CREDIT TRANSACTIONS –TITLE XVI - Pledge, Mortgage and Antichresis CHAPTER 1
Provisions common to pledge and mortgage
Article 2085. The following requisites are essential to
the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of
a principal obligation;
(2) That the pledgor or mortgagor be the absolute
owner of the thing pledged or mortgaged;
(3) That the persons constituting the pledge or
mortgage have the free disposal of their property, and
in the absence thereof, that they be legally authorized
for the purpose.
Third persons who are not parties to the principal
obligation may secure the latter by pledging or
mortgaging their own property.
Article 2086. The provisions of article 2052 are
applicable to a pledge or mortgage.
Article 2087. It is also of the essence of these contracts common agreement. (Art. 2093) Without delivery, there
that when the principal obligation becomes due, the
things in which the pledge or mortgage consists may be
alienated for the payment to the creditor.
Definition of pledge.
Pledge is a contract by virtue of which the debtor
delivers to the creditor or to a third person a movable
(Art. 2094.) or document evidencing incorporeal rights
(Art. 2095.) for the purpose of securing the fulfillment
of a principal obligation with the understanding that
when the obligation is fulfilled, the thing delivered shall pledge appear in a public instrument (Art. 2096.), while
be returned with all its fruits and accessions.
Cause or consideration in pledge.
Pledge is an accessory contract. Its cause insofar as the
pledgor is concerned is the principal obligation. But if he consent of the pledgee (Art. 2097), while the mortgagor
is not the debtor (Art. 2085, par. 2.), the cause is the
compensation stipulated for the pledge or the mere
liberality of the pledgor. As an accessory contract, its
validity would depend on the validity of the principal
obligation secured by it.
Kinds of pledge.
(1) Voluntary or conventional or one which is created by
agreement of the parties; or
(2) Legal or one which is created by operation of law.
(see Art. 2121.)
Characteristics of the contract.
(1) a real contract
(2) an accessory contract
(3) a unilateral contract
(4) a subsidiary contract
Essential requirements of pledge and mortgage.
Articles 2085 and 2087 enumerate the essential
requisites common to pledge and mortgage.
(1) Constituted to secure fulfillment of a principal
obligation.
(2) Pledgor or mortgagor is absolute owner.
(3) Pledgor or mortgagor has free disposal of property
or has legal authority.
(4) Thing pledged or mortgaged may be alienated.
In addition to the above requisites, the thing pledged
must be delivered to the creditor or a third person by
is no pledge.
Pledge and real mortgage distinguished.
(1) Pledge is constituted on movables (Art. 2094.), while
mortgage, on immovables. (Art. 2124.)
(2) In pledge, the property is delivered to the pledgee,
or by common consent to a third person (Art. 2093.),
while in mortgage, delivery is not necessary; and
(3) Pledge is not valid against third persons unless a
description of the thing pledged and the date of the
mortgage is not valid against third persons if not
registered. (Art. 2125.)
(4) The pledgor can sell the thing pledged with the
can sell the property mortgaged even without the
consent of the mortgagee. (Art. 2130)
For definition of “mortgage,” see comments under
Article 2124.
Article 2088. The creditor cannot appropriate the things
given by way of pledge or mortgage, or dispose of them.
Any stipulation to the contrary is null and void.
CREDIT TRANSACTIONS –TITLE XVI - Pledge, Mortgage and Antichresis CHAPTER 1
Right of creditor where debtor fails to comply with his
obligation.
The property given in pledge or mortgage stands as
security for the fulfillment of the principal obligation.
(Art. 2085, par. 1.)
(1) Sale of subject properly with formalities required by
law. — If the debtor fails to comply with the obligation
at the time it falls due, the creditor is merely entitled to and a pair of earrings worth P5,000.00.
move for the sale of the thing pledged or mortgaged
(Art. 2087.) with the formalities required by law in order
to collect the amount of his claim from the proceeds.
(2) Prohibition against appropriation of property. — The
creditor in a contract of real security like pledge and
mortgage, cannot appropriate to himself without
foreclosure the thing held as pledge or under mortgage,
nor can he dispose of the same as owner. (Art. 2088.)
The prohibition applies to an immovable which is the
object of the contract of antichresis. (see Art. 2137.) The received his share. The same is true if B is the only
act of the mortgagee, for example, in registering the
property mortgaged in his own name upon the
mortgagor’s failure to redeem the property would
amount to the exercise of the privilege of a mortgagee
in a pactum commissorium. (exception irn Art. 2112)
Article 2089. 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 debtor's heir who has paid a part of the
debt cannot ask for the proportionate extinguishment
of the pledge or mortgage as long as the debt is not
completely satisfied.
Neither can the creditor's heir 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.
From these provisions is excepted the case in which,
there being several things given in mortgage or pledge,
each one of them guarantees only a determinate
portion of the credit.
The debtor, in this case, shall have a right to the
extinguishment of the pledge or mortgage as the
portion of the debt for which each thing is specially
answerable is satisfied.
Article 2090. The indivisibility of a pledge or mortgage is
not affected by the fact that the debtors are not
solidarily liable.
EXAMPLES:
(1) A borrowed from B P20,000.00 and to guarantee
payment, A pledged his diamond ring worth P15,000.00
If A pays P15,000.00, he cannot ask for the return of the
ring because both the ring and the earrings are given to
secure payment of the entire obligation of P20,000.00.
This is because the pledge is indivisible. B may cause the
sale of either or both for the payment of his credit. (see
Art. 2112.) The same is true if A dies leaving W and X as
his heirs and W pays P15,000.00 to B.
If the creditors are B and C, and A pays B P15,000.00, B
cannot return the ring to the prejudice of C who has not
creditor and he dies leaving Y and Z as his heirs and A
pays Y P15,000.00.
However, if it was agreed that the ring was given to
secure the payment of P15,000.00 and the earrings, the
balance of P5,000.00, and A (or his heir W) pays
P15,000.00, A can demand the return of the ring.
(2) A and B are jointly liable to C in the sum of
P20,000.00 secured by A’s ring worth P15,000.00 and
B’s watch worth P5,000.00. If A pays P15,000.00, he
cannot demand the return of the ring even if their
liability is only joint or proportionate because pledge is
indivisible. Indivisibility is not the same as solidarity. The
former refers to the object or prestation of the
obligation, while the latter, to the legal tie of the
obligation.
Article 2091. The contract of pledge or mortgage may
secure all kinds of obligations, be they pure or subject
to a suspensive or resolutory condition.
CREDIT TRANSACTIONS –TITLE XVI - Pledge, Mortgage and Antichresis CHAPTER 1
Article 2092. A promise to constitute a pledge or
mortgage gives rise only to a personal action between
the contracting parties, without prejudice to the
criminal responsibility incurred by him who defrauds
another, by offering in pledge or mortgage as
unencumbered, things which he knew were subject to
some burden, or by misrepresenting himself to be the
owner of the same.