Credit Transactions Flashcards
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
- 3 Requisites of Contract of Pledge and Mortgage?
- On 9/30, D pledge cp of his father. On 10/31, father died and as a sole heir, he obtained ownership of the cp. What is the status of the contract pf pledge?
1:
1. To secure a FULFILLMENT OF PRINCIPAL OBLIGATION
2. Pledgor or mortgagor should be the ABSOLUTE OWNER
3. FREE DISPOSAL of their property, in the absence thereof, that they be legally authorized for the purpose
- Void. Since the requirement of the contract is “absolute ownership” must be complied with AT THE TIME THE COTRACT WAS ENTERED INTO
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
Explain Accesory Contract
Cannot exist without a VALID obligation or a principal contract
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
Provide Type of obligations that a Pledge/Mortgage may secure
- Pure Obligations
- Conditional Obligations (suspensive or resolutory)
- Obligations with a term (suspensive or resolutory)
- Natural Obligations
- Recissible Contracts
- Voidable Contracts
- Unenforceable Contracts
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
Can secure void obligation/contracts?
NO
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
Third Person (not parties to the principal obligation) may secure the latter by pledging or mortgaging their own property?
Yes. Just follow the requisites.
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
Exlpain Pactum Commissorium
PC means Automatic Appropriation Prohibited. PC Void.
The creditor cannot appropriate the thing given by way of pledge pr mortgage, pr dispose of them.
Any stipulation to the contrary is void!
Credit Transactions
Similarities between Pledge, Real Estate Mortgage, and Chattel Morgage
Explain Indivisibility of Contract and its exception
A pledge or mortgage is indivisible even though the debt may be divided among successors in interest of the debtor of the creditor
Exception: if there being several things given in mortgage or pledge, each one of them guarantees only a determinate portion of the credit
D has 2 debts with C, 50k each. Pledge his diamond ring and gold watch. If D paid 50k, he can demand the release of the diamond or gold.
Credit Transactions
Pledge
2 Kinds of pledge?
- Voluntary or conventional - created by agreement of the parties
- Legal - created by operation of law
Credit Transactions
Pledge
Exlpain Delivery / real contract
The thing pedged must be placed in the possession on the creditor, or thrid person by common agreement
Delivery is necessary in order to constitute the contract of pledge
Credit Transactions
Pledge
Exlapin rules on fruits of pledged things
Fruits, income, dividends, or interest.
May apply to anu interest, if none, to principal obligation.
Also, like in Corporate Liquidation, the pledge shall extend to the interest and earnings of the right pledged
Credit Transactions
Pledge
Who is the owner of the thing pledged if not yet expropriated?
Debtor
Credit Transactions
Pledge
Other way of exthinguishment of a contract of pledge? Aside from payment of principal obligation.
- Thing pledged is returned. The pledge is Extinguished. Any stipulation to the contrary shall be void!
- Renunciation or Abandonment of pledge. Basta may statement in writing.
Credit Transactions
Pledge
- Explain creditors right of appropriation (auction).
- Does pledgor has the right to bid?
1:
1. If the FIRST auction id not sold, second one with same formalities shall be held
- If the Second auction still not sold, THE CREDITOR MAY APPROPRIATE THE THING PLEDGED!
2: Yes. But his offer shall not be valid if he is the only bidder.
Credit Transactions
Pledge
Explain Sale of the thing, proceeds thereof
1. Price is more than obligation including interest
2. Less than
3. Explain also if credit (pautang) is the object of pledge?
- The debtor shall not be entitled to the excess, unless it is otherwise agreed.
- Creditor shall not be entitled to recover the deficiency, any stipulation to the contrary shall be void.
Hence, the sale of the thing pledge shall extinguish the principal obligation, whether less or more than.
- If more or less yung collection, ibigay dapat ni creditor yung sobra sa debtor or still bayaran ni debtor yung kulang. Remember, wala pang foreclosure dito.
Credit Transactions
Pledge
Provide 3 VOID stipulations
- Pledge is not extingished by the return of the thing pledged
- Automatic Appropriation (pactum comissorium)
- Recovery of dificiency in case proceeds from the sale is less than the amount of the obligation
Credit Transactions
Pledge
Pahapyaw. Legal Pledge?
A type of of a pledge which refers to the right of a person to retain thing until he reveives payment of his claim
Credit Transactions
Real Estate Mortgage
Object?
- Immovables
- Alienable rights in accordance with the laws, imposed upon immovables
Credit Transactions
Real Estate Mortgage
3 Types?
- Conventional - created by the agreement of the parties
- Legal - provision of law
- Equitable - lacks certain formality, but the facts show the intention of the parties to charge Real Property as security for a debt is not contrary to the law
Credit Transactions
Real Estate Mortgage
Form?
No form is required tp contitute a contract of real state mortgage
Credit Transactions
Real Estate Mortgage
Explain Pactum De Non-alienado
The owner is allowed to alienate (sell to other party) the immovable propery mortgaged.
Stipulation prohibiting such right is called pactum de non-alienado and is considered VOID.
Credit Transactions
Real Estate Mortgage
Exlpain the proceeds of the forclose sale:
- More than
- Less than
- If more than Unpaid amount, mortgagor shall be entitled to the excess
- Less than, the mortgagee shall be entitled to recover deficiency
The rationale is that the mprtgage is still a separate contract and merely stands as means to recover unpaid amount.
Credit Transactions
Real Estate Mortgage
In case of non payment of the principal obligation, the creditor mortgagee may foreclose the mortgage 1. Either? 2. Notice of foreclosure required?
- Extrajudicial - non required, unless stipulated
- Judicial - posting in 3 public places atleast 20 days prior to sale and publication of tge notice of sale in a newspaper of generic circulation
Credit Transactions
Real Estate Mortgage
- Explain Redemption
- Period to redeem
- It only exists i REM foreclosures.
- a. Extrajudicial
General Rule - 1 year
Exception if the creditor is bank, 3 months from the sale or registration
b. Judicial - though 90-120days, bit still exists as long as there is no confirmation of sale by court
Credit Transactions
Chattel Mortgage
Define
Personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation
Credit Transactions
Chattel Mortgage
If the movable property is not recorded in Chattel Mortgage, bu delivered to the creditor or third person, this contract is?
Pledge
Credit Transactions
Chattel Mortgage
Is this a formal contract?
Yes. It is perfected by the registration to chattel mortgage register
Credit Transactions
Chattel Mortgage
- What is Affidavit of good faith? Its effect on validity?
- And its effect on Third Persons
- Sworn statement. Does not affect the validity of the contract (still valid since both parties may be considered in pari delicto), but it only makes the contract non binding to third persons who acted in goodfaith.
- To affect 3rd persons, there must be an Affidavit ot Goodfaith and the same must be registred with Chattel Mortgage Registry, MARINA (vessels), LTO (vehicles)
Credit Transactions
Chattel Mortgage
Exlpain forclosure
Shall be done in extra judicial only.
Notice: 10 days prior to sale; posting two or more public places 10 days before auction
Credit Transactions
Chattel Mortgage
Explain proceeds of Forclosure of Sale:
1. More than
2. Less than
- If more than unpaid amount, the excess shall belong to mortgagor
- If less than:
General Rule - creditor is entiled for deficiency (Note: including interest and cost of forclosure sale!)
Except: if the object is sale in installment and covered by Recto Law
Credit Transactions
Chattel Mortgage
Is there a right of redemption like in Real State Mortgage?
No
Credit Transactions
Real Estate Mortgage
Notes:
*Covered by statute of frauds
*Public instrument that is registered in the Registry of deeds is required to bind third parties
Credit Transactions
Pledge
A pledge shall take effect agaisnt 3rd person if there is public instrument which includes:
Description of the thing pledge and date of the pledge
Credit Transactions
Chattel Mortgage
In order for a contract of chattel mortgage to be valid, it:
Must be in writing subcribed by botg parties in the presence of two witnesses
