ART. 1774 name.

Which statement describes the relationship

1. How can the title of immovable property acquired by the existing among the three?
partnership be conveyed? A. X, Y and Z are just friends.
A. Under the name of the partners B. X, Y and Z are members.
B. Under the name of the capitalist partner only C. X, Y and Z are co-owners.
C. Under the name of the managing partner D. X, Y and Z have no relationship with each other.
D. Under the partnership’s name
ART. 1776
2. Statement 1: There are only two kinds of partnership when classified
A partnership has juridical personality separate and as to its object and with regards to the liability of the
independent of the persons or members composing it. partners.
Statement 2: A. The statement is correct maybe.
Nevertheless, it can still acquire interest and convey it B. The statement is incorrect.
under the managing partner’s name. C. The statement is correct.
A. Only the first statement is correct. D. The statement is complicated.
B. Only the second statement is correct.
C. Both statements are correct. 7. A partnership can be universal partnership of all present
D. Both statements are incorrect. property as to object and at the same time, can be
limited partnership as regards to the liability of the
3. Which of the following statement is incorrect? partners.
A. A partnership cannot acquire immovable property A. The statement is partly correct.
and convey the title under the partners’ name. B. The statement is complicated.
B. A partnership cannot acquire immovable property C. The statement is correct.
and convey the title under the capitalist partners’ D. The statement is incorrect.
name.
C. A partnership cannot acquire immovable property 8. Statement 1:
and convey its title under the managing partners’ A partnership can be universal or particular as to object.
name. Statement 2:
D. A partnership cannot acquire immovable property A partnership can be general or limited as to liability.
and convey the title under the partnership’s name. A. Only statement 1 is true.
B. Only statement 2 is true.
ART. 1775 C. Both statements are true.
4. What provision will govern secret partnerships without D. Both statements are false.
juridical personality?
A. Provisions relating to secret associations ART. 1777
B. Provisions relating to partnerships 10. This is a type of partnership wherein the partners
C. Provisions relating to co-ownerships contribute all the properties which belong to them at
D. Provisions relating to sole proprietorships the time of constitution of the partnership to a common
fund.
5. Statement 1: A. General partnership
Any associations and societies that kept their B. Universal partnership
agreements among themselves and have allowed the C. Universal partnership of all profits
partners to enter into contract with third parties using D. Universal partnership of all present property
their name never acquire juridical personality and will
not be considered partnerships. 11. When will a stipulation to include future property be
Statement 2: considered as void?
Associations and societies who kept their agreement A. When the property is subsequently acquired by
among themselves are still considered as partnerships inheritance.
with juridical personality. B. When the property is subsequently acquired
A. Only statement 1 is true. through donation.
B. Only statement 2 is true. C. When the property is subsequently acquired by
C. Both statements are true. legacy.
D. Both statements are false. D. All of the above.

6. X, Y and Z agreed to form a partnership but did not make 12. When will profits from other sources be part of the
the ART.s of partnership public or in other words, they common property?
kept the agreements among themselves. X, Y and Z are A. When there is a stipulation.
also allowed to contract with third persons under their B. When it is donated.
1
 C. It will never be part of the common property.
D. It depends upon the discretion of the owners.
ART. 1778
A. Which of the following partnership provides the
partner to contribute all the property which actually
belongs to them to a common fund, with the
intention of dividing the same among themselves,
as well as all the profits they may Universal
partnership of all profits
B. Universal partnership of all present property
C. Particular partnership
D. De jure partnership
13. Which of the following is not true about the partnership
of all present property?
A. Contributions of the partners are all properties
belonging to the partners only
B. The contribution may be all properties belonging to
the partner
C. Contributions are all properties belonging to the
partner and all its profits acquired to it
D. The intention is to divide the profit among
themselves
14. Partnership of all present property is one kind of what
partnership?
A. Universal partnership
B. Particular partnership
C. General partnership
D. Limited partnership
ART. 1779
16. In a universal partnership of all present property,
stipulations can be made. Which of the following is a
valid stipulation?
A. Acquire inheritance
B. Common enjoyment of any other profit
C. Legacy
D. Donation
17. What is the classification of universal of partnership of
all present property?
A. According to object
B. According to liability
C. According to duration
D. According to particular undertaking
18. Which of the following is not a reason why future
property cannot be included in the contribution of the
partners in universal partnership of all present
property?
A. Contracts according to succession rights can be
made
B. A partnership demands that the contributed things
be determinate, known and certain
C. A universal partnership of all present property
implies a donation
D. The rule itself prohibits the contribution of future
property
ART. 1780
19. Which of the following partnership comprises all that
the partners may acquire by their industry or work
during the existence of the partnership?
A. Universal partnership of all profits
B. Universal partnership of all present property
C. Particular partnership
D. De facto partnership
20. Which of the following partnership allows only the
passing of the usufruct of immovable or movable
property which the partner posses?
A. Universal partnership of all profits and present
property
B. Universal partnership and particular partnership
C. Universal partnership of all profits
D. Partnership by estoppels
21. What can be contributed in the universal partnership of
all profits?
A. Movable property
B. Immovable property
C. Movable and immovable property
D. Usufruct a property
ART. 1781
22. If the ART. of Universal Partnership does not specify its
nature, which of the following may constitute?
A. Universal partnership of all profits
B. Universal partnership of all present property
C. Particular partnership
D. Limited partnership
23. What partnership imposes fewer obligations to the
partners in the partnership?
A. Universal partnership of all profits
B. Particular partnership
C. Limited partnership
D. Universal partnership of all present property
24. What partnership allows the retaining of the naked title
of the partner’s real and personal properties?
A. Universal partnership of all profits
B. Universal partnership of all present property
C. Ordinary partnership
D. De jure partnership
ART. 1782
25. S1. Persons who are not prohibited from giving each
other any donation or advantage cannot enter into
universal partnership.
S2. Person who are prohibited from giving each other
any donation or advantage cannot into universal
partnership.
A. Statement 1 is false, Statement 2 is true
B. Statement 1 is true, Statement 2 is true
2
 C. Statement 1 is false, Statement 2 is false 33. A partnership which commence to exist at some point in
D. Statement 1 is true, Statement 2 is false. time is called?
A. Future partnership
26. One of the following is not prohibited in giving B. Imminent partnership
donations. C. Partnership yet to come
A. Donation made to spouses D. Prospective partnership
B. Donation made by a minor
C. Donation made by mentally handicapped person ART. 1785
under lucid interval 34. S1. A particular partnership which specific term that has
D. None of the choices prescribed may continue to exist with the absent
agreement of the parties
27. One of the following is a prohibited donation S2. In relation to statement 1, rights and duties of the
A. Donation made under donation mortis-causa partners remains the same as they were at such
B. Donation made under donation inter-vivos termination.
C. Donation made by a corporation A. True, True
D. None of the choices B. True, False
C. False. True
ART. 1783 D. False, False
28. S1. A particular partnership is one whose object or
purpose is defined and must be within the commerce of 35. Partnership as to duration except
man and is not contrary to law A. Partnership of a fixed term
S2. A universal partnership one which is broad and B. Partnership At will
unlimited in scope C. Partnership of a particular undertaking
A. Statement 1 is true, Statement 2 is true D. None of the choices
B. Statement 1 is true, Statement 2 is false
C. Statement 1 is false, Statement 2 is true 36. Partnership with specific purpose and object is called
D. Statement 1 is false, Statement 2 is false A. Particular partnership
B. Universal partnership
29. One of the following is an object with no commercial C. Partnership with a purpose
purpose. D. Limited partnership
A. The sun
B. The moon ART. 1786
C. The stars 37. Statement 1: Every partner is a debtor of the
D. None of the choices partnership for whatever he may have promised to
contribute thereto.
30. A partnership whose purpose is specific is called Statement 2: He shall also be bound for warranty in
A. Particular partnership case of eviction which he may have contributed to the
B. General partnership partnership.
C. Limited partnership A. Only Statement 1 is true
D. Universal partnership B. Only Statement 2 is true
C. Both Statements are true
ART. 1784 D. Both Statements are false
31. S1. A partnership begins from the moment of execution
of the contract 38. Every partner is liable for the fruits of what he
A partnership may stipulate when such partnership may contributed
commence. A. Only if stipulated
A. Statement 1 is true, Statement 2 is true B. Only if agreed upon by majority of partners
B. Statement 1 is true, Statement 2 is false C. Without the need of demand
C. Statement 1 is false, Statement 2 is true D. If needed by partners
D. Statement 1 is false, Statement 2 is false

32. When can a partnership commence to exist?
A. At the execution of the contract
B. At the specified time agreed to by the party.
C. A and B
D. A only
39. Every partner shall be bound for
___________________.
A. Eviction in case of warranty
B. Case of eviction warranty
C. Warranty in case of eviction
D. In warranty of eviction case

3
ART. 1787
40. The appraisal of goods which a partner is bound to
contribute must be made first in the manner
A. Made by experts chosen by the partners
B. According to current prices
C. Prescribed by the contract of partnership
D. According to the fair value of the goods
41. Which is not a mode of appraisal for goods contributed
by partner?
A. Made by experts chosen by the partners
B. According to current prices
C. Prescribed by the contract of partnership
D. According to the fair value of the goods
42. Appraisal of goods contributed by partners in the
absence of stipulation shall be made in the manner
A. Made by experts chosen by the partners
B. According to current prices
C. Prescribed by the contract of partnership
D. According to the fair value of the goods
ART. 1790
ART. 1788
43. A partner who has undertaken to contribute a sum of
money and fails to do so becomes a debtor for the
interest and damages
A. From the time his contribution is made
B. From the formation of partnership until the winding
up of the partnership
C. From the time he should have completed with his
obligation
D. From the stipulation of contracts
44. A partner who has undertaken to contribute a sum of
money and fails to do so becomes a debtor for the
interest and damages, his liability shall begin
A. From the time he joined the partnership
B. From the time the partnership dissolves
C. From the time he converted the amount to his own
use
D. From the time he leaves the partnership
45. A partner who has undertaken to contribute a sum of
money and fails to do so becomes a
A. Creditor for the interest and damages
B. Insurer for the goods contributed
C. Debtor for the interest and damages
D. Debtor for the whole amount
ART. 1791
ART. 1789
46. Statement 1: An industrial partner cannot engage in
business for himself
Statement 2: Unless the partnership expressly permits
him to do so
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both Statements are true
D. Both Statements are false
47. Which is a remedy if an industrial partner engages in
business for himself without permission?
A. Exclude him from the management of the
partnership
B. Avail other partners from benefits which he may
have obtained in his engagement
C. Pool his interest in the firm and later sell it at a
public auction
D. Sue him for moral damages
48. I. Exclude him from the firm
II. Give him administrative penalty
III. Avail themselves of the benefits which he may have
obtained in violation of this provision
Which of these are remedies of a capitalist partner
whenever an industrial partner engages in business for
himself without permission?
A. II only
B. I and II
C. I and III
49. Statement 1: Partners can stipulate the contribution of
unequal shares to the common fund.
Statement 2: Absence of stipulation, there is a
presumption that the contribution is in equal shares.
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements are true
D. Both statements are false
50. A and B decided to form partnership but did not say how
much the other should contribute, how much should
each partner contribute to the partnership if the capital
contribution totalled to php.10,000.00?
A. 5,000.00 Php. each
B. 6,000.00 Php. and 4,000.00 Php.
C. 7,000.00 Php and 3,000.00 Php.
D. None of the above
51. These rule is not applicable to this partner, besides his
services, he has contributed capital pursuant to an
arrangement to that effect.
A. Limited partner
B. Capitalist partner
C. Industrial Partner
D. General Partner
52. All are requisites for application of the rule in case of an
imminent loss of the partnership is stated except for:
A. Imminent loss of the business
B. Majority of the capitalist partners are of the
opinion that an additional contribution to the
common fund would save the business
C. The partner refuses deliberately
D. There is an agreement
4
 53. As a general rule, this partner is not bound to contribute
more than what he agreed to contribute. What kind of
partner is he?
A. Limited partner
B. Capitalist partner
C. Industrial Partner
D. General Partner
54. Which of the following statement is true for the
obligation of a capitalist partner in the case of an
imminent loss of the business and there is no agreement
on the contrary?
Statement 1: He is not obliged to contribute an
additional share to save the venture
Statement 2: If he refuses, he shall be obliged to sell his
interest to the other partners
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements are true
D. Both statements are false
ART. 1792
55. All are requisites for application of the rule in case of
Obligation of managing partner who collects debt
except for:
A. There are at least 2 debts; one from the partners
and the other to the partnership
B. The partner who collects is authorized to manage
and actually manages the partnership
C. Both debt is demandable
D. None of the above
56. Supposing the credit of A carries 18% while that of the
partnership carries only 10%. C pays A and says that the
Php. 1000.00 shall be applied to A’s credit. Is the
partnership entitled to share in the Php. 1000.00 still?
A. No, the debtor is given the right to apply payment
to whichever debt is more onerous.
B. No, the debtor is given the right to apply payment.
C. Yes, the debtor is given the right to apply payment.
D. Yes, the debtor is given the right to apply payment
to whichever debt is more onerous.
57. Statement 1: General Rule: If there is debt to the
partnership and to the managing partner, payment shall
be applied to both credits proportionately.
Statement 2: Exception: it was received for the account
of the partners only
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements are true
D. Both statements are false
ART.s 1793
58. All are requisites for application of the rule when it
comes to the obligation of partner who receives share of
partnership credit is stated except for:
A. The partnership debtor has become insolvent
B. A partner has not received in whole or in part, his
share of the partnership credit
C. The other partners have not collected their shares
D. None of the above
59. Statement 1
Reason for applying payment to partnership credit: the
debt becomes a bad debt. It would be unjust for that one
partner not to share in the lost.
Statement 2 Requisite for application of the rule: The
other Partners have not collected their shares
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements are true
D. Both statements are false
60. 3.) A and B are partners and C owes the partnership a
sum of Php.10, 000.00. B is the managing partner but A
collects his share in the Php.10, 000.00 and C pays A 5,
000.00 Php. to which A issues a receipt in his name.
When B’s turn to collect comes, C is already insolvent.
What should A do?
A. A shall return his Php. 5,000.00 to the partnership
and split it with B and C.
B. A shall return his Php. 5,000.00 to the partnership
and split it with C.
C. A shall return his Php. 5,000.00 to the partnership
and split it with B.
D. None of the above
ART. 1794
61. Statement 1: Every partner is responsible to the
partnership for damages suffered by it through his fault.
Statement 2: A partner may compensate them with the
profits and benefits which he may have earned for the
partnership by his industry.
A. True, True
B. False, True
C. False, False
D. True, False
62. Who can equitably mitigate or lessen a partner’s
liability for damages?
A. General partner
B. Liquidating partner
C. The court
D. The partnership
63. A partner’s liability for damages to the partnership can
be mitigated or lessen if,
A. Through his extraordinary effort, usual profit is
realized
B. Through his typical effort, unusual profit is realized
C. Through his extraordinary effort, unusual profit is
realized
D. Through his typical effort, usual profit is realized
5
ART. 1795
64. The risk of the things contributed to the partnership is
borne by the partnership except if,
A. Non-fungible thing is contributed
B. If fungible goods is contributed
C. If things to be sold is contributed
D. If ownership is transferred to the partnership
65. In the absence of stipulation, who shall borne the risk of
things brought and appraised in the inventory?
A. Partner who contributed
B. The appraiser
C. The partnership
D. Both the appraiser and partnership
66. Statement 1: The appraiser shall bear the risk for the
items brought for sale in inventory for appraisal.
Statement 2: The partnership shall shoulder the risk of
tangible things contributed.
A. True, True
B. True, False
C. False, False
D. False, True
ART. 1796
67. Which of the following is an obligation of the
partnership to partners?
A. Reimburse any amount disbursed in behalf of the
partnership
B. Answer for any obligations contracted in good faith
C. To answer risk in management
D. All of the above
68. A partnership needs office supplies so Apple-pen
contracts for P10,000.00 worth of supplies. Who will pay
the contract price?
A. Apple-pen, because he entered into the contract by
himself
B. Partnership shall pay half and Apple-pen for the
other half
C. Partnership, because Apple-pen entered into
contract in good faith
D. Partners are pro rata liable for the cost
69. An obligation of partnership to partners arises in the
following cases except,
A. B paid the debts in behalf of the partnership
B. Z ordered supplies exceeding the agreed amount a
partnership can enter
C. Y got injured while managing the partnership
business
D. X purchase supplies needed by the partnership
ART. 1797
70. Statement 1: The partners share the profits but not
losses according to their agreement
Statement 2: If there is no agreement on how to
distribute the profit, the losses-ratio must be followed
Statement 3: Industrial shall receive just and equitable
profit share under the circumstances
A. False, False, True
B. False, False, False
C. True, True, False
D. False, True, True
71. As regards to distribution of profit and losses which of
the following is correct?
Loss Profit
A. Limited X X
B. General / X
C. Industrial X /
D. None of the above
72. Arrange the following in order of consideration as
regards to distribution of losses to the partners.
1. Profit- sharing ratio
2. Agreed distribution term
3. In proportion to capital contribution
A. 3,1,2
B. 2,1,3
C. 1,2.3
D. 2,3,1
ART. 1798
73. STATEMENT 1: A partner, who has begun to execute the
decision of the third person, entrusted to designate the
partnership profits and losses, cannot complain of such
decision of the third person.
STATEMENT 2: Designation of profits and losses can be
entrusted to one of the partners
A. Only the First statement is correct
B. Only the Second statement is correct
C. Both statement is correct
D. Both statement is incorrect
74. Partners Ho, Lee, and Chit agreed that Mr. Boi will
designate the share of each partners in the profits and
losses. However, Mr. Boi and Ms. Ho have a relationship
and in return, Mr. Boi increased Mrs. Ho’s share in the
partnerships’ profits. If Mrs. Lee, and Mrs. Chit had the
knowledge of their relationship and such designation of
profits, they can:
A. Not complain since Mr. Boi is entrusted by all of the
partners in the designation, and has the right to do
so
B. Impugned the decision only after 3 months they had
knowledge of such designation of profits
C. Impugned the decision within 3 months they had
knowledge of such designation of profits
D. Impugned the decision within 3 months they had
knowledge of Mr. Boi and Ms. Ho’s relationship
75. If all the partners agreed to entrust the designation of
profits and losses, it can be entrusted to all of the
following except:
A. Lawyer
6
 B. Accountant
C. Third Person
D. Partners
ART. 1799
76. If parties X, Y, and Z expressly stipulated that there will
be no sharing losses and the nature of the contract is
clear that the party do not intend to share in the losses,
the partnership:
A. Losses will be assumed to be divided equally among
the parties
B. Losses will be proportional to their contribution
C. Division on the loss will be decided upon the
occurrence thereof
D. Does not exist
77. If the stipulation excludes one or more partners from
any share in the profits or losses,
A. The stipulation and the partnership are void
B. The stipulation is void, but the partnership is valid
C. Partners stated in the stipulation is excluded from
the losses only
D. The stipulation is valid
78. Yu, Mi, and Bryan formed a partnership. Partners Yu,
and Bryan are capitalist partners while Mi is a general
partner. The partnership is valid and operational within
a few months. Without the stipulation excluding Mi on
the sharing of losses,
A. Yu, Mi, and Bryan are all liable for the losses
B. Mi will have to compensate his share on the loss
through his profits
C. Mi is considered as an employee
D. Mi is exempted from the partnership losses
ART. 1800
79. The power of a partner who has been appointed
manager after the constitution of the partnership is
A. Execute all acts of administration despite the
opposition of his partners
B. Revocable upon just and lawful cause and with the
vote of the partners representing the controlling
interest
C. Revocable anytime for any cause
D. Irrevocable
80. Mr. Sal-it was appointed manager in the ART.s of
partnership. All of the following are true regarding to his
power as a managing partner, except
A. Execute all acts of administration despite the
opposition of his partners
B. Revocable upon just and lawful cause and with the
vote of the partners representing the controlling
interest
C. Revocable anytime for any cause
D. Irrevocable
81. A partner appointed as manager has the following
incidental powers, except
A. Issue a receipt to a customer on business dealings
B. Purchase raw materials on credit essential for
running the business without the approval of the
other partners
C. Dismiss an unruly employee
D. Bind the partnership by a contract wholly foreign to
its business
ART. 1801
82. STATEMENT 1: If one or more managing partners shall
oppose the acts of the others, the act shall be
abandoned or dismissed
STATEMENT 2: If two or more partners have been
appointed with the management of the partnership,
such stipulation is void.
A. Only the First statement is correct
B. Only the Second statement is correct
C. Both statement is correct
D. Both statement is incorrect
83. Assume that A, B, C, and D are all managing partners.
Their respective interests in the partnership are as
follows: A – 20%; B – 15%; C – 55%; D – 10%.
D appointed E as a secretary. A and B agreed to the
appointment but C objects. Is the appointment valid?
A. No, since B owns more than 50% of the
partnerships’ interest
B. Yes, since majority of managing partners agreed to
the appointment
C. No, since one of the managing partners opposed
the decision
D. Yes, since it is clearly a tie between the majority of
the managing partners against the interest in the
partnership so the decision of the managing partner
who decided to appoint prevails
84. Suppose that there was a tie between the managing
partners and 50% interest of the partnership, the best
solution is to
A. Dissolve the partnership
B. Cast another vote
C. Exclude the opposing partners owning 50% of the
controlling interest
D. Exclude the managing partners opposing the
decision
ART. 1802
85. When there is an imminent danger of grave or
irreparable injury to the partnership, a partner
A. May act alone without the consent of the absent
partner
B. Must not act alone without the consent of the
absent partner
C. May act or not act depending on the situation
D. Must wait for the other partners to come
7
 86. The consent of the managing partners in routine
transactions of the business is
A. Always necessary
B. Not necessary
C. Sometimes necessary
D. Irrelevant
87. The concurrence of all ____________ shall be necessary
for the validity of the acts, and the absence or disability
of any one of them cannot be alleged.
A. Liquidating partners
B. Surviving partners
C. Managing partners
D. Limited partners
ART. 1803
88. In making any important alteration in the immovable
property of the partnership, a managing partner
A. Can make such alteration alone
B. cannot make such alteration without the consent
of the other managing partners
C. cannot make such alteration without the consent
of all the partners
D. can make such alteration without anyone's
consent
89. The consent of the other partners is not required if the
alteration of the immovable property is
A. necessary for its depreciation
B. necessary for its renunciation
C. necessary for its auction
D. necessary for its preservation
90. All of the partners shall be considered agents and
whatever any of them may do alone shall
A. bind the partnership without any prejudice to the
provisions of ART. 1801
B. bind the partnership with prejudice to the
provisions of ART. 1801
C. not bind the partnership without prejudice to the
provisions of ART. 1801
D. not bind the partnership with prejudice to the
provisions of ART. 1801
ART. 1804
91. A partner may associate another person with him in his
share who may sometimes be referred to as
A. Sub-partner
B. Partner by estoppel
C. Capitalist partner
D. Limited partner
92. A sub-partnership is a partnership within a partnership
but is
A. Joint but distinct from the partnership
B. Separate and distinct from the partnership
C. Joint and alike from the partnership
D. Separate and indistinguishable from the
partnership
93. In a partnership, who may associate another person
with him in his share?
A. Managing partners only
B. Capitalist partners only
C. Limited partners only
D. Every partner
ART. 1805
94. Subject to any agreement to contrary, the partnership
books should be kept at the
A. Principal place of business
B. Place of the managing partner
C. Place of any partner nearest to the place of the
business
D. Place of the capitalist partner
95. Which of the following statements is correct?
A. A partner is a co-owner of the partnership
properties excluding the books of the partnership.
B. A partner is a co-owner of the partnership
properties not including the books of the
partnership.
C. A partner is a co-owner of the partnership
properties including the books of the partnership.
D. A partner is a co-owner of the partnership
properties exclusive of the partnership books.
96. Which of the following statements is incorrect?
A) The partnership books shall be kept at the principal
place of the business.
B) Every partner shall have access to the partnership
books at any reasonable hour.
C) Only managing partners may inspect and copy any of
the accounts in the partnership books.
D) The partners' inspection rights are not absolute.
ART. 1806
97. Partners shall render on demand ___and___
information of all things affecting the partnership to any
partner or the legal representative of any deceased
partner or of any under legal disability.
A. Full and True
B. True and full
C. Service and true
D. Whole and full
98. Under the same principle of mutual trust and confidence
among partners, there must be no concealment
between them in all matters affecting the partnership.
A. Partners obligation to render information
B. Partnership purpose
C. Partnership books
D. None of the above
8
 99. S1: The use of the words “on demand” does not mean
that a partner is under no duty to make voluntary 105. It is universal that a capitalist partner______, cannot
disclosure of information affecting the partnership. carry on a business of the same nature and in
S2: Not only is a partner bound to give information on competition with that of the firm.
demand but in a certain circumstances, he is under the A. With the consent of his co partners
duty of voluntary disclosure of material facts within his B. Without the consent of his co partners
exclusive knowledge relating to or affecting the C. Will not be permitted to retain
partnership affairs. D. Will be permitted to retain
A. S1 is true; S2 is false
B. S1 is false; S2 is true ART. 1809
C. Both statements are true 106. A partner is not entitled to a formal account of
D. Both statements are false partnership affairs.
A. General rule
ART. 1807 B. Exceptions/absolute rule
100. It is the obligation of a partner to act for all transactions C. Rights of partnership
relating to the partnership business or affairs. D. Right of third person
A. Duty to render information
B. Duty to act for common benefit 107. A formal account is a necessary incident to the
C. Duty to account for secret and similar profits dissolution of a partnership.
D. Duty to make full disclosure of information affecting A. Terms of any agreement
partnership B. Rights of partnership
C. Exceptions/absolute rule
101. When a partner wrongfully snatches a seed of D. General rule
opportunity from the granary of his firm.
A. Duty to account for secret and similar profits 108. S1: Whenever other circumstances render it just and
B. Duty to account for earnings accruing even after reasonable.
termination of partnership. S2: Any partner shall have no the right to a formal
C. Duty to make full disclosure of information affecting account as to partnership affairs.
partnership A. S1 is true; S2 is false
D. Duty to render information B. Both statement are false
C. Both statements are true
102. To the detriment of the other partners, apply exclusively D. None of the above
to his own benefit the result of the knowledge and
information gained in the character of partner. ART. 1810
A. Duty to make full disclosure of information affecting 109. Which of the following is not included as a property
partnership rights of a partner?
B. Duty to act for common benefit A. His rights in specific partnership property
C. Duty to render information B. His interest in the partnership
D. Duty to account for secret and similar profits C. His right to sell the property
D. His right to participate in the management
ART. 1808
103. The capitalist partner is only prohibited from engaging 110. Its value may vary from day to day with changes in the
for his own account in any operation which is the same market value of the partnership assets
as or similar to the business in which the partnership A. Partnership property
is_____. B. Partnership capital
A. Not engaged C. Partnership interest
B. engage D. Partnership Goodwill
C. engaged
D. engaging 111. Represents the aggregate of the individual contribution
made by the partners. Such contributions may be in cash
104. The capitalist partners cannot engage for their own or in property or services the value of which has been
account in any operation which is of the kind of business fixed in the partnership agreements.
in which the partnership is engaged, unless there is A. Partnership property
a____ B. Partnership capital
A. Transactions C. Partnership interest
B. Stipulation to the contrary D. Partnership goodwill
C. No stipulation to the contrary
D. Consent
9
ART. 1811 A. Both statements are true
112. One of the following is not an incident of co-ownership B. Both statements are false
of specific partnership property. C. Only statement 1 is true
D. Only statement 2 is true
A. Equal right with his partners to possess specific
partnership property for partnership purposes ART. 1813
B. Partner's right in specific partnership property is not 118. Which of the following is a right of assignee of partner's
assignable interest?
C. A partner's right in specific partnership property is
subject to attachment or execution A. To interfere in the management
D. A partner's right in specific partnership property is not B. To require any information or account
subject to legal support. C. To inspect any of the partnership books
D. To receive the assignor's interest in case of dissolution
113. Statement 1. A partner has an equal right to possess
specific partnership property 119. In case of dissolution of the partnership, the assignee is
Statement 2. Any partner shall have the right to formal entitled to?
account of partnership affairs if he is wrongfully A. Receive his assignor's interest
excluded from the possession of its property by his co- B. May require any information or account
partners. C. May inspect any of the partnership books
A. Both statements are true D. May interfere in the management
B. Both statements are false
C. Only statement 1 is true 120. Statement 1. Partnership is a relation in which delectus
D. Only statement 2 is true personae is an important element
Statement 2. The assignee has the right to inspect any of
114. Statement 1. A partner's in specific partnership property the partnership books
is subject to legal support under ART. 291 A. Both statements are true
Statement 2. A partner's right in specific partnership B. Both statements are false
property is subject to attachment or execution. C. Only statement 1 is true
A. Both statements are true D. Only statement 2 is true
B. Both statements are false
C. Only statement 1 is true ART.1814
D. Only statement 2 is true 121. Statement I: A partner cannot claim any right under the
exemption laws when specific partnership property is
ART. 1812 attach for partnership debt.
115. It means the excess of returns over expenditure in a
transaction or series of transactions. Statement II: A partner cannot claim any right under the
A. Revenue homestead laws when specific partnership property is
B. Interest attach for partnership debt.
C. Profit A. Both statements are true
D. Surplus B. Only statement I is true
C. Only statement II is true
116. It refers to the assets of the partnership after D. Both statements are false
partnership debts and liabilities are paid and settled and
the rights of the partners among themselves are 122. Statement I: A separate creditor of a partner cannot
adjusted attach or any upon specific partnership property for the
A. Revenue satisfaction of his credit.
B. Interest
C. Profit Statement II: A separate creditor of partner can secure a
D. Surplus judgment on his credit and then apply for the court for
a charging order by subjecting the interest of the debtor-
117. Statement 1. On dissolution of the partnership, the partner in the partnership with the payment of
value of his share usually cannot be accurately unsatisfied amount of such judgment with interest
determined until liquidation of the business has taken therein.
place and partnership accounts have been settled A. Both statements are true
Statement 2. The partner's interest in the partnership B. Only S1 is true
consists of his share in the profits during the life of the C. Only S2 is true
partnership as a going concern and his share in the D. Both are false
surplus after dissolution
10
 123. Which of the following is correct? A. A & B only
A. Claims of partnership creditors must be satisfied B. Partner A, B & C
first before the separate creditors of the partners C. Partner C only
can be paid out of the interest charged. D. Partner A only
B. Claims of partners separate creditor must be
satisfied first before the partnership creditors 129. A & B are capitalist partners, with C as an industrial
C. Both A&B are correct partner. A & B contributed 20,000 each to the capitalist
D. None of the above of the partnership. A contractual liability of a 46,000 was
incurred by the partnership in favor of X. How much will
ART.1815 A, B, & C should pay to D after exhausting the
124. S1: A partnership must have a firm name under which it partnership asset.
operates. A. 3000 each to partner A & B
S2: Partnership name may or may not include the name B. 2000 each to partner A, B & C
of one or more of the partners. C. Only C is liable for the 6000 since he is the industrial
partner.
A. Only S1 is true D. 4000 to partner A & 2000 to partner B.
B. Only S2 is false
C. Both Statements are true ART.1817
D. Both statements are false 130. A, B & C are partners in a business, each of their
contributed 10,000 each. They stipulated that the
125. S1: Persons, who, not being partners, include their name liability of A shall not exceed his capital contribution. If
in the partnership in the firm name do acquire the rights after exhaustion of a partnership asset and their still
of a partner. remains 9,000 in favor of creditor D. Whom creditor D
S2: Persons, who, not being partners include their name can recover the 9,000 unpaid balance?
in the partnership in the firm name be liable to third A. Partner A & B.
person without notice is concern. B. Partner A only
A. Only S1 is true C. Partner A, B, C
B. Only S2 is true D. Partner B & C only
C. Both statements are true
D. Both statements are false 131. In the preceding number, how much can D still recover
from each of the partner? As their stipulation can
126. S1: The partnership may adopt any name it wishes as adversely affect him?
long as it is not identical or similar to a name which is A. 3,000 each, Yes
adopted by any other entity. B. 6,000 to partner A & 3000 to partner B, No
S2: The partnership name must be the surnames of all C. 9,000 to partner A & C as their stipulation, Yes
the partners. D. None of the above
A. Only S1 is true
B. Only S2 is true 132. S1: The partner stipulation regarding excluding one
C. Both statements are true partner in the partnership liability will not affect
D. Both statements are false creditors.
S2: They stipulation against excluding any partner to
ART.1816 partnership liability is void, except as among the
127. S1: The ability of partnership to pay its debt to bid partners.
person at a particular time does not necessary mean A. Both statements are true
that the partnership business as a whole, has been B. Only S1 is true
operated at a loss. C. Only S2 is false
S2: Industrial partner is exempt to pay losses while in D. Both are false
liability he is not exempt.
A. Only S1 is true ART. 1818
B. Only S2 is true 133. Which of the following is not a power of partner as agent
C. Both statements are true of partnership?
D. Both statements are false A. To bind the partnership
B. Unlimited authority
128. A & B are capitalist partners, with C as an industrial C. As to third person
partner. A & B contributed 10,000 each to the capital of D. As among themselves
the partnership. A contractual liability of 26,000 were
incurred by the partnership in favor of D. who is liable to
D?
11
 134. Which of the following is not a liability of partnership for
acts of partners?
A. Acts for apparently carrying on in the usual way the
business of the partnership
B. Act of strict dominion or ownership
C. Acts in contravention of a restriction on authority
D. Acts in managing transactions of the partners
135. B makes an agreement with C to sell the furnishings of
an office maintained by the partnership in connection
with its business. Can C enforce the agreement against
the partnership?
A. No, because there is no contract signed
B. No, it has no implied power to sell partnership
property not held for sale
C. Yes, because T is an agent of a partnership
D. Yes, B and C has agreement to sell.
ART.1819
136. A, B, and C are partners engaged in buying and selling
property. A, without authority, sells the land to D in
partnership's name but immediately sell it to E. the land
was originally under partnership's name. Can the
partnership recover the land?
A. Yes, because the land was sold without the
authority of the other partners
B. Yes, because A has no authority to sell thus the
transaction to D is void.
C. No, because the land was already transferred to E.
D. No, because the land was already transferred to D
137. X and Y are partners engaged in selling house and lot.X
sell the house and lot to Z without the knowledge of Y.
The house and lot is in the name of X. Can Y run after to
Z the house and lot?
A. Yes, but only the equitable title passes to Z
B. Yes, the house and lot plus damages
C. No, because the X owns the house and lot
D. No, because the house and lot was already
transferred to Z.
138. When thus the title or ownership of real property is/are
conveyed?
A. Registered in partnership name
B. Registered in all partners
C. Register in one or more or all the partners, or in a or
the partnership
D. Both A and B
Art1820
139. When the new partner can be admitted?
A. Purchase of personal property of the existing
partner that is not included in the partnership.
B. Purchase of interest of a partner by Estoppel
C. Purchase of interest of a existing partner
D. All of the above
140. S1: In order that admission or representation made can
be used as evidence, the existence of partnership must
be established and proved first.
S2: Anything a partner says or admits, as long as it is
concerning the partnership affairs and it is within the
scope of authority, is sufficient evidence against the
partnership.
A. S1 is true, S2 is false
B. S1 is false, S2 is true
C. Both statement is false
D. Both statement is true
141. S1: A new partner can only be admitted if he buy half of
the interest of each of the existing partner.
S2: A partner can be admitted by purchasing interest or
investing capital.
A. S1 is true; S2 is false
B. S1 is false; S2 is true
C. Both statement is false
D. Both statement is true
Art1821
142. Which of the following speaks in cases of knowledge of
a partner?
A. Knowledge of the partner acting in the particular
matter acquired while a partner
B. Knowledge of the partner acting in the particular
matter then present to his mind
C. Knowledge of any partner who reasonably could
and should have communicated it to the acting
partner
D. All of the above
143. S1.Notice to or knowledge of any partner of any matter
relating to partnership affairs operates as a notice to or
knowledge of the partnership except in case of fraud.
S2: A third person desiring to give notice to a matter
pertaining to the partnership business need not
communicate with all the partners.
A. S1 is true; S2 is false
B. S1 is false; S2 is true
C. Both statement is false
D. Both statement is true
144. B an acting partner, bought a parcel of land from D.
Before the sale, B acquired some knowledge that the
land is involved in a litigation in which E claims to be the
owner. B did not convey the information to the
partnership. Which of the following is true?
A. B's knowledge is not the knowledge of the
partnership
B. D is not liable
C. A can file damages to D
D. The partnership can file for damages to D

12
ART.1822 C. Anyone partner
145. What is the requisite of the liability? D. Neither of the above
A. The partnership must not be guilty of wrongful act
of omission. 152. When notice to or knowledge of a partner is ____notice
B. He must not be acting in the ordinary course of the to or knowledge of the partnership.
business
C. The partner must be guilty of wrongful act or A. Not deemed
omission B. Deemed
D. Both A & B C. Committed to
D. Consented to
146. The partnership is liable the same extent as
A. The partner so acting in the ordinary course 153. For loss or injury caused to a ______ or any _____ is
B. Omitting to the act incurred by reason of the wrongful act or omission of the
C. Both A and B partner.
D. None of the above A. Third person; penalty
B. Any person; authority
147. Where, by any wrongful act or omission of any partner C. Third person; authority
acting in the ordinary course of the business of the D. Any person; penalty
partnership or with the authority of his co-partners, loss
or injury is caused to any person, not being a partner in ART.1825
the partnership, or any penalty is incurred, the 154. When a person, by words ____or ____ or by ____
partnership is liable therefor to the same extent as the represents himself or consent to another representing
partner so acting or omitting to act. himself to anyone.
A. The statement is true A. Speak; wrote; conducted
B. The statement is false B. Spoken; written; conduct
C. Both A & D C. Speaking; writing; conducting
D. None of the above D. Spoken; writing; conducts

ART.1823 155. S1: When a partnership liability results, he is liable as

148. A partnership is liable for any
A. Losses suffered by third person
B. Losses not suffered by a third person
C. Losses suffered by any person
D. Both A & C
149. S1: Where one partner acting within the scope of his
apparent authority receives money or property of a third
person and misapplies it.
S2: Where the partnership in the course of its business
receives money or property of a third person and the
money or property so received is misapplied by any
partner while it is in the custody of the partnership.
A. Both statements is Correct
B. Only S1 is incorrect
C. Only S2 is correct
D. Both statements is incorrect
150. Which of the following is pertaining to ART.1823?
A. Partnership is bound to make loss and profit
B. Partnership bound to make good the loss
C. Partnership is not bound to make good the loss
D. Both A and B
ART.1824
151. All of the partners are liable solidarily with the
partnership for______
A. Everything that is not chargeable
B. Everything that is chargeable
though he were an actual member of the partnership;
S2: When no partnership liability results, he is liable pro
rata with the other persons, if any, so consenting to the
contract or representation as to incur liability, otherwise
separately.
A. S1 is true
B. S2 is false
C. Both statements are true
D. Both statements are false
156. When a person has been thus represented to be a
partner in an existing partnership, or with one or more
persons not actual partners, he is an agent of the
persons consenting to such representation to bind them
to the same extent and in the same manner as though
he were a partner in fact, with respect to persons who
rely upon the representation. When all the members of
the existing partnership consent to the representation,
a partnership act or obligation results; but in all other
cases it is the _____ or obligation of the person acting
and the persons consenting to the representation.
A. Joint act
B. Responsible
C. Representation
D. None of the above
13
ART. 1826 ART. 1828
157. Generally, a person admitted as into an existing 163. It is the change in the relation of the partners caused by
partnership shall be liable for: any partner ceasing to be associated in the carrying on
A. all the obligations of the partnership after his of the business.
admission A. Termination
B. all the obligations of the partnership before his B. Winding Up
admission C. Dissolution
C. all the obligation of the partnership excluding debts D. Extinguishment
of the partnership
D. None of the above 164. It signifies the end of the partnership life.
A. Extinguishment
158. The liability of incoming partner for existing partnership B. Termination
obligations is/are C. Dissolution
A. limited to his share in partnership property for D. Winding Up
existing obligations
B. Extends to his separate property for subsequent 165. The process of settling the business or partnership
obligations affairs after dissolution.
C. Both a and b A. Termination
D. None of the above B. Winding up
C. Dissolution
159. Statement 1: Existing and subsequent creditors have D. Extinguishment
equal rights as against partnership property, and
separate property of the previously existing members of ART. 1829
the partnership. 166. 1. Which of the following statements is correct?
Statement 2: Only subsequent creditors have right against the A. On dissolution the partnership is already
separate property of the newly admitted partner terminated
A. True, True B. On dissolution the partnership is mean to its
B. True, False extinguishment
C. False, False C. On dissolution the partnership is not terminated
D. False, True D. None of the above

ART. 1827 167. Statement 1: Partnership is not terminated by

160. With respect to partnership assets, who are entitled to dissolution.
priority of payment? Statement 2: On dissolution the partnership continues
A. Partners until winding up is completed.
B. Partnership Creditor A. True, False
C. Private creditor B. False, True
D. None of the above C. False, False
D. True, True
161. Which of the following statements is incorrect?
A. A partner's separate creditors are preferred as to 168. Statement 1: Dissolution refers to actual cessation of the
the partner's separate assets partnership business.
B. A partner's separate creditors may attach partner's Statement 2: Dissolution is a mere suspension in the
share in the partnership assets conduct of its business or operation
C. Partnership creditors are preferred as to A. True, True
partnership assets. B. False, False
D. Partnership creditors are preferred as to each C. True, False
partner's separate assets. D. False, True

162. Who may be sued by the creditors of the partnership? ART. 1830
A. Only the partnership 169. Which of the following is not a cause of dissolution of a
B. Only the partners limited partnership when brought about independently
C. Both the partnership and the partners of the will of the partners or by operation of law?
D. None A. Death of any partner
B. Expulsion of any partner
C. Insolvency of any partner
D. Civil interdiction of any partner

14
 170. In a loss of a specific thing, the limited partnership is not ART. 1833
dissolved if: 178. If the partnership is dissolved due to insolvency, the
A. The loss occurred after the delivery authority of partners, as among themselves, to act for
B. The loss occurred before delivery the partnership is
C. Both a and b A. Terminated
D. None of the above B. Not deemed terminated
C. Dissolved
171. Which of the following is incorrect pertaining to D. Continued
expulsion of any partner?
A. Must be in good faith 179. A person has knowledge of a fact when he has
B. The power may be vested in one partner exclusively A. An actual knowledge
C. Must be in accordance with the power conferred by B. No knowledge
the agreement of partners C. A knowledge of such other facts that shows bad
D. Has the effect of increasing the number of partners faith
D. Both a and c
ART. 1831
172. Which of the following is not a ground for dissolution by 180. A, B, and C were partners. If A sent a mail to B stating
decree of court? that C filed a resignation to him, B has a
A. Insanity of a partner A. Knowledge of fact
B. Incapacity of a partner to perform his duties B. Notice of resignation
C. Insolvency of a partner C. Notice of fact
D. Misconduct of partnership agreement D. Knowledge of resignation

173. Which of the following is not an example of other ART. 1834

circumstances which render dissolution? 181. After dissolution, a partner can bind the partnership,
A. Fraud in the management of the business except
B. Abandonment of the business A. By any act appropriate for winding-up partnership
C. Refusal without justifiable cause to render affairs or completing partners is unfinished after
accounting of partnership affairs dissolution
D. None of the above B. By any transaction which would bind the
partnership if dissolution had not taken place
174. The rule in ART. 1831 only applies if the partnership is C. Both a and b
A. Partnership by estoppel D. None of the above
B. Partnership at will from the beginning
C. Partnership with a fixed term 182. A partnership is bound by transactions entered by a
D. Close partnership partner after dissolution when
A. The acting partner is insolvent
ART. 1832 B. The acting partner is not authorized
175. Upon dissolution, the authority of partners is C. When the partnership becomes unlawful
A. Continued D. Completely new business is with innocent third
B. Suspended persons
C. Terminated
D. Not affected 183. A partnership is bound by the transaction entered into
by a partner,
176. The authority of any partner to bind the partnership by A. When the acting partner is not insolvent
a new contract is immediately terminated if the B. When the acting partner is insolvent
dissolution is caused by C. When the business of the partnership becomes
A. Insolvency unlawful
B. Death of a partner D. Both a & c
C. Both a and b
D. Neither a and b ART. 1835
184. Statement 1: The dissolution of the partnership does not
177. If the dissolution is caused by insolvency or death of a of itself discharge the liability of any partner
partner, the authority of partners is terminated if Statement 2.The individual property of deceased partner shall be
A. The partner had knowledge of dissolution liable for all obligations of the partnership incurred while he was
B. There is a notice of dissolution to the partners a partner, but subject to the prior payment of his separate debts.
C. Both a and b Which is TRUE?
D. Neither a and b A. Statement 1 is correct, statement 2 is incorrect
15
 B. Statement 1 is incorrect, statement 2 is correct
C. Statement 1 is correct, statement 2 is correct
D. Both statement is incorrect
185. How does a partner’s liability be discharged?
A. The dissolution of the partnership does not of itself
discharge existing liability of any partner
B. The dissolution of the partnership discharge the
existing liability of any partner
C. Both a & b
D. None of the above
186. A, B and C are partner’s. Later, C retired but A and B
continued the business. Is C liable to previous customers
who transact with the new firm if the firm still uses the
old firm?
A. No, the customer has no knowledge about C’s
retirement
B. Yes, unless C actually notifies the said old customers
or unless said customers actually knew of his
retirement
C. Both a and b
D. None of the above
ART. 1836
187. This is a manner of winding up of the dissolved
partnership which is under the control and direction of
the proper court upon the cause shown by any partner,
his legal representative and or his assignee
A. Judicial
B. Extra-judicial
C. Legal
D. Trial
188. This is a manner of winding up the dissolved partnership
which is under the control of the partners themselves
without the intervention of the court
A. Judicial
B. Extra-judicial
C. Legal
D. Lawful
189. The following are authorized to wind-up the affairs of
the partnership, except?
A. The partners designated by the agreement
B. In the absence of such agreement ,all the partners
who have not wrongfully dissolved the partnership
C. The legal representative of the last surviving
partner, not insolvent
D. The legal representative of the last surviving partner
which is insolvent
ART. 1837
190. The following are the rights of each partner in case of
dissolution without violation of partnership agreement
except
A. To have the partnership property applied to
discharge the liabilities of the partnership
B. To have the surplus, if any, applied to pay in cash
the net amount owing to the respective partners
C. To be indemnified for damages caused by the
partner guilty of wrongful dissolution
D. Both b and c
191. Which of the following is the right of a partner who has
not caused the dissolution wrongfully?
A. To be indemnified for damages caused by the
partner guilty of wrongful dissolution
B. To be released from all existing and future liabilities
of the partnership
C. To have the surplus, if any, applied to pay in cash
the net amount owing to the respective partners
D. To be discharged with all the liabilities of the
partnership
192. Which of the following is the right of the partner who
wrongfully caused the dissolution?
A. To be indemnified for damages caused by the
partner guilty of wrongful dissolution
B. To be released from all existing and future liabilities
of the partnership
C. To have the surplus, if any, applied to pay in cash
the net amount owing to the respective partners
D. To be discharged with all the liabilities of the
partnership
ART. 1838
193. Three of the following enumerations are rights of a
partner entitled to rescind partnership contract. Which
among them is the exception?
A. The right to lien or retention of partnership
B. The right to sell partnership property
C. The right to be subrogated in place of
partnership creditors
D. Right of indemnification against all debts and
liabilities of the parnership
194. If one is induced by fraud or misinterpretation to
become a partner, the contract is?
A. Voidable
B. Annulable
C. Enforceable
D. Both a&b
195. S1: One of the rights of a partner entitled to rescind a
partnership contract is the right to be subrogated in
place of partnership creditors.
S2: Fraud is one of the grounds for recission of
partnership contract.Which is correct?
A. Both statements are correct
B. Only s1 is correct
C. Both statements are incorrect
D. Only s2 is correc
16
ART. 1839 A. Both statements are correct
196. In settling accounts between the partners after B.Both statements are incorrect
dissolution, the order of preference shall apply to the C. Only statement 1 is correct
liabilities of the partnership. D. Only statement 2 is correct
I. Pay outside the creditors
II. Pay inside creditors 201. S1: Creditors of the dissolved partnership are not
III. Return of capital contribution creditors of the partnership continuing the business.
IV. Partner's profit S2: The change in relation of the partners results in the
A. I,III, I’, IV dissolution of the partnership.
B. I, II, III, IV A. Both statements are correct
C.I, IV, II, III B. Both statements are in correct
D.I, II, IV, III C. Only statement 1 is correct
D. Only statement 2 is correct
197. Separate property of an insolvent partner shall be
distributed in the following order ART. 1841:
I. Those owing to separate creditors 202. The following are the rights of the legal representative
II. Those owing to partnership creditors of deceased partner when business is continued. Which
III. Those owing to partners by way of contributions is incorrect?
A. I,III, II A. To have the value of the interest of the retiring
B. II, I, III partner or deceased partner
C. III, II, I B. To acquire asset from the partnership
D. I, II, III C. To receive an amount equal to the value of his
share in the dissolved partnership with
198. S1: A partner who contributes no capital, but only interest, or, at his option, in lieu of interest, the
services is not entitled to any share in the firm capital on profits attributable to the use of his right.
dissolution, but is limited to his share in profits as D. Both a&b
compensation for his services
S2: The individual property of a deceased partner shall 203. The right of a retiree or legal representative of a
be liable for his share of the contributions necessary to deceased partner is exercised against ?
satisfy the liabilities of the partnership A. Winding up partner
incurred while he was a partner. Which is correct? B. Surviving partner
A. Both statements are correct C. The person or partnership continuing the business
B.Both statements are incorrect D. All of the above
C. Only statement 1 is correct
D. Only statement 2 is correct 204. When does a retiree partner have the right to
accounting accrue in the absence of a contrary
ART. 1840 agreement?
199. 1.Three of the following cases are considered to be A. On the date of dissolution
creditors of the dissolved partnership who are also B. Before the date of dissolution
creditors of the partnership continuing the business. C. After the date of dissolution
Which is not? D. Any of the above
A. When any new partner is admitted into an
existing partnership ART. 1842
B. When a partner becomes insolvent 205. It is the right to demand an accounting of the value of a
C. When a partner is expelled partner's interest after dissolution in the absence of an
D. When any partner wrongfully causes a agreement to the contrary.
dissolution A. Accrual of right
B. Accrual of shares
200. S1: The liability of a new or incoming a partner in the C. Accrual of interest
partnership continuing the business to the creditors of D. Accrual of debts
the dissolved partnership shall be satisfied out of the
partnership property only, unless there is a stipulation 206. The following are persons liable to render an account to
to the contrary. a partner or the one who represents him as owner of his
S2: The use by the person or partnership continuing the interest to an account, except:
business of the partnership name, or the name of a A. The winding up partner
deceased partner as part thereof, shall not of itself make B. The surviving partner
the individual property of the deceased partner liable C. The liquidating partner
for any debts contracted by such person or partnerships. D. The person or partnership continuing the business
17

207. When a partnership is dissolved, a partner or his legal
representative is entitled to the payment of what may
be due after a liquidation.
A. Exception
B. General rule
C. Both A and B
D. None of the above
ART. 1843
208. It is a partnership formed by 2 or more persons having
as members one or more general partners and one or
more limited partners.
A. General partnership
B. Limited partnership
C. Universal partnership
D. Partnership by estoppel
209. Which of the following is not a characteristic of a limited
partnership?
A. A limited partnership is formed by compliance with
the statutory requirements.
B. The partnership debts are paid out of the common
fund and the individual properties of the general
partners.
C. One or more limited partners contribute to the
capital, share in the profits and participates in the
management of the business.
D. All of the following are characteristics of a limited
partnership
210. Among the following are distinctive characteristics of a
limited partnership from a general partnership, except :
A. Its interest is freely assignable
B. It may be constituted in any form by contract or
conduct of the parties
C. Its liability extends only to his capital contribution
D. Its name must not appear in the firm name
ART. 1844
211. The following statements are true regarding limited
partnership, choose the exception :
A. A limited partnership cannot be constituted orally.
B. The certificate of ART.s of the limited partnership
must be signed and sworn to.
C. A strict compliance with the legal requirement is
necessary. It is not sufficient if there is substantial
compliance only.
D. The failure of a limited partnership to extend its
term when it expired and to register it anew with
the SEC has the effect of freeing the limited partners
of the privilege of limited liability.
212. The certificate of partnership shall state the following
except:
A. The character of the business
B. The term for which the partnership is to exist
C. The location of the principal place of the business
D. All of the following are included in the certificate of
partnership
213. The following aren't true regarding limited’ partnership,
except :
A. A limited partnership is created not by a formal
proceeding but through voluntary agreement.
B. A strict compliance with the legal requirements is
needed.
C. The purpose of filing the certificate of partnership is
to give actual or constructive notice to creditors of
the limited liability of the limited partners.
D. It is not enough if there is substantial compliance of
the essential requirements for the formation of a
limited partnership.
ART. 1845
214. A limited partner may contribute the following, except:
A. Capital
B. Property
C. Services
D. All of the following must not be contributed
215. Which of the statement is true, if a partner contribute
capital only?
A. He is a general partner.
B. He is a limited partner.
C. A or B or both depending upon the stipulation
stated in the certificate.
D. None of the above
216. The following contribution of a limited partner will not
satisfy the law except:
A. Promissory Notes
B. Bonds
C. Manager's check
D. Post-dated checks
ART. 1846
217. The surname of a limited partner shall not appear in the
partnership name unless:
A. It is also the surname of a general partner, or
B. Prior to the time when the limited partner became
such, the business has been carried on under a
name in which his
C. surname appeared.
D. A and B
E. no answer
218. A limited partner whose surname appears in a
partnership name contrary to the provisions of this code
is liable
A. as a general partner to partnership creditors who
extend credit to the partnership without actual
knowledge that he is not a general partner.
B. as a general partner to partnership creditors who
extend credit to the partnership with actual
knowledge that he is not a general partner
18
 C. as a general partner
D. as a limited partner to partnership creditors who
extend credit to the partnership
219. The surname of a limited partner shall appear in the
partnership name
A. is an absolute rule
B. is a general rue
C. is true
D. is not true
ART. 1847
220. If the certificate contains a false statement, one who
suffers loss by reliance on such statement may hold
liable
A. any party to the certificate who knew the statement
to be false
B. all the partners in the partnership
C. the third party only
D. the general partners
221. For a party to be deemed liable he/ she must possess
knowledge of the falsity
A. At the time he signed the certificate
B. must not possess any knowledge of the false
statement at all
C. Subsequently, but within a sufficient time before
the statement was relied upon to enable him to
cancel or amend the certificate, or to file a petition
for its cancellation or amendment as provided in
ART. 1865.
D. both A and C
222. The nature of liability for a guilty partner in case of
falsification is?
A. liability as a general partner
B. a statutory penalty only
C. liability as a general partner as to third party
D. not liable at all because h is a limited partner
ART. 1848
223. A limited partner shall not become liable as a general
partner unless, in addition to the exercise of his rights
and powers as a limited partner, __________ Which is
an exception?
A. he takes part in the control of the business for
dissolution purposes
B. grant of apparent control where he has not actually
participated in the control of the partnership
C. he takes part in the control of the business
D. all are instances where he becomes liable as a
general partner
224. Statement 1: A limited partners abstinence from
participation in fact in the transaction of the business is
essential to his exemption from liability for the debts of
the firm
Statement 2: A limited partner shall not become liable as a
general partner, whenever he participates in the management of
the firms business
A. False, True
B. False, False
C. True, True
D. True, False
225. Which of the following partners may not participate in
the management of the firms business?
A. Limited Partner
B. General Partner
C. Ostensible Partner
D. Secret Partner
ART. 1849
226.Statement 1: After the formation of a limited
partnership, additional limited partners may be
admitted upon filing an amendment to the original
certificate in accordance with the requirements of ART.
1865.
Statement 2: After the formation of a limited
partnership, additional limited partners may be
admitted by the approval of all partners, to be filed in
the office of the Securities and Exchange Commission
A. True, True
B. True, False
C. False, True
D. False, False
227.The admission of new Limited partners
A. is similar to the admission of general partners in a
general partnership
B. require a proper amendment to the certificate
C. does not cause the dissolution of the partnership
D. is not based on the principle of delectus personae
since approval of all members is needed
228.The amendment to the certificate must be signed and
sworn to by
A. all partners
B. all partners excluding new limited partners
C. all partners including new limited partners
D. the managing partner/partners
ART. 1850
229.Statement 1: A general partnership is dissolved when a
general partner dies. Statement 2: A limited partnership
is dissolved when a limited partner dies.
A. Statement 1 is True, Statement 2 is False.
B. Statement 1 is False, Statement 2 is True.
C. Both statements are True.
D. Both statements are False.
230.Statement 1: A general partner has the same rights,
powers and limitations in a limited partnership as when
he would have been in a general partnership. Statement
2: But a general partner, in a limited partnership,
19
 without the consent of all the limited partners, cannot
do any act such as confess a judgment against the
partnership.
A. Statement 1 is True, Statement 2 is False
B. Statement 1 is False, Statement 2 is True
C. Both statements are True.
D. Both statements are False.
231.The partner which requires the written consent or
ratification in order to do a certain act in a limited
partnership.
A. General Partner
B. Industrial Partner
C. Managing Partner
D. Limited Partner
ART. 1851
232.A limited partner has the rights similar to a general
partner, except:
A. Share in profits.
B. Demand true and full information regarding
matters concerning the partnership.
C. Manage the business.
D. Return of contribution.
233.A general partner has similar rights as to a limited
partner, except:
A. Require that the partnership books be kept at the
principal place of business.
B. Demand for legal winding up of the business.
C. Inspect and copy partnership books.
D. Conduct the affairs of the partnership and to do any
and all acts on behalf of the partnership.
234.A limited partner has the rights similar to a general
partner, except
A. Carry out and implement the purpose of the
partnership.
B. Share in other compensation by way of income.
C. Inspect and copy partnership books.
D. Return of contribution.
ART. 1852
235.In a limited partnership, a partner believing himself as a
limited partner but was erroneously signed as a general
partner in the certificate of the partnership cannot be
held liable as a general partner if:
A. He participates in the management of the
partnership.
B. His surname is used in the partnership name.
C. Upon realization of the error, he renounces his
involvement with the partnership.
D. All of the above.
236.A partner believing he is a limited partner but was
erroneously signed as a general partner in the certificate
of the partnership is still held liable if upon the
realization of the error:
A. He renounces his involvement with the partnership.
B. He retrieves his contribution to the partnership.
C. His first name is used in the partnership name.
D. He participates in the conduct of the business.
237.Statement 1: A limited partner is still considered a
limited partner even after the fact that his surname used
in the partnership name is the same surname as a
general partner. Statement 2: A partner is a general
partner when his surname is used in the partnership
name.
A. Statement 1 is True, Statement 2 is False.
B. Statement 1 is False, Statement 2 is True.
C. Both statements are True.
D. Both statements are False
ART. 1853
238.Statement 1: A partner can be a limited partner and a
general partner at the same time provided they are
mentioned in the certificate which he has signed.
Statement 2: Generally, a partner who is both a limited
partner and a general partner shall have all the rights
and powers but is also subject to all restrictions of a
general partner.
A. Statement 1 is True, Statement 2 is False.
B. Statement 1 is False, Statement 2 is True.
C. Both statements are True.
D. Both statements are False.
239.Partners who are both limited and general partner, as
amongst the partners are:
A. General partners
B. Industrial partners
C. Capitalist partners
D. Limited partners
240.Partners who are both limited and general partner, as
amongst the third persons are:
A. General partners
B. Industrial partners
C. Capitalist partners
D. Limited partner
ART. 1854
241.Which of the following is not a right of a limited partner?
A. To loan money to the partnership.
B. To transact business with partnership.
C. To receive or hold as collateral security any
partnership property.
D. To receive a pro-rata share of the partnership assets
with general creditors.
242.Sprite, Royal and Coke are partners in Cola-Cola
Partnership Ltd., with Sprite and Royal as general
partners and Coke as limited partner, each contributing
Php100,000. The partnership incurred obligation to X, a
stranger, for Php120,000, and to C, a limited partner, for
20
 Php60,000. Upon dissolution, if X and C will proceed
against the partnership, who will be paid first?
A. C, because he is a limited partner.
B. X, because he is an outside creditor.
C. Both in pro-rata to their right if partnership is
solvent.
D. Both in pro-rata to their right whether partnership
is solvent or insolvent.
243.A limited partner is prohibited to receive payment,
conveyance or release from liability if the partnership
assets are sufficient to discharge it's liabilities to third
person. Apply the rule on pro-rata if one of the creditors
is a limited partner and whether or not the partnership
is solvent.
A. Only statement 1 is true.
B. Only statement 2 is true.
C. Both statement are true.
D. Neither statement is true.
ART. 1855.
244.The partners in a limited partnership may agree that one
or more limited partners may be given priority over
other limited partners. Such agreement may or may not
be in writing and in the absence of such agreement all
the limited partner shall stand upon equal footing.
A. Only statement 1 is true.
B. Only statement 2 is true.
C. Both statement is true.
D. Neither statement is true.
245.Which of the following statement is false?
A. Preference of priority can only be done if there are
several limited partners.
B. Preference of priority agreement of limited
partners may only involve the return of their
contribution or their compensation by way of
income.
C. Preference of priority agreement must be stated in
the certificate.
D. Without an agreement all limited partner shall
stand upon equal footing.
246.Which of the following may be the nature of priority
with regards to limited partners?
A. Return of contribution
B. Compensation
C. Other matters
D. All of the above
ART. 1856
247.Which of the following is not requisite for a limited
partner to receive his share in the profit or
compensation by way of income?
A. After payment, partnership assets are in excess of
liabilities to general partners.
B. After payment, partnership assets are in excess of
liabilities to limited partners.
C. After payment, partnership assets are in excess of
liabilities to outside creditors.
D. All of the above are requisites.
248.A limited partner may receive from the partnership the
share of profits or the compensation by way of income
stipulated for in the certificate. Provided that after such
payment is made, whether from the property of the
partnership or that of general partners, partnership
assets are in excess of all liabilities of the partnership
including liabilities to limited partners on account of
their contributions and to general partners.
A. Statement 1 is false.
B. Statement 2 is false.
C. Both statement s are false.
D. Neither statement are false.
249.Limited partner may only receive his share of his profit
or compensation after payment of partnership liabilities
to outside creditors. Limited partner may only receive
his share of profit or compensation after payment of
partnership liability to him except his contributions.
A. Statement 1 is false.
B. Statement 2 is false.
C. Both statements are false.
D. Neither statement is false.
ART. 1857
250.Which of the following is not a requisite that must be
present before the capital contribution of a limited
partner is returned to him?
A. All liabilities of the partnership have been paid or
there are sufficient assets to pay partnership
liabilities, except liabilities to general partners and
to limited partners on account of their contribution.
B. Consent of majority of partners is obtained, except
when return of contribution may be rightfully
demanded.
C. The certificate is cancelled or amended showing the
withdrawal or reduction of the contribution.
D. None of the above.
251.Which of the following instances does not give a limited
partner his right to demand the return of his capital
contribution?
A. On the dissolution of the partnership
B. Upon arrival of the date specified in the certificate
of its return
C. If no time is fixed, after 3 months notice in writing is
given to all other partners
D. None of the above
252.If a limited partner withdraws rightfully his contribution,
all conditions for withdrawal being fulfilled, he is still
answerable to previous creditors if later on the firm
becomes insolvent. His contribution if returned to him
21
 shall be treated as trust fund for the discharge of A. Marriage between partners
partnership liability including interest earned. B. Merger
A. Statement 1 is false. C. Retirement
B. Statement 2 is false. D. Adoption
C. Both statements are false.
D. Neither statement is false. 260.The following events may dissolve a general partnership
except:
ART. 1858 A. Death
253.They are not principals in the transaction of a B. Insolvency
partnership; their liability except for known false C. Civil interdiction
statement in the certificate, is to the partnership, not to D. None of the above
the creditors of the partnership.
A. Limited partners 261.The insolvency of a general partner dissolves the
B. General partners partnership, unless the business is continued by the
C. Dormant partners remaining partners:
D. Incoming partners A. Under a right so to do stated in the certificate
B. With the consent of all the members
254.Who is liable to the partnership for the return of C. Both a and b
contribution lawfully received by him to pay creditors D. None of the above
who extended credit or whose claim arose before such?
A. General partner ART. 1861
B. Incoming partner 262.On the death of a limited partner, who shall have the
C. Partner by estoppel rights of a limited partner for the purpose of settling his
D. Limited partner estate?
A. Executor
255.Who cannot waive any liability of the limited partners to B. Administrator
the prejudice of such creditors? C. A or b
A. Industrial partners D. Co-partners
B. Limited partners
C. General partners 263.Statement I: The estate of a deceased limited partner
D. Partner by estoppel shall be liable for all his liabilities as a limited partner.
Statement II: The estate of a deceased limited partner is
ART. 1859 liable as such limited partner for all his liabilities
256.Who may assign his interest in the partnership to contracted by the partnership while he was a limited
another person? partner.
A. General partner A. Only the first statement is correct
B. Partner by estoppel B. Only the second statement is correct
C. Limited partner C. Both statements are correct
D. Industrial partner D. Both statements are incorrect

257.A person admitted to all the rights of a limited partner 264.Statement I: On the death of a limited partner, his
who has died or has assigned his interest in a executor or administrator shall have the right to
partnership. constitute the assigned of the deceased as substituted
A. Substituted general partner limited partner. Statement II: The executor or
B. Substituted limited partner administrator may constitute the assignee as a
C. Substituted incoming partner substituted limited partner even if the deceased was not
D. Substituted secret partner empowered to do so in the certificate.
A. Only statement I is correct
258.Has no right to require any information or account of B. Only statement II is correct
partnership transactions or to inspect the partnership C. Both statements are correct
books. D. Both statements are incorrect
A. Assignee
B. Limited partner ART. 1862
C. General partner 265.The interest may be redeemed without the separation
D. Assignor property of any general partner, but may not be
redeemed with partnership property.
ART. 1860 A. True
259.Which of the following dissolves a general partnership? B. False
22
 C. Cannot be determined
ART. 1865
266.Nothing in this chapter shall be held to deprive a limited 274.Which of the following is the requirement to amend a
partner of his statutory exemption. certificate?
A. True A. The certificate as amended filed for record in the
B. False SEC.
C. Cannot be determined B. It must be in signed to by all members including the
new members.
267.Remedies conferred by the first paragraph shall be C. It must be signed and sworn to by all members
deemed exclusive of others which may exist. including the new members, and the assigning
A. True limited partners in case of substitution or addition
B. False of a limited or general partners.
C. Cannot be determined
275.When will be the certificate amendment or
ART. 1863 cancellation?
268.After Dissolution the liabilities of the partnership shall A. When there is filed record in the Office of Securities
be entitled to payment in the: and Exchange Commission.
A. To Those general partners in respect to their capital B. When a person desirea the cancellation or
of their contributions. amendment of a certificate.
B. To Those general partners in respect to profits and C. When there is approval by the Commission of the
capital. amendment or cancellation.
C. To Those limited partners in respect to profits and
capital. 276.The amendment shall also be signed by the:
A. Assigning Limited Partner.
269.Regarding to the general partnership, the claims of B. Assigning General Partner.
general partners in respect of capital, enjoy preference C. Majority of the Members including the new
over those in respect of: members.
A. Profits
B. Capital ART. 1866
C. Capital of their contributions 277.Statement I: A limited partner is a proper party to
proceedings by or against a partnership because he does
270.In the absence of any statement in the certificate of not take part of control in the management of the
subsequent agreement, which of the following partner/s partnership business. Statement II: Limited partners
to share in the partnership assets in respect to their who just contributed money or property may not
claims for capital and profits to the respective amount participate in the management and are liable not
of such claims. beyond their interest in the firm.
A. General partners. A. Both statements are true
B. Limited partners. B. Both statements are false
C. General and Limited Partners. C. Only statement I is true
D. Only statement II is true
ART. 1864
271.The Certificate shall be cancelled when the partnership 278.A limited partner has no right of action against third
is dissolved or all limited partners cease to be such. persons against whom the partnership has any
A. True enforceable claim unless he is also a/n?
B. False A. Industrial partner
C. Cannot be determined B. General partner
C. Universal partner
272.A certificate shall be amended when there is a change in D. Ostensible partner
the character of the business of the partnership.
A. True 279.Statement I: A limited partner may maintain an action in
B. False his own name where the object is to enforce his
C. Cannot be determined individual rights against the partnership. Statement II:
Where the object is to enforce a limited partner’s right
273.A certificate shall be amended when an additional against or liability of a partnership is an exception to the
limited partner is admitted. general rule of a limited partner not a proper party to
A. True proceedings.
B. False A. Both statements are true
C. Cannot be determined B. Both statements are false
23
 C. Only statement II is false Sec 2
D. Only statement I is false 286.The following are attributes of a corporation except:
A. Artificial being
ART. 1867 B. Created by operation of law
280.The following are distinctions of partnership from C. Has the right of succession
corporation except: D. Has the powers, attributes and properties expressly
A. To divide the profits among themselves unauthorized by law or incident to its existence
B. Created by mere agreement of the parties
C. Has juridical personality 287.Which of the following are disadvantages of a
D. Unlimited life corporation:
I. Capacity to act as legal entity
281.Statement I: In a general partnership, all partners are II. High cost of formation or operation
managers unless there is a stipulation to the contrary. III. Double taxation
Statement II: Death, insolvency, retirement and insanity IV. Limited liability
of a partner, as a rule, will not dissolve the limited A. I, II, III and IV
partnership. B. I, II and III only
A. Both statements are false C. II, III and IV only
B. Both statements are true D. I, III and IV only
C. Only statement II is false
D. Only statement I is false 288.Under this doctrine, the separate and distinct
personality of the corporation may be disregarded for it
282.Van, as a general partner formed a partnership with Vin was used to justify a wrong, protect fraud or perpetrate
and Von who are limited partners before the Civil Code a deception.
took effect. What will happen to the partnership? A. Doctrine of Instrumentality
A. The partnership will become void. B. Doctrine of Separate entity
B. The partnership will automatically be dissolved C. Doctrine of Trust fund
because there will be a new law that they must D. Grandfather Rule
comply with.
C. The partnership will become a limited partnership Sec. 3
but they must first comply with the requirements 289.A corporation that has been created in strict compliance
enunciated in ART. 1867 of the Civil Code. with all the legal requirements and whose right to exist
D. The partnership will become a general partnership as a corporation cannot be successfully attacked in a
by complying with the requirements enunciates in direct proceeding for that purpose by the State.
the ART. 1867 of the Civil Code. A. De facto corporation
B. De jure corporation
Sec. 1 C. Corporation by prescription
283.When was the present Corporation Code approved and D. Corporation by estoppel
took effect?
A. May 1, 1980 290.One which is so related to another corporation that it
B. May 1, 1890 has the power either directly or indirectly to, elect the
C. April 3, 1980 majority of the directors of such other corporation.
D. April 3, 1890 A. Subsidiary Corporation
B. Parent Corporation
284.Corporation Code of the Philippines is also known as? C. True Corporation
A. Batasang Pambansa Blg. 68 D. Quasi-corporation
B. Republic Act No. 68
C. Batas Pambansa Blg. 68 291.It refers to a corporation which operates within the
D. Presidential Decree No. 68 country under whose laws it was incorporated.
A. Foreign corporation
285.The Corporation Code of the Philippines composes of B. Offshore corporation
how many sections? C. Domestic corporation
A. 147 sections D. Public corporation
B. 148 sections
C. 149 sections Sec. 4
D. 150 sections 292.This refers to the law under which corporation is created
which may be either the general law or a special law.
A. Charter of a Corporation
B. By-laws
24
 C. Corporation Code the holders of common shares in the remaining profits
D. Law on Private Corporation pro rata after the common shares have been paid is
called as.
293.For corporations created by special law or charter, they A. Participating preferred shares
shall be governed by which of the following? B. Cumulative-participating preferred share
A. Primarily by the provisions of the special law or C. Non-cumulative participating preferred share
charter creating them or applicable to them. D. Non-participating preferred share
B. Supplemented by the provisions of the Corporation
Code. 300.Statement 1: Share of stock is incorporeal or intangible
C. A only property while certificate of stock is tangible. Statement
D. Both A and B 2: Certificate of stock represents the right or interest of
a person in a corporation while share of stock is the
294.Statement 1: The Constitution restricts the creation of written evidence of that right or interest.
corporations by special law to corporations owned or A. Both statements are true
controlled by the government. Statement 2: B. Both statements are false
Corporation created by special laws or charters shall be C. Only statement 1 is true
governed primarily by the provisions of the special law D. Only statement 2 is true
or charter creating them.
A. Both statements are true SECTION 7
B. Both statements are false 301.These are shares issued to the organizers and promoters
C. Only statement 1 is true of a corporation in consideration of some supposed right
D. Only statement 2 is true or property.
A. Redeemable shares
Sec. 5 B. Founders’ shares
295.Those who are mentioned in the ART.s of incorporation C. Preference Shares
as originally forming and composing the corporation and D. Treasury Shares
who executed and signed the ART.s of incorporation. 302.The exclusive right to vote and be voted for in the
A. Corporators election of directors is granted for a limited period not
B. Incorporators exceeding how many years?
C. Stockholders A. Two (2) years
D. Members B. Three (3) years
C. Four (4) years
296.It is a general term used for those who compose the D. Five (5) years
corporation. 303.S1: Founder’s shares usually share in profits or loss after
A. Corporators a certain percentage has been paid upon the common
B. Incorporators stock.
C. Stockholders S2: Founder’s shares are often given special privileges over
D. Members other stock as to voting and as to division of profits in excess
of a minimum dividend on the common stock.
297.Persons who have agreed to take and pay for original, A. Only statement 1 is false
unissued shared of a corporation formed or to be B. Only statement 2 is false
formed. C. Both statements are true
A. Promoters D. Both statements are false
B. Subscribers
C. Underwriter SECTION 8
D. Stockholders 304.Shares which are callable at a fixed date or at the option
of either the issuing corporation or the stockholder or
Sec. 6 both at a certain redemption price is known as:
298.Share which entitles the holder thereof not only to the A. Redeemable shares
payment of current dividends but also to dividends in B. Founder’s shares
arrears. C. Preference shares
A. Cumulative preferred share D. Treasury shares
B. Non-cumulative preferred share 305.S1: Redeemable shares may be issued only when
C. Participating preferred share expressly so provided in the ART.s of corporation.
D. Non-participating preferred share S2: Redeemable shares may not be deprived of voting rights
in the ART.s of corporation.
299.A share which gives the holder to receive the stipulated A. Only statement 1 is false
dividends at the preferred rate and to participate with B. Only statement 2 is false
25
 C. Both statements are true 312.Which among the following is not a step in
D. Both statements are false incorporation?
A. Drafting and execution of the ART. of incorporation
306.S1: Redeemable shares may be redeemed regardless of by the incorporators.
the existence of unrestricted earnings, provided that the B. Filing with Securities and Exchange Commission
corporation has sufficient assets to cover debts and C. Payment of deferred tax liabilities of incorporators
liabilities inclusive of capital stock. D. The issuance by the SEC of the certificate of
S2: Redemption may be made where the corporation is incorporation
insolvent.
A. Only statement 1 is false SECTION 11
B. Only statement 2 is false 313.How long is the term of a corporation?
C. Both statements are true A. 100 years
D. Both statements are false B. 30 years
C. 50 years
SECTION 9 D. 70 years
307.These are shares which has been lawfully issued by the
corporation and fully paid and later reacquired. 314.S1: The corporate term as originally stated in the ART.s
A. Redeemable shares of incorporation may be extended for periods not
B. Founders’ shares exceeding fifty (50) years in any single instance by an
C. Preference Shares amendment of the ART.s of incorporation.
D. Treasury Shares S2: A private corporation may extend or shorten its term
as stated in the ART.s of incorporation when approved
308.The following are ways of reacquiring treasury shares by a majority vote of the board of directors or trustees
except: and ratified at a meeting by the stockholders
A. Donation representing at least two-thirds (2/3) of the outstanding
B. Purchase capital stock or by at least two-thirds (2/3) of the
C. Redemption members in case of non-stock corporations.
D. Other unlawful means A. 1st statement is true, 2nd statement is false
B. 1st statement is false, 2nd statement is true
309.S1: Treasury shares have no voting rights as long as they C. Both statements are true
remain in the treasury. D. Both statements are false
S2: Treasury shares are not entitled to dividends nor
assets. 315.S1: A private corporation may extend or shorten its term
A. Only statement 1 is false as stated in the ART.s of incorporation when approved
B. Only statement 2 is false by a majority vote of the board of directors or trustees
C. Both statements are true and ratified at a meeting by the stockholders
D. Both statements are false representing at least two-thirds (2/3) of the outstanding
capital stock or by at least two-thirds (2/3) of the
SECTION 10 members in case of non-stock corporations.
310.S1: Incorporators may consist of any number of natural S2: Written notice of the proposed action and of the
and/or juridical persons not less than five (5) but not time and place of the meeting shall not be addressed to
more than fifteen (15). each stockholder or member at his place of residence as
S2: Each of the incorporators of a stock corporation must shown on the books of the corporation and deposited to
own or be a subscriber to at least one (1) share of the capital the addressee in the post office with postage prepaid, or
stock of the corporation. served personally.
A. Statement 1 is false A. 1st statement is true, 2nd statement is false
B. Statement 2 is false B. 1st statement is false, 2nd statement is true
C. Both statements are true C. Both statements are true
D. Both statements are false D. Both statements are false

311.Which term is said to be not a legal but a business term, SECTION 12

usefully summing up in a single word, a number of 316.Statement 1: The new Corporation Code does not
business operations peculiar to the business world by require any paid up capital as long as the minimum
which a company is generally brought into existence. authorized capital stock is not less than P5, 000.
A. Promotion Statement 2: Filipino corporations require a certain
B. Incorporation percentage on capital stock.
C. Formal Organization A. Both statements are true
D. Commencement of business operations B. Statement 1 is true, Statement 2 is false.
26
 C. Both statements are false SECTION 14
D. Statement 1 is false, statement 2 is true. 322.Which of the following is NOT on the ART.s of
Incorporation?
317.Which of the following is INCORRECT? A. The name of the corporation
A. Public Utilities require at least 60% of the capital B. The term for which the corporation is to exist
which is owned by Filipinos C. The names, nationalities and residences of the
B. Pawnshops require at least 60% of the capital which incorporators
is owned by Filipinos D. The qualifications, duties and compensation of
C. Financing Companies require at least 60% of the directors or trustees, officers and employees.
capital which is owned by Filipinos
D. Educational Institutions other than those 323.Incorporating directors
established by religious orders, mission boards and A. Directors elected before or at the time of
charitable organizations, require at least 60% of the incorporation
capital which is owned by Filipinos B. Shall not be less than five (5) not more than fifteen
(15)
318.Banking corporations require at least 60% of the capital C. Chosen by incorporators and their selection
which is owned by Filipinos. Rural Banks capital stock precedes the drafting and filing of the ART.s of
shall be: Incorporation.
A. at least 60% of the capital which is owned by D. All of the above
Filipinos
B. at least 75% of the capital which is owned by 324.Name of the corporation
Filipinos i. Identifies and distinguishes it from others
C. at least 60% of its voting stock is owned by Filipinos ii. Shall not allowed to be identical to another
D. 100% owned and held by Filipinos corporation but can be similar to a name of an existing
corporation
SECTION 13 iii. Can be changed by an amendment of the ART.s of
319.What is subscription? incorporation.
A. Subscription is a written contract by which one A. i, ii
engages to take and pay for capital stock B. i only
Corporation, or to contribute a sum of money for a C. i, iii
designated purpose, either gratuitously or in D. all of the above
consideration.
B. The action of making or agreeing to make an SECTION 15
advance payment in order to receive or participate 325.It is the document prepared by the persons establishing
in something. a corporation and filed with SEC containing the matters
C. a signature or short piece of writing at the end of a required by the code.
document A. ART.s of partnership
D. None of the above B. ART.s of Incorporation
C. ART.s of the constitution
320.Which of the following conditions will allow corporate D. ART.s of the Code
formation?
Authorized Capital Subscribed Capital Paid-in Capital 326.A corporations right to use its corporate and trade name
A. 200,000 50,000 9,500 is a
B. 50,000 12,000 5,000 A. Property right
C. 100,000 49,000 12,000 B. Political right
D. 60,000 15,000 6,000 C. Moral right
D. Human right
321.Five persons decided to organize a corporation. Which
of the following situation illustrates the best minimum 327.S1: In case some of the shares of the capital stock have
requirement of the law to capital formation? par and some without par value, the AOI may not state
Authorized Paid up Capital such number of shares without par value.
Capital Stock Subscribed Stock S2: The AOI must be written in any languages duly signed
A. 100,000 20,000 5,000 and acknowledged by all of the incorporators.
B. 100,000 25,000 5,000 A. Only S1 is true
C. 100,000 30,000 6,000 B. Only S2 is true
D. 100,000 25,000 6,250 C. Both are true
D. Neither is true

27
SECTION 16 A. That the Treasurer’s Affidavit concerning the
328. The amendments of AOI are deemed approved from the amount of capital stock subscribed and/or paid is
date of filing with SEC if not acted upon within ________ false.
from said date for a cause not attributable to the B. That the percentage of ownership of the capital
corporation. stock to be owned by citizens of the Philippines has
A. 6 months been complied with as required by existing laws or
B. 1 year the Constitution.
C. 3 months C. That the ART.s of incorporation or any amendment
D. 1 month thereto is not substantially in accordance with the
form prescribed herein.
329. S1: The original and amended ART.s together shall D. None of these.
contain all provisions required by law to be set out in the
AOI. SECTION 18
S2: The amendment may not be effected by the written 334. S1: Mere approval by the stockholders of the
assent of the stockholders representing at least 2/3 of amendment of AOI changing the corporate name
the outstanding capital stock of the corporation or 2/3 automatically changes the name of the corporation as of
of its members. that date.
A. Only S1 is true S2: when a change of name is approved, it is not
B. Only S2 is true required that the Commission must issue an amended
C. Both are true certificate of incorporation under the amended name.
D. Neither is true A. S1 is true
B. S2 is true
330. Which is false? C. Both are true
A. The amendments shall take effect upon their D. Neither is true
approval by the SEC.
B. Such ART.s as amended, shall be indicated by 335. Which is true regarding corporate name?
underlining the change/s made. A. It must not be identical with or similar to a name
C. A and B which was previously adopted, being used by
D. None of these. another corporation.
B. It must not be contrary to existing law.
SECTION 17 C. Incorporators may choose and use any name they
331. Grounds for suspension/revocation of the certificate of may see fit.
registration of corporation include: D. All of the above.
A. Failure to fill by-laws within the required period.
B. Continuous inoperation for a period of at least 5 336. A corporation can change the name originally selected
years by it
C. Serious misrepresentation as to what the A. without the need of amending the AOI
corporation can do or is doing to the great prejudice B. after complying with the formalities prescribed by
of or damage to the general public. law.
D. All of the above. C. by mere approval of the stockholders
D. None of the above
332. S1: The SEC is required to give incorporators reasonable
time within which to correct or modify objectionable SECTION 19
portions of AOI. 337.A corporation commences to have juridical personality
S2: SEC may approve or accept AOI or amendment to and legal existence only from
AOI of corporations governed by special laws even A. the moment the Securities and Exchange
without a favorable recommendation of the appropriate Commission issues a certificate of incorporation
agency that such ART.s or amendment is in accordance under its official seal.
with law. B. the moment the incorporators files the ART.s of
A. S1 is true Incorporation.
B. S2 is true C. the moment third persons are notified about the
C. Both are true corporation.
D. Neither is true D. the moment the incorporators subscribe 25% of the
authorized capital stock.
333. The following are grounds of rejection of AOI or
amendment except: 338.An entity with a status of “unregistered” association and
the member themselves shall be held personally liable
A. for the association.
28
 B. for their acts or contracts.
C. both A and B.
D. neither A nor B.
339.In case of cooperatives, they acquire juridical personality
upon
A. registration with the Securities and Exchange
Commission.
B. registration with the Cooperatives Development
Authority.
C. registration with SEC and CDA.
D. cooperatives do not acquire juridical personality.
SECTION 20
340.A corporation which actually exists for all practical
purposes but which has no legal right to corporate
existence against the State.
A. de jure corporation
B. corporation by estoppel
C. stock corporation
D. de facto corporation
341.The following are requirements before one can qualify
as a de facto corporation except
A. existence of an invalid law under which it may
incorporate.
B. a bona fide attempt to organize a corporation under
such law.
C. actual user or exercise in good faith of corporate
powers conferred upon it by law.
D. existence of a valid law under which a corporation
with powers assumed might be incorporated.
342.The following are examples of defects which do not
preclude the creation of a de facto corporation except
A. the ART.s of incorporation fails to state all the
matters required by the Code to be stated, or state
some of them incorrectly.
B. the incorporators or a certain number of them are
not citizens of the Philippines.
C. the failure to submit its by-laws on time.
D. The percentage of Filipino ownership of the capital
stock required for the business is less than that
prescribed by law.
SECTION 21
343.All persons who assume to act as a corporation knowing
it to be without authority to do so shall be liable as
general partners for all debts, liabilities and damages
incurred or arising as a result thereof.
A. corporation by prescription
B. corporation sole
C. corporation aggregate
D. corporation by estoppel
344.Which one of the statements is incorrect?
A. A corporation by estoppel has no legal existence in
law.
B. A corporation by estoppel may arise even if no de
facto corporation exists.
C. A corporation by estoppel exists only between the
persons who misrepresented their status and the
parties who relied on the misrepresentation.
D. A corporation by estoppel may not be attacked by
any third party.
345.If a group of persons (would-be corporation) does not
qualify as a corporation, whether de jure, de facto, or by
estoppel, there is no corporation and the stockholders
are
A. not held liable.
B. held liable as limited partners.
C. held personally liable.
D. held jointly liable.
SECTION 22
346.A corporation shall be deemed dissolved and its
corporate powers shall be ceased if it does not formally
organize and commence transaction of its business
within
A. 5 years of inoperative period.
B. 2 years from the date of filing of ART.s of
incorporation.
C. 2 years from the date of its incorporation.
D. 5 years from the date of its incorporation.
347.The 2-year and 5-year rule are not applicable if the
failure to organize or continuously operate is due to
causes beyond the control of
A. the government authority.
B. the corporation.
C. persons comprising the corporation.
D. the members of non-stock corporation.
348.These are the conditions non-compliance with which will
prevent the legal existence of a corporation.
A. mandatory provisions
B. conditions precedent
C. conditions subsequent
D. directory provisions
SECTION 23
349.The law is settled that contracts between a corporation
and third persons must be made by or under the
authority of its board of directors and not by its
stockholders. Hence, the action of the stockholders in
such matter is
A. wise binding on the corporation
B. only advisory
C. both advisory and wise binding on the corporation
D. defective
350.Refers to a person other than an officer or employee of
the corporation, its parents or subsidiaries, or any other
individual having any relationship with the corporation
which would interfere with the exercise of independent
judgment in carrying out the responsibilities of a
29
 director.
A. President
B. Vice-President
C. Independent Director
D. Dependent Director
351.The qualifications of directors of stock corporations are
as follows except:
A. Every director must own at least one share of the
capital stock
B. The share of stock held by the director must be
registered in his name on the books of the
corporation
C. Every director must continuously own at least a
share of stock during his term, otherwise, he shall
automatically cease to be a director
D. At least two-third (2/3) of the directors must be
residents of the Philippines
SECTION 24
352.S1: No delinquent stock shall be voted.
S2: In case of failure to hold an election for any reason, the
meeting may be adjourned from day to day or from time to
time and can be adjourned sine die or indefinitely.
A. S1 is TRUE, S2 is FALSE
B. S1 is FALSE, S2 is TRUE
C. S1 and S2 are both TRUE
D. S1 and S2 are both FALSE
353.The privilege of this method of voting is permitted for
the purpose of giving minority stockholders
representation in the board of directors.
A. Straight Voting
B. Cumulative Voting for one candidate
C. Cumulative Voting by distribution
D. Non-cumulative straight voting
354.How to get the number of votes required to elect
desired number of directors?
A. Number of shares necessary to elect desired number of
directors X Total number of directors to be elected
B. Number of shares necessary to elect desired number of
directors X Number directors desired to be elected
C. Total number of directors to be elected + Total number
of outstanding shares entitled to vote
D. Total number of directors to be elected X Total number
of outstanding shares entitled to vote
SECTION 25
355.Who cannot attend or vote by proxy at board meetings?
A. Stockholders
B. Members
C. Treasurer
D. Directors/Trustees
356.This officer is appointed to control accounts and to
check expenditures. By virtue of his office, his authority
is restricted to doing those things which are usual and
necessary in the performance of his duties.
A. Comptroller
B. Treasurer
C. Secretary
D. General Manager
357.He has no authority by virtue of his office alone to enter
into contracts in behalf of the corporation. However, it
is frequently the case that he is given certain executive
duties by the board of directors or by-laws of the
corporation.
A. General Manager
B. Vice-President
C. Comptroller
D. Treasurer
SECTION 26
358.Within thirty (30) days after the election of the directors,
trustees and officers of the corporation, the secretary ,
or any other officer of the corporation, shall submit to
the SEC the
A. Names, nationalities and residences of the
directors, trustee and officer elected.
B. Names and residences of the directors, trustee and
officer elected.
C. Names and nationalities of the directors, trustee
and officer elected
D. Names of the directors, trustee and officer elected.
359.S1: Should a director, trustee or officer die, resign or in
any manner cease to hold office, his heirs in case of his
death, the secretary, or any other officer of the
corporation, or the director, trustee or officer himself,
shall immediately report such fact to the Securities and
Exchange Commission.
S2: The shares of stock or membership represented at
such meeting and entitled to vote thereat, either in
person, by remote communication, in absentia, or by
proxy, shall not constitute a quorum for the purpose of
such meetings, notwithstanding any provision of the
ART.s of incorporation or by-laws to the contrary.
A. S1 is TRUE, S2 is FALSE
B. S1 is FALSE, S2 is TRUE
C. S1 and S2 are both TRUE
D. S1 and S2 are both FALSE
360.S1: The non-holding of any election and the reasons
therefor, shall be reported to the commission within
three (3) days from the date of the scheduled election;
provided that, the notice of non-holding may be
submitted in the form of an electronic document, in
accordance with the rules and regulations of the
commission on the use of the electronic data messages.
S2: When pertaining to the original schedule, the report
of non-holding shall further specify a new date for the
election which shall not be later than thirty days from
the original date.
A. S1 is TRUE, S2 is FALSE
30
 B. S1 is FALSE, S2 is TRUE
C. S1 and S2 are both TRUE
D. S1 and S2 are both FALSE
SECTION 27
361.Who are disqualified to be a director, trustee or officer?
A. Person's guilty of violating the new Corporation
Code, committed within 5 years prior to the date of
election or appointment.
B. Person's convicted by final judgment of an offense
punishable by imprisonment for more than six
years.
C. Both A and B
D. Neither A nor B
SECTION 29
362.Statement 1: A person is disqualified to be a director if
he was convicted by final judgment of an offense
punishable by imprisonment for a period exceeding six
(6) years.
Statement 2: A person is disqualified to be a director if
he was guilty of violating the new Corporation Code,
committed within (3) years prior to the date of his
election or appointment.
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements is true
D. Both statement is false
363.The qualifications of directors of stock corporations are
as follows. Which is the exception?
A. Every director must own at least one share of the
capital stock
B. The share of stock held by the director must be
registered in his name on the books of the
corporation
C. Every director must continuously own at least a
share of stock during his term, otherwise, he shall
automatically cease to be a director
D. At least two-third (2/3) of the directors must be
residents of the Philippines
SECTION 28
364.The following are requisites to be complied with before
a director can be removed. Which is the exemption?
A. The removal must take place at a meeting called for
that purpose.
B. Notice must be given to the stockholders purposely
for that removal.
C. Meeting of directors duly assembled as a corporate
board
D. By a vote of 2/3 of the outstanding stock.
365.Statement 1: Incumbent members of the Board of
Directors of a corporation cannot be removed by merely
electing new directors.
Statement 2: The reason given is that "Under the law,
directors of a corporation can only be removed from
office by a vote of the stockholders representing at least
2/3 of the outstanding capital stock.
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statement is true
D. Both statement is false
366.The following refers to the three fold duties of a Director
of a corporation. Which is the exception?
A. They must be kind
B. They must be obedient
C. They must be diligent
D. They must be loyal
367.X'acto corporation fixes the number of directors at
seven (7). All the seven were elected and serve as such
for the current year. If three (3) out if the seven resign,
can the vacancies be filled up by the remaining four (4).
A. Yes, because before the resignation of the three,
the members of the board constitute a quorum.
The vacancies can be filled up by the votes of three
out of the four.
B. No, because after the resignation of the three, the
members of the board constitute a quorum. The
vacancies can be filled up by the votes of three out
of the four.
C. Yes, because after the resignation of the three, the
members of the board constitute a quorum. The
vacancies can be filled up by the votes of three out
of the four.
368.Refer to the preceding number. Suppose four of the
seven resign. Is there still a quorum?
A. Yes, because before the resignation of the three,
the members of the board constitute a quorum,
thus, the vacancies can be filled up by the votes of
three out of the four.
B. No quorum, because majority of seven is four
C. No, because after the resignation of the three, the
members of the board constitute a quorum, thus,
vacancies can be filled up by the votes of three out
of the four.
D. Yes there is still quorum
369.Statement 1. The board is empowered to fill the
vacancies if still constituting a quorum, except those
caused by removal or expiration of term.
Statement 2. A director or trustee so elected to fill a
vacancy shall be elected only for the unexpired term of
his predecessor in office.
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements are true
D. Both statements are false
31
SECTION 30
370.The amount of compensation in no case shall the total
yearly compensation of a director, as such
____________ of the net income before income tax of
the corporation during the preceding year.
A. Exceeds 10%
B. Not exceeding 10%.
C. Not exceeding 11%
D. Exceeds 11%
371.Statement 1. While directors are not entitled to
compensation, the officers and executives who are
members of the board such as the manager, treasurer,
secretary or cashier are entitled to be compensated for
their valuable services to the corporation.
Statement 2. Directors shall not receive any
compensation, as such directors, except for reasonable
per diems.
A. Statement 1 is true, Statement 2 is false
B. Statement 1 is false, Statement 2 is true
C. Both statements are true
D. Both statements are false
372.Directors are entitled to compensation only when:
A. Stated in the by-law
Resolution granting them compensation is
approved by the vote of the stockholders
representing at least a majority of the outstanding
capital stock at a regular or special stockholders
meeting.
B. Both A and B
C. Neither A nor B
SECTION 31
373.The following enumerates the occasions when a director
or trustee may be held liable for damages except:
A. He wilfully and knowingly vote for assent to
patently unlawful acts of the corporation
B. He is guilty of gross negligence or bad faith in
directing the affair of the corporation
C. He acquires any personal or pecuniary interest in
conflict with his duty
D. He exercised honest bad judgement that caused
business losses not amounting to bad faith or gross
negligence
374.Statement 1: A director or trustee is liable for business
losses incurred by the corporation because of honest
bad judgment not amounting to bad faith or gross
negligence.
Statement 2: A director guilty of disloyal act against the
corporation shall account to the corporation the profits
and losses obtained by him from the business
opportunity which should belong to the corporation.
A. Statement 1 is true; Statement 2 is false
B. Statement 1 is false; Statement 2 is true
C. Both statements are true
D. Both statements are false
375.Statement 1: A director is not liable for the misconduct
of his co-director or other officers unless he connives or
participates in it.
Statement 2: A director, trustee or officer shall be jointly
and severally liable for all damages suffered by the
corporation resulting from his unlawful acts.
A. Statement 1 is true; Statement 2 is false
B. Statement 1 is false; Statement 2 is true
C. Both statements are true
D. Both statements are false
SECTION 32
376.A contract of the corporation with one or more directors
or trustees can be ratified by the votes of?
A. Majority of the BOD/BOT
B. Majority of the stockholders/members
C. Stockholders representing at least 2/3 of the
outstanding capital stock or 2/3 of the members
D. Both A and C
377.A contract of the corporation with one or more directors
or trustees is valid under the following conditions
except:
A. The presence of such director/trustee in the board
meeting in which the contract was approved is not
necessary to constitute a quorum
B. The vote of such director/trustee is necessary for
the approval of the contract
C. The contract is fair and reasonable under the
circumstances
D. None of the above
378.Statement 1: In the case of a contract with a director or
trustee, such contract is valid when the board elects not
to question the validity of the contract.
Statement 2: A contract of the corporation with one or
more of its directors or trustees or officers is void, at the
option of such corporation.
A. Statement 1 is true; Statement 2 is false
B. Statement 1 is false; Statement 2 is true
C. Both statements are true
D. Both statements are false
SECTION 33
379.The interest of an interlocking director is nominal if his
stockholdings is:
A. At least 20%
B. More than 20%
C. At least 30%
D. More than 30%
380.This refers to a person who serves as a director to two
or more corporations.
A. Managing Director
B. Comptroller
C. Corporate Director
D. Interlocking Director
32

381.Statement 1: Contracts between corporations where a
director in one corporation is also a director in another
corporation is not prohibited under the Corporation
Code.
Statement 2: A corporation may provide in its by-laws a
provision that prohibits the contact mentioned above.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true; Statement 2 is false
D. Statement 1 is false; Statement 2 is true
SECTION 34
382.A disloyal director is exempted from liability to the
corporation if his disloyal act was ratified by the votes
of:
A. Majority of the BOD/BOT
B. Majority of the stockholders/members
C. Stockholders representing at least 2/3 of the
outstanding capital stock or 2/3 of the members
D. Both A and C
383.Statement 1: When a director acquires for himself a
business which should belong to the corporation, he
shall be considered disloyal notwithstanding the fact
that he risked his own fund for the venture.
Statement 2: The duty of a disloyal director is to account
to the corporation for all profits and losses derived by
him from a business opportunity by refunding the same
to the corporation.
A. Both statements are true
B. Both statements are false
C. Statement 1 is true; Statement 2 is false
D. Statement 1 is false; Statement 2 is true
384.Under this doctrine, a director, by virtue of his office,
acquires for himself a business opportunity which
should belong to the corporation, thereby, obtaining
profits to the prejudice of such corporation.
A. Doctrine of Corporate Entity
B. Doctrine of Corporate Opportunity
C. Doctrine of Apparent Authority
D. Doctrine of Separate Personality
Section 35
385.Which of the following is incorrect about executive
committee?
A. Under section 35, the executive committee must
provide by-laws and compose of not less than three
members of the board.
B. All members of the executive committee must be a
directors of the company.
C. The general rule for quorum requirements is the
same as that for majority of stockholders.
D. A majority of the members constitute a quorum
386.The executive committee is composed of?
A. 3 or more members.
B. Not less than 3 members of the board.
C. Less than 5 members of the board.
D. More than the number of the board.
387.The composition of the executive committee must be?
A. Voted by the majority of the stockholders.
B. Voted by the 2/3 of stockholder and appointed by
the members of the board of directors.
C. Authorized by the majority of the members of the
board and voted by majority.
D. Appointed by the board
Section 36
388.S1: the power to amend its articles of incorporation is
one of the powers expressly granted to a corp. by its
charter. S2: Acts which involves embarking on a diff. Line
of business is one of the incidental powers of a corp. S3:
business corp. Are not organized solely for profit-making
but also for social and economic betterment, this serves
as a basis of sec.36(9)
A. S1 is false
B. S2 is false
C. Both s1& s2 are true
D. All statements are true
389.In order for a corporation to purchase its own stocks,
one has to have:
A. Accumulated earnings
B. Restricted retained earnings
C. Unrestricted Retained earnings
D. Treasury shares
390.The following are true except:
A. A corporation not duly registered in accordance w/
law has no capacity to sue
B. Seal is a substitute device to authenticate.
C. De facto corporation may sue or be sued
D. De jure corporation cannot sue but can be sued.
Section 37
391.S1: Amendment to extend corporate term should be
ratified at a meeting represented by almost 2/3 of the
outstanding capital stock. S2: mere assent would be
sufficient in case of amendments
Which of the above statements is/are true.
A. Both S1 & S2
B. S1 only
C. Either S1 or S2
D. Neither S1 nor S2
392.Appraisal right is:
A. the right of a bond holder to demand payment of
his shares when he dissents to certain corporate
acts
B. Right of bond holder to increase the value of his
bonds
C. Both A & B
D. None of the above
33

393.Which of the following is/are requisites to
extend/shorten corporate term
I. Majority vote of BOD/BOT
II. Ratification
III. Written notice, addressed to stock holder, of
the proposed action (w/ time and place)
A. I, II, III B. I, II C. I ONLY D. None of the above
Section 38
394.Does the treasurer executes a sworn statement
attesting the fact that at least 25% of the Inc. in capital
stock has been paid & at least 25% of it has been paid?
A. Yes, because it is a requisite under sec. 37
B. No, because the CPA should do such
C. Maybe
D. Answer not given
395.Under this doctrine, there shall be no distribution of
assets to shareholders until the claims of creditors has
been paid or an application of such assets have been
made for payment of such claims A. Holmes doctrine
A. Marshall doctrine
B. Asset doctrine
C. Trust fund doctrine
396.S1: one way to increase capital stock is to increase no. of
shares w/o increasing the par value S2: The increase or
decrease of capital stock may be approved by SEC
A. S1 is false
B. S1 & S2 are true
C. S2 is false
D. S1 & S2 are false
Section 39
397.Statement I: The power to deny pre-emptive right must
be embedded in the Articles of Incorporation.
Statement II: The right of pre-emption is absolute to
existing stockholders.
A. Statement one is true; Statement two is false
B. Statement one is false; Statement two is true
C. Statement one is true; Statement two is true
D. Statement one is false; Statement two is false
398.New issue of stocks must be offered first to the
stockholders in proportion to their existing
shareholdings before subscriptions are received from
the general public, of what principle?
A. Appreciation right
B. Appraisal right
C. Redemption right
D. Pre-emptive right
399.Whenever the capital stock of a corporation is increased
and new shares of stock are issued, the stockholders are
entitled to pre-emptive right. For which purpose is the
said right?
A. To protect from impairment the voting control of
the stockholder
B. To protect dividend payment from declining
C. To preserve the proportionate influence and
interest of the stockholder in the corporation
D. All above mentioned are purposes of the right of
pre-emption
Section 40
400.For a sale of all or substantially all corporate asset to be
valid, the following is the requisite, except:
A. Approval by the BOD/BOT
B. The approval of the BOD/BOT is authorized by vote
of stockholders representing 2/3 of the outstanding
stock, or 2/3 of the members
C. The authorization must be done at a stockholder’s,
or members’ meeting
D. The sale may not be subject to the provisions of
existing law on illegal combinations and monopolies
401.S1: For sale of corporate assets, the board is given the
right to decide upon the terms and conditions of the sale
including the consideration for the property sold.
S2: For at any rate, the board is given the right to decide
upon the terms and conditions of the sale, the sale is still
subject to approval, by stockholders/ members.
Which of the above mentioned is false?
A. Neither S1 nor S2
B. Both S1 and S2
C. S1
D. S2
402.Which instances regarding the sale or disposition of
SUBSTANTIALLY ALL of a corporation’s corporate
property is incorrect?
A. The corporation would be rendered incapable of
continuing the business
B. The proceeds are to be appropriated for the
conduct of the normal business of the corporation
C. The corporation ceases to carry off the purpose for
which it was incorporated
Section 41
403.Under this doctrine, the capital stock and assets of the
corporation are held in trust for creditors.
A. Trust fund doctrine
B. Doctrine of piercing the veil of corporate entity
C. Doctrine of Equivalents
D. Insurance principle
404.S1: A provision in the Corporation Code of the
Philippines authorizes a stock corporation to purchase
or acquire its own shares
S2: A stock corporation may purchase its own shares
provided the acquisition is for legitimate purpose and its
retained earnings is restricted.
A. S2 is false
B. S1 is false
34
 C. Both S1 and S2 are true D. Profits
D. Both S1 and S2 are false 410.The declared dividends by the board of directors of a
stock corporation out of the unrestricted retained
405.A stock corporation is authorized to purchase its own earnings shall be payable in;
shares for the following purpose, except: A. Cash
A. Elimination of fractional shares B. Property
B. Satisfaction of indebtedness to corporation C. Stock
C. Payment of shares of dissenting or withdrawing D. A and B only
stockholders E. All of the above
D. To increase its earnings per share to be reported to
potential investors 411.The following are classes of dividends except;
A. Composite dividends
Section 42 B. Cumulative dividends
406.The following are the requisites for the exercise of a C. Scrap dividends
corporate power to invest corporate funds in another D. Liquidating dividends
corporation in another corporation, except: E. None of the above
A. Approval of a majority of the BOD/ BOT
B. Ratification by the stockholders representing at Section 44
least 2/3 of the outstanding capital stock, or by at 412.It is an agreement whereby a corporation delegates the
least 2/3 of the members for non-stock corporation, managing of its affairs to another corporation for a
at a meeting duly called for the purpose certain period of time.
C. Written notice of the proposed investment and the A. Management contract
time and place of the meeting shall be addressed to B. Service contract
each stockholder or member C. Administrative agreement
D. Any dissenting stockholder shall have pre-emptive D. Agreement of operations
right
413.2 S1: The capability to enter into a management
407.The power to invest corporate funds for the PRIMARY contract is an express power of a corporation.
PURPOSE it was incorporated requires: S2: The contract must be approved by a majority of the
I: Majority vote of the BOD/BOT quorum of the board of directors or trustees and
II: 2/3 of the outstanding capital stock or 2/3 of the rescinded by the prescribed vote of stockholders or
members members
III: Voting shall take place in meeting duly called for the A. Both statements are true
purpose B. 1st statement is false, 2nd statement is true
A. Statement 1 only C. Both statements are false
B. Statement 1 and 2 required D. 1st statement is true, 2nd statement is false
C. Statement 1, 2 and 3 required
D. None is required because it is for primary purpose 414.S1: A management agreement entered into by a
corporation with natural persons is a valid contract
408.Which of the following investment requires both vote of S2: The period of the contract must not be longer than
1.) Majority of the board of directors or trustees, and 2.) five years for any one term except contracts which
2/3 of the outstanding stock or 2/3 of the members in a relates to the exploration, development, exploitation or
meeting duly called for the purpose utilization of natural resources.
A. Investment of corporate funds for the primary A. Both statements are true
purpose indicated in the AOI B. 1st statement is false, 2nd statement is true
B. Corporate funds in invested in another business C. Both statements are false
which is auxiliary to its primary purpose D. 1st statement is true, 2nd statement is false
C. Investment for any other purpose other than the
primary purpose Section 45
D. Both B and C 415.What is the effect of an ultra vires act?
A. Void
Section 43 B. Voidable
409. It refers to the difference between the total present C. Valid
value of the assets after deducting losses and liabilities D. All of the above
and the amount of its capital stock
A. Dividends 416.It refers to an act which is impliedly forbidden because
B. Retained earnings it is not expressly or impliedly authorized in the exercise
C. Revenues of powers.
35
 A. Illegal act 423.This matter is an internal one which the law has left for
B. Intra Vires act the corporation to decide.
C. Ultra Vires act A. Issuance of certificate of stock
D. Corporate act B. Place of meetings
C. Qualifications of directors
417.S1: An ultra vires act is an illegal act
S2: Intra vires are acts done within the legitimate powers Section 48
of a corporation or authorized person 424.Amended or new by- laws must be:
A. 1st statement is true, 2nd statement is false A. not inconsistent with the codes provided
B. Both statement are true B. not copied from other companies
C. 2nd statement is true, 1st statement is false C. must be patented
D. Both statement are false
425.The previous notice of proposed revocation at meeting
Section 46 is,
418.The following are elements of a valid by-laws except: A. necessary
A. It must be reasonable B. not necessary
B. It must be general and uniform in the operation and C. mandatory
directed against particular individuals. 426.Statement 1: Articles of incorporation constitutes the
C. It must not be contrary to existing law and charter of fundamental law of the corporation
inconsistent with the Code Statement 2: By- laws are merely rules and regulation
D. It must not impair obligations of contract adopted by the corporation.
A. only statement 1 is correct
419.S1: The function of by-laws is to prescribe the rights and B. both statements are correct
duties of the board of directors towards the corporation C. neither of the statements is correct
and among themselves with reference to the
management of corporate affairs and to regulate the Section 49- 50
transaction of the business of the corporation in a 427.These are meetings held annually on a fixed date or any
particular way. date of a month every year as determined by the board
S2: The rules of action adopted by the corporation for its of directors or trustees.
internal regulations and for government of its officers is A. regular
called the by-laws. B. special
A. Both statements are true C. optional
B. 1st statement is true, 2nd statement is false
C. Both statements are false 428.These are meetings that are held anytime deemed
D. 1nd statement is false, 2st statement is true necessary or are provided by the by- laws.
A. regular
420.What are the parties bounded by the effects of by-laws. B. special
A. Directors or Trustees C. optional
B. Stakeholders and Members
C. Third persons 429.Who shall preside at all meetings of directors or trustees
D. All of the above and of the stockholders or members?
A. President
Section 47 B. Secretary
421.These are the list of rules of action provided by the C. any of the officers
corporation for its own internal government.
A. Articles of Partnership 430.If there are no date fixed in the by- laws of a regular
B. Contents of by- laws meeting, on what month of the year must it take place?
C. Articles of Incorporation A. February
B. March
422.The location where the stockholders’ or members’ C. April
meeting must always be held.
A. The office of Securities and Exchange Commission 431.Written notice of regular meetings must be sent to all
B. City or municipality where the principal office of the stockholders or members of record for at least:
corporation is located A. 1 week prior to the meeting
C. Any place desired by majority of the stockholders or B. 2 weeks prior to the meeting
members C. 3 weeks prior to the meeting

36
 432.Written notice for a special meeting must be sent to all Section 53
stockholders of members for at least: 433.Regular meetings for directors or trustees shall be
A. 1 week prior to the meeting held ________, unless the by-laws provide
B. 2 weeks prior to the meeting otherwise.
C. 3 weeks prior to the meeting A. Weekly
B. Quarterly
Section 51 C. Monthly
427.S1: Notice of meetings shall be in writing, and the time D. Yearly
and place thereof stated therein.
S2: Directors’ meeting may be held at any place fixed in 434.Special meetings of the board of directors may be
the by-laws but not beyond the bounds of the state held at any time upon the call of the
where the corporation exists. , or as provided in the by-laws.
A. Both statements are true. A. Duty
B. Both statements are false. B. Chairman
C. Only statement 1 is true. C. President
D. Only statement 2 is true. D. Stockholders

428.S1: The “call” for a meeting is exercised by the person 435.S1: A director or trustee may not waive the
who has the power to call a meeting. requirement of notice of any meeting, expressly or
S2: “Notice” is the writing informing the stockholders or implied.
members of the meeting. S2: Special meetings shall be held yearly upon the
A. Both statements are true. call of the Chairman.
B. Both statements are false. A. Both statements are true.
C. Only statement 1 is true. B. Both statements are false.
D. Only statement 2 is true. C. Only statement 1 is true.
D. Only statement 2 is true.
429.A/an may not consider business other
than those listed in the notice of meeting unless there is Sec. 54
unanimous waiver. 436.All are presiding officers at meetings except:
A. Staff meeting A. Secretary
B. Emergency meeting B. Vice-Chairman
C. Business meeting C. President
D. Special meeting D. Stockholder or member chosen

Section 52 437.The shall preside at all meetings of the

430.In a , the basis for determining the quorum directors or trustees as well as of the stockholders or
is the total number of registered members. members, unless the by-laws provide otherwise.
A. Stock Corporations A. Chairman
B. Non-stock Corporations B. President
C. Domestic Corporations C. Vice-chairman
D. Foreign Corporations D. Director

431.A shall consist of the stockholders 438.S1: The by-laws may provide that the chairman, instead
representing a majority of the outstanding stock or a of the president, shall preside at board meetings.
majority of the members in the case of non-stock S2: Stockholder or member in a temporary capacity may
corporations. be a presiding officer at meetings.
A. Meeting A. Both statements are true.
B. Quorum B. Both statements are false.
C. Board C. Only statement 1 is true.
D. Convention D. Only statement 2 is true.

432.Enumerated below are matters in which the law Section 55

requires specific number of votes, except:
A. To amend Articles of Incorporation
B. To elect directors or trustees
C. To adopt by-laws
D. To remove stockholders
439.S1: Executors, administrators or receivers may exercise
the right to vote the shares under their administration
without the need of any written proxy. S2: Stock
corporations in case of pledged or mortgaged shares,
pledgor or mortgagor shall have the right to attend and
vote at meetings of stockholders.
37
 A. Only S1 is true
B. Only S2 is false
C. Both statement is true
D. Both statement is false
440.The right of a member of a non-stock corporation to
vote may be limited or broadened, but it may not be
denied. II. Since membership in a non-stock corporation
is personal and non-transferable, a member can only
vote in person and not by proxy or through other means.
In your evaluation of the foregoing statements:
A. Both statements are true
B. Both statements are false
C. Only S1 is true
D. Only S2 is true
441.A stockholder may vote in stockholders' meetings: I.
Directly or personally II. By representative voting such as
by means of proxy or voting trust agreement, or through
a legal representative such as an executor or receiver.
The statements are true with respect to:
A. I only B. II only C. Both I and II D. Neither I and II
Section 56
442.Following statement are the exceptions for voting in
case of joint ownership except?
A. Written proxy signed by all the co-owners
B. The consent of all co-owners shall be necessary
C. The shares are owned in an "and/or" capacity
443.S1: Any one of the joint owners can vote said shares or
appoint a proxy therefor S2: an executor or
administrator of a stockholder may not be elected
unless he owns at least 1 share
A. Only S1 is true
B. Only S2 is true
C. Both statement is true
D. Both statement is false
444.Stockholders and members may vote in person or by
proxy in all meetings of stockholders or members. II. In
order to vote the same, the consent of all the co-owners
shall be necessary. In the foregoing statement, which is
true for voting in case of joint ownership?
A. Statement I
B. Statement II
C. Both statement
Section 57
445.Which of the following statements concerning treasury
shares is incorrect?
A. They are not outstanding shares
B. They have no voting rights as long as they remain in
the treasury
C. They may not be disposed of at a price lower than
par value
D. They are not entitled to dividends
446.Which of the following statements is incorrect?
A. Treasury shares may be made other than by the
endorsement of the stock certificate by the owner
of the shares or by his duly authorized agent
B. Treasury shares have no voting right as long as such
shares remain in the treasury
C. In case of sale or reissue, treasury shares regain
dividend and voting rights to which they were
originally entitled.
447.Such shares are not entitled to dividends. Treasury
shares are formally cancelled, and are, therefore,
subject to reissue by the corporation at some future
time. II. Treasury shares, not being outstanding, are not
entitled to voting rights.
A. Only S1 is true
B. Only S2 is true
C. Only S2 is false
D. Both statements are true
Section 58
448.It refers to the written authority given by a stockholder
to another person to exercise the voting right without
transferring title to the shares.
A. Power of attorney
B. Voting trust agreement
C. Proxy
449.Who may attend and vote in person or by proxy in
meetings?
A. Stockholders or members in the regular or special
meetings of the stockholders or members.
B. Directors or trustee in the regular or special
meetings of the BOD/BOT
C. Both A and B
450.S1: Stockholders or members may attend and vote in
their meeting by proxy.
S2: In non-stock corporations, the right to vote by proxy
or even the right to vote itself may be denied to
members in the articles of incorporation or the by-laws.
A. Both statement is true
B. Both statement is false
C. Only statement 1 is true
D. Only statement 2 is false
SECTION 59
451.STATEMENT 1: No voting trust agreement shall be
entered into for the purpose of circumventing the law
against monopolies and illegal combinations in restraint
of trade or used for purposes of fraud.
STATEMENT 2: The rule that voting trust should not have
a period exceeding five (5) years is an absolute rule.
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false
38
 452.The following are requisites of a voting trust. EXCEPT?
A. Must be notarized
B. May be in writing
C. Must be filed with the corporation and the SEC.
D. It should confer upon the trustee or trustees the
right to vote and other rights pertaining to the
share
453.Which of the following statements is false?
A. Unless expressly renewed, all rights granted in a
voting trust agreement shall automatically expire at
the end of the agreed period.
B. In a voting trust, the beneficial owner of the shares
ceases to be a stockholder of a record of the
corporation.
C. The trustees cannot just act and vote at any meeting
during the duration of the voting trust agreement.
D. A voting trust is irrevocable.
SECTION 60
454.STATEMENT 1: A subscription contract is required to be
written as mentioned in the corporation code.
STATEMENT 2: A subscription, making the subscriber a
stockholder, and rendering him liable as such is called a
conditional subscription.
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false
455.STATEMENT 1: A subscription for shares requires an
express promise to pay the amount subscribed.
STATEMENT 2: A valid and binding subscription for stock
of a corporation cannot be cancelled so as to release the
subscriber from liability thereon.
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false
456.Which of the following statements is false?
A. Unpaid Subscriptions are not due and payable until
a call is made by the corporation for payments
B. A stockholder is personally liable for the financial
obligations of the corporation to the extent of his
unpaid subscription.
C. The subscription to capital stock of the corporation
is payable at the moment of the subscription.
D. A valid and binding subscription contract cannot be
cancelled so as to release the subscriber form
liability thereon except when the consent of all
stockholders is given.
SECTION 61
457.STATEMENT 1: A pre-incorporation subscription for
shares can still be revocable for the first six (6) months
from the date of subscription.
STATEMENT 2: Subscription to the capital of a
corporation constitutes a fund to which the creditors
have a right to look for satisfaction of their claims
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false
458.Which of the following is not true?
A. The board can declare a formal resolution for the
payment of subscription.
B. Failure to pay on the date required in the call or as
specified in the contract of subscription will render
the entire balance due and payable and making the
stockholder liable for the interest.
C. No pre-incorporation subscription may be revoked
after the submission of the articles of incorporation
to the Securities and Exchange Commission.
D. A stock certificate shall be issued upon the
subscription of the shares of stock.
459.A subscription for shares of stock of a corporation still to
be formed shall be irrevocable for a period of at least six
(6) months from the date of subscription, unless:
A. A majority of the stockholders consent to the
revocation.
B. All the other subscribers consent to the revocation.
C. A majority of the subscribers consent to the
revocation.
D. 2/3 of the other subscribers consent to the
revocation.
SECTION 62
460.Consideration for issuance of stock may be any or
combination of any two or more of the following,
except:
A. Actual cash paid to the corporation
B. Labor performed to the corporation
C. Amounts transferred from unrestricted retained
earnings to stated capital
D. Property actually received that may or may not be
necessary for lawful purposes by the corporation.
461.Which of the following statements is incorrect?
A. Valuation of a property received is at a fair value
equal to the par or issued value of the stock issued.
B. Shares of stock can be issued in exchange for
promissory notes or future services.
C. Stocks shall not be issued for less than the par or
issued price.
D. Previously incurred indebtedness can be a
consideration for an issuance of stock.
462.STATEMENT 1: A consideration for stocks can consist of
intangible property and the value shall thereof be
determined and approved by the incorporators or the
board of directors.
39
 STATEMENT 2: The issued price of no-par value shares
may be fixed in the articles of incorporation or by the
board of directors pursuant to authority conferred upon
it by the articles of incorporation or the by-laws.
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false
Section 63
463.The document evidencing the ownership of shares of
stocks by a stockholder and the full payment of its issue
or subscription price.
A. Share of Stock
B. Certificate of Stock
C. Receipt
D. Certificate of Recognition
464.It is the Interest or right which the stockholder has in
the management of the corporation, and its surplus
profits, and upon a dissolution, in all of its assets
remaining after payment of corporate debts.
A. Share of Stock
B. Certificate of Stock
C. Capital stock
D. Certificate of Recognition
465.The following statements are given to you:
 Statement 1: A Share of stock is a unit of interest in a
corporation.
 Statement 2: A Certificate of stock is an incorporeal or an
intangible property.
A. Both statements are TRUE
B. Both statements are FALSE
C. Statement 1 is FALSE; Statement 2 is TRUE
D. Statement 1 is TRUE; Statement 2 is FALSE
Section 64
466.It is a doctrine wherein no certificate of stock shall be
issued to a subscriber until the full amount of his
subscription together with interest and expenses (in
case of delinquent shares), if any is due, has been paid:
A. Doctrine of Separate Entity
B. Doctrine of Corporate Opportunity
C. Doctrine of Individuality of Subscription
D. Trust Fund Doctrine
467.The following statements are given to you:
 Statement 1: A certificate of stock shall be issued to
subscribers even if the full amount of the subscription is not
fully paid.
 Statement 2: No certificate of stock shall be issued to
subscribers until the full amount of the subscription is fully
paid.
A. Both statements are TRUE
B. Both statements are FALSE
C. Statement 1 is FALSE; Statement 2 is TRUE
D. Statement 1 is TRUE; Statement 2 is FALSE
468.It is a document issued to subscribers if the
subscription is fully paid.
A. Shares of Stock
B. Certificate of Stock
C. Capital Stock
D. Treasury shares
Section 65
469.The following statements are given to you:
 Statement 1: Any director or officer of a corporation
consenting to the issuance of stocks for a consideration
more than its par or issued value or for a consideration in
any form other than cash, valued in excess of its fair value,
shall be solidarily, liable with the stockholder concerned to
the corporation and its creditors for the difference between
the fair value received at the time of issuance of the stock
and the par or issued value of the same.
 Statement 2: Any director or officer of a corporation
consenting to the issuance of stocks for a consideration less
than its par or issued value or for a consideration in any
form other than cash, valued in excess of its fair value, or
who, having knowledge thereof, does not forthwith express
his objection in writing and file the same with the corporate
secretary, shall not be solidarily, liable with the stockholder
concerned to the corporation and its creditors for the
difference between the fair value received at the time of
issuance of the stock and the par or issued value of the
same.
A. Both statements are TRUE
B. Both statements are FALSE
C. Statement 1 is FALSE; Statement 2 is TRUE
D. Statement 1 is TRUE; Statement 2 is FALSE
470.A stock that is issued with a value much greater than
the value of the issuing company's assets.
A. Preferred stock
B. Common stock
C. Redeemable share
D. Watered Stock
471.Both par and no par stocks can thus be watered stocks.
Hence, watered stock includes:
A. Issued without consideration.
B. Issued as fully paid when the corporation has
received a lesser sum of money than its par or
issued value.
C. Issued as stock dividend when there are no
sufficient retained earnings to justify it.
D. All of the above
Section 66
472.The following statements are given to you:
 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.
40
 If no rate of interest is fixed in the by-laws, such rate shall 479.Who cannot incur any deficiency liability because the hi
be deemed to be the legal rate. ghest bid must not be less than the full amount due?
A. Both statements are TRUE A. subscriber
B. Both statements are FALSE B. stockholder
C. Statement 1 is FALSE; Statement 2 is TRUE C. member
D. Statement 1 is TRUE; Statement 2 is FALSE D. BOD/Trustee

473.What is the legal rate in the Philippines? 480.Which of the following statement is false?
A. 5% A. Stockholders are given notice of the resolution by t
B. 6% he secretary of the corporation
C. 7% B. The BOD, by resolution, orders the sale of the delin
D. 8% quent stocks
C. Unpaid shares which are not delinquent stockholde
474.Who will pay to the corporation interest on all unpaid rs which notice shall be Published
subscriptions from the date of subscription, if so D. None of the above
required by, and at the rate of interest fixed in the by-
laws. SEC 69
A. Members 481. Which of the following is/are the ground/s for the reco
B. Corporators very of stock unlawfully sold for delinquency?
C. Incorporators A. Irregularity or defect in the notice of sale
D. Subscribers B. Irregularity or defect in the sale itself of the delinqu
ent stock
SEC. 67 C. Both a and b
475.Which of the following is not a remedy to enforce paym D. None of the above
ent of stock subscription?
A. Extra-judicial sale at public auction 482.1st statement: No action to recover delinquent stock so
B. Recover any other claim against the subscriber ld can be sustained upon the ground of irregularity or d
C. Judicial action efect in the notice of sale, or in the sale itself of its delin
D. Collection from cash dividends and withholding divi quent stock.
dens 2nd statement: No such action shall be maintained unle
ss its commenced by the filing of a complaint within six (
476.It is a declaration officially made by a corporation usuall 6) months from the date of sale.
y expressed in the form of resolution of the Board of Dir A. Only statement 1 is true
ectors requiring the payment of all/ a certain prescribe B. Only statement 2 is true
d portion of a subscriber’s stock subscription C. Both statements are true
A. Call D. Both statements are false
B. Assessment
C. Payment 483.In case of stock unlawfully sold for delinquency when is
D. Collection the filing of complaint?
A. Within 3 months from date of sale
477.Which of the following is not a requisite for a valid call? B. Within 3 months from date of subscription
A. It must be made in the manner prescribed by law C. Within 6 months from date of sale
B. It must be made by BOD D. Within 6 months from date of subscription
C. It must operate uniformly upon all the shareholder
s SEC 70
D. None of the above 484.Which of the following statement is true
A. Unpaid subscription can recover
SEC 68 B. Unpaid subscription cannot recover
478.It is a person offering at the sale to pay the full amount C. None of the above
of the balance on the subscription together with the acc
rued interest, cost of advertisement and expenses of sal 485.As a general rule, a corporation may not maintain a suit
e, for the smallest number of shares or fraction of a sha for the enforcement of unpaid subscription without firs
re. t making a call as provided by law.
A. Incorporator The above statement is a:
B. Corporator A. Extra-judicial remedy
C. Highest bidder B. Judicial remedy
D. BOD/Trustee C. Equitable remedy
D. None of the above
41

486. Nothing in this code shall prevent the corporation from
collecting by action in a court of proper jurisdiction the
amount due on any:
A. Unpaid subscription
B. Unpaid subscription and costs
C. Unpaid subscription, cost and expenses
Section 71
487. The following are effects of delinquency except:
A. Stock delinquency does not necessarily result in the
deprivation of all the rights of the stockholder.
B. Any cash dividend due on delinquent stock shall first
be applied to the unpaid balance on the
subscription plus cost and expenses.
C. If shares declared delinquent, the delinquent
stockholder shall not be entitled to receive
dividends.
D. Stock dividends shall be withheld from the
delinquent stockholders until his unpaid
subscription is fully paid.
488. 1st statement: No delinquent stock shall be voted for or
be entitled to vote or to representation at any
stockholders' meeting.
2nd statement: The holder of the delinquent stock
thereof be entitled to any of the rights of a stockholder.
A. Only 1st statement is true
B. Only 2nd statement is true
C. Both are true
D. Both are false
489. Delinquent stocks are:
A. Entitled to vote in stockholders' meeting
B. Entitled to inspect the books of the corporation
C. Entitled to dividends
D. None of the above.
Section 72
490. Holders of unpaid shares of stock which are not
delinquent shall:
A. Have all the rights of a stockholder
B. Shall not be entitled to any of the rights of a
stockholder
C. Shall be entitled to receive dividends only
D. None of the above
491. 1st statement: Holders of subscribed shares not fully
paid which are not delinquent shall have all the rights of
a stockholder.
2nd statement: Subscribed share not fully paid up may
be voted provided no subscription call or interest due on
subscription is unpaid and delinquent.
A. Only 1st statement is true
B. Only 2nd statement is true
C. Both are true
D. Both are false
492. In the case of par value shares, a subscriber who has
been issued fully paid certificate of stock for partial
payments on his subscription and is thereafter declared
delinquent as to the rest
A. Can vote the numbers of shares corresponding to
the amount already paid.
B. Cannot vote the numbers of shares corresponding
to the amount already paid.
C. Can vote the numbers of shares corresponding to
the unpaid amount
D. None of the above
Section 73
493. 1.The registered owner of a certificate of stock in a
corporation or his legal representative shall file with the
corporation an affidavit of loss of the stock certificate
which contains the following except:
A. the circumstances as to how the certificate was lost,
stolen or destroyed,
B. the number of shares represented by such
certificate,
C. the serial number of the certificate,
D. the name of the owner's legal representatives,
494. After verifying the affidavit and other information and
evidence with the books of the corporation, said
corporation shall publish a notice in a newspaper of
general circulation published in the place where the
corporation has its principal office, once a week for
three (3) consecutive weeks which shall state the
following except:
A. the name of said corporation,
B. the name of the registered owner,
C. the serial number of said certificate,
D. the number of shares represented by such
certificate,
E. All of the above
495. Evaluate the following statements:
I. If a contest has been presented to said corporation or if an
action is pending in court regarding the ownership of said
certificate of stock which has been lost, stolen or destroyed,
the issuance of the new certificate of stock in lieu thereof
shall be suspended until the final decision by the court
regarding the ownership of said certificate of stock which has
been lost, stolen or destroyed.
II. Except in case of fraud, bad faith, or negligence on the part
of the corporation and its officers, no action may be brought
against any corporation which shall have issued certificate of
stock in lieu of those lost, stolen or destroyed pursuant to
the procedure above-described.
A. Both statements are true.
B. Both statements are false.
C. Only statement II is true.
D. Only statement II is false.
42
Section 74 Section 76
496. Which of the following is included in the books and 502. It is a plan created by the representatives of the
records of the corporation: constituent corporations, providing for the details of
A. stock and transfer books in case of non-stock such merger.
corporations A. Plan of Limited Partnership
B. lists of creditors of the corporation B. Plan of an Incorporators
C. minutes of all meetings of stockholders or members C. Plan of merger and or consolidation
and of directors or trustees D. None of the above
D. a & c only
E. all of the above 503. The plan of merger or consideration shall set forth the
following except:
497. Who has the right to inspect the corporations records in A. Name of the corporation involved
books? B. Terms and mode of carrying it out
A. directors or trustees C. The articles of the new corporation to be formed in
B. any proper representative case of consolidation
C. attorney-in-fact D. None of the above
D. none of the above
E. all of the above 504. It is where a corporation absorbs the other and remains
in existence while others are dissolved.
498. It is the book kept by stock corporations A. Merger
A. Corporation book B. Consolidation
B. Stock corporation bible C. Dissolution
C. Stock and transfer book D. None of the Above
D. None of the above
Section 77
Section 75 505. 1st statement: Notice upon the stockholders’ or
499. 1st statement: If the Paid up capital of the corporation is members’ approval shall state the purpose of the
less than 50,000, the financial statements may not be meeting and shall include a copy or a summary of the
certified under oath by the treasurer or any responsible plan of merger or consolidation.
officer of the corporation. 2nd Statement: Any amendment to the plan of merger
2nd Statement: If the Paid up capital of the corporation or consolidation may be made, provided it is approved
is less than 50,000, the financial statements may be by the two-thirds (2/3) vote of BOD/trustees of all
certified under oath by the treasurer or any responsible constituent corporation.
officer of the corporation. A. Only statement 1 is true
A. Only statement 1 is true B. Only statement 2 is true
B. Only statement 2 is true C. Both statement are true
C. Both statement are true D. Both statement are false
D. Both statement are false
506. In case of the stockholders’ or members’ approval,
500. At the regular meeting of stockholders or members who notice of a corporate meeting shall be given to all
shall present the financial report of the operations of the stockholders or members of each respective
corporation for the preceding year? corporation.
A. Underwriters A. One week prior to the date of the meeting
B. BOD/Trustees B. Two weeks prior to the date of the meeting
C. Stockholders C. Three weeks prior to the date of the meeting
D. Subscribers D. Four weeks prior to the date of the meeting

501. The corporation shall furnish to him its most recent 507. 1st statement: The affirmative vote of stockholders
financial statement within ______ from receipt of a representing at least two-thirds (2/3) of the outstanding
written request of any stockholder/member. capital stock of each corporation in the case of stock
A. Five (5) Days corporations shall be necessary for the approval of such
B. Ten (10) Days plan.
C. Fifteen (15) Days 2nd statement: The affirmative vote of stockholders
D. Twenty (20) Days representing at least two-thirds (2/3) of the members in
the case of non-stock corporation shall be necessary for
the approval of such plan.
A. Only statement 1 is true
B. Only statement 2 is true
43
 C. Both statement are true
D. Both statement are false
Section 78
508. It is a document to be assigned by the president or vice
president of each corporation and signed by their
secretary or assistant secretary.
A. Articles of incorporation
B. Articles of Merger and consolidation
C. Articles of Limited Partnership
D. None of the above
509. In the article of merger or consideration, people
involved of each corporation should set forth the Section 80.
following except:
A. The plan of the merger or the plan of consolidation
B. As to stock corporations, the number of shares
outstanding, or in the case of non-stock
corporations, the number of members
C. As to each corporation, the number of shares or
members voting for and against such plan,
respectively
D. None of the above
510. 1st statement: In an article of merger or consolidation,
signature of the president or vice president is needed
and must also certify by the secretary of assistant
secretary of each corporation.
2nd Statement: After the approval by the stockholders or
members, articles of merger or consolidation shall be
executed by each of the constituents.
A. Only statement 1 is true
B. Only statement 2 is true
C. Both statement are true
D. Both statement are false
Section 79
511. All of the following shall first obtain a favorable
recommendation of the appropriate government
agency before submitting the articles of merger or
consolidation to the Securities and Exchange
Commission except:
A. Banks and banking institutions
B. Public utilities
C. Insurance companies
D. None of the above. Section 81
512. The consolidation or merger shall be effective from and
after:
A. The issuance by the SEC of the certificate of
consolidation or merger.
B. The submission of the duly signed article of merger
or of consolidation to the SEC.
C. The approval of a plan by the board of directors or
trustees.
D. The execution of a formal contract by each of the
constituent corporations.
513. The following statements are given to you:
Statement 1. The articles of merger or consolidation shall be
submitted in four copies to the SEC for approval.
Statement 2. If the SEC, upon investigation, believes that the
proposed merger or consolidation is contrary with the
provisions of the Corporation code or existing laws, the
merger or consolidation is immediately considered as VOID.
A. Both statements are TRUE.
B. Both statements are FALSE.
C. Only statement 2 is FALSE.
D. Only statement 1 is FALSE.
514. These equations are presented to you:
Equation 1. A+B=A
Equation 2. A+B=X
What do the above equation represent?
A. Both equations represent merger.
B. Equation 1 is consolidation while equation 2 is
merger.
C. Both equations represent consolidation.
D. Equation 1 is merger while equation 2 is
consolidation.
515. The constituent corporations shall become a single
corporation which, in case of merger, shall be the
___________ in the plan of merger.
A. Consolidated corporation
B. Surviving corporation
C. Constituent Corporation
D. Any of the above
516. Which of the following statements is true?
Statement 1: The rights of creditors upon the property
of any of such constituent corporations shall not be
impaired by such merger or consolidation.
Statement 2: The separate existence of the constituent
corporations shall cease, except that of the surviving or
the consolidated corporation.
A. Both statements are true.
B. Statement 1 only.
C. Statement 2 only.
D. None of the statements is true.
517. The right of a stockholder to demand payment of the fair
value of his shares when he dissents from certain
corporate acts is known as:
A. Redemption right.
B. Appreciation right.
C. Pre-emptive right.
D. Appraisal right.
518. All of the following are instances that appraisal right is
available except in case of:

44
 A. Sale, lease, exchange, transfer, mortgage, pledge or C. 25 days after the reward
other disposition of all or substantially all of the D. 15 days after the reward
corporate property and assets.
B. Changing or restricting the rights of any 525. Upon payment of share of the dissenting stockholder, all
stockholders or class of shares. his rights as stockholder are?
C. Investment funds for the purpose of increasing the A. suspended
capital stock of the corporation. B. amended
D. Merger or consolidation. C. transferred to other stockholders
D. terminated
519. Exercise of appraisal right has the following limitations
except: SECTION 84
A. The dissenting stockholder must have voted against 526. Any of the following cases, except one, will have the
the proposed corporate action. effect of extinguishing the withdrawing stockholder’s
B. A written demand on the corporation for payment right to payment of his shares. Which is the exception?
of his shares must be made by him within 30 days
after the vote was taken. A. Such stockholder withdraws his demand for
C. The price must be based on the FV of the shares as payment and the corporation consents thereto
of the day prior to the date on which the vote was B. The proposed corporate action is abandoned or
taken. rescinded by the corporation
D. None. All of the above are limitations on the C. The Commission determines that such stockholder
exercise of appraisal right. is entitled to appraisal right
D. The proposed corporate action is disapproved by
Section 82 the SEC where its approval is necessary
520. If the withdrawing stockholder and the corporation
cannot agree on the fair value of the shares, it shall be 527. What will happen if the right to payment of a dissenting
determined by: stockholder ceases?
A. Collaboration A. The stockholder shall not be paid the fair value of
B. Aggregation his shares
C. Arbitration B. His status as a stockholder shall thereupon be
D. Votation restored
C. All dividend distribution which would have accrued
521. Where must the corporation get the payment for the on his shares shall be paid to him
shares to withdrawing stockholders? D. All of the above
A. Net income
B. Cash account 528. A dissenting stockholder who demands payment of his
C. Restricted Retained earnings shares is no longer allowed to withdraw from his
D. Unrestricted Retained earnings decision unless?
A. The corporation consents thereto
522. The demand period for the appraisal right is: B. Allowed by the board of directors
A. 30 days C. Allowed by the majority of stockholders
B. 60 days D. Approved and signed by the President of the
C. 10 days corporation
D. 45 days
SECTION 85
SECTION 83 529. The corporation shall bear the costs of appraisal if?
523. Once the dissenting stockholder demands payment of
the fair value of his shares, all rights accruing to such A. The price which the corporation offered to pay
shares including voting and dividend rights shall? dissenting stockholder is lower than the fair value
A. remain as determined by the appraisers named by them
B. be suspended B. The price offered by the corporation is
C. be amended approximately the same as the fair value
D. be transferred to other stockholders ascertained by the appraisers
C. An action is filed by the dissenting stockholder and
524. The dissenting stockholder’s voting and dividend rights his refusal to accept payment is found by the court
shall be restored if he is not paid the value of his shares to be unjustified
within what time? D. None of the above
A. 30 days after the reward
B. 40 days after the reward
45
 530. The dissenting stockholder shall bear the costs of C. Only statement 1 is false.
appraisal if? D. Only statement 2 is false.
A. The price which the corporation offered to pay 536. Any profit which a non-stock corporation may obtain as
dissenting stockholder is lower than the fair value an incident to its operation shall
as determined by the appraisers named by them A. Be distributed and divided among its members.
B. The price offered by the corporation is B. Be used for furtherance of its purpose.
approximately the same as the fair value C. Either A or B
ascertained by the appraisers D. Neither A nor B.
C. An action is filed by the dissenting stockholder and
his refusal to accept payment is found by the court 537. Statement 1: A non-stock corporation may never
to be unjustified possess capital stock dividends.
D. None of the above Statement 2: A non-stock corporation may possess
capital stock dividends.
531. Who bears the costs of appraisal? A. Only statement 1 is true.
A. Corporation B. Only statement 2 is true.
B. Dissenting Stockholder C. Both statements are false.
C. Both corporation and dissenting stockholder D. Both statements are true.
D. Either corporation or dissenting stockholder
SECTION 88
SECTION 86 538. A non-stock corporation may be formed or organized for
532. When shall a dissenting stockholder submit the any of the following instances except.
certificate of stock representing his shares to the A. Charitable
corporation for notation thereon that such shares are B. Cultural
dissenting shares? C. Trade
A. Within 10 days before leaving the corporation D. None of the above
B. Within 10 days after leaving the corporation
C. Within 10 days before demanding payment for his 539. The determination of whether or not a non-stock
shares corporation can engage in profit-making business or
D. Within 10 days after demanding payment for his activity depends largely on.
shares A. Its by-laws.
B. Its purpose/s.
533. The shares represented by the certificate(s) bearing C. The decision of its trustees only.
such notation may be transferred or sold by whom? D. The decision of its trustees and members.
a. by the transferee
b. by the dissenting stockholder 540. Statement 1: A private corporation may either be a stock
c. by the corporation or non-stock corporation.
d. Any of those mentioned above Statement 2: An eleemosynary corporation may either
be a stock or non-stock corporation.
534. Which is incorrect regarding the transfer of dissenting A. Only statement 1 is false.
shares? B. Only statement 2 is false.
A. The transferee shall become a regular stockholder C. Both statements are true.
with the right to receive all dividend distributions D. Both statements are false.
which would have accrued to such shares
B. The right of the transferor as a dissenting SECTION 89
stockholder to be paid the fair value of the shares 541. Statement 1: Each member shall be entitled to as many
shall cease. votes depending on the method of voting.
C. Both A and B Statement 2: Each member, regardless of class, shall be
D. None of the above entitled to only one vote.
A. Only statement 1 is true.
SECTION 87 B. Only statement 2 is true.
535. Statement 1: A non-stock corporation is one where no C. Both statements are false.
part of its income is distributable as dividends to its D. Both statements are true.
members, trustees, or officers.
Statement 2: The provisions governing a stock 542. The right to vote is limited, broadened, or denied in.
corporation is not applicable to a non-stock corporation A. Articles of incorporation
in any instances. B. By-laws
A. Both statements are true. C. Either A or B
B. Both statements are false. D. Neither A nor B
46

543. A member may vote by.
A. Proxy
B. Mail
C. Either A or B
D. Neither A or B
SECTION 90
544. Membership in a non-stock corporation and all rights
arising therefrom are.
A. Personal and non-transferable
B. Personal and transferable
C. General and non-transferable
D. General and transferable
545. In a non-stock corporation, those who shall be counted
in determining the existence of a quorum during
members meeting are those.
A. Actual and living members only.
B. Living members only.
C. Actual, living members with voting rights.
D. Living or dead members with voting rights.
546. ABCHS is a non-stock corporation with 15 regular
members, who also constitute the board of trustees.
During the annual members meeting there were only 11
living member- trustees, as 4 had already died. How
many trustees should be present in a meeting to
constitute a quorum?
A. 8
B. 7
C. 9
D. 6
SECTION 91
547. Statement 1: Membership in a non-stock corporation
shall be terminated in the manner and for the causes
provided in the articles of incorporation or the
by-laws.
Statement 2: Termination of membership in a non-stock
corporation shall have the effect of extinguishing all
rights of a member in the corporation or in its property.
A. The two statements are correct
B. The two statements are wrong
C. Statement 1 is correct, Statement 2 is wrong
D. Statement 1 is wrong, Statement 2 is correct
548. Membership in a non-stock corporation shall be
terminated in the manner and for the causes provided
in the:
A. Articles of incorporation or the by-laws
B. Articles of partnership
C. Articles of incorporation and the by-laws
D. The by-laws
549. Termination of membership in a non-stock corporation
shall have the effect of:
A. a. 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.
B. b. Acquiring all rights of a member in the
corporation or in its property, unless otherwise
provided in the by-laws.
C. Distributing all rights of a member in the
corporation or in its property.
D. Answer not given
SECTION 92
550. Statement 1: No person shall be elected as trustee in a
non-stock corporation unless he is a member of the
corporation.
Statement 2: Trustees so elected in a non-stock
corporation shall have a term of three (3) years.
A. Statement 1 is correct, Statement 2 is wrong
B. Both statements are correct
C. Both statements are wrong
D. Statement 1 is wrong, Statement 2 is correct
551. The board of trustees of non-stock corporations:
A. May be less than five in number.
B. May be greater than five but not more than fifteen
in number.
C. May be more than fifteen in number.
D. None of the above
552. The board of trustees of non-stock corporations shall, as
soon as organized, so classify themselves that the term
of office of:
A. Two-third (2/3) of their number shall expire every
year.
B. One-third (1/3) of their number shall expire every
year.
C. One-third (1/3) of their number shall expire every
six months.
D. Answer not given
SECTION 93
553. Which of the following may provide that the members
of a non-stock corporation may hold their regular or
special meetings at any place even outside the place
where the principal office of the corporation is located?
A. Articles of incorporation
B. By-laws
C. Either a or b
D. Neither a nor b
554. Statement 1: The proper notice is sent to all members of
a non-stock corporation indicating the date, time, and
place of the meeting.
Statement 2: The place of meeting of the members of a non-
stock corporation is outside the Philippines.
A. Both are true
B. Both are false
C. Statement 1 is true, Statement 2 is false
47
 D. Statement 1 is false, Statement 2 is true
555. The place of meeting of the members of a non-stock
corporation shall be within the Philippines.
A. True
B. False
C. It depends
D. Cannot be determined
SECTION 94
556. In case of dissolution of a non-stock corporation in
accordance with the provisions of this Code, its assets
shall be applied and distributed:
A. All liabilities and obligations of the corporation shall
be paid, satisfied and discharged, or adequate
provision shall be made therefore.
B. Assets held by the corporation upon a condition
requiring return, transfer or conveyance, and which
condition occurs by reason of the dissolution, shall
be returned, transferred or conveyed in accordance
with such requirements.
C. Assets may be distributed to such persons,
societies, organizations or corporations, whether or
not organized for profit, as may be specified in a
plan of distribution as provided in this Chapter.
D. All of the above
557. Statement 1: Assets received and held by the non-stock
corporation subject to limitations permitting their use
only for charitable, religious, benevolent, educational or
similar purposes.
Statement 2: Assets other than those mentioned in the
preceding paragraph of Section 94, if any, shall not be
distributed in accordance with the provisions of the
articles of incorporation or the by-laws.
A. Statement 1 is correct, Statement 2 is false
B. Statement 1 is wrong, Statement 2 is correct
C. Both are correct
D. Both are wrong
558. Which of the following is correct regarding the rules for
distribution in case of dissolution of a non-stock
corporation?
A. All liabilities and obligations of the corporation shall
be paid, satisfied and discharged.
B. All liabilities and obligations of the corporation may
not be paid.
C. Assets must not be distributed to such persons,
societies, organizations or corporations, whether or
not organized for profit.
D. None of the above
SECTION 95
559. Upon which of the following a plan of distribution of
assets shall be adopted?
A. Approval of at least two-thirds of the members
having voting rights
B. Adoption by the majority vote of the board of
trustees
C. Dissolution of the corporation
D. Meeting of the voting members
560. In the process of dissolution of a non-stock corporation,
who shall, by majority of vote, adopt a resolution
recommending a plan of distribution and directing the
submission thereof to a vote at a meeting?
A. Board of directors
B. Board of trustees
C. President
D. Any officer
561. Which of the following statements concerning a plan for
distribution of assets is incorrect?
A. A plan providing for the distribution of assets may
be adopted by a non-stock corporation so long as
not inconsistent with the provisions under Title XI.
B. A plan providing for the distribution of assets is
adopted by a non-stock corporation by majority
vote of the board of trustees and approved by at
least 2/3 of the voting members.
C. A plan providing for the distribution of assets
cannot be adopted by a non-stock corporation if it
is inconsistent with the provisions under Title XI.
D. A plan providing for the distribution of assets
cannot be adopted by a non-stock corporation.
SECTION 96
562. Which of the following statements regarding a close
corporation is correct?
A. A close corporation shall list in any stock exchange
or make any public offering of any of its stock of any
class.
B. A close corporation provides in its articles of
incorporation that all of the issued stock of all
classes shall not be subject to one or more
restrictions on transfer.
C. Generally, any corporation may be incorporated as
a close corporation.
D. Banks may be incorporated as a close corporation.
563. What may not be incorporated as a close corporation?
A. Public utilities
B. Educational institutions
C. Corporations vested with public interest
D. All of the above
564. The following statements are concerning close
corporations:
I. All of the corporation’s issued stock of all
classes, excluding treasury shares, shall be held
of record by not more than a specified number
of persons not exceeding 20.
II. All of the issued stock of all classes shall be
subject to one or more restrictions on transfer.
48
 III. The corporation shall not list in any stock
exchange or make any public offering of any its
stock of any class.
Which of the foregoing statements must be provided in
the articles of incorporation of a close corporation?
A. I and II
B. I and III
C. II and III
D. I,II, and III
SECTION 97
565. The articles of incorporation of a close corporation may
provide the following, except:
A. Classification of directors into one or more class
B. Management of the corporation by the
stockholders
C. Election or appointment of officers by stockholders
D. Greater quorum and lesser voting requirements in
meetings of stockholders or directors other than
those provided in the Code
566. The management of the business of a close corporation
by the stockholders instead of by a board of directors
produces which of the following effects?
A. No meeting of stockholders need be called to elect
directors
B. The stockholders of the corporation shall be
deemed to be directors
C. The stockholders shall be subject to all liabilities of
directors
D. All of the above
567. Which of the following statements regarding the effects,
if the business of a close corporation is managed by the
stockholders, is incorrect?
A. No meeting of stockholders need be called to elect
directors
B. The stockholders of the corporation shall be
deemed to be directors
C. The stockholders shall be subject to all liabilities of
directors
D. None of the above
SECTION 98
568. For restrictions on transfer of shares to be valid, such
restrictions must appear in which of the following?
A. Articles of incorporation only
B. Articles of incorporation and by-laws only
C. Articles of incorporation, by-laws, and certificate of
stock
D. By-laws and certificate of stock only
569. The failure of existing stockholders or corporation to
exercise option to repurchase produces which of the
following effects?
A. The transferring stockholder becomes the owner of
the corporation.
B. The transferring stockholder may sell his share to
any third person.
C. The transferring stockholder cannot sell his share to
any third person.
D. None of the above.
570. The following statements are regarding the validity of
restrictions on transfer of shares:
I. The restriction shall not be more onerous than
granting the existing stockholders or the
corporation the option to purchase the shares
of the transferring stockholder.
II. The restrictions on the transfer must appear in
the articles of incorporation, by-laws, and stock
certificate.
Which of the above statements is correct?
A. I only
B. II only
C. I and II
D. None of the above
SECTION 99
571. If a stock of a close corporation is issued to a person who
is not entitled by the articles of incorporation to be a
stock holder and if the certificate for such stock
noticeably shows the qualification of that person, that
person is presumed to have?
A. Notice of the fact of his ineligibility to be a
stockholder.
B. Knowledge of the fact of his ineligibility to be a
stockholder.
C. Notice of his eligibility to be a stockholder since the
certificate stated so.
D. Knowledge of his eligibility to be a stockholder since
the certificate stated so.
572. What’s the maximum number of stock holders in a close
corporation?
A. Maximum of 15 stock holders.
B. Maximum of 5 stock holders.
C. Maximum of 20 stock holders.
D. Depends on the article of incorporation.
573. The issuance or transfer of stock of a close corporation
in breach of qualifying conditions shall be binding upon
the corporation, when?
A. It has been consented by all the stockholders.
B. It has amended its articles of incorporation.
C. It has been approved by majority of the
stockholders.
D. No amendment of articles of incorporation.
SECTION 100
574. What’s the liability of stockholders who actively
engaged in the management of a close corporation?
A. Personally liable for corporate unlawful act.
B. Criminally liable for corporate unlawful act.
49
 C. Liable to the extent of stockholders subscribed D. The absent director promptly expresses his
shares. objection.
D. Has no liability at all when the stockholders are in
good faith. SECTION 102.
580. Pre-emptive rights of stockholders in close corporations
575. Agreements among stockholders executed before the extends to the following stock to be issued, except;
formation of a close corporation shall continue to be A. Common stock
valid and binding between them if; B. Preferred stock
A. Majority of the stockholders signed the agreement. C. Voting or non-voting
B. All of the stockholders signed the agreement. D. None of the above
C. 2/3 of the stockholders signed the agreement.
D. Majority of the directors approved the agreement. 581. On the part of the stock holders in closely-held
corporation, the right of pre-emption is a matter of?
576. An agreement between 2 or more stockholders in a A. General right
close corporation is valid in exercising any voting rights, B. Legal right
if the agreement is? C. Absolute right
A. Approved by the parties. D. Obligation
B. Signed by the parties.
C. In writing and signed by the parties. 582. It is one of the vital importance of pre-emptive right in
D. In writing and approved by the majority closely-held corporation.
stockholders. A. Unwelcome outsiders.
B. Keep the association intact.
SECTION 101 C. Avoid deadlocks in the management of the
577. There is an action taken by the directors of a close corporation.
corporation. The action is done without a meeting but D. All of the above
before or after such action is taken, written consent
thereto is signed by all the directors. Which statement is SECTION 103
true? 583. Any amendment in the articles of incorporation to
A. The action is invalid. reduce a quorum or voting requirement stated in said
B. The action is valid. articles of incorporation shall be valid or effective if:
C. Need 2/3 votes of the outstanding share or A. approved by the affirmative vote of at least two-
members for the action to be valid. thirds (2/3) of the outstanding capital stock
D. Need the approval of the SEC for such action to be B. approved by the affirmative vote of at least majority
valid. of the outstanding capital stock
C. Both A and B
578. In relation to #1, what if all stockholders have actual or D. None of the above
implied knowledge of the action and make no prompt
objection thereto in writing. Which statement is true? 584. As stated in Section 103 of the Corporation Code, the
A. The action is invalid. effect of an amendment is to terminate the status of the
B. The action is valid. corporation as
C. Need 2/3 votes of the outstanding share or A. Private Corporation
members for the action to be valid. B. Close Corporation
D. Need the approval of the SEC for such action to be C. De Facto Corporation
valid. D. De Jure Corporation

579. A directors’ meeting is improperly held, an action taken 585. The mere assent of the stockholders which is allowed in
therein within the corporate power is assumed to be Section 16 of the Corporation code is insufficient. Thus,
authorized by a director who failed to attend. The the amendment of the articles of incorporation must be
exemption is; approved during:
A. The absent director promptly files his written A. stockholder’s meeting
objection with the secretary of the corporation B. the meeting of the BOD
after having knowledge thereof. C. meeting of the stakeholders affected by the
B. The absent director promptly files his written amendment
objection with the SEC after having knowledge D. All of the Above
thereof.
C. The absent director promptly files his written
objection with the BOD of the corporation after
having knowledge thereof.
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SECTION 104 C. any of the acts of those in control of the corporation
586. Which of the following statements defines deadlocks as is dishonest and oppressive
provided in Section 104 of BP 68? D. any of the acts of those in control of the corporation
I. Notwithstanding any contrary provisions in the articles involves breach of agreements
of incorporation or by-laws or agreement of
stockholders of a close corporation 590. Compelling the dissolution of such close corporation is
II. The directors or stockholders are so divided an effect of
respecting the management of the corporation's A. Written petition to the SEC by any of the
business and affairs stockholder of a close corporation
III. The votes required for any corporate action cannot B. Written petition to the SEC by any of the officer of a
be obtained close corporation
IV. The consequence is that the business and affairs of C. Both A and B
the corporation can no longer be D. None of the Above
conducted to the advantage of the stockholders
generally 591. Any stockholder of a close corporation may, for any
A. I only reason compel the said corporation to purchase his
B. II and III only shares at their fair value which
C. IV and III A. Shall not be less than their par value
D. I, II, III and IV B. Shall not be more than their par value
C. Equal to the par or issued value
587. According to Section 104 of the Corporation code, such D. Can be A or C
deadlocks can be resolved. The SEC, upon written
petition by any stockholder shall have the power to SECTION 106
arbitrate the dispute. All of the following are orders of 592. Educational Corporation refers to a stock or non-stock
such power, except: corporation organized to provide facilities for teaching
A. Cancelling or altering any provision contained in the or instruction. It is referred to by the Corporation code
articles of incorporation, bylaws,or any as:
stockholder's agreement A. Special Corporation
B. Directing or prohibiting any act of the corporation B. Close Corporation
or its board of directors, stockholders, officers, or C. Private Corporation only
other persons part to the action D. Stock Corporation
C. Requiring the purchase at their fair value of shares
of any stockholder, either by the corporation 593. Supplementary, the educational corporations shall be
regardless of the availability of unrestricted governed by the provisions on
retained earnings in its books, or by the other A. Special Corporation
stockholders; B. Close Corporation
D. Not appointing a provisional director C. Private Corporation only
D. Stock Corporation
588. An impartial person who is neither a stockholder nor a
creditor of the corporation or of any subsidiary or 594. In connection to the preceding number, the educational
affiliate of the corporation, and whose further corporations shall be governed supplementary as to the:
qualifications, if any,may be determined by the A. number of directors
Commission. B. term of directors
C. B only
A. Provisional Director D. A and B
B. Arbitrator
C. Adjudicator
D. None of the above

SECTION 105
589. As stated in Section 105 of BP 68, any stockholder of a
close corporation may compel the dissolution of such
corporation when:
A. any of the acts of the directors, officers or those in
control of the corporation is illegal
B. any of the acts of the officers is unfairly prejudicial
to the corporation

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