PLEDGE

This is another accessory contract which is anchored on a principal obligation. It cannot exist by itself where you have a debtor who delivers as security movable
property to the creditor. Only the possession is delivered as collateral to the payment of indebtedness. A classic example of pledge is what you do in a pawnshop
or in tagalog we called it “sangla”. So we have a principal contract usually a loan. So we have a creditor and debtor. Let’s say the amount of loan is 5,000. There
is no pledge yet there but if the creditor will ask the debtor for collateral which he will keep possession then another one is coming. So collateral is any movable
property. What you see in pawnshop as collateral properties may be jewelries or gadgets but there is no prohibition for a motor vehicle to be a thing pledge if they
have a warehouse. Of course there are papers which can be pledge like negotiable instruments like bill of exchange, or any of its kind, or promissory note or any
of its kind, or checks, or instruments with limited negotiability like bill of lading, warehouse receipt, treasury warrant or even a postal money order so long as the
pawnshops accept it no problem. (You cannot pledge your marriage contract or birth certificate).

For example if you pledge your ring, the pawnshop will not become the owner but have only the right to possess and the right to retain until such time that the
debtor will settle his indebtedness.

So the debtor is the pledgor and the creditor becomes the pledgee. Since this is in a pawnshop, the pledgor is called the pawner and the pledgee is the pawnee
and the ring is what you called the pawn. Now, the pawnshop as I have said have two attribute of ownership, the jus possidendi and jus retinendi until such time
that the obligation is settled. Is there a need for this contract to be reduced into writing to be valid? Rule is there is no need because this is not a formal contract.
A pledge is a real contract. So you just need to deliver the thing, if not delivered then there is no valid contract of pledge. If this still is constituted as collateral but
is not delivered it might be another contract, it may be chattel mortgage. So the delivery of the thing is an important element of this contract of pledge. Now since
this is a pledge which is in a pawnshop, the pledge is required to be governed by P.D 114 or the pawnshop regulation law and the Codal provision of the civil
code on pledge.

Under P. D 114 how much is required for capitalization? You just need 100,000 and then can be sole proprietorship, partnership or a corporation. What are the
requirements?
If sole proprietorship, registration with the bureau of trade regulation and consumer protection that is with the DTI. Other than that there should be registration
with the BSP plus a permit or license from the local government unit where the pawnshop will operate.