PRESUMPTIONS

Sesbreno vs CA
RAUL SESBREÑO vs HON. COURT OF APPEALS, DELTA MOTORS CORPORATION AND PILIPINAS
BANK
G.R. No. 89252 May 24, 1993
FACTS:  Raul Sesbreno made a money market placement in the amount of P300,000 with PhilFinance, with
a term of 32 days. PhilFinance issued to Sesbreno the Certificate of Confirmation of Sale of a Delta Motor
Corporation Promissory Note (DMC PN No. 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.  Philfinance delivered to
petitioner Denominated Custodian Receipt (DCR).

Petitioner approached Ms. Elizabeth de Villa of private respondent Pilipinas, and handed her a demand
letter informing the bank that his placement with Philfinance in the amount reflected in the DCR had
remained unpaid and outstanding, and that he in effect was asking for the physical delivery of the underlying
promissory note. Petitioner then examined the original of the DMC PN No. 2731 and found: that the security
had been issued on 10 April 1980; that it would mature on 6 April 1981; that it had a face value of
P2,300,833.33, with the Philfinance as “payee” and private respondent Delta Motors Corporation (“Delta”) as
“maker;” and that on face of the promissory note was stamped “NON NEGOTIABLE.”  Pilipinas did not
deliver the Note, nor any certificate of participation in respect thereof, to petitioner.

Petitioner later made similar demand letters again asking private respondent Pilipinas for physical delivery of
the original of DMC PN No. 2731.

Petitioner also made a written demand upon private respondent Delta for the partial satisfaction of DMC PN
No. 2731, explaining that Philfinance, as payee thereof, had assigned to him said Note to the extent of
P307,933.33. Delta, however, denied any liability to petitioner on the promissory note.

As petitioner had failed to collect his investment and interest thereon, he filed an action for damages against
private respondents Delta and Pilipinas.

ISSUE: WON DMC PN No. 2731 marked as non-negotiable may be assigned?

HELD: YES. 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 where the negotiable
instrument is in bearer form. A negotiable instrument may, however, instead of being negotiated, also be
assigned or transferred. The legal consequences of negotiation as distinguished from assignment of a
negotiable instrument are, of course, different. A non-negotiable instrument may, obviously, 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 words “not negotiable,” stamped on the face of the bill of lading, did not destroy its assignability, but the
sole effect was to exempt the bill from the statutory provisions relative thereto, and a bill, though not
negotiable, may be transferred by assignment; the assignee taking subject to the equities between the
original parties. 12 (Emphasis added)
DMC PN No. 2731, while marked “non-negotiable,” was not at the same time stamped “non-transferable” or
“non-assignable.” It contained no stipulation which prohibited Philfinance from assigning or transferring, in
whole or in part, that Note.