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Art. 2140. By a chattel mortgage, personal property is recorded in the Chattel Mortgage Register as a security for the
performance of an obligation. If the movable, instead of being recorded, is delivered to the creditor or a third person,
the contract is a pledge and not a chattel mortgage. (n)
CHATTEL MORTGAGE
> Contract by virtue of which personal property is recorded in the Chattel Mortgage Register as security for the
performance of an obligation
CHARACTERISTICS
1. Accessory contract
2. Formal contract
WHAT MAKES IT DIFFERENT FROM A PLEDGE?
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ell. But if the debtor is not willing and able, the loss is with the creditor.
4. There is a 30-day equity of redemption period (payment of obligation)
5. After foreclosure, there could be recovery of deficiency, but there is Recto Law (1484) pertaining to sale of
personal property in installments and there is a Chattel Mortgage to secure payment of price.
AN ACTION FOR SPECIFIC PERFORMANCE IS TANTAMOUNT TO THE ABANDONMENT OF RIGHTS OF
MORTGAGEE
APPLICATION OF PROCEEDS OF FORECLOSURE
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Costs
Obligation itself. Pay first the interest and then the principal. If there is penalty, then pay it first.
Junior encumbrances
Owner