Pledge, Chattel Mortgage, and Real Estate Mortgage
1. The following requisites are essential to the contract of pledge and mortgage, except:
a. That they be constituted to secure the fulfillment of a principal obligation.
b. That the pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged.
c. The pledgor or mortgagor can appropriate the object of pledge or mortgage upon
default.
d. That the persons constituting the pledge or mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose.
2. A borrowed 50,000 from B with A’s cellphone given to B by way of pledge. It was stipulated that
in
incase of non-payment on due date, the cellphone would belong to B. This forfeiture is:
a. Right of redemption
b. Conventional redemption
c. Pactum commissorium
d. Legal redemption
3. I. Pledges and mortgages are accessory contracts.
II. A principal obligation may still be valid even if the pledge or mortgage is void.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
4. A borrowed P100,000 from B, and as security, he pledged his ring, cellphone and laptop. On due
date, A paid P70,000. 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.
5. Is an accessory, real and unilateral contract by virtue of which the debtor or a third person delivers
to the creditor or a third person movable property as security for the performance of the principal
obligation?
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis
6. Is a contract embodied in a public instrument recorded in the registry of property, by which the
owner of an immovable directly and immediately subjects it, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted?
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis
7. It is contract in which the debtor guarantees to the creditor the fulfillment of a principal
obligation, subjecting for the faithful compliance therewith a real property in case of non-fulfillment of
said obligation at the time stipulated.
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis
8. A mortgaged his residential land to B to secure the loan 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 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.
9. I. A mortgage is regarded as nothing more than a mere lien, encumbrance, or security for a deb,
and passes no title or estate to the mortgagee and gives him no right or claim to the possession of the
property.
II. The mortgagee only owns the mortgage credit, not the property itself.
a.
b.
c.
d.
Only I is true
Only II is true
Both are true
Both are false
10. I. settled is the rule that a contract of mortgage must be constituted only by the absolute owner
on the property mortgaged. A mortgage constituted by an impostor is voidable.
II. Where a mortgage is not valid, as where it is executed by one who is not the owner of the
property, or the consideration of the contract is simulated or false, the principal obligation which it
guarantees is thereby rendered null void.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
11. Where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title
being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are given effect by
reason of public policy.
a. Doctrine of mortgagee in good faith
b. Doctrine of mortgagor in good faith
c. Doctrine of highest bidder in good faith
d. Doctrine of lowest bidder in good faith
12. This is based on the rule that all persons dealing with property covered by a torrens Certificate of
title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title.
a. Doctrine of mortgagee in good faith
b. Doctrine of mortgagor in good faith
c. Doctrine of highest bidder in good faith
d. Doctrine of lowest bidder in good faith
13. There are at least two contractual modes under the Civil Code by which personal property can be
used to secure a principal obligation:
I. The first is through a contract pledge.
II. The second is through a real mortgage.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
14. I. The law recognizes instances when persons not directly parties to a loan agreement may give as
security their own properties for the principal transaction.
II. When the property of a third person which has been expressly mortgaged to guarantee an
obligation to which the said person is a stranger, said property is directly and solidarily liable for the
fulfillment thereof.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
15. I. In a contract of mortgage, the debtor retains beneficial interest over the property
notwithstanding the encumbrance, since the mortgage only serves to secure the fulfillment of the
principal obligation.
II. Even if the debtor defaults, this fact does not operate to vest in the creditor the ownership of the
real property, subject of mortgage. The creditor must still resort to foreclosure proceedings.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
16. I. The subsequent declaration of a title as null and void is not a ground for nullifying the mortgage
right of a mortgagee in good faith.
II. Where innocent third persons relying on the correctness of the certificate thus issued, acquire
rights over the property, the court cannot disregard such rights.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
17. I. A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattel
mortgage constituted over the personal property as security for the debt or value of the promissory
note which he seeks to recover in the said collection suit.
II. In the accessory contract of real estate mortgage, the consideration of the debtor in furnishing
the mortgage is the existence of a valid voidable, or unenforceable debt.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
18. I. When the principal obligation becomes due the debtor fails to perform his obligation, the
creditor may foreclose on the pledge or mortgage for the purpose of alienating the property to satisfy
his credit.
II. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of
them. Any stipulation to the contrary is unenforceable.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
19. Appropriation of the mortgaged properties by the mortgagee even if stipulated by the parties
would be null and void for being what is known as:
a. Pactum commissorium
b. Pacta sunt servanda
c. Pactum commissioner
d. Pacto de retro
20. I. The prohibition against a pacto commissorio is intended to protect the obligor, pledgor, or
mortgagor against being overreached by his creditor who holds a pledge or mortgage over property
whose value is much more than the debt.
II. The essence of pactum commissorium is that ownership of the security will pass to the creditor by
the mere default of the debtor. Such arrangement is contrary to morals and public policy.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
21. There are two elements for pactum commissorium to exist:
I. That there should be a pledge or mortgage wherein a property is pledged or mortgaged by way of
security for the payment of the principal obligation.
II. That there should be a stipulation for an automatic appropriation by the creditor of the thing
pledged of mortgaged in the event of non-payment of the principal obligation within the stipulated
period.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
22. I. A stipulation allowing the mortgagee to take actual or constructive possession of a mortgaged
property upon foreclosure is not valid.
II. A pledge or mortgage is divisible, even though the debt may be divided among the successors in
interest of the debtor or of creditor.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
23. I. pledge or mortgage, the debtor’s heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not completely satisfied.
II. In pledge or mortgage, neither can the creditor’s heir who received his share of the debt return
the pledge or cancel the mortgage, to the prejudice of the other heirs who have not been paid.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
24. I. The pledge or mortgage is divisible if there being several things given in mortgage or pledge, each
one of them guarantees only a determinate portion of the credit.
II. The debtor, in divisible mortgage or pledge, shall have a right to the which each thing is specially
answerable satisfied.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
25. I. In essence, indivisibility means that the mortgage obligation cannot be divided among the different
lots, that is, each and every parcel under mortgage answers for the totality of the debt.
II. The indivisibility of a pledge or mortgage is affected by the fact that the debtors are not solidarily
liable.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
26. I. The contract of pledge or mortgage may secure few kinds of obligations, which excludes pure or
subject to a suspensive or resolutory condition..
II. A promise to constitute a pledge or mortgage gives rise only to personal action between the
contracting parties, without prejudice to the criminal responsibility incurred by him who defrauds
another, by offering in pledge or mortgage us unencumbered, things which he knew were subject to
some burden, or by misrepresenting himself to be the owner of the same.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
27. I. In order to constitute the contract of pledge, the thing pledged must be placed in the possession of
the creditor, or of a third person by common agreement.
II. A pledge contract is an accessory contract, however, it is not discharged if the principal obligation
is extinguished.
a.
b.
c.
d.
Only I is true
Only II is true
Both are true
Both are false
28. The requisites for the contract of pledge to be valid, except one, are:
a. The pledge is constituted to secure the fulfillment of a principal obligation.
b. The pledgor can appropriate the object of pledge upon default if there is stipulation.
c. The pledgor be the absolute owner of the thing pledge.
d. The person constituting the pledge has the free disposal of his property, and in the absence
thereof, that he be legally authorized for the purpose.
29. I. A pledge is a formal contract, hence, it is necessary in order to constitute the contract of pledge,
that the thing pledged be placed in the possession of the creditor, or of a third person by common
agreement.
II. All movables which are within commerce may be pledge, provided they are susceptible of
possession.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
30. I. Incorporeal rights, evidenced by negotiable instruments, bills of lading shares of stock, bonds,
warehouse receipts and similar documents may not be pledged and the date of the pledge do not
appear in a private instrument.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
31. I. For the contract of pledge to affect third persons, apart from being in a private instrument,
possession of the thing pledged must, in addition, be delivered to the pledgee.
II. With the consent of the pledgee, the thing pledged may be alienated by the pledgor or owner,
subject to the pledge.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
32. I. The contract of pledge gives a right to the creditor to retain the thing in his possession or in that of
a third person to whom it has been delivered, until the debt is paid.
II. The creditor shall take care of the thing pledged with the extra ordinary diligence; he has a right to
the reimbursement of the expenses made for its preservation, and is liable for its loss or deterioration.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
33. I. The pledgee can deposit the thing pledge with a third person, unless there is a stipulation
authorizing him to do so.
II. The pledgee is not responsible for the acts of his agents or employees with respect to the thing
pledged.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
34. I. In case of pledge of animals, their offspring shall pertain to the pledgee.
II. The creditor cannot use the thing pledged, without the authority of the owner, and if he should do
so, or should misuse the thing in any other way, the owner may ask that it be judicially or extra judicially
deposited. When the preservation of the thing pledged requires its use, it must be used by the creditor
but only for that purpose.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
35. I. The debtor cannot ask for return of the thing pledged against the will of the creditor, unless and
until he has paid the debt and its interest, with expenses in a proper case.
II. In pledge, the prescriptive period within which to demand the return of the thing pledge should
begin to run only after the payment of the loan and a demand for the thing has been made.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
36. I. If through the negligence or willful act of the pledgee, the thing pledged is in danger of being lost
or impaired, the pledgor may require that it be deposited with a third person.
II. The pledgee is bound to advise the pledgor, without delay, of any danger to the thing pledged.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
37. I. If there are reasonable grounds to fear the destruction or impairment of the thing pledged,
without the fault of the pledgee, the pledgor may demand the return of the thing, upon offering another
thing in pledge.
II. If, without the fault of the pledgee, there is danger of destruction, impairment, or diminution in
value of the thing pledgee, he may cause the same to be sold at a public sale.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are fals
38. I. If the creditor is deceived on the substance or quality of the thing pledged, he may either claim
another thing in its stead, or demand immediate payment of the principal obligation.
II. If the thing pledged is returned by the pledgee to the pledgor or owner, the pledge is extinguished.
Any stipulation to the contrary shall be valid.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
39. I. 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.
II. A verbal statement by the pledgee that he renounces or abandons the pledge is sufficient to
extinguish the pledge.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
40. I. If creditor to whom the credit has not been satisfied in due time, may proceed before a judge for
the sale of the thing pledged.
II. If at the first auction, the thing is not sold, a second one with the same formalities shall be held;
and if at the second auction, there is no sale either, the creditor may appropriate the thing pledged.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
41. I. The creditor, in a contract of real security, like pledge, cannot appropriate without foreclosure the
things given by way of pledge.
II. The law requires foreclosure in order to allow a transfer of title of the goods given by way of
security from its pledgor, and before any such foreclosure, the pledgor, not the pledgee, is the owner of
the goods.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
42. I. At the public auction, the pledgor or owner cannot bid.
II. The pledgee may also bid, and his offer shall be valid if he is the only bidder.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
43. I. The sale of the thing pledged shall extinguish the principal obligation, only if the proceeds of the
sale are equal to the amount of the principal obligation, interest and expenses in proper case.
II. All bids at the public auction shall offer to pay the purchase price at once. If any other bid is
accepted, the pledgee is deemed to have received the purchase price, as far as the pledgor or owner is
concerned.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
44. In case of the thing pledge:
I. If the price of the sale is more than said amount, the debtor shall be entitled to the excess, unless it
is otherwise agreed.
II. If the price of the sale is less, neither shall the creditor be entitled to recover the deficiency, unless
otherwise stipulated.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
45. I. Under the civil code, it is the pledgee, and not the pledgor, who is given the right to choose which
of the items should be sold if two or more things are pledged.
II. There is nothing in the civil code provisions governing the extrajudicial sale of pledged properties
that prohibits the pledgee of several different pledge contracts from auctioning all of the pledged
properties on a single occasion, or from the buyer at the auction sale in purchasing all the pledged
properties with a single purchase price.
a. Only I is true
b. Only II i true
c. Both are true
d. Both are fasle
46. I. It is settled that if the proceeds of the sale are insufficient to cover the debt in an extrajudicial
foreclosure of the mortgage, the mortgagee is not entitled to claim the deficiency from the debtor.
II. When the legislature intends from foreclosure of security given to guarantee an obligation, It
expressly provides as in the case of pledges and in real mortgages of a thing sold on installment basis.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
47. I. In pledge, the sale of the thing pledged extinguishes the entire principal obligation, such that the
pledgor may no longer recover proceeds of the sale in excess of the amount of the principal obligation.
In Chattel Mortgage Law, It expressly entitles the mortgagor to the balance of the proceeds, upon
satisfaction of the principal obligation and cost.
II. In the extrajudicial foreclosure of real mortgages , while silent as to the mortgagee’s right to
recover,does not, prohibit recovery of deficiency.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
48. I. If a credit which has been pledged becomes due before it is redeemed, the pledgee may collect
and receive the amount due. He shall apply the same to the payment of his claim, and deliver the
surplus, should there be any, to the pledgor.
II. Any third person who has any right in or to the thing pledged may satisfy the principal obligation
as soon as the latter becomes due and demandable.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
49. I. If two or more things are pledged, the pledgee may choose which he will cause to be sold, unless
there is a stipulation to the contrary.
II. In pledges created by operation of law, after payment of the debt and expenses, the remainder of
the price of the sale shall not be delivered to the obligor.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
50. I. Pledges created by operation of law refers to the right of retention.
II. A thing under a pledge by operation of law may be sold only after demand of the amount for
which the thing is retained. The public auction shall take place within two months after such demand.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
51. Only the following property may be the object of a contract of mortgage:
I. Immovables.
II. Alienable real rights in accordance with the laws, imposed upon immovable.
III. Movables may be the object of a chattel mortgage.
a. Only I is true
b. Only II and III are true
c. I,II and III are true
d. Only III is true
52. One which reveals an intent to make the property a security, even if the contract lacks the proper
formalities of a real estate mortgage.
a. Voluntary mortgage
b. Conventional mortgage
c. Legal mortgage
d. Equitable mortgage
53. I. It is indispensable, in order that a mortgage may be validly constituted, that the document in
which it appears be recorded in the registry of property. If the instrument is not recorded, the mortgage
is nevertheless, binding between the parties.
II. The persons in whose favor the law establishes a mortgage have no other right than to demand the
execution and the recording of the document in which the mortgage is formalized.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
54. I. The mortgage directly and immediately subjects the property upon which it is imposed, whoever
the possessor may be, to the fulfillment of the obligation for whose security it was constituted.
II. The mortgage credit may be alienated or assigned to a third person, in whole or in part, with the
formalities required by law.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
55. I. A stipulation forbidding the owner from alienating the immovable mortgaged shall be valid.
II. The foreclosure of a mortgage before mortgagor’s default is void.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
56. A contract where a personal property is recorded as a security for the performance of an obligation.
a. Pledge
b. Chattel mortgage
c. Real mortgage
d. Equitable mortgage
57. 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 first and second
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 P20,000 if 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.
58. I. The chattel mortgage must be registered in two chattel mortgage register when the mortgagor
resides in one province, but the property is located in another province.
II. The registration of the chattel mortgage is an effective and binding notice to other creditors of its
existence and creates a real right or a lien registration gives the mortgagee symbolical possession.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
59. It is an oath in a contract of chattel mortgage wherein the parties “severally swear that the mortgage
is made for the purpose of securing the obligation specified in the conditions thereof and for no other
purposes and that the same is a just and valid obligation and one not entered into for the purpose of
fraud.”
a. Affidavit of chattel mortgage
b. Affidavit of good faith
c. Affidavit of bad faith
d. Affidavit of just and valid obligations.