3. C granted D a loan of 1M at 20% interest payable in 6 months.

In order to secure fulfilment of the

obligation X constituted a pledge over a diamond ring valued at 250T, a bracelet worth 400T and a
necklace appraised at 250T. D paid an amount 200T but he failed to pay the remaining balance of the
loan. The diamond ring was found in the possession of D when C constituted the foreclosure
proceedings. At the auction sale, C was the highest bidder at 150T. C then filed a suit against D to collect
the deficiency including the accrued interest thereon and to recover the diamond ring. DECIDE.

Answer:

Provided that there was no sale in the first auction sale, and the creditor was the highest and not the
sole bidder on the second auction sale, there was a valid foreclosure sale.

With regards to the suit filed by C against D to collect deficiency of the principal obligation plus interests,
Art. 2115 shall apply. This article provides that the sale of the thing pledged shall extinguish the principal
obligation. This will be applied in all cases, meaning, even if the bid is lower than the principal obligation,
as in this case, the creditor is not entitled to recover the deficiency notwithstanding any stipulation to
the contrary.

With regards to the suit for the recovery of the diamond ring, Art. 2052 shall apply which provides that
the extinguishment of the principal obligation extinguishes the accessory obligation. Since there is
already a valid sale of the thing pledged, the pledge is also extinguished. Thus, C can no longer ask to
recover the object of the pledge.

9. May a real estate mortgage be constituted on future property of the mortgagor to secure his future
obligation? Explain.

Answer: No. Art. 2058 provides that it is essential in a contract of mortgage that the person constituting
it is the absolute owner of the thing mortgaged and that he has the free disposal of the property. Future
properties are not absolutely owned by the mortgagor and he has no free disposal thereof. Since the
requisites mentioned above are essential, the contract of REM constituted on future property will be
void at its inception.