TEC BI & CO v CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA

41 Phil 596
CARSON; Feb 5, 1916
FACTS:
- on the 7th of November 1912, the plaintiff sold to the "La Urania Cigar Factory (Ltd.)," a quantity of leaf tobacco.
- on 16th January, 1913, the "La Urania Cigar Factory (Ltd.)," pledged to the defendant corporation as security for the payment of an
indebtedness of P25,000 the bales of tobacco. The bales of tobacco thus pledged were stored in the bodega of a third person,
Messrs. Sprungli & Co., situated at No. 42 (now No. 214) of Calle David, Manila.
- on or about the 1st day of February, 1913, the defendant corporation demanded and obtained from Messrs. Sprungli & Co. the
keys to the said bodega, and discovered that of the 436 bales of tobacco there remained only those set forth in paragraph 4 of the
answer. (I have no idea how many. Sorry.)
- the defendant bank did not know and had been unable to ascertain whether "La Urania Cigar Factory (Ltd.)," misrepresented the
quantity of the tobacco in the said warehouse at the time of the execution of said document of pledge, or whether the difference
between the amount described in the document of pledge and that found on hand on the 1st of February, 1913, and in the meantime
been disposed of by "La Urania Cigar Factory (Ltd.)," in collusion with Messrs. Sprungli & Co., but that if such disposition was made
it was without the knowledge or consent of the defendant bank.
- from said 1st day of February, 1913, the defendant corporation had been in the absolute and exclusive possession of the tobacco,
until the 15th of May, 1913, when same was sold under and by virtue of the document of pledge by the defendant bank for the sum
of P12,722.36 which was applied on account of said loan, the entire amount of which was then past due and unpaid, leaving a large
balance thereof still due and unpaid.
- on the 22nd day of April, 1913, the plaintiff Tec Bi & Co., filed a complaint in the Court of First Instance of Manila against "La
Urania Cigar Factory (Ltd.)," claiming the payment of the sum of P11,572.96 as the balance of the unpaid purchase price of the
tobacco
- on the 5th day of May, 1913, Tec Bi & Co. asked for and obtained from the Court of First Instance an attachment against the said
bales of tobacco, but inasmuch as the bodega was locked and the sheriff was informed that the keys were in the possession of the
bank, he demanded the delivery thereof from the latter, which demand was refused by the bank, alleging that it held possession of
the tobacco under a pledge.
- the sheriff notified it that the bales of tobacco were attached subject to the results of the complaint filed by Tec Bi & Co. against "La
Urania Cigar Factory (Ltd.),”
- on 8th day of May, 1913, the bank answered the notification of the sheriff, confirming the fact that it had in its possession the bales
of tobacco specified in the notification, as security for the payment of a loan and that it intended to sell the same; that the sheriff
communicated the answer of the bank to the attorneys to Tec Bi & Co., who replied insisting upon the levy of the attachment.
- on the 19th day of May, 1913, the Court of First Instance rendered judgment in said case against "La Urania Cigar Factory (Ltd.),"
in favor of Tec Bi & Co., for the sum of P11,572.96, with legal interest from April 22, 1913, and costs.
- on the 22d day of May, 1913, the sheriff attempted to execute the judgment upon the bales of tobacco attached and in the
possession of the defendant corporation, but was unable to do so due to the statement of the agent of said corporation, that the
tobacco had been sold and that the proceeds of the sale had been applied upon the payment of the amount due to from "La Urania
Cigar Factory (Ltd.),"
- Court of First Instance found that the plaintiff's claim was a preferred credit under the provisions of paragraph 1 of article 1922 of
the Civil Code; that the pledge executed by "La Urania Cigar Factory (Ltd.)," in favor of the defendant corporation was not binding
upon the plaintiff for the reason that it was not set forth in a public instrument as required by article 1865 of the Civil Code in order to
be effective against, third person, and rendered judgment in favor of the plaintiff and against the defendant for the amount of the
former's judgment against "La Urania Cigar Factory (Ltd.)," with interest and costs.

ISSUE:
WON the court erred in holding that the plaintiff did not waive any defect in the private instrument of pledge by expressly admitting
its genuineness and the correctness of its date by stipulation, and by failure to object to its introduction in evidence.
NOTE: the case dealt with a pledgor-pledgee [credit] relationship. The discussion here is limited to that pertaining to civil provision.
Please see case re issues on credit.

HELD:
A general admission of the truth of the allegations set forth in a pleading is not an admission of the truth of an impossible conclusion
of fact drawn from other facts set out in the pleading, nor of a wrong conclusion of law based on the allegations of fact well pleaded,
nor of the truth of a general averment of facts contradicted by more specific averments. Thus, if a pleader alleges that two pesos
were borrowed on one day and two more borrowed on another making five Pin all, a stipulation of the truth of the allegations in the
pleading does not amount to an admission by the opposing party that twice two make five. Again if a pleader alleges that one
hundred pesos were loaned without interest for one year and had not been paid, and that the borrower is indebted to the lender in
the sum of one hundred and ten pesos, that being the amount of the capital together with interest for the year for which the money
was loaned, a stipulation as to the truth of the allegation set forth in the pleadings is not an admission of the truth of the conclusion
of law as to the interest due by the borrower. These elementary principles have been quite fully developed in a great variety of
cases arising on demurrers, and sufficiently dispose of the attempt of counsel to fix the attention of the court upon this single
averment of the answer, apart from the context and to the exclusion of the specific allegations of fact, the truth of which, as
stipulated by the parties, cannot be questioned.

DISPOSITION: Judgment affirmed