PLEDGE, MORTGAGE
AND ANTICHRESIS
COVERAGE OF DISCUSSION:
• PROVISIONS COMMON TO PLEDGE AND MORTGAGE
Common requisites of pledge and mortgage
That they be constituted to secure the fulfillment of a principal obligation.
The principal obligation must be a valid obligation, as a rule, because being accessory contracts, pledge and mortgage owe their
existence upon the principal obligation. However, a pledge or mortgage may secure
A. All kinds of obligations, whether pure or subject to a suspensive or resolutory condition (Art. 2091) or even
B. Voidable, unenforceable, or natural obligations (Arts. 2052, 2086)
That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged.
A. Ownership at the time pledge or mortgage is constituted – The pledgor or mortgagor must be the absolute owner of the thing
pledged or mortgaged at the time it is constituted. Therefore, a pledge or mortgage constituted on future property is void.
(Arenas vs. Raymundo, 19 Phil 46)
B. Third persons may pledge or mortgage their property – It is not required for the validity of a pledge or mortgage that the debtor
be the owner of the thing pledged or mortgaged. Third persons may pledge or mortgage their property secure another person's
debt. (Art. 2085) However, they can be held liable only to the extent of the value of their property with respect to mortgage,
they may be treated liable for any deficiency in case on foreclosure if they expressly agreed to assume the principal obligation.
(Philtrust vs. Echaus, 52 Phil B12)
That the persons constituting the pledge or mortgage have the fire disposal of the
property, and in the absence thereof, that they be legally authorized for the purpose. (Art.
2005)
Free disposal means the property being given in pledge or mortgage is free from claims or
encumbrances, Thus, if the pledge or mortgage was constituted on the property of a corporation
under receivership, the pledge or mortgage is not void, because the corporation does not have the
free disposal of the thing Compana General de Tabacos vo, Gauzon, 20 Phil 261)
When thing pledged or mortgaged may be sold
or alienated to pay debt
Before maturity
General rule: The thing pledged or mortgaged cannot be sold or alienated since payment of the debt
cannot yet be compelled;
Exception: If the pledgor or mortgagor fails to fulfill certain conditions, such a violation would make
the debt due and entitle the pledges or mortgagee to have the thing sold through the formalities required
by law. (PNB vo. Lopez-Vito, 52 Phil 41) "Thus, if the debtor has lost the right to make use of the
period, or when there is an acceleration clause in an obligation payable installments and the debtor has
defaulted in the payment of on installment, the thing pledged or mortgaged may be alienated because
such violations would make the balance of the debt become due and demandable.
At maturity
Upon default of the debtor to pay the obligation at maturity, the thing pledged or mortgaged may be
sold or otherwise alienated to pay the creditor. (Art 2087)
Appropriation of the thing pledged or
mortgaged
Pactum commissorium, concept – This is a stipulation in a pledge or mortgage which provides for automatic
forfeiture, i.e. that ownership of the thing pledged or mortgaged shall pass to the creditor by the mere default of
the debtor (Declaro Vs. Alpha Insurance, 58564-R, June 16. 1978)
The elements of pactum commissorium, which enables the mortgagee (or pledgee) to acquire ownership of the mortgaged
(pledged) property without-the need of foreclosure proceedings, are (a) there should be a property mortgaged (or pledged)
by way of security for the payment of the principal obligation, and (b) and there should be a stipulation for automatic
appropriation by the creditor of the thing mortgaged (or pledged) in case of non-payment of the principal obligation within
the stipulated period. (Sps. Ong vs. Roban Lending Corporation, GR No. 172592, July 9, 2008; Garcia vs. Villar, G.R. No.
158891, June 27, 2012; Philnico Industrial Corporation vs. Privatization and Management Office, GR, No. 199420,
August 27, 2014)
This stipulation is void for being contrary to morals and public policy. (Perez vs. Cortez, 35 Phil 211) The creditor is
allowed only to move for the sale of the thing pledged or mortgaged after the principal obligation becomes due, in order to
collect the amount of his claims from the proceeds. (Ranjo vs. Salmon, 15 Phil 436) The stipulation, however, that the
pledgee or mortgagee may purchase the thing pledged or mortgaged at its current price if the debt is not paid on time is
valid. (See Warner- Barns vs. Buenaflor and Macoy, C.A. 36 OG 3290.) The pledgee or mortgagee may also bid at the
public auction of the things pledged or mortgaged.
Appropriation of property pledged or mortgaged
Pledge – Appropriation in pledge is allowed only if the thing pledged is not sold at two public
auctions. The pledgee is required in this case to give an acquittance for his entire claim. (Art.
2112)
Mortgage – In no case is appropriation of the property mortgaged allowed.
Indivisibility of pledge and mortgage
General rule: 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. (Art. 2089) This rule applies even if the
debtors are jointly liable. (Art. 2090)
1. Indivisibility among heirs of debtor – 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. (Art.
2089)
2. Indivisibility among heirs of creditor – The creditor's heir who received his share of the debt cannot return
the pledge or cancel the mortgage, to the prejudice of the other heirs who have not been paid. (Art. 2089)
Exception: The pledge or mortgage is divisible if several things are given in pledge or mortgage and
each one of them guarantees only a determinate portion of the credit.
The debtor in this case, shall have a right to the extinguishment of the pledge or mortgage as the
portion of the debt for which each thing is answerable is satisfied. (Art. 2089)
Examples:
1. D borrowed P10,000.00 from C. The debt is secured by a pledge of D's ring and bracelet. Even if D pays C P6,000.00, he
cannot ask for the return of the ring or the bracelet so as to extinguish partially the pledge. He can ask for the
extinguishment of the pledge only after he ha’s paid the obligation in full.
However, If D and C agreed that the ring would secure the amount of 6,000, and the bracelet 4,000, then D can ask for the
extinguishment of the pledge constituted on the ring upon his payment of 6,000.
2. D borrowed from C 1000,000 secured by a mortgage on D’s two adjoining lost (lot 1 and Lot 2). D dies leaving E and F
as heirs with E inheriting Lot 1 and F Lot 2. Even if E pays C 50,000, he cannot ask for the extinguishment of the
mortgage on Lot 1.
3. Suppose it is C who dies leaving X and Y as heirs of the credit right. If D pays X 50,000, X cannot cancel the mortgage
on Lot 1 to the prejudice of Y.
4. A and B jointly borrowed 20,000 from C. To secure the debt, A pledge his necklace and B his ring. If A pays C 10,000, he
cannot ask for the extinguishment of the pledge on his necklace. Although the debtors are jointly liable, the pledge
constituted on the necklace and the ring is indivisible.
Promise to constitute pledge or mortgage
A promise to constitute a pledge or mortgage gives rise only to a personal action between the contracting parties (Art. 2092)
The debtor can be compelled by the creditor to fulfill his promise by executing the pledge or mortgage. Until the mortgage has been
executed, no real right on the property is created In the case of pledge, the same shall not be perfected until the delivery of the object of
the pledge.
Should the debtor fail to comply with his promise to constitute the pledge or mortgage, he loses the benefit of the period Accordingly,
the creditor may demand immediate payment. (See Art. 1198.)
Example;
D borrowed P20,000.00 from C. The loan is payable in 12 months. D promised to execute a mortgage on his land within one
month to secure the debt. C accepted the promise. In this case, no mortgage has been constituted yet. However, C has e
personal right to demand the constitution of the mortgage. Once the mortgage has been constituted, it creates a real right in
favor of C If D does not constitute the mortgage within the one-month period, C may demand immediate payment of the
debt
