PRIMER ON CREDIT TRANSACTIONSPrimer on Credit TransactionsUP BarOps 2002I. INTRODUCTIONA. MEANING AND SCOPE OF CREDITTRANSACTIONScredit: abilitytoborrowmoneyor thingsbyvirtue o the trust re!ose" by a len"er that theborrower may!aywhat he!romise"withinas!e#iie" !erio" credit transactions: all transa#tionsinvolvingthe !ur#hase or loan o goo"s$ servi#es ormoneyinthe!resent with!romiseto!ayor"eliver in the uture ty!es: SEC%RED&su!!orte"bya#ollateralor en#umbran#e o !ro!erty 'real ( thereis nee" or "elivery) %NSEC%RED& su!!orte" only by a!ersonal #ommitment o another'!ersonal$ e*+ guaranty or suretyshi!)B. SECURITY AND BAILMENT CONTRACTSsecurit:something given$ "e!osite" or servingas a means to ensure the ulillment orenor#ement o a !rin#i!al obligation!ai"#ent: the "elivery o !ro!erty by one!erson to another in trust or a s!e#ii# !ur!ose$witha#ontra#t that thetrust shall beaithullye*e#ute" an" the !ro!erty returne" or "ulya##ounte" or when the s!e#ial !ur!ose isa##om!lishe" or ,e!t until the bailor re#laims it !arties: -AI.OR & the giver/ the !arty who"elivers the!ossessionor #usto"y othe thing baile" -AI.EE&there#i!ient/ the!artywhore#eivesthe!ossessionor #usto"yothe thing thus "elivere" ,in"s: solebeneit o thebailor &gratuitous"e!osit or man"atum sole beneit o the bailee ommo"atum or mutuum 'sim!le loan) beneit o both !arties & "e!osit or#om!ensation$ !le"ge$ bailment or hireII. LOANcontract o$ "oan 'Art. %&''):one o the !arties"elivers to another: somethingnot #onsumablesothat thelatter mayusethesameor a#ertaintime an" return it 'COMMODAT%M) money or other #onsumable thing$ u!onthe#on"itionthat thesameamount othe same ,in" an" 0uality shall be !ai"'SIMP.E .OAN OR M%T%%M) aREA.CONTRACT(not !ere#te"untilthe "elivery o the ob1e#t o the #ontra#t this is in viewo the!ur!oseo the#ontra#t whi#histotranser either theuse or the ownershi! o the thing loane" however$ an a##e!te" !romise to "eliversomethingbywayo #ommo"atumorsim!le loan is a#onsensual #ontra#t$bin"ing u!on the !arties 'Art. %&'()Saura I#)ort and E*)ort Co. +. DBP2here an a!!li#ationora loano moneywasa!!rove" by resolution o the "een"ant#or!oration an" the #orres!on"ing mortgagewas e*e#ute" an" registere"$ there arises a!ere#te" #onsensual #ontra#t o loan+Bonne+ie +. CAIn this #ase$ the mortgage was e*e#ute" or an"on #on"ition o the loan grante" to the .o3anos!ouses+ The a#t that the latter "i" not #olle#tromtheres!on"ent ban,the#onsi"erationothemortgageonthe"ateit wase*e#ute"isimmaterial+ Theherein#ontra#t o loanwase*e#ute" at the same time the #ontra#t omortgagewase*e#ute"+ The!romissorynote*e#ute"isonlyanevi"en#eo in"ebte"nessan""oesnot in"i#atela#,o #onsi"erationothe mortgage at the time o its e*e#ution+A. COMMODATUM4+ Nature o$ Co##odatu# 'Art. %&',) bailee a#0uires the use o the thingloane"$ but not its ruits%P -AROPS 5665 4PRIMER ON CREDIT TRANSACTIONS however$ un"erArt. %&(-$ asti!ulation that the bailee may ma,euse o the ruits o the thing loane"is vali" the en1oyment o the ruits must onlybe in#i"ental to the use o the thingloane"/ i it isthemain#ause$ the#ontra#t may be one o usuru#t ESSENTIA..78RAT%ITO%S/ #ontra#t#eases to be a #ommo"atumi any#om!ensation is to be !ai" by the bailee'insu#ha#ase$ therearisesalease#ontra#t) !ur!ose o the #ontra#t must be thetem!orary use o the thing loane"/ i thebaileeisnot entitle"totheuseo thething$ the #ontra#t may be a "e!osit bailor nee" not be the owner o the thingloane" 'Art. %&'.) sin#eownershi!"oesnot !asstothe borrower however$ thebaileemaynot len"nor lease the thing loane" to him toa 9r" !erson 'Art. %&'&/01) P%RE.7 PERSONA. in #hara#ter 'Art.%&'&)4) "eath o either the bailor or thebailee e*tinguishes the #ontra#t5) bailee #an neither len" not lease theob1e#t o the #ontra#t to a 9r" !erson/but members o the bailee:shousehol" may ma,e use o thething loane"$ unless: there is a sti!ulation to the#ontrary thenatureo thethingorbi"ssu#h use Art+ 4;9; #onstitutes an e*#e!tion tothe general rule that all rightsa#0uire"invirtueo anobligationare transmissible 'Art+ 44< years !arta,es o the#hara#ter o a #ommo"atum+It "oes not militateagainst the title o the owner+ One:s ownershi!o a thing may be lost by !res#ri!tion by reasono another:s !ossess i su#h !ossession beun"er #laim o ownershi!$ not where the!ossession is only inten"e" to be transient+S%-?ECT MATTER O@ COMMODAT%M 'Arts.%&'2 and %&'3): generally$ nonA#onsumable goo"s #onsumablegoo"smaybethesub1e#to #ommo"atum i the !ur!ose is not the#onsum!tiono theob1e#t$ i+e+ it isore*hibition may be movable or immovable !ro!ertyMina +. Pascua"An e*am!le o #ommo"atum involving real!ro!ertyiswhena!ersonallowe"another tobuil" a warehouse on the ormer:s lan" so thatthelatter mayusethe!ro!erty or a#ertain!erio" without any !ayment o rentals+I no timeor the use o the lan" is s!e#iie"$ the #ontra#twoul"bethat s!e#ieso #ommo"atum#alle"precariume*!ressly re#ogni3e" in Arti#le 4;B6)%P -AROPS 5665 BPRIMER ON CREDIT TRANSACTIONSb+ @%N8I-.E TEIN8 borrower is un"er obligationto!aythe len"er another thing o the same,in"$ 0uality an" 0uantity in #ase this is im!ossible to "o$ theborrower shall !ayitsvalueat thetime o the !ere#tion o the loan'. Interest 8EN+ R%.E: Nointerest shall be"ue+'Art. %&,2) ECCEPTIONS: i agreement to !ay interest ise*!ressly sti!ulate" an" is in writing'Art. %&,2) the interest must be lawul$ i+e+ itis not usurious 'Art. %&,3)/however$ laws on usury havebeen sus!en"e" in"emnity or "amages ( the "ebtorin "elay is liable to !ay legal interestevenin absen#e osti!ulation 'Art+556;) interest "ue shall earn legal interestrom the time it is 1u"i#ially"eman"e" although the obligationmaybesilent u!onthis!oint 'Art+5545)San4rador +. 7a"derra#a2here no interest was e*!ressly sti!ulate"$althoughahi""eninterest wasin#or!orate"inthe !rin#i!al amount$ the #ourt or"ere" the!ayment o 45H interest !er annum+Eastern S5i))in4 Lines +. CA2ith regar" !arti#ularly to an awar" o interest inthe #on#e!t o a#tual an" #om!ensatory"amages$ the rate o interest woul" be im!ose"as ollows: 'a) obligation brea#he"$ !ayment osum o money 'orbearan#e o money or loan)$that sti!ulate"$ intheabsen#eo whi#h45H#om!ute" rom"eault/ 'b) theobligation not#onstituting loan or orbearan#e o money$interest im!ose" at the "is#retion o the #ourt attherateo FH!erannum/ '#)when1u"gmentawar"ing sumo money be#omes inal an"e*e#utory$ rate is 45H !er annum$ interim !erio""eeme" e0uivalent to a orbearan#e or #re"it+6a+ier +. De Gu8#an2hilethe%sury.awisnowlegallyine*istent$when the interest #harge" is e*orbitant an"un#ons#ionable$ the #ourts may !rovi"e relie tothe borrower+ i interest is!ayablein,in"$ itsvalueshall be a!!raise" at the #urrent !ri#e othe!ro"u#tsorgoo"sat thetimean"!la#e o !ayment 'Art. %&,.) I the borrower !ays interest when therehasbeennosti!ulationthereore$ the!rovisions #on#erning solutio indebitiornatural obligations shall be a!!lie" 'Art.%&2-)+ whereunsti!ulate"interest is!ai"by mista,e$ the "ebtor may re#over'Art+ 54>B) whereunsti!ulate"interest is!ai"voluntarily be#ause the "ebtor eelsmorally oblige" to "o so$ there #anbe no re#overy 'Art+ 4B5>)co#)ounded interest: interest "ue an" un!ai"shall be a""e" to the !rin#i!al obligation an" theresulting total amount shall earn interest 8EN+ R%.E: a##rue" interest shall not earninterest ECCEPTIONS: when 1u"i#ially "eman"e" 'Art+ 5545) when there is an e*!ress sti!ulationma"e by the !arties 'Art. %&,&)Cu Un9ien4 +. Ma!a"acat Su4ar Co.A sti!ulation to the ee#t that interest shall be attherateo 45H!er annum!ayableat ea#hmonth u!on the un!ai" #a!ital o the loan$ "oesnot authori3e the #om!oun"ing o interest!ayment at intervals o one month+ 2hereinterest #harge" is usurious$ the mere voluntary!ayment o it to the #re"itor by the "ebtor is notbin"ing+Intheabsen#eo e*!ress sti!ulationor thea##umulationo#om!oun" interest$nointerest#anbe #olle#te" u!oninterestuntilthe "ebt is1u"i#ially #laime"+co##odatu# #utuu#sub1e#t matter isor"inarily somethingnot #onsumablesub1e#t matter ismoney or other#onsumable thingownershi! o thingloane" is retaine" bythe len"erownershi! istranserre" to theborroweressentially gratuitous may be gratuitous oronerous 'wIsti!ulationto !ay interest)borrower must returnthe same thing loane" borrower nee" only!aythesameamount%P -AROPS 5665 >PRIMER ON CREDIT TRANSACTIONSo thesame,in"an"0ualitymay involve real or!ersonal !ro!ertyreers only to !ersonal!ro!ertyloan or use loan or #onsum!tionbailor may "eman"return o the thingloane" beore thee*!irationo thetermin #ase o urgent nee"the len"er may not"eman" its returnbeore the la!se o theterm agree" u!on loss is generally bornebythebailorsin#eheis the ownerborrower suers thelossIII. DEPOSITA. DEPOSIT IN GENERALde)osit'Art. %&20): #onstitute" rom themoment a !erson re#eives a thing belonging toanother with the obligation o: saely ,ee!ing it$ an" returning the same I sae,ee!ingo thething"elivere"isnotthe !rin#i!al !ur!ose o the #ontra#t$ there isnot "e!osit but someother #ontra#t 'Art.%&20)+ a REA. CONTRACT ( "e!osit is not!ere#te" until the "elivery o the thing but an agreement to #onstitute a "e!ositis bin"ing 'Art. %&2') may be #onstitute" 1u"i#ially ore*tra1u"i#ially 'Art. %&2() it isa1u"i#ial "e!osit or se0uestrationwhen an atta#hment or sei3ure o!ro!erty in litigation is or"ere" e*tra1u"i#ial "e!osit iseither voluntaryor ne#essary 'Art. %&23) a generally 8RAT%ITO%S CONTRACT $unless: there is an agreement to the #ontrary the "e!ositary is engage" in thebusiness o storing goo"s'Art. %&2,) sub1e#t matter #oversonlymovablethings'Art. %&22) however$ 1u"i#ial "e!osit may #overmovable as well as immovable !ro!ertyits !ur!ose being to !rote#t the things o!arties to a suit 'Art. 0--2)de)osit #utuu#!rin#i!al !ur!ose is !rin#i!al !ur!ose issae,ee!ing #onsum!tion"e!ositor#an"eman"the return o thesub1e#t matter at willthe len"er must waituntil the e*!iration othe !erio" grante"both movable an"immovable !ro!erty 'in#ase o 1u"i#ial"e!osit) may be theob1e#tonlymoneyan"otherungible things may bethe ob1e#tde)ositco##odatu#!rin#i!al !ur!ose issae,ee!ing!rin#i!al !ur!ose is thetranser o the usemay be gratuitous essentiallyan"alwaysgratuitousB. 7OLUNTARY DEPOSIT%. Genera" Pro+isions+o"untar de)osit 'Art. %&2.): "elivery is ma"e by the will o the "e!ositor "elivery ma"e by 5 or more !ersons ea#h owhombelieves himselentitle" to thething"e!osite" with a 9r" !erson 9r"!ersonshall "eliver it ina!ro!er#ase to the one to whom it belongs #ontra#t may beentere"intoorally or inwriting 'Art. %&2&)E@@ECT O@ INCAPACIT7a+ o the DEPOSITOR 'Art. %&3-) "e!ositary shall be sub1e#t to all theobligations o a "e!ositary "e!ositarymaybe#om!elle"toreturnthe thing by the guar"ian ora"ministrator o the "e!ositor or by the"e!ositor himsel i heshoul"a#0uire#a!a#ityb+ o the DEPOSITAR7 'Art. %&3%) "e!ositary "oes not in#ur the obligationso a "e!ositary "e!ositaryisliabletoreturnthething"e!osite" while still in his !ossession "e!ositary may be #om!elle" to !ay the"e!ositor the amount by whi#h he mayhave beneite" himsel with the thing orits!ri#esub1e#t totheright o any9r"!ersonwhoa#0uire" thethingingoo"aith "e!ositor may bring an a#tion against a9r" !erson who a#0uires the thing in ba"aith%P -AROPS 5665 FPRIMER ON CREDIT TRANSACTIONS0. O!"i4ations o$ t5e De)ositara+ to JEEPthe thing SA@E an" RET%RNit whenre0uire"$ tothe"e!ositor$ hisheirs an" su##essors$ or any !ersonwhomayhavebeen"esignate"inthe#ontra#t 'Art. %&30) res!onsibility o "e!ositary withregar" to the sae,ee!ingan" losso the thing is governe" by Arts+45F5 to 45F; heis liablei theloss o##ursthrough his ault or negligen#e "eensesavailable:"iligen#e oa goo" ather o a amily$ortuitous event "egree o #are is greater is the"e!osit is or #om!ensation thanwhen it is gratuitous i the "e!ositor shoul" lose his#a!a#ity to #ontra#t ater havingma"e the "e!osit$the thing #annotbereturne"e*#e!t tothe!ersonswho may have the a"ministration ohis !ro!erty an" rights 'Art. %&.2)b+ NOTtoDEPOSITthethingwitha9RDPERSON$ unless there is a sti!ulation tothe #ontrary 'Art. %&3') i "e!osit with a 9r"!erson isallowe"$ the"e!ositaryisliableorthelossi he"e!osite"thethingwith a !erson who is maniestly#areless or unit "e!ositary is res!onsible or thenegligen#e o his em!loyees#+ may CEAN8E TEE 2A7 o theDEPOSIT un"er #ir#umstan#es he mayreasonably!resumethat the"e!ositorwoul" #onsent to the #hange i he ,newo the a#ts o the situation 'Art. %&3() "e!ositary must irst notiy the"e!ositor an" wait or the latter:s"e#ision beore ee#ting the #hange re0uirement o !rior noti#e maybe"is!ense"withi the"elaywoul" #ause "anger"+ toCO..ECTINTERESTonCEOSESIN ACTION "e!osite" 'Art. %&3,) where the "e!ositary is hol"ing#ertii#ates$ bon"s$ se#urities$ orinstruments whi#h earn interest "e!ositary is also boun" to ta,esu#hste!sne#essaryinor"erthatthe se#urities may !reserve theirvalue an" rights #orres!on"ing tothem !rovision "oes not a!!ly to#ontra#ts or the rent o saety"e!osit bo*es'bailment or hire$ as!e#ial ,in" o "e!osit)e+ may COMMIN8.E 8RAIN or arti#les otheSAMEJINDANDG%A.IT7'Art.%&32) unlessthereisasti!ulationtothe#ontrary the various "e!ositors shallown orhave a !ro!ortionate interest in themass+ NOT to MAJE %SE o the TEIN8DEPOSITED 'Art. %&33) unless: thereise*!ress!ermissionothe "ebtor the !reservation o the thing"e!osite" re0uires its use$ but itmay only be use" or that!ur!ose brea#h o this obligation shall ren"erthe "e!ositary liable or "amages irre4u"ar de)osit: when the"e!ositary has !ermission to usethe #onsumable thing or money"e!osite" but sae,ee!ing is still the!rin#i!al !ur!ose i the thing "e!osite" is nonA#onsumable an"the "e!ositaryhas !ermission to use the thing$the #ontra#t is #onverte" to oneo #ommo"atum 'Art. %&3.) i thething"e!osite" is moneyor other #onsumablething$ the!ermission given an" the#onsum!tion #onverts the#ontra#t into a sim!le loan 'Art.%&3.) !ermission to use is not!resume"but must be!roven'Art. %&3.)Co#)ania A4rico"a de U"tra#ar +.Ne)o#ucenoThereare!ointso "ieren#ebetweenaloanan" an irregular "e!osit+In an irregular "e!osit$%P -AROPS 5665 are note*#lusive/ other #auses #an be oun" inArt+ 4594 o the Civil Co"e 'e*+ novation$merger$ et#+)+C. NECESSARY DEPOSIT2EEN CONSTIT%TED:4) when it is ma"e in #om!lian#e with a legalobligation 'Art. %&&2)%P -AROPS 5665 ;PRIMER ON CREDIT TRANSACTIONS governe"bythe!rovisionso thelawestablishing it/ in #ase o its "ei#ien#y$bytheruleso voluntary"e!osit 'Art.%&&3) e*am!les: 1u"i#ial "e!osit o a thing the!ossession o whi#h is being"is!ute"inlitigationby5or more!ersons 'Art+ >9=) "e!osit o a thing !le"ge" when the#re"itorusesthesamewithout theauthority o the owner or misuses itin any other way 'Art. 0%-() those #onstitute" to guarantee#ontra#ts with the government5) when it ta,es !la#e on the o##asion o any#alamity$ su#h as ire$storm$ loo"$!illage$shi!wre#,$ or other similar events 'Art.%&&2) regulate" by the rules on voluntary"e!osit an" by Art+ 54F= 'establishes aG%ASIACONTRACT(owner isboun"to!ayanother or savinghis!ro!ertyrom "estru#tion)9) "e!osit o ee#ts ma"e by travelers in hotelsor inns 'Art. %&&.) to hol" ,ee!ers o hotels or innsres!onsible as "e!ositaries$ theollowing must #on#ur: noti#e be given to themor theirem!loyees$ o the ee#ts brought gueststa,ethe!re#autionswhi#hhotel,ee!ers or their substitutesa"vise" relative to the #are an"vigilan#e o their ee#ts liability e*ten"s to ee#ts lost or"amage"intheanne*eso thehotel'Art. %&&&) res!onsibility o hotel,ee!ers shallin#lu"e loss o$ or in1ury to the !ersonal!ro!erty o guests #ause" by em!loyeesas well as strangers 'Art. 0---) hotel,ee!ers are not liable when: the loss or in1ury is #ause" by or#ema1eure 'Art. 0---) the a#t o a thie or robber$ whohas entere" the hotel$ is not"eeme" or#e ma1eure unless itis "one with the use o arms orthrough irresistible or#e 'Art.0--%) the loss is "ue to the a#ts o guests$his amily$servantsor visitors'Art.0--0) the loss arises rom the #hara#ter othe things brought into the hotel'Art. 0--0) hotel,ee!er has a right to retain thethings brought into the hotel as ase#urity or #re"its on a##ount o lo"gingan" su!!lies 'Art. 0--() The hotel,ee!er #annot su!!ress or"iminish liability by !ostingnoti#es totheee#t that heisnot liableor thearti#les brought by the guest+ Anysti!ulationto the #ontrary shallbe voi"'Art. 0--')+D. SE:UESTRATION OR 6UDICIALDEPOSIT ta,es !la#e when an atta#hment orsei3ure o !ro!erty in litigation isor"ere" 'Art. 0--,) !ur!ose is to maintain the status0uo "uring the !en"en#y o litigation Rule >< 'Rules o Court): !ro!ertiesmay be atta#he" by the sheri u!onthe iling o a #om!laint Rule>;'ROC): a!!ointment o are#eiver or the !reservation o!ro!erty in litigation Rule F6 'ROC): !ersonal !ro!erty issei3e" in suits o re!levin ob1e#t maybemovableor immovable!ro!erty 'Art. 0--2) ONERO%S ( always remunerate"O-.I8ATION O@ TEE DEPOSITAR7: to ta,e #are o the !ro!erty with the"iligen#eoagoo"atheroa amily'Art.0--.) may not be relieve" o his res!onsibility untilthe litigation is en"e" or the #ourt so or"ers'Art. 0--3) Astomattersnot !rovi"e"or intheCivilCo"e$ 1u"i#ial se0uestration shall begoverne" by the Rules o Court 'Art. 0--&)+I7. GUARANTYA. NATURE AND E;TENT OF GUARANTY%P -AROPS 5665 46PRIMER ON CREDIT TRANSACTIONS4uarant'Art. 0-(3): a#ontra#t wherebya!erson 'guarantor) bin"s himsel to the #re"itorto ulillthe obligationo the !rin#i!al"ebtorin#ase the latter shoul" ail to "o so ACCESSOR7 ( #annot e*ist without a vali"obligation nevertheless$ a guaranty may be#onstitute" to guarantee the!erorman#e o a voi"able orunenor#eable #ontra#t$ or a naturalobligation 'Art. 0-,0) a #on"itional obligation may also bese#ure" 'Art. 0-,') S%-SIDIAR7(ta,esee#tonlywhenthe!rin#i!al "ebtor ails in his obligation gratuitous$ unless there is a sti!ulation to the#ontrary 'Art. 0-(.) JINDS 'Art. 0-,%): #onventional & by agreement o the!arties legal & by virtue o law 1u"i#ial & by or"er o the #ourt gratuitous onerous in avor o the !rin#i!al "ebtor in avor o another guarantor 'dou!"e orsu! Inc. +. PinonA #ontra#t o guarantyisnot aormal #ontra#tan" shall bevali" inwhateverormitmaybe$!rovi"e" that it #om!lies with the Statute o@rau"s+Paci$ic To!acco Cor). +. Loren8anaThe rule ostrictissimijuris'guaranty is stri#tlyinter!rete"against the#re"itor an"inavorothe guarantor) is not a!!li#able to a#om!ensate" guarantor or #or!orate sureties%P -AROPS 5665 44PRIMER ON CREDIT TRANSACTIONSengage" in the business o urnishing bon" or#om!ensation+Art. 0-(&.A marrie" woman may guarantee anobligation without the husban":s #onsent$ butshallnot thereby bin" the #on1ugal!artnershi!$e*#e!t in #ases !rovi"e" by law+2EEN8%ARANT7IS2ITEO%TCONSENTOR A8AINST TEE 2I.. O@ PRINCIPA.DE-TOR 'Art. 0-,-): Art+ 459F & guarantor #an re#over onlyinsoarasthe!ayment isbenei#ial tothe"ebtor Art+ 459 MORTGAGE ANDANTIC?RESIS%P -AROPS 5665 4>PRIMER ON CREDIT TRANSACTIONSA.APRO7ISIONS COMMON TO PLEDGE ANDMORTGAGE)"ed4e: an a##essory obligation whereby!ersonal !ro!erty o the "ebtor or a 9r" !erson is"elivere"tothe#re"itor or toa9r"!ersonby#ommon agreement$ to se#ure the !erorman#eo a !rin#i!al obligationrea" estate#ort4a4e: a#ontra#t inwhi#hthe"ebtor or a 9r" !erson guarantees to the #re"itorthe ulillment o a !rin#i!al obligation$ sub1e#tingto su#h se#urity$ immovable !ro!erty or realrights over immovable !ro!erty in #ase the!rin#i!al obligationisnot #om!lie"withat thetime sti!ulate"c5atte" #ort4a4e: #ontra#t byvirtueo whi#h!ersonal !ro!erty is re#or"e" in the ChattelMortgage Register as a se#urity or the!erorman#e o an obligationESSENTIA.REG%ISITESO@P.ED8EANDMORT8A8E 'Art. 0-.,)4) #onstitute" to se#ure the ulillment o a!rin#i!al obligation !rin#i!al obligation must be vali" however$ they may guarantee avoi"able$ unenor#eable or naturalobligation 'Art. 0-.2$ reerring to Art+ 56>5) !ureor #on"itional obligations'sub1e#tto sus!ensive or resolutory #on"ition)may also be se#ure" 'Art. 0-&%)5) !le"gor or mortgagor is the absolute ownero the thing !le"ge" or mortgage" 9r"!ersonswhoarenot !artiestothe!rin#i!al obligation may se#ure the latterby !le"ging or mortgaging their own!ro!erty9) !ersons #onstituting the !le"ge or mortgagemust have the ree "is!osal o their !ro!erty in the absen#e thereo$ !le"gor ormortgagor must be legally authori3e" to"is!ose o the !ro!ertyB) the thing !le"ge" or mortgage" may bealienate" or the !ayment o the #re"itorwhenthe!rin#i!al obligation be#omes"ue'Art. 0-.3) the #re"itor "oes not automati#allybe#ome the owner i at the timesti!ulate" the obligation is still unulille"Di"a4 +. ?eirs o$ ResurreccionAsamortgagere0uiresthat themortgagor bethe absolute owner o the !ro!erty to bemortgage"$ a mortgagor #annot legallymortgage !ro!erty he might a#0uire in the utureor !ro!erty he "oes not own yet+)"ed4e #ort4a4e!ro!erty is "elivere" tothe !le"gee$ or by#ommon#onsent toa9r" !erson"elivery is notne#essarynot vali" against 9r"!ersons unless a"es#ri!tion o the thing!le"ge"an"the"ateo the !le"ge a!!ear ina !ubli# instrumentnot vali" against 9r"!ersons i notregistere")actu# co##issoriu#: a sti!ulation in !le"ge$mortgage or anti#hresis that the #re"itor #ana!!ro!riatethethingsgivenasse#urityisthe"ebt is not !ai" DOID un"er Art. 0-.. rationale: the amount o the loan is or"inarilymu#hlessthat thereal valueo thething!le"ge" or mortgage" thesti!ulation"oesnot ae#t the!rin#i!al#ontra#to!le"geor mortgage itselwhi#hremains vali"/ only the sti!ulation is voi"Tan +. Cest Coast Li$e Insurance Co.A !romiseto assignthemortgage" !ro!erty in#ase o ailure to !ay is not !a#tum#ommissorium be#ause it re0uires a !ositive a#to #onveyan#eby the!romisor or whi#h he#oul" not be #om!elle"$ although sai" !romisormaybeliableor"amages+ -ut anautomati##onveyan#e o !ro!erty in #ase o ailure to !ayis!a#tum#ommissoriumbe#auseinthat #asethe obligor has no o!tion+R%.E O@ INDIDISI-I.IT7 !le"geor mortgageisINDIDISI-.E$ eventhough the "ebt may be "ivi"e" among thesu##essors in interest o the "ebtor or o the#re"itor "ebtor:s heir #annot as, or the!ro!ortionate e*tinguishments o the!le"ge or mortgage as long as the "ebtis not #om!letely satisie" #re"itor:s heir who has been !ai" #annotreturn the !le"ge or #an#el the%P -AROPS 5665 4FPRIMER ON CREDIT TRANSACTIONSmortgage to the !re1u"i#e o other heirswho have not been !ai" exception: where several things aregiven in mortgage or !le"ge$ ea#h oneguaranteeing only a "eterminate !ortiono the #re"it "ebtor shall have a right toe*tinguishthe!le"geor mortgageas to the !ortion o the "ebtsatisie" or whi#h ea#h thing ises!e#ially answerable'Art. 0-.&) in"ivisibilityisnot ae#te"bythea#t thatthe "ebtors are not soli"arily liable 'Art.0-&-)PNB +. A#oresAmortgage obligation is one an" in"ivisible+Themortgagor #annot o!t$ mu#hless#om!elthe mortgagee$ to a!!ly any !ayment ma"e byhimon a s!e#ii# !ortion o the mortgage"!ro!erty to ee#t release+ Neither may themortgageea!!ly!aymentsma"etoit on$an"#onse0uently release$ a !ortion o themortgage"!ro!erty an"ee#t ore#losureonthe rest+E@@ECT O@ PROMISE TO CONSTIT%TEP.ED8E OR MORT8A8E 'Art. 0-&0) gives rise only to a !ersonal a#tion betweenthe #ontra#ting !arties #reates no real right in the !ro!erty without !re1u"i#e to #riminal res!onsibility'or estaa) in#urre"byhimwho"erau"sanother$ by: oering in !le"ge or mortgage asunen#umbere" things whi#h he ,newwere sub1e#t to some bur"en misre!resenting himsel to be the ownero the thingA.BPLEDGECEARACTERISTICS O@ P.ED8E4) a REA. CONTRACT ( the thing !le"gemust be!la#e"inthe!ossessiono the#re"itor$ or o a 9r"!erson by #ommonagreement 'Art. 0-&') a#tual !ossession is re0uire"/ meresymboli# "elivery is not sui#ient 'Betita+. Gan8on) however in another #ase$ the Court sai"that symboli# or #onstru#tive "elivery issui#ient toma,ethe!le"geee#tive/the ty!e o "elivery will "e!en" u!on thenature an" !e#uliar #ir#umstan#es oea#h #ase 'Yu"ion4siu +. PNB)5) a##essory & no in"e!en"ent e*isten#e o itsown9) unilateral& on !art o #re"itor to return thething sub1e#t to ulillment o !rin#i!alobligationB) subsi"iary&obligation"oesnot ariseuntilulillment o !rin#i!al obligation whi#h isse#ure">) ownershi! is retaine" by the "ebtor or!le"gorS%-?ECT MATTER O@ P.ED8E4) all movables within #ommer#e an"sus#e!tible o !ossession 'Art. 0-&()5) in#or!oreal rights 'Art. 0-&,) evi"en#e" by negotiable instruments$billso la"ing$ shareso sto#,$ bon"s$warehouse re#ei!ts instrument !roving the right !le"ge"shall be "elivere" to the #re"itor i instrument is negotiable$ must bein"orse"-INDIN8 E@@ECT ON 9RD PERSONS to be bin"ing on 9r" !ersons$ the "es#ri!tiono thething!le"ge"an"the"ateo the!le"gemust a!!earina!ubli#instrument'Art. 0-&2) rationale: to orestall rau"$ be#ause a"ebtor may attem!t to #on#ealhis !ro!ertyrom #re"itors by simulating a !le"geA.IENTATION O@ TEE TEIN8 P.ED8ED'Art.0-&3) with #onsent o the !le"gee ownershi! o the thing !le"ge" istransmitte"totheven"eeortransereeassoon as the !le"gee #onsents to thealienation !le"gee remains in !ossession o the thing!le"ge" "es!ite alienation !le"gor may alienate the thing !le"ge"sin#e he retains the ownershi! o su#h thingO-.I8ATIONS O@ TEE P.ED8EE tota,e#areo thething!le"ge"withthe"iligen#e o a goo" ather o a amily with right to reimbursement o e*!ensesma"e or its !reservation %P -AROPS 5665 4