Synopsis of Law on Pledge, Mortgage

and Antichresis (Ph)

Pledge and real mortgage distinguished:

Pledge Real Mortgage

1. Constituted on 1. Constituted on
movables. immovables.
2. Thing is delivered 2. Thing is not
to the creditor or a required to be
third person by delivered to the
common agreement. creditor.
3. Must be in a 3. Must be registered
public instrument to take effect against
showing a third person.
description of the
thing pledged and
the date of the
pledge to bind third
persons.
4. Deficiency cannot 4. Deficiency can be
be recovered even if recovered.
there is a stipulation.
5. Excess of the 5. Excess of the
proceeds of sale is proceeds of sale
retained by the belongs to the
pledgee unless there mortgagor even if
is a stipulation there is no
giving it to the stipulation to that
pledgor. effect.
6. Pledgee may 6. Mortgagee cannot
appropriate the thing appropriate the thing
pledged if the same mortgaged.
is not sold in two
public auctions.

Real Mortgage and Chattel Mortgage distinguished:

Real Mortgage Chattel Mortgage

1. Constituted on 1. Constituted on
immovables. movables.
2. Must be registered 2. Must be registered
to take effect against and accompanied by
third persons. an affidavit of good
faith to take effect
 against third persons.
3. It may secure 3. It cannot secure
future obligations. future obligations.

Pledge and Chattel Mortgage distinguished:

Pledge Chattel Mortgage

1. Thing is delivered 1. Thing is not
to the creditor or a required to be
third person by delivered to the
common agreement. creditor.
2. Must be in a 2. Must be registered
public instrument and accompanied by
showing a an affidavit of good
description of the faith to take effect
thing pledge and the against third persons.
date of the pledge to
bind third persons.
3. Deficiency cannot 3. Deficiency can be
be recovered even if recovered except in
there is a stipulation. the case of personal
property sold on
installment.
4. Excess of the 4. Excess of the
proceeds of the sale proceeds of sale
is retained by the belongs to the
pledgee unless there mortgagor even if
is a stipulation there is no
giving it to the stipulation to that
pledgor and in case effect.
of legal pledge.
5. Pledgee may 5. Mortgagee cannot
appropriate the thing appropriate the thing
pledge if the same is mortgaged.
not sold in two
public auctions.

Deficiency judgment – if the proceeds of sale are not sufficient to satisfy the claim of the creditor, 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.

Antichresis – is a contract whereby 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, and thereafter to the principal
of his credit.

CHARACTERISTICS:
1.       Accessory;
2.       Formal;
3.       Nominate;
4.       Real right;
5.       Real property;
6.       Indivisible.

Requisites of Antichresis:
1.       That it be constituted to secure the fulfillment of a principal obligation;
o   A contract of Antichresis may secure all kinds of obligations, be they pure or subject to a resolutory or
suspensive condition.
2.       That the debtor be the absolute owner of the immovable property (a third person, not a party to the
principal obligation, may be the owner of the immovable given as security);
3.       That the debtor must have the free disposal of such immovable property, and in the absence thereof,
that he be duly authorized for the purpose;
4.       That the amount of the principal and the interest must be in writing; otherwise, the Antichresis is void.

Measure of application of fruits

  Actual Market Value of the fruits at the time of application thereof to the interest and principal shall be the
measure of such application.

Obligations of the creditor:

1.       To pay the taxes and charges upon the immovable, unless there is a stipulation to the contrary;
2.       To bear the expenses necessary for its preservation and repair.

Application of the fruits of the immovable:

1.       The taxes and charges upon immovable;
2.       The expenses for preservation and repair;
3.       Interest on the principal obligation; and
4.       Principal obligation.

Debtor can reacquire the enjoyment of the 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.

Effect of non-payment of the debt within the period agreed upon

  The creditor does not acquire ownership of the immovable for non-payment of the debt within the period
agreed upon. Any stipulation to the contrary is void. (i.e Pactum Commissorium)

In case of non-payment, the creditor shall have the following remedies:

1.       To petition the court for the payment of the debt;
2.       To sell the immovable.
         The provisions of the Rules of Court on foreclosure of mortgages shall apply. In case of any deficiency in
the foreclosure sale, the creditor can recover the deficiency.