26 Tec Bi

PHILIPPINE REPORTS ANNOTATED VOLUME 041 11/02/2020, 1'10 PM
[No. 9802. February 5, 1916.]
TEC Bi & Co., plaintiff and appellee, vs. THE

CHARTERED BANK OF INDIA, AUSTRALIA & CHINA,
defendant and appellant.
1. PLEDGES; ATTACHMENT OF THING PLEDGED BY

PREFERRED CREDITOR.·A considerable quantity of
tobacco was pledged by its owner
597
VOL. 41, FEBRUARY 5, 1916. 597
Tec Bi & Co. vs. Chartered Bank of India, etc.
to secure the payment of a debt. The tobacco was turned

over to the possession of the pledgee in pursuance of the
terms of a pledge contract. The pledge contract was
executed in a private document. Evidence of the date of the
pledge contract does not appear in a public instrument.
Held: That under the provisions of article 1865 of the Civil
Code the execution of the pledge could not and did not
adversely affect the preferred rights of another creditor of
the pledgor; and that the tobacco in the hands of the pledgee
was subject to attachment in an action instituted by another
creditor for the recovery of his claim of indebtedness.
2. ID.; ARTICLE 1865, CIVIL CODE; VENDOR ON CREDIT

AS "THIRD PERSON."·The vendor of tobacco on credit is a
"third person" as that term is used in article 1865 of the
Civil Code with relation to a pledge contract under which
the purchaser pledges the tobacco for the payment of the
debt of another creditor.
http://central.com.ph/sfsreader/session/0000017032a04652060e984a003600fb002c009e/p/ARR085/?username=Guest Page 1 of 17
3. ID.; ID.; OTHER CREDITORS AS "THIRD

PERSON."·When goods or merchandise have been pledged
to secure the payment of a debt of a particular creditor, the
other creditors of the pledgor are "third person" with
relation to the pledge contract and the pledgor and pledgee,
as that word is used in article 1865 of the Civil Code.
4. ID. ; ID. ; NECESSITY OF DATE IN PUBLIC

INSTRUMENT.·Article 1865 of the Civil Code providing
that "a pledge shall not be effective against a third person,
when evidence of its date does not appear in a public
instrument" is not a mere rule of adjective law prescribing
the mode whereby proof may be made of the date of a
.pledge contract. It is a rule of substantive law, prescribing a
condition without which the execution of a pledge contract
cannot affect third persons adversely.
5. PLEADING; WHAT ADMISSION OF ALLEGATIONS

AMOUNTS TO.·A general admission or stipulation of the
truth of the allegations set forth in a pleading is not an
admission of the truth of an impossible conclusion of facts
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.
APPEAL from a judgment of the Court of First Instance of

Manila. Del Rosario, J.
The facts are stated in the opinion of the court.
Gibbs, McDonough & Blanco for appellant.
Herrero & Masigan for appellee.
598
598 PHILIPPINE REPORTS ANNOTATED

CARSON, J.:
The following statement of the facts upon which this case

was submitted in the court below is taken literally from the
brief of counsel for the appellant:
"This is an action to recover from the defendant bank

the sum of P11,572.96, the amount of a judgment recovered
by the plaintiff against 'La Urania Cigar Factory (Ltd.),'
and for which the plaintiff seeks to hold the defendant
liable by virtue of an attempted levy of attachment upon
certain leaf tobacco in the possession of the defendant bank
under a pledge executed by the said. 'La Urania Cigar
Factory (Ltd.).' The Tobacco being pledged f or an amount
largely in excess of its value, the bank refused to deliver it
to the sheriff, and the pledge having become due, sold the
tobacco and applied the proceeds on account of the
indebtedness, previous to the time when the plaintiff
finally secured judgment against 'La Urania Cigar Factory
(Ltd.).' and issued execution thereon."
The case was submitted upon a stipulation of facts as f
ollows:
"It is hereby agreed that all the facts contained in
paragraphs 1, 2, 3, and 4 of the complaint are true, with
the exception of that part of the first five lines of paragraph
2, which alleges that the plaintiff had notice that some of
the bales of tobacco in leaf which were sold to the 'La
Urania Cigar Factory (Ltd.),' were attempted to be sold for
the manifest purpose of defrauding the plaintiff.
"Referring to the answer of the defendant corporation it
stipulated that the allegations of paragraphs 2, 3, 4, 5, and
6 are true.
The defendant corporation offers in evidence the original
contract of pledge marked Exhibit 1, as part of this
stipulation.
'"With reference to the admission of the contents of
paragraph 3 of the answer, it is understood that the word
'neutral' is eliminated."
599
VOL. 41, FEBRUARY 5, 1916. 599

Tec Bi & Co. vs. Chartered Bank of India,, etc.
From the allegations of the complaint and answer admitted

to be true in conformity with the foregoing stipulation, it
appears:
"(1) That on the 7th of November, 1912, the plaintiff

sold to the 'La Urania Cigar Factory (Ltd.),' a
quantity of leaf tobacco. (Paragraph 1 of complaint.)
"(2) That on the 16th of 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
described in Exhibit A of the answer, the original of
which has been offered in evidence in connection
with the stipulation of facts as Exhibit 1.
"(3) That the bales of tobacco thus pledged and
described in Exhibit 1 were stored in the bodega of
a third person, that is to say, in the bodega of
Messrs. Sprungli & Co., situated at No. 42 (now No.
214) of Calle David, Manila. (Paragraph 3 of
answer.)
"(4) That on or about the 1st day of February, 1913, the
defendant corporation demanded of and obtained
from Messrs. Sprungli & Co. the keys to the said
bodega, and discovered that of the 436 bales of
tobacco described in Exhibit 1 there remained only
those set forth in paragraph 4 of the answer.
(Paragraph 4 of answer.)
"(5) That 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 f ound on hand on the
1st of February, 1913, had 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.
(Paragraph 5 of answer.)
"(6) That from said 1st day of February, 1913, the
defendant corporation had been in the absolute and
exclusive
600

possession of the tobacco described in the fourth

paragraph of the answer and in Exhibit 1 of the
stipulation of facts, until the 15th of May, 1913,
when same was sold under and by virtue of the
document of pledge Exhibit 1 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. (Paragraph 6
of answer.)
"(7) That on the 22d 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 referred to in paragraph 2.
(Paragraph 1 of complaint.)
"(8) That 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. (Paragraph 2 of
complaint.)
"(9) That in view of the statement of the bank, the
sheriff notified it that the bales of tobacco identified
in Exhibit A of the complaint were attached subject
to the results of the complaint filed by Tec Bi & Co.
against 'La Urania Cigar Factory (Ltd.).'
(Paragraph 2 of complaint.)
"(10) That on the 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 of Tec Bi & Co.,
who replied insisting upon the levy of the
attachment. (Paragraph 3 of complaint.)
"(11) That on the 19th day of May, 1913, the Court of
First Instance rendered judgment in said case
against 'La
601
VOL. 41, FEBRUARY 5, 1916. 601

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. (Paragraph 4 of
complaint.)
"(12) That 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 from 'La Urania Cigar
Factory (Ltd.).' (Paragraph 4 of complaint.)
"The case having been submitted on the foregoing

stipulation of facts, the 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 (Exhibit 1) 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
persons, 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. (Pages 17 to 24, inclusive, bill of
exceptions.)"
From this judgment the defendant corporation appeals,

assigning the following errors:
"ASSIGNMENT OF ERRORS
"I. The court erred in holding that the plaintiff's claim as

vendor of the tobacco was entitled to preference over that of
the defendant bank secured by a pledge on the same
tobacco.
"II. The court erred in applying article 1865 of the Civil Code to
the defendant's pledge, and in holding that such pledge was
ineffective as to the plaintiff.
"III. The court erred in holding that the plaintiff was a third
person as contemplated by that term in article 1865 of the
Civil Code.
602

"IV. Assuming that article 1865 is applicable to the

transaction in question, the court erred in holding
that the plaintiff did not waive any def ect 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.
"V. The court erred in rendering judgment in favor of
the plaintiff and against the defendant, and in
denying the latter's motion for a new trial."
It will readily be seen that our disposition of this appeal

must turn upon the force and effect which should be given
the instrument referred to in the statement of facts as the
"original contract of pledge marked Exhibit 1."
Plaintiff's contention is that under the provisions of
clause 1 of article 1922, his right as a preferred creditor for
the amount of the purchase price of the tobacco was not
prejudiced and could not be prejudiced by the pledge of the
tobacco to the defendant, since the date of the contract of
pledge is not evidenced by a public document; and, further,

that he had a perfect right to attach the tobacco in the
course of judicial proceedings for the recovery of his claim
against the pledgor, for the purchase price of the tobacco
pledged to the defendant bank.
The defendant bank, on the other hand, contends that
under the provisions of clause 2 of article 1922 of the Civil
Code read together with clause 1 of section 1926, the right
of preference in favor of the bank, to which the tobacco had
been pledged by the common debtor, excluded the
preference in f avor of the plaintiff; and that plaintiff could
not rely on the provisions of article 1865 of the Code,
because he was not a "third person" in the sense in which
these words are used in that article.
Clauses 1 and 2 of article 1922 of the Civil Code are as f
ollows:
"1922. With regard to the specified personal property of
the debtor, the following are preferred:
"1. Credits for the construction, repair, preservation, or
for the amount of the sale of personal property which may
603
VOL. 41, FEBRUARY 5, 1916. 603

be in the possession of the debtor to the extent of the value

of the same.
"2. Those secured by a pledge which may be in the
possession of the creditor, with regard to the thing pledged
and to the extent of its value."
Clause 1 of article 1926 of the Civil Code is as follows:
"1926. Credits which enjoy preference with regard to
certain personal property, exclude all the others to the
extent of the value of the personal property to which the
preference refers.
"When two or more creditors claim preference with
regard to certain personal property, the following rules
shall be observed as to priority of payment:
"1. Credits secured by a pledge exclude all others to the
extent of the value of the thing given in pledge." Article
1865 of the Civil Code is as follows:
"A pledge shall not be 'effective against a third person,

when evidence of its date does not appear in a public
instrument."
Under these provisions of the Code there can be no
doubt that had the date of the contract of pledge been
evidenced by a public document, the preferential right of
the pledgee would have been superior to and excluded all
and any preferential rights of the vendor. We so held in
Macke and Macke vs. Rubert (11 Phil., 480).
The pledge contract (Exhibit 1) is before us, however,
and it is admitted that the date is not evidenced by a public
instrument. It cannot therefore be permitted to prejudice
the rights of the vendor of the tobacco if he is a "third
person" in the sense in which that term is used in the
above-cited article 1865 of the code.
It cannot be doubted that with relation to the pledgor
and the pledgee the original vendor of the, goods was a
third person. The words are not susceptible of any possible
explanation which would exclude him. He had no privity
with either of the parties to the pledge contract. He had no
knowledge of the execution of that contract. He did not
participate in it in any way whatever. His rights
604

so far as they affected the pledged property, were adverse

to both pledgor and pledgee. In a word he was as to them a
third person.
It necessarily follows that since the execution of the
pledge in favor of the defendant bank without the date of
execution being evidenced by a public instrument could
have no effect as against the plaintiff, he was strictly
within his rights in asserting his claims as a preferred
creditor and in levying an attachment against the tobacco;
and the defendant bank could not lawf ully assert any right
as a pledgee or preferred creditor which adversely affected
the rights of the plaintiff in the premises.
To these conclusions a number of) objections have been
raised, none of which, however, will bear close inspection.
It is said that even though the date of the defendant

bank's pledge is not evidenced in a public document, still
the delivery of the tobacco into the possession of the bank
defeated the right of the plaintiff to a preference. This
contention is based on the provision of article 1922 which
limits the pref erence for the purchase price of goods sold to
the time during which they continue in the possession of
the purchaser.
To this contention there are two sufficient answers.
First. While the contract of pledge and the delivery of
the tobacco undoubtedly created a valid pledge as between
the pledgor and the pledgee, so that the pledgor himself
could not disturb the possession of the pledgee; still, with
relation to third persons, the possession of the bank must
be deemed to be that of the purchaser of the tobacco, since,
under the provisions of article 1865 of the Code, the
execution of the pledge could not affect the right of third
persons. As to third persons the pledge and the pledged
property must be treated as if the pledge never had been
executed.
Second. Even if it were true that the plaintiff had lost
his statutory right of preference as a result of the execution
of the pledge and the delivery of possession to the bank,
still he had a perfect right to levy an attachment
605
VOL. 41, FEBRUARY 5, 1916. 605

on the tobacco pending his action to recover the amount of

the pledgor's indebtedness, unless the execution of the
pledge had the effect of depriving him of that right. But it
is very clear that under the express provisions of article
1865 of the code no such effect could be given the pledge.
Much is made in the brief of the appellant of the fact
that one of the allegations of the answer set forth that at
the date of the issuance of the attachment the defendant
bank was in the absolute and exclusive possession of the
tobacco in question; and that the truth of this allegation
was admitted in the agreed statement of facts.
The defendant's answer contains a series of allegations
setting forth the precise nature and character of the

possession of the tobacco by the bank, and of all the
circumstances under and by virtue of which the bank came
into possession; and there is attached to the answer, as an
exhibit a copy of the pledge contract itself. We have shown
that accepting these allegations as true, the possession of
the bank was not absolute and exclusive in the sense that
it could in any wise affect the right of another credit of the
common debtor, a "third person" with relation to the pledge
contract, to levy an attachment upon the tobacco. We must
conclude therefore that the stipulation as to the truth of
the allegation of the answer that the possession of the
tobacco by the bank was "absolute and exclusive" was
intended only to mean that it was "absolute and exclusive"
so far as the pledgor himself was concerned; or else that the
stipulation as to the truth of the allegations of the answer
did not include this averment as to the "absolute and
exclusive" possession of the tobacco by the bank, it being
merely a conclusion of law, based upon the other
allegations of facts alleged by the pleader.
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
606

averments. Thus, if a pleader alleges that two pesos were

borrowed on one day and two more borrowed on another
making five pesos in 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
1
by the parties,
2
cannot be questioned.
(Cf. 144 U. S., 75 ; 97 Ala., 491 ; 31 Cyc., 333-337; 6 Encyc.
Pl. & Pr., 334-338.)
One other contention of counsel for the appellant
remains to be considered. It is that on which his fourth
assignment of error is based. Counsel insist that "assuming
that article 1865 is applicable to the transaction in
question, 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."
This contention rests on a misconception of the real
purpose and object of the provisions of article 1865 of the
code. This article is not a mere rule of adjective law,
prescribing the mode whereby proof may be made of the
date of a con-
________________
1 Kent vs. Lake Superior etc. Railway & Iron Co.

2 Dickerson vs. Winslow.
607
VOL. 41, FEBRUARY 5, 1916. 607

tract of pledge. It is a rule of substantive law, prescribing a

condition without which the execution of a pledge contract
cannot affect third persons adversely.
The plaintiff in this action does not question the truth of
the bank's allegations that the pledge contract was
executed on the day on which it purports on its face to have

been signed and delivered. There is no suggestion of bad
faith or sharp practice on the part of either the pledgor or
pledgee in the execution of the pledge. Under the
circumstances plaintiff had no reason to object to the
introduction of evidence which tended directly to establish
his claim that although the pledge had been executed as
alleged by the defendant bank, it could not affect his rights
on the premises. On the contrary he must have welcomed
the introduction of this evidence, which conclusively
established the very point upon which his whole case
necessarily turns.
Plaintiff stands strictly on the rule of substantive law
laid down in this article of the code which declares that his
rights, as a "third person," cannot be adversely affected by
a pledge the date of which is not evidenced in a public
document. His right so to do cannot be successfully
challenged; and indeed we are inclined to think that the
equities of the case, as far as they appear from the record,
are with the vendor of a large quantity of tobacco, in his eff
ort to recover the unpaid purchase price, rather than the
creditor, who succeeded in having the debtor who had failed
to pay the purchase price of this tobacco, bought on credit,
turn it over to him by way of a pledge to secure the
payment of a preexisting debt.
What has been said would seem to dispose of all the
contentions of the appellant; but at the risk of extending
this opinion to an undue length, we here insert the
comment of a learned Spanish commentator (Manresa) on
the provisions of article 1865 of the code, because he seems
to have anticipated every contention of appellant in this
case, and the citation demonstrates quite conclusively that
the plaintiff is entitled to rely on his rights in the premises
as a
608

"third person," who cannot be adversely affected by the

execution of a pledge in the manner and form in which the
pledge to the defendant bank was made.

"Article 1865. A pledge will not be valid against a third
party if the certainty of the date is not expressed in a
public instrument.
"This article, the precept of which did not exist in our old
law, answers the necessity for not disturbing the
relationship or the status of the ownership of things with
hidden or simulated contracts of pledge, in the same way
and for the identical reasons that were taken into account
by the mortgage law in order to suppress the implied and
legal mortgages which produced so much instability in real
property.
"Considering the effects of a contract of pledge, it is
easily understood that, without this warranty demanded by
law, the case may happen wherein a debtor in bad faith
from the moment that he sees his movable property in
danger of execution may attempt to withdraw the same
from the action of justice and the reach of his creditors by
simulating, through criminal confabulations, anterior and
fraudulent alterations in his possession by means of
feigned contracts of this nature; and, with the object of
avoiding or preventing such abuses, almost all the foreign
writers advise that, for the effectiveness of the pledge, it be
demanded as a precise condition that in every case the
contract be executed in a public writing, for, otherwise, the
determination of its date will be rendered difficult and its
proof more so, even in cases in which it is executed before
witnesses, due to the difficulty to be encountered in seeking
those before whom it was executed.
"Our code has not gone so far, for it does not demand in
express terms that in all cases the pledge be constituted or
formalized in a public writing, nor even in private
document, but only that the certainty of the date be
expressed in the first of the said class of instruments in
order that it may be valid against a third party; and, in
default of any express
609
VOL. 41, FEBRUARY 5, 1916. 609

provision of law, in the cases where no agreement requiring

the execution in a public writing exists, it should be
subjected to the general rule, especially to that established
in the last paragraph of article 1280, according to which all
contracts not included in the foregoing cases of the said
article should be made in writing even though it be private,
whenever the amount of the prestation of one or of the two
contracting parties exceeds 1,500 pesetas.
"The pledge, therefore, can be constituted in whatever
form, as all other contracts, and the one formalized in that
way will be valid and will produce its natural and legal
consequences in the juridical order with respect to the
contracting parties and to their assigns; but it will not have
effect with respect to a third party if the certainty of the
date is not evidenced in a public writing, by which means
the legislator has tried to render impossible the existence
of the fraudulent confabulations which we have
hereinbefore indicated as otherwise possible.
"That is to say, what the law wishes in the precept that
we are examining is to impose the existence, not only of an
efficacious and authentic means of proof of the constitution
of a pledge, but also of a security of its certainty and the
reality of the pledge in order to avoid frauds and damages
to the creditors, arising from the bad faith of the debtor;
something like the inscription of the mortgage in the
Registry of Property, as has been said by an author,
although with less warranties than this one.
"Some authors criticise the limitations in the wording of
the article insofar as it does not ,demand an identical
expression respecting the other essential circumstances of
the contract, they upholding the necessity or at least the
convenience of expressing in the public instrument
principally the debt for the security of which the pledge is
constituted, the date of debt, the designation of the thing
pledged, the period during which the accessory obligation is
contracted for, with all the other stipulations which
constitute the essence of the contract. But this should not
be imposed by
610
the law but by the private interest which is the only one
affected, and for the same reason, a like determination
should be demanded in all contracts.
"The only thing in this case that could interest or
concern the legislator would be to prevent or to make
impossible any simulation or fraud, supposing the
existence of fraudulent pledges to be to the prejudice of
third parties and to that end, it is sufficient that the date of
its constitution be evidenced with all certainty in a public
instrument. Any thing else would amount to an attempt
against the principle of liberty with which contracts of the
modern legislation are inspired, placing obstacles to it by
demanding the execution in every case of a public writing,
a thing which though it constitutes a worthy and just
aspiration, yet, can not take precedence over the will and
the freedom of the contracting parties.
"Hence, any one who may wish to constitute a pledge in
a private document or verbally, if the prestations of the
parties do not exceed 1,500 pesetas, can validly make it; but
the contract celebrated will not prejudice a third party
while the requisite of the execution of a public instrument
referred to in the article is not complied with.
"There exists another reason which justifies the precept
we are discussing. In fact, from the contract of pledge
arises the preference established in No. 2 of article 1922,
respecting the credits guaranteed by the thing pledged
which is in the possession of the creditor, up to the amount
of its value, which preference may be opposed against third
parties; and, in order that the latter may not be prejudiced,
it is necessary that the date of the contract be expressed in
a true, indubitable and authentic manner and that it be
certain to the end that even the bare possibility of fraud
and of collusion between the creditor keeping the pledge
and the debtor owner thereof may be excluded."
What has been said necessitates the entry of judgment
affirming the judgment entered in the court below, with the
costs of this instance against the appellant.
611
VOL. 41, FEBRUARY 5, 1916. 611

Kuenzle & Streiff vs. Villanueva.
Let judgment be entered accordingly. So ordered.
Arellano, C. J., Torres, and Trent, JJ., concur.

Johnson, J., did not take part.
Moreland, J., dissents.
Judgment affirmed.
________________
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PHILIPPINE REPORTS ANNOTATED VOLUME 041 11/02/2020, 1'10 PM

[No. 9802. February 5, 1916.]

TEC Bi & Co., plaintiff and appellee, vs. THE

1. PLEDGES; ATTACHMENT OF THING PLEDGED BY

VOL. 41, FEBRUARY 5, 1916. 597

Tec Bi & Co. vs. Chartered Bank of India, etc.

to secure the payment of a debt. The tobacco was turned

2. ID.; ARTICLE 1865, CIVIL CODE; VENDOR ON CREDIT

3. ID.; ID.; OTHER CREDITORS AS "THIRD

4. ID. ; ID. ; NECESSITY OF DATE IN PUBLIC

5. PLEADING; WHAT ADMISSION OF ALLEGATIONS

APPEAL from a judgment of the Court of First Instance of

598 PHILIPPINE REPORTS ANNOTATED

The following statement of the facts upon which this case

"This is an action to recover from the defendant bank

VOL. 41, FEBRUARY 5, 1916. 599

From the allegations of the complaint and answer admitted

"(1) That on the 7th of November, 1912, the plaintiff

600 PHILIPPINE REPORTS ANNOTATED

possession of the tobacco described in the fourth

the same; that the sheriff communicated the

VOL. 41, FEBRUARY 5, 1916. 601

Urania Cigar Factory (Ltd.)/ in favor of Tec Bi &

"The case having been submitted on the foregoing

From this judgment the defendant corporation appeals,

"I. The court erred in holding that the plaintiff's claim as

602 PHILIPPINE REPORTS ANNOTATED

"IV. Assuming that article 1865 is applicable to the

It will readily be seen that our disposition of this appeal

pledge is not evidenced by a public document; and, further,

VOL. 41, FEBRUARY 5, 1916. 603

be in the possession of the debtor to the extent of the value

"A pledge shall not be 'effective against a third person,

604 PHILIPPINE REPORTS ANNOTATED

so far as they affected the pledged property, were adverse

It is said that even though the date of the defendant

VOL. 41, FEBRUARY 5, 1916. 605

on the tobacco pending his action to recover the amount of

setting forth the precise nature and character of the

606 PHILIPPINE REPORTS ANNOTATED

averments. Thus, if a pleader alleges that two pesos were

money was loaned, a stipulation as to the truth of the

1 Kent vs. Lake Superior etc. Railway & Iron Co.

VOL. 41, FEBRUARY 5, 1916. 607

tract of pledge. It is a rule of substantive law, prescribing a

executed on the day on which it purports on its face to have

608 PHILIPPINE REPORTS ANNOTATED

"third person," who cannot be adversely affected by the

pledge to the defendant bank was made.

VOL. 41, FEBRUARY 5, 1916. 609

provision of law, in the cases where no agreement requiring

610 PHILIPPINE REPORTS ANNOTATED

Tec Bi & Co. vs. Chartered Bank of India, etc.

VOL. 41, FEBRUARY 5, 1916. 611

Let judgment be entered accordingly. So ordered.

Arellano, C. J., Torres, and Trent, JJ., concur.

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