Delivery physical transfer of possession of the

Delivery – physical transfer of possession of the instrument
by the maker or drawer with the intention to transfer title to
the payee and recognize him as holder thereof.
o Essential for the instrument to be deemed as issued
as it is the final act to consummate the transfer
o Must be made under the authority of the party
making, drawing, accepting or indorsing the
instrument
o Valid and intentional delivery is presumed.
SUBSEQUENT NEGOTIATION
SECTION 30. What constitutes Negotiation
An instrument is negotiated when it is transferred from one
person to another in such manner as to constitute the
transferee the holder thereof. If payable to bearer, it is
negotiated by delivery; if payable to order, it is negotiated by
the indorsement of the holder completed by delivery.
o If payable to bearer, negotiated by mere delivery.
o If payable to order, negotiated by indorsement,
completed by delivery
CASE1 INDORSEMENT OF AN INSTRUMENT PAYABLE
TO BEARER
Sec 40. Indorsement of Instrument Payable to
Bearer
Where an instrument payable to bearer is indorsed
specially, it may nevertheless be further negotiated by
delivery; but any person indorsing specially is liable as
indorser to only such holders as make title through his
indorsement.
General Rule:
An originally bearer instrument will always be a bearer
instrument.
An instrument payable to bearer is not converted into an
instrument payable to order by being indorsed specially.
Thus, the indorsee may further negotiate the instrument
by mere delivery.
Liability of Special Indorser: Person indorsing specially
is liable only to those holders who can trace their title to
the instrument by a series of unbroken indorsements from
such special indorser.
Example:
“Pay to B
Sgd. A
Pay to C
Sgd. B”
A is liable to B and C and B is liable to C.
Sgd. C (delivered to D)
A and B will not be liable to D. But C will be liable to
D.
CASE 2 TRANSFER OF ORDER INSTRUMENT
WITHOUT INDORSEMENT
Sec 49. Transfer without indorsement; effect of.
Where the holder of an instrument payable to his order
transfers it for value without indorsing it, the transfer vests
in the transferee such title as the transferor had therein,
and the transferee acquires in addition, the right to have
the indorsement of the transferor. But for the purpose of
determining whether the transferee is a holder in due
course, the negotiation takes effect as of the time when
the indorsement is actually made.
Effect of transfer without indorsement of order
instrument
The instrument is in effect merely assigned to the
transferee.
1. Equitable Assignment
o Transferee acquires the instrument subject to
defenses and equities available among prior
parties.
o If the transferor had legal title, transferee acquires
such title and in addition, the right to have the
indorsement of the transferor and also the right to
have the indorsement of the transferor
2. No presumption
o Presumption of sufficiency of consideration and
title that is enjoyed by holders of duly negotiated
instruments will not be enjoyed by transferee.