Republic of the Philippines

Pamantasan ng Cabuyao
(University of Cabuyao)
Senior High School Department
Katapatan Mutual Homes, Brgy. Banay-banay, City of Cabuyao, Laguna 4025

 A Documents of Title is a legal document that proves that

someone owns property or goods or has the right to take control of it or them.
o Nature and function of documents of title
 Documents of title refer to goods and not to money. They all have this in
common: that they are receipts of a bailee, or orders upon a bailee. A different
name is given in popular speech to the document when it is issued by a carrier
and when it is issued by a warehouseman but in substance, the nature of the
document is the same in both cases.
 It refers as evidence of transfer of title and possession of goods and contract
between the parties. A document of title is symbol of the goods covered by it,
serving as evidence of transfer of title and transfer of possession. It also serves
as an evidence of the contract between the parties who are bound by its terms.
So far as concerns the transfer of property between the parties, their intention
would be effectual without the document, but where third parties' rights are
involved, the form of the document becomes important.

 Bailee - person or party to whom goods are delivered for a purpose, such as custody or repair,
without transfer of ownership.
 Bailor - An individual who temporarily relinquishes possession but not ownership of a good or
other property under a bailment agreement.
 Bailment - It refers to a legal relationship between two parties in common law, where assets or
property are transferred from a bailor to a bailee.
 Common forms of documents of title
o Bill of Lading is a legal document issued by a carrier to a shipper that details the type,
quantity, and destination of the goods being carried.
 Functions of bills of lading
 It is a document of title to the goods described in the document.
 It is a receipt for the shipped products.
 It represents the agreed terms and conditions for the transportation of the
goods.
o Delivery Orders/ Dock warrant - an instrument given by dock owners to an importer of
goods warehoused on the dock recognizing the importer's title to the said goods.
o Warehouse Receipt - are used by all different types of businesses that need to
temporarily store products in bulk before either shipping them to other locations or
individually to end consumers.
 Quedan a receipt usually for sugar received by a warehouse man. It is an old system of recording
commodity deposits as practiced during the Spanish colonization of the Philippines.
 Goods refer to the personal chattel and other property which may be detached from land.
 Order is a stated intention, either spoken or written, to engage in a commercial transaction for
specific products or services.
 Article 1507 Negotiable Document of Title
o The document is negotiable if the goods are deliverable to bearer or if the goods are
deliverable to the order of a certain person.
 Article 1508 How Negotiable Document of Title is Negotiated
o 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 indorsement of such indorsee.
 Article 1509 Negotiation by Indorsement and Delivery

4TH QUARTERLY EXAM – LAWS ON NEGOTIABLE INSTRUMENTS

 Republic of the Philippines
Pamantasan ng Cabuyao
(University of Cabuyao)
Senior High School Department
Katapatan Mutual Homes, Brgy. Banay-banay, City of Cabuyao, Laguna 4025

o A negotiable document of title may be negotiated by the indorsement of the person to

whose order the goods are by the terms of the document deliverable. Such indorsement
may be in blank, to bearer or to a specified person. 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. Subsequent negotiations may be made in like manner.
 Article 1510 Effect of Placing the Word “Non-Negotiable”
o 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.
 Article 1511 Effect of Delivery When Document Cannot Be Negotiated By Mere Delivery
o 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 indorsement of such a document gives the
transferee no additional right.
 Article 1512 Person Who May Negotiate a Document
o A negotiable document of title may be negotiated by the owner thereof; or 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.
 Article 1513 Rights of Person to Whom Negotiable Document Is Negotiated
o This article specifies the rights of a person to whom a negotiated document of title has
been duly negotiated, in the case of a document of title to bearer, or by indorsement and
delivery, in the case of a document of title.
 Article 1514 Rights of Mere Transferee
o A person to whom a document of title has been transferred, but not negotiated, acquires
thereby, as against the transferor, the title to the goods, subject to the terms of any
agreement with the transferor.
 Article 1515 Rule if Indorsement is Needed for Negotiation
o Where a negotiable document of title is transferred for value by delivery, and the
indorsement of the transferor is essential for negotiation, the transferee acquires a right
against the transferor to compel him to indorse the document unless a contrary intention
appears. The negotiation shall take effect as of the time when the indorsement is actually
made.
 Article 1518 When Negotiation Not Impaired by Fraud, Mistake, Duress, etc.
o The validity of the negotiation of a negotiable document of title is not impaired by the fact
that the negotiation was a breach of duty on the part of the person making the
negotiation, or by the fact that the owner of the document was deprived of the possession
of the same by loss, theft, fraud, accident, mistake, duress, or conversion, if the person to
whom the document was negotiated or a person to whom the document was

4TH QUARTERLY EXAM – LAWS ON NEGOTIABLE INSTRUMENTS

 Republic of the Philippines
Pamantasan ng Cabuyao
(University of Cabuyao)
Senior High School Department
Katapatan Mutual Homes, Brgy. Banay-banay, City of Cabuyao, Laguna 4025

subsequently negotiated paid value therefor in good faith without notice of the breach of
duty, or loss, theft, fraud, accident, mistake, duress or conversion.

4TH QUARTERLY EXAM – LAWS ON NEGOTIABLE INSTRUMENTS