Negotiable Instruments Law – Transfer


Memory Aid

Based on the Outline of the 1994 Edition of Campos & Campos



  • NI incomplete and revocable until delivery for the purpose of giving effect thereto
  • as between
  1. immediate parties
  2. a remote party other than  holder in due course

delivery, to be effectual,  must  be made by or under the authority of the party making/drawing/accepting/indorsing

  • in such case delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument.


Where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved (*if in the hands of a HDC, presumption conclusive)


  • When an instrument is transferred from one person to another as to constitute the transferee the holder thereof.
  • If payable to BEARER, negotiated by delivery; if payable to ORDER, negotiated by indorsement of holder + delivery


  • Indorser generally enters into two contracts:
  1. sale or assignment of instrument
  2. to pay instrument in case of default of maker
  • Sec. 31 (how indorsement made)
  • Sec. 41 (where payable to two or more)
  • Sec. 43 (indorsement where name misspelled)
  • Sec. 48 (cancellation of indorsement)
  • Sec. 45, 46 (presumptions)
  • Indorsement must be of entire instrument. (can’t be indorsement of only part of amount payable, nor can it be to two or more indorsees severally. But okay to indorse residue of partially paid instrument)
  • Sec. 67 (liability of indorser where paper negotiable by delivery)
  • Sec. 63 (when person deemed indorser)


  1. as to manner of future method of negotiation
  2. special – specifies the person to whom/to whose order the instrument is to be payable; indorsement of such indorsee is necessary to further negotiation.
  3. Blank – specifies no indorsee, instrument so indorsed is payable to bearer, and may be negotiated by delivery
  • the holder may convert a blank indorsement into a special indorsement  by writing over the signature of the indorser in blank any contract consistent with the character of the indorsement


  1. as to kind of title transferred
  2. restrictive
  • prohibits further negotiation of instrument,
  • constitutes indorsee as agent of indorser, or
  • vests title in indorsee in trust for another
  • rights of indorsee in restrictive ind.:
    • receive payment of inst.
    • Bring any action thereon that indorser could bring
    • Transfer his rights as such indorsee, but all subsequent indorsees acquire only title of first indorsee under restrictive indorsement
  1. non-restrictive


  1. as to kind of liability assumed by indorser
  2. qualified-constitutes indorser as mere assignor of title (eg. “without recourse”)
  3. unqualified


  1. as to presence/absence of express limitations put by indorser upon primary obligor’s privileges of paying the holder
  2. conditional – additional condition annexed to indorser’s liability.
  • Where an indorsement is conditional, a party required to pay the instrument may disregard the condition, and make payment to the indorsee or his transferee, whether condition has been fulfilled or not
  • Any person to whom an instrument so indorsed is negotiated will hold the same/proceeds subject to rights of person indorsing conditionally
  1. unconditional



  • Where an instrument payable to bearer is indorsed specially, it may nevertheless be further negotiated by delivery
  • Person indorsing specially liable as indorser to only such holders as make title through his indorsement


  • Where holder of instrument payable to his order transfers it for value without indorsing, transfer vests in transferee
  1. such title as transferor had therein
  2. right of tranferee to have indorsement of transferor
  • for purposes of determining HDC negotiation effective upon actual indorsement


Reference:  University of the Philippines

BarOps ’99

Commercial Law – Val Feria, Mina Herrera, Gary Mallari & Rachel Ramos


About Magz

First of all, I am not a lawyer. I'm a graduate of AB Political Science and went to the College of Law but stopped going to law school for some reasons. I'm a passionate teacher who has been teaching English to speakers of other languages and a person who likes writing and blogging. I lost some important files and software when my computer broke down so the reason I created this website is to preserve the notes, reviewers and digests I collected when I was at the law school and at the same time, I want to help out law students who do not have enough time to go and read books in the library.

Posted on December 19, 2011, in Negotiable Instruments Law and tagged . Bookmark the permalink. Leave a comment.

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