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Estrada v. Court of Agrarian Relations GR Nos.

L-17481 and L-17537 to L17559 August 15, 1961 FACTS: The petition filed by the petitioners under date of June 10, 1961, asking that the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan be declared in contempt of court and punished accordingly. Court resolved on January 6, 1961 granting in favor of the petitioners On April 12, 1961, petitioners allege that the manager of the Moncada Bonded Warehouse is continuing to refuse to comply with the above Court resolution unless the original of the receipts of palay deposits be presented and surrendered to him. Petitioners could not present any receipt to surrender due to the fact that a fire has destroyed the receipts ISSUE: WON warehouseman could release the palay without the surrender of the original receipt RULING: That the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan were duly served with notice of the above resolutions, and that notwithstanding such service of notice and in spite of repeated demands, the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan refused and still refuse to comply with the above orders of this Court, the former, for the reason that petitioners could not surrender to him the original of the warehouse receipts issued for the palay in question, and the latter, because, as he alleged in his answer to the motion for contempt, he could not locate any more said receipts "as they were scattered, misplaced, destroyed or lost when the contents of the Office of said respondent-appellee, Faustino F. Galvan, in the

Galvan-Cabrera Building in Ylaya Street, Manila, were being desperately evacuated therefrom during the fire which burned the Divisoria market and said Galvan-Cabrera Building in Ylaya Street, Manila, in the latter part of May, 1961." The excuses respectively offered by the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan are not without some merits. The former unquestionably had the right to protect the interest of the bonded warehouse of which he was manager, as the warehouse receipts issued for the palay in question might have been for the value in favor of innocent third parties; and the latter, or Faustino F. Galvan, might have in fact lost said warehouse receipts in the manner above stated, for his allegation to the effect in his answer to petitioners' motion for contempt until now has not been contradicted. Such incidents, however, do not constitute a valid excuse to evade compliance with the order of this Court that the palay in question be delivered to the petitioners, and, considering that the petitioners, according to the manifestation filed by their counsel under date of August 3, 1961, are in dire need of said palay for their subsistence, our order must be carried out in the meantime that this cases have not been finally decided in order to ameliorate the precarious situation in which said petitioners find themselves. Where the court ordered the manager of the bonded warehouse to deliver the deposited palay to certain specified parties, and the person ordered to present the original warehouse receipts failed to do so because they were allegedly lost in a fire, the court may order said manager to release the palay to the proper parties upon their issuing a receipt therefore without necessity of producing and surrendering the original receipts Consolidated Terminals Development Co Inc GR No. L-25748 March 10, 1975 Inc v. Artex

FACTS: CTI was the operator of a customs bonded warehouse located at Port Area, Manila. It received on deposit one hundred ninety-three (193) bales of high density compressed raw cotton valued at P99,609.76. It was understood that CTI would keep the cotton in behalf of Luzon Brokerage Corporation until the consignee thereof, Paramount Textile Mills, Inc., had opened the corresponding letter of credit in favor of shipper, Adolph Hanslik Cotton of Corpus Christi, Texas. Allegedly by virtue of a forged permit to deliver imported goods, purportedly issued by the Bureau of Customs, Artex was able to obtain delivery of the bales of cotton on November 5 and 6, 1964 after paying CTI P15,000 as storage and handling charges. At the time the merchandise was released to Artex, the letter of credit had not yet been opened and the customs duties and taxes due on the shipment had not been paid. CTI, in its original complaint, sought to recover possession of the cotton by means of a writ of replevin. The writ could not be executed. CTI then filed an amended complaint by transforming its original complaint into an action for the recovery from Artex of P99,609.76 as compensatory damages, P10,000 as nominal and exemplary damages and P20,000 as attorney's fees. It should be clarified that CTI in its affidavit for manual delivery of personal property and in paragraph 7 of its original complaint alleged that Artex acquired the cotton from Paramount Textile Mills, Inc., the consignee. Artex filed a motion to dismiss. Artex alleged that it was not shown in the delivery permit that Artex was the entity that presented that document to the CTI. Artex further averred that it returned the cotton to Paramount Textile Mills, Inc. when the contract of sale between them was rescinded because the cotton did not conform to the stipulated specifications as to quality. No copy of the rescissory agreement was attached to Artex's motion to dismiss.

CFI Manila dismissed the amended complaint for lack of cause of action. Since plaintiff CTI is only a warehouseman and according to the amended complaint, CTI was already paid the warehousing and handling charges of the 193 bales of high density compressed raw cotton mentioned in the complaint, the plaintiff can no longer recover for its services as warehouseman. The alleged presentation of a forged permit to deliver imported goods by the defendant did not give rise to a cause of action in favor of CTI but in favor of the Bureau of Customs and of the consignee. Also, the fact that the delivery of the goods was obtained by the defendant without opening the corresponding letter of credit cannot be the basis of a cause of action of CTI because such failure of the defendant to open the letter of credit gives rise to a cause of action in favor of the shipper of the goods and not in favor of CTI. On appeal, CTI contends that, as warehouseman, it was entitled to the possession (should be repossession) of the bales of cotton and that Artex acted wrongfully in depriving CTI of the possession of the merchandise because Artex presented a falsified delivery permit and should therefore pay damages to CTI. ISSUE: WON CTI has a cause of action against Artex in its action to repossess the goods RULING: DENIAL AFFIRMED of the CFI Manila

The only statutory rule cited by CTI is section 10 of the Warehouse Receipts Law which provides that "where a warehouseman delivers the goods to one who is not in fact lawfully entitled to the possession of them, the warehouseman shall be liable as for conversion to all having a right of property or possession in the goods ..." We hold that CTI's appeal has not merit. Its amended complaint does not clearly show that, as warehouseman, it has a cause of action for damages against Artex. The real parties interested in the bales of cotton were Luzon Brokerage Corporation as depositor, Paramount

Textile Mills, Inc. as consignee, Adolph Hanslik Cotton as shipper and the Commissioners of Customs and Internal Revenue with respect to the duties and taxes. These parties have not sued CTI for damages or for recovery of the bales of cotton or the corresponding taxes and duties. The case might have been different if it was alleged in the amended complaint that the depositor, consignee and shipper had required CTI to pay damages, or that the Commissioners of Customs and Internal Revenue had held CTI liable for the duties and taxes. In such a case, CTI might logically and sensibly go after Artex for having wrongfully obtained custody of the merchandise. But that eventuality has not arisen in this case. So, CTI's basic action to recover the value of the merchandise seems to be untenable. It was not the owner of the cotton. How could it be entitled to claim the value of the shipment? In other words, on the basis of the allegations of the amended complaint, the lower court could not render a valid judgment in accordance with the prayer thereof. It could not render such valid judgment because the amended complaint did not unequivocally allege what right of CTI was violated by Artex against CTI which would justify the latter in recovering the value of bales of cotton even if it was not the owner thereof. A warehouseman has no cause of action for repossession and damages against a person to whom it delivered deposited articles on the basis of an alleged falsified delivery permit where the real parties interested in the questioned articles have not yet sued the warehouseman for damages on account of said wrongful delivery Philippine National Bank v. Noahs Ark Sugar Refinery GR No. 107243 September 1, 1993 FACTS: Noah's Ark Sugar Refinery issued on several dates warehouse receipts (quedans) as follows:

March 1, 1989, receipt No. 18062 covering sugar deposited by Rosa Sy March 7, 1989, receipt No. 18080 covering sugar deposited by RNS Merchandising (Rosa Ng Sy) March 21, 1989, receipt No. 18081 covering sugar deposited by RNS Merchandising March 31, 1989, receipt No. 18086 covering sugar deposited by St. Therese Merchandising April 1, 1989, receipt No. 18087 covering sugar deposited by RNS Merchandising

The receipts are substantially in the form, and contain the terms, prescribed for negotiable warehouse receipts by Section 2 of the law. Subsequently, warehouse receipts Numbered 18080 and 18081 (covering sugar deposited by RNS Merchandising) were negotiated and indorsed to Luis T. Ramos; and receipts Numbered 18086 (sugar of St. Therese Merchandising), 18087 (sugar of RNS Merchandising) and 18062 (sugar of Rosa Sy) were negotiated and indorsed to Cresencia K. Zoleta. Zoleta and Ramos then used the quedans as security for loans obtained by them from the Philippine National Bank (PNB) in the amounts of P23.5 million and P15.6 million, respectively. These quedans they indorsed to the bank. Both Zoleta and Ramos failed to pay their loans upon maturity. Consequently, PNB wrote to Noah's Ark demanding delivery of the sugar covered by the quedans indorsed to it by Zoleta and Ramos. When Noah's Ark refused to comply with the demand, PNB filed with RTC of Manila a verified complaint for "Specific Performance with Damages and Application for Writ of Attachment" against Noah's Ark, Alberto T. Looyuko, Jimmy T. Go, and Wilson T. Go, the last three being identified as "the Sole Proprietor, Managing Partner and Executive Vice President of Noah's Ark, respectively."

The Court denied the application for preliminary attachment after conducting a hearing thereon. It denied as well the MR filed by PNB. Noah's Ark and its co-defendants then filed their responsive pleading in which they claimed, inter alia, that they "are still the legal owners of the subject quedans and the quantity of sugar represented thereon," a claim founded on the following averments, to wit: In the sale agreement between defandants and Rosa Ng Sy of RNS Merchandising and Teresita Ng of St. Therese Merchandising the total volume of sugar indicated in the quedans already stored at Noah's Ark Sugar Refinery for a total consideration of P63,000,000.00 The corresponding payments in the form of checks issued by the vendees in favor of defendants were subsequently dishonored by the drawee banks by reason of "payment stopped" and "drawn against insufficient funds" Upon proper notification to said vendees and plaintiff in due course, defendants refused to deliver to vendees therein the quantity of sugar covered by subject quedans. Considering that the vendees and first indorsers of subject quedans did not acquire ownership thereof, the subsequent indorsers and plaintiff itself did not acquire a better right of ownership than the original vendees/first indorsers.

latter be ordered to deliver or return to them the quedans (eventually indorsed to the PNB and now subject of this suit) and pay damages and litigation expenses. The answer of Rosa Ng Sy and Teresita Ng, was essentially to the effect that the transaction between them and Jimmy T. Go concerning the quedans and the sugar thereby covered was "bogus and simulated complex banking schemes and financial maneuvers" to avoid VAT payment and other BIR assessments considering that Noah's Ark is under sequestration by the PCGG and that the quedans were in fact used by Noah's Ark Executive Director, Luis T. Ramos, and one Cresenciana K. Zoleta as security for their loans from the bank (in the aggregate amount) of P39.1 million pesos. PNB filed a Motion for Summary Judgment asserting that there is no genuine issue as to a material fact proper for trial and that plaintiff is ENTITLED as a matter of law to a summary judgment. It contended that the defenses set up by Noah's Ark, et al. in their responsive pleading involves purely questions of law THAT THERE IS NO SUBSTANTIAL CONTROVERSY TO A MATERIAL FACT (a) that the vendees of the sugar covered by the quedans in dispute never acquired title to the goods because of their failure to pay the stipulated purchase price and hence, ownership over the sugar was retained by Noah's Ark, et al. (b) PNB's action is premature since as pledgee it failed to exercise the remedies provided in the contract of pledge and the Civil Code. And it specified in no little detail the admissions and documents on record demonstrating the absence of any genuine factual issue. PNB prayed that the court grant its Motion for Summary Judgement and order Noahs Ark to deliver to PNB the sugar stocks covered by the Warehouse Receipts/Quedans which are now in the latter's possession as holder for value and in due course; or alternatively, to pay plaintiff actual damages in the amount of P39.1 Million exclusive of interest, penalties and charges; and to pay plaintiff attorney's fees, litigation expenses and judicial costs estimated at no less

The defendants also adverted to PNB's supposed awareness "that subject quedans are NOT negotiable instruments within the purview of the Warehouse Receipts Law but simply an internal guarantee of defendants in the sale of their stocks of sugar." The answer incorporated a third party complaint by the 3 officers doing business under the name and style of Noah's Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng, praying that the

than P1 Million and such other reliefs just and equitable under the premises. An opposition to the motion presented by defendants Noah's Ark asserts the existence of genuine issues, to wit: whether or not the sale was ever consummated considering that "the checks issued by the first indorsees in payment of said quedans bounced," and whether or not PNB acquired ownership over the quedans considering that "it did not dispose (of) said quedans under Art. 2112 of the Civil Code, as specifically reflected in the contract of pledge," both contentions allegedly being "material facts which has ( sic) to be supported by evidence." The third-party defendants (Rosa Ng Sy and Teresita Ng) also opposed the motion for summary judgment insofar as concerned their counterclaim in relation to the third-party complaint asserted against them. RTC DENIED the motion for summary judgement on the ground that an "examination of the pleadings and the record readily shows that there exists sharply conflicting claims among the parties relative to the ownership of the sugar quedans as to whether or not the subject quedans falls (sic) squarely within the coverage of the Warehouse Receipt Law and whether or not the transaction between plaintiff and third party defendants is governed by contract of pledge that would require plaintiff's compliance with Art. 2112, Civil Code on pledge as regards the dispositions of the subject quedans in public sale. MR by PNB denied PNB filed a petition for certiorari to the CA to nullify RTC ruling and compel Summary Judgement be granted in its favor. CA found that RTC committed grave abuse of discretion in denying PNBs motion for Summary Judgement. A scrutiny of defendants' affirmative defenses does not show material questions of facts as to the alleged non-payment of purchase price by the vendees/first indorsers which is not disputed

by PNB as it does not materially affect PNB's title as holder of the negotiable quedans. What is determinative of the propriety of summary judgment is not the existence of conflicting claims for prior parties but whether from an examination of the pleadings, depositions, admissions and documents on file, the defenses as to the main issue do NOT tender MATERIAL questions of fact OR if the issues thus tendered are in fact sham, fictitious, contrived, set up in bad faith or so unsubstantial as not to constitute genuine issues for trial. The questioned order of the RTC do not specify what material facts are in issue. To require a trial notwithstanding pertinent allegations of the pleadings and other facts appearing on record would constitute a waste of time and an injustice to the PNB whose rights to relief to which it is plainly entitled would be further delayed to its prejudice. CA remanded back the case to RTC to rule in favor of PNB. RTC rendered judgment but not in accordance with the aforesaid decision of the CA. Instead of a summary judgment in favor of the PNB against Noah's Ark, RTC decreed the dismissal of PNBs complaint against Noah's Ark for lack of cause of action and dismissal as well of the counterclaim pleaded by the latter against PNB, and of the third-party complaint, and the third-party defendant's counterclaim. The RTC declared that if the only material facts established on the basis of the pleadings, documentary evidence on record, admissions and stipulations during the hearing on PNB's application for a writ of preliminary attachment, are the facts as alleged by plaintiff and accepted as established by the Court of Appeals, this Court will have no difficulty in finding for plaintiff as prayed for in its motion for summary judgment. But it being its view that other facts, "as alleged by defendants and not disputed by PNB, have been likewise established, RTC cannot rule in favor of PNB Appeal to the SC ISSUE:

WON the non-payment of the purchase price for the sugar stock evidenced by the quedans by the original depositors/ vendees (RNS Merchandising and St. Therese Merchandising) rendered invalid the negotiation of said quedans by vendees/first indorsers to indorsers (Ramos and Zoleta) and the subsequent negotiation of Ramos and Zoleta to PNB. WON PNB as indorsee/ pledgee of quedans was entitled to delivery of sugar stocks from the warehouseman, Noah's Ark. RULING: RTC ruling REVERSED and SET ASIDE The ruling of the CA that there was no substantial controversy to any material fact was correct. The validity of the negotiation by the depositors RNS Merchandising and St. Therese Meerchandising to Ramos and Zoleta and by them to PNB to secure a loan cannot be impaired by the fact that the negotiation between Noah's Ark and RNS Merchandising and St. Therese Merchandising was in breach of faith on the part of the merchandising firms or by the fact that the owner (Noah's Ark) was deprived of the possession of the same by fraud, mistake or conversion of the person to whom the warehouse receipt/quedan was subsequently negotiated if PNB paid value therefor in good faith without notice of such breach of duty, fraud, mistake or conversion. And the creditor (PNB) whose debtor was the owner of the negotiable document of title (warehouse receipt) shall be entitled to such aid from the court of appropriate jurisdiction attaching such document or in satisfying the claim by means as is allowed by law or in equity in regard to property which cannot be readily attached or levied upon by ordinary process. If the quedans were negotiable in form and duly indorsed to the creditor(PNB), the delivery of

the quedans to PNB makes the PNB the owner of the property covered by said quedans and on deposit with Noah's Ark, the warehouseman. PNB is therefore entitled to the delivery. In the case at bar, We found that the factual bases underlying the defendant's affirmative defenses are not disputed and have been stipulated by the parties and therefore do not require presentation of evidence. PNB's right to enforce the obligation of Noah's Ark as a warehouseman, to deliver the sugar stock to PNB as holder of the quedans, does not depend on the outcome of the thirdparty complaint because the validity of the negotiation transferring title to the goods to PNB as holder of the quedans is not affected by an act of RNS Merchandising and St. Therese Merchandising, in breach of trust, fraud or conversion against Noah's Ark. The Trial Judge may not evade compliance with the final judgment of the Court of Appeals on the theory that the latter had acted only on a mere interlocutory order while he had subsequently adjudged the action for specific performance on the merits. Quite obvious is that the Court of Appeals had decided that a summary judgment was proper in said action of specific performance, that this was in truth a determination of the merits of the suit, that that decision had become final and executory, and that the decision expressly commanded His Honor to render such a judgment. Under the circumstances, the latter's duty was clear and inescapable. It was not within the Trial Judge's competence or discretion to take exception to, much less overturn, any of the factual or legal conclusions laid down by the Court of Appeals in its verdict. It was an act of supererogation, of

presumptuousness, on His Honor's part to disregard the Court's clear and categorical command, and to dispose of the case in a manner diametrically opposed thereto. In doing so, the Trial Judge committed grave error which must forthwith be corrected. Philippine National Bank v. Se Jr. GR No. 119231 April 18, 1996 FACTS: The source of conflict herein is the question as to whether PNB should pay storage fees for sugar stocks covered by 5WRs stored in the warehouse of private respondents in the face of the CA and SC decision declaring PNB as owner of the said sugar stocks and ordering their delivery to the said bank. After the ruling on PNB v. Noahs Ark, Noahs Ark filed before the RTC an Omnibus Motion seeking among others the deferment of the proceedings until they are heard on their claim for warehousemans lien. On the other hand, PNB filed a Motion for the Issuance of a Writ of Execution and an Opposition to the Omnibus Motion filed by private respondents. The trial court granted private respondents Omnibus Motion and set reception of evidence on their claim for warehousemans lien. The resolution of the PNBs Motion for Execution was ordered deferred until the determination of private respondents claim. Private respondents claim for lien was heard and evidence was received in support thereof, RTC gave both parties 5 days to file respective memoranda. Instead of filing its memoranda, PNB filed a Manifestation with Urgent Motion to Nullify Court Proceedings. RTC declared the validity of private respondents warehousemans lien under Section 27 of Republic Act No 2137 and ordering that execution of the CA decision be in effect held in abeyance until the full amount of the warehousemans lien on the sugar stocks

covered by 5 quedans subject of the action shall have been satisfied conformably with the provisions of Section 31 of Republic Act 2137. PNB then filed this petition which seeks to annul the resolution of respondent RTC Judge Benito C. Se, Jr. in: authorizing reception of evidence to establish the claim of respondents Noahs Ark for storage fees and preservation expenses over sugar stocks covered by 5WRs which is in the nature of a warehousemans lien in declaring the validity of private respondents warehousemans lien


WON the warehouseman can enforce his warehousemans lien before delivering the sugar stocks as ordered by the CA and SC or need he file a separate action to enforce payment of storage fees? RULING: Petition DISMISSED for lack of merit The issues presented before the SC in this petition revolve around the legality of the questioned orders of respondent judge, issued as they were after we had denied with finality private respondents contention that the PNB could not compel them to deliver the stocks of sugar in their warehouse covered by the endorsed quedans or pay the value of the said stocks of sugar. Petitioners submission is on a technicality, that is, that private respondents have lost their right to recover warehousemans lien on the sugar stocks covered by the 5WRs for the reason that they failed to set up said claim in their Answer before the RTC and that private respondents did not appeal from the decision in this regard. Petitioner asseverates that the denial by this Court of the motion seeking clarification of our decision on the PNB v. Noahs Ark has

foreclosed private respondents right to enforce their warehousemans lien for storage fees and preservation expenses under the Warehouse Receipts Act. On the issue of failure to set up claim on their answer, private respondents were correct in maintaining that they could not have claimed the right to a warehouseman s lien as it would have been inconsistent with their stand that they claim ownership of the stocks covered by the quedans since the checks issued for payment thereof were dishonored. If they were still the owners, it would have been absurd for them to ask payment for storage fees and preservation expenses. Also, the SC resolution merely affirmed and adopted the earlier decision of the CA and did not make any finding on the matter of the warehouseman s lien. The SC is also not persuaded by the petitioners argument that its resolution carried with it the denial of the warehousemans lien over the sugar stocks covered by the subject Warehouse Receipts. SC simply resolved and upheld the propriety of summary judgment which was then assailed by private respondents. In effect, SC ruled therein that, considering the circumstances obtaining before the RTC, the issuance of the Warehouse Receipts not being disputed by the private respondents, a summary judgment in favor of PNB was proper. SC in effect further affirmed the finding that Noahs Ark is a warehouseman which was obliged to deliver the sugar stocks covered by the Warehouse Receipts pledged by Cresencia K. Zoleta and Luis T. Ramos to the petitioner pursuant to the pertinent provisions of Republic Act 2137. In disposing of the private respondents motion for clarification, SC could not contemplate the matter of warehousemans lien because the issue to be finally resolved then was the claim of private respondents for retaining ownership of the stocks of sugar covered by the endorsed

quedans. Stated otherwise, there was no point in taking up the issue of warehousemans lien since the matter of ownership was as yet being determined. Neither could storage fees be due then while no one has been declared the owner of the sugar stocks in question. Of considerable relevance is the pertinent stipulation in the subject Warehouse Receipts which provides for respondent Noahs Arks right to impose and collect warehousemans lien: Storage of the refined sugar quantities mentioned herein shall be free up to one (1) week from the date of the quedans covering said sugar and thereafter, storage fees shall be charged in accordance with the Refining Contract under which the refined sugar covered by this Quedan was produced. 6 It is not disputed, therefore, that, under the subject Warehouse Receipts provision, storage fees are chargeable. Petitioner anchors its claim against private respondents on the 5WRs issued by the latter to third-party defendants Rosa Ng Sy of RNS Merchandising and Teresita Ng of St. Therese Merchandising, which found their way to petitioner after they were negotiated to them by Luis T. Ramos and Cresencia K. Zoleta for a loan of P39.1 Million. Accordingly, petitioner PNB is legally bound to stand by the express terms and conditions on the face of the Warehouse Receipts as to the payment of storage fees. Even in the absence of such a provision, law and equity dictate the payment of the warehouseman s lien pursuant to Sections 27 and 31 of the Warehouse Receipts Law (R.A. 2137), to wit: SECTION 27. What claims are included in the warehousemans lien. - Subject to the provisions of section thirty, a warehouseman shall have lien on goods deposited or on the proceeds

thereof in his hands, for all lawful charges for storage and preservation of the goods; also for all lawful claims for money advanced, interest, insurance, transportation, labor, weighing coopering and other charges and expenses in relation to such goods; also for all reasonable charges and expenses for notice, and advertisement of sale, and for sale of the goods where default has been made in satisfying the warehousemans lien. xxx xxx xxx

parties and should be complied with in good faith. Petitioner is in estoppel in disclaiming liability for the payment of storage fees due the private respondents as warehouseman while claiming to be entitled to the sugar stocks covered by the subject Warehouse Receipts on the basis of which it anchors its claim for payment or delivery of the sugar stocks. The unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the Warehouse Receipts Law (R.A. 2137) carried with it the admission of the existence and validity of the terms, conditions and stipulations written on the face of the Warehouse Receipts, including the unqualified recognition of the payment of warehousemans lien for storage fees and preservation expenses. Petitioner may not now retrieve the sugar stocks without paying the lien due private respondents as warehouseman. In view of the foregoing, the rule may be simplified thus: While the PNB is entitled to the stocks of sugar as the endorsee of the quedans, delivery to it shall be effected only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien, because a warehousemans lien is possessory in nature. There is no abuse of discretion on the part of the public respondent in issuing the questioned orders which recognized the legitimate right of Noahs Ark, after being declared as warehouseman, to recover storage fees before it

SECTION 31. Warehouseman need not deliver until lien is satisfied. - A warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied. After being declared not the owner, but the warehouseman, by the CA and affirmed by the SC, private respondents cannot legally be deprived of their right to enforce their claim for warehousemans lien, for reasonable storage fees and preservation expenses. Pursuant to Section 31, the goods under storage may not be delivered until said lien is satisfied. SECTION 31. Warehouseman need not deliver until lien is satisfied. - A warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied. Considering that petitioner does not deny the existence, validity and genuineness of the Warehouse Receipts on which it anchors its claim for payment against private respondents, it cannot disclaim liability for the payment of the storage fees stipulated therein. As contracts, the receipts must be respected by authority of Article 1159 of the Civil Code, to wit: ART. 1159. Obligations arising from contracts have the force of law between the contracting

would release to the PNB sugar stocks covered by the 5WRs. Philippine National Bank v. Sayo GR No. 129918 July 9, 1998 FACTS: A special action for certiorari asking the court to annul: the order granting private respondents motion for execution to satisfy their warehousemans lien against petitioner the order denying with finality petitioners motion for reconsideration of the first order and urgent motion to lift garnishment, and private respondents motion for partial reconsideration.

ISSUE: WON PNB is liable for the amount of lien and how much RULING: Petition GRANTED, motion for execution and levy and garnishment REVERSED and SET ASIDE. DIRECTS the RTC to conduct further proceedings This special action is the appropriate remedy. It is well-settled that the availability of an appeal does not foreclose recourse to the extraordinary remedies of certiorari or prohibition where appeal is not adequate, or equally beneficial, speedy and sufficient. The challenged orders having been issued without or in excess of jurisdiction or with grave abuse of discretion, petitioner had no other plain, speedy and adequate remedy in the ordinary course of law. As hereafter shown, these claims were not unfounded, thus the propriety of this special civil action is beyond question. Respondent also is right in refusing delivery of the goods until his lien is satisfied and petitioner is clearly liable for it. However, petitioners status as to the quedans must first be clearly defined and delineated to be able to determine the extent of its liability. Petitioners contend that it was a mere pledgee as the quedans were used to secure two loans it granted. Thus, Martinez v. PNB: In conclusion, we hold that where a warehouse receipt or quedan is transferred or endorsed to a creditor only to secure the payment of a loan or debt, the transferee or endorsee does not automatically become the owner of the goods covered by the warehouse receipt or quedan but he merely retains the right to keep and with the consent of the owner to sell them so as to satisfy the obligation from the proceeds of the sale. The indorsement and delivery of the quedans by Ramos and Zoleta to petitioner was not to convey title to or ownership of the goods but to secure the loans granted to Ramos and Zoleta. The indorsement of the quedans to perfect the pledge merely constituted a symbolical or

That after the SC ruling on PNB v. Se Jr., Noahs Ark claimed a lien in the amount of P734,341,595.06 for 86,356.41 50kg. bags of sugar. PNB was immediately served with a Writ of Execution in spite of the fact that it had not yet been served with the Order of the court a quo. PNB thus filed an Urgent Motion dated seeking the deferment of the enforcement of the Writ of Execution until order has been served to it. Nevertheless, the Sheriff levied on execution a 99, 999 sq. m. property of PNB and garnished fund deposits of PNB in the BSP. PNB filed for an MR to reconsider the execution of the lien to which private respondents opposed, saying that aside from the 734M accrued warehouse lien, accrual of said liens should continue until paid. PNB also filed a motion to lift garnishment of its funds in the BSP. Both this motion and the MR were denied by the respondent presiding judge of RTC.

constructive delivery of the possession of the thing thus encumbered. The creditor, in a contract of real security, like pledge, cannot appropriate without foreclosure the things given by way of pledge. Any stipulation to the contrary, termed pactum commissorio, is null and void The law requires foreclosure in order to allow a transfer of title of the good given by way of security from its pledgor, and before any such foreclosure, the pledgor, not the pledgee, is the owner of the goods. In this case, it is Ramos and Zoleta as pledgors who still own the goods until it is foreclosed and not the pledgee, PNB. Nonetheless, the SC held that the warehouseman nevertheless is entitled to his lien that attaches to the goods invokable against anyone who claims a right of possession thereon. Under the Warehouse Receipts Law, where a valid demand by the lawful holder of the quedans for the delivery of the goods is refused by the warehouseman, despite the absence of a lawful excuse provided by the statute itself, the warehousemans lien is thereafter concomitantly lost. A lawful excuse under sec. 8 is that the failure was not due to any fault on the part of the warehouseman, as by showing that, prior to demand for delivery and refusal, the goods were stolen or destroyed by fire, flood, etc., without any negligence on his part, unless he has contracted so as to be liable in such case, or that the goods have been taken by the mistake of a third person without the knowledge or implied assent of the warehouseman, or some other justifiable ground for non-delivery. It would appear that the refusal of private respondents to deliver the goods was not anchored on a valid excuse non-satisfaction of the warehousemans lien over the goods but on an adverse claim of ownership. Private respondents justified their refusal to deliver the goods, as stated in their Answer with Counterclaim and Third-Party Complaint claiming that they are still the legal owners of the subject quedans and the quantity of sugar represented therein.

Under the circumstances, this hardly qualified as a valid, legal excuse. The loss of the warehousemans lien, however, does not necessarily mean the extinguishment of the obligation to pay the warehousing fees and charges which continues to be a personal liability of the owners, i.e., the pledgors, not the pledgee, in this case. But even as to the owners-pledgors, the warehouseman fees and charges have ceased to accrue from the date of the rejection by Noahs Ark to heed the lawful demand by petitioner for the release of the goods. The fees should be confined to the fees and charges as of the date in March 1990 the date when Noahs Ark refused to heed PNBs demand for delivery of the sugar stocks WITHOUT LAWFUL EXCUSSE and in no event shall the fees be beyond the value of the credit in favor of the pledgee since it is basic that, in foreclosures, the buyer does not assume the obligations of the pledgor to his other creditors even while such buyer acquires title over the goods less any existing preferred lien thereover. The foreclosure of the thing pledged, it might incidentally be mentioned, results in the full satisfaction of the loan liabilities to the pledgee of the pledgors.