Sesbreno vs CA

Sesbreno vs. Court of Appeals

GR 89252, 24 May 1993

FACTS: Petitioner 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, 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 March 13, 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 which was issued on April 10, 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. Delta Motors contents that said promissory note was not intended to be negotiated or otherwise transferred by Philfinance as manifested by the word "non-negotiable" stamped across the face of the Note.

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

RULING: 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 non-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. The subject promissory note, 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 such note, in whole or in part.

**A non-negotiable instrument may not be negotiated but may be assigned or transferred, absent

an express prohibition against assignment or transfer written on the face of the instrument.

Definition of 'Money Market'

A segment of the financial market in which financial instruments with high liquidity

and very short maturities are traded. The money market is used by participants as

a means for borrowing and lending in the short term, from several days to just

under a year. Money market securities consist of negotiable certificates of deposit

(CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal

notes, federal funds and repurchase agreements (repos).

Investopedia explains 'Money Market'

The money market is used by a wide array of participants, from a company raising

money by selling commercial paper into the market to an investor purchasing CDs

as a safe place to park money in the short term. The money market is typically

seen as a safe place to put money due the highly liquid nature of the securities and

short maturities, but there are risks in the market that any investor needs to be

aware of including the risk of default on securities such as commercial paper.