CHATTEL MORTGAGE
CHATTEL MORTGAGE
A chattel mortgage is an accessory contract by virtue of which personally property is recorded in the Chattel Mortgage Register as security for the performance of an obligation. (Art. 2140, NCC)
A chattel mortgage is not a conditional sale (Serra vs. Rodriguez, 56 SCRA 538.) It’s a security; an accessory contract where personal property is mortgaged as security for the performance of an obligation (Art. 2140, Civil Code.)
A 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. (Sect. 3, Act 1508; The Chattel Mortgage Law.)
After-acquired Property
Can future or after-acquired property be the subject of chattel mortgage?
Yes, provided that the after-acquired property is either
(1) in renewal of, or in substitution for, goods on hand when the mortgage was executed, or
(2) purchased with the proceeds of the sale of such goods. (Torres v. Limjap, 56 Phil. 141; 1931)
It can only cover property that has been expressly described; substitutes and similar property (after-acquired property) won’t do (Tsai vs. CA, 366 SCRA 324) unless the after-acquired property in question pertains to stores open to the public.
After-incurred Obligations
Can a chattel mortgage cover after-incurred obligations or debts subsequently contracted?
No. A chattel mortgage can only cover obligations existing at the time the mortgage is constituted. (Acme Shoe, et al. V. CA, G.R. 103576, Aug. 22, 1996) Personal or movable property
1. Shares of stock;
2. Interest in business; 3. Machinery treated as personal property subsequently installed on leased land (Davao Sawmill v.
A chattel mortgage is an accessory contract by virtue of which personally property is recorded in the Chattel Mortgage Register as security for the performance of an obligation. (Art. 2140, NCC)
A chattel mortgage is not a conditional sale (Serra vs. Rodriguez, 56 SCRA 538.) It’s a security; an accessory contract where personal property is mortgaged as security for the performance of an obligation (Art. 2140, Civil Code.)
A 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. (Sect. 3, Act 1508; The Chattel Mortgage Law.)
After-acquired Property
Can future or after-acquired property be the subject of chattel mortgage?
Yes, provided that the after-acquired property is either
(1) in renewal of, or in substitution for, goods on hand when the mortgage was executed, or
(2) purchased with the proceeds of the sale of such goods. (Torres v. Limjap, 56 Phil. 141; 1931)
It can only cover property that has been expressly described; substitutes and similar property (after-acquired property) won’t do (Tsai vs. CA, 366 SCRA 324) unless the after-acquired property in question pertains to stores open to the public.
After-incurred Obligations
Can a chattel mortgage cover after-incurred obligations or debts subsequently contracted?
No. A chattel mortgage can only cover obligations existing at the time the mortgage is constituted. (Acme Shoe, et al. V. CA, G.R. 103576, Aug. 22, 1996) Personal or movable property
1. Shares of stock;
2. Interest in business; 3. Machinery treated as personal property subsequently installed on leased land (Davao Sawmill v.