SEVENTEENTH CONGRESS OF THE
REPUBLIC OF THE PHILIPPINES ]
Third Regular Session ]

18 NUG-2 P67
SENATE

s.B. No. 1908 ReCr nae

Introduced by SEN. WIN GATCHALIAN

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

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 the
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, and 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 promotes

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 s/he can
easily trade, barter or sell in order to obtain the necessary credit. With the
use of a 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 2018 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 the subsequent trading of interests

therein.! Its immediate approval is earnestly sought.

1 Section 2 of the proposed Philippine Warehouse Receipts Act of 2018.



SEVENTEENTH CONGRESS OF THE ]

REPUBLIC OF THE PHILIPPINES ]
Third Regular Session ]
AUG -2 P657
SENATE
S.B. No. 1908 petenid gp

Introduced by SEN. WIN GATCHALIAN

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 1 - GENERAL PROVISIONS

1 SECTION 1. Title. - This Act shall be known as the “Philippine
2 Warehouse Receipts Act of 2018.” (n)

3 SEC. 2. Declaration of Policy. - \t is the policy of the State to
4 promote economic activity by increasing access, particularly for entities
5 engaged in agricultural businesses such as farming, to least cost credit
6 by establishing a simplified, unified, and modern framework for the
7 storage of goods in warehouses and the subsequent trading of interests
8

therein.
9
10 SEC. 3. Definition of Terms. - As used in this Act, the following
11 __ terms shall mean:
12 (a) Buyer in Good Faith - a person that buys goods in good faith
13 without personal knowledge of any defect in the title of the

14 seller. (n)



(b)

(c)
(a)

(©

(8)

(h)

(i)
(i)

(k)

()

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

Deposit - the act of transferring actual possession of goods to
a warehouseman.

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

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)

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)

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.

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 release of the goods
is proper. (n)

Purchase - a voluntary transaction where one 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)

Receipt — a warehouse receipt. (n)

(m) Record - information that is inscribed on a tangible medium

(n)
(0)

(P)

or that is stored in an electronic or other medium and is
retrievable in perceivable form. (n)

Registry — the electronic Warehouse Receipts Registry. (n)
Release ~ means voluntary transfer of the warehouseman of
actual possession of goods deposited in a warehouse to a
person entitled under a warehouse receipt.

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)

(t) 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)

Warehouseman ~ a person lawfully engaged in the business

of storing goods for profit. (n)

(t

CHAPTER 2 - WAREHOUSE RECEIPTS

SEC. 4. Creation of Uniform Registry System for Electronic
Warehouse Receipts. - 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 the revocation of a warehouse’s license 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 Warchouse
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
an original electronic Warehouse Receipt properly registered and 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 Receipt 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 in 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;

(c) 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;

() 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;



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

(j) 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. - |f 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 a Warehouse Receipt bind holders of the Receipt prior to its
inclusion.

CHAPTER 3 - WAREHOUSING ACCREDITATION COUNCIL

SEC. 15. Establishment of the 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;



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(b) The Secretary of the Department of Trade and Industry
(DTI) 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 Warchousing 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 a term 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;

(c) 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;

(c) 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;

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

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

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

(i) 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 Warehouseman. - A\l 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. (n)

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

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adoption of written examinations. The Council may coordinate with
other governmental bodies in order to create a viable screening process
for Warehousemen. (n)

SEC. 20. Warehouseman’s Bond. - Prior to operation, a
Warehouseman 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
Warehouseman’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 Warehouseman 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 required to be
placed on a Warehouse Receipt under this Act.

SEC. 23. Permissible Insertions. - A warchouseman 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 him which 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;



WYAKHAWHYE

(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 acknowledgment
that the party causing the release is lawfully entitled to the goods,
and that such goods have been released to them.

When the Warehouseman receives a valid written demand, it is
ministerial upon him to release the goods absent the existence of a
lawful excuse for such refusal as found in this Act. Failing to establish
such lawful 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 in 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 a 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 Electronic 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

9



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. (n)

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 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 the 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. Irretrievable 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 Receipt in the Registry, and that such

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electronic Warehouse Receipt was, in fact, lost, destroyed, or corrupted
through no fault of his own. The ruling of the SEC shall be final and
executory. (n)

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 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 of 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 on 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 by custom, a Warehouseman may mingle fungible
goods with other goods of the same kind and grade. In such case, the
various depositors of the mingled goods shall own the entire mass in
common and each depositor shall be entitled to such portion thereof as
the amount deposited by him bears to the whole.

SEC. 36. Liability of Warehouseman for Unauthorized Co-
Mingling. - The Warehouseman shall be severally liable to each

11



depositor for the care and redelivery of his share of such mass to the
same extent and under the same circumstances as if the goods had
been kept separate.

CHAPTER 5 - WAREHOUSES

SEC. 37. Registration with the Council. - All Warehouses must
be registered with and accredited by the 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. (n)

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
Warchousemen in storing goods covered by Warehouse Receipts. (n)

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 compliant.

SEC. 40. Initiative to Examine Warehouses. - The Bangko
Sentral ng Pilipinas, or any permanent member of the Council, may
request the Council to examine the operations of 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. (n)

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;

12



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

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

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

(a) That 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, 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 garnishment 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 receipt is cancelled or he is otherwise ordered by the court.

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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. (n)

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. (n)

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 per cent 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 and 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 is 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

14



WOMYAUswWHHE

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. (n)

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 Sub-
Registry based failures are not recoverable from the Fund. (n)

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 the 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 - 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, insurance, transportation,
labor, weighing, coopering and other charges and expenses in relation
to such goods, also for all reasonable charges and expenses for notice,
and advertisements of sale, and for sale of the goods where default had
been made in satisfying the warehouseman's lien.



SEC. 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 to 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. (n)

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 the 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 a 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 the 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 in not less than six conspicuous places therein.

From the proceeds of such sale, the Warehouseman shall satisfy
his lien including the reasonable charges of notice, advertisement and
sale. The balance, if any, of such proceeds shall be held by the
Warehouseman and delivered on demand to the person to whom he
would have been bound to 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 in whose names the goods are stored, as is
reasonable and possible under the circumstances, to satisfy the lien
upon such goods and to remove them from the warehouse and in the
event of the failure of such person to satisfy the lien and to receive the
goods within the time so specified, the Warehouseman may sell the
goods at public or private sale without advertising. If the
Warehouseman, after a reasonable effort, is unable to sell such goods,

17



he may dispose of them in any lawful manner and shall incur no liability
by reason thereof.

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

SEC. 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 himself
is liable, his license shall likewise 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 that 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 the value of the goods involved, or both.
If the Warehouseman himself is liable, his license shall likewise 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

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CONTRA ONe

10

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35,
36
37
38
39
40
41
42
43

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 a 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 a 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. 69. Fraudulent Deposit of Goods. - Any person who, with
fraud, deposits goods to which he has no title, or upon which there is a
lien or mortgage, and who obtains an electronic Warehouse Receipt for
the same, 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.

Any Warehouseman or his agent who knowingly facilitates 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 himself is liable, his license shall likewise
be revoked.

SEC. 70. Issuance of Warehouse Receipts by Unregistered
Warehouseman. - Any Warchouseman 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
punished by imprisonment of ten years, or a fine equal to triple the
value of the goods involved, or both. (n)

SEC. 71. Willful Operation of an Unregistered or Un-
Accredited Warehouse. - Any Warchouseman 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

19



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

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 organizations 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. (n)

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. (n)

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. (n)

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 Receipt includes a valid Arbitration
Clause, all actions arising from this Act shall fall under the jurisdiction
of the Regional Trial Courts. (n)

SEC. 76. Transition Period. - All existing Warchousemen and
Warehouses must be compliant 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.

20



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. (n)

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 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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