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29 Questions
1. 1. One of the distinctions between pledge and mortgage is that pledge:
b. requires absolute ownership on the
part of the person constituting the
A B
security.
d. requires the actual delivery of the thing
C given as security to the creditor or a third D
person by common agreement.
2. 2. In order to bind third persons, a pledge:
c. is sufficient that it be in a private
A instrument showing a description of the B
thing pledged and the date of the pledge.
a. must be recorded with the Register of
C D
Deeds.
3. 3. Pledge and Mortgage are accessory contracts because they:
c. Can exist by themselves.
A B
a. Are meant to secure the fulfillment of a
C D
principal obligation.
4. 4. The following is required in order that a chattel mortgage will bind third persons.
d. The thing mortgaged must be delivered
to the creditor.
A B
c. It is sufficient that the chattel mortgage
be in writing, public or private.
C D
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DATE  :
c. requires that the one constituting the
security must have the free disposal of the
thing or be legally authorized for the said
purpose.
a. is constituted to secure the fulfillment of
a principal obligation.
b. must be in a public instrument showing
a description of the thing pledged and the
date of the pledge.
d. must be accompanied by an affidavit of
good faith.
b. Cannot exist if the principal obligation is
void.
d. Cannot secure fulfillment of rescissible
obligation
b. The chattel mortgage must be in a
public instrument showing a description of
the thing mortgaged and the date of the
chattel mortgage. .
a. The chattel mortgage must be
accompanied by an affidavit of good faith
and recorded in the Chattel Mortgage
Register.
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5. 5. Which of the following statements is true and correct:

c. Where an obligation is secured by a d. Unless otherwise agreed upon by the

pledge or mortgage and it is not paid parties, the sale of the mortgage property
when due the pledge or mortgagee may extinguishes in full the obligation of the
A B
dispose of the thing pledged or mortgaged mortgagor to the mortgagee.
if there is an agreement to that effect
between the parties.

b. In both pledge and mortgage, the a. Pledge and mortgage are accessory
C creditor is entitled to deficiency judgment. D contracts because they cannot exist by
themselves.

6. 6. The following is required in order that a real mortgage will bind third persons:

b. The real mortgage must be in a public a. The real mortgage must be

instrument showing a description of the accompanied by an affidavit of good faith
A B
thing mortgaged and the date of the real and recorded with the Registry of
mortgage. Property.

c. It is sufficient that the real mortgage be d. The real mortgage must be recorded in
C D
in writing, public or private. the Registry of Property.

7. 7. When is appropriation by the creditor of the thing given as security allowed in pledge, real
mortgage and chattel mortgage?

b. When the thing given as security in c. When the thing given as security in
A pledge is not sold at two public auctions. B chattel mortgage is not sold at one public
auction.

a. When the thing given as security in real d. No appropriation is allowed in either

C mortgage is not sold at two public D pledge, real mortgage or chattel mortgage.
auctions.

8. 8. This is a stipulation in pledge or mortgage providing that the ownership of the thing given
as security will pass to the pledgee or mortgagee upon default of the debtor.

A c. Legal subrogation B d. Redemption

C b. Pactum commissorium D a. Constitutum possessorium

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9. 9. D borrowed P30,000.00 from C. To secure the debt, D pledged his ring, wristwatch, and
necklace. Before the debt could be paid, C died leaving X, Y and Z as heirs. By agreement
among the heirs who inherited the credit, the ring would secure the share of X of the credit,
the wristwatch the share of Y, and the necklace the share of Z. Later, D pays X P10,000.00.

a. D can demand the extinguishment of c. The pledge of the ring will remain until
A B
the pledge of the ring. the shares of Y and Z are paid by D

b. X may release the pledge of the ring.
C D
d. D can demand the extinguishment of
the pledge of the ring, wristwatch and
necklace because there has been partial
payment.

10. 10. The debtor/pledgor has the following rights, except to:

c. require the deposit of the thing with a b. continue to be the owner of the thing
third person if it is in danger of being pledged unless it is expropriated.
A B
impaired or lost through the negligence or
willful act of the pledgee.

a. ask for the return of the thing pledged d. alienate the thing pledged without the
C after he has paid the debt, its interests, D consent of the pledgee.
and with expenses in a proper case

11. 11. The creditor/pledgee has the following rights, except to:

c. demand reimbursement of the b. use the thing pledged even without

expenses made for the preservation of the authority if such use is necessary for its
A B
thing. preservation.

a. retain the thing in his possession until d. automatically appropriate the thing
the debt is paid. pledged upon default of the debtor in the
C D
payment of his debt.

12. 12. One of the following may not be the object of a real mortgage:

c. Animal houses, pigeon houses or other a. Land, buildings, roads and construction
breeding places intended by the owner to of all kinds adhered to the soil.
A B
be permanently attached to the land,
including the animals therein.

d. Growing fruits that have been gathered b. Fertilizer actually used on a piece of
C D
from trees planted on land. land.

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13. 13. D borrowed P100,000.00 from C. To secure the debt, D mortgaged his land and building
in favor of C. The mortgage is registered with the Registry of Property. Sometime later, D
sold the land and building to X who was not aware of the mortgage of the land and building.
Based on the above information, which of the following statements is false?

a. X must respect the mortgage although b. X was not bound by the mortgage
A B
he was not a party thereto. because he was not aware of it.

c. If C forecloses the mortgage and the
proceeds of the foreclosure sale are not
C D
enough to pay for the debt, C can recover
the deficiency from D.
d. If C forecloses the mortgage and the
proceeds of the foreclosure sale exceed
the amount of debt, D is entitled to the
excess.

14. 14. It is the right of the mortgagor to redeem the property that was mortgaged after it was
sold.

A b. Right of redemption. B d. Right of pre-emption.

C a. Equity of redemption. D c. Right of subrogation.

15. 15. The creation of a lien on the property upon which it is imposed,whoever may be the
possessor of the property, to the fulfillment of the obligation for whose security it was
constituted refers to the characteristic of a real mortgage being:

A d. a real property in itself. B b. an indivisible contract

C a. an accessory contract. D c. an inseparable contract.

16. 16. Alpine Corporation obtained a loan amounting to P1,000,000.00from Eastern Bank. To
secure the obligation, P, the president of Alpine, mortgaged his own building in favor of the
bank. The contract of loan and deed of mortgage have been signed by the parties but have
not been acknowledged before a notary public,

b. P may validly mortgage his own d. The mortgage contract can stand
A property to secure the obligation of Alpine B independently from the contract of loan.
to the bank.

a. Alpine Corporation and P are one and c. The mortgage is not yet binding
C the same person. D between the parties since it has not been
notarized.

17. 17. The law currently governing security interest over personal property is the:

A c. Personal Property Security Act B d. Property Registration Decree

C a. Chattel Mortgage Law D b. Civil Code

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18. 18. Under the PPSA, a security interest may be perfected in the following manner, except:

b. Possession of the object a. Registration of a notice with the

A B
electronic registry

C d. Written contract for the security interest D c. Control of the account

19. 19. When is the transitional period under the PPSA?(i.e. the security interest will be
governed by the prior law creating the security interest if perfected prior to such date)?

A a. November 18, 2019 B b. October 10, 2018

C d. February 9, 2019 D c. August 7, 2018

20. 20. If the security interest is perfected on or after the transitional period under the PPSA,
what is the governing law?

c. PPSA, but the registration of security d. PPSA, but the registration of security
A agreement is in the meantime pursuant to B agreement is in the meantime pursuant to
Section 4 of the Chattel Mortgage Law. the Civil Code

C a. Civil Code D b. PPSA

21. 21. It is the right of the mortgagor to redeem the mortgaged property after his default but
before the auction sale:

A c. equitable right B a. right of pre-emption

C d. equity of redemption D b. right of redemption

22. 22. An affidavit of good faith refers to an oath in a contract of chattel mortgage wherein the
parties severally swear that:

d. all of the above b. they will abide by the stipulations of the

contract and any violation thereof will
A B
subject the guilty party to interest and
penalties

c. the mortgage is executed for the
purpose of securing the obligations of the
C debtor and the latter undertakes that he is D
the absolute owner of the property
mortgaged;
a. the mortgage is made for the purpose
of securing the obligation specified in the
conditions thereof and for no other
purpose, and that same is valid obligation
and one not entered into for fraud

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23. 23. Which of the following is not a cause for the extinguishment of pledge?

c. Verbal renouncement or abandonment a. Payment of debt

A B
by the pledgee of the pledge

d. If the thing pledged is returned by the b. Sale of thing pledge at public auction
C D
pledgee to the pledgor or owner

24. 24. Regine mortgaged his farmland to Shara. The farmland has a fair market value of
P500,000 while the loan is only P100,000. Thereafter, Regine sold the farmland to Gary.
What is the legal effect of the sale to Gary?

d. Shara may foreclose the property to c. The sale is unenforceable as Regine was
A B
protect his interest not authorized to sell the property

a. The sale is void and Shara may foreclose b. The sale is valid and does not affect the
C D
the mortgage in case of default by Regine mortgage

25. 25. Which of the following statements is false?

a. Real estate mortgage is a lien b. Real estate mortgage extends to the

A B
accessions and accessories

c. The mortgage credit may not be d. Pactum de non-aliendo is void

C D
assigned to a third person

26. In the sale of thing pledged, where the proceeds of the sale are less than the amount due,
when can the pledgee recover the deficiency?

C.  The pledgee can never recover the A.  In the case of pawnshops.
A B
deficiency.

B.  If there is stipulation allowing such D.  In case of pledge by operation of law.
C D
recovery.

27. A pledge agreement allowed the pledgee to transfer the pledge shares in pledgee’s name in
the corporate books if the pledgor fails to remedy a payment default within thirty (30) days
from receipt of a written demand from the pledgee. Is the stipulation VALID?

Yes, because the transfer is only as act of No because it constitutes pactum

A B
administration. commissorium

No, because it dispenses with the A.  Yes, because the transfer is not
C payment of taxes due on to the transfer D automatic i.e, only after pledgor fails to
pay during the period

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28.
B purchased a motor vehicle from S for P1,200,000, payable by a downpayment of P600,000
and the balance in 12 monthly installments of P50,000 each. A chattel mortgage on the
vehicle was executed to serve as a security. B defaulted on the 7th and 8th monthly
installments chattel mortgage was foreclosed but the auction sale resulted into a deficiency
of P100,000.

Under R. A. No. 1508, as amended, otherwise known as the Chattel Mortgage Law, in
relation to Article 1484 of the Civil Code, more popularly known as the Recto Law, what is
the remedy of S to recover the deficiency?

A. Auction the other properties of B for C. Cancel the installment sale.

A B
P100,000.

B. No other remedy on the deficiency. D. File a collection suit for P100,000

C D
against B.

29. Which of the following statements relative to R.A. No. 1508, as amended, otherwise known
as the Chattel Mortgage Law, is FALSE?

A. Aside from the Chattel Mortgage B. Where the parties executed a chattel
Registry of the Register of Deeds where mortgage on a building, they shall be
the property if located, registration shall bound to the chattel mortgage contract.
A B
also be made where the mortgagor
resides if he resides in a place other than
where the property is located.

C. Failure to execute the Affidavit of Good D. Registration of the chattel mortgage is

Faith and to register the chattel mortgage made in the Chattel Mortgage Registry of
C D
contract shall invalidate the mortgage. the Register of Deeds where the property
is 1ocated.

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Answer Key

1. c 2. b 3. b 4. d

5. d 6. d 7. a 8. c

9. b 10. d 11. d 12. c

13. b 14. a 15. d 16. a

17. a 18. c 19. c 20. a

21. c 22. d 23. a 24. d

25. c 26. d 27. b 28. c

29. c

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