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TRIPLE-V vs. FILIPINO MERCHANTS In a decision dated June 22, 2001, the trial court rendered
judgment for respondent FMICI, thus:
THIRD DIVISION
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff (FMICI) and against the
Gentlemen: defendant Triple V (herein petitioner) and the latter is
hereby ordered to pay plaintiff the following:
Quoted hereunder, for your information, is a resolution of
this Court dated FEB 21 2005. 1. The amount of P669,500.00, representing actual
damages plus compounded (sic);
G.R. No. 160544 (Triple-V Food Services, Inc. vs. Filipino
Merchants Insurance Company, Inc.) 2. The amount of P30,000.00 as acceptance fee plus the
amount equal to 25% of the total amount due as attorney's
Assailed in this petition for review on certiorari is the fees;
decision[1]cralaw dated October 21, 2003 of the Court of
Appeals in CA-G.R. CV No. 71223, affirming an earlier 3. The amount of P50,000.00 as exemplary damages;
decision of the Regional Trial Court at Makati City, Branch
148, in its Civil Case No. 98-838, an action for damages
thereat filed by respondent Filipino Merchants Insurance, 4. Plus, cost of suit.
Company, Inc., against the herein petitioner, Triple-V Food
Services, Inc.
Defendant Triple V is not therefore precluded from taking
appropriate action against defendant Armando Madridano.
On March 2, 1997, at around 2:15 o'clock in the afternoon,
a certain Mary Jo-Anne De Asis (De Asis) dined at
petitioner's Kamayan Restaurant at 15 West Avenue, SO ORDERED.
Quezon City. De Asis was using a Mitsubishi Galant Super
Saloon Model 1995 with plate number UBU 955, assigned Obviously displeased, petitioner appealed to the Court of
to her by her employer Crispa Textile Inc. (Crispa). On said Appeals reiterating its argument that it was not a depositary
date, De Asis availed of the valet parking service of of the subject car and that it exercised due diligence and
petitioner and entrusted her car key to petitioner's valet prudence in the safe keeping of the vehicle, in handling the
counter. A corresponding parking ticket was issued as car-napping incident and in the supervision of its
receipt for the car. The car was then parked by petitioner's employees. It further argued that there was no valid
valet attendant, a certain Madridano, at the designated subrogation of rights between Crispa and respondent
parking area. Few minutes later, Madridano noticed that FMICI.
the car was not in its parking slot and its key no longer in
the box where valet attendants usually keep the keys of cars
entrusted to them. The car was never recovered. Thereafter, In a decision dated October 21, 2003,[2]cralaw the Court of
Crispa filed a claim against its insurer, herein respondent Appeals dismissed petitioner's appeal and affirmed the
Filipino Merchants Insurance Company, Inc. (FMICI). appealed decision of the trial court, thus:
Having indemnified Crispa in the amount of P669.500 for
the loss of the subject vehicle, FMICI, as subrogee to WHEREFORE, based on the foregoing premises, the instant
Crispa's rights, filed with the RTC at Makati City an action appeal is hereby DISMISSED. Accordingly, the assailed
for damages against petitioner Triple-V Food Services, Inc., June 22, 2001 Decision of the RTC of Makati City - Branch
thereat docketed as Civil Case No. 98-838 which was raffled 148 in Civil Case No. 98-838 is AFFIRMED.
to Branch 148.

SO ORDERED.
In its answer, petitioner argued that the complaint failed to
aver facts to support the allegations of recklessness and
negligence committed in the safekeeping and custody of the In so dismissing the appeal and affirming the appealed
subject vehicle, claiming that it and its employees wasted decision, the appellate court agreed with the findings and
no time in ascertaining the loss of the car and in informing conclusions of the trial court that: (a) petitioner was a
De Asis of the discovery of the loss. Petitioner further depositary of the subject vehicle; (b) petitioner was negligent
argued that in accepting the complimentary valet parking in its duties as a depositary thereof and as an employer of
service, De Asis received a parking ticket whereunder it is the valet attendant; and (c) there was a valid subrogation of
so provided that "[Management and staff will not be rights between Crispa and respondent FMICI.
responsible for any loss of or damage incurred on the
vehicle nor of valuables contained therein", a provision
Hence, petitioner's present recourse.
which, to petitioner's mind, is an explicit waiver of any right
to claim indemnity for the loss of the car; and that De Asis
knowingly assumed the risk of loss when she allowed We agree with the two (2) courts below.
petitioner to park her vehicle, adding that its valet parking
service did not include extending a contract of insurance or
warranty for the loss of the vehicle. When De Asis entrusted the car in question to petitioners
valet attendant while eating at petitioner's Kamayan
Restaurant, the former expected the car's safe return at the
During trial, petitioner challenged FMICI's subrogation to end of her meal. Thus, petitioner was constituted as a
Crispa's right to file a claim for the loss of the car, arguing depositary of the same car. Petitioner cannot evade liability
that theft is not a risk insured against under FMICI's by arguing that neither a contract of deposit nor that of
Insurance Policy No. PC-5975 for the subject vehicle. insurance, guaranty or surety for the loss of the car was
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constituted when De Asis availed of its free valet parking trial courts, more so when affirmed, as here, by the Court
service. of Appeals, are conclusive on this Court unless the trial
court itself ignored, overlooked or misconstrued facts and
circumstances which, if considered, warrant a reversal of
In a contract of deposit, a person receives an object the outcome of the case.[8]cralaw This is not so in the case
belonging to another with the obligation of safely keeping it at bar. For, we have ourselves reviewed the records and find
and returning the same.[3]cralaw A deposit may be no justification to deviate from the trial court's findings.
constituted even without any consideration. It is not
necessary that the depositary receives a fee before it
becomes obligated to keep the item entrusted for WHEREFORE, petition is hereby DENIED DUE COURSE.
safekeeping and to return it later to the depositor.
SO ORDERED.
Specious is petitioner's insistence that the valet parking ACT NO. 3893 - AN ACT TO REGULATE THE BUSINESS OF
claim stub it issued to De Asis contains a clear exclusion of RECEIVING RICE FOR STORAGE, GIVING THE DIRECTOR
its liability and operates as an explicit waiver by the OF COMMERCE AND INDUSTRY THE DUTY TO ENFORCE
customer of any right to claim indemnity for any loss of or IF, PROVIDING PENALTIES FOR VIOLATION OF THE
damage to the vehicle. PROVISIONS, EXEMPTING COOPERATIVE MARKETING
ASSOCIATIONS OF RICE PRODUCERS FROM
APPLICATION THEREOF, REPEALING ACT NUMBERED
The parking claim stub embodying the terms and THIRTY-FOUR HUNDRED AND SIXTY-NINE AND FOR
conditions of the parking, including that of relieving OTHER PURPOSES
petitioner from any loss or damage to the car, is essentially Section 1. This Act shall be known by the short title of
a contract of adhesion, drafted and prepared as it is by the "BONDED WAREHOUSE ACT."
petitioner alone with no participation whatsoever on the Sec. 2. As used in this Act, the term "warehouse" shall be
part of the customers, like De Asis, who merely adheres to deemed to mean every building, structure, or other
the printed stipulations therein appearing. While contracts protected inclosure in which rice is kept for storage. The
of adhesion are not void in themselves, yet this Court will term "rice" shall be deemed to mean either palay in bundles,
not hesitate to rule out blind adherence thereto if they prove or in grains, or clean rice, or both. "Person" including
to be one-sided under the attendant facts and corporation or partnership or two or more persons having
circumstances.[4]cralaw joint or common interest; "warehouseman" means a person
engaged in the business receiving rice for storage; and
Hence, and as aptly pointed out by the Court of Appeals, "receipt" means any receipt issued by a warehouseman for
petitioner must not be allowed to use its parking claim rice delivered to him. For the purpose of this Act, the
stub's exclusionary stipulation as a shield from any business of receiving rice for storage shall include (1) any
responsibility for any loss or damage to vehicles or to the contract or transaction wherein the warehouseman is
valuables contained therein. Here, it is evident that De Asis obligated to return the very same rice delivered to him or
deposited the car in question with the petitioner as part of pay its value;(2) any contract or transaction wherein the
the latter's enticement for customers by providing them a rice delivered is to be milled for and on account of the owner
safe parking space within the vicinity of its restaurant. In a thereof; (3) any contract or transaction wherein the rice
very real sense, a safe parking space is an added attraction delivered is commingled with the rice delivered by or
to petitioner's restaurant business because customers are belonging to other persons and the warehouseman is
thereby somehow assured that their vehicle are safely kept, obligated to return the rice of the same kind or pay its value.
rather than parking them elsewhere at their own risk.
Having entrusted the subject car to petitioner's valet Sec. 3. No person shall engage in the business of receiving
attendant, customer De Asis, like all of petitioner's rice for storage without first securing a license therefore
customers, fully expects the security of her car while at from the Director of the Bureau of Commerce and Industry.
petitioner's premises/designated parking areas and its safe Said license shall be annual and shall expire on the thirty-
return at the end of her visit at petitioner's restaurant. first day of December.

Sec. 4. Any person applying for a license to engage in the

Petitioner's argument that there was no valid subrogation business of receiving rice for storage shall set forth in the
of rights between Crispa and FMICI because theft was not application the place or places where the business and
a risk insured against under FMICI's Insurance Policy No. warehouse are to be established or located and the
PC-5975 holds no water. maximum quantity of rice to be received. The application
shall be accompanied by a cash bond or a bond secured by
Insurance Policy No. PC-5975 which respondent FMICI real estate or signed by a duly authorized bonding
issued to Crispa contains, among others things, the company, the amount of which shall be fixed by the Director
following item: "Insured's Estimate of Value of Scheduled of the Bureau of Commerce and Industry at not less than
Vehicle- P800.000".[5]cralaw On the basis of such item, the thirty-three and one third percent of the market value of the
trial court concluded that the coverage includes a full maximum quantity or rice to be received. Said bond shall
comprehensive insurance of the vehicle in case of damage be so conditioned as to respond for the market value of the
or loss. Besides, Crispa paid a premium of P10,304 to cover rice actually delivered and received at any time the
theft. This is clearly shown in the breakdown of premiums warehouseman is unable to return the rice or to pay its
in the same policy.[6]cralaw Thus, having indemnified value. The bond shall be approved by the Director of the
CRISPA for the stolen car, FMICI, as correctly ruled by the Bureau of Commerce and Industry before issuing a license
trial court and the Court of Appeals, was properly under this Act, to satisfy himself concerning the sufficiency
subrogated to Crispa's rights against petitioner, pursuant of such bond, and to determine whether the warehouse for
to Article 2207 of the New Civil Code[7]. which such license is applied for is suitable for the proper
storage of rice.

Anent the trial court's findings of negligence on the part of Sec. 5. Whenever the Director of the Bureau of Commerce
the petitioner, which findings were affirmed by the appellate and Industry shall determine that a bond approved by him,
court, we have consistently ruled that findings of facts of is or any cause, has become insufficient, he may require an
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additional bond or bonds to be given by the warehouseman comply with any provision of this Act or of the rules and
concerned, conforming with the requirements of the regulations made by virtue thereof.
preceding section, and unless the same be given within the
time fixed by a written demand therefor the license of such Sec. 15. This Act shall not be applicable to cooperative
warehouse may be suspended or revoked. marketing associations of rice producers organized under
Act Numbered Three Thousand Four Hundred and Twenty-
Sec. 6. Every person licensed under this Act to engage in five known as the "Cooperative Marketing Law," provided
the business of receiving rice for storage shall insure the such associations shall not receive, for storage, rice from
rice so received and stored against fire. non-members which is greater in quantity than one-half of
the total quantity of rice received from members, at any
Sec. 7. Any person injured by the breach of any obligation time.
to secure which a bond is given, under the provisions of this
Act, shall be entitled to sue on the bond in his own name in Sec. 16. If any clause, sentence, or paragraph, or part of
any court of competent jurisdiction to recover the damages this Act shall, for any reason, be adjusted by any court of
he may have sustained by such breach. Nothing contained competent jurisdiction to be invalid, such judgment shall
herein shall except any property of assets of any not affect, impair, or invalidate the remainder thereof, but
warehouseman from being sued on in case the bond given shall be confined in his operation to the clause, sentence,
is not sufficient to respond for the full market value of the paragraph or part thereof directly involved in the
rice received by such warehouseman. controversy in which such judgment shall have been
rendered.
Sec. 8. Every warehouseman licensed under this Act shall
receive for storage, so far as his license and the capacity of Sec. 17. This Act shall take effect on January First, nineteen
his warehouse permit, any rice, of the kind customarily hundred and thirty-two.
stored therein by him, which may be tendered to him in a ACT NO. 2137 - THE WAREHOUSE RECEIPTS LAW
suitable condition for warehousing, in the usual manner
and in the ordinary and usual course of business, without
making any discrimination between persons desiring to
avail themselves of warehouse facilities. I — THE ISSUE OF WAREHOUSE RECEIPTS

Sec. 9. Every warehouseman licensed under this Act shall Section 1. Persons who may issue receipts. — Warehouse
keep a complete record of the rice received by him, of the receipts may be issued by any warehouseman.
receipts issued therefor of the withdrawals, of the
liquidations and of all receipts returned to and cancelled by Sec. 2. Form of receipts; essential terms. — Warehouse
him. He shall make reports to the Director of Bureau of receipts need not be in any particular form but every such
Commerce and Industry concerning his warehouse and the receipt must embody within its written or printed terms:
conditions, contents, operations, and business thereof in
such form and at such time as the said Director may (a) The location of the warehouse where the goods are
require, and shall conduct said warehouse in all other stored,
respects in compliance with this Act and the rules and
regulations made in accordance therewith. (b) The date of the issue of the receipt,

Sec. 10. The Director of Bureau of Commerce and Industry (c) The consecutive number of the receipt,
shall from time to time make such rules and regulations as
he may deem necessary for the efficient execution of the (d) A statement whether the goods received will be delivered
provisions of this Act. to the bearer, to a specified person or to a specified person
or his order,
Sec. 11. Any person engaging in the business of receiving
rice for storage in violation of Section three of this Act shall (e) The rate of storage charges,
be deemed guilty of misdemeanor, and upon conviction
thereof shall be punished by imprisonment of not less than (f) A description of the goods or of the packages containing
one month or by a fine of not more than five thousand them,
pesos, or both, in the discretion of the court.
(g) The signature of the warehouseman which may be made
Sec. 12. Any warehouseman licensed under this Act by his authorized agent,
receiving a quantity of rice greater than that specified in his
application and license, shall, upon conviction, be fined (h) If the receipt is issued for goods of which the
double the market value of the rice so received in excess of warehouseman is owner, either solely or jointly or in
the quantity of rice he is authorized to receive. common with others, the fact of such ownership, and

Sec. 13. Any person entering into connivance or (i) A statement of the amount of advances made and of
combination with any warehouseman that is not licensed liabilities incurred for which the warehouseman claims a
under this Act, with the purpose of evading the provisions lien. If the precise amount of such advances made or of
of section three of this Act, shall be deemed guilty of such liabilities incurred is, at the time of the issue of,
misdemeanor, and upon conviction thereof, shall be fined unknown to the warehouseman or to his agent who issues
not more than two hundred pesos or imprisonment for not it, a statement of the fact that advances have been made or
more than one months, or both, in the discretion of the liabilities incurred and the purpose thereof is sufficient.
court.
A warehouseman shall be liable to any person injured
Sec. 14. The Director of the Bureau of Commerce and thereby for all damages caused by the omission from a
Industry may, after opportunity for hearing has been negotiable receipt of any of the terms herein required.
afforded to the license concerned, suspend or revoke any
license issued to any warehouseman, conducting a Sec. 3. Form of receipts. — What terms may be inserted. —
warehouse under this Act, for any violation or failure to A warehouseman may insert in a receipt issued by him any
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other terms and conditions provided that such terms and Sec. 9. Justification of warehouseman in delivering. — A
conditions shall not: warehouseman is justified in delivering the goods, subject
to the provisions of the three following sections, to one who
(a) Be contrary to the provisions of this Act. is:

(b) In any wise impair his obligation to exercise that degree (a) The person lawfully entitled to the possession of the
of care in the safe-keeping of the goods entrusted to him goods, or his agent;
which is reasonably careful man would exercise in regard
to similar goods of his own. (b) A person who is either himself entitled to delivery by the
terms of a non-negotiable receipt issued for the goods, or
Sec. 4. Definition of non-negotiable receipt. — A receipt in who has written authority from the person so entitled either
which it is stated that the goods received will be delivered indorsed upon the receipt or written upon another paper;
to the depositor or to any other specified person, is a non- or
negotiable receipt.
(c) A person in possession of a negotiable receipt by the
Sec. 5. Definition of negotiable receipt. — A receipt in which terms of which the goods are deliverable to him or order, or
it is stated that the goods received will be delivered to the to bearer, or which has been indorsed to him or in blank by
bearer or to the order of any person named in such receipt the person to whom delivery was promised by the terms of
is a negotiable receipt. the receipt or by his mediate or immediate indorser.

No provision shall be inserted in a negotiable receipt that it Sec. 10. Warehouseman's liability for misdelivery. — Where
is non-negotiable. Such provision, if inserted shall be void. a warehouseman delivers the goods to one who is not in fact
lawfully entitled to the possession of them, the
Sec. 6. Duplicate receipts must be so marked. — When warehouseman shall be liable as for conversion to all having
more than one negotiable receipt is issued for the same a right of property or possession in the goods if he delivered
goods, the word "duplicate" shall be plainly placed upon the the goods otherwise than as authorized by subdivisions (b)
face of every such receipt, except the first one issued. A and (c) of the preceding section, and though he delivered
warehouseman shall be liable for all damages caused by his the goods as authorized by said subdivisions, he shall be so
failure so to do to any one who purchased the subsequent liable, if prior to such delivery he had either:
receipt for value supposing it to be an original, even though
the purchase be after the delivery of the goods by the (a) Been requested, by or on behalf of the person lawfully
warehouseman to the holder of the original receipt. entitled to a right of property or possession in the goods,
not to make such deliver; or
Sec. 7. Failure to mark "non-negotiable." — A non-
negotiable receipt shall have plainly placed upon its face by (b) Had information that the delivery about to be made was
the warehouseman issuing it "non-negotiable," or "not to one not lawfully entitled to the possession of the goods.
negotiable." In case of the warehouseman's failure so to do,
a holder of the receipt who purchased it for value supposing Sec. 11. Negotiable receipt must be cancelled when goods
it to be negotiable, may, at his option, treat such receipt as delivered. — Except as provided in section thirty-six, where
imposing upon the warehouseman the same liabilities he a warehouseman delivers goods for which he had issued a
would have incurred had the receipt been negotiable. negotiable receipt, the negotiation of which would transfer
the right to the possession of the goods, and fails to take up
This section shall not apply, however, to letters, and cancel the receipt, he shall be liable to any one who
memoranda, or written acknowledgment of an informal purchases for value in good faith such receipt, for failure to
character. deliver the goods to him, whether such purchaser acquired
title to the receipt before or after the delivery of the goods
II — OBLIGATIONS AND RIGHTS OF WAREHOUSEMEN by the warehouseman.
UPON THEIR RECEIPTS
Sec. 12. Negotiable receipts must be cancelled or marked
Sec. 8. Obligation of warehousemen to deliver. — A when part of goods delivered. — Except as provided in
warehouseman, in the absence of some lawful excuse section thirty-six, where a warehouseman delivers part of
provided by this Act, is bound to deliver the goods upon a the goods for which he had issued a negotiable receipt and
demand made either by the holder of a receipt for the goods fails either to take up and cancel such receipt or to place
or by the depositor; if such demand is accompanied with: plainly upon it a statement of what goods or packages have
been delivered, he shall be liable to any one who purchases
(a) An offer to satisfy the warehouseman's lien; for value in good faith such receipt, for failure to deliver all
the goods specified in the receipt, whether such purchaser
(b) An offer to surrender the receipt, if negotiable, with such acquired title to the receipt before or after the delivery of
indorsements as would be necessary for the negotiation of any portion of the goods by the warehouseman.
the receipt; and
Sec. 13. Altered receipts. — The alteration of a receipt shall
(c) A readiness and willingness to sign, when the goods are not excuse the warehouseman who issued it from any
delivered, an acknowledgment that they have been liability if such alteration was:
delivered, if such signature is requested by the
warehouseman. (a) Immaterial,

In case the warehouseman refuses or fails to deliver the (b) Authorized, or

goods in compliance with a demand by the holder or
depositor so accompanied, the burden shall be upon the (c) Made without fraudulent intent.
warehouseman to establish the existence of a lawful excuse
for such refusal. 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
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fraudulent intent, the warehouseman shall be liable the depositor or person claiming under him against the
according to the terms of the receipt as they were before warehouseman for failure to deliver the goods according to
alteration. the terms of the receipt.

Material and fraudulent alteration of a receipt shall not Sec. 20. Liability for non-existence or misdescription of
excuse the warehouseman who issued it from liability to goods. — A warehouseman shall be liable to the holder of a
deliver according to the terms of the receipt as originally receipt for damages caused by the non-existence of the
issued, the goods for which it was issued but shall excuse goods or by the failure of the goods to correspond with the
him from any other liability to the person who made the description thereof in the receipt at the time of its issue. If,
alteration and to any person who took with notice of the however, the goods are described in a receipt merely by a
alteration. Any purchaser of the receipt for value without statement of marks or labels upon them or upon packages
notice of the alteration shall acquire the same rights against containing them or by a statement that the goods are said
the warehouseman which such purchaser would have to be goods of a certain kind or that the packages containing
acquired if the receipt had not been altered at the time of the goods are said to contain goods of a certain kind or by
purchase. words of like purport, such statements, if true, shall not
make liable the warehouseman issuing the receipt,
Sec. 14. Lost or destroyed receipts. — Where a negotiable although the goods are not of the kind which the marks or
receipt has been lost or destroyed, a court of competent labels upon them indicate or of the kind they were said to
jurisdiction may order the delivery of the goods upon be by the depositor.
satisfactory proof of such loss or destruction and upon the
giving of a bond with sufficient sureties to be approved by Sec. 21. Liability for care of goods. — A warehouseman shall
the court to protect the warehouseman from any liability or be liable for any loss or injury to the goods caused by his
expense, which he or any person injured by such delivery failure to exercise such care in regard to them as reasonably
may incur by reason of the original receipt remaining careful owner of similar goods would exercise, but he shall
outstanding. The court may also in its discretion order the not be liable, in the absence of an agreement to the
payment of the warehouseman's reasonable costs and contrary, for any loss or injury to the goods which could not
counsel fees. have been avoided by the exercise of such care.

The delivery of the goods under an order of the court as Sec. 22. Goods must be kept separate. — Except as
provided in this section, shall not relieve the warehouseman provided in the following section, a warehouseman shall
from liability to a person to whom the negotiable receipt has keep the goods so far separate from goods of other
been or shall be negotiated for value without notice of the depositors and from other goods of the same depositor for
proceedings or of the delivery of the goods. which a separate receipt has been issued, as to permit at
all times the identification and redelivery of the goods
Sec. 15. Effect of duplicate receipts. — A receipt upon the deposited.
face of which the word "duplicate" is plainly placed is a
representation and warranty by the warehouseman that Sec. 23. Fungible goods may be commingled if
such receipt is an accurate copy of an original receipt warehouseman authorized. — If authorized by agreement
properly issued and uncanceled at the date of the issue of or by custom, a warehouseman may mingle fungible goods
the duplicate, but shall impose upon him no other liability. with other goods of the same kind and grade. In such case,
the various depositors of the mingled goods shall own the
Sec. 16. Warehouseman cannot set up title in himself . — entire mass in common and each depositor shall be entitled
No title or right to the possession of the goods, on the part to such portion thereof as the amount deposited by him
of the warehouseman, unless such title or right is derived bears to the whole.
directly or indirectly from a transfer made by the depositor
at the time of or subsequent to the deposit for storage, or Sec. 24. Liability of warehouseman to depositors of
from the warehouseman's lien, shall excuse the commingled goods. — The warehouseman shall be severally
warehouseman from liability for refusing to deliver the liable to each depositor for the care and redelivery of his
goods according to the terms of the receipt. share of such mass to the same extent and under the same
circumstances as if the goods had been kept separate.
Sec. 17. Interpleader of adverse claimants. — If more than
one person claims the title or possession of the goods, the Sec. 25. Attachment or levy upon goods for which a
warehouseman may, either as a defense to an action negotiable receipt has been issued. — If goods are delivered
brought against him for non-delivery of the goods or as an to a warehouseman by the owner or by a person whose act
original suit, whichever is appropriate, require all known in conveying the title to them to a purchaser in good faith
claimants to interplead. for value would bind the owner, and a negotiable receipt is
issued for them, they can not thereafter, while in the
Sec. 18. Warehouseman has reasonable time to determine possession of the warehouseman, be attached by
validity of claims. — If someone other than the depositor or garnishment or otherwise, or be levied upon under an
person claiming under him has a claim to the title or execution unless the receipt be first surrendered to the
possession of goods, and the warehouseman has warehouseman or its negotiation enjoined. The
information of such claim, the warehouseman shall be warehouseman shall in no case be compelled to deliver up
excused from liability for refusing to deliver the goods, the actual possession of the goods until the receipt is
either to the depositor or person claiming under him or to surrendered to him or impounded by the court.
the adverse claimant until the warehouseman has had a
reasonable time to ascertain the validity of the adverse Sec. 26. Creditor's remedies to reach negotiable receipts. —
claim or to bring legal proceedings to compel claimants to A creditor whose debtor is the owner of a negotiable receipt
interplead. shall be entitled to such aid from courts of appropriate
jurisdiction, by injunction and otherwise, in attaching such
Sec. 19. Adverse title is no defense except as above receipt or in satisfying the claim by means thereof as is
provided. — Except as provided in the two preceding allowed at law or in equity in these islands in regard to
sections and in sections nine and thirty-six, no right or title property which can not readily be attached or levied upon
of a third person shall be a defense to an action brought by by ordinary legal process.
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Sec. 27. What claims are included in the warehouseman's (c) A demand that the amount of the claim as stated in the
lien. — Subject to the provisions of section thirty, a notice of such further claim as shall accrue, shall be paid
warehouseman shall have a lien on goods deposited or on on or before a day mentioned, not less than ten days from
the proceeds thereof in his hands, for all lawful charges for the delivery of the notice if it is personally delivered, or from
storage and preservation of the goods; also for all lawful the time when the notice shall reach its destination,
claims for money advanced, interest, insurance, according to the due course of post, if the notice is sent by
transportation, labor, weighing, coopering and other mail,
charges and expenses in relation to such goods, also for all
reasonable charges and expenses for notice, and (d) A statement that unless the claim is paid within the time
advertisements of sale, and for sale of the goods where specified, the goods will be advertised for sale and sold by
default had been made in satisfying the warehouseman's auction at a specified time and place.
lien.
In accordance with the terms of a notice so given, a sale of
Sec. 28. Against what property the lien may be enforced. — the goods by auction may be had to satisfy any valid claim
Subject to the provisions of section thirty, a of the warehouseman for which he has a lien on the goods.
warehouseman's lien may be enforced: The sale shall be had in the place where the lien was
acquired, or, if such place is manifestly unsuitable for the
(a) Against all goods, whenever deposited, belonging to the purpose of the claim specified in the notice to the depositor
person who is liable as debtor for the claims in regard to has elapsed, and advertisement of the sale, describing the
which the lien is asserted, and goods to be sold, and stating the name of the owner or
person on whose account the goods are held, and the time
(b) Against all goods belonging to others which have been and place of the sale, shall be published once a week for
deposited at any time by the person who is liable as debtor two consecutive weeks in a newspaper published in the
for the claims in regard to which the lien is asserted if such place where such sale is to be held. The sale shall not be
person had been so entrusted with the possession of goods held less than fifteen days from the time of the first
that a pledge of the same by him at the time of the deposit publication. If there is no newspaper published in such
to one who took the goods in good faith for value would have place, the advertisement shall be posted at least ten days
been valid. before such sale in not less than six conspicuous places
therein.
Sec. 29. How the lien may be lost. — A warehouseman loses
his lien upon goods: From the proceeds of such sale, the warehouseman shall
satisfy his lien including the reasonable charges of notice,
(a) By surrendering possession thereof, or advertisement and sale. The balance, if any, of such
proceeds shall be held by the warehouseman and delivered
(b) By refusing to deliver the goods when a demand is made on demand to the person to whom he would have been
with which he is bound to comply under the provisions of bound to deliver or justified in delivering goods.
this Act.
At any time before the goods are so sold, any person
Sec. 30. Negotiable receipt must state charges for which the claiming a right of property or possession therein may pay
lien is claimed. — If a negotiable receipt is issued for goods, the warehouseman the amount necessary to satisfy his lien
the warehouseman shall have no lien thereon except for and to pay the reasonable expenses and liabilities incurred
charges for storage of goods subsequent to the date of the in serving notices and advertising and preparing for the sale
receipt unless the receipt expressly enumerated other up to the time of such payment. The warehouseman shall
charges for which a lien is claimed. In such case, there deliver the goods to the person making payment if he is a
shall be a lien for the charges enumerated so far as they are person entitled, under the provision of this Act, to the
within the terms of section twenty-seven although the possession of the goods on payment of charges thereon.
amount of the charges so enumerated is not stated in the Otherwise, the warehouseman shall retain the possession
receipt. of the goods according to the terms of the original contract
of deposit.
Sec. 31. Warehouseman need not deliver until lien is
satisfied. — A warehouseman having a lien valid against the Sec. 34. Perishable and hazardous goods. — If goods are of
person demanding the goods may refuse to deliver the a perishable nature, or by keeping will deteriorate greatly in
goods to him until the lien is satisfied. value, or, by their order, leakage, inflammability, or
explosive nature, will be liable to injure other property , the
Sec. 32. Warehouseman's lien does not preclude other warehouseman may give such notice to the owner or to the
remedies. — Whether a warehouseman has or has not a lien person in whose names the goods are stored, as is
upon the goods, he is entitled to all remedies allowed by law reasonable and possible under the circumstances, to satisfy
to a creditor against a debtor for the collection from the the lien upon such goods and to remove them from the
depositor of all charges and advances which the depositor warehouse and in the event of the failure of such person to
has expressly or impliedly contracted with the satisfy the lien and to receive the goods within the time so
warehouseman to pay. specified, the warehouseman may sell the goods at public
or private sale without advertising. If the warehouseman,
Sec. 33. Satisfaction of lien by sale. — A warehouseman's after a reasonable effort, is unable to sell such goods, he
lien for a claim which has become due may be satisfied as may dispose of them in any lawful manner and shall incur
follows: no liability by reason thereof.

(a) An itemized statement of the warehouseman's claim, The proceeds of any sale made under the terms of this
showing the sum due at the time of the notice and the date section shall be disposed of in the same way as the proceeds
or dates when it becomes due, of sales made under the terms of the preceding section.

(b) A brief description of the goods against which the lien Sec. 35. Other methods of enforcing lien. — The remedy for
exists, enforcing a lien herein provided does not preclude any other
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remedies allowed by law for the enforcement of a lien delivered by the terms of the receipt had or had ability to
against personal property nor bar the right to recover so convey to a purchaser in good faith for value, and
much of the warehouseman's claim as shall not be paid by
the proceeds of the sale of the property. (b) The direct obligation of the warehouseman to hold
possession of the goods for him according to the terms of
Sec. 36. Effect of sale. — After goods have been lawfully sold the receipt as fully as if the warehouseman and contracted
to satisfy a warehouseman's lien, or have been lawfully sold directly with him.
or disposed of because of their perishable or hazardous
nature, the warehouseman shall not thereafter be liable for Sec. 42. Rights of person to whom receipt has been
failure to deliver the goods to the depositor or owner of the transferred. — A person to whom a receipt has been
goods or to a holder of the receipt given for the goods when transferred but not negotiated acquires thereby, as against
they were deposited, even if such receipt be negotiable. the transferor, the title of the goods subject to the terms of
any agreement with the transferor.
III — NEGOTIATION AND TRANSFER OF RECEIPTS
If the receipt is non-negotiable, such person also acquires
Sec. 37. Negotiation of negotiable receipt of delivery. — A the right to notify the warehouseman of the transfer to him
negotiable receipt may be negotiated by delivery: of such receipt and thereby to acquire the direct obligation
of the warehouseman to hold possession of the goods for
(a) Where, by terms of the receipt, the warehouseman him according to the terms of the receipt.
undertakes to deliver the goods to the bearer, or
Prior to the notification of the warehouseman by the
(b) Where, by the terms of the receipt, the warehouseman transferor or transferee of a non-negotiable receipt, the title
undertakes to deliver the goods to the order of a specified of the transferee to the goods and the right to acquire the
person, and such person or a subsequent indorsee of the obligation of the warehouseman may be defeated by the levy
receipt has indorsed it in blank or to bearer. of an attachment or execution upon the goods by a creditor
of the transferor or by a notification to the warehouseman
Where, by the terms of a negotiable receipt, the goods are by the transferor or a subsequent purchaser from the
deliverable to bearer or where a negotiable receipt has been transferor of a subsequent sale of the goods by the
indorsed in blank or to bearer, any holder may indorse the transferor.
same to himself or to any other specified person, and, in
such case, the receipt shall thereafter be negotiated only by Sec. 43. Transfer of negotiable receipt without indorsement.
the indorsement of such indorsee. — Where a negotiable receipt is transferred for value by
delivery and the indorsement of the transferor is essential
Sec. 38. Negotiation of negotiable receipt by indorsement. for negotiation, the transferee acquires a right against the
— A negotiable receipt may be negotiated by the transferor to compel him to indorse the receipt unless a
indorsement of the person to whose order the goods are, by contrary intention appears. The negotiation shall take
the terms of the receipt, deliverable. Such indorsement may effect as of the time when the indorsement is actually made.
be in blank, to bearer or to a specified person. If indorsed
to a specified person, it may be again negotiated by the Sec. 44. Warranties of a sale of receipt. — A person who, for
indorsement of such person in blank, to bearer or to value, negotiates or transfers a receipt by indorsement or
another specified person. Subsequent negotiation may be delivery, including one who assigns for value a claim
made in like manner. secured by a receipt, unless a contrary intention appears,
warrants:
Sec. 39. Transfer of receipt. — A receipt which is not in such
form that it can be negotiated by delivery may be (a) That the receipt is genuine,
transferred by the holder by delivery to a purchaser or
donee. (b) That he has a legal right to negotiate or transfer it,

A non-negotiable receipt can not be negotiated, and the (c) That he has knowledge of no fact which would impair the
indorsement of such a receipt gives the transferee no validity or worth of the receipt, and
additional right.
(d) That he has a right to transfer the title to the goods and
Sec. 40. Who may negotiate a receipt. — A negotiable receipt that the goods are merchantable or fit for a particular
may be negotiated: purpose whenever such warranties would have been
implied, if the contract of the parties had been to transfer
(a) By the owner thereof, or without a receipt of the goods represented thereby.

(b) By any person to whom the possession or custody of the Sec. 45. Indorser not a guarantor. — The indorsement of a
receipt has been entrusted by the owner, if, by the terms of receipt shall not make the indorser liable for any failure on
the receipt, the warehouseman undertakes to deliver the the part of the warehouseman or previous indorsers of the
goods to the order of the person to whom the possession or receipt to fulfill their respective obligations.
custody of the receipt has been entrusted, or if, at the time
of such entrusting, the receipt is in such form that it may Sec. 46. No warranty implied from accepting payment of a
be negotiated by delivery. debt. — A mortgagee, pledgee, or holder for security of a
receipt who, in good faith, demands or receives payment of
Sec. 41. Rights of person to whom a receipt has been the debt for which such receipt is security, whether from a
negotiated. — A person to whom a negotiable receipt has party to a draft drawn for such debt or from any other
been duly negotiated acquires thereby: person, shall not, by so doing, be deemed to represent or to
warrant the genuineness of such receipt or the quantity or
(a) Such title to the goods as the person negotiating the quality of the goods therein described.
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 Sec. 47. When negotiation not impaired by fraud, mistake
the depositor or person to whose order the goods were to be or duress. — The validity of the negotiation of a receipt is
 8

not impaired by the fact that such negotiation was a breach warehouseman, or any of his officers, agents, or servants
of duty on the part of the person making the negotiation or who, knowing this ownership, issues or aids in issuing a
by the fact that the owner of the receipt was induced by negotiable receipt for such goods which does not state such
fraud, mistake or duress or to entrust the possession or ownership, shall be guilty of a crime, and, upon conviction,
custody of the receipt to such person, if the person to whom shall be punished for each offense by imprisonment not
the receipt was negotiated or a person to whom the receipt exceeding one year, or by a fine not exceeding two thousand
was subsequently negotiated paid value therefor, without pesos, or by both.
notice of the breach of duty, or fraud, mistake or duress.
Sec. 54. Delivery of goods without obtaining negotiable
Sec. 48. Subsequent negotiation. — Where a person having receipt. — A warehouseman, or any officer, agent, or
sold, mortgaged, or pledged goods which are in warehouse servant of a warehouseman, who delivers goods out of the
and for which a negotiable receipt has been issued, or possession of such warehouseman, knowing that a
having sold, mortgaged, or pledged the negotiable receipt negotiable receipt the negotiation of which would transfer
representing such goods, continues in possession of the the right to the possession of such goods is outstanding and
negotiable receipt, the subsequent negotiation thereof by uncanceled, without obtaining the possession of such
the person under any sale or other disposition thereof to receipt at or before the time of such delivery, shall, except
any person receiving the same in good faith, for value and in the cases provided for in sections fourteen and thirty-six,
without notice of the previous sale, mortgage or pledge, be found guilty of a crime, and, upon conviction, shall be
shall have the same effect as if the first purchaser of the punished for each offense by imprisonment not exceeding
goods or receipt had expressly authorized the subsequent one year, or by a fine not exceeding two thousand pesos, or
negotiation. by both.

Sec. 49. Negotiation defeats vendor's lien. — Where a Sec. 55. Negotiation of receipt for mortgaged goods. — Any
negotiable receipt has been issued for goods, no seller's lien person who deposits goods to which he has no title, or upon
or right of stoppage in transitu shall defeat the rights of any which there is a lien or mortgage, and who takes for such
purchaser for value in good faith to whom such receipt has goods a negotiable receipt which he afterwards negotiates
been negotiated, whether such negotiation be prior or for value with intent to deceive and without disclosing his
subsequent to the notification to the warehouseman who want of title or the existence of the lien or mortgage, shall
issued such receipt of the seller's claim to a lien or right of be guilty of a crime, and, upon conviction, shall be
stoppage in transitu. Nor shall the warehouseman be punished for each offense by imprisonment not exceeding
obliged to deliver or justified in delivering the goods to an one year, or by a fine not exceeding two thousand pesos, or
unpaid seller unless the receipt is first surrendered for by both.
cancellation.
V — INTERPRETATION
IV — CRIMINAL OFFENSES
Sec. 56. Case not provided for in Act. — Any case not
Sec. 50. Issue of receipt for goods not received. — A provided for in this Act shall be governed by the provisions
warehouseman, or an officer, agent, or servant of a of existing legislation, or in default thereof, by the rule of
warehouseman who issues or aids in issuing a receipt the law merchant.
knowing that the goods for which such receipt is issued
have not been actually received by such warehouseman, or Sec. 57. Name of Act. — This Act may be cited as the
are not under his actual control at the time of issuing such Warehouse Receipts Act.
receipt, shall be guilty of a crime, and, upon conviction,
shall be punished for each offense by imprisonment not Sec. 58. Definitions. — (a) In this Act, unless the content
exceeding five years, or by a fine not exceeding ten or subject matter otherwise requires:
thousand pesos, or both.
"Action" includes counterclaim, set-off, and suits in equity
Sec. 51. Issue of receipt containing false statement. — A as provided by law in these islands.
warehouseman, or any officer, agent or servant of a
warehouseman who fraudulently issues or aids in "Delivery" means voluntary transfer of possession from one
fraudulently issuing a receipt for goods knowing that it person to another.
contains any false statement, shall be guilty of a crime, and
upon conviction, shall be punished for each offense by "Fungible goods" means goods of which any unit is, from its
imprisonment not exceeding one year, or by a fine not nature by mercantile custom, treated as the equivalent of
exceeding two thousand pesos, or by both. any other unit.

Sec. 52. Issue of duplicate receipt not so marked. — A "Goods" means chattels or merchandise in storage or which
warehouse, or any officer, agent, or servant of a has been or is about to be stored.
warehouseman who issues or aids in issuing a duplicate or
additional negotiable receipt for goods knowing that a "Holder" of a receipt means a person who has both actual
former negotiable receipt for the same goods or any part of possession of such receipt and a right of property therein.
them is outstanding and uncanceled, without plainly
placing upon the face thereof the word "duplicate" except in "Order" means an order by indorsement on the receipt.
the case of a lost or destroyed receipt after proceedings are
provided for in section fourteen, shall be guilty of a crime, "Owner" does not include mortgagee.
and, upon conviction, shall be punished for each offense by
imprisonment not exceeding five years, or by a fine not "Person" includes a corporation or partnership or two or
exceeding ten thousand pesos, or by both. more persons having a joint or common interest.

Sec. 53. Issue for warehouseman's goods or receipts which To "purchase" includes to take as mortgagee or as pledgee.
do not state that fact. — Where they are deposited with or
held by a warehouseman goods of which he is owner, either "Receipt" means a warehouse receipt.
solely or jointly or in common with others, such
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"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.

(b) A thing is done "in good faith" within the meaning of this
Act when it is in fact done honestly, whether it be done
negligently or not.

Sec. 59. Application of Act. — The provisions of this Act do

not apply to receipts made and delivered prior to the taking
effect hereof.

Sec. 60. Repeals. — All acts and laws and parts thereof
inconsistent with this Act are hereby repealed.

Sec. 61. Time when Act takes effect. — This Act shall take
effect ninety days after its publication in the Official Gazette
of the Philippines shall have been completed.