Libro Segundo · Título V Capítulo IV. Prenda agraria, ganadera e industrial

A pledge may be constituted independently of the immovables to which they belong and they remain in the possession of the debtor, over the following property:

1°.Pending, future or harvested fruits.

2°.The products of plants and plants that may only be used by cutting.

3°.Machines, implements or instruments used in agriculture.

4°.Animals and their offspring.

5°.Machines and instruments used in industry.

6°.Raw materials of every kind and products in any state of factories or industries; and

7°.Products of mines and quarries.

A pledge may also be constituted over vehicles and other easily identifiable movables constituting security for a commercial transaction.

Even if the estate is mortgaged, the property referred to in the preceding article may be pledged, but preference must be given to the mortgage creditor, who may exercise this right within five days counted from when the debtor informs him in authentic form of the bases of the contract he intends to enter into. If the mortgage creditor does not grant the credit, he may not oppose the debtor obtaining it from another person on the same bases.

Only the pending harvest may be pledged, but when its proceeds do not suffice to amortize the pledge credit, the unpaid balance shall be paid with the proceeds of the subsequent harvest, even if it does not suffice to cover the entirety of said balance. When the pledge covers livestock or industrial products, any balance shall be paid with the harvests of the two subsequent years. Credits granted by banking institutions are excepted from this limitation.

The pledge creditor has preference over any other creditor, in the price of the property given in pledge, for the amount of the credit, interest and expenses if any.

A new encumbrance may be constituted over property already pledged, or the remaining part of a pending harvest may be given in guarantee to a person other than the first creditor, provided that the latter, informed of the bases of the contract intended to be entered into, in the manner expressed in Article 905, does not wish to or cannot grant new credit; but in any case, without prejudice to the rights to which as first creditor he is entitled.

In the pledge over fungible property it may be agreed that the pledged property may be substituted, provided that the depositary has in existence at the time of substitution property of the same characteristics specified in the respective contract.

Funds obtained with agricultural pledge, if there is a mortgage, shall be invested exclusively in administration, maintenance, cultivation, harvesting and processing expenses, and in repair of machinery, on the farm in question.

In loans granted for the purchase of machinery, livestock or property of any other kind, a pledge may be constituted over such property, even if not yet in the debtor's possession. Such pledge is perfected without the need for any other requirement when the debtor acquires the pledged property.

A pledge may be constituted as security for future obligations in favor of banking institutions. In this case, it is indispensable to designate the creditor, the maximum amount of the obligations secured and the term of validity of the guarantee. When the obligations are created or the loans are granted, it shall be stated in the respective title or contract that they are secured by the preconstituted pledge and that each obligation or loan shall also be subject to the stipulations specified in the respective contract or title.

The creditor may, personally or through a delegate, inspect the property that is the object of the pledge and, if they are found to be suffering damage or deterioration or in a state of abandonment by the debtor, the creditor may also apply to the judge for the appointment of an administrator-in-charge.

The provisions of the common pledge and of the mortgage are applicable to the agricultural or industrial pledge insofar as they do not contravene its nature and what is prescribed in the Law on Movable Guarantees.