Philippine National Bank v. Atendido
REITERATIONFacts
The Antecedents: Laureano Atendido obtained a loan of P3,000 from the Philippine National Bank (PNB), payable in 120 days with interest. To guarantee payment, Atendido pledged 2,000 cavanes of palay, depositing them in a warehouse and endorsing the corresponding warehouse receipt in blank to PNB. Before the loan matured, the palay disappeared from the warehouse for unknown reasons. Atendido failed to pay the loan upon maturity. Procedural History: PNB instituted an action to collect the loan. Atendido set up the defense that the loss of the palay relieved him of liability and counterclaimed for indemnity for the difference between the palay's value and the loan amount. The case was submitted on an agreed statement of facts. The Court of First Instance ordered Atendido to pay the P3,000 plus interest and costs. Atendido appealed to the Court of Appeals, which certified the case to the Supreme Court as it involved a pure question of law. The Petition: The core issue is whether the endorsement of the warehouse receipt in blank to PNB transferred ownership of the palay to the bank or merely served as a guarantee for the loan.
Issue(s)
Whether the endorsement of a warehouse receipt in blank to a bank as collateral security transfers ownership of the goods to the bank. Whether the pledgor is relieved of liability for a loan when the pledged property is lost without the pledgee's fault.
Ruling
The decision of the Court of First Instance ordering Laureano Atendido to pay the Philippine National Bank the sum of P3,000, with interest thereon at the rate of 6% per annum from June 26, 1940, and the costs of action, is affirmed.
Ratio Decidendi
On the issue of whether the endorsement of a warehouse receipt in blank to a bank as collateral security transfers ownership of the goods to the bank: The Court held that the surrender of the warehouse receipt covering the palay by the defendant to the plaintiff was not a transfer of ownership but merely a guarantee to secure the fulfillment of the obligation. This is in line with the nature of a contract of pledge as defined by law. The contract expressly stated that the palay was given as collateral security. The delivery of the palay was merely by way of security, and its ownership remained with the pledgor, subject only to foreclosure in case of non-fulfillment of the obligation. The pledgee cannot become the owner of, nor appropriate to himself, the thing given in pledge. The endorsement in blank merely served to transfer the juridical possession of the property to the pledgee and to prevent disposition by the pledgor, notwithstanding contrary provisions in the Warehouse Receipt Law. On the issue of whether the pledgor is relieved of liability for a loan when the pledged property is lost without the pledgee's fault: The Court affirmed that the ownership of the pledged property remains with the pledgor. Consequently, in case of loss of the property, the loss should be borne by the pledgor. The pledgee's right is limited to selling the property upon non-fulfillment of the obligation and applying the proceeds to the debt. If the property covered by the warehouse receipt is lost without the fault or negligence of the pledgee, the goods are regarded as lost on account of the real owner, the pledgor. This principle was reiterated from a similar case, Martinez vs. Philippine National Bank.
Main Doctrine
The endorsement of a warehouse receipt in blank to a bank as collateral security for a loan does not transfer ownership of the goods to the bank. The pledgor remains the owner, and in case of loss of the pledged property without the pledgee's fault, the loss is borne by the pledgor.