commercial law review - zara notes chattel mortgage

8/9/2019 Commercial Law Review - Zara Notes Chattel Mortgage

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Commercial Law Review

Special Laws

Maria Zarah Villanueva - Castro

CHATTEL MORTGAGE:

A. Define chattel mortgage

It is an accessory contract by virtue of whichpersonal property is recorded in the ChattelMortgage Register as a security for theperformance of an obligation

Su!ect Matter:

!It covers personal or movable propertiescontemplated under "rticle #$% and #$& ofthe 'ew Civil Code including shares ofstoc(s and interest in business

!)rowing crops may be sub*ect to chattelmortgage as e+press provision of law

General Rule: ,uildings are not sub*ect ofchattel mortgage

E"ce#tion: he chattel mortgage over abuilding is considered valid as between theparties on the basis of estoppels but notagainst third persons

$. Di%tingui%h chattel mortgage from #le&ge

'le&ge Chattel Mortgage

'ot perfected untilthere is delivery

.elivery is notnecessary

Registration is notnecessary

Registration isnecessary to bindthird persons

'o recovery fordeficiency

General Rule: hereis recovery fordeficiencyE"ce#tion: In caseof sale under Recto

LawGeneral Rule:.ebtor is not entitledto the e+cessE"ce#tion%: there isstipulation/ and incase of legal pledge

.ebtor is entitled tothe e+cess

0ledge can secureafter-incurredobligations

Cannot secure after-incurred obligations

C. (h) i% regi%tration nece%%ar)*

Registration creates a lien that follows theproperty and serves as notice to thirdpersons

!)ood faith is not a defense

+: If there is actual (nowledge but noregistration1 is the third party bound to the

mortgage2

A: ,ES. he registration re3uirement iscomplied with by reason of actual(nowledge

D. (here &o )ou regi%ter chattel mortgage*

he mortgage must be registered in theChattel Mortgage Register of the Register of.eeds of the province in which themortgagor resides at the time of ma(ing thesane or if1 he resides within the 0hilippines1

in the province in which the property issituated If the property is situated in differentprovince from that in which the mortgagorresides1 that mortgage must be recorded inthe Chattel Mortgage Register of theRegister of .eeds of both the province in

which the mortgagor resides and that inwhich the property is situated

E. -% there a foreclo%ure %ale in chattelmortgage*

,ES.

Can the mortgagee recover &eficienc)*

,ES.4+cept in case of sale sub*ect to RectoLaw

Reui%ite%:

$ Sale of personal property

5 he personal property sub*ect of sale iscovered by chattel mortgage

6 he payment is via instalment/. After0incurre& Oligation%

!Chattel mortgage can cover only obligationse+isting at the time the mortgage isconstituted!It cannot cover after-incurred obligationsbecause of the e+ecution of affidavit of goodfaith

!.rag net clause is not allowed in chattelmortgage- .rag net clause is a clause in pledge1 realmortgage1 or antichresis that allows the

properties sub*ect of pledge1 real mortgageor antichresis to secure future obligations

A1 ACT TO REG2LATE THE SALE O/'RO'ERT, 21DER S'EC-AL 'O(ERS-1SERTED -1 OR A11E3ED TO REAL ESTATEMORTGAGE 4ACT 56578:

$


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Special Laws


A. Reuirement% for the e"tra!u&icialforeclo%ure to e effecte&

$ here must be a special power insertedin or attached to any real estatemortgage allowing the sale of property

5 Said sale cannot be made legally outsideof the province in which the property soldis situated/ and in case the place withinsaid province in which the sale is to bemade is sub*ect to stipulation1 such saleshall be made in said place or in themunicipal building of the municipality in

which the property or part thereof is

situated

6 'otice shall be given by posting noticesof the sale for not less than twenty daysin at least three public places of themunicipality or city where the property issituated1 and if such property is worthmore than four hundred pesos1 suchnotice shall also be published once a

wee( for at least three consecutivewee(s in a newspaper of generalcirculation in the municipality or city

# he sale shall be made at public auction1between the hours or nine in the morningand four in the afternoon/ and shall beunder the direction of the sheriff of theprovince1 the *ustice or au+iliary *ustice ofthe peace of the municipality in whichsuch sale has to be made1 or a notarypublic of said municipality1 who shall beentitled to collect a fee of five pesos eachday of actual wor( performed1 in additionto his e+penses

$. -n ca%e of foreclo%ure %ale9 what are the!uri%&ictional reuirement%*Sec 5 of "ct 6$67 provides that8 9Said sale

cannot be made legally outside of the

province in which the property sold is

situated/ and in case the place within said

province in which the sale is to be made is

sub*ect to stipulation1 such sale shall be

made in said place or in the municipal

building of the municipality in which the

property or part thereof is situated

C. -n ca%e of foreclo%ure %ale9 what i% the#erio& of re&em#tion*

/or 1atural #er%on%:$ year from the date

of the registration of the certificate of sale

with the Register of .eeds

/or uri&ical #er%on%: the right to redeem

the property is until1 but not after1 the

registration of the certificate of foreclosuresale which in no case shall be more than

three :6; months after foreclosure1 whichever

is earlier1 as provided in Section #& of

Republic "ct 'o

D. -% the #urcha%er entitle& to #o%%e%% the

#ro#ert) &uring the #erio& of

re&em#tion*

,ES. Sec #& of the ),L provides that the

purchaser at the auction sale concernedwhether in a *udicial or e+tra-*udicial

foreclosure shall have the right to enter upon

and ta(e possession of such property

immediately after the date of the confirmation

of the auction sale and administer the same

in accordance with law


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Special Laws


6 Sale1 transfer1 mortgage or otherdisposition of all or substantially all of the

fi+tures and e3uipment

$. (hat are the tran%action% not covere&*

$ Sale by virtue of *udicial order

5 Sale or mortgage is made in the ordinarycourse of trade and business

6 >hen accompanied with a written waiverby the seller?mortgagor@s creditors

# Sale by assignee in insolvency or thosebeyond the reach of creditors

7 Sale of properties e+empt fromattachment or e+ecution

C. (hat are the oligation% of the%ellerIt doesn@t matter if the claim has not beenreduced to *udgment

E. 'ur#o%e of the $ul= Sale% Law:

o prevent the merchants from evading intheir obligations

It see(s to prevent the defrauding ofcreditors by the secret sale or disposal inbul( of all or substantially all of a merchant@sstoc( of goods

-1SOL?E1C, LA(:A. (hat i% the o!ect of %u%#en%ion of

#a)ment*

he ob*ect of suspension of payment is tosee( postponement of the payment of debtsin order to provide the debtor a given periodto convert some of his properties to cash

$. (hat i% the financial con&ition of thea##licant when he file& the #etition for%u%#en%ion of #a)ment*

he debtor has sufficient property to cover allhis debts but there is impossibility to meetthem when they respectively fall due

C. (here &o )ou file a #etition for%u%#en%ion of #a)ment*

he petition is filed in the court of theprovince or of the city where the debtorresided for si+ months ne+t preceding thefiling of his petition

D. (hat are the effect% of the filing of a#etition for %u%#en%ion of #a)ment*$ 'o disposition in any manner of his

property may be made by the petitioner

e+cept insofar as concerns the ordinary

operations of commerce or of industry in

which he is engaged/

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Special Laws


5 'o payments may be made by the

petitioner e+cept in the ordinary course of

his business or industry/ and6 =pon re3uest to the court1 all pending

e+ecutions against the debtor shall be

suspended e+cept e+ecution against

property especially mortgaged

E. (hat i% &oule ma!orit) rule for #ro#o%e&%che&ule of liailit)*Sec B :e; of the Insolvency Law providesthat to form a ma*ority1 it is necessary that5?6 of the creditors voting unite upon thesame proposition and that the claims

represented by said ma*ority vote amount toat least 6?7 of the total liabilities of the debtormentioned in the petition

/. Di%tingui%h in%olvenc) from %u%#en%ion

Su%#en%ion of'a)ment

-n%olvenc)

he debtor hassufficient propertybut he foresees theimpossibility ofmeeting his debts asthey fall due

he debtor does nothave sufficientproperty to pay hisdebts

he purpose is tosuspend or delaypayment of debts

he purpose is todischarge the debtorfrom the payment ofcertain debts

he amount ofindebtedness is notaffected

Some of the creditorsmay receive lessthan their credits

he number ofcreditors isimmaterial

In case of involuntaryinsolvency1 three ormore creditors arere3uired

G. Di%tingui%h involuntar) in%olvenc) fromvoluntar) in%olvenc)

-nvoluntar)-n%olvenc)

?oluntar)-n%olvenc)

6 or more creditorsare re3uired

ne creditor issufficient

commercial law review - zara notes chattel mortgage

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