Warehouse Receipt Cases

8/22/2019 Warehouse Receipt Cases

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RAMON GONZALES,plaintiff-appellee, vs.

GO TIONG and LUZON SURETY CO., INC.,defendants-appellants.

FACTS: Go Tiong owned a rice mill and warehouse, located at Mabini, Urdaneta, Pangasinan. He obtained a license of a

bonded businessman with Luzon Surety Co., with conditions he failed to fulfill. The warehouse and palay depositedtherein were insured with the Alliance Surety and Insurance Company. Ramon Gonzales deposited palay to Go Tiong

even before he got the license who later demanded the value of his deposits. But Go Tiong failed to give him his valueuntil fire burned down the warehouse, with sacks in excess of that was authorized under his license. The receipts issued to

Gonzales were ordinary receipts and not the warehouse receipts as defined by Warehouse receipts act. Plaintiff filed theirclaims with the Bureau of Commerce and the proceeds of the insurance policy, BOC paid off some claims. Plaintiffs

counsel withdrew the claims, because according to court othing came from plaintiff's efforts to have his claim paid,inconsistent with what Go Tiong claimed that it was denied Gonzales filed claims both against Gonzales and LuzonSurety, and renewed his claim with BOC. Gonzales and Go Tiong entered into a contract of amicable settlement to

the effect that upon the settlement of all accounts, but upon failure to comply, Gonzales prosecuted his court action. Courtruled in favor of Gonzales. Hence this appeal.

ISSUE: Is the plaintiffs claim covered by the Civil Law, and not Bonded Warehouse Act for the reason that, GoTiong

issued to plaintiff were ordinary receipts, not the warehouse receipts contemplated by theWarehouse Receipts Law, andbecause the deposits of palay of plaintiff were gratuitous?

RULING: Consequently, any deposit made with him as a bonded warehouseman must necessarily be governed by theprovisions of Act No. 3893. 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 and indispensable in the sense that if theyfell short of the requirements of the Warehouse Receipts Act, then the commodities delivered for storage become ordinary

deposits and will not be governed by the provisions of the Bonded Warehouse Act. As the trial court well observed, as faras 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. Furthermore, as found by the trial court, Go Tiong had repeatedly promised plaintifto issue to him "quedans" and had assured him that he should not worry; and that Go Tiong was in the habit of issuing

ordinary receipts (not"quedans") to his depositors. Considering the fact, as already stated, that prior to the burning ofthe warehouse, plaintiff demanded the payment of the value of his palay from Go Tiong on two occasions but was putoff without any valid reason, it is illogical and unreasonable to hold that the presumption of negligence in case of this kindis rebutted by the bailee by simply proving that the property bailed was destroyed by an ordinary fire which broke out onthe bailee's own premises, without regard to the care exercised by the latter to prevent the fire, or to save the property afterthe commencement of the fire. Besides, as observed by the trial court, 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 riskAppealed decision affirmed


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EN BANC

G.R. No. L-16315 May 30, 1964

COMMISSIONER OF INTERNAL REVENUE,Petitioner, vs. HAWAIIAN-PHILIPPINE

COMPANY,Respondent.

Office of the Solicitor General for petitioner.

Hilado and Hilado for appellee.

DIZON, J.:chanrobles virtual law library

This is a petition filed by the Commissioner of Internal Revenue for the review of the decision of the Court of Tax

Appeals in C.T.A. Case No. 598 ordering him to refund to respondent Hawaiian-Philippine Company the amount ofP8,411.99 representing fixed and percentage taxes assessed against it and which the latter had deposited with the CityTreasurer of Silay, Occidental Negros.chanroblesvirtualawlibrarychanrobles virtual law library

The undisputed facts of this ease, as found by the Court of Tax Appeals, are as follows:

The petitioner, a corporation duly organized in accordance with law, is operating a sugar central in the City of Silay

Occidental Negros. It produces centrifugal sugar from sugarcane supplied by planters. The processed sugar is dividedbetween the planters and the petitioner in the proportion stipulated in the milling contracts, and thereafter is deposited in

the warehouses of the latter. (Pp. 4-5, t.s.n.) For the sugar deposited by the planters, the petitioner issues thecorresponding warehouse receipts of "quedans". It does not collect storage charges on the sugar deposited in its warehouse

during the first 90 days period counted from the time it is extracted from the sugarcane. Upon the lapse of the first ninetydays and up to the beginning of the next milling season, it collects a fee of P0.30 per picul a month. Henceforth, if thesugar is not yet withdrawn, a penalty of P0.25 per picul or fraction thereof a month is imposed. (Exhibits "B-1", "C-1",

"D-1", "B-2", "C-2", p. 10, t.s.n.) chanrobles virtual law library

The storage of sugar is carried in the books of the company under Account No. 5000, denominated "Manufacturing CostLedger Control"; the storage fees under Account No. 521620; the expense accounts of the factory under Account No.

5200; and the so-called "Sugar Bodega Operations" under Account No. 5216, under which is a Sub-Account No. 20

captioned, "Credits". (Pp. 16-17, t.s.n., Exhibit "F".) The collections from storage after the lapse of the first 90 days periodare entered in the company's books as debit to CASH, and credit to Expense Account No. 2516-20 (p. 18t.s.n.).chanroblesvirtualawlibrarychanrobles virtual law library

The credit for storage charges decreased the deductible expense resulting in the corresponding increase of the taxableincome of the petitioner. This is reflected by the entries enclosed in parenthesis in Exhibit "G", under the heading "Storage

Charges". (P. 18, t.s.n.) The alleged reason for this accounting operation is that, inasmuch as the "Sugar BodegaOperations" is considered as an expense account, entries under it are "debits". Similarly, since "Storage Charges"

constitute "credit", the corresponding figures (see Exhibit "C") are enclosed in parenthesis as they decrease the expensesof maintaining the sugar warehouses.chanroblesvirtualawlibrarychanrobles virtual law library

Upon investigation conducted by the Bureau, it was found that during the years 1949 to 1957, the petitioner realized from

collected storage fees a total gross receipts of P212,853.00, on the basis of which the respondent determined thepetitioner's liability for fixed and percentage taxes, 25% surcharge, and administrative penalty in the aggregate amount ofP8,411.99 (Exhibit "5", p. 11, BIR rec.) chanrobles virtual law library

On October 20, 1958, the petitioner deposited the amount of P8,411.99 with the Office of the City Treasurer of Silay.

(Exhibits "I" and "I-1", pp. 59-60, CTA rec.) Later, it filed its petition for review before this Court (Exhibit "K", p. 25,CTA rec.)

After due hearing the Court of Tax Appeals rendered the appealed decision.chanroblesvirtualawlibrarychanrobles virtuallaw library


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The only issue to be resolved in the case at bar is whether or not, upon the facts stated above, petitioner is awarehouseman liable for the payment of the fixed and percentage taxes prescribed in Sections 182 and 191 of the NationalInternal Revenue Code which read as follows:

SEC. 182. FIXED TAXES - (a) ON BUSINESS (1) PERSONS SUBJECT TO PERCENTAGE TAX. - Unless otherwiseprovided every person engaging in a business on which the percentage tax is imposed shall pay a fixed annual tax oftwenty pesos. ... .chanroblesvirtualawlibrarychanrobles virtual law library

SEC. 191. PERCENTAGE TAX ON ROAD, BUILDING, IRRIGATION, ARTESIAN WELL, WATERWORKS, ANDOTHER CONSTRUCTION WORK CONTRACTORS, PROPRIETORS OR OPERATORS OF DOCKYARD, AND

OTHERS. ... warehousemen; plumbers, smiths; house or sign painters; lithographers, publishers, except those engaged inthe publication or printing and publication of any newspaper, magazine, review or bulletin which appear at regularintervals with fixed prices for subscription and sale, and which is not devoted principally to the publication of

advertisements; printers and bookbinders, business agents and other independent contractors, shall pay a tax equivalent toTHREE PERCENTUM of their gross receipts. ... .

Respondent disclaims liability under the provisions quoted above, alleging that it is not engaged the business of storing its

planters' sugar for profit; that the maintenance of its warehouses is merely incidental to its business of manufacturingsugar and in compliance with its obligation to its planters. We find this to be withoutmerit.chanroblesvirtualawlibrarychanrobles virtual law library

It is clear from the facts of the case that, after manufacturing the sugar of its planters, respondent stores it in itswarehouses and issues the corresponding "quedans" to the planters who own the sugar; that while the sugar is stored freeduring the first ninety days from the date the it "quedans" are issued, the undisputed fact is that, upon the expiration of

said period, respondent charger, and collects storage fees; that for the period beginning 1949 to 1957, respondent's totagross receipts from this particular enterprise amounted to P212,853.00.chanroblesvirtualawlibrarychanrobles virtual law

library

A warehouseman has been defined as one who receives and stores goods of another for compensation (44 Words andPhrases, p. 635). For one to be considered engaged in the warehousing business, therefore, it is sufficient that he receives

goods owned by another for storage, and collects fees in connection with the same. In fact, Section 2 of the GeneralBonded Warehouse Act, as amended, defines a warehouseman as "a person engaged in the business of receiving

commodity for storage." chanrobles virtual law library

That respondent stores its planters' sugar free of charge for the first ninety days does not exempt it from liability under the

legal provisions under consideration. Were such fact sufficient for that purpose, the law imposing the tax would berendered ineffectual.chanroblesvirtualawlibrarychanrobles virtual law library

Neither is the fact that respondent's warehousing business is carried in addition to, or in relation with, the operation of itssugar central sufficient to exempt it from payment of the tax prescribed in the legal provisions quoted heretofore UnderSection 178 of the National Internal Revenue Code, the tax on business is payable for every separate or distinct

establishment or place where business subject to the tax is conducted, and one line of business or occupation does notbecome exempt by being conducted with some other business or occupation for which such tax has beenpaid.chanroblesvirtualawlibrarychanrobles virtual law library

Lastly, respondent's contention that the imposition of the tax under consideration would amount to double taxation is

likewise without merit. As is clear from the facts, respondent's warehousing business, although carried on in relation to theoperation of its sugar central, is a distinct and separate business taxable under a different provision of the Tax Code. There

can be no double taxation where the State merely imposes a tax on every separate and distinct business in which a party isengaged. Moreover, inManufacturers Life insurance Co. vs. Meer, G.R. No. L-2910, June 29, 1951; City of Manila vs

Inter-Island Gas service, G.R. L-8799, August 31, 1956, We have ruled that there is no prohibition against double or

multiple taxation in this jurisdiction.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the decision appealed from is reversed and set aside, with costs.


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fG.R. Nos. L-21000, 21002-21004, and 21006 December 20, 1924

In the matter of the involuntary insolvency of Umberto de Poli. BANK OF THE PHILIPPINE ISLANDS, ETAL., claimants-appellees,

vs.

J.R. HERRIDGE, assignee of the insolvent estate of U. de Poli, BOWRING and CO., C.T. BOWRING and CO.,

LTD., and T.R. YANGCO, creditors-appellants.

Crossfield and O'Brien, J.A. Wolfson and Camus and Delgado for appellants.Hartigan and Welch, Fisher and DeWitt and Gibbs and McDonough for appellees.

OSTRAND, J.:

The present appeals, all of which relate to the Insolvency of U. de Poli, have been argued together and as the principal

questions involved are the same in all of them, the cases will be disposed of in one decision.

The insolvent Umberto de Poli was for several years engaged on an extensive scale in the exportation of Manila hempmaguey and other products of the country. He was also a licensed public warehouseman, though most of the goods stored

in his warehouses appear to have been merchandise purchased by him for exportation and deposited there by he himself.

In order to finance his commercial operations De Poli established credits with some of the leading banking institutionsdoing business in Manila at that time, among them the Hongkong & Shanghai Banking Corporation, the Bank of the

Philippine Islands, the Asia Banking Corporation, the Chartered Bank of India, Australia and China, and the AmericanForeign Banking Corporation. The methods by which he carried on his business with the various banks was practically thesame in each case and does not appear to have differed from the ordinary and well known commercial practice in handling

export business by merchants requiring bank credits.

De Poli opened a current account credit with the bank against which he drew his checks in payment of the productsbought by him for exportation. Upon the purchase, the products were stored in one of his warehouses and warehouse

receipts issued therefor which were endorsed by him to the bank as security for the payment of his credit in the account

current. When the goods stored by the warehouse receipts were sold and shipped, the warehouse receipt was exchangedfor shipping papers, a draft was drawn in favor of the bank and against the foreign purchaser, with bill of landing attached,and the entire proceeds of the export sale were received by the bank and credited to the current account of De Poli.itc-a1f

On December 8, 1920, De Poli was declared insolvent by the Court of First Instance of Manila with liabilities to theamount of several million pesos over and above his assets. An assignee was elected by the creditors and the election was

confirmed by the court on December 24, 1920. The assignee qualified on January 4, 1921, and on the same date the clerkof the court assigned and delivered to him the property of the estate.

Among the property taken over the assignee was the merchandise stored in the various warehouses of the insolvent. This

merchandise consisted principally of hemp, maguey and tobacco. The various banks holding warehouse receipts issued byDe Poli claim ownership of this merchandise under their respective receipts, whereas the other creditors of the insolvent

maintain that the warehouse receipts are not negotiable, that their endorsement to the present holders conveyed no title tothe property, that they cannot be regarded as pledges of the merchandise inasmuch as they are not public documents andthe possession of the merchandise was not delivered to the claimants and that the claims of the holders of the receipts have

no preference over those of the ordinary unsecured creditors.

On July 20, 1921, the banks above-mentioned and who claim preference under the warehouse receipts held by thementered into the following stipulation:lawphi1.net

It is stipulated by the between the undersigned counsel, for the Chartered Bank of India, Australia & China, theHongkong & Shanghai Banking Corporation, the Asia Banking Corporation and the Bank of Philippine Islandsthat:


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Whereas, the parties hereto are preferred creditors of the insolvent debtor U. de Poli, as evidenced by thefollowing quedans or warehouse receipts for hemp and maguey stored in the warehouses of said debtor:

QUEDANS OR WAREHOUSE RECEIPTS OF THE CHARTERED BANK

No. A-131 for 3,808 bales hempNo. A-157 for 250 bales hempNo. A-132 for 1,878 bales maguey

No. A-133 for 1,574 bales maguey. Nos. 131, 132 and 133 all bear date November 6, 1920, and No. 157November 19, 1920.

QUEDANS OR WAREHOUSE RECEIPTS OF THE HONGKONG & SHANGHAI BANKING CORPORATION

No. 130 for 490 bales hemp and 321 bales maguey.

No. 134 for 1,970 bales hemp.No. 135 for 1,173 bales hemp.

No. 137 for 237 bales hemp.

QUEDANS OR WAREHOUSE RECEIPTS OF THE ASIA BANKING CORPORATION

No. 57 issued May 22, 1920, 360 bales hemp.No. 93 issued July 8, 1920 bales hemp.

No. 103 issued August 18, 1920, 544 bales hemp.No. 112 issued September 15, 1920, 250 bales hemp.No. 111 issued September 15, 1920, 2,007 bales maguey.

QUEDANS OR WAREHOUSE RECEIPTS OF THE BANK OF THE PHILIPPINE ISLANDS

No. 147 issued November 13, 1920, 393 bales hemp.

No. 148 issued November 13, 1920, 241 bales hemp.No. 149 issued November 13, 1920, 116 bales hemp.

No. 150 issued November 13, 1920, 217 bales hemp.

And whereas much of the hemp and maguey covered by the above mentioned quedans was either non-existent at the timeof the issuance of said quedans or has since been disposed of by the debtor and of what remains much of the same hemp

and maguey transferred by means of quedans to one of the parties hereto has also been transferred by means of otherquedans to one or more of the other parties hereto and

Whereas, the hemp and maguey covered by said quedans is to a considerable extent commingled.

Now, therefore, it is hereby agreed subject to the rights of any other claimants hereto and to the approval of this Honorable

Court that all that remains of the hemp and maguey covered by the warehouse receipts of the parties hereto or of any ofthem shall be adjudicated to them proportionately by grades in accordance with the quedans held by each as above setforth in accordance with the rule laid down in section 23 of the Warehouse Receipts Law for the disposition of

commingled fungible goods.

Manila, P.I., July 20, 1921.

GIBBS, MCDONOUGH & JOHNSON

By A. D. GIBBSAttorneys for the Chartered Bank

of India, Australia & China

FISHER & DEWITT


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By C.A. DEWITTAttorneys for the Hongkong & ShanghaiBanking Corporation

WOLFSON, WOLFSON & SCHWARZKOFF

Attorneys for the Asia Banking Corporation

HARTIGAN & WELCH

Attorneys for the Bank of the Philippine Islands

Claims for hemp and maguey covered by the respective warehouse receipts of the banks mentioned in the foregoing

stipulation were presented by each of said banks. Shortly after the adjudication of the insolvency of the firm of Wise &Co., one of the unsecured creditors of the insolvent on June 25, 1921, presented specific written objections to the claimsof the banks on the ground of the insufficiency of the warehouse receipts and also to the stipulation above quoted on the

ground that it was entered into for the purpose of avoiding the necessity of identifying the property covered by eachwarehouse receipt. Bowring & Co., C.T. Bowring Co., Ltd., and Teodoro R. Yang with the assignee in his motion for a

rehearing and in his appeal to this court.

Upon hearing, the court below held that the receipts in question were valid negotiable warehouse receipts and ordered thedistribution of the hemp and maguey covered by the receipts among the holders thereof proportionately by grades, in

accordance with the stipulation above quoted, and in a supplementary decision dated November 2, 1921, the courtadjudged the merchandise covered by warehouse receipts Nos. A-153 and A-155 to the Asia Banking Corporation. Fromthese decisions the assignee of the insolvent estate, Bowring & Co., C.T. Bowring Co., Ltd., and Teodoro R. Yangcoappealed to this court.

The warehouse receipts are identical in form with the receipt involved in the case ofRoman vs. Asia BankingCorporation (46 Phil., 705), and there held to be a valid negotiable warehouse receipt which, by endorsement, passed thetitle to the merchandise described therein to the Asia Banking Corporation. That decision is, however, vigorously attacked

by the appellants, counsel asserting, among other things, that "there was not a single expression in that receipt, or in any othose now in question, from which the court could or can say that the parties intended to make them negotiable receipts. In

fact, this is admitted in the decision by the statement "... and it contains no other direct statement showing whether thegoods received are to be delivered to the bearer, to a specified person, or to a specified person or his order." There isnothing whatever in these receipts from which the court can possibly say that the parties intended to use the phrase "a laorden" instead of the phrase "por orden," and thus to make said receipts negotiable. On the contrary, it is very clear fromthe circumstances under which they were issued, that they did not intend to do so. If there was other language in said

receipts, such as would show their intention in some way to make said receipts negotiable, then there would be somereason for the construction given by the court. In the absence of language showing such intention, the court, bysubstituting the phrase "a la orden" for the phrase "por orden," is clearly making a new contract between the parties which,as shown by the language used by them, they never intended to enter into."

These very positive assertions have, as far as we can see, no foundation in fact and rest mostly on misconceptions.

Section 2 of the Warehouse Receipts Act (No. 2137) prescribes the essential terms of such receipts and reads as follows:

Warehouse receipts needed not be in any particular form, but every such receipt must embody within its written or

printed terms

(a) The location of the warehouse where the goods are stored,

(b) The date of issue of the receipt,

(c) The consecutive number of the receipt,


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(d) A statement whether the goods received will be delivered to the bearer, to a specified person, or to a specifiedperson or his order,

(e) The rate of storage charges,

(f) A description of the goods or of the packages containing them,

(g) The signature of the warehouseman, which may be made by his authorized agent,

(h) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in commonwith others, the fact of such ownership, and

(i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a

lien. If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of thereceipt, unknown to the warehouseman or to his agent who issues it, a statement of the fact that advances have

been made or liabilities incurred and the purpose thereof is sufficient.

A warehouseman shall be liable to any person injured thereby, for all damage caused by the omission from a

negotiable receipt of any of the terms herein required.

Section 7 of the Act reads:

A nonnegotiable receipt shall have plainly placed upon its face by the warehouseman issuing it "nonnegotiable,"or "not negotiable." In case of the warehouseman's failure so to do, a holder of the receipt who purchased it for

value supposing it to be negotiable, may, at his option, treat such receipt as imposing upon the warehouseman thesame liabilities he would have incurred had the receipt been negotiable.

All of the receipts here in question are made out on printed blanks and are identical in form and terms. As an example, we

may take receipt No. A-112, which reads as follows:

U. DE POLI209 Estero de Binondo

BODEGAS

QUEDAN No. A-112Almacen Yangco

Por

Marcas

UDP

Bultos

250

Clase de las

mercanciasFardos abaca

"Quedan depositados en estos almacenes por orden del Sr. U. de Poli la cantidad

de doscientos cincuenta fardos abaca segun marcas detalladas al margen, y conarreglo a las condiciones siguientes:

1.a

Estan asegurados contra riesgo de incendios exclusivamente, segun lascondiciones de mis polizas; quedando los demas por cuenta de los depositantes.

2.a

No se responde del peso, clase ni mal estado de la mercancia depositada.

3.a El almacenaje sera de quince centimos fardo por mes.

I certify that I am the sole owner of 4.a El seguro sera de un octavo por ciento mensual por el total. Tanto el almacenaje


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the merchandise herein described.(Sgd.) "UMBERTO DE POLI

como el seguro se cobraran por meses vencidos, y con arreglo a los diasdevengados siendo el minimo para los efectos del cobro 10 dias.

5.a

No seran entregados dichos efectos ni parte de los mismos sin la presentacionde este "quedan"para su correspondiente deduccion.

6.a El valor para el seguro de estas mercancias es depesos filipinos nueve mi

quinientossolamentes.

7.a Las operaciones de entraday salida, seran de cuenta de los depositantespudiendo hacerlos con sus trabajadores, o pagando los que le sean facilitados, conarreglo a los tipos que tengo convenido con los mios.

Valor del Seguro P9,500.V. B.(Sgd.) UMBERTO DE POLI

Manila, 15 de sept. de 1920El Encargado(Sgd.) I. MAGPANTAY

The receipt is not marked "nonnegotiable" or "not negotiable," and is endorsed "Umberto de Poli."

As will be seen, the receipt is styled "Quedan" (warehouse receipt) and contains all the requisites of a warehouse receipt

as prescribed by section 2,supra, except that it does not, in express terms, state whether the goods received are to bedelivered to bearer, to a specified person or to his order. The intention to make it a negotiable warehouse receipt appearsnevertheless, quite clearly from the document itself: De Poli deposited the goods in his own warehouse; the warehouse

receipt states that he is the owner of the goods deposited; there is no statement that the goods are to be delivered to thebearer of the receipt or to a specified person and the presumption must therefore necessarily be that the goods are in thewarehouse subject to the orders of their owner De Poli. As the owner of the goods he had, of course, full control over

them while the title remained in him; we certainly cannot assume that it was the intention to have the goods in thewarehouse subject to no one's orders. That the receipts were intended to be negotiable is further shown by the fact that

they were not marked "nonnegotiable" and that they were transferred by the endorsement of the original holder, who wasalso the warehouseman. In his dual capacity of warehouseman and the original holder of the receipt, De Poli was the only

party to the instrument at the time of its execution and the interpretation he gave it at that time must therefore be

considered controlling as to its intent.

In these circumstances, it is hardly necessary to enter into any discussion of the intended meaning of the phrase "pororden" occurring in the receipts, but for the satisfaction of counsel, we shall briefly state some of our reasons for the

interpretation placed upon that phrase in the Felisa Roman case:

The rule is well-known that wherever possible writings must be so construed as to give effect to their general intent and soas to avoid absurdities. Applying this rule, it is difficult to see how the phrase in question can be given any other rationa

meaning than that suggested in the case mentioned. It is true that the meaning would have been more grammaticallyexpressed by the word "a la orden"; the world "por preceding the word "orden" is generally translated into the Englishlanguage as "by" but "por" also means "for" or "for the account of" (see Velazquez Dictionary) and it is often used in the

latter sense. The grammatical error of using it in connection with "orden" in the present case is one which mightreasonably be expected from a person insufficiently acquainted with the Spanish language.

If the receipt had been prepared in the English language and had stated that the goods were deposited "for order" of U. de

Poli, the expression would not have been in accordance with good usage, but nevertheless in the light of the context andthat circumstances would be quite intelligible and no one would hesitate to regard "for order" as the equivalent of "to theorder." Why may not similar latitude be allowed in the construction of a warehouse receipt in the Spanish language?

If we were to give the phrase the meaning contended for by counsel, it would reveal no rational purpose. To say that awarehouseman deposited his own goods with himself by his own order seems superfluous and means nothing. Theappellants' suggestion that the receipt was issued by Ireneo Magpantay loses its force when it is considered thatMagpantay was De Poli's agent and that his words and acts within the scope of his agency were, in legal effect, those ofDe Poli himself. De Poli was the warehouseman and not Magpantay.


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Counsel for the appellants also assail the dictum in our decision in the Felisa Roman case that section 7 of the WarehouseReceipts Act "appears to give any warehouse receipt not marked "nonnegotiable" or "not negotiable" practically the sameeffect as a receipt which by its terms is negotiable provided the holder of such unmarked receipt acquired it for valuesupposing it to be negotiable." The statement is, perhaps, too broad but it certainly applies in the present case as against

the appellants, all of whom are ordinary unsecured creditors and none of them is in position to urge any preferential rights.

As instruments of credit, warehouse receipts play a very important role in modern commerce and the present day tendencyof the courts is towards a liberal construction of the law in favor of a bona fide holder of such receipts. Under the Uniform

Warehouse Receipts Act, the Supreme Court of New York in the case of Joseph vs. P. Viane, Inc.( [1922], 194 N.Y. Supp., 235), held the following writing a valid warehouse receipt:

"Original. Lot No. 9. New York, November 19, 1918. P. Viane, Inc., Warehouse, 511 West 40th Street, NewYork City. For account of Alpha Litho. Co., 261 9th Avenue. Marks: Fox Film Co. 557 Bdles 835- R. 41 x 54-

116. Car Number: 561133. Paul Viane, Inc. E.A. Thompson. P. Viane, Inc., Warehouse."

In the case of Manufacturers' Mercantile Co vs. Monarch Refrigerating Co.( [1915], 266 III., 584), the Supreme Court of Illinois said:

The provisions of Uniform Warehouse Receipts Act, sec. 2 (Hurd's Rev. St. 1913, c. 114, sec. 242), as to the

contents of the receipt, are for the benefit of the holder and of purchasers from him, and failure to observe these

requirements does not render the receipt void in the hands of the holder.

In the case of Hoffman vs. Schoyer ( [1892], 143 III., 598), the court held that the failure to comply with Act III, April 25

1871, which requires all warehouse receipts for property stored in Class C to "distinctly state on their face the brands ordistinguishing marks upon such property," for which no consequences, penal or otherwise, are imposed, does not rendersuch receipts void as against an assignee for value.

The appellants argue that the receipts were transferred merely as security for advances or debts and that such transfer wasof no effect without a chattel mortgage or a contract of pledge under articles 1867 and 1863 of the Civil Code. Thisquestion was decided adversely to the appellants' contention in the case ofRoman vs. Asia Banking Corporation, supra

The Warehouse Receipts Act is complete in itself and is not affected by previous legislation in conflict with its provisionsor incompatible with its spirit or purpose. Section 58 provides that within the meaning of the Act "to "purchase" includes

to take as mortgagee or pledgee" and "purchaser" includes mortgagee and pledgee." It therefore seems clear that, as to thelegal title to the property covered by a warehouse receipt, a pledgee is on the same footing as a vendee except that theformer is under the obligation of surrendering his title upon the payment of the debt secured. To hold otherwise would

defeat one of the principal purposes of the Act, i. e., to furnish a basis for commercial credit.

The appellants also maintain that baled hemp cannot be regarded as fungible goods and that the respective warehousereceipts are only good for the identical bales of hemp for which they were issued. This would be true if the hemp wereungraded, but we can see no reason why bales of the same government grade of hemp may not, in certain circumstances

be regarded as fungible goods. Section 58 of the Warehouse Receipts Act defines fungible goods as follows:

"Fungible goods" means goods of which any unit is, from its nature or by mercantile custom, treated as the

equivalent of any other unit.

In the present case the warehouse receipts show how many bales of each grade were deposited; the Government grade ofeach bale was clearly and permanently marked thereon and there can therefore be no confusion of one grade with another;it is not disputed that the bales within the same grade were of equal value and were sold by the assignee for the same priceand upon the strength of the Government grading marks. Moreover, it does not appear that any of the claimant creditors,except the appellees, hold warehouse receipts for the goods here in question. Under these circumstances, we do not think

that the court below erred in treating the bales within each grade as fungible goods under the definition given by thestatute. It is true that sections 22 and 23 provide that the goods must be kept separated and that the warehouseman may notcommingle goods except when authorized by agreement or custom, but these provisions are clearly intended for the

benefit of the warehouseman. It would, indeed, be strange if the warehouseman could escape his liability to the owners o


10/33

the goods by the simple process of commingling them without authorization. In the present case the holders of the receiptshave impliedly ratified the acts of the warehouseman through the pooling agreement hereinbefore quoted.

The questions so far considered are common to all of the claims now before us, but each claim has also its separate

features which we shall now briefly discuss:

R.G. Nos. 21000 AND 21004

CLAIMS OF THE BANK OF THE PHILIPPINE ISLANDS AND THE GUARANTY TRUST COMPANY OF NEWYORK

The claim of the Bank of the Philippine Islands is supported by four warehouse receipts, No. 147 for 393 bales of hempNo. 148 for 241 bales of hemp, No. 149 for 116 bales of hemp and No. 150 for 217 bales of hemp. Subsequent to thepooling agreement these warehouse receipts were signed, endorsed and delivered to the Guaranty Trust Company of New

York, which company, under a stipulation of October 18, 1921, was allowed to intervene as a party claiming the goodscovered by said receipts, and which claim forms the subject matter of the appeal R.G. No. 21004. All of the warehouse

receipts involved in these appeals were issued on November 13, 1920, and endorsed over the Bank of the PhilippineIslands.

On November 16, 1920, De Poli executed and delivered to said bank a chattel mortgage on the same property described in

the receipts, in which chattel mortgage no mention was made of the warehouse receipts. This mortgage was registered inthe Office of the Register of Deeds of Manila on November 18, 1920.

The appellants argue that the obligations created by the warehouse receipts were extinguished by the chattel mortgage andthat the validity of the claim must be determined by the provisions of the Chattel Mortgage Law and not by those of theWarehouse Receipts Act, or, in other words, that the chattel mortgage constituted a novation of the contract between the

parties.

Novations are never presumed and must be clearly proven. There is no evidence whatever in the record to show that anovation was intended. The chattel mortgage was evidently taken as additional security for the funds advanced by the

bank and the transaction was probably brought about through a misconception of the relative values of warehouse receiptsand chattel mortgages. As the warehouse receipts transferred the title to the goods to the bank, the chattel mortgage was

both unnecessary and inefficatious and may be properly disregarded.

Under the seventh assignment of error the appellants argue that as De Poli was declared insolvent by the Court of FirstInstance of Manila on December 8, 1920, only twenty-five days after the warehouse receipts were issued, the latter

constituted illegal preferences under section 70 of the Insolvency Act. In our opinion the evidence shows clearly that thereceipts were issued in due and ordinary course of business for a valuable pecuniary consideration in good faith and arenot illegal preferences.

R.G. No. 21002

CLAIM OF THE HONGKONG & SHANGHAI BANKING CORPORATION

The warehouse receipts held by this claimant-appellee are numbered A-130 for 490 bales of hemp and 321 bales ofmaguey, No. A-134 for 1,970 bales of hemp, No. A-135 for 1,173 bales of hemp and No. A-137 for 237 bales of hemp

were issued by De Poli and were endorsed and delivered to the bank on or about November 8, 1920. The appellantsmaintain that the bank at the time of the delivery to it of the warehouse receipts had reasonable cause to believe that DePoli was insolvent, and that the receipts therefore constituted illegal preferences under the Insolvency Law and are null

and void. There is nothing in the record to support this contention.

The other assignments of error relate to questions which we have already discussed and determined adversely to theappellants.

R.G. No. 21003


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CLAIM OF THE CHARTERED BANK OF INDIA, AUSTRALIA & CHINA

This claimant holds warehouse receipts Nos. 131 for 3,808 bales of hemp, A-157 for 250 bales of hemp, A-132 for 1,878bales of maguey and A-133 for 1,574 bales of maguey. Nos. A-131, A-132 and A-133 bear the date of November 6, 1920

and A-157 is dated November 19, 1920.

Under the fourth assignment of error, the appellants contend that the court erred in permitting counsel for the claimantbank to retract a withdrawal of its claim under warehouse receipt No. A-157. It appears from the evidence that during the

examination of the witness Fairnie, who was the local manager of the claimant bank, counsel for the bank, after an answermade by Mr. Fairnie to one of his questions, withdrew the claim under the warehouse receipt mentioned, being under the

impression that Mr. Fairnie's answer indicated that the bank had knowledge of De Poli's pending insolvency at the timethe receipt was delivered to the bank. Later on in the proceedings the court, on motion of counsel, reinstated the claimCounsel explains that by reason of Mr. Fairnie's Scoth accent and rapid style of delivery, he misunderstood his answer and

did not discover his mistake until he read the transcript of the testimony.

The allowance of the reinstatement of the claim rested in the sound discretion of the trial court and there is nothing in therecord to show that this discretion was abused in the present instance.

Under the fifth assignment of error appellants argue that the manager of the claimant bank was informed of De Poli's

difficulties on November 19, 1920, when he received warehouse receipt No. A-157 and had reasonable cause to believe

that De Poli was insolvent and that the transaction therefore constituted an illegal preference.

Mr. Fairnie, who was the manager of the claimant bank at the time the receipt in the question was delivered to the bank,

testifies that he had no knowledge of the impending insolvency and Mr. De Poli, testifying as a witness for the assignee-appellee, stated that he furnished the bank no information as to his failing financial condition at any time prior to the filingof the petition for his insolvency, but that on the contrary he advised the bank that his financial condition was sound.

The testimony of the same witnesses also shows that the bank advanced the sum of P20,000 to De Poli at Cebu against thesame hemp covered by warehouse receipt No. A-157 as early as October, 1920, and that upon shipment thereof to Manilathe bill of lading, or shipping documents, were made out in favor of the Chartered Bank and forwarded to it at Manila;

that upon the arrival of the hemp at Manila, Mr. De Poli, by giving a trust receipt to the bank for the bill of lading,obtained possession of the hemp with the understanding that the warehouse receipt should be issued to the bank therefor

and it was in compliance with that agreement previously made that the receipt was issued on November 19, 1920. Uponthe facts stated we cannot hold that the bank was given an illegal preference by the endorsement to it of the warehousereceipt in question. (Mitsui Bussan Kaisha vs. Hongkong & Shanghai Banking Corporation, 36 Phil., 27.)

R.G. No. 21006

CLAIM OF THE ASIA BANKING CORPORATION

Claimant holds warehouse receipts Nos. A-153, dated November 18, 1920, for 139 bales of tobacco, A-154, datedNovember 18, 1920, for 211 bales of tobacco, A-155, dated November 18, 1920, for 576 bales of tobacco, A-57, dated

May 22, 1920, for 360 bales of hemp, A-93, dated July 8, 1920, for 382 bales of hemp, A-103, dated August 18, 1920, fo544 bales of hemp, A-112, dated September 15, 1920, for 250 bales of hemp and A-111, dated September 15, 1920, for

207 bales of maguey.

The assignments of error in connection with this appeal are, with the exception of the fourth, similar to those in the other

cases and need not be further discussed.

Under the fourth assignment, the appellants contend that warehouse receipts Nos. A-153, A-154 and A-155 were illegapreferences on the assumption that the claimant bank must have had reasonable reasons to believe that De Poli was

insolvent on November 18, 1920, when the three receipts in question were received. In our opinion, the practicallyundisputed evidence of the claimant bank sufficiently refutes this contention.

For the reasons hereinbefore stated the judgments appealed from are hereby affirmed, without costs. So ordered.


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EN BANC

[G.R. No. L-4080. September 21, 1953.]

JOSE R. MARTINEZ, as administrator of the Instate Estate of Pedro Rodriguez, deceased, Plaintiff-Appellant, vs

PHILIPPINE NATIONAL BANK, Defendant-Appellee.

D E C I S I O N

MONTEMAYOR, J.:

As of February 1942, the estate of Pedro Rodriguez was indebted to the defendant Philippine National Bank in the amoun

of P22,128.44 which represented the balance of the crop loan obtained by the estate upon its 1941-1942 sugar cane cropSometime in February 1942, Mrs. Amparo R. Martinez, late administratrix of the estate upon request of the defendant

bank through its Cebu branch, endorsed and delivered to the said bank two (2) quedans according to plaintiff-appellan

issued by the Bogo-Medellin Milling Co. where the sugar was stored covering 2,198.11 piculs of sugar belonging to theestate, 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 inthe warehouse of the Bogo-Medellin 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.

Under the theory and claim that sometime in February 1942, when the invasion of the Province of Cebu by the JapaneseArmed Forces was imminent, the administratrix of the estate asked the bank to release the sugar so that it could be sold ata good price which was about P25 per picul in order to avoid its possible loss due to the invasion, but that the bankrefused the request and as a result the amount of P54,952.75 representing the value of said sugar was lost, the presentaction was brought against the defendant bank to recover said amount. After trial, the Court of First Instance of Manila

dismissed the complaint on the ground that the transfer of the quedan or quedans representing the sugar in the warehouseof the Bogo-Medellin Milling Co. to the bank did not transfer ownership of the Sugar, and consequently, the loss of saidsugar should be borne by the plaintiff-appellant. Administrator Jose R. Martinez is now appealing from that decision.

We agree with the trial court that at the time of the loss of the sugar during the war, sometime in 1943, said sugar stillbelonged to the estate of Pedro Rodriguez. It had never been sold to the bank so as to make the latter owner thereof. Thetransaction could not have been a sale, first, because one of the essential elements of the contract of sale, namely

consideration was not present. If the sugar was sold, what was the price? We do not know, for nothing was said about it.Second, the bank by its charter is not authorized to engage in the business of buying and selling sugar. It only acceptssugar as security for payment of its crop loans and later on pursuant to an understanding with the sugar planters, it sellssaid sugar for them, or the planters find buyers and direct them to the bank. The sugar was given only as a security for the

payment of the crop loan. This is admitted by the appellant as shown by the allegations in its complaint filed before thetrial court and also in the brief for appellant filed before us. According to law, the mortgagee or pledgee cannot become

the owner of or convert and appropriate to himself the property mortgaged or pledged (Article 1859, old Civil CodeArticle 2088, new Civil Code). Said property continues to belong to the mortgagor or pledgor. The only remedy given to

the mortgagee or pledgee is to have said property sold at public auction and the proceeds of the sale applied to thepayment of the obligation secured by the mortgage or pledge.

The position 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, thebank should suffer the loss of the sugar on the principle that "a thing perishes for its owner". We take it that by endorsingthe quedan, defendant was supposed to have sold the sugar to the bank for the amount of the outstanding loan ofP22,128.44 and the interest then accrued. That would mean that plaintiff's account with the bank has been entirelyliquidated and their contractual relations ended, the bank, suffering the loss of the amount of the loan and interest. But

plaintiff-appellant in the next breath contends that had the bank released the sugar in February 1942, plaintiff could havesold it for P54,952.75, from which the amount of the loan and interest could have been deducted, the balance to have beenretained by plaintiff, and that since the loan has been entirely liquidated in 1948, then the whole expected sales price ofP54,952.75 should now be paid by the bank to appellant. This second theory presupposes that despite the endorsement ofthe quedan, plaintiff still retained ownership of the sugar, a position that runs counter to the first theory of transfer of

ownership to the bank.


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In the course of the discussion of this case among the members of the Tribunal, one or two of them who will dissent fromthe majority view sought to cure and remedy this apparent inconsistency in the claim of appellant and sustain the theorythat the endorsement of the quedan made the bank the owner of the sugar resulting in the payment of the loan, so thatnow, the bank should return to appellant the amount of the loan it improperly collected in 1948.

In support of the theory of transfer of ownership of the sugar to the bank by virtue of the endorsement of the quedan,reference was made to the Warehouse Receipts Law, particularly section 41 thereof, and several cases decided by thiscourt are cited. In the first place, this claim is inconsistent with the very theory of plaintiff-appellant that the sugar far

from being sold to the bank was merely given as security for the payment of the crop loan. In the second place, the

authorities cited are not directly applicable. In those cases this court held that for purposes of facilitating commercialtransaction, the endorsee or transferee of a warehouse receipt or quedan should be regarded as the owner of the goodscovered by it. In other words, as regards the endorser or transferor, even if he were the owner of the goods, he may nottake possession and dispose of the goods without the consent of the endorsee or transferee of the quedan or warehouse

receipt; that in some cases the endorsee of a quedan may sell the goods and apply the proceeds of the sale to the paymentof the debt; and as regards third persons, the holder of a warehouse receipt or quedan is considered the owner of the goodscovered by it. To make clear the view of this court in said cases, we are quoting a portion of the decisions of this court intwo of these cases cited which are typical.

"As to the first cause of action, we hold that in January, 1919, the bank became and remained the owner of thefive quedans Nos. 30, 35, 38, 41, and 42; that they were in form negotiable, and that, as such owner, it was legallyentitled to the possession and control of the property therein described at the time the insolvency petition was

filed and had a right to sell it and apply the proceeds of the sale to its promissory notes, including the three notesof P18,000 each, which were formerly secured by the three quedans Nos. 33, 36, and 39, which the bank

surrendered to the firm." (Philippine Trust Co. vs. National Bank, 42 Phil., 413, 427).

". . . Section 53 provides that within the meaning of the Act 'to "purchase" includes to take as mortgagee orpledgee' and "purchaser" includes mortgagee and pledgee.' It therefore seems clear that, as to the legal title to the

property covered by a warehouse receipt, a pledgee is on the same footing as a vendee except that the former isunder the obligation of surrendering his title upon the payment of the debt secured. To hold otherwise would

defeat one of the principal purposes of the Act, i.e., to furnish a basis for commercial credit." (Bank of thePhilippine Islands vs. Herridge, 47 Phil. 57, 70).

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 soldand then satisfy the obligation from the proceeds of the sale. From all this, it is clear that at the time the sugar in question

was lost sometime during the war, estate of Pedro Rodriguez was still the owner thereof.

It is further contended in this appeal that the defendant- appellee failed to exercise due care for the preservation of thesugar, and that the loss was due to its negligence as a result of which the appellee incurred the loss. In the first place, this

question was not raised in the court below. Plaintiff's complaint failed to make any allegation regarding negligence in thepreservation of this sugar. In the second place, it is a fact that the sugar was lost in the possession of the warehouseselected by the appellant to which it had originally delivered and stored it, and for causes beyond the bank's controlnamely, the war.

In connection with the claim that had the bank released the sugar sometime in February, 1942, when requested by the

plaintiff, said sugar could have been sold at the rate of P25 a picul or a total of P54,952.75, the amount of the presentclaim, there is evidence to show that the request for release was not made to the bank itself but directly to the official of

the warehouse, the Bogo-Medellin Milling Co. and that the bank was not aware of any such request, but that before April9, 1942, when the Cebu branch of the defendant was closed, the bank through its officials offered the sugar for sale but

that there were no buyers, perhaps due to the unsettled and chaotic conditions then obtaining by reason of the enemyoccupation.

In conclusion, we hold that where a warehouse receipt or quedan is transferred or endorsed to a creditor only to secure thepayment of a loan or debt, the transferee or endorsee does not automatically become the owner of the goods covered bythe warehouse receipt or quedan 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 asale but only a mortgage or pledge, and that if the property covered by the quedans or warehouse receipts is lost without


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the fault or negligence of the mortgagee or pledgee or the transferee or endorsee of the warehouse receipt or quedan, thensaid goods are to be regarded as lost on account of the real owner, mortgagor or pledgor.

In view of the foregoing, the decision appealed from is hereby affirmed, with costs.


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

In the matter of the Involuntary insolvency of U. DE POLI.FELISA ROMAN, claimant-appellee,

vs.ASIA BANKING CORPORATION, claimant-appellant.

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

Antonio V. Herrero for appellee.

OSTRAND, J.:

This is an appeal from an order entered by the Court of First Instance of Manila in civil No. 19240, the insolvency ofUmberto de Poli, and declaring the lien claimed by the appellee Felisa Roman upon a lot of leaf tobacco, consisting of 576

bales, and found in the possession of said insolvent, superior to that claimed by the appellant, the Asia BankingCorporation.

The order appealed from is based upon the following stipulation of facts:

It is hereby stipulated and agreed by and between Felisa Roman and Asia Banking Corporation, and on their

behalf by their undersigned attorneys, that their respective rights, in relation to the 576 bultos of tobaccomentioned in the order of this court dated April 25, 1921, be, and hereby are, submitted to the court for decision

upon the following:

I. Felisa Roman claims the 576 bultos of tobacco under and by virtue of the instrument, a copy of which is heretoattached and made a part hereof and marked Exhibit A.

II. That on November 25, 1920, said Felisa Roman notified the said Asia Banking Corporation of her contentiona copy of which notification is hereto attached and made a part hereof and marked Exhibit B.

III. That on November 29, 1920, said Asia Banking Corporation replied as per copy hereto attached and markedExhibit C.

IV. That at the time the above entitled insolvency proceedings were filed the 576 bultos of tobacco were inpossession of U. de Poli and now are in possession of the assignee.

V. That on November 18, 1920, U. de Poli, for value received, issued a quedan, covering aforesaid 576bultos otobacco, to the Asia Banking Corporation as per copy of quedan attached and marked Exhibit D.

VI. That aforesaid 576 bultos of tobacco are part and parcel of the 2,777 bultos purchased by U. de Poli fromFelisa Roman.

VII. The parties further stipulate and agree that any further evidence that either of the parties desire to submit shall

be taken into consideration together with this stipulation.

Manila, P. I., April 28, 1921.

(Sgd.) ANTONIO V. HERREROAttorney for Felisa Roman

(Sgd.) WOLFSON, WOLFSON & SCHWARZKOPFAttorney for Asia Banking Corp.

Exhibit A referred to in the foregoing stipulation reads:


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1. Que la primera parte es duea de unos dos mil quinientos a tres mil quintales de tacabo de distintas clasesproducidos en los municipios de San Isidro, Kabiaw y Gapan adquiridos por compra con dinero perteneciente asus bienes parafernales, de los cuales es ella administradora.

2. Que ha convenido la venta de dichos dos mil quinientos a tres mil quintales de tabaco mencionada con laSegunda Parte, cuya compraventa se regira por las condiciones siguientes:

(a) La Primera Parte remitira a la Segunda debidamente enfardado el tabaco de que ella es propietaria enbultos no

menores de cincuenta kilos, siendo de cuenta de dicha Primera Parte todos los gastos que origine dicha mercancjahasta la estacion de ferrocarril de Tutuban, en cuyo lugar se hara cargo la Segunda y desde cuyo instante seran de

cuenta de esta los riesgos de la mercancia.

(b) El precio en que la Primera Parte vende a la Segunda el tabaco mencionada es el de veintiseis pesos (P26)moneda filipina, por quintal, pagaderos en la forma que despues se establece.

(c) La Segunda Parte sera la consignataria del tabaco en esta Ciudad de Manila quien se hara cargo de el cuando

reciba la factura de embarque y la guia de Rentas Internas, trasladandolo a su bodega quedando en la misma encalidad de deposito hasta la fecha en que dicha Segunda Parte pague el precio del mismo, siendo de cuenta dedicha Segunda Parte el pago de almacenaje y seguro.

(d) LLegada la ultima expedicion del tabaco, se procedera a pesar el mismo con intervencion de la Primera Parte ode un agente de ella, y conocido el numero total de quintales remitidos, se hara liquidacion del precio a cuenta decual se pagaran quince mil pesos (P15,000), y el resto se dividira en cuatro pagares vencederos cada uno de ellos

treinta dias despues del anterior pago; esto es, el primer pagare vencera a los treinta dias de la fecha en que sehayan pagado los quince mil pesos, el segundo a igual tiempo del anterior pago, y asi sucesivamente;conviniendose que el capital debido como precio del tabaco devengara un interes del diez por ciento anual.

Los plazos concedidos al comprador para el pago del precio quedan sujetos a la condicion resolutoria de que siantes del vencimiento de cualquier plazo, el comprador vendiese parte del tabaco en proporcion al importe decualquiera de los pagares que restasen por vencer, o caso de que vendiese, pues se conviene para este caso que

desde el momento en que la Segunda Parte venda el tabaco, el deposito del mismo, como garantia del pago delprecio, queda cancelado y simultaneamente es exigible el importe de la parte por pagar.

Leido este documento por los otorgantes y encontrandolo conforme con lo por ellos convenido, lo firman laPrimera Parte en el lugar de su residencia, San Isidro de Nueva Ecija, y la Segunda en esta Ciudad de Manila, enlas fechas que respectivamente al pie de este documento aparecen.

(Fdos.) FELISA ROMAN VDA. DE MORENOU. DE POLI

Firmado en presencia de:

(Fdos.) ANTONIO V. HERREROT. BARRETTO

("Acknowledged before Notary")

Exhibit D is a warehouse receipt issued by the warehouse of U. de Poli for 576 bales of tobacco. The first paragraph of thereceipt reads as follows:

Quedan depositados en estos almacenes por orden del Sr. U. de Poli la cantidad de quinientos setenta y seis fardosde tabaco en rama segun marcas detalladas al margen, y con arreglo a las condiciones siguientes:

In the left margin of the face of the receipts, U. de Poli certifies that he is the sole owner of the merchandise therein

described. The receipt is endorced in blank "Umberto de Poli;" it is not marked "non-negotiable" or "not negotiable."


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Exhibit B and C referred to in the stipulation are not material to the issues and do not appear in the printed record.

Though Exhibit A in its paragraph (c) states that the tobacco should remain in the warehouse of U. de Poli as a deposituntil the price was paid, it appears clearly from the language of the exhibit as a whole that it evidences a contract of sale

and the recitals in order of the Court of First Instance, dated January 18, 1921, which form part of the printed record, showthat De Poli received from Felisa Roman, under this contract, 2,777 bales of tobacco of the total value of P78,815.69, ofwhich he paid P15,000 in cash and executed four notes of P15,953.92 each for the balance. The sale having been thusconsummated, the only lien upon the tobacco which Felisa Roman can claim is a vendor's lien.

The order appealed from is based upon the theory that the tobacco was transferred to the Asia Banking Corporation as

security for a loan and that as the transfer neither fulfilled the requirements of the Civil Code for a pledge nor constituteda chattel mortgage under Act No. 1508, the vendor's lien of Felisa Roman should be accorded preference over it.

It is quite evident that the court below failed to take into consideration the provisions of section 49 of Act No. 2137 whichreads:

Where a negotiable receipts has been issued for goods, no seller's lien or right of stoppage in transitu shall defeathe rights of any purchaser for value in good faith to whom such receipt has been negotiated, whether suchnegotiation be prior or subsequent to the notification to the warehouseman who issued such receipt of the seller's

claim to a lien or right of stoppage in transitu. Nor shall the warehouseman be obliged to deliver or justified in

delivering the goods to an unpaid seller unless the receipt is first surrendered for cancellation.

The term "purchaser" as used in the section quoted, includes mortgagee and pledgee. (See section 58 (a) of the same Act.)

In view of the foregoing provisions, there can be no doubt whatever that if the warehouse receipt in question is negotiablethe vendor's lien of Felisa Roman cannot prevail against the rights of the Asia Banking Corporation as the indorse of thereceipt. The only question of importance to be determined in this case is, therefore, whether the receipt before us is

negotiable.

The matter is not entirely free from doubt. The receipt is not perfect: It recites that the merchandise is deposited in thewarehouse "por orden" instead of "a la orden" or "sujeto a la orden" of the depositor and it contain no other directstatement showing whether the goods received are to be delivered to the bearer, to a specified person, or to a specified

person or his order.

We think, however, that it must be considered a negotiable receipt. A warehouse receipt, like any other document, must beinterpreted according to its evident intent (Civil Code, arts. 1281 et seq.) and it is quite obvious that the deposit evidenced

by the receipt in this case was intended to be made subject to the order of the depositor and therefore negotiable. That thewords "por orden" are used instead of "a la orden" is very evidently merely a clerical or grammatical error. If anyintelligent meaning is to be attacked to the phrase "Quedan depositados en estos almacenes por orden del Sr. U. de Poli" itmust be held to mean "Quedan depositados en estos almacenes a la orden del Sr. U. de Poli." The phrase must beconstrued to mean that U. de Poli was the person authorized to endorse and deliver the receipts; any other interpretation

would mean that no one had such power and the clause, as well as the entire receipts, would be rendered nugatory.

Moreover, the endorsement in blank of the receipt in controversy together with its delivery by U. de Poli to the appellant

bank took place on the very of the issuance of the warehouse receipt, thereby immediately demonstrating the intention ofU. de Poli and of the appellant bank, by the employment of the phrase "por orden del Sr. U. de Poli" to make the receiptnegotiable and subject to the very transfer which he then and there made by such endorsement in blank and delivery of thereceipt to the blank.

As hereinbefore stated, the receipt was not marked "non-negotiable." Under modern statutes the negotiability ofwarehouse receipts has been enlarged, the statutes having the effect of making such receipts negotiable unless marked"non-negotiable." (27 R. C. L., 967 and cases cited.)

Section 7 of the Uniform Warehouse Receipts Act, says:


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A non-negotiable receipt shall have plainly placed upon its face by the warehouseman issuing it 'non-negotiable,or 'not negotiable.' In case of the warehouseman's failure so to do, a holder of the receipt who purchased it forvalue supposing it to be negotiable may, at his option, treat such receipt as imposing upon the warehouseman thesame liabilities he would have incurred had the receipt been negotiable.

This section shall not apply, however, to letters, memoranda, or written acknowledgments of an informacharacter.

This section appears to give any warehouse receipt not marked "non-negotiable" or "not negotiable" practically the sameeffect as a receipt which, by its terms, is negotiable provided the holder of such unmarked receipt acquired it for value

supposing it to be negotiable, circumstances which admittedly exist in the present case.

We therefore hold that the warehouse receipts in controversy was negotiable and that the rights of the endorsee thereof,the appellant, are superior to the vendor's lien of the appellee and should be given preference over the latter.

The order appealed from is therefore reversed without costs. So ordered.


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EN BANC

G.R. No. L-12377 March 29, 1961

WARNER, BARNES & CO., LTD.,Plaintiff-Appellee, vs. RAMON FLORES,Defendant-Appellant.

Hilado and Hilado for plaintiff-appellee.

Enrique F. Mariano and Mario D. Lachica for defendant-appellant.

PAREDES, J.:chanrobles virtual law library

By stipulation of the parties, the following facts are admitted: -chanrobles virtual law library

Defendant-appellant, Ramon Flores, in November, 1940, purchased from plaintiffs-appellees Warner, Barnes & Co., ltd.P3,127.90 worth of fertilizer and agreed to pay it on or before December 31, 1941, with 7% annual interest compounded

quarterly. To guarantee the payment of the obligation, including interest and expenses of drafting, notarization andregistration of the mortgage, the defendant mortgaged to the mortgaged to the plaintiff 951 piculs of sugar of the crop year1941-42. When the mortgaged crops were milled by the Ma-oa Sugar Central in 1941-42, the defendant's rented

hacienda's produced a total of 1, 954.02 piculs of sugar of which 47% was his share or 918.39 piculs. out of defendant'sshare of 918.39, piculs the plaintiffs received from the sugar central "quedans" for 278 piculs. Neither the plaintiff not the

defendant was able to sell and said 278 piculs or the remaining 640.39 piculs that had no "quedans", because at the timethere were no sugar buyers due to lack of shipping facilities and to the eventual involvement of the Philippines in World

War II. All the defendant's sugar and other sugar stored in the warehouse of the Ma-ao Sugar central, were burned, lost,destroyed or located during the Japanese occupation of the province of Negros Occidental. because the mortgage sugarwas not sold, the indebtedness of the defendant to the plaintiffs had a debit valance of P3,098.72 on April 30, 1942 threeweeks before the Japanese occupied said province. On February 28, 1954, the fertilizer account of the defendant with the

plaintiffs, had a debit balance of P5,223.41, to which interest should be added a the rate of P0.67918 per day from march

1, 1954. Annex A of the complaint is the chattel mortgage involved.chanroblesvirtualawlibrarychanrobles virtual lawlibrary

On April 3, 1954, the present complaint was filed. The lower court rendered judgment on January 16, 1956, "con denandoal demandado a pagar a lademandante la cantidad de P5,223.41 con interes al tipo del P0.67918 diarioscom putados desde

el dia 1 de Marzo de 1954 hasta su completo pago, mas un 20% sobre todo el importe de esta sentencia en conception dehonorarios deabogado y gastos de cobranza. Las costas se tasaran en antra el demandado." On appeal to the Court ofAppeals, said Tribunal certified the case to Us for the questions raised by defendant-appellant are purely in nature. Ineffect, the appellant submits that the court a quo erred: (1) In finding and declaring that defendant shall bear and suffer theloss of the sugar in the warehouse of the Ma-ao Sugar Central; (2) In sentencing and condemning the defendant to pay the

plaintiffs the amounts stated in the appealed judgment; and (3) In not declaring that from the sugar produced from thedefendant's share, his monetary obligation with the plaintiffs has been completely paid andsettled.chanroblesvirtualawlibrarychanrobles virtual law library

Appellant claims that for all legal intents and purposes, the appellees were already paid by him. He cited competitionsNos. 7, 8 and 10 of the chattel mortgage, Annex A, to support his contention.

7. El Deudor Hipotecario por al presente authorization y ordena a la Ma-ao Central Para que durante la molienda de lacosecha arriba mencionada, despuesque se haya convertido en azucar, retenga de la participacion del mismo los 951 Picosgravados con esta hipoteca, y remita mensualmente a la Acreedora Hipotecario en Iloilo, el quedan correspondiente hastaque se hayan cubiertolog 951 picos por la presente hipotecados extendiendose dicho quedan a nombre del DeudorHipotecario o a su orden pero, con una nota o memorandum en dichoquedan al sentido de que al azucar representado porel mismo esta hipotecadoa Warner, Barnes & Go Ltd., por el total de su valor. Esta autorization esfirme e irrevocable sin

el consentimiento por escrito de las Sres Warner, Barne & Co., Ltd.chanroblesvirtualawlibrarychanrobles virtual lawlibrary

8. Queda tambien estipulado que en caso de que el Deudor hipotecariodejare de pagar el importe del abono-garantizado

por esta hipoteca dentro delplaza fijado en el parrafo 2 de esta escritura, la Acreedora Hipotecario autorizada vender el


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azucar hipotecado en cualquier tiempo que es time conveniente, por el precio corriente en el mercado; retenelendo delproductsde la venta valor del abono arriba mencionado, juitamente con sus intereses devengados asi como los gastosocasionados por la venta del referido azucar y entre gando el sobrante si hubiere al Deudor Hipotecario. Para efectuardicha venta el Deudor Hipotecario, autoriza por al presente a Warner, Barnes & Co., Ltd., para endorsar y firmar los

quedanes correspondientes en su nombrey representation ratificando desde abora dicho acto como si el hubiere ejecutadopersonalmente.chanroblesvirtualawlibrarychanrobles virtual law library

10. Y, por ultimo asimismo convenido que en caso de que el Deudor Hipotecario no pudiera moler sus plantaciones de

canadulce por faita degastos o cualquier otro motivo la Acredora Hipotecario tendra derecho, aopcion soya, a cons tituirseen la Hacienda ... y tomar completa possession de la misma y de sus plantaciones de canadulce y de cuantos mate riales,apero de molienda, carabaos y obreros de sean nece sarios y Ilevara a cabo los trabajos de molienda cargando a cuenta deDeudor Hipotecario todo los gastos reales y necesarios en que incurra con relacion a dichos trabajos incluyendo la labor,supervisions, materiales y demas gastos necessaries y justos Todos los gastos que por estos conceptos desembalsare la

acreedora hipotecaria devengaran interes al tipo de.... % annual, ademas de un 10% sobre el importe total de los gastos porla supervision de dichos trabajos".

In view of the above conditions, the appellant argues, thus: That plaintiffs have the first lien on all the sugar produced bythe defendant which lien has preference over any and all other gravamen in the existing sugar of the defendant; the

defendant had no control or power to withdraw the sugar from the Ma-ao Sugar Central; the plaintiff company hadirrevocable power to sell the sugar of the defendant; the said sugar or net participation of the de defendant including his

properties, were under the exclusive control of the plaintiffs; the defendant produced sugar for the plaintiffs and this is althat matters; there is no condition in Annex A that of the sugar which were lost or destroyed, the defendant should bearthe loss; and not having assumed the risk, the defendant should not be responsible for those events which could not be

foreseen or which though foreseen were inevitable (Art. 1174, Civil Code); the defendant, having performed his part ofthe obligation and not being guilty of fraud, negligence or delay, is deemed to have completely paid and settled his

obligation (Arts. 1170 and 1262, Civil Code), and the plaintiffs not having protested either to the defendant or to thecentral on its inability to sell or dispose the sugar because of the approaching war, the obligation is deemed duly complied

with (Art. 1235, Civil Code).chanroblesvirtualawlibrarychanrobles virtual law library

The fundamental error of the defendant, however, may be seen from the fact that he was the owner of the sugar which waslost, at the time of the loss, hence the fitness of the maxim; "Res Periit Domino Suo." The plaintiffs were mere mortgageesof defendant's sugar. Clause 8, of the Chattel Mortgage, heretofore quoted, did not transfer the ownership of the

defendant's sugar to the plaintiffs. If merely authorized the plaintiffs to sell said sugar in case the defendant failed to payon the maturity date (December 31, 1941), and to retain from the proceeds of the sale the value of the fertilizer bought

with the accrued interest and the expenses of the sale, and any surplus remaining after the defendant's obligation was paidshould be turned over to the defendant. If the plaintiffs were the owner of the sugar, there would be no need for thedefendant to authorize the former to sell it and the defendant would not have any right to the surplus over and above his

debt. This particular issue is no longer of first impression in this jurisdiction. In the case of Martinez vs. PhilippineNational Bank, G.R. No. L-4080, Sept. 21, 1958, it was held:

... It (bank) only accepts sugar as security for the payment for the payment of its crop loans and later on pursuant to an

understanding with the sugar planter, it sell said sugar for them, or the planters find buyers and direct them to the Bank.The sugar was given only as a security for the payment of the crop loan. This is admitted by the appellant as shown by the

allegations in its complaint filed before the trial court and also in the brief for appellant filed before us. According to lawthe mortgagee or pledge cannot become the owner of or convert and appropriate to himself the property mortgaged or

pledged (Art. 1839, old Civ. Code, Art. 2088, new Civ. Code). Said property continues to belong to the mortgagor or

pledgor. The only remedy given to the mortgagee or pledgee is to have said property sold at the public auction and theproceeds of the sale applied to the payment of the obligation secured by the mortgage or pledge.

x x x x x x x x xchanrobles virtual law library

In conclusion, we hold that where a warehouse receipt or quedan is transferred or endorsed to a creditor only to secure thepayment of a loan or debt, the transferee or endorsee does not automatically become the owner of the goods covered bythe warehouse receipt or quedan 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 asale but only a mortgage or pledge, and that if the property covered by the quedans or warehouse receipts is lost without


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the fault or negligence of the mortgagee or pledgee or the transferee or endorsee of the warehouse receipt or quedan, thensaid goods are to be regarded as lost on account of the real owner, mortgagor or pledgor.

It is to be noted that the position of the herein plaintiffs is even more advantageous than that of the bank, the case just

cited. In the Martinez case, the mortgagor endorsed and delivered the "quedans" representing all the mortgaged sugar tothe mortgagee, whereas in the present case, only a part of the "quedans" were delivered to the mortgagees and they werenot even endorsed at that. In fact the "quedans" were issued in the name of the mortgagor (Flores), or his order "pero conuna noti o memorandum al sentido de que el azucar representado por el mismo esta hipotecado a Warner, Barnes & Co.,

Ltd. por el total de su valor". Of course, the defendant contends that the Martinez case is not applicable to the case at barwe are fully satisfied, however, that the principles of law announced therein, govern the present case.

Judgment appealed from is affirmed. Costs against the defendant-appellant.


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PNB vs. Sayo, Jr. [292 SCRA 202 (July 9 1998)]

Warehouse Receipts Law, Warehousemans Lien

Facts: Noahs Ark Sugar Refinery issued several warehouse receipts covering sugar deposited by RNS Merchandising

and St. Therese Merchandising. Subsequently, these same receipts were endorsed to Ramos and Zoleta. The latter then

used the receipts as security for two loan agreements with PNB, thus endorsing them with said bank. When Ramos and

Zoleta could not pay their loan to the bank, PNB demanded delivery of the sugar stocks covered by the receipts fromNoah Ark Sugar Refinery. Noah refused to comply with the demand alleging ownership of the sugar. It alleged that the

owner of Noah, Looyuko, entered into an agreement with RNS and St. Therese Merchandising to sell the sugar indicated

in the warehouse receipts stored in Noah for an amount of P63,000,000. Checks were issued but they were dishonored for

being drawn against insufficient funds.

Hence, PNB filed a complaint with the RTC. RTC dismissed said complaint. On appeal to the SC by way of petition for

review on certiorari, SC ordered Noah and its owner, Looyuko, to deliver to PNB the sugar stocks covered by the

warehouse receipts in controversy.

However, Noah filed an Omnibus Motion seeking deferment of the judgment until it was heard on its warehousemans

lien. RTC granted the order and evidence was received in support thereof. RTC adjudged that there existed a valid lien in

favor of Noah, and accordingly, execution of the judgment against Noah should be stayed until the full amount of Noahs

lien shall have been satisfied. PNB then filed certiorari proceedings before the SC. SC held that while PNB was entitled

to the sugar stocks as endorsee of the receipts, delivery to it shall only be effected upon payment of the storage fees. SC

further ruled that imperative is the right of the warehouseman to demand payment of his lien because he loses his lien

upon goods by surrendering possession thereof.

RTC Judge Sayo, Jr. allowed a writ of execution in favor of Noah to collect on its warehousemans lien against PNB.

Hence, this certiorari proceeding before the SC.

Issue: (1) Whether or not PNB is liable for storage fees.

(2) If yes, what is the duration of time the right of PNB over the goods may be subject to the lien?

Held: (1) YES. PNB contends that it was a mere pledgee as the receipts were used to secure two loans it granted. SC

agreed with this and held that the indorsement and delivery of the receipts by Ramos and Zoleta to PNB was not to

convey title to or ownership of the goods but to secure the loans by way of pledge. The indorsement of the receipts to

perfect the pledge merely constituted a symbolical or constructive delivery of the possession of the thing thus

encumbered. The creditor, in a contract of real security, like pledge, cannot appropriate without foreclosure the things

given by way of pledge. Any stipulation to the contrary is null and void for being pactum commissorio. The law requires

foreclosure in order to allow a transfer of title of the goods given by way of security from its pledgor, and before any such

foreclosure, the pledgor, not the pledgee, is the owner of the goods.

However, SC held that the warehouseman nevertheless is entitled to his lien that attaches to the goods invokable against

anyone who claims a right of possession thereon.

(2) SC held that where a valid demand by the lawful holder of the receipts for the delivery of the goods is refused by the

warehouseman, despite the absence of a lawful excuse provided by the law itself, the warehousemans lien is thereafter


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concomitantly lost. As to what the law deems a valid demand, Section 8 of the Warehouse Receipts Law enumerates

what must accompany a demand.

SC held that regrettably, the factual settings do not sufficiently indicate whether the demand to obtain possession of thegoods complied with Sec. 8. The presumption, nevertheless, would be that the law was complied with. On the other hand

it would appear that the refusal of Noah to deliver the goods was not anchored on a valid excuse, i.e., non-satisfaction of

the lien over the goods, but on an adverse claim of ownership. Under the circumstances, this hardly qualified as a valid

legal excuse. The loss of the lien, however, does not necessarily mean the extinguishment of the obligation to pay thewarehousing fees and charges which continues to be a personal liability of the owners, i.e., the pledgors, not the pledgee,

in this case. But even as to the owners-pledgors, the warehouseman fees and charges have ceased to accrue from the date

of the rejection by Noah to heed the lawful demand by PNB for the release of the goodsHence, the time from which the fees and charges should be made payable is from the time Noah refused to heed PNBs

demand for delivery of the sugar stocks and in no event beyond the value of the credit in favor of the pledgee since it is

basic that, in foreclosures, the buyer does not assume the obligations of the pledgor to his other creditors even while suchbuyer acquires title over the goods less any existing preferred lien thereover.


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PNB v. Judge Beni to C. Se, Jr .(256 SCRA 380)

A prior judgment holding that a party is a warehouseman obligated to deliver sugar stocks covered by the warehouse

receipts does not necessarily carry with it a denial of its lien over the same sugar stocks. Thus where the judgment creditor

(in this case PNB) makes an unconditional presentment of warehouse receipts for delivery of sugar stocks against the

warehouseman (Noahs Ark), it thereby admits 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. Thus, PNB may not retrieve the sugar stocks without paying the warehousemans

lien. The warehouseman need not file a separate action to enforce payment of storage fees. He may enforce his lien before

delivering the sugar stocks covered by the warehouse receipts.

PHILIPPINE NATIONAL BANK, petitioner, vs. HON. PRES. JUDGE BENITO C. SE, JR., RTC, BR. 45, MANILA;

NOAHS ARK SUGAR REFINERY; ALBERTO T. LOOYUKO, JIMMY T. GO and WILSON T. GO, respondents

G.R. No. 119231. April 18, 1996

FACTS:

In accordance with Act No. 2137, the Warehouse Receipts Law, Noahs Ark Sugar Refinery issued on several dates, 5Warehouse Receipts (Quedans).

They were endorsed and negotiated to Ramos and Zoleta. They failed to pay their loans upon maturity. So, PNB wroteto 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. So, PNB filed a complaint for Specific Performance with Damages andApplication for Writ of Attachment.

Respondent Judge Benito C. Se, Jr., in whose sala the case was raffled, denied the Application for PreliminaryAttachment.

HELD: Under the subject Warehouse Receipts provision, storage fees are chargeable. 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 warehousemans lien pursuant to Sections 27 and31 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. 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. After being declared as the warehouseman, PRs cannot legally be deprived of their right

to enforce their claim for warehousemans lien, for reasonable storage fees and preservation expenses. Pursuant to Section

31 which we quote earlier, the goods under storage may not be delivered until said lien is satisfied.

Considering that PNB does not deny the existence, validity and genuineness of the Warehouse Receipts on which i

anchors its claim for payment against PRs, it cannot disclaim liability for the payment of the storage fees stipulated

therein. PNB is in estoppel in disclaiming liability for the payment of storage fees due the PRs 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 PNB for payment

against PRs on the strength of the provisions of the Warehouse Receipts

Warehouse Receipt Cases

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