ANTI-CHRESIS

- PACTUM COMMISSORIUM IS ALSO PROHIBITED IN ANTICHRESIS

- SECURITY CONTRACT
- DEBTOR GIVES THE CREDITOR THE RIGHT TO ACQUIRE THE FRUITS OF THE IMMOVABLE
PROPERTY IN SATISFACTION OF A DEBT.
- FORMAL REQUIREMENT : INTEREST AND PRINCIPAL CONTRACT MUST BE IN WRITING ;
OTHERWISE VOID.
- POSSESSION GENERALLY IS WITH THE CREDITOR ; BUT THERE MAY BE A STIPULATION WHEREIN
THE POSSESSION IS NOT WITH HIM
- A STATEMENT IS TRUE IF IT IS TRUE UNDER ANY OF THE CIRCUMSTANCE **NOTE FOR THE EXAM.
- WHO SHOULD HAVE POSSESSION: CREDITOR
- 10 MILLION LOAN 1% INTEREST PER QUARTER
- Fruits of the land: when sold the proceeds will be used in payment of an obligation/
- If possession is necessary: for the possession of the fruits
- SPA IRREVOCABLE IF IT IS COUPLED WITH INTEREST –A means to fulfill a contract or obligation
- Or notice that from this certain day, the creditor can collect rent
- Real estate tax only : tax on the immovable
- Not withholding tax ; creditor doesn’t want to assume that
- Can the creditor refuse to pay the charges and expenses
- He ought to give up the antichresis
- Pactum commissorium
- Benefit : not just the fruits + judicial foreclosure
- What the law prohibits is just pactum commissorium

L----------- B 10 m

2------------12M

-------Guaranty

-----------antichresis

Can there be a 3rd party contract –still valid

Let’s say 10 m and minimal fruits

Default : Creditor goes after the anti-chresis ; if there’s a deficiency ,separate aciom

DEFAULT RULE: Foreclose by judicial foreclosure ; motion for deficiency judgment executed in some
other property ; notarial sale of the pledged property ::

MAXIMUM RECOVERY

(1) PLEDGE- 2 DAYS : WE’RE DONE, NOTICE TODAY, FORECLOSURE TOMORROW

(2) REAL ESTATE MORTGAGE-JUDICIAL FORECLOSURE

* SURETY IS ALSO A POSSIBILITY AS LONG AS THERE IS NO LEGAL HURDLES

MAXIMUM AND QUICKEST : best bet surety: as long as no hurdles

If quick and certain : pledge

Mortgage: takes awhile because there is litigation + additional costs

Pledge is okay but there’s a risk of deficiency

WHAT IS A CHATTEL MORTGAGE:

- Personal property is recorded in the chattel mortgage register as a security for the performance
of an obligation

ART 2141 : The provisions of this code on pledge insofar as they are not in conflict with the Chattel
Mortgage law shall be applicable to chattel mortgage

CHATTEL MORTGAGE LAW

CHATTEL MORTGAGE PLEDGE

Delivery necessary Delivery is necessary
Sec. 14. Sale of property at public auction; Article 2112. The creditor to whom the credit has
Officer's return; Fees; Disposition of proceeds. — not been satisfied in due time, may proceed
The mortgagee, his executor, administrator, or before a Notary Public to the sale of the thing
assign, may, after thirty days from the time of pledged. This sale shall be made at a public
condition broken, cause the mortgaged property, auction, and with notification to the debtor and
or any part thereof, to be sold at public auction the owner of the thing pledged in a proper case,
by a public officer at a public place in the stating the amount for which the public sale is to
municipality where the mortgagor resides, or be held. If at the first auction the thing is not sold,
where the property is situated, provided at least a second one with the same formalities shall be
ten days' notice of the time, place, and purpose held; and if at the second auction there is no sale
of such sale has been posted at two or more either, the creditor may appropriate the thing
public places in such municipality, and the pledged. In this case he shall be obliged to give an
mortgagee, his executor, administrator, or assign, acquittance for his entire claim. (1872a)
shall notify the mortgagor or person holding
under him and the persons holding subsequent
mortgages of the time and place of sale, either by
notice in writing directed to him or left at his
abode, if within the municipality, or sent by mail
if he does not reside in such municipality, at least
ten days previous to the sale.
Movable property
If you’re the creditor, what do you prefer?

- Pledge : you want possession because : it’s easier to foreclose

WHEN WOULD YOU PREFER CHATTEL MORTAGE

- IF THOSE ARE NECESSARY FOR THE BUSINESS OFF DEBTOR SO HE CAN PAY
- YOU CANNOT TAKE THE NECESSARY IMPLEMENTS
 - Farm
- It covers the crops : (415) attached to the property
- Including the improvements, the accessions and accessories therein
- EQUIPMENTS NECESSARY FOR BUSINESS

Law itself provides a form

- Non-compliance : form : assuming there are all other requisites : mortgage binding on parties
- NON-COMPLIANCE affects its binding effect to 3 rd persons
- In writing
- Affidavit of good faith –; even If registered shall not bind 3 rd parties

L----------- B 10M

-------P + I

----------- 15m CM

Chattel mortgage registered but no affidavit of GF: will this bind 3ps? NO

X cannot challenge because L is going after B not as mortgagee, but he’s only using the CM that B owes L
the principal + interest

Chattel mortgage : contract between mortgagor and mortgagee

Let’s assume P+ I = P15M

At time of default, propert is only worth 12 M

Can the lender collect the deficiency? BY WHAT AUTHORITY?

 Public auction –foreclosure. Posting and personal notice. Sheriff or notary public authorized to
conduct the auction
 DEFICIENCY : general rule on mortgage where u can recover deficiency unless there is a law
prohibiting it

RECTO LAW

- Sale of an movable property on installments

- Article 1484
- Article 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:
- (1) Exact fulfillment of the obligation, should the vendee fail to pay;
- (2) Cancel the sale, should the vendee's failure to pay cover two or more installments
- (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the
vendee's failure to pay cover two or more installments. In this case, he shall have no further
action against the purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void. (1454-A-a)
LAW CONTEMPLATES VENDOR SELLING PROPERTY ON INSTALLMENT, BANK NOT COVERED, BECAUSE
THAT IS A LOAN

1. Specific Performance: Exact fulfillment should the buyer fail to pay

General Rule: If availed of, the unpaid seller cannot anymore choose other remedies;

Exception: if after choosing, it has become impossible, rescission may be pursued

2. Rescission: Cancel the sale if buyer fails to pay 2 or more installments Deemed chosen when:

a. Notice of rescission is sent

b. Takes possession of subject matter of sale

c. Files action for rescission

3. Foreclosure: Foreclose on chattel mortgage if buyer fails to pay 2 or more installments

General Rule: Actual foreclosure is necessary to bar recovery of balance - Extent of barring effect:
purchase price

Exception: Mortgagor refuses to deliver property to effect foreclosure; expenses incurred in attorneys
fees, etc

MACEDA LAW

- REAL PROPERTY

Affidavit of good faith

- We severally swear that the foregoing mortgage is made for the purpose of securing the
obligation specified in the conditions thereof and for no other purpose and the same is a just
and valid obligation and one not entered for the purpose of fraud
- Signed by both parties

2 locations of cars: register to both locations of cars + the place of residence of the debtor

Why is residence of mortgagor material? –because you are encumbering property

REGISTER IN THE CHATTEL MORTGAGE REGISTER

LAND TRANSPORTATION OFFICE –IF MOTOR VEHICLE C

REGISTRATION DOES NOT CURE THE DEFECT

OBJECT OF THE CHATTEL MORTGAGE : MOVABLE

DESCRIBE:SPECIFIC DESCRIPTION : LICENSE PLATE

- NUMBER THE ASSETS

 CAN CHATTEL MORTGAGE COVER FUTURE PROPERTIES?

- GR: NO
- Exception : department store inventory ; impede trade ; impossible to use chattel mortgage

Personal notice required

REAL ESTATE MOTRGAGE :

- Publication
- Posting on public places lang
- 10 days prior to selling
- 30 days from default : MINIMUM
- NO MAX
- If you have a situation : seller sells prop to buyer, buyer mortgages, for balance
- In case of non-payment : resolution (x) –instead seller must go to foreclosure

MULTIPLE SECURITIES

SURETY

PLEDGE

CM

REM

 EXCEPTION : CASES WHERE COURT INVALIDATES SURETY OR GUARANTY : EXCESSIVE

PLEDGE – MAX RECOVERY LEAST TIME

SURETY – PROVIDED NO LEGAL HURDLES

SELLER SOLD PERSONAL PROPERTY TO BUYER FOR 2M PAYABLE IN INSTALLMENTS

40 EQUAL MONTHLY INSTALLMENTS : COVERED BY 1484

REMEDIES:

SPECIFIC PERF, FORECLOSURE, RESOLUTION

LET’S SAY THERE IS CHATTEL MORTGAGE ON THE PERSONAL PROPERTY

 REM OF A CONDO UNIT AMOUNTING TO 2M ; ANOTHER ONE : A PLEDGE 3M (OVER

COLLATERALIZED OBLIGATION)
 CAN THERE BE RESOLUTION? BA
 DIBA YOU MAY TREAT REM AS PP.
 It is undeniable that the parties to a contract may by agreement, treat as personal property that
which by nature would be real property" VICE VERSA
 DI KO GETS TANONG MO, CAN YOU TREAT PERSONAL PROPERTY AS REAL? YES DAW.
 CAN YOU TREAT REAL AS PERSONAL? PWEDE DIN
 by way of chattel mortgage defendants-appellants could only have meant to convey the
house as chattel, or at least, intended to treat the same as such, so that they should not now
be allowed to make an inconsistent stand by claiming otherwise
 NO RECOVERY OF DEFICIENCY IN PLEDGE ; MUTUALLY EXCLUSIVE THERE IS
ALREADY EXTINCTION OF PRINCIPAL OBLIGATION