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II.

LOAN

(6) Portions of special time deposit loans covered by Industrial Guarantee


and Loan Fund (IGLF) guarantee;
CIRCULAR NO. 416
Series of 2004

(7) Real estate mortgage loans to the extent guaranteed by the Home
Guaranty Corporation (HGC);

Pursuant to Monetary Board Resolution No. 1843 dated 18 December 2003,


approving the amendment to the guidelines on the adoption of the risk-

(8) Loans to the extent guaranteed by the Trade and Investment

based capital adequacy framework under Circular No. 280 dated 29 March

Development Corporation of the Philippines (TIDCORP);

2001, as amended, the provisions of the Manual of Regulations for Banks


are hereby amended as follows:

(9) Foreign currency notes and coins on hand acceptable as international


reserves; and

1. Subsection X116.2 is amended to reflect (1) the reduction in the risk


weight of multilateral development banks from 20% to 0%; and (2) to

(10) Gold bullion held either in own vaults, or in anothers vaults on an

remove loans to exporters to the extent guaranteed by the Guarantee Fund

allocated basis, to the extent it is offset by gold bullion liabilities;

for Small and Medium Enterprises (GFSME) from the list of 0% risk
weighted assets, as follows:

20% risk weight

xxx

(1) Checks and other cash items;

0% risk weight

(2) Claims on or portions of claims guaranteed by or collateralized by


securities issued by non-central government public sector entities of

(1) Cash on hand;

foreign countries with the highest credit quality as defined in Subsec.


X116.3;

(2) Claims on or portions of claims guaranteed by or collateralized by


securities issued by -

(3) Claims on or portions of claims guaranteed by Philippine incorporated


banks/quasi-banks with the highest credit quality as defined in Subsec.

i. Philippine national government and BSP; and

X116.3;

ii. Central governments and central banks of foreign countries with the

(4) Claims on or portions of claims guaranteed by foreign incorporated

highest credit quality as defined in Subsec. X116.3;

banks with the highest credit quality as defined in Subsec. X116.3;

(3) Claims on or portions of claims guaranteed by or collateralized by

(5) Loans to exporters to the extent guaranteed by Small Business

securities issued by multilateral development banks;

Guarantee and Finance Corporation (SBGFC): Provided, That loans to


exporters to the extent guaranteed by the Guarantee Fund for

(4) Loans to the extent covered by hold-out on, or assignment of

Small and Medium Enterprises (GFSME) outstanding as of the date

deposits/deposit substitutes maintained with the lending bank;

of the effectivity of the merger of the SBGFC and the GFSME shall
continue to have a zero percent risk weight: Provided, further,

(5) Loans or acceptances under letters of credit to the extent covered by

That the zero percent risk weight shall not apply to loans renewed

margin deposits;

after the merger of the SBGFC and the GFSME.

(6) Foreign currency checks and other cash items denominated in


currencies acceptable as international reserves; and
(7) Claims on Philippine incorporated banks, which claims obtain and
maintain credit ratings of at least equal to that of the Philippine national
government from a BSP recognized international credit rating agency;
x x x.
2. Subsection X116.3 is amended to expand the list of multilateral
development banks assigned a zero percent risk weight, as follows:
x x x
u. Multilateral development banks. These refer to the World Bank Group
comprised of the International Bank for Reconstruction and Development

The Monetary Board, in its Resolution No. 2224 dated December 3, 1982,
approved the following regulations governing interest rates on loans or
forbearance of money, goods or credit and the amendment of Books I to IV
of the Manual of Regulations for Banks and Other Financial Intermediaries:
General Provisions
SECTION 1.
The rate of interest, including commissions, premiums,
fees and other charges, on a loan or forbearance of any money, goods, or
credits, regardless of maturity and whether secured or unsecured, that
may be charged or collected by any person, whether natural or juridical,
shall not be subject to any ceiling prescribed under or pursuant to the
Usury Law, as amended.
SECTION 2.
The rate of interest for the loan or forbearance of any
money, goods or credits and the rate allowed in judgments, in the absence
of express contract as to such rate of interest, shall continue to be twelve
per cent (12%) per annum.

(IBRD) and the International Finance Corporation (IFC), the Asian


Development Bank (ADB), the African Development Bank (AfDB), the
European Bank for Reconstruction and Development (EBRD), the InterAmerican Development Bank (IADB), the European Investment Bank
(EIB);the Nordic Investment Bank (NIB); the Caribbean
Development Bank (CDB), the Council of Europe Development
Bank (CEDB) and such others as may be recognized by the BSP.

SECTION 3.
Loans denominated or payable in a foreign currency shall
continue to be subject to Central Bank regulations on foreign borrowings.
BOOK I
Commercial Banks
SECTION 4.
deleted.

x x x
This Circular shall take effect fifteen (15) days after its publication either in
the Official Gazette or in a newspaper of general circulation.
FOR THE MONETARY BOARD:

RAFAEL B. BUENAVENTURA
Governor
CBP CIRCULAR NO. 905-82

Subsection 1254.3 of the Manual of Regulations is hereby

SECTION 5.
Section 1303 of the Manual of Regulations is hereby
amended to read as follows:
SECTION 1303. Interest and Other Charges. The rate of interest,
including commissions, premiums, fees and other charges, on any loan, or
forbearance of any money, goods or credits, regardless of maturity and
whether secured or unsecured, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.
SECTION 6.
deleted.

Subsection 1303.3 of the Manual of Regulations is hereby

SECTION 7.
The first paragraph of Subsection 1303.4 of the Manual of
Regulations is hereby amended to read as follows:

The rate of interest on a floating rate loan during each interest period
shall be stated on the basis of a reference rate plus a margin as may be
agreed upon by the parties.
SECTION 8.
Subsection 1303.6 of the Manual of Regulations is hereby
amended to read as follows:
Subsection 1303.6. Short-term rate. Expanded commercial banks,
commercial banks and specialized government banks shall post their
respective short-term prime rates in a conspicuous place in their principal
offices, branches and other banking offices. Expanded commercial banks
and the Land Bank of the Philippines shall publish every other Monday their
respective prevailing short-term prime rates in at least one daily
newspaper of general circulation throughout the Philippines and on the
effective date of any change of at least one-half per cent (%) per annum
from the last published rate, in at least one daily newspaper of general
circulation throughout the Philippines. For purposes of this subsection, the
short-term prime rate shall be the lowest effective rate which a bank will
charge on availments of P500,000.00 and above with a maturity of 90
days, more of less , against credit lines of the banks more established
clients, provided that such availments are not eligible for rediscounting
with the Central Bank at preferential rates and that the borrowers are not
directors, officers and stockholders, including their related interest, of the
lending bank.
Likewise, for purposes of this subsection, more established clients is
defined as client who has been availing himself of the facilities of the bank
for number of years, by maintaining substantial deposit balances, utilizing
foreign exchange facilities such as exports, imports and remittances on a
regular basis, or availing himself of other fee-based services.
For statistical and monitoring purposes, banks shall report these rates
monthly to the Department of Economic Research, Domestic, Central Bank
of the Philippines. Changes in these rates shall also be reported to said
Department on the day the changes are to be effective.
Banks shall report monthly to the Department of Economic ResearchDomestic the volume and interest of availments of P500,000.00 and above
with a maturity of 90 days, more or less, against credit lines of their
clients.
SECTION 9.
Item d of Section 1349 of the Manual of Regulations is
hereby amended to read as follows:

d. Terms, interest and charges. The maximum term of loans money


shops may grant shall in no case exceed 180 days and the rate of interest
on such loans, inclusive of commissions, premiums, fees and other
charges, shall not be subject to any ceilings prescribed under or pursuant
to the Usury Laws, as amended.
SECTION 10.
Subsection 1388.1 of the Manual of Regulations is hereby
amended to read as follows:
The rate of yield, including commissions, premiums, fees, and other
charges, from the purchase of receivables and other obligations, regardless
of maturity, that may be charged or received by banks authorized to
engage in quasi-banking functions or by non-bank financial intermediaries
authorized to engage in quasi-banking functions, shall not be subject to
any regulatory ceiling.
Data on the volume and interest rates of domestic loans and discounts
with original maturities of more than 365 days shall be reported by
expanded commercial banks and commercial banks to the Department of
Economic Research, Domestic, Central Bank of the Philippines, not later
than the 15th banking day after end of reference month.
BOOK II
Thrift Banks
SECTION 11.
deleted.

Subsection 2254.3 of the Manual of Regulations is hereby

SECTION 12.
Section 2303 of the Manual of Regulations is hereby
amended to read as follows:
SECTION 2303. Interest and other Charges. The rate of interest,
including commissions, premiums, fees and other charges, on a loan or
forbearance of any money, goods or credits, regardless of maturity, and
whether secured or unsecured, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.
SECTION 13.
deleted.

Subsection 2303.3 of the Manual of Regulations is hereby

SECTION 14.
The first paragraph of Subsection 2303.4 of the Manual of
Regulations is hereby amended to read as follows:

The rate of interest on a floating rate loan during each interest period
shall be stated on the basis of a reference rate plus a margin as may be
agreed upon by the parties.:
SECTION 15.
The last paragraph of Subsection 2303.4 of the Manual of
Regulations is hereby amended to read as follows:
Where the loan agreement provides for a floating interest rate, the
interest period, which shall be such period of time for which the rate of
interest is fixed, shall be such period as may be agreed upon by the
parties.
SECTION 16.
The first paragraph of Subsection 2303.6 of the Manual of
Regulations is hereby deleted.
SECTION 17.
Item c of Section 2349 of the Manual of Regulations is
hereby amended to read as follows:
C.
Terms, interest and charges. The maximum term of loans
money shops may grant shall in no case exceed 180 days and the rate of
interest on such loans, inclusive of commission, premiums, fees and other
charges, shall not be subject to any ceiling prescribed under or pursuant to
the Usury Law, as amended.
SECTION 18.
Subsection 2388.1 of the Manual of Regulations is hereby
ended to read as follows:
Subsection 2388.1.
Yields on purchases of receivables. The rate
of yield, including commissions, premiums, fees and other charges, from
the purchase of receivables and other obligations, regardless of maturity,
that may be charged or received by banks authorized to engage in quasibanking functions or by non-bank financial intermediaries authorized to
engage in quasi-banking functions, shall not be subject to any regulatory
ceiling.
BOOK III
Rural Banks
SECTION 19.
Item c of Subsection 3152.3 of the Manual of
Regulations is hereby amended to read as follows:

c. Terms, interest and charges. The maximum term of loans money


shops may grant shall in no case exceed 180 days and the rate of interest
on such loans, inclusive of commissions, premiums, fees and other
charges, shall not be subject to any ceiling prescribed under or pursuant to
the Usury Law, as amended.
SECTION 20.
deleted.

Subsection 3254.2 of the Manual of Regulations is hereby

SECTION 21.
Paragraph a of Subsection 3303.1 of the Manual of
Regulations is hereby amended to read as follows:
a. Interest rate. The rate of interest, including commissions, premiums,
fees and other charges, on a loan or forbearance of any money, goods, or
credits, regardless of maturity and whether secured or unsecured, shall not
be subject to any ceiling prescribed under or pursuant to the Usury Law, as
amended.
SECTION 22.
Item b of Subsection 3303.1 of the Manual of
Regulations is hereby deleted and items c, d, f and g of the same
Subsection are hereby relettered as items b, c, d and e,
respectively.
SECTION 23.
The first paragraph of Subsection 3303.2 of the Manual of
Regulations is hereby deleted.
SECTION 24.
Subsection 3303.5 of the Manual of Regulations is hereby
amended to read as follows:
Subsection 3303.5. Floating rates of interest. The rate of interest on a
floating rate loan during each interest period shall be stated on the basis of
a reference rate plus a margin as may be agreed upon by the parties.

Reference rates for various interest periods shall be determined and


announced by the Central Bank every week and shall be based on the
weighted average of the interest rates paid during the immediately
preceding week by the ten (10) commercial banks with the highest levels
of outstanding deposit substitutes on promissory notes issued by such
banks, with maturities corresponding to the interest periods for which such
reference rates are being determined. The commercial banks to be
included for purposes of computing the reference rates shall be reviewed
and determined at the beginning of every calendar semester on the basis
of the levels of their outstanding deposit substitutes as of May 31 or
November 30, as the case may be.
The rate of interest on floating rate loans, existing and outstanding as of
April 2, 1982 shall continue to be determined on the basis of the reference
rate obtained from the weighted average of the interest rates paid by the
five banks with the largest volume of business transacted during the
immediately preceding thirty (30) days, on time deposits with maturities of
more than seven hundred thirty (730) days, which shall be announced by
the Central Bank every month for as long as such loans are existing and
outstanding: Provided, however, That the parties to such existing floating
rate loans agreements are not precluded from amending or modifying their
loan agreements by adopting a floating rate of interest determined on the
basis of the reference rate mentioned in the preceding paragraph.
Where the loan agreement provides for a floating interest rate, the
interest period, which shall be such period of time for which the rate of
interest is fixed, shall be such period as may be agreed upon by the
parties.
BOOK IV
Non-Bank Financial Intermediaries
SECTION 25.
The last paragraph of Subsection 4283Q.1 of the Manual
of Regulations is hereby amended to read as follows:
Procedures for demand deposits of NBQBs with the Central Bank as
provided in Appendix 14 shall be followed.
SECTION 26.
Subsection 4303Q.1 to 4303Q.9 of the Manual of
Regulations are hereby amended to read as follows:

Subsection 4303Q.1. Purchase of Receivables. The rate of yield,


including commissions, premiums, fees and other charges, from the
purchase of receivables and other obligations, regardless of maturity, that
may be charged or received by NBQBs shall not be subject to any
regulatory ceiling.
Receivables and other obligations shall include claims collectible in money
of any amount and maturity from domestic and foreign sources. The
Monetary Board shall determine in doubtful cases whether a particular
claim is included within said phrase.
Subsection 4303Q.2. Loans. The rate of interest, including
commissions, premiums, fees and other charges, on loan transactions,
regardless of maturity and whether secured or unsecured, shall not be
subject to any ceiling prescribed under or pursuant to the Usury Law, as
amended.
Subsection 4303Q.3. Floating rate of interest. The rate of interest on a
floating rate loan during each interest period shall be stated on the basis of
a reference rate plus a margin as may be agreed upon by the parties.
Reference rates for various interest periods shall be determined and
announced by the Central Bank every week and shall be based on the
weighted average of the interest rates paid during the immediately
preceding week by the ten (10) commercial banks with the highest levels
of outstanding deposit substitutes on promissory notes issued by such
banks, with maturities corresponding to the interest periods for which such
references rates are being determined. The commercial banks to be
included for purposes of computing the reference rates shall be reviewed
and determined at the beginning of every calendar semester on the basis
of the levels of their outstanding deposit substitutes as of May 31 or
November 30, as the case may be.
The rate of interest on floating rate loans, existing and outstanding as of
April 2, 1982 shall continue to be determined on the basis of the reference
rate obtained from the weighted average of the interest rates paid by the
five banks with the largest volume of business transacted during the
immediately preceding thirty (30) days, on time deposits with maturities of
more than seven hundred thirty (730) days, which shall be announced by
the Central Bank every month for as long as such loans are existing and
outstanding: Provided, however, That the parties to such existing floating
rate loan agreements are not precluded from amending or modifying their
loan agreements by adopting a floating rate of interest determined on the
basis of the reference rate mentioned in the next preceding paragraph.

Where the loan agreement provides for a floating interest rate, the
interest period, which shall be such period of time for which the rate of
interest is fixed, shall be such period as may be agreed upon by the
parties.
Subsection 4303Q.4. Effect of prepayment. If there is no agreement on
the rebate of interest in the event of prepayment of the loan, the creditor is
not under any legal obligation to return the interest corresponding to the
period from date of prepayment to the stipulated maturity date of the loan.
Any prepayment made by the debtor should not, therefore, affect the
computation of the effective rate stipulated in the loan contract.

SECTION 31.
hereby deleted.

SECTION 32.
Whenever any person or entity violated any of the
provisions of this Circular, the person or entity responsible for such
violation shall be subject to the penalties prescribed in the first paragraph
of Section 34 of Republic Act No. 265, as amended, and/or the penalties
prescribed in Section 10 of Act No. 2655, without prejudice to the
imposition of administrative sanctions under Sections 34-A and 34-B of
Republic Act No. 265, as amended.
SECTION 33.

SECTION 27.
Subsections 4303Q.10 and 4303Q.11 of the Manual of
Regulations are hereby renumbered as Subsections 4303Q.5. and 4303Q.6,
respectively.
SECTION 28.
Subsection 4303N.1 of the Manual of Regulations is
hereby amended to read as follows:
Subsection 4303N.1. Interest Rates. The rate of interest including
commissions, premiums, fees and other charges on loans and forbearance
of money, regardless of maturity and whether secured or unsecured, shall
not be subject to any ceilings prescribed under or pursuant to the Usury
Law, as amended.
SECTION 29.
Subsections 4303N.2, 4303N.4 and 4303N.5 of the
Manual of Regulations are hereby deleted, and Subsections 4303N.3,
4303N.6, and 4303N.7 thereof are hereby renumbered as Subsections
4303N.2, 4303N.3 and 4303N.4, respectively.
SECTION 30.
Section 4303P of the Manual of Regulations is hereby
amended to read as follows:
SECTION 4303P. Interest, Fees and Other Charges. The rate of interest
including commissions, premiums, fees and other charges on any loan or
forbearance of money extended by a pawnshop, pawnbroker or
pawnbrokers agent, regardless of maturity, shall not be subject to any
ceiling prescribed under or pursuant to the Usury Law, as amended.
No pawnshop shall collect interest on loans in advance for a period of
more than a year.

Subsection 4303P.1 of the Manual of Regulations is

This Circular shall take effect on January 1, 1983.

FOR THE MONETARY BOARD:


(SGD.) JAIME C. LAYA

AN ACT TO ASSURE UNIFORM VALUE TO PHILIPPINE COIN AND


CURRENCY
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::
WHEREAS, the value of Philippine coin and currency affects public interest
and is subject to regulation by the Congress of the Philippines; and
WHEREAS, it has been disclosed that the provisions of certain obligations
contracted in the Philippines purport to give the obligee the right to require
payment in gold or in a particular kind of coin or currency or in an amount
in money of the Philippines measured thereby, thus obstructing the power
of the Congress to regulate the value of the money of the Philippines and
contravening the policy of the Congress, here declared, to maintain at all
times the equal and stable power of every peso coined or issued by the
Philippines, in the markets and in the payment of debts; Now, therefore.
Section 1. Every provision contained in, or made with respect to, any
obligation which provision purports to give the obligee the right to require
payment in gold or in a particular kind of coin or currency other than
Philippine currency or in an amount of money of the Philippines measured

thereby, be as it is hereby declared against public policy, and null, void and
of no effect, and no such provision shall be contained in, or made with
respect to, any obligation hereafter incurred. Every obligation heretofore or
hereafter incurred, whether or not any such provision as to payment is
contained therein or made with respect thereto, shall be discharged upon
payment in any coin or currency which at the time of payment is legal
tender for public and private debts: Provided, That, if the obligation was
incurred prior to the enactment of this Act and required payment in a
particular kind of coin or currency other than Philippine currency, it shall be
discharged in Philippine currency measured at the prevailing rates of
exchange at the time the obligation was incurred, except in case of a loan
made in a foreign currency stipulated to be payable in the same currency
in which case the rate of exchange prevailing at the time of the stipulated
date of payment shall prevail. All coin and currency, including Central Bank
notes, heretofore or hereafter issued and declared by the Government of
the Philippines shall be legal tender for all debts, public and private.
Section 2. All acts and parts of acts inconsistent with this Act are hereby
repealed.
Section 3. This Act shall take effect upon its approval.

Section 1. Persons who may issue receipts. Warehouse receipts may be


issued by any warehouseman.
Sec. 2. Form of receipts; essential terms. Warehouse receipts need not be
in any particular form but every such receipt must embody within its
written or printed terms:
(a) The location of the warehouse where the goods are stored,
(b) The date of the issue of the receipt,
(c) The consecutive number of the receipt,
(d) A statement whether the goods received will be delivered to the bearer,
to a specified person or to a specified person or his order,
(e) The rate of storage charges,
(f) A description of the goods or of the packages containing them,

REPUBLIC ACT NO. 8183 . . AN ACT REPEALING REPUBLIC ACT NUMBERED


FIVE HUNDRED TWENTY-NINE AS AMENDED, ENTITLED "AN ACT TO ASSURE
THE UNIFORM VALUE OF PHILIPPINE COIN AND CURRENCY". Section 1. All
monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the
obligation or transaction shall be settled in any other currency at the time
of payment. Sec. 2. Republic Act Numbered Five Hundred Twenty-Nine (R.A.
No. 529), as amended entitled "An Act to Assume the Uniform Value of
Philippine Coin and Currency," is hereby repealed. Sec. 3. This Act shall
take effect fifteen (15) days after its publication in the Official Gazette or in
two (2) national newspapers of general circulation. The Bangko Sentral ng
Pilipinas and the Department of Finance shall conduct an intensive
information campaign on the effect of this Act

(g) The signature of the warehouseman which may be made by his


authorized agent,
(h) 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, and
(i) 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

III. DEPOSIT

of the fact that advances have been made or liabilities incurred and the
purpose thereof is sufficient.

ACT NO. 2137 THE WAREHOUSE RECEIPTS LAW


I THE ISSUE OF WAREHOUSE RECEIPTS

A warehouseman shall be liable to any person injured thereby for all

Sec. 7. Failure to mark non-negotiable. A non-negotiable receipt shall

damages caused by the omission from a negotiable receipt of any of the

have plainly placed upon its face by the warehouseman issuing it non-

terms herein required.

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

Sec. 3. Form of receipts. What terms may be inserted. A warehouseman

negotiable, may, at his option, treat such receipt as imposing upon the

may insert in a receipt issued by him any other terms and conditions

warehouseman the same liabilities he would have incurred had the receipt

provided that such terms and conditions shall not:

been negotiable.

(a) Be contrary to the provisions of this Act.

This section shall not apply, however, to letters, memoranda, or written


acknowledgment of an informal character.

(b) In any wise impair his obligation to exercise that degree of care in the
safe-keeping of the goods entrusted to him which is reasonably careful

II OBLIGATIONS AND RIGHTS OF WAREHOUSEMEN UPON THEIR RECEIPTS

man would exercise in regard to similar goods of his own.


Sec. 8. Obligation of warehousemen to deliver. A warehouseman, in the
Sec. 4. Definition of non-negotiable receipt. A receipt in which it is stated

absence of some lawful excuse provided by this Act, is bound to deliver the

that the goods received will be delivered to the depositor or to any other

goods upon a demand made either by the holder of a receipt for the goods

specified person, is a non-negotiable receipt.

or by the depositor; if such demand is accompanied with:

Sec. 5. Definition of negotiable receipt. A receipt in which it is stated that

(a) An offer to satisfy the warehousemans lien;

the goods received will be delivered to the bearer or to the order of any
person named in such receipt is a negotiable receipt.

(b) An offer to surrender the receipt, if negotiable, with such indorsements


as would be necessary for the negotiation of the receipt; and

No provision shall be inserted in a negotiable receipt that it is nonnegotiable. Such provision, if inserted shall be void.

(c) A readiness and willingness to sign, when the goods are delivered, an
acknowledgment that they have been delivered, if such signature is

Sec. 6. Duplicate receipts must be so marked. When more than one

requested by the warehouseman.

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

In case the warehouseman refuses or fails to deliver the goods in

issued. A warehouseman shall be liable for all damages caused by his

compliance with a demand by the holder or depositor so accompanied, the

failure so to do to any one who purchased the subsequent receipt for value

burden shall be upon the warehouseman to establish the existence of a

supposing it to be an original, even though the purchase be after the

lawful excuse for such refusal.

delivery of the goods by the warehouseman to the holder of the original


receipt.

Sec. 9. Justification of warehouseman in delivering. A warehouseman is


justified in delivering the goods, subject to the provisions of the three
following sections, to one who is:

(a) The person lawfully entitled to the possession of the goods, or his

whether such purchaser acquired title to the receipt before or after the

agent;

delivery of the goods by the warehouseman.

(b) A person who is either himself entitled to delivery by the terms of a

Sec. 12. Negotiable receipts must be cancelled or marked when part of

non-negotiable receipt issued for the goods, or who has written authority

goods delivered. Except as provided in section thirty-six, where a

from the person so entitled either indorsed upon the receipt or written

warehouseman delivers part of the goods for which he had issued a

upon another paper; or

negotiable receipt and fails either to take up and cancel such receipt or to
place plainly upon it a statement of what goods or packages have been

(c) A person in possession of a negotiable receipt by the terms of which the

delivered, he shall be liable to any one who purchases for value in good

goods are deliverable to him or order, or to bearer, or which has been

faith such receipt, for failure to deliver all the goods specified in the

indorsed to him or in blank by the person to whom delivery was promised

receipt, whether such purchaser acquired title to the receipt before or after

by the terms of the receipt or by his mediate or immediate indorser.

the delivery of any portion of the goods by the warehouseman.

Sec. 10. Warehousemans liability for misdelivery. Where a

Sec. 13. Altered receipts. The alteration of a receipt shall not excuse the

warehouseman delivers the goods to one who is not in fact lawfully entitled

warehouseman who issued it from any liability if such alteration was:

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

(a) Immaterial,

delivered the goods otherwise than as authorized by subdivisions (b) and


(c) of the preceding section, and though he delivered the goods as

(b) Authorized, or

authorized by said subdivisions, he shall be so liable, if prior to such


delivery he had either:

(c) Made without fraudulent intent.

(a) Been requested, by or on behalf of the person lawfully entitled to a

If the alteration was authorized, the warehouseman shall be liable

right of property or possession in the goods, not to make such deliver; or

according to the terms of the receipt as altered. If the alteration was


unauthorized but made without fraudulent intent, the warehouseman shall

(b) Had information that the delivery about to be made was to one not

be liable according to the terms of the receipt as they were before

lawfully entitled to the possession of the goods.

alteration.

Sec. 11. Negotiable receipt must be cancelled when goods delivered.

Material and fraudulent alteration of a receipt shall not excuse the

Except as provided in section thirty-six, where a warehouseman delivers

warehouseman who issued it from liability to deliver according to the terms

goods for which he had issued a negotiable receipt, the negotiation of

of the receipt as originally issued, the goods for which it was issued but

which would transfer the right to the possession of the goods, and fails to

shall excuse him from any other liability to the person who made the

take up and cancel the receipt, he shall be liable to any one who purchases

alteration and to any person who took with notice of the alteration. Any

for value in good faith such receipt, for failure to deliver the goods to him,

purchaser of the receipt for value without notice of the alteration shall
acquire the same rights against the warehouseman which such purchaser

would have acquired if the receipt had not been altered at the time of

Sec. 18. Warehouseman has reasonable time to determine validity of

purchase.

claims. If someone other than the depositor or person claiming under him
has a claim to the title or possession of goods, and the warehouseman has

Sec. 14. Lost or destroyed receipts. Where a negotiable receipt has been

information of such claim, the warehouseman shall be excused from

lost or destroyed, a court of competent jurisdiction may order the delivery

liability for refusing to deliver the goods, either to the depositor or person

of the goods upon satisfactory proof of such loss or destruction and upon

claiming under him or to the adverse claimant until the warehouseman has

the giving of a bond with sufficient sureties to be approved by the court to

had a reasonable time to ascertain the validity of the adverse claim or to

protect the warehouseman from any liability or expense, which he or any

bring legal proceedings to compel claimants to interplead.

person injured by such delivery may incur by reason of the original receipt
remaining outstanding. The court may also in its discretion order the

Sec. 19. Adverse title is no defense except as above provided. Except as

payment of the warehousemans reasonable costs and counsel fees.

provided in the two preceding sections and in sections nine and thirty-six,
no right or title of a third person shall be a defense to an action brought by

The delivery of the goods under an order of the court as provided in this

the depositor or person claiming under him against the warehouseman for

section, shall not relieve the warehouseman from liability to a person to

failure to deliver the goods according to the terms of the receipt.

whom the negotiable receipt has been or shall be negotiated for value
without notice of the proceedings or of the delivery of the goods.

Sec. 20. Liability for non-existence or misdescription of goods. A


warehouseman shall be liable to the holder of a receipt for damages

Sec. 15. Effect of duplicate receipts. A receipt upon the face of which the

caused by the non-existence of the goods or by the failure of the goods to

word duplicate is plainly placed is a representation and warranty by the

correspond with the description thereof in the receipt at the time of its

warehouseman that such receipt is an accurate copy of an original receipt

issue. If, however, the goods are described in a receipt merely by a

properly issued and uncanceled at the date of the issue of the duplicate,

statement of marks or labels upon them or upon packages containing them

but shall impose upon him no other liability.

or by a statement that the goods are said to be goods of a certain kind or


that the packages containing the goods are said to contain goods of a

Sec. 16. Warehouseman cannot set up title in himself . No title or right to

certain kind or by words of like purport, such statements, if true, shall not

the possession of the goods, on the part of the warehouseman, unless such

make liable the warehouseman issuing the receipt, although the goods are

title or right is derived directly or indirectly from a transfer made by the

not of the kind which the marks or labels upon them indicate or of the kind

depositor at the time of or subsequent to the deposit for storage, or from

they were said to be by the depositor.

the warehousemans lien, shall excuse the warehouseman from liability for
refusing to deliver the goods according to the terms of the receipt.

Sec. 21. Liability for care of goods. A warehouseman shall be liable for
any loss or injury to the goods caused by his failure to exercise such care in

Sec. 17. Interpleader of adverse claimants. If more than one person

regard to them as reasonably careful owner of similar goods would

claims the title or possession of the goods, the warehouseman may, either

exercise, but he shall not be liable, in the absence of an agreement to the

as a defense to an action brought against him for non-delivery of the goods

contrary, for any loss or injury to the goods which could not have been

or as an original suit, whichever is appropriate, require all known claimants

avoided by the exercise of such care.

to interplead.

Sec. 22. Goods must be kept separate. Except as provided in the

Sec. 27. What claims are included in the warehousemans lien. Subject to

following section, a warehouseman shall keep the goods so far separate

the provisions of section thirty, a warehouseman shall have a lien on goods

from goods of other depositors and from other goods of the same depositor

deposited or on the proceeds thereof in his hands, for all lawful charges for

for which a separate receipt has been issued, as to permit at all times the

storage and preservation of the goods; also for all lawful claims for money

identification and redelivery of the goods deposited.

advanced, interest, insurance, transportation, labor, weighing, coopering


and other charges and expenses in relation to such goods, also for all

Sec. 23. Fungible goods may be commingled if warehouseman authorized.

reasonable charges and expenses for notice, and advertisements of sale,

If authorized by agreement or by custom, a warehouseman may mingle

and for sale of the goods where default had been made in satisfying the

fungible goods with other goods of the same kind and grade. In such case,

warehousemans lien.

the various depositors of the mingled goods shall own the entire mass in
common and each depositor shall be entitled to such portion thereof as the

Sec. 28. Against what property the lien may be enforced. Subject to the

amount deposited by him bears to the whole.

provisions of section thirty, a warehousemans lien may be enforced:

Sec. 24. Liability of warehouseman to depositors of commingled goods.

(a) Against all goods, whenever deposited, belonging to the person who is

The warehouseman shall be severally liable to each depositor for the care

liable as debtor for the claims in regard to which the lien is asserted, and

and redelivery of his share of such mass to the same extent and under the
same circumstances as if the goods had been kept separate.

(b) Against all goods belonging to others which have been deposited at any
time by the person who is liable as debtor for the claims in regard to which

Sec. 25. Attachment or levy upon goods for which a negotiable receipt has

the lien is asserted if such person had been so entrusted with the

been issued. If goods are delivered to a warehouseman by the owner or

possession of goods that a pledge of the same by him at the time of the

by a person whose act in conveying the title to them to a purchaser in

deposit to one who took the goods in good faith for value would have been

good faith for value would bind the owner, and a negotiable receipt is

valid.

issued for them, they can not thereafter, while in the possession of the
warehouseman, be attached by garnishment or otherwise, or be levied

Sec. 29. How the lien may be lost. A warehouseman loses his lien upon

upon under an execution unless the receipt be first surrendered to the

goods:

warehouseman or its negotiation enjoined. The warehouseman shall in no


case be compelled to deliver up the actual possession of the goods until

(a) By surrendering possession thereof, or

the receipt is surrendered to him or impounded by the court.


(b) By refusing to deliver the goods when a demand is made with which he
Sec. 26. Creditors remedies to reach negotiable receipts. A creditor

is bound to comply under the provisions of this Act.

whose debtor is the owner of a negotiable receipt shall be entitled to such


aid from courts of appropriate jurisdiction, by injunction and otherwise, in

Sec. 30. Negotiable receipt must state charges for which the lien is

attaching such receipt or in satisfying the claim by means thereof as is

claimed. If a negotiable receipt is issued for goods, the warehouseman

allowed at law or in equity in these islands in regard to property which can

shall have no lien thereon except for charges for storage of goods

not readily be attached or levied upon by ordinary legal process.

subsequent to the date of the receipt unless the receipt expressly

enumerated other charges for which a lien is claimed. In such case, there

In accordance with the terms of a notice so given, a sale of the goods by

shall be a lien for the charges enumerated so far as they are within the

auction may be had to satisfy any valid claim of the warehouseman for

terms of section twenty-seven although the amount of the charges so

which he has a lien on the goods. The sale shall be had in the place where

enumerated is not stated in the receipt.

the lien was acquired, or, if such place is manifestly unsuitable for the
purpose of the claim specified in the notice to the depositor has elapsed,

Sec. 31. Warehouseman need not deliver until lien is satisfied. A

and advertisement of the sale, describing the goods to be sold, and stating

warehouseman having a lien valid against the person demanding the

the name of the owner or person on whose account the goods are held,

goods may refuse to deliver the goods to him until the lien is satisfied.

and the time and place of the sale, shall be published once a week for two
consecutive weeks in a newspaper published in the place where such sale

Sec. 32. Warehousemans lien does not preclude other remedies.

is to be held. The sale shall not be held less than fifteen days from the time

Whether a warehouseman has or has not a lien upon the goods, he is

of the first publication. If there is no newspaper published in such place,

entitled to all remedies allowed by law to a creditor against a debtor for the

the advertisement shall be posted at least ten days before such sale in not

collection from the depositor of all charges and advances which the

less than six conspicuous places therein.

depositor has expressly or impliedly contracted with the warehouseman to


pay.

From the proceeds of such sale, the warehouseman shall satisfy his lien
including the reasonable charges of notice, advertisement and sale. The

Sec. 33. Satisfaction of lien by sale. A warehousemans lien for a claim

balance, if any, of such proceeds shall be held by the warehouseman and

which has become due may be satisfied as follows:

delivered on demand to the person to whom he would have been bound to


deliver or justified in delivering goods.

(a) An itemized statement of the warehousemans claim, showing the sum


due at the time of the notice and the date or dates when it becomes due,

At any time before the goods are so sold, any person claiming a right of
property or possession therein may pay the warehouseman the amount

(b) A brief description of the goods against which the lien exists,
(c) A demand that the amount of the claim as stated in the notice of such
further claim as shall accrue, shall be paid on or before a day mentioned,
not less than ten days from the delivery of the notice if it is personally
delivered, or from the time when the notice shall reach its destination,
according to the due course of post, if the notice is sent by mail,
(d) A statement that unless the claim is paid within the time specified, the
goods will be advertised for sale and sold by auction at a specified time
and place.

necessary to satisfy his lien and to pay the reasonable expenses and
liabilities incurred in serving notices and advertising and preparing for the
sale up to the time of such payment. The warehouseman shall deliver the
goods to the person making payment if he is a person entitled, under the
provision of this Act, to the possession of the goods on payment of charges
thereon. Otherwise, the warehouseman shall retain the possession of the
goods according to the terms of the original contract of deposit.
Sec. 34. Perishable and hazardous goods. If goods are of a perishable
nature, or by keeping will deteriorate greatly in value, or, by their order,
leakage, inflammability, or explosive nature, will be liable to injure other
property , the warehouseman may give such notice to the owner or to the
person in whose names the goods are stored, as is reasonable and possible

under the circumstances, to satisfy the lien upon such goods and to

(b) Where, by the terms of the receipt, the warehouseman undertakes to

remove them from the warehouse and in the event of the failure of such

deliver the goods to the order of a specified person, and such person or a

person to satisfy the lien and to receive the goods within the time so

subsequent indorsee of the receipt has indorsed it in blank or to bearer.

specified, the warehouseman may sell the goods at public or private sale
without advertising. If the warehouseman, after a reasonable effort, is

Where, by the terms of a negotiable receipt, the goods are deliverable to

unable to sell such goods, he may dispose of them in any lawful manner

bearer or where a negotiable receipt has been indorsed in blank or to

and shall incur no liability by reason thereof.

bearer, any holder may indorse the same to himself or to any other
specified person, and, in such case, the receipt shall thereafter be

The proceeds of any sale made under the terms of this section shall be

negotiated only by the indorsement of such indorsee.

disposed of in the same way as the proceeds of sales made under the
terms of the preceding section.

Sec. 38. Negotiation of negotiable receipt by indorsement. A negotiable


receipt may be negotiated by the indorsement of the person to whose

Sec. 35. Other methods of enforcing lien. The remedy for enforcing a lien

order the goods are, by the terms of the receipt, deliverable. Such

herein provided does not preclude any other remedies allowed by law for

indorsement may be in blank, to bearer or to a specified person. If indorsed

the enforcement of a lien against personal property nor bar the right to

to a specified person, it may be again negotiated by the indorsement of

recover so much of the warehousemans claim as shall not be paid by the

such person in blank, to bearer or to another specified person. Subsequent

proceeds of the sale of the property.

negotiation may be made in like manner.

Sec. 36. Effect of sale. After goods have been lawfully sold to satisfy a

Sec. 39. Transfer of receipt. A receipt which is not in such form that it can

warehousemans lien, or have been lawfully sold or disposed of because of

be negotiated by delivery may be transferred by the holder by delivery to a

their perishable or hazardous nature, the warehouseman shall not

purchaser or donee.

thereafter be liable for failure to deliver the goods to the depositor or


owner of the goods or to a holder of the receipt given for the goods when

A non-negotiable receipt can not be negotiated, and the indorsement of

they were deposited, even if such receipt be negotiable.

such a receipt gives the transferee no additional right.

III NEGOTIATION AND TRANSFER OF RECEIPTS

Sec. 40. Who may negotiate a receipt. A negotiable receipt may be


negotiated:

Sec. 37. Negotiation of negotiable receipt of delivery. A negotiable receipt


may be negotiated by delivery:

(a) By the owner thereof, or

(a) Where, by terms of the receipt, the warehouseman undertakes to

(b) By any person to whom the possession or custody of the receipt has

deliver the goods to the bearer, or

been entrusted by the owner, if, by the terms of the receipt, the
warehouseman undertakes to deliver the goods to the order of the person
to whom the possession or custody of the receipt has been entrusted, or if,

at the time of such entrusting, the receipt is in such form that it may be

Sec. 43. Transfer of negotiable receipt without indorsement. Where a

negotiated by delivery.

negotiable receipt is transferred for value by delivery and the indorsement


of the transferor is essential for negotiation, the transferee acquires a right

Sec. 41. Rights of person to whom a receipt has been negotiated. A

against the transferor to compel him to indorse the receipt unless a

person to whom a negotiable receipt has been duly negotiated acquires

contrary intention appears. The negotiation shall take effect as of the time

thereby:

when the indorsement is actually made.

(a) Such title to the goods as the person negotiating the receipt to him had

Sec. 44. Warranties of a sale of receipt. A person who, for value,

or had ability to convey to a purchaser in good faith for value, and also

negotiates or transfers a receipt by indorsement or delivery, including one

such title to the goods as the depositor or person to whose order the goods

who assigns for value a claim secured by a receipt, unless a contrary

were to be delivered by the terms of the receipt had or had ability to

intention appears, warrants:

convey to a purchaser in good faith for value, and


(a) That the receipt is genuine,
(b) 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

(b) That he has a legal right to negotiate or transfer it,

warehouseman and contracted directly with him.


(c) That he has knowledge of no fact which would impair the validity or
Sec. 42. Rights of person to whom receipt has been transferred. A person

worth of the receipt, and

to whom a receipt has been transferred but not negotiated acquires


thereby, as against the transferor, the title of the goods subject to the

(d) That he has a right to transfer the title to the goods and that the goods

terms of any agreement with the transferor.

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

If the receipt is non-negotiable, such person also acquires the right to

without a receipt of the goods represented thereby.

notify the warehouseman of the transfer to him of such receipt and thereby
to acquire the direct obligation of the warehouseman to hold possession of

Sec. 45. Indorser not a guarantor. The indorsement of a receipt shall not

the goods for him according to the terms of the receipt.

make the indorser liable for any failure on the part of the warehouseman or
previous indorsers of the receipt to fulfill their respective obligations.

Prior to the notification of the warehouseman by the transferor or


transferee of a non-negotiable receipt, the title of the transferee to the

Sec. 46. No warranty implied from accepting payment of a debt. A

goods and the right to acquire the obligation of the warehouseman may be

mortgagee, pledgee, or holder for security of a receipt who, in good faith,

defeated by the levy of an attachment or execution upon the goods by a

demands or receives payment of the debt for which such receipt is

creditor of the transferor or by a notification to the warehouseman by the

security, whether from a party to a draft drawn for such debt or from any

transferor or a subsequent purchaser from the transferor of a subsequent

other person, shall not, by so doing, be deemed to represent or to warrant

sale of the goods by the transferor.

the genuineness of such receipt or the quantity or quality of the goods


therein described.

Sec. 47. When negotiation not impaired by fraud, mistake or duress. The

control at the time of issuing such receipt, shall be guilty of a crime, and,

validity of the negotiation of a receipt is not impaired by the fact that such

upon conviction, shall be punished for each offense by imprisonment not

negotiation was a breach of duty on the part of the person making the

exceeding five years, or by a fine not exceeding ten thousand pesos, or

negotiation or by the fact that the owner of the receipt was induced by

both.

fraud, mistake or duress or to entrust the possession or custody of the


receipt to such person, if the person to whom the receipt was negotiated or

Sec. 51. Issue of receipt containing false statement. A warehouseman, or

a person to whom the receipt was subsequently negotiated paid value

any officer, agent or servant of a warehouseman who fraudulently issues or

therefor, without notice of the breach of duty, or fraud, mistake or duress.

aids in fraudulently issuing a receipt for goods knowing that it contains any
false statement, shall be guilty of a crime, and upon conviction, shall be

Sec. 48. Subsequent negotiation. Where a person having sold,

punished for each offense by imprisonment not exceeding one year, or by

mortgaged, or pledged goods which are in warehouse and for which a

a fine not exceeding two thousand pesos, or by both.

negotiable receipt has been issued, or having sold, mortgaged, or pledged


the negotiable receipt representing such goods, continues in possession of

Sec. 52. Issue of duplicate receipt not so marked. A warehouse, or any

the negotiable receipt, the subsequent negotiation thereof by the person

officer, agent, or servant of a warehouseman who issues or aids in issuing

under any sale or other disposition thereof to any person receiving the

a duplicate or additional negotiable receipt for goods knowing that a

same in good faith, for value and without notice of the previous sale,

former negotiable receipt for the same goods or any part of them is

mortgage or pledge, shall have the same effect as if the first purchaser of

outstanding and uncanceled, without plainly placing upon the face thereof

the goods or receipt had expressly authorized the subsequent negotiation.

the word duplicate except in the case of a lost or destroyed receipt after
proceedings are provided for in section fourteen, shall be guilty of a crime,

Sec. 49. Negotiation defeats vendors lien. Where a negotiable receipt

and, upon conviction, shall be punished for each offense by imprisonment

has been issued for goods, no sellers lien or right of stoppage in transitu

not exceeding five years, or by a fine not exceeding ten thousand pesos, or

shall defeat the rights of any purchaser for value in good faith to whom

by both.

such receipt has been negotiated, whether such negotiation be prior or


subsequent to the notification to the warehouseman who issued such

Sec. 53. Issue for warehousemans goods or receipts which do not state

receipt of the sellers claim to a lien or right of stoppage in transitu. Nor

that fact. Where they are deposited with or held by a warehouseman

shall the warehouseman be obliged to deliver or justified in delivering the

goods of which he is owner, either solely or jointly or in common with

goods to an unpaid seller unless the receipt is first surrendered for

others, such warehouseman, or any of his officers, agents, or servants

cancellation.

who, knowing this ownership, issues or aids in issuing a negotiable receipt


for such goods which does not state such ownership, shall be guilty of a

IV CRIMINAL OFFENSES

crime, and, upon conviction, shall be punished for each offense by


imprisonment not exceeding one year, or by a fine not exceeding two

Sec. 50. Issue of receipt for goods not received. A warehouseman, or an

thousand pesos, or by both.

officer, agent, or servant of a warehouseman who issues or aids in issuing


a receipt knowing that the goods for which such receipt is issued have not

Sec. 54. Delivery of goods without obtaining negotiable receipt. A

been actually received by such warehouseman, or are not under his actual

warehouseman, or any officer, agent, or servant of a warehouseman, who

delivers goods out of the possession of such warehouseman, knowing that

Fungible goods means goods of which any unit is, from its nature by

a negotiable receipt the negotiation of which would transfer the right to the

mercantile custom, treated as the equivalent of any other unit.

possession of such goods is outstanding and uncanceled, without obtaining


the possession of such receipt at or before the time of such delivery, shall,

Goods means chattels or merchandise in storage or which has been or is

except in the cases provided for in sections fourteen and thirty-six, be

about to be stored.

found guilty of a crime, and, upon conviction, shall be punished for each
offense by imprisonment not exceeding one year, or by a fine not

Holder of a receipt means a person who has both actual possession of

exceeding two thousand pesos, or by both.

such receipt and a right of property therein.

Sec. 55. Negotiation of receipt for mortgaged goods. Any person who

Order means an order by indorsement on the receipt.

deposits goods to which he has no title, or upon which there is a lien or


mortgage, and who takes for such goods a negotiable receipt which he
afterwards negotiates for value with intent to deceive and without
disclosing his want of title or the existence of the lien or mortgage, shall be
guilty of a crime, and, upon conviction, shall be punished for each offense
by imprisonment not exceeding one year, or by a fine not exceeding two
thousand pesos, or by both.
V INTERPRETATION
Sec. 56. Case not provided for in Act. Any case not provided for in this Act
shall be governed by the provisions of existing legislation, or in default
thereof, by the rule of the law merchant.
Sec. 57. Name of Act. This Act may be cited as the Warehouse Receipts
Act.
Sec. 58. Definitions. (a) In this Act, unless the content or subject matter
otherwise requires:
Action includes counterclaim, set-off, and suits in equity as provided by
law in these islands.
Delivery means voluntary transfer of possession from one person to
another.

Owner does not include mortgagee.


Person includes a corporation or partnership or two or more persons
having a joint or common interest.
To purchase includes to take as mortgagee or as pledgee.
Receipt means a warehouse receipt.
Value is any consideration sufficient to support a simple contract. An
antecedent or pre-existing obligation, whether for money or not,
constitutes value where a receipt is taken either in satisfaction thereof or
as security therefor.
Warehouseman means a person lawfully engaged in the business of
storing goods for profit.
(b) A thing is done in good faith within the meaning of this Act when it is
in fact done honestly, whether it be done negligently or not.
Sec. 59. Application of Act. The provisions of this Act do not apply to
receipts made and delivered prior to the taking effect hereof.
Sec. 60. Repeals. All acts and laws and parts thereof inconsistent with
this Act are hereby repealed.

Sec. 61. Time when Act takes effect. This Act shall take effect ninety days

Sec. 3. No person shall engage in the business of receiving rice for storage

after its publication in the Official Gazette of the Philippines shall have

without first securing a license therefore from the Director of the Bureau of

been completed.

Commerce and Industry. Said license shall be annual and shall expire on
the thirty-first day of December.

ACT NO. 3893 AN ACT TO REGULATE THE BUSINESS OF RECEIVING RICE


FOR STORAGE, GIVING THE DIRECTOR OF COMMERCE AND INDUSTRY THE

Sec. 4. Any person applying for a license to engage in the business of

DUTY TO ENFORCE IF, PROVIDING PENALTIES FOR VIOLATION OF THE

receiving rice for storage shall set forth in the application the place or

PROVISIONS, EXEMPTING COOPERATIVE MARKETING ASSOCIATIONS OF

places where the business and warehouse are to be established or located

RICE PRODUCERS FROM APPLICATION THEREOF, REPEALING ACT

and the maximum quantity of rice to be received. The application shall be

NUMBERED THIRTY-FOUR HUNDRED AND SIXTY-NINE AND FOR OTHER

accompanied by a cash bond or a bond secured by real estate or signed by

PURPOSES

a duly authorized bonding company, the amount of which shall be fixed by


the Director of the Bureau of Commerce and Industry at not less than

Section 1. This Act shall be known by the short title of BONDED

thirty-three and one third percent of the market value of the maximum

WAREHOUSE ACT.

quantity or rice to be received. Said bond shall be so conditioned as to


respond for the market value of the rice actually delivered and received at

Sec. 2. As used in this Act, the term warehouse shall be deemed to mean

any time the warehouseman is unable to return the rice or to pay its value.

every building, structure, or other protected inclosure in which rice is kept

The bond shall be approved by the Director of the Bureau of Commerce

for storage. The term rice shall be deemed to mean either palay in

and Industry before issuing a license under this Act, to satisfy himself

bundles, or in grains, or clean rice, or both. Person including corporation

concerning the sufficiency of such bond, and to determine whether the

or partnership or two or more persons having joint or common interest;

warehouse for which such license is applied for is suitable for the proper

warehouseman means a person engaged in the business receiving rice

storage of rice.

for storage; and receipt means any receipt issued by a warehouseman


for rice delivered to him. For the purpose of this Act, the business of

Sec. 5. Whenever the Director of the Bureau of Commerce and Industry

receiving rice for storage shall include (1) any contract or transaction

shall determine that a bond approved by him, is or any cause, has become

wherein the warehouseman is obligated to return the very same rice

insufficient, he may require an additional bond or bonds to be given by the

delivered to him or pay its value;(2) any contract or transaction wherein

warehouseman concerned, conforming with the requirements of the

the rice delivered is to be milled for and on account of the owner thereof;

preceding section, and unless the same be given within the time fixed by a

(3) any contract or transaction wherein the rice delivered is commingled

written demand therefor the license of such warehouse may be suspended

with the rice delivered by or belonging to other persons and the

or revoked.

warehouseman is obligated to return the rice of the same kind or pay its
value.

Sec. 6. Every person licensed under this Act to engage in the business of
receiving rice for storage shall insure the rice so received and stored
against fire.

Sec. 7. Any person injured by the breach of any obligation to secure which

Sec. 12. Any warehouseman licensed under this Act receiving a quantity of

a bond is given, under the provisions of this Act, shall be entitled to sue on

rice greater than that specified in his application and license, shall, upon

the bond in his own name in any court of competent jurisdiction to recover

conviction, be fined double the market value of the rice so received in

the damages he may have sustained by such breach. Nothing contained

excess of the quantity of rice he is authorized to receive.

herein shall except any property of assets of any warehouseman from


being sued on in case the bond given is not sufficient to respond for the full

Sec. 13. Any person entering into connivance or combination with any

market value of the rice received by such warehouseman.

warehouseman that is not licensed under this Act, with the purpose of
evading the provisions of section three of this Act, shall be deemed guilty

Sec. 8. Every warehouseman licensed under this Act shall receive for

of misdemeanor, and upon conviction thereof, shall be fined not more than

storage, so far as his license and the capacity of his warehouse permit, any

two hundred pesos or imprisonment for not more than one months, or

rice, of the kind customarily stored therein by him, which may be tendered

both, in the discretion of the court.

to him in a suitable condition for warehousing, in the usual manner and in


the ordinary and usual course of business, without making any

Sec. 14. The Director of the Bureau of Commerce and Industry may, after

discrimination between persons desiring to avail themselves of warehouse

opportunity for hearing has been afforded to the license concerned,

facilities.

suspend or revoke any license issued to any warehouseman, conducting a


warehouse under this Act, for any violation or failure to comply with any

Sec. 9. Every warehouseman licensed under this Act shall keep a complete

provision of this Act or of the rules and regulations made by virtue thereof.

record of the rice received by him, of the receipts issued therefor of the
withdrawals, of the liquidations and of all receipts returned to and

Sec. 15. This Act shall not be applicable to cooperative marketing

cancelled by him. He shall make reports to the Director of Bureau of

associations of rice producers organized under Act Numbered Three

Commerce and Industry concerning his warehouse and the conditions,

Thousand Four Hundred and Twenty-five known as the Cooperative

contents, operations, and business thereof in such form and at such time

Marketing Law, provided such associations shall not receive, for storage,

as the said Director may require, and shall conduct said warehouse in all

rice from non-members which is greater in quantity than one-half of the

other respects in compliance with this Act and the rules and regulations

total quantity of rice received from members, at any time.

made in accordance therewith.


Sec. 16. If any clause, sentence, or paragraph, or part of this Act shall, for
Sec. 10. The Director of Bureau of Commerce and Industry shall from time

any reason, be adjusted by any court of competent jurisdiction to be

to time make such rules and regulations as he may deem necessary for the

invalid, such judgment shall not affect, impair, or invalidate the remainder

efficient execution of the provisions of this Act.

thereof, but shall be confined in his operation to the clause, sentence,


paragraph or part thereof directly involved in the controversy in which such

Sec. 11. Any person engaging in the business of receiving rice for storage

judgment shall have been rendered.

in violation of Section three of this Act shall be deemed guilty of


misdemeanor, and upon conviction thereof shall be punished by

Sec. 17. This Act shall take effect on January First, nineteen hundred and

imprisonment of not less than one month or by a fine of not more than five

thirty-two.

thousand pesos, or both, in the discretion of the court.

PRESIDENTIAL DECREE No. 115 January 29, 1973


PROVIDING FOR THE REGULATION OF TRUST RECEIPTS
TRANSACTIONS
WHEREAS, the utilization of trust receipts, as a convenient business device
to assist importers and merchants solve their financing problems, had
gained popular acceptance in international and domestic business
practices, particularly in commercial banking transactions;
WHEREAS, there is no specific law in the Philippines that governs trust
receipt transactions, especially the rights and obligations of the parties
involved therein and the enforcement of the said rights in case of default
or violation of the terms of the trust receipt agreement;
WHEREAS, the recommendations contained in the report on the financial
system which have been accepted, with certain modifications by the
monetary authorities included, among others, the enactment of a law
regulating the trust receipt transactions;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, as Commanderin-Chief of all the Armed Forces of the Philippines, and pursuant to
Proclamation No. 1081, dated September 21, 1972, and General Order No.
1, dated September 22, 1972, as amended, and in order to effect the
desired changes and reforms in the social, economic, and political
structure of our society, do hereby order and decree and make as part of
the law of the land the following:
Section 1. Short Title. This Decree shall be known as the Trust Receipts
Law.
Section 2. Declaration of Policy. It is hereby declared to be the policy of
the state (a) to encourage and promote the use of trust receipts as an
additional and convenient aid to commerce and trade; (b) to provide for
the regulation of trust receipts transactions in order to assure the
protection of the rights and enforcement of obligations of the parties
involved therein; and (c) to declare the misuse and/or misappropriation of
goods or proceeds realized from the sale of goods, documents or
instruments released under trust receipts as a criminal offense punishable
under Article Three hundred and fifteen of the Revised Penal Code.
Section 3. Definition of terms. As used in this Decree, unless the context
otherwise requires, the term
(a) "Document" shall mean written or printed evidence of
title to goods.

(b) "Entrustee" shall refer to the person having or taking


possession of goods, documents or instruments under a
trust receipt transaction, and any successor in interest of
such person for the purpose or purposes specified in the
trust receipt agreement.
(c) "Entruster" shall refer to the person holding title over
the goods, documents, or instruments subject of a trust
receipt transaction, and any successor in interest of such
person.
(d) "Goods" shall include chattels and personal property
other than: money, things in action, or things so affixed to
land as to become a part thereof.
(e) "Instrument" means any negotiable instrument as
defined in the Negotiable Instrument Law; any certificate of
stock, or bond or debenture for the payment of money
issued by a public or private corporation, or any certificate
of deposit, participation certificate or receipt, any credit or
investment instrument of a sort marketed in the ordinary
course of business or finance, whereby the entrustee, after
the issuance of the trust receipt, appears by virtue of
possession and the face of the instrument to be the owner.
"Instrument" shall not include a document as defined in
this Decree.
(f) "Purchase" means taking by sale, conditional sale,
lease, mortgage, or pledge, legal or equitable.
(g) "Purchaser" means any person taking by purchase.
(h) "Security Interest" means a property interest in goods,
documents or instruments to secure performance of some
obligations of the entrustee or of some third persons to the
entruster and includes title, whether or not expressed to be
absolute, whenever such title is in substance taken or
retained for security only.
(i) "Person" means, as the case may be, an individual,
trustee, receiver, or other fiduciary, partnership,
corporation, business trust or other association, and two
more persons having a joint or common interest.
(j) "Trust Receipt" shall refer to the written or printed
document signed by the entrustee in favor of the entruster
containing terms and conditions substantially complying
with the provisions of this Decree. No further formality of

execution or authentication shall be necessary to the


validity of a trust receipt.
(k) "Value" means any consideration sufficient to support a
simple contract.
Section 4. What constitutes a trust receipt transaction. A trust receipt
transaction, within the meaning of this Decree, is any transaction by and
between a person referred to in this Decree as the entruster, and another
person referred to in this Decree as entrustee, whereby the entruster, who
owns or holds absolute title or security interests over certain specified
goods, documents or instruments, releases the same to the possession of
the entrustee upon the latter's execution and delivery to the entruster of a
signed document called a "trust receipt" wherein the entrustee binds
himself to hold the designated goods, documents or instruments in trust
for the entruster and to sell or otherwise dispose of the goods, documents
or instruments with the obligation to turn over to the entruster the
proceeds thereof to the extent of the amount owing to the entruster or as
appears in the trust receipt or the goods, documents or instruments
themselves if they are unsold or not otherwise disposed of, in accordance
with the terms and conditions specified in the trust receipt, or for other
purposes substantially equivalent to any of the following:
1. In the case of goods or documents, (a) to sell the goods
or procure their sale; or (b) to manufacture or process the
goods with the purpose of ultimate sale: Provided, That, in
the case of goods delivered under trust receipt for the
purpose of manufacturing or processing before its ultimate
sale, the entruster shall retain its title over the goods
whether in its original or processed form until the entrustee
has complied fully with his obligation under the trust
receipt; or (c) to load, unload, ship or tranship or otherwise
deal with them in a manner preliminary or necessary to
their sale; or
2. In the case of instruments,
a) to sell or procure their sale or exchange; or
b) to deliver them to a principal; or
c) to effect the consummation of some transactions
involving delivery to a depository or register; or
d) to effect their presentation, collection or renewal
The sale of goods, documents or instruments by a person
in the business of selling goods, documents or instruments

for profit who, at the outset of the transaction, has, as


against the buyer, general property rights in such goods,
documents or instruments, or who sells the same to the
buyer on credit, retaining title or other interest as security
for the payment of the purchase price, does not constitute
a trust receipt transaction and is outside the purview and
coverage of this Decree.
Section 5. Form of trust receipts; contents. A trust receipt need not be in
any particular form, but every such receipt must substantially contain (a) a
description of the goods, documents or instruments subject of the trust
receipt; (2) the total invoice value of the goods and the amount of the draft
to be paid by the entrustee; (3) an undertaking or a commitment of the
entrustee (a) to hold in trust for the entruster the goods, documents or
instruments therein described; (b) to dispose of them in the manner
provided for in the trust receipt; and (c) to turn over the proceeds of the
sale of the goods, documents or instruments to the entruster to the extent
of the amount owing to the entruster or as appears in the trust receipt or
to return the goods, documents or instruments in the event of their nonsale within the period specified therein.
The trust receipt may contain other terms and conditions agreed upon by
the parties in addition to those hereinabove enumerated provided that
such terms and conditions shall not be contrary to the provisions of this
Decree, any existing laws, public policy or morals, public order or good
customs.
Section 6. Currency in which a trust receipt may be denominated. A trust
receipt may be denominated in the Philippine currency or any foreign
currency acceptable and eligible as part of international reserves of the
Philippines, the provisions of existing law, executive orders, rules and
regulations to the contrary notwithstanding: Provided, however, That in the
case of trust receipts denominated in foreign currency, payment shall be
made in its equivalent in Philippine currency computed at the prevailing
exchange rate on the date the proceeds of sale of the goods, documents or
instruments held in trust by the entrustee are turned over to the entruster
or on such other date as may be stipulated in the trust receipt or other
agreements executed between the entruster and the entrustee.
Section 7. Rights of the entruster. The entruster shall be entitled to the
proceeds from the sale of the goods, documents or instruments released
under a trust receipt to the entrustee to the extent of the amount owing to
the entruster or as appears in the trust receipt, or to the return of the
goods, documents or instruments in case of non-sale, and to the
enforcement of all other rights conferred on him in the trust receipt
provided such are not contrary to the provisions of this Decree.
The entruster may cancel the trust and take possession of the goods,
documents or instruments subject of the trust or of the proceeds realized

therefrom at any time upon default or failure of the entrustee to comply


with any of the terms and conditions of the trust receipt or any other
agreement between the entruster and the entrustee, and the entruster in
possession of the goods, documents or instruments may, on or after
default, give notice to the entrustee of the intention to sell, and may, not
less than five days after serving or sending of such notice, sell the goods,
documents or instruments at public or private sale, and the entruster may,
at a public sale, become a purchaser. The proceeds of any such sale,
whether public or private, shall be applied (a) to the payment of the
expenses thereof; (b) to the payment of the expenses of re-taking, keeping
and storing the goods, documents or instruments; (c) to the satisfaction of
the entrustee's indebtedness to the entruster. The entrustee shall receive
any surplus but shall be liable to the entruster for any deficiency. Notice of
sale shall be deemed sufficiently given if in writing, and either personally
served on the entrustee or sent by post-paid ordinary mail to the
entrustee's last known business address.
Section 8. Entruster not responsible on sale by entrustee. The entruster
holding a security interest shall not, merely by virtue of such interest or
having given the entrustee liberty of sale or other disposition of the goods,
documents or instruments under the terms of the trust receipt transaction
be responsible as principal or as vendor under any sale or contract to sell
made by the entrustee.
Section 9. Obligations of the entrustee. The entrustee shall (1) hold the
goods, documents or instruments in trust for the entruster and shall
dispose of them strictly in accordance with the terms and conditions of the
trust receipt; (2) receive the proceeds in trust for the entruster and turn
over the same to the entruster to the extent of the amount owing to the
entruster or as appears on the trust receipt; (3) insure the goods for their
total value against loss from fire, theft, pilferage or other casualties; (4)
keep said goods or proceeds thereof whether in money or whatever form,
separate and capable of identification as property of the entruster; (5)
return the goods, documents or instruments in the event of non-sale or
upon demand of the entruster; and (6) observe all other terms and
conditions of the trust receipt not contrary to the provisions of this Decree.
Section 10. Liability of entrustee for loss. The risk of loss shall be borne
by the entrustee. Loss of goods, documents or instruments which are the
subject of a trust receipt, pending their disposition, irrespective of whether
or not it was due to the fault or negligence of the entrustee, shall not
extinguish his obligation to the entruster for the value thereof.
Section 11. Rights of purchaser for value and in good faith. Any purchaser
of goods from an entrustee with right to sell, or of documents or
instruments through their customary form of transfer, who buys the goods,

documents, or instruments for value and in good faith from the entrustee,
acquires said goods, documents or instruments free from the entruster's
security interest.
Section 12. Validity of entruster's security interest as against
creditors. The entruster's security interest in goods, documents, or
instruments pursuant to the written terms of a trust receipt shall be valid
as against all creditors of the entrustee for the duration of the trust receipt
agreement.
Section 13. Penalty clause. The failure of an entrustee to turn over the
proceeds of the sale of the goods, documents or instruments covered by a
trust receipt to the extent of the amount owing to the entruster or as
appears in the trust receipt or to return said goods, documents or
instruments if they were not sold or disposed of in accordance with the
terms of the trust receipt shall constitute the crime of estafa, punishable
under the provisions of Article Three hundred and fifteen, paragraph one
(b) of Act Numbered Three thousand eight hundred and fifteen, as
amended, otherwise known as the Revised Penal Code. If the violation or
offense is committed by a corporation, partnership, association or other
juridical entities, the penalty provided for in this Decree shall be imposed
upon the directors, officers, employees or other officials or persons therein
responsible for the offense, without prejudice to the civil liabilities arising
from the criminal offense.
Section 14. Cases not covered by this Decree. Cases not provided for in
this Decree shall be governed by the applicable provisions of existing laws.
Section 15. Separability clause. If any provision or section of this Decree
or the application thereof to any person or circumstance is held invalid, the
other provisions or sections hereof and the application of such provisions
or sections to other persons or circumstances shall not be affected thereby.
Section 16. Repealing clause. All Acts inconsistent with this Decree are
hereby repealed.
Section 17. This Decree shall take effect immediately.
Done in the City of Manila, this 29th day of January, in the year of Our Lord,
nineteen hundred and seventy-three.

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