Restrictive Indorsement

Kinds: (Sec. 36)

1. Prohibits the further negotiation of the instrument
- The indorsee can no longer negotiate the
instrument. The negotiability of the instrument
ceases.
2. Constitutes the indorsee the agent of the indorser
(Agency type)
- The agent does not acquire title to the instrument.
He holds the instrument as agent of his principal,
the restrictive indorser, subject to the restrictive
indorsement.
3. Vests title in the indorsee in trust for or to the use of
some other person. (Trust type)
- This indorsement transfers title to the indorsee
not for himself but in trust or for the benefi of
another person including the indorser. The
indorsee cannot negotiate the instrument for his
own benefit but for the beneficial owner.
Effects: (Sec. 37)
A restrictive indorsement confers upon the indorsee the
right
1. To receive payment of the instrument.
2. To bring any action thereon that the indorser could
bring.
3. To transfer his rights as such indorsee, where the
form of the indorsement authorizes him to do so.
All subsequent indorsees acquire only the title of the first
indorsee under the restrictive indorsement.
Qualified Indorsement (Sec. 38)
A qualified indorsement constitutes the indorser a mere assignor
of the title to the instrument. It does not impair the negotiable
character of the instrument.
How made
It may be made by adding the words without recourse, or
words of similar import such as indorser not holden; at the
indorsees risk.
Liability of qualified indorser

The words without recourse or words of similar import simply

mean that the qualified indorser is not liable if the holder cannot the
instrument is invalid or that no valuable consideration was given.
However, he is liable on his warranties.
Conditional Indorsement (Sec. 39)
This is an indorsement, which is subject to the happening
of a condition.
Waiver of condition by party required to pay
The party required to pay the instrument may disregard
the condition and make payment to the indorsee or his
transferee whether the condition has been fulfilled or not. But
any person to whom an instrument so indorsed is negotiated will
hold the same, or the proceeds thereof, subject to the rights of
the person indorsing conditionally.
EXAMPLES:
Pay to Jose Manalo only.
(Sgd.) Wally Bayola
Pay to Alden Richards for collection.
(Sgd.) Maine Mendoza
Pay to Gong Yoo for collection and deposit.
(Sgd.) Jung Yu- Mi
Pay to Dingdong Dantes for collection only.
(Sgd.) Marian Rivera
Pay to Dick Gordon in trust for Antonio Trillanes.
(Sgd.) Leila De Lima
Pay to Melai Hontiveros for the Use of Mela Francisco.
(Sgd.) Jason Francisco
Pay to Korina Sanchez for my personal use.
(Sgd.) Mar Roxas

Pay to the order of Jessica Sanchez without recourse.

(Sgd.) Jessica Soho
Pay to the order of Pia Wurtzbach if she marries the Sexiest
Doctor Alive, Mikhail Varshavski.
(Sgd.) James Franco