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Traders Royal Bank v. Court of Appeals [G.R. No. 93397. March 3, 1997]

30 Jul

FACTS

Filriters Guaranty Assurance Corporation (Filriters) executed a “Detached Assignment” . . ., unto Philippine Underwriters Finance Corporation (Philfinance) all its rights and title to Central Bank Certificates of Indebtedness.

 

ISSUE

Whether or not the Certificates of Indebtedness may be negotiated.

 

RULING

NO. The instrument is not negotiable but assignable. 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 touchtone 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.

 

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