CIVIL LAW REVIEW 2

COLLEGE OF LAW, UC

EXAMINATION IN SECURED TRANSACTIONS

TORTS AND DAMAGES and PREFERENCE OF CREDITS

NAME:________________________________________ SECTION:________

PART 1

INSTRUCTIONS: This is a HANDWRITTEN examination. Read each question

carefully then choose the correct answer for each number. For each number, write
down the question then below it write in CAPITAL LETTERS the letter of your choice
together with its accompanying statement. Good Luck!

1. The right to request for the issuance of a writ of possession over a foreclosed real
property prescribes in:

a. Five years from the time the time the petition for issuance of a writ of
possession has become final and executory
b. Imprescriptible
c. Ten years from the time the petition for issuance of a writ of possession has
become final and executory
d. Five years from the lapse of the period to redeem

2. Amador obtained a loan of P300,000.00 from Basilio payable on March 25, 2012. As
security for the payment of his loan, Amador constituted a mortgage on his
residential house and lot in Basilio’s favor. Cacho, a good friend of Amador,
guaranteed and obligated himself to pay Basilio, in case Amador fails to pay his loan
at maturity. If Amador fails to pay Basilio his loan on March 25, 2012, can Basilio
compel Cacho to pay?

a. No, Basilio cannot compel Cacho to pay as guarantor, Cacho can invoke the
principle of division. The debt must be proportionately divided between Amador
and Cacho.
b. Yes, Basilio can compel Cacho to pay. In a contract of guaranty, the guarantor
commits to pay in the event the principal debtor does not pay. The creditor may
choose his remedy to enforce the fulfillment of the obligation of amador.
c. Yes, Cacho bound himself as a surety of the obligation of Amador to Basilio
and therefore Basilio may proceed immediately against him in the event of
default on the part of Amador.
d. No. Basilio has in his favor a real estate mortgage and he should exhaust his
legal remedies first against Amador before proceeding against Cacho.

3. A dragnet clause in a real estate mortgage may not apply:

a. In cases covering subsequent and additional loans extended to the mortgagor

after the execution of the real estate mortgage.
b. Previous loans prior to the execution of the real estate mortgage although
subsumed in the principal loan.
c. to other loans extended by the mortgagee to the mortgagor for which other
securities were given.

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 d. to other loans extended by the mortgagee to the mortgagor not mentioned in
the real estate mortgage.

4. Cruz lent Jose his car until Jose finished his Bar exams. During the bar exam month,
Jose lent the car to his girlfriend, Jolie, who parked the car at the Mall of Asia's open
parking lot, with the ignition key inside the car. Car thieves broke into and took the
car. Is Jose liable to Cruz for the loss of the car?

a. No, Jose is not liable to Cruz as the loss was not due to his fault or negligence.
b. No, Jose is not liable to Cruz. In the absence of any prohibition, Jose could lend
the car to Jolie. Since the loss was due to force majeure, neither Jose nor Jolie
is liable.
c. Yes, Jose is liable to Cruz. Since Jose lent the car to Jolie without Cruz's
consent, Jose must bear the consequent loss of the car.
d. Yes, Jose is liable to Cruz. The contract between them is personal in nature.
Jose can neither lend nor lease the car to a third person.

5. Who enjoys the Right of Retention?

a. Depositary until full payment of what may be due him in deposit.

b. Lessee if he advances the expenses for the repair of the leased premises.
c. Bailee if bailor owes him something.
d. Builder in bad faith for the recovery of necessary and useful expenses.

6. Asiong borrowed P1 million from a bank, secured by a mortgage on his land.

Without his consent, his friend Boyong paid the whole loan. Since Asiong benefited
from the payment, can Boyong compel the bank to subrogate him in its right as
mortgagee of Asiong's land?
a. No, but the bank can foreclose and pay Boyong back.
b. No, since Boyong paid for Asiong’s loan without his approval.
c. Yes, since a change of creditor took place by novation with the bank’s consent.
d. Yes, since it is but right that Boyong be able to get back his money and, if not,
to foreclose the mortgage in the manner of the bank.

7. A borrowed B’s truck. During a fire which broke out in A’s garage, he had time to
save only one vehicle and he saved his car instead of the truck. Is he liable for
the loss of B’s truck? Why?

a. A cannot be held liable because the loss of the truck he borrowed from B was
due to a fortuitous event. No one can be held liable for a fortuitous event.

b. A is liable for the loss of B’s truck. The contract entered into between them is a
contract of loan where the bailee is liable for the loss of the thing even if it
should be through a fortuitous event, if, being able to save the thing borrowed
or his own thing, he chose to save the latter.

c. A is liable for the loss of B’s truck because of the negligence of A. The truck
would not have been loss had there been due diligence on the part of A. A
contract of loan is based on trust and confidence and by reason of the
negligence of A, this trust and confidence and the obligation to take due care of
the thing loaned has been breached by A.

d. A is liable to B for the loss of the latter’s truck despite the happening of a
fortuitous event. A contract of loan is based on trust and as such the degree
of diligence necessary to preserve the thing loaned must be extraordinary

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 diligence and any loss of the thing not due to purely force majeure shall
constitute negligence on the part of the borrower.

8. Lennie bought a business class ticket from Alta Airlines. As she checked in, the
manager downgraded her to economy on the ground that a Congressman had to
be accommodated in the business class. Lennie suffered the discomfort and
embarrassment of the downgrade. She sued the airlines for quasi-delict but Alta
Airlines countered that, since her travel was governed by a contract between them,
no quasi-delict could arise. Is the airline correct?

a. No, the breach of contract may in fact be tortious as when it is tainted, as in

this case, with arbitrariness, gross bad faith, and malice.
b. No, denying Lennie the comfort and amenities of the business class as
provided in the ticket is a tortious act.
c. Yes, since the facts show a breach of contract, not a quasi-delict.
d. Yes, since quasi-delict presupposes the absence of a pre-existing contractual
relation between the parties.

9. What is a contract of precarium?

a. A contract of precarium is a real, principal, essentially gratuitous and a personal

contract where one of the parties delivers to another a non-consumable object,
so that the latter may use the same for a certain period and later return it.
b. A contract of precarium is a contract of commodatum where the bailor has the
right to demand the return of the thing, which is the object of the contract, at
any time.
c. It is a contract wherein one of the parties delivers to another, either something
not consumable so that the latter may use the same for a certain time and
return it or money or other consumable thing, upon the condition that the same
amount of the same kind and quality shall be paid.
d. A contract of precarium is a contract for the use of property of another with the
consent of the other, either expressly or impliedly, and with the obligation to
return the thing loaned.

10. Which phrase best completes the statement—The Deed of Chattel Mortgage, if
not registered with the Register of Deeds where the debtor resides:

a. Is not valid, hence not binding between the mortgagor and the mortgagee;
b. Is binding between the mortgagor and the mortgagee but will not affect third
parties;
c. To be valid between the mortgagor and the mortgagee, it must be coupled with
the delivery of the subject matter of the chattel mortgage;
d. Is a non-existent chattel mortgage.

11. A is indebted to B for P500,000, B later borrowed A’s car but refused to return it on
the ground that A owed him some money. Is B correct?

a. No, B is not correct. The bailee cannot retain the thing loaned on the ground
that the bailor owes him something. Each contract is separate from the
other and the performance or non-performance of one is not dependent on
the other.
b. No, B is not correct. The bailee cannot retain the thing loaned on
the ground that the bailor owes him something, even though it may be by
reason of expenses.
c. No, there can be no right of retention even if the bailor and bailee are
mutually principal debtors and creditors to one another in another contract
between them. There can be no right of retention if one contract proceeds

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 from a contract of commodatum and the other contract proceeds from a
contract of payment of a monetary debt.
d. No , there is no right of retention in a contract of commodatum unless it is by
reason only of payment of damages suffered by the baillee on account of
the failure of the bailor to inform him of hidden defects of the thing loaned.

12. Which phrase best completes the statement—A chattel mortgage can cover:
a. Only property described in the deed without exception
b. Can also cover substituted property
c. Properties described in the deed except in case of stock in trade being a
substitute
d. After acquired property

13. What contract is entered into when the thing delivered can be used by the
depository and he is obliged to pay interest for said use.

a. mutuum
b. deposit
c. commodatum
d. barter

14. Walter left his house to James with the instructions that the latter would watch over
it, preserve it and keep the house safe. What contract was entered into between
Walter and James?

a. deposit
b. lease of services
c. antichresis
d. loan

15. The liability of the school, its administrators and teachers, or the individual, entity
or institution engaged in child care over the minor child for damage caused by the
acts or omissions of the unemancipated minor under their supervision, instruction
or custody shall be:

a. Joint and subsidiary

b. Principal and joint
c. Principal and solidary
d. Subsidiary but solidary

16. Virgilio owned a bare and simple swimming pool in his garden. MB, a 7-year old
child, surreptitiously entered the garden and merrily romped around the ledges of
the pool. He accidentally tripped, fell into the pool, and drowned. MB’s parents
sued Virgilio for damages arising from their child’s death, premised on the principle
of “attractive nuisance”. Is Virgilio liable for the death of MB?

a. No, the child was 7 years old and knew the dangers that the pool offered.
b. Yes, being an attractive nuisance, Virgilio had the duty to prevent children
from coming near it.
c. No, since the pool was bare and had no enticing or alluring gadgets, floats,
or devices in it that would attract a 7-year old child.
d. Yes, since Virgilio did not cover the swimming pool while not in use to
prevent children from falling into it.

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17. A deposited a car with B. A allowed B to deposit the car with a third person. B then
deposited the car with C. If through C’s carelessness, the car is destroyed, who
should be liable for the loss the car?

a. B should be liable provided C is a person who is manifestly careless.

b. C should be liable because the obligation to keep and return the thing
deposited has been completely transferred to him.
c. A is liable for the loss because of the risks involved in a contract of
deposit.
d. B is not liable because the depositary allowed B to deposit the car with a
third person.

18. Juan deposited a radio-phonograph set with Peter. Can Peter use the thing
deposited?

a. Yes, he can use it even without permission of Juan because it is an

implied privilege in a contract of deposit
b. Yes, he can use it in order to preserve the thing so as to function
properly
c. No, because express permission to use the thing must be given by the
depositor in a contract of deposit
d. No, there is no implied privilege to use the thing deposited

19. What happens when the depositary has permission to make use of the thing
deposited?

a. It loses its concept as a contract of deposit

b. It losses the concept of deposit and becomes a loan
c. It losses the concept of deposit and it creates a creditor-debtor
relationship automatically
d. It will governed by the rules of the contract most analogous to it.

20. Pitoy deposited 50 sacks of palay with Luis so that it would be threshed into rice.
What kind of contract is this?

a. This is actually a contract of service

b. This is a still a contract of deposit
c. This is a contract of loan
d. This is a contract of service but after it was threshed it would continue to
be a contract of deposit for them to return upon demand

21. Pitoy deposited money, consisting of coins of legal tender, with Mr. Money.
Subsequently, Pitoy authorized Mr. Money to use and dispose the same. The
agreement thus entered between the depositor and the depositary is:

a. A contract of Deposit
b. A contract of Irregular Deposit
c. A contract of usufruct
d. A contract of loan

22. Pedro deposited a car with Gloria to be returned to him upon returning from a
foreign travel in Singapore. Gloria was worried that the car will not function
properly if it is not used for a long time. She then decides to lend the car to Atong
for a test drive. While on test drive, Atong was stricken by lightning at Mendiola
where he died instantly and leaving the car totally wrecked and beyond recovery.
Is Gloria liable for the loss of the car?

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 a. No, because it was due to a fortuitous event
b. No, because it was not her fault, it was Atong’s fault for passing Mendiola
that time
c. Yes, because she was negligent in choosing Atong to test drive the car.
d. Yes, because she allowed Atong to use it even without Pedro’s
permission.

23. It is damages granted by the court in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him.

a. moral damages
b. temperate damages
c. nominal damages
d. actual damages

24. This is secret bidding by or on behalf of the seller by persons who are not
themselves bound by their bids, the purpose simply is to inflate the price of the
goods sold which is fraud upon the purchase of the goods.

a. This is called dragnet agreement

b. This is called “puffing” or “by-bidding”
c. This is called “ballooning” bids
d. This is called caveat imptor

25. A deposited P10,000.00 in his current account with X Bank. Subsequently, the
Bank was declared insolvent. During the insolvency proceeding, A intervened
claiming that the P10,000 deposited does not constitute part of the assets of the
Bank that will be placed in the possession of the receiver or assignee because he
is still the owner thereof. Will the claim of A prosper?

a. Yes, because the ownership of the amount deposited still belongs to him
b. Yes, because the contract is that of a deposit, hence, he can demand the
return of what has been deposited
c. No, because the receivership or assignment is only temporary
d. No, the contract perfected was a contract of simple loan, hence, the
ownership of the amount deposited was transmitted to the Bank upon the
perfection of the contract

26. Suppose in the problem above, the P10,000.00 had been placed in a box, properly
sealed, marked and identified as A’s property, and such box was found in the
vaults of the Bank, would that make any difference in your answer?

a. No, the contract perfected is still a contract of simple loan, hence, the
ownership of the amount deposited was transmitted to the Bank upon the
perfection of the contract
b. Yes, because the contract this time is that of a deposit, hence, he can
demand return of what has been deposited
c. No, it does not make a difference because the receivership or assignment
is only temporary
d. Yes, because there was no transfer of ownership.

27. Mario borrowed P3Million from Philippine National Bank (PNB) and to secure the
same he constituted a chattel mortgage over his vehicle in favor of PNB. When the
debt became due and demandable Mario failed to pay the loan. PNB soon
thereafter caused the extrajudicial foreclosure of the vehicle through a private sale.
Is the private sale of the property mortgaged proper?

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 a. No. Extrajudicial foreclosure of a chattel mortgage must be done only
through a public auction.
b. Yes. Extrajudicial foreclosure of a chattel mortgage may be through public
or private auction sale provided this is contained in the chattel mortgage
agreement.
c. Yes. PNB is authorized to sell the mortgaged property at either a public or
private sale even without previous notice to the mortgagor.
d. No. Foreclosure of a chattel mortgage shall be undertaken by the sheriff and
necessarily this has to be a public auction sale.

28. A borrowed from B 1Million Pesos. C guaranteed and paid the obligation of A even
against the latter's will. Can C recover from A what he has paid to B?

a. Yes, a guarantor can recover from the debtor what the former had to
pay the creditor, even if the guaranty was against the debtor's will.
b. No, a person who pays the obligation of another without the knowledge
and consent of the debtor shall not be entitled to recover what he has paid
to the creditor. His recourse is to demand from the creditor what he has
paid.
c. Yes, even a person not interested in the fulfillment of the obligation may
pay the obligation to the creditor for as long as the creditor gives his
consent. Otherwise, this would be a case of unjust enrichment on the part
of the debtor.
d. No, a guarantor who pays the obligation of the debtor against the will of
the debt cannot recover the amount he paid because he is only
subsidiarily liable and should wait for the debtor to pay first and in the
event of his failure to pay, the guarantor may cause the payment of the
obligation.

29. A borrowed from B P1 Million. No mortgage was constituted. C guaranteed to B

the payment of A's debt, and to show his sincerity, C even mortgaged his land in
favor of B. If A cannot pay, and C cannot pay, may B foreclose the mortgage on
C's land?

a. No. The obligation of C being merely accessory to A's debt, it should not be
more onerous than the latter. The mortgage in this case makes the
guarantor's liability more onerous than that of the principal debtor.
b. Yes, a mortgage is indivisible and inseparable and cannot be cancelled until
and unless the obligation of the debtor has been paid by the debtor or the
guarantor.
c. No. The obligation of C being merely accessory to A’s debt he can only be
made to pay the monetary obligation which was what he guaranteed. When
the guarantor is made to answer for the debt, default or miscarriage of
another, fulfillment must be through payment of the principal amount and
cannot be through foreclosure of the property given by way of security.
d. Yes. An obligation may be secured not only by a guaranty but also by a
mortgage. If the principal obligation is not fulfilled the creditor has the legal
right to proceed against any other security constituted otherwise it would
infringe on his right to collect his credit.

30. A borrowed P1Million from B. C guaranteed the obligation. Without C's knowledge,
the obligation was increased to P5Million. What is the effect of this increased as to
the obligation of C?

a. When C guaranteed the obligation of the debtor without qualification he is

bound to pay the amount not only agreed upon at the time of the constitution
of the contract of guaranty but the obligation at the time of its maturity.

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 b. C would be liable for the increased amount if the debtor cannot pay the
obligation. A guarantor is an original promisor to the principal contract and
thus commits to pay if the principal debtor cannot pay whatever the amount is
at the time of the maturity of the obligation.

c. If the indebtedness is increased without the guarantor's consent, he is

completely released from the obligation as guarantor or surety.

d. The guarantor is liable only and up to the original amount agreed upon in the
mortgage.

31. What is equity of redemption?

a. This is the right of the mortgagor to redeem the mortgaged property within a
period of one year from the time the certificate of sale issued by the sheriff
at the public sale was registered with the Registry of Deeds where the
property is located.

b. This is the right of the mortgagor to redeem the mortgaged property after his
default in the performance of the conditions of the mortgage but before the
judicial sale of the mortgaged property or confirmation of the sale by the
court.

c. This is the right of the mortgagor to redeem the mortgaged property after his
default in the performance of the conditions of the mortgage before the
actual judicial sale of the property.

d. This is the right of the mortgagor to redeem the mortgaged property sold a
public auction within a period of two (2) years from the time of the actual
judicial sale of the property.

32. A borrower obtained a loan, delivered the property as security so that the creditor
may use the fruits. But no interest was mentioned and it was not stated that the
fruits would be applied to the interest first and then to the principal. What kind of
contract is this?

a. This is still a contract of antichresis

b. This is a contract deposit only with respect to the property
c. This is a real mortgage
d. This is a contract of commodatum

33. May an antichretic creditor acquire the property by prescription?

a. No, because he is not a possessor in the concept of an owner but a mere

holder placed in possession of the land by its owner.
b. Yes, because he is a possessor in the concept of an owner and placed in
possession of the land by its owner.
c. No, because he is just an agent of the land owner
d. Yes, because his possession can serve as a title for acquiring dominion.

34. Which of the following statements is/are correct?

a. The debtor’s heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the antichresis as long as the debt is not
completely satisfied.

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 b. The creditor’s heir who received his share of the debt cannot ask for the
extinguishment of the antichresis, to the prejudice of the other heirs who
have not been paid.
c. An antichresis is indivisible, even though the debt may be divided among
the successors in interest of the debtor or of the creditor.
d. All of the above

35. The doctrine of “Avoidable Consequences” means:

a. Exhorts persons to exercise due diligence or the diligence of a good father of

a family in order not to cause injury, harm or damage to a person or to the
latter’s property.
b. Where both parties are negligent, but the negligent act of one is appreciably
later in time than that of the other, or when it is impossible to determine
whose fault or negligence should be attributed to the incident, the one who
had the last clear opportunity to avoid the impending harm and failed to do so
is chargeable with the consequences thereof.
c. Exhorts parties suffering from loss or injury to exercise the diligence of a good
father of a family to minimize the damages resulting from the act or omission
in question.
d. A defendant liable where the thing which caused the injury complained of is
shown to be under the latter’s management and the accident is such that, in
the ordinary course of things, cannot be expected to happen if those who
have its management or control use proper care.

36. Which of the following statements is correct with respect to a contract of

antichresis:

a. The contract of antichresis is not perfected unless there is delivery of the

thing subject of said contract.
b. The contract of antichresis is a consensual contract and can be perfected
without the delivery of the thing given by way of antichresis.
c. The contract of antichresis is unenforceable unless the same appears in
writing.
d. The contract of antichresis must be in writing for purposes of validity.

37. A final judgment for the payment of a time deposit in a savings bank, which
judgment was obtained after the bank had been declared insolvent, is

a. A preferred claim against the bank

b. An ordinary claim by the owner of the time deposit
c. Not a preferred claim against the bank
d. Enjoys no preference at all against the bank

38. Under Article 2242 of the Civil Code enumerating the claims or liens preferred with
respect to specific immovable properties, the order of enumeration means:

a. The order of enumeration constitutes an order of preference

b. The order of enumeration is not an order of preference nor is it exclusive
c. The order of enumeration does not constitute an order of preference.
b. the order of enumeration is an order of enumeration and is an exclusive
enumeration of preferred claims on the specific real property.
39. The credits to which the Civil Code gives preference are:

a. Credits that may be due or not due

b. Credits that are not yet due and demandable
c. Credits that have been proven in a court of law by final judgment

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 b. Credits that are already due

40. Which phrase best completes the statement—The affidavit of good faith in a Deed
of Chattel Mortgage is:
a. An oath where the parties swear that the mortgage is made for the purpose of
securing the obligations specified and that the obligation is just and valid;
b. An affidavit, the absence of which will vitiate the mortgage between the
parties;
c. Necessary only if the chattel being mortgaged are growing crops;
d. A certification from the mortgagor that he is the mortgagor of the chattel.

41. X defaulted in his loan with Y. Y instituted extra-judicial foreclosure of the property
subject to a real estate mortgage that secured the loan. X has 1 year within which
to redeem the property. After the foreclosure, X filed an action questioning the
validity of the extra-judicial foreclosure sale. Which statement is most accurate?
a. The 1 year period within which to redeem will be interrupted by the filing of an
action questioning the validity of the foreclosure;
b. The 1 year period will not be interrupted by the filing of the action;
c. The 1 year period will be extended for another year because of the filing of an
action questioning the validity of the foreclosure sale;
d. If the action which questions the validity of the foreclosure prospers, the
periodwill be interrupted.

42. X, at Y’s request, executed a Real Estate Mortgage (REM) on his (X’s) land to
secure Y’s loan from Z. Z successfully foreclosed the REM when Y defaulted on
the loan but half of Y’s obligation remained unpaid. May Z sue X to enforce his
right to the deficiency?
a. Yes, but solidarily with Y.
b. Yes, since X’s is deemed to warrant that his land would cover the whole
obligation.
c. No, since it is the buyer at the auction sale who should answer for the
deficiency.
d. No, because X is not Z’s debtor.

43. The liability of operators and drivers of colliding vehicles – the bus company, its
driver, the operator of the other vehicle and the driver of the vehicle – where both
drivers were negligent thereby causing damage to passengers of one of the
vehicles in the collision, where a case for damages was filed, is:

a. The liability of the operators of the vehicles involved in the collision is

subsidiary.
b. The liability of the operators together with the drivers involved is joint.
c. The liability of the bus operators and the drivers involved is joint and several.
d. Only the driver, together with bus operator of the vehicle he was driving, is
proven to have had the last clear opportunity to avoid the impending harm
and failed to do so shall be liable primarily while his bus operator shall be
liable subsidiarily.

44. Moral damages may be recovered in an action upon breach of contract of carriage
only:

a. Where death of a passenger results;

b. Where it is proven that the carrier was guilty of fraud and bad faith, even if
death does not result.

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 c. Only A
d. A and B

45. Where earning capacity is plainly established but no evidence was presented to
support the allegation of the injured party’s actual income. The court:

a. Can still grant actual damages using as basis the earnings of similarly
situated persons in the same profession or work;
b. Deny any recoverable compensation;
c. Grant instead temperate damages;
d. Grant instead nominal damages

46. Indemnification for damages shall comprehend:

a. Not only the value of the loss suffers also called “lucrum cessans” but also the
profits which the oblige failed to obtain which is also called “damnum
emergens”;
b. Indemnification for nominal and actual damages;
c. Not only annual earnings taken together with the victims life expectancy;
d. Not only the value of the loss suffers also called “damnum emergens” but also
the profits which the oblige failed to obtain which is also called “lucrum
cessans”;

47. In case of death in crimes and quasi-delict, the following may recover moral
damages:

a. The spouse, legitimate and illegitimate descendants and ascendants of the

deceased may demand moral damages for mental anguish by reason of the
death of the deceased.
b. The spouse, legitimate descendants and legitimate ascendants of the
deceased may demand moral damages for mental anguish by reason of the
death of the deceased.
c. The spouse, legitimate and illegitimate descendants and ascendants of the
deceased, brothers and sisters of the deceased may demand moral damages
for mental anguish by reason of the death of the deceased.
d. The parents of the deceased may demand moral damages for mental anguish
by reason of the death of the deceased.

48. In case of deficiency in the extrajudicial foreclosure sale of a chattel mortgage, the
mortgagee:

a. May file an independent civil action for the recovery of the deficiency;
b. Can no longer recover any deficiency;
c. May ask execution against any other property of the mortgagor for payment of
the balance;
d. None of the above

49. A contract of Antichresis

a. Must be in writing to be valid and enforceable.

b. Must in writing to be enforceable.
c. Need not be in writing to be valid and enforceable.
d. Must be in writing otherwise it is voidable.

50. In case of extrajudicial foreclosure of real property where the mortgagee-creditor is

a banking institution, the redemption price is:

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 a. The amount by which the purchaser at the auction had purchased the
property, with one (1) per centum per month interest thereon in addition, up to
the time of redemption, together with any amount of any assessment or taxes
which the purchased may have paid thereon after purchase, and interest on
such last named amount at the same rate.

b. The amount by which the purchaser at the auction had purchased the
property, with three (3) per centum per annum interest thereon in addition, up
to the time of redemption, together with any amount of any assessment or
taxes which the purchased may have paid thereon after purchase, and
interest on such last named amount at the same rate.

c. The amount due under the mortgagee deed, with interest at one (1) per
centum per month interest thereon in addition, up to the time of redemption,
together with any amount of any assessment or taxes which the purchased
may have paid thereon after purchase, and interest on such last named
amount at the same rate.

d. The amount due under the mortgagee deed, with interest thereon at the rate
specified in the mortgage, and all the costs and expenses incurred by the
bank or institution from the sale and custody of said property less the income
derived therefrom.

PART II

TRUE or FALSE. For each number answer “TRUE” if the statement is true, or “FALSE”
if the statement is false. Then copy the sentence.
Invalid, not binding and not enforceable
1. An oral promise of guaranty is valid, binding and enforceable.

2. In a judgment of a case, the court acts accordingly when it denies the prayer for
moral, nominal and exemplary damages on the ground that there was no
pecuniary loss proven.

3. A chattel mortgage constituted by the debtor-mortgagor on his house situated on a

rented land belonging to another is void and may be assailed by any of the parties
to the contract.

T 4. Spouses cannot recover actual damages in the form of indemnity for the loss of the
life of their unborn child in a vehicular collision because an unborn child is not yet
considered a person and the law allows indemnity only for loss of life of a person.

5. Adolf, executed a chattel mortgage on certain personal properties in favor of Benjie

to secure a debt. The chattel properties were attached by Conrad, knowing that
said properties had been mortgaged to Benjie. As between Benjie and Conrad,
Conrad has a better right to the properties. Under the Chattel Mortgage Law, an
unregistered chattel mortgage is not valid against any person, since registration is
essential for the validity of the chattel mortgage.

6. A suit for the recovery of the deficiency, after the foreclosure of a real estate
mortgage, prescribes in ten (10) years.

7. A contract of antichresis cannot secure loans which are not interest bearing.

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8. A thing under a pledge by operation of law may be sold only after demand of the
amount for which the thing is retained.

9. A deed of assignment over time deposits to guarantee an obligation is in the nature

of a contract of pledge.

10. The consent of both the mortgagor and the mortgagee is necessary in order to
cause the registration of the mortgage with the Register of Deeds.

11. To secure a loan obtained from a rural bank, Purita assigned her leasehold rights
over a stall in the public market in favor of the bank. The deed of assignment
provides that in case of default in the payment of the loan, the bank shall have the
right to sell Purita’s rights over the market stall as her attorney-in-fact, and to apply
the proceeds to the payment of the loan. The assignment of lease hold rights over
the stall was in fact a mortgage, and not a cession since there was no transfer of
ownership to the bank over the stall.

12. X borrowed money from Y and gave a piece of land as security by way of
mortgage. The agreement between X and Y was that if X failed to pay the
mortgage debt on time, the debt shall be paid with the land mortgaged by X to Y.
this is a valid stipulation and is not in the nature of a pactum commissorium.

13. X defaulted in his loan with Y. Y instituted extrajudicial foreclosure of the property
subject to a real estate mortgage that secured the loan. X has one (1) year within
which to redeem the property. After the foreclosure, X filed an action questioning
the validity of the extra-judicial foreclosure sale. The 1-year period to redeem the
property will not be interrupted by the filing of the action.

14. In a contract of pledge the right of redemption does not exist. Since there is no
right to redeem personal property, the rights of ownership vested unto the
purchaser at the foreclosure sale.

15. A guaranty may be constituted to secure debts of unknown amount at the time the
contract was entered into.

16. A contract of chattel mortgage must be recorded in a public instrument to bind third
persons while a contract of pledge must be in a public instrument containing a
description of the thing pledged and the date thereof to bind third persons.

17. An unrecorded real estate mortgage in the Office of the Register of Deeds would
bar foreclosure of the property upon the non-payment of the loan secured by said
mortgage.

18. Special preferred credits constitute liens or encumbrances on the specific movable
or immovable property to which they relate.

19. The contractual relation between a commercial bank and another party in a
contract of rent of a safety deposit box with respect to its contents placed by the
latter is one of bailor and bailee.

20. In a mortgage it is the property, movable or immovable, rather than the individual
financial capacity of the mortgagor that is chiefly relied upon to answer for the
payment of the debt.

21. Ricardo was employed as sweeper of a school for two (2) hours every day as a
working scholar in exchange for the privilege to study free of charge. On October
20, 2017, he drove a jeep belonging to the school and hit a pedestrian causing

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 injuries to him. He was charged criminally and thereafter convicted. A suit for
damages was filed against the school and Ricardo. The school was held liable as
employer of Ricardo under 2180 of the Civil Code or by reason of the schools
imputed liability/vicarious liability as employer of Ricardo.

22. The Right of Redemption is the right of the mortgagor, after the foreclosure sale of
the mortgaged property, to redeem the property by paying to the purchaser in the
sale or for him to the sheriff who made the sale, the amount paid by the purchaser,
with interest, within one (1) year from registration of the certificate of sale with the
Register of Deeds.

23. Manufacturers and processors of foodstuff, drinks, toilet articles and similar goods
shall be liable for death or injuries caused by any noxious or harmful substance
used, although no contractual relation exists between them and the consumers.
This is known as the Product Liability Rule.

24. Under the rules on preference of credits, there is no preference among common
credits and they are to be paid pro rata regardless of dates.

25. Parents and guardians are primarily liable for acts of their children who are above
15 but under 21 years of age under Article 2180 of the Civil Code referring to
“Vicariously Liability” or “Imputed Liability”.

“Don’t just wish for it. Work for it and soon you will achieve it!”

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