15462020 JP San Pedro Jen Laygo Sectrans Reviewer

8/13/2019 15462020 JP San Pedro Jen Laygo Sectrans Reviewer

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SECTRANSFINALS

SECTRANS FINALS REVIEWERSECTRANS FINALS REVIEWER

INTRODUCTION

CREDIT TRANSACTIONSInclude all transactions involving the purchase or loan of goods, services ormoney in the present and the promise to pay or deliver in the future!ay "e secured or unsecured

SEC#RIT$Something given, deposited or serving as a means to ensure fulfillment orenforcement of an o"ligation or of protecting some interest in property!ay "e personal or real

%AI&!ENTDelivery of property to another in trust for a specific purpose 'ith a contractthat the trust shall "e faithfully e(ecuted and the property returned or dully

accounted for 'hen the special purpose is accomplished or )ept until the"ailor reclaims it!ay "e for the sole "enefit of the "ailor, for the sole "enefit of the "ailee,and for the "enefit of "oth parties%ailment for hire arises 'hen goods are left 'ith "ailee for some use orservice, al'ays for some compensation

I. LOAN

*ENERA& +RO ISIONS&oans are Real Contracts - Re.uire DE&I ER$ for perfection %ut anaccepted promise to deliver is "inding, although there is no contract of loan

until thing is delivered There is no re.uired form - only that stipulation forINTEREST must "e in /RITIN*&oans are unilateral contracts - once the S! is delivered, it createso"ligations on the part only of the "orro'er0 )inds of Contracts of &oan - Commodatum and !utuum 1 Simple &oan

CREDIT v &OAN v DE%TCredit - a"ility of an individual to "orro'&oan - delivery and receipt of money or consuma"le thing 'ith agreement

to repay same amount of same )ind and .ualityDe"t - credit considered from creditor2s standpoint

CO!!ODAT#! v !#T##! 1 SI!+&E &OAN

Commodatum Mutuum / Simple LoanIs gratuitous Any stipulation for compensation,contract ceases to "ecommodatum

Default rule is that simple loan is*ratuitous %ut there may also "e astipulation for interest - remem"erthat this must "e in 'riting

*enerally involves non3consuma"lethings 4"ecause you have to returnit5 %ut consuma"le things may "esu"6ect of commodatum - 'hen thepurpose is not to consume it, "utonly to display it

S! is money or other consuma"lething

%ailor retains o'nership of the S! O'nership passes to "orro'er%orro'er has o"ligation to return

the same thing loaned - the actualthing

%orro'er need only pay the same

amount of the same )ind 7 .uality+ayment only of the e.uivalentReal or personal property may "esu"6ect of commodatum

Involves only personal property

+urpose is only for temporary useor possession

The purpose of the contract is toconsume the thing 4Consumption5

&oss of the thing is suffered "ylender - "ecause he still o'ns theS! 4Res +erit Domino5

&oss is suffered "y "orro'er - evenif "y fortuitous event 4Res +eritDomino5

If thing is not returned - lia"le forestafa

%orro'er not criminally lia"le - "utonly civil lia"ility for "reach ofo"ligation to pay

Ordinary - 'ith term "ut lender may

demand if urgent need+recarium - may demand return at"ailor2s 'ill

&ender may not demand return of

the thing "efore lapse of the term

Consideration is pure li"erality Consideration is the promise of the"orro'er to pay

JEN LAYGO 2D 05JEN LAYGO 2D 05 1


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COMMODATUM

0 )inds of commodatum8Ordinary - 'ith term "ut lender may demand return "efore e(piration

only if there is urgent need

+recarium - "ailor may demand the thing loaned at 'ill%ailee ac.uires use of thing "ut NOT ITS 9R#ITS%ut parties may stipulate that "orro'er may use fruits - only incidental to

contract of commodatumIf "ailee is not entitled to use the thing - contract of depositLender need not be the owner of the thing , enough that he has possessory

interest or right to use itIs +urely +ersonal in character8

1. *R8 DEAT: of either party e(tinguishes contractE8 Contrary stipulation that commodatum su"sists until purpose

is accomplished2. *R8 %orro'er CANNOT &END to someone else

E8 #se "y mem"ers of "orro'er2s household

E to E8 There is stipulation to the contrary Nature of thing for"ids it 4e(ample accdg to ;+ is adildo5

O%&I*ATIONS O9 %ORRO/ER 40&ORD5< ORDINAR$ E=+ENSES 3 for use and preservation

3 If, for t he purpose of ma)ing use of the thing,the "ailee incurs e(penses other than O+ foruse or E+ for preservation and actual use, he isnot entitled to reim"ursement

0 &OSS O9 T:E T:IN* 3 *R8 "orro'er not lia"le if fortuitous eventE(ceptions8 'hen "orro'er lia"le for fortuitous event8

a.Bad Faith - used for different purpose 4also a "reach5 b. Delay 3 )eeps it for longer period than stipulated

c. Assumption of Risk - thing delivered 'ith appraisal of value3 E8 Stipulation e(empting "ailee

d. Brea h 3 &end to > rd person not in "orro'er2s householde. !ngratitude 3 "eing a"le to save either thing "orro'ed or his

o'n thing, he chose to save his o'n3. DETERIORATION 3 "orro'er not lia"le for ordinary deterioration

or 'ear 7 tear as natural conse.uence of its use3 must "e 'ithout his fault

4. RET#RN O9 T:E T:IN* 3 as soon as term e(pires or purpose isaccomplished

3 *R8 cannot )eep thing as security for anythinglender may o'e him

3 E8 Damages for hidden defects5. 0 OR !ORE %ORRO/ERS - in the same contract, lia"ility is SO&IDAR$

O%&I*ATIONS O9 &ENDER 4DRE951. RES+ECT D#RATION - cannot demand return unless period e(pires or

purpose is accomplished3 E8 Return 1 temporary use if in #rgent Need -

contract of commodatum is deemed suspended3 +RECARI#! e(ists 'hen8

a. No stipulation for duration or use of thing" #se is merely tolerated "y the o'ner

3 %#T lender may not 'himsically, ar"itrarily orcapriciously demand, other'ise lia"le for Art


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D &ender does not Advise"orro'er

E %orro'er suffers damages3 E(ception8 /hen %uyer should have )no'n3 %orro'er has RI*:T O9 RETENTION

NOTE8 Remem"er that %orro'er is lia"le for ORDINAR$ e(penses for use andpreservation 7 half of the E=TRAORDINAR$ e(penses for actual use &enderis lia"le only for E=TRAORDINAR$ e(penses

Also, according to Art


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SECTRANSFINALS

3 O"ligation of guarantor only as tocreditor and not vice3verse

F DISTINCT +ERSON 3 *uarantor must "e distinct fromprincipal de"tor %ut in real guaranty, person may guaranty his o'no"ligation 'ith his o'n properties

ClassificationsIn *eneral8 +ersonal and RealOrigin8 Conventional, &egal, ;udicialConsideration8 *ratuitous and Onerous+rincipal De"t8 Single 4principal o"li5 and Dou"le 1 Su"3*uaranty

4guaranty5Scope8 Definite 4principal o"li only5 and

!ndefinite / Simple 4no stipulation that guaranty is onprincipal de"t only, lia"ility includes accessory o"lis5

RULES ON GUARANTY

< *uaranty is *RAT#ITO#S 3 E8 Onerous only if stipulated

0 Same Cause as principal o"ligation 3 *uarantor need not have a directinterest in the o"ligation nor receive any "enefit from it> !arried 'oman may guarantee 3 *R8 %ut if '1o the hus"and2s

consent, she only "inds her separate properties She can2t "ind the AC+3 E8 /hen it redounds to the "enefit

of the family

4. /ith principal de"tor2s consent 3 S#%RO*ATED in Rights of Creditor3 If entered '1o )no'ledge1consent or against the 'ill of the de"tor83 Effect is li)e payment "y a > rd person8

< *uarantor can only recover insofar as payment "enefitedthe principal de"tor

0 *uarantor cannot compel the creditor to su"rogate him in

the creditor2s rights such as those arising from amortgage, guaranty or penalty

!ay "e on a OIDA%&E, #NEN9ORCEA%&E or a NAT#RA& O%&I3 In natural o"ligations, even if the principal o"ligation is not civilly

enforcea"le, creditor may still go after the guarantor 3 A conditional o"ligation may also "e su"6ect of guaranty

B !ay "e given to secure 9#T#RE DE%TS, amount of 'hich is not yet)no'n %ut there can "e no claim against the guarantor until the de"t isli.uidated

3 Continuing *uaranty

3 Remem"er that there must "e an e(isting principal o"li /hat isallo'ed is the guaranty for a principal o"li in e(istence +S futurede"t *uaranty cannot "e constituted on a future de"t only

3 Conditional O"ligations - If principal o"li is su"6ect to a suspensivecondition, guarantor lia"le only upon happening of the condition

*uarantor may "ind himself 9OR &ESS "ut not for more than the principalo"li

3 %oth as to amount and the onerous nature of the conditions3 If he "ound himself for more, shall "e reduced to the limits of the

principal de"tor2s lia"ility3 Opt Out8 Separate Contract 'here lender 'ould render service to

guarantor in e(change for the additional amount3 :o'ever, if creditor sues guarantor, latter may "e lia"le for costs,

attorney2s fees 7 penalties

G *uaranty is NOT +RES#!ED 3 must "e e(press and limited to terms 3 Strictly construed against creditor, in

favor of guarantor if gratuitous 3 must "e in /RITIN* 4SO95 3 +rospective application 4not past de"t5

? No need for Creditor to Accept 3 E8 if guarantor merely offers to guaranty3 E to E8 unconditional promise


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SECTRANSFINALS

%enefit of E(haustion Shall NOT ta)e place8< /hen E(cussion shall not ta)e place0 If guarantor 'aives or fails to set3up the "enefit and point

properties of the de"tor to the creditor > If guarantor is a 6udicial "ondsman and su"3suretyF /here pledge or mortgage has "een given "y him as special

security9ails to interpose it as a defense "efore 6udgment is renderedagainst him

%enefit of E(cussion Shall NOT ta)e place81. *uarantor e(pressly RENO#NCED it0 :e has "ound himself SO&IDARI&$3. In case of INSO& ENC$ of de"tor 4+ractical Insolvency5F De"tor has A%SCONDED, or cannot "e sued '1in +hilippines,

unless he has left a manager or representative#SE&ESS - 'hen it may "e presumed that e(ecution on

property of principal de"tor 'ould not satisfy 'hole o"ligation

Opt Out - *et guarantor to sign a /AI ER of the "enefit or ma)e him

SO&IDARI&$ lia"le +ayment "y *uarantor constitutes /aiver of "enefit

!!% &uarantor must set'up the benefit against the creditor and pointto properties of the debtor in the (hils sufficient to ans)er thedebt

3 To collect from guarantor, creditor must ma)e prior demand forpayment from guarantor8 !ade after 6udgment on the de"t andmust "e actual demand, not merely 6oining * in the suit

3 Once guarantor sets3up and points to properties, creditor 'ho isnegligent in e(hausting the property pointed out suffers the lossto the e(tent of the value of the property

!!!% Every action by creditor must be against the principal debtoralone% reditor must as* court to notify the guarantor%

3 Creditor can only sue the guarantor together 'ith the principalde"tor in the instances 'hen the "enefit of e(cussion does notta)e place

3 *uarantor must "e notified so that he can set3up his defenses

!+% The benefit of e cussion shall al)ays be unimpaired, even if -udgment is rendered against the principal debtor and theguarantor%

3 If guarantor appears in the action, he is still given the "enefit ofE(haustion even after 6udgment is rendered against theprincipal de"tor

3 If guarantor does not appear, 6udgment is not "inding on him&ender must separately sue guarantor to claim from him

3 +ro"lem8 Time lag "et'een 6udgment against de"tor 7 against *3 Opt Out8 %an) guaranty or &C 'here only need to inform the "an)

+% !f a compromise is made, )hoever is not party to the compromisebenefits but is not pre-udiced%

3 If guarantor compromises 'ith creditor - he cannot demand morefrom the de"tor than 'hat he really paid

+!% The sub'guarantor en-oys the benefit of e cussion )ith respect tothe guarantor and the principal debtor

+!!% .E#E/!T "/ 0!+!S!"#1 Several co'guarantors, 2 debtor, 2 debt 3obligation divided among all% reditor can only claim respectiveshare of each guarantor%

3 *R8 6oint lia" il ity3 E8 In cases 'here no "enefit of e(cussion 4R#SIA5 and 'hen

solidarity has "een stipulated

VIII. 0ebtor must indemnify guarantor if the latter pays% !ndemnityincludes1< Total amount of de"t - only 'hat he has actually paid #nless

stipulation of right to demand reim"ursement as soon as lia"le, even'ithout having paid

0 Interest - interest from the time notice of payment of the de"t "y * ismade )no'n to de"tor *uarantor can collect interest on amount paideven if principal o"li has no stipulation for interest %asis of the right isdelay of de"tor in reim"ursing

> E(penses - those that guarantor must satisfy in accordance 'ith la'&imited to those incurred after notifying de"tor that payment has "eendemanded from guarantor

F Damages - only if they are due

!X% E ceptions1 4here & has no right to be reimbursed< *uaranty constituted '1o )no'ledge or against 'ill of de"tor

3 can only claim "eneficial reim"ursement2. +ayment "y > rd person '1o intention to "e reim"ursed is Donation,

re.uiring consent of donee %ut payment is valid as to creditor> /aiver "y guarantor of right to "e reim"ursed

X% &uarantor )ho pays is subrogated to all rights of creditor againstdebtor

3 Right of su"rogation only given to guarantor if he has a right to "ereim"ursed No right - no su"rogation



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X!% !f & pays )5o notifying debtor, debtor may enforce against himall defenses he could have set up against the creditor at time ofpayment%

X!!% !f debt )as for a period and & paid before period ended, hecannot demand reimbursement from debtor until period ends%

3 E(ception8 if de"tor ratified1consents to such payment "F duedate

XIII. !f & paid )5o notifying debtor, then debtor also pays 3 & can6tgo after the debtor but must go after the creditor%

3 E(ception8 * may claim from clueless de"tor if8< gratuitous guaranty0 * prevented from informing de"tor of payment "y

fortuitous event> Creditor "ecomes insolvent

XIV. !nstances )hen &uarantor may proceed against principal0ebtor even .E/"RE payment

1. /hen * is S#ED for payment

2. If principal de"tor is INSO& ENT3. If guaranty is for a +ERIOD and period has e(pired4. De"t "ecome DE!ANDA%&E "y lapse of period F

paymentAfter lapse of


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Dispenses 'ith all legal re.uirements or conditions for proceeding against aguarantorSO&IDARIT$ A!ON* DE%TORS v S#RET$S:I+

%oth stand for some other person%oth may demand reim"ursementDifference is that in solidarity among de"tors, the reim"ursementinvolves only the amount of the share of the other de"tors Insuretyship, the surety is reim"ursed for the 'hole amount&ender cannot go after surety right a'ay, there must "e default "ythe principal de"tor first In solidarity of de"tors, creditor can goafter any solidary de"tor on due date

NAT#RE O9 S#RET$2S #NDERTA IN*1. CONTRACT#A& 7 ACCESSOR$ 3 lia"ility is merely collateral to principal

%#T DIRECT o"ligation "ut direct, primary anda"solute o"ligation to creditor

2. &IA%I&IT$ &I!ITED TO TER!S 3 lia"ility is determined "y terms of O9 T:E CONTRACT

3. &IA%I&IT$ ARISES ON&$ I9 3 $ffe ts(+RINCI+A& DE%TOR IS &IA%&E < Surety is "ound "y a 6udgment

against the principal even if he isnot party to t he proceedings

0 Creditor may sue, separately ortogether, the principal de"tor andthe surety

> *enerally, a demand or notice ofdefault is not re.uired to fi( thesurety2s lia"ility 4K5

F An accommodation party is asurety A +romise to pay signed "y 0

de"tors is solidary 4not surety5B Surety "ond 'here there is noprincipal de"tor is OID

4. NOT ENTIT&ED TO E=:A#STION 3 of properties of principalde"tor, since he assumes solidary lia"ility

5. #NDERTA IN* IS TO CREDITOR 3 de"tor cannot claim thatsurety "reached its o"ligation to pay "ecause there is no o"ligation "et'eensurety and de"tor

*#ARANT$ S#RET$S:I+*uarantor promises to ans'er for de"t,default or miscarriage of the principal

Surety promises to ans'er for de"t,default or miscarriage of principal

&ia"ility of guarantor depends uponindependent agreement to pay theo"ligation if de"tor fails to do so

Surety assumes lia"ility as a regular party to the underta)ing

Engagement of guarantor is acollateral1accessory underta)ing

Surety is charged as an original promisor

*uarantor is se ondarily liable) %enefitof E(haustion, E(cussion 7 Division

A surety is primarily liableNo "enefit of E(cussion

*#ARANTOR %INDS :I!SE&9 TO+A$ I9 T:E +RINCI+A& DE%TORCANNOT +A$ 4INS#RER O9 T:ESO& ENC$ O9 T:E DE%TOR5

S#RET$ #NDERTA ES TO +A$ I9 T:E+RINCI+A& DOES NOT +A$ 4INS#RERO9 DE%T53 !ore onerous

III. PLEDGE

ESSENTIA& REH#ISITES O9 +&ED*E1. +urpose 3 to Secure the fulfillment of a +rincipal O"ligation0 Real 3 Re.uires delivery of the thing

3 Agreement to pledge, 'hen "reached, gives rise to damages> Alienation 3 'hen +O "ecomes due and de"tor defaults, thing pledged may

"e alienated to satisfy the principal o"li3 A direct lien on the property, no need for litigation to alienate

F Disposal 3 9ree Disposal of property or legal authority to do so3 not su"6ect to any claim "y a > rd person

5. O'nership 3 +ledgor "e the A"solute O'ner of thing, "ears the loss3 &oss8 !ust replace thing or lose "enefit of the period3 9uture property CANNOT "e pledged3 !ust have "oth %ENE9ICIA& 7 &E*A& TIT&E3 In suspensive condition - o'nership retroacts

B Third persons not parties to principal o"li may "e pledgor

Definition of +ledge ContractDe"tor delivers to creditor or > rd person a mova"le or document involvingincorporeal rights for the purpose of securing the fulfillment of a principalo"ligation 'ith the understanding that 'hen the o"ligation is fulfilled, the thingdelivered shall "e returned 'ith all its fruits and accessions

INDS8 oluntary 1 Conventional and &egal



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C:ARACTERISTICS1. Real 3 "y delivery, !#ST % IN +#%&IC INSTR#!ENT0 Accessory 3 no independent e(istence> #nilateral 3 o"li of creditor to return thingF Su"sidiary 3 o"li of creditor arises only upon fulfillment of

+OJ!ay "e on a OIDA%&E, #NEN9ORCEA%&E or a NAT#RA& o"ligation

R#&ES ON +&ED*E1. reditor A##"T A((R"(R!ATE thing pledged or dispose of them

3 contrary stipulation is OID3 Stipulation of +actum Commissorium is OID

A /hen there is a pledge or mortgage% A Stipulation for A#TO!ATIC appropriation of

the thing in case of default "y the de"tor 3 $% eption to *a tum Commissorium 8 /hen thing is not sold after

0 pu"lic auctions, creditor may appropriate for himself3 #pon default, creditor moves for sale of the pledged thing3 If he 'ants to ac.uire it for himself, creditor may "id in pu"lic

auction3 :o' to Opt Out of +actum Commissorium +rohi"ition8

A Enter into another contract outside the pledgeB. De"tor can voluntarily cede property to creditor - NovationC Stipulation 'here de"tor merely promises to sell, non3

compliance 'ill give rise to damagesD. Stipulation granting creditor authority to ta)e possession

and not o'nership of property upon foreclosure

2. (ledge is !#0!+!S!.:E3 :eirs of either de"tor or creditor cannot as) for proportionate

e(tinguishment or return of the thing pledged3 E=CE+TIONS8

< Several things given in pledge, each one ans'ering for adeterminate portion of the credit

0 Only partial release of the loan 4Central %an) v CA53. 9ailure of Consideration - creditor too) over management

"ut the "usiness failed3 Indivisi"ility of +ledge is NOT A99ECTED "y the fact that the

de"tors are NOT SO&IDARI&$ &IA%&E

7% ontract of (ledge may secure all *inds of obligations3 +ure or Su"6ect to a Suspensive or Resolutory Condition3 alid, oida"le or #nenforcea"le Contracts

;% (romise to constitute a pledge gives rise only to a personal actionbet)een parties%

3 /1o pre6udice to criminal lia"ility of party 'ho defrauds another "yoffering a thing in pledge as unencum"ered, )no'ing it 'as su"6ectto some "urden or representing himself to "e the o'ner

+RO ISIONS A++&ICA%&E ON&$ TO +&ED*E

1. Delivery must "e to CREDITOR or > rd person agreed upon

0 S! 3 All mova"les 'ithin the commerce of man 'hich are suscepti"le ofpossession, and

3 Incorporeal rights evidenced "y documents - must "e indorsed ifnegotia"le

3. !ust "e in a +#%&IC INSTR#!ENT, 'ith a description of the thing pledgedand the date of the pledge, in order to affect > rd persons

F A&IENATION - Thing pledged may "e alienated "y the o'ner "ut must "e'ith consent of pledgee O'nership is transferred only upon consent ofpledgee, "ut latter continues to possess

5. RI*:T O9 CREDITOR TO RETAIN - in his possession or in > rd person until+rincipal O"ligation is paid

B Creditor shall ta)e care 'ith Diligence of a *ood 9ather of the 9amily3 Creditor has a right to "e reim"ursed for e(penses due to

preservation3 Creditor also lia"le for &OSS or Deterioration

7. +ledgee cannot deposit thing to a > rd person3 E(ception8 contrary stipulation3 +ledgee responsi"le for acts of his employees1agents3 Remedy of +ledgor8 E(tra6udicial deposit or deposit 'ith a

>rd person 4Arts 0


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3 If period is for "enefit of pledge, even if o"li is not due, hemay compensate against the interest or principal

rd person possesses thing, receiving it fromthe pledgor or o'ner

3 E=CE+TION8 pledgor acts as agent of pledgee


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9OREC&OS#RE O9 +&ED*E

9OR!A&ITIES REH#IRED< De"t is due and unpaid0 Sale must "e at pu"lic auction> Notice to pledgor and o'ner, stating the amount dueF !ust "e 'ith intervention of Notary +u"lic

+ROCESS< De"t "ecomes due and de"tor defaults0 Creditor proceeds to Notary +u"lic and as)s to conduct a

Notarial Sale> Sale shall "e a pu"lic auction supervised "y Notary

"ut in class, ;+ said creditor has control anddetermines details of the sale

F Notice of sale must "e given to pledgor and o'ner No specified period for notification

If not sold on 0 pu"lic auctions, creditor may appropriate forhimself "y giving an ac.uittance for his entire claim

B After auction, pledge shall advise o'ner or pledgor of result

R#&ES< At auction, pledgor or o'ner may "id and shall have a "etter right

if same terms as highest "idder

0 +ledgee may also "id "ut invalid if he is only "idder

> All "ids must offer to pay price at once If other "id is accepted,pledgee is deemed to have received purchase price

F SA&E E=TIN*#IS:ES /:O&E O%&I*ATION3 principal, interest, and e(penses

5. DE%TOR NOT ENTIT&ED TO E=CESS, !A$ STI+#&ATE

6. DE%TOR NOT &IA%&E 9OR DE9ICIENC$3 contrary stipulation is OID3 opt out8 set a minimum "id, or 6ust file collection suit

instead of foreclosing, or stipulate that if pledgegoes under certain amount, de"tor must pledgeadditional securities

Any person 'ho has a right to thing pledged may satisfy +O assoon as it "ecomes due and demanda"le

3 creditor cannot refuse payment "y interested > rd person3 can "e a "uyer of the thing, or someone 'ith a 6unior lien

G If credit pledged "ecomes due "efore it is redeemed, +&ED*EEmay collect and receive the amount due

3 pledge shall apply the proceeds to payment of theprincipal o"ligation

3 S#R+S should "e delivered to +&ED*OR? If 0 or more things are pledged, +ledgee may choose 'hich to sell,

unless contrary stipulation

10. If a > rd party pledges his o'n mova"le property, he has same rightsas guarantor

3 >rd party pledgor is entitled to8a Indemnity" Su"rogationc. +ledgor released if creditor accepts property in

payment of de"t DACIONd Release of < pledgor '1o consent "enefits alle E(tension granted to de"tor e(tinguished pledge

f +ledgors are released from o"li if no su"rogation "yact of creditor

g +ledgor may set up defenses inherent in the de"t

CON ENTIONA& +&ED*E &E*A& +&ED*EDe"tor1O'ner1+ledgor is notentitled to e(cess "ut may stipulateDe"tor is also not lia"le fordeficiency and cannot stipulate

E(cess1Remainder of the price ofthe sale shall "e delivered to thede"tor

De"tor need only default andnotarial intervention for sale to "eheld

!ay only "e sold after DE!AND ofthe A!O#NT for 'hich the thing isretained

No re.uired period to hold auctionsale +u"lic Auction shall "e held ONE!ONT: after such demandIf '1o 6ust grounds, creditor doesnot cause pu"lic sale to "e held'1in such period, de"tor mayre.uire return of the thing

R#&ES 9OR &E*A& +&ED*E+ossesor in *9 may retain thing on .'hich he spent for necessary e(penses

until reim"ursed:e 'ho 'or)s on a mova"le may retain t he same until paid for the 'or)



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Depositary may retain the thing until paid for the deposit Agent may retain o"6ects of agency until reim"ursed "y principal&a"orer2s 'ages are considered a lien on goods manufactured or 'or) done

IV. REAL MORTGAGE

DE9INITION A real estate mortgage is a contract 'here"y the de"tor secures to thecreditor the fulfillment of a principal o"ligation, specially su"6ecting to suchsecurity immova"le property or real rights over immova"le property in casethe principal o"ligation is not complied 'ith at the time stipulated

C:ARACTERISTICSReal 3 "y delivery, !#ST "e RE*ISTERED

Accessory 3 no independent e(istenceSu"sidiary 3 o"li of creditor arises only upon fulfillment of +O

!ay "e on a OIDA%&E, #NEN9ORCEA%&E or a NAT#RA& o"ligation

INDS8 oluntary 1 &egal and E.uita"le !ortgage

As a *eneral Rule, the !ORT*A*OR RETAINS +OSSESSION, ho'everthis is not essential and mortgagee may have possession and it 'ould still"e a mortgage and some other contract

S!8 Immova"les and Aliena"le Rights over Immova"les

9#T#RE +RO+ERT$ CANNOT %E O%;ECT O9 o !ORT*A*E !ust "ea"solute o'ner %ut future improvements are valid

REH#ISITES+urpose 3 to secure a +rincipal O"ligationReal 3 must "e registered in Registry of +roperty to pre6udice

>rd persons Alienation 3 /hen +O "ecomes due, may "e alienated for paymentDisposal 3 9ree Disposal or &egally AuthoriLed to do soO'nership 3 A"solute o'nership of thing mortgaged

JEven '1o registration, there is already a valid mortgage "et'een parties

:O/ TO ENTER

E(ecute document of mortgage*o to a notary pu"lic 'ho 'ill notariLe document+ay documentary stamp ta(*o to RD to register, must "e updated in ta( payments

R#&ES1E99ECTS The mortgage 0irectly and !mmediately sub-ects the property upon

)hich it is imposed, )hoever the possessor may be, to thefulfillment of the obligation for )hose security it )as constituted%

3 O'nership is retained "y mortgagor, may even mortgage it again3 The portion of the mortgage registered creates a preference in favor

of creditor over the land3 Opt Out8 do a credit line arrangement 'ith a ceiling price or e(ecute

a ne' document everytime funds are released

rd person 4must "epossession in concept of an o'ner5



12/25

SECTRANSFINALS

3 %ut >rd person is not lia"le for deficiency unless contrary isstipulated :e cannot "e lia"le for more than value of propertyalienated to him

Stipulation forbidding the o)ner from alienating immovablemortgaged shall be void%

3 %ut the mortgage can stipulate that property 'ill not "e furtherencum"ered - valid stipulation as mere regulation3 Stipulation that mortgagor must notify m2ee "efore alienating is

valid

9OREC&OS#RE O9 REA& !ORT*A*EDefault rule8 ;udicial 9oreclosureE8 E(tra6udicial foreclosure only if S+OA stipulatedE8 +arties may also stipulate a private sale9oreigner can "e mortgagee, governed "y RA>

RA> Applies 'hen mortgagee or his successor in interest is dis.ualified toac.uire or hold lands of the pu"lic domain8

= :e shall not ta)e possession of the mortgaged property duringthe e(istence of the mortgage

= $% ept after default and only for the purpose of fore losure0re ei ership0 enfor ement or other pro eedings and

= In no case e(ceeding years from actual possession= Shall not "id or ta)e part in any sale of such real property in

foreclosure9oreigner mortgagee, ;#DICIA& 9OREC&OS#RE under Act>S+OA, E=TRA;#DICIA& 9OREC&OS#RE according to Act>No stipulation, ;#DICIA& 9OREC&OS#RE under RuleBG of the RoC!ortgagee %AN , Act> applies 7 SecF of the *eneral %an)ing Act

JUDICIAL FORECLOSURE UNDERRULE 68 OF RULES OF COURT

+ROCESS!2ee files petition for 6udicial foreclosure in court 'here prop2y situatedCourt 'ill conduct trialEH#IT$ O9 REDE!+TION +ERIOD Court 'ill promulgate 6udgment 7

order mortgagor to pay de"t '1in ?@3 CONSEC#TI E /EE S ifvalue e(ceeds +F@@

3. +#%&IC A#CTION 3 Time8 ?3Fpm3 #nder Sheriff16ustice of peace2s direction or N+3 Anyone may "id unless e(ceptions stipulated3 Even if !2ee only "idder, valid, may still redeem3 !ust "e at least 0 "idders

3 :ighest "idder, "ut if ceiling price stipulated andcreditor highest "idder, estopped

4. +ROCEEDS 3 Inade.uacy of price is immaterial, right to redeem3 E(cess goes to !or tgagor 3 Deficiency must "e collected via court action

5. +OSSESSION 3 if !2or in possession, 'ill retain possession duringredemption period of


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SECTRANSFINALS

6. REDE!+TION 3 !2or may redeem 'ithin rd person '1inredemption period, > rd person only "oughtthe right to redeem the property and the rightto possess '1in the redemption period

Right of redemption may "e 'aived only if there is fair e(change of value

and information "et'een parties!ortgagor can e(ercise right of redemption in same terms even if propertyis su"se.uently sold to a > rd party

EXCEPTIONS UNDER SEC47OF GENERAL BANKING LAW

Applies 'hen foreclosing mortgagee is a %AN Same procedures as 6udicial or e(tra36udicial "ut 'ith ff e(ceptions8

RI*:T TO REDEE!*R8 No right to redeem in ;udicial 9oreclosuresE8 9or %an)s, there is still a right to redeem w/in 1 year from

registration of the sale

REDE!+TION +RICE*R8 In e(tra36udicial foreclosure, the Redemption price is thepurchase price plus < monthly interest

E8 In "an)s, redemption price consists of8principal o"ligationinterest on loan at the rate stipulated in mortgageCosts of Sale

A#TO!ATIC RI*:T O9 +OSSESSION*R8 mortgagor retains possession '1in redemption periodE8 in "an)s, purchaser automatically has right of possession

IN;#NCTION

Anyone 'ho 'ants to en6oin foreclosure instituted "y a "an)may file a "ond to satisfy damage may "e suffered "yin6unction

+ERIOD O9 RED!E+TION 9OR ;#RIDICA& +ERSONS*R8 in e(tra36udicial foreclosure, mortgagor may redeem after rd person, ;! only su"rogated inright of first mortgagee

0 /hen e(tra36udicial sale is made, ;! may redeem '1in < year from sale ;+says ;! should pay price at 'hich property 'as sold

3. +roceeds in e(cess of +O of < st ! shall "e applied to ;! %ut if there is noe(cess, the 0 nd !ortgage is E(tinguished

F ;! may foreclose on the right of redemption so that he 'ill "e the only one toe(ercise the right 'hen the time comes

V. CHATTEL MORTGAGE

DE9INITIONChattel !ortgage is the contract "y virtue of 'hich personal property isrecorded in the Chattel !ortgage Registry as a security for the performanceof an o"ligationIf the mova"le, instead of "eing recorded, is delivered to the creditor or a > rd

person, the contract is a +&ED*E

C:ARACTERISTICS< Accessory 3 secures performance of a principal o"ligation0 9ormal 3 re.uires registration in C! Register for validity> #nilateral 3 produces only o"ligations on creditor to free thing from

encum"rance on fulfillment of +O

REH#ISITES< +RINCI+A& O%&I*ATION



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SECTRANSFINALS

0 A%SOTE O/NER> 9REE DIS+OSA& or A#T:ORIT$F A&IENATION /:EN +O D#E

RECORDED IN C:ATTE& !ORT*A*E RE*ISTR$a RD 'here mortgagor resides at the time of ma)ing" Resides outside +hils - 'here prop2y situatedc If prop2y situated in different province different from 'here !2or

resides, RD of %OT: province 'here resides and 'hereproperty is situated - !ust "e signed "y 0 'itnesses

C:ATTE& !ORT*A*E +&ED*ES! +ersonal or mova"le prop2y +ersonal or mova"le prop2yDelivery Not necessary Necessary for validityRegistration Necessary to "ind > rd persons,

in all proper RDs+u"lic Document is enoughto "ind > rd persons

+rocedure forSale

Sec C! cannot "e constituted on future o"ligations !ust "e e(istingprincipal o"ligation A*9 says for no other purpose

3 ;+ says "inding "et'een parties "ut not to > rd persons3 They should e(ecute a ne' C! Contract

F *eneral rule is you can2t mortgage future property E(ception is inventoryof retail stores "ec SC treats it as actually rene'al or replenishment ofgoods on hand at constitution of C!

/hen mortgagor pays principal o"ligation, he gets a DISC:AR*E frommortgagee and can cancel lien on mova"le

#+ON DE9A#&T< RI*:T O9 REDE!+TION

3 In case of default, the ff may redeem8i !or tgagor ii Su"se.uent !ortgagee 4;unior Encum"rances5iii Su"se.uent Attaching Creditor

3 If attaching creditor redeems, he is S#%RO*ATED to rights of themortgagor, he can foreclose mortgage

3 +O P COSTS 7 E(penses M su"rogated3 3o redemption on e property is sold0 must redeem before sale)

0 RI*:T O9 !ORT*A*EE TO +OSSESSION3 !2ee has implied right to foreclose

3 If !2or refuses to give possession, creditor may file action forRE+&E IN or action for ;#DICIA& 9OREC&OS#RE

> 9OREC&OS#RE< 9I&E CO!+&AINT 9OR 9OREC&OS#RE

0 NOTICE O9 SA&Ei +osting at 0 or more pu"lic places in municipality

ii. +ersonal Notice to !2or and ;unior !2ees at least @ days after default

ii No ma( time for holding saleiii If !2or sells '1in >@days '1o consent of !2ee, he is

lia"le for deceits, a)in to estafaiv Anyone may "id, unless stipulatedv Even if !2ee is sole "idder - "ec of redemption

F +ROCEEDSi Applied to8

< Costs0 O"ligat ion> Su"se.uent mortgagesF %alance given to mortgagor



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SECTRANSFINALS

ii E(cess8 6unior liens and encum"rances then !2or iii Deficiency8 9ile separate Action for Deficiency

+OSSESSIONi +ossession retained "y !2or during redemptionii If purchaser 'ants possession, 'rit of possession

plus "ond for Creditor is o"liged to pay8a Ta(es and charges" E(penses necessary for preservation and repair

c Sums spent for such e(penses shall "e deducted from 9R#ITS3 if creditor does not pay ta(es, he has to pay Indemnity for

Damages to de"tor 3 If de"tor pays ta(es 'hich creditor must pay, the amount is to

"e applied to the payment of the de"t If the amount paide(ceeds the principal o"li, "oth the loan and antichresis aree(tinguished and creditor has to return property to de"tor

F De"tor CANNOT reac.uire property '1o first having TOTA&&$ +AID 'hathe o'es creditor

3 If creditor does not 'ant to pay the ta(es and charges8 A Stipulate

% :e may Compel de"tor to enter again upon en6oyment ofproperty E(cept 'hen8 contrary stipulation has effect of E=TIN*#IS:IN*

ANTIC:RESIS

Creditor DOES NOT ACH#IRE O/NERS:I+ of the real estate for non3payment of the de"t 'ithin the period agreed upon

3 Every stipulation to the contrary is OID3 In case of default, creditor has the ff remedies8

A specific performance 1 collection% sale of property in 6udicial foreclosure 3 ROC



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SECTRANSFINALS

3 *R8 Creditor cannot ac.uire property "y antichresis - not held inconcept of an o'ner E(ception8 if creditor repudiatesantichresis

B +arties may stipulate that interest "e compensated 'ith fruits ofproperty o"6ect of antichresis

a Actual mar)et value of the fruits at time of application

b. 9orm of interest in )ind value at date of paymentOther characteristics of Antichresis

a. A > rd person, not party to the +O, may offer his immova"leunder the contract of antichresis for the de"t of another

" Contract is INDI ISI%&Ec Indivisi"ility is not affected "y 6oint lia"ility of de"torsd !ay secure all )inds of o"ligations - pure or conditional

4resolutory or suspensive5

VI. CONCURRENCE AND PREFERENCE OF CREDITS

DE9INITIONConcurrence implies possession "y 0 or more creditors of e.ual rights orprivileges over the same property or all of t he properties of de"tor+reference is the right held "y a creditor to "e preferred in the payment ofhis claim out of the de"tor2s assets a"ove others

NAT#RE 7 E99ECT< An e(ception to *R of payment so strictly construed0 Does not create an interest in property - preference of app of proceeds> Creditor doesn2t have right to ta)e property or sell it - applies after saleF !ust "e asserted

!ust "e maintainedREH#ISITES

< 0 or !ORE CREDITORS0 SE+ARATE AND DISTINCT C&AI!S3. A&& C&AI!S1DE%TS ARE D#EF SA!E DE%TOR

3 E(cept if natural person gets a discharge under insolvency la'sINS#99ICIENT +RO+ERT$

3 "ut must "e a"solute o'ner of propertiesB +ROCEEDIN* /:EREIN CREDITOR CAN 9I&E C&AI!S

3 &i)e insolvency proceedings

3 Right "ecomes significant only if properties of de"tor alreadyli.uidated and inventoried and claims of creditors have "eenesta"lished

R#&ES

< A de"tor is lia"le 'ith A&& his property, present and future, for thefulfillment of his o"ligations

E8 Su"6ect to e(emptions provided "y la' 4future support, home5

0 As long as AC+ or C+* su"sists, its property shall not "e among assetsta)en "y assignee for payment of insolvent de"tor2s o"ligations

E8 Redounded to the "enefit of the family

3. /hen insolvent de"tor is a co3o'ner 'ith an undivided share in anyproperty, his undivided share shall "e among the assets ta)en forpayment of his o"ligations

F +roperty held "y insolvent de"tor as a trustee of an e(press or impliedTR#ST shall "e e(cluded from insolvency proceedings

CLASSIFICATION OF CREDITS

I. SPECIAL PREFERRED CREDITS A Spe ifi Mo able *roperty

< D#TIES, TA=ES on the property itself, and 9EES D#E TO T:E STATE

!ISA++RO+RIATION, %REAC: O9 TR#ST or !A&9EASANCE "y+#%&IC O99ICIA&S committed in the performance of their duties, onmova"les, money or securities o"tained "y them

#N+AID +RICE O9 !O A%&ES SO&D, on said mova"les, so long as theyare in the possession of the de"tor, up to the value of the same and if themova"le has "een resold "y the de"tor and the price is still unpaid, the lien

JEN LAYGO 2D 05JEN LAYGO 2D 05

ANTICHRESIS REAL MORTGAGE

Same S! Same S!+roperty is delivered to creditor De"tor usually retains possessionCreditor only has right to receivefruits, not a real right4%ut may "e a real right if registered5

Creditor has no right to receive fruits"ut has real right over the property

*R8 creditor must pay for ta(es andcharges upon the estateE8 contrary stipulation

Creditor has no o"ligation to payta(es and charges

E(pressly stipulated that creditorshall apply fruits to payment ofinterest, if o'ing, then to principal

No o"ligation on part of mortgageeto apply fruits to interest t henprincipal

16


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SECTRANSFINALS

may "e enforced on the price this right is not lost "y the immo"iliLationof the thing "y destination, provided it has not lost its form, su"stanceand identity neither is the right lost "y the sale of the thing together 'ithother property for a lump sum, 'hen the price thereof can "e determinedproportionally

Credits guaranteed 'ith a +&ED*E so long as the things pledged are in

the hands of the creditor, or those guaranteed "y a C:ATTE&!ORT*A*E, upon the things pledged or mortgaged, up to the valuethereof

3 In the foregoing cases, if the mova"les to 'hich the lien or preferenceattaches have "een 'rongfully ta)en, the creditor may demand themfrom any possessor, 'ithin >@DA$S from the unla'ful seiLure

3 E(cept for ta(es, no preference among those enumerated3 9or ta(es to "e preferred, must "e on mova"le itself3 9or misappropriation, must still "e 'ith the +O and not innocent purchaser 3 +&ED*E - pu"lic instrument C:ATTE& ! - C! registry

B) Spe ifi !mmo ables and Real Rights

< TA=ES D#E upon the land or "uilding#N+AID +RICE O9 REA& +RO+ERT$ SO&D, upon the immova"le sold

!ORT*A*E CREDITS recorded in the Registry of +roperty, upon the realestate mortgaged

CREDITS ANNOTATED IN T:E RE*ISTR$ O9 +RO+ERT$, in virtue of a 6udicial order, "y ATTAC:!ENTS or E=EC#TIONS, upon the propertyaffected, and only as to later credits

3 E(cept for real property ta(, does not create preference, merely enumerates3 #npaid price for prop2y sold cannot "e enforced v I+9 , governed "y

+D< 0?3 Credits annotated "y 6udicial order are preferred over credits of the same

nature 'hich are registered later #nli)e other special preferred credits,these credits do not share proportionately in the property upon 'hich theyare imposed To determine priority among several credits of this )ind,their DATES should "e the "asis The first one to "e registered isprioritiLed

JThe claims or credits enumerated in the 0 preceding articles shall "econsidered as mortgages or pledges of real or personal property or liens'ithin the purvie' of legal provisions governing insolvency

II. ORDINARY PREFERRED CREDITS

Q< Credits for services rendered the insolvent "y employees, la"orers, orhousehold helpers for one year preceding the commencement of theproceedings in insolvency

Q? Ta(es and assessments due the national government, other than thosementioned in Articles 00F


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SECTRANSFINALS

VII. INSOLVENCY LAW

> RE!EDIES8< Suspension of +ayments0 oluntary Insolvency 3 discharge> Involuntary Insolvency 3 discharge

JSecurity creditors 1 secured claims are not covered "y Insolvency la', theyhave option of foreclosing securities instead

SUSPENSION OF PAYMENTS

+ostponement, "y court order, of the payment of de"ts of one 'ho, 'hilepossessing sufficient property to cover his de"ts, foresees the impossi"ilityof meeting them 'hen they respectively fall dueSolvent "ut not &i.uid

UNDER 90 !A UNDER INSOLVENCY LAW

/:O !A$ A corporation Natural or ;uridical +ersonREH2TS 1. Solvent "ut not li.uid

or 0 Insolvent 7 under

receivership

SO& ENT - sufficient prop2yNOT &IH#ID - foresee impossi"ility of

meeting all 'hen they fall due+etitioning he "e declared in state ofsuspension of payment

/:ERE RTC RTC 'here de"tor resided for Bmonthsprior

Incidents < De"tor has continuedaccess to properties

0 *ives de"tor leverageor frame'or) fornegotiation

< No disposition of property may "emade "y the de"tor e(cept inordinary course of "usiness

0 No payments may "e made "yde"tor e(cept in ordinary course of"usiness

> #pon re.uest to the court, allpending e(ecutions against de"torshall "e suspended e(cepte(ecution against prop2y especially

mortgaged Advantages < !ore lenient Even ifunder receivershiponly, may file

0 Only the court decides> Even secured creditors

are suspended

< De"tor must "e solvent "ut notli.uid

0 Creditors have a say> Secured creditors are not

suspended and may foreclose

*R7C$D6R$ F7R S6S*$3S!73 7F *A5M$34 63D$R !3S7L8$3C5 LA2

1. 9ile +ETITION in RTC 'here de"tor resides Bmonths prior +etitionshall "e accompanied "y8

a ERI9IED &IST O9 A&& CREDITORS

" DE%TS AND &IA%I&ITIESc STATE!ENT O9 ASSETS 7 &IA%I&ITIESd +RO+OSED A*REE!ENT

2. Court 'ill issue ORDER calling for the meeting of all creditors !eetingshall ta)e place 03G 'ee)s from date of order

3. Order 'ill "e +#%&IS:ED and NOTICE sent to all creditors of de"tor 4. !EETIN* of Creditors

3 H#OR#! REH#IRE!ENT - to have a valid meeting,creditors present must represent at least B@ of thetotal lia"ilities of de"tor

Creditors 'ill A++RO E the proposition3 !A;ORIT$ REH#IRED 9OR A++RO A&3 A DO#%&E !A;ORIT$ consisting of8

a 01> of the num"ers of creditors voting" The 01> must represent at least B@ of the

total lia"ilitiesB O%;ECTIONS must "e made 'ithin


19/25

SECTRANSFINALS

insolvency in the RTC 'here he has resided for the last Bmonths prior tofiling In involuntary insolvency, the de"tor himself is the petitioner

INSO& ENC$ S#S+ENSION O9+A$!ENTS

+urpose To discharge the de"tor from thepayment of de"ts

To suspend or delaypayment of de"ts

Solvency ofDe"tor

De"tor does not have sufficientproperty to pay his de"ts

De"tor has sufficientproperty to pay his de"ts

Effect on Amount ofInde"tedness

Amount is affectedCreditors receive less than theircredits and 'here there arepreferences, some creditors maynot receive anything at all

The amount ofinde"tedness is notaffected

Num"er ofCreditors

There must "e > or more creditorsif it is involuntary insolvency

The num"er of creditorsis immaterial

+ROCED#RE1. 9iling of +ETITION, containing8

a De"tor2s place of residence and period of residence" :is ina"ility to pay all his de"ts in fullc /illingness to surrender all his property, estate and effects not

e(empt from e(ecution for the "enefit of his creditorsd An application to "e ad6udged insolvent

0 +etition shall "e accompanied "y8a A verified SC:ED#&E containing8

i 9ull and true statement of all de"ts and lia"ilitiesii. 9acts 'hich give rise or 'hich may give rise to cause of

action against insolvent de"tor " A verified IN ENTOR$ containing8

i Description of all personal and real properties, 'hethere(empt or not, value, location and encum"rance

ii. 9acts 'hich give rise to action in fa or of insolvent de"tor 3. Court issues and ORDER O9 AD;#DICATION - no hearing, voluntary4. +#%&ICATION AND SER ICE of order to creditors5. !EETIN* of Creditors t o elect ASSI*NEEB CON E$ANCE of de"tor2s property "y Cler) of Court to Assignee

&IH#IDATION of de"tor2s assets and payment of hid de"tsG CO!+OSITION? DISC:AR*E, e(cept if de"tor is a corporation or more creditor s

+etitioner Insolvent de"tor > or more creditors 'hopossess .ualifications

Acts of Insolvency De"tor must not "e guilty ofany act of insolvency

De"tor must havecommitted < or more of acts

Amount ofInde"tedness

!ust "e greater than +


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SECTRANSFINALS

Should not have accrued '1in >@ days prior to filing of petition+ETITION

< erified "y the petitioners0 Sets forth < or more acts of insolvency> Accompanied "y a %OND approved "y court 'ith at least 0

sureties

> inds of Acts of Insolvency< %y de"tor to ensure that de"tor 'ill not "e a"le to pay0 %y de"tor in fraud of creditors> %y de"tor, giving preference to < creditor against other creditors

PROCEDURE

9ile petition "y > or more creditors in RTC 'here de"tor resides or place of"usiness

Issuance of order re.uiring de"tor to sho' causeService to de"tor of order 9iling of de"tor2s ans'er or motion to dismiss:earingIssuance of order or decision ad6udging de"tor as insolvent

3 So that pending 6udgment, de"tor cannot dissipate his assets,creditors should as) the court for an in6unction or for a receiver'ho 'ill hold the properties

+u"lication and Service of Order - must attach1garnish assets!eeting of creditors for E&ECTION of assignee

3 elected 'ithin 03G 'ee)s from date of order Conveyance of de"tor2s property&i.uidation of assets and payment of de"tsCompositionDischargeO"6ection

Appeal to SC

ASSIGNEES

+erson elected "y creditors or appointed "y the court to 'hom an insolventde"tor ma)es an assignment of all his property for the "enefit of thecreditors The assignment vests title to all the assets of the de"tor in favor ofassignee

2ho an parti ipate in $le tionCreditors 'ho have filed their claims in the Cler) of Court at least 0 daysprior to scheduled election *eneral rule8 secured creditors cannot, e(cept ifthey8 < As) for the fi(ing of the value of the security

0 Surrender the security to the sheriff or the receiver

Creditors meet and a !A;ORIT$ of %OT: IN N#!%ER AND IN T:E A!O#NT O9 CREDIT they represent should vote for the same assignee Ifthis fails, court 'ill appoint

2hat Assignee should do/ithin days from election, assignee should file %OND '1 0 or more sureties

Assignee gets for < st +


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SECTRANSFINALS

F Surplus in partnership assets shall "e added to assets ofindividual partners in proportion to their interest in thepartnership

PROOF OF DEBTS

DE%TS /:IC: !A$ %E +RO ED1CO&E&CTED All de"ts due and paya"le at time of ad6udication All de"ts e(isting at time "ut not paya"le until a future time Any de"t of insolvent arising from his lia"ility as indorser, surety, "ailor or

guarantor 'here such lia"ility "ecame a"solute after the ad6udication ofinsolvency "ut "efore the final dividend shall have "een declared

Other contingent de"ts 7 lia"ilities contracted "y the insolvent if thecontingency shall happen "efore the order of final dividend

Any claim for reim"ursement of a person 'ho has ans'ered, in 'hole or inpart, for the insolvent2s de"t as "ail, surety or guarantor or other'ise

CONTIN*ENT C&AI! A lia"ility 'hich depends on a future and uncertain event A claim "ase dona contingency 'hich has not happened at time of the proceedings cannot "e

proved since there is no real claim yet%ut if it happens after the proceedings, creditor can still claim fro de"tor

DE%TS /:IC: CANNOT %E +RO ED< "arred "y prescription0 secured creditors, unless 'aived> claims of creditors 'ho hold an attachment or e(ecution issued >@days

"efore institutionF fraudulent preference

SupportB Damages from tort

3 The discharge granted to the de"tor does not cover those de"ts thatcould not have "een proved

3 Compensation can "e set up against insolvent only for de"ts arising atleast >@days "efore filing

COMPOSITIONS

An agreement made upon sufficient consideration "et'een insolvent and allcreditors 'here"y the creditors agree to accept a dividend less than theamount of their claims, for the sa)e of getting paid sooner

REH#ISITES< offer of the terms of composition made after filing of the schedule and

list of creditors

0 Offer accepted in 'riting "y a DO#%&E !A;ORIT$ of creditors> !ade after depositing the consideration to "e paid and the cost of

proceedingsF Court must approve terms of compensation

DISCHARGE

De"tor must as) for discharge 'ithin > months to < year from time he isad6udicated insolvent It is not automaticOnly those de"ts set forth in schedule and those 'hich 'ere or might have"een proved against estate in proceedings are released "y discharge+etition for discharge can "e denied if he is in "ad faith or does acts topre6udice creditorsDischarge can "e revo)ed if creditor can prove it 'as fraudulently o"tainedCreditor must file action 'ithin


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SECTRANSFINALS

VIII. DEPOSIT

C:A+TER

Documents

15462020 JP San Pedro Jen Laygo Sectrans Reviewer