Short answer. No. Under Article 1503, when a seller ships goods and routes the bill of lading together with a bill of exchange so the buyer pays or accepts before claiming the goods, the buyer must return the bill of lading if he refuses to honor the draft. Wrongfully keeping it gives him no added right over the goods.
What the law says
the buyer is bound to return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added right thereby
Civil Code, Article 1503 — Reservation of Ownership on Shipment. Read the full provision →
Why sellers use this sight-draft arrangement
A seller shipping goods to a distant buyer often will not release full control over them outright. Instead the seller routes the bill of lading through a bank or agent together with a bill of exchange, so the buyer only receives the paperwork needed to claim the goods once he pays or formally accepts the draft drawn against him, keeping the seller in control until payment or acceptance is actually secured.
What counts as wrongful retention
Wrongful retention happens when the buyer ends up physically holding the bill of lading, for example by inducing the bank to release it, without paying or accepting the draft the way the arrangement required. The document changing hands does not by itself mean the buyer was entitled to it, since the whole point of the arrangement was to withhold it until payment or acceptance actually took place.
The consequence is no added right over the goods
The provision is blunt about the result. A buyer who wrongfully retains the bill of lading acquires no added right by doing so. Physically holding the shipping document does not make him owner or give him any enforceable claim to the goods; the seller's underlying ownership and security interest are unaffected by the buyer's wrongful act of holding onto a document he was never entitled to keep.
A different rule protects an innocent third-party purchaser
The same article separately shields someone who, in good faith and for value, later buys the bill of lading or the goods themselves from that buyer without notice of the irregularity. That good-faith purchaser can still acquire ownership, even though the buyer who wrongfully held the document never gained any right of his own to pass along to anyone else down the chain.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Designer Basktets, Inc. vs. Air Sea Transport, Inc., et al, G.R. No. 184513, March 9, 2016 — read the decision on LawPhil →
- National Power Corporation vs. Province of Quezon and Municipalilty of Pagbilao, G.R. No. 171586, January 25, 2010 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1503 — Reservation of Ownership on Shipment
- Civil Code, Article 1523 — Delivery to the Carrier Is Delivery to the Buyer