Raul Sesbreño v. Hon.

Court of Appeals, Delta Motors Corporation and

Pilipinas Bank

G.R. No. 89252, May 24, 1993

Facts:

Petition Raul Sesbreño made a money market placement with the Philfinance
in the amount of Php 300,000. Philfinance issued various documents to
petitioner, one of which are post-dated checks payable on March 13, 1981.
On that date, petitioner sought to encash these post-dated checks. However,
these checks were dishonored. Another one of these documents is the DMC
PN. Petitioner found out that the security for it had been issued with
Philfinance as “payee and Delta Motors Corporation as “maker” and on face of
the promissory note was stamped “NON-NEGOTIABLE.”

Pilipinas Bank, private respondent, did not deliver the Note, nor any
certificate of participation in respect thereof, to petitioner. Pilipinas allegedly
referred all of petitioner’s demand letters to Philfinance for written
instructions. Philfinance never did provide the appropriate instructions. Since
petitioner failed to collect his investment, he filed an action for damages with
the RTC against Delta Motors.

The RTC dismissed the complaint and counterclaims for lack of merit. The
Courts of appeals denied the appeal and confirmed the decision of the RTC. It
held that petitioner acquired no rights against Delta in respect of the Delta
promissory note (DMC PN No. 2731); nor could he have acquired any right
over DMC PN No. 2731 as the same is non-negotiable.’
Issue:

 
1.   Whether ‘DMC PN No. 2731 is negotiable or non-negotiable, and can
petitioner acquire the rights thereof

SC Ruling:

 
1.   DMC PN No. 2731 is a non-negotiable instrument. However,
petitioner can still acquire rights over it since the mark “non-
negotiable” does not include that it is “non-assignable.”
 
A negotiable instrument may be negotiated either by indorsement
thereof coupled with delivery, or by delivery alone where the negotiable
instrument is in bearer form. a negotiable instrument may, however,
instead of being negotiated, also be assigned or transferred.
 
A non-negotiable instrument may not be negotiated; but it may be
assigned or transferred, absent an express prohibition against
assignment or transfer written in the face of the instrument. The sole
effect of stamping the words “non-negotiable” on an instrument is to
exempt the instrument from the statutory provisions relative thereto.