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BAM 242 - Regulatory Framework and Legal Issues in Business
MOCK PHINMA EXAMINATION
Name: Date:
Instructor: Rating:
GENERAL DIRECTIONS
READ THIS PAGE BEFORE STARTING THE ASSESSMENT
This is an 13 paged test and is composed of 2 sections and has a total score of one hundred (110)
points. You have eighty (80) Minutes to finish this examination. The breakdown of the exam is as
follows:
(1) Multiple-choice question Section. The questions in this LEARNING OBJECTIVE:

section is with four answer choices. The test is composed of
150 questions and is rated as 1 point each. This assessment measures
the competence of the
student in terms of
All things unnecessary for the test must be put in front of the his/her application of
testing area. Use BLACK or BLUE ink ballpen only. Write all knowledge and skills in
your answers on the designated answer sheet. Further, erasures the following topics:
are strictly NOT allowed and will invalidate your answers. 1. LAW ON SALES
2. LAW ON AGENCY
You may NOT use smart phones or reference materials 3. PLEDGE, MORTGAGE,
during the testing session. Only the allowed calculators should be AND ANTICHRESIS LAW
used. 4. INTELECTUAL PROPERTY
LAW
Try to answer all questions. In general, if you have some
knowledge about a question, it is better to try to answer it. You
will not be penalized for guessing.
Be sure to allocate your time carefully so you can complete the entire test within the exam session.
You may go back and review your answers at any time during the exam session.
Those who are caught cheating or doing acts not allowed during the exam shall be instructed to
surrender their test papers and shall leave the testing room immediately. Subsequently, their papers shall
be rated as ZERO.
This concludes the instruction page.
You may now begin answering.
1. As a rule, this contract of sale involving a piece of land is void,
A. Between a minor and a capacitated person.

B. Between two insane persons who did not act during lucid interval
C. Between first degree cousins
D. Between husband and wife
2. X, 17 years old, sold to Z, of legal age, her necklace worth P20,000 for P15,000. Later, Z
sold the necklace to Y for P20,000. Which of the following statements is correct?
A. X has got a voidable title because at the time of sale, she is a minor
B. X can ask for rescission of the sale to Y because she suffered a lesion of more than ¼ of
the value of the property.
C. If Y is in bad faith, Y becomes the owner of the necklace upon delivery to him but his
title is voidable.
D. X can ask for the annulment of the sale to Y because at the time of sale she is a minor.
3. This serves as a proof of the perfection of the contract of sale
A. Dacion en pago
B. Option money
C. Delivery
D. Arras
4.A contract of sale is not a(an)
A. Onerous contract
B. Accessory contract
C. Commutative contract
D. Bilateral contract
5.Warranty against hidden defects is
A. An essential element
B. A natural element
C. An accidental element
D. An artificial element
7. When a sale of a piece of land or any interest therein is through an agent, the authority of
the
agent shall be in writing, otherwise the sale is
A. Valid
B. Voidable
C. Unenforceable
D. Void
8. The sale of an expected thing
A. Dacion en pago
B. Payment by cession
C. Emptiospei
D. Emptio rei-speratae
9. The sale of the hope itself
A. Dacion en pago
B. Payment by cession
C. Emptio spei
D. Emptio rei-speratae
10. One of the following is not correct
A. Things subject to a resolutory condition may be the object of the contract of sale.
B. A thing is generic when it is particularly designated or physically segregated from all
others of the same class.
C. Things having a potential existence may be the object of the contract of sale.
D. The sole owner of a thing may sell an undivided interest therein
11. X needs a size of 10 of model 101 of Leather Shoes regularly available to the public for her
boyfriend Z, but the same is out of stock so she placed an order for one. On the other hand,
Z
placed an order for size No. 8, colored violet, (something not ordinarily made by the
company) to be given to X. Which is correct?
A. Both are contracts of sale

B. Both are contracts for a piece of work
C. First is a contract of sale second is a contract for a piece of work
D. First is a contract for a piece of work, second is a contract of sale
12. V offered to sell for P12,000,000 her house and lot to DD who was interested in buying the
same. In her letter to DD, V stated that she is giving DD a period of one month within which
to raise the amount and that as soon as DD is ready, they will sign the deed of sale. Five days
before the expiration of the one month period. V went to DD and told her that she is no
longer willing to sell the property unless the price in increased to P15,000,000. Which is
correct?
A. DD may compel V to accept the P12,000,000 first offered.

B. V may compel DD to pay P15,000,000
C. V and DD should shoulder the P3,000,000 difference
D. DD cannot compel V to accept the P12,000,000 first offered
13. If the object of the contract is specially made or manufactured at the specific order of
another, it is a contract for a piece of work. This is
A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule
14. If the article already exists and subsequently acquired by another, it is a contract of sale,
and
if the article is still to be manufactured at the instance of another, it is a contract for a piece
of work. This is
A. English rule
C. New York rule
D. Chicago rule
15. If the material used in the manufacturer of the article is more valuable, it is a contract of
sale, and if the labor or skill is more valuable than the material used in the manufacture of
the article, it is a contract for a piece of work. This is
A. English rule
C. New York rule
D. Chicago rule
16. The rule observed in the Philippines is
A. English rule
C. New York rule
D. Chicago rule
17. The Realty Installment Buyer Protection Act applies to all transactions involving the sale or
financing of real estate on installment but it excludes the following except:
A. Sale or financing of industrial lots

B. Sale or financing of commercial building
C. Sale to tenants under the Land Reform Code
D. Sale of residential condominiums
18. Delivery by merely pointing to the object of sale if it cannot be delivered to the vendee at
the
time of the sale is
A. Traditio longa manu

B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica
19. Effected when the object of sale is already in the possession of the vendee at the time of
sale
so that delivery need no longer be made is

20. When the owner of the thing sells it to vendee, but continues to have possession or
occupation of the thing not as owner but as tenant or lessee

21. Goods are deemed in transit
A. When the buyer accepts delivery of the goods upon arrival at destination
B. When the buyer intercepts and lawfully takes possession of the goods at any point
before destination.
C. From the time they are delivered by the seller to a common carrier or other bailee for
transmission to the buyer, up to the time that the buyer or his agent takes delivery of
the goods from the carrier or bailee.
D. When the carrier or bailee, upon arrival of the goods at destination acknowledges to the
buyer or his agent that he is holding the goods as bailee for the latter.
22. Goods are deemed no longer in transit
A. If the goods are rejected by the buyer for a valid reason and the carrier or other bailee
continues in possession of them, even if the seller has refused to receive them back.
B. From the time they are delivered to a carrier by land, water or air for the purpose of
transmission to the buyer.
C. From the time they are delivered to a bailee for the purpose of transmission to the
buyer until the buyer or his agent in that behalf, takes delivery of them from such
bailee.
D. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
agent in that behalf.
23. X sold to V orally a parcel of land for P200,000. X effected the delivery of the land. The
payment of the price was to be made three month later. At the end of three month period
A. V may refuse to pay claiming in his defense the Statute of Frauds

B. V may return the parcel of land to X
C. X can collect from V because the contract has already been executed
D. V may refuse to pay on the ground that there is no written contract to support the sale.
24. On January 15, 2010, X sold for P2M her house and lot to V. It was agreed that delivery of
the house and lot, and the payment therefore, would be made on March 10, 2010.
Unfortunately, Z a stranger negligently set the house on fire on February 25, 2010, and the
house was completely destroyed. Which is correct?
A. V is not required to pay the P2M since the contract had no subject matter.
B. X must still deliver the lot but is excused from delivering the house, while V must still
pay the P2M
C. X must deliver the lot while V should pay only the amount equivalent to the value of the
lot.
D. X need not deliver the lot while V need not pay the P2M
25. If immovable property should have been sold to different vendees, the ownership shall be
transferred to the person
A. Who have first taken possession in good faith

B. Who presents the oldest title in good faith
C. Who in good faith first recorded it in the Registry of Property
D. Who have paid in good faith the purchase price in full
26. Using the preceding number, if movable property, it shall belong to the person
A. Who have paid in good the purchase price in full

B. Who in good faith first recorded it in the Registry of Property
C. Who presents the oldest title in good faith
D. Who have first taken possession in good faith
27. Action by the vendee against the vendor to nullify the sale due to some vices or defects
which render the object of sale unfit for the use intended or knowledge of which the vendee
should not have bought the thing
A. Accion quanti minoris

B. Accion reinvidicatoria
C. Accion pauliana
D. Redhibilitory action
28. Action to seek a corresponding reduction in price by reason of some vices or defects in the
thing purchased
A. Accion quanti minoris

B. Accion reinvidicatoria
C. Accion pauliana
D. Redhibilitory action
29. The redhibitory action based on the faults or defects of animals must be brought within
A. 30 days from delivery to the vendee

B. 40 days from delivery to the vendee
C. 45 days from delivery to the vendee
D. 6 months from delivery to the vendee
30. In contract of sale, if the price is absolutely simulated, the sale is
A. Unenforceable
B. Voidable
C. Void
D. Rescissible
31. In a contract of sale, of personal property, the price of which is payable in installments, the
vendor may exercise any of the following remedies, except
A. Exact fulfillment of the obligation, should the vendee fail to pay any installment
B. Cancel the sale, should the vendee’s failure to pay cover two or more installment
C. Foreclose the chattel mortgage on the thing sold, if one has been constituted should the
vendee’s failure to pay cover two or more installments
D. Rescind the sale should the vendee fail to pay any installment.
32. The right of the seller to stop goods in transit, upon discovering that the buyer does not
have
the funds to pay for the goods
A. Pre-emptive right
B. Appraisal right
C. Voting right
D. Right of stoppage in transit
33. A sold to B a parcel of land for P3.8M. The sale is evidenced by a memorandum of
agreement of sale written in the Bicolano dialect. One week later, A sold the same parcel of
land to C for P4M. This is evidenced by a formal deed of sale. Upon buying the property, C,
who was aware of the first sale immediately took possession of the lot. When informed of
the second sale, B subsequently registered an adverse claim to the property. Later, C
registered the deed of sale in her favor. The parcel of land shall belong to
A. B because he has got an older title

B. C because he is the first to register
C. C because he is the first to take possession
D. No one as both sales are void
34. Voluntary renunciation made by the buyer of his right to warranty against eviction where
in
case the buyer is evicted, the seller is liable to the value of the thing at the time of eviction.
A. Waiver intentionada
B. Waiver consciente
C. Waiver cursunada
D. Waiver inocente
35. Using the preceding number, where the seller is no longer liable
A. Waiver intentionada
B. Waiver consciente
C. Waiver cursunada
D. Waiver inocente
36. A contract of sale whereby the seller acquires the right to redeem or repurchase the object
of
the sale from the buyer within a certain period agreed upon
A. Equitable mortgage
B. Absolute sale
C. On sale or return
D. Pacto de retro sale
37. A sold to B his car and promised to deliver ten days later. The next day, after the sale to B,
A sold the same car to C and immediately affected delivery. On the day agreed upon, A did
not deliver the car to B. Which is correct?
A. B can cancel the contract between A and C, because the contract between A and B was
perfected ahead of the contract between A and c
B. B should make the demand to make A in default
C. A is liable to B for the value of the car plus damages after B makes a demand
D. A is liable to B for damages and is in default without need of any demand
38. X sold to V her Yamaha organ. It was agreed that X would fix the price a week later. At the
agreed time, X named the price P10,000. V agreed. Was the sale perfected?
A. No, because the price was left to the discretion of one of the contracting parties
B. No, because at the time of sale the price was not fixed
C. Yes, because the price fixed by one of the parties was accepted by the other
D. Yes, because there was agreement that X would fix the price
39. Not an implied warranty in a contract of sale
A. Right to sell the thing at the time of perfection of the contract

B. Reasonably fit for the purpose they are acquired
C. Merchantable in quality
D. Free from charges or encumbrances not declared or known to the buyer
40. After the death of C, A, C’s son, sold his inheritance though its amount has not yet been
determined to B for a consideration of P1,000,000. Which is correct?
A. The contract is valid if the value of inheritance is at least equal to P1,000,000

B. The contract is valid even though the inheritance to be turned over to B is less than P1M
C. The contract is void as future inheritance cannot be the object of sale
D. The contract is unenforceable
41. X stole a fountain pen from P and sold it to Z Merchandise, a “store for pens”, which paid
for
it in good faith, not knowing it was stolen. The “store” then sold it to C, a student.Which is
correct?
A. C cannot be considered as the owner because the original seller (X) is not the real
owner.
B. P may recover the fountain pen from C without reimbursement because he is the legal
owner.
C. C became the owner because he purchased the pen from a merchant store
D. C became the owner regardless of whether the seller is a store for pens or not because
C bought it in good faith.
42. When goods are delivered to the buyer on “sale or return” for period of seven days,
ownership of the goods passes to the buyer
A. Upon perfection of the contract

B. Upon acceptance by the buyer of the offer of the seller
C. Upon expiration of seven days

D. Upon delivery of the goods
43. Quasi-traditio is equivalent to

D. Execution of a public instrument
44. Vi imported radios from Taiwan and asked for 220 volts radios. The radios arrived clearly
labeled 220 volts and Vi sold them to the public as such. Later the customer complained
that
the radios have been mislabeled by the manufacturer and that they were good only for 110
volts. As a consequence
A. Vi is liable to the vendees for any hidden defects even though he is not aware.
B. Vi is not liable because he is in good faith
C. Vi is not liable under the principle of “caveat emptor” or let the buyer beware
D. The vendees may hold the manufacturer liable but not Vi because Vi specifically asked
for 220 volts
45. If the redemption is to be made by the seller, one of the following need not be given to the
Buyer
A. Expenses of the contract

B. Interest on the price of the sale
C. Necessary expenses on the thing sold
D. Price of the sale
46. Not an element of the sellers right of stoppage in transit
A. The goods must be in transit

B. The buyer must be insolvent
C. The seller must be in possession of the goods
D. The seller must be unpaid
47. A sold his only car to B for P300,000 to be paid as follows: P150,000 upon delivery of the
car to B and the balance at P10,000 per month until full payment of the purchase price.
Later
the car gets burned in the possession of B through fortuitous event and without B’s fault,
before full payment of the balance. Is B obliged to pay the balance?
A. No, because the car was lost through fortuitous event and without B’s fault, hence B’s
obligation is extinguished.
B. No, because the loss should be borne by the seller as this an installment sale so until the
buyer pays the full amount of the price of the sale, A remains to be the owner.
C. Yes, but A must give another car to B because of the principle “genus nunquam perit” or
generic thing never perishes
D. Yes, because the principle “res perit domino” or the thing perishes with the owner.
48. A, B and C are co-owners of an undivided parcel of land, A sold his 1/ 3 interest to B
absolutely. Which is correct?
A. C may exercise his right of redemption of the interest sold by A to B

B. C cannot exercise the right of redemption because the sale was made in favor of a co-
owner
C. The sale made by A to B is void because it was not made in favor of a stranger
D. C may redeem only 1 /2 of the interest sold by A to B
49. Using the preceding number, suppose, instead of selling his interest to B, A sold it to D, who
can exercise the right of redemption?
A. Both B and C
B. B but not C
C. C but not B
D. A, B and C
50. Which of the following cannot be the object of a contract of sale?
A. Sale of credit
B. Young animal not yet conceived at the time of perfection
C. Land which the seller expects to buy
D. Future inheritance
51. A offered for sale to B 20 cavans of wagwag rice and fixed the price per cavan at P10 over
the price offered at Z’s store in Cainta Market. The price is
A. Not certain because the price at Cainta Market is not stated

B. Certain because it has got reference to another thing which is certain
C. Certain because there is a price ceiling for price of land
D. Not certain so court may fix the price
52. X sold his motor vehicle to V who bought it for P200,000. It turned out however, that X has
2 motor vehicles: Toyota valued at P230,000 and Lancer valued at P220,000. Which is
correct?
A. There is no contract of sale between X and V

B. The parties may ask for interpretation or reformation
C. The parties can ask for annulment of the contract
D. V may choose between the Toyota or Lancer
53. X offers to V 100 electric fans for P80,000 payable in 60 days with 12% interest per annum.
V accepted the offer by telegram provided that interest is reduced to 6%. If there is no
further communication between X and V relating to the terms
A. The contract is perfected because of the acceptance by V

B. There is no contract yet between X and V because V made a counter offer
C. The contract is perfected under the terms of X
D. There is no contract yet unless v gives earnest money
54. X owns 50 mango trees bearing fruits, ready for harvest. She told all the fruits of all the
trees
to V who paid P100,000. X told V that he can harvest her fruits anytime he likes and
pointing at the mango trees. For legal purposes, X has fulfilled her obligation to deliver the
mango fruits to V by

D. Execution of a public instrument
55. X sold her specific car to V for P200,00 payable in 5 equal installments. X delivered the car
to V but a mortgage was constituted on the car to answer for the unpaid installments. V
paid
the first 2 installments but failed to pay the last 3 installments. X foreclosed the mortgaged
property and sold it at public auction for P100,000. Which is correct?
A. X can recover from V the balance of P20,000 even if there is no stipulation to that effect
B. X can recover from V the balance of P20,000 if there is stipulation to that effect
C. X cannot recover the deficiency except if there is stipulation to that effect
D. X cannot recover the deficiency even if there is stipulation to the contrary
56. Ownership of the thing sold is
A. Retained by the seller in “sale or return

B. Transferred to the buyer upon constructive or actual delivery of the thing sold
C. Acquired by the buyer upon perfection of the contract
D. Transferred to the buyer upon acceptance of the price
57. X sold his horse to Y for P40,000. No payment has yet been made and the sales document
does not provide the date of delivery. Before delivery and payment the horse gave birth to
a
baby horse, which is correct?
A. Y is entitled to the baby horse which was born after the perfection of the contract
B. X is entitled to the fruit (baby horse) as Y has not paid the price yet
C. X is entitled to the (baby horse) because it was born before his obligation to deliver
arises
D. Y should pay additional amount for the baby horse to be entitled to it
58. A contract of sale is in the stage of conception when
A. There is meeting of the minds

B. Negotiations are in progress
C. The parties come to an agreement
D. The contract is perfect
59. A seller sold to a buyer a piece of jewelry at a price of P25,000. The contract provides that
the buyer will pay the seller cash, P20,000 and for the balance, the buyer will give the seller
a micro oven worth P5,000. What is the nature of the contract?
A. Sale
B. Partly sale partly barter
C. Barter
D. Commodatum
60. X, the guardian of V, sold V’s house and lot worth P480,0000 for P430,000
A. The contract can be rescinded because of inadequacy of price

B. The contract cannot be rescinded because there is no fraud, mistake or undue influence
C. The contract cannot be rescinded because all the elements of a contract are present
D. The contract can be rescinded by X.
61. X leased to V a 5 Freezer for two years at a lease rental fee of P1,000 per month and signed
an option in favor of V to buy the freezers at the end of the term of the lease at P50,000. All
rental fee paid are to be considered as partial payment of the sale. After 12 months V was
able to pay the rental fee for 9 months and was in arrears for three months. X terminated
the
lease contract and repossessed the freezers. The consequence of the transaction is
A. X can collect the rental fees for three months which are in arrears.
B. X can collect the rental fees for the unexpired 12 months of the lease contract.
C. When X took possession of the freezer, he has no further action against V
D. X in terminating the lease and repossessing the freezer is obliged to refund the 9
months rental fee, paid by V even if there is a stipulation to the contrary.
62. X sold his car to Z for P60,000. No date was fixed for the performance of the obligation of
the seller and the buyer. The obligation of X is
A. To deliver the car immediately because the sale is a perfected contract

B. To deliver the car only after Z writes to X demanding the delivery of the car.
C. To deliver the car only after Z pays the P60,000
D. To rescind the contract because there is no time fixed for the delivery
63. I. The vendor need not be the owner at the time the sale is perfected. It is sufficient that he
is
the owner at the time the thing sold is delivered.
II. The sale of a vain hope or expectancy is voidable.
A. First statement is true, second statement is false.

B. First statement is false, second statement is true.
C. Both statements are true.
D. Both statements are false.
64. I. There may be a contract of sale of goods, whose acquisition by the seller depends upon a
contingency which may or may not happen.
II. If the consideration of the contract consists partly in money and partly in another thing, it
shall be considered a barter if the value of the thing given as a part of the consideration
exceeds the amount of the money or its equivalent.

D. Both statements are false
65. I. If the price is grossly inadequate, the sale is void.
II. Whenever option money is given in a contract of sale, it shall be considered as part of the
price and a proof of the perfection of the contract.

66. I. Earnest money and option money both apply to perfected sale.
II. In a contract of sale of personal property the price of which is payable in installment, the
vendor may cancel the sale should the vendee fail to pay.

67. The following requisites are essential to the contracts of pledge, real estate mortgage and
chattel mortgage, except
A. That they be constituted to secure the fulfilment of a principal obligation.
B. That the pledger or mortgagor be the absolute owner of the thin g pledged or mortgaged
C. That the persons constituting the pledge or mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose.
D. That when the principal obligation becomes due, the things in which the pledge or mortgage
consists may be alienated for the payment of the creditor.
E. That the thing pledged or mortgaged be placed in the possession of the creditor, or of a third
person by common agreement.
68. The following are the kinds of principal obligations that may be secured by a contracts of
pledge of real estate mortgage or of chattel mortgage, except
A. Pure or conditional obligations whether suspensive or resolutory conditions
B. Natural obligations
C. Rescissible, voidable or unenforceable obligations
D. Null and void obligations
69. When is the pledger or mortgagor required to be the owner of the thing pledged or
mortgaged for the validity of contracts of pledge, of real estate mortgage or of chattel
mortgage?
A. At the time the principal obligation is constituted.
B. At the time the contract of pledge or mortgage is constituted.
C. At the time of the failure to pay the principal obligation.
D. At the time the thing to be pledged or mortgaged is to be delivered.
70. D borrowed P1,000,000 from C. G, a third person, mortgaged his land to secure the
fulfillment of D’s loan. Is the contract of mortgage valid?
A. No because D must be the owner of the mortgaged land.
B. Yes provided G will deliver the land to C.
C. Yes because third persons who are not parties to the principal obligation may secure the
latter by pledging or mortgaging their own property.
D. No because G is no privy to the contract of loan.
71. D borrowed P10,000 from C, To secure the fulfillment of the loan, D pledged his laptop. The
contract of pledge provides that the creditor-pledgee may appropriate the laptop upon failure
of the debtor-pledger to pay the loan. On the date of maturity of the loan, D failed to pay the
loan. Which of the following statements is correct?
A. C becomes the owner of the laptop.
B. The laptop cannot be alienated for the payment of the loan.
C. C does not become the automatic owner of the laptop upon D’s failure to pay the loan
because that provision is considered Pactum commissorium, which IS contrary to law and public
policy
D. The contract of pledge is null and void because of pactum commissorium provision.
73. D borrowed P20, 000 from C. To secure the fulfillment of the loan, D mortgaged__ a land
owned by his ailing father. Which of the following statements is correct?
A. The contract of mortgage is valid because future property may be pledged or mortgaged.
B. The contract of loan 1s null and void because the contract of mortgage is null and void.
C. The contract of mortgage will become valid upon the death of D’s father.
D. The contract of mortgage is null and void because the mortgagor must be the owner of the
property mortgaged at the time it is constituted but the contract of loan remains to be valid.
74. ABC Inc. borrowed P2,000,000 from BPI. ABC Inc. is under receivership. To secure the
fulfillment of the loan, ABC mortgaged its administrative building. Which of the following
statements is correct?
A. The contract of mortgage is null and void because the mortgagor has no free disposal of the
thing.
B. The contract of mortgage is valid because the mortgagor is the absolute owner of the
property mortgaged at the time the mortgage is constituted.
C. The contract of mongage is null and void because only natural person may enter in a contract
of mortgage.
D. The contract of mortgage is voidable.
75. It is a stipulation whereby the thing pledged or mortgaged shall automatically become the
property of the creditor in the event of non-payment of the debt within the term fixed.
A. Pactum creditarium
B. Pactum commissorium
C. Pactum debitarium
D. Pactum crematorium
76. The following are the instances where the thing pledged or mortgaged may be sold or
alienated to pay the principal obligation, except
A. If the pledger or mortgagor fails to fulfill certain conditions and such violation would make
the debt due and demandable.
B. If the debtor has lost the right to make use of the period or where there is an acceleration
clause in the payment of installment.
C. Upon default to pay the obligation at maturity.

D. Before maturity of the principal obligation.
77. What 15 the nature of a contract of pledge, of chattel mortgage, of real estate mortgage or
of antichresis?
A. It is divisible if the principal contract is joint.
B. It 1s indivisible if the principal contract is solidary.
C. It is divisible whether the principal contract is joint or solidary.
D. It is indivisible whether the principal contract is joint or solidary.
78. D borrowed P10, 000 from C and pledged his ring and watch with P4,000 and P6,000 value
respectively. After several days, D pays P4, 000 to C. Which of the following statements is
correct?
A. The contract of pledge is extinguished.
B. The contract of loan is extinguished.
C. D cannot demand the release of his ring because a contract of pledge is indivisible.
D. D may compel C to return the ring because P4,000 of the loan is already paid.
79. D borrowed from C P100,000 secured by a mortgage on D’s two lots (lot 1 and lot 2). D dies
leaving E and F as heirs with E inheriting lot 1 and F lot 2. F pays P50,000 of the loan. Which of
the following statements is correct?
A. F may ask for the extinguishment of the mortgage on lot 2.
B. The contract of mortgage is extinguished.
C. The contract of loan is extinguished.
D. F cannot ask for the extinguishment of the mortgage on lot 2.
80. Using the same data in number 12, suppose it is C who dies leaving X and Y as heirs. If D
pays X P50,000, which of the following statements is correct?
A. X may cancel the mortgage to the prejudice of Y.
B. X cannot cancel the mortgage to the prejudice of Y.
C. The contract of mortgage is extinguished.
D. The contract of loan is extinguished.
81. D borrowed P10,000 from C and pledged his ring and watch with P4,000 and P6,000 value
respectively. They agreed that the ring will secure P4,000 of the loan and the watch will secure
the balance of the loan. Alter several days, D pays P4,000 to C. Which of the following
statements is correct?
A. The contract of pledge on the watch is extinguished.
B. The contract of loan is fully extinguished.
C. D cannot demand the release of his ring because a contract of pledge is indivisible.
D. D may compel C to return the ring because contract of pledge on the ring is extinguished.
82. It is a contract by virtue of which the debtor delivers to the creditor or to a third person a
movable, or instrument evidencing incorporeal rights for the purpose of securing the fulfillment
of a principal obligation with the understanding that when the obligation is fulfilled, the thing
delivered shall be returned with all its fruits and accessions.
A. Contract of Pledge
B. Contract of Chattel mortgage
C. Contract of Real estate mortgage
D. Contract of Antichresis
83. The following are the characteristics of a contract of pledge except

A. Consensual - perfected by mere consent.
B. Accessory - It has no independent existence of it’s own.
C. Unilateral - It creates an obligation on the part of the creditor to return the thing upon the
fulfillment of the principal obligation.
D. Subsidiary - The obligation incurred does not arise until the fulfillment of the principal
obligation which is secured.
84. The following are the essential requisites of conventional pledge or contract of pledge,
except
A. That it be constituted to secure the fulfillment of a principal obligation.
B. That the pledger be the absolute owner of the thing pledged.
C. That person constituting the pledge has the free disposal of his property, and in the absence
thereof, that he be legally authorized for the purpose.
D. That the thing pledged be placed in the possession of the creditor, or a third person by__
common agreement.
e. That the contract of pledge be constituted in public document.
85. What is the nature of a contract to constitute a pledge?

A. Consensual contract
B. Real contract
C. Formal contact
86. What is the legal effect of a promise or contract to constitute a pledge?
A. It is perfected by delivery of the thing pledge.
B. It is perfected through the notarization of the promise.
C. It is perfected by mere consent and gives rise only to a personal action between the
contracting parties.
D. It gives rise to a real action over the thing pledged.
87. The following statements pertaining to a promise to constitute a pledge or mortgage are
correct, except
A. It gives rise only to a personal action between the contracting parties.
B. The contract perfected is a real contract.
C. It creates no real right 1n the property but only a right to compel the fulfilment of the
promise but there is no pledge or mortgage yet.
D. The promissory will be criminally liable if he mortgages or pledges as encumbered things
which he knew were subject to some burden
88. What is the nature of a contract of pledge?

A. Consensual contract
B. Real contract
C. Formal contract
89. The following may become the object of a contract of pledge, except
A. All movable
B. Personal property susceptible of possession.
C. Incorporeal rights which are evidenced by negotiable instruments bill of lading, shares of
stocks, bonds, warehouse receipts and similar documents
D. Real or immovable properties and rights thereon.
90. What’ is the form of contract of pledge to bind the contracting parties?
A. It must be in a private instrument
B. It must be m a public instrument.
C. It must be registered in the registry of deeds.
D. It may be in any form because it is a real contract.
91. What is the form of contract of pledge to bind third persons?

A. It must be registered the chattel mortgage registry
B. It must be registered in the registry of deeds.
C. It must be in a public instrument showing a description of the thing pledged and the date of
the pledge.
92. The contract of pledge shall cover the following, except

A. The thing pledged.
B. The fruits, income, dividends or interests earned or produced by the thing pledge, unless
there is stipulation excluding them.
C. The offspring, when the thing pledged is an animal, unless there is a stipulation excluding
them.
D. The future inheritance of the pledger.
93. The following are the rights of the debtor-pledger, except

A. To alienate, without the consent of the pledgee, the thing pledged.
B. To ask that the thing pledged be judicially or extra-judicially deposited if it is used without
authority or for a purposes other than for its preservation.
C. To continue to be the owner of the thing pledged unless it is expropriated.
D. To ask for the return of the thing pledged after he has paid the debt and its interest, with
expenses in a proper case.
E. To require that the thing be deposited with a third person if it is in danger of being lost or
impaired through the negligence or willful act of the pledgee.
F. To demand the return of the thing pledged, upon offering another thing in pledge, provided
the latter is of the same kind and quality, if there are reasonable grounds to fear the
construction or impairment of the thing pledged without the fault of the pledgee. This right is
without prejudice to the right of the pledgee to have the thing sold at a public sale.
94. In case the thing pledged is alienated by the debtor-pledger to third person, what is the
effect of the consent of the pledgee to the alienation?
A. The thing pledged remains to be owned by the debtor-pledger
B. The ownership of the thing pledged’ 1s transmitted to the buyer.
C. The creditor-pledgee loses possession of the thing pledged.
D. The contact of pledge is already extinguished.
95. What is the remedy of the pledger-debtor if the pledgee-creditor use the thing pledged,
without the authority of the owner or should misuse the thing in any other way?
A. To ask that it be judicially or extra-judicially deposited.
B. To ask for the return of the thing pledged
C. To ask for the extinguishment of the contract of pledge.
D. To ask for the extinguishment of the contract of loan.
96. What is the remedy of the pledger-owner if the thing pledged 1s in danger of being, lost or
impaired through the negligent or willful act of the pledgee?
A. To require that it be deposited with a third person.
B. To ask for the return of the thing pledged.
97. What is the remedy of the pledger-owner if there are reasonable grounds to fear the
destruction or impairment of the thing pledged, without the fault of the pledgee?
A. To ask for the return of the thing, upon offering another thing’ in pledge, provided the latter
of the same kind as the former and not of inferior quality.
B. To require that it be deposited with a third person.
98. If there are reasonable grounds to fear the destruction or impairment of the thing pledged,
without the fault of the pledgee, which is correct?
A. The pledger-owner may ask for the return of the thing, upon offering another thing in
pledged, provided the latter is of the same kind as the former and not of inferior quality even it
is already sold in public auction by the pledgee-creditor.
B. The pledgee-creditor may cause the sale of the thing pledged at a public sale and the
proceeds of the auction shall be a security for the principal obligation in the same manner as
the thing originally pledged.
C. The right of the pledger-owner is superior to the right of the pledgee-creditor
D. The contract of pledge is extinguished by the sale of the thing pledged in the public auction.
99. The following are the obligation of debtor-pledger, except

A. To pay the debt and its interest, with expenses, in a proper case, when they are due.
B. To pay damages that the pledgee may suffer by reason of the laws of the thing pledged, if he
was aware of such flaws but did not advise the pledgee of the same
C. To pay for the expenses which are necessary for the preservation of the thing pledged.
D. To warrant the thing pledged for its quality and merchantability
100. The following are the rights of the creditor-pledgee, except

A. To retain in his possession the thing pledged until the debt is paid
B. To demand reimbursement of the expenses made for the preservation of the thing pledged.
C. To bring actions which pertain to the owner of the thing pledged’ In order to recover it from,
or defend it against third person.
D. To use the thing pledged if he is authorized to do so, or when its use is necessary of the
preservation of the thing.
E. To cause the sale of the thing pledged at a public sale, if there is a danger of destruction,
impairment or diminution of value of the thing pledged without his fault.
F. To collect and receive the amount due if the thing pledged is a credit which becomes due
before it is redeemed, and to apply the same to the payment of his claim.
G. To sell the thing pledged upon default of the debtor.
H. To appropriate the thing pledged upon failure of debtor to pay the principal obligation.
101. Which of the following statements is correct when the pledgor sells the thing pledged with
the consent of the pledgee?
A. The ownership is transmitted to the vendee or transferee upon delivery.
B. The contract of pledge is extinguished.
C. The ownership is transmitted to the vendee 01’ transferee as soon as the pledger consents to
the alienation.
D. The thing pledged shall be delivered to the vendee.
102. The following are the obligations of creditor-pledgee, except

A. To take care of the thing pledged with the diligence of a good father of a family.
B. To be liable for the loss or deterioration of the thing pledged unless it is due to a fortuitous
event.
C. To be responsible for the acts of his agents or employees with respect to the thing pledged.
D. Not to use the thing pledged except when he is authorized by the owner or when the use of
the thing is necessary for its preservation.
E. To deliver to the debtor the surplus after paying his claim from what he has collected on a
credit that was pledged and which has become due before it is redeemed.
F. To deposit the thing pledged with a third person.
103. The following are the rights of a third person who pledges his own movable property to
secure debt of another, except
A. To be indemnified by the debtor if he pays the creditor.
B. To be subrogated to all the rights of the creditor against the debtor if he pays the creditor.
C. To be released from liability in the cases provided by law.
D. To become principally liable.
104. Grace obtained a loan from Jojo in the amount of PIM with Max serving as guarantor Rody
pledged his cellphone to secure the debt of Giace. If Rody pays the PIM loan of Grace, which 13
correct?
A. There will be no legal subrogation if Grace does not consent to the payment of Rody.
B. Rody cannot collect the PIM from Grace if the latter does not consent to the payment of
Rody.
C. Rody can collect the PiM from Mar if Grace will not be able to pay Rody.
D. Mar is not liable to Rody.
105. A third person who pledges his own movable property to secure the debt of another shall
be released from liability in the following cases, except
A. If the creditor voluntarily accepts immovable or other property in payment of the debt even
if the creditor thereafter loses the same by eviction
B. If an extension of time is granted to the debtor by the creditor without pledger’s consent
C. If through some get of the creditor, the pledger cannot be subrogated to the rights,
mortgages and preferences of the creditor.
D. If the thing pledged is deteriorated on the fault of the pledgee.
E. If the debtor defaults 1n the payment of p1incipal obligation on the maturity date.
106. If two or more things are pledged who has the right to choose which thing will be sold in
the absence of stipulation?
A. Pledger
B. Pledgee
C. Debtor
D. Government
107. Pledge may be extinguished directly or indirectly. The following are the modes of
extinguishing the contract of pledge directly, except
A. When the principal obligation secured by the pledged is extinguished.
B. Return by the pledgee of the thing pledged to the pledger or owner.
C. Renunciation or abandonment in writing by the pledgee of the pledge
D. Sale of the thing pledged.
E. Appropriation of the thing pledged if the thing pledged is not sold in the first and second
auctions.
108. Which of the following direct modes of extinguishing contract of pledge impliedly
extinguishes the principal obligation or contact of loan?
I. Return by the pledgee of the thing pledged to the pledger or owner.
II. Renunciation or abandonment in writing by the pledgee of the contract of pledge. .
III. Sale of the thing pledged in case of default by debtor.
IV. Appropriation of the thing pledged by the pledgee in case the thing pledged is not sold in
the first and second public auctions.
A. I and II
B. III and IV
C. I and III
D. II and IV
109. D owes C P5,000 .The debt is secured by a pledge of G’s watch. If G pays C which of the
following statements is correct.
A. The contract of loan cannot be extinguished by the payment of a third person
B. The contract of pledge is not extinguished because the contract of loan is subsisting.
C. G is subrogated with the rights of the creditor.
D. G cannot recover from D.
110. Which of the following stipulations is null and void?

I. A stipulation which provides that the contract of pledge is not extinguished by the return of
the thing pledged.
II. A stipulation allowing the appropriation by the pledgee of the thing pledged in case the same
is not sold in the first and second auctions.
III. A stipulation for the recovery of deficiency in case the proceeds from the sale of the thing
pledged Is less than
A. I and III
B. II and III
C. I and II
D. I, II, and III
111. If the thing is found in the possession of the pledger or owner or if the thing is in the
possession of a third person who has received it from the pledger or owner, which of the
following is incorrect?
A. There is prima facie presumption that the contract of pledge is extinguished.
B. There is prima facie presumption that pledgee returned the thing pledged.
C. There is prima facie presumption that the contact of loan is extinguished.
112. In case the cause or consideration of the contract of pledge is not stipulated, what is the
cause or consideration of a contract of pledge?
A. It has no cause or consideration.
B. The consideration of the principal obligation or contract of loan.
C. The cause or consideration is the liberality of the pledger.
D. The cause is the service remunerated.
113. Which of the following statements is incorrect in case the pledgee renounces or abandons
in writing the pledge?
A. The contract of pledge is extinguished.
B. The acceptance by the pledger is not necessarily for extinguishing contract of pledge.
C. The pledgee becomes a depositary upon renunciation if in the meantime, the thing pledged
is not yet returned to the owner. ‘
D. The return of the thing pledged is necessary for extinguishing the contract of pledge for this
mode of extinguishment.
114. The following are the formalities required for the sale of the thing pledged In case of
failure of the debtor to fail the principal obligation, except
A. It must be by public auction.
B. It must be through a notary public.
C. There must be a notice to the debtor and them owner of the thing pledged, stating the
amount for which the public sale is to be held
D. It must be sold at the first auction.
115. The following persons may bid at the public auction except
A. The pledger or owner
B. The pledgee even if he is the only bidder
C. Third persons
116. Mr. Dela Cruz, a second year accountancy student of a University in Manila, photocopied
some pages of the Financial Accounting book authored by C. Valix, CPA. Mr. Ferrer, his
professor in Financial Accounting, saw the photocopies during one of their classes. He scolded
Mr. Dela Cruz for not buying the original book and told him that he violated the copyright law
and maybe penalized. Is Mr. Ferrer correct?
A. Yes, because the book was photocopied without the consent of the author and used publicly
in a classroom.
B. No, because the private reproduction of a published work in a single copy, where the
reproduction is made by a natural person exclusively for research and private study, shall be
permitted, without the authorization of the owner of copyright in the work.
C. No, because Mr. Dela Cruz reproduced a single copy only, exclusively for his private study
and he did not gain any profit for photocopying some of the pages of the book.
D. No, because he did not reproduced the whole book but only some of its pages, it can be
permitted even without the consent of the owner of the copyright.
117. Kris Aquino commissioned Mr. Magaling to write a biography of her late father, Ninoy
Aquino, for a fee. Upon completion of the work, Kris paid Mr. Magaling the agreed price. The
biography was copyrighted. Kris, however, changed her mind again upon reading the book and
decided not to have it published. Can Kris Aquino sell the property without the consent of Mr.
Magaling?
A. Yes, Kris Aquino can sell the copyrighted biography of her father without need of securing
the consent of Mr. Magaling, the writer of said biography.
B. Mr. Magaling entered into a contract with Kris Aquino and having compensated, he had
parted with all his rights to the said book, in effect making Kris his assignee.
C. The assignee’s rights include the right to sell the work without the consent of the writer, Mr.
Magaling.
D. All of the above
118. Atty. Ana Maganda wrote a legal opinion for a client on the differences of a probationary,
regular, casual and seasonal employee. She quoted without permission Atty. Aliling’s comment
appearing in his book “Annotations on the Labor Code”, but she indicated the source of the
quotation, the book and the author’s name. Atty Aliling is a labor law expert. Can Atty. Aliling
hold Atty. Ana Maganda liable for infringement of copyright for quoting a portion of his book
without his permission?
A. Yes, because Atty. Ana Maganda copied somebody else’s work without the original author’s
consent.
B. No, because the Intellectual Property Code provides that a quotation from a copyrighted
work can be used for judicial proceedings or for giving professorial advice by legal practitioner,
provided the source are identified.
C. Yes, because Atty. Ana Maganda used the work of another for her own gain.
D. No, because everybody can quote somebody as long as the source and the name of the
author of the quotation are identified.
119. Read the following statements and determine which of the choices are correct:
Statement 1: Infringement is the use by others without the registrant’s consent of a
reproduction or colorable imitation of his trademark, tradename or service mark with the
purpose of causing to mislead or misleading the public that those goods or services are those of
the registrant.
Statement 2: The definition of infringement implies that only registered trademarks, trade
names and service marks are protected against infringement or unauthorized use by another or
others
A. Both statements are true
B. Statement 1 is true while Statement 2 is false
C. Only Statement 1 is true
D. Only Statement 2 is true
120. To establish trademark infringement, the following elements must be shown: (1) the
validity of the plaintiff’s mark; (2) the plaintiff’s ownership of the mark; and (3) the use of the
mark or its colorable imitation by the alleged infringer results in “likelihood of confusion” Of
these, the element of ______________ is the gravamen of trademark infringement.
A. Element no. 1
B. Element No. 2
C. Element No. 3
D. All of the above
121. Unilevel Corporation asked your legal advice regarding their plan to use a trademark with
the words “SWEET CANDY” However, there is an existing and registered trademark using the
words “TWEET CANDY” Which of the following advices are correct.
A. The firm must abandon the plan because another company uses the trademark Tweet Candy
and there is a danger of a suit for infringement. The words Sweet and Tweet is almost similar in
sound and they can confuse or mislead the public.
B. They can use the SWEET CANDY as long as there will be a very different packaging and flavors
so as not to mislead the public.
C. Unilevel is a well-known company and their products are patronized country-wide, they can
use the trademark SWEET CANDY because TWEET CANDY is owned by a small-time company
whose market is within Luzon only.
D. None of the above
122. Which of the following works are protected and can be copyrighted?
A. A biography containing your life, love and success.
B. Your musical compositions with or without words.
C. News of the day and other facts having the character of mere press information.
D. A and B only
123. The Sogod Hotel chain reproduces DVD’s, distributes the copies thereof to its hotels and
makes them available to hotel guests for viewing in the hotel guest rooms and charges a
separate fee for the use of the DVD players. Is Sogod Hotel liable for infringement?
A. No, the DVD viewing is done privately in the hotel guest rooms.
B. Yes, because the reproduction of the DVD’s violate the copyright or economic rights of the
owner of the film. The hotel charge fees for the use of DVD player as well as there are room
charges, they earn gain from the use of the DVD because it entices the guests to check-in in
their hotel.
C. No, the DVD viewing is part of the hotel services and it is the use of the DVD players that is
charged and not the cost of the DVD.
124. Narciso Planas invented a gas-saving device, manufactured and sold it to the market
without securing a patent. San Miguel Co., a rich and well-known company, bought one gadget,
dismantled the device and studied it. In due time, the company is manufacturing a gas-saving
device similar to the invention of Narciso Planas. Before offering it for sale, the company
secured a patent. Below are the actions and defenses available for Narciso Planas. Which of the
following statements are correct?
I. Narciso Planas should first bring an action for the cancellation of the patent illegally secured
by San Miguel Company and on the said proceedings, he must prove that he invented the
device.
II. Narciso Planas, being the inventor of the gadget, is the owner of an intellectual creation and
is entitled to legal protection of said property right from the unauthorized use of the same by
another person or entity.
III. While the cancellation proceedings are pending, Narciso Planas may ask the court for
preliminary injunction to prevent San Miguel from manufacturing more gadgets.
IV. San Miguel Co. has a better right over the invention because they secured a patent before
selling the device.
A. Statements I and II are correct.
B. Statements I and III are correct
C. Statement IV is correct
D. Statements I, II and III are correct
125. The infringer is liable to the following:

1. An injunction for such infringement
2. Pay actual, moral and exemplary damages
3. Deliver for impounding of the articles alleged to infringe a copyright
4. Deliver for destruction all copies, devices and other means used for making the infringing
copies
Which of the statements above are TRUE:
A. Statement 1
B. Statement 2
C. Statement 3
D. Statement 4
E. All of the above
126. A files a patent application for product Z, a revolutionary computer chip which is capable
of outperforming current chips by as much as 10x. A is employed by company B, a software
company. A’s job is to develop software programs for businesses. He developed this chip during
office hours and days where he was researching for software ideas which he would use for his
job. B filed its application over the same product at the day after A filed his patent. Who owns
the patent?
A. A since A filed his patent first.
B. B since A made his chip during office hours and days.
C. A since A made the chip not in the course of regular duties.
D. B since A made the chip during office hours and utilized B’s resources.
127. A is a holder of patent X. B also holds a patent over X. A trial ensued and B was declared
the true owner of the patent. What are the remedies for B?
A. Upon filing a motion in court, the court shall order for his substitution as patentee
B. the court shall order for his substitution as patentee, or at the option of the court, cancel the
patent, and award actual and other damages in his favor if warranted by the circumstances,
C. the court shall order for his substitution as patentee, or at the option of the true inventor,
cancel the patent, and award actual and other damages in his favor if warranted by the
circumstances
D. Upon a petition by the true inventor, cancel the patent, and award actual and other damages
in his favor if warranted by the circumstances.
128. Which of the following are rights conferred by a patent?

A. Where the subject matter of a patent is a product, to restrain, prohibit and prevent any
unauthorized person or entity from making, using, offering for sale, selling or importing that
product;
B. Where the subject matter of a patent is a process, to restrain, prevent or prohibit any
unauthorized person or entity from using the process, and from manufacturing, dealing in,
using, selling or offering for sale, or importing any product obtained directly or indirectly from
such process.
C. Patent owners shall have the right to assign, or transfer by succession the patent, and to
conclude licensing contracts for the same
D. All of the above
129. Which of the following requisites are not included for an invention to be patentable?
A. It is New, it has an inventive step, and it does not form part of a prior art
B. It is New, it has an inventive step, and it is industrially applicable
C. It is new, it does not form part of a prior art and it is registered
130. A Scientist has managed to create a new breed of pigs by altering its DNA of which such
has never existed prior to such act by the scientist. Is the pig breed patentable?
A. No. Since it is immoral
B. Yes. Since the pig was created purely by the hand of the scientist
C. No. Since animal breeds are not patentable
D. Yes. Although the animal breeds are not patentable, the essential micro-biological process is
patentable
131. Are Computer programs never patentable?

A. No. Computer programs are always patentable
B. Yes. Section 22 is explicit on this
C. No. Computer programs may be patentable provided it forms part of a process
D. Yes. It contains non-patentable elements
132. A filed a patent in Malaysia over his invention on January 8, 2009. He subsequently filed a
patent in the Philippine IPO on March 30, 2009, expressly claiming priority. Apparently, B has
also filed a patent pertaining to the same invention on February 18, 2009. Who has priority
right over the patent?
A. A since he filed his patent in Malaysia earlier and also he has claimed priority expressly.
B. B since a patent application in a foreign country has no effect here in the Philippines
C. A since he filed his patent in Malaysia earlier and also he has claimed priority expressly, and it
is within 12 months from the initial registration in Malaysia.
D. B since he was the first one to file his registration in the Philippines
133. A was able to invent a new type of vehicle. However, B was able to register the invention
first although it was clearly A who was the true inventor. What remedy may A avail of?
A. He will file a civil case of patent infringement
B. He can file for cancellation of patent plus damages
C. He can file for the substitution as the real patentee
D. Both A and C
134. A medicine already being distributed both in the U.S. and in the Philippines by distributor
VX authorized by the patent holder is now being imported by A, a doctor who operates a small
clinic and is using the drug for the treatment of his patients. Is A liable for patent infringement?
A. Yes. A is liable since VX is the only authorized distributor of the patented drug.
B. No. A is not liable since section 72 (1) allows such use of the product.
C. Yes. A is liable since he is not an authorized distributor of the product.
D. No. A is not liable since this is a case of fair use.
135. A has been importing patented medical drugs from Thailand. The patent is owned by B. B
has a local distribution unit in the Philippines. B wants to file a case of patent infringement and
importation of counterfeit drugs against A. Will this prosper?
A. No. This is a case of fair use
B. Yes. A counterfeit drug is a form of infringement against the patent of B.
C. No. An unregistered drug is not the same as a counterfeit drug and also that section 72 (1)
allows such importation by a 3rd party.
D. Yes. B has not authorized A to distribute the products.
136. When a device appropriates a prior invention by incorporating its innovative concept and,
although with some modification and change, performs substantially the same function in
substantially the same way to achieve substantially the same result, what test should be
applied?
A. Literal infringement test
B. Denicola test
C. Doctrine of Equivalents test
D. Fair Use test
137. B was selling a product of A who was the patent holder of B’s product. Apparently, B has
been passing A’s patent as his. A filed a criminal case of infringement against B. will this
prosper?
A. Yes. A is the rightful owner of the patent
B. No. B is exempted under the fair use doctrine
C. Yes. A never authorized B to sell such products as his.
D. No. B has yet to be found guilty of a previous infringement, hence A has no cause of action.
138. A utility model lasts for:

A. 20years non-renewable
B. 5 years, renewable for another 2 consecutive terms.
C. 7 years, renewable for another 2 consecutive terms.
D. 7 years non-renewable
139. The provisions of compulsory licensing provides for instances where the patent holder is
required to grant a license to the government or to a 3rd party. Is this provision unfair for
depriving the patent holder of his right to his property?
A. No. This is a case of eminent domain.
B. Yes. This is a case of depriving the patent holder of his property without due process of law
C. No. The patent holder is not deprived of his rights to the patent since he will still receive
royalties for his patents.
D. Yes. The patent holder has exclusive rights over his patents and such exclusivity is rendered
inutile by the provision.
140. Which of the following types of names confer the greatest chance of being a valid
trademark?
A. Generic
B. Descriptive
C. Suggestive
D. Arbitrary/Fanciful
141. Businessman A puts up a sari-sari store named “Andongs”. B also puts up a sari-sari store
named “Andongs” a month later. Can A filed against B an infringement case?
A. Yes. A can file an infringement case against B for unlawfully using his tradename.
B. No. He has not registered his tradename.
C. Yes. This is a case of unfair competition.
D. No. He has not registered his trademark.
142. When testing whether the likelihood of deception has occurred, at what point of a
transaction do we consider such likelihood?
A. After the sale of the item bearing the mark.
B. Prior to the sale of the item bearing the mark.
C. At the point of the sale of the item bearing the mark.
D. None of the above.
143. When is non-use of a mark excusable?

A. It must always be used, failure to use it for any reason will forfeit the use of such mark.
B. When the trademark owner is lacking in funds due to slow sales.
C. When the trademark owner has already registered his mark with the IPO
D. When the cause of such non-use is due to reasons independent of the will of the trademark
owner.
144. Which among the following statements is false?

A. Infringement of trademark is the unauthorized use of a trademark, whereas unfair
competition is the passing off of one’s goods as those of another.
B. In infringement of trademark, fraudulent intent is unnecessary, whereas in unfair
competition, fraudulent intent is essential.
C. In infringement of trademark and in unfair competition, prior registration are both necessary.
D. In infringement of trademark and in unfair competition, prior registration to both are not
necessary
145. Suppose an author published a book describing a new method of book-keeping, which of
the following statements is true?
A. The author has a copyright over the book as well as the method described in his book; thus,
he is able to preclude others from only copying the book as well as preclude others from
employing the method as described in the book without his permission.
B. The author has an exclusive right to the method described in the book.
C. The extent of the author’s copyright is limited to him being able to prevent third persons
from copying portions of his work; he is unable to prevent third persons from employing or
describing the method discussed in such book.
D. The extent of the copyright extends to the idea itself, not merely the expression
146. A reporter wants to write a true-to-life story about a person who was kidnapped and
buried alive for 83 hours. The reporter then extensively interviewed the survivor and spent
several months coming up with a book documenting the plight of the survivor. A Hollywood
studio company then made a movie out of the ordeal of the survivor. The reporter is saying that
even though the movie was not based on the book, the research he has spent documenting the
event was copyrightable. Is the contention of the reporter correct?
A. Yes, considering that the research material used served as the foundation for the subsequent
book of the reporter about the survivor.
B. Yes, considering that the reporter has exerted substantial time and effort in his research, it is
copyrightable.
C. No, facts and research involved in obtaining facts should not be distinguished, and are not
copyrightable.
D. No. the subject matter is not copyrightable.
147. Is a work with a merger of aesthetic and functional features copyrightable?

A. No, copyright law contemplates only original intellectual creations in the literary and artistic
domain and is the proper subject of a patent.
B. Yes, on all cases.
C. It depends, if the design elements reflect a merger of aesthetic and functional consideration
cannot be separated from utilitarian features, it is not copyrightable.
D. No, on all cases.
148. Samsung invented a cellular phone that can also play digital music or MP3s. It applied for
the issuance of letters patent.
A. The invention is not patentable because it is a combination of old functions which does not
produce a new result.
B. The invention is patentable because it is a new product which is beneficial to the public.
C. The invention is not patentable because Samsung is a foreign corporation and it should file
its application in its home country.
D. The invention is patentable because it combines existing elements, a cellular phone and a
digital music player, and produces a new and useful result, namely, the convenience of having
two gadgets in one.
149. Lucky Me registered its trademark, “Ang Sarap Pancit Palabok” with the Intellectual
Property Office. Nissin subsequently introduced its new product, “Ang Sarap Pinoy Ramen”.
Lucky Me sued for trademark infringement.
A. Nissin is not guilty of trademark infringement because the trademark “Ang Sarap” is
descriptive, hence not capable of exclusive appropriation.
B. Nissin is not guilty of trademark infringement because its product, Pinoy Ramen, belongs to a
different category from Lucky Me’s product, Pancit Palabok.
C. Nissin is guilty of trademark infringement because it did not register its trademark “Ang
Sarap Pinoy Ramen”.
D. Nissin is guilty of trademark infringement because the trademark “Ang Sarap” is fanciful and
arbitrary, hence capable of exclusive appropriation.
150. Center Book Store is the publisher of the book Legal Journal. It donated one copy to the
Library of the U.E. College of Law. The Library, in order to preserve the original book,
reproduced one copy of the Journal for lending to the University’s students for room use. Is the
U.E. Law Library liable for copyright infringement?
A. No. The reproduction is consistent with fair use.
B. Yes. Only the National Library is allowed to reproduce books and other works.
C. No. The copy of the Journal is marked “For Room Use Only” and is therefore not made
available to the public outside of the Library.
D. Yes. The law only allows a library to photocopy a book if it is fragile or rare.

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BAM 242 - Regulatory Framework and Legal Issues in Business

MOCK PHINMA EXAMINATION

(1) Multiple-choice question Section. The questions in this LEARNING OBJECTIVE:

This concludes the instruction page.

You may now begin answering.

1. As a rule, this contract of sale involving a piece of land is void,

A. Between a minor and a capacitated person.

3. This serves as a proof of the perfection of the contract of sale

4.A contract of sale is not a(an)

5.Warranty against hidden defects is

8. The sale of an expected thing

9. The sale of the hope itself

10. One of the following is not correct

A. Both are contracts of sale

A. DD may compel V to accept the P12,000,000 first offered.

16. The rule observed in the Philippines is

A. Sale or financing of industrial lots

A. Traditio longa manu

A. Traditio longa manu

A. Traditio longa manu

21. Goods are deemed in transit

22. Goods are deemed no longer in transit

A. V may refuse to pay claiming in his defense the Statute of Frauds

A. Who have first taken possession in good faith

A. Who have paid in good the purchase price in full

A. Accion quanti minoris

A. Accion quanti minoris

A. 30 days from delivery to the vendee

30. In contract of sale, if the price is absolutely simulated, the sale is

A. B because he has got an older title

39. Not an implied warranty in a contract of sale

A. Right to sell the thing at the time of perfection of the contract

A. The contract is valid if the value of inheritance is at least equal to P1,000,000

A. Upon perfection of the contract

C. Upon expiration of seven days

43. Quasi-traditio is equivalent to

A. Traditio longa manu

A. Expenses of the contract

46. Not an element of the sellers right of stoppage in transit

A. The goods must be in transit

A. C may exercise his right of redemption of the interest sold by A to B

50. Which of the following cannot be the object of a contract of sale?

A. Not certain because the price at Cainta Market is not stated

A. There is no contract of sale between X and V

A. The contract is perfected because of the acceptance by V

A. Traditio longa manu

56. Ownership of the thing sold is

A. Retained by the seller in “sale or return

58. A contract of sale is in the stage of conception when

A. There is meeting of the minds

A. The contract can be rescinded because of inadequacy of price

A. To deliver the car immediately because the sale is a perfected contract

II. The sale of a vain hope or expectancy is voidable.

A. First statement is true, second statement is false.

A. First statement is true, second statement is false.

65. I. If the price is grossly inadequate, the sale is void.

A. First statement is true, second statement is false.

A. First statement is true, second statement is false.

C. Upon default to pay the obligation at maturity.

83. The following are the characteristics of a contract of pledge except

85. What is the nature of a contract to constitute a pledge?

88. What is the nature of a contract of pledge?

91. What is the form of contract of pledge to bind third persons?