NEGOTIABLE INSTRUMENTS LAW
Sec. 1-13, 126 and 184
Caltex (Philippines), Inc. v. CA, 1992
Private respondent, issued 280 certificates of time deposit (CTDs) in favor of oneAngel dela Cruz who deposited with herein private respondent the aggregate amount of P1,120,000.00.
A sample of text of the CTDs is as follows:
“This is to Certify that BEARER has
deposited in this Bank the sum of PESOS: FOUR SECURITY BANK THOUSAND ONLY. SUCAT OFFICE P4,000 & 00 CTS Pesos, Philippine Currency, repayable to said depositor 731 daysafter date, upon presentation and surrender of this certificate, with interest at the rate of
16% per cent per annum.”
Dela Cruz delivered the said CTDs to herein petitioner in connection with hispurchase of fuel products from the latter.
Thereafter Dela Cruz informed the Branch Manager of private respondent, that helost all the certificates of time deposit in dispute and on the basis of an affidavit of loss, 280replacement CTDs were issued in favor of said depositor.
Dela Cruz then negotiated and obtained a loan from respondent bank in the amountof P875,000.00 and he executed a notarized Deed of Assignment of Time Deposit whichstated, that he surrenders to private respondent full control of the time deposits and furtherauthorizes said bank to pre-terminate, set-off and 'apply the said time deposits to thepayment of whatever amount or amounts may be due' on the loan upon its maturity
Private respondent then received a letter from petitioner formally informing it of itsdecision to preterminate the CTDs in its possession alleging that they were delivered byDela Cruz as security for purchases made with Petitioner.
Private respondent rejected the petitioners demand and claim for payment of thevalue of the CTDs.
When the loan of Dela Cruz matured and fell due, the private respondent set-off andapplied the time deposits in question to the payment of the matured loan.
Petitioner filed the instant complaint.
After trial, the RTC rendered its decision dismissing the complaint.
On appeal, respondent court affirmed the lower court's dismissal of the complaintstating that the CTDs are payable, not to whoever purports to be the `bearer' but only tothe specified person indicated therein, the depositor. In effect, the appellee bankacknowledges its depositor Angel dela Cruz as the person who made the deposit and furtherengages itself to pay said depositor the amount indicated thereon at the stipulated date."
Hence this petition.Issue:Whether the CTDs in question are negotiable instruments.Ruling:Yes. The CTDs in question undoubtedly meet the requirements of the law for negotiabilityincluding Section 1(d) of the NIL. The accepted rule is that the negotiability or non-negotiability of an instrument is determined from the writing, that is, from the face of theinstrument itself. Contrary to what respondent court held, the CTDs are negotiableinstruments. The documents provide that the amounts deposited shall be repayable to the