1. Which of the following reflects a correct legal precept?

a. Private corporations under the Corporation Code are created by law.

b. A private corporation may always be held civilly liable for negligent acts committed by its employees.

c. The corporate obligations are, as a rule, not the obligations of the corporate officers as long as the absence of liability of
the latter is reflected in the corporate by laws.

d. Private corporations under the Corporation Code may either be de facto or de jure.

2. Which of the following is in conformity with both law and jurisprudence?

a. The separate personality of a corporation may be disregarded when an incorporator dominates and controls the
outstanding capital stock.

b. Shareholders cannot maintain a suit in their own names to recover corporate property.

c. A corporation does not fall within the constitutional protection against unreasonable searches and seizures.

d. A corporation has a right against self-incrimination.

3. Ten persons, all Filipinos, and acting as incorporators, filed an application for the incorporation of XYZ Bank, Inc. Which
of the following is correct?

a. The incorporators are not disqualified by reason of their nationality.

b. XYZ Bank, Inc. may issue no-par value shares as long as the consideration thereof is not less than P5.00.

c. The incorporators must all be Philippine residents.

d. None of the above.

4. When the articles of incorporation provide for non-voting shares, the holders of such shares shall nevertheless be
entitled to vote on the following matters, except:

a. Dissolution of the corporation.

b. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of corporate property. Amendment
of the articles of incorporation.

c. Incurring, creating, increasing or assignment of bonded indebtedness.

5. ABC Corporation, a private corporation engaged in the business of importing used cars from Japan was issued a
certificate of incorporation by virtue of R.A. 27890. Because of a failed business transaction, ABC Corporation sued Mr. X
for a damage arising from the latters alleged breach of its contractual obligations.

a. Mr. X cannot allege lack of legal capacity to sue of ABC Corporation in its motion to dismiss because it has a legal
personality conferred by law.

b. Mr. X cannot allege lack of legal capacity in its motion to dismiss because it is not allowed to attack the existence of
the corporation collaterally.

c. ABC Corporation is a de jure corporation and its existence can be attacked only through a quo warranto proceeding.

d. Attacking the existence of ABC Corporation may be done through a motion to dismiss because its creation is void.

6. No 1 Within five (5) years from issuance of its certificate of incorporation, the newly-formed corporation must formally
organize and commence business operations. Failure to do so within such period is a ground for dissolution. No. 2 Every
member of the board of every corporation must own at least one (1) share of stock standing in his name in the books of
the corporation.

a. Both statements are false.

b. Both statements are true.

c. The first statement is true; the second is false.

d. The second statement is true; the first is false.

7. A corporation was formed by fifteen (15) incorporators and its certificate of incorporation was duly issued. A year after
its attainment of juridical personality, the stockholders, who are themselves the members of the board adopted a
resolution, providing for the following (i) That all of the corporations issued stock of all classes, exclusive of treasury
shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20); (ii) That all of
the issued stock of the corporation shall be subject to certain specified restrictions; and (iii) That the corporation shall not
list in any stock exchange or make any public offering of any of its stocks of any class.

a. The corporation is a close corporation because the resolution contains the elements of a close corporation;

b. The corporation is de facto because although it has a certificate of incorporation, the provisions in the resolution should
have been contained n the articles.

c. The corporation is an open corporation. The corporation is a corporation by estoppel because although it operates as a
corporation, it did not comply with certain legal requirements for the establishment of a close corporation.

8. Which of the following is correct?

a. The secretary of a corporation must be a citizen of the Philippines and a resident of the Philippines. He must be also a
member of the board.

b. The members of the board are liable whenever they vote for unlawful acts.

c. If there are only ten (1) directors elected although the articles of incorporation provide for fifteen (15) directors, the
quorum in a board meeting is eight (8).

d. A director may be removed by the vote of all the stockholders in any meeting.

9. Which of the following acts could be ratified by a vote representing at least 2/3 of the outstanding capital stock?

a. Acts of directors or trustees who are guilty of gross negligence or bad faith in directing the affairs of the corporation;

b. An attempt by a director to acquire or actual acquisition of any interest adverse to that of the corporation in respect of
any matter reposed upon him in confidence;

c. Acts of directors constituting an approval of patently unlawful acts;

d. Acquisition of a business opportunity which should belong to the corporation, thereby acquiring profits which should
belong to the corporation.

10. The pre-emptive right extends to the right to subscribe;

a. Only to new issues of shares arising out of an increase of the capital stock.

b. Only to the issuance of previously unissued portions of the outstanding capital stock.

c. To all issues of shares or dispositions of shares of any class;

d. To all issues or dispositions of shares of any class other than redeemable or treasury shares.

11. The following are the requisites for the corporate power to acquire its own shares. Which is the exception?

a. The corporation must have unrestricted earnings in its books to cover the purchase of the shares except in the case of
redeemable shares.

b. The acquisition must be for the sole purpose of acquiring shares in order to eliminate fractional shares.

c. The acquisition must be for a legitimate purpose.

d. The corporation must have unrestricted earnings in its books to cover the purchase of shares.

12. Which of the following is correct?

a. Dividends may be declared out of a reappraisal surplus or revaluation increment because they constitute profits.

b. Dividends are profits but not all profits are dividends.

c. All dividends are taxable as income of the stockholder.

d. The declaration of any kind of dividend requires the assent of at least 2/3 of the outstanding capital stock.

13. X subscribed to 1,000 shares of stock in ABC He paid 50% of the subscription but such subscription was later on
declared delinquent. The total liability of X, including the balance, accrued interest, costs and other expenses amounted to
P50,000. Which bidder is considered the highest bidder in the delinquency sale?

a. A bid of P45,000 for 500 shares;

b. A bid of P43,000 for 504 shares;

c. A bid of P50,000 for 900 shares;

d. A bid of P40,000 for 300 shares;

14. No. 1 Holders of delinquent shares are not entitled to dividends. No. 2 A transfer of shares to a non-stockholder is
binding to the corporation as long as the transfer is in a public document.

a. Both statements are true.

b. Both statements are false.

c. No 1 is true; No. 2 is false.

d. No. 2 is true; no. 1 is false.

15. No. 1 A foreign corporation intending to sue in Philippine courts must always have a license to engage in business n
the Philippines. No. 2 A foreign corporation engaged in business in the Philippines may sue and be sued n the Philippines.

a. Both statements are false.

b. Both statements are true.

c. No. 1 is true; No. 2 is false.

d. No. 1 is false; no. 2 is true.

16. Which of the following is not a negotiation of a negotiable instrument?

a. Delivery to the payee of an instrument payable to bearer;

b. Delivery to the payee of an instrument payable to bearer Jose.

c. Delivery of an instrument payable to the order of Superman.

d. indorsement and delivery of an instrument payable to the order of Jose.

17. An indorsement is restrictive if:

a. it is indorsed to Jose.

b. it is indorsed to Jose or bearer.

c. it is indorsed to Jose in trust for my child.

d. It is indorsed to the order of Jose.

18. The instrument is payable to bearer if

a. it is payable to the order of cash.

b. it is payable to cash.

c. it is payable to the order of the King of the Philippine Islands.

d. it is payable as in all of the above.

19. X wants to lend money to third persons but asks his friend, B to sign promissory notes of the borrowers as the lender/
payee. As payee, B indorses the notes to X. B receives no consideration for lending his name.

a. X is a party accommodated.

b. B is an accommodation party.

c. B is not an accommodation party.

d. B is not a party to the note, but X is.

20. D issues a note payable to the order of P. P indorses the note thus: To A. Sgd P.

a. A is an assignee.

b. A may negotiate to B by delivery alone.

c. A may negotiate to B by indorsement completed by delivery.

d. A cannot negotiate the note any further.

21. The following instrument is negotiable assuming all other requisites are present:

a. I promise to pay Pedro Santos P50,000

b. Pay to X or his order P50,000 and deliver 10 sacks of rice.

c. I promise to pay to the order of P P50,000 and such other sums he may be entitled to.

d. I promise to pay O or bearer P50,000 with interest.

22. Which among the following has a conditional promise hence, non-negotiable?

a. To D. Pay to the order of P P50,000. Sgd. DR.

b. To D. Pay to the order of P P50,000 out of my money in your hands. Sgd DR.

c. I promise to pay P or his order P30,000 on the day his father passes away.

d. None of the above is conditional.

23. X indorses a note sans recourse and delivers it to B.

a. If B cannot collect from the maker, B can never collect from X.

b. If B cannot collect from the maker, B can collect from X after giving him a notice of dishonor.

c. If B cannot collect from the maker because of forgery of the latters signature, B cannot collect from X.

d. If B cannot collect from the maker because of forgery of the latters signature, B can collect from X.

24. Drawer issues a check to the order of P drawn against O Bank. Through illegal means, F gets hold of the check,
indorses the check to himself by forging Ps signature, and deposits it in his account in M Bank which indorses the check for
clearing with the words All prior indorsements guaranteed.Which is correct?

a. P can still collect from Drawer.

b. O Bank is liable to Drawer for reimbursement of the amount deducted from the account of Drawer.

c. M Bank is liable to O Bank as an indorser.

d. All of the above.

25. No. 1 The maker engages to pay according to the tenor of his acceptance. No. 2 The indorser warrants that the
instrument is genuine only n certain cases.

a. Both are false.

b. Both are true.

c. No. 1 is true; No. 2 is false.

d. No. 1 is false; No. 2 is true.

26. Which of the following statements is not legally true?

a. Common carriers are required to cater to every member of the public.

b. To be a common carrier, an entity must have a certificate of public convenience.

c. Travel agencies as such are common carriers.

d. It is possible for a customs broker to be a common carrier if it transports goods for a fee.

27. Which could be availed of as a complete defense by a common carrier?

a. All forms of fortuitous events;

b. The doctrine of last clear chance in case of collisions.

c. Contributory negligence of the plaintiff.

d. None of the above.

28. The common carriers duty to observe extraordinary diligence in the vigilance over the goods;

a. ends when they are temporarily unloaded in transit.

b. ends when the goods are lost in transit.

c. begins upon the execution of a bill of lading.

d. ends when the shipper has availed of his right of stoppage in transitu.

29. The doctrine of inscrutable fault applies

a. when there is collision.

b. when a vessel makes a wrong maneuver in the second zone of collision.

c. when there is no evidence as to which vessel is negligent.

d. whenever a collision occurs.

30. A commercial vessel was sunk when it was overtaken by a typhoon in the ocean. It was established that the ship was
unseaworthy but would have successfully completed the voyage had it not been for the typhoon.

a. The ship owner may invoke fortuitous event as a defense.

b. The ship agent may be held liable in case the ship owner is not found.

c. The ship agent may not be held liable because he is acting for a disclosed principal.

d. No one is liable.

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