BPI Vs Herridge

9/21/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 047
[Nos. 21000, 2100221004, and 21006. December 20, 1924]
In the matter of the involuntary insolvency of Umberto de

Poli. BANK OF THE PHILIPPINE ISLANDS ET AL.,
claimants and appellees, vs. J. R. HERRIDGE, assignee of
the insolvent estate of U. de Poli, BOWRING & Co., C. T.
BOWRING & Co., LTD., and T. R. YANGCO, creditors and
appellants.
1. WRITTEN INSTRUMENTS; CONSTRUCTION.—

Whenever possible, writings must be so construed as to
give effect to their general intent and so as to avoid
absurdities.
58
58 PHILIPPINE REPORTS ANNOTATED
Bank of the Philippine Islands vs. Herridge
2. WAREHOUSE RECEIPTS; CONSTRUCTION.—As

instruments of credit, warehouse receipts play an
important role in modern commerce and the present day
tendency of the courts is towards a liberal construction of
the law in favor of bona fide holders of such receipts.
3. ID.; ID.—A warehouseman deposited merchandise in his

own warehouse, issued a warehouse receipt therefor and
thereafter negotiated the receipt by endorsement. The
receipt recites that the goods were deposited "por orden" of
the depositor, the warehouseman, but contained no
statement that the goods were to be delivered to the
bearer of the receipt or to a specified person. It was in the
form of a negotiable warehouse receipt and was not
marked "nonnegotiable" or "not negotiable." Held: That,
the receipt was a negotiable warehouse receipt and that
the words "por orden" must be construed to mean "to the
order."
4. ID.; CHATTEL MORTGAGE; NOVATION.—A chattel

mortgage was taken by a bank upon the goods previously
http://central.com.ph/sfsreader/session/0000015ea2ff4834afd6c973003600fb002c009e/t/?o=False 1/18
transferred to the same bank by warehouse receipt. Held:

That, under the circumstances of the case, the chattel
mortgage did not work a novation of the warehouse
contract between the parties and that the bank might still
insist on the rights acquired by it under the warehouse
receipt.
APPEAL from five judgments of the Court of First Instance

of Manila. Harvey, J.
The facts are stated in the opinion of the Court.
Crossfield & O'Brien, J. A. Wolfson and Camus &
Delgado for appellants.
Hartigan & Welch, Fisher & DeWitt and Gibbs &
McDonough for appellees.
OSTRAND, J.:
The present appeals, all of which relate to the Insolvency of

U. de Poli, have been argued together and as the principal
questions involved are the same in all of them, the cases
will be disposed of in one decision.
The insolvent Umberto de Poli was for several years
engaged on an extensive scale in the exportation of Manila
hemp, maguey and other products of the country. He was
59
VOL. 47, DECEMBER 20, 1924 59

also a licensed public warehouseman, though most of the

goods stored in his warehouses appear to have been
merchandise purchased by him for exportation and
deposited there by he himself.
In order to finance his commercial operations De Poli
established credits with some of the leading banking
institutions doing business in Manila at that time, among
them the Hongkong & Shanghai Banking Corporation, the
Bank of the Philippine Islands, the Asia Banking
Corporation, the Chartered Bank of India, Australia and
China, and the American Foreign Banking Corporation.
The methods by which he carried on his business with the
various banks was practically the same in each case and
does not appear to have differed from the ordinary and well
known commercial practice in handling export business by
merchants requiring bank credits.
De Poli opened a current account credit with the bank
against which he drew his checks in payment of the
products bought by him for exportation. Upon the

purchase, the products were stored in one of his
warehouses and warehouse receipts issued therefor which
were endorsed by him to the bank as security for the
payment of his credit in the account current. When the
goods stored by the warehouse receipts were sold and
shipped, the warehouse receipt was exchanged for shipping
papers, a draft was drawn in favor of the bank and against
the foreign purchaser, with bill of lading attached, and the
entire proceeds of the export sale were received by the bank
and credited to the current account of De Poli.
On December 8, 1920, De Poli was declared insolvent by
the Court of First Instance of Manila with liabilities to the
amount of several million pesos over and above his assets.
An assignee was elected by the creditors and the election
was confirmed by the court on December 24, 1920. The
assignee qualified on January 4, 1921, and on the same
date the clerk of the court assigned and delivered to him
the propery of the estate.
60

Among the property taken over by the assignee was the

merchandise stored in the various warehouses of the
insolvent. This merchandise consisted principally of hemp,
maguey and tobacco. The various banks holding warehouse
receipts issued by De Poli claim ownership of this
merchandise under their respective receipts, whereas the
other creditors of the insolvent maintain that the
warehouse receipts are not negotiable, that their
endorsement to the present holders conveyed no title to the
property, that they cannot be regarded as pledges of the
merchandise inasmuch as they are not public documents
and the possession of the merchandise was not delivered to
the claimants and that the claims of the holders of the
receipts have no preference over those of the ordinary
unsecured creditors.
On July 20, 1921, the banks abovementioned and who
claim preference under the warehouse receipts held by
them, entered into the following stipulation:
"It is stipulated by and between the undersigned
counsel, for the Chartered Bank of India, Australia &
China, the Hongkong & Shanghai Banking Corporation,
the Asia Banking Corporation and the Bank of Philippine
Islands that:
"Whereas, the parties hereto are preferred creditors of

the insolvent debtor U. de Poli, as evidenced by the
following quedans or warehouse receipts for hemp and
maguey stored in the warehouses of said debtor:
"QUEDANS OR WAREHOUSE RECEIPTS OF THE

CHARTERED BANK
"No. A131 for 3,808 bales hemp.

"No. A157 for 250 bales hemp.
"No. A132 for 1,878 bales maguey.
"No. A133 for 1,574 bales maguey.
"Nos. 131, 132 and 133 all bear date November 6, 1920, and
No. 157, November 19, 1920.
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VOL. 47, DECEMBER 20, 1924 61

"QUEDANS OR WAREHOUSE RECEIPTS OF THE

HONGKONG & SHANGHAI BANKING CORPORATION
"No. 130 for 490 bales hemp and 321 bales maguey.
"No. 134 for 1,970 bales hemp.
"No. 135 for 1,173 bales hemp.
"No. 137 for 237 bales hemp.
"QUEDANS OR WAREHOUSE RECEIPTS OF THE ASIA

BANKING CORPORATION
"No. 57 issued May 22, 1920, 360 bales hemp.

"No. 93 issued July 8, 1920, 382 bales hemp.
"No. 103 issued August 18, 1920, 544 bales hemp.
"No. 112 issued September 15, 1920, 250 bales hemp.
"No. 111 issued September 15, 1920, 2,007 bales maguey.
"QUEDANS OR WAREHOUSE RECEIPTS OF THE BANK

OF THE PHILIPPINE ISLANDS
"No. 147 issued November 13, 1920, 393 bales hemp.

"And whereas much of the hemp and maguey covered by

the above mentioned quedans was either nonexistent at
the time of the issuance of said quedans or has since been
disposed of by the debtor and of what remains much of the
same hemp and maguey transferred by means of quedans
to one of the parties hereto has also been transferred by

means of other quedans to one or more of the other parties
hereto and
"Whereas, the hemp and maguey covered by said
quedans is to a considerable extent commingled.
"Now, therefore, it is hereby agreed subject to the rights
of any other claimants hereto and to the approval of this
Honorable Court that all that remains of the hemp and
maguey covered by the warehouse receipts of the parties
62

hereto or of any of them shall de ajudicated to them

proportionately by grades in accordance with the quedans
held by each as above set forth in accordance with the rule
laid down in section 23 of the Warehouse Receipts Law f or
the disposition of commingled fungible goods.
"Manila, P. L, July 20, 1921.

"GlBBS, MCDONOUGH & JOHNSON
"By A. D. GlBBS
"Attorneys for the Chartered Bank
of India, Australia & China
"FlSHER & DEWlTT
"By C. A. DEWITT
"Attorneys for the Hongkong & Shanghai
Banking Corporation
"WOLFSON, WOLSFON & SCHWARZKOFF
"Attorneys for the Asia Banking Corporation
"HARTIGAN & WELCH
"Attorneys for the Bank of the Philippine Islands"
Claims for hemp and maguey covered by the respective

warehouse receipts of the banks mentioned in the foregoing
stipulation were presented by each of said banks. Shortly
after the adjudication of the insolvency of the firm of Wise
& Co., one of the unsecured creditors of the insolvent on
June 25, 1921, presented specific written objections to the
claims of the banks on the ground of the insufficiency of the
warehouse receipts and also to the stipulation above quoted
on the ground that it was entered into for the purpose of
avoiding the necessity of identifying the property covered
by each warehouse receipt. Bowring & Co., C. T. Bowring
Co., Ltd., and Teodoro R. Yangco, also unsecured creditors
of the insolvent, appeared in the case after the decision of
the trial court was rendered and joined with the assignee
in his motion for a rehearing and in his appeal to this
court.
Upon hearing, the court below held that the receipts in
question were valid negotiable warehouse receipts and
ordered the distribution of the hemp and maguey covered
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VOL. 47, DECEMBER 20, 1924 63

by the receipts among the holders thereof proportionately

by grades, in accordance with the stipulation above quoted,
and in a supplementary decision dated November 2, 1921,
the court adjudged the merchandise covered by warehouse
receipts Nos. A153, A154 and A155 to the Asia Banking
Corporation. From these decisions the assignee of the
insolvent estate, Bowring & Co., C. T. Bowring Co., Ltd.,
and Teodoro R. Yangco appealed to this court.
The warehouse receipts are identical in form with the
receipt involved in the case of Roman vs. Asia Banking
Corporation (46 Phil., 705), and there held to be a valid
negotiable warehouse receipt which, by endorsement,
passed the title to the merchandise described therein to the
Asia Banking Corporation. That decision is, however,
vigorously attacked by the appellants, counsel asserting,
among other things, that "there was not a single expression
in that receipt, or in any of those now in question, from
which the court could or can say that the parties intended
to make them negotiable receipts. In fact, this is admitted
in the decision by the statement ' * * * and it contains no
other direct statement showing whether the goods received
are to be delivered to the bearer, to a specified person, or to
a specified person or his order.' There is nothing whatever
in these receipts from which the court can possibly say that
the parties intended to use the phrase 'a la orden' instead
of the phrase 'por orden,' and thus to make said receipts
negotiable. On the contrary, it is very clear from the
circumstances under which they were issued, that they did
not intend to do so. If there was other language in said
receipts, such as would show their intention in some way to
make said receipts negotiable, then there would be some
reason for the construction given by the court. In the
absence of language showing such intention, the court, by
substituting the phrase 'a la orden' for the phrase 'por
orden,' is clearly making a new contract between the
parties which, as
64

shown by the language used by them, they never intended

to enter into."
These very positive assertions have, as far as we can see,
no foundation in fact and rest mostly on misconceptions.
Section 2 of the Warehouse Receipts Act (No. 2137)
prescribes the essential terms of such receipts and reads as
f ollows:
"Warehouse receipts need not be in any particular form,
but every such receipt must embody within its written or
printed terms—
"(a) The location of the warehouse where the goods are

stored,
" (b) The date of issue of the receipt,
" (c) The consecutive number of the receipt,
" (d) A statement whether the goods received will be
delivered to the bearer, to a specified person, or to a
specified person or his order,
" (e) The rate of storage charges,
" (f) A description of the goods or of the packages
containing them,
" (g) The signature of the warehouseman, which may be
made by his authorized agent,
" (h) If the receipt is issued for goods of which the
warehouseman is owner, either solely or jointly or
in common with others, the fact of such ownership,
and
" (i) A statement of the amount of advances made and of
liabilities incurred for which the warehouseman
claims a lien. If the precise amount of such
advances made or of such liabilities incurred is, at
the time of the issue of the receipt, unknown to the
warehouseman or to his agent who issues it, a
statement of the fact that advances have been made
or liabilities incurred and the purpose thereof is
sufficient.
"A warehouseman shall be liable to any person injured

thereby, for all damage caused by the omission from a
negotiable receipt of any of the terms herein required."
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VOL. 47, DECEMBER 20, 1924 65

Section 7 of the Act reads:

"A nonnegotiable receipt shall have plainly placed upon
its face by the warehouseman issuing it 'nonnegotiable,' 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."
All of the receipts here in question are made out on
printed blanks and are identical in form and terms. As an
example, we may take receipt No. A112, which reads as f
ollows:
"U. DE POLI
"209 Estero de Binondo
"BODEGAS
"QUEDAN No. A112

"Almacén Yangco_______
"Por___________________
Marcas Bultos Clase de "Quedan depositados en estos

las almacenes por orden del Sr. U.
"UDP 250 mercanias de Poli la cantidad de
Fardos doscientos cincuenta fardos
abacá abacá según marcas detalladas
al margen, y con arreglo a las
condiciones siguientes:
"1.a Están asegurados contra
riesgo de incendios
exclusivamente, según las
condiciones de mis pólizas;
quedando los demás por cuenta
de los depositantes.
"2. No se responde del peso,
clase ni mal estado de la
mercancía depositada.
66

"3.a El almacenaje será de quince

céntimos fardo por mes.
"I certify that I "4.a El seguro sera de un octavo por
am the sole ciento mensual por el total. Tanto el
owner of the almacenaje como el seguro se cobrarán
merchandise por meses vencidos, y con arreglo a los
herein described. días devengados siendo el mínimo para
(Sgd.) los ef ect os del cobro 10 días.
"UMBERTO DE
POLI
"5.a No serán entregados dichos efectos
ni parte de los mismos sin la
presentación de este 'quedan' para su
correspondiente deducción.
"6.a El valor para el seguro de estas
mercancías es de pesos filipinos nueve
mil quinientos solamente.
"7.a Las operaciones de. entrada y
salida, serán de cuenta de los
depositantes, pudiendo hacerlos con sus
trabajadores, o pagando los que le sean
facil itados, con arreglo a los tipos que
tengo convenido con los míos.
"Valor del Seguro "Manila, 15 de sept. de 1920.
P9,500.
"V.° B.° "El Encargado,
(Sgd.) (Sgd.) "I. MAGPANTAY"
"UMBERTO DE
POLI
The receipt is not marked "nonnegotiable" or "not

negotiable," and is endorsed "Umberto de Poli."
As will be seen, the receipt is styled "Quedan"
(warehouse receipt) and contains all the requisites of a
warehouse receipt as prescribed by section 2, supra, except
that it does not, in express terms, state whether the goods
re
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VOL. 47, DECEMBER 20, 1924 67

ceived are to be delivered to bearer, to a specified person or

to his order. The intention to make it a negotiable
warehouse receipt appears, nevertheless, quite clearly from
the document itself: De Poli deposited the goods in his own
warehouse; the warehouse receipt states that he is the
owner of the goods deposited; there is no statement that
the goods are to be delivered to the bearer of the receipt or
to a specified person and the presumption must therefore
necessarily be that the goods are in the warehouse subject
to the orders of their owner De Poli. As the owner of the
goods he had, of course, full control over them while the
title remained in him; we certainly cannot assume that it
was the intention to have the goods in the warehouse
subject to no one's orders. That the receipts were intended
to be negotiable is further shown by the fact that they were
not marked "nonnegotiable" and that they were transferred
by the endorsement of the original holder, who was also the
warehouseman. In his dual capacity of warehouseman and
the original holder of the receipt, De Poli was the only
party to the instrument at the time of its execution and the
interpretation he gave it at that time must therefore be
considered controlling as to its intent.
In these circumstances, it is hardly necessary to enter
into any discussion of the intended meaning of the phrase
"por orden" occurring in the receipts, but for the
satisfaction of counsel, we shall briefly state some of our
reasons for the interpretation placed upon that phrase in
the Felisa Roman case:
The rule is wellknown that wherever possible writings
must be so construed as to give effect to their general
intent and so as to avoid absurdities. Applying this rule, it
is difficult to see how the phrase in question can be given
any other rational meaning than that suggested in the case
mentioned. It is true that the meaning would have been
more grammatically expressed by the word "a la orden";
the word "por" preceding the word "orden" is generally
68

translated into the English language as "by," but "por" also

means "for" or "for the account of" (see Velazquez
Dictionary) and it is often used in the latter sense. The
grammatical error of using it in connection with "orden" in
the present case is one which might reasonably be expected
from a person insufficiently acquainted with the Spanish

language.
If the receipt had been prepared in the English language
and had stated that the goods were deposited "for order" of
U. de Poli, the expression would not have been in
accordance with good usage, but nevertheless in the light of
the context and the circumstances would be quite
intelligible and no one would hesitate to regard "for order"
as the equivalent of "to the order." Why may not similar
latitude be allowed in the construction of a warehouse
receipt in the Spanish language?
If we were to give the phrase the meaning contended for
by counsel, it would reveal no rational purpose. To say that
a warehouseman deposited his own goods with himself by
his own order seems superfluous and means nothing. The
appellants' suggestion that the receipt was issued by Irineo
Magpantay loses its force when it is considered that
Magpantay was De Poli's agent and that his words and acts
within the scope of his agency were, in legal effect, those of
De Poli himself. De Poli was the warehouseman and not
Magpantay.
Counsel for the appellants also assail the dictum in our
decision in the Felisa Roman case that section 7 of the
Warehouse Receipts Act "appears to give any warehouse
receipt not marked 'nonnegotiable' 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." The
statement is, perhaps, too broad but it certainly applies in
the present case as against the appellants, all of whom are
ordinary unsecured creditors and none of them is in
position to urge any preferential rights.
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VOL. 47, DECEMBER 20, 1924 69

As instruments of credit, warehouse receipts play a very

important role in modern commerce and the present day
tendency of the courts is towards a liberal construction of
the law in favor of a bona fide holder of such receipts.
Under the Uniform Warehouse Receipts Act, the Supreme
Court of New York in the case of Joseph vs. P. Viane, Inc.
([1922], 194 N. Y. Supp., 235), held the following writing a
valid warehouse receipt:
" 'Original. Lot No. 9. New York, November 19, 1918. P.
Viane, Inc., Warehouse, 511 West 40th Street, New York
City. For account of Alpha Litho. Co., 261 9th Avenue.

Marks: Fox Film Co. 557 Bdles 835½ R. 41 x 54116. Car
Number: 561133. Paul Viane, Inc. E. A. Thompson. P.
Viane, Inc., Warehouse.'"
In the case of Manufacturers' Mercantile Co. vs.
Monarch Refrigerating Co. ([1915], 266 111., 584), the
Supreme Court of Illinois said:
"The provisions of Uniform Warehouse Receipts Act, sec.
2 (Hurd's Rev. St. 1913, c. 114, sec. 242), as to the contents
of the receipt, are for the benefit of the holder and of
purchasers from him, and failure to observe these
requirements does not render the receipt void in the hands
of the holder."
In the case of Hoffman vs. Schoyer ([1892], 143 111.,
598), the court held that the failure to comply with Act III,
April 25, 1871, which requires all warehouse receipts for
property stored in Class C to "distinctly state on their face
the brands or distinguishing marks upon such property,"
for which no consequences, penal or otherwise, are
imposed, does not render such receipts void as against an
assignee for value.
The appellants argue that the receipts were transferred
merely as security for advances or debts and that such
transfer was of no effect without a chattel mortgage or a
contract of pledge under articles 1867 and 1863 of the Civil
Code. This question was decided adversely to the
appellants' contention in the case of Roman vs Asia
70

Banking Corporation, supra,. The Warehouse Receipts Act

is complete in itself and is not affected by previous
legislation in conflict with its provisions or incompatible
with its spirit or purpose. Section 58 provides that within
the meaning of the Act "to 'purchase' includes to take as
mortgagee or pledgee" and " 'purchaser' includes mortgagee
and pledgee." It therefore seems clear that, as to the legal
title to the property covered by a warehouse receipt, a
pledgee is on the same footing as a vendee except that the
former is under the obligation of surrendering his title
upon the payment of the debt secured. To hold otherwise
would defeat one of the principal purposes of the Act, i. e.,
to furnish a basis for commercial credit.
The appellants also maintain that baled hemp cannot be
regarded as fungible goods and that the respective
warehouse receipts are only good for the identical bales of

hemp for which they were issued. This would be true if the
hemp were ungraded, but we can see no reason why bales
of the same government grade of hemp may not, in certain
circumstances, be regarded as fungible goods. Section 58 of
the Warehouse Receipts Act defines fungible goods as
follows:
" 'Fungible goods' means goods of which any unit is, from
its nature or by mercantile custom, treated as the
equivalent of any other unit."
In the present case the warehouse receipts show how
many bales of each grade were deposited; the Government
grade of each bale was clearly and permanently marked
thereon and there can therefore be no confusion of one
grade with another; it is not disputed that the bales within
the same grade were of equal value and were sold by the
assignee for the same price and upon the strength of the
Government grading marks. Moreover, it does not appear
that any of the claimant creditors, except the appellees,
hold warehouse receipts for the goods here in question.
Under these circumstances, we do not think that the
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VOL. 47, DECEMBER 20, 1924 71

court below erred in treating the bales within each grade as

fungible goods under the definition given by the statute. It
is true that sections 22 and 23 provide that the goods must
be kept separated and that the warehouseman may not
commingle goods except when authorized by agreement or
custom, but these provisions are clearly intended for the
benefit of the holders of the receipts and not for the benefit
of the warehouseman. It would, indeed, be strange if the
warehouseman could escape his liability to the owners of
the goods by the simple process of commingling them
without authorization. In the present case the holders of
the receipts have impliedly ratified the acts of the
warehouseman through the pooling agreement
hereinbefore quoted.
The questions so far considered are common to all of the
claims now before us, but each claim has also its separate
features which we shall now briefly discuss:
R. G. Nos. 21000 AND 21004
CLAIMS OF THE BANK OF THE PHILIPPINE ISLANDS

AND THE GUARANTY TRUST COMPANY OF NEW
YORK
The claim of the Bank of the Philippine Islands is

supported by four warehouse receipts, No. 147 for 393 bales
of hemp, No. 148 for 241 bales of hemp, No. 149 for 116
bales of hemp and No. 150 for 217 bales of hemp.
Subsequent to the pooling agreement these warehouse
receipts were signed, endorsed and delivered to the
Guaranty Trust Company of New York, which company,
under a stipulation of October 18,1921, was allowed to
intervene as a party claiming the goods covered by said
receipts, and which claim forms the subject matter of the
appeal R. G. No. 21004. All of the warehouse receipts
involved in these appeals were issued on November 13,
1920, and endorsed over to the Bank of the Philippine
Islands.
On November 16, 1920, De Poli executed and delivered
to said bank a chattel mortgage on the same property de
72

scribed in the receipts, in which chattel mortgage no

mention was made of the warehouse receipts. This
mortgage was registered in the Office of the Register of
Deeds of Manila on November 18, 1920.
The appellants argue that the obligations created by the
warehouse receipts were extinguished by the chattel
mortgage and that the validity of the claim must be
determined by the provisions of the Chattel Mortgage Law
and not by those of the Warehouse Receipts Act, or, in
other words, that the chattel mortgage constituted a
novation of the contract between the parties.
Novations are never presumed and must be clearly
proven. There is no evidence whatever in the record to
show that a novation was intended. The chattel mortgage
was evidently taken as additional security for the funds
advanced by the bank and the transaction was probably
brought about through a misconception of the relative
values of warehouse receipts and chattel mortgages. As the
warehouse receipts transferred the title to the goods to the
bank, the chattel mortgage was both unnecessary and
inefficatious and may be properly disregarded.
Under the seventh assignment of error the appellants

argue that as De Poli was declared insolvent by the Court
of First Instance of Manila on December 8, 1920, only
twentyfive days after the warehouse receipts were issued,
the latter constituted illegal preferences under section 70 of
the Insolvency Act. In our opinion the evidence shows
clearly that the receipts were issued in due and ordinary
course of business for a valuable pecuniary consideration in
good faith and are not illegal preferences.
R. G. No. 21002
CLAIM OF THE HONGKONG & SHANGHAI BANKING

CORPORATION
The warehouse receipts held by this claimantappellee are

numbered A130 for 490 bales of hemp and 321 bales of
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VOL. 47, DECEMBER 20, 1924 73

maguey, No. A134 for 1,970 bales of hemp, No. A135 for
1,173 bales of hemp and No. A137 for 237 bales of hemp,
were issued by De Poli and were endorsed and delivered to
the bank on or about November 8, 1920. The appellants
maintain that the bank at the time of the delivery to it of
the warehouse receipts had reasonable cause to believe
that De Poli was insolvent, and that the receipts therefore
constituted illegal preferences under the Insolvency Law
and are null and void. There is nothing in the record to
support this contention.
The other assignments of error relate to questions which
we have already discussed and determined adversely to the
appellants.
R. G. No. 21003
CLAIM OF THE CHARTERED BANK OF INDIA,

AUSTRALIA & CHINA
This claimant holds warehouse receipts Nos. 131 for 3,808

bales of hemp, A157 for 250 bales of hemp, A132 for 1,878
bales of maguey and A133 for 1,574 bales of maguey. Nos.
A131, A132 and A133 bear the date of November 6, 1920,
and A157 is dated November 19, 1920.
Under the fourth assignment of error, the appellants
contend that the court erred in permitting counsel for the
claimant bank to retract a withdrawal of its claim under

warehouse receipt No: A157. It appears from the evidence
that during the examination of the witness Fairnie, who
was the local manager of the claimant bank, counsel f or
the bank, after an answer made by Mr. Fairnie to one of his
questions, withdrew the claim under the warehouse receipt
mentioned, being under the impression that Mr, Fairnie's
answer indicated that the bank had knowledge of De Poli's
pending insolvency at the time the receipt was delivered to
the bank. Later on in the proceedings the court, on motion
of counsel, reinstated the claim. Counsel explains that by
reason of Mr. Fairnie's Scotch accent and rapid
74

style of delivery, he misunderstood his answer and did not

discover his mistake until he read the transcript of the
testimony.
The allowance of the reinstatement of the claim rested
in the sound discretion of the trial court and there is
nothing in the record to show that this discretion was
abused in the present instance.
Under the fifth assignment of error appellants argue
that the manager of the claimant bank was informed of De
Poli's difficulties on November 19, 1920, when he received
warehouse receipt No. A157 and had reasonable cause to
believe that De Poli was insolvent and that the transaction
therefore constituted an illegal preference.
Mr. Fairnie, who was the manager of the claimant bank
at the time the receipt in question was delivered to the
bank, testifies that he had no knowledge of the impending
insolvency and Mr. De Poli, testifying as a witness for the
assigneeappellee, stated that he furnished the bank no
information as to his failing financial condition at any time
prior to the filing of the petition for his insolvency, but that
on the contrary he advised the bank that his financial
condition was sound.
The testimony of the same witnesses also shows that the
bank advanced the sum of P20,000 to De Poli at Cebu
against the same hemp covered by warehouse receipt No.
A157 as early as October, 1920, and that upon shipment
thereof to Manila the bill of lading, or shipping documents,
were made out in favor of the Chartered Bank and
forwarded to it at Manila; that upon the arrival of the
hemp at Manila, Mr. De Poli, by giving a trust receipt to
the bank for the bill of lading, obtained possession of the

hemp with the understanding that the warehouse receipt
should be issued to the bank therefor, and it was in
compliance with that agreement previously made that the
receipt was issued on November 19, 1920. Upon the facts
stated we cannot hold that the bank was given an illegal
preference by the endorsement to it of the warehouse re
75
VOL. 47, DECEMBER 20, 1924 75

La Insular vs. Jao Oge
ceipt in question. (Mitsui Bussan Kaisha vs. Hongkong &

Shanghai Banking Corporation, 36 Phil., 27.)
R. G. No. 21006
CLAIMS OF THE ASIA BANKING CORPORATION
Claimant holds warehouse receipts Nos. A153, dated

November 18, 1920, for 139 bales of tobacco, A154, dated
May 22, 1920, for 360 bales of hemp, A93, dated July 8,
1920, for 382 bales of hemp, A103, dated August 18, 1920,
for 544 bales of hemp, A112, dated September 15, 1920, for
250 bales of hemp and A111, dated September 15, 1920,
for 207 bales of maguey.
The assignments of error in connection with this appeal
are, with the exception of the fourth, similar to those in the
other cases and need not be further discussed.
Under the fourth assignment, the appellants contend
that warehouse receipts Nos. A153, A154 and A155 were
illegal preferences on the assumption that the claimant
bank must have had reasonable reasons to believe that De
Poli was insolvent on November 18, 1920, when the three
receipts in question were received. In our opinion, the
practically undisputed evidence of the claimant bank
sufficiently refutes this contention. For the reasons
hereinbefore stated the judgments appealed from are
hereby affirmed, without costs. So ordered.
Street, Malcolm, Avanceña, Villamor, and Romualdez,

JJ., concur.
Judgments affirmed.
_________________
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9/21/2017 PHILIPPINE REPORTS ANNOTATED VOLUME 047

[Nos. 21000, 21002­21004, and 21006. December 20, 1924]

In the matter of the involuntary insolvency of Umberto de

1. WRITTEN INSTRUMENTS; CONSTRUCTION.—

58 PHILIPPINE REPORTS ANNOTATED

Bank of the Philippine Islands vs. Herridge

2. WAREHOUSE RECEIPTS; CONSTRUCTION.—As

3. ID.; ID.—A warehouseman deposited merchandise in his

4. ID.; CHATTEL MORTGAGE; NOVATION.—A chattel

transferred to the same bank by warehouse receipt. Held:

APPEAL from five judgments of the Court of First Instance

The present appeals, all of which relate to the Insolvency of

VOL. 47, DECEMBER 20, 1924 59

also a licensed public warehouseman, though most of the

products bought by him for exportation. Upon the

60 PHILIPPINE REPORTS ANNOTATED

Among the property taken over by the assignee was the

"Whereas, the parties hereto are preferred creditors of

"QUEDANS OR WAREHOUSE RECEIPTS OF THE

"No. A­131 for 3,808 bales hemp.

VOL. 47, DECEMBER 20, 1924 61

"QUEDANS OR WAREHOUSE RECEIPTS OF THE

"QUEDANS OR WAREHOUSE RECEIPTS OF THE ASIA

"No. 57 issued May 22, 1920, 360 bales hemp.

"QUEDANS OR WAREHOUSE RECEIPTS OF THE BANK

"No. 147 issued November 13, 1920, 393 bales hemp.

"And whereas much of the hemp and maguey covered by

to one of the parties hereto has also been transferred by

62 PHILIPPINE REPORTS ANNOTATED

hereto or of any of them shall de ajudicated to them

"Manila, P. L, July 20, 1921.

Claims for hemp and maguey covered by the respective

VOL. 47, DECEMBER 20, 1924 63

by the receipts among the holders thereof proportionately

64 PHILIPPINE REPORTS ANNOTATED

shown by the language used by them, they never intended

"(a) The location of the warehouse where the goods are

"A warehouseman shall be liable to any person injured

VOL. 47, DECEMBER 20, 1924 65

Section 7 of the Act reads:

"209 Estero de Binondo

"QUEDAN No. A­112

Marcas Bultos Clase de "Quedan depositados en estos

66 PHILIPPINE REPORTS ANNOTATED

"3.a El almacenaje será de quince

The receipt is not marked "nonnegotiable" or "not

VOL. 47, DECEMBER 20, 1924 67

ceived are to be delivered to bearer, to a specified person or

68 PHILIPPINE REPORTS ANNOTATED

translated into the English language as "by," but "por" also

from a person insufficiently acquainted with the Spanish

VOL. 47, DECEMBER 20, 1924 69

As instruments of credit, warehouse receipts play a very

City. For account of Alpha Litho. Co., 261 9th Avenue.

70 PHILIPPINE REPORTS ANNOTATED

Banking Corporation, supra,. The Warehouse Receipts Act

warehouse receipts are only good for the identical bales of

VOL. 47, DECEMBER 20, 1924 71

court below erred in treating the bales within each grade as

R. G. Nos. 21000 AND 21004

CLAIMS OF THE BANK OF THE PHILIPPINE ISLANDS

The claim of the Bank of the Philippine Islands is

72 PHILIPPINE REPORTS ANNOTATED

[Nos. 21000, 2100221004, and 21006. December 20, 1924]

"No. A131 for 3,808 bales hemp.

"QUEDAN No. A112

The warehouse receipts held by this claimantappellee are

Claimant holds warehouse receipts Nos. A153, dated