COMMERCIAL LAW – Warehouse Receipt Law

2009 BAR OPERATIONS

WAREHOUSE RECEIPT LAW
(Act no. 2137)
Definition:
1. Warehouseman – person lawfully
engaged in the business of storing
goods for profit
2. Warehouse – the building or place
where goods are deposited and stored
for profit
3. Warehouse receipts – a written
acknowledgement by
warehouseman that he has received
and holds certain goods therein
described in store for the person to
whom it is issued; a written contract
between the owner of the goods and
the warehouseman to pay the
compensation for that service
4. Non-negotiable receipts – a receipt
in which it is stated that the goods
received will be delivered to the
depositor, or to any other specified
person
5. Negotiable receipts – a receipt in
which it is stated that the goods
received will be delivered to the bearer
or to the order of any person named in
such receipt
Notes:
that in the passage of the warehouse
receipts through the channels of
commerce, the law regards the
property which they describe as
following them and gives to their
regular transfer by endorsement the
effect of manual delivery of the things
specified in them.
Contents of a Warehouse receipt Generally,
the warehouse receipt is not required to be in
any particular form. However it should contain
a the following contents:
1. Location of the warehouse where goods
are stored
2. Date of issue of the receipt
3. Consecutive number of the receipts
4. Statements whether the goods received
will be delivered to the bearer, to a
specified person, or to a specified person
or his order
5. Rate of storage charges
6. Description of the goods or of the
packages containing them
7. Signature of the warehouseman which
may be made by his authorized agent
8. Warehouseman’s ownership of or interest
in the goods
9. Statement of advances made and
liabilities incurred

1. Section 1 of the law provides that only The requirements are for the protection of the
a warehouseman may issue depositor and those succeeding to his rights.
warehouse receipts, those not If the warehouseman omits any of the required
issued by a warehouseman are not information and injury is caused thereby to a
warehouse receipts. person, the warehouseman shall be liable to
the said person for all damages caused by
2. Warehouse receipts are not such omission.
negotiable instruments under the
Negotiable Instruments Law INSERTIONS BY THE WAREHOUSEMAN
The warehouseman may insert any other
terms and conditions PROVIDED it shall not;
Negotiable Warehouse Receipt 1) be contrary to the provisions of
Instruments this Act and
The subject is money The subject is 2) in anywise, impair his obligations
merchandise to exercise that degree of care in
The instrument itself The goods are the the safekeeping of the goods
is the object of value object of value entrusted to him
Intermediate parties Intermediate partied KEY: Not CI
become secondarily are not liable for the
liable warehouseman’s The warehouseman is required to exercise
failure to deliver the that degree of care which a reasonably careful
goods. man would exercise in regard to similar goods
of his own.
3. No provision shall be inserted in a
negotiable receipt that it is non-
negotiable. Such provision if inserted,
shall be void. Kinds of receipt a warehouseman may
4. The warehouse receipt is issue
negotiable under this act, meaning
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COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
1. Non-negotiable receipt – one which would be necessary for negotiation of
provides that the goods will be delivered to the receipts
the depositor or to any other specified 3.a readiness and willingness to sign,
person when the goods are delivered, an
This may not be transferred by acknowledgment that the goods had
negotiation but may be assigned been delivered.
2. Negotiable receipt – one which that the
goods will be delivered to the bearer or to Refusal or failure to deliver – the burden shall
the order of any person named in the be upon the warehouseman to establish the
receipt. existence of a lawful excuse for the refusal.
Ownership is not a defense for the refusal to
Non-negotiable mark – a non-negotiable deliver goods
receipt shall have plainly placed upon its face
by the warehouseman issuing it as “non- Doctrine of Estoppel - The warehouseman
negotiable” or “not negotiable”. Failure to do cannot refuse to deliver the goods on the
so, the holder of the receipt believing it to be ground that he has acquired title or right to the
negotiable may, at his option, treat it as possession of the same unless such title or
imposing upon the warehouseman the same right is derived:
liabilities he would have incurred had the 1. Directly or indirectly from a transfer
receipt been negotiable. made by the depositor at the time of
the deposit for storage or subsequent
A negotiable receipt cannot be converted into thereto;
a non-negotiable one such as by inserting a 2. From the warehouseman’s lien.
provision in the receipt stating that it is non- (Sec.16)
negotiable. Such a provision shall be void. Neither can the warehouseman, as a
depositary for hire, set up an adverse title in
Duplicate receipts – when more than one another as an excuse for his failure to deliver
negotiable receipt is issued for the same the property to his bailor on demand. (Sec.19)
goods, the word “duplicate” shall be plainly
placed upon the face of every such receipt DISTINCTIONS BETWEEN NEGOTIABLE
EXCEPT THE ONE FIRST ISSUED. AND NON-NEGOTIABLE WR
NEGOTIABLE WR NON-NEGOTIABLE
Warranties if the term “Duplicate” is WR
indicated in the receipt? May be acquired May be acquired
Sec 15 provides that if the term “duplicate’ is through negotiation through transfer or
assignment
indicated in the receipts it warrants the ff:
Rights of the person to Rights of the
a. That the duplicate is an accurate copy of
whom it is negotiated transferee:
the original receipt; and (holder): 1. Title of the goods,
b. Such original receipt is uncancelled at 1. Title to the goods of as against the
the date of the issue of the duplicate the person negotiating transferor (merely
the receipt and title of steps into the shoes);
Obligation of the warehouseman to deliver the person to whose 2. Right to notify the
goods delivered with him order the goods were warehouseman of the
A warehouseman is bound to deliver the to be delivered. transfer and acquire
goods upon a demand made either by; 2. Direct obligation of the direct obligation of
the warehouseman to the warehouseman to
1. The person lawfully entitled to the
hold possession of the hold the goods for
possession of the goods or his agent goods for him, as if the him.
(e.g. buyer in an auction sale, donee warehouseman directly
of the goods) contracted with him.
2. A person who is entitled to delivery by Negotiation defeats the
the terms of the non-negotiable receipt lien of the seller of the
or who has written authority from the goods (Sec. 49)
person so entitled either indorsed or Goods represented Goods represented
written upon another paper cannot be subject to can be subject to
3. Person in possession of a negotiable attachment or levy by attachment or levy by
execution, unless in execution (Sec. 42)
receipt proper circumstances
PROVIDED such demand is accompanied by: (Sec. 25)
1.an offer to satisfy the warehouseman’s
lien
2.an offer to surrender the receipt, if LIABILITIES OF A WAREHOUSEMAN
negotiable with such endorsements as

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COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
CIVIL CRIMINAL
Warehouseman or his agent
For damages 1. Issuance of receipts
suffered by reason of for goods not received
failure to comply with (Sec. 50)
legal duties 2. Issuance of receipt
containing false statement
(Sec. 51)
3. Issuance of duplicate
negotiable WR not
marked as such (Sec.52)
4. Issuance of
negotiable WR for goods
of which he is an owner
without stating such fact of
ownership (Sec. 53)
5. Delivery of goods
without obtaining
negotiable WR (Sec.54)
Third persons
Negotiation of WR issued
for mortgaged goods with
intent to deceive
1. Liability of warehouseman for
misdelivery
a. A warehouseman would be liable for
misdelivery or conversion if he delivers
the goods to one who is not in fact
lawfully entitled to the possession of the
goods
Conversion – is unauthorized
assumption and exercise of the right of
ownership over goods belonging to
another through the alteration of their
condition or the exclusion of the owner’s
right.
b. He would also be liable for misdelivery
even if he delivers to a person holding a
non-negotiable receipt or a negotiable
receipt if prior to such delivery he had
either:
1. Been requested, by or on behalf of
the person lawfully entitled to a
right or property or possession in
the goods, not to make such
delivery; or
2. Had information that the delivery
about to be made was to one not
lawfully entitled to the possession
of the goods
Refusal of delivery of goods, when
allowed:
1. If he had been requested, by or on
behalf of the person lawfully entitled to
a right or property or possession in the
goods, not to make such delivery to
anyone
2. If he had information that the delivery
about to be made was to one not lawfully
entitled to the possession of the goods
3. If several persons claim the goods
4. If the warehouse lien is not yet been
satisfied
5. If the goods were loss by fortuitous
event except when guaranteed liability of
loss (e.g. fire, flood etc) without his fault
prior to demand for delivery and refusal
a 6. Where the goods have already been
lawfully sold to third persons to satisfy a
warehouseman’s lien or have been
lawfully sold or disposed because of their
perishable or hazardous nature
KEY: R(o)N-S FeW Sold
Where a warehouseman delivers goods or
part of the goods for which he had issued a
negotiable receipts and fails to take up and
cancel the receipt , or to place plainly upon it a
statement of what goods or packages have
been delivered, he shall be liable to any one
who purchases for value in good faith such
receipt, for failure to deliver the goods
specified in the receipt, whether such
purchaser acquired title to the receipt before or
after the delivery of the goods by the
warehouseman.
2. Liability of warehouseman for alteration
of receipts
The liability would depend on the nature of
the alteration
1.If the alteration is immaterial, that is
the tenor of the receipt is not
changed, whether fraudulent or
not, authorized or not, the
warehouseman is liable on the
altered receipt according t its
original tenor
2.If the alteration is material, that is
the tenor of the receipt is
changed, but authorized, the
warehouseman is liable according
to the terms of the receipt as
altered.
3.If the alteration is material but
innocently made though
unauthorized, the warehouseman
is liable on the altered receipt
according to its original tenor; and
4.If the alteration is material and
fraudulently made, the
warehouseman is liable according
to the original tenor of the receipt
to a purchaser of the receipt for
value without notice and even to
the alterer and subsequent
purchases with notice.
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COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
3. Liability of warehouseman for lost or
destroyed receipts
If the receipt is claimed to have been lost
or destroyed, it is essential that the court
shall pass upon the question and make
sure that the receipt is really lost or
destroyed before the goods are delivered
or a new receipt is issued.
Section 14 provides that a competent
court may order the delivery of the goods
only
1.Upon proof of the loss or destruction
of the receipt; and
2.Upon the giving of a bond with
sufficient sureties to be approved by
the court
4. Liability of warehouseman as to
duplicate
Where more than 1 negotiable receipt is
issued for the same goods, the word
“duplicate” must be plainly placed by the
warehouseman upon the face of every
such receipt, except the one first issued
Effect of failure to place the word
“Duplicate” in a duplicate receipt
Failure to do so will make the
warehouseman liable for all the damages
to anyone who purchased such receipt
believing it to be an original, even if the
purchase be after the delivery of the goods
by the warehouseman to the holder of the
original receipt. (Sec 6)
He shall be guilty of a crime punishable of
a crime punishable by fine or
imprisonment, or both, if he issues a
duplicate or additional negotiable receipt
for goods knowing that a former negotiable
receipt for the same goods or any part of
then is outstanding or and uncancelled,
without plainly placing upon the face of the
receipt the word duplicate.
Exception: In the case of a lost or
destroyed receipt after proceedings
5. Liability of warehouseman to rightful
claimant
 Duty of the warehouseman where
there are several claimants
1. He can refuse to deliver the
goods to anyone of them until
he has had reasonable time to
ascertain the validity of the
various claims;
2. He can require all claimants to
interplead, either as a defense
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to an action against him for
non-delivery of the goods, or
as an original suit, whichever
is appropriate
INTERPLEADER – this is a remedy
given to the warehouseman in case
there is more than one person who
claims title or possession of the goods
either as a defense to an action brought
against him for non-delivery or as an
original suit; this would require the
different claimants to litigate among
themselves.
Sec18 provides that if someone other
than the depositor or person claiming
has a claim to the title or possession of
the goods, the warehouseman shall be
excused from liability for refusing to
deliver the goods until he has a
reasonable time to ascertain the validity
of the adverse claim or bring legal
proceedings to compel claimants to
interplead.
6. Liability of warehouseman for non-
existence or misdescription of goods
General Rule: the warehouseman is
under obligation to deliver the identical
property stored with him and if he fails to
do so, he is liable directly to the owner or
holder of a receipt for damages.
Exception: if the description consists
merely of marks or labels upon the goods
or upon the packages containing them, the
warehouseman is not liable even if the
goods are not of the kind as indicated in
the marks or labels.
7. Liability of the warehouseman for loss
due to lack of care
General rule: The warehouseman is
required to exercise ordinary or
reasonable care in the custody of goods,
that is, the care a reasonably careful
owner would exercise over similar goods
of his own. This is the “diligence of a good
father of a family”
Exception: But in the absence of any
agreement to the contrary, the
warehouseman is not liable for any loss or
injury to the goods which could not have
been avoided by the exercise of such
care.
8. Liability of warehouseman to depositors
of commingled goods
Commingling of deposited goods
General Rule: a warehouseman shall
keep the goods so far separate from
COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
goods of other depositors, and from other
goods of the same depositor for which a
separate receipt has been issued.
Purpose: to permit at all times the
identification and redelivery of the goods
deposited
Exception:
(1) If authorized by agreement or by
custom,
(2) Or if the goods are fungible goods
with other goods of the same kind and
grade.
In this case, the various depositors of
the mingled goods shall own the entire
mass in common and each depositor
shall be entitled to such portion as the
amount deposited by him bears to the
whole.
The warehouseman shall be severally liable to
each depositor for the care and redelivery of
his share of such mass to the same extent and
under the same circumstances as if the goods
had been kept separate.
9. Liability in failure to mark a receipt
intended to be non-negotiable as “non-
negotiable”
Effect: the holder of the receipt believing it
to be negotiable may, at his option, treat it
as imposing upon the warehouseman the
same liabilities he would have incurred
had the receipt been negotiable.
The “holder” referred herein cannot be
the original holder because, as the
depositor, he is presumed to know
whether he is getting a negotiable or a
non0negotiable receipt.
10. Liability in Failure to take up and cancel
a negotiable receipt when goods are
delivered. OR failure to take up and cancel
a negotiable receipt or to place upon it a
statement of what goods have been
delivered, when the goods are partly
delivered
The warehouseman shall be liable for
failure to deliver the goods to any one who
purchases for value in good faith such
receipt whether the purchaser acquired
title to the receipt before or after delivery
of the goods by the warehouseman. He
shall also be guilty in such case of crime
punishable by fine or imprisonment.
Exception:
1. Where the goods have been lawfully
sold to satisfy a warehouseman’s
lien
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2. the goods have been lawfully sold or
disposed of because of their
perishable or hazardous nature.
11. Issuing receipts for goods not received
by him or are not under his actual control
at the time of issuance of the receipt
12. Issuing receipts for the
warehouseman’s goods which do not state
that fact
A warehouseman shall be guilty of a crime
punishable by fine or imprisonment, or by
both, if he issues a negotiable receipt for the
same goods deposited with or held by him of
which he knows he is the owner, solely or
jointly or in common with others, if he fails to
state such ownership in the receipt
13. For delivery of goods without obtaining
negotiable receipt or knowing that a
negotiable receipt is outstanding and
uncancelled.
Exception:
1. Where the goods have been lawfully
sold to satisfy a warehouseman’s
lien or
2. The goods have been lawfully sold
or disposed of because of their
perishable or hazardous nature or
3. In case of lost or destroyed receipt
after proceedings
Attachment or levy of negotiable receipts
The warehouseman has the direct obligation
to hold possession of the goods for the original
owner or for the person to whom the
negotiable receipt of title has been duly
negotiated.(Sec 41) While in possession of
such, the goods cannot be attached or levied
upon under an execution unless:
a. The document be first surrendered; or
b. The negotiation is enjoined;
c. The document is impounded by the
court.
The prohibition is for the protection of the
warehouseman since he could be made liable
to a subsequent purchaser for value in good
faith.
This provision of Sec 25 does not apply to
the following:
a. If the person depositing is not the
owner of the goods or one who has no
right to convey title to the goods
binding upon the owner;
b. Actions for recovery or manual
delivery of goods by the real owner;
c. Cases where the attachment is made
before the issuance of the negotiable
receipt of title
COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
BUT IN SEC 26, it provides that: a creditor
whose debtor is the owner of a negotiable
receipt CAN ATTACH THE NEGOTIABLE
RECEIPT IN THE DEBTOR’s POSSESSION
and NOT the goods covered by such
receipt. This provision expressly gives the
court full power to aid by injunction and
otherwise a creditor seeking to get a
negotiable receipt covering such goods.
The warehouseman has a lien on goods
deposited or on the proceeds thereof in his
hands for:
a. All lawful charges for storage
and preservation of the goods
b. All lawful claims for money
advanced, interest, insurance,
transportation, labor, weighing,
cooperating and other charges or
expenses in relation to the goods
c. All reasonable charges and
expenses for notice and
advertisements of sale, and
d. Sale of goods where default
has been made in satisfying the
warehousing lien.
The warehouseman’s lien over the goods
deposited with him is his security for the
payment of the charge, money advanced and
other expenses.
The warehouseman’s lien can be enforced
against:
a. The goods of the depositor
who is liable to the warehouseman as
debtor whenever such goods are
deposited; and
b. The goods of other persons
stored by the depositor who is liable to
the warehouseman as debtor with
authority to make a valid pledge.
This is to give the warehouseman a lien for
charges against goods of persons who are
primarily liable for the charge incurred, and
who by their agreement create the relation of
debtor and creditor.
Extinguishment of lien
a. By surrendering possession of goods
– a warehouseman loses his lien upon
the goods by voluntary surrendering
the possession without requiring
payment of the lien, it will be
presumed that the lien has been
waived or abandoned where the
warehouseman permits a depositor to
remove the goods BUT NOT where
the property is taken without
warehouseman’s consent or by force
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b. By wrongfully refusing to deliver goods
when demand is made with which he
is bound to comply under provisions of
Sec8
Satisfaction of lien by sale
a. Procedure: (Sec33)
1. The warehouseman shall give a
WRITTEN NOTICE to the person on
whose account the goods were held or
to any person who has a claim or
interest in the goods. The notice shall
be given either by delivery in person
or by registered mail to the last known
place of business or abode. The
notice shall contain the following:
a. An itemized statement of the
warehouseman’s claim, the
sum due and the date(s) when
it became due.
b. A brief description of the
goods against which the lien
exists.
c. A demand that the amount of
the claim shall be paid on or
before a day mentioned (not
less than 10 days from the
delivery of the notice if
personally delivered or from
the time when the notice
should reach its destination if
the notice is sent by mail)
d. A statement that unless the
claim is paid within the time
specified, the goods will be
advertised for sale and sold by
auction at a specified time and
place.
2. In accordance with the terms of the
notice, a sale of the goods by auction
may be had to satisfy any valid claim
of the warehouseman for which he
has a lien over the goods.
3. After the time for payment ahs
elapsed, an advertisement of the sale,
describing the goods to be sold and
stating the name of the owner or
person on whose account the goods
has been held and the time and place
of the sale.
4. The ad shall be published once a
week for two consecutive weeks in a
newspaper published in the place
where the sale shall be held. It can be
in the place where the lien was
acquired or if such place is manifestly
unsuitable, at the nearest suitable
place.
b. If there is no newspaper published in
such place, the advertisement shall be
posted at least 10 days before such
COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
sale in not less than six (6)
conspicuous places therein.
5. The sale shall be held not less than 15
days from the time of the first
publication.
6. From the proceeds of the sale the
warehouseman shall satisfy his lien
including the reasonable charges of
notice, advertisement and sale.
7. The balance, if any, shall be held by
the warehouseman, and delivered on
demand to the person to whom he
would have been bound to deliver the
goods.
At any time before the goods are sold, ANY
PERSON CLAIMING A RIGHT OF
POSSESSION on the goods MAY PAY THE
WAREHOUSEMAN THE AMOUNT
NECESSARY:
1. To satisfy his lien and
2. to pay the reasonable expenses
and liabilities incurred in serving
notices, advertisements and
preparing for the sale up to time
of payment.
If the same is satisfied, the warehouseman
shall deliver the goods to the person making
payment. Otherwise, the warehouseman
shall retain possession of the goods
according to the terms of the original
contract of deposit.
Remedies available to warehouseman to
enforce his lien:
1. Refusing to deliver the goods until the
lien is satisfied;
2. Causing the extrajudicial sale of the
property and applying the proceeds to
the value of the lien; and
3. Filing a civil action for the unpaid
charges or by way of counterclaim in an
action to recover the property from him.
Whether a warehouseman has or has not lien
upon the goods, he is entitled to all remedies
allowed by law to a creditor against his debtor,
for the collection from the depositor of all the
charges and advances which the depositor
has expressly or impliedly contracted with the
warehouseman to pay. (Sec 32)
Perishable and Hazardous goods refers to
goods which by keeping will deteriorate greatly
in value, or by odor, leakage, inflammability or
explosive nature and will make warehouseman
liable in case it will injure other property.
In cases of perishable and hazardous goods,
the warehouseman may give NOTICE to the
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owner, or to the person in whose name the
goods are stored, to satisfy the lien upon such
goods and to remove them from the
warehouse. Failure to do so may entitle the
warehouseman to sell the goods at public or
private sale without advertisements. In case
he was unable to sell, he may -dispose of
them in any lawful manner, and shall incur no
liability by reason thereof.
Effect of sale of goods to satisfy the
warehouseman’s lien on account of the
good’s perishable or hazardous nature
The warehouseman shall not
thereafter be liable for failure to deliver the
goods to the depositor or owner of the goods
even if such receipt be negotiable.
Negotiation and Transfer of Receipts
How negotiated (Sec37):
A negotiable receipt may be negotiated by
delivery where, by the terms of the receipt,
a. The warehouseman undertakes to
deliver the goods to the bearer;
b. The warehouseman undertakes to
deliver the goods to the order of a
specified person, and such person or
a subsequent endorsee of the receipt
has indorsed it in blank or to bearer
Under this circumstance, any holder may
indorse the same to himself, or to any other
specified person, and in such case the receipt
shall thereafter be negotiated only by the
endorsement by such endorsee.
Negotiation of a negotiable receipt by
endorsement
It may be negotiated only by the endorsement
of such person:
a. If indorsed in blank or to bearer, the
document becomes negotiable by
delivery
b. If indorsed to a specified person, it
may be again negotiated by the
endorsement of such person in blank,
to bearer or to another specified
person. Delivery alone is not sufficient.
Person who negotiate a receipt (Sec 40)
a. The owner thereof; or
b. By any person to whom the
possession or custody of the receipt is
entrusted by the owner
Rights Acquired by Indorsee
a) Such title to the goods which the
person negotiating had, or such title
as the depositor had the ability to
convey;
COMMERCIAL LAW – Warehouse Receipt Law
2009 BAR OPERATIONS
b) The direct obligation of the
warehouseman to hold the possession
of the goods for him.
Transferability of non-negotiable receipt
A non-negotiable receipt of title cannot
be negotiated. Nevertheless, it can be
transferred or assigned by delivery to a
purchaser or donee. Even if the receipt is
indorsed, the transferee acquires no additional
right
Advantages of a negotiable receipt from a
non-negotiable receipt
1. Protects a purchaser for value and in
good faith
2. The goods covered by the receipt
cannot be garnished or levied upon
under execution unless it is surrendered,
impounded or its negotiation enjoined;
3. In case of negotiation, the holder
acquires the direct obligation of the
warehouseman to hold possession of
the goods for him without notice to such
warehouseman.
4. The goods it covers are not subject to
seller lien or stoppage in transitu
Rights of a person to whom a negotiable
receipt has been negotiated (Sec. 41)
The rights acquired by such person are the
following:
a. The title of the person negotiating the
receipt over the goods covered by the
receipt;
b. The title of the person (depositor or
owner) to whose order by the terms of
the receipt the goods were to be
delivered over such goods; and
c. The direct obligation of the
warehouseman to hold possession of
the goods for him, as if the
warehouseman directly contracted
with him.
Rights of a person to whom a non-
negotiable receipt has been transferred
(Sec42)
The rights acquired by such person are the
following:
a. The title to the goods as against the
transferor;
b. The right to notify the warehouseman
of the transfer thereof; and
c. The right, thereafter, to acquire the
obligation of the warehouseman to
hold the goods for him.
The right of the transferee is not absolute as it
is subject to the terms of any agreement with
the transferor. He merely steps into the shoes
of the transferor.
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Rights of a transferee of a negotiable
eceipt delivered without endorsement
(Sec43)
The rights acquired by such person are the
following:
a. The right to the goods as against the
transferor; and
b. The right to compel the transferor to
indorse the receipt
The negotiation shall take effect as of the time
when the endorsement is actually made.
The endorsement of a receipt shall not make
the endorser liable for any failure on the part of
the warehouseman or previous endorsers of
the receipt to fulfill their respective obligations.
(Sec45)
Warranties on sale of receipt
a. That the receipt is genuine;
b. That he has a legal right to negotiate
or transfer it;
c. That he has the knowledge of no fact
which would impair the validity or
worth of the receipt; and
d. That he has a right to transfer the title
to the goods and that the goods are
merchantable or fit for a particular
purpose, whenever such warranties
would have been implied, if the
contract of the parties had been
without receipt the goods represented
thereby
A holder for security of a receipt who in good
faith accepts payment of the debt from a
person DOES NOT thereby warrant the
genuineness of the receipt nor the quality or
quantity of the goods therein described.
(Sec46)
It is the duty of the purchaser, mortgagee,
pledge of goods for which a negotiable receipt
has been issued to require the negotiation of
the receipt to him, otherwise his failure will
have the same effect as an express
authorization on his part to the seller,
mortgagor or pledgor in possession of such
receipt to make any subsequent negotiation.
The subsequent purchaser must have taken
the receipt in good faith and for value.
A bona fide purchaser of a negotiable
warehouse receipt acquires title to the goods
where he purchases from the owner’s agent
within the actual or apparent scope of his
authority. In sum, negotiation is valid despite
having been made in breach of trust.
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2009 BAR OPERATIONS
If a) there was a breach of duty on the part of
the person making the negotiation; or b) the
owner of the receipt was induced by fraud,
mistake or duress to entrust the possession or
custody of receipt to such person, the validity
of the negotiation is NOT IMPAIRED if the
person to whom the receipt was negotiated, or
a person to whom the receipt was
subsequently negotiated PAID VALUE
THEREFOR, WITHOUT NOTICE OF THE
BREACH OF DUTY OR FRAUD, MISTAKE
OR DURESS.
Effect of subsequent negotiation by seller
of a receipt
There is a duty upon the purchaser,
mortgagee, or pledgee of goods for which a
negotiable receipt has been issued, to require
the negotiation of the receipt to him otherwise,
his failure will have the same effect as an
express authorization on his part to the seller,
mortgagor or pledgor in possession of such
receipt to make any subsequent negotiation.
Negotiation defeats vendor’s lien
Where a negotiable receipt has been issued
for the goods:
a. No seller’s lien or right of stoppage in
transitu shall defeat the rights of any
purchaser for value in good faith to
whom such receipt has been
negotiated whether it be prior or
subsequent to the notification to the
warehouseman who issued such
receipt;
b. The warehouseman shall not be
obliged to deliver or justified in
delivering the goods to an unpaid
seller unless the receipt is first
surrendered for cancellation.
Criminal Offenses
1. Warehouseman, or any officer, agent or
servant of the warehouseman, issues or aids
in issuing a receipt knowing that the goods
have not actually been received or are not
under his actual control at the time of issuing
of such receipt.
LIABILITY: Imprisonment not exceeding 5 yrs
or by a fine not exceeding P10, 000.00, or by
both.
2. Warehouseman, or any officer, agent or
servant of warehouseman, fraudulently issues
or aids in fraudulently issuing a receipt for
goods knowing that it contains any false
statements.
LIABILITY: Imprisonment not exceeding 1 yr,
or by a fine not exceeding P2,000.00, or by
both.
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3. Warehouseman, or any officer, agent or
servant of warehouseman, issues or aids in
issuing a duplicate or additional negotiable
receipt for goods knowing that a former
negotiable receipt for the same goods is
outstanding and uncancelled, without plainly
placing “duplicate” (except in case of loss or
destroyed receipts)
LIABILITY: Imprisonment not exceeding 5 yrs,
or by a fine not exceeding P10,000.00, or by
both.
4. If there are goods deposited or held by the
warehouseman as an owner, either solely or
jointly with others, and that warehouseman, or
any officer, agent or his servant, knowing such
ownership, issues or aids in issuing a
negotiable receipt not stating such ownership.
LIABILITY: Imprisonment not exceeding 1 yr,
or by a fine not exceeding P2,000.00, or by
both.
5. Warehouseman, or any officer, agent or
servant of warehouseman, delivers goods out
of the possession of such warehouseman,
knowing that a negotiable receipt is
outstanding and uncancelled, without
obtaining the possession of such receipt at or
before the time of delivery
LIABILITY: Imprisonment not exceeding 1 yr,
or a fine not exceeding P2,000.00, or by both.
6. Any person who deposits goods to which he
has no title, or upon which there is a lien or
mortgage, and who takes, for such goods a
negotiable receipt which he afterwards
negotiates for value without disclosing his
want of title or existence of the lien or
mortgage.
LIABILITY: Imprisonment not exceeding 1 yr,
or by a fine not exceeding P2,000.00, or by
both.
GENERAL BONDED WAREHOUSE ACT
(ACT NO 3893 as amended by RA 247)
The purpose of the law is to protect depositors
by giving then recourse in case of the
insolvency of the warehouseman against the
bond filed by him.
To achieve this purpose, any person who
wants to engage in the business of receiving
commodities for storage is required by the Act
to first secure a license therefore from the
Department of Trade and Industry.
A warehouseman is a person engaged in the
business of receiving commodity for storage.
(Compare it in the Warehouse Receipt Act)
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2009 BAR OPERATIONS
Salient Features
1. License from the Bureau of Domestic
Trade required;
2. Amount of bond – 33 1/3% of the
value of the goods intended to be
stored in the warehouse;
3. Depositor given a direct recourse
against the bond filed by the
warehouseman;
4. All goods are insured against fire for
their value.
Business of receiving commodity for
storage
It includes entering into any contract or
transaction wherein:
1. The warehouseman is obligated to
return the very same commodity
delivered to him or to pay its value
2. The commodity delivered is to be
milled for the owner thereof
3. The commodity delivered is
commingled with the commodity
belonging to other persons, and the
warehouseman is obligated to return
commodity of the same kind or to
pay its value
Commodities that can be stored in a
bonded warehouse
Generally, these commodities could
be any raw, processed, manufactured or
finished product or by-product, goods, article,
or merchandise, either domestic or of foreign
production or origin, which may be traded or
dealt in openly and legally. Thus, prohibited
substances, the possession of which is
prohibited by law, may not be validly received
for storage in a bonded warehouse.
Bond by the warehouseman
1. The bond may either be cash or
property bond or bond issued by a
duly authorized bonding company
2. The amount of the bond must not be
less than 33 1/3 % of the market
value of the maximum quantity of the
commodity to be received by the
warehouseman.
3. It shall be conditioned as to respond
for the market value of the commodity
actually delivered and received at any
time by the warehouseman in case the
latter is unable to return the
commodity or to pay its value.
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Duties of a bonded warehouseman
1. To insure the commodity received
for storage against fire
2. To receive for storage any
commodity of the kind customarily
stored by him in the warehouse, so
far as his license or the capacity of the
warehouse will permit, without making
any discrimination between persons
desiring to avail themselves of
warehouse facilities
3. To keep complete record of all
commodities received by him, of the
receipts issued therefore, of the
withdrawals, of the liquidation, and of
all receipts returned to and canceled
by him.
Rights of a person injured by the breach by
the warehouseman of any of his obligation
under the act
He may sue on the bond put up by the
warehouseman to recover the damages he
may have sustained on account of such
breach. In case the bond given is not
sufficient to cover the full market value of the
commodity stored, he may sue on any
property or assets of the warehouseman not
exempt by law form attachment and execution.
Offenses penalized under the act
1. Engaging in the business of receiving
commodities for storage without the
proper license
2. Receiving a quantity of commodity
greater that that specified in the
license of the warehouseman
3. Conniving or entering into a
combination with an unlicensed
warehouseman for the purpose of
avoiding compliance with the
requirement of obtaining a license
before engaging in the business of
receiving commodities for storage