SPECIAL COMMERCIAL LAWS WAREHOUSE RECEIPTS LAW (ACT NO. 2137) Purposes of Warehouse Receipts Law (WRL): (Re'PF) 1. To Regulate the status, rights and liabilities of the parties in a warehousing contract, 2. To Render the title to, and right of possession of, property stored in warehouses more easily convertible; 3. In order to accomplish these, to place a much greater Responsibility on the warehouseman 4, To Protect those who, in good faith and for value, acquire negotiable warehouse receipts by negotiation; 5. To Eaciltate the use of warehouse receipts as documents of title (DE LEON & DE LEON, JR., Comments and Cases on Credit Transactions [2016] p. 220-221) {hereinafter DE LEON & DE LEON, JR., Credit Transactions) Governing Laws: 1. WRL: Applies to all warehouses, whether public private, bonded or not; and 2. Civil Code: In all other cases where receipts are. Tot issued by the warehouseman, Arts. 1507 to 1520 applies. Warehouseman A person lawfully engaged in the business of storing goods for profit (WRL, Sec. 58 (a}). Note: Only a warehouseman may issue warehouse receipts (WRL, Sec. 1). Hence, receipts not issued by a warehouseman are not warehouse receipts although in the form of warehouse receipts (National Bank of Commerce v. Kansas City, 188 S.W. 117). However, 2 duly authorized officer or agent of @ warshouseman may validly Issue a warehouse receipt (National Bank v. Producer's Warehouse Association, G.R. No. L-16510, January 9, 1922, WAL, Sec. 2(Q)) Warehouse The building or place where goods are deposited and stored for profit (General Bonded Warehouse Act, Sec. 2, as amended; DE LEON & DE LEON, JR. Credit Transactions, supra at 222-223) Warehouse Receipt (WR) It is a written acknowledgment by a warehouseman or agent that he has received and holds certain goods therein described in his warehouse for the person to whom itis issued (Id. at 223). AWR js a document of title to goods (CIVIL CODE, Art. 1636, par. (1); Vanett v. Reilly-Hertz Automobile Co., 173 N.W. 466). Functions: (CRD) 4l2 | 2018 SAN BEDA CENTRALIZED BAR OPERATIONS, WRis a document of ile to goods, and as such * "= 3 functions, to wit: 1. Itis a Gontract — simple contract evidencin underlying contract of deposit or of carriage. 2. Evidence of Receipt of goods: and 3. Represents the goods and therefore operates = transferable Document of title that carries w= control over the goods (SUNDIANG & AQU’ Reviewer on Commercial Law, supra at 380 Essential Terms of WR: (L?ORD SINS) 1. Location of the warehouse where the goods == stored: 2, Statement of advances made and liad incurred for which the warehouseman clair Lien; 3, Warehouseman's Ownership of or interest goods: 4, Rate of storage charges - in the absen ‘express agreement, the law presumes th: depositor shall pay the customary or reasonace compensation for the services of m= warehouseman; 5. Description of the goods or the packass containing them; 6. Signature of the warehouseman which may 22 made by his authorized agent; 7. Date of Issue of receipt - indicates prima faci date when the contract of deposit was perfec and when the storage charges shall bagin to ~» 8 Gonsecutive Number of receipt; and 9. Statement whether goods will be delivered to = bearer, to a specified person or to a spect=> person or his order (WRL, Seo. 2) Z = The WR indicates prima facie a. The date when the contract of depost = perfected and when the storage charges shai begin to run against the depositor; and The person or persons who are entitled law‘ to the possession of the goods deposited LEON & DE LEON, JR, Credit Transact ‘supra at 225-226). The mere fact that the goods deposited == incorrectly described does not make ineffective receipt when the identity of the goods is established by evidence. Thus, its endorsement 2 delivery shall constitute @ sufficient transfer of the of the goods (DE LEON & DE LEON, JR., C Transactions, supra at 227, citing American Fore Banking Corp. v. Herridge, G.R. No. 21005, December 20, 1924). Effects of Omission of Any of the Essential’ Terms: (VDNC?) 1. Validity of receipt not affected (DE LEON & LEON. JR,, Credit Transactions, supra at 226 2, Warehouseman liable for Damages (WRL, Se: 2, par. (2) Note: require succee Credit Terms 1. Th suc a Mone: AQUI: Comn supra (AQu: Instr: Negot Instrur 182).SPECIAL COMMERCIAL LAWS not affected ‘Monarch 3, Negotiability of receipts (Manufacturer's Mercantile Co. v. Refrigerating Co., 107 N.E. 885); 4, Contract is Converted to ordinary deposit (Gonzales v. Go Tiong & Luzon Surety Co., GR. No. L-11776, August 30, 1958); 5. May render the warehouseman Criminally liable (WRL, Sec. 53). : i i Note: The terms prescribed in Sec. 2 of WRL are required for the protection of the depositor and those is <= | succeeding to his right (DE LEON & DE LEON, JR. Credit Transactions, supra at 227) Terms that cannot be included: 1. Those contrary to the provisions of the WRL, such as: a. Any term exempting him from liability for misdelivery of goods because it would be against Sec. 10 of WRL; and b. Not giving statutory notice in case of sale of goods because such would be contrary to Socs. 33 and 34 of WRL Those which may impair the obligation of the warehouseman to exercise that degree of care in the safekeeping of the goods entrusted to him which a reasonably careful man would exercise in regard to similar goods of his own (WRL, Sec. 3); and 3, Those contrary to law, morals, good customs, public order or public policy (CIVIL CODE, Art 1306) ms 35 Negotiable Instrument v. Negotiable Warehouse Receipt _ ASS Merchandise or Goods AQUINO, Reviewer on Commercial Law, _supra at 11), nt itself (as substitute for money) (AQUINO, Negotiable Instruments, supra at ‘Secondary (like drawers and general indorsers)_ (AQUINO, Negotiable Instruments, supra at 162). (SUNDIANG & AQUINO, Reviewer on Commercial Law, supra at 11). | Goods deposited (DE LEON & DE LEON, JR., Credit Transactions, supra at 224). failure to deliver the goods) (WRL, None (for Sec. 45). Valid, but enforceable only in accordance with | Originally bearer instrument wil always be such (AQUINO, Negotiable Instruments, supra at | 105 citing WRL, Sec. 149). Converted to an order WR if specially endorsed (WRL, Soc. 37). May obtain a better title wherein he holds the instrument free from any defect of title of prior parties (SUNDIANG & AQUINO, Reviewer on Commercial Law, supra at 35). Obtains only the title which the party negotiating had over the goods (WRL, Sec. 47) Kinds of WR: 4. Negotiable ~ A receipt in which itis stated that the goods received will be delivered to the bearer or to the order of any person named in such receipt is a negotiable receipt (WRL, Seo. 5) Note: A provision in a negotiable WR that the instrument is non-negotiable is void (WRL, Sec. 5). 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 Teceipt, except the first one issued. A warehouseman shall be liable for all damages caused by his failure to do so to anyone who purchased the subsequent receipt for value Supposing it to be an original, even though the purchase is made after the delivery of the goods by the warehouseman to the holder of the original receipt (WRL, Sec. 6). 2, Non-negotiable ~ A receipt in which it is stated that the goods received will be delivered to the depositor or to any other specified person, is @ non-negotiable receipt (WRL, Sec. 4) Note: The word negotiable as used in a WR is not the same as those in bills of exchange and promissory notes but only in the sense that the passage of WR through: the channals of commerce, The law regards the property deseribed therein as following them and gives effect as manual delivery thru the indorsement of the WR (DE LEON & DE LEON, JR., Credit Transactions, supra at 229-230) ‘A WR és not a negotiable instrument under Sec. 1 of the NIL, because it does not conform to the requirement that it should contain anSPECIAL COMMERCIAL LAWS unconditional promise or order to pay a sum certain in money (1d). The receipt should be stamped on its face non- negotiable; otherwise, a holder believing it to be negotiable may treat the receipt as negotiable (WRL, Sec. 7). Negotiable WR v. Non-Negotiable WR_ May be acquired ' May acquired | through negotiation through transferor | (WRL, Sec. 37). | assignment (WRL, Sec. 39), | i mise saies| Rights of the person to | Rights of the transferee. whom it is negotiated 1.Title of the goods, as (holder: against the 1. Title to the goods of | _ transferor; the person | 2.Right to notify the negotiating the | warehouseman of the receipt andtitle ofthe | transfer and acquire person to whose | the direct obligation order the goods were | ofthe warehouseman to be delivered; | to hold the goods for | 2. Direct obligation of | him (WRL, Sec. 42) | the warehiouseman tohold possession of the goods for him, a8. if the warehouseman | directly contracted with him (WRL, Sec. Last). “Negotiation defeats the | lien of the seller of the goods (WRL, Sec. 49). “Goods represented cannot be subject to 52° “Subject to attach or lev PY | attachment or levy by reciion, unis in propor ercumstances eoutlon (WAL, Sec (WRL, Sec. 25). Goods represented can Effect of Failure to Mark “Negotiable” or “Non- negotiable” 1. Failure to mark “negotiable” - does not render it non-negotiable if it contains words of negotiability (WRL, Sec. 5). 2. Failure to mark “non-negotiable” - negotiable, at the option of the holder of the receipt who purchased it for value supposing it to be negotiable (WRL, Sec. 7). Negotiation and Transfer of WR |. Negotiable WR. 1. How negotiated: (DI) a, By Delivery 114 | 2018 SAN BEDA CENTRALIZED BAR OF 2. Who may negotiate: When the goods are deliverable to bearer, or where deliverable to a spec person or order and the latter or subsea: indorsee indorses it in blank or to (WRL, Sec. 37). Note: A bearer document of title is 7 always a bearer document in the sense a special indorsement has the effect converting the bearer instrument in order instrument (SUNDIANG & AQU Reviewer on Commercial Law, supra at 322 b. Indorsement coupled with delivery if the receipt is indorsed to a spec person, it becomes an order receist = negotiation can only be effected b indorsement of such person in bia bearer or to another specified pesar Delivery alone is not sufficient (WRL a). Note: If the indorsement is necessary negotiable receipt was only transfer the value by delivery, the effect is thet i. The transferee acquires title 20 transferor; ji. There is no direct obligation warehouseman to hold the goo: him; and ii, The transferee can compel the tre to complete the negotiation by i the instrument (WRL, Sec. 43) 2 Warrar A persi receipt assigns Negotiation takes effect on the date a indorsement only (WRL, Sec. 43) a. Owner thereof: or _®. Any person to whom the possessor = He custody of the receipt has been entrust=2 a the the owner, if by the torms of the rocect tae He goods are deliverable to the ore te that person to whom the possession o cuss par receipt has been entrusted or in suct 7a wot that it may be negotiated by delivery WE par Soc. 40). the Note: Even a thief of the receipt or one wes JENote: ~ deftauds another can negotiate the --=e [Fwarcho: but it should be in such a form that he 7st JE Seo. 45, * not forge any signature (SUNDIANS © AQUINO, Reviewer on Commercia am Ws holde supra at 386). cepts pearrant Mustrati es quar © (owner) deposited certain goods we (warehouseman) for which the latter == a negotiable WR deliverable to bearer Tae receipt was stolen by R (robber)