Document Of Title 6b2tu

Art. 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Nothing in this Title, however, shall affect: (1) The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof; (2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent jurisdiction;

a. payable to bearer- mere delivery, person in possession b. payable to order- indorsement and delivery is required. Payable to payee, indorser, and person authorized or ordered by payee to collect. Negotiable Delivered to bearer or order of the person named in a document Negotiated by mere delivery (bearer) or indorsement plus delivery (order) Protected from attachment or levy

Non-negotiable Delivered to specified persons

Transfer/Assignment (As to goods) Refers to ordinary contracts

Negotiation (As to the instrument) Refers only to negotiable instruments Transferee is a holder

(3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special laws. (n)

Can be transferred but not negotiated. Transferred by delivery Not properly negotiated, may be defeated by levy or attachment or excecution upon the goods by a creditor or a transferor (garnishment)

Par.3 1. One who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same without reimbursement. Private sales, theft etc. Xpn?- if acquired in good faith the owner can recover it as long as there is reimbursement. 2. If a possessor of a movable acquired it in good faith at a public sale the owner must reimburse the price paid. Includes- merchant’s store, fair, market, public auction. Art. 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title. (n) 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. (n) Negotiable Document of title

Transferee is an assignee Assignee is subject to both real and personal defenses Assignee merely steps into the shoes of the assignor

Assignor is liable without notice of dishonor Governed by 1624 to 1635 NCC

Holder is only subject to real defenses May acquire a better title or greater rights under the instrument than those possessed by a prior party Indorser is not liable unless there be a presentment and notice of dishonor Negotiable Instruments Law

Art. 1508. A negotiable document of title may be negotiated by delivery: (1) Where by the 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 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 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. (n) Pars. 1& 2- negotiable 1. payable to bearer- can transfer it to any person and transferee will be entitled to the goods. 2. payable to order- indorsed blank or bearer. Par. 3 non-negotiable- from blank or to bearer, it is indorsed to himself or any specified person it becomes non-negotiable. However, it is still negotiable by indorsement ONLY. Blank- signs his name at the back without specifying to whom the goods are to be delivered. Specially indorsed-can only be effected by the indorsement of the indorsee. Art. 1509. A negotiable document of title may be negotiated by the endorsement of the person to whose order the goods are by the 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. (n Negotiation of negotiable document by indorsement 1. Person specified therein indorses it 2. Blank or to bearer- negotiable by delivery 3. If specified to a person, it can still be negotiable if it is subsequently indorsed in blank or made to bearer or to specific persons.

Indorser becomes a guarantor for identification purposes only. Title will only if the seller intends it shall. Indorsement and Delivery Ex. Deliver to the order of Mr. X To negotiate it, Mr. X must sign his name and deliver. Mere delivery without g is not sufficient. Indorsement and delivery amounts to transfer of possession and ownership. 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," "nonnegotiable" 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. Bu't 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. (n) Marked “non-negotiable” or “not negotiable”, it still continues to be negotiable (if subsequently indorsed to bearer, order or to specific persons), its negotiability is not destroyed. To order Bailee is required to take it before delivering the goods, liable to holder if goods are delivered to consignee without surrender of the document even though the latter was marked non-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.

May be given or assigned but has no effect of negotioation, it amounts to mere transfer or assignment A non-negotiable document cannot be negotiated and the endorsement of such a document gives the transferee no additional right. (n) Not negotiable, but may be transferred. Indorsement is usless. Not properly enforced for negotiation- the holder is not the promissee of the bailee, since he is not the order of the person to whom the document was originally made. Bailee’s promise is merely to a specific person, the document is not necessary for acquiring possession of the goods. Transfer of non-nego- by delivery. Deliver to Mr. X- non-negotiable, indorsement is useless 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 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. (n) Refers to persons who may negotiate. 1. Owner D deposits sacks of rice with W and W issues a warehouse receipt stating “to be delivered to the order of D” D may negotiate the receipt to another. 2. Person whom the possession or custody of the document has been entrusted by the owner. a. bailee undertakes to deliver the goods to the possessor of the document EXAMPLE: WH receipt “to be delivered to the order of D or to the person to whom this document has been entrusted by D”, if D

entrusts it with X, X may negotiate it to another person. b. Negotiation by delivery “deliver to bearer”, X may negotiate it to another person. NOTE: Thief or finder is not included is within the of the article. 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 value are entitled to rely despite breaches of trust or violations of agreement on the part of the apparent owner. In this case, the owner bears the loss and he cannot impugn the validity of the negotiation. 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 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 of the document as fully as if such bailee had contracted directly with him. (n) Rights of Person to Whom Negotiable Document is Negotiated. Document represents the depositor’s right to the goods. 1. Title of the person negotiating the document over the goods covered by the document. 2. Title of the person (depositor or owner) to whose order by the of the document the goods were to be delivered of such goods 3. Direct obligation of the bailee to hold possession of the goods for him, as if the bailee directly contracted with him. Purchaser acquires the title of the person to whose order the goods were to be delivered.

Purchaser, may acquire a better title as he acquires the right not only of the immediate predecessors but also the rights of the original consignee (recipient) of the goods.

by a notification to such bailee by the transferor or a subsequent purchaser from the transfer of a subsequent sale of the goods by the transferor. (n)

If bought from a thief, the buyer acquires no rights over the goods even if innocent. But the purchaser acquires a good title if by the conduct of the owner, he is estopped (if he consents etc.).

Right of the transferee

When buyer does not acquire title 1. bailee never received any goods and the document was issued fraudulently. –lack of object, holder may enforce a claim against the bailee issuing the document. 2. depositor of the goods may have no title to goods- 1505 buyer acquires no better title to the goods that the seller had unless the owner is by his conduct precluded from denying the seller’s authority to sell. 3. goods deposited may have been destroyed after their receipt by the bailee, but prior to the negotiation of the document of title- XPN: buyer of the doc of title ageed to bear the risk of past loss, the buyer, will not bear the risk but will be able to recover any money paid by him for the bill of lading. 4. goods may have been delivered by the bailee to one who has the right to retain them prior to the time of the negotiation of the document Art. 1514. 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 of any agreement with the transferor. If the document is non-negotiable, such person also acquires the right to notify the bailee who issued the document of the transfer thereof, and thereby to acquire the direct obligation of such bailee to hold possession of the goods for him according to the of the document. Prior to the notification to such bailee by the transferor or transferee of a nonnegotiable document of title, the title of the transferee to the goods and the right to acquire the obligation of such bailee may be defeated by the levy of an attachment of execution upon the goods by a creditor of the transferor, or

1. title to the goods as against transferorrights of a person to whom a negotiable document of title lacking an endorsement necessary for complete negotiation. 2. Transferee of non-negotiable documents also acquires a. right to notify the baille of the transfer. b. right to acquire the obligation of the bailee to hold the goods for him. 3. Right of assignee- subject to the of any agreement with the transferor. Attachment of Goods covered by document transferred. 1. last par. Of 1514 2. Non nego,does not affect the delivery of the goods covered by it. May be defeated by a levy…. 3. If negotiable,goods cannot be attached or levied unless the document is surrendered to the bailee or its negotiation is ened (ordered). Rights acquired by a person whom a negotiable document of title is negotiated. 1. title over the goods 2. title of the depositor or shipper. 3. direct obligation of bailee to hold goods for him. Non-negotiable 1. title to the goods. 2. right to notfiy the bailee of the transfer to him. a. upon notice, acquires the direct obligation. b. lack of notice, obligation may be defeated by: levy of an attachment or execution OR notification of such bailee by the transferor or a subsequent transfer

EXAMPLE: I deposited goods with W who issued a non-negotiable instrument. Thereafter, I assigned it to A. Later, A assigned it to H. None of them notified W of such transfer. A sold the goods covered by the receipt to X who notified W.

1. right to the goods as against the transferor 2. right to compel the transferor to indorse the indorsement

In this case, X has a better right by virtue of the notification and defeated H’s title.

If mere transfer is intended no right to require the transferor to indorse the document arises.

Negotiable document of Title

If subsequently indorsed

a. title to the goods

1. Negotiation shall take effect as of the time when the indorsement is actually made.

b. right to notify bailee of transfer that may be defeated by: 1. levy of an attachment 2. notification to such bailee 3. right to compel the transferor to indorse the document unless the contrary intention appears. Effect of negotiation 1. negotiation takes effect upon indorsement 2. upon negotiation, transferee acquires the direct obligation to hold possession of the goods. No further notification is required upon such indorsement completed by delivery. Without negotiation the transferee does not acquire the direct obligation of bailee at the time of transfer. Art. 1515. Where a negotiable document of title is transferred for value by delivery, and the endorsement of the transferor is essential for negotiation, the transferee acquires a right against the transferor to compel him to endorse the document unless a contrary intention appears. The negotiation shall take effect as of the time when the endorsement is actually made. (n) A negotiable instrument should be indorsed in order that the person to whom it is negotiated should have a perfect title, unless the document runs to the bearer or is indorsed in blank, or to bearer. Rights of a person to whom an order document of title, not properly negotiated by mere delivery has been delivered without indorsement

2. negotiation becomes complete only at the time of indorsement. If the purchaser had notice that the title of the seller was defective he cannot be considered a purchaser in good faith though he had no such notice when he bought the document. Art. 1516. A person who for value negotiates or transfers a document of title by endorsement or delivery, including one who assigns for value a claim secured by a document of title unless a contrary intention appears, warrants: (1) That the document is genuine; (2) That he has a legal right to negotiate or transfer it; (3) That he has knowledge of no fact which would impair the validity or worth of the document; and (4) That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular purpose, whenever such warranties would have been implied if the contract of the parties had been to transfer without a document of title the goods represented thereby. (n) Warranties in negotiation or transfer 1. by a person who negotiates 2. by a person who assigns or transfers for value Warranties about 1. the document 2. right to the document 3. the goods represented by the document

The person negotiating or transferring a document could be hed liable if the document was a forgery, or stole it, or had knowledge that the doc. Was invalid for want of consideration, or that the goods had been damaged.

a. made in breach of duty of the person negotiating

Duty of the indorsee (person to whom a bill of exchange is made payable) to know that all previous indorsements are genuine, otherwise, he will not acquire a valid title to the instrument.

C issues to S a bill of lading “deliver to bearer”

b. owner was deprived of loss, theft, fraud etc. S delivers to C for shipment

The bill is stolen by T who negotiates it to H (good faith) Negotiation to H is valid

Art. 1517. The endorsement of a document of title shall not make the endorser liable for any failure on the part of the bailee who issued the document or previous endorsers thereof to fulfill their respective obligations. (n) 1. conveyance of the instrument and a contract of the indorser with the indorsee that on certain conditions the indorser will pay the instrument if the party liable fails to do so. 2. the indorsement of a doc of title amounts merely a conveyance by the indorser, not a contract of guaranty. An indorser shall not be liable to the holder if, for example, the bailee fails to deliver the goods because they were lost due to his fault or negligence Art. 1518. 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 subsequently negotiated paid value therefor in good faith without notice of the breach of duty, or loss, theft, fraud, accident, mistake, duress or conversion. (n)

A negotiable instrument may be negotitated by any person in possession of the same, however such possession may have been acquired.

In may even be negotiated by a thief or finder and the holder would acquire a good title thereto if he paid value therefor in good faith without notice of the seller’s defect of title. Art. 1519. If goods are delivered to a bailee by the owner or by a person whose act in conveying the title to them to a purchaser in good faith for value would bind the owner and a negotiable document of title is issued for them they cannot thereafter, while in possession of such bailee, be attached by garnishment or otherwise or be levied under an execution unless the document be first surrendered to the bailee or its negotiation ened. The bailee shall in no case be compelled to deliver up the actual possession of the goods until the document is surrendered to him or impounded by the court. (n) GR: A document of title cannot be levied or attached XPN: 1. When document is surrendered to bailee 2. Negotiation of the document is ened (ordered) B. Bailee cannot be compelled to surrender the goods 1. when document is surrendered to him 2. document is impounded by the court A bailee may not deliver the goods, even to the person entitled to receive them, without the surrender of the negotiable document of title. Scope of Rule

In case of a non-negotiable document of title, the transferer thereof does not prevent the bailor’s creditors from causing the levy or attachment of the goods.

NOT APPLICABLE WHEN, the person depositing is not the owner of the goods or one who has no right to convey title to the goods binding upon the owner.

If negotiable in form, the person to whom the document is negotiated for value before it became spent, acquires title and delivery of the goods by a delivery to him of the document. A person to whom the document is negotiated will prevail over a subsequent attachment or levy by creditors of the indorser.

Art. 1520. A creditor whose debtor is the owner of a negotiable document of title shall be entitled to such aid from courts of appropriate jurisdiction by injunction and otherwise in attaching such document or in satisfying the claim by means thereof as is allowed at law or in equity in regard to property which cannot readily be attached or levied upon by ordinary legal process. (n)

Attachment or levy upon goods covered by a negotiable document Bailee has the direct obligation to hold possession…. 1. while in the possession of such bailee, the goods cannot be attached or levied under an execution UNLESS the document be first surrendered, or its negotiation prohibited by the court. 2. the bailee cannot be compelled to deliver up the possession of the goods until the document is surrendered to him or impounded by the court.

Remedy of a creditor of debtor-owner of goods covered by a negotiable document of title. Creditor can ask the court for an order attaching the document of title or ening the delivery of the goods to the debtorowner. Aid by injunction, however, an injunction is issued but the negotiable document of title is negotiated to an innocent person, the transfer is nevertheless effectual.