NEGOTIABLE INSTRUMENTS LAW

GENERAL BONDED WAREHOUSE ACT

GENERAL BONDED WAREHOUSE ACT

Act No. 3893, as amended by R.A. No. 247
A. Definition of Terms
1) Warehouse every building, structure, or other protected inclosure in which commodity is
kept for storage.
2) Commodity any farm, agricultural or horticultural product; animal and animal
husbandry or livestock, dairy or poultry product; water, marine or fish product; mineral,
chemical, drug or medicinal product; and any raw, processed, manufactured or finished
product or by-product, goods, article, or merchandise either of domestic or of foreign
production or origin, which may be traded or dealt in openly and legally.
3) Person includes a corporation or partnership or two or more persons having a joint or
common interest
4) Warehouseman a person engaged in the business of receiving commodity for storage
a) The business of receiving commodity for storage include the following:
i)
Any contract or transaction wherein the warehouseman is obligated to return
the very same commodity delivered to him or to pay its value
ii)
Any contract or transaction wherein the commodity delivered is to be milled for
and on account of the owner thereof
iii)
Any contract or transaction wherein the commodity delivered is commingled
with commodity delivered by or belonging to other persons, AND the
warehouseman is obligated to return the commodity of the same kind or to pay
its value
5) Receipt any receipt issued by a warehouseman for commodity delivered to him
B. Salient features of the Act
1) PURPOSE: To afford protection to persons dealing with a warehouseman engaged in the
business of receiving commodity for storage
2) It applies not only to storage of rice and palay but also to any other goods, articles or
merchandise, which may be traded or dealt in openly and legally
3) Before a person may engage in the business of receiving commodity for storage, he must
first secure a license therefor from the Director of the Bureau of Commerce
4) Person applying for such license shall file a bond or additional bond or bonds as may be
required to be approved by the Director of the Bureau of Commerce for not less than the
amount fixed by the Act.
5) Every person licensed under this Act shall insure the commodity so received and stored
against fire.
6) It provides penalties for any violation of or failure to comply with any provision of the Act or
the rules and regulations made by virtue thereof.
C. Obligations of a bonded warehouseman
1) To secure the required license from the Director of the Bureau of Commerce before engaging
in the business of receiving commodity for storage
a) License shall be annual and shall expire on December 31st of each year
b) Annual license fee to be paid:
i)
50.00 for the first 1000 square meters of protected enclosure or for the first
1000 cubic meters of storage space
ii)
2.50 for each additional square meter or cubic meter
BORBON, BRIGOLA, HERNANDEZ, REYES, ROSARIO

NEGOTIABLE INSTRUMENTS LAW

GENERAL BONDED WAREHOUSE ACT

c) Contents of the application for a license to engage in the business of receiving

commodity for storage:
i)
Place where the business and the warehouse are to be established or located
ii)
Maximum quantity of commodity to be received
iii)
Application shall also be accompanied by a cash bond, or bond secured by a real
estate mortgage, or bond signed by a duly authorized bonding company.
2) To file the required bond
a) Amount of bond
i)
shall be fixed by the Director of Bureau of Commerce
ii)
shall not be less than 33.33% of the market value of the maximum quantity of
commodity to be received
b) The bond shall be approved by the Director of Bureau of Commerce before a license
shall be issued.
c) The bond is liable if the warehouseman is unable to return the commodity OR if he fails
to pay its value
d) Whenever the Director of Bureau of Commerce shall determine that a bond approved is
or has become insufficient, he may require an additional bond or bonds to be given by
the warehouseman concerned within the time fixed by a written demand therefor. The
license of such warehouseman may be SUSPENDED or REVOKED for failure to give the
additional bond within the time fixed.
e) What is the PURPOSE of requiring the warehouseman to post a bond?
i)
To provide protection to the owner of the commodity who delivers his goods to
the warehouseman for storage
f) When is bond NOT necessary?
i)
Where the warehouseman has posted a performance bond as required by the
owner, AND insured the goods, the owner of the commodity is already amptly
protected.
ii)
To further require him to post an additional bond would be unreasonable and
oppressive
3) To insure the commodity against fire
4) To issue warehouse receipts for commodity received and stored
a) Though it is desirable that receipts issued by a bonded warehouseman should conform
to the provisions of the Warehouse Receipts Law, said provisions are not mandatory and
indispensable.
b) Issuance of warehouse receipt is merely permissive and directory
c) The Bonded Warehouse Act permits the warehouseman to issue any receipt
i)
A surety cannot avoid liability from the mere failure of the warehouseman to
issue the prescribed receipt
5) To answer for damages to any persons injured by the breach of any obligation
a) The bond may be sued in any court of competent jurisdiction
b) The property and assets of the warehouseman may also be subjected to attachment and
execution in case the bond is not sufficient to respond for the full market value of the
commodity he received

BORBON, BRIGOLA, HERNANDEZ, REYES, ROSARIO

NEGOTIABLE INSTRUMENTS LAW

GENERAL BONDED WAREHOUSE ACT

6) To receive for storage any commodity of the kind customarily restored by him, without
making any discrimination between persons desiring to avail of the warehouse facilities
7) To keep a complete record of all the commodity received by him, the receipts issued for the
such commodity, the withdrawals, the liquidation, and the receipts returned to and
cancelled by him
8) To make reports to the Director of Bureau of Commerce concerning his warehouse and the
condition, contents, operation, and business thereof in such form and at such time as the
said Director may require
9) To conduct his warehouse in all other respects in compliance with the requirement of the
Director
10) Not to receive a quantity of commodity greater than that specified in his application and
license
D. Violations and Penalties
Who shall be charged
Any person who engages in the
business of receiving
commodity for storage without
first securing the required
license from the Director of the
Bureau of Commerce

Any licensed warehouseman

who shall receive a greater
quantity of commodity than
that specified in his application
and license

Any person entering into

connivance or combination with
any warehouseman that is not
licensed under this Act, with
the purpose of evading the
provision of Section 3 of Act No.
3893

Violation

Penalties

Guilty of misdemeanor under

Section 11 of Act No. 3893

Upon his conviction, he shall be

punished by imprisonment of
not less than 1 month, OR by
fine of not more than
5,000.00, OR both, at the
courts discretion

Violation under Section 12 of

Act No. 3893

Guilty of misdemeanor under

Section 13 of Act No. 3893

Upon his conviction, he shall be

fined double the market value
of the commodity so received in
excess of the quantity of
commodity he is authorized to
receive

Upon his conviction, he shall be

fined for not more than
200.00, OR imprisoned for not
more than 1 month, OR both,
at the courts discretion

Any person, firm, corporation,

partnership, joint-stock
company, or association
BORBON, BRIGOLA, HERNANDEZ, REYES, ROSARIO

NEGOTIABLE INSTRUMENTS LAW

owning, maintaining, or
operating any warehouse which
is neither licensed under the
General Bonded Warehouse Act
nor established under the
Administrative Code
-who shall use the word
bonded, partly or wholly, as
their trade name or business
name; or

GENERAL BONDED WAREHOUSE ACT

Violation under Section 3 of

R.A. No. 247

Upon conviction, violators shall

be punished with imprisonment
of not more than 5 years, OR
with a fine of not more than
5,000.00, OR both, at the
courts discretion.

-who shall use the word

bonded to name, designate, or
advertise their unlicensed
warehouse.

E. Powers of the Director of Bureau of Commerce

1) From time to time, he may make such rules and regulations as he may deem necessary for
the efficient execution of the provisions of the General Bonded Warehouse Act
2) After opportunity for hearing has been afforded to the warehouseman concerned, he may
suspend or revoke any license issued to any warehouseman for any violation of or failure to
comply with any provision of the General Bonded Warehouse Act, or of the rules and
regulations made by virtue thereof

BORBON, BRIGOLA, HERNANDEZ, REYES, ROSARIO