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Siy Cong Bieng & Co., Inc. vs.

Hongkong Credtrans: Warehouse Receipts


57 Shanghai Banking Corporation (Section 42)
34655 March 5, 1932 J. Ostrand By: Peaches
Petitioners: Respondents:
SIY CONG BIENG & CO., INC. HONGKONG & SHANGHAI BANKING CORPORATION
Recit Ready Summary
Plaintiff sold bales of hemp to Otto Ranft by quedans. Petitioner delivered the quedans, together
with the covering invoice, without having been paid for, but with the understanding that payment
would be made ASAP. Ranft on the same day pledged the quedans to the respondent bank to
secure payment of his debts. Ranft died on the same evening. Petitioner now tries to claim from
HSBC the value of said quedans.

Issue is w/n HSBC is liable to petitioner? NO.

The bank has a perfect right to act as it did, and its actions were in accordance with sections 47,
38, and 40 of the Warehouse Receipts Act. The quedans were negotiable in form and on its
face and duly endorsed in blank by the plaintiff and by Otto Ranft. Quedans were duly
negotiated to respondent bank. If the owner permits another to have possession of negotiable
receipts to the order of the latter or to bearer, it is representation of title upon which bona fide
purchasers for value are entitled to rely. As between 2 innocent persons, loss must fall upon him
whose misplaced confidence made the loss possible.
Facts
1. A certain Otto Ranft called petitioner to purchase hemp (abaca). On the same day, the
quedans (spanish term for warehouse receipts) with the covering invoice were delivered
to him without payment from Ranft with petitioner’s understanding that it will be paid
ASAP.
2. Same night, Ranft died without being able to pay the quedans.
3. When petitioner demanded for the return or payment of quedans, it was told that
quedans were sent to respondent bank.
4. The negotiable warehouse receipts were pledged by Ranft to respondent HSBC for his
existing debts, immediately after receiving them.
5. The warehouse receipts covered bales of hemp amounting to P31, 635. 6 of which were
endorsed in blank by petitioner and Ranft, while other two were by Ranft alone.
6. RTC ruled in favor of petitioner on the ground that HSBC could not have acted in good
faith because the quedans were delivered to secure the debts of Ranft acquired for the
payment of its value.
Point/s of Contention
Petitioners:
1. It attempted to sell the quedans in question but Ranft failed to fulfill conditions of sale.
2. Respondent should have ascertained whether Ranft had the authority to negotiate the
quedans.
Respondent:
1. It was a holder in due course.
Issues Ruling
1. Is the respondent bank liable to petitioner for the quedans? 1. No
Rationale
1. Is the respondent bank liable to petitioner for the quedans? NO.
The bank has a perfect right to act as it did, and its actions were in accordance with sections 47,
38, and 40 of the Warehouse Receipts Act.

Jurisprudence provides that: (SC cited this case which explained the provisions invoked by SC)
● Under sec. 40, he may negotiate the receipt if he is: (a) owner or (b) person to whom the
possession or custody of the receipt has been intrusted by the owner. The warehouse
receipt represents the goods, but the intrusting of the receipt is a representation that the
one to whom the possession of the receipt has been so intrusted has the title to the
goods.
● Under sec. 47, the negotiation of the receipt to a purchaser for value without notice is not
impaired by the fact that it is a breach of duty, or that the owner of the receipt was
induced 'by fraud, mistake, or duress' to intrust the receipt to the person who negotiated
it.
● Under sec. 41, one who received the negotiable receipt acquires such title to the goods
as the person negotiating the receipt to him, or the depositor or person to whose order
the goods were deliverable by the terms of the receipt, either had or had ability to
convey to a purchaser in good faith for value.

If the owner permits another to have possession of negotiable receipts to the order of the latter
or to bearer, it is representation of title upon which bona fide purchasers for value are entitled to
rely. As between 2 innocent persons, loss must fall upon him whose misplaced confidence
made the loss possible.
Disposition
Petition is DENIED. Respondent absolved.

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