CPA Review School of the Philippines

CREDIT TRANSACTIONS Manila DELA CRUZ

PLEDGE AND MORTGAGE

1. S, a minor, sold her bracelet to B for P8,000. Later, B, needing money to pay her daughter’s tuition fee,
borrowed P15,000 from C and as a security, pledged the bracelet to the latter. B failed to pay C resulting
into the auction sale of the bracelet in favor of D for P10,000 only. Which of the following statements is
correct?
a. The title of B over the bracelet is not valid, hence the pledge, as well as the sale of said bracelet is
likewise defective. The pledgor must be the owner of the thing pledged.
b. The deficiency of P5,000n may still be recovered by C from B if there is a stipulation to this effect
c. C can no longer recover the deficiency of P5,000 from B. The pledge, together with the sale is valid.
The voidable title of B is valid because it is not yet annulled.
d. If D was a purchaser in bad faith as he knew of the defective title of B over the bracelet from S,
ownership will not pass to him (D).

2. In the preceding number, assuming what was executed by B in favor of C was a valid chattel mortgage
which was eventually foreclosed and the bracelet was sold to D at the public auction for the same
amount, which statement is correct?
a. The title of B over the bracelet is not valid, hence the chattel mortgage, as well as the sale of said
bracelet is likewise defective. The mortgagor must be the owner of the thing mortgaged.
b. The deficiency of P5,000 may still be recovered by C from B
c. C can no longer recover the deficiency of P5,000 from B as the mortgage, together with the foreclosure
sale, was valid. The title of B was still valid
d. If D was a purchaser in bad faith as he knew of the defective title of B over the bracelet, ownership
will not pass to him (D).

3. S sold to B a specific car for P200,000 payable in four equal installments. S delivered the car to B but
required B to mortgage it back to S to answer for the unpaid installments. B paid the 1st and 2nd
installments but he failed to pay the balance. S foreclosed the mortgaged property and sold it at public
auction for P80,000. As a result,
a. S can recover from B the balance of P20,000
b. S can recover from B the balance of P20,000if there is stipulation to that effect
c. S cannot recover the deficiency any more even if there is stipulation to that effect
d. S cannot recover the deficiency except if there is stipulation.

4. Elements of contracts of pledge and mortgage, except

a. Pledgor or mortgagor must be the absolute owner
b. Pledgor or mortgagor must have the free disposal of the thing pledged
c. The thing pledged or mortgaged may be appropriated if the debtor cannot pay
d. Pledge and mortgage are accessory contracts

5. A borrowed P100,000 from B with A’s ring given to B by way of pledge. It was stipulated that in case of
non-payment on due date, the ring would belong to B. This forfeiture is
a. caveat emptor c. pactum commisorium
b. dacion en pago d. pacto de retro

6. A borrowed P100,000 from B, and as a security. A pledged his ring to B. After the obligation falls due, A
goes to B relinquishing ownership of the ring in favor of B. This is
a. caveat emptor c. pactum comisorio
b. dacion en pago d. pacto de retro

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7. A borrowed P30,000 from B, and as security, he pledged his ring, pair of earrings and necklace. On due
date, A paid P20,000. As a result,
a. A can demand the return of one (1) of the things pledged
b. A can demand the return of any two (2) of the things pledged
c. A can demand the return of the ring.
d. A cannot demand the return of any of the things pledged

8. Which of the following is not correct as regards pledge and mortgage?

a. The creditors can foreclose the things pledged or mortgaged in case of non-payment of the obligation
b. The things pledged or mortgaged are delivered to the creditors to secure the fulfillment of the
obligation
c. In case of default, the creditors cannot appropriate the things pledged or mortgaged even if stipulated
d. A pledge or mortgage cannot exist without a valid obligation

9. In real estate mortgage, the mortgagor can sell the property mortgaged
a. Only if with the oral consent of the mortgagee
b. Only if with the written consent of the mortgagee
c. If not prohibited to sell
d. Even without the consent of the mortgagee

10. Which of the following statements is true?

a. Any stipulation in a contract of pledge authorizing the pledgee to sell the thing pledged if the
pledgor cannot pay is void
b. In mortgage, the mortgagee is entitled to the entire proceeds of the sale of the thing mortgaged
c. In mortgage and in pacto de retro sale, the title to the property which is the subject matter of the
contract is transferred to the other party
d. Real estate mortgage is an accessory contract

11. A mortgaged his residential land to B as a guarantee for the payment of P400,000 obligations to B. They
agreed that A should not sell the land while the obligation exists. Before the maturity of the mortgage, C
offered to buy the land from A. Which is correct?
a. A cannot sell the land to C because of the agreement not to sell
b. A can sell the land to C only if B consents in writing’
c. A can sell the land to C despite the agreement not to sell
d. A cannot sell the land to C unless A pays the obligation

PLEDGE

For numbers 12 to 37 write

a. both are true b. both are false c. only the first is true d. only the second is true

12. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them,
except if there is a stipulation to the contrary.
The indivisibility of a pledge or mortgage is affected by the fact that the debtors are solidarily liable.
a. both are true b. both are false c. only the first is true d. only the second is true

13. A pledge or mortgage is indivisible, except if the debt may be divided among the successors in interest
of the debtor or of the creditor.
In case of pledge of animals, their offspring shall pertain to the pledgee of the animals.
a. both are true b. both are false c. only the first is true d. only the second is true

14. The creditor can use the thing pledged even without the authority of the pledgor.
If through the negligence or willful act of the pledgee, the thing pledged is in danger of being lost or
impaired, the pledgee may cause the same to be sold at a public auction.
a. both are true b. both are false c. only the first is true d. only the second is true

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15. If the thing pledged is returned by the pledgee to the pledgor or owner, the pledge is extinguished,
except if there is a stipulation to the contrary.
If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner there
is a conclusive presumption that the same has been returned by the pledgee.
a. both are true b. both are false c. only the first is true d. only the second is true

16. A statement in writing by the pledgee that he renounces or abandons the pledge is sufficient to
extinguish the pledge only if accepted by the pledgor or owner and the thing pledged is returned.
At the public auction, the pledgee may also bid and his offer shall be valid even if he is the only bidder.
a. both are true b. both are false c. only the first is true d. only the second is true

17. The sale of the thing pledged shall extinguish the principal obligation provided the proceeds of the sale
are equal to the amount of the principal obligation.
If the price of the sale is more than the amount of the obligation, the debtor shall be entitled to the
excess, unless it is otherwise agreed.
a. both are true b. both are false c. only the first is true d. only the second is true

18. If the price of the sale is less than the amount of the obligation the creditor shall not be entitled to
recover the deficiency except if there is a stipulation to the contrary.
If two or more things are pledged, the pledgor may choose which he will cause to be sold, unless there
is a stipulation to the contrary.
a. both are true b. both are false c. only the first is true d. only the second is true

19. A pledge shall not take effect against third person if a description of the thing pledged and the date of
the pledge do not appear in a public instrument
If after the auction sale, the thing pledged is not sold, the pledgee can appropriate the thing pledged.
a. both are true b. both are false c. only the first is true d. only the second is true

20. A pledged his ring to B for P20,000. A failed to pay his obligation on time. B sold the ring at a public
auction for P16,000. B cannot recover P4,000 from A even if there is stipulation
Using the same facts, if the proceeds of sale is P24,000. A can recover the excess of P4,000 if
stipulated.
a. both are true b. both are false c. only the first is true d. only the second is true

21. In sale at public auction, the pledgor or owner may be a bidder and shall have a better right if he should
offer the same terms as the highest bidder.
Pledge is a real contract.
a. both are true b. both are false c. only the first is true d. only the second is true

MORTGAGE

22. A stipulation prohibiting the owner from alienating the immovable mortgaged shall be void.
The equity of redemption refers to the right of the mortgagor to redeem the mortgaged property within
a certain period of time after it was sold to a third person.
a. both are true b. both are false c. only the first is true d. only the second is true

23. The right of redemption refers to the right of the mortgagor to redeem the mortgaged property after his
default in payment but before the sale.
The registration in the Registry of Property is necessary for the validity of a contract of real estate
mortgage.
a. both are true b. both are false c. only the first is true d. only the second is true

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24. Except in case of sale of personal property in installments, if the proceeds of the sale is less than the
principal obligation, the creditor-mortgagee can recover the deficiency.
A borrowed P100,000 from B payable in 10 equal monthly installments. To secure payment of the
loan, A executed a chattel mortgage on his Mercedes Benz car. If A violates the condition of the
mortgage, and the car was foreclosed and sold at a public auction but the proceeds is less than the
collectible amount, B cannot recover the deficiency.
a. both are true b. both are false c. only the first is true d. only the second is true

25. In real estate mortgage the mortgagor can sell the property mortgage even without the consent of the
mortgagee.
In chattel mortgage the mortgagor cannot sell the thing mortgage even with the written consent of the
mortgagee appearing at the back of the mortgage.
a. both are true b. both are false c. only the first is true d. only the second is true

26. Chattel mortgage like pledge is a real contract.

In chattel mortgage like pledge the possession of the thing mortgaged is vested in the creditor.
a. both are true b. both are false c. only the first is true d. only the second is true

LOAN

27. In mutuum or loan, one of the parties delivers to another something not consumable so that the latter
may use the same for a certain time and return it.
Mutuum is essentially gratuitous.
a. both are true b. both are false c. only the first is true d. only the second is true

28. In commodatum one of the parties delivers money or consumable thing upon the condition that the
same amount of the same kind and quality shall be paid.
In commodatum and mutuum ownership of the thing loan is transferred to the borrower.
a. both are true b. both are false c. only the first is true d. only the second is true

29. Commodatum and mutuum involve real and personal property.

The bailee in commodatum acquires the use of the thing loaned and its fruits.
a. both are true b. both are false c. only the first is true d. only the second is true

30. The bailee in commodatum can lend or lease the object of the contract to a third person.
When there are two or more bailees to whom a thing is loaned in the same contract, they are liable
jointly.
a. both are true b. both are false c. only the first is true d. only the second is true

31. A contract whereby one person transfers the ownership of non-fungible things to another with the
obligation on the part of the latter to give things of the same kind, quantity and quality shall be
considered a loan.
Precarium is a kind of mutuum where the bailor may demand the thing loaned at will.
a. both are true b. both are false c. only the first is true d. only the second is true

DEPOSIT
32. An agreement to constitute a deposit is binding and is perfected from the moment there is meeting of
minds.
Movable and immovable things may be the object of judicial deposit.
a. both are true b. both are false c. only the first is true d. only the second is true

33. A contract of deposit must be in writing.

The depositary can make use of the things deposited even without the express permission of the
depositor.
a. both are true b. both are false c. only the first is true d. only the second is true
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34. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the
provisions concerning simple loan.
The depositary can demand that the depositor prove his ownership of the thing deposited.
a. both are true b. both are false c. only the first is true d. only the second is true

35. Unless there is a stipulation to the contrary, the depositary cannot deposit the thing with a third person.
When the depositary has permission to use the thing deposited, the contract loses the concept of a
deposit and becomes a loan or commodatum even where safekeeping is still the principal purpose of
the contract.
a. both are true b. both are false c. only the first is true d. only the second is true

36. The thing deposited shall be returned with all its products, accessories and accessions.
A contract of deposit is perfected from the moment there is meeting of minds.
a. both are true b. both are false c. only the first is true d. only the second is true

37. D deposits his money by way of a savings account with C Bank. The contract between D and C is
a. Deposit b. Agency c. Commodatum d. Mutuum

The End!!

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