pdic-til-warehouse.doc

PDIC; TIL; Warehouse Receipts Law Comia, A.T.

PHILIPPINE DEPOSIT INSURANCE COMPANY

1. PDIC v. Court of Appeals, 283 SCRA 462 (1998)


TRUTH IN LENDING

1. Consolidated Bank and Trust Company v. Court of Appeals, 246 SCRA 193 (1995)

2. Development Bank of the Philippines v. Arcilla Jr., 462 SCRA 599 (2005)

3. UCPB v. Spouses Beluso, 530 SCRA 567 (2007)

WAREHOUSE RECEIPTS LAW

1. Estrada v. Court of Agrarian Relations, 2 SCRA 986 (1961)

2. Consolidated Terminals v. Artex Development Co., 63 SCRA 46 (1975)

3. Philippine National Bank v. Noah’s Ark Sugar Refinery, 226 SCRA 36 (1993)

4. Philippine National Bank v. Se Jr., 256 SCRA 380 (1996)

5. Philippine National Bank v. Sayo Jr., 292 SCRA 202 (1998)

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PHILIPPINE DEPOSIT INSURANCE COMPANY


FACTS:

-The plantiff-appellees invested in money market placements with Premiere Financing Corporation wherein they

were issued by PFC corresponding PNs and checks for that certain investment.

-Cotacco, in behalf of the other plaintiffs, went to the PFC to encash those PNs and checks, however he was

referred to Regent Savings Bank.

-Instead of paying those PNs and checks, they agreed instead to issue 13 certificates of time deposit to Cotacco.

-Upon maturity of the certificates Cotacco went to RSB to encash those but the latter failed to pay the value and

advised the former to claim the amount to PDIC.

-Subsequently, the MB issued a resolution suspending the operations of RSB and a resolution for its liquidation.

-An inventory of the assets of RSB was made, however, the said certificate of time deposits were not included in

the inventory because those were not funded by PFC or duly recorded as liabilities of RSB.

-The plaintiffs filed with the PDIC their claims but the latter refused for the grounds that the CTDs are non

negotiable.

-Then the plaintiffs filed a collection case against PDIC with the RTC granting the petition.

ISSUE:

- Whether or not the claim for deposits insurance with the PDIC may not prosper in this case.

HELD:

-Whether the CTDs in question are negotiable or not is, however, immaterial in the present case. The Philippine

Deposit Insurance Corporation was created by law and, as such, is governed primarily by the provisions of the

special law creating it. The liability of the PDIC for insured deposits therefore is statutory and, under Republic Act

No. 3591, as amended, such liability rests upon the existence of deposits with the insured bank, not on the

negotiability or non-negotiability of the certificates evidencing these deposits.

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- The fact that the certificates state that the certificates are insured by PDIC does not ipso facto make the latter

liable for the same should the contingency insured against arise. As stated earlier, the deposit liability of PDIC is

determined by the provisions of R.A. No. 3519, and statements in the certificates that the same are insured by

PDIC are not binding upon the latter.

- In order that a claim for deposit insurance with the PDIC may prosper, the law requires that a corresponding

deposit be placed in the insured bank.


FACTS:

- Respondents had, individually or jointly with each other, 71 certificates of time deposits denominated as “Golden

Time Deposits” (GTD) with an aggregate face value of P1,115,889.96.

-On May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines, now Bangko Sentral

ng Pilipinas, issued Resolution 505 prohibiting MBC to do business in the Philippines, and placing its assets and

affairs under receivership. The Resolution, however, was not served on MBC until Tuesday the following week, or

on May 26, 1987, when the designated Receiver took over.

-On May 25, 1987, the next banking day following the issuance of the MB Resolution, respondent Jose Abad was

at the MBC at 9:00 a.m. for the purpose of pre-terminating the 71 aforementioned GTDs and re-depositing the

fund represented thereby into 28 new GTDs in denominations of P40,000.00 or less under the names of herein

respondents individually or jointly with each other. Of the 28 new GTDs, Jose Abad pre-terminated 8 and

withdrew the value thereof in the total amount of P320,000.00.

-Respondents thereafter filed their claims with the PDIC for the payment of the remaining 20 insured GTDs.

-On February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of P120,000.00. PDIC,

however, withheld payment of the 17 remaining claims after Washington Solidum, Deputy Receiver of MBC-Iloilo,

submitted a report to the PDIC that there was massive conversion and substitution of trust and deposit accounts

on May 25, 1987 at MBC-Iloilo.

-Because of the report, PDIC entertained serious reservation in recognizing respondents’ GTDs as deposit

liabilities of MBC-Iloilo. Thus, on August 30, 1991, it filed a petition for declaratory relief against respondents with

the Regional Trial Court (RTC) of Iloilo City, for a judicial declaration determination of the insurability of

respondents’ GTDs at MBC-Iloilo.

-In their Answer filed on October 24, 1991 and Amended Answer filed on January 9, 1992, respondents set up a

counterclaim against PDIC whereby they asked for payment of their insured deposits.

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In its Decision of February 22, 1994, Branch 30 of the Iloilo RTC declared the 20 GTDs of respondents to be

deposit liabilities of MBC, hence, are liabilities of PDIC as statutory insurer.

ISSUE:

- Whether or not the transaction covering the 28 GTDs is not considered done in the ordinary course of business

Hence, PDIC is not liable.

HELD:

- PDIC is liable only for deposits received by a bank "in the usual course of business. MBC and its clients could be

given the benefit of the doubt that they were not aware that the MB resolution had been passed, given the

necessity of confidentiality of placing a banking institution under receivership.

TRUTH IN LENDING

1. Consolidated Bank and Trust Company v. Court of Appeals, 246 SCRA 193 (1995)

FACTS:

- George King Tin Pua, had two sets of accounts with consolidated Bank ad Trust Company: his personal

account and the account of George and George Trade Inc.,

-PUA obtained several loans his personal account and the account of George and George Trade Inc. from the

bank. The bank executed PNs for those loans but the PNs do not any stipulation of handling charges.

-To secure those loans, Pua assigned to the bank the proceeds of a fire insurance policy issued by Kerr. The

proceeds of the insurance policy were subsequently paid to the bank and it initially applied the proceeds to the

personal account of Pua then the remainder was applied to George and George.

-The proceeds were not enough to cover the loan and the bank filed an action for recovery of the unpaid balance

including handling charges. But a counter claim was made by Pua saying that the bank has the upaid balance to

him. The RTC ordered to Pua to pay the balance but the CA reversed.

ISSUE:

-Whether or not the bank may collect handling charges not otherwise stipulated in the PNs.

HELD:

-All banks and non-bank financial intermediaries authorized to engage in quasi-banking functions are required to

strictly adhere to the provisions of Republic Act No. 3765 otherwise known as the "Truth in Lending Act" and shall

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make the true and effective cost of borrowing an integral part of every loan contract. The romissory notes signed

by private respondents do not contain any stipulation on the payment of handling charges. Petitioner bank cannot,

therefore, charge private respondents such handling charges.

2. Development Bank of the Philippines v. Arcilla Jr., 462 SCRA 599 (2005)

FACTS:

- Arcilla, availed of a loan under the Individual Housing Project (IHP) of the DBP.

-DBP and Arcilla executed a Deed of Conditional Sale over a parcel of land, as well as the house to be

constructed thereon. Arcilla borrowed the said amount from DBP for the purchase of the lot and the construction

of a residential building thereon. He obliged himself to pay the loan in 25 years, to be deducted from his monthly

salary. DBP promised to transfer the title of the property upon the payment of the loan. It was also agreed therein

that if Arcilla availed of optional retirement, he could elect to continue paying the loan, provided that the

loan/amount would be converted into a regular real estate loan account with the prevailing interest assigned on

real estate loans, payable within the remaining term of the loan account.

-Arcilla was notified of the periodic release of his loan. The monthly amortizations for the said account were

deducted from his monthly salary, for which he was issued receipts.

-The monthly amortization was increased.

-Arcilla resigned from the bank.

-The bank informed him, that the balance of his loan account with the bank had been converted to a regular

housing loan.

-Arcilla then signed three PNs. Upon his request, DBP agreed to grant Arcilla additional cash advance and

thereafter, a Supplement to the Conditional Sale Agreement was executed in which DBP and Arcilla agreed. The

additional advance was, thus, consolidated to the outstanding balance of Arcilla’s original advance, payable within

the remaining term thereof.

-Arcilla failed to pay his loan account, advances, penalty charges and interests so DBP rescinded the Deed of

Conditional Sale and wrote Arcilla, giving him a chance to repurchase the property upon full payment of the

current appraisal or updated total, whichever is lesser; in case of failure to do so, the property would be advertised

for bidding.

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-DBP reiterated the said offer but Arcilla failed to respond. Consequently, the property was advertised for sale at

public bidding. Arcilla filed a complaint against DBP.

-RTC nullified the rescission of such sale.

-CA reversed.

ISSUE:

-Whether or not the failure of the DBP to inform Arcilla of the data required by the law prior to the consummation

of the availment or drawdown will affect the enforceability of the contract. .

HELD:

-Section 1 of R.A. No. 3765 provides that prior to the consummation of a loan transaction, the bank, as creditor, is

obliged to furnish a client with a clear statement, in writing, setting forth, to the extent applicable and in

accordance with the rules and regulations prescribed by the Monetary Board of the Central Bank of the

Philippines, the following information:

(1) the cash price or delivered price of the property or service to be acquired;

(2) the amounts, if any, to be credited as down payment and/or trade-in;

(3) the difference between the amounts set forth under clauses (1) and (2);

(4) the charges, individually itemized, which are paid or to be paid by such person in connection with the

transaction but which are not incident to the extension of credit;

(5) the total amount to be financed;

(6) the finance charges expressed in terms of pesos and centavos; and

(7) the percentage that the finance charge bears to the total amount to be financed expressed as a simple

annual rate on the outstanding unpaid balance of the obligation.

-If the borrower is not duly informed of the data required by the law prior to the consummation of the availment or

drawdown, the lender will have no right to collect such charge or increases thereof, even if stipulated in the

promissory note. However, such failure shall not affect the validity or enforceability of any contract or transaction.

3. UCPB v. Spouses Beluso, 530 SCRA 567 (2007)

FACTS:

-UCPB granted the spouses Beluso a Promissory Notes Line under a Credit Agreement. As additional security,

the spouses Beluso constituted, a Real Estate Mortgage over parcels of land,

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-The Credit Agreement was subsequently amended to increase the amount of the PNs Line and to extend the

term thereof. The spouses then availed themselves of the credit line

-Later, the payment of the principal and interest of the latter two PNs were debited from the spouses Beluso’s

account with UCPB; yet, a consolidated loan was again released to the spouses Beluso under one PN. To

completely avail themselves credit line extended to them by UCPB, the spouses Beluso executed two more PNs.

-However, the spouses Beluso alleged that the amounts covered by these last two PNs were never released or

credited to their account and, and that the principal indebtedness was only P2 Million

-UCPB continued to charge interest and penalty on the obligations of the spouses. The PNs grant UCBP to fix the

interest rates unilaterally. But the spouses, however, failed to make any payment of the foregoing amounts. UCPB

then demanded that the spouses Beluso pay their total obligation plus 25% attorney’s fees.

-Spouses Beluso failed to comply

-UCPB foreclosed the properties mortgaged by the spouses to secure their credit line. The spouses filed a

Petition for Annulment, Accounting and Damages against UCPB.

ISSUE:

-Whether or not DBP violated provisions in mutuality of contracts in the Civil Code and Truth in Lending Law and

the civil and criminal action can be filed separately.

HELD:

-A Promissory Note which grants the creditor the power to unilaterally fix the interest means that the PN does not

contain a clear statement in writing of the finance charge. Such provision is illegal not only it violates the provision

of the Civil Code in mutuality of contracts but also violates Truth in Lending Law. The penalty for the violation of

the law is P100.00 or an amount equal to twice the finance charge required by such creditor in connection with

such transaction .The action to recover the penalty should be brought within one year from the date of occurrence

of the violation. As the penalty depends on finance charge required of the borrower, the borrower’s cause of

action would only accrue when such finance charge is required. The action to recover such penalty may be

instituted by the aggrieved party separately and independently of the criminal case for the same offense.

WAREHOUSE RECEIPTS LAW

1. Estrada v. Court of Agrarian Relations, 2 SCRA 986 (1961)

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FACTS:

-A court order against manager/owner of Monaca Warehouse was issued to release and give to Estrada et al the

remaining palay deposits in the warehouse. However, the former had refused to comply with the order except if

the original of the receipts of palay deposits be presented and surrendered to him.

-Subsequently, the court ordered Galvan to surrender the original thereof to the manager/owner of the said

warehouse.

-Despite having received of the resolution of the court, and despite repeated demands both Galvan and the

manager did not comply with the order of the court.

-The Galvan’s excuse is that could not locate anymore the receipts because of the office of Galvan was

desperately evacuated and things thereon were scattered, misplaced or destroyed because of the fire which

burned Divisoria Market. The Manager’s excuse is that the original warehouse receipt was not surrendered.

HELD:

- The excuses made do not constitute a valid excuse to evade compliance with the order of this Court that the

palay in question be delivered to the petitioners, and, considering that the petitioners, according to the

manifestation filed by their counsel are in dire need of said palay for their subsistence, our order must be carried

out in the meantime that this cases have not been finally decided in order to ameliorate the precarious situation in

which said petitioners find themselves.

2. Consolidated Terminals v. Artex Development Co., 63 SCRA 46 (1975)

FACTS:

-CTI received on deposits bales of raw cottons with the agreement that CTI should take care of the cotton in

Behalf of Luzon until the consignee Paramount had opened a LC in favor of the shipper Adolph Hanslik of Corpus

Christi.

-By virtue of a forged permit to deliver imported goods, supposedly issued by Bureau of Customs, Artex was able

to obtain delivery after paying CTI storage and handling charges. As soon as the goods where released to Artex,

the Letter of credit has not been opened and the customs duties and taxes dues on the shipment has not been

paid.

-CTI sought to recover possession of the cotton through a writ of replevin, and then amended to complaint into an

action for recovery of damages.

-CFI dismissed the complaint for lack of cause of action.

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ISSUE:

-Whether or not a warehouseman has cause of action for repossession and damages notwithstanding it was

paid?

HELD:

- Amended complaint does not clearly show that, as warehouseman, it has a cause of action for damages against

Artex. The real parties interested in the bales of cotton were Luzon Brokerage Corporation as depositor,

Paramount Textile Mills, Inc. as consignee, Adolph Hanslik Cotton as shipper and the Commissioners of Customs

and Internal Revenue with respect to the duties and taxes. These parties have not sued CTI for damages or for

recovery of the bales of cotton or the corresponding taxes and duties.

-CTI’s basic action to recover the value of the merchandise seems to be untenable, It was not the owner of the

cotton.

3. Philippine National Bank v. Noah’s Ark Sugar Refinery, 226 SCRA 36 (1993)

FACTS:

-Noah’s Ark issued negotiable warehouse receipts.

Two of the warehouse receipts were negotiated and endorsed to Ramos and the other two to Zoleta. The

endorsees used the quedans as security for loans obtained by them from the PNB and the quedans were

subsequently endorsed to the bank.

-Failure of payment prompted PNB to demand delivery of the sugar covered by the receipts, but Noah’s Ark

refused to comply so PNB filed an action for specific performance but denied by the court.

-CA reversed.

ISSUE:

-If the warehouse man was not paid for the warehouse receipt, may the negotiation of the warehouse receipt be

valid?

HELD:

- The validity of the negotiation by RNS Merchandising and St. Therese Merchandising to Ramos and Zoleta, and

by the latter to PNB to secure a loan cannot be impaired by the fact that the negotiation between Noah's Ark and

RNS Merchandising and St. Therese Merchandising was in breach of faith on the part of the merchandising firms

or by the fact that the owner (Noah's Ark) was deprived of the possession of the same by fraud, mistake or

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conversion of the person to whom the warehouse receipt/quedan was subsequently negotiated if (PNB) paid

value therefor in good faith without notice of such breach of duty, fraud, mistake or conversion. And the creditor

(PNB) whose debtor was the owner of the negotiable document of title (warehouse receipt) shall be entitled to

such aid from the court of appropriate jurisdiction attaching such document or in satisfying the claim by means as

is allowed by law or in equity in regard to property which cannot be readily attached or levied upon by ordinary

process.

-If the quedans were negotiable in form and duly indorsed to PNB (the creditor), the delivery of the quedans to

PNB makes the PNB the owner of the property covered by said quedans and on deposit with Noah's Ark, the

warehouseman.

4. Philippine National Bank v. Se Jr., 256 SCRA 380 (1996)

FACTS:

-In PNB vs. Noah’s Ark, SC ordered Noah’s Ark to deliver to PNB the sugar covered by the warehouse receipts.

Noah’s Ark filed a MR and motion seeking clarification of the decision but SC denied both motions.

-Noah’s Ark filed before the trial court an Omnibus Motion seeking deferment of the proceedings until it is heard

on its claim for warehouseman’s lien. On the other hand, PNB filed a motion for issuance of writ of execution.

-Trial Court granted the Omnibus motion and set the reception of evidence on their claim for warehouseman’s

lien. Motion for execution was deferred until determination of respondent’s claim.

-The trial court issued an order finding that there exists a warehouseman’s lien and execution of judgment is

stayed and/or precluded until the full amount of the full amount of the defendant’s lien on the sugar stocks shall be

satisfied. Noah’s Ark submits that they could not have claimed their right to warehouseman’s lien in the prior case

since it could be inconsistent with their claim of ownership.

ISSUE:

- Should the writ of execution be stayed until full amount of lien be satisfied.

HELD:

-In PNB v. Noah’s Ark Suagr refinery the Supreme Court ruled that PNB is entitled to the stocks of sugar as the

endorsee of the quedans. In this case, the Supreme Court clarified that while the PNB is entitled to the stocks of

sugar as the endorsee of the quedans, delivery to it shall be effected only upon payment of the storage fees.

Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in

accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by

surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders the

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possession of the goods without requiring payment of his lien, because a warehouseman’s lien is possessory in

nature.

5. Philippine National Bank v. Sayo Jr., 292 SCRA 202 (1998)

FACTS:

-In PNB vs. Se, the court postponed the delivery until payment of warehouseman’s lien. RTC had set the

reception of evidence on warehouseman’s lien. PNB claims that the lien is unbelievable and there is no basis for

the execution of lien until PNB obliges the delivery. The RTC granted the motion for execution saying that the

motion for execution saying that the corporation of accrued storage fees and preservation charges had sufficient

basis and should be granted. PNB was then served with the writ of execution while it has not been served with the

court order. PNB subsequently filed a motion for deferment of the said writ. The sheriff levied on execution several

properties of PNB then the latter filed a MR while Noah’s Ark et al filed a motion for partial reconsideration and

additional storage fees. RTC denied the MR ordering garnishment and that the writ of execution is final.

ISSUE:

-Whether or not the Noah’s Ark may enforce its warehouseman’s lien.

HELD:

-The remedies available to a warehouseman, 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

Receipt 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 Receipt 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. Initially, private respondents availed of the

first remedy. However, when petitioner moved to execute the judgment 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, we

already recognized their right to have such charges and fees determined. The import of our holding 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. Thus we note that petitioner, in fact, already acquiesced to

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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.

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