Credit Transactions

Thursday, October 27, 2022 4:41 PM

Focus on board:
• Pledge
• Real estate mortgage
• Chattel mortgage

REQUISITES necessary for validity:

1. That they must be constituted to secure the fulfillment of a principal obligation;
- Nature: accessory contract kasi dependent sila sa existence ng principal obligation
A pledge or a mortgage may be constituted to guarantee the performance of:
a. A voidable or
b. An unenforceable contract
c. A natural obligation
d. All kinds of obligation, be they pure or subject to a suspensive or resolutory conditi
1. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged
(absolute ownership);
- At the time the contract of pledge or mortgage was entered into
2. 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
ILLUSTRATION
On September 30, 2020, D executed a contract of pledge over the cellphone of his father to sec
his (D's) obligation to C for P10,000. On October 31, 2020, the father of D died and as sole heir,
obtained ownership over the assets, including the cellphone. What is the status of the contrac
pledge?
ANSWER: The contract of pledge is void since the requirement of "absolute ownership" must b
complied with at the time the contract was entered into; in contrast with a contract of sale whi
requires ownership only at the time the obligation to deliver arises.

THIRD PERSONS
• Third persons who are not parties to the principal obligation may secure the latter by
pledging or mortgaging their own property
ILLUSTRATION
D is indebted to C for P100,000. X executed a pledge/mortgage in favor or C to secure D's debt.
ANALYSIS: In this case, X can validly enter into a contract of pledge or mortgage to secure an
obligation to which he is not a party to. It would follow that the requirement of absolute
ownership and free disposal shall apply to X, being the pledgor/mortgagor, even if he is not the
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ILLUSTRATION
D is indebted to C for P100,000. X executed a pledge/mortgage in favor or C to secure D's debt.
ANALYSIS: In this case, X can validly enter into a contract of pledge or mortgage to secure an
obligation to which he is not a party to. It would follow that the requirement of absolute
ownership and free disposal shall apply to X, being the pledgor/mortgagor, even if he is not the
principal debtor.

AUTOMATIC APPROPRIATION - VOID

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.
The stipulation is otherwise known as Pactum Commissorium.

INDIVISIBILITY
A pledge or mortgage is indivisible, even though the debt may be divided among the successors
interest of the debtor or of the creditor.
Therefore:
1. 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.
2. Neither can the creditor's heir who received his share of the debt return the pledge or ca
the mortgage, to the prejudice of the other heirs who have not been paid.
The indivisibility of a pledge or mortgage is not affected by the fact that the debtors are not
solidarily liable.
Ang sinasabi lang ay kahit na dinivide yung debit sa heirs ng debtor o credit sa heirs ng creditor
walang partial payment that will authorize the release of any of the thing given by way of pledg
NOT APPLICABLE: If there being several things given in mortgage or pledge, each one of them
guarantees only a determinate portion of the credit.
ILLUSTRATION
D executed a contract of pledge in favor of C, delivering his diamond ring and gold watch, as
security for his loan amounting to P100,000. Without the debt being paid, C died leaving X and
his sole heirs; D likewise died leaving A and B, his sold heirs. A eventually made a payment to X
representing his share of the P100,000 debt owed by his father to X's father.
• Binayaran ni A si X ng 50,000, yung share niya sa credit
ANALYSIS: A cannot demand, and X cannot allow, the release of any of the objects given by wa
pledge.
GENERIC RULE: If two or more objects are given by way of pledge to secure one obligation, no
partial payment will authorize the release of any of the objects.
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