8) Phil. National Bank v. Se, et al.

G.R. No. 119231; April 18, 1996

HERMOSISIMA, JR., J.
FACTS: In accordance with Act No. 2137, the Warehouse Receipts Law, Noahs Ark
Sugar Refinery issued on several dates 5 Warehouse Receipts (Quedans). 2 of
which were negotiated and endorsed to Luis T. Ramos; and the other 3 were
negotiated and endorsed to Cresencia K. Zoleta. Ramos and Zoleta then used
the quedans as security for two loan agreements 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.
Consequently, 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 averring as they did that: In an agreement,
Noahs Ark Sugar Refinery 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.
ISSUE: W/N The warehouseman enforce his warehousemans lien before delivering
the sugar stocks to PNB
HELD: YES. 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. 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.

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.
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.
9) Transfield Phil. Inc v. Luzon Hydro Corporation Australia, et al.
G.R. No. 146717; November 22, 2004
TINGA, J.
FACTS: Transfield Philippines (Transfield) entered into a turn-key contract with
Luzon Hydro Corp. (LHC).Under the contract, Transfield were to construct a
hydro-electric plants in Benguet and Ilocos. Transfield was given the sole
responsibility for the design, construction, commissioning, testing and
completion of the Project. The contract provides for a period for which the
project is to be completed and also allows for the extension of the period
provided that the extension is based on justifiable grounds such as fortuitous
event. In order to guarantee performance by Transfield, two stand-by letters of
credit, herein referred to as Securities, were required to be opened. During the
construction of the plant, Transfield requested for extension of time citing
typhoon and various disputes delaying the construction. LHC did not give due
course to the extension of the period prayed for but referred the matter to
arbitration committee. Because of the delay in the construction of the plant,
LHC called on the stand-by letters of credit because of default. However, the
demand was objected by Transfield on the ground that there is still pending
arbitration on their request or extension of time.
ISSUE: W/N LHC may draw on the Securities
HELD: YES. Transfields argument that any dispute must first be resolved by the
parties, whether through negotiations or arbitration, before the beneficiary is
entitled to call on the letter of credit in essence would convert the letter of
credit into a mere guarantee.
Jurisprudence has laid down a clear distinction between a letter of credit and a
guarantee in that the settlement of a dispute between the parties is not a prerequisite for the release of funds under a letter of credit. In other words, the
argument is incompatible with the very nature of the letter of credit. If a letter
of credit is drawable only after settlement of the dispute on the contract
entered into by the applicant and the beneficiary, there would be no practical
and beneficial use for letters of credit in commercial transactions.
The engagement of the issuing bank is to pay the seller or beneficiary of the
credit once the draft and the required documents are presented to it. The so-

called independence principle assures the seller or the beneficiary of prompt

payment independent of any breach of the main contract and precludes the
issuing bank from determining whether the main contract is actually
accomplished or not. Under this principle, banks assume no liability or
responsibility for the form, sufficiency, accuracy, genuineness, falsification or
legal effect of any documents, or for the general and/or particular conditions
stipulated in the documents or superimposed thereon, nor do they assume any
liability or responsibility for the description, quantity, weight, quality, condition,
packing, delivery, value or existence of the goods represented by any
documents, or for the good faith or acts and/or omissions, solvency,
performance or standing of the consignor, the carriers, or the insurers of the
goods, or any other person whomsoever.