Credit Transaction Exercise 1

D1 and D2, joint debtors, executed a contract of pledge in favor of C, delivering a diamond ring and a gold watch, as security for his loan amounting to P250,000. Without the debt being paid, C died leaving X and Y, his sole heirs; D1 eventually made a payment to X representing his share of the debt owed to C. Which of the following is true?

D1 cannot ask for the release, and X is not authorized to return, any of the objects

If the principal obligation remains unsatisfied, the pledgee-creditor can have the pledge foreclosed. Who will conduct the foreclosure sale?

Notary Public

The sale of the thing subject of a legal pledge shall be done only after a demand is made for the amount for which it is retained The public auction shall take place within ________ after such demand.

one month

First statement: If the thing pledged is not sold at the public auction, a second one with the same formalities shall be held

Second statement: If at the second auction there is still no sale, the creditor may appropriate the thing pledged

Both statements are correct

D is indebted to C for P10,000 payable on November 30, 2020. To secure the obligation, D negotiated a negotiable promissory note payable to him (D) for the amount of P15,000 due on October 30, 2020 On October 30, 2020, and C collected on the promissory note and applied the P10,000 to the obligation of D to him.

Who would be entitled to the excess P5,000?

D

A pledged his diamond ring to secure his debt to B amounting to P20,000. A was not able to pay the said debt. Which of the following is incorrect if B sold the ring at a public auction?

If the ring sold for P18,000, B would be entitled to the deficiency if there is stipulation to that effect

A void stipulation allowing the creditor to appropriate the things given by way of pledge or mortgage or dispose of them.

Pactum commissorium

Which of the following is false?

The creditor can use the thing pledged, even without the authority of the owner

In this type of contract, sale of the thing subject thereof during the pendency of the contract will result in criminal liability:

Chattel Mortgage

First statement: A statement in writing by the pledgee that he renounces or abandons the pledge extinguishes the pledge upon receipt of the pledgor of the thing pledged

Second statement: The acceptance by the pledgor or owner, or the return of the thing pledged is necessary to extinguish the pledge

Both statements are incorrect