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WAREHOUSE RECEIPTS LAW

(Act No. 2137) PURPOSES:


To prescribe the rights and duties of a warehouseman To regulate the relationship between a warehouseman and; i. ii. iii. iv. The depositor of the goods The holder of the warehouse receipt The person lawfully entitled to the possession of the goods Other persons

DEFINITIONS
Warehouseman A person lawfully engaged in the business of storing goods for profit (Sec. 58)

Warehouse Receipts A written acknowledgment by a warehouseman that he has received and holds certain goods therein described in store for the person to whom it is issued It is a contract between the owner of the goods and the warehouseman, the latter to store goods and the former to pay the compensation for that service It is issued by any warehouseman (Sec.1) whether public or private, bonded or not, or a person authorized by the warehouseman

ESSENTIAL TERMS: a. b. c. d. Location of the warehouse Date of issue of the receipt Number of the receipt Statement whether the stored goods are deliverable to bearer, to specified person or his order e. Storage charges f. Description of the stored goods g. Signature of the warehouseman or his agent

h. Fact of the warehousemans ownership in the goods, if any i. Statement of advances made and liabilities incurred by depositor for which the lien was constituted (Sec. 2) If the warehouseman omits any of the required information from the receipt and injury is caused thereby to a person, the warehouseman shall be liable to the said person for all damages caused by such omission

TERMS WHICH CANNOT BE INCLUDED: a. Terms contrary to WRL b. Terms reducing the degree of diligence or his obligation to exercise that degree of care in the safe-keeping of the goods entrusted to him which is a reasonably careful man would exercise in regard to similar goods of his own (Sec. 3)

KINDS OF WAREHOUSE RECEIPT


A. Negotiable Where the goods are deliverable to bearer or to the order of the person specified. (Sec. 5) It is negotiated by either delivery or indorsement Persons who may negotiate a warehouse receipt: a. Owner thereof; b. Any person to whom the possession or custody of the receipt has been entrusted by the owner, if, by the terms of the receipt, the warehouseman undertakes to deliver the goods to the order of the person to whom possession or custody of the receipt has been entrusted, or if, at the time of such entrusting, the receipt is in such form that it may be negotiated by delivery (Sec. 40) Note: (2nd par.) even a thief of the instrument or one who defrauds another can negotiate the instrument but it should be in such form that he need not forge any signature (Secs. 40 and 47)

B. Non-negotiable The goods received will be delivered to the depositor or to any specified person (Sec. 4) The receipt should be stamped on its face nonnegotiable, otherwise, a holder believing it to be negotiable may treat the receipt as negotiable (Sec. 7) It is transferred by its delivery to the transferee accompanied by a deed of assignment, donation or other form of transfer

NEGOTIATION OF WAREHOUSE RECEIPTS A. Negotiation by Delivery only (Sec. 37) a. Where, by the terms of the receipts, the warehouseman undertakes to deliver the goods to the bearer b. Where, by the terms of the receipts, the warehouseman undertakes to deliver the goods to the order of a specified person, and such person or a subsequent indorsee of the receipt has indorsed it in blank or to bearer A bearer instrument specially indorsed converts the negotiability from mere deliver to indorsement for complete negotiation

B. Indorsement coupled with delivery a. A warehouse receipt is an order document if it states that the goods are to be delivered to the order of a person named therein It can be negotiated through indorsement of the specified person so named (indorsement plus delivery)

b. EFFECTS: if indorsement is necessary but the negotiable receipt was only delivered:

i. The transferee acquires title against the transferor ii. There is no direct obligation of the warehouseman iii. The transferee can compel the transferor to complete the negotiation by indorsing the instrument (Sec. 43). The negotiation takes effect on the date of indorsement only.

EFFECTS OF NEGOTIATION OF WAREHOUSE RECEIPT Negotiation of the document has the effect of manual delivery so as to constitute the transferee the owner of the goods Negotiation carries with it both title to and possession of the property Transfer of title and possession is accomplished because the person to whom the instrument is negotiated acquires the following rights (Sec. 41): a. Title to the goods as the person negotiating the receipt to him had or had ability to convey to the purchaser in good faith for value, and also such title to the goods as the depositor or person to whose order the goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith for value, and; b. The direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt as fully as if the warehouseman had contracted directly with him

VENDORS LIEN The transfer of title to the purchaser for value is not affected by the rights of the vendor (Sec. 49) Where the negotiable receipt has been issued for goods, no sellers lien or right of stoppage in transit shall defeat the rights of any purchaser for value in good faith to whom such receipt has been negotiated, whether such

negotiation be prior or subsequent to the notification to the warehouseman who issued such receipt of the sellers claim to a lien or right of stoppage in transit The warehouseman cannot be obliged to deliver the goods to an unpaid seller unless the receipt is first validly surrendered for cancellation (Sec. 49). This means that the unpaid seller has validly reacquired the receipt from the holder for value.

PLEDGE OF RECEIPT Pledge also enjoy preference over unpaid seller As to legal title to the property covered by a warehouse receipt, a pledge is on the same footing as a vendee except that the former is under obligation of surrendering his title upon the payment of the debt secured. (BPI vs. J.R. Herridge)

WARRANTIES If the warehouseman failed to deliver the goods, the indorser or one who negotiates for value shall not be liable to the bona fide purchaser. He does not guarantee the performance of the obligation of the warehouseman as the case may be (Sec. 45) A person who, for value, negotiates or transfers a receipt by indorsement or delivery, including one who assigns for value a claim secured by a receipt, unless a contrary intention appears, warrants; The receipt is genuine, That he has legal right to negotiate or transfer it, That he has knowledge of no fact which would impair the validity or worth of the receipt, and 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 to transfer

without a receipt of the goods represented thereby NON-NEGOTIABLE RECEIPTS The goods received will be delivered to the depositor or to any specified person (Sec. 4) The receipt should be stamped on its face nonnegotiable, otherwise, a holder believing it to be negotiable may treat the receipt as negotiable (Sec. 7)

RIGHTS OF THE TRANSFEROR OF NON-NEGOTIABLE RECEIPT (Sec. 42)

a. The title of the goods subject to the terms of any agreement with the transferor b. The right to notify the warehouseman of the transfer to him of such receipt and thereby to acquire the direct obligation of the warehouseman to hold possession of the goods for him according to the terms of the receipt It is transferred by its delivery to the transferee accompanied by a deed of assignment, donation or other form of transfer Prior to the notification of the warehouseman by the transferor or transferee to the goods of a non-negotiable receipt, the title of the transferee to the goods and the right to acquire the obligation of the warehouseman MAY BE DEFEATED o by the LEVY OF AN ATTACHMENT OR EXECUTION upon the goods by the creditor of the transferor o by a notification to the warehouseman by the transferor

o a subsequent purchaser from the transferor of a subsequent sale of the goods by the transferor

Negotiable Warehouse Receipt May be acquired through negotiation (delivery / indorsement) Rights of the person to whom it is negotiated (holder): 1. title to the goods of the person negotiating the receipt and title of the person to whom the goods are to be delivered 2.direct obligation of the warehouseman to hold goods for him, as if directly contracted with him Negotiation defeats the lien of the seller of the goods (Sec. 49) Goods cannot be subject to attachment or levy by execution, unless in proper circumstances (Sec. 25)

Non-Negotiable WR May be acquired through transfer or assignment Rights of the transferee: 1. title of the goods, as against the transferor (merely steps into the shoes) 2. right t notify the warehouseman of the transfer and acquire the direct obligation of the latter to hold goods for him

Goods represented can be subject to attachment or levy by exeution (Sec. 42)

DUTY OF THE WAREHOUSEMAN WHEN: upon demand made by the holder of a receipt or by the depositor, unless there are legal excuse, if the demand is accompanied by;

offer to satisfy warehousemans lien offer to surrender the receipt, if negotiable, the necessary indorsement should be accomplished

readiness and willingness to sign an acknowledgement when the goods are delivered, if such signature is requested by warehouseman (Sec. 8)

TO WHOM: to the person lawfully entitled to the goods the person named in a non-negotiable instrument receipt or to his assignee to the lawful holder of a negotiable receipt (Sec. 9)

WAREHOUSEMAN IS LIABLE FOR MISDELIVERY o he delivers the goods to one who is not in fact lawfully entitled to the possession of the goods o liable even if delivery was made to a person holding a nonnegotiable receipt or a negotiable receipt, as provided under Section 9, if prior to such delivery he had either: been requested not to make such delivery by the person lawfully entitled to a right of property or possession in the goods

had information that the delivery about to be made was to one not lawfully entitled to the possession of the goods

WAREHOUSEMANS DEFENSES FOR NON-DELIVERY OR MISDELIVERY -

loss or destruction of the goods without the fault of the bailee failure to satisfy the bailees lien (Sec. 8) failure to surrender the negotiable document of title (Sec. 8) lack of willingness to sign acknowledgement (Sec. 8) receipt by the bailee of a request by or on behalf of the person lawfully entitled to a right of property or possession in the goods, not to make such delivery (Sec. 10) the bailee has information that the delivery about to be made was to one not lawfully entitled to the possession of the goods (Sec. 10) delivery to a claimant with better right

attachment or levy of the goods by a creditor where the document is impounded (Sec. 25) where the document of title is attached by a creditor (Sec. 26)

(PNB vs. Sayo, Jr. No. 129918, July 9, 1998)

WAREHOUSEMANS LIEN EXTENT: a. lawful charges for storage and preservation of the goods b. lawful claims for money advanced, interest, insurance, transportation, labor, weighing, cooperating, and other charges and expenses in relation to such goods c. reasonable charges and expenses for notice and advertisement of the sale, and the sale of the goods where default had been made in satisfying the warehousemans lien (Sec. 27) it is necessary however, that the charges that are present at the time of the issuance of the receipt must be so stated in the receipt with the amounts thereof specified if the existing charges are not stated, the warehouseman shall have no lien thereon he shall have lien only for charges for storage of goods subsequent to the date of the receipt unless the receipt expressly enumerated other charges for which a lien is claimed (Sec. 30)

PROPERTIES THAT ARE SUBJECT TO LIEN (Sec. 28) a. all deposited goods of the person liable for the lien; b. all good belonging to others deposited by the person liable for the lien. LOSS OF LIEN (Sec. 29) a. by surrendering the possession thereof, or b. by refusing to deliver the goods when a demand is made with which he is bound to comply

PRESENCE OF ADVERSE CLAIMANT ADVERSE CLAIMANT: if more than one person claim the title or possession of the goods, the warehouseman may, either as a defense to an action brought against him for non-delivery of the goods or as an original suit, whichever is appropriate, require all known claimants to interplead (Sec. 17)

OPTIONS: (1973 Bar)


a. he can REFUSE TO DELIVER the goods to any one of

the claimants until he had reasonable time to check the validity of the claims
b. he may FILE ACTION FOR INTERPLEADER and allow

the claimants to prove their claims or in a case an action filed against him, set up the defense that there are two or more claimants

RULES ON ATTACHMENT OR LEVY ON EXECUTION a. NEGOTIABLE RECEIPT Goods cannot be attached or levied in execution

UNLESS: o Receipt is first surrendered o Negotiation is enjoined o Receipt is impounded by the court (Sec. 25) CREDITORS REMEDY o Seek for the injunction or attachment of the receipt or seek aid from the courts to compel the debtor to satisfy claims by means allowed by law in regards to property which cannot be readily attached or levied upon by ordinary process (Sec. 29) b. NON-NEGOTIALE RECEIPT

Goods can be attached, provided it is done prior to the notification of the warehouseman of the transfer (Sec. 42)

REASON: o Absent such notice, both the warehouseman and the sheriff have a right to assume that the goods are still owned by the person whose name appears in the receipt

Negotiable Instrument

Negotiable Warehouse Receipt Merchandise Goods deposited None (for failure to deliver goods) Valid but unenforceable only in accordance with its original tenor Converted if specially indorsed Only the title which the party negotiating had over the goods

Subject Object of Value Liability to intermediate parties Effect of deliberate alteration Conversion from bearer to order Significance of holder in Due course

Money Instrument itself Secondary

Null and void Original bearer always bearer instrument Obtain better title

OTHER OBLIGATIONS OF THE WAREHOUSEMAN Failure to mark a receipt non-negotiable (Sec. 7): The holder may treat such receipt as imposing upon the warehouseman the same liabilities he would have incurred had the receipt been negotiable Excludes the original holder (estoppel)

Failure to cancel negotiable receipt when goods are delivered (Sec. 11):

Warehouseman shall be liable for failure to deliver the goods to anyone who purchases for value in good faith such receipt whether such purchaser acquired title to the receipt before or after delivery of the goods by the warehouseman Also be guilty of a crime punishable by fine or imprisonment or by both (Sec. 54)

Exception: a. Have been lawfully sold to satisfy the warehousemans lien; b. Have been lawfully sold or disposed of because of their perishable or hazardous nature (Sec. 36)

Altered Receipts Alteration is immaterial Liable according to the terms of the receipts as originally issued

Alteration is authorized Liable according to the terms of the receipt as altered

Alteration is unauthorized but without fraudulent intent Liable according to the terms of the receipts as they were before the alteration

Alteration is material and with fraudulent intent Liable according to the terms of the receipts as originally issued even: o To a purchaser of the receipt for value without notice of the alteration o To person who made the alteration and to any person who took it with notice of the alteration In this case, warehouseman is excused from any other liability

For Non-existence or Misdescription of Goods Liable to the holder of a receipt for damages caused by the non-existence of the goods or by the failure of the goods to

correspond with the description thereof in the receipt at the time of its issue Exception: No liability shall attach if the goods are described in the receipt merely; a. By statement of the marks or labels upon them or upon the packages containing them b. By statement that the goods are of certain kind or that the packages containing the goods contain goods of a certain kind or by words of similar import For Commingled Goods Liable severally to each depositor for the care and redelivery of the depositors share of the mass of commingled goods to the same extent and under the same circumstances as if the goods had been kept separate (Sec. 24)

Issuing Goods not Received (Sec. 50) Issuing Receipt containing False Statements (Sec. 51) Guilty of the crime punishable by fine and imprisonment, or by both, if he issues a receipt for goods that have not been actually received by him or are not under his actual control at the time of issuance of the receipt