Deposit And Warehouse Cases.docx

[DEPOSIT] 02 BPI V. IAC and Zshornack G.R. No. L-66826, Aug 19, 1988 | Cortes, J. | Doctrine: the document and the subsequent acts of the parties show that they intended the bank to safekeep the foreign exchange, and return it later to Zshornack. The parties did not intend to sell the US dollars to the Central Bank within one business day from receipt Facts: ●

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Zshornack delivered to COMTRUST (absorbed in 1980 by BPI, which was substituted as a party here), through Garcia (Asst Branch Manager of COMTRUST QC) US $3000 cash (aka greenbacks) for safekeeping, and the agreement was embodied in a document1 ○ Bank did not specifically deny under oath the authenticity and due execution of the above instrument Despite demands, the bank refused to return the money In its answer, COMTRUST averred that the US $3000 was credited to Zshornack’s peso current account at prevailing conversion rates ○ US $2000 was sold and the peso proceeds amounting to P14,920 were deposited to Zshornack’s current account ○ The remaining US $1000 was sold and the proceeds amounting to P8350 were deposited to his current account CFI ruled in favor of Zshornack. IAC ordered COMTRUST to return to Zshornack U.S. $3000. Reason: the said amount was merely held in custody for safekeeping, but was not actually deposited because being cash currency, it cannot by law be deposited with Zshornack’s dollar account and COMTRUST’s only obligation is to return it to Zshornack upon demand. Bank argues before SC that the contract embodied in the document is a contract of depositum as defined in Art 1962, NCC, which banks do not enter into. ○ Bank also alleges that Garcia exceeded his powers when he entered into the transaction, hence the bank cannot be held liable under the contract, and the obligation is purely personal to Garcia

Ruling: W/N Garcia’s act of entering into the contract binds the corporation? - YES. ● The cause of action is based on an actionable document, so it was incumbent upon the bank to specifically deny under oath the due execution of the document, under Rule 8, Sec. 8, if it desired (1) to question the authority of Garcia to bind the corporation, and (2) to deny its capacity to enter into such contract. ● No sworn answer denying the due execution of the document in question, or questioning the authority of Garcia to bind the bank, or denying the bank's capacity to enter into the contract, was ever filed. Hence, the bank is deemed to have admitted not only Garcia's authority, but also the bank's power, to enter into the contract in question. ○ Reason behind this procedural requirement: Whether a particular officer actually possesses the authority which he assumes to exercise is frequently known to very few, and the proof of it usually is not readily accessible to the stranger who deals with the corporation on the faith of the ostensible authority exercised by some of the corporate officers. It is therefore reasonable, in a case where an officer of a corporation has made a contract in its name, that the corporation should be required, if it denies his authority, to state such defense in its answer. By this means the plaintiff is apprised of the fact that the agent's authority is contested; and he is given an opportunity “We acknowledged (sic) having received from you today the sum of US DOLLARS: THREE THOUSAND ONLY (US$3,000.00) for safekeeping.” 2 Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the 1

to adduce evidence showing either that the authority existed or that the contract was ratified and approved. W/N the contract is one of deposit? - YES. ● The document which embodies the contract states that the US $3000 was received by the bank for safekeeping. Subsequent acts of the parties also show that the intent of the parties was really for the bank to safely keep the dollars and return it to Zshornack at a later time. Thus, Zshornack demanded the return of the money over five months later. ● The above arrangement is that contract defined under Art. 1962, NCC 2 ● The object of the contract was foreign exchange. Hence the transaction was covered by Central Bank Circ. No. 20, Restrictions on Gold and Foreign Exchange Transactions, in force at the time the parties entered into the transactions: ○ 4.(a) All receipts of foreign exchange shall be sold daily to the Central Bank by those authorized to deal in foreign exchange. All receipts of foreign exchange by any person, firm, partnership, association, branch office, agency, company or other unincorporated body or corporation shall be sold to the authorized agents of the Central Bank by the recipients within one business day following the receipt of such foreign exchange. Any person, firm, partnership, association, branch office, agency, company or other unincorporated body or corporation, residing or located within the Philippines, who acquires on and after the date of this Circular foreign exchange shall not, unless licensed by the Central Bank, dispose of such foreign exchange in whole or in part, nor receive less than its full value, nor delay taking ownership thereof except as such delay is customary; Provided, further, That within one day upon taking ownership, or receiving payment, of foreign exchange the aforementioned persons and entities shall sell such foreign exchange to designated agents of the Central Bank ○ 8. Strict observance of the provisions of this Circular is enjoined; and any person, firm or corporation, foreign or domestic, who being bound to the observance thereof, or of such other rules, regulations or directives as may hereafter be issued in implementation of this Circular, shall fail or refuse to comply with, or abide by, or shall violate the same, shall be subject to the penal sanctions provided in the Central Bank Act. ● Par. 4(a) was modified by Sec. 6 of CB Circ. No. 281, Regulations on Foreign Exchange, by limiting its coverage to PH residents only: ○ SEC. 6. All receipts of foreign exchange by any resident person, firm, company or corporation shall be sold to authorized agents of the Central Bank by the recipients within one business day following the receipt of such foreign exchange. Any resident person, firm, company or corporation residing or located within the Philippines, who acquires foreign exchange shall not, unless authorized by the Central Bank, dispose of such foreign exchange in whole or in part, nor receive less than its full value, nor delay taking ownership thereof except as such delay is customary; Provided, That, within one business day upon taking ownership or receiving payment of foreign exchange the aforementioned persons and entities shall sell such foreign exchange to the authorized agents of the Central Bank. ● the document and the subsequent acts of the parties show that they intended the bank to safekeep the foreign exchange, and return it later to Zshornack, who alleged in his complaint that he is a Philippine resident. The parties did not intended to sell the US dollars to the Central Bank within one business day from receipt. Otherwise, the contract of depositum would never have been entered into at all. ● Since the mere safekeeping of the greenbacks, without selling them to the Central Bank within one business day from receipt, is a transaction which is not authorized by CB

thing delivered is not the principal purpose of the contract, there is no deposit but some other contract.

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Circular No. 20, it must be considered as one which falls under the general class of prohibited transactions. Hence, pursuant to Article 5 of the Civil Code, it is void, having been executed against the provisions of a mandatory/prohibitory law. ○ Also, it affords neither of the parties a cause of action against the other. "When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no cause of action against each other. . ." [Art. 1411, New Civil Code.] The only remedy is one on behalf of the State to prosecute the parties for violating the law. ○ Thus, Zshornack cannot recover under this cause of action Dispositive WHEREFORE, the decision appealed from is modified

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G.R. No. L-6913

November 21, 1913

THE ROMAN CATHOLIC BISHOP OF JARO, plaintiff-appellee, vs. GREGORIO DE LA PEÑA, administrator of the estate of Father Agustin de la Peña, defendant-appellant. J. Lopez Vito, for appellant. Arroyo and Horrilleno, for appellee.

MORELAND, J.: This is an appeal by the defendant from a judgment of the Court of First Instance of Iloilo, awarding to the plaintiff the sum of P6,641, with interest at the legal rate from the beginning of the action. It is established in this case that the plaintiff is the trustee of a charitable bequest made for the construction of a leper hospital and that father Agustin de la Peña was the duly authorized representative of the plaintiff to receive the legacy. The defendant is the administrator of the estate of Father De la Peña. In the year 1898 the books Father De la Peña, as trustee, showed that he had on hand as such trustee the sum of P6,641, collected by him for the charitable purposes aforesaid. In the same year he deposited in his personal account P19,000 in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the war of the revolution, Father De la Peña was arrested by the military authorities as a political prisoner, and while thus detained made an order on said bank in favor of the United States Army officer under whose charge he then was for the sum thus deposited in said bank. The arrest of Father De la Peña and the confiscation of the funds in the bank were the result of the claim of the military authorities that he was an insurgent and that the funds thus deposited had been collected by him for revolutionary purposes. The money was taken from the bank by the military authorities by virtue of such order, was confiscated and turned over to the Government.

By placing the money in the bank and mixing it with his personal funds De la Peña did not thereby assume an obligation different from that under which he would have lain if such deposit had not been made, nor did he thereby make himself liable to repay the money at all hazards. If the had been forcibly taken from his pocket or from his house by the military forces of one of the combatants during a state of war, it is clear that under the provisions of the Civil Code he would have been exempt from responsibility. The fact that he placed the trust fund in the bank in his personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at all hazards. We do not enter into a discussion for the purpose of determining whether he acted more or less negligently by depositing the money in the bank than he would if he had left it in his home; or whether he was more or less negligent by depositing the money in his personal account than he would have been if he had deposited it in a separate account as trustee. We regard such discussion as substantially fruitless, inasmuch as the precise question is not one of negligence. There was no law prohibiting him from depositing it as he did and there was no law which changed his responsibility be reason of the deposit. While it may be true that one who is under obligation to do or give a thing is in duty bound, when he sees events approaching the results of which will be dangerous to his trust, to take all reasonable means and measures to escape or, if unavoidable, to temper the effects of those events, we do not feel constrained to hold that, in choosing between two means equally legal, he is culpably negligent in selecting one whereas he would not have been if he had selected the other. The court, therefore, finds and declares that the money which is the subject matter of this action was deposited by Father De la Peña in the Hongkong and Shanghai Banking Corporation of Iloilo; that said money was forcibly taken from the bank by the armed forces of the United States during the war of the insurrection; and that said Father De la Peña was not responsible for its loss. The judgment is therefore reversed, and it is decreed that the plaintiff shall take nothing by his complaint. Arellano, C.J., Torres and Carson, JJ., concur. Separate Opinions

While there is considerable dispute in the case over the question whether the P6,641 of trust funds was included in the P19,000 deposited as aforesaid, nevertheless, a careful examination of the case leads us to the conclusion that said trust funds were a part of the funds deposited and which were removed and confiscated by the military authorities of the United States. That branch of the law known in England and America as the law of trusts had no exact counterpart in the Roman law and has none under the Spanish law. In this jurisdiction, therefore, Father De la Peña's liability is determined by those portions of the Civil Code which relate to obligations. (Book 4, Title 1.) Although the Civil Code states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family" (art. 1094), it also provides, following the principle of the Roman law, major casus est, cui humana infirmitas resistere non potest, that "no one shall be liable for events which could not be foreseen, or which having been foreseen were inevitable, with the exception of the cases expressly mentioned in the law or those in which the obligation so declares." (Art. 1105.)

TRENT, J., dissenting: I dissent. Technically speaking, whether Father De la Peña was a trustee or an agent of the plaintiff his books showed that in 1898 he had in his possession as trustee or agent the sum of P6,641 belonging to the plaintiff as the head of the church. This money was then clothed with all the immunities and protection with which the law seeks to invest trust funds. But when De la Peña mixed this trust fund with his own and deposited the whole in the bank to his personal account or credit, he by this act stamped on the said fund his own private marks and unclothed it of all the protection it had. If this money had been deposited in the name of De la Peña as trustee or agent of the plaintiff, I think that it may be presumed that the military authorities would not have confiscated it for the reason that they were looking for insurgent funds only. Again, the plaintiff had no reason to suppose that De la Peña would attempt to strip the fund of its identity, nor had he said or done anything which tended to relieve De la Peña from the legal reponsibility which pertains to the care and custody of trust funds.

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The Supreme Court of the United States in the United State vs. Thomas (82 U. S., 337), at page 343, said: "Trustees are only bound to exercise the same care and solicitude with regard to the trust property which they would exercise with regard to their own. Equity will not exact more of them. They are not liable for a loss by theft without their fault. But this exemption ceases when they mix the trust-money with their own, whereby it loses its identity, and they become mere debtors." If this proposition is sound and is applicable to cases arising in this jurisdiction, and I entertain no doubt on this point, the liability of the estate of De la Peña cannot be doubted. But this court in the majority opinion says: "The fact that he (Agustin de la Peña) placed the trust fund in the bank in his personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at all hazards. . . . There was no law prohibiting him from depositing it as he did, and there was no law which changed his responsibility, by reason of the deposit." I assume that the court in using the language which appears in the latter part of the above quotation meant to say that there was no statutory law regulating the question. Questions of this character are not usually governed by statutory law. The law is to be found in the very nature of the trust itself, and, as a general rule, the courts say what facts are necessary to hold the trustee as a debtor. If De la Peña, after depositing the trust fund in his personal account, had used this money for speculative purposes, such as the buying and selling of sugar or other products of the country, thereby becoming a debtor, there would have been no doubt as to the liability of his estate. Whether he used this money for that purpose the record is silent, but it will be noted that a considerable length of time intervened from the time of the deposit until the funds were confiscated by the military authorities. In fact the record shows that De la Peña deposited on June 27, 1898, P5,259, on June 28 of that year P3,280, and on August 5 of the same year P6,000. The record also shows that these funds were withdrawn and again deposited all together on the 29th of May, 1900, this last deposit amounting to P18,970. These facts strongly indicate that De la Peña had as a matter of fact been using the money in violation of the trust imposed in him. lawph!1.net If the doctrine announced in the majority opinion be followed in cases hereafter arising in this jurisdiction trust funds will be placed in precarious condition. The position of the trustee will cease to be one of trust.

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Voluntary Deposit in General 04 Baron v David Oct 8, 1927 | Street, J. | ● Petitioner/s: Silvestra and Guillermo Baron Respondent/s: Pablo David Doctrine: Under article 1768 of the Civil Code, when the depository has permission to make use of the thing deposited, the contract loses the character of mere deposit and becomes a loan or a commodatum; and of course by appropriating the thing, the bailee becomes responsible for its value.

Ruling: W/N there was a deposit - NO.  Under article 1768 of the Civil Code, when the depository has permission to make use of the thing deposited, the contract loses the character of mere deposit and becomes a loan or a commodatum; and of course by appropriating the thing, the bailee becomes responsible for its value. 

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Silvestra Baron is the aunt of Pablo David Guillermo Baron is the uncle. Pablo David has been engaged in running a rice mill in the municipality of Magalang, in the Province of Pampanga A fire occurred that destroyed the mill and its contents, and it was some time before the mill could be rebuilt and put in operation again In the months of March, April, and May, 1920, Silvestra Baron placed a quantity of palay in the David's mill. ○ This amounted to 1,012 cavans and 24 kilos Guillermo Baron placed other 1,865 cavans and 43 kilos of palay in the mill. No compensation has ever been received by Silvestra Baron upon account of the palay delivered by Guillermo Baron, he has received from the defendant advancements amounting to P2,800; but apart from this he has not been compensated. The Barons claim that the palay which was delivered by them to the David was sold. Pablo David claims that the palay was deposited subject to future withdrawal by the depositors or subject to some future sale which was never effected. Pablo David claims to be relieved from responsibility due to the fire The Barons cliam that the palay was delivered to the David at his special request, coupled with a promise on his part to pay for the same at the highest price per cavan at which palay would sell during the year 1920 ○ On August of that year the defendant promised to pay them severally the price of P8.40 per cavan, which was about the top of the market for the season, provided they would wait for payment until December. Two actions were instituted in the CFI of Pampanga by Silvestra Baron and Guillermo Baron to recover from Pablo David, the value of palay alleged to have been sold by the Barons to the David in 1920 Both cases were heard together in the trial court and determined in a single opinion 1st Case ○ Silvestra Baron is plaintiff, the court gave judgment for her to recover of the defendant the sum of P5,238.51, with costs. nd 2 Case ○ Guillermo Baron, is plaintiff, the court gave judgment for him to recover of the defendant the sum of P5,734.60, with costs ○ David interposed a counterclaim in which he asked credit for the sum of P2,800 which he had advanced to the plaintiff Guillermo Baron on various occasions. ■ This credit was admitted by the plaintiff and allowed by the trial court. ○ David also interposed a cross-action against Guillermo Baron in which the he claimed compensation for damages alleged to have been suffered by him by reason of the alleged malicious and false statements made by Baron against the him in suing out an attachment against the David's property soon after the institution of the action.

In the same cross-action the David also sought compensation for damages incident to the shutting down of his rice mill for the period of 170 days during which the attachment was in force RTC disallowed these claims

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In this connection we wholly reject David pretense that the palay delivered by the Barons was consumed in the fire of January, 1921. Nor is the liability of the David affected by the circumstance that, by a custom prevailing among rice millers in this country, persons placing palay with them without special agreement as to price are at liberty to withdraw it later, proper allowance being made for storage and shrinkage, a thing that is sometimes done, though rarely. It should be stated that the palay in question was placed by the Barons in the David's mill with the understanding that David was at liberty to convert it into rice and dispose of it at his pleasure. Pablo David admits that the palay of the Brons was mixed with that of others. In view of the nature of the David's activities and the way in which the palay was handled in the his mill, it is quite certain that all of the plaintiffs' palay, which was put in before June 1, 1920, been milled and disposed of long prior to the fire of January 17, 1921. Considering the fact that the defendant had thus milled and sold the palay prior to the date of the fire, it result that he is bound to account for its value, and his liability was not extinguished by the occurrence of the fire. It seems to have been assumed by the attorneys that in order for the Barons to recover, it is necessary that they should be able to establish that the Baron’s palay was delivered in the character of a sale, and that if, on the contrary, Pablo David should prove that the delivery was made in the character of deposit, the he should be absolved. However, the case does not depend precisely upon this explicit alternative o Even supposing that the palay may have been delivered in the character of deposit, subject to future sale or withdrawal at plaintiffs' election, nevertheless if it was understood that the defendant might mill the palay and he has in fact appropriated it to his own use, he is of course bound to account for its value.

W/N there was a demand made by the Barons. Yes  ●

A careful examination of the proof would show that there was a demand made on August 1920 It was the date of the demand of the plaintiffs for settlement that determined the price to be paid by the defendant, and this is true whether the palay was delivered in the character of sale with price undetermined or in the character of deposit subject to use by the defendant. ○ It results that the plaintiffs are respectively entitle to recover the value of the palay which they had placed with the defendant during the period referred to, with interest from the date of the filing of their several complaints.

W/N the Barons are liable for the counter-complaint of David and should pay damages for a wrongful suit out of the attachment and the levy if the mill? No

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It appears that about two and one-half months after said action was begun, the plaintiff, Guillermo Baron, asked for an attachment to be issued against the property of the defendant; and to procure the issuance of said writ the plaintiff made affidavit to the effect that the defendant was disposing, or attempting the plaintiff. Upon attaching the property the sheriff closed the mill and placed it in the care of a deputy. Operations were not resumed until September 13, 1924, when the attachment was dissolved by an order of the court and the defendant was permitted to resume control. The plaintiff, being unable or unwilling to give this bond, the sheriff surrendered the palay to the claimants; but the attachment on the rice mill was maintained until September 13, as above stated, covering a period of one hundred seventy days during which the mill was idle. The ground upon which the attachment was based, as set forth in the plaintiff's affidavit was that the defendant was disposing or attempting to dispose of his property for the purpose of defrauding the plaintiff. That this allegation was false is clearly apparent, and not a word of proof has been submitted in support of the assertion. On the contrary, the defendant testified that at the time this attachment was secured he was solvent and could have paid his indebtedness to the plaintiff if judgment had been rendered against him in ordinary course. His financial condition was of course well known to the plaintiff, who is his uncle.

Dispositive From what has been said it result that judgment of the court below must be modified with respect to the amounts recoverable by the respective plaintiffs in the two actions R. G. Nos. 26948 and 26949 and must be reversed in respect to the disposition of the cross-complaint interposed by the defendant in case R. G. No. 26949, with the following result: In case R. G. No. 26948 the plaintiff Silvestra Baron will recover of the Pablo David the sum of P6,227.24, with interest from November 21, 1923, the date of the filing of her complaint, and with costs. In case R. G. No. 26949 the plaintiff Guillermo Baron will recover of the defendant Pablo David the sum of P8,669.75, with interest from January 9, 1924. In the same case the defendant Pablo David, as plaintiff in the cross-complaint, will recover of Guillermo Baron the sum of P7,000, without costs. So ordered.

Notes Insert notes

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Necessary Deposit 05 YHT REALTY CORP V. COURT OF APPEALS February 17, 2005 | TINGA, J. |

When He arrived in Hongkong, he opened the USD envelope and noticed it only contained 3,000 USD. Since he had no idea whether someone else tampered with his safety box, he thought it was just bad accounting on his part, since he didn’t spend anything from that envelope.

Petitioners: YHT Realty Corp., Erlinda Lainez and Anicica Payam Respondents: Court of Appeals and Maurice McLoughlin

On his return to manila, upon check out on December 18, 1987: he checked the deposit box and discovered his envelope with 10,000 USD only had 5,000 USD. Jewelry which he bought in hongkong and stored to in the box was missing, except for a diamond bracelet.

Doctrine: Art. 2002 presupposes that the hotel-keeper is not guilty of concurrent negligence or has not contributed in any degree to the occurrence of the loss.

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Respondent McLoughlin, An Australian businessman-philanthropist, used to stay at the Sheraton during his trips prior to 1984 when he met tan Tan befreiended McLoughlin by showing him around, introducing him to important people, accompanying him in visiting impoverished street children and assisting him in buying gifts for the children and distributing the same to charitable institutions for poor children Tan Convinced McLoughlin to transfer from the Sheraton to Tropicana where Lainez, Payam and Danilo Lopez were employed. Lopez was manager of the hotel. Lainez and Payam had custody of the keys for the safety deposit boxes of Tropicana. Tan took care of McLoughlins booking at the Tropicana where he started staying during his trips to the Philippines from December 1984 - September 1987.

30 October, 1987: Mcloughlin arrived from Australia and registered with Tropicana, renting a safety deposit box. (This was his practice to rent a box everytime he registered with Tropicana) McLoughlin was aware of the procedure observed by Tropicana relative to its safety deposit boxes. It could only be open with two keys, one given to the registered guest and the other remaining in possession of the management of the hotel. When a registered guest wished to open his safety deposit box, he alone could personally request the management who then would assign one of its employees to accompany the guest and assist him in opening the safety deposit box with the two keys. McLoughlin placed the ff in the deposit box: 15,000 USD, in two envelopes o 1st envelope: 10,000 USD o 2nd envelope: 5,000 USD 10,000 AUD Two envelopes containing letters, and credit cards Two bankbooks A Checkbook (arranged side by side with the bankbooks in the safety deposit box) 12 December, 1987: Before leaving for Hongkong, McLoughlin opened his safety deposit box with his key and the key of the management. He Took: Envelope with 5,000 USD Envelope with 10,000 AUD Passports Credit cards He left the other items in the box as he did not check out of the room yet.

When McLoughlin returned to the Philippines in April 4, 1988 he asked Lainez if some money and/or jewelry which he lost were found and returned to her or management. Lainez said no one in the hotel found such things, and none were turned over to management. McLoughlin rented a safety deposit box again: 15,000 USD in an envelope 10,000 AUD in an envelope Other envelopes containing his traveling papers/documents April 16, 1988: McLoughlin requested Lainez and Payam to open his safety deposit box, and noticed that the envelope containing 15,000 USD had 2000 USD missing, also the envelope containing 10,000 AUD, 4,500 AUD was missing. This time when noticing the loss, he immediately confronted Lainez and Payam who admitted that Tan opened the box with the key assigned to him. McLoughlin went up to the room where Tan was staying and confronted her. Tan admitted she had stolen McLoughlin’s key and was able to open the safety deposit box with the assistance of Lopez, Payam and Lainez. Lopez also told McLoughlin that Tan stole the key assidned to Mcloughlin while he was sleeping. McLoughlin requested management for an investigation of the incident. Lopez spoke to Tan, and arranged for a meeting with the police and Mcloughlin. When the police did not arrive, Lopez and Tan went to the room of McLoughlin at Tropicana and thereat, Lopez wrote a piece of paper, a promissory note promising to pay Mcloughlin AUD 4,000 and USD 2,000 or its equivalent in Ph Currency on or before May 5, 1988 Lopez and Tan signed the note, with Lopez signing as witness. Despite the promissory note, McLoughlin insisted that it must be the hotel who should assume responsibility for the loss he suffered. Lopez however refused to accept responsibility, relying on the conditions for renting the safety deposit box (SEE NOTES) May 17, 1988, McLoughlin went back to Australia and consulted lawyers as to the validity of the stipulations in the undertaking for renting the safety deposit box Lawyers prepared a letter dated May 30, 1988, signed by McLoughlin and sent to President Corazon Aquino. Office of the President referred the letter to the DOJ which forwarded the same to the Western Police District. After receiving a copy of the indorsement in Australia, McLoughlin came to the Philippines and registered again as a hotel guest of Tropicana. McLoughlin went to Malacaňang to follow up on his letter but he was instructed to go to the DOJ. The DOJ directed him to proceed to the WPD for

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documentation. But McLoughlin went back to Australia as he had an urgent business matter to attend to. Several times, Mcloughlin went back to Australia to attend to his business and came back to the Ph to follow up on his letter to the president but failed to gain any concrete assistance. On his return to the Ph, on August 25, 1989, the WPD conducted an investigation which resulted in the preparation of an affidavit which was forwarded to the Manila City Fiscal’s office – this affidavidt became the basis for a preliminary investigation McLoughlin left for Australia again without receiving notice and hearing on November 24, 1989, resulting in the Fiscal’s office dismissing the case for failure to prosecute. Upon his return on October, 22, 1990 at the Echelon Towers in Malate, Manila, meetings were held between McLoughlin and his lawyer resulting in the filing of a complaint for damages against YHT Realty, Lopez, Lainez and tan for the loss of McLoughlin’s money. Mc Loughlin went back to Australia to attend to an urgent business manner. Tan and Lopez were not served with summons so the trial proceeded only with Lainez, Payam and YHT Realty Corp as defendnats RTC Manila Rendered Judgment in favor of McLoughlin, finding that Mcloughlin’s allegations as to the fact of loss and amount of money he lost were sufficiently shown by his direct and straightforward manner of testifying in court and found him to be credible and worthy of belief as it was established that Mcloughlins money, kept in Tropicana’s safety deposit box, was taken by Tan without Mcloughlin’s consent, taken through the use of the master key which was in possession of management Payam and Lainez allowed Tan to use the master key without authority from McLoughlin As Regards to the loss of 7,000 USD and jewelry approximately worth 1,200 USD no claim was made by McLoughlin because he was not sure how they were lost and who the responsible persons were. Trial court also found that the defendants acted with gross negligence in the performance and exercise of their duties and obligations as innkeepers CA Affirmed the ruling of the lower court, but modified damages awarded. Defendnats appealed by certiorari to the SC Ruling: W/N a hotel may evade liability for the loss of items left with it for safekeeping by its guests, by having these guests execute written waivers holding the establishment or its employees free from blame for such loss in light of Article 2003 of the Civil Code which voids such waivers? NO The issue of whether the Undertaking For The Use of Safety Deposit Box executed by McLoughlin is tainted with nullity presents a legal question appropriate for resolution in this petition. Notably, both the trial court and the appellate court found the same to be null and void. We find no reason to reverse their common conclusion. Article 2003 is controlling, thus:

Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in Articles 1998 to 2001 is suppressed or diminished shall be void. Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to apply to situations such as that presented in this case. The hotel business like the common carriers business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes the essence of the business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary stipulation in so-called undertakings that ordinarily appear in prepared forms imposed by hotel keepers on guests for their signature. Paragraphs (2) and (4) of the undertaking manifestly contravene Article 2003 of the New Civil Code for they allow Tropicana to be released from liability arising from any loss in the contents and/or use of the safety deposit box for any cause whatsoever. Evidently, the undertaking was intended to bar any claim against Tropicana for any loss of the contents of the safety deposit box whether or not negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the responsibility of the hotel-keeper shall extend to loss of, or injury to, the personal property of the guests even if caused by servants or employees of the keepers of hotels or inns as well as by strangers, except as it may proceed from any force majeure. It is the loss through force majeure that may spare the hotel-keeper from liability. In the case at bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible force to qualify the same as force majeure. Petitioners likewise anchor their defense on Article 2002. -exempts the hotel-keeper from liability if the loss is due to the acts of his guest, his family, or visitors. Even a cursory reading of the provision would lead us to reject petitioners contention. The justification they raise would render nugatory the public interest sought to be protected by the provision. What if the negligence of the employer or its employees facilitated the consummation of a crime committed by the registered guests relatives or visitor? Should the law exculpate the hotel from liability since the loss was due to the act of the visitor of the registered guest of the hotel? Hence, this provision presupposes that the hotel-keeper is not guilty of concurrent negligence or has not contributed in any degree to the occurrence of the loss. In the case at bar, the responsibility of securing the safety deposit box was shared not only by the guest himself but also by the management since two keys are necessary to open the safety deposit box. Without the assistance of hotel employees, the loss would not have occurred. Thus, Tropicana was guilty of concurrent negligence in allowing Tan, who was not the registered guest, to open the safety deposit box of McLoughlin, even assuming that the latter was also guilty of negligence in allowing another person to use his key. Petitioners contend that McLoughlins case was mounted on the theory of contract, but the trial court and the appellate court upheld the grant of the claims of the latter on the basis of tort. There is nothing anomalous in how the lower courts decided the controversy for this Court has pronounced a jurisprudential rule that tort liability can exist even if there are already contractual relations. The act that breaks the contract may also be tort.

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ON DAMAGES: As to damages awarded to McLoughlin, we see no reason to modify the amounts awarded by the appellate court for the same were based on facts and law. It is within the province of lower courts to settle factual issues such as the proper amount of damages awarded and such finding is binding upon this Court especially if sufficiently proven by evidence and not unconscionable or excessive. Thus, the appellate court correctly awarded McLoughlin Two Thousand US Dollars (US$2,000.00) and Four Thousand Five Hundred Australian dollars (AUS$4,500.00) or their peso equivalent at the time of payment, being the amounts duly proven by evidence. The alleged loss that took place prior to 16 April 1988 was not considered since the amounts alleged to have been taken were not sufficiently established by evidence. The appellate court also correctly awarded the sum of P308,880.80, representing the peso value for the air fares from Sydney to Manila and back for a total of eleven (11) trips; one-half of P336,207.05 or P168,103.52 representing payment to Tropicana; one-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower; one-half of P179,863.20 or P89,931.60 for the taxi or transportation expenses from McLoughlins residence to Sydney Airport and from MIA to the hotel here in Manila, for the eleven (11) trips; one-half of P7,801.94 or P3,900.97 representing Meralco power expenses; one-half of P356,400.00 or P178,000.00 representing expenses for food and maintenance.

Notes Undertaking For the Use Of Safety Deposit Box,[15] specifically paragraphs (2) and (4) thereof, to wit: 2. To release and hold free and blameless TROPICANA APARTMENT HOTEL from any liability arising from any loss in the contents and/or use of the said deposit box for any cause whatsoever, including but not limited to the presentation or use thereof by any other person should the key be lost; ... 4. To return the key and execute the RELEASE in favor of TROPICANA APARTMENT HOTEL upon giving up the use of the box.[16]

The amount of P50,000.00 for moral damages is reasonable. Although trial courts are given discretion to determine the amount of moral damages, the appellate court may modify or change the amount awarded when it is palpably and scandalously excessive. Moral damages are not intended to enrich a complainant at the expense of a defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of defendants culpable action. The awards of P10,000.00 as exemplary damages and P200,000.00 representing attorneys fees are likewise sustained.

Dispositive WHEREFORE, foregoing premises considered, the Decision of the Court of Appeals dated 19 October, 1995 is hereby AFFIRMED. Petitioners are directed, jointly and severally, to pay private respondent the following amounts: (1) US$2,000.00 and AUS$4,500.00 or their peso equivalent at the time of payment; (2) P308,880.80, representing the peso value for the air fares from Sydney to Manila and back for a total of eleven (11) trips; (3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Copacabana Apartment Hotel; (4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower; (5) One-half of P179,863.20 or P89,931.60 for the taxi or transportation expense from McLoughlins residence to Sydney Airport and from MIA to the hotel here in Manila, for the eleven (11) trips; (6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses; (7) One-half of P356,400.00 or P178,200.00 representing expenses for food and maintenance; (8) P50,000.00 for moral damages; (9) P10,000.00 as exemplary damages; and (10) P200,000 representing attorneys fees. With costs.

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[NECESSARY DEPOSIT] 06 MAKATI SHANGRI-LA V HARPER August 29, 2012 | Bersamin, J. | Petitioner/s: Makati Shangri-la Hotel and Resort, Inc. Respondent/s: Ellen Harper, Jonathan Christopher Harper, and Rigoberto Gillera

RTC: the hotel is liable for the death of Christian Harper and ordered to pay P43.9M actual and compensatory damages, transportation expenses, attorney's fees CA: affirmed RTC but modified the actual and compensatory damages to P52.1M, P25K temperate damages, and P250K attorney's fees

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Doctrine: The hotel business like the common carrier’s business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel guests but also security to their persons and belongings. The twin duty constitutes the essence of the business Facts:

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o o o o o 

Petitioner owns and operates 5-star Shangri-la Hotel in Makati First week of November 1999, Christian Harper came to Manila on a business trip and checked into Shangri-la Hotel and was billeted at Room 1428. He was supposed to check out on Nov 6, 1992. but in the early morning of that day he was murdered in his hotel room How the crime was discovered: o A routine verification call from AmEx to Harper’s residence in Oslo, Norway because around 11am of the same day, a Caucasian man entered the Alexis Jewelry Store in Glorietta, Ayala Center, Makati City and expressed interest in purchasing a Cartier lady’s watch valued at P320K using two Mastercard credit cards and an American Express credit card of Harper. o But the customer’s had difficulty in answering the queries phoned in by a credit card representative which aroused the suspicion of saleslady Anna Liza Lumba (Lumba), who asked for the passport but probably sensing trouble for himself, the customer hurriedly left the store, and left the three credit cards and the passport behind. Harper's family tried to call his room but no response, so they requested the Makati Shang management to check up on him. Raymond Alarcon, the Duty Manager, and a security personnel went to Room 1428 at 11:27 a.m., and were shocked to discover Harper’s lifeless body on the bed. Col. Rodrigo de Guzman, the hotel’s Security Manager, investigated and concluded that from the several empty bottles of wine in the trash can and the number of cigarette butts in the toilet bowl that Harper and his visitors had drunk that much and smoked that many cigarettes the night before. The follow up investigation revealed that the victim’s eyes and mouth had been bound with electrical and packaging tapes, and his hands and feet tied with a white rope. The CCTV reveal that Harper entered his room at 12:14 am, the woman entered at 12:17am, the Caucasian male entered at at 2:48 am; the woman left the room at 5:33 am, while the Caucasian male at 5:46 am Respondents (wife and son of Harper) filed this suit for damages in the RTC alleging that: o (1) the murderer succeeded to trespass into the area of the hotel’s private rooms area and into the room of the said deceased on account of the hotel’s gross negligence in providing the most basic security system of its guests, the lack of which owing to the acts or omissions of its employees was the immediate cause of the tragic death of said deceased. o (2) Defendant has prided itself to be among the top hotel chains in the East claiming to provide excellent service, comfort and security for its guests for which reason ABB Alstom executives and their guests have invariably chosen this hotel to stay.

Ratio: the action is predicated on negligence, (relevant law: NCC 2176). Negligence is defined as the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. o Test for negligence: Did defendant, in doing the alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, the person is guilty of negligence. o The test, as applied to this case, is whether or not defendant-appellant, under the attendant circumstances, used that reasonable care and caution which an ordinary reasonable person would have used in the same situation. - NO, according to the CA o The record failed to show that at the time of the death of Christian Harper, it was exercising reasonable care to protect its guests from harm and danger by providing sufficient security commensurate to it being one of the finest hotels in the country o The hotel business like the common carrier’s business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel guests but also security to their persons and belongings. The twin duty constitutes the essence of the business. o Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces, the injury, and without which the result would not have occurred. o Defendant-appellant is engaged in a business imbued with public interest, ergo, it is bound to provide adequate security to its guests. As previously discussed, defendant-appellant failed to exercise such reasonable care expected of it under the circumstances. Such negligence is the proximate cause which set the chain of events that led to the eventual demise of its guest. Had there been reasonable security precautions, the same could have saved Christian Harper from a brutal death.

Ruling: W/N petitioner is liable for damages for the death of Christian Harper due to its negligence YES

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Petitioner failed to provide the basic and adequate security measures expected of a fivestar hotel; and that its omission was the proximate cause of Harper’s death. The testimony of Col. De Guzman (security officer) revealed that the management practice prior to the murder of Harper had been to deploy only one security or roving guard for every three or four floors of the building; that ratio had not been enough considering the L-shape configuration of the hotel that rendered the hallways not visible from one or the other end; and that he had recommended to management to post a guard for each floor, but his recommendation had been disapproved because the hotel “was not doing well” at that time. But Col. De Guzman clarified this that petitioner had seen no need at the time of the incident to augment the number of guards due to the hotel being then only half-booked at that time. The hotel business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for their guests but also security to the persons and belongings of their guests. The twin duty constitutes the essence of the business.

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Applying by analogy Article 2000, Article 2001 and Article 2002 of the Civil Code (all of which concerned the hotelkeepers’ degree of care and responsibility as to the personal effects of their guests), we hold that there is much greater reason to apply the same if not greater degree of care and responsibility when the lives and personal safety of their guests are involved. Otherwise, the hotelkeepers would simply stand idly by as strangers have unrestricted access to all the hotel rooms on the pretense of being visitors of the guests, without being held liable should anything untoward· befall the unwary guests. That would be absurd, something that no good law would ever envision.

Dispositive CA Judgment affirmed.

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o

[EXTRAJUDICIAL DEPOSIT-NECESSARY DEPOSIT] 07 DURBAN APARTMENTS CORP.vs PIONEER INSURANCE AND SURETY CORP January 12, 2011 | Nachura, J. | Petitioner/s: Durban Apartments Corporation, doing business under the name and style of City Garden Hotel Respondent/s: Pioneer Insurance and Surety Corporation Doctrine: Art. 1998. The deposit of effects made by travelers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. Facts: ●

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Jeffrey S. See checked in at the City Garden Hotel in Makati cor Kalayaan Avenues, Makati City before midnight ○ It’s parking attendant, Vincente Justimbaste got the key to See’s Susuki Grand Vitara and parked it. At 1AM See was awakened by a call from the Hotel Chief Security Officer who informed him that his Vitara was carnapped while it was left unattended at the parking area of Equitable PCI Bank between 12mn and 1am. The car was insured by Pioneer Insurance so See filed a claim to receive the proceeds of the policy ○ Pioneer hired Vespers to investigate veracity of See’s claim, along with the claims evaluator of Pioneer which pegged at P1,1630, 250 as sum for his claim. ○ Vespers found out that it was normal practice for the hotel to take the keys of the guests as soon as they reached the lobby entrance to park their cars. Since they only had 12 parking spots, City Garden Hotel made a deal with Equitable PCI Bank to use their parking at night. ○ Vespers also found out that a Starex was also carnapped from that place barely a month before the incident (Vespers was also tasked to investigate this incident) ■ This was admitted in sworn statement of Justimbaste Pioneer Insurance required See to sign a Release of Claim and Subrogation Receipt, and finally paid him the sum of ₱1,163,250.00 for his claim. ○ Pioneer then sent multiple demand letters to Durban for the reimbursement of the claims, but Durban did not pay July 2003: Pioneer Insurance and Surety Corp by right of subrogation, filed with RTC of Makati, a Complaint for Recover of Damages against Durban Apartments Corporation, doing business under the name and style of City Garden Hotel

RTC: Durn to pay Pioneer P1,163,250 w/ legal interest until oblig fully paid CA: AFFIRMED RTC; Durban solely liable to Pioneer for the loss of See’s vehicle Durban appealed to the SC averring its liability

valet parking services is a special privilege; it does not include responsibility for any losses or damages to motor vehicles and its accessories in the parking area; and the same holds true even if it was See himself who parked his Vitara within the premises of the hotel as evidenced by the valet parking customer’s claim stub issued to him; the carnapper was able to open the Vitara without using the key given earlier to the parking attendant and subsequently turned over to See after the Vitara was stolen;

Court’s Explanation:  Article 1962, in relation to Article 1998, of the Civil Code defines a contract of deposit and a necessary deposit made by persons in hotels or inns: o Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. o Art. 1998. The deposit of effects made by travelers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. 

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Pioneer proved allegations in complaint, i.e., a contract of necessary deposit existed between the insured See and Durban o Upon arrival at Hotel, See gave notice to the doorman and parking attendance regarding his car and entrusted his car keys to the parking attendant, who gave See a customer claim stub and parked the Vitara at the Equitable PCI Bank parking area, and placed the ignition key inside a safety key box while See proceeded to the hotel lobby to check in. o The Equitable parking area became an annex of City Garden Hotel when the management of the said bank allowed the parking of the vehicles of hotel guests thereat in the evening after banking hours. See deposited his vehicle for safekeeping with Durban through its employee, petitioner, Justimbaste. In turn, Justimbaste issued a claim stub to See. Thus, the contract of deposit was perfected from See’s delivery, when he handed over to Justimbaste the keys to his vehicle, which Justimbaste received with the obligation of safely keeping and returning it. Ultimately, petitioner is liable for the loss of See’s vehicle..

Dispositive WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 86869 is AFFIRMED with the MODIFICATION that the award of attorney’s fees is reduced to ₱60,000.00. Costs against petitioner. Notes Insert notes

Ruling: W/N a contract of necessary deposit exists between See and Durban, thus making Durban liable to Pioneer - YES Durban’s Arguments:  See did not check in but was merely a guest of Ching Montero  It was See who requested that his Vitara be parked at any available parking space and it was parked at the Equitable Bank parking area, which was within See’s view, while he and Montero were waiting in front of the hotel

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[DEPOSIT] 08 TRIPLE V FOOD V. FILIPINO MERCHANTS INSURANCE Feb. 21, 2005 | Minute Resolution | Petitioner/s: Triple V Food Respondent/s: Filipino Merchants Insurance Doctrine: In a contract of deposit, a person receives an object belonging to another with the obligation of safely keeping it and returning the same. A deposit may be constituted even without any consideration. It is not necessary that the depositary receives a fee before it becomes obligated to keep the item entrusted for safekeeping and to return it later to the depositor.

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Petitioner must not be allowed to use its parking claim stub's exclusionary stipulation as a shield from any responsibility. Here, it is evident that De Asis deposited the car in question with the petitioner as part of the latter's enticement for customers by providing them a safe parking space within the vicinity of its restaurant. In a very real sense, a safe parking space is an added attraction to petitioner's restaurant business because customers are thereby somehow assured that their vehicle are safely kept, rather than parking them elsewhere at their own risk. Having entrusted the subject car to petitioner's valet attendant, customer De Asis, like all of petitioner's customers, fully expects the security of her car while at petitioner's premises/designated parking areas and its safe return at the end of her visit at petitioner's restaurant.

Dispositive WHEREFORE, petition is hereby DENIED DUE COURSE.

Facts:  Mary Jo-Anne De Asis dined at Kamayan Restaurant in QC, owned by petitioner. She availed of valet parking service of petitioner and entrusted her car key to petitioner's valet counter. A corresponding parking ticket was issued as receipt for the car. The car was then parked by petitioner's valet attendant, a certain Madridano, at the designated parking area. o Her car was a Mitsubishi Galant assigned by her employer Crispa Textile  Few minutes later, Madridano noticed that the car was not in its parking slot and its key no longer in the box where valet attendants usually keep the keys. The car was never recovered.  Crispa filed a claim against its insurer, Filipino Merchants Insurance Company Inc. (FMICI), and was indemnified in the amount of P669,500 for the vehicle. Thus, FMICI as subrogee to Crispa's rights, filed with the RTC a complaint for damages against Triple V.  Triple V’s Defense: o There was no negligence because Triple V’s employees wasted no time in ascertaining the loss of the car and in informing De Asis of the discovery of the loss. o in accepting the complimentary valet parking service, De Asis received a parking ticket which said that "Management and staff will not be responsible for any loss of or damage incurred on the vehicle nor of valuables contained therein." Thus, it is an explicit waiver of any right to claim indemnity for the loss of the car. o De Asis knowingly assumed the risk of loss when she allowed petitioner to park her vehicle as the valet service did not insure the vehicle against loss.  RTC ruled for FMICI. In the CA, Triple V reiterated its argument that it was not a depositary of the subject car and that it exercised due diligence and prudence in the safe keeping of the vehicle, in handling the car-napping incident and in the supervision of its employees.  The CA affirmed the RTC’s findings that Triple V was a depositary of the vehicle and it was negligent in its duties as a depositary and as an employer of the valet attendant. Ruling: W/N there was a contract of deposit between Triple V and De Asis – YES.  When De Asis entrusted the car to petitioner’s valet attendant while eating at petitioner's restaurant, she expected the car's safe return at the end of her meal. Thus, petitioner was constituted as a depositary of the car. Petitioner cannot evade liability by arguing that neither a contract of deposit nor that of insurance, guaranty or surety for the loss of the car was constituted when De Asis availed of its free valet parking service.  In a contract of deposit, a person receives an object belonging to another with the obligation of safely keeping it and returning the same. A deposit may be constituted even without any consideration. It is not necessary that the depositary receives a fee before it becomes obligated to keep the item entrusted for safekeeping and to return it later to the depositor.  The parking claim stub embodying the terms and conditions of the parking, including that of relieving petitioner from any loss or damage to the car, is essentially a contract of adhesion. While contracts of adhesion are not void in themselves, yet the Court will not hesitate to rule out blind adherence thereto if they prove to be one-sided under the attendant facts and circumstances.

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[Judicial Deposit] 09 DEL MORAL V. REPUBLIC April 26, 2005 | Austria-Martinez, J. | Petitioner/s: AUL C. DEL MORAL, JUAN ANTONIO DEL MORAL and JOSE LUIS C. DEL MORAL Respondent/s: REPUBLIC OF THE PHILIPPINES Represented by the Presidential Commission on Good Government (PCGG) and the Sandiganbayan Doctrine: Sequestered assets and corporations are legally and technically in custodia legis, under the administration of the PCGG for the purpose of preventing the destruction, concealment or dissipation of, and otherwise conserving and preserving the same. Facts: ●

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On May 9, 1986, PCGG issued a writ of sequestration over all properties or assets of the Mountain View Real Estate Corp. believed to be part of the so-called ill-gotten wealth. ○ The writ of sequestration was annotated at the back of TCT 9497, covering a parcel of land located in the province of Cavite co-owned by Mountain View and other persons. In July 1987, PCGG filed with the Sandiganbayan a case for the recovery of ill-gotten wealth against several defendants, one of them being Anthony Lee, president of Mountain View. The share of Mountain View in the land covered by TCT 9497 was listed as one of the assets of Lee. Subsequently, PCGG and Lee entered into a compromise agreement which was approved by the Sandiganbayan, where Lee transferred his rights and interest in Mountain View in favor of the Government. On Feb. 4, 1987, movants Del Morals and Primicias, together with the other co-owners of the land covered by TCT 9497, filed with respondent RTC of Tagaytay City an action against Mountain View for the partition of the piece of land covered by the said title. Mountain View was declared in default. RTC approved the project of partition submitted by the parties with the exception of Mountain View. The piece of land covered by TCT 9497 was allocated to the different co-owners, including Mountain View which was given an area of 78,072 square meters. On April 26, 1988, RTC amended its decision by adding therein a portion ordering the Register of Deeds to issue the corresponding certificates of title to the co-owners who were parties to the project of partition, and also to Mountain View, and directing the cancellation of TCT 9497. A TCT was issued in the name of Mountain View covering an area of 78,072 square meters. However, on August 17, 1998, the RTC issued an order approving the revised technical description submitted by movants Del Morals which in effect reduced the area of the share in the land of Mountain View to only 57,693 square meters. It was only in 1994 that the PCGG came to know of the action for partition filed by herein petitioners in the RTC of Tagaytay City. The Republic, then filed, on November 20, 1996, a petition before the Sandiganbayan for the annulment of the amended decision of the said trial court and for the reconveyance in favor of Mountain View of the area taken from its share. Petitioners filed a Motion to Dismiss alleging that the Sandiganbayan has no jurisdiction over the case. Sandiganbayan denied this. ○ It held that SB has exclusive original jurisdiction over all civil cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986, which executive orders refer to the recovery of the supposed ill-gotten wealth of the late President Marcos, his family and his associates. ○ It held that the present PCGG petition for reconveyance can be deemed as a case arising from and incidental to the recovery of ill-gotten wealth. (PCGG v. Pena doctrine).

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It is the regular courts which have jurisdiction over the present case since what is involved is merely a civil case for partition and not a case for the recovery of ill-gotten wealth; that the fact that it involves a corporation that was placed under sequestration is merely incidental and would not confer upon the SB jurisdiction over the case.

Ruling: W/N SB has jurisdiction over a petition for annulment of an RTC ruling in a partition case wherein a sequestered corporation is a party. - YES. ● In PCGG v. Pea, SC held that under section 2 of the Presidents Executive Order No. 14 issued on May 7, 1986, all cases of the Commission regarding the Funds, Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees whether civil or criminal, are lodged within the exclusive and original jurisdiction of the SB and all incidents arising from, incidental to, or related, to such cases necessarily fall likewise under the SB’s exclusive and original jurisdiction. ● In PCGG v. Sandiganbayan, SC held that the SB has original and exclusive jurisdiction not only over principal causes of action involving recovery of ill-gotten wealth, but also over all incidents arising from, incidental to, or related to such cases for the following reasons: ○ Sequestered assets and corporations are legally and technically in custodia legis, under the administration of the PCGG. Executive Order No. 2 specifically prohibits that such assets and properties be transferred, conveyed, encumbered, or otherwise depleted or concealed, under pain of such penalties as prescribed by law. Considering that PNCC/CDCP and AHL are sequestered corporations, and WUTICs claim is questionable, the payment of a substantial amount of money can result in the deterioration and disappearance of the sequestered assets. Such a situation cannot be allowed to happen, unless there is a final adjudication and disposition of the issue as to whether these assets are ill-gotten or not, since it may result in damage or prejudice to the Republic of the Philippines. ● It was explained in Baseco v. PCGG that the power of the PCGG to sequester property claimed to be ill-gotten means to place or cause to be placed under its possession or control said property, or any building or office wherein any such property and any records pertaining thereto may be found, including business enterprises and entities, --- for the purpose of preventing the destruction, concealment or dissipation of, and otherwise conserving and preserving the same --- until it can be determined, through appropriate judicial proceedings, whether the property was in truth ill-gotten. Dispositive WHEREFORE, the present petition is DISMISSED for lack of merit. Notes Insert notes

Petitioner’s contention:

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[JUDICIAL DEPOSIT: Definition, Object, Responsibility, Rules Governing Sequestration] 10 REPUBLIC vs SANDIGANBAYAN February 25, 1992 | C.J. Narvasa PETITIONER: Republic of the Philippines (represented by PCGG) RESPONDENTS: Sandiganbayan (2nd Division) and Rebecco Panlilio DOCTRINE: The findings by administrative or quasi-judicial agencies like PCGG are entitled to the greatest respect and are practically binding and conclusive, like the factual findings of the trial and appellate courts, Provided, that those findings may and should be reviewed and reversed or nullified where they are patently arbitrary or capricious or are not supported by substantial evidence. FACTS ●

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3

[May 31, 1986] PCGG Comm. Mary Concepcion Bautista issued a writ which placed 3 firms under sequestration—Silahis International Hotel, Hotel Properties, Inc., and Philroad Construction Corporation. [July 28, 1989] The PCGG issued Mission Order No. AD-89-51 creating a “Management Committee” to completely take-over the management and operations of Silahis. ○ The Mission Order was meant to protect the interest of the government in view of the state of labor/management situation, brought about by the presence of undesirable elements of dubious intentions causing the occurrence of incidents of violence and undue disruption of the business operations of the hotel. [August 3, 1989] Panlilio filed a Motion for Injunction with Application for Restraining Order wherein he alleged that: ○ such takeover was not within the scope of the writ of sequestration; ○ despite the sequestered status, Silahis had achieved a business turnaround at the start of last year and business since then become profitable; ○ as a result of a deadlock in CBA negotiations with the union representing its employees, the union declared a strike, but there were ongoing negotiations for settlement of the controversy; ○ the takeover was effected with abusive and unnecessary force PCGG said that it had acted in the exercise of its primary administrative jurisdiction 3. Hence, SB had no jurisdiction over the sequestration and takeover of Silahis. [August 14, 1989] SB (2nd Division) enjoined PCGG and the Management Committee from further implementing the Mission Order. ○ Panlilio has presented documentary evidence tending to show that the takeover of the management and operation of Silahis was not due to any disposal or dissipation of its assets. ○ The PCGG had not presented countervailing evidence, but on the contrary, admitted the factual basis for the issuance of the Mission Order which is

Under the doctrine of primary administrative jurisdiction, courts will not determine a controversy where the issues for resolution demand the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact. (Nestle PH vs Uniwide Sales; October 20, 2010) 4 The Aug. 14, 1989 SB Resolution was challenged by the Republic before the SC. Before respondents could file a comment, petitioner filed a “Second Urgent Motion for Issuance of a TRO”. The SC resolved to refer the urgent motion to the SB to be considered by the latter as a MR of the Aug. 14, 1989 SB Resolution.

●

that there was labor unrest among the employees, insisting merely that it had acted and was acting in the exercise of its primary administrative jurisdiction On MR4, SB asserted its authority and jurisdiction, contrary to the denial of PCGG. It ruled that: ○ The Mission Order is null and void ab initio; ○ The takeover is arbitrary and illegal ○ PCGG and the Management Committee are to divest themselves of any participation and/or involvement in the management and operation of Silahis

ISSUE/HELD: WON THE SB HAS NO JURISDICTION TO REVIEW PCGG’s ACTS OF SEQUESTRATION - SB HAS JURISDICTION PCGG’s argument ● PCGG may administer the properties placed under its custodia legis, and its acts may not be interfered with by the courts. Based on PCGG vs Peña, purely administrative and discretionary functions may not be interfered with by the courts. Supreme Court ruling ● In Peña, it was held that “the findings by administrative or quasi-judicial agencies like PCGG are entitled to the greatest respect and are practically binding and conclusive, like the factual findings of the trial and appellate courts”, those findings may and should be reviewed and reversed or nullified “where they are patently arbitrary or capricious or are not supported by substantial evidence.” ● Neither in Peña nor in any other case did the SC ever say that orders of sequestration, seizure or takeover of the PCGG or other acts done in the exercise of its “primary administrative jurisdiction” are beyond judicial review, or beyond the power of the courts to reverse or nullify. ● Review of those acts, and correction or invalidation thereof, when called for, can only be undertaken by the SB, which has exclusive jurisdiction over all cases regarding the funds, moneys, assets, and properties illegally acquired or misappropriated by Marcos and his cronies.5 ● The rule is not altered by the fact that the sequestration, seizure or takeover preceded the commencement of action in the SB involving the subject property. ● Peña is consistent with Baseco vs PCGG which requires that sequestration in order to be valid must have factual basis and must accord due process to the parties affected — that said remedies are not meant to create a permanent situation as regards the property , or divest ownership or rights, that they are in fact merely provisional and temporary and subsist only until ownership is finally judicially determined.

5

In Peña: All cases of the Commission regarding the "Funds, Moneys, Assets and Properties Illegally Acquired or Misappropriated by Former President Ferdinand E. Marcos, Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents or, nominees," whether civil or criminal, are lodged within the exclusive and original jurisdiction of, "the Sandiganbayan" and all incidents arising from, incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court.

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

[WAREHOUSE RECEIPTS LAW] 01 GONZALES V GO TIONG AND LUZON SURETY CO. August 30, 1958 | Montemayor, J. | RAMON GONZALES, Plaintiff-Appellee, INC., Defendants-Appellants.

v.

GO

TIONG

and

LUZON

SURETY

CO.,

Facts:  

   

   



Go Tiong owned a rice mill and warehouse, located at Mabini, Urdaneta, Pangasinan. Feb 4, 1953, he obtained a license to engage in the business of a bonded warehouseman Jan 26, 1953. To secure the performance of his obligations as such bonded warehouseman, the Luzon Surety Co. executed a Guaranty Bond for P18, 334, on the fulfillment by Go Tiong of his duty or obligation to deliver to the depositors in his storage warehouse, the palay received by him for storage, at any time demand is made, or to pay the market value thereof, in case he was unable to return the same. The palay was deposited with Alliance Surety and Insurance. Prior to being license as bonded warehouseman, he had received on several occasions palay for deposit from plaintiff Ramon Gonzales, totalling 368 sacks, for which he issued receipts After licensing, he again received from Gonzales 492 sack. For a grand total of 860 sacks, valued at P8600 @ P10/sack Mar 15/17, 1953. Plaintiff on two occasions demanded from Go Tiong the value of his deposits in the amount of P8,600 but he was merely told to come back. A few days later, the warehouse burned to the ground. There were 5,847 sacks of palay in the warehouse, in excess of the 5,000 sacks authorized under his license. The receipts issued by Go Tiong to the plaintiff were ordinary receipts, not the "warehouse receipts" defined by the Warehouse Receipts Act (Act No. 2137) The depositors of palay including plaintiff, filed their claims with the Bureau of Commerce, and some of them were paid with the proceeds from the insurance policy. Plaintiff’s counsel later withdrew his claim with the BoC because nothing came from plaintiff’s efforts to have his claim paid. (This claim with the BoC was later reinstated) Thereafter, Gonzales filed the present action against Go Tiong and the Luzon Surety for the sum of P8,600, the value of his palay, with legal interest, damages in the sum of P5,000 and P1,500 as attorney’s fees While the case was pending in court, Gonzales and Go Tiong entered into a contract of amicable settlement o That upon the settlement of all accounts due to him, Gonzales would have all the actions against Go Tiong dismissed. Go Tiong failed to settle the accounts, Gonzales prosecuted his court action.

CFI: Judgement against Go Tiong and Luzon Surety, jointly and severally, to pay plaintiff the sum of P4,920 with legal interest. Judgement against Go Tion got pay P3,680 with legal interest. CA: indorsed the case to the SC, as the issues raised were purely questions of law. RESP: claim is governed by the Civil Code and not by the Bonded Warehouse Act (Act No. 3893, as amended by Republic Act No. 247), for the reason that, as already:  what Go Tiong issued to plaintiff were ordinary receipts, not the warehouse receipts contemplated by the Warehouse Receipts Law, therefore plaintiff may not sue on the bond  the deposits of palay of plaintiff were gratuitous.

burning of the warehouse was a fortuitous event and not due to any fault of Go Tiong and that consequently, he should not be held liable

LUZON SURETY: the amicable settlement by and between Gonzales and Go Tiong constituted a material alteration of its bond, thereby extinguishing and discharging its liability. Issue: WON the case falls under the Civil Code. NO, the form of the receipts is not material. Held:  Act No. 3893 as amended is a special law regulating the business of receiving commodities for storage and defining the rights and obligations of a bonded warehouseman and those transacting business with him.  The kind or nature of the receipts issued by him for the deposits is not very material, much less decisive. o Though it is desirable that receipts issued by a bonded warehouseman should conform to the provisions of the Warehouse Receipts Law, said provisions are not mandatory and indispensable in the sense that if they fell short of the requirements of the Warehouse Receipts Act, then the commodities delivered for storage become ordinary deposits and will not be governed by the provisions of the Bonded Warehouse Act o Sec 16 of the Warehouse Receipts Act is merely permissive and directory and not obligatory. o Sec 2, Act No. 3893, defining receipt as any receipt issued by a warehouseman for commodity delivered to him, showing that the law does not require as indispensable that a warehouse receipt be issued.  The fact that the receipts issued by him were not "quedans" is no valid ground for defense because he was the principal obligor. Go Tiong had repeatedly promised plaintiff to issue to him "quedans"; and that Go Tiong was in the habit of issuing ordinary receipts (not "quedans") to his depositors. As to gratuitous deposit: it would appear that Go Tiong induced plaintiff to deposit his palay in the warehouse free of charge in order to promote his business and to attract other depositors. Because of the accommodation, Gonzales would convince others to deposit with Go Tiong On defense of fortuitous event: evidence is insufficient to show that it was a fortuitous event. On the contrary, the fact that he exceeded the limit of the authorized deposit must have increased the risk.  The rule that there shall be a presumption of negligence in bailment cases is necessary, especially considering that there was already default in the delivery and accounting o This is because the facts surrounding the care of the property are peculiarly within the bailee’s knowledge and power to prove, and that the enforcement of any other rule would impose great difficulties upon the bailors On Luzon’s defense of extinguishment of liability: the settlement was never consummated because Go Tiong failed to settle the accounts of Gonzales to the latter’s satisfaction. Consequently, said non-consummated compromise settlement does not discharge the surety  Sec 7, Act No 3893 as long as the depositor is injured by a breach of any obligation of the warehouseman, which obligation is secured by a bond, said depositor may sue on said

SECTION 1. Persons who may issue receipts. — Warehouse receipts may be issued by any warehouseman.", and the Bonded Warehouse Act as amended permits the warehouseman to issue any receipt, thus: ". . . receipt’ as any receipt issued by a warehouseman for commodity delivered to him 6

16

 

bond. In other words, the surety cannot avoid liability from the mere failure of the warehouseman to issue the prescribed receipt The surety company itself responsible for the performance by the warehouseman of all the duties and obligations imposed upon him by the statute; and, if he failed to perform any such duty to the loss of the bailor, the surety company became liable therefor. Where the warehouseman receives grain for storage and refuses to return or pay it, the fact that he failed to issue the receipt, when the statute required him to issue on receiving it, is not available to the surety as a defense against an action on the bond. The obligation of the surety covers the duty of the warehouseman to issue the prescribed receipt, as well as the other duties imposed upon him by the statute.

Dispositive Decision affirmed. Notes

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[G.R. No. 119231. April 18, 1996] PHILIPPINE NATIONAL BANK, petitioner, vs. HON. PRES. JUDGE BENITO C. SE, JR., RTC, BR. 45, MANILA; NOAHS ARK SUGAR REFINERY; ALBERTO T. LOOYUKO, JIMMY T. GO and WILSON T. GO, respondents. Rolan A. Nieto for petitioner. Madella & Cruz Law Offices for private respondents. DECISION HERMOSISIMA, JR., J.: The source of conflict herein is the question as to whether the Philippine National Bank should pay storage fees for sugar stocks covered by five (5) Warehouse Receipts stored in the warehouse of private respondents in the face of the Court of Appeals decision (affirmed by the Supreme Court) declaring the Philippine National Bank as the owner of the said sugar stocks and ordering their delivery to the said bank. From the same facts but on a different perspective, it can be said that the issue is: Can the warehouseman enforce his warehousemans lien before delivering the sugar stocks as ordered by the Court of Appeals or need he file a separate action to enforce payment of storage fees? The herein petition seeks to annul: (1) the Resolution of respondent Judge Benito C. Se, Jr. of the Regional Trial Court of Manila, Branch 45, dated December 20, 1994, in Civil Case No. 90-53023, authorizing reception of evidence to establish the claim of respondents Noahs Ark Sugar Refinery, et al., for storage fees and preservation expenses over sugar stocks covered by five (5) Warehouse Receipts which is in the nature of a warehousemans lien; and (2) the Resolution of the said respondent Judge, dated March 1, 1995, declaring the validity of private respondents warehousemans lien under Section 27 of Republic Act No 2137 and ordering that execution of the Court of Appeals decision, dated December 13, 1991, be in effect held in abeyance until the full amount of the warehousemans lien on the sugar stocks covered by five (5) quedans subject of the action shall have been satisfied conformably with the provisions of Section 31 of Republic Act 2137. Also prayed for by the petition is a Writ of Prohibition to require respondent RTC Judge to desist from further proceeding with Civil Case No. 90-53023, except order the execution of the Supreme Court judgment; and a Writ of Mandamus to compel respondent RTC Judge to issue a Writ of Execution in accordance with the said executory Supreme Court decision. THE FACTS In accordance with Act No. 2137, the Warehouse Receipts Law, Noahs Ark Sugar Refinery issued on several dates, the following Warehouse Receipts (Quedans): (a) March 1, 1989, Receipt No. 18062, covering sugar deposited by Rosa Sy; (b) March 7, 1989, Receipt No. 18080, covering sugar deposited by RNS Merchandising (Rosa Ng Sy); (c) March 21, 1989, Receipt No. 18081, covering sugar deposited by St. Therese Merchandising; (d)March 31, 1989, Receipt No. 18086, covering sugar deposited by St. Therese Merchandising; and (e) April 1, 1989, Receipt No. 18087, covering sugar deposited by RNS Merchandising. The receipts are substantially in the form, and contains the terms, prescribed for negotiable warehouse receipts by Section 2 of the law.

Cresencia K. Zoleta. Ramos and Zoleta then used the quedans as security for two loan agreements - one for P15.6 million and the other for P23.5 million - obtained by them from the Philippine National Bank. The aforementioned quedans were endorsed by them to the Philippine National Bank. Luis T. Ramos and Cresencia K. Zoleta failed to pay their loans upon maturity on January 9, 1990. Consequently, on March 16, 1990, the Philippine National Bank wrote to Noahs Ark Sugar Refinery demanding delivery of the sugar stocks covered by the quedans endorsed to it by Zoleta and Ramos. Noahs Ark Sugar Refinery refused to comply with the demand alleging ownership thereof, for which reason the Philippine National Bank filed with the Regional Trial Court of Manila a verified complaint for Specific Performance with Damages and Application for Writ of Attachment against Noahs Ark Sugar Refinery, Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three being identified as the sole proprietor, managing partner, and Executive Vice President of Noahs Ark, respectively. Respondent Judge Benito C. Se, Jr., in whose sala the case was raffled, denied the Application for Preliminary Attachment. Reconsideration therefor was likewise denied. Noahs Ark and its co-defendants filed an Answer with Counterclaim and Third-Party Complaint in which they claimed that they are the owners of the subject quedans and the sugar represented therein, averring as they did that: 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 volume of sugar indicated in the quedans stored at Noahs Ark Sugar Refinery for a total consideration of P63,000,000.00, *** The corresponding payments in the form of checks issued by the vendees in favor of defendants were subsequently dishonored by the drawee banks by reason of payment stopped and drawn against insufficient funds, *** Upon proper notification to said vendees and plaintiff in due course, defendants refused to deliver to vendees therein the quantity of sugar covered by the subject quedans. 10. *** Considering that the vendees and first endorsers of subject quedans did not acquire ownership thereof, the subsequent endorsers and plaintiff itself did not acquire a better right of ownership than the original vendees/first endorsers. 1 The Answer incorporated a Third-Party Complaint by Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, doing business under the trade name and style Noahs Ark Sugar Refinery against Rosa Ng Sy and Teresita Ng, praying that the latter be ordered to deliver or return to them the quedans (previously endorsed to PNB and the subject of the suit) and pay damages and litigation expenses. The Answer of Rosa Ng Sy and Teresita Ng, dated September 6, 1990, one of avoidance, is essentially to the effect that the transaction between them, on the one hand, and Jimmy T. Go, on the other, concerning the quedans and the sugar stocks covered by them was merely a simulated one being part of the latters complex banking schemes and financial maneuvers, and thus, they are not answerable in damages to him. On January 31, 1991, the Philippine National Bank filed a Motion for Summary Judgment in favor of the plaintiff as against the defendants for the reliefs prayed for in the complaint.

Subsequently, Warehouse Receipts Nos. 18080 and 18081 were negotiated and endorsed to Luis T. Ramos; and Receipts Nos. 18086, 18087 and 18062 were negotiated and endorsed to

18

On May 2, 1991, the Regional Trial Court issued an order denying the Motion for Summary Judgment. Thereupon, the Philippine National Bank filed a Petition for Certiorari with the Court of Appeals, docketed as CA-G.R. SP. No. 25938 on December 13, 1991.

(b) to pay plaintiff Philippine National Bank attorneys fees, litigation expenses and judicial costs hereby fixed at the amount of One Hundred Fifty Thousand Pesos (P150,000.00) as well as the costs.

Pertinent portions of the decision of the Court of Appeals read:

SO ORDERED.3

In issuing the questioned Orders, the respondent Court ruled that questions of law should be resolved after and not before, the questions of fact are properly litigated. A scrutiny of defendants affirmative defenses does not show material questions of fact as to the alleged nonpayment of purchase price by the vendees/first endorsers, and which nonpayment is not disputed by PNB as it does not materially affect PNBs title to the sugar stocks as holder of the negotiable quedans.

On September 29, 1993, private respondents moved for reconsideration of this decision. A Supplemental/Second Motion for Reconsideration with leave of court was filed by private respondents on November 8, 1993. We denied private respondents motion on January 10, 1994. .

What is determinative of the propriety of summary judgment is not the existence of conflicting claims from prior parties but whether from an examination of the pleadings, depositions, admissions and documents on file, the defenses as to the main issue do not tender material questions of fact (see Garcia vs. Court of Appeals, 167 SCRA 815) or the issues thus tendered are in fact sham, fictitious, contrived, set up in bad faith or so unsubstantial as not to constitute genuine issues for trial. (See Vergara vs. Suelto, et al., 156 SCRA 753; Mercado, et al. vs. Court of Appeals, 162 SCRA 75). The questioned Orders themselves do not specify what material facts are in issue. (See Sec. 4, Rule 34, Rules of Court). To require a trial notwithstanding pertinent allegations of the pleadings and other facts appearing on the record, would constitute a waste of time and an injustice to the PNB whose rights to relief to which it is plainly entitled would be further delayed to its prejudice. In issuing the questioned Orders, We find the respondent Court to have acted in grave abuse of discretion which justify holding null and void and setting aside the Orders dated May 2 and July 4, 1990 of respondent Court, and that a summary judgment be rendered forthwith in favor of the PNB against Noahs Ark Sugar Refinery, et al., as prayed for in petitioners Motion for Summary Judgment.2 On December 13, 1991, the Court of Appeals nullified and set aside the orders of May 2 and July 4, 1990 of the Regional Trial Court and ordered the trial court to render summary judgment in favor of the PNB. On June 18, 1992, the trial court rendered judgment dismissing plaintiffs complaint against private respondents for lack of cause of action and likewise dismissed private respondents counterclaim against PNB and of the Third-Party Complaint and the Third-Party Defendants Counterclaim. On September 4, 1992, the trial court denied PNBs Motion for Reconsideration. On June 9, 1992, the PNB filed an appeal from the RTC decision with the Supreme Court, G.R. No. 107243, by way of a Petition for Review on Certiorari under Rule 45 of the Rules of Court. This Court rendered judgment on September 1, 1993, the dispositive portion of which reads:

Private respondents filed a Motion Seeking Clarification of the Decision, dated September 1, 1993. We denied this motion in this manner: It bears stressing that the relief granted in this Courts decision of September 1, 1993 is precisely that set out in the final and executory decision of the Court of Appeals in CA-G.R. SP No. 25938, dated December 13, 1991, which was affirmed in toto by this Court and which became unalterable upon becoming final and executory. 4 Private respondents thereupon filed before the trial court an Omnibus Motion seeking among others the deferment of the proceedings until private respondents are heard on their claim for warehousemans lien. On the other hand, on August 22, 1994, the Philippine National Bank filed a Motion for the Issuance of a Writ of Execution and an Opposition to the Omnibus Motion filed by private respondents. The trial court granted private respondents Omnibus Motion on December 20, 1994 and set reception of evidence on their claim for warehousemans lien. The resolution of the PNBs Motion for Execution was ordered deferred until the determination of private respondents claim. On February 21, 1995, private respondents claim for lien was heard and evidence was received in support thereof. The trial court thereafter gave both parties five (5) days to file respective memoranda. On February 28, 1995, the Philippine National Bank filed a Manifestation with Urgent Motion to Nullify Court Proceedings. In adjudication thereof, the trial court issued the following order on March 1, 1995: WHEREFORE, this court hereby finds that there exists in favor of the defendants a valid warehousemans lien under Section 27 of Republic Act 2137 and accordingly, execution of the judgment is hereby ordered stayed and/ or precluded until the full amount of defendants lien on the sugar stocks covered by the five (5) quedans subject of this action shall have been satisfied conformably with the provisions of Section 31 of Republic Act 2137. 5

WHEREFORE, the trial judges 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 Noahs Ark Sugar Refinery, Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, jointly and severally:

Consequently, the Philippine National Bank filed the herein petition to seek the nullification of the above-assailed orders of respondent judge.

(a) to deliver to the petitioner Philippine National Bank, the sugar stocks covered by the Warehouse Receipts/ Quedans which are now in the latters possession as holder for value and in due course; or alternatively, to pay (said) plaintiff actual damages in the amount of P39.1 million, with legal interest thereon from the filing of the complaint until full payment; and

I

The PNB submits that:

PNBs RIGHT TO A WRIT OF EXECUTION IS SUPPORTED BY TWO FINAL AND EXECUTORY DECISIONS: THE DECEMBER 13, 1991 COURT OF APPEALS DECISION IN CA-G.R. SP. NO. 25938; AND, THE NOVEMBER 9, 1992 SUPREME COURT DECISION IN G.R NO. 107243. RESPONDENT RTCS MINISTERIAL AND MANDATORY DUTY IS TO ISSUE THE WRIT OF

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EXECUTION TO IMPLEMENT THE DECRETAL PORTION OF SAID SUPREME COURT DECISION II RESPONDENT RTC IS WITHOUT JURISDICTION TO HEAR PRIVATE RESPONDENTS OMNIBUS MOTION. THE CLAIMS SET FORTH IN SAID MOTION: (1) WERE ALREADY REJECTED BY THE SUPREME COURT IN ITS MARCH 9, 1994 RESOLUTION DENYING PRIVATE RESPONDENTS MOTION FOR CLARIFICATION OF DECISION IN .G.R. NO. 107243; AND (2) ARE BARRED FOREVER BY PRIVATE RESPONDENTS FAILURE TO INTERPOSE THEM IN THEIR ANSWER, AND FAILURE TO APPEAL FROM THE JUNE 18, 1992 RTC DECISION IN CIVIL CASE NO. 90-52023

We have carefully examined our resolution, dated March 9, 1994, which denied Noahs Arks motion for clarification of our decision, dated September 1, 1993, wherein we affirmed in full and adopted the Court of Appeals earlier decision, dated December 13, 1991, in CA-G.R. SP. No. 25938. We are not persuaded by the petitioners argument that our said resolution carried with it the denial of the warehousemans lien over the sugar stocks covered by the subject Warehouse Receipts. We have simply resolved and upheld in our decision, dated September 1, 1993, the propriety of summary judgment which was then assailed by private respondents. In effect, we ruled therein that, considering the circumstances obtaining before the trial court, the issuance of the Warehouse Receipts not being disputed by the private respondents, a summary judgment in favor of PNB was proper. We in effect further affirmed the finding that Noahs Ark is a warehouseman which was obliged to deliver the sugar stocks covered by the Warehouse Receipts pledged by Cresencia K. Zoleta and Luis T. Ramos to the petitioner pursuant to the pertinent provisions of Republic Act 2137.

III RESPONDENT RTCS ONLY JURISDICTION IS TO ISSUE THE WRIT TO EXECUTE THE SUPREME COURT DECISION. THUS, PNB IS ENTITLED TO: (1) A WRIT OF CERTIORARI TO ANNUL THE RTC RESOLUTION DATED DECEMBER 20, 1994 AND THE ORDER DATED FEBRUARY 7, 1995 AND ALL PROCEEDINGS TAKEN BY THE RTC THEREAFTER; (2) A WRIT OF PROHIBITION TO PREVENT RESPONDENT RTC FROM FURTHER PROCEEDING WITH CIVIL CASE NO. 90-53023 AND COMMITTING OTHER ACTS VIOLATIVE OF THE SUPREME COURT DECISION IN G.R. NO. 107243; AND (3) A WRIT OF MANDAMUS TO COMPEL RESPONDENT RTC TO ISSUE THE WRIT TO EXECUTE THE SUPREME COURT JUDGMENT IN FAVOR OF PNB The issues presented before us in this petition revolve around the legality of the questioned orders of respondent judge, issued as they were after we had denied with finality private respondents contention that the PNB could not compel them to deliver the stocks of sugar in their warehouse covered by the endorsed quedans or pay the value of the said stocks of sugar. Petitioners submission is on a technicality, that is, that private respondents have lost their right to recover warehousemans lien on the sugar stocks covered by the five (5) Warehouse Receipts for the reason that they failed to set up said claim in their Answer before the trial court and that private respondents did not appeal from the decision in this regard, dated June 18, 1992. Petitioner asseverates that the denial by this Court on March 9, 1994 of the motion seeking clarification of our decision, dated September 1, 1993, has foreclosed private respondents right to enforce their warehousemans lien for storage fees and preservation expenses under the Warehouse Receipts Act. On the other hand, private respondents maintain that they could not have claimed the right to a warehouseman s lien in their Answer to the complaint before the trial court as it would have been inconsistent with their stand that they claim ownership of the stocks covered by the quedans since the checks issued for payment thereof were dishonored. If they were still the owners, it would have been absurd for them to ask payment for storage fees and preservation expenses. They further contend that our resolution, dated March 9, 1994, denying their motion for clarification did not preclude their right to claim their warehousemans lien under Sections 27 and 31 of Republic Act 2137, as our resolution merely affirmed and adopted the earlier decision, dated December 13, 1991, of the Court of Appeals (6th Division) in CA-G.R. SP. No. 25938 and did not make any finding on the matter of the warehouseman s lien.

In disposing of the private respondents motion for clarification, we could not contemplate the matter of warehousemans lien because the issue to be finally resolved then was the claim of private respondents for retaining ownership of the stocks of sugar covered by the endorsed quedans. Stated otherwise, there was no point in taking up the issue of warehousemans lien since the matter of ownership was as yet being determined. Neither could storage fees be due then while no one has been declared the owner of the sugar stocks in question. Of considerable relevance is the pertinent stipulation in the subject Warehouse Receipts which provides for respondent Noahs Arks right to impose and collect warehousemans lien: Storage of the refined sugar quantities mentioned herein shall be free up to one (1) week from the date of the quedans covering said sugar and thereafter, storage fees shall be charged in accordance with the Refining Contract under which the refined sugar covered by this Quedan was produced. 6 It is not disputed, therefore, that, under the subject Warehouse Receipts provision, storage fees are chargeable. Petitioner anchors its claim against private respondents on the five (5) Warehouse Receipts issued by the latter to third-party defendants Rosa Ng Sy of RNS Merchandising and Teresita Ng of St. Therese Merchandising, which found their way to petitioner after they were negotiated to them by Luis T. Ramos and Cresencia K. Zoleta for a loan of P39.1 Million. Accordingly, petitioner PNB is legally bound to stand by the express terms and conditions on the face of the Warehouse Receipts as to the payment of storage fees. Even in the absence of such a provision, law and equity dictate the payment of the warehouseman s lien pursuant to Sections 27 and 31 of the Warehouse Receipts Law (R.A. 2137), to wit: SECTION 27. What claims are included in the warehousemans lien. - Subject to the provisions of section thirty, a warehouseman shall have lien on goods deposited or on the proceeds thereof in his hands, for all lawful charges for storage and preservation of the goods; also for all lawful claims for money advanced, interest, insurance, transportation, labor, weighing coopering and other charges and expenses in relation to such goods; also for all reasonable charges and expenses for notice, and advertisement of sale, and for sale of the goods where default has been made in satisfying the warehousemans lien. xxx xxx xxx

We find for private respondents on the foregoing issue and so the petition necessarily must fail.

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SECTION 31. Warehouseman need not deliver until lien is satisfied. - A warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied. After being declared not the owner, but the warehouseman, by the Court of Appeals on December 13, 1991 in CA-G.R. SP. No. 25938, the decision having been affirmed by us on December 1, 1993, private respondents cannot legally be deprived of their right to enforce their claim for warehousemans lien, for reasonable storage fees and preservation expenses. Pursuant to Section 31 which we quote hereunder, the goods under storage may not be delivered until said lien is satisfied. SECTION 31. Warehouseman need not deliver until lien is satisfied. - A warehouseman having a lien valid against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied.

under Republic Act No. 2137. Neither did the Court of Appeals decision, dated December 13, 1991, restrict such right. Our Resolutions reference to the decision by the Court of Appeals, dated December 13, 1991, in CA-G.R. SP. No. 25938, was intended to guide the parties in the subsequent disposition of the case to its final end. We certainly did not foreclose private respondents inherent right as warehouseman to collect storage fees and preservation expenses as stipulated n the face of each of the Warehouse Receipts and as provided for in the Warehouse Receipts Law (R.A. 2137). WHEREFORE, the petition should be, as it is, hereby dismissed for lack of merit. The questioned orders issued by public respondent judge are affirmed. Costs against the petitioner. SO ORDERED.

Considering that petitioner does not deny the existence, validity and genuineness of the Warehouse Receipts on which it anchors its claim for payment against private respondents, it cannot disclaim liability for the payment of the storage fees stipulated therein. As contracts, the receipts must be respected by authority of Article 1159 of the Civil Code, to wit:

Padilla (Chairman), Bellosillo, Vitug, and Kapunan, Jr., JJ., concur.

ART. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Petitioner is in estoppel in disclaiming liability for the payment of storage fees due the private respondents as warehouseman while claiming to be entitled to the sugar stocks covered by the subject Warehouse Receipts on the basis of which it anchors its claim for payment or delivery of the sugar stocks. The unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the Warehouse Receipts Law (R.A. 2137) carried with it the admission of the existence and validity of the terms, conditions and stipulations written on the face of the Warehouse Receipts, including the unqualified recognition of the payment of warehousemans lien for storage fees and preservation expenses. Petitioner may not now retrieve the sugar stocks without paying the lien due private respondents as warehouseman. In view of the foregoing, the rule may be simplified thus: While the PNB is entitled to the stocks of sugar as the endorsee of the quedans, delivery to it shall be effected only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien, because a warehousemans lien is possessory in nature. We, therefore, uphold and sustain the validity of the assailed orders of public respondent, dated December 20, 1994 and March 1, 1995. In fine, we fail to see any taint of abuse of discretion on the part of the public respondent in issuing the questioned orders which recognized the legitimate right of Noahs Ark, after being declared as warehouseman, to recover storage fees before it would release to the PNB sugar stocks covered by the five (5) Warehouse Receipts. Our resolution, dated March 9, 1994, did not preclude private respondents unqualified right to establish its claim to recover storage fees which is recognized

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[WAREHOUSE RECEIPTS LAW] 03 CONSOLIDATED TERMINALS, INC. V. ARTEX DEVELOPMENT CO., INC. March 10, 1975 | Aquino, J. | Petitioner/s: Consolidated Terminals, Inc. (CTI) Respondent/s: Artex Development Co., Inc. Facts: ●

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CTI was the operator of a customs bonded warehouse located at Port Area, Manila. ○ It received on deposit one hundred ninety-three (193) bales of high density compressed raw cotton valued at P99,609.76. ○ It was understood that CTI would keep the cotton in behalf of Luzon Brokerage Corporation until the consignee thereof, Paramount Textile Mills, Inc., had opened the corresponding letter of credit in favor of shipper, Adolph Hanslik Cotton of Corpus Christi, Texas. November 5 and 6, 1964 – Allegedly by virtue of a forged permit to deliver imported goods, purportedly issued by the Bureau of Customs, Artex was able to obtain delivery of the bales of cotton after paying CTI P15,000 as storage and handling charges. ○ At the time the merchandise was released to Artex, the letter of credit had not yet been opened and the customs duties and taxes due on the shipment had not been paid. ○ The delivery permit was not included by CTI in its record on appeal. CTI, in its original complaint, sought to recover possession of the cotton by means of a writ of replevin. The writ could not be executed. ○ CTI then filed an amended complaint by transforming its original complaint into an action for the recovery from Artex of P99,609.76 as compensatory damages, P10,000 as nominal and exemplary damages and P20,000 as attorney's fees. ○ CTI in its affidavit for manual delivery of personal property and in its original complaint alleged that Artex acquired the cotton from Paramount Textile Mills, Inc., the consignee. Artex filed a motion to dismiss, alleging that it was not shown in the delivery permit that Artex was the entity that presented the abovementioned document to CFI. ○ Artex further averred that it returned the cotton to Paramount Textile Mills, Inc. when the contract of sale between them was rescinded because the cotton did not conform to the quality stipulated. The lower court judge (Judge Perez) granted Artex’s motion to dismiss: ○ Since CTI is only a warehouseman and according to the amended complaint was already paid the warehousing and handling charges of the 193 bales mentioned in the complaint, CTI can no longer recover for its services as warehouseman. ○ The fact that the delivery of the goods was obtained by Artex without opening the corresponding letter of credit cannot be the basis of a cause of action of CTI because such failure to open the letter of credit gives rise to a cause of action in favor of the shipper of the goods and not in favor of CTI. ○ With respect to the allegation that the goods were taken by Artex without paying the customs duties and other revenues assessed thereon, this does not give rise to a cause of action in favor of CTI for the party aggrieved is the government. ○ The alleged presentation of a forged permit to deliver imported goods by Artex did not give rise to a cause of action in favor of the CTI but in favor of the Bureau of Customs and of the consignee. CTI appealed, contending that, as warehouseman, it was entitled to the repossession of the bales of cotton; that Artex acted wrongfully in depriving CTI of the possession of the merchandise because Artex presented a falsified delivery permit, and that Artex should pay damages to CTI.

CTI cited section 10 of the Warehouse Receipts Law which provides that "where a warehouseman delivers the goods to one who is not in fact lawfully entitled to the possession of them, the warehouseman shall be liable as for conversion to all having a right of property or possession in the goods x x x".

Ruling: W/N the lower court erred in dismissing the complaint – NO. ● “Judge Perez was guided more by logic and common sense than by any specific rule of law or jurisprudence.” ● CTI’s complaint does not clearly show that, as warehouseman, it is entitled to damages from Artex. ○ The real parties interested in the bales of cotton were Luzon Brokerage Corporation as depositor, Paramount Textile Mills, Inc. as consignee, Adolph Hanslik Cotton as shipper and the Commissioners of Customs and Internal Revenue with respect to the duties and taxes. ○ These parties have not sued CTI for damages or for recovery of the bales of cotton or the corresponding taxes and duties. ● It was not the owner of the cotton. How could it be entitled to claim the value of the shipment? ○ The case might have been different if it was alleged in the amended complaint that the depositor, consignee and shipper had required CTI to pay damages, or that the Commissioners of Customs and Internal Revenue had held CTI liable for the duties and taxes. ● The lower court could not render judgment in accordance with CTI’s complaint because the amended complaint did not unequivocally allege what right of CTI was violated by Artex, or hat delict or wrong was committed by Artex against CTI which would justify the latter in recovering the value of the bales even if it was not the owner thereof. Dispositive WHEREFORE, the order of dismissal is affirmed with costs against the plaintiff-appellant. Notes

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[Warehouse Receipts Law] 04 LUA KIAN v MANILA RAILROAD COMPANY Jan. 5, 1967 | Bengzon, J. |

o

Manila Port Service is held liable, without prejudice to recovering from Cebu United.

Dispositive Judgment appealed from is affirmed.

Petitioner/s: Lua Kian

Notes

Respondent/s: Manila Railroad Company

Insert notes

Facts:  



 

Lua Kian filed a suit against Manila Railroad and Manila Port Service in order to recover the invoice value of the "Carnation" milk it imported but was allegedly not delivered. The following facts were admitted: o At the time material to the action, the defendant Manila Port Service (subsidiary of Manila Railroad) operated the arrastre service at the Port of Manila. o Lua Kian imported 2,000 cases of Carnation Milk from Carnation Company of San Francisco, California, and this was shipped on board the SS Golden Bear as shown in Bill of Lading No. 17. o Out of the 2,000 cases, only 1,829 cases marked 'Lua Kian' were discharged from the vessel and received by the Manila Port Service. o On the same day, 3,171 cases of Carnation Milk marked 'Cebu United' were discharged from the same vessel and into the custody of the Manila Port Service, and consigned to Cebu United Enterprises, as seen in Bill of Lading No. 18 o Manila Port Service delivered to Lua Kian 1,913 cases of Carnation Milk marked 'Lua Kian'  As shown by gate passes and delivery receipts. From these facts, the TC found that considering Lua Kian and Cebu United were the only consignees of the 5,000 cases of Carnation Milk, it found that 171 of the 3,171 cases marked 'Cebu United,' should have been delivered to Lua Kian. o Lua Kian is 87 cases short of 2,000 stated in the Bill of Lading. The TC ordered Cebu United to pay Lua Kian the value of the 87 cases. Cebu United appealed and contended that argued that: o they should not be made to pay for the undelivered cases of milk, and o they insist that Manila Port Service was only bound to deliver 1,829 cases to Lua Kian  Therefore there was over delivery.

Ruling: W/N Manila Port Services is liable for the undelivered cases - YES. o The bill of lading of Cebu United showed that only 3,000 cases were due to it, even though 3,171 cases were marked in its favor. o There was an excess 171 cases that were marked 'Cebu United' o The legal relationship between an arrastre operator and consignee is similar to that of a depositor and warehouseman. o As custodian of the goods discharged from the vessel, the arrastre operator has the duty to take good care of the goods and to turn them over to the party entitled to their possession. o Therefore, Manila Port Service should have withheld delivery because of the discrepancy between the bill of lading and the marked goods and should have conducted its own investigation (similar to Sec 18 of Warehouse receipts law), or called the parties to interplead (similar Sec 17 same law) in order to determine the rightful owner of the goods.

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