TOPIC Warehouse Law

CASE NO. G.R. No. 119231 (April 18, 1996)

DOCTRINE
 While the PNB is entitled to the stocks of sugar as the endorse of the quedans, delivery to it shall be effected
only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his
lien at this juncture, because, in accordance with Section 29 of the Warehouse Receipts Law, the
warehouseman loses his lien upon goods by surrendering possession thereof. In other words, the lien may be
lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien,
because a warehouseman's lien is possessory in nature.

RECIT-READY DIGEST
Noah’s Ark Sugar Refinery endorsed 5 warehouses receipts to Rosa Sy and St. Therese Merchandising. 2
Warehouse Receipts were negotiated and endorsed to Luis Ramos, and 3 Warehouse Receipts were negotiated and
endorsed to Cresencia Zoleta. Ramos and Zoleta then used the quedans as security for 2 loan agreements from
PNB. However they failed to pay the loan, prompting PNB to demand from Noah’s Ark the release of the sugar
stocks subject to the warehouse receipts. Noah’s Ark claimed that it previously sold the sugar stocks to Ramos and
Zoleta but the latter two failed to pay the same; thus it argues that it is the rightful owner of the sugar stocks
and not PNB. PNB sued Noah’s Ark for specific performance. The Supreme Court initially ruled that PNB is the
owner of the sugar stocks. Noah’s Ark subsequently filed with the RTC a motion for an enforcement of a
warehouseman’s lien over the sugar stocks. PNB opposed such motion, arguing that Noah’s Ark no longer could
impose such lien on the goods.

SC decided that Noah’s ark could impose the warehouseman lien. Noah’s Ark cannot legally be deprived
of their right to enforce their claim for warehouseman’ss lien, for reasonable storage fees and preservation
expenses. Pursuant to Section 31, the goods under storage may not be delivered until said lien is satisfied.
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. Hence, PNB ordered to pay the storage costs before Noah’s Ark could be
compelled to release the sugar stocks.

FACTS
 In accordance with Act No. 2137, the Warehouse Receipts Law, Noah's Ark Sugar Refinery issued 5
Warehouse Receipts (Quedans):
o March 1, 1989, Receipt No. 18062, covering sugar deposited by Rosa Sy;
o March 7, 1989, Receipt No. 18080, covering sugar deposited by RNS Merchandising (Rosa Ng Sy);
o March 21, 1989, Receipt No. 18081, covering sugar deposited by St. Therese Merchandising;
o March 31, 1989, Receipt No. 18086, covering sugar deposited by St. Therese Merchandising; and
o April 1, 1989, Receipt No. 18087, covering sugar deposited by RNS Merchandising.
 The receipts are substantially in the form, and contains the terms, prescribed for negotiable warehouse receipts
by Section 2 of the law.
 2 Warehouse Receipts were negotiated and endorsed to Luis Ramos, and 3 Warehouse Receipts were
negotiated and endorsed to Cresencia Zoleta. Ramos and Zoleta then used the quedans as security for 2 loan
agreements from PNB – one for P15.6M and the other for P23.5M.
 Ramos and Zoleta failed to pay the loans on maturity despite demand. PNB then demanded from Noah’s Ark
the delivery of the sugar stocks covered by the 5 quedans endorsed to it by Ramos and Zoleta.
 Noah’s Ark refused to comply with the demands alleging that it is the owner of the sugar stocks.
Consequently, PNB filed for specific performance against Noah’s Ark and the latter’s executive officers.
 Noah’s Ark and its officers filed a Counterclaim against PNB and a third-party complaint against Ramos and
Zoleta.

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 Noah’s Ark claimed:
o Noah’s Ark agreed to sell to Rosa Ng Sy of RNS Merchandising and Teresita Ng of St. Therese
Merchandising the total volume of sugar indicated in the quedans stored at Noah 's Ark Sugar Refinery for
a total consideration of P63,000,000.00, . . . The corresponding payments in the form of checks issued by
the vendees in favor of defendants were subsequently dishonored by the drawee banks by reason of
'payment stopped' and 'drawn against insufficient funds,' . . . Upon proper notification to said vendees and
plaintiff in due course, defendants refused to deliver to vendees therein the quantity of sugar covered by the
subject quedans.
o Considering that the vendees and first endorsers of subject quedans did not acquire ownership thereof, the
subsequent endorsers and plaintiff itself did not acquire a better right of ownership than the original
vendees/first endorsers.
 Sy and Ng, on the other hand, argued that the transaction between them and Noah’s Ark was simulated and that
it was a complex financial maneuver.
 PNB filed with the RTC a complaint for Specific Performance with Damages and an application for Writ of
Attachment against Noah’s ark and several others.
 Noah’s Ark and its co-defendants claim that they are the owners of the subject quedans and the sugar
represented therein.
 Supreme Court, by way of a Petition for Review on Certiorari under Rule 45, rendered judgment rendering
jointly and severally private Noah’s Ark liable to deliver to PNB sugar stocks covered by the receipts, or to pay
damages in the amount of P39.1 million with legal interest.
 Noah’s Ark filed Omnibus motion seeking to defer proceedings until they are heard on their claim for
warehouseman’s lien. RTC grants motion and found that there exists in favor of the defendants a valid
warehouseman’s lien under Section 27 of RA 2137 and accordingly, execution of judgment is ordered stayed
and precluded until full amount of defendant’s lien on the sugar stocks covered by the receipts have been
satisfied conformably with the provisions of Sec 31 of RA 2137.
 PNB filed a petition to seek the nullification of the orders of respondent judge.
 TO BE CLEAR:
o PNB’s submission is on a technicality, that is, that private respondents have lost their right to recover
warehouseman's lien on the sugar stocks covered by the five (5) Warehouse Receipts for the reason that
they failed to set up said claim in their Answer before the trial court and that private respondents did not
appeal from the decision in this regard.
o Noah’s Ark maintain that they could not have claimed the right to a warehouseman's lien in their Answer to
the complaint before the trial court as it would have been inconsistent with their stand that they claim
ownership of the stocks covered by the quedans since the checks issued for payment thereof were
dishonored.

ISSUE/S and HELD

RATIO
Noah’s Ark can impose warehouseman’s lien.
 “We in effect further affirmed the finding that Noah's Ark is a warehouseman which was obliged to deliver the
sugar stocks covered by the Warehouse Receipts pledged by Cresencia K. Zoleta and Luis T. Ramos to the
petitioner pursuant to the pertinent provisions of Republic Act 2137.”
 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 not the owner, but the warehouseman, by the CA, affirmed by this court, Noah’s Ark
cannot legally be deprived of their right to enforce their claim for warehouseman’ss lien, for reasonable
storage fees and preservation expenses. Pursuant to Section 31, the goods under storage may not be
delivered until said lien is satisfied.

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 Considering that PNB does not deny the existence, validity and genuineness of the Warehouse Receipts on
which it anchors its claim for payment against Noah’s Ark, it cannot disclaim liability for the payment of the
storage fees stipulated therein.
 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.
 PNB is in estoppel in disclaiming liability for the payment of storage fees due the private respondents as
warehouseman while claiming to be entitled to the sugar stocks covered by the subject Warehouse Receipts on
the basis of which it anchors its claim for payment or delivery of the sugar stocks. The unconditional
presentment of the receipts by the petitioner for payment against private respondents on the strength of the
provisions of the Warehouse Receipts Law (R.A. 2137) carried with it the admission of the existence and
validity of the terms, conditions and stipulations written on the face of the Warehouse Receipts, including the
unqualified recognition of the payment of warehouseman’s lien for storage fees and preservation expenses.
 Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in
accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by
surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders
the possession of the goods without requiring payment of his lien, because a warehouseman’s lien is
possessory in nature.

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