SECTION 41

Indorsement where payable to

two or more persons.
How indorsement of joint payees
made.

1. Two or more payees or indorsees

jointly.
2. Two or more payees severally.
3. Indorsement by all payees or
indorsees.
Exceptions to the rule.

1. Where the payees or indorsees are

partners; and
2. Where the payee or indorsee indorsing
has authority to indorse for others.
Example:
M makes a note payable to the order of P and A.
The indorsement of either P and A alone, or the
indorsement of both of them, by one without
authority from the other, does not constitute a
negotiation of the instrument because it would not
be an indorsement of the entire instrument. But if
P and A are partners, or the one indorsing has the
authority to indorse for the other, the indorsement
will bind the other.
SECTION 42
Effect of instrument drawn or
indorsed to a person as cashier.
Where an instrument is drawn or
indorsed to a person as cashier or
other fiscal officer of a bank or
corporation , it is deemed prima facie
to be payable to the bank or
corporation of which he is such
officer.
Example:
Pay P1000 to the order of cashier, Centro
Escolar University.

(Sgd.) A
SECTION 43
Indorsement where name is
misspelled, etc.
Application of Section 43

An instrument drawn or indorsed to “Juan

Dytuco” whose real name is “Juan
Dyjuco” may be indorsed as follows:
● Pay to Y (Sgd.) Juan Dytuco Juan
Dyjuco
● or (Sgd.) Juan Dytuco
SECTION 44
Indorsement in representative
capacity.
Example:
SECTION 45
Time of indorsement;
presumption.
If the indorsement bears a date, the
presumption is that it is the true date.
If the indorsement is without a date,
the presumption is that it was
negotiated before maturity. The on
who alleges that the indorsement was
effected after maturity has the burden
of proof.
Example:
A note payable on August 10, 2013 bears the
undated instrument of the payee.

Presumption:
He indorsed the note on or before August 10,
2013, that is, before the note was overdue.
SECTION 46
Time of indorsement;
presumption.
Except where the contrary appears,
every indorsement is presumed prima
facie to have been made at the place
where the instrument is dated.
Importance of Place of
Indorsement
The place of indorsement is sometimes
material because because an
indorsement is governed by the laws of
the state where it is indorsed.
Example:
Suppose a note is dated as follows:
“Manila, March 9, 2013”

Presumption:
The indorsement was made in Manila where
the note was dated.
SECTION 47
Continuation of negotiable
character.
When negotiable instrument
rendered non-negotiable.

a. When the instrument has been

restrictively indorsed; or
b. When it has been discharged by
payment or otherwise.
SECTION 48
Striking out indorsements.
When holder may strike out
indorsement.

1. An instrument payable to bearer on its

face.
2. An instrument originally payable to
order.
Example:
Suppose M makes a note payable to P or bearer. The
note is indorsed specially and in succesion as follows:

Pay to A
(Sgd.) P
Pay to B
(Sgd.) A
Pay to C
(Sgd.) B
Example:
Suppose M issues a promisorry note payable to the
order of P. It is indorsed as follows:
(Blank Indorsement)
(Sgd.) P
Pay to B
(Sgd.) A
Pay to C
(Sgd.) B
SECTION 49.
Transfer without indorsement;
effect of.
Effect of transfer without
indorsement.
1. The transaction operates as an equitable
assignment and the transferee acquires
the instrument subject to defences and
equities said to value without indorsing it.
2. He cannot negotiate it.
3. If the transferor had legal title, the
transferee acquires such title and the
right to have the indorsement of the
transferor
Example:
M issues an instrument payable to P or order. P
delivers it to A for value without indorsing it.

The transfer does not constitute negotiation but it

vests in A such title as P had and in addition , it
gives A the right to have P’s indorsement and to
recover from M who has, however, the right to
require proof from A that the transfer to him was
legitimate. Thus, such an instrument may still be
effectually transferred by mere delivery.
SECTION 50.
When prior party may negotiate
instrument.
If a prior party reacquires an
instrument before maturity, he may
negotiate the same further. But after
paying the holder, he may not claim
payment from any of the intervening
parties.
Example:
M makes a note payable to the order of P. It is indorsed successively as follows:
Pay to A
(Sgd.) P
Pay to B
(Sgd.) A
Pay to C
(Sgd.) B
Pay to D
(Sgd.) C
Pay to B
(Sgd.) D
Pay to E
(Sgd.) B