SECOND DIVISION

[G.R. Nos. 21000, 21002-21004 & 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 & CO., C.T. BOWRING & CO., LTD., AND T. T. YANGCO ,
creditors-appellants.

Crossfield & O'Brien, J. A. Wolfson and Camus & Delgado for appellants.
Hartigan & Welch, Fisher & DeWitt and Gibbs & McDonough for appellees.

SYLLABUS

1. WRITTEN INSTRUMENTS CONSTRUCTION.-Whenever possible, writing must

be so construed as to give effect to their general intent and so as to avoid absurdities.
2. WAREHOUSE RECEIPTS; CONSTRUCTION. — As instrument 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 de
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 speci ed 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 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 warehouse receipt.

DECISION

OSTRAND , J : p

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.
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 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.
In order to nance his commercial operation 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 store 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 con rmed by
the court on December 24, 1920. The assignee quali ed on January 4, 1921, and on the
same date the clerk of the court assigned and delivered to him the property of the
estate.
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 above-mentioned 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. A-131 for 3,808 bales hemp.
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 "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, 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.
"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 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 by the warehouse receipts of the parties hereto or of any
of them shall de 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
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 "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 rm Wise & Co., one of the
unsecured creditors of the insolvent on June 25, 1921, presented speci c written
objections to the claims of the banks of the ground of the insuf ciency 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 receipt in question were valid
negotiable warehouse receipt 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, A-154 and A-155 to the Asia Banking Corporation. Form 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 speci ed person, or to a speci ed 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."

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
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 terms of such receipts and reads as follows:
"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."
Section 7 of the Act reads:
"A nonnegotiable shall have plainly place 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 __________
"Por _______________________
Marcas Bultos Clase de las

mercancias
"UDP 250 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
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 margen, y con arreglo a las condiciones siguientes:
"1. Estan asegurados contra riesgo de incendios exclusivamente, segun las
condiciones de mis polizas; quedando los demas por cuenta de los
depositantes.
"2. No se responde del peso, clase ni mal estade de la mercancia depositada.
"3. El almacenaje sera de quince centimos fardo por mes.
"I certify that I am the sole owner "4. El seguro sera de un octavo por of the
merchandise herein ciento mensual por el total. Tanot described. (SGD.) el
almacenaje como el seguro se "UMBERTO DE POLI cobraran por meses vencidos,
y con arreglo a los dias devengados siendo el minimo para los efectos del cobro
10 dias.
"5. No seran entregados dichos efectos ni parte de los mismos sin la
presentacion de este 'quedan' para su correspondiente deduccion.
"6. El valor para el seguro de estas mercancias es de pesos lipinos nueve mil
quinientos solamente.
"7. Las operaciones de entrada y salida, seran de cuenta delos 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. "Manila, 15 de sept. de 1920.
"V. B. "El Encargado,
(Sgd.) "UMBERTO DE POLI (Sgd.) "I MAGPANTAY"
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 received are to be delivered to
bearer, to a speci ed 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 speci ed 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 receipt 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 brie y state some of our reasons for the interpretation
placed upon that phrase in the Felisa Roman case:
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
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 is dif cult 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 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 insuf ciently
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 the 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 super uous 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.
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 de 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 835-1/2 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 Ill., 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 bene t 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 Ill., 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
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 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
Banking Corporation, supra. The Warehouse Receipt Act is complete in itself and is not
affected by previous legislation in con ict 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 court below erred in treating the bales within
each grade as fungible goods under the de nition given by the statute. It is true that
section 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 bene t of the holders of the
receipts and not for the bene t 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 rati ed 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
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 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 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 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.
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
twenty- ve 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 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 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, 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.
Under the fourth assignment of error, the appellants contend that the court erred
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 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. Fairnis'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 style of delivery, he misunderstood his answer and he 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 fth assignment of error appellants argue that the manager of the
claimant bank was informed of De Poli's dif culties 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.
Mr. Fairnie, who was the manager of the claimant bank at the time the receipt in
question was delivered to the bank, testi es 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 nancial condition at
any time prior to the ling 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. 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 CORPORATION
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.
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. 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
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 on November 18, 1920, when the three receipts in question were received. In our
opinion, the practically undisputed evidence of the claimant bank suf ciently refutes
this contention.
For the reasons hereinbefore stated the judgments appealed from are hereby
affirmed, without costs. So ordered.
Street, Malcolm, Avancena, Villamor, and Romualdez, JJ., concur.

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