CRU>IT TRANSACTIO!

IIS
Chanel Mort&•&• taw
frujrSJQr All) Alona Sllltll 8 Rll)'ftu, ( PA

ACT NO. 1508 • AN ACT PROVIDI NG •'OR THE MORTGAGISC Of P£1l~ ' AL
PROPERTY ANll FOR THE REGISTRATION OF THE MORTGAG£S SO EXt.,( t.TrD

Stttioa I. The short tide of this Ac1 shall be "The Chanel Mortgage Law:

Stt. 2. All personal property shall be subject IO mortgage, agreeably IO the proHSlOOS of lhu Act.
and a mortgage executed in pursuance thereof shall be tmned chattel mongagc.

Stt. 3. Chattd mortgage dtftntd. - A chattel mortgage is a conditional sale of pmomJ

propeny as security for the payment of a debt, or the pcrfo~ of some Olber obligJIJOO
specified therein. the condition being that the sale shall be void upon the seller paymg to the
purchaser a sum of money or doing some other act named. lf the condition is pclfomxd
according to its terms the mortgage and sale immediately become void, and the mortgagee lS
thereby divested of his title.

Stt. 4. Validity. -A chattel mortgage shall 001 be valid against any person cxcq,t the
mongagor, his executors or administrators, unless the possession of the propcny is defocn:d to
and retained by the mongagcc or unless the mortgage is recorded in the office of the rcgwcr of
deeds of the pro\·incc in which the mortgagor resides at the time of making the same. or, 1fbe
resides without the Philippine Islands. in lhe province in which the propert)' is si1wucd: Provtdcd,
however, Thai if the propcny is siruatcd in a differcn1 province from that in which the rnonpgor
resides, the mortgage shall be recorded in the office of the register of deeds of both the pn)\'\nCC
in which the mortgagor resides and !hat in which the property is si1ua1ed, and for the purposc:s o(
this Act thc city of Manila shall be deemed to be a province.

Mc. S. Form. - A chancl mortgage shall be dtfflled 1.0 be sufficicn1 when made su.Mtanllally in
accordance with the following fonn. and shall be signed by the person or persons cxccutJng the
same. in the presence of rwo witnesses.. who shall sign the mortg,l8c as wilnc:$Sa to the
execution thereof, and each mortgagor and mortgagee, or. in lhc absence of the inortpacc, bu
agent or anomcy. shall make: and subscribe an affidavit in substance as berci.naJ\cr !iC1 fonh.
wh.icb affidavit. signed by the parties lo the mongagc as above slated, and the catJficalc of I.he
oath sjgncd by the authority admjnistcring the same, shall be appended IO such l1lOl1&A£C and
recorded lhcrewith.

FORM OF CHATTEL MORTGAGE AND AfllDA VIT

"This mortgage made this __ day of _ _ l9_ by _ _ _ _ _ _ . 1 n:s:adc:nA
of the municipality of _ _ _ _ _..., Province of . Pb1hppmc b1aods
mongngor, to _ _ _ __, a resident of the municipality of . Pro\ 1.0CC of
_ _ _ __ _,. Phili ppine Island,, mortgagee. \ \ i ~.

"That the said mortgagor hc:rd>y com cys lllld monpgcs 10 the s;ud Ill of the

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 CREDIT TRANSACTIONS
Chattel Mortgage Law
Professor: Atty. Alona Suzel/ B. Ruyeras, CPA

following-described personal property situated in the municipality of _ _ _ _ __

Province of _ _ _ _ _ and now in the possession of said mortgagor, to wit:

(Here insert specific description of the property mortgaged.)

"This mortgage is given as security for the payment to the said _ _, mortgagee, of
promissory notes for the sum of _ _ _ _ _ pesos, with (or without, as the case may
be) interest thereon at the rate of _____ per centum per annum, according to the
terms of _ _ ___, certain promissory notes, dated _ _ __, and in the words and
figures following (here insert copy of the note or notes secured).

"(If the mortgage is given for the performance of some other obligation aside from the
payment of promissory notes, describe correctly but concisely the obligation to be
performed.)

"The conditions of this obligation are such that if the mortgagor, his heirs, executors, or
administrators shall well and truly perform the full obligation (or obligations) above
stated according to the terms thereof, then this obligation shall be null and void.

"Executed at the municipality of _ _ __, in the Province of _ _ _ , this _ _ day

of 19

(Signature of mortgagor.)

"In the presence of

(Two witnesses sign here.)

FORM OF OATH.
"We severally swear that the foregoing mortgage is made for the purpose of securing the
obligation specified in the conditions thereof, and for no other purpose, and that the same
is a just and valid obligation, and one not entered into for the purpose of fraud."

FORM OF CERTIFICATE OF OATH.

"At _ _ _ _ in the Province of ____, personally appeared _ _ _ ___,
the parties who signed the foregoing affidavit and made oath to the truth thereof before
me.

(Notary public, justice of the peace, 1 or other officer, as the case may be.)

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 CREDIT TRANSACTIONS
Chattel Mortgage Law
Professor: Atty. Alona Suze/1 B. Ruyeras, CPA

I Sec. 6. Corporations. - When a corporation is a party to such mortgage the affidavit required
may be made and subscribed by a director, trustee, cashier, treasurer, or manager thereof, or by a
person authorized on the part of such corporation to make or to receive sue~ mortgage. When a
partnership is a party to the mortgage the affidavit may be made and subscribed by one member
thereof.

Sec. 7. Descriptions of property. -The description of the mortgaged property shall be such as
to enable the parties to the mortgage, or any other person, after reasonable inquiry and
investigation, to identify the same.

If the property mortgaged be large cattle," as defined by section one of Act Numbered Eleven
and forty-seven, 2 and the amendments thereof, the description of said property in the mortgage
shall contain the brands, class, sex, age, knots of radiated hair commonly known as remolinos, or
cowlicks, and other marks of ownership as described and set forth in the certificate of ownership
of said animal or animals, together with the number and place of issue of such certificates of
ownership.

If growing crops be mortgaged the mortgage may contain an agreement stipulating that the
mortgagor binds himself properly to tend, care for and protect the crop while growing, and
faithfully and without delay to harvest the same, and that in default of the performance of such
duties the mortgage may enter upon the premises, take all the necessary measures for the
protection of said crop, and retain possession thereof and sell the same, and from the proceeds of
such sale pay all expenses incurred in caring for, harvesting, and selling the crop and the amount
of the indebtedness or obligation secured by the mortgage, and the surplus thereof, if any shall be
paid to the mortgagor or those entitled to the same.

A chattel mortgage shall be deemed to cover only the property described therein and not like or
substituted property thereafter acquired by the mortgagor and placed in the same depository as
the property originally mortgaged, anything in the mortgage to the contrary notwithstanding.

Sec. 8. Failure of mortgagee to discharge the mortgage. - If the mortgagee, assign,

administrator, executor, or either of them, after performance of the condition before or after the
breach thereof, or after tender of the performance of the condition, at or after the time fixed for
the perfonnance, does not within ten days after being requested thereto by any person entitled to
redeem, discharge the mortgage in the manner provided by Jaw, the person entitled to redeem
may recover of the person whose duty it is to discharge the same twenty pesos for his neglect and
all damages occasioned thereby in an action in any court havingjurisdiction of the subject-matter
thereof.

Sec. 9. No personal property upon which a chattel mortgage is in force shall be removed from
the province in which the same is located at the time of the execution of the mortgage without
the written consent of the mortgagor and mortgagee, or their executors, administrators, or
assigns.

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 CREDIT TRANSACTIONS
Chattel Mortgage Law
Professor: Atty. Alona Suzell B. Ruyeras, CPA

sec. 10. A mortgagor of personal property shall not sell or pledge such property, or any part
thereof, mortgaged by him without the consent of the mortgagee in writing on the back of the
mortgage and on the margin of the record thereof in the office where such mortgage is recorded.

Sec. 11. A mortgagor shall not execute a second or subsequent mortgage of personal property
while the same is subject to the previously existing mortgage given by such mortgagor unless the
existence of such previous mortgage is set forth in the subsequent mortgage.

Sec. 12. If a mortgagor violates either of the three last preceding sections he shall be fined a swn
double the value of the property so wrongfully removed from the province, sold, pledged or
mortgaged, one half to the use of the party injured and the other half to the use of the Treasury of
the Philippine Islands, or he may be imprisoned for a period not exceeding six months, or
punished by both such fine and imprisonment, in the discretion of the court.

Sec. 13. When the condition of a chattel mortgage is broken, a mortgagor or person holding a
subsequent mortgage, or a subsequent attaching creditor may redeem the same by paying or
delivering to the mortgagee the amount due on such mortgage and the reasonable costs and
expenses incurred by such breach of condition before the sale thereof. An attaching creditor who
so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the
mortgage in the same manner that the mortgagee could foreclose it by the terms of this Act.

Sec. 14. Sale of property at public auction; Officer's return; Fees; Disposition of proceeds.
- The mortgagee, his executor, administrator, or assign, may, after thirty days from the time of
condition broken, cause the mortgaged property, or any part thereof, to be sold at public auction
by a public officer at a public place in the municipality where the mortgagor resides, or where
the property is situated, provided at least ten days' notice of the time, place, and purpose of such
sale has been posted at two or more public places in such municipality, and the mortgagee, his
executor, administrator, or assign, shall notify the mortgagor or person holding under him and
the persons holding subsequent mortgages of the time and place of sale, either by notice in
writing directed to him or left at his abode, if within the municipality, or sent by mail ifhe does
not reside in such municipality, at least ten days previous to the sale.

The officer making the sale shall, within thirty days thereafter, make in writing a return of his
doings and file the same in the office of the register of deeds where the mortgage is recorded,
and the register of deeds shall record the same. The fees of the officer for selling the property
shall be the same as in the case of sale on execution as provided in Act Numbered One hundred
and ninety, 4 and the amendments thereto, and the fees of the register of deeds for registering
the officer's return shall be taxed as a part of the costs of sale, which the officer shall pay to the
register of deeds. The return shall particularly describe the articles sold, and state the amount
received for each article, and shall operate as a discharge of the lien thereon created by the
mortgage. The proceeds of such sale shall be applied to the payment, first, of the costs and
expenses of keeping and sale, and then to the payment of the demand or obligation secured by
such mortgage, and the residue shall be paid to persons holding subsequent mortgages in their
order, and the balance, after paying the mortgages, shall be paid to the mortgagor or person
holding under him on demand.
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 CREDIT TRANSACTIONS
Chattel Mortgage Law
Professor: Atty. Alona Suzell B. Ruyeras, CPA

If the sale includes any "large cattle," a certificate of transfer as required by section sixteen of
;.ct Numbered Eleven hundred and forty-seven 5 shall be issued by the treasurer of the
municipality where the sale was held to the purchaser thereof.

Sec. 15. Every register of deeds shall keep a book of records of chattel mortgages; shall certify
on each mortgage left for record the records date, hour, and minute when the same was by him
received; record in such book any chattel mortgage, transfer, or discharge, and the officer's return
of sale upon any mortgage, making reference upon the margin of the record of such officer's
return to the volume and page of the record of the mortgage, and a reference of such return on
the record of the mortgage itself, and give a certified copy thereof, when requested, upon the
payment of the lawful fees for such copy; and certify upon each mortgage officers return of sale
or discharge of mortgage, the date, hour, and minute when the same is received for record and
record such certificate with the return itself and keep an alphabetical index of mortgagors and
mortgagees, which record and index shall be open to public inspection. Duly certified copies of
such records shall be receivable as evidence in any court, as provided in Act Numbered One
hundred and ninety. The register of deeds for each province or tin; city of Manila, as the resisters
of case may be, shall be entitled to receive the following fees for services under the provisions of
this Act:

For filing and recording each chattel mortgage, including the necessary certificates and
affidavits, three pesos; Recording each release of a chattel mortgage, including the necessary
index and references, forty centavos: For recording each sheriff's return of sale, including the
necessary index and references, twenty centavos for each folio of one hundred words; Fees so
received shall accrue to the treasuries of the respective provinces, or of the city of Manila, as the
case may be.

Sec. 16. This Act shall take effect on August first, nineteen hundred and six.

Enacted, July 2, 1906.

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