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Mortgage Payment Real Redemption Chattel Public Check Civil

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VI.
Lito obtained a loan of Pl,OOO,OOO from Ferdie, payable within one year. To secure payment, Lito executed a chattel mortgage on a Toyota Avanza and a real estate mortgage on a 200-square meter piece of property.
(A) Would it be legally significant - from the point of view of validity and enforceability - if the loan and the mortgages were in public or private instruments? (6%)
(B) Lito's failure to pay led to the extra-judicial foreclosure of the mortgaged real property. Within a year from foreclosure, Lito tendered a manager's check to Ferdie to redeem the property. Ferdie refused to accept payment on the ground that he wanted payment in cash: the check does not qualify as legal tender and does not include the interest payment.
Is Ferdie's refusal justified? (4%)

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SUGGESTED ANSWER:
From the point of view of validity and enforceability, there would be legal significance if the mortgage was in public or private instrument.  As for the loan, there is no legal significance except if interest were charged on the loan, in which case the charging of interest must be in writing.
A contract of loan is a real contract and is perfected upon the delivery of the object of the obligation. (Art. 1934, Civil Code).  Thus, a contract of loan is valid and enforceable even if it is neither in a private nor in a public document.
As a rule, contracts shall be obligatory in whatever form they may have been entered into provided all the essential requisites for their validity are present.  With regard to its enforceability, a contract of loan is not among those enumerated under Article 1403(2) of the Civil COde, which are covered by the Statute of Frauds.
It is important to note that under Article 1358 of the Civil Code, all other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one.  However, the requirement is not for the validity of the contract, but only for its greater efficacy.
With regard the chattel mortgage, Act No. 1508, the Chattel Mortgage LAw, requires an affidavit of good faith standing that the chattel mortgage is supposed to stand as security for the loan;  thus, for validity of the chattel mortgage, it must be in a public document and recorded in the Chattel Mortgage Register in the Registry of Deeds.  A real estate mortgage under the provisions of Article 2125 of the Civil Code requires that in order that a mortgage may be validly constituted the document in which it appears be recorded.  If the instrument is not recorded, the mortgage is nevertheless valid and binding between the parties.  Hence, for validity of both chattel and real estate mortgages, they must appear in a public instrument.  But for the purposes of enforceability, it is submitted that the form of the contract, whether in a public or private document, would be immaterial. (Mobil Oil v. Diocaresa, 29 SCRA 656[1969]).
Also, under Article 1358, acts and contracts which have for their object the creation or transmission of real rights over immovable property must be in a public document for greater efficacy and a real estate mortgage is a real right  over immovable property.
SUGGESTED ANSWER:
Ferdie's refusal is justified.
A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditors (Philippine Airlines v. CA and Amelia Tan, GR No. L-49188[1990]).  Mere delivery of checks does not discharge the obligation under a judgement.  A check shall produce the effect of payment only when they have been cashed or when through the fault of the creditor, they have been impaired (Art. 1249, Civil Code)
However, it is not necessary that the right of redemption be exercised by delivery of legal tender.  A check may be used for the exercise of right of redemption, the same being a right and not an obligation.  The tender of a check is sufficient to compel redemption but is not in itself a payment that relieves the redemptioner from his liability to pay the redemption price (Biana v. Gimenez, GR NO. 132768, September 9, 2005, citing Fortunado v. CA)
Redemption within the period allowed by law is not a matter of intent but a question of payment or valid tender of full redemption price within the said period.  Whether the redemption is not being made under Act 3135 or under the General Banking Law, the mortgagor or his assignee is required to tender payment to make said redemption valid. (Heirs of Quisumbing v. PNB and SLDC, GR No. 178242, January 20, 2009).
Moreover, Ferdie's refusal was justified on the ground that the amount tendered does not include interest.  In order to effect the redemption of the foreclosed property, the payment to the purchaser must include the following sums: (a)  the bid price;  (b) the interest on the bid price, computed at one per centum (1%) per month; and (c) the assessments or taxes, if any, paid by the purchaser, with the same rate of interest (Section 28, 1997 Rules of Civil Procedure).  Unless there is an express stipulation to that effect, the creditor cannot be compelled to receive partial payment of the prestation. (Art. 1248 Civil Code). 

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