Corporation Law (Part 1) — Multiple Choice Quiz
1. 1. What is a corporation under Philippine law?
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A. A natural person engaged in business
B. An artificial being created by operation of law
C. A partnership with limited partners
D. A government-owned entity
✅Answer: B
2. 2. Which of the following is NOT an advantage of forming a corporation?
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A. Limited liability of stockholders
B. Continuity of existence
C. Centralized management
D. Lack of personal element
✅Answer: D
3. 3. A close corporation is one whose shares are:
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A. Publicly traded on the stock exchange
B. Held by no more than 20 persons
C. Owned entirely by the government
D. Without par value
✅Answer: B
4. 4. A corporation by estoppel arises when:
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A. A corporation fails to register its Articles of Incorporation
B. Persons act as a corporation without legal incorporation and induce others to deal
with them as such
C. The corporation has ceased operations
D. The SEC cancels its certificate of incorporation
✅Answer: B
5. 5. A de jure corporation is one that:
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A. Exists by estoppel
B. Has complied with all legal requirements for incorporation
C. Operates without registration
D. Exists only in fact but not in law
✅Answer: B
6. 6. The Control Test determines a corporation’s nationality based on:
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A. The place where it operates
B. The residence of its directors
C. The percentage of Filipino ownership of voting shares
D. The nationality of its incorporators
✅Answer: C
7. 7. The Grandfather Rule is applied when:
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A. There is direct ownership by Filipino citizens
B. The corporation is wholly owned by foreigners
C. Ownership is indirect or through another corporation
D. The Control Test yields clear results
✅Answer: C
8. 8. The Doctrine of Separate Juridical Personality means that:
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A. The corporation and its owners are the same legal entity
B. Corporate debts are automatically personal debts of stockholders
C. The corporation has a personality separate from its owners
D. The corporation can exist without registration
✅Answer: C
9. 9. The veil of corporate fiction may be pierced when:
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A. The corporation fails to pay dividends
B. The corporation is used to commit fraud or defeat public convenience
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C. There are disputes among stockholders
D. The corporation is small or family-owned
✅Answer: B
10. 10. The issuance of a Certificate of Incorporation by the SEC marks:
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A. The start of business operations
B. The legal existence of the corporation
C. The dissolution of the corporation
D. The approval of corporate by-laws
✅Answer: B