WAREHOUSE RECEIPTS LAW

Atty. Reyaine Mendoza

 NAME AND FUNCTION OF A
WAREHOUSE RECEIPT LAW

Warehouse: a building or place where goods are deposited and stored for profit.
Warehouse Receipt: is a written acknowledgment by a warehouseman that:
a. He has received
b. Holds certain goods therein described
c. In storage
d. For the person to whom it is issued.
 NATURE OF A WAREHOUSE RECEIPT

1. Bilateral Contract
a. Imports that goods are in the hands of a warehouseman
b. It is a symbolical representation of the property itself.

2. Not a Negotiable Instrument under the Negotiable Instruments Law

 PURPOSE OF THE LAW

1. Regulate the status, rights, and liabilities of the parties in a warehousing

contract
2. To protect those who in good faith and for value, acquire negotiable
warehouse receipts by negotiation.
3. To render the title to, and right of possession of, property stored in
warehouses more easily convertible.
4. To facilitate the use of warehouse receipts as documents of title
5. In order to accomplish these, to place a much greater responsibility on the
warehouseman.
 WHO MAY ISSUES WAREHOUSE
RECEIPTS

1. Warehouse man
- Is a person lawfully engaged in the business of storing goods
- He stores good for PROFIT
- He is the only person who can issue warehouse receipts.

2. Agent of Warehouse man

- Duly authorized officer or agent may issue a warehouse receipt.
 FORM AND CONTENT OF WAREHOUSE
RECEIPTS

A. No form exactly required.

B. Essential terms:
1. Location of Warehouse
- For the benefit of the holders of warehouse receipts to
enable them to determine where the goods are deposited especially when the
warehouseman has more than one warehouse located in different place.
2. Date of Issue of Receipt
- Indicated prima facie the date when the contract of deposit is perfected and when
the storage charges shall begin to run against the depositor.
3. Consecutive number of Receipt
- In order to identify each receipt with the goods for which it was issued.
There is no express requirement as to when the consecution numbering shall begin.
 FORM AND CONTENT OF WAREHOUSE RECEIPTS

B. Essential terms:
4. Person to whom goods are deliverable
- Persons who shall prima facie be entitled lawfully to the possession of the goods deposited.
- If for example, the terms of receipt provide that it is to be delivered to order or to bearer, then it is a
negotiable warehouse receipt.
- Note: notwithstanding the failure to use words of negotiability, the receipt may still be considered negotiable.
(we will explain later)
5. Rate of Storage Charges
- States the consideration
- If consideration is not placed it is the customary or reasonable compensation for the services of the
warehouseman
6. Description of goods or packages
- Purpose is for the identification of property which should be delivered to the rightful owner
- Note: notwithstanding the fact that the goods deposited are incorrectly described does not make ineffective
the receipt when the identity of the goods is fully established by the evidence.
 FORM AND CONTENT OF WAREHOUSE RECEIPTS

B. Essential terms:
7. Signature of Warehouseman
- Furnishes the best evidence of the fact that the warehouseman received the goods and has bound himself to
assume all obligations in connection with such.
8. Warehouseman’s ownership of or interest in goods
- Purpose is to prevent abuses which in the past had arisen from warehousemen issuing receipts on their
goods.
Section 53 provides that the omission to state his ownership of the goods in the receipt issued by him, may
render the warehouseman criminally liable.
9. Statement of Advances made and liabilities incurred
- Purpose of this requirement is to preserve the lien of the warehouseman over the goods stored or the
proceeds thereof in his hands.
- This does not need to be placed if such liabilities were never incurred to begin with.
 EFFECT OF THE OMISSION OF ANY OF THE ESSENTIAL TERMS

1. Validity of receipt not affected

2. Warehouseman is liable for damages
3. Negotiability not affected
- Section 2 does not deal with negotiability of warehouse receipts.
The last paragraph of section 2 refers expressly to “omission from a negotiable receipt of any of the
terms herein required” and not from a receipt which would otherwise be negotiable
4. Contract converted to ordinary deposit
- Issuance of a warehouse receipt in the form provided by law is merely permissive and directory and
not mandatory in the sense that if the requirements are not observed, the goods delivered for storage
become ordinary deposits
 TERMS THAT CANNOT BE INCLUDED

1. Those which are contrary to the provisions of this law

2. Those which would:
a. Impair his obligation to exercise that degree of care in the safekeeping of the goods
entrusted to him.
b. Such degree of care is that which a reasonably careful man would exercise in regard
to similar goods of his own
3. Those contrary to law, morals, good customs, public order or public policy
Some Examples:
a. Terms exempting him from liability from misdelivery of goods (Sec. 10)
b. Terms exempting him from liability for not giving statutory notice in case of sale of
goods (Sec. 33 and 34)
c. Terms exempting him from liability for negligence
- “For account and at the risk of the depositor”
 TO WHOM DELIVER

1. Person lawfully entitled to possession of good or his agent

a. Whomever Competent court directs

b. An attaching creditor
c. Purchaser in case of sale of the goods by the warehouseman to enforce his lien or where the
goods are perishable or hazardous.

2. Person entitled to delivery under a non-negotiable receipt or with written authority

3. Person in possession of a negotiable receipt.

 KINDS

1. Non-negotiable warehouse receipt

- A receipt in which it is states that the goods received will be delivered to the
depositor or to any other specified persons.
Example: Delivery to X 1,000 piculs of first grade sugar.
(Signed B)
2. Negotiable to order warehouse receipts
Example: Deliver to X or order 1,000 piculs of first grade sugar.
(Signed B)
3. Negotiable bearer warehouse receipts
Example: Deliver to X or bearer 1,000 piculs of first grade sugar.
 WHO IS A WAREHOUSEMAN

Person lawfully engaged in the business of storing goods for

profit.
**Only a warehouseman may issue warehouse
receipts
 PRINCIPAL OBLIGATIONS OF A
WAREHOUSEMAN

1. To issue a WR in the required form for goods received

2. To care of the goods deposited with ordinary and reasonable diligence

General Rule:
A warehouseman is required to exercise such degree of care which a reasonable careful
owner would exercise over similar goods of his own. He shall be liable for any loss or injury
to the goods caused by his failure to exercise such care.

Exception: He shall not be liable for any loss or injury which could not have been
avoided by the exercise of such care.

Exception to the Exception:

He may limit his liability to an agreed value of the property received in case of loss. He cannot
stipulate that he will not be responsible for any loss caused by his negligence.
 PRINCIPAL OBLIGATIONS OF A WAREHOUSEMAN

3. To deliver the goods to the person lawfully entitled Duty to deliver

General Rule : Only arises when there is a DEMAND accompanied by the ff:
- Offer to satisfy warehouseman’s lien
- Offer to surrender the receipt, if negotiable, with such endorsement as would be
necessary for the negotiation of the receipt
- Readiness and willingness to sign an acknowledgement when the goods are
delivered, if such signature is requested by the warehouseman.
Exception: Lawful Excuse Deliver to Who
- Person lawfully entitled to possession of goods or his agent (person to whom
a competent court has ordered delivery of goods; attaching creditor; purchaser)
- Person entitled to delivery under a non-negotiable receipt or with written
authority
- Person in possession of a negotiable receipt
 PRINCIPAL OBLIGATIONS OF A WAREHOUSEMAN

4. Not to co-mingle the goods deposited unless goods deposited are fungible and of the same kind and grade giving
rise to ownership over co-mingled mass
General Rule:
A warehouseman may not co-mingle goods belonging to different depositors or belonging to the same
depositor for which separate receipts had been issued. E
Exceptions:
A warehouseman may co-mingle fungible goods of the same kind and grade provided he is authorized by
agreement or by custom. Effect of Co-mingling of Goods:

- The different owners become co-owners of the whole mass

- The warehouseman shall be severally liable to each depositor for the care 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.
 PRINCIPAL OBLIGATIONS OF A WAREHOUSEMAN

5. To insure the goods in proper circumstances

- Where the law provides
- Where it was an inducement for the depositor to enter into the contract
- Established practice
- Where the WR contains a representation to that effect

6. To mark a non-negotiable WR as such

7. To mark as such the duplicate of a negotiable WR
8. To give the proper notice in case of sale of the goods as provided in the WRL
9. To take up and cancel the WR when the goods are delivered
 LAWFUL EXCUSES TO DELIVER THE GOODS

1. The holder of the receipt does NOT satisfy the CONDITIONS prescribed in Sec. 8
2. When the warehouseman has LEGAL title in himself on the goods, such title or right
being derived directly or indirectly from the transfer made by the depositor at the
time or subsequent to the deposit for storage or from the warehouseman’s lien (Sec
16.)
3. If the warehouseman had been REQUESTED by a person lawfully entitled to a right of
property or possession in the goods no to make delivery to any person (Sec 10.)
4. If he had INFORMATION that the delivery to be made was to one not lawfully
entitled to the possession of the goods (Sec 10.)
5. Where the goods have already been lawfully SOLD to 3rd persons to satisfy the
warehouseman’s lien or disposed of because of their perishable or hazardous nature
(Sec 36.)
 LAWFUL EXCUSES TO DELIVER THE GOODS

6. In case of ADVERSE claimant/s (Sec 17.)

7. In the valid exercise of the warehouseman’s LIEN (Sec 31.)
8. Delivery to a claimant with a BETTER right
9. Attachment or levy of the GOODS by a creditor where the document is surrendered
or its negotiation is enjoined or the document is impounded (Sec 25.)
10. Where the document of title is ATTACHED by a creditor (Sec 26.)
11. FAILURE was not due to any fault of the part of the warehouseman.
 IN CASE OF MISDELIVERY
When is there Misdelivery?
When the warehouseman delivers the goods to a person who is not in fact lawfully entitled to the possession of the
goods because:
1. the person does not fall under letter B** or C** or
2. the person falls under letter B** or C** but prior to delivery, the warehouseman had
either:
a. Been requested by the person lawfully entitled to the delivery not to
make such delivery, or
b. Had information that the delivery about to be made was to one not
lawfully entitled to the possession of the goods.
**[B] A person who is either himself entitled to delivery by the terms of a non-negotiable
receipt issued for the goods, or who has written authority from the person so entitled
either indorsed upon the receipt or written upon another paper; or
**[C] A 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.
Effects of Misdelivery: The warehouseman shall be liable for conversion to all having a right to property or
possession of the goods
 ALTERED RECEIPTS

ALTERATION EFFECT
IMMATERIAL – Fraudulent or not (the tenor of the receipt Warehouseman is liable according to the ORIGINAL tenor
is not changed)

MATERIAL but AUTHORIZED Warehouseman is liable according to the terms of the

MATERIAL, UNAUTHORIZED but INNOCENTLY MADE altered receipt.

MATERIAL, and FRAUDULENTLY MADE Warehouseman is liable on the altered receipt according to
its original tenor
Warehouseman is liable:

- to the purchaser of the receipt for value and

without notice of the alteration according to the
tenor of the altered receipt
- to the alterer, according to the terms of the original
receipt
- to subsequent purchasers with notice of the alteration,
according to the terms of the original receipt
 CONVERSION

Conversion
An unauthorized assumption and exercise of the right of
ownership over goods belonging to another through the
alteration of their condition or the exclusion of the owner’s
right.
 INSTANCES WHERE A WAREHOUSEMAN IS
LIABLE FOR CONVERSION

1. Where the delivery is otherwise than as authorized by subsections (b**) and (c**) of
Sec. 9 (Sec. 10)
**(b) A person who is either himself entitled to delivery by the terms of a non- negotiable receipt
issued for the goods, or who has written authority from the person so entitled either indorsed
upon the receipt or written upon another paper; or
**(c) A 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
 INSTANCES WHERE A WAREHOUSEMAN IS
LIABLE FOR CONVERSION

2. Even if delivered to persons entitled under Sec 9, he may still be liable for conversion if prior to
delivery:
a. He had been requested not to make such delivery
b. He had received notice of the adverse claim or title of a third person (Sec. 10)