1. A baught certain machineries from X Go. payable in monthly installments. As security, 8 constituted a real estate mortgage (REM) on a Jot belonging’ to him in favor of X Go. Because of A’s failure to pay several installments, X brought @n action to fereciose the REM. B interposed the detense that his properties are merely a guarantee of the paymen of the debt of A and that X. co. has no right of action against him before exhausting all legal remedies against A, the true debtor. Decide with reasons. ANSWER: 4 in @ contract of guarantee, the guarantor has the benefits of excussicn. This means that before he shall be obliged to pay the debt, the creditor shall proceed all the valuable properties of the debicr to satisfy the debt. This:rule however, is with exception. It is when the guarantor executes a real estate mortgage in favor of the creditor to secure the performance of the principal obligation incurred by the debtor, he cannot avail of the benefit Of excussion. The crexitor can direct proceed fo foreclose the mortgaged property the moment the debtor fails to pay the debt at the time the debt matures and becomes. In the case, the contention of B is untenable. What is important here is execution of the morigage to secure the performance of the debt. The guarantor is bound to abide by the result of the foreclosure. 2. What are the essential requisites of a contract of pledge? ‘The essential requisites of a contract of pleaye are: 4.) That it is constituted to secure the performance of the principal obligation 2.) That the pledgor must be the absolute owner of the thing pledged. 3.) That the pledgor must have the free disposal of the property pledged, or in the absence thereof, he must be legaily authorized for the purpose. 4.) That upon default of the pledgor to fulfill the obligation, the pledgee may alfenate the pledged property to satisfy the debt. 5.) That the property piadged must be in the possession of the cr by common agreement. f, or the third persons 3. Define pactim commissorium. What are the rule and exception to the rule? ANSWER: ; x Paetumn commissorium is a pact or agreement in a contract.of pledge, mortgage or antichresis or a stipulationof such contract by virtue of which, the cteditor shall appropriate or dispose the property secured to satisfy the principal obligation, or to transmit such property automatically to the creditor without any further action from the debtor. Such stipulation, accarding to our Civil Law, is invalid for it contravenes with the law, customs, and public Policy. 4. a. D borrowed P§,000 from C. As security for the payment‘of the debt, the former pledged to the latter a diamond ring valued at 23,000. It was expressly stipulated in the contract that if D cannot pay his debt when it matures, the diamond ring will be considered as full payment without further action. Can C now appropriate the ring? ANSWER:C cannot appropriate the ring. This is a flagrant violation of our laws and’a classic example of pactum commissorium. The automatic appropriation of the ring without any further action is pactum commisso:um. The creditor, upon the default of the debtor in fulfilling his obligation, cannot appropriate the pledged property automatically. This stipulation is Prohibited by law, morals and good customs. a b Suppose in the above problem, the agreement is to the effect that in case of non- Payment when the devt matures. The debtor shall execute a deed of absolute sale of the ring in favor of the creditor, what would be your answer? t ANSWER: E Yes, this would make a difference in the answer. In this case, the stipulation is valid. In here, there is no automatic appropriation of the pledged property but the debtor merely assigns the property to the creditor to satisfy the principal obligation upon his default of payment. This stipulation is not one of the pactum commissorium and this is a valid business transaction, ‘What is prohibited is automatic appropriation of the property. 5. To secure an obligation of P100,000, Ferdie pledged 100 shards of stock of San Miguel "Go. In favor of Johnny. Because Ferdie defaulted, Johnny sold at public auction the said shares. In the auction, the shares were sold at 500,000. It turned out, however, that after the pledge but before the auction sale, Ferdie had executed a bill of sale transferring the shares to Meldy. Decide. ANSWER: The person who purchased the shares of stocks sol! at the public auction sale“is the owner of the property. The bill of sale is invalid because the same is executed without the consent of the pledges. The transfer of shares to Meldy by ay of bill of sale ig not binding, on the part of the pledgee because the same was executed without his consent and was done after the pledge and before the auction saie. 8. After applying the proceeds to the obligation there is_an excess of P5,000. How is this excess applied? Explain. ‘ ANSWER: The excess shall be for the benefit of the creditor. Art. 2115 declares, inter alia, that if the price of the auction sale is more than the principal obligation, interests and expenses, the debtor shall not be entitled to the excess unless it is otherwise agreed. 7. A debtor pledged to his surety pieces of jewelry to indemnity the latter in case the surety would be obliged to pay the creditor. The surety paid P20,000 to the creditor. To recover the amount, the surety sold at public auction the jewelry but realized only P5,000. May the surety recover the deficiency from the debtor? Reason, ANSWER: In this case, the excess of the proceeds shall be owned by the creditor. It is because when a pledged property is sold at public auction, when the proceeds of the sale is in excess of the Principal obligation, the debtor cannot demand such amount. The same holds true when the Proceeds of the sale is less than the principal obligation, the creditor cannot demand the deficiency. The proceeds turn out to be excess, the same will inure to the benefit of the creditor. 78. A widower, borrewed money from B in 1966. This was evidenced by an informally private instrument executed by_A_The security for the loan was a parcel of unregistered land Which belongs to A and which he inherited from his parents. in 1971_A ied without Paying the indebtedness. The records show that 8 had been paying the really taxes from 1966 to 1986 when he finally died. C, his son who had inherited the property continued Paying taxes. By 1996, C filed an application for the registration of his title to the land The children of B, whe were in possession of the land, filed their opposition. They contended that they are the owner of the land and that C does not have a retraceable title thereto. Decide. . 3 ANSWER: ‘The contention of A’s children that C does not have the registrable title thereto is correct, It is commissorium which is prohibited by law. The payment of taxes;for so many years cannot overcome the right of “'s children of their ownership to the mortgaged land, 8. X Borrowed money from the bank using the real property of Y as security with consent of Y. X was unable fo fully settle the loan so that the bank extra judicially foreclosed the mortgage of the property. On Dec. 7, 1878, the sheriff sold the land at public auction with the bank itself as the highest bidder to which. the corresponding certificate of sale wae ‘sued on the same day. However, the certificate of sale was not registered until April 15, A280. on April 23, 1980, the bank sold the land to Z. X offered to redeem the property on Aor 5, 1982. The bank refused to accept the offer contending that the one yes iegematicn period which began on the dzie of sais has expired. Its lawyer argued that ae between the immediate parties, the registration is not necessary since they have already actual notice, Is he correct? ANSWER: a Cisarly, the one year :2demption period does not elapse yet. Hence, the redemption ie stil wvalid. The bank shouid not refuse the offer, The contention of the:lawwyer is untenable. It is because the registration is still necessary not only for the purpose of binding the parties but aiso in. order to affeét third persons. Alec, the Purpose of registration in the case at bar, is to determine the reckorling period of redemption 10.A bought a.washing machine from Y Co. on installment.,As security, a chattel mortgage was constituted on the appliance. X defaulted on his payments which prompted Y Co. to institute an action for specific performance. Thus, the washing machine was subsequently attached and sold in a public auction. The procéeds of the sale was not gnough to cover for the exposure thereby initiating Y Co. to claim for deficiency judgment. X claims that Y Co. is not entitled to deficiency judgment, Decide. ANSWER: ; Upon the default of the debtor to pay the obligaticn of a sale by ‘installments, the creditor has the following remedies: 1) Exact specific performance *2.) Rescind the contract : 3.) Forociose the mortgage These remedies are exclusive, that the creditor may benefit from one and be barred from using the others. If in an auction sale, the creditor has the right to claim deficiency judgment against the debtor. The only exception is when two or more installments has been’due and the debtor fails to pay, the creditor may foreclose the mortgaged property without having any further action against the debtor to claim for deficiency. . 11.A obtained a loan trom B securing the same with a chattel mortgage on A’s car. The contract although in due form was not registered to both the Chattel Mortgage Registry and the Land Transportation Office. Subsequently, A failed to pay’ his obligation. Thus, B instituted foreclosure proceedings on the car. A assailed the action of B arguing that the chattel mortgage contract was void due to the absence of an essential act whiéh is the registration in the CMR and the LTO. Is his contention correct? Decide. ANSWER: There are two schools of thought regarding this case ai bar, to wit; 4.) Art. 2140 of the Civil Code, such property should be recorded in the Chattel Mortgage Registry as security for the performance of an obligation, to be valid between the mediate parties and third parties. 2.) Sec. IV of the Chattel Morigage Law provides that registration is only for the purpose of affecting third persons in statutory construction, In case of conflict between @ general iaw and a special law, the latter prevails. Therefore, the motor which should be registered at the CMR and LTO in order to affect third persons, but such contract is valid between the immediate parties regardless of non- registration. 12.4 and B entered into a contract of antichresis with A as creditor and B as the debtor. A took possession of the property and continued to pay the taxes. B was unable to pay obligation until both of them died 50 years later. After the lapse of 100 years, the heirs of A sold the property to C. The third generation descendants of B instituted an action against A's heirs and C to recover the property. A's heirs and C responded that more than 100 years have passed while the petitioners just acted on their rights allowing the “doctrine of stale demands” or laches to set in. Can B’s descendants recover the property? ANSWER: P create A's heirs and C's contentions are not tenable. An antichretic debtor cannot acquire by prescription the land of the debtor. There is an absence of an essential of ownership by prescription and that is possession should be in concepto de dueni or in the concept of an owner. Their possession cannot serve as title of their acquiring dominion of the property. Laces or stale demands cannot set in, as reasoned. However, thé antichretic creditor may file in court a demand to fulfill the obligation contracted 100 years ago. 13.When is it presumed to be an equitable mortgage? The NCC provides that the following are presumed to be an equitaile mortgage: * 4, When the price of the sale with the right to repurchase is unusually inadequate.When the vendor remains in possession as lessee or otherwise When the vendor binds himself to pay for the taxes of the thing sold When the purchaser retains for himself a part of the purchase price. When there is a doubt as to whether the contract is a contractiof sale with the right to repurchase in an equitable mortgage. opon 14. What are the most common kinds of real mortgage? Define each. AWSWER: : —_—— 1) Voluntary or Conventional — created by the parties (Art. 188 Mortgage Law) : 2.) Legal Mortgage — one required by law to guarantee performance (Art. 169 Mortgage Law) ; 3.) Equitable Mortgage — (Art. 1602, Civil Code) one which feveals an intent to make the property a security, even if the contract lacks the pfoper formalities of a real estate mortgage. 18.When may a married woman mortgage without marital consent? Discuss fully interrelating with your knowledge of persons and family relations. ANSWER: § in the Civil Code provisions regarding Family Relations and enunciated in vérious ‘Supreme Court rulings, @ married woman cannot encumber or dispose of a property of conjugal ownership without prior written consent or mutual agreement of both spouses or otherwiss decreed by the court. Such mortgage in the absence of the required consent is of doubtful ppralidity (Serra vs. Rodriguez) Ths however would not apply if the property in issus is paraphemal property or acquired by the wife gratuitously or agreed in a marriage settlement or pre-nuptial agreement : | Commodatum | Mutuum | Deposit | ! 2 cet Hf aah fi [1 Kind of contract" Real “(perfected by Regi (perfected “by | Real (perfected by | z | delivery) delivery) | delivery) [2 Object Non-Fungible — Fungible = [Anything = | (SGavse Gratuitous — Gratuitous/Onerous | Gratutous/Onetous | [3-Pumpose Use — _ [Consumption : 8. Ownership | Bailor = [Debtor i ;Seme__ [Same amountiandiaty 7 Same taken T Pledge Pf Real Esiate "| Antichrasis‘Object Movable [Real Frujts of the [Movable _ | Reai Sag immovable | Form Public Instrument | Registration to | Writing Registration | Registratior | to bind thitd | bind third parties | -__ | parties : : [Possessio Creditor 3" | Debiorimortgagor | Creditor! Debtor DabtoriMior la patties . si 4 ‘|gagor i: (Fruits Interest Not [Not [Taxes Debior/pledgor Debtor/Morigagor | Credifor/Debtor Debtor/mart _ a : gagor i Saie/Forecl | Extra Extra/iud sud Extra/Jud sure i . , a Deficiency | None Yes [Yes Yes Yes Judgment eae i pana