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TitleCredit Transactions Notes
TagsLawsuit Guarantee Legal Concepts Foreclosure Mortgage Law
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Page 1

CREDIT TRANSACTIONS





PLEDGE



Pledge is a contract by virtue of which the debtor delivers to the creditor or to a third person

a movable (Article 2094) or document evidencing incorporeal rights (Article 2095) for the

purpose of securing the fulfillment of a principal obligation with the understanding that

when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and

accessions.



KINDS OF PLEDGE:



1. Voluntary or conventional- created by agreement of the parties

2. Legal- created by operation of law



Characteristics



1. A real contract because it is perfected by the delivery of the thing pledged by the debtor

who is called the pledgor to the creditor who is the pledge, or to a third person by common

agreement;



2. An accessory contract because it has no independent existence of its own;



3. A unilateral contract because it creates an obligation solely on the part of the creditor to

return the thing subject thereof upon the fulfillment of the principal obligation;



4. A subsidiary contract because the obligation incurred does not arise until the fulfillment of

the principal obligation to which it is secured.



CAUSE OR CONSIDERATION



1) Principal obligation – In so far as the pledgor is concerned.



2) Compensation stipulated for the pledge or mere liberality of the pledgor – If pledgor is

not the debtor.





PLEDGE MORTGAGE

Constituted on movables. Constituted on immovables.

Property is delivered to the pledgee, or by

common consent to a 3rd person.

Delivery not necessary.

Not valid against 3
rd
persons unless a

description of the thing pledged and the date

of the pledge appear in a public instrument.

Not valid against 3
rd
persons if not

registered.



PROVISIONS COMMON TO PLEDGE AND MORTGAGE (Art 2085-2123)

ESSENTIAL REQUISITES TO CONTRACTS OF PLEDGE AND MORTGAGE:



1. constituted to secure the fulfillment of a principal obligation



2. pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged.

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