!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !

"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
CnA1Lk 7: DCCUMLN1S CI 1I1LL

I. Def|n|t|on (Art|c|e 1636)

Art|c|e 1636.
In the preced|ng art|c|es |n th|s 1|t|e govern|ng the sa|e of goods,
un|ess the context or sub[ect matter otherw|se requ|res:

(1) "Document of t|t|e to goods" |nc|udes any b||| of |ad|ng, dock
warrant, "quedan," or warehouse rece|pt or order for the de||very of
goods, or any other document used |n the ord|nary course of bus|ness
|n the sa|e or transfer of goods, as proof of the possess|on or contro| of
the goods, or author|z|ng or purport|ng to author|ze the possessor of
the document to transfer or rece|ve, e|ther by |ndorsement or by
de||very, goods represented by such document.

"Goods" |nc|udes a|| chatte|s persona| but not th|ngs |n act|on or
money of |ega| tender |n the h|||pp|nes. 1he term |nc|udes grow|ng
fru|ts or crops.

"Crder" re|at|ng to documents of t|t|e means an order by |ndorsement
on the documents.

"ua||ty of goods" |nc|udes the|r state or cond|t|on.

"Spec|f|c goods" means goods |dent|f|ed and agreed upon at the t|me a
contract of sa|e |s made.

An antecedent or pre-ex|st|ng c|a|m, whether for money or not,
const|tutes "va|ue" where goods or documents of t|t|e are taken e|ther
|n sat|sfact|on thereof or as secur|ty therefor.

(2) A person |s |nso|vent w|th|n the mean|ng of th|s 1|t|e who e|ther
has ceased to pay h|s debts |n the ord|nary course of bus|ness or
cannot pay h|s debts as they become due, whether |nso|vency
proceed|ngs have been commenced or not.

(3) Goods are |n a "de||verab|e state" w|th|n the mean|ng of th|s 1|t|e
when they are |n such a state that the buyer wou|d, under the
contract, be bound to take de||very of them. (n)

Any blll of ladlng, dock warranL, "quedan," or warehouse recelpL
or order for Lhe dellvery of goods, or any oLher documenL used
ln Lhe ordlnary course of buslness ln Lhe sale or Lransfer of
goods, as proof of Lhe possesslon or conLrol of Lhe goods, or
auLhorlzlng or purporLlng Lo auLhorlze Lhe possessor of Lhe
documenL Lo Lransfer or recelve, elLher by endorsemenL or by
dellvery, goods represenLed by such documenL. (ArLlcle 1636)
o Lxample: Warehouse 8ecelpLs, 8onded Warehouse
8ecelpLs
uellvery and possesslon of Lhe documenL of LlLle ls LanLamounL
Lo dellvery and possesslon of Lhe goods whlch Lhe documenL of
LlLle represenLs. lL represenLs LhaL one who has possesslon of
Lhe recelpL has been enLrusLed has Lhe LlLle Lo Lhe goods.
!"#$#%%#&' )*+,- ./0 10 23-#/&3$ 43&56 78 !"#$0 79: ;9<89=> ?#@
./&A 4#'&A 10 B/&A5/&A C ?"3&A"3# 43&56 DE !"#$0 D<F ;9<:8=

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
II. urpose of Documents of 1|t|e

A. 1wo Iunct|ons:
1. As evldence of Lhe possesslon or conLrol of Lhe goods descrlbed
Lhereln.
2. As Lhe medlum of Lransferrlng LlLle and possesslon over Lhe
goods descrlbed Lhereln, wlLhouL havlng Lo effecL acLual
dellvery Lhereof.
1hrough a documenL of LlLle, seller ls allowed by flcLlon of law Lo
deal wlLh Lhe goods descrlbed Lhereln as Lhough he had
physlcally dellvered Lhem Lo Lhe buyer, and buyer may Lake Lhe
documenL as Lhough he had acLually Laken possesslon and
conLrol over Lhe goods descrlbed Lhereln0 G!"#$#%%#&' )*+,- ./0
10 23-#/&3$ 43&56 78 !"#$0 79: ;9<89=0
1he provlslons on documenLs of LlLle are geared Lowards
assurlng Lhe publlc Lo Lake, accepL, and deal wlLh LransacLlons
over goods and merchandlse by means of Lhe documenLs of LlLle
lssued ln represenLaLlon Lhereof.
Warehouse recelpL represenLs Lhe goods, buL Lhe lnLrusLlng of
Lhe recelpL ls more Lhan Lhe mere dellvery of Lhe goods, lL ls a
represenLaLlon LhaL Lhe one Lo whom Lhe possesslon of Lhe
recelpL has been so enLrusLed has Lhe LlLle Lo Lhe goods. G?#@
./&A 4#'&A 10 B/&A5/&A C ?"3&A"3# 43&56 DE !"#$0 D<F ;9<:8=

III. Negot|ab|e Documents of 1|t|e

A. Negot|ab|e Document of 1|t|e

Art|c|e 1S07.
A document of t|t|e |n wh|ch |t |s stated that the goods referred to
there|n w||| be de||vered to the bearer, or to the order of any person
named |n such document |s a negot|ab|e document of t|t|e. (n)

1. Lffects Cf Use Cf "Non-Negot|ab|e" 1erms Cn Negot|ab|e
Documents Cf 1|t|e
Such documenL may neverLheless be negoLlaLed by Lhe holder
and ls a negoLlable documenL of LlLle

8. now Negot|ated (Art|c|es 1S08-1S09)

Art|c|e 1S08.
A negot|ab|e document of t|t|e may be negot|ated by de||very:

(1) Where by the terms of the document the carr|er, warehouseman or
other ba||ee |ssu|ng the same undertakes to de||ver the goods to the
bearer, or

(2) Where by the terms of the document the carr|er, warehouseman or
other ba||ee |ssu|ng the same undertakes to de||ver the goods to the
order of a spec|f|ed person, and such person or a subsequent |ndorsee
of the document has |ndorsed |t |n b|ank or to the bearer.

Where by the terms of a negot|ab|e document of t|t|e the goods are
de||verab|e to bearer or where a negot|ab|e document of t|t|e has
been |ndorsed |n b|ank or to bearer, any ho|der may |ndorse the same
to h|mse|f or to any spec|f|ed person, and |n such case the document
sha|| thereafter be negot|ated on|y by the |ndorsement of such
|ndorsee. (n)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

Art|c|e 1S09.
A negot|ab|e document of t|t|e may be negot|ated by the |ndorsement
of the person to whose order the goods are by the terms of the
document de||verab|e. Such |ndorsement may be |n b|ank, to bearer or
to a spec|f|ed person. If |ndorsed to a spec|f|ed person, |t may be aga|n
negot|ated by the |ndorsement of such person |n b|ank, to bearer or to
another spec|f|ed person. Subsequent negot|at|ons may be made |n
||ke manner. (n)

C. Who Can Negot|ate (Art|c|e 1S12)

Art|c|e 1S12.
A negot|ab|e document of t|t|e may be negot|ated:

(1) 8y the owner thereof, or

(2) 8y any person to whom the possess|on or custody of the document
has been entrusted by the owner, |f, by the terms of the document the
ba||ee |ssu|ng the document undertakes to de||ver the goods to the
order of the person to whom the possess|on or custody of the
document has been entrusted, or |f at the t|me of such entrust|ng the
document |s |n such form that |t may be negot|ated by de||very. (n)

D. Lffects of Negot|at|on (Art|c|e 1S13)

Art|c|e 1S13.
A person to whom a negot|ab|e document of t|t|e has been du|y
negot|ated acqu|res thereby:

(1) Such t|t|e to the goods as the person negot|at|ng the document to
h|m had or had ab|||ty to convey to a purchaser |n good fa|th for va|ue
and a|so such t|t|e to the goods as the person to whose order the
goods were to be de||vered by the terms of the document had or had
ab|||ty to convey to a purchaser |n good fa|th for va|ue, and

(2) 1he d|rect ob||gat|on of the ba||ee |ssu|ng the document to ho|d
possess|on of the goods for h|m accord|ng to the terms of the
document as fu||y as |f such ba||ee had contracted d|rect|y w|th h|m.
(n)

1he endorsemenL and dellvery of a negoLlable !"#$%& operaLes
as Lhe Lransfer of possesslon and ownershlp of Lhe properLy
referred Lo Lhereln, and had Lhe effecL of dlvorclng Lhe properLy
covered Lhereln from Lhe esLaLe of Lhe lnsolvenL prlor Lo Lhe
flllng of Lhe peLlLlon for lnsolvency0 G!"#$#%%#&' )*+,- ./0 10
23-#/&3$ 43&56 78 !"#$0 79: ;9<89=0

L. Lffects of Mere|y 1ransferr|ng]De||ver|ng of "Crder" Negot|ab|e
Documents of 1|t|e

Art|c|e 1S1S.
Where a negot|ab|e document of t|t|e |s transferred for va|ue by
de||very, and the endorsement of the transferor |s essent|a| for
negot|at|on, the transferee acqu|res a r|ght aga|nst the transferor to
compe| h|m to endorse the document un|ess a contrary |ntent|on
appears. 1he negot|at|on sha|| take effect as of the t|me when the
endorsement |s actua||y made. (n)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

I. Unauthor|zed Negot|at|on (Art|c|e 1S18)

Art|c|e 1S18.
1he va||d|ty of the negot|at|on of a negot|ab|e document of t|t|e |s not
|mpa|red by the fact that the negot|at|on was a breach of duty on the
part of the person mak|ng the negot|at|on, or by the fact that the
owner of the document was depr|ved of the possess|on of the same by
|oss, theft, fraud, acc|dent, m|stake, duress, or convers|on, |f the
person to whom the document was negot|ated or a person to whom
the document was subsequent|y negot|ated pa|d va|ue therefor |n
good fa|th w|thout not|ce of the breach of duty, or |oss, theft, fraud,
acc|dent, m|stake, duress or convers|on. (n)

Lven when Lhe owner loses Lhe negoLlable documenL of LlLle Lo
a Lhlef, and lL ls dellverable Lo bearer, Lhe laLLer may valldly
lmparL LlLle LhereLo Lo a holder ln due course, who ls essenLlally
a buyer ln good falLh and for value.
1he only real defense LhaL can valldly be ralsed agalnsL Lhe
holder ln due course of a negoLlable documenL of LlLle would be
forgery of Lhe endorsemenL of Lhe owner when such
endorsemenL ls necessary Lo effecL proper negoLlaLlon.
As beLween Lhe owner of a negoLlable documenL of LlLle who
endorsed lL ln blank and enLrusLed lL Lo a frlend, and Lhe holder
of such negoLlable documenL of LlLle Lo whom lL was negoLlaLed
and who recelved lL ln good falLh and for value, Lhe laLLer ls
preferred, under Lhe prlnclple LhaL as beLween Lwo lnnocenL
persons, he who made Lhe loss posslble should bear Lhe loss.
G?#@ H/&A 4#'&A 10 B/&A5/&A 3&I ?"3&A"3# 43&5#&A ./*%06 DE
!"#$0 D<F ;9<:8=0

IV. Non-negot|ab|e Documents of 1|t|e
uocumenLs of LlLle whlch are noL dellverable Lo bearer" or Lo
order."

A. now 1ransferred or Ass|gned (Art|c|e 1S14)

Art|c|e 1S14.
A person to whom a document of t|t|e has been transferred, but not
negot|ated, acqu|res thereby, as aga|nst the transferor, the t|t|e to the
goods, sub[ect to the terms of any agreement w|th the transferor.

If the document |s non-negot|ab|e, such person a|so acqu|res the r|ght
to not|fy the ba||ee who |ssued the document of the transfer thereof,
and thereby to acqu|re the d|rect ob||gat|on of such ba||ee to ho|d
possess|on of the goods for h|m accord|ng to the terms of the
document.

r|or to the not|f|cat|on to such ba||ee by the transferor or transferee
of a non-negot|ab|e document of t|t|e, the t|t|e of the transferee to the
goods and the r|ght to acqu|re the ob||gat|on of such ba||ee may be
defeated by the |evy of an attachment of execut|on upon the goods by
a cred|tor of the transferor, or by a not|f|cat|on to such ba||ee by the
transferor or a subsequent purchaser from the transferor of a
subsequent sa|e of the goods by the transferor. (n)

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Slnce a non-negoLlable documenL of LlLle consLlLuLes an
lncorporeal rlghL, lLs sale consLlLuLes acLually an asslgnmenL
whlch under Art|c|e 1624 ls perfecLed by mere consenL, buL
whlch under Art|c|e 162S would requlre lLs appearance ln a
publlc lnsLrumenL, oLherwlse lL shall produce no effecL as
agalnsL Lhlrd persons"

8. Lffects of 1ransfer (Art|c|e 1S14).

V. Lffects of Lrrors on Documents of 1|t|e
Clerlcal errors do noL affecL Lhe negoLlablllLy of Lhe lnsLrumenL

VI. Warrant|es of Se||er of Documents of 1|t|e (Art|c|e 1S16)

Art|c|e 1S16.
A person who for va|ue negot|ates or transfers a document of t|t|e by
|ndorsement or de||very, |nc|ud|ng one who ass|gns for va|ue a c|a|m
secured by a document of t|t|e un|ess a contrary |ntent|on appears,
warrants:

(1) 1hat the document |s genu|ne,

(2) 1hat he has a |ega| r|ght to negot|ate or transfer |t,

(3) 1hat he has know|edge of no fact wh|ch wou|d |mpa|r the va||d|ty
or worth of the document, and

(4) 1hat he has a r|ght to transfer the t|t|e to the goods and that the
goods are merchantab|e or f|t for a part|cu|ar purpose, whenever such
warrant|es wou|d have been |mp||ed |f the contract of the part|es had
been to transfer w|thout a document of t|t|e the goods represented
thereby. (n)

1he seller/asslgnor of Lhe documenL of LlLle also warranLs Lhe
exlsLence and legallLy of Lhe documenLs of LlLle aL Lhe Llme of
sale, unless lL has been sold as doubLful, buL LhaL he does noL
warranL Lhe solvency of Lhe debLor (l.e. Lhe ballee), unless lL has
been so expressly sLlpulaLed or unless Lhe lnsolvency was prlor
Lo Lhe sale and of common knowledge.

VII. Lffects When Cwner of the Document of 1|t|e nas No Lega| 1|t|e to
the Goods

A. When Goods Covered by Non-Negot|ab|e Document

Where the owner had ne|ther |ost
nor been un|awfu||y depr|ved of
the goods
Where the owner had |ost the
goods or been un|awfu||y
depr|ved thereof.
1he asslgnee-buyer's LlLle Lo Lhe
goods ls preferred agalnsL Lhe
owner who can no longer recover
Lhe goods. ln such cases, Lhe
asslgnee-buyer's ownershlp Lo Lhe
goods ls noL derlved from Lhe
asslgnor-seller, buL ls granLed by
Art|c|e SS9
1he owner may recover agalnsL
Lhe asslgnee-buyer, even when Lhe
laLLer ls ln good falLh and boughL
for value, because Art|c|e SS9
expressly does noL glve Lo Lhe
asslgnee-buyer any orlglnal LlLle,
and ln such cases, Lhe LlLle of Lhe
asslgnee-buyer ls derlved from
LhaL of Lhe asslgnor-seller's.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
8. When Goods Covered by Negot|ab|e Document

Where the owner had ne|ther |ost
nor been un|awfu||y depr|ved of
the goods
Where the owner had |ost the
goods or been un|awfu||y
depr|ved thereof.
1he holder-buyer acqulres valld
ownershlp of such goods because
hls possesslon ln good falLh and for
value, whlch by lLself would
consLlLuLe as an orlglnal source or
ownershlp under Art|c|e SS9, ls
clearly evldenced by hls belng a
holder ln due course of Lhe
negoLlable documenL of LlLle
1he owner may recover agalnsL
Lhe ballee and Lherefore
agalnsL Lhe holder-buyer, even
when Lhe laLLer ls a holder ln
due course wlLh respecL Lo Lhe
negoLlable documenL of LlLle,
and a possessor ln good falLh
and for value wlLh respecL Lo
Lhe goods.

VIII. ku|es of Levy]Garn|shment of Goods (Art|c|es 1S14, 1S19, 1S20).

Art|c|e 1S19.
If goods are de||vered to a ba||ee by the owner or by a person whose
act |n convey|ng the t|t|e to them to a purchaser |n good fa|th for va|ue
wou|d b|nd the owner and a negot|ab|e document of t|t|e |s |ssued for
them they cannot thereafter, wh||e |n possess|on of such ba||ee, be
attached by garn|shment or otherw|se or be |ev|ed under an execut|on
un|ess the document be f|rst surrendered to the ba||ee or |ts
negot|at|on en[o|ned. 1he ba||ee sha|| |n no case be compe||ed to
de||ver up the actua| possess|on of the goods unt|| the document |s
surrendered to h|m or |mpounded by the court. (n)

Art|c|e 1S20.
A cred|tor whose debtor |s the owner of a negot|ab|e document of t|t|e
sha|| be ent|t|ed to such a|d from courts of appropr|ate [ur|sd|ct|on by
|n[unct|on and otherw|se |n attach|ng such document or |n sat|sfy|ng
the c|a|m by means thereof as |s a||owed at |aw or |n equ|ty |n regard
to property wh|ch cannot read||y be attached or |ev|ed upon by
ord|nary |ega| process. (n)

A. When Non-Negot|ab|e Document of 1|t|e
See ArLlcle 1314(3)
o rlor Lo noLlflcaLlon, garnlshmenL and levy may defeaL
Lhe non-negoLlable documenL of LlLle.
ln effecL, Lhe asslgnmenL or sale by Lhe orlglnal owner of Lhe
non-negoLlable documenL of LlLle, even when execuLed ln a
publlc, lnsLrumenL does noL Lransfer possesslon or LlLle over Lhe
goods covered by Lhe documenL of LlLle, unLll acLual noLlflcaLlon
ls made Lo Lhe ballee of Lhe Lransfer or asslgnmenL of goods.
ln Lhe case of a non-negoLlable documenL of LlLle, possesslon
and ownershlp of Lhe documenL of LlLle (by asslgnmenL) does
noL necessarlly brlng wlLh lL possesslon or LlLle over Lhe goods
covered. 8aLher, lL ls Lhe noLlflcaLlon of Lhe ballee of Lhe
asslgnmenL LhaL ls Lhe operaLlve acL LhaL wlll Lransfer LlLle
and/or possesslon of Lhe goods ln favor of Lhe Lransferee-
asslgnee.

8. When Negot|ab|e Document of 1|t|e
See ArLlcle 1319
1he speclal rules on goods covered by Lhe negoLlable documenL
of LlLle show LhaL ln such case ownershlp and possesslon of Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
documenL lLself ls equlvalenL Lo Lhe holder havlng acLual
ownershlp and possesslon of Lhe goods covered Lhereby.
1he goods are LreaLed Lo be lnseparable from Lhe negoLlable
documenL of LlLle coverlng Lhem and vlce versa.