4. It is a loan.

the debtors were lawfully authorized to make use of the amount deposited, which they
have done, as subsequent shown when asking for an extension of the time for the return thereof,
inasmuch as, acknowledging that they have subjected the letter, their creditor, to losses and
damages for not complying with what had been stipulated, and being conscious that they had used,
for their own profit and gain, the money that they received apparently as a deposit, they engaged to
pay interest to the creditor from the date named until the time when the refund should be made.
Such conduct on the part of the debtors is unquestionable evidence that the transaction entered into
between the interested parties was not a deposit, but a real contract of loan.

When on one of the latter days of January, 1898, Jose Lim went to the office of the creditor asking
for an extension of one year, in view of the fact the money was scare, and because neither himself
nor the other defendant were able to return the amount deposited, for which reason he agreed to
pay interest at the rate of 15 per cent per annum, it was because, as a matter of fact, he did not have
in his possession the amount deposited, he having made use of the same in his business and for his
own profit; and the creditor, by granting them the extension, evidently confirmed the express
permission previously given to use and dispose of the amount stated as having bee deposited,
which, in accordance with the loan, to all intents and purposes gratuitously, until the 20th of January,
1898, and from that dated with interest at 15 per cent per annum until its full payment, deducting
from the total amount of interest the sum of 1,000 pesos, in accordance with the provisions of article
1173 of the Civil Code.

Moreover, for the reason above set forth it may, as a matter of course, be inferred that there was no
renewal of the contract deposited converted into a loan, because, as has already been stated, the
defendants received said amount by virtue of real loan contract under the name of a deposit, since
the so-called bailees were forthwith authorized to dispose of the amount deposited. This they have
done, as has been clearly shown.

5.Yes. It should be stated that the palay in question was placed by the plaintiffs in the defendant’s mill
with the understanding that the defendant was at liberty to convert it into rice and dispose of it at his
pleasure. The mill was actively running during the entire season, and as palay was daily coming in from
many customers and as rice was being constantly shipped by the defendant to Manila, or other rice markets,
it was impossible to keep the plaintiffs’ palay segregated. In fact the defendant admits that the plaintiffs’
palay was mixed with that of others. In view of the nature of the defendant’s activities and the way in which
the palay was handled in the defendant’s mill, it is quite certain that all of the plaintiffs’ palay, which was
put in before June 1, 1920, had been milled and disposed of long prior to the fire of January 17, 1921.
Furthermore, the proof shows that when the fire occurred there could not have been more than about 360
cavans of palay in the mill, none of which by any reasonable probability could have been any part of the
palay delivered by the plaintiffs. Considering the fact that the defendant had thus milled and doubtless sold
the plaintiffs’ palay prior to the date of the fire, it results that he is bound to account for its value, and his
liability was not extinguished by the occurrence of the fire. In the briefs before us it seems to have been
assumed by the opposing attorneys that in order for the plaintiffs to recover, it is necessary that they should
be able to establish that the plaintiffs’ palay was delivered in the character of a sale, and that if, on the
contrary, the defendant should prove that the delivery was made in the character of deposit, the defendant
should be absolved. But the case does not depend precisely upon this explicit alternative; for even
supposing that the palay may have been delivered in the character of deposit, subject to future sale or
withdrawal at plaintiffs’ election, nevertheless if it was understood that the defendant might mill the palay
and he has in fact appropriated it to his own use, he is of course bound to account for its value. Under
article 1768 of the Civil Code, when the depositary has permission to make use of the thing deposited, the
contract loses the character of mere deposit and becomes a loan or a commodatum; and of course by
appropriating the thing, the bailee becomes responsible for its value. In this connection we wholly reject the
defendant’s pretense that the palay delivered by the plaintiffs or any part of it was actually consumed in the
fire of January, 1921. Nor is the liability of the defendant in any wise affected by the circumstance that, by a
custom prevailing among rice millers in this country, persons placing palay with them without special
agreement as to price are at liberty to withdraw it later, proper allowance being made for storage and
shrinkage, a thing that is sometimes done, though rarely.
7. Negotiable. We think, however, that it must be considered a negotiable receipt. A warehouse
receipt, like any other document, must be interpreted according to its evident intent (Civil Code, arts.
1281 et seq.) and it is quite obvious that the deposit evidenced by the receipt in this case was
intended to be made subject to the order of the depositor and therefore negotiable. That the words
"por orden" are used instead of "a la orden" is very evidently merely a clerical or grammatical error. If
any intelligent meaning is to be attacked to the phrase "Quedan depositados en estos almacenes
por orden del Sr. U. de Poli" it must be held to mean "Quedan depositados en estos almacenes a la
orden del Sr. U. de Poli." The phrase must be construed to mean that U. de Poli was the person
authorized to endorse and deliver the receipts; any other interpretation would mean that no one had
such power and the clause, as well as the entire receipts, would be rendered nugatory.

Moreover, the endorsement in blank of the receipt in controversy together with its delivery by U. de
Poli to the appellant bank took place on the very of the issuance of the warehouse receipt, thereby
immediately demonstrating the intention of U. de Poli and of the appellant bank, by the employment
of the phrase "por orden del Sr. U. de Poli" to make the receipt negotiable and subject to the very
transfer which he then and there made by such endorsement in blank and delivery of the receipt to
the blank.

As hereinbefore stated, the receipt was not marked "non-negotiable." Under modern statutes the
negotiability of warehouse receipts has been enlarged, the statutes having the effect of making such
receipts negotiable unless marked "non-negotiable." (27 R. C. L., 967 and cases cited.)

Section 7 of the Uniform Warehouse Receipts Act, says:

A non-negotiable receipt shall have plainly placed upon its face by the warehouseman
issuing it 'non-negotiable,' or 'not negotiable.' In case of the warehouseman's failure so to do,
a holder of the receipt who purchased it for value supposing it to be negotiable may, at his
option, treat such receipt as imposing upon the warehouseman the same liabilities he would
have incurred had the receipt been negotiable.

This section shall not apply, however, to letters, memoranda, or written acknowledgments of
an informal character.

This section appears to give any warehouse receipt not marked "non-negotiable" or "not negotiable"
practically the same effect as a receipt which, by its terms, is negotiable provided the holder of such
unmarked receipt acquired it for value supposing it to be negotiable, circumstances which admittedly
exist in the present case.

We therefore hold that the warehouse receipts in controversy was negotiable and that the rights of
the endorsee thereof, the appellant, are superior to the vendor's lien of the appellee and should be
given preference over the latter.

8. YES. WHERE ONE CORPORATION APPOINTS ANOTHER AS ITS GENERAL MANAGER, THE FORMER IS
BOUND BY THE AUTHORIZED ACTS OF THE LATTER WITHIN THE SCOPE OF ITS AUTHORITY. — Where the
defendant entered into a written contract appointing P. F. & P. Co., another corporation, as general manager
of its business for a term of years, with full power to manage its business, subject only to the control of the
defendant’s board of directors, and under such power P. F. & P. Co. issued the quedans of the defendant in
its own name and pledged them as collateral with a bank, which received them in good faith, the defendant
is bound by the acts of its general manager, and estopped to deny its authority to issue such quedans.

CORPORATION BOUND BY ACTS OF ITS GENERAL MANAGER. — Where one corporation appoints another
corporation its general manager with authority to issue quedans in the name of the former, and the latter
issued quedans of the former in its own name and pledged them for value to a bank as collateral, in the
 absence of fraud or collusion to which the bank was a party, the quedans are valid and binding, and the
former is liable to the bank for the property therein described or its value.

10.
YES. Moreover, Plaintiff is estopped to deny
that the bank had a valid title to the
quedans
for the reason that the
Plaintiff had voluntarily clothed Ranft
with all the attributes of ownership and
upon which the Defendant bank relied.
Subsequently, Plaintiff in this case has
suffered the loss of the
quedans, but
as far as the court sees it, there is now
no remedy available to the Plaintiff
equitable estoppel place the loss upon
him whose misplaced confidence has
made the wrong possible