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e - Building or place where goods are deposited and stored for profit. Warehouse Receipt - Written acknowledgment by a warehouseman that: a. He has received b. Holds certain goods therein described c. In storage d. For the person to whom it is issued. Nature Bilateral Contract a. Imports that goods are in the hands of a warehouseman b. It is a symbolical representation of the property itself. Not a Negotiable Instrument under the Negotiable Instruments Law (Section 1 with an X) Purpose of the Law Regulate the status, rights, and liabilities of the parties in a warehousing contract To protect those who in good faith and for value, acquire negotiable warehouse receipts by negotiation. To render the title to, and right of possession of, property stored in warehouses more easily convertible. To facilitate the use of warehouse receipts as documents of title In order to accomplish these, to place a much greater responsibility on the warehouseman. Who may issue Warehouse Receipts Warehouse man Is a person lawfully engaged in the business of storing goods? He stores good for PROFIT He is the only person who can issue warehouse receipts. Agent of Warehouse man Duly authorized officer or agent may issue a warehouse receipt. 1. Location of Warehouse For the benefit of the holders of warehouse receipts to enable them to determine where the goods are deposited especially when the warehouseman has more than one warehouse located in different place. Date of Issue of Receipt Indicated prima facie the date when the contract of deposit is perfected and when the storage charges shall begin to run against the depositor. Consecutive number of Receipt In order to identify each receipt with the goods for which it was issued. There is no express requirement as to when the consecutive numbering shall begin. Person to whom goods are deliverable Persons who shall prima facie be entitled lawfully to the possession of the goods deposited. If for example, the terms of receipt provide that it is to be delivered to order or to bearer, then it is a negotiable warehouse receipt. Note: notwithstanding the failure to use words of negotiability, the receipt may still be considered negotiable. (we will explain later) Rate of Storage Charges States the consideration If consideration is not placed it is the customary or reasonable compensation for the services of the warehouseman Description of goods or packages Purpose is for the identification of property which should be delivered to the rightful owner Note: notwithstanding the fact that the goods deposited are incorrectly described does not make ineffective the receipt when the identity of the goods is fully established by the evidence. (the law does not demand the stupid) Signature of Warehouseman Furnishes the best evidence of the fact that the warehouseman received the goods and has bound himself to assume all obligations in connection with such. Warehousemans ownership of or interest in goods Purpose is to prevent abuses which in the past had arisen from warehousemen issuing receipts on their goods. Section 53 provides that the omission to state his ownership of the goods in the receipt issued by him, may render the warehouseman criminally liable. Statement of Advances made and liabilities incurred Page 1 of 6
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Form and Content of Warehouse Receipts: A. No form exactly required. B. Essential terms:
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-WAREHOUSE RECEIPT LAW CHIONGSON, CONEJOS, PILAPIL Purpose of this requirement is to preserve the lien of the warehouseman over the goods stored or the proceeds thereof in his hands. This does not need to be placed if such liabilities were never incurred to begin with. c. 3. 4. 5. Purchaser in case of sale of the goods by the warehouseman to enforce his lien or where the goods are perishable or hazardous. Person entitled to delivery under a non-negotiable receipt or with written authority Person in possession of a negotiable receipt. Kinds Non-negotiable warehouse receipt A receipt in which it is states that the goods received will be delivered to the depositor or to any other specified persons. Example: Delivery to X 1,000 piculs of first grade sugar. (Signed B) 2. Negotiable to order warehouse receipts Example: Deliver to X or order 1,000 piculs of first grade sugar. (Signed B) 3. Negotiable bearer warehouse receipts Example: Deliver to X or bearer 1,000 piculs of first grade sugar. Duties of a Warehouseman - Who is a Warehouseman Person lawfully engaged in the business of storing goods for profit. **Only a warehouseman may issue warehouse receipts. - Principal obligations of a warehouseman 1. 2. To issue a WR in the required form for goods received To care of the goods deposited with ordinary and reasonable diligence General Rule: A warehouseman is required to exercise such degree of care which a reasonable careful owner would exercise over similar goods of his own. He shall be liable for any loss or injury to the goods caused by his failure to exercise such care. Exception: He shall not be liable for any loss or injury which could not have been avoided by the exercise of such care. Page 2 of 6
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Effect of omission of any of the essential terms: Validity of receipt not affected Warehouseman is liable for damages Negotiability not affected Section 2 does not deal with negotiability of warehouse receipts. The last paragraph of section 2 refers expressly to omission from a negotiable receipt of any of the terms herein required and not from a receipt which would otherwise be negotiable. Contract converted to ordinary deposit Issuance of a warehouse receipt in the form provided by law is merely permissive and directory and not mandatory in the sense that if the requirements are not observed, the goods delivered for storage become ordinary deposits. Terms that cannot be included Those which are contrary to the provisions of this law Those which would: a. Impair his obligation to exercise that degree of care in the safekeeping of the goods entrusted to him. b. Such degree of care is that which a reasonably careful man would exercise in regard to similar goods of his own Those not contrary to law, morals, good customs, public order or public policy Some Examples: a. Terms exempting him from liability from misdelivery of goods (Sec. 10) b. Terms exempting him from liability for not giving statutory notice incase of sale of goods (Sec. 33 and 34) c. Terms exempting him from liability for negligence For account and at the risk of the depositor To Whom Deliver: Person lawfully entitled to possession of good or his agent a. Whomever Competent court directs b. An attaching creditor
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-WAREHOUSE RECEIPT LAW CHIONGSON, CONEJOS, PILAPIL 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. 3. To deliver the goods to the person lawfully entitled Duty to deliver GR: Only arises when there is a DEMAND accompanied by the ff: Offer to satisfy warehousemans lien Offer to surrender the receipt, if negotiable, with such endorsement as would be necessary for the negotiation of the receipt Readiness and willingness to sign an acknowledgement when the goods are delivered, if such signature is requested by the warehouseman. EX: Lawful Excuse Deliver to Who Person lawfully entitled to possession of goods or his agent (person to whom a competent court has ordered delivery of goods; attaching creditor; purchaser) Person entitled to delivery under a non-negotiable receipt or with written authority Person in possession of a negotiable receipt 4. Not to co-mingle the goods deposited unless goods deposited are fungible and of the same kind and grade giving rise to ownership over co-mingled mass GR: A warehouseman may not co-mingle goods belonging to different depositors or belonging to the same depositor for which separate receipts had been issued. EX: A warehouseman may co-mingle fungible goods of the same kind and grade provided he is authorized by agreement or by custom. Effect of Co-mingling of Goods: The different owners become co-owners of the whole mass. Page 3 of 6 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. To insure the goods in proper circumstances Where the law provides Where it was an inducement for the depositor to enter into the contract Established practice Where the WR contains a representation to that effect To mark a non-negotiable WR as such To mark as such the duplicate of a negotiable WR To give the proper notice in case of sale of the goods as provided in the WRL To take up and cancel the WR when the goods are delivered - Lawful excuses to deliver goods (CRIS-BAG-FALL) 1. 2. The holder of the receipt does NOT satisfy the CONDITIONS prescribed in Sec. 8 When the warehouseman has LEGAL title in himself on the goods, such title or right being derived directly or indirectly from the transfer made by the depositor at the time or subsequent to the deposit for storage or from the warehousemans lien (Sec 16.) If the warehouseman had been REQUESTED by a person lawfully entitled to a right of property or possession in the goods no to make delivery to any person (Sec 10.) If he had INFORMATION that the delivery to be made was to one not lawfully entitled to the possession of the goods (Sec 10.) rd Where the goods have already been lawfully SOLD to 3 persons to satisfy the warehousemans lien or disposed of because of their perishable or hazardous nature (Sec 36.) In case of ADVERSE claimant/s (Sec 17.) In the valid exercise of the warehousemans LIEN (Sec 31.) Delivery to a claimant with a BETTER right
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-WAREHOUSE RECEIPT LAW CHIONGSON, CONEJOS, PILAPIL 9. Attachment or levy of the GOODS by a creditor where the document is surrendered or its negotiation is enjoined or the document is impounded (Sec 25.) 10. Where the document of title is ATTACHED by a creditor (Sec 26.) 11. FAILURE was not due to any fault of the part of the warehouseman. - In case of Misdelivery When is there Misdelivery? When the warehouseman delivers the goods to a person who is not in fact lawfully entitled to the possession of the goods because: 1. 2. the person does not fall under letter B** or C** above; or the person falls under letter B** or C** but prior to delivery, the warehouseman had either: IMMATERIAL Fraudulent or not (the tenor of the receipt is not changed) MATERIAL but AUTHORIZED MATERIAL, UNAUTHORIZED but INNOCENTLY MADE MATERIAL and FRAUDULENTLY MADE Warehouseman is liable according to the ORIGINAL tenor Warehouseman is liable according to the terms of the altered receipt. Warehouseman is liable on the altered receipt according to its original tenor. Warehouseman is liable to the purchaser of the receipt for value and without notice of the alteration according to the tenor of the altered receipt to the alterer, according to the terms of the original receipt to subsequent purchasers with notice of the alteration, according to the terms of the original receipt
b. Had information that the delivery about to be made was to one not
lawfully entitled to the possession of the goods. **[B] A person who is either himself entitled to delivery by the terms of a non-negotiable receipt issued for the goods, or who has written authority from the person so entitled either indorsed upon the receipt or written upon another paper; or **[C] A person in possession of a negotiable receipt by the terms of which the goods are deliverable to him or order, or to bearer, or which has been indorsed to him or in blank by the person to whom delivery was promised by the terms of the receipt or by his mediate or immediate indorser. Effects of Misdelivery: The warehouseman shall be liable for conversion to all having a right to property or possession of the goods. - Altered ReceiptsAlteration Effect
Conversion An unauthorized assumption and exercise of the right of ownership over goods belonging to another through the alteration of their condition or the exclusion of the owners right. Instances where a warehouseman is liable for conversion 1. Where the delivery is otherwise than as authorized by subsections (b**) and (c**) of Sec. 9 (Sec. 10) **(b) A person who is either himself entitled to delivery by the terms of a non-negotiable receipt issued for the goods, or who has written authority from the person so entitled either indorsed upon the receipt or written upon another paper; or **(c) A person in possession of a negotiable receipt by the terms of which the goods are deliverable to him or order, or to bearer, or which has been indorsed to him or in blank by the person to whom delivery was promised by the terms of the receipt or by his mediate or immediate indorser. 2. Even if delivered to persons entitled under Sec 9, he may still be liable for conversion if prior to delivery: a. He had been requested not to make such delivery Page 4 of 6
-WAREHOUSE RECEIPT LAW CHIONGSON, CONEJOS, PILAPIL b. He had received notice of the adverse claim or title of a third person (Sec. 10) - Liability of a WarehousemanCriminal Warehouseman or his Agent For damages suffered by reason of Issuance of receipts for goods not failure to comply with legal duties received (Sec. 50) Issuance of receipts containing false statement (Sec. 51) Issuance of duplicate negotiable WR not marked as such (Sec. 52) Issuance of a negotiable WR for goods of which he is an owner without stating such fact of ownership (Sec. 53) Delivery of goods without obtaining negotiable WR (Sec. 54) Third Persons Negotiations of WR issued for mortgaged goods with intent to deceive Other Acts of which Warehouseman is Liable 1. Failure to stamp duplicate on copies of negotiable receipt (Sec. 6) 2. Failure to place non-negotiable or not negotiable on a non negotiable receipt (Sec 7.) 3. Misdelivery of the goods (Sec. 10) 4. Failure to effect cancellation of a negotiable receipt upon delivery of the goods (Sec. 11) 5. Issuing receipt for non-existing goods or misdescribed goods (Sec. 20) 6. Failure to give notice in case of sale of goods to satisfy lien (Sec. 33) or because the goods are hazardous (Sec. 34) Warehousemans Lien Right to be paid - Extent1. 2. All lawful charges for storage and preservation of the goods All lawful claims for money advanced Civil 3. 4. All reasonable charges and expenses for notice and advertisement of sale, and the sale of goods. In case of NEGOTIABLE receipt the that are present at the time of the issuance of the receipt MUST BE STATED in the receipt with the amounts thereof specified; Otherwise, the warehouseman shall have no lien thereon, EXCEPT only for charges for storage of those goods subsequent to the date of receipt. - Loss and Waiver of lien1. 2. By surrendering possession thereof; By refusing to deliver the goods when a demand is made which he is bound to comply (Sec. 22)
*A Warehousemans lien is possessory in nature. *Involuntary parting with the possession does not result to the loss of lien *loss of the warehousemans lien does not necessarily mean the extinguishment of the depositors obligation to pay, it subsist as a personal liability - Enforcement1. 2. 3. By refusing to deliver the goods until his lien is satisfied (sec. 31) By causing extrajudicial sale of the property and applying the proceeds to the value of the lien. (Sec 33 & 34) By the other means allowed by law to a creditor against his debtor (Sec. 32) OR such other remedies allowed by law doe the enforcement of a lien against personal property.
Distinctions between negotiable instrument and a negotiable warehouse receipt Warehouse Receipt 1. When it is altered it remains valid but it may be enforced only in accordance with its original tenor. 2. When it is payable to bearer and it is endorsed specially it will be converted into a receipt deliverable to order and can only be negotiated further by Negotiable Instrument 1. When a negotiable instrument is deliberately altered, it becomes void. 2. When a negotiable instrument is originally payable to bearer, it will always remain so payable regardless of the way it is endorsed, whether Page 5 of 6
-WAREHOUSE RECEIPT LAW CHIONGSON, CONEJOS, PILAPIL endorsement and delivery. 3. The endorsee, even if the holder in due course, obtains only such title as the person negotiating had over the goods. specially or in blank. 3. 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. There is no holder in due course of a receipt, only a purchaser for value and in good faith.
Rights of a holder of a negotiable warehouse receipt as against a transferee of a nonnegotiable warehouse receipt Holder of Negotiable Warehouse Receipt 1. Holder acquires the title of the person negotiating the receipt over the goods covered by the receipt. 2. Holder acquires the title of the person (depositor or owner) to whose order by the terms of the receipt the goods were to be delivered, over such goods. 3. Holder acquires the direct obligation of the warehouseman to hold possession of the goods for him, as if the warehouseman directly contracted with him. Transferee of Nonnegotiable Warehouse Receipt 1. Transferee acquires the title to the goods as against the transferor 2. Transferee acquires the right to notify the warehouseman of the transfer
Warranties on sale (i.e., negotiation, transfer or assignment) of receipt 1. That the receipt is genuine; 2. That the seller has a legal right to negotiate or transfer it; 3. That the seller has knowledge of no fact which would impair its validity; and 4. That the seller has a right to transfer title to goods that are in fact merchantable, in cases where a transfer is made without a receipt. Criminal offenses Issue of receipt for goods not delivered; Issue of receipt containing false statement; Issue of duplicate receipt not so marked; Issue of receipt for goods owned by warehouseman which does not state the fact; Delivery of goods without obtaining the receipt; Negotiation of receipt for mortgaged goods.
3. Transferee acquires the right thereafter, to acquire the obligation of the warehouseman to hold the goods for him. *right of transferee is not absolute as it is subject to the terms of any agreement with the transferor. He merely steps into the shoes of the transferor.
Other distinctions with negotiable instruments: Negotiable warehouse receipts are not negotiable instruments (they do not contain the unconditional promise to pay); Removing negotiability of receipts requires not only the absence of terms of negotiability, but also by the stamp not negotiable or nonnegotiable by the issuing warehouseman; The warranties are given by a seller, whether or not he negotiates the receipt or merely transfers it; The indorser or transferee of a receipt does not become a guarantor of the performance of obligations under it;
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