LUZON BROKERAGE CORPORATION, PETITIONER, VS. COURT OF APPEALS AND MANILA BANKING CORPORATION, RESPONDENTS.

The proceedings at bar had their inception in a contract entitled
“Field Warehouse Storage Agreement” executed by Luzon Brokerage
Corporation and Pacific Copra Export Co., Inc.1 Under this contract, Luzon
Brokerage Corporation (hereafter simply LUZON) undertook to operate field
warehouses in Davao City and Mati,
Davao, which were needed by Pacific Copra Export Co.,
Inc.  (hereafter
simply PACOCO) for the storage of copra.2 In implementation of the agreement,
PACOCO subsequently leased to LUZON two (2) warehouses
under separate contracts denominated “Field Warehouse Leases,”3
one of the warehouses being located at Zamora Street,
Mati, Davao City.4

Conformably with these arrangements, LUZON
received from PACOCO from time to time quantities of copra resecada issuing the corresponding Field Warehouse
Receipts therefor. 
Two (2) of these receipts were:

1) Field Warehouse Receipt No. 917,1 in which LUZON
acknowledged to have received at Warehouse No. 8-DM, Mati,
Davao,
500 long tons of copra resecada –

“ ** for the account of
and to be delivered without surrender of said warehouse receipt upon written
order of the Bank of America, NT & SA, Manila, for Wells Fargo Bank, San
Francisco, California, pledgee for Paxsmo, Inc., San Francisco, California, covering Letter of
Credit No. 13325;”

and

2) Field Warehouse Receipt No. 997,2 in which LUZON
acknowledged having received from PACOCO at the same Warehouse 8-DM, 250 long
tons of copra resecada –

“** for the account of
and to be delivered without surrender of said warehouse receipt upon written
order of the Philippine National Bank, Manila, for Wells Fargo Bank, San
Francisco, California, pledgee for Paxsmo, Inc., San Francisco, California, covering Letter of
Credit No. 14727.”

Both field warehouse receipts inter alia stipulated that the copra deposited was
“subject to lien for storage, handling and other charges, as per contract
and lease with the industry served.”3

After the Field Warehouse Storage Agreement had been in effect
for about four (4) years, LUZON learned that the Manila Banking Corporation had
asked the Provincial Sheriff of Davao to sell at
public auction 42 tons of the copra deposited at the LUZON?PACOCO
warehouse at Mati, Davao,
with a value of not less than P23,530.00, in
satisfaction of PACOCO’s indebtedness to said Bank.4
That indebtedness had been incurred in connection with (1) an Overdraft
Agreement executed between the bank (hereafter simply MANILABANK) to secure
which PACOCO had executed a Deed of Assignment of Inventory, assigning to
MANILABANK all its right, title and interest in and to the 4,100 long tons of
copra valued at P1,500,600.00 deposited in its various warehouses in Visayas and Mindanao, including 600 long tons at its
warehouse at Mati, Davao;5 and (2) and an Amendment of the
Overdraft Agreement in relation to which PACOCO executed a chattel mortgage
over all the copra deposited in its various warehouses, including that at Mati, Davao.1

LUZON forthwith filed suit in the Court of
First Instance of Davao against MANILABANK, PACOCO
and the Davao Provincial Sheriff.  In its complaint,2
LUZON (1) alleged substantially the foregoing facts;  (2) asserted that notwithstanding that under
the terms of its receipts and the Warehouse Receipts Law (Act No. 2137) it had
not only the right to keep the copra in its custody until its lien had been
satisfied, but also the obligation “to deliver ** (the copra) only upon
surrender of the warehouse receipts or ‘upon written order’ of the entities
named therein,”3 “MANILABANK and/or PACOCO
without satisfying said lien, or surrendering said receipts, or obtaining **
(its) consent or the written order of the entities named therein,” were
threatening to cause the sale at public auction of “at least 42 tons of
said copra deposited at the bodega in Mati, Davao, with a value of not less than P23,530.00;” and
(3) prayed that the Court (a) issue first a preliminary, and later a perpetual,
injunction to restrain the defendants, their agents or deputies from selling
the copra in question and from molesting it in its possession; and (b) condemn
MANILABANK and PACOCO to pay it “not less than P5,000.00 by way of
attorney’s fees and other necessary expenses of litigation,” as well as the
costs of suit.  The Court issued a
preliminary injunction, as prayed for,4 but this was dissolved not long
afterwards upon agreement of the parties that the sale of the copra should go
on, but the proceeds would remain on deposit with the MANILABANK subject to
final disposition by the Court.5

Only MANILABANK and the Provincial Sheriff filed an answer to the
complaint.  In its amended answer (with
compulsory counterclaim),6 MANILABANK –

1) admitted having asked its co-defendant, the Provincial
Sheriff, to extra-judicially sell at public auction the copra deposited at the
bodega at Mati, Davao but
alleged that the request “was within the valid exercise of its rights as
the registered chattel mortgagee and it was under no obligation to secure the
consent of plaintiff or the entities named in the alleged warehouse receipts,
who indisputably possess no right superior to those of the ** (bank);” and
that, moreover, it had never been informed of the existence of the warehouse
receipts or of LUZON’s alleged lien thereunder; and

2) averred that the very warehousing agreement between LUZON and
PACOCO provided that there had to be an adjustment of actual cost (of
salaries of employees in the storing and handling of commodities) as well as
the presentation of invoices (for expenses incident to conducting any
warehouse and maintaining possession of the commodities for the benefit of
warehouse receipt holders and the depositor) before the obligations in favor of
LUZON for storage, handling and other charges could become due and demandable;
but no averment to this effect is contained in the complaint which therefore fails,
on this account, to state a cause of action.

The Trial Court1 found for LUZON,
after due proceedings.  It declared that
–

… the disputed 42 tons of copra could
not have been among those mortgaged by the ** (PACOCO) in favor of **
(MANILABANK).  It is true that under
paragraph (d) of the chattel mortgage executed by ** (PACOCO) in favor of **
(MANILABANK), it was the duty of the former to replace the mortgaged property
with similar property of the same value, kind and quantity should the same be
sold but there is no proof that the 42 tons of copra deposited in the Mati bodega sought to be sold at public auction by
defendant provincial sheriff of Davao belonged to **
(PACOCO) and were among those mortgaged to the ** (MANILABANK).  In fact, Atty. Asedillo,
witness for the defendant bank, admitted that he had no way of knowing whether
the copra subject of the suit was included in the 100 long tons of copra
deposited in Mati, mortgaged to the ** (MANILABANK)
as appearing in Exhibit 6.

Its judgment declared LUZON entitled to the proceeds of the sale
of the 42 long tons of copra in the amount of P21,474.20,
at the time on deposit with the Davao Branch of the
Bank of the Philippine Islands, and authorized it (a) to withdraw said amount
from the bank and, (b) after deducting therefrom the
amount of P7,300.00 representing storage charges due it, to deliver the
remainder to the party entitled thereto in accordance with the terms of the
corresponding warehouse receipts.

This judgment, on appeal by MANILABANK,2
was affirmed by the Court of Appeals.3

On motion for reconsideration filed by the bank, however, the
Court rendered a Resolution setting aside its original decision and entering
another, “dismissing the complaint and ordering the plaintiff-appellee (LUZON), on the appellant’s (MANILABANK’s)
counterclaim, to pay ** (the latter) P23,530.00 as actual damages, and
P5,000.00 for and as attorneys’ fees and expenses of litigation, and ** the
costs.”1
The Resolution sustained MANILABANK’s contention (a)
that the Field Warehouse Storage Agreement satisfactorily demonstrates PACOCO
to be the owner of the 42 tons of copra; (b) that there was no evidence proving
that either Paxsmo Inc. or Wells Fargo Bank —
mentioned in the field warehouse receipts2 — ever entered into a pledge
agreement over the copra in question; and (c) that even assuming otherwise, the
pledge could not bind either PACOCO or MANILABANK, they not being parties
thereto.3
It sustained, too, MANILABANK’s argument that the
copra deposited in the bodega at Mati, Davao, actually conformed to the
quality of copra mortgaged to the bank, the testimony of its credit
investigator, Vicente Tuazon, to this effect never
having been disputed.4 It also found from the evidence
that LUZON was not in truth a warehouseman, but merely
an employee or dummy of PACOCO.5 Finally, it ruled that, as
maintained by MANILABANK, the Trial Court’s disposition of the proceeds of the
sale was erroneous for, as already stated, (a) Paxsmo
Inc. and Wells Fargo in fact had no existing pledge contract over the copra,
(b) a warehouseman could not set up title to the deposited goods in himself, or
set up a third person’s right or title as a defense to an action brought by a
depositor or person claiming under him for the delivery of the goods, and (c)
no one other than MANILABANK had in truth laid claim to the copra, and even
assuming there were other claimants, the remedy of LUZON, as warehouseman, was
to file an action for interpleader, either as an
original suit or as a defense to an action for recovery of the goods deposited.6
Subsequently, LUZON‘s motion for reconsideration was denied for lack of merit.7

 LUZON
has appealed to this Court, disputing all the Appellate Court’s findings just
specified.8
Its appeal is without 
merit.

The Appellate Court’s findings impugned by LUZON
are essentially factual, having been made in relation to the following issues –

1) whether or not the evidence shows
PACOCO to be the owner of the 42 tons of copra in question;

2) whether or not the evidence
establishes that a pledge had been executed over the copra between Paxsmo Inc., as pledgor, and
Wells Fargo Bank, as pledgee;

3) whether or not the evidence shows that the 42 tons of copra
were among those covered by The Deed of Chattel Mortgage executed by PACOCO in
favor of MANILABANK; and

4) whether or not the proofs adduced by
the parties show that LUZON was not a bona fide
warehouseman, but merely an employee or dummy of PACOCO.

The conclusions of the Court of Appeals on the foregoing issues
were reached not only after consideration of the points set forth in MANILABANK’s motion for reconsideration of its original
decision — as to which LUZON presented no opposition despite having been given
an opportunity to do so — but also, and more importantly, after another
“thorough examination” and “appraisal,” and “careful
analysis” of the evidence.1 Those conclusions, to repeat, are
factual, having been made as regards the truth or falsity of avowed events or
posited actualities, or as regards the respective probative value of the
parties’ testimonial and documentary evidence,2 conclusions requiring prior
calibration of the proofs, i.e., the credibility of witnesses and evidentiary
worth of documents, the existence and relevancy of specific surrounding
circumstances, their relation to each other and to the whole, and the
probabilities of the situation.3 And it was on the basis of the
factual conclusions thus arrived at that the Appellate Tribunal ordered
dismissal of LUZON’s complaint and condemned it to
pay MANILABANK, on its counterclaim, actual damages, attorney’s fees and
expenses of litigation, and the costs of suit .4

Now, as this Court has time and again stressed, it is axiomatic
that the judgment of the Court of Appeals is conclusive as to the facts and may
not be reviewed by this Court.5 The doctrine is, to be sure,
subject to certain specific exceptions6 none of which, however, obtains
here.

LUZON‘s attempt, by an adroit formulation of the issues raised
in its petition and taken up at some length in its brief, to characterize those
issues as legal, instead of factual — hence properly cognizable by this Court
— is unconvincing and fails of its purpose. 
Its arguments on this matter appear to run along two main themes:  that the Court of Appeals incurred in error
of law because it reversed, upon MANILABANK’s motion
for reconsideration, earlier findings made in its original decision, and said
Court’s reappraisal of the evidence runs counter to LUZON‘s perception
of how that evidence should be weighed or evaluated.  To that end the earlier findings are
repeatedly juxtaposed against those made in the resolution of reversal, and it
is sought to explain in some detail why the former were, in the view of said
petitioner, correct and the latter erroneous.

It goes without saying, however, that every court has the power
and indeed the duty to review and amend or reverse its findings and decisions
when its attention is timely called to any error or defect therein.  Simply because the Appellate Court has done
that here and revised its earlier findings to reflect what it felt to be a more
correct appraisal of the weight and preponderance of the evidence than it had
originally made, does not justify a recourse to this Court that is normally precluded
by law and rule, absent any showing of grave abuse of discretion or similar
extraordinary circumstance clearly calling for the exercise of this Court’s
power of review.  Still less does the
reconsideration and reversal by the Court of Appeals of its original decision
work a transformation of what were essentially findings of fact into
conclusions of law which may be reviewed by this Court.  The most cursory perusal of LUZON’s brief will show that, as already stated, the
findings complained of were made upon such disputed matters of fact as who
actually owned the copra subject of the parties’ contending claims, whether or
not it was covered by the chattel mortgage executed by MANILABANK in favor of
PACOCO, and whether PACOCO is a bona fide warehouseman or merely an employee or
dummy of LUZON.  Evidence pro and con
as to such controverted facts having been received,
and been passed upon by the Court of Appeals in arriving at its now-questioned
findings, this Court will not undertake to review those findings merely because
the petitioner accounts them erroneous based on its own perception of the
relative worth and weight of such evidence.

At any rate, a review of the record shows no substantial reason
to reverse or modify in any way the Appellate Court’s questioned Resolution.

WHEREFORE, the petition for review on certiorari is
DENIED for lack of merit, and the Resolution of the Court of Appeals subject
thereof is AFFIRMED in toto.  Costs against petitioner.

Cruz, Gancayco, Griño-Aquino,
and Medialdea,
JJ., concur.

1
The contract was dated June 28, 1960
and a copy thereof was presented in evidence in the Trial Court as plaintiff’s Exh. A.

2
Rollo, p. 96

3
The leases were executed on August 28,
1960 and November 19,
1964, and were marked in evidence in the Trial Court as Exhibits B
and C.

4
Rollo, p. 96

1
Dated July 16, 1964:  Exh. D:  rollo, p.
96; emphasis supplied

2
Dated Aug. 4, 1964:  Exh. E:  rollo, p.
97; emphasis supplied

3
Record on Appeal (Rollo, p. 44), pp. 35, 37

4
Id., p. 11

5
Copy marked as Exhibit 1 in the proceedings before the Trial Court

1 Exh. 2, in the proceedings before the Trial Court

2 Docketed as Civil Case No. 4461:  Rec. on App. (Rollo,
p. 44), pp. 1, 7-38

3 Said entities being, respectively:  Bank of America, NT & SA, Manila (as
regards FWR 917), and Philippine National Bank, Manila (as regards FWR 997), pledgees for Paxsmo, Inc., San
Francisco, California

4 Rec. on App. (Rollo,
p. 44), pp. 39-40

5 Id.,
pp. 60-62

6 Id., pp. 62 et seq.

1 Presided over by Hon. Vicente Cusi

2 Docketed as CA-G.R. No. 41041-R

3 The judgment was rendered on September 16, 1975, the ponente
being Busran, J., with Reyes and Ramos, JJ., concurring.

1 The Resolution was promulgated on March 9, 1976:  Rollo, pp.
37-40

2 See footnotes 1 and 2 and related text, at p. 2, supra

3 Rollo, p. 38

4 Id.,
p. 39

5 Ibid.; the conclusion, according to the
Court, being clearly indicated by the fact that the monthly rental being paid
by LUZON was unconscionable:  P1.00, for a warehouse “capable of
storing 1,200 long tons of copra”

6 Id.,
pp. 39-40

7 Rollo, p.13

8 Id.,
p. 14

1 Rollo, pp. 38, 39,
40

2 Ramos v. Pepsi-Cola Bottling Co.
of the Phil., 19 SCRA 289, 292

3 SEE Lim v. Calaguas,
83 Phil. 796, 799; Mackay Radio & Tel. Co. v. Rich, 28 SCRA 699,
705, cited in Moran, Comments on the Rules, 1979 ed., vol. 2, p. 474; Sta. Ana
v. Hernandez, 18 SCRA 973, 978

4 SEE footnote 1 at p. 5, supra

5 SEE, e.g., Ramirez Tel. Corp. v. Bank of
America, 29 SCRA 191, 198 and the numerous cases on the point collated in
Moran, op. cit., at pp. 474-475

6 Ramos v. Pepsi-Cola Bottling Co., 19 SCRA
289, supra; Evangelista v. Alto Surety & Ins. Co., L-11139, April 23, 1958