You are on page 1of 1

Traders Royal Bank v.

CA

[G.R. No. 93397 March 3, 1997]

Torres, J.:

Facts

- Being assailed in the petition is the nullity of the transfer of the Central Bank Certificate of Indebtedness
(CBCI) worth P500,000 from Philfinance to petitioner Traders under a repurchase agreement
- It was stated in the petition that Filwriters executed a detached agreement where it conferred all its
rights to the CBCI upon Philfinance
- FilWriters owns 90% of PhilFinance with basically the same board members
- The Detached Assignment contains the authorization that transfers the registration to the name of
PhilFinance
- Petitioner entered into a repurchase agreement to register the name of the certificate to PhilFinance
- Petitioner then entered into a repurchase agreement with PhilFinance for P500,000 where PhilFinance
delivered to the petitioner a CBCI worth the same. PhilFinance then agreed to repurchase the CBCI.
However, if failed to repurchase the CBCI due to insufficient funds
- PhilFinance then executed a detachment assignment in favor of the petitioner which transfers all its
rights with the CBCI to the latter
- Petitioner presented the CBCI to the Securities Servicing Department of respondent Central Bank and
requested the latter to effect the registration to its name
- Respondent CB failed and refused to register the CBCI in the name of Traders Royal
- The provisions governing the transfer of the CBCI were complied with the petitioner's request for
registration.
- Petitioner then filed a case in court to compel CB to register the CBCI in its name.
- FilWriters interjected stating that the CBCI is part of the reserve investment against liabilities required of
respondent as an insurance company under the Insurance Code and that the transfer was made by
Filriters SVP for Treasury Banaria without a Board resolution and without a consideration, hence
making it void.
- The RTC held that the assignment of the CBCI by PhilFinance to Traders void
- In the appellate court, petitioners argue that the CBCI is a negotiable instrument, and acquiring the
certificate from Philfinance as a holder in due course without defect, it may enforce payment of the
instrument against all parties liable thereon
- CA said that the CBCI is not a negotiable instrument, since the instrument clearly stated that it was
payable to Filriters, and that the certificate lacked the words of negotiability which serve as an
expression of consent that the instrument may be transferred by negotiation.

Issue:

- Is the CBCI assigned to Petitioner by PhilFinance a negotiable instrument?

Held:

- No, the subject CBCI is not a negotiable instrument in the absence of words of negotiability within the
meaning of the negotiable instruments law (Act 2031).
- The transfer of the instrument from Philfinance to TRB was merely an assignment, and is not governed
by the negotiable instruments law.
- Petitioner argues that the transfer of the CBCI to TRB must be upheld, as the respondent Filriters and
Philfinance, have used their corporate fiction to defraud TRB into purchasing the subject CBCI, which
purchase now is refused registration by the Central Bank. The corporate separateness between Filriters
and Philfinance remains, despite the petitioners insistence on the contrary. There is no proof that
respondents defrauded TRB into purchasing the CBCI, hence, the piercing the corporate veil doctrine
does not apply

You might also like