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LAW notes and output, Summaries of Law

University of Cebu (UC)Law

Warehouse Receipts Law and it's important details in a concise summary

Typology: Summaries

2019/2020

Uploaded on 02/29/2020

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Estenzo, Nieva Marie Enovero, Andrea
Cabatingan, Cendy Cajes, Dave Israel
Pitogo, Miriam Bernadine Mantuhac, Anthony
Denoso, Sismae
WAREHOUSE RECEIPTS LAW(WRL)
WHAT
- Act No.2137, as amended known as The Warehouse Receipts Law
- It covers all warehouses whether public/private, bonded or not
- The Act applies to warehouse receipts issued by a warehouseman as defined in this Act
Source: p.349 The Law on Negotiable Instruments by De Leon and De Leon Jr. (2016 Ed.)
Sec. 2 of WRL
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.
Source: p.350-351 The Law on Negotiable Instruments by De Leon and De Leon Jr. (2016
Ed.)
WHO
Sec. 1 of WRL
Persons who may issue receipts. @ Warehouse receipts may be issue by any
warehouseman.
Source: p.350-351 The Law on Negotiable Instruments by De Leon and De Leon Jr. (2016
Ed.)
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Estenzo, Nieva Marie Enovero, Andrea Cabatingan, Cendy Cajes, Dave Israel Pitogo, Miriam Bernadine Mantuhac, Anthony Denoso, Sismae WAREHOUSE RECEIPTS LAW(WRL) WHAT

  • Act No.2137, as amended known as The Warehouse Receipts Law
  • It covers all warehouses whether public/private, bonded or not
  • The Act applies to warehouse receipts issued by a warehouseman as defined in this Act Source: p.349 The Law on Negotiable Instruments by De Leon and De Leon Jr. (2016 Ed.) Sec. 2 of WRL
  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. Source: p.350-351 The Law on Negotiable Instruments by De Leon and De Leon Jr. ( Ed.) WHO Sec. 1 of WRL Persons who may issue receipts. ̶ Warehouse receipts may be issue by any warehouseman. Source: p.350-351 The Law on Negotiable Instruments by De Leon and De Leon Jr. ( Ed.)

Parties involved in the Warehouse Receipt Law

  • Warehouseman/ Bailee – a person (natural or juridical) lawfully engaged in business of storing goods for business.
  • Holder – as applied to a negotiable receipt, means a person who has possession of the receipt and a right of property therein, and, as applied to a non-negotiable receipt, means a person named therein as the person to whom the goods are to the delivered or to his transferee.
  • Negotiable warehouse receipts – A negotiable warehouse receipt is one which it is stated that the goods received will be delivered either: 1. To the bearer; or 2. To the order of any person named in such receipt.
  • Non-negotiable warehouse receipts – A non-negotiable warehouse receipt is one which it is stated that the goods received will be delivered to the depositor or to any specified person. References: batasnatin.com (as observed in Sec.4-5 of WRL) WHY History and the creation of Warehouse receipts law This law is adapted by the Philippines from United States. In 1914, it was originally introduced to the US Congress as a bill aimed primarily to assist the southern cotton planter to finance themselves through the cotton depression of that year because cotton production is important not just to the Southern economy but also to overall U.S. economic prosperity in the 19th and early 20th centuries. But when it became law in 1916, it applied not only to the cotton planter but to the producers of grain, tobacco, and wool. The framers of the law had in mind the producer's interests primarily, but it soon became apparent that others could also derive benefit through a proper use of the law. Banks, buyers of agricultural products, manufacturers of raw agricultural products, and warehousemen were also benefited. This law is implemented in the hope that it may give warehouseman a better conception of what the warehouse receipts law is, how it functions, and how they may avail themselves of it. Warehouse receipt system is created for the convenience of the producer of commodities. This system enables farmer whenever supply exceed demand to deliver his products to the warehouseman upon receipt of document of title to the products and to reclaim his products. The producer benefits from this system because it constitutes a valid contract between the bailee and the bailor, which entitles the latter to transfer his rights over the stored products to any buyer by simple delivery of the receipt without having physical transfer of commodity. Warehouse receipts can be used by farmers to obtain short-term loans. The warehouse receipt issued for the deposited good can be used by the farmer to obtain loans from banks. Access to short-term financing becomes easier since banks are assured of a collateral that can be liquidated quickly and which retains a high commercial value. Hence, banks can recover losses
  1. To render the title to, and right of possession of, property stored in warehouses more easily convertible;
  2. To facilitate the use of warehouse receipts; and
  3. In order to accomplish these, to place a much greater responsibility on the warehouseman (64 C.J. 447-448) Source: p.349 The Law on Negotiable Instruments by De Leon and De Leon Jr. (2016 Ed.) HOW III — NEGOTIATION AND TRANSFER OF RECEIPTS Sec. 37. Negotiation of negotiable receipt of delivery. — A negotiable receipt may be negotiated by delivery: (a) Where, by terms of the receipt, the warehouseman undertakes to deliver the goods to the bearer, or (b) 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. Where, by the terms of a negotiable receipt, the goods are deliverable to bearer or where a negotiable receipt has been indorsed in blank or to 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 of such indorsee. Sec. 38. Negotiation of negotiable receipt by indorsement. — A negotiable receipt may be negotiated by the indorsement of the person to whose order the goods are, by the terms of the receipt, deliverable. Such indorsement may be in blank, to bearer or to a specified person. 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. Subsequent negotiation may be made in like manner. Sec. 39. Transfer of receipt. — A receipt which is not in such form that it can be negotiated by delivery may be transferred by the holder by delivery to a purchaser or donee. A non-negotiable receipt can not be negotiated, and the indorsement of such a receipt gives the transferee no additional right.

Sec. 40. Who may negotiate a receipt. — A negotiable receipt may be negotiated: (a) By the owner thereof, or (b) 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 time of such entrusting, the receipt is in such form that it may be negotiated by delivery. Sec. 41. Rights of person to whom a receipt has been negotiated. — A person to whom a negotiable receipt has been duly negotiated acquires thereby: (a) Such title to the goods as the person negotiating the receipt to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the depositor or person to whose order the goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith for value, and (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 warehouseman and contracted directly with him. Sec. 42. Rights of person to whom receipt has been transferred. — A person to whom a receipt has been transferred but not negotiated acquires thereby, as against the transferor, the title of the goods subject to the terms of any agreement with the transferor. If the receipt is non-negotiable, such person also acquires the right to 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 the goods for him according to the terms of the receipt. Prior to the notification of the warehouseman by the transferor or transferee of a non- negotiable receipt, the title of the transferee to the goods and the right to acquire the obligation of the warehouseman may be defeated by the levy of an attachment or execution upon the goods by a creditor of the transferor or by a notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of a subsequent sale of the goods by the transferor. Sec. 43. Transfer of negotiable receipt without indorsement. — Where a negotiable receipt is transferred for value by delivery and the indorsement of the transferor is essential for

of the negotiable receipt, the subsequent negotiation thereof by the person under any sale or other disposition thereof to any person receiving the same in good faith, for value and without notice of the previous sale, mortgage or pledge, shall have the same effect as if the first purchaser of the goods or receipt had expressly authorized the subsequent negotiation. Sec. 49. Negotiation defeats vendor's lien. — Where a negotiable receipt has been issued for goods, no seller's lien or right of stoppage in transitu shall defeat the rights of any purchaser for value in good faith to whom such receipt has been negotiated, whether such negotiation be prior or subsequent to the notification to the warehouseman who issued such receipt of the seller's claim to a lien or right of stoppage in transitu. Nor shall the warehouseman be obliged to deliver or justified in delivering the goods to an unpaid seller unless the receipt is first surrendered for cancellation. Source: p.377-383 The Law on Negotiable Instruments by De Leon and De Leon Jr. ( Ed.) WHAT IS AN ADVERSE CLAIM?  If someone other than the depositor or person claiming under him to the title of possession of goods (De Leon, 2016 pg. 365-366) Duty of warehouseman where there are several claimants:

  1. Determine within a reasonable time the validity of conflicting claims and deliver to whom he finds is entitled to the possession of the products. Nevertheless, the warehouseman isn't excused from the liability just in case he makes an error. (see Section 10). (De Leon, 2016 pg. 366)
  2. Must bring a complaint in interpleader and require the claimants to litigate among themselves. (Section 17). In such a case, the warehouseman is going to be excused from the liability in delivering the products to the person whom the court finds to own a higher right. Adverse title of a third person not a defense for refusal to deliver. The warehouseman cannot set up a title in himself as an excuse for his failure to deliver the goods. (Section 16.) Neither can the warehouseman, as a depository in hire, set up adverse title in another as an excuse for his failure to deliver the property to his bailor on demand. Exceptions above the rule are Sections 9, 17, 18, and 36. (De Leon, 2016 pg. 366-377).

WHAT IS AN ATTACHMENT/LEVY?

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 Source: Batasnatin.com Sec. 25. Attachment or levy upon goods for which a negotiable receipt has been issued. — If goods are delivered to a warehouseman by the owner or by a person whose act in conveying the title to them to a purchaser in good faith for value would bind the owner, and a negotiable receipt is issued for them, they can not thereafter, while in the possession of the warehouseman, be attached by garnishment or otherwise, or be levied upon under an execution unless the receipt be first surrendered to the warehouseman or its negotiation enjoined. The warehouseman shall in no case be compelled to deliver up the actual possession of the goods until the receipt is surrendered to him or impounded by the court. (WRL, source from http://www.chanrobles.com/acts/actsno2137.html)