Negotiable Instruments - Atty.
Ampil
AY 2017 - 2018 - Term 1
01 Gonzales v Go Tiong
Facts:
● Go Tiong owns a rice mill in Pangasinan. He applied for a license to engage
in the business of a bonded warehouseman.
● While his application is on process, Go Tiong encouraged Gonzales to
deposit his palays for free, to encourage other people to deposit their palays
as well
● After the license was issued to Go Tiong, Gonzales added 492 sacks.
o Gonzales Total deposit now is 860 sacks
● Go Tiong issues “ordinary receipts” to Gonzales, not the form provided by
the law.
o Go Tiong tells Gonzales not to worry as he will exchange it to a
“warehouse receipt” and he also do the same to his other
customers
● Gonzales subsequently wanted to withdraw his palays from the warehouse
by showing the ordinary receipt. However Go Tiong told Gonzales to come
back after two days
● A fire burned the warehouse to the ground hence Go Tiong customers
including Gonzales asked the Bureau of Commerce for claims.
o Gonzales withdrew his claim and filed for an action against Go
Tiong and Luzon Surety for the sum of 8.6k, value of his palay with
legal interest and damages
● During the pendency of the case, Go Tiong and Gonzales entered into an
amicable settlement to drop the charges if Go Tiong pays the claim.
However Go Tiong failed to do so. Hence, Gonzales continued the case
against Go Tiong and Luzon Surety.
● Go Tiong Contention:
o Gonzales may not sue him under Act 3893 because the receipts
issued to him does not conform to the one stated in the law. The
receipts issued to him were merely “ordinary”.
● Luzon Surety Contention
o Since Go Tiong and Gonzales entered into an amicable settlement,
Luzon surety must be discharged
Issues:
1. WON Gonzales may sue Go Tiong for claims under Act 3893 even if the
receipts he received does not conform to the one stated by the law
2. WON Luzon surety is discharged due to the amicable settlement
Doctrine: The law does not require a specific form of warehouse receipt. Any receipt
issued by a warehouseman for commodity delivered to him will suffice.
Held:
1. YES. Though it is desirable that receipts issued by a bonded warehouseman
should conform to the provisions of the Warehouse Receipts Law, said
provisions are not mandatory. If the said form does not follow the form and
requirements of the Act, that doesn’t mean that the commodities delivered
for storage are not governed by the law.
Garcia, Pernes, Tagacay, Villasanta
2. NO, Since the amicable settlement was never consummated. Luzon Surety
is not discharged
02 Consolidated Terminal v. Artex Development Co.
Facts:
● Consolidated Terminals, Inc. (CTI) received on deposit one hundred
ninety-three bales of high density compressed raw cotton valued at
P99,609.76 in behalf of Luzon Brokerage Corporation until the consignee
thereof, Paramount Textile Mills, Inc., had opened the corresponding letter of
credit in favor of shipper, Adolph Hanslik Cotton of Corpus Christi, Texas.
(Warehouse operator – CTI, Depositor - Luzon Brokerage, Consignee –
Paramount Textile Mills, Inc., Shipper – Adolph Hanslik)
● Through a forged permit to deliver imported goods allegedly issued by the
Bureau of Customs, Artex Development Co., Inc. (Artex) was able to obtain
delivery of the bales of cotton after paying CTI P15,000 as storage and
handling charges. At the time the merchandise was released to Artex, the
letter of credit had not yet been opened and the customs duties and taxes
due on the shipment had not been paid.
● CTI filed action for recovery from Artex of P99, 609.76 for compensatory
damages. Artex alleged in its motion to dismiss that it was not shown in the
delivery permit that Artex was the entity that presented that document to the
CTI. Artex further averred that it returned the cotton to Paramount Textile
Mills, Inc. when the contract of sale between them was rescinded because
the cotton did not conform to the stipulated specifications as to quality.
● RTC through Judge Perez sustained Artex’s motion to dismiss. CTI in this
appeal to SC contends that, as warehouseman, it was entitled to the
possession (should be repossession) of the bales of cotton; that Artex acted
wrongfully in depriving CTI of the possession of the merchandise because
Artex presented a falsified delivery permit, and that Artex should pay
damages to CTI.
Issue:​ WON CTI has cause of action against Artex- NO
Held:
1. We hold that CTI's appeal has not merit. Its amended complaint does not
clearly show that, as warehouseman, it has a cause of action for damages
against Artex. The real parties interested in the bales of cotton were Luzon
Brokerage Corporation as depositor, Paramount Textile Mills, Inc. as
consignee, Adolph Hanslik Cotton as shipper and the Commissioners of
Customs and Internal Revenue with respect to the duties and taxes.
2. These parties have not sued CTI for damages or for recovery of the
bales of cotton or the corresponding taxes and duties.
3. If it was alleged in the amended complaint that the depositor, consignee and
shipper had required CTI to pay damages, or that the Commissioners of
Negotiable Instruments - Atty. Ampil
AY 2017 - 2018 - Term 1
Customs and Internal Revenue had held CTI liable for the duties and taxes,
CTI might logically and sensibly go after Artex for having wrongfully obtained
custody of the merchandise.
4. CTI's basic action to recover the value of the merchandise seems to be
untenable. ​It was not the owner of the cotton.
Doctrine:
Real parties to a case are is the depositor, consignee, shipper and the
Commissioners of Customs and Internal Revenue with respect to the duties and
taxes. The warehousman only becomes a party to the case when said parties sues
the warehouseman for damages or for recovery of deposit.
For this case, there is no cause of action, since CTI, the warehouseman, is not the
owner of the of the cotton in the first place.
03. Philippine National Bank vs Se, Jr.
FACTS:
o In accordance with Act No. 2137, the Warehouse Receipts Law, Noah's Ark
Sugar Refinery issued on several dates, the following Warehouse Receipts
(Quedans):
(a) March 1, 1989, Receipt No. ​18062​, covering sugar
deposited by Rosa Sy;
(b) March 7, 1989, Receipt No. ​18080​, covering sugar
deposited by RNS Merchandising (Rosa Ng Sy);
(c) March 21, 1989, Receipt No. ​18081​, covering sugar
deposited by St. Therese Merchandising;
(d) March 31, 1989, Receipt No. ​18086​, covering sugar
deposited by St. Therese Merchandising; and (e) April 1,
1989, Receipt No. ​18087, covering sugar deposited by
RNS Merchandising.
o The receipts are substantially in the form, and contains the terms, prescribed
for negotiable warehouse receipts by Section 2 of the law.
o Subsequently, Warehouse Receipts Nos. 18080 & 18081 were negotiated
and endorsed to Luis T. Ramos, and Receipts Nos. 18086, 18087, and
18062 were negotiated and endorsed to Cresencia K. Zoleta.
o Ramos and Zoleta then used the quedans as security for two loan
agreements — one for P15.6 million and the other for P23.5 million
— obtained by them from the Philippine National Bank.
o The aforementioned quedans were endorsed by them to the
Philippine National Bank.
o Luis T. Ramos and Cresencia K. Zoleta failed to pay their loans upon
maturity on January 9, 1990.
o Consequently, on March 16, 1990, the Philippine National Bank
wrote to Noah's Ark Sugar Refinery demanding delivery of the
sugar stocks covered by the quedans endorsed to it by Zoleta and
Ramos.
o Noah's Ark Sugar Refinery refused to comply with the demand
alleging ownership thereof, for which reason the Philippine National
Bank filed with the Regional Trial Court of Manila a verified
Garcia, Pernes, Tagacay, Villasanta
complaint for "Specific Performance with Damages & Application
for Writ of Attachment.
o Defendants (Noah’s Ark Sugar Refinery) filed an answer with counterclaim
and third party complaint saying that they are the owners of sugar stocks
because they agreed to sell to the persons who deposited said sugar stocks
the total volume of sugar covered by the quedans; however the checks
issued for the payment were dishonored (payment stopped.) They (Noah’s
Ark Sugar Refinery) averred that the vendees and the first endorsers did not
acquire ownership therefore the 2nd endosers did not acquire better right
than the original owners/1st endorsers.
o In short, the defendants were contending that before the
delivery of goods under the warehouse receipts, they must be
first paid the storage fees incurred.
o PNB filed for motion of summary judgment. RTC denied. CA reversed RTC
and ordered the RTC to render summary judgment in favor of PNB.
o RTC dismissed the complaint against private respondents for lack
of cause of action and likewise dismissed private respondents‘
counterclaim against PNB and 3rd party complaint, as well as the
3rd party defendant‘s counterclaim.
o PNB filed an appeal with the SC by way of Petition for Review on
Certiorari.
o SC ordered private respondents to deliver the sugar stocks to
PNB.
o Private Respondents filed before the RTC an Omnibus Motion
seeking deferment of the proceedings until private respondents are
heard on their claim for warehouseman‘s lien.
o RTC granted said motion and set reception of evidence on their
claim for warehouseman‘s lien.
o PNB now seeks the nullification of the orders.
ISSUE: ​WON the defendants can enforce their warehouseman’s lien before delivering
the sugar stocks to PNB? - YES.
HELD:
1. 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.
2. 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
warehouseman‘s lien is possessory in nature. ​It is not disputed, therefore,
that, under the subject Warehouse Receipts provision, storage fees are
chargeable.
3. 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:
Negotiable Instruments - Atty. Ampil
AY 2017 - 2018 - Term 1
Garcia, Pernes, Tagacay, Villasanta

"SECTION 27. What claims are included in the warehouseman's 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 warehouseman's lien.

SECTION 31. Warehouseman need not deliver until lien is satisfied. —

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."

4. Private respondents cannot legally be deprived of their right to

enforce their claim for warehouseman's lien, for reasonable storage
fees and preservation expenses. Pursuant to Section 31 which we
quote hereunder, the goods under storage may not be delivered until
said lien is satisfied.
"SECTION 31. Warehouseman need not deliver until lien is satisfied. —
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."
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.

5. Lastly, No separate action is needed to enforce the payment of storage fees. He

may enforce the lien before delivering the sugar stocks.