Give it back to me!

Pablo bought an agricultural tractor for his farm. He then had it parked at his son’s bucolic rented house. Mik, his son, kept the tractor in the garage of the house he was renting from Cal.

In the beginning, Cal was pleased with Mik since the latter religiously paid his obligations. But beginning November, Mik stopped paying the rent.

Cal learned that Mik also did not pay the charges for electric and water consumption in the leased premises, which the latter was obliged to do so under their lease contact.

Cal confronted Mik about his unpaid obligations. During their talk, Mik assured Cal that he would leave the premises in December and that he would be settling his account with the latter, offering the tractor as security. Mik even requested Cal to help him find a buyer for the tractor so he could pay his outstanding obligations.

Mik left the premises without paying his bills. In January, a new tenant moved into the house. Meanwhile, Cal had the tractor moved to the garage of his mother’s house.

Cal’s efforts to collect Mik’s outstanding accounts all proved futile. Mik was always not in his new home. On his last visit to Mik’s home, Cal left word that that there was a prospective buyer for the tractor.

Days after, Mik appeared at Cal’s doorstep. Mik inquired about the prospective buyer.

The sale, however, did not push through as the buyer did not come back anymore. When again confronted with his outstanding obligation, Mik reassured Cal that the tractor would stand as a guarantee for its payment. That was the last time Cal saw or heard from Mik.

A year after, Mik’s father, Pablo, went to Cal to claim and take possession of the tractor. Cal refused to surrender the tractor to him saying that Mik left the tractor with him as security for the payment of his son’s obligations.

Pablo, the ever doting father offered to write Cal a check in payment of Mik’s unpaid lease rentals, in addition to issuing postdated checks to cover the unpaid electric and water bills, the correctness of which Pablo said he still had to verify with Mik.

Cal told Pablo that he would accept the check only if the latter would execute a promissory note in his favor to cover the amount of the unpaid electric and water bills. Of course, Pablo was not amenable to this proposal. No agreement was thus forged. Worse, Pablo left without the tractor.

Q: What is a pledge?

A: In a contract of pledge, the creditor is given the right to retain his debtor’s movable property in his possession, or in that of a third person to whom it has been delivered, until the debt is paid.

For the contract to be valid, it is necessary that: the pledge is constituted to secure the fulfillment of a principal obligation; the pledgor be the absolute owner of the thing pledged; and 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.

Q: Was the tractor validly pledged to Mik to Cal?

A: No, the tractor was not validly pledged. Mik was not the absolute owner of the tractor that was allegedly pledged to Cal.

The tractor was owned by his father, Pablo, who left the equipment with him for safekeeping. Clearly, the second requisite for a valid pledge—that the pledgor be the absolute owner of the property—is absent in this case.

Q: Can Cal, in the concept of an innkeeper, hold on the tractor, as and by way of deposit, until Mik pays his obligations?

A: No. In a contract of deposit, a person receives an object belonging to another with the obligation of safely keeping it and of returning the same. Cal admits that he received the tractor not to safely keep it but as a form of security for the payment of Mik’s obligations. There is no deposit where the principal purpose for receiving the object is not safekeeping.

Consequently, Cal had no right to refuse delivery of the tractor to its lawful owner. On the other hand, Pablo, as owner, had every right to seek to repossess the tractor.

Source: Calibo vs. Court of Appeals, G.R. No. 120528, January 29, 2001

Ma. Soledad Deriquito-Mawis is currently the Dean, Lyceum of the Philippines University; president of Philippine Association of Law Schools; and Senior Partner at Gatchalian Castro & Mawis Law Office