4 - Credit Transactions

1. A contract of pledge is perfected upon:

a. Consent of both the contracting parties

b. Delivery of the thing pledged

c. Execution of the contract in writing

d. Execution of the contract in a public instrument

B

2. In what capacity an agent can retain the things which are the objects of agency until the principal effects the reimbursement and pays the indemnity?

a. In the capacity of a pledgor

b. In the capacity of an unpaid seller

c. In the capacity of a guarantor

d. In the capacity of an antichretic creditor

A

A, minor, entered into a contract of loan with B, of legal age. Under the contract, B borrowed P100,000 from A. Pursuant to this contract B likewise executed a contract of pledge whereby be delivered his laptop and his phone to A to secure the obligation. Is the contract of pledge valid?

a. No a contract of pledge cannot secure a voidable contract.

b. No a contract of pledge cannot secure an unenforceable contract.

c. Yes a contract of pledge can secure a voidable contract.

d. Yes. A contract of pledge can secure unenforceable contract.

C

4. Ocean entered into a contract of loan with Lake whereby Lake borrowed P250,000 from Ocean. Bay entered into a contract of pledge with Ocean whereby Bay delivered her car to Ocean to secure Lake's obligation. Is the contract of pledge valid?

a. Yes. The contract of pledge is valid as long as Bay is the absolute owner of the car.

b. No. The contract of pledge is not valid because Bay does not have the free disposal of the proceeds of the loan.

c. Yes. The contract of pledge is valid provided that prior consent of Lake was secured.

d. No. The contract of pledge is not valid because Bay is not a party to the principal obligation secured.

A

In a contract of pledge, the pledgor transfers:

a. Possession over the thing pledged.

b. Ownership over the thing pledged.

c. Both possession and ownership over the thing pledged.

d. Neither possession nor ownership over the thing pledged.

A

A pledge shall take effect against third persons if the following information appear in a public instrument:

a. Description of the thing pledged and date of the pledge

b. Description of the thing pledged, date of the pledge, and the original contract of loan

c. Description of the thing pledged, date of the pledge, the original contract of loan, and the due date of payment of the loan

d. Description of the thing pledged, date of the pledge, the original contract of loan, the due date of payment of the loan, and the intended disposition of the proceeds of the loan

A

Toby and Shiela entered into a contract of loan whereby Toby borrowed P4,000,000 from Shiela by way of loan. Toby likewise delivered by way of pledge his car to Shiela. Toby eventually sold the car to Max, who paid sufficient and valuable consideration for the car. Which of the following statements is true?

a. Even without the consent of Shiela, Max will gain ownership and possession over the car.

b. Even without the consent of Shiela, Max will gain ownership over the car, but, as a rule, possession will remain with Shiela.

c. It is only with the consent of Shiela that Max will gain ownership over the car, and, as a rule, possession shall likewise be with Max.

d. It is only with the consent of Shiela that Max will gain ownership over the car, but, as a rule, possession will remain with Shiela.

D

Statement 1: A pledgee cannot deposit the thing pledged.

Statement 2: Any stipulation allowing the pledgee to deposit the thing pledged is void.

a. Only Statement 1 is true.

b. Only Statement 2 is true.

c. Both statements are true.

d. Both statements are not true.

A

Lala and Po entered into a contract of pledge over a motorcycle to secure Po's debt of P100,000. Lala, the pledgee, suddenly had an errand to buy tomatoes on the public market, but the public market is three kilometers away. She suddenly remembered that she has in his possession Po's motorcycle. Can Lala use the motorcycle?

a. No, Lala has not been granted authority by Po to use the motorcycle,

b. Yes, Lala can use the motorcycle to go to the public market because this is considered as ordinary usage.

c. No. Lala can only use the motorcycle for purposes that are beneficial to Po.

d. Yes, Lala can use the motorcycle provided she gives notice to Po.

A

Which of the following contracts require delivery for perfection?

I. Pledge

II. Chattel mortgage

a. I only.

b. II only,

c. Both I and II.

d. Neither I nor II.

A

In order for a contract of chattel mortgage to valid, it:

a. It must be in a public instrument subscribed by both parties

b. It must be in writing subscribed by both parties in the presence of two (2) witnesses

c. It must be in writing subscribed by both parties in the presence of three (3) witnesses

d. It must be in a public instrument subscribed by at least one of the parties.

B

Statement 1: Personal properties can be the subject of chattel mortgage.

Statement 2: An affidavit of merit must be attached to the contract of chattel mortgage.

a. Only Statement 1 is true.

b. Only Statement 2 is true.

c. Both statements are true.

d. Both statements are not true.

A

Patrick entered into a contract of chattel mortgage with Edward involving the former's fleet of cars. At the time of execution of the chattel mortgage, Patrick earns a blue and a red car. The contract described the two (2) cars as constitutive of the entire fleet of cars of Patrick that is the subject of the chattel mortgage. Two months after the execution of the chattel mortgage, Patrick was able to purchase another car, a green one. Edward, being unpaid sought to foreclose the blue, red, and green cars. Can Edward do so?

a. No. The green car was not particularly described in the contract of chattel mortgage.

b. Yes. It is the intention of the parties to subject the entire fleet of cars

of Patrick to the chattel mortgage.

c. No. Foreclosure can only be done on one of the cars, not all.

d. Yes. After-acquired properties are, as a rule, deemed to be included in the contract of chattel mortgage.

A

A mortgagor in default may prevent the transfer of ownership from the foreclosure of the mortgaged property by paying the amount due on the mortgage and the reasonable costs and expenses:

a. Before notice of the foreclosure sale

b Before the foreclosure sale

c. Within thirty (30) days from the foreclosure sale

d. Within ninety (90) days from the foreclosure sale

B

Sally, as the mortgagor, entered into a contract of chattel mortgage over a car with Jenny, as the mortgagee to secure a contract of loan amounting to P500,000. When the loan fell due after one (1) year, Sally was unable to pay Jenny, and Sally's balance is now P525,000, considering the addition of interest. Jenny sought to foreclose Jenny's car. Jenny spent P12,000 as cost of foreclosure sale. She was able to sell the car for P400,000. Can Jenny recover the deficiency?

a. No, there is no right of recovery in foreclosures of chattel mortgages.

b. Yes, but only up to P100,000. The recovery should exclude the interest and costs of foreclosure sale.

c. Yes, but only up to P125,000. The recovery should exclude the costs of foreclosure sale.

d. Yes. The recovery includes both interest and costs of foreclosure sale.

D

The mortgagee in a real estate mortgage:

a. Takes ownership and possession of the property mortgaged

b. Takes possession, but not ownership, of the property mortgaged

c. Does not take possession and ownership of the property mortgaged but is entitled to the fruits of the property mortgaged,

d. Does not take possession and ownership of the property mortgaged and is likewise not entitled to the fruits of the property mortgaged,

D

Cairo and Beirut entered into a contract of loan for P1,220,000 secured by a real estate mortagage over a 1,200 square meter parcel of land owned by Cairo as the mortgagor located in Camarines Sur. Jeddah is interested in acquiring Cairo's land. Can Cairo sell his land?

a. Yes, but only if there is a stipulation allowing him to do so.

b. Yes, but only if there is no stipulation prohibiting him to do so.

c. Yes, even if there is a stipulation prohibiting him to do so.

d. No, Cairo cannot sell his land to Jeddah as it is mortgaged with Beirut.

C

Normani and Camila entered into a contract of loan secured by a real recorded in the Registry of Deeds. When Normani was not able to pay estate mortgage. The contract was entered into in writing but not the loan, the mortgagee, Camila, sought to foreclose the real estate mortgage. However, Normani opposed the move, contending that the contract of real estate mortgage is not recorded in the Registry of Deeds Can Camila foreclose?

a. Yes. Recording in the Registry of Deeds is not required for the validity of the real estate mortgage.

b. No. Recording in the Registry of Deeds is required for the validity of the real estate mortgage.

c. Yes. Although the recording in the Registry of Deeds is required for the validity of the real estate mortgage, it is required before a property may be foreclosed.

d. No. Although the recording in the Registry of Deeds is required for the validity of the real estate mortgage, it is not required before a property may be foreclosed.

A

Statement 1: A real estate mortgage cannot secure a future loan.

Statement 2: A real estate mortgage is always a right in rem.

a. Only Statement 1 is true.

b. Only Statement 2 is true.

c. Both statements are true.

d. Both statements are not true.

D

If there is equity of redemption, the court orders the mortgagor to pay the amount due and other charges within a period of:

a. Not less than 30 days nor more than 60 days.

b. Not less than 60 days nor more than 90 days.

c. Not less than 90 days nor more than 120 days.

d. Not less than 120 days nor more than 180 days.

C

There is equity of redemption in:

a. Judicial foreclosure only.

b. Extrajudicial foreclosure only.

c. Both judicial and extrajudicial foreclosure.

d. Neither judicial not extrajudicial foreclosure.

A

Which of the following act in a judicial foreclosure operates to divest the rights of all parties to the action?

a. Expiration of the period of redemption.

b. Order of sale at a public auction

c. Confirmation of sale by the court

d. Recording of the sale in the Registry of Deeds.

C

In extrajudicial foreclosure, the debtor has the right to redeem the property sold within:

a. 30 days from the date of sale.

b. 90 days from the date of sale.

c. 180 days from the date of sale

d. 1 year from the date of sale.

D

What is the notice required prior to the conduct of public sale in an judicial foreclosure?

a. Posting of the notice in three public places

b. Publication in a newspaper of general circulation

c. Posting of the notice in three public places and publication in a newspaper of general circulation

d. Posting of the notice in three public places or newspaper of general circulation

D

If the mortgagee is a bank, quasi-bank or trust entity and the debtor is a juridical person:

a. There is no right of redemption. However, juridical mortgagors may redeem the property before the registration of the TCT to the buyer

b. There is no right of redemption. Juridical mortgagors cannot redeem the property before the registration of the TCT to the buyer

c. There is a right of redemption. Juridical mortgagors may redeem the property within three months after the registration of the TCT to the buyer.

d. There is a right of redemption. Juridical mortgagors may redeem the property within one year after the registration of the TCT to the buyer.

A