Philippine National Bank vs. Sayo, Jr.

292 SCRA 202 (1998)

Facts: Noah’s Ark Sugar Refinery issued several warehouse receipts covering sugar deposited by RNS
Merchandising and St. Therese Merchandising. Subsequently, these same receipts were endorsed to
Ramos and Zoleta. The latter then used the receipts as security for two loan agreements with PNB, thus
endorsing them with said bank. When Ramos and Zoleta could not pay their loan to the bank, PNB
demanded delivery of the sugar stocks covered by the receipts from Noah’s Ark Sugar Refinery.

Noah refused to comply with the demand alleging ownership of the sugar. It alleged that the owner of
Noah, Looyuko, entered into an agreement with RNS and St. Therese Merchandising to sell the sugar
indicated in the warehouse receipts stored in Noah for an amount of P63,000,000. Checks were issued
but they were dishonored for being drawn against insufficient funds.

Hence, PNB filed a complaint with the RTC. RTC dismissed said complaint. On appeal to the SC via
petition for review on certiorari, the Supreme Court ordered Noah and its owner, Looyuko, to deliver to
PNB the sugar stocks covered by the warehouse receipts in controversy.

However, Noah filed an Omnibus Motion seeking deferment of the judgment until it was heard on its
warehouseman’s lien. RTC granted the order and evidence was received in support thereof. RTC
adjudged that there existed a valid lien in favor of Noah, and accordingly, execution of the judgment
against Noah should be stayed until the full amount of Noah’s lien shall have been satisfied. PNB then
filed certiorari proceedings before the Supreme Court.

The Supreme Court held that while PNB was entitled to the sugar stocks as endorsee of the receipts,
delivery to it shall only be effected upon payment of the storage fees. The Supreme Court 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.

RTC Judge Sayo, Jr. allowed a writ of execution in favor of Noah to collect on its warehouseman’s lien
against PNB. Hence, this certiorari proceeding before the Supreme Court.

Issue/s: Whether or not PNB is liable for storage fees.

If yes, what is the duration of time the right of PNB over the goods may be subject to the lien?

Ruling: YES. PNB contends that it was a mere pledgee as the receipts were used to secure two loans it
granted. The Supreme Court agreed with this and held that the indorsement and delivery of the receipts
by Ramos and Zoleta to PNB 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, like pledge, cannot appropriate without foreclosure the things given by way of pledge. Any
stipulation to the contrary is null and void for being pactum commissorio. The law requires 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.

However, the Supreme Court 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.

(2) The Supreme Court 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 excuse provided by
the law itself, the warehouseman’s lien is thereafter concomitantly lost. As to what the law deems a valid
demand, Section 8 of the Warehouse Receipts Law enumerates what must accompany a demand.

The Supreme Court held that regrettably, the factual settings do not sufficiently indicate whether the
demand to obtain possession of the goods complied with Sec. 8. The presumption, nevertheless, would be
that the law was complied with. On the other hand, it would appear that the refusal of Noah to deliver the
goods was not anchored on a valid excuse, i.e., non-satisfaction of the lien over the goods, but on an
adverse claim of ownership. Under the circumstances, this hardly qualified as a valid, legal excuse. The
loss of the 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 Noah to heed the lawful demand by PNB for the
release of the goods.

Hence, the time from which the fees and charges should be made payable is from the time Noah refused
to heed PNB’s demand for delivery of the sugar stocks 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 acquires title over the goods less any existing
preferred lien thereover.