PARTICULAR PLEDGE REAL ESTATE CHATTEL MORTGAGE

MORTGAGE
Definition An accessory contract A contract whereby the A contract whereby a
whereby the debtor debtor secures to the personal property is
delivers to the creditor creditor the fulfillment recorded in the Chattel
or a 3rd person a of a principal obligation mortgage Register as a
movable or personal specially subjecting to security for the
property or document such secutiryt, performance of an
evidencing incorporeal immovable property or obligation.
rights, to secure real rights over
fulfillment of a immovable property, in
principal obligation case the principal
with the condition that obligation is not paid or
when the obligation is complied with at the
satisfied, the thing time stipulated.
delivered shall be
returned to the pledgor
with all its fruits and
accessions, if any.
Principal or Accessory Accessory Accessory Accessory
Contract
Object of the contract Movable Immovable Movable
Necessity of delivery   
Pledgor or Mortgagor is   
the absolute owner of
the property
Pledgor or mortgagor   
must have the free
disposal of the
property

a) Limited liability of a third person as a pledgor or mortgagor: aka Accommodation Mortgagor. This
is a 3rd person who owns a property and will have the property as a collateral of a loan made by
the debtor.
b) Property acquired in the future, can it be mortgaged? No.
c) Pactum Commissorium
d)c) (Research on this. Part of your Midterms)
 REAL ESTATE MORTGAGE
1. Subject: Land and Bldg.
2. Mortgagee in good faith
a. Banks- cannot rely on the face of the title alone. By nature of their functions, the banks
are requires to go beyond the title. Hence, it conducts both title investigation report and
title verification report.
b. Mortgagee other than banks- can rely on the face of the title as to the annotations
stipulated therein
3. After acquired properties: may stipulate that after-acquired properties are automatically
included in the mortgage
4. After incurred obligation: may expressly state that it may secure future obligations. Hence, a
collateral may cover obligations after the current obligation.
5. Foreclosure of mortgage
a. Extrajudicial foreclosure (RA No. 3135)
b. Judicial Foreclosure (Rule 68 of the Rules of Court)
c. Ordinary execution sale (Rule 39 of Rules of Court)
6. Extrajudicial foreclosure:
a. Filing of petition: must be at the place where the property is situated
b. Notice and publication:
- Notice: 3 public places. Not required that notice will be placed on where the
property is located
- Publication: Newspaper of General Circulation (e.g. Philippine Daily Inquirer,
Philippine Star, Mindanao Daily News)
7. Redemption:
- GR: 1Y from the date ethe certificate of sale is registered with the Register of
Deeds
- If the mortgagee is a bank, the general rule applies
- XPN: if the mortgagee is a juridical person, the mortgagor can redeem the
property within 3 months from foreclosure but not later than the registration
of the certificate of sale.
Sample:

a) A have a P1MM loan with BDO. VS REM (Real Estate Mortgage) on T-123456.
- Possession of the property after the loan is still with A
- A can still sell the same to another.
- If A sold the property to B.
- BDO still have better rights over B in case A will not be able to fully pay the loan and will
resort to foreclosure of the property.

b) A have a P1MM loan with BDO. VS UREM (Unregistered Real Estate Mortgage) on T-123456.
- Possession of the property after the loan is still with A
- A can still sell the same to another.
- If A sold the property to B.
 - B will have better rights over BDO as B is a buyer in good faith without knowledge of the
collateral on the property as no annotation was made.

c) A have a P1MM loan with BDO. VS UREM (Unregistered Real Estate Mortgage) on T-123456.
- Possession of the property after the loan is still with A
- A can still mortgage the same to another.
- If A mortgage the property to BPI for P1MM.
- BDO will have better rights than BPI. As a bank, BPI should exercise more diligence in
determining whether or no the property is a collateral for another loan.
 CHATTEL MORTGAGE

1) Subject matter- where it must be registered to be binding to 3rd persons

a) Shares of stocks: not required to be registered with the Stock and transfer book
b) Machinery: See Art 415(a) of NCC. If all the requisites are complied with, subject is under
REM. Otherwise, CHM.
c) Vessels: registered with Maritime Industry Authority
d) Motor vehicles: registered with LTO
e) Buildings: not covered by CHM. However, CHM contract will be valid between parties. But it
will not be binding with 3rd persons.
2) After-acquired properties: not allowed to be covered by existing CHM
3) After-incurred properties: not allowed to be covered by existing CHM
 CONDOMINIUM ACT (RA 4726)
Project

Playground, Lounge
COMMON AREAS

Bldg. A Bldg. B
1 UNIT = 1 SHARE IN THE
CONDO CORP

1) Ownership:
- The project is owned by the condominium owners
- 1 unit of the condominium = 1 share in the condominium corporation
- The condo owners will have undivided interest in the common areas. Hence,
they can enjoy the properties but they will not be able to have a say on what
shall be done on it as the management will be under the condominium
corporation.
2) Management
- Management will be under the condominium corporation
- Its term is co-terminus with that of the project.
- Purpose is to manage only the project.
3) Rights of owner
- Partition rights of the owner is discussed under Section 8 of RA 4726
(memorize)
 MACEDA LAW
• Installment Sales on Real Property
• Coverage: condominiums
o Exclusions:
1. Industrial lots
2. Commercial buildings
3. Sale to tenants under agrarian laws
4. Sale of lands payable in straight terms

• In case of default of payment, the remedies of the buyer are as follows:

a. If paid less than 2Y of installments:
1. Have grace period of at least 60 days
2. If the buyer fails to pay the installments due at the expiration of the grace period, the seller
may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation
or demand for rescission.
b. If paid at least 2Y of installments:
1. Buyer is entitled to a grace period of 1 month per year of installments made
2. If the buyer is not able to pay, a contract may be cancelled, and cash surrender value will be
paid to the buyer.
CASH SURRENDER VALUE = (50%)(total payments) + (5%)(per year of installment after 5Y of
installment) (maximum amount to be recovered is 90% of the total payments made)
 RECTO LAW
• Installment sales law on personal property
• Requisites:
1. Valid contract of sale
2. Subject matter is personal property
3. Payable in installments; and
4. In the case of 2nd and 3rd remedies, that there has been a failure to pay 2/more installments.
• Alternative remedies in case of failure to pay on the part of the buyer
1. Specific performance
2. Rescission
3. Foreclosure
• Specific performance: Require buyer to pay-off the remaining balance.
- GR: once chosen, can no longer choose other remedies
XPN: If impossible to perform it, rescission will apply
• Rescission: Cancel the contract of sale and return to the buyer the price paid and the buyer will
return the object of the sale. Deemed chosen when:
a. Notice of rescission is sent;
b. Take possession of the subject matter; and
c. File action for rescission
• Foreclosure: if chosen, can no longer recover any unpaid balance. Any agreement to the contrary is
void.