Title PHILIPPINE NATIONAL BANK, plaintiff-appellant,

vs.
PRODUCERS' WAREHOUSE ASSOCIATION, defendant-appellee.
Ponente JOHNS, J.:
Doctrine WAREHOUSE RECIEPTS
Facts ● Producers’ Warehouse Association (PWA) entered into a contract with
Philippine Fiber and Produce Co. (Fiber Co.) where the latter was appointed
as the general manager of PWA’s warehouse business.
● Fiber Co. had all the power and authority needed to conduct PWA’s
business, including the authority to sign PWA’s name
● PWA issued to Fiber Co. 7 Negotiable Quedans for 15k+ piculs of copra.
The Negotiable Quedans (warehouse receipts) terms:
o It was deliverable to Fiber Co, or its order.

o It was subject to the terms and conditions printed therein.

▪ Section 4 stated that the PWA will deliver the copra upon
surrendering the quedan.
▪ Section 5 stated that no transfer of interest/ownership will be
recognized by the PWA unless they are registered in the
books of PWA, and that all charges for the storage and
insurance due has been paid.
o Each gave the number of sacks, piculs, warehouse number, gross
weight in kilos, and declared value.
o Declared that the copra was insured for the full amount of its
declared value.
o It had across its face the words, “Negotiable Warrant”

o It had in red the words, “This warrant is of no value unless signed

by an officer of the Association.”
o Each were actually signed by two PWA officers.

▪ George Wicks (Treasurer)

▪ R. Torres (Warehouseman)
● Fiber Co. entered into an Overdraft Agreement with the Philippine National
Bank (PNB) to have the latter extend a credit of P1M.
● To secure the agreement, the mentioned Negotiable Quedans were
 endorsed in blank and delivered to PNB.
● PNB eventually made a letter requesting the delivery of the copra described
in the quedans and eventually commenced an action to recover the value.
● PNB requested PWA to register the quedans in the name of PNB and to
deliver the copra. PNB even offered to settle the necessary dues. However ,
PWA still refused and said that there were no such copra in their
warehouse.
Contentions Petitioner [] Respondent [PWA]
  Fiber Co. did deposit copra in PWA’s warehouse, and
quedans were issued signed by two officers But PWA
did not authorize these two officers to issue receipts in
the name of Fiber Co.
 the PNB consented to have all the copra deposited by
Fiber Co. in PWA’s warehouse be sold and delivered to
Laguna Coconut Oil Co. The delivery was done without
PNB surrendering their quedans.
 The quedans were never considered transferred to the
PNB because such was not recorded in PWA’s books
pursuant to terms.
 The quedans were issued without the copra described
therein being deposited in the warehouse.
Lower Courts judgement in favor of PWA.
Appellate Court
Issue W/N the PWA is still liable to honor the quedans issued in favor of PNB? – YES
SC Ruling The quedans have legal force and effect.

 They were duly EXECUTED by Wicks, as TREASURER and Torres as

WAREHOUSEMAN, for and in behalf of the defendant.

 PWA was ESTOPPED TO claim or ASSERT that PNB did not comply with any
condition precedent. In this kind of action, a person has NO LEGAL RIGHT
TO DENY THE EXISTENCE OF QUEDANS on which it is based, and then
claim that the plaintiff has not complied with the provisions of the
instrument.

 PWA was the one who refused to record the transfer of quedans when PNB
requested for it

 Fiber Co. was the general manager of PNB and was thus duly authorized to
issue quedans in PWA’s name ;The quedans were duly issued and
authenticated ;PNB was acting in good faith, and the quedans were issued
to it as collateral in the ordinary course of business ; Even if there was
fraud between PWA and Fiber Co., PNB is not a party to such.