Week 13 Nego

NEGO
week 13

1. Gonzales v. Go Tiong - Mariana RAMON GONZALES vs. GO TIONG and LUZON SURETY CO., INC.,- LOPA

Emergency Recit:
Parties:
Go Tiong Bonded warehouseman. Licensed to hold 5000 sacks of palay.
Luzon Surety secured Go Tiongs obligation as bonded warehouseman.
Alliance Surety and Insurance Company insured palay deposited in Go Tiongs warehouse
Gonzales depositor

(Read the role of all the parties first) Gonzales deposited with Go Tiong some palay. Total of 860 sacks of palay worth
P8,600. Go Tiong issued ordinary receipts (not quedans or warehouse receipts). Gonzales asked for the value of the
deposits twice and was twice refused. After which, a fire burned the warehouse and all the palay. There was a total of
5847 sacks of palay (in excess of what Go Tiong was licensed to store). Various depositors claimed with Bureau of
Commerce (BoC) but only some got paid. Gonzales was not paid. Gonzales withdrew from BoC claims and brought
action to court. CFI ruled in favor of Gonzales.

1. W/N GO TIONG IS LIABLE TO PAY GONZALES? YES.
o No matter what kind of receipt is issued, the Bonded Warehouse Act will govern all situations where
things are deposited with a bonded warehouseman.
o Issuance of a warehouse receipt in the form provided by The Warehouse Receipts Law is merely
permissive and directory and not obligatory.
o Section 2 of Bonded Warehouse Act - defines receipt as any receipt issued by a warehouseman for
commodity delivered to him. The law does not require as indispensable that a warehouse receipt be
issued.
o Even if the Civil Code should govern, they would still be liable because Go Tiong was in default (Gonzales
already demanded for payment) and the fact that Go Tiong held more than he was licensed to increased
the risk. Even when the loss is due to a fortuitous event, if the depositary was at fault or negligent, he
shall be liable.

2. W/N LUZON SURETY IS LIABLE TO PAY GONZALES? YES.
o Section 7 of Bonded Warehouse Act 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. Surety cannot avoid liability from the mere failure of the warehouseman to issue the prescribed
receipt.

Facts:
o Go Tiong owned a rice mill and warehouse, located at Mabini, Urdaneta, Pangasinan.
o Go Tiong obtained a license to engage in the business of a bonded warehouseman.
o Luzon Surety Co. executed Guaranty Bond No. 294 in the sum of P18,334 to insure Go Tiongs obligation.
o 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.
o Go Tiong insured the warehouse and the palay deposited therein with the Alliance Surety and Insurance
Company.

LEX. ANGEL. JOBEN. GEORGE. NORBY. KEITH. MAITI. KARL. MARIANA. DONDON. CJ. GASTON. ZEP. RIO. JECH. JED
2C 2015
NEGO week 13

o
o
o
o
o
o
o
Gonzales deposits.
o BEFORE THE ISSUANCE OF LICENSE TO GO TIONG TO OPERATE AS BONDED WAREHOUSEMAN, Gonzales
deposited palay with him (368 sacks). Go Tiong issued receipts.
o AFTER ISSUANCE OF LICENSE, Go Tiong got another 492 sacks from Gonzales. Issued receipts again.
Total of 860 sacks worth P8,600.
o Receipts issued were ordinary NOT WAREHOUSE receipts defined by the Warehouse Receipts Act (Act
No. 2137).
Gonzales demanded for value of deposits but Go Tiong asked him to come back in 2 days. Gonzales did. Go
Tiong delayed again. Then BOOM the warehouse burned to the ground.
Total of 5,847 sacks of palay were in the warehouse when it burned down (from various depositors).
o BUT WAIT! Take note, Go Tiong was only licensed to store 5000 sacks of palay.
Depositors of palay filed claims with the Bureau of Commerce (BoC). With the proceeds from the insurance
policy, SOME were paid.
Gonzales withdrew their claim with BoC.
o According to Go Tiong: reason was because BoC denied their claim
o According to CFI: reason was because nothing was happening with this claim.
[FILING OF CFI CASE] Gonzales filed present action against Go Tiong and Luzon Surety for the value of his palay
(P8600) with legal interest, damages and attorneys fees.
[AMICABLE SETTLEMENT BETWEEN GONZALES AND GO TIONGFAILED] Upon settlements of accounts due to
Gonzales, he would have all the pending actions against Go Tiong dismissed. But Go Tiong never paid. Gonzales
pursued case in CFI
CFI ruled in favor of Gonzales. CA indorsed the case to the SC because issues only concerned questions of law.
Hence this case.

ISSUES:
o The answer of the above question really depends on the question Which law should apply -- Civil Code or
Bonded Warehouse Act?
o If Civil Code no liability because of fortuitous event?
o If Bonded Warehouse Act liable

RATIO:
o Go Tiong claims that the Civil Code and not the Bonded Warehouse Act should govern because of two reasons:
o He issued ordinary receipts and not quedans. Nope.
o It was a gratuitous deposit. Wrong again buddy.
o The fact that Go Tiong did not issue quedans is no valid ground for defense because he was the principal
obligor.
o Go Tiong repeatedly promised to give Gonzales quedans and assured him saying he shouldnt worry. Go Tiong
assured that he was in the habit of issuing ordinary receipts to his depositors.
o It was a gratuitous deposit because Go Tiong induced Gonzales to deposit his palay in order to promote his
business and to attract other depositors. Gonzales was to convince other palay owners to deposit with Go Tiong
(as if thatll happen now haha)

2C 2015
NEGO week 13

o
o
o
o
o
Act No. 3893 (Bonded Warehouse Act) as amended is a special law regulating the business of receiving
commodities for storage and defining the rights and obligations of a bonded warehouseman and those
transacting business with him.
Any deposit made with a bonded warehouseman must necessarily be governed by the provisions of the
Bonded Warehouse Act. The kind or nature of the receipts issued by him for the deposits is not very material
much less decisive.
Conformity with the provisions of the Warehouse Receipts Law (Sec 1) are not mandatory and indispensable.
They are merely permissive and directory. (Warehouse receipts MAY be issued by warehousemen)
Even if ordinary receipts were issued, as long as the deposit was made with a bonded warehouseman, the
laws on the Bonded Warehouse Act will govern.
Under Section 2 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.
Section 2 of Bonded Warehouse Act - defines receipt as any receipt issued by a warehouseman for
commodity delivered to him. The law does not require as indispensable that a warehouse receipt be issued.

EVEN ASSUMING THE CIVIL CODE WOULD GOVERN, GO TIONG WOULD STILL BE LIABLE. [not nego but important]
o Depositary is only free from liability if there was no fault or negligence on his part and the fortuitous
event destroyed the object of the deposit.
o The fact that Go Tiong held more palay than he was authorized to, he must have increased the risk and
this would militate against his defense of non-liability.
o Remember that Gonzales had twice demanded and Go Tiong twice delayed. There shall be a
presumption of negligence in bailment cases like the present one, where there is default in delivery or
accounting, for the goods

o Section 7 of Bonded Warehouse Act 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. Surety cannot avoid liability from the mere failure of the warehouseman to issue the prescribed
receipt.
o The surety company thereby made itself responsible for the performance by the warehouseman of all the
duties and obligations imposed upon him by the statute; and, if he failed to perform any such duty to the
loss or detriment of those who delivered grain for storage, the surety company became liable therefor.
o Amicable settlement was never consummated because Go Tiong failed to settle the accounts of Gonzales to
the latter's satisfaction. Luzon Surety not discharged.
o A compromise or settlement between the creditor or obligee and the principal, by which the latter is
discharged from liability, discharges the surety. But an unconsummated agreement to compromise, falling
short of an effective settlement, will not discharge the surety.

2. Consolidated Terminals v. Artex Development Keith
Consolidated Terminals Inc. vs. Artex Development Co. Inc
- Elbert

Emergency Recit:

2C 2015
NEGO week 13

CTI is an operator of a customs bonded warehouse

It received on deposit 193 bales of cotton keeping it in behalf of Luzon Brokerage Corp.
It was to keep it until the consignee Paramount Textiles had opened letters of credit (LC) in favor of shipper
Adolph Cotton
Artex was able to obtain delivery of such cotton by virtue of an alleged forged permit to deliver and paying CTI
storage and handling fees.
This was also done without the LC being opened in favor of shipper Cotton and the customs duties and tax due
on shipment were also not paid.
CTI sought to recover possession. Writ of replevin failed. Hence amended action to recover the value.
Court ruled in favor of Artex. CTI does not have a cause of action. And they were already paid for their services.
(see ruling in facts for clarity)
Hence the appeal. CTI contends they are entitled to repossession. Cites Sec. 10 of Warehouse receipt law as
legal basis
Issue: WON they can recover?
NO. They have no cause of action against Artex. They are not the real parties in interest. They are not even
owners of the cotton hence could not claim the value.
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.
OBITER: They would have a cause of action against Artex if any of the above parties had sued them for damages.

Weird case. But this is how it is exactly worded.

Facts:
Consolidated Terminals Inc. (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.
CTI was to keep the cotton in behalf of Luzon Brokerage Corporation (depositor)
CTI was to keep it until the consignee of the cotton, Paramount Textile Mills, Inc., had opened the
corresponding letter of credit in favor of shipper, Adolph Hanslik Cotton of Corpus Christi, Texas.
By virtue of an alleged forged permit to deliver imported goods supposedly issued by 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 sought to recover possession by means of a writ of replevin. The writ could not be executed (no reason
given)
CTI then brought an action for the recovery from Artex of P99,609.76 as compensatory damages + nominal and
exemplary damages + atty.s fees
CTI alleged that Artex acquired the cotton from Paramount Textile Mills, Inc., the consignee
Artex in its motion to dismiss alleged:

2C 2015
NEGO week 13

it was not shown in the delivery permit that Artex was the entity that presented that document to the
CTI
o 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
rescissory agreement was attached)
Court through Judge Perez ruled in favor of Artex (guided by logic and common sense than by any specific rule
of law or jurisprudence)
o the plaintiff can no longer recover for its services as warehouseman since they were already paid the
warehousing and handling charges of the 193 bales of high density compressed raw cotton
o The fact that the delivery of the goods was obtained by the defendant Artex without opening the
corresponding letter of credit cannot be the basis of a cause of action of the plaintiff 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 the plaintiff.
o With respect to the allegation of the amended complaint that the goods were taken by the defendant
without paying the customs duties and other revenues (sic) assessed thereon, this does not give rise to
a cause of action in favor of the plaintiff for the party aggrieved is the government.
o 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 the plaintiff but in favor of the Bureau of Customs and of the consignee.
Summary of above court ruling
o there was no cause of action of CTI because they have already been paid their services
o The non-opening of the letter of credit gives rise to cause of action to the shipper (Cotton) and not CTI
o That Artex did not pay customs duties gives rise to a cause of action to the government
o Forgery of permit to deliver gives rise to cause of action in favor Bureau of customs and of the
consignee (paramount textile mills)
Hence this appeal
CTI contends that:
o As warehouseman, it was entitled to repossession of the bales of cotton
o Artex wrongfully deprived them of possession due to falsified permit
o Sec 10 of Warehouse Receipts Law
o
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 ...".
Issue: WON they can recover the cotton or even its value? NO. They are not the owners.
Ratio:
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.

2C 2015
NEGO week 13

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 this did not happen.
It was not the owner of the cotton and hence not entitled to claim the value of the shipment
The amended complaint did not unequivocally allege what right of CTI was violated by Artex, or, to use the familiar
language of adjective law, what delict or wrong was committed 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.

3. PNB v. Se Joben
PNB vs. Hon. Se (Del Rosario)
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. PRES. JUDGE BENITO C. SE, JR., RTC, BR. 45, MANILA; NOAHS ARK
SUGAR REFINERY; ALBERTO T. LOOYUKO, JIMMY T. GO and WILSON T. GO, respondents.

EMERGENCY RECIT:
Noahs Ark issued 5 warehouse receipts. PNB received these as security from a loan obtained by Ramos and Zoleta.
Ramos and Zoleta were unable to pay. PNB wrote to Noahs Ark demanding delivery of the sugar stocks covered by the
quedans. Noahs Ark Sugar Refinery refused to comply. SC eventually ruled in favor of PNB ordering Noahs Ark to
deliver the sugar stocks covered by the warehouse receipts. Noahs Ark filed a motion to be heard on their claim for a
warehousemans lien. They were heard and RTC ruled in their favor precluding the delivery of the sugar stocks until PNB
pays the full amount of the defendants lien. Can the warehouseman enforce his warehousemans lien before delivering
the sugar stocks as ordered by the Court of Appeals? YUP. 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 - lawful
charges for storage and preservation of the good. SECTION 31. Warehouseman need not deliver until lien is satisfied. 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. 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.

FACTS:
Petition seeks to annul the resolution of Judge Se of the RTC Manila declaring the validity of private respondents
warehousemans lien (composed of storage fees and preservation expenses) and ordering that execution of the CA

2C 2015
NEGO week 13

decision be in effect held in abeyance until the full amount of the warehousemans lien on the sugar stocks shall have
been satisfied.

In accordance with Act No. 2137, the Warehouse Receipts Law, Noahs Ark Sugar Refinery (NOAHS ARK) issued 5
warehouse receipts (Quedans is what they call them.) The receipts are substantially in the form, and contains the terms,
prescribed for negotiable warehouse receipts by Section 2 of the law.

Two of these were negotiated and endorsed to Ramos. Three were negotiated and endorsed to Zoleta. Ramos and
Zoleta then used the quedans as security (and endorsed) for two loan agreements - one for P15.6 million and the other
for P23.5 million - obtained by them from the PNB.

Ramos and Zoleta failed to pay their loans. PNB wrote to Noahs Ark demanding delivery of the sugar stocks covered by
the quedans. Noahs Ark Sugar Refinery refused to comply.

PNB filed with the RTC Manila a verified complaint for Specific Performance with Damages and Application for Writ of
Attachment. Rspondednt Judge Se of RTC Manila denied.

CA nullified and set aside the previous RTC decisions. The CA ordered the trial court to render summary judgment. The
RTC dismissed PNBs complaint and likewise dismissed the respondents counterclaim.

PNB filed an appeal from the RTC decision with the Supreme Court. SC ruled in favor of PNB ordering that Noahs Ark
deliver to PNB the sugar stocks covered by the warehouse receipts/quedans and pay for judicial costs/attorney fees.

Private respondents thereupon filed before the trial court an Omnibus Motion seeking among others the deferment of
the proceedings until private respondents are heard on their claim for warehousemans lien GRANTED. Pursuant to
this the trial court issued the following order - there exists in favor of the defendants a valid warehousemans lien under
Section 27 of Republic Act 2137 and accordingly, execution of the judgment is hereby ordered stayed and/ or precluded
until the full amount of defendants lien on the sugar stocks covered by the five (5) quedans subject of this action shall
have been satisfied conformably with the provisions of Section 31 of
Republic Act 2137.

This Petition.

ISSUE:
Can the warehouseman enforce his warehousemans lien before delivering the sugar stocks as ordered by the Court of
Appeals? YUP

2C 2015
NEGO week 13

RATIO:
We are not persuaded by the petitioners argument that our said resolution carried with it the denial of the
warehousemans lien over the sugar stocks covered by the subject Warehouse Receipts. We 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 Zoleta and Ramos to the petitioner.

Petitioner PNB anchors its claim against Noahs Ark on the five (5) Warehouse Receipts issued by the latter to third-
party defendants Rosa Sy of RNS Merchandising and Teresita Ng of St. Therese Merchandising, which found their way to
petitioner after they were negotiated to them by Ramos and 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.

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 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 (Contracts
have the force of law between the parties.)

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. (SCRA)

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.

2C 2015
NEGO week 13

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. (SCRA)

WHEREFORE, the petition should be, as it is, hereby dismissed for lack of merit. The questioned orders issued by public
respondent judge are affirmed.

2C 2015

Week 13 Nego

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Week 13 Nego

Uploaded by

Copyright:

Available Formats

NEGO

CTI is an operator of a customs bonded warehouse

You might also like