Republic of the Philippines

JOSE RIZAL MEMORIAL STATE UNIVERSITY

The Premier University in Zamboanga del Norte
Gov. GuadingAdaza St., Sta. Cruz, Dapitan City, Philippines Registration No. 62Q17082
COLLEGE
TheOF BUSINESS
Law & ACCOUNTANCY
on Partnership & Corporation INSTITUTIONAL LEVEL
Long Quiz III

Name: Kae Alymar R. Quintero Date: May 20, 2021

Year and Program: BSA - II Score:

General Instruction: Apply everything you have learned in this particular course. Encircle
the incorrect letters.

1. One of the distinctions between a partnership and a corporation is that a

partnership:
a. Is managed by a board of directors.
b. Is characterized by a principle of delectus personae.
c. Has the right of succession.
d. May be dissolved only with the consent of the State.
2. Rights of the corporation to continue to continue as a juridical entity for the term
stated in the articles of incorporation despite the death of any stockholders.
a. Juridical personality
b. Re – emptive right
c. Right of succession
d. Right of existence
3. Three (3) of the following are attributes of a corporation. Which is the exception?
a. An artificial being
b. Has the right of succession
c. Has power, attributes and properties expressly authorized by law or incident
to its existence.
d. Created by agreement of the corporation
4. Which of the following is the disadvantage of forming a corporation?
a. The free and ready transferability of ownership.
b. The shareholders are not liable for the debts of the business.
c. Because of the power of succession, the existence of the entity is not
affected by the personal vicissitudes of the individual shareholders.
d. The subservience of minority stockholders to the wishes of the majority
subject only to equitable restraint.
5. These do not form part of the outstanding capital stock:
a. Bonus Shares
b. Treasury Shares
c. Founder’s Share
d. Redeemable Share
6. They are issued to those who helped in incorporating the company or for services
rendered in launching the welfare of the company:
a. Preferred stocks
b. Stock in escrow
c. Founders stock
d. Promotion stock
7. This share can be acquired by the corporation which issued it even without
unrestricted retained earnings:
a. Founder’s shares
b. Redeemable shares
c. Par value shares
d. No – par shares
8. Corporations organized by private persons performing public function and for profits
to private persona are:
a. Public Corporations
b. Government Controlled Corporations
c. Quasi-Public Corporation
d. Private Corporation
9. The following are advantages of no-par value share of stock. Which is the exception?
a. No par value shares allow flexibility in price.
b. The stockholders of no-par value shares are relieved of personal liability for
unpaid stock subscription.
c. It allows the issue of stocks in exchange of property.

The Law on Business Organization Long Quiz 3 1

 d. No-par value shares afford a possible remedy of relief from the evil of over
from capitalization and stock watering.
10. Which of the following statement pertaining to no-par shares is incorrect?
a. Subscriptions to no-par shares are deemed fully paid and non-assessable.
b. Shares without par value may not be for a consideration less than P5.00 per
share.
c. No-par shares may not be issued by banks, trust companies, insurance
companies, public utilities and building and loan associations.
d. Subscriptions to no-par shares in excess of the issued price shall be
available for distribution as stock dividends.
11. These corporation are prohibited from issuing no par shares, except:
a. Banks
b. Trust corporations
c. Stock exchanges
d. Insurance companies
e. Public utility corporation
12. The following statement pertaining to the power of a corporal to issue non-
voting shares were presented to you for evaluation:
i. Those classified as “redeemable” or “preferred” may be deprived of the
voting right.
ii. All shares of the corporation may be deprived of the voting right.
iii. Non-voting shares may vote in certain corporate acts like in the
amendment of incorporation.
a. I and II are true.
b. II and III are true.
c. I and III are true
d. All statements are true.
13. The articles of incorporation differ from the by-laws in that the articles of
incorporation are:
a. The rules of action adopted by a corporation for its internal government.
b. Adopted before or after incorporation.
c. A condition precedent in the acquisition by a corporation of a juridical
personality.
d. Approved by the stockholders if adopted after incorporation.
14. Choose the minimum requirement of the Corporation Law to Corporate formation:
Authorized Subscribed Capital Paid in Capital
a. P100,000 P20,000 P5,000
b. P100,000 P20,000 P4,000
c. P100,000 P25,000 P5,000
d. P100,000 P25,000 P6,250
15. The articles of incorporation of Acme Corporation provide for the issuance of
100,000 shares without par value price per share P10.00. At the time of
incorporation subscription and paid up capital should not be less than:
a. P250,000.00 and P62,500.00, respectively,
b. P1,000,000.00 and P250,000.00, respectively,
c. P250,000.00 and P250,000.00, respectively,
d. P250,000.00 and P125,000.00, respectively.
16. Three of the following enumerations are not authorized to issue no par value
shares of stocks. Which is the exception?
a. Insurance companies
b. Industrial companies
c. Public utilities
d. Trust companies
17. Corporations organized by private persons performing public functions and for
profits to private persons are:
a. Public Corporations
b. Government Controlled Corporations
c. Quasi-Public Corporations
d. Private corporation
18. Several American doctors wanted to set up a group clinic in the Philippines so
they could render modern medical services. If the clinic to be incorporated under
our laws, what is the required foreign equity participation in such a corporation?
a. 60%
b. 40%

The Law on Business Organization Long Quiz 3 2

 c. 0%
d. 70%
19. 1st statement: A majority of the directors or trustees of all corporations
organized in the Philippines must be citizens of the Philippines.
2 nd statement: Any
two (2) or more positions may be held concurrently by the same person, except that
no one shall act as president and secretary or as secretary and treasurer at the
same time.
a. Both statements are not true
b. Only 1st statement is true
c. Only 2nd statement is true
d. Both statements are true
20. A private corporation organized under the corporation law commences to have
corporate existence and juridical personality and its deemed incorporated form:
a. The date when the articles of incorporation is signed by the incorporators.
b. When the articles of incorporation and by-laws are presented and received by
the Security and Exchange Commission and the filling fee is paid.
c. From the date the SEC issues a certificate of incorporation under its official
seal.
d. When the articles of incorporation is notarized by a Notary Public.
21. In the amendment of the Articles of Incorporation of a stock corporation, the
following is necessary:
a. Amendment by the majority vote of the Board of Directors plus a vote or
written assent of the stockholders representing at least 2/3 of the
outstanding capital stock.
b. Amendment by a vote of 2/3 of the stockholders.
c. Amendment by a majority vote of the Board of Directors.
d. None of the three.
22. Which of the following will not qualify as incorporator of a corporation?
a. A minor who is emancipated by voluntary concession or marriage.
b. A married woman without the consent of the husband where the property involved
in the act of incorporation is paraphernal.
c. A corporation.
d. Answer not given.
23. Contracts between a corporation and third persons must be by or under the
authority of its:
a. Board of directors
b. Shareholders
c. President and Chief Operating Officer
d. General Manager
24. An officer of a corporation may hold two or more positions in the corporation
but not as :
a. Chairman of the Board and President
b. President and Treasurer
c. Secretary and Treasurer
d. Vice president and Secretary
25. A Chinese national are not allowed ro become:
a. Treasurer
b. Secretary
c. Director
d. President
26. P, the President of X Corporation, by virtue of a resolution of the
stockholders empowering him to enter into a contract with T Corporation for the
purchase of certain machineries, actually did so. Such contract is:
a. Valid
b. Rescissible
c. Voidable
d. Unenforceable
e. Void
27. In the meeting of the board of directors of Grand Corporation, a construction
company, held on March 31, 2003, directors A, B, C, D and E were present among the 9
directors. The meeting had for its agenda the following:
i. The appointment of new treasurer.

The Law on Business Organization Long Quiz 3 3

 ii. The approval of the contract for the purchase of cement worth P50,000.00
from X Construction Supplies Co.

When the voting took place, A, B, C and D voted for the election of Y as
the new treasurer; and directors A, B and C voted for the approval of the
contract with X Construction Supplies.

a. Both corporate acts are valid

b. Both corporate acts are not valid
c. The election of Y as the new treasurer is valid; the
approval of the contract with X Construction Supplies are
not valid
d. The election of Y as the new treasurer is not valid; the
approval of the contract with X Construction Supplies is
valid
28. Purely ultra vires acts of the officers of a corporation to invest corporate
funds in another business or corporation, i.e. acts not contrary to law, morals,
public policy may be ratified by:
a. The stockholders holding 2/3 of the voting power.
b. Majority vote of all members of the board.
c. The stockholders holding ½ of the voting power.
d. Majority vote of board of director’s present.
29. The articles of Incorporation is required to state the name, nationalities and
residences of persons who shall act as directors or trustees until the first regular
directors or trustees are duly elected and qualified. This requirement is intended
to provide a basis by which the Securities and Exchange Commission could determine
whether the Articles of Incorporation has complied with the requirement that:
a. At least a majority of the directors or trustees are residents of the
Philippines.
b. All the directors or trustees are residents of the Philippines.
c. 2/3 of the directors or trustees are residents of the Philippines.
d. Answer not given.
30. Which of the following is not a qualification of incorporators of a stock
corporation?
a. They must be a natural persons
b. They must be of legal age
c. Majority of them must be citizens of the Philippines
d. They must be subscribers to at least 1 share of stock of the corporation
31. The following, except one are qualifications of corporate directors:
a. Must continuously own at least one share during their term as directors.
b. Must own at least one share of stock.
c. Ownership of shares must be recorded in the books of corporation.
d. Majority are citizens of the Philippines.
32. Which of these groups of persons can validly organize a corporation under
Philippine laws?
a. Fifteen Chinese, ten of whom are residing in the Philippines.
b. Ten Filipinos, five of whom are immigrants in the U.S.A.
c. Five Germans, two of whom are residents of the Philippines.
d. None of them.
33. The following are some of the requisites of a de facto corporation. Choose the
exception:
a. Valid law under which it is incorporated
b. Attempt to incorporate
c. Assumption of corporate power
d. None of the above
34. In the amendment of the Articles of Incorporation of a stock corporation, the
following is necessary:
a. Amendment by the majority vote of Board of Directors plus a vote or a written
assent of the stockholders representing at least 2/3 of the outstanding
capital stock.
b. Amendment by a vote of 2/3 of the stockholders.
c. Amendment by a majority vote of Board of Directors.
d. None of the three.
35. The voting requirement for delegating power to adopt, amend or repeal the by-
laws in favor of the board of directors is:

The Law on Business Organization Long Quiz 3 4

 a. 2/3 vote of the outstanding shares
b. Majority of the vote of shareholders plus the vote of the majority of the
outstanding shares
c. Majority vote of the directors plus the vote of 2/3 of the outstanding shares.
36. Which of the following meeting may be held outside the Philippines?
i. Board of Directors meeting.
ii. Members meeting of a non-stock corporation
iii. Stockholders meeting of a corporation going public
a. I only
b. I and II
c. I and III
d. I, II and III
37. A corporation created in strict or substantial conformity with the statutory
requirements for incorporations and whose right to exist as a corporation cannot be
successfully attacked even in a direct proceeding for the purpose by the State id
known as:
a. De jure corporation
b. De facto corporation
c. Corporation by estoppel
d. Answer not given
38. Which of the following is not a requisite for the existence of de facto
corporation?
a. The existence of the valid a valid statute under which a corporation, with
some purposes in question can be formed.
b. An attempt in good faith to form a corporation according to the requirements
of law.
c. A user of corporate powers. There must be a transaction of business in some
ways as if it were a corporation.
d. The organization is not registered in the Securities and Exchange Commission.
39. In which of the following corporations will those composing the corporation be
liable as general partners?
a. Corporation by prescription
b. De facto corporation
c. Corporation by estoppel
d. Dejure corporation
40. In the following cases, the preemptive right of the stockholders can be denied
– choose the exception.
a. If it is denied in the articles of incorporation
b. If the increased of the capital stock is to enable the corporation to comply
with the law requiring subscription by the public
c. By a vote of 2/3 of the outstanding shares where the increase in authorized
capital stock is to be exchanged with a property needed for a corporate
purpose.
d. By a vote of a majority of the outstanding shares where the increase in
authorized capital stock is to be used for the payment of corporate debts
still to be contracted.
41. Which of these purposes can be combined in just one corporation?
a. Bank and trust purposes
b. Educational and insurance purposes
c. Railroad and bank purposes
d. Insurance and railroad purposes
e. All of the above
42. The certificate of incorporation of Seven Stars Corporation, a trading
corporation, was issued although only 2 of its 5 incorporators are residents of the
Philippines. Three, however, are citizens of the Philippines. The corporation
created in such a situation is a:
a. Dejure corporation
b. Corporation by estoppel
c. De facto corporation
d. No corporation was created at all
43. A, B, C, D, E, F and G are duly elected directors for 2015 of Excellent
Corporation whose articles of Incorporation provide for 7 directors. On august 1,
2016, directors A, B, C, D and E met to fill two vacancies of the board brought
about by the valid removal of F for disloyalty to the corporation and the death of

The Law on Business Organization Long Quiz 3 5

 G. In the said meeting, the remaining directors voted for X to replace F, and Y, son
of G, to replace his father. Both X and Y are owners at least one share of stock of
the corporation. The election of X and Y by the remaining directors is:
a. Valid for both X and Y
b. Not valid for both X and Y
c. Valid with respect to X; not valid with respect to Y
d. Not valid with respect to X; valid with respect to Y
44. Which cause of vacancy in the board of directors may be filled by the board of
directors if the remaining directors still constitute a quorum and by the
stockholders if such quorum does not exist?
a. Removal of a director
b. Resignation of a director
c. Increase in the numbers of the directors
d. Expiration of the term of some directors
45. A is a director and owns 50% of the outstanding capital stock of Ace
Corporation which is engaged in the trading of computers. Ace Corporation purchased
computer tables from Top Corporation of which A is also a director and owns 15% of
its outstanding capital stock. The articles of incorporation of both corporations
provide for 5 directors. In the approval of the contract of the said purchased, A
did not attend the meeting of Ace Corporation, while the meeting of the Board of
Directors of Top Corporation which was called for the same purpose, directors A, B,
C and D were present and all of them for the approval of the contact. Assuming that
there is no fraud and that the contract is fair and reasonable under the
circumstances, the contract between Ace Corporation and Top Corporation is
a. Valid
b. Voidable at the option of Top Corporation
c. Unenforceable against Top Corporation
d. Void because corporation with interlocking directorate should not enter into a
contract with each other.
46. One of the following is not required and does not from part of the three-fold
duty of directors of a corporation. Which one?
a. Duty of negligence
b. Duty of loyalty
c. Duty of obedience
d. Duty of efficiency
47. The power to deny pre-emptive right as a corporate power is classified as:
a. Incidental power
b. Express power
c. Implied power
d. Discretionary power
48. In which of these cases may the right preemption of stockholders be denied?
a. If the right is denied the articles of incorporation.
b. If the increase in authorized capital stock is for the purpose of complying
with the law requiring subscription by the public.
c. By a vote of 2/3 of the outstanding shares where the increased of the
authorized capital stock shall be exchange for a property needed for a
corporate purpose.
d. By a vote of 2/3 of the outstanding shares where the increased of the
authorized capital stock shall be used to pay the corporate debts previously
contracted.
e. All of the above.
49. Those regulate different internal matter of the corporation such as calling
and defining of the meeting of the stockholders and directors.
a. Board of directors
b. By-laws
c. Article of incorporation
d. Proxy
50. Which of the following bylaws is valid?
a. A by-law which provides that one need not to be the owner of share stock to
become a dire tor of the corporation.
b. A by-law which provides that one must be the owner of more than one share of
stock of the corporation to become director.
c. A by-law which provides that one can continue to be a director throughout his
term although he has disposed all his shares in the corporation.

The Law on Business Organization Long Quiz 3 6

 d. A by-law which provides a greater number of directors than that seated in the
articles of incorporation.
51. What is the voting requirement for the adoption of corporate by-laws?
a. Majority of the outstanding shares.
b. Majority vote of the directors plus the vote of a majority of the outstanding
shares.
c. Majority vote of the directors plus the vote of 2/3 of the outstanding shares.
d. Unanimous vote of the incorporation if filed together with the articles of
incorporation.
e. Both (a) and (b).
52. As regards to corporate by-laws, which of the following rules is not correct?
a. To adopt by-laws, majority of the outstanding capital stock is needed.
b. To delegate to the Boars Directors or trustees the power to amend or repeal
the by-laws, 2/3 of the outstanding capital stock is needed.
c. To revoke the power delegated to the Board of Directors to adopt new by-laws,
2/3 of the outstanding capital stock or of its members is needed.
d. To amend or repeal the by-laws, majority of the board of directors and of
outstanding capital stock is needed.
53. The following may be the consideration of the shares of the stock of a
corporation, except:
a. Actual cash paid to the corporation.
b. Previously incurred indebtedness of the corporation.
c. Amounts transferred from unrestricted retained earnings.
d. Service to be performed by a lawyer on the purpose increase in capital stock
of the corporation.
54. A corporation may invest its funds in any other corporation or business or for
any other purpose other than primary of which it was organized.
a. There is a majority vote of the Board of Directors and ratified by the
stockholders representing 2/3 of the outstanding capital stock.
b. It is reasonably necessary to accomplish its secondary purpose, the approval
of the stockholders not necessary.
c. There is majority vote of the Board of Directors.
d. There is a majority vote of the outstanding capital stock.
55. One of the following does not require stockholder’s approval:
a. Merger or consolidation.
b. Change of corporate name.
c. Investment of corporate funds for a purpose outside of the main purpose of the
corporation.
d. Declaration of cash dividends.
56. How many numbers of choices of the Board of Directors are required to change
the name of the corporation?
a. 2/3 vote of all members of the board.
b. 2/3 vote of all the present.
c. Majority vote of all present constituting a quorum.
d. Majority vote of the board.

Mantra of the day:

Thank you
Thank you
Thank you
–Russell Clayton

GOD BLESS!

The Law on Business Organization Long Quiz 3 7