1.I.

In an action for infringement, the defendant, in addition to other defenses available to

him, may show the invalidity of the patent, or any claim thereof.
II. In an action for infringement, if the court shall find the patent or any claim to be invalid,
it shall cancel the same.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

2. It is any visible sign capable of distinguishing the goods or services of an enterprise

and shall include a stamped or marked container of goods.

A. Mark
A. Collective mark
B. Trade Name
C. Copymark

3. It is any visible sign, designated as such in the application for registration and capable
of distinguishing the origin.

A. Mark
A. Collective mark
B. Tradename
C. Copymark

4.It is the name or designation identifying or distinguishing an enterprise.

A. Mark
A. Collective mark
B. Tradename
C. Copymark

5. I. A certificate of registration of a mark shall be conclusive evidence of the validity of

the registration, the registrant’s ownership of the mark, and of the registrant's exclusive
right to use the same.
II. A certificate of registration shall remain in force for 15 years.

A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

6. I. In infringement of trademark, fraudulent intent is unnecessary

II. in unfair competition, fraudulent intent is not essential

A. Only I is true
A. Only II is true
B. Both are true
C. Both are false
7. I. In infringement of trademark, fraudulent intent is unnecessary
II. One function of trademark is to advertise the goods

A. Only I is true
A. Only II is true
B. Both are true
C. Both are false
8. I. In infringement of trademark, the prior registration of the trademark is a prerequisite
to the action.
II. In unfair competition, registration is not necessary.

A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

9.it refers to a mark well-known by the competent authority of the country where
protection for the mark is sought.
A. Trademark
A. Service mark
B. Well-known mark
C. Patent mark

10.It is any visible sign, designated as such in the application for registration and
capable of distinguishing the origin or any other common characteristics.

A. Collective mark
A. Collective sign
B. Collective symbol
C. Collective logo

11. It is a name or designation identifying or distinguishing an enterprise.

A. Trade name
A. Trade mark
B. Business permit
C. goodwill

12. These are commonly used as the name or description of a kind of goods, such as
“Lite” for beer or “Chocolate Fudge” for chocolate soda drink.

A. Generic marks
A. Descriptive marks
B. Suggestive marks
C. None of the above
13. I. a mark is valid if it is distinctive and hence not barred from registration under the
Trademark Law.
II. Once registered, not only the marks validity but also the registrant’s ownership thereof
is prima facie presumed.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

14. A mark cannot registered if it:

A. Is likely to mislead the public, particularly as to the nature, quality, characteristic or
geographical origin of the goods or service.
A. Consists exclusively of signs or of indications that have become customary to designate
the goods or services in everyday language or in bona fide and established trade practice.
B. Consists exclusively of signs that are generic for the goods or services that they seek to
identify.
C. All of the above.

15. Are those which constitute “the common descriptive name of an article or substance”
or comprise the “genus of which the particular product is a species” or are “commonly
used as the name or description of a kind of goods,” or “imply reference to every
member of a genus and the exclusion of individuating characters,” or “refer to the basic
nature of the wares or services provided rather than to the more idiosyncratic
characteristics pf a particular product,” and are not legally protectable.
A. Generic term
A. Descriptive term
B. Suggestive term
C. None of the above

16. I. A mark is valid if it is distinctive and hence not barred from registration under the
Trademark Law.
II. Once registered, not only the marks validity but also the registrant's ownership thereof
is prima facie presumed.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

17. It is the lessening of the capacity of a famous mark to identify and distinguish goods
or services.
A. Trademark Depreciation
A. Trademark Appreciation
B. Trademark Devaluation
C. Trademark Dilution

18. It means the process of rendering or representing words, letters or character from
one language to the corresponding words, letters or characters of another language or
alphabet.
A. Transliteration
A. Translation
B. Reproduction
C. None of the above

19. I. A certificate of registration shall remain in force for 10 years.

II. A certificate of registration may be renewed for periods of 10 years at its expiration.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

20. I. The exclusive right of the owner of a well-known mark which is registered in the
Philippines, shall extend to goods and services which are not similar to those in respect
of which the mark is registered.
II. Registration of the mark shall not confer on the registered owner the right to preclude
third parties from using bona fide their names, addresses, pseudonyms, a geographical
name, or exact indications concerning the kind, quality, quantity, destination, value, place
of origin, or time of production or of supply, of their goods or services.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

21. I. An application for registration of a mark, or its registration, may be assigned or

transferred with or without the transfer of the business using the mark.
II. The assignment of the application for registration of a mark, or of its registration, shall
be in writing and require the signatures of the contracting parties.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

22. I. A petition to cancel a registration of a mark may be filed by any person who
believes that he is or will be damaged by the registration of a mark.
II. Non-use of a mark may be excused if caused by circumstances arising independently
of the will of the trademark owner. Lack of funds shall excuse non-use of a mark.
A. Only I is true
A. Only II is true
B. Both are true
C. Both are false

23. I. The use of mark in a form different from the form in which it is registered, which
does not alter its distinctive character, shall not be a ground for cancellation or removal
of the mark and shall not diminish the protection granted to the mark
II. The use of a mark by a company related with the registrant or applicant shall inure to
the latters benefit, and such use shall not affect the validity of such mark or of its
registration.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
24. Any person who shall, without the consent of the owner of the registered mark
reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant, feature
thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisement intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with such use is likely to cause
confusion, or to cause mistake, or to deceive.
A. Infringement of trademark
A. Copyrighting of trademark
B. Patenting of trademark
C. Unfair competition of trademark

Answers

1.C
2.B
3.C
4.C
5.D
6.A
7.C
8.C
9.C
10.A
11.A
12.A
13.C
14.D
15.A
16.C
17.D
18.A
19.B
20.C
21.C
22.D
23.C
24.A
1. The making, using, offering for sale, selling, or importing a patented product or a
product obtained directly or indirectly from a patented the use of a patented process
without the authorization of the patentee constitutes:
A. Patent infringement
B. Trademark infringement
C. Copyright infringement
D. Double sale

2. A Government agency or third person authorized by the Government may exploit the
invention even without agreement of the patent owner where:
I. The public interest, in particular, national security, nutrition, health or the development
of other sectors, as determined by the appropriate agency of the government, so
requires,
II. A judicial or administrative body has determined that the manner of exploitation, by
the owner of the patent or his licensee, is anti- competitive.
A. Only I is true
D. Both are false
B. Only II is true
C. Both are true

3. I. Patent owners shall also have the right to assign, or transfer by succession the
patent, and to conclude licensing contracts for the same.
II. Any prior user, who, in good faith was using the invention or has undertaken serious
preparations to use the invention in his enterprise or business, before the filing date or
priority date of the application on which a patent is granted, shall have the right to
continue the use thereof as envisaged in such preparations within the territory where the
patent produces its effect.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

4. A patent shall confer on its owner the following exclusive rights:

I. 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;
II. 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.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

5. If a person, who was deprived of the patent without his consent or through fraud is
declared by final court order or decision to be the true and actual inventor, the court shall
order:
I. For his substitution as patentee.
II. At the option of the true inventor, cancel the patent, and award actual and other
damages in his favor if warranted by the circumstances.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

6. Any interested person may petition to cancel the patent or any claim thereof, or parts
of the claim, on the following ground/s:
A. That what is claimed as the invention is not new or patentable.
B. That the patent does not disclose the invention in a manner sufficiently clear and complete for
it to be carried out by any person skilled in the art.
C. That the patent is contrary to public order or morality.
D. All of the above

7. I. The term of a patent shall be 17 years from the filing date of the application.
II. To maintain the patent application or patent, an annual fee shall be paid upon the
expiration of 4 years from the date the application was published.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
8. I. If the application meets the legal requirements, the Intellectual Property Office (IPO)
shall grant the patent
II. A patent shall take effect on the date of the publication of the grant of the patent in the
IPO Gazette.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

9. I. After publication of a patent application, any interested party may inspect the
application documents filed with the Intellectual Property Office.
II. Following the publication of the patent application, any person may present
observations in writing concerning the patentability of the invention. Such observations
shall be communicated to the applicant who may comment on them.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

10. I. The application shall relate to one invention only or to a group of inventions
forming a single general inventive concept.
II. The fact that a patent has been granted on an application that did not comply with the
requirement of unity of invention shall not be a ground to cancel the patent.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

11. I. No patent may be granted unless the application identifies the inventor.
II. An applicant who is not a resident of the Philippines must appoint and maintain a
resident agent or representative in the Philippines.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

12. In case the employee made the invention in the course of his employment contract,
the patent shall belong to:
I. The employee, if the inventive activity is part of his regular duties even if the employee
uses the time, facilities and materials of the employer.
II. The employer, if the invention is the result of the performance of his regularly-assigned
duties, unless there is an agreement, express or implied, to the contrary.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

13. I. The person who commissions the work shall own the patent, unless otherwise
provided in the contract.
II. An application for patent filed by any person who has previously applied for the same
invention in another country which by treaty, convention, or law affords similar privileges
to Filipino citizens, shall be considered as filed as of the date of filing the foreign
application.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

14. I. If two or more persons have made the invention separately and independently of
each other, the right to the patent shall belong to the person who filed an application for
such invention.
II. Where two or more applications are filed for the same invention, the right to a patent
belongs to the applicant who has the earliest filing date or, the earliest priority date.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

15. I. The right to a patent belongs to the inventor only.

II. When two or more persons have jointly made an invention, the right to a patent shall
belong to them jointly.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

16. I. An invention that can be produced and used in any industry shall be industrially
applicable.
II. An invention involves an inventive step if, having regard to prior art, it is not obvious
to a person skilled in the art at the time of the filing date or priority date of the application
claiming the invention.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

17. It means any person who, at the filing date of application, had the right to the patent.
A. Inventor
B. Infringer
C. Trader
D. Proprietor

18. Prior art shall consist of:

I. Everything which has been made available to the public a world, before the filing date
or the priority date of the application claiming the invention. anywhere in the
II. The whole contents of an application for a patent, published, filed or effective in the
Philippines, with a filing or priority date that is earlier than the filing or priority date of the
application.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
19. I. Any technical solution of a problem if any field of human activity which is new,
involves an inventive step and is industrially applicable shall be patentable.
II. Patentable invention may be, or may relate to, a product, or process, or an
improvement of any of the foregoing.
A. Only I is true
B. Only Il is true
C. Both are true
D. Both are false

20. I. An invention shall not be considered new if it forms part of a prior art.
II. An invention involves an inventive step if, having regard to prior art, it is not obvious
to a person skilled in the art at the time of the filing date or priority date of the application
claiming the invention.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

21. It is an oath in a contract of chattel mortgage wherein the parties "severally swear
that the mortgage is made for the purpose of securing the obligation specified in the
conditions thereof and for no other purposes and that the same is a just and valid
obligation and one not entered into for the purpose of fraud."
A. Affidavit of chattel mortgage
B. Affidavit of good faith
C. Affidavit of bad faith
D. Affidavit of just and valid obligation

22. I. The chattel mortgage must be registered in two chattel mortgage register when the
mortgagor resides in one province, but the property is located in another province.
II. The registration of the chattel mortgage is an effective and binding notice to other
creditors of its existence and creates a real right or a lien which, being recorded, follows
the chattel wherever it goes. The registration gives the mortgagee symbolical
possession.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

23. S sold to B a specific car for P200,000 payable in four equal installments. S delivered
the car to B but required B to mortgage it back to S to answer for the unpaid installments.
B paid the first and second installments but he failed to pay the balance. S foreclosed the
mortgaged property and sold it at public auction for P80,000. As a result:
A. S can recover from B the balance of P20,000.
B. S can recover from B the balance of P20,000 if there is stipulation that effect.
C. S cannot recover the deficiency any more even if there is stipulation to that effect.
D. S cannot recover the deficiency except if there is stipulation.

24. A contract where a personal property is recorded as a security for the performance of
an obligation.
A. Pledge
B. Chattel mortgage
C. Real mortgage
D. Equitable mortgages

25. I. A stipulation forbidding the owner from alienating the immovable mortgaged shall
be valid.
II. The foreclosure of a mortgage before mortgagor's default is void.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

26. I. The mortgage directly and immediately subjects the property upon which it is
imposed, whoever the possessor may be, to the fulfillment of the obligation for whose
security it was constituted.
II. The mortgage credit may be alienated or assigned to a third person, in whole or in part,
with the formalities required by law.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

27. I. It is indispensable, in order that a mortgage may be validly constituted, that the
document in which it appears be recorded in the Registry of Property. If the instrument is
not recorded, the mortgage is, nevertheless, binding between the parties.
II. The persons in whose favor the law establishes a mortgage have no other right than to
demand the execution and the recording of the document in which the mortgage is
formalized.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

28. One which reveals an intent to make the property a security, even if the contract lacks
the proper formalities of a real estate mortgage.
A. Voluntary mortgage
B. Conventional mortgage
C. Legal mortgage
D. Equitable mortgage

29. Only the following property may be the object of a contract of mortgage:
I. Immovables.
II. Alienable real rights in accordance with the laws, imposed upon immovable.
III. Movables may be the object of a chattel mortgage.
A. Only I is true
B. Only I and II are true
C. I, II, and III are true
D. Only III is true

30. I. Pledges created by operation of law refers to the right of retention

II. A thing under a pledge by operation of law may be sold only after demand of the
amount for which the thing is retained. The public auction shall take place within 2
months after such demand.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

31. I. If two or more things are pledged, the pledgee may choose which he will cause to
be sold, unless there is a stipulation to the contrary.
II. In pledges created by operation of law, after payment of the debt expenses, the
remainder of the price of the sale shall not be delivered to the obligor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

32. I. If a credit which has been pledged becomes due before it is redeemed, the pledgee
may collect and receive the amount due. He shall apply the same to the payment of his
claim, and deliver the surplus, should there be any, to the pledgor.
II. Any third person who has any right in or to the thing pledged the principal obligation
as soon as the latter becomes due and demandable.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

33. I. In pledge, the sale of the thing pledged extinguishes the entire principal obligation,
such that the pledgor may no longer recover proceeds of the sale in excess of the
amount of the principal obligation. In Chattel Mortgage Law, it expressly entitles the
mortgagor to the balance of the proceeds, upon satisfaction of the principal obligation
and costs.
II. In the extrajudicial foreclosure of real mortgages, while silent as to the mortgagee's
right to recover, does not, prohibit recovery of deficiency.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
34. I. It is settled that if the proceeds of the sale are insufficient to cover the debt in an
extrajudicial foreclosure of the mortgage, the mortgagee is not entitled to claim the
deficiency from the debtor.
II. When the legislature intends to deny the right of a creditor to sue for any deficiency
resulting from foreclosure of security given to guarantee an obligation, it expressly
provides as in the case of pledges and in real mortgages of a thing sold on installment
basis.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

35. I. Under the Civil Code, it is the pledgee, and not the pledgor, who is given the right to
choose which of the items should be sold if two or more things are pledged.
II. There is nothing in the Civil Code provisions governing the extrajudicial sale of
pledged properties that prohibits the pledgee of several different pledge contracts from
auctioning all of the pledged properties on a single occasion, or from the buyer at the
auction sale in purchasing all the pledged properties with a single purchase price.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

36. In a sale of the thing pledge:

I. If the price of the sale is more than said amount, the debtor shall be entitled to the
excess, unless it is otherwise agreed.
II. If the price of the sale is less, neither shall the creditor be entitled to recover the
deficiency, unless otherwise stipulated.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

37. I. The sale of the thing pledged shall extinguish the principal obligation, only if the
proceeds of the sale are equal to the amount of the principal obligation, interest and
expenses in a proper case.
II. All bids at the public auction shall offer to pay the purchase price at once. If any other
bid is accepted, the pledgee is deemed to have received the purchase price, as far as the
pledgor or owner is concerned.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

38. I. At the public auction, the pledgor or owner cannot bid.

II. The pledgee may also bid, and his offer shall be valid if he is the only bidder.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

39. I. The creditor, in a contract of real security, like pledge, cannot appropriate without
foreclosure the things given by way of pledge.
II. The law requires foreclosure in order to allow a transfer of title of the goods given by
way of security from its pledgor, and before any such foreclosure, the pledgor, not the
pledgee, is the owner of the goods.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

40. I. The creditor to whom the credit has not been satisfied in due time, may proceed
before a Judge for the sale of the thing pledged.
II. If at the first auction, the thing is not sold, a second one with the same formalities shall
be held; and if at the second auction, there is no sale either, the creditor may appropriate
the thing pledged.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
41. I. If subsequent to the perfection of the pledge, the thing is in the possession of the
pledgor or owner, there is a conclusive presumption that the same has been returned by
the pledgee.
II. A verbal statement by the pledgee that he renounces or abandons the pledge is
sufficient to extinguish the pledge.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

42. I. If the creditor is deceived on the substance or quality of the thing pledged, he may
either claim another thing in its stead, or demand immediate payment of the principal
obligation.
II. If the thing pledged is returned by the pledgee to the pledgor or owner, the pledge is
extinguished. Any stipulation to the contrary shall be valid.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

43. I. If there are reasonable grounds to fear the destruction or impairment of the thing
pledged, without the fault of the pledgee, the pledgor may demand the return of the thing,
upon offering another thing in pledge.
II. If, without the fault of the pledgee, there is danger of destruction, impairment, or
diminution in value of the thing pledged, he may cause the same to be sold at a public
sale.
A. Only I is true
B. Only Il is true
C. Both are true
D. Both are false

44. I. If through the negligence or willful act the pledgee, the thing pledged is in danger
being lost or impaired, the pledgor may require that it be deposited with a third person.
II. The pledgee is bound to advise the pledgor, without delay, of any danger to the thing
pledged.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

45. I. The debtor cannot ask for the return of the thing pledged against the will of the
creditor, unless and until he has paid the debt and its interest, with expenses in a proper
case.
II. In pledge, the prescriptive period within which to demand the return of the thing
pledged should begin to run only after the payment of the loan and a demand for the
thing has been made.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

46. I. In case of pledged of animals, their offspring shall pertain to the pledgee.
II. The creditor cannot use the thing pledged, without the authority of the owner, and if he
should do so, or should misuse he thing in any other way, the owner may ask that it be
judicially or extrajudicially deposited. When the preservation of the thing pledged
requires its use, it must be used by the creditor but only for that purpose.
A. Only I is true
B. Only Il is true
C. Both are true
D. Both false

47. I. The pledgee can deposit the thing pledged with a third person, unless there is a
stipulation authorizing him to do so.
II. The pledgee is not responsible for the acts of his agents or employees with respect to
the thing pledged.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
48. I. The contract of pledge gives a right to the creditor to retain the thing in his
possession or in that of a third person to whom it has been delivered, until the debt is
paid.
II. The creditor shall take care of the thing pledged with the extraordinary diligence; he
has a right to the reimbursement of the expenses made for its preservation, and is liable
for its loss or deterioration.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

49. I. For the contract of pledge to affect third persons, apart from being in a private
instrument, possession of the thing pledged must, in addition, be delivered to the
pledgee.
II. With the consent of the pledgee, the thing pledged may be alienated by the pledgor or
owner, subject to the pledge.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

50. I. Incorporeal rights, evidenced by negotiable instruments, bills of lading, shares of

stock, bonds, warehouse receipts and similar documents may not be pledged.
II. A pledge shall not take effect against third persons if a description of the thing
pledged and the date of the pledge do not appear in a private instrument.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

51. I. A pledge is a formal contract, hence, it is necessary in order to constitute the

contract of pledge, that the thing pledged be placed in the possession of the creditor, or
of a third person by common agreement.
II. All movables which are within commerce may be pledged, provided they are
susceptible of possession.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

52. The requisites for the contract of pledge to be valid are the following except one:
A. The pledge is constituted to secure the fulfillment of a principal obligation.
B. The pledgor can appropriate the object of pledge upon default if there is stipulation.
C. The pledgor be the absolute owner of the thing pledged.
D. The person constituting the pledge has the free disposal of his property, and in the absence
thereof, that he be legally authorized for the purpose.

53. I. In order to constitute the contract of pledge, the thing pledged must be placed in
the possession of the creditor, or of a third person by common agreement.
II. A pledge contract is an accessory contract, however, it is not discharged if the
principal obligation is extinguished.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

54. I. The contract of pledge or mortgage may secure few kinds of obligations, which
excludes pure or subject to a suspensive or resolutory condition.
II. A promise to constitute a pledge or mortgage gives rise only to a personal action
between the contracting parties, without prejudice to the criminal responsibility incurred
by him who defrauds another, by offering in pledge or mortgage as unencumbered,
things which he knew were subject to some burden, or by misrepresenting himself to be
the owner of the same.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

55. S sold to B a specific car for P200,000 payable in 4 equal installments. S delivered the
car to B but required B to mortgage it back to S to answer for the unpaid installments. B
paid the first and second installments but he failed to pay the balance. S foreclosed the
mortgaged property and sold it at public auction for P80,000. As a result:
A. S can recover from B the balance of P20,000.
B. S can recover from B the balance of P20,000 if there is stipulation to B.
C. S cannot recover the deficiency any more even if there is stipulation that effect. to that effect
D. S cannot recover the deficiency except if there is stipulation.

56. Elements of contracts of pledge and mortgage, except:

A. Pledgor or mortgagor must be the absolute owner.
B. Pledgor or mortgagor must have the free disposal of the thing pledged.
C. The thing pledged or mortgaged may be appropriated if the debtor cannot pay.
D. Pledge and mortgage are accessory contracts.

57. In real estate mortgage, the mortgagor can sell the property mortgaged.
A. Only if with the oral consent of the mortgagee.
B. Only if with the written consent of the mortgagee.
C. If not prohibited to sell.
D. Even without the consent of the mortgagee

58. A borrowed P100,000 from B, and as a security. A pledge his ring to B. After the
obligation falls due, A goes to B relinquishing ownership of ring in favor of B. This is:
A. Cession in payment
B. Dacion en pago
C. Pactum commissorium
D. Condonation

59. B pledged his watch to D pawnshop for P5,000. On due date, B failed to redeem his
watch. The pawnshop sold the watch at a public auction to the highest bidder at P4,000.
A. The pawnshop can recover the deficiency of P1,000 from B.
B. The pawnshop cannot recover the deficiency of P1,000 unless there is a stipulation.
C. The pawnshop cannot recover the deficiency of P1,000 even if there is a stipulation.
D. The pawnshop can recover the deficiency of P1,000 even without a stipulation.
60. B pledged his Rolex watch to C for P4,000. B failed to pay C the P4,000. On due date,
C sold the Rolex watch at a public auction to the highest bidder at P3,500.
A. C can recover the deficiency of P500 from B.
B. C can recover the deficiency of P500 even without stipulation.
C. C cannot recover the deficiency of P500 even without stipulation
D. C cannot recover the deficiency of P500 even if there is stipulation.

61. D obtained a loan of P100,000 from C, and pledged her diamond ring. The contract
signed by the parties stipulated that if D is unable to redeem the ring on due date, C may
immediately sell the ring and appropriate the entire proceeds thereof for himself as full
payment of the loan. Decide.
A. The stipulation authorizing the pledgee to immediately sell the thing pledge is valid.
B. C can immediately sell by himself the thing pledged.
C. Foreclosure is not necessary in this case.
D. The stipulation authorizing the pledgee to immediately sell the thing pledge is void.

62. D obtained a loan of P100,000 from C, and pledged her diamond ring. The contract
signed by the parties stipulated that if D is unable to redeem the ring on due date, he will
execute a document in favor of C providing that the ring shall automatically be
considered full payment t of the loan. Is the contract valid?
A. The contract is void because it amounts to automatic appropriation
B. The contract is valid.
C. The contract is unenforceable because it amounts to pactum commissorium.
D. The contract is voidable due to vice of consent.

63. I. In a contract of chattel mortgage, it must be recorded in a public instrument to bind

third persons.
II. In a contract of pledge, it must be in public instrument containing description of the
thing pledged and the date thereof to bind third containing persons.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
64. X loaned to Y P40,000 for which the latter pledged 4,000 shares of stock in Z
Corporation. It was agreed that if the pledgor failed to pay the loan with 10% yearly
interest within 4 years, the pledgee is authorize to foreclose on the shares of stock. As
required, Y delivered possession of the shares to X with the understanding that the
shares would be returned to Y upon the payment of the loan. However, the loan was not
paid on time. A month after 4 years, may the shares of stock pledged be deemed owned
by X?
A. Yes, because non-payment of the loan will transfer ownership.
B. No, because they have to be foreclosed.
C. Yes, because the loan and the value of the shares are equal.
D. Yes, because the creditor can appropriate the things given by way of pledge.

65. H and W borrowed money from Y. To guarantee payment, they left the Torrens title of
their land with Y for him to hold until they pay the loan. What contract was executed?
A. A contract of pledge
B. A contract of real estate mortgage
C. A contract of antichresis
D. None of the above

66. D pledged his specific sewing machine to C for P8,000. D was unable to pay the
obligation within 60 days after due date. C sold the machine at a public auction for
P6,000.
A. C cannot recover the deficiency of P2,000 even if there is stipulation that he can.
B. C can recover the deficiency of P2,000 even without stipulation.
C. C cannot recover the deficiency of P2,000.
D. C can recover the deficiency of P2,000.

67. A mortgaged his residential land to B as a guarantee P400,000 obligation to B. They

agreed that A shall not sell the obligation exists. Before the maturity of mortgage, C
offered to buy the land from A. Which is correct?
A. A cannot sell the land to C because of the agreement not to sell.
B. A can sell the land to C only if B consents in writing.
C. A can sell the land to C despite the agreement not to sell.
D. A can sell the land to C unless A pays the obligation.

68. The distinction between a chattel mortgage and a pledge is that in chattel mortgage:
A. The delivery of the personal property is necessary.
B. The registration of the property in the Registry of Property is not necessary.
C. The excess of the amount due after foreclosure goes to the debtor.
D. Answer not given.

69. One of the following is not a characteristic of pledge and mortgage:

A. Accessory
B. Consensual
C. Gratuitous
D. Onerous

70. A borrowed P30,000 from B, and as security, A pledged his ring, pair of earrings and
necklace. On due date, A paid P20,000, as a result:
A. A can demand the return of one (1) of the things pledged.
B. A can demand the return of any two (2) of the things pledged.
C. A can demand the return of the ring.
D. A cannot demand the return of any of the things pledged.

71. A borrowed P100,000 from B with A's ring given to B by way of pledge. It was
stipulated that in case of non-payment on due date, the ring would belong to B. This
forfeiture is:
A. Cession in payment
B. Dacion en pago
C. Pactum commissorium
D. Condonation

72. The following are requisites of pledge, except:

A. The disposal property by the pledge.
B. Absolute ownership of the property pledged.
C. The thing pledged may be places in the possession of a third person.
D. To bind a third person, it must be recorded in the office of the Registry of Deeds.
73. Three of the following are essential requisites of a contact of mortgage. Which is not?
A. The person instituting the mortgage has the free disposal of his property.
B. The contract must be in writing.
C. The mortgagor is the absolute owner of the thing mortgaged.
D. The mortgage is constituted to secure the fulfillment of a principal obligation.

74. Which of the following statements is true and correct?

A. Unless otherwise agreed upon by the parties, the sale of the mortgaged property
extinguishes in full the obligation of mortgagor to the mortgagee.
B. Pledge and mortgage are considered principal contracts
C. When the obligation is secured by a pledge or mortgage and it is not paid when due, the
pledgee or mortgagee may dispose the collateral even if there is no agreement to that effect
between the parties.
D. In both pledge and mortgage, the creditor is entitled to deficiency judgment.

75. X was engaged in the business of buying and selling of second-hand cars. X
advanced for her marketing specialists (employees) sums of money for the business
operation. X required them to surrender the Transfer Certificate of Title (TCT) of their
lands and tooexecute the corresponding Contract of Sale in her favor. Subsequently, Y,
one of X's employees, incurred shortage. X, afterwards, sold the land of Y to Z. Y filed an
action for annulment of sale against X and Z alleging that there was no sale intended but
only equitable mortgage for the purpose of securing the shortage by Y. Decide.
A. The contract between X and Y was clearly a real estate mortgage and not a contract of sale.
B. The contract between X and Y was a contract of sale and not an equitable mortgage.
C. The purported contract of sale was actually intended merely to secure the payment of the
shortage incurred by Y in the conduct of the buy and sell of second-hand cars.
D. The contract between X and Y can be interpreted both as a contract of sale and an equitable
mortgage.

76. In real mortgage, the following rules are valid, except one:
A. A stipulation in the mortgage contract prohibiting the owner from alienating the immovable
mortgaged is valid.
B. The mortgage may alienate the mortgage credit or assign to a third person in whole or in
part.
C. Any stipulation allowing the mortgage creditor to appropriate the property mortgaged is null
and void.
D. If alienation of mortgage credit is not registered, it is still valid between the parties.
77. Which of the following is common requisite for Pledge, Chattel Mortgage and
Antichresis?
A. The amount of the principal and interest must be in writing.
B. The property must be in the possession of the creditor.
C. To bind third persons, they must be duly recorded in the office of Register of Deeds.
D. It is constituted to secure the fulfillment of a principal obligation.

78. X obtained a loan of P50,000 from Y. X pledged his laptop. The contract signed by the
parties stipulated that if X is unable to redeem the laptop on due date, X will execute a
document in favor of Y providing that the laptop shall automatically be considered full
payment of the loan. Is the contract valid?
A. The contract is void as it amounts to pactum commissorium.
B. The contract is void because it provides for the automatic appropriation by Y of the laptop.
C. The contract is valid because it was made in good faith.
D. The contract is valid because it does not amount to pactum commissorium as it does not
provide for the automatic appropriation by Y of the laptop in case of default of X.

79. X obtained a loan of P50,000 from Y. X pledged his laptop. The contract signed by the
parties stipulated that if X is unable to redeem the Y may immediately sell laptop and
appropriate the entire proceeds thereof for herself as full payment of the loan. Decide.
A. The contract of loan is voidable as it is tainted with vice of consent.
B. The contract of pledge violates the Statute of Frauds.
C. The stipulation authorizing Y to immediately sell the laptop is valid as it falls under the
principle of autonomy of contract or liberty to contract.
D. The stipulation authorizing Y to immediately sell the laptop is void as Y cannot appropriate
the things given by way of pledge or dispose of them.

80. In 2022, D borrowed P500,000 from C, collaterized by pledge of shares of stock of a

corporation worth 700,000. In 2023, because of the economic crisis, the value of the
shares fell to 100,000. Can C demand that D surrender additional shares worth 600,000?
A. No. Contract of pledge cannot be changed unilaterally. Moreover, pledge is only an accessory
contract.
B. Yes, because the parties did not contemplate said circumstance when the pledge was
perfected.
C. Yes, because the parties intended that the value of the object of pledge shall always be
higher than the amount of the loan.
D. No, because the right of C is to sell the shares at public auction and claim for the deficiency.

ANSWER KEY: 40. B

41. D
1. A
42. A
2. C
43. C
3. C
44. C
4. C
45. C
5. C
46. B
6. D
47. D
7. B
48. A
8. C
49. B
9. C
50. D
10. C
51. B
11. C
52. B
12. B
53. A
13. C
54. B
14. C
55. C
15. B
56. C
16. C
57. D
17. A
58. B
18. C
59. C
19. C
60. D
20. C
61. D
21. B
62. B
22. C
63. C
23. C
64. B
24. B
65. D
25. B
66. A
26. C
67. C
27. C
68. C
28. D
69. C
29. C
70. D
30. A
71. C
31. A
72. D
32. C
73. B
33. C
74. C
34. D
75. C
35. C
76. A
36. D
77. D
37. B
78. D
38. D
79. D
39. C
80. A
81.