How does the warehouse

system work?
The warehouse system starts when a depositor entrusts to a warehouse
the possession over his goods. As an evidence thereto, a warehouse receipt
is issued by the warehouseman to the depositor. As a consideration, the
depositor must pay the warehouseman the agreed fee for the contract.

DEPOSITOR WAREHOUSEMAN
If the depositor fails to pay for
the compensation due to the
warehouseman, the later may
enforce a lien over the goods
until payment is made.
History of Warehouse Receipt Law
Act No. 2137 or the Warehouse Receipts Law is the body of
rules currently governing warehouse receipts, which was
enacted on
1912
Since then, the law has been supplemented by various laws regarding
specific warehouse receipts such as those for the sugar industry or
quedans, and the rules and regulations for the grains industry.
Currently, there is a pending law
in Congress aiming to amend
Act. No. 2137 which is known as
HOUSE BILL NO. 6310
PHILIPPINE WAREHOUSE
RECEIPTS ACT OF 2018
 The law proposes that the
electronic receipts
shall be kept in a registry which
will be created by the Securities
and exchange commission.
 It law also provides that the nature of the
warehouse receipts will be deemed negotiable:

Sec 7. Nature of the warehouse receipts—All

Warehouse Receipts, regardless of what is
stated upon their face, are negotiable at the
option of the holder.
Furthermore, the amendment also
requires that all warehousemen must
acquire a license from the Securities
and Exchange Commission in order for
him to be allowed to issue a
warehouse receipt.
An unaccredited warehouseman
who issues a warehouse receipt shall
be subject to criminal penalty of
imprisonment or he may be liable to
pay a fine equal to or triple the value
of the goods involved or both.
Scope of Warehouse Receipt Laws
 Act No. 2137 or the Warehouse Receipts Law is
applicable to all warehouses, whether public or
private, regardless if it is bonded or not. It is also
applicable to all warehousemen who are engaged
in the business of receiving commodities for
storage. Likewise, it will only apply to warehouse
receipts law as provided for in Section 58 of the
law. Therefore, Act no. 2137 will not apply to
transactions without warehouse receipts issued by
the warehouseman.
Purpose of Warehouse Receipt Laws
 The law has been enacted:
1. To regulate the status, rights, and liabilities of the parties in a warehousing
contract;
2. To protect those who, in good faith and for value, acquire negotiable
warehouse receipts by negotiation;
3. To render the title to, and right of possession of, property stored in
warehouses more easily convertible;
4. To facilitate the use of warehouse receipts as documents of title; and
5. In order to accomplish these, to place a much greater responsibility on the
warehouseman.
Interpretation of the Warehouse Receipt Law
 The law provides in
Section 56 that:
Section 56. Cases not provided for in the
Act—Any case not provided for in this Act
shall be governed by the provisions of
existing legislation, or in default thereof,
by the rule of the law merchant.
A reading of this provision will show that
Act no. 2137 will apply primarily to
transactions involving warehouse receipts
and that any other law will apply only with
regards to matters which are not covered
by its provisions.
Thus, the provision of the Civil Code on documents of title will only
apply suppletorily. This must be so since the Civil Code provisions
were promulgated on a later date than Act No. 2137. When these
articles were being considered, the Legislature was fully aware of
the existing provisions of the Warehouse receipt act as in fact many
of the provisions were copied from the later.
Finally, the Sec. 56 also provides that in
default of any of existing legislations
the rule of the law merchant shall
apply.
 A body of customary rules and
principles relating to merchants and
mercantile transactions and adopted by
traders themselves for the purpose of
regulating their dealings. Initially, it was
administered for the most part in
special quasi-judicial courts, such as
those of the guilds in Italy and, later,
regularly constituted piepoudre courts
in England.