MULTIPLE CHOICE

1.It is the preferential right of all stockholders of a stock corporation to

subscribe to all issues or disposition of shares of any class,in
proportion to their respective shareholdings.
a. Appraisal right
b.Pre-emptive right
c. Right to vote
d.Voting right
2.I.The purpose of pre-emptive right is to enable the shareholder to
retain his proportionate control in the corporation.
II.A suit to enforce preemptive rights in a corporation is a derivative
suit
a.Only I is true
b.Only Il is true
c. Both are true
d. Both are false
3.The requirements for the sale or other disposition of assets are the
following,except:
a.Approval by the majority vote of its board of directors or trustees.
b.Ratification by the vote of the stockholders representing at least
2/3 of the outstanding capital stock,or in case of non-stock
corporation,by the vote of at least to 2/3 of the members.
c.Any dissenting stockholder may exercise his appraisal right.
d.SEC approval is required.
4.The following are instances when a corporation may acquire its own
shares,except:
a. To acquire founders'shares.
b.To eliminate fractional shares arising out of stock dividends.
c.To collect or compromise an indebtedness to the corporation,
arising out of unpaid subscription,in a delinquency sale,and to
purchase delinquent shares sold during said sale.
d.To pay dissenting or withdrawing stockholders entitled to payment
for their shares under the provisions of the Corporation Code.
5.I.The corporation may only acquire its own stocks in the presence of
unrestricted retained earnings.
II.Preferred shares may be acquired even without surplus profit for as
long as it will not result to the insolvency of the Corporations.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

6.I.The requirement of unrestricted retained earnings to cover the

shares is based on the doctrine of limited capacity.
Il.There can be no distribution of assets among the stockholders
without first paying corporate creditors.Hence,any disposition of
corporate funds to the prejudice of creditors is rescissible.
a.Only l is true
b.Only ll is true
c. Both are true
d.Both are false
7.The following are the requisites for the exercise of a corporate power
to invest corporate funds in another corporation,except:
a.Any dissenting stockholder shall have pre-emptive right.
b.Approval of the majority of the board of directors or trustees.
c.Ratification by the stockholders representing at least 2/3 of the
outstanding capital stock,or by at least 2/3 of the members in the
case of non-stock corporations,at a stockholder's or member's
meeting duly called for the purpose.
d.Written notice of the proposed investment and the time and place
of the meeting shall be addressed to each stockholder or member
by mail or served personally.
8.The retained earnings which have not been reserved or set aside by the
board of directors for some corporate purpose.
a.Restricted retained earnings
b.All of the above
c.Unrestricted retained earnings
d.None of the above
9.L.No management contract shall be entered into for a period longer
than 5 years for any 1 term.
II.No corporation shall possess or exercise corporate powers other
than those conferred by the Revised Corporation Code or by its articles
of incorporation and except as necessary or incidental to the exercise of
the powers conferred.
a.Only l is true
b.Only Il is true
c. Both are true
d.Both are false
10.Where a stockholder or stockholders representing the same interest of
both the managing and the managed corporations own or control more
than 1/3 of the total outstanding capital stock entitled to vote of the
managing corporation.
a.Interlocking board of directors
b.Interlocking members
c.Interlocking stockholders

d. None of the above.

11.Where a majority of the members of the board of directors of the
managing corporation also constitute a majority of the members of the
board of directors of the managed corporation.
a.Interlocking stockholders
b. Interlocking members
c.Interlocking board of directors
d.None of the above.
12.I.A corporation has no power except those expressly conferred on it by
the Corporation Code and those that are implied or incidental to its
existence.
II.In turn,a corporation exercises said powers through its board of
directors and/or its duly authorized officers and agents.
a. Only I is true
b.Only Il is true
c. Both are true
d. Both are false
13.It is an action brought by a stockholder on behalf of the corporation to
enforce corporate rights against the corporation's directors,officers or
other insiders.
a. Individual suit
b. Derivative suit
c. Corporate suit
d. Representative suit
14.The following are the requisites of the corporate power to extend or
shorten corporate term
I.Approval by a 2/3 vote of the board of directors or trustees.
II. Ratification by the stockholders representing at least 2/3 of the
outstanding capital stock or by at least 2/3 of the members in case
of non-stock corporations.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
15.It means that a stockholder who dissented and voted against the
proposed corporate action,may choose to get out of the corporation by
demanding payment of the fair market value of his shares.
a.Pre-emptive right
b. Appraisal right
c.Stockholders right
d. Right to liquidation

16.Subscriptions to the capital stock of a corporation constitute a fundto

which the creditors have a right to look for the satisfaction of ther
claims.
a.Trust fund doctrine
b.Doctrine of corporate opportunity
c.Doctrine of piercing the veil of corporate fiction
d.Entity doctrine
17.The distribution of corporate capital happens in only in three instances,
except:
a.Amendment of the articles of incorporation to reduce the
authorized capital stock.
b.Purchase of redeemable shares by the corporation,regardless of
the existence of unrestricted retained earnings.
c.Dissolution and eventual liquidation of the corporation.
d.Amendment of the by-laws to reduce the authorized capital stock.
18.The following are the requirements of increase or decrease authorized
capital stock,except:
a.No decrease of the capital stock shall be approved if its effect shall
prejudice the rights of corporate creditors.
b.Approval by a majority vote of the board of directors.
c.Ratification by the stockholders holding at least 2/3 of the
outstanding capital stock.
d.Approval thereof by the DTI.
19.I.The right of appraisal may be exercised when there is a fundamental
change in the charter or articles of incorporation substantially
prejudicing the rights of the stockholders.
II.A corporation can purchase its own shares,provided payment is
made out of surplus profits and the acquisition is for a legitimate
corporate purpose.
a.Only l is true
b.Only II is true
c.Both are true
d.Both are false
20.Corporate profits set aside,declared,and ordered to be paid by the
directors for distribution among stockholders at a fixed time.
a. Income
b.Dividends
c. Revenue
d. Sales
21.I.payment of dividends to a stockholder is not a matter of right but a
matter of consensus.
II.The declaration of dividends is dependent upon the availability of
surplus profit or restricted retained earnings.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
22.The limitations on dividends are the following,except:
a.The right to dividend is based on duly recorded stockholdings.
b.The right to dividend accrues only if there is SEC approval.
c.Dividends among stockholders of the same class must always be
pro rata equal and without discrimination and regardless of the
time when the shares were acquired.The right of the stockholder
to be paid dividends accrues as soon as the declaration is made.
d.Declaration of dividends is discretionary upon the board of
directors.
23.It is an agreement whereby a corporation delegates the management of
its affairs to another corporation for a certain period of time.
a.Voting trust agreement
b.Contract of agency
c.Self-dealing contract
d.Management contract
24.It refers to an act outside or beyond corporate powers,including those
that may ostensibly be within such powers but are,by general or
special laws,prohibited or declared illegal.
a. Intra vires act
b.Doctrine of limited capacity
c. Ultra vires act
d.Doctrine of piercing the veil of corporate fiction
25.I.Every corporation has the power and capacity to have perpetual
existence unless the certificate of incorporation provides otherwise.
Every corporation has the power and capacity to enter into a
partnership,joint venture,merger,consolidation,or any other
commercial agreement with natural and juridical persons.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
MULTIPLE CHOICE
1.It is the preferential right of all stockholders of a stock corporation to
subscribe to all issues or disposition of shares of any class,in
proportion to their respective shareholdings.
a. Appraisal right
b.Pre-emptive right
c. Right to vote
d.Voting right
2.I.The purpose of pre-emptive right is to enable the shareholder to
retain his proportionate control in the corporation.
II.A suit to enforce preemptive rights in a corporation is a derivative
suit
a.Only I is true
b.Only Il is true
c. Both are true
d. Both are false
3.The requirements for the sale or other disposition of assets are the
following,except:
a.Approval by the majority vote of its board of directors or trustees.
b.Ratification by the vote of the stockholders representing at least
2/3 of the outstanding capital stock,or in case of non-stock
corporation,by the vote of at least to 2/3 of the members.
c.Any dissenting stockholder may exercise his appraisal right.
d.SEC approval is required.
4.The following are instances when a corporation may acquire its own
shares,except:
a. To acquire founders'shares.
b.To eliminate fractional shares arising out of stock dividends.
c.To collect or compromise an indebtedness to the corporation,
arising out of unpaid subscription,in a delinquency sale,and to
purchase delinquent shares sold during said sale.
d.To pay dissenting or withdrawing stockholders entitled to payment
for their shares under the provisions of the Corporation Code.
5.I.The corporation may only acquire its own stocks in the presence of
unrestricted retained earnings.
II.Preferred shares may be acquired even without surplus profit for as
long as it will not result to the insolvency of the Corporations.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

6.I.The requirement of unrestricted retained earnings to cover the

shares is based on the doctrine of limited capacity.
Il.There can be no distribution of assets among the stockholders
without first paying corporate creditors.Hence,any disposition of
corporate funds to the prejudice of creditors is rescissible.
a.Only l is true
b.Only ll is true
c. Both are true
d.Both are false
7.The following are the requisites for the exercise of a corporate power
to invest corporate funds in another corporation,except:
a.Any dissenting stockholder shall have pre-emptive right.
b.Approval of the majority of the board of directors or trustees.
c.Ratification by the stockholders representing at least 2/3 of the
outstanding capital stock,or by at least 2/3 of the members in the
case of non-stock corporations,at a stockholder's or member's
meeting duly called for the purpose.
d.Written notice of the proposed investment and the time and place
of the meeting shall be addressed to each stockholder or member
by mail or served personally.
8.The retained earnings which have not been reserved or set aside by the
board of directors for some corporate purpose.
a.Restricted retained earnings
b.All of the above
c.Unrestricted retained earnings
d.None of the above
9.L.No management contract shall be entered into for a period longer
than 5 years for any 1 term.
II.No corporation shall possess or exercise corporate powers other
than those conferred by the Revised Corporation Code or by its articles
of incorporation and except as necessary or incidental to the exercise of
the powers conferred.
a.Only l is true
b.Only Il is true
c. Both are true
d.Both are false
10.Where a stockholder or stockholders representing the same interest of
both the managing and the managed corporations own or control more
than 1/3 of the total outstanding capital stock entitled to vote of the
managing corporation.
a.Interlocking board of directors
b.Interlocking members
c.Interlocking stockholders
d. None of the above.
11.Where a majority of the members of the board of directors of the
managing corporation also constitute a majority of the members of the
board of directors of the managed corporation.
a.Interlocking stockholders
b. Interlocking members
c.Interlocking board of directors
d.None of the above.
12.I.A corporation has no power except those expressly conferred on it by
the Corporation Code and those that are implied or incidental to its
existence.
II.In turn,a corporation exercises said powers through its board of
directors and/or its duly authorized officers and agents.
a. Only I is true
b.Only Il is true
c. Both are true
d. Both are false
13.It is an action brought by a stockholder on behalf of the corporation to
enforce corporate rights against the corporation's directors,officers or
other insiders.
a. Individual suit
b. Derivative suit
c. Corporate suit
d. Representative suit
14.The following are the requisites of the corporate power to extend or
shorten corporate term
I.Approval by a 2/3 vote of the board of directors or trustees.
II. Ratification by the stockholders representing at least 2/3 of the
outstanding capital stock or by at least 2/3 of the members in case
of non-stock corporations.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
15.It means that a stockholder who dissented and voted against the
proposed corporate action,may choose to get out of the corporation by
demanding payment of the fair market value of his shares.
a.Pre-emptive right
b. Appraisal right
c.Stockholders right
d. Right to liquidation

16.Subscriptions to the capital stock of a corporation constitute a fundto

which the creditors have a right to look for the satisfaction of ther
claims.
a.Trust fund doctrine
b.Doctrine of corporate opportunity
c.Doctrine of piercing the veil of corporate fiction
d.Entity doctrine
17.The distribution of corporate capital happens in only in three instances,
except:
a.Amendment of the articles of incorporation to reduce the
authorized capital stock.
b.Purchase of redeemable shares by the corporation,regardless of
the existence of unrestricted retained earnings.
c.Dissolution and eventual liquidation of the corporation.
d.Amendment of the by-laws to reduce the authorized capital stock.
18.The following are the requirements of increase or decrease authorized
capital stock,except:
a.No decrease of the capital stock shall be approved if its effect shall
prejudice the rights of corporate creditors.
b.Approval by a majority vote of the board of directors.
c.Ratification by the stockholders holding at least 2/3 of the
outstanding capital stock.
d.Approval thereof by the DTI.
19.I.The right of appraisal may be exercised when there is a fundamental
change in the charter or articles of incorporation substantially
prejudicing the rights of the stockholders.
II.A corporation can purchase its own shares,provided payment is
made out of surplus profits and the acquisition is for a legitimate
corporate purpose.
a.Only l is true
b.Only II is true
c.Both are true
d.Both are false
20.Corporate profits set aside,declared,and ordered to be paid by the
directors for distribution among stockholders at a fixed time.
a. Income
b.Dividends
c. Revenue
d. Sales
21.I.payment of dividends to a stockholder is not a matter of right but a
matter of consensus.
II.The declaration of dividends is dependent upon the availability of
surplus profit or restricted retained earnings.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
22.The limitations on dividends are the following,except:
a.The right to dividend is based on duly recorded stockholdings.
b.The right to dividend accrues only if there is SEC approval.
c.Dividends among stockholders of the same class must always be
pro rata equal and without discrimination and regardless of the
time when the shares were acquired.The right of the stockholder
to be paid dividends accrues as soon as the declaration is made.
d.Declaration of dividends is discretionary upon the board of
directors.
23.It is an agreement whereby a corporation delegates the management of
its affairs to another corporation for a certain period of time.
a.Voting trust agreement
b.Contract of agency
c.Self-dealing contract
d.Management contract
24.It refers to an act outside or beyond corporate powers,including those
that may ostensibly be within such powers but are,by general or
special laws,prohibited or declared illegal.
a. Intra vires act
b.Doctrine of limited capacity
c. Ultra vires act
d.Doctrine of piercing the veil of corporate fiction
25.I.Every corporation has the power and capacity to have perpetual
existence unless the certificate of incorporation provides otherwise.
Every corporation has the power and capacity to enter into a
partnership,joint venture,merger,consolidation,or any other
commercial agreement with natural and juridical persons.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

1.I.As a rule,a quorum shall consist of the stockholders representing a

majority of the outstanding capital stock or a majority of the members
in the case of nonstock corporations.
II.Unless the articles of incorporation or the bylaws provides for a
greater majority,a majority of the directors or trustees as stated in the
articles of incorporation shall constitute a quorum to transact
corporate business.
a. Only I is true
b.Only II is true
c.Both are true
d. Both are false
2. Is the book which records the names and addresses of all stockholders
arranged alphabetically,the installments paid and unpaid on all stock
for which subscription has been made,and the date of payment thereof.
a. Check book
b. Journals
c. Ledgers
d.Stock and transfer book
3.I.Every decision of at least a majority of the directors or trustees
present at a meeting at which there is a quorum shall be valid as a
corporate act.
II.The election of officers which requires the vote of a majority of all
the members of the board.
a.Only I is true
b. Only Il is true
c. Both are true
d. Both are false
4.The requirements for board meeting are the following,except:
a.Meeting of the directors or trustees duly assembled as a Board.
b.Decision of the majority of all the members of the board.
c.Presence of the required quorum.
d.Meeting at the place,time,and manner provided in the by-laws.
5.I.Meetings of directors or trustees of corporations may be held
anywhere in or outside of the Philippines,unless the bylaws provide
otherwise.
Il.Notice of regular or special meetings stating the date,time and place
of the meeting must be sent to every director or trustee at least i day
prior to the scheduled meeting,unless a longer time is provided in the
bylaws.
a.Only I is true
b.Only Il is true
c. Both are true

d.Both are false

6.I.In case of pledged or mortgaged shares in stock corporations,the
pledgee or mortgagee shall have the right to attend and vote t
meetings of stockholders.
Il.In case of shares of stock owned jointly by two or more persons,t
order to vote the same,the consent of all the co-owners shall be
necessary.
a. Only l is true
b. Only Il is true
c. Both are true
d. Both are false
7.I.Treasury shares shall have no voting right as long as such share
remain in the Treasury.
Il.Directors or trustees cannot attend or vote by proxy at board
meetings but there is no prohibition for them to act as proxies ir
stockholders'meetings.
a.Only lis true
b.Only ll is true
c. Both are true
d.Both are false
8.I.Directors or trustees who cannot physically attend or vote at board
meetings can participate and vote through remote communication sud
as videoconferencing,teleconferencing,or other alternative modes cf
communication that allow them reasonable opportunities
participate.
II.Directors or trustees can attend or vote by proxy at board meetings
a.Only l is true
b.Only II is true
c. Both are true
d. Both are false
9.L The chairman or,in his absence,the president shall preside at al
meetings of the directors or trustees as well as of the stockholders cr
members,unless the bylaws provide otherwise.
II.In case a stockholder grants security interest in his or her shares ir
stock corporations,the stockholder-grantor shall have the right to
attend and vote at meetings of stockholders.
a.Only l is true
b.Only Il is true
c. Both are true
d. Both are false

10.I.Executors,administrators,receivers,and other legal representatives

duly appointed by the court may attend and vote in behalf of the
stockholders or members without need of any written proxy.
II.When the shares are owned in an "and/or"capacity by the holders
thereof,any one of the joint owners can vote said shares or appoint a
proxy therefor.
a. Only l is true
b.Only ll is true
c. Both are true
d. Both are false
11.I.Stockholders and members may vote in person or by proxy in all
meetings of stockholders or members.
II.When so authorized in the bylaws or by a majority of the board of
directors,the stockholders or members of corporations may also vote
through remote communication or in absentia.
II.A stockholder or member who participates through remote
communication or in absentia shall be deemed present for purposes of
quorum.
a. Only l is true
b.Only Il is true
c. Only III is true
d. I,II and II are true
12.I.The general rule is that every member of a nonstock corporation,and
every legal owner of shares in a stock corporation,has a right to be
present and to vote in all corporate meetings.
II.Voting may be expressed personally,or through proxies who vote in
their representative capacities.
a. Only l is true
b.Only Il is true
c. Both are true
d. Both are false
13.I.Directors must act as a body in a meeting called pursuant to the law
or the corporation's by-laws,otherwise,any action taken therein may
be questioned by any objecting director or shareholder.
II.The general rule is that a corporation,through its board of directors,
should act in the manner and within the formalities,if any,prescribed
by its charter or by the general law.
a.Only l is true
b.Only II is true
c. Both are true
d. Both are false
14.I.An action of the board of directors during a meeting,which was illegal
for lack of notice,may not be ratified.

Il.Notice of meeting may not be waived,expressly or impliedly,by any

stockholder or member.
a.Only l is true
b.Only ll is true
c. Both are true
d. Both are false
15.The requirements for a valid meeting are the following,except:
a.It must be held at the stated date and at the appointed time.
b.It must be called by the proper person.
c.The person or persons designated in the by-laws have authority to
call stockholders or members meeting.
d.It must be held always at the principal place of business.
16.1.Stockholder's or member's meetings shall be held in the city or
municipality where the principal office of the corporation is located.
II.Regular meetings of stockholders or members shall be held annually
on a date fixed in the bylaws,or if not so fixed,on any date after April
15 of every year as determined by the board of directors or trustees.
a.Only lis true
b.Only Il is true
c.Both are true
d.Both are false
17.1.In regular meetings of stockholders or members,a written notice of
regular meetings shall be sent to all stockholders or members of record
at least 10 days prior to the meeting.
II.Written notice of regular meetings may be sent to all stockholders or
members of record through electronic mail or such other manner as the
SEC shall allow under its guidelines.
a.Only l is true
b.Only ll is true
c. Both are true
d.Both are false
18.I.Any city or municipality in Metro Manila,Metro Cebu,Metro Davao,
and other Metropolitan areas shall,for purposes of stockholders'or
members'meetings,be considered a city or municipality.
II.Notice of meetings shall be sent through the means of
communication provided in the bylaws,which notice shall state the
time,place and purpose of the meetings.
a.Only l is true
b.Only Il is true
c.Both are true
d.Both are false
19.The requirements for a valid proxy are the following,except:

a. It shall be in writing
b.It shall be filed before the scheduled meeting with the corporate
secretary.
c. It shall be signed by the corporate secretary.
d.Unless otherwise provided in the proxy,it shall be valid only for the
meeting which it is intended.
20.The purposes of proxies are the following,except:
a. For convenience
b.It enables those who do not wish to attend the meeting to protect
their interest
c. It assures the presence of all.
d.It secures voting control.
21.Revocation of proxy may be made through the following,except:
a.Formal notice;
b.Verbal communication;or
c. Conduct
d. None of the above
22.A trust created by an agreement between a group of the stockholders of
a corporation and the trustee or by a group of identical agreements
between individual stockholders and a common trustee,whereby it is
provided that for a term of years,or for a period contingent upon a
certain event,or until the agreement is terminated,control over the
stock owned by such stockholders,either for certain purposes or for all
purposes,is to be lodged in the trustee,either with or without a
reservation to the owners,or persons designated by them,of the power
to direct how such control shall be used.
a. Proxy
b.Management contract
c.Voting trust agreement
d. Executive committee
23.The following are the requirements imposed on a voting trust
agreement,except:
a.The agreement must be in writing and notarized and specify the
terms and conditions thereof.
b.A certified copy of such agreement shall be filed with the
corporation and with the Securities and Exchange Commission;
non-compliance,however,said agreement is effective and
enforceable.
The certificate or certificates of stock covered by the voting trust
C. 'agreement shall be cancelled and new ones shall be issued in the
name of the trustee or trustees stating that they are issued
pursuant to said agreement.
d.It shall be noted that the transfer in the name of the trustee or
trustees is made pursuant to said voting trust agreement.
24.The three tests of voting trust agreement are the following:
a.That the voting rights of the stock are separated from the other
attributes of ownership.
b.That the voting rights granted are intended to be irrevocable for a
definite period of time.
c.That the principal purpose of the grant of voting rights is to acquire
voting control of the corporation.
d. All of the above.
25.1.A stockholder or member may propose the holding of a special
meeting and items to be included in the agenda.
Il.Whenever for any cause,there is no person authorized or the person
authorized unjustly refuses to call a meeting,the SEC,upon petition ofa
stockholder or member on a showing of good cause therefor,may issue
an order,directing the petitioning stockholder or member to call a
meeting of the corporation by giving proper notice.
a. Only I is true
b.Only II is true
c. Both are true
d. Both are false
26.I.Unless the bylaws provide for a longer period,the stock and transfer
book or membership book shall be closed at least 20 days for regular
meetings and 7 days for special meetings before the scheduled date of
the meeting
II.The right to vote of stockholders or members may be exercised in
person,through a proxy,or when so authorized in the bylaws,through
remote communication or in absentia.
a.Only l is true
b.Only II is true
c.Both are true
d.Both are false

1.I.As long as the shares are not considered delinquent,stockholders are

entitled to all rights granted to it whether or not subscribed capital
stocks are fully paid.
Il.Shares of stock shall not be issued in exchange for promissory notes
or future service.
a.Only l is true
b. Only Il is true
c.Both are true
d. Both are false
2.I.Stocks shall not be issued for a consideration less than the par or
issued price thereof.
II.Where the consideration is other than actual cash,or consists of
intangible property such as patents of copyrights,the valuation thereof
shall initially be determined by the incorporators or the board of
directors,subject to approval of the SEC.
a.Only l is true
b.Only ll is true
c.Both are true
d.Both are false
3.Unit of interest in a corporation.
a.Treasury stock
b.Certificate of stock
c. Shares of stock
d.Par value stock
4.Evidence of the holder's ownership of the stock and of his right as a
shareholder.
a.Treasury stock
b. Certificate of stock
c.Shares of stock
d. Par value stock
5.I.The stock and transfer book is the basis for ascertaining the persons
entitled to the rights and subject to the liabilities of a stockholder.
II.On the death of a shareholder,the executor or administrator duly
appointed by the Court is vested with the legal title to the stock but not
entitled to vote it.
a.Only Iis true
b.Only Il is true
c. Both are true
d. Both are false

6.For a valid transfer of stocks,there must be strict compliance with the

mode of transfer prescribed by law.The following are the
requirements,except:
a.There must be delivery of the stock certificate.
b.The certificate must be endorsed by the owner or his attorney-in-
fact or other persons legally authorized to make the transfer.
c.To be valid against third parties,the transfer must be recorded in
the books of the corporation.
d.To be valid against third parties,the transfer must be recorded in
the SEC.
7.Solidary liabilities may be incurred and the veil of corporate fiction may
be pierced when directors and trustees or,in appropriate case,the
officers of a corporation does the following,except:
a.Vote for or assent to patently unlawful acts of the corporation.
b.Act in bad faith or with gross negligence in directing the corporate
affairs.
c.Are guilty of conflict of interest to the prejudice of the corporation,
its stockholders or members,and other persons.
d.Habitual absence in the directors'meeting.
1.As a rule,the doctrine of corporate opportunity is violated where the
8.
stocks are issued by the corporation for a consideration which is less
than its par value
II.Subscribers for stock shall pay to the corporation interest on all
unpaid subscriptions from the date of subscription,if so required by,
and at the rate of interest fixed in the by-laws.
a.Only I is true
b. Only II is true
c. Both are true
d.Both are false
9.Bidder who shall offer to pay the full amount of the balance on the
subscription together with accrued interest,costs of advertisement and
expenses of sale,for the smallest number of shares or fraction of a
share.
a. Lowest bidder
b. Winning bidder
c.Highest bidder
d.Losing bidder
10.I.A subscription of shares in a corporation still to be formed shall be
irrevocable for a period of at least six(6)months from the date of
subscription
II.No pre-incorporation subscription may be revoked after the articles
of incorporation is submitted to the Commission.
a.Only I is true

b.Only II is true
c. Both are true
d. Both are false
11.Consideration for the issuance of stock may be:
a.Actual cash paid to the corporation.
b.Labor performed for or services to be rendered to the corporation;
c.Property,tangible or intangible,actually received by the
corporation and necessary or convenient for its use and lawful
purposes at a fair valuation equal to the par or issued value of the
stock issued.
d.Previously incurred indebtedness of the corporation.
12.1.In stock corporations,shareholders may generally transfer their
shares.
II.Membership in and all rights arising from a nonstock corporation are
personal and non-transferable.
a.Only l is true
b.Only ll is true
c.Both are true
d. Both are false
13.Is an action brought by minority shareholders in the name of the
corporation to redress wrongs committed against it,for which the
directors refuse to sue.
a. Derivative suit
b.Individual suit
c.Representative suit
d. Class suit
14.The following are the requisites of a derivative suit:
a.The party bringing suit should be a shareholder as of the time of
the act or transaction complained of,the number of his shares not
being material;
b.He has tried to exhaust intra-corporate remedies,i.e.,has made a
demand on the board of directors for the appropriate relief but the
latter has failed or refused to heed his plea;and
c.The cause of action actually devolves on the corporation,the
wrongdoing or harm having been,or being caused to the
corporation and not to the particular stockholder bringing the suit.
d.All of the above
15.Where a stockholder or member is denied the right of inspection,his
suit would be individual because the wrong is done to him personally
and not to the other stockholders or the corporation.
a.Representative suit
b.Class suit

c. Derivative suit
d. Individual suit
16.Where the wrong is done to a group of stockholders,as where
preferred stockholders'rights are violated,a class suit will be proper
for the protection of all stockholders belonging to the same group.
a. Individual suit
b.Corporate suit
c. Representative suit
d. Derivative suit
17.Any contract for the acquisition of unissued stock in an existing
corporation or a corporation still to be formed shall be deemed a
subscription notwithstanding the fact that the parties refer to it as a
purchase or some other contract.
a. Contract of sale
b. Management contract
c. Subscription contract
d. None of the above
18.I.The rule is that the endorsement of the certificate of stock by the
owner or his attorney-in-fact or any other person legally authorized to
make the transfer shall be sufficient to effect the transfer of shares only
if the same is coupled with delivery.
II.The delivery of the stock certificate duly endorsed by the owner is
the operative act of transfer of shares from the lawful owner to the new
transferee.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
19.I.The certificate of stock itself once issued is a continuing affirmation or
representation that the stock described therein is valid and genuine.
II.Stock issued without authority and in violation of law is voidable and
confers no rights on the person to whom it is issued and subjects him to
no liabilities.
a. Only l is true
b.Only II is true
c. Both are true
d. Both are false
20.I.A certificate of stock is one,entire and divisible contract.
II.The stockholder shall not be entitled to a certificate until he has
remitted the full payment of his subscription together with any interest
or expenses,if any is due.

a.Only l is true
b.Only ll is true
c. Both are true
d.Both are false
21.I.The general rule is that obligations incurred by the corporation,
acting through its directors,officers and employees,are their joint
liabilities.
II.It is basic that a corporation is a juridical entity with legal
personality separate and distinct from those acting for and in its behalf
and,in general,from the people comprising it.
a.Only l is true
b.Only ll is true
c. Both are true
d. Both are false
22.The following,except one,are the exceptional circumstances
warranting the disregard of the doctrine of separate personality:
a.When a director,trustee or officer is made,by specific provision of
by-laws,personally liable for his corporate action.
b.When directors and trustees or,in appropriate case,the officers of
a corporation vote for or assent to patently unlawful acts of the
corporation.
When a director or officer has consented to the issuance of watered
C.'
down stocks or who,having knowledge thereof,did not forthwith
file with the corporate secretary his written objection thereto.
d.When a director,trustee or officer has contractually agreed or
stipulated to hold himself personally and solidarily liable with the
corporation.

1.The books and records required to be kept by the corporation are the
following,except:
a.Minutes of meetings of stockholders or members.
b.Minutes of all meetings of directors or trustees.
c. Stock and transfer book,in case of stock corporations.
d. Daily time record.
2.The following are the limitations on the right of inspection by a
stockholder,except;
a.The right can be exercised only by the common stockholders.
b.The right must be exercised during reasonable hours on business
days.
c.The person demanding the right has not improperly used any
information obtained through any previous examination of the
books and records of the corporation.
d.The demand is made in good faith or for a legitimate purpose.
3.I.The corporate secretary has the duty to record and prepare the
minutes of the meeting.
II.Without the certification of the corporate secretary,it is incumbent
upon the other directors or stockholders as the case may be,to submit
proof that the minutes of the meeting is accurate and reflective of what
transpired during the meeting.
a.Only l is true
b.Only Il is true
c. Both are true
d. Both are false
4.I.A corporation shall furnish a stockholder or member,within 10 days
from receipt of their written request,its most recent financial
statement,in the form and substance of the financial reporting required
by the Commission.
II.At the regular meeting of stockholders or members,the board of
directors or trustees shall present to such stockholders or members a
financial report of the operations of the corporation for the preceding
year,which shall include financial statements.
a.Only I is true
b. Only II is true
c. Both are true
d. Both are false
5.I.The proper custodian of the books,minutes and official records of a
corporation is usually the corporate treasurer.
ll.The signature of the corporate president gives the minutes of the
meeting probative value and credibility.
a. Only I is true

b. Only Il is truc
c. Both are true
d. Both are false
6.I.The stockholder's right of inspection of the corporation's books and
records is based upon their ownership of the assets and property of the
corporation.
II.The right of inspection granted to stockholders is absolute.
a. Only I is true
b.Only II is true
c.Both are true
d.Both are false
7.I.Corporate records,regardless of the form in which they are stored,
shall be open to inspection by any director,trustee,stockholder or
member of the corporation in person or by a representative at
reasonable hours on business days.
ll.The inspecting or reproducing party shall remain bound by
confidentiality rules under prevailing laws.
a.Only I is true
b.Only II is true
c. Both are true
d.Both are false
8.I.A requesting party who is not a stockholder or member of record,or
is a competitor,director,officer,controlling stockholder or otherwise
represents the interests of a competitor shall have no right to inspect or
demand reproduction of corporate records.
II.If the corporation denies or does not act on a demand for inspection
and/or reproduction,the aggrieved party may report such denial or
inaction to the SEC.
a.Only I is true
b.Only II is true
c. Both are true
d. Both are false
9.Stock corporations must also keep a stock and transfer book,which
shall contain:
a.A record of all stocks in the names of the stockholders
alphabetically arranged.
b.The installments paid and unpaid on all stocks for which
subscription has been made,and the date of payment of any
instalment
c.A statement of every alienation,sale or transfer of stock made,the
date thereof,by and to whom made.
d.All of the above.

1.It is the union of two or more existing entities to form a new entity
called the consolidated corporation.
a.Merger
b.Acquisition
c. Consolidation
d.Business combination
2.I.Merger or consolidation become effective upon the mere agreement
of the constituent corporations.
ll.Ordinarily,in the merger of two or more existing corporations,one
of the corporations survives and continues the combined business,
while the rest are dissolved and all their rights,properties,and
liabilities are acquired by the surviving corporation.
a.Only l is true
b.Only II is true
c.Both are true
d.Both are false
3.1.Upon approval by majority vote of each of the board of directors or
trustees of the constituent corporations of the plan of merger or
consolidation,the same shall be submitted for approval by the
stockholders or members of each of such corporations at separate
corporate meetings duly called for the purpose.
Il.The affirmative vote of stockholders representing at least 2/3 of the
outstanding capital stock of each corporation in the case of stock
corporations or at least 2/3 of the members in the case of non-stock
corporations shall be necessary for the approval of such plan.
a.Only l is true
b.Only Il is true
c.Both are true
d.Both are false
4.I.In the merger of two existing corporations,one of the corporations
survives and continues the business,while the other is dissolved,and
all its rights,properties,and liabilities are acquired by the surviving
corporation.
II.By operation of law,upon the effectivity of the merger,the absorbed
corporation ceases to exist but its rights and properties,as well as
liabilities,shall be taken and deemed transferred to and vested in the
surviving corporation.
a.Only l is true
b.Only I is true
c.Both are true
d.Both are false
5.I.Any amendment to the plan of merger or consolidation may be made.

Il.The amendment to the plan of merger or consolidation must be

approved by a majority vote of the respective boards of directors or
trustees of all the constituent corporations and ratified by the
affirmative vote of stockholders representing at least 2/3 of the
outstanding capital stock or of 2/3 of the members of each of the
constituent corporations.
a.Only l is true
b.Only Il is true
c.Both are true
d.Both are false
6.The merger or consolidation shall have the following effects:
a.The constituent corporations shall become a single corporation.
b.The separate existence of the constituent corporations shall cease.
c. The surviving or the consolidated corporation shall possess all the
rights,privileges,immunities,and powers and shall be subject to all
the duties and liabilities of a corporation.
d. All of the above.
7.As a rule,a corporation that purchases the assets of another will not be
liable for the debts of the selling corporation,except when any of the
following circumstances is present.Which is the exception?
a.Where the transaction is validly entered into.
b. Where the purchaser expressly or impliedly agrees to assume the
debts.
c. Where the transaction amounts to a consolidation or merger of the
corporations.
d.Where the purchasing corporation is merely a continuation of the
selling corporation.
8.I.Two or more corporations may merge into a single corporation which
shall be one of the constituent corporations.
II.Two or more corporations may consolidate into a new single
corporation which shall be the consolidated corporation.
a.Only l is true
b.Only II is true
c. Both are true
d. Both are false
9.It is a union whereby one or more existing corporations are absorbed
by another corporation that survives and continues the combined
business.
a. Consolidation
b.Acquisition
c. Business combination
d.Merger

10.I.For a valid merger or consolidation,the approval by the SEC of the

articles of merger or consolidation is required.
II.If,upon investigation,the SEC has reason to believe that the
proposed merger or consolidation is contrary to the provisions of the
Corporation Code or existing laws,it shall set a hearing to give the
corporations concerned the opportunity to be heard.
a.Only l is true
b.Only Il is true
c. Both are true
d.Both are false
11.1.The merger shall only be effective upon the issuance of a certificate of
merger by the SEC.
II.Consolidation becomes effective not upon mere agreement of the
members but only upon issuance of the certificate of consolidation by
the SEC.
a.Only l is true
b.Only II is true
c. Both are true
d.Both are false
12.I.When the SEC is satisfied that the consolidation of the corporations is
not inconsistent with the provisions of the Corporation Code and
existing laws,it issues a certificate of consolidation which makes the
reorganization official.
Il.Since there is a dissolution of the absorbed corporations,there is
winding up of their affairs or liquidation of their assets.
a.Only l is true
b.Only Il is true
c. Both are true
d.Both are false

1.1.The dissenting stockholder shall be entitled to receive payment of the

fair value of his shares as agreed upon between him and the
corporation or as determined by the appraisers chosen by them.
II.Payment may be made regardless if the corporation has unrestricted
retained earnings in its books to cover the same.
a.Only l is true
b.Only ll is true
c. Both are true
d.Both are false
2.The following are instances where a dissenting stockholder who
demands payment of his shares is no longer allowed to withdraw from
his decision,except:
a.The corporation consents to the withdrawal.
b.The proposed corporate action is approved by the SEC where its
approval is necessary.
c.The proposed corporate action is abandoned or rescinded by the
corporation.
d.The SEC determines that such stockholder is not entitled to
appraisal right.
3.I.The corporation shall bear the costs of appraisal,as a rule.
II.Clearly,the right of appraisal may be exercised when there is a minor
change in the charter or articles of incorporation substantially
prejudicing the rights of the stockholders.
a.Only lis true
b.Only Il is true
c.Both are true
d.Both are false
4.Any stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of his shares in the following
instances,except:
a.In case any amendment to the articles of incorporation has the
effect of changing or restricting the rights of any stockholder or
class of shares,or of authorizing preferences in any respect
superior to those of outstanding shares of any class,or of extending
or shortening the term of corporate existence.
b.In case of sale,lease,exchange,transfer,mortgage,pledge or other
disposition of all or substantially all of the corporate property and
assets.
c.In case of increase or decrease of capital stock.
d.In case of merger or consolidation.
5.The following are the instances of appraisal right,except:
a. In case of investing of corporate funds in another corporation or
business.
b.In case of sale,lease,exchange,transfer,mortgage,pledge or other
disposition of all or substantially all of the corporate property and
assets.
c. In case of merger or consolidation.
d. In case any amendment to the articles of incorporation.
6.I.In a close corporation,any stockholder of a close corporation may,for
any reason,compel the said corporation to purchase his shares at their
fair value,which shall not be less than their par or issued value,when
the corporation has sufficient assets in its books to cover its debts and
liabilities exclusive of capital stock.
II.The appraisal right may be exercised by any stockholder who shall
have voted against the proposed corporate action,by making a written
demand on the corporation within 30 days after the date on which the
vote was taken for payment of the fair value of his shares.
a. Only l is true
b.Only II is true
c. Both are true
d. Both are false
7.I.If within a period of 60 days from the date the corporate action was
approved by the stockholders,the withdrawing stockholder and the
corporation cannot agree on the fair value of the shares,it shall be
determined and appraised by 5 disinterested persons.
II.That no payment shall be made to any dissenting stockholder unless
the corporation has unrestricted retained earnings in its books to cover
such payment.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
8.The effects of transfer of dissenting shares are the following:
I.The rights of the transferor as a dissenting stockholder shall cease
and the transferee shall have all the rights of a regular stockholder.
II.All dividend distributions which would have accrued on such
shares shall be paid to the transferee.
a. Only I is true
b.Only ll is true
c. Both are true
d. Both are false
9. I.From the time of demand for payment of the fair value of a
stockholder's shares until either the abandonment of the corporate
action involved or the purchase of the said shares by the corporation,
all rights accruing to such shares,including voting and dividend rights,
shall be suspended.
Il.If the dissenting stockholder is not paid the value of his shares within
10 days after the award,his voting and dividend rights shall
immediately be restored.
a.Only l is true
b.Only II is true
c. Both are true
d.Both are false
10.It means that a stockholder who dissented and voted against the
proposed corporate action,may choose to get out of the corporation by
demanding payment of the fair market value of his shares.
a.Pre-emptive right
b.Voting right
c.Appraisal right
d.Management right

1.I.In stock corporations,shareholders may generally transfer their

shares.
II.Membership in and all rights arising from a nonstock corporation are
transferable.
a.Only I is true
b.Only II is true
c. Both are true
d. Both are false
2.I.The Plan of Distribution of Assets may be adopted by a majority vote
of the board of trustees and approval of majority of the members
having voting rights present or represented by proxy at the meeting
during which said plan is adopted.
II.Members'meetings may be held at any place outside the principal
office of the corporation provided it shall be within the Philippines.
a. Only I is true
b.Only II is true
c. Both are true
d. Both are false
3.I.No person shall be elected as trustee unless he is a member of the
corporation.
II.Unless otherwise provided in the articles of incorporation or the by-
laws,officers of a non-stock corporation may be directly elected by the
members
a.Only I is true
b.Only Il is true
c. Both are true
d. Both are false
4.I.Membership shall be terminated in the manner and for the causes
provided in the articles of incorporation or the by-laws.
Il.Termination of membership shall have the effect of extinguishing all
rights of a member in the corporation or in its property,unless
otherwise provided in the articles of incorporation or the by-laws.
a.Only I is true
b.Only Il is true
c. Both are true
d. Both are false
5.It is one where no part of its income is distributable as dividends to its
members,trustees,or officers.
a.Stock corporation
b.Close corporation
c.Corporation sole
d.Non-stock corporation

6.I.Any profit which a non-stock corporation may obtain as an incidentto

its operations shall,whenever necessary or proper,be used for he
furtherance of the purpose or purposes for which the corporation was
organized.
ll.A non-stock corporation can be converted into a stock corporation
by mere amendment of its articles of incorporation.
a.Only l is true
b.Only ll is true
c.Both are true
d. Both are false
7.The following are the characteristics of a non-stock corporation,except:
a.It does not have capital stock divided into shares.
b.As a general rule,it is not empowered to engage in business.
Moreover,it is prohibited to make income or profits as an incident
to its operation
c.No part of its income during its existence is distributable as
dividends to its members,trustees,or officers.
d.There is non-transferability of membership.
8.The following are the characteristics of a non-stock corporation,except:
a.The right to vote of members may be limited,broadened,or even
denied in the articles of incorporation or the by-laws.
b.By-laws may provide that the members may hold their meetings at
any place even outside the place where the principal office of the
corporation is located,even if that such place is outside the
Philippines.
c.Non-stock corporation may,through their articles of incorporation
or their by-laws designate their governing boards by any name
other than as board of trustees.
d.A non-stock corporation is not allowed to distribute any of its
assets or any incidental income or profit made by the corporation
during its existence.
9.I.The determination of whether or not "dead members"are entitled to
exercise their voting rights,depends on those articles of incorporation
or by-laws.
Il.In stock corporations,on the death of a shareholder,the executor or
administrator duly appointed by the Court is vested with the legal title
to the stock and entitled to vote it.
a. Only l is true
b.Only Il is true
c. Both are true
d.Both are false
10.1.Membership in and all rights arising from a nonstock corporation are
personal and non-transferable.

II.Unless otherwise provided in the articles of incorporation or the by

laws,a member may not vote by proxy.
a.Only l is true
b.Only Il is true
c. Both are true
d. Both are false
11.I.The number of trustees shall be fixed in the articles of incorporation
or bylaws which may or may not be more than 15.
II.Except with respect to independent trustees of nonstock
corporations vested with public interest,only a member of the
corporation shall be elected as trustee.
a.Only I is true
b.Only II is true
c. Both are true
d. Both are false