What is ANTICHRESIS?

Article 2132
By the contract of antichresis the creditor acquires the right to receive fruits of an
immovable of his debtor, with the obligation to apply them to the payment of the
interest, if owing, and thereafter to the principal of his credit.
What are its CHARACTERISTICS?
>an accessory contract because it secures the performance of a principal obligation.
>a formal contract because it must be in a specified form to be valid.
What are the REQUISITES of antichresis?
>It can cover only the fruits of an immovable property
>Delivery of the immovable is necessary for the creditor to receive the fruits and not that the
contract shall be binding
>Amount of principal and interest must be specified in writing
>Express agreement that the debtor will give possession of the property to creditor and that the
latter will apply the fruits to the interest, if any, then to the principal of his credit. In the absence
of this requisite, the contract shall be deemed to be one of mortgage
Antichresis vs Pledge
ANTICHRESIS
PLEDGE
refers to real property
Refers to personal property
perfected by mere consent
perfected by the delivery of the thing pledged
consensual contract
a real contract
*Both are similar in that the debtor loses control of the subject matter of the contract
Antichresis vs Mortgage
ANTICHRESIS
the property is delivered to the creditor

MORTGAGE
the debtor usually retains possession of
the property
the creditor acquires only the right to
the creditor does not have any right
receive the fruits of the property hence it
to receive the fruits but the mortgage
does not produce a real right
creates a
real right over the property which is
enforceable against the whole world
, the creditor unless there is a stipulation to
the creditor has no such obligation
the contrary, is obliged to pay the taxes
and charges upon the estate
, it is expressly stipulated that the creditor
there is no such obligation in the part
given possession of the property shall
of the mortgagee
apply the fruits thereof to the payment of
interest, if owing, and thereafter to the
principal of the credit

*Both are similar in that the subject matter is a real property. Like pledge and mortgage, antichresis
gives a real and not merely a personal right if it is registered in the Registry of Property.
Article 2133
The actual market value of the fruits at the time of the application thereof to the interest and
principal shall be the measure of such application
Measure of application
>The contract does not cover the immovable but only its fruits. The fruits must be appraised at
their actual market value at the time of the application.
Article 2134
The amount of the principal and the interest shall be specified in writing; otherwise, the
contract of antichresis is void.
Form of the contract
>It should be in writing. The law requires a certain form for it to be valid and not only to affect
third persons.
>But even if the contract of antichresis is void, the principal contract is still valid
Article 2135
The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes and
charges upon the estate. He is also bound to bear the expenses necessary for the
preservation and repair. The sums spent for the purposes stated in this article shall be
deducted from the fruits.
Obligations of the antichretic creditor
>To pay taxes and charges on the estate, including expenses necessary for preservation and
repair
>To apply the fruits, after receiving them to the payment of interest, if owing, and thereafter to
the principal
>To render an account of the fruits to the debtor
>To bear the expenses necessary for its preservation and repair
Article 2136
The debtor cannot reacquire the enjoyment of the immovable without first having totally paid
what he owes the creditor. But the latter, in order to exempt himself from the obligations
imposed upon him by the preceding article, may always compel the debtor to enter again
upon the enjoyment of the property, except when there is a stipulation to the contrary.
* The property delivered stands as a security for the payment of the obligation of the debtor in
antichresis. Hence, the debtor cannot demand its return until the debt is totally paid. However, if the
creditor does not want to pay the taxes and incur the necessary expenses for the preservation and
repair of the property, he may compel the debtor to reacquire the same except when there is a
contrary stipulation.

Article 2137
The creditor does not acquire the ownership of the real estate for nonpayment of the debt
within the period agreed upon. Every stipulation to the contrary shall be void. But the creditor
may petition the court for the payment of the debt or the sale of the property. In this case, the
Rules of Court on the foreclosure of mortgages shall apply.
Remedy of creditor in case of nonpayment
>To bring an action for specific performance
>To petition for the sale of the real property as in a foreclosure of mortgages under Rule 68 of
the Rules of Court. However, the parties may agree on an extrajudicial foreclosure in the same
manner as they are allowed in contracts of mortgage and pledge.
*the creditor in antichresis and his successors-in-interest cannot ordinarily acquire by
prescription the land given to him, any agreement to the contrary is void.
Article 2138
The contracting parties may stipulate that the interest upon the debt be compensated with
the fruits of the property which is the object of the antichresis, provided that if the value of
the fruits should exceed the amount of interest allowed by the law against usury, the excess
shall be applied to the principal.
*The antichretic creditor is under the obligation to apply the fruits of the property in
satisfaction, first, of whatever interest on the debt is due, and secondly, to the payment of the
principal.
*The fruits must be appraised on the basis of their actual market value at the time of the
application

What is a Chattel Mortgage?

-

A chattel mortgage is a contract by virtue of which a 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.

Characteristics of Chattel Mortgage

-

Formal contract
Accessory contract
Unilateral contract
Does not convey dominion but only a security
Creates a real right or lien which follows the chattel wherever it goes

Distinctions between chattel and pledge

Basis
As to delivery of property
As to registration
As to procedure of sale
As to excess in case of
foreclosure
As to recovery of deficiency in
case of foreclosure

Chattel mortgage
Not necessary
required
Sec. 14 of act 1508 applies
Goes to the debtor
Creditor is entitled unless the
chattel mortgage is
constituted as security for
purchase of personal property
in installments

Pledge
Necessary
Not required
Art 2112 applies
Goes to the creditor unless
otherwise agreed
Creditor not entitled even if
agreed between the parties

Laws governing chattel mortgage

1
2
3
4
5

Chattel Mortgage Law Act no 1508

Civil Code
Revised Administratice Code
Revised Penal Code
Ship Mortgage Decree of 1978

Art. 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.
Registration
There are no absolute criterion between the two kinds of property, Real and Personal, for
purposes of the application of Chattel Mortgage Law. In such cases, a personal property may
be imputed as real property or vice versa.
- Under given conditions, property may have different character different from that imputer to
it in said articles
- Parties may, by agreement, treat as personal property by which by nature would be real
property; and it is a familiar phenomenon to see things classed as real property for purposes
of taxation which on general principles might be considered as personal property
- The proper classification of one thing as real or personal property is doubtful
Sec 7 of the Chattel Mortgage Law does not demand a minute and specific description of
every chattel mortgaged in the deed of mortgage, but only requires that the description be
such to enable the partied to identify the same after reasonable investigation and inquiry
The law on provides for only one way of executing a valid chattel mortgage, the registration
of the personal property in the Chattel Mortgage Registry. The law is substantially and
sufficiently complied with where the registration is made by the mortgagee before the
mortgagor has complied with his principal obligation and no right of innocent third persons is
prejudiced.
Registration of an assignment of Chattel Mortgage credit is merely permissive.
Sec 5 of the Chattel Mortgage Law provides that in describing what constitutes a good
chattel mortgage, includes the requirement of the affidavit of good faith appended in the
mortgage and recorded therewith. The affidavit of good faith is an oath in a contract of
chattel mortgage where the parties severally swear that the mortgage is made for the
purpose of securing the obligation specified in the conditions. It is not necessary for the
validity of the chattel mortgage but only to give it a preferred status.
A chattel mortgage can only cover obligations existing at the time the mortgage is
constituted.

Effects of Registration
1.) Creates Real Right the registration in the chattel mortgage is an effective and binding notice to
other creditors of its existence and creates a real right or lien which, being recorded, follows the
chattel wherever it goes. The registration gives the mortgagee symbolical possession.
2.) Adds nothing to mortgage registration adds nothing to the instrument, considered as a
source of title and affects nobodys rights except as a species of notice.
Right of mortgagee to possession
1.) After Default the right of the creditor to take the mortgaged property is implied in his right to
sell when default occurs.
2.) Before Default the mortgagee is not entitled to the possession of the mortgaged property upon
execution of the chattel mortgage for otherwise, it becomes a pledge,
3.) Where mortgagee refuses to surrender possession Sec 14 provides that the creditors
remedy in such instance is to file for an action for a judicial foreclosure or to take possession of the
property as a preliminary to the sale contemplated.
Foreclosure of the Chattel Mortgage
Public Sale if the mortgagor defaults in the payment of the secured debt or otherwise fails to
comply with the conditions of the mortgage, the creditor is permitted only to recover his credit from
the proceeds of the property at public auction. Sec 14 provides that allows a mortgagee to have the
mortgaged property sold in the manner as that allowed in extrajudicial foreclosure.
Private Sale an agreement to such is not illegal, immoral or against public order for the private
sale of a personal property.
* After 30 days from the time of the condition broken, cause the mortgaged property to be sold at
public auction by a public officer with at least 10 day notice to the mortgagor and posting of public
otice of time, place and purpose of such sale.
Right of mortgagee to deficiency
Where mortgage foreclosed, the creditor may file for the deficiency although the Chattel Mortgage
Law is silent on this point. The reason is that the chattel mortgage is only given as a security and not
as payment for the debt in case of failure of payment.
Where mortgage constituted as security for purchase of personal property payable in
installments, no deficiency judgment can be asked and any agreement to the contrary shall be
void.
Where mortgaged property subsequently attached and sold, the chattel mortgagee is entitled to
deficiency judgment in an action for specific performance. The execution sale in such a case is not a
foreclosure sale.

Application of Sale
1. Costs and expenses of keeping and sale
2. Payment of the obligation secured by the mortgagee
3. Claims of persons holding subsequent mortgages in their order
4. The balance, if any, shall be paid to the mortgagor, or person holding under him