Modes of Extinguishment

 Pledge may be extinguished directly or indirectly. 

1. Indirect cause - When the principal obligation secured by the pledge is
extinguished. thee pledge, being a mere accessory contract, is likewise
extinguished. 
2. Direct causes 
2.a Return by the pledgee of the thing pledged to the pledgor or owner. 
2.b Renunciation or abandonment in writing by the pledgee of the pledge. 
2.c Sale of the thing pledged.
2.d Appropriation of the thing pledged. - This is an exception to pactum
commissorium. Art 2112 states that "If the thing pledged is not sold in the
first and second public auctions, the creditor may appropriate the thing
pledged. In this case, he/she shall be obliged to give an acquittance for
his/her entire claim. 
 

Foreclosure of real mortgage..

Grounds
1. When the principal obligation is not paid when due
2. When there is any violation of any condition, stipulation or warranty by
the mortgagor
 

Kinds of Foreclosure
1. Judicial - made through a petition to court
2. Extra-judicial - made in compliance with Act. No. 3135 in the following
cases:
2.a Where there is a stipulation in the mortgage contract that mortgagee
may foreclose extrajudicially
2.b Where such extra-judicial foreclosure sale is made under a special
power of attorney inserted in the contract. 
 

In case of deficiency in the foreclosure sale, the creditor may recover the
same from the debtor. 
 

Redemption
Transaction through which the mortgagor or one claiming his/her right, by
means of payment or the performance of the condition, reacquires or buys
back the value of the title which may have passed under the mortgage,
divests the mortgaged premises of the lien which the mortgage may have
created. 
Kinds of redemption
1. Equity of redemption - right of the mortgagor to redeem the mortgaged
property after his/her default in the performance of the obligation but before
the property is sold. 
2. Right of redemption - right of the mortgagor to repurchase the property
within a certain period after it was sold for the payment of the mortgage
debt 
a) in Judicial foreclosure, the mortgagor may redeem the property after the
sale and before the confirmation by the court of the sale. 
b) In extra-judicial foreclosure, the mortgagor has one year from the date of
registration of the sale to redeem the property.