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    Chattel

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    Kersy Mere Fajardo
    A chattel mortgage is a conditional sale of personal property to secure payment of a debt, where the sale becomes void if the debt is paid. It must be registered to be valid against third parties. Key characteristics include: it secures a principal obligation; requires registration; produces only obligations for the creditor; excess proceeds go to the debtor; and the creditor can recover deficiencies from the debtor. Subjects of a chattel mortgage include shares, business interests, machinery, vessels, motor vehicles, and various types of houses. Registration must occur before the debtor satisfies the principal obligation. Registration creates real rights and adds nothing to the mortgage. Assignment does not require reregistration, but the debtor is protected if unaware of

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    Chattel

    Uploaded by

    Kersy Mere Fajardo
    27 views2 pages
    A chattel mortgage is a conditional sale of personal property to secure payment of a debt, where the sale becomes void if the debt is paid. It must be registered to be valid against third parties. Key characteristics include: it secures a principal obligation; requires registration; produces only obligations for the creditor; excess proceeds go to the debtor; and the creditor can recover deficiencies from the debtor. Subjects of a chattel mortgage include shares, business interests, machinery, vessels, motor vehicles, and various types of houses. Registration must occur before the debtor satisfies the principal obligation. Registration creates real rights and adds nothing to the mortgage. Assignment does not require reregistration, but the debtor is protected if unaware of

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    A chattel mortgage is a conditional sale of personal property to secure payment of a debt, where the sale becomes void if the debt is paid. It must be registered to be valid against third parties. Key characteristics include: it secures a principal obligation; requires registration; produces only obligations for the creditor; excess proceeds go to the debtor; and the creditor can recover deficiencies from the debtor. Subjects of a chattel mortgage include shares, business interests, machinery, vessels, motor vehicles, and various types of houses. Registration must occur before the debtor satisfies the principal obligation. Registration creates real rights and adds nothing to the mortgage. Assignment does not require reregistration, but the debtor is protected if unaware of

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views2 pages

    Chattel

    Uploaded by

    Kersy Mere Fajardo
    A chattel mortgage is a conditional sale of personal property to secure payment of a debt, where the sale becomes void if the debt is paid. It must be registered to be valid against third parties. Key characteristics include: it secures a principal obligation; requires registration; produces only obligations for the creditor; excess proceeds go to the debtor; and the creditor can recover deficiencies from the debtor. Subjects of a chattel mortgage include shares, business interests, machinery, vessels, motor vehicles, and various types of houses. Registration must occur before the debtor satisfies the principal obligation. Registration creates real rights and adds nothing to the mortgage. Assignment does not require reregistration, but the debtor is protected if unaware of

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    6.

    CHATTEL MORTGAGE
    Chattel Mortgage is a conditional sale of personal property as
    security for the payment of a debt, or the performance of some
    other obligation specified therein, the condition being that the
    sale shall be void upon the seller paying to the purchaser a sum
    of money or doing some other act named. If the condition is
    performed according to its terms, the mortgage and sale
    immediately become void, and the mortgagee is thereby divested of
    his title.
    CHARACTERISTICS
    1. It is an accessory contract because it secures performance
    of a principal obligation
    2. It is a formal contract because it requires registration
    in the Chattel Mortgage Register for its validity (but
    only as against third persons)
    3. It is a unilateral contract because it produces only
    obligations on the part of the creditor to free the thing
    from the encumbrance on fulfillment of the obligation.
    4. The excess of the proceeds of the sale goes to the
    debtor/mortgagor
    5. Creditor/mortgagee can recover deficiency from the
    debtor/mortgagor, except if covered by the Recto Law

     Subject matter:
    Certain deviations have been allowed. These are mortgageable
    under the Chattel Mortgage Law:
    a. Shares of stock (but if owner and corporation have
    different domiciles, registration required in both
    places)
    b. Interest in business
    c. Machinery treated by the parties as personal property –
    based on estoppel (Davao Sawmill v. Castillo)
    d. Vessels – essential to be recorded in the Philippine
    Coast Guard
    e. Motor vehicles – but must be registered with the LTO
    f. House of mixed materials – by its very nature
    g. House intended to be demolished – what is mortgaged is
    actually the materials
    h. House built on rented land
    i. House of strong materials

    REGISTRATION PERIOD WITHIN WHICH REGISTRATION SHOULD BE MADE


    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.
     EFFECT OF REGISTRATION
    o Creates real rights
    o Adds nothing to mortgage
    REGISTRATION OF ASSIGNMENT OF MORTGAGE NOT REQUIRED
    o A chattel mortgage may be alienated or assigned to a third
    person
    o The debtor is protected if he pays his creditor without
    actual knowledge that the debt has been assigned
    o Affidavit of good faith is required.

    AFFIDAVIT OF GOOD FAITH is an oath in a contract of chattel


    mortgage wherein the parties “severally swear that the mortgage
    is made for the purpose of securing the obligation specified in
    the conditions thereof and for no other purposes and that the
    same is a just and valid obligation and one not entered into for
    the purpose of fraud.”
    Effect of Absence: Mortgage is vitiated only as against third
    persons without notice.
    REQUISITES
    1. It should substantially comply with the form prescribed by
    law
    2. It should be signed by the person/s executing the same in
    the presence of two witnesses who shall sign the mortgage
    as witnesses to the execution thereof and
    Each mortgagor and mortgagee or, in the absence of the mortgagee,
    his agent or attorney, shall make and subscribe an affidavit in
    the form prescribed by law, which affidavit, signed by the
    parties to the mortgage and the two witnesses and the certificate
    of the oath signed by the person authorized to administer an oath
    shall be appended to such mortgage

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