BUSINESS LAW ATTY. A. S.

MACMOD, CPA
CREDIT TRANSACTIONS

I. Identification: Basic Concept and principles

__________________ 1. Contract whereby one delivers to another money or other consumable things provided the same
amount or quality shall be related/paid.
__________________ 2. Contract whereby one delivers to another non-consumable things for the latter to use and return
later.
__________________ 3. A contract wherein the creditor acquires the right to receive fruits of an immovable of his debtor,
with an obligation to apply them to the principal.
__________________ 4. Contract whereby personal property is recorded in the chattel mortgage registered as security for
the performance of an obligation.
__________________ 5. A stipulation in contract of pledge. Mortgage or antichresis whereby creditor is given the power
to appropriate for himself the thing given as security if the principal obligation is not fulfilled.
__________________ 6. The right of a guarantor to let the creditor exhaust first the assets of the debtor before he can be
compelled to pay.
__________________ 7. A contract whereby the debtor delivers to the creditor a personal property as a security for a
credit.
__________________ 8. A person who binds himself to fulfill the obligation of the principal debtor in case he fails to
pay.
__________________ 9. A person who binds himself solidarily with the principal debtor for the payment of an
obligation.
__________________ 10. A real estate mortgage in the form of conventional redemption or absolute sale.

II. TRUE OR FALSE

11. If the thing pledged is returned by the pledgee to the pledgor or owner, the principal obligation is extinguished.
__________
12. A chattel mortgage exists when personal property is recorded in the Chattel Mortgage Register as a security for
the performance of the obligation. __________
13. In chattel mortgage, the mortgagor must execute an affidavit of good faith in order that the mortgage shall be
valid against third person and between the parties.. __________
14. If the thing pledged is sold but the proceeds of the sale is less than the principal obligation, the pledgee can
collect the deficiency from the pledgor. __________
15. Any stipulation in a contract of pledge authorizing the pledgee to sell the thing pledged if the pledgor cannot pay
is void. __________
16. 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 endorsed. __________
17. 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. __________
18. Pledge is a real contract which is perfected from the time the thing pledge is placed in the possession of the
creditor, or of a third person by common agreement. __________
19. If two or more things are pledged, the pledgee may choose which he will cause to be sold, unless there is
stipulation to the contrary. He may demand the sale of only as many of the things as are necessary for the
payment of the debt. __________
20. Chattel mortgage is a solemn contract. __________
21. If the thing pledged is alienated by the pledgor, consented by the pledgee the ownership and possession is
transmitted to the vendee after sale is notarized. __________
22. In mortgage, the mortgagee is entitled to the entire proceeds of the sale of the thing mortgaged. __________
23. In chattel mortgage, and in sale con pacto de retro, the title to the subject matter of the contract is transferred to
the other party. __________
24. If the immovable mortgaged is sold, and the amount realized is less than the mortgage debt, the buyer of the
mortgaged property is liable to pay the deficiency, if any. __________
25. A stipulation forbidding the owner from alienating the immovable property mortgaged is void. __________

III. MULTIPLE CHOICE

26. D1, D2 and D3 borrowed from C P300,000 as a security, he mortgaged their undivided agricultural land to C,
Subsequently, D1 paid C P100,000. Is the mortgage on D1’s share of the land extinguished?
a. Yes, because the obligation of D1 on the debt is only P100,000
b. Yes, the obligation of the debtors is joint, D1 is answerable only for P100,000
 2
c. No, because the obligation is solidary, payment in part shall not extinguish the obligation secured by the
mortgage.
d. No, because mortgages are considered indivisible, payment in part shall not extinguish the obligation
secured by the mortgage.

27. B telephoned S, his sister, to sell his parcel of land. The land was purchased by X, but S did not forward the
money to B. Now wants to recover the parcel of land.
a. B cannot recover because the sale is valid
b. B can recover because the sale between S and X is void, therefore there is no sale
c. B can recover only if B can return the money paid by X to S
d. B can rescind the sale.

28. If P leads X to believe that A is his (P’s) agent, when as a matter of fact such is not true, and A acts on such
misrepresentation, there is
a. An implied agency
b. An agency by estoppel
c. An agency by necessity
d. An express agency by words spoken

29. Which of the following statements is correct:

a. Pledge and mortgage are accessory contracts because they can not exist by themselves
b. In both pledge and mortgage the creditor is entitled to deficiency judgment
c. Where an obligation is secured by a pledge or mortgage and it is not paid when due the pledge or
mortgagee may appropriate the thing pledge or mortgaged if there is an agreement to that effect
between the parties.
d. Unless otherwise agreed upon by the parties, the sale of the mortgage property extinguishes in full the
obligation of the C offered to buy the land from A.

30. D pledged his ring to C for P10,000. D failed to pay his obligation on time. C sold it/at public auction for P7,000.
a. C can recover die deficiency even without stipulation
b. C cannot recover the deficiency even if there is stipulation
c. C cannot recover the deficiency
d. C can recover the deficiency

31. 1st statement: A guaranty is generally onerous.

2nd statement: A married woman may not guarantee an obligation without the husband’s consent.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

32. 1st statement: The guarantor of a guarantor can enjoy the benefit of excussion.
2nd statement: A compromise between the creditor and the debtor benefits the guarantor but shall not
prejudice him.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

33. 1st statement: The pledgor/mortgagor must be the absolute owner of the object.
2nd statement: The pledger/mortgagor must have free disposal of the object.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

34. 1st statement: All movables and immovables which are within the commerce of men may be pledged.
2nd statement: A pledge or mortgage is divisible if the debt secured is also divisible.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

35. 1st statement: Pledgor has the same responsibility as a bailee in commodatum.
2nd statement: Pledgee can deposit the thing pledged to another person.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

36. 1st statement: Movables or immovables may be the object of mortgage.

2nd statement: Mortgage extends to the natural accessions and fruits of the property involved.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

37. 1st statement: The creditor in antichresis is obliged to pay the taxes upon the estate.
2nd statement: The creditor is also bound to bear the expenses of preservation and repair.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

38. 1st statement: Expenses for the presentation and use of thing loaned are chargeable to the bailee.
 3
2nd statement: Loss of the thing in commodatum shall be borne by the bailee.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

39. Statement 1: In contracts of pledge, the pledgee is allowed to use the thing pledged.
Statement 2: In case of pledge of animals, their offspring shall pertain to the pledgor of the animal pledged and are
no longer subject to the pledge, unless stipulated.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

40. Statement 1: In sale of the thing pledged by public auction, pledgee is not allowed to join the bidding in the 1 st
auction.
Statement 2: In sale at public auction, the pledgor or owner may be bid and shall have a better right if he should
offer the same terms as the highest bidder.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

41. Statement 1: A stipulation in a contract of mortgage stipulating an upset price, at which the property may be sold is
void.
Statement 2: Antichreses is void if not in a public instrument..
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

42. Statement 1: A real mortgage may guarantee future obligation, while a chattel mortgage cannot guarantee future
obligation.
Statement 2: The mortgagee has the right to take possession of the chattel mortgaged upon default of the mortgagor.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

43. Statement 1: In chattel mortgage, the mortgagor must execute an affidavit of good faith in order that the mortgage
shall be valid.
Statement 2: Delivery of property is also required in chattel mortgage.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

44. Statement 1: Pledge can secure a principal or subsidiary obligation.

Statement 2: Creditor can appropriate the thing given by way of pledge or mortgage.
a. Both are true c. No.1 is true; No.2 is false
b. Both are false d. No.1 is false; No.2 is true

45. In case of sale of property in public auction, deficiency cannot be recovered in:
a. Real estate mortgage
b. Chattel mortgage
c. Pledge
d. Antichresis

46 to 55

Write:
a. If only the 1st statement is correct
b. If only the 2nd statement is correct
c. If both statements are correct
d. If both statements are incorrect

46. 1st Statement Commodatum is generally gratuitous.

2nd statement Mutuum is also called secured loan.

47. 1st statement In Commodatum bailor bears the risk of loss.

2nd statement In Mutuum bailee bears the risk of loss.

48. 1st statement The subject matter of commodatum may be consumable.

2nd statement The subject matter of Mutuum may be non-consumable.

49. 1st statement The bailee in commodatum acquires the use of the thing loaned including its fruits.
2nd statement Commodatum is purely personal in character.

50. 1st statement In commodatum, the bailor need not be the owner of the thing.
2nd statement In mutuum the lender must be the owner of the object.

51. 1st statement Commodatum and Mutuum are consensual contracts.

2nd statement A stipulation in commodatum that the bailee may use the fruits of the thing loaned is void.
 4
52. 1st statement Only money or other fungible things may be the object of mutuum.
2nd statement Movable or immovable and other fungible goods may be the object of commodatum.

53. 1st statement Guaranty and Security are contracts of personal security.
2nd statement Pledge and Mortgages are contracts of real security.

54. 1st statement Pactum commissorium is valid if clearly stipulated.

2nd statement Mortgage and antichresis are basically consensual contracts.

55. 1st statement Pledge is accessory, real and unilateral contract.

2nd statement Pledge and mortgages can secure all kinds of obligation but not antichresis.

56. Not a characteristic of mutuum/ commodatum:

a. Bilateral contract
b. Principal contract
c. Gratuitous contract
d. Consensual contract

57. Not a characteristic of pledge/ mortgages:

a. Nominate contract
b. Onerous contract
c. Principal contract
d. Bilateral contract

58. Not a characteristic of antichresis:

a. Consensual contract
b. Onerous contract
c. Nominate contract
d. Formal contract

59. Affidavit of good faith is required in this contract.

a. Real estate mortgage
b. Antichresis
c. Chattel mortgage
d. Pledge

60. In the following contracts, which is directly affected by Recto Law:

a. Real estate mortgage
b. Antichresis
c. Chattel mortgage
d. Pledge

“All accomplishments were achieved by persistent focus on the desired goal”.

-from the book Master Key to Success