Madrigal Shipping Co., Inc., owner of Barge No. 601, pledged said vessel and tugboat to secure the Shipping Company's obligation to herein private respondent Solidbank in the amount of PhP 2,094,000. Both parties executed a document denominated as "Pledge Agreement".
Madrigal failed to pay its obligation to the Solidbank. When the latter was about to sell the pledge property, the same was no where to be found from its bodega. Meanwhile, on August 1, 1979, petitioner Honesto Ong bought one barge, the same barge which was the subject of the pledge from Santiago Ocampo.
Solidbank filed a complaint against Honesto Ong, et al. Petitioner contends that they are purchaser in good faith, and the contract of pledge by and between Solidbank and Madrigal Shipping Co., Inc. was not recorded under Section 804 and 809 of the Tariff and Custom Code, hence, not binding on third person like the petitioners.
Private respondent argued that petitioner acted in bad faith, and that it complied with all the requirements necessary to bind third persons.
ISSUE: WON the contract of pledge entered into by and between Solidbank and Madrigal Shipping Co., Inc. is binding to petitioner Ong?
HELD:
YES, it is binding on said petitioners. Article 2096 of the Civil Code requires that a pledge to take effect against third persons, it should be in a public instrument which must contain the description of the thing pledged and the date of the pledges. In the case at bar, all three requirements have been complied.
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