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CA- NEGOTIABLE INSTRUMENTS 212 SCRA 448 Bearer Instrument Certificate of Time Deposit Security bank issued Certificates of Time Deposits to Angel dela Cruz. The same were given by Dela Cruz to petitioner in connection to his purchase of fuel products of the latter. On a later date, Dela Cruz approached the bank manager, communicated the loss of the certificates and requested for a reissuance. Upon compliance with some formal requirements, he was issued replacements. Thereafter, he secured a loan from the bank where he assigned the certificates as security. Here comes the petitioner, averred that the certificates were not actually lost but were given as security for payment for fuel purchases. The bank demanded some proof of the agreement but the petitioner failed to comply. The loan matured and the time deposits were terminated and then applied to the payment of the loan. Petitioner demands the payment of the certificates but to no avail. The said CTDs are couched in the following manner: This is to Certify that B E A R E R has deposited in this Bank the sum of PESOS: FOUR THOUSAND ONLY, SECURITY BANK SUCAT OFFICE P4,000 & 00 CTS Pesos, Philippine Currency, repayable to said depositor 731 days. after date, upon presentation and surrender of this certificate, with interest at the rate of 16% per cent per annum. (Sgd. Illegible) (Sgd. Illegible)

ISSUE: Whether or not the certificates of time deposit are negotiable. HELD: Yes. The CTDs indicate that they are payable to the bearer; that there is an implication that the depositor is the bearer but as to who the depositor is, no one knows. It does not say on its face that the depositor is Angel de la Cruz. If it was really the intention of respondent bank to pay the amount to Angel de la Cruz only, it could have with facility so expressed that fact in clear and categorical terms in the documents, instead of having the word BEARER stamped on the space provided for the name of the depositor in each CTD. On the wordings of the documents, therefore, the amounts deposited are repayable to whoever may be the bearer thereof. Thus, de la Cruz is the depositor insofar as the bank is concerned, but obviously other parties not privy to the transaction between them would not be in a position to know that the depositor is not the bearer stated in the CTDs. However, Caltex may not encash the CTDs because although the CTDs are bearer instruments, a valid negotiation thereof for the true purpose and agreement between Caltex and De la Cruz, requires both delivery and indorsement. As discerned from the testimony of Caltex representative, the CTDs were delivered to them by de la Cruz merely for guarantee or security and not as payment.

Metropolitan Bank & Trust Company vs. Court of Appeals G.R. No. 88866 February 18, 1991 -negotiability

FACTS: Eduardo Gomez opened an account with Golden Savings and Loan Association and deposited over a period of two months 38 treasury warrants with a total value of P1,755,228.37. All these warrants were subsequently indorsed by Gloria Castillo as Cashier of Golden Savings and deposited to its savings account in the Metrobank branch in Calapan, Mindoro. They were then sent for clearing by the branch office to the principal office of Metrobank, which forwarded them to the Bureau of Treasury for special clearing. Before they were cleared, petitioner decided to allow Golden Savings to withdraw from the proceeds of the warrants. Golden Savings in turn subsequently allowed Gomez to make withdrawals from his own account. Subsequently, Metrobank informed Golden Savings that 32 of the warrants had been dishonored by the Bureau of Treasury and demanded the refund by Golden Savings of the amount it had previously withdrawn, to make up the deficit in its account. Metrobank contends that by indorsing the warrants in general, Golden Savings assumed that they were "genuine and in all respects what they purport to be," in accordance with Section 66 of the Negotiable Instruments Law. ISSUE: Whether petitioner can hold Golden Savings liable as an indorser of the treasury warrants based on the predication that the treasury warrants involved in this case are negotiable instruments. RULING: Clearly stamped on the face of the treasury warrants is the word "non-negotiable." It is also indicated that they are payable from a particular fund, to wit, Fund 501. The indication of Fund 501 as the source of the payment to be made on the treasury warrants makes the order or promise to pay "not unconditional" and the warrants themselves non-negotiable. Petitioner cannot hold Golden Savings liable as an indorser under Section 66 of the NIL for the simple reason that this law is not applicable to the non-negotiable treasury warrants. The indorsement was made for the purpose of merely depositing them with Metrobank for clearing. It was in fact Metrobank which stamped on the back of the warrants: All prior indorsements and/or lack of endorsements guaranteed