Pledge (1994)
In 1982, Steve borrowed P400.000.00 from Danny, collateralized by a pledge of shares of stock of Concepcion Corporation worth P800,000,00. In 1983, because of the economic crisis, the value of the shares pledged fell to only P100,000.00. Can Danny demand that Steve surrender the other shares worth P700,000.00?
SUGGESTED ANSWER:
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.
Pledge (2004)
ABC loaned to MNO P40,000 for which the latter pledged 400 shares of stock in XYZ Inc. It was agreed that if the pledgor failed to pay the loan with 10% yearly interest within four years, the pledgee is authorized to foreclose on the shares of stock. As required, MNO delivered possession of the shares to ABC with the understanding that the shares would be returned to MNO upon the payment of the loan. However, the loan was not paid on time.
A month after 4 years, may the shares of stock pledged be deemed owned by ABC or not? Reason.
SUGGESTED ANSWER:
The shares of stock cannot be deemed owned by ABC upon default of MNO. They have to be foreclosed. Under Article 2088 of the Civil Code, the creditor cannot appropriate the things given by way of pledge. And even if the parties have stipulated that ABC becomes the owner of the shares in case MNO defaults on the loan, such stipulation is void for being a pactum commissorium.
Pledge; Mortgage; Antichresis (1996)
In the province, a farmer couple borrowed money from the local merchant. To guarantee payment, they left the Torrens Title of their land with the merchant, for him to hold until they pay the loan. Is there a –
a) contract of pledge,
b) contract of mortgage,
c) 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).
From the ANSWERS TO BAR EXAMINATION QUESTIONS in CIVIL LAW by the UP LAW COMPLEX and PHILIPPINE ASSOCIATION OF LAW SCHOOLS.
