G.R. No. 97753 – 212 SCRA 448 – Mercantile Law – Negotiable Instruments Law – Negotiable Instruments in General – Bearer Instrument – Certificate of Time Deposit
In 1982, Angel de la Cruz obtained certificates of time deposit (CTDs) from Security Bank and Trust Company for the former’s deposit with the said bank amounting to P1,120,000.00. 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, Philippine Currency, repayable to said depositor _____ days. after date, upon presentation and surrender of this certificate, with interest at the rate of ___ per cent per annum.
Angel de la Cruz subsequently delivered the CTDs to Caltex in connection with the purchase of fuel products from Caltex.
In March 1982, Angel de la Cruz advised Security Bank that he lost the CTDs. He executed an affidavit of loss and submitted it to the bank. The bank then issued another set of CTDs. In the same month, Angel de la Cruz acquired a loan of P875,000.00 and he used his time deposits as collateral.
In November 1982, a representative from Caltex went to Security Bank to present the CTDs (delivered by de la Cruz) for verification. Caltex advised Security Bank that de la Cruz delivered Caltex the CTDs as security for purchases he made with the latter. Security Bank refused to accept the CTDs and instead required Caltex to present documents proving the agreement made by de la Cruz with Caltex. Caltex however failed to produce said documents.
In April 1983, de la Cruz’ loan with Security bank matured and no payment was made by de la Cruz. Security Bank eventually set-off the time deposit to pay off the loan.
Caltex sued Security Bank to compel the bank to pay off the CTDs. Security Bank argued that the CTDs are not negotiable instruments even though the word “bearer” is written on their face because the word “bearer” contained therein refer to depositor and only the depositor can encash the CTDs and no one else.
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.
