Bengzon, Padilla, Tuason, Reyes, Jugo, Bautista Angelo and Labrador, JJ., concur. Separate Opinions PARAS, C.J.

, dissenting: The plaintiff seeks to recover from the defendant Philippine National Bank the sum of P54,952.75, representing the value of 2,198.11 piculs of sugar covered by two quedans indorsed and delivered to the bank by the administratrix of the estate of the deceased Pedro Rodriguez to secure the indebtedness of the latter in the amount of P22,128.44. It is alleged that when the two quedans were indorsed and delivered to the defendant bank in or about January, 1942, the sugar was in deposit at the Bogo-Medellin Sugar Co., Inc.; that said sugar was lost during the war; that the indebtedness of P22,128.44 was liquidated in 1948 by the estate of the deceased Pedro Rodriguez and that, notwithstanding demands, the defendant bank refused to credit the plaintiff with the value of the sugar lost. There is no question as to the existence of the sugar covered by the two quedans, or as to the indorsement and delivery of said quedans to the defendant bank The Court of First Instance of Manila which decided against the plaintiff and held that the defendant bank is not liable for the loss of the sugar in question, indeed stated that the only question that arises is whether the indorsement of the warehouse receipts transferred the ownership of the sugar to the defendant bank; that if it did, the bank should suffer the loss, but if it did not, the loss should be for the account of the estate of the deceased Pedro Rodriguez. In dismissing the plaintiff's action, the trial court held that the indorsement of the quedans to the defendant bank did not carry with it the transfer of ownership of the sugar, as the indorsement and delivery were effected merely to secure the payment of an indebtedness, to facilitate the sale of the sugar, and to prevent the debtor from disposing of it without the knowledge and consent of the defendant bank. The plaintiff has appealed. The applicable legal provision is section 41 of Act No. 2137, otherwise known as the Warehouse Receipts Law, which reads as follows: "SEC. 41. Rights of person to whom a receipt has been negotiated. A person to whom a negotiable receipt has been duly negotiated acquires thereby: "(a) Such title to the goods as the person negotiating the receipt to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the depositor or person to whose order the goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith for value, and. "(b) The direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt as fully as if the warehouseman had contracted directly with him." This provision plainly states that a person to whom a negotiable receipt (such as the sugar quedans in question) has been duly negotiated acquires title to the goods covered by the receipt, as well as the possession of the goods through the warehouseman, as if the latter had contracted directly with the person to whom the negotiable receipt has been duly negotiated. Consequently, the defendant bank to whom the two quedans in question have been indorsed and delivered, thereby acquired the ownership of the sugar covered by said quedans, with the logical result that the loss of the article should be borne by the defendant bank. The fact that the quedans were indorsed and delivered as a security for the payment of an indebtedness did not prevent the bank from acquiring ownership, since the only effect of the transfer was that the debtor could reacquire said ownership upon payment of his obligation. Section 41 of Act No. 2137 had already been construed by this court in the sense that ownership passes to the indorsee, although the quedans are indorsed and delivered merely as a security. (Sy Cong Bieng vs. Hongkong &

Shanghai Bank, 56 Phil., 498; Philippine Trust Co. vs. Philippine National Bank, 42 Phil., 438; Bank of the Philippine Islands vs. Herridge, 47 Phil., 57; Roman vs. Asia Banking Corporation, 46 Phil., 405.) The relation of a pledgor of a warehouse receipt, duly indorsed and delivered to the pledgee, is substantially analogous to the relation of a vendor and vendee, with right of repurchase. The vendor a retro actually transfers the ownership of the property sold to the vendee, but the former may reacquire said ownership upon payment of the repurchase price. If the property sold a retro is lost before being repurchased, the vendee naturally has to bear the loss, with the vendor having nothing to repurchase. But if the loss should occur after the repurchase price has been paid but before the property sold a retro is actually reconveyed, the vendee is bound to return to the vendor only the repurchase price paid, and not the value of the property. In my opinion, therefore, the loss of the sugar should be for the account of the defendant bank, which should return to the plaintiff P22,128.44, the amount of the indebtedness of the estate of the deceased Pedro Rodriguez which had already been paid in 1948, without however being liable for the difference between P54,952.75 (actual value of the sugar) and the amount of said payment. The appealed judgment should therefore be reversed and the defendant bank sentenced to pay to the plaintiff the sum of P22,128.44.chanroblesvirtualawlibrary Pablo, J., concurs.
G.R. No. L-17825 June 26, 1922

In the matter of the Involuntary insolvency of U. DE POLI. FELISA ROMAN, claimant-appellee, vs. ASIA BANKING CORPORATION, claimant-appellant. Wolfson, Wolfson and Schwarzkopf and Gibbs, McDonough & Johnson for appellant. Antonio V. Herrero for appellee. OSTRAND, J.: This is an appeal from an order entered by the Court of First Instance of Manila in civil No. 19240, the insolvency of Umberto de Poli, and declaring the lien claimed by the appellee Felisa Roman upon a lot of leaf tobacco, consisting of 576 bales, and found in the possession of said insolvent, superior to that claimed by the appellant, the Asia Banking Corporation. The order appealed from is based upon the following stipulation of facts: It is hereby stipulated and agreed by and between Felisa Roman and Asia Banking Corporation, and on their behalf by their undersigned attorneys, that their respective rights, in relation to the 576 bultos of tobacco mentioned in the order of this court dated April 25, 1921, be, and hereby are, submitted to the court for decision upon the following: I. Felisa Roman claims the 576 bultos of tobacco under and by virtue of the instrument, a copy of which is hereto attached and made a part hereof and marked Exhibit A. II. That on November 25, 1920, said Felisa Roman notified the said Asia Banking Corporation of her contention, a copy of which notification is hereto attached and made a part hereof and marked Exhibit B. III. That on November 29, 1920, said Asia Banking Corporation replied as per copy hereto attached and marked Exhibit C.

IV. That at the time the above entitled insolvency proceedings were filed the 576 bultos of tobacco were in possession of U. de Poli and now are in possession of the assignee. V. That on November 18, 1920, U. de Poli, for value received, issued a quedan, covering aforesaid 576bultos of tobacco, to the Asia Banking Corporation as per copy of quedan attached and marked Exhibit D. VI. That aforesaid 576 bultos of tobacco are part and parcel of the 2,777 bultos purchased by U. de Poli from Felisa Roman. VII. The parties further stipulate and agree that any further evidence that either of the parties desire to submit shall be taken into consideration together with this stipulation. Manila, P. I., April 28, 1921. (Sgd.) ANTONIO V. HERRERO Attorney for Felisa Roman (Sgd.) WOLFSON, WOLFSON & SCHWARZKOPF Attorney for Asia Banking Corp. Exhibit A referred to in the foregoing stipulation reads: 1. Que la primera parte es duea de unos dos mil quinientos a tres mil quintales de tacabo de distintas clases, producidos en los municipios de San Isidro, Kabiaw y Gapan adquiridos por compra con dinero perteneciente a sus bienes parafernales, de los cuales es ella administradora. 2. Que ha convenido la venta de dichos dos mil quinientos a tres mil quintales de tabaco mencionada con la Segunda Parte, cuya compraventa se regira por las condiciones siguientes: (a) La Primera Parte remitira a la Segunda debidamente enfardado el tabaco de que ella es propietaria enbultos no menores de cincuenta kilos, siendo de cuenta de dicha Primera Parte todos los gastos que origine dicha mercancja hasta la estacion de ferrocarril de Tutuban, en cuyo lugar se hara cargo la Segunda y desde cuyo instante seran de cuenta de esta los riesgos de la mercancia. (b) El precio en que la Primera Parte vende a la Segunda el tabaco mencionada es el de veintiseis pesos (P26), moneda filipina, por quintal, pagaderos en la forma que despues se establece. (c) La Segunda Parte sera la consignataria del tabaco en esta Ciudad de Manila quien se hara cargo de el cuando reciba la factura de embarque y la guia de Rentas Internas, trasladandolo a su bodega quedando en la misma en calidad de deposito hasta la fecha en que dicha Segunda Parte pague el precio del mismo, siendo de cuenta de dicha Segunda Parte el pago de almacenaje y seguro. (d) LLegada la ultima expedicion del tabaco, se procedera a pesar el mismo con intervencion de la Primera Parte o de un agente de ella, y conocido el numero total de quintales remitidos, se hara liquidacion del precio a cuenta del cual se pagaran quince mil pesos (P15,000), y el resto se dividira en cuatro pagares vencederos cada uno de ellos treinta dias despues del anterior pago; esto es, el primer pagare vencera a los treinta dias de la fecha en que se hayan pagado los quince mil pesos, el segundo a igual tiempo del anterior pago, y asi sucesivamente; conviniendose que el capital debido como precio del tabaco devengara un interes del diez por ciento anual. Los plazos concedidos al comprador para el pago del precio quedan sujetos a la condicion resolutoria de que si antes del vencimiento de cualquier plazo, el comprador vendiese parte del tabaco en proporcion al importe de cualquiera de los pagares que restasen por vencer, o caso de que vendiese, pues se conviene para este caso que desde el momento en que la Segunda Parte venda el tabaco, el

deposito del mismo, como garantia del pago del precio, queda cancelado y simultaneamente es exigible el importe de la parte por pagar. Leido este documento por los otorgantes y encontrandolo conforme con lo por ellos convenido, lo firman la Primera Parte en el lugar de su residencia, San Isidro de Nueva Ecija, y la Segunda en esta Ciudad de Manila, en las fechas que respectivamente al pie de este documento aparecen. (Fdos.) FELISA ROMAN VDA. DE MORENO U. DE POLI Firmado en presencia de: (Fdos.) ANTONIO V. HERRERO T. BARRETTO ("Acknowledged before Notary") Exhibit D is a warehouse receipt issued by the warehouse of U. de Poli for 576 bales of tobacco. The first paragraph of the receipt reads as follows: Quedan depositados en estos almacenes por orden del Sr. U. de Poli la cantidad de quinientos setenta y seis fardos de tabaco en rama segun marcas detalladas al margen, y con arreglo a las condiciones siguientes: In the left margin of the face of the receipts, U. de Poli certifies that he is the sole owner of the merchandise therein described. The receipt is endorced in blank "Umberto de Poli;" it is not marked "non-negotiable" or "not negotiable." Exhibit B and C referred to in the stipulation are not material to the issues and do not appear in the printed record. Though Exhibit A in its paragraph (c) states that the tobacco should remain in the warehouse of U. de Poli as a deposit until the price was paid, it appears clearly from the language of the exhibit as a whole that it evidences a contract of sale and the recitals in order of the Court of First Instance, dated January 18, 1921, which form part of the printed record, show that De Poli received from Felisa Roman, under this contract, 2,777 bales of tobacco of the total value of P78,815.69, of which he paid P15,000 in cash and executed four notes of P15,953.92 each for the balance. The sale having been thus consummated, the only lien upon the tobacco which Felisa Roman can claim is a vendor's lien. The order appealed from is based upon the theory that the tobacco was transferred to the Asia Banking Corporation as security for a loan and that as the transfer neither fulfilled the requirements of the Civil Code for a pledge nor constituted a chattel mortgage under Act No. 1508, the vendor's lien of Felisa Roman should be accorded preference over it. It is quite evident that the court below failed to take into consideration the provisions of section 49 of Act No. 2137 which reads: Where a negotiable receipts has been issued for goods, no seller's lien or right of stoppage in transitu shall defeat the rights of any purchaser for value in good faith to whom such receipt has been negotiated, whether such negotiation be prior or subsequent to the notification to the warehouseman who issued such receipt of the seller's claim to a lien or right of stoppage in transitu. Nor shall the warehouseman be obliged to deliver or justified in delivering the goods to an unpaid seller unless the receipt is first surrendered for cancellation.

The term "purchaser" as used in the section quoted, includes mortgagee and pledgee. (See section 58 (a) of the same Act.) In view of the foregoing provisions, there can be no doubt whatever that if the warehouse receipt in question is negotiable, the vendor's lien of Felisa Roman cannot prevail against the rights of the Asia Banking Corporation as the indorse of the receipt. The only question of importance to be determined in this case is, therefore, whether the receipt before us is negotiable. The matter is not entirely free from doubt. The receipt is not perfect: It recites that the merchandise is deposited in the warehouse "por orden" instead of "a la orden" or "sujeto a la orden" of the depositor and it contain 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. We think, however, that it must be considered a negotiable receipt. A warehouse receipt, like any other document, must be interpreted according to its evident intent (Civil Code, arts. 1281 et seq.) and it is quite obvious that the deposit evidenced by the receipt in this case was intended to be made subject to the order of the depositor and therefore negotiable. That the words "por orden" are used instead of "a la orden" is very evidently merely a clerical or grammatical error. If any intelligent meaning is to be attacked to the phrase "Quedan depositados en estos almacenes por orden del Sr. U. de Poli" it must be held to mean "Quedan depositados en estos almacenes a la orden del Sr. U. de Poli." The phrase must be construed to mean that U. de Poli was the person authorized to endorse and deliver the receipts; any other interpretation would mean that no one had such power and the clause, as well as the entire receipts, would be rendered nugatory. Moreover, the endorsement in blank of the receipt in controversy together with its delivery by U. de Poli to the appellant bank took place on the very of the issuance of the warehouse receipt, thereby immediately demonstrating the intention of U. de Poli and of the appellant bank, by the employment of the phrase "por orden del Sr. U. de Poli" to make the receipt negotiable and subject to the very transfer which he then and there made by such endorsement in blank and delivery of the receipt to the blank. As hereinbefore stated, the receipt was not marked "non-negotiable." Under modern statutes the negotiability of warehouse receipts has been enlarged, the statutes having the effect of making such receipts negotiable unless marked "non-negotiable." (27 R. C. L., 967 and cases cited.) Section 7 of the Uniform Warehouse Receipts Act, says: A non-negotiable receipt shall have plainly placed upon its face by the warehouseman issuing it '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. This section shall not apply, however, to letters, memoranda, or written acknowledgments of an informal character. This section appears to give any warehouse receipt not marked "non-negotiable" or "not negotiable" practically the same effect as a receipt which, by its terms, is negotiable provided the holder of such unmarked receipt acquired it for value supposing it to be negotiable, circumstances which admittedly exist in the present case. We therefore hold that the warehouse receipts in controversy was negotiable and that the rights of the endorsee thereof, the appellant, are superior to the vendor's lien of the appellee and should be given preference over the latter. The order appealed from is therefore reversed without costs. So ordered. Araullo, C.J., Malcolm, Avancea, Villamor, Johns and Romualdez, JJ., concur.

AMERICAN FOREIGN BANKING CORPORATION, claimant-appellee, 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. Crossfield and OBrien for the appellant assignee. J. A. Wolfson for the appellants Bowring and Co. and C. T. Bowring and Co., Ltd. Camus and Delgado for the appellant Yangco. Ross, Lawrence and Selph for appellee. OSTRAND, J.: This is an appeal from the following decision of the Court of First Instance of Manila, the Honorable George R. Harvey presiding: On or about April 28, 1920, the debtor, U. de Poli, a licensed public warehouseman in the City of Manila, issued warehouse receipt No. A-48, commonly known as a quedan, for 560 bales of tobacco, which tobacco was particularly described therein as Cagayan tabacco en rama with specified marks thereon. Said U. de Poli certified over his signature on the face of said quedan as follows: I certify that I am the sole owner of the merchandise herein described. (Exhibit A of American Foreign Banking Corporation.) This quedan was endorsed in bank by U. de Poli, who delivered it to the American Foreign Banking Corporation as security upon his overdraft, then amounting to about P40,000. The claimant bank, by its motion of April 23, 1921, asked that the assignee be ordered to deliver to said bank the 560 bales of leaf tobacco called for in said quedan upon surrender of the original of the warehouse receipt. In answer to said motion the assignee denied that the 560 bales of Cagayan tobacco listed in said Exhibit A are now in his possession as assignee of said insolvent estate, and denied that said Exhibit A constitutes a negotiable warehouse receipt under the law, for the reason that it does not comply with the provisions of sections 2, 4 or 5 of the Warehouse Receipt Act; and that, even assuming that said 560 bales of leaf tobacco were now in his possession, he denies that the claimant bank is the owner thereof, or has any lien thereon, or any rights therein, by virtue of said receipt, Exhibit A; and by his amended answer alleges that said Exhibit A was not delivered by the insolvent, U. de Poli, to the claimant for the purpose of transferring the ownership of the property described therein to it, but only as collateral security for a preexisting indebtedness by way of overdraft, for which purpose it is under the law invalid and wholly ineffective as against the general creditors of the said insolvent estate. Substantially the same answer was made by Wise & Co. as general creditors. There has been no question raised about the authenticity of the quedan. U. de Poli testified that he issued it to said bank as security for his said overdraft; that the tobacco was in the bodega on Calle Acarraga when he gave the quedan to the bank; that the tobacco had to be stripped and booked, and, for this reason there might have been a slight difference between the quantity given in the quedan and the quantity at present in existence in the warehouse; that he knows that the tobacco was in the warehouse at the time he became insolvent, because he had given an order to fill an order for stripped

tobacco, and that the tobacco was taken from the pile which he had given in guaranty to the American Foreign Banking Corporation; that Vicente Molina was in charge of the warehouse, and that he (De Poli) acted upon the data furnished to him by Mr. Molina. The evidence shows that there were only 530 bales of this tobacco. The quedan (Exhibit A) calls for Cagayan tobacco, but it was stipulated in this case that the 530 bales of tobacco claimed by the American Foreign Banking Corporation are Isabela tobacco. Mr. De Poli explained this discrepancy in discrepancy in description by saying that he had the description of grade only and made the quedan without giving importance if it was Cagayan or Isabela tobacco; that he asked only for grade, and did not ask whether it was Cagayan or Isabela tobacco, because he had to deliver the security no matter whether it was Isabela or Cagayan tobacco. The objection and motion of the opposition counsel that this explanation be stricken out are hereby overruled. The quedan in question was issued by J. Magpantay, who was encargado of all the U. de Poli warehouse, but he did not have control of the warehouses, but he did not have control of the warehouses, according to Mr. de Poli. Molina did not see the quedan when it was issued, but said that he knew of the tobacco which Mr. De Poli transferred to the claimant bank, because Mr. De Poli told him about it; that it was tobacco from Isabela for the year 1919, was stored in the warehouse on Calle Azcarraga, and that there was no other tobacco in the warehouse except the 1919 Isabela tobacco. The evidence further shows that in December, 1920, Mr. Kaintzler, a sub accountant of the claimant bank, went to the U. de Poli warehouse on Calle Azcarraga to have the tobacco covered by this quedan, Exhibit A, pointed out to him; that the then assignee (Mr. Bayne) and one of his accountants showed him (Kaintzler) the 530 bales of tobacco with the tag A. F. B. C. on them, and these bales were pointed out to him by Mr. Bayne as the tobacco which belonged to the American Foreign Banking Corporation. The quedan (Exhibit A) is in the same form as quedan No. A-155, which, in the case of Felisa Roman vs. Asia Banking Corporation, was declared by the Supreme Court of the Philippine Islands to be a negotiable warehouse receipt conveying title to the said bank superior to that of the vendors lien of Felisa Roman (R. G. No. 17825). 1 The evidence shows that said quedan (Exhibit A) was taken by the American Foreign Banking Corporation for value, believing it to be a negotiable warehouse receipt, and without reasonable cause to believe that the debtor U. de Poli (who was operating a public warehouse at the time) was insolvent. In view of the decision of the Supreme Court in the Felisa Roman case, above-mentioned, the only question raised by the attorneys for the consignee and for the common creditors which will be considered by the court is that as to the sufficiency of the description of the tobacco in said warehouse receipt. This lot of tobacco was the only tobacco in the warehouse. The debtor said that it was the tobacco which he transferred to the claimant bank. The tobacco was pointed out by the then assignee to the claimants representative as the tobacco covered by said quedan, Exhibit A. Hence, there does not appear to be any doubt about the identity of the tobacco.

The only question left for consideration is whether the use of the word Cagayan instead of Isabela in describing the tobacco in the quedan rendered the quedan null and void as a negotiable warehouse receipt for the tobacco intended to be covered by it. The insolvent, U. de Poli, testified positively that this quedan referred to the tobacco in the Azcarraga warehouse, and he explained the discrepancy in the description. The then assignee (Mr. Bayne) was evidently convinced that this lot of tobacco belonged to the claimant bank, because he pointed it out to one of the banks employees, who noted the tags thereon bearing the initials of the claimant bank. The court is of the opinion that the intention of the parties to the transaction must prevail against such a technical objection as to the sufficiency of the description of the tobacco. It might be different if there had been Cagayan tobacco in the warehouse at the time of the issuance of the quedan, Exhibit A, or if there were any doubt whatever as to the identity of the tobacco intended to be covered by the quedan. The assignee stands in the shoes of the insolvent, and while it is his duty to protect the general creditors, he is not in the position of a judgment creditor with an unsatisfied execution. In view of the foregoing considerations, the court is of the opinion that the quedan, Exhibit A, is a negotiable warehouse receipt which was duly issued and delivered by the debtor U. de Poli to the American Foreign Banking Corporation, and that it divested U. de Poli of his title to said tobacco and transferred the position and the title thereof to the American Foreign Banking Corporation. It is therefore ordered and adjudged that the consignee deliver the said five hundred and thirty (530) bales of tobacco to the American Foreign banking Corporation, upon payment by said bank of any liens or charges thereon, or, in the event of said tobacco having been sold, the proceeds thereof, less the storage and insurance charges paid after the declaration of insolvency; and thereafter due report will be made to this court of such delivery to the claimant bank in order that the proceeds be deducted from the balance to said claimant bank from the insolvent debtor. We find no reversible error in the decision quoted and do not think it necessary to add anything to the discussion therein contained. The judgment appealed from is therefore affirmed, with the costs against the appellants. So ordered. Street, Malcolm, Avancea, Villamor and Romualdez, JJ., concur.

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. Crossfield and O'Brien, J.A. Wolfson and Camus and Delgado for appellants. Hartigan and Welch, Fisher and DeWitt and Gibbs and 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 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 landing attached, and the entire proceeds of the export sale were received by the bank and credited to the current account of De Poli.
itc-a1f

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. 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. On July 20, 1921, the banks above-mentioned and who claim preference under the warehouse receipts held by them, entered into the following stipulation:
lawphi 1.net

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: 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 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 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. 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. 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." 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 follows: Warehouse receipts needed 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 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 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 margen, y con arreglo a las condiciones siguientes: 1.a Estan asegurados contra riesgo de incendios exclusivamente, segun las condiciones de mis polizas; quedando los demas por cuenta de los depositantes. 2.a No se responde del peso, clase ni mal estado de la mercancia depositada. 3.a El almacenaje sera de quince centimos fardo por mes.

I certify that I am the sole owner of the merchandise herein described.

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

(Sgd.) "UMBERTO DE POLI

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." 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. 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 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. 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? 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. 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 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. 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. 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. 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 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-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 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 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. 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 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. 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. 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 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. 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 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, Avancea, Villamor, and Romualdez, JJ., concur.