Credit Transactions

Question 1

The following are similarities between pledge and mortgage, except:

a. Constituted to secure the fulfillment of an obligation

b. Pledgee/mortgagee be the absolute owner of the thing pledged/mortgaged

c. Persons constituting the pledge or mortgage have free disposal of their property

Answer 1

b.

Pledgor/mortgagor be the absolute owner of the thing pledged/mortgaged

Question 2

A pledge or mortgage is a ____________ contract, meaning that it cannot exist without a valid obligation or a principal contract

a. Onerous
b. Commutative
c. Preparatory
d. Accessory

Answer 2

d.

Question 3

How can third persons who are not parties to the principal obligation secure the said obligation?

a. Pledging a property which does not belong to them

b. Mortgaging a property belonging to them

c. Write a public instrument and mortgage a property belonging to them

d. None of the choices

Answer 3

b.

Question 4

A stipulation where the creditor appropriates the things given by way of pledge or mortgage, or dispose them, is ________

a. Void
b. Valid
c. Voidable
d. Unenforceable

Answer 4

a.

Question 5

It is necessary in a pledge that, in order to constitute it, the thing pledged be placed in the possession of the debtor. TRUE OR FALSE?

Answer 5

False.

It should be placed in the possession of the CREDITOR.

Question 6

This kind of pledge is created by operation of law.

a. Legal
b. Voluntary
c. Conventional
d. Real

Answer 6

a.

Question 7

Identify which of the statements is incorrect.

A - If the pledge earns or produces fruits, income, dividends or interest, the debtor shall compensate what he receives with those which are owing him.

B - In cases of pledge involving animals, their offspring shall pertain to the pledgor/owner of the animals.

a. A only
b. B only
c. Both A and B
d. Neither A nor B

Answer 7

a.

Question 8

The following are not the characteristics of a contract of pledge, except:

a. Bilateral
b. Principal
c. Unilateral
d. Preparatory

Answer 8

c.

Pledge creates an obligation solely on the part of the creditor to return the thing.

Question 9

F owes G P10,000,000. This debt is secured by a pledge on a building owned by F.

During the year, while the debt was still unpaid, the building earned P150,000 rent income. The debt has interest payable of P200,000.

The income from the building can be applied to (and amount that can be allocated):

a. Entire P150,000 to the principal
b. Entire P150,000 to the interest
c. P50,000 to the principal, P100,000 to the interest
d. P50,000 to the interest, P100,000 to the principal

Answer 9

b.

The creditor shall compensate whatever fruits/income/dividends/interest he shall receive with those which are owing him. If none, or if there is any excess, he shall apply it to the principal.

Question 10

L owes K P100,000. L pledged his personal car to K in order to secure the former’s debt. While the debt is still unpaid, K used the car to drive daily around the community to warm up the engine and keep the brakes functioning. When L noticed what K is doing, he asked the latter that the car be judicially deposited. Is his contention valid?

a. Yes, because the creditor cannot use the thing pledged without the authority of the owner.

b. Yes, because K’s actions will lead to the destruction of his car.

c. No, because he has implied authority to use the car (that is, to drive around the community)

d. No, because while there may be no authorization from the owner, K’s actions will help preserve the thing.

Answer 10

d.

Question 11

True or False: a pledgee can bid in a public auction, regardless of whether he is the sole bidder or not.

Answer 11

False.

The pledge can bid in a public auction, except when he is the only bidder.

Question 12

I - If the price of the sale > amount, debtor shall be entitled to the excess all the time.

II - If the price of the sale < amount, the creditor shall not be entitled to recover the deficiency

Which of the statements are true?

a. II
b. I
c. Both I and II
d. Neither I nor II

Answer 12

a.

Question 13

K is indebted to A for P200,000. The debt is secured by a pledge over K’s motorcycle. K failed to pay on time, so A foreclosed the pledge. The selling price is P240,000. There is no stipulation stating that the debtor will be entitled to the excess.

How much can K receive?

a. P200,000
b. P40,000
c. P0
d. P120,000

Answer 13

c.

Question 14

A real estate mortgage should be in a public instrument containing the description of the property mortgaged, as well as it should be recorded in the Registry of Property. Failure to do so will make the mortgage _____________.

a. Void
b. Voidable
c. Unenforceable
d. Valid

Answer 14

d.

The two (2) requisites above are valid. There is no form required to constitute a contract of real estate mortgage, but the two requisites above are only needed to affect third persons.

Question 15

A stipulation that covers future advancements is called:

a. Escalation clause
b. Dragnet clause
c. Netdrag clause
d. Dragrace clause

Answer 15

b.

Question 16

D is indebted to X for P5,000,000. D mortgaged his lot and executed a Deed of Real Estate Mortgage. Also included in the agreement is a stipulation where D is forbidden to alienate the lot.

With respect to the agreement, the stipulation is ________

a. Valid
b. Rescissible
c. Void
d. Voidable

Answer 16

c.

Question 17

What is the requirement for notice of foreclosure sale if it would be done judicially?

a. Not required
b. Not required, unless stipulated
c. Posting in 20 public places at least 3 days prior to sale
d. Posting in 3 public places at least 20 days prior to sale.

Answer 17

d.

Question 18

J, mortgagee, sold the property mortgaged by M, mortgagor, in a foreclosure sale for P1,000,000. The unpaid debt amounts to P1,100,000, which is also equal to the value of the property. The property is subject to real property mortgage.

Who is entitled to the excess (deficiency)?

a. J
b. M
c. Both, equally
d. None of them

Answer 18

a.

If proceeds is more than unpaid amount: mortgagor entitled to excess.

If proceeds less than unpaid amount: mortgage entitled to deficiency.

Question 19

Notice of an extrajudicial foreclosure sale is:

a. Posting in 3 public places at least 20 days prior to sale
b. Posting in 20 public places at least 3 days prior to sale
c. Not required, unless stipulated
d. Done online

Answer 19

c.

Question 20

Period of redemption in an extrajudicial sale where the debtor is Metrobank and creditor is K is:

a. 1 year from date of foreclosure
b. 3 months from sale or registration of certificate of sale, whichever is later
c. 3 months from sale or registration of certificate of sale, whichever is earlier
d. 90 days

Answer 20

a.

If debtor is K and creditor is Metrobank, under General Banking Law, the answer would be choice c.

Question 21

To affect third persons in a chattel mortgage, vehicles mortgaged should be registered and reported to which agency?

a. LTO
b. LTFRB
c. MARINA
d. CAP

Answer 21

a.

Question 22

An affidavit of good faith is a ______ contract.

a. Onerous
b. Principal
c. Bilateral
d. Formal

Answer 22

d.

Question 23

Which credit transaction will result to a criminal act if the object is disposed?

a. Pledge
b. Real estate mortgage
c. Chattel mortgage
d. All of the choices

Answer 23

c.

Question 24

Foreclosure in a chattel mortgage shall be done ______________

a. Judicially
b. Extrajudicially
c. Either, at option of the parties
d. None of the choices

Answer 24

b.

Question 25

How many days before auction and how many public places should a notice of foreclosure sale of a chattel mortgage be required?

a. 10 days, 2 or more public places
b. 2 days, 10 or more public places
c. 2 days, 2 or more public places
d. 10 days, 10 or more public places

Answer 25

a.