NEGOTIOABLE INSTRUMENTS CASE DIGESTS BY C.

GUMPIC
CALTEX PHILIPPINES, INC. VS COURT OF APPEALS; SECURITY BANK AND TRUST COMPANY
G.R. No. 97753

August 10, 1992

212 SCRA 448

FACTS:
Respondent bank issued to one Angel dela Cruz, certificates of time deposits (CTD) which the
latter delivered to herein plaintiff to guarantee his purchases of fuel products. After some time,
replacements of CTDs were issued to dela Cruz upon informing the respondent bank that he lost
all CTDs issued to him previously. Dela Cruz then negotiated and obtained a loan from defendant
bank and executed a Notarized Deed of Assignment of Time Deposit indicating that said bank
shall have full control of the CTDs for the payment of whatever amount may be due on the loan
upon its maturity.
After some time, plaintiff went to defendant bank to demand and claim said amounts indicated in
the CTDs which the defendant apparently rejected. Upon maturity of dela Cruzs loan, the
defendant bank applied said CTDs in question to the payment of the matured loan. This
prompted plaintiff to file a complaint praying that defendant bank be ordered to pay the value of
said CTDs.
ISSUE/S:
Was there negotiation in the sense of a transfer of legal title to the CTDs in favour of plaintiff so
as to give the latter, being the holder thereof, the right to claim said amount?
RULING:
No, there was no negotiation because the delivery thereof only as security for the purchases of
Angelo dela Cruz could only constitute petitioner as a holder for value by reason of his lien. As
such holder of collateral security, he would be a pledgee but the requirements therefor and the
effects thereof, not being provided for by the Negotiable Instruments Law, shall be governed by
the Civil Code provisions on pledge of incorporeal rights. As holder of collateral security, he
would be a pledgee but the requirements therefor and the effects thereof, not being provided for
by the Negotiable Instruments Law, shall be governed by the Civil Code provisions on pledge of
incorporeal rights which under said law, provides that said pledge should be written in a public
instrument for it to take effect against third persons. The plaintiff, however, failed to show any
evidence or instrument establishing such contract of pledge or guarantee.

NEGOTIOABLE INSTRUMENTS CASE DIGESTS BY C. GUMPIC