CASE 1 BPI v Herridge

Upon hearing, the court below held that the

receipts in question were valid negotiable
warehouse receipts and ordered the
distribution of the hemp and maguey covered
by the receipts among the holders thereof
proportionately by grades.
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 the same liabilities he would
have incurred had the receipt been negotiable.
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 be delivered to bearer, to a
specified person or to his order. The intention
to make it a negotiable warehouse receipt
appears, nevertheless, 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 the bearer of the
receipt or to a specified person and the
presumption must therefore necessarily be that
the goods are in the warehouse 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 the warehouse
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
was also 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.
As instruments of credit, warehouse receipts
play a very important role in modern
commerce and the present day tendency of the
courts is towards a liberal construction of
the law in favor of a bona fide holder of
such receipts.
CLAIMS OF THE BANK OF THE PHILIPPINE
ISLANDS AND THE GUARANTY TRUST
COMPANY OF NEW YORK
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 in the 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 and that
the validity of the claim must be determined by
the provisions of the Chattel Mortgage Law and
not by those of the Warehouse 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 a novation
was intended.
ROMAN v. ASIA BANKING CORPORATION
Facts:
That on November 18, 1920, U. de Poli,
for value received, issued a quedan,
covering aforesaid 576 bultos of
tobacco, to the Asia Banking Corporation
as per copy of quedan attached and
marked Exhibit D.
That aforesaid 576 bultos of tobacco are
part and parcel of the 2,777 bultos

purchased by U. de Poli from Felisa

Roman
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."
Though Exhibit A in its paragraph (c)
states that the tobacco should remain in
the warehouse of U. de Poli as a deposit
until 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, show that De Poli received from
Felisa Roman, under this contract, 2,777
bales of tobacco of the total value of
P78,815.69, of which he paid P15,000 in
cash and executed four notes of
P15,953.92 each for the balance. The
sale having been thus consummated,
the only lien upon the tobacco which
Felisa Roman can claim is a vendor's
lien.
DOCTRINE:
Where a negotiable receipts has been
issued for goods, no seller's lien or right of
stoppage in transitu shall defeat the rights
of any purchaser for value in good faith to
whom such receipt has been negotiated,
whether such negotiation 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.)
There can be no doubt whatever that if
the warehouse receipt in question is
negotiable, the vendor's lien of Felisa
Roman cannot prevail against the rights

of the Asia Banking Corporation as the

indorse of the receipt.
ISSUE: whether the receipt before us is
negotiable.
RULING:
Yes. It must be considered a negotiable receipt.
A warehouse receipt, like any other document,
must be interpreted 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 the words "por orden" are used instead of
"a la orden" is very evidently merely a clerical
or grammatical error. The phrase must be
construed 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 of U. de Poli and of the appellant
bank, by the employment of the phrase "por
orden del Sr. U. de Poli" to make the receipt
negotiable and subject to the very transfer
which he then and there made by such
endorsement in blank and delivery of the
receipt to the blank.
Not market as non nego or not nego on face.
PNB v ATENDIDO
FACTS:
Philippine National Bank a loan of P3,000
payable in 120 days with interests at 6%
per annum from the date of maturity. To
guarantee the payment of the obligation
the borrower pledged to the bank 2,000
cavanes of palay which were then
deposited in the warehouse of Cheng
Siong Lam & Co. in San Miguel, Bulacan,
and to that effect the borrower endorsed

in favor of the bank the corresponding

warehouse receipt.
Before the maturity of the loan, the
2,000 cavanes of palay disappeared for
unknown reasons in the warehouse.
When the loan matured the borrower
failed to pay either the principal or the
interest and so the present action was
instituted.
Defendant claimed that the warehouse
receipt covering the palay which was
given as security having been endorsed
in blank in favor of the bank, and the
palay having been lost or disappeared,
he thereby became relieved of liability.
ISSUE:
Whether the surrender of the warehouse
receipt covering the 2,000, cavanes of
palay given as a security, endorsed in
blank, to appellee, has the effect of
transferring their title or ownership to said
appellee, or it should be considered merely
as a guarantee to secure the payment of
the obligation of Appellant.
RULING:
Guaranty. Where a warehouse receipt or
quedan is transferred or endorsed to a creditor
only to secure the payment of a loan or debt,
the transferee or endorsee does not
automatically become the owner of the goods
covered by the 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 a sale but only a mortgage or pledge,
and that if the property covered by the quedan
or warehouse receipt is lost without the fault or
negligence of the mortgagee or pledgee or the
transferee or endorsee of the quedan, then
said goods are to be regarded as lost on
account of the real owner, mortgagor or
pledgor. The fact that the quedan is endorsed
in blank, does not alter the situation, the
purpose of the endorsement being merely to
transfer the juridical possession of the property
to the pledgee and to forestall any possible
disposition thereof on the part of the pledgor.

This is true notwithstanding the provisions to

the contrary of the Warehouse Receipts Law.
This being so, the ownership remains with the
pledgor subject only to foreclosure in case of
non-fulfillment of obligation. The pledgor,
continuing to be the owner of the goods
pledged during the pendency of the obligation
in case of the loss of the property, the loss is
borne by him.
SIY CONG BIEN v HSBC
FACTS:
This action was brought in the Court of
First Instance of Manila to recover the
sum of P31,645, the value of 464 bales
of hemp deposited in certain bonded
warehouses as evidenced by the
quedans (warehouse receipts) described
in the complaint, said quedans having
been delivered as pledge by one Otto
Ranft to the herein defendant, the
Hongkong and Shanghai Banking
Corporation, for the guarantee of a
preexisting debt of the former to the
latter.
That in the night of June 25, 1926, said
Otto Ranft died suddenly at his house in
the City of Manila. Plaintiff filed its first
complaint against the defendant,
wherein it alleged that it has "sold" the
quedans in question to the deceased O.
Ranft for cash, but that the said O. Ranft
had not fulfilled the conditions of the
sale.
ISSUE: W/N the Quedans endorsed in blank
gave HSBC rightful and valid title to the goods.
RULING:
Yes. . It may be noted, first, that the quedans in
question were negotiable in form; second, that
they were pledge by Otto Ranft to the
defendant bank to secure the payment of his
preexisting debts to said bank (paragraph 3 of
the Stipulation of Facts); third, that such of the
quedans as were issued in the name of the
plaintiff were duly endorsed in blank by the
plaintiff and by Otto Ranft; and fourth, that the
two remaining quedans which were duly
endorsed in blank by him.

SEC. 47. When negotiation not impaired by

fraud, mistake, or duress. The validity of
the negotiation of a receipt is not impaired by
the fact that such negotiation was a breach of
duty on the part of the person making the
negotiation, or by the fact that the owner of
the receipt was induced by fraud, mistake, or
duress to intrust the possession or custody of
the receipt was negotiated, or a person to
whom the receipt was subsequent negotiated,
paid value therefor, without notice of the
breach of duty, or fraud, mistake, or duress.
SEC. 38. Negotiation of negotiable receipts by
indorsement. A negotiable receipt may be
negotiated by the indorsement of the person to
whose order the goods are, by the terms of the
receipt, deliverable. Such indorsement may be
in blank, to bearer or to a specified person. . . .
Subsequent negotiation may be made in like
manner.
SEC. 40. Who may negotiate a receipt.
SEC. 41. Rights of person to whom a receipt
has been negotiated.
In its second assignment of error, the
defendant-appellant maintains that the
plaintiff-appellee is estopped to deny that
the bank had a valid title to the quedans
for the reason that the plaintiff had
voluntarily clothed Ranft with all the
attributes of ownership and upon which
the defendant bank relied. The Supreme
Court of the United States through Justice
Day applied the familiar rule of equitable
estoppel that where one of two innocent
persons must suffer a loss he who by his
conduct made the loss possible must bear
it.
PNB v SE
FACTS:
Noahs Ark Sugar Refinery issued on
several dates, Warehouse Receipts
covering sugar deposited. 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 P15.6 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 Noahs Ark Sugar Refinery
demanding delivery of the sugar stocks
covered by the quedans endorsed to it
by Zoleta and Ramos. Noahs Ark Sugar
Refinery refused to comply with the
demand alleging ownership thereof
Judgement rendered ordering the private
respondents Noahs Ark Sugar Refinery,
Alberto T. Looyuko, Jimmy T. Go and
Wilson T. Go, jointly and severally: (a) to
deliver to the petitioner Philippine
National Bank, the sugar stocks covered
by the Warehouse Receipts/ (b) to pay
plaintiff Philippine National Bank
attorneys fees, litigation expenses
private respondents moved for
reconsideration of this decision, filed a
Motion Seeking Clarification of the
Decision
ISSUE:
Can the warehouseman enforce his
warehousemans lien before delivering the
sugar stocks as ordered by the Court of
Appeals or need he file a separate action to
enforce payment of storage fees?
RULING:
Yes. While the PNB is entitled to the stocks of
sugar as the endorsee of the quedans, delivery
to it shall be effected only upon payment of the
storage fees. Imperative is the right of the
warehouseman to demand payment of his lien
at this juncture, because, in accordance with

Section 29 of the Warehouse Receipts Law, the

warehouseman loses his lien upon goods by
surrendering possession thereof. In other
words, the lien may be lost where the
warehouseman surrenders the possession of
the goods without requiring payment of his
lien, because a warehousemans lien is
possessory in nature.
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.
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
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.
PNB v SE
FACTS:
On February 21, 1995, private
respondents claim for lien was heard and
evidence was received in support
thereof.
Pursuant to the abovementioned
Supreme Court Decision, private
respondents filed a Motion for Execution
of Defendants Lien as Warehouseman
dated 27 November 1996.
PNB opposed said Motion on the
following grounds:

(a) The lien claimed by Noahs Ark in the

unbelievable amount of
P734,341,595.06 is illusory; and
(b) There is no legal basis for execution
of defendants lien as warehouseman
unless and until PNB compels the
delivery of the sugar stocks.
ISSUES:
1. special civil action the appropriate
remedy
2. Has the trial court the authority to issue
a writ of execution on Noahs Arks claims
for storage fees? Is [petitioner] liable for
storage fees (a) from the issuance of the
quedans in 1989 to Rosa Sy, St. Therese
Merchandising and RNS Merchandising,
up to their assignment by endorsees
Ramos and Zoleta to [petitioner] for
their loan; or (b) after [petitioner] has
filed an action for specific performance
and damages (Civil Case No. 90-53023)
against Noahs Ark for the latters failure
to comply with [petitioners] demand for
the delivery of the sugar?
3. Did respondent Judge commit grave
abuse of discretion as charged?
RULING:
1. Yes. This Court has original jurisdiction,
concurrent with that of Regional Trial
Courts and the Court of Appeals, over
petitions for certiorari, prohibition,
mandamus, quo warranto and habeas
corpus,[33] and we entertain direct
resort to us in cases where special and
important reasons or exceptional and
compelling circumstances justify the
same.[34] These reasons and
circumstances are present here.
2. We confirmed petitioners liability for
storage fees in G.R. No. 119231.
However, petitioners status as to the
quedans must first be clearly defined
and delineated to be able to determine
the extent of its liability.
In conclusion, we hold that where a
warehouse receipt or quedan is
transferred or endorsed to a creditor
only to secure the payment of a loan or

debt, the transferee or endorsee does

not automatically become the owner of
the goods covered by the 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 a sale but
only a mortgage or pledge, and that if
the property covered by the quedans or
warehouse receipts is lost without the
fault or negligence of the mortgagee or
pledgee or the transferee or endorsee of
the warehouse receipt or quedan, then
said goods are to be regarded as lost on
account of the real owner, mortgagor or
pledgor.
Simply put, where a valid demand
by the lawful holder of the quedans
for the delivery of the goods is
refused by the warehouseman,
despite the absence of a lawful
excuse provided by the statute
itself, the warehousemans lien is
thereafter concomitantly lost.
The loss of the warehousemans lien,
however, does not necessarily mean
the extinguishment of the
obligation to pay the warehousing
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 Noahs Ark
to heed the lawful demand by
petitioner for the release of the
goods.

3. Yes. We hold that the trial court

deprived petitioner of due process in
rendering the challenged order of 15
April 1996 without giving petitioner an
opportunity to present its evidence.
During the final hearing of the case,
private respondents commenced and
concluded their presentation of evidence
as to the matter of the existence of and
amount owing due to their
warehousemans lien.
A warehouseman may enforce his lien under
the following instances: 1) he may refuse to
deliver the goods until his lien is satisfied; 2)
he may sell the goods and apply the proceeds
thereof to the value of the lien; and 3) by other
means allowed by law to a creditor against his
debtor, for the collection from the depositor of
all charges and advances which the depositor
expressly or impliedly contracted with the
warehouseman; or such remedies allowed by
law for the enforcement of a lien against
personal property. (Philippine National Bank vs.
Sayo, Jr., 292 SCRA 202 (1998))

The refusal of the warehouseman to deliver the

sugar to the endorsee of the quedans on the
ground that it has claimed ownership over the
sugar by reason of non-payment of its buyer,
not being one of the remedies available to the
warehouseman to enforce his lien, caused the
loss of the warehousemans lien. Nevertheless,
the loss did not extinguish the obligation to pay
the warehousemans fees but merely caused
the fees and charges to cease to accrue from
the date of the rejection by the warehouseman
to heed the previous lawful demand for the
release of the goods. (Philippine National Bank
vs. Sayo, Jr., 292 SCRA 202 (1998))