C
CAATTEEGGOORRYY GGUUAARRAANNTTYY SSUURREETTYYSSHHIIPP PPLLEEDDGGEE MMOORRTTGGAAGGEE AANNTTIICCHHRREESSIISS CHATTEL CHATTEL MORTGAGE MORTGAGE REAL REAL ESTATE ESTATE MORTGAGE MORTGAGE LAW
LAW CIVIL CODECIVIL CODE Articles 2047-2084 Articles 2047-2084 The second The second paragraph o paragraph of f Article 2047 Article 2047 states the la states the la applica!le to the applica!le to the contract of contract of s"ret#shi s"ret#ship$ p$ ItIt co%ers Articles co%ers Articles &207 to &222' &207 to &222' Title I Title I (O!ligations)' (O!ligations)' Chapter * Chapter * (Different +inds (Different +inds of of O!ligations)O!ligations)'' ,ection 4 (oint ,ection 4 (oint and ,olidar# and ,olidar# O!ligations)' O!ligations)' .oo/ IV .oo/ IV (O!ligations and (O!ligations and Contracts) of the Contracts) of the CIVIL CODE CIVIL CODE CIVIL CODE CIVIL CODE Articles Articles 208-2&2* 2&2* CIVIL CODE CIVIL CODE Articles Articles 208-201208-20122 2&40-2&4& TE 2&40-2&4& TE CATTEL CATTEL 3OT5A5E LA6 3OT5A5E LA6 (Act o$ &08' as (Act o$ &08' as
aended) aended) CIVIL CODE CIVIL CODE Articles Articles 208*-2012 208*-2012 2&24-2&*& 2&24-2&*& ,9:E3E ,9:E3E CO9T A$3$ CO9T A$3$ O$ 11-&0-0 O$ 11-&0-0--0 A 0 A,, A3EDED A3EDED .; .; E,OL9TIO E,OL9TIO O< 9E *0' O< 9E *0' 200& AD 200& AD A959,T 7' A959,T 7' 2002 2002 9DICIAL 9DICIAL <OECLO,9 <OECLO,9 E O< EAL E O< EAL
E,TATE E,TATE 3OT5A5E 3OT5A5E ("le =8' OC) ("le =8' OC) CIVIL CODE CIVIL CODE Articles Articles 208-2012 208-2012 2&*2-2&*1 2&*2-2&*1 DEFINITION
DEFINITION .# g"arant# a.# g"arant# a person' call person' called theed the
g"arantor' !inds g"arantor' !inds hiself to the hiself to the creditor to f"lfill the creditor to f"lfill the o!ligation of the o!ligation of the principal de principal de!tor in!tor in
case the latter sho"ld case the latter sho"ld fail to do
fail to do so$ Art$so$ Art$ 2047 (&) 2047 (&) If a person !inds If a person !inds hiself hiself solidaril# ith solidaril# ith the principal the principal de!tor' the de!tor' the pro%isions pro%isions ofof ,ection 4' ,ection 4' Chapter *' Chapter *' Title & of this Title & of this .oo/ shall !e .oo/ shall !e o!ser%ed$ In o!ser%ed$ In s"ch case the s"ch case the contract is called contract is called It is a contract !# It is a contract !# %irt"e of hich %irt"e of hich the de!tor the de!tor deli%ers to the deli%ers to the creditor or to a creditor or to a third person a third person a o%a!le o%a!le or a doc"ent or a doc"ent in%ol%ing in%ol%ing incorporeal rights incorporeal rights for the p"rpose of for the p"rpose of sec"ring the sec"ring the f"lfillent of a f"lfillent of a .# a chattel .# a chattel ortgage' personal ortgage' personal propert# is re propert# is recordedcorded
in the Chattel in the Chattel
3ortgage egister as 3ortgage egister as a sec"rit# for the a sec"rit# for the perforan
perforance of ance of an o!ligation
o!ligation$ If $ If thethe o%a!le' instead of o%a!le' instead of !eing reco
!eing recorded' isrded' is deli%ered to the deli%ered to the creditor or a third creditor or a third person' person' A real estate A real estate ortgage is a ortgage is a contract contract here!# the here!# the de!tor sec"res de!tor sec"res to the creditor to the creditor the f"lfillent the f"lfillent of a principal of a principal o!ligation' o!ligation' speciall# speciall# s"!>ecting to s"!>ecting to s"ch sec"rit# s"ch sec"rit# io%a!le io%a!le .# the contract of .# the contract of antichresis the antichresis the creditor ac?"ires creditor ac?"ires the right to recei%e the right to recei%e the fr"its of an the fr"its of an io%a!le of his io%a!le of his de!tor' ith the de!tor' ith the o!ligation to app o!ligation to app appl# the to the appl# the to the pa#e
pa#ent of thent of the interest' if interest' if oing' and oing' and thereafter to the thereafter to the
a s"ret#ship$ (Art$ 2047 (2))
principal o!ligation ith the "nderstanding that hen the o!ligation is f"lfilled' the thing deli%ered shall !e ret"rned ith all its fr"its and accessions$
the contract is a pledge and not a
chattel ortgage$ (Art$ 2&40) propert# or real rights o%er io%a!le propert# in case the principal o!ligation is not coplied ith at the tie stip"lated$ principal of his credit$ (Art$ 2&*2$)
PURPOSE ,pecial proise to anser for the de!t' defa"lt or
iscarriage of another
,"ret# proises to anser for the de!t' defa"lt or iscarriage of the principal$ To sec"re f"lfillent of a principal o!ligation$ To sec"re f"lfillent of principal o!ligation To sec"re f"lfillent of principal o!ligation It sec"res the perforance of a principal o!ligation PARTIES 5"arantor' Creditor
@ De!tor
O!ligor' s"ret# and o!ligee
:ledgor @ :ledgee
3ortgagor @ 3ortgagee Creditor @ De!tor SUBJECT MATTER personal the
g"arant# is the credit gi%en !# the person ho g"arantees the f"lfillent of the principal o!ligation
(g"arantor)
real the g"arant# is propert#$ If the g"arant# is io%a!le propert# real ortgage or antichresisB If the g"arant# is o%a!le propert# pledge or chatter ortgage personal the g"arant# is the credit gi%en !# the person ho g"arantees the f"lfillent of the principal o!ligation (g"arantor) real the g"arant# is propert#$ If the g"arant# is io%a!le propert# real ortgage or antichresisB If the g"arant# is o%a!le All o%a!les' hich are ithin coerce' a# !e pledged' pro%ided the# are s"scepti!le of possession$ (Art$ 2014) Incorporeal rights (Art$ 201$ ) personal or o%a!le propert#$ &$ Io%a!les 2$ Aliena!le rights iposed "pon io%a!les Io%a!les or eal :ropert#
propert# pledge or chatter ortgage KINDS/
CLASSIFICATION
&$ Con%entional- one constit"ted !# agreeent of the parties (art$ 20&' par$ &) 2$ Legal- one iposed !# %irt"e of a pro%ision of laB (I!id) *$ "dicial- one re?"ired !# a co"rt to g"arantee the
e%ent"al right of one of the parties in a case$ &$ Vol"ntar# or con%entional (created !# agreeent of the parties)B 2$ Legal (!# operation of la)$ 1. Voluntary Agreed to !eteen the parties or constit"ted !# the ill of the oner of the propert# 2. Legal e?"ired !# la to !e eec"ted in fa%or of certain persons 3. Equitable Lac/s the proper foralities of ortgage !"t shos the intention of the parties to a/e the propert# as a sec"rit# for a de!t NATURE AND CHARACTERISTICS &$ Accessor# It is dependent for its eistence "pon the principal o!ligation
g"aranteed !# it$ 2$ ,"!sidiar# and Conditional It ta/es effect onl# hen the principal de!tor fails in
his o!ligation$ *$ 9nilateral a$ It gi%es rise to
&$ Contractual and Accessory BUT Direct The contract"al o!ligation of the s"ret# is erel# an accessor# or collateral to the o!ligation contracted !# the principal$ .9T' his lia!ilit# to the creditor is direct' Real' !eca"se it is perfected !# deli%er# of the thing pledged$ 2$ Acessor' !eca"se it has no independent eistence$ *$ U!"la#eral' !eca"se it creates &$ I# "s a! accessory contract $eca%se "# sec%res &er'or(a!ce o' a &r"!c"&al o$l")a#"o! 2$ I# "s a foral contract $eca%se "# re*%"res re)"s#ra#"o! "! #+e C+a##el Mor#)a)e 3ortgage is a real ' accessory' and subsidiary contract 1. Accessory It sec"res the perforance of a principal o!ligation$ 3anresa' hoe%er' !elie%es that it is an independent contract$
o!ligations on the part of the g"arantor in relation to the creditor and not %ice-%ersa$ (Altho"gh after its f"lfillent' the principal de!tor sho"ld
indenif#
the g"arantor' !"t this o!ligation is onl# incidental)
!$ It a# !e entered into e%en itho"t the inter%ention of the principal de!tor$
4$ Distinct :erson It re?"ires that the person of the g"arantor "st !e distinct fro the person of the principal
de!tor (#o" cannot g"arant# #o"r on de!t)$ oe%er' in a real g"arant#' a person a# g"arantee his on o!ligation ith his on properties$ 5EEAL 9LE 5"arant# is grat"ito"s$ ECE:TIO 5"arant# is onero"s onl# if it is stip"lated g"arantee is gi%en$ priar#' and a!sol"te$ 2$ Liability is liited by t!e ters of t!e contract The etent of a s"ret#Fs lia!ilit# is
deterined onl# !# the ters of the contract and cannot !e etended !#
iplication$ *$ Liability arises only if "rinci"al debtor is !eld liable If the principal de!tor and the s"ret# are held lia!le' their lia!ilit# to pa# the creditor o"ld !e solidar#$ ."t' the s"ret# does not inc"r lia!ilit# "nless and "ntil the principal de!tor is
held lia!le$ 4$ #urety is not entitled to
e$!austion A s"ret# is not entitled to the eha"stion of the properties of the principal de!tor
since the s"ret# ass"es a solidar# lia!ilit# for the f"lfillent of the principal o!ligation$
$ T!e underta%ing is to t!e
C&ED'T(&) not to t!e "rinci"al debtor The de!tor cannot clai that the s"ret# !reached its
o!ligation to pa# for
an o!ligation solel# on the part of the creditor to ret"rn the thing pledged "pon f"lfillent of the principal o!ligation$ 4$ S%$s","ar' !eca"se the o!ligation of the creditor does not arise "ntil f"lfillent of the principal o!ligation$ Re)"s#er 'or "#s -al","# .$%# o!l a)a"!s# #+"r, &erso!s *$ I# "s a unilateral contract $eca%se "# &ro,%ces o!l o$l")a#"o!s o! #+e &ar# o'
#+e cre,"#or #o 'ree #+e #+"!) 'ro( #+e e!c%($ra!ce o! '%l'"ll(e!# o' #+e o$l")a#"o!0 2. Formal Contract –It "st !e in specified for to !e %alid (in riting)$ *$ A third person' ho is not a part# to the principal contract' a# offer his io%a!le "nder the contract of antichresis to sec"re the de!t of another$ (208) 4$ The contract of antichresis is indi%isi!le$ (2081) $ The indi%isi!ilit# of the antichresis is not affected !# the fact that the de!tors are not solidaril# lia!le$ (2010)
=$ The contract of antichresis a# sec"re all /inds of o!ligations p"re or conditional$ (201&)
the principal o!ligation !eca"se there
is no o!ligation as !eteen the s"ret#
and the de!tor$ If the s"ret# does not pa#' the
principal de!tor is still not relie%ed of his o!ligation$
PERFECTION CO,E,9AL CO,E,9AL eal There
"st !e deli%er# of the thing$ CO,E,9AL EAL COTACT .9T O DELIVE; Deli%er# is not re?"ired for the %alidit# of the contract itself$ .9T' it is re?"ired in order that the creditor a# recei%e the fr"its$ CO,E,9AL FORMALITY 3"st !e in riting to
!e enforcea!le$ It is go%ern !# the ,tat"te of <ra"ds$ 3"st !e in riting 3"st !e in riting o registration needed 3"st !e in riting' a specific for is re?"ired$ <oral egistered in chattel ortgage register 3"st !e in riting' a specific for is re?"ired$ <oral 6ritten or oral ."t the oral ortgage is not !inding against third persons$ egistered p"!lic doc"ent 3"st !e in riting' otherise it is %oid$
The ao"nt of the principal and of the
interest shall !e specified in ritingB otherise' the contract of antichresis shall !e %oid (Art$ 2&*4)$
LIABILITY
,er%es as an accessor# contract
Gith regard to s"ret#ship it is contract"al and accessor# !"t direct$ In other ords he is directl#'
priaril# and e?"all# !o"nd ith the principal as original proisor altho"gh he possesses no direct or personal interest o%er the latterFs o!ligations nor does he recei%e an# !enefit therfro$ (5arcia' r$ Vs$ CA)
DELI1ERY Deli%er# is not
necessar#
Deli%er# of the thing is
Deli%er# of the thing pledge is necessar#$
I! C+a##el Mor#)a)e' deli%er# of the personal
I! Real Mor#)a)e'
Deli%er# a# or a# not !e
not necessar# propert# to the ortgage is not necessar#$ deli%er# is not necessar#$ necessar#$
OWNERSHIP The g"arantor need not !e the oner$
:ledgor "st !e the oner of the thing pledge' otherise
the pledge is %oid$
3ortgagor "st !e the oner of the thing ortgaged' otherise the ortgage is %oid$
Creditor "st !e the oner
1ALIDITY The contract of
g"arant# is %alid onl# !eteen the contracting parties$
ot %alid against third persons "nless a description of the thing pledged and the date of the pledge appear in a p"!lic instr"ent$
I! C+a##el Mor#)a)e' not %alid against third person "nless registered in the Chattel 3ortgage egister$ I! Real Mor#)a)e' not %alid against third persons if not registered$ The contract is %alid onl# !eteen the parties$ PROHIBITION Against "n>"st enrichent Against :act" Coissori"
Against :act" Coissori" Against :act" Coissori" Against 9s"rio"s ates RIGHTS AND OBLIGATIONS OF THE PARTIES G%ara!#or2 &) 5"arantor cannot !e copelled to pa# the creditor "nless the latter has eha"sted all the propert# of the de!tor and has resorted to all the legal reedies against the de!tor$ Cre,"#or2 O$l")or-"nderta/es an o!ligationB he is the principal o!ligor S%re#3 a person ho engages hiself to !e ansera!le to a third person for de!t' defa"lt' iscarriage of another$ Ple,)or4s R")+#s2 &) To deand the
ret"rn in case of reasona!le gro"nds to fear destr"ction or ipairent of the thing itho"t the pledgeeFs fa"lt' s"!>ect to the d"t# of replaceent$ 2) To !id and !e preferred at the p"!lic a"ction$ *) To alienate the thing pledged pro%ided the pledgee consent to the sale$ 4) To as/ that the
I! C+a##el Mor#)a)e2
I! Real Mor#)a)e5 Mor#)a)or4s R")+#2
&) To alienate the thing ortgaged propert# !"t the ortgage shall
reain attached to the propert#$ A stip"lation for!idding the oner fro alienating the io%a!le ortgage shall !e %oid !eing contrar# to p"!lic polic# inas"ch as the transission of propert# sho"ld not !e "nd"l# ipede$
Mor#)a)ee4s R")+#2
&) To clai fro third a person in possession of the ortgaged propert# the pa#ent of the part of the credit sec"red !# hich
Cre,"#or2
&) To pa# the taes and charges "pon the estate "nless there is a contrar# stip"lation$ 2) To pa# epenses for necessar# repairs$ De$#or2 To pa# hat he oes the creditor
&) Eha"st all the propert# of the de!tor "nless the g"arantor is not entitled to s"ch !enefit "nder art$ 201$ 2) esort to all the legal reedies against the de!tor$ *) :ro%e that the
de!tor is still "na!le to pa#$ De$#or2 :a#ent of his principal o!ligation$ O$l")ee3to ho the o!ligation is ade$ thing pledged !e deposited in one of the folloing cases a) < the creditor
"ses the thing itho"t a"thorit#$ !) e is"ses the
thing$ c) The thing is endangered of !eing lost or ipaired !eca"se of negligence or illf"l act of the pledgee$ Ple,)or4s O$l")a#"o!s2
&) To ad%ise the pledgee of the
flas of the thing$
2) ot to deand the ret"rn of the thing "ntil after f"ll pa#ent of the de!t' incl"ding interest d"e thereon and epenses inc"rred for this preser%ation$ Ple,)ee4s R")+#s2 &) Option to deand replaceent or iediate pa#ent of the de!t in case of deception as to s"!stance or
said third person possesses$ It is necessar# that prior deand for pa#ent "st ha%e !een ade on the
de!tor and the latter failed to pat$
in order to reac?"ire the en>o#ent of the io%a!le$
?"alit#$ 2) To sell at p"!lic a"ction in case of reasona!le gro"nds to fear destr"ction or ipairent of the thing itho"t his fa"lt$ *) To !ring actions pertaining to the oner or to defend it against third persons$ 4) To choose hich of se%eral things pledged shall !e sold$ ) To collect and recei%e ao"nt d"e on credit pledged$ =) To !id at p"!lic a"ction' "nless he is the onl# !idder$ To appropriate the thing
REMEDIES In case of pa#ing g"arantor &) ight of indenit# or rei!"rseent 2) ight of s"!rogation Other reedies
&) O!tain release fro the g"arant#$
Deand a sec"rit# that shall protect hi
fro an#
,ale of the thing pledged at a p"!lic
a"ction$ In case of legal pledge' it can !e ade fro the
date of deand otheriseB the de!tor a# re?"ire the ret"rn of the thing$
<oreclos"re of Chattel 3ortgage !# p"!lic a"ction "nder Act &08 !"t the parties a# stip"late that it a# !e !# pri%ate sale$
&) Action for specific perforanc
e
2) :etition for the sale of the ortgages "nder "le =8 of the "les of Co"rt$ *) "dicial <oreclos"re
proceedings !# the creditor and against the danger of insol%enc# of the de!tor$ SPECIAL RE6UISITES &) A g"arant# cannot eist itho"t a %alid o!ligation$ 2) 3a# also !e gi%en as sec"rit# for f"t"re de!ts$
&$ :ossession of the thing pledged "st !e transferred to the creditor or a third person !# agreeent 2) ,"!>ect atter o%a!le and incorporeal rights e%idenced !# doc"ents of the title and the instr"ents pro%ing the right pledged shall !e deli%ered to the creditor and if negotia!le "st !e endorsed$
The description of the thing pledged and the date of "st appear in a p"!lic instr"ent to !ind third persons !"t not for the %alidit# of the contract$ I! C+a##el Mor#)a)e' 1) It can cover only personal or movable property in general; however, the parties may treat as personal property that which by its nature would be real property. 2) Registration of the mortgage with the Chattel ortgage Register where the mortgagor resides; if property is located in a di!erent province, registration in both provinces is re"uired. #) $escription of the property as would I! Real Mor#)a)e5 1) It can cover only immo vable proper ty and aliena ble real rights impos ed upon immo vable. 2) It must appea r i n a public instru ment. egistration in the registr# of propert# is
necessar# to !ind third persons !"t not for the %alidit# of the contract$ 1) It can cover only the fruits of an immovabl e property 2) $elivery of the immovabl e is necessar y for the creditor to receive the fruits and not that the contract shall be biding. #) %mount of the principal and interest must be speci&ed in writing. Epress agreeent that de!tor ill gi%e possession of the propert# to creditor and that the latter ill
enable the parties or other persons to identify the same after reasonable investigation and in"uiry. ') %ccompanied by an a(davit of good faith to bind thirds persons but not for the validity of the contract. ) It can cover only obligations e*isting at the time the mortgage s constituted.
appl# the fr"its to the interest if an# ten to the principal of his credit$
E7TINGUISHMENT OF A CONTRACT
&) elease in fa%or of one of the g"arantors' itho"t the consent of the other' !enefits all to the etent of the share of all the g"arantor to ho it has !een granted$ 2) If the creditor %ol"ntaril# accepts io%a!le or 1) +or the same causes as all other obligations. 2) Return of the thing pledged by the pledgee to the pledgor. #) tatement in writing by the pledge that
&) <oreclos"re of the thing ortgaged$
"dicial ordinar# action for foreclos"re "nder "le =8 of the "les of Co"rt Etra->"dicial hen ortgagee is gi%en a special poer of attorne# to sell the ortgaged propert# !# p"!lic a"ction "nder Act o$ *&*
-he debtor shall have the right
to the
e*tinguishment of the pledge or
mortgage as
the portion of the debt for
which each
thing is
especially
answerable is satis&ed.
other properties in pa#ent of the de!t' e%en if he sho"ld afterards lose the sae tro"gh e%iction or con%e#ance of propert#$
*) 6hene%er !# soe act of the creditor' the g"arantors e%en tho"gh the# are solidaril# lia!le cannot !e s"!rogated to the rights' ortgages and preferences of the forer$ 4) <or the sae ca"ses as all other o!ligations "nder art$ &2*&$ ) 6hen the principal o!ligation is eting"ished$ =) Etension granted to the de!tor !# the creditor itho"t the consent of the he renounces or abandons the pledge. ') ayment of the debt. ) ale of the thing pledged at public auction. Appropriation "nder Art$ 2&&2$
