CREDIT TRANSACTIONS MIDTERM EXAM

April 6, 2022, 5:30PM-7:30PM

Aklan Catholic College
SY 2021-2022

INSTRUCTIONS

1. This questionnaire consists of FOUR (4) pages including this instructions

page.

There are TWENTY (20) questions numbered I to XX, to be answered

within TWO (2) hours.

2. Read each question very carefully and write your answers in the same
order the questions are posed. Write your answers only at the front page
of every sheet in your examination notebook. Note well the allocated
percentage points for each question. In your answers, use the numbering
system in the questionnaire.

If the sheets provided in your examination notebook are not sufficient for
your answers, use the back pages of every sheet of your examination
notebook, starting at the back page of the first sheet and the back of the
succeeding sheets thereafter.

3. Answer the questions legibly, clearly, and concisely. Start each number on
a separate page.

Your answer should demonstrate your ability to analyze the facts

presented by the question, to select the material from the immaterial facts, and to
discern the points upon which the question turns. It should show your knowledge
and understanding of the pertinent principles and theories of law involved and their
qualifications and limitations. It should demonstrate your ability to apply the law to
the given facts, and to reason logically in a lawyer-like manner to a sound conclusion
from the given premises.

QUESTIONS

I. Can intangible personal property be the subject of a bailment? (5%)

II. Explain ordinary and extraordinary bailments. (5%)

III. What are the kinds of commodatum? (5%)

IV. B’s house was burnt down after a fire broke out in his neighborhood. A,
feeling pity for his best friend B, offered his vacation house where B can
stay until such time that he is able to build a new house. The next day, C,
A’s lawyer son came to B and demanded that the latter vacate
immediately, otherwise, he would sue him. B then charged C with the
crime of grave threats. A, finding the act of B as an act of ingratitude,
asked B to leave and return possession of the house. Can A compel B to

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 do so? (5%)

V. D borrowed P1M from C with a stipulation to pay interest but failed to fix
the rate thereof. When the debt matured, C wanted to collect the principal
amount of P1M plus interest. D refused to pay interest for the reason that
no rate had been previously fixed. Is D correct? (5%)

VI. What is an escalation clause? Is it valid? (5%)

VII. What is the rate of interest for the loan or forbearance of any money,
goods, or credits and the rate allowed in judgments, in the absence of
express contract as to such rate? (5%)

VIII. U lent money to V at an interest of 20 per cent per month payable in six
monthly installments. V was able to comply with his obligation within the
stipulated period. However, three years after the payment, realizing that
the interest was usurious, V filed an action to recover. U raised the defense
of prescription. Can V still recover? If so, up to what extent? (5%)

IX. D1 deposited with W 100 cavans of barley. On the same day, D2 also
deposited 100 cavans of barley of the same kind and quality. Without
getting permission from the two depositors, W commingled all the 200
cavans subject of the deposits. Is W legally allowed to do so? (5%)

X. In what four instances is the depositary liable for the loss of the thing
even through a fortuitous event? (5%)

XI. T, a thief, armed with a picklock that he hid in his pocket entered H Hotel.
He then went to the upper floor and saw a guest coming out of his room.
As the guest walked away, T took out his picklock and used the same to
gain entry. He then broke open the vault therein and took the valuables of
a considerable amount. Later, upon discovering what happened, the guest
sued the hotel for the value of his missing stuff. The hotel denied liability
saying that under the circumstances, the act of the thief was deemed a
force majeure. Is the hotel’s contention correct? (5%)

XII. When does judicial deposit or sequestration take place? May movables be
the object thereof? (5%)

XIII. What is a document of title under the Warehouse Receipts Act? (5%)

XIV. Warehouseman W issued a negotiable warehouse receipt wherein the

goods were deliverable to depositor D or his order. D negotiated the
receipt to his friend F. Thereafter, C, D’s creditor secured judgment against
the latter and served notice of levy over the goods on W. W immediately
turned over the subject goods to C. Is W’s action correct? (5%

XV. X borrowed P500,000.00 from Y. Z guaranteed the whole obligation.

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 When the stipulated time for payment came, X absconded. Y then
immediately compelled Z to pay. Z refused, citing Article 2058 of the New
Civil Code, which provides that the guarantor cannot be compelled to pay
the creditor unless the latter has exhausted all the property of the debtor,
and has resorted to all the legal remedies. Is Z’s contention tenable? (5%)

XVI. What are the exceptions to the benefit of excussion as provided for by
Article 2059 of the New Civil Code? (5%)

XVII. Give at least five causes of extinguishment of guaranty. (5%)

XVIII. A owes B P3M, which debt was guaranteed by C, D and E. C, afraid of the
possible obligation that he may incur should A fail to pay, talked to B
asking that he be released. Since B was also confident that A would be
able to pay him back on time as A had a good credit standing, B agreed.
But it turned out that A lost the capacity to pay, hence, B sued D and E for
P1.5M each. For how much can D and E be held liable? (5%)

XIX. D obtained a loan of P5M from B Bank, secured by a real estate

mortgage. Without D’s knowledge, his friend C paid the whole loan.
Thereafter, C compelled B to subrogate him in its right as mortgagee. Will
C’s action prosper? (5%)

XX. Respondent M.B Lending Corporation extended a loan in the amount of

P30,000.00 to spouses Osmeña and Merlyn Azarraga, together with
petitioner Estrella Palmares, who signed a promissory note as a co-maker.
The Azarraga spouses made payments but left a balance of P13,700.00.
The respondent later filed a complaint against petitioner. Petitioner
countered in her answer that she offered to settle the obligation with
respondent corporation but the latter informed her that they would try to
collect from the spouses Azarraga and that she need not worry about it. Is
Palmares only a guarantor or a surety?

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