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CHATTEL MORTGAGE

REAL ESTATE MORTGAGE


PLEDGE

PLEDGE
They are constituted to
REQUISITES
secure fulfillment of the
principal obligation.
The pledgor or mortgagor is
the absolute owner of the
thing pledge or mortgage.

The person constituting the


pledge or mortgage have
free disposal of the their
property and in the absence
thereof, that may be legally
authorized for the purpose
(Art. 2085); and
The when the principal
obligation becomes due, the
things in which the pledge
or mortgage consists may
be alienated for the
payment of the creditor.
(Art. 2087)
The thing pledged must be
placed in the possession of
the creditor, or of a third
person by common
agreement (Art. 2093)

ESSENTIAL

MORTGAGE
They are constituted to
secure fulfillment of the
principal obligation.
The pledgor or mortgagor
is the absolute owner of
the thing pledge or
mortgage.

The person constituting


the pledge or mortgage
have free disposal of the
their property and in the
absence thereof, that may
be legally authorized for
the purpose (Art. 2085);
and
The when the principal
obligation becomes due,
the things in which the
pledge or mortgage
consists may be alienated

NOTES

a. Third persons who are not parties to the principal obligation


may secure the latter by pledging or mortgaging their own
property (Art. 2085).

b. Any kind of obligation whether pure or conditional, including


natural, voidable and unenforceable obligations may be
secured by a contract of pledge and mortgage. (Art. 2091,
2052).

PACTUM COMMISSORIUM
It is a stipulation authorizing the creditor to appropriate the
things given by way of pledge and mortgage or to
dispose of
them. It is declared null and void by law. (Art 2088).

DIFFERENCES
MORTGAGE

Mortgage is constituted
on immovables (Art
2124);

In mortgage, delivery is
not necessary

Mortgage is not valid


against third persons if
not registered even if
embodied in a public
instrument. (Art 2125).

PLEDGE

Pledge is constituted on
movables (Art 2094);

In pledge, the property is


delivered to the pledgee, or
by common consent to third
person (Art 2093);

Pledge is not valid against


third persons unless a
description of the thing
pledged and the date of the
pledge appear on a public
instrument (Art 2096)

Note:

Both are extinguished by the fulfillment of the


principal obligation and by the destruction of the
property pledged or mortgaged.

Rules on the indivisibility of


Pledge and Mortgage
A pledge or mortgage is indivisible, even though the debt may be
divided among the successors in interest of the debtor or of the
creditor;
Therefore, the debtors heirs who has paid of the debt cannot ask
for the proportionate extinguishments of the pledge or mortgage
as long as the debt is not completely satisfied;
Neither can the creditors heirs who received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of the
other heirs who have not been paid;
The above rules, however, do not apply where there being in
several things given in mortgage or pledge, each of them
guarantees only a determinate portion of the credit. In this case,
the debtor shall have a right to the extinguishments of the pledge
or mortgage as the portion of the debt for each thing is especially
answerable is satisfied.

CHATTEL MORTGAGE
Chattel Mortgage Law (Act No. 1508)
Civil Code Arts 2140 and 2141

Define CHATTEL MORTGAGE

Chattel Mortgage is a contract by virtue of which


personal property is recorded in the Chattel Mortgage
Register as a security for the performance of an
obligation (Art 2140).

A chattel mortgage is a conditionalsaleof personal


property assecurityfor thepaymentof adebt, or the
performance of some other obligation specified
therein, the condition being that the sale shall be void
upon the seller paying to the purchaser a sum of
money or doing some other act named. If the
condition is performed according to its terms the
mortgage and sale immediately become void, and the
mortgagee is thereby divested of his title (SEC. 3 ACT
1508)

PARTS OF A CHATTEL
MORTGAGE

Venue and Title

Personal Circumstances of the Parties

Conveyance of Mortgage and Technical Description of


Property

Copy of the Promissory Note

Discharge of Mortgage

Acknowledgment

Affidavit of Good Faith

Note:

The absence of the affidavit vitiates a mortgage


only as against third persons without notice, like
creditors and subsequent encumbrances.

REAL ESTATE
MORTGAGE

DEFINITION

REM is a contract whereby the debtor secures


to the creditor the fulfillment of the principal
obligation, especially subjecting to such
security the immovable property or real rights
over immovable property in case the principal
obligation is not complied with at the time
stipulated.

places of similar nature, in case


their owner has placed them or
preserves them with the
WHAT CONSTITUTES IMMOVABLES
(ART 415 CC)
intention to have them
permanently attached to the
Land, buildings, roads and
construction of all kinds adhered to
land, and forming a permanent
the soil.
part of it; the animals in these
places are included.
Trees, plants and growing fruits, while
they are attached to the land or form
an integral part of an immovable.

Everything attached to an immovable


in fixed manner, in such a way that it
cannot be separated there from
without breaking the material or
deterioration of the object.

Statues, reliefs, painting or other


objects for use or ornamentation,
placed in buildings or on lands by the
owner of the immovable in such a
manner that it reveals the intention
to attach them permanently to the
tenements.

Machinery, receptacles, instruments


or implements intended by the owner
of the tenement for an industry or
works which may be carried on in a
building or on a piece of land, and

Fertilizer actually used on a


piece of land.

Mines, quarries, slag dumps,


while the manner thereof forms
part of the bed, and waters
either running or stagnant.

Docks and structures which,


though floating, are intended by
their nature and object to remain
at a fixed place on a river, lake
or coast.

Contracts for public works, and


servitudes and other real rights
over immovable property.

note;:

Extra-judicial proceeding- redemption is


within 1year (act 3135 as amended by Act
4118)

Judicial proceeding equity of redemption is


within 90-120 days from entry of judgment
(Sec. 2, R68, RROC)

PARTS OF A DEED OF REM


Venue and Title
Mortgagor
Amount of Loan
Mortgagee
Conveyance of Real Property and Technical Description
Ownership of Real Property
Discharge of Mortgage
Acknowledgment

PLEDGE

DIFFERENCES

The delivery of the personal


CHATTEL
MORTGAGE
property to the mortgagee is not
necessary

The registration of the same in


the Chattel Mortgage Register is
necessary for its validity
the procedure for the sale is
found in Section 14 of Act No.
1508, as amended
The excess over the amount due
after foreclosure goes to the
debtor (Art No. 1508, Section 14)
The creditor is entitled to recover
any deficiency except if the
chattel mortgage is a security for
the purchase of personal
property in installments,

PLEDGE

Delivery is necessary

Registration in the Registry of


Property is not necessary.

Procedure for the sale is found in


Article 2112 of the Civil Code.

If the property is sold, the debtor is


not entitled to the excess unless it is
otherwise agreed (Art 2115) or
except in the case of a legal pledge
(Art 2121)

The creditor is not entitled to recover


deficiency regardless of a stipulation
to the contrary (Art 2115).

DEFINITION OF PLEDGE
It is a contract by virtue of which the debtor
delivers to the creditor or to the third person a
movable or instrument evidencing incorporeal
rights for the purpose of securing the
fulfillment of a principal obligation and when
fulfilled the thing delivered shall be returned
with all the fruits and accessions.

Additional requirements in order that pledge


shall take effect against third parties:

The description of the thing pledge; and

The date of pledge (Art 2076)