THE Warehouse Receipts Law (ACT NO. 2137, As Amended)

THE
WAREHOUSE
RECEIPTS LAW
(ACT NO. 2137, as
amended)
General Rule:
A warehouseman may not mingle
goods belonging to depositors (Sec. 22).
Exception:
Fungible Goods: The warehouseman
may mingle them with the goods of the
same kind and grade provided that
he is authorized by agreement or
custom (Sec.23).
Liability of warehouseman:
The warehouseman shall be severally
liable to each depositor (Sec. 24).
COMMINGLING OF DEPOSITED
GOODS
While in possession of such warehouseman, the
goods cannot be attached or levied upon under
an execution unless:
(1) the document be first surrendered; or
(2) its negotiation is enjoined; or
(3) the document is impounded by the court.
ATTACHMENT OR LEVY OF NEGOTIABLE RECEIPT

The warehouseman cannot be compelled to
deliver up the possession of the goods until:
1.) the receipt is surrendered to him or
2.) impounded by the court
DELIVERY OF GOODS COVERED BY AN OUTSTANDING

NEGOTIABLE RECEIPT
REMEDIES OF CREDITOR OR OWNER OF NEGOTIABLE RECEIPT
Generally, no attachment or levy.
However, a creditor of the owner of negotiable

receipts is protected by law.
The court is expressly given the full power to aid by:
1.) injunction and otherwise, in attaching such

receipt or in satisfying the claim by means
thereof as is allowed at law or in equity
EXTENT OF WAREHOUSEMAN’S LIEN
A warehouseman shall have a lien on goods deposited

or on the proceeds thereof in his hands, for all lawful:
1.) charges for storage and preservation of the goods;
2.) claims for money advanced, interest, insurance,

transportation, labor, weighing, cooperating and
other charges and expenses in relation to such goods
3.) all reasonable charges and expenses for notice and

advertisements of sale, and for sale of the goods
where default had been made in satisfying the
warehouseman’s lien.
GOODS SUBJECT TO WAREHOUSEMAN’S LIEN LOSS and WAIVER of LIEN upon GOODS
1.) Goods belonging to depositor or his principal. 1.) By surrendering possession of goods
(a) against the goods of the depositor who is liable to
the warehouseman as debtor whenever such goods are 2.) By wrongfully refusing to deliver the goods
deposited
(b) against goods of other persons stored by the

depositor who is liable to the warehouseman as debtor
with authority to make a valid pledge
2.) Goods stored in fraud of true owner’s rights.

ENFORCEMENT OF WAREHOUSEMAN’S LIEN
(1) By refusing to deliver the (2) By causing the (3) By filing a civil action for
goods until the lien is satisfied extrajudicial sale of the collection of the unpaid charges or
(Sec. 31) property and applying by way of counterclaim in an
the proceeds to the action to recover the property
value of the lien from him or such other remedies
(Secs. 33, 34) allowed by law for the
enforcement of a lien against
personal property (Sec. 35)
or to a creditor against his debtor,
for the collection from the
depositor of all the charges which
the depositor has bound himself
to pay. (Sec. 32)
8
EFFECT OF SALE OF GOODS
1.) Warehouseman is not liable for non-delivery
2.) Sale is void and the purchaser of the goods acquires no title in them.
9
ACTS FOR WHICH WAREHOUSEMAN IS LIABLE
(1) Failure to stamp “duplicate” on copies of a 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 take care of the goods
(Sec. 21.); and
(7) Failure to give notice in case of sale of goods to satisfy his lien
(Sec. 3)
or because the goods are perishable or hazardous
(Sec. 34)
10
NEGOTIATION OF NEGOTIABLE RECEIPT
(1) By DELIVERY if the goods are deliverable to the bearer or when
it is indorsed in blank or to the bearer by the person to whose
order the goods are deliverable or by a subsequent indorsee.
(2) If the receipt is specially indorsed, it becomes an order receipt
and negotiation can only be effected by the INDORSEMENT of
the indorsee.
11
NEGOTIATION OF NEGOTIABLE RECEIPT BY INDORSEMENT
(1) If indorsed in blank or to bearer, the document becomes negotiable by
delivery. (Sec. 37.)
(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 is not sufficient.
12
TRANSFER OF NON-NEGOTIABLE RECEIPT
A receipt which is not in such form that it can be negotiated by delivery may be
transferred by the holder by delivery to a purchaser or donee.
A non-negotiable receipt can not be negotiated, and the indorsement of such a

receipt gives the transferee no additional right.
13
(1) It protects a purchaser for value and in good faith
(Sec.41);
(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
(Sec. 25.);
(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
(Sec. 41.); and
(4) The goods it covers are not subject to seller’s lien or

stoppage in transitu.
(Sec. 49.)
ADVANTAGES OF NEGOTIABLE WAREHOUSE RECEIPT

RIGHTS OF PERSON TO WHOM RIGHTS OF PERSON TO WHOM
RECEIPT HAS BEEN RECEIPT HAS BEEN
NEGOTIATED TRANSFERRED
(1) The title of the person negotiating (1) The title to the goods as
the receipt over the goods covered against the transferor;
by the receipt;
(2) The right to notify the

(2) The title of the person (depositor or warehouseman of the transfer
owner) to whose order by the terms of thereof; and
the receipt the goods were to be
delivered, over such goods; and
(3) The right, thereafter, to
acquire the obligation of the
(3) The direct obligation of the warehouseman to hold the
warehouseman to hold possession of goods for him.
the goods for him, as if the
warehouseman directly contracted with
him.
15
(1) Receipt non-negotiable
A receipt in which it is stated that the

goods received will be delivered to the
depositor or to any other specified
person.
(2) Receipt negotiable
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 such receipt.
ATTACHMENT OF GOODS COVERED BY

RECEIPT
Receipt non-negotiable
The transfer of a non-negotiable document of title does not effect the

delivery of the goods covered by it.
Receipt negotiable
If the receipt is negotiable, the goods cannot be attached or be levied

under an execution unless the receipt be first surrendered to the
warehouseman or its negotiation enjoined.
17
Alex deposited goods for which Billy, a
warehouseman, issued a negotiable warehouse
receipt wherein the goods were delivered to
Alex or order. Alex negotiated the receipt to
Caloy. Thereafter, Dario, a creditor, secured
judgment against Alex and served notice of levy
over the goods on the warehouseman.
Q1: To whom should the warehouseman deliver

the goods upon demand?
Q2: Would your answer be the same if the

warehouseman issued a non-negotiable
warehouse receipt?
A1: The warehouseman should deliver the goods to
Caloy. The goods cannot be attached by garnishment or
otherwise, or levied upon, unless the receipt be first
surrendered to the warehouseman, or its negotiation is
enjoined. (Sec. 25, WRL)
A2: No. The non-negotiable warehouse receipt does not

confer upon the transferee the direct obligation of the
warehouseman to hold possession of the goods for him.
(Sec, 42, WRL).
In such a case, the law provides that when a non-
negotiable warehouse receipt is transferred to Caloy, he
only gets such title to the goods as Alex had and also a
right to notify the warehouseman to hold the goods for
Caloy’s account. Prior to such notice, Caloy’s claim can
be defeated by a levy of execution upon the goods by a
creditor of Alex.
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THE

(1) the document be first surrendered; or

(2) its negotiation is enjoined; or

(3) the document is impounded by the court.

ATTACHMENT OR LEVY OF NEGOTIABLE RECEIPT

1.) the receipt is surrendered to him or

2.) impounded by the court

DELIVERY OF GOODS COVERED BY AN OUTSTANDING

Generally, no attachment or levy.

However, a creditor of the owner of negotiable

The court is expressly given the full power to aid by:

1.) injunction and otherwise, in attaching such

A warehouseman shall have a lien on goods deposited

1.) charges for storage and preservation of the goods;

2.) claims for money advanced, interest, insurance,

3.) all reasonable charges and expenses for notice and

(b) against goods of other persons stored by the

2.) Goods stored in fraud of true owner’s rights.

A non-negotiable receipt can not be negotiated, and the indorsement of such a

(2) The goods covered by the receipt cannot be garnished

(3) In case of negotiation, the holder acquires the direct

(4) The goods it covers are not subject to seller’s lien or

ADVANTAGES OF NEGOTIABLE WAREHOUSE RECEIPT

(2) The right to notify the

A receipt in which it is stated that the

(2) Receipt negotiable

A receipt in which it is stated that the

ATTACHMENT OF GOODS COVERED BY

The transfer of a non-negotiable document of title does not effect the

If the receipt is negotiable, the goods cannot be attached or be levied

Q1: To whom should the warehouseman deliver

Q2: Would your answer be the same if the

A2: No. The non-negotiable warehouse receipt does not

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