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

21, 1953) 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 covering 1,071.04 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 BogoMedellin 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. 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 public auction 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 fault or negligence of the mortgagee or pledgee or the transferee or 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) Noahs 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 Noahs 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 judges 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 warehousemans lien. Granted. The issues presented before us in this petition revolve around the legality of the questioned orders of respondent judge, issued as they were after we had denied with finality private respondents contention that the PNB could not compel them to deliver the stocks of sugar in their warehouse covered by the endorsed quedans or pay the value of the said stocks of sugar. ISSUE: Can the warehouseman enforce his warehousemans lien before delivering the sugar stocks as ordered by the Court of Appeals or need he file a separate action to enforce payment of storage fees?

we could not contemplate the matter of warehousemans 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 warehousemans 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 warehousemans lien, for reasonable storage fees and preservation expenses The unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the Warehouse Receipts Law (R.A. 2137) carried with it the admission of the existence and validity of the terms, conditions and stipulations written on the face of the Warehouse Receipts, including the unqualified recognition of the payment of warehousemans lien for storage fees and preservation expenses. Petitioner may not now retrieve the sugar stocks without paying the lien due private respondents as warehouseman. While the PNB is entitled to the stocks of sugar as the endorsee of the quedans, delivery to it shall be effected only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien, because a warehousemans lien is possessory in nature. SC uphold and sustain the validity of the assailed orders of public respondent, in issuing the questioned orders which recognized the legitimate right of Noahs 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 that anybody who wants his palay to be milled and converted into rice may

deliver the same to the rice mill paying P0.40 per cavan of palay for the services of the petitioner in milling it. The mill itself is within a building which the petitioner calls a "camalig" about ten meters long, eight meters wide and five meters high. The "camalig" is totally enclosed partly by steelmatting, partly by wood and partly by galvanized iron sheets. Director of Commerce ruled that appellant's rice milling business falls under the law just quoted, required her to secure the corresponding renewal license and started steps for her prosecution in view of her refusal to do so. In other words, it is enough that the palay is delivered, even if only to have it milled. Delivery connotes transfer of physical possession or custody; and it may indeed be seriously doubted if the concept of "storage" under the law would cover a situation where one merely utilizes the services of the mill but keeps the palay under his physical control all steps of the way. But in this case it is a fact that palay is delivered to appellant and sometimes piled inside her "camalig" in appreciable quantities, to wait for its turn in the milling process. This is precisely the situation covered by the statute. "There is a reason for the inclusion of the business of the petitioner within the operation of Act 3893 as amended by Republic Act 247. The main intention of the lawmaker is to give protection to the owner of the commodity against possible abuses (and we might add negligence) of the person to whom the physical control of his properties is delivered." Appellant says her "camalig" is neither adequate nor suitable for storage. But the inadequacy of the construction insofar as the safety of the palay is concerned is not a valid reason to remove it from the operation of the statute, for otherwise the very fact of non-compliance with the legal requirements in this respect would be its own excuse from 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 bonded warehouseman, to secure performance obtained Luzon Surety Co. executed Guaranty Bond conditioned particularly on the fulfillment by Go Tiong of his duty or obligation to deliver to the depositors in his storage warehouse, the palay received by him for storage, at any time demand is made, or to pay the market value thereof, in case he was unable to return the same But prior to the issuance of the license, he had on several occasions received 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 Tiong again 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, including plaintiff, filed their claims with the Bureau of Commerce, and it would appear that with the proceeds of the insurance policy, the Bureau of Commerce paid off some of the claim. Plaintiff's counsel later withdrew his claim with the Bureau of Commerce, according to Go Tiong, because his claim was denied by the Bureau, but according to the decision of the trial court, because nothing came from plaintiff's efforts to have his claim paid. Gonzales filed the present action.

Gonzales and Go Tiong entered into a contract of amicable settlement to the effect that upon the settlement of all accounts due to him by Go Tiong, he, Gonzales, would have all actions pending against Go Tiong dismissed. 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 of receiving commodities for storage and defining the rights and obligations of a bonded warehouseman and those transacting business with him. SECTION 1. Persons who may issue receipts. Warehouse receipts may be issued by any warehouseman., and the Bonded Warebouse Act as amended permits the warehouseman to issue any receipt, thus: . . . . "receipt" as any receipt issued by a warehouseman for commodity delivered to him as far as Go Tiong was concerned, the fact that the receipts issued by him were not "quedans" is no valid ground for defense because he was the principal obligor As to the contention that the deposits made by the plaintiff were free because he paid no fees therefor, it would appear that Go Tiong induced plaintiff to deposit his palay in the warehouse free of charge in order to promote his business and to attract other depositors The defense that the palay was destroyed by fire neither does the Court consider to be good for while the contract was in the nature of a deposit and the loss of the thing would exempt the obligor in a contract of deposit to return the goods, this exemption from the responsibility for the damages must be conditioned in his proof that the loss was by force majeure, and without his fault , the fact that he exceeded the limit of the authorized deposit must have increased the risk and would militate against his defense of nonliability. , the defendant violated the terms of his license by accepting for deposit palay in excess of the limit authorized by his license, which fact must have increased the risk. It is evident, however, that while there was an attempt to settle the case amicably, the settlement was never consummated because Go Tiong failed to settle the accounts of Gonzales to the latter's satisfaction. Consequently, said non-consummated compromise settlement does not discharge the surety: In relation to the failure of Go Tiong to issue the warehouse receipts contemplated by the Warehouse Receipts Act, which failure, according to appellants, precluded plaintiff from suing on the bond , defining receipt as any receipt issued by a warehouseman for commodity delivered to him, showing that the law does not require as indispensable that a warehouse receipt be issued. as long as the depositor is injured by a breach of any obligation of the warehouseman, which obligation is secured by a bond, said depositor may sue on said bond. In other words, the surety cannot avoid liability from the mere failure of the warehouseman to issue the prescribed receipt The surety company concedes that the bond which it gave contains the statutory conditions. The statute . . . requires that the bond shall be conditioned upon the faithful performance of the public local grain

warehouseman of all the provisions of law relating to the storage of grain by such warehouseman. The obligation of the surety covers the duty of the warehouseman to issue the prescribed receipt, as well as the other duties imposed upon him by the statute. We deem it unnecessary to discuss and rule upon the other questions raised in the appeal. appealed decision affirmed