Special Commercial Law Reviewer
Special Commercial Law Reviewer
Special Commercial Law Reviewer
COMMERCIAL LAW
Commerce
If you are to sell something you are not free to dispose, is the
It is the exchange of goods, productions, or property of any kind. It is contract of sale valid?
intercourse by way of trade traffic between different peoples or states
and the citizens or inhabitants thereof, including not only the purchase, No; no ownership to transfer
sale, and exchange of commodities, but also the instrumentalities and
agencies by which it is promoted and the means and appliances by
which it is carried on, and transportation of persons as well as goods. Who are involved?
(Black’s Law Dictionary)
√ Merchants
It is that branch of human activity, the purpose of which is to bring
products to the consumer by means of exchanges or operations which
tend to supply and extend to him, habitually, with intent to gain, at the
Merchants (A1)
proper time and place and in good quality and quantity. (1 Blanco 36)
1. Those who having capacity to engage in commerce, habitually devote
themselves thereto.
Trade v Commerce
2. Commercial or Industrial associations organized in accordance with
Trade Commerce the Code of Commerce.
Wider in scope; continuous 3. Those having the free disposition of their property
1. Universal
- shifting of values every second
-exists in every civilized society
- in business, time has a cost (time cost)
-commerce happens in all parts of the world
*equitableness
2. Progressive
Delay No need to demand Mora accipiendi, Section 10. The Congress shall, upon recommendation of the economic
for debtor to incur mora solvendi and planning agency, when the national interest dictates, reserve to
liability (mora ex re) citizens of the Philippines or to corporations or associations at least sixty
- failure to pay +
per centum of whose capital is owned by such citizens, or such higher
liability for such
percentage as Congress may prescribe, certain areas of investments. The
delay; “in default”
Congress shall enact measures that will encourage the formation and
Retraso operation of enterprises whose capital is wholly owned by Filipinos.
- failure to pay on In the grant of rights, privileges, and concessions covering the national
time but no liability; economy and patrimony, the State shall give preference to qualified
“mere delay” Filipinos.
√ There must be The State shall regulate and exercise authority over foreign investments
demand for liability within its national jurisdiction and in accordance with its national goals
to exist and priorities.
Section 12. The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt measures that
Constitutional Provisions on Commercial Law help make them competitive.
- Economic nationalism as constitutional Policy on national economy and 4. Sec. 1, Art. VIII
commerce
- Power of judicial review in key economic and commercial matters
ARTICLE VIII
ARTICLE XII
Section 1. The judicial power shall be vested in one Supreme Court and
Section 1. The goals of the national economy are a more equitable in such lower courts as may be established by law.
distribution of opportunities, income, and wealth; a sustained increase in
the amount of goods and services produced by the nation for the benefit Judicial power includes the duty of the courts of justice to settle actual
of the people; and an expanding productivity as the key to raising the controversies involving rights which are legally demandable and
quality of life for all, especially the under-privileged. enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
The State shall promote industrialization and full employment based on of any branch or instrumentality of the Government.
sound agricultural development and agrarian reform, through industries
that make full and efficient use of human and natural resources, and
which are competitive in both domestic and foreign markets. However,
the State shall protect Filipino enterprises against unfair foreign
competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of II. LETTER OF CREDIT
the country shall be given optimum opportunity to develop. Private
enterprises, including corporations, cooperatives, and similar collective (LC, documentary credit)
organizations, shall be encouraged to broaden the base of their
(Code of Commerce Articles 567-572)
ownership.
ARTICLE II
Governing Law
Section 19. The State shall develop a self-reliant and independent
national economy effectively controlled by Filipinos. √ Uniform Customs and Practices (UCP)
Section 20. The State recognizes the indispensable role of the private -adopted by the International Chamber of Commerce (ICC)
sector, encourages private enterprise, and provides incentives to needed
investments. -first established in 1933
- Equitable distribution of wealth It is a letter issued by one merchant to another for the purpose of
attending to a commercial transaction (Art. 567, Code of Commerce)
ARTICLE II
It is an engagement by a bank or other person made at the request of a
Section 9. The State shall promote a just and dynamic social order that customer that the issuer will honor drafts or other demands for payment
will ensure the prosperity and independence of the nation and free the upon compliance with the conditions specified in credit Through a letter
people from poverty through policies that provide adequate social of credit, the bank merely substitutes its own promise to pay for the
services, promote full employment, a rising standard of living, and an promise to pay of one of its customers who in return promises to pay the
improved quality of life for all. bank the amount of funds mentioned in the letter of credit plus credit or
commitment fees mutually agreed upon. (Prudential Bank vs. IAC GR no
Section 10. The State shall promote social justice in all phases of national
74886 December 8, 1992)
development.
It is a financial device developed by merchants as a convenient and 2. That it be limited to a fixed and specified amount or to one or more
relatively safe mode of dealing with sales of goods to satisfy the undeterminable amounts but within the maximum limits of which has to
seemingly irreconcilable interests of a seller, who refuses to part with his be stated exactly.
goods before he is paid, and a buyer, who wants to have control of the
goods before paying. To break the impasse, the buyer may be required to 3. Duration
contract a bank to issue a letter of credit in favor of the seller so that, by
a. 6 mos. if used in the Philippines or
virtue of the letter of credit, the issuing bank can authorize the seller to
draw drafts and engage to pay them upon their presentment b. 1 year if used abroad,
simultaneously with the tender of documents required by the letter of
credit. The buyer and the seller agree on what documents are to be Unless the parties provide for a different period.
presented for payment, but ordinarily they are documents of title
evidencing or attesting to the shipment of the goods to the buyer. Once
the credit is established, the seller ships the goods to the buyer and in the It becomes VOID in fact and in law when it is not used within the
process secures the required shipping documents or documents of title. period agreed upon or within the duration aforementioned as
To get paid, the seller executes a draft and presents it together with the provided by law.
required documents to the issuing bank. The issuing bank redeems the
draft and pays cash to the seller if it finds that the documents submitted
by the seller conform to what the letter of credit requires. The bank then
obtains possession of the documents upon paying the seller. The
transaction is completed when the buyer reimburses the issuing bank
and acquires the documents entitling him to the goods. Under this
arrangement, the seller gets paid only if he delivers the documents of
title over the goods, while the buyer acquires the said documents and
control over the goods only after reimbursing the bank. (Bank of America
vs. CA GR no. 105395 December 10, 1993)
Stages
1. It is an accessory contract.
Parties to a LC
2. It is NOT a negotiable instrument because it does NOT have all the
requisites of negotiability. 1. Buyer/importer/applicant
What characterizes letters of credit, as distinguished from other a. procures the letter of credit and
accessory contracts, is the engagement of the issuing bank to pay the
seller once the draft and the required shipping documents are presented b. obliges himself to reimburse the issuing bank upon receipt of the
to it. In turn, this arrangement assures the seller of prompt payment, documents of title.
independent of any breach of the main sales contract. (Ibid)
2. Issuing/opening bank
-buyer can refuse payment; bank pays frauding seller at its own
risk
Importance of LC to Seller
Types of LC
1. Globalization
1. Standby LC
- tool/medium for the seller to be assured of payment
2. LC On Sight
2. To benefit form the expertise of the bank
3. LC on Term/Usance
3. Opens the door for financing opportunities
4. Revocable LC
4. Assurance of payment
5. Irrevocable LC
6. Confirmed LC
Importance of LC to Buyer/Importer
7. Unconfirmed LC
1. Assurance that payment will only be made if the docs are
delivered to the buyer 8. Red Clause LC
3. Cash resources are _______; leeway, no cash at the beginning Standby Letter of Credit
-obligates the issuing bank to honor drafts drawn in compliance with the
credit and can neither be cancelled nor modified without the consent of
all parties, including the beneficiary
Confirmed
Purposes
Unconfirmed
1. To encourage and promote the use of trust receipts as an additional
-carries only the obligation of the issuing bank
and convenient aid to commerce and trade
-a mere advising bank is not guaranteeing a credit
2. To regulate trust receipts transactions in order to assure the protection
of the rights and the enforcement of the obligations of the parties
involved therein
Letter of Credit is non negotiable but the draft may be negotiable
3. To declare the misuse or misappropriation of goods or the proceeds
realized from the sale of goods released under trust receipts as an offense
punishable under A.315 of the Revised Penal Code
Definition
-commercial document whereby the bank releases the goods in the - person holding title over the goods, documents, or instruments subject
possession of the entrustee but retains ownership thereof while the of a trust receipt transaction and any successor-in-interest of such person
entrustee shall sell the goods and apply the proceeds for the full
payment of the liability to the bank. - mere holder of security interest and NOT the owner of the goods
Security Interest c. Enforcement of all other rights conferred on him in the trust receipt
provided such are not contrary to the provisions of this decree.
-a property interest in goods, documents or instruments to secure
performance of some obligations of the entrustee or of some third 2. May cancel the trust and take possession of the goods, documents or
persons to the entruster and includes title, whether or not expressed to instruments subject of the trust or of the proceeds realized therefrom at
be absolute, whenever such title is in substance taken or retained for any time upon default or failure of the entrustee to comply with any of
security only. the terms and conditions of the trust receipt; or
2. Devolvera - return unsold goods 4. The entruster’s security interest in goods, documents or instruments
pursuant to the written terms of a trust receipt shall be valid as against
all creditors of the entrustee for the duration of the trust receipt
agreement.
*alternative
5. The entruster holding a security interest shall NOT, merely by virtue
*no transfer of ownership; entrustor retains ownership
of such interest or having given the entrustee liberty of sale or other
disposition of the goods, documents or instruments under the terms of
the trust receipt transaction, be responsible as principal or as vendor
Failure to return/deliver under any sale or contract to sell made by the entrustee.
-mala prohibita; good faith is not a defense Right of purchaser in good faith
1. Entrustee 1. Loan - entruster is the one who buys form the seller
- Borrower/buyer/importer 2. Security - goods are collateral
1. Give possession of the goods to the entrustee; and b. Payment of the expenses of re-taking, keeping and storing of goods,
documents or instruments;
2. Give at least 5 days notice to the entrustee of the intention to sell the
goods at an intended public sale c. Satisfaction of the entrustee’s indebtedness to the entruster.
3. Excess/Deficiency
*damage to entruster need not be proven Act No. 3893, amended by RA 247 (Bonded Warehouse Act)
Form
Purposes
Generally, the warehouse receipt is not required to be in any particular
1. To regulate the status, rights and liabilities of the parties in a form. However it should contain the following:
warehousing contract
2. To protect those who, in good faith and for value, acquire negotiable
warehouse receipts by negotiation 1. Location of the warehouse where goods are stored
3. To render the title o, and right of possession of, property stored in 2. Date of issue of the receipt
warehouses more easily convertible
3. Consecutive number of the receipts
4. To facilitate the use of warehouse receipts
4. Statements whether the goods received will be delivered to the bearer,
to a specified person, or to a specified person or his order
To ALL warehouses, public/private, bonded or not 6. Description of the goods or of the packages containing them
Articles 1507-1520 of the Civil Code apply in all other cases where The mere fact that the goods deposited are incorrectly described does
receipts are NOT issued by a warehouseman. not make ineffective the receipt, when the identity of the goods is fully
established by evidence. Its indorsement and delivery shall constitute a
sufficient transfer of the title of the goods. (American Foreign Banking
Corporation vs. Herridge, December 20, 1924)
*CBW Customs bonded warehouse; registered with the BOC
7. Signature of the warehouseman which may be made by his authorized
*CSW ________ Storage Warehouse
agent
4. Non-negotiable receipts
receipt in which it is stated that the goods received will be delivered to The warehouseman may insert any other terms and conditions.
the depositor, or to any other specified person
Exceptions:
5. Negotiable receipts
1. Those contrary to the provisions of the Warehouse Receipts Law
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 2. Those contrary to law, morals, good customs, public order or public
policy
5. Those which may impair the obligation of the warehouseman to i. the person negotiating the receipt
exercise that degree of care in the safekeeping of goods entrusted to him ii. the person to whose order the goods were to be delivered
Deliberate alteration makes it Valid if altered BUT 1. DELIVERY, when the goods are deliverable to
null and void enforceable only in
a) the bearer, or
accordance with its original
b) a specified person or order, and the latter or a subsequent indorsee
tenor
indorses it in blank or to bearer
If originally a bearer Converted to an order
2. INDORSEMENT + DELIVERY
instrument, it will remain as instrument IF specially
such indorsed If the receipt is indorsed to a specified person, it becomes an order
receipt and negotiation can only be effected by the indorsement of such
Holder in due course may HDC obtains only the title
person in blank, to bearer or to another specified person
obtain a better title which the party negotiating
had over the goods Delivery alone is not sufficient
Effects of delivery without indorsement:
should be stamped on its face “non-negotiable”; otherwise, a holder Negotiation of a receipt may also be by way of pledge; as to the legal
believing it to be negotiable may treat it as such (Sec. 7) title to the property covered by a warehouse receipt, a pledge is on the
same footing as a vendee EXCEPT that the former is under obligation of
acquired through transfer and assignment, NOT through negotiation;
surrendering his title over the goods upon payment of the debt secured.
vests the transferee with the ff. rights:
(BPI vs. Herridge, December 20, 1924)
a. right of title to the goods, as against the transferor BUT the pledgee or mortgagee does NOT automatically become the
owner of the goods, but merely retains the right to keep them and sell
b. right to notify the warehouseman of the transfer and acquire the them (with consent of the owner) so as to satisfy the obligation from the
direct obligation of the warehouseman to hold the goods for him proceeds (PNB vs. Sayo, July 9, 1998)
If the property is lost without the fault or negligence of the pledgee or
goods represented can be subject to attachment or levy by
mortgagee, it is regarded as lost on account of the real owner, mortgagor
execution (Sec.42)
or pledgor
2. NEGOTIABLE
B. Who may negotiate
one which that the goods will be delivered to the bearer or to the order
1. Owner
of any person named in the receipt
2. Any person to whom the possession or custody of the receipt has been
failure to mark it as “negotiable” does NOT render it non-negotiable
entrusted by the owner IF
for as long as it contains words of negotiability (Sec. 5)
acquired through negotiation; vests the holder with the ff. rights:
a) by the terms of the receipt, the goods are deliverable to the order of negotiated whether it be prior or subsequent to the notification to the
the person to whom the possession/custody of the receipt has been warehouseman who issued such receipt;
entrusted, or b. The warehouseman shall NOT be obliged to deliver or justified in
b) the receipt is in such form that it may be negotiated by delivery delivering the goods to an unpaid seller unless the receipt is first
surrendered for cancellation.
3. Even a thief or fraud can negotiate the receipt if it is in such a form that
he need not forge any signature (bearer instrument).
1. Negotiation produces the effect of delivery: the transferee becomes the Delivery to the transferee accompanied by a deed of assignment,
owner of the goods. donation or other form of transfer
2. Negotiation carries with it BOTH title to and possession of the
property.
B. To Whom Delivered
1. Depositor
D. Rights
2. Any other specified person
1. Person to whom a negotiable receipt has been negotiated: (Sec41)
a. The title of the person negotiating the receipt over the goods covered
by the receipt;
b. The title of the person (depositor or owner) to whose order by the C. Non-negotiable Mark
terms of the receipt the goods were to be delivered over such goods; and
A non-negotiable receipt shall have plainly placed upon its face by the
c. The direct obligation of the warehouseman to hold possession of the
warehouseman issuing it as “non-negotiable” or “not negotiable”
goods for him, as if the warehouseman directly contracted with him.
2. Transferee of a negotiable receipt delivered WITHOUT endorsement: Failure to do so, the holder of the receipt believing it to be negotiable
(Sec43) may, AT HIS OPTION, treat it as imposing upon the warehouseman the
a. The right to the goods as against the transferor; and same liabilities he would have incurred had the receipt been negotiable
b. The right to compel the transferor to indorse the receipt
The negotiation shall take effect as of the time when the endorsement is
actually made.
D. Rights of Transferee (Sec42)
The endorsement of a receipt shall not make the endorser liable for any 1. The title to the goods as against the transferor;
failure on the part of the warehouseman or previous endorsers of the
receipt to fulfill their respective obligations. (Sec45) 2. The right to notify the warehouseman of the transfer thereof; and
The indorser does NOT warrant the warehouseman’s complicity with 3. To refuse delivery in proper legal circumstances
the latter’s duties.
A holder for security who in good faith accepts payment of a debt does
NOT warrant: Obligations of a warehouseman
a. The genuineness of the receipt A. To issue a warehouse receipt in the required form for goods received,
b. The quality or quantity of the goods described therein and mark them accordingly (i.e. non-negotiable, duplicate)
Sec 15 provides that if the term “duplicate’ is indicated in the receipts it 1. Where the law provides;
warrants the ff:
2. Where it was an inducement for the depositor to enter into the
a. That the duplicate is an accurate copy of the original receipt; and contract;
b. Such original receipt is uncancelled at the date of the issue of the
duplicate 3. Where it is an established practice
G. Effect of Vendor’s Lien D. To give up the proper notice in case of sale of the goods, as provided
Where a negotiable receipt has been issued for the goods: E. To NOT commingle the goods deposited UNLESS they are fungible
and of the same kind and grade (co-ownership applies)
a. 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 F. To deliver the goods to the person lawfully entitled
1. A warehouseman is bound to deliver the goods UPON A
DEMAND made either by:
b. A person who is entitled to delivery by the terms of the A. Liability for misdelivery or conversion
non-negotiable receipt or who has written authority from the
1. A warehouseman would be liable for misdelivery or conversion if he
person so entitled either indorsed or written upon another paper
delivers the goods to one who is not in fact lawfully entitled to the
c. A person in possession of a negotiable receipt possession of the goods
2. Such demand must accompanied by: Conversion is an unauthorized assumption and exercise of the right of
ownership over goods belonging to another through the alteration of
a. an offer to satisfy the warehouseman’s lien their condition or exclusion of the owner’s right.
b. an offer to surrender the receipt, if negotiable with such 2. He would also be liable for misdelivery even if he delivers to a person
endorsements as would be necessary for negotiation of the receipts holding a non-negotiable receipt or a negotiable receipt if prior to such
delivery he had either:
c. a readiness and willingness to sign, when the goods are
delivered, an acknowledgment that the goods had been delivered a. Been requested, by or on behalf of the person lawfully entitled to a
right or property or possession in the goods, not to make such
3. Ownership is NOT a defense for the refusal to deliver goods delivery; or
When the warehouseman has rendered it beyond his power to deliver b. Had information that the delivery about to be made was to one not
the goods, demand may be dispensed with. (A.1169,NCC) lawfully entitled to the possession of the goods
Refusal or failure to deliver: the burden shall be upon the 3. Steps a warehouseman may take to protect him from misdelivery:
warehouseman to establish the existence of a lawful excuse for the
refusal. a. He could ascertain the validity of the adverse claim or to bring legal
proceedings to compel claimants to interplead (sec 17)
Neither can the warehouseman, as a depositary for hire, set up an
adverse title in another as an excuse for his failure to deliver the property b. He may require the claimants to interplead (sec 18)
to his bailor on demand. (Sec.19)
DOCTRINE OF ESTOPPEL:
B. Liability for alteration of receipts
The warehouseman cannot refuse to deliver the goods on the ground
that he has acquired title or right to the possession of the same unless 1. If the alteration is IMMATERIAL, that is, the tenor of the receipt is not
such title or right is derived: changed, whether fraudulent or not, authorized or not, the
warehouseman is liable on the altered receipt according to its original
a. Directly or indirectly from a transfer made by the depositor at tenor
the time of the deposit for storage or subsequent thereto;
2. If the alteration is MATERIAL, that is the tenor of the receipt is
b. From the warehouseman’s lien. (Sec.16) changed, but authorized, the warehouseman is liable according to the
terms of the receipt as altered.
4. The warehouseman may legally refuse to deliver goods in the
following circumstances: 3. If the alteration is MATERIAL BUT INNOCENTLY MADE THOUGH
UNAUTHORIZED, the warehouseman is liable on the altered receipt
a. When the holder of the receipt does NOT satisfy the conditions according to its original tenor; and
prescribed in Section 8 of the Act
4. If the alteration is MATERIAL AND FRAUDULENTLY MADE, the
b. When the warehouseman has legal title in himself on the goods, warehouseman is liable according to the original tenor of the receipt to a
such title or right being derived directly or indirectly from the purchaser of the receipt for value without notice and even to the alterer
transfer made by the depositor at the time or subsequent to the and subsequent purchases with notice.
deposit for storage, or from the warehouseman’s lien (Sec.16)
i. Attachment/levy of the goods by a creditor where the document 1. Failure to place the word “duplicate” in a duplicate receipt will make
is surrendered/ impounded or its negotiation enjoined (Sec.25) the warehouseman liable for all the damages to anyone who purchased
such receipt believing it to be an original, even if the purchase be after
j. Where the document of title is attached by a creditor (Sec.26) the delivery of the goods by the warehouseman to the holder of the
original receipt. (Sec 6)
k. Failure was not due to any fault of the warehouseman (Sec.26)
2. He shall be guilty of a crime punishable by fine or imprisonment, or
G. To take up and cancel the warehouse receipt when the goods are
both, if he issues a duplicate or additional negotiable receipt for goods
delivered
knowing that a former negotiable receipt for the same goods or any part The holder of the receipt believing it to be negotiable may, at his
of then is outstanding or and uncancelled, without plainly placing upon option, treat it as imposing upon the warehouseman the same liabilities
the face of the receipt the word duplicate, EXCEPT in the case of a lost or he would have incurred had the receipt been negotiable.
destroyed receipt after proceedings.
The “holder” referred herein cannot be the original holder because, as
the depositor, he is presumed to know whether he is getting a negotiable
or a non0negotiable receipt.
E. Liability to rightful claimants
2. Sec.18 provides that if someone other than the depositor or person GR: The warehouseman shall be liable for failure to deliver the goods
claiming has a claim to the title or possession of the goods, the to any one who purchases for value in good faith such receipt whether
warehouseman shall be excused from liability for refusing to deliver the the purchaser acquired title to the receipt before or after delivery of the
goods until he has a reasonable time to ascertain the validity of the goods by the warehouseman. He shall also be guilty in such case of crime
adverse claim or bring legal proceedings to compel claimants to punishable by fine or imprisonment.
interplead.
Exceptions:
GR: The warehouseman is under obligation to deliver the identical 2. Where the goods have been lawfully sold or disposed of because of
property stored with him and if he fails to do so, he is liable directly to their perishable or hazardous nature.
the owner or holder of a receipt for damages.
GR: The warehouseman is required to exercise ordinary or reasonable A warehouseman shall be guilty of a crime punishable by fine or
care in the custody of goods, that is, the care a reasonably careful owner imprisonment, or by both, if he issues a negotiable receipt for the same
would exercise over similar goods of his own. This is the “diligence of a goods deposited with or held by him of which he knows he is the owner,
good father of a family” solely or jointly or in common with others, if he fails to state such
ownership in the receipt
EXC: In the absence of any agreement to the contrary, the
warehouseman is not liable for any loss or injury to the goods which
could not have been avoided by the exercise of such care.
M. Liability for delivery of goods without obtaining negotiable receipt or
knowing that a negotiable receipt is outstanding and uncancelled
PURPOSE: to permit at all times the identification and redelivery of the 1. Where the goods have been lawfully sold to satisfy a warehouseman’s
goods deposited lien or
2. The goods have been lawfully sold or disposed of because of their
GR: A warehouseman shall keep the goods so far separate from goods perishable or hazardous nature or
of other depositors, and from other goods of the same depositor for 3. In case of lost or destroyed receipt after proceedings
which a separate receipt has been issued.
EXC:
Attachment or levy of goods deposited
1. If authorized by agreement or by custom, or
A. Negotiable receipt
2. If the goods are fungible goods with other goods of the same kind and The warehouseman has the direct obligation to hold possession of the
grade. goods for the original owner or for the person to whom the negotiable
receipt of title has been duly negotiated.(Sec 41)
a. The various depositors of the mingled goods shall own the entire mass
in common and each depositor shall be entitled to such portion as the GR: While in possession of such, the goods CANNOT be attached or
amount deposited by him bears to the whole. levied upon under an execution unless:
b. The warehouseman shall be severally liable to each depositor for the 1. The document be first surrendered; or
care and redelivery of his share of such mass to the same extent and 2. The negotiation is enjoined;
under the same circumstances as if the goods had been kept separate. 3. The document is impounded by the court.
EXCEPTIONS:
1. If the person depositing is not the owner of the goods or one who has
I. Liability for failure to mark a receipt intended to be non-negotiable as no right to convey title to the goods binding upon the owner;
“non-negotiable” 2. Actions for recovery or manual delivery of goods by the real owner;
3. Cases where the attachment is made before the issuance of the
negotiable receipt of title
A creditor whose debtor is the owner of a negotiable receipt CAN 2. Wrongfully refusing to deliver goods when demand is made with
attach the negotiable receipt in the debtor’s possession and NOT the goods which he is bound to comply under provisions of Sec.8
covered by such receipt. (Sec.26) This provision expressly gives the court
full power to aid by injunction and otherwise a creditor seeking to get a
negotiable receipt covering such goods.
E. Satisfaction by sale
The prohibition is for the protection of the warehouseman since he
1. PROCEDURE: (Sec.33)
could be made liable to a subsequent purchaser for value in good faith.
a. The warehouseman shall give a WRITTEN NOTICE to the person
on whose account the goods were held or to any person who has a
B. Non-negotiable receipt claim or interest in the goods. The notice shall be given either by
The goods can be attached, provided it is done prior to the notification delivery in person or by registered mail to the last known place of
of the warehouseman of the transfer (Sec.42) business or abode. The notice shall contain the following:
Absent such notice, both the warehouseman and the sheriff have a
right to assume that the goods are still owned by the person whose name i. An itemized statement of the warehouseman’s claim, the sum
appears in the receipt. due and the date(s) when it became due.
ii. A brief description of the goods against which the lien exists.
iii. A demand that the amount of the claim shall be paid on or
The warehouseman’s lien before a day mentioned (not less than 10 days from the delivery of
the notice if personally delivered or from the time when the notice
A. Extent should reach its destination if the notice is sent by mail)
The warehouseman has a lien on goods deposited or on the proceeds iv. A statement that unless the claim is paid within the time
thereof in his hands for: specified, the goods will be advertised for sale and sold by auction
at a specified time and place.
1. All lawful charges for storage and preservation of the goods
2. All lawful claims for money advanced, interest, insurance, b. In accordance with the terms of the notice, a sale of the goods by
transportation, labor, weighing, cooperating and other charges or auction may be had to satisfy any valid claim of the warehouseman
expenses in relation to the goods for which he has a lien over the goods.
c. After the time for payment ahs elapsed, an advertisement of the
3. All reasonable charges and expenses for notice and advertisements of sale, describing the goods to be sold and stating the name of the
sale, and owner or person on whose account the goods has been held and the
4. Sale of goods where default has been made in satisfying the time and place of the sale.
warehousing lien. d. The ad shall be published once a week for two consecutive weeks
in a newspaper published in the place where the sale shall be held. It
The warehouseman’s lien over the goods deposited with him is his
can be in the place where the lien was acquired or if such place is
security for the payment of the charge, money advanced and other
manifestly unsuitable, at the nearest suitable place.
expenses.
If there is no newspaper published in such place, the advertisement
shall be posted at least 10 days before such sale in not less than six (6)
conspicuous places therein.
B. Against what enforced e. The sale shall be held not less than 15 days from the time of the first
The warehouseman’s lien can be enforced against: publication.
f. From the proceeds of the sale the warehouseman shall satisfy his
1. The goods of the depositor who is liable to the warehouseman as
lien including the reasonable charges of notice, advertisement and
debtor whenever such goods are deposited; and
sale.
2. The goods of other persons stored by the depositor who is liable to the
g. The balance, if any, shall be held by the warehouseman, and
warehouseman as debtor with authority to make a valid pledge.
delivered on demand to the person to whom he would have been
Purpose of the law: to give the warehouseman a lien for charges bound to deliver the goods.
against goods of persons who are primarily liable for the charge
incurred, and who by their agreement create the relation of debtor and
creditor. 2. EFFECT
The warehouseman shall not thereafter be liable for failure to deliver
the goods to the depositor or owner of the goods even if such receipt be
C. Remedies for enforcement negotiable.
In cases of perishable and hazardous goods, the warehouseman may
1. Refusing to deliver the goods until the lien is satisfied;
give notice to the owner, or to the person in whose name the goods are
2. Causing the extrajudicial sale of the property and applying the
stored, to satisfy the lien upon such goods and to remove them from the
proceeds to the value of the lien; and
warehouse. Failure to do so may entitle the warehouseman to sell the goods at
3. Filing a civil action for the unpaid charges or by way of counterclaim public or private sale without advertisements. In case he was unable to sell, he
in an action to recover the property from him. may dispose of them in any lawful manner, and shall incur no liability by
reason thereof.
Whether a warehouseman has or has not lien upon the goods, he is
entitled to all remedies allowed by law to a creditor against his debtor,
for the collection from the depositor of all the charges and advances
which the depositor has expressly or impliedly contracted with the Perishable and hazardous goods are goods which by keeping will
warehouseman to pay. (Sec 32) deteriorate greatly in value, or by odor, leakage, inflammability or
explosive nature and will make warehouseman liable in case it will
injure other property.
LIABILITY: Imprisonment not exceeding 1 yr, or by a fine not Commodities which may be stored in a bonded warehouse
exceeding P2,000.00, or by both.
Generally, these commodities could be any raw, processed,
manufactured or finished product or by-product, goods, article, or
merchandise, either domestic or of foreign production or origin, which
5. Warehouseman, or any officer, agent or servant of warehouseman,
may be traded or dealt in openly and legally.
who delivers goods out of the possession of such warehouseman, knowing that
Prohibited substances, the possession of which is prohibited by law,
a negotiable receipt is outstanding and uncancelled, without obtaining
may NOT be validly received for storage in a bonded warehouse.
the possession of such receipt at or before the time of delivery
Purposes of the law a. of the kind customarily stored by him in the warehouse,
b. so far as his license or the capacity of the warehouse will permit,
1. To protect depositors by giving then recourse in case of the insolvency c. without making any discrimination between persons desiring to avail
of the warehouseman against the bond filed by him themselves of warehouse facilities
To achieve this purpose, any person who wants to engage in the A fine for double the market value of the commodity so received is
business of receiving commodities for storage is required by the Act to imposed in case of excess of the authorized quantity. (Sec.12)
first secure a license therefore from the Department of Trade and
Industry. 5. To keep complete record of all commodities received by him, of the
receipts issued therefore, of the withdrawals, of the liquidation, and of
2. To regulate the business of receiving commodities for storage
all receipts returned to and canceled by him;
3. To encourage the establishment of more warehouse
6. To observe the rules and regulations of the Bureau of Domestic Trade Central Bank Def’n
(DTI)
A central bank is a bank that holds the cash reserves of a country’s
commercial banks, performs monetary services for the government,
issues bank notes, and makes funds available to commercial banks
Right of a person injured by the breach by the warehouseman of any
of his obligation under the act:
He may sue on the bond put up by the warehouseman to recover the Every country has a central bank
damages he may have sustained on account of such breach.
In case the bond given is not sufficient to cover the full market value of
the commodity stored, he may sue on any property or assets of the Establishment and organization of Bangko Sentral ng Pilipinas
warehouseman not exempt by law from attachment and execution.
- The central Bank shall be the central monetary authority that shall
function and operate as an independent and accountable body corporate
in the discharge of its mandated responsibilities concerning money,
Offenses penalized under the act
banking and credit.
A. Civil
- It is a government-owned-and-controlled corporation but it was created
- Breach of obligations secured by the bond as an autonomous body corporate governed by the provisions of its
charter (RA 265). It enjoys fiscal and administrative autonomy.( Sec1;
B. Criminal Chapter I )
(Sec 3; Chapter I)
Responsibilities:
Primary objectives:
June 14, 1993 1. Supervisory Powers. The operations and activities of banks shall be
subject to supervision of the Bangko Sentral. It shall also have
supervision over the operations of and exercise regulatory powers over
Policy quasi-banks, trust entities and other financial institutions which under
special laws are subject to Bangko Sentral supervision.
maintenance of a central monetary authority (CMA)
The Monetary Board may exempt particular categories of transactions -governing body
from the abovementioned regulations, but not limited to:
1. Exceptional cases or
Composition of the monetary board
2. To enable a bank or quasi-bank under rehabilitation or during a
merger or consolidation to continue in business, with safety to its - 7 members appointed by the President of the Philippines for a term of 6
creditors, depositors and the general public. years
3. Authorize person or entity to engage in banking operations or - The seven members are:
quasi-banking functions
a. Governor of Bangko Sentral – shall be the Chairman of the Monetary
Board; his appointment is subject to the confirmation by Commission of
Appointments
No person or entity shall engage in banking operations or quasi-banking
functions without authority from the Bangko Sentral: b. Members of the Cabinet – designated by the President of the
Philippines
Provided, however, That an entity authorized by the Bangko Sentral to
perform universal or commercial banking functions shall likewise have c. 5 members who shall come from the private sector, all shall serve
the authority to engage in quasi-banking functions. full-term
Upon issuance of this authority, such person or entity may commence to - 3 shall have a term of 6 years
engage in banking operations or quasi-banking function and shall
- 2 shall have a term of 3 years
continue to do so unless such authority is sooner
1. Surrendered,
***No member of the Monetary Board may be reappointed more than
2. Annulled by the Bangko Sentral in accordance with this Act or other
once.
special laws.
3. Revoked,
4. Suspended
QUALIFICATIONS OF THE MEMBERS OF THE BOARD
4. of unquestionable integrity
5. of known probity and patriotism
2. Members coming from private sector shall not hold any other public
office/public employment during their tenure;
REMOVAL
- the President may remove any member for the following reasons: