1. What are the characteristic elements of a partnership?

a. Consensual, Nominate, Bilateral, Communicative

b. Consensual, Nominate, Bilateral, Commutative
c. Consensual, Nominal, Bilateral, Communicative
d. Consensual, Nominal, Bilateral, Commutative
Answer: b. Consensual, Nominate, Bilateral, Commutative

2. The following statements are provided for you:

Statement I: Parties must have legal capacity to enter into the contract is an essential feature of
a partnership.
Statement II: Mutual contribution of money, property, or industry to a mutual fund is an essential
feature of a partnership.

a. Only statement I is correct

b. Only statement II is correct
c. Both statements are correct
d. None of the statements are correct
Answer: a. Only statement I is correct

3. The following statements are provided for you:

Statement I: It is essential that the contracting parties have the necessary legal capacity to enter
into a contract.
Statement II: Any person may be a partner who is capable under the law of entering into
contractual relations.
a. Only Statement I is correct
b. Only Statement II is correct
c. Both statements are correct.
d. Either Statement I nor Statement II is correct.
Answer: c. Both statements are correct

4. Sam, Kris, and Zac are partners in SKZ Company with contributions of money and property
totaling P150,000. However, they have failed to comply with the requirements of having their
contract in a public instrument to be recorded in the SEC. With this, what rights or obligations
does the partnership NOT possess?
a. enter into contracts and to sue and be sued
b. acquire and possess property in its name
c. both a and b
d. none of the above
Answer: d. none of the above

5. In which of the following situations does a partnership exist?

a. Peter and Felix inherited an apartment from their parents which is leased to third persons.
b. GOT Company purchased a car from Mark and they agreed to pay the purchase price out of
the net profits of the business.
c. Ash, Dame, and Lia pooled their money to put up a business and agreed to divide the profits
and losses equally among themselves.
d. Niel works as an employee at SKY Company and receives 10% of the company’s monthly net
profits as his salary.
Answer: c. Ash, Dame, and Lia pooled their money to put up a business and agreed to
divide the profits and losses equally among themselves.

6. The following are the effects of unlawful partnership, except:

a. The contract is voidable from the very beginning.
b. The profits shall be confiscated in favor of the government.
c. The instruments or tools and proceeds of the crime shall be forfeited in favor of the
government.
d. The contributions of the partners shall not be confiscated.
Answer: a. The contract is voidable from the very beginning.

7. Mari and Mar formed into a partnership. Two years after the formation of the partnership, the
two got married. The marriage between Mari and Mar dissolved the partnership they earlier
formed if it were:
a. A general partnership
b. A particular partnership
c. A universal partnership
d. None of the above

Answer: a. A general partnership

8. The following instances, except one, when a partnership is unlawful. Which is the exception?
a. A partnership formed for the purpose of selling illegal drugs.
b. A partnership formed for the purpose of buying land.
c. A partnership formed to create illegal gambling.
d. A partnership formed for selling smuggled cars.
Answer: b. A partnership formed for the purpose of buying land.

9. X, Y, Z entered into a general professional partnership to run an accounting firm. Subsequent

to the formation of the partnership, X and Y got married. Does the stipulation in Article 1782
stating that ‘persons who are prohibited from giving each other any donation or advantage
cannot enter into a universal partnership’ apply to X and Y? Why?
a. Yes, since X and Y are married, they are no longer allowed by law to enter any partnership
together.
b. Yes, a general professional partnership is a universal partnership. Therefore, after X and Y’s
marriage, it longer acquires legal personality.
c. No, a partnership is fiduciary in nature. Therefore, X and Y’s marriage will be an asset in the
partners’ relations because there is trust and confidence.
d. No, a general professional partnership is a particular partnership. Therefore, X and Y’s
marriage does not dissolve the partnership.
Answer: d. No, a general professional partnership is a particular partnership. Therefore,
X and Y’s marriage does not dissolve the partnership.

10. Q, W, E, R, and T formed an association called “Pearson Specter” whose articles are kept
among themselves and wherein any one of the members may transact in his own name. The
following are true subsequent to the formation of the association, except:
a. Pearson Specter shall have no juridical personality.
b. Pearson Specter shall be governed by the provisions relating to co-ownership.
c. Pearson Specter may sue third persons under its name.
d. Pearson Specter may be sued under its name.
Answer: c. Pearson Specter may sue third persons under its name.

11. Where an immovable property or real rights are contributed to a partnership, the partnership
contract must be in a public instrument to which shall be attached an inventory of the immovable
property contributed and signed by the parties. Failure to comply with the said requirements
shall:
a. Makes the partnership void.
b. Makes the partnership unenforceable.
c. Makes the partnership voidable.
d. Does not affect the acquisition by the partnership of a juridical personality.
Answer: a. Makes the partnership void.

12. Which of the following partnership is required to be in a public instrument and an inventory
of the property contributed must be made, signed by the parties and attached to the public
instrument?
a. A general partnership where the capital amounts to P2, 000,000.00 in cash.
b. A general partnership where the capital amounts to P850,000.00 in cash.
c. A general partnership where the capital amounts to P200,000.00 consisting cash of
P150,000.00 and a vacant lot worth P50,000.00.
d. A general partnership where the capital amounts to P100,000.00 consisting of P40,000.00
cash and P60,000.00 worth of computers.
Answer: c. A general partnership where the capital amounts to P200,000.00 consisting
cash of P150,000.00 and a vacant lot worth P50,000.00.

13. Jojo and Bebe formed a universal partnership of profits. Which of the following properties
belong to the partnership?
a. 50-hectare farm inherited by Jojo before the formation of the partnership.
b. Salary received by Bebe as a school nurse in ABC University during the first year of the
partnership.
c. Brand new car won by Jojo during the first year of the partnership.
d. Three-storey building donated to Bebe during the first year of the partnership.
Answer: b. Salary received by Bebe as a school nurse in ABC University during the first
year of the partnership.
14. Statement 1: The partnership should answer for obligations the partner may have contracted
in good faith in the interest of the partnership business.
Statement 2: Industrial partners are not liable pro rata to 3rd persons.
a. Statement 1 is True while Statement 2 is False
b. Both statements are True
c. Both statements are False
d. Statement 1 is False while Statement 2 is True
Answer: a. Statement 1 is True while Statement 2 is False

15. Jet and Joanne are partners in Yellow and Stitch Co., with Jet as managing partner. John is
indebted to Jet in the sum of 2,000 and also to the partnership in the sum of 4,000. Both debts
are demandable. John gives 1,500 to Jet saying it is in payment for his debt to Jet. The latter
issues his receipt. Which is correct?
a. Jet receives the whole amount, P1500
b. Jet receives P700, The partnership, P800
c. Jet receives the amount proportion to his credit, P500 and same with the partnership, P1000.
d. None of the above
Answer: c. Jet receives the amount proportion to his credit, P500 and same with the
partnership, P1000.

16. Which of the following is true?

a. Industrial partners are liable for losses.
b. Unless there is stipulation to the contrary, partners shall contribute equal shares to the capital
of the partnership.
c. A partnership cannot acquire a juridical personality.
d. None of the above.
Answer: b. Unless there is stipulation to the contrary, partners shall contribute equal
shares to the capital of the partnership.

17. Tartaglia and Zhongli entered into a contract of partnership for a period of 10 years. As a
rule, after the expiration of 10 years the partnership of Tartaglia and Zhongli will be dissolved.
a. Partnership at will
b. Partnership with a fixed term
c. Partnership for a particular undertaking
d. De facto partnership
Answer: b. Partnership with a fixed term

18. When, as a rule, does a partnership begin to exist?

a. On the date of the recording of the partnership agreement with the Securities and Exchange
Commission.
b. Upon the execution of the partnership agreement by the partners.
c. On the date when all the capitalist partners have delivered their contributions to the
partnership.
d. On the date when the partnership agreement is acknowledged before a notary public.
Answer: b. Upon the execution of the partnership agreement by the partners.

19. ABCD Company is a partnership composed of Angela, Banana, Catana, and Donna. The
partners have capital contributions of P10,000.00, P20,000.00, P30,000.00 and P40,000.00,
respectively, and share in the profits in the ratio of 2:1:2:5. In 2021, the partnership sustained a
loss of P12,000.00. The share of each partner in the losses shall be:
a. Based on their profit sharing ratio.
b. Equal for each partner at P3,000.00 since the partners do not have a loss sharing agreement.
c. Felisa, P1,200.00; Irmina, P2,400.00; Nerissa, P3,600.00; and Eloisa, P4,800.00, based on
their capital contributions of the partners.
d. The partners need to have an agreement on the sharing of the loss before it can be divided
among the partners.
Answer: a. Based on their profit sharing ratio.

20. Which of the following stipulations is valid?

a. A stipulation excluding a capitalist partner from profits.
b. A stipulation exempting a capitalist partner from losses.
c. A stipulation excluding an industrial partner from profits.
d. A stipulation exempting an industrial partner from losses.
Answer: d. A stipulation exempting an industrial partner from losses.

21. SHEEESH, a partnership engaged in the management of professional teams is composed

of the following partners with their capital contributions: Sinatraa, P10,000.00, Hiko, P20,000.00;
Edward, P25,000.00; Earl, P30,000.00; Ethan, P40,000.00; Subroza, P150,000.00; and Hazed,
P350,000.00. There was no agreement among the partners as to who shall be the manager.
a. All of the partners will be managers.
b. The partners will have to agree as to who shall be the manager.
c. Subroza and Hazed will be the managers because the two of them own the controlling
interest.
d. Hazed shall be the manager because he owns the controlling interest.
Answer A: Under Article 1803, if there was no agreement regarding to be a managing
partner, all partners are considered agents and whatever any of them may do, even
without the approval of the others, are binding on the partnership. In this case, because
there was NO agreement as to who will manage the partnership, all of them will be
considered as managing partners and any act of each of them shall bind the partnership.
The fact that one of the partners has controlling interest does not entitle him to become
the managing partner of the firm absent any agreement between the partners.

22. SHEEESH, a partnership engaged in the management of professional teams is composed

of the following partners with their capital contributions: Sinatraa, P10,000.00, Hiko, P20,000.00;
Edward, P25,000.00; Earl, P30,000.00; Ethan, P40,000.00; Subroza, P150,000.00; and Hazed,
P350,000.00. There was no agreement among the partners as to who shall be the manager.
Assume that Sinatraa desires to scout TenZ from Cloud 9, but Ethan opposes it. A voting took
place and Hiko, Edward and Earl sided with Sinatraa, while Subroza and Hazed sided with
Ethan.
a. The group of Ethan, Subroza, and Hazed will prevail because they own the controlling
interest.
b. The conflict should be resolved by a unanimous vote among the partners.
c. The group of Sinatraa, Hiko, Edward and Earl will prevail because they constitute the majority.
d. None will prevail because no one was appointed as manager.
Answer C: Under Article 1803, all partners are considered an agent of the partnership
since there is no agreement appointing a partner as a managing partner. On the other
hand, Article 1801 states that in case 2 or more partners were entrusted to manage the
partnership without specification as to their respective function, each one of the partners
can bind the partnership in any act for the administration of the partnership. And if any
one of the managing partners opposes, then, the decision of the majority of the
managing partners shall prevail WITHOUT considering their respective interest. As such,
the group of Sinatraa will prevail since they constitute the majority of the managing
partners.

23. These statements are presented to you:

Statement I: If the partner who has an associate is the manager, the associate immediately
becomes a partner, even if the other partners do not consent.
Statement II: With or without the consent of the other partners, a partner can associate another
individual with him in his share.
In your evaluation of the foregoing statements:
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
Answer B: Under Article 1804, every partner may associate another person with him in
his share with or without the consent of the other partners which makes the second
statement true. But, the associate shall not be admitted into the partnership immediately
without the consent of all the other partners even if the partner having an associate
should be a manager. The first statement is false because it contradicts the second
sentence of this paragraph.

24. The conveyance such as by assignment by a partner of his whole interest in the partnership
produces the following effects, except:
a. The partnership still remains.
b. The assignee becomes a partner.
c. The assignee is entitled to receive the assignor-partner’s interest in the profits.
d. The assignee cannot participate in the management of the partnership.
Answer B: It was stated in Article 1813 that the assignee does not become a partner if
there is no consent by the other partners to admit him as a partner.

25. These statements are presented to you:

I. A partner’s right in specific partnership property may be attached by his separate creditors.
II. A partner’s right in specific partnership property may be assigned by him for his separate
debts.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.
Answer D: Both statements are false because it opposes the statement under Article
1811. A partner’s right in specific partnership property is not subject to attachment or
execution by the personal creditors of the partner. A partner’s right in specific
partnership property is also not assignable. This is considering that the partnership
properties are owned by the partnership and NOT by the individual partners.

26. Ringo, John, George, and Paul are partners. Ringo, George, and Paul being capitalist
partners of a restaurant who contributed P15,000, P10,000, and P8,000 respectively while John
contributed his skills in cooking. The partners incurred a contractual liability of P40,000 in favor
of Yoko Ono. All of the partners paid the debt to Yoko Ono pro rata at P10,000 each.
Recognizing that John is an industrial partner, who should he ask reimbursement from?
a. John can ask for reimbursement from Ringo because he has the largest share among the
partners.
b. John can ask reimbursement from all capitalist partners pro rata.
c. John can ask reimbursement from all of capitalist partners proportionately.
d. John cannot ask reimbursement from any capitalist partners.
Answer C: According to Art. 1816, all partners, including the industrial ones, are liable
pro rata with all their property and after all partnership assets have been exhausted for
contracts which may be entered into in the name and for the account of the partnership.
However, any partner may enter into a separate obligation. Once they have settled
liability with a third person, the industrial partner may ask for reimbursement from
capitalist partners proportionately, based on the shares.

27. Steph, LeBron, and Kevin are partners in an auto repair shop. While fixing Klay's car, Kevin
lifted up the car's hood but slipped and accidentally hit Klay's head. Knowing that damages
should be paid, who should be liable for the act omitted?
a. Kevin because he did not act in an ordinary course of business.
b. Steph, LeBron, and Kevin should be proportionately liable to Klay.
c. Steph, LeBron, and Kevin should not be liable since it was an accident.
d. Steph, LeBron, and Kevin should be solidarily liable to Klay.
Answer D: According to Article 1822, any wrongful act or omission of any partner who is
acting within the ordinary course of business of the partnership or with the authority of
his co-partners can cause injury or loss to any person, the partnership would be liable
therefore extending the omitting act to the partners. This article connects with Art. 1823,
and 1824, where Art 1824 states that all partners are liable solidarily with the partnership
for everything chargeable to the partnership under Art. 1822 and 1823.
28. Rae, Sykunno, Toast, and Corpse are partners in a partnership. Rae contributed as capital
contribution of P10,000, Sykunno with P10,000, Toast with P8,000, while Corpse is an industrial
partner. Felix sent a notice to Corpse letting him know that their debt is due in a few days. Is the
notice sent to Corpse a notice for all the partners?
a. Yes, because a notice to one is a notice to all partners.
b. Yes, because Corpse will pay the debt for all of the partners.
c. No, because Corpse is only an industrial partner and has no obligation to give notice to
capitalist partners.
d. No, because the notice was only sent to Corpse.
Answer A: According to Art. 1821, a notice to any partner of any matter relating to
partnership affairs and the knowledge of the partner acting in the particular manner,
acquired while a partner or then present to his mind operate as a notice to or knowledge
of the partnership except in case of a fraud on the partnership, committed by or with the
consent of that partner.

29. Bridget, Jonabelle, Kaye, and Stephanie are partners in HalaKaTea Company, whose
business is selling milk tea. Bridget contributed P70,000.00, Jonabelle, P40,000.00, Kaye,
P30,000.00, and Stephanie, P20,000.00. The partners failed to agree on who shall manage the
partnership.
a. Bridget shall be the manager because he owns the controlling interest.
b. Bridget and Jonabelle will be the managers because they own the controlling interest and
there should be at least two managers who can discuss and decide for the partnership.
c. All the partners will be considered the managers or agents of the partnership.
d. No one among the partners can manage the partnership because it is void when the partners
fail to designate the manager.
Answer C: According to Article 1818, every partner is an agent of the partnership for the
purpose of its business. Therefore, no matter how significant the contribution made by a
partner or vice versa, it entitles him to act as an agent for the partnership unless
otherwise there is a stipulation on who will act for the partnership.

30. Which of the following is an act that is not apparently carrying on in the usual way of
business of the partnership?
a. Disposing the good-will of the business
b. Submitting a partnership claim or liability to arbitration
c. Assigning the partnership property in trust for creditors or on the assignee’s promise to pay
for the debts of the partnership
d. All of the aforementioned
Answer D: The stated choices are included in the acts that the partners are not
authorized to do so that is stipulated in Article 1818 which states that: “Except when
authorized by the other partners or unless they have abandoned the business, one or
more but less than all the partners have no authority to: (1) Assign the partnership
property in trust for creditors or on the assignee’s promise to pay the debts of the
partnership; (2) Dispose of the goodwill of the business; (3) Do any other act which
would make it impossible to carry on the ordinary business of a partnership; (4) Confess
a judgment; (5) Enter into a compromise concerning a partnership claim or liability; (6)
Submit a partnership claim or liability or arbitration; (7) Renounce a claim of the
partnership.”

31. JAB Enterprises is a partnership composed of Jet, Angelo, and Bridget. Jet was driving the
partnership’s truck beyond the speed limit to deliver some goods to the customer when it hit and
damaged Karl's car. Who is/are held liable for the damages?
a. JAB Enterprises and the three partners may be held solidarily liable by Karl for damages.
b. Only Jet may be held liable by Karl for damages because of the former’s negligence for
driving beyond the speed limit.
c. Only JAB Enterprises may be held liable by Karl because the damage was sustained by Karl
while Jet was performing an act in the course of business.
d. Only JAB Enterprises and Jet may be held solidarily liable by Karl.
Answer A: Under Article 1824 in relation with 1822, loss or injury caused to a third person
or any penalty is incurred by reason of negligence of any partner acting in the ordinary
course of business, the partnership shall be solidarily liable with all the partners.
Note: The partner must act in the ordinary course of business so that the other partner
can be made liable. If the partner was not acting in the ordinary course of business and
the act was without the consent of the other partners, neither the partnership nor the
other partners will be liable. The liability in that case will be for the SOLE account of the
erring partner.

32. Below are situations which are grounds for dissolution by decree of the court, except:
a. Dumbie, a partner of AMBHOBOH Partnership, was declared insane by her doctors.
b. Aurora, a partner of Disney Princess Partnership, had a car accident that damaged her spinal
cord. She is now suffering from tetraplegia, paralysis of both arms and legs, that hinders her to
perform her daily activities.
c. Jayzam, a partner of Mandirigma Ahu Partnership, persistently breaches the partnership
agreement.
d. Camille, who has acted in good faith, expressly stated her will to dissolve the partnership she
belongs in.
Answer D: Camille who has acted in good faith and then decided to dissolve the
partnership is an exemplification of Article 1830. Elaborately, Article 1830 states that
dissolution of a partnership may be caused by the express will of any partner, who must
act in good faith, when no definite term or particular undertaking is specified. Meanwhile,
the situations of Dumbie, Aurora, Jayzam are grounds for dissolution by decree of the
court, according to Article 1831, for the reason that Dumbie is insane, Aurora is
paralyzed, and Jayzam persistently breaches the partnership agreement.

33. According to Article 1830, dissolution may be caused without violation of the agreement
between partners. By the express will of any partner, who must act in bad faith, when no definite
term or particular undertaking is specified.
a. Both statements are true
b. Both statements are false
c. First statement is true; Second statement is false
d. Second statement is true; First statement is false
Answer C: Article 1830 states that dissolution may be caused without violation of the
agreement between partners which can be through the expressed will of the partner. But
such partners should act in good faith.

34. Which of the following will not cause the automatic dissolution of a general partnership?
a. Death of any partner
b. Termination of the definite term of the partnership
c. Incapability of a partner performing his part
d. Civil interdiction of a partner
Answer C: Article 1830 enumerated the grounds for the automatic dissolution of the
partnership. It means that in the grounds stated therein, the partnership will be
automatically dissolved even without a court order. Included in the enumeration therein
is A, B and D. On the other hand, Article 1831 provides for the dissolution of the
partnership upon application and decree by the court. The ground stated therein will NOT
automatically dissolve the partnership. There is still a need for a petition for dissolution
and actual court order dissolving the partnership before the partnership can be
considered dissolved on those grounds. The incapability of a partner performing his part
of the partnership contract is one of those grounds enumerated therein.

35. A partnership is dissolved by the death of a partner. The dissolution of the partnership was
published in a newspaper of general circulation. Toni, a previous creditor, and Rob, a new
creditor, both transacted new business with the partnership after dissolution, but neither of them
read the publication of the firm’s dissolution nor learned of it in some other way. Who is deemed
to have knowledge of the dissolution of the partnership?
a. Rob only
b. Toni only
c. Both Toni and Rob
d. Neither Toni nor Rob because neither one has come to learn of the dissolution of the
partnership
Answer A: Since Toni is a previous creditor of the partnership and having no knowledge
of the dissolution, she must be entitled to special attention; hence, she must be specially
notified of the dissolution. The mere publication of the dissolution is not a notice to her.
Without the presence of a special notification from the partnership, Toni would have
assumed that the partnership still continues to exist. On the other hand, Rob, a new
creditor and also having no knowledge of the dissolution, shall not be entitled to any
special attention; hence, the mere publication of the dissolution is a constructive notice
to Rob although he had not read it. The fact that the partnership had published their
dissolution in a newspaper, they would have assumed that Rob knows that the
partnership is now dissolved. Therefore, Rob is deemed to have knowledge of the
dissolution of the partnership. The foregoing is based on Article 1834.
36. Dambie, Nica and Jayzam are partners in a law firm. Jayzam was appointed as judge of the
Regional Trial Court. Such appointment:
a. Prohibits the inclusion of the name of Jayzam in the firm name without dissolving the
partnership.
b. Results in the dissolution of partnership
c. Suspends the participation of Jayzam in the management of the firm without causing the
dissolution of the partnership.
d. Merely requires the disclosure of Jayzam’s appointment to the court without dissolving the
partnership.
Answer B: As provided in Article 1831 of the Civil Code, one of the applications by or
partner the court shall decree a dissolution whenever a partner becomes incapable of
performing his part of the partnership contract. This tells us that Dambie, Nica and
Jayzam are partners in a law firm. Subsequently, Jayzam was appointed as the judge of
the Regional Trial Court. Therefore, Jayzam will not be given authority by their head of
office to engage in their law firm. Thus, in this case, Jayzam is incapable of performing
his part of the partnership contract.

37. Zeinab, Camille, Awra and Boknoy entered into a contract of partnership. One of their
stipulations in the contract, among others, is the expulsion of any partner who incurred 14 days
in a month without official leave (AWOL). If Boknoy will violate this agreement, what will happen
to Boknoy?
a. Boknoy will be in good faith.
b. Boknoy will be criminally liable.
c. Boknoy will be expelled in bad faith, and can claim damages.
d. Boknoy will no longer be liable for damages.
Answer C: Article 1830. Dissolution is caused: (1) without the violation of the agreement
between the partners; xxx (d) by the expulsion of any partner from the business bona
fide in accordance with such a power conferred by the agreement between the partners.
If Boknoy violated their agreement, then he can be expelled and can claim damages.
According to the latter, expulsion must be in good faith.

38. Jayzam and Camille have been partners for more than 5 years in their milktea business. At
the start of the sixth year, Jayzam assigned his interest in the partnership to Nica, but Camille
objected on the grounds that she did not want Nica to be her partner.
a. Jayzam and Camille continue to be partners despite Jayzam’s conveyance of his interest to
Nica.
b. The conveyance by Jayzam of his interest in the partnership to Nica entitled the latter to
inspect the books, and participate in the management of the partnership.
c. Nica will automatically become a partner of Camille when Jayzam conveyed his interest to
her.
d. The partnership between Jayzam and Camille was automatically dissolved when Jayzam
conveyed his interest to Nica.
Answer A: Article 1813 of the Civil Code provides as follows:
A conveyance by a partner of his whole interest in the partnership does not of itself
dissolve the partnership, or, as against the other partners in the absence of agreement,
entitle the assignee, during the continuance of the partnership, to interfere in the
management or administration of the partnership business or affairs, or to require any
information or account of partnership transactions, or to inspect the partnership books;
but it merely entitles the assignee to receive in accordance with his contract the profits
to which the assigning partner would otherwise be entitled. However, in case of fraud in
the management of the partnership, the assignee may avail himself of the usual
remedies.
In case of a dissolution of the partnership, the assignee is entitled to receive his
assignor’s interest and may require an account from the date only of the last account
agreed to by all the partners.

39. In the following cases, creditors of the dissolved partnership are also creditors of the person
or partnership continuing the business: These statements are presented to you:
Statement I: When any new partner is admitted into an existing partnership, or when any partner
retires and assigns (or the representative of the deceased partner assigns) his rights in
partnership property to two or more of the partners, or to one or more of the partners and one or
more third persons, if the business is continued with a liquidation of the partnership affairs;
Statement II: When all but one partner retire and assign (or the representative of a deceased
partner assigns) their rights in partnership property to the remaining partner, who continues the
business without liquidation of partnership affairs, either alone or with others.
In your evaluation of the foregoing statements:
a. Both statements are false
b. Statement I is true; Statement II is false
c. Both statements are true
d. Statement I is false; Statement II is true
Answer D: Article 1840 states that when any new partner is admitted into an existing
partnership, or when any partner retires and assigns (or the representative of the
deceased partner assigns) his rights in partnership property to two or more of the
partners, or to one or more of the partners and one or more third persons, if the business
is continued without a liquidation of the partnership affairs.
Therefore, statement I is false; Statement II is true.

40. The partnership of Elijah, Azrael, and Damon was dissolved due to the death of Damon.
Rafael is a partnership creditor prior to the dissolution, while Josiah is the private creditor of
Damon. Is the separate property of Damon liable to Rafael?
a. Yes, however the separate liability to Josiah must first be paid and thereafter, any remaining
property of Damon will be available to satisfy his share in the partnership liability to Rafael that
was incurred prior to dissolution.
b. No, the separate property of Damon is not liable to Rafael.
c. Yes, the separate property of Damon is liable to Rafael.
d. No, since the death of Damon, his separate liability to Josiah no longer exists as well as his
partnership liability to Rafael.
Answer A: Article 1835 states that the dissolution of the partnership does not of itself
discharge the existing liability of any partner.
Also, the individual property of a deceased partner shall be liable for all obligations of the
partnership incurred while he was a partner, but subject to the prior payment of his
separate debts as expressly stated in the last paragraph of Article 1835.

41. Liabilities of the partnership shall rank in order of payment:

I: Those owing to partners in respect of profits;
II: Those owing to partners (e.g., the partner or partners who gave a loan to the partnership);
III: Those owing to partnership creditors other than partners; and
IV: Those owing to partners in respect of capital.
In your evaluation of the foregoing statements:
a. I, II, III, IV
b. III, II, IV, I
c. IV, I, III, II
d. II, IV, III, I
Answer B: Under Article 1839 liabilities of the partnership shall rank in order of payment.
I. Those owing to partnership creditors other than partners; II. Those owing to partners
(e.g., the partner or partners who gave a loan to the partnership); III. Those owing to
partners in respect of capital; and
Note: An industrial partner is not entitled to participate in the capital because he did not
contribute money or property or both. IV. Those owing to partners in respect of profits.
Note: An industrial partner is entitled to participate in the profits.

42. Who are the persons authorized to wind up a partnership?

a. The legal representative of the last surviving partner, not insolvent.
b. All the partners who have not wrongfully dissolved the partnership.
c. Court-appointed receiver
d. All of the above
Answer D: Article 1836 states that unless otherwise agreed, the partners who have not
wrongfully dissolved the partnership or the legal representative of the last surviving
partner, not insolvent, has the right to wind up the partnership affairs, provided, however,
that any partner, his legal representative or his assignee, upon cause shown, may obtain
winding up by the court. Thus, all of the above mentioned are the persons authorized to
wind up.

43. From the following statements:

I: To have partnership property applied to discharge the liabilities of the partnership.
II: To have partnership property applied for the payment of its liabilities and to receive in cash
his share of the surplus.
III: To be indemnified for damages.
IV: To have the surplus, if any, applied to pay in cash the net amount owing to the respective
partners.
Determine the rights of the partners when dissolution is not in contravention of agreement?
a. I and III
b. II and III
c. I and IV
d. II and IV
Answer C: According to Article 1837, when dissolution is caused in any way, except in
contravention of the partnership agreement, each partner, as against his co-partners and
all persons claiming through them in respect of their interests in the partnership, unless
otherwise agreed, may have the partnership property applied to discharge its liabilities,
and the surplus applied to pay in cash the net amount owing to the respective partners.
Hence, statements I and IV are both the rights of the partners when dissolution is not in
contravention of agreement.

44. A, B, C and D intended to form a limited partnership, thus, they have signed and sworn to a
certificate and submitted such to the office of the Securities and Exchange Commission. They
have included every information required to form a limited partnership in their certificate, but
they had failed to add the word "Limited" into the name of their partnership. Because of this,
what will then happen to their partnership?
a. This would make the partnership voidable.
b. This would make the partnership a general partnership.
c. This would make the partnership void.
d. None of the above.
Answer B: Article 1844 of the Civil Code requires partners to sign and swear to a
certificate that should state the required requisites provided by the said article, and
should be submitted to the Securities and Exchange Commission afterwards. By failing
to include the word "limited" into their partnership name, the nature of the said
partnership will then be considered as a general partnership in contrast to what the
parties had originally contemplated.

45. Which of the following statements are false?

a. A certificate shall be amended when all limited partners cease to be limited partners.
b. Limited partners are given priority over general partners.
c. When the partnership is dissolved, the partnership's certificate shall be cancelled.
d. The amended certificate must be in writing, signed, sworn into, and submitted to the SEC for
it to be valid.
Answer A: Article 1864 clearly states that cancellation of the certificate can only occur
when a partnership is dissolved

46. These statements are presented to you:

I. At least one (1) limited partner and at least one (1) general partner is enough to form a limited
partnership.
II. A limited partnership can be a general partner at the same time.
Which of the statements are true?
a. Only statement I is true.
b. Both statements are false.
c. Statement I is false.
d. Both statements are true.
Answer D: Article 1843 of the Civil Code requires limited partnerships to have at least
one (1) member who is a general partnership and at least one (1) who is a limited partner.
Meanwhile, there is no prohibition against a general partner being also a limited partner,
thus making Statement II also true.

47. A limited partner may have the partnership dissolved and its affairs wound up when:
a. He rightfully and successfully demands his return of his contribution; or
b. The other liabilities of the partnership have been paid, or the partnership property is sufficient
for their payment as required by the first paragraph, No. 1, and the limited partner would not
otherwise be entitled to the return of his contribution.
c. All of the above
d. None of the above
Answer D: ART.1857 – A limited partner may have the partnership dissolved and its
affairs wound up when: (1) He rightfully but unsuccessfully demands his return of his
contribution; or (2) The other liabilities of the partnership have not been paid, or the
partnership property is insufficient for their payment as required by the first paragraph,
No. 1, and the limited partner would otherwise be entitled to the return of his
contribution.

48. I. The substituted limited partner has all the rights and powers, and is subject to all the
restrictions and liabilities of his assignor, including those liabilities of which he was ignorant at
the time he became a limited partner and which could not be ascertained for the certificate.
II. A substituted limited partner is a person admitted to all the rights of a limited partner who has
died or has assigned his interest in a partnership.
a. Both statements are true
b. Only statement I is true
c. Statement II is false
d. Only statement II is true
Answer D: Statement I – FALSE: ART.1859. The substituted limited partner has all the
rights and powers, and is subject to all the restrictions and liabilities of his assignor,
except those liabilities of which he was ignorant at the time he became a limited partner
and which could not be ascertained for the certificate.
Statement II – TRUE: ART.1859. A substituted limited partner is a person admitted to all
the rights of a limited partner who has died or has assigned his interest in a partnership.

49. Which statement(s) is true about Limited Partnership?

I. Partners in Limited Partnership may contribute money, property, or services
II. Created by the members after compliance with the requirements set forth by law.
III. Liability of such partner extends only to his capital contribution
IV. Composed only of limited partners
a. I, II, III, and IV
b. I and II only
c. II and III only
d. II, III, and IV only
Answer C: Article 1843. One of the characteristics of a limited partnership; II. Formed by
compliance with statutory requirements; III. The liability of limited partners is limited to a
fixed amount of their capital contributions or the amount they have invested in the
partnership.
False: I and IV; where: I. Partners in Limited Partnership must contribute money or
property but not services. Whereas IV. Limited Partnership is composed of both general
and limited partners.

50. There is no need for such certificates or articles of the limited partnership to be filed for
record to the Office of the SEC.
a. True, it is not necessary to submit such file to be passed in the office in the SEC
b. False, it must be filed for record in the office of the court.
c. False, such certificate must be filed for record in the Office of the SEC as one of the
requirements to form such partnership.
d. True, there is no such requirement given by the law.
Answer C: Article 1844. Requirements for formation of a limited partnership. 1.) The
certificate or articles of the limited partnership which state the matters enumerated in the
article, must be signed and sworn to; and 2.) Such a certificate must be filed for record in
the Office of the SEC.

51. The following are attributes of a corporation, except

a. It is an artificial being
b. It is created by operation of law
c. It enjoys the right of succession
d. It does not have the powers, attributes, and properties expressly authorized by law or incident
to its existence
Answer D: Sec. 2. of the Corporation Code of the Philippines provides the definition of a
corporation and the analysis of which reveals its attributes. A corporation is an artificial
being created by operation of law, having the right of succession and the powers,
attributes, and properties expressly authorized by law or incident to its existence.

52. As a general rule, may a corporation enter into a contract of partnership?

a. Yes, a corporation has all the power to enter into partnership.
b. No, a corporation has no power to enter into a partnership.
c. Both A and B are correct
d. None of the above
Answer B: If a corporation would enter into a contract of partnership, the corporation
would be bound by the acts of those who are not its duly appointed and authorized
agents and officers, and it would be entirely inconsistent with the policy of the law that
the corporation shall manage its own affairs separately and exclusively. The corporations
may have no power to enter into a partnership as a general rule but there are a couple of
exceptions that the SEC allows for the corporations to enter into partnerships with other
corporations and individuals provided that: 1. The authority to enter into a partnership
relation is expressly conferred by the Charter or the AOI and the nature of the business
venture to be undertaken by the partnership is in line with the business authorized by the
charter or the AOI. (SEC Opinions, Feb. 29, 1980, Dec. 1, 1993, and Feb. 23, 1994.) 2. The
partnership must be a limited partnership and the corporation must be a limited partner.
3. If it is a foreign corporation, it must obtain a license to transact business in the
country.

53. Karylle, Yana, Patrish, Nika, and Ieano formed KAYAPANI, INC. and was issued a certificate
of registration by the appropriate government agency. It turned out, however, that Karylle, Yana,
and Nika are not residents of the Philippines. What type of corporation is KAYAPANI, INC.?
a. De Jure Corporation
b. De Facto Corporation
c. Corporation by Estoppel
d. Corporation by Prescription
Answer B: Generally, a corporation is formed through compliance with a state
incorporation statute. However, if a corporation fails to comply with the said articles of
incorporation statute, the corporation created is called de facto corporation. Sec. 19. De
Facto Corporation, provides a clear definition and also states the requisites for a
corporation to be a de facto. The case above falls under the second requisite of de facto
corporation, which is the bona fide attempt in good faith to incorporate under such law,
which also states that the above may be considered inadvertent or minor defects or
errors that can be excused to prevent injustice.

54. Shares classified as such in the articles of incorporation which may be given certain rights
and privileges not enjoyed by the owners of other stocks.
a. Redeemable shares
b. Retained shares
c. Funder’s share
d. Founder’s share
Answer D: Section 7. Founder's Share- Founder's shares may be given certain rights and
privileges not enjoyed by the owners of other stocks. Where the exclusive right to vote
and be voted for in the election of directors is granted, it must be for a limited period not
to exceed five (5) years from the date of incorporation: Provided, That such exclusive
right shall not be allowed if its exercise will violate Commonwealth Act No. 108,
otherwise known as the "Anti-Dummy Law"; Republic Act No. 7042, otherwise known as
the "Foreign Investments Act of 1991", and other pertinent laws.

55. Corporations, which have capital stock divided into shares and are authorized to distribute to
the holders of such shares, dividends, or allotments of the surplus profits based on the shares
held.
a. Stock Corporations
b. Open Corporations
c. Non-Stock Corporations
d. Government-Owner and Controlled Corporations
Answer A: Section 3. Classes of Corporations. - Corporations formed or organized under
this Code may be stock or nonstock corporations. Stock corporations are those which
have capital stock divided into shares and are authorized to distribute to the holders of
such shares, dividends, or allotments of the surplus profits on the basis of the shares
held. All other corporations are nonstock corporations.

56. The due incorporation of any corporation claiming to be in good faith to be a corporation
under this code.
a. De Facto Corporation
b. De Facto Partnership
c. De Jure Corp
d. De Jure Partnership
Answer B: Sec. 19. De Facto corporation. – The due incorporation of any corporation
claiming in good faith to be a corporation under this Code, and its right to exercise
corporate powers, shall not be inquired into collaterally in any private suit to which such
corporation may be a party. Such an inquiry may be made by the Solicitor General in a
quo warranto proceeding.

57. All persons who assume to act as a corporation knowing it to be without authority to do so.
a. Third person
b. Corporation by estoppel
c. Estoppel
d. Corporation by third person
Answer B: Section 20. Corporation by estoppel- All persons who assume to act as a
corporation knowing it to be without the authority to do so shall be liable as general
partners for all debts, liabilities, and damages incurred or arising as a result thereof:
Provided, however, That when any such ostensible corporation is sued on any
transaction entered by it as a corporation or on any tort committed by it as such, it shall
not be allowed to use its lack of corporate personality as a defense. Anyone who
assumes an obligation to an ostensible corporation as such cannot resist performance
thereof on the ground that there was in fact no corporation.

58. In the matter of management of the corporation, this is the supreme

a. president
b. chairman of the board
c. stockholders
d. board of directors
Answer D: SEC. 22. The Board of Directors or Trustees of a Corporation; Qualification
and Term. – Unless otherwise provided in this Code, the board of directors or trustees
shall exercise the corporate powers, conduct all business, and control all properties of
the corporation.

59. The amendment of the articles of incorporation must be approved by

a. vote or written assent of all of the Board of Directors or Trustees
b. vote or written assent of majority of the Board of Directors or Trustees and vote or written
assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock
of the corporation
c. written assent of the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock of the corporation
d. vote or written assent of majority of the Board of Directors or Trustees and vote or written
assent of the stockholders representing at least two-thirds (1/3) of the outstanding capital stock
of the corporation
Answer B: SEC. 15. Amendment of Articles of Incorporation. – Unless otherwise
prescribed by this Code or by special law, and for legitimate purposes, any provision or
matter stated in the articles of incorporation may be amended by a majority vote of the
board of directors or trustees and the vote or written assent of the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice
to the appraisal right of dissenting stockholders in accordance with the provisions of this
Code. The articles of incorporation of a nonstock corporation may be amended by the
vote or written assent of majority of the trustees and at least two-thirds (2/3) of the
members.

60. A. For a stock corporation, ownership of at least 1 share of capital stock of the corporation in
his own name, and if he ceases to own at least one share in his own name, he automatically
becomes a director.
B. Only natural persons can be elected directors/trustees. Other qualifications as may be
prescribed in the by-laws of the corporation or any other special law.
Which statement is true?
a. A is true and B is false
b. B is true and A is false
c. Both statements are true
d. Both statements are false.
Answer B: For a stock corporation, ownership of at least 1 share of capital stock of the
corporation in his own name, and if he ceases to own at least one share in his own name,
he automatically "ceases" to be a director.

61. GENERAL RULE: The corporate powers of the corporation shall be exercised, all business
conducted, and all property of such corporation and held by the board of directors or trustees.
(Sec.22)
a. True
b. False
c. Sometimes true
d. Maybe
Answer A: According to the GENERAL RULE: The corporate powers of the corporation
shall be exercised, all business conducted, and all property of such corporation and held
by the board of directors or trustees. (Sec.22).
62. A delinquent corporation shall have a period of (5) years to resume operations and comply
with all requirements that the Commission shall prescribe. Upon compliance by the corporation,
the Commission shall issue an order lifting the delinquent status. Failure to comply with the
requirements and resume operations within the period given by the Commission shall cause the
revocation of the corporation's certificate of incorporation.
a. True
b. Sometimes True.
c. False, a delinquent corporation shall have a period of (2) years.
d. False, a delinquent corporation shall have a period of (3) years.
Answer C: According to (Sec.21) A delinquent corporation shall have a period of (2) years
"to resume operations and comply with all requirements that the Commission shall
prescribe. Upon compliance by the corporation, the Commission shall issue an order
lifting the delinquent status. Failure to comply with the requirements and resume
operations within the period given by the Commission shall cause the revocation of the
corporation's certificate of incorporation.

63. Which of the following statements is true?

Statement I: A president must be a director and of course a stockholder. Hence, a president
cannot be concurrently a treasurer or secretary.
Statement II: Even without the authority by a majority of the board of directors, the stockholders
or members may still vote through remote communication or in absentia: Provided that the right
to vote through such modes may be exercised in corporations vested with public interest.
a. Both statements are true
b. Only statement I is true
c. Only Statement II is true
d. Both statements are false
Answer B: Republic Act No. 11232 under section 24 states that immediately after their
election, the directors of a corporation must formally organize and elect a president, who
must be a director. And no one shall act as president and secretary or as president and
treasurer at the same time, unless otherwise allowed in this Code. Hence, the officers
shall manage the corporation and perform such duties as may be provided in the bylaws
and/or as resolved by the board of directors.
Furthermore, statement II is false because RA No. 11232

66. Validity of summons and issuance of alias summons — Summons shall remain valid until
duly served, unless it is recalled by the court. In case of loss or destruction of summons, the
court may, upon motion, issue an alias summons.
a. True
b. False
c. Partly true
d. Partly false
Answer A: There is failure of service after unsuccessful attempts to personally serve the
summons on the defendant in his or her address indicated in the complaint. Substituted
service should be in the manner provided under Section 6 of this Rule.

67. Which of the following must be indicated in the articles of incorporation?

a. Classification of shares, their corresponding rights, privileges, or restrictions and their stated
market value, if any.
b. Classification of shares, their corresponding demands, privileges, or restrictions, and their
stated market value, if any.
c. Classification of shares, their corresponding rights, privileges, or restrictions, and their stated
par value, if any.
d. Classification of shares, their corresponding rights, demands, privileges, or restrictions.

Answer C: Stated in the Revised Corporation Code (2019) SEC 6. under Classification of
Shares that, the classification of shares, their corresponding rights, privileges, or
restrictions, and their stated par value, if any, must be indicated in the articles of
incorporation. Each share shall be equal in all respects to every other share, except as
otherwise provided in the articles of incorporation and in the certificate of stock.

68. How many years does the certificate of incorporation shall be deemed revoked, if a
corporation does not formally organize and commence its business?
a. Within 5 years
b. Less than 5 years
c. 2 years
d. 2-5 years

Answer A: SEC. 21. Effects of Non-Use of Corporate Charter and Continuous Inoperation,
of Revised Corporation Code stated that, if a corporation does not formally organize and
commence its business within five (5) years from the date of its incorporation, its
certificate of incorporation shall be deemed revoked as of the day following the end of
the five-year period.

69. The following statements refers to the Corporation and Organization of Private Corporation
under Number and Qualifications of Incorporators, which of the statements are true?
I. Any person, partnership, association or corporation, singly or jointly with other but not more
than 15 in number may organize a corporation for any lawful purpose or purposes.
II. Any person, partnership, association or corporation, singly or jointly with other but not more
than 15 in number cannot organize a corporation for any lawful purpose or purposes.
III. Provided that natural persons who are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a profession, shall not be allowed to
organize as a corporation unless under special laws.
IV. Provided that natural persons who are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a profession, shall not be allowed to
organize as a corporation unless otherwise provided under special laws.
a. Statements II and IV
b. Statements I and III
c. Statements I and IV
d. Statements II and III

Answer C: SEC. 10. Number and Qualifications of Incorporators. Any person,

partnership, association or corporation, singly or jointly with others but not more than
fifteen (15) in number, may organize a corporation for any lawful purpose or purposes:
Provided, that natural persons who are licensed to practice a profession, and
partnerships or associations organized for the purpose of practicing a profession, shall
not be allowed to organize as a corporation unless otherwise provided under special
laws.

70. He is a person who is independent of management and free from any business or other
relationship which could, or could reasonably be perceived to materially interfere with the
exercise of independent judgment in carrying out the responsibilities as a director.
a. Interlocking directors
b. Trustees
c. Independent directors
d. Executive committee

Answer C: As provided in the Revised Corporation Code under section 22, the board of
the following corporations vested with public interest shall have independent directors
constituting at least twenty percent (20%) of such board. An independent director is a
person who, apart from shareholdings and fees received from the corporation, is
independent of management and free from any business or other relationship which
could or could reasonably be perceived to materially interfere with the exercise of
independent judgment in carrying out the responsibilities as a director. Independent
directors must be elected by the shareholders present or entitled to vote in absentia
during the election of directors. Independent directors shall be subject to rules and
regulations governing their qualifications, disqualifications, voting requirements,
duration of term and term limit, maximum number of board memberships and other
requirements that the SEC will prescribe to strengthen their independence and align with
international best practices.

71. A person shall be disqualified from being a director, trustee, or officer of any corporation if,
within five (5) years prior to the election or appointment as such, the person was convicted with
the following final judgment, EXCEPT:
a. For an offense punishable by imprisonment for a period exceeding six (6) years
b. For violation of the Revised Corporation Code
c. For violating Republic Act No. 8799 or otherwise known as "The Securities Regulation Code"
d. For violating the natural laws
Answer D: As provided in the Revised Corporation Code, under section 26, a person
shall be disqualified from being a director, trustee or officer of any corporation if, within
five (5) years prior to the election or appointment as such, the person was: (1) Of an
offense punishable by imprisonment for a period exceeding 6 years; (2) For violating
Republic Act No. 11232, otherwise known as the “Revised Corporation Code“; and (3) For
violating Republic Act No. 8799, otherwise known as “The Securities Regulation Code”

72. Which of the following statement is TRUE?

Statement I: Each stockholder or member shall have the right to nominate any director or
trustee who possess all of the qualifications set forth in this code.
Statement II: The Election may not be by ballot.

a. Only Statement II is False

b. Both Statement is True
c. Only Statement II is True
d. Only Statement I is False

Answer A: As provided by the Republic Act 11232, Section 23 states that At all elections
of directors or trustees, there must be present, either in person or through a
representative authorized to act by written proxy, the owners of majority of the
outstanding capital stock, or if there be no capital stock, a majority of the members
entitled to vote.

73. Which is NOT included in the legitimate corporate purposes if a stock corporation having the
power to acquire its own shares?
a. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the
provisions of this Code.
b. To eliminate fractional shares arising out of stock dividends.
c. To have perpetual existence unless the certificate of incorporation provides otherwise.
d. To collect or compromise an indebtedness to the corporation, arising out of unpaid
subscription, in a delinquency sale, and to purchase delinquent shares sold during said sale.

Answer C: According to the Revised Corporation Code under Section 40, that the
corporation has unrestricted retained earnings in its books to cover the shares to be
purchased or acquired, a stock corporation shall have the power to purchase or acquire
its own shares for a legitimate corporate purpose or purposes, including the following
cases: (a) To eliminate fractional shares arising out of stock dividends; (b) To collect or
compromise an indebtedness to the corporation, arising out of unpaid subscription, in a
delinquency sale, and to purchase delinquent shares sold during said sale; and (c) To
pay dissenting or withdrawing stockholders entitled to payment for their shares under
the provisions of this Code.

74. Statement I: Directors or trustees who cannot physically attend or vote at board meetings
can participate and vote through remote communication such as videoconferencing,
teleconferencing, or other alternative modes of communication that allow them reasonable
opportunities to participate.
Statement II: Directors and Trustees can also attend or vote by proxy at board meetings.

a. Both statements are true.

b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.

Answer B: As provided in the Revised Corporation Code (2019) under SEC. 52. Regular
and Special Meetings of Directors or Trustees; Directors or trustees who cannot
physically attend or vote at board meetings can participate and vote through remote
communication such as videoconferencing, teleconferencing, or other alternative modes
of communication that allow them reasonable opportunities to participate. Directors or
trustees cannot attend or vote by proxy at board meetings.

75. In the contents of bylaws, a private corporation may provide the following, except:
a. The time, place and manner of calling and conducting regular or special meetings of the
directors and trustees.
b. Mode of notifying the stockholders or members.
c. The modes by which a stockholder, member, director, or trustee may attend meetings and
cast their votes.
d. None of the above.

Answer D: As provided in the Revised Corporation Code (2019) under SEC. 46. Contents
of Bylaws. – A private corporation may provide the following in its bylaws: (a) The time,
place and manner of calling and conducting regular or special meetings of the directors
or trustees; (b) The time and manner of calling and conducting regular or special
meetings and mode of notifying the stockholders or members thereof; (c) The required
quorum in meetings of stockholders or members and the manner of voting therein; (d)
The modes by which a stockholder, member, director, or trustee may attend meetings
and cast their votes.

76. Statement I: Regular meetings of stockholders or members shall be held annually on a date
fixed in the bylaws, or if not so fixed, on any date after April 15 of every year as determined by
the board of directors or trustee.
Statement II: Provided, That written notice of regular meetings shall be sent to all stockholders
or members of record at least two (2) days prior to the meeting, unless a different period is
required in the bylaws, law, or regulation.

a. Both statements are true.

b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.
Answer C: Revised Corporation Code (2019), Republic Act No. 11232, TITLE VI
MEETINGS, SEC. 49. Regular and Special Meetings of Stockholders or Members.–Regular
meetings of stockholders or members shall be held annually on a date fixed in the
bylaws, or if not so fixed, on any date after April 15 of every year as determined by the
board of directors or trustees: Provided, That written notice of regular meetings shall be
sent to all stockholders or members of record at least twenty-one (21) days prior to the
meeting, unless a different period is required in the bylaws, law, or regulation.

77. A director or officer of a corporation shall be liable to the corporation or its creditors,
solidarily with the stockholder when he:
a. Having no knowledge of the insufficient consideration, does not file a written objection with
the Corporate secretary
b. Consents to the issuance of stocks for a consideration less than its par or issued value
c. Consents to the issuance of stocks for a consideration other than cash, valued in excess of its
fair value.
d. Both B and C are correct

Answer D: Revised Corporation Code (2019), Republic Act No. 11232, TITLE VII STOCKS
AND STOCKHOLDERS SEC. 64. Liability of Directors for Watered Stocks. – A director or
officer of a corporation who: (a) consents to the issuance of stocks for a consideration
less than its par or issued value; (b) consents to the issuance of stocks for a
consideration other than cash, valued in excess of its fair value; or (c) having knowledge
of the insufficient consideration, does not file a written objection with the corporate
secretary, shall be liable to the corporation or its creditors, solidarily with the stockholder
concerned for the difference between the value received at the time of issuance of the
stock and the par or issued value of the same.

78. The following statement refers to the Interest on Unpaid Subscriptions in the Revised
Corporation Code of the Philippines.
I: Subscribers to stocks shall be liable to the corporation for interest on all unpaid subscriptions
from the date of subscription, if so required by and at the rate of interest fixed in the
Subscription contract.
II: Subscribers to stocks shall not be liable to the corporation for interest on all unpaid
subscriptions from the date of subscription, if so required by and at the rate of interest fixed in
the Subscription contract.
III: If no rate of interest is fixed in the subscription contract, the prevailing legal rate shall not
apply.
IV: If no rate of interest is fixed in the subscription contract, the prevailing legal rate shall apply.

Which of the following statements are true?

a. Statement I only
b. Statement II and III
c. Statement I and IV
d. All of the statements

Answer C: SEC. 65. Interest on Unpaid Subscriptions. – Subscribers to stocks shall be

liable to the corporation for interest on all unpaid subscriptions from the date of
subscription, if so required by and at the rate of interest fixed in the subscription
contract. If no rate of interest is fixed in the subscription contract, the prevailing legal
rate shall apply.

79. The provisions of Republic Act No. 8293, otherwise known as the?
a. Intellectual Property Code of the Philippines
b. Data Privacy Act of 2012
c. Act Providing for the Revised Corporation Code of the Philippines
d. The Securities Regulation Code

Answer A: The provisions of Republic Act No.8293, otherwise known as the “Intellectual
Property Code of the Philippines,” as amended, and Republic Act No. 10173, otherwise
known as the “Data Privacy Act of 2012.”

80. The following statements refer to Appraisal Right in the Revised Corporation Code of the
Philippines.
I. Only the directors of a corporation shall have the right to dissent and demand payment of the
fair value of the shares.
II. Right of Appraisal may be exercised in case of merger or consolidation of the corporation.
III. In case of investment of corporate funds for only the primary purpose of the corporation, the
exercise of right of appraisal may be practice.
IV. In case of sale of all or substantially all of the corporate property or assets as provided in the
Revised Corporation Code, the exercise of right of appraisal may be practice.

Which of the following statements are true?

a. Statement I
b. Statement I and III
c. Statement II and IV
d. All of the statements

Answer C: SEC. 80. When the Right of Appraisal May Be Exercised. – Any stockholder of
a corporation shall have the right to dissent and demand payment of the fair value of the
shares in the following instances:
(a) In case an amendment to the articles of incorporation has the effect of changing or
restricting the rights of any stockholder or class of shares, or of authorizing preferences
in any respect superior to those of outstanding shares of any class, or of extending or
shortening the term of corporate existence;
(b) In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all
or substantially
81. Which of the following is the effect of merger?
a. The constituent corporations shall become a single corporation shall be the surviving
corporation designated in the plan of merger.
b. The surviving corporation loses all rights and privileges, immunities, and powers.
c. The surviving corporation undergoes dissolution due to change of relation of its stockholders.
d. It creates a new organization where the constituent corporations unite into one corporate
body.

Answer A: SEC. 79. Effects of Merger or Consolidation. – The merger or consolidation

shall have the following effects: (a) The constituent corporations shall become a single
corporation which, in case of merger, shall be the surviving corporation designated in the
plan of merger; and, in case of consolidation, shall be the consolidated corporation
designated in the plan of consolidation;

82. Trustees of educational institutions organized as nonstock corporations shall be:

a. The number of trustees are multiples of two (2)
b. Less than five (5) or more than fifteen (15)
c. Not less than five (5) nor more than fifteen (15)
d. Exactly fifteen (15)

Answer C: SEC. 106. Board of Trustees. – Trustees of educational institutions organized

as nonstock corporations shall not be less than five (5) nor more than fifteen (15);
Provided however, That the number of trustees shall be in multiples of five (5).

83. The submission of the Articles of Incorporation of Religious Corporations are:

a. Duly certified to be correct by any notary public.
b. Must be verified, by affidavit or affirmation of the chief archbishop, bishop, priest, minister,
rabbi, or presiding elder.
c. Accompanied by a copy of the commission, certificate of election or letter of appointment of
such chief archbishop, bishop, priest, minister, rabbi, or presiding elder.
d. All of the things mentioned.

Answer D: SEC. 110. Submission of the Articles of Incorporation. – The articles of

incorporation must be verified, by affidavit or affirmation of the chief archbishop, bishop,
priest, minister, rabbi, or presiding elder, as the case may be, and accompanied by a
copy of the commission, certificate of election or letter of appointment of such chief
archbishop, bishop, priest, minister, rabbi, or presiding elder, duly certified to be correct
by any notary public.

84. The One Person Corporation is required to submit and file corporate by-laws. A One Person
Corporation shall indicate the letters “OPC” either below or at the end of its corporate name.
a. True
b. First statement is true, second statement is false
c. First statement is false, second statement is true
d. False

Answer C: SEC. 119. By-laws. – The One Person Corporation is not required to submit
and file corporate by-laws.
SEC. 120. Display of Corporate Name. – A One Person Corporation shall indicate the
letters “OPC” either below or at the end of its corporate name.

85. Which statement is correct about agreements by stockholders?

Statement I: A written agreement signed by two or more stockholders may provide that in
exercising any voting right, the share held by them shall be voted as provided as they agreed.
Statement II: All provisions in written agreements signed by the stockholders, relating to any
phase to corporate affairs, shall be invalidated between the parties on the ground.
Statement III: Stockholders inactively engaged in the operation of the business and affairs of a
close corporation shall be held to strict fiduciary duties to each other and among themselves.
a. Only statement I is correct
b. None of the above
c. Only statements I and III are correct
d. All statements are correct

Answer A: SEC. 99. Agreements by Stockholders- (b) A written agreement signed by two
or more stockholders may provide that in exercising any voting right, the shares held by
them shall be voted as provided as they agreed or in accordance with a procedure
agreed upon by them.

86. Trustees of educational institutions organized as nonstock corporations shall not be less
than___?
a. 6
b. 4
c. 5
d. 8

Answer C: Section 106. Board of Trustees- Trustees of educational institutions organized

as nonstock corporations shall not be less than five (5) nor more than fifteen (15).

87. The articles of incorporation of a close corporation may provide for:

a. Greater quorum or voting requirements in meetings of stockholders or directors than those
provided in this Code.
b. A classification of directors into one (1) or more classes, each of whom may be voted for and
elected solely by a particular class of stock.
c. A classification of shares or rights, the qualifications for owning or holding the same, and
restrictions on their transfers, subject to the provisions of the following section.
d. All of the aforementioned
Answer D: SEC. 96. Articles of Incorporation. – The articles of incorporation of a close
corporation may provide for: (a) A classification of shares or rights, the qualifications for
owning or holding the same, and restrictions on their transfers, subject to the provisions
of the following section; (b) A classification of directors into one (1) or more classes,
each of whom may be voted for and elected solely by a particular class of stock; (c)
Greater quorum or voting requirements in meetings of stockholders or directors than
those provided in this Code.

88. The following statements are provided:

Statement I: Religious corporations may be incorporated by only three persons. Such
corporations may be classified into corporations sole and religious societies.
Statement II: For the purpose of administering and managing, as trustee, the affairs, property
and temporalities of any religious denomination, sect or church, a corporation sole may be
formed by the chief archbishop, bishop, priest, minister, rabbi, or other presiding elder of such
religious denomination, sect, or church.
a. Only statement I is correct.
b. Only statement II is correct.
c. Both statements are correct.
d. None of the statements are correct.

Answer B: SEC. 107. Classes of Religious Corporations. – Religious corporations may be

incorporated by one or more persons. Such corporations may be classified into
corporations sole and religious societies.
SEC. 108. Corporation sole. – For the purpose of administering and managing, as trustee,
the affairs, property and temporalities of any religious denomination, sect or church, a
corporation sole may be formed by the chief archbishop, bishop, priest, minister, rabbi,
or other presiding elder of such religious denomination, sect, or church.

89. The statement given;

I. That the incorporation of the religious society or religious order, diocese, synod, or district
organization is not forbidden by competent authority or by the Constitution, rules, regulations or
discipline of the religious denomination, sect, or church of which it forms part;
II. The names, nationalities, and residence addresses of the trustees, not less than five (5) but
limited to fifteen (15), elected by the religious society or religious order, or the diocese, synod, or
district organization to serve for the first year or such other period as may be prescribed by the
laws of the religious society or religious order, or of the diocese, synod, or district organization.
a. I and II are correct
b. Only II is correct
c. Only I is correct
d. I and II are incorrect

Answer A: The names, nationalities, and residence addresses of the trustees, not less
than five (5) nor more than fifteen (15), elected by the religious society or religious order,
or the diocese, synod, or district organization to serve for the first year or such other
period as may be prescribed by the laws of the religious society or religious order, or of
the diocese, synod, or district organization.

90. What books are required to be maintained by the secretary of a One Person Corporation?
a. Records of Corporation’s expenditure
b. By-laws
c. Book of accounts
d. Minutes Book

Answer D: SEC. 123. Special Functions of the Corporate Secretary. – In addition to the
functions designated by the One Person Corporation, the corporate secretary shall: (a)
be responsible for maintaining the minutes book and/or records of the corporation.

91. If the dissolution of a corporation does not prejudice the rights of any creditor having a claim
against it, the dissolution may be effected by majority vote of the board of directors or trustees,
and by a resolution adopted by the affirmative vote of the stockholders owning at least the
majority of the outstanding capital stock or majority of the members of a meeting to be held
upon the call of the directors or trustees.
a. Voluntary dissolution where creditors are affected
b. Dissolution where no creditors are affected
c. Dissolution by shortening corporate term
d. Involuntary dissolution

Answer B: SEC. 133. Methods of Dissolution. – A corporation formed or organized under

the provisions of this Code may be dissolved voluntarily or involuntarily.
SEC. 134. Voluntary Dissolution Where No Creditors are Affected. – If dissolution of a
corporation does not prejudice the rights of any creditor having a claim against it, the
dissolution may be effected by majority vote of the board of directors or trustees, and by
a resolution adopted by the affirmative vote of the stockholders owning at least the
majority of the outstanding capital stock or majority of the members of a meeting to be
held upon the call of the directors or trustees.

92. Statement I: The single stockholder may change its nominee and alternate nominee at any
time.
Statement II: Upon submitting the names of the new nominees and their written consent to the
Commission, the articles of incorporation need to be amended.
a. Only Statement I is correct.
b. Only Statement II is correct.
c. Both statements are correct.
d. None of the statements are correct.

Answer A: SEC. 126 of the Revised Corporation Code. Change of Nominee or Alternate
Nominee. – The single stockholder may, at any time, change its nominee and alternate
nominee by submitting to the Commission the names of the new nominees and their
corresponding written consent. For this purpose, the articles of incorporation need not
be amended.

93. The following are grounds for involuntary dissolution of a corporation except:
a. Continuous inoperation of a corporation
b. Upon receipt of a lawful court order dissolving the corporation
c. Use of corporate charter
d. Upon finding by final judgment that the corporation procured its incorporation through fraud

Answer C: SEC. 138 of the Revised Corporation Code. Involuntary Dissolution. – A

corporation may be dissolved by the Commission motu proprio or upon filing of a
verified complaint by any interested party. The following may be grounds for dissolution
of the corporation: (a) Non-use of corporate charter as provided under Section 21 of this
Code; (b) Continuous inoperation of a corporation as provided under Section 21 of this
Code; (c) Upon receipt of a lawful court order dissolving the corporation; (d) Upon
finding by final judgment that the corporation procured its incorporation through fraud;
(e) Upon finding by final judgment that the corporation: (1) Was created for the purpose
of committing, concealing or aiding the commission of securities violations, smuggling,
tax evasion, money laundering, or graft and corrupt practices; (2) Committed or aided in
the commission of securities violations, smuggling, tax evasion, money laundering, or
graft and corrupt practices, and its stockholders knew; and (3) Repeatedly and knowingly
tolerated the commission of graft and corrupt practices or other fraudulent or illegal acts
by its directors, trustees, officers, or employees.

94. I. The unauthorized use of a corporate name shall be punished with a fine ranging from
P10,000.00 to P200,000.00.
II. A corporation that conducts its business through fraud shall be punished with a fine ranging
from P200,000.00 to P2,000,000.00.
a. Only I is True
b. Only II is True
c. Both are True
d. Both are False

Answer C: SEC. 159. Unauthorized Use of Corporate Name; Penalties. – The unauthorized
use of a corporate name shall be punished with a fine from Ten thousand pesos
(P10,000.00) to Two hundred thousand pesos (P200,000.00).
SEC. 165. Fraudulent Conduct of Business; Penalties. – A corporation that conducts its
business through fraud shall be punished with a fine ranging from Two hundred
thousand pesos (P200,000.00) to Two million pesos (P2,000,000.00). When the violation of
this provision is injurious or detrimental to the public, the penalty is a fine ranging from
Four hundred thousand pesos (P400,000.00) to Five million pesos (P5,000,000.00).

95. The SEC shall have the power and authority to:
a. Exercise supervision and jurisdiction over all corporations and persons acting on their behalf.
b. Impose sanctions for the violation of the Revised Corporation Code, its implementing rules
and orders of the SEC.
c. Promote corporate governance and the protection of minority investors, through, among
others, the issuance of rules and regulations consistent with international best practices.
d. All of the above.

Answer D: SEC. 179. para 1, 3-4. Powers, functions, and jurisdiction of the Commission. –
The Commission shall have the power and authority to: (a) Exercise supervision and
jurisdiction over all corporations and persons acting on their behalf, except as otherwise
provided under this Code; (c) Impose sanctions for the violation of this Code, its
implementing rules, and orders of the Commission; (d) Promote corporate governance
and the protection of minority investors, through, among others, the issuance of rules
and regulations consistent with international best practices.

96. Whenever the Commission has reasonable basis to believe that a person has violated, or is
about to violate, this Code, rule, regulation, or order of the Commission, it may direct such
person to desist from committing the act constituting the violation. The commission may:
a. Issue a cease and desist order ex parte to enjoin an act or practice which is fraudulent or can
be reasonably expected to cause significant, imminent, and irreparable danger or injury to public
safety or welfare.
b. Issue suspension or revocation of the certificate of incorporation.
c. Provide reasonable notice to and coordinate with the appropriate regulatory agency prior to
any such publication involving companies under their special regulatory jurisdiction.
d. May investigate an alleged violation of this Code, rule, regulation, or order of the
Commission.

Answer A: As provided in the Revised Corporation Code 2019 under Section 156. Cease
and Desist Orders. – Whenever the Commission has reasonable basis to believe that a
person has violated or is about to violate this Code, rule, regulation, or order of the
Commission, it may direct such person to desist from committing the act constituting the
violation. The Commission may issue a cease-and-desist order ex parte to enjoin an act
or practice which is fraudulent or can be reasonably expected to cause significant,
imminent, and irreparable danger or injury to public safety or welfare.

97. The term “outstanding capital stock” under the Miscellaneous Provisions of the Revised
Corporation Code 2019 is defined as:
a. The total shares of stock issued under binding subscription agreements to subscribers or
stockholders, whether or not fully or partially paid, except treasury shares.
b. The total shares of stock issued without binding subscription agreements to subscribers or
stockholders, whether or fully or partially paid, except treasury shares.
c. The total shares of stock issued under binding subscription agreements to subscribers or
stockholders, whether or fully or partially paid, except treasury shares.
d. The total shares of stock issued without binding subscription agreements to subscribers or
stockholders, whether or not fully or partially paid, except treasury shares.

Answer: C Under Section 173 of the Revised Corporation Code 2019, the term
“outstanding capital stock” refers to the total shares of stock issued under binding
subscription agreements to subscribers or stockholders, whether fully or partially paid,
except treasury shares.

98. These statements are presented to you:

Statement I: Everything in this law shall be construed as amending existing provisions of special
laws governing the registration, regulation, monitoring, and supervision of special corporations
such as banks, non-bank financial institutions, and insurance companies.
Statement II: Notwithstanding any provision to the contrary, regulators such as the Bangko
Sentral ng Pilipinas and the Insurance Commission shall exercise the last authority over special
corporations.

In your evaluation of the foregoing statements:

a. Both statements are true.
b. Both statements are false.
c. Only statement I is true.
d. Only statement II is true.

Answer: B Section 183 of the Revised Corporation Code specifies that nothing in this law
should be construed as amending existing provisions of special laws governing the
registration, regulation, monitoring, and supervision of special corporations such as
banks, non-bank financial institutions, and insurance companies. It also confirms that
regulators like the Bangko Sentral ng Pilipinas and the Insurance Commission exercise
primary authority over such special corporations, not last authority.

99. Which of the following statements does not belong to the process improvements upon doing
corporate activities under Section 180?
a. Developing electronic filing and monitoring system
b. Promulgating rules to facilitate submission of documents
c. Sharing of pertinent information with other government agencies
d. None of the above

Answer: D Section 180 of the Revised Corporation Code outlines process improvements
such as the development of an electronic filing and monitoring system, the promulgation
of rules to facilitate the submission of documents, and the sharing of information with
other government agencies. Therefore, none of the options above is excluded from the
process improvements.

100. If any provision of this Act is declared invalid or unconstitutional, other provisions hereof
which are not affected thereby shall not continue to be in full force and effect.
a. True
b. False
c. Sometimes True
d. Sometimes False

Answer: B According to Section 186 (Separability Clause) of Republic Act No. 11232, if
any provision of this Act is declared invalid or unconstitutional, the remaining provisions
not affected by the invalidity will continue to be in full force and effect. Therefore, the
statement is false.