Republic of the Philippines.
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. mee 6

Introduced by Rep. BERNADETTE “BH” HERRERA-DY

EXPLANATORY NOTE

This is a bill strengthening and modernizing Act No. 2137 or the Warehouse Receipts Law of
1912, as amended. The old law prescribed a relatively simple way by which farmers and other workers
from agricultural sector can obtain credit by storing their goods in a warehouse and trading or
‘encumbering the warehouse receipt. It also: (1) prescribed the rights and duties of a warehouseman; (2)
regulated the relationship between the warehouseman and the depositor of goods or the holder of a
warehouse receipt for the goods; (3) made the title to, the right of possession over, the property stored
in a warehouse more easily convertible; and (4) protected those who, in good faith and for value,
acquired warehouse receipts by negotiation.

Enacted over a century ago, the Warehouse Receipts Law of 1912 has failed to take advantage
‘of modern technological advances that could be used to establish a system that is more secure,
transparent, reliable and promote ease of doing business. This Act proposes to establish a central
electronic Registry for all Warehouse Receipts, to be made readily available online, which shall be
managed by a Warehousing Accreditation Council. A party will simply deposit his goods and products in
the warehouse ~ assured that his goods shall be taken care of — in exchange for a Warehouse Receipt
which she can easily trade, barter or sell in order to obtain the necessary credit. With the use of reliable
and secure central electronic Registry, banks and other financial institutions will not be reluctant to
accept these Warehouse Receipts in exchange for loans as they can easily check the veracity of the
Warehouse Receipts, as well as the presence and quality of the corresponding goods and products in the
Warehouse.

The Proposed Philippine Warehouse Receipts Act of 2019 will enable the agricultural sector to
“convert” goods and products into credit in a faster and simpler way, promote economic activity by
increasing access, particularly for entities engaged in agricultural businesses such as farming, to least
cost credit by establishing a simplified, unified, and modern framework for the storage of goods in
warehouses and subsequent trading of interests therein. its immediate approval is earnestly sought.

BERNADS7TE “BH” HERBERA-DY


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. poce

Introduced by Rep. BERNADETTE “BH” HERRERA-DY

AN ACT
STRENGTHENING AND MODERNIZING THE WAREHOUSE RECEIPTS LAW OF THE
PHILIPPINES IN ORDER TO PROVIDE A LEGAL FRAMEWORK IN THE PHILIPPINES THAT
‘SHALL FACILITATE TRADE, COMMERCE, AND OTHER RELATED PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

CHAPTER I- GENERAL PROVISIONS

SECTION 1. Title. - This Act shall be known as the Philippine Warehouse Receipts Act of
2019." (n)

SEC. 2. Declaration of Policy. — It is the policy of the State to promote economic activity by
increasing access, particularly for entities engaged in agricultural businesses such as farming,
to least cost credit by establishing a simplified, unified, and modern framework for the storage of
goods in warehouses and subsequent trading of interests therein.

SEC. 3. Definition of Terms. - As used in this Act, the following terms shall mean:

(a) Buyer in Good Faith - a person that buys goods in good faith without personal
knowledge of any defect in the title of the seller. (n)

(b) Default the failure or refusal of a debtor to pay in accordance with, or otherwise perform
an obligation under, a warehouse receipt.

(c) Deposit — the act of transferring actual possession of goods to a warehouseman.

(a) Fungible Goods — goods of which any unit is, from its nature by mercantile custom,
treated as the equivalent of any other unit.

(e) Goods — chattels or merchandise in storage or which has been or is about to be stored
except those that are meant for direct import or export. Goods, as defined, shall not
include any living objects.

() Holder- one who has both actual possession of a warehouse receipt and a right of
property therein. (n)

(g) Issuer — in the case of a release order, the holder or his agent who issued the release
order. An agent or employee of a holder may be considered an issuer provided he
issued the release order with real or apparent authority, regardless if the goods were not
actually released or wrongly described, or if he acted in violation of the holder's
instructions. (n)

(h) Notice — a statement of information that is registered in the Registry relating to goods
stored in a warehouse that are subject of a warehouse receipt.

(i) Person — includes both natural and juridical persons. (n)

() Person entitled under the document -the valid holder of the warehouse receipt, or the
person to whom the release of the goods is proper. (n)


(k) Purchase- a voluntary transaction where on party obligates himself to transfer ownership
over the warehouse receipt and the goods they cover in exchange for the other party
paying a price certain in money or its equivalent. (n)

(1) Receipt — a warehouse receipt. (n)

(m)Record — information that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable form. (n)

(n) Registry - the electronic Warehouse Receipts Registry.(n)

(0) Release - means voluntary transfer of the warehouseman of actual possession of goods
deposited in a warehouse to a person entitled under a warehouse receipt.

(p) Release Order — means a record that contains an order directed to a warehouseman to
release the goods to a specified person. (n)

(q) Sign — the intentional adoption or ratification of a record through a tangible or electronic.
symbol associated with the party making the sign. (n)

() Warehouse — a place for storing goods for profit within the territory of The Philippines.
(n)

(s) Warehouse Receipt — a receipt, whether electronic or otherwise, issued by a
warehouseman, evidencing title over goods stored at a warehouse. (n)

(t) Warehouseman -- a person lawfully engaged in the business of storing goods for profit.
(n)

CHAPTER 2 WAREHOUSE RECEIPTS

SEC. 4. Creation of Uniform Registry System for Electronic Warehouse Receipt. — The
Securities and Exchange Commission (SEC) is hereby tasked with creating an online and
uniform Registry where all electronic Warehouse Receipts can be kept and accessed, as well as
rules and regulations pertaining specifically to registration procedures and procedures on how to
update or amend electronic Warehouse Receipts. The SEC is likewise authorized to engage the
services of third parties in creating and maintaining the Registry.

SEC. 5 Local Sub- Registry — In addition to the Registry created and maintained by the SEC, all
warehouses must contain a sub-Registry specifically for goods contained in them. Failure of a
warehouse to keep a sub-Registry, as well as any fraud committed thereon, shall be grounds for
revocation of a warehouse's licenses to operate.

SEC. 6. Creation of Warehouse Receipts - Only a duly registered and accredited
Warehouseman operating a duly registered and accredited Warehouse may validly create an
entry in the Registry for which an electronic Warehouse receipt shall be issued.

SEC. 7. Nature of Warehouse Receipts. ~All Warehouse Receipts, regardless of what is stated
upon their face, are negotiable at the option of the holder. (n)

SEC. 8. Original Warehouse Receipts. — The electronic copy of a Warehouse Receipt shall be
considered as the Original. Any physical copy of the electronic Warehouse Receipt that is a
Certified True Copy of the same shall be valid. However, in case of any discrepancy between
the electronic Warehouse Receipt and a Certified True Copy of the same, the electronic
Warehouse Receipt shall be controlling.

A Certified True Copy of the electronic Warehouse Receipt is a representation and warranty that
such receipt is an accurate copy of the original electronic Warehouse Receipt properly
registered an un-canceled at the date of the issue of the copy.

SEC. 9. Issuance of Certified True Copies of Electronic Receipts. - The SEC is hereby
authorized to create rules and regulations for the orderly and expedient issuance of Certified
True Copies of electronic Receipts.

SEC. 10. Transactions involving Physical Copies of Warehouse Receipts. — All transactions
involving Certified True Copies of Warehouse Receipts are valid provided they comply with
existing Philippine Laws regarding the form and substance of the mode of transfer. However,


the transferee is charged with the duty to have the electronic Warehouse Receipts amended to
reflect his interests therein. In case there are several contesting parties, the buyer in good faith
who had the electronic Warehouse Receipt amended his favor first shall be the valid owner of
the same.

SEC. 11. Notification Requirement. - Whenever an amendment to the electronic Warehouse
Receipt pursuant to a valid transaction is sought by a party, whether he be the transferee or
transferor, the other party to the transaction must be notified of the impending amendment.
‘Such notified party shall be given three (3) working days from receipt of notification to contest
the amendment, otherwise it shall be ministerial on the part of the Warehouseman to effect such
amendment to the Registry. (n)

SEC. 12. Required Contents of a Warehouse Receipt. - Warehouse Receipts must contain the
following:

(a) A description of the goods or packages containing them;

(b) The date and time when the goods or packages were deposited with the
Warehouseman;

(©) The location of the Warehouse where the goods are stored;

(d) The date and time when the Receipt was issued;

(e) The consecutive number of the Receipt;

(f) The rate of storage charges;

(g) The signature of the Warehouseman which may be made by his authorized agent;

(h) If the receipt is issued for goods of which the warehouseman is owner, either solely or
jointly or in common with others, the fact of such ownership;

() A statement of the amount of advances made and of liabilities incurred for which the
warehouseman claims a lien. If the precise amount of such advances made or of such
liabilities incurred is, at the time of the issue, unknown to the warehouseman or to his
agent who issues it, a statement of the fact that advances have been made or liabilities
incurred and the purpose thereof is sufficient; and

() A statement of any interests on the Warehouse Receipt or goods subject thereof as well
as the dates when such interests were registered

SEC. 13. Required Contents of Certified True Copies of Warehouse Receipts. — All Certified
True Copies of Warehouse Receipts must contain all the required contents of an Original
Warehouse Receipt as well as:

(a) A marking or statement that the copy is a mere copy and that in case of any
discrepancy, the original shall be controlling; and
(b) The date and time when the copy was issued.

SEC. 14. Arbitration Clause. — if a holder so desires, and with the express conformity of the
Warehouseman, he may cause to be written into the electronic Warehouse Receipt a clause
which states that the civil aspect of any liability arising from the Warehouse Receipt shall be
‘subject to Arbitration. In no instance shall an Arbitration clause found in Warehouse Receipt
bind holders of the Receipt prior to its inclusion.

CHAPTER 3 - WAREHOUSING ACCREDITATION COUNCIL

SEC. 15. Establishment of Warehousing Accreditation Council. - There is hereby established
an accrediting body for Warehousemen and Warehouses to be known as the Warehousing
Accreditation Council, herein referred to as the “Council.” The Council shall be composed of four
(4) permanent members and three (3) members who are experts on Warehousing.

The permanent members of the Council shall be composed of the following,


(a) The Chairman of the SEC or designated representative as the Chairperson of the
Council;

(b) The Secretary of the Department of Trade and Industry or designated representative;

(c) The Secretary of the Department of Finance (DOF) or designated representative; and

(d) The Secretary of the Department of Agriculture (DA) or designated representative.

The three (3) members who are Warehousing experts shall be chosen by at least majority of the
permanent members of the Council from a list of nominees prepared by the SEC. They shall
serve for aterm of one (1) year and shall not be disqualified from being re-chosen by the
permanent members of the Council

‘Once the full membership of the Council is obtained, all members of the Council are entitled to
one (1) vote each in the conduct of its business.

The Council shall be assisted by a secretariat to be lodged in the SEC, which shall coordinate
the activities involved in the accreditation process. (n)

SEC. 16. Functions and Responsibilities of the Warehousing Accreditation Council. - As the
accrediting entity, the Council shall have the following functions and responsibilities:

(a) Institute and operationalize a system of accreditation for Warehousemen: Provided, that
the criteria for accreditation shall include sound and measurable standards relating to
the ability and capacity to handle the storage of goods;

(b) Institute and operationalize a system of accreditation for Warehouses: Provided, that the
criteria for accreditation shall include sound and measurable standards relating to
sanitation, storage, and safety of goods stored in Warehouses;

(©) Issue certificate of accreditation to qualified Warehousemen and Warehouses upon
determination that the criteria set for this purpose have been fully satisfied. Provided,
that the certificate of accreditation shall be valid only for such period as may be
prescribed under the implementing rules and regulations of this Act;

(d) Monitor the performance of Warehousemen and Warehouses to ensure continuing
compliance with the provisions of this Act and its implementing rules and regulations;

(e) Place under probation, suspend or revoke any certificate of accreditation upon due
determination that a Warehouseman or Warehouse no longer meets the criteria for
accreditation;

(f) Require regular submission of reports by Warehousemen and Warehouses;

(@) Collect reasonable accreditation and monitoring fees from Warehousemen and
Warehouses which shall be used for accrediting entity's operational requirements;

(h) Submit an annual report to the President of the Philippines and the concerned
committees both Houses of Congress;

()) License inspectors, graders, and weighers who shall assist in ensuring the good quality
of warehouses; and

() Perform such other functions as may be necessary to accomplish the purposes and
objectives of this Act in relation to Warehousemen and Warehouses.

SEC. 17. Warehousing Experts. - The Council is authorized to create rules and regulations in
order to determine which persons would qualify as Warehousing Experts. The Warehousing
Experts must be persons actually knowledgeable on the running and maintenance of
Warehouses in accordance with globally accepted best practices in Warehousing. (n)

CHAPTER 4 - WAREHOUSEMEN

SEC. 18. Registration of Warehousemen. - All Warehousemen are required to register and
‘obtain accreditation with the Council. The Council is hereby ordered and authorized to create
rules and regulations to facilitate the registration of Warehousemen. All Warehousemen who are
not registered and accredited with the Council are prohibited from creating warehouse receipts.


SEC. 19. Screening Process for Warehousemen. - To ensure the quality of the
Warehousemen, the Council is hereby authorized to create a screening process for
Warehousemen which may include the adoption of written examinations. The Council may
coordinate with other governmental bodies in order to create a viable screening process for
Warehousemen.

SEC. 20. Warehouseman's Bond. ~ Prior to operation, a Warehousemen must post a bond to
answer for any liabilities he may have during the effectivity of his license. The Council is hereby
ordered and authorized to come up with rules and regulations concerning the Warehousemen’s
bond.

SEC. 21. Duty of Warehousemen to Create Electronic Warehouse Receipts. - When goods are
deposited with the Warehouseman, the Warehouseman has the duty to create an electronic
Warehouse Receipt in the Registry to reflect the deposit of such goods. Likewise, a
Warehousemen has the duty to cause the amendment of the electronic Warehouse Receipt
when he is informed by a valid holder of any change in the details found on the electronic
Warehouse Receipt, including but not limited to changes in interest.

SEC. 22. Liability for Omission of Required Contents. - A Warehouseman shall be liable to any
person for all damages caused by his omission from a Warehouse Receipt of any details
Tequired to be placed on a Warehouse Receipt under this Act.

SEC. 23. Permissible Insertions. — A Warehouseman may insert in a receipt issued by him any
other terms and conditions provided that such terms and conditions shall not:

(a) Be contrary to the provisions of this Act; and

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

SEC, 24. Obligation of Warehousemen to Release Goods. A warehouseman, in the absence of
some lawful excuse provided by this Act, is bound to release the goods upon a written demand
from the party registered under the electronic Warehouse Receipt provided that such demand is
accompanied with:

(a) An attached Certified True Copy of the electronic Warehouse Receipt clearly showing
that the demanding party is the registered owner of the electronic Receipt;

(b) An offer to satisfy the Warehouseman's lien coupled with the subsequent satisfaction
thereof; and

(c) An offer to sign, when the goods are released, an acknowledgement that the party
causing the release is lawfully excuse, the Warehouseman shall be liable for all
damages stemming from his failure or refusal to release the goods.

SEC. 25. Valid Excuses for Non-Release of Goods. — A Warehouseman can validly refuse to
release the goods when:

(a) The party asking for the release of goods fails to deliver a valid written demand as
contemplated by this Act;

(b) There is a Court Order prohibiting him from releasing the goods;

(c) Despite the offer to satisfy the same, the Warehouseman's lien was not fully satisfied; or

(d) The demanding party reneges on its offer to sign an acknowledgment that the party
causing the release is lawfully entitled to the goods, and that such goods have been
released to them.

SEC. 26. Release of Goods to Agent. - A Warehouseman is justified in releasing the goods to
an agent of the party entitled to the goods under the electronic Warehouse Receipt provided
that such agent had an apparent or real authority from his principal to cause the release of the
goods. Where the Warehouseman released the goods to an agent absent any showing of real


or apparent authority from the principal, both the Warehouseman and the Agent shall be liable
for all damages stemming from the unlawful release.

SEC. 27. Obligation to Cancel Warehouse Receipt Upon Release. - A Warehouseman has the
duty to cause the electronic Warehouse Receipt to be marked “cancelled” once he has validly
released the goods, regardless if the release was in full or merely partial.

When a Warehouseman fails to have the electronic Warehouse Receipt cancelled after
releasing the goods, he shall be liable to anyone who purchases in good faith and for value
such receipt, on account of his inability to release the goods to him, whether such purchaser
acquired title to the receipt before or after the release of the goods by the Warehouseman.

SEC. 28. Effect of Partial Release of Goods. — If the party causing the partial release of goods
wishes to keep the remaining goods stored in the same Warehouse, he shall inform the
Warehouseman of his intention and have a new Warehouse Receipt created in his favor over
the remaining goods. Otherwise, it is incumbent upon the Warehouseman to remove such
goods no longer covered by a valid Warehouse Receipt from his Warehouse.

SEC. 29. Fraudulent Alterations of Receipt. - Any Fraudulent alteration made by the
Warehouseman on the electronic Warehouse Receipt or any copy thereof shall make him liable
for all damages stemming from the unlawful alteration. If the fraudulent alteration was caused by
any party other than the Warehouseman, and without the Warehouseman's knowledge that the
same was fraudulent, the Warehouseman shall only be liable according to the tenor of
Warehouse Receipt prior to its fraudulent alteration.

SEC. 30. Innocent Purchaser of a Fraudulently Altered Receipt. - Any purchaser of the receipt
for value who had no knowledge that the same had been fraudulently altered by the
Warehouseman at the time of purchase shall acquire the same rights against the
Warehouseman which such purchaser would have acquired if the receipt had not been altered
at the time of purchase.

In the event the fraudulent alteration was caused by any party other than the Warehouseman,
and without the Warehouseman's knowledge that the same was fraudulent, both the
Warehouseman and the party causing the alteration shall be held liable to the innocent
purchaser according to the tenor of altered Receipt, but the liability of the Warehouseman shall
not go beyond what he would have been liable for according to the tenor of Warehouse Receipt
prior to its fraudulent alteration.

SEC. 31 Iretrievable Loss of Electronic Receipts. - The SEC is hereby authorized to settle
claims and disputes stemming from the irretrievable loss of electronic Warehouse Receipts in
the Registry. In such cases, the claimant must adequately show he had a valid and existing
electronic Warehouse Receipts in the Registry, and that such electronic Warehouse Receipt
was, in fact, lost or destroyed, or corrupted through no fault of his own. The ruling of the SEC
shall be final and executory.

SEC. 32. Liability for Non-Existence or False Description of Goods. -Warehouseman shall be
liable to the holder of a receipt for damages caused by the non-existence of the goods or by the
failure of the goods to correspond with the description thereof in the receipt at the time of its
issue

If, however, the goods are described in a receipt merely by marks or labels upon them or upon
packages containing them, or by a statement that the goods are said to be goods of a certain
kind or that the packages containing the goods are said to contain goods of certain goods of a


certain kind, or by words of like purport on the goods themselves or on their packages or
containers, such statements, if true, shall not render liable the Warehouseman issuing the
receipt, even if the goods are not f the kind which the marks or labels upon them indicate, or of
the kind they were claimed to be by the depositor.

SEC. 33. Liability for Damage or Loss to Goods. — A Warehouseman shall be liable for any loss
or injury to the goods caused by his failure to exercise such care in regard to them as
reasonably careful owner of similar goods would exercise, but he shall not be liable, in the
absence of an agreement to the contrary, for any loss or injury to the goods, which could not
have been avoided by the exercise of such care.

SEC. 34. General Prohibition of Co-Mingling of Goods. — Except where expressly allowed by
this Act, a Warehouseman shall keep the goods under his care reasonably separated from the
goods of other depositors, and from other goods of the same depositor for which a separate
receipt has been created , as to permit at all times the identification and redelivery of the goods
deposited.

SEC. 35. When Co-Mingling of Goods Allowed. - if authorized by agreement or custom, a
Warehouseman may mingle fungible goods with other goods of the same kind and grade. In
such case, the various depositors of the mingled goods shall own the entire mass in common
and each depositor shall be entitled to such portion thereof as the amount deposited by him
bears to the whole.

SEC. 36. Liability of Warehouseman for Unauthorized Co-Mingling. - The Warehouseman shall
be severally liable to each depositor for the care and redelivery of his share of such mass to the
same extent and under the same circumstances as if the goods has been kept separate.

CHAPTER 5 - WAREHOUSES

SEC. 37. Registration with the Council, — All Warehouses must be registered with and
accredited by then Council. The Council is hereby ordered and authorized to create a system for
registering accredited Warehouses which may be accessed by the public. The Council is
likewise authorized to create rules and regulations governing the registration of accredited
Warehouses.

SEC. 38. Prohibition of Non-Accredited and Non-Registered Warehouses. — All Warehouses
that are not registered with and accredited by the Council are prohibited from being used by
Warehousemen in storing goods covered by Warehouse Receipts.

SEC. 39. Insurance. — All Warehouses must be insured in accordance with the value and types
of goods kept in them. The Council is hereby empowered to close down any warehouse that
stores goods covered by Warehouse Receipts despite not having the necessary insurance until
the same becomes complaint.

SEC. 40. Initiative to Examine Warehouses. - The Bangko Sentral ng Pilipinas (BSP), or any
permanent member of the Council, may request the Council to examine the operations
Warehouses for the purpose of determining that the Warehouses are not engaged in
unauthorized undertaking or activities which are subject to their respective jurisdictions. In case
of a finding by the Council that an accredited Warehouse is engaged in an unauthorized
undertaking or activities subject to their said respective regulations, it shall place on probation,
suspend or revoke the accreditation of the Warehouse based on such ground, as may be
appropriate under the circumstances

CHAPTER 6- RIGHTS OF HOLDERS AND CLAIMANTS


SEC. 41. Rights of Persons to whom a Receipt has been Transferred. — A person to whom a
receipt has been validly transferred acquires thereby:

(a) Such title to the goods as the person transferring the receipt to him had or had ability to
convey to a purchaser in good faith for value;

(b) The right to have the electronic Warehouse Receipt amended to reflect his ownership
over the goods; and

(©) The direct obligation of the Warehouseman to hold possession of the goods form him
according to the terms of the receipt as fully as if the Warehouseman and contracted
directly with him,

SEC. 42. Warranties of a Transferor. — A person who, for value, transfers a receipt, unless a
contrary intention appears, warrants:

(a) The receipt is genuine;
(b) That he has a legal right to transfer it; and
(©) That he has knowledge of no fact which would impair the validity or worth of the receipt.

SEC. 43. Transferor not a Guarantor. ~ The transferor shall not be liable for any failure on the
part of the Warehouseman or previous transferors of the receipt to fulfill their respective
obligations.

SEC. 44. When Transfer Not Impaired by Fraud, Mistake or Duress. — The validity of the
transfer of a receipt is not impaired by the fact that such transfer was a breach of duty on the
part of the person making the transfer, or by the fact that the owner of the receipt was induced
by fraud, mistake or duress to entrust the possession or custody of the receipt to such person, if
the person to whom the receipt was transferred, or a person to whom the receipt was
subsequently transferred, paid value therefor, without notice of the breach of duty, or fraud or
mistake or duress.

SEC. 45. Enforcement of Security Interest of Secured Creditor's for Transfers where the Receipt
is a Security. -In any transaction where the Warehouse Receipt or the goods evidenced thereby
are treated as security to the transaction, the same shall be governed by the Personal Property
Security Act of 2018.

SEC 46. Attachment or Levy upon Goods Covered by an Electronic Warehouse Receipt. — If
goods are delivered to a Warehouseman by the owner, or by a person whose act in conveying
the title over the goods to a purchaser in good faith for value would bind the owner, and a
receipt was created for them, such goods cannot thereafter, while in the possession of the
Warehouseman, be attached by gamishment or otherwise, or be levied upon under an
execution, unless the receipt be first cancelled. The Warehouseman shall in no case be
compelled to deliver up the actual possession of the goods until the rerceipt is cancelled or he is
otherwise ordered by the court.

SEC. 47. Creditor's Remedies to reach Warehouse Receipts. — A creditor whose debtor is the
registered owner of an electronic Warehouse Receipt shall be entitled to such aid from courts of
appropriate jurisdiction, by injunction and otherwise, in attaching such receipt or in satisfying the
claim by means thereof as is allowed at law or in equity in these islands in regard to property
which cannot readily be attached or levied upon by ordinary legal process.

‘SEC. 48. Conflicting Claims over Warehouse Receipts. - The SEC is hereby empowered to
settle any conflicts relating to title and ownership over Warehouse Receipts. The decision of the
SEC shall be final and executory.

CHAPTER 7 - WAREHOUSE RECEIPTS ASSURANCE FUND

SEC. 49. Establishment of Warehouse Receipts Assurance Fund. A Warehouse Receipts
Assurance Fund is hereby established to cover for losses involving Warehouse Receipts
stemming from Registry based failures including but not limited to the irretrievable destruction of
the Registry or any entries therein. The SEC shall be in charge of the Warehouse Receipts


Assurance Fund and is hereby ordered and authorized to create rules and regulations for the
creation, management, and disbursement thereof. The SEC is likewise authorized to seek third
party assistance for the creation and maintenance of the Assurance Fund.

SEC. 50. Contribution to Assurance Fund. — Upon the issuance or amendment of an electronic
Warehouse Receipt, as well as the issuance of a Certified True Copy of the electronic
Warehouse Receipt, there shall be paid to the SEC one-fourth of one percent of the assessed
value of the goods covered by the Warehouse Receipt, as contribution to the Assurance Fund.
The SEC is hereby ordered to coordinate with the Department of Trade and Industry, as well as
other government agents, to come up with a proper and just valuation for any all goods that may
be covered by a Warehouse Receipt.

Nothing in this section shall in any way preclude the court from increasing or decreasing the
valuation of the goods should it appear during the hearing that the value stated it either too
‘small or too large. (n)

SEC. 51. Recovery of Losses from Fund. — A person who, without negligence on his part,
sustains loss or damage, or is deprived of any goods covered by an electronic Warehouse
Receipt or any interest therein as a consequence of Registry based failures shall file a claim
before the SEC. The SEC is hereby authorized to settle claims and disputes involving a party's
right to recover from the Fund. The SEC is likewise ordered and authorized to create rules and
regulations regarding the procedure that must be followed by parties seeking to claim against
the Fund. Any decision by the SEC involving such matter shall be final and executory.

SEC. 52. Maximum Recoverable Claim. — A party may only claim a maximum of five hundred
thousand pesos for every electronic Warehouse Receipt. In case the damage suffered by the
claimant was caused by fraud, the claimant is not precluded from pursuing a claim for damages
against such liable persons for the amount of the goods covered by the electronic Warehouse
Receipt less any amounts recovered from the Fund.

SEC. 53. Losses not Recoverable. - The Assurance Fund shall not be liable for any loss,
damage or deprivation that is not caused or occasioned by a Registry based failure. Any losses
stemming from Sub0Registry based failures are not recoverable from the Fund.

SEC. 54, Release of Funds. — Any money obtained by the SEC in relation to the Assurance
Fund shall be placed in a special fund and shall be treated as part of the savings of the SEC
which shall be deposited with the National treasury. Once the SEC makes a request from the
National Treasury or Department of Budget and Management for the release of such funds in
relation to a lawful purpose primarily related to the Assurance Fund, the release of the funds is
immediate and ministerial.

CHAPTER 8 - A WAREHOUSEMAN’S LIEN

SEC. 55. Claims Included in the Warehouseman’s Lien. Subject to the provisions of this Act, a
Warehouseman shall have a lien on goods deposited, or on the proceeds thereof, in his hands,
for all lawful charges for storage and preservation of the goods; also for all lawful claims for
money advanced, interest, transportation, labor, weighing, coopering and other charges and
expenses in relation to such goods, also for all reasonable charges and expenses for notice,
and advertisements of sale, and for sale of the goods where default had been made in satisfying
the warehouseman's lien.

SEC. 56. Against What Property the Lien may be Enforced. - A Warehouseman's lien may be
enforced against any and all goods stored in his Warehouse and covered by a valid Warehouse
Receipt.

SEC. 57. Receipt in State Charges for which the Lien is Claimed. — The Warehouseman shall
have no lien on a Receipt except for charges for storage of goods subsequent to the date of the
Receipt unless the Receipt expressly enumerated other charges for which a lien is claimed. In
‘such case, there shall be a lien for the charges enumerated so far as they are consistent with
this Act provided the amount or rate of the charges so enumerated is stated in the Receipt.


SEC. 58. Warehouseman Need not Release until Lien is Satisfied. - A Warehouseman having a
lien valid against the person demanding the goods may refuse to release the goods to him until
the lien is satisfied

‘A Warehouseman who voluntarily releases the goods despite his lien not being fully satisfied
waives his lien over the same.

SEC. 59. Warehouseman's Lien does not Preclude other Remedies. - Whether a
Warehouseman has or has not a lien upon the goods, he is entitled to all remedies allowed by
law to a creditor against a debtor for the collection from the depositor of all charges and
advances which the depositor has expressly or impliedly contracted with the Warehouseman to
pay.

SEC. 60. Notice of Warehouseman’s Lien. — Following a valid offer to satisfy the
Warehouseman’s lien, he must provide the following notices to the person who validly offered to
satisfy his lien

{a) An itemized statement of the Warehouseman’s claim, showing the sum due at the time
of the notice and the date or dates when it becomes due;

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

(c) A demand that the amount of the claim shall be paid on or before a day mentioned, not
less than ten days from the delivery of the notice if it is personally delivered, or from the
time when the notice shall reach its destination, according to the due course of post, if
the notice is sent by mail; and

(d) A statement that unless the claim is paid within the time specified, the goods will be
advertised for sale and sold by auction at a specified time and place.

SEC. 61. Procedure for Auction Sale to Satisfy Warehouseman's Lien. — In relation to the
aforementioned provision, if the Warehouseman’s lien is not satisfied within the time specified,
he may satisfy his lien over the goods by selling the same through auction. The auction sale
shall be had in the place where the lien was acquired, or, if such place is manifestly unsuitable
for such purpose, in the nearest city or municipality where such sale is may be suitably
conducted.

Prior to the auction sale, the Warehouseman must advertise the sale, describing the goods to
be sold, and stating the name of the owner or person on whose account the goods are held, and
time and place of the sale. Such advertisement shall be published once a week for two
consecutive weeks in a newspaper published in the place where such sale is to be held. The
sale shall not be held less than fifteen days from the time of the first publication. If there is no
newspaper published in such place, the advertisement shall be posted at least ten days, before
‘such sale is not less than six conspicuous places therein.

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

At any time before the goods are so sold, the registered owner may pay the Warehouseman the
‘amount necessary to satisfy his lien and to pay the reasonable expenses and liabilities incurred
in serving notices and advertising and preparing for the sale up to the time of such payment.
Once the registered owner has satisfied the Warehouseman’s lien, he must release the goods
absent any lawful cause as provided under this Act.

SEC. 62. Perishable and Hazardous Goods. - If goods are of a perishable nature, or by keeping
will deteriorate greatly in value, or by their order, leakage, inflammability, or explosive nature,
will be liable to injure other property, the Warehouseman may give such notice to the owner or
to the person whose names of the goods are stored, as is reasonable and possible under the
circumstances, to satisfy the lien upon such goods and to remove them from the warehouse and

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in the event of the failure of such person to satisfy the lien and to receive the goods within the
time so specified, the Warehouseman may sell the goods at public or private sale without
advertising. If the Warehouseman, after a reasonable effort, is unable to sell such goods, he
may dispose of them in any unlawful manner and shall incur no liability by reason thereof.

The proceeds of any sale made under the terms of this section shall be disposed of in the same
way as the proceeds of sales made under the terms of the preceding section.

SEC. 63. Other Methods of Lien Enforcement. - The remedy for enforcing a lien herein provided
does not preclude any other remedies allowed by law for the enforcement of a lien against
personal property nor bar the right to recover so much of the Warehouseman’s claim as shall
not be paid by the proceeds of the sale of the property.

SEC. 64. Effect of Sale. — After goods have been lawfully sold to satisfy a Warehouseman's
lien, or have been lawfully sold or disposed of because of their perishable or hazardous nature,
the Warehouseman shall not thereafter be liable for failure to deliver the goods to the registered
‘owner of the goods.

CHAPTER 9 - PENALTIES

SEC. 65. Creation of Receipt for Goods not Received. — A Warehouseman , or an officer, agent,
or servant of a Warehouseman who creates or aids in creating a Receipt knowing that the
goods for which such Receipt is created have not been actually received by such
Warehouseman, or are not under his actual control at the time of creating such receipt, shall be
guilty of a crime, and upon conviction, shall be punished by imprisonment of ten years, or a fine
equal to triple the value of the goods involved, or both. If the Warehouseman himseff is liable,
his license shall ikewise be revoked.

SEC. 66. Creation of Receipt Containing False Statement. - A Warehouseman, or any officer,
agent or servant of a warehouseman who fraudulently creates or aids in fraudulently creating a
Receipt for goods knowing it contains any false statement, shall be guilty of a crime, and upon
conviction, shall be punished by imprisonment of ten years, or a fine equal to triple to the value
of the goods involved, or both. If the Warehouseman himself is liable, his license shall ikewise
be revoked,

SEC. 67. Creation of Fraudulent Duplicate Receipt. - A Warehouseman, or any officer, agent,
or servant of a Warehouseman who creates or aids in creating a second electronic Warehouse
Receipt for goods knowing that there is an existing prior electronic Warehouse Receipt for the
‘same goods or any part of them, except in the case of a Court order following an irretrievably
lost receipt as provided for in this Act, shall be guilty of a crime, and upon conviction, shall be
punished by imprisonment of ten years, or fine equal to triple the value of the goods involved, or
both. If the Warehouseman himself is liable, his license shall likewise be revoked.

SEC. 68. Unlawful Release of Goods Covered by Warehouse Receipt. - A Warehouseman or
any officer, agent or servant of a Warehouseman, who releases without any legal basis any
goods covered by an electronic Warehouse Receipt shall be guilty of a crime, and upon
conviction, be punished by imprisonment of ten years, or affine equal to triple the value of the
goods involved, or both. If the Warehouseman himself is liable, his license shall be revoked.

SEC. 69, Fraudulent Deposit of Goods. — Any person who, with fraud, deposits goods to which
he has no title, or upon which there is alien or mortgage, and who obtains an electronic
Warehouse Receipt for the same, shall be guilty of a crime, and upon conviction, be punished
imprisonment of ten years, or a fine equal to triple the value of the goods involved, or both.

‘Any Warehouseman or his agent who knowingly facilities the creation of an electronic
Warehouse Receipt for such goods shall be guilty of a crime, and upon conviction, be punished
by imprisonment of ten years, or a fine equal to triple the value of the goods involved, or both. If
the Warehouseman himseft is liable, his license shall likewise be revoked.

SEC. 70. Issuance of Warehouse Receipts by Unregistered Warehouseman. — Any
Warehouseman who issues a Warehouse Receipt despite not being registered with the
Securities and Exchange Commission shall be guilty of a crime, and upon conviction, be

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punished by imprisonment of ten years, or a fine equal to triple the value of the goods involved,
or both.

SEC. 71. Wifful Operation of an Unregistered or Un-Accredited Warehouse. — Any
Warehouseman who issues a Warehouse receipt for goods stored in a Warehouse that is not
registered with the Securities and Exchange Commission, or not accredited by the Warehouse
Accreditation Council, or whose registration or accreditation has been revoked or suspended
under the provisions of this Act, shall be guilty of a crime, and upon conviction, be punished by
imprisonment of ten years, or a fine equal to triple the value of the goods invol.ved, or both.

CHAPTER 10- TRANSITORY PROVISIONS

SEC. 72. Role of the Securities and Exchange Commission and Coordination with Other
Agencies. The SEC shall be the primary regulatory body in charge of all matters related to
Warehouse Receipts. While the SEC may consult with other regulatory bodies, as well as other
organization representative of a particular sector, the SEC shall, at all times, be the lead agency
in ensuring the successful implementation of this Act except as otherwise provided in this Act.

SEC. 73. inter-Connected Registry Information. — Where feasible, the SEC is ordered and
authorized to engage in concerted activity with other government agencies for the linking of the
Registry provided under this Act with other Registries in order to be able to come up with an
inter-connected Registry.

‘SEC. 74. Public Information.- All entries in the Registry of electronic Warehouse Receipts shall
be available to the public. Likewise, the list of licensed Warehousemen and Warehouses, as
well as the list of Warehouseman and Warehouses whose licenses have been revoked, shall be
available to the public. The SEC and the Council are both ordered and authorized to create
rules and regulations to facilitate the orderly and expedient access to such information by the
public in accordance with existing standards under Philippine law.

SEC. 75. Dispute Resolution. Except in cases specifically placed under the jurisdiction of the
‘SEC under this Act, as well as cases where the electronic Warehouse Receipts includes a valid
Arbitration Clause, all actions arising from this Act shall fall under the jurisdiction of the Regional
Trial Courts.

SEC. 76. Transition Period. — All existing Warehousemen and Warehouses must be complaint
with the provisions of this Act relating to registration and licensing within three years from the
effectivity of this Act. All physical Warehouse Receipts must be converted to electronic
Warehouse Receipts within three years of the opening of the system of Registry for Warehouse
Receipts to be made by the SEC

SEC. 77. Appropriations. — The amount necessary to carry out the initial implementation of this
Act shall be included in the General Appropriations Act.

SEC. 78. implementing Rules and Regulations — Within ninety (90) days after the effectivity of
this Act, the SEC, in coordination with the DTI, the DOF, the DA, and other relevant
organizations, shall promulgate rules and regulations for the implementation of this Act and or
for the public interest or for the protection of Warehousemen and Warehouses accredited or
regulated pursuant to the authority granted under this Act

SEC. 79. Repeals. ~ All acts and laws and parts thereof inconsistent with this Act are hereby
repealed.

SEC. 80. Effectivity. - This Act shall take effect within fifteen (15) days after its publication in the
Official Gazette of the Philippines or in at least two (2) newspapers of general circulation.

Approved,

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