G.R. No. L-45961. July 3, 1990.
MANILA BANKING CORPORATION, petitioner, vs. COURT OF APPEALS and LUZON BROKERAGE CORPORATION, respondents.

FACTS

Luzon Brokerage Corporation (Luzon) filed a complaint for injunction against Manila Banking Corporation (Manilabank), Pacific Copra Export Co., Inc. (PACOCO), and the Provincial Sheriff of Surigao del Norte. Luzon alleged it had a warehouseman’s lien over 150 long tons of copra stored pursuant to agreements with PACOCO. Manilabank, holding a registered chattel mortgage over PACOCO’s copra, requested the sheriff to extrajudicially sell the stored copra. Luzon contended the sale would violate its rights as the warehouseman’s lien was unsatisfied, the warehouse receipt was not surrendered, and no written order from the entities named in the receipt was presented. It prayed for a writ of preliminary and permanent injunction to restrain the sale.
The Trial Court initially issued a temporary restraining order but later directed the sheriff to sell the perishable copra at public auction and hold the proceeds. Subsequently, upon Manilabank’s motion, the court dismissed the complaint for failure to state a cause of action. It ruled that injunction could not stand as a principal action under the new rules and noted discrepancies in warehouse numbers and the non-registration of Luzon’s storage agreement. The Court of Appeals reversed, holding the complaint sufficient as injunction could be a main action and remanded the case for trial. Manilabank elevated the case to the Supreme Court.

ISSUE

Whether the complaint for injunction filed by Luzon Brokerage Corporation states a cause of action.

RULING

No, the complaint fails to state a cause of action. The Supreme Court reversed the Court of Appeals and reinstated the Trial Court’s order of dismissal. The legal logic proceeds from two key principles. First, on the nature of the action, the Court clarified that a complaint for a “permanent injunction” can indeed constitute a principal action under the Rules of Court, contrary to the Trial Court’s erroneous view. An injunction is a proper remedy to prevent a continuing trespass or a malicious interference with contract rights. Therefore, the form of the action was not inherently defective.
Second, and decisively, the substantive allegations of the complaint, even if assumed true, do not entitle Luzon to the relief sought. The core of Luzon’s claim was the protection of its warehouseman’s lien. However, a warehouseman’s lien is a possessory lien. The factual recitals in the complaint itself reveal that Luzon had already lost possession of the copra. The Trial Court’s order, which Luzon did not oppose, directed the sheriff to sell the goods and hold the proceeds. By acquiescing to this sale and the deposit of the proceeds with the bank, Luzon voluntarily surrendered possession of the stored goods. Under the Warehouse Receipts Law, a warehouseman loses his lien by surrendering possession of the goods without requiring payment. Consequently, at the point the complaint was evaluated, Luzon no longer had any possessory lien to protect via injunction against Manilabank. Its claim for storage fees became a mere personal claim against its debtor, PACOCO, not a valid cause of action against the mortgagee, Manilabank. Since the complaint’s own facts demonstrated the legal insufficiency of the claim, dismissal was proper.