269 SCRA 15


Filriters through a Detached Agreement   transferred   ownership to Philfinance a Central Bank Certificate of Indebtedness.  It was only through one of its  officers by which the CBCI was conveyed without authorization from  the  company.    Petitioner  and  Philfinance  later  entered  into  a Repurchase   agreement,   on   which   petitioner   bought   the   CBCI   from Philfinance.  The latter agreed to repurchase the CBCI but failed to do so. When the petitioner tried to have it registered in its name in the CB, the latter didn't want to recognize the transfer.  


The  CBCI  is  not  a  negotiable  instrument. The  instrument  provides  for  a promise to pay the registered owner Filriters.  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 negotiation.
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 specified 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  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  CB. Giving  more  credence  to rule that there was no valid transfer or assignment to petitioner.