Sesbreno vs.

CA GR 89252, 24 May 1993

Facts:

On 9 February 1981, Raul Sesbreno made a money market placement in the amount of
P300,000 with the Philippine Underwriters Finance Corporation (PhilFinance), with a
term of 32 days. PhilFinance issued to Sesbreno the Certificate of Confirmation of Sale
of a Delta Motor Corporation Promissory Note (2731), the Certificate of Securities
Delivery Receipt indicating the sale of the note with notation that said security was in
the custody of Pilipinas Bank, and postdated checks drawn against the Insular Bank of
Asia and America for P304,533.33 payable on 13 March 1981. The checks were
dishonored for having been drawn against insufficient funds. Pilipinas Bank never
released the note, nor any instrument related thereto, to Sesbreno; but Sesbreno
learned that the security was issued 10 April 1980, maturing on 6 April 1981, has a face
value of P2,300,833.33 with PhilFinance as payee and Delta Motors as maker; and was
stamped “non-negotiable” on its face. As Sesbreno was unable to collect his investment
and interest thereon, he filed an action for damages against Delta Motors and Pilipinas
Bank.

Issue:

Whether non-negotiability of a promissory note prevents its assignment.

Held:

Only an instrument qualifying as a negotiable instrument under the relevant statute may
be negotiated either by indorsement thereof coupled with delivery, or by delivery alone if
it is in bearer form. A negotiable instrument, instead of being negotiated, may also be
assigned or transferred. The legal consequences of negotiation and assignment of the
instrument are different. A negotiable instrument may not be negotiated but may be
assigned or transferred, absent an express prohibition against assignment or transfer
written in the face of the instrument. herein, there was no prohibition stipulated.