Credit Transactions

Question 1

Requisites of Contract of Pledge and Mortgage

Answer 1

• That they be constituted to secure the fulfillment of a principal obligation;
• That the pledgor or mortgagor be the absolute owner of the thing pledged or
  mortgaged;
• That the persons constituting the pledge or mortgage have the free disposal of their
  property, and in the absence thereof, that they be legally authorized for the purpose.

Question 2

General Rule on Use of the Thing Pledged

Answer 2

General Rule: The creditor cannot use the thing pledged, without authority of the
owner.

Question 3

Exceptions to the General Rule on Use of the Thing Pledged

Answer 3

• Authority from the Owner (Pledgor)
• When the preservation of the thing pledged requires its use, it must be used by the
  creditor but only for that purpose.

Question 4

Two ways to Extinguish a Contract of Pledge

Answer 4

• Thing Pledge is Returned.
• Renunciation or Abandonment of Pledge

Question 5

Subject of Commodatum (General Rule and Exception)

Answer 5

• General Rule: The subject matter of commodatum must be non-consumable because
  the thing must be returned.
• Exception: Consumable goods may be the object of commodatum if the purpose is not
  to consume them such as when they were loaned merely for exhibition purposes. After
  the affair, the same and identical goods shall be returned to the lender or bailor.

Question 6

Requisites to bind third persons in a Contract of Pledge

Answer 6

• Pledge must be embodied in a public instrument containing the following:
• Description of the thing pledged
• Statement of date when the pledge was executed

Question 7

Requisites of a Public Auction

Answer 7

• Obligation must be due and unpaid.
• Sale of the thing pledged must be in a public auction.
• There must be a notice to the pledgor and owner stating the amount for which the sale
  is to be held.
• Sale must be conducted by Notary Public

Question 8

What are the requisites to bind third persons in the contract of real estate mortgage?

Answer 8

• In order to affect third persons:
• There must be a public instrument containing the description thereof; and
• The same should be recorded in the Registry of Property

Question 9

What would happen if the proceeds of the foreclosure sale is more than the unpaid amount
under the contract of real estate mortgage?

Answer 9

The mortgagor shall be entitled to the excess.

Question 10

Instances of Necessary Deposit

Answer 10

• In compliance with a legal obligation
• Takes place on the occasion of any calamity
• Made by passengers with common carriers
• Made by travelers in hotels or inns

Question 11

What is Pactum Commissorium?

Answer 11

the automatic appropriation by the creditor of the thing pledged or mortgaged upon the failure of the debtor to pay the principal obligation

Question 12

Characteristic of real mortgage

Answer 12

• Nominate- it has special designation under the civil code
• Accessory- validity is dependent upon the validity of principal contract
• Consensual - perfected by mere consent
• Unilateral- only the mortgagor has an obligation in favor of the mortgages

Question 13

What is a chattel mortgage?

Answer 13

Chattel mortgage is a contract whereby personal property is recorded in the chattel
mortgage registry as a security for the performance of the obligation.