93. What is the effect if the.

proceeds in an extra-judicial foreclosure sale is not

sufficient to pay for the obligation?
a) the mortgagee can claim for deficiency judgment from the debtor.
b) the mortgagee can claim for deficiency judgment from the mortgagor even
though it is a third party mortgage.
c) the mortgagee has no more recourse or claim against the debtor.
d) the mortgagee cannot claim for deficiency judgment from the debtor
because its an extrajudicial foreclosure
49. 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
Page 10 of 22Bar Examination Questionnaire for Civil Law
Set A
right as mortgagee of Asiong's land?
A. No, but the bank can foreclose and pay Boyong back.
B. No, since Boyong paid for Asiongs loan without his approval.
C. Yes, since a change of creditor took place by novation with the banks
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.
85. X borrowed money from a bank, secured by a mortgage on the land of Y, his
close friend. When the loan matured, Y offered to pay the bank but it refused
since Y was not the borrower. Is the banks action correct?
A. Yes, since X, the true borrower, did not give his consent to Ys offer to pay.
B. No, since anybody can discharge Xs obligation to his benefit.
C. No, since Y, the owner of the collateral, has an interest in the payment of the
obligation.
D. Yes, since it was X who has an obligation to the bank
32. X constituted a chattel mortgage on a car (valued at Php1 Million pesos) to
secure a P500,000.00 loan. For the mortgage to be valid, X should have
A. the right to mortgage the car to the extent of half its value.
B. ownership of the car.
C. unqualified free disposal of his car.
D. registered the car in his name.
Rebecca obtained a loan of P60,000.00 from John, and pledged her motorcycle. The
contract signed by the parties stipulated that if Rebecca is unable to redeem the
motorcycle on due date, she will execute a document in favor of John providing that the
motorcycle shall automatically be considered full payment of the loan.
a. Is the contract valid? Explain.
This is a valid stipulation and does not constitute pactum commissorium. In pactum
commissorium, the acquisition is automatic without need of any further action. In the
instant problem another act is required to be performed, namely, the conveyance of the
property as payment (dacion en pago).
b. Will your answer to [a] be the same if the contract stipulates that upon failure of
Rebecca to redeem the motorcycle on due date, John may immediately sell the motorcycle
and appropriate the entire proceeds thereof for himself as full payment of the loan?
Reasons.
II
Gerardo owns a fishpond which he can no longer properly manage due to health
problems. Since he is indebted to Roy in the amount of P500.000 he asks Roy to manage
the fishpond and apply the harvest to the payment of his obligation to him, principal and
interest, until his indebtedness shall have been fully paid. Roy agrees.
What kind of contract is entered into between Gerardo and Roy? Explain.
What specific obligations are imposed by law on Roy as a consequence of their contract?
Does the law require any specific form for the validity of their contract? Explain.
4) May Gerardo re-acquire the fishpond before his entire indebtedness shall have been
fully paid? Explain.
1. A contract of antichresis was entered into between payment of the loan. However, the
loan was not paid on Olivia and Peter. Under Article 2132 of the New Civil Code, by a
contract of antichresis the creditor acquires the right to receive the fruits of an immovable
of his debtor, with the obligation to apply them to the payment of the interest, and
thereafter to the principal of his credit.
SUGGESTED ANSWER:
2. Peter must pay taxes and charges upon the land and bear the necessary expenses for
preservation and repair which he may deduct from the fruits. (Art, 2135, NCC)
SUGGESTED ANSWER:
3. The amount of the principal and interest must be specified in writing, otherwise the
antichresis will be void. (Art. 2134, NCC)
SUGGESTED ANSWER:
4. No. Art. 2136 specifically provides that the debtor cannot re-acquire the enjoyment of
the immovable without first having totally paid what he owes the creditor. However, it is
potestative on the part of the creditor to do so in order to exempt him from his obligation
under Art. 2135, NCC, The debtor cannot re-acquire the enjoyment unless Peter compels
Olivia to enter again the enjoyment of the property.
III
In 2008, Cesar borrowed P500,000 from Manuel, collateralized by a pledge of shares of
stocks worth P1,000,000. In 2009, because of the economic crisis, the value of the shares
of stocks fell to only P100,000. Can Manuel demand that Cesar surrenders his other
shares of stocks worth P900,000? Explain.
a) No. Bilateral contracts cannot be changed unilaterally. A pledge is only a subsidiary
contract, and Steve is still indebted to Danny for the amount of P400,000.00 despite the
fall in the value of the stocks pledged.
b) No. Danny's right as pledgee is to sell the pledged shares at a public sale and keep the
proceeds as collateral for the loan. There is no showing that the fall in the value of the
pledged property was attributable to the pledger's fault or fraud. On the contrary, the
economic crisis was the culprit. Had the pledgee been deceived as to the substance or
quality of the pledged shares of stock, he would have had the right to claim another thing
in their place or to the immediate payment of the obligation. This is not the case here.
IV
In the town of Ubay, Bohol, a fisherman borrowed money from a loan shark in the amount
of P200,000. To guarantee payment, he surrendered his Torrens Title of land with the loan
shark, for him (loan shark) to hold until he is able to pay the loan.
Is there a -
contract of pledge
contract of mortgage,
contract of antichresis, or
d) none of the above? Explain.
SUGGESTED ANSWER:
None of the above. There is no pledge because only movable property may be pledged
(Art. 2094. NCC). If at all, there was a pledge of the paper or document constituting the
Torrens Title, as a movable by itself, but not of the land which the title represents. There is
no mortgage because no deed or contract was executed in the manner required by law for
a mortgage (Arts. 2085 to 2092, NCC; 2124 to 2131, NCC). There is no contract of
antichresis because no right to the fruits of the property was given to the creditor (Art.
2132 NCC).
A contract of simple loan was entered into with security arrangement agreed upon by the
parties which is not one of those mentioned above.
ALTERNATIVE ANSWER:
There is a contract of mortgage constituted over the land. There is no particular form
required for the validity of a mortgage of real property. It is not covered by the statute of
frauds in Art. 1403, NCC and even assuming that it is covered, the delivery of the title to
the creditor has taken it out of the coverage thereof. A contract of mortgage of real
property is consensual and is binding on the parties despite absence of writing. However,
third parties are not bound because of the absence of a written instrument evidencing the
mortgage and, therefore the absence of registration. But this does not affect the validity of
the mortgage between the parties (Art. 2125, NCC), The creditor may compel the debtor to
execute the mortgage in a public document in order to allow its registration (Art. 1357.NCC
in relation to Art. 1358. NCC).
V
Victor constructed a building on a parcel of land he leased from Ben. He obtained a loan
from Hector. The building was used as a collateral and he executed a Deed of Chattel
Mortgage in favor of Hector. When Victor defaulted in making payments, Hector initiated
foreclosure proceedings. Victor claimed that the building he had constructed on the leased
land cannot be validly foreclosed because the building was, by law, an immovable. Is
Victor correct? Explain.
SUGGESTED ANSWERS:
a) The Chattel Mortgage is void and cannot be foreclosed because the building is an
immovable and cannot be an object of a chattel mortgage.
b) It depends. If the building was intended and is built of light materials, the chattel
mortgage may be considered as valid as between the parties and it may be considered in
respect to them as movable property, since it can be removed from one place to another.
But if the building is of strong material and is not capable of being removed or transferred
without being destroyed, the chattel mortgage is void and cannot be foreclosed.
c) If it was the land which Vini chattel mortgaged, such mortgage would be void, or at
least unenforceable, since he was not the owner of the land. If what was mortgaged as a
chattel is the building, the chattel mortgage is valid as between the parties only, on
grounds of estoppel which would preclude the mortgagor from assailing the contract on the
ground that its subject-matter is an immovable. Therefore Vini's defense is untenable, and
Felicia can foreclose the mortgage over the building, observing, however, the procedure
prescribed for the execution of sale of a judgment debtor's immovable under Rule 39,
Rules of Court, specifically, that the notice of auction sale should be published in a
newspaper of general circulation.
d) The problem that Vini mortgaged the land by way of a chattel mortgage is untenable.
Land can only be the subject matter of a real estate mortgage and only an absolute owner
of real property may mortgage a parcel of land. (Article 2085 (2) Civil Code). Hence, there
can be no foreclosure. But on the assumption that what was mortgaged by way of chattel
mortgage was the building on leased land, then the parties are treating the building as
chattel. A building that is not merely superimposed on the ground is an immovable property
and a chattel mortgage on said building is legally void but the parties cannot be allowed to
disavow their contract on account of estoppel by deed. However, if third parties are
involved such chattel mortgage is void and has no effect.
VI
Felix obtained a loan of P2,000,000 from Jojo. As a collateral for the said loan, he
executed a Deed of Real Estate Mortgage on his 20 condominium units. In accordance
with the schedule of payments, he was able to pay P1,000,000. Since Felix was able to
pay 1/2 of his loan, can he ask for the release of 1/2 of the number of condominium units
mortgaged? Explain.
VII
Jose obtains a loan in the amount of P3,000,000 from his best friend, Mario. In the Deed of
Real Estate Mortgage, Jose mortgages his house and lot located in Maria Clara St.,
Tagbilaran City and another house and lot located in J. A. Clarin St., Tagbilaran City which
he will acquire on April 1, 2010. The deed is registered. Is this a valid mortgage? Explain.
VIII
Tom borrows P10M from Jerry. Tom offers the following securities to Jerry:
a GUARANTY by Harry in the amount of P100M
a PLEDGE of shares of stock worth P10M
(3) a REAL ESTATE MORTGAGE worth P15M
Which security would you advise Jerry to choose? Explain.
It really depends on the circumstances, but here are the considerations:
1. If he chooses the pledge,it is easier to foreclose, and he can get the excess in case the
shares of stock are sold for more than P10M.
2. If he chooses the guaranty, it is good only if he is sure that the guarantor will pay. If the
guarantor is any of the following, persons, the guaranty would be a good choice:
the Governmentbecause it is never insolvent
a Bankin the form of a bank guaranty through a letter of credit
c. Insurance Company though in some cases, it is also hard to collect
from an insurance company (also, take note that they would be governed, not by the Civil
Code provisions on guaranty, but by the Insurance Code).
But the disadvantage of choosing the guaranty is that the guarantor who is worth P100M
can afford to hire good lawyers who can stall the Lenders claim.
3. In the case of the real estate mortgage, it depends on how easy it would be to dispose
of the property. If its property at a prime spot in Makati, this might be a good choice since
it can probably be sold at a good price right away. But if its located in the boondocks, the
Lender may have a very difficult time selling it.
IX
Bernadette borrows P100,000 from Luisa guaranteed by Geraldine. Bernadette has
1,000,000 in assets which are all still with her and 1,500,000 in liabilities. Bernadette
defaults in paying her obligation to Luisa. Can Luisa collect from the guarantor, Geraldine,
right away? Explain.
No. In this case, G still has the benefit of excussion. Why? Because even if B is apparently
insolvent, since his liabilities exceed his assets, there is still no claim against these assets
by the other creditors. They can still be accessed by L, and L can still file an action for
collection of money against B. So in this case, even if B is insolvent on paper, his
properties are still with him, and he can still pay L. Therefore, G still should still have the
benefit of excussion.