SIY CONG BIEN VS HSBC (HONGKONG SHANGHAI BANK CORP)

FACTS

Plaintiff is a corporation engaged in business generally, and that theDefendant HSBC is a foreign bank authorized to engage in the bankingbusiness in the Philippines.

On June 25, 1926, Otto Ranft called the office of the plaintiff to purchase abaca hemp, and he was offered the bales of hemp as described in the contested negotiable quedans.The parties agreed to the aforesaid price,  and on the same date the quedans, together with the covering invoice, were sent to Ranft by the Plaintif, without having been paid for the hemp, but the Plaintif’s understanding was that the payment would be made against the same quedans, and it appear that in previous transaction of the same kind between the bank and thePlaintif, quedans were paid one or  two days after their delivery to them.

Immediately these quedans were pledged by Otto Ranft to theDefendant HSBC to secure the payment of his preexisting debts to the latter. The baled hemp covered by these warehouse receipts was worth P31,635.00; 6 receipts were endorsed in blank by the Plaintif and Otto Ranft, and 2 were endorsed in blank, by Otto Ranft  alone.

On the evening of the said delivery date,  Otto Ranft died suddenly at his house in the City of Manila. When the Plaintif found out, it immediately demanded the return of the quedans, or the payment of the value, but was told that the quedans had been sent to the herein Defendant as soon as they were received by Ranft.

Shortly thereafter the Plaintiff  filed a claim for the aforesaid sum of P31,645.00 in the intestate proceedings of the estate of the deceased Otto Ranft,which on an appeal from the decision of the committee on claims, was allowed by the CFI of Manila.

In the meantime, demand had been made by the Plaintiff on the Defendant bank  for the return of the quedans, or their value, which demand was refused by the bank on the ground that it was a holder of the quedans in due course.

ISSUE

Whether or not the quedans endorsed in blank gave the HSBC rightful and valid title to the goods?

HELD

 YES. SC ruled in favor of Defendant HSBC.

It may be noted

• first, that the quedans in question were negotiable in form;
• second, that they were pledged by Otto Ranft to the Defendant bank to secure the payment ofhis preexisting debts to said bank;
• third, that such of the quedans as were issued in the name of the Plaintiff were duly endorsed in blank by the Plaintiff and by Otto Ranft;
• and fourth, that the two remaining quedans which were duly endorsed in blank by him.

The bank had a perfect right to act as it did, and its action is in accordance with sections 47, 38, and 40 of the Warehouse Receipts Act.

Digest Credit: Mark Alfed Santillan