WAREHOUSE RECEIPT LAW particular form.
However it should contain the
(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 a 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:
1. Section 1 of the law provides that only a
warehouseman may issue warehouse
receipts, those not issued by a
warehouseman are not warehouse
receipts.
2. Warehouse receipts are not negotiable
instruments under the Negotiable
Instruments Law
Negotiable Warehouse Receipt
Instruments
The subject is money The subject is
merchandise
The instrument itself is The goods are the
the object of value object of value
Intermediate parties Intermediate partied are
become secondarily not liable for the
liable warehouseman’s failure
to deliver the goods.
3. No provision shall be inserted in a
negotiable receipt that it is non-
negotiable. Such provision if inserted,
shall be void.
4. The warehouse receipt is negotiable
under this act, meaning 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
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
The requirements are for the protection of the
depositor and those succeeding to his rights. If
the warehouseman omits any of the required
information and injury is caused thereby to a
person, the warehouseman shall be liable to the
said person for all damages caused by such
omission.
INSERTIONS BY THE WAREHOUSEMAN
The warehouseman may insert any other terms
and conditions PROVIDED it shall not;
1) be contrary to the provisions of this
Act and
2) in anywise, impair his obligations to
exercise that degree of care in the
safekeeping of the goods entrusted to
him
KEY: Not CI
The warehouseman is required to exercise that
degree of care which a reasonably careful man
would exercise in regard to similar goods of his
own.
Kinds of receipt a warehouseman may issue
1. Non-negotiable receipt – one which provides
that the goods will be delivered to the
depositor or to any other specified person
This may not be transferred by negotiation
but may be assigned
2. Negotiable receipt – one which that the
goods will be delivered to the bearer or to the
order of any person named in the receipt.
Non-negotiable mark – a non-negotiable receipt
shall have plainly placed upon its face by the
warehouseman issuing it as “non-negotiable” or
“not negotiable”. Failure to do so, 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.
A negotiable receipt cannot be converted into a
non-negotiable one such as by inserting a
provision in the receipt stating that it is non- DISTINCTIONS BETWEEN NEGOTIABLE AND
negotiable. Such a provision shall be void. NON-NEGOTIABLE WR
NEGOTIABLE WR NON-NEGOTIABLE
Duplicate receipts – when more than one WR
negotiable receipt is issued for the same goods, May be acquired May be acquired
the word “duplicate” shall be plainly placed upon through negotiation through transfer or
the face of every such receipt EXCEPT THE ONE assignment
FIRST ISSUED. Rights of the person Rights of the
to whom it is transferee:
Warranties if the term “Duplicate” is indicated negotiated (holder): 1. Title of the goods,
in the receipt? 1. Title to the goods as against the
Sec 15 provides that if the term “duplicate’ is of the person transferor (merely
indicated in the receipts it warrants the ff: negotiating the steps into the
a. That the duplicate is an accurate copy of the receipt and title of shoes);
original receipt; and the person to whose 2. Right to notify the
b. Such original receipt is uncancelled at the order the goods warehouseman of
date of the issue of the duplicate were to be delivered. the transfer and
2. Direct obligation of acquire the direct
Obligation of the warehouseman to deliver the warehouseman obligation of the
goods delivered with him to hold possession warehouseman to
A warehouseman is bound to deliver the goods of the goods for him, hold the goods for
upon a demand made either by; as if the him.
1. The person lawfully entitled to the warehouseman
possession of the goods or his agent (e.g. directly contracted
buyer in an auction sale, donee of the with him.
goods) Negotiation defeats
2. A person who is entitled to delivery by the the lien of the seller
terms of the non-negotiable receipt or who of the goods (Sec.
has written authority from the person so 49)
entitled either indorsed or written upon Goods represented Goods represented
another paper cannot be subject to can be subject to
3. Person in possession of a negotiable attachment or levy by attachment or levy
receipt execution, unless in by execution (Sec.
PROVIDED such demand is accompanied by: proper circumstances 42)
1. an offer to satisfy the warehouseman’s lien (Sec. 25)
2. an offer to surrender the receipt, if
negotiable with such endorsements as
would be necessary for negotiation of the LIABILITIES OF A WAREHOUSEMAN
receipts
3. a readiness and willingness to sign, when
the goods are delivered, an CIVIL CRIMINAL
acknowledgment that the goods had been Warehouseman or his agent
delivered. For damages 1. Issuance of
suffered by reason receipts for goods not
Refusal or failure to deliver – the burden shall be of failure to comply received (Sec. 50)
upon the warehouseman to establish the existence with legal duties 2. Issuance of receipt
of a lawful excuse for the refusal. Ownership is not containing false
a defense for the refusal to deliver goods statement (Sec. 51)
3. Issuance of
Doctrine of Estoppel - The warehouseman duplicate negotiable
cannot refuse to deliver the goods on the ground WR not marked as
that he has acquired title or right to the possession such (Sec.52)
of the same unless such title or right is derived: 4. Issuance of a
1. Directly or indirectly from a transfer made negotiable WR for
by the depositor at the time of the deposit goods of which he is an
for storage or subsequent thereto; owner without stating
2. From the warehouseman’s lien. (Sec.16) such fact of ownership
Neither can the warehouseman, as a depositary (Sec. 53)
for hire, set up an adverse title in another as an 5. Delivery of goods
excuse for his failure to deliver the property to his without obtaining
bailor on demand. (Sec.19) 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
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.
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 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 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
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
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
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 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 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 (Sec. 37):
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;
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.
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.
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.
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)
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.

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