Pledge ChattelMortgage RealEstateMortgage Antichrecis

Requisites 1. constituted to secure the fulfillment of a principal obligation all kinds of

obligations (pure or subject to suspensive or resolutory condition or even
voidable, unenforceable or natural obligations)
2. that the pledger or mortgagor be the absolute owner of the thing pledged or
mortgage
3. 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
All-Accessory ✔ ✔ ✔ ✔ Contracts of Real
contracts only security debtor has
property to support his
obligation vs. Contract
of personal security
guaranty or surety
Individual 1. constituted to secure 1. constituted to secure the 1. constituted to secure the 1. constituted to secure
requisites the fulfillment of a fulfillment of a principal fulfillment of a principal the fulfillment of a
principal obligation obligation obligation principal obligation
2. pledger be the 2. mortgagor be the 2. mortgagor be the absolute 2. debtor be the absolute
absolute owner of absolute owner of the thing owner of the thing mortgaged owner of the immovable
the thing pledged mortgaged 3. person constituting the property
3. person constituting 3. person constituting the mortgaged has the free 3. debtor has the free
the pledge has the mortgaged has the free disposal of his property and disposal of his property
free disposal of his disposal of his property and in the absence thereof, that and in the absence
property and in the in the absence thereof, that he be legally authorized for thereof, that he be
absence thereof, that he be legally authorized for the purpose legally authorized for the
he be legally the purpose 4. the document in which the purpose
authorized for the 4. the document in which mortgage appears be 4. the amount of the
purpose the mortgage appears be recorded in the Registry of principal and the interest
4. thing pledged be recorded in the Chattel Property must be in writing,
placed in the Mortgage Register otherwise, it is void.
 possession of the
creditor or of a third
person by common
5. agreement actual
or physical delivery is
needed
Kinds 1. Conventional or
voluntary constituted
by the mutual consent of
the pledgor and the
pledgee
2. Legal created by
operation of law
Object used Personal Property
Incorporeal rights
Form 1. between the parties
2. as regards third
persons public
instrument
Personal Property
1. between the parties
2. as regards third persons
Chattel Mortgage
Register
1. Conventional or voluntary
created by the agreement
of parties
2. Legal Mortgage
provision of law
3. Equitable Mortgage
although it lacks certain
formality, form or words or
other requisites prescribed by
statute, shows the intention of
the parties to charge a real
property as a security for a
debt and contains nothing
contrary to law
Real Property Fruits of Real Property
(ex. harvest of a farm)
Alienable real rights
1.between the parties
2. as regards third person
must be recorded in Registry
of property
Extent Shall cover: Shall cover:

1. the thing pledged 1. the property mortgaged

2. the fruits, income, 2. natural accessions

dividends or interests
earned or produced by 3. improvements
the thing pledged unless
stipulated 4. growing fruits

3. the offspring when the 5. rents and income not yet

thing pledged is an received when the obligation
animal, unless there is a becomes due
stipulation excluding
them 6. indemnity granted or owing
to the proprietor from the
insurers of the property
mortgaged or in virtue of
expropriations for public use
Rights
Requirement as a Void without delivery No delivery needed only No delivery needed, only Void if not in writing
contract registration Chattel registration. Also, registration
To be valid vs. 3rd Mortgage (Register office) of deeds or property
person it must be with formal registration needed otherwise
1
description and public otherwise 1valid (debtor & valid (debtor & creditor) or
2
instrument creditor) or 2void (vs. 3rd void (vs. 3rd person)
person)
Can the credit X X X X Pacto Comissorio
own or Void even if stipulated.
appropriate for
himself the
property if debtor
cannot pay?
Remedy of Creditor will need the Creditor will need the help Creditor Not Applicable
creditors? help of Notary Public as of sheriff to foreclose the -judicial (no right of
-can alienate by he will administer the chattel mortgage in public redemption) court
selling the public auction. auction sale
property in public -extra judicial (1 year right of
auction to recover The debtor should be redemption) sheriff only to
the debt notify. foreclose the real estate
mortgage in a public auction
sale
Public auction -deficient = NO -deficient = YES unless -deficient = YES Not applicable
proceeds (absolute) Recto Law applies
-excess =NO
-deficient (can -excess = YES (not -excess = NO
creditor recover?) absolute unless
stipulated)
-excess (can
creditor get all?)
Can the debtor Yes, but he cannot No, without creditor’s Yes, because it is not easy to Not applicable
sell the property deliver it without consent, otherwise Estafa hide house and lot.
even before the creditors consent (imprisonment)
obligation is paid? (Creditor can keep But whoever is the buyer
possession until property must honor the real estate
is sold) mortgaged if registered or
recorded.
-Animal? YES Conventional mortgage = by
-offspring? YES unless agreement of parties
stipulated
Equitable mortgage
-intangible property -sale in form
 (share of stock)? YES, -but real estate mortgage in
but you must deliver substance
document
-dividends? go to the Indicators:
pledgee (creditor) [STUPED]
apply it to the obligation -when the vendor is still in
+ interest accrued possession of property sold

Can the pledgee -vendor still pays the tax on

(creditor) use the the property sold
property pledged?
No, unless stipulated -vendee keeps substantial
portion of the purchase price

-when the price is unusually

low

-pacto de retro sale, after

period to redeem is expired
extension was granted

-real purpose of contract is a

security to an obligation

-if in doubt real estate

mortgage

PLEDGE

Kinds of Pledge
I. Conventional or Voluntary Pledge - constituted by the mutual consent of the pledgor and the pledgee
 i. Rights of the debtor/pledgor
1. to alienate, with the consent of the pledgee, the thing pledged ownership is transmitted to the vendee or transferee as
soon as the pledgee consents to the alienation, but the pledgee shall continue in possession
2. to ask that the thing pledged by judicially or extra-judicially deposited If it is used without authority or for a purpose other
than for its preservation
3. to continue to be the owner of the thing pledged unless it is expropriated
4. to ask for the return of the thing pledged after he has paid the debt and its interests with expenses in a proper case
5. to require that the thing pledged be deposited with a third person if it is in danger of being lost or impaired through the
negligence or willful act of the pledgee
6. to demand the return of the thing pledged, upon offering another thing in pledge, provided that the latter is of the same kind
and quality, if there are reasonable grounds to fear the destruction or impairment of the thing pledged without the fault of the
pledgee
ii. Obligations of the debtor/pledger
1. to pay the debt and its interest
2. to pay damages that the pledgee may suffer by reason of the flaws of the thing pledged, if he was aware of such flaws but
did not advise the pledgee of the same
iii. Rights of the creditor/pledgee
1. to retain in his possession the thing pledged until the debt is paid
2. to demand reimbursement of the expenses made for the preservation of the thing pledged
3. to bring actions which pertain to the owner of the thing pledged in order to recover it from, or defend it against, third persons
4. to use the thing pledged if he is authorized to do so, or when its use is necessary for the preservation of the thing
5. if he is deceived or the substance of the thing pledged, he may either claim the another thing be given to him in place of the
thing pledged or demand immediate payment of the principal obligation
6. to cause the sale of the thing pledged at a public sale, if there is a danger of destruction, impairment or diminution in value
of the thing pledged without its fault
7. to collect and receive the amount due if the thing pledged is a credit which becomes due before it is redeemed and to apply
the same to the payment of his claim
8. to sell the thing pledged upon default of the debtor
iv. Obligations of the creditor/pledgee
1. to take care of the thing pledged with the diligence of a good father of a family
2. to be liable for the loss or deterioration of the thing pledged unless it is due to fortuitous event
 3. not to deposit the thing pledged with a third person unless authorized
4. to be responsible for the acts of his agents or employees with respect to thing pledged
5. not to use the thing pledged except when he is authorized by the owner or the use of the thing is necessary for its
preservation
6. to deliver to the debtor the surplus after paying his claim from what he has collected on a credit that was pledged and which
has become due before it is redeemed
v. Rights of a third person who pledges his own movable property to secure the debt of another
1. to be indemnified by the debtor if he pays the creditor amount of debt, legal interests, expenses and damages
2. to be subrogated to all the rights of the creditor against the debtor if he pays the creditor
3. to be released from liability
a. if the creditor voluntarily accepts immovable or other property in payment of the debt even if the creditor thereafter
loses the same by eviction
b. if an extension of time is granted to the debtor by the creditor without pledgor’s consent
c. if through some act of the creditor the pledger cannot be subrogated to the rights, mortgages and preferences of
the creditor
vi. Extinguishment of pledge
1. Indirect Cause when the principal obligation secured by the pledge is extinguished, the pledge is also extinguished
2. Direct Cause
a. return by the pledgee of the thing pledged to the pledger or owner
i. any stipulation that the pledge is not extinguishes by the return of the thing = VOID
ii. prima facie presumption
1. if the thing pledged is found in the possession of the pledger or owner
2. if the thing pledged is in the possession of a third person who has received it from the pledger or
owner
b. renunciation or abandonment in writing by the pledgee of the pledge
i. acceptance by the pledger of the renunciation is not necessary
ii. pledgee becomes a depositary upon renunciation if in the meantime the thing pledged is not yet returned to
the owner
c. sale of the thing pledged
i. formalities of the sale
1. by public auction
 2. through a notary public
3. with notice to the debtor and the owner of the thing pledged, stating the amount for which the
public sale is to be held
ii. who may bid at the public auction
1. pledger or owner (preferred if offer is same with the highest bidder)
2. pledgee not valid if he is the only bidder
3. third persons
iii. required amount of bids pay the purchase price
iv. effects of sale principal obligation is extinguished whether or not the proceeds of the sale are equal to the
amount of obligation
1. price > obligation debtor shall not entitled to excess, unless there is an agreement
2. price < obligation creditor cannot recover the deficiency even if stipulated
v. rule when two or more things are pledged
d. appropriation of the pledged pledgee may choose which he will cause to be sold unless there is a contrary
stipulation
II. Legal Pledge – created by the operation of law
i. Examples
1. possessory lien by a possessor in good fait
2. possessory lien of worker
3. depositary’s right of retention
ii. Rules provisions on conventional pledge on the possession, care and sale of the thing as well as on the termination of pledge
except with respect to the sale of the thing:
1. the thing may be sold only after demand of the amount for which the thing is retained
2. the public auction shall take place within one month after such demand
3. if without just grounds, the creditor does not cause the public sale to be held within such period, the debtor may
require the return of the thing
4. after the payment of debt and expenses, the remainder of the price of sale shall be delivered to the obligor

CHATTELMORTGAGE

I. Foreclosure
 A. Grounds for foreclosure
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
B. Kinds of foreclosure
1. Judicial – made by instituting a court action following the provisions of the Chattel Mortgage Law
2. Extra-judicial – follows the provision of the Chattel Mortgage Law; instituting a court action is necessary only to secure
possession of the thing if the debtor refuses to deliver the thing
C. Distribution of proceeds of foreclosure sale
1. costs of sale
2. claims of the person foreclosing the mortgage
3. claims of persons holding subsequent mortgages in order
4. balance, if any, shall be paid to the mortgagor
D. Effect of sale when there are two or more mortgages
1. senior mortgagees – no effect from junior mortgagees foreclosure and sale
2. junior mortgagees – extinguished from the foreclosure and sale of senior mortgagee
E. Deficiency judgment the creditor may institute a court action to recover the deficiency except in the case of foreclosure of a
chattel mortgage constituted on personal property which is sold at a price payable in installments

REALMORTGAGE
I. Characteristics
1. Accessory – cannot exists without a principal obligation
2. Indivisible – creates a lien on the whole property mortgaged
3. Inseparable – subjects the property upon which it is imposed whoever the possessor may be, to the fulfillment of the obligation for
whose security it was constituted
4. Real right – creates a lien on the property mortgaged whereby the mortgagee has a right to have the mortgaged property sold to
satisfy his claim
5. Real property – real right over immovable property
II. Stipulation
1. Alienation VOID = prohibits the owner
2. Second mortgage mortgagor may execute a second mortgage thereon, even without the consent of the mortgagee
III. Foreclosure remedy available to the mortgagee by which he subjects the property mortgaged to the satisfaction of the obligation secured
1. Grounds
a. when the principal obligation is not paid when due
b. when there is any violation of any condition, stipulation or warranty by the mortgagor
2. Kinds
a. Judicial filing a petition in court
i. if the defendant fails to pay the amount due within the time directed by the court property = sold
ii. distribution of proceeds of sale
1. costs of sale
2. claim of the person foreclosing the mortgage
3. claims of junior encumbrancers in the order of their priority
4. balance mortgagor or his agent
iii. deficiency judgment the court upon motion shall render judgment against debtor for such balance
b. Extra-judicial compliance with the provisions of Act No. 3135
where there is a stipulation in the mortgage contract that the mortgage may be foreclosed extra-
judicially
where such extra-judicial foreclosure sale is made under a special power of attorney inserted in the
contract
i. distribution of proceeds same with judicial foreclosure
ii. recovery of deficiency the creditor may recover the same from the principal debtor by filing a court action
iii. effect of sale when there are two or more mortgages
a. senior mortgagees – no effect on the sale of junior mortgagee
b. junior mortgagees – extinguished upon the foreclosure and sale of senior mortgagee
iv. redemption
a. equity of redemption right of mortgagor to redeem the mortgaged property after his default in the
performance of his obligation but before the property is sold
i. judicial = given not less than 90 days to pay the mortgage debt before the property is sold
ii. extra-judicial = may avail after his default but before the sale of the property
b. right of redemption right of mortgagor to repurchase the property within a certain period after it was sold
for the payment of the mortgage debt
i. judicial = may redeem after the sale and before the confirmation by the court of the sale
ii. extra-judicial = has one year from the date of registration of the sale to redeem the property
REAL MORTGAGE SALE WITH RIGHT TO REPURCHASE
1. constituted as security for a principal obligation 1. not a security for an obligation
2. there is no transfer of ownership 2. ownership of the property is transferred upon delivery
3. generally no transfer of possession 3. the property is generally transferred to the buyer a retro
4. indivisible 4. redemption of the property may be partial
5. applies only to real property 5. applies to both real and personal property

ANTICHRESIS
I. Characteristics
1. Accessory – dependent upon another for its existence
2. Formal – must be in writing (if not=VOID)
3. Nominate – special name under the law
4. Real right – creates a lien on immovable property
5. Indivisible – subsists as long as the principal obligation remains unpaid
II. Measure of application of fruits actual market value
III. Obligation of the creditor
1. to pay taxes and charges upon the immovable, unless there is a stipulation to the contrary
2. to bear expenses necessary for its preservation and repair
IV. Application of the fruits of the immovable
1. taxes and charges upon the immovable
2. expenses for preservation and repair
3. interest on the principal obligation
4. principal obligation
V. When debtor can reacquire enjoyment of property
1. upon full payment of his obligation to the creditor
2. when he is compelled by the creditor to enter into the enjoyment of the property, unless there is stipulation to the contrary
VI. Effect of non-payment of the debt within the period agreed upon
Remedies:
1. to petition the court for the payment of the debt
2. to sell the immovable