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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
In this special civil action for certiorari, actually three 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 Noahs Ark and its co-defendants filed an Answer with
urgent motion to lift garnishment, and private Counterclaim and Third-Party Complaint in which they
respondents motion for partial reconsideration. claimed that they [were] the owners of the subject
quedans and the sugar represented therein, averring
The factual antecedents until the commencement as 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 setting aside the Orders dated May 2 and July 4, 1990
the 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 the Regional Trial Court and ordered the trial court to
prayed 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
or so unsubstantial as not to constitute genuine issues thereon from the filing of the complaint until full
for trial. (See Vergara vs. Suelto, et al., 156 SCRA 753; payment; and
Mercado, et al. vs. Court of Appeals, 162 SCRA 75). [sic]
The questioned Orders themselves do not specify what (b) to pay plaintiff Philippine National Bank attorneys
material facts are in issue. (See Sec. 4, Rule 34, Rules of fees, litigation expenses and judicial costs hereby fixed
Court). at the amount of One Hundred Fifty Thousand Pesos
(P150,000.00) as well as the costs.
To require a trial notwithstanding pertinent
allegations of the pleadings and other facts appearing SO ORDERED.
on the record, would constitute a waste of time and an
injustice to the PNB whose rights to relief to which it is On September 29, 1993, private respondents moved
plainly entitled would be further delayed to its for reconsideration of this decision. A
prejudice. Supplemental/Second Motion for Reconsideration
with leave of court was filed by private respondents on I
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
executory. II
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 CLAIMS SET FORTH IN SAID MOTION: (1)
respondents [were] heard on their claim for WERE ALREADY REJECTED BY THE
warehousemans lien. On the other hand, on August 22, SUPREME COURT IN ITS MARCH 9, 1994
1994, the Philippine National Bank filed a Motion for RESOLUTION DENYING PRIVATE
the Issuance of a Writ of Execution and an Opposition RESPONDENTS MOTION FOR
to 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 SUPREME COURT DECISION. THUS, PNB IS
five (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.

Unsatisfied with the trial courts order of 1 March In our decision of 18 April 1996 in G.R. No.
1995, herein petitioner filed with us G.R. No. 119231, 119231, we held against herein petitioner as to these
contending: issues and concluded:
In view of the foregoing, the rule may be simplified 3.25 PNB opposed said Motion on the following
thus: While the PNB is entitled to the stocks of sugar as grounds:
the endorsee of the quedans, delivery to it shall be
effected only upon payment of the storage fees. (a) The lien claimed by Noahs Ark in the
unbelievable amount
Imperative is the right of the warehouseman to of P734,341,595.06 is illusory;
demand payment of his lien at this juncture, because, and
in accordance with Section 29 of the Warehouse
Receipts Law, the warehouseman loses his lien upon (b) There is no legal basis for execution
goods by surrendering possession thereof. In other of defendants lien as
words, the lien may be lost where the warehouseman warehouseman unless and until
surrenders the possession of the goods without PNB compels the delivery of the
requiring payment of his lien, because a sugar stocks.
warehousemans lien is possessory in nature.
3.26 In their Reply to Opposition dated 18 January
We, therefore, uphold and sustain the validity of the 1997, private respondents pointed out that a lien
assailed orders of public respondent, dated December existed in their favor, as held by the Supreme Court. In
20, 1994 and March 1, 1995. its Rejoinder dated 7 February 1997, PNB countered
private respondents argument, pointing out that the
In fine, we fail to see any taint of abuse of discretion on dispositive portion of the court a quos Order dated 1
the part of the public respondent in issuing the March 1995 failed to state the amount for which
questioned orders which recognized the legitimate execution may be granted and, thus, the same could
right of Noahs Ark, after being declared as not be the subject of execution; and (b) private
warehouseman, to recover storage fees before it would respondents should instead file a separate action to
release to the PNB sugar stocks covered by the five (5) prove the amount of its claim as warehouseman.
Warehouse Receipts. Our resolution, dated March 9,
1994, did not preclude private respondents 3.27 The court a quo, this time presided by herein
unqualified right to establish its claim to recover public respondent, Hon. Marcelino L. Sayo Jr., granted
storage fees which is recognized under Republic Act private respondents Motion for Execution. In its
No. 2137. Neither did the Court of Appeals decision, questioned Order dated 15 April 1997 (Annex A), the
dated December 13, 1991, restrict such right. court a quo ruled in this wise:

Our Resolutions reference to the decision by the Court Accordingly, the computation of accrued storage fees
of Appeals, dated December 13, 1991, in CA-G.R. SP No. and preservation charges presented in evidence by the
25938, was intended to guide the parties in the defendants, in the amount of P734,341,595.06 as of
subsequent disposition of the case to its final end. We January 31, 1995 for the 86,356.41 50 kg. bags of
certainly did not foreclose private respondents sugar, being in order and with sufficient basis, the
inherent right as warehouseman to collect storage fees same should be granted. This Court consequently
and preservation expenses as stipulated on the face of rejects PNBs claim of no sugar no lien, since it is
each of the Warehouse Receipts and as provided for in undisputed that the amount of the accrued storage fees
the Warehouse Receipts Law (R.A. 2137).[6] is substantially in excess of the alternative award
of P39.1 Million in favor of PNB, including legal interest
Petitioners motion to reconsider the decision in and P150,000.00 in attorneys fees, which PNB is
G.R. No. 119231 was denied. however entitled to be credited x x x.
After the decision in G.R. No. 119231 became final
xxxxxxxxx
and executory, various incidents took place before the
trial court in Civil Case No. 90-53023. The petition in
this case summarizes these as follows: WHEREFORE, premises considered and finding merit
in the defendants motion for execution of their claim
for lien as warehouseman, the same is hereby
3.24 Pursuant to the abovementioned Supreme Court
GRANTED. Accordingly, let a writ of execution issue for
Decision, private respondents filed a Motion for
the amount of P662,548,611.50, in accordance with the
Execution of Defendants Lien as Warehouseman dated
above disposition.
27 November 1996. A photocopy of said Motion for
Execution is attached hereto as Annex I.
SO ORDERED. (Emphasis supplied.)
3.28 On 23 April 1997, PNB was immediately served (6) In all respects, the decisions of both the
with a Writ of Execution for the amount Supreme Court and of the former
of P662,548,611.50 in spite of the fact that it had not Presiding Judge of the trial court do 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 with Urgent Prayer for Quashal of Writ of Execution is
already barred by prescription attached hereto and made integral part hereof as
and/or laches; Annex M.

(3) Assuming further that said lien has not 3.32 Private respondents filed an Opposition with
been waived nor barred, still there was Motion for Partial Reconsideration dated 8 May
no complaint ever filed in court to 1997. Still discontented with the excessive and
effectively commence this entirely new staggering amount awarded to them by the court a
cause of action; quo, private respondents Motion for Partial
Reconsideration sought additional and continuing
(4) There is no evidence on record which storage fees over and above what the court a quo had
would support and sustain the claim already unjustly awarded. A photocopy of private
of P734,341,595.06 which is excessive, respondents Opposition with Motion for Partial
oppressive and unconscionable; 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 3.34 On 6 May 1997, petitioner also filed an Urgent
prayed for a continuing amount of P345,424.00 as Motion to Lift Garnishment of PNB Funds with Bangko
daily storage fees after 15 April 1997 until the total Sentral ng Pilipinas.
amount of the storage fees is satisfied.
3.35 On 14 July 1997, respondent Judge issued the
3.33 On 19 May 1997, PNB filed its Reply with second Order (Annex B), the questioned part of the
Opposition (To Defendants Opposition with Partial dispositive portion of which states:
Motion for Reconsideration), containing therein the
following motions: (i) Supplemental Motion for WHEREFORE, premises considered, the plaintiff
Reconsideration; (ii) Motion to Strike out the Philippine National Banks subject Motion for
Testimony of Noahs Arks Accountant Last February 21, Reconsideration With Urgent Prayer for Quashal of
1995; and (iii) Motion for the Issuance of a Writ of Writ of Execution dated April 28, 1997 and undated
Execution in favor of PNB.In support of its pleading, Urgent Motion to Lift Garnishment of PNB Funds With
petitioner raised the following: Bangko Sentral ng Pilipinas filed on May 6, 1997,
together with all its related Motions are all DENIED
(1) Private respondents failed to pay the with finality for lack of merit.
appropriate docket fees either for its
principal claim or for its additional xxxxxxxxx
claim, as said claims for warehousemans
lien were not at all mentioned in their The Order of this Court dated April 15, 1997, the final
answer to petitioners Complaint; Writ of Execution likewise dated April 15, 1997 and
the corresponding Garnishment all stand firm.
(2) The amount awarded by the court a
quo was grossly and manifestly SO ORDERED.[7]
unreasonable, excessive, and
oppressive; Aggrieved thereby, petitioners filed this petition,
alleging as grounds therefor, the following:
(3) It is the dispositive portion of the decision
which shall be controlling in any A. THE COURT A QUO ACTED WITHOUT OR
execution proceeding. If no specific IN EXCESS OF ITS JURISDICTION OR WITH
award is stated in the dispositive GRAVE ABUSE OF DISCRETION WHEN IT
portion, a writ of execution supplying an ISSUED A WRIT OF EXECUTION IN FAVOR OF
amount not included in the dispositive DEFENDANTS FOR THE AMOUNT
portion of the decision being executed is OF P734,341,595.06.
null and void;
4.1 The court a quo had no authority to issue a writ
(4) Private respondents failed to prove the of execution in favor of private respondents as there
existence of the sugar stocks in Noahs was no final and executory judgment ripe for
Arks warehouses. Thus, private execution.
respondents claims are mere paper liens
which cannot be the subject of 4.2 Public respondent judge patently exceeded the
execution; scope of his authority in making a determination of
the amount of storage fees due private respondents
(5) The attendant circumstances, particularly in a mere interlocutory order resolving private
Judge Ses Order of 1 March 1995 respondents Motion for Execution.
onwards, were tainted with fraud and
absence of due process, as PNB was not 4.3 The manner in which the court a quo awarded
given a fair opportunity to present its storage fees in favor of private respondents and
evidence on the matter of the ordered the execution of said award was arbitrary
warehousemans lien. Thus, all orders and capricious, depriving petitioner of its inherent
prescinding thereform, including the substantive and procedural rights.
questioned Order dated 15 April 1997,
must perforce be set aside and the B. EVEN ASSUMING ARGUENDO THAT THE
execution proceedings against PNB be COURT A QUO HAD AUTHORITY TO GRANT
permanently stayed. PRIVATE RESPONDENTS MOTION FOR
EXECUTION, THE COURT A QUO ACTED
WITH GRAVE ABUSE OF DISCRETION IN TO LIFT THE ORDER OF GARNISHMENT OF
AWARDING THE HIGHLY UNREASONABLE, THE FUNDS OF PNB WITH THE BANGKO
UNCONSCIONABLE, AND EXCESSIVE SENTRAL NG PILIPINAS.
AMOUNT OF P734,341,595.06 IN FAVOR OF
PRIVATE RESPONDENTS. 4.11 Public respondent judge failed to consider
PNBs arguments in support of its Urgent Motion to
4.4 There is no basis for the court a quos award Lift Garnishment.[8]
of P734,341,595.06 representing private
respondents alleged warehousemans lien. In arguing its cause, petitioner explained that this
Courts decision in G.R. No. 119231 merely affirmed the
4.5 PNB has sufficient evidence to show that the trial courts resolutions of 20 December 1994 and 1
astronomical amount claimed by private March 1995. The earlier resolution set private
respondents is very much in excess of the industry respondents reception of evidence for hearing to prove
rate for storage fees and preservation expenses. their warehousemans lien and, pending determination
thereof, deferred petitioners motion for execution of
C. PUBLIC RESPONDENT JUDGES GRAVE the summary judgment rendered in petitioners favor
ABUSE OF DISCRETION BECOMES MORE in G.R. No. 107243. The subsequent resolution
PATENT AFTER A CLOSE PERUSAL OF THE recognized the existence of a valid warehousemans
QUESTIONED ORDER DATED 14 JULY 1997. lien without, however, specifying the amount, and
required its full satisfaction by petitioner prior to the
4.6 The court a quo resolved a significant and execution of the judgment in G.R. No. 107243.
consequential matter entirely relying on documents Under said circumstances, petitioner reiterated
submitted by private respondents totally that neither this Courts decision nor the trial courts
disregarding clearly contrary evidence submitted resolutions specified any amount for the
by PNB. warehousemans lien, either in the bodies or
dispositive portions thereof. Petitioner therefore
4.7 The court a quo misquoted and misinterpreted questioned the propriety of the computation of the
the Supreme Court Decision dated 18 April 1997. warehousemans lien in the assailed order of 15 April
1997.
D. THE COURT A QUO ACTED WITH GRAVE
ABUSE OF DISCRETION IN NOT HOLDING Petitioner further characterized as highly
THAT PRIVATE RESPONDENTS HAVE LONG irregular the trial courts final determination of such
WAIVED THEIR RIGHT TO CLAIM ANY lien in a mere interlocutory order without explanation,
WAREHOUSEMANS LIEN. as such should or could have been done only by way of
a judgment on the merits. Petitioner likewise reasoned
4.8 Private respondents raised the matter of their that a writ of execution was proper only to implement
entitlement to a warehousemans lien for storage a final and executory decision, which was not present
fees and preservation expenses for the first time in the instant case. Petitioner then cited the cases of
only during the execution proceedings of the Edward v. Arce, where we ruled that the only portion
Decision in favor of PNB. of the decision which could be the subject of execution
was that decreed in the dispositive part,[9] and Ex-
4.9 Private respondents claim for warehousemans Bataan Veterans Security Agency, Inc. v. National Labor
lien is in the nature of a compulsory counterclaim Relations Commission,[10] where we held that a writ of
which should have been included in private execution should conform to the dispositive portion to
respondents answer to the Complaint.Private be executed, otherwise, execution becomes void if in
respondents failed to include said claim in their excess of and beyond the original judgment.
answer either as a counterclaim or as an Petitioner likewise emphasized that the hearing of
alternative defense to PNBs Complaint. 21 February 1995 was marred by procedural
infirmities, narrating that the trial court proceeded
4.10 Private respondents claim is likewise lost by with the hearing notwithstanding the urgent motion
virtue of a specific provision of the Warehouse for postponement of petitioners counsel of record, who
Receipts Law and barred by prescription and attended a previously scheduled hearing in Pampanga.
laches. However, petitioners lawyer-representative was sent
to confirm the allegations in said motion. To
E. PUBLIC RESPONDENT JUDGE ACTED WITH petitioners dismay, instead of granting a
GRAVE ABUSE OF DISCRETION IN REFUSING postponement, the trial court allowed the continuance
of the hearing on the basis that there was nothing Performance by Philippine Sugar Refineries from 1989
sensitive about [the presentation of private to 1994, in disregard of Noahs Arks certified reports
respondents evidence].[11] At the same hearing, the that it did not have sufficient sugar stock to cover the
trial court admitted all the documentary evidence quantity specified in the subject quedans. Between the
offered by private respondents and ordered the filing two, petitioner urged, the latter should have been
of the parties respective memoranda. Hence, petitioner accorded greater evidentiary weight.
was virtually deprived of its right to cross-examine the
Petitioner then argued that the trial courts second
witness, comment on or object to the offer of evidence
assailed order of 14 July 1997 misinterpreted our
and present countervailing evidence. In fact, to date,
decision in G.R. No. 119231 by ruling that the Refining
petitioners urgent motion to nullify the court
Contract under which the subject sugar stock was
proceedings remains unresolved.
produced bound the parties. According to petitioner,
To stress its point, petitioner underscores the the Refining Contract never existed, it having been
conflicting views of Judge Benito C. Se, Jr., who heard denied by Rosa Ng Sy; thus, the trial court could not
and tried almost the entire proceedings, and his have properly based its computation of the
successor, Judge Marcelino L. Sayo, Jr., who issued the warehousemans lien on the Refining Contract.
assailed orders. In the resolution[12] of 1 March 1995, Petitioner maintained that a separate trial was
Judge Se found private respondents claim for necessary to settle the issue of the warehousemans
warehouse lien in the amount of P734,341,595.06 lien due Noahs Ark, if at all proper.
unacceptable, thus:
Petitioner further asserted that Noahs Ark could
no longer recover its lien, having raised the issue for
In connection with [private respondents] claim for
the first time only during the execution proceedings of
payment of warehousing fees and expenses, this Court
this Courts decision in G.R. No. 107243. As said claim
cannot accept [private respondents] pretense that they
was a separate cause of action which should have been
are entitled to storage fees and preservation expenses
raised in private respondents answer with
in the amount of P734,341,595.06 as shown in their
counterclaim to petitioners complaint, private
Exhibits 1 to 11. There would, however, appear to be
respondents failure to raise said claim should have
legal basis for their claim for fees and expenses
been deemed a waiver thereof.
covered during the period from the time of the
issuance of the five (5) quedans until demand for their Petitioner likewise insisted that under Section
delivery was made by [petitioner] prior to the 29[19] of the Warehouse Receipts Law, private
institution of the present action. [Petitioner] should respondents were barred from claiming the
not be made to shoulder the warehousing fees and warehousemans lien due to their refusal to deliver the
expenses after the demand was made. xxx[13] goods upon petitioners demand. Petitioner further
raised that private respondents failed to timely assert
Since it was deprived of a fair opportunity to their claim within the five-year prescriptive period,
present its evidence on the warehousemans lien due citing Article 1149[20] of the New Civil Code.
Noahs Ark, petitioner submitted the following
Finally, petitioner questioned the trial courts
documents: (1) an affidavit of petitioners credit
refusal to lift the garnishment order considering that
investigator[14] and his report[15] indicating that Noahs
the levy on its real property, with an estimated market
Ark only had 1,490 50kg. bags, and not 86,356.41 50kg.
value of P6,000,000,000, was sufficient to satisfy the
bags, of sugar in its warehouse; (2) Noahs Arks
judgment award; and contended that the garnishment
reports[16] for 1990-94 showing that it did not have
was contrary to Section 103[21] of the Bangko Sentral
sufficient sugar stock to cover the quantity specified in
ng Pilipinas Law (Republic Act No. 7653).
the subject quedans; (3) Circular Letter No. 18 (s.
1987-88)[17] of the Sugar Regulatory Administration On 8 August 1997, we required respondents to
requiring sugar mill companies to submit reports at comment on the petition and issued a temporary
weeks end to prevent the issuance of warehouse restraining order enjoining the trial court from
receipts not covered by actual inventory; and (4) an implementing its orders of 15 April and 14 July 1997.
affidavit of petitioners assistant vice
president alleging that Noahs Arks daily storage fee
[18] In their comment, private respondents first sought
of P4/bag exceeded the prevailing industry rate. the lifting of the temporary restraining order, claiming
that petitioner could no longer seek a stay of the
Petitioner, moreover, laid stress on the fact that in execution of this Courts decision in G.R. No. 119231
the questioned order of 14 July 1997, the trial court which had become final and executory; and the
relied solely on the Annual Synopsis of Production & petition raised factual issues which had long been
Performance Date/Annual Compendium of resolved in the decision in G.R. No. 119231, thereby
rendering the instant petition moot and presented and bewailed its belated attempts to present
academic. They underscored that CA-G.R. No. SP No. contrary evidence through its pleadings. Nonetheless,
25938, G.R. No. 107243 and G.R. No. 119231 all said evidence was even considered by the trial court
sustained their claim for a warehousemans lien, while when petitioner sought a reconsideration of the first
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
entitled to a warehousemans lien, for which reason, for the storage and preservation of the sugar
the execution of the judgment in favor of petitioner stock; and denied having waived their warehousemans
was stayed until the latters full payment of the lien. lien, an issue already raised and rejected by this Court
This resolution was then affirmed by this Court in our in G.R. 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
hearing, petitioner was represented by counsel who
39 of the 1997 Rules of Civil Procedure, which
failed to object to the presentation and offer of their
provided that the sheriff must levy on all the property
evidence consisting of the five quedans, Refining
of the 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
of res judicata could bar this petition as the element of of Noahs Ark a warehousemans lien under Section 27
a final and executory judgment was lacking. Petitioner of R.A. No. 2137 and directing that the execution of the
likewise disputed the claim that the resolution of 1 judgment in favor of PNB be stayed and/or precluded
March 1995 was final and executory, otherwise private until the full amount of Noahs Arks lien is satisfied
respondents would not have filed an opposition and conformably with Section 31 of R.A. No. 2137?
motion for partial reconsideration[26] two years
later. Petitioner also contended that the issues raised (3) Is [petitioner] liable for storage fees (a) from the
in this petition were not resolved in G.R. No. 119231, issuance of the quedans in 1989 to Rosa Sy, St. Therese
as what was resolved there was private respondents Merchandising and RNS Merchandising, up to their
mere entitlement to a warehousemans lien, without assignment by endorsees Ramos and Zoleta to
specifying a corresponding amount. In the instant [petitioner] for their loan; or (b) after [petitioner] has
petition, the issues pertained to the amount and filed an action for specific performance and damages
enforceability of said lien based on the arbitrary (Civil Case No. 90-53023) against Noahs Ark for the
manner the amount was determined by the trial court. latters failure to comply with [petitioners] demand for
the delivery of the sugar?
Petitioner further argued that the refining
contracts private respondents invoked could not bind
the former since it was not a party thereto. In fact, said (4) Did respondent Judge commit grave abuse of
contracts were not even attached to the quedans when discretion as charged?[28]
negotiated; and that their validity was repudiated by a
supposed party thereto, Rosa Ng Sy, who claimed that In our resolution of 24 November 1997, we
the contract was simulated, thus void pursuant to summarized the positions of the parties on these
Article 1345 of the New Civil Code. Should the refining issues, thus:
contracts in turn be declared void, petitioner
advocated that any determination by the court of the Expectedly, counsel for petitioner submitted
existence and amount of the warehousemans lien due that certiorari under Rule 65 of the Rules of Court is
should be arrived at using the test of reasonableness. the proper remedy and not an ordinary appeal,
Petitioner likewise noted that the other refining contending, among others, that the order of execution
contracts[27] presented by private respondents to show was not final. On the other hand, counsel for
similar storage fees were executed between the years respondents maintained that petitioner PNB
1996 and 1997, several years after 1989. Thus, disregarded the hierarchy of courts as it bypassed the
petitioner concluded, private respondents could not Court of Appeals when it filed the instant petition
claim that the more recent and increased rates where before this Court.
those which prevailed in 1989.
On the second issue, counsel for petitioner submitted
Finally, petitioner asserted that in the event that that the trial court had no authority to issue the writ of
this Court should uphold the trial courts determination execution or if it had, it denied PNB due process when
of the amount of the warehousemans lien, petitioner it held PNB liable for the astronomical amount
should be allowed to exercise its option as a judgment of P734,341,595.06 as warehousemans lien or storage
obligor to specify which of its properties may be levied fees. Counsel for respondent, on the other hand,
upon, citing Section 9(b), Rule 39 of the 1997 Rules of contended that the trial courts authority to issue the
Civil Procedure. Petitioner claimed to have been questioned writ of execution is derived from the
deprived of this option when the trial court issued the decision in G.R. No. 119231 which decision allegedly
garnishment and levy orders. provided for ample or sufficient parameters for the
The petition was set for oral argument on 24 computation of the storage fees.
November 1997 where the parties addressed the
following issues we formulated for them to discuss: On the third issue, counsel for petitioner while
presupposing that PNB may be held to answer for
(1) Is this special civil action the appropriate remedy? storage fees, contended that the same should start
from the time the endorsees of the sugar quedans
(2) Has the trial court the authority to issue a writ of defaulted in their payments, i.e., 1990 because before
execution on Noahs Arks claims for storage fees that, respondent Noahs Arks claim was that it was the
considering that this Court in G.R. No. 119231 merely owner of the sugar covered by the quedans. On the
sustained the trial courts order of 20 December 1994 other hand, respondents counsel pointed out that
granting the Noahs Ark Omnibus Motion and setting PNBs liability should start from the issuance of the
the reception of evidence on its claims for storage fees, quedans in 1989.
and of 1 March 1995 finding that there existed in favor
The arguments on the fourth issue, hinge on the or with grave abuse of discretion and alleged that it
parties arguments for or against the first three had no other plain, speedy and adequate remedy in the
issues. Counsel for petitioner stressed that the trial ordinary course of law. As hereafter shown, these
court indeed committed a grave abuse of discretion, claims were not unfounded, thus the propriety of this
while respondents counsel insisted that no grave special civil action is beyond question.
abuse of discretion was committed by the trial
This Court has original jurisdiction, concurrent
court.[29]
with that of Regional Trial Courts and the Court of
Appeals, over petitions for certiorari,
Private respondents likewise admitted that during
prohibition, mandamus, quo warranto and habeas
the pendency of the case, they failed to avail of their
corpus,[33] and we entertain direct resort to us in cases
options as a warehouseman. Concretely, they could
where special and important reasons or exceptional
have enforced their lien through the foreclosure of the
and compelling circumstances justify the
goods or the filing of an ordinary civil action. Instead,
same.[34] These reasons and circumstances are present
they sought to execute this Courts judgment in G.R. No.
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
not adequate, or equally beneficial, speedy and
G.R. No. 119231, we already recognized their right to
sufficient.[32]
have such charges and fees determined in Civil Case
Petitioner assailed the challenged orders as No. 90-53023. The import of our holding in G.R. No.
having been issued without or in excess of jurisdiction 119231 was that private respondents were likewise
entitled to a judgment on their warehouse charges and
fees, and the eventual satisfaction thereof, thereby The indorsement and delivery of the warehouse
avoiding having to file another action to recover these receipts (quedans) by Ramos and Zoleta to petitioner
charges and fees, which would only have further was not to convey title to or ownership of the goods
delayed the resolution of the respective claims of the but to secure (by way of pledge) the loans granted to
parties, and as a corollary thereto, the indefinite Ramos and Zoleta by petitioner. The indorsement of
deferment of the execution of the judgment in G.R. No. the warehouse receipts (quedans), to perfect the
107243. Thus we note that petitioner, in fact, already pledge,[39] merely constituted a symbolical or
acquiesced to the scheduled dates previously set for constructive delivery of the possession of the thing
the hearing on private respondents warehousemans thus encumbered.[40]
charges.
The creditor, in a contract of real security, like
However, as will be shown below, it would be pledge, cannot appropriate without foreclosure the
premature to execute the order fixing the things given by way of pledge.[41] Any stipulation to the
warehousemans charges and fees. contrary, termed pactum commissorio, is null and
void.[42] The law requires foreclosure in order to allow
C. Petitioner is Liable for Storage Fees.
a transfer of title of the good given by way of security
We confirmed petitioners liability for storage fees from its pledgor,[43] and before any such foreclosure,
in G.R. No. 119231. However, petitioners status as to the pledgor, not the pledgee, is the owner of the
the quedans must first be clearly defined and goods. In Philippine National Bank v. Atendido,[44] we
delineated to be able to determine the extent of its said:
liability.
The delivery of the palay being merely by way of
Petitioner insisted, both in its petition and during security, it follows that by the nature of the transaction
the oral arguments on 24 November 1997, that it was a its ownership remains with the pledgor subject only to
mere pledgee as the quedans were used to secure two foreclosure in case of non-fulfillment of the
loans it granted.[36] In our decision in G.R. No. 107243, obligation. By this we mean that if the obligation is not
we upheld this contention of petitioner, thus: paid upon maturity the most that the pledgee can do is
to sell the property and apply the proceeds to the
Zoleta and Ramos then used the quedans as payment of the obligation and to return the balance, if
security for loans obtained by them from the any, to the pledgor (Art. 1872, Old Civil Code [Art.
Philippine National Bank (PNB) as security for 2112, New Civil Code]). This is the essence of this
loans obtained by them in the amounts of P23.5 contract, for, according to law, a pledgee cannot
million and P15.6 million, become the owner of, nor appropriate to himself, the
respectively. These quedans they indorsed to the thing given in pledge (Article 1859, Old Civil Code [Art.
bank.[37] 2088, New Civil Code]) The fact that the warehouse
receipt covering palay was delivered, endorsed in
As such, Martinez v. Philippine National blank, to the bank does not alter the situation, the
Bank[38] becomes relevant: purpose of such endorsement being merely to transfer
the juridical possession of the property to the pledgees
In conclusion, we hold that where a warehouse receipt and to forestall any possible disposition thereof on the
or quedan is transferred or endorsed to a creditor only part of the pledgor. This is true notwithstanding the
to secure the payment of a loan or debt, the transferee provisions of the Warehouse Receipt Law.
or endorsee does not automatically become the owner
of the goods covered by the warehouse receipt or The warehouseman, nevertheless, is entitled to
quedan but he merely retains the right to keep and the warehousemans lien that attaches to the goods
with the consent of the owner to sell them so as to invokable against anyone who claims a right of
satisfy the obligation from the proceeds of the sale, this possession thereon.
for the simple reason that the transaction involved is
not a sale but only a mortgage or pledge, and that if the The next issue to resolve is the duration of time
property covered by the quedans or warehouse the right of petitioner over the goods may be held
receipts is lost without the fault or negligence of the subject to the warehousemans lien.
mortgagee or pledgee or the transferee or endorsee of Sections 8, 29 and 31 of the Warehouse Receipts
the warehouse receipt or quedan, then said goods are Law now come to fore. They provide, as follows:
to be regarded as lost on account of the real owner,
mortgagor or pledgor.
SECTION 8. Obligation of warehousemen to deliver. A
warehouseman, in the absence of some lawful excuse
provided by this Act, is bound to deliver the goods
upon a demand made either by the holder of a receipt (2) That the warehouseman has legal title in
for the goods or by the depositor, if such demand is himself on the goods, such title or right being
accompanied with: derived directly or indirectly from a transfer
made by the depositor at the time of or
(a) An offer to satisfy warehousemans lien; subsequent to the deposit for storage, or from the
warehousemans lien. (Sec. 16, Act No. 2137)
(b) An offer to surrender the receipt, if
negotiable, with such (3) That the warehouseman has legally set up
indorsements as would be the title or right of third persons as lawful defense
necessary for the negotiation of for non-delivery of the goods as follows:
the receipt; and
(a) Where the warehouseman has been requested, by
(c) A readiness and willingness to sign, or on behalf of the person lawfully entitled to a right of
when the goods are delivered, property of or possession in the goods, not to make
an acknowledgment that they such delivery (Sec. 10, Act No. 2137), in which case, the
have been delivered, if such warehouseman may, either as a defense to an action
signature is requested by the brought against him for nondelivery of the goods, or as
warehouseman. an original suit, whichever is appropriate, require all
known claimants to interplead (Sec. 17, Act No. 2137);
In case the warehouseman refuses or fails to deliver
the goods in compliance with a demand by the holder (b) Where the warehouseman had information that the
or depositor so accompanied, the burden shall be upon delivery about to be made was to one not lawfully
the warehouseman to establish the existence of a entitled to the possession of the goods (Sec. 10, Act No.
lawful excuse for such refusal. 2137), in which case, the warehouseman shall be
excused from liability for refusing to deliver the goods,
SECTION 29. How the lien may be lost. A either to the depositor or person claiming under him
warehouseman loses his lien upon goods; or to the adverse claimant, until the warehouseman
has had a reasonable time to ascertain the validity of
(a) By surrendering possession thereof, or the adverse claims or to bring legal proceedings to
compel all claimants to interplead (Sec. 18, Act No.
(b) By refusing to deliver the goods when a 2137); and
demand is made with which he is
bound to comply under the provisions (c) Where the goods have already been lawfully sold to
of this Act. third persons to satisfy a warehousemans lien, or have
been lawfully sold or disposed of because of their
SECTION 31. Warehouseman need not deliver until lien perishable or hazardous nature. (Sec. 36, Act No. 2137).
is satisfied. A warehouseman having a lien valid against
the person demanding the goods may refuse to deliver (4) That the warehouseman having a lien valid against
the goods to him until the lien is satisfied. the person demanding the goods refuses to deliver the
goods to him until the lien is satisfied. (Sec. 31, Act No.
Simply put, where a valid demand by the lawful 2137)
holder of the quedans for the delivery of the goods is
refused by the warehouseman, despite the absence of a (5) That the failure was not due to any fault on the part
lawful excuse provided by the statute itself, the of the warehouseman, as by showing that, prior to
warehousemans lien is thereafter concomitantly demand for delivery and refusal, the goods were stolen
lost. As to what the law deems a valid demand, Section or destroyed by fire, flood, etc., without any negligence
8 enumerates what must accompany a demand; while on his part, unless he has contracted so as to be liable
as regards the reasons which a warehouseman may in such case, or that the goods have been taken by the
invoke to legally refuse to effect delivery of the goods mistake of a third person without the knowledge or
covered by the quedans, these are: implied assent of the warehouseman, or some other
justifiable ground for non-delivery. (67 C.J. 532)[45]
(1) That the holder of the receipt does not
satisfy the conditions prescribed in Section 8 of Regrettably, the factual settings do not sufficiently
the Act. (See Sec. 8, Act No. 2137) indicate whether the demand to obtain possession of
the goods complied with Section 8 of the law. The
presumption, nevertheless, would be that the law was
complied with, rather than breached, by memorandum. Likewise, plaintiff [petitioner] is given
petitioner. Upon the other hand, it would appear that five (5) days, from receipt of defendants [private
the refusal of private respondents to deliver the goods respondents] memorandum, to file its comment
was not anchored on a valid excuse, i.e., non- thereto. Thereafter the same shall be deemed
satisfaction of the warehousemans lien over the goods, submitted for decision.
but on an adverse claim of ownership. Private
respondents justified their refusal to deliver the goods, SO ORDERED.[48]
as stated in their Answer with Counterclaim and Third-
Party Complaint in Civil Case No. 90-53023, by Nowhere in the transcript of stenographic notes,
claiming that they are still the legal owners of the however, does it show that petitioner was afforded an
subject quedans and the quantity of sugar represented opportunity to comment on, much less, object to,
therein. Under the circumstances, this hardly qualified private respondents offer of exhibits, or even present
as a valid, legal excuse. The loss of the warehousemans its evidence on the matter in dispute. In fact, petitioner
lien, however, does not necessarily mean the immediately moved to nullify the proceedings
extinguishment of the obligation to pay the conducted during that hearing, but its motion was
warehousing fees and charges which continues to be ignored and never resolved by the trial
a personal liability of the owners, i.e., the pledgors, not court. Moreover, it cannot be said that petitioners filing
the pledgee, in this case. But even as to the owners- of subsequent pleadings, where it attached its
pledgors, the warehouseman fees and charges have affidavits and documents to contest the
ceased to accrue from the date of the rejection by warehousemans lien, was sufficient to fully satisfy the
Noahs Ark to heed the lawful demand by petitioner for requirements of due process. The subsequent
the release of the goods. pleadings were filed only to show that petitioner had
The finality of our denial in G.R. No. 119231 of evidence to refute the claims of private respondents or
petitioners petition to nullify the trial courts order of that the latter were not entitled thereto, but could not
01 March 1995 confirms the warehousemans lien; have adequately substituted for a full-blown
however, such lien, nevertheless, should be confined to opportunity to present its evidence, given the
the fees and charges as of the date in March 1990 when exorbitant amounts involved. This, when coupled with
Noahs Ark refused to heed PNBs demand for delivery the fact that the motion to postpone the hearing filed
of the sugar stocks and in no event beyond the value of by petitioners counsel was not unreasonable, leads us
the credit in favor of the pledgee (since it is basic that, to conclude that petitioners right to fully present its
in foreclosures, the buyer does not assume the case was rendered nugatory. It is thus evident to us
obligations of the pledgor to his other creditors even that there was undue and unwarranted haste on the
while such buyer acquires title over the goods less any part of respondent court to rule in favor of private
existing preferred lien thereover).[46] The foreclosure respondents. We do not hesitate to say that any tilt of
of the thing pledged, it might incidentally be the scales of justice, no matter how slight, evokes
mentioned, results in the full satisfaction of the loan suspicion and erodes a litigants faith and hope in
liabilities to the pledgee of the pledgors.[47] seeking recourse before courts of law.

D. Respondent Judge Committed Grave Abuse Likewise do we refuse to give credence to private
of Discretion. respondents allegation that the parties agreed that
petitioners presentation of evidence would be
We hold that the trial court deprived petitioner of submitted on the basis of affidavits,[49] without,
due process in rendering the challenged order of 15 however, specifying any order or written agreement to
April 1996 without giving petitioner an opportunity to that effect.
present its evidence. During the final hearing of the
case, private respondents commenced and concluded It is interesting to note that among the evidence
their presentation of evidence as to the matter of the petitioner wanted to present were reports obtained
existence of and amount owing due to their from Noahs Ark, disclosing that the latter failed to
warehousemans lien. Their exhibits were duly marked maintain a sufficient inventory to satisfy the sugar
and offered, and the trial court thereafter ruled, to wit: stock covered by the subject quedans. This was a
serious allegation, and on that score alone, the trial
court should have allowed a hearing on the matter,
Court: Order.
especially in light of the magnitude of the claims
sought. If it turns out to be true that the stock of sugar
With the admission of Exhibits 1 to 11, inclusive of
Noahs Ark had in possession was below the quantities
submarkings, as part of the testimony of Benigno
specified in the quedans, then petitioner should not be
Bautista, the defendant [private respondents] is given
five (5) days from today to file its
made to pay for storage and preservation expenses for LOOYUKO, JIMMY T. GO and WILSON T.
non-existent goods. GO, respondents.
It was likewise grave abuse of discretion on the SYLLABUS
part of respondent court to order immediate execution
1. COMMERCIAL LAW; WAREHOUSE RECEIPTS
of the 15 April 1997 order. We ruled earlier that said
LAW; THE UNCONDITIONAL PRESENTMENT OF
order was in the nature of a final order fixing the
THE RECEIPTS FOR PAYMENT CARRIED WITH
amount of the warehousemans charges and fees, and
IT THE ADMISSIONS OF THE EXISTENCE AND
petitioners net liability, after the set-off of the money
VALIDITY OF THE TERMS, CONDITIONS AND
judgment in its favor in G.R. No. 107243. Section 1 of
STIPULATIONS WRITTEN ON THE FACE OF THE
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
upon a judgment or order that disposes of the action or
PAYMENT OF WAREHOUSEMANS LIEN FOR
proceeding upon the expiration of the period to appeal
STORAGE FEES AND PRESERVATION
therefrom if no appeal has been duly
EXPENSES; CASE AT BAR. - Petitioner is in
perfected. Execution pending appeal is, however,
estoppel in disclaiming liability for the payment of
allowed in Section 2 thereof, but only on motion with
storage fees due the private respondents as
due notice to the adverse party, more importantly, only
warehouseman while claiming to be entitled to
upon good reasons shown in a special order. Here,
the sugar stocks covered by the subject
there is no showing that a motion for execution
Warehouse Receipts on the basis of which it
pending appeal was filed and that a special order was
anchors its claim for payment or delivery of the
issued by respondent court. Verily, the immediate
sugar stocks. The unconditional presentment of
execution only served to further strengthen our
the receipts by the petitioner for payment against
perception of undue and unwarranted haste on the
private respondents on the strength of the
part of respondent court in resolving the issue of the
provisions of the Warehouse Receipts Law (R.A.
warehousemans lien in favor of private respondents.
2137) carried with it the admission of the
In light of the above, we need not rule anymore on existence and validity of the terms, conditions and
the fourth formulated issue. stipulations written on the face of the Warehouse
Receipts, including the unqualified recognition of
WHEREFORE, the petition is GRANTED. The
the payment of warehousemans lien for storage
challenged orders of 15 April and 14 July 1997,
fees and preservation expenses. Petitioner may
including the notices of levy and garnishment, of the
not now retrieve the sugar stocks without paying
Regional Trial Court of Manila, Branch 45, in Civil Case
the lien due private respondents as
No. 90-53023 are REVERSED and SET ASIDE, and said
warehouseman.
court is DIRECTED to conduct further proceedings in
said case: 2. ID.; ID.; ID.; WAREHOUSEMANS LIEN;
POSSESSORY IN NATURE. - While the PNB is
(1) to allow petitioner to present its evidence
entitled to the stocks of sugar as the endorsee of
on the matter of the warehousemans lien;
the quedans, delivery to it shall be effected only
(2) to compute the petitioners upon payment of the storage fees. Imperative is
warehousemans lien in light of the the right of the warehouseman to demand
foregoing observations; and payment of his lien at this juncture, because, in
accordance with Section 29 of the Warehouse
(3) to determine whether, for the relevant Receipts Law, the warehouseman loses his lien
period, Noahs Ark maintained a sufficient upon goods by surrendering possession thereof.
inventory to cover the volume of sugar In other words, the lien may be lost where the
specified in the quedans. warehouseman surrenders the possession of the
Costs against private respondents. goods without requiring payment of his lien,
because a warehousemans lien is possessory in
SO ORDERED. nature.
APPEARANCES OF COUNSEL

PHILIPPINE NATIONAL BANK, petitioner, vs. HON. Rolan A. Nieto for petitioner.
PRES. JUDGE BENITO C. SE, Madella & Cruz Law Offices for private
JR., RTC, BR. 45, MANILA; respondents.
NOAHS ARK SUGAR REFINERY; ALBERTO T.
DECISION
HERMOSISIMA, JR., J.: Receipt No. 18081, covering sugar deposited by St.
Therese Merchandising; (d)March 31, 1989, Receipt
The source of conflict herein is the question as to No. 18086, covering sugar deposited by St. Therese
whether the Philippine National Bank should pay Merchandising; and (e) April 1, 1989, Receipt No.
storage fees for sugar stocks covered by five (5) 18087, covering sugar deposited by RNS
Warehouse Receipts stored in the warehouse of Merchandising. The receipts are substantially in the
private respondents in the face of the Court of Appeals form, and contains the terms, prescribed for negotiable
decision (affirmed by the Supreme Court) declaring the warehouse receipts by Section 2 of the law.
Philippine National Bank as the owner of the said
Subsequently, Warehouse Receipts Nos. 18080
sugar stocks and ordering their delivery to the said
and 18081 were negotiated and endorsed to Luis T.
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
Ramos and Zoleta then used the quedans as security
before delivering the sugar stocks as ordered by the
for two loan agreements - one for P15.6 million and the
Court of Appeals or need he file a separate action to
other for P23.5 million - obtained by them from the
enforce payment of storage fees?
Philippine National Bank. The aforementioned
The herein petition seeks to annul: (1) the quedans were endorsed by them to the Philippine
Resolution of respondent Judge Benito C. Se, Jr. of the National Bank.
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
Consequently, on March 16, 1990, the Philippine
claim of respondents Noahs Ark Sugar Refinery, et al.,
National Bank wrote to Noahs Ark Sugar Refinery
for storage fees and preservation expenses over sugar
demanding delivery of the sugar stocks covered by the
stocks covered by five (5) Warehouse Receipts which
quedans endorsed to it by Zoleta and Ramos. Noahs
is 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
warehousemans lien on the sugar stocks covered by
three 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
judgment; and a Writ of Mandamus to compel Noahs Ark and its co-defendants filed an Answer
respondent RTC Judge to issue a Writ of Execution in with Counterclaim and Third-Party Complaint in which
accordance with the said executory Supreme Court they claimed that they are the owners of the subject
decision. quedans and the sugar represented therein, averring
as they did that:

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


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
reason of payment stopped and drawn against What is determinative of the propriety of summary
insufficient funds, judgment is not the existence of conflicting claims from
prior parties but whether from an examination of the
*** Upon proper notification to said vendees and pleadings, depositions, admissions and documents on
plaintiff in due course, defendants refused to deliver to file, the defenses as to the main issue do not tender
vendees therein the quantity of sugar covered by the material questions of fact (see Garcia vs. Court of
subject quedans. Appeals, 167 SCRA 815) or the issues thus tendered are
in fact sham, fictitious, contrived, set up in bad faith or
10. *** Considering that the vendees and first so unsubstantial as not to constitute genuine issues for
endorsers of subject quedans did not acquire trial. (See Vergara vs. Suelto, et al., 156 SCRA 753;
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 record,
Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng, would constitute a waste of time and an injustice to the
praying that the latter be ordered to deliver or return PNB whose rights to relief to which it is plainly entitled
to them the quedans (previously endorsed to PNB and 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
On December 13, 1991, the Court of Appeals
damages to him.
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 On June 18, 1992, the trial court rendered judgment
prayed 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:
(a) to deliver to the petitioner Philippine On February 28, 1995, the Philippine National
National Bank, the sugar stocks covered by Bank filed a Manifestation with Urgent Motion to
the Warehouse Receipts/ Quedans which Nullify Court Proceedings. In adjudication thereof, the
are now in the latters possession as holder trial court issued the following order on March 1,
for value and in due course; or alternatively, 1995:
to pay (said) plaintiff actual damages in the
amount of P39.1 million, with legal interest WHEREFORE, this court hereby finds that there exists in
thereon from the filing of the complaint favor of the defendants a valid warehousemans lien
until full payment; and under Section 27 of Republic Act 2137 and accordingly,
execution of the judgment is hereby ordered stayed and/
(b) to pay plaintiff Philippine National Bank
or precluded until the full amount of defendants lien on
attorneys fees, litigation expenses and
the sugar stocks covered by the five (5) quedans subject
judicial costs hereby fixed at the amount of
of this action shall have been satisfied conformably with
One Hundred Fifty Thousand Pesos
the provisions of Section 31 of Republic Act 2137. 5
(P150,000.00) as well as the costs.
Consequently, the Philippine National Bank filed
SO ORDERED.3
the herein petition to seek the nullification of the
above-assailed orders of respondent judge.
On September 29, 1993, private respondents
moved for reconsideration of this decision. A The PNB submits that:
Supplemental/Second Motion for Reconsideration
I
with leave of court was filed by private respondents
on November 8, 1993. We denied private respondents
motion on January 10, 1994. . PNBs RIGHT TO A WRIT OF EXECUTION IS SUPPORTED
BY TWO FINAL AND EXECUTORY DECISIONS:
Private respondents filed a Motion Seeking THE DECEMBER 13, 1991 COURT OF APPEALS
Clarification of the Decision, dated September 1, 1993. DECISION IN CA-G.R. SP. NO. 25938; AND,
We denied this motion in this manner: THE NOVEMBER 9, 1992 SUPREME COURT DECISION IN
G.R NO. 107243. RESPONDENT RTCS MINISTERIAL AND
It bears stressing that the relief granted in this Courts MANDATORY DUTY IS TO ISSUE THE WRIT OF
decision of September 1, 1993 is precisely that set out in EXECUTION TO IMPLEMENT THE DECRETAL PORTION
the final and executory decision of the Court of Appeals OF SAID SUPREME COURT DECISION
in CA-G.R. SP No. 25938, dated December 13, 1991,
which was affirmed in toto by this Court and which II
became unalterable upon becoming final and
executory. 4 RESPONDENT RTC IS WITHOUT JURISDICTION TO
HEAR PRIVATE RESPONDENTS OMNIBUS MOTION. THE
Private respondents thereupon filed before the CLAIMS SET FORTH IN SAID MOTION: (1) WERE
trial court an Omnibus Motion seeking among others ALREADY REJECTED BY THE SUPREME COURT IN
the deferment of the proceedings until private ITS MARCH 9, 1994 RESOLUTION DENYING PRIVATE
respondents are heard on their claim for RESPONDENTS MOTION FOR CLARIFICATION OF
warehousemans lien. On the other hand, on August 22, DECISION IN .G.R. NO. 107243; AND (2) ARE BARRED
1994, the Philippine National Bank filed a Motion for FOREVER BY PRIVATE RESPONDENTS FAILURE TO
the Issuance of a Writ of Execution and an Opposition INTERPOSE THEM IN THEIR ANSWER, AND FAILURE
to the Omnibus Motion filed by private respondents. TO APPEAL FROM THE JUNE 18, 1992 RTC DECISION IN
CIVIL CASE NO. 90-52023
The trial court granted private respondents
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 RESPONDENT RTCS ONLY JURISDICTION IS TO ISSUE
determination of private respondents claim. THE WRIT TO EXECUTE THE SUPREME COURT
DECISION. THUS, PNB IS ENTITLED TO: (1) A WRIT OF
On February 21, 1995, private respondents claim CERTIORARI TO ANNUL THE RTC RESOLUTION
for lien was heard and evidence was received in DATED DECEMBER 20, 1994 AND THE ORDER
support thereof. The trial court thereafter gave both DATED FEBRUARY 7, 1995 AND ALL PROCEEDINGS
parties five (5) days to file respective memoranda. TAKEN BY THE RTC THEREAFTER; (2) A WRIT OF
PROHIBITION TO PREVENT RESPONDENT RTC FROM
FURTHER PROCEEDING WITH CIVIL CASE NO. 90-53023 1991, in CA-G.R. SP. No. 25938. We are not persuaded
AND COMMITTING OTHER ACTS VIOLATIVE OF THE by the petitioners argument that our said resolution
SUPREME COURT DECISION IN G.R. NO. 107243; AND carried with it the denial of the warehousemans lien
(3) A WRIT OF MANDAMUS TO COMPEL RESPONDENT over the sugar stocks covered by the subject
RTC TO ISSUE THE WRIT TO EXECUTE THE SUPREME Warehouse Receipts. We have simply resolved and
COURT JUDGMENT IN FAVOR OF PNB upheld in our decision, dated September 1, 1993, the
propriety of summary judgment which was then
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 retaining ownership of the stocks of sugar covered by
that the denial by this Court on March 9, 1994 of the the endorsed quedans. Stated otherwise, there was no
motion seeking clarification of our decision, dated point in taking up the issue of warehousemans lien
September 1, 1993, has foreclosed private respondents since the matter of ownership was as yet being
right to enforce their warehousemans lien for storage determined. Neither could storage fees be due then
fees and preservation expenses under the Warehouse while no one has been declared the owner of the sugar
Receipts 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
after they were negotiated to them by Luis T. Ramos
We have carefully examined our resolution,
and Cresencia K. Zoleta for a loan of P39.1 Million.
dated March 9, 1994, which denied Noahs Arks motion
Accordingly, petitioner PNB is legally bound to stand
for clarification of our decision, dated September 1,
by the express terms and conditions on the face of the
1993, wherein we affirmed in full and adopted the
Warehouse Receipts as to the payment of storage fees.
Court of Appeals earlier decision, dated December 13,
Even in the absence of such a provision, law and equity
dictate the payment of the warehouseman s lien Warehouse Receipts on the basis of which it anchors
pursuant to Sections 27 and 31 of the Warehouse its claim for payment or delivery of the sugar stocks.
Receipts Law (R.A. 2137), to wit: The unconditional presentment of the receipts by the
petitioner for payment against private respondents on
SECTION 27. What claims are included in the the strength of the provisions of the Warehouse
warehousemans lien. - Subject to the provisions of Receipts Law (R.A. 2137) carried with it the admission
section thirty, a warehouseman shall have lien on goods of the existence and validity of the terms, conditions
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
xxx xxx xxx fees.
SECTION 31. Warehouseman need not deliver until lien Imperative is the right of the warehouseman to
is satisfied. - A warehouseman having a lien valid demand payment of his lien at this juncture, because,
against the person demanding the goods may refuse to in accordance with Section 29 of the Warehouse
deliver the goods to him until the lien is satisfied. Receipts Law, the warehouseman loses his lien upon
goods by surrendering possession thereof. In other
After being declared not the owner, but the words, the lien may be lost where the warehouseman
warehouseman, by the Court of Appeals on December surrenders the possession of the goods without
13, 1991 in CA-G.R. SP. No. 25938, the decision having requiring payment of his lien, because a
been affirmed by us on December 1, 1993, private warehousemans lien is possessory in nature.
respondents cannot legally be deprived of their right to We, therefore, uphold and sustain the validity of
enforce their claim for warehousemans lien, for the assailed orders of public respondent,
reasonable storage fees and preservation expenses. dated December 20, 1994 and March 1, 1995.
Pursuant to Section 31 which we quote hereunder, the
goods under storage may not be delivered until said In fine, we fail to see any taint of abuse of
lien is satisfied. discretion on the part of the public respondent in
issuing the questioned orders which recognized the
SECTION 31. Warehouseman need not deliver until lien legitimate right of Noahs Ark, after being declared as
is satisfied. - A warehouseman having a lien valid warehouseman, to recover storage fees before it would
against the person demanding the goods may refuse to release to the PNB sugar stocks covered by the five (5)
deliver the goods to him until the lien is satisfied. Warehouse Receipts. Our resolution, dated March 9,
1994, did not preclude private respondents
Considering that petitioner does not deny the unqualified right to establish its claim to recover
existence, validity and genuineness of the Warehouse storage fees which is recognized under Republic Act
Receipts on which it anchors its claim for payment No. 2137. Neither did the Court of Appeals decision,
against private respondents, it cannot disclaim liability dated December 13, 1991, restrict such right.
for the payment of the storage fees stipulated therein. Our Resolutions reference to the decision by the
As contracts, the receipts must be respected by Court of Appeals, dated December 13, 1991, in CA-G.R.
authority of Article 1159 of the Civil Code, to wit: SP. No. 25938, was intended to guide the parties in the
subsequent disposition of the case to its final end. We
ART. 1159. Obligations arising from contracts have the certainly did not foreclose private respondents
force of law between the contracting parties and should inherent right as warehouseman to collect storage fees
be complied with in good faith. and preservation expenses as stipulated n the face of
each of the Warehouse Receipts and as provided for in
Petitioner is in estoppel in disclaiming liability for the Warehouse Receipts Law (R.A. 2137).
the payment of storage fees due the private
respondents as warehouseman while claiming to be
entitled to the sugar stocks covered by the subject
WHEREFORE, the petition should be, as it is, In accordance with Act No. 2137, the Warehouse
hereby dismissed for lack of merit. The questioned Receipts Law, Noah's Ark Sugar Refinery issued on
orders issued by public respondent judge are affirmed. several dates warehouse receipts (quedans) as follows:
Costs against the petitioner.
March 1, 1989, receipt No. 18062
SO ORDERED. covering sugar deposited by Rosa Sy;

March 7, 1989, receipt No. 18080


covering sugar deposited by RNS
G.R. No. 107243 September 1, 1993 Merchandising (Rosa Ng Sy);

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."
The Court, by Order dated June 28, 1990, denied the The answer of Rosa Ng Sy and Teresita Ng, dated
application for preliminary attachment after September 6, 1990, was essentially to the effect that
conducting a hearing thereon. It denied as well the the transaction between them and Jimmy T. Go
motion for reconsideration thereafter filed by PNB, by concerning the quedans and the sugar thereby covered
Order dated August 22, 1990. was "bogus and simulated (being part of the latter's)
complex banking schemes and financial maneuvers;"
Noah's Ark and its co-defendants then filed their that the simulated transaction "was just a tolling
responsive pleading entitled "Answer with scheme to
Counterclaim and Third Party Complaint," dated June avoid VAT payment and other BIR assessments
21, 1990 in which they claimed, inter alia, that they (considering that) as . . . confidentially intimated (by
"are still the legal owners of the subject quedans and said Jimmy Go) . . . Noah's Ark is under sequestration
the quantity of sugar represented thereon," a claim by the PCGG," and that the quedans "were in fact used
founded on the following averments, to wit: by Noah's Ark Executive Director, Luis T. Ramos, and
one Cresenciana K. Zoleta as security for their loans
. . . In an agreement dated April 1, 1989, from the bank . . . . (in the aggregate amount) of P39.1
defendants agreed to sell to Rosa Ng Sy million pesos."
of RNS Merchandising and Teresita Ng
of St. Therese Merchandising the total On January 31, 1991, PNB filed a "Motion for Summary
volume of sugar indicated in Judgment." It asserted that "from the pleadings,
the quedans stored at Noah's Ark Sugar documents, and admissions on file, there is no genuine
Refinery for a total consideration of issue as to a material fact proper for trial and that
P63,000,000.00, . . . The corresponding plaintiff is entitled as a matter of law, . . . (to) a
payments in the form of checks issued summary judgment." It contended that the defenses set
by the vendees in favor of defendants up by Noah's Ark, et al. in their responsive pleading
were subsequently dishonored by the involve purely questions of law — i.e., (a) that the
drawee banks by reason of "payment vendees of the sugar covered by the quedans in dispute
stopped" and "drawn against never acquired title to the goods because of their
insufficient funds," . . . Upon proper failure to pay the stipulated purchase price and hence,
notification to said vendees and ownership over the sugar was retained by Noah's Ark,
plaintiff in due course, defendants et al.; and (b) PNB's action is premature since as
refused to deliver to vendees therein pledgee it failed to exercise the remedies provided in
the quantity of sugar covered by the contract of pledge and the Civil Code. And it
subject quedans. specified in no little detail the admissions and
documents on record demonstrating the absence of
. . . Considering that the vendees and any genuine factual issue. On these premises, it prayed
first indorsers of subject quedans did "that a summary judgment be rendered for plaintiff
not acquire ownership thereof, the against the defendants for the reliefs prayed for in the
subsequent indorsers and plaintiff itself complaint," these reliefs being:
did not acquire a better right of
ownership than the original (a) to deliver to PNB the sugar stocks
vendees/first indorsers. covered by the Warehouse
Receipts/Quedans which are now in
The defendants also adverted to PNB's supposed the latter's possession as holder for
awareness "that subject quedans are not negotiable value and in due course; or
instruments within the purview of the Warehouse alternatively, to pay plaintiff actual
Receipts Law but simply an internal guarantee of damages in the amount of P39.1 Million
defendants in the sale of their stocks of sugar. . . ." 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 PNB's title to the sugar stock as holder
defendants Noah's Ark, et al., dated March 4, 1991, of the negotiable quedans.
asserting the existence of genuine issues, to wit:
whether or not the sale was ever consummated What is determinative of the propriety
considering that "the checks issued by the first of summary judgment is not the
indorsees in payment of said quedans bounced," and existence of conflicting claims for prior
whether or not PNB acquired ownership over parties but whether from an
the quedans considering that "it did not dispose (of) examination of the pleadings,
said quedans under Art. 2112 of the Civil Code, as depositions, admissions and documents
specifically reflected in the contract of pledge," both on file, the defenses as to the main issue
contentions allegedly being "material facts which has do not tender material questions of fact
(sic) to be supported by evidence." (see Garcia vs. Court of Appeals 167
SCRA 815) or the issues thus tendered
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 in grave abuse of discretion which
No. 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
decision of the Court of Appeals. As stated in the 1) Whether or not the
opening paragraph of this opinion, instead of a non-payment of the
summary judgment "in favor of the PNB against Noah's purchase price for the
Ark Sugar Refinery, et al., as prayed for in . . . (PNB)'s sugar stock evidenced
Motion for Summary Judgment," the Trial Court's by the quedans, by the
verdict decreed the dismissal of "plaintiff's complaint original depositors/
against defendants Noah's Ark Sugar Refinery, Alberto vendees (RNS
T. Looyuko, Jimmy Go and Wilson T. Go . . . . for lack of Merchandising and St.
cause of action;" and dismissal as well of the Therese Merchandising)
counterclaim pleaded by the latter against PNB, and of rendered invalid the
the third-party complaint, and the third-party negotiation of said
defendant's counterclaim. quedans by
vendees/first indorsers
The Trial Court declared that if "the only material facts to indorsers (Ramos
established on the basis of the pleadings, documentary and Zoleta) and the
evidence on record, admissions and stipulations subsequent negotiation
during the hearing on PNB's application for a writ of of Ramos and Zoleta to
preliminary attachment, are the facts as alleged by PNB.
plaintiff and accepted as established by the Court of
Appeals, this Court will have no difficulty in finding for 2) Whether or not PNB
plaintiff as prayed for in its motion for summary as indorsee/ pledgee of
judgment. But are the facts alleged by plaintiff the only quedans was entitled to
material facts established on the basis of the pleadings, delivery of sugar stocks
documentary evidence on record, stipulations and from the
admissions during the proceedings on the application warehouseman, Noah's
for a writ of preliminary attachment?" To this question Ark."
the Trial Court gave a negative answer, it being its view
that other facts, "as alleged by defendants . . . (and) not These legal questions were disposed of by the
disputed by PNB, have been likewise established." Appellate Court as follows:

The Trial Court later denied PNB's motion for The validity of the negotiation by RNS
reconsideration (by Order dated September 4, 1992), Merchandising and St. Therese
evidently finding merit in the argument of Noah's Ark, Merchandising to Ramos and Zoleta,
et al., therein quoted, that "Certiorari as a mode of and by the latter to PNB to secure a
appeal involves the review of judgment, award of final loan cannot be impaired by the fact that
order on the merits, while the original action the negotiation between Noah's Ark
for certiorari and as a special civil action is generally and RNS Merchandising and St. Therese
directed against an interlocutory order of the Court, Merchandising was in breach of faith on
prior to an appeal from the judgment of the main case the part of the merchandising firms or
which in the case at bar is specific performance . . ." by the fact that the owner (Noah's Ark)
was deprived of the possession of the
Hence, this appeal. same by fraud, mistake or conversion of
the person to whom the warehouse
In CA-G.R. SP No. 25938 above mentioned, after an receipt/quedan was subsequently
extensive review of the entire record of the case before negotiated if (PNB) paid value therefor
the Regional Trial Court (including the admissions of in good faith without notice of such
Noah's Ark, et al. and the parties' stipulations of fact), breach of duty, fraud, mistake or
as well as the pleadings filed by the parties before it, conversion. (See Article 1518, New Civil
the Court of Appeals arrived at the conclusion that a Code). And the creditor (PNB) whose
summary judgment was proper since "there was no debtor was the owner of the negotiable
substantial controversy on a(ny) material fact, the only document of title (warehouse receipt)
issues for the Court's shall be entitled to such aid from the
determination . . . (being) purely . . . questions of law, court of appropriate jurisdiction
as follows: attaching such document or in
satisfying the claim by means as is
allowed by law or in equity in regard to
property which cannot be readily Therese Merchandising was made in breach of faith on
attached or levied upon by ordinary the part of the merchandising firms or by the fact that
process. (See Art. 1520, New Civil the owner (Noah's Ark) was deprived of the possession
Code). If the quedans were negotiable of the same by fraud, mistake or conversion . . ." 5 It
in form and duly indorsed to PNB (the also ruled that the quedans were negotiable documents
creditor), the delivery of the quedans to and had been duly negotiated to the PNB which
PNB makes the PNB the owner of the thereby acquired the rights set out in Article 1513 of
property covered by said quedans and the Civil Code," 6 viz.:"
on deposit with Noah's Ark, the
warehouseman. (See Sy Cong Bieng & (1) Such title to the goods as the person
Co. vs. Hongkong & Shanghai Bank negotiating the documents to him had
Corp., 56 Phil. 598). or had ability to convey to a purchaser
in good faith for value and also such
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
established on the basis of the pleadings, documentary therefore a judgment on the pleadings is not proper —
evidence on record, stipulations and admissions a summary judgment may still be rendered on the
during 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
allegedly not examined by the Court of Appeals, were fact," 10 that is to say, the issues thus tendered are not
in fact duly considered by the latter — i.e., that "the genuine, are in other words sham, fictitious, contrived,
various postdated checks issued by the buyers (RNS set up in bad faith, patently unsubstantial. 11 The
Merchandising and St. Therese Merchandising) in determination may be made by the Court on the basis
favor of Noah's Ark were dishonored when presented of the pleadings, and the depositions, admissions and
for payment . . (and hence) the buyers never acquired affidavits that the movant may submit, as well as those
title to the sugar evidenced by the quedans," 3 and that which the defendant may present in turn."12
PNB "did not follow the procedure stated in Article
2112 of the Civil Code." 4 In its decision, as just pointed In any event, the conclusions of fact and law set out in
out, the Court of Appeals explicitly ruled that the the Appellate Court's decision are undeniably binding
"validity of the negotiation" of the quedans to PNB" on all the parties to the case, the respondent Regional
cannot be impaired by the fact that the negotiation Trial Judge included. Having been rendered by a
between Noah's Ark and RNS Merchandising and St. competent court within its jurisdiction, and having
become final and executory, the decision now operates thereon from the filing of the complaint until full
as the immutable law among the parties, the payment; and
respondent Trial Judge included; it has become the law
of the case and may no longer, in subsequent b) to pay plaintiff Philippine National Bank attorney's
proceedings, be altered or modified in any way, much fees, litigation expenses and judicial costs hereby fixed
less reversed or set at naught, by the latter, or any at the amount of one hundred fifty thousand pesos
other judge, not even by the Supreme Court; it is an (150,000.00), as well as the costs.
unalterable determination of the propriety of a
summary judgment in the action in question, and upon SO ORDERED.
all the issues therein raised or which could have been
raised relative to the merits of said action.13

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