G.R. No. 120528. January 29, 2001. ATTY. DIONISIO CALIBO, JR., petitioner, vs. COURT OF APPEALS and DR. PABLO U. ABELLA, respondents.
FACTS

Private respondent Pablo Abella owned an agricultural tractor. In 1986, he left it in the safekeeping of his son, Mike Abella, who was then leasing a house from petitioner Dionisio Calibo, Jr. Mike fell behind on his rental and utility payments. During a confrontation over these arrears, Mike offered the tractor to Calibo as security for his debt and even asked Calibo to help find a buyer for it. Mike then vacated the premises. Calibo moved the tractor to his father’s garage and later attempted, unsuccessfully, to collect from Mike and to facilitate a sale. In November 1988, Pablo Abella came to claim the tractor. Calibo refused to release it, asserting it was pledged to secure Mike’s unpaid obligations. The parties failed to reach a settlement.
Pablo Abella filed an action for replevin to recover possession of the tractor. The Regional Trial Court ruled in his favor, a decision affirmed by the Court of Appeals. The appellate court held that no valid pledge was created because Mike was not the owner of the tractor. It also rejected Calibo’s alternative theories of deposit and agency.

ISSUE

Whether a valid contract of pledge, deposit, or agency was created, granting Calibo the right to retain the tractor against its owner, Pablo Abella.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. No valid pledge was constituted. Under Article 2085 of the Civil Code, a requisite for a valid pledge is that the pledgor must be the absolute owner of the property pledged. It was undisputed that Mike Abella was not the owner; he was merely a bailee for safekeeping. A pledge by a non-owner conveys no right to the pledgee over the property.
The Court also rejected the claim of an implied agency under Article 1869. For such agency to arise, the principal must know that another is acting on his behalf. Pablo Abella left the tractor with Mike solely for safekeeping, without knowledge or authority for Mike to pledge it. Consequently, Article 1911, which holds a principal liable if he allows an agent to act as though with full powers, does not apply.
Finally, no contract of deposit existed. A deposit under Article 1962 obligates the depositary to safely keep and return the property. Calibo admitted he received the tractor not for safekeeping but as security for a debt. Since safekeeping was not the primary purpose, no deposit was created. Therefore, Calibo had no legal right to withhold the tractor from its lawful owner, Pablo Abella, who properly sought its recovery through a replevin action.