THE WAREHOUSE RECEIPTS LAW

ACT NO. 2137

(IN PARTIAL FULFILLMENT

OF THE SUBJECT SPECIAL COMMERCIAL LAW)

SUBMITTED TO:
ATTY. AURELIO A. GALACGAC

SUBMITTED BY:

ARIZ, MAC TOMMY

BILOG, ARMANDO
CHILAGAN, KIMBERLY JOY P.
OKKO, ALMA T.

4-B

NOVEMBER 23, 2017

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 THE WAREHOUSE RECEIPTS LAW
ACT NO. 2137

WHAT IS WAREHOUSE RECEIPT?

It is a written acknowledgement of a warehouseman that he holds certain goods in

storage for the person to whom the document is issued. This is also known as the
warehouse-keepers receipt, quedan for certain goods, or storage receipt.

PURPOSE OF WAREHOUSE RECEIPTS LAW:

The Warehouse Receipt Law regulates the status, rights, and liabilities of the
parties. In particular, it prescribes the rights and duties of a warehouseman and to
regulate his relationships with the depositor of the goods, the holder of the
warehouse receipt or the person lawfully entitled to the possession of the goods
and other persons.

PURPOSE OF GENERAL BONDED WAREHOUSE RECEIPT LAW:

The purpose of the General Bonded Warehouse Receipt Law is to regulate the
business of receiving commodities for storage in order to protect persons who
may want to avail themselves of warehouse facilities and to encourage the
establishment of more warehouses.

HOW OWNERSHIP OF NEGOTIABLE WAREHOUSE RECEIPT IS

TRANSFERRED.

Ownership is transferred by delivery if the negotiable warehouse receipt states

that it is deliverable to bearer or a named person or bearer, or to the person named
therein.

If it is deliverable to named person or order, ownership may be transferred by

special indorsement and delivery. The endorsement can be to bearer or to
specified person.

A non-negotiable warehouse receipt is transferred by delivery accompanied with a

deed of assignment or transfer. If this is indorsed, the indorsement will not give
the transferee any right whatsoever.

ADVANTAGES OF A NEGOTIABLE WAREHOUSE RECEIPT

1. Good cannot be garnished or levied upon under execution unless receipt is

surrendered, or impounded, or its negotiation is enjoined;

2. In case of negotiation, the holder acquires the direct obligation of the

warehouseman to hold the possession of the goods for him; and

3. The goods are not subject to vendors lien or stoppage in transitu.

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 DEFINITION OF WAREHOUSEMAN.

A warehouseman is a person lawfully engaged in the business of storing goods for

profit. He is also known as one who receives and stores goods owned by others
and collects fees for so doing.

PRIMARY DUTIES OF A WAREHOUSEMAN UNDER THE WAREHOUSE

RECEIPT LAW

Under the Warehouse Receipt Law, the primary duties of a warehouseman are:

1. To issue a receipt for any commodity that he receives for storage; and

2. To exercise that degree of care in safeguarding the goods entrusted to him

which a reasonably careful man would exercise in regard to similar goods of
his own. In the absence of any agreement to the contrary, he shall not be liable
for any loss or injury to the goods, which could not have been avoided by the
exercise of such care. A stipulation limiting liability to the agreed value of the
goods is valid. If, exemption to liability due to the negligence of the
warehouseman or that of his employees is indicated in the receipt, such
provision is void.

PRIMARY DUTIES OF A WAREHOUSEMAN UNDER THE GENERAL

BONDED WAREHOUSE RECEIPT LAW.

The primary duties of a warehouseman under the General Bonded Warehouse

Receipt Law are:
1. Put up a cash bond secured by a real estate or a bond issued by a duly
authorized bonding company in an amount no less than 33 and 1/3 percent of
the market value of the maximum quantity of commodity to be received by the
warehouseman, conditioned as to respond to the market value of the
commodity actually delivered and received at any time by the warehouseman is
able to return the commodity or pay its value. The bond is available for
recourse to a party damaged by the breach of the warehouseman of any of his
obligations. If it be insufficient, the injured party may sue on any property or
asset not otherwise exempt form attachment or execution; and

2. Insure the commodity received for storage against fire. The other instances
when he is required to procure insurance are: when notice to that effect has
been made by the warehouseman; as a matter of practice; when it is so
provided in the warehouse receipt, or; where the law so provides.

REQUISITES IN ORDER TO OBLIGE A WAREHOUSEMAN TO DELIVER

THE GOODS.

The claimant is the holder of the receipt of the goods or the depositor who upon
demand also makes the following:

1. An offer to satisfy warehousemans lien;

2. An offer to surrender the receipt if it is negotiable; and
3. A readiness or willingness to sign acknowledgment of delivery of the goods if
requested.

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 TWO (2) WAYS A WAREHOUSEMAN MAY AVAIL IN ORDER TO PROTECT
HIM FROM MISDELIVERY:

1. Availing of the reasonable time that he is entitled to within which to ascertain

the validity of the adverse claim; and

2. To bring legal proceedings to force the claimants to interplead or may actually

require the claimants to interplead.

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:

1. Those contrary to any provision of the law.
2. In any wise impair the warehousemans 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.

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 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 warehousemans lien.

b. An offer to surrender the receipt, if negotiable with such indorsement as would be
necessary for the negotiation of the receipts.
c. A readiness and willingness to sign, when the goods are delivered, an
acknowledgment that they have been delivered, if such signature is requested by the
warehouseman.

WHAT SHOULD ACCOMPANY THE DEMAND FOR THE RETURN OF THE

GOODS?
1. An offer to satisfy the warehousemans 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 acknowledgment 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

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 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.

WAREHOUSEMANS 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:

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

property or possession in goods, not to make such delivery.

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
another through the alteration of their condition or the exclusion of the owners 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 anyone 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 alter the alterer and subsequent purchasers with notice except that as regards to
the last two, warehousemans 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

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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 warehousemans 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 has 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 right to the possession of the same unless such title or right is derived:

Directly or indirectly from a transfer made by the depositor at the time of the
deposit for storage or subsequent thereto.

From the warehousemans 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 DETERMINEVALIDITYOF

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 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.

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 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 isnt liable for any loss or injury to the goods, which couldnt have
been avoided by the exercise of such care. 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 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 good 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:

The document is first surrendered.

Its negotiation is enjoined.
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.

CREDITORS 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 WAREHOUSEMANS LIEN

1. All lawful charges for storage and preservation of the goods.

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 2. All lawful claims for money advanced - Interests, Insurances, 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 warehousemans 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
isnt stated

OTHER THINGS IN CONNECTION TO WAREHOUSEMANS LIEN

1. Warehouseman need not deliver lien is satisfied.
2. Warehousemans lien doesnt 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 WAREHOUSEMANS LIEN

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 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, 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.

3. 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 isnt
sufficient.

TRANSFER OF NON-NEGOTIABLE RECEIPT

A non-negotiable receipt of title cannot be negotiated.

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 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 arent subject to sellers lien or stoppage in transit.

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.

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 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 doesnt 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 doesnt 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 isnt 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.

INDORSEES RIGHT SUPERIOR TO VENDORS 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 vendors lien upon such goods.

Warehouseman isnt 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?

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 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.
Reference: https://www.batasnatin.com/law-library/civil-law/obligations-and-contracts/875-the-warehouse-
receipts-law.html

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 CASE DIGESTS

People vs. Versola

G.R. No. 1-5707, March 27, 1958
Concepcion J.

Facts: Dionisio Versola was convicted for operating a rice mill without a license, in violation of
section 3 of Act No. 3893, otherwise known as "The General Bonded Warehouse Act. He is the
owner and operator of a rice mill enclosed within a structure or "camarin", 6 by 8 meters, made
of wooden posts and partition walls, with cogon roof.

In January, 1951, and prior thereto, appellant accepted and milled palay in his "camarin",
and charged therefor frorn P0.50 to P0.80 per cavan, without securing the license provided for in
Act No. 3893, from the Bureau of Commerce. What is more, he refused to obtain said license,
although a representative of said office had' urged him to secure one. Appellant maintains that
his mill is not subject to the provisions of said Act, upon the ground that the structure above
mentioned is used for milling only, not for the storage and deposit of palay or rice; that,
sometimes, his customers bring small quantities of palay, ranging from one petroleum can to a
sack; and that the palay or rice received in his "camarin" is not kept therein for over an hour.

However, appellant insisted that the provisions of the Act. No. 3893 has no possible
application where rice is delivered, not for storage, but for milling purposes.

Issue: Whether or not Versola is engaged in Warehouse business so as to require him to obtain a
license.

Held: Yes. The term "warehouse" shall be deemed to mean every building, structure, or other
protected inclosure in which rice is kept for storage. The term "rice" shall be deemed to mean
either palay, in bundles or in grains, of cleaned rice, or both. "Person" includes a corporation or
partnership or two or more persons having a joint or common interest; "warehouseman" means a
person engaged in the business of receiving rice for storage; and "receipt" means any receipt
issued by a warehouseman for rice delivered to him.

Thus, whenever a rice mill, engaged in the business of hulling palay for others, is housed
in a" camarin" like that of appellant herein, the keeping of palay or rice therein follows as a
necessary consequence. This is true, even if the grains were received therein exclusively for
milling purposes. Hence, one way or the other, there is a form of storage, the duration of which
may vary, depending upon circumstances. In any event, the rice mill operator is responsible for
the palay or rice, while the same is in his possession, and public policy or public interest
demands that the rights of the owners of commodity which is our main staple be duly
protected. Hence, the need of securing the license prescribed in Act No. 3893, in order that the
Director of Commerce could determine the conditions under which the mill may be authorized to
operate, conformably with the objective of said legislation, and the amount of the bond to be
required for the protection of the people who avail themselves of its services.

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 Commissioner of Internal Revenue vs. Hawaiian-Philippine Company
G.R. No. L-16315, May 30, 1964
Dizon, J.

Facts: The Hawaiian-Philippine Company is operating a sugar central in the City of Silay,
Occidental Negros. It produces centrifugal sugar from sugarcane supplied by planters. The
processed sugar is divided between the planters and the petitioner in the proportion stipulated in
the milling contracts, and thereafter is deposited in the warehouses of the latter.

For the sugar deposited by the planters, the petitioner issues the corresponding warehouse
receipts of "quedans". It does not collect storage charges on the sugar deposited in its warehouse
during the first 90 days period counted from the time it is extracted from the sugarcane. Upon the
lapse of the first ninety days and up to the beginning of the next milling season, it collects a fee
of P0.30 per picul a month. Henceforth, if the sugar is not yet withdrawn, a penalty of P0.25 per
picul or fraction thereof a month is imposed.

Upon investigation conducted by the Bureau, it was found that during the years 1949 to
1957, the petitioner realized from collected storage fees a total gross receipts of P212,853.00, on
the basis of which the respondent determined the petitioner's liability for fixed and percentage
taxes, 25% surcharge, and administrative penalty in the aggregate amount of P8,411.99.

On October 20, 1958, the petitioner deposited the amount of P8,411.99 with the Office of
the City Treasurer of Silay. Later, it filed its petition for review before this Court disclaiming
liability alleging that it is not engaged the business of storing its planters' sugar for profit; that the
maintenance of its warehouses is merely incidental to its business of manufacturing sugar and in
compliance with its obligation to its planters.

Issue: Whether or not petitioner is a warehouseman liable for the payment of the fixed and
percentage taxes.

Held: Yes. A warehouseman is one who receives and stores goods of another for compensation.
For one to be considered engaged in the warehousing business, therefore, it is sufficient that he
receives goods owned by another for storage, and collects fees in connection with the same. In
fact, Section 2 of the General Bonded Warehouse Act, as amended, defines a warehouseman as
"a person engaged in the business of receiving commodity for storage."

The fact that the HPC stores its planters sugar free of charge does not exempt it from
liability. While the sugar is stored free during the 90 days from the date the it "quedans" are
issued, the undisputed fact is that, upon the expiration of said period, respondent charges, and
collects storage fees.

Lastly, respondent's contention that the imposition of the tax under consideration would
amount to double taxation is likewise without merit. As is clear from the facts, respondent's
warehousing business, although carried on in relation to the operation of its sugar central, is a
distinct and separate business taxable under a different provision of the Tax Code. There can be
no double taxation where the State merely imposes a tax on every separate and distinct business
in which a party is engaged.

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 ROMAN vs. ASIA BANKING CORPORATION
G.R. No. L-17825, June 26, 1922
Ostrand, J.

Facts: The case is an appeal in with regard to the insolvency of Umberto de Poli, and declaring
the lien claimed by the appellee Felisa Roman upon a lot of leaf tobacco, consisting of 576 bales,
and found in the possession of said insolvent, superior to that claimed by the appellant, the Asia
Banking Corporation.

The warehouse of U. de Poli for 576 bales of tobacco issued a warehouse receipt. In the
face of the instrument ,U. de Poli certifies that he is the sole owner of the merchandise therein
described. The receipt is endorsed in blank "Umberto de Poli;" it is not marked "non-negotiable"
or "not negotiable."

The first paragraph of the receipt reads as follows:

Quedan depositados en estos almacenes por orden del Sr. U. de Poli la cantidad de quinientos
setenta y seis fardos de tabaco en rama segun marcas detalladas al margen, y con arreglo a las
condiciones siguientes:

Issue: Whether or not the warehouse receipt is a negotiable instrument.

Held: Yes, because the receipt was not marked "non-negotiable." Section 7 of the Uniform
Warehouse Receipts Act, says:

A non-negotiable receipt shall have plainly placed upon its face by the warehouseman
issuing it 'non-negotiable,' or 'not negotiable.' In case of the warehouseman's failure so to
do, a holder of the receipt who purchased it for value supposing it to be negotiable may,
at his option, treat such receipt as imposing upon the warehouseman the same liabilities
he would have incurred had the receipt been negotiable.

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

acknowledgments of an informal character.

This section appears to give any warehouse receipt not marked "non-negotiable" or "not
negotiable" practically the same effect as a receipt which, by its terms, is negotiable provided the
holder of such unmarked receipt acquired it for value supposing it to be negotiable,
circumstances which admittedly exist in the present case.

We therefore hold that the warehouse receipts in controversy was negotiable and that the
rights of the endorsee thereof, the appellant, are superior to the vendor's lien of the appellee and
should be given preference over the latter.

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