What is the remedy of the pledgor-owner of the thing pledged is in danger of being lost or impaired?

To require that it be deposited with a third person

If there are reasonable grounds to fear the destruction or impairment of the thing pledged, without the
fault of the pledge e, which is correct?

The pledgor-owner may ask for the return of the thing, upon offering another thing in
pledged, provided the latter is of the same kind as the former and not of inferior quality even it is
already sold in public auction by the pledgee creditor

The following are examples of legal pledge, except

A contract by virtue of which the debtor delivers to the creditor or to third person a movable,
or instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all the its fruits and accessions

A owes C P5,000. The debt is secured by a pledge of G's watch. If G pays C, which of the following
statements is correct?

G is subrogated with the rights of the creditor

A pledge his wristwatch to B for a loan of P.1M. Due to A's failure to pay his debt, B auctioned the watch
and was sold to C for P.15M. Can A recover the excess?

A can recover the excess if so agreed upon by the parties

The following are instances of pledge created by operation of law, except

An agent retains in pledge the thing which is the object of the agency until he paid his
commission

What is the legal effect of a promise or contract to constitute a pledge?

It is perfected be delivery of the thing pledge

D borrowed P10,000 from C. To secure the fulfillment of the loan, D pledged his laptop. The contract of
pledge provides that the creditor pledgee may appropriate the laptop upon failure of the debtor-
pledgor to pay the loan. On the date of maturity of the loan, D failed to pay the loan. Which of the
following statements is correct?

C does not become the automatic owner of the laptop upon failure to pay the loan because
that provision is considered pactum commissorium which is contrary to law and public policy

The following are the kinds of principal obligations that may be secured by a pledge or mortgage, except

Null and void obligations

The contract of pledge shall cover the following, except

The inheritance of the pledger

A mortgaged his Rolex watch to B for a loan of P.2M. Due to the failure of A to redeem the security, B
sold the same at public auction for P.15M to the highest bidder.

B can recover the deficiency of P.05M from A

X borrowed money from Y and gave a piece of land as security by way of mortgage. It was agreed
between the parties that upon non-payment of the loan, the land would already belong to Y. If X failed
to pay the debt, would I now become the owner of the land?

Y would not become the owner because the agreement that he would become the owner
default of X is against the law

S, a minor, sold her bracelet to B for P8,000. Later, B, needing money to pay her daughters tuition fee,
borrowed P15,000 from C and as a security, pledged the bracelet to the latter. B failed to pay C resulting
into the auction sale of the bracelet in favor of D for P10,000 only. Which of the following statements is
correct?

C can no longer recover the deficiency of P5,000 from B. the pledge, together with the sale is
valid. The voidable title of B is valid because it is not yet annulled.

A pledged his wristwatch to B pawnshop for a loan of P7,000 which he failed to pay. B sold the watch at
public auction for P4,000.

it cannot recover the deficiency even if there is stipulation allowing it

Which of these is not an essential requisite common to both pledge and mortgage?

That the pledgor or mortgagor be the principal debtor

Onyok pledged his motor bike to Pepito for P5,000.00. When Onyok failed to pay his obligation, Pepito
sold the motor bike at public auction to the highest bidder for P4,000.00. Therefore

Pepito cannot recover P1,000.00 from Onyok even if there is stipulation

The provisions on conventional pledge on possession, care and sale of the thing as well as on the
termination of the pledge shall be applicable to legal pledge except with respect to the sale of the thing
as follows. The following are the rules applicable to legal pledge on the sale of the thing pledged, except

After payment debt and expenses, the remainder of the price of sale shall be retained by the
pledgee-creditor

D is indebted to C in the amount of P200,000 and delivers to C his diamond ring by way of pledge. If D
sells the same diamond ring to T, when will T acquire ownership of the same?
 From the time C consents to the sale between D and T

Pledge may be extinguished directly or indirectly. The following are the modes of extinguishing the
contract of pledge directly, except

When the principal obligation secured by the pledged is extinguished

A pledged his Toyota car to 8 for a loan of P1M. A was unable to pay the loan and therefore B sold the
car in a public auction but it was sold only for P.5M. Can B recover the deficiency from A?

No, he cannot even if there is an agreement that he can

When is the pledgor or mortgagor required to be the owner of the thing pledged or mortgaged for the
validity of contract of pledge or mortgage?

At the time the pledge or mortgage is constituted

D borrowed P1M from C. G, a third person, mortgaged his land to secure the fulfillment of D's loan. Is
the contract of mortgage valid?

Yes because third persons who are not parties to the principal obligation may secure the latter
by pledging or mortgaging their own property

It is a stipulation whereby the thing pledged or mortgaged shall be automatically become the property
of creditor in the event of non-payment of the debt within the term fixed

Pactum commissorium

D borrowed P10,000 from C and pledged his ring and watch with P4,000 and P6,000 value respectively.
After several days, D pays P4,000 to C. Which of the following statements is correct?

D cannot demand the release of his ring because a contract of pledge is indivisible

What is the nature of contract of pledge or mortgage?

A pledge or mortgage is indivisible whether the principal contract is joint or solidary

The following are instances of pledge created by operation of law, except:

An agent retains in pledge the thing which is the object of the agency regarding his
commission

The following are the obligations of the debtor pledgor, except

To pay for the expenses which are not necessary for the preservation of the thing pledged

If the thing is found in the possession of the pledgor or owner or if the thing is in the possession of a
third person who has received it from the pledgor or owner, which of the following is incorrect?
 There is prima facie presumption that the contract of pledge is extinguished

In 2012, D borrowed P.4M from C, collateralized by a pledge of shares of stock of X corporation worth
P.8M. In 2013, because of the economic crisis, the value of the shares pledged fell to only P.1M. Can C
demand that D surrender the other shares worth P.7M?

No, because the only right of C is to sell the shares at the public auction and keep the
proceeds as security for the loan.

What is the remedy of the pledgor-owner if there are reasonable grounds to fear the destruction or
impairment of the thing pledged, without the fault of the pledgee?

To ask for the return of the thing upon offering another thing in pledge provided the latter is
of the same kind as the former and not of inferior quality

What is the remedy of the pledgor-debtor if the pledgee creditor use the thing pledged, without the
authority of the owner or should misuse the thing in any other way?

To ask that it be judicially or extra judicially deposited

Element of contracts of pledge and mortgage, except

The thing pledged or mortgaged may be appropriated if the debtor cannot pay

A pledged his watch to B for P20,000. A failed to pay his obligation. B sold it at public auction for
P18,000. Can B recover the deficiency?

No, even if there is stipulation

The following requisites are essential to the contracts of pledge and mortgage, except

That when the principal obligation becomes due, the things in which the pledge or mortgage
consists may be alienated for the payment of the creditor

The following are the instances where the thing pledged or mortgaged may be sold or alienated to pay
the principal obligation, except

Before maturity of the principal obligation

D borrowed P20.000 from C. To secure the fulfillment of the loan, D mortgaged a land owned by his
ailing father. Which of the following statements is correct?

The contract of mortgage is null and void because the mortgagor must be the owner of the
property mortgaged at the time it is constituted but the contract of loan remains to be valid.

A third person who pledges his own movable property to secure the debt of another shall be released
from liability in the following cases and may ask for the return of the thing pledge from the pledgee,
except
 If the debtor defaults in the payment of principal obligation on the maturity date.

The following persons may bid at the public auction, except

The pledgee even if he is the only bidder

In case of legal pledge or pledge by operation of law, if the thing held in pledged by operation of law is
sold by the creditor in public auction resulting to deficiency, may there be recovery of deficiency by the
creditor?

Yes even if not stipulated.

DLSU pledged its notes receivable form a parent to a factor on January 1, 2016 with remaining term of
30 days or maturity date of January 31, 2016. The face value of the notes receivable is P1,000,000 with
maturity value of P1,200,000. The notes receivable is pledged for a note payable of P1,100,000 inclusive
of interest. If the factor-pledgee collects the P1,200,000 from the parent on January 31, 2016, who shall
be entitled for the excess of P100,000?

DLSU, the pledgor-debtor

Grace obtained a loan from Jojo in the amount of P1M with Mar serving as guarantor. Rody pledged his
cellphone to secure the debt of Grace. If Rody pays P1M loan of Grace, which is correct?

Rody can collect the P1M from Mar if Grace will not be able to pay Rody.

D borrowed P10,000 from C. To secure the fulfillment of the loan, D pledged his laptop. The contract of
pledge provides that the creditor-pledgee may appropriate the laptop upon failure of the debtor-
pledgor to pay the loan. On the date of maturity of the loan. D failed to pay the loan. Which of the
following statements is correct?

C does not become the automatic owner of the laptop upon D’s failure to pay the loan
because that provision is considered pactum commissorium which is contrary to law and public policy.

What is the remedy of the pledgor-owner if the thing pledged is in danger of being lost or impaired
through the negligent or willful act of the pledgee?

To require that it be deposited with a third person.

The following are the kinds of principal obligations that may be secured by a contracts of pledge, of real
estate mortgage or of chattel mortgage, except

Null and void obligations

If two or more things are pledged, who has the right to choose which thing will be sold in the absence of
stipulation?

Pledgee
The following are the obligations of the debtor-pledgor, except

To warrant the thing pledged for its quality and merchantability.

It is a type of pledge which refers to the right of a person to retain a thing until he receives payment of
his claim.

Legal pledge or pledge by operation of law

ABC Inc. borrowed P2,000,000 from BPI. ABC Inc. is under receivership. To secure the fulfillment of the
loan, ABC mortgaged its administrative building. Which of the following statements is correct?

The contract of mortgage is null and void because the mortgagor has no free disposal of the
thing.

The following are the formalities required for the sale of the thing pledged in case of failure of the
debtor to fail the principal obligation, except

It must be sold at the first auction.

It is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable, or
instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.

Contract of Pledge

The following are examples of legal pledge, except

A contract by virtue of which the debtor delivers to the creditor or to a third person a
movable, or instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a
principal obligation with the understanding that when the obligation is fulfilled, the thing delivered
shall be returned with all its fruits and accessions.

The following are the essential requisites of a contract of real estate mortgage for its validity, except

That the document in which the mortgage appears be recorded in the Registry of Property.

Which of the following statements concerning formalities of real estate mortgage is incorrect?

The real mortgage must be in writing to be valid since it is a formal contract.

The following are the instances where the thing pledged or mortgaged may be sold or alienated to pay
the principal obligation, except

Before maturity of the principal obligation.

D borrowed P10,000 from C and pledged his ring and watch with P4,000 and P6,000 value respectively.
They agreed that the ring will secure P4,000 of the loan and the watch will secure the balance of the
loan. After several days, D pays P4,000 to C. Which of the following statements is correct?

D may compel C to return the ring because contract of pledge on the ring is extinguished.

What is the nature of a contract of pledge?

Real contract

What is the legal effect of a promise or contract to constitute a pledge?

It is perfected by mere consent and gives rise only to a personal action between the
contracting parties.

The following stipulations concerning real estate mortgage are null and void, except

A stipulation prohibiting a second mortgage with respect to property registered under the
Torrens System.

D borrowed from C P10,000 secured by a mortgage on D’s two lots (lot 1 and lot 2). D dies leaving E and
F as heirs with E inheriting lot 1 and F lot 2. F pays P50,000 of the loan. Which of the following
statements is correct?

F cannot ask for the extinguishment of the mortgage on lot 2.

The contract of pledge shall cover the following, except

The future inheritance of the pledgor.

What is the form of contract of pledge to bind or to affect third persons?

It must be in a public instrument showing a description of the thing pledged and the date of
the pledge.

If the proceeds of the sale of the thing pledged in conventional pledge is less than the amount of the
obligation, which of the following statements is true?

The creditor-pledgee cannot recover the deficiency even if stipulated.

What is the form of contract of pledge to bind the contracting parties?

It may be in any form because it is a real contract.

It is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable, or
instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.
 The cause or consideration of the principal obligation or contract of loan.

Which of the following direct modes of extinguishing contract of pledge do not impliedly extinguish the
principal obligation or contract of loan?

I. Return by the pledgee of the thing pledged to the pledgor or owner.

II. Renunciation or abandonment in writing by the pledgee of the contract of pledge.

III. Sale of the thing pledged in public auction in case of default by debtor regardless of the amount of
the net proceeds of sale.

IV. Appropriation of the thing pledged by the pledgee in case the thing pledged is not sold in the first
and second public auctions.

a. I and II

The following requisites are essential to the contracts of pledge, real estate mortgage and chattel
mortgage, except

That the thing pledged or mortgaged be placed in the possession of the creditor, or of a third
person by common agreement.

The following are the characteristics of a contract of pledge, except

Consensual - It is perfected by mere consent.

What is the remedy of the pledgor-owner if there are reasonable grounds to fear the destruction or
impairment of the thing pledged, without the fault of the pledgee?

To ask for the return of the thing, upon offering another thing in pledge, provided the latter is
of the same kind as the former and not of inferior quality but subject to the right of the pledgee to sell
the said pledged item in public auction.

D borrowed P1,000,000 from C. G, a third person, mortgaged his land to secure the fulfillment of D’s
loan. Is the contract of mortgage valid?

Yes because third persons who are not parties to the principal obligation may secure the latter
by pledging or mortgaging their own property.

In case the thing pledged is alienated by the debtor-pledgor to third person, what is the effect of the
consent of the pledgee to the alienation made by the pledgor of the thing pledged to third person?

The ownership of the thing pledged is transmitted to the buyer.

The following may become object of contract of real estate mortgage, except

Personal property
What is the nature of a contract of pledge, of chattel mortgage, of real estate mortgage or of
antichresis?

It is indivisible whether the principal contract is joint or solidary.

If the thing is found in the possession of the pledgor or owner or if the thing is in the possession of a
third person who has received it from the pledgor or owner, which of the following is incorrect?

There is prima facie presumption that the contract of loan is extinguished.

D borrowed P10.000 from C and pledged his ring and watch with P4,000 and P6,000 value respectively.
After several days. D pays P4,000 to C. Which of the following statements is correct?

D cannot demand the release of his ring because a contract of pledge is indivisible.

It refers to the remedy available to the mortgage by which he subjects the property mortgaged to the
satisfaction of the obligation secured when the principal obligation is not paid when due or when there
is any violation of any condition, stipulation or warranty by the mortgagor.

Foreclosure

The following are the important characteristics of contract of real estate mortgage, except

Real contract - It is perfected by the delivery of the thing mortgaged.

Which of the following stipulations in a contract of pledge is null and void?

I. A stipulation which provides that the contract of pledge is not extinguished by the return of the thing
pledged.

III. A stipulation allowing the appropriation by the pledgee of the thing pledged in case the same is not
sold in the first and second auctions.

III. A stipulation for the recovery of deficiency in case the proceeds from the sale of the thing pledged is
less than the amount of the obligation.

I and III

If the thing pledged is not sold in the first and second public auctions, which of the following statements
is incorrect in case of appropriation by the pledgee of the thing pledged?

The principal obligation/contract of loan is not extinguished if the creditor decided to

appropriate the thing pledged.

Which of the following direct modes of extinguishing contract of pledge impliedly extinguish the
principal obligation or contract of loan?
I. Return by the pledgee of the thing pledged to the pledgor or owner.

II. Renunciation or abandonment in writing by the pledgee of the contract of pledge.

III. Sale of the thing pledged in public auction in case of default by debtor regardless of the amount of
the net proceeds of sale.

IV. Appropriation of the thing pledged by pledgee in case the thing pledged is not solid in the first and
second public auctions.

III and IV

The following statements pertaining to a promise to constitute a pledge or mortgage are correct, except

The contract perfected is a real contract.

In case the bids of the pledgor-owner, the pledgee and a third person are equal and considered the
highest bid, who shall be preferred among them?

Pledgor-owner

Using the same data in preceding number, suppose it is C who dies leaving X and Y as heirs. If D pays X
P50,000, which of the following statements is correct?

X cannot cancel the mortgage to the prejudice of Y.

A and B jointly borrowed P10,000 from C. In order to secure the obligation, A pledged his cellphone
while B pledged his laptop. At the maturity date of the loan, A paid P5,000 of the loan. Which of the
following statements is correct?

A cannot demand the release of his cellphone because a contract of pledge is indivisible.

The following are the essential requisites of conventional pledge or contract of pledge, except

That the contract of pledge be constituted in public document.

Pledge may be extinguished directly or indirectly. The following are the modes of extinguishing the
contract of pledge directly, except

When the principal obligation secured by the pledged is extinguished.

The following are the rights of a third person who pledges his own movable property to secure debt of
another except

To become principally liable.

What is the remedy of the pledgor-debtor if the pledgee-creditor use the thing pledged, without the
authority of the owner or should misuse the thing in any other way?
 To ask that it be judicially or extra-judicially deposited.

It is a contract whereby the debtor or third person secures to the creditor the fulfillment of a principal
obligation, specially subjecting to such security immovable property or real rights over immovable
property in case the principal obligation is not complied with at the time stipulated.

Real estate mortgage

What is the effect of sale at public auction of the thing pledged?

The contract of pledge and principal obligation/contract of loan shall be extinguished whether
or not the proceeds of the sale are equal to the amount of the principal obligation, interest and
expenses in a proper case.

The following are the rights of the creditor-pledgee, except

To become the automatic owner the thing pledged upon first default of debtor to pay the
principal obligation.

The provisions on conventional pledge on the possession, care and sale of the thing as well as on the
termination of the pledge shall be applicable to legal pledge except with respect to the sale of the thing
as follows. The following are the rules applicable to legal pledge on the sale of the thing pledged, except

After payment of debt and expenses, the remainder of the price of sale shall be retained by
the pledgee-creditor.

The following are the rights of the debtor-pledgor, except

To demand the return of the thing pledged despite defaulting on the payment of the secured
principal obligation.

The following may become the object of a contract of pledge, except

Real or immovable properties and rights thereon.

If the proceeds of the sale of the thing pledged in conventional pledge is more than the amount of the
obligation, which of the following statements is true?

The creditor-pledgee shall be entitled to the excess unless there is an agreement to the
contrary.

Which of the following statements is incorrect in case the pledgee renounces or abandons in writing the
contract of pledge?

The return of the thing pledged is necessary for extinguishing the contract of pledge for this
mode of contract of pledge extinguishment.

Which of the following statements pertains to equitable mortgage?

 It is one which although lacks certain formality, form or words or other requisites provided by
statute, shows the intention of the parties to charge the real property as a security for a debt and
contains nothing contrary to law.