TELENGTAN BROTHERS & SONS, INC. vs. CA, KAWASAKI KISHEN KAISHA, LTD.

and SMITH, BELL & CO., INC.

FACTS:

Van Reekum Paper, Inc. entered into a contract of affreightment with thek Kawasaki for the shipment of 468 rolls of
container board liners from Savannah, Georgia to Manila. The shipment was consigned to herein petitioner. The
contract of affreightment was embodied in a bill of lading by the carrier to the shipper. The consignee is in charge of
expenses of loading and unloading .

The consignee (herein petitioner) received from the shipper photocopies of the bill of lading, consular invoice and
packing list, as well as notice of the estimated time of arrival of the cargo.

The bill of lading covered 12 containers but only 10 arrived (in the manifest).

Petitioner paid the total demurrage and additional charges to secure all the containers, but it was not able to obtain
its goods. Letters of complaint sent to the Philippine Ports Authority requesting reconsideration of the demurrage
charges, on the ground that the delay in claiming the goods was due to the alleged late arrival of the shipping
documents, the delay caused by the amendment of the manifest, and the fact that two of the containers arrived
separately from the other ten containers.

Petitioner wrote private respondent for a refund of the demurrage charges, but private respondent replied it could
not modify the rules or authorize refunds of the stipulated tariffs. Private respondents claimed that collection of
container charges was authorized by §§ 2, 23 and 29 of the bill of lading and that they were not free to waive these
charges because under the United States Shipping Act of 1916 it was unlawful for any common carrier engaged in
transportation involving the foreign commerce of the United States to charge or collect a greater or lesser
compensation that the rates and charges specified in its tariffs on file with the Federal Maritime Commission.

Petitioner's argument that it is not bound by the bill of lading issued by K-Line because it is a contract of adhesion,
whose terms as set forth at the back are in small prints and are hardly readable.

ISSUE: Whether or not a bill of lading operates as a contract.

RULING: NO

Now a bill of lading is both a receipt and a contract. As a contract, its terms and conditions are conclusive on the
parties, including the consignee. What we said in one case mutatis mutandis applies to this case: A bill of lading
operates both as a receipt and a contract. .

. . . As a contract, it names the contracting parties which include the consignee, fixes the route, destination, freight
rate or charges, and stipulates the rights and obligations assumed by the parties . . . . By receiving the bill of lading,
it assented to the terms of the consignment contained therein, and became bound thereby, so far as the
conditions named are reasonable in the eyes of the law. Since neither appellant nor appellee alleges that any
provision therein is contrary to law, morals, good customs, public policy or public order·and indeed we found
none·the validity of the Bill of Lading must be sustained and the provisions therein properly applies to resolve the
conflict between the parties.

BPI vs. Intermediate Appellate Court GR# L-66826, August 19, 1988

Facts: Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings account and a peso
current account. An application for a dollar draft was accomplished by Virgillo Garcia branch manager of
COMTRUST payable to a certain Leovigilda Dizon. In the application, Garcia indicated that the amount was
to be charged to the dolar savings account of the Zshornacks. There was no indication of the name of the
purchaser of the dollar draft. Comtrust issued a check payable to the order of Dizon. When Zshornack
noticed the withdrawal from his account, he demanded an explainaton from the bank. In its answer,
Comtrust claimed that the peso value of the withdrawal was given to Atty. Ernesto Zshornack, brother of
Rizaldy. When he encashed with COMTRUST a cashiers check for P8450 issued by the manila banking
corporation payable to Ernesto.

Issue: Whether the contract between petitioner and respondent bank is a deposit?

Ruling: Yes. The document which embodies the contract states that the US$3,000.00 was received by the
bank for safekeeping. The subsequent acts of the parties also show that the intent of the parties was really
for the bank to safely keep the dollars and to return it to Zshornack at a later time. Thus, Zshornack
demanded the return of the money on May 10, 1976, or over five months later.

The above arrangement is that contract defined under Article 1962, New Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with
the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not
the principal purpose of the contract, there is no deposit but some other contract.

Since the mere safekeeping of the greenbacks, without selling them to the Central Bank within one
business day from receipt, is a transaction which is not authorized by CB Circular No. 20, it must be
considered as one which falls under the general class of prohibited transactions. Hence, pursuant to Article
5 of the Civil Code, it is void, having been executed against the provisions of a mandatory/prohibitory law.
More importantly, it affords neither of the parties a cause of action against the other. "When the nullity
proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal
offense, both parties being in pari delicto, they shall have no cause of action against each other. . ." [Art.
1411, New Civil Code.] The only remedy is one on behalf of the State to prosecute the parties for violating
the law.

Roman vs. Asia Banking Corporation

Facts:

Felisa Roman claims the 576 bundles of tobacco under and by virtue of the instrument, and on
November 25, 1920, Felisa Roman reported the said Asia Banking Corporation of her contention, a copy of
which notification is hereto attached and made to part hereof and marked Exhibit B.

An insolvency proceedings were filed and the 576 bundles of tobacco were in possession of U. de Poli
and now are in possession of the assignee. U. de Poli, for value received, issued to remain, covering
aforesaid 576 packages of tobacco, to the Asia Banking Corporation .

The 576 lumps of tobacco are part and parcel of the 2,777 lumps purchased by U. de Poli from Felisa
RomanU. de Poli certifies that he is the sole owner of the merchandise therein described.

The warehouse receipt is endorced in blank "Umberto de Poli;" it is not marked "non-negotiable" or "not
negotiable."

The order appealed from is based on the theory that the tobacco was transferred to the Asian 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.

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.

Issue: Whether or not the warehouse receipt is negotiable such that the claim of Asian Banking
Corporation is stronger over the claim of Roman

Ruling:

Yes. A warehouse receipt, like any other document, must be interpreted according to its evident intent
(Civil Code, articles 1281 et seq.) and it is 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 "by
order" are used instead of "to order" is very evidently merely a clerical or grammatical error. If any
intelligent meaning is attacked to the phrase "They remain deposited in these warehouses by order of Mr.
U. de Poli" it must be held to mean "They are deposited in these warehouses at the order of Mr. U. de Poli.
" The phrase must be construed to mean that U. de Poli was the authorized person 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, which immediately
demonstrates the intention of U. de Poli and of the appellant bank, by the employment of the phrase "by
order of Mr. U. de Poli" to make the receipt of the receipt and the transfer to the very transfer, which then
and there made by such endorsement in blank and delivery of the receipt to the blank .

As stated above, the receipt was not marked "non-negotiable." Under modern statutes of the negotiability
of warehouse receipts has been enlarged, the statutes having the effect of making such receipts negotiable
unless marked "non-negotiable."

We therefore hold that the warehouse receipts in controversy was negotiable and that the rights of the
endorsee, the appellant, Asia Banking Corporation are superior to the seller of the appellee, Roman and
should be given preference over the latter.

RAMON GONZALES vs GO TIONG and LUZON SURETY CO., INC G.R. No. L-11776
08/30/1958
FACTS:
Go Tiong obtained a license to engage in the business of a bonded warehouseman being an owner of
a rice mill and warehouse. To secure the performance of his obligations as such bonded warehouseman,
Luzon Surety Co. executed a bond conditioned particularly on the fulfillment by Go Tiong of his duty or
obligation to deliver to the depositors in his storage warehouse, the palay received by him for storage, at
any time demand is made, or to pay the market value thereof, in case he was unable to return the same.
Prior to the issuance of the license to Go Tiong to operate as bonded warehouseman, he had on several
occasions received palay for deposit from plaintiff Gonzales for he issued ordinary receipts. After he was
licensed as bonded warehouseman, Go Tiong again received various deliveries of palay from plaintiff or
which he issued the corresponding receipts, On or about March 15, 1953, plaintiff demanded from Go
Tiong the value of his deposits for which he was told to come back twice until the warehouse got burnt
down.

ISSUE: WON the case at bar falls under the warehouse receipts law, and not the Civil Code?
HELD:
Yes. Any deposit made with him as a bonded warehouseman must necessarily be governed by the
provisions of the warehouse receipts law. The kind or nature of the receipts issued by him for the deposits
is not very material much less decisive. Though it is desirable that receipts issued by a bonded
warehouseman should conform to the provisions of the Warehouse Receipts Law, said provisions in our
opinion are not mandatory and indispensable in the sense that if they fell short of the requirements of the
Warehouse Receipts Act, then the commodities delivered for storage become ordinary deposits and will
not be governed by the provisions of the Bonded Warehouse Act. Under Section 1 of the Warehouse
Receipts Act, one would gather the impression that the issuance of a warehouse receipt in the form
provided by it is merely permissive and directory and not obligatory. As the trial court well observed, as
far as Go Tiong was concerned, the fact that the receipts issued by him were not "quedans" is no valid
ground for defense because he was the principal obligor. Furthermore, as found by the trial court, Go
Tiong had repeatedly promised plaintiff to issue to him "quedans" and had assured him that he should not
worry; and that Go Tiong was in the habit of issuing ordinary receipts (not "quedans") to his depositors.
(QUEDANS: Warehouse receipts that cover sugar)

In relation to the failure of Go Tiong to issue the warehouse receipts contemplated by the Warehouse
Receipts Act, which failure, according to appellants, precluded plaintiff from suing on the bond, reference
may be made to Section 2 of Act No. 3893, defining receipt as any receipt issued by a warehouseman for
commodity delivered to him, showing that the law does not require as indispensable that a warehouse
receipt be issued. Furthermore, Section 7 of said law provides that as long as the depositor is injured by a
breach of any obligation of the warehouseman, which obligation is secured by a bond, said depositor may
sue on said bond. In other words, the surety cannot avoid liability from the mere failure of the
warehouseman to issue the prescribed receipt.

5. LUA KIAN v. MANILA RAILROAD COMPANY and MANILA PORT SERVICE

G.R. No. L-23033 January 5, 1967

FACTS: The present suit was filed by Lua Kian against the Manila Railroad Co. and Manila Port Service for the
recovery of the invoice value of imported evaporated "Carnation" milk alleged to have been undelivered. Defendant
Manila Port Service as a subsidiary of defendant Manila Railroad Company operated the arrastre service at the Port of
Manila under and pursuant to the Management Contract entered into by and between the Bureau of Customs and
defendant Manila Port Service. Plaintiff Lua Kian imported 2,000 cases of Carnation Milk from the Carnation Company
of San Francisco, California, and shipped on Board SS "GOLDEN BEAR" per Bill of Lading No. 17.Out of the
aforesaid shipment of 2,000 cases of Carnation Milk per Bill of Lading No. 17, only 1,829 cases marked `LUA KIAN
1458' were discharged from the vessel S`GOLDEN BEAR' and received by defendant Manila Port Service per pertinent
tally sheets issued by the said carrying vessel.

Discharged from the same vessel on the same date unto the custody of defendant Manila Port Service were 3,171 cases
of Carnation Milk marked "CEBU UNITED 4860-PH-MANILA" consigned to Cebu United Enterprises, per Bill of
Lading No. 18.Defendant Manila Port Service delivered to the plaintiff thru its broker, Ildefonso Tionloc, Inc. 1,913
cases of Carnation Milk market "LUA KIAN 1458" per pertinent gate passes and broker's deliver receipts. A provisional
claim was filed by the consignee's broker for and in behalf of the plaintiff with defendant Manila Port Service.

The invoice value of the 87 cases of Carnation Milk claimed by the plaintiff to have been short-delivered by defendant
Manila Port Service is P1,183.11 while the invoice value of the 87 cases of Carnation Milk claimed by the defendant
Manila Port Service to have been over-delivered by it to plaintiff is P1,130.65.
The 1,913 cases of Carnation mentioned in paragraph 5 hereof were taken by the broker at Pier 13, Shed 3, sometime in
February, 1960where at the time, there were stored therein, aside from the shipmen involved herein, 1000 cases of
Carnation Milk bearing the same marks and also consigned to plaintiff Lua Kian but had been discharged from SS
`STEEL ADVOCATE' and covered by Bill of Lading No. 11.Lua Kian as consignee thereof filed a claim for
short-delivery again defendant Manila Port Service, and said defendant Manila Port Service paid Lua Kian plaintiff
herein, P750.00 in settlement of its claim.

Defendants appealed to the Supreme Court and contend that they should not be made to answer for the undelivered cases
of milk, insisting that Manila Port Service was bound to deliver only

1,829 cases to Lua Kian and that it had there before in fact over-delivered to the latter.

ISSUE: Whether defendant Manila Port Service is liable for the undelivered cases of “Carnation” milk to
petitioner due to improper marking.

RULING: Yes. The bill of lading in favor of Cebu United Enterprises indicated that only 3,000 cases were due to said
consignee, although 3,171 cases were marked in its favor. Lua Kian whose bill of lading on the other hand indicated that
it should receive 171 cases more. The legal relationship between an arrastre operator and the consignee is akin to that of
a depositor and warehouseman. As custodian of the goods discharged from the vessel, it was defendant arrastre
operator's duty, like that of any ordinary depositary, to take good care of the goods and to turn them over to the party
entitled to their possession. The said defendant should have withheld delivery because of the discrepancy between the
bill of lading and the markings and conducted its own investigation, not unlike that under Section 18 of the Warehouse
Receipts Law, or called upon the parties, to interplead, such as in a case under Section 17 of the same law, in order to
determine the rightful owner of the goods.

It is true that Section 12 of the Management Contract exempts the arrastre operator from responsibility form is delivery
or non-delivery due to improper or insufficient marking. It cannot however excuse the defendant from liability in this
case because the bill of lading showed that only 3,000 cases were consigned to Cebu United Enterprises. The fact that
the excess of171 cases were marked for Cebu United Enterprises and that the consignment to Lua Kian was 171 cases
less than the 2,000 in the bill of lading, should have been sufficient reason for the defendant Manila Port Service to
withhold the goods pending determination of their rightful ownership.