Myline Cordial

Caltex Philippines, Inc. vs. Court of Appeals
G.R. No. 97753, August 10, 1992

FACTS:
Defendant bank, Security Bank and Trust Company (SBTC) issued 280 certificates of time deposit (CTDs) in favour of Angel dela Cruz who then used the CTDs to guarantee his purchases of fuel products and delivered them to plaintiff Caltex. Sometime in March 1982, Angel dela Cruz informed the bank that he lost all the CTDs and he was advised to submit a notarized affidavit of loss. Upon receipt of the said affidavit, issued 280 replacement CTDs which he assigned and transferred to defendant bank in consideration of the loan that was granted to him. Angel dela Cruz executed a notarized Deed of Assignment of Time Deposit which stated that he surrendered to defendant bank full control of the CTDs from and after the date of assignment and authorized said bank to pre-terminate, set-off and apply the said time deposits to the payment of whatever amount or amounts may be due on the loan upon its maturity.

On the CTDs issued the word ‘bearer’ appears boldly and after the word BEARER stamped on the space provided supposedly for the name of the depositor, the words ‘has deposited’ a certain amount follows. The document further provides that the amount deposited shall be ‘repayable to said the depositor’ on the period indicated

ISSUES:
(1). Whether or not the subject CTDs are negotiable instruments.
(2) Whether or not the CTDs were negotiated to petitioner Caltex.

RULING:
(1) Yes, the CTDs are negotiable instruments. The negotiability or non negotiability of an instrument is determined from the writing that is from the face of the instrument itself.
The CTDs in question meet the requirements of the law for negotiability in accordance with Section 1 of the Negotiable Instruments Law which enumerates the requisites for an instrument to be negotiable:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrrument is addressed to a drawer, he must be named or otherwise indicated therein with reasonable certainty.

(2) Under the Negotiable Instruments Law, an instrument is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder thereof, and the holder may be the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof. In these case, there was no negotiation in the sense of a transfer of the legal title to the CTDs in favor of Caltex. Here, the delivery thereof was only a security for the purchases of Angel dela Cruz which could at the most constitute petitioner only as a holder for value by reason of his lien.