Union Christian College

City of San Fernando, La Union

SCHOOL OF BUSINESS SCIENCES

Law on Credit Transactions

Name: _________________________________________ Rating: __________

Course/Yr./Time: _______________________________ Score: __________

Please Follow Instruction: Write TRUE in the space provided if the

Statement is correct, otherwise write FALSE. State your REASON/s why it is
TRUE or FALSE.

1. A stipulation forbidding the mortgagor alienating the immovable mortgaged

is valid.
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2. The mortgagor, may execute a second mortgage thereon, even without the
consent of the mortgagee.
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3. When the thing pledged is later found in the hands of the pledgor or the
owner, the principal obligation is presumed to have been remitted.
___________________________________________________
4. The sale of the thing pledged extinguishes the principal obligation whether
the price of the sale is more or less than the amount due.
________________________________________________
5. If the price of the sale of the thing pledged is less, the creditor is entitled to
recover the deficiency if stipulated.
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6. The possession of the thing pledged by the debtor or owner subsequent to
the perfection of the pledge gives rise to a conclusive presumption that the
thing has been returned and, therefore, that the pledge has been
extinguished. ______________________________________________
7. The pledgee has no right to use the thing pledged or to appropriate the fruits
thereof without the authority of the owner. But the pledgee can apply the
fruits, income, dividends, or interest, if owing and thereafter to the principal
of his credit.
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8. Pledgee is not authorized to transfer possession of the thing pledged to a
third person and any stipulation authorizing pledgee to transfer possession is
null and void.
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9. 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 void.
__________________________________________________________________
10. While it is true that under Article 2085 it is essential that the
mortgagor be the absolute owner of the property mortgaged, a mortgagee
 has the right to rely upon what appears in the certificate of title (Torrents
Title) and does not have to inquire further.
________________________________________________________________________
11. A mortgage of conjugal property by one of the spouses is valid only as
to one-half (1/2) of the entire property.
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12. In order that a mortgage may be validly constituted, it must appear in
a public document duly recorded in the Registry of Property.
_______________________________________
13. The mortgagee of a real estate may appropriate for himself the said
property if it is not sold at two public auctions to satisfy the debtor’s
obligation.
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14. A pledge or mortgage is divisible if there are several debtors who are
jointly bound.
________________________________________________________________________
15. A real mortgage is not binding between the parties if the same was
entered into orally.
________________________________________________________________________
16. While the assignment of mortgage credit is valid, the assignee,
however, is not allowed to foreclose the mortgage in case of non-payment of
the mortgage indebtedness.
________________________________________________________________________
17. A stipulation authorizing the antichretic creditor to appropriate the
property upon the non-payment of the debt within the period agreed upon is
void.
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18. The creditor is obliged, unless there is a stipulation to the contrary, to
pay the taxes and charges upon the estate. If he does not pay the taxes, he
is, by law, required to pay indemnity for damages to the debtor.
_________________________________________________________
19. Antichresis is a formal contract because the amount of the principal
and of the interest must both be in writing, otherwise the contract is void.
____________________________________________________________________________
20. A Chattel Mortgage must be registered and accompanied by an
affidavit of good faith to take effect against third persons.
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