ReSA Regulatory Framework for Business Transactions (RFBT) ‘The Review School of Accountancy 5°FloorCMFFIBuilding 813 Cor R. Papa and S. Loyola Sts. Sampaloc, Manila 8735-9807 1734-3980 | (0910) 439-1320 [email protected] Atty. R. Rosales « Atty. J. Domingo Atty. N. Valderrama RFBT - 09: CREDIT TRANSACTIONS Provisions common to pledge and mortgage a. That they be constituted to secure the fulfillment of a principal obligation; + The principal obligation must be a valid obligation, as a rule, because being accessory contracts, pledge and mortgage owe their existence upon the principal obligation. However, a pledge or mortgage may secure: © All kinds of obligations, whether pure or subject to a Suspensive ‘or Resolutory condition or even 2 Voidable, ‘unenforceabie or natural obligations. b. That the pledger or mortgagor be the absolute owner of the thing pledged or mortgaged; |. The pledger or mortgagor must be the absolute owner of the thing pledged or mortgaged at the time the pledge is constituted. Therefore, a pledge or mortgage on future property is void; Third persons may pledge or mortage their property ~ it Is NOT required for the validity of a pledge or mortgage that the debtor be the owner of thing pledged er mortgaged. Third persons may pledge or mortgage their property to secure another person's debt. However, they can be held liable only to the extent of the value of their property. With respect to mortgage, they may be held liable for any deficiency in case of foreclosure if they expressly agreed to ‘assume the principal obligation; c. That the persons constituting the pledge or mortgage have the free disposal of the property, and in the absence thereof, that they be legally authorized for the purpose. + Free disposal means the property being given in pledge or mortgage is free from claims or encumbrances. d. Can the thing pledged or mortgaged be sold or alienated to pay the debt? i. Before Maturity - As a rule, NO because the payment of the debt ‘cannot yet be compelled; + Except if the pledger or mortgagor fails to fulfill certain conditions such 2 violation would make the debt due. i. At Maturity - Upon default of the debtor to pay the obligation at maturity, the thing pledged or mortgaged may be sold or otherwise alienated to pay the creditor; e. Appropriation of the thing pledged or mortgaged i. Pactum Commissorium - this is an agreement whereby the creditor automatically becomes the owner of the thing given by way of pledge or mortgage or dispose of them in case of non-payment. + It is @ stipulation which enables the mortgagee or pledgee to acquire ownership of the pledged or mortgaged property without the need of any foreclosure proceeding oF public auction. + Pactum Commissorium is null and void. Ji. Distinguished from dacion en pago - In a true dacion en pago, the transfer of the property to the creditor extinguishes the monetary debt. In pactum commissorium, the property 1s initially given as a security but later appropriated without the benefit of foreciosure. f AS a rule, @ pledge or mortgage is indivisible, even though the debt may be divided among the successors in interest of the debtor or of the creditor. This rule applies even if the debtors are jointly liable. Exception: The pledge or mortgage is divisible if several things are given in pledge or mortgage and each one of them guarantees only a determinate portion of the credit. Pledge - is an accessory contact by virtue of which personal property delivered to the creditor as a security for an obligation with the agreement that it can be sold at public auction in case of non-payment to answer for the unpaid obligation or for the creditor to return the same in case the principal obligation is paid. It may be conventional or voluntary pledge or legal or by operation of lew, a, Requisites of Conventional or Voluntary Pledge: 1. The pledge must be constituted to secure the fulfilment of a principal obligation; +Can an after incurred obligation be secured by an already existing pledge? Yes, provided such obligation is. accurately described, 1, The pledgor must be the absolute owner of the thing pledged or mortgaged;ReSA ~ The Review School of Accountancy Iii, The pledgor must have free dispesel of the property; iv. The thing pledged should be viaced in the possession of the creditor or of a third person by common agreement ~ ACTUAL delivery must be made and aot symbolic delivery. v. To take effect against third persons the description of the thing pledged and the date of the pledge must apgear in a public instrument. b, Subject Matter of Piedre ~ personal or movable pre susceptible of possession. Incorporeal rights - evidenced by negotiable instruments, bills of lading, shares of stocks, bonds, etc. ii, Fruits ~ If the thing pleaged earns or produces fruits, income, or dividads, the creditor shail 1. Compensate what he receives. witt those which are owing him; But if néne are owing him, or insofar as the amount may exceed that which 1s due, he shall apply it to the principal. Unless there is 2 stipuiation te the contrary, the pledge shall extend to the Interest | and earning of the ight pledged; 3. Offspring of Animals ~ shalt pertain to the pledgor or owner of animals pledged, but shall be subjat to the pledge if there is no stipulaticn to the contrary; cc. Rules in Possession i. The pledgee has the right to retain the thing until the debt is paid; . The pledgor cannot alienate the th pledged before the obligation becomes due unless there is consent on the part of the pledgee - owner stip of the thing pledged is transferred to the venuze or transferee as soon as ihe yiedgee consents to the alienation but the latter shall continue in possessio iti, The creditor-pledgee shall take care of the thing pledged with the diligence of ‘a good father of a family; he has @ right of reimbursement of the expense: made for its preservation and ‘s liable for its loss or deterioration: iv. The pledgee cannot ceposit the thiny pledged with a third person, unless there is a stipulation authorizing him to do so; v. The creditor-pledgee may bring actions which pertain to the owner of the thing pledged in order to recover it from or defend it against a third persor vi, The creditor cannot use the thing pledged without the authority of the owner, and if he shoulé do so, or should misuse the thing w aay other way, the owner may ask that it be judicially or extrajudicielly depasited. EXCEPT: If the preservation of the thing pledged requires its use it must RFBT - 09 f be used by the creditor but only for that purpose. Public Auction ~ The creditor to whom the credit has not been satisfied in due time, may proceed before a notary public. to the sale of the thing pledged. This sale shall be: Made at’a public auction; With notification to the debtor and the ‘owner of the thing pledged in a proper case; The notice must state the date for which the public sale is to be made. If at the first auction sale the thing is not sold, 2 second one with the same formalities shall be held; and if at the second auction there is no sale either, the creditor may appropriate the thing pledged, In this case, the creditor shall be obliged to give an acquitance for his entire claim. At the public auction, the pledgor or the owner may bid. He shall moreover, have a better right if he should offer the same terms as the highest bidder. The pledgee may also bid but his offer shall not be valid if he is the ONLY bidder. The pledgor or owner has no right to redeem the property after the public auction, However, there is equity of redemption, that is pledgor or owner may satisfy the obligation after it becomes due and before the public sale. Rules on Deficiency and excess Deficiency cannot be recovered ~ the sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the auction sale are equal to the amount of the principal obligation, interest and expenses in a proper case. The creditor 1s not entitled to recover the deficiency even if there is a stipulation to the contrary; Excess belongs to the creditor~ pledgee = if the price of the sale is more than the amount of the obligation, the debtor shall not be entitled to the excess. Exceptions: If it is otherwise agreed, In legal pledge or pledge by ‘operation of law, after payment of the debt and expenses, the remainder of the price of the sale shall be delivered to the obligor. Extinguishment of Pledge: If the thing pledged is returned by the pledgee to the pledgor or owner and nay stipulation to the contrary shall be void; . ‘A statement in writing by the pledgee that he renounces or abandons the pledge is sufficient to extinguish the pledge. For this purpose, neither the acceptance by the pledgor or owner nor the return of the thing pledged is necessary, the pledgee becoming a depositary. Page 2 of 4ReSA ~ The Review School of Accountancy TI, Real Estate Mortgage: b 2131 Governing Law ~ Articles 2124 of the Civil Code and Act No. 3135 Subject - only immovable properties or real rights over such immovable may be the subject of a REM, + Buildings are immovable properties distinet from the land on which they are built, hence, buildings may be the subject of a separate REM; + There are instances when certain movables are treated as real property because of estoppel~if the parties are aware that the subject property is a movable end yet the execute @ REM cn such Property. The parties are precluded from denying the existence of the REM in order to protect the interest of third persons; Nature of REM - REM is an encumbrance on real property. The registered mortgage follows the property even if there is a change in ‘ownership. i, Security interest - only security interest is acquired, the right to Possession is not included unless otherwise stipulated; li, In case of several mortgages constituted over the same property, the first registered mortgagee has superior right over junior mortgages or attaching creditors; Iii, Registration - 2 real estate mortgage must be registered with the Registry of Deeds vehere tne subject property is located in) order to affect third persons. Hcwever, an unregistered mortgage is valid between the parties. After-acquired property and _after- incurred obligations The parties may stipulate that after acquired property are automatically included in the mortgage; After-incurred or future obligations may be covered by REM if the same is, expressly provided; In the absence of stipulation, the general rule is that the mortgage must be limited to the amount mentioned in the mortgage; Dragnet clause - a stipulation wherein all debts of the mortgagor will be secured by the current REM; A mortgage with a dragnet clause makes available future loans without the need to execute another set of security documents. Foreclosure of REM Concept - foreciosure is the remedy available to the mortgagee by which he subjects the property mortgaged to the satisfaction of the obligation secured; Grounds for foreclosure: RFBT - 09 1. When the principal obligation is not paid when due; 2. When there is any violation of any condition, stipulation or warranty by the mortgagor. ili, Kinds of foreclosure 1. Judicial Foreclosure ~ a foreclosure made through the filing of a petition in court a. If the defendant fails to pay the amount due within the time directed by the court, the property shall be sold; b. The proceeds of the sale shall be distributed as follows: 1. The cost of the sale; li ‘The claim of the person foreclosing the mortgage; iii, Claims of junior encumbrances in the order of their priority; iv. Balance after all of. the above are paid shall be paid to the mortgagor for his agent Deficiency judgment - if the proceeds of the sale are not sufficient to satisfy the claim of the creditor, the court, upon motion, shall render the judgment against the debtor, for such balance. 2. Extrajudicial foreclosure - this is made in compliance with the provisions of Act No, 3135 in the following cases: Where there is @ stipulation in the mortgage contract that the mortgage may be foreclosed extra-judicially; or b. Where such extra-judicial foreclosure sale is made under a special power of attorney inserted in the contract. f. Redemption Concept - a transaction through Which the mortgagor, or one claiming in his right, by means of payment or the performance of the condition, reacquires or buys back the value of the title which may have passed under the mortgage. ii, Kinds of redemption: Equity of Redemption - this refers to the right of the mortgagor to redeem the mortgaged property after his default in the performance of his obligation but before the property is sold. Available only in judicial forectosure of REM, the mortgagor is given not less than 90 days to pay the mortgage debt before the property 1s sold; Right of Redemption - this refers to the right of the mortgagor to repurchase the property within a certain period after t was sold for the payment of the mortgage debt In judicial foreclosure, the morgago- may redeem the property after the before the confirmation by the court of the sale. In extrajudicial foreclosure, the mortgacor fhas one year from the date of registration of the sale to redeem the property. Page 3 of 4ReSA — The Review School of Account v. ancy Exception: if the owner of the property is @ juridical person, the right of rademption may be exercised until the sovistraiion of the certificate of foreclosure sai. wilt the Registry of Deeds which in ny case shall a more than 3 manths after foreciosua, whichever is earlier. Chattel Mortgage Concept - It is an accessory contract by virtue of which personal property is recorded in the Chattel Mortgage Registry 2s security for the performance of an obligation: Subject Matter ~ It covers persona! or movable properties including nzorporest Properties, shares of stocks acid interests ir business. The exception in estoppel is siz applicable in chattel mortgage. c. Required formalities CM must be registered in the Crattel Mortgage Registry of the Registry of Deeds where the mortgagor resides or if he resides outside the Philippines, in the place were the property is situated. An unregsstered mortgage is binding between the parties but not on third persons; Affidavit of good faith - a document executed by the partes attesting that the loan on which the personal property secures is entered into in good faith. After incurred obligations and after acquired properties A. chattel mortgage can cover only obligations EXISTING at che time tie mortgage is constituted. 1{ CaiNOT cover after incurred obligations; Chattel mortgage shall be aeeniad ‘0 cover only the property described thereix and not like or substituted property thercs{ter acquired; Right of redemption - there 15 no right of redemption after the foreciosure sale; there is only equity of redemption belore the foreclosure sale—mortgagor is given not less than 90 days to pay the morgage vent before the property 1s sold. Deficiency after foreclosure ~ after foreclosure, the mortgagee mey genercily recover any deficiency that may result afer applying the proceeds of the foreciosure sale to the obligation. Exception | When the transaction secured is sale of personal property on installment basis under the Recto Law, Antichresis a. Concept - It is an accessory 6 whereby the creditor acquires the right to receive the fruits of an IMMOVABLE property of his debtor with the ‘obligation to apply them to the payment of the interest, if owing, ond thereafter to the principal of his credit Svable = The property involved is an imi that is delivered to the an creditor as a security + ovinesshin is NOT transferad. The debtor cannot reacquire the enjoyment of the RFBT - 09 immovable until full payment of his obligation. Antichresis Js also indivisible and the rules that apply to mortgage and pledge regarding indivisibility applies to Antichresis, Required formalities - The amount of the principal and the interest shall be specified in writing, otherwise the contract of Antichresis is void. Measurement of value - the actual market value of the fruits at the time of the application thereof to the interest and principal shall be the measure of the application of fruits to the obligation, Fhe contracting parties may stipulate that the interest upon the debt be compensated with the fruits of the property which is the object of the Antichresis; If the value of the fruits should exceed the amount of interest allowed by the lav against usury,.the excess shall be applied to the principal Obligations of the antichretic creditor To pay the taxes and charges upon the estate, unless there is 2 stipulation On the contrary - to be deducted from the fruits; To bear the expenses necessary for its preservation and repair - to be deducted from the fruits; The creditor in order to exempt himself from the obligations imposed upon him to pay the abovementioned expenses may always compel the debtor to enter again upon the enjoyment of the property, except when there is a stipulation to the contrary. Remedies of the antichretic creditor The creditor does not acquire the ownership of the real estate for non- payment of the debt within the period agreed upon. Every stipulation to the contrary shall be void; ‘The remedies of the creditor in case of non-payment of debt within the period agreed upon (the fruits are not enough) are as follows: To abandon the security and file an action for specific performance; Petition the court for the payment of the debt or the sale of the real property ~ the rules of court on the foreclosure of mortgages shall apply. Page 4 of 4S°FloorCMFFIBuilding ReSA The Review School of Accountan (RISE G07 ZT O80 (0010) 499- 1320. resareview@hotmail com Regulatory Framework for Atty. R. Rosales » Atty. J. Domingo Business Transactions (RFBT) Atty. N. Valderrama RFBT - 09Q: CREDIT TRANSACTIONS PLEDGE 1. What is an obligation of the pledgor? A. To demand the return of the thing before full payment of the debt, including interest due thereon and expenses incurred for its preservation 8. To advise the pledgee of the flaws of the thins C. To take care of the thing with the diligence of ¢ good father of a family and be liable for the loss or deterioration of such D. Responsibility for acts of agents and employees as regards the thing 2. What is an obligation of the pledgee? ‘A, To use the thing even without authority from the owner 8. To deposit the thing with a third person absent a stipulation C. To advise pledgor of danger to the thing D. To advise pledgor of the result of the private auction 3. The pledgor may alienate the thing pledged provided ‘A. The pledgee consents to the sale B. The owner consents to the sale . The loan has been fully paid D. The price is not less than the amount of the loan 4. Acontract of pledge is not effective between the cuntracting parties until: A. The notarization of the contract B. Actual delivery of the thing pledged to the creditor of to a third person by common agreement C. Constructive delivery of the thing pledged D. The contracting parties come to an agreement 5. Acontract of pledge is not effective against third persons until the following appears in the public instrument: A. Description of the thing pledged and date of oledae B. Description of the thing pledged only C. Date of pledge only ©. Amount of loan secured 6. If the pledgor or mortgagor is not the owner of the thing pledged or mortgaged, the contract of pledge or mortgage is: A. Void valid B. Voidable D. Unenforceable 7. The contract of pledge or mortgage may secure (1) pure and (2) conditional obligations. A. Pure only 8. Conditional only C. Both of them 1. Pure and suspensive conditional obligation oniy 8. Danny pledged his diamond ring with Justin. If Danny sells the ring and Ron buys it with the consent of Justin, who shall have the right of possession over the ring? A. Justin B. Danny C. Justin . Any third person agreed by Danny and Justin 9. Anna borrowed P30,000 from Rona and pledged her necklace-to secure the debt. Without being paid, Rona returned the necklace. Anna then borroved 920,006 from Leinor and pledged the same necklace. How many contract/s of pledge are ex'sting? A. None c. fwe B. Just one D. Three : 10. Who shall be liable for the loss or deterioration of the thing pledged? A. Debtor C Creditor B. Pledgor D. Both the creditor and debtor 11. The pledgor continues to be owner of the thing pledged until: A. The thing pledged 's expropriated. B. The debtor fails to pay what is due C. The pledgee exercises his right to appropriate the thing pledged. . The thing pledged ts delivered to the pledgesReSA — The Review School of Accountancy 12. When can the debtor he retura ct ‘A, Upon payment of debt and inte ser only 8. Upon payment of debt and exprinses only, . Upon judici D. Upon payment of debt, interest and o: 13. If there are reasonable grounds to fear the destruction or impairment of the thing pledged, without the fault of the pledgee, what is remady available to the pledgor? ‘A, Demand the return of the thing pleuged even without a substitute. B. Cause the same to be sold at a public saie C. Cause the same to be sold at a private sale, 1. Demand the return of the thing pledges but there must be a substitute. 14, If the thing pledged is reiuined by the oledgee to the pledgor or owner, the pledge is extinguished. Any stipulation to the contrary sh A. Voidable C. Void B. Unenforceable ©. valia 15. How many auction/s should fall before the pledgee can appropriate the thing pledged for himself? age B. 2 ca. D5 16. If at the public auction of the thing pledged, the pledgor or owner offered the same terms as the highest bidder, who has a better sight? A. Pledgor or owner B. Highest bidder C: Any of the pledgee’s coosing D. Conduct another auction 17. IF the price of the sale of the thing pledgéc! is more then the obligation due, who is entitled to the excess? A. Debtor, unless it is otherwise agreed B. Creditor, unless it is otherwise sareed C. Creditor, notwithstanding any stipulation to the contrary . Debtor, notwithstanding any siipulation to the cantrary 18. Oliver borrowed from Ryan 10,000. This was secured by a negotiable promissory note made by Roald in favor of Oliver to the amount of PL5,00. ihe negotiable promissory note was endorsed by Oliver in Ryan's favor. If the note becomes due belare it Is redeemed and Ryan collects from Roald, how much can Ryan keep? ‘A. P8,000 B. P10,000 c. P18,000 D. None 19. If two or more things are pledged, which must be chosen to be sold, if necessary? ‘A. Whatever the pledgee chooses. B. Whatever the pledgor chooses CC. The thing with the highest value D. The thing with the lowest value 20. If the thing pledged by operation of law is not sold curing the first public auction, what must be done next? ‘A, Conduct another public aucti B. Deposit the thing to the court C. Pledge may keep the thing D. Return the thing to the oer REAL MORTGAGE 3 21. First Statement: A third person who is not a party to the principal obligation may mortgage his property to secure the obligation of the ceptor. Second Statement: The mortgage is indivisible A, Both statements are true. B. Only first statement is true. C. Only second statemunt is true. D. None of the statements is true 22, First Statement: The mortgage secures only she amount stated in the mortgage deed which may be ess than the amount of the principal obligation Second Statement: A building can be separalcly mortgaged from the land where it stands. A. Both statements are true. B. Only first statement is true. CC. Only second statement is true. D. None of the statements 1s true. 23. In order to affect third persons, a real estat: A. Where the mortgagor resicles 8. Where the mortgagee resides C. Where the subject propercy is located ©. Where both the mortgagor end morcgacee reside mortgage must be registered with the Register of Deeds: RFBT —09Q Page 2 of 4ReSA - The Review School of Accountancy 24, First Statement: The parties may stioy the real estate mortgage. Second Statement: A deed of real estate mortgaye may expressly provide that it may secure after- Incurred or future obligations. A, Both statements are true. B. Only first statement is true, C. Only second statement is true. D. None of the statements 1» true. 25. Land with a Torrens title was mortgaged as security for a bank loan. If the Torrens title is later nullified, will the mortgage be also nullified? A, No, because the mortgage i> a sevsrate document. B. YNo, as long as the bank has actea #. ood faith C. es, because the accessory document follows the principal document, D. Yes, without the title, there can't be wny mertgage. Ac that after-acquired properties are automatically included in 26. If one mortgages his property to guaranty another's debt, when can he be compelled to pay the deficiency remaining after the mortgage has been foreclosed? ‘A. When the creditor files an action against him B. When he mortgaged his property, he already guaranteed the whole debt C. When he expressly assumes perscnal liability for such debt D. No mortgagor can ever be held liable for the deficiency 27. What distinguishes pledge fron mortgage? A, Pledge is an accessory contract. B. The pledgor must be the absolute owner of the thing pledged. C. The pledgor must have free disposat. D. The thing pledged must be placed in the possession of the creditor, or of a third person by common agreement 28. If the mortgage is not recorded in the Registry of Property, itis: A Void C. Binding between the parties B. Voidable D.» Unenforceable 29, If a moitgaged property is sold to a buyer, what happens to the mortgage? A. Continues to exist B. Extinguished upon sale . Extinguished upon transfer of possession D. Binds the personal properties of the ouver 30. A stipulation forbidding the owner from afienating the immovable mortgage shall be: A B. Voidable C. Valid B. Void E. Unenforceable MORTGAGE 31. First Statement: Chattel mortgage on shares of stocks need not be registered in the stock and transfer book Second Statement: A machinery installed by the lessee on the leased premises may be subject of @ chattel mortgage. A. Both statements are true. C. Only second statement is true. 8. Only first statement is true 1D. None of the statements is true. 32. For a machinery to be considered real property, which of the following requisites must be present? First: installed by the owner ‘Second: intended by the owner of the tenement for an industry or work being carried on in a building or piece of land Third: which tend directly to meet the needs of the said industry or works A First and second only C. Second and third only 8. First and third only 0D. All of them 33. For mortgage over shipping vessels to be effective as to third persons, it must be recorded in the office/s of A, Maritime Industry Authority and Register of Deeds 8. Maritime Industry Authority only C. Register of Deeds only . Philippine Coast Guard only 34, First Statement: The chattel mortgage aver a building is considered valid as between the parties 07 the basis of estoppel but not against third persons. Second Statement: Chattel mortgage shail be deemed to cover only the property described thereie: and not like or substituted property thereafter acquired but such rule does not apply to stores open to the public. A. Both statements are true C. Only second statement is true. B. Only first statement is true. D. None of the statements is true. RFBT — 09Q Page 3 0! 4ReSA ~ The Review School of Accountancy 35, First Statement: A chattel mortgage can only cover obligations existing at the time the mortgage is. constituted. Second Statement: Since a chattel mortgage is just a security, foreclosure thereof will not prevent the mortgagee from appiying any deficiency that may result after applying the proceeds of the foreclosure sale to the obligation. A. Both staternents are (rue. C. Only second statement is true. B. Only first statement is true. D. None of the statements is true. 36. If the movable as a security for the perfermance of an obligation, is delivered to the creditor or a third Person, the contract is a: A. Chattel mortgage C. Guaranty B. Pledge D. Deposit 37. When should a chattel mortgage registered in two registries? ‘A. When the mortgagor and inortgagee stipclate such arrangement. 8B. When the property is not where ihe chattel mortgage is executed, . When the mortgagor resides in one province and the groperty is in another. D. When the mortgagee residas in one jrovince and the property is in another. 38. When may a house be subjsct of chattel mortgrge? A. If the parties agree ever. though third s.-r97s are prejudiced. B. If the house is not intended to be ce:nolished or removed. . If the parties agree and 9 third persuns are prejudiced. D. It can never be subject of a chattel -nartgage, 39. Where the proceeds irom the sale of mortgaged property (chattel mortgage) do not fully satisfy the secured debt, is the mortgagee entitled to recover the deficiency from the mortgagor? A. No, the rule on pledge applies te chattel mortgage. B. No, the chattel satisfies the obligation in ful C. No, notwithstanding any stipuiation to the contrary, D. Yes, the mortgagee is entitled to recover. 40. When a chattel mortgage: Is entered into as security for the purchase of personal property payable in installments, no deficiency judgment 29 be asked. Any agreement to the contrary shall be: AL Valid c Voidable BL Void ©. unenforceable ANSWER KEY 1B 9B 7B 8 33. 8 2-€ 40. C 18 B ¢ 34. A 3A WA is A D 35. A 4B 12.0 2. 0 ¢ 36. B SA 3.0 Ale (A a 7 C 60 IK 1a. € 22. A D 38. 2 € 15. B 23. A 39. 3 BOA 16. A mn o 40. 8 RFBT — 09a Page 40f4