EXCEPTIONS To The Rule of Indivisibility
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Mich SalvatorēEXCEPTIONS To The Rule of Indivisibility
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Mich Salvatorē- Types and Characteristics of Pledge: Explains the definition of a pledge, its types, characteristics, and how it is created and enforced.
- Obligations and Rights of Pledgor and Pledgee: Outlines the obligations of the pledgor and the rights and duties of the pledgee under a pledge agreement.
NOTES
PLEDGE: 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 the purpose of securing the
fulfillment of a principal obligation with the understanding that when the obligation is
fulfilled, the thing delivered shall be returned with all its fruits and accessions.
-contract of pledge or mortgage may secure all kinds of obligation, be they pure or subject to a
suspensive or resolutory condition
-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 the promise but there
is no pledge or mortgage yet
GR: pledge is indivisible
EXCEPTIONS to the rule of indivisibility:
a. where each one of several things guarantees determinate portion of credit
b. where only portion of loan was released
c. where there was failure of consideration
KINDS OF PLEDGE
1. Voluntary or conventional- created by agreement of the parties
2. Legal- created by operation of law
CHARACTERISTICS OF PLEDGE:
1. real- perfected by delivery
2. unilateral- creates obligation solely on the part of the creditor to return the thing subject
upon the fulfillment of the principal obligation
3. subsidiary/accessory- obligation incurred does not arise until the fulfillment of the
principal obligation
PROVISIONS APPLICABLE ONLY TO PLEDGE
1. 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 the warehouse is sufficient to
show that the depositary appointed by common consent 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 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 following appears in a public instrument:
NOTE:
a. description of the thing pledged
b. date of the pledge
5. Thing pledged may be alienated by the pledgor or owner only if with the consent of the
pledgee.
Ownership of the thing pledged is transmitted to the vendee or transferee as soon as the
pledgee consents to the alienation, but he latter shall continue in possession
6. Contract of pledge gives right to the creditor to retain the thing in his possession or in that of a
third person to whom it has been delivered, until the debt is paid
OBLIGATIONS OF THE PLEDGEE
a. cannot deposit the thing pledged with a third person, unless there is a stipulation
authorizing him to do so
b. shall responsible for the acts of his agents or employees with respect to the thing pledged
c. has no right to use the thing or to appropriate the fruits without the authority of the
owner
d. may cause public sale of the thing pledged if without fault on his part:
Grounds: there is danger of
a. destruction, impairment
b. diminution in value of the thing.
NOTE: The proceeds of the auction shall be a security for the principal obligation
e. shall take care of the thing pledged with the diligence of a good father of a family
f. has the right to the reimbursement of the expenses made
for it preservation is liable for its loss or deterioration by reason of fraud, negligence,
delay or violation of the terms of the contract, and not due to fortuitous event
g. may bring the actions which pertain to the owner of the thing in order to recover it from, or
defend it against a 3rd person
OBLIGATIONS OF THE PLEDGOR
a. has the responsibility for flaws of the thing pledged.
b. cannot ask for the return of the thing against the will of the creditor, unless and until he has paid
the debt and its interest, with expenses in a proper case
c. is allowed to substitute the thing which is in danger of destruction or impairment without
any fault on the
EXTINGUISHMENT OF PLEDGE
a. If the thing pledged is returned by the pledgee to the pledgor or owner, pledge is extinguished.
b. statement in writing by the pledgee that he renounces or abandons the pledge is
sufficient to extinguish. For this purpose, neither the acceptance by the pledgor o
owner, nor the return of the thing pledged is necessary, the pledgee becoming a depositary.
c. If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or
owner, there is prima facie presumption that the thing has been returned by the pledgee.
d. 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 that the thing has been
returned by the pledgee
e. Payment of the debt
b. Sale of the thing pledged at public auction
FORMALITIES REQUIRED IN SALE BY A CREDITOR IF CREDIT NOT PAID IN DUE TIME:
1. the debt is due and unpaid
2. the sale must be at a public auction
3. there must be notice to the pledgor and owner, stating the amount due, and
4. the sale must be made with the intervention of a notary public
EFFECT OF THE SALE OF THE THING PLEDGED
1. 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 excess unless the
contrary is provided
3. if the price of the sale is less, neither is the creditor entitled to recover the deficiency. Contrary
stipulation is void.
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 reimbursed may require that the thing be
deposited with a 3rd person if through the negligence or willful act of the pledgee the thing
is in danger of being lost or impaired
2. He who has executed work upon a movable has a right to retain it by way of pledge until he
is paid.
3. The agent may retain the things which are the objects of agency until the principal effects
the reimbursement and pays the indemnity.
4. The laborer’s wages shall be a lien on the goods manufactured or the work done.
