G.R. No. 93397 March 3, 1997
Lessons Applicable: Requisites of negotiability to antedated and postdated instruments (Negotiable Instrument Law)
FACTS: Filriters (assigned) > Philfinance (still under the name of Filriters assigned) > Traders Royal Bank = ? (valid or not)
- November 27, 1979: Filriters Guaranty Assurance Corporation (Filriters) executed a "Detached Assignment whereby Filriters, as registered owner, sold, transferred, assigned and delivered unto Philippine Underwriters Finance Corporation (Philfinance) all its rights and title to Central Bank Certificates of Indebtedness (CBCI) of P500k and having an aggregate value of P3.5M
- The Detached Assignment contains an express authorization executed by the transferor intended to complete the assignment through the registration of the transfer in the name of PhilFinance
- February 4, 1981: Traders Royal Bank (Traders) entered into a Repurchase Agreement w/ PhilFinance whereby in consideration of the sum of P500,000.00, PhilFinance sold, transferred and delivered a CBCI w/ a face value of P500K which CBCI was among those previously acquired by PhilFinance from Filriters
- PhilFinance failed to repurchase on the agreed date of maturity, April 27, 1981, when the checks it issued in favor of petitioner were dishonored for insufficient funds
- Philfinance transferred and assigned all, its rights and title in the CBCI to Traders
- Respondent failed and refused to register the transfer as requested, and continues to do so notwithstanding petitioner's valid and just title over the same and despite repeated demands in writing
- Traders prayed for the registration by the Central Bank of the subject CBCI in its name.
- CA affirmed RTC: subsequent assignment in favor of Traders Royal Bank null and void and of no force and effect.
- Philfinance acquired no title or rights under CBCI which it could assign or transfer to Traders and which it can register with the Central Bank
- instrument is payable only to Filriters, the registered owner
ISSUE: W/N the CBCI is a negotiable instrument
HELD: NO. Petition is dismissed. CA affirmed.
- CBCI is not a negotiable instrument in the absence of words of negotiability within the meaning of the negotiable instruments law (Act 2031)
- certificate of indebtedness
- = certificates for the creation and maintenance of a permanent improvement revolving fund
- similar to a "bond"
- properly understood as acknowledgment of an obligation to pay a fixed sum of money
- usually used for the purpose of long term loans
- Philfinance merely borrowed the CBCI from Filriters, a sister corporation.
- lack of any consideration = assignment is a complete nullity
- Filriters to Philfinance did not conform to the "Rules and Regulations Governing Central Bank Certificates of Indebtedness" (Central Bank Circular No. 769, series of 1980) under which the note was issued.
- Published in the Official Gazette on November 19, 1980, Section 3 thereof provides that any assignment of registered certificates shall not be valid unless made . . . by the registered owner thereof in person or by his representative duly authorized in writing
- Alfredo O. Banaria, who signed the deed of assignment purportedly for and on behalf of Filriters, did not have the necessary written authorization from the BOD
- Traders, being a commercial bank, cannot feign ignorance of Central Bank Circular 769, and its requirements.
- The fact that Filfinance owns majority shares in Filriters is not by itself a ground to disregard the independent corporate status of Filriters.
- Traders knew that Philfinance is not registered owner of the CBCI.
- The fact that a non-owner was disposing of the registered CBCI owned by another entity was a good reason for petitioner to verify of inquire as to the title Philfinance to dispose to the CBCI.
- Nemo potest nisi quod de jure potest — no man can do anything except what he can do lawfully.