G.R. No.
126780             February 17, 2005 McLoughlin allegedly placed the following in his safety deposit box: Fifteen Thousand US
YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA PAYAM, petitioners,
vs.
THE COURT OF APPEALS and MAURICE McLOUGHLIN, respondents.
DECISION
TINGA, J.:
The primary question of interest before this Court is the only legal issue in the case: It is
whether a hotel may evade liability for the loss of items left with it for safekeeping by its
guests, by having these guests execute written waivers holding the establishment or its
employees free from blame for such loss in light of Article 2003 of the Civil Code which
voids such waivers.
Before this Court is a Rule 45 petition for review of the Decision1 dated 19 October 1995 of
the Court of Appeals which affirmed the Decision2 dated 16 December 1991 of the Regional
Trial Court (RTC), Branch 13, of Manila, finding YHT Realty Corporation, Brunhilda Mata-
Tan (Tan), Erlinda Lainez (Lainez) and Anicia Payam (Payam) jointly and solidarily liable for
damages in an action filed by Maurice McLoughlin (McLoughlin) for the loss of his American
and Australian dollars deposited in the safety deposit box of Tropicana Copacabana
Apartment Hotel, owned and operated by YHT Realty Corporation.
The factual backdrop of the case follow.
Private respondent McLoughlin, an Australian businessman-philanthropist, used to stay at
Sheraton Hotel during his trips to the Philippines prior to 1984 when he met Tan. Tan
befriended McLoughlin by showing him around, introducing him to important people,
accompanying him in visiting impoverished street children and assisting him in buying gifts
for the children and in distributing the same to charitable institutions for poor children. Tan
convinced McLoughlin to transfer from Sheraton Hotel to Tropicana where Lainez, Payam
and Danilo Lopez were employed. Lopez served as manager of the hotel while Lainez and
Payam had custody of the keys for the safety deposit boxes of Tropicana. Tan took care of
McLoughlin's booking at the Tropicana where he started staying during his trips to the
Philippines from December 1984 to September 1987.3
On 30 October 1987, McLoughlin arrived from Australia and registered with Tropicana. He
rented a safety deposit box as it was his practice to rent a safety deposit box every time he
registered at Tropicana in previous trips. As a tourist, McLoughlin was aware of the
procedure observed by Tropicana relative to its safety deposit boxes. The safety deposit
box could only be opened through the use of two keys, one of which is given to the
registered guest, and the other remaining in the possession of the management of the hotel.
When a registered guest wished to open his safety deposit box, he alone could personally
request the management who then would assign one of its employees to accompany the
guest and assist him in opening the safety deposit box with the two keys.4
Dollars (US$15,000.00) which he placed in two envelopes, one envelope containing Ten
Thousand US Dollars (US$10,000.00) and the other envelope Five Thousand US Dollars
(US$5,000.00); Ten Thousand Australian Dollars (AUS$10,000.00) which he also placed in
another envelope; two (2) other envelopes containing letters and credit cards; two (2)
bankbooks; and a checkbook, arranged side by side inside the safety deposit box.5
On 12 December 1987, before leaving for a brief trip to Hongkong, McLoughlin opened his
safety deposit box with his key and with the key of the management and took therefrom the
envelope containing Five Thousand US Dollars (US$5,000.00), the envelope containing Ten
Thousand Australian Dollars (AUS$10,000.00), his passports and his credit
cards.6 McLoughlin left the other items in the box as he did not check out of his room at the
Tropicana during his short visit to Hongkong. When he arrived in Hongkong, he opened the
envelope which contained Five Thousand US Dollars (US$5,000.00) and discovered upon
counting that only Three Thousand US Dollars (US$3,000.00) were enclosed therein.7 Since
he had no idea whether somebody else had tampered with his safety deposit box, he
thought that it was just a result of bad accounting since he did not spend anything from that
envelope.8
After returning to Manila, he checked out of Tropicana on 18 December 1987 and left for
Australia. When he arrived in Australia, he discovered that the envelope with Ten Thousand
US Dollars (US$10,000.00) was short of Five Thousand US Dollars (US$5,000). He also
noticed that the jewelry which he bought in Hongkong and stored in the safety deposit box
upon his return to Tropicana was likewise missing, except for a diamond bracelet.9
When McLoughlin came back to the Philippines on 4 April 1988, he asked Lainez if some
money and/or jewelry which he had lost were found and returned to her or to the
management. However, Lainez told him that no one in the hotel found such things and none
were turned over to the management. He again registered at Tropicana and rented a safety
deposit box. He placed therein one (1) envelope containing Fifteen Thousand US Dollars
(US$15,000.00), another envelope containing Ten Thousand Australian Dollars
(AUS$10,000.00) and other envelopes containing his traveling papers/documents. On 16
April 1988, McLoughlin requested Lainez and Payam to open his safety deposit box. He
noticed that in the envelope containing Fifteen Thousand US Dollars (US$15,000.00), Two
Thousand US Dollars (US$2,000.00) were missing and in the envelope previously
containing Ten Thousand Australian Dollars (AUS$10,000.00), Four Thousand Five
Hundred Australian Dollars (AUS$4,500.00) were missing.10
When McLoughlin discovered the loss, he immediately confronted Lainez and Payam who
admitted that Tan opened the safety deposit box with the key assigned to him.11 McLoughlin
went up to his room where Tan was staying and confronted her. Tan admitted that she had
stolen McLoughlin's key and was able to open the safety deposit box with the assistance of
Lopez, Payam and Lainez.12 Lopez also told McLoughlin that Tan stole the key assigned to
McLoughlin while the latter was asleep.13
McLoughlin requested the management for an investigation of the incident. Lopez got in
touch with Tan and arranged for a meeting with the police and McLoughlin. When the police
did not arrive, Lopez and Tan went to the room of McLoughlin at Tropicana and thereat,
Lopez wrote on a piece of paper a promissory note dated 21 April 1988. The promissory
note reads as follows:
I promise to pay Mr. Maurice McLoughlin the amount of AUS$4,000.00 and US$2,000.00 or
its equivalent in Philippine currency on or before May 5, 1988.14
Lopez requested Tan to sign the promissory note which the latter did and Lopez also signed
as a witness. Despite the execution of promissory note by Tan, McLoughlin insisted that it
must be the hotel who must assume responsibility for the loss he suffered. However, Lopez
refused to accept the responsibility relying on the conditions for renting the safety deposit
box entitled "Undertaking For the Use Of Safety Deposit Box,"15 specifically paragraphs (2)
and (4) thereof, to wit:
2. To release and hold free and blameless TROPICANA APARTMENT HOTEL from any
liability arising from any loss in the contents and/or use of the said deposit box for any
cause whatsoever, including but not limited to the presentation or use thereof by any other
person should the key be lost;
...
4. To return the key and execute the RELEASE in favor of TROPICANA APARTMENT
HOTEL upon giving up the use of the box.16
On 17 May 1988, McLoughlin went back to Australia and he consulted his lawyers as to the
validity of the abovementioned stipulations. They opined that the stipulations are void for
being violative of universal hotel practices and customs. His lawyers prepared a letter dated
30 May 1988 which was signed by McLoughlin and sent to President Corazon Aquino.17 The
Office of the President referred the letter to the Department of Justice (DOJ) which
forwarded the same to the Western Police District (WPD).18
After receiving a copy of the indorsement in Australia, McLoughlin came to the Philippines
and registered again as a hotel guest of Tropicana. McLoughlin went to Malacaňang to
follow up on his letter but he was instructed to go to the DOJ. The DOJ directed him to
proceed to the WPD for documentation. But McLoughlin went back to Australia as he had
an urgent business matter to attend to.
For several times, McLoughlin left for Australia to attend to his business and came back to
the Philippines to follow up on his letter to the President but he failed to obtain any concrete
assistance.19
McLoughlin left again for Australia and upon his return to the Philippines on 25 August 1989
to pursue his claims against petitioners, the WPD conducted an investigation which resulted
in the preparation of an affidavit which was forwarded to the Manila City Fiscal's Office. Said
affidavit became the basis of preliminary investigation. However, McLoughlin left again for
Australia without receiving the notice of the hearing on 24 November 1989. Thus, the case
at the Fiscal's Office was dismissed for failure to prosecute. Mcloughlin requested the
reinstatement of the criminal charge for theft. In the meantime, McLoughlin and his lawyers
wrote letters of demand to those having responsibility to pay the damage. Then he left again
for Australia.
Upon his return on 22 October 1990, he registered at the Echelon Towers at Malate, Manila.
Meetings were held between McLoughlin and his lawyer which resulted to the filing of a
complaint for damages on 3 December 1990 against YHT Realty Corporation, Lopez,
Lainez, Payam and Tan (defendants) for the loss of McLoughlin's money which was
discovered on 16 April 1988. After filing the complaint, McLoughlin left again for Australia to
attend to an urgent business matter. Tan and Lopez, however, were not served with
summons, and trial proceeded with only Lainez, Payam and YHT Realty Corporation as
defendants.
After defendants had filed their Pre-Trial Brief admitting that they had previously allowed
and assisted Tan to open the safety deposit box, McLoughlin filed
an Amended/Supplemental Complaint20 dated 10 June 1991 which included another incident
of loss of money and jewelry in the safety deposit box rented by McLoughlin in the same
hotel which took place prior to 16 April 1988.21 The trial court admitted
the Amended/Supplemental Complaint.
During the trial of the case, McLoughlin had been in and out of the country to attend to
urgent business in Australia, and while staying in the Philippines to attend the hearing, he
incurred expenses for hotel bills, airfare and other transportation expenses, long distance
calls to Australia, Meralco power expenses, and expenses for food and maintenance,
among others.22
After trial, the RTC of Manila rendered judgment in favor of McLoughlin, the dispositive
portion of which reads:
WHEREFORE, above premises considered, judgment is hereby rendered by this Court in
favor of plaintiff and against the defendants, to wit:
1. Ordering defendants, jointly and severally, to pay plaintiff the sum of
US$11,400.00 or its equivalent in Philippine Currency of ₱342,000.00, more or
less, and the sum of AUS$4,500.00 or its equivalent in Philippine Currency of
₱99,000.00, or a total of ₱441,000.00, more or less, with 12% interest from April
16 1988 until said amount has been paid to plaintiff (Item 1, Exhibit CC);
2. Ordering defendants, jointly and severally to pay plaintiff the sum of
₱3,674,238.00 as actual and consequential damages arising from the loss of his
Australian and American dollars and jewelries complained against and in
prosecuting his claim and rights administratively and judicially (Items II, III, IV, V,
VI, VII, VIII, and IX, Exh. "CC");
3. Ordering defendants, jointly and severally, to pay plaintiff the sum of
₱500,000.00 as moral damages (Item X, Exh. "CC");
 4. Ordering defendants, jointly and severally, to pay plaintiff the sum of
₱350,000.00 as exemplary damages (Item XI, Exh. "CC");
5. And ordering defendants, jointly and severally, to pay litigation expenses in the
sum of ₱200,000.00 (Item XII, Exh. "CC");
6. Ordering defendants, jointly and severally, to pay plaintiff the sum of
₱200,000.00 as attorney's fees, and a fee of ₱3,000.00 for every appearance; and
7. Plus costs of suit.
SO ORDERED.23
The trial court found that McLoughlin's allegations as to the fact of loss and as to the
amount of money he lost were sufficiently shown by his direct and straightforward manner of
testifying in court and found him to be credible and worthy of belief as it was established
that McLoughlin's money, kept in Tropicana's safety deposit box, was taken by Tan without
McLoughlin's consent. The taking was effected through the use of the master key which was
in the possession of the management. Payam and Lainez allowed Tan to use the master
key without authority from McLoughlin. The trial court added that if McLoughlin had not lost
his dollars, he would not have gone through the trouble and personal inconvenience of
seeking aid and assistance from the Office of the President, DOJ, police authorities and the
City Fiscal's Office in his desire to recover his losses from the hotel management and Tan.24
As regards the loss of Seven Thousand US Dollars (US$7,000.00) and jewelry worth
approximately One Thousand Two Hundred US Dollars (US$1,200.00) which allegedly
occurred during his stay at Tropicana previous to 4 April 1988, no claim was made by
McLoughlin for such losses in his complaint dated 21 November 1990 because he was not
sure how they were lost and who the responsible persons were. But considering the
admission of the defendants in their pre-trial brief that on three previous occasions they
allowed Tan to open the box, the trial court opined that it was logical and reasonable to
presume that his personal assets consisting of Seven Thousand US Dollars (US$7,000.00)
and jewelry were taken by Tan from the safety deposit box without McLoughlin's consent
through the cooperation of Payam and Lainez.25
The trial court also found that defendants acted with gross negligence in the performance
and exercise of their duties and obligations as innkeepers and were therefore liable to
answer for the losses incurred by McLoughlin.26
Moreover, the trial court ruled that paragraphs (2) and (4) of the "Undertaking For The Use
Of Safety Deposit Box" are not valid for being contrary to the express mandate of Article
2003 of the New Civil Code and against public policy.27 Thus, there being fraud or wanton
conduct on the part of defendants, they should be responsible for all damages which may
be attributed to the non-performance of their contractual obligations.28
The Court of Appeals affirmed the disquisitions made by the lower court except as to the
amount of damages awarded. The decretal text of the appellate court's decision reads:
THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED but
modified as follows:
The appellants are directed jointly and severally to pay the plaintiff/appellee the following
amounts:
1) ₱153,200.00 representing the peso equivalent of US$2,000.00 and
AUS$4,500.00;
2) ₱308,880.80, representing the peso value for the air fares from Sidney [sic] to
Manila and back for a total of eleven (11) trips;
3) One-half of ₱336,207.05 or ₱168,103.52 representing payment to Tropicana
Apartment Hotel;
4) One-half of ₱152,683.57 or ₱76,341.785 representing payment to Echelon
Tower;
5) One-half of ₱179,863.20 or ₱89,931.60 for the taxi xxx transportation from the
residence to Sidney [sic] Airport and from MIA to the hotel here in Manila, for the
eleven (11) trips;
6) One-half of ₱7,801.94 or ₱3,900.97 representing Meralco power expenses;
7) One-half of ₱356,400.00 or ₱178,000.00 representing expenses for food and
maintenance;
8) ₱50,000.00 for moral damages;
9) ₱10,000.00 as exemplary damages; and
10) ₱200,000 representing attorney's fees.
With costs.
SO ORDERED.29
Unperturbed, YHT Realty Corporation, Lainez and Payam went to this Court in this appeal
by certiorari.
Petitioners submit for resolution by this Court the following issues: (a) whether the appellate
court's conclusion on the alleged prior existence and subsequent loss of the subject money
and jewelry is supported by the evidence on record; (b) whether the finding of gross
negligence on the part of petitioners in the performance of their duties as innkeepers is
supported by the evidence on record; (c) whether the "Undertaking For The Use of Safety
Deposit Box" admittedly executed by private respondent is null and void; and (d) whether
the damages awarded to private respondent, as well as the amounts thereof, are proper
under the circumstances.30
The petition is devoid of merit.
It is worthy of note that the thrust of Rule 45 is the resolution only of questions of law and
any peripheral factual question addressed to this Court is beyond the bounds of this mode
of review.
Petitioners point out that the evidence on record is insufficient to prove the fact of prior
existence of the dollars and the jewelry which had been lost while deposited in the safety
deposit boxes of Tropicana, the basis of the trial court and the appellate court being the sole
testimony of McLoughlin as to the contents thereof. Likewise, petitioners dispute the finding
of gross negligence on their part as not supported by the evidence on record.
We are not persuaded.l^vvphi1.net We adhere to the findings of the trial court as affirmed
by the appellate court that the fact of loss was established by the credible testimony in open
court by McLoughlin. Such findings are factual and therefore beyond the ambit of the
present petition.1awphi1.nét
The trial court had the occasion to observe the demeanor of McLoughlin while testifying
which reflected the veracity of the facts testified to by him. On this score, we give full
credence to the appreciation of testimonial evidence by the trial court especially if what is at
issue is the credibility of the witness. The oft-repeated principle is that where the credibility
of a witness is an issue, the established rule is that great respect is accorded to the
evaluation of the credibility of witnesses by the trial court.31 The trial court is in the best
position to assess the credibility of witnesses and their testimonies because of its unique
opportunity to observe the witnesses firsthand and note their demeanor, conduct and
attitude under grilling examination.32
We are also not impressed by petitioners' argument that the finding of gross negligence by
the lower court as affirmed by the appellate court is not supported by evidence. The
evidence reveals that two keys are required to open the safety deposit boxes of Tropicana.
One key is assigned to the guest while the other remains in the possession of the
management. If the guest desires to open his safety deposit box, he must request the
management for the other key to open the same. In other words, the guest alone cannot
open the safety deposit box without the assistance of the management or its employees.
With more reason that access to the safety deposit box should be denied if the one
requesting for the opening of the safety deposit box is a stranger. Thus, in case of loss of
any item deposited in the safety deposit box, it is inevitable to conclude that the
management had at least a hand in the consummation of the taking, unless the reason for
the loss is force majeure.
Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had
custody of the master key of the management when the loss took place. In fact, they even
admitted that they assisted Tan on three separate occasions in opening McLoughlin's safety
deposit box.33 This only proves that Tropicana had prior knowledge that a person aside from
the registered guest had access to the safety deposit box. Yet the management failed to
notify McLoughlin of the incident and waited for him to discover the taking before it
disclosed the matter to him. Therefore, Tropicana should be held responsible for the
damage suffered by McLoughlin by reason of the negligence of its employees.
The management should have guarded against the occurrence of this incident considering
that Payam admitted in open court that she assisted Tan three times in opening the safety
deposit box of McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was still
asleep.34 In light of the circumstances surrounding this case, it is undeniable that without the
acquiescence of the employees of Tropicana to the opening of the safety deposit box, the
loss of McLoughlin's money could and should have been avoided.
The management contends, however, that McLoughlin, by his act, made its employees
believe that Tan was his spouse for she was always with him most of the time. The
evidence on record, however, is bereft of any showing that McLoughlin introduced Tan to
the management as his wife. Such an inference from the act of McLoughlin will not
exculpate the petitioners from liability in the absence of any showing that he made the
management believe that Tan was his wife or was duly authorized to have access to the
safety deposit box. Mere close companionship and intimacy are not enough to warrant such
conclusion considering that what is involved in the instant case is the very safety of
McLoughlin's deposit. If only petitioners exercised due diligence in taking care of
McLoughlin's safety deposit box, they should have confronted him as to his relationship with
Tan considering that the latter had been observed opening McLoughlin's safety deposit box
a number of times at the early hours of the morning. Tan's acts should have prompted the
management to investigate her relationship with McLoughlin. Then, petitioners would have
exercised due diligence required of them. Failure to do so warrants the conclusion that the
management had been remiss in complying with the obligations imposed upon hotel-
keepers under the law.
Under Article 1170 of the New Civil Code, those who, in the performance of their
obligations, are guilty of negligence, are liable for damages. As to who shall bear the burden
of paying damages, Article 2180, paragraph (4) of the same Code provides that the owners
and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed
or on the occasion of their functions. Also, this Court has ruled that if an employee is found
negligent, it is presumed that the employer was negligent in selecting and/or supervising
him for it is hard for the victim to prove the negligence of such employer.35 Thus, given the
fact that the loss of McLoughlin's money was consummated through the negligence of
Tropicana's employees in allowing Tan to open the safety deposit box without the guest's
consent, both the assisting employees and YHT Realty Corporation itself, as owner and
operator of Tropicana, should be held solidarily liable pursuant to Article 2193.36
The issue of whether the "Undertaking For The Use of Safety Deposit Box" executed by
McLoughlin is tainted with nullity presents a legal question appropriate for resolution in this
petition. Notably, both the trial court and the appellate court found the same to be null and
void. We find no reason to reverse their common conclusion. Article 2003 is controlling,
thus:
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the guest. Any stipulation between the
hotel-keeper and the guest whereby the responsibility of the former as set forth in Articles
1998 to 200137 is suppressed or diminished shall be void.
Article 2003 was incorporated in the New Civil Code as an expression of public policy
precisely to apply to situations such as that presented in this case. The hotel business like
the common carrier's business is imbued with public interest. Catering to the public,
hotelkeepers are bound to provide not only lodging for hotel guests and security to their
persons and belongings. The twin duty constitutes the essence of the business. The law in
turn does not allow such duty to the public to be negated or diluted by any contrary
stipulation in so-called "undertakings" that ordinarily appear in prepared forms imposed by
hotel keepers on guests for their signature.
38 
In an early case, the Court of Appeals through its then Presiding Justice (later Associate
Justice of the Court) Jose P. Bengzon, ruled that to hold hotelkeepers or innkeeper liable for
the effects of their guests, it is not necessary that they be actually delivered to the
innkeepers or their employees. It is enough that such effects are within the hotel or
inn.39 With greater reason should the liability of the hotelkeeper be enforced when the
missing items are taken without the guest's knowledge and consent from a safety deposit
box provided by the hotel itself, as in this case.
Paragraphs (2) and (4) of the "undertaking" manifestly contravene Article 2003 of the New
Civil Code for they allow Tropicana to be released from liability arising from any loss in the
contents and/or use of the safety deposit box for any cause whatsoever.40 Evidently, the
undertaking was intended to bar any claim against Tropicana for any loss of the contents of
the safety deposit box whether or not negligence was incurred by Tropicana or its
employees. The New Civil Code is explicit that the responsibility of the hotel-keeper shall
extend to loss of, or injury to, the personal property of the guests even if caused by servants
or employees of the keepers of hotels or inns as well as by strangers, except as it may
proceed from any force majeure.41 It is the loss through force majeure that may spare the
hotel-keeper from liability. In the case at bar, there is no showing that the act of the thief or
robber was done with the use of arms or through an irresistible force to qualify the same
as force majeure.42
Petitioners likewise anchor their defense on Article 200243 which exempts the hotel-keeper
from liability if the loss is due to the acts of his guest, his family, or visitors. Even a cursory
reading of the provision would lead us to reject petitioners' contention. The justification they
raise would render nugatory the public interest sought to be protected by the provision.
What if the negligence of the employer or its employees facilitated the consummation of a
crime committed by the registered guest's relatives or visitor? Should the law exculpate the
hotel from liability since the loss was due to the act of the visitor of the registered guest of
the hotel? Hence, this provision presupposes that the hotel-keeper is not guilty of
concurrent negligence or has not contributed in any degree to the occurrence of the loss. A
depositary is not responsible for the loss of goods by theft, unless his actionable negligence
contributes to the loss.44
In the case at bar, the responsibility of securing the safety deposit box was shared not only
by the guest himself but also by the management since two keys are necessary to open the
safety deposit box. Without the assistance of hotel employees, the loss would not have
occurred. Thus, Tropicana was guilty of concurrent negligence in allowing Tan, who was not
the registered guest, to open the safety deposit box of McLoughlin, even assuming that the
latter was also guilty of negligence in allowing another person to use his key. To rule
otherwise would result in undermining the safety of the safety deposit boxes in hotels for the
management will be given imprimatur to allow any person, under the pretense of being a
family member or a visitor of the guest, to have access to the safety deposit box without fear
of any liability that will attach thereafter in case such person turns out to be a complete
stranger. This will allow the hotel to evade responsibility for any liability incurred by its
employees in conspiracy with the guest's relatives and visitors.
Petitioners contend that McLoughlin's case was mounted on the theory of contract, but the
trial court and the appellate court upheld the grant of the claims of the latter on the basis of
tort.45 There is nothing anomalous in how the lower courts decided the controversy for this
Court has pronounced a jurisprudential rule that tort liability can exist even if there are
already contractual relations. The act that breaks the contract may also be tort.46
As to damages awarded to McLoughlin, we see no reason to modify the amounts awarded
by the appellate court for the same were based on facts and law. It is within the province of
lower courts to settle factual issues such as the proper amount of damages awarded and
such finding is binding upon this Court especially if sufficiently proven by evidence and not
unconscionable or excessive. Thus, the appellate court correctly awarded McLoughlin Two
Thousand US Dollars (US$2,000.00) and Four Thousand Five Hundred Australian dollars
(AUS$4,500.00) or their peso equivalent at the time of payment,47 being the amounts duly
proven by evidence.48 The alleged loss that took place prior to 16 April 1988 was not
considered since the amounts alleged to have been taken were not sufficiently established
by evidence. The appellate court also correctly awarded the sum of ₱308,880.80,
representing the peso value for the air fares from Sydney to Manila and back for a total of
eleven (11) trips;49 one-half of ₱336,207.05 or ₱168,103.52 representing payment to
Tropicana;50 one-half of ₱152,683.57 or ₱76,341.785 representing payment to Echelon
Tower;51 one-half of ₱179,863.20 or ₱89,931.60 for the taxi or transportation expenses from
McLoughlin's residence to Sydney Airport and from MIA to the hotel here in Manila, for the
eleven (11) trips;52 one-half of ₱7,801.94 or ₱3,900.97 representing Meralco power
expenses;53 one-half of ₱356,400.00 or ₱178,000.00 representing expenses for food and
maintenance.54
The amount of ₱50,000.00 for moral damages is reasonable. Although trial courts are given
discretion to determine the amount of moral damages, the appellate court may modify or
change the amount awarded when it is palpably and scandalously
excessive.l^vvphi1.net Moral damages are not intended to enrich a complainant at the
expense of a defendant.l^vvphi1.net They are awarded only to enable the injured party to
obtain means, diversion or amusements that will serve to alleviate the moral suffering he
has undergone, by reason of defendants' culpable action.55
The awards of ₱10,000.00 as exemplary damages and ₱200,000.00 representing attorney's
fees are likewise sustained.
WHEREFORE, foregoing premises considered, the Decision of the Court of Appeals dated
19 October 1995 is hereby AFFIRMED. Petitioners are directed, jointly and severally, to pay
private respondent the following amounts:
(1) US$2,000.00 and AUS$4,500.00 or their peso equivalent at the time of
payment;
(2) ₱308,880.80, representing the peso value for the air fares from Sydney to
Manila and back for a total of eleven (11) trips;
(3) One-half of ₱336,207.05 or ₱168,103.52 representing payment to Tropicana
Copacabana Apartment Hotel;
(4) One-half of ₱152,683.57 or ₱76,341.785 representing payment to Echelon
Tower;
(5) One-half of ₱179,863.20 or ₱89,931.60 for the taxi or transportation expense
from McLoughlin's residence to Sydney Airport and from MIA to the hotel here in
Manila, for the eleven (11) trips;
(6) One-half of ₱7,801.94 or ₱3,900.97 representing Meralco power expenses;
(7) One-half of ₱356,400.00 or ₱178,200.00 representing expenses for food and
maintenance;
(8) ₱50,000.00 for moral damages;
(9) ₱10,000.00 as exemplary damages; and
(10) ₱200,000 representing attorney's fees.
With costs.
SO ORDERED.
[G.R. No. 119231. April 18, 1996.]
PHILIPPINE NATIONAL BANK, Petitioner, v. HON. PRES. JUDGE BENITO
C. SE, JR., RTC, BR. 45, MANILA; NOAH’S ARK SUGAR REFINERY;
ALBERTO T LOOYUKO, JIMMY T. GO and WILSON T. GO, Respondent.
Rolan Nieto for Petitioner.
Medalla and Cruz, Law Offices-private respondents.
SYLLABUS
1. COMMERCIAL LAW; WAREHOUSE RECEIPTS LAW; THE UNCONDITIONAL
PRESENTMENT OF THE RECEIPTS FOR PAYMENT CARRIED WITH IT THE
ADMISSIONS 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
WAREHOUSEMAN’S LIEN FOR STORAGE FEES AND PRESERVATION EXPENSES;
CASE AT BAR. — Petitioner is in estoppel in disclaiming liability for the payment
of storage fees due the private respondents as warehouseman while claiming to
be entitled to the sugar stocks covered by the subject Warehouse Receipts on
the basis of which it anchors its claim for payment or delivery of the sugar
stocks. The unconditional presentment of the receipts by the petitioner for
payments 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.
2. ID.; ID.; ID.; WAREHOUSEMAN’S LIEN; POSSESSORY IN NATURE. — While
the PNB is entitled to the stocks of sugar as the endorse 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 warehouseman’s lien is possessory in nature.
DECISION
HERMOSISIMA, JR., J.:
The source of conflict herein is the question as to whether Philippine National
Bank should pay storage fees for sugar stocks covered by five (5) Warehouse
Receipts stored in the warehouse of private respondents in the face of the Court
of Appeals’ decision (Affirmed by the Supreme Court) declaring the Philippine
National Bank as the owner of the said sugar stocks and ordering their delivery
to the said bank. From the same facts but on a different perspective, it can be
said that the issue is: Can the warehouseman enforce his warehouseman’s 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?
The herein petition seeks to annul: (1) the Resolution of respondent Judge
Benito C. Se, Jr. of the Regional Trial Court of Manila, Branch 45, dated
December 20, 1994, in Civil Case No. 90-53023, authorizing reception of
evidence to establish the claim of respondents Noah’s Ark Sugar Refinery, Et Al.,
for storage fees and preservation expenses over sugar stocks covered by five
(5) Warehouse Receipts which is in the nature of a warehouseman’s lien; and
(2) the Resolution of the said respondent Judge, dated March 1, 1995, declaring
the validity of private respondents’ warehouseman’s lien under Section 27 of
Republic Act No 2137 and ordering that execution of the Court of Appeals’
decision, dated December 13, 1991, be in effect held in abeyance until the full
amount of the warehouseman’s lien on the sugar stocks covered by five (5)
quedans subject of the action shall have been satisfied conformably with the
provisions of Section 31 of Republic Act 2137.
Also prayed for by the petition is a Writ of Prohibition to require respondent RTC
Judge to desist from further proceeding with Civil Case No. 90-53023, except
order the execution of the Supreme Court judgment; and a Writ of Mandamus to
compel respondent RTC Judge to issue a Writ of Execution in accordance with
the said executory Supreme Court decision.
THE FACTS
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. The receipts are substantially in the form, and contains the
terms, prescribed for negotiable warehouse receipts by Section 2 of the law.
Subsequently, Warehouse Receipts Nos. 18080 and 18081 were negotiated and
endorsed to Luis T. Ramos; and Receipts Nos. 18086, 18087 and 18062 were
negotiated and endorsed to Cresencia K Zoleta Ramos and Zoleta then used the
quedans as security for two loan agreements — one for 15.6 million and the
other for P23.5 million — 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 on
January 9, 1990. 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. Noah’s Ark Sugar
Refinery refused to comply with the demand alleging ownership thereof, for
Manila a verified complaint for "Specific Performance with Damages and
Application for Writ of Attachment" against Noah’s Ark Sugar Refinery, Alberto
T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three being identified as the
sole proprietor, managing partner, and Executive Vice President of Noah’s Ark,
respectively.
Respondent Judge Benito C. Se, Jr., in whose sala the case was raffled, denied
the Application for Preliminary Attachment. Reconsideration therefor was
likewise denied.
Noah’s Ark and its co-defendants filed an Answer with Counterclaim and Third-
Party Complaint in which they claimed that they are the owners of the subject
quedans and the sugar represented therein, averring as they did
that:jgc:chanrobles.com.ph
"9. . . . In an agreement dated April 1, 1989, defendants 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 Noah ‘s 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,’ . . . Upon proper notification to
said vendees and plaintiff in due course, defendants refused to deliver to
vendees therein the quantity of sugar covered by the subject quedans.
10. . . . Considering that the vendees and first endorsers of subject quedans did
not acquire ownership thereof, the subsequent endorsers and plaintiff itself did
not acquire a better right of ownership than the original vendees/first
endorsers" 1
The Answer incorporated a Third-Party Complaint by Alberto T. Looyuko, Jimmy
T. Go and Wilson T. Go, doing business under the trade name and style Noah’
Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng, praying that the latter
be ordered to deliver or return to them the quedans (previously endorsed to
PNB and the subject of the suit) and pay damages and litigation expenses.
The Answer of Rosa Ng Sy and Teresita Ng, dated September 6, 1990, one of
avoidance, is essentially to the effect that the transaction between them, on the
one hand, and Jimmy T. Go, on the other, concerning the quedans and the
sugar stocks covered by them was merely a stimulated one being part of the
latter’s complex banking schemes and financial maneuvers, and thus, they are
not answerable in damages to him.
On January 31, 1991, the Philippine National Bank filed a Motion for Summary
Judgment in favor of to the plaintiff as against the defendants for the reliefs
prayed for in the complaint.
On May 2, 1991, the Regional Trial Court issued an order denying the Motion for
Summary Judgment. Thereupon, the Philippine National Bank filed a Petition
for Certiorari with the Court of Appeals, docketed as CA-G.R. SP. No. 25938 on
December 13, 1991.
Pertinent portions of be decision of the Court of Appeals
read:jgc:chanrobles.com.ph
"In issuing the questioned Orders, the respondent Court ruled that ‘questions of
law should be resolved after and not before, the questions of fact are properly
litigated.’ A scrutiny of defendant’s affirmative defenses does not show material
questions of fact as to the alleged nonpayment of purchase price by the
vendees/first endorsers, and which nonpayment is not disputed by PNB as it
does not materially affect PNB’s title to the sugar stocks as holder of the
negotiable quedans
What is determinative of the propriety of summary judgment is not the
existence of conflicting claims from prior parties but whether from an
examination of the pleadings, depositions, admissions and documents on file,
the defenses as to the main issue do not tender material questions of fact (see
Garcia v. Court of Appeals, 167 SCRA 815) or the issues thus tendered are in
fact sham, fictitious, contrived, set up in bad faith or so unsubstantial as not to
constitute genuine issues for trial. (See Vergara v. Suelto, et al, 156 SCRA 753;
Mercado, Et. Al. v. Court of Appeals, 162 SCRA 75). The questioned Orders
themselves do not specify what material facts are in issue. (See Sec. 4, Rule 34,
Rules of Court).
To require a trial notwithstanding pertinent allegations of the pleadings and
other facts appearing on the record, would constitute a waste of time and an
injustice to the PNB whose rights to relief to which it is plainly entitled would he
further delayed to its prejudice.
In issuing the questioned Orders, We find the respondent Court to have acted in
grave abuse of discretion which justify holding null and void and setting aside
the Orders dated May 2 and July 4, 1990 of respondent Court, and that a
summary judgment be rendered forthwith in favor of the PNB against Noah’s
Ark Sugar Refinery, Et Al., as prayed for in petitioner’s Motion for Summary
Judgment." 2
On December 13, 1991, the Court of Appeals nullified and set aside the orders
of May 2 and July 4, 1990 of the Regional Trial Court and ordered the trial court
to render summary judgment in favor of the PNB. On June 18, 1992, the trial
court rendered judgment dismissing plaintiff’s complaint against private
respondents’ or lack of cause of action and likewise dismissed private
respondents’ counterclaim against PNB and of the Third-Party Complaint and the
Third-Party Defendant’s Counterclaim. On September 4, 1992, the trial court
denied PNB’s Motion for Reconsideration.
On June 9, 1992, the PNB filed an appeal from the RTC decision with the
Supreme Court, G.R No. 107243, by way of a Petition for Review
on Certiorari under Rule 45 of the Rules of Court. This Court rendered judgment
on September 1, 1993, the dispositive portion of which
reads:jgc:chanrobles.com.ph
"WHEREFORE, the trial judge’s decision in Civil Case No. 90-53023, dated June
18, 1992, is reversed and set aside and a new one rendered conformably with
the final and executory decision of the Court of Appeals in CA-G.R SP. No.
25938, ordering the private respondents Noah ‘s Ark Sugar Refinery, Alberto T.
Looyuko, Jimmy T. Go and Wilson T. Go, jointly and severally:chanrob1es
virtual 1aw library
(a) to deliver to the petitioner Philippine National Bank, ‘the sugar stocks
covered by the Warehouse Receipts/Quedans which are now in the latter’s
possession as holder for value and in due course; or alternatively, to pay (said)
plaintiff actual damages in the amount of P39.1 million,’ with legal interest
thereon from the filing of the compliant until full payment; and
(b) to pay plaintiff Philippine National Bank attorney’s fees, litigation expenses
and judicial costs hereby fixed at the amount of One Hundred Fifty Thousand
Pesos (P150,000.00) as well as the costs.
SO ORDERED." 3
On September 29, 1993, private respondents moved for reconsideration of this
decision. A Supplemental/Second Motion for Reconsideration with leave of court
was filed by private respondents on November 8, 1993. We denied private
respondents’ motion on January 10, 1994.
Private respondents filed a Motion Seeking Clarification of the Decision, dated
September 1, 1993. We denied this motion in this manner
"It bears stressing that the relief granted in this Court’s decision of September
1, 1993 is precisely that set out in the final and executory decision of the Court
of Appeals in CA-G.R. SP. No. 25938, dated December 13, 1991, which was
affirmed in toto by this Court and which became unalterable upon becoming
final and executory." 4
Private respondents thereupon filed before the trial court an Omnibus Motion
seeking among others the deferment of the proceedings until private
respondents are heard on their claim for warehouseman’s lien. On the other
hand, on August 22, 1994, the Philippine National Bank filed a Motion for the
Issuance of a Writ of Execution and an Opposition to the Omnibus Motion filed
by private respondents.
The trial court granted private respondents’ Omnibus Motion on December 20,
1994 and set reception of evidence on their claim for warehouseman’s lien. The
resolution of the PNB’s Motion for Execution was ordered deferred until the
determination of private respondents’ claim.
On February 21, 1995, private respondents’ claim for lien was heard and
evidence was received in support thereof. The trial court thereafter gave both
parties five (5) days to file respective memoranda.
On February 28, 1995, the Philippine National Bank filed a Manifestation with
Urgent Motion to Nullify Court Proceedings. In adjudication thereof, the trial
court issued the following order on March 1, 1995:jgc:chanrobles.com.ph
"WHEREFORE, this court hereby finds that there exists in favor of the
defendants a valid warehouseman’s lien under Section 27 of Republic Act 2137
and accordingly, execution of the judgment is hereby ordered stayed and/or
precluded until the full amount of defendants’ lien on the sugar stocks covered
by the five (5) quedans subject of this action shall have been satisfied
conformably with the provisions of Section 31 of Republic Act 2137." 5
Consequently, the Philippine National Bank filed the herein petition to seek the
nullification of the above-assailed orders of respondent judge.
The PNB submits that:chanrob1es virtual 1aw library
"I
PNB’S RIGHT TO A WRIT OF EXECUTION IS SUPPORTED BY TWO FINAL AND
EXECUTORY DECISIONS: THE DECEMBER 13, 1991 COURT OF APPEALS
DECISION IN CA-GR SP. NO. 25938; AND, THE NOVEMBER 9, 1992 SUPREME
COURT DECISION IN G.R NO. 107243. RESPONDENT RTC’S MINISTERIAL AND
MANDATORY DUTY IS TO ISSUE THE WRIT OF EXECUTION TO IMPLEMENT THE
DECRETAL PORTION OF SAID SUPREME COURT DECISION
II
RESPONDENT RTC IS WITHOUT JURISDICTION TO HEAR PRIVATE
RESPONDENTS’ OMNIBUS MOTION. THE CLAIMS SET FORTH IN SAID MOTION
(1) WERE ALREADY REJECTED BY THE SUPREME COURT IN ITS MARCH 9, 1994
RESOLUTION DENYING PRIVATE RESPONDENTS’ ‘MOTION FOR CLARIFICATION
OF DECISION IN G.R No 107243; AND (2) ARE BARRED FOREVER BY PRIVATE
RESPONDENTS’ FAILURE TO INTERPOSE THEM IN THEIR ANSWER, AND
FAILURE TO APPEAL FROM THE .JUNE 18, 1992 RTC DECISION CIVIL CASE NO.
90-52023
III
RESPONDENT RTC’S ONLY JURISDICTION IS TO ISSUE THE WRIT TO EXECUTE
THE SUPREME COURT DECISION. THUS, PNB IS ENTITLED TO: (I) A WRIT OF
CERTIORARI TO ANNUL THE RTC RESOLUTION DATED DECEMBER 20, 1994
AND THE ORDER DATED FEBRUARY 7, 1995 AND ALL PROCEEDINGS TAKEN BY
THE RTC THEREAFTER, (2)A WRIT OF PROHIBITION TO PREVENT RESPONDENT
RTC FROM FURTHER PROCEEDING WITH CIVIL CASE NO. 90-53023 AND
COMMITTING OTHER ACTS VIOLATIVE OF THE SUPREME COURT DECISION IN
G.R NO. 107243; AND (3) A WRIT OF MANDAMUS TO COMPEL RESPONDENT
RTC TO ISSUE THE WRIT TO EXECUTE THE SUPREME COURT JUDGMENT IN
FAVOR OF PNB"
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.
Petitioner’s submission is on a technicality, that is, that private respondents
have lost their right to recover warehouseman’s lien on the sugar stocks
covered by the five (5) Warehouse Receipts for the reason that they failed to set
up said claim in their Answer before the trial court and that private respondents
did not appeal from the decision in this regard, dated June 18, 1992. Petitioner
asseverates that the denial by this Court on March 9, 1994 of the motion
seeking clarification of our decision, dated September 1, 1993, has foreclosed
private respondents’ right to enforce their warehouseman’s lien for storage fees
and preservation expenses under the Warehouse Receipts Act.
On the other hand, private respondents maintain that they could not have
claimed the right to a warehouseman’s lien in their Answer to the complaint
before the trial court as it would have been inconsistent with their stand that
they claim ownership of the stocks covered by the quedans since the checks
issued for payment thereof were dishonored. If they were still the owners, it
would have been absurd for them to ask payment for storage fees and
preservation expenses. They further contend that our resolution, dated March 9,
1994, denying their motion for clarification did not preclude their right to claim
their warehouseman’s lien under Sections 27 and 31 of Republic Act 2137, as
our resolution merely affirmed and adopted the earlier decision, dated
December 13, 1991, of the Court of Appeals (6th Division) in CA-GR SP No.
25938 and did not make any finding on the matter of the warehouseman’s lien.
We find for private respondents on be foregoing issue and so the petition
necessarily must fail.
We have carefully examined our resolution, dated March 9, 1994, which denied
Noah’s Ark’s motion for clarification of our decision, dated September 1, 1993,
wherein we affirmed in full and adopted the Court of Appeals’ earlier decision,
dated December 13, 1991, in CA-G.R SP. No. 25938. We are not persuaded by
the petitioner’s argument that our said resolution carried with it the denial of
the warehouseman’s lien over the sugar stocks covered by be subject
Warehouse Receipts. We have simply resolved and upheld in our decision, dated
September 1, 1993, the propriety of summary judgment which was then
assailed by private respondents. In effect, we rule therein that, considering the
circumstances obtaining before the trial court, the issuance of the Warehouse
Receipts not being disputed by the private respondents, a summary judgment in
favor of PNB was proper. We in effect further affirmed the finding that Noah’s
Ark is a warehouseman which was obliged to deliver the sugar stocks covered
by the Warehouse Receipts pledged by Cresencia K Zoleta and Luis T. Ramos to
the petitioner pursuant to the pertinent provisions of Republic Act 2137.
In disposing of the private respondents’ motion for clarification, we could not
contemplate the matter of warehouseman’s lien because the issue to be finally
resolved then was the claim of private respondents for retaining ownership of
the stocks of sugar covered by the endorsed quedans. Stated otherwise, there
was no point in taking up the issue of warehouseman’s lien since the matter of
ownership was as yet being determined. Neither could storage fees be due then
while no one has been declared the owner of the sugar stocks in question.
Of considerable relevance is the pertinent stipulation in the subject Warehouse
Receipts which provides for respondent Noah’s Ark’s right to impose and collect
warehouseman’s lien:jgc:chanrobles.com.ph
"Storage of the refined sugar quantities mentioned herein shall be free up to
one (1) week from the date of the quedans covering said sugar and thereafter,
storage fees shall be charged in accordance with the Refining Contract under
which the refined sugar covered by this Quedan was produced." 6
It is not disputed, therefore, that, under the subject Warehouse Receipts
provision, storage fees are chargeable.
Petitioner anchors its claim against private respondents on the five (5)
Warehouse Receipts issued by the latter to third-party defendants Rosa Ng Sy of
RNS Merchandising and Teresita Ng of St. Therese Merchandising, which found
their way to petitioner after they were negotiated to them by Luis T. Ramos and
Cresencia K Zoleta for a loan of P39.1 Million. 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 (RA. 2137),
to wit:jgc:chanrobles.com.ph
"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 an lawful charges for
storage and preservation of the goods; also for all lawful claims for money
advanced, interest, insurance, transportation, labor, weighing cooperating 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.
x           x           x
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."cralaw virtua1aw
library
After being declared not the owner, but the warehouseman, by the Court of
Appeals on December 13, 1991 in CA-G.R SP. No. 25938, the decision having
been affirmed by us on December 1, 1993, 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."cralaw virtua1aw
library
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. As contracts, the receipts must be
respected by authority of Article 1159 of the Civil Code, to
wit:jgc:chanrobles.com.ph
"ARTICLE 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith"
Petitioner is in estoppel in disclaiming liability for the payment of storage fees
due the private respondents as warehouseman while claiming to be entitled to
the sugar stocks covered by the subject Warehouse Receipts on the basis of
which it anchors its claim for payment or delivery of the sugar stocks. 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
warehouseman’s lien for storage fees and preservation expenses. Petitioner may
not now retrieve the sugar stocks without paying the lien due private
respondents as warehouseman.

In view of the foregoing, the rule may be simplified thus: 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 warehouseman’s lien is possessory in nature.

We, therefore, uphold and sustain the validity of the assailed orders of public
respondent, dated December 20, 1994 and March 1, 1995.

In fine, we fail to see any taint of abuse of discretion on the part of the public
respondent in issuing the questioned orders which recognized the legitimate
right of Noah’s Ark, after being declared as warehouseman, to recover storage
fees before it would release to the PNB sugar stocks covered by the five (5)
Warehouse Receipts. Our resolution, dated March 9, 1994, did not preclude
private respondents’ unqualified right to establish its claim to recover storage
fees which is recognized under Republic Act No. 2137. Neither did the Court of
Appeals’ decision, dated December 13, 1991, restrict such right.

Our Resolution’s reference to the decision by the Court of Appeals, dated

December 13, 1991, in CA-G.R SP. No. 25938, was intended to guide the
parties in the subsequent disposition of the case to its final end. We certainly did
not foreclose private respondents’ inherent right as warehouseman to collect
storage fees and preservation expenses as stipulated on the face of each of the
Warehouse Receipts and as provided for in the Warehouse Receipts Law (RA.
2137).

WHEREFORE, the petition should be, as it is, hereby dismissed for lack of merit.
The questioned orders issued by public respondent judge are affirmed.

Costs against the petitioner.

SO ORDERED.