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218

WAREHOUSE
RECEIPTS LAW

the warehouse receipt or quedan but he merely


retains the right to keep, and with the consent of
the owner to sell, them so as to satisfy the
obligation from the proceeds of the sale, this for
the simple reason that the transaction involved
is not a sale but only a mortgage or pledge, and
if the property covered by the quedans or
warehouse receipts is lost later without the fault
or negligence of the mortgagee or pledgee or
the transferee or endorsee of the warehouse
receipt or quedan, then said goods are to be
regarded as lost on account of the real owner,
mortgagor or pledgor.

(Act 2137)

I
PURPOSE AND COVERAGE
B.

Covers negotiable warehouse receipts,


which can only be issued by a
warehouseman in the business of
receiving commodities on deposit for
storage
For public and private warehouses
Bills of lading and quedans are governed
by Art 1507-1520 and 1636 of the Civil
Code (Ratio: Sugar centrals that issue
quedans are not warehousemen)
But note: a warehouse receipt is also
cited in Art 1636 as a document of title
All other negotiable receipts are covered
by the law on negotiable instruments

Form of Warehouse Receipt


Sec 2. Warehouse receipts need not be in
any particular form but every such receipt
must embody within its written or printed
terms:
a.
b.
c.
d.

e.
f.

II
NATURE/CHARACTERISTICS
OF WAREHOUSE RECEIPTS
A.

g.
h.

Function of Warehouse Receipt


Negotiation carries with it transfer of
title over the commodity covered by the
receipt (thus, it has the same function
as a negotiable bill of lading)

i.

EXCEPT:
Where
a
negotiable
warehouse receipt is indorsed and
delivered to a creditor as a collateral
for a loan
If commodity covered by receipt is lost
through a fortuitous event, the debtor
will bear loss
Martinez vs PNB (1953)
Where a warehouse receipt or quedan is
transferred or endorsed to a creditor only to
secure the payment of a loan or debt, the
transferee or endorsee does not automatically
become the owner of the goods covered by

The location of the warehouse


where the goods are stored
The date of the issue of the
receipt
The consecutive number of the
receipt
A statement whether the goods
received will be delivered to the
bearer, to a specified person, or
to a specified person in his order
The rate of storage charges
A description of the goods or of
the packages containing them
The
signature
of
the
warehouseman or his authorized
agent
If the receipt is issued for goods
of which the warehouseman is
owner, either solely or in common
with others, the fact of such
ownership, and
A statement of the amount of
advances made and of liabilities
incurred
for
which
the
warehouseman claims a lien. If
the precise amount of such
advances made or of such
liabilities incurred is, at the time
of the issue of, unknown to the
warehouseman or to his agent
who issues it, a statement of the
fact that advances have been
made or liabilities incurred and
the purpose thereof is sufficient.

Effect of Non-compliance:

Sec. 2. A warehouseman shall be


liable to any person injured thereby

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219

C.

for all damages caused by the


omission from a negotiable receipt
of any of the terms herein required.
If any of these requisites in Sec 2
are absent, it becomes a deposit
only

Kinds of Warehouse Receipts


1)

Non-negotiable
Sec. 4. A receipt in which it is
stated that the goods received will
be delivered to the depositor or to
any other specified person
Sec. 7. A non-negotiable receipt
shall have plainly placed upon its
face by the warehouseman issuing it
non-negotiable or not negotiable.
In case of the warehousemans
failure so to do, a holder of the
receipt who purchased it for value
supposing it to be negotiable, may,
at his option, treat such receipt as
imposing upon the warehouseman
the same liabilities he would have
incurred had the receipt been
negotiable.
This section shall not apply to
letters, memoranda, or written
acknowledgement of an informal
character.

2)

an original, even though the purchase


be after the delivery of the goods by
the warehouseman to the holder of
the original receipt.
Non-Negotiable
If goods are sold
by assignment,
assignee must
advise
warehouseman.
Until he does, his
rights may be
defeated by a
subsequent
attaching creditor,
or a subsequent
levy on execution,
or a vendors lien
or stoppage in
transitu that could
be enforced
against the
assignor

Negotiable
Sec. 5. 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
No provision shall be inserted in a
negotiable receipt that it is nonnegotiable. Such provision shall be
void.

3)

Duplicate Receipts
Sec. 6. When more than one
negotiable receipt is issued for the
same goods, the word duplicate
shall be plainly placed upon the face
of every such receipt, except the
first one issued. A warehouseman
shall be liable for all damages
caused by his failure to do so to any
one who purchased the subsequent
receipt for value supposing it to be

Negotiable
As long as the
goods covered by a
negotiable
warehouse receipt,
these goods may
not be attached
etc.

a.

Deliver to X this is nonnegotiable. To sell the goods, the


warehouse
receipt
must
be
assigned

b.

Deliver to X or order - this is


negotiable. The goods can be sold
by special endorsement and
delivery

c.

Deliver to X or bearer- this is


negotiable
because
it
is
deliverable to bearer. The goods
can be sold by delivery.

III
ASSIGNMENT AND
NEGOTIATION
Sec 41. A person to whom a negotiable
receipt has been duly negotiated acquires
thereby :
a.

Such title to the goods as the person


negotiating the receipt to him had or
had ability to convey to a 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

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220
b.

a purchaser in good faith for value,


and
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
and
contracted
directly with him.

B.

Sec 8. A warehouseman, in the absence


of some lawful excuse provided by this
Act, is bound to deliver the goods upon a
demand made either by the holder of a
receipt for the goods or by the depositor;
if such demand is accompanied with:
1. an offer to satisfy the warehouse
mans lien
2. an offer to surrender the receipt,
if
negotiable,
with
such
indorsements
as
would
be
necessary for the negotiation of
the receipt; and
3. a readiness and willingness to
sign,
when
the
goods
are
delivered, an acknowledgement
that they have been delivered, if
such signature is requested by
the warehouseman.
The
burden
shall
be
upon
the
warehouseman to establish the existence
of a lawful excuse for such refusal.

Note: Indorser does not guarantee that


warehouseman will comply with his duties (Sec
45)
Note: Negotiable Warehouse Receipt
different from a Negotiable Instrument
Negotiable
Instrument

Allow negotiation
If
deliberately
altered, it becomes
null and void
If originally payable
to bearer, it will
always remain so
even
if
it
is
endorsed specially
or in blank

Holder
in
due
course may obtain a
title better than that
which
the
party
negotiating to him
had

is

Negotiable
Warehouse Receipt

If altered, it is still
valid, but can be
enforced only accdg
to its original tenor
If originally payable
to bearer but is
endorsed specially,
it
will
become
deliverable to order
and can only be
negotiated
by
indorsement
and
delivery
Endorsee, even if a
holder
in
due
course, obtains only
such title as the
person negotiating
had over the goods

Sec 9. A warehouseman is justified in


delivering the goods to one who is :
1. the person lawfully entitled to the
possession of the goods, or his
agent;
2. a person who is either himself
entitled to delivery by the terms
of a non-negotiable receipt issued
for the goods, or who has written
authority from the person so
entitled either indorsed upon the
receipt or written upon another
paper; or
3. a person in possession of a
negotiable receipt by the terms of
which the goods are deliverable to
him or order, or to bearer, or
which has been indorsed to him
or in blank by the person to
whom delivery was promised by
the terms of the receipt or by his
mediate or immediate indorser.

IV
RIGHTS AND DUTIES
OF A WAREHOUSEMAN
A.

Degree of Care
Sec 3. A warehouseman may insert in a
receipt issued by him any other terms
and conditions provided that such terms
and conditions shall not:
xxx
a) in any wise impair his obligation to
exercise that degree of care which a
reasonably
careful
man
would
exercise in regard to similar goods
of his own

Obligation to Deliver Goods

C.

Liability for Misdelivery / Conversion


Sec. 10. When a warehouseman delivers
the goods to one who is not in fact
lawfully entitled to the possession of
them, the warehouseman shall be liable as
for conversion to all having a right of
property or possession in the goods if he

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221
delivered the goods otherwise than as
authorized by (b) and (c) of Sec 9
Though he delivered the goods as
authorized by said subdivisions he shall
be so liable, if prior to such delivery he
had either:
1.
2.

been requested, by or on behalf


of the person lawfully entitled,
not to make such delivery or
had
information
that
the
delivery about to be made was
to one not lawfully entitled

Sec. 17. If more than one person claims


the title / possession of the goods, the
warehouseman may, either as a defense
to an action or as an original suit,
require
all
known
claimants
to
interplead.
Sec. 18. If:
1. someone
other
than
the
depositor or person claiming
under him has a claim to the
title or possession of goods AND
2. the
warehouseman
has
information of such claim
the warehouseman shall be excused
from liability for refusing to deliver the
goods until he has had:
1. reasonable time to ascertain the
validity of the adverse claim OR
2. bring
legal
proceedings
to
compel claimants to interplead
d) When negotiable receipt not required
to be surrendered
Sec. 9. A warehouseman is justified in
delivering the goods to one who is :
a) the person lawfully entitled to the
possession of the goods, or his
agent;
b) a person who is either himself
entitled to delivery by the terms of a
non-negotiable receipt issued for the
goods, or who has written authority
from the person so entitled either
indorsed upon the receipt or written
upon another paper; or
c) a person in possession of a
negotiable receipt by the terms of
which the goods are deliverable to
him or order, or to bearer, or which
has been indorsed to him or in blank
by the person to whom delivery was
promised by the terms of the receipt
or by his mediate or immediate
indorser.

Sec. 14. Lost / destroyed receipts


Where a negotiable receipt has been lost /
destroyed, a court may order the delivery of
the goods upon
satisfactory proof of loss / destruction
giving of a bond with sufficient sureties to
be approced by the court to protect the
warehouseman from any liability or
exponse, which he or any person injured
by such delivery may incur by reason of
the original receipt remaining outstanding
A court may also order payment of
warehousemans reasonable costs and counsel
fees.
The delivery of goods shall not relieve the
warehouseman from liability to a person to
whom the negotiable receipt has been / shall
be negotiated for value without notice of the
proceedings / delivery of goods.
Sec. 36. After goods have been lawfully sold

to satisfy a warehousemans lien or

because
of
their
perishable
/
hazardous nature
the warehouseman shall not thereafter be
liable for failure to deliver the goods to the
depositor / owner of the goods / holder of the
receipt, even if such receipt be negotiable.
Estrada vs CAR (1961) :
(No surrender needed if ordered by court) The
SC ordered the manager of Moncada Bonded
Warehouse to release shares in palay without
the necessity of producing and surrendering
the original of the warehouse receipts issued
The SC stated our order must be carried out
in the meantime that this cases have not been
finally decided in order to ameliorate the
precarious situation in which said petitioners
find themselves.
e) Commingling of Goods
General Rule :
Sec. 22 A warehouseman shall keep the
goods so far separate from
the goods of other depositors and
from other goods of the same
depositor for which a separate
receipt has been issued
as to permit at all times the identification and
redelivery of the goods deposited.
Exception:
Sec. 23.
1. If authorized by agreement or custom
and

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222
2. Goods are fungible
the warehouseman may mingle with other
goods of the same kind and grade.
The various depositors shall own the entire
mass and each shall be entitled to such
portion as the amount deposited by him
bears to the whole.
F. Other Duties

If warehouseman fails to cancel receipt


when he delivers goods, he is liable if
receipt should turn up again (Sec 11)

Warehouseman should record partial


delivery on receipt, or else he is liable on
entire receipt (Sec 12)

If
alteration
is
authorized,
warehouseman is liable as altered. If not
authorized, warehouseman is liable as
originally issued (Sec 13)

Warehouseman is estopped to set up


title in himself (Sec 16)

Non-delivery or goods do not correspond


to description => warehouseman is
liable

possession of goods such that


a pledge by him at the time
of the deposit to one who
took the goods in good faith
for value would have been
valid.
Sec. 29. A warehouseman loses his lien :
a) by surrendering possession of the
goods
b) by refusing to deliver the goods when
a demand is made with which he is
bound to comply
Sec. 31. A warehouseman having a valid lien
against the person demanding the goods may
refuse to deliver the goods until the lien is
satisfied.

Remedies discussed in PNB vs. Sayo, 292


SCRA 202 (1998)
i. To refuse to deliver the goods until his
lien is satisfied (Sec 31)
ii. To sell the goods by public auction
and apply the proceeds to the value of
the lien (Sec 33 and 34)
iii. By other means allowed by law to a
creditor against his debtor, to collect
from the depositor all charges and
advances
which
the
depositor
expressly or impliedly contracted with
the warehouseman to pay (Sec 32)
iv. Other remedies allowed by law to
enforce a lien against personal
property (Sec 35)

The warehouseman may refuse to deliver


goods to any holder of the receipt when
the storage fee stipulated in the receipt
has not yet been paid

V
WAREHOUSEMANS LIEN
Sec. 27. A warehouseman shall have a lien
on the goods deposited or on the proceeds
thereof for

all lawful charges for storage and


preservation of goods

all
lawful
claims
for
money
advanced,
interest,
insurance,
transportation,
labor,
weighing,
coopering, and other charges in
relation to such goods

all reasonable charges for notice and


advertisements of sale

sale of goods where default has


been
made
in
satisfying
the
warehousemans lien
Sec. 28. A warehousemans lien may be
enforced:
a) against all goods belonging to the
person who is liable as debtor for
the claims
b) against all goods belonging to others
which have been deposited a any
time by the person who is liable as
debtor for the claims
IF such person had been so
entrusted
with
the

PNB vs. Se (1996)


While the PNB is entitled to the stocks of sugar
as the endorsee of the quedans, delivery to it
shall be effected only upon payment of the
storage fees. Imperative is the right of the
warehouseman to demand payment of his lien
at this juncture, because in accordance with
Section 29 of the Warehouse Receipts Law, the
warehouseman loses his lien upon goods by
surrendering possession thereof. In other
words, the lien may be lost where the
warehouseman surrenders the possession of
the goods without requiring payment of his
lien, because a warehouseman's lien is
possessory in nature.

But the warehouseman cannot refuse to


deliver the goods because of an adverse
claim of ownership (PNB vs. Sayo, 292
SCRA 202 (1998))

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