THE WAREHOUSE RECEIPTS LAW 1.
1. Those contrary to any provision of the law
WHO MAY ISSUE WAREHOUSE RECEIPT?
> A warehouseman is a person lawfully engaged
in the business of storing goods for profit.
> Only a warehouseman may issue warehouse
receipts
WHAT SHOULD BE DONE TO PUT THE RECEIPT
WITHIN THE PURVIEW OF WAREHOUSE
RECEIPTS LAW?
> The warehouse receipt should be issued
by the warehouseman
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
packages 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 to his
agent
who issues it, a statement of the fact that advances
have been made or liabilities incurred and the
purpose thereof is sufficient
EFFECT OF OMISSION OF THE ESSENTIAL
CONTENTS
> A warehouseman shall be liable to any person
injured thereby all damages caused by the
omission from a negotiable receipt of any of the
terms herein required
> Validity of the receipt not affected
> Negotiability of the receipt not affected
TERMS THAT CANNOT BE INCLUDED IN THE
WAREHOUSE RECEIPT
they have been delivered, if such signature is
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 exercise with
regard to similar goods of his own
NON-NEGOTIABLE WAREHOUSE RECEIPT
> Receipt in which it is stated that the goods
received will be delivered to the depositor or to any
specified person
NEGOTIABLE WAREHOUSE RECEIPT
> Receipt in which it is stated that the goods
received will be delivered to the bearer or to the
order of any person named in such receipt
> No provision shall be inserted in a negotiable
receipt that it is non-negotiable. Such provision if
inserted shall be void.
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
OBLIGATIONS AND RIGHTS OF
WAREHOUSEMAN UPON THEIR RECEIPTS
PRINCIPAL OBLIGATIONS OF THE
WAREHOUSEMAN
1. To take care of the goods entrusted to his
safekeeping
2. To deliver them to the holder of the receipt
or the depositor provided the following conditions
are fulfilled—there is demand by the depositor
accompanied by either
a. An offer to satisfy the warehouseman’s lien
b. An offer to surrender the receipt, if negotiable
with such indorsements as would be necessary
for the negotiation of the receipts
c. A readiness and willingness to sign, when
the goods are delivered, an acknowledgement
that
another through the alteration of their condition or
requested by the warehouseman
WHAT SHOULD ACCOMPANY THE DEMAND
FOR THE RETURN OF THE GOODS?
1. An offer to satisfy the warehouseman’s lien
2. An offer to surrender the receipt, if
negotiable with such indorsements as would be
necessary for the negotiation of the receipts
3. A readiness and willingness to sign, when
the goods are delivered, an acknowledgement
that they have been delivered, if such
signature is requested by the warehouseman
A WAREHOUSEMAN IS JUSTIFIED IN
DELIVERING THE GOODS TO ONE WHO IS—
1. Person lawfully entitled to the possession of the
goods, or his agent
2. Person who either himself entitled to delivery by
the terms of the non-negotiable receipt issued for
the goods, or who has written authority from the
person so entitled either endorsed upon the
receipt or written on another paper
3. Person in possession of a negotiable receipt
by the terms of which the goods are deliverable
to him or order, or to bearer, or which has been
indorsed to him or in blank by the person to whom
delivery was promised by the terms of the receipt or
by his mediate or immediate indorser
WAREHOUSEMAN’S LIABILITY FOR
MISDELIVERY
> Where a warehouseman delivers the goods to
one who is not in fact lawfully entitled to the
possession of them, the warehouseman shall be
liable for conversion/estafa to all having a right of
property or possession in the goods if he delivered
the goods otherwise than as authorized
> And though he delivered the goods as authorized
he shall be so liable if prior to such delivery he had
either—
o Been requested, by or on behalf of the
person lawfully entitled to a right of property
or
possession in the goods, not to make such delivery
o Had information that the delivery about to
be made was to one not lawfully entitled to the
possession of the goods
WHAT IS CONVERSION?
> Unauthorized assumption and exercise of the
right of ownership over goods belonging to
the exclusion of the owner’s right
NEGOTIABLE RECEIPTS MUST BE
CANCELLED OR MARKED WHEN GOODS
DELIVERED OR WHEN PART OF IT IS
DELIVERED. FAILURE TO DO SO WILL
MAKE THE WAREHOUSEMAN LIABLE—
> The warehouseman is liable to any one who
purchases for value in good faith such receipt,
for failure to deliver the goods to him, whether
such purchaser acquired title to the receipt before
or after the delivery of the goods by the
warehouseman
EFFECT OF ALTERATION ON LIABILITY OF
WAREHOUSEMAN
1. Alteration immaterial—whether fraudulent or
not, whether authorized or not, the
warehouseman is liable on the altered receipt
according to its original tenor
2. Alteration material—if the alteration is
material, but authorized, the warehouseman is
liable according to the terms of the receipt as
altered
3. Material alteration innocently made—the
warehouseman is liable on the altered receipt
according to its original receipt
4. Material alteration fraudulently made—
warehouseman is liable according to the original
tenor of the receipt to a purchaser of the receipt
for value without notice, and even to the alterer
and subsequent purchasers with notice except
that as regards to the last two, the
warehouseman’s liability is limited only to delivery as
he is excused from any liability
NOTA BENE: it is clear that even a fraudulent
alteration cannot divest the title of the owner
of stored goods and the warehouseman is,
therefore, liable to return them to the owner.
But a bona fide holder acquires no right to the
goods under a negotiable receipt which has
been lost or stolen or to which the endorsement
of the depositor has been forged.
LOST OR DESTROYED RECEIPTS
> The court may order the delivery of the goods
upon satisfactory proof of such loss or destruction
and upon the giving of a bond with sufficient sureties
to be approved by the court to protect the
warehouseman from any liability or expense, which
he or any person injured by such delivery
may incur by reason of the original receipt
remaining outstanding
> The court may also in its discretion order the
payment of the warehouseman’s reasonable costs
and counsel fees
> The order of the court shall not relieve the
warehouseman from liability to a person to
whom the negotiable receipt as been or shall be
negotiated for value without notice of the
proceedings or of the delivery of the goods
LIABILITY OF WAREHOUSEMAN AS TO
DUPLICATE—HE WARRANTS
1. That the duplicate is an accurate copy of
the original receipt
2. Such original receipt is uncancelled at the date
of the issue of the duplicate
WAREHOUSEMAN CANNOT SET UP TITLE IN
HIMSELF
> The warehouseman cannot refuse to deliver the
goods on the ground that he has acquired title
or right to the possession of the same unless
such title or right is derived—
o Directly or indirectly from a transfer made
by the depositor at the time of the deposit for
storage or subsequent thereto
o From the warehouseman’s lien
INTERPLEADER OF ADVERSE CLAIMANTS
> If more than one person claims the title or
possession of the goods, the warehouseman may,
either as a defense to an action brought against
him for non-delivery of the goods, or as an
original suit, whichever is appropriate, require all
known claimants to interplead
WAREHOUSEMAN HAS REASONABLE TIME
TO DETERMINE VALIDITY OF 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
information of such claim, the warehouseman shall
be excused from liability for refusing to deliver the
goods, either to the depositor or person
claiming under him or to the adverse claimant,
until the warehouseman has had a reasonable time
to ascertain the validity of the adverse claim or to
bring legal proceedings to compel all claimants to
interplead
LIABILITY OF WAREHOUSEMAN FOR NON-
EXISTENCE OR MISDESCRIPTION OF GOODS
> As a general rule, the warehouseman is under
obligation to deliver the identical property stored with
him and if he fails to do so, he is liable directly to the
owner
> As against a bona fide holder of a warehouse
receipt, the warehouseman is estopped whether
the receipt is negotiable or not, to deny that he
has received the goods described in it
LIABILITY OF WAREHOUSEMAN FOR LOSS DUE
TO LACK OF CARE
> The warehouseman is required to exercise
ordinary or reasonable care in the custody of
the goods, that is, the care is reasonably careful
owner would exercise over similar goods of his
own.
> The warehouseman isn’t liable for any loss or
injury to the goods, which couldn’t have been
avoided by the exercise of such care. Of
course, what constitutes ordinary or reasonable
care depends upon the circumstances such as
the character and value of the property and the
character
and location of the warehouse.
COMMINGLING OF DEPOSITED GOODS
> As a general rule, a warehouseman may not
mingle goods belonging to depositors
> In case of fungible goods, the warehouseman may
mingle them with the goods of the same kind and
grade provided that he authorized by agreement or
custom
> Commingling is intended for the benefit
of the warehouseman. It would, indeed be
strange if the warehouseman could escape his
liability to the owner of the goods by the simple
process of commingling them without authorization
ATTACHMENT OR LEVY OF A NEGOTIABLE
RECEIPT
> The warehouseman has the direct obligation
to hold possession of the goods for the original
owner or for the person known the negotiable
receipt of title has been duly negotiated.
> While in possession of such warehouseman,
the goods cannot be attached or levied upon
under an execution unless—
o The document is first surrendered
o Its negotiation is enjoined
o The document is impounded by the court
> This shall not apply if the person depositing is
not the owner of the goods or one who has no right
to convey title to the goods binding upon the owner.
> Neither shall it apply to actions for recovery
or manual delivery of goods by the real owner nor
to cases where the attachment is made before the
issuance of the negotiable receipt of title
CREDITOR’S REMEDIES TO REACH
NEGOTIABLE RECEIPTS
> A creditor whose debtor is the owner of negotiable
receipt shall be entitled to such aid from courts
of appropriate jurisdiction, by injunction and
otherwise, in attaching such receipt or in satisfying
the claim by means thereof as is allowed by
law or in equity in regard to property which
cannot be readily be attached or levied upon by
ordinary legal process
WHAT CLAIMS ARE INCLUDED IN THE
WAREHOUSEMAN’S LIEN
1. All lawful charges for storage and
preservation of the goods
2. All lawful claims for money advanced—
Interests, Insurance, Transportation, Labor,
Weighing, Cooperating and other charges and
expenses in relation to the goods
3. All reasonable charges and expenses for
notice and advertisements of sale
4. Sale of goods where default has been made
in satisfying warehouseman’s lien
AGAINST WHAT PROPERTY THE LIEN MAY BE
ENFORCED
1. Against all goods, whenever deposited,
belonging to the person who is liable to the debtor
for the claims in regard to which the lien is asserted
2. Against all goods belonging to others which
have been deposited at any time by the person who
is liable as debtor for claims in regard to which
the lien is asserted if such person had been
entrusted with the possession of the goods that a
pledge of the same by him at the time of the deposit
to one who took the goods in good faith for value
would have been valid
HOW WAREHOUSEMAN LOSES HIS LIEN
1. By surrendering possession thereof
2. By refusing to deliver the goods when a
demand is made with which he is bound to comply
under the provisions of the law
LIEN WHERE RECEIPT NEGOTIABLE
> With the exception of the charges for the
storage or preservation of goods for which a
negotiable receipt has been issued, the lien
exists only for the other charges expressly
enumerated in the receipt so far as they are
written although the amount of the said charge isn’t
stated
OTHER THINGS IN CONNECTION TO
WAREHOUSEMAN’S LIEN
1. Warehouseman need not deliver lien is satisfied
2. Warehouseman’s lien doesn’t preclude other
remedies
SATISFACTION OF LIEN BY SALE
1. The warehouseman shall give a written
notice to the person on whose account the goods
are held, and to any other person known by the
warehouseman to claim an interest in the goods.
Such notice shall be given by delivery in person
or by registered mail addressed to the
last known place of business or abode of the person
to be notified.
2. The notice shall contain—
a. An itemized statement of the claim, showing
the sum due at the time of the notice and the
dates when it became due
b. A brief description of the goods
c. A demand that such amount of the claim as
stated shall be paid on or before the day mentioned,
not
less than 10 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
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
ENFORCEMENT OF WAREHOUSEMAN’S LIEN
1. By refusing to deliver the goods until the lien is
satisfied
2. By causing the extrajudicial sale of the
property and applying the proceeds to the value of
the lien
3. By filing a civil action for collection of the
unpaid charges or by way of counterclaim in an
action to recover the property from him
EFFECT OF SALE OF GOODS
1. In case of sale of goods, the warehouseman
is not liable for nondelivery even if the receipt
given for the goods when they were deposited be
negotiated.
2. When the sale was made without the
publication requirement and before the time
specified by law, such sale is void and the
purchaser of the goods acquires no title in them.
ACTS FOR WHICH WAREHOUSEMAN IS LIABLE
1. Failure to stamp duplicate on copies of
negotiable receipt
2. Failure to place non-negotiable or not
negotiable on the not negotiable receipt
3. Misdelivery of the goods
4. Failure to effect cancellation of a negotiable
receipt upon delivery of the goods
5. Issuing receipt for non-existing goods or
misdescribed goods
6. Failure to take care of the goods
7. Failure to give notice in case of sale of goods to
satisfy the lien or because the goods are perishable
or hazardous
NEGOTIATION AND TRANSFER OF RECEIPTS
NEGOTIATION OF NEGOTIABLE RECEIPT BY
DELIVERY
1. Where by the terms of the receipt, the
warehouseman undertakes to deliver the goods to
the bearer
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 to bearer
a. Where by the terms of the receipt, the goods
are deliverable to bearer or where a negotiable
receipt
has been indorsed in blank or bearer, any
holder may indorse the same to himself or to
any other
specified person, and in such case the receipt shall
thereafter be negotiated only by the indorsement
by such indorsee
NEGOTIATION OF NEGOTIABLE RECEIPT BY
INDORSEMENT
1. If indorsed in blank or to bearer, the
document becomes negotiable by delivery
2. If indorsed to a specified person, it may be
again negotiated by the indorsement of such person
in blank, to bearer or to another specified person.
Delivery alone isn’t sufficient.
TRANSFER OF NON-NEGOTIABLE RECEIPT
> A non-negotiable receipt of title cannot be
negotiated.
> Nevertheless, it can be transferred or assigned by
delivery
> The assignee or transferee only acquires the
rights of the transferor or assignor
ADVANTAGES OF A NEGOTIABLE WAREHOUSE
RECEIPT
1. It protects a purchaser for value and in good
faith
2. The goods covered by the receipt cannot be
garnished or levied upon under execution unless
it is surrendered, or impounded, or its negotiation
enjoined
3. In case of negotiation, the holder acquires
the direct obligation of the warehouseman to hold
possession of the goods for him without notice to
such warehouseman
4. The goods it covers aren’t subject to seller’s
lien or stoppage in transitu
WHO MAY NEGOTIATE A RECEIPT
1. By the owner thereof
2. By any person to whom the possession or
custody of the receipt has 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
same time of such entrusting, the receipt is in such
form that it may be negotiated by delivery
RIGHTS OF PERSON TO WHOM RECEIPT
HAS BEEN NEGOTIATED
1. The title of the person negotiating the
receipt over the goods covered by the receipt
2. The title of the person to whose order by the
terms of the receipt the goods were to be delivered
over such goods
3. The direct obligation of the
warehouseman to hold possession of the goods
for him, as if the warehouseman directly
contracted with him
RIGHTS OF PERSON TO WHOM RECEIPT
HAS BEEN TRANSFERRED
1. Title to the goods as against the transferor
2. The right to notify the warehouseman of the
transfer thereof
3. The right thereafter to acquire the obligation
of the warehouseman to hold the goods for him
RIGHTS OF TRANSFEREE OF NEGOTIABLE
RECEIPT
1. The right to the goods as against the transferor
2. The right to compel the transferor to indorse the
receipt
RULE WHERE RECEIPT IS SUBSEQUENTLY
INDORSED
> For the purpose of determining whether the
transferee is a purchaser for value in good faith
without notice, the negotiation shall take effect
as of the time when the indorsement is actually
made not at the time the receipt is delivered
> Reason for the rule: negotiation becomes
complete only at the time of indorsement
WARRANTIES ON SALE OF RECEIPT
1. That the receipt is genuine
2. That he has a legal right to negotiate or transfer
it
3. That he has knowledge of no fact which would
impair the validity of the worth of the receipt
4. That he has a right to transfer the title to the
goods and that 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
INDORSER, NOT A GUARANTOR
> The indorsement of a receipt doesn’t make
the indorser liable for any failure on the part of the
warehouseman or previous indorser of the
receipt to fulfill their respective obligations
NO WARRANTY IMPLIED FROM ACCEPTING
PAYMENT OF A DEBT
> A mortgagee, pledgee or holder for security of
a receipt who, in good faith, demands or
receives payment of the debt for which such
receipt is security, whether from a party to a
draft drawn for such debt or from any other
person, shall not, by so doing, be deemed to
represent or
to warrant the genuineness of such receipt or the
quantity or quality of the goods therein described
> In other words, the holder of a security who in
good faith accepts payment of a debt from a person
doesn’t warrant thereby the genuineness of the
receipt nor the quality or quantity of the goods
therein described
WHEN NEGOTIATION NOT IMPAIRED BY
FRAUD, DURESS, MISTAKE
> The validity of the negotiation of a receipt isn’t
impaired by the fact that such negotiation was a
breach of duty on the part of the person making the
negotiation, or by the fact that the owner of the
receipt was induced by fraud, mistake or duress
to entrust the possession or custody of the receipt
to such person, if the person to whom the
receipt was negotiated, or to a person to whom the
receipt
is subsequently negotiated paid value therefor,
without notice of the breach of duty, fraud, mistake
or duress
EFFECT OF SUBSEQUENT NEGOTIATION BY
SELLER, ETC.
> The purchaser, mortgagee, or pledgee of goods
for which a negotiable receipt has been issued,
or of the negotiable receipt itself, has the duty to
require the negotiation of the receipt to him
otherwise, his failure will have the same effect
as an express authorization on his part to the seller,
mortgagor, or pledgor in possession of such
receipt to make subsequent negotiation
> The subsequent purchaser must have taken the
receipt in good faith and for value in order to
acquire a better right
INDORSEE’S RIGHT SUPERIOR TO VENDOR’S
LIEN
> An innocent holder of a negotiable receipt has
a better right to the goods for which the receipt is
given than the vendor who has a vendor’s lien upon
such goods
> Warehouseman isn’t obliged to deliver or
justified in delivering the goods to an unpaid seller
unless the receipt is first surrendered for
cancellation
HOW DO YOU ATTACH OR IMPOSE A LIEN
OVER GOODS COVERED BY A WAREHOUSE
RECEIPT?
If it is not negotiable, the court would issue a writ of
attachment. If it is negotiable, the court should
require the surrender of the receipt and restrict
further negotiations.