Sesbreno vs CA

222 SCRA 466

FACTS: Raul Sesbreño made a money market placement in the amount of P300,000.00 with the
Philippine Underwriters Finance Corporation ("Philfinance") with a term of thirty-two (32) days.
Philfinance issued to Sesbreno the Certificate of Confirmation of Sale of a Delta Motor Corporation
Promissory Note, the Certificate of Securities Delivery Receipt indicating the sale of the note with a
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. 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 the non-negotiability of a promissory note prevents its assignment.

RULING: No. 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. Here, the Court found
nothing in his "Letter of Agreement" which can be reasonably construed as a prohibition upon
Philfinance assigning or transferring all or part of the promissory note, before the maturity thereof.