Facts:
The defendant, Security Bank and
Trust Company, a commercial banking institution issued 280 Certificate of time
deposit (CTDs) in favor of Angel Dela Cruz who deposited with the Security Bank
the total amount of P1.2 Million. Angel delivered the CTDs to Caltex, in
connection with his purchased of fuel products from the latter.
Subsequently, Angel informed the
bank that he lost all the CTDs, and thus executed an affidavit of loss to
facilitate the issuance of the replacement CTDs. Angel negotiated and obtained
a loan from Security Bank in the amount of P875, 000 and executed a notarized
Deed of Assignment of Time Deposit.
When
Caltex presented said CTDs for verification with the bank and formally informed
the bank of its decision to pre-terminate the same, the bank rejected Caltex’
claim and demand as Caltex failed to furnish copies of certain requested
documents. In 1983, dela Cruz’ loan matured and the bank set-off and
applied the time deposits as payment for the loan. Caltex filed a complaint
which was dismissed on the ground that the subject certificates of deposit are
non-negotiable.
Issue:
1.
Whether
or not the subject CTDs are negotiable.
2.
Whether
or not petitioner is a holder in due course of the CTDs.
Ruling:
1.
Yes.
The CTDs in question are
negotiable instruments as they meet the requirements of the law for
negotiability as provided for in Section 1 of the Negotiable Instruments
Law. The documents provide that the amounts deposited shall be repayable
to the depositor. And according to the document, the depositor is the
"bearer." The documents do not say that the depositor is Angel de la
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. However,
petitioner cannot recover on the CTDs. Although the CTDs are bearer
instruments, a valid negotiation thereof for the true purpose and agreement
between it and dela Cruz, as ultimately ascertained, requires both delivery and
indorsement. In this case, there was no indorsement as the CTDs
were delivered not as payment but only as a security for dela Cruz' fuel
purchases.
Section 1 Act No. 2031, otherwise known as
the Negotiable Instruments Law, enumerates the requisites for an instrument to
become negotiable, viz:
(a) It must be in writing and signed by the maker or
drawer;
(b) Must contain an unconditional promise or order to
pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or
determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he
must be named or otherwise indicated therein with reasonable certainty.
2.
No.
The records reveal that Angel de la Cruz,
whom petitioner chose not to implead in this suit for reasons of its own,
delivered the CTDs amounting to P1,120,000.00 to petitioner without informing
respondent bank thereof at any time. Unfortunately for petitioner, although the
CTDs are bearer instruments, a valid negotiation thereof for the true purpose
and agreement between it and De la Cruz, as ultimately ascertained, requires
both delivery and indorsement. For, although petitioner seeks to deflect this
fact, the CTDs were in reality delivered to it as a security for De la Cruz'
purchases of its fuel products.
Any doubt as to whether the CTDs were
delivered as payment for the fuel products or as a security has been dissipated
and resolved in favor of the latter by petitioner's own authorized and
responsible representative himself.
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