YULIONGSUI VS.

PNB (22 SCRA 585)

pledge contract. Necessarily, this

judicial admission binds Yuliongsiu.
Without any showing that this was
made thru palpable mistake, no amount
of rationalization can offset it.

Facts:

Plaintiff Yuliongsui was the owner of 3

vessels.

In 1947, plaintiff obtained a loan from

defendant PNB for P50,000 guaranteed
by a pledge of the 3 vessels to PNB,
which pledge contract was duly
registered with the office of the
Customs Collector of Cebu.

The pledgee can temporarily entrust the

physical possession of the chattels (in
this case, the vessels) to the pledgor
without invalidation the pledge.

Yuliongsui effected partial payment of

said loan (P20K) and delivered 2
promissory notes for the balance.

The pledgor is regarded as holding the

property pledged merely as trustee for
the pledgee.

These two notes were never paid at all

by Yuliongsiu on their respective due
dates.

In 1948, the defendant PNB filed

criminal charges against plaintiff for
estafa thru falsification of documents.

Since the defendant PNB was,

pursuant to the terms of the contract, in
full contract of the vessels thru the
plaintiff Yuliongsui, the former could
take actual possession at any time
during the life of the pledge to make
more effective its security.

With the institution of the criminal

action, defendant PNB took physical
possession of the 3 pledged vessels.

After the first note fell due, without the

plaintiff effecting payment, the
defendant, pursuant to the terms of the
contract, executed a document of sale
transferring the vessels to itself.

Its taking of the vessels. Therefore, was

not unlawful, nor was it unjustified
considering that plaintiff had just
defrauded the defendant.

2 of the vessels were later sold to a 3rd

party.

Yuliongsui filed an action to recover the

vessels or their value plus damages.

Trial court decided for defendant PNB.

Issue: WON the contention of PNB is

tenable / WON the contract entered into by the
parties was a pledged
Held:

The parties parties entered into is a

OPTIONAL:

PNB as pledgee was therefore entitled

to the actual possession of the vessels.

While it is true that Yuliongsiu continued
operating the vessels after the pledge
contract was entered into, his
possession was expressly made
subject to the order of the pledgee."
The provision of Art. 2110 of the

present Civil Code being new, cannot

apply to the pledge contract here which
was entered into on June 30, 1947.
On the other hand, there is an authority
supporting the proposition that the
pledgee can temporarily entrust the

physical possession of the chattels

pledged to the pledgor without
invalidating the pledge.
In such a case, the pledgor is regarded

as holding the pledged property merely

as trustee for the pledgee.
Yuliongsiu also urge us to rule that

constructive delivery is insufficient to

make pledge effective.
The type of delivery will depend upon

the nature and the peculiar

circumstances of each case.
The parties here agreed that the

vessels be delivered by the "pledgor to

the pledgor who shall hold said property
subject to the order of the pledgee."
Considering the circumstances of this

case and the nature of the objects

pledged, i.e., a vessel used in maritime
business, such delivery is sufficient.
Since PNB was, pursuant to the terms
of pledge contract, in full control of the
vessels thru Yuliongsiu, the former
could take actual possession at any
time during the life of the pledge to
make more effective its security. Its
taking of the vessels therefore was not
unlawful. Nor was it unjustified
considering that Yuliongsiu had just
defrauded the PNB in the huge sum of
P184,000