Short answer. Yes, presumptively. Article 2110 says that if the thing pledged is in the possession of the pledgor or owner after the pledge was perfected, there is a prima facie presumption that the pledgee returned it — and a return extinguishes the pledge. The presumption can be overcome by contrary proof.
What the law says
If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner, there is a prima facie presumption that the same has been returned by the pledgee.
Civil Code, Article 2110 — Return Extinguishes the Pledge. Read the full provision →
Possession is a pledge, so return ends it
A pledge depends on the creditor holding the thing; the security lies in that possession. Article 2110 builds on this. Its first rule is direct: If the thing pledged is returned by the pledgee to the pledgor or owner, the pledge is extinguished. It even guards that rule against clever drafting, adding that Any stipulation to the contrary shall be void. The parties cannot agree that a pledge survives once the creditor hands the item back. So when a pledged item genuinely leaves the creditor's hands and returns to you, the security interest that depended on his possession falls away with it.
The presumption when the item is with you
Because return extinguishes the pledge, the law reads your possession as a sign that a return happened. The article provides that If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner, there is a prima facie presumption that the same has been returned by the pledgee. The phrase prima facie matters: it is a starting assumption, not a final verdict. Your holding the item after the pledge was perfected is treated as evidence that the pledgee gave it back, and therefore that the pledge is presumed extinguished, unless something shows otherwise.
The presumption can be rebutted
A prima facie presumption shifts the burden but does not close the question. The pledgee may still show that your possession does not reflect a true return — for example, that you took the item without his consent, or that he handed it over only for a limited, temporary purpose rather than to surrender the security. If he proves that, the presumption gives way and the pledge may be treated as still standing. So while your possession works in your favor, it is not automatically conclusive; the creditor is entitled to explain how the item came back into your hands.
Third-person possession and the takeaway
The article extends the same logic beyond your own hands: This same presumption exists if the thing pledged is in the possession of a third person who has received it from the pledgor or owner after the constitution of the pledge. Practically, if the item is out of the creditor's control and with you or someone who got it from you, the law leans toward treating the pledge as extinguished. But because the presumption is rebuttable and any contrary stipulation is void, the decisive facts are how and why the item returned — voluntary return by the pledgee ends the pledge; a wrongful taking does not.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Premier Development Bank vs. Central Surety and Insurance Company, Inc, G.R. No. 176246, February 13, 2009 — read the decision on LawPhil →