Case Digest (G.R. No. 93397) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Traders Royal Bank v. Court of Appeals, Filriters Guaranty Assurance Corporation, and Central Bank of the Philippines (G.R. No. 93397, March 3, 1997), the petitioner Traders Royal Bank (TRB) sought to compel the Central Bank of the Philippines to register the transfer of Central Bank Certificate of Indebtedness (CBCI) No. D891, with a face value of ₱500,000, acquired from Philippine Underwriters Finance Corporation (Philfinance) under a Repurchase Agreement dated February 4, 1981 and a Detached Assignment dated April 27, 1981. Originally, Filriters Guaranty Assurance Corporation (Filriters) had executed a Detached Assignment on November 27, 1979 in favor of Philfinance for a block of CBCIs including No. D891, authorizing the Central Bank to transfer title on its books. When Philfinance defaulted on its obligation to repurchase CBCI No. D891 on April 27, 1981, it executed a second Detached Assignment in favor of TRB, again authorizing the Central Bank to transfer the certifica Case Digest (G.R. No. 93397) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Original issuance and initial assignment
- CBCI No. D891, 4-year, 8th series, face value P500,000, issued by Central Bank of the Philippines.
- On November 27, 1979, Filriters Guaranty Assurance Corp. (“Filriters”), as registered owner, executed a “Detached Assignment” conveying CBCI Nos. D890–D896 (aggregate P3,500,000) to Philippine Underwriters Finance Corp. (“Philfinance”), with written authorization for Central Bank to register the transfer.
- Repurchase agreement and subsequent assignment
- On February 4, 1981, Traders Royal Bank (“TRB”) paid P500,000 to Philfinance for CBCI No. D891 under a Repurchase Agreement, entitling Philfinance to repurchase at P519,361.11 on April 27, 1981.
- Philfinance defaulted on repurchase; its checks were dishonored. On April 27, 1981, Philfinance executed a Detached Assignment of CBCI No. D891 to TRB, again authorizing Central Bank registration.
- Judicial proceedings below
- TRB filed a Rule 65 mandamus petition in RTC Manila, Branch 32, to compel Central Bank to register transfer; Central Bank counterclaimed for interpleader, impleading Filriters.
- Filriters’ special defenses: CBCI was part of its required reserve investment under the Insurance Code; no board resolution or Insurance Commissioner clearance for assignments; absence of consideration; violation of CB Circular No. 769; assignment was a personal, simulated act of its officers.
- RTC Decision (April 29, 1988) declared both assignments (Filriters→Philfinance and Philfinance→TRB) null and void; ordered Central Bank to disregard transfer and pay CBCI proceeds to Filriters; awarded costs and fees.
- Court of Appeals affirmed (January 29, 1990), holding CBCI non-negotiable, assignments simulated, title defective, Philfinance acquired no rights to transfer.
- TRB elevated the case to the Supreme Court via Petition for Review on Certiorari (G.R. No. 93397).
Issues:
- Is CBCI No. D891 a negotiable instrument entitling TRB, as a holder in due course, to enforce payment free of prior defenses?
- Were the assignments from Filriters to Philfinance and from Philfinance to TRB valid under applicable law and Central Bank Circular No. 769?
- Can the corporate veil between Filriters and Philfinance be pierced to treat TRB’s payment to Philfinance as payment to Filriters?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)