1.

An artificial being created by operation of law, having the right of succession and the powers, attributes and
properties expressly authorized by law or incident to its existence.
A. Partnership
B. Corporation
C. Joint Stock
D. Association

2. The following are attributes of a corporation, except:

A. It is an artificial being
B. It has powers, attributes and properties expressly authorized by law
C. It is created by agreement of the parties
D. It has the right of succession

3. An ultra vires act is an act which:

A. Is considered illegal
B. Is contrary to morals, public policy, good customs
C. Not within the express, implied or incidental powers of the corporation
D. All of the above

4. The following are consequences of an ultra vires act, except:

A. The proper forum may have the corporation’s franchise suspended or revoked
B. A stockholder may bring an individual or derivative suit to enjoin the same
C. If the contract remains to be executory, neither party may maintain an action for its non-performance
D. None of the above

5. Under the corporation code, a corporation has power and capacity to (choose the exception):
A. To sue and be sued in its corporate name
B. To adopt and use a corporate seal
C. To make reasonable donations for public welfare including giving aid to political parties
D. To acquire real and personal properties in its own name

6. As to the right to declare and distribute dividends, corporations may be classified as:
A. Stock and non-stock
B. Domestic and foreign
C. Close and open
D. De jure and de facto

7. As to under which law a corporation was organized, it will be considered either as:
A. Stock or non-stock
B. Domestic or foreign
C. Close or open
D. De jure or de facto

8. As to whether it has authority to openly accept outsiders as stockholders or investors, corporations can be
classified as:
A. De jure and de facto
B. Private and public
C. Open and close
D. Ecclesiastical and law

9. A corporation organized for spiritual purposes or for administering properties held for religious ones.
A. Eleemosynary corporation
B. Lay corporation
C. Ecclesiastical corporation
D. Corporation sole
10. A group of persons which holds itself out as a corporation and enters into a contract with third persons on the
strength of such appearance cannot be permitted to deny its existence in an action under the said contract. The
“corporation” these people set themselves out to be is called:
A. De jure corporation
B. De facto corporation
C. Corporation by estoppel
D. Public corporation

11. Those formed or organized for the government of a portion of the State or any of its political subdivisions and
which have for their purpose the general good and welfare.
A. Private corporations
B. Public corporations
C. Government-owned and/or -controlled corporations
D. Publicly-listed corporations

12. Mr. X was invited by his friends to invest in XYZ Corp., a newly organized firm where he was appointed
president. He entered into a contract of sale with ABC Corp. to purchase equipment, in accordance with the
primary purpose of the corporation. Later on, however, it was discovered that the Articles of Incorporation had
not been filed by his friends. He hurriedly attended to the matter and when the SEC issued the Certificate of
Registration, the corporation became bankrupt and Mr. X is now being sued by ABC Corp. in his personal
capacity. In this case,
A. Mr. X cannot be made liable since XYZ Corp. is considered a de facto corporation which has a separate
personality.
B. Mr. X cannot be made liable since the de facto status of the corporation has not been attacked by the State.
C. Mr. X can be made liable upto his personal assets since he is the president of XYZ Corporation which is a
corporation by estoppel.
D. Mr. X can be made liable only upto his investment since he had no knowledge that the
corporation was not validly incorporated.
13. As to number of individuals that compose the corporation, a corporation may be classified as:
A. Close or open
B. Stock or non-stock
C. Private or public
D. Aggregate or sole

14. Which of the following statements is false?

A. The promotional stage undertaken by the organizers or promoters who bring together persons interested in
the business venture.
B. A promoter, although he may assume to act for and on behalf of a projected corporation and not for
himself, will be held personally liable on contracts made by him for the benefit of a corporation he intends
to organize.
C. The personal liability of promoters for contracts entered into in behalf of the projected
corporation ceases after the formation of the corporation.
D. None of the above.

15. Which of the following is a false statement?

A. A bank cannot have insurance activities as its secondary purpose.
B. Educational corporations cannot include any other purpose which would change or contradict its nature.
C. Stock brokers can have no other line of business not peculiar to them.
D. A group of CPAs can form a corporation for the purpose of practicing their profession.

16. First statement: Corporations whose capital is less than $2.5M engaged in retail trade must be wholly Filipino-
owned.
Second statement: Corporations with foreign equity can engage in restaurant business if it is incidental or in
connection with their hotel or inn-keeping business.
A. Both statements are true
B. Both statements are false
C. Only the first statement is true
D. Only the second statement is true
17. The principal place of business must be indicated in the Articles of Incorporation. This is necessary for (choose
the exception):
A. Venue of the stockholders’ meeting
B. Registration of chattel mortgage on shares of stock
C. Venue of actions
D. None of the above

18. ABC Corporation was incorporated on Jan. 1, 2020. It can exist until _________ and its registration can be
renewed earliest ___________.
A. December 31, 2078; December 31, 2063
B. December 31, 2068; December 31, 2065
C. December 31, 2068; December 31, 2063
D. None of the above.

19. Incorporators must not be less than 5 but not more than 15 and (choose the exception):
A. Must be natural persons
B. Must be of legal age
C. Owns at least 1 share
D. Majority must be citizens of the Philippines

20. First statement: All incorporators are corporators

Second statement: All corporators are incorporators.
A. Both statements are true
B. Both statements are false
C. Only the first statement is true
D. Only the second statement is true

21. The number of directors, which must be stated in the Articles of Incorporation, shall not be less than 5 but not
more than 15. Educational institutions must likewise have the same minimum and maximum number of
directors, except that the number must be divisible by:
A. 2 C. 4
B. 3 D. 5

22. A close corporation’s stockholders can opt to directly manage the business and can therefore be considered
members of the board. In which case, the number of directors can be upto a maximum of:
A. 15 C. 20
B. 18 D. 25

23. A, B, C, D and E is organizing a corporation whose Authorized Capital Stock is P10,000,000. Each of them
subscribed to P500,000 or equivalent to 5%. A, B and C paid 50% of their subscribed capital but D and E did
not. In this case,
A. D and E must pay at least 25% of their subscribed capital to comply with the requirements of the law.
B. There can still be valid incorporation, provided that D and E pay within 30 days from submission to the SEC.
C. The requirement that 25% of the authorized capital stock has not been met.
D. A, B and C’s payments complies with the requirement that 25% of the subscribed capital must
be paid-up.

24. A, B, C, D and E is organizing a corporation whose Authorized Capital Stock is P64,000. How much is the
minimum paid-up capital requirement?
A. P4,000 C. P10,000
B. P5,000 D. P25,000

25. The outstanding capital stock of the corporation is composed of:

A. Paid-up shares plus subscribed less treasury shares
B. Authorized less treasury shares
C. Issued plus subscribed less treasury shares
D. Paid-up capital including the equivalent shares for the Additional Paid-in less treasury shares

26. The following are valid considerations for stocks, except:

 A. Actual cash paid to the corporation
B. Labor or services actually performed for the corporation
C. Indebtedness to be incurred by the corporation
D. Property, real or personal, tangible or intangible, actually received by the corporation and necessary or
convenient for its use and lawful purpose.

27. The following are grounds for disapproval of the SEC of the Articles of Incorporation, except:
A. That the articles of incorporation or any amendment thereto is not substantially in accordance with the form
prescribed.
B. That the purpose or purposes of the corporation are patently unconstitutional, illegal, immoral, or contrary
to government rules and regulations.
C. That the Treasurer's Affidavit concerning the amount of capital stock subscribed and/or paid if false.
D. None of the above.

28. The existence of a corporation commences from:

A. The time the parties came to an agreement to form a corporation and contribute money or property.
B. Filing of the articles of incorporation.
C. Issuance of a certificate of registration.
D. First day of the year following the filing of the Articles of Incorporation.

29. The existence of a corporation sole begins from:

A. The time the parties came to an agreement to form a corporation and contribute money or property.
B. Filing of the articles of incorporation.
C. Issuance of a certificate of registration.
D. First day of the year following the filing of the Articles of Incorporation.

30. Failure of the corporation to organize within __ years will result to _____:
A. 2 years; automatic dissolution.
B. 5 years; a ground for suspension or revocation.
C. 2 years; a ground for suspension or revocation.
D. 5 years; automatic dissolution.

31. If the corporation was able to commence business but became inoperative for __ years, it will result to ____:
A. 2 years; automatic dissolution.
B. 5 years; a ground for suspension or revocation
C. 2 years; a ground for suspension or revocation.
D. 5 years; automatic dissolution.

32. Mr. X invested his property in exchange for shares in ABC Corporation. Later on, the same property mortgaged
as security for the loan of ABC Corporation from M Bank. For failure to pay, the mortgage was foreclosed and
proceeds was less than the amount of the outstanding balance of the loan which M Bank sought from Mr. X
contending that the property was invested by him. Mr. X cannot be made liable under which principle:
A. Corporate Entity Theory
B. Piercing the Veil of Corporate Entity
C. Limited Liability Principle
D. All of the above.

33. Rustan Corp., through Tantoco, its general manager and president, entered into a contract of sale with Lluch
Corp., which was later on stopped by Rustan Corp. Lluch then sued for breach of contract against Rustan Corp
and Tantoco. In this case,
A. Both Rustan Corp and Tantoco can be held liable.
B. Only Rustan Corp can be made liable
C. Only Tantoco can be made liable
D. None of the above.

34. Isabelo Calingasan, the employer of Alfredo Carillo, was held subsidiarily liable when Carillo, driving the jeepney
of Calingasan, ran over a child. Later on, Calingasan transferred said jeep to Fely Transport Corporation, where
the incorporators are Calingasan, his wife, his son, Dr. Calingasan and his two daughters and the only asset
thereof was the same jeepney. In this case,
 A. Fely Transport Corporation has sole liability since the jeepney was already transferred to it.
B. Isabelo Calingasan can no longer be held liable since he no longer owns the jeepney.
C. Both Fely Transport Corporation and Isabelo Calingasan can be held liable since the transfer
was only made to escape liability.
D. All incorporators of Fely Transport Corporation can be made liable.

35. The supreme authority in matters of management and regular and ordinary business affairs of the corporation.
A. Stockholders C. the President
B. Board of Directors D. the Treasurer

36. The following are qualifications of a Director, except:

A. They must own at least 1% share.
B. Majority must be residents of the Philippines.
C. They do not possess any of the disqualifications under the Corporation Code.
D. None of the above.

37. John Gokongwei, Jr. is a major stockholder of a corporation in direct competition with SMC. He later on invested
in SMC and sought to be a member of the Board but the by-laws contained a disqualification for stockholders of
competing corporations. In this case,
A. The disqualification is invalid since it is not provided for under the Corporation Code.
B. The disqualification is valid since a corporation is authorized to prescribe qualifications/ disqualifications in
the Articles of Incorporation
C. The disqualification is valid since a corporation is authorized to prescribe qualifications/
disqualifications in the by-laws
D. None of the above is a correct statement.

38. A, is a stockholder of Silvestre Corporation, who holds 10,000 shares thereof. A stockholders meeting was called
to elect members of a 5-man Board. How many votes can A cast in favor of B, a candidate to be a Director using
straight voting?
A. 10,000 votes C. 50,000 votes
B. 25,000 votes D. 100,000 votes

39. In the preceding number, how many votes can A cast in favor of B if they employ cumulative voting?
A. 10,000 votes C. 50,000 votes
B. 25,000 votes D. 100,000 votes

40. First statement: A director representing the majority can be removed even without cause.
Second statement: A director representing the minority can be removed even without cause.
A. Both statements are correct
B. Both statements are incorrect
C. Only the first statement is correct
D. Only the second statement is correct