Caltex vs CA Case Digest

Caltex, Inc., petitioner

vs.
Court of Appeals, and Security Bank and Trust Company, respondent.
10 August 1992, G.R. No. 97753

FACTS:

[[[[Certificate of deposit
This is to Certify that BEARER has deposited in this Bank the sum of PESOS: . . . ]]]]

Security bank issued Certificates of Time Deposits to Angel dela Cruz. The same were
given by Dela Cruz to Caltex 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 trail court ruled that the subject certificates of deposit were not negotiable instruments
and that the petitioner did not become their holder in due course.

ISSUES:

Whether or not the certificates of deposit are negotiable instruments.

RULING:

The certifcates of deposit are negotiable instruments.

The requisites for an instrument to become negotiable are;

 ...

(4) Must be payable to order or to bearer . . .

Here, the documents provide that the amounts deposited shall be repayable to the depositor,
and according to the documents, the depositor is the bearer. The documents do not say that the
depositor is Angel de a Cruz and that the amounts deposited are repayable specifically to him.
Rather, the amounts are to be repayable to the bearer of the documents or, for that matter,
whosoever may be the bearer at the time of presentment. If the bank intended to pay Angel de la
Cruz only, it could have expressed in clear and catergorical terms in the documents, instead of
having the word “Bearer”.

However, the petitioner can still not recover the certificates of time deposit. This is because
that the respondent bank was not informed of the delivery of the certificates of deposit from Angel
dela Cruz to petitioner. A valid negotiation regarding the CTDs for the true purpose an agreement
between petitioner and Dela Cruz requires both delivery and indorsement.

If the CTDS were indeed delivered as payment and not as security, the petitioner’s credit
manager could have easly said so instead of using the words “to guarantee”.