GR 97753; (August, 1992) (Digest)
G.R. No. 97753 August 10, 1992
CALTEX (PHILIPPINES), INC., petitioner, vs. COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY, respondents.
FACTS
On various dates in February and March 1982, Security Bank and Trust Company, through its Sucat Branch, issued 280 Certificates of Time Deposit (CTDs) with the word “BEARER” stamped on the space for the depositor’s name, aggregating P1,120,000.00. Angel dela Cruz delivered these CTDs to Caltex (Philippines), Inc. in connection with his fuel purchases. In March 1982, dela Cruz informed the bank he lost the CTDs, executed an Affidavit of Loss, and was issued 280 replacement CTDs. On March 25, 1982, dela Cruz obtained a loan from the bank for P875,000.00 and executed a Deed of Assignment of the replacement time deposits, authorizing the bank to apply them to the loan upon maturity. In November 1982, Caltex presented the original CTDs to the bank for verification, claiming they were delivered as security for dela Cruz’s purchases, and later demanded payment. The bank requested a copy of the guarantee agreement, which Caltex did not provide. The bank rejected Caltex’s demand. In April 1983, upon maturity of dela Cruz’s loan, the bank set off and applied the time deposits to pay the loan. Caltex filed a complaint to recover the aggregate value of the CTDs.
ISSUE
1. Whether the Certificates of Time Deposit (CTDs) are negotiable instruments.
2. Whether Caltex became a holder in due course of the CTDs.
3. Whether the bank was liable to Caltex for the value of the CTDs.
RULING
1. Yes, the CTDs are negotiable instruments. The Supreme Court held that the CTDs meet all requisites under the Negotiable Instruments Law. They are in writing, signed by the bank, contain an unconditional promise to pay a sum certain in money, are payable at a determinable future time, and are payable to bearer. The face of the instruments states they are repayable to the “BEARER,” not specifically to Angel dela Cruz. The negotiability of an instrument is determined from its face, and the word “BEARER” clearly indicates it is payable to bearer.
2. No, Caltex did not become a holder in due course. The CTDs were delivered to Caltex merely as security for dela Cruz’s fuel purchases, not as an indorsement for value or in negotiation of the instruments. Caltex did not acquire the CTDs in the ordinary course of business, for value, and in good faith, as required for a holder in due course. Its possession was only as a pledgee, not a holder who acquired the instrument by negotiation.
3. No, the bank was not liable to Caltex. The bank acted within its rights. The CTDs were not indorsed, and Caltex did not provide the requested documents to prove its claim. The bank had a valid Deed of Assignment from the depositor, Angel dela Cruz, authorizing it to apply the deposits to his loan. The replacement of the lost CTDs was proper based on the Affidavit of Loss. The bank’s set-off of the deposits against the matured loan was legitimate. The petition was denied, and the Court of Appeals’ decision dismissing Caltex’s complaint was affirmed.