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1990.

Consequently, on March 16, 1990, the Philippine


PHILIPPINE NATIONAL BANK, petitioner, vs. HON.
National Bank wrote to Noahs Ark Sugar Refinery
MARCELINO L. SAYO, JR., in his capacity as
demanding delivery of the sugar stocks covered by the
Presiding Judge of the Regional Trial Court
quedans endorsed to it by Zoleta and Ramos. Noahs
of Manila (Branch 45), NOAHS ARK SUGAR
Ark Sugar Refinery refused to comply with the demand
REFINERY, ALBERTO T. LOOYUKO, JIMMY T.
alleging ownership thereof, for which reason the
GO and WILSON T. GO, respondents.
Philippine National Bank filed with the Regional Trial
Court of Manila a verified complaint for Specific
DECISION Performance with Damages and Application for Writ of
DAVIDE, JR., J.: Attachment against Noahs Ark Sugar Refinery, Alberto
T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three
In this special civil action for certiorari, actually being identified as the sole proprietor, managing
the third dispute between the same private parties to partner, and Executive Vice President of Noahs Ark,
have reached this Court,[1] petitioner asks us to annul respectively.
the orders[2] of 15 April 1997 and 14 July 1997 issued
in Civil Case No. 90-53023 by the Regional Trial Court, Respondent Judge Benito C. Se, Jr., [to] whose sala the
Manila, Branch 45. The first order [3] granted private case was raffled, denied the Application for
respondents motion for execution to satisfy their Preliminary Attachment. Reconsideration therefor was
warehousemans lien against petitioner, while the likewise denied.
second order[4] denied, with finality, petitioners motion
for reconsideration of the first order and urgent Noahs Ark and its co-defendants filed an Answer with
motion to lift garnishment, and private respondents Counterclaim and Third-Party Complaint in which they
motion for partial reconsideration. claimed that they [were] the owners of the subject
quedans and the sugar represented therein, averring as
The factual antecedents until the commencement they did that:
of G.R. No. 119231 were summarized in our decision
therein, as follows: 9. *** In an agreement dated April 1, 1989, defendants
agreed to sell to Rosa Ng Sy of RNS Merchandising and
In accordance with Act No. 2137, the Warehouse Teresita Ng of St. Therese Merchandising the total
Receipts Law, Noahs Ark Sugar Refinery issued on volume of sugar indicated in the quedans stored at
several dates, the following Warehouse Receipts Noahs Ark Sugar Refinery for a total consideration
(Quedans): (a) March 1, 1989, Receipt No. 18062, of P63,000,000.00, *** The corresponding payments in
covering sugar deposited by Rosa Sy; (b) March 7, the form of checks issued by the vendees in favor of
1989, Receipt No. 18080, covering sugar deposited by defendants were subsequently dishonored by the
RNS Merchandising (Rosa Ng Sy); (c) March 21, 1989, drawee banks by reason of payment stopped and
Receipt No. 18081, covering sugar deposited by St. drawn against insufficient funds, *** Upon proper
Therese Merchandising; (d) March 31, 1989, Receipt notification to said vendees and plaintiff in due course,
No. 18086, covering sugar deposited by St. Therese defendants refused to deliver to vendees therein the
Merchandising; and (e) April 1, 1989, Receipt No. quantity of sugar covered by the subject quedans.
18087, covering sugar deposited by RNS
Merchandising. The receipts are substantially in the 10. *** Considering that the vendees and first
form, and contains the terms, prescribed for negotiable endorsers of subject quedans did not acquire
warehouse receipts by Section 2 of the law. ownership thereof, the subsequent endorsers and
plaintiff itself did not acquire a better right of
Subsequently, Warehouse Receipts Nos. 18080 and ownership than the original vendees/first endorsers.
18081 were negotiated and endorsed to Luis T. Ramos,
and Receipts Nos. 18086, 18087 and 18062 were The Answer incorporated a Third-Party Complaint by
negotiated and endorsed to Cresencia K. Zoleta. Ramos Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go,
and Zoleta then used the quedans as security for two doing business under the trade name and style Noahs
loan agreements one for P15.6 million and the other Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng,
for P23.5 million obtained by them from the Philippine praying that the latter be ordered to deliver or return
National Bank. The aforementioned quedans were to them the quedans (previously endorsed to PNB and
endorsed by them to the Philippine National Bank. the subject of the suit) and pay damages and litigation
expenses.
Luis T. Ramos and Cresencia K. Zoleta failed to pay
their loans upon maturity on January 9,
The Answer of Rosa Ng Sy and Teresita Ng, dated In issuing the questioned Orders, We find the
September 6, 1990, one of avoidance, is essentially to respondent Court to have acted in grave abuse of
the effect that the transaction between them, on the discretion which justify holding null and void and
one hand, and Jimmy T. Go, on the other, concerning the setting aside the Orders dated May 2 and July 4, 1990
quedans and the sugar stocks covered by them was of respondent Court, and that a summary judgment be
merely a simulated one being part of the latters rendered forthwith in favor of the PNB against Noahs
complex banking schemes and financial maneuvers, Ark Sugar Refinery, et al., as prayed for in petitioners
and thus, they are not answerable in damages to him. Motion for Summary Judgment.

On January 31, 1991, the Philippine National Bank filed On December 13, 1991, the Court of Appeals nullified
a Motion for Summary Judgment in favor of the and set aside the orders of May 2 and July 4, 1990 of
plaintiff as against the defendants for the reliefs prayed the Regional Trial Court and ordered the trial court to
for in the complaint. render summary judgment in favor of the PNB. On June
18, 1992, the trial court rendered judgment dismissing
On May 2, 1991, the Regional Trial Court issued an plaintiffs complaint against private respondents for
order denying the Motion for Summary lack of cause of action and likewise dismissed private
Judgment. Thereupon, the Philippine National Bank respondents counterclaim against PNB and of the
filed a Petition for Certiorari with the Court of Appeals, Third-Party Complaint and the Third-Party Defendants
docketed as CA-G.R. SP No. 25938 on December 13, Counterclaim. On September 4, 1992, the trial court
1991. denied PNBs Motion for Reconsideration.

Pertinent portions of the decision of the Court of On June 9, 1992, the PNB filed an appeal from the RTC
Appeals read: decision with the Supreme Court, G.R. No. 107243, by
way of a Petition for Review on Certiorari under Rule
In issuing the questioned Orders, the respondent Court 45 of the Rules of Court. This Court rendered judgment
ruled that questions of law should be resolved after on September 1, 1993, the dispositive portion of which
and not before, the questions of fact are properly reads:
litigated. A scrutiny of defendants affirmative defenses
does not show material questions of fact as to the WHEREFORE, the trial judges decision in Civil Case No.
alleged nonpayment of purchase price by the 90-53023, dated June 18, 1992, is reversed and set
vendees/first endorsers, and which nonpayment is not aside and a new one rendered conformably with the
disputed by PNB as it does not materially affect PNBs final and executory decision of the Court of Appeals in
title to the sugar stocks as holder of the negotiable CA-G.R. SP No. 25938, ordering the private
quedans. respondents Noahs Ark Sugar Refinery, Alberto T.
Looyuko, Jimmy T. Go and Wilson T. Go, jointly and
What is determinative of the propriety of summary severally:
judgment is not the existence of conflicting claims from
prior parties but whether from an examination of the (a) to deliver to the petitioner Philippine National
pleadings, depositions, admissions and documents on Bank, the sugar stocks covered by the Warehouse
file, the defenses as to the main issue do not tender Receipts/Quedans which are now in the latters
material questions of fact (see Garcia vs. Court of possession as holder for value and in due course; or
Appeals, 167 SCRA 815) or the issues thus tendered alternatively, to pay (said) plaintiff actual damages in
are in fact sham, fictitious, contrived, set up in bad faith the amount of P39.1 million, with legal interest thereon
or so unsubstantial as not to constitute genuine issues from the filing of the complaint until full payment; and
for trial. (See Vergara vs. Suelto, et al., 156 SCRA 753;
Mercado, et al. vs. Court of Appeals, 162 SCRA 75). [sic] (b) to pay plaintiff Philippine National Bank attorneys
The questioned Orders themselves do not specify what fees, litigation expenses and judicial costs hereby fixed
material facts are in issue. (See Sec. 4, Rule 34, Rules of at the amount of One Hundred Fifty Thousand Pesos
Court). (P150,000.00) as well as the costs.

To require a trial notwithstanding pertinent allegations SO ORDERED.


of the pleadings and other facts appearing on the
record, would constitute a waste of time and an On September 29, 1993, private respondents moved
injustice to the PNB whose rights to relief to which it is for reconsideration of this decision. A
plainly entitled would be further delayed to its Supplemental/Second Motion for Reconsideration with
prejudice. leave of court was filed by private respondents on
November 8, 1993. We denied private respondents PNBS RIGHT TO A WRIT OF EXECUTION IS
motion on January 10, 1994. SUPPORTED BY TWO FINAL AND
EXECUTORY DECISIONS: THE DECEMBER
Private respondents filed a Motion Seeking 13, 1991 COURT OF APPEALS [sic]
Clarification of the Decision, dated September 1, DECISION IN CA-G.R. SP NO. 25938; AND,
1993. We denied this motion in this manner: THE NOVEMBER 9, 1992 SUPREME
COURT DECISION IN G.R. NO.
It bears stressing that the relief granted in this Courts 107243. RESPONDENT RTCS
decision of September 1, 1993 is precisely that set out MINISTERIAL AND MANDATORY DUTY IS
in the final and executory decision of the Court of TO ISSUE THE WRIT OF EXECUTION TO
Appeals in CA-G.R. SP No. 25938, dated December 13, IMPLEMENT THE DECRETAL PORTION OF
1991, which was affirmed in toto by this Court and SAID SUPREME COURT DECISION.
which became unalterable upon becoming final and II
executory.
RESPONDENT RTC IS WITHOUT
Private respondents thereupon filed before the trial JURISDICTION TO HEAR PRIVATE
court an Omnibus Motion seeking among others the RESPONDENTS OMNIBUS MOTION. THE
deferment of the proceedings until private respondents CLAIMS SET FORTH IN SAID MOTION: (1)
[were] heard on their claim for warehousemans WERE ALREADY REJECTED BY THE
lien. On the other hand, on August 22, 1994, the SUPREME COURT IN ITS MARCH 9, 1994
Philippine National Bank filed a Motion for the RESOLUTION DENYING PRIVATE
Issuance of a Writ of Execution and an Opposition to RESPONDENTS MOTION FOR
the Omnibus Motion filed by private respondents. CLARIFICATION OF DECISION IN G.R. NO.
107243; AND (2) ARE BARRED FOREVER
The trial court granted private respondents Omnibus BY PRIVATE RESPONDENTS FAILURE TO
Motion on December 20, 1994 and set reception of INTERPOSE THEM IN THEIR ANSWER,
evidence on their claim for warehousemans lien. The AND FAILURE TO APPEAL FROM THE
resolution of the PNBs Motion for Execution was JUNE 18, 1992 DECISION IN CIVIL CASE
ordered deferred until the determination of private NO. 90-52023.
respondents claim. III

On February 21, 1995, private respondents claim for RESPONDENT RTCS ONLY JURISDICTION
lien was heard and evidence was received in support IS TO ISSUE THE WRIT TO EXECUTE THE
thereof. The trial court thereafter gave both parties five SUPREME COURT DECISION. THUS, PNB IS
(5) days to file respective memoranda. ENTITLED TO: (1) A WRIT
OF CERTIORARI TO ANNUL THE RTC
On February 28, 1995, the Philippine National Bank RESOLUTION DATED DECEMBER 20, 1994
filed a Manifestation with Urgent Motion to Nullify AND THE ORDER DATED FEBRUARY 7,
Court Proceedings. In adjudication thereof, the trial 1995 AND ALL PROCEEDINGS TAKEN BY
court issued the following order on March 1, 1995: THE RTC THEREAFTER; (2) A WRIT OF
PROHIBITION TO PREVENT RESPONDENT
WHEREFORE, this court hereby finds that there exists RTC FROM FURTHER PROCEEDING WITH
in favor of the defendants a valid warehousemans lien CIVIL CASE NO. 90-53023 AND
under Section 27 of Republic Act 2137 and accordingly, COMMITTING OTHER ACTS VIOLATIVE OF
execution of the judgment is hereby ordered stayed THE SUPREME COURT DECISION IN G.R.
and/or precluded until the full amount of defendants NO. 107243; AND (3) A WRIT
lien on the sugar stocks covered by the five (5) OF MANDAMUS TO COMPEL RESPONDENT
quedans subject of this action shall have been satisfied RTC TO ISSUE THE WRIT TO EXECUTE
conformably with the provisions of Section 31 of THE SUPREME COURT JUDGMENT IN
Republic Act 2137.[5] FAVOR OF PNB.
In our decision of 18 April 1996 in G.R. No.
Unsatisfied with the trial courts order of 1 March 119231, we held against herein petitioner as to these
1995, herein petitioner filed with us G.R. No. 119231, issues and concluded:
contending:
I In view of the foregoing, the rule may be simplified
thus: While the PNB is entitled to the stocks of sugar as
the endorsee of the quedans, delivery to it shall be (a) The lien claimed by Noahs Ark in the
effected only upon payment of the storage fees. unbelievable amount
of P734,341,595.06 is illusory;
Imperative is the right of the warehouseman to and
demand payment of his lien at this juncture, because,
in accordance with Section 29 of the Warehouse (b) There is no legal basis for execution
Receipts Law, the warehouseman loses his lien upon of defendants lien as
goods by surrendering possession thereof. In other warehouseman unless and until
words, the lien may be lost where the warehouseman PNB compels the delivery of the
surrenders the possession of the goods without sugar stocks.
requiring payment of his lien, because a
warehousemans lien is possessory in nature. 3.26 In their Reply to Opposition dated 18 January
1997, private respondents pointed out that a lien
We, therefore, uphold and sustain the validity of the existed in their favor, as held by the Supreme Court. In
assailed orders of public respondent, dated December its Rejoinder dated 7 February 1997, PNB countered
20, 1994 and March 1, 1995. private respondents argument, pointing out that the
dispositive portion of the court a quos Order dated 1
In fine, we fail to see any taint of abuse of discretion on March 1995 failed to state the amount for which
the part of the public respondent in issuing the execution may be granted and, thus, the same could not
questioned orders which recognized the legitimate be the subject of execution; and (b) private
right of Noahs Ark, after being declared as respondents should instead file a separate action to
warehouseman, to recover storage fees before it would prove the amount of its claim as warehouseman.
release to the PNB sugar stocks covered by the five (5)
Warehouse Receipts. Our resolution, dated March 9, 3.27 The court a quo, this time presided by herein
1994, did not preclude private respondents unqualified public respondent, Hon. Marcelino L. Sayo Jr., granted
right to establish its claim to recover storage fees private respondents Motion for Execution. In its
which is recognized under Republic Act No. questioned Order dated 15 April 1997 (Annex A), the
2137. Neither did the Court of Appeals decision, dated court a quo ruled in this wise:
December 13, 1991, restrict such right.
Accordingly, the computation of accrued storage fees
Our Resolutions reference to the decision by the Court and preservation charges presented in evidence by the
of Appeals, dated December 13, 1991, in CA-G.R. SP No. defendants, in the amount of P734,341,595.06 as of
25938, was intended to guide the parties in the January 31, 1995 for the 86,356.41 50 kg. bags of sugar,
subsequent disposition of the case to its final end. We being in order and with sufficient basis, the same
certainly did not foreclose private respondents should be granted. This Court consequently rejects
inherent right as warehouseman to collect storage fees PNBs claim of no sugar no lien, since it is undisputed
and preservation expenses as stipulated on the face of that the amount of the accrued storage fees is
each of the Warehouse Receipts and as provided for in substantially in excess of the alternative award of P39.1
the Warehouse Receipts Law (R.A. 2137).[6] Million in favor of PNB, including legal interest
and P150,000.00 in attorneys fees, which PNB is
Petitioners motion to reconsider the decision in however entitled to be credited x x x.
G.R. No. 119231 was denied.
xxxxxxxxx
After the decision in G.R. No. 119231 became final
and executory, various incidents took place before the
WHEREFORE, premises considered and finding merit
trial court in Civil Case No. 90-53023. The petition in
in the defendants motion for execution of their claim
this case summarizes these as follows:
for lien as warehouseman, the same is hereby
GRANTED. Accordingly, let a writ of execution issue for
3.24 Pursuant to the abovementioned Supreme Court
the amount of P662,548,611.50, in accordance with the
Decision, private respondents filed a Motion for
above disposition.
Execution of Defendants Lien as Warehouseman dated
27 November 1996. A photocopy of said Motion for
SO ORDERED. (Emphasis supplied.)
Execution is attached hereto as Annex I.
3.28 On 23 April 1997, PNB was immediately served
3.25 PNB opposed said Motion on the following
with a Writ of Execution for the amount
grounds:
of P662,548,611.50 in spite of the fact that it had not
yet been served with the Order of the court a quo dated contain a specific determination and/or
15 April 1997. PNB thus filed an Urgent Motion dated computation of warehousemans lien,
23 April 1997 seeking the deferment of the thus requiring first and foremost a fair
enforcement of the Writ of Execution. A photocopy of hearing of PNBs evidence, to include the
the Writ of Execution is attached hereto as Annex J. true and standard industry rates on
sugar storage fees, which if computed at
3.29 Nevertheless, the Sheriff levied on execution such standard rate of thirty centavos per
several properties of PNB. Firstly, a Notice of Levy kilogram per month, shall result in the
dated 24 April 1997 on a parcel of land with an area of sum of about Three Hundred Thousand
Ninety-Nine Thousand Nine Hundred Ninety-Nine Pesos only.
(99,999) square meters, covered by Transfer
Certificate of Title No. 23205 in the name of PNB, was 3.31 In its Motion for Reconsideration, petitioner
served upon the Register of Deeds of Pasay prayed for the following reliefs:
City. Secondly, a Notice of Garnishment dated 23 April
1997 on fund deposits of PNB was served upon the 1. PNB be allowed in the meantime to exercise its basic
Bangko Sentral ng Pilipinas. Photocopies of the Notice right to present evidence in order to prove the above
of Levy and the Notice of Garnishment are attached allegations especially the true and reasonable storage
hereto as Annexes K and L, respectively. fees which may be deducted from PNBs judgment
award of P39.1 Million, which storage fees if computed
3.30 On 28 April 1997, petitioner filed a Motion for correctly in accordance with standard sugar industry
Reconsideration with Urgent Prayer for Quashal of rates, would amount to only P300 Thousand Pesos,
Writ of Execution dated 15 April 1997. Petitioners without however waiving or abandoning its (PNBs)
Motion was based on the following grounds: legal positions/contentions herein abovementioned.

(1) Noahs Ark is not entitled to a 2. The Order dated April 15, 1997 granting the Motion
warehousemans lien in the humongous for Execution by defendant Noahs Ark be set aside.
amount of P734,341,595.06 because the
same has been waived for not having 3. The execution proceedings already commenced by
been raised earlier as either said sheriffs be nullified at whatever stage of
counterclaim or defense against PNB; accomplishment.

(2) Assuming said lien has not been waived, A photocopy of petitioners Motion for Reconsideration
the same, not being registered, is already with Urgent Prayer for Quashal of Writ of Execution is
barred by prescription and/or laches; attached hereto and made integral part hereof as
Annex M.
(3) Assuming further that said lien has not
been waived nor barred, still there was 3.32 Private respondents filed an Opposition with
no complaint ever filed in court to Motion for Partial Reconsideration dated 8 May
effectively commence this entirely new 1997. Still discontented with the excessive and
cause of action; staggering amount awarded to them by the court a quo,
private respondents Motion for Partial Reconsideration
(4) There is no evidence on record which sought additional and continuing storage fees over and
would support and sustain the claim above what the court a quo had already unjustly
of P734,341,595.06 which is excessive, awarded. A photocopy of private respondents
oppressive and unconscionable; Opposition with Motion for Partial Reconsideration
dated 8 May 1997 is attached hereto as Annex N.
(5) Said claim if executed would constitute
unjust enrichment to the serious 3.32.1 Private respondents prayed for the further
prejudice of PNB and indirectly the amount of P227,375,472.00 in storage fees from 1
Philippine Government, who innocently February 1995 until 15 April 1997, the date of the
acquired the sugar quedans through questioned Order granting their Motion for Execution.
assignment of credit;
3.32.2 In the same manner, private respondents prayed
(6) In all respects, the decisions of both the for a continuing amount of P345,424.00 as daily
Supreme Court and of the former storage fees after 15 April 1997 until the total amount
Presiding Judge of the trial court do not of the storage fees is satisfied.
3.33 On 19 May 1997, PNB filed its Reply with 3.35 On 14 July 1997, respondent Judge issued the
Opposition (To Defendants Opposition with Partial second Order (Annex B), the questioned part of the
Motion for Reconsideration), containing therein the dispositive portion of which states:
following motions: (i) Supplemental Motion for
Reconsideration; (ii) Motion to Strike out the WHEREFORE, premises considered, the plaintiff
Testimony of Noahs Arks Accountant Last February 21, Philippine National Banks subject Motion for
1995; and (iii) Motion for the Issuance of a Writ of Reconsideration With Urgent Prayer for Quashal of
Execution in favor of PNB.In support of its pleading, Writ of Execution dated April 28, 1997 and undated
petitioner raised the following: Urgent Motion to Lift Garnishment of PNB Funds With
Bangko Sentral ng Pilipinas filed on May 6, 1997,
(1) Private respondents failed to pay the together with all its related Motions are all DENIED
appropriate docket fees either for its with finality for lack of merit.
principal claim or for its additional
claim, as said claims for warehousemans xxxxxxxxx
lien were not at all mentioned in their
answer to petitioners Complaint; The Order of this Court dated April 15, 1997, the final
Writ of Execution likewise dated April 15, 1997 and the
(2) The amount awarded by the court a corresponding Garnishment all stand firm.
quo was grossly and manifestly
unreasonable, excessive, and oppressive; SO ORDERED.[7]

(3) It is the dispositive portion of the decision Aggrieved thereby, petitioners filed this petition,
which shall be controlling in any alleging as grounds therefor, the following:
execution proceeding. If no specific
award is stated in the dispositive A. THE COURT A QUO ACTED WITHOUT OR
portion, a writ of execution supplying an IN EXCESS OF ITS JURISDICTION OR WITH
amount not included in the dispositive GRAVE ABUSE OF DISCRETION WHEN IT
portion of the decision being executed is ISSUED A WRIT OF EXECUTION IN FAVOR OF
null and void; DEFENDANTS FOR THE AMOUNT
OF P734,341,595.06.
(4) Private respondents failed to prove the
existence of the sugar stocks in Noahs 4.1 The court a quo had no authority to issue a writ
Arks warehouses. Thus, private of execution in favor of private respondents as
respondents claims are mere paper liens there was no final and executory judgment ripe for
which cannot be the subject of execution.
execution;
4.2 Public respondent judge patently exceeded the
(5) The attendant circumstances, particularly scope of his authority in making a determination of
Judge Ses Order of 1 March 1995 the amount of storage fees due private respondents
onwards, were tainted with fraud and in a mere interlocutory order resolving private
absence of due process, as PNB was not respondents Motion for Execution.
given a fair opportunity to present its
evidence on the matter of the 4.3 The manner in which the court a quo awarded
warehousemans lien. Thus, all orders storage fees in favor of private respondents and
prescinding thereform, including the ordered the execution of said award was arbitrary
questioned Order dated 15 April 1997, and capricious, depriving petitioner of its inherent
must perforce be set aside and the substantive and procedural rights.
execution proceedings against PNB be
permanently stayed. B. EVEN ASSUMING ARGUENDO THAT THE
COURT A QUO HAD AUTHORITY TO GRANT
3.34 On 6 May 1997, petitioner also filed an Urgent PRIVATE RESPONDENTS MOTION FOR
Motion to Lift Garnishment of PNB Funds with Bangko EXECUTION, THE COURT A QUO ACTED
Sentral ng Pilipinas. WITH GRAVE ABUSE OF DISCRETION IN
AWARDING THE HIGHLY UNREASONABLE,
UNCONSCIONABLE, AND EXCESSIVE
AMOUNT OF P734,341,595.06 IN FAVOR OF 4.11 Public respondent judge failed to consider
PRIVATE RESPONDENTS. PNBs arguments in support of its Urgent Motion to
Lift Garnishment.[8]
4.4 There is no basis for the court a quos award
of P734,341,595.06 representing private In arguing its cause, petitioner explained that this
respondents alleged warehousemans lien. Courts decision in G.R. No. 119231 merely affirmed the
trial courts resolutions of 20 December 1994 and 1
4.5 PNB has sufficient evidence to show that the March 1995. The earlier resolution set private
astronomical amount claimed by private respondents reception of evidence for hearing to prove
respondents is very much in excess of the industry their warehousemans lien and, pending determination
rate for storage fees and preservation expenses. thereof, deferred petitioners motion for execution of
the summary judgment rendered in petitioners favor in
C. PUBLIC RESPONDENT JUDGES GRAVE G.R. No. 107243. The subsequent resolution recognized
ABUSE OF DISCRETION BECOMES MORE the existence of a valid warehousemans lien without,
PATENT AFTER A CLOSE PERUSAL OF THE however, specifying the amount, and required its full
QUESTIONED ORDER DATED 14 JULY 1997. satisfaction by petitioner prior to the execution of the
judgment in G.R. No. 107243.
4.6 The court a quo resolved a significant and Under said circumstances, petitioner reiterated
consequential matter entirely relying on documents that neither this Courts decision nor the trial courts
submitted by private respondents totally resolutions specified any amount for the
disregarding clearly contrary evidence submitted warehousemans lien, either in the bodies or dispositive
by PNB. portions thereof. Petitioner therefore questioned the
propriety of the computation of the warehousemans
4.7 The court a quo misquoted and misinterpreted lien in the assailed order of 15 April 1997.
the Supreme Court Decision dated 18 April 1997.
Petitioner further characterized as highly irregular
D. THE COURT A QUO ACTED WITH GRAVE the trial courts final determination of such lien in a
ABUSE OF DISCRETION IN NOT HOLDING mere interlocutory order without explanation, as such
THAT PRIVATE RESPONDENTS HAVE LONG should or could have been done only by way of a
WAIVED THEIR RIGHT TO CLAIM ANY judgment on the merits. Petitioner likewise reasoned
WAREHOUSEMANS LIEN. that a writ of execution was proper only to implement
a final and executory decision, which was not present
4.8 Private respondents raised the matter of their in the instant case. Petitioner then cited the cases of
entitlement to a warehousemans lien for storage Edward v. Arce, where we ruled that the only portion of
fees and preservation expenses for the first time the decision which could be the subject of execution
only during the execution proceedings of the was that decreed in the dispositive part, [9] and Ex-
Decision in favor of PNB. Bataan Veterans Security Agency, Inc. v. National Labor
Relations Commission,[10] where we held that a writ of
execution should conform to the dispositive portion to
4.9 Private respondents claim for warehousemans
be executed, otherwise, execution becomes void if in
lien is in the nature of a compulsory counterclaim
excess of and beyond the original judgment.
which should have been included in private
respondents answer to the Complaint.Private Petitioner likewise emphasized that the hearing of
respondents failed to include said claim in their 21 February 1995 was marred by procedural
answer either as a counterclaim or as an infirmities, narrating that the trial court proceeded
alternative defense to PNBs Complaint. with the hearing notwithstanding the urgent motion
for postponement of petitioners counsel of record, who
4.10 Private respondents claim is likewise lost by attended a previously scheduled hearing in Pampanga.
virtue of a specific provision of the Warehouse However, petitioners lawyer-representative was sent to
Receipts Law and barred by prescription and confirm the allegations in said motion. To petitioners
laches. dismay, instead of granting a postponement, the trial
court allowed the continuance of the hearing on the
E. PUBLIC RESPONDENT JUDGE ACTED WITH basis that there was nothing sensitive about [the
GRAVE ABUSE OF DISCRETION IN REFUSING presentation of private respondents evidence].[11] At
TO LIFT THE ORDER OF GARNISHMENT OF the same hearing, the trial court admitted all the
THE FUNDS OF PNB WITH THE BANGKO documentary evidence offered by private respondents
SENTRAL NG PILIPINAS. and ordered the filing of the parties respective
memoranda. Hence, petitioner was virtually deprived two, petitioner urged, the latter should have been
of its right to cross-examine the witness, comment on accorded greater evidentiary weight.
or object to the offer of evidence and present
Petitioner then argued that the trial courts second
countervailing evidence. In fact, to date, petitioners
assailed order of 14 July 1997 misinterpreted our
urgent motion to nullify the court proceedings remains
decision in G.R. No. 119231 by ruling that the Refining
unresolved.
Contract under which the subject sugar stock was
To stress its point, petitioner underscores the produced bound the parties. According to petitioner,
conflicting views of Judge Benito C. Se, Jr., who heard the Refining Contract never existed, it having been
and tried almost the entire proceedings, and his denied by Rosa Ng Sy; thus, the trial court could not
successor, Judge Marcelino L. Sayo, Jr., who issued the have properly based its computation of the
assailed orders. In the resolution [12] of 1 March 1995, warehousemans lien on the Refining Contract.
Judge Se found private respondents claim for Petitioner maintained that a separate trial was
warehouse lien in the amount of P734,341,595.06 necessary to settle the issue of the warehousemans
unacceptable, thus: lien due Noahs Ark, if at all proper.
Petitioner further asserted that Noahs Ark could
In connection with [private respondents] claim for
no longer recover its lien, having raised the issue for
payment of warehousing fees and expenses, this Court
the first time only during the execution proceedings of
cannot accept [private respondents] pretense that they
this Courts decision in G.R. No. 107243. As said claim
are entitled to storage fees and preservation expenses
was a separate cause of action which should have been
in the amount of P734,341,595.06 as shown in their
raised in private respondents answer with
Exhibits 1 to 11. There would, however, appear to be
counterclaim to petitioners complaint, private
legal basis for their claim for fees and expenses
respondents failure to raise said claim should have
covered during the period from the time of the
been deemed a waiver thereof.
issuance of the five (5) quedans until demand for their
delivery was made by [petitioner] prior to the Petitioner likewise insisted that under Section
institution of the present action. [Petitioner] should 29[19] of the Warehouse Receipts Law, private
not be made to shoulder the warehousing fees and respondents were barred from claiming the
expenses after the demand was made. xxx[13] warehousemans lien due to their refusal to deliver the
goods upon petitioners demand. Petitioner further
Since it was deprived of a fair opportunity to raised that private respondents failed to timely assert
present its evidence on the warehousemans lien due their claim within the five-year prescriptive period,
Noahs Ark, petitioner submitted the following citing Article 1149[20] of the New Civil Code.
documents: (1) an affidavit of petitioners credit
Finally, petitioner questioned the trial courts
investigator[14] and his report[15] indicating that Noahs
refusal to lift the garnishment order considering that
Ark only had 1,490 50kg. bags, and not 86,356.41 50kg.
the levy on its real property, with an estimated market
bags, of sugar in its warehouse; (2) Noahs Arks
value of P6,000,000,000, was sufficient to satisfy the
reports[16] for 1990-94 showing that it did not have
judgment award; and contended that the garnishment
sufficient sugar stock to cover the quantity specified in
was contrary to Section 103[21] of the Bangko Sentral ng
the subject quedans; (3) Circular Letter No. 18 (s.
Pilipinas Law (Republic Act No. 7653).
1987-88)[17] of the Sugar Regulatory Administration
requiring sugar mill companies to submit reports at On 8 August 1997, we required respondents to
weeks end to prevent the issuance of warehouse comment on the petition and issued a temporary
receipts not covered by actual inventory; and (4) an restraining order enjoining the trial court from
affidavit of petitioners assistant vice implementing its orders of 15 April and 14 July 1997.
president alleging that Noahs Arks daily storage fee
[18]

of P4/bag exceeded the prevailing industry rate. In their comment, private respondents first sought
the lifting of the temporary restraining order, claiming
Petitioner, moreover, laid stress on the fact that in that petitioner could no longer seek a stay of the
the questioned order of 14 July 1997, the trial court execution of this Courts decision in G.R. No. 119231
relied solely on the Annual Synopsis of Production & which had become final and executory; and the
Performance Date/Annual Compendium of petition raised factual issues which had long been
Performance by Philippine Sugar Refineries from 1989 resolved in the decision in G.R. No. 119231, thereby
to 1994, in disregard of Noahs Arks certified reports rendering the instant petition moot and
that it did not have sufficient sugar stock to cover the academic. They underscored that CA-G.R. No. SP No.
quantity specified in the subject quedans. Between the 25938, G.R. No. 107243 and G.R. No. 119231 all
sustained their claim for a warehousemans lien, while
the storage fees stipulated in the Refining Contract had assailed order of 15 April 1997, thus further
the approval of the Sugar Regulatory precluding any claim of denial of due process.
Authority. Likewise, under the Warehouse Receipts
Private respondents next pointed to the fact that
Law, full payment of their lien was a pre-requisite to
they consistently claimed that they had not been paid
their obligation to release and deliver the sugar stock
for storing the sugar stock, which prompted them to
to petitioner.
file criminal charges of estafa and violation of Batas
Anent the trial courts jurisdiction to determine the Pambansa (BP) Blg. 22 against Rosa Ng Sy and Teresita
warehousemans lien, private respondents maintained Ng. In fact, Sy was eventually convicted of two counts
that such had already been established. Accordingly, of violation of BP Blg. 22. Private respondents,
the resolution of 1 March 1995 declared that they were moreover, incurred, and continue to incur, expenses for
entitled to a warehousemans lien, for which reason, the the storage and preservation of the sugar stock; and
execution of the judgment in favor of petitioner was denied having waived their warehousemans lien, an
stayed until the latters full payment of the lien. This issue already raised and rejected by this Court in G.R.
resolution was then affirmed by this Court in our No. 119231.
decision in G.R. No. 119231. Even assuming the trial
Private respondents further claimed that the
court erred, the error could only have been in the
garnishment order was proper, only that it was
wisdom of its findings and not of jurisdiction, in which
rendered ineffective. In a letter[24] received by the
case, the proper remedy of petitioner should have been
sheriff from the Bangko Sentral ng Pilipinas, it was
an appeal and certiorari did not lie.
stated that the garnishment could not be enforced
Private respondents also raised the issue of res since petitioners deposits with the Bangko Sentral ng
judicata as a bar to the instant petition, i.e., the March Pilipinas consisted solely of legal reserves which were
resolution was already final and unappealable, having exempt from garnishment. Petitioner therefore
been resolved in G.R. No. 119231, and the orders suffered no damage from said garnishment. Private
assailed here were issued merely to implement said respondents likewise deemed immaterial petitioners
resolution. argument that the writ of execution issued against its
real property in Pasay City was sufficient, considering
Private respondents then debunked the claim that
its prevailing market value of P6,000,000,000 was in
petitioner was denied due process. In that February
excess of the warehousemans lien; and invoked Rule 39
hearing, petitioner was represented by counsel who
of the 1997 Rules of Civil Procedure, which provided
failed to object to the presentation and offer of their
that the sheriff must levy on all the property of the
evidence consisting of the five quedans, Refining
judgment debtor, excluding those exempt from
Contracts with petitioner and other quedan holders,
execution, in the execution of a money judgment.
and the computation resulting in the amount
of P734,341,595.06, among other documents. Private Finally, private respondents accused petitioner of
respondents even attached a copy of the transcript of coming to court with unclean hands, specifically citing
stenographic notes[22] to their comment. In refuting its misrepresentation that the award of the
petitioners argument that no writ of execution could warehousemans lien would result in the collapse of its
issue in absence of a specific amount in the dispositive business. This claim, private respondents asserted, was
portion of this Courts decision in G.R. No. 119231, contradicted by petitioners 1996 Audited Financial
private respondents argued that any ambiguity in the Statement indicating that petitioners assets amounted
decision could be resolved by referring to the entire to billions of pesos, and its 1996 Annual Report to its
record of the case,[23] even after the decision had stockholders where petitioner declared that the
become final. pending legal actions arising from their normal course
of business will not materially affect the Groups
Private respondents next alleged that the award
financial position.[25]
of P734,341,595.06 to satisfy their warehousemans
lien was in accordance with the stipulations provided In reply, petitioner advocated that resort to the
in the quedans and the corresponding Refining remedy of certiorari was proper since the assailed
Contracts, and that the validity of said documents had orders were interlocutory, and not a final judgment or
been recognized by this Court in our decision in G.R. decision. Further, that it was virtually deprived of its
No. 119231. Private respondents then questioned constitutional right to due process was a valid issue to
petitioners failure to oppose or rebut the evidence they raise in the instant petition; and not even the doctrine
presented and bewailed its belated attempts to present of res judicata could bar this petition as the element of
contrary evidence through its pleadings. Nonetheless, a final and executory judgment was lacking. Petitioner
said evidence was even considered by the trial court likewise disputed the claim that the resolution of 1
when petitioner sought a reconsideration of the first March 1995 was final and executory, otherwise private
respondents would not have filed an opposition and until the full amount of Noahs Arks lien is satisfied
motion for partial reconsideration[26] two years conformably with Section 31 of R.A. No. 2137?
later. Petitioner also contended that the issues raised in
this petition were not resolved in G.R. No. 119231, as (3) Is [petitioner] liable for storage fees (a) from the
what was resolved there was private respondents mere issuance of the quedans in 1989 to Rosa Sy, St. Therese
entitlement to a warehousemans lien, without Merchandising and RNS Merchandising, up to their
specifying a corresponding amount. In the instant assignment by endorsees Ramos and Zoleta to
petition, the issues pertained to the amount and [petitioner] for their loan; or (b) after [petitioner] has
enforceability of said lien based on the arbitrary filed an action for specific performance and damages
manner the amount was determined by the trial court. (Civil Case No. 90-53023) against Noahs Ark for the
latters failure to comply with [petitioners] demand for
Petitioner further argued that the refining
the delivery of the sugar?
contracts private respondents invoked could not bind
the former since it was not a party thereto. In fact, said
contracts were not even attached to the quedans when (4) Did respondent Judge commit grave abuse of
negotiated; and that their validity was repudiated by a discretion as charged?[28]
supposed party thereto, Rosa Ng Sy, who claimed that
the contract was simulated, thus void pursuant to In our resolution of 24 November 1997, we
Article 1345 of the New Civil Code. Should the refining summarized the positions of the parties on these
contracts in turn be declared void, petitioner issues, thus:
advocated that any determination by the court of the
existence and amount of the warehousemans lien due Expectedly, counsel for petitioner submitted
should be arrived at using the test of reasonableness. that certiorari under Rule 65 of the Rules of Court is
Petitioner likewise noted that the other refining the proper remedy and not an ordinary appeal,
contracts[27] presented by private respondents to show contending, among others, that the order of execution
similar storage fees were executed between the years was not final. On the other hand, counsel for
1996 and 1997, several years after 1989. Thus, respondents maintained that petitioner PNB
petitioner concluded, private respondents could not disregarded the hierarchy of courts as it bypassed the
claim that the more recent and increased rates where Court of Appeals when it filed the instant petition
those which prevailed in 1989. before this Court.

Finally, petitioner asserted that in the event that On the second issue, counsel for petitioner submitted
this Court should uphold the trial courts determination that the trial court had no authority to issue the writ of
of the amount of the warehousemans lien, petitioner execution or if it had, it denied PNB due process when
should be allowed to exercise its option as a judgment it held PNB liable for the astronomical amount
obligor to specify which of its properties may be levied of P734,341,595.06 as warehousemans lien or storage
upon, citing Section 9(b), Rule 39 of the 1997 Rules of fees. Counsel for respondent, on the other hand,
Civil Procedure. Petitioner claimed to have been contended that the trial courts authority to issue the
deprived of this option when the trial court issued the questioned writ of execution is derived from the
garnishment and levy orders. decision in G.R. No. 119231 which decision allegedly
The petition was set for oral argument on 24 provided for ample or sufficient parameters for the
November 1997 where the parties addressed the computation of the storage fees.
following issues we formulated for them to discuss:
On the third issue, counsel for petitioner while
(1) Is this special civil action the appropriate remedy? presupposing that PNB may be held to answer for
storage fees, contended that the same should start
(2) Has the trial court the authority to issue a writ of from the time the endorsees of the sugar quedans
execution on Noahs Arks claims for storage fees defaulted in their payments, i.e., 1990 because before
considering that this Court in G.R. No. 119231 merely that, respondent Noahs Arks claim was that it was the
sustained the trial courts order of 20 December 1994 owner of the sugar covered by the quedans. On the
granting the Noahs Ark Omnibus Motion and setting other hand, respondents counsel pointed out that PNBs
the reception of evidence on its claims for storage fees, liability should start from the issuance of the quedans
and of 1 March 1995 finding that there existed in favor in 1989.
of Noahs Ark a warehousemans lien under Section 27
of R.A. No. 2137 and directing that the execution of the The arguments on the fourth issue, hinge on the parties
judgment in favor of PNB be stayed and/or precluded arguments for or against the first three issues. Counsel
for petitioner stressed that the trial court indeed
committed a grave abuse of discretion, while claims were not unfounded, thus the propriety of this
respondents counsel insisted that no grave abuse of special civil action is beyond question.
discretion was committed by the trial court. [29]
This Court has original jurisdiction, concurrent
with that of Regional Trial Courts and the Court of
Private respondents likewise admitted that during
Appeals, over petitions for certiorari,
the pendency of the case, they failed to avail of their
prohibition, mandamus, quo warranto and habeas
options as a warehouseman. Concretely, they could
corpus,[33] and we entertain direct resort to us in cases
have enforced their lien through the foreclosure of the
where special and important reasons or exceptional
goods or the filing of an ordinary civil action. Instead,
and compelling circumstances justify the same.
they sought to execute this Courts judgment in G.R. No. [34]
These reasons and circumstances are present here.
119231. They eventually agreed that petitioners
liability for the warehousemans lien should be B. Under the Special Circumstances in This
reckoned from the time it stepped into the shoes of the Case, Private Respondents May Enforce
original depositors.[30] Their Warehousemans Lien in Civil Case No.
90-53023.
In our resolution of 24 November 1997, we
required the parties to simultaneously submit their The remedies available to a warehouseman, such
respective memoranda within 30 days or, in the as private respondents, to enforce his warehousemans
alternative, a compromise agreement should a lien are:
settlement be achieved. Notwithstanding efforts
exerted by the parties, no mutually acceptable solution (1)To refuse to deliver the goods until his lien
was reached. is satisfied, pursuant to Section 31 of the
Warehouse Receipt Law;
In their respective memoranda, the parties
reiterated or otherwise buttressed the arguments (2) To sell the goods and apply the proceeds
raised in their previous pleadings and during the oral thereof to the value of the lien pursuant to
arguments on 24 November 1997, especially on the Sections 33 and 34 of the Warehouse
formulated issues. Receipts Law; and

The petition is meritorious. (3) By other means allowed by law to a


creditor against his debtor, for the
We shall take up the formulated issues in seriatim. collection from the depositor of all charges
and advances which the depositor
A. This Special Civil Action is an Appropriate
expressly or impliedly contracted with the
Remedy.
warehouseman to pay under Section 32 of
A careful perusal of the first assailed order shows the Warehouse Receipt Law; or such other
that the trial court not only granted the motion for remedies allowed by law for the
execution, but also appreciated the evidence in the enforcement of a lien against personal
determination of the warehousemans lien; formulated property under Section 35 of said law. The
its computation of the lien; and adopted an offsetting third remedy is sought judicially by suing
of the parties claims. Ineluctably, the order as in the for the unpaid charges.[35]
nature of a final order for it left nothing else to be
Initially, private respondents availed of the first
resolved thereafter. Hence, petitioners remedy was
remedy. However, when petitioner moved to execute
to appeal therefrom.[31] Nevertheless, petitioner was
the judgment in G.R. No. 107243 before the trial court,
not precluded from availing of the extraordinary
private respondents, in turn, moved to have the
remedy of certiorari under Rule 65 of the Rules of
warehouse charges and fees due them determined and
Court. It is well-settled that the availability of an appeal
thereafter sought to collect these from
does not foreclose recourse to the extraordinary
petitioners. While the most appropriate remedy for
remedies of certiorari or prohibition where appeal is
private respondents was an action for collection, in G.R.
not adequate, or equally beneficial, speedy and
No. 119231, we already recognized their right to have
sufficient.[32]
such charges and fees determined in Civil Case No. 90-
Petitioner assailed the challenged orders as having 53023. The import of our holding in G.R. No. 119231
been issued without or in excess of jurisdiction or with was that private respondents were likewise entitled to
grave abuse of discretion and alleged that it had no a judgment on their warehouse charges and fees, and
other plain, speedy and adequate remedy in the the eventual satisfaction thereof, thereby avoiding
ordinary course of law. As hereafter shown, these having to file another action to recover these charges
and fees, which would only have further delayed the
resolution of the respective claims of the parties, and
as a corollary thereto, the indefinite deferment of the pledge,[39] merely constituted a symbolical or
execution of the judgment in G.R. No. 107243. Thus we constructive delivery of the possession of the thing
note that petitioner, in fact, already acquiesced to the thus encumbered.[40]
scheduled dates previously set for the hearing on
The creditor, in a contract of real security, like
private respondents warehousemans charges.
pledge, cannot appropriate without foreclosure the
However, as will be shown below, it would be things given by way of pledge.[41] Any stipulation to the
premature to execute the order fixing the contrary, termed pactum commissorio, is null and void.
warehousemans charges and fees. [42]
The law requires foreclosure in order to allow a
transfer of title of the good given by way of security
C. Petitioner is Liable for Storage Fees.
from its pledgor,[43] and before any such foreclosure,
We confirmed petitioners liability for storage fees the pledgor, not the pledgee, is the owner of the
in G.R. No. 119231. However, petitioners status as to goods. In Philippine National Bank v. Atendido,[44] we
the quedans must first be clearly defined and said:
delineated to be able to determine the extent of its
liability. The delivery of the palay being merely by way of
security, it follows that by the nature of the transaction
Petitioner insisted, both in its petition and during its ownership remains with the pledgor subject only to
the oral arguments on 24 November 1997, that it was a foreclosure in case of non-fulfillment of the
mere pledgee as the quedans were used to secure two obligation. By this we mean that if the obligation is not
loans it granted.[36] In our decision in G.R. No. 107243, paid upon maturity the most that the pledgee can do is
we upheld this contention of petitioner, thus: to sell the property and apply the proceeds to the
payment of the obligation and to return the balance, if
Zoleta and Ramos then used the quedans as any, to the pledgor (Art. 1872, Old Civil Code [Art.
security for loans obtained by them from the 2112, New Civil Code]). This is the essence of this
Philippine National Bank (PNB) as security for contract, for, according to law, a pledgee cannot
loans obtained by them in the amounts of P23.5 become the owner of, nor appropriate to himself, the
million and P15.6 million, thing given in pledge (Article 1859, Old Civil Code [Art.
respectively. These quedans they indorsed to the 2088, New Civil Code]) The fact that the warehouse
bank.[37] receipt covering palay was delivered, endorsed in
blank, to the bank does not alter the situation, the
As such, Martinez v. Philippine National purpose of such endorsement being merely to transfer
Bank[38] becomes relevant: the juridical possession of the property to the pledgees
and to forestall any possible disposition thereof on the
In conclusion, we hold that where a warehouse receipt part of the pledgor. This is true notwithstanding the
or quedan is transferred or endorsed to a creditor only provisions of the Warehouse Receipt Law.
to secure the payment of a loan or debt, the transferee
or endorsee does not automatically become the owner The warehouseman, nevertheless, is entitled to
of the goods covered by the warehouse receipt or the warehousemans lien that attaches to the goods
quedan but he merely retains the right to keep and invokable against anyone who claims a right of
with the consent of the owner to sell them so as to possession thereon.
satisfy the obligation from the proceeds of the sale, this
for the simple reason that the transaction involved is The next issue to resolve is the duration of time
not a sale but only a mortgage or pledge, and that if the the right of petitioner over the goods may be held
property covered by the quedans or warehouse subject to the warehousemans lien.
receipts is lost without the fault or negligence of the Sections 8, 29 and 31 of the Warehouse Receipts
mortgagee or pledgee or the transferee or endorsee of Law now come to fore. They provide, as follows:
the warehouse receipt or quedan, then said goods are
to be regarded as lost on account of the real owner,
SECTION 8. Obligation of warehousemen to deliver. A
mortgagor or pledgor.
warehouseman, in the absence of some lawful excuse
provided by this Act, is bound to deliver the goods
The indorsement and delivery of the warehouse upon a demand made either by the holder of a receipt
receipts (quedans) by Ramos and Zoleta to petitioner for the goods or by the depositor, if such demand is
was not to convey title to or ownership of the goods accompanied with:
but to secure (by way of pledge) the loans granted to
Ramos and Zoleta by petitioner. The indorsement of
(a) An offer to satisfy warehousemans lien;
the warehouse receipts (quedans), to perfect the
(b) An offer to surrender the receipt, if (3) That the warehouseman has legally set up
negotiable, with such the title or right of third persons as lawful defense
indorsements as would be for non-delivery of the goods as follows:
necessary for the negotiation of
the receipt; and (a) Where the warehouseman has been requested, by
or on behalf of the person lawfully entitled to a right of
(c) A readiness and willingness to sign, property of or possession in the goods, not to make
when the goods are delivered, such delivery (Sec. 10, Act No. 2137), in which case, the
an acknowledgment that they warehouseman may, either as a defense to an action
have been delivered, if such brought against him for nondelivery of the goods, or as
signature is requested by the an original suit, whichever is appropriate, require all
warehouseman. known claimants to interplead (Sec. 17, Act No. 2137);

In case the warehouseman refuses or fails to deliver (b) Where the warehouseman had information that the
the goods in compliance with a demand by the holder delivery about to be made was to one not lawfully
or depositor so accompanied, the burden shall be upon entitled to the possession of the goods (Sec. 10, Act No.
the warehouseman to establish the existence of a 2137), in which case, the warehouseman shall be
lawful excuse for such refusal. excused from liability for refusing to deliver the goods,
either to the depositor or person claiming under him
SECTION 29. How the lien may be lost. A or to the adverse claimant, until the warehouseman
warehouseman loses his lien upon goods; has had a reasonable time to ascertain the validity of
the adverse claims or to bring legal proceedings to
(a) By surrendering possession thereof, or compel all claimants to interplead (Sec. 18, Act No.
2137); and
(b) By refusing to deliver the goods when a
demand is made with which he is (c) Where the goods have already been lawfully sold to
bound to comply under the provisions third persons to satisfy a warehousemans lien, or have
of this Act. been lawfully sold or disposed of because of their
perishable or hazardous nature. (Sec. 36, Act No. 2137).
SECTION 31. Warehouseman need not deliver until lien
is satisfied. A warehouseman having a lien valid against (4) That the warehouseman having a lien valid against
the person demanding the goods may refuse to deliver the person demanding the goods refuses to deliver the
the goods to him until the lien is satisfied. goods to him until the lien is satisfied. (Sec. 31, Act No.
2137)
Simply put, where a valid demand by the lawful
holder of the quedans for the delivery of the goods is (5) That the failure was not due to any fault on the part
refused by the warehouseman, despite the absence of a of the warehouseman, as by showing that, prior to
lawful excuse provided by the statute itself, the demand for delivery and refusal, the goods were stolen
warehousemans lien is thereafter concomitantly or destroyed by fire, flood, etc., without any negligence
lost. As to what the law deems a valid demand, Section on his part, unless he has contracted so as to be liable
8 enumerates what must accompany a demand; while in such case, or that the goods have been taken by the
as regards the reasons which a warehouseman may mistake of a third person without the knowledge or
invoke to legally refuse to effect delivery of the goods implied assent of the warehouseman, or some other
covered by the quedans, these are: justifiable ground for non-delivery. (67 C.J. 532)[45]

(1) That the holder of the receipt does not Regrettably, the factual settings do not sufficiently
satisfy the conditions prescribed in Section 8 of indicate whether the demand to obtain possession of
the Act. (See Sec. 8, Act No. 2137) the goods complied with Section 8 of the law. The
presumption, nevertheless, would be that the law was
(2) That the warehouseman has legal title in complied with, rather than breached, by
himself on the goods, such title or right being petitioner. Upon the other hand, it would appear that
derived directly or indirectly from a transfer made the refusal of private respondents to deliver the goods
by the depositor at the time of or subsequent to was not anchored on a valid excuse, i.e., non-
the deposit for storage, or from the satisfaction of the warehousemans lien over the goods,
warehousemans lien. (Sec. 16, Act No. 2137) but on an adverse claim of ownership. Private
respondents justified their refusal to deliver the goods,
as stated in their Answer with Counterclaim and Third- Nowhere in the transcript of stenographic notes,
Party Complaint in Civil Case No. 90-53023, by however, does it show that petitioner was afforded an
claiming that they are still the legal owners of the opportunity to comment on, much less, object to,
subject quedans and the quantity of sugar represented private respondents offer of exhibits, or even present
therein. Under the circumstances, this hardly qualified its evidence on the matter in dispute. In fact, petitioner
as a valid, legal excuse. The loss of the warehousemans immediately moved to nullify the proceedings
lien, however, does not necessarily mean the conducted during that hearing, but its motion was
extinguishment of the obligation to pay the ignored and never resolved by the trial
warehousing fees and charges which continues to be court. Moreover, it cannot be said that petitioners filing
a personal liability of the owners, i.e., the pledgors, not of subsequent pleadings, where it attached its
the pledgee, in this case. But even as to the owners- affidavits and documents to contest the
pledgors, the warehouseman fees and charges have warehousemans lien, was sufficient to fully satisfy the
ceased to accrue from the date of the rejection by requirements of due process. The subsequent
Noahs Ark to heed the lawful demand by petitioner for pleadings were filed only to show that petitioner had
the release of the goods. evidence to refute the claims of private respondents or
that the latter were not entitled thereto, but could not
The finality of our denial in G.R. No. 119231 of
have adequately substituted for a full-blown
petitioners petition to nullify the trial courts order of
opportunity to present its evidence, given the
01 March 1995 confirms the warehousemans lien;
exorbitant amounts involved. This, when coupled with
however, such lien, nevertheless, should be confined to
the fact that the motion to postpone the hearing filed
the fees and charges as of the date in March 1990 when
by petitioners counsel was not unreasonable, leads us
Noahs Ark refused to heed PNBs demand for delivery
to conclude that petitioners right to fully present its
of the sugar stocks and in no event beyond the value of
case was rendered nugatory. It is thus evident to us
the credit in favor of the pledgee (since it is basic that,
that there was undue and unwarranted haste on the
in foreclosures, the buyer does not assume the
part of respondent court to rule in favor of private
obligations of the pledgor to his other creditors even
respondents. We do not hesitate to say that any tilt of
while such buyer acquires title over the goods less any
the scales of justice, no matter how slight, evokes
existing preferred lien thereover). [46] The foreclosure of
suspicion and erodes a litigants faith and hope in
the thing pledged, it might incidentally be mentioned,
seeking recourse before courts of law.
results in the full satisfaction of the loan liabilities to
the pledgee of the pledgors.[47] Likewise do we refuse to give credence to private
respondents allegation that the parties agreed that
D. Respondent Judge Committed Grave Abuse
petitioners presentation of evidence would be
of Discretion.
submitted on the basis of affidavits, [49] without,
We hold that the trial court deprived petitioner of however, specifying any order or written agreement to
due process in rendering the challenged order of 15 that effect.
April 1996 without giving petitioner an opportunity to
It is interesting to note that among the evidence
present its evidence. During the final hearing of the
petitioner wanted to present were reports obtained
case, private respondents commenced and concluded
from Noahs Ark, disclosing that the latter failed to
their presentation of evidence as to the matter of the
maintain a sufficient inventory to satisfy the sugar
existence of and amount owing due to their
stock covered by the subject quedans. This was a
warehousemans lien. Their exhibits were duly marked
serious allegation, and on that score alone, the trial
and offered, and the trial court thereafter ruled, to wit:
court should have allowed a hearing on the matter,
especially in light of the magnitude of the claims
Court: Order. sought. If it turns out to be true that the stock of sugar
Noahs Ark had in possession was below the quantities
With the admission of Exhibits 1 to 11, inclusive of specified in the quedans, then petitioner should not be
submarkings, as part of the testimony of Benigno made to pay for storage and preservation expenses for
Bautista, the defendant [private respondents] is given non-existent goods.
five (5) days from today to file its
memorandum. Likewise, plaintiff [petitioner] is given It was likewise grave abuse of discretion on the
five (5) days, from receipt of defendants [private part of respondent court to order immediate execution
respondents] memorandum, to file its comment of the 15 April 1997 order. We ruled earlier that said
thereto. Thereafter the same shall be deemed order was in the nature of a final order fixing the
submitted for decision. amount of the warehousemans charges and fees, and
petitioners net liability, after the set-off of the money
SO ORDERED.[48] judgment in its favor in G.R. No. 107243. Section 1 of
Rule 39 of the Rules of Court explicitly provides that WAREHOUSE RECEIPTS, INCLUDING THE
execution shall issue as a matter of right, on motion, UNQUALIFIED RECOGNITION OF THE PAYMENT
upon a judgment or order that disposes of the action or OF WAREHOUSEMANS LIEN FOR STORAGE FEES
proceeding upon the expiration of the period to appeal AND PRESERVATION EXPENSES; CASE AT BAR.
therefrom if no appeal has been duly - Petitioner is in estoppel in disclaiming liability
perfected. Execution pending appeal is, however, for the payment of storage fees due the private
allowed in Section 2 thereof, but only on motion with respondents as warehouseman while claiming to
due notice to the adverse party, more importantly, only be entitled to the sugar stocks covered by the
upon good reasons shown in a special order. Here, subject Warehouse Receipts on the basis of which
there is no showing that a motion for execution it anchors its claim for payment or delivery of the
pending appeal was filed and that a special order was sugar stocks. The unconditional presentment of
issued by respondent court. Verily, the immediate the receipts by the petitioner for payment against
execution only served to further strengthen our private respondents on the strength of the
perception of undue and unwarranted haste on the provisions of the Warehouse Receipts Law (R.A.
part of respondent court in resolving the issue of the 2137) carried with it the admission of the
warehousemans lien in favor of private respondents. existence and validity of the terms, conditions and
stipulations written on the face of the Warehouse
In light of the above, we need not rule anymore on
Receipts, including the unqualified recognition of
the fourth formulated issue.
the payment of warehousemans lien for storage
WHEREFORE, the petition is GRANTED. The fees and preservation expenses. Petitioner may
challenged orders of 15 April and 14 July 1997, not now retrieve the sugar stocks without paying
including the notices of levy and garnishment, of the the lien due private respondents as
Regional Trial Court of Manila, Branch 45, in Civil Case warehouseman.
No. 90-53023 are REVERSED and SET ASIDE, and said
2. ID.; ID.; ID.; WAREHOUSEMANS LIEN;
court is DIRECTED to conduct further proceedings in
POSSESSORY IN NATURE. - While the PNB is
said case:
entitled to the stocks of sugar as the endorsee of
(1) to allow petitioner to present its evidence the quedans, delivery to it shall be effected only
on the matter of the warehousemans lien; upon payment of the storage fees. Imperative is
the right of the warehouseman to demand
(2) to compute the petitioners payment of his lien at this juncture, because, in
warehousemans lien in light of the accordance with Section 29 of the Warehouse
foregoing observations; and Receipts Law, the warehouseman loses his lien
(3) to determine whether, for the relevant upon goods by surrendering possession thereof. In
period, Noahs Ark maintained a sufficient other words, the lien may be lost where the
inventory to cover the volume of sugar warehouseman surrenders the possession of the
specified in the quedans. goods without requiring payment of his lien,
because a warehousemans lien is possessory in
Costs against private respondents. nature.
SO ORDERED. APPEARANCES OF COUNSEL
Rolan A. Nieto for petitioner.
Madella & Cruz Law Offices for private
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. respondents.
PRES. JUDGE BENITO C. SE,
JR., RTC, BR. 45, MANILA; DECISION
NOAHS ARK SUGAR REFINERY; ALBERTO T.
LOOYUKO, JIMMY T. GO and WILSON T. HERMOSISIMA, JR., J.:
GO, respondents.
The source of conflict herein is the question as to
SYLLABUS
whether the Philippine National Bank should pay
1. COMMERCIAL LAW; WAREHOUSE RECEIPTS LAW; storage fees for sugar stocks covered by five (5)
THE UNCONDITIONAL PRESENTMENT OF THE Warehouse Receipts stored in the warehouse of private
RECEIPTS FOR PAYMENT CARRIED WITH IT respondents in the face of the Court of Appeals
THE ADMISSIONS OF THE EXISTENCE AND decision (affirmed by the Supreme Court) declaring the
VALIDITY OF THE TERMS, CONDITIONS AND Philippine National Bank as the owner of the said
STIPULATIONS WRITTEN ON THE FACE OF THE sugar stocks and ordering their delivery to the said
bank. From the same facts but on a different Ramos; and Receipts Nos. 18086, 18087 and 18062
perspective, it can be said that the issue is: Can the were negotiated and endorsed to Cresencia K. Zoleta.
warehouseman enforce his warehousemans lien before Ramos and Zoleta then used the quedans as security
delivering the sugar stocks as ordered by the Court of for two loan agreements - one for P15.6 million and the
Appeals or need he file a separate action to enforce other for P23.5 million - obtained by them from the
payment of storage fees? Philippine National Bank. The aforementioned
quedans were endorsed by them to the Philippine
The herein petition seeks to annul: (1) the
National Bank.
Resolution of respondent Judge Benito C. Se, Jr. of the
Regional Trial Court of Manila, Branch 45, dated Luis T. Ramos and Cresencia K. Zoleta failed to pay
December 20, 1994, in Civil Case No. 90-53023, their loans upon maturity on January 9, 1990.
authorizing reception of evidence to establish the claim Consequently, on March 16, 1990, the Philippine
of respondents Noahs Ark Sugar Refinery, et al., for National Bank wrote to Noahs Ark Sugar Refinery
storage fees and preservation expenses over sugar demanding delivery of the sugar stocks covered by the
stocks covered by five (5) Warehouse Receipts which is quedans endorsed to it by Zoleta and Ramos. Noahs
in the nature of a warehousemans lien; and (2) the Ark Sugar Refinery refused to comply with the demand
Resolution of the said respondent Judge, dated March alleging ownership thereof, for which reason the
1, 1995, declaring the validity of private respondents Philippine National Bank filed with the Regional Trial
warehousemans lien under Section 27 of Republic Act Court of Manila a verified complaint for Specific
No 2137 and ordering that execution of the Court of Performance with Damages and Application for Writ of
Appeals decision, dated December 13, 1991, be in Attachment against Noahs Ark Sugar Refinery, Alberto
effect held in abeyance until the full amount of the T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three
warehousemans lien on the sugar stocks covered by being identified as the sole proprietor, managing
five (5) quedans subject of the action shall have been partner, and Executive Vice President of Noahs Ark,
satisfied conformably with the provisions of Section 31 respectively.
of Republic Act 2137.
Respondent Judge Benito C. Se, Jr., in whose sala
Also prayed for by the petition is a Writ of the case was raffled, denied the Application for
Prohibition to require respondent RTC Judge to desist Preliminary Attachment. Reconsideration therefor was
from further proceeding with Civil Case No. 90-53023, likewise denied.
except order the execution of the Supreme Court
Noahs Ark and its co-defendants filed an Answer
judgment; and a Writ of Mandamus to compel
with Counterclaim and Third-Party Complaint in which
respondent RTC Judge to issue a Writ of Execution in
they claimed that they are the owners of the subject
accordance with the said executory Supreme Court
quedans and the sugar represented therein, averring as
decision.
they did that:

9.*** In an agreement dated April 1, 1989, defendants


THE FACTS agreed to sell to Rosa Ng Sy of RNS Merchandising and
Teresita Ng of St. Therese Merchandising the total
In accordance with Act No. 2137, the Warehouse volume of sugar indicated in the quedans stored at
Receipts Law, Noahs Ark Sugar Refinery issued on Noahs Ark Sugar Refinery for a total consideration of
several dates, the following Warehouse Receipts P63,000,000.00,
(Quedans): (a) March 1, 1989, Receipt No. 18062,
covering sugar deposited by Rosa Sy; (b) March 7, *** The corresponding payments in the form of checks
1989, Receipt No. 18080, covering sugar deposited by issued by the vendees in favor of defendants were
RNS Merchandising (Rosa Ng Sy); (c) March 21, 1989, subsequently dishonored by the drawee banks by
Receipt No. 18081, covering sugar deposited by St. reason of payment stopped and drawn against
Therese Merchandising; (d)March 31, 1989, Receipt insufficient funds,
No. 18086, covering sugar deposited by St. Therese
Merchandising; and (e) April 1, 1989, Receipt No. *** Upon proper notification to said vendees and
18087, covering sugar deposited by RNS plaintiff in due course, defendants refused to deliver to
Merchandising. The receipts are substantially in the vendees therein the quantity of sugar covered by the
form, and contains the terms, prescribed for negotiable subject quedans.
warehouse receipts by Section 2 of the law.
10. *** Considering that the vendees and first
Subsequently, Warehouse Receipts Nos. 18080
endorsers of subject quedans did not acquire
and 18081 were negotiated and endorsed to Luis T.
ownership thereof, the subsequent endorsers and Mercado, et al. vs. Court of Appeals, 162 SCRA 75). The
plaintiff itself did not acquire a better right of questioned Orders themselves do not specify what
ownership than the original vendees/first endorsers. 1 material facts are in issue. (See Sec. 4, Rule 34, Rules of
Court).
The Answer incorporated a Third-Party Complaint
by Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, To require a trial notwithstanding pertinent allegations
doing business under the trade name and style Noahs of the pleadings and other facts appearing on the
Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng, record, would constitute a waste of time and an injustice
praying that the latter be ordered to deliver or return to the PNB whose rights to relief to which it is plainly
to them the quedans (previously endorsed to PNB and entitled would be further delayed to its prejudice.
the subject of the suit) and pay damages and litigation
expenses. In issuing the questioned Orders, We find the respondent
Court to have acted in grave abuse of discretion which
The Answer of Rosa Ng Sy and Teresita Ng,
justify holding null and void and setting aside the Orders
dated September 6, 1990, one of avoidance, is
dated May 2 and July 4, 1990 of respondent Court, and
essentially to the effect that the transaction between
that a summary judgment be rendered forthwith in
them, on the one hand, and Jimmy T. Go, on the other,
favor of the PNB against Noahs Ark Sugar Refinery, et
concerning the quedans and the sugar stocks covered
al., as prayed for in petitioners Motion for Summary
by them was merely a simulated one being part of the
Judgment.2
latters complex banking schemes and financial
maneuvers, and thus, they are not answerable in
damages to him. On December 13, 1991, the Court of Appeals
nullified and set aside the orders of May 2 and July 4,
On January 31, 1991, the Philippine National Bank 1990 of the Regional Trial Court and ordered the trial
filed a Motion for Summary Judgment in favor of the court to render summary judgment in favor of the PNB.
plaintiff as against the defendants for the reliefs prayed On June 18, 1992, the trial court rendered judgment
for in the complaint. dismissing plaintiffs complaint against private
respondents for lack of cause of action and likewise
On May 2, 1991, the Regional Trial Court issued an
dismissed private respondents counterclaim against
order denying the Motion for Summary Judgment.
PNB and of the Third-Party Complaint and the Third-
Thereupon, the Philippine National Bank filed a
Party Defendants Counterclaim. On September 4, 1992,
Petition for Certiorari with the Court of Appeals,
the trial court denied PNBs Motion for
docketed as CA-G.R. SP. No. 25938 on December 13,
Reconsideration.
1991.
On June 9, 1992, the PNB filed an appeal from the
Pertinent portions of the decision of the Court of
RTC decision with the Supreme Court, G.R. No. 107243,
Appeals read:
by way of a Petition for Review on Certiorari under
Rule 45 of the Rules of Court. This Court rendered
In issuing the questioned Orders, the respondent Court judgment on September 1, 1993, the dispositive
ruled that questions of law should be resolved after and portion of which reads:
not before, the questions of fact are properly litigated. A
scrutiny of defendants affirmative defenses does not
WHEREFORE, the trial judges decision in Civil Case No.
show material questions of fact as to the alleged
90-53023, dated June 18, 1992, is reversed and set aside
nonpayment of purchase price by the vendees/first
and a new one rendered conformably with the final and
endorsers, and which nonpayment is not disputed by
executory decision of the Court of Appeals in CA-G.R SP.
PNB as it does not materially affect PNBs title to the
No. 25938, ordering the private respondents Noahs Ark
sugar stocks as holder of the negotiable quedans.
Sugar Refinery, Alberto T. Looyuko, Jimmy T. Go and
Wilson T. Go, jointly and severally:
What is determinative of the propriety of summary
judgment is not the existence of conflicting claims from
(a) to deliver to the petitioner Philippine
prior parties but whether from an examination of the
National Bank, the sugar stocks covered by
pleadings, depositions, admissions and documents on
the Warehouse Receipts/ Quedans which
file, the defenses as to the main issue do not tender
are now in the latters possession as holder
material questions of fact (see Garcia vs. Court of
for value and in due course; or
Appeals, 167 SCRA 815) or the issues thus tendered are
alternatively, to pay (said) plaintiff actual
in fact sham, fictitious, contrived, set up in bad faith or
damages in the amount of P39.1 million,
so unsubstantial as not to constitute genuine issues for
trial. (See Vergara vs. Suelto, et al., 156 SCRA 753;
with legal interest thereon from the filing of WHEREFORE, this court hereby finds that there exists in
the complaint until full payment; and favor of the defendants a valid warehousemans lien
under Section 27 of Republic Act 2137 and accordingly,
(b) to pay plaintiff Philippine National Bank
execution of the judgment is hereby ordered stayed and/
attorneys fees, litigation expenses and
or precluded until the full amount of defendants lien on
judicial costs hereby fixed at the amount of
the sugar stocks covered by the five (5) quedans subject
One Hundred Fifty Thousand Pesos
of this action shall have been satisfied conformably with
(P150,000.00) as well as the costs.
the provisions of Section 31 of Republic Act 2137. 5
SO ORDERED.3
Consequently, the Philippine National Bank filed
the herein petition to seek the nullification of the
On September 29, 1993, private respondents above-assailed orders of respondent judge.
moved for reconsideration of this decision. A
Supplemental/Second Motion for Reconsideration with The PNB submits that:
leave of court was filed by private respondents
I
on November 8, 1993. We denied private respondents
motion on January 10, 1994. .
PNBs RIGHT TO A WRIT OF EXECUTION IS SUPPORTED
Private respondents filed a Motion Seeking BY TWO FINAL AND EXECUTORY DECISIONS:
Clarification of the Decision, dated September 1, 1993. THE DECEMBER 13, 1991 COURT OF APPEALS
We denied this motion in this manner: DECISION IN CA-G.R. SP. NO. 25938; AND,
THE NOVEMBER 9, 1992 SUPREME COURT DECISION IN
It bears stressing that the relief granted in this Courts G.R NO. 107243. RESPONDENT RTCS MINISTERIAL AND
decision of September 1, 1993 is precisely that set out in MANDATORY DUTY IS TO ISSUE THE WRIT OF
the final and executory decision of the Court of Appeals EXECUTION TO IMPLEMENT THE DECRETAL PORTION
in CA-G.R. SP No. 25938, dated December 13, 1991, OF SAID SUPREME COURT DECISION
which was affirmed in toto by this Court and which
became unalterable upon becoming final and II
executory. 4
RESPONDENT RTC IS WITHOUT JURISDICTION TO
Private respondents thereupon filed before the HEAR PRIVATE RESPONDENTS OMNIBUS MOTION. THE
trial court an Omnibus Motion seeking among others CLAIMS SET FORTH IN SAID MOTION: (1) WERE
the deferment of the proceedings until private ALREADY REJECTED BY THE SUPREME COURT IN
respondents are heard on their claim for ITS MARCH 9, 1994 RESOLUTION DENYING PRIVATE
warehousemans lien. On the other hand, on August 22, RESPONDENTS MOTION FOR CLARIFICATION OF
1994, the Philippine National Bank filed a Motion for DECISION IN .G.R. NO. 107243; AND (2) ARE BARRED
the Issuance of a Writ of Execution and an Opposition FOREVER BY PRIVATE RESPONDENTS FAILURE TO
to the Omnibus Motion filed by private respondents. INTERPOSE THEM IN THEIR ANSWER, AND FAILURE
TO APPEAL FROM THE JUNE 18, 1992 RTC DECISION IN
The trial court granted private respondents
CIVIL CASE NO. 90-52023
Omnibus Motion on December 20, 1994 and set
reception of evidence on their claim for
III
warehousemans lien. The resolution of the PNBs
Motion for Execution was ordered deferred until the
determination of private respondents claim. RESPONDENT RTCS ONLY JURISDICTION IS TO ISSUE
THE WRIT TO EXECUTE THE SUPREME COURT
On February 21, 1995, private respondents claim DECISION. THUS, PNB IS ENTITLED TO: (1) A WRIT OF
for lien was heard and evidence was received in CERTIORARI TO ANNUL THE RTC RESOLUTION
support thereof. The trial court thereafter gave both DATED DECEMBER 20, 1994 AND THE ORDER
parties five (5) days to file respective memoranda. DATED FEBRUARY 7, 1995 AND ALL PROCEEDINGS
TAKEN BY THE RTC THEREAFTER; (2) A WRIT OF
On February 28, 1995, the Philippine National
PROHIBITION TO PREVENT RESPONDENT RTC FROM
Bank filed a Manifestation with Urgent Motion to
FURTHER PROCEEDING WITH CIVIL CASE NO. 90-
Nullify Court Proceedings. In adjudication thereof, the
53023 AND COMMITTING OTHER ACTS VIOLATIVE OF
trial court issued the following order on March 1,
THE SUPREME COURT DECISION IN G.R. NO. 107243;
1995:
AND (3) A WRIT OF MANDAMUS TO COMPEL
RESPONDENT RTC TO ISSUE THE WRIT TO EXECUTE
THE SUPREME COURT JUDGMENT IN FAVOR OF PNB
The issues presented before us in this petition assailed by private respondents. In effect, we ruled
revolve around the legality of the questioned orders of therein that, considering the circumstances obtaining
respondent judge, issued as they were after we had before the trial court, the issuance of the Warehouse
denied with finality private respondents contention Receipts not being disputed by the private
that the PNB could not compel them to deliver the respondents, a summary judgment in favor of PNB was
stocks of sugar in their warehouse covered by the proper. We in effect further affirmed the finding that
endorsed quedans or pay the value of the said stocks of Noahs Ark is a warehouseman which was obliged to
sugar. deliver the sugar stocks covered by the Warehouse
Receipts pledged by Cresencia K. Zoleta and Luis T.
Petitioners submission is on a technicality, that is,
Ramos to the petitioner pursuant to the pertinent
that private respondents have lost their right to
provisions of Republic Act 2137.
recover warehousemans lien on the sugar stocks
covered by the five (5) Warehouse Receipts for the In disposing of the private respondents motion for
reason that they failed to set up said claim in their clarification, we could not contemplate the matter of
Answer before the trial court and that private warehousemans lien because the issue to be finally
respondents did not appeal from the decision in this resolved then was the claim of private respondents for
regard, dated June 18, 1992. Petitioner asseverates that retaining ownership of the stocks of sugar covered by
the denial by this Court on March 9, 1994 of the motion the endorsed quedans. Stated otherwise, there was no
seeking clarification of our decision, dated September point in taking up the issue of warehousemans lien
1, 1993, has foreclosed private respondents right to since the matter of ownership was as yet being
enforce their warehousemans lien for storage fees and determined. Neither could storage fees be due then
preservation expenses under the Warehouse Receipts while no one has been declared the owner of the sugar
Act. stocks in question.
On the other hand, private respondents maintain Of considerable relevance is the pertinent
that they could not have claimed the right to a stipulation in the subject Warehouse Receipts which
warehouseman s lien in their Answer to the complaint provides for respondent Noahs Arks right to impose
before the trial court as it would have been and collect warehousemans lien:
inconsistent with their stand that they claim
ownership of the stocks covered by the quedans since Storage of the refined sugar quantities mentioned herein
the checks issued for payment thereof were shall be free up to one (1) week from the date of the
dishonored. If they were still the owners, it would have quedans covering said sugar and thereafter, storage fees
been absurd for them to ask payment for storage fees shall be charged in accordance with the Refining
and preservation expenses. They further contend that Contract under which the refined sugar covered by this
our resolution, dated March 9, 1994, denying their Quedan was produced. 6
motion for clarification did not preclude their right to
claim their warehousemans lien under Sections 27 and It is not disputed, therefore, that, under the
31 of Republic Act 2137, as our resolution merely subject Warehouse Receipts provision, storage fees are
affirmed and adopted the earlier decision, dated chargeable.
December 13, 1991, of the Court of Appeals (6th
Division) in CA-G.R. SP. No. 25938 and did not make Petitioner anchors its claim against private
any finding on the matter of the warehouseman s lien. respondents on the five (5) Warehouse Receipts issued
by the latter to third-party defendants Rosa Ng Sy of
We find for private respondents on the foregoing RNS Merchandising and Teresita Ng of St. Therese
issue and so the petition necessarily must fail. Merchandising, which found their way to petitioner
We have carefully examined our resolution, after they were negotiated to them by Luis T. Ramos
dated March 9, 1994, which denied Noahs Arks motion and Cresencia K. Zoleta for a loan of P39.1 Million.
for clarification of our decision, dated September 1, Accordingly, petitioner PNB is legally bound to stand by
1993, wherein we affirmed in full and adopted the the express terms and conditions on the face of the
Court of Appeals earlier decision, dated December 13, Warehouse Receipts as to the payment of storage fees.
1991, in CA-G.R. SP. No. 25938. We are not persuaded Even in the absence of such a provision, law and equity
by the petitioners argument that our said resolution dictate the payment of the warehouseman s lien
carried with it the denial of the warehousemans lien pursuant to Sections 27 and 31 of the Warehouse
over the sugar stocks covered by the subject Receipts Law (R.A. 2137), to wit:
Warehouse Receipts. We have simply resolved and
upheld in our decision, dated September 1, 1993, the SECTION 27. What claims are included in the
propriety of summary judgment which was then 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 and stipulations written on the face of the Warehouse
lawful charges for storage and preservation of the Receipts, including the unqualified recognition of the
goods; also for all lawful claims for money advanced, payment of warehousemans lien for storage fees and
interest, insurance, transportation, labor, weighing preservation expenses. Petitioner may not now
coopering and other charges and expenses in relation to retrieve the sugar stocks without paying the lien due
such goods; also for all reasonable charges and expenses private respondents as warehouseman.
for notice, and advertisement of sale, and for sale of the
In view of the foregoing, the rule may be
goods where default has been made in satisfying the
simplified thus: While the PNB is entitled to the stocks
warehousemans lien.
of sugar as the endorsee of the quedans, delivery to it
shall be effected only upon payment of the storage fees.
xxx xxx xxx
Imperative is the right of the warehouseman to
SECTION 31. Warehouseman need not deliver until lien demand payment of his lien at this juncture, because,
is satisfied. - A warehouseman having a lien valid in accordance with Section 29 of the Warehouse
against the person demanding the goods may refuse to Receipts Law, the warehouseman loses his lien upon
deliver the goods to him until the lien is satisfied. goods by surrendering possession thereof. In other
words, the lien may be lost where the warehouseman
After being declared not the owner, but the surrenders the possession of the goods without
warehouseman, by the Court of Appeals on December requiring payment of his lien, because a
13, 1991 in CA-G.R. SP. No. 25938, the decision having warehousemans lien is possessory in nature.
been affirmed by us on December 1, 1993, private We, therefore, uphold and sustain the validity of
respondents cannot legally be deprived of their right to the assailed orders of public respondent,
enforce their claim for warehousemans lien, for dated December 20, 1994 and March 1, 1995.
reasonable storage fees and preservation expenses.
Pursuant to Section 31 which we quote hereunder, the In fine, we fail to see any taint of abuse of
goods under storage may not be delivered until said discretion on the part of the public respondent in
lien is satisfied. issuing the questioned orders which recognized the
legitimate right of Noahs Ark, after being declared as
SECTION 31. Warehouseman need not deliver until lien warehouseman, to recover storage fees before it would
is satisfied. - A warehouseman having a lien valid release to the PNB sugar stocks covered by the five (5)
against the person demanding the goods may refuse to Warehouse Receipts. Our resolution, dated March 9,
deliver the goods to him until the lien is satisfied. 1994, did not preclude private respondents unqualified
right to establish its claim to recover storage fees
Considering that petitioner does not deny the which is recognized under Republic Act No. 2137.
existence, validity and genuineness of the Warehouse Neither did the Court of Appeals decision,
Receipts on which it anchors its claim for payment dated December 13, 1991, restrict such right.
against private respondents, it cannot disclaim liability Our Resolutions reference to the decision by the
for the payment of the storage fees stipulated therein. Court of Appeals, dated December 13, 1991, in CA-G.R.
As contracts, the receipts must be respected by SP. No. 25938, was intended to guide the parties in the
authority of Article 1159 of the Civil Code, to wit: subsequent disposition of the case to its final end. We
certainly did not foreclose private respondents
ART. 1159. Obligations arising from contracts have the inherent right as warehouseman to collect storage fees
force of law between the contracting parties and should and preservation expenses as stipulated n the face of
be complied with in good faith. each of the Warehouse Receipts and as provided for in
the Warehouse Receipts Law (R.A. 2137).
Petitioner is in estoppel in disclaiming liability for
the payment of storage fees due the private WHEREFORE, the petition should be, as it is,
respondents as warehouseman while claiming to be hereby dismissed for lack of merit. The questioned
entitled to the sugar stocks covered by the subject orders issued by public respondent judge are affirmed.
Warehouse Receipts on the basis of which it anchors its Costs against the petitioner.
claim for payment or delivery of the sugar stocks. The
unconditional presentment of the receipts by the SO ORDERED.
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 G.R. No. 107243 September 1, 1993
PHILIPPINE NATIONAL BANK, petitioner, March 21, 1989, receipt No. 18081
vs. covering sugar deposited by RNS
NOAH'S ARK SUGAR REFINERY, ALBERTO T. Merchandising;
LOOYUKO, JIMMY T. GO, WILSON T. GO, respondents.
March 31, 1989, receipt No. 18086
Santiago, Jr. Vida, Corpuz & Associates for petitioner. covering sugar deposited by St. Therese
Merchandising; and
Tomas P. Madella Jr. for respondents.
April 1, 1989, receipt No. 18087
covering sugar deposited by RNS
Merchandising.
NARVASA, C.J.:
The receipts are substantially in the form, and contain
The case at bar involves extraordinary situation in the terms, prescribed for negotiable warehouse
which a Regional Trial receipts by Section 2 of the law.
Judge — after receiving notice to the final and
executory judgment of the Court of Appeals in a special Subsequently, warehouse receipts Numbered 18080
civil action of certiorari in which said Trial Judge was a and 18081 (covering sugar deposited by RNS
respondent, and which judgment contained the Merchandising) were negotiated and indorsed to Luis
following disposition, viz.: T. Ramos; and receipts Numbered 18086 (sugar of St.
Therese Merchandising), 18087 (sugar of RNS
In issuing the questioned Orders, We Merchandising) and 18062 (sugar of Rosa Sy) were
find the respondent Court to have acted negotiated and indorsed to Cresencia K. Zoleta. Zoleta
in grave abuse of discretion which and Ramos then used the quedans as security for loans
justify holding null and void and setting obtained by them from the Philippine National Bank
aside the Orders date May 2 and July 4, (PNB) in the amounts of P23.5 million and P15.6
1990 of respondent Court, and that a million, respectively. These quedans they indorsed to
summary judgment be rendered the bank.
forthwith in favor of the PNB against
Noah's Ark Sugar Refinery, et al., as Both Zoleta and Ramos failed to pay their loans upon
prayed for in petitioner's Motion for maturity on January 9, 1990. Consequently on March
Summary Judgment. 16, 1990, PNB wrote to Noah's Ark Sugar Refinery
(hereafter, simply Noah's Ark) demanding delivery of
SO ORDERED. the sugar covered by the quedans indorsed to it by
Zoleta and Ramos. When Noah's Ark refused to comply
— proceeded to render judgment, not "in favor of the with the demand, PNB filed with the Regional Trial
PNB against Noah's Ark Sugar Refinery, et al.," but in Court of Manila a verified complaint for "Specific
favor of the latter and its co-defendants. That judgment Performance with Damages and Application for Writ of
has been appealed by PNB to this Court "on pure Attachment" against Noah's Ark, Alberto T. Looyuko,
questions of law." Jimmy T. Go, and Wilson T. Go, the last three being
identified as "the Sole Proprietor, Managing Partner
No dispute exists about the facts which gave rise to the and Executive Vice President of Noah's Ark,
controversy at bar. respectively."

In accordance with Act No. 2137, the Warehouse The Court, by Order dated June 28, 1990, denied the
Receipts Law, Noah's Ark Sugar Refinery issued on application for preliminary attachment after
several dates warehouse receipts (quedans) as follows: conducting a hearing thereon. It denied as well the
motion for reconsideration thereafter filed by PNB, by
Order dated August 22, 1990.
March 1, 1989, receipt No. 18062
covering sugar deposited by Rosa Sy;
Noah's Ark and its co-defendants then filed their
responsive pleading entitled "Answer with
March 7, 1989, receipt No. 18080
Counterclaim and Third Party Complaint," dated June
covering sugar deposited by RNS
21, 1990 in which they claimed, inter alia, that they
Merchandising (Rosa Ng Sy);
"are still the legal owners of the subject quedans and
the quantity of sugar represented thereon," a claim said Jimmy Go) . . . Noah's Ark is under sequestration
founded on the following averments, to wit: by the PCGG," and that the quedans "were in fact used
by Noah's Ark Executive Director, Luis T. Ramos, and
. . . In an agreement dated April 1, 1989, one Cresenciana K. Zoleta as security for their loans
defendants agreed to sell to Rosa Ng Sy from the bank . . . . (in the aggregate amount) of P39.1
of RNS Merchandising and Teresita Ng million pesos."
of St. Therese Merchandising the total
volume of sugar indicated in On January 31, 1991, PNB filed a "Motion for Summary
the quedans stored at Noah's Ark Sugar Judgment." It asserted that "from the pleadings,
Refinery for a total consideration of documents, and admissions on file, there is no genuine
P63,000,000.00, . . . The corresponding issue as to a material fact proper for trial and that
payments in the form of checks issued plaintiff is entitled as a matter of law, . . . (to) a
by the vendees in favor of defendants summary judgment." It contended that the defenses set
were subsequently dishonored by the up by Noah's Ark, et al. in their responsive pleading
drawee banks by reason of "payment involve purely questions of law — i.e., (a) that the
stopped" and "drawn against vendees of the sugar covered by the quedans in dispute
insufficient funds," . . . Upon proper never acquired title to the goods because of their
notification to said vendees and failure to pay the stipulated purchase price and hence,
plaintiff in due course, defendants ownership over the sugar was retained by Noah's Ark,
refused to deliver to vendees therein et al.; and (b) PNB's action is premature since as
the quantity of sugar covered by subject pledgee it failed to exercise the remedies provided in
quedans. the contract of pledge and the Civil Code. And it
specified in no little detail the admissions and
. . . Considering that the vendees and documents on record demonstrating the absence of
first indorsers of subject quedans did any genuine factual issue. On these premises, it prayed
not acquire ownership thereof, the "that a summary judgment be rendered for plaintiff
subsequent indorsers and plaintiff itself against the defendants for the reliefs prayed for in the
did not acquire a better right of complaint," these reliefs being:
ownership than the original
vendees/first indorsers. (a) to deliver to PNB the sugar stocks
covered by the Warehouse
The defendants also adverted to PNB's supposed Receipts/Quedans which are now in the
awareness "that subject quedans are not negotiable latter's possession as holder for value
instruments within the purview of the Warehouse and in due course; or alternatively, to
Receipts Law but simply an internal guarantee of pay plaintiff actual damages in the
defendants in the sale of their stocks of sugar. . . ." amount of P39.1 Million exclusive of
interest, penalties and charges; and
The answer incorporated a third party complaint by
Alberto Looyuko, Jimmy T. Go and Wilson T. Go ("doing (b) to pay plaintiff attorney's fees,
business under the name and style of Noah's Ark Sugar litigation expenses and judicial costs
Refinery") against Rosa Ng Sy and Teresita Ng, praying estimated at no less than P1 Million;
that the latter be ordered to deliver or return to them (and) such other reliefs just and
the quedans (eventually indorsed to the PNB and now equitable under the premises.
subject of this suit) and pay damages and litigation
expenses. An opposition to the motion was presented by
defendants Noah's Ark, et al., dated March 4, 1991,
The answer of Rosa Ng Sy and Teresita Ng, dated asserting the existence of genuine issues, to wit:
September 6, 1990, was essentially to the effect that whether or not the sale was ever consummated
the transaction between them and Jimmy T. Go considering that "the checks issued by the first
concerning the quedans and the sugar thereby covered indorsees in payment of said quedans bounced," and
was "bogus and simulated (being part of the latter's) whether or not PNB acquired ownership over
complex banking schemes and financial maneuvers;" the quedans considering that "it did not dispose (of)
that the simulated transaction "was just a tolling said quedans under Art. 2112 of the Civil Code, as
scheme to specifically reflected in the contract of pledge," both
avoid VAT payment and other BIR assessments contentions allegedly being "material facts which has
(considering that) as . . . confidentially intimated (by (sic) to be supported by evidence."
The third-party defendants (Rosa Ng Sy and Teresita are in fact sham, fictitious, contrived,
Ng) also opposed the motion for summary judgment set up in bad faith or so unsubstantial
insofar as concerned their counterclaim in relation to as not to constitute genuine issues for
the third-party complaint asserted against them. trial. (See Vergara vs. Suelto, et al., 156
SCRA 753; Mercado, et al. vs. Court of
On May 2, 1991, the Trial Court issued an Order Appeals, 162 SCRA 75). The questioned
denying the motion for summary judgment on the Orders themselves do not specify what
ground that an "examination of the pleadings and the material facts are in issue. (See Sec. 4,
record readily shows that there exists sharply Rule 34, Rules of Court).
conflicting claims among the parties relative to the
ownership of the sugar quedans as to whether or not To require a trial notwithstanding
the subject quedans falls (sic) squarely within the pertinent allegations of the pleadings
coverage of the Warehouse Receipt Law and whether and other facts appearing on record,
or not the transaction between plaintiff and third party would constitute a waste of time and an
defendants is governed by contract of pledge that injustice to the PNB whose rights to
would require plaintiff's compliance with Art. 2112, relief to which it is plainly entitled
Civil Code on pledge as regards the disposition of the would be further delayed to its
subjects quedans." PNB's for reconsideration was prejudice.
denied by Order dated July 4, 1991.
In issuing the questioned Orders, We
PNB thereupon filed a petition for certiorari with the find the respondent Court to have acted
Court of Appeals, which was docketed as CA-G.R. SP No. in grave abuse of discretion which
25938. This special civil action eventuated in a justify holding null and void and setting
Decision promulgated on December 13, 1991 by the aside the Orders dated May 2 and July
Sixth Division of that Court, 1 nullifying and setting 4, 1990 of respondent Court, and that a
aside the challenged Orders of May 2, 1991 and July 4, summary judgment be rendered
1991, and commanding that "summary judgment be forthwith in favor of the PNB against
rendered forthwith in favor of the PNB against Noah's Noah's Ark Sugar Refinery, et al., as
Ark Sugar Refinery, et al., as prayed for in petitioner's prayed for in the petitioner's Motion for
Motion for Summary Judgment." Said the Appellate Summary Judgment.
Court:2
SO ORDERED.
In issuing the questioned Orders, the
respondent Court ruled that "questions Noah's Ark, et al. moved for reconsideration, but their
of law should be resolved after and not motion was denied by the Appellate Tribunal's
before, the questions of fact are Resolution dated March 6, 1991.
properly litigated." A scrutiny of
defendants' affirmative defenses does The judgment became final. Entry of Judgment was
not show material questions of facts as made on May 26, 1992. Thereafter the case was
to the alleged non-payment of purchase remanded to the Court of origin.
price by the vendees/first indorsers,
and which non-payment is not disputed On June 18, 1992, the Regional Trial Court rendered
by PNB as it does not materially affect judgment, but not in accordance with the aforesaid
PNB's title to the sugar stock as holder decision of the Court of Appeals. As stated in the
of the negotiable quedans. opening paragraph of this opinion, instead of a
summary judgment "in favor of the PNB against Noah's
What is determinative of the propriety Ark Sugar Refinery, et al., as prayed for in . . . (PNB)'s
of summary judgment is not the Motion for Summary Judgment," the Trial Court's
existence of conflicting claims for prior verdict decreed the dismissal of "plaintiff's complaint
parties but whether from an against defendants Noah's Ark Sugar Refinery, Alberto
examination of the pleadings, T. Looyuko, Jimmy Go and Wilson T. Go . . . . for lack of
depositions, admissions and documents cause of action;" and dismissal as well of the
on file, the defenses as to the main issue counterclaim pleaded by the latter against PNB, and of
do not tender material questions of fact the third-party complaint, and the third-party
(see Garcia vs. Court of Appeals 167 defendant's counterclaim.
SCRA 815) or the issues thus tendered
The Trial Court declared that if "the only material facts and Zoleta) and the
established on the basis of the pleadings, documentary subsequent negotiation
evidence on record, admissions and stipulations during of Ramos and Zoleta to
the hearing on PNB's application for a writ of PNB.
preliminary attachment, are the facts as alleged by
plaintiff and accepted as established by the Court of 2) Whether or not PNB
Appeals, this Court will have no difficulty in finding for as indorsee/ pledgee of
plaintiff as prayed for in its motion for summary quedans was entitled to
judgment. But are the facts alleged by plaintiff the only delivery of sugar stocks
material facts established on the basis of the pleadings, from the
documentary evidence on record, stipulations and warehouseman, Noah's
admissions during the proceedings on the application Ark."
for a writ of preliminary attachment?" To this question
the Trial Court gave a negative answer, it being its view These legal questions were disposed of by the
that other facts, "as alleged by defendants . . . (and) not Appellate Court as follows:
disputed by PNB, have been likewise established."
The validity of the negotiation by RNS
The Trial Court later denied PNB's motion for Merchandising and St. Therese
reconsideration (by Order dated September 4, 1992), Merchandising to Ramos and Zoleta,
evidently finding merit in the argument of Noah's Ark, and by the latter to PNB to secure a
et al., therein quoted, that "Certiorari as a mode of loan cannot be impaired by the fact that
appeal involves the review of judgment, award of final the negotiation between Noah's Ark
order on the merits, while the original action and RNS Merchandising and St. Therese
for certiorari and as a special civil action is generally Merchandising was in breach of faith on
directed against an interlocutory order of the Court, the part of the merchandising firms or
prior to an appeal from the judgment of the main case by the fact that the owner (Noah's Ark)
which in the case at bar is specific performance . . ." was deprived of the possession of the
same by fraud, mistake or conversion of
Hence, this appeal. the person to whom the warehouse
receipt/quedan was subsequently
In CA-G.R. SP No. 25938 above mentioned, after an negotiated if (PNB) paid value therefor
extensive review of the entire record of the case before in good faith without notice of such
the Regional Trial Court (including the admissions of breach of duty, fraud, mistake or
Noah's Ark, et al. and the parties' stipulations of fact), conversion. (See Article 1518, New Civil
as well as the pleadings filed by the parties before it, Code). And the creditor (PNB) whose
the Court of Appeals arrived at the conclusion that a debtor was the owner of the negotiable
summary judgment was proper since "there was no document of title (warehouse receipt)
substantial controversy on a(ny) material fact, the only shall be entitled to such aid from the
issues for the Court's court of appropriate jurisdiction
determination . . . (being) purely . . . questions of law, as attaching such document or in
follows: satisfying the claim by means as is
allowed by law or in equity in regard to
1) Whether or not the property which cannot be readily
non-payment of the attached or levied upon by ordinary
purchase price for the process. (See Art. 1520, New Civil
sugar stock evidenced Code). If the quedans were negotiable
by the quedans, by the in form and duly indorsed to PNB (the
original depositors/ creditor), the delivery of the quedans to
vendees (RNS PNB makes the PNB the owner of the
Merchandising and St. property covered by said quedans and
Therese Merchandising) on deposit with Noah's Ark, the
rendered invalid the warehouseman. (See Sy Cong Bieng &
negotiation of said Co. vs. Hongkong & Shanghai Bank
quedans by Corp., 56 Phil. 598).
vendees/first indorsers
to indorsers (Ramos
In the case at bar, We found that the title to the goods as the person to
factual bases underlying the whose order the goods were to be
defendant's affirmative defenses (upon delivered by the terms of the document
which PNB has moved for summary had or had ability to convey to a
judgment) are not disputed and have purchaser in good faith for value; and
been stipulated by the parties and
therefore do not require presentation (2) The direct obligation of the bailee
of evidence. PNB's right to enforce the issuing the document to hold
obligation of Noah's Ark as a possession of the goods for him
warehouseman, to deliver the sugar according to the terms of the document
stock to PNB as holder of the quedans, as fully as if such bailee had contracted
does not depend on the outcome of the directly with him.
third-party complaint because the
validity of the negotiation transferring The Court of Appeals found correctly that the
title to the goods to PNB as holder of indications in the pleadings to the contrary
the quedans is not affected by an act of notwithstanding, no substantial triable issue of fact
RNS Merchandising and St. Therese actually existed, and that certain issues raised in
Merchandising, in breach of trust, fraud answer, even if taken as established, would not
or conversion against Noah's Ark. materially change the ultimate findings relative to the
main claim. 7 Its decision is entirely in accord with this
The Court considers the Appellate Court's conclusions Court's rulings regarding the propriety of summary
of fact and law to be correct. judgments invoked by the Appellate
Tribunal, i.e., Vergara, Sr. v. Suelto, 8 and Mercado v.
The Trial Judge's argument that the Appellate Court's Court of Appeals. 9 According to Vergara, for instance,
decision failed to take account of other "material facts "even if the answer does tender issues — and therefore
established on the basis of the pleadings, documentary a judgment on the pleadings is not proper — a
evidence on record, stipulations and admissions during summary judgment may still be rendered on the
the proceedings on the application for a writ of plaintiff's motion if he can show to the Court's
preliminary attachment," is quite transparently satisfaction that "except as to the amount of damages,
specious. For the matters cited by His Honor, as there is no genuine issue as to any material fact," 10 that
allegedly not examined by the Court of Appeals, were is to say, the issues thus tendered are not genuine, are
in fact duly considered by the latter — i.e., that "the in other words sham, fictitious, contrived, set up in bad
various postdated checks issued by the buyers (RNS faith, patently unsubstantial. 11 The determination may
Merchandising and St. Therese Merchandising) in favor be made by the Court on the basis of the pleadings, and
of Noah's Ark were dishonored when presented for the depositions, admissions and affidavits that the
payment . . (and hence) the buyers never acquired title movant may submit, as well as those which the
to the sugar evidenced by the quedans," 3 and that PNB defendant may present in turn."12
"did not follow the procedure stated in Article 2112 of
the Civil Code." 4 In its decision, as just pointed out, the In any event, the conclusions of fact and law set out in
Court of Appeals explicitly ruled that the "validity of the Appellate Court's decision are undeniably binding
the negotiation" of the quedans to PNB" cannot be on all the parties to the case, the respondent Regional
impaired by the fact that the negotiation between Trial Judge included. Having been rendered by a
Noah's Ark and RNS Merchandising and St. Therese competent court within its jurisdiction, and having
Merchandising was made in breach of faith on the part become final and executory, the decision now operates
of the merchandising firms or by the fact that the as the immutable law among the parties, the
owner (Noah's Ark) was deprived of the possession of respondent Trial Judge included; it has become the law
the same by fraud, mistake or conversion . . ." 5 It also of the case and may no longer, in subsequent
ruled that the quedans were negotiable documents and proceedings, be altered or modified in any way, much
had been duly negotiated to the PNB which thereby less reversed or set at naught, by the latter, or any
acquired the rights set out in Article 1513 of the Civil other judge, not even by the Supreme Court; it is an
Code," 6 viz.:" unalterable determination of the propriety of a
summary judgment in the action in question, and upon
(1) Such title to the goods as the person all the issues therein raised or which could have been
negotiating the documents to him had raised relative to the merits of said action.13
or had ability to convey to a purchaser
in good faith for value and also such
The Trial Judge may not evade compliance with the
final judgment of the Court of Appeals on the theory
that the latter had acted only on a mere interlocutory
order (the order denying PNB's motion for summary
judgment), while he had subsequently adjudged the
action for specific performance on the merits. Quite
obvious is that the Court of Appeals had decided that a
summary judgment was proper in said action of
specific performance, that this was in truth a
determination of the merits of the suit, that that
decision had become final and executory, and that the
decision expressly commanded His Honor to render
such a judgment. Under the circumstances, the latter's
duty was clear and inescapable.

It was not within the Trial Judge's competence or


discretion to take exception to, much less overturn, any
of the factual or legal conclusions laid down by the
Court of Appeals in its verdict. He was as much bound
thereby as the private parties themselves. His only
function was to implement and carry out the Appellate
Tribunal's judgment. It was an act of supererogation, of
presumptuousness, on His Honor's part to disregard
the Court's clear and categorical command, and to
dispose of the case in a manner diametrically opposed
thereto. In doing so, the Trial Judge committed grave
error which must forthwith be corrected.

WHEREFORE, the Trial Judge's Decision in Civil Case


No. 90-53023 dated June 18, 1992 is REVERSED and
SET ASIDE and a new one rendered conformably with
the final and executory Decision of the Court of
Appeals in CA-G.R. SP No. 25938, ordering the private
respondents, Noah's Ark Sugar Refinery, Alberto T.
Looyuko, Jimmy T. Go and William T. Go, jointly and
severally:

a) to deliver to the petitioner Philippine National Bank,


"the sugar stocks covered by the Warehouse
Receipts/Quedans which are now in the latter's
possession as holder for value and in due course; or
alternatively, to pay (said) plaintiff actual damages in
the amount of P39.1 Million," with legal interest
thereon from the filing of the complaint until full
payment; and

b) to pay plaintiff Philippine National Bank attorney's


fees, litigation expenses and judicial costs hereby fixed
at the amount of one hundred fifty thousand pesos
(150,000.00), as well as the costs.

SO ORDERED.