CPA REVIEW SCHOOL OF THE PHILIPPINES REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS. ‘COVERAGE: Speci! Laws ‘A. Securities Regulation Code B. Code of Corporate Governance © Intellectual Property Code D._ Data Privacy Act E. Electronle Commerce Act F. Ease of Dolng Business and Emicien Delivery of Governmeat Services Law irectlon: Read and select the best answer forthe following questions. |. Which ofthe following is not an objective of Securities Regultion Code aka. R.A. No. 87997 ‘2 Toestabish a socially consclous, free market that regulales itself b. To encourage the widest participation of ownership in enterprises ©. Toenhance the democratization of wealth 4. To promote monopoly and oligopoly, 2. Which ofthe following is not an objective of Securities Regulation Code aka. R.A. No, 87997 To promote the development ofthe capital market To protect investors To ensure full and fair disclosure about securities To encourage insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market eege 3. Upon winding up of the comporate affairs, any asst distributable t any creditor or stockholder or member who is unknown and cannot be {ound shal be escheated and forfeited in favor ofthe 1d Co:poration Code Revised Corporation Code Barangay where such propery i located Province where such property is located , Province where such property is located City where such property is located ‘city or municipality where such property is located National government 4d. National government City of municipality where such property is located 4. Under Securities Regulation Code, they are defined as shares participation or interests in a corporation or in a commercial enterprise or Profitemaking venture and evidenced by a certificate, contrac, instruments, whether written or electronic in character, a Securities b. Instruments © Documents 4. Papers 5. Which of the following is considered a security under Securities Regulation Code? a. Inventory b. Options and warrants Investment property 4. Prepaid asset 6. Which ofthe following is not considered a security under Securities Regulation Code? 2 Shares ofsiocks, bonds, debentures, notes evidences of indebtedness, asset-backed securities ‘5. Investment contracts, certificates of interest or paticipation in a profit sharing agreement, cenfies of deposit for a future subscription €. Fractional undivided interests in oil, gas or other mineral rights 4. Deed of Lease or Deed of Sale 7. Which ofthe following is not considered a security under Securities Regulation Code? ‘2 Certificates of assignments, certificates of participation, trust certificates, voting trust certificates or similar instruments 'b. Derivatives lke option and warrants © Deed of Loan with Real Estate Mortgage 4. Proprietary or nonproprietary membership certificates in corporations 8, They are contracts that give the buyer the right, but aot the obligation, to buy or sell an underiying security ata predetermined price, called the exercise or strike price, on or before a predetermined date, called the expiry date, which can only be extended by SEC upon stockholders’ approval ‘@ Option contract 'b. Subseription contract Contract of sale 4 Bond indenture 9. Herefers to the originator, maker, obligor or creator ofthe secu. a Issuer b. Broker © Dealer Associated person of a broker or dealer 10. He refers i the person engaged in the business of buying and selling securities forthe atcount of other. a issuer b. Broker ce Dealer d. Associated person 11. He refers to person who buys sells securities for his/her own account in the ordinary course of busines. a Issuer b. Broker © Dealer Associated person ofa broker or dealer a (CPAR - Regulatory Framework for Business Transactions (RFBT 8715) Page 1 of 24| Me fers to an employee therefor whom, directly exerciscs gontrol of supervisory authority, but does not inelude a salesman, v1 en agent or } ‘person whose functions are solely clerical ar minister. wiser | b Broker | Dealer 4. Associated person ofa broker or dealer 13. He refers toa natural person, employed as such as en agent, by desler, issuer or broker to buy and sell securities, © Issuer b Broker Salesman 4d. Associated person ofa broker or dealer 14, He refers to any person who acts as intermediary in making deliveries upon payment effect settlement in securities trans a Exchange . Clearing agency Market Avction 1S. Irefers to an organized marketplace or facility tht brings together buyers and sellers and executes trade of securities and/or commodities | a Exchange | ». Auction | Mall | Store 16, They refer to contracts which provide forthe performance of futute services of or the payment of future monetary considerations atthe ‘ime actual need, for which plan holders pay in cash or installment at stated prices, with or without interest or insurance coverage and includes ifs eaion, edation,iterent and ote plans which the Commision may fom time to time approve & Insurance policies b. Investment schemes ©. Premeed plans 4. Money market placements | | 17. He refers to person who, acting alone or with others, takes initiative in founding and organizing the business or enterprise ofthe issuer ' ‘and receives consideration therefor. a Promoter | b. Underwriter & Incorporator 4. Founder 18, He refers toa person who guarantees on a fim commitment and/or declared best effort basis the distribution and sale of securities of any kind by another company. a. Promoter b. Underwriter | © Incorporator 4 Founder 18. Wie goers age entrusted wie sii Secs Renton ot | 2 ou ot Asonary 2. Series an xchange Commision | — Bangko Sentral ng Pi & team Connie 20, Which ofthe following is function of Securities and Exchange Commission? | a. To approve, reject, suspend, revoke or require amendments to registration statements, ané registration and licensing applications b. To.convict a person of criminal violation of Securities Regulation Code . To-emeriain intra-corporate disputes and election contests 4. Toreverse the decision of bourd of directors in matters of corporate management 21, Which ofthe following is nota function of Securities end Exchange Commission? ‘a To prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance with such rues, regulation and orders in relation to Securites Regulation Code i b. To compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision ©. To suspend or revoke, after proper notice and hearing the flanchse or certificate of registration of eorporatons, partnership or associations, upon any of the grounds provided by law 4. Tocenact law amending the Securities Regulation Code and the Corporation Code ofthe Philippines 22. What isthe condition precedent before securities willbe allowed 0 be sold or offered forsale or distribution wi ‘2 Itmust be guaranteed by the Government ofthe Republic ofthe Philippines. The securities must be risk-free. ' & The securities must be registered frst before the Securities and Exchange Commission, 4d. The securities must be profitable in all eases. the Philippines? 23, refers to the application forthe registration of securities required to be filed withthe Securities and Exchange Commission before these securities be allowed tobe sold or offered for sale or disiributed within the Philippines. Certificate of registration b. Application form Registration statement 4, Articles ofreisiation oO SS SS CPAR — Reaulatory Framework far Rucinece Tranenrhinnc(P' IT ATAEY Page 7 of 7424, Itrefers to the document made by or an behalf of an issuer, underwriter or dealer to sell or offer securities for sle to the public through registration sintement filed withthe Securities and Exchange Commission, a Prospectus b. Brochure © Table of specification 4. Syllabus, 25. Which ofthe following may not be done by Securities and Exchange Commission regarding the application for registration of securities by issuer? 11 The SEC may specify the terms and conditions under which any written communication, Including any summary prospectus, shal be deemed not constitute an offer for sale. b. The SEC may audit the Financial statements, assets and other information of firm applying for registration ofits securities whenever it deems the same necessary to insure full disclosure orto protect the interest of the investors andthe public in general The SEC shall deny any application for registration of secures if the applicent is anot a Filipino citizen The SEC shall keep Register Securities which shall record the registration of securities and such register and all documents or information withthe respect tothe securities registered therein shall be open to public inspection at reasonable hours on business days Which ofthe following securities is required tobe registered before the Securities and Exchange Commission? ‘Any security issued or guaranteed by the Government ofthe Philippines, or by any political subdivision or agency thereof, or by any person controlled or supervised by, and acting as an instrumentality of said Goverment b. Shae of stocks issued by a banking institution & Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body d.__Any security issued or gusranteed by the government of any country with which the Philippines maintains diplomatic relations, ‘or by any state, province or politcal subdivision thereof onthe basis of reciprocity ‘Which ofthe folowing securities is required to be registered before the Securities and Exchenge Commission? Bank's own shares of stocks . Insurance policy ‘© Preneed policy 4. Centcate of time deposit ‘Which of the following securities is exempted from registration before Securities and Exchange Commission? ‘@ Insurance policy 'b. Bond indenture Share warrants and share options J. Fractional undivided interest in oil oF minecal rights Which of the following securities is exempted from registration before Securities and Exchange Commission? ‘Participation in profit sharing agreement in a partnership b. Investment contracts issued by a networking compeny Trust certificates and voting trust certificates in a mining company dd. Cerificate of time deposit or money market placement issued by @ bank ‘Which ofthe following sale of securities is subject to registration with Securities and Exchange Commission? ‘a Atany judicial sae, or sale by an executor, administrator, guardian or reveiver or trustee in insolvency or bankruptcy The distribution by a corporation actively engaged in the business authorized by its articles of incorporation, of securities to its stockholders or other security holders a a stock dividend or other distribution out of surplus € The sale of capital stock of corporation to its own stockholders exclusively, where no commission or other remuneration is paid or given directly or indirectly in connection wit the sale of such capital stock d._ The sale of securities by an issuer to more than twenty (20) persons inthe Philippines during any twelve-month period |. Which of the following sale of securities is subject to registration with Securities and Exchange Commission? ‘a. The issuance of bonds or notes secured by mortgage upon realestate or tangible personal property, when the entire mortgage together with ll the bonds or notes secured thereby are sold toa single purchaser ata single sale bb. Broker's transaction, executed upon customer's orders, on any registered Exchange or other trading market The exchange of securities by the issuer with the new security holders where commission or other remuneration is paid or given directly or indirectly for soliciting such exchange 4. Am isolated transaction in which any security is sold, offered forsale, subscription or delivery by the owner therefore, or by his representative for the owner's account, uch sale or offer forsale or offer forsale, subscription or delivery not being made in the course of repeated and successive transaction ofa like character by such owner, or on his account by such represeniaive and such. ‘owner of representative not being the underwriter of such security 32. Which ofthe following sale of securities is exempted from registration with Securities and Exchange Commission? ‘a By or for the account ofa pledge holder, or mortgagee or any ofa pledge liem holder selling of offering forsale or delivery in the ordinary course of business and not forthe purpose of avoiding the provision of this Code, to liquidate a bonajide debt, a security pledged in good faith as security for such debt , Sale of investiment contracts to numerous investors by a networking company Sale of subscription contracts by a prospective corporation tothe public ‘Subscriptions for shares of the capitals stocks ofa corporation priar tothe incorporation thereof or in pursuance of an inerease in its authorized capital stocks under the Corporation Code, when expense is incurred, or commission, compensation ot remuneration is paid or given in connection with the sale or disposition of such securities, and when the purpose fr soliciting, giving oF taking of such subscription is other than to comply with the requirements of such law as to the percentage ofthe capital stock of a corporation which should be subscribed before it ean be registered and duly incorporated, ofits authorized, capital increase 33. In which of the following buyers of securities Is sale of securities still required to be registered with Securitics and Exchange Commission? a Bank '. Registered investment house of investment company ‘cInsurance company 4d. Professionals Se CPAR - Regulatory Framework for Business Transactions (RFBT 8715) Page 3 of 2434. In which of the following buyers of securities is sale of securities exempted from registration with Securhics and Exchange Commission? 11 Pension fund or retirement plan of Government of the Ph! 2° or any of its politial subdivision ', Real estate company Educational institution 4. Farmers 35. Which of the following is nota ground for the rejection ofthe egisiration statement and refuse registration ofthe securities ofthe issuer by the Securities and Exchange Commission? 1, The issuer has been judicially declared solvent. b. The issuer has violated any of the provision of Securitles Regulation Code. c. The issuer has been or is engaged or about to engage in fraudulent transactions. 4. The issuer has failed to comply with the conditions Imposed by SEC for registration of security 36. Which of the following is a ground forthe rejection of the registntion statement and refuse registration of the securities ofthe issuer by the Securities and Exchange Commission? 1 The issuer has been profitable during the year, b. The issuer has abided withthe Inwful order of SEC. © The issuer has made any false or misleading representation of materiel fects in any prospectus concerning the issuer or its securities 4, The issuer is # non-resident and non-Philippine national juridical person, 37, it menns a publicly announced intention by a person acting alone or fn concert with other persons to acquire outstanding equity securities of 1 public company, or outstanding equity securities of an associa or elated company of such public company which controls the said public company a. Tender offer b. Insider trading. © Fraudulent practices 4. Issuer tender offer 38. Irmeans a publicly announced intention by an Issuer to reacquire any of is own class of equity securities, oF by an associate of such Issuer to acquire such securities, Tender offer b. Insider wading ©. Fraudulent practices Issuer tender offer 39. In which of the following instances is tender offer mandatory? Any person oF group of persons acting in concert, who intends to seq ‘oF more transactions within a period of twelve (12) months. b. Any person or group of persons acting in concert, who intends to acquire (5%) of the outstanding voting shares or such ‘outstanding voting sires that are sufficient to gain contol ofthe board ina public company in one or more transactions within a period of rwelve (12) months. © Any person or group of persons acting in concert, who intends to acquire (5%) of the outstending voting shares or such ulstanding voting shares that sre sufficient to gain control of the board in a public company directly from one or more stockholders. 4d. Any acquisition that would result in ownership of over (10%) ofthe total oustanding equity securities of a public company (15%) of equity securities in a public company in one 440. In which of the following instances is tender offer not mandatory? | Any person or group of persons acting in concert, who intends to acquire (15 %) of equity securities ina public company in one. fr more transactions within period of twelve (12) months. b. Any person of group of persons acting in concert, who intends to acquire (35%) of the outstanding voting shares or such ‘outstanding voting shares that are sufficient to gain control ofthe board ina public company in one or more transactions within a period of twelve (12) months Any person or group of persons acting in concert, who Intends to acquire (3$%) of the outstanding voting shares or such ulstanding voting shares that are sufficient to gain control of the board in a public company direcly from one or more stockholders. 4 Any scquisition that would result in ownership of over (50%) ofthe otal outstanding equity securities of public company ‘Any person or group of persons acting In concer, who intends to acquire thirty five percent (35%) of the outstanding voting ‘hares or such outstanding voting shares Unt are suficent to galn control of the board in a public company through the Exchange wading system if such person or group of persons acting in concert acquire the remuinder through a block sale but after Acquisition through the Exchange trading system, they fil to acquire thelr target of thirty five percent (35%) or such outstanding, voting shaves that is suicient to gain control ofthe board. 41, Which ofthe following transactions is subject to mandatory tender offer? ‘8 Any acquisition that would result in ownership of over ($0%) ofthe total oulstanding equity securities ofa public company b. Any purchase of securities from an increase in authorized capital stock ©. Purchase in connection with foreclosure proceedings involving a duly constitwed pledge or security arrangement where the acquisition is made by the debtor or reditor Purchases in connection with corporate rehabilitation under court supervision Purchases in the open market atthe prevailing market price 42, Which ofthe following transactions is exempted from mandatary tender offer? Any purchase of securities from the unissued capital stock even ifthe acquisition will result to a fifty pereem (50%) or more ‘ownership of securites by the purchaser or such percentage thut Is suficlet to gain control ofthe bourd Merger or consolidation ©. Any purchase from a publicly listed company 4. Purchase from the biggest company 43, Which of the following transactions is exempted from mandatory tender offer? ‘Purchases in connection with a privatization undertaken by the government of te Philippines 1b. Purchases in connection with a banking institutions ©. Purchases thal wll result to contro} ofa publicly listed company 44, Purchases that wil result to parent-subsidiary relationship oT — ——— CPAR.— Regulatory Framework for Business Transactions (Ro ‘BT 8715) Page 4 of 244 45 46 4”. 48, 49, 0, sh. 2. 33 ‘What isthe condition precedent in the tender offer by an Issuer or buyback or reaequisiton or repurchase by an Issuer of is on secusities? ‘a Presence of unrestricted retained earnings in its books '. Presence of contributed capita in its books ‘e.Solvency of the issuer Liquidity of the issuer Which of the following is not a purpose of tender offer by an Issuer or buyback or reacquistion or repurchase by an Issuer of its own securities? 1 To implementa stock option or stock purchase plan . Tomeet shor-term obligations which can be seed by the reissuance of the repurchased shares ‘& To pay dissenting or withdrawing stockholders entitled to payment for ther securities under the Corporation Code d. To dissolve the corporation ‘Where and when shall the terms and conditions of the tender offer be published by the offeror or issuer in a tender offer? ‘& An Offeror or Issuer shall publish the ‘erm and conditions ofthe tender offering in (2) national newspapers of general circulation in the Philippines on the date of commencement ofthe tender offer and for (2) consecutive days . An Offeror or Issuer shall publish the tems and conditions ofthe tender offering in (1) national newspaper of general circulation in the Philippines on the date of commencement ofthe tender offer and for (1) éay © An Offeror or Issuer shall publish the terms and conditions ofthe tender offering in (3) national newspapers of general circulation inthe Philippines onthe date of commencement ofthe tender offer and for (3) consecutive days 4. An Offeror or Issuer shall publish the terms and conditions ofthe tender offering in (4) national newspapers of general circulation in the Philippines on the date of commencement ofthe tender offer and for (4) consecutive days Unless withdrawn earlier, what isthe validity o expiration period of tender offer? | AL least twenty (20) business days ftom its commencement: Provided, that an offer should as much as possible be completed ‘within sixty (60) business days from the dae the intention to make such offer is publicly announced '. Atleast ten (10) business days from the date the notice ofa change in the percentage of the class of securities being sought or in ‘the consideration offered i fist published, sent or given to security holders Either A or B Neither A nor B Ina mandatory tender offer, what price of shares of stocks shall the Ofleor shall be compelled o offer? ‘a. The highest price paid by him for such securities during the preceding six (6) months b. The lowest price paid by him for such securities during the preceding six (6) months ‘c. The average price paid by him for such securities during the receding six (6) months 4. The lowest price pad by him for such securities during the preceding three (3) months What are the requirements of tender offer? ‘8 Tender offer shall be open to all security holders ofthe class of securities subject tothe tender offer. The consideration paid to any security holder pursuant to the tender offer shall be the highest consideration paid to any other security holder during such tender offer. ©. Both AandB, Neither A nor B In efers to the company subject ofthe tender offer. ‘a Target company b. Desired company Prospective company 4. Forecasted company In case of a tender offer other than by an Issue, the subject of the ender offer ("the target company") shall not engage in any of the following transactions during the course of a tender offer, or before its commencement if its board has reason to believe that an offer might be imminent, except ‘a_Issue any authorized but unissued shares Issue or grant options in respect to any unissued shares Create o issue, or permit the creation or issuance of any securities carrying rights of conversion into, or subscription to shares 4. Sel, dispose of or acquite oF agree to acquire, any asset whose value amounts to five percent (5 %) or more ofthe toll value of the asses prior to acquisition ‘e Enler into contacts tha are in the ordinary course of business It refers to the act of an insider or selling or buying a security ofthe Isuer, while in possession of materia information with respect tothe uer or the security that is not generally available tothe public. a Tender offer Manipulation of price é Fraudulent practice Insider trading {teers to (a) the issuer; (b) a director or officer (or any person performing similar functions) of, or a person controlling the issuer, gives or {gave him secess to material information about the iver or the security Uht isnot generally available tothe public: (e) A government employee, director, or officer of an exchange, clearing agency and/or self-regulatory organization who has access to material information ‘bout an issuer ore security that isnot generally available to the public; or (d) a person who learns such information by a communication ‘from any forgoing insiders. a Insider b. Outsider ©. Independent person 4. Suitably qualified extemal person CPAR.— Regulatory Framework for Business Transactions (RFBT 8718) Page 5 of 245A 5s. 56, 38 39, 60, 61 62 8. Which ofthe following is uot considered an Insider? ‘a Issuer ofthe securities A director or officer (or any person performing similar functions) of, ora person controlling the issuer © Apperson wi has access to material information sbout the issuer or the security that isnot generally available tothe publie 4. A government employee, director, or officer of an exchange, clearing agency and/or self-regulatory organiailon who has access to material information about an issuer ora security that isnot generally available tothe public ©. Any person who made investment decision on the basis of published audited financial statements ‘Which ofthe following is not considered an insider? ‘a Internal auditor ofthe issuer , Extemal auditor of the issuer © Creditor ofthe issuer 4, Board of directors of the issuer ‘When is information considered “material nonpublic for purposes of insider trading? ‘a. When the information has not been generally disclosed to the public and would likely affect the market price of the security after being aisseminazed to the public and the lapse ofa reasonable ime for the market to absorb the information 'b. When the information would be considered by a reasonable person important under the circumstances in determining his course of ation whether to buy, sell or hold a security ©. Either A or B 4. Neither A nor B ‘Which ofthe following acts considered insider trading is unlawful? ‘To communicate material nonpublic information about tte issuer or the security 10 any person who, by virtue of the ‘communication, becomes an insider, where the insider comununicatng the information knows or has reason to believe that such person wil likely buy or sella security ofthe issuer whole in possession of such information ‘To become an insider ©. To possess material nonpublic information for being an insider 4. Allof the above Which of the following acts is not considered unlawful under Securities Regulation Code? ‘@ To employ any device, scheme or anifice to defraud b. To invest in bonds and stocks of competing corporations © To obtain money or propery by means of any untrue stazment of a material fact of any omission to state a material fact necessary in order to make the statements mede, in the light of the circumstances under which they were made, not misleading 6, To engage in any act, ransaction, practice or course of business which operates or would operatc as a fraud or deceit upon any person Which ofthe following acts is not considered unlawful manipulation of security prices under Securities Regulation Code? ‘To create 6 false or misleading appearance of active trading in any listed security traded in an Exchange of any other trading marke’ b. To affect, alone or with others, a securities or transactions in securities that (I) Raises their price to induce the purchase of « security, whether of the same or a differet class of the same issuer or of controlling, controlled, or commonly controlled company by others; or (if) Creates active trading to induce such a purchase or sale through manipulative devices such as marking the close, painting the ape, squeezing the float, hype and dump, boiler room operations and such other similar devicesTo obtain ‘money of property by means of any untrue statement of a mseral fect of any omission to state @ material fact necessary in order to make the statements made, in the light ofthe circumstances under which they were made, not misleading. © To circulate or disseminate information thatthe price of any security listed in an Exchange will ors likely to rise o fll because of manipulative market operations of any one or more persons conducted for the purpose of raising or depressing the price of the security forthe purpose of inducing the purpose of sale of such security 4. To participate in trading of stocks and bonds Ifthe investor isnot stock broker ‘Which of the following acts i not considered unlawful manipulation of security prices under Securities Regulation Code? To make false or misleading statement with respect to any material fct, which he knew of had reasonable ground to believe was 0 false or misleading, for the purpose of inducing the purchase or sale of any security listed or raded in an Exchange b. To effect, either alone or others, any series of transactions forthe purchase andlor sale of any security traded in an Exchange for the purpose of pegging, fixing or stabilizing the price of such security To use or employ, in connection with the purchase or sale of any security any manipulative or deceptive device or contrivance 4, To sell securities in order to obtain gain on changes in fer value ofthe stocks. emeans any sale of security which the seller does not own or any sale which is consummated by the delivery ofa security borrowed by, or for the account of the seller with the commitment of the seller or securities borrower to retum or deliver sald securities or their equivalent to the lender on a determined or determinable future time. a Shor sale Long sale © Middle sale Narrow sale Winchudes making or offering ta make with any person, o Inducing oF atempting to induce any person to enter into orto offer ‘any agreement for or with a view to acquiring, disposing of, subscribing for secures, a Dealing in securities b. Promoting securities ' Advertsing securities Investing in series enter into It refers tothe et of sckng o asking for business o information whic acudes heat of providing information about a security of invesment product being offered forse withthe view of making arthe persona cet or sing or binging In aslo purchase of security ofvesimet product saaton B Advertsing © Makan 4 Dealing CPAR - Regulatory Framework for Business Transactions (REBT 8715) Pape 6 of 2465. 66, a 68, 69, 10. n n B 14 15. means a contract, transaction or scheme (collectively “contract") whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others. I is presumed to exist whenever a person secks to use the money or property of ers ‘onthe promise of profits. ‘4 Investment contract '. Share options Warrants 4. Debentures 1 refers to the governing body elected by the stockholders in stack corporation that exercises the corporate powers of a corporation, conducts all ts business and controls its properties, & General assembly b. Board of directors & Board of trustees 4. Executive committee It refers to the framework of rules, systems and processes in the corporation thal governs the performance by the Board of Directors and “Management of ther respective duties and responsibilities tothe stockholders. ‘& Corporate governance b. Corporate by-laws ‘&_ Articles of incorporation 4. Corporate regulation ‘Which of te following compani Corpor >. Barangay Micro Business Enterprise ‘¢ Close corporation Closely eld corporation is covered by the Revised Code of Corporate Governance? ‘whose equity securities ere listed on an Exchange Market ‘Which of the following companies isnot covered by the Revised Code of Corporate Governance? | Corporation that is a grantee of secondary licenses from SEC Small and Medium Enterprise © Corporation that sells equity andlor debt securities tothe public that are required to be registered withthe SEC 4 Corporation that has assets in excess of Fifty Million Pesos and atleast rwo hundred (200) stockholders who own al least ‘one hundred (100) shares each of equity securities [How many independent directors must be present ina corporation covered by Revised Code of Corporate Governance? ‘a One independent director 'b. Two independent directors Three independent directors Four independent directors In addition to the qualifications provided by the Coiporats Code of the Philippines, what qualifications of a member of the Board of Directors may be provided by the Corporation in accordance to Revised Code of Corporate Govemance? College education or equivalent academic degree Practical understanding ofthe business ofthe corporation “Membership in good standing in relevant industry, business or profesional organizations Previous business experience All ofthe above perce ‘Which ofthe following is a ground for permanent disqualification of a director under the Revised Code of Corporate Governance? ‘& Conviction by final judgment ofan offense punishable by imprisonment for more than six (6) years b. Any director aceused of violation ofthe Corporation Code Any director charged of crimes involving violation of Securities Regulation Code 4d. Anainment of doctorate degree in a university Which of the following isa ground for permanent disqualification ofa director under the Revised Code of Corporate Governance? Any person earlier elected as independent director who becomes an officer, employee or consultant ofthe same corporation b. Refusal to comply with the disclosure requirements of the Securities Regulation Code and its Implementing Rules and Regulations ‘Absence in more than fifty (50) percent of all regular and special meetings of the Board during his incumbency 4d. Any director charged of crimes involving violation of Securities Regulation Code Which of the following isa ground for temporary disqualification of a director under the Revised Code of Corporate Governance? ‘a Absence for any twelve (12) month period during his incumbency 'b. Any person judicially declared as insolvent ‘e. _Any person convicted by final judgment or order by @ court or competent administrative body ofan offense involving morat ‘turpitude, fraud, embezzlemeni, nef, estafa, counterfeiting, misappropriation, forgery, bribery, false affirmation, perjury or other fraudulent acts 4. Any person found guilty by final judgment or order of « foreign court or equivalent financial regulatory authority of fraudulent acts ‘What is the nature ofthe office of a director? ‘tis one of wus and confidence, b. Iis one of independence tis one for public interest ‘4. tis one for creditor's interest Which ofthe following isa responsibility of «director ofa corporation? & He should actin the best interest of the corporation in a manner characterized by transparency, accountabllity and fale. b. He should also exercise leadership, prudence and integrity in directing the comporation towards sustained progress © Both A and B 4d. Neither A nor B IR — Regulatory Framework for Business Transactions (RFBT 8716) Page 7 of 2416, n. %8 79. 50. 81 as, 86, ‘Which of the following is not responsibility of director of corporation? 1, He must conduct unfair business transactions with the corporation, and ensure thet his personal interest does conflict with the interests of the corporation, ', He must devote the time and attention necessary o properly and effectively perform his duties and responsibilities. © He mustact judiciously and exercise independent judgment. 4. He must have a working knowledge of the statvtory and regulstory requirements that affect the corportion, including its larticles of incorporation and by-laws, the rules and regulations of the SEC and, where applicable, the requirements of relevant regulatory agencies, e. He must observe confidentiality, Itrefers to an executive commitee with the responsibility to assist the Board of Directors inthe performance of its oversight responsibilty for the financial reporting process, system of internal conco, audit process, and monitoring of compliance with applicable laws, rule and regulations. ‘& Finance committee Operation committee & Audit committee 4. Extemal committee ‘What isthe minimum composition of audit commie ofa corpration? © At least three directors who shall preferably have sccounting and finance backgrounds, one of whom shall be an independent director and another with audit experience ‘Atleast five directors who shall preferably have accounting and finance backgrounds, one of whom sball bean independent director and another with audit experience ‘© At east four directors who shall preferably have accounting and finance backgrounds, one of whom shall bean independent 4irector and another with aut experience 4. At least seven directors who shall preferably have accounting and finance backgrounds, one of whom shall be an independent director and another with aut experience Who shall be the chairman of the audit committee ofa corporation? 8 Chtitman of the Board of Directors b. Independent direcior ©. President ofthe Corporation 4. Secretary of the Corporation He refers to a corporate officer who must monitor compliance by the corporation with Revised Code of Corporate Governance and the rules and regulstions of regulatory agencies and, if any violations ae found, report the matter to the Board of Directors and recommend the imposition of appropriate disciplinary action on the responsible partes andthe edoption of measures to prevent a repetition of te violation. Independent director b. Compliance officer ©. Controller Treasurer ‘To whom shall the compliance officer report directly? President ofthe corporation b. Chairman of the board of directors © Independent director 4 Chairman ofthe audit committee What is the period for submission or filing to SEC of audited financial statements of a corporation whose fiscal year ends on a date other than December 317 Within 120 calendar days from the end of fiscal year b. Within 120 working days from the end of fiscal year c. Within 90 calendar days from the end of fiscal year d, Within 90 working days from the end of fiscal year ‘When shall the General Information Sheet ofa corporation be fled 10 SEC? ‘a Within 30 calendar days from the date of actual meeting of stockholders or members . Within 30 working days from the date of actual meeting of stockholders of members © Within 30 calendar days from the end of fiscal year 4. Within 30 working days fom December 31 ‘What rules and regulations issued by Securities and Exchange Commission govern the financial reporting requirements by covered centties? Securities Regulation Code Rule 68 b. Securities Regulation Code Rule 69 ©, Securities Regulation Code Rule 65 4 Securities Regulation Code Rule 66 ‘Whieb ofthe following is a coverea entity by Securities Kegulaion Code Kule O87 Stock Corporations with paid up capital of P50 or more . Stock Corporations with paid up capital of P500 or more ©. Stock Corporations with paid up capital of PS,0@0 or more 4. Stock Corporations with paid up capital of P0,000 or more ‘Which ofthe following Is nota covered by Securities Regulator Code Rule 687 ‘Non-stock corporations with total assets of P500,000 or more, ot gross annual receipts of P100,000 or more 'b. Branch offices of stock foreign corporations with assigned capital in the equivalent amount of P1,000,000 or more ©. Branch offices of nonstock corporations with otal asses in the equivalent amount of P1,000,000 or more a . Regional operating beedquartrs of forelgn corpo-ations with total revenues in the equivalent amount of P1,000,000 or more (Cooperatives with paid up capital of PS0,000 or more —_—_—_—_—_—_—_—_————————————— CPAR — Regulatory Framework for Pacinece Teancactiane (RERT A715) Pave Bof2489, 1 7 93. 94, 9s. 96, 97, 98 Which ofthe following isa large and/or publicly accountable entity under SRC Rule 68? 4 Those with total assets ef more than P3SM or total liabilities of more than P2SM. \. Those with total assets of more than P3.5M or total liabilities of more than P2'5M © Those with fotal assets of more than P350M or total ibis of more than P250M Those with total assets of more than P350,000 or total ibilities of more than P250,000 Which ofthe folowing isa not large and/or publicly accountable entity under SRC Rule 687 Those which are required to file financial statements under Part Il of SRC Rule 68. 1. Those in the process of fling their financial statements for the purpose of issuing any class of instruments In a public market. ‘Those which ar holders of secondary licenses issued by regulatory agencies. ‘Those which are considered ws close corporations with paid up capital ofa eat P50,000. pe ‘What is the applicable financial reporting framework forthe preparation and presentation of financial statements ofa large and/or publicly accountable entity under SRC Rule 687 ‘= Full Philippine Financial Reporting Standards '. Philippine Financial Reporting Standards for Medium Entities. ‘© Philippine Financial Reporting Standards for Small Entities 4. Philippine Financial Reporting Standards for Micro Entities ‘What isthe quantitative threshold to be considered a medium sized entity uader SRC Rule 687 a Those with total assets between PIOOM to P3$0M or total liabilities of between P1O0M to P2SOM. '. Those with total assets of more than P350M or toal liabilities of more than P2S0M Those with otal assets between P3M to PIOOM or toal liabilities of between P3M to PIOOM. 4. Those with total assets below P3M and total liablies of below PIM. Waste applicable financial repoing funewor fo the prepuron end preenaon of nancial statements ofa mediusized ety under SRC Rule 68? "penn " ‘Fall Philippine Financial Reporting Sundards Philippine Financia Reporting Standards for Medium Enies Philippine Financial Reporting Standard for Small nites 4. Iermaional Financial Reporting Sands for Mir Ens ‘What isthe quantitative threshold to be considered a small entity under SRC Rule 687 Those with total assets between PIOOM to P3S0M or total liabilities of between PIOOM to P2S0M. 'b. Those with otal assets of more than P3SOM or total liabilities of more than P250M & Those with total assets between P3M to P1O0M or total liabilities of berween P3M to PLOOM, 4. Those with total assets below P3M and total liabilities of below P3M, ‘What is the applicable financial reporting framework forthe preparation and presentation of financial statements of a small entity under SRC Rule 68? ‘Pull Philippine Financial Reporting Standards . Philippine Financial Reporting Standards for Medium Entities c.Philippine Financial Reporting Standards for Small Entities 4. Intemational Financial Reporting Standards for Micro Entities ‘What is the quantutive threshold to be considered a micro entity under SRC Rule 68? 1. Those with total assets between PIO0M to P3S0M or total liabilities of between PIOOM to P2S0M. 'b, Those with total asses of more than P3S0M or toal liabilities of more than P2SOM © Those with total assets between P3M to P1O0M or total liabilities of between P3M to P1O0M, 4. Those with total assets below P3M and total liabililies of below P3M. ‘What isthe applicable financial reporting framework for the preparation and presentation of financial statements of a micro entity under SRC Rule 687 ‘a Full Philippine Financial Reporting Standards 'b, Philippine Finencial Reporting Standards for Medium Entities Philippine Financial Reporting Standards for Small Enuties Intemational Financial Reporting Standards for Micro Entities ‘Tax Basis or Cash Basis or Any acceptable financial reporting framework Any ofthe above means ‘What isthe sate's policy under Foreign lavestmeat Act of 1991 aka. RA. No. 70427 ‘a To attract, promote and welcome productive investments from foreign individuals, partnerships, corporations, and ‘governments, including ther political subdivisions, in activities which significantly contribute to national industrialization and socio-economic development to the extent that foreign investment i allowed in such activity by the Constitution and relevant laws To discriminate against foreigners in so far s investment inthe Philippines is concerned. ©. To reserve all industries to Filipinos. 4. To discourage globalization, Under the 1987 Constitution, which ofthe following industry must be fully owned and controlled by Filipinos? ‘2 Educational institution Mass media Advertising Public utility Exploration, development and uilzation of natural resources ‘Under the 1987 Constitution, what is the maximum foreign investment in an advertising company? 2 100% b. 30% ce 40% 4 60% (CRAR.- Regulatory Framework for Business Transactions (RFBT 8715) Page 9 of 2499. Under the 1987 Constitution, what is the minimum Filipino ownership in an educational institution? ‘2 70% b. 30% 40% a 60% 100. Under the 1987 Constitution, what isthe maximum foreign investment in a public utility? a 100% b. 30% © 40% 4 60% 101. Under the 1987 Constitution, what isthe minimum Fili ‘natural resources? ino ownership in an entity engaged in exploration development and utilization of a 70% b. 30% «40% a 60% 102. Under the 1987 Constitution, what is the minimum Filipino ownership in a corporation before such corporation may own private land in the Philippines? a 70% b. 30% 40% 4 60% 103. Twenty professional doctors are intending to establish an entity for the rendition of medical services. What is the maximum foreign investment in such entity? a 0% b. 60% ce 40% 30% 104. Ten scientists are intending to establish a corporation for the manufacturing and disposition of medical equipments. What the maximum foreign investment in such entity? a 100% b. 305% 40% 4 0% 105. Under Special Laws, in which ofthe following companies may foreigner make investment inthe Philippines? a Cooperatives 'b. Retail trade enterprises with paid up capital les than USA $2,500,000 © Recording company d. Small-seale mining 106. It means an equity investment made by noa-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank which shall assess and appraise the value of such assets other than foreign exchange, ‘a. Foreign investment b. Nonresident investment ©. Filipino investment 4. OffShore investment 107, Which of the following is considered Non-Philippine national under Foreign Investment Act? a Citizen of the Philippines b. Domestic Partnership or Association wholly owned by citizens ofthe Philippines ©. A Corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines 4. A Corporation organized abroad and registered as doing business in the Philippines under the Corporation Code of which ‘one hundred percent (100%) ofthe capital stock outstanding and entitled to vote is wholly owned by Foreigners 108. What isthe requirement before « non-Philippine national be allowed to engage in business inthe Philippines? ‘a. Such person must first apply naturalization process to become a Filipino national, . Such person must first register and obtain a license from appropriate agency such as SEC or DT ©. Such person must invest first in the Philippines. 4. Such person must setup first a corporation inthe Philippines. 109. Which ofthe following acts is considered doing business? ‘a Any other act or acts thal imply a continuity of commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of commercial gain or ofthe purpose and object of the business organization, b. Mere investment asa shareholder by a foreign entity in domestic corporations duly registered to do business Having a nominee director or officer to represent Ils interests in such corporation Appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account = CRAR— Regulatory Framework for Business Transactions (RFBT 8715) Page 10 of 24110, Which ofthe folowing acts isnot considered doing business? ‘Participating in dhe marugement, supervision or control of any domestl business, frm, et Philippines b. Mere exercise of rights as an Investor or stockholder ina Fllipino corporation © Soliciting orders, service contracts, opening offices, whether called “liaison” offices or branches; appointing representatives or distributors damictled in the Philippines or who In any colendar year stay in the county fora period or periods of one hundred eighty {180} days or more 4 Any other actor sets that Imply a continuity of commerciel dealings or arrangements and contemplate 1 that extent the performance of acts oF works, ofthe exercise of some ofthe functions normally Incident to and in progressive prosecution ‘of commercial gan or ofthe purpose and object of the business organization iy oF corporation in the 11. This tes of nationality of corporation means that corporation {sa national of the country under whose laws it has been organized and registered, ‘2 Place of incorporation test, b. Control west © Dominancy test Grandfather rule vest 112. This test of nationality of corporation means that the nationality ofa corporation is determined by the nationality of the majority of the stockholders on whom equity contol is vested and it is normally used as wartime test or to determine the compliance with minimum ‘requirement of Filipino ownership in industry reserved for Filipinos, 1 Place of incorporation test b. Control test © Dominancy test 4. Grandfather rue test 113. This test of nationality of corporation is a a three-level relationship test by which the percentage of Filipino equity is computed in a corporation engaged in fully or partly nationalized areas of activities provided in the Constitution and other nationalization laws, in ‘cases where corporate sharcholders aze preseot in the situation, by atributing the nationality ofthe second or even subsequent tier of ‘ownership to detemnine the nationality of the corporate shareholder. ‘Place of incorporation test b. Control test © Dominancy test 6 Grandfather rule test 114, What isthe effect if there is non-compliance or violation of minimum Filipino ownership in an existing corporation? 1 The corporation is ipso facto dissolved by operation of law. b. The corporate remains to be de jure corporation ©. The noncompliance is merely a non-automatic ground for dissolution making a corporation ade facto comporation subject 10 direc attack by the State through the Office of Solicitor General via Quo Warranto Proceedings. 4. The corporation becomes an ostensible corporation 115. Ayala Corporation is 60% owned by Filipinos and 40% owned by Japanese. Globe Corporation is owned 55% by Ayals Corporation, 10% by other Filipino Citizens and the remaining interest by Americans. Does Globe Corporation, a public utility, comply with the minimum Filipino ownership? . Iecannot be determined. b, Yes under grandfather rule test © Nounder grandfather rue tes. No under incorporation test. 116. MPIC Comporation is 50% owned by Filipinos and 50% owned by Indonesians. Smart Corporation is owned 60% by MPIC Corporation, 25% by other Filipino Citizens and the remaining interest by Koreans. Does Smart Corporation, a public utility, comply with the ‘mialmum Filipino ownership? ‘a Iteannot be determined. Yes under grandfather rule test © Nounder grandfather rule test 4. No under incorporation test. 117. MPIC Comporation is 55% owned by Filipinos and 45% owned by Indonesians. Meralco is owned 60% by MPIC Corporation, 30% by other Filipino Citizens and the remaining interest by Koreans. Does Meralco, a public utility, comply with the minimum Filipino cownership’ ‘a Teanot be determined. b. Yesunder grandfather rule test. ©. Nouunder grandfather rae test. 4. No.under incorporation tes 118. efers to an intellectual property which gives an exclusive right to the inventor over his new, inventive and useful product, process or an improvement ofa product or process. 2 Copyright b Trademark © Prnehise 4 Paes 119, How is potent es an intellectual property or right created or protected by law? ‘By invention by the inventor b. By registration with Intellectual Property Office © By notrization ofthe invention 4. By experimenting over the invention arene ra ORAR— Regulatory Framework for Business Transactions (RFBT 8715) Page 11 of 24120, What isthe legal term ofa patent that gives its over the exclusive right touse the covered invention? a. 20 years bl years 1S years 4. 25 years 121. It refers to a protection option. which is designed to protect innovations that are not sufficiently inventive to meet the inventive threshold required for standard patents application. [t may be any useful machine, implement, tools, product, composition, process, ‘improvement or part of the same, that is of practical utility, novelty and industtal applicability. Utility model b. Patent ©. Industrial design 4. Trademack 122, What isthe legal tem ofthe registered owner of utility model? a 20 years b. 7 years lyears So years 123. It refers to any composition of lines or colors or any three-dimensional form, whether or not associated with lines or colors; provided that such composition or form gives a special appearance to and can serve as pattern for an industrial product or handicraft Simply pu, it |s that aspect of a useful article which is omamental or aesthetic. 2 Utility model b. Patent c_Industral design 4. Trademark 124, What isthe legal term of the registration ofan industrial design? ‘The registration of the Industrial Design shall be valid for (5) years from the fling date of the application. It may be renewed for not more than two (2) consecutive periods of five (5) years each, by paying the renewal fee. The registration of the Industrial Design shall be valid for (10) years from the filing date ofthe application. It may be renewed for not more han two (2) consecutive periods of (10) years each, by paying the renewal fee The registration of the Industrial Design shall be valid for (8) years from the filing date of the application. It may be renewed for not more then two (2) consecutive periods of (8) years each, by paying the renewal fee. 4. The registration of the Industrial Design shall be valid for 20 (20) years from the ing date ofthe application It may be renewed for not more tban two (2) consecutive periods of (20) years each, by paying the renewal fee 125. Which ofthe following isnot a requisite ofa patentable invention? 1 Itmust involve a technical solution ta problem in any field of human activity. b._Itmast be new or novel © Itmust involve inventive step, 4 Itmastbe industrially applicable. fe Itmust be made by a scientist, 126, When isan invention considered new or novel? ‘a When it forms part of prior at. When it does not form part of prior an. © Bither A or B. 4. Neither A nor B 127, What consist prior art? a. Everything which has been made aveilable to the public anywhere inthe worl, before the fling date or the priority date of the application claiming the invention. 'b, The whole contents of an application for patent, ullity model, or industrial design regisvation, published in accordance with Intellectual Property Code, filed or effective in the Philippines, with a filing or priorty date that is earlier than the Bing or priority dae ofthe application, ©. Both Aand B, 4. Neither A nor B, 128. When does an invention involve inventive step? When its part of prior at When itis not obvious to person skilled in the art at the sime of the filing date or priority date of the application claiming the invention Either AorB. Neither A nor B. 129, Which ofthe following may become the subject matter of patent spplication? ‘a. Discoveries, scientific theories and mathematical methods 'b. Schemes, niles and methods of performing mental acts, playing games or doing business, and programs for computers .& Methods for treatment ofthe human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body 4. Microorganisms, non-blological process and migrobiological process ©. Plant varieties and animal breeds 130. Which of the following is non-patentable? a Aesthetic creations b. Salt mp technology © Cardriven by water-engine <4. Microorganisms —_—_—_—_—_——————— CPAR— Regulatory Framework for Business Transactions (RFBT 8715) Page 12 of 2411. Which ofthe following is non-patentable? Scientific discovery b. Solar-panel © Soft-ouch technology Laser that can remove sears 132. Iftwo or more persons have made an invention separately and independently ofeach other, who shall own the right to the patent? ‘Theirs person who invented the technology. 'b, The person who filed an application for registration for such invention. ‘c. The first person who mass produced the technology. <4. The frst person who presented the technology toa convention 133. two oF more persons have made an invention separately and independently of each other, who shall own the right tothe patent where (Wo ‘of more applications fr registration ae ied for the same invention? ‘The applicant who has the earliest fling date or, the earliest priority date. 'b. The applicant who has the latest fing date or, the latest priority date. ce The first person who invented the technology. 4. The first person who presented the tectnology to a convention. 134, On January 1, 2001, Mang Tora invented the technology of Bamboo Lamp and was using it leady forthe years, On January 1, 2004, Mang Pedro invented the same technology of Bamboo Lamp. Mang Pedro made an appliston for registration with Intellectual Property Office. Who has beter it over the patent of he technology? Mang Pedro Mang Tomas Both Pedro and Tomes equally None of them 135.0n January 1, 2001, Steve Jobs invented the technology of Sof Touch which he restered inthe Intellectual Propery Office of USA on ‘envary 1,200), On Apr 2001, Juan Gaya als invented the sue technology of Soft Touch which he registered inde Ltllectal Property Office ofthe Philipines on Api 1,200. A cated copy of Steve Jobs epplication in USA was filed on June 1, 2001 to Intellectual Property Office ofthe Philppines. Who has beter right over the pent of the Soft Touch in so fr asthe Philipine 5risdieton is coneemed? a Steve Job b. Juan Gaya © Both Steve and Juan equally None ofthem 136. Cherry Mobile Co. commissioned Engineer Reyes to develop a new phone. Engineer Reyes was able to develop the commissioned phone, ‘Who owas the patent over the new phone? ‘a Always Cherry Mobile Co. b. Always Engineer Reyes ‘e. Generally Cherry Mobile Co. unless otherwise provided in the contract 4. Generally Engineer Reyes unless otherwise proved inthe contract 137, Samsung Co. employs Engineer Cruz to develop a new phone. Engineer Cruz was able to develop the phone in the course of performance ‘of is regular duties, Who owns the patent over the new phone? ‘a Always Samsung Co. Always Engineer Cruz ‘© Generally Samsung Co. unless otherwise provided inthe contract 4d. Generally Engineer Cruz unless otherwise provided inthe contract 138, Sony Co. employs Engineer Santos to develop a new phone. Engineer Santos was able to develop the phone during his breaktime using the esources of Sony Co. Who owns the patent over the new phone? ‘a Always Sony Co. b. Always Engineer Santos e Generally Sony Co. unless otherwise provided in the contract 4 Generally Engineer Santos unless oierwise provided in the contract 139, Itmeans the unauthorized, replication or use of patented invention or process. a. Patent laundering . Patent infringement ‘c._Patent misappropriation d._Patent destruction 140, This est of patent infFingement means that a resort must be had, in he frst instance, tothe words of the claim. ‘Literal infringement test . Doctrine of equivalents infringement est & Dominancy test 4. Holistic test 141 This test of patent infringement means that infringement also lakes place 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 resul ‘a Literal infringement tes '. Doctrine ofequivalens infringement test ©. Dominaney test 4. Holistic test, =o ii oo ™&y Oy CRAR.— Regulatory Framework for Business Transactions (RFBT 8715) Page 13 of 24142. Which ofthe following is nota vulid defense by the defendant in an aston for patent infringement? 1, The covered invention or technical solution is non-patenable. b.” The covered invention or technical solution is par of prior art. © The respondent isthe tre owner of the patent and has right of priority in registration. 4 The respondent has right of prior use. ©The respondent acted in good falth 143. This defense may be set up by a respondent in an action for patent inftingement when the respondent is any prior user, who, in good falth ‘was using the invention or has undertaken serious preparations to use the invention In his enterprise or business, before the filng date ‘or priority date ofthe application on which a patent is granted. ‘a Dootrine of fair use . Doctrine of prior use & Doctrine of good faith 4. Doctrine of bad falth 1441s an intellectual property that refers to any visible sign eapable of distinguishing the goods of an enterprise and shall include stamped ‘or marked container of goods Distinguishing mark b. Trademark © Patent & Copyright "45. 1s an tells] propery tha refers toany visible sign capable of distinguishing services of n enterprise an shal includ a stamped or ‘marked container of services. Distinguishing mark b. Service mark © Pateat 4 Copyright 146. Is an imtelleetut property that refers to any visible sign designated as such inthe application for registration and capable of distinguishing the origin or any other common characteristic, including the quality of goods or services of different enterprises which use the sign Under the control ofthe registered owner ofthe colletive mark, Distinguishing mark b. Collective mark ©. Patent & Copyright 147. Is an intellectual propery that refers tothe name or designation identifying or distinguishing an enterprise. a Distinguishing name b. Tradename © Patent Copyright 148, How isthe right over a trademark, service mark or collective mark created or protected by aw? 2 By itsusage of owner b, By its registration with Intellectual Property Office © By its publication in a newspaper of general circulation 4. By notarization ofthe mark 149, How isthe right over a tradename created or protected by law? a By its usage of owner '. By its registration with Inelletual Property Office ©. By its publication in a newspaper of general circulation 4 By its registration with DT or SEC 150, What isthe term and life ofa trademark? It hasa term of 10 years which is subject unlimited times of renewel, thus, thas indefinite ie. b. Ithas aterm of 5 years which is subject to unlimited times of renewal, thus, it bas definite life ‘c_Ithas aterm of 20 years which is subject to unlimited times of renewal, thu, it has indefinite life, d._Ithas aterm of 15 years which i subject to unlimited times of renewal, thus, it has definite life. 151, Which of following marks may be registered before Intellectual Property Office for protection? ‘2 Marks consisting exclusively of signs that are generic forthe goods or services that they seek to identify 'b. Marks consisting of color along Marks consisting of shapes only 4. Marks consisting of combination of color, shepes and drawing 152, Which ofthe following marks may be registered before Intellectual Property Office for protection? 2 Marks consisting exclusively of signs or of indications tht have become customary or usual to designate the goods or services in everyday languge or in bona fide and established trade practice ‘Marks identical or confusingly similar toa well-enown mark Marks consisting of s name, portat or signanue identifying a paiculr living individual with consent of such individual 4. Marks consisting of portrait of a deceased President of the Philippines, during the life of his widow, if any without by ‘wetten consent ofthe widow 153. Which ofthe following marks may be egistered before Intellecwal Property Office for protection? 1. Marks consisting of immoral, deceptive or scandalous mater, or matter which may disparage or falsely suggest a connection with persons living or dead, institutions, belief, or national symbols, or bring them into contempt or disrepute b. Marks which are unlikely o mislead the public, particulary as tothe nature, quality, charscterstics or geographical origin ‘of the goods or service ©. Marks consisting ofthe flag or cout of srms or other insignia ofthe Philippines or any of is political subdivisions, or of any foreign nation, or any simulation thereof 4. Marks identical toa registered mark belonging toa different proprietor or a mark with an earlier fling or priority date ee CRAR— Regulatory Framework for Business Transactions (RFBT 8715) Page 14 of 24154, This est of tndemark infingement focuses on the similarity of the main, prevalent or sential features of te competing trademarks that ‘might cause confusion. Literal infingement test b. Doctrine of equivalents test © Dominaney test 4 Holistic test, 15. This test of trademark infringement focuses not only on the predominant words bu also on the other features appearing om the labels ‘Literal infringement test b. Doctrine of equivalents test © Dominancy test 4. Holistic test 156.1 refers wo the unautoried sage by any person of @ mark without the consect of the registrant of mark. It also perns to ‘any reproduction, counterfeiting, copying or coloreble imitation of any registered mark or tradename in connection with the se, fering for sal, or advertising of any goods, business or services on or in connection with which such use is key to cause confusion ‘or mistake orto deceive purchasers or others aso the source or eign of such goods or serves or identity of such business. ‘Trademmek infringement 1. Unis competion Trademark misappropriation Unfair ther 157. It refers to the passing off (or palming off or attempting to pass off upon the public ofthe goods or business of one person asthe goods oF business of another with the end and probable effect of deceiving the public ‘Trademark infringement Unfair competition ‘Trademark misappropretion Uniair thet peer 158. Which ofthe following is nota valid defense by the defendant in an action for trademark infringement? The marks nonregistable. 'b. The respondent isthe tru owner of the mark ‘The respondent has right of priority in registration. 4. The espondeat ated in good faith 159, Iris an imellectul property that refers tothe legel protection extended to the owner ofthe rights in an original work. a Trademark b. Copyright & Tradename 4d. Patent 160, It refers to every production in the literary, scientific and anistc domain such as books and other writings, musical works, films, paintings and other works, and computer programs, 2 Original work bb. Imitted work ©. Countereited work 4. Copied work 161, How isa copyright over original work created or protected by law? ‘a Itis created and protected from the moment of creation. . Iisereated and protected from the moment of registration with Intellectual Property Office. . [tis created and protected from the moment of notrization 4. Itiscreated and protected from the moment of publics 162, As a general rule, what isthe tem of copyright? ‘a. The term of protection of copyright for original and derivative works isthe life of the autho plus ($0) years afer his death. 'b. The term of protection of copyright for original and derivative works is th life of the author plus (20) years afer his death ‘¢ The term of protection of copyright for original and derivative works sth fe ofthe author plus (10) years after his death 4. Theterm of protection of copyright for original and derivative work is th life of the author plus (30) years after his death. 163. It refers toa type of right provided by a copyright which enables the creator to obtain remuneration from the exploitation of his works by ‘hied partes a Economic rights Moral rights Material rights 4. Intellectual rights 164.1 refers toa type of right provided by a copyright which makes it possible forthe creator to undertake measures to maintain and protect the personal connection between himself and the work. ‘a Economic rights b Moral rights Material rights Intellectual rights 16. Which ofthe following is ot an example of orl ight granted by copyright tothe crator or eign work? © Right of attribution 1b Riphtof aeration 6. Right of integrity by objecting to ay predic ditonton 4. Right to resin the se of his name ¢. Right to rental income: CPAR— Regulatory Framework fr Business Transactions (RFBT 8715) Page 15 of 24166, Rose commissioned Jack to paint her nude body. Who owns the painting of aude body of Rose? a. Jock b. Rose . Both Jack and Rose Neither Jack nor Rose 167. Rose commissioned Jack to paint her nude body. Who owns the copyright over the painting of nude body of Rose? a Jack b. Rose & Both Juckand Rose Neither Jack nor Rose 168, Jane Santos isan employed scriptwriter of ABS CBN Co. As part of her regularly assigned dut ‘movie One More Chance. Who owns the copyright over the script? Generally Jane Santos in the absence of express or implied agreement to the contrary '. Generally ABS CBN in the absence of express or implied agreement to the contrary & Always Jane Santos Always ABS CBN. she was able to write the script ofthe 169. Cris Reyes is an employed reporter of GMAT. During his breaktime, Cris was able to write a novel tiled True Love using the laptop and printer of GMA7. Who owns the copyright over the novel? ‘4 Generally Cris Reyes in the absence of express or implied agreement to the contrary 'b. Generally GMAT in the absence of express or implied agreement to the contrary Always Cris Reyes 170. Which of he following works i not copyrightable? ‘any official text ofa legislative, administrative or legal nature, as well as any official translation thereof computer programs drawings or plastic works of scientific or technical character 4. lectures, sermons, addresses, disserations prepared for oral delivery, whether or not reduced in writing or other material form 171, Which ofthe following works is eopyrightable? {news of the day and other miscellaneous facts having the character of mere items of press information b. any idea, procedure, system, method or operation © concept, principle, discovery or mere data as such 4. _ musical compositions, with or without words 172, Which of the following works is copyrightable? Speech of a senator b. Jurisprudence involving decision of Supreme Court ©. Philippine Financial Reporting Standards and Philippine Standards on Auditing & Republic Act No. 10963 ake, TRAIN Law 173.1 consists of unauthorized use of original work without proper consent and atibution to the owner of te original work. a Plagiarism b. Infringement of copyright (& Misappropriation of copyright 4. Protection of copyright 174. 1trefers to the defense in a suit in copyright infringement which pertains toa privilege to use the copyrighted material in a reasonable ‘manner without the consent ofthe copyright owner or as copying the theme or ideas rather than their expression. It isan exception to the copyright owner's monopoly ofthe use ofthe work to avoid stifling the very creativity which that law s designed to foster. a Doctrine of Fair use Doctrine of Unfair use ©. Doctrine of Inappropriate use Doctrine of Authorized use 175, [trefers to a government agency which is considered an independent body entrusted to administer and implement the provisions of Data Privacy Act, aad to monitor and ensure compliance ofthe county with interational standards set for dat protection, National Telecommunication Commission b. National Privacy Commission ‘¢ National Economie Commission 4. National Power Corporation 176, refers to any freely given, specific, informed indication of wil, whereby the data subject agres to the collection and processing of personal information about andor relating to him or her. ‘a Concent ofthe data subject, 'b. _Acceptance of the dala subject © Offer ofthe dats subject . 4. Objection of the data subject 177. How shall consent ofthe data subject be evidenced? By written means only '. By electronic means only ©. By recorded means only Any ofthe above eo CRAR- Regulatory Framework for Business Transactions (RFBT 8715) Page 16 of 24178 179, 180. 181, 182, 183. 184, 185, 181. 188. How shall consent ofthe data subject be given? Only personaly by th data subject only b. Only through an agent specifically authorized by the data subject to do so, © Either Aor B Neither A nor B He refers to an individual whose personal information is processed. Dam subject bb. Subject mater Subject matter information Humanity refers to communication by whatever means of any advertising or marketing material which is directed to particular individuals. ‘a Solicitation b. Direct marketing Incidental advertisement 4 Business proposing Icrefers to any act of information relating to natural or juridical persons to the extent that, although the information is not processed by ‘equipment operating automatically in response to instructions given for that purpose, the set is structured, either by reference 10 individuals or by reference to criteria relating to individuals, in such a way that specific information relating toa particular person is readily accessible. Structuring system ', Organizing system © Controlling system Filing system It refers to a system for generating, sending, receiving, storing or otherwise processing electronic data messages or electronic documents and includes the computer system or other similar device by or which data is recorded, transmitted or stored and any ‘rocedute related to the recording, transmission or storage of electronic data, electronic message, or electronic document. ‘Information and communication system Database system Transportation system 4. Connectivity system It refers to any information whether recorded in » material form or no, from which the identity of an individual is apparent or can be reasonably and directly ascertained by the entity holding the information, or when put together with other information would directly and certainly identify an individual ‘Confidential information b. Sensitive information Personal information 4. Privileged information He or it refers toa person or organization who controls te collection, holding, processing or use of personal information, including a person of organization who instructs another person or organization to collect, hold, process, use, transfer or disclose personal information on his or her behalf ‘a Personal information processor 'b. Personal information controller Personal information holder 4. Personal information collector ‘Which of the following are considered personal information controller’? ‘A person of organization who performs such functions as instructed by another person or organization b. An individual who collects, holds, processes or uses personal informetion in connection with the individual's personal, family or household afairs| ©. Both A and B 4. Neither A nor B He or it refers to any natural or juridical person qualified to act as such under Data Privacy Act to whom a personal information controller may outsource the processing of personal data pertaining to a data subject. ‘Personal information processor , Personal information collector ¢. Personal information holder 4. Personal information custodian It refers to any operation or any set of operations performed upon personal information including, but not limited to, the collection, recording, organization, storage, updating or modification, retrieval, consultation, use, consolidation, blocking, erasure or destruction of data a. Processing b. Collecing ©. Auditing 4. Examining Itrefers to any and all forms of data which under the Rules of Court and other pertinent laws constitute privileged communicetion. ‘& Confidential information . Seasitive information . Personal information 4. Privileged information —_——— (CPAR— Regulatory Framework for Business Transactions (REBT 8715) Page 17 of 24189, 190 191. 192, 193, 194 195, 196. 197. 198, ‘Which ofthe following is considered a sensitive personal information? ‘L._Information about tn individual's rce, ethnic orgin, marital status, age, color, and religous, philosophical or political afflations ‘Information about an individual's business, company, business venture and profitable tansactions ‘Information about an individual's facebook publle profile picture and display photo Information about an individual's instagram public account and public twit account Which ofthe following isnot considered a sensitive personal information? ‘Information about en individuals health, education, genetic or sexual life ofa person, orto any proceeding for any offense ‘committed or alleged to have been committed by such person the disposal of such proceedings, or the sentence of any court {in such proceedings '. Information issued by government agencies peculiar to an individual which includes, but not limited to, social security ‘numbers, previous or curent health records, licenses or its denlals, suspension or revocation, and tax returns © Information specifically established by an executive order or an act of Congress to be kept classified 4. Information about the pletform ofa candidate for national elective position that is discussed in a public debate televised in national television network ‘Which ofthe following isnot covered by Data Privacy Act? Processing of al types of personal information by natural persons Processing of al types of personal information by juridical persons Processing of all ypes of personal information by persona information controllers Processing of all types of personal information by personal information processors . Requiring the publishers, editors or duly accredited reporters of any newspaper, magazine or periodical of general Circulation to reveal the source of any news report or information appearing in suid publication which was related in any confidence to such publisher, editor, oF reporter pepee Which ofthe following information is covered by the protection of Daa Privacy Act? ‘© Information about any individual who is or was ax officer or employee of 2 govemment institution that relates to the position or functions ofthe individual . Information about an individual who is or was performing service under contract for a government institution that relates to the services performed, including the terms of the contract, and the name of the Individual given in the course of the Performance of those services ‘Information about students enrolled inthe Collegeof Law or Graduate School 4, Information relating to any discretionary benefit of «financial nature such as the granting of license or permit given by the {government to an individual, including the name ofthe individual andthe exact nature af the benefit ‘Which ofthe following information is covered by the protection of Data Privacy Act? ‘Personal information processed fr journalistic, ants, literary or research purposes 'b. Information necessary in order to carry out the functions of public authority which includes the processing of personal data forthe performance by the independent, central monetary authority and law enforcentent and regulatory agencies of their constitutionally and statutorily mandated functions Information necessary for banks and other financial institutions under the jurisdiction ofthe independent, central monetary authority or Baagko Sentral ng Pilipinas to comply with Republic Act No. 9510, and Republic Act No. 9160, as amended, otherwise known as the Anti-Money Laundering Act and other applicable laws 4. Information about employees ofa nonstock nonprofit charitable institutions information originally collected from residents of foreign jurisdictions in accordance with the laws of those foreign ons, including any applicable data privacy laws, which is being processed in the Philippines What is the obligation of National Privacy Commission regarding any personal information tbat comes to its knowledge and possession? ‘Ic shall a ll ies ensure the confidentiality of suc personal information, Ie shall disclose such personal information without the consent of deta subject. . _It-shall sell such persona! information for commercial purposes. 4. [c shall use such personal information for public persecution. Who is National Privacy Commission’s head that shall also act as the National Privacy Commission Chairman? a Privacy Chairperson b. Privacy Commissioner ©. Privacy Director 4. Privacy Administrator ‘Who shall assist the Privacy Commissioner of National Privacy Commission? ‘4 Two Deputy Privacy Commissioner, one to be responsible for Data Processing Systems and to be responsible for Policies and Planning ', Two Assistant Privacy Commissioner, one to be responsible for Data Processing Systems and to be responsible for Policies and Planning & Two Vice Privacy Commissioner, one to be responsible for Data Processing Systems and to be responsible for Pol Planning 4. Two Under Privacy Commissioner, one tobe responsible for Date Processing Systems and to be responsible for Policies and Planning ies and ‘Who has the authority to appoint the Privacy Commissiongr and the rwo Deputy Privacy Commissioners? ‘Department of information and Communication Technology (DICT) Secretary b. Department of Justice Seeretary ©. President ofthe Republic ofthe Philippines 4. Commission of Human Rights (CHR) Chairman ‘What isthe term of office of Privacy Commissioner and the two Deputy Privacy Commissioner? ‘© Termof three (3) years and may be reappointed fr anoter term of ee (3) years 'b. Term of sx (6) years but ineligible for reappointment & Term ofseven (7) yeas but ineligble for appointment 4 Term of fou (4) years and may be reappointed for another rm of fur (4) years ol — — CRAR— Regulatory Framework for Business Transactions (RFBT 8715) Page 18 of 24199. 200. 201. 202. 203. 204. 208. 206, 208. ‘of the following is not a qualification of Privacy Commissioner? 4 Hemust be at least 38 years of age . He must be of good moral character, unquestionable integrity and known probity. © He mus bea recognized exper in the field of information technology and data privacy. 4. Hemustbe a older of Doctor of Philosophy (PAD) inthe field of information technology and data privacy. ‘Which of te following is the qualification of wo Deputy Privacy Commisioners? {He mus beat leas 35 years of age. . He must bee holder of Master! Degree in the feof information technology and dau privacy. ©. He must be recognized expert in the fed of Information and communication technology and data privacy. 4. He must be a holder of Doctor of Philosophy (PhD) inthe eld of information technology and data privacy. When wil the Privacy Commissioner and two Deputy Privacy Conmissioners become civilly liable for their acts? ‘2 When they acted in good faith inthe performance oftheir duties. b. When they wilfully and negligently acted in such a manner that is contrary to law, morals, public policy and good customs even if they acted under orders or instructions of superiors. Either A orB 4. Neither A nor B ‘Which ofthe following is nota general data privacy principle? a Transparency b. Legitimate purpose &Proportionality 4. Immorality ‘Which ofthe following is nota general data privacy principle? 4 Personal information must be collected fr specified and legitimate purposes determined and declared before, o a 00 85 reasonably practicable afer collection, and laer processed in a way compatible wth such declre, specified and legitimate purposes only 'b. Personal information must be processed fuity and lawfully Personal information must be accurate, relevant and, where necessary for purposes for which itis to be used the processing of personal information, kept up to date inaccurate or incomplete daa must be rectified, supplemented, destoyed or their further processing restricted 44. Personal information must be disclosed for commercial rurpses even without he consent of data subject Which ofthe following is not a general data privacy principle? ‘Personal information must be adequate and not excessive in relation to the purposes for which they are collected and processed b. Personal information must be retained only for as long as necessary forthe fulfillment of the purposes for which the data ‘was obtained or forthe establishment, exercise or defense of legl claims, o fr legitimate business purposes, or as provided bylaw Personal information must be kept ina form which permits identification of data subjects for no longer than is necessary for the purposes for which the data were collected and processed 4. Personal information must be processed surreptitiously to achieve the objective of the company Which of the following isnot a criterion for lawful processing of personal information? ‘The data subject has given his o her consent b. The processing of personal information is necessary and is related tothe fulfillment of e contract with the data subject or ia order to take steps atthe request of the data subject priorto entering into a contract The processing is necessary for compliance with a legal obligation to which the personal information controller is subject 4d. The processing is necessary in order to take undue advantage on the personal information ofthe dasa subject ‘Which of the following is nota criterion for lawful processing of personal information? ‘a. The processing is necessary to protect vitally important interests ofthe data subject, including life and health b, The processing is necessary inorder to respond to national emergency, o comply with the requlrements of public order and safer, of to full functions of public authority which necessarily includes the processing of personal daa for the fulfillment ofits mandate The processing is necessary forthe purposes of the legitimate interests pursued by the personal information controller or by ‘third party or parties to whom the data is disclosed, except where such interests ae overridden by fundamental rights and freedoms of the data subject which require protection under the Philippine Constitution 4. The processing pertains o sensitive personal informatio ofthe data subject without the consent ofthe data subject ‘What isthe principle about the processing of sensitive personal information and privileged information or communication? ‘a Asa general rule, the processing of sensitive personal information and privileged information shall be prohibited except 0 those allowed by Data Privacy Act b. Asa general rule, the processing of sensitive personal information and privileged information shall be allowed except to those prohibited by Data Privacy Act . The processing of sensitive personal information and privileged information shall be absolutely prohibited. 4. The processing of sensitive personal information and privileged information shall be absolutly allowed. Which isnot lawful processing of sensitive personal information and privileged information or communication? ‘The daa subject has given his o her consent, specific othe purpose prior to the procesing, oF in the case of privileged information, ll partes tothe exchange have given thee consent pro to procesing b. The procesing of the same is provided for by existing laws and regulations Provided, That such regulatory enactments {guarantee th protection of the senaive personal infomation and the privileged infomation: Provide, further, That the consent ofthe dala subjects are not required by law or regulon permiting the processing ofthe sensitive personal infomation o the privileged infomation. The processing is necessary to protect the ie and heal ofthe data subject or another perton, and the daa subject snot legally o¢phylcally able to expres his oher consent prior othe processing 4. The pressing i necesary for making economic decision onthe part of at controll ————_— CRAR.- Regulatory Framework for Business Transactions (RFBT 8715) Page 19 of 24