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This document defines key terms related to documents of title and negotiable documents of title under Philippine law. It explains that a negotiable document of title is a document stating that goods will be delivered to the bearer or to the order of any person named in the document. It defines terms like "document of title," "goods," and "order." It also discusses the purpose of documents of title and the most common forms, including bills of lading, dock warrants, and warehouse receipts. It describes classes of documents of title as either negotiable or non-negotiable.

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Shawn Michael Doluntap
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339 views4 pages

Law Project

This document defines key terms related to documents of title and negotiable documents of title under Philippine law. It explains that a negotiable document of title is a document stating that goods will be delivered to the bearer or to the order of any person named in the document. It defines terms like "document of title," "goods," and "order." It also discusses the purpose of documents of title and the most common forms, including bills of lading, dock warrants, and warehouse receipts. It describes classes of documents of title as either negotiable or non-negotiable.

Uploaded by

Shawn Michael Doluntap
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Art. 1507.

A document of title in which it is stated that the goods referred to therein will be
delivered to the bearer, or to the order of any person named in such document is a
negotiable document of title.
Definition of terms
1) Document of title to goods - Includes any bill of lading, dock warrant, "quedan," or warehouse
receipt or order for the delivery of goods, or any other document used in the ordinary course of
business in the sale or transfer of goods, as proof of the possession or control of the goods, or
authorizing or purporting to authorize the possessor of the document to transfer or receive, either by
indorsement or by delivery, goods represented by such document.
2) Goods - Included all chattels personal but not things in action or money of legal tender in the
Philippines. The term includes growing fruits or crops.
3) Order relating to documents of title means an order by indorsement on the documents.

Purpose of Document of Title


1) Evidence of possession or control of goods described therein.
2) Medium of transferring title and possession over the goods described therein without having to
effect actual delivery thereof.
3) The custody of a negotiable warehouse receipts issued to the order of the owner, or to bearer, is a
representation of title upon which bona fide purchasers for value are entitled to rely, despite breaches
of trust or violations of agreement on the part of the apparent owner.
Most common forms of documents of title.
There are three most common forms or documents of title, namely:
1) Bill of lading It is a contract and a receipt for the transport of goods and their delivery to the
person named therein, to order, or to bearer. It usually involves three persons the carrier, the
shipper, and the consignee. The shipper and the consignee may be one and the same person. Its
acceptance generally constitutes the contract of carriage even though not signed.
2) Dock warrant - It is an instrument given by dock owners to an importer of goods warehoused on
the dock as a recognition of the importer's title to the said goods, upon production of the bill of lading;
and
3) Warehouse receipt - a contract or receipt for goods deposited with a warehouseman containing the
latter's undertaking to hold and deliver the said goods to a specified person, to order, or to bearer.
Quedan is a warehouse receipt usually for sugar received by a warehouseman.

Classes of documents of titles


Documents of title may be either:
1) Negotiable documents of title or those by the terms of which the bailee undertakes to deliver the
goods to the bearer and those by the terms of which the bailee undertakes to deliver the goods to the
order of a specified person; or
2) Non-negotiable documents of title or those by the terms of which the goods covered are deliverable
to a specified person.

Art. 1508. A negotiable document of title may be negotiated by delivery:

(1) Where by the terms of the document the carrier, warehouseman or other bailee issuing
the same undertakes to deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier, warehouseman or other bailee issuing
the same undertakes to deliver the goods to the order of a specified person, and such
person or a subsequent endorsee of the document has indorsed it in blank or to the bearer.
Where by the terms of a negotiable document of title the goods are deliverable to bearer or
where a negotiable document of title has been indorsed in blank or to bearer, any holder
may indorse the same to himself or to any specified person, and in such case the document
shall thereafter be negotiated only by the endorsement of such endorsee.

Negotiation of negotiable document by delivery


A negotiable document of title is negotiable by delivery if the goods are deliverable to the
bearer, or when it is indorsed in blank or to the bearer by the person to whose order the goods are
deliverable or by a subsequent indorsee. An indorsement is in blank when the holder merely signs his
name at the back of the receipt without specifying to whom the goods are to be delivered.
If the document is specially indorsed, it becomes an order document of title and negotiation
can only be effected by the indorsement of the indorsee. A special indorsement specifies the person to
whom or to whose order the goods are to be delivered.

Art. 1509. A negotiable document of title may be negotiated by the endorsement of the
person to whose order the goods are by the terms of the document deliverable. Such
endorsement may be in blank, to bearer or to a specified person. If indorsed to a specified
person, it may be again negotiated by the endorsement of such person in blank, to bearer
or to another specified person. Subsequent negotiations may be made in like manner.

Negotiation of negotiable document by indorsement

A negotiable document of title by the terms of which the goods are deliverable to a person
specified therein may be negotiated only by the indorsement of such person.
1) If indorsed in blank or to bearer, the document becomes negotiable by delivery.
2) If indorsed to a specified person, it may be again negotiated by the indorsement of such person in
blank, to bearer, or to another specified person. Delivery alone is not sufficient.
A party is liable only as guarantor and not as indorser if his indorsement is made for the purpose of
identification only.

Art. 1510. If a document of title which contains an undertaking by a carrier, warehouseman


or other bailee to deliver the goods to bearer, to a specified person or order of a specified
person or which contains words of like import, has placed upon it the words "not
negotiable," "non-negotiable" or the like, such document may nevertheless be negotiated
by the holder and is a negotiable document of title within the meaning of this Title. But
nothing in this Title contained shall be construed as limiting or defining the effect upon the
obligations of the carrier, warehouseman, or other bailee issuing a document of title or
placing thereon the words "not negotiable," "non-negotiable," or the like.
Negotiable documents of title marked "non-negotiable
Under Article 1510, the words "not negotiable," "non-negotiable" and the like when placed
upon a document of title in which the goods are to be delivered to "order" or to "bearer" have no
effect and the document continues to be negotiable.
Under the Warehouse Receipts Law, any provision inserted in a negotiable receipt that it is
non-negotiable is declared void. (Sec. 5, par. 2.)
When the document of title is to order, the bailee is obliged to take it up before delivering the
goods. Accordingly, he is liable to the holder of an order document if the goods are delivered to the
consignee without surrender of the document even though the latter was marked "not negotiable."

Art. 1511. A document of title which is not in such form that it can be negotiated by delivery
may be transferred by the holder by delivery to a purchaser or donee. A non-negotiable
document cannot be negotiated and the endorsement of such a document gives the
transferee no additional right.

Transfer of non-negotiable documents


A non-negotiable document of title cannot be negotiated. Nevertheless, it can be transferred
or assigned by delivery. In such a case, the transferee or assignee acquires only the rights stated in
Article 1514. Even if the document is indorsed, the transferee acquires no additional right.

Art. 1512. A negotiable document of title may be negotiated:


(1) By the owner therefor; or
(2) By any person to whom the possession or custody of the document has been entrusted
by the owner, if, by the terms of the document the bailee issuing the document undertakes
to deliver the goods to the order of the person to whom the possession or custody of the
document has been entrusted, or if at the time of such entrusting the document is in such
form that it may be negotiated by delivery.
Persons who may negotiate a document
It will be noticed that the provision does not give a power to negotiate documents of title
equal to that allowed under the Negotiable Instruments Law (Act No. 2031.) in the case of bills of
exchange and promissory notes inasmuch as neither a thief nor a finder is within the terms of the
article. (but see Art. 1518.) However, if the owner of the goods permits another to have the
possession or custody of negotiable receipts running to the order of the latter or to bearer, it is a
representation of title upon which bona fide purchasers for virtue are entitled to rely despite breaches
of trust or violations of agreement on the part of the apparent owner. As between two innocent
persons, the loss must fall upon him whose misplaced confidence made the loss possible.

Art. 1513. A person to whom a negotiable document of title has been duly negotiated
acquires thereby:
(1) Such title to the goods as the person negotiating the document to him had or had ability
to convey to a purchaser in good faith for value and also such title to the goods as the
person to whose order the goods were to be delivered by the terms of the document had or
had ability to convey to a purchaser in good faith for value; and
(2) The direct obligation of the bailee issuing the document to hold possession of the goods
for him according to the terms of the document as fully as if such bailee had contracted
directly with him. (n)

Rights of person to whom document has been negotiated


This article specifies the rights of a person to whom a negotiable document of title has been
duly negotiated, either by delivery, in the case of a document of title to bearer, or by indorsement and
delivery, in the case of a document of title to order. Such person acquires:
1) The title of the person negotiating the document, over the goods covered by the document;
2) The title of the person (depositor or owner) to whose order by the terms of the document the goods
were to be delivered, over such goods; and
3) The direct obligation of the bailee (warehouseman or carrier) to hold possession of the goods for
him, as if the bailee had contracted directly with him.
One who purchases, therefore, a negotiable document of title issued to a thief acquires no
right over the goods as the thief has no right to transfer, notwithstanding that such purchaser is
innocent. But the purchaser acquires a good title where the owner, by his conduct, is estopped from
asserting his title.

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