Week 5 CREDIT TRANSACTION- Warehouse Receipts Aw

8/18/2019 Week 5 CREDIT TRANSACTION- Warehouse Receipts Aw

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CREDIT TRANSACTION: Compilation ofCases

G.R. No. L-17825 June 26, 1922

In the matter of the Involuntary inolven!y of ". #$ %&LI.

'$LI() R&*)N, claimant-appellee,

vs.

)(I) +)NING &R%&R)I&N, claimant-appellant.

Wolfson, Wolfson and Schwarzkopf and Gibbs, McDonough & Johnson for appellant.

Antonio . !errero for appellee.

&(R)N#, J.:

This is an appeal from an order entered ! the Co"rt of #irst Instance of $anila in civil No.

%&'(), the insolvenc! of *merto de +oli, and declarin the lien claimed ! the appellee

#elisa Roman "pon a lot of leaf toacco, consistin of / ales, and fo"nd in the possession

of said insolvent, s"perior to that claimed ! the appellant, the Asia 0an1in Corporation.

The order appealed from is ased "pon the follo2in stip"lation of facts:

It is here! stip"lated and areed ! and et2een #elisa Roman and Asia 0an1in

Corporation, and on their ehalf ! their "ndersined attorne!s, that their respective

rihts, in relation to the / bultos of toacco mentioned in the order of this co"rt

dated April ', %&'%, e, and here! are, s"mitted to the co"rt for decision "pon

the follo2in:

I. #elisa Roman claims the / bultos of toacco "nder and ! virt"e of the

instr"ment, a cop! of 2hich is hereto attached and made a part hereof and mar1edE3hiit A.

II. That on Novemer ', %&'), said #elisa Roman noti4ed the said Asia 0an1in

Corporation of her contention, a cop! of 2hich noti4cation is hereto attached and

made a part hereof and mar1ed E3hiit 0.

III. That on Novemer '&, %&'), said Asia 0an1in Corporation replied as per cop!

hereto attached and mar1ed E3hiit C.

I5. That at the time the aove entitled insolvenc! proceedins 2ere 4led the /

bultos of toacco 2ere in possession of *. de +oli and no2 are in possession of theassinee.

5. That on Novemer %6, %&'), *. de +oli, for val"e received, iss"ed a 7"edan,

coverin aforesaid / bultos of toacco, to the Asia 0an1in Corporation as per cop!

of 7"edan attached and mar1ed E3hiit D.

5I. That aforesaid / bultos of toacco are part and parcel of the ', bultos

p"rchased ! *. de +oli from #elisa Roman.

5II. The parties f"rther stip"late and aree that an! f"rther evidence that either of

the parties desire to s"mit shall e ta1en into consideration toether 2ith this

stip"lation.

$anila, +. I., April '6, %&'%.

8Sd.9 ANTONIO 5. ERRERO

Attorne" for #elisa $o%an

% ;areho"se Receipt


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8Sd.9 ;O


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8#dos.9 ANTONIO 5. ERRERO

T. 0ARRETTO

8GAc1no2leded efore Notar!G9

E3hiit D is a 2areho"se receipt iss"ed ! the 2areho"se of *. de +oli for / ales of

toacco. The 4rst pararaph of the receipt reads as follo2s:

"edan depositados en estos almacenes por orden del Sr. *. de +oli la cantidad de

7"inientos setenta ! seis fardos de taaco en rama se"n marcas detalladas al

maren, ! con arrelo a las condiciones si"ientes:

In the left marin of the face of the receipts, *. de +oli certi4es that he is the sole o2ner of

the merchandise therein descried. The receipt is endorced in lan1 G*merto de +oliG it is

not mar1ed Gnon-neotialeG or Gnot neotiale.G

E3hiit 0 and C referred to in the stip"lation are not material to the iss"es and do not appear

in the printed record.

Tho"h E3hiit A in its pararaph 8c9 states that the toacco sho"ld remain in the 2areho"se

of *. de +oli as a deposit "ntil the price 2as paid, it appears clearl! from the lan"ae of the

e3hiit as a 2hole that it evidences a contract of sale and the recitals in order of the Co"rt of

#irst Instance, dated Han"ar! %6, %&'%, 2hich form part of the printed record, sho2 that De

+oli received from #elisa Roman, "nder this contract, ', ales of toacco of the total

val"e of +6,6%./&, of 2hich he paid +%,))) in cash and e3ec"ted fo"r notes of

+%,&.&' each for the alance. The sale havin een th"s cons"mmated, the onl! lien

"pon the toacco 2hich #elisa Roman can claim is a vendorJs lien.

The order appealed from is ased "pon the theor! that the toacco 2as transferred to the

Asia 0an1in Corporation as sec"rit! for a loan and that as the transfer neither f"l4lled the

re7"irements of the Civil Code for a plede nor constit"ted a chattel mortae "nder Act No.

%)6, the vendorJs lien of #elisa Roman sho"ld e accorded preference over it.

It is 7"ite evident that the co"rt elo2 failed to ta1e into consideration the provisions of

section (& of Act No. '% 2hich reads:

;here a neotiale receipts has een iss"ed for oods, no sellerJs lien or riht of

stoppae in transit" shall defeat the rihts of an! p"rchaser for val"e in ood faith to2hom s"ch receipt has een neotiated, 2hether s"ch neotiation e prior or

s"se7"ent to the noti4cation to the 2areho"seman 2ho iss"ed s"ch receipt of the

sellerJs claim to a lien or riht of stoppae in transit". Nor shall the 2areho"seman e

olied to deliver or "sti4ed in deliverin the oods to an "npaid seller "nless the

receipt is 4rst s"rrendered for cancellation.

The term Gp"rchaserG as "sed in the section 7"oted, incl"des mortaee and pledee. 8See

section 6 8a9 of the same Act.9

In vie2 of the foreoin provisions, there can e no do"t 2hatever that if the 2areho"se

receipt in 7"estion is neotiale, the vendorJs lien of #elisa Roman cannot prevail aainst the

rihts of the Asia 0an1in Corporation as the indorse of the receipt. The onl! 7"estion ofimportance to e determined in this case is, therefore, 2hether the receipt efore "s is

neotiale.

The matter is not entirel! free from do"t. The receipt is not perfect: It recites that the

merchandise is deposited in the 2areho"se Gpor ordenG instead of Ga la ordenG or Gs"eto a la

ordenG of the depositor and it contain no other direct statement sho2in 2hether the oods

;areho"se Receipt


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received are to e delivered to the earer, to a speci4ed person, or to a speci4ed person or

his order.

;e thin1, ho2ever, that it m"st e considered a neotiale receipt. A 2areho"se receipt, li1e

an! other doc"ment, m"st e interpreted accordin to its evident intent 8Civil Code, arts.

%'6% et se(.9 and it is 7"ite ovio"s that the deposit evidenced ! the receipt in this case

2as intended to e made s"ect to the order of the depositor and therefore neotiale.

That the 2ords Gpor ordenG are "sed instead of Ga la ordenG is ver! evidentl! merel! a

clerical or rammatical error. If an! intellient meanin is to e attac1ed to the phrase

G"edan depositados en estos almacenes por orden del Sr. *. de +oliG it m"st e held to

mean G"edan depositados en estos almacenes a la orden del Sr. *. de +oli.G The phrase

m"st e constr"ed to mean that *. de +oli 2as the person a"thoriFed to endorse and deliver

the receipts an! other interpretation 2o"ld mean that no one had s"ch po2er and the

cla"se, as 2ell as the entire receipts, 2o"ld e rendered n"ator!.

$oreover, the endorsement in lan1 of the receipt in controvers! toether 2ith its deliver!! *. de +oli to the appellant an1 too1 place on the ver! of the iss"ance of the 2areho"se

receipt, there! immediatel! demonstratin the intention of *. de +oli and of the appellant

an1, ! the emplo!ment of the phrase Gpor orden del Sr. *. de +oliG to ma1e the receipt

neotiale and s"ect to the ver! transfer 2hich he then and there made ! s"ch

endorsement in lan1 and deliver! of the receipt to the lan1.

As hereinefore stated, the receipt 2as not mar1ed Gnon-neotiale.G *nder modern

stat"tes the neotiailit! of 2areho"se receipts has een enlared, the stat"tes havin the

eKect of ma1in s"ch receipts neotiale "nless mar1ed Gnon-neotiale.G 8' R. C.


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G.R. No. L-/080 (etemer 21, 1953

J&($ %. *)RIN$4, a aminitrator of the Intate $tate of %ero Roriue,e!eae, plaintiK-appellant,vs.%ILI%%IN$ N)I&N)L +)N, defendant-appellee.

Delgado, #lores, & Macapagal for appellant.$a%on . de los $e"es and Angel G. +lagan for appellee.

*&N$*)&R, J.:

As of #er"ar! %&(', the estate of +edro Rodri"eF 2as indeted to the defendant +hilippineNational 0an1 in the amo"nt of +'',%'6.(( 2hich represented the alance of the crop loanotained ! the estate "pon its %&(%-%&(' s"ar cane crop. Sometime in #er"ar! %&(',$rs. Amparo R. $artineF, late administratri3 of the estate "pon re7"est of the defendantan1 thro"h its Ce" ranch endorsed and delivered to the said an1 t2o 8'9 7"edansaccordin to plaintiK-appellant iss"ed ! the 0oo-$edellin $illin co. 2here the s"ar 2as

;areho"se Receipt


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stored coverin ',%&6.%% pic"ls of s"ar elonin to the estate, altho"h accordin to thedefendant-appellee, onl! one 7"edan coverin %,)%.)( pic"ls of s"ar 2as endorsed anddelivered. D"rin the last +aci4c 2ar, sometime in %&(, the s"ar covered ! the 7"edan or7"edans 2as lost 2hile in the 2areho"se of the 0oo-$edellin $illin Co. In the !ear %&(6,

the indetedness of the estate incl"din interest 2as paid to the an1, accordin to theappellant, "pon the insistence of land press"re ro"ht to ear ! the an1.

*nder the theor! and claim the sometime in #er"ar! %&(', 2hen the invasion of the+rovince of Ce" ! the Hapanese Armed #orces 2as imminent, the administratri3 of theestate as1ed the an1 to release the s"ar so that it co"ld e sold at a od price 2hich 2asao"t +' per pic"l in order to avoid its possile loss d"e to the invasion, "t that the an1ref"sed that re7"est and as a res"lt the amo"nt of +(,&'. representin the val"e of saids"ar 2as lost, the present action 2as ro"ht aainst the defendant an1 to recover saidamo"nt. After trial, the Co"rt of #irst Instance of $anila dismissed the complaint on thero"nd that the transfer of the 7"edan or 7"edans representin the s"ar in the 2areho"seof the 0oo-$edellin $illin Co. to the an1 did not transfer o2nership of the s"ar, andconse7"entl!, the loss of said s"ar sho"ld e orne ! the plaintiK appellant. administrator

Hose R. $artineF is no2 appealin from that decision.

;e aree 2ith the trial co"rt that at the time of the loss of the s"ar d"rin the 2ar,sometime in %&(, said s"ar still eloned to the estate of +edro Rodri"eF. It had nevereen sold to the an1 so as to ma1e the latter o2ner thereof. The transaction co"ld not haveeen a sale, 4rst, eca"se one of the essential elements of the contract of sale, namel!,consideration 2as not present. If the s"ar 2as sold, 2hat 2as the priceL ;e do not 1no2,for nothin 2as said ao"t it. Second, the an1 ! its charter is not a"thoriFed to enae inthe "siness of "!in and sellin s"ar. It onl! accepts s"ar as sec"rit! for pa!ment of itscrop loans and later on p"rs"ant to an "nderstandin 2ith the s"ar planters, it sell saids"ar for them, or the planters 4nd "!ers and direct them to the an1. The s"ar 2as ivenonl! as a sec"rit! for the pa!ment of the crop loan. This is admitted ! the appellant assho2n ! the alleations in its complaint 4led efore the trial co"rt and also in the rief for

appellant 4led efore "s. Accordin to la2, the mortaee or plede cannot ecome theo2ner of or convert and appropriate to himself the propert! mortaed r pleded 8Article%6&, old Civil Code Article ')66, ne2 Civil code9. Said propert! contin"es t elon to themortaor or pledor. The onl! remed! iven to the mortaee or pledee is to have saidpropert! sold at p"lic a"ction and the proceeds of the sale applied to the pa!ment of theoliation sec"red ! the mortae or plede.

The position and claim of plaintiK-appellant is rather inconsistent and conf"sin. #irst, hecontends that the endorsement and deliver! of the 7"edan or 7"edans to the an1transferred the o2nership of the s"ar to said an1 so that as o2ner, the an1 sho"ld s"Kerthe loss of the s"ar on the principle that Ga thin perishes for the o2nerG. ;e ta1e it that !endorsin the 7"edan, defendant 2as s"pposed to have sold the s"ar to the an1 for theamo"nt of the o"tstandin loan of +'',%'6.(( and the interest then occ"red. That 2o"ld

mean that plaintiKJs acco"nt 2ith the an1 has een entirel! li7"idated and their contract"alrelations ended, the an1 s"Kerin the loss of the amo"nt of the loan and interest 0"tplaintiK-appellant in the ne3t reath contends that had the an1 released the s"ar in#er"ar! %&(', plaintiK Mco"ld have sold it for +(,&'., from 2hich the amo"nt of theloan and interest co"ld have een ded"cted, the alance to have een retained ! plaintiK,and that since the loan has een entirel! li7"idated in %&(6, then the 2hole e3pected saleprice of +(,&'. sho"ld no2 e paid ! the an1 to appellant. This second theor!pres"pposes that despite the indorsement of the 7"edan plaintiK still retained o2nership ofthe s"ar, a position that r"ns co"nter to the 4rst theor! of transfer of o2nership to thean1.

In the co"rse of the disc"ssion of this case amon the memers of the Tri"nal, one or t2othem 2ho 2ill dissent from the maorit! vie2 so"ht to c"re and remed! this apparentinconsistenc! in the claim of appellant and s"stain the theor! that the endorsement of the7"edan made the an1 the o2ner of the s"ar res"ltin in the pa!ment of the loan, so thatno2, the an1 sho"ld ret"rn to appellant the amo"nt of the loan it improperl! collected in%&(6.

In s"pport of the theor! of transfer of o2nership of the s"ar to the an1 ! virt"e of theendorsement of the 7"edan, reference 2as made to the ;areho"se Receipts


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place, this claim is inconsistent 2ith the ver! theor! of plaintiK appellant that the s"ar farfrom ein sold to the an1 2as merel! iven as sec"rit! for the pa!ment of the crop loan.In the second place, the a"thorities cited have not directl! applicale. In those cases thisco"rt held that for p"rposes of facilitatin commercial transaction, the endorse of transferee

of a 2areho"se receipt or 7"edan sho"ld e rearded as the o2ner of the oods covered !it. In other 2ords, as reards the endoser or transferor, even if he 2ere the o2ner of theoods, he ma! not ta1e possession and dispose of the oods 2itho"t the consent of theendorse or transferee of the 7"edan or 2areho"se receipt that in some cases the endorse of a 7"edan ma! sell the oods and appl! the proceeds of the sale to the pa!ment of the detand as reards third persons, the holder of a 2areho"se receipt or 7"edan is considered theo2ner of the oods covered ! it. To ma1e clear the vie2 of this co"rt in said co"rt in t2o ofthese cases cited 2hich are t!pical.

As to the 4rst of action, 2e hold that in Han"ar!, %&%&, the an1 ecame andremained the o2ner of the 4ve 7"edans Nos. ), , 6, (%, and (' that the! 2erein form neotiale, and that, as s"ch o2ner, it 2as leall! entitled to the possession and control of the propert! therein descried at the time the insolvenc! petition 2as

4led and had a riht to sell it and appl" the proceeds of the sale to its promissor!notes, c"red ! the three 7"edans Nos. , /, and &, 2hich the an1 s"rrenderedto the 4rm. 8+hilippine Tr"st Co. vs. National 0an1, (' +hil., (%, ('9.

... Section 6 provides that 2ithin the meanin of the Act Gto Gp"rchaseG incl"des tota1e as mortaee or pledeeJ and clear that, as to the leal title to the propert!covered ! a 2areho"se receipt, a pledee is on the same footin as a vendeee3cept that the former is "nder the oliation of s"rrenderin his title "pon thepa!ment of the det sec"red. To hold other2ise 2o"ld defeat one of the principalp"rposes of the Act, i. e., to f"rnish a asis for commercial credit. 80an1 of the+hilippine Islands vs. erride, ( +hil. , )9.

It is ovio"s that 2here the transaction involved in the transfer of a 2areho"se receipt or7"edan is not a sale "t plede or sec"rit!, the transferee or endorsee does not ecome theo2ner of the oods "t that he ma! onl! have the propert! sold then satisf! the oliationfrom the proceeds of the sale. #rom all this, it is clear that at the time the s"ar in 7"estion2as lost sometime d"rin the 2ar, estate of +edro Rodri"eF 2as still the o2ner thereof.

It is f"rther contended in this appeal that the defendant appellee failed to e3cercise d"e carefor the preservation of the s"ar, and that the loss 2as d"e to its nelience as a res"lt of2hich the appellee inc"rred the loss. In the 4rst place, this 7"estion 2as not raised in theco"rt elo2. +laintiKJs complaint to ma1e an! alleation reardin nelience in thepreservation of this s"ar. In the second place, it is a fact that the s"ar 2as lost in thepossession of the 2areho"se selected ! the appellant to 2hich it had oriinall! deliveredand stored it, and for ca"ses e!ond the an1Js control, namel!, the 2ar.

In connection 2ith the claim that had the released the s"ar sometime in #er"ar!, %&(',2hen re7"ested ! the plaintiK, said s"ar co"ld have een sold at the rate of +' a pic"l ora total of +(,&'., the amo"nt of the present claim, there is evidence to sho2 that there7"est for release 2as not made to the an1 itself "t directl! to the ocial of the2areho"se the 0oo $edellin $illin Co. and that an1 2as not a2are of an! s"ch re7"est,"t that therefore April &, %&(', 2hen the Ce" ranch of the defendant 2as closed, thean1 thro"h its ocials oKered the s"ar for sale "t that there 2ere no "!ers, perhapsd"e to the "nsettled and chaotic conditions that otainin ! reason of the enem!occ"pation.

In concl"sion, 2e hold that 2here a 2areho"se receipt or 7"edan is transferred or endorsedto a creditor onl! to sec"re the pa!ment of a loan or det, the transferee or endorsee does

not a"tomaticall! ecome the o2ner of the oods covered ! the 2areho"se receipt or7"edan "t he merel! retains the riht to 1eep and 2ith the consent of the o2ner to sellthem so as to satisf! the oliation from the proceeds of the sale, this for the simple reasonthat the transaction involved is not a sale covered ! the 7"edans of 2areho"se receipts islost 2itho"t the fa"lt or nelience of the mortaee or pledee or 7"edan, then said oodsare to e rearded as lost on acco"nt of the real o2ner, mortaor or pledor.-wphl.n/t

In vie2 of the foreoin, the decision appealed from is here! armed, 2ith costs.

;areho"se Receipt


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engzon, 0adilla, 1uason, $e"es, Jugo, autista Angelo, and 2abrador, JJ., conc"r.

(earate &inion

%)R)(, C. J., dissentin:

The plaintiK see1s to recover from the defendant +hilippine National 0an1 the s"m of+(,&'., representin the val"e of ',%&6.%% pic"ls of s"ar covered ! t2o 7"edansindorsed and delivered to the an1 ! the administrati3 of the estate of the deceased +edroRodri"eF to sec"re the indetedness of the latter in the amo"nt of +'',%'6.((. It is alleedthat 2hen the t2o 7"edans 2ere indorsed and delivered to the defendant an1 in or ao"t

Han"ar!, %&(', the s"ar 2as in deposit at the 0oo-$edellin S"ar Co., Inc. that said s"ar2as lost d"rin the 2ar that the indetedness of +'',%'6.(( 2as li7"idated in %&(6 ! theestate of the deceased +edro Rodri"eF and that, not2ithstandin demands, the defendant

an1 ref"sed to credit the plaintiK 2ith the val"e of the s"ar lost.

There is no 7"estion as to the e3istence of the s"ar covered ! the t2o 7"edans, or as tothe indorsement and deliver! of said 7"edans to the defendant an1. The Co"rt of #irstInstance of $anila 2hich decided aainst the plaintiK and held that the defendant an1 isnot liale for the loss of the s"ar in 7"estion, indeed stated that the onl! 7"estion thatarises is 2hether the indorsement of the 2areho"se receipts transferred the o2nership f thes"ar to the defendant an1 that if it did, the an1 sho"ld s"Ker the loss, "t if it did not,the loss sho"ld e for the acco"nt of the estate of the deceased +edro Rodri"eF. Indismissin the plaintiKJs action, the trial co"rt held that the indorsement of the 7"edans tothe defendant an1 did not carr! 2ith it the transfer of o2nership of the s"ar, as theindorsement and deliver! 2ere eKected merel! sec"re the pa!ment of an indetedness, tofacilitate the sale of the s"ar, and to prevent the detor from disposin of it 2itho"t the

1no2lede and consent of the defendant an1. The plaintiK has appealed.

The applicale leal provision is section (% of Act No. '%, other2ise as the ;areho"seReceipts


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The relation of a pledor of a 2areho"se receipt d"l! indorsed and delivered to the plede,is s"stantiall! riht of rep"rchase. The vendor a retro act"all! transfers the o2nership ofthe propert! sold to the vendee, "t the former ma! reac7"ire said o2nership "ponpa!ment is lost efore ein rep"rchased, the vendee nat"rall! has to ear the loss, 2ith

the vendor havin nothin to rep"rhase. 0"t if the loss sho"ld occ"r after the rep"rchaseprice has een paid "t efore the propert! sold a retro is act"all! reconve!ed, the vendeeis o"nd to ret"rn to the vendor onl! the rep"rchase price paid, and not the val"e of thepropert!. In m! opinion, therefore, the loss of the s"ar sho"ld e for the acco"nt of thedefendant an1, 2hich sho"ld ret"rn to the plaintiK +'',%'6.((, the amo"nt of theindetedness of the estate of the deceased +edro Rodri"eF 2hich had alread! een paid%&(6, 2itho"t ho2ever ein liale for the diKerence et2een +(,&'. 8act"al val"e ofthe s"ar9 and the amo"nt of said pa!ment.

The appealed "dment sho"ld therefore e reversed and the defendant an1 sentenced topa! to the plaintiK the s"m of +'',%'6.((.

0ablo, J., conc"rs.

& ;areho"se Receipt


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G.R. No. 129918 July 9, 1998

%ILI%%IN$ N)I&N)L +)N, petitioner,

vs.

&N. *)R$LIN& L. ()&, JR., in hi !aa!ity a %reiin Jue of the Reional

rial ourt of *anila :+ran!h /5;, N&)I#$, JR., J.:

In this special civil action for certiorari, act"all! the third disp"te et2een the same privateparties to have reached this Co"rt, 1 petitioner as1s "s to ann"l the orders 2 of % April %&&

and %( H"l! %&& iss"ed in Civil Case No. &)-)' ! the Reional Trial Co"rt, $anila,

0ranch (. The 4rst order 3 ranted private respondentsJ motion for e3ec"tion to satisf! their

2areho"semanJs lien aainst petitioner, 2hile the second order / denied, 2ith 4nalit!,

petitionerJs motion for reconsideration of the 4rst order and "rent motion to lift

arnishment, and private respondentsJ motion for partial reconsideration.

The fact"al antecedents "ntil the commencement of .R. No. %%&'% 2ere s"mmariFed in

o"r decision therein, as follo2s:

In accordance 2ith Act No. '%, the ;areho"se Receipts


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oleta and Ramos. NoahJs

Ar1 S"ar Re4ner! ref"sed to compl! 2ith the demand allein o2nership

thereof, for 2hich reason the +hilippine National 0an1 4led 2ith the Reional

Trial Co"rt of $anila a veri4ed complaint for GSpeci4c +erformance 2ith

Damaes and Application for ;rit of AttachmentG aainst NoahJs Ar1 S"ar

Re4ner!, Alerto T.


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On $a! ', %&&%, the Reional Trial Co"rt iss"ed an order den!in the $otion

for S"mmar! H"dment. There"pon, the +hilippine National 0an1 4led a

+etition for 'ertiorari 2ith the Co"rt of Appeals, doc1eted as CA-.R. S+ No.

'&6 on Decemer %, %&&.

+ertinent portions of the decision of the Co"rt of Appeals read:

In iss"in the 7"estioned Orders, the respondent Co"rt r"led

that G7"estions of la2 sho"ld e resolved after and not efore,

the 7"estions of fact are properl! litiated.G A scr"tin! of

defendantJs armative defenses does not sho2 material

7"estions of fact as to the alleed nonpa!ment of p"rchase

price ! the vendees4rst endorsers, and 2hich nonpa!ment is

not disp"ted ! +N0 as it does not materiall! aKect +N0Js title

to the s"ar stoc1s as holder of the neotiale 7"edans.

;hat is determinative of the propriet! of s"mmar! "dment is

not the e3istence of conictin claims from prior parties "t

2hether from an e3amination of the pleadins, depositions,

admissions and doc"ments on 4le, the defenses as to the main

iss"e do not tender material 7"estions of fact 8see arcia vs.

Co"rt of Appeals, %/ SCRA 6%9 or the iss"es th"s tendered

are in fact sham, 4ctitio"s, contrived, set "p in ad faith or so

"ns"stantial as not to constit"te en"ine iss"es for trial. 8See

5erara vs. S"elto, et al., %/ SCRA $ercado, et al. vs.

Co"rt of Appeals, %/' SCRA 9. PsicM The 7"estioned Orders

themselves do not specif! 2hat material facts are in iss"e. 8SeeSec. (, R"le (, R"les of Co"rt9.

To re7"ire a trial not2ithstandin pertinent alleations of the

pleadins and other facts appearin on the record, 2o"ld

constit"te a 2aste of time and an in"stice to the +N0 2hose

rihts to relief to 2hich it is plainl! entitled 2o"ld e f"rther

dela!ed to its pre"dice.

In iss"in the 7"estioned Orders, ;e 4nd the respondent Co"rt

to have acted in rave a"se of discretion 2hich "stif! holdin

n"ll and void and settin aside the Orders dated $a! ' and H"l!

(, %&&) of respondent Co"rt, and that a s"mmar! "dment e

rendered forth2ith in favor of the +N0 aainst NoahJs Ar1 S"ar

Re4ner!, et al., as pra!ed for in petitionerJs $otion for S"mmar!

H"dment.

On Decemer %, %&&%, the Co"rt of Appeals n"lli4ed and set aside the orders

of $a! ' and H"l! (, %&&) of the Reional Trial Co"rt and ordered the trial

co"rt to render s"mmar! "dment in favor of the +N0. On H"ne %6, %&&', the

trial co"rt rendered "dment dismissin plaintiKs complaint aainst private

respondents for lac1 of ca"se of action and li1e2ise dismissed private

respondentJs co"nterclaim aainst +N0 and of the Third-+art! Complaint and

the Third-+art! DefendantJs Co"nterclaim. On Septemer (, %&&', the trialco"rt denied +N0Js $otion for Reconsideration.

On H"ne &, %&&', the +N0 4led an appeal from the RTC decision 2ith the

S"preme Co"rt, .R. No. %)'(, ! 2a! of a +etition for Revie2 on 'ertiorari

"nder R"le ( of the R"les of Co"rt. This Co"rt rendered "dment on

Septemer %, %&&, the dispositive portion of 2hich reads:

%' ;areho"se Receipt


13/70


;ERE#ORE, the trial "deJs decision in Civil Case No. &)-)', dated H"ne

%6, &&', is reversed and set aside and a ne2 one rendered conformal! 2ith

the 4nal and e3ec"tor! decision of the Co"rt of Appeals in CA-.R. S+ No.

'&6, orderin the private respondents NoahJs Ar1 S"ar Re4ner!, Alerto T.


14/70


;ERE#ORE, this co"rt here! 4nds that there e3ists in favor of

the defendants a valid 2areho"semanJs lien "nder Section ' of

Rep"lic Act '% and accordinl!, e3ec"tion of the "dment is

here! ordered sta!ed andor precl"ded "ntil the f"ll amo"nt of

defendantsJ lien on the s"ar stoc1s covered ! the 4ve 89

7"edans s"ect of this action shall have een satis4ed

conformal! 2ith the provisions of Section % of Rep"lic Act

'%. 5

*nsatis4ed 2ith the trial co"rtJs order of % $arch %&&, herein petitioner 4led 2ith "s .R.

No. %%&'%, contendin:

I

+N0JS RIT TO A ;RIT O# EEC*TION IS S*++ORTED 0U T;O #INA< AND

EEC*TORU DECISIONS: TE DECE$0ER %, %&&% CO*RT O# A++EA


15/70


2areho"seman s"rrenders the possession of the oods 2itho"t re7"irin

pa!ment of his lien, eca"se a 2areho"semanJs lien is possessor! in nat"re.

;e, therefore, "phold and s"stain the validit! of the assailed orders of p"lic

respondent, dated Decemer '), %&&( and $arch %, %&&.

In 4ne, 2e fail to see an! taint of a"se of discretion on the part of the p"lic

respondent in iss"in the 7"estioned orders 2hich reconiFed the leitimate

riht of NoahJs Ar1, after ein declared as 2areho"seman, to recover storae

fees efore it 2o"ld release to the +N0 s"ar stoc1s covered ! the 4ve 89

;areho"se Receipts. O"r resol"tion, dated $arch &, %&&(, did not precl"de

private respondentsJ "n7"ali4ed riht to estalish its claim to recover storae

fees 2hich is reconiFed "nder Rep"lic Act No. '%. Neither did the Co"rt of

AppealsJ decision, dated Decemer %, %&&%, restrict s"ch riht.

O"r Resol"tionJs reference to the decision ! the Co"rt of Appeals, datedDecemer %, %&&%, in CA-.R. S+ No. '&6, 2as intended to "ide the

parties in the s"se7"ent disposition of the case to its 4nal end. ;e certainl!

did not foreclose private respondentsJ inherent riht as 2areho"seman to

collect storae fees and preservation e3penses as stip"lated on the face of

each of the ;areho"se Receipts and as provided for in the ;areho"se

Receipts


16/70


7"estioned Order dated % April %&& 8Anne3 GAG9, the co"rt a (uo r"led in

this 2ise:

Accordinl!, the comp"tation of accr"ed storae fees and

preservation chares presented in evidence ! the defendants,

in the amo"nt of +(,(%,&.)/ as of Han"ar! %, %&& for

the 6/,/.(%, ) 1. as of s"ar, ein in order and 2ith

s"cient asis, the same sho"ld e ranted. This Co"rt

conse7"entl! reects +N0Js claim of no s"ar no lien, since it is

"ndisp"ted that the amo"nt of the accr"ed storae fees is

s"stantiall! in e3cess of the alternative a2ard of +&.% $illion

in favor of +N0, incl"din leal interest and +%),))).)) in

attorne!Js fees, 2hich +N0 is ho2ever entitled to e

credited . . . .

333 333 333

;ERE#ORE, premises considered and 4ndin merit in the

defendantsJ motion for e3ec"tion of their claim for lien as

2areho"seman, the same is here! RANTED. Accordinl!, let a

2rit of e3ec"tion iss"e for the amo"nt of +//',(6,/%%.), in

accordance 2ith the aove disposition.

SO ORDERED. 8Emphasis s"pplied.9

.'6 On ' April %&&, +N0 2as immediatel! served 2ith a ;rit of E3ec"tion

for the amo"nt of +//',(6,/%%.) in spite of the fact that it had not !et eenserved 2ith the Order of the co"rt a (uo dated % April %&&. +N0 th"s 4led

an *rent $otion dated ' April %&& see1in the deferment of the

enforcement of the ;rit of E3ec"tion. A photocop! of the ;rit of E3ec"tion is

attached hereto as Anne3 GHG.

.'& Nevertheless, the SheriK levied on e3ec"tion several properties of +N0.

#irstl!, a Notice of


17/70


89 Ass"min f"rther that said lien has not een

2aived nor arred, still there 2as no complaint

ever 4led in co"rt to eKectivel! commence this

entirel! ne2 ca"se of action

8(9 There is no evidence on record 2hich 2o"ld

s"pport and s"stain the claim of +(,(%,&.)/

2hich is e3cessive, oppressive and

"nconscionale

89 Said claim if e3ec"ted 2o"ld constit"te "n"st

enrichment to the serio"s pre"dice of +N0 and

indirectl! the +hilippine overnment, 2ho

innocentl! ac7"ired the s"ar 7"edans thro"h

assinment of credit

8/9 In all respects, the decisions of oth the

S"preme Co"rt and of the former +residin H"de

of the trial co"rt do not contain a speci4c

determination andor comp"tation of

2areho"semanJs lien, th"s re7"irin 4rst and

foremost a fair hearin of +N0Js evidence, to

incl"de the tr"e and standard ind"str! rates on

s"ar storae fees, 2hich if comp"ted at s"ch

standard rate of thirt! centavos per 1iloram per

month, shall res"lt in the s"m of ao"t Three

"ndred Tho"sand +esos onl!.

.% In its $otion for Reconsideration, petitioner pra!ed for the follo2in

reliefs:

%. +N0 e allo2ed in the meantime to e3ercise its asic riht to

present evidence in order to prove the aove alleations

especiall! the tr"e and reasonale storae fees 2hich ma! e

ded"cted from +N0Js "dment a2ard of +&.% $illion, 2hich

storae fees if comp"ted correctl! in accordance 2ith standard

s"ar ind"str! rates, 2o"ld amo"nt to onl! +)) Tho"sand

+esos, 2itho"t ho2ever 2aivin or aandonin its 8+N0Js9 leal

positionscontentions herein aovementioned.

'. The Order dated April %, %&& rantin the $otion for

E3ec"tion ! defendant NoahJs Ar1 e set aside.

. The e3ec"tion proceedins alread! commenced ! said

sheriKs e n"lli4ed at 2hatever stae of accomplishment.

A photocop! of petitionerJs $otion for Reconsideration 2ith *rent +ra!er for

"ashal of ;rit of E3ec"tion is attached hereto and made interal part hereof

as Anne3 G$G.

.' +rivate respondents 4led an Opposition 2ith $otion for +artial

Reconsideration dated 6 $a! %&&. Still discontented 2ith the e3cessive and

staerin amo"nt a2arded to them ! the co"rt a (uo, private respondentsJ

$otion for +artial Reconsideration so"ht additional and contin"in storae

fees over and aove 2hat the co"rt a (uo had alread! "n"stl! a2arded. A

% ;areho"se Receipt


18/70


photocop! of private respondentsJ Opposition 2ith $otion for +artial

Reconsideration dated 6 $a! %&& is attached hereto as Anne3 GNG.

.'.% +rivate respondents pra!ed for the f"rther amo"nt of

+'',,('.)) in storae fees from % #er"ar! %&& "ntil %

April %&&, the date of the 7"estioned Order rantin their

$otion for E3ec"tion.

.'.' In the same manner, private respondents pra!ed for a

contin"in amo"nt of +(,('(.)) as dail! storae fees after %

April %&& "ntil the total amo"nt of the storae fees is satis4ed.

. On %& $a! %&&, +N0 4led its Repl! 2ith Opposition 8To DefendantsJ

Opposition 2ith +artial $otion for Reconsideration9, containin therein the

follo2in motions: 8i9 S"pplemental $otion for Reconsideration 8ii9 $otion to

Stri1e o"t the Testimon! of NoahJs Ar1Js Acco"ntant


19/70


. On %( H"l! %&&, respondent H"de iss"ed the second Order 8Anne3 G0G9,

the 7"estioned part of the dispositive portion of 2hich states:

;ERE#ORE, premises considered, the plaintiK +hilippine

National 0an1Js s"ect G$otion for Reconsideration ;ith *rent

+ra!er for "ashal of ;rit of E3ec"tionG dated April '6, %&&

and "ndated G*rent $otion to


20/70


(./. The co"rt a (uo resolved a sini4cant and conse7"ential matter entirel!

rel!in on doc"ments s"mitted ! private respondents totall! disreardin

clearl! contrar! evidence s"mitted ! +N0.

(. The co"rt a (uo mis7"oted and misinterpreted the S"preme Co"rt

Decision dated %6 April %&&.

D. TE CO*RT A 674 ACTED ;IT RA5E A0*SE O# DISCRETION IN NOT

O


21/70


+etitioner li1e2ise emphasiFed that the hearin of '% #er"ar! %&& 2as marred !

proced"ral in4rmities, narratin that the trial co"rt proceeded 2ith the hearin

not2ithstandin the "rent motion for postponement of petitionerJs co"nsel of record, 2ho

attended a previo"sl! sched"led hearin in +ampana. o2ever, petitionerJs la2!er-

representative 2as sent to con4rm the alleations in said motion. To petitionerJs disma!,

instead of rantin a postponement, the trial co"rt allo2ed the contin"ance of the hearin

on the asis that there 2as Gnothin sensitive ao"t Pthe presentation of private

respondentsJ evidenceM.G 11 At the same hearin, the trial co"rt admitted all the

doc"mentar! evidence oKered ! private respondents and ordered the 4lin of the partiesJ

respective memoranda. ence, petitioner 2as virt"all! deprived of its riht to cross-e3amine

the 2itness, comment on or oect to the oKer of evidence and present co"ntervailin

evidence. In fact, to date, petitionerJs "rent motion to n"llif! the co"rt proceedins remains

"nresolved.

To stress its point, petitioner "nderscores the conictin vie2s of H"de 0enito C. Se, Hr., 2ho

heard and tried almost the entire proceedins, and his s"ccessor, H"de $arcelino


22/70


+etitioner f"rther asserted that NoahJs Ar1 co"ld no loner recover its lien, havin raised the

iss"e for the 4rst time onl! d"rin the e3ec"tion proceedins of this Co"rtJs decision in .R.

No. %)'(. As said claim 2as a separate ca"se of action 2hich sho"ld have een raised in

private respondentsJ ans2er 2ith co"nterclaim to petitionerJs complaint, private

respondentsJ fail"re to raise said claim sho"ld have een deemed a 2aiver thereof.

+etitioner li1e2ise insisted that "nder Section '& 19 of the ;areho"se Receipts


23/70


+rivate respondents ne3t alleed that the a2ard of +(,(%,&.)/ to satisf! their

2areho"semanJs lien 2as in accordance 2ith the stip"lations provided in the (uedans and

the correspondin Re4nin Contracts, and that the validit! of said doc"ments had een

reconiFed ! this Co"rt in o"r decision in .R. No. %%&'%. +rivate respondents then

7"estioned petitionerJs fail"re to oppose or re"t the evidence the! presented and e2ailed

its elated attempts to present contrar! evidence thro"h its pleadins. Nonetheless, said

evidence 2as even considered ! the trial co"rt 2hen petitioner so"ht a reconsideration of

the 4rst assailed order of % April %&&, th"s f"rther precl"din an! claim of denial of d"e

process.

+rivate respondents ne3t pointed to the fact that the! consistentl! claimed that the! had not

een paid for storin the s"ar stoc1, 2hich prompted them to 4le criminal chares of estafa

and violation of 0atas +amansa 80+9 0l. '' aainst Rosa N S! and Teresita N. In fact, S!

2as event"all! convicted of t2o co"nts of violation of 0+ 0l. ''. +rivate respondents,

moreover, inc"rred, and contin"e to inc"r, e3penses for the storae and preservation of the

s"ar stoc1 and denied havin 2aived their 2areho"semanJs lien, an iss"e alread! raisedand reected ! this Co"rt in .R. No. %%&'%.

+rivate respondents f"rther claimed that the arnishment order 2as proper, onl! that it 2as

rendered ineKective. In a letter 2/ received ! the sheriK from the 0an1o Sentral n

+ilipinas, it 2as stated that the arnishment co"ld not e enforced since petitionerJs deposits

2ith the 0an1o Sentral n +ilipinas consisted solel! of leal reserves 2hich 2ere e3empt

from arnishment. +etitioner therefore s"Kered no damae from said arnishment. +rivate

respondents li1e2ise deemed immaterial petitionerJs ar"ment that the 2rit of e3ec"tion

iss"ed aainst its real propert! in +asa! Cit! 2as s"cient, considerin its prevailin mar1et

val"e of +/,))),))),))) 2as in e3cess of the 2areho"semanJs lien and invo1ed R"le & of

the %&& R"les of Civil +roced"re, 2hich provided that the sheriK m"st lev! on all thepropert! of the "dment detor, e3cl"din those e3empt from e3ec"tion, in the e3ec"tion of

a mone! "dment.

#inall!, private respondents acc"sed petitioner of comin to co"rt 2ith "nclean hands,

speci4call! citin its misrepresentation that the a2ard of the 2areho"semanJs lien 2o"ld

res"lt in the collapse of its "siness. This claim, private respondents asserted, 2as

contradicted ! petitionerJs %&&/ A"dited #inancial Statement indicatin that petitionerJs

assets amo"nted to illions of pesos, and its %&&/ Ann"al Report to its stoc1holders 2here

petitioner declared that the pendin leal actions arisin from their normal co"rse of

"siness G2ill not materiall! aKect the ro"pJs 4nancial position.G 25

In repl!, petitioner advocated that resort to the remed! of certiorari 2as proper since the

assailed orders 2ere interloc"tor!, and not a 4nal "dment or decision. #"rther, that it 2as

virt"all! deprived of its constit"tional riht to d"e process 2as a valid iss"e to raise in the

instant petition and not even the doctrine of res ;udicata co"ld ar this petition as the

element of a 4nal and e3ec"tor! "dment 2as lac1in. +etitioner li1e2ise disp"ted the

claim that the resol"tion of % $arch %&& 2as 4nal and e3ec"tor!, other2ise private

respondents 2o"ld not have 4led an opposition and motion for partial reconsideration 26 t2o

!ears later. +etitioner also contended that the iss"es raised in this petition 2ere not resolved

in .R. No. %%&'%, as 2hat 2as resolved there 2as private respondentsJ mere entitlement

to a 2areho"semanJs lien, 2itho"t specif!in a correspondin amo"nt. In the instant

petition, the iss"es pertained to the amo"nt and enforceailit! of said lien ased on the

aritrar! manner the amo"nt 2as determined ! the trial co"rt.

+etitioner f"rther ar"ed that the re4nin contracts private respondents invo1ed co"ld not

ind the former since it 2as not a part! thereto. In fact, said contracts 2ere not even

attached to the (uedans 2hen neotiated and that their validit! 2as rep"diated ! a

s"pposed part! thereto, Rosa N S!, 2ho claimed that the contract 2as sim"lated, th"s void

p"rs"ant to Article %( of the Ne2 Civil Code. Sho"ld the re4nin contracts in t"rn e

declared void, petitioner advocated that an! determination ! the co"rt of the e3istence and

' ;areho"se Receipt


24/70


amo"nt of the 2areho"semanJs lien d"e sho"ld e arrived at "sin the test of

reasonaleness. +etitioner li1e2ise noted that the other re4nin contracts 27 presented !

private respondents to sho2 similar storae fees 2ere e3ec"ted et2een the !ears %&&/

and %&&, several !ears after %&6&. Th"s, petitioner concl"ded, private respondents co"ld

not claim that the more recent and increased rates 2here those 2hich prevailed in %&6&.

#inall!, petitioner asserted that in the event that this Co"rt sho"ld "phold the trial co"rtJs

determination of the amo"nt of the 2areho"semanJs lien, petitioner sho"ld e allo2ed to

e3ercise its option as a "dment olior to specif! 2hich of its properties ma! e levied

"pon, citin Section &89, R"le & of the %&& R"les of Civil +roced"re. +etitioner claimed to

have een deprived of this option 2hen the trial co"rt iss"ed the arnishment and lev!

orders.

The petition 2as set for oral ar"ment on '( Novemer %&& 2here the parties addressed

the follo2in iss"es 2e form"lated for them to disc"ss:

8%9 Is this special civil action the appropriate remed!L

8'9 as the trial co"rt the a"thorit! to iss"e a 2rit of e3ec"tion on NoahJs Ar1Js

claims for storae fees considerin that this Co"rt in .R. No. %%&'% merel!

s"stained the trial co"rtJs order of ') Decemer %&&( rantin the NoahJs Ar1

Omni"s $otion and settin the reception of evidence on its claims for

storae fees, and of % $arch %&& 4ndin that there e3isted in favor of NoahJs

Ar1 a 2areho"semanJs lien "nder Section ' of R.A. No. '% and directin

that the e3ec"tion of the "dment in favor of +N0 e sta!ed andor precl"ded

"ntil the f"ll amo"nt of NoahJs Ar1Js lien is satis4ed conformal! 2ith Section

% of R.A. No. '%L

89 Is PpetitionerM liale for storae fees 8a9 from the iss"ance of the 7"edans

in %&6& to Rosa S!, St. Therese $erchandisin and RNS $erchandisin, "p to

their assinment ! endorsees Ramos and >oleta to PpetitionerM for their loan

or 89 after PpetitionerM has 4led an action for speci4c performance and

damaes 8Civil Case No. &)-)'9 aainst NoahJs Ar1 for the latterJs fail"re

to compl! 2ith PpetitionerJsM demand for the deliver! of the s"arL

8(9 Did respondent H"de commit rave a"se of discretion as charedL 28

In o"r resol"tion of '( Novemer %&&, 2e s"mmariFed the positions of the parties on these

iss"es, th"s:

E3pectedl!, co"nsel for petitioner s"mitted that certiorari "nder R"le / of

the R"les of Co"rt is the proper remed! and not an ordinar! appeal,

contendin, amon others, that the order of e3ec"tion 2as not 4nal. On the

other hand, co"nsel for respondents maintained that petitioner +N0

disrearded the hierarch! of co"rts as it !passed the Co"rt of Appeals 2hen

it 4led the instant petition efore this Co"rt.

On the second iss"e, co"nsel for petitioner s"mitted that the trial co"rt had

no a"thorit! to iss"e the 2rit of e3ec"tion or if it had, it denied +N0 d"e

process 2hen it held +N0 liale for the astronomical amo"nt or+(,(%,&.)/ as 2areho"semanJs lien or storae fees. Co"nsel for

respondent, on the other hand, contended that the trial co"rtJs a"thorit! to

iss"e the 7"estioned 2rit of e3ec"tion is derived from the decision in .R. No.

%%&'% 2hich decision alleedl! provided for ample or s"cient parameters

for the comp"tation of the storae fees.

'( ;areho"se Receipt


25/70


On the third iss"e, co"nsel for petitioner 2hile pres"pposin that +N0 ma! e

held to ans2er for storae fees, contended that the same sho"ld start from

the time the endorsees of the s"ar 7"edans defa"lted in their pa!ments, i.e.,

%&&) eca"se efore that, respondent NoahJs Ar1Js claim 2as that it 2as the

o2ner of the s"ar covered ! the 7"edans. On the other hand, respondentsJ

co"nsel pointed o"t that +N0Js liailit! sho"ld start from the iss"ance of the

7"edans in %&6&.

The ar"ments on the fo"rth iss"e, hine on the partiesJ ar"ments for or

aainst the 4rst three iss"es. Co"nsel for petitioner stressed that the trial

co"rt indeed committed a rave a"se of discretion, 2hile respondentsJ

co"nsel insisted that no rave a"se of discretion 2as committed ! the trial

co"rt. 29

+rivate respondents li1e2ise admitted that d"rin the pendenc! of the case, the! failed to

avail of their options as a 2areho"seman. Concretel!, the! co"ld have enforced their lienthro"h the foreclos"re of the oods or the 4lin of an ordinar! civil action. Instead, the!

so"ht to e3ec"te this Co"rtJs "dment in .R. No. %%&'%. The! event"all! areed that

petitionerJs liailit! for the 2areho"semanJs lien sho"ld e rec1oned from the time it stepped

into the shoes of the oriinal depositors. 30

In o"r resol"tion of '( Novemer %&&, 2e re7"ired the parties to sim"ltaneo"sl! s"mit

their respective memoranda 2ithin ) da!s or, in the alternative, a compromise areement

sho"ld a settlement e achieved. Not2ithstandin eKorts e3erted ! the parties, no

m"t"all! acceptale sol"tion 2as reached.

In their respective memoranda, the parties reiterated or other2ise "ttressed the ar"mentsraised in their previo"s pleadins and d"rin the oral ar"ments on '( Novemer %&&,

especiall! on the form"lated iss"es.

The petition is meritorio"s.

;e shall ta1e "p the form"lated iss"es in seriati%.

A. 1his Special 'i)il Action is an Appropriate $e%ed" .

A caref"l per"sal of the 4rst assailed order sho2s that the trial co"rt not onl! ranted the

motion for e3ec"tion, "t also appreciated the evidence in the determination of the

2areho"semanJs lien form"lated its comp"tation of the lien and adopted an oKsettin of

the partiesJ claims. Inel"ctal!, the order as in the nat"re of a 4nal order for it left nothin

else to e resolved thereafter. ence, petitionerJs remed! 2as to appeal therefrom. 31

Nevertheless, petitioner 2as not precl"ded from availin of the e3traordinar! remed! of

certiorari "nder R"le / of the R"les of Co"rt. It is 2ell-settled that the availailit! of an

appeal does not foreclose reco"rse to the e3traordinar! remedies of certiorari or prohiition

2here appeal is not ade7"ate, or e7"all! ene4cial, speed! and s"cient. 32

+etitioner assailed the challened orders as havin een iss"ed 2itho"t or in e3cess of

"risdiction or 2ith rave a"se of discretion and alleed that it had no other plain, speed!

and ade7"ate remed! in the ordinar! co"rse of la2. As hereafter sho2n, these claims 2ere

not "nfo"nded, th"s the propriet! of this special civil action is e!ond 7"estion.

This Co"rt had oriinal "risdiction, conc"rrent 2ith that of Reional Trial Co"rts and the

Co"rt of Appeals, over petitions for certiorari, prohiition, %anda%us, (uo warranto and

habeas curpus, 33 and 2e entertain direct resort to "s in cases 2here special and important

reasons or e3ceptional and compellin circ"mstances "stif! the same. 3/ These reasons and

circ"mstances are present here.

' ;areho"se Receipt


26/70


. 7nder the Special 'ircu%stances in 1his 'ase, 0ri)ate

$espondents Ma" 3nforce 1heir Warehouse%an 5s 2ien

in 'i)il 'ase :o. ?=@?.

The remedies availale to a 2areho"seman, s"ch as private respondents, to enforce his

2areho"semanJs lien are:

8%9 To ref"se to deliver the oods "ntil his lien is satis4ed,

p"rs"ant to Section % of the ;areho"se Receipt oleta and Ramos then "sed the (uedans as sec"rit! for loans otained !

them from the +hilippine National 0an1 8+N09 as sec"rit! for loans otained !

them in the amo"nts of +'. million and +%./ million, respectivel!. These

(uedans the! indoors to the an1. 37

As s"ch, Martinez ). 0hilippine :ational ank 38 ecomes relevant:

'/ ;areho"se Receipt


27/70


In concl"sion, 2e hold that 2here a 2areho"se receipt or 7"edan is

transferred or endorsed to a creditor onl! to sec"re the pa!ment of a loan or

det, the transferee or endorsee does not a"tomaticall! ecome the o2ner of

the oods covered ! the 2areho"se receipt or 7"edan "t he merel! retains

the riht to 1eep and 2ith the consent of the o2ner to sell them so as to

satisf! the oliation from the proceeds of the sale, this for the simple reason

that the transaction involved is not a sale "t onl! a mortae or plede, and

that if the propert! covered ! the 7"edans or 2areho"se receipts is lost

2itho"t the fa"lt or nelience of the mortaee or pledee or the transferee

or endorsee of the 2areho"se receipt or 7"edan, then said oods are to e

rearded as lost on acco"nt of the real o2ner, mortaor or pledor.

The indorsement and deliver! of the 2areho"se receipts 87"edans9 ! Ramos and >oleta to

petitioner 2as not to conve! GtitleG to or o2nership of the oods "t to sec"re 8! 2a! of

plede9 the loans ranted to Ramos and >oleta ! petitioner. The indorsement of the

2areho"se receipts 87"edans9, to perfect the plede, 39 merel! constit"ted a s!molical orconstr"ctive deliver! of the possession of the thin th"s enc"mered. /0

The creditor, in a contract of real sec"rit!, li1e plede, cannot appropriate 2itho"t

foreclos"re the thins iven ! 2a! of plede. /1 An! stip"lation to the contrar!, termed

pactu% co%%issorio, is n"ll and void. /2 The la2 re7"ires foreclos"re in order to allo2 a

transfer of title of the ood iven ! 2a! of sec"rit! from its pledor, /3 and efore an! s"ch

foreclos"re, the pledor, not the pledee, is the o2ner of the oods. In 0hilippine :ational

ank ). Atendido, // 2e said:

The deliver! of the pala! ein merel! ! 2a! of sec"rit!, it follo2s that !

the nat"re of the transaction its o2nership remains 2ith the pledor s"ectonl! to foreclos"re in case of non-f"l4llment of the oliation. 0! this 2e mean

that if the oliation is not paid "pon mat"rit! the most that the pledee can

do is to sell the propert! and appl! the proceeds to the pa!ment of the

oliation and to ret"rn the alance, if an!, to the pledor 8Art. %6', Old Civil

Code PArt. '%%', Ne2 Civil CodeM9. This is the essence of this contract, for,

accordin to la2, a pledee cannot ecome the o2ner of, nor appropriate to

himself, the thin iven in plede 8Article %6&, Old Civil Code PArt. ')66, Ne2

Civil CodeM9. . . The fact that the 2areho"se receipt coverin pala! 2as

delivered, endorsed in lan1, to the an1 does not alter the sit"ation, the

p"rpose of s"ch endorsement ein merel! to transfer the "ridical possession

of the propert! to the pledees and to forestall an! possile disposition

thereof on the part of the pledor. This is tr"e not2ithstandin the provisions

of the ;areho"se Receipt


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89 An oKer to s"rrender the receipt, if neotiale,

2ith s"ch indorsements as 2o"ld e necessar!

for the neotiation of the receipt and

8c9 A readiness and 2illinness to sin, 2hen the

oods are delivered, an ac1no2ledment that

the! have een delivered, if s"ch sinat"re is

re7"ested ! the 2areho"seman.

In case the 2areho"seman ref"ses or fails to deliver the oods in compliance

2ith a demand ! the holder or depositor so accompanied, the "rden shall

e "pon the 2areho"seman to estalish the e3istence of a la2f"l e3c"se for

s"ch ref"sal.

Sec. '&. !ow the lien %a" be lost . A 2areho"seman loses his lien "pon

oods

8a9 0! s"rrenderin possession thereof, or.

89 0! ref"sin to deliver the oods 2hen a

demand is made 2ith 2hich he is o"nd to

compl! "nder the provisions of this Act.

Sec. %. Warehouse%an need not deli)er until lien is satised . A

2areho"seman havin a lien valid aainst the person demandin the oods

ma! ref"se to deliver the oods to him "ntil the lien is satis4ed.

Simpl! p"t, 2here a valid demand ! the la2f"l holder of the (uedans for the deliver! of the

oods is ref"sed ! the 2areho"seman, despite the asence of a la2f"l e3c"se provided !

the stat"te itself, the 2areho"semanJs lien is thereafter concomitantl! lost. As to 2hat the

la2 deems a valid demand, Section 6 en"merates 2hat m"st accompan! a demand 2hile

as reards the reasons 2hich a 2areho"seman ma! invo1e to leall! ref"se to eKect

deliver! of the oods covered ! the (uedans, these are:

8%9 That the holder of the receipt does not satisf! the conditions prescried in

Section 6 of the Act. 8See Sec. 6, Act No. '%9

8'9 That the 2areho"seman has leal title in himself on the oods, s"ch titleor riht ein derived directl! or indirectl! from a transfer made ! the

depositor at the time of or s"se7"ent to the deposit for storae, or from the

2areho"semanJs lien. 8Sec. %/, Act No. '%9

89 That the 2areho"seman has leall! set "p the title or riht of third persons

as la2f"l defense for non-deliver! of the oods as follo2s:

8a9 ;here the 2areho"seman has een re7"ested, ! or on

ehalf of the person la2f"ll! entitled to a riht of propert! of or

possession in the oods, not to ma1e s"ch deliver! 8Sec. %), Act

No. '%9, in 2hich case, the 2areho"seman ma!, either as a

defense to an action ro"ht aainst him for nondeliver! of theoods, or as an oriinal s"it, 2hichever is appropriate, re7"ire

all 1no2n claimants to interplead 8Sec. %, Act No. '%9

89 ;here the 2areho"seman had information that the deliver!

ao"t to e made 2as to one not la2f"ll! entitled to the

possession of the oods 8Sec. %( Act No. '%9, in 2hich case,

'6 ;areho"se Receipt


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the 2areho"seman shall e e3c"sed from liailit! for ref"sin to

deliver the oods, either to the depositor or person claimin

"nder him or to the adverse claimant, "ntil the 2areho"seman

has had a reasonale time to ascertain the validit! of the

adverse claims or to rin leal proceedins to compel all

claimants to interplead 8Sec. %6, Act No. '%9 and

8c9 ;here the oods have alread! een la2f"ll! sold to third

persons to satisf! a 2areho"semanJs lien, or have een la2f"ll!

sold or disposed of eca"se of their perishale or haFardo"s

nat"re. 8Sec. /, Act No. '%9.

8(9 That the 2areho"seman havin a lien valid aainst the person demandin

the oods ref"ses to deliver the oods to him "ntil the lien is satis4ed. 8Sec.

% Act No. '%9

89 That the fail"re 2as not d"e to an! fa"lt on the part of the 2areho"seman,

as ! sho2in that, prior to demand for deliver! and ref"sal, the oods 2ere

stolen or destro!ed ! 4re, ood, etc., 2itho"t an! nelience on his part,

"nless he has contracted so as to e liale in s"ch case, or that the oods

have een ta1en ! the mista1e of a third person 2itho"t the 1no2lede or

implied assent of the 2areho"seman, or some other "sti4ale ro"nd for non-

deliver!. 8/ C.H. '9 /5

Rerettal!, the fact"al settins do not s"cientl! indicate 2hether the demand to otain

possession of the oods complied 2ith Section 6 of the la2. The pres"mption, nevertheless,

2o"ld e that the la2 2as complied 2ith, rather than reached, ! petitioner. *pon theother hand, it 2o"ld appear that the ref"sal of private respondents to deliver the oods 2as

not anchored on a valid e3c"se, i.e., non-satisfaction of the 2areho"semanJs lien over the

oods, "t on an adverse claim of o2nership. +rivate respondents "sti4ed their ref"sal to

deliver the oods, as stated in their Ans2er 2ith Co"nterclaim and Third-+art! Complaint in

Civil Case No. &)-)', ! claimin that the! Gare still the leal o2ners of the s"ect

(uedans and the 7"antit! of s"ar represented therein.G *nder the circ"mstances, this

hardl! 7"ali4ed as a valid, leal e3c"se. The loss of the 2areho"semanJs lien, ho2ever, does

not necessaril! mean the e3tin"ishment of the oliation to pa! the 2areho"sin fees and

chares 2hich contin"es to e a personal liailit! of the o2ners, i.e., the pledors, not the

pledee, in this case. 0"t even as to the o2ners-pledors, the 2areho"seman fees and

chares have ceased to accr"e from the date of the reection ! NoahJs Ar1 to heed the

la2f"l demand ! petitioner for the release of the oods.

The 4nalit! of o"r denial in .R. No. %%&'% of petitionerJs petition to n"llif! the trial co"rtJs

order of )% $arch %&& con4rms the 2areho"semanJs lien ho2ever, s"ch lien, nevertheless,

sho"ld e con4ned to the fees and chares as of the date in $arch %&&) 2hen NoahJs Ar1

ref"sed to heed +N0Js demand for deliver! of the s"ar stoc1s and in no event e!ond the

val"e of the credit in favor of the pledee 8since it is asic that, in foreclos"res, the "!er

does not ass"me the oliations of the pledor to his other creditors even 2hile s"ch "!er

ac7"ires title over the oods less an! e3istin preferred lien thereover9. /6 The foreclos"re of

the thin pleded, it miht incidentall! e mentioned, res"lts in the f"ll satisfaction of the

loan liailities to the pledee of the pledors. /7

D. $espondent Judge 'o%%itted Gra)e Abuse of Discretion.

;e hold that the trial co"rt deprived petitioner of d"e process in renderin the challened

order of % April %&&/ 2itho"t ivin petitioner an opport"nit! to present its evidence.

D"rin the 4nal hearin of the case, private respondents commenced and concl"ded their

presentation of evidence as to the matter of the e3istence of and amo"nt o2in d"e to their

'& ;areho"se Receipt


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2areho"semanJs lien. Their e3hiits 2ere d"l! mar1ed and oKered and the trial co"rt

thereafter r"led, to 2it:

Co"rt: Order.

;ith the admission of E3hiits G%G to G%%G, incl"sive of

s"mar1ins, as part of the testimon! of 0enino 0a"tista, the

defendant Pprivate respondentsM is iven 4ve 89 da!s from

toda! to 4le its memorand"m.


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e3ec"tion onl! served to f"rther strenthen o"r perception of "nd"e and "n2arranted haste

on the part of respondent co"rt in resolvin the iss"e of the 2areho"semanJs lien in favor of

private respondents.

In liht of the aove, 2e need not r"le an!more on the fo"rth form"lated iss"e.

;ERE#ORE, the petition is RANTED. The challened orders of % April and %( H"l! %&&,

incl"din the notices of lev! and arnishment, of the Reional Trial Co"rt of $anila, 0ranch

(, in Civil Case No. &)-)' are RE5ERSED and SET ASIDE, and said co"rt is DIRECTED to

cond"ct f"rther proceedins in said case:

8%9 to allo2 petitioner to present its evidence on the matter of

the 2areho"semanJs lien

8'9 to comp"te the petitionerJs 2areho"semanJs lien in liht of

the foreoin oservations and

89 to determine 2hether, for the relevant period, NoahJs Ar1

maintained a s"cient inventor! to cover the vol"me of s"ar

speci4ed in the (uedans.

Costs aainst private respondents.

SO ORDERED.

ellosillo, itug, 0anganiban and 6uisu%bing, JJ., concur.

G.R. No. L-63/2 January 26, 195/

%ILI%%IN$ N)I&N)L +)N, plaintiK-appellee,

vs.

L)"R$)N& )$N#I#&, defendants-appellant.

:icolas #ernandez for appellee.

Gaudencio 2. Atendido for appellant.

+)"I(), )NG$L&, J.@

% ;areho"se Receipt


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This is an appeal from a decision of the Co"rt of #irst Instance of N"eva Ecia 2hich orders

the defendant to pa! to the plaintiK the s"m of +,))), 2ith interest thereon at the rate of

/V per ann"m from H"ne '/, %&(), and the costs of action.

On H"ne '/, %&(),


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coverin the pala! 2as delivered, endorsed in lan1, to the an1 does not alter the sit"ation,

the p"rpose of s"ch endorsement ein merel! to transfer the "ridical possession of the

propert! to the pledee and to forestall an! possile disposition thereof on the part of the

pledor. This is tr"e not2ithstandin the provisions to the contrar! of the ;areho"se Receipt


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G.R. No. 1072/3 (etemer 1, 1993

%ILI%%IN$ N)I&N)L +)N, petitioner,

vs.

N&)


35/70


The receipts are s"stantiall! in the form, and contain the terms, prescried for neotiale

2areho"se receipts ! Section ' of the la2.

S"se7"entl!, 2areho"se receipts N"mered %6)6) and %6)6% 8coverin s"ar deposited

! RNS $erchandisin9 2ere neotiated and indorsed to oleta and Ramos failed to pa! their loans "pon mat"rit! on Han"ar! &, %&&).

Conse7"entl! on $arch %/, %&&), +N0 2rote to NoahJs Ar1 S"ar Re4ner! 8hereafter, simpl!

NoahJs Ar19 demandin deliver! of the s"ar covered ! the (uedans indorsed to it !

>oleta and Ramos. ;hen NoahJs Ar1 ref"sed to compl! 2ith the demand, +N0 4led 2ith the

Reional Trial Co"rt of $anila a veri4ed complaint for GSpeci4c +erformance 2ith Damaesand Application for ;rit of AttachmentG aainst NoahJs Ar1, Alerto T.


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s"ar there! covered 2as Go"s and sim"lated 8ein part of the latterJs9 comple3

an1in schemes and 4nancial mane"versG that the sim"lated transaction G2as "st a

tollin scheme to

avoid 5AT pa!ment and other 0IR assessments 8considerin that9 as . . . con4dentiall!

intimated 8! said Himm! o9 . . . NoahJs Ar1 is "nder se7"estration ! the +C,G and that

the (uedans G2ere in fact "sed ! NoahJs Ar1 E3ec"tive Director,


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"dment e rendered forth2ith in favor of the +N0 aainst NoahJs Ar1 S"ar Re4ner!, et al.,

as pra!ed for in petitionerJs $otion for S"mmar! H"dment.G Said the Appellate Co"rt: 2

In iss"in the 7"estioned Orders, the respondent Co"rt r"led that G7"estions

of la2 sho"ld e resolved after and not efore, the 7"estions of fact are

properl! litiated.G A scr"tin! of defendantsJ armative defenses does not

sho2 material 7"estions of facts as to the alleed non-pa!ment of p"rchase

price ! the vendees4rst indorsers, and 2hich non-pa!ment is not disp"ted

! +N0 as it does not materiall! aKect +N0Js title to the s"ar stoc1 as holder

of the neotiale 7"edans.

;hat is determinative of the propriet! of s"mmar! "dment is not the

e3istence of conictin claims for prior parties "t 2hether from an

e3amination of the pleadins, depositions, admissions and doc"ments on 4le,

the defenses as to the main iss"e do not tender material 7"estions of fact

8see arcia vs. Co"rt of Appeals %/ SCRA 6%9 or the iss"es th"s tenderedare in fact sham, 4ctitio"s, contrived, set "p in ad faith or so "ns"stantial as

not to constit"te en"ine iss"es for trial. 8See 5erara vs. S"elto, et al., %/

SCRA $ercado, et al. vs. Co"rt of Appeals, %/' SCRA 9. The 7"estioned

Orders themselves do not specif! 2hat material facts are in iss"e. 8See Sec. (,

R"le (, R"les of Co"rt9.

To re7"ire a trial not2ithstandin pertinent alleations of the pleadins and

other facts appearin on record, 2o"ld constit"te a 2aste of time and an

in"stice to the +N0 2hose rihts to relief to 2hich it is plainl! entitled 2o"ld

e f"rther dela!ed to its pre"dice.

In iss"in the 7"estioned Orders, ;e 4nd the respondent Co"rt to have acted

in rave a"se of discretion 2hich "stif! holdin n"ll and void and settin

aside the Orders dated $a! ' and H"l! (, %&&) of respondent Co"rt, and that a

su%%ar" ;udg%ent be rendered forthwith in fa)or of the 0: against :oah5s

Ark Sugar $ener", et al., as pra"ed for in the petitioner5s Motion for

Su%%ar" Judg%ent .

SO ORDERED.

NoahJs Ar1, et al. moved for reconsideration, "t their motion 2as denied ! the Appellate

Tri"nalJs Resol"tion dated $arch /, %&&%.

The "dment ecame 4nal. Entr! of H"dment 2as made on $a! '/, %&&'. Thereafter the

case 2as remanded to the Co"rt of oriin.

On H"ne %6, %&&', the Reional Trial Co"rt rendered "dment, "t not in accordance 2ith

the aforesaid decision of the Co"rt of Appeals. As stated in the openin pararaph of this

opinion, instead of a s"mmar! "dment Gin favor of the +N0 aainst NoahJs Ar1 S"ar

Re4ner!, et al., as pra!ed for in . . . 8+N09Js $otion for S"mmar! H"dment,G the Trial Co"rtJs

verdict decreed the dismissal of GplaintiKJs complaint aainst defendants NoahJs Ar1 S"ar

Re4ner!, Alerto T.


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alleed ! plaintiK the onl! material facts estalished on the asis of the pleadins,

doc"mentar! evidence on record, stip"lations and admissions d"rin the proceedins on the

application for a 2rit of preliminar! attachmentLG To this 7"estion the Trial Co"rt ave a

neative ans2er, it ein its vie2 that other facts, Gas alleed ! defendants . . . 8and9 not

disp"ted ! +N0, have een li1e2ise estalished.G

The Trial Co"rt later denied +N0Js motion for reconsideration 8! Order dated Septemer (,

%&&'9, evidentl! 4ndin merit in the ar"ment of NoahJs Ar1, et al., therein 7"oted, that

G'ertiorari as a mode of appeal involves the revie2 of "dment, a2ard of 4nal order on the

merits, 2hile the oriinal action for certiorari and as a special civil action is enerall!

directed aainst an interloc"tor! order of the Co"rt, prior to an appeal from the "dment of

the main case 2hich in the case at ar is speci4c performance . . .G

ence, this appeal.

In CA-.R. S+ No. '&6 aove mentioned, after an e3tensive revie2 of the entire record ofthe case efore the Reional Trial Co"rt 8incl"din the admissions of NoahJs Ar1, et al. and

the partiesJ stip"lations of fact9, as 2ell as the pleadins 4led ! the parties efore it, the

Co"rt of Appeals arrived at the concl"sion that a s"mmar! "dment 2as proper since Gthere

2as no s"stantial controvers! on a8n!9 material fact, the onl! iss"es for the Co"rtJs

determination . . . 8ein9 p"rel! . . . 7"estions of la2, as follo2s:

%9 ;hether or not the non-pa!ment of the p"rchase price for

the s"ar stoc1 evidenced ! the 7"edans, ! the oriinal

depositors vendees 8RNS $erchandisin and St. Therese

$erchandisin9 rendered invalid the neotiation of said 7"edans

! vendees4rst indorsers to indorsers 8Ramos and >oleta9 andthe s"se7"ent neotiation of Ramos and >oleta to +N0.

'9 ;hether or not +N0 as indorsee pledee of 7"edans 2as

entitled to deliver! of s"ar stoc1s from the 2areho"seman,

NoahJs Ar1.G

These leal 7"estions 2ere disposed of ! the Appellate Co"rt as follo2s:

The validit! of the neotiation ! RNS $erchandisin and St. Therese

$erchandisin to Ramos and >oleta, and ! the latter to +N0 to sec"re a loan

cannot e impaired ! the fact that the neotiation et2een NoahJs Ar1 and

RNS $erchandisin and St. Therese $erchandisin 2as in reach of faith on

the part of the merchandisin 4rms or ! the fact that the o2ner 8NoahJs Ar19

2as deprived of the possession of the same ! fra"d, mista1e or conversion of

the person to 2hom the 2areho"se receipt7"edan 2as s"se7"entl!

neotiated if 8+N09 paid val"e therefor in ood faith 2itho"t notice of s"ch

reach of d"t!, fra"d, mista1e or conversion. 8See Article %%6, Ne2 Civil

Code9. And the creditor 8+N09 2hose detor 2as the o2ner of the neotiale

doc"ment of title 82areho"se receipt9 shall e entitled to s"ch aid from the

co"rt of appropriate "risdiction attachin s"ch doc"ment or in satisf!in the

claim ! means as is allo2ed ! la2 or in e7"it! in reard to propert! 2hich

cannot e readil! attached or levied "pon ! ordinar! process. 8See Art. %'),

Ne2 Civil Code9. If the 7"edans 2ere neotiale in form and d"l! indorsed to+N0 8the creditor9, the deliver! of the 7"edans to +N0 ma1es the +N0 the

o2ner of the propert! covered ! said 7"edans and on deposit 2ith NoahJs

Ar1, the 2areho"seman. 8See S! Con 0ien = Co. )s. on1on = Shanhai

0an1 Corp., / +hil. &69.

6 ;areho"se Receipt


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In the case at ar, ;e fo"nd that the fact"al ases "nderl!in the defendantJs

armative defenses 8"pon 2hich +N0 has moved for s"mmar! "dment9 are

not disp"ted and have een stip"lated ! the parties and therefore do not

re7"ire presentation of evidence. +N0Js riht to enforce the oliation of

NoahJs Ar1 as a 2areho"seman, to deliver the s"ar stoc1 to +N0 as holder of

the 7"edans, does not depend on the o"tcome of the third-part! complaint

eca"se the validit! of the neotiation transferrin title to the oods to +N0 as

holder of the 7"edans is not aKected ! an act of RNS $erchandisin and St.

Therese $erchandisin, in reach of tr"st, fra"d or conversion aainst NoahJs

Ar1.

The Co"rt considers the Appellate Co"rtJs concl"sions of fact and la2 to e correct.

The Trial H"deJs ar"ment that the Appellate Co"rtJs decision failed to ta1e acco"nt of other

Gmaterial facts estalished on the asis of the pleadins, doc"mentar! evidence on record,

stip"lations and admissions d"rin the proceedins on the application for a 2rit ofpreliminar! attachment,G is 7"ite transparentl! specio"s. #or the matters cited ! is onor,

as alleedl! not e3amined ! the Co"rt of Appeals, 2ere in fact d"l! considered ! the latter

i.e., that Gthe vario"s postdated chec1s iss"ed ! the "!ers 8RNS $erchandisin and St.

Therese $erchandisin9 in favor of NoahJs Ar1 2ere dishonored 2hen presented for pa!ment

. . 8and hence9 the "!ers never ac7"ired title to the s"ar evidenced ! the 7"edans,G 3

and that +N0 Gdid not follo2 the proced"re stated in Article '%%' of the Civil Code.G / In its

decision, as "st pointed o"t, the Co"rt of Appeals e3plicitl! r"led that the Gvalidit! of the

neotiationG of the (uedans to +N0G cannot e impaired ! the fact that the neotiation

et2een NoahJs Ar1 and RNS $erchandisin and St. Therese $erchandisin 2as made in

reach of faith on the part of the merchandisin 4rms or ! the fact that the o2ner 8NoahJs

Ar19 2as deprived of the possession of the same ! fra"d, mista1e or conversion . . .G5

Italso r"led that the (uedans 2ere neotiale doc"ments and had een d"l! neotiated to the

+N0 2hich there! ac7"ired the rihts set o"t in Article %% of the Civil Code,G 6 )iz .:G

8%9 S"ch title to the oods as the person neotiatin the doc"ments to him

had or had ailit! to conve! to a p"rchaser in ood faith for val"e and also

s"ch title to the oods as the person to 2hose order the oods 2ere to e

delivered ! the terms of the doc"ment had or had ailit! to conve! to a

p"rchaser in ood faith for val"e and

8'9 The direct oliation of the ailee iss"in the doc"ment to hold possession

of the oods for him accordin to the terms of the doc"ment as f"ll! as if s"ch

ailee had contracted directl! 2ith him.

The Co"rt of Appeals fo"nd correctl! that the indications in the pleadins to the contrar!

not2ithstandin, no s"stantial triale iss"e of fact act"all! e3isted, and that certain iss"es

raised in ans2er, even if ta1en as estalished, 2o"ld not materiall! chane the "ltimate

4ndins relative to the main claim. 7 Its decision is entirel! in accord 2ith this Co"rtJs r"lins

reardin the propriet! of s"mmar! "dments invo1ed ! the Appellate Tri"nal, i.e.,

ergara, Sr. ). Suelto, 8 and Mercado ). 'ourt of Appeals. 9 Accordin to ergara, for

instance, Geven if the ans2er does tender iss"es and therefore a "dment on the

pleadins is not proper a s"mmar! "dment ma! still e rendered on the plaintiKJs

motion if he can sho2 to the Co"rtJs satisfaction that Ge3cept as to the amo"nt of damaes,

there is no en"ine iss"e as to an! material fact,G 10 that is to sa!, the iss"es th"s tenderedare not en"ine, are in other 2ords sham, 4ctitio"s, contrived, set "p in ad faith, patentl!

"ns"stantial. 11 The determination ma! e made ! the Co"rt on the asis of the pleadins,

and the depositions, admissions and adavits that the movant ma! s"mit, as 2ell as those

2hich the defendant ma! present in t"rn.G 12

In an! event, the concl"sions of fact and la2 set o"t in the Appellate Co"rtJs decision are

"ndenial! indin on all the parties to the case, the respondent Reional Trial H"de

& ;areho"se Receipt


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incl"ded. avin een rendered ! a competent co"rt 2ithin its "risdiction, and havin

ecome 4nal and e3ec"tor!, the decision no2 operates as the imm"tale la2 amon the

parties, the respondent Trial H"de incl"ded it has ecome the la2 of the case and ma! no

loner, in s"se7"ent proceedins, e altered or modi4ed in an! 2a!, m"ch less reversed or

set at na"ht, ! the latter, or an! other "de, not even ! the S"preme Co"rt it is an

"nalterale determination of the propriet! of a s"mmar! "dment in the action in 7"estion,

and "pon all the iss"es therein raised or 2hich co"ld have een raised relative to the merits

of said action. 13

The Trial H"de ma! not evade compliance 2ith the 4nal "dment of the Co"rt of Appeals on

the theor! that the latter had acted onl! on a mere interloc"tor! order 8the order den!in

+N0Js motion for s"mmar! "dment9, 2hile he had s"se7"entl! ad"ded the action for

speci4c performance on the merits. "ite ovio"s is that the Co"rt of Appeals had decided

that a s"mmar! "dment 2as proper in said action of speci4c performance, that this 2as in

tr"th a determination of the merits of the s"it, that that decision had ecome 4nal and

e3ec"tor!, and that the decision e3pressl! commanded is onor to render s"ch a "dment. *nder the circ"mstances, the latterJs d"t! 2as clear and inescapale.

It 2as not 2ithin the Trial H"deJs competence or discretion to ta1e e3ception to, m"ch less

overt"rn, an! of the fact"al or leal concl"sions laid do2n ! the Co"rt of Appeals in its

verdict. e 2as as m"ch o"nd there! as the private parties themselves. is onl! f"nction

2as to implement and carr! o"t the Appellate Tri"nalJs "dment. It 2as an act of

s"pereroation, of pres"mpt"o"sness, on is onorJs part to disreard the Co"rtJs clear and

cateorical command, and to dispose of the case in a manner diametricall! opposed thereto.

In doin so, the Trial H"de committed rave error 2hich m"st forth2ith e corrected.

;ERE#ORE, the Trial H"deJs Decision in Civil Case No. &)-)' dated H"ne %6, %&&' isRE5ERSED and SET ASIDE and a ne2 one rendered conformal! 2ith the 4nal and e3ec"tor!

Decision of the Co"rt of Appeals in CA-.R. S+ No. '&6, orderin the private respondents,

NoahJs Ar1 S"ar Re4ner!, Alerto T.


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G.R. No. L-16510 January 9, 1922

%ILI%%IN$ N)I&N)L +)N, plaintiK-appellant,

vs.

%R"$R(< =)R$&"($ )((&I)I&N, defendant-appellee.

$o%an 2acson for appellant.

$oss & 2awrence and 3wald 3. Selph for appellee.

J&N(, J.:

The plaintiK is a corporation oraniFed "nder the an1in la2s of the +hilippine Islands 2ith

its principal oce in the cit! of $anila. The defendant is a domestic corporation doin a

eneral 2areho"se "siness and domiciled at $anila, and the +hilippine #ier and +rod"ce

Compan!, to 2hich 2e 2ill hereafter refer as the +rod"ce Compan!, is another domestic

corporation 2ith its principal oce also at $anila. In $a!, %&%/, the defendant, as part! of

the 4rst part, entered into a 2ritten contract 2ith the +rod"ce Compan!, as part! of the

second part, in and ! 2hich Gthe aove-named part! of the second part is here! named,

constit"ted, and appointed as the eneral manaer of the "siness of the part! of the 4rst

part, in all of the ranches thereof, 2ith the d"ties, po2ers, a"thorit! and compensation

hereinafter provided.G GThe said part! of the second part shall e3ercise a eneral and

complete s"pervision over and manaement of the "siness of the part! of the 4rst part,Gand Gshall direct, manae, promote and advance the said "siness, s"ect onl! to the

control and instr"ctions of the oard of directors of the part! of the 4rst part.G That said

part! of the second part, as eneral manaer, shall have all po2ers and a"thorities

necessar!, proper or "s"al for the d"e transaction of the "siness of the part! of the 4rst

part, incl"din the po2er to sin the compan!Js name, save and e3cept s"ch po2er or

a"thorit! as shall have een e3pressl! reserved to itself, ! the oard of directors of the

part! of the 4rst part, provided Gthat s"ch reservations ! the oard of directors shall not e

(% ;areho"se Receipt


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emplo!ed to "nreasonal! hamper or interfere 2ith the d"e manaement of said "siness

and shall, at no time, red"ce the po2ers and a"thorities of said eneral manaer elo2 the

"s"al and ordinar! standard in "siness of li1e 1ind.G It is then areed that the +rod"ce

Compan! shall have an ann"al salar! of +,)) for its services as eneral manaer, and that

the defendant 2ill also pa! the local aents of the +rod"ce Compan! +)) per month for

their services. The areement also provides that it shall remain in force and eKect ten !ears

from date, 2ith the riht of the +rod"ce Compan! to rene2 it for a f"rther period of one to

ten !ears at its option. In the months of Novemer and Decemer, %&%6, and 2hile the

contract 2as in force and eKect, the defendant d"l! iss"ed to the +rod"ce Compan! its

neotiale 7"edans Nos. %', %'//, %', %', %', %'&, and %'6 for %,/&&.(

pic"ls of copra in and ! 2hich, s"ect to the terms and conditions therein stated, it areed

to deliver that amo"nt of copra to the +rod"ce Compan! or its order.

Section ( of the conditions printed on the ac1 provides:

This Association 2ill deliver the pac1ae, noted hereon, on s"rrender to theAssociation of this 2arrant endorsed ! the part! 2ho shall e for the time reistered

in the oo1s of the Association as the o2ner of the pac1aes descried hereon and

the prod"ction ! the Association of this 2arrant shall at all times e concl"sive proof

that the pac1aes hereon noted have een properl! delivered ! the Association and

shall e3empt the Association from all responsiilit! in connection 2ith the said

pac1aes or oods.

Section provides:

No transfer of interest andor o2nership 2ill e reconiFed ! the Association "nless

reistered in the oo1s of the Association, andor all chares for storae andorins"rance d"e to the Association paid. S"ch storae andor ins"rance shall constit"te

a lien aainst the pac1aes herein noted "ntil paid and aid pac1ae shall remain

"ndelivered "ntil s"ch lien or lien isare satis4ed.

Each 7"edan ave the n"mer of sac1, pic"ls, 2areho"se n"mer, ross 2eiht in 1ilos and

its declared val"e, and recited thereon that the copra 2as ins"red for the f"ll amo"nt of its

declared val"e, and across the face of the 7"edan 2ere the 2ords GNeotiale ;arrantG in

red in1. The! 2ere all of the printed form entitled G+rod"cersJ ;areho"se Association.G Each

recited in red in1 GThis 2arrant is of no val"e "nless sined ! an ocer of the Association,G

and 2ere sined G+rod"cersJ ;areho"se Association ! eore 0. ;ic1s, Treas"rer, and

+rod"cersJ ;areho"se Association ! R. Torres, ;areho"seman.G Each receipt 2as also

n"mered, and stated the n"mer of the 2areho"se and 2here sit"ated, and recited that

storae chares 2ere at the rate of +).)( per pic"l per month, and that the ins"rance rate

2as % per cent per month on the declared val"e.

The +rod"ce Compan! arraned for an overdraft 2ith the plaintiK of +%,))),))). To sec"re

s"ch overdraft, and as collateral from and after the dates of their iss"ance, the 7"edans in

7"estion 2ere endorsed in lan1 ! the +rod"ce Compan!, and delivered to the plaintiK,

2hich ecame and is no2 the o2ner and holder thereof. ;itho"t ma1in a tender of an!

chares, on $arch '%, %&%&, the plaintiK re7"ested the deliver! of the copra descried in the

respective 7"edans, and, for its fail"re to do so, commenced this action on April ', %&%&, to

recover its val"e alleed to e +'(),/6&, 2ith interest from $arch '%, %&%&, at the rate of /

per cent per ann"m. H"l! %), %&%&, an amended complaint 2as 4led, and on A""st &, %&%&,a second amended complaint 2as 4led, in 2hich it is alleed that, in ood faith, the plaintiK

p"rchased these 7"edans, and that it is the o2ner, and recites all of the conditions printed

on the ac1, and made a part of the 7"edans. It is then alleed that on H"l! ), %&%&, the

plaintiK re7"ested the defendant to reister the 7"edans in the name of the plaintiK, and to

deliver to it the %(,6.%& pic"ls of copra, and, "pon that date, that it had oKered to satisf!

an! lien that defendant miht have, to s"rrender the receipts 2ith s"ch indorsement that it

miht re7"ire, and the receipt therefor, 2hen the oods 2ere delivered, if s"ch sinat"re is

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re7"ested ! the defendant. GThat the defendant ref"sed to compl! 2ith the demands of the

plaintiK, statin that it co"ld not deliver the oods mentioned in the receipts as said oods

are not in the 2areho"se, said defendant still ref"sin to ma1e s"ch deliver!.G That on H"l!

), %&%&, copra 2as of the val"e of +'% per pic"l. That ! reason of s"ch ref"sal, plaintiK

has een damaed in the amo"nt of +)/,).&&. It is also alleed that in Han"ar!, %&%&,

2ith the consent of the plaintiK, the +rod"ce Compan! removed from the 2areho"se of the

defendant %,%%'.% pic"ls of copra descried in receipt No. %', of the declared val"e of

+%6,).

#or amended ans2er, the de

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