Art. 2096. 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. (1865a)
PUBLIC INSTRUMENT NECESSARY TO BIND THIRD PERSONS
1. CONTENTS OF PUBLIC INSTRUMENT
a. The pledge is not binding against third persons unless in addition to delivery of the thing pledged,
it is embodied in a public instrument
b. Description of the thing pledged; and the date of pledge
2. OBJECT OF THE REQUIREMENT—to forestall fraud, because a debtor may attempt to conceal his property from his creditors when he sees it in danger of execution by simulating a pledge thereof with an accomplice
THE DATE OF THE PLEDGE IS RELEVANT TO KNOW IF THERE IS VALID CONSIDERATION IN THE FIRST PLACE.
WHAT IS A PUBLIC INSTRUMENT?
The pledge contract should be the one in the public instrument, acknowledged by the notary public
What if there is litigation ensued and the pledge is not in a public instrument? Is this binding upon the court? No, it is not. There should be payment of documentary stamp tax.
