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RFBT.2904 - Credit Transactions
RFBT.2904 - Credit Transactions
RFBT.2904 - Credit Transactions
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MORTGAGE creditor, or of a third person by common agreement.
The following requisites are essential to the contracts of pledge (2093)
and mortgage: (2085) • Object of pledge
1. That they be constituted to secure the fulfillment of a a. All movables which are within commerce may be
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principal obligation. Hence, it is also of the essence of pledged, provided they are susceptible of possession.
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these contracts that when the principal obligation becomes (2094)
b. Incorporeal rights, evidenced by negotiable
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due, the things in which the pledge or mortgage consists
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may be alienated for the payment to the creditor. (2087) instruments, bills of lading, shares of stock, bonds,
2. That the pledgor or mortgagor be the absolute owner of warehouse receipts and similar documents may also be
the thing pledged or mortgaged; pledged. The instrument proving the right pledged shall
3. That the persons constituting the pledge or mortgage have be delivered to the creditor, and if negotiable, must be
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the free disposal of their property, and in the absence indorsed. (2095)
thereof, that they be legally authorized for the purpose.
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4. Third persons who are not parties to the principal Requisites of pledge to bind third person (2096)
obligation may secure the latter by pledging or mortgaging It must appear in a public instrument
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stipulation to the contrary is null and void. (2088) the alienation, but the latter shall continue in possession.
(pactum commissorium) (2097)
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2. Creditor cannot dispose of the things pledges or diligence of a good father of a family; he has a right to the
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Reason for prohibition: Contrary to good morals and public and is liable for its loss or deterioration, in conformity with
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policy (Report, Code Commission, P.156) the provisions of this Code. (2099)
Note: The creditor is entitled only to move for the public • The pledgee cannot deposit the thing pledged with a
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sale of the thing pledged or mortgaged, in order to satisfy third person, unless there is a stipulation authorizing him
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his claims out of the proceeds thereof. to do so. The pledgee is responsible for the acts of his
agents or employees with respect to the thing pledged.
• A pledge or mortgage is indivisible, even though the debt (2100)
may be divided among the successors in interest of the • If the pledge earns or produces fruits, income, dividends, or
debtor or of the creditor. (2089) interests, the creditor shall compensate what he receives
• The indivisibility of a pledge or mortgage is not affected by with those which are owing him; but if none are owing him,
the fact that the debtors are not solidarily liable. (2090) or insofar as the amount may exceed that which is due, he
• The contract of pledge or mortgage may secure all kinds of shall apply it to the principal. Unless there is a stipulation to
obligations, be they pure or subject to a suspensive or the contrary, the pledge shall extend to the interest and
resolutory condition. (2091) earnings of the right pledged. (2101)
• A promise to constitute a pledge or mortgage gives rise • In case of a pledge of animals, their offspring shall pertain
only to a personal action between the contracting parties, to the pledgor or owner of animals pledged, but shall be
without prejudice to the criminal responsibility incurred by subject to the pledge, if there is no stipulation to the
him who defrauds another, by offering in pledge or contrary. (2102)
mortgage as unencumbered, things which he knew were • Unless the thing pledged is expropriated, the debtor
subject to some burden, or by misrepresenting himself to be continues to be the owner thereof. Nevertheless, the
the owner of the same. (2092) creditor may bring the actions which pertain to the owner of
the thing pledged in order to recover it from, or defend it
against a third person. (2103) same terms as the highest bidder. (2113)
• The creditor cannot use the thing pledged, without the
authority of the owner, and if he should do so, or should Foreclosure sale
misuse the thing in any other way, the owner may ask that it Pledge
be judicially or extrajudicially deposited. When the a. Excess – The debtor is not entitled to excess except if there
preservation of the thing pledged requires its use, it must be is stipulation.
used by the creditor but only for that purpose. (2104) b. Deficiency – Creditor is not entitled to recover the
• The debtor cannot ask for the return of the thing deficiency. Any stipulation is void.
pledged against the will of the creditor, unless and until he Chattel mortgage
has paid the debt and its interest, with expenses in a proper a. Excees – The mortgagor is entitled to excess
case. (2105) b. Deficiency – The mortgagee is entitled to recover the
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• If through the negligence or willful act of the pledgee, the deficiency except in case of foreclosure of chattel mortgage
thing pledged is in danger of being lost or impaired, the on the thing sold on installment when the vendee’s failed to
pledgor may require that it be deposited with a third person. pay covering two or more installment. (Recto law).
(2106)
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• Right of the pledgor - to substitute thing pledged; Right of Real Estate Mortgage
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the pledge – to cause the same to be sold at a public sale a. Excess – The mortgagor is entitled to the excess.
b. Deficiency – The mortgagee is entitled to recover the
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a. The pledgor has reasonable grounds to fear the
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destruction or impairment of the thing pledged deficiency.
b. There is no fault on the part of the pledgee,
c. The pledgor is offering in place of the thing another Antichresis
thing in pledge which is of the same kind and quality as a. Excess – The mortgagor is entitled to the excess.
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the former b. Deficiency – The mortgagee is entitled to recover the
d. The pledge does not choose to exercise his right to deficiency.
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cause the thing pledged to be sold at public auction.
• If, without the fault of the pledgee, there is danger of • The pledgee may also bid, but his offer shall not be valid
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thing pledged (2109) obligation, whether or not the proceeds of the sale are equal
a. To either claim another thing in pledge to the amount of the principal obligation, interest and
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b. To demand immediate payment of the principal expenses in a proper case. If the price of the sale is more
obligation. than said amount, the debtor shall not be entitled to the
• If the thing pledged is returned by the pledgee to the excess, unless it is otherwise agreed. If the price of the
pledgor or owner, the pledge is extinguished. Any sale is less, neither shall the creditor be entitled to recover
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perfection of the pledge, the thing is in the possession of the contrary. (2115)
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pledgor or owner, there is a prima facie presumption that • After the public auction, the pledgee shall promptly advise
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the same has been returned by the pledgee. This same the pledgor or owner of the result thereof. (2116)
presumption exists if the thing pledged is in the possession • Any third person who has any right in or to the thing
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retained. The public auction shall take place within one specified in writing; otherwise, the contract of
month after such demand. If, without just grounds, the antichresis shall be void. (2134)
creditor does not cause the public sale to be held within • The creditor is obliged to pay the taxes and charges upon
such period, the debtor may require the return of the thing. the estate unless there is a stipulation to the contrary. (2135)
(2122) He is also bound to bear the expenses necessary for its
• Special laws govern the pawnshops and other preservation and repair.
establishments, which are engaged in making loans The sums spent for the purposes stated in this article shall
secured by pledges and subsidiarily by the civil code. be deducted from the fruits.
(2123) • The debtor cannot reacquire the enjoyment of the
immovable without first having totally paid what he owes
REAL ESTATE MORTGAGE the creditor.
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• Only the following property may be the object of a contract But the latter, in order to exempt himself from the
of mortgage: (2124) obligations imposed upon him by the preceding article, may
1. Immovables; always compel the debtor to enter again upon the enjoyment
2. Alienable real rights in accordance with the laws, of the property, except when there is a stipulation to the
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imposed upon immovables. contrary. (2136)
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3. Movables may be the object of a chattel mortgage. • The creditor does not acquire the ownership of the real
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It is indispensable, in order that a mortgage may be validly estate for non-payment of the debt within the period agreed
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constituted, that the document in which it appears be upon. Every stipulation to the contrary shall be void. But
recorded in the Registry of Property. If the instrument is not the creditor may petition the court for the payment of the
recorded, the mortgage is nevertheless binding between the debt or the sale of the real property. In this case, the Rules
parties. (2125) of Court on the foreclosure of mortgages shall apply. (2137)
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• The persons in whose favor the law establishes a mortgage • The contracting parties may stipulate that the interest upon
have no other right than to demand the execution and the the debt be compensated with the fruits of the property
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recording of the document in which the mortgage is which is the object of the antichresis, provided that if the
formalized. value of the fruits should exceed the amount of interest
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• The mortgage directly and immediately subjects the allowed by the laws against usury, the excess shall be
property upon which it is imposed, whoever the possessor applied to the principal. (2138)
may be, to the fulfillment of the obligation for whose
security it was constituted. (2126) CHATTEL MORTGAGE
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• The mortgage extends to (2127) • By a chattel mortgage, personal property is recorded in the
a. Natural accessions, Chattel Mortgage Register as a security for the performance
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d. The rents or income not yet received when the pledge and not a chattel mortgage. (2140)
obligation becomes due, • The provisions of this Code on pledge, insofar as they are
e. To the amount of the indemnity granted or owing to the not in conflict with the Chattel Mortgage Law shall be
proprietor from the insurers of the property mortgaged, applicable to chattel mortgages. (2141)
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by law, whether the estate remains in the possession of 1. Constituted to secure the fulfillment of a principal
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the creditor or third person be deliver to the creditor 4. If the thing or subject matter of the pledge is sold for an
by common agreement amount in excess of the obligation, the pledgor becomes, as
There must be a Public It must be Register to the a matter of right, entitled to the excess.
instrument indicating chattel mortgage registry a. In case of voluntary pledge.
therein the description of and there must be affidavit b. In case of legal pledge.
the thing pledge and the of good faith c. Both in cases of voluntary and legal pledge.
date d. Neither in voluntary and legal pledge.
The deficiency cannot be The deficiency can be 5. D borrows from C P400,000 and delivers his car to the
recovered. recovered except in case of latter by way of chattel mortgage. The contract between D
Recto law and C is –
The excess of the proceed is The excess belongs to the a. A pledge
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retained by the pledgee, mortgagor even if there is no b. A chattel mortgage
except: stipulation to that effect c. Either a pledge or chattel mortgage according to the
a.) by stipulation; b.) legal choice of D.
pledge d. Either a pledge or chattel mortgage according to the
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Pledgee may appropriate Mortgagee cannot choice of C.
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the thing pledged, if the appropriate the thing 6. In a contact of pledge if the obligation is not paid, which of
these is a correct statement?
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same is not sold in two mortgaged.
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public auctions a. If object of the pledge is sold at public auction by a
notary public and there is an excess from that of the
Distinction between Real Estate mortgage and Chattel debt - Excess shall appertain to the pledgee.
Mortgage b. But if there is a stipulation that such excess shall
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Real Mortgage Chattel mortgage appertain to the debtor, then it shall be given to the
It is constituted on It is constituted on movables latter.
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immovables c. If it is sold at a deficiency, the pledgee cannot recover
It must be registered to take It must be accompanied by the deficiency judgment from the pledgor.
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effect against third person an affidavit of good faith to d. If it is sold at a deficiency but there is a stipulation that
take effect against third such deficiency can be recovered from debtor - that
persons stipulation is null and void.
It may secure future Cannot secure future e. All of the above
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Multiple Choice
of loan and antichresis.
1. Which of these is not essential requisite common to both
a. Are both valid.
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and void.
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the obligation.
8. In which of these cases is the object of the pledge allowed
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possession of the creditor, or of a third person by common c. The delivery of the personal property is necessary.
agreement. d. The registration of the property in the Registry of
a. Both are True c. 1st is True; 2nd is False Property is not necessary.
b. Both are False d. 1st is False; 2nd is True 18. Basco pledged his Omega watch to Cruz pawnshop for
P10,000. Basco failed to pay the pawnshop the P10,000 on
11. Dean borrowed from Bean P20,000. Dean offered his ring
due date. Cruz sold the Omega watch at a public auction to
by way of pledge. It was expressly stipulated that upon non- the highest bidded at P8,000. (Phil CPA, 98-1)
payment of the debt on time, the ring would belong to Bean. a. Cruz can recover the deficiency of P2,000 from Basco.
This forfeiture clause, which has traditionally not been b. Cruz cannot recover the deficiency of P2,000 even if
allowed, is called: there is a stipulation.
a. Pacto de retro c. Commodatum c. Cruz can recover the deficiency of P2,000 even without
b. Pacto comisorio d. Mutuum stipulation.
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12. A stipulation whereby the pledgee or mortgagee d. Cruz cannot recover the deficiency of P2,000 unless
automatically becomes the owner of the thing pledged or there is a stipulation.
mortgaged: (Phil CPA, 93-2) e. Property is not necessary.
a. Pactum commissorium.
19. The following are essential requisites common to the
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b. Consolidation of ownership.
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contract of pledge and mortgage, except one: (Phil CPA,
c. Conventional redemption. 97-2)
d. Consignation.
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a. That they are constituted to secure the fulfillment of a
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13. Which of the following statements is true and correct? (Phil principal obligation.
CPA, 93-2) b. That the pledgor or mortgagor is the absolute owner of
a. Pledge and mortgage are accessory contracts because the thing pledged or mortgaged.
they cannot exist by themselves. c. That the contract is registered with the Register of
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b. In both pledge and mortgage the creditor is entitled to Deeds.
deficiency judgment. d. That the person constituting the contract has free
disposal of his property or that he is authorized legally
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c. Where an obligation is secured by a pledge or mortgage
for the purpose.
and it is not paid when due the pledgee or mortgagee 20. Cesar pledged his Toyota car to Dan for P100,000. Cesar
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may dispose of the thing pledged or mortgaged if there was unable to pay the obligation two (2) months after the
is an agreement to that effect between the parties. obligation became due and demandable. Wherefore, Dan
d. Unless otherwise agreed upon by the parties, the sale of sold the car at public auction for P80,000. Can Dan recover
the mortgaged property extinguishes in full the the deficiency of P20,000 from Cesar?
1st answer: No, he cannot recover the deficiency even is
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interest of 12% per annum. To secure the debt; D agreed 2nd answer: Yes, he can recover the deficiency even
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with C that the fruits from the agricultural lot of D shall without stipulation. (Phil CPA, 97-2)
answer for the interest and the principal obligation. a. 1st answer correct, 2nd answer wrong
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