Pledge and mortgage

1. How does voluntary pledge differ from legal pledge?

 In conventional pledge, there is no deficiency liability on the part of the pledgor inspite of
stipulation to the contrary. In legal pledge, the excess of the proceeds of the sale after
foreclosure shall pertain to the pledgor even in the absence of stipulation

2. Pledge is a subsidiary contract. Explain.

 Subsidiary Pledge Agreements means one or more pledge agreements in form and substance
satisfactory to the Administrative Agent pursuant to which the Equity Interests of a Subsidiary
are pledged to the Administrative Agent for the ratable benefit of the Lenders to secure the
payment of the Indebtedness and the reimbursement of obligations under the Letters of Credit,
as such agreements may be amended, modified or supplemented from time to time.

3. In order to secure the payment of his debt, A gave his ring to B as security for a P10,000.00 loan.

a. Can B use the ring?

Yes, if the thing pledged have the authority of the pledgor.

b. In case A cannot pay, can B automatically appropriate the ring to himself?

Yes he can, if there is an stipulations that if A can not pay his obligations.

4. A borrowed P50,000 from B and deposited his ipad worth P20,000, his cellphone worth P15,000 and a
laptop worth P15,000 to secure his obligation. Should A be able to pay B, P15,000, can A demand from B
the return of the cellphone or the laptop? Explain.

 A cannot demand the return of any of the things pledged because he fails to meet his
obligations which is to pay the amount of P50,000 to B.

5. Distinguish pledge from mortgage.

 In its most basic form, a mortgage is a security interest secured against the property, which is
the pledge. Therefore, mortgages and pledges are not necessarily comparable, but rather, co-
 dependent. A mortgage and a pledge work together to secure financing for the borrower and
security for the lender. This allows the borrower to seek a larger loan amount while
simultaneously protecting the lender’s interests if the borrower should fail to meet her
obligations, as the lender can then sell the pledge to recoup some or all of the loss incurred from
the borrower’s failure to pay.

6. A used his ring worth P50,000 to secure a P20,000 debt he got from B. When A was not able to pay, B
sold the thing pledge to C for P15,000. Considering that there is still an unpaid balance of P5,000, can B
collect such amount from A?

 No, he cannot even if there is stipulation.

7. How does legal mortgage differ from equitable mortgage?

 A legal mortgage is a document that clearly describes your financial obligations to the
mortgagee and meets with the jurisdiction's legal standards. If any section of a mortgage
document is inaccurate or absent, it becomes an equitable mortgage, which makes it a legally
void document.

8. Give an example of pactum commissorium?

 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.

9. Pactum commissorium is declared by the Supreme Court as contrary to law and morals, why?

 It is because the first element is present, considering that the property of the debtor was
mortgaged in favor of the creditor to secure the former’s indebtedness. The transfer of property
that was made upon default by the debtor makes it in the nature of a pactum commissorium,
hence, null and void.