1
Q
REQUISITES OF CONTRACT OF PLEDGE AND MORTGAGE
A
- 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
2
Q
a pledge or mortgage, being an ________, cannot exist without a valid obligation or a principal contract
A
accessory contract
3
Q
The contract of pledge or mortgage may secure all kinds of obligations, be they
A
pure or subject to a suspensive
or resolutory condition
4
Q
THIRD PERSONS who are not parties to the principal obligation may secure the latter by
A
pledging or mortgaging
their own property
5
Q
The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void. This is also known as
A
Pactum Commissorium
6
Q
A pledge or mortgage is ____, even though the debt may be divided among the successors in interest of the debtor or of the creditor
A
indivisible
7
Q
The debtor’s heir who has paid a part of the debt cannot ask for the
A
proportionate extinguishment of the pledge or mortgage as long as the debt is not completely satisfied
8
Q
Neither can the creditor’s heir who received his share of the debt return the
A
pledge or cancel the mortgage,
to the prejudice of the other heirs who have not been paid
9
Q
If there being several things given in mortgage or pledge, each one of them guarantees only a determinate portion of the credit. The debtor, in this case, shall
A
have a right to the extinguishment of the pledge or mortgage as the portion of the
debt for which each thing is specially answerable is satisfied
10
Q
is a contract by virtue of which the debtor delivers to the creditor or to a third person movable (Art. 2094) or document evidencing incorporeal rights (Art. 2095) for the purpose of securing the fulfilment of a principal obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and accessions.
A
Pledge
11
Q
in addition to the above-mentioned essential requisites of contracts of pledge or mortgage, it is necessary, in order to constitute the contract of pledge, that
A
the thing pledged be placed in the possession of the creditor, or of a third person by common agreement
12
Q
KINDS OF PLEDGE:
A
- Voluntary or conventional – created by agreement of the parties; or
- Legal – created by operation of law.
13
Q
CHARACTERISTICS of Pledge
A
- REAL CONTRACT – perfected by the delivery of the thing pledged;
- ACCESSORY CONTRACT – no independent existence of its own;
- UNILATERAL – creates an obligation solely on the part of the creditor to return the thing;
- SUBSIDIARY – obligation incurred does not arise until the fulfilment of the principal obligation which is
secured.
14
Q
CAUSE OR CONSIDERATION:
A
- Pledgor/debtor – the principal obligation;
- Pledgor not the debtor – compensation stipulated or mere liberality
15
Q
OBJECT of the pledge
A
- Movable property;
- Incorporeal rights, evidenced by negotiable instruments, bills of lading, shares of stock, bonds, warehouse
receipts and similar documents may also be pledged. The instrument proving the right pledged shall be
delivered to the creditor, and if negotiable, must be indorsed
16
Q
Rules:
A
- Within the commerce of man and capable of possession;
- If the pledge earns or produces fruits, income, dividends, or interests, the creditor shall compensate what he
receives with those which are owing him; but if none are owing him, or insofar as the amount may exceed
that which is due, he shall apply it to the principal - Unless there is a stipulation to the contrary, the pledge shall extend to the interest and earnings of the right
pledged - In case of a pledge of animals, their offspring shall pertain to the pledgor or owner of animals pledged, but
shall be subject to the pledge, if there is no stipulation to the contrary - Unless the thing pledged is expropriated, the debtor continues to be the owner thereof
- Nevertheless, the creditor may bring the actions which pertain to the owner of the thing pledged in order to
recover it from, or defend it against a third person
17
Q
Deposit of the Thing Pledged with a Third Person:
A
- On the part of the pledgee – if there is stipulation granting such right;
- On the part of the pledgor:
a. If through the negligence or willful act of the pledgee, the thing pledged is in danger of being lost or impaired.
b. If the pledgee uses or misuses the thing.
18
Q
Fear of destruction, loss or impairment WITHOUT pledgee’s fault
A
- The pledgor may demand the return of the thing, upon offering another thing in pledge, provided the
latter is of the same kind as the former and not of inferior quality; or - The pledgee may cause the same to be sold at a public sale
19
Q
Is there a form to constitute a contract of pledge?
A
No, there is no form
20
Q
In order to affect third persons:
A
- There must be a public instrument
- The public instrument contains:
a. The description of the thing pledged; and
b. the date of the pledge
21
Q
(True or False) Alienation (Sale) of the thing pledged: is allowed with the consent of the pledgee.
A
True
* The ownership of the thing pledged is transmitted to the vendee or transferee as soon the pledgee
consents to the alienation,
* But the creditor-pledgee shall continue in possession
22
Q
Creditor-pledgee rights and obligations
A
- The creditor shall take care of the thing pledged with the diligence of a good father of a family;
- He has a right to the reimbursement of the expenses made for its preservation, and is liable for its loss or
deterioration, in conformity with the Civil Code. - The pledgee is responsible for the acts of his agents or employees with respect to the thing pledged
- If the creditor is deceived on the substance or quality of the thing pledged, he may either claim another thing
in its stead, or demand immediate payment of the principal obligation
23
Q
General Rule: The creditor cannot use the thing pledged, without the authority of the owner
A
Exceptions:
1. Authority from the owner (pledgor); or
2. When the preservation of the thing pledged requires its use, it must be used by the creditor but only for that purpose
24
Q
The pledgor who, knowing the flaws of the thing pledged, does not advise the pledgee of the same, shall be
A
liable to the latter for the damages which he may suffer by reason thereof
25
The debtor cannot ask for the return of the thing pledged against the will of the creditor, unless and until he
has paid the debt and its interest, with expenses in a proper case
26
Extinguishment of a Contract of Pledge: can be by any mode of extinguishment of obligations or the extinguishment of the principal obligation or contract, but also
1. Thing pledged is returned
2. Renunciation or Abandonment of Pledge
27
If the thing pledged is returned by the pledgee to the pledgor or owner
the pledge is extinguished. Any stipulation to the contrary shall be void
28
(True or False) A statement in writing by the pledgee that he renounces or abandons the pledge is NOT sufficient to extinguish the pledge.
False, for this purpose, neither the acceptance by the
pledgor or owner, nor the return of the thing pledged is necessary, the pledgee becoming a depositary
29
Requisites for a foreclosure sale
1. The creditor to whom the credit has not been satisfied in due time, may proceed before a Notary Public to the
sale of the thing pledged.
2. This sale shall be made at a public auction, and
3. With notification to the debtor and the owner of the thing pledged in a proper case, stating the amount for which the public sale is to be held.
30
Creditor’s right of appropriation
1. If at the first auction the thing is not sold, a second one with the same formalities shall be held; and
2. If at the second auction there is no sale either, the creditor may appropriate the thing pledged
31
(True or False) At the public auction, the pledgor or owner may bid. He shall, moreover, have a better right if he should offer the same terms as the highest bidder
True
32
May the pledgee also bid?
The pledgee may also bid, but his offer shall not be valid if he is the only bidder
33
If the price of the sale is more than said amount, the debtor shall
not be entitled to the excess, unless it is otherwise agreed
34
If the price of the sale is less, the creditor shall
not be entitled to recover the deficiency, notwithstanding any stipulation to the contrary
35
Only the following property may be the object of a contract of mortgage
(1) Immovables;
(2) Alienable real rights in accordance with the laws, imposed upon immovables
36
The sale of the thing pledged shall
extinguish the principal obligation, whether or not the proceeds of the sale are
equal to the amount of the principal obligation, interest and expenses in a proper case
37
Is there a form for contracts of real estate mortgage?
No
38
In order to affect third persons:
1. There must be a public instrument containing the description thereof; and
2. The same should be recorded in the Registry of Property.
39
The mortgage extends to the
natural accessions, to the improvements, growing fruits, and the rents or income not yet received when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications and limitations established by law, whether the estate remains in the possession
of the mortgagor, or it passes into the hands of a third person
40
General Rule: covers only that which is stated in the deed even if less than the amount of loan
Exception: if there is stipulation to cover future advancements called a dragnet clause
41
Is mortgage credit transferable?
The mortgage credit may be alienated or assigned to a third person, in whole or in part, with the formalities required by law
42
the owner is allowed to alienate the immovable property mortgaged. A stipulation
prohibiting/forbidding such right is called
pactum de non-aliendo and is considered void
43
Buyers or transferees of the property mortgaged are not affected by an unregistered
mortgage. However, if the mortgage is registered (Art. 1312) they are
1. Bound by a foreclosure sale on the property
2. Not bound to answer the deficiency
3. Unless there is novation in the person of the debtor
44
in case of non-payment of the principal obligation, the creditor-mortgagee may foreclose the mortgage either:
1. Judicially – under Rule 68 of the Rules of Court;
2. Extra-judicially – under Act No. 3135
45
Notice of Foreclosure Sale
1. Extrajudicial – not required, unless stipulated.
2. Judicial - Posting in 3 public places at least 20 days prior to sale and publication of the notice of sale in a newspaper of general circulation.
46
If the proceeds of the foreclosure sale, is more than the unpaid amount
the mortgagor shall be entitled to the excess
47
If the proceeds of the foreclosure sale, is less than the unpaid amount
the mortgagee shall be entitled to recover the deficiency
48
(True or False) Redemption is not available in a real estate mortgage
Redemption exists only in Real Estate Mortgage foreclosures
49
The period to redeem shall depend if the foreclosure is
1. Extra-judicial
2. Judicial
50
Extrajudicial
a. General Rule: 1 year from date of foreclosure
b. Exception: Under the General Banking Law, 3 months from sale or registration of the certificate of sale, whichever is earlier, whenever:
i. The debtor – juridical person
ii. The creditor – bank
51
Judicial redemption period
Although the Rules of Court provide that the equity of redemption is 90 to 120 days, it has been held that the equity of redemption exists as long as there is no confirmation of sale by the court
52
personal property is recorded in the ______ as a security for the performance of an obligation for a chattel mortgage
Chattel Mortgage Register
53
If the movable, instead of being recorded, is delivered to the creditor or a third person is it still a chattel mortgage?
No, it is a pledge
54
To affect third persons, the chattel mortgage must have
an Affidavit of Good Faith and the same is registered with the Chattel Mortgage Registry; or the MARINA – in case of vessels; and in case of vehicles with a report to the Land
Transportation Office
55
Coverage of chattel mortgage
shall be the debts existing at the time the contract was entered into and indicated in the Affidavit of Good Faith. As a rule, an amendment of the Affidavit shall be necessary to cover subsequent obligations
56
If the object was disposed during pendency of the mortgage
It is considered a criminal act
57
Does Judicial foreclosure exist in chattel mortgage?
No, foreclosure for chattel mortgage must be done extrajudicially
58
Notice for foreclosure of chattel mortgage
Required 10 days prior to sale; Posting in two or more public places 10 days before auction
59
If the amount of the proceeds of foreclosure sale of a chattel mortgage is more than the unpaid amount
the excess shall belong to the mortgagor
60
If the amount of the proceeds of foreclosure sale of a chattel mortgage is less than the unpaid amount
a. General Rule: the creditor is entitled to the deficiency;
b. Except: if the object is subject of a sale in installment and covered by the Recto Law which prohibits collection of unpaid amount once the creditor (unpaid seller) already foreclosed the chattel mortgage on the property itself.
61
may be created over all forms of tangible or intangible asset or personal property as defined by the Civil Code
Security Interest (provided, that a security interest can only be
created on the asset over which grantor has a legal right)
62
the centralized and nationwide electronic registry established in the _____ where notice of a security interest and a lien in personal property may be
registered
Land Registration
Authority (LRA)
63
Security Agreement can now provide for security
interest in a ________
future property (subject to security interest when the borrower acquires right in it or
the power to encumber it)
64
A security agreement must be contained in a
written contract signed by the parties. It may consist of one or more writings that, taken together, establish the intent
of the parties to create a security interest. It must identify the collateral and the secured obligation. It may consist of one or more writings that, taken together, establish the intent of the parties.
65
A security interest shall be created by
a security agreement or the lease of an operating lease for not less than one (1) year
66
When is the security interest perfected?
(a) A security interest shall be perfected when it has been created and the secured creditor has taken one of the actions in accordance with Section 12 of RA No. 11057.
(b) On perfection, a security interest becomes effective against third parties
67
A security interest may be perfected by
(a) Registration of a notice with the Registry;
(b) Possession of the collateral by the secured creditor; and
(c) Control of investment property and deposit account
68
Priority of Security Interest
GR: The priority of security interests and liens on the same collateral shall be determined according to the time of registration of a notice or perfection by other means, without regard to the order of creation of the security interests and liens
69
Where is there an exception to the priority of security interest?
Investment Property and Deposit Accounts
70
Priority rules for Investment Property and Deposit Accounts
1st: Security interest of a deposit-taking institution or intermediary
2nd: Security interest perfected by a control agreement
3rd: Among all control agreements, the basis of time shall be used
etc.
RFBT Finals
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Decks in class (6)
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