Since 1977

BUSINESS LAW ATTY. ONG/LOPEZ

1. 1st Statement - Any stipulation authorizing the pledgee to 8. In real estate mortgage, the mortgagor can sell the mortgaged
appropriate the thing pledged is void and without effect. property
2nd Statement - If the thing pledged is alienated by the a. With the consent of the mortgagee in writing.
pledgor, consented by the pledgee, the ownership and b. Even without the consent of the mortgagee.
possession is transmitted to the vendee after alienation. c. Only with the consent of the mortgagee in writing or
a. Both are True c. 1st is True; 2nd is False orally.
b. Both are False d. 1st is False; 2nd is True d. All of the above.
2. Three of the following are considered elements of contract of 9. Statement 1: D borrowed PI00,000 from C, and as a security,
pledge and mortgage, what is the exception? he pledged his diamond ring. In the public instrument
a. Accessory contract executed, there is no description of the ring and no date of
b. Pledger or mortgagor must be the absolute owner. pledge appearing but the ring is delivered to C. If D will sell
c. Thing pledged may be appropriated if debtor cannot pay. the ring to X, will X have a better title than C?
d. Pledger or mortgagor must have a free disposal of the Yes, because to him (X) the pledge is not valid and effective.
thing pledged. Statement 2: Any stipulation in a contract of pledge, that if
3. Real estate mortgage: the debt is not paid at maturity, the thing pledge will be
a. Have for its object movables as well as immovables. acquired by the creditor at the current market price is valid.
b. Is perfected the moment the contract is registered with a. Both are true
the Registry of Property. b. Both are false
c. Is inseparable because the mortgage directly and c. No. 1 is true; No. 2 is false
immediately subjects the property upon which it is d. No. 1 is false; No. 2 is true
imposed, whoever the possessor may be, to the 10. D borrowed P10,000.00 from C the debt being payable in 6
fulfillment of the obligation for whose security it was months. To secure the debt, D promised to pledge his ring
constituted. within 2 weeks. Two weeks had already lapsed but D had not
d. Entitles the mortgagee to the fruits of the thing yet constituted the pledge.
mortgaged. I. C may demand the constitution of the pledge.
4. In order to bind third persons, a pledge: II. D loses the benefit of the period given to him to pay the
a. must toe recorded with the Register of Deeds. debt; hence, C may demand immediate payment of the
b. must be in a public instrument showing a description of debt.
the thing pledged and the date of the pledge. a. Both statements are true c. I is true; II is false
c. is sufficient that it be in a private instrument showing a b. Both statements are false d. I is false; II is true.
description of the thing pledged and the date of the 11. A third person who pledges his property to secure another
pledge. person's debt is released from liability in the following cases,
d. must be accompanied by an affidavit of good faith. except:
5. Statement 1: D borrowed PI00,000 from C, and as a security, a. when the creditor voluntarily accepts an immovable
he pledged his diamond ring. In the public instrument property in payment of the debt.
executed, there is no description of the ring and no date of b. when the creditor voluntarily accepts a movable property
pledge appearing but the ring is delivered to C. If D will sell in payment of the debt.
the ring to X, will X have a better title than C? c. if an extension of time is granted to the debtor by the
Yes, because to him (X) the pledge is not valid and effective. creditor with the pledger's consent.
Statement 2: Any stipulation in a contract of pledge, that if d. if through some acts of the creditor, the pledgee cannot
the debt is not paid at maturity, the thing pledge will be be subrogated to the rights, mortgages and preferences of
acquired by the creditor at the current market price is valid. the creditor.
a. Both are true 12. If the thing or subject matter of the pledge is sold for an
b. Both are false amount in excess of the obligation, the pledgor becomes, as a
c. No. 1 is true; No. 2 is false matter of right, entitled to the excess.
d. No. 1 is false; No. 2 is true a. In case of voluntary pledge.
6. Real mortgage: b. In case of legal pledge.
a. May guarantee future debts c. Both in cases of voluntary and legal pledge.
b. Objects are immovable property d. Neither in voluntary and legal pledge.
c. Is an accessory contract 13. Statement 1: If the thing pledged is alienated by the pledgor,
d. All of the above consented by the pledgee the ownership and possession is
7. X, at Y’s request, executed a Real Estate Mortgage (REM) on transmitted to the vendee after alienation
his (X’s) land to secure Y's loan from Z. Z successfully Statement 2: In sale public auction, the pledgor or owner may
foreclosed the REM when Y defaulted on the loan but half of bid and shall have a better right if he should offer the same
Y's obligation remained unpaid. May Z sue X to enforce his term as the highest bidder.
right to the deficiency? a. Both are true
a. Yes, but solidarily with Y. b. Both are false
b. Yes, since X’s is deemed to warrant that his land would c. No. 1 is true; No. 2 is false
cover the whole obligation. d. No. 1 is false; No. 2 is true
c. No, since it is the buyer at the auction sale who should 14. X constituted a chattel mortgage on a car (valued at Php1
answer for the deficiency. Million pesos) to secure a P500,000.00 loan. For the
d. No, because X is not Z’s debtor. mortgage to be valid, X should have

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a. the right to mortgage the car to the extent of half its b. That the pledgor or mortgagor is the absolute owner of
value. the thing pledged or mortgaged.
b. ownership of the car. c. That the contract is registered with the Register of Deeds.
c. unqualified free disposal of his car. d. That the person constituting the contract has free
d. registered the car in his name. disposal of his property or that he is authorized legally
15. D borrows from C P400,000 and delivers his car to the latter for the purpose.
by way of chattel mortgage. The contract between D and C is 23. In a contact of pledge if the obligation is not paid, which of
- these is a correct statement?
a. A pledge a. If object of the pledge is sold at public auction by a
b. A chattel mortgage notary public and there is an excess from that of the debt
c. Either a pledge or chattel mortgage according to the - Excess shall appertain to the pledgee.
choice of D. b. But if there is a stipulation that such excess shall
d. Either a pledge or chattel mortgage according to the appertain to the debtor, then it shall be given to the latter.
choice of C. c. If it is sold at a deficiency, the pledgee cannot recover the
16. The following is required in order that a -chattel mortgage deficiency judgment from the pledgor.
will bind third persons. d. If it is sold at a deficiency but there is a stipulation that
a. The chattel mortgage must be accompanied by an such deficiency can be recovered from debtor - that
affidavit of good faith and recorded in the Chattel stipulation is null and void.
Mortgage Register. e. All of the above
b. The chattel mortgage must be in a public instrument 24. D pledged his Singer Sewing Machine to C for P8,000. D
showing a description of the thing mortgaged and the was unable to pay the obligation 60 days after due date. C
date of the chattel mortgage. sold the machine at public auction for P6,000.
c. It is sufficient that the chattel mortgage be in writing, a. C cannot recover the deficiency of P2,000 even if there is
public or private. stipulation that he can.
d. The thing mortgaged must be delivered to the creditor. b. C can recover the deficiency of P2,000 even without
17. Real property mortgaged stipulation.
a. Generally, is not possessed by the creditor. c. C cannot recover the deficiency of P2,000.
b. Cannot be acquired by the creditor, even if he is in d. C can recover the deficiency of P2,000.
possession for 30 years by prescription. 25. Which of the following statements is true and correct?
c. Mortgage cannot appropriate the property for himself, a. Pledge and mortgage are accessory contracts because
even if stipulated. they cannot exist by themselves.
d. All of the above. b. In both pledge and mortgage the creditor is entitled to
18. A kind of mortgage which lacks the formalities required by deficiency judgment.
law but nevertheless shows the intention of the parties to c. Where an obligation is secured by a pledge or mortgage
secure a debt with real property is known as: and it is not paid when due the pledgee or mortgagee may
a. conventional mortgage. dispose of the thing pledged or mortgaged if there is an
b. voluntary mortgage. agreement to that effect between the parties.
c. equitable mortgage. d. Unless otherwise agreed upon by the parties, the sale of
d. legal mortgage. the mortgaged property extinguishes in full the obligation
19. 1st Statement - If the thing pledged is returned by the pledgee of the mortgagor to the mortgagee.
to the pledger or owner, the principal obligation is 26. Which of the following statements regarding contract of
extinguished. pledge is not correct?
2nd Statement - A chattel mortgage exists when personal a. A pledge cannot be constituted unless the thing pledged
property is recorded in the Chattel Mortgage Register as a be placed in the possession of the creditor.
security for the performance of an obligation. b. Pledge is a real contract because it is perfected by
a. Both are True c. 1st is True; 2nd is False delivery of the thing pledged.
b. Both are False d. 1st is False; 2nd is True c. Pledge is an accessory contract because it needs a
20. D borrowed P10,000.00 from C the debt being payable in 6 principal obligation to exist.
months. To secure the debt, D promised to pledge his ring d. A pledge cannot be constituted to secure the performance
within 2 weeks. Two weeks had already lapsed but D had not of a voidable or unenforceable or even a natural
yet constituted the pledge. obligation.
I. C may demand the constitution of the pledge. 27. D borrowed P30,000.00 from C. To secure the debt, D
II. D loses the benefit of the period given to him to pay the pledged his ring, wristwatch, and necklace. Before the debt
debt; hence, C may demand immediate payment of the could be paid, C died leaving X, Y and Z as heirs. By
debt. agreement among the heirs who inherited the credit, the ring
a. Both statements are true c. I is true; II is false would secure the share of X of the credit, the wristwatch the
b. Both statements are false d. I is false; II is true. share of Y, a necklace the share of Z. Later, D pays X
21. A pledge is extinguished through any of the following, P10,000.00.
except: a. D can demand the extinguishment of the pledge of the
a. sale of the thing pledged. ring.
b. appropriation of the thing pledged after the thing is not b. X may release the pledge of the ring.
sold at one public auction. c. The pledge of the ring will remain until the shares of Y
c. written abandonment of the pledge in writing. and Z are paid by D.
d. return of the thing pledged. d. D can demand the extinguishment of the pledge of the
22. The following are essential requisites common to the contract ring, wristwatch and necklace because there has been
of pledge and mortgage, except one: partial payment.
a. That they are constituted to secure the fulfillment of a
principal obligation.

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