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    212 Scra 448 RGFM

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    Rhuejane Gay Maquiling
    1. Caltex (Philippines), Inc. sued Security Bank and Trust Company over 280 Certificate of Time Deposits (CTDs) issued to Angel Dela Cruz who deposited P1.2 million and delivered the CTDs to Caltex for fuel purchases. 2. Angel later claimed the CTDs were lost and got a loan from Security Bank by assigning the CTDs, then the bank refused to honor the CTDs when Caltex tried to redeem them. 3. The court ruled the CTDs were negotiable instruments but that Caltex was not a holder in due course because the CTDs were delivered as security for purchases, not payment, so Caltex could not recover from the bank.

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    212 Scra 448 RGFM

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    1. Caltex (Philippines), Inc. sued Security Bank and Trust Company over 280 Certificate of Time Deposits (CTDs) issued to Angel Dela Cruz who deposited P1.2 million and delivered the CTDs to Caltex for fuel purchases. 2. Angel later claimed the CTDs were lost and got a loan from Security Bank by assigning the CTDs, then the bank refused to honor the CTDs when Caltex tried to redeem them. 3. The court ruled the CTDs were negotiable instruments but that Caltex was not a holder in due course because the CTDs were delivered as security for purchases, not payment, so Caltex could not recover from the bank.

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    1. Caltex (Philippines), Inc. sued Security Bank and Trust Company over 280 Certificate of Time Deposits (CTDs) issued to Angel Dela Cruz who deposited P1.2 million and delivered the CTDs to Caltex for fuel purchases. 2. Angel later claimed the CTDs were lost and got a loan from Security Bank by assigning the CTDs, then the bank refused to honor the CTDs when Caltex tried to redeem them. 3. The court ruled the CTDs were negotiable instruments but that Caltex was not a holder in due course because the CTDs were delivered as security for purchases, not payment, so Caltex could not recover from the bank.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    119 views2 pages

    212 Scra 448 RGFM

    Uploaded by

    Rhuejane Gay Maquiling
    1. Caltex (Philippines), Inc. sued Security Bank and Trust Company over 280 Certificate of Time Deposits (CTDs) issued to Angel Dela Cruz who deposited P1.2 million and delivered the CTDs to Caltex for fuel purchases. 2. Angel later claimed the CTDs were lost and got a loan from Security Bank by assigning the CTDs, then the bank refused to honor the CTDs when Caltex tried to redeem them. 3. The court ruled the CTDs were negotiable instruments but that Caltex was not a holder in due course because the CTDs were delivered as security for purchases, not payment, so Caltex could not recover from the bank.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Caltex (Philippines), Inc. vs Court of Appeals 212 SCRA 448.

    August 10,
    1992

    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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