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Home > ChanRobles Virtual Law Library > Philippine Supreme Court Jurisprudence > G.R.
No. L-21000, 21002-21004, and 21006


EN BANC
G.R. Nos. L-21000, 21002-21004, and 21006 December
20, 1924
In the matter of the involuntary insolvency of Umberto de
Poli. BANK OF THE PHILIPPINE ISLANDS, ET
AL.,claimants-appellees, vs. J.R. HERRIDGE, assignee of
the insolvent estate of U. de Poli, BOWRING and CO.,
C.T. BOWRING and CO., LTD., and T.R.
YANGCO, creditors-appellants.

OSTRAND, J .: chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles virtual law library
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 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.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
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.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
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 landing attached, and the entire
proceeds of the export sale were received by the bank and
credited to the current account of De Poli.chanroblesvirtualawl ibrary chanrobles virtual law library
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 property of the
estate.chanroblesvirtua lawlibrary chanrobles virtual law library
Among the property taken over 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.chanroblesvir tualawlibrary chanrobles virtual law li brary
On July 20, 1921, the banks above-mentioned and who claim
preference under the warehouse receipts held by them, entered
into the following stipulation:
It is stipulated by the 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:chanrobles virtual law library
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. A-131 for 3,808 bales hemp.
No. A-157 for 250 bales hemp.
No. A-132 for 1,878 bales maguey.
No. A-133 for 1,574 bales maguey. Nos. 131, 132 and 133 all
bear date November 6, 1920, and No. 157, November 19,
1920.
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 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.
No. 148 issued November 13, 1920, 241 bales hemp.
No. 149 issued November 13, 1920, 116 bales hemp.
No. 150 issued November 13, 1920, 217 bales hemp.
And whereas much of the hemp and maguey covered by the
above mentioned quedans was either non-existent 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 andchanrobles virtual law l ibrary
Whereas, the hemp and maguey covered by said quedans is to
a considerable extent commingled.chanroblesvirtualawl ibrary chanrobles virtual law library
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 hereto or of any of
them shall be adjudicated 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 for the disposition of commingled
fungible goods.
Manila, P.I., July 20, 1921.
GIBBS, MCDONOUGH & JOHNSON
By A. D. GIBBS
Attorneys for the Chartered Bank
of India, Australia & China
FISHER & DEWITT
By C.A. DEWITT
Attorneys for the Hongkong & Shanghai
Banking Corporation
WOLFSON, WOLFSON & 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.chanroblesvirt ualawlibrary chanrobles virtual law librar y
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 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.
A-153 and A-155 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.chanroblesvirtualawlibrary chanrobles virtual law library
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 shown by
the language used by them, they never intended to enter into."chanrobles
virtual law l ibrary
These very positive assertions have, as far as we can see, no
foundation in fact and rest mostly on misconceptions.chanroblesvirtualawlibrary chanrobles virtual law li brary
Section 2 of the Warehouse Receipts Act (No. 2137)
prescribes the essential terms of such receipts and reads as
follows:
Warehouse receipts needed not be in any particular form, but
every such receipt must embody within its written or printed
terms - chanrobles virtual law library
(a) The location of the warehouse where the goods are stored,chanrobles
virtual law l ibrary
(b) The date of issue of the receipt,chanrobles virtual law library
(c) The consecutive number of the receipt,chanrobles virtual law library
(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,chanrobles virt ual law li brary
(e) The rate of storage charges,chanrobles virtual law l ibrary
(f) A description of the goods or of the packages containing
them,chanrobles virtual law l ibrary
(g) The signature of the warehouseman, which may be made
by his authorized agent,chanrobles virtual law library
(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, andchanrobles virtual law library
(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.chanroblesvirtualawl ibrary chanrobles virtual law library
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.
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. A-112, which reads as follows:
U. DE POLI
209 Estero de Binondo
BODEGAS

QUEDAN No. A-112
Almacen Yangco ----chanrobles virtual law library
Por -------
Marcas
UDP
Bultos
250
Clase de las
mercancias
Fardos
abaca
"Quedan depositados en estos
almacenes por orden del Sr. U. de
Poli la cantidad de doscientos
cincuenta fardos abaca segun
marcas detalladas al margen, y
con arreglo a las condiciones
siguientes:chanrobles vir tual law l ibrary
1.
a
Estan asegurados contra riesgo
de incendios exclusivamente,
segun las condiciones de mis
polizas; quedando los demas por
cuenta de los depositantes.chanroblesvirtualawlibrary chanrobles virtual law li brary
2.
a
No se responde del peso, clase
ni mal estado de la mercancia
depositada.chanroblesvirt ualawlibrary chanrobles virtual law library
3.
a
El almacenaje sera de quince
centimos fardo por mes.
I certify that I am the
sole owner of the
merchandise herein
described.
(Sgd.) "UMBERTO DE
POLI
4.
a
El seguro sera de un octavo
por ciento mensual por el total.
Tanto el almacenaje como el
seguro se cobraran por meses
vencidos, y con arreglo a los dias
devengados siendo el minimo para
los efectos del cobro 10 dias.
5.
a
No seran entregados dichos
efectos ni parte de los mismos sin
la presentacion de
este "quedan" para su
correspondiente deduccion.
6.
a
El valor para el seguro de
estas mercancias es de pesos
filipinos nueve mil
quinientos solamentes.
7.
a
Las operaciones de entrada y
salida, seran de cuenta de los
depositantes, pudiendo hacerlos
con sus trabajadores, o pagando
los que le sean facilitados, con
arreglo a los tipos que tengo
convenido con los mios.
Valor del Seguro
P9,500.
V. B.
(Sgd.) UMBERTO DE
POLI
Manila, 15 de sept. de 1920.
El Encargado,
(Sgd.) I. MAGPANTAY
The receipt is not marked "nonnegotiable" or "not negotiable,"
and is endorsed "Umberto de Poli."chanrobles virtual law library
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 received 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.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
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:chanrobles virtual law library
The rule is well-known 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 world "por preceding
the word "orden" is generally 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.chanroblesvirt ualawlibrary chanrobles virtual law library
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
that 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?chanrobles virtual law
library
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 Ireneo
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.chanroblesvir tualawlibrary chanrobles virtual law li brary
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.chanroblesvirtualawlibrary chanrobles virtual law library
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 835- R. 41 x 54-116. 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 III., 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 III., 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.chanroblesvir tualawlibrary chanrobles virtual law
library
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 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.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
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 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 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.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
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
YORKchanrobles virtual law library
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 the Bank of the Philippine Islands.chanroblesvirtualawli brary chanrobles virtual law li brary
On November 16, 1920, De Poli executed and delivered to
said bank a chattel mortgage on the same property described 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.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
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.chanroblesvirtualawlibrary chanrobles virtual law li brary
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.chanroblesvirtualawl ibrary chanrobles virtual law library
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 twenty-five
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
CORPORATIONchanrobles virtual law library
The warehouse receipts held by this claimant-appellee are
numbered A-130 for 490 bales of hemp and 321 bales of
maguey, No. A-134 for 1,970 bales of hemp, No. A-135 for
1,173 bales of hemp and No. A-137 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.chanroblesvirtualawlibrary chanrobles virtual law library
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 & CHINAcha nrobles virtual law library
This claimant holds warehouse receipts Nos. 131 for 3,808
bales of hemp, A-157 for 250 bales of hemp, A-132 for 1,878
bales of maguey and A-133 for 1,574 bales of maguey. Nos.
A-131, A-132 and A-133 bear the date of November 6, 1920,
and A-157 is dated November 19, 1920.chanroblesvirtualawl ibrary chanrobles virtual law library
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. A-157. It appears from the evidence that during the
examination of the witness Fairnie, who was the local manager
of the claimant bank, counsel for 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 Scoth accent and rapid
style of delivery, he misunderstood his answer and did not
discover his mistake until he read the transcript of the
testimony.chanroblesvirtualawl ibrary chanrobles virtual law library
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.chanroblesvirt ualawlibrary chanrobles virtual law library
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. A-157 and had reasonable cause to
believe that De Poli was insolvent and that the transaction
therefore constituted an illegal preference.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
Mr. Fairnie, who was the manager of the claimant bank at the
time the receipt in the 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
assignee-appellee, 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.chanroblesvirtualawl ibrary chanrobles virtual law library
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. A-157 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 receipt in
question. (Mitsui Bussan Kaisha vs. Hongkong & Shanghai
Banking Corporation, 36 Phil., 27.)
R.G. No. 21006
CLAIM OF THE ASIA BANKING CORPORATIONchanrobles vir tual law l ibrary
Claimant holds warehouse receipts Nos. A-153, dated
November 18, 1920, for 139 bales of tobacco, A-154, dated
November 18, 1920, for 211 bales of tobacco, A-155, dated
November 18, 1920, for 576 bales of tobacco, A-57, dated
May 22, 1920, for 360 bales of hemp, A-93, dated July 8,
1920, for 382 bales of hemp, A-103, dated August 18, 1920,
for 544 bales of hemp, A-112, dated September 15, 1920, for
250 bales of hemp and A-111, dated September 15, 1920, for
207 bales of maguey.chanroblesvirtualawl ibrary chanrobles virtual law library
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.chanroblesvirt ualawlibrary chanrobles virtual law li brary
Under the fourth assignment, the appellants contend that
warehouse receipts Nos. A-153, A-154 and A-155 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.chanroblesvirtualawlibrary chanrobles virtual law library
For the reasons hereinbefore stated the judgments appealed
from are hereby affirmed, without costs. So ordered.chanroblesvirtualawlibrary chanrobles virtual law l ibrary
Street, Malcolm, Avancea, Villamor, and Romualdez, JJ.,
concur.





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