G.R. No. L-11776 - Gonzales vs. Go Tiong

Plaintiff and appellee is Ramon Gonzales. Defendants and appellants are Go Tiong and Luzon Surety Co., Inc.
The case involves the loss of palay (unhusked rice) deposited by plaintiff with Go Tiong’s rice mill and warehouse in Mabini, Urdaneta, Pangasinan.
Go Tiong was licensed on February 4, 1953, as a bonded warehouseman under Act No. 3893 (Bonded Warehouse Act) and executed a guaranty bond with Luzon Surety Co. to secure performance of obligations as such.

Before receiving his bonded warehouseman license, Go Tiong accepted palay deposits from Gonzales totaling 368 sacks with receipts issued (Exhibits A, B, C, D).
After licensing, Go Tiong accepted additional palay from Gonzales totaling 492 sacks with receipts issued. Total palay deposited: 860 sacks, valued at ₱8,600 (₱10 per sack).
The receipts issued were ordinary receipts, not “warehouse receipts” as required or defined by the Warehouse Receipts Act (Act No. 2137).

On or about March 15, 1953, Gonzales demanded the return or value of his deposited palay, but Go Tiong delayed without valid reason.
Shortly after, the warehouse burned down and palay in excess of the license limit (5,847 sacks vs. authorized 5,000 sacks) was lost.
Deposit claims including Gonzales’ were filed with the Bureau of Commerce, which partially paid claims from insurance proceeds. Gonzales’ claim was withdrawn initially but later renewed.

Gonzales filed suit against Go Tiong and Luzon Surety for ₱8,600 with legal interest, ₱5,000 damages, and ₱1,500 attorney’s fees.
An amicable settlement was attempted during the pendency of the case but failed because Go Tiong did not settle Gonzales’ accounts, prompting Gonzales to continue the suit.
The trial court ruled in favor of Gonzales, ordering defendants to pay sums with interest and attorney’s fees. Go Tiong and Luzon Surety appealed, raising several assignments of error.

Whether plaintiff’s claim is governed by the Bonded Warehouse Law (Act No. 3893) or by the Civil Code.
Whether Go Tiong is exempt from liability due to the alleged gratuitous nature of the deposits or being a mere depositary.
Whether the failure to issue “warehouse receipts” affects the applicability of the Bonded Warehouse Act and the surety’s liability.
Whether the fire destroyed the deposited palay by force majeure, exempting defendants from liability.
Whether the amicable settlement extinguished the surety’s liability for failure to settle.
Whether the palay delivered constituted a sale rather than a deposit, altering the legal rights and obligations.
Whether the surety company’s liability was discharged by the Bureau of Commerce’s payment of claims or other acts of plaintiff.