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CUSTOMS WAREHOUSING (CM3)

Handout 3

Warehouse
Receipt Law

NAME: ______________________ Year/Section: ___________

Prepared by: Sheryl S. Sabeda, LPT

INTRODUCTION
Warehouse receipt law is a legal framework governing the issuance and transfer of warehouse receipts, which
are documents used in the storage and the transfer of goods. These receipts serve as evidence of ownership
or title to store goods and can be crucial in financing, trade and logistics. Warehouse receipt law establish the
rights of various parties involved in these transactions, including warehouse operators and third-party. This
law was created to ensure the proper functioning and security of warehouse operations and the efficient
movement of goods in the supply chain.
This handout will help the students understand the rights and obligations of the warehousemen and the
difference between negotiable and non-negotiable receipt,

OBJECTIVES
At the end of this lesson, the students shall:

 Familiarized with the Act No. 2137 Warehouse Receipt Law

 Appreciate the obligations and rights of warehousemen upon their receipts.
 Differentiate negotiable and non-negotiable receipt

DEFINITION OF TERMS
Delivery - means voluntary transfer of possession from one person to another.
Fungible goods - means goods of which any unit is, from its nature by mercantile custom, treated as the
equivalent of any other unit.
Goods - means chattels or merchandise in storage or which has been or is about to be stored.
Holder of a receipt - means a person who has both actual possession of such receipt and a right of property
therein.
Negotiable receipt – 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 is a negotiable receipt.
Non-negotiable receipt – a receipt in which it is stated that the goods received will be delivered
to the depositor or to any other specified person, is a non-negotiable receipt.
Owner -does not include mortgagee.
Person - includes a corporation or partnership or two or more persons having a joint or common
interest.
Receipt - means a warehouse receipt.
Value - is any consideration sufficient to support a simple contract. An antecedent or pre-existing
obligation, whether for money or not, constitutes value where a receipt is taken either in satisfaction
thereof or as security therefor.
Warehouseman - means a person lawfully engaged in the business of storing goods for profit.

ACT NO. 2137 - THE WAREHOUSE RECEIPTS LAW

I – THE ISSUE OF WAREHOUSE RECEIPTS

Section 1. Persons who may issue receipts. – Warehouse receipts may be issued by any warehouseman.

Sec. 2. Form of receipts; essential terms. – Warehouse receipts need not be in any particular form but every
such receipt must embody within its written or printed terms:

(a) The location of the warehouse where the goods are stored,

(b) The date of the issue of the receipt,

(c) The consecutive number of the receipt,

(d) A statement whether the goods received will be delivered to the bearer, to a specified person or to a
specified person or his order,

(e) The rate of storage charges,

(f) A description of the goods or of the packages containing them,

(g) The signature of the warehouseman which may be made by his authorized agent,

(h) 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, and
(i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims
a lien. If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue
of, 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.

A warehouseman shall be liable to any person injured thereby for all damages caused by the omission from a
negotiable receipt of any of the terms herein required.

Sec. 3. Form of receipts. – What terms may be inserted. – A warehouseman may insert in a receipt issued by
him any other terms and conditions provided that such terms and conditions shall not:

(a) Be contrary to the provisions of this Act.

(b) In any wise impair his obligation to exercise that degree of care in the safe-keeping of the goods entrusted
to him which is reasonably careful man would exercise in regard to similar goods of his own.

Sec. 4. Definition of non-negotiable receipt. – A receipt in which it is stated that the goods received will be
delivered to the depositor or to any other specified person, is a non-negotiable receipt.

Sec. 5. Definition of negotiable receipt. – 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 is a negotiable receipt.
No provision shall be inserted in a negotiable receipt that it is non-negotiable. Such provision, if inserted shall
be void.
Sec. 6. Duplicate receipts must be so marked. – When more than one negotiable receipt 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 liable for all damages caused by his failure so to do to anyone who
purchased the subsequent receipt for value supposing it to be an original, even though the purchase be after
the delivery of the goods by the warehouseman to the holder of the original receipt.

Sec. 7. Failure to mark "non-negotiable." – 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 acknowledgment of an informal
character.

II – OBLIGATIONS AND RIGHTS OF WAREHOUSEMEN UPON THEIR RECEIPTS

Sec. 8. Obligation of warehousemen to deliver. – A warehouseman, in the absence of some lawful excuse
provided by this Act, is bound to deliver the goods upon a demand made either by the holder of a receipt for
the goods or by the depositor; if such demand is accompanied with:

(a) An offer to satisfy the warehouseman's lien;

(b) An offer to surrender the receipt, if negotiable, with such indorsements as would be necessary for the
negotiation of the receipt; and

(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.

In case the warehouseman refuses or fails to deliver the goods in compliance with a demand by the holder or
depositor so accompanied, the burden shall be upon the warehouseman to establish the existence of a lawful
excuse for such refusal.

Sec. 9. Justification of warehouseman in delivering. – A warehouseman is justified in delivering the goods,

subject to the provisions of the three following sections, to one who is:

(a) The person lawfully entitled to the possession of the goods, or his agent;
(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.

Sec. 10. Warehouseman's 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 as for conversion to
all having a right of property or possession in the goods if he delivered the goods otherwise than as authorized
by subdivisions (b) and (c) of the preceding section, and though he delivered the goods as authorized by said
subdivisions, he shall be so liable, if prior to such delivery he had either:

(a) Been requested, by or on behalf of the person lawfully entitled to a right of property or possession in the
goods, not to make such deliver; or

(b) Had information that the delivery about to be made was to one not lawfully entitled to the possession of the
goods.

Sec. 11. Negotiable receipt must be cancelled when goods delivered. – Except as provided in section
thirty-six, where a warehouseman delivers goods for which he had issued a negotiable receipt, the negotiation
of which would transfer the right to the possession of the goods, and fails to take up and cancel the receipt, he
shall be 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.

Sec. 12. Negotiable receipts must be cancelled or marked when part of goods delivered. – Except as
provided in section thirty-six, where a warehouseman 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, he shall be liable to anyone who purchases for value in good
faith such receipt, for failure to deliver all the goods specified in the receipt, whether such purchaser acquired
title to the receipt before or after the delivery of any portion of the goods by the warehouseman.

Sec. 13. Altered receipts. – The alteration of a receipt shall not excuse the warehouseman who issued it from
any liability if such alteration was:
(a) Immaterial,
(b) Authorized, or
(c) Made without fraudulent intent.
If the alteration was authorized, the warehouseman shall be liable according to the terms of the receipt as
altered. If the alteration was unauthorized but made without fraudulent intent, the warehouseman shall be
liable according to the terms of the receipt as they were before alteration.

Material and fraudulent alteration of a receipt shall not excuse the warehouseman who issued it from liability to
deliver according to the terms of the receipt as originally issued, the goods for which it was issued but shall
excuse him from any other liability to the person who made the alteration and to any person who took with
notice of the alteration. Any purchaser of the receipt for value without notice of the alteration shall acquire the
same rights against the warehouseman which such purchaser would have acquired if the receipt had not been
altered at the time of purchase.

Sec. 14. Lost or destroyed receipts. – Where a negotiable receipt has been lost or destroyed, a court of
competent jurisdiction 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
warehouseman's reasonable costs and counsel fees.

The delivery of the goods under an order of the court as provided in this section, 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.

Sec. 15. Effect of duplicate receipts. – A receipt upon the face of which the word "duplicate" is plainly placed
is a representation and warranty by the warehouseman that such receipt is an accurate copy of an original
receipt properly issued and uncanceled at the date of the issue of the duplicate, but shall impose upon him no
other liability.

Sec. 16. Warehouseman cannot set up title in himself. – No title or right to the possession of the goods, on
the part of the warehouseman, unless such title or right is derived directly or indirectly from a transfer made by
the depositor at the time of or subsequent to the deposit for storage, or from the warehouseman's lien, shall
excuse the warehouseman from liability for refusing to deliver the goods according to the terms of the receipt.

Sec. 17. 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.

Sec. 18. Warehouseman has reasonable time to determine validity of 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 depositor 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
claimants to interplead.

Sec. 19. Adverse title is no defense except as above provided. – Except as provided in the two preceding
sections and in sections nine and thirty-six, no right or title of a third person shall be a defense to an action
brought by the depositor or person claiming under him against the warehouseman for failure to deliver the
goods according to the terms of the receipt.

Sec. 20. Liability for non-existence or misdescription of goods. – A warehouseman shall be liable to the
holder of a receipt for damages caused by the non-existence of the goods or by the failure of the goods to
correspond with the description thereof in the receipt at the time of its issue. If, however, the goods are
described in a receipt merely by a statement of marks or labels upon them or upon packages containing them
or by a statement that the goods are said to be goods of a certain kind or that the packages containing the
goods are said to contain goods of a certain kind or by words of like purport, such statements, if true, shall not
make liable the warehouseman issuing the receipt, although the goods are not of the kind which the marks or
labels upon them indicate or of the kind they were said to be by the depositor.

Sec. 21. Liability for care of goods. – A warehouseman shall be liable for any loss or injury to the goods
caused by his failure to exercise such care in regard to them as reasonably careful owner of similar goods
would exercise, but he shall not be liable, in the absence of an agreement to the contrary, for any loss or injury
to the goods which could not have been avoided by the exercise of such care.

Sec. 22. Goods must be kept separate. – Except as provided in the following section, a warehouseman shall
keep the goods so far separate from goods of other depositors and from other goods of the same depositor for
which a separate receipt has been issued, as to permit at all times the identification and redelivery of the goods
deposited.

Sec. 23. Fungible goods may be commingled if warehouseman authorized. – If authorized by agreement
or by custom, a warehouseman may mingle fungible goods with other goods of the same kind and grade. In
such case, the various depositors of the mingled goods shall own the entire mass in common and each
depositor shall be entitled to such portion thereof as the amount deposited by him bears to the whole.

Sec. 24. Liability of warehouseman to depositors of commingled goods. – 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.

Sec. 25. Attachment or levy upon goods for which a negotiable receipt has been issued. – If goods are
delivered to a warehouseman by the owner or by a person whose act in conveying the title to them to a
purchaser in good faith for value would bind the owner, and a negotiable receipt is issued for them, they cannot
thereafter, while in the possession of the warehouseman, be attached by garnishment or otherwise, or be
levied upon under an execution unless the receipt be first surrendered to the warehouseman or its negotiation
enjoined. The warehouseman shall in no case be compelled to deliver up the actual possession of the goods
until the receipt is surrendered to him or impounded by the court.

Sec. 26. Creditor's remedies to reach negotiable receipts. – A creditor whose debtor is the owner of a
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 at law or in equity
in these islands in regard to property which cannot readily be attached or levied upon by ordinary legal
process.

Sec. 27. What claims are included in the warehouseman's lien. – Subject to the provisions of section thirty,
a warehouseman shall have a lien on goods deposited or on the proceeds thereof in his hands, for all lawful
charges for storage and preservation of the goods; also for all lawful claims for money advanced, interest,
insurance, transportation, labor, weighing, coopering and other charges and expenses in relation to such
goods, also for 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.

Sec. 28. Against what property the lien may be enforced. – Subject to the provisions of section thirty, a
warehouseman's lien may be enforced:

(a) Against all goods, whenever deposited, belonging to the person who is liable as debtor for the claims in
regard to which the lien is asserted, and

(b) Against all goods belonging to others which have been deposited at any time by the person who is liable as
debtor for the claims in regard to which the lien is asserted if such person had been so entrusted with the
possession of 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.
Sec. 29. How the lien may be lost. – A warehouseman loses his lien upon goods:

(a) By surrendering possession thereof, or

(b) By refusing to deliver the goods when a demand is made with which he is bound to comply under the
provisions of this Act.

Sec. 30. Negotiable receipt must state charges for which the lien is claimed. – If a negotiable receipt is
issued for goods, the warehouseman shall have no lien thereon except for charges for storage of goods
subsequent to the date of the receipt unless the receipt expressly enumerated other charges for which a lien is
claimed. In such case, there shall be a lien for the charges enumerated so far as they are within the terms of
section twenty-seven although the amount of the charges so enumerated is not stated in the receipt.

Sec. 31. Warehouseman need not deliver until lien is satisfied. – A warehouseman having a lien valid
against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied.

Sec. 32. Warehouseman's lien does not preclude other remedies. – Whether a warehouseman has or has
not a lien upon the goods, he is entitled to all remedies allowed by law to a creditor against a debtor for the
collection from the depositor of all charges and advances which the depositor has expressly or impliedly
contracted with the warehouseman to pay.

Sec. 33. Satisfaction of lien by sale. – A warehouseman's lien for a claim which has become due may be
satisfied as follows:

(a) An itemized statement of the warehouseman's claim, showing the sum due at the time of the notice and
the date or dates when it becomes due,

(b) A brief description of the goods against which the lien exists,

(c) A demand that the amount of the claim as stated in the notice of such further claim as shall accrue, shall be
paid on or before a day mentioned, not less than ten 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 the 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.

In accordance with the terms of a notice so given, a sale of the goods by auction may be had to satisfy any
valid claim of the warehouseman for which he has a lien on the goods. The sale shall be had in the place
where the lien was acquired, or, if such place is manifestly unsuitable for the purpose of the claim specified in
the notice to the depositor has elapsed, and advertisement of the sale, describing the goods to be sold, and
stating the name of the owner or person on whose account the goods are held, and the time and place of the
sale, shall be published once a week for two consecutive weeks in a newspaper published in the place where
such sale is to be held. The sale shall not be held less than fifteen days from the time of the first publication.
If there is no newspaper published in such place, the advertisement shall be posted at least ten days before
such sale in not less than six conspicuous places therein.

From the proceeds of such sale, the warehouseman shall satisfy his lien including the reasonable charges of
notice, advertisement and sale. The balance, if any, of such proceeds shall be held by the warehouseman and
delivered on demand to the person to whom he would have been bound to deliver or justified in delivering
goods.

At any time before the goods are so sold, any person claiming a right of property or possession therein may
pay the warehouseman the amount necessary to satisfy his lien and to pay the reasonable expenses and
liabilities incurred in serving notices and advertising and preparing for the sale up to the time of such payment.
The warehouseman shall deliver the goods to the person making payment if he is a person entitled, under the
provision of this Act, to the possession of the goods on payment of charges thereon. Otherwise, the
warehouseman shall retain the possession of the goods according to the terms of the original contract of
deposit.

Sec. 34. Perishable and hazardous goods. – If goods are of a perishable nature, or by keeping will
deteriorate greatly in value, or, by their order, leakage, inflammability, or explosive nature, will be liable to
injure other property , the warehouseman may give such notice to the owner or to the person in whose names
the goods are stored, as is reasonable and possible under the circumstances, to satisfy the lien upon such
goods and to remove them from the warehouse and in the event of the failure of such person to satisfy the lien
and to receive the goods within the time so specified, the warehouseman may sell the goods at public or
private sale without advertising. If the warehouseman, after a reasonable effort, is unable to sell such goods,
he may dispose of them in any lawful manner and shall incur no liability by reason thereof.
The proceeds of any sale made under the terms of this section shall be disposed of in the same way as the
proceeds of sales made under the terms of the preceding section.

Sec. 35. Other methods of enforcing lien. – The remedy for enforcing a lien herein provided does not
preclude any other remedies allowed by law for the enforcement of a lien against personal property nor bar the
right to recover so much of the warehouseman's claim as shall not be paid by the proceeds of the sale of the
property.

Sec. 36. Effect of sale. – After goods have been lawfully sold to satisfy a warehouseman's lien, or have been
lawfully sold or disposed of because of their perishable or hazardous nature, the warehouseman shall not
thereafter be liable for failure to deliver the goods to the depositor or owner of the goods or to a holder of the
receipt given for the goods when they were deposited, even if such receipt be negotiable.

III – NEGOTIATION AND TRANSFER OF RECEIPTS

Sec. 37. Negotiation of negotiable receipt of delivery. – A negotiable receipt may be negotiated by delivery:

(a) Where, by terms of the receipt, the warehouseman undertakes to deliver the goods to the bearer, or

(b) 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.

Where, by the terms of a negotiable receipt, the goods are deliverable to bearer or where a negotiable receipt
has been indorsed in blank or to 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 of such indorsee.

Sec. 38. Negotiation of negotiable receipt by indorsement. – A negotiable receipt may be negotiated by the
indorsement of the person to whose order the goods are, by the terms of the receipt, deliverable. Such
indorsement may be in blank, to bearer or to a specified person. 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.
Subsequent negotiation may be made in like manner.

Sec. 39. Transfer of 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 done.

A non-negotiable receipt cannot be negotiated, and the indorsement of such a receipt gives the transferee no
additional right.

Sec. 40. Who may negotiate a receipt. – A negotiable receipt may be negotiated:

(a) By the owner thereof, or

(b) 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 time of such entrusting, the receipt is in
such form that it may be negotiated by delivery.

Sec. 41. Rights of person to whom a receipt has been negotiated. – A person to whom a negotiable
receipt has been duly negotiated acquires thereby:

(a) Such title to the goods as the person negotiating the receipt to him had or had ability to convey to a
purchaser in good faith for value, and also such title to the goods as the depositor or person to whose order the
goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith
for value, and

(b) The direct obligation of the warehouseman to hold possession of the goods for him according to the terms
of the receipt as fully as if the warehouseman and contracted directly with him.

Sec. 42. Rights of person to whom receipt has been transferred. – A person to whom a receipt has been
transferred but not negotiated acquires thereby, as against the transferor, the title of the goods subject to the
terms of any agreement with the transferor.

If the receipt is non-negotiable, such person also acquires the right to notify the warehouseman of the transfer
to him of such receipt and thereby to acquire the direct obligation of the warehouseman to hold possession of
the goods for him according to the terms of the receipt.

Prior to the notification of the warehouseman by the transferor or transferee of a non-negotiable receipt, the
title of the transferee to the goods and the right to acquire the obligation of the warehouseman may be
defeated by the levy of an attachment or execution upon the goods by a creditor of the transferor or by a
notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of a
subsequent sale of the goods by the transferor.

Sec. 43. Transfer of negotiable receipt without indorsement. – Where a negotiable receipt is transferred for
value by delivery and the indorsement of the transferor is essential for negotiation, the transferee acquires a
right against the transferor to compel him to indorse the receipt unless a contrary intention appears. The
negotiation shall take effect as of the time when the indorsement is actually made.

Sec. 44. Warranties of a sale of receipt. – A person who, for value, negotiates or transfers a receipt by
indorsement or delivery, including one who assigns for value a claim secured by a receipt, unless a contrary
intention appears, warrants:

(a) That the receipt is genuine,

(b) That he has a legal right to negotiate or transfer it,

(c) That he has knowledge of no fact which would impair the validity or worth of the receipt, and

(d) 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.

Sec. 45. Indorser not a guarantor. – The indorsement of a receipt shall not make the indorser liable for any
failure on the part of the warehouseman or previous indorsers of the receipt to fulfill their respective
obligations.

Sec. 46. 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.

Sec. 47. When negotiation not impaired by fraud, mistake or duress. – The validity of the negotiation of a
receipt is not 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 or to entrust
the possession or custody of the receipt to such person, if the person to whom the receipt was negotiated or a
person to whom the receipt was subsequently negotiated paid value therefor, without notice of the breach of
duty, or fraud, mistake or duress.

Sec. 48. Subsequent negotiation. – Where a person having sold, mortgaged, or pledged goods which are in
warehouse and for which a negotiable receipt has been issued, or having sold, mortgaged, or pledged the
negotiable receipt representing such goods, continues in possession of the negotiable receipt, the subsequent
negotiation thereof by the person under any sale or other disposition thereof to any person receiving the same
in good faith, for value and without notice of the previous sale, mortgage or pledge, shall have the same effect
as if the first purchaser of the goods or receipt had expressly authorized the subsequent negotiation.

Sec. 49. Negotiation defeats vendor's lien. – Where a negotiable receipt has been issued for goods, no
seller's lien or right of stoppage in transitu shall defeat the rights of any purchaser for value in good faith to
whom such receipt has been negotiated, whether such negotiation be prior or subsequent to the notification to
the warehouseman who issued such receipt of the seller's claim to a lien or right of stoppage in transitu. Nor
shall the warehouseman be obliged to deliver or justified in delivering the goods to an unpaid seller unless the
receipt is first surrendered for cancellation.

IV – CRIMINAL OFFENSES

Sec. 50. Issue of receipt for goods not received. – A warehouseman, or an officer, agent, or servant of a
warehouseman who issues or aids in issuing a receipt knowing that the goods for which such receipt is issued
have not been actually received by such warehouseman, or are not under his actual control at the time of
issuing such receipt, shall be guilty of a crime, and, upon conviction, shall be punished for each offense by
imprisonment not exceeding five years, or by a fine not exceeding ten thousand pesos, or both.

Sec. 51. Issue of receipt containing false statement. – A warehouseman, or any officer, agent or servant of
a warehouseman who fraudulently issues or aids in fraudulently issuing a receipt for goods knowing that it
contains any false statement, shall be guilty of a crime, and upon conviction, shall be punished for each
offense by imprisonment not exceeding one year, or by a fine not exceeding two thousand pesos, or by both.

Sec. 52. Issue of duplicate receipt not so marked. – A warehouse, or any officer, agent, or servant of a
warehouseman who issues or aids in issuing a duplicate or additional negotiable receipt for goods knowing
that a former negotiable receipt for the same goods or any part of them is outstanding and uncanceled, without
plainly placing upon the face thereof the word "duplicate" except in the case of a lost or destroyed receipt
after proceedings are provided for in section fourteen, shall be guilty of a crime, and, upon conviction, shall be
punished for each offense by imprisonment not exceeding five years, or by a fine not exceeding ten thousand
pesos, or by both.

Sec. 53. Issue for warehouseman's goods or receipts which do not state that fact. – Where they are
deposited with or held by a warehouseman goods of which he is owner, either solely or jointly or in common
with others, such warehouseman, or any of his officers, agents, or servants who, knowing this ownership,
issues or aids in issuing a negotiable receipt for such goods which does not state such ownership, shall be
guilty of a crime, and, upon conviction, shall be punished for each offense by imprisonment not exceeding one
year, or by a fine not exceeding two thousand pesos, or by both.

Sec. 54. Delivery of goods without obtaining negotiable receipt. – A warehouseman, or any officer, agent,
or servant of a warehouseman, who delivers goods out of the possession of such warehouseman, knowing
that a negotiable receipt the negotiation of which would transfer the right to the possession of such goods is
outstanding and uncanceled, without obtaining the possession of such receipt at or before the time of such
delivery, shall, except in the cases provided for in sections fourteen and thirty-six, be found guilty of a crime,
and, upon conviction, shall be punished for each offense by imprisonment not exceeding one year, or by a fine
not exceeding two thousand pesos, or by both.

Sec. 55. Negotiation of receipt for mortgaged goods. – Any person who deposits goods to which he has no
title, or upon which there is a lien or mortgage, and who takes for such goods a negotiable receipt which he
afterwards negotiates for value with intent to deceive and without disclosing his want of title or the existence of
the lien or mortgage, shall be guilty of a crime, and, upon conviction, shall be punished for each offense by
imprisonment not exceeding one year, or by a fine not exceeding two thousand pesos, or by both.
 ACTIVITY
Handout 3

Name: _______________________________ Year & Section: _____________

Teacher: ______________________________ Subject: CUSTOMS WAREHOUSING

I. Identification.
Direction: Write the correct answer on the space provided.
____________________1. Receipt in which it is stated that the goods received will be delivered to the depositor or to
any specified person.
____________________2. Who may issue warehouse receipt?
____________________3. It means goods of which any unit is, from its nature by mercantile custom, treated as the
equivalent of any other unit.
____________________4. A person lawfully engaged in the business of storing goods for profit.
____________________5. 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.

II. True or False.Direction: Read each statement below carefully. Place a T on the line if you think a statement is TRUE.
Place an F on the line if you think the statement is FALSE.

_______1. A warehouseman shall be liable to any person injured thereby for all damages caused by the omission from a
negotiable receipt of any of the terms herein required.
_______2. A non-negotiable receipt of title can be negotiated.
_______3. In case the warehouseman refuses or fails to deliver the goods in compliance with a demand by the holder or
depositor so accompanied, the burden shall be upon the holder to establish the existence of a lawful excuse for such
refusal.
_______4. A warehouseman loses his lien upon goods by surrendering possession thereof.
_______5. Warehouseman cannot set up title in himself.
_______6. After goods have been lawfully sold to satisfy a warehouseman's lien, or have been lawfully sold or disposed
of because of their perishable or hazardous nature, the warehouseman shall be liable for failure to deliver the goods to
the depositor or owner of the goods
_______7. Where a negotiable receipt has been issued for goods, no seller's lien or right of stoppage in transitu shall
defeat the rights of any purchaser for value in good faith to whom such receipt has been negotiated.
_______8. If goods are of a perishable and hazardous in nature, will be liable to injure other property, the owner may
give such notice to the warehouseman to satisfy the lien upon such goods and to remove them from the warehouse.
_______9. If a warehouseman delivers the goods to one who is not in fact lawfully entitled to the possession of them,
the warehouseman shall be liable as for conversion to all having a right of property or possession in the goods.
_______10. No title or right to the possession of the goods, on the part of the warehouseman, unless such title or right
is derived directly or indirectly from a transfer made by the depositor.

Give the following: (5 points each)

1. Provide a brief overview of Act No. 2137
2. List down the responsibilities of warehousemen.
3. Enumerate the entitlements of warehousemen.