QuestionsQuestions (Act No. 1508)
A chattel mortgage is a conditional sale of personal property as security for the payment of a debt or performance of another specified obligation, where the sale is void upon the seller/mortgagor paying the sum of money or doing the specified act.
If the mortgagor performs the condition according to its terms, the mortgage and sale immediately become void, and the mortgagee is thereby divested of title.
A chattel mortgage is not valid against any person except the mortgagor (and his executors/administrators) unless either (a) possession of the property is delivered to and retained by the mortgagee, or (b) the mortgage is recorded in the proper office of the register of deeds.
It must be recorded in the office of the register of deeds of both provinces: the province where the mortgagor resides and the province where the property is situated; for this purpose, the city of Manila is deemed a province.
It must be made substantially in the prescribed form, signed by the mortgagor(s) and mortgagee(s) (or mortgagee’s agent/attorney in absence), executed in the presence of two witnesses who sign as witnesses, and accompanied by the required affidavits signed by the parties and the notarial/authority certificate appended and recorded with the mortgage.
The parties must swear that the mortgage is made to secure the obligation specified and for no other purpose; it is a just and valid obligation; and it is not entered into for the purpose of fraud.
The description must be such that the parties or any other person, after reasonable inquiry and investigation, can identify the property.
The mortgage must include the brands, class, sex, age, knots of radiated hair (reniclinos/cowlicks), and other marks of ownership as described in the animal’s certificate of ownership, plus the number and place of issue of those certificates.
It may stipulate that the mortgagor will properly tend, care for, and protect the crop and faithfully and without delay harvest it; in default, the mortgagee may enter the premises, take necessary measures to protect the crop, retain possession, and sell it, applying proceeds first to expenses and the secured indebtedness, with any surplus to the mortgagor (or those entitled).
A chattel mortgage covers only the property described therein and not any like or substituted property thereafter acquired and placed in the same depository, notwithstanding any contrary wording in the mortgage.
The person entitled to redeem may recover from the person whose duty it is to discharge: (1) twenty pesos as a penalty for neglect, plus (2) all damages occasioned by such neglect in an action in a court with jurisdiction.
No. Under Section 9, no personal property under a chattel mortgage may be removed from the province where it is located at the time of execution without the written consent of the mortgagor and mortgagee (or their successors).
The mortgagor cannot sell or pledge the mortgaged property (or any part thereof) without the written consent of the mortgagee, placed on the back of the mortgage and on the margin of the record in the office where it is recorded.
A mortgagor cannot execute a second or subsequent mortgage of the same personal property while it is subject to a previous mortgage unless the existence of the previous mortgage is set forth in the subsequent mortgage.
A mortgagor, or a person holding a subsequent mortgage, or an attaching creditor may redeem by paying/delivering the amount due plus reasonable costs and expenses incurred before sale. An attaching creditor who redeems is subrogated to the mortgagee’s rights and may foreclose in the same manner the mortgagee could foreclose.