67512449 Special Comml Law (1)

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Martinez vs. PNB (GR No. L-4080, Sept.21, 1953)

Facts: the estate of Pedro Rodriguez was indebted to the defendant

Philippine National Bank which represented the balance of the crop

loan obtained by the estate. Amparo R. Martinez, late administratrix of

the estate upon request of the defendant bank endorsed and delivered

to the said bank two (2) quedans according to plaintiff-appellant issued

by the Bogo-Medellin Milling Co. where the sugar was stored although

according to the defendant-appellee, only one quedan covering1,071.04 piculs of sugar was endorsed and delivered. During the last

Pacific war, sometime in 1943, the sugar covered by the quedan or

quedans was lost while in the warehouse of the Bogo-Medellin Milling

Co. In the year 1948, the indebtedness of the estate including interest

was paid to the bank, according to the appellant, upon the insistence of

and pressure brought to bear by the bank when the invasion by the

Japanese Armed Forces was imminent, the administratrix of the estate

asked the bank to release the sugar so that it could be sold at a good

price to avoid its possible loss due to the invasion, but that the bank

refused value of said sugar was lost, the present action was brought

against the defendant bank to recover said amount. Dismissed the

complaint the loss of said sugar should be borne by the plaintiff-

appellant. Administrator Jose R. Martinez is now appealing from that

decision.

Held: It had never been sold to the bank, one of the essential elements

of the contract of sale, namely, consideration was not present. What

was the price? We do not know

Second, the bank by its charter is not authorized to engage in the

business of buying and selling sugar. Accepts sugar as security for

payment of its crop loans. , it sells said sugar for them, or the planters

find buyers and direct them to the bank.

According to law, the mortgagee or pledgee cannot become the owner

of or convert and appropriate to himself the property mortgaged or

pledged

The only remedy of pledgee is to have said property sold at publicauction and the proceeds of the sale applied to the payment of the

obligation secured by the mortgage or pledge and claim of plaintiff-

appellant is rather inconsistent and confusing. First, he contends that

the endorsement and delivery of the quedan or quedans to the bank

transferred the ownership of the sugar to said bank so that as owner,

the bank should suffer the loss of the sugar on the principle that "a

thing perishes for its owner

But plaintiff-appellant in the next breath contends that had the bank

released the sugar in February 1942, plaintiff could have sold it for

P54,952.75. This second theory presupposes that despite the

endorsement of the quedan, plaintiff still retained ownership of the

sugar, a position that runs counter to the first theory of transfer of

ownership to the bank.

It is obvious that where the transaction involved in the transfer of a

warehouse receipt or quedan is not a sale but pledge or security, the

transferee or endorsee does not become the owner of the goods but

that he may only have the property sold and then satisfy the obligation

from the proceeds of the sale.

Plaintiff's complaint failed to make any allegation regarding negligence

in the preservation of this sugar. In the second place, it is a fact that

the sugar was lost in the possession of the warehouse selected by the

appellant to which it had originally delivered and stored it, and for

causes beyond the bank's control, namely, the war request for release

was not made to the bank itself but directly to the official of the

warehouse. the bank was not aware of any such request. the bank

through its officials offered the sugar for sale but that there were no

buyers 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, this for the simple reason that the transaction involved is

not a sale but only a mortgage or pledge, and that if the property

covered by the quedans or warehouse receipts is lost without the faultor negligence of the mortgagee or pledgee or the transferee o

endorsee of the warehouse receipt or quedan, then said goods are to

be regarded as lost on account of the real owner, mortgagor or

pledgor.

CA decision affirmed

PNB vs. Judge Benito Se, Jr., et.al. (GR No. 119231, April 18, 1996

Noah’s Ark Sugar Refinery issued on several dates (Quedans):

negotiated and endorsed to Luis T. Ramos and to Cresencia K. Zoleta.

Ramos and Zoleta then used the quedans as security for two loan

agreements

Luis T. Ramos and Cresencia K. Zoleta failed to pay their loans upon

maturity

Philippine National Bank wrote to Noah’s Ark Sugar Refinery

demanding delivery of the sugar stocks covered by the quedans

endorsed to it by Zoleta and Ramos.

refused to comply with the demand alleging ownership

the Philippine National Bank filed a Motion for Summary Judgment in

favor of the plaintiff as against the defendants. Denied. Petition for

certiorari.

trial judge’s decision , is reversed and set aside. Priv. respondents

moved for reconsideration. Denied.

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 warehouseman’s lien.

Granted.

The issues presented before us in this petition revolve around thelegality of the questioned orders of respondent judge, issued as theywere after we had denied with finality private respondents’ contentionthat the PNB could not compel them to deliver the stocks of sugar intheir warehouse covered by the endorsed quedans or pay the value ofthe said stocks of sugar.

ISSUE: Can the warehouseman enforce his warehouseman’s lien

before delivering the sugar stocks as ordered by the Court of Appealsor need he file a separate action to enforce payment of storage fees?

we could not contemplate the matter of warehouseman’s 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.

there was no point in taking up the issue of warehouseman’s 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

After being declared not the owner, but the warehouseman

, private respondents cannot legally be deprived of their right to

enforce their claim for warehouseman’s lien, for reasonable storage

fees and preservation expenses

The unconditional presentment of the receipts by the petitioner forpayment against private respondents on the strength of the provisionsof the Warehouse Receipts Law (R.A. 2137) carried with it theadmission of the existence and validity of the terms, conditions andstipulations written on the face of the Warehouse Receipts, includingthe unqualified recognition of the payment of warehouseman’s lien forstorage fees and preservation expenses. Petitioner may not nowretrieve the sugar stocks without paying the lien due privaterespondents as warehouseman.

While the PNB is entitled to the stocks of sugar as the endorsee of thequedans, delivery to it shall be effected only upon payment of thestorage fees.

Imperative is the right of the warehouseman to demand payment of hislien at this juncture, because, in accordance with Section 29 of theWarehouse Receipts Law, the warehouseman loses his lien upongoods by surrendering possession thereof. In other words, the lien maybe lost where the warehouseman surrenders the possession of thegoods without requiring payment of his lien, because awarehouseman’s lien is possessory in nature.

SC uphold and sustain the validity of the assailed orders of public

respondent, in issuing the questioned orders which recognized the

legitimate right of Noah’s Ark, after being declared as warehouseman,

to recover storage fees before it would release to the PNB sugar

stocks covered by the five (5) Warehouse Receipts.

petition dismissed for lack of merit.

Limjoco vs. Director of Commerce (G.R. No. L-17640, November

29, 1965)

petitioner and her husband, , were the owners of a rice mill commonly

called "kiskisan" and were engaged in the business of milling palay

belonging to their customers for the purpose of removing its hull and

converting it into rice

. Limjoco died, leaving the milling business in the hands of his

surviving spouse, the petitioner

petitioner continued in the business, which prior to the death of her

husband, was managed by the latter without, however, renewing the

license

the petitioner refused to secure a license from the Bureau of

Commerce claiming that her business does not fall within the

provisions of Act 3893 as amended by Republic Act 247.

The facilities of the rice mill are open to the public in the sense thatanybody who wants his palay to be milled and converted into rice maydeliver the same to the rice mill paying P0.40 per cavan of palay for theservices of the petitioner in milling it. The mill itself is within a buildingwhich the petitioner calls a "camalig" about ten meters long, eightmeters wide and five meters high. The "camalig" is totally enclosed

partly by steelmatting, partly by wood and partly by galvanized ironsheets.

Director of Commerce ruled that appellant's rice milling business fallsunder the law just quoted, required her to secure the correspondingrenewal license and started steps for her prosecution in view of herrefusal to do so.

In other words, it is enough that the palay is delivered, even if only tohave it milled. Delivery connotes transfer of physical possession orcustody; and it may indeed be seriously doubted if the concept of"storage" under the law would cover a situation where one merelyutilizes the services of the mill but keeps the palay under his physicalcontrol all steps of the way. But in this case it is a fact that palay isdelivered to appellant and sometimes piled inside her "camalig" inappreciable quantities, to wait for its turn in the milling process. This isprecisely the situation covered by the statute.

"There is a reason for the inclusion of the business of the petitionerwithin the operation of Act 3893 as amended by Republic Act 247. Themain intention of the lawmaker is to give protection to the owner of thecommodity against possible abuses (and we might add negligence) ofthe person to whom the physical control of his properties is delivered."

Appellant says her "camalig" is neither adequate nor suitable forstorage. But the inadequacy of the construction insofar as the safety ofthe palay is concerned is not a valid reason to remove it from theoperation of the statute, for otherwise the very fact of non-compliancewith the legal requirements in this respect would be its own excusefrom the liabilities imposed

decision appealed affirmed

Gonzales vs. Go Tiong, et.al. (GR No.L-11776, August 30, 1958)

Go Tiong owned a rice mill and warehouse, located at Mabini,Urdaneta, Pangasinan

he obtained a license to engage in the business of a bondedwarehouseman, to secure performance obtained Luzon Surety Co.executed Guaranty Bond conditioned particularly on the fulfillment byGo Tiong of his duty or obligation to deliver to the depositors in hisstorage warehouse, the palay received by him for storage, at any timedemand is made, or to pay the market value thereof, in case he wasunable to return the same

But prior to the issuance of the license, he had on several occasionsreceived palay for deposit from plaintiff Gonzales

plaintiff demanded from Go Tiong the value of his deposits

but he was told to return after two days, which he did, but Go Tiongagain told him to come back. A few days later, the warehouse burned

to the ground

After the burning of the warehouse, the depositors of palay, includingplaintiff, filed their claims with the Bureau of Commerce, and it wouldappear that with the proceeds of the insurance policy, the Bureau ofCommerce paid off some of the claim. Plaintiff's counsel later withdrewhis claim with the Bureau of Commerce, according to Go Tiong,because his claim was denied by the Bureau, but according to thedecision of the trial court, because nothing came from plaintiff's effortsto have his claim paid. Gonzales filed the present action.



Gonzales and Go Tiong entered into a contract of amicable settlementto the effect that upon the settlement of all accounts due to him by GoTiong, he, Gonzales, would have all actions pending against Go Tiongdismissed. Inasmuch as Go Tiong failed to settle the accounts,Gonzales prosecuted his court action..

Act No. 3893 as amended is a special law regulating the business ofreceiving commodities for storage and defining the rights andobligations of a bonded warehouseman and those transacting

business with him.

SECTION 1. Persons who may issue receipts. — Warehouse receiptsmay be issued by any warehouseman.,

and the Bonded Warebouse Act as amended permits thewarehouseman to issue any receipt, thus:

. . . . "receipt" as any receipt issued by a warehouseman for commoditydelivered to him

as far as Go Tiong was concerned, the fact that the receipts issued byhim were not "quedans" is no valid ground for defense because he wasthe principal obligor

As to the contention that the deposits made by the plaintiff were freebecause he paid no fees therefor, it would appear that Go Tionginduced plaintiff to deposit his palay in the warehouse free of charge inorder to promote his business and to attract other depositors

The defense that the palay was destroyed by fire neither does theCourt consider to be good for while the contract was in the nature of adeposit and the loss of the thing would exempt the obligor in a contractof deposit to return the goods, this exemption from the responsibility forthe damages must be conditioned in his proof that the loss was byforce majeure, and without his fault

, the fact that he exceeded the limit of the authorized deposit musthave increased the risk and would militate against his defense of non-

liability.

, the defendant violated the terms of his license by accepting fordeposit palay in excess of the limit authorized by his license, which factmust have increased the risk.

It is evident, however, that while there was an attempt to settle thecase amicably, the settlement was never consummated because GoTiong failed to settle the accounts of Gonzales to the latter'ssatisfaction. Consequently, said non-consummated compromisesettlement does not discharge the surety:

In relation to the failure of Go Tiong to issue the warehouse receiptscontemplated by the Warehouse Receipts Act, which failure, accordingto appellants, precluded plaintiff from suing on the bond

, defining receipt as any receipt issued by a warehouseman forcommodity delivered to him, showing that the law does not require asindispensable that a warehouse receipt be issued.

as long as the depositor is injured by a breach of any obligation of thewarehouseman, which obligation is secured by a bond, said depositormay sue on said bond. In other words, the surety cannot avoid liabilityfrom the mere failure of the warehouseman to issue the prescribedreceipt

The surety company concedes that the bond which it gave contains thestatutory conditions. The statute . . . requires that the bond — shall beconditioned upon the faithful performance of the public local grainwarehouseman of all the provisions of law relating to the storage ofgrain by such warehouseman.

The obligation of the surety covers the duty of the warehouseman toissue the prescribed receipt, as well as the other duties imposed uponhim by the statute.

We deem it unnecessary to discuss and rule upon the other questionsraised in the appeal.

appealed decision affirmed

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67512449 Special Comml Law (1)