Practice question
A motorist already owns a vehicle and later obtains an independent cash loan secured by it. The lender did not sell the vehicle or receive an assignment of a seller’s installment-sale rights. The borrower claims that merely using a vehicle as security necessarily makes the transaction an Article 1484 installment sale. Which is correct?
- Every secured vehicle loan is a sale by definition
- All loans are donations
- The actual independent-loan transaction must be distinguished from a sale on installments; vehicle collateral alone does not establish Article 1484 coverage
- The collateral automatically becomes real estate
- The borrower’s label conclusively determines the contract
Legal references
- Civil Code, Article 1484: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/53360
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