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 and mortgagor be the absolute owner of the thing
pledged and 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.
WHAT IS A PLEDGE?

 A pledge is an accessory, real and unilateral contract by virtue of

which the debtor or a third person delivers to the creditor or to a
third person movable property as security for the performance of
the principal obligation, upon fulfillment of which the thing pledged,
with all its accessions and accessories, shall be returned to the
debtor or to the third person.
ACCESSORY FOLLOWS THE PRINCIPAL;
EXCEPTIONS TO ACCESSION
 While it is a hornbook doctrine that the accessory follows the principal, [1] that
is, the ownership of the property gives the right by accession to everything
which is produced thereby, or which is incorporated or attached thereto, either
naturally or artificially,[2] such rule is not without exception.
 In cases where there is a clear and convincing evidence to prove that the
principal and the accessory are not owned by one and the same person or
entity, the presumption shall not be applied and the actual ownership shall be
upheld.
WHAT IS A REAL ESTATE MORTGAGE?

 A real estate mortgage, according to the Civil Code, is a contract

embodied in a public instrument recorded in the Registry of Property,
by which the owner of an immovable (or an alienable real right
imposed upon immovables) directly and immediately subjects it,
whoever the possessor may be, to the fulfillment of the obligation for
whose security it was constituted. “It is a contract in which the debtor
guarantees to the creditor the fulfillment of principal obligation,
subjecting for the faithful compliance therewith a real property in case
of non-fulfillment of said obligation at the time stipulated”.
 “THE MORTGAGOR MUST BE THE OWNER, OTHERWISE THE
MORTGAGE IS VOID.”
 “THE MORTGAGEE ONLY OWNS THE MORTGAGE CREDIT, NOT THE
PROPERTY ITSELF.”
DOCTRINE OF “THE MORTGAGEE IN
GOOD FAITH”
 A foreclosure sale, though essentially a “forced sale”, is still a sale in
accordance with Art. 1458 of the Civil Code, under which the
mortgagor in default, the forced seller, becomes obliged to transfer the
ownership of the thing sold to the highest bidder who, is obliged to pay
therefor the bid thing sold to the highest bidder who, in turn, is obliged
to pay therefor the bid price in money or its equivalent. Being a sale,
the rule that the seller must be the owner of the thing sold also applies
in a foreclosure sale. This is the reason Art. 2085 of the Civil Code, in
providing for the essential requisites of the contract of mortgage and
pledge, requires, among other things, that the mortgaged in
anticipation of a possible foreclosure sale should the mortgagor default
in the payment of the loan.
TWO CONTRACTUAL MODES BY WHICH PERSONAL
PROPERTY CAN BE USED TO SECURE A PRINCIPAL
OBLIGATION
 1. CONTRACT OF PLEDGE specifies what is owed, the property that
shall be used as a pledge, and conditions for satisfying the debt or
obligation.
 2. CHATTEL MORTGAGE. A contract where a personal property is
recorded as a security for the performance of an obligation.
DEBTOR RETAINS BENEFICIAL
INTEREST IN MORTGAGE

 In a contract of mortgage, the debtor retains beneficial interest over

the property notwithstanding the encumbrance, since the mortgage
only serves to secure the fulfillment of the principal obligation.
“Is the declaration of a title as null and
void a ground for nullifying the mortgage
right of a mortgagee in good faith?”
Filing of collection suit barred the
foreclosure of the chattel mortgage

 “A MORTGAGEE WHO FILES A SUIT FOR COLLECTION ABANDONS THE

REMEDY OF FORECLOSURE OF THE CHATTEL MORTGAGE CONSTITUTED
OVER THE PERSONAL PROPERTY AS SECURITY FOR THE DEBT OR VALUE OF
THE PROMISSORY NOTE WHICH HE SEEKS TO RECOVER IN THE SAID
COLLECTION SUIT.”
 THE REASON FOR THIS RULE IS THAT: WHEN THE MORTGAGEE ELECTS TO
FILE A SUIT FOR COLLECTION, NOT FORECLOSURE, THEREBY ABANDONING
THE CHATTEL AS BASIS FOR RELIEF, HE CLEARLY MANIFESTS HIS LACK OF
DESIRE AND INTEREST TO GO AFTER THE MORTGAGED PROPERTY AS
SECURITY FOR THE PROMISSORY NOTE.
 Article 2086. The provisions of article 2052 are applicable to a
pledge or mortgage
 Article 2052. A guaranty cannot exist without a valid obligation.
Nevertheless, a guaranty may be constituted to guarantee the
performance of a voidable or an unenforceable contract. It may also
guarantee a natural obligation.
Article 2087.

 It is also of the essence of these contracts 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.
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.
1. PACTUM COMMISSORIUM

2. INTENTION OF PACTO COMMISSORIO

ELEMENTS OF PACTUM COMMISSORIUM

a) That there should be a pledge or mortgage wherein property is

pledged or mortgaged by way of security for the payment of the
principal obligation;
b) That there should be a stipulation for an automatic appropriation by
the creditor of the thing pledged or mortgaged in the event of non-
payment of the principal obligation within the stipulated period.
THE ESSENCE OF PACTUM COMMISSORIUM

 is that ownership of the security will pass to the creditor by the mere
default of the debtor.
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 expected 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.
INDIVISIBILITY OF A PLEDGE OR
MORTGAGE

 It arises only when there is a debt, that is, there is a debtor-creditor

relationship.
ARTICLE 2090

 The indivisibility of a pledge or mortgage is not affected by the fact

that the debtors are not solidarily liable.
Example: D pledged his only cellphone while E pledged his only laptop in
favor of C to secure a total loan obligation of 50,000. It was agreed that
the obligation is joint.
Explanation: In this case, the indivisibility of pledge is not affected by the
fact that the debtors are jointly liable.
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.

 PURE OBLIGATION. An obligation whose performance does not depend upon

a future or uncertain event, or upon a past event unknown to the parties, is
demandable at once.
 CONDITIONAL OBLIGATION. An obligation where the acquisition of rights,
as well as the extinguishment or loss of those already acquired, shall depend
upon the happening of the event which constitutes the condition.
 SUSPENSIVE CONDITION. The fulfillment of the condition results in the
acquisition of rights arising out of the obligation.
 RESOLUTORY CONDITION. The fulfillment of the condition results in
extinguishment of rights arising out of the obligation.
ARTICLE 2092

 A promise to constitute a pledge or mortgage give 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.