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8) Phil. National Bank v. Se, et al.

G.R. No. 119231; April 18, 1996
HERMOSISIMA, JR., J.
FACTS: In accordance with Act No. 2137, the Warehouse Receipts Law, Noahs Ark
Sugar Refinery issued on several dates 5 Warehouse Receipts (Quedans). 2 of
which were negotiated and endorsed to Luis T. Ramos; and the other 3 were
negotiated and endorsed to Cresencia K. Zoleta. Ramos and Zoleta then used
the quedans as security for two loan agreements obtained by them from the
Philippine National Bank. The aforementioned quedans were endorsed by them
to the Philippine National Bank.
Luis T. Ramos and Cresencia K. Zoleta failed to pay their loans upon maturity.
Consequently, the 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. Noahs Ark Sugar Refinery refused to comply with the
demand alleging ownership thereof averring as they did that: In an agreement,
Noahs Ark Sugar Refinery agreed to sell to Rosa Ng Sy of RNS Merchandising
and Teresita Ng of St. Therese Merchandising the total volume of sugar
indicated in the quedans stored at Noahs Ark Sugar Refinery for a total
consideration of P63,000,000.00. The corresponding payments in the form of
checks issued by the vendees in favor of defendants were subsequently
dishonored by the drawee banks by reason of payment stopped and drawn
against insufficient funds.
ISSUE: W/N The warehouseman enforce his warehouseman’s lien before delivering
the sugar stocks to PNB
HELD: YES. Considering that petitioner does not deny the existence, validity and
genuineness of the Warehouse Receipts on which it anchors its claim for
payment against private respondents, it cannot disclaim liability for the
payment of the storage fees stipulated therein. Accordingly, petitioner PNB is
legally bound to stand by the express terms and conditions on the face of the
Warehouse Receipts as to the payment of storage fees. Even in the absence of
such a provision, law and equity dictate the payment of the warehouseman s
lien pursuant to Sections 27 and 31 of the Warehouse Receipts Law (R.A. 2137),
to wit:
SECTION 27. What claims are included in the warehousemans lien. Subject to the provisions of section thirty, a warehouseman shall have
lien on goods deposited or on the proceeds thereof in his hands, for all
lawful charges for storage and preservation of the goods; also for all
lawful claims for money advanced, interest, insurance, transportation,
labor, weighing coopering and other charges and expenses in relation
to such goods; also for all reasonable charges and expenses for notice,
and advertisement of sale, and for sale of the goods where default has
been made in satisfying the warehousemans lien.

If a letter of credit is drawable only after settlement of the dispute on the contract entered into by the applicant and the beneficiary.A warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied. 2004 TINGA. the demand was objected by Transfield on the ground that there is still pending arbitration on their request ±or extension of time. G. ISSUE: W/N LHC may draw on the Securities HELD: YES. Luzon Hydro Corporation Australia. commissioning. because a warehousemans lien is possessory in nature. 9) Transfield Phil. (LHC). there would be no practical and beneficial use for letters of credit in commercial transactions. J. During the construction of the plant. LHC called on the stand-by letters of credit because of default. No. because.Under the contract. Transfield’s argument that any dispute must first be resolved by the parties. . In other words. testing and completion of the Project. Transfield requested for extension of time citing typhoon and various disputes delaying the construction. the lien may be lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien. Transfield was given the sole responsibility for the design. Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement of a dispute between the parties is not a prerequisite for the release of funds under a letter of credit. whether through negotiations or arbitration. construction. two stand-by letters of credit. However. The contract provides for a period for which the project is to be completed and also allows for the extension of the period provided that the extension is based on justifiable grounds such as fortuitous event.R. before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of credit into a mere guarantee. In order to guarantee performance by Transfield. the warehouseman loses his lien upon goods by surrendering possession thereof. Inc v. FACTS: Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro Corp. Transfield were to construct a hydro-electric plants in Benguet and Ilocos. in accordance with Section 29 of the Warehouse Receipts Law. LHC did not give due course to the extension of the period prayed for but referred the matter to arbitration committee. November 22. The so- . were required to be opened. Warehouseman need not deliver until lien is satisfied. 146717. In other words. Because of the delay in the construction of the plant. et al. Imperative is the right of the warehouseman to demand payment of his lien at this juncture. herein referred to as Securities. The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the required documents are presented to it.SECTION 31. the argument is incompatible with the very nature of the letter of credit.

nor do they assume any liability or responsibility for the description. or for the general and/or particular conditions stipulated in the documents or superimposed thereon. Under this principle.called “independence principle” assures the seller or the beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank from determining whether the main contract is actually accomplished or not. falsification or legal effect of any documents. . quality. condition. accuracy. quantity. or any other person whomsoever. genuineness. or for the good faith or acts and/or omissions. sufficiency. delivery. performance or standing of the consignor. packing. value or existence of the goods represented by any documents. weight. banks assume no liability or responsibility for the form. or the insurers of the goods. the carriers. solvency.