WAREHOUSE RECIEPT LAW
SCOPE
It covers all warehouses, whether public or
private, bonded or not.
Civil Code Applicability
The act applies to warehouse receipts issued
by a warehouseman as defined in Sec. 58 of
the act, while the civil code, to other cases
where the receipts are not issued by a
warehouseman as defined in this section.
Purposes of the Law
1. Regulate the status, rights, and
liabilities of the parties in a
warehousing contract;
2. Protect those who, in good faith and for
value, acquire negotiable warehouse
receipts by negotiation;
3. Render the title to, and right of
possession of, property stored in
warehouses easily convertible;
4. Facilitate the use of warehouse receipts
as documents of title;
5. In order to accomplish these, to place a
much greater responsibility on the
warehouseman
ISSUANCE of WAREHOUSE RECIEPT
Sec. 1 Warehouse receipts may be issued by
any warehouseman.
Note:
Warehouseman person lawfully engaged in
the business of goods for profit (Sec. 58)
Only a warehouseman or his duly authorized
agent may issue a warehouse receipt.
Warehouse building or a place where goods
are deposited and stored for profit.
Form
Warehouse receipts need not be in any
particular form. Provided, the following are
embodied in the receipt:
1. Location of the warehouse;
2. Date of issue prima facie date when
contract is perfected and when storage
charges shall begin.
3. Consecutive number of receipts
4. Person to whom goods are deliverable
prima facie entitlement to the goods.
5. Rate of storage charges consideration
for the contract
6. Description of goods/packages mere
fact that the goods are incorrectly
described does not make ineffective
the receipt when identity of the goods
is fully established by the evidence.
7. Signature of the warehouseman
8. Warehousemans ownership/interest in
the goods
9. Statement of advances and liabilities
incurred
Effect of Omission
- Validity of receipt not affected
- Warehouseman liable for damages
- Negotiability not affected
- Contract CONVERTED to ordinary
receipt
Freedom to Stipulate (LIMITATIONS)
A warehouseman may insert other terms,
except;
a. Contrary to the provisions of this act
(Ex. Exemption from liability due to
misdelivery)
b. Exemption from liability for
negligence/failure to exercise due
diligence
c. Contrary to law, morals, good customs,
public order, or public policy
Negotiability
Not the same as that of negotiable instruments
as provided for in Sec. 1 of the Negotiable
Instruments law because it is not an
unconditional promise/order to pay a sum
certain in money.
Negotiable only indicating that in the passage
of warehouse receipts, the law regards the
property which they describe as following
them.
Failure to Mark (Negotiable/Non-
Negotiable)
a. Negotiable must be written or printed
on the face of a negotiable warehouse
receipt. Failure to do so, would not
render it non-negotiable IF it contains
words of negotiability
b. Non-Negotiable WM has duty to mark
them as non-negotiable, otherwise
they shall be negotiable provided the
holder of such unmarked receipt
purchased it for value supposing it to
be negotiable.
OBLIGATIONS OF THE WAREHOUSEMAN
Principal Obligations:
WAREHOUSE RECIEPT LAW
1. Take care of the goods entrusted to his
safekeeping
2. Deliver them to the holder of the
receipt or depositor provided
conditions under Sec. 8 are fulfilled.
Requisites:
a. Offer to satisfy the warehouse lien;
b. Offer to surrender the receipt
c. Readiness and willingness to sigh,
when goods are delivered, if such is
requested by the WM
Demand
Demand is necessary in order that the duty to
deliver the goods arise, UNLESS, demand is
useless (ex. Impossible).
WMs lien
- Lien is loss upon delivery
- Offer to satisfy warehouse lien is
therefore required before delivery
Surrender of Receipt
This is subject to WAIVER.
Note:
If receipt is non-negotiable, any person lawfully
entitled to the possession of the goods may be
entitled to delivery without surrender of the
receipt.
Reason: No danger of receipt being in the
hands of another who acquire it in good faith
and for value therefore, confusion as to the
person entitled to receive the goods will not
happen
Person to WHOM Goods must be
Delivered
1. Person lawfully entitled to the
possession of the goods/his agent
2. Person entitled to delivery under a non-
negotiable receipt/with written
authority
3. Person in possession of a negotiable
warehouse receipt
Note:
Even if delivered to (2) and (3), WM may still be
liable if prior to the deliver, he was requested
not to make such delivery/he had received
notice of adverse claim/title of third person.
(CONVERSION)
Liability for Misdelivery
Similar to forged check, WM is still liable. He
must devise appropriate means by which
deception can be avoided.
Conversion
Unauthorized assumption and exercise of right
of ownership over the goods belonging to
another
Cancellation of Reciepts
a. When goods are delivered
- Failure to do so, would make the WM
liable if acquired by a purchases for
value and in good faith, regardless, if
there was already delivery or not.
Exception:
Purchaser acquired title from a thief or
person who does not have a title over
the receipt or property.
b. Receipt must be properly marked when
there is PARTIAL delivery
Altered Receipts
Effect:
1. Alteration Immaterial (tenor of receipt
not changed)
o Fraudulent or not, authorized or
not, WM liable on the ALTERED
receipt according to the
ORIGINAL tenor
2. Material Alteration (tenor changed) +
Authorized
o WM liable to the terms as
altered
3. Material Alteration + Innocently made
o WM liable to the original
4. Material alteration + Fraud
o Purchase of receipt for value
liable to the original tenor
o Alterer and purchaser with
notice original tenor but
limited only to the delivery as
he is excused from liability
Note:
A bona fide holder acquires no right to the
goods under a negotiable receipt which was
a. Lost
b. Stolen
c. Indorsement of the depositor
has been forged
Lost/Destroyed Receipts
WM is not obliged to deliver should the holder
fail to surrender the receipt because of its lost
or destruction. However, a competent court
may order the delivery when;
a. Upon proof of the loss/destruction of
the receipt; and
b. Upon the giving of a bond with
sufficient sureties to be approved by
the court
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Duplicate
It must be plainly placed by the WM upon the
face of every such receipt except the one first
issued.
WM warrants:
1. Duplicate is an accurate copy of the
original receipt; and
2. Such original receipt is uncancelled at
the date of issue of the duplicate
Note:
Except for the BREACH of this warranty, the
duplicate imposes no liability. WM may not be
compelled to deliver the goods by virtue of the
duplicate, only unless the procedure in Sec. 14
is followed (See Lost/destruction)
Ownership NOT a Defense for Refusal to
Deliver
WM cannot refuse delivery on the ground that
he has acquired title/right of possession unless
such is derived:
a. Directly/indirectly from a transfer made
by a depositor at the time of the
deposit for storage
b. From the warehousemans lien.
Several Claimants
He may deliver to the person he finds entitled
to the possession of the goods but is liable if
such was a mistake.
Proper Action: INTERPLEADER
Note:
If he neither interpleads/investigates, after the
lapse of a reasonable time, he will be held
guilty of conversion.
Non-existence/Misdescription of Goods
General Rule: WM 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.
Exception:
If the description consists merely of marks or
labels upon the goods/packages containing
them, etc. the warehouseman is not liable even
if the goods are not of the kind as indicated in
the marks/labels.
Note:
No stipulation may be valid when it aims to
exempt the WM from any liability. A limitation
as to the liability, however, may be valid.
Commingling of Deposited Goods
GR: a WM may not mingle goods belonging to
depositors
Exception:
Fungible goods with goods of the same kind
and grade, provided that he is authorized by
agreement/custom.
(Owners become co-owners)
Note:
Art. 1976 (Civil Code) unless there is a
stipulation to the contrary, the depository may
commingle grain/other articles of the same
kind and quality.
Attachment or Levy of Negotiable Receipt
While in the possession of the WM, the goods
cannot be attached/levied upon under an
execution unless:
1. Document is first surrendered;
2. Negotiation is enjoined;
3. Document is impounded by the court
The WM cannot be compelled to deliver until:
1. Surrender of the receipt; or
2. Impounded by the court
The rule on attachment and Levy is not
applicable when:
1. Person depositing is not the owner (ex.
Thief)
2. Actions for recovery/manual recovery
of goods by the real owner
3. Attachment is made before the
insurance of the negotiable receipt of
title
Remedy of Creditor: ATTACHMENT OF THE
RECEPT in the debtors possession and not the
property.
WAREHOUSEMANS LIEN (EXTENT)
1. All lawful charges for storage and
preservation of the goods;
2. All lawful claims for;
a. Money advanced
b. Interest
c. Insurance
d. Transportation
e. Labor
f. Weighing
g. Cooperating
h. Other charges in relation to goods
3. All reasonable charges and expenses
for notices and advertisements of sale
4. Sale of the goods where default had
been made in satisfying the WMs lien
Goods Subject to LIEN
WAREHOUSE RECIEPT LAW
a. Goods of the depositor debtor with authority to make a valid
b. Goods of the persons stored by the pledge
depositor who is liable to the WM as