11.

TRANSFER AND NEGOTIATION

11.01.
If the instrument is negotiable, transfer thereof can
be effected either through: (a) negotiation; or (b)
assignment.
a)
If the negotiable instrument is merely assigned,
the transferee does not become a holder, and
he merely steps into the shoes of the transferor
(Salas v. CA, G.R. No. 76788, January 22, 1990).
Any defense available against the transferor is
available against the transferee. Example: Where
the instrument that is payable to order was merely
delivered without indorsement.
b)
11.02. a)
A non-negotiable instrument can be assigned and
cannot be negotiated (2012 Bar). However, this is
still transfer of a right to claim payment.
ISSUANCE
"Issue" is the first delivery of the instrument
complete in form to a person who takes it as a
holder (Sec. 191, NIL).
1)
Issuance to the payee is negotiation because
the transfer constitutes the payee the holder
of the instrument. The payee may even be
a holder in due course if he has acquired
the note from another holder or he has not
directly dealt with the maker thereof.
2)
Delivery
is
defined as the 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 (De la Victoria v. Burgos, 245 SCRA
374 [1995]).
b)
NEGOTIATION. An instrument is negotiated
when it is transferred from one person to another