G.R. No. 120528 – 403 Phil. 340 – Civil Law – Credit Transactions – Pledge – Deposit – Agency
In 1985, Mike Abella rented a house owned by Atty. Dionisio Calibo, Jr. Meanwhile, Dr. Pablo Abella, Mike’s father, entrusted to Mike a tractor. Pablo delivered the tractor to Mike in order for the latter to safe-keep the same.
In November 1986, Mike defaulted in his rental payments to Calibo. Calibo repeatedly demanded payments but Mike failed to pay. However, Mike assured Calibo that he will soon pay and Mike used his father’s tractor as a security. Hence, Calibo took possession of the tractor. Later, Mike advised Calibo that he can sell the tractor as payment for his debts.
Pablo learned of the foregoing and so he contacted Calibo. He offered to pay a portion of Mike’s debt and in return Calibo must return the tractor. Calibo refused and he wanted Pablo to guarantee all of Mike’s debt which Pablo does not want. Eventually, to redeem his tractor, Pablo filed a replevin suit against Calibo, which Pablo won.
On appeal, Calibo invoked that the replevin should not have been granted as there was a valid contract of pledge between him and Mike; and that Mike was Pablo’s agent because Pablo was aware of the fact that Mike pledged the tractor to him. In the alternative, Calibo invoked that if there’s no contract of pledge, there is at least a contract of deposit since Mike himself left the tractor with him in the concept of an innkeeper.
ISSUE: Whether or not the arguments of Calibo are valid.
HELD: No.
There is no contract of pledge.
The elements of a contract of pledge are as follows:
1. the pledge is constituted to secure the fulfillment of a principal obligation;
2. the pledgor be the absolute owner of the thing pledged; and
3. the person constituting the pledge has the free disposal of his property, and in the absence thereof, that he be legally authorized for the purpose.
In this case, element number 2 is missing. Mike is not the absolute owner of the tractor.
There is no contract of agency between Pablo and Mike.
It was proven in court that Pablo only left the tractor in his son’s possession only for the purpose of safekeeping. Pablo was not aware that his son pledged it to Calibo and he never authorized his son to do so.
There is no contract of deposit between Mike and Calibo.
There is no deposit where the principal purpose for receiving the object is not safekeeping. In this case, Calibo himself admitted in court that Mike delivered the tractor to him as security for Mike’s debts.
The judgment ordering Calibo to return the tractor to Pablo was affirmed by the Supreme Court.
