The Warehouse Receipts Law The Warehouse Receipts Law (Act No.

2137, as amended) Purpose o the WRL To prescri!e the ri"hts and duties o a warehouseman# !. To re"u$ate the re$ationship !etween a warehouseman and the depositor o "oods, or the ho$der o a warehouse receipts or the "oods, or other persons# c. To render tit$e to, and ri"ht o possession o , propert% stored in warehouse more easi$% con&erti!$e# d. To protect those who, in "ood aith and or &a$ue, ac'uire ne"otia!$e warehouse receipts !% ne"otiation. a. Warehouse Receipt (t is a written ac)now$ed"ement !% a warehouseman that he has recei&ed and ho$ds certain "oods therein descri!ed in store or the person to whom it is issued. (Ta$en"tan *ros. + ,ons &s. -A, ..R. No. L/110121, ,ept. 21, 1334) 2. (t is a simp$e written contract !etween the owner o the "oods and the warehouseman to pa% the compensation or that ser&ice. 3. (t is a !i$atera$ contract. (t imports that "oods are in the hands o a warehouseman and is a s%m!o$ica$ representation o the propert% itse$ . 1. Warehouseman 5 *ai$ee 6 A person (natura$ or 7uridica$) $aw u$$% en"a"ed in the !usiness o storin" "oods or pro it. . Who 8a% (ssue Warehouse Receipts 9n$% a warehouseman ma% issue warehouse receipts to put said warehouse receipts within the pur&iew o the WRL. . :orm o Receipts# ;ssentia$ Terms 1) The $ocation o the warehouse where the "oods are stored# 2) The date o issue o the receipt# 3) -onsecuti&e num!er o the receipt# 4) A statement whether the "oods recei&ed wi$$ !e de$i&ered to the !earer, to a speci ied person, or to a speci ied person or his order# 1) The rate o stora"e char"es# <) A description o the "oods or o the pac)a"e containin" them# 7) The si"nature o the warehouseman which ma% !e made !% his authori=ed a"ent# 2) ( the receipt is issued or "oods o which the warehouseman is owner, either so$e$% or 7oint$% or in common with others, the act o such ownership# 3) A statement o the amount o ad&ances made and o $ia!i$ities incurred or which the warehouseman c$aims as $ien. ( the precise amount or such ad&ances made or o such $ia!i$ities 1)

incurred is, at the same time o the issue o the receipt, un)nown to the warehouseman or his a"ent who issues it, a statement o the act that ad&ances ha&e !een made or $ia!i$ities incurred and the purpose thereo is su icient. ; ect o 9mission o the ;ssentia$ -ontents 1) A warehouseman sha$$ !e $ia!$e to an% person in7ured there!% a$$ dama"es caused !% the omission rom a n"otia!$e receipt o an% o the terms herein re'uired# 2) >a$idit% o receipt not a ected# 3) Ne"otia!i$it% o receipt not a ected. Terms that -annot !e (nc$uded in the Warehouse Receipt 1) Those contrar% to an% pro&ision o the $aw# 2) (n an% wise impair the warehouseman?s o!$i"ation to e@ercise that de"ree o care in the sa e)eepin" o the "oods entrusted to him which a reasona!$% care u$ man wou$d e@er&ise with re"ard to simi$ar "oods o his own. Aocument o Tit$e to .oods 6 An% document used in the ordinar% course o !usiness, in the sa$e5trans er o "oods, as proo o possession or contro$ o the "oods, or authori=in" or purportin" to authori=e the possessor o the document to trans er or recei&e either !% indorsement or !% de$i&er%, "oods represented !% such document. (Art. 1<3<,N--) -ommon T%pes o Aocument o Tit$e *i$$ o Ladin" / written ac)now$ed"ement o the receipt o "oods and an a"reement to transport and to de$i&er them at a speci ied p$ace to a person named therein or on his order. 2) Buedan 6 warehouse receipt that co&ers su"ar. 3) Aoc) Warrant 6 warrant "i&en !% doc) owners to the owner o merchandise imported and warehoused on the doc), upon the aith o the !i$$s o $adin", as a reco"nition o his tit$e to the "oods. 9n *oard *i$$ o Ladin" 6 issued when the "oods ha&e !een actua$$% p$aced a!oard the ship with &er% reasona!$e e@pectation that the shipment is as "ood as on its wa%. Port *i$$ o Ladin" 6 issued !% the carrier to whom the "oods ha&e !een de$i&ered and the &esse$ indicated in the !i$$ o $adin" !% which the "oods are to !e shipped is a$read% in the port where the "oods are he$d or shipment. :unctions o Aocuments o Tit$e ;&idence o receipt o "oods# Represents the "oods and there ore operates as trans erra!$e document that carries with it the contro$ o&er the "oods. (t is used to pass tit$e to the "oods# 3. (t is a contract. 1. 2.

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8eanin" o Ne"otia!$e Cnder the Act (t indicates that in the passa"e o warehouse receipts throu"h the channe$s o commerce, the $aw re"ards the propert% which the% descri!e as o$$owin" them and "i&es to their re"u$ar trans er !% indorsement the e ect o manua$ de$i&er% o the thin"s speci ied in them. Ne"otia!$e Warehouse Receipts A ne"otia!$e warehouse receipt is one in which it is stated that the "oods recei&ed wi$$ !e de$i&ered eitherD a) To the !earer# or !) To the order o an% person named in such receipt. (,ec. 1, WRL) Non/Ne"otia!$e Warehouse Receipts A non/ne"otia!$e warehouse receipt is one in which it is stated that the "oods recei&ed wi$$ !e de$i&ered to the depositor or to an% speci ied person. Aup$icate Receipts 8ust *e 8ar)ed When more than one is issued or the same "oods, the word Edup$icateE sha$$ !e p$ain$% p$aced upon the ace o e&er% such receipt, e@cept the irst one issued. A warehouseman sha$$ !e he$d $ia!$e or dama"es or ai$ure to do so to an%one who purchased the su!se'uent receipt or &a$ue supposin" it to !e ori"ina$, e&en thou"h the purchaser !e a ter the de$i&er% o the "oods !% the warehouseman to the ho$der o the ori"ina$ receipt. Ne"otiation o Warehouse Receipts A. *% Ae$i&er% 1) Where !% the terms o the receipt, the warehouseman underta)es to de$i&er the "oods to the !earer# or 2) Where !% the terms o the receipt, the warehouseman underta)es to de$i&er the "oods to the order o a speci ied person, and such person or a su!se'uent indorsee o the receipt has indorsed it in !$an) or !earer. The !earer document is not a$wa%s a !earer document. A specia$ indorsement has the e ect o con&ertin" the !earer instrument into an order instrument. *. 1) 2) a) !) c) *% (ndorsement -oup$ed with Ae$i&er% ( the receipt states that the "oods are to !e de$i&ered to the order o a person named therein# ; ects when indorsement is necessar% !ut the ne"otia!$e receipt was on$% de$i&eredD The trans eree ac'uires tit$e a"ainst the trans eror# There is no direct o!$i"ation o the warehouseman to de$i&er the "oods to such ho$der o the receipt# The trans eree can compe$ the trans eror to comp$ete the ne"otiation !% indorsin" the instrument (,ec.43, WRL).The ne"otiation ta)es e ect on the date o the indorsement on$%.

; ect o Ne"otiation o Warehouse Receipt Ne"otiation o the document has the e ect o manua$ de$i&er% so as to constitute the trans eree the owner o the "oods. Ri"hts o a Person to Whom a Receipt Fas *een N;.9T(AT;AD 1) (n case o receipt ne"otia!$e !% de$i&er%, such tit$e to the "oods as the person ne"otiatin" the receipt to him had or had a!i$it% to con&e% to a purchaser in "ood aith or &a$ue# 2) (n case o receipt ne"otia!$e !% indorsement coup$ed !% de$i&er%, such tit$e to the "oods as the depositor or person to whose order the "oods were to !e de$i&ered !% the terms o the receipt has or had a!i$it% to con&e% to a purchaser in "ood aith or &a$ue# 3) The direct o!$i"ation o the warehouseman to ho$d possession o the "oods or him accordin" to the terms o the receipt as u$$% as i the warehouseman had contracted direct$% with him. (,ec.41, WRL) Ri"hts o a Person to Whom a Receipt Fas *een TRAN,:;RR;AD 1) The tit$e to the "oods as a"ainst the trans eror with respect to a ne"otia!$e warehouse receipt not du$% ne"otiated (mere$% steps into the shoes)# 2) The ri"ht, therea ter, to ac'uire the o!$i"ation o the warehouseman to ho$d the "oods or him# and 3) ( the receipt is non/ne"otia!$e, such person ac'uires the ri"ht to noti % the warehouseman o the trans er thereo . (,ec. 42, WRL) Prior to the noti ication o the warehouseman !% the trans eror or trans eree o a non/ne"otia!$e receipt, the tit$e o the trans eree to the "oods and the ri"ht to ac'uire the o!$i"ation o the warehouseman ma% !e de eated !%D 1) The $e&% o an attachment or e@ecution upon the "oods !% a creditor o the trans eror# or 2) A noti ication to the warehouseman !% the trans eror or a su!se'uent purchaser rom the trans eror o the su!se'uent sa$e o the "oods !% the trans eror. / *ut/ An unpaid se$$erGs $ien or ri"ht o stoppa"e in transitu cannot de eat the ri"ht o the ho$der in "ood aith o NWR. .oods co&ered !% NWR cannot !e attached or $e&ied upon un$ess receipt is surrendered. WarehousemanGs Ae enses or Non/Ae$i&er% or 8isde$i&er% Loss or destruction o the "oods without the au$t o the !ai$ee :ai$ure to satis % the !ai$eeGs $ien :ai$ure to surrender a ne"otia!$e document o tit$e Lac) o wi$$in"ness to si"n ac)now$ed"ement Ae$i&er% to a c$aimant with !etter ri"ht

1) 2) 3) 4) 1)

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Where the document o tit$e is attached !% a creditor 7) Receipt !% the !ai$ee o a re'uest !% or on !eha$ o the person $aw u$$% entit$ed to a ri"ht o propert% or possession in the "oods, not to ma)e such de$i&er% 2) The !ai$ee has in ormation that the de$i&er% a!out to !e made was to one not $aw u$$% entit$ed to the possession o the "oods 3) Attachment5$e&% o the "oods !% a creditor where the document is surrendered or its ne"otiation is en7oined or the document is impounded (n -ase o Ad&erse -$aim, the *ai$ee 8a% 6 Re use to de$i&er the "oods to an%one o them unti$ he has had reasona!$e time to chec) the &a$idit% o the c$aims 2) :i$e as action or interp$eader and a$$ow the c$aimants to pro&e their c$aims or in case an action is i$ed a"ainst the !ai$ee, he can set up the de ense o ad&erse c$aims 1) WarehousemanGs 9!$i"ations A. Cnder the WRL 1) Ae$i&er the "oods upon a demand made either !% the ho$der o a receipt or the "oods or depositor. 2) 9!$i"ation to de$i&er arises on$% i the demand is accompanied !%D a) An o er to satis % the warehousemanGs $ien# !) An o er to surrender the receipt, i ne"otia!$e, with such indorsement as ma% !e necessar% or the ne"otiation o the receipt# and c) A readiness and wi$$in"ness to si"n, when the "oods are de$i&ered, an ac)now$ed"ement that the% ha&e !een de$i&ered, i such si"nature is re'uested !% the warehouseman. *. Cnder the .enera$ *onded Warehouse Law (Act No. 3233# R.A. 247) 1) ,ecure a $icense rom the Aepartment o Trade and (ndustr%# 2) :i$e a !ond e'ui&a$ent to 33 HI o the mar)et &a$ue o ma@imum 'uantit% o "oods to !e recei&ed or the protection o the depositors# 3) Not discriminate and must open his warehouse to the pu!$ic# 4) *e $ia!$e in the amount e'ui&a$ent to dou!$e the mar)et &a$ue o the "oods in case o dama"e to the "oods !ecause the warehouseman accepts "oods in e@cess o the capacit% o his warehouse# and 1) (nsure the "oods a"ainst ire. Lia!i$it% o Warehouseman or ,to$en and Aeposited .oods ( sto$en "oods are deposited !% the thie with a warehouseman, the $atter sha$$ not !e $ia!$e to the ho$der o the receipt e&en i he de$i&ers the "oods to the rea$ owners without the receipt !ein" surrendered to him. (,ec.11 and 141, WRL) WarehousemanGs Lien

A warehouseman sha$$ ha&e a $ien on the "oods deposited or on the proceeds thereo in his hands orD 1. A$$ $aw u$ char"es or stora"e and preser&ation o the "oods# 2. A$$ $aw u$ c$aims or mone% ad&anced, interest, insurance, transportation, $a!or, wei"hin", cooperin", and other char"es and e@penses in re$ation to such "oods# and 3. A$$ reasona!$e char"es and e@penses or notice and ad&ertisements o sa$e, and or the sa$e o the "oods where de au$t had !een made in satis %in" the warehousemanGs $ien. Remedies o a Warehouseman to ;n orce Fis Lien Re use to de$i&er the "oods unti$ his $ien is satis ied (,ec. 31, WRL)# 2) ,e$$ the "oods and app$% the proceeds thereo to the &a$ue o the $ien (,ections 33 + 34, WRL)# 3) *% other means a$$owed !% $aw to a creditor a"ainst his de!tor (,ec. 32, WRL)# 4) ,uch other remedies a$$owed !% $aw or the en orcement o a $ien a"ainst persona$ propert% (,ec. 31, WRL). 1) Loss o Lien WarehousemanGs $ien is $ost either !%D 1) ,urrenderin" possession thereo # or 2) Re usin" to de$i&er the "oods when a demand is made with which he is !ound to comp$% (,ec. 23, WRL). When warehouseman withho$ds the de$i&er% o the "oods without an% &a$id reason, he is $ia!$e or the $oss o the "oods and the $ia!i$it% cannot !e e$iminated !% proo o e@ercise o due di$i"ence. Attachment or Le&% Ne"otia!$e receipt 6 the "oods cannot !e attached5$e&ied in e@ecution un$essD 1) The receipt is irst surrendered 2) (ts ne"otiation is en7oined 3) The receipt is impounded !% the court (,ec. 21, WRL) -reditor?s Remedies to Reach Ne"otia!$e Receipt A creditor whose de!tor is owner o a ne"otia!$e warehouse receipt ma% see) or the attachment o the receipt or see) aid rom the courts to compe$ the de!tor to satis % c$aims !% means a$$owed !% $aw in re"ard to propert% which cannot readi$% !e attached or $e&ied upon !% ordinar% $e"a$ process. (,ec. 2<, WRL) 1) (t does not app$% whenD The depositor is not the owner o the "oods (thie ) or one who has no ri"ht to con&e% tit$e to the "oods !indin" upon the owner#

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The action or reco&er% or manua$ de$i&er% o "oods !% the rea$ owner# 3) Where attachment is made prior to the issuance o receipt. Non/ne"otia!$e 6 the "oods can !e attached , pro&ided it is done prior to the noti ication o the !ai$ee o the trans er. (,ec. 42, WRL) Warranties Warranties o Trans eror A person who, or &a$ue, ne"otiates or trans ers a receipt !% indorsement or de$i&er%, inc$udin" one who assi"ns or &a$ue a c$aim secured !% a receipt, un$ess a contrar% intention appears, warrants thatD The receipt is "enuine# Fe has a $e"a$ ri"ht to ne"otiate or trans er it# Fe has )now$ed"e o no act which wou$d impair the &a$idit% or worth o that receipt# Fe has a ri"ht to trans er the tit$e to the "oods# and The "oods are merchanta!$e or it or a particu$ar purpose whene&er such warranties wou$d ha&e !een imp$ied, i the contract o the parties had !een to trans er without a receipt o the "oods represented there!%. (,ec. 44, WRL)

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Kes. The rice mi$$, as ho$der or &a$ue o the receipt, has a !etter ri"ht to the rice than the creditor. (t is the rice mi$$ that can surrender the receipt which is in its possession and can comp$% with the other re'uirements which wi$$ o!$i"e the warehouseman to de$i&er the rice, name$%, to si"n a receipt or the de$i&er% o the rice, and to pa% the warehousemanGs $iens and ees and other char"es.

LLLLL *B (2001) Mo7o deposited se&era$ cartons o "oods with ,N Warehouse -orporation. The correspondin" warehouse receipt was issued to the order o Mo7o. Fe endorsed the warehouse receipt to ;M who paid the &a$ue o the "oods deposited. *e ore ;M cou$d withdraw the "oods, 8e$chor in ormed ,N Warehouse -orporation that the "oods !e$on"ed to him snd were ta)en !% Mo7o without his consent. 8e$chor wants to "et the "oods, !ut ;M a$so wants to withdraw the same. a) Who has a !etter ri"ht to the "oodsJ Wh%J !) ( ,N Warehouse -orporation is uncertain as to who is entit$ed to the propert%, what is the proper recourse o the corporationJ ;@p$ain. a) AnswerD ;M has !etter ri"ht to the "oods. The "oods are co&ered !% a ne"otia!$e warehouse receipt which was indorsed to ;M or &a$ue. The ne"otiation to ;M was not impaired !% the act that Mo7o too) the "oods without the consent o 8e$char, as ;M had no notice o such act. 8oreo&er, ;M is in possession o the warehouse receipt and on$% he can surrender it to the warehouseman. (,ec. 2, WRL) ,ince there are con $ictin" c$aims o ownership o tit$e, ,N Warehouse -orporation shou$d i$e a comp$aint in interp$eader. The matter in&o$&es a 7udicia$ 'uestion as to whose c$aim is &a$id.

1) 2) 3) 4) 1)

R;>(;W BC;AT(9N, *B (1333) A Warehouse -ompan% recei&ed or sa e)eepin" 1,000 !a"s o rice rom a merchant. To e&idence the transaction, the Warehouse -ompan% issued a receipt e@press$% pro&idin" that the "oods !e de$i&ered to the order o said merchant. A month a ter, a creditor o!tained 7ud"ment a"ainst said merchant or a sum o mone%. The sheri proceeded to $e&% on the rice and directed the Warehouse -ompan% to de$i&er to him the deposited rice. a. What ad&ice wi$$ %ou "i&e the Warehouse -ompan%. ;@p$ain %our answer. (2I) !. Assumin" that a wee) prior to the $e&%, the receiptwas so$d to a rice mi$$ on the !asis o which it i$ed a c$aim with the sheri$$. Wou$d the rice mi$$ ha&e !etter ri"hts to the rice than the creditorJ (2I) a) AnswerD The 1,000 !a"s o rice were de$i&ered to the Warehouse -ompan% !% a merchant, and a ne"otia!$e receipt was issued there or. The rice cannot therea ter, whi$e in the possession o the Warehouse -ompan%, !e attached !% "arnishment or otherwise, or !e $e&ied upon under an e@ecution un$ess the receipt !e irst surrendered to the warehouseman, or its ne"otiation en7oined. The Warehouse -ompan% cannot !e compe$$ed to de$i&er the actua$ possession o the rice unti$ the receipt is surrendered to it or impounded !% the court.

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LLLLL *B (2007) A$e@ deposited "oods or which *i$$%, a warehouseman, issued a ne"otia!$e warehouse receipt wherein the "oods were de$i&ered to A$e@ or order. A$e@ ne"otiated the receipt to -a$o%. Therea ter, Aario, a creditor, secured 7ud"ment a"ainst A$e@ and ser&ed notice o $e&% o&er the "oods on the warehouseman. a) To whom shou$d the warehouseman de$i&er the "oods upon demandJ !) Wou$d %our answer !e the same i the warehouseman issued a non/ne"otia!$e warehouse receiptJ Reason !rie $%. a) AnswerD The warehouseman shou$d de$i&er the "oods to -a$o%. The "oods cannot !e attached !%

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"arnishment or otherwise, or $e&ied upon, un$ess the receipt !e irst surrendered to the warehouseman, or its ne"otiation is en7oined. (,ec. 21, WRL) !) No. The non/ne"otia!$e warehouse receipt does not con er upon the trans eree the direct o!$i"ation o the warehouseman to ho$d possession o the "oods or him. (,ec, 42, WRL). (n such a case, the $aw pro&ides that when a non/ne"otia!$e warehouse receipt is trans erred to -a$o%, he on$% "ets such tit$e to the "oods as a$e@ had and aso a ri"ht to noti % the warehouseman to ho$d the "oods or -a$o%Gs account. Prior to such notice, -a$o%Gs c$aim can !e de eated !% a $e&% o e@ecution upon the "oods !% a creditor o A$e@. LLLLL BD -oco was issued !% a warehouseman a ne"otia!$e receipt or sa e)eepin" !% the $atter o his "oods. -an the 7ud"ment creditor o -oco $e&% !% e@ecution the "oods co&ered !% the ne"otia!$e receiptJ AD The "oods cannot, whi$e in the possession o the warehouseman, !e attached !% "arnishment or otherwise, or !e $e&ied upon under an e@ecution un$ess the receipt is irst surrendered to the warehouseman, or its ne"otiation en7oined. The warehouseman cannot !e compe$$ed to de$i&er the actua$ possession o the "oods unti$ the receipt is surrendered to it or impounded !% the court. LLLLL B. N deposits his "oods in K?s warehouse, or which K issues Warehouse receipt No. 00021 which stated that the "oods recei&ed wi$$ !e de$i&ered to the !earer or to the order o an% person named in such receipt. 1) ,uppose N ne"otiates the warehouse receipt to O, can O con&ert the receipt to a non/ne"otia!$e warehousr receipt !% writin" on its ace the word Enon/ne"otia!$eEJ A. No. O cannot con&er the receipt in that manner. Accordin" to ,ection 1 o the WRL, a ne"otia!$e warehouse receipt cannot !e con&erted into a non/ ne"otia!$e warehouse receipt !% insertin" an% pro&ision in the ne"otia!$e receipt that it is non/ ne"otia!$e. 2) N ne"otiates the warehouse receipt to 8. 8, in c$aimin" the "oods co&ered !% the receipt, does not !rin" with him the receipt, !ut simp$% ma)es an ora$ demand on K and nothin" more. -an K &a$id$% re use to de$i&erthe "oodsJ ;@p$ain. A. Kes, K can &a$id$% re use to de$i&er the "oods. The warehouseman is !ound to de$i&er the "oods upon demand either !% the ho$der o a receipt or the "oods or !% the depositor, pro&ided that such demand is accompanied !%D

a) an o er to satis % the warehouseman?$ien# !) an o er to surrender the receipt i it is ne"otia!$e, and c) a readiness and wi$$in"ness to si"n an ac)now$ed"ement, when the "oods are de$i&ered, that the% ha&e !een d$ei&ered i such is re'uested !% the warehouseman. 3) ,uppose instead o c$aimin" the "oods himse$ , 8 indorses the receipt in !$an) to N. 9, sees this and waits or an opportunit% to stea$ the receipt. 9 succeeds and "ot to K, demandin" the "oods. A ew minutes !e ore, howe&er, K was in ormed that Warehouse Receipt No. 00021 had !een sto$en. ,hou$d K de$i&er the "oods to 9J ;@p$ain. A. No. K shou$d not de$i&er the "oods to 9. ( K were to de$i&er the "oods to 9, K cou$d !e $ia!$e or misde$i&er% under ,ec. 10, WRL, as K had in ormation that the de$i&er% a!out to !e made was to one not $aw u$$% entit$ed to the possession o the "oods. K, !ein" aware o the the t, is 7usti ied in re usin" de$i&er% to 9.

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