LAW EACH WEEK

PLEDGE, MORTGAGE AND ANTICHRESIS

A public service of the Sen. Jovito R. Salonga Center for Law and Development
November 11, 2012

1. What is pledge?

Pledge may be defined as an accessory, real and unilateral contract by virtue of which the debtor or a third person
delivers to the creditor or to a third person movable property as security for the performance of the principal
obligation, upon the fulfillment if which the thing pledged with all its accession abd accessories, shall be returned to
the debtor or to third person.

2. Define pactum commissorium. What is the rule with regard to pactum commissorium? Is there any
exception?

It is a pact or agreement in a contract of pledge, mortgage, or antichresis by virtue of which if the debtor cannot fulfill
his obligation, the creditor can appropriate or dispose of the thing given by way of pledge, mortgage, or antichresis. It
is prohibited by law.

The only exception is in the case of contract of pledge, but even then, certain conditions should be complied with. In
pledge, if the debtor is unable to pay his obligation, the creditor has a right to have the thing pledged sold at public
auction for the payment of his credit. If the thing is not sold, a second public auction should be held. If still it is not
sold, then he may appropriate the thing.

3. What are the effects of the sale of the thing pledged?

The sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the sale are
equal to the amount of the principal obligation, interest and expenses in a proper
case. If the price of sale is more than said amount, the debto shall not be
entitled to excess, unless it is otherwise agreed. If the price of the sale is less,
neither shall the creditor be entitled to recover the deficiency, notwithstanding any stipulation to the contract.

4. What is real estate mortgage?

It is an accessory contract whereby the debtor guarantees the performance of the principal obligation whereby the
debtor guarantees the performance if the principal obligation by subjecting real property or real rights as security is
case of non-performance if such obligation within the period agreed upon.

5. Is registration in the Registry of Property necessary for the validity of a contract of rem?

It is not necessary for the validity of the contract between the parties. However, it is necessary for the purpose of
binding third persons.

6. What is antichresis?

It is contract of which the creditor acquires the right to receive the fruits of an immovable of his debtor, with the
obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit.

7. What is chattel mortgage?

By a chattel mortgage, personal property is recorded in the Chattel Mortgage Register as a security for the
performance of an obligation.
8. Is the registration of a CM in the Chattel Mortgage Register essential for the validity of the contract?

Yes, registration is essential for the validity of the contract of Chattel Mortgage. If there is no registration, the contract
is void or inexistent (Ihra Faith C Magno, Contributor).