NON-NEGOTIABLE WAREHOUSE RECEIPT

THE WAREHOUSE RECEIPTS LAW > Receipt in which it is stated that the goods received will be delivered to the
depositor or to any specified person
WHO MAY ISSUE WAREHOUSE RECEIPT?
NEGOTIABLE WAREHOUSE RECEIPT
> A warehouseman is a person lawfully engaged in the business of storing
goods for profit. > Receipt in which it is stated that the goods received will be delivered to the
> Only a warehouseman may issue warehouse receipts 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.
WHAT SHOULD BE DONE TO PUT THE RECEIPT WITHIN THE PURVIEW OF
WAREHOUSE RECEIPTS LAW?
DUPLICATE RECEIPTS MUST BE MARKED
> The warehouse receipt should be issued by the warehouseman
> 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
FORM OF RECEIPTS; ESSENTIAL TERMS issued

1. The location of the warehouse where the goods are stored > A warehouseman shall be held liable for damages for failure to do so to
2. The date of issue of the receipt anyone who purchased the subsequent receipt for value supposing it to be
3. Consecutive number of the receipt original, even though the purchaser be after the delivery of the goods by
4. A statement whether the goods received will be delivered to the bearer, to a the warehouseman to the holder of the original receipt
specified person or to a specified person or his order
5. The rate of storage charges OBLIGATIONS AND RIGHTS OF WAREHOUSEMAN UPON THEIR RECEIPTS
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 PRINCIPAL OBLIGATIONS OF THE WAREHOUSEMAN
agent
8. If the receipt is issued for goods of which the warehouseman is 1. To take care of the goods entrusted to his safekeeping
owner, either solely or jointly or in common with others, the fact of such
ownership 2. To deliver them to the holder of the receipt or the depositor provided
9. A statement of the amount of advances made and of liabilities incurred the following conditions are fulfilled—there is demand by the depositor
for which the warehouseman claims as lien. If the precise amount for such accompanied by either
advances made or of such liabilities incurred is, at the same time of the issue of the a. An offer to satisfy the warehouseman’s lien
receipt, unknown to the warehouseman or to his agent b. An offer to surrender the receipt, if negotiable with such indorsements as
who issues it, a statement of the fact that advances have been made or liabilities would be necessary for the negotiation of the receipts
incurred and the purpose thereof is sufficient c. A readiness and willingness to sign, when the goods are delivered, an
acknowledgement that
they have been delivered, if such signature is requested by the warehouseman
EFFECT OF OMISSION OF THE ESSENTIAL CONTENTS

> A warehouseman shall be liable to any person injured thereby all damages WHAT SHOULD ACCOMPANY THE DEMAND FOR THE RETURN OF THE GOODS?
caused by the omission from a negotiable receipt of any of the terms herein
required 1. An offer to satisfy the warehouseman’s lien
> Validity of the receipt not affected 2. An offer to surrender the receipt, if negotiable with such indorsements as
> Negotiability of the receipt not affected would be necessary for the negotiation of the receipts
3. A readiness and willingness to sign, when the goods are delivered, an
acknowledgement that they have been delivered, if such signature is
TERMS THAT CANNOT BE INCLUDED IN THE WAREHOUSE RECEIPT requested by the warehouseman
1. Those contrary to any provision of the law
2. In any wise impair the warehouseman’s obligation to exercise that A WAREHOUSEMAN IS JUSTIFIED IN DELIVERING THE GOODS TO ONE WHO
degree of care in the safekeeping of the goods entrusted to him which a IS—
reasonably careful man would exercise with regard to similar goods of his own
1. Person lawfully entitled to the possession of the goods, or his agent
2. Person who either himself entitled to delivery by the terms of the non-
negotiable receipt issued for the goods, or who has written authority from the liability
person so entitled either endorsed upon the receipt or written on another paper NOTA BENE: it is clear that even a fraudulent alteration cannot divest the title
3. Person in possession of a negotiable receipt by the terms of which the of the owner of stored goods and the warehouseman is, therefore,
goods are deliverable to him or order, or to bearer, or which has been liable to return them to the owner.
indorsed to him or in blank by the person to whom delivery was promised by the But a bona fide holder acquires no right to the goods under a negotiable
terms of the receipt or by his mediate or immediate indorser receipt which has been lost or stolen or to which the endorsement of the
depositor has been forged.
WAREHOUSEMAN’S LIABILITY FOR MISDELIVERY
LOST OR DESTROYED RECEIPTS
> 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 > The court may order the delivery of the goods upon satisfactory proof of
conversion/estafa to all having a right of property or possession in the goods if he such loss or destruction and upon the giving of a bond with sufficient sureties to be
delivered the goods otherwise than as authorized approved by the court to protect the warehouseman from any liability or expense,
> And though he delivered the goods as authorized he shall be so liable if prior to which he or any person injured by such delivery
such delivery he had either— may incur by reason of the original receipt remaining outstanding
> The court may also in its discretion order the payment of the warehouseman’s
o Been requested, by or on behalf of the person lawfully entitled to a reasonable costs and counsel fees
right of property or > The order of the court shall not relieve the warehouseman from liability to a
possession in the goods, not to make such delivery person to whom the negotiable receipt as been or shall be negotiated for value
without notice of the proceedings or of the delivery of the goods
o Had information that the delivery about to be made was to one not
lawfully entitled to the
possession of the goods LIABILITY OF WAREHOUSEMAN AS TO DUPLICATE—HE WARRANTS

1. That the duplicate is an accurate copy of the original receipt

WHAT IS CONVERSION? 2. Such original receipt is uncancelled at the date of the issue of the duplicate
> Unauthorized assumption and exercise of the right of ownership over
goods belonging to another through the alteration of their condition or the WAREHOUSEMAN CANNOT SET UP TITLE IN HIMSELF
exclusion of the owner’s right
> The warehouseman cannot refuse to deliver the goods on the ground that he
has acquired title or right to the possession of the same unless such title
NEGOTIABLE RECEIPTS MUST BE CANCELLED OR MARKED WHEN GOODS or right is derived—
DELIVERED OR WHEN PART OF IT IS DELIVERED. FAILURE TO DO o Directly or indirectly from a transfer made by the depositor at the time of
SO WILL MAKE THE WAREHOUSEMAN LIABLE— the deposit for storage or subsequent thereto
o From the warehouseman’s lien
> The warehouseman is liable to any one who purchases for value in good faith
such receipt, for failure to deliver the goods to him, whether such purchaser
acquired title to the receipt before or after the delivery of the goods by the INTERPLEADER OF ADVERSE CLAIMANTS
warehouseman
> 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
EFFECT OF ALTERATION ON LIABILITY OF WAREHOUSEMAN non-delivery of the goods, or as an original suit, whichever is appropriate,
require all known claimants to interplead
1. Alteration immaterial—whether fraudulent or not, whether authorized or not,
the warehouseman is liable on the altered receipt according to its original tenor
WAREHOUSEMAN HAS REASONABLE TIME TO DETERMINE VALIDITY OF CLAIMS
2. Alteration material—if the alteration is material, but authorized, the
warehouseman is liable according to the terms of the receipt as altered > 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
3. Material alteration innocently made—the warehouseman is liable on the altered such claim, the warehouseman shall be excused from liability for refusing to
receipt according to its original receipt deliver the goods, either to the depositor or person
claiming under him or to the adverse claimant, until the warehouseman has
4. Material alteration fraudulently made—warehouseman is liable according to
had a reasonable time to ascertain the validity of the adverse claim or to bring legal
the original tenor of the receipt to a purchaser of the receipt for value without proceedings to compel all claimants to interplead
notice, and even to the alterer and subsequent purchasers with notice except
that as regards to the last two, the
warehouseman’s liability is limited only to delivery as he is excused from any
LIABILITY OF WAREHOUSEMAN FOR NON-EXISTENCE OR MISDESCRIPTION OF be attached or levied upon by ordinary legal process
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 WHAT CLAIMS ARE INCLUDED IN THE WAREHOUSEMAN’S LIEN
> As against a bona fide holder of a warehouse receipt, the warehouseman is
1. All lawful charges for storage and preservation of the goods
estopped whether the receipt is negotiable or not, to deny that he has
received the goods described in it 2. All lawful claims for money advanced—Interests, Insurance,
Transportation, Labor, Weighing, Cooperating and other charges and expenses in
LIABILITY OF WAREHOUSEMAN FOR LOSS DUE TO LACK OF CARE relation to the goods

> The warehouseman is required to exercise ordinary or reasonable care in 3. All reasonable charges and expenses for notice and advertisements of
the custody of the goods, that is, the care is reasonably careful owner sale
would exercise over similar goods of his own.
4. Sale of goods where default has been made in satisfying warehouseman’s
> The warehouseman isn’t liable for any loss or injury to the goods, which
lien
couldn’t have been avoided by the exercise of such care. Of course, what
constitutes ordinary or reasonable care depends upon the circumstances such
as the character and value of the property and the character AGAINST WHAT PROPERTY THE LIEN MAY BE ENFORCED
and location of the warehouse.
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
COMMINGLING OF DEPOSITED GOODS 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
> As a general rule, a warehouseman may not mingle goods belonging to
lien is asserted if such person had been entrusted with the possession of
depositors
the goods that a pledge of the same by him at the time of the deposit to one who
> In case of fungible goods, the warehouseman may mingle them with the goods of
took the goods in good faith for value would have been valid
the same kind and grade provided that he authorized by agreement or custom
> Commingling is intended for the benefit of the warehouseman. It
would, indeed be strange if the warehouseman could escape his liability to HOW WAREHOUSEMAN LOSES HIS LIEN
the owner of the goods by the simple process of commingling them without
authorization 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
ATTACHMENT OR LEVY OF A NEGOTIABLE RECEIPT

> The warehouseman has the direct obligation to hold possession of the LIEN WHERE RECEIPT NEGOTIABLE
goods for the original owner or for the person known the negotiable receipt of
title has been duly negotiated. > With the exception of the charges for the storage or preservation of
> While in possession of such warehouseman, the goods cannot be attached goods for which a negotiable receipt has been issued, the lien exists only
or levied upon under an execution unless— for the other charges expressly enumerated in the receipt so far as they are
o The document is first surrendered written although the amount of the said charge isn’t stated
o Its negotiation is enjoined
o The document is impounded by the court
OTHER THINGS IN CONNECTION TO WAREHOUSEMAN’S LIEN
> 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. 1. Warehouseman need not deliver lien is satisfied
> Neither shall it apply to actions for recovery or manual delivery of goods by 2. Warehouseman’s lien doesn’t preclude other remedies
the real owner nor to cases where the attachment is made before the issuance of
the negotiable receipt of title
SATISFACTION OF LIEN BY SALE

CREDITOR’S REMEDIES TO REACH NEGOTIABLE RECEIPTS 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
> A creditor whose debtor is the owner of negotiable receipt shall be entitled to warehouseman to claim an interest in the goods. Such notice shall be
such aid from courts of appropriate jurisdiction, by injunction and otherwise, in given by delivery in person or by registered mail addressed to the
attaching such receipt or in satisfying the claim by means thereof as is last known place of business or abode of the person to be notified.
allowed by law or in equity in regard to property which cannot be readily 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 where a negotiable receipt
b. A brief description of the goods has been indorsed in blank or bearer, any holder may indorse the same to
c. A demand that such amount of the claim as stated shall be paid on or before himself or to any other
the day mentioned, not specified person, and in such case the receipt shall thereafter be negotiated only
less than 10 days from the delivery of the notice if it is personally delivered, or by the indorsement
from the time when by such indorsee
the notice shall reach its destination, according to due course of post, if the notice
is sent by mail
NEGOTIATION OF NEGOTIABLE RECEIPT BY INDORSEMENT
d. A statement that unless the claim is paid within the time specified, the goods
will be advertised for sale 1. If indorsed in blank or to bearer, the document becomes negotiable by
and sold by auction at a specified time and place delivery
2. If indorsed to a specified person, it may be again negotiated by the
ENFORCEMENT OF WAREHOUSEMAN’S LIEN indorsement of such person in blank, to bearer or to another specified person.
Delivery alone isn’t sufficient.
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
TRANSFER OF NON-NEGOTIABLE RECEIPT
to the value of the lien
3. By filing a civil action for collection of the unpaid charges or by way of > A non-negotiable receipt of title cannot be negotiated.
counterclaim in an action to recover the property from him > Nevertheless, it can be transferred or assigned by delivery
> The assignee or transferee only acquires the rights of the transferor or assignor
EFFECT OF SALE OF GOODS
ADVANTAGES OF A NEGOTIABLE WAREHOUSE RECEIPT
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 1. It protects a purchaser for value and in good faith
negotiated. 2. The goods covered by the receipt cannot be garnished or levied upon under
2. When the sale was made without the publication requirement and execution unless it is surrendered, or impounded, or its negotiation enjoined
before the time specified by law, such sale is void and the purchaser of 3. In case of negotiation, the holder acquires the direct obligation of the
the goods acquires no title in them. warehouseman to hold possession of the goods for him without notice to such
warehouseman
ACTS FOR WHICH WAREHOUSEMAN IS LIABLE 4. The goods it covers aren’t subject to seller’s lien or stoppage in transitu

1. Failure to stamp duplicate on copies of negotiable receipt

WHO MAY NEGOTIATE A RECEIPT
2. Failure to place non-negotiable or not negotiable on the not negotiable
receipt 1. By the owner thereof
3. Misdelivery of the goods 2. By any person to whom the possession or custody of the receipt has been
4. Failure to effect cancellation of a negotiable receipt upon delivery of the entrusted by the owner, if by the terms of the receipt, the warehouseman
goods 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
5. Issuing receipt for non-existing goods or misdescribed goods
same time of such entrusting, the receipt is in such form that it may be negotiated
6. Failure to take care of the goods
by delivery
7. Failure to give notice in case of sale of goods to satisfy the lien or because the
goods are perishable or hazardous
RIGHTS OF PERSON TO WHOM RECEIPT HAS BEEN NEGOTIATED
NEGOTIATION AND TRANSFER OF RECEIPTS 1. The title of the person negotiating the receipt over the goods covered by
the receipt
NEGOTIATION OF NEGOTIABLE RECEIPT BY DELIVERY 2. The title of the person to whose order by the terms of the receipt the goods
were to be delivered over such goods
1. Where by the terms of the receipt, the warehouseman undertakes to 3. The direct obligation of the warehouseman to hold possession of the
deliver the goods to the bearer goods for him, as if the warehouseman directly contracted with him
2. Where by the terms of the receipt, the warehouseman undertakes to
deliver the goods to the order of a specified person, and such person or a
subsequent indorsee of the receipt has indorsed it in blank or to bearer
a. Where by the terms of the receipt, the goods are deliverable to bearer or
RIGHTS OF PERSON TO WHOM RECEIPT HAS BEEN TRANSFERRED > The validity of the negotiation of a receipt isn’t impaired by the fact that such
negotiation was a breach of duty on the part of the person making the
1. Title to the goods as against the transferor negotiation, or by the fact that the owner of the receipt was induced by
2. The right to notify the warehouseman of the transfer thereof fraud, mistake or duress to entrust the possession or custody of the receipt to
3. The right thereafter to acquire the obligation of the warehouseman to hold such person, if the person to whom the receipt was negotiated, or to a person
the goods for him to whom the receipt
is subsequently negotiated paid value therefor, without notice of the breach of
RIGHTS OF TRANSFEREE OF NEGOTIABLE RECEIPT duty, fraud, mistake or duress

1. The right to the goods as against the transferor

EFFECT OF SUBSEQUENT NEGOTIATION BY SELLER, ETC.
2. The right to compel the transferor to indorse the receipt
> 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
RULE WHERE RECEIPT IS SUBSEQUENTLY INDORSED 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
> For the purpose of determining whether the transferee is a purchaser for value in possession of such receipt to make subsequent negotiation
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 > The subsequent purchaser must have taken the receipt in good faith and for
> Reason for the rule: negotiation becomes complete only at the time of value in order to acquire a better right
indorsement
INDORSEE’S RIGHT SUPERIOR TO VENDOR’S LIEN
WARRANTIES ON SALE OF RECEIPT
> An innocent holder of a negotiable receipt has a better right to the goods
1. That the receipt is genuine for which the receipt is given than the vendor who has a vendor’s lien upon such
2. That he has a legal right to negotiate or transfer it goods
3. That he has knowledge of no fact which would impair the validity of the worth > Warehouseman isn’t obliged to deliver or justified in delivering the goods to
of the receipt an unpaid seller unless the receipt is first surrendered for cancellation
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 HOW DO YOU ATTACH OR IMPOSE A LIEN OVER GOODS COVERED BY A
have been implied, if the contract of the parties had been to transfer without a WAREHOUSE RECEIPT?
receipt of the goods represented thereby
If it is not negotiable, the court would issue a writ of attachment. If it is negotiable,
INDORSER, NOT A GUARANTOR the court should require the surrender of the receipt and restrict further
negotiations.
> The indorsement of a receipt doesn’t make the indorser liable for any
failure on the part of the warehouseman or previous indorser of the receipt to
fulfill their respective obligations

NO WARRANTY IMPLIED FROM ACCEPTING PAYMENT OF A DEBT

> A mortgagee, pledgee or holder for security of a receipt who, in good

faith, demands or receives payment of the debt for which such receipt is
security, whether from a party to a draft drawn for such debt or from any
other person, shall not, by so doing, be deemed to represent or
to warrant the genuineness of such receipt or the quantity or quality of the goods
therein described
> In other words, the holder of a security who in good faith accepts payment of a
debt from a person doesn’t warrant thereby the genuineness of the receipt nor
the quality or quantity of the goods therein described

WHEN NEGOTIATION NOT IMPAIRED BY FRAUD, DURESS, MISTAKE