Union Bank of the Philippines Vs. Alain Juniat, et al.

, GR 171569, 01 August 2011

DEL CASTILLO, J.

FACTS: Petitioner filed a Complaint with prayer for the issuance of ex-parte writs of
preliminary attachment and replevin against respondent and a third person (Nonwovan) in
possession of the mortgaged motorized sewing machines and equipment. Petitioner alleged
that Juniat executed a Chattel Mortgage over several motorized sewing machines and other
allied equipment to secure their obligation arising from export bills transactions to petitioner.
In its answer, Norwovan contends that the Chattel Mortgage executed in favor of petitioner
has no binding effect on Nonwoven and that it has a better title over the motorized sewing
machines and equipment because these were assigned to it by Juniat pursuant to their
Agreement (pledge).
ISSUE: Whether or not the Agreement (pledge) entered into by Juniat and Norwovan binds
third persons?
RULING: No. A perusal of the Agreement entered into between Juniat and Norwovan
clearly shows that the sewing machines, snap machines and boilers were pledged to
Nonwoven by Juniat to guarantee his obligation. However, under Article 2096 of the Civil
Code, [a] pledge shall not take effect against third persons if a description of the thing pledged
and the date of the pledge do not appear in a public instrument. Hence the pledge executed
by Juniat in favor of Nonwoven cannot bind petitioner.