Credit Transactions 1

Question 1

Edward Cullen delivered to Bella Swan his guitar for safekeeping, so that Bella may keep it for the meantime and return the exact thing. What is the nature of the contract?
a) commodatum
b) mutuum
c) deposit
d) suretyship

Answer 1

c) deposit

Question 2

In case no. 1, if the primary purpose is for Bella to use the thing and keep it for the
meantime, and to later on return the exact same thing, what is the nature of the
contract?
a) commodatum
b) mutuum
c) deposit
d) suretyship

Answer 2

a) commodatum

Question 3

Only one of the choices does not match any of the given. Which is it?
i - commodatum
ii - mutuum
iii - necessary deposit

a) one which is made in compliance with a legal obligation
b) one where a person binds himself to the creditor to fulfil the obligation of the principal debtor in case the latter fails to do so
c) one which is essentially gratuitous and which has for its purpose the use of the thing loaned
d) one whereby one of the parties delivers to another money or other consumable thing with the understanding that the same amount of the same kind and quality shall be paid

Answer 3

b) one where a person binds himself to the creditor to fulfil the obligation of the principal debtor in case the latter fails to do so

Question 4

Only one of the choices does not match any of the given. Which is it?
i - agency
ii - credit transactions
iii - guaranty

a) is a contract which exists where one person has undertaken an obligation and another person is also under a direct and primary obligation or other duty to the oblige, who is entitled to but one performance
b) is a contract where one person binds himself to the creditor to fulfil the obligation of the principal debtor in case the latter fails to do so
c) is a contract where one person binds himself to render some service or to do something in representation or on behalf of another, with the consent and authority of the latter
d) one which include all transactions involving the purchase or loan of things, services or money in the present with a promise to pay in the future

Answer 4

a) is a contract which exists where one person has undertaken an obligation and another person is also under a direct and primary obligation or other duty to the oblige, who is entitled to but one performance

Question 5

Zack borrows P100,000 from Cody, and as a security, delivered to Cody his farm land
so that Cody may harvest the crops and apply the same to the payment of the
interest. What kind of contract was entered into by Zack and Cody?

a) contract of pledge
b) contract of real estate mortgage
c) contract of antichresis
d) contract of chattel mortgage

Answer 5

c) contract of antichresis

Question 6

Candace and Stassi are bestfriends. Candace needs money to put up a small business selling candies. Stassi is willing to lend Candace P100,000 provided Candace delivers to her (Stassi) her (Candace’s) shiny new pink bicycle. What is the nature of the
accessory contract between the bestfriends?
a) contract of pledge
b) contract of chattel mortgage
c) contract of real mortgage
d) contract of antichresis

Answer 6

a) contract of pledge

Question 7

In the preceding case, if the security for the principal obligation is not a bicycle, but a small piece of land to be transferred to Stassi’s possession, what is the nature of the accessory contract?
a) contract of chattel mortgage
b) contract of suretyship
c) contract of antichresis
d) contract of mutuum

Answer 7

c) contract of antichresis

Question 8

If Stassi is only willing to lend money to Candace provided Jeremy binds himself solidarily to pay the obligation, what is the nature of the accessory contract?

a) contract of guaranty
b) contract of mutuum
c) contract of pledge
d) contract of suretyship

Answer 8

d) contract of suretyship

Question 9

Rachel borrowed from Kurt his electric blue costume to wear to a musical performance by New Directions. Kurt previously owes Rachel P2,000 which obligation had not yet been paid. Kurt let Rachel borrow the costume with the understanding that such will
be returned to him after the performance. When Rachel was about to return the costume, she remembered that Kurt owes her P2,000, and told Kurt that she will just keep the costume until such time that Kurt will pay his obligation. Which of the
following is correct?

a) Rachel can keep the costume as security for Kurt’s obligation
b) Rachel can keep the costume as payment of Kurt’s obligation to her
c) Rachel cannot keep the costume since ownership remains with Kurt
d) none of the above

Answer 9

d) none of the above

Question 10

In the preceding case, if there were defects or flaws in the costume, and Kurt was aware thereof but did not notify Rachel, and Rachel incurs expenses because of such flaws, can Rachel keep the costume?

a) yes, until such time that Kurt will reimburse her for the expenses
b) yes, and ownership thereof will be transferred to her
c) yes, if the expenses are considered as extraordinary
d) yes, if the expenses are only ordinary

Answer 10

a) yes, until such time that Kurt will reimburse her for the expenses

Question 11

Which of the following is true?

a) The bailee in commodatum acquires the use of the thing loaned, however, such use does not extend to the fruits
b) Only immovable things can be the object of commodatum
c) A stipulation that the bailee may make use of the things loaned shall not be valid
d) The bailee is liable for the loss of the thing if such loss is occasioned through an event considered fortuitous

Answer 11

a) The bailee in commodatum acquires the use of the thing loaned, however, such use does not extend to the fruits

Question 12

One where the creditor can demand for the return of the thing loaned at will

a) Precarium
b) Mutuum
c) Commodatum
d) Novation

Answer 12

a) Precarium

Question 13

What kind of credit transactions are deposits of money at the bank?

a) Mutuum
b) Commodatum
c) Deposit
d) Judicial deposit

Answer 13

a) Mutuum

Question 14

Hannah is the guarantor of Lilly for Lilly’s obligation to Oliver. Lilly owes Oliver the sum of P15,000 but Hannah told Oliver that such guaranty extends to the amount of P25,000.

a) Hannah may guaranty up to the amount of P25,000 for Lilly’s future obligations to Oliver
b) Hannah cannot bind herself for more than the amount of the principal obligation
c) Hannah may bind herself for less as well as for more than the principal obligation
d) None of the above

Answer 14

b) Hannah cannot bind herself for more than the amount of the principal obligation

Question 15

One where the creditor acquires the right to receive the fruits of an immovable of the debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of the credit

a) Pledge
b) Mortgage
c) Antichresis
d) None of the above

Answer 15

c) Antichresis

Question 16

Goofy is eager to purchase his very own brand new car and approached Clarabelle Car Dealership to buy one. The owner Clarabelle told him that there is a roadster car that would be perfect for him. Goofy decided that he would purchase such roadster
and told Clarabelle that his cash on hand is only P50,000, and that he could not afford a roadster costing P300,000. Clarabelle then offered Goofy an installment plan where Goofy will pay Clarabelle a down payment of P50,000 and pay the balance in
installments, at a monthly payment of P5,000 with 0% interest. However, Clarabelle will constitute a mortgage on the tiny piece of land which Goofy owns to secure the fulfillment of the installment obligation, to which Goofy agreed thereto. After paying P100,000, Goofy failed to pay the other installments, which led Clarabelle to foreclose the mortagage. At the public auction, the tiny piece of land was bought by Minnie for P100,000. Which is true?

a) Minnie will have to pay the deficiency of P50,000
b) Goofy is no longer liable to pay anything in accordance with the Civil Code of the
Philippines
c) Goofy will have to pay Clarabelle Car Dealership the amount of P50,000
d) The buyer of the roadster is no longer liable to pay the deficiency in accordance
with the Maceda Law

Answer 16

c) Goofy will have to pay Clarabelle Car Dealership the amount of P50,000

Question 17

Honesto bought from Eli a motorcycle for P60,000 payable in installment, at P5,000 for 12 months. As security thereof, a chattel mortgage was constituted on the pink bicycle of Lea. After payments for five months, Honesto failed to pay for the installment due the current month. What is Eli’s course of action?

a) Eli can compel Honesto to pay P5,000
b) Eli can demand the exact fulfillment of the obligation
c) Eli can foreclose the chattel mortgage
d) Eli can cancel the sale

Answer 17

a) Eli can compel Honesto to pay P5,000

Question 18

Honesto bought from Eli a motorcycle for P60,000 payable in installment, at P5,000 for 12 months. As security thereof, a chattel mortgage was constituted on the pink bicycle of Lea. After payments for five months, Honesto failed to pay for the installment due the current month. What provision of the Law should Honesto consider in the present case?

a) The Recto Law
b) Sales Law, particularly Article 1484
c) The Law on Chattel Mortgage
d) All of the above

Answer 18

d) All of the above

Question 19

Honesto bought from Eli a motorcycle for P60,000 payable in installment, at P5,000 for 12 months. As security thereof, a chattel mortgage was constituted on the pink bicycle of Lea. After payments for five months, Honesto failed to pay for the installment due the current month. Eli made a demand for payment, but Honesto failed to pay for the current month and for three succeeding months thereafter. Eli then foreclosed the chattel mortgage constituted on the bicycle of Lea. Can Lea prevent the foreclosure of the property?

a) Yes, since she is the owner of the property
b) Yes, since partial payments had already been made on the obligation
c) It would depend on Lea whether she will consent thereto or not
d) No, since she consented to the chattel mortgage constituted on the chattel

Answer 19

d) No, since she consented to the chattel mortgage constituted on the chattel

Question 20

The following contracts are all credit transactions. Which one would require a personal property as its object?

a) Antichresis
b) Surety
c) Pledge
d) None of the above

Answer 20

c) Pledge

Question 21

True/False:

(i) In the contracts of pledge and mortgage, it is important that the
pledgor or mortgagor be the absolute owner of the thing.
(ii) In a contract of mortgage, it is always the debtor of the principal obligation whohas to mortgage his own property as security for the fulfillment of such obligation.

a) True, false
b) False, true
c) True, true
d) False, false

Answer 21

a) True, false

Question 22

Kit loaned P10,000 from Tash and mortgaged her pink bicycle as security for the fulfillment of the obligation. The parties included a stipulation in their contract that Tash will become the automatic owner of the bicycle in case Kit will not be able to pay the loan on time. At the maturity of the obligation, Kit was not able to pay the sum of P10,000. Will Tash became the owner of the pink bicycle?

a) Yes, since that is the stipulation between the parties
b) No, because the value of the pink bicycle may be higher than the amount of
P10,000
c) Yes, if it can be proven that the value of the pink bicycle is more or less the
same as the amount of P10,000
d) No, since the stipulation is void

Answer 22

d) No, since the stipulation is void

Question 23

Kit loaned P10,000 from Tash and mortgaged her pink bicycle as security for the fulfillment of the obligation. A few months later, she needed another P10,000 and mortgaged the exact same bicycle to Valerie. How would the second mortgaged be
characterized?

a) The second mortgage is void since there had already been a previous mortgage
b) The second mortgage would only be valid upon the payment of the previous
mortgage
c) The second mortgage would still be a valid mortgage
d) The second mortgage is voidable and could be avoided upon the instance of
Tash

Answer 23

c) The second mortgage would still be a valid mortgage

Question 24

Tash and Kit entered into a contract of loan with a corresponding contract of pledge on Tash’s bicycle. A month thereafter, Tash asked Kit if it would be okay if he will sell the bicycle to Valerie. Kit consented thereto. After the sale to Valerie, Kit has to turn over the possession of the bicycle to the new owner thereof.

a) True, since Valerie is now the new owner of the bicycle
b) False, since in a contract of pledge, the object remains in the possession of the debtor thereof
c) True, since in a contract of pledge, the thing subject matter thereof will be
transferred to the possession of the owner if there is consent of the creditor, Kit
d) False, since in a contract of pledge, as in this case, the possession of the thing will still be with Kit

Answer 24

d) False, since in a contract of pledge, as in this case, the possession of the thing
will still be with Kit