Credit Transactions Second Semester, AY 2007-2008 Lecture I: Common Provisions, Pledge, and Mortgage Prof. Gwen G.
de Vera University of the Philippines Provisions Common to Pledge and Mortgage (Common Provisions), Articles 2085- 2092 Is a promise to constitute a pledge or mortgage valid? Yes. A promise to constitute a pledge or mortgage is valid; however, it gives rise only to a personal action between the contracting parties. (Art. 2092) What requisites are essential to constitute a valid pledge and mortgage? (a) That they be constituted to secure the fulfillment of a principal obligation; (b) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged; (c) That the persons constituting the pledge or mortgage have free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. (Art. 2085) ⇒ What kinds of obligations may be secured by a pledge and mortgage? ⇒ Generally, all kinds of obligations, be they pure or subject to a suspensive or resolutory condition, may be secured, subject to the rules below, as well as to principles peculiar to real estate mortgage and chattel mortgage. ⇒ Consistent with Art. 2085, Art. 2052 applies to contracts of pledge and mortgage, stating that these cannot exist without a valid obligation. ⇒ Nevertheless, voidable, unenforceable and natural obligations may likewise be secured. Which of the following is the appropriate remedy under a contract of pledge or mortgage? (a) disposition by the creditor of the thing given in pledge or mortgage (b) alienation of the thing for payment to the creditor (c) appropriation by the creditor of the thing (See Articles 2087 and 2088) May the pledgor or mortgagor obtain a release of the thing/s given by way of pledge or mortgage, to the extent that the principal obligation has been partially fulfilled? ⇒ As a general rule, this is not possible; a pledge or mortgage being indivisible.(Art. 2089) Is partial release possible, where there are several debtors who are not solidarily bound? ⇒ No. This is not possible. The indivisibility of a pledge or mortgage is not affected by the fact that the debtors are not solidarily liable (Art. 2090)
PLEDGE, Articles 2093- 2123 What is a pledge? ⇒ A pledge is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable, or document evidencing incorporeal rights, for the purpose of securing the fulfillment of a principal obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and accessions. It may be voluntary or conventional, and legal (or one created by law). Which of the following, in addition to the essential requisites under Art. 2085, is/are required to constitute a contract of pledge? (a) amount of the principal and of the interest shall be specified in writing; otherwise, the contract of pledge shall be void (b) description of the thing pledged and the date of the pledge must appear in a public instrument (c) the subject of the pledge must be recorded in the appropriate registry of property
⇒ Note that pledgor has same responsibility as bailor in case under Art. PNB) What is the scope of a contract of pledge (subject of contract of pledge)? ⇒ Pledge may be constituted over movable property: (a) within the commerce of man and (b) susceptible of possession. that the creditor may bring actions pertaining to the owner of the thing pledged under Art. unless and until he has paid the debt and its interest. These are governed by provisions on pledge. as to possession. (Art. 1731). the creditor may bring actions which pertain to the owner of the thing pledged in order to recover it from. 2094. if there is no stipulation to the contrary. 2105) ⇒ Although. and (c)in a deposit. in what instances? ⇒ Yes. 2121) How is it different from a voluntary or contractual pledge? (a) Remainder of purchase price may be delivered to the obligor-pledgor. 2122) What principal right/s is/are granted to the creditor in a contract of pledge? ⇒ The contract of pledge gives a right to the creditor to retain the thing in his possession or in that of a third person to whom it has been delivered. (b) When demand for return of thing may also be made (Art. (b) under lease (contract for piece of work). Examples are: (a) a possessor in good faith awaiting reimbursement (Art. CA) ⇒ (Take note. sale and termination. or interests. care. then. particularly upon creditors. further. without which the pledge cannot bind third parties. 2095) What is a rationale for requiring that a description of the property and date of the pledge be in a public instrument? ⇒ The rule is a substantive one. Future property may not be the subject of pledge. 1951. first as to interest. (Arts. When. when there are reasonable grounds to fear the destruction or impairment of the thing pledged.) May a pledge be created by operation of law? If so. may the pledgor resort to return of the thing or other remedies? RETURN and OFFER ANOTHER THING SAME KIND ⇒ without prejudice to Art.(d) there must be a written instrument of pledge (e) the thing pledged must be placed in the possession of the creditor or a third person Is it correct to say that only actual delivery is sufficient to constitute a pledge? ⇒ No. 546). 2103). their offspring shall pertain to the pledgor or owner of the animals pledged. 2108. dividends. 1994).) ⇒ In case of pledge of animals. one who has executed a work upon a movable has a right to retain it by way of pledge until he is paid (Art. (see Yuliongsui v. 2098) ⇒ Corollarily. (There may be stipulation to the contrary. Pledge may extend to the fruits. containing description of the thing and the date of the pledge. there is no transfer of ownership (Art. by a debtor who may attempt to conceal his property or remove them from his estate by simulating a pledge. A pledge may be created by operation of law. where depositary may retain the thing in pledge until the full payment of what may be due him by reason of the pledge (Art. 2103 (a real right enforceable against third persons) only if the pledge is embodied in a public instrument. It may also cover incorporeal rights. 2107)
. until the debt is paid. without fault of pledgee (Art. or defend it against a third person. Whether actual or constructive delivery is required depends on the peculiar nature of the things given in pledge. One aim to is prevent fraud. (Art. income. with expenses in the proper case (Art. and/or application to principal. subject to compensation. but shall be subject to the pledge. (Review Caltex v. the debtor is obliged not to ask for the return of the thing pledged against the will of the creditor.
what standard of care must be observed?
⇒ Diligence of a good father of a family. The sale must be at a public auction. but his offer shall not be valid if he is the only bidder (e) All bids shall offer to pay purchase price (cash) at once. 2104)
is the remedy of the owner/pledgor in case of unauthorized use or misuse by the creditor?
⇒ Owner/pledgor may cause for the thing to be under judicial or extrajudicial deposit. with the pledgee’s consent. pledgee being deemed to have received the purchase price. (b) Pledgor may bid (c) Owner may bid (d) Pledgee may bid. (Art. or diminution in value of thing pledged.)
What is the principal remedy of the creditor.
Conduct of the Sale
(a) If two or more things are pledged. 2108)
May the pledgee appropriate the proceeds (or resort to compensation) in satisfaction of the debt?
⇒ No. that the owner of the thing cannot alienate the same? ⇒ No. 2106) PUBLIC AUCTION . A non-conforming bid may be accepted. (f) Pledgee may appropriate thing if after first and second auctions. Only as much of the things as are necessary for payment of debt may be sold. impairment. through no fault of the pledgee. there is danger or destruction.add to pledgor ⇒ when. or (b) when necessary for the preservation of the thing. (Art. The thing may be alienated by the owner. (Note what may happen if there is no public instrument with description and date of pledge. There must be due notice to the pledgor and owner. the thing is not sold. The exceptions are: (a) when authorized. whose credit has not been satisfied in due time?
⇒ Cause the sale of the thing in public auction. The proceeds are held by the pledgee as security in place of the thing sold. (Art.DEPOSIT WITH THIRD PERSON ⇒ when through negligence or willful act of pledgee. It is consent of pledgee which operates as transfer. the thing is in danger of being lost or impaired (Art. notwithstanding transfer of possession only and retention by
owner/pledgor of ownership.
Is it correct to conclude that. stating the amount due. he may not use the thing. 2099)
creditor use the thing?
⇒ As a general rule. pledgee may choose which he will cause to be sold. impairment. ⇒ The formalities/requisites for such a sale are: (a) (b) (c) (d) The debt is due and unpaid. This is incorrect. Pledgee retains ownership.
What then is the remedy of the pledgee in case there is danger of destruction. or
diminution of value? ⇒ The pledgee may cause the thing to be sold in a public auction. he may cause
the thing is in possession of the creditor. The purchaser then takes the thing subject to the pledge. unless there is stipulation to the contrary.
Effect of Sale
. The sale must be made with intervention of Notary Public.
2066 to 2070. (Note further. (Creditor cannot refuse payment.
. Real Estate Mortgage Chattel Mortgage
In addition to the requisites under Art.)
Effect of Mortgage.
Rights of Third Parties (including Third Party Pledgor)
⇒ Any third person who has any right in or to the thing pledged may satisfy the principal obligation as soon as the latter becomes due and demandable. what must be complied with in order to establish a valid
mortgage as against third parties? ⇒ The document in which it appears must be recorded in the Registry of Property. which obligation shall be satisfied with the proceeds of the sale of the said property or rights. 2077-2081. unlike in the case of pledge.) ⇒ Sale/Auction of the thing ⇒ Principally by return of the thing given by way of pledge ⇒ Renunciation or abandonment. to the fulfillment of the obligation for whose security it was constituted. to answer the amount of indebtedness in case of non-payment. unless stipulated otherwise (c) Price < Amount Due. property is thus identified or set apart from the mass of the property of the debtor mortgagor as security for the payment of money or fulfillment of an obligation. the persons in whose favor the law establishes a mortgage have no other right than to demand the execution and recording of the document in which the mortgage is formalized. debtor not entitled to excess. 2117) ⇒ A third party pledgor has same rights as guarantor under Arts. Indeed. (b) Price > Amount Due. this is the basic rationale for availability of deficiency to the creditor/mortgagee. 2124-2131
What is a mortgage?
⇒ Mortgage is a contract whereby the debtor secured to the creditor the fulfillment of a principal obligation. continued
⇒ By mortgage. loss of the thing. (Note that this is a significant concept. in case the said obligation is not complied with at the time stipulated.(a) The sale of the thing pledged extinguishes the principal obligation. Stipulation to the contrary is void. even in the treatment of mortgage under provisions on Concurrence and Preference of Credits. whoever the possessor may be. by the pledgee (although pledgee may continue in the possession to the thing.) (Art.
What is the effect of a mortgage?
⇒ The mortgage directly and immediately subjects the property upon which it is imposed. specially subjecting to such security immovable property or real rights over immovable property. Chattel mortgage has a specific definition.)
Is there transfer of ownership from mortgagor to mortgagee? NO. 2085. (Note other requisites with respect to Chattel Mortgage.)
Does this mean that a mortgage must be in writing in order to be valid?
⇒ No. payment. He shall not be prejudiced by any waiver of rights by the principal obligor. etc. in writing. Arts. creditor not entitled to deficiency. whether the price is more or less than the amount due.
Grounds to Extinguish Pledge
(Apart from general causes such as prescription. Arts. the nature of such possession shall be as depositary) MORTGAGE.
recording fees. the parties may stipulate on after-acquired properties and that the character of the properties there were properly made the subject of the provision. the nature or extent of which may not be known or anticipated at the time.
Examples of clauses recognized as allowing future loans/advances or past loans
⇒ “For the payment of the loan of PhP[specific amount] and such other loans or other advances already obtained or still to be obtained by mortgagors as makers. Dahican Lumber that.) ⇒ We learn from People’s Bank and Trust v. travel. the general disability to subject future property to a mortgage. fixtures. a mortgage must sufficiently describe the debt sought to be secured by mortgage unless it comes fairly within the terms of the mortgage. if the intend to secure future loans or advances may be sufficiently determined from the instrument. growing fruits. attach. loan closing costs. equipments. 2130)
What may be the object of a mortgage?
(a) (b) (c) (d) Immovables Alienable real rights Movables (Chattel Mortgage) Mortgage extends to the natural accessions. A stipulation forbidding the owner from alienating the immovable mortgaged shall be void. as dragnet clause. it may be covered under a promise to constitute a mortgage.
May a real estate mortgage cover “after acquired properties”?
⇒ Note that this questions is significant vis-à-vis the requirement that the mortgage must be constituted by the owner of the property. it is crystal clear that all property of every nature and description taken in exchange or replacement. its lumber concession — "shall immediately be and become subject to the lien" of both mortgages in the same manner and to the same extent as if already included therein at the time of their execution. under the factual setting of that case. install. (At best. however. and they avoid the expense and inconvenience of executing a new security on each new transaction. to upon. or in connection with the premises — that is. or use in. specifically phrased to subsume all debts of past or future origin. construct. ⇒ A “dragnet clause” operates as a convenience and accommodation to the borrowers as it makes available additional funds without their having to execute additional security documents. Does this mean that the mortgaged property may be further alienated?
⇒ Yes. machineries. ⇒ Note here the Supreme Court found an attempt to circumvent this provision ⇒ Under the fourth paragraph of both deeds of mortgage.Must there be delivery. (Art. hence. actual or constructive. may also cover past obligations and/or future advances.”
What is a dragnet clause? Also known as blanket clause
⇒ The previously discussed provisions are known in American jurisprudence. ⇒ Considered valid and legal ⇒ Amounts specified do not necessarily limit the amount for which the mortgage may stand as security ⇒ Intent to secure future and other indebtedness must be asceretained
. and be continuing in nature. ⇒ The case of Prudential v. ⇒ A mortgage. tools. as well as in our own. The amounts specifically stated in the contract of mortgage do not limit the amount for which the mortgaged property may stand as security. to constitute a mortgage? NO. et cetera. as well as all buildings. and the rents or income not yet received
What is the scope of a mortgage?
⇒ As a general rule. and other property that the mortgagor may acquire. thereby saving time. costs of extra legal services. to the improvements. Alviar teaches us important information regarding a “dragnet clause” ⇒ Also known as a “blanket clause” ⇒ Specifically phrased to subsume all debts of past or future origin ⇒ Carefully scrutinized and strictly construed ⇒ Enables the parties to provide continuous dealings.
000. he has a prior lien on the property. a sale though unregistered. but he cannot have both. that the amounts named as consideration in said contract do not limit the amount for which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and other indebtedness can be gathered. the pertinent real estate mortgage contract states among others: “. if the mortgagee resorts to an action to collect the debt. IAC. In case of a deficiency. render it voidable. ⇒ Where a debt is secured by a mortgage and there is a default in payment on the part of the mortgagor. at the very least. ⇒ On the other hand. ⇒ When the mortgagee chooses the foreclosure of the mortgage as a remedy. or 2) file an ordinary action to collect the debt. until the full amount of the advancements are paid. 3 public places in city or municipality where property located. not mere representation (c) Is not extinguished by death of the mortgagor (d) Does not prohibity mortgagee from bidding Notice Requirement ⇒ Posting of 20 days.. ⇒ A mortgage given to secure advancements is a continuing security and is not discharged by repayment of the amount named in the mortgage. ⇒ Note that.. Remedies ⇒ While we know that the principle remedy under a mortgage is foreclosure. then the same should have been indicated in the mortgage contract. considering that the sale deprived the mortgagor of ownership (Flancia v. construed against the party who caused the ambiguity which could have avoided it by the exercise of a little more care. Pioneer Savings.” ⇒ In Mojica v. but need not be on property itself ⇒ Publication once a week for three consecutive weeks in newspaper of general circulation (not widest circulation) ⇒ Personal or other notice to any particular party not required. but he will not have priority over the latter and there may be other creditors who have better lien on the properties of the mortgagor. If the judgment in the action to collect is favorable to him. ⇒ We know the answer to this question is yes. the mortgagee has a choice of one (1) of two (2) remedies. Court of Appeals. 457 SCRA 224) Foreclosure of Real Estate Mortgage May an assignee cause the foreclosure of mortgaged property. unless otherwise stipulated ⇒ The rule is statutory provisions governing public notice of foreclosure must be strictly complied with. agreement for the payment of the loan of P20. any ambiguity is to be taken contra proferentum.
. Extrajudicial Foreclosure When applicable (a) Where there is a power of sale in the mortgage deed (b) Nature of an agency. that the secured creditor has two alternative remedies. considering that a mortgage directly and immediately subjects the property upon which it is imposed to the fulfillment of the obligation for whose security it was constituted. The mortgagee may: 1) foreclosure the mortgage. even slight deviation will invalidate sale or. he thereby waives his mortgage lien. would take precedence over a registered mortgage. and it becomes final and executory. He can even levy execution on the same mortgaged property. that is. Consequently.00 and such other loans or other advances already obtained or still to be obtained by the mortgagors …” ⇒ There the Supreme Court ruled that It has long been settled by a long line of decisions that mortgages given to secure future advancements are valid and legal contracts. where the Supreme Court that FINASIA. he enforces his lien by the sale on foreclosure of the mortgaged property. The proceeds of the sale will be applied to the satisfaction of the debt. He will have no more priority over the mortgaged property. consistent with Article 2085 of the Civil Code. we learn in Caltex v. the mortgagee has the right to claim for the deficiency resulting from the price obtained in the sale of the real property at public auction and the outstanding obligation at the time of the foreclosure proceedings. With this remedy. as explained in Santiago v.“If the parties intended that the “blanket mortgage clause” shall cover subsequent advancement secured by separate securities.⇒ The problem in Alviar . as assignee may cause the foreclosure. Court of Appeals. he can enforce said judgment by execution.
annotators are of opinion that it should not bar resort to judicial foreclosure ⇒ In petition for sale of property in antichresis ⇒ Note that chattel mortgage not mentioned under the rules. ⇒ An action to enforce a right arising from a mortgage should be made within ten (10) years from the time the right of action accrues. Feria. Feria (ret. purchaser is entitled to consolidate title by affidavit of consolidation at Register of Deeds and obtain possession by writ of possession or other action ⇒ Extrajudicial Foreclosure Deficiency Judgment ⇒ Has been defined as one for the balance of the indebtedness after applying the proceeds of the sale of the mortgaged property to such indebtedness and necessarily filed after foreclosure proceeding. This period is mandatory and cannot be changed by stipulation.Sale ⇒ Within province. by public auction. without prior levy ⇒ Under direction of sheriff.
Act No.) is of the opinion that rules may apply to chattel mortgage Procedure ⇒ By action in court ⇒ Court renders judgment for (1) sum found due with order to pay the court or the judgment obligee. successor-in-interest. each one affording complete relief. judge. ⇒ Judicial Foreclosure ⇒ Effect of confirmation
Divests rights in the property and invests rights in the purchaser. hence. subject to right of redemption under Rep. but J. notary (see Supreme Court Circular) ⇒ Price need not be amount of debt or value of property ⇒ Creditor or representative may participate as bidder ⇒ Result of sale is certificate of sale to the purchaser Purchaser ⇒ Entitled to registration of certificate of sale ⇒ Acquires rights to property which owner-mortgagor has. not less than 90 days and not more than 120 days from entry of judgment and (2) upon default. judicial creditor and lienholders subsequent to mortgage ⇒ Subsists for one year from registration of certificate of sale ⇒ Exercised by offer with tender (an action to repurchase has been construed as such offer) ⇒ Purchaser at public auction entitled to possession during period of redemption by filing a petition for issuance of writ of possession. ⇒ According to J. mutually exclusive Judicial Foreclosure (Rule 68) When applicable ⇒ Where there is no special power in the mortgage permitting extrajudicial foreclosure ⇒ Where such power is granted. upon filing of bond ⇒ Upon lapse of redemption period. it wall be barred by prescription and the mortgage creditor will lose his rights under the mortgage. 337. it may be exercised even after the sale but before confirmation of sale by the court. subject to prior liens Right of redemption ⇒ Is the prerogative to re-acquire the property after registration of foreclosure sale ⇒ Is different from a right to repurchase ⇒ Vested in debtor. Foreclosure ⇒ Foreclosure action prescribes in ten years. ⇒ Remedies of mortgagor are (1) personal action or (2) foreclosure. otherwise. cause the sale ⇒ Motion to sell ⇒ Motion for order of confirmation of sale Equity of Redemption ⇒ It is the right of defendant mortgagor (in equity) to extinguish the mortgage and retain ownership by paying secured debt (or amount specified in judgment) witin the period under the Rule.
1508) Subject Matter ⇒ Generally.Chattel Mortgage (Act No. ⇒ Additionally. What is an Affidavit of Good Faith? ⇒ It is an affidavit or oath substantially attesting to the following: (a) The chattel mortgage is being executed for not purpose other than to secure the obligation described in the deed. extend to after-acquired property. shall be paid to persons holding subsequent mortgages in their order. This definition was considered inaccurate by the Code of Commission. In a chattel mortgage. and (c) The same is not entered into for the purpose of fraud. chattel mortgage is given as security and not as payment for the debt in case of default. there is no deposit but some other contract. where chattel mortgage constituted as security for the purchase price. This renders an “after-acquired property clause” of doubtful validity. Deposit Define a contract of deposit. so as to enable the parties thereto. Foreclosure ⇒ The proceeds of the sale shall be applied to the payment. ⇒ A deposit is constituted from the moment a person receives a thing belonging to another. the mortgagor may maintain an action for recovery of deficiency. in case of the latter. 1508. the new definition. unlike a pledge. machinery treated by the parties as personal property. 1508. Thereafter. hence. But Torres v. first. When is there a necessary deposit?
. The residue. ⇒ Examples in jurisprudence include shares of stock. ⇒ Exception is Article 1484 of the Civil Code. house of mixed materials. motor vehicles. if any. on sale of personal property in installments. What is a voluntary deposit? ⇒ A voluntary deposit is that wherein delivery is made by the will of the depositor. there is a requirement that personal property being mortgaged is required to be described in the deed of chattel mortgage itself. The rationale offered in support of this position is that. Extent of Chattel Mortgage ⇒ In real estate mortgage. or other person. the same shall be delivered to the mortgagor. It may be judicial or extrajudicial. Chattel Mortgage (Act No. parties to a chattel mortgage are required to execute an Affidavit of Good Faith. that is registration of the personal property in the appropriate registry. Deficiency ⇒ In the event the foreclosure sale proceeds is insufficient to cover the entire debt secured by the chattel mortgage. with the obligation of safely keeping it and of returning the same. an interest in the business. it is nevertheless binding between the parties. movable. unlike in a deed of real estate mortgage. the mortgage may. of the costs and expenses of keeping the chattel and sale thereof. a chattel mortgage is defined as a conditional sale of personal property as security for the payment of a debt or the performance of some other obligation. vessels. it has been ruled that if the chattel mortgage is not so recorded. under certain circumstances. if there be any balance still remaining. as amended) Definition and Nature ⇒ As defined under Article 2140 of the New Civil Code. house built on rented land) Creation of Chattel Mortgage ⇒ Law provides for only one way of executing a valid chattel mortgage. (b) The same is valid and binding in accordance with its terms. Limjap teaches that it may extend to shifting stock. however. However. after reasonable inquiry or investigation. to identify the said mortgaged chattels. If the safekeeping of the thing delivered is not the principal purpose of the contract. a chattel mortgage is a security whereby personal property is recorded in the Chattel Mortgage Register as a security for the perfomance of an obligation. voluntary or necessary. and then to the payment of the demand or obligation secured by chattel mortgage. ⇒ Under Section 3 of Act No.
thing must be returned to the depositor upon demand. unless otherwise stipulated (f) Cannot use without express permission of depositor (unless necessary for preservation) (g) May retain thing IN PLEDGE until the full payment of what may be due him by reason of the deposit The depositary is liable for the loss of the thing through a fortuitous event: (a) If it is so stipulated. ⇒ If depositary discovers thing has been stolen and knows true owner . (b) If he uses the thing without the depositor’s permission. securities or instruments which earn interest (e) Cannot commingle. or other similar events (c) Deposit of effects made by travellers in hotels or inns under Art. storm. return must be made at such place. 1993) Conditions of return ⇒ As a general rule. (d) If he allows others to use it. 1998 How may a deposit be validly constituted? ⇒ Perfection by delivery ⇒ Contract may be made orally or in writing Note. bonds. May the depositary refuse to return on the ground that he doubts the depositor’s legal title to the thing? ⇒ No. with depositor shouldering cost of transportation Let us say the depositor has made a demand for the return of the thing. that movable as well as immovable may be the object of sequestration Are fixed. however. even though a specified period or time for return has been fixed ⇒ The thing deposited shall be returned with all its products. however. (c) If he delays its return. Who are the parties to a contract of deposit? ⇒ Depositor and Depositary Note. return must be in same condition ⇒ If place was designated for return at the time the deposit was made. accessories and accessioins ⇒ Where delivered closed and sealed.⇒ A deposit is necessary (a) When it is made in compliance with a legal obligation. shipwreck. even though he himself may have been authorized to use the same Obligations of Depositor ⇒ Where gratuitous. that an agreement to constitute a deposit is binding. this does not mean that the depositor is or must be the owner of the thing What is scope of deposit? ⇒ Covers only movables ⇒ Note. however. if it may be reasonably presumed depositor would consent. The depositary cannot demand that the depositor prove his ownership of the thing deposited. unless otherwise stipulated (c) May change way of typhoon. reimburse the depositary for expenses incurred for preservation of the thing ⇒ Reimburse for loss arising from character of the thing deposited (exceptions in Art. except where safekeeping remains the principal purpose of the contract Rights and obligations of the depositary (a) Keep thing safely and return it. the contract loses the concept of a deposit and becomes a loan or commodatum. savings and current deposits of money in banks and similar institutions considered contracts of voluntary deposit? ⇒ Fixed. He may not refuse. when required (b) Cannot deposit thing with third person. What is the purpose of deposit? ⇒ Safekeeping ⇒ When the depositary has the permission to use the thing deposited. pillage. (b) When it takes place on the occasion of any calamity. flood. with notice (d) Collect interest when holding certificates. such as fire.advise latter of deposit
. savings and current deposits of money in banks and similar institutions shall be governed by the provisions concerning loan.
preference arises. depositary relieved of responsibility by returning thing to the depositor ⇒ If depositary has reasonable grounds to believe that the thing has not been lawfully acquired by the depositor . Rules on judicial foreclosure applies. act of thief or robber who enters hotel. without priorty among themselves. Right/s and obligation/s of creditor ⇒ Right to receive fruits of an immovable for purposes of application ⇒ Obliged to pay taxes and charges upon the estate. When does concurrence of credits occur? ⇒ Concurrence occurs when the same specific property of the debtor or all of his property is subjected to claims of several creditors. ⇒ In the event of non-payment. upon death of either party Necessary Deposit (specifically Articles 1998-2003) ⇒ Conditions of application of 1998 include notice to hotel-keeper or employees and traveller takes advice as to care and vigilance ⇒ Extends to vehicles. without use of arms or irresistible force NOT force majeure ⇒ Hotelkeeper with right of retention. the creditor may petition the court for the payment of the debt or the sale of real property. The right of first preference as regards unpaid wages does constitute a lien on the property of the insolvent debtor in favor of workers. liquidation of estate. A preference applies only to claims which to do not attach to specific properties. as security for credits and supplies ⇒ Note that the hotel-keeper cannot free himself from liability by posting notices to the effect that he is not liable. animals. any stipulation whereby responsibility under Articles 1998-2001 suppressed or diminished shall be void. otherwise. or similar proceeding.
. whether known or not may be bound by the proceedings. Antichresis What is a contract of antichresis? ⇒ By the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his debtor. a proceeding in rem. When property not sufficient. the contract of antichresis shall be void.he may return the same Specific modes of extinguishing a deposit (a) Loss or destruction of thing (b) Where gratuitous. does not claim within one month. and articles introduced or placed in annexes of hotel ⇒ Excludes loss or injury arising from (a) acts of guest. How is a contract of antichresis validly established? ⇒ The amount of the principal and of the interest shall be specified in writing. unless otherwise stipulated ⇒ Bound to bear expenses necessary for its preservation and repair ⇒ May exempt himself from the two obligations above by compelling the debtor to enter again upon the enjoyment of the property. and thereafter to the principal of his credit. but a preference in application. such as insolvency. where all interested persons. Concurrence and Preference of Credits In what proceeding does concurrence and preference of credits properly apply? ⇒ Put simply. and satisfied pro rata. so informed. (b) character of thing.⇒ If owner. (c) force majeure. Concurrence of credits raises no question of consequence where value of property or asset not sufficient. unless there is stipulation to the contrary Remedies May the creditor claim ownership of the real estate for non-payment of debt? ⇒ No. Any stipulation to this effect shall be void. credits stand equally. Preference ⇒ Distinction should be made between a preference and a lien. if owing. ⇒ Where there is concurrence. with the obligation to apply them to the payment of the interest.
000. the worker’s preference under Article 110 of the Labor Code is an ordinary preferred credit. 110 of Labor Code ⇒ Under Articles 2241 and 2242 of the Civil Code.5M Apply the rules on concurrence and preference of credits ⇒ ⇒ ⇒ ⇒ ⇒ ⇒ ⇒ Claim of LGU is preferred under 2242. (Some annotators indicate that PC Stop claim may be considered preferred as to the equipment. Sample problem A debtor corporation in insolvency has the following creditors: (a) PC Stop . On the other hand. Within provisions.loan of PhP2. and PC Stop as unpaid seller are common credits and should be paid last.00 (c) Employees engaged in manufacturing parts produced and sold by company for unpaid wages .000. par.Application (Classification of Credits) ⇒ Articles 2241 and 2242 are special preferred credits.000. concurrent and proportionate.00 (b) Rapid Din . ⇒ If asset not sufficient.PhP80. amounting to PhP450. as to vehicle Claim of workers preferred under 2241.000. credits are equal. per 2241.
. RE: Art.unpaid VAT .PhP200.(2244) BIR for VAT Nik Nak’s claim The claim of the Credit Company.00 (f) LGU . Excess used to satisfy other credits.00 (g) The Credit Company . Only taxes enjoy priority. which are not preferred. 3). The same has ho preference over the special preferred credits.for parts and repair service rendered on a company car in the amount of PhP20. as to goods manufactured Following claims must be paid in following order . special preferred may become ordinary preferred under 2244 ⇒ 2245 refers to common credits ⇒ Claims of workers become specially preferred only when under Article 2241 (6) or Article 2242 (3).PhP1M (d) Nik Nak .for various laptops and personal computers sold on credit. should be satisfied first as to the specific immovable Claim of Rapid Din is preferred under 2241.00 (e) BIR . the right of employees to be paid benefits due them from the properties of their employer cannot have any preference over the latter’s mortgage credit.former employee and judgment creditor in illegal dismissal case for PhP 300.000.unpaid real estate taxes . Thus. a mortgage credit is a special preferred credit that enjoys preference with respect to a specific/determinate property of the debtor.