CLASSIFICATIONS OF GUARANTY 3.

Surety, is the person who answers for the

Personal Security – the faithful performance of the debt, default, or obligation of the principal.
obligation by the debtor is secured by the personal Note: the undertaking is usually in a form of bond.
commitment of another, the guarantor or the surety.

Note: The guaranty is the credit given by the person

who actually guarantees the fulfillment of the
principal obligation. Characteristics of the Contract of Guaranty
❖ Gratuitous – guaranty is gratuitous unless there
Real Security – the fulfillment is secured by the is stipulation to the contrary. (Art 2048)
encumbrance of the property. ❖ Accessory – secures payment of the principal
obligation, therefore it cannot exist without the
Note: if the guaranty is immovable, the guarantee is principal obligation.
in the form of real estate mortgage. I f the guaranty is ❖ Subsidiary- guarantor will only pay if principal
movable, it could be in a form of pledge or chattel debtor cannot pay and no properties are
mortgage. available to answer for the obligation.
❖ Conditional – example is that requirement of
exhaustion must be complied with by the
ARTICLE 2047 guarantor before he can be made liable.
❖ Unilateral- only on the part of the guarantor in
What is a guaranty?
favor of the creditor. Debtor need not to be
Under 2047: By guaranty a person called the
notified.
guarantor, binds himself to the creditor to fulfill the
❖ Express – it is no presumed. It cannot extend to
obligation of the principal debtor in case the latter
more than what is stipulated in the contract.
should fail to do so.
❖ Formal – the guaranty is a collateral contract. It
is a promise to answer for debt. Therefore, it
The original contract of his principal is not his
must be in writing. It is not required that the
contract, and he is not bound to take notice of his non-
guaranty be in a public instrument.
performance. He is often discharged by the mere
indulgence of the creditor to the principal and is
Art. 1403 (2) provides that the following
usually not liable unless notified by the default of the
contracts are no enforceable unless they are
debtor.
ratified:

(2) Those that do not comply with the Statute of

Frauds as set forth in this number. In the
Who are the parties? following cases an agreement hereafter made
In the contract of guaranty, we have: shall be unenforceable by action, unless the
1. Principal obligor or debtor, the person whose same, or some note or memorandum, thereof, be
obligation is secured by the guarantor in writing, and subscribed by the party charged,
2. Oblige or Creditor, the person whose in favor or by his agent; evidence therefore cannot be
the security is made received without the writing, or a secondary
3. Guarantor evidence of its contents.

In the contract of surety: Note: An agreement that is covered by the

1. Principal Obligor or debtor, person whose statute of frauds shall be unenforceable by
obligation is secured by bond or suretyship/ action, unless the same, or some note or
2. Oblige or Creditor, person in whose favor the memorandum, thereof, be in writing, and
surety is made. subscribed by the party charged, or by his agent;
evidence therefore cannot be received without
 the writing, or a secondary evidence of its What is suretyship?
contents. Art. 2047: If the person binds himself solidarily with
the principal debtor, the provisions of Section 4
Chapter 3 Title 1 of this Book shall be observed. In
The true test as to whether the promise is within the such case, the contract is called suretyship.
Statute has been sais to lie in the answer to the question
whether the promise is an original or collateral one. Suretyship is a contract which includes an agreement
whereby a party called the surety guarantees the
If the promise is original/ independent, thereby the performance by another person or by another party
principal becomes primarily liable for the payment of the called the principal or the obligor of an obligation or
debt, the promise is not within the Statute. undertaking in favor of a third party called the oblige.
If the promise is collateral to the agreement of another
and the promisor becomes thereby merely a surety, the Surety is a contractual relation resulting from one
promise must be in writing. agreement whereby one person, the surety engages to
be answerable for the debt, default or miscarriage of
Note: the obligor cannot claim that he is only a mere another, known as the principal.
guarantor of his own obligation. One cannot be both the
principal debtor and the guarantor of his own debt. It is The surety binds himself solidarily to the creditor to
inconsistent with the purpose for the creditor to proceed fulfill the obligation of the principal debtor.
against third person if the debtor defaults in its
obligation.
Can a guarantor enter into a contract of guaranty What is the liability of the surety?
through an agent? The liability of the surety is joint and several with the
Yes. However, the authority of the agent to enter into the obligor and limited to the amount fixed in the
contract of the guaranty cannot be presumed. agreement.
Essential requisites of a Contract
1. Consent- manifested by meeting of the offer and Although the contract of surety is in essence a secondary
acceptance upon the thing. The parties must only to a principal obligation, the surety becomes liable
have the capacity to give their consent. for the debt or duty of another although it possesses no
2. Object – is the obligation guaranteed by it direct or personal interest over the obligations and do not
3. Cause- it is gratuitous unless stipulation to the receive benefit therefrom.
contrary Notwithstanding the fact that it is secondary to the
Note: the obligation of the guarantor arises from the principal obligation, the surety assumes liability as a
contract entered into by the creditor and guarantor. regular party to the undertaking.
A surety’s liability stands regardless of the ability of the
The Obligation of the guarantor may arise from a debtor to perform his obligation under the contract which
contract entered into by the debtor and guarantor in is subject to suretyship.
which the guarantor binds himself to fulfill the debtor’s
obligation if the latter fail to do so. Relationships involved in a surety:
The guaranty shall comprise: ➢ Principal relationship between the obligee and
▪ Principal obligation of the debtor the obligor.
▪ Accessory Obligation pertaining to the principal ➢ Accessory relationship between the principal and
obligation surety.
▪ The obligation that arise as a matter of law from Insurance Code Provisions
the guaranteed obligations i.e. payment of Art. 177 : A contract of suretyship is an agreement
interest, paying judicial costs incurred. whereby a party called the surety guarantees the
performance by another party called the principal of
obligor of an obligation in favor of the third party or
oblige.
Art. 178: the liability of the surety shall be joint or several
with the obligor and shall be limited to the amount of the Whoever pays for another may demand from the debtor
bond. It is determined strictly by the terms of the contract what he has paid, except if he paid without the
of suretyship in relation to the principal contract between knowledge or against the will of the debtor, he can
the obligor and obligee. recover in so far as the payment has been beneficial to the
Note: A surety bondsman cannot dmenad the xhaustion debtor.
of the property of the principal debtor.
The surety is not entiyled to be given notice of the default Article 1237: Whoever pays on behalf of the debtor
without the knowledge or against the will of the latter,
cannot compel the creditor to subrogate him in his
rights, such as those arising from mortgage, guaranty, or
penalty.

Discussion:
If there is no consent to the guaranty, the payment made
by the guarantor shall be considered as payment by a
third person. The effects would be:
Differences of surety and guaranty (1) There is limited right of reimbursement.
(2) The guarantor has no right of subrogation.

The agreement may stipulate that the payment may be

secured by the third person who will act as a guarantor.
It can also be stipulated the the guarantor maya be
secured even without prior notice to the debtor. In which
case, reimbursement is not abailable but the right of
subrogation is available.
ARTICLE 2051
A guaranty may be conventional, legal or judicial,
gratuitous or by onerous title.
It may be constituted, not only in favor of the principal
debtor, but also in favor of the guarantor, with the latter’s
consent, or without his knowledge or even over his
objection.
Article 2052: A guaranty cannot exist without valid
Article 2049 A married woman may guaranty an obligation
obligation without husband’s consent, but shall not Nevertheless, the guaranty may be constituted to
thereby bind the conjugal partnership except in cases guarantee the performance of a voidable contract or an
provided by law. unenforceable contract. It may also guaranty a natural
i.e. “in cases provided by law” – such as when the obligation.
guaranty has redounded to the benefit of the family/.
Article 2050 If the guaranty is entered into without the Discussion:
knowledge or consent, or against the will of the principal This provision covers suretyship. While guaranty and
debtor, the provisions of Articles 1236 and 1237 may suretyship are accessory obligations, the principal
apply. obligation need not to be valid.
The obligation of the guarantor will not arise if the
Article 1236 The creditor is not bound to accept principal obligation is not enforced, annulled or if the
payment or performance by a third person who has no suspensive condition does not occur.
interest in the fulfillment of the obligation, unless there
is a stipulation to the contrary.
Note: It is not necessary that the principal contract is What is the extent of the liability of surety?
written since under 1356 of the CC, the contracts shall be It is determined by the language of the guaranty or
obligatory in whatever form they may have entered into surety contract itself.
provided hat all the essential requisites for their validity
are present. The contract is only prospective unless a contrary intent
Article 2053: A guaranty may also be given as security is clearly shown.
for future debts, the amount of which is not yet known; Article 2056: One who is obliged to furnish a guarantor
there can be no claim against the guarantor until the debt shall present a person who possesses integrity, capacity
is liquidated. A conditional obligation may also be to bind himself, and sufficient property to answer for the
secured. obligation which he guarantees. The guarantor shall be
Can a guaranty or surety be given as security for subject to the jurisdiction of the court of the place where
future debts? this obligation is to be complied with.
Yes. However, there can be no claim against the Article 2057: if the Guarantor shall be convicted in first
guarantor or surety until the debt is liquidated. instance of a crime involving dishonesty or should
It may be in a discrete guaranty or continuing guaranty. become insolvent, the creditor may demand another who
has all the qualifications required in 2056. The case is
What is a continuing guaranty? excepted where the creditor has required and stipulated
By executing this, the principal debtor places himself in that the person should be the guarantor.
a position to enter into the projected series of EFFECT OF GUARANTY
transactions with its creditor with such surety or Article 2058: the guarantor cannot be compelled to pay
guaranty agreement, there would be not need to execute the creditor unless the latter has exhausted all the
a separate contracts or bond for each financing property, and resorted to the legal remedies against the
accommodations extended to PO. debtor.
When shall excussion not take place?
It is one which is not limited to single transaction, but Article 2059: The excussion shall not take place :
which contemplates a future course of dealing, covering 1. When the guarantor expressly renounced it.
series of transactions, generally for an indefinite time or 2. He has bound himself solidarily with the debtor
until revoked. 3. In case of insolvency of the debtor
Article 2054: A guarantor may bind himself for less, but 4. When he absconded or cannot be sued within the
for more than the principal debtor, both as regards the Philippines unless he has left a manager or
amount and the onerous nature of the conditions. representative.
5. If it may be presumed that an execution on the
Article 2055: A guaranty is not presumed; it must be property of the would not result in the satisfaction of the
expressed and cannot extend to more than what is obligation.
stipulated therein. Article 2060: In order that the guarantor may make use
of the benefit of excussion, he must set it up against the
If it be simple or indefinite, it shall comprise not only the creditor upon the latter’s demand for payment from him,
principal obligation but also the accessories, including and point out to the creditor available properties of the
judicial costs, provided with respect to the latter, that the debtor within Philippine Territory, sufficient to cover the
guarantor shall only be liable for those costs incurred amount.
after it has been judicially required to pay. Article 2061: The guarantor having fulfilled all the
conditions required in the preceding aricle, the creditor
Discussion: Accessories include damages include who is negligent in exhausting the property pointed out
damages, interest and charges and judicial costs shall suffer the loss, to the extent of the said property, for
incurred. the insolvency of the debtor resulting for such
Unless there is a specific period is fixed in the contract, negligence.
the obligation of the surety exists so long as the principal Article 2061: in every action by the creditor, which must
obligation subsists. be against the principal debtor alone, except in the cases
mentioned in 2059 (excussion not take place), the former
shall ask the court to notify the guarantor of the action. creditor successfully collects the full amount from one
The guarantor may appear so that he may if he so desire, guarantor, the other guarantors are released from their
set up such defense as are granted to him by law. The liability. The liability is not divisible as between them, it
benefit of excussion shall always be unimpaired, even if can be forced up to the full extent against anyone of them
judgment should be rendered against the principal Article 2070: of the guarantor has paid without
debtor and the guarantor in case of appearance of the notifying the debtor and the latter not being aware of the
latter. payment, repeats the payment, the former has no remedy
Discussion: whatever against the debtor, but only against the
To make the guarantor liable the creditor must take the creditor.
following indispensable steps: In case of gratuitous guaranty, if the guarantor is
1. The creditor must file must file a case against prevented by a fortuitous event from advising the debtor
the debtor alone of the payment, and the creditor became insolvent, the
2. The creditor must ask the court to notify the debtor shall reimburse the guarantor for the amount
guarantor so that he may be given a chance to paid.
interpose defenses granted to him by law.
3. A judgment in favor of the creditor must be Discussion: the debtor is still liable despite double
obtained payment if the following are present. (1) the guaranty is
4. Execution of the judgment. gratuitous (2)the guarantor was prevented by
Article 2063: A compromise .. fortuitous event from advising the debtor of the
Article 2064 the guarantor shall enjoy the benefit of payment (3) the creditor is insolvent.
excussion, bothe with respect to the guarantor and to When is there no reimbursement?
the principal debtor. 1. In case there is double payment and the
Article 2065: Should there be several guarantors of condition under Art 2071 is present
only one debtor and for the same debt, the obligation 2. There is no consent to the guaranty and the
to answer for the same is divided among all. The payment was not beneficial to the debtor
guarantor cannot claim from the guarantors except 3. If the payment was made without notifying the
the shares which they are respectively bound to pay, debtor and the debtor has defenses.
unless solidarity has been stipulated. 4. If there was premature payment by the
guarantor, there is no right of reimbursement
The benefit of division against the co-guarantors until the debt is due unless payment is ratified.
ceases in the same cases and for the same reasons as 5. If the guarantor waived his right for
the benefit of excussion against the principal debtor. reimbursement.
Art. 2073: when there are two or more guarantors of the
Discussion: same debtor and for the same debt, the one among them
When the co-guarantors are solidary, they do not have who has paid may demand of each of the others the share
the benefit of division against the creditor. However, which is proportionally owing from him.
they have the benefit of division with respect to each If any of the guarantors should be insolvent, his share
other because it is presumed that they have equal shares shall be borne by the others, including the payer in the
in the obligation. Hence, after the solidary guarantor same proportion.
pays the entire amount, he can ask for reimbursement This provisions shall not be applicable, unless the
from the co-guarantors but only up to the extent of their payment has been made by virtue of a judicial demand or
respective shares. unless the principal debtor is insolvent.
What is a solidary guaranty clause? Art. 2075: A sub-guarantor, in case of insolvency of the
The obligation of one is only that of the guarantor. guarantor, for whom he bound himself, is responsible to
solidary guaranty clause in a contract makes multiple the co-guarantors in the same terms as the guarantor.
guarantors jointly and severally liable for the full amount Art 2076: The obligation is extinguished at the same
of the principal debtor's obligation. This means the time as that of the debtor and for the same causes as all
creditor can pursue any one or all of the guarantors for other obligations.
the entire debt if the principal debtor defaults. If the Discussion:
Death does not extinguish the liability or the suretyship.
Obligations of the decedent is part of the inheritance..
however, while the contract of suretyship an guaranty is
transmissible, the effect is that it is provable against the Provisions Common to pledge and mortgage
estate of the decedent and not personal liability of the Art 2085 The ff. Requisites are essential to the
heirs. contracts of pledge and mortgage
1. That they be constituted to secure the
Note: Extinctive novation of the principal will also fulfillment of the principal obligation.
extinguish the accessory obligation. The contract of
guaranty and suretyship is extinguished if there is Pledge and mortgage are accessory contracts
material alteration of the PO. It will not be extinguished that exists only after the execution of the
if the guarantor or surety agreed to be bound by any principal contract.
novation or extension or if the novation is modificatory.
2. The pledgor or the mortgagor be the
Surety is released from obligation when there is material absolute owner of the thing pledged or
alteration of the principal contract in connection with mortgaged.
which bond is given sucha s change which imposes
new obligation on the promising party, takes away The pledgor or the mortgagor must be the absolute
obligations already imposed or one which change the owner at the time of the constitution of the pledge
legal effect of the original contract and not merely its or mortgage
form.
3. That the persons constituting the pledge
Increase of indebtedness is prejudicial and material to or mortgage have the free disposal of
the creditor. It decreases the probability of the debtor to their property and in the absence
liquidate the debt thus increasing the risk undertaken by thereof, that they be legally authorized
the surety or guarantor to answer for thr failure to pay. to the purpose.
Art. 2077: If the creditor voluntarily accepts immovable
or other property in payment of the debt, even if he The act of pledging and mortgaging is an act
should afterwards lose the same through eviction, the of strict ownership as it does the alienation
guarantor is released. – dacion en pago or transmission of real right in property.
Art. 2078: A release made by the creditor in favor of one
of the guarantors, without the consent of the others, Third persons who are not parties to the
benefits all to the extent of the share of the guarantor to principal obligation may secure the
whom it has been granted. - condonation latter by pledging or mortgaging their
Art. 2079 own property.
The extension of time given to the principal debtor by the It is not necessary that the one who pledges
creditor without the consent of the surety, deprives the or mortgages is the debtor himself, it can be
surety of his right to pay the creditor and to immediately third party by pledging or mortgaging his
subrogated to the creditor’s remedies against the PO own property.
upon the original maturity date.

Art. 2086: The provisions of Art. 2052 are

applicable to pledge or mortgage

Art. 2052. A guaranty cannot exist without a valid

obligation. Nevertheless a guaranty may be
constituted to guarantee the performance of a
voidable or an unenforceable contract.
Art. 2087 It is of the essence of these contracts that Neither can the creditor heir who received his share
when the principal obligations become due, the of the debt return the pledge or cancel the mortgage,
things in which the pledge or mortgage consists to the prejudice of the other heirs who have not been
may be alienated for the payment to the creditor. paid.
Art. 2088 the creditor cannot appropriate the This provisions is expected the case in which, there
things given by way of pledge or mortgage, or being several things given un mortgage or pledge,
dispose of them. Any stipulation to the contrary is each one of them guarantees only a determinable
null and void. portion of the credit.
The debtor in this. Case shall have the right to the
Pactum Commissorium – this is an agreement extinguishment of the pledge or mortgage as the
providing for the creditor mortgagee/ pledgee’ portion of the debt for which each thing is especially
automatic appropriation of ownership in case of answerable is satisfied.
non-payment of the primcipal obligation. It is a
stipulation that enables the pledgee or mortgagee to Discussion:
acquire ownership of the pledged or mortgage The law is explicit that a mortgage obligation is one
property without the need of foreclosure and indivisible. Every portion of the mortgage is
proceedings or public auction. This agreement is answerable for the whole obligation as soon as the
null and void. latter falls due. The mortgagor cannot opt, much
less compel the mortgagee, to apply any payment
Promise to Transfer – a promise to transfer a made by him on specific portion of the mortgaged
property in favor of the creditor in case of non- property to effect release. Neither the mortgagee
payment is not pactu commissorium because there applies the payments made to it on, and
is no automatic transfer. The mortgagor is free to consequently release, a portion of the mortgaged
sell or not the property. property and effect foreclosure on the rest.

There is no pactum commissorium if the principal The indivisibility of the mortgage is not violated by
obligation is extinguished by dacion en pago, instituting two separate foreclosure proceedings on
novation or cession. The parties may voluntarily mortgaged property located in different provinces
novate the agreement later in such a way that the as long as each parcel of land is answerable for the
property will be conveyed to the mortgagee. This is entire debt.
not covered by the prohibition because these are Art. 2090: the indivisibility of pledge or mortgage
acts or transactions that are agreed upon, not at the is not affected by the fact that the debtors are not
time it was constituted but thereafter. solidarily liable.
Art 2091. The contract of pledge or mortgage may
Dacion en ppago – stipulation that states that the secure all kinds of obligations, be pure, orsubject to
property will be used as payment. There is no a suspensive or resolutory condition.
automatic appropriation. Art. 2092. A promise to constitute a pledge or
Alcantara v. Alinea 8 Phil 111 mortgage gives rise to a personal action between the
Art. 2089 contracting parties, without prejudice to the
A pledge or mortgage is indivisible, eve though the criminal responsibility incurred by him who
debt may be divided among the successors in defrauds another, by offering in pledge or mortgage
interest of the debtor as unencumbered, things which he knew were
subject to some burden or by misrepresenting
Therefore, the debtor’s heir who has paid the part of himself to be the owner of the same.
the debt cannot ask for the proportionate Discussion: 2092 involves a consensual contract to
extinguishment of the pledge or mortgage as long mortgage or pledge. The mortgagee or pledgee
as the debt is not completely satisfied. acquires no real right of encumbrance until the
mortgage or pledge is validly constituted.
However, the prospective mortgagee or pledgee can ❖ It is subsidiary because the property
file an action for specific performance against the mortgaged will answerfor the principal
debtor who promised to constitute the contract. obligation only upon the default of the
principal debtor. In these contracts, The
The same provision recognizes the possible security constitutes encumbrance on
criminal responsibility that may be incurred by him property.
who defrauds another, by offering in pledge or Note: Lien Theory is not followed in our
mortgage as unencumbered, things of which he jurisdiction.
knew were subject to some burden, or by The enforcement of a mortgage through
misrepresenting himself to be the owner of the foreclosure is the alternative remedy.
same. This may include case of estafa. The SC explained that the mortgagee-creditor may
institute two alternative remedies against the
mortgagor/ debtor. The ME/C can either institute a
REAL ESTATE MORTGAGE personal action for the collection of the debt or a real
action to foreclose the mortgage but not both. Each
Real property mortgage is an accessory contract by alternative remedy is complete by itself. If the ME
which real property is conveyed by way of security decides to foreclose the mortgage, he waives the
and a lien is created over a specific real property or action for the collection of the debt and vise versa.
properties with the condition that if the obligation Soriano v. Enriquez 24 Phil 584 p. 633- 635
secured is not paid the mortgage may be foreclosed Note: there are instances when certain movables
and the property sold to answer for the mortgaged are treated as real properties by estoppel
credit.
Case: People’s Bank v. Dahican Lumber
Art. 2124. Only the following property may be the After incurred or future obligations:
object of the contract of mortgage: This may be covered by real estate mortgage if the
(1) immovables; same is expressly provided for in the contract. The
(2) alienable real rights in accordance with the deed of real estate mortgage may expressly state that
lawls upon immovables. it secures future advancements.

Nevertheless, movables may be the subject of a GR the amount secured by a mortgage is limited to the
chattel mortgage. amount expressly mentioned in the mortgage.
Blanket Mortgage or Dragnet Clause
Art. 2126. The mortgage directly and immediately It is one that is specifically phrased to subsume all
subjects the property upon which it is imposed, debts of past or future origin. It is ac continuing
whoever the possessor may be, to the fulfillment of security. A mortgage with a dragnet clause makes
the obligation for whose security is constituted. available future loans without the need of executing
Who are the parties? another set of security documents.
The mortgagor is the person who conveys the real Kinds of mortgage
property by way of mortgage to secure an obligation. 1. Voluntary – one that is constituted by the
The mortgagee is the creditor whose credit is secured agreement of the parties
by mortgage, 2. Legal – includes cases contemplated by the
What are the characteristics of REM 2nd par of art 2125 which provides that the
❖ It creates a real right of security persons and whose favor the law establishes
❖ It is an accessory contract a mortgage have no other right than to
❖ It is a real security contract. demand execution and the recording of the
❖ It is unilateral in the sense that only the document in which the mortgage is
signature of the mortgagor is necessary to formalized. These also includes cases where
constitute it. the law requires the constitution of a
mortgage or any other security.
 3. Equitable- contract that appears to be a sale Under our laws, a mortgagor is allowed to take as
with a right to repurchase or an absolute sale second or subsequent mortgage on a property already
which in reality is a contract whereby no mortgaged, subject to the prior rights of the previous
transfer of ownership is intended but the real mortgages.
intention only is to constitute a security.
Instanece where the sale is presumed to be an It can be registered, however the first registered
equitable motgage. mortgage has superior right over junior mortgagees
Art. 1602. It is one which, although lacking in some or attaching creditors or persons with adverse claims.
formmality, or form, or words or other requisites
demanded by the statute, nevertheless reveals the The second mortgagee merely takes what is called an
intention of the parties to charge real property as a equity of redemption and thus a second mortgagee
security for a debt, and contains nothing impossible has to wait until the final debtor’s obligation to first
or contrary to law. mortgagee by fully settled.
Art 2127 the mortgage extends to the natural
The essential requisite of an equitable mortgage are: accessions, to improvements, growing fruits and the
1. The parties enter into what appears to be rents or income not yet received when the obligation
a contract of sale becomes due, and to the amount of the indemnity
2. But their intention is to secure an existing granted or owing to the proprietor from the insurers
debt by way of mortgage. of the property mortgaged, or in virtue of
Tan v. Valdehueza GR. L-38745 expropriation for public use, with declarations,
Mortgagee in good faith p. 642. amplifications and limitations established by law,
Note of the exception p 644 whether the estate remains in the possession of the
Remedy p 645 mortgagor or it passes into the hands of third persons.
GR L-43972 july 24 1990
Art. 2125. In addition to the requisites states in Art Discussion:
2085, it is indispensable, in order that a mortgage The mortgage extends to the following although they
may be validly constituted, that the document in are not yet received when the obligation becomes
which it appears be recorded in the registry of due: NATURAL ACCESSIONS, IMPROVEMENTS,
property. If the instrument is not recorded, the GROWING FRUITS, RENTS OR INCOME.
mortgage is nevertheless binding between the
parties. The presumption is that the ownership of the
The persons in whose favor the law establishes a accessions and accessories also belong to the
mortgage have no other right than to demand the mortgagor as the owner of the principal. Any
execution and the recording of the document in evidence ovethrowing the presumption that the
which the mortgage is formalized. mortgagor owns the mortgaged property precludes
the application of this Article.
Discussion: the real estate mortgage must be Art. 2128. The mortgage credit may be alienated or
registered with the RD where the subject property is assigned to a third person, in whole or in part with the
located in order to affect third persons. It was formalities required by law.
explained the whether registered or not, is binding
between the parties, registration being only Discussion: The mortgagee acquires real right when
necessary to make the same valid against third the property is mortgaged. The mortgagee is the
persons. owner of an intangible property that is the mortgage
credit. As the owner, he has the right to dispose of the
Preference of mortgage credits is determined by the mortgage credit.
priority of registration of the mortgages following the Art 2129. The creditor may claim from third person
maxim, “he who first in time is preferred in right” in possession of the mortgages property, the payment
Junior Mortgage of the part of the credit secured by the property which
said person possesses, in terms and with the
formalities which the law establishes.
Art. 2130. A stipulation forbidding the owner from
alienating the immovable property shall be void.

Discussion:
The mortgagor remains the owner of the property
despite the mortgage. Hence, the mortgagor has the
right to dispose of the mortgage contract cannot
stipulate that the mortgagor is prohibited from
transferring ownership of the mortgaged property. It
cannot be stipulated that prior consent of the
mortgagee is necessary for the sale of the mortgage
property. Such would be contrary to public good.

Later however the SC expalinned that is such

provision appears in the mortgage contract, it cannot
be interpreted as absolutely forbidding the owner
from selling the same while her loan is pending.

Act 3135 An Act to regulate the Sale of the

Property under Special Powers Inserted or
Annexed. (Read again)
ANTICHRESIS
ART.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.

Discussion:
Elements
1. The existence of the principal obligation
is secured
2. The property involved must be
immovable
3. The person who will constitute the
antichresis should be the absolute owner
4. “ must have the free disposal of the
property
5. The parties agree that the creditor
acquires the right to receive the fruits of
an immovable of his debtor.
6. The creditor has the obligation to apply
the fruits of the immovable to the
payment of interest if owing and
thereafter to the principal of his credit
7. The amount of the interest shall be
specified in writing otherwise it is void.