- Petitioner
- Cornelio Cruz
- Respondent
- Chua A. H. Lee
- Citation
- G.R. No. 31018
- Court
- Supreme Court En Banc
- Division
- En Banc
- Ponente
- Street, J.
- Decided
- November 6, 1929
Summary
This case establishes the fundamental principle that a pledgee who holds pawn tickets as security has an affirmative duty to renew them to prevent lapsing. Cornelio Cruz pledged jewelry and pawn tickets to Chua A. H. Lee for loans totaling P6,520. When Lee failed to renew the pawn tickets, they lapsed and the underlying jewelry was sold at auction by the pawnshops. The Supreme Court, applying Article 1867 of the Civil Code, held that a pledgee must exercise the diligence of a good father of a family in caring for pledged property and is liable for damages resulting from loss due to negligence. The court awarded damages of P6,687.56, representing the difference between the jewelry's actual value and the amounts advanced on the pledges. This decision clarifies the active duties of pledgees in maintaining the viability of their security interests.