WAREHOUSE RECEIPT LAW
I. Nature and Function
1. One of these statements is not correct:
a. A warehouse receipt serves as proof of possession of the
warehouseman of the goods described in it and as authorization for
the possessor of the warehouse receipt to transfer or receive the
goods described in it.b. A non-negotiable receipt is one in which
it is stated that the goods received will be delivered to the
depositor or to any other specified person.c. A negotiable receipt
is a 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 the
receipt.d. A warehouse receipt is not a document of title.
2. One of these statements is not correct:
a. When a negotiable instrument is altered, it becomes null and
void. When a negotiable warehouse receipt is altered, it is still
valid but may be enforced only in accordance with its original
tenor.b. A negotiable instrument which is originally payable to
bearer remains so payable even if it is indorsed specially. A
negotiable receipt deliverable to bearer if indorsed specially
becomes deliverable to order.c. The holder in due course of a
negotiable instrument may be able to obtain a title better than
that of the indorser. An indorsee of a negotiable receipt acquires
only such title as the person who negotiated had over the goods
even if he is a holder in due course.d. Both in a negotiable
instrument and in a negotiable receipt the indorser warrants that
all prior parties had capacity to contract.
I. Duties of Warehouseman
A. Delivery of Goods
1. One of these is not required to bind the warehouseman to
deliver the goods:
a. An offer to satisfy his lien.b. An offer to surrender the
receipt, if it is negotiable, with indorsements necessary for its
negotiation.c. A readiness and willingness to sign upon delivery of
the goods, an acknowledgment that they have been received, if the
warehouseman requests it.d. An undertaking to hold the warehouseman
harmless from claims of third parties.
2. A warehouseman is not justified in delivering the goods to
one of the following:
a. The person lawfully entitled to the possession of the goods
or his agent.b. A person entitled to the delivery by the terms of
the non-negotiable receipt for goods or has written authority from
such person.c. A person in possession of a negotiable receipt for
goods deliverable to him or his order or to bearer, which has been
indorsed to him or in blank by the person to whom delivery was
promised or by his indorsee.d. The pledgee of the goods covered by
the receipt.
3. One of these statements is not correct:
a. The general rule is that a warehouseman cannot invoke the
right or title of a third person as an excuse for not delivering
the goods covered by a receipt.b. By way of exception, the
warehouseman may withhold delivery until he has had reasonable
opportunity to ascertain the validity of the claim of the third
party or to file an action for interpleader.c. If the goods were
lawfully sold to satisfy the lien of the warehouseman or were
lawfully sold or disposed of because of their perishable or
hazardous nature, the warehouseman is not liable for not delivering
them.d. If the warehouse receipt was fraudulently altered, the
warehouseman will be discharged from liability to deliver the
goods.
4. One of these statements is not correct:
a. A warehouseman cannot set up title in himself as an excuse
for refusing to deliver the goods unless the title is directly or
indirectly from a transfer by the depositor or from enforcement of
his lien.b. If a warehouseman delivers goods covered by a warehouse
receipt and does not take up and cancel it, he will be liable to
anyone who purchases the warehouse receipt in good faith and for
value.c. If a warehouseman delivers a part of the goods for which
he issued a negotiable receipt and did not take up and cancel the
receipt or state plainly upon it what goods were delivered, he will
be liable to anyone who purchased the receipt in good faith and for
value.d. A warehouseman is not liable to the holder of a receipt if
the goods do not correspond with the description in it.
B. Safekeeping of the Goods
1. One of these statements is not correct:
a. A warehouseman is liable for any loss or injury to the goods
caused by his failure to exercise such care as a reasonably careful
owner would exercise.b. In the absence of a stipulation to the
contrary, the warehouseman is not liable for any loss or injury to
the goods which could not have been avoided by exercise of such
care.c. A warehouseman is not liable for loss due to a fortuitous
event.d. The person claiming the goods has the burden of proving
the loss was due to the fault of the warehouseman.
II. Warehousemans Lien
A. Claims Included and Properties Covered
1. One of these statements is not correct:
a. A warehouseman has a lien on the goods deposited or their
proceeds in his hands for all lawful charges for storage and
preservation of the goods, for all lawful claims in relation to the
goods, for all reasonable charges and expenses for notice and
advertisement for sale, and for sale of the goods.b. If the receipt
is negotiable, the warehouseman will have no lien on the goods
except charges for storage, unless the receipt expressly enumerates
other charges for which a lien is claimed.c. A warehouseman has a
lien against all goods belonging to the person liable for the
claims with respect to which a lien is asserted.d. A warehouseman
cannot have a lien against the goods if the depositor was merely
entrusted with its possession, even if the warehouseman acted in
good faith and for value.
B. Enforcement of Warehousemans Lien
1. One of these statements is not correct:
a. A warehousemans lien may be satisfied by selling the goods.b.
The warehouseman must give the person for whose account he is
holding the goods or any other person he knows to claim an interest
in the goods notice to pay within ten days.c. If the warehouseman
is not paid, an advertisement of the sale must be published once a
week for three consecutive weeks in a newspaper published in the
place of the sale.d. The sale cannot be made less than 15 days
before the date of the first publication.
2. One of these statements is not correct:
a. If there is no newspaper published in the place of the sale,
the advertisement must be posted at least 10 days before the sale
in six conspicuous places.b. A sale held without complying with the
publication and before the prescribed time is void.c. In case of
deficiency in the proceeds of the sale, the warehouseman cannot sue
for the deficiency.d. If the proceeds of the sale exceed the amount
due the warehouseman, the excess shall be delivered to the person
entitled to the delivery of the goods.
III. Negotiation and Transfer of Warehouse Receipts
A. Negotiation
1. One of these statements is not correct:
a. A negotiable receipt may be negotiated by delivery if by its
terms the goods are deliverable to the bearer or by its terms the
goods are deliverable to the order of a specified person and he or
a subsequent indorsee indorsed the receipt in blank or to bearer.b.
If the goods are deliverable to bearer or the negotiable receipt
was indorsed in blank or to bearer, even if the holder indorsed it
to himself or a specified person, the receipt can be negotiated
further by delivery.c. The warrant of a negotiable receipt by the
person to whose order the goods are deliverable may be in blank, to
bearer, or to a specified person.d. Subsequent negotiations may be
made in the same manner.
2. One of these statements is not correct:
a. A negotiable receipt may be negotiated by the owner.b. If by
the terms of a negotiable receipt, the goods are deliverable to the
order of the person to whose possession the owner of the receipt
entrusted it, such person cannot negotiate the receipt.c. A person
to whom a negotiable receipt was negotiated acquires such title to
the goods as the person negotiating had ability to convey to a
buyer in good faith and for value.d. A person to whom a negotiable
receipt was negotiated acquires the direct obligation of the
warehouseman to hold the goods for him.
3. One of these statements is not correct:
a. The negotiation of a negotiable receipt is not impaired by
the fact that it was a breach of duty of the person negotiating it
or that the owner of the receipt was induced by fraud, mistake or
duress to entrust the receipt to such person if the person to whom
it was negotiated took it in good faith and for value.b. If a
person who sold goods covered by a negotiable receipt remained in
possession of it, the negotiation of the receipt to a person who
took it in good faith and for value has the same effect as if the
first buyer had authorized the negotiation.c. A sellers lien or
right of stoppage in transitu will defeat the rights of a buyer in
good faith and for value to whom the receipt was negotiated.d. If a
warehouseman who sold sugar covered by a negotiable receipt was not
paid by the buyer, the negotiation of the receipt by the buyer is
valid.
B. Transfer of Rights
1. One of these statements is not correct:
a. A non-negotiable receipt may not be transferred by
delivery.b. The negotiation of a non-negotiable receipt does not
give the transferee any additional right.c. A person to whom a
non-negotiable receipt was transferred acquires as against the
transferor title to the goods subject to their agreement.d. A
person to whom a non-negotiable receipt was transferred acquires
the right to notify the warehouseman of the transfer to him and to
acquire the direct obligation of the warehouseman to hold the goods
for him.
2. One of these statements is not correct:
a. Before the notification to the warehouseman, the title of the
transferee to the goods maybe defeated by a levy upon them by a
creditor of the goods.b. Before the notification to the
warehouseman, the title of the transferee to the goods may be
defeated by a notification to the warehouseman of a subsequent sale
of the goods.c. If a negotiable receipt is transferred for value by
delivery and indorsement is necessary for its negotiation, the
transferee can compel the transferor to indorse it.d. The effect of
the negotiation will retroact to the date of the transfer of the
receipt.
TITLE 1V: THE WAREHOUSE RECEIPTS LAWINTRODUCTION
Scope of the law : All warehouses, whether public or private,
bonded or not. Civil Code applicable where the receipts are not
issued by a warehouse man Purposes of the law:1) Regulate the
status, rights, and liabilities of the parties in a warehousing
contract2) Protect those who, in good faith and for value, acquire
negotiable warehouse receipts by negotiation3) Render the title to,
and the right of possession of, property stored in warehouses4)
Facilitate the use of warehouse receipts as documents of title5)
Place a much greater responsibility on the warehouseman
CHAPTER 1: THE ISSUE OF WAREHOUSE RECEIPTS
Section 1
Warehouseman person lawfully engaged in the business of storing
goods for profit Only one authorized to issue warehouse receipts A
duly authorized officer/agent of a warehouseman may validly issue a
warehouse receipt. Warehouse the building or place where goods are
deposited and stored for profit
Section 2
Warehouse receipt a written acknowledgment by a warehouseman
that he has received and holds certain goods therein described in
store for the person to whom it is issued Simple written contract
between the owner of the goods and the warehouseman to pay the
compensation for that service A bilateral contract (symbolical
representation of the property itself) Not a negotiable instrument
Not require or specify any particular form Essential terms of the
receipt:1) Location of warehouse for the benefit of the holders of
warehouse receipts2) Date of issue of receipt not essential;
indicates prima facie the date when the contract of deposit is
perfected and when the storage charges shall begin to run against
the depositor3) Consecutive number of receipt to identify each
receipt with the goods for which it was issued No express
requirement as to when the consecutive numbering shall begin4)
Person to whom goods are deliverable prima facie entitled lawfully
to the possession of the goods deposited Does not determine the
negotiability of the receipt5) Rate of storage charges the
consideration for the contract from the view of the warehouseman
Presumption that depositor shall pay the customary/reasonable
compensation for the services of the warehouseman (in the absence
of express agreement)6) Description of goods or packages for
identification so that the identical property delivered to the
warehouseman may be delivered back by him upon the return of the
warehouse receipt Mere fact that the goods deposited are
incorrectly described does not make ineffective the receipt when
the identity of the goods is fully established by evidence7)
Signature of the warehouseman best evidence of the fact that the
warehouseman has received the goods described in the receipt and
has bound himself to assume all obligations in connection with it8)
Warehousemans ownership of or interest in goods the document should
carry the notice of the fact on its face Omission to state
ownership of the goods in the receipt issued render the
warehouseman criminally liable9) Statement of advances made and
liabilities incurred to preserve the lien of the warehouseman over
the goods stored or the proceeds of it Effect of omission of any of
essential terms:1) Validity of the receipt not affected2)
Warehouseman liable for damages to those injured3) Negotiability of
receipt not affected4) Contract converted to ordinary deposit Form
provided by the law is merely permissive and directory
Section 3
Warehouseman given the power to insert additional terms or
conditions in receipts Limitations:a) Contrary to provisions of Act
No. 2137b) In any wise impair his obligation to exercise that
degree of carec) Not contrary to law, morals, good customs, public
order, or public policy Terms that cannot be included in a
warehouse receipt:1) Exemption from liability from misdelivery
contrary to Section 10 or Sections 33/342) Exemption from liability
for negligence
Sections 4-5
Negotiable the law regards the property which they describe as
following them and gives to their regular transfer by indorsement
the effect of manual delivery of the things specified in them A
warehouse receipt is no sense a negotiable instrument!
Sections 6-7
Section 6 refer to negotiable receipts Section 7 refer to
non-negotiable receipts Effect of failure to mark negotiable or
non-negotiable:1) Negotiable not render the receipt non-negotiable
Usually written or printed on the face of a negotiable warehouse
receipt2) Non-negotiable render it negotiable Provided : Holder of
such unmarked receipt purchased it for value supposing it to be
negotiable Law imposes upon the warehouseman the duty to mark the
receipts non-negotiable or not negotiable Liberal construction of
the law in favor of the bona fide holders of such receipts No
application to actions against any party to the transactions other
than a warehouseman
CHAPTER 2: OBLIGATIONS AND RIGHTS OF THE WAREHOUSEMEN UPON THEIR
RECEIPTS
Section 8
Warehouseman is essentially a depositary with respect to the
goods received and stored by him in the warehouse. Principal
obligations of warehouseman:1) Take care of the goods entrusted to
his safekeeping2) Deliver the goods to the holder of the receipt or
the depositor Demand should be made on the warehouseman in order
that the duty to deliver the goods will arise If demand is useless,
demand is dispensed with. Offer to satisfy the warehousemans lien
is required before the warehouseman is bound to deliver or return
the goods If offer is vain/useless, formal tender is not required.
Warehouseman criminally liable if he delivers goods without
obtaining possession of such receipts Right to require production
of the receipt as a condition precedent to delivery is subject to
waiver Negotiable receipt = demand for the delivery of the goods
must be accompanied by an offer to surrender the receipt properly
indorsed Not negotiable receipt = any person lawfully entitled to
the possession of the goods may be entitled to delivery without the
surrender of the receipt Existence of a lawful excuse for such
refusal to deliver is an affirmative defense which the warehouseman
must prove
Section 9
Person to whom goods must be delivered:1) Person lawfully
entitled to possession of goods or his agent Competent court has
ordered the delivery of the goods Attaching creditor Purchaser in
case of sale of the goods by the warehouseman to enforce his lien
Goods are perishable or hazardous2) Person entitled to delivery
under a non-negotiable receipt or with written authority3) Person
in possession of a negotiable receipt If delivered to one who
acquired custody of the goods through the use of falsified delivery
permit, warehouseman cannot sue for the value of the goods unless
he has been sued by the depositor or consignee.
Section 10
Warehousemans liability for misdelivery:1) Liability similar to
a bank paying for a forged check duty rests upon the warehouseman
of devising appropriate means by which deception can be avoided2)
Liability for conversion Liable if prior to delivery, he has been
requested not to make such delivery or he had received notice of
the adverse claim or title of a third person Conversion
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 owners rights
Sections 11-12
Not applicable to non-negotiable receipts Warehouseman may make
delivery without requiring their surrender and cancellation
SECTION 11SECTION 12
Receipt must be cancelledReceipt must be either cancelled or
marked
Except as provided in Section 36Except as provided in Section
36
Warehouseman delivers goods for which he had issued a negotiable
receipt and fails to take up and cancel the receiptWarehouseman
delivers PART of the goods for which he had issued a 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 delivered
Liable to anyone who purchases for value in good faith such
receipt for failure to deliver the goods to himLiable to anyone who
purchases for value in good faith such receipt for failure to
deliver ALL the goods specified in the receipt
Warehouseman not liable to purchaser for value in good faith of
such receipt from a thief
Section 13
Effects of alteration on liability of warehouseman:1) Alteration
immaterial liable on the altered receipt according to its original
tenor Tenor of the receipt not changed Whether fraudulent or not
Whether authorized or not2) Alteration material liable according to
the terms of the receipt as altered Tenor of the receipt is changed
Authorized3) Material alteration innocently made liable on the
altered receipt according to its original tenor Unauthorized4)
Material alteration fraudulently made liable according to the
original tenor of the receipt to a purchaser for value without
notice Liability is limited only to delivery as he is excused from
any liability Even a fraudulent alteration cannot divest the title
of the owner of stored goods Warehouseman liable to return them to
the owner A bona fide holder acquires no right to the goods under a
negotiable instrument:1) lost2) stolen3) indorsement of depositor
has been forged
Section 14
Court shall pass upon the question and make sure that the
receipt is really lost or destroyed before the goods are delivered
or a new receipt is issued Competent court may order the delivery
of goods only:1) Upon proof of loss or destruction of the receipt2)
Upon the giving of a bond with sufficient sureties to be approved
by the court Warehouseman is still liable to a holder of the
receipt for value without notice
Section 15
When more than one negotiable receipt is issued for the same
goods, the word duplicate must be plainly placed by the
warehouseman upon the face of every receipt, except the first one
issued. Duplicate is an accurate copy of the original receipt
Original receipt is uncancelled at the date of the issue of the
duplicate Duplicate imposes no other liability upon the
warehouseman Except for breach of warranty Warehouseman may not be
compelled to deliver the goods by virtue of the duplicate only
Section 16
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:a) Directly or indirectly
from a transfer made by the depositor at the time of the deposit
for storage or subsequent theretob) From the warehousemans lien
Based on the doctrine of estoppel
Sections 17-18
If there are several claimants to the goods:1) Determine within
reasonable time the validity of the conflicting claims2) Deliver to
entitled person the possession of the goods3) Not excused from
liability in case he makes a mistake Warehouseman must bring a
complaint in interpleader and require the different claimants to
litigate among themselves Relieved from liability in delivering the
goods to the person whom the court finds to have a better right
Warehouseman liable for refusal to deliver to the rightful claimant
Where he does not compel interpleader in a case requiring it
Warehouseman held guilty of conversion as of the date of original
demand for the goods Warehouseman neither interpleads nor
investigates After a lapse of reasonable time Reasonable time
determined in accordance with the circumstances of the particular
case Section 18 not apply to cases where the warehouseman himself
makes claim to the goods
Section 19
Warehouseman cannot set up title in himself as an excuse for his
failure or refusal to deliver the goods Adverse title of third
person not a defense for refusal to deliver Exceptions:1) Section 9
person to whom goods must be delivered2) Section 17 interpleader of
adverse claimants3) Section 18 warehouseman has reasonable time to
determine validity of claims4) Section 36 effect of sale
Section 20
GENERAL RULE: 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. Warehouseman is estopped to deny that
he has received the goods described in it. As against a bona fide
purchaser of a warehouseman receipt Whether the receipt is
negotiable or not Warehouseman is not liable even if the goods are
not of the kind as indicated in the marks or labels
Section 21
Required to exercise ordinary or reasonable care in the custody
of the goods Diligence of a good father of a family (Article 1163
of CC) Warehouseman not liable for any loss or injury to the goods
which could not have been avoided by the exercise of such care In
the absence of any agreement to the contrary What constitutes
ordinary or reasonable care depends upon the circumstances
Warehouseman cannot stipulate with the depositor that he would not
be responsible for any loss Even if caused by his negligence
Stipulation is VOID
Sections 22-24
GENERAL RULE: Warehouseman may not mingle goods belonging to
depositors EXCEPTION: Warehouseman may mingle fungible goods with
the goods of the same kind and grade Provided, he is authorized by
agreement or custom Different owner become co-owners of the whole
mass Intended for the benefit of the holders of the receipt
Section 25
Direct obligation to hold possession of the goods:1) For the
original owner 2) For the person to whom the negotiable receipt of
title has been duly negotiated Goods cannot be attached or levied
upon under an execution unless:1) Document be first surrendered2)
Negotiation is enjoined3) Document is impounded by the court
Warehouseman cannot be compelled to deliver up the possession of
the goods until the receipt is surrendered to him or impounded by
the court Section 25 do not apply:1) Depositor is not the owner of
the goods (thief)2) Depositor has no right to convey title to the
goods binding upon the owner3) Actions for recovery or manual
delivery of goods by the real owner4) Attachment is made before the
issuance of the negotiable receipt of title Rights acquired by
attaching creditors cannot be defeated by the issuance of a
negotiable receipt of title thereafter
Section 26
What is attached by the creditor is the negotiable receipt in
the debtors possession Expressly gives the court full power to aid
by injunction and otherwise a creditor seeking to get a negotiable
receipt covering such goods
Section 27
Warehousemans lien over the goods deposited with him is his
security for the payment of the charges, money advanced, and other
expenses. Lien exists for the benefit of the warehouseman Section
30 prescribes the extent of lien when the receipt is negotiable
Section 28
Goods subject to lien:1) Goods belonging to depositor or his
principal2) Goods stored in fraud of true owners rights
Warehouseman may enforce his lien:1) Against the goods of the
depositor who is liable to the warehouseman as debtor whenever such
goods are deposited2) Against goods of other persons stored by the
depositor who is liable to the warehouseman as debtor with
authority to make a valid pledge To give the warehouseman a lien
for charges against the goods of persons who are primarily liable
for the charges incurred Create the relation of debtor and
creditor
Section 29
Loss and waiver of lien upon goods:1) By surrendering possession
of goods By voluntarily surrendering the possession of it without
requiring payment of lien Presumption that lien has been waived or
abandoned where warehouseman permits a depositor to remove the
goods Involuntary parting with possession of goods ordinarily does
not result in loss of his lien by a warehouseman. Claim a lien on
other goods of the same depositor for unpaid charges on the goods
surrendered if the goods were delivered to him under different
bailments2) By wrongfully refusing to deliver goods Where the
holder of the receipt offers to comply with the requirements In
case the warehouse receipt has been pledged as security =
depositor-pledgor as owner continues to be liable The fact that the
receipt was delivered and endorsed in blank to the pledgee does not
alter the situation. Warehousemans lien concomitantly lost as to
what the law deems a valid demand Valid demand by the lawful holder
of a warehouse receipt for the delivery of goods Absence of a
lawful excuse provided by the law Valid reasons for refusing to
deliver goods:1) Holder of the receipt does not satisfy the
conditions prescribed in Section 82) Warehouseman has legal title
in himself on the goods3) Warehouseman has legally set up the title
or right of third person as lawful defense for nondelivery of the
goods3.1) Requested by or on behalf of the person lawfully entitled
to a right of property of or possession in the goods not to make
such delivery = require all known claimants to interplead3.2) Had
information that the delivery about to be made was to one not
lawfully entitled to the possession of the goods = excused from
liability3.3) Goods have already been lawfully sold to third person
to satisfy the warehousemans lien, or have been lawfully sold or
disposed of because of their perishable or hazardous nature4)
Warehouseman having a lien valid against the person demanding the
goods refuses to deliver the goods to him unless the lien is
satisfied5) Failure was not due to any fault on the part of the
warehouseman Good were stolen or destroyed by fire, flood, etc.
without any negligence on his part Goods taken by the mistake of a
third person without the knowledge or implied assent of the
warehouseman Other justifiable ground for non-delivery
Section 30
Lien exists only for the other charges expressly enumerated in
the receipt Written within the terms of Section 26 Although amount
not stated Exception: Charges for storage and preservation of goods
Warehouseman shares pro rata with the other creditors of the
depositor the balance of the proceeds of the sale for the
satisfaction of said claims Claims not specified in the receipt
After deducting the charges for storage
Sections 31-36
Remedies for enforcement of warehousemans lien:1) Refusing to
deliver the goods until the lien is satisfied2) Causing the
extrajudicial sale of the property and applying the proceeds to the
value of the lien3) Filing a civil action for collection of the
unpaid charges Or by way of counterclaim in an action to recover
the property from him Or other remedies allowed by law for the
enforcement of a lien against personal property Or to a creditor
against his debtor Warehouseman entitled to all the remedies
allowed by the law to a creditor against his debtor for the
collection from the depositor of all the charges which the
depositor has bound himself to pay. Effect of sale:1) Warehouseman
not liable for nondelivery Even if receipt given for the goods when
they were deposited be negotiated2) Sale without publication
required and before time specified by the law = VOID Purchases of
the goods acquires no title Acts for which warehouseman is
liable:1) Failure to stamp duplicate on copies of a negotiable
receipt2) Failure to place non-negotiable or not negotiable on a
non-negotiable receipt3) Misdelivery of goods4) Failure to effect
cancellation of a negotiable receipt upon delivery of the goods5)
Issuing receipt for non-existing goods or misdescribed goods6)
Failure to take care of the goods7) Failure to give notice for sale
of goods to satisfy his lien for perishable or hazardous goods
WAREHOUSE RECEIPTS LAW1. 1. Warehouse a building or place where
goods are deposited and stored for profit.1. 2. Warehouseman person
lawfully engaged in the business of storing goods for profit. Only
a warehouseman may issue warehouse receipts.1. 3. Warehouse Receipt
written acknowledgment by a warehouseman that he has received and
holds certain goods therein described in store for the person to
whom it is issued.1. 4. Non-negotiable Receipt receipt deliverable
to a specified person.1. 5. Negotiable Receipt receipt deliverable
to order or to bearer.1. 6. Essential Terms which MUST be embodied
in a Warehouse Receipt:1. a. location of the warehouse2. b. date of
the issue of the receipt3. c. consecutive number of the receipt4.
d. statement whether the goods received will be delivered to
bearer, or a specified person, or his order5. e. rate of storage
charges6. f. description of the goods or packages containing them
for identification purposes7. g. signature of the warehouseman8. h.
statement of the amount of advances made and of liabilities
incurred for which the warehouseman claims as lien1. 7. Effect of
omission of any of the essential terms:1. a. The validity of the
warehouse receipt is not affected.2. b. The warehouseman shall be
held liable for damages to those injured by his omission.3. c. The
negotiability of the warehouse receipt is not affected.4. d. The
issuance of a warehouse receipt in the form provided by the law is
merely permissive and directory and not mandatory in the sense that
if the requirements are not observed, then the goods delivered for
storage become ordinary deposits.1. 8. Terms which may be inserted
in a Warehouse Receipt: Any other terms except (a) those contrary
to the provisions of this Act; (b) those that would impair a
warehousemans obligation to exercise that degree of care in the
safekeeping of the goods entrusted to him1. 9. Marks to be made on
a warehouse receipt:1. a. A non-negotiable receipt must be clearly
marked non-negotiable or not negotiable, otherwise, the holder of
the receipt who purchased it for value and who supposed it to be
negotiable, may treat it as negotiable.2. b. Duplicate receipts
must be so marked, otherwise, the warehouseman is held liable for
all damages suffered by a holder believing the same to be the
original.1. 10. Warranties of a warehouseman as to duplicate
receipts:1. a. The duplicate is an accurate copy of the original
receipt.2. b. Such original receipt is uncancelled at the date of
the issue of the duplicate.1. 11. Effects of alteration on the
liability of the warehouseman:1. a. If the alteration is IMMATERIAL
(the tenor of the receipt is not changed), whether fraudulent or
not, authorized or not, the warehouseman is liable on the altered
receipt according to its original tenor.2. b. If the alteration is
MATERIAL but AUTHORIZED, the warehouseman is liable according to
the terms of the altered receipt.3. c. If the alteration is
MATERIAL, UNAUTHORIZED but INNOCENTLY MADE, the warehouseman is
liable on the altered receipt according to its original tenor.4. d.
If the alteration is MATERIAL and FRAUDULENTLY MADE, the
warehouseman is liable:(1) to the purchaser of the receipt for
value and without notice of the alteration according to the tenor
of the altered receipt(2) to the alterer, according to the terms of
the original receipt(3) to subsequent purchasers with notice of the
alteration, according to the terms of the original receipt1. 12.
Effects of misdescription of goods:1. a. A warehouseman is under
the obligation to deliver the identical property stored with him
and if he fails to do so, he is liable directly to the owner.2. b.
As against a bona fide purchaser of a warehouse receipt, the
warehouseman is estopped from denying that he has received the
goods described in the receipt.3. c. If the description consists
merely of marks or label upon the goods or upon the packages
containing them, the warehouseman is not liable even if the goods
are not of the kind as indicated in the marks or labels.1. 13.
Principal Obligations of a Warehouseman:1. a. To take care of the
goods entrusted to his safekeeping 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.1. b. To deliver the goods to the holder of the
receipt or the depositor upon demand, provided demand is
accompanied with:(1) an offer to satisfy the warehousemans lien;(2)
an offer to surrender the negotiable receipt properly endorsed. If
the receipt is non-negotiable, any person lawfully entitled to the
possession of the goods may be entitled to delivery without
surrender of the receipt.(3) a readiness and willingness to sign an
acknowledgment that the goods have been delivered if such is
requested by the warehouseman.1. 14. Persons to whom goods must be
delivered:1. A. Persons lawfully entitled to the possession of the
goods or his agent:a. persons to whom a competent court has ordered
the delivery of the goods(1) where a negotiable instrument has been
lost or destroyed, the court may order delivery to a person upon
satisfactory proof of such loss or destruction and upon proper
posting of a bond to protect the warehouseman from any liability or
expense which he may incur by reason of the original receipt
remaining outstanding.(2) where more than one person claims title
or possession of the goods the warehouseman may require all
claimants to interplead. The court will then order delivery to the
person having a better right.1. b. an attaching creditor Goods,
while in the possession of the warehouseman and covered by a
negotiable receipt, cannot be attached or levied upon under an
execution unless:(I) the negotiable receipt is first surrendered to
the warehouseman, or(ii) its negotiation is enjoined, or(iii) the
receipt is impounded by the courtc. to the purchaser in case of
sale of the goods by the warehouseman to enforce his lien1. d. to
the purchaser where perishable or hazardous goods are sold at
private or public sale1. B. If goods are covered by a
non-negotiable receipt:1. a. a person entitled to the delivery by
the terms of the receipt, or2. b. one who has written authority
from letter a1. C. If goods are covered by a negotiable receipt, a
person in possession of the receipt, the terms of which the goods
are deliverable:1. a. to him or order2. b. to bearer3. c. indorsed
to him4. d. indorsed in blank by the person whom delivery was
promised1. 15. 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. a. the person does not
fall under letter B or C above; or2. b. the person falls under
letter B or C but prior to delivery, the warehouseman had
either:(1) been requested by the person lawfully entitled to the
delivery not to make such delivery, or(2) had information that the
delivery about to be made was to one not lawfully entitled to the
possession of the goods1. 16. Effects of Misdelivery:The
warehouseman shall be liable for conversion to all having a right
to property or possession of the goods.1. 17. What happens if there
is proper delivery or partial delivery but the warehouseman fails
to cancel the receipt or record on the receipt of such partial
delivery?1. a. If goods covered by a negotiable warehouse receipt
are delivered by a warehouseman but he fails to take the receipt
and cancel it, then he is still liable to one who purchases for
value and in good faith such receipt.2. b. If he makes partial
delivery of the goods but fails to record the partial delivery on
the receipt then he may still be held liable for the entire receipt
to one who purchases for value and in good faith such receipt.1.
18. Lawful excuses for refusal to deliver goods:1. a. The
warehouseman can refuse to deliver the goods if he has acquired
title or right to the possession of the goods:(1) directly or
indirectly from a transfer made by the depositor at the time of the
deposit for storage or subsequent thereto; or(2) from the
warehousemans lien1. b. If someone other than the depositor or
person claiming under the depositor has a claim to the title or
possession of the 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 until he has had a reasonable time to ascertain
the validity of the adverse claim or to bring legal proceedings to
compel all claimants to interplead.1. c. The warehouseman will not
be required to deliver the goods if such had been lost. But this is
without prejudice to liabilities which may be incurred by him due
to such loss.1. d. The warehouseman having a valid lien against the
person demanding the goods may refuse to deliver the goods to him
until the lien is satisfied.1. e. If goods have been lawfully sold
or disposed of because of their perishable or hazardous nature, the
warehouseman shall not be liable for failure to deliver the
goods.1. 19. A warehouseman cannot refuse to deliver goods to the
depositor or to a person claiming under him on the ground that
adverse title to the goods belongs to a third person.1. 20. Rules
as regards Co-mingling of Deposited Goods: 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. Exception: A warehouseman may co-mingle
fungible goods of the same kind and grade provided he is authorized
by agreement or by custom.1. 21. Effect of Co-mingling of Goods:1.
a. The different owners become co-owners of the whole mass.2. b.
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.1. 22. Remedies of a Creditor: (the debtor being the
owner of the negotiable receipt)Creditors of the depositors, before
negotiation, may protect themselves by obtaining a writ of
preliminary injunction and serve the same on the depositor before
he has a chance to negotiate the receipt. Once enjoined, there will
be no longer a danger that a 3rd person will be prejudiced so the
goods may now be attached, levied upon, or that the vendors lien or
the right of stoppage in transit be exercised.1. 23. Warehousemans
Lien Extent of Warehousemans Lien:A warehouseman shall have a lien
on goods deposited or on the proceeds thereof in his hands for:1.
a. all lawful charges for storage and preservation of the goods2.
b. all lawful claims for money advances, interest, insurance,
transportation, labor, weighing, cooperating and other charges and
expenses in relation to such goods3. c. all reasonable charges and
expenses for notice and advertisements of sale and for sale of the
goods where default has been made in satisfying the warehouse lien
Goods Subject to lien:1. a. goods belonging to the depositor who is
liable to the warehouseman as debtor whenever such goods are
deposited and2. b. goods belonging to other persons stored by the
depositor who is liable to the warehouseman as debtor with
authority to make a valid pledge How is a lien enforced?1. a. by
refusing to deliver the goods until the lien is satisfied2. b. by
causing the extrajudicial sale of the property and applying the
proceeds to the value of the lien3. c. by filing a civil action for
unpaid charges or by way of counterclaim in an action to recover
the property from him How is a lien lost?1. a. when the
warehouseman voluntarily surrenders possession of the goods without
requiring payment of his lien; or2. b. when the warehouseman
wrongfully refuses to deliver the goods when a demand is made with
which he is bound to comply1. 24. Negotiation and Transfer of
Receipts How do we negotiate a receipt deliverable to order?1. a.
by indorsing it in blank thereby making it deliverable to bearer
or2. b. by special indorsement which would require further
indorsements for further negotiations.In both cases, the
indorsements must be coupled with delivery. How do we negotiate a
receipt deliverable to bearer?There is no need to indorse for
negotiation. Physical delivery of the instrument will suffice. But
if the instrument is indorsed specially, the bearer character of
the receipt is destroyed and for further negotiation, there will be
a need for indorsement. Who may negotiate warehouse receipts?1. a.
the owner of the receipt, or2. b. the person to whom possession of
the receipt was entrusted to by the owner Rights acquired by a
person to whom the receipt has been negotiated:1. a. the title of
the person negotiating the receipt over the goods covered by the
receipt2. b. the title of the person (depositor or owner) to whose
order by the terms of the receipt the goods were to be delivered3.
c. the direct obligation of the warehouseman to hold possession of
the goods for him, as if the warehouseman directly contracted with
him May non negotiable receipts be negotiated?No, even if the
receipt is indorsed, the transferee acquires no additional right.
That is why they are called non negotiable receipts. But they may
be transferred or assigned by delivery. Rights of a person to whom
a non negotiable receipt has been transferred:1. a. the title to
the goods as against the transferor2. b. the right to notify the
warehouseman of the transfer thereof and3. c. the right thereafter
to acquire the obligation of the warehouseman to hold the goods for
him Distinction between a non negotiable receipt from a negotiable
receipt with regard to attachment or execution upon goods:
Non-negotiable ReceiptNegotiable Receipt
Prior to notification of the warehouseman by the transferor or
transferee, the warehouseman is not bound to the transferee whose
right may be defeated by a levy of an attachment or execution upon
the goods by the creditor of the transferor or by a notification to
such warehouseman of the subsequent sale of the goods.The goods
cannot be attached or levied under an execution unless the receipt
be first surrendered to the warehouseman or its negotiation
enjoined.
Rights of a person to whom a negotiable receipt has been
transferred, not indorsed:1. a. the right to the goods as against
the transferor2. b. the right to compel the transferor to indorse
the receipt. But if the intention of the parties is that the
receipt should merely be transferred, the transferee has no right
to require the transferor to indorse the receipt.Note: Negotiation
takes effect as of the time when the indorsement is actually made.
Warranties of a person negotiating or transferring a receipt:1. a.
the receipt is genuine2. b. he has a legal right to negotiate or
transfer it3. c. he has knowledge that would impair the validity or
worth of the receipt and4. d. he has a right to transfer the title
to the goods and that the goods are merchantable A holder for
security of a receipt (mortgagee or pledgee) who in good faith
accepts payment of the debt from a person does not warrant the
genuineness of the receipt not the quality or quantity of the goods
therein described. It is the duty of the purchaser, mortgagee or
pledgee of goods for which a negotiable receipt has been issued 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 any subsequent negotiation. The subsequent
purchaser must have taken the receipt in good faith and for value.
A bona fide purchaser of a negotiable warehouse receipt acquires
title to the goods where he purchases from the owners agent within
the actual or apparent scope of his authority. In sum, negotiation
is valid despite having been made in breach of trust. Distinctions
between a negotiable instrument and a negotiable warehouse
receipt:Negotiable InstrumentNegotiable Warehouse Receipt
When a negotiable instrument is altered deliberately, it becomes
null and void.When a warehouse receipt is altered, it is still
valid but it may be enforced only in accordance with its original
tenor.
If a negotiable instrument is originally payable to bearer, it
will always remain so payable regardless of the way it is indorsed,
whether specially or in blank.If a warehouse receipt, payable to
bearer, is indorsed specially, it will be converted into a receipt
deliverable to order and can only be negotiated further by
indorsement and delivery.
A holder in due course may be able to obtain a title better than
that which the party who negotiated the instrument to him had.An
indorsee even if a holder in due course obtains only such title as
the person negotiating has over the goods.
The indorsement of a negotiable instrument has a double effect.
It is at the same time a conveyance of the instrument and a
contract the indorser has with the indorsee that on certain
conditions, the indorser will pay the instrument if the party
primarily liable fails to do so.The indorsement of a warehouse
receipt amounts merely to a conveyance by the indorser.
Accordingly, an indorser of a receipt shall not be liable to the
holder if, for example, the warehouseman fails to deliver the goods
because they were lost due to his fault or negligence.
PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs. LAUREANO
ATENDIDO, defendant-appellant.
Nature: An appeal from a decision of CFI Nueva Ecija ordering
Atendido to pay PNB the sum of P3,000, with interest thereon at the
rate of 6% per annum from June 26, 1940, and the costs of
action.
Facts: June 26, 1940 - Atendido obtained from PNB a loan of
P3,000 payable in 120 days with interest at 6% per annum from the
date of maturity. To guarantee the payment of the obligation,
Atendido pledged to PNB 2,000 cavanes of palay deposited in a
warehouse in Bulacan. Atendido endorsed the corresponding warehouse
receipt in favor of PNB.
Before the maturity of the loan, the 2,000 cavanes of palay
disappeared for unknown reasons in the warehouse. When the loan
matured Atendido failed to pay. The present action was
instituted.
Atendido claims that the warehouse receipt covering the palay
which was given as security having been endorsed in blank in favor
of PNB, and the palay having been lost or disappeared, he thereby
became relieved of liability. He also claims that he is entitled to
an indemnity which represents the difference between the value of
the palay lost and the amount of his obligation. CFI ruled in favor
of PNB. Atendido appealed
Issue: Whether the surrender of the warehouse receipt covering
the 2,000 cavanes of palay given as a security, endorsed in blank,
to PNB, has the effect of transferring their title or ownership to
PNB.
SC Held: CFI decision affirmed.
The surrendering of the warehouse receipt was not that of a
final transfer but merely as a guarantee to the fulfillment of the
original obligation of P3,000.00.
The 2,000 cavanes of palay covered by the warehouse receipt were
given to PNB only as a guarantee to secure the fulfillment by
Atendido of his obligation. This appears in the contract between
them wherein it is expressly stated that said 2,000 cavanes of
palay were given as a collateral security.
The delivery of said palay being merely by way of security, it
follows that by the very nature of the transaction its ownership
remains with Atendido (the pledgor) subject only to foreclosure in
case of non-fulfillment of the obligation.
If the obligation is not paid upon maturity the most that PNB
(the pledgee) can do is to sell the property and apply the proceeds
to the payment of the obligation and to return the balance, if any,
to the pledgor (Article 1872, Old Civil Code).
According to the SC, this is the essence of this contract, for,
according to law, a pledgee cannot become the owner of, nor
appropriate to himself, the thing given in pledge (Article 1859,
Old Civil Code).
If by the contract of pledge the pledgor continues to be the
owner of the thing pledged during the pendency of the obligation,
in case of loss of the property, the loss should be borne by the
pledgor (owner).
The fact that the warehouse receipt covering the palay was
delivered, endorsed in blank, to PNB does not alter the situation,
the purpose of such endorsement being merely to transfer the
juridical possession of the property to the pledgee and to
forestall any possible disposition thereof on the part of the
pledgor.
RCBC vs ALFA
Facts:Alfa on separate instances was granted by RCBC 4 letters
of credit to facilitate the purchase of raw materials for their
garments business. Alfa executed 4 trust receipts and made
comprehensive surety agreements wherein the signatory officers of
Alfa agreed in joint/several capacity to pay RCBC in case the
company defaulted. RCBC filed a case versus Alfa for a sum of
money. The CA awarded only P3M (minimum amount) to RCBC instead of
P18M as stipulated in their contract.
Issue:W/N the CA can deviate from the provisions of the contract
between the parties?
Ruling: No. Contracting parties may establish agreements terms,
deemed advisable provided they are not contrary to law/public
policy. A contract is a law between the parties. In this case its
valid because it was not excessive under the Usury Law.
*Atty. Aguinaldo assigned this case because he just wanted to
show us how to compute for the interest in long term deals. He even
made a diagram on the board. Di ko na ilalagay un sa digest because
I assume that my industrious & responsible classmates took down
notes... = p
RODZSSEN SUPPLY V. FAR EAST
Facts: On January 15, 1979, defendant Rodzssen Supply, Inc.
opened with plaintiff Far East Bank and Trust Co. a 30-day domestic
letter of credit, in the amount of P190,000.00 in favor of Ekman
and Company, Inc. (Ekman) for the purchase from the latter of five
units of hydraulic loaders, to expire on February 15, 1979. The
three loaders were delivered to defendant for which plaintiff paid
Ekman and which defendant paid plaintiff before expiry date of LC.
The remaining two loaders were delivered to defendant but the
latter refused to pay. Ekman pressed payment to plaintiff.
Plaintiff paid Ekman for the two loaders and later demanded from
defendant such amount as it paid Ekman. Defendant refused payment
contending that there was a breach of contract by plaintiff who in
bad faith paid Ekman, knowing that the two units of hydraulic
loaders had been delivered to defendant after the expiry date of
subject LC.
Issue: WON petitioner is liable to respondent.
Ruling: The SC agrees with the CA that petitioner should pay
respondent bank the amount the latter expended for the equipment
belatedly delivered by Ekman and voluntarily received and kept by
petitioner. Equitable considerations behoove us to allow recovery
by respondent. True, it erred in paying Ekman, but petitioner
itself was not without fault in the transaction. It must be noted
that the latter had voluntarily received and kept the loaders since
October 1979. When both parties to a transaction are mutually
negligent in the performance of their obligations, the fault of one
cancels the negligence of the other and, as in this case, their
rights and obligations may be determined equitably under the law
proscribing unjust enrichment.
PNB vs. Se, et al.G.R. No. 119231 | 18 April 1996
ISSUE:WON the warehouseman can enforce his warehouseman's lien
before delivering the sugar stocks as ordered by the Court of
Appeals or need he file a separate action first to enforce payment
of storage fees
HELDYES. It is not disputed, therefore, that, under the subject
Warehouse Receipts provision, storage fees are chargeable.
Petitioner anchors its claim against private respondents on the
five (5) Warehouse Receipts issued by the latter to third-party
defendants Rosa Ng Sy of RNS Merchandising and Teresita Ng of St.
Therese Merchandising, which found their way to petitioner after
they were negotiated to them by Luis T. Ramos and Cresencia K.
Zoleta for a loan of P39.1 Million. Accordingly, petitioner PNB is
legally bound to stand by the express terms and conditions on the
face of the Warehouse Receipts as to the payment of storage fees.
Even in the absence of such a provision, law and equity dictate the
payment of the warehouseman's lien pursuant to Sections 27 and 31
of the Warehouse Receipts Law (R.A. 2137).After being declared not
the owner, but the warehouseman, the decision having been affirmed
by us on December 1, 1993, private respondents cannot legally be
deprived of their right to enforce their claim for warehouseman's
lien, for reasonable storage fees and preservation expenses.
Pursuant to Section 31, the goods under storage may not be
delivered until said lien is satisfied. Considering that petitioner
does not deny the existence, validity and genuineness of the
Warehouse Receipts on which it anchors its claim for payment
against private respondents, it cannot disclaim liability for the
payment of the storage fees stipulated therein.
Petitioner is in estoppel in disclaiming liability for the
payment of storage fees due the private respondents as warehouseman
while claiming to be entitled to the sugar stocks covered by the
subject Warehouse Receipts on the basis of which it anchors its
claim for payment or delivery of the sugar stocks. The
unconditional presentment of the receipts by the petitioner for
payment against private respondents on the strength of the
provisions of the Warehouse Receipts Law (R.A. 2137) carried with
it the admission of the existence and validity of the terms,
conditions and stipulations written on the face of the Warehouse
Receipts, including the unqualified recognition of the payment of
warehouseman's lien for storage fees and preservation expenses.
Petitioner may not now retrieve the sugar stocks without paying the
lien due private respondents as warehouseman.
While the PNB is entitled to the stocks of sugar as the endorsee
of the quedans, delivery to it shall be effected only upon payment
of the storage fees. Imperative is the right of the warehouseman to
demand payment of his lien at this juncture, because, in accordance
with Section 29 of the Warehouse Receipts Law, the warehouseman
loses his lien upon goods by surrendering possession thereof. In
other words, the lien may be lost where the warehouseman surrenders
the possession of the goods without requiring payment of his lien,
because a warehouseman's lien is possessory in nature.