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RFBT > Pledge and Mortgage > Flashcards

Pledge and Mortgage Flashcards

1
Q

Credit Transactions

A

include all transactions involving the purchase or loan of goods, services, or money in the present with a promise to pay or deliver in the future

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2
Q

Two Types of Credit Transactions

A
  1. Secured transactions or contracts of real security - those supported by a collateral or encumbrance of property
  2. Unsecured transactions or contracts of personal security - fulfillment by the debtor is supported only by a promise to pay or personal commitment of another
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3
Q

Examples of credit transactions

A
  1. Bailment contracts
  2. Contracts of guaranty and suretyship
  3. Pledge and mortgage
  4. Antichresis
  5. Concurrence and preference of credits
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4
Q

Security

A

Something given, deposited, or serving as a means to ensure the fulfillment or enforcement of an obligation or of protecting some interest in property

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5
Q

Kinds of security

A
  1. Personal security - when an individual becomes a surety or a guarantor
  2. Property or Real Security - when a mortgage, pledge, antichresis, charge or lien or other devices is used to have property held, out of which the person to be made secure can be compensated for loss
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6
Q

Difference of pledge, chattel and real estate mortgage by definition

A

Pledge - accessory contract by which a debtor delivers to a creditor or to a third person a movable or a document involving incorporeal rights to secure the fulfillment of the principal obligation
Chattel mortgage - contract of which a personal property is recorded in the chattel mortgage register as a security
Real Estate mortgage - contract whereby a debtor secures to the creditor, immovable property or real rights over immovable property

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7
Q

Difference of pledge, chattel and real estate mortgage by object

A

Pledge - movable or personal property, or document evidencing incorporeal rights
Chattel mortgage - personal property
Real estate mortgage - immovable property or real rights over immovable property

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8
Q

Difference of pledge, chattel and real estate mortgage by necessity of delivery

A

Pledge - necessary

Chattel & Real Estate Mortgage - not necessary

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9
Q

Essential requisites to the contracts of pledge and mortgage (S, AO, FD, TP)

A
  1. Constituted to secure fulfillment of principal obligation
  2. The pledgor/mortgagor must be the absolute owner of the thing pledged/mortgage
  3. 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
  4. Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property
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10
Q

Can a guaranty exist without a valid obligation?

A

A guaranty cannot exist without a valid obligation. However, it may guarantee the performance of a voidable or unenforceable contract or a natural obligation (Art. 2086).

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11
Q

Can the things pledged or mortgaged be alienated?

A

When the principal obligation becomes due, the things in which the pledge or mortgage consists may be alienated for the payment to the creditor (Art. 2087).

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12
Q

May property aquirable in the future be mortgaged?

A

Future property cannot be subject matter if mortgage. But the future improvements, accessions, and fruits of the property already mortgaged are also covered by the mortgage

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13
Q

Is a third person who pledge/mortgaged his property (accommodation mortgagor) liable for the deficiency?

A
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14
Q

Pledge

A

Contract by virtue of which the debtor delivers to the creditor or to a third person a movable or a document involving incorporeal rights for the purpose of securing fulfillment of a principal obligation which if fulfilled already, the thing delivered shall be returned with all its fruits and accessions.

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15
Q

Kinds of Pledge

A
  1. Voluntary or conventional - created by agreement of the parties
  2. Legal - by operation of law
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16
Q

Purpose of pledge

A

To secure fulfillment of a principal obligation

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17
Q

Characteristics of Pledge

A
  1. Real - perfected by delivery
  2. Accessory - no independent existence
  3. Unilateral - creates an obligation solely on the part of the creditor to return the thing pledged upon fulfillment of the principal obligation
  4. Subsidiary - the obligation of the creditor does not arise until fulfillment of the principal obligation
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18
Q

How does a pledge not appearing in public instrument affect its validity?

A

It does not affect its validity. It is valid between parties but void as to third persons.

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19
Q

Parties in a contract of pledge

A

Pledgor - the debtor, the one who delivers the thing pledged

Pledgee - creditor; the one who receives the thing pledged

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20
Q

Rights of the pledgor

A
  1. Right to dispose of the thing pledged, provided there is consent from the pledgee
  2. Right to ask that the thing pledged be deposited
  3. Right to substitute the thing pledged
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21
Q

Right to dispose the thing pledged (PLEDGOR; Art. 2097) and who becomes the possessor of the thing deposited?

A

With the consent of the pledgee, the thing pledged may be alienated by the pledgor or owner. The ownership of the thing pledge shall be transferred to the vendee or transferee, the pledgee however shall continue in possession.

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22
Q

Right to ask that the thing pledged be deposited (Pledgor, Art. 2106)

A

If through the negligence or willful act of the pledgee, the thing pledged is in danger of being lost or impaired, the pledgor may require that it be deposited to a third person.

  1. If the creditor uses the thing w/out the authority.
  2. If he misuses the thing in any other way.
  3. If the thing is in danger of being lost or impaired due to negligence.
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23
Q

Right to substitute the thing pledged (Pledgor, Art. 2107)

A

The pledgor may demand the return of the thing provided:

  1. Reasonable grounds to fear the destruction/ impairment of the thing pledged
  2. No fault on the part of the pledgee
  3. Pledgor must offer another thing of the same kind and quality
  4. No sale in public auction yet
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24
Q

Rights of a pledgee

A
  1. Retain the thing until debt is paid
  2. To be reimbursed for the expenses made for the preservation of the thing pledged
  3. Creditor may bring an action pertaining to the pledgor in order to recover it from or defend it against a third person
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25
Q

Obligations of the pledgee

A
  1. Take care of the thing pledged with the good diligence of a good father of a family
  2. Apply the fruits, income, dividends, or interests produced or earned by the property to interests, expenses, or principal
  3. Cannot use the thing pledged without the authority unless necessary for its preservation but only for that purpose
  4. GR: Pledgee cannot deposit the thing pledged to a third person
    EXC: Unless there is a stipulation
  5. Return the things pledged to the creditor when the principal obligation is fulfilled or satisfied
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26
Q

Art. 2088 Can the creditor appropriate the things pledged?

A

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.

27
Q

Pacto commissorium

A

Stipulation for automatic appropriation of the creditor of the thing in case of default by the debtor. Such stipulation is null and void.

28
Q

What is the remedy of the creditor with the pledge/mortgage when the debtor defaults?

A

The creditor can move for the sale of the thing pledged or mortgaged.

29
Q

What if the creditor wants to acquire the thing?

A

He may purchase it at the public auction.

30
Q

Requisites for pactum commissorium to exist

A
  1. There should be a pledge/mortgage

2. There should be a stipulation for automatic appropriation or the thing inn case of default by the debtor

31
Q

Exception to pactum commissorium

A

Art. 2112 provides that if the thing pledged or mortgaged is not sold in two public auctions, the creditor may appropriate the same.

32
Q

How is public sale conducted?

A

Default rule under Art. 2112:
Proceed before a notary public and ask him to conduct a notarial sale. The notary supervises the sale of the pledged property, drafts the rules and notifies the debtor and the owner.

33
Q

What are the formalities required for the notarial sale?

A
  1. The debt is due and unpaid
  2. The sale must be at public auction
  3. There must be notice to the pledgor and owner, stating the amount due
  4. The sale must be with the intervention of a notary public
34
Q

Art 2112 If at the first auction the thing is not sold

A

a second one with the same formalities shall be held; and if the at the second auction there is no sale either, the creditor may appropriate the thing pledged. In this case, he shall be obliged to give an acquittance for his entire claim.

35
Q

Is the pledgor/owner allowed to bid at the public auction?

A

The pledgor/owner may bid. He shall, moreover, have a better right if he should offer the same terms as the highest bidder.

36
Q

Art 2114 If any other bid is accepted

A

All bids at the public auction shall offer to pay the purchase price at once. If any other bid is accepted, the pledgee is deemed to have been received the purchase price, as far as the pledgor or owner is concerned.

37
Q

Successful bid/public sale results to

A

Extinguishment of debt.
If more than the said amount = the debtor shall not be entitled to the excess unless it is otherwise agreed.
If less = the creditor shall not be entitled to recover the deficiency notwithstanding any stipulation to the contrary

38
Q

General rule on the indivisibility of pledge

A

Art 2089 A pledge or mortgage is indivisible, even though the debt may be divided among the successors in interest of the debtor or of the creditor.
Art 2090 The indivisibility of pledge or mortgage is not affected by the fact that the debtors are not solidarily liable.

39
Q

Exception to the indivisibility of pledge

A

There being several things given in mortgage or pledge, each one of them guarantees only a determinate portion of credit. The debtor shall have the right to the extinguishment of the pledge or mortgage as the portion of the debt which each thing is especially answerable is satisfied.

40
Q

Pledges by operation of law (Legal Pledges)

A

The remainder of the sales price shall be delivered to the debtor. But after sale, the excess, if any, is returned to the pledgor:

  1. Possessor in good faith may retain the thing on which he spent for necessary expenses until he is reimbursed.
  2. He who works on a movable may retain the same until the paid of work.
  3. Depositary may retain the thing until paid for the deposit.
  4. Agent may retain the objects of agency until reimbursed by principal.
  5. Laborer’s wages are considered a lien on goods manufactured or work done.
41
Q

Real Estate Mortgage

A

A contract whereby the debtor secures to the creditor the fulfillment of a principal, especially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated.

42
Q

What is the subject matter of real mortgage

A
  1. Immovables

2. Alienable rights imposed upon immovables

42
Q

What is the subject matter of real mortgage

A
  1. Immovables

2. Alienable rights imposed upon immovables

43
Q

What are the characteristics of the contract of mortgage?

A

Real, accessory, and subsidiary

44
Q

Requisites of real mortgage

A
  1. Constituted to secure a principal obligation
  2. Mortgagor must be the absolute owner
  3. Mortgagor must have free disposal of the thing or otherwise authorized to be
  4. When the principal becomes due, the property mortgaged may be alienated for the payment to the creditor.
  5. To prejudice third persons, the mortgage must be recorded in the Registry of Property.
  • The first four requisites already constitutes a valid mortgage. The last requisite is only to affect third persons, to serves as notice.
45
Q

Characteristics of the contract of guaranty (A-SC-U-D)

A
  1. Accessory - dependent upon principal obligation
  2. Subsidiary and Conditional - takes effect only when the principal debtor fails in his obligation
  3. Unilateral - gives rise to obligations on the part of the guarantor; may be entered into even without the intervention of principal debtor
  4. Distinct Person - person of guarantor must be distinct from the person of principal obligation. However, a person may guarantee his own obligation with his own properties.
45
Q

Characteristics of the contract of guaranty (A-SC-U-D)

A
  1. Accessory - dependent upon principal obligation
  2. Subsidiary and Conditional - takes effect only when the principal debtor fails in his obligation
  3. Unilateral - gives rise to obligations on the part of the guarantor; may be entered into even without the intervention of principal debtor
  4. Distinct Person - person of guarantor must be distinct from the person of principal obligation. However, a person may guarantee his own obligation with his own properties.
46
Q

Art 2126 What if the ownership of the property mortgaged changes?

A

The mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted. The mortgage follows the property wherever it goes and subsists even if the ownership changes.

47
Q

Does the mortgagor lose his title to the property mortgaged?

A

A mortgage does not involve transfer, cession or conveyance of property but only constitutes lien thereon. The mortgagor continues to be the owner of the property and can even mortgage it again to another mortgagor. The only right of the mortgagee is to foreclose the mortgage and sell the property to satisfy the obligation.

48
Q

Art 2128 Can a mortgage credit be alienated or assigned to the third persons?

A

Yes, it can be alienated or assigned in whole or in part, with the formalities required by the law.

49
Q

Can a creditor claim from a third person in possession of the mortgaged property the payment of the part of credit secured by the property?

A

Yes, in the terms and with the formalities which the law establishes. However, he cannot be held liable for any deficiency in the absence of contrary stipulation. The creditor, however, can go after the debtor for the reimbursement of the deficiency.

50
Q

Art. 2130 A stipulation forbidding the owner from alienating the immovable mortgaged shall be

A

VOID. The essence of a mortgage is that upon default, the mortgagee can foreclose and apply the proceeds of the sale to the principal obligation.

51
Q

Foreclosure

A

Remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation.

52
Q

Types of foreclosure

A
  1. Judicial foreclosure - the default
  2. Extra-judicial foreclosure - if the mortgage deed has a provision which gives the mortgagee the special power of attorney to sell the mortgaged property
53
Q

What is the effect of inadequacy of the price at which the property is sold at auction?

A

If there is a right to redeem - the inadequacy of price is not material because the debtor may reacquire the property
Mere inadequacy - not sufficient to set aside the sale unless the price is so inadequate

54
Q

What happens if there is an excess?

A

The excess should first be applied to satisfy the junior liens and encumbrances on the property. If there is still an excess, it goes to the mortgagor.

55
Q

What happens if there is a deficiency?

A

The mortgagee must go to court and file an action to collect the deficiency. He may file an action for deficiency judgement even during the period of redemption.

56
Q

Redemption

A

The debtor has right to redeem the property sold within one year from the date of sale, reckoned from date of execution of the certificate of sale.

57
Q

Exception to the general rule in redemption as to juridical persons

A

If the mortgagee foreclosing is a bank and the mortgagor is a juridical person. The juridical person shall have the right to redeem the property before the registration of the certificate of sale but not exceeding 90 days from the date of foreclosure.

58
Q

Difference between right of redemption and equity redemption

A

Right of redemption - right of the mortgagor to redeem the mortgaged property within a certain period after the sale of the property in satisfaction of the mortgage debt. Available only for extrajudicial foreclosure and mortgagee-bank.

Equity redemption - the right of the mortgagor in a judicial foreclosure to pay the amount of his obligation before the confirmation of the sale of the mortgaged property.

59
Q

Chattel mortgage

A

Contract by virtue of which personal property is recorded in the chattel mortgage register as a security

60
Q

Characteristics of the chattel mortgage

A
  1. Accessory contract
  2. Formal contract - requires registration in the chattel mortgage register for its validity against third persons
  3. Unilateral
61
Q

Subject matter of chattel mortgage

A

Personal or movable property

62
Q

Requisites for valid chattel mortgage

A
  1. Constituted to secure principal obligation
  2. Absolute owner
  3. Free disposal/authorization
  4. Alienated
  5. Recorded in registry (to prejudice third persons)*

*First 4 requisites - valid already

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