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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. oEssential for the instrument to be deemed as issued as it is the final act to consummate the transferoMust be made under the authority of the party making, drawing, accepting or indorsing the instrumentoValid and intentional delivery is presumed. SUBSEQUENT NEGOTIATIONSECTION 30. What constitutes NegotiationAn 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 bythe indorsement of the holder completed by delivery. oIf payable to bearer, negotiated by mere delivery. oIf payable to order, negotiated by indorsement, completed by delivery CASE1 INDORSEMENT OF AN INSTRUMENT PAYABLE TO BEARERSec 40. Indorsement of Instrument Payable to BearerWhere an instrument payable to bearer is indorsedspecially, it may nevertheless be further negotiated bydelivery; but any person indorsing specially is liable asindorser to only such holders as make title through hisindorsement. 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 BSgd. APay to CSgd. 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 toD.CASE 2 TRANSFER OF ORDER INSTRUMENT WITHOUT INDORSEMENTSec 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 vestsin 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 instrumentThe instrument is in effect merely assigned to the transferee. 1.Equitable AssignmentoTransferee acquires the instrument subject to defenses and equities available among prior parties. oIf the transferor had legal title, transferee acquiressuch title and in addition, the right to have the indorsement of the transferor and also the right tohave the indorsement of the transferor2.No presumptionoPresumption of sufficiency of consideration and title that is enjoyed by holders of duly negotiated instruments will not be enjoyed by transferee.