9 PNB V Sayo

202 SUPREME COURT REPORTS ANNOTATED
Philippine National Bank vs. Sayo, Jr.
*
G.R. No. 129918. July 9, 1998.
PHILIPPINE NATIONAL BANK, petitioner, vs. HON.

MARCELINO L. SAYO, JR., in his capacity as Presiding
Judge of the Regional Trial Court of Manila (Branch 45),
NOAH’S ARK SUGAR REFINERY, ALBERTO T.
LOOYUKO, JIMMY T. GO and WILSON T. GO,
respondents.
Actions; Appeals; Certiorari; It is well-settled that the

availability of an appeal does not foreclose recourse to the
extraordinary remedies of certiorari or prohibition where appeal is
not adequate, or equally beneficial, speedy and sufficient.—A
careful perusal of the first assailed order shows that the trial
court not only granted the motion for execution, but also
appreciated the evidence in the determination of the
warehouseman’s lien; formulated its computation of the lien; and
adopted an offsetting of the parties’ claims. Ineluctably, the order
as in the nature of a final order for it left nothing else to be
resolved thereafter. Hence, petitioner’s remedy was to appeal
therefrom. Nevertheless, petitioner was not precluded from
availing of the extraordinary remedy of certiorari under Rule 65 of
the Rules of Court. It is well-settled that the availability of an
appeal does not foreclose recourse to the extraordinary remedies
of certiorari or prohibition where appeal is not adequate, or
equally beneficial, speedy and sufficient.
Same; Same; Same; Hierarchy of Courts; Direct resort to the

Supreme Court is allowed where special and important reasons or
exceptional and compelling circumstances justify the same.—This
Court has original jurisdiction, concurrent with that of Regional
Trial Courts and the Court of Appeals, over petitions for
certiorari, prohibition, mandamus, quo warranto and habeas
corpus, and we entertain direct resort to us in cases where special
and important reasons or exceptional and compelling
circumstances justify the same. These reasons and circumstances
are present here.
Warehouse Receipts Law; Warehouseman’s Lien; Remedies
Available to Warehouseman to Enforce His Warehouseman’s Lien.
—The remedies available to a warehouseman, such as private
respondents, to enforce his warehouseman’s lien are: (1) To refuse
to de-
_______________
* FIRST DIVISION.
203
VOL. 292, JULY 9, 1998 203
liver the goods until his lien is satisfied, pursuant to Section 31 of

the Warehouse Receipts Law; (2) To sell the goods and apply the
proceeds thereof to the value of the lien pursuant to Sections 33
and 34 of the Warehouse Receipts Law; and (3) By other means
allowed by law to a creditor against his debtor, for the collection
from the depositor of all charges and advances which the
depositor expressly or impliedly contracted with the
warehouseman to pay under Section 32 of the Warehouse
Receipts Law; or such other remedies allowed by law for the
enforcement of a lien against personal property under Section 35
of said law. The third remedy is sought judicially by suing for the
unpaid charges.
Same; Pledges; The indorsement of the warehouse receipts

(quedans), to perfect the pledge, merely constitutes a symbolical or
constructive delivery of the possession of the thing thus
encumbered.—The indorsement and delivery of the warehouse
receipts (quedans) by Ramos and Zoleta to petitioner was not to
convey “title” to or ownership of the goods but to secure (by way of
pledge) the loans granted to Ramos and Zoleta by petitioner. The
indorsement of the warehouse receipts (quedans), to perfect the
pledge, merely constituted a symbolical or constructive delivery of
the possession of the thing thus encumbered.
Same; Same; Pactum Commissorio; The creditor, in a contract

of real security, like pledge, cannot appropriate without foreclosure
the things given by way of pledge.—The creditor, in a contract of
real security, like pledge, cannot appropriate without foreclosure
the things given by way of pledge. Any stipulation to the contrary,
termed pactum commissorio, is null and void. The law requires
foreclosure in order to allow a transfer of title of the good given by
way of security from its pledgor, and before any such foreclosure,
the pledgor, not the pledgee, is the owner of the goods.
Same; Warehouseman’s Lien; Where a valid demand by the

lawful holder of the quedans for the delivery of the goods is refused
by the warehouseman, despite the absence of a lawful excuse
provided by the statute itself, the warehouseman’s lien is thereafter
concomitantly lost.—Simply put, where a valid demand by the
lawful holder of the quedans for the delivery of the goods is
refused by the warehouseman, despite the absence of a lawful
excuse provided by the statute itself, the warehouseman’s lien is
thereafter concomitantly lost. As to what the law deems a valid
demand, Section 8 enumerates what
204
must accompany a demand; while as regards the reasons which a

warehouseman may invoke to legally refuse to effect delivery of
the goods covered by the quedans, these are: (1) That the holder of
the receipt does not satisfy the conditions prescribed in Section 8
of the Act. (See Sec. 8, Act No. 2137); (2) That the warehouseman
has legal title in himself on the goods, such title or right being
derived directly or indirectly from a transfer made by the
depositor at the time of or subsequent to the deposit for storage,
or from the warehouseman’s lien. (Sec. 16, Act No. 2137); (3) That
the warehouseman has legally set up the title or right of third
persons as lawful defense for non-delivery of the goods as follows:
x x x (4) That the warehouseman having a lien valid against the
person demanding the goods refuses to deliver the goods to him
until the lien is satisfied. (Sec. 31, Act No. 2137); (5) That the
failure was not due to any fault on the part of the warehouseman,
as by showing that, prior to demand for delivery and refusal, the
goods were stolen or destroyed by fire, flood, etc., without any
negligence on his part, unless he has contracted so as to be liable
in such case, or that the goods have been taken by the mistake of
a third person without the knowledge or implied assent of the
warehouseman, or some other justifiable ground for non-delivery.
(67 C.J. 532)
Same; Same; Adverse claim of ownership as a basis by a

warehouseman for refusing to deliver the goods covered by
warehouse receipts is not a valid, legal excuse.—Regrettably, the
factual settings do not sufficiently indicate whether the demand
to obtain possession of the goods complied with Section 8 of the
law. The presumption, nevertheless, would be that the law was
complied with, rather than breached, by petitioner. Upon the
other hand, it would appear that the refusal of private
respondents to deliver the goods was not anchored on a valid
excuse, i.e., non-satisfaction of the warehouseman’s lien over the
goods, but on an adverse claim of ownership. Private respondents
justified their refusal to deliver the goods, as stated in their
Answer with Counterclaim and Third-Party Complaint in Civil
Case No. 90-53023, by claiming that they “are still the legal
owners of the subject quedans and the quantity of sugar
represented therein.” Under the circumstances, this hardly
qualified as a valid, legal excuse. The loss of the warehouseman’s
lien, however, does not necessarily mean the extinguishment of
the obligation to pay the warehousing fees and charges which
continues to be a personal liability of the owners, i.e., the
pledgors, not the pledgee, in this case. But even as to the owners-
pledgors, the warehouseman
205
VOL. 292, JULY 9, 1998 205
fees and charges have ceased to accrue from the date of the
rejection by Noah’s Ark to heed the lawful demand by petitioner
for the release of the goods.
Same; Same; Foreclosures; A warehouseman’s lien should in

no event go beyond the value of the credit in favor of the pledgee—
the foreclosure of the thing pledged results in the full satisfaction
of the loan liabilities to the pledgee of the pledgors; It is basic in
foreclosures that the buyer does not assume the obligations of the
pledgor to his other creditors even while such buyer acquires title
over the goods less any existing preferred lien thereover.—The
finality of our denial in G.R. No. 119231 of petitioner’s petition to
nullify the trial court’s order of 01 March 1995 confirms the
warehouseman’s lien; however, such lien, nevertheless, should be
confined to the fees and charges as of the date in March 1990
when Noah’s Ark refused to heed PNB’s demand for delivery of
the sugar stocks and in no event beyond the value of the credit in
favor of the pledgee (since it is basic that, in foreclosures, the
buyer does not assume the obligations of the pledgor to his other
creditors even while such buyer acquires title over the goods less
any existing preferred lien thereover). The foreclosure of the thing
pledged, it might incidentally be mentioned, results in the full
satisfaction of the loan liabilities to the pledgee of the pledgors.
Courts; Due Process; A court deprives a party of due process if

it renders its orders without giving such party an opportunity to
present its evidence.—We hold that the trial court deprived
petitioner of due process in rendering the challenged order of 15
April 1996 without giving petitioner an opportunity to present its
evidence. During the final hearing of the case, private
respondents commenced and concluded their presentation of
evidence as to the matter of the existence of and amount owing
due to their warehouseman’s lien. Their exhibits were duly
marked and offered, and the trial court thereafter ruled, to wit:
Court: Order. With the admission of Exhibits “1” to “11,” inclusive
of submarkings, as part of the testimony of Benigno Bautista, the
defendant [private respondents] is given five (5) days from today
to file its memorandum. Likewise, plaintiff [petitioner] is given
five (5) days, from receipt of defendants’ [private respondents’]
memorandum, to file its comment thereto. Thereafter the same
shall be deemed submitted for decision.
206
Same; Same; Any tilt of the scales of justice, no matter how

slight, evokes suspicion and erodes a litigant’s faith and hope in
seeking recourse before courts of law.—Nowhere in the transcript
of stenographic notes, however, does it show that petitioner was
afforded an opportunity to comment on, much less, object to,
private respondents’ offer of exhibits, or even present its evidence
on the matter in dispute. In fact, petitioner immediately moved to
nullify the proceedings conducted during that hearing, but its
motion was ignored and never resolved by the trial court.
Moreover, it cannot be said that petitioner’s filing of subsequent
pleadings, where it attached its affidavits and documents to
contest the warehouseman’s lien, was sufficient to fully satisfy the
requirements of due process. The subsequent pleadings were filed
only to show that petitioner had evidence to refute the claims of
private respondents or that the latter were not entitled thereto,
but could not have adequately substituted for a full-blown
opportunity to present its evidence, given the exorbitant amounts
involved. This, when coupled with the fact that the motion to
postpone the hearing filed by petitioner’s counsel was not
unreasonable, leads us to conclude that petitioner’s right to fully
present its case was rendered nugatory. It is thus evident to us
that there was undue and unwarranted haste on the part of
respondent court to rule in favor of private respondents. We do
not hesitate to say that any tilt of the scales of justice, no matter
how slight, evokes suspicion and erodes a litigant’s faith and hope
in seeking recourse before courts of law.
Same; Same; Judgments; Writs of Execution; It is grave abuse

of discretion on the part of a court to order immediate execution of
a final order without awaiting the expiration of the period to
appeal therefrom.—It was likewise grave abuse of discretion on
the part of respondent court to order immediate execution of the
15 April 1997 order. We ruled earlier that said order was in the
nature of a final order fixing the amount of the warehouseman’s
charges and fees, and petitioner’s net liability, after the set-off of
the money judgment in its favor in G.R. No. 107243. Section 1 of
Rule 39 of the Rules of Court explicitly provides that execution
shall issue as a matter of right, on motion, upon a judgment or
order that disposes of the action or proceeding upon the expiration
of the period to appeal therefrom if no appeal has been duly
perfected. Execution pending appeal is, however, allowed in
Section 2 thereof, but only on motion with due notice to the
adverse party, more importantly, only “upon good reasons shown
in a special order.” Here, there is no showing
207
VOL. 292, JULY 9, 1998 207
that a motion for execution pending appeal was filed and that a
special order was issued by respondent court. Verily, the
immediate execution only served to further strengthen our
perception of undue and unwarranted haste on the part of
respondent court in resolving the issue of the warehouseman’s
lien in favor of private respondents.
SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.
The facts are stated in the opinion of the Court.

De Borja, Medialdea, Bello, Guevarra, Serapio &
Gerodias for petitioner.
Ronald E. Javier for private respondents.
DAVIDE, JR., J.:
In this special civil action for certiorari, actually the third

dispute between
1
the same private parties to have reached
2
this Court, petitioner asks us to annul the orders of 15
April 1997 and 14 July 1997 issued in Civil Case No. 90-
53023 by the3
Regional Trial Court, Manila, Branch 45. The
first order granted private respondents’ motion for
execution to satisfy their warehouseman’s
4
lien against
petitioner, while the second order denied, with finality,
petitioner’s motion for reconsideration of the first order and
urgent motion to lift garnishment, and private respondents’
motion for partial reconsideration.
_______________
1 The first was G.R. No. 107243, 1 September 1993, entitled Philippine
National Bank v. Noah’s Ark Sugar Refinery, Alberto Looyuko, Jimmy T.
Go and Wilson T. Go, 226 SCRA 36 [1993]; while the second was G.R. No.
119231, 18 April 1996, entitled Philippine National Bank v. Hon. Pres.
Judge Benito C. Se, Jr., RTC, Branch 45, Manila; Noah’s Ark Sugar
Refinery; Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, 256 SCRA
380 [1996].
2 Per Judge Marcelino L. Sayo, Jr.
3 Annex “A” of Petition; Rollo, 57-63.
4 Annex “B” of Petition; Rollo, 64-68.
208

The factual antecedents until the commencement of G.R.

No. 119231 were summarized in our decision therein, as
follows:
In accordance with Act No. 2137, the Warehouse Receipts Law,

Noah’s 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.
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
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 Noah’s Ark Sugar
Refinery demanding delivery of the sugar stocks covered by the
quedans endorsed to it by Zoleta and Ramos. Noah’s 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 Noah’s 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 Noah’s Ark, respectively.
Respondent Judge Benito C. Se, Jr., [to] whose sala the case
was raffled, denied the Application for Preliminary Attachment.
Reconsideration therefor was likewise denied.
209
VOL. 292, JULY 9, 1998 209

Noah’s Ark and its co-defendants filed an Answer with

Counterclaim and Third-Party Complaint in which they claimed
that they [were] 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 Noah’s Ark
Sugar Refinery for a total consideration of P63,000,000.00,
*** The corresponding payments in the form of checks
issued by the vendees in favor of defendants were
subsequently dishonored by the drawee banks by reason of
‘payment stopped’ and ‘drawn against insufficient funds,’
*** Upon proper notification to said vendees and plaintiff
in due course, defendants refused to deliver to vendees
therein the quantity of sugar covered by the subject
quedans.
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.”
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 Noah’s 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 latter’s
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.
On May 2, 1991, the Regional Trial Court issued an order
denying the Motion for Summary Judgment. Thereupon, the
Philip-
210

pine National Bank filed a Petition for Certiorari with the Court
of Appeals, docketed as CA-G.R. SP No. 25938 on December 13,
1991.
Pertinent portions of the decision of the Court of Appeals read:
“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 defendant’s 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 PNB’s title to the
sugar stocks as holder of the negotiable quedans.
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). [sic] 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 Noah’s Ark Sugar Refinery, et al., as prayed
for in petitioner’s Motion for Summary Judgment.”
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 plaintiff’s complaint against private
respondents
211
VOL. 292, JULY 9, 1998 211

for lack of cause of action and likewise dismissed private

respondent’s counterclaim against PNB and of the Third-Party
Complaint and the Third-Party Defendant’s Counterclaim. On
September 4, 1992, the trial court denied PNB’s 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:
“WHEREFORE, the trial judge’s decision in Civil Case No. 90-
53023, dated June 18, 1992, is reversed and set aside and a new
one rendered conformably with the final and executory decision of
the Court of Appeals in CA-G.R. SP No. 25938, ordering the
private respondents Noah’s Ark Sugar Refinery, Alberto T.
Looyuko, Jimmy T. Go and Wilson T. Go, jointly and severally:
(a) to deliver to the petitioner Philippine National Bank, ‘the sugar
stocks covered by the Warehouse Receipts/Quedans which are
now in the latter’s possession as holder for value and in due
course; or alternatively, to pay (said) plaintiff actual damages in
the amount of P39.1 million,’ with legal interest thereon from the
filing of the complaint until full payment; and
(b) to pay plaintiff Philippine National Bank attorney’s fees,
litigation expenses and judicial costs hereby fixed at the amount
of One Hundred Fifty Thousand Pesos (P150,000.00) as well as
the costs.
SO ORDERED.
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
respondent’s motion on January 10, 1994.
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 Court’s 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
212

in toto by this Court and which became unalterable upon becoming final
and executory.”
Private respondents thereupon filed before the trial court an

Omnibus Motion seeking among others the deferment of the
proceedings until private respondents [were] heard on their claim
for warehouseman’s 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 warehouseman’s lien. The resolution of the PNB’s 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 warehouseman’s 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
5
Act 2137.
Unsatisfied with the trial court’s order of 1 March 1995,

herein petitioner filed with us G.R. No. 119231, contending:
“I
PNB’S RIGHT TO A WRIT OF EXECUTION IS SUPPORTED BY

TWO FINAL AND EXECUTORY DECISIONS: THE DECEMBER
_______________
5 Supra note 2 at 384-389.
213
VOL. 292, JULY 9, 1998 213

13, 1991 COURT OF APPEALS [sic] DECISION IN CA-G.R. SP

NO. 25938; AND, THE NOVEMBER 9, 1992 SUPREME COURT
DECISION IN G.R. NO. 107243. RESPONDENT RTC’S
MINISTERIAL AND MANDATORY DUTY IS TO ISSUE THE
WRIT OF 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 DECISION IN CIVIL CASE NO. 90-52023.
III
RESPONDENT RTC’S 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.”
In our decision of 18 April 1996 in G.R. No. 119231, we

held against herein petitioner as to these issues and
concluded:
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.
214

Imperative is the right of the warehouseman to demand payment

of his lien at this juncture, because, in accordance with Section 29
of the Warehouse Receipts Law, the warehouseman loses his lien
upon goods by surrendering possession thereof. In other words,
the lien may be lost where the warehouseman surrenders the
possession of the goods without requiring payment of his lien,
because a warehouseman’s lien is possessory in nature.
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 Noah’s 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 under Republic Act No.
2137. Neither did the Court of Appeals’ decision, dated December
13, 1991, restrict such right.
Our Resolution’s 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 on the face of each of
the Warehouse Receipts 6and as provided for in the Warehouse
Receipts Law (R.A. 2137).
Petitioner’s motion to reconsider the decision in G.R. No.

119231 was denied.
After the decision in G.R. No. 119231 became final and
executory, various incidents took place before the trial
court in Civil Case No. 90-53023. The petition in this case
summarizes these as follows:
3.24 Pursuant to the abovementioned Supreme Court Decision,

private respondents filed a Motion for Execution of
Defendants’
_______________
6 Id., at 394-395.
215
VOL. 292, JULY 9, 1998 215

Lien as Warehouseman dated 27 November 1996. A

photocopy of said Motion for Execution is attached hereto as
Annex “I.”
3.25 PNB opposed said Motion on the following grounds:
(a) The lien claimed by Noah’s Ark in the unbelievable

amount of P734,341,595.06 is illusory; and
(b) There is no legal basis for execution of defendants’ lien as
warehouseman unless and until PNB compels the delivery
of the sugar stocks.
3.26 In their Reply to Opposition dated 18 January 1997,

private respondents pointed out that a lien existed in their
favor, as held by the Supreme Court. In its Rejoinder
dated 7 February 1997, PNB countered private
respondents’ argument, pointing out that the dispositive
portion of the court a quo’s Order dated 1 March 1995
failed to state the amount for which execution may be
granted and, thus, the same could not be the subject of
execution; and (b) private respondents should instead file
a separate action to prove the amount of its claim as
warehouseman.
3.27 The court a quo, this time presided by herein public
respondent, Hon. Marcelino L. Sayo, Jr., granted private
respondents’ Motion for Execution. In its questioned Order
dated 15 April 1997 (Annex “A”), the court a quo ruled in
this wise:
“Accordingly, the computation of accrued storage fees and preservation

charges presented in evidence by the defendants, in the amount of
P734,341,595.06 as of January 31, 1995 for the 86,356.41 50 kg. bags of
sugar, being in order and with sufficient basis, the same should be
granted. This Court consequently rejects PNB’s claim of no sugar no lien,
since it is undisputed that the amount of the accrued storage fees is
substantially in excess of the alternative award of P39.1 Million in favor
of PNB, including legal interest and P150,000.00 in attorney’s fees, which
PNB is however entitled to be credited x x x.
x x x x x x x x x
“WHEREFORE, premises considered and finding merit in the
defendants’ motion for execution of their claim for lien as warehouseman,
the same is hereby GRANTED. Accordingly, let a writ of execution issue
for the amount of P662,548,611.50, in accordance with the above
disposition.
SO ORDERED.” (Emphasis supplied.)
216

3.28 On 23 April 1997, PNB was immediately served with a

Writ of Execution for the amount of P662,548,611.50 in
spite of the fact that it had not yet been served with the
Order of the court a quo dated 15 April 1997. PNB thus
filed an Urgent Motion dated 23 April 1997 seeking the
deferment of the enforcement of the Writ of Execution. A
photocopy of the Writ of Execution is attached hereto as
Annex “J.”
3.29 Nevertheless, the Sheriff levied on execution several
properties of PNB. Firstly, a Notice of Levy dated 24 April
1997 on a parcel of land with an area of Ninety-Nine
Thousand Nine Hundred Ninety-Nine (99,999) square
meters, covered by Transfer Certificate of Title No. 23205
in the name of PNB, was served upon the Register of
Deeds of Pasay City. Secondly, a Notice of Garnishment
dated 23 April 1997 on fund deposits of PNB was served
upon the Bangko Sentral ng Pilipinas. Photocopies of the
Notice of Levy and the Notice of Garnishment are
attached hereto as Annexes “K” and “L,” respectively.
3.30 On 28 April 1997, petitioner filed a Motion for
Reconsideration with Urgent Prayer for Quashal of Writ of
Execution dated 15 April 1997. Petitioner’s Motion was
based on the following grounds:
(1) Noah’s Ark is not entitled to a warehouseman’s lien in the

humongous amount of P734,341,595.06 because the same
has been waived for not having been raised earlier as
either counterclaim or defense against PNB;
(2) Assuming said lien has not been waived, the same, not
being registered, is already barred by prescription and/or
laches;
(3) Assuming further that said lien has not been waived nor
barred, still there was no complaint ever filed in court to
effectively commence this entirely new cause of action;
(4) There is no evidence on record which would support and
sustain the claim of P734,341,595.06 which is excessive,
oppressive and unconscionable;
(5) Said claim if executed would constitute unjust enrichment
to the serious prejudice of PNB and indirectly the
Philippine Government, who innocently acquired the
sugar quedans through assignment of credit;
(6) In all respects, the decisions of both the Supreme Court
and of the former Presiding Judge of the trial court do
217
VOL. 292, JULY 9, 1998 217

not contain a specific determination and/or computation of

warehouseman’s lien, thus requiring first and foremost a fair
hearing of PNB’s evidence, to include the true and standard
industry rates on sugar storage fees, which if computed at such
standard rate of thirty centavos per kilogram per month, shall
result in the sum of about Three Hundred Thousand Pesos only.
3.31 In its Motion for Reconsideration, petitioner prayed for the

following reliefs:
“1. PNB be allowed in the meantime to exercise its basic right

to present evidence in order to prove the above allegations
especially the true and reasonable storage fees which may
be deducted from PNB’s judgment award of P39.1 Million,
which storage fees if computed correctly in accordance
with standard sugar industry rates, would amount to only
P300 Thousand Pesos, without however waiving or
abandoning its (PNB’s) legal positions/contentions herein
abovementioned.
“2. The Order dated April 15, 1997 granting the Motion for
Execution by defendant Noah’s Ark be set aside.
“3. The execution proceedings already commenced by said
sheriffs be nullified at whatever stage of accomplishment.”
A photocopy of petitioner’s Motion for Reconsideration with

Urgent Prayer for Quashal of Writ of Execution is attached hereto
and made integral part hereof as Annex “M.”
3.32. Private respondents filed an Opposition with Motion for

Partial Reconsideration dated 8 May 1997. Still
discontented with the excessive and staggering amount
awarded to them by the court a quo, private respondents’
Motion for Partial Reconsideration sought additional and
continuing storage fees over and above what the court a
quo had already unjustly awarded. A photocopy of private
respondents’ Opposition with Motion for Partial
Reconsideration dated 8 May 1997 is attached hereto as
Annex “N.”
3.32.1 Private respondents prayed for the further amount of

P227,375,472.00 in storage fees from 1 February 1995
until 15 April 1997, the date of the questioned Order
granting their Motion for Execution.
3.32.2 In the same manner, private respondents prayed for a
continuing amount of P345,424.00 as daily storage fees
218

after 15 April 1997 until the total amount of the storage fees is
satisfied.
3.33 On 19 May 1997, PNB filed its Reply with Opposition (To
Defendants’ Opposition with Partial Motion for
Reconsideration), containing therein the following
motions: (i) Supplemental Motion for Reconsideration; (ii)
Motion to Strike out the Testimony of Noah’s Ark’s
Accountant Last February 21, 1995; and (iii) Motion for
the Issuance of a Writ of Execution in favor of PNB. In
support of its pleading, petitioner raised the following:
(1) Private respondents failed to pay the appropriate docket

fees either for its principal claim or for its additional
claim, as said claims for warehouseman’s lien were not at
all mentioned in their answer to petitioner’s Complaint;
(2) The amount awarded by the court a quo was grossly and
manifestly unreasonable, excessive, and oppressive;
(3) It is the dispositive portion of the decision which shall be
controlling in any execution proceeding. If no specific
award is stated in the dispositive portion, a writ of
execution supplying an amount not included in the
dispositive portion of the decision being executed is null
and void;
(4) Private respondents failed to prove the existence of the
sugar stocks in Noah’s Ark’s warehouses. Thus, private
respondents’ claims are mere paper liens which cannot be
the subject of execution;
(5) The attendant circumstances, particularly Judge Se’s
Order of 1 March 1995 onwards, were tainted with fraud
and absence of due process, as PNB was not given a fair
opportunity to present its evidence on the matter of the
warehouseman’s lien. Thus, all orders prescinding
therefrom, including the questioned Order dated 15 April
1997, must perforce be set aside and the execution
proceedings against PNB be permanently stayed.
3.34 On 6 May 1997, petitioner also filed an Urgent Motion to

Lift Garnishment of PNB Funds with Bangko Sentral ng
Pilipinas.
3.35 On 14 July 1997, respondent Judge issued the second
Order (Annex “B”), the questioned part of the dispositive
portion of which states:
219
VOL. 292, JULY 9, 1998 219

“WHEREFORE, premises considered, the plaintiff Philippine National

Bank’s subject “Motion for Reconsideration With Urgent Prayer for
Quashal of Writ of Execution” dated April 28, 1997 and undated “Urgent
Motion to Lift Garnishment of PNB Funds With Bangko Sentral ng
Pilipinas” filed on May 6, 1997, together with all its related Motions are
all DENIED with finality for lack of merit.
x x x x x x x x x
“The Order of this Court dated April 15, 1997, the final Writ of
Execution likewise dated April 15, 1997 and the corresponding
Garnishment all stand firm.
7
“SO ORDERED.”
Aggrieved thereby, petitioners filed this petition, alleging

as grounds therefor, the following:
A. THE COURT A QUO ACTED WITHOUT OR IN

EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION WHEN IT
ISSUED A WRIT OF EXECUTION IN FAVOR OF
DEFENDANTS FOR THE AMOUNT OF
P734,341,595.06.
4.1 The court a quo had no authority to issue a writ of

execution in favor of private respondents as there
was no final and executory judgment ripe for
execution.
4.2 Public respondent judge patently exceeded the scope
of his authority in making a determination of the
amount of storage fees due private respondents in a
mere interlocutory order resolving private
respondents’ Motion for Execution.
4.3 The manner in which the court a quo awarded
storage fees in favor of private respondents and
ordered the execution of said award was arbitrary
and capricious, depriving petitioner of its inherent
substantive and procedural rights.
B. EVEN ASSUMING ARGUENDO THAT THE

COURT A QUO HAD AUTHORITY TO GRANT
PRIVATE RESPONDENTS’ MOTION FOR
EXECUTION, THE COURT A QUO ACTED WITH
GRAVE ABUSE OF DISCRETION IN AWARDING
THE HIGHLY UNREASONABLE,
UNCONSCIONABLE, AND EXCESSIVE
_______________
7 Rollo, 22-27.
220

AMOUNT OF P734,341,595.06 IN FAVOR OF
PRIVATE RESPONDENTS.
4.4 There is no basis for the court a quo’s award of
P734,341,595.06 representing private respondents’
alleged warehouseman’s lien.
4.5 PNB has sufficient evidence to show that the
astronomical amount claimed by private
respondents is very much in excess of the industry
rate for storage fees and preservation expenses.
C. PUBLIC RESPONDENT JUDGE’S GRAVE

ABUSE OF DISCRETION BECOMES MORE
PATENT AFTER A CLOSE PERUSAL OF THE
QUESTIONED ORDER DATED 14 JULY 1997.
4.6 The court a quo resolved a significant and

consequential matter entirely relying on documents
submitted by private respondents totally
disregarding clearly contrary evidence submitted by
PNB.
4.7 The court a quo misquoted and misinterpreted the
Supreme Court Decision dated 18 April 1997.
D. THE COURT A QUO ACTED WITH GRAVE

ABUSE OF DISCRETION IN NOT HOLDING
THAT PRIVATE RESPONDENTS HAVE LONG
WAIVED THEIR RIGHT TO CLAIM ANY
WAREHOUSEMAN’S LIEN.
4.8 Private respondents raised the matter of their

entitlement to a warehouseman’s lien for storage fees
and preservation expenses for the first time only
during the execution proceedings of the Decision in
favor of PNB.
4.9 Private respondents’ claim for warehouseman’s lien
is in the nature of a compulsory counterclaim which
should have been included in private respondents’
answer to the Complaint. Private respondents failed
to include said claim in their answer either as a
counterclaim or as an alternative defense to PNB’s
Complaint.
4.10 Private respondents’ claim is likewise lost by virtue
of a specific provision of the Warehouse Receipts
Law and barred by prescription and laches.
E. PUBLIC RESPONDENT JUDGE ACTED WITH

GRAVE ABUSE OF DISCRETION IN REFUSING
TO LIFT THE ORDER OF GARNISHMENT OF
THE FUNDS OF PNB WITH THE BANGKO
SENTRAL NG PILIPINAS.
221
VOL. 292, JULY 9, 1998 221

4.11 Public respondent judge failed to consider PNB’s

arguments in 8 support of its Urgent Motion to Lift
Garnishment.
In arguing its cause, petitioner explained that this Court’s

decision in G.R. No. 119231 merely affirmed the trial
court’s resolutions of 20 December 1994 and 1 March 1995.
The earlier resolution set private respondents’ reception of
evidence for hearing to prove their warehouseman’s lien
and, pending determination thereof, deferred petitioner’s
motion for execution of the summary judgment rendered in
petitioner’s favor in G.R. No. 107243. The subsequent
resolution recognized the existence of a valid
warehouseman’s lien without, however, specifying the
amount, and required its full satisfaction by petitioner
prior to the execution of the judgment in G.R. No. 107243.
Under said circumstances, petitioner reiterated that
neither this Court’s decision nor the trial court’s
resolutions specified any amount for the warehouseman’s
lien, either in the bodies or dispositive portions thereof.
Petitioner therefore questioned the propriety of the
computation of the warehouseman’s lien in the assailed
order of 15 April 1997. Petitioner further characterized as
highly irregular the trial court’s final determination of such
lien in a mere interlocutory order without explanation, as
such should or could have been done only by way of a
judgment on the merits.
Petitioner likewise reasoned that a writ of execution was
proper only to implement a final and executory decision,
which was not present in the instant case. Petitioner then
cited the cases of Edward v. Arce, where we ruled that the
only portion of the decision which could be the subject 9
of
execution was that decreed in the dispositive part, and
ExBataan Veterans Security
10
Agency, Inc. v. National Labor
Relations Commission, where we held that a writ of
execution should conform to the dispositive portion to be
executed, oth-
_______________
8 Rollo, 28-29.
9 98 Phil. 688, 692 [1956].
10 250 SCRA 418, 427 [1995].
222

erwise, execution becomes void if in excess of and beyond

the original judgment.
Petitioner likewise emphasized that the hearing of 21
February 1995 was marred by procedural infirmities,
narrating that the trial court proceeded with the hearing
notwithstanding the urgent motion for postponement of
petitioner’s counsel of record, who attended a previously
scheduled hearing in Pampanga. However, petitioner’s
lawyer-representative was sent to confirm the allegations
in said motion. To petitioner’s dismay, instead of granting a
postponement, the trial court allowed the continuance of
the hearing on the basis that there was “nothing sensitive 11
about [the presentation of private respondents’ evidence].”
At the same hearing, the trial court admitted all the
documentary evidence offered by private respondents and
ordered the filing of the parties’ respective memoranda.
Hence, petitioner was virtually deprived of its right to
cross-examine the witness, comment on or object to the
offer of evidence and present countervailing evidence. In
fact, to date, petitioner’s urgent motion to nullify the court
proceedings remains unresolved.
To stress its point, petitioner underscores the conflicting
views of Judge Benito C. Se, Jr., who heard and tried
almost the entire proceedings, and his successor, Judge
Marcelino L. Sayo,
12
Jr., who issued the assailed orders. In
the resolution of 1 March 1995, Judge Se found private
respondents’ claim for warehouse lien in the amount of
P734,341,595.06 unacceptable, thus:
In connection with [private respondents’] claim for payment of

warehousing fees and expenses, this Court cannot accept [private
respondents’] pretense that they are entitled to storage fees and
preservation expenses in the amount of P734,341,595.06 as shown
in their Exhibits “1” to “11.” There would, however, appear to be
legal basis for their claim for fees and expenses covered during
the period from the time of the issuance of the five (5) quedans
until demand
_______________
11 TSN, 21 February 1995, 4.
12 Rollo, 88-92.
223
VOL. 292, JULY 9, 1998 223

for their delivery was made by [petitioner] prior to the institution

of the present action. [Petitioner] should not be made to shoulder
the13warehousing fees and expenses after the demand was made. x
xx
Since it was deprived of a fair opportunity to present its

evidence on the warehouseman’s lien due Noah’s Ark,
petitioner submitted the following documents:14
(1) an
15
affidavit of petitioner’s credit investigator and his report
indicating that Noah’s Ark only had 1,490 50 kg. bags, and
not 86,356.41 50 kg.16 bags, of sugar in its warehouse; (2)
Noah’s Ark’s reports for 1990-94 showing that it did not
have sufficient sugar stock to cover the quantity specified
in the
17
subject quedans; (3) Circular Letter No. 18 (s. 1987-
88) of the Sugar Regulatory Administration requiring
sugar mill companies to submit reports at week’s end to
prevent the issuance of warehouse receipts not covered by
actual inventory; and 18 (4) an affidavit of petitioner’s
assistant vice president alleging that Noah’s Ark’s daily
storage fee of P4/bag exceeded the prevailing industry rate.
Petitioner, moreover, laid stress on the fact that in the
questioned order of 14 July 1997, the trial court relied
solely on the Annual Synopsis of Production & Performance
Date/Annual Compendium of Performance by Philippine
Sugar Refineries from 1989 to 1994, in disregard of Noah’s
Ark’s certified reports that it did not have sufficient sugar
stock to cover the quantity specified in the subject quedans.
Between the two, petitioner urged, the latter should have
been accorded greater evidentiary weight.
Petitioner then argued that the trial court’s second
assailed order of 14 July 1997 misinterpreted our decision
in G.R. No. 119231 by ruling that the Refining Contract
under which the
_______________
13 Resolution, p. 2; Rollo, 89.

14 Annex “O” of Petition; Rollo, 169-170.
15 Annex “P” of Petition; Rollo, 171.
16 Annexes “R”-“R-16”; Rollo, 174-190.
17 Annex “Q” of Petition; Rollo, 172.
18 Annexes “S” and “T” of Petition; Rollo, 191, 192-195.
224

subject sugar stock was produced bound the parties.

According to petitioner, the Refining Contract never
existed, it having been denied by Rosa Ng Sy; thus, the
trial court could not have properly based its computation of
the warehouseman’s lien on the Refining Contract.
Petitioner maintained that a separate trial was necessary
to settle the issue of the warehouseman’s lien due Noah’s
Ark, if at all proper.
Petitioner further asserted that Noah’s Ark could no
longer recover its lien, having raised the issue for the first
time only during the execution proceedings of this Court’s
decision in G.R. No. 107243. As said claim was a separate
cause of action which should have been raised in private
respondents’ answer with counterclaim to petitioner’s
complaint, private respondents’ failure to raise said claim
should have been deemed a waiver thereof. 19
Petitioner likewise insisted that under Section 29 of the
Warehouse Receipts Law, private respondents were barred
from claiming the warehouseman’s lien due to their refusal
to deliver the goods upon petitioner’s demand. Petitioner
further raised that private respondents failed to timely
assert their claim 20within the five-year prescriptive period,
citing Article 1149 of the New Civil Code.
Finally, petitioner questioned the trial court’s refusal to
lift the garnishment order considering that the levy on its
real property, with an estimated market value of
P6,000,000,000, was sufficient to satisfy the judgment
award; and contended
21
that the garnishment was contrary
to Section 103 of the Bangko Sentral ng Pilipinas Law
(Republic Act No. 7653).
_______________
19 Section 29. How the lien may be lost.—A warehouseman loses his lien
upon goods: (a) By surrendering possession thereof, or (b) By refusing to
deliver the goods when a demand is made with which he is bound to
comply under the provisions of this Act.
20 Article 1149. All other actions whose periods are not fixed in this
Code or in other laws must be brought within five years from the time the
right of action accrues.
21 Section 103. Exemption from Attachment and Other Purposes.—
Deposits maintained by banks with the Bangko Sentral as
225
VOL. 292, JULY 9, 1998 225

On 8 August 1997, we required respondents to comment on

the petition and issued a temporary restraining order
enjoining the trial court from implementing its orders of 15
April and 14 July 1997.
In their comment, private respondents first sought the
lifting of the temporary restraining order, claiming that
petitioner could no longer seek a stay of the execution of
this Court’s decision in G.R. No. 119231 which had become
final and executory; and the petition raised factual issues
which had long been resolved in the decision in G.R. No.
119231, thereby rendering the instant petition moot and
academic. They underscored that CA-G.R. No. SP No.
25938, G.R. No. 107243 and G.R. No. 119231 all sustained
their claim for a warehouseman’s lien, while the storage
fees stipulated in the Refining Contract had the approval of
the Sugar Regulatory Authority. Likewise, under the
Warehouse Receipts Law, full payment of their lien was a
pre-requisite to their obligation to release and deliver the
sugar stock to petitioner.
Anent the trial court’s jurisdiction to determine the
warehouseman’s lien, private respondents maintained that
such had already been established. Accordingly, the
resolution of 1 March 1995 declared that they were entitled
to a warehouseman’s lien, for which reason, the execution
of the judgment in favor of petitioner was stayed until the
latter’s full payment of the lien. This resolution was then
affirmed by this Court in our decision in G.R. No. 119231.
Even assuming the trial court erred, the error could only
have been in the wisdom of its findings and not of
jurisdiction, in which case, the proper remedy of petitioner
should have been an appeal and certiorari did not lie.
Private respondents also raised the issue of res judicata
as a bar to the instant petition, i.e., the March resolution
was
_______________
part of their reserve requirements shall be exempt from attachment,

garnishments, or any other order or process of any court, government
agency or any other administrative body issued to satisfy the claim of a
party other than the Government, or its political subdivisions or
instrumentalities.
226

already final and unappealable, having been resolved in

G.R. No. 119231, and the orders assailed here were issued
merely to implement said resolution.
Private respondents then debunked the claim that
petitioner was denied due process. In that February
hearing, petitioner was represented by counsel who failed
to object to the presentation and offer of their evidence
consisting of the five quedans, Refining Contracts with
petitioner and other quedan holders, and the computation
resulting in the amount of P734,341,595.06, among other
documents. Private respondents even 22
attached a copy of
the transcript of stenographic notes to their comment. In
refuting petitioner’s argument that no writ of execution
could issue in absence of a specific amount in the
dispositive portion of this Court’s decision in G.R. No.
119231, private respondents argued that any ambiguity in
the decision could 23be resolved by referring to the entire
record of the case, even after the decision had become
final.
Private respondents next alleged that the award of
P734,341,595.06 to satisfy their warehouseman’s lien was
in accordance with the stipulations provided in the quedans
and the corresponding Refining Contracts, and that the
validity of said documents had been recognized by this
Court in our decision in G.R. No. 119231. Private
respondents then questioned petitioner’s failure to oppose
or rebut the evidence they presented and bewailed its
belated attempts to present contrary evidence through its
pleadings. Nonetheless, said evidence was even considered
by the trial court when petitioner sought a reconsideration
of the first assailed order of 15 April 1997, thus further
precluding any claim of denial of due process.
Private respondents next pointed to the fact that they
consistently claimed that they had not been paid for storing
the sugar stock, which prompted them to file criminal
charges of
_______________
22 Annex “11” of Comment; Rollo, 290-314.

23 Citing Filinvest Credit Corp. v. Court of Appeals, 226 SCRA 257
[1993]; and Republic v. de los Angeles, 41 SCRA 422 [1977].
227
VOL. 292, JULY 9, 1998 227

estafa and violation of Batas Pambansa (BP) Blg. 22

against Rosa Ng Sy and Teresita Ng. In fact, Sy was
eventually convicted of two counts of violation of BP Blg.
22. Private respondents, moreover, incurred, and continue
to incur, expenses for the storage and preservation of the
sugar stock; and denied having waived their
warehouseman’s lien, an issue already raised and rejected
by this Court in G.R. No. 119231.
Private respondents further claimed that the
garnishment order was24 proper, only that it was rendered
ineffective. In a letter received by the sheriff from the
Bangko Sentral ng Pilipinas, it was stated that the
garnishment could not be enforced since petitioner’s
deposits with the Bangko Sentral ng Pilipinas consisted
solely of legal reserves which were exempt from
garnishment. Petitioner therefore suffered no damage from
said garnishment. Private respondents likewise deemed
immaterial petitioner’s argument that the writ of execution
issued against its real property in Pasay City was
sufficient, considering its prevailing market value of
P6,000,000,000 was in excess of the warehouseman’s lien;
and invoked Rule 39 of the 1997 Rules of Civil Procedure,
which provided that the sheriff must levy on all the
property of the judgment debtor, excluding those exempt
from execution, in the execution of a money judgment.
Finally, private respondents accused petitioner of
coming to court with unclean hands, specifically citing its
misrepresentation that the award of the warehouseman’s
lien would result in the collapse of its business. This claim,
private respondents asserted, was contradicted by
petitioner’s 1996 Audited Financial Statement indicating
that petitioner’s assets amounted to billions of pesos, and
its 1996 Annual Report to its stockholders where petitioner
declared that the pending legal actions arising from their
normal course of business25 “will not materially affect the
Group’s financial position.”
_______________
24 Annex “21” of Comment; Rollo, 395-396.

25 Philippine National Bank, 1996 Annual Report, 19; Annex “1” of
Comment; Rollo, 279.
228

In reply, petitioner advocated that resort to the remedy of

certiorari was proper since the assailed orders were
interlocutory, and not a final judgment or decision.
Further, that it was virtually deprived of its constitutional
right to due process was a valid issue to raise in the instant
petition; and not even the doctrine of res judicata could bar
this petition as the element of a final and executory
judgment was lacking. Petitioner likewise disputed the
claim that the resolution of 1 March 1995 was final and
executory, otherwise private respondents would not have 26
filed an opposition and motion for partial reconsideration
two years later. Petitioner also contended that the issues
raised in this petition were not resolved in G.R. No.
119231, as what was resolved there was private
respondents’ mere entitlement to a warehouseman’s lien,
without specifying a corresponding amount. In the instant
petition, the issues pertained to the amount and
enforceability of said lien based on the arbitrary manner
the amount was determined by the trial court.
Petitioner further argued that the refining contracts
private respondents invoked could not bind the former
since it was not a party thereto. In fact, said contracts were
not even attached to the quedans when negotiated; and
that their validity was repudiated by a supposed party
thereto, Rosa Ng Sy, who claimed that the contract was
simulated, thus void pursuant to Article 1345 of the New
Civil Code. Should the refining contracts in turn be
declared void, petitioner advocated that any determination
by the court of the existence and amount of the
warehouseman’s lien due should be arrived at using the
test of reasonableness. 27Petitioner likewise noted that the
other refining contracts presented by private respondents
to show similar storage fees were executed between the
years 1996 and 1997, several years after 1989. Thus,
petitioner concluded, private respondents could not claim
that the more recent and increased rates where those
which prevailed in 1989.
_______________
26 Annex “N” of Petition; Rollo, 144-168.
27 Annexes “16”-“19” of Comment; Rollo, 377-393.
229
VOL. 292, JULY 9, 1998 229

Finally, petitioner asserted that in the event that this

Court should uphold the trial court’s determination of the
amount of the warehouseman’s lien, petitioner should be
allowed to exercise its option as a judgment obligor to
specify which of its properties may be levied upon, citing
Section 9(b), Rule 39 of the 1997 Rules of Civil Procedure.
Petitioner claimed to have been deprived of this option
when the trial court issued the garnishment and levy
orders.
The petition was set for oral argument on 24 November
1997 where the parties addressed the following issues we
formulated for them to discuss:
(1) Is this special civil action the appropriate remedy?

(2) Has the trial court the authority to issue a writ of
execution on Noah’s Ark’s claims for storage fees
considering that this Court in G.R. No. 119231
merely sustained the trial court’s order of 20
December 1994 granting the Noah’s Ark Omnibus
Motion and setting the reception of evidence on its
claims for storage fees, and of 1 March 1995 finding
that there existed in favor of Noah’s Ark a
warehouseman’s lien under Section 27 of R.A. No.
2137 and directing that the execution of the
judgment in favor of PNB be stayed and/or
precluded until the full amount of Noah’s Ark’s lien
is satisfied conformably with Section 31 of R.A. No.
2137?
(3) Is [petitioner] liable for storage fees (a) from the
issuance of the quedans in 1989 to Rosa Sy, St.
Therese Merchandising and RNS Merchandising,
up to their assignment by endorsees Ramos and
Zoleta to [petitioner] for their loan; or (b) after
[petitioner] has filed an action for specific
performance and damages (Civil Case No. 90-
53023) against Noah’s Ark for the latter’s failure to
comply with [petitioner’s] demand for the delivery
of the sugar?
(4) Did respondent Judge 28
commit grave abuse of
discretion as charged?
In our resolution of 24 November 1997, we summarized the

positions of the parties on these issues, thus:
_______________
28 Rollo, 438-439.
230

Expectedly, counsel for petitioner submitted that certiorari under

Rule 65 of the Rules of Court is the proper remedy and not an
ordinary appeal, contending, among others, that the order of
execution was not final. On the other hand, counsel for
respondents maintained that petitioner PNB disregarded the
hierarchy of courts as it bypassed the Court of Appeals when it
filed the instant petition before this Court.
On the second issue, counsel for petitioner submitted that the
trial court had no authority to issue the writ of execution or if it
had, it denied PNB due process when it held PNB liable for the
astronomical amount of P734,341,595.06 as warehouseman’s lien
or storage fees. Counsel for respondent, on the other hand,
contended that the trial court’s authority to issue the questioned
writ of execution is derived from the decision in G.R. No. 119231
which decision allegedly provided for ample or sufficient
parameters for the computation of the storage fees.
On the third issue, counsel for petitioner while presupposing
that PNB may be held to answer for storage fees, contended that
the same should start from the time the endorsees of the sugar
quedans defaulted in their payments, i.e., 1990 because before
that, respondent Noah’s Ark’s claim was that it was the owner of
the sugar covered by the quedans. On the other hand,
respondents’ counsel pointed out that PNB’s liability should start
from the issuance of the quedans in 1989.
The arguments on the fourth issue, hinge on the parties’
arguments for or against the first three issues. Counsel for
petitioner stressed that the trial court indeed committed a grave
abuse of discretion, while respondents’ counsel insisted 29 that no
grave abuse of discretion was committed by the trial court.
Private respondents likewise admitted that during the

pendency of the case, they failed to avail of their options as
a warehouseman. Concretely, they could have enforced
their lien through the foreclosure of the goods or the filing
of an ordinary civil action. Instead, they sought to execute
this Court’s judgment in G.R. No. 119231. They eventually
agreed that petitioner’s liability for the warehouseman’s
lien should
_______________
29 Rollo, 438-439.
231
VOL. 292, JULY 9, 1998 231

be reckoned from the30

time it stepped into the shoes of the
original depositors.
In our resolution of 24 November 1997, we required the
parties to simultaneously submit their respective
memoranda within 30 days or, in the alternative, a
compromise agreement should a settlement be achieved.
Notwithstanding efforts exerted by the parties, no
mutually acceptable solution was reached.
In their respective memoranda, the parties reiterated or
otherwise buttressed the arguments raised in their
previous pleadings and during the oral arguments on 24
November 1997, especially on the formulated issues.
The petition is meritorious.
We shall take up the formulated issues in seriatim.
A. This Special Civil Action is an Appropriate

Remedy.
A careful perusal of the first assailed order shows that the

trial court not only granted the motion for execution, but
also appreciated the evidence in the determination of the
warehouseman’s lien; formulated its computation of the
lien; and adopted an offsetting of the parties’ claims.
Ineluctably, the order as in the nature of a final order for it
left nothing else to be resolved thereafter. Hence, 31
petitioner’s remedy was to appeal therefrom.
Nevertheless, petitioner was not precluded from availing of
the extraordinary remedy of certiorari under Rule 65 of the
Rules of Court. It is well-settled that the availability of an
appeal does not foreclose recourse to the extraordinary
remedies of certiorari or prohibition where appeal 32is not
adequate, or equally beneficial, speedy and sufficient.
_______________
30 TSN, 24 November 1997, 106-107.

31 See Meneses v. Court of Appeals, 237 SCRA 484, 492 [1994].
32 Gavieres v. Falcis, 193 SCRA 649, 657-658 [1991] citing PNB v.
Puno, 170 SCRA 229 [1989]; Echauz v. Court of Appeals, 199 SCRA 381,
386-387 [1991], citing Jaca v. Davao Lumber Co., 113 SCRA 107 [1982];
Hualam Construction and Development Corp. v. Court of Appeals, 214
SCRA 612, 628 [1992]; Ruiz v. Court of Ap-
232

Petitioner assailed the challenged orders as having been

issued without or in excess of jurisdiction or with grave
abuse of discretion and alleged that it had no other plain,
speedy and adequate remedy in the ordinary course of law.
As hereafter shown, these claims were not unfounded, thus
the propriety of this special civil action is beyond question.
This Court has original jurisdiction, concurrent with
that of Regional Trial Courts and the Court of Appeals,
over petitions for certiorari, prohibition,
33
mandamus, quo
warranto and habeas corpus, and we entertain direct
resort to us in cases where special and important reasons
or exceptional
34
and compelling circumstances justify the
same. These reasons and circumstances are present here.
B. Under the Special Circumstances in This Case,

Private

Respondents May Enforce Their Warehouseman’s

Lien

Case No. 90-53023.
in Civil
The remedies available to a warehouseman, such as private

respondents, to enforce his warehouseman’s lien are:
(1) To refuse to deliver the goods until his lien is

satisfied, pursuant to Section 31 of the Warehouse
Receipts Law;
(2) To sell the goods and apply the proceeds thereof to
the value of the lien pursuant to Sections 33 and 34
of the Warehouse Receipts Law; and
(3) By other means allowed by law to a creditor against
his debtor, for the collection from the depositor of
all charges and advances which the depositor
expressly or impliedly contracted with the
warehouseman to pay under Section 32 of the
Warehouse Receipts Law; or
_______________
peals, 220 SCRA 490, 500 [1993]; Rodriguez v. Court of Appeals, 245
SCRA 150, 152 [1995].
33 Sec. 5(1), Article VIII of the Constitution, in relation to Secs. 9(1) and
21(1) of B.P. Blg. 129.
34 People v. Cuaresma, 172 SCRA 415, 423-424 [1989]; Defensor-
Santiago v. Vasquez, 217 SCRA 633, 651-652 [1993]; Manalo v. Gloria,
236 SCRA 130, 138-139 [1994].
233
VOL. 292, JULY 9, 1998 233

such other remedies allowed by law for the enforcement of a lien

against personal property under Section 35 of said law. The35 third
remedy is sought judicially by suing for the unpaid charges.
Initially, private respondents availed of the first remedy.

However, when petitioner moved to execute the judgment
in G.R. No. 107243 before the trial court, private
respondents, in turn, moved to have the warehouse charges
and fees due them determined and thereafter sought to
collect these from petitioners. While the most appropriate
remedy for private respondents was an action for collection,
in G.R. No. 119231, we already recognized their right to
have such charges and fees determined in Civil Case No.
90-53023. The import of our holding in G.R. No. 119231
was that private respondents were likewise entitled to a
judgment on their warehouse charges and fees, and the
eventual satisfaction thereof, thereby avoiding having to
file another action to recover these charges and fees, which
would only have further delayed the resolution of the
respective claims of the parties, and as a corollary thereto,
the indefinite deferment of the execution of the judgment in
G.R. No. 107243. Thus we note that petitioner, in fact,
already acquiesced to the scheduled dates previously set for
the hearing on private respondents’ warehouseman’s
charges.
However, as will be shown below, it would be premature
to execute the order fixing the warehouseman’s charges
and fees.
C. Petitioner is Liable for Storage Fees.
We confirmed petitioner’s liability for storage fees in G.R.

No. 119231. However, petitioner’s status as to the quedans
must first be clearly defined and delineated to be able to
determine the extent of its liability.
_______________
35 See 3 TEODORICO C. MARTIN, COMMENTARIES AND

JURISPRUDENCE ON THE PHILIPPINE COMMERCIAL LAWS, 581-
587 (1989 ed.) (hereinafter 3 MARTIN).
234

Petitioner insisted, both in its petition and during the oral

arguments on 24 November 1997, that it was a mere
pledgee as
36
the quedans were used to secure two loans it
granted. In our decision in G.R. No. 107243, we upheld
this contention of petitioner, thus:
Zoleta and Ramos then used the quedans as security for loans
obtained by them from the Philippine National Bank (PNB) as
security for loans obtained by them in the amounts of P23.5
million and P15.6 37 million, respectively. These quedans they
indorsed to the bank.
38
As such, Martinez v. Philippine National Bank becomes
relevant:
In conclusion, we hold that where a warehouse receipt or quedan

is transferred or endorsed to a creditor only to secure the payment
of a loan or debt, the transferee or endorsee does not
automatically become the owner of the goods covered by the
warehouse receipt or quedan but he merely retains the right to
keep and with the consent of the owner to sell them so as to
satisfy the obligation from the proceeds of the sale, this for the
simple reason that the transaction involved is not a sale but only
a mortgage or pledge, and that if the property covered by the
quedans or warehouse receipts is lost without the fault or
negligence of the mortgagee or pledgee or the transferee or
endorsee of the warehouse receipt or quedan, then said goods are
to be regarded as lost on account of the real owner, mortgagor or
pledgor.
The indorsement and delivery of the warehouse receipts
(quedans) by Ramos and Zoleta to petitioner was not to
convey “title” to or ownership of the goods but to secure (by
way of pledge) the loans granted to Ramos and Zoleta by
petitioner. The indorsement of the warehouse receipts
(quedans),
_______________
36 Petition, 8; TSN, 24 November 1997, 26.

37 226 SCRA 36, 39 [1993].
38 93 Phil. 765, 770-771 [1953]. See also Philippine National Bank v.
Atendido, 94 Phil. 254, 258 [1954]; and Warner, Barnes, & Co. Ltd. v.
Flores, 1 SCRA 881, 885-886 [1961].
235
VOL. 292, JULY 9, 1998 235

39
to perfect the pledge, merely constituted a symbolical or
constructive 40delivery of the possession of the thing thus
encumbered.
The creditor, in a contract of real security, like pledge,
cannot appropriate
41
without foreclosure the things given by
way of pledge. Any stipulation to the 42
contrary, termed
pactum commissorio, is null and void. The law requires
foreclosure in order to allow a transfer of43title of the good
given by way of security from its pledgor, and before any
such foreclosure, the pledgor, not the pledgee, is the owner
44
of the goods. In Philippine National Bank v. Atendido, we
said:
The delivery of the palay being merely by way of security, it

follows that by the nature of the transaction its ownership
remains with the pledgor subject only to foreclosure in case of
non-fulfillment of the obligation. By this we mean that if the
obligation is not paid upon maturity the most that the pledgee can
do is to sell the property and apply the proceeds to the payment of
the obligation and to return the balance, if any, to the pledgor
(Art. 1872, Old Civil Code [Art. 2112, New Civil Code]). This is
the essence of this contract, for, according to law, a pledgee cannot
become the owner of, nor appropriate to himself, the thing given
in pledge (Article 1859, Old Civil Code [Art. 2088, New Civil
Code]) . . . The fact that the warehouse receipt covering palay was
delivered, endorsed in blank, to the bank does not alter the
situation, the purpose of such endorsement being merely to
transfer the juridical possession of the property to the pledgees
and to forestall any possible disposition thereof on the part of the
pledgor. This is true notwithstanding the provisions of the
Warehouse Receipts Law.
_______________
39 Art. 2095, New Civil Code.

40 First Camden National Bank & Trust Co. v. J.R. Watkins Co., D.C.
Pa 36 F. Supp. p. 416.
41 Lao v. Court of Appeals, G.R. No. 115307, 8 July 1997; Development
Bank of the Philippines v. Court of Appeals, G.R. No. 118342, 5 January
1998.
42 Art. 2088, Civil Code.
43 Art. 2112, Civil Code.
44 94 Phil. 254, 257-258 [1954].
236

The warehouseman, nevertheless, is entitled to the

warehouseman’s lien that attaches to the goods invokable
against anyone who claims a right of possession thereon.
The next issue to resolve is the duration of time the
right of petitioner over the goods may be held subject to the
warehouseman’s lien.
Sections 8, 29 and 31 of the Warehouse Receipts Law
now come to fore. They provide, as follows:
SECTION 8. Obligation of warehousemen to deliver.—A

warehouseman, in the absence of some lawful excuse provided by
this Act, is bound to deliver the goods upon a demand made either
by the holder of a receipt for the goods or by the depositor, if such
demand is accompanied with:
(a) An offer to satisfy warehouseman’s lien;

(b) An offer to surrender the receipt, if negotiable, with such
indorsements as would be necessary for the negotiation of
the receipt; and
(c) A readiness and willingness to sign, when the goods are
delivered, an acknowledgment that they have been
delivered, if such signature is requested by the
warehouseman.
In case the warehouseman refuses or fails to deliver the goods

in compliance with a demand by the holder or depositor so
accompanied, the burden shall be upon the warehouseman to
establish the existence of a lawful excuse for such refusal.
SECTION 29. How the lien may be lost.—A warehouseman
loses his lien upon goods:
(a) By surrendering possession thereof, or

(b) By refusing to deliver the goods when a demand is made
with which he is bound to comply under the provisions of
this Act.
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.
Simply put, where a valid demand by the lawful holder of

the quedans for the delivery of the goods is refused by the
237
VOL. 292, JULY 9, 1998 237

warehouseman, despite the absence of a lawful excuse

provided by the statute itself, the warehouseman’s lien is
thereafter concomitantly lost. As to what the law deems a
valid demand, Section 8 enumerates what must accompany
a demand; while as regards the reasons which a
warehouseman may invoke to legally refuse to effect
delivery of the goods covered by the quedans, these are:
(1) That the holder of the receipt does not satisfy the
conditions prescribed in Section 8 of the Act. (See
Sec. 8, Act No. 2137)
(2) That the warehouseman has legal title in himself
on the goods, such title or right being derived
directly or indirectly from a transfer made by the
depositor at the time of or subsequent to the deposit
for storage, or from the warehouseman’s lien. (Sec.
16, Act No. 2137)
(3) That the warehouseman has legally set up the title
or right of third persons as lawful defense for non-
delivery of the goods as follows:
(a) Where the warehouseman has been requested, by

or on behalf of the person lawfully entitled to a
right of property of or possession in the goods, not
to make such delivery (Sec. 10, Act No. 2137), in
which case, the warehouseman may, either as a
defense to an action brought against him for
nondelivery of the goods, or as an original suit,
whichever is appropriate, require all known
claimants to interplead (Sec. 17, Act No. 2137);
(b) Where the warehouseman had information that the
delivery about to be made was to one not lawfully
entitled to the possession of the goods (Sec. 10, Act
No. 2137), in which case, the warehouseman shall
be excused from liability for refusing to deliver the
goods, either to the depositor or person claiming
under him or to the adverse claimant, until the
warehouseman has had a reasonable time to
ascertain the validity of the adverse claims or to
bring legal proceedings to compel all claimants to
interplead (Sec. 18, Act No. 2137); and
(c) Where the goods have already been lawfully sold to
third persons to satisfy a warehouseman’s lien, or
have been lawfully sold or disposed of because of
their perishable or hazardous nature. (Sec. 36, Act
No. 2137).
238

(4) That the warehouseman having a lien valid against

the person demanding the goods refuses to deliver
the goods to him until the lien is satisfied. (Sec. 31,
Act No. 2137)
(5) That the failure was not due to any fault on the
part of the warehouseman, as by showing that,
prior to demand for delivery and refusal, the goods
were stolen or destroyed by fire, flood, etc., without
any negligence on his part, unless he has contracted
so as to be liable in such case, or that the goods
have been taken by the mistake of a third person
without the knowledge or implied assent of the
warehouseman, or some other45
justifiable ground for
non-delivery. (67 C.J. 532)
Regrettably, the factual settings do not sufficiently indicate

whether the demand to obtain possession of the goods
complied with Section 8 of the law. The presumption,
nevertheless, would be that the law was complied with,
rather than breached, by petitioner. Upon the other hand,
it would appear that the refusal of private respondents to
deliver the goods was not anchored on a valid excuse, i.e.,
non-satisfaction of the warehouseman’s lien over the goods,
but on an adverse claim of ownership. Private respondents
justified their refusal to deliver the goods, as stated in their
Answer with Counter-claim and Third-Party Complaint in
Civil Case No. 90-53023, by claiming that they “are still the
legal owners of the subject quedans and the quantity of
sugar represented therein.” Under the circumstances, this
hardly qualified as a valid, legal excuse. The loss of the
warehouseman’s lien, however, does not necessarily mean
the extinguishment of the obligation to pay the
warehousing fees and charges which continues to be a
personal liability of the owners, i.e., the pledgors, not the
pledgee, in this case. But even as to the owners-pledgors,
the warehouseman fees and charges have ceased to accrue
from the date of the rejection by Noah’s Ark to heed the
lawful demand by petitioner for the release of the goods.
The finality of our denial in G.R. No. 119231 of
petitioner’s petition to nullify the trial court’s order of 01
March 1995 confirms the warehouseman’s lien; however,
such lien, never-
_______________
45 3 MARTIN, at 553-554.
239
VOL. 292, JULY 9, 1998 239

theless, should be confined to the fees and charges as of the

date in March 1990 when Noah’s Ark refused to heed
PNB’s demand for delivery of the sugar stocks and in no
event beyond the value of the credit in favor of the pledgee
(since it is basic that, in foreclosures, the buyer does not
assume the obligations of the pledgor to his other creditors
even while such buyer acquires title 46
over the goods less any
existing preferred lien thereover). The foreclosure of the
thing pledged, it might incidentally be mentioned, results
in the full satisfaction
47
of the loan liabilities to the pledgee
of the pledgors.
D. Respondent Judge Committed Grave Abuse of

Discretion.
We hold that the trial court deprived petitioner of due
process in rendering the challenged order of 15 April 1996
without giving petitioner an opportunity to present its
evidence. During the final hearing of the case, private
respondents commenced and concluded their presentation
of evidence as to the matter of the existence of and amount
owing due to their warehouseman’s lien. Their exhibits
were duly marked and offered, and the trial court
thereafter ruled, to wit:
Court: Order.
With the admission of Exhibits “1” to “11,” inclusive of
submarkings, as part of the testimony of Benigno Bautista, the
defendant [private respondents] is given five (5) days from today
to file its
_______________
46 The rules on concurrence and preference of credits under the Civil Code
would be inapplicable until there arises a judicial settlement of the property of an
insolvent in favor of all creditors.
47 Article 2115, Civil Code provides: The sale of the things pledged shall
extinguish the principal obligation, whether or not the proceeds of the sale are
equal to the amount of the principal obligation, interest and expenses in a proper
case. If the amount of the sale is more than the said amount, the debtor shall not
be entitled to the excess, unless it is otherwise agreed. If the price of the sale is
less, neither shall the creditor be entitled to recover the deficiency,
notwithstanding any stipulation to the contrary. (n)
240

memorandum. Likewise, plaintiff [petitioner] is given five (5)

days, from receipt of defendants’ [private respondents’]
memorandum, to file its comment thereto. Thereafter the same
shall be deemed submitted
48
for decision.
SO ORDERED.
Nowhere in the transcript of stenographic notes, however,

does it show that petitioner was afforded an opportunity to
comment on, much less, object to, private respondents’ offer
of exhibits, or even present its evidence on the matter in
dispute. In fact, petitioner immediately moved to nullify
the proceedings conducted during that hearing, but its
motion was ignored and never resolved by the trial court.
Moreover, it cannot be said that petitioner’s filing of
subsequent pleadings, where it attached its affidavits and
documents to contest the warehouseman’s lien, was
sufficient to fully satisfy the requirements of due process.
The subsequent pleadings were filed only to show that
petitioner had evidence to refute the claims of private
respondents or that the latter were not entitled thereto, but
could not have adequately substituted for a full-blown
opportunity to present its evidence, given the exorbitant
amounts involved. This, when coupled with the fact that
the motion to postpone the hearing filed by petitioner’s
counsel was not unreasonable, leads us to conclude that
petitioner’s right to fully present its case was rendered
nugatory. It is thus evident to us that there was undue and
unwarranted haste on the part of respondent court to rule
in favor of private respondents. We do not hesitate to say
that any tilt of the scales of justice, no matter how slight,
evokes suspicion and erodes a litigant’s faith and hope in
seeking recourse before courts of law.
Likewise do we refuse to give credence to private
respondents’ allegation that the parties agreed that
petitioner’s presentation of evidence would be submitted on
the basis of
_______________
48 TSN, 21 February 1995, 25.
241
VOL. 292, JULY 9, 1998 241

49
affidavits, without, however, specifying any order or
written agreement to that effect.
It is interesting to note that among the evidence
petitioner wanted to present were reports obtained from
Noah’s Ark, disclosing that the latter failed to maintain a
sufficient inventory to satisfy the sugar stock covered by
the subject quedans. This was a serious allegation, and on
that score alone, the trial court should have allowed a
hearing on the matter, especially in light of the magnitude
of the claims sought. If it turns out to be true that the stock
of sugar Noah’s Ark had in possession was below the
quantities specified in the quedans, then petitioner should
not be made to pay for storage and preservation expenses
for non-existent goods.
It was likewise grave abuse of discretion on the part of
respondent court to order immediate execution of the 15
April 1997 order. We ruled earlier that said order was in
the nature of a final order fixing the amount of the
warehouseman’s charges and fees, and petitioner’s net
liability, after the set-off of the money judgment in its favor
in G.R. No. 107243. Section 1 of Rule 39 of the Rules of
Court explicitly provides that execution shall issue as a
matter of right, on motion, upon a judgment or order that
disposes of the action or proceeding upon the expiration of
the period to appeal therefrom if no appeal has been duly
perfected. Execution pending appeal is, however, allowed in
Section 2 thereof, but only on motion with due notice to the
adverse party, more importantly, only “upon good reasons
shown in a special order.” Here, there is no showing that a
motion for execution pending appeal was filed and that a
special order was issued by respondent court. Verily, the
immediate execution only served to further strengthen our
perception of undue and unwarranted haste on the part of
respondent court in resolving the issue of the
warehouseman’s lien in favor of private respondents.
In light of the above, we need not rule anymore on the
fourth formulated issue.
_______________
49 TSN, 24 November 1997, 64.
242

WHEREFORE, the petition is GRANTED. The challenged

orders of 15 April and 14 July 1997, including the notices of
levy and garnishment, of the Regional Trial Court of
Manila, Branch 45, in Civil Case No. 90-53023 are
REVERSED and SET ASIDE, and said court is DIRECTED
to conduct further proceedings in said case:
(1) to allow petitioner to present its evidence on the

matter of the warehouseman’s lien;
(2) to compute the petitioner’s warehouseman’s lien in
light of the foregoing observations; and
(3) to determine whether, for the relevant period,
Noah’s Ark maintained a sufficient inventory to
cover the volume of sugar specified in the quedans.
Costs against private respondents.

SO ORDERED.
Bellosillo, Vitug, Panganiban and Quisumbing, JJ.,
concur.
Petition granted; orders, notices of levy and garnishment

reversed and set aside.
Notes.—The advance notice of the actual invoice of the

goods entrusted to the arrastre operator is for the purpose
of determining its liability, that it may obtain
compensation commensurate to the risk it assumes, and
not for the purpose of determining the degree of care or
diligence it must exercise as a depository or
warehouseman. (Summa Insurance Corporation vs. Court
of Appeals, 253 SCRA 175 [1996])
A prior judgment holding that a party is a
warehouseman obligated to deliver sugar stocks covered by
the Warehouse Receipts does not necessarily carry with it a
denial of the warehouseman’s lien over the same sugar
stocks. (Philippine National Bank vs. Se, Jr., 256 SCRA
380 [1996])
——o0o——
243
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202 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Sayo, Jr.

PHILIPPINE NATIONAL BANK, petitioner, vs. HON.

Actions; Appeals; Certiorari; It is well-settled that the

Same; Same; Same; Hierarchy of Courts; Direct resort to the

VOL. 292, JULY 9, 1998 203

Philippine National Bank vs. Sayo, Jr.

liver the goods until his lien is satisfied, pursuant to Section 31 of

Same; Pledges; The indorsement of the warehouse receipts

Same; Same; Pactum Commissorio; The creditor, in a contract

Same; Warehouseman’s Lien; Where a valid demand by the

204 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Sayo, Jr.

must accompany a demand; while as regards the reasons which a

Same; Same; Adverse claim of ownership as a basis by a

VOL. 292, JULY 9, 1998 205

Philippine National Bank vs. Sayo, Jr.

Same; Same; Foreclosures; A warehouseman’s lien should in

Courts; Due Process; A court deprives a party of due process if

206 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Sayo, Jr.

Same; Same; Any tilt of the scales of justice, no matter how

Same; Same; Judgments; Writs of Execution; It is grave abuse

VOL. 292, JULY 9, 1998 207

Philippine National Bank vs. Sayo, Jr.

SPECIAL CIVIL ACTION in the Supreme Court.

The facts are stated in the opinion of the Court.

In this special civil action for certiorari, actually the third

208 SUPREME COURT REPORTS ANNOTATED

The factual antecedents until the commencement of G.R.

In accordance with Act No. 2137, the Warehouse Receipts Law,

VOL. 292, JULY 9, 1998 209

Noah’s Ark and its co-defendants filed an Answer with

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

The Answer incorporated a Third-Party Complaint by Alberto

210 SUPREME COURT REPORTS ANNOTATED

On December 13, 1991, the Court of Appeals nullified and set

VOL. 292, JULY 9, 1998 211

for lack of cause of action and likewise dismissed private

On September 29, 1993, private respondents moved for

212 SUPREME COURT REPORTS ANNOTATED

Private respondents thereupon filed before the trial court an

Unsatisfied with the trial court’s order of 1 March 1995,

PNB’S RIGHT TO A WRIT OF EXECUTION IS SUPPORTED BY

5 Supra note 2 at 384-389.

VOL. 292, JULY 9, 1998 213

13, 1991 COURT OF APPEALS [sic] DECISION IN CA-G.R. SP

RESPONDENT RTC IS WITHOUT JURISDICTION TO

RESPONDENT RTC’S ONLY JURISDICTION IS TO ISSUE

In our decision of 18 April 1996 in G.R. No. 119231, we

In view of the foregoing, the rule may be simplified thus: While

214 SUPREME COURT REPORTS ANNOTATED

Imperative is the right of the warehouseman to demand payment

Petitioner’s motion to reconsider the decision in G.R. No.

3.24 Pursuant to the abovementioned Supreme Court Decision,

VOL. 292, JULY 9, 1998 215

Lien as Warehouseman dated 27 November 1996. A

(a) The lien claimed by Noah’s Ark in the unbelievable

3.26 In their Reply to Opposition dated 18 January 1997,