he Warehouse Receipts Law

The Warehouse Receipts Law (Act No. 2137, as amended) a. b. c. d. Purpose of the WRL To prescribe the rights and duties of a warehouseman; To regulate the relationship between a warehouseman and the depositor of goods, or the holder of a warehouse receipts for the goods, or other persons; To render title to, and right of possession of, property stored in warehouse more easily convertible; To protect those who, in good faith and for value, acquire negotiable warehouse receipts by negotiation.

Warehouse Receipt 1. It is a written acknowledgement by a warehouseman that he has received and holds certain goods therein described in store for the person to whom it is issued. (Talengtan Bros. & Sons vs. CA, G.R. No. L-110581, Sept. 21, 1994) 2. It is a simple written contract between the owner of the goods and the warehouseman to pay the compensation for that service. 3. It is a bilateral contract. It imports that goods are in the hands of a warehouseman and is a symbolical representation of the property itself. Warehouseman / Bailee A person (natural or juridical) lawfully engaged in the business of storing goods for profit. . Who May Issue Warehouse Receipts Only a warehouseman may issue warehouse receipts to put said warehouse receipts within the purview of the WRL. . Form of Receipts; Essential Terms 1) The location of the warehouse where the goods are stored; 2) The date of issue of the receipt; 3) Consecutive number of the receipt; 4) A statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his order; 5) The rate of storage charges; 6) A description of the goods or of the package containing them; 7) The signature of the warehouseman which may be made by his authorized agent; 8) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership; 9) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims as lien. If the precise amount for such advances made or of such liabilities incurred is, at the same time of the issue of the receipt, unknown to the warehouseman or 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 Omission of the Essential Contents 1) A warehouseman shall be liable to any person injured thereby all damages caused by the omission from a ngotiable receipt of any of the terms herein required;

2) Validity of receipt not affected; 3) Negotiability of receipt not affected. Terms that Cannot be Included in the Warehouse Receipt 1) Those contrary to any provision of the law; 2) In any wise impair the warehouseman's obligation to exercise that degree of care in the safekeeping of the goods entrusted to him which a reasonably careful man would exervise with regard to similar goods of his own. Document of Title to Goods Any document used in the ordinary course of business, in the sale/transfer of goods, as proof of possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive either by indorsement or by delivery, goods represented by such document. (Art. 1636,NCC) Common Types of Document of Title 1) Bill of Lading - written acknowledgement of the receipt of goods and an agreement to transport and to deliver them at a specified place to a person named therein or on his order. 2) Quedan warehouse receipt that covers sugar. 3) Dock Warrant warrant given by dock owners to the owner of merchandise imported and warehoused on the dock, upon the faith of the bills of lading, as a recognition of his title to the goods. On Board Bill of Lading issued when the goods have been actually placed aboard the ship with very reasonable expectation that the shipment is as good as on its way. Port Bill of Lading issued by the carrier to whom the goods have been delivered and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment. Functions of Documents of Title 1. Evidence of receipt of goods; 2. Represents the goods and therefore operates as transferrable document that carries with it the control over the goods. It is used to pass title to the goods; 3. It is a contract. Meaning of Negotiable Under the Act It indicates that in the passage of warehouse receipts through the channels of commerce, the law regards the property which they describe as following them and gives to their regular transfer by indorsement the effect of manual delivery of the things specified in them. Negotiable Warehouse Receipts A negotiable warehouse receipt is one in which it is stated that the goods received will be delivered either: a) To the bearer; or b) To the order of any person named in such receipt. (Sec. 5, WRL) Non-Negotiable Warehouse Receipts A non-negotiable warehouse receipt is one in which it is stated that the goods received will be delivered to the depositor or to any specified person.

Duplicate Receipts Must Be Marked When more than one 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 held liable for damages for failure to do so to anyone who purchased the subsequent receipt for value supposing it to be original, even though the purchaser be after the delivery of the goods by the warehouseman to the holder of the original receipt. Negotiation of Warehouse Receipts A. By Delivery 1) Where by the terms of the receipt, the warehouseman undertakes to deliver the goods to the bearer; or 2) Where by the terms of the receipt, 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 bearer. The bearer document is not always a bearer document. A special indorsement has the effect of converting the bearer instrument into an order instrument. B. By Indorsement Coupled with Delivery 1) If the receipt states that the goods are to be delivered to the order of a person named therein; 2) Effects when indorsement is necessary but the negotiable receipt was only delivered: a) The transferee acquires title against the transferor; b) There is no direct obligation of the warehouseman to deliver the goods to such holder of the receipt; c) The transferee can compel the transferor to complete the negotiation by indorsing the instrument (Sec.43, WRL).The negotiation takes effect on the date of the indorsement only. Effect 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. Rights of a Person to Whom a Receipt Has Been NEGOTIATED: 1) In case of receipt negotiable by delivery, 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; 2) In case of receipt negotiable by indorsement coupled by delivery, 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 has or had ability to convey to a purchaser in good faith for value; 3) 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. (Sec.41, WRL) Rights of a Person to Whom a Receipt Has Been TRANSFERRED: 1) The title to the goods as against the transferor with respect to a negotiable warehouse receipt not duly negotiated (merely steps into the shoes); 2) The right, thereafter, to acquire the obligation of the warehouseman to hold the goods for him; and 3) If the receipt is non-negotiable, such person acquires the right to notify the warehouseman of the transfer thereof. (Sec. 42, WRL)

Prior to the notification of the warehouseman by the transferor or transferee 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 by: 1) The levy of an attachment or execution upon the goods by a creditor of the transferor; or 2) A notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of the subsequent sale of the goods by the transferor. But- An unpaid sellers lien or right of stoppage in transitu cannot defeat the right of the holder in good faith of NWR. Goods covered by NWR cannot be attached or levied upon unless receipt is surrendered. 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 Failure to surrender a negotiable document of title Lack of willingness to sign acknowledgement Delivery to a claimant with better right Where the document of title is attached by a creditor 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 The bailee has information that the delivery about to be made was to one not lawfully entitled to the possession of the goods Attachment/levy of the goods by a creditor where the document is surrendered or its negotiation is enjoined or the document is impounded

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In Case of Adverse Claim, the Bailee May 1) Refuse to deliver the goods to anyone of them until he has had reasonable time to check the validity of the claims 2) File as action for interpleader and allow the claimants to prove their claims or in case an action is filed against the bailee, he can set up the defense of adverse claims Warehousemans Obligations A. Under the WRL 1) Deliver the goods upon a demand made either by the holder of a receipt for the goods or depositor. 2) Obligation to deliver arises only if the demand is accompanied by: a) An offer to satisfy the warehousemans lien; b) An offer to surrender the receipt, if negotiable, with such indorsement as may be necessary for the negotiation of the receipt; and c) 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.

B. Under the General Bonded Warehouse Law (Act No. 9893; R.A. 247) 1) Secure a license from the Department of Trade and Industry; 2) File a bond equivalent to 33 % of the market value of maximum quantity of goods to be received for the protection of the depositors; 3) Not discriminate and must open his warehouse to the public; 4) Be liable in the amount equivalent to double the market value of the goods in case of damage to the goods because the warehouseman accepts goods in excess of the capacity of his warehouse; and 5) Insure the goods against fire. Liability of Warehouseman for Stolen and Deposited Goods If stolen goods are deposited by the thief with a warehouseman, the latter shall not be liable to the holder of the receipt even if he delivers the goods to the real owners without the receipt being surrendered to him. (Sec.11 and 141, WRL) Warehousemans Lien A warehouseman shall have a lien on the goods deposited or on the proceeds thereof in his hands for: 1. All lawful charges for storage and preservation of the goods; 2. All lawful claims for money advanced, interest, insurance, transportation, labor, weighing, coopering, and other charges and expenses in relation to such goods; and 3. All reasonable charges and expenses for notice and advertisements of sale, and for the sale of the goods where default had been made in satisfying the warehousemans lien. 1) 2) 3) 4) Remedies of a Warehouseman to Enforce His Lien Refuse to deliver the goods until his lien is satisfied (Sec. 31, WRL); Sell the goods and apply the proceeds thereof to the value of the lien (Sections 33 & 34, WRL); By other means allowed by law to a creditor against his debtor (Sec. 32, WRL); Such other remedies allowed by law for the enforcement of a lien against personal property (Sec. 35, WRL).

Loss of Lien Warehousemans lien is lost either by: 1) Surrendering possession thereof; or 2) Refusing to deliver the goods when a demand is made with which he is bound to comply (Sec. 29, WRL). When warehouseman withholds the delivery of the goods without any valid reason, he is liable for the loss of the goods and the liability cannot be eliminated by proof of exercise of due diligence. Attachment or Levy Negotiable receipt the goods cannot be attached/levied in execution unless: 1) The receipt is first surrendered 2) Its negotiation is enjoined 3) The receipt is impounded by the court (Sec. 25, WRL)

Creditor's Remedies to Reach Negotiable Receipt A creditor whose debtor is owner of a negotiable warehouse receipt may seek for the attachment of the receipt or seek aid from the courts to compel the debtor to satisfy claims by means allowed by law in regard to property which cannot readily be attached or levied upon by ordinary legal process. (Sec. 26, WRL) It does not apply when: 1) The depositor is not the owner of the goods (thief) or one who has no right to convey title to the goods binding upon the owner; 2) The action for recovery or manual delivery of goods by the real owner; 3) Where attachment is made prior to the issuance of receipt. Non-negotiable the goods can be attached , provided it is done prior to the notification of the bailee of the transfer. (Sec. 42, WRL) Warranties Warranties of Transferor 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 that: The receipt is genuine; He has a legal right to negotiate or transfer it; He has knowledge of no fact which would impair the validity or worth of that receipt; He has a right to transfer the title to the goods; and 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. (Sec. 44, WRL)

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