5. Several merchants want to embark in a joint venture and engaged you as their company consultant. They want to source out financial accommodations by way of direct investments and/or loans for their capitalization requirements. Your opinion as their company consultant is solicited on the following various questions that may arise:

a. In case the company will use real property as collateral for a loan is registration in the Registry of Property necessary for the validity and enforceability of a contract of real estate mortgage?

b. In case the company will use chattels as collateral for a loan, is registration of a chattel mortgage in the CHattel Mortgage Register essential for the validity and enforceability of the contract?

c. In case your company will not be able to repay its loan as may be stipulated in the contract of real mortgage and chattel mortgage, respectively, and foreclosure was conducted against said properties, would your company have the right to redeem? if so, for how long would such right be exercised?

d. If your company would suffer financial liquidity problems but is not yet insolvent, although the management foresees its inability to pay its obligations as they fall due, what do you propose to be done, and how it would be done? In routine form, please provide the steps/procedures to be undertaken.

6. Primetime Corporation (the Borrower) obtained a P10 M, 5-year term loan from Universal Bank (the Bank) in 1996. As security for the loan and as required by the Bank, the Borrower gave the following collateral security in favor of the Bank:

a. A real estate mortgage over the land and building owned by the Borrower and located in Batac City;

b. The joint and several promissory note of Mr. Primo Timbol, the President of the Borrower; and

c. A real estate mortgage over the residential house and lot owned by Mr. Timbol, also located in Batac City

Because of business reverses, neither the Borrower nor Mr. Timbol was able to pay the loan. In June 2001, the Bank extrajudicially foreclosed the two real estate mortgages, with the Bank as the only bidder in the foreclosure sale. On September 16, 2001, the certificates of sale of the two properties in favor of the Bank were registered with the Register of Deeds of Batac City. 10 months later, both the Borrower and Mr. Timbol were able to raise sufficient funds to redeem their respective properties from the Bank, but the Bank refused to permit redemption on the ground that the period for redemption had already expired, so that the Bank now has absolute ownership of both properties. The Borrower and Mr. Timbol came to you today, September 15, 2002, to find out if the position of the Bank is correct. What would be your answer? State your reasons