Case Digest (G.R. No. 9802)
Facts:
Tec Bi & Co. v. The Chartered Bank of India, Australia & China, G.R. No. 9802, February 05, 1916, the Supreme Court En Banc, Carson, J., writing for the Court.
Tec Bi & Co. (plaintiff–appellee) sold leaf tobacco to La Urania Cigar Factory (Ltd.) on November 7, 1912. On January 16, 1913, La Urania pledged a quantity of those bales as security to The Chartered Bank of India, Australia & China (defendant–appellant) for a loan of P25,000; the written pledge (Exhibit 1) was produced in the record but its date was not evidenced by a public instrument. The pledged tobacco was stored in the warehouse (bodega) of Messrs. Sprungli & Co. at Calle David, Manila.
About February 1, 1913, the bank obtained the keys to the warehouse and found fewer bales on hand than those described in the pledge; the bank could not ascertain whether La Urania or Sprungli & Co. had caused the discrepancy and asserted any such disposition would have been without the bank's knowledge or consent. From February 1 until May 15, 1913, the bank remained in possession of the tobacco described in Exhibit 1 and, on May 15, sold the tobacco under the terms of the pledge for P12,722.36, applying the proceeds to the then-due loan, which still left a balance unpaid.
On April 22, 1913, Tec Bi & Co. filed suit in the Court of First Instance of Manila against La Urania to recover P11,572.96 (the unpaid purchase price). On May 5, 1913, Tec Bi obtained an attachment against the bales, but the sheriff could not obtain entry because the warehouse keys were held by the bank. The bank refused to surrender the keys, claiming it held the bales as pledgee and informed the sheriff it intended to sell them; the sheriff nevertheless notified the bank that the bales were attached subject to the action. On May 19, 1913, the Court of First Instance rendered judgment for Tec Bi for P11,572.96 plus interest and costs; on May 22 the sheriff attempted execution but was thwarted by the bank's claim that the tobacco had already been sold and proceeds applied.
The Court of First Instance held that Tec Bi’s vendor’s claim was a preferred credit under Article 1922(1) of the Civil Code and that the bank’s pledge was ineffective against Tec Bi because Article 1865 requires the certainty of a pledge’s date to be evidenced in a public instrument for it to affect third persons; judgment was entered for the plaintiff. Th...(Pro-only)
Issues:
- Did Tec Bi & Co.’s vendor’s preference under Article 1922(1) prevail over the bank’s pledge when the pledge’s date was not evidenced by a public instrument?
- Did the bank’s possession of the pledged tobacco and its sale defeat Tec Bi’s right to levy attachment and enforce its vendor’s preference?
- Did Tec Bi waive any defect in the private pledge (Exhibit 1) by stipulating to its genuineness and date and by failing to o...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)