University

of the Philippines College of Law

NBB


Topic DEPOSIT: Extrajudicial Deposit
Case No. G.R. No. 120528. January 29, 2001
Case Name Atty. Dionisio Calibo Jr. vs. CA
Ponente Quisumbing, j.

RELEVANT FACTS

Pablo Abella, from Dagohoy, Bohol, owned a tractor, which he left with his son Mike for
safekeeping. Mike kept the tractor in the garage of the house he was leasing from Dionisio Calibo. Mike
failed to pay his succeeding monthly rents as well as his electric and water bills. When confronted by
Dionisio, Mike promised to pay Dionisio his unsettled accounts, offering the subject tractor as security.
Mike also asked Dionisio to find a buyer for the tractor. When the lease ended, Mike vacated the
premises and went to Cebu. Dionisio visited Mike in his Cebu address to collect from the latter, back
rentals, electricity and water bills. A negotiated sale of the tractor also did not push through. However,
Mike reiterated that the tractor would still stand as security for his obligation.
Pablo Abella then went to Dionisio to take possession of the subject tractor but the latter
refused to give the tractor claiming that Mike, as a security for his outstanding obligation, left the
tractor to him. Pablo offered to write a 2,000 check which would cover the back rentals of Mike but
Dionisio insisted that he would only accept it if Pablo would also write a Promissory Note to cover the
unpaid electric and water bills. Pablo was not amenable to it and left for Cebu without taking the
tractor.
Pablo later instituted an action for replevin, claiming ownership of the tractor and seeking to
recover its possession from Dionisio.

RTC: ruled in favor of Pablo Abella

CA: affirmed the RTC decision

Mike could not validly pledge the subject tractor to Dionisio since he was not the owner nor was he
authorized to pledge it to Dionisio. A Deposit was also not created since the primary purpose of a
deposit is for mere safekeeping and not as a security for an obligation as in this case. The CA deducted
the cost of transporting the tractor from Bohol to Cebu from the award of actual damages.

1. Appeal to SC
2. Dionisio: valid pledge; tractor left to him in concept of innkeeper, on deposit, and he may hold onto
it til Mike pay; principal-agent relationship, failure to repudiate = estoppel






 University of the Philippines College of Law
NBB

ISSUE AND RATIO DECIDENDI

Issue Ratio

1. W/N there was a valid NO.
pledge
1. Pledge is constituted to secure the fulfilment of a principal obligation
and the creditor is given the right to retain his debtor’s property until
the debt is paid.
However, Dionisio failed to prove that the requisites of a valid pledge
were satisfied under the Civil Code. For the contract of Pledge to be
valid, it is necessary that:
(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.

Calibo insisted that there exists an implied agency between Pablo and

Mike and that the former failed to repudiate this agency when Pablo

already knew that Mike acted on his behalf without authority in

pledging the tractor. He further argued that under Article 1911 of the

Civil Code, Pablo is bound by the pledge, even if it were beyond the

authority of his son to pledge the tractor, since he allowed his son to

act as though he had full powers.

There is no implied agency in this case as Pablo did not know that Mike
was acting on his behalf without his authority as he left the tractor to
Mike only for safekeeping and not for anything else. Hence, the second
requisite of a valid Pledge was not met, as Mike is not the absolute
owner of the tractor nor was he authorized to pledge said tractor.
Pablo merely left the tractor to Mike for safekeeping and not for him to
pledge or alienate.

NO
2. W/N there was a valid
Deposit 2. Dionisio claimed that the tractor was left in his possession as a form
of security for Mike’s unsettled accounts. This runs contrary to the
nature of a valid deposit. 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. The Court ruled that there is no deposit where
the principal purpose for receiving the object is not for safekeeping.

 University of the Philippines College of Law
NBB


RULING

WHEREFORE, the instant petition is DENIED for lack of merit, and the decision of the Court of
Appeals in CA-G.R. CV No. 39705 is AFFIRMED. Costs against petitioner.

NOTES

ART 2085. The following requisites are essential to the contracts of Pledge and Mortgage:
(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.
Third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property.

ART 1962. A deposit is constituted from the moment a person receives a thing belonging to another,
with obligation of safely keeping it and returning the same. If the safekeeping of the thing delivered is
not the principal purpose of the contract, there is no deposit but some other contract.

ART 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that another person is acting on his behalf
without authority.

ART 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the
agent if the former allowed the latter to act as though he had full powers.

He who is not the owner or proprietor of the property pledged or mortgaged to guarantee the
fulfillment of a principal obligation, cannot legally constitute such a guaranty as may validly bind the
property in favor of his creditor, and the pledgee or mortgagee in such a case acquires no right
whatsoever in the property pledged or mortgaged. (A.M. TOLENTINO V, CIVIL CODE OF THE
PHILIPPINES, p. 533.)