Siy Cong Bien vs HSPC

Facts:

Otto Ranft bought bales of hemp from plaintiff evidenced by the sent quedans together with the
invoices. Ranft did not pay for the hemp but the plaintiff’s understanding was that payment would
be made against the same quedans like in his previous transactions were it is paid after delivery.
Ranft died and the plaintiff, upon knowing the same, immediately demanded the return of the
quedans but was told that it had been sent to the bank, HSBC. Hence, plaintiff filed a claim to
recover the sum of P31,645, the value of the bales of hemp. He demanded for the return of the
quedans, or the value thereof, which was refused by the bank on the ground that the latter was the
holder in due course.

Issue: Whether or not HSBC acquired rightful and valid title over the quedans.

Held:

Yes, HSBC acquired valid title.

It is duly because first, that the quedans in question were negotiable in form; second, that they were
pledge by Otto Ranft to the Defendant bank to secure the payment of his preexisting debts to said
bank; and 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. As provided in Sec 41 of the Warehouse
Receipts Act, the person to who a receipt has been negotiated has the right also to the title to the
goods as the depositor of person to whose order it was delivered. Thus, the entrustment of the
quedans is more than delivery of goods, it is a representation that the possession of the possession
of the receipt entrust the title to the goods. As provided in the same Act,said negotiation is not
impaired by breaches of trust or violations of agreement. Hence, the plaintiff is estopped to deny
the bank’s right to the valid title over the quedans. The rule on equitable estoppels is applied that
where one of two innocent persons must suffer a loss, he who by conduct made the loss possible,
must bear it.

Philippine Trust Co. vs PNB

Facts:

The firm of Salvador Hermanos executed with PNB 8 promissory notes, each secured by warehouse
receipt for piculs of copra. Hermanos then filed a petition for insolvency before the Court and cited
properties pledged in favor of PNB on account of its credit. Acting on the same, PNB sold all of the
personal property for which was held by the warehouse receipts except those released to the firm.
The firm then was adjudged to be insolvent and Philippine Trust Co. was elected assignee of the
same. The latter made a demand upon the bank for the surrender and delivery of the property,
which the bank refused, prompting the company to file for claim of action for recovery and contend
that it has become the owner of the remaining property from the insolvency of the firm and thus
that bank had unlawfully seized and converted the property to its own use.

Issue: Whether or not PNB acquired rightful and valid title over the quedans.
Held:

Yes, PNB acquired valid title.

Each quedan, or warehouse receipt, was specifically described in a given note, and was made a
part of it, and the note recites that, for any breach of its terms or con ditions, the bank has full
power and authority "to sell, assign, transfer and deliver the whole of the said security, or any
part thereof, etc.," and that "at any such sale, the said bank may itself purchase the whole or any
part of the property sold, free from any right of redemption on the part of the undersigned, which
is hereby waived and released."

In addition, the quedan itself was delivered to and held by the bank, and the warehouseman
recognized the bank as the owner of the property. Legally speaking, the owner of the quedans, or
warehouse receipts, was the owner of the property described in them, and the quedans were
given as collateral to secure promissory notes, which, for value received, were executed to the
bank. The execution of the notes, the physical possession of the negotiable quedan, or warehouse
receipt, and the recognition of ownership by the warehouseman, legally carries with it both the
title to, and the possession of, the property.