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    Traders Royal Bank vs. CA

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    MariaFaithFloresFelisarta
    The document summarizes a court case regarding the transfer of a Central Bank Certificate of Indebtedness. [1] Filriters Guaranty Assurance Corp transferred a CBCI to Philippine Underwriters Finance Corporation through a detached agreement signed by a Filriters officer without authorization. [2] When the CBCI matured, Philippine Underwriters failed to repurchase it and instead transferred it to Traders Royal Bank. However, the Central Bank did not recognize this transfer. [3] The court ruled that the CBCI was not a negotiable instrument as it only stated that payment was to be made to Filriters, and lacked words allowing it to be transferred. The transfer from Philippine Under

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    Traders Royal Bank vs. CA

    Uploaded by

    MariaFaithFloresFelisarta
    2K views2 pages
    The document summarizes a court case regarding the transfer of a Central Bank Certificate of Indebtedness. [1] Filriters Guaranty Assurance Corp transferred a CBCI to Philippine Underwriters Finance Corporation through a detached agreement signed by a Filriters officer without authorization. [2] When the CBCI matured, Philippine Underwriters failed to repurchase it and instead transferred it to Traders Royal Bank. However, the Central Bank did not recognize this transfer. [3] The court ruled that the CBCI was not a negotiable instrument as it only stated that payment was to be made to Filriters, and lacked words allowing it to be transferred. The transfer from Philippine Under

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    The document summarizes a court case regarding the transfer of a Central Bank Certificate of Indebtedness. [1] Filriters Guaranty Assurance Corp transferred a CBCI to Philippine Underwriters Finance Corporation through a detached agreement signed by a Filriters officer without authorization. [2] When the CBCI matured, Philippine Underwriters failed to repurchase it and instead transferred it to Traders Royal Bank. However, the Central Bank did not recognize this transfer. [3] The court ruled that the CBCI was not a negotiable instrument as it only stated that payment was to be made to Filriters, and lacked words allowing it to be transferred. The transfer from Philippine Under

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views2 pages

    Traders Royal Bank vs. CA

    Uploaded by

    MariaFaithFloresFelisarta
    The document summarizes a court case regarding the transfer of a Central Bank Certificate of Indebtedness. [1] Filriters Guaranty Assurance Corp transferred a CBCI to Philippine Underwriters Finance Corporation through a detached agreement signed by a Filriters officer without authorization. [2] When the CBCI matured, Philippine Underwriters failed to repurchase it and instead transferred it to Traders Royal Bank. However, the Central Bank did not recognize this transfer. [3] The court ruled that the CBCI was not a negotiable instrument as it only stated that payment was to be made to Filriters, and lacked words allowing it to be transferred. The transfer from Philippine Under

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Traders Royal bank vs. Court of Appeals, Filriters Guaranty Assurance Corp.

    269
    SCRA 15 (1997)

    Petition for review on certiorari is the decision of the respondent Court of


    Appeals affirming the nullity of the transfer of Central Bank Certificate of
    Indebtedness No. D891 with a face value of P500,000.00.

    Facts:

    On November 27, 1979 Guaranty Assurance Corporation (Filriters) executed


    a “detached agreement’’ whereby Filriters, as registered owner, sold transferred,
    assigned and delivered unto Philippine Underwriters Finance Corporation
    (Philfinance) all it rights and title to Central Bank Certificates of Indebtedness of
    PESOS: Five hundred thousand (P500,000.00) and having an aggregate value of
    Pesos: three million five hundred thousand pesos (P3,500,000.00).

    Through a Detached Agreement, the said CBCI was transferred to Phil


    finance by one of Filriters officers without authorization from the company itself.
    Later on, Philfinance transferred agreement. When Philfinance failed to repurchase
    back the CBCI upon its maturity, TRB tried to register it in its name but the Central
    Bank of the Philippines did not recognize the transfer.

    The action was originally filed a Petition for Mandamus under Rule 65 of the
    Rules of Court, to compel the Central Bank to register the transfer of the subject
    CBCI to petitioner TRB. RTC held that the transfer is null and void.

    Upon elevation to the CA, the appellant court ruled that the subject CBCI is
    not a negotiable instrument. Philfinance acquired no title or rights under CBCI No.
    D891 which it could assign or transfer to TRB and which the latter can register with
    the Central Bank. Thus, the transfer of the instrument from the Philfinance to TRB
    was merely an assignment and is not governed by NIL.

    ISSUE: Whether or not, CBIC is a negotiable instrument.

    RULING: No, the instrument provides for a promise to pay Filriters Guaranty
    Assurance Corporation, the registered owner. Very clearly, the instrument was only
    payable to Filriters. It lacked the words of negotiability which should have served as
    an expression of the consent that the instrument may be transferred by
    negotiations.

    The subject CBCI indicates that the same is payable to Filriters Guaranty
    Assurance Corporation, and to no one else, discounting the petitioner’s submission
    that the same is negotiable instrument, and that it is a holder in due course of the
    certificate.

    The language of negotiability which characterize a negotiable paper as a


    credit instrument is its freedom to circulate as a substitute for money. Hence,
    freedom of negotiability is the touchstone relating to the protection of holders in
    due course, and the freedom of negotiability is the foundation for the protection,
    which the law throws around a holder in due course. This freedom in negotiability is
    totally absent in a certificate of indebtedness as it merely acknowledges to pay a
    sum of money to a specific person or entity for a period of time.

    The transfer of the instrument from Philfinance to TRB was merely an


    assignment, and is not governed by the negotiable instruments law. The pertinent
    question then is-was the transfer of the CBCI from Filriters to Philfinance and
    subsequently from Philfinance to TRB, in accord with existing law, so as to entitle
    TRB to have the CBCI registered in its name with the Central Bank? Clearly shown
    in the record is the fact that Philfinance’ s title over the CBCI is defective since it
    acquired the instrument from Filriters fictitiously. Although the deed of assignment
    stated that the transfer was for value received; there was really no consideration
    involved. What happened was Philfinance merely borrowed CBCI from Filriters, a
    sister corporation. Thus, for lack of any consideration, the assignment made is a
    complete nullity. Furthermore, the transfer wasn’t in conformity with the
    regulations set by the Central Bank, giving more credence to the rule that there
    was no valid transfer or assignments to petitioner TRB.

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