addendum to sec trans

8/6/2019 Addendum to Sec Trans

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

PLEDGE (definition) - A contract by virtue of which the debtor delivers to the creditor or

to a third person a movable or document evidencing incorporeal rights for thepurpose of securing the fulfillment of a principal obligation with the understandingthat when the obligation is fulfilled, the thing delivered shall be returned with all itsfruits and accessions.

Essential Requisites to Contracts of Pledge and Mortgage1. constituted to secure the fulfillment of a principal obligation2. pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged3. the persons constituting the pledge or mortgage have the free disposal of their

property, and in the absence thereof, that they be legally authorized for thepurpose

4. cannot exist without a valid obligation

5. when the principal obligation becomes due, the thing in which the pledge or mortgage consists may be alienated for the payment to the creditor.

• third persons not parties to the principal obligation may secure the latter by pledging or mortgaging their own property

• but may be constituted to secure fulfillment of a voidable or unenforceableor natural obligation

• in case of pledge, the thing pledged must be delivered to the creditor or toa third person by common agreement

• in case of mortgage, as a general rule, the mortagagor retains hepossession of the property mortgaged

Kinds of Pledge:

1. Voluntary or conventional – created by agreement of the parties2. Legal - created by operation of law

Characteristics of Pledge:1. real - perfected by delivery2. accessory - has no independent existence of its own3. unilateral - creates obligation solely on the part of the creditor to return the thing

subject upon the fulfillment of the principal obligation4. subsidiary – obligation incurred does not arise until the fulfillment of the principal

obligation

Cause or Consideration in Pledge

1. principal obligation – in so far as the pledgor is concerned2. compensation stipulated for the pledge or mere liberality of the pledgor – if

pledgor is not the debtor

Important Points:1. future property cannot be pledged or mortgaged2. pledge or mortgage executed by one who is not the owner of the property

pledged or mortgaged is without legal existence and registration cannot validateit.

3. mortgage of a conjugal property by one of the spouses is valid only as to ½ of theentire property

4. in case of property covered by Torrens title a mortgagee has the right to rely

upon what appears in the certificate of title and does not have to inquire further.5. pledgor or mortgagor has free disposal of property6. thing pledged or mortgaged may be alienated.7. creditor not required to sue to enforce his credit8. pledgor or mortgagor may be third person



PLEDGE MORTGAGE

Constituted on movables Constituted on immovables

Property is delivered to the pledgee, or by

common consent to a 3rd person

Delivery not necessay

Not valid against 3rd persons unless adescription of the thing pledged and thedate of the pledge appear in a publicinstrument

Not valid against 3rd persons if notregistered

Right of Creditor where Debtor fails to Comply with his Obligation1. creditor is merely entitled to move for the sale of the thing pledged or mortgaged

with the formalities required by law in order to collect2. creditor cannot appropriate to himself the thing nor can he dispose of the same

as owner.

Prohibition against pactum commissorium1. stipulation is null and void - stipulation where thing or mortgaged shall

automatically become the property of the creditor in the event of nonpayment of the debt within the term fixed

2. Requisites of pactum commissorium:a. there should be a pledge or mortgageb. there should be a stipulation for an automatic appropriation by the creditor

of the property in the event of nonpayment3. Effect on Security Contract

-nullity of the stipulation does not affect validity and efficacy of the principalcontract

Permissible Stipulations with regard to pactum commissorium:1. subsequent modification of original contract by agreement of parties2. subsequent voluntary act of the debtor making cession of property in payment of

the debt3. promise to assign or sell said property in payment of the obligation if, upon its

maturity, it is not paid4. authorizing the mortgagee to take possession of the mortgaged premises upon

the foreclosure of a mortgage5. if after the first and second auctions, the thing is not sold

Important Points:1. debtor-owner bears the risk of loss of the property

2. pledge or mortgage is indivisible:a. every portion of the property is answerable for the whole obligationb. when several things are pledged or mortgaged, all of them are liable for

the totality of the debt. Creditor does not have to divide his action bydistributing the debt, among the various things pledged or mortgaged

c. the debtor’s heir who has paid a part of the debt cannot ask for theproportionate extinction of the pledge or mortgage nor can the creditor’sheir who has received his share of the debt return the pledge or cancelthe mortgages if the debt is not yet completely satisfied

d. EXCEPTIONS to the rule of INDIVISIBILITY:i. where each one of several things guarantees determinate portion of

credit

ii. where only portion of loan was releasediii. where there was failure of consideration

3. rule that real property, consisting of several lots should be sold separately,applies to sales in execution, and not to foreclosure of mortgages

4. the mere embodiment of a real estate mortgage and a chattel mortgage in onedocument does not have the effect of fusing both securities into an indivisiblewhole



5. contract of pledge or mortgage may secure all kinds of obligation, be they pure or subject to a suspensive or resolutory condition

6. a promise to constitute pledge or mortgage creates no real right, only a personal

right biding upon the parties, only right of action to compel the fulfillment of thepromise but there is no pledge or mortgage yet

7. under RPC, estafa is committed by a person who, pretending to be the owner of any real property, shall convey, sell, encumber or mortgage the same knowingthat the real property is encumbered shall dispose of the same asunencumbered. It is essential that fraud or deceit be practiced upon the vendeeat the time of the sale.

PROVISIONS APPLICABLE ONLY TO PLEDGE1. transfer of possession to the creditor or to third person by common agreement is

essential in pledge- ACTUAL DELIVERY is important

- CONSTRUCTIVE delivery or symbolic delivery of the key to thewarehouse is sufficient to show that the depositary appointed by commonconsent of the parties was legally placed in possession.

2. all movables within commerce of men may be pledged as long as susceptible of possession

3. incorporeal right, evidenced by:a. negotiable instruments;b. bills of lading;c. shares of stock;d. bonds;e. warehouse receipts ;andf. similar documents

may be pledged. The instruments pledged shall be delivered to the creditor and if negotiable, must be indorsed.

4. pledge shall take effect against 3rd persons only if the ff appears in a publicinstrument:

a. description of the thing pledgedb. date of the pledge

5. thing pledged may be alienated by the pledgor or owner only if with the consentof the pledgee. Ownership of the thing pledged is transmitted to the vendee or transferee as soon as the pledgee consents to the alienation, butt he latter shallcontinue in possession

6. contract of pledge gives right to the creditor to retain the thing in his possessionor in that of a third person to whim it has been delivered, until the debt is paid

7. creditor :a. shall take care of the thing pledged with the diligence of a goodfather of a family.

b. has the right to the reimbursement of the expenses made for itspreservation is liable for its loss or deterioration by reason of fraud,negligence, delay or violation of the terms of the contract, and not due tofortuitous event

c. may bring the actions which pertain to the owner of the thing inorder to recover it from, or defend it against a 3rd persond. cannot use the thing without the authority of the owner, and if heshould do so, or misuse the thing, the owner may ask that it be judiciallyor extrajudicially deposited.

e. may use the thing if it is necessary for the preservation of thethingf. may either claim another thing in pledge or demand immediatepayment of the principal obligation if he is deceived on the substance or quality of the thing.



8. pledgee:a. cannot deposit the thing pledged with a third person, unlessthere is a stipulation authorizing him to do so

b. is responsible for the acts of his agents or employees withrespect to the thing pledgedc. has no right to use the thing or to appropriate the fruits withoutthe authority of the owner can apply the fruits, income , dividends or interest earned or produced by the thing pledged to the payment of theinterest, and thereafter to the principal of his credit. Unless there isstipulation to the contrary, the interest and earnings of the right pledgedand in case of animals, their offsprings are included in the pledge.d. may cause public sale of the thing pledged if, without fault on hispart, there is danger of destruction, impairment or dimunition in value of the thing. The proceeds of the auction shall be a security for the principalobligation.

9. pledgor :a. has the responsibility for flaws of the thing pledged.b. cannot ask for the return of the thing against the will of thecreditor, unless and until he has paid the debt and its interest, withexpenses in a proper casec. is allowed to substitute the thing which is in danger of destruction or impairment without any fault on the part of the pledgee,with another thing of the same kind and quality

d. may require that the thing be deposited with a 3rd person if through the negligence or wilfull act of the pledgee the thing is in danger of being lost or impaired

Extinguishment of Pledge• If the thing pledged is returned by the pledgee to the pledgor or owner, pledge is

extinguished

• A statement in writing by the pledgee that he renounces or abandons the pledgeis sufficient to extinguish. For t his purpose, neither the acceptance by thepledgor o owner, nor the return of the thing pledged is necessary, the pledgeebecoming a depositary.

• If subsequent to the perfection of the pledge, the thing is in the possession of thepledgor or owner, there is prima facie presumption that the thing has beenreturned by the pledgee

• If the thing is in the possession of 3rd person who has received it from the pledgor or owner after the constitution of the pledge, there is prima facie presumption thatthe thing has been returned by the pledgee.

Formalities required Sale by a Creditor if credit not paid in due time:1. the debt is due and unpaid2. the sale must be at a public auction3. there must be notice to the pledgor and owner, stating the amount due, and4. the sale must be made with the intervention of a notary public the th

• The pledgee may appropriate the thing if after the first and secondauctions, the thing is not sold.

• At the public auction, the pledgor or owner may bid.

• Pledgor or owner shall have a better right if he should offer the sameterms as the highest bidder

• Pledgee may also bid, but his offer shall not be valid if he is the onlybidder. All bids at the public auction shall ofer to pay the purchase price atonce. BIDS MUST BE FOR CASH. If any other bid is accepted, thepledgee is deemed to have received the purchase price, as far as thepledgor or owner is concerned.



Effect of the Sale of the thing pledged1. extinguishes the principal obligation whether the price of the sale is more or less

than the amount due

2. if the price is more than amount due, the debtor is not entitled to the excessunless the contrary is provided

3. if the price of the sale is less, neither is the creditor entitled to recover thedeficiency. Contrary stipulation is void.

• After public auction, the pledgee shall promptly advise the pledgor or owner of the result.

• Any third person who has any right in the thing may satisfy the principalobligation as soon as the latter becomes due and demandable

• The right of choice given to the pledgee as to which of the things pledged

he shall cause to be sold is limited only by stipulation. After sufficient property hasbeen sold to satisfy the obligation plus interest and expenses, no more shall be sold.

• A 3rd person who is not a party to the principal obligation may secure thelatter by pledging his own property. He has the same as a guarantor and he cannotbe prejudiced by any waiver of defense by the principal obligor

Legal Pledges:1. Necessary expenses shall be refunded to every possessor, but only possessor

in good faith may retain the thing until he has been reimbursedUseful expenses shall be refunded only to the possessor I n good faith with thesame right of retention, the person who has defeated him in the possession

having the option of refunding the amount of the expenses or of paying theincrease in value which the thing may have acquired and by reason thereof (art546)

2. He who has executed work upon a movable has a right to retain it by way of pledge until he is paid. (art 1731)

3. The agent may retain the things which are the objects of agency until theprincipal effects the reimbursement and pays the indemnity. (art 1914)

4. The laborer’s wages shall be a lien on the goods manufactured or the work done(art 1707)

Special Laws apply to pawnshops and establishment which are engaged in makingloans secured by pledges. Provisions of the Civil Code shall apply subsidiarily.

REAL MORTGAGE (Arts. 2124-2131) - It is a contract whereby the debtor secures to

the creditor the fulfillment of a principal obligation, specially subjecting to suchsecurity immovable property or real rights over immovable property in case theprincipal obligation is not complied with at the time stipulated.

Objects of Real Mortgage1. immovables2. alienable real rights in accordance with the laws, imposed upon immovables

* future property cannot be object of mortgage

Important Points:

1. As a general rule, the mortgagor retains possession of the property he maydeliver said property to the mortgagee without altering the nature of the contractof mortgage.

2. It is not an essential requisite that the principal of the credit bears interest, or thatthe interest as compensation for the use of the principal and the enjoyment of itsfruits be in the form of a certain percent thereof.



Kinds of Mortagage:1. voluntary2. legal

3. equitable – one which, although it lacks the proper formalities of a mortgageshows the intention of the parties to make the property as a security for a debt(provisions governing equitable mortgage - arts 1365, 1450, 1454, 1602, 1603,1604 and 1607)

Essential Requisites of Mortgage1. constituted to secure the fulfillment of a principal obligation2. pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged3. the persons constituting the pledge or mortgage have the free disposal of their

property, and in the absence thereof, that they be legally authorized for thepurpose

4. cannot exist without a valid obligation

5. when the principal obligation becomes due, the thing in which the pledge or mortgage consists may be alienated for the payment to the creditor.

6. appears in a public document duly recorded in the Registry of Property to bevalidly constituted

*legal mortgage – the persons in whose favor the law establishes amortgage have on other right than to demand the execution and therecording of the document in which the mortgage is formalized.

Incidents of Registration of Mortgage1. Mortgagee entitled to registration of mortgage as a matter of right2. Proceedings for registration do not determine validity of mortgage or its effect3. Registration is without prejudice to better right of third parties

4. Mortgage deed once duly registered forms part of the records for the registrationof the property mortgaged

5. Mortgage by surviving spouse of his/her undivided share of conjugal property canbe registered

Effect of Invalidity of Mortgage on principal obligation:1. principal obligation remains valid2. mortgage deed remains as evidence of a personal obligation

Effect of Mortgage:1. creates real rights, a lien inseparable from the property mortgaged, enforceable

against the whole world

2. creates merely an encumbrance

Extent of Mortgagea. the natural accessionsb. to the improvements,c. growing fruitsd. the rents or income not yet received when the obligation becomes due,e. to the amount of the indemnity granted or owing to the proprietor from the

insurers of the property,f. in virtue of expropriation for public use, with the declarations,

amplifications and limitations established by law, whether the estateremains in the possession of the mortgagor, or it passes into the hands of

a third person.

Important Points:1. Stipulation in mortgage contract including after-acquired properties is valid.2. Attachment of lien is retroactive3. Stipulation is necessary for mortgage to secure future advancements4. Mortgage is a continuing security until the full amount of advances are paid.



5. Mortgage credit may be alienated or assigned to a third person, in whole or inpart, with the formalities required by law.

a.Alienation or assignment is valid even if not registered. Registration is

necessary only to affect 3rd persons.6. Creditor may claim from a 3rd person in possession of the property the payment

of the part of the credit secured by the property7. Stipulation forbidding the owner from alienating the immovable mortgaged shall

be void.

Laws governing Mortgage:1. New Civil Code2. PD 19523. Revised Administrative Code4. RA 4882 , as regards aliens becoming mortgages

Foreclosure of Mortgage - It is the remedy available to the mortgagee by which hesubjects the mortgaged property to the satisfaction of the obligation to securewhich the mortgage was given.

Kinds of Foreclosure1. judicial2. extrajudicial

• both should be distinguished from execution sale which is governed byRule 39 of the Rules of Court

Judicial Foreclosure(governed by Rule 68 of Rules of Court)

1. May be availed of by bringing an action in the proper court which has jurisdictionover the area wherein the real property involved or apportion thereof is situated

2. If the court finds the complaint to be well-founded, it shall order the mortgagor topay the amount due with interest and other charges within a period of not lessthan 90 days nor more than 120 days from the entry of judgment.

3. If the mortgagor fails to pay at time directed, the court, upon motion, shall order the property to be sold to the highest bidder at a public auction.

4. Upon confirmation of the sale by the court, also upon motion, it shall operates todivest the rights of all parties to the action and to vest their rights to thepurchaser subject to such rights of redemption as may be allowed by law

5. Before the confirmation, the court retains control of the proceedings.6. The proceeds of the sale shall be applied to the payment of the:

a. Costs of the sale;b. Amount due the mortgagee;c. Claims of junior encumbrancers or persons holding subsequent

mortgages in the order of their priority; andd. the balance, if any shall be paid to the mortgagor

7. Sheriff’s certificate is executed, acknowledged and recorded to complete theforeclosure

Nature of Judicial Foreclosure Proceedings:1. quasi in rem action2. foreclosure is only the result or incident of the failure to pay debt3. survives death of mortgagor

Extrajudicial Foreclosure(governed by Act No, 3135, as amended)

1. express authority to sell is given to the mortgagee.2. authority is not extinguished by death of mortgagor or mortgagee3. public sale should be made after proper notice4. surplus proceeds of foreclosure sale belong to the mortgagor



5. debtor has the right to redeem the property sold within 1 year from and after thedate of sale

6. remedy of party aggrieved by foreclosure is a petition to set aside sale and

cancellation of writ of possession.

Right of Mortgagee to recover deficiency1. Mortgagee is entitled to recover deficiency

2. If the deficiency is embodied in a judgment, it is referred to as deficiency judgment.

3. Action for recovery of deficiency may be filed even during redemption period.4. Action to recover prescribes after 10 years from the time the right of action

accrues

Nature of Power of foreclosure by extrajudicial sale1. conferred for mortgagee’s protection

2. an ancillary stipulation3. a prerogative of the mortgagee

Note: Stipulation of upset price in mortgage contract is void

Effect of inadequacy of price in foreclosure sale1. Where there is right to redeem

a.GR : Inadequacy of price is immaterial because the judgment debtor mayredeem the property

b. EXCEPTION : the price is so inadequate as to shock the conscience of the court taking into consideration the peculiar circumstances

2. Property may be sold for less than its fair market value upon the theory that the

lesser the price the easier for the owner to redeem.3. The value of the mortgaged property has no bearing on the bid price at the public

auction, provided that the public auction was regularly and honestly conducted.

Waiver of security by creditor 1. Mortgagee may waive right to foreclose his mortgage and maintain a personal

action for recovery of theindebetness.2. Mortgagee cannot have both remedies

Note: Foreclosure retroacts to the date of registration of mortgage

Redemption - It is a transaction by which the mortgagor reacquires the property which

may have passed under the mortgage or divests the property of the lien which themortgage may have created.

Kinds of Redemption1. equity of redemption

- right of the mortgagor to redeem the mortgaged property after his default inthe performance of the conditions of the mortgage but before the sale of the mortgaged property or confirmation of sale

2. right of redemption

- right of the mortgagor to redeem the property within a certain period after itwas sold for the satisfaction of the debt.

Equity of Redemption1. exercised before confirmation of sale2. second mortgagee acquires only the equity of redemption vested in the

mortgagor 3. taking physical possession not necessary for levy4. can be levied upon by means of writ of execution



5. remedy of mortgagee to obtain possession is to bring a civil action either torecover possession as a preliminary step to the sale or to obtain judicialforeclosure

Right of Redemption1. may be exercised within 1 year from and after the date of registration of the

certificate of sale with the appropriate Registry of Deeds.2. if no redemption is made within prescribed period, the purchaser has the

absolute right to a writ of possession which is the final process to consummateextrajudicial foreclosure

3. effect of seasonable redemption is not to recover ownership which was never lostbut the elimination from his title the lien created by the levy or attachment.

4. sale by the mortgagor to a 3rd person during redemption period transfers only theright to redeem the property and the right to possess, use and enjoy the sameduring said period.

5. if sale to a 3rd person is not registered and made without the consent of themortagee, buyer was not validly substituted as a debtor thus has no right toredeem

6. if extrajudicial foreclosure if effected with fraud, it is null nad void ab initio.

CHATTEL MORTGAGE (Arts. 2140-2141) - It is a contract by virtue of which a personalproperty is recorded in the Chattel Mortgage Register as security for the performance of an obligation.

Note: If the movable, instead of being recorded is delivered to thecreditor, it is pledge and not chattel mortgage.

CHATTEL MORTGAGE PLEDGEInvolves movable property Involves movable property

Delivery of the personal property is NOTnecessary

Delivery of the personal property isnecessary

Registration is necessary for validity Registration is NOT necessary for validityProcedure : Sec 14 of Act no 1508, asamended

Procedure: Art 2112 of Civil Code

If the property is foreclosed, the excessover the amount due goes to the debtor

If the property is sold, the debtor is notentitled to the to the excess UNLESS it isotherwise agreed or in case of legalpledge

Creditor is entitled to deficiency from thedebtor EXCEPT if it is a security for thepurchase of personal property ininstallments

Creditor is not entitled to recover deficiencynotwithstanding any stipulation to thecontrary

Laws governing Chattel Mortgage:1. Chattel Mortgage Law, Act No. 1508, as amended2. Civil Code3. Revised Administrative Code4. Revised Penal Code5. Ship Mortgage Decree of 1978 (PD 1521) governs mortgage of vessels of

domestic ownership

Important points:

The provisions of Civil Code on pledge shall be applicable to chattel mortgage only insofar as they are not in conflict with the Chattel MortgageLaw

Subject matter of Chattel mortgage must be described and identified.



Extent of Chattel Mortgage - It is deemed to cover only the property described and not like or substituted property thereafter acquired by the

mortgagor and placed in the same depositary as the property originally mortgaged, anything in the mortgage to the contrary notwithstanding

Effect of Registration1. creates real rights2. adds nothing to mortgage

Note: Registration of assignment of mortgage is not required

Right of Redemption1. when the condition of a chattel mortgage is broken, the ff may redeem:

a. mortgagor;

b. person holding a subsequent mortgage;c. subsequent attaching creditor.

2. an attaching creditor who so redeems shall be subrogated to the rights of themortgagee and entitled to foreclose the mortgage in the same manner that themortgagee could foreclose it

3. the redemption is made by paying or delivering o the mortgagee the amount dueon such mortgage and the costs and expenses incurred by such breach of condition before the sale

Foreclosure of Chattel Mortgage1. public sale2. private sale – there is nothing illegal, immoral or against public order in an

agreement for the private sale of the personal properties covered by chattelmortgage

Period to Foreclose1. After 30 days from the time of the condition is broken2. The 30-day period is the minimum period after violation of the mortgage condition

for the creditor to cause the sale at public auction with at least 10 days notice tothe mortgagor and posting of public notice of time, place, and purpose of suchsale, and is a period of grace for the mortgagor, to discharge the obligation.

3. After the sale at public auction, the right of redemption is no longer available tothe mortgagor

Civil Action to recover credit1. independent action not required2. mortgage lien deemed abandoned by obtaining a personal judgment

Right of Mortgagee to recover Deficiency1. where mortgage foreclosed

- creditor may maintain action for deficiency although Chattel Mortgage Lawis silent on this point. Reason is chattel mortgage is only given as a securityand not as payment of the debt.

2. where mortgage constituted as security for purchase of personal propertypayable in installments

- no deficiency judgment can be asked and any agreement to the contrary

shall be void3. where mortgaged property subsequently attached and sold- mortgagee is entitle to deficiency judgment in an action for specificperformance

Application of proceeds of sale1. costs and expenses of keeping and sale2. payment of the obligation



3. claims of persons holding subsequent mortgages in their order 4. balance, if any, shall be paid to the mortgagor, or person holding under him

CONCURRENCE AND PREFERENCE OF CREDITS (Arts. 2236-2251) –

Concurrence of credit - It implies possession by two or more creditors of equal right or privileges over the same property or all of the property of a debtor

Preference of Credit - It is the right held by a creditor to be preferred in the payment of his claim above other out of the debtor’s assets

General Provisions:1. the debtor is liable with all his property, present and future, for the fulfillment of

his obligations, subjects to exemptions provided by law- exempt property:

a. present property1. family home (Arts 152, 153 & 155, NCC)2. right to receive support as well as money or property

obtained by such support shall not be levied upon onattachment or execution (Art 205, NCC)

3. Sec 13, Rule 39, Rules of Court4. Sec 118, the public Land Act,( CA No. 141, as amended)

b. future property- a debtor who obtains a discharge from his debts on accountof insolvency, is not liable for the unsatisfied claims of hiscreditors with said property (Secs. 68 & 69, Insolvency Law,Act No. 1956

c. property in custodia legis and of public dominion2. insolvency shall be governed by the Insolvency Lae (Act No. 1956, as amended)3. Exemption of conjugal property or absolute community or property provided that:

a. Partnership or community subsistsb. Obligations of the insolvent spouse have not redounded to the benefit of

the family4. if there is co-ownership, and one of the co-owners is the insolvent debtor, his

undivided share or interest in the property shall be possessed by the assignee ininsolvency proceedings because it is part of his assets

5. property held by the insolvent debtor as a trustee of an express or implied trust,shall be excluded from the insolvency proceedings

Classification of Credits1. special preferred credits (Arts 2241 & 2242 of NCC)a. considered as mortgages or pledges of real or personal property or liens within the purview of legal provisions governinginsolvencyb. taxes due to the State shall first be satisfied

2.ordinary preferred credits (Art 2244)- preferred in the order given by law

3.common credits (Art 2245)- credits of any other kind or class, or by any other right or title not comprised

in Arts 2241-2244 shall enjoy no preference

Order of Preference of Credita. credits which enjoy preference with respect to specific movables, excludeall others to the extent of the value of the personal property to which thepreference refers.b. if there are 2 or more credits with respect to the same specific movableproperty, they shall be satisfied pro rata, after the payment of duties, taxes andfees due the State or any subdivision thereof



c. those credits which enjoy preference in relation to specific real property or real rights, exclude all others to the extent of the value of the immovable or realright to which the preference refers.

d. if there are 2 or more credits with respect to the same specific real propertyor real rights, they shall be satisfied pro rata, after the payment of the taxes andassessment of the taxes and assessments upon the immovable property or realright.e. the excess, if any, after the payment of the credits which enjoy preferencewith respect to specific property, real or personal, shall be added to the freeproperty which the debtor may have, for the payment of other credits.f. those credits which do not enjoy any preference with respect to specificproperty, and those which enjoy preference, as to the amount not paid, shall besatisfied according to the following rules:

- order established by Art 2244- common credits referred to in Art 2245 shall be paid pro rata regardless of

dates.

addendum to sec trans

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