H.

WAREHOUSE RECEIPTS LAW 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. Estrada vs. Court of Agrarian Relations 2 SCRA 9 ! "#9!#$ Facts: Respondent Faustino Galvan refuses to release the palay, which were the subject matter of herein case. The manager of the Moncada Bonded arehouse also refused to release the palay notwithstanding the resolution issued by the !upreme "ourt to release the same to the petitioners. !uch refusal was anchored on the fact that the petitioners were not able to present the original receipt corresponding to the palay deposited. #n the part of the petitioners, their failure to surrender the original receipt was due to the fire that destroyed such document. Issue/s: hether the warehouseman could release the palay even without the surrender of the original

Ruling: The e$cuses respectively offered by the manager of the Moncada and Galvan are not without some merits. %owever, such incidents do not constitute a valid e$cuse to evade compliance with the order of this "ourt that the palay in &uestion be delivered to the petitioners, and, considering that the petitioners, according to the manifestation filed by their counsel under date of 'ugust (, )*+), 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. ,t is hereby ordered that the manager or the owner of the Moncada Bonded arehouse in Moncada, Tarlac, and respondent Faustino F. Galvan release and deliver to the petitioners the portion still remaining to be delivered to them or their shares in the palay involved in these cases. -owarehouseman 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 !uestioned articles have not yet sued the warehouseman for damages on account of said wrongful delivery. Consolidated Ter%inals vs. Arte& 'evelo(%ent Co. !) SCRA *! "#9+,$ Facts: "T, was the operator of a customs bonded warehouse located at -ort 'rea, Manila. ,t received on deposit of )*( bales of high density compressed raw cotton. ,t was understood that "T, would .eep the cotton in behalf of /u0on Bro.erage "orporation until the consignee thereof, -aramount Te$tile Mills, ,nc., had opened the corresponding letter of credit in favor of shipper. 'llegedly by virtue of a forged permit to deliver imported goods, purportedly issued by the Bureau of "ustoms, 'rte$ was able to obtain delivery of the bales of cotton on after paying "T, -)1,222 as storage and handling charges. 't the time the merchandise was released to 'rte$, the letter of credit had not yet been opened and the customs duties and ta$es due on the shipment had not been paid. "T,, in its original complaint, sought to recover possession of the cotton by means of a writ of replevin. The writ could not be e$ecuted. "T, then filed an amended complaint by transforming its

original complaint into an action for the recovery from 'rte$ of -**,+2*.3+ as compensatory damages, -)2,222 as nominal and e$emplary damages and -42,222 as attorney5s fees ,t should be clarified that "T, alleged that 'rte$ ac&uired the cotton from -aramount Te$tile Mills, ,nc., the consignee. 'rte$ alleged in its motion to dismiss that it was not shown in the delivery permit that 'rte$ was the entity that presented that document to the "T,. 'rte$ further averred that it returned the cotton to -aramount Te$tile Mills, ,nc. when the contract of sale between them was rescinded because the cotton did not conform to the stipulated specifications as to &uality. Issue/s: hether "T, has a cause of action against 'rte$

Ruling: "T, in this appeal contends that, as warehouseman, it was entitled to the repossession

of the bales of cotton6 that 'rte$ acted wrongfully in depriving "T, of the possession of the merchandise because 'rte$ presented a falsified delivery permit, and that 'rte$ should pay damages to "T,.
The only statutory rule cited by "T, is section )2 of the arehouse Receipts /aw which provides that 7where 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 ...7. e hold that "T,5s appeal has not merit. ,ts amended complaint does not clearly show that, as warehouseman, it has a cause of action for damages against 'rte$. The real parties interested in the bales of cotton were /u0on Bro.erage "orporation as depositor, -aramount Te$tile Mills, ,nc. as consignee, 'dolph %ansli. "otton as shipper and the "ommissioners of "ustoms and ,nternal Revenue with respect to the duties and ta$es. These parties have not sued "T, for damages or for recovery of the bales of cotton or the corresponding ta$es and duties. The case might have been different if it was alleged in the amended complaint that the depositor, consignee and shipper had re&uired "T, to pay damages, or that the "ommissioners of "ustoms and ,nternal Revenue had held "T, liable for the duties and ta$es. ,n such a case, "T, might logically and sensibly go after 'rte$ for having wrongfully obtained custody of the merchandise. But that eventuality has not arisen in this case. !o, "T,5s basic action to recover the value of the merchandise seems to be untenable. It was not the owner of the cotton. %ow could it be entitled to claim the value of the shipment8 -o"he negotiation of the warehouse receipt by the buyer of goods purchased from and deposited to the warehouse is valid even if the warehouseman who issued a negotiable warehouse receipt was not the buyer. "he validity of the negotiation cannot be impaired by the fact that the owner/warehouseman was deprived of the possession of the same by fraud, mista#e or conversion. P-ili((ine .ational /an0 vs. .oa-1s Ar0 Sugar Refiner2 22! SCRA )! "#99)$ Facts: ,n accordance with 'ct 9o. 4)(3, the arehouse Receipts /aw, 9oah5s 'r. !ugar Refinery issued on several dates warehouse receipts : !uedans;. The receipts are substantially in the form, and contain the terms, prescribed for negotiable warehouse receipts by !ection 4 of the law. !ubse&uently, warehouse receipts, covering sugar deposited by R9! Merchandising, were negotiated and indorsed to /uis T. Ramos6 and receipts corresponding to the sugar of !t. Therese Merchandising, of sugar of R9! Merchandising, and of sugar of Rosa !y were negotiated and indorsed to "resencia

<. =oleta. =oleta and Ramos then used the !uedans as security for loans obtained by them from the -hilippine 9ational Ban. :-9B;. These !uedans they indorsed to the ban.. Both =oleta and Ramos failed to pay their loans upon maturity. "onse&uently, -9B wrote to 9oah5s 'r. !ugar Refinery :9oah5s 'r.; demanding delivery of the sugar covered by the !uedans indorsed to it by =oleta and Ramos. hen 9oah5s 'r. refused to comply with the demand, -9B filed with the Trial "ourt a verified complaint for 7!pecific -erformance with >amages and 'pplication for rit of 'ttachment7 against 9oah5s 'r., 'lberto T. /ooyu.o, ?immy T. Go, and ilson T. Go, the last three being identified as 7the !ole -roprietor, Managing -artner and @$ecutive Aice -resident of 9oah5s 'r., respectively.7 Issue/s: hether -9B ac&uired ownership over the &uedans.

Ruling: The validity of the negotiation by R9! Merchandising and !t. Therese Merchandising to Ramos and =oleta, and by the latter to -9B to secure a loan cannot be impaired by the fact that the negotiation between 9oah5s 'r. and R9! Merchandising and !t. Therese Merchandising was in breach of faith on the part of the merchandising firms or by the fact that the owner :9oah5s 'r.; was deprived of the possession of the same by fraud, mista.e or conversion of the person to whom the warehouse receiptB&uedan was subse&uently negotiated if :-9B; paid value therefore in good faith without notice of such breach of duty, fraud, mista.e or conversion. :!ee 'rticle )1)C, 9ew "ivil "ode;. 'nd the creditor :-9B; 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 e&uity in regard to property which cannot be readily attached or levied upon by ordinary process. :!ee 'rt. )142, 9ew "ivil "ode;. ,f the &uedans were negotiable in form and duly indorsed to -9B :the creditor;, the delivery of the &uedans to -9B ma.es the -9B the owner of the property covered by said &uedans and on deposit with 9oah5s 'r., the warehouseman. ,n the case at bar, e found that the factual bases underlying the defendant5s affirmative defenses :upon which -9B has moved for summary judgment; are not disputed and have been stipulated by the parties and therefore do not re&uire presentation of evidence. -9B5s right to enforce the obligation of 9oah5s 'r. as a warehouseman, to deliver the sugar stoc. to -9B as holder of the &uedans, does not depend on the outcome of the thirdDparty complaint because the validity of the negotiation transferring title to the goods to -9B as holder of the &uedans is not affected by an act of R9! Merchandising and !t. Therese Merchandising, in breach of trust, fraud or conversion against 9oah5s 'r.. -oIn $%& vs. %oah's r# (ugar Refinery )supra*, the (upreme +ourt ruled that $%& is entitled to the stoc#s of sugar as the endorsee of the !uedans. In this case, the (upreme +ourt clarified that while $%& is entitled to the stoc#s of sugar, delivery to it shall effected only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his lien because in according with (ection ,- of the Warehouse Receipts .aw, the warehouseman loses his lien upon the goods by surrendering possession thereof. P-ili((ine .ational /an0 vs. Se3 4r. !) SCRA ) 5 "#99!$ Facts: This case is the continuation of -9B v. 9oah5s 'r. !ugar Refinery. The respondent herein is Benito !e ?r., presiding judge of the court to which said case was raffled and which denied the application for preliminary attachment.

9oahEs 'r. and its coDdefendants filed an 'nswer with "ounterclaim and ThirdD-arty "omplaint in which they claimed that they are the owners of the subject &uedans and the sugar represented therein. The 'nswer incorporated a ThirdD-arty "omplaint by 'lberto T. /ooyu.o, ?immy T. Go and ilson T. Go, doing business under the trade name and style 9oahEs 'r. !ugar Refinery against Rosa 9g !y and Teresita 9g, praying that the latter be ordered to deliver or return to them the &uedans :previously endorsed to -9B and the subject of the suit; and pay damages and litigation e$penses. The 'nswer of Rosa 9g !y and Teresita 9g, one of avoidance, is essentially to the effect that the transaction between them, on the one hand, and ?immy T. Go, on the other, concerning the &uedans and the sugar stoc.s covered by them was merely a simulated one being part of the latterEs comple$ ban.ing schemes and financial maneuvers, and thus, they are not answerable in damages to him. #n ?anuary (), )**), the -hilippine 9ational Ban. filed a Motion for !ummary ?udgment in favor of the plaintiff as against the defendants for the reliefs prayed for in the complaint. #n May 4, )**), the Regional Trial "ourt issued an order denying the Motion for !ummary ?udgment. Thereupon, the -hilippine 9ational Ban. filed a -etition for "ertiorari with the "ourt of 'ppeals. Issue/s: hether -9B should pay the lien that is due to 9oahEs 'r. as a warehouseman

Ruling: 'ccordingly, petitioner -9B is legally bound to stand by the e$press terms and conditions on the face of the arehouse Receipts as to the payment of storage fees. @ven in the absence of such a provision, law and e&uity dictate the payment of the warehousemanE s lien pursuant to !ections 43 and () of the arehouse Receipts /aw :R.'. 4)(3;, to witF /(0+"I1% ,2. What claims are included in the warehouseman3s lien. 4 (ub5ect 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 goods6 also for all lawful claims for money advanced, interest, insurance, transportation, labor, weighing coopering and other charges and e7penses in relation to such goods6 also for all reasonable charges and e7penses for notice, and advertisement of sale, and for sale of the goods where default has been made in satisfying the warehouseman3s lien. $$$ $$$ $$$ (0+"I1% 89. Warehouseman need not deliver until lien is satisfied. warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied.: 'fter being declared not the owner, but the warehouseman, by the "ourt of 'ppeals on >ecember )(, )**) in "'DG.R. !-. 9o. 41*(C, the decision having been affirmed by us on >ecember ), )**(, private respondents cannot legally be deprived of their right to enforce their claim for warehousemanEs lien, for reasonable storage fees and preservation e$penses. -ursuant to !ection () which we &uote hereunder, the goods under storage may not be delivered until said lien is satisfied. /(0+"I1% 89. Warehouseman need not deliver until lien is satisfied. - warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied.: "onsidering that petitioner does not deny the e$istence, validity and genuineness of the arehouse 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. 's contracts, the receipts must be respected by authority of 'rticle ))1* of the "ivil "ode, to witF

/ R". 99;-. 1bligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.: -etitioner 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 stoc.s covered by the subject arehouse Receipts on the basis of which it anchors its claim for payment or delivery of the sugar stoc.s. The unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the arehouse Receipts /aw :R.'. 4)(3; carried with it the admission of the e$istence and validity of the terms, conditions and stipulations written on the face of the arehouse Receipts, including the un&ualified recognition of the payment of warehousemanEs lien for storage fees and preservation e$penses. -etitioner may not now retrieve the sugar stoc.s without paying the lien due private respondents as warehouseman. ,n view of the foregoing, the rule may be simplified thusF hile the -9B is entitled to the stoc.s of sugar as the endorsee of the &uedans, delivery to it shall be effected only upon payment of the storage fees. -o"he remedies available to a warehouseman to enforce his warehouseman's lien are: )9* to refuse to deliver the goods until his lien is satisfied, pursuant to (ection 89 of the Warehouse Receipts .aw6 ),* to sell the goods and apply the proceeds thereof to the value of the lien pursuant to (ections 88 and 8< of the warehouse Receipts .aw6 and )8* by other means allowed by law to a creditor against his debtor, for the collection from the depositor of all charges and advances which the depositor e7pressly or impliedly contracted with the warehouseman to pay under (ection 8, of the Warehouse Receipts .aw6 or such remedies allowed by law for the enforcement of a lien against personal property under (ection 8; of said law. 0ven in the absence of a provision in the warehouse receipts, law and e!uity dictate the payment of the warehouseman's lien pursuant to (ection ,2 and 89 of the Warehouse Receipts .aw. "he refusal of the warehouseman who previously owned the sugar stored with it, to deliver the sugar to the endorsee of the !uedans on the ground that it was still the owner of the sugar because it had not been paid by the buyer, is not a valid e7cuse. "he loss of the warehouseman's lien, however, does not necessarily mean the e7tinguishment of the obligation to pay the warehouseman fees and charges which continues to be a personal liability of the owners, i.e., the pledgors, not the pledgee, in this case. &ut even as to the owners pledgors, the warehouseman fees and charges have ceased to accrue from the date of the re5ection by the warehouseman to heed the lawful demand by the endorsee of the !uedan for the release of the goods. warehouseman's lien should in no event go beyond the value of the credit in favor of the pledge. It is based on the foreclosures that the buyer does not assume the obligations of the pledgor to his other creditors even while such buyer ac!uires title over the goods less any e7isting preferred lien thereon. Reasons which a warehouseman may invo#e to legally refuse to effect delivery of the goods covered by the !uedans: )9* "hat the holder of the receipt does not satisfy the conditions prescribed in (ection = of the ct. )(ec. =, ct %o. ,982*6 ),* "hat the warehouseman has legal title in himself on the goods, such title or right being derived directly or indirectly from a transfer made by the depositor at the time of or subse!uent to the deposit for storage, or from the warehouseman's lien. )8* "hat the warehouseman has legally set up the title or right of third persons as lawful defense for non-delivery of the goods as follows: 7 7 7 )<* "hat the warehouseman having a lien valid against the person demanding the goods refuses to deliver the goods to him until the lien is satisfied. )(ec. 89, ct %o. ,982*6 );* "hat the failure was not due to any fault on the part of the warehouseman, as by showing that, prior top 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 ta#en by mista#e of a third person without the #nowledge or implied assent of the warehouseman, or some other 5ustifiable grounds for non-delivery.

dverse claim of ownership as a basis by a warehouseman for refusing to deliver the goods covered by warehouse receipts is not a valid legal e7cuse. P-ili((ine .ational /an0 vs. Sa2o3 4r. 292 SCRA 252 "#99 $ Facts: 9oahEs 'r. !ugar Refinery issued several warehouse receipts covering sugar deposited by R9! Merchandising and !t. Therese Merchandising. !ubse&uently, these same receipts were endorsed to Ramos and =oleta. The latter then used the receipts as security for two loan agreements with -9B, thus endorsing them with said ban.. hen Ramos and =oleta could not pay their loan to the ban., -9B demanded delivery of the sugar stoc.s covered by the receipts from 9oahEs 'r. !ugar Refinery. 9oah refused to comply with the demand alleging ownership of the sugar. ,t alleged that the owner of 9oah, /ooyu.o, entered into an agreement with R9! and !t. Therese Merchandising to sell the sugar indicated in the warehouse receipts stored in 9oah for an amount of -+(,222,222. "hec.s were issued but they were dishonored for being drawn against insufficient funds. %ence, -9B filed a complaint with the RT". RT" dismissed said complaint. #n appeal to the !" via petition for review on certiorari, the !upreme "ourt ordered 9oah and its owner, /ooyu.o, to deliver to -9B the sugar stoc.s covered by the warehouse receipts in controversy. %owever, 9oah filed an #mnibus Motion see.ing deferment of the judgment until it was heard on its warehousemanEs lien. RT" granted the order and evidence was received in support thereof. RT" adjudged that there e$isted a valid lien in favor of 9oah, and accordingly, e$ecution of the judgment against 9oah should be stayed until the full amount of 9oahEs lien shall have been satisfied. -9B then filed certiorari proceedings before the !upreme "ourt. The !upreme "ourt held that while -9B was entitled to the sugar stoc.s as endorsee of the receipts, delivery to it shall only be effected upon payment of the storage fees. The !upreme "ourt further ruled that imperative is the right of the warehouseman to demand payment of his lien because he loses his lien upon goods by surrendering possession thereof. RT" ?udge !ayo, ?r. allowed a writ of e$ecution in favor of 9oah to collect on its warehousemanEs lien against -9B. %ence, this certiorari proceeding before the !upreme "ourt. Issue/s: hether or not -9B is liable for storage fees. ,f yes, what is the duration of time the right of -9B over the goods may be subject to the lien8 Ruling: G@!. -9B contends that it was a mere pledgee as the receipts were used to secure two loans it granted. The !upreme "ourt agreed with this and held that the indorsement and delivery of the receipts by Ramos and =oleta to -9B was not to convey title to or ownership of the goods but to secure the loans by way of pledge. The indorsement of the receipts to perfect the pledge merely constituted a symbolical or constructive delivery of the possession of the thing thus encumbered. The creditor, in a contract of real security, li.e pledge, cannot appropriate without foreclosure the things given by way of pledge. 'ny stipulation to the contrary is null and void for being pactum commissorio. The law re&uires foreclosure in order to allow a transfer of title of the goods given by way of security from its pledgor, and before any such foreclosure, the pledgor, not the pledgee, is the owner of the goods. %owever, the !upreme "ourt held that the warehouseman nevertheless is entitled to his lien that attaches to the goods invo.able against anyone who claims a right of possession thereon. :4; The !upreme "ourt held that where a valid demand by the lawful holder of the receipts for the delivery of the goods is refused by the warehouseman, despite the absence of a lawful e$cuse

provided by the law itself, the warehousemanEs lien is thereafter concomitantly lost. 's to what the law deems a valid demand, !ection C of the arehouse Receipts /aw enumerates what must accompany a demand. The !upreme "ourt held that regrettably, the factual settings do not sufficiently indicate whether the demand to obtain possession of the goods complied with !ec. C. The presumption, nevertheless, would be that the law was complied with. #n the other hand, it would appear that the refusal of 9oah to deliver the goods was not anchored on a valid e$cuse, i.e., nonDsatisfaction of the lien over the goods, but on an adverse claim of ownership. Hnder the circumstances, this hardly &ualified as a valid, legal e$cuse. The loss of the lien, however, does not necessarily mean the e$tinguishment of the obligation to pay the warehousing fees and charges which continues to be a personal liability of the owners, i.e., the pledgors, not the pledgee, in this case. But even as to the ownersDpledgors, the warehouseman fees and charges have ceased to accrue from the date of the rejection by 9oah to heed the lawful demand by -9B for the release of the goods. %ence, the time from which the fees and charges should be made payable is from the time 9oah refused to heed -9BEs demand for delivery of the sugar stoc.s and in no event beyond the value of the credit in favor of the pledgee since it is basic that, in foreclosures, the buyer does not assume the obligations of the pledgor to his other creditors even while such buyer ac&uires title over the goods less any e$isting preferred lien thereover. -o-