Article 2085.

The mortgage have the free

following requisites are disposal of their property,
essential to the contracts and in the absence thereof,
of pledge and mortgage: that they be
(1) That they be legally authorized for the
constituted to secure the purpose.
fulfillment of a principal Third persons who are not
obligation; parties to the principal
(2) That the pledgor or obligation may secure the
mortgagor be the absolute latter by pledging or
owner of the thing pledged mortgaging their own
or mortgaged; property. (1857)
(3) That the persons Article 2086. The
constituting the pledge or provisions of article 2052
are applicable to a pledge to a third person a
or mortgage. (n) moveable, or instrument
Article 2087. It is also of evidencing
the essence of these incorporeal rights for the
contracts that when the purpose of securing the
principal obligation fulfillment of a principal
becomes due, the things in obligation.
which the pledge or 1. Real contract – because
mortgage consists may be it is perfected by the
alienated for the payment delivery of the thing
to the creditor. (1858) pledged
Pledge – a contract by 2. Accessory contract – it
virtue of which the debtor has no independent
delivers to the creditor or existence of its own
3. Unilateral contract – Voluntary or conventional
creates an obligation pledge – created by
solely on the part of the agreement of the parties
creditor to return the thing Legal pledge – created by
upon fulfillment of the operation of law
principal Essential requisites
obligation common to pledge and
4. Subsidary contract – the mortgage
obligation incurred doesn’t  Constituted to secure
arise until the fulfillment fulfillment of a principal
of the principal obligation obligation
which is secured  Pledgor or mortgagor
is absolute owner
 Pledgor or mortgagor
Article 2086. The provisions of article 2052 are applicable
to a pledge or mortgage. (n)

Article 2087. It is also of the essence of these contracts

has free disposal of that when the principal obligation becomes due, the things in
which the pledge or mortgage consists may be alienated for

property or has legal the payment to the creditor. (1858)

Pledge – a contract by virtue of which the debtor delivers to

authority – pledgor or the creditor or to a third person a moveable, or instrument

evidencing incorporeal rights for the purpose of securing the
fulfillment of a principal obligation.
mortgagor must have 1. Real contract – because it is perfected by the delivery of
the thing pledged
capacity or at 2. Accessory contract – it has no independent existence of its
own
least authority or consent 3. Unilateral contract – creates an obligation solely on the
part of the creditor to return the thing upon fulfillment of the
of owner to pledge or principal obligation

4. Subsidary contract – the obligation incurred doesn’t arise

mortgage the property until the fulfillment of the principal obligation which is
secured
Article 2085. The following requisites are essential to the
contracts of pledge and mortgage: Voluntary or conventional pledge – created by agreement of
the parties
(1) That they be constituted to secure the fulfillment of a
principal obligation; Legal pledge – created by operation of law
(2) That the pledgor or mortgagor be the absolute owner of Essential requisites common to pledge and mortgage
the thing pledged or mortgaged;
Constituted to secure fulfillment of a principal obligation
(3) That the persons constituting the pledge or mortgage
have the free disposal of their property, and in the absence Pledgor or mortgagor is absolute owner
thereof, that they be legally authorized for the purpose. Pledgor or mortgagor has free disposal of property or has
Third persons who are not parties to the principal obligation legal authority – pledgor or mortgagor must have capacity or
may secure the latter by pledging or mortgaging their own at least authority or consent of owner to pledge or mortgage
property. (1857) the property
Thing pledged or mortgaged may be alienated – pledge and
mortgage are constituted to fulfillment of obligation, so the
creditor doesn’t automatically become owner if obligation is
Therefore, the debtor's heir
still unfulfilled. MUST BE DELIVERED, IF NONE THERE IS NO
PLEDGE 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
Article 2088. The creditor cannot appropriate the things
given by way of pledge or mortgage, or dispose of them. Any
completely satisfied.
stipulation to the contrary is null and void. (1859a)

Right of creditor to appropriate thing pledged or mortgaged

Neither can the creditor's
Sale of subject property – if debtor fails to comply with
obligation at a time, creditor is entitled to sell the thing to
heir who received his
collect amount of his claim of the proceeds
share of the debt return the
Prohibition against appropriation of property –
creditor can’t appropriate or dispose to himself the thing held
as pledge or under mortgage
pledge or cancel the
Prohibition against pactum commissorium mortgage, to the prejudice
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
of the other
heirs who have not been portion of the debt for
paid. which each thing is
From these provisions is specially answerable is
excepted the case in satisfied. (1860)
which, there being several Article 2090. The
things given in mortgage indivisibility of a pledge
or pledge, each one of or mortgage is not affected
them guarantees by the fact that the debtors
only a determinate portion are not solidarily liable.
of the credit. (n)
The debtor, in this case, Article 2091. The contract
shall have a right to the of pledge or mortgage may
extinguishment of the secure all kinds of
pledge or mortgage as the obligations, be they pure
or subject to a suspensive mortgage as
or resolutory unencumbered, things
condition. (1861) which he knew were
Article 2092. A promise to subject to some burden, or
constitute a pledge or by misrepresenting
mortgage gives rise only himself to be the owner of
to a personal action the same. (1862)
between the contracting Article 2093. In addition
parties, without to the requisites prescribed
prejudice to the criminal in article 2085, it is
responsibility incurred by necessary, in order to
him who defrauds another, constitute the contract of
by offering in pledge or pledge, that the
thing pledged be placed in bills of lading, shares of
the possession of the stock, bonds, warehouse
creditor, or of a third receipts and
person by common similar documents may
agreement. (1863) also be pledged. The
Article 2094. All instrument proving the
movables which are within right pledged shall be
commerce may be delivered to the creditor,
pledged, provided they are and if negotiable, must
susceptible of possession. be indorsed. (n)
(1864) Article 2096. A pledge
Article 2095. Incorporeal shall not take effect
rights, evidenced by against third persons if a
negotiable instruments, description of the thing
pledged and the date of the consents to the alienation,
pledge do not but the latter
appear in a public shall continue in
instrument. (1865a) possession. (n
Therefore, the debtor's heir who has paid a part of the debt
Article 2097. With the cannot ask for the proportionate extinguishment of the
pledge or mortgage as long as the debt is not completely

consent of the pledgee, the satisfied.

Neither can the creditor's heir who received his share of the

thing pledged may be debt return the pledge or cancel the mortgage, to the
prejudice of the other heirs who have not been paid.

alienated by the pledgor or From these provisions is excepted 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.
owner, subject to the The debtor, in this case, shall have a right to the
extinguishment of the pledge or mortgage as the portion of
pledge. The the debt for which each thing is specially answerable is
satisfied. (1860)

ownership of the thing Article 2090. The indivisibility of a pledge or mortgage is

not affected by the fact that the debtors are not solidarily

pledged is transmitted to liable. (n)

Article 2091. The contract of pledge or mortgage may

the vendee or transferee as secure all kinds of obligations, be they pure or subject to a
suspensive or resolutory condition. (1861)

soon as the pledgee Article 2092. A promise to constitute a pledge or mortgage

gives 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 its preservation, and is liable for its loss or deterioration, in
subject to some burden, or by misrepresenting himself to be conformity with the provisions of this Code. (1867)
the owner of the same. (1862)
Article 2100. The pledgee cannot deposit the thing pledged
Article 2093. In addition to the requisites prescribed in with a third person, unless there is a stipulation authorizing
article 2085, it is necessary, in order to constitute the him to do so.
contract of pledge, that the thing pledged be placed in the
The pledgee is responsible for the acts of his agents or
possession of the creditor, or of a third person by common
employees with respect to the thing pledged. (n)
agreement. (1863)
Article 2101. The pledgor has the same responsibility as a
Article 2094. All movables which are within commerce may
bailor in commodatum in the case under article 1951. (n)
be pledged, provided they are susceptible of possession.
(1864) Article 2102. If the pledge earns or produces fruits, income,
dividends, or interests, the creditor shall compensate what
Article 2095. Incorporeal rights, evidenced by negotiable
he receives with those which are owing him; but if none are
instruments, bills of lading, shares of stock, bonds,
owing him, or insofar as the amount may exceed that which
warehouse receipts and similar documents may also be
is due, he shall apply it to the principal. Unless there is a
pledged. The instrument proving the right pledged shall be
stipulation to the contrary, the pledge shall extend to the
delivered to the creditor, and if negotiable, must be indorsed.
interest and earnings of the right pledged.
(n)
In case of a pledge of animals, their offspring shall pertain to
Article 2096. A pledge shall not take effect against third
the pledgor or owner of animals pledged, but shall be subject
persons if a description of the thing pledged and the date of
to the pledge, if there is no stipulation to the contrary.
the pledge do not appear in a public instrument. (1865a)
(1868a)
Article 2097. With the consent of the pledgee, the thing
Article 2103. Unless the thing pledged is expropriated, the
pledged may be alienated by the pledgor or owner, subject
debtor continues to be the owner thereof.
to the pledge. The ownership of the thing pledged is
transmitted to the vendee or transferee as soon as the Nevertheless, the creditor may bring the actions which
pledgee consents to the alienation, but the latter shall pertain to the owner of the thing pledged in order to recover
continue in possession. (n) it from, or defend it against a third person. (1869)
Article 2098. The contract of pledge gives a right to the Article 2104. The creditor cannot use the thing pledged,
creditor to retain the thing in his possession or in that of a without the authority of the owner, and if he should do so, or
third person to whom it has been delivered, until the debt is should misuse the thing in any other way, the owner may
paid. (1866a) ask that it be judicially or extra judicially deposited. When
the preservation of the thing pledged requires its use, it
Article 2099. The creditor shall take care of the thing
must be used by the creditor but only for that purpose.
pledged with the diligence of a good father of a family; he
(1870a)
has a right to the reimbursement of the expenses made for
Article 2105. The debtor cannot ask for the return of the pledgee. This same presumption exists if the thing pledged is
thing pledged against the will of the creditor, unless and until in the possession of a third person who has received it from
he has paid the debt and its interest, with expenses in a the pledgor or owner after the constitution of the pledge. (n)
proper case. (1871)
Article 2111. A statement in writing by the pledgee that he
Article 2106. If through the negligence or wilful act of the renounces or abandons the pledge is sufficient to extinguish
pledgee, the thing pledged is in danger of being lost or the pledge. For this purpose, neither the acceptance by the
impaired, the pledgor may require that it be deposited with a pledgor or owner, nor the return of the thing pledged is
third person. (n) necessary, the pledgee becoming a depositary. (n)

Article 2107. If there are reasonable grounds to fear the Article 2112. The creditor to whom the credit has not been
destruction or impairment of the thing pledged, without the satisfied in due time, may proceed before a Notary Public to
fault of the pledgee, the pledgor may demand the return of the sale of the thing pledged. This sale shall be made at a
the thing, upon offering another thing in pledge, provided public auction, and with notification to the debtor and the
the latter is of the same kind as the former and not of owner of the thing pledged in a proper case, stating the
inferior quality, and without prejudice to the right of the amount for which the public sale is to be held. If at the first
pledgee under the provisions of the following article. auction the thing is not sold, a second one with the same
formalities shall be held; and if at the second auction there is
The pledgee is bound to advise the pledgor, without delay, of
no sale either, the creditor may appropriate the thing
any danger to the thing pledged. (n)
pledged. In this case he shall be obliged to give an
Article 2108. If, without the fault of the pledgee, there is acquaintance for his entire claim. (1872a)
danger of destruction, impairment, or diminution in value of
Article 2113. At the public auction, the pledgor or owner
the thing pledged, he may cause the same to be sold at a
may bid. He shall, moreover, have a better right if he should
public sale. The proceeds of the auction shall be a security
offer the same terms as the highest bidder.
for the principal obligation in the same manner as the thing
originally pledged. (n) The pledgee may also bid, but his offer shall not be valid if
he is the only bidder. (n)
Article 2109. If the creditor is deceived on the substance or
quality of the thing pledged, he may either claim another Article 2114. All bids at the public auction shall offer to pay
thing in its stead, or demand immediate payment of the the purchase price at once. If any other bid is accepted, the
principal obligation. (n) pledgee is deemed to have been received the purchase price,
as far as the pledgor or owner is concerned. (n)
Article 2110. If the thing pledged is returned by the
pledgee to the pledgor or owner, the pledge is extinguished. Article 2115. The sale of the thing pledged shall extinguish
Any stipulation to the contrary shall be void. the principal obligation, whether or not the proceeds of the
sale are equal to the amount of the principal obligation,
If subsequent to the perfection of the pledge, the thing is in
interest and expenses in a proper case. If the price of the
the possession of the pledgor or owner, there is a prima facie
sale is more than said amount, the debtor shall not be
presumption that the same has been returned by the
entitled to the excess, unless it is otherwise agreed. If the
price of the sale is less, neither shall the creditor be entitled Article 2122. A thing under a pledge by operation of law
to recover the deficiency, notwithstanding any stipulation to may be sold only after demand of the amount for which the
the contrary. (n) thing is retained. The public auction shall take place within
one month after such demand. If, without just grounds, the
Article 2116. After the public auction, the pledgee shall
creditor does not cause the public sale to be held within such
promptly advise the pledgor or owner of the result thereof.
period, the debtor may require the return of the thing. (n)
(n)
Article 2123. With regard to pawnshops and other
Article 2117. Any third person who has any right in or to
establishments, which are engaged in making loans secured
the thing pledged may satisfy the principal obligation as soon
by pledges, the special laws and regulations concerning them
as the latter becomes due and demandable. (n)
shall be observed, and subsidiarily, the provisions of this
Article 2118. If a credit which has been pledged becomes Title. (1873a)
due before it is redeemed, the pledgee may collect and
Article 2124. Only the following property may be the object
receive the amount due. He shall apply the same to the
of a contract of mortgage:
payment of his claim, and deliver the surplus, should there
be any, to the pledgor. (n) (1) Immovables;

Article 2119. If two or more things are pledged, the (2) Alienable real rights in accordance with the laws,
pledgee may choose which he will cause to be sold, unless imposed upon immovables.
there is a stipulation to the contrary. He may demand the
Nevertheless, movables may be the object of a chattel
sale of only as many of the things as are necessary for the
mortgage. (1874a)
payment of the debt. (n)
Article 2125. In addition to the requisites stated in article
ARTICLE 2120. If a third party secures an obligation by
2085, it is indispensable, in order that a mortgage may be
pledging his own movable property under the provisions of
validly constituted, that the document in which it appears be
article 2085 he shall have the same rights as a guarantor
recorded in the Registry of Property. If the instrument is not
under articles 2066 to 2070, and articles 2077 to 2081. He is
recorded, the mortgage is nevertheless binding between the
not prejudiced by any waiver of defense by the principal
parties.
obligor. (n)
The persons in whose favor the law establishes a mortgage
Article 2121. Pledges created by operation of law, such as
have no other right than to demand the execution and the
those referred to in articles 546, 1731, and 1994, are
recording of the document in which the mortgage is
governed by the foregoing articles on the possession, care
formalized. (1875a)
and sale of the thing as well as on the termination of the
pledge. However, after payment of the debt and expenses, Article 2126. The mortgage directly and immediately
the remainder of the price of the sale shall be delivered to subjects the property upon which it is imposed, whoever the
the obligor. (n) possessor may be, to the fulfillment of the obligation for
whose security it was constituted. (1876)
Article 2127. The mortgage extends to the natural Article 2134. The amount of the principal and of the
accessions, to the improvements, growing fruits, and the interest shall be specified in writing; otherwise, the contract
rents or income not yet received when the obligation of antichresis shall be void.(n)
becomes due, and to the amount of the indemnity granted or
Article 2135. The creditor, unless there is a stipulation to
owing to the proprietor from the insurers of the property
the contrary, is obliged to pay the taxes and charges upon
mortgaged, or in virtue of expropriation for public use, with
the estate.
the declarations, amplifications and limitations established by
law, whether the estate remains in the possession of the He is also bound to bear the expenses necessary for its
mortgagor, or it passes into the hands of a third person. preservation and repair.
(1877)
The sums spent for the purposes stated in this article shall
Article 2128. The mortgage credit may be alienated or be deducted from the fruits. (1882)
assigned to a third person, in whole or in part, with the
formalities required by law. (1878) Article 2136. The debtor cannot reacquire the enjoyment of
the immovable without first having totally paid what he owes
Article 2129. The creditor may claim from a third person in the creditor.
possession of the mortgaged property, the payment of the
part of the credit secured by the property which said third But the latter, in order to exempt himself from the
person possesses, in the terms and with the formalities obligations imposed upon him by the preceding article, may
which the law establishes. (1879) always compel the debtor to enter again upon the enjoyment
of the property, except when there is a stipulation to the
Article 2130. A stipulation forbidding the owner from contrary. (1883)
alienating the immovable mortgaged shall be void. (n)
Article 2137. The creditor does not acquire the ownership
Article 2131. The form, extent and consequences of a of the real estate for non-payment of the debt within the
mortgage, both as to its constitution, modification and period agreed upon.
extinguishment, and as to other matters not included in this
Chapter, shall be governed by the provisions of the Mortgage Every stipulation to the contrary shall be void. But the
Law and of the Land Registration Law. (1880a) creditor may petition the court for the payment of the debt
or the sale of the real property. In this case, the Rules of
Article 2132. By the contract of antichresis the creditor Court on the foreclosure of mortgages shall apply. (1884a)
acquires the right to receive the fruits of an immovable of his
debtor, with the obligation to apply them to the payment of Article 2138. The contracting parties may stipulate that the
the interest, if owing, and thereafter to the principal of his interest upon the debt be compensated with the fruits of the
credit. (1881) property which is the object of the antichresis, provided that
if the value of the fruits should exceed the amount of interest
Article 2133. The actual market value of the fruits at the allowed by the laws against usury, the excess shall be
time of the application thereof to the interest and principal applied to the principal. (1885a)
shall be the measure of such application. (n)
Article 2139. The last paragraph of article 2085, and
articles 2089 to 2091 are applicable to this contract. (1886a)

Article 2140. By a chattel mortgage, personal property is

recorded in the Chattel Mortgage Register as a security for
the performance of an obligation. If the movable, instead of
being recorded, is delivered to the creditor or a third person,
the contract is a pledge and not a chattel mortgage. (n)

Article 2141. The provisions of this Code on pledge, insofar

as they are not in conflict with the Chattel Mortgage Law
shall be applicable to chattel mortgages. (n)