Midterm Flashcards
1
Q
Credit transactions
A
Sets of contracts governing money and assets
2
Q
Credit
A
Ability of person to incur debt based on the evaluation of another person (trust, confidence).
His ability to borrow money by virtue of the confidence or trust reposed by a lender that he will pay what he may promise
Based on the ability to pay
3
Q
Loan
A
One party delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid
4
Q
Credit (TILA)
A
- Any loan, mortgage, deed of trust, advance, or discount
- Any conditional sales contract
- Any contract to sell
- Any sale or contract of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale/contract
- Any rental-purchase contract
- Any contract or arrangement for the hire, bailment, or leasing of property
- Any option, demand, lien, pledge, or other claim against, or of the delivery of, property or money
- Any purchase or other acquisition of any obligation of claim arising out of any of the foregoing
- Any credit upon the security of any obligation of claim arising out of any of the foregoing
- Any transaction or series of transaction having a similar purpose or effect
5
Q
Commodatum
A
One of the parties delivers to another something non-consumable so that the latter may use the same for a certain time and return it
6
Q
Purpose of a loan
A
Permissive use
7
Q
Commodatum vs. loan
A
1) Object
2) What is allowed
3) For consideration?
4) What happens to ownership?
8
Q
Obligations under loan
A
1) To deliver
2) To return or pay
9
Q
When is loan perfected?
A
Upon delivery of the object
10
Q
What does the bailee acquire in commodatum?
A
The use of the thing; not the fruits
11
Q
What character does commodatum have
A
Personal in character
12
Q
What happens if there are 2 or more bailees?
A
Solidarily liable
13
Q
What is the bailee liable for?
A
Ordinary expenses and damages due to his fault
14
Q
Essential features of commodatum
A
- Gratuitous
- Use of a thing belonging to another for a certain period
15
Q
Precarium
A
When a bailor can demand the return of the thing at will because the thing is merely tolerated/no duration was stipulated
16
Q
What is bailor liable for?
A
- Extraordinary expenses (so long as bailee brings the same to the knowledge of the bailor before incurring them)
17
Q
What happens to extraordinary expenses arising from the occasion of actual use by bailee even though no fault from him?
A
Born equally by bailor and bailee unless there’s stipulation to the contrary
18
Q
When is bailee liable for the loss of the thing (even if fortuitous)
A
1) Devotes it to any purpose diff from that for which it was loaned
2) Keeps it longer than the period stipulated
3) Thing loaned has been delivered with an appraised value, UNLESS there’s a stipulation exempting the bailee from responsibility in case of a fortuitous event
4) Lends/leases the thing to a 3rd person not a member of his household
5) Being able to save between the thing borrowed or his own thing, he chose to save the latter
19
Q
Can bailor demand immediate return of the thing?
A
YES. When bailee commits acts of ingratitude
20
Q
When may bailor demand the thing at will?
A
Precarium
Acts of ingratitude
21
Q
Bailee’s right of retention
A
Only for damages (due to not being given notice of flaws); NOT right for expenses or for things owed
22
Q
Fungible
A
Capable of being replaced by the same kind; no act can make it determinable
23
Q
Object of loan
A
Money or any other fungible thing
24
Q
Obligations of a debtor (loan)
A
To pay the creditor an equal amount of the same kind and quality
25
Barter
One person transfers the ownership of non-fungible things to another with the obligation on the part of the latter to give things of the same kind, quantity and quality
26
Interest
Compensation fixed by the parties for the use or forbearance of money
27
When does right to interest arise?
By virtue of a contract/damages for delay or failure to pay the principal loan on which interest is demanded
28
Requirements for interest
Expressly stipulated in writing
29
Who prescribes legal interest
Monetary Board of the CBP
30
Escalation clause
Stipulations that govern
31
Obligation when you get a loan of a fungible thing other than money
Owe another thing of the same kind, quantity and quality even if the thing changes in value
32
Mutuality of contracts
Validity or compliance to a contract can't be left to the will of one of them
33
Escalation clauses
Stipulations allowing an increase in the interest rate agreed upon by the contracting parties.
34
Purpose of escalation clauses
Maintain fiscal stability and retain the value of the money
35
When is demand unnecessary?
1) Obligation or law expreslsly declares
2) Nature and circumstance, designation of time was a controlling motive
3) Demand would be useless; obligor has rendered it beyond his power to perform
36
Compensatory interest
1) Obligations consisting in the payment of a sum of money
| 2) Debtor incurs in delay
37
Forbearance
Arrangements other than loan agreements, where a person acquiesces to the temporary use of his money, goods or credits pending happening of certain events or fulfillment of certain conditions
38
When is stipulated interest valid?
Not excessive and unconscionable
39
Creditor needs to provide what? (TILA)
- Cash price
- Amounts to be credited as down
- Difference between the two
- Charges (indiv. itemized); not incident to the extension of credit
- Total amount to be financed
- Finance charge
Percentage that the finance bears to the total amount to be financed
40
Penalties TILA
1) Failure to disclose information - P100/amount = 2x the finance charged; not exceeding 2K
2) Willfully violates any provision - P1K-5K, or impirsonment not < 6 months
41
What guides Monetary Board
1) existing economic conditions
2) supply and demand for credit
3) rat e of increase in the price levels
4) other relevant criteria
42
Forbearance (usury law)
A contractual obligation of the lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay a loan then due and payable
43
Obligations in a deposit
Safekeep and return a thing
44
Voluntary deposit
Delivery is made by the will of the depisot
45
When is a deposit extinguished
Loss or destruction
| Death of depositor/depositary (fgratuitous)
46
Form for deposits
No form
47
Object of deposit
- Movables
48
COnsideration for deposits
GEN: Gratuitious
EXC: Agreement to the contrary, if depositary is in the business of storing goods
49
Deposit vs. Lease
Lease: for use
Deposit: safekeeping
50
Deposit vs. Consignation
Deposit with court
51
Deposit vs. Consignment
Ask someone to sell the thing for you
52
Kinds of deposit
Judicial/Extrajudicial
53
Kinds of EJ Deposit
Necessary
| Voluntary
54
When is depositary liable for loss thru fortuitous event?
1) Stipulated
2) Uses thet hing without permission
3) Delays its return
4) Allows others to use it even though he himself is authorized
55
Non-negotiable receipt
States that the goods received will be delivered to the depositor or to any other SPECIFIED person
56
Negotiable receipt
States that the goods received will be delivered to the bearer or to the order of any person named in such receipt
57
Judicial depositq
Court orders for attachment or seizure of property
58
Receipt
1) Location of warehosue
2) Date of issuance
3) Receipt number
4) Statement as to whether the goods will be delivered to bearer, their specified person or his order
5) Rate of storage charges
6) Signature of WHM
7) Description of the goods
8) Statement as to ownership of WHM if any
9) Statement of advances made and liabilities incurred that constitute a lien
59
Requisites to contract of pledge
1) Constituted to secure fulfillment of a principal obligation
2) Pledgor/mortgagor be the absolute owner of the thing pledged
3) Person constituting the pledge have the free disposal of their property; in the absence thereof, that they be legally authorized for the purpose.
* 4) May be alienated when principal obligation becomes due
60
(Art. 316) Criminal responsibility when one:
Defrauds another by:
1) Offering in pledge or mortgage as unencumbered things which he knew were
subject to some burden; OR
2) Misrepresenting himself to be the owner of the same
61
Pactum commissorium
1) There is property pledged or mortgaged by way of security for the payment of the principal obligation
2) There is a stipulation for automatic appropriation by the creditor of the collateral in case of non-payment
62
Equitable mortgage when:
1) Price with right to repurchase is unusually inadequate
2) Vendor remains in possession as lessee/otherwise
3) Upon expiration of the right to repurchase, the period is then extended
4) Purchaser retains a part of the purchase price
5) Vendor binds himself to pay taxes on the thing sold
6) Any other case where it can be fairly inferred that the real intention was to secure payment;
63
Equitable mortgage
1) Entered into something denominated as a CONTRACT OF SALE
| 2) True intention was to secure existing debt by way of mortgage
64
Real estate mortgage
constituted to secure the fulfillment of a principal obligation by the absolute owner (MORTGAGOR) of immovable/alienable real rights
65
Objects of a mortgage
1) Immovables
2) Alienable real rights
3) Movables (Chattel mortgage)
66
Dragnet clause
Meant to subsume all debts whether past or future
67
Reliance on security test
When the mortgagor takes another loan for which another security was given it could not be inferred that such loan was made in reliance solely on the original security with the "dragnet clause," but rather, on the new security given. This is the "reliance on the security test”
68
After acquired properties
A stipulation in a REGISTERED REM that all property taken in exchange or replacement by the mortgagor (after acquired property) shall become subject to the mortgage
69
Right of redemption
As per Act 3135, in an EJ foreclosure, mortgagor has the right of redemption within 1 year from registration of the sheriff's certificate of foreclosure sale
70
Equity of redemption
Right of the petitioner to extinguish the mortgage and retain ownership of the property by paying the debt within the 90 day period after the judgement became final or even after the foreclosure sale but prior to its confirmation.
EXC: Can be after confirmation by the court under pNB Charter and General Banking Act; open 1 year from date of registration of the certificate of sale in the Registry of property
71
Remedies for ineffective sale
1) Recover the price paid
| 2) Have the original judgement revived
72
Remedies of revival are available when
1) Purchaser fails to recover possession
2) Evicted because of:
- sale irregularities
- reversal of judgement
- property was exempt form execution
- a third person vindicated his claim
73
Disposition of sale proceeds
1) Costs of sale
2) Payment of mortgage debt
3) Junior encumbrancers
4) Mortgagor
74
Remedy if proceeds are not enough
Motion for deficiency judgement
75
Remedy against debt due from estate
1) Prosecute claim under Rule 86 and share in the general distribution of estate assets
2) Creditor can foreclose through an action in court
76
Notice for EJ Sale
```
20 days min
3 public places
* 3 consecutive weeks in a newspaper
* no newspaper req but notice for 60 days
*notice for 20 days in 2 places
```
77
EJ Process
1) Apply for EJ Sale with the COC
2) Let COC fulfill its duties
3) Raffle to the sheriffs (under supervision of executive judge)
4) Sheriff will prepare notice of EJ sale
5) Sheriff will conduct sale
6) Award to highest bidder
7) Pay in cash/manager's check
8) COC shall collect fees
9) Sheriff will report bidders to the COC
10) COC will issue certificate of sale
11) Approve certificate by Exec Judge
78
Who can conduct EJ sale
- Sheriff
| - Notary public
79
Duty of COC
- Examine SPA
- Give fule number
- Endorse date, time and docket it
- Collect fees and issue receipt
-
80
Participants to the sale
1) Creditor
2) Trustee
3) Other persons authorized by the creditor
81
Right of redemption can be exercised by:
1) Debtor
2) Debtors successors in interes
3) Judicial creditor
4) Any person having a lien on the property
82
How to redeem
1) Make payment to purchaser/officer who made the sale
2) Provide copy of judgement, copy of any assignment to establish claim and affidavit showing amount due on his lien
3) Purchaser must deliver a notarized certificate of redemption
83
Right of reredemption
60 days from last redemption
84
Purchaser wants possession
1) Apply for a writ of possession
2) Purchaser must furnish a bond
Remedy of debtor
1) Petition to set aside the sale and cancel the writ (Grounds: 1) Mortgage was not violated, 2) Sale didn't follow Act 3135)
2) Court will take cognizance of it
3) Both may appeal
85
Exceptions to right of purchaser to possess property
1) Equitable considerations
2) Sold to 3rd parties that assumed the mortgagor's indebtedness (attachment or co-owner)
3) Mortgagee fails to deliver surplus of proceeds
86
Antichresis
Creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit
87
Obligations of creditor in antichresis
1) Apply fruits to interest and principal
2) Pay taxes and charges unless otherwise stipulated
3) Necessary expenses
88
Form of antichresis
In writing
89
Form of pledge
Public document
90
Legal pledges
1) Possessor in good faith until he is reimbursed necessary expenses
2) Mechanic's lien
3) Bailee over damages
4) Depositary for full payment that may be due him
5) Hotel-keeper for credit on lodging and supplies
91
Exceptions regarding use by pledgee
1) Owner authorizes it
| 2) Object needs it for its preservation
92
When can pledgor demand return of the thing
1) Reasonable ground to fear destruction/impairment
2) No fault on part of pledgee
3) Pledgor offers another thing of same kind and quality
4) Pledgee didn't elect to sell it in a public sale
93
Conventional vs. legal sale
In legal sale, remainder of of the price will go to debtor
94
Scope of PPSA
All transactions of any form that secure an obligation with movable collateral except interests in aircrafts and ships
95
Movable property
1) Susceptible of appropriation
2) Real property considered as personalty
3) Forces of nature brought under control of science
4) Transported from place to place without impairment to the real property upon which it is fixed
5) Obligations and actions that have movable/demandable sums as their object
6) Shares of stock of agri, commercial and indu entities
96
Rule on commingling of funds
So long as traceable even if not identifiable
97
Form of PPSA
Written contract with a reasonable description of the collateral
98
Means of perfection
1) Registration
2) Possession
3) Control (for investment property and deposit account)
99
How to perfect via control
1) Creation of a security interest
2) Conclusion of control agreement
3) Notation in the books
100
Control agreement over:
1) Securities
2) Rights over a deposit account
3) Commodity contracts
101
Enforcement of security interest
1) Recovery
2) Disposition
3) Retention
102
Insolvency proceedings
Statutory procedures by which a debtor obtains financial relief and undergoes judicially supervised REORGANIZATION OR LIQUIDATION of its assets for the benefit of its creditors
103
Insolvent
Generally unable to pay its or his liabilities as they fall due in the ordinary course of business OR has liabilities that are greater than his assets
104
When is commingling allowed with a related enterprise
1) Prior commingling
2) Common creditors
3) Convenience
4) Related enterprise voluntarily accedes
5) Consolidation is beneficial to all concerned and promotes rehab
105
Liability
1) Dispose other than in the ordinary course of business
2) Approve transactions in fraud of creditors
3) In a manner grossly disadvantageous to debtor and/or creditors
4) Conceal property
5) Embezzle/misappropriate property
106
CLassification of credits
1) Special preferred credits (mortgages or pledges)
a) Trade-related claims
b) Taxes
c) All others
2) Ordinary preferred
3) Common credits
107
Suspension of payments
Judicial insolvency proceeding by which an individual debtor submits, for approval by his creditors, a PROPOSED AGREEMENT
108
WHen allowed to be in a state of suspension?
INsolvent under equity concept
109
Equity concept
Possessing sufficient property to cover all his debts, BUT foresees the impossibility of meeting them when they fall due
110
Requirements of petition for state of suspension
1) Schedule of debts and liability
2) Asset inventory
3) Proposed agreements w/ creditors
111
Rehabilitation
Restoration of the debtor to a condition of successful operation and solvency, IF it is shown that its continuance of operation is economically feasible and tis creditors can recover by way of the present value of payments projected in the plan, MORE IF THE DEBTOR CONTINUES AS A GOING CONCERN THAN IF IT IS IMMEDIATELY LIQUIDATED
112
Circumstances requiring rehab
1) No genuine issue of fact/law on the creditor claims
2) Due and demandable payments not for at least 60 days
3) Illiquidity; fails to meet liabilities
4) Creditor has initiated foreclosure; will force debtor into illiquidity/will render it insolvent (balance sheet concept)
113
Modes of rehab
- Court-supervised
- Pre-negotiated
- Out of court
114
Rehab process
1) File a verified petition for rehab
| 2]
115
Petition
1) Debtor
2) Facts and cause of insolvency
3) Relief sought
4) Grounds
5) Other info
6) Debt sched
7) Asset inventory
8) Rehab plan
9) Rehab receiver nominees
10) Other documents
116
Judicial insolvency proceedings
The assets of an insolvent debtor are recovered and their value preserved and maximized for the purpose of converting the same into money and discharging, to the extent possible, all the claims against the insolvent debtor
