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Credit > Midterm > Flashcards

Midterm Flashcards

1
Q

Credit transactions

A

Sets of contracts governing money and assets

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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

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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

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4
Q

Credit (TILA)

A
  1. Any loan, mortgage, deed of trust, advance, or discount
  2. Any conditional sales contract
  3. Any contract to sell
  4. 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
  5. Any rental-purchase contract
  6. Any contract or arrangement for the hire, bailment, or leasing of property
  7. Any option, demand, lien, pledge, or other claim against, or of the delivery of, property or money
  8. Any purchase or other acquisition of any obligation of claim arising out of any of the foregoing
  9. Any credit upon the security of any obligation of claim arising out of any of the foregoing
  10. Any transaction or series of transaction having a similar purpose or effect
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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

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6
Q

Purpose of a loan

A

Permissive use

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7
Q

Commodatum vs. loan

A

1) Object
2) What is allowed
3) For consideration?
4) What happens to ownership?

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8
Q

Obligations under loan

A

1) To deliver

2) To return or pay

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9
Q

When is loan perfected?

A

Upon delivery of the object

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10
Q

What does the bailee acquire in commodatum?

A

The use of the thing; not the fruits

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11
Q

What character does commodatum have

A

Personal in character

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12
Q

What happens if there are 2 or more bailees?

A

Solidarily liable

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13
Q

What is the bailee liable for?

A

Ordinary expenses and damages due to his fault

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14
Q

Essential features of commodatum

A
  • Gratuitous

- Use of a thing belonging to another for a certain period

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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

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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)
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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

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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

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19
Q

Can bailor demand immediate return of the thing?

A

YES. When bailee commits acts of ingratitude

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20
Q

When may bailor demand the thing at will?

A

Precarium

Acts of ingratitude

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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

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22
Q

Fungible

A

Capable of being replaced by the same kind; no act can make it determinable

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23
Q

Object of loan

A

Money or any other fungible thing

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24
Q

Obligations of a debtor (loan)

A

To pay the creditor an equal amount of the same kind and quality

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25
Q

Barter

A

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

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26
Q

Interest

A

Compensation fixed by the parties for the use or forbearance of money

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27
Q

When does right to interest arise?

A

By virtue of a contract/damages for delay or failure to pay the principal loan on which interest is demanded

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28
Q

Requirements for interest

A

Expressly stipulated in writing

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29
Q

Who prescribes legal interest

A

Monetary Board of the CBP

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30
Q

Escalation clause

A

Stipulations that govern

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31
Q

Obligation when you get a loan of a fungible thing other than money

A

Owe another thing of the same kind, quantity and quality even if the thing changes in value

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32
Q

Mutuality of contracts

A

Validity or compliance to a contract can’t be left to the will of one of them

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33
Q

Escalation clauses

A

Stipulations allowing an increase in the interest rate agreed upon by the contracting parties.

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34
Q

Purpose of escalation clauses

A

Maintain fiscal stability and retain the value of the money

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35
Q

When is demand unnecessary?

A

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

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36
Q

Compensatory interest

A

1) Obligations consisting in the payment of a sum of money

2) Debtor incurs in delay

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37
Q

Forbearance

A

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

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38
Q

When is stipulated interest valid?

A

Not excessive and unconscionable

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39
Q

Creditor needs to provide what? (TILA)

A
  • 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
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40
Q

Penalties TILA

A

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

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41
Q

What guides Monetary Board

A

1) existing economic conditions
2) supply and demand for credit
3) rat e of increase in the price levels
4) other relevant criteria

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42
Q

Forbearance (usury law)

A

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

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43
Q

Obligations in a deposit

A

Safekeep and return a thing

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44
Q

Voluntary deposit

A

Delivery is made by the will of the depisot

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45
Q

When is a deposit extinguished

A

Loss or destruction

Death of depositor/depositary (fgratuitous)

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46
Q

Form for deposits

A

No form

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47
Q

Object of deposit

A
  • Movables
48
Q

COnsideration for deposits

A

GEN: Gratuitious

EXC: Agreement to the contrary, if depositary is in the business of storing goods

49
Q

Deposit vs. Lease

A

Lease: for use
Deposit: safekeeping

50
Q

Deposit vs. Consignation

A

Deposit with court

51
Q

Deposit vs. Consignment

A

Ask someone to sell the thing for you

52
Q

Kinds of deposit

A

Judicial/Extrajudicial

53
Q

Kinds of EJ Deposit

A

Necessary

Voluntary

54
Q

When is depositary liable for loss thru fortuitous event?

A

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
Q

Non-negotiable receipt

A

States that the goods received will be delivered to the depositor or to any other SPECIFIED person

56
Q

Negotiable receipt

A

States that the goods received will be delivered to the bearer or to the order of any person named in such receipt

57
Q

Judicial depositq

A

Court orders for attachment or seizure of property

58
Q

Receipt

A

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
Q

Requisites to contract of pledge

A

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
Q

(Art. 316) Criminal responsibility when one:

A

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
Q

Pactum commissorium

A

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
Q

Equitable mortgage when:

A

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
Q

Equitable mortgage

A

1) Entered into something denominated as a CONTRACT OF SALE

2) True intention was to secure existing debt by way of mortgage

64
Q

Real estate mortgage

A

constituted to secure the fulfillment of a principal obligation by the absolute owner (MORTGAGOR) of immovable/alienable real rights

65
Q

Objects of a mortgage

A

1) Immovables
2) Alienable real rights
3) Movables (Chattel mortgage)

66
Q

Dragnet clause

A

Meant to subsume all debts whether past or future

67
Q

Reliance on security test

A

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
Q

After acquired properties

A

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
Q

Right of redemption

A

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
Q

Equity of redemption

A

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
Q

Remedies for ineffective sale

A

1) Recover the price paid

2) Have the original judgement revived

72
Q

Remedies of revival are available when

A

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
Q

Disposition of sale proceeds

A

1) Costs of sale
2) Payment of mortgage debt
3) Junior encumbrancers
4) Mortgagor

74
Q

Remedy if proceeds are not enough

A

Motion for deficiency judgement

75
Q

Remedy against debt due from estate

A

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
Q

Notice for EJ Sale

A 
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
Q

EJ Process

A

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
Q

Who can conduct EJ sale

A
  • Sheriff

- Notary public

79
Q

Duty of COC

A
  • Examine SPA
  • Give fule number
  • Endorse date, time and docket it
  • ## Collect fees and issue receipt
80
Q

Participants to the sale

A

1) Creditor
2) Trustee
3) Other persons authorized by the creditor

81
Q

Right of redemption can be exercised by:

A

1) Debtor
2) Debtors successors in interes
3) Judicial creditor
4) Any person having a lien on the property

82
Q

How to redeem

A

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
Q

Right of reredemption

A

60 days from last redemption

84
Q

Purchaser wants possession

A

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
Q

Exceptions to right of purchaser to possess property

A

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
Q

Antichresis

A

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
Q

Obligations of creditor in antichresis

A

1) Apply fruits to interest and principal
2) Pay taxes and charges unless otherwise stipulated
3) Necessary expenses

88
Q

Form of antichresis

A

In writing

89
Q

Form of pledge

A

Public document

90
Q

Legal pledges

A

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
Q

Exceptions regarding use by pledgee

A

1) Owner authorizes it

2) Object needs it for its preservation

92
Q

When can pledgor demand return of the thing

A

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
Q

Conventional vs. legal sale

A

In legal sale, remainder of of the price will go to debtor

94
Q

Scope of PPSA

A

All transactions of any form that secure an obligation with movable collateral except interests in aircrafts and ships

95
Q

Movable property

A

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
Q

Rule on commingling of funds

A

So long as traceable even if not identifiable

97
Q

Form of PPSA

A

Written contract with a reasonable description of the collateral

98
Q

Means of perfection

A

1) Registration
2) Possession
3) Control (for investment property and deposit account)

99
Q

How to perfect via control

A

1) Creation of a security interest
2) Conclusion of control agreement
3) Notation in the books

100
Q

Control agreement over:

A

1) Securities
2) Rights over a deposit account
3) Commodity contracts

101
Q

Enforcement of security interest

A

1) Recovery
2) Disposition
3) Retention

102
Q

Insolvency proceedings

A

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
Q

Insolvent

A

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
Q

When is commingling allowed with a related enterprise

A

1) Prior commingling
2) Common creditors
3) Convenience
4) Related enterprise voluntarily accedes
5) Consolidation is beneficial to all concerned and promotes rehab

105
Q

Liability

A

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
Q

CLassification of credits

A

1) Special preferred credits (mortgages or pledges)
a) Trade-related claims
b) Taxes
c) All others

2) Ordinary preferred
3) Common credits

107
Q

Suspension of payments

A

Judicial insolvency proceeding by which an individual debtor submits, for approval by his creditors, a PROPOSED AGREEMENT

108
Q

WHen allowed to be in a state of suspension?

A

INsolvent under equity concept

109
Q

Equity concept

A

Possessing sufficient property to cover all his debts, BUT foresees the impossibility of meeting them when they fall due

110
Q

Requirements of petition for state of suspension

A

1) Schedule of debts and liability
2) Asset inventory
3) Proposed agreements w/ creditors

111
Q

Rehabilitation

A

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
Q

Circumstances requiring rehab

A

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
Q

Modes of rehab

A
  • Court-supervised
  • Pre-negotiated
  • Out of court
114
Q

Rehab process

A

1) File a verified petition for rehab

2]

115
Q

Petition

A

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
Q

Judicial insolvency proceedings

A

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

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