CALTEX PHIL. INC.

VS CA, 212 SCRA 448

FACTS:
Security Bank and Trust Co. issued 280 certificates of time deposit (CTD) in favor of
one Mr. Angel dela Cruz who deposited with the bank P1.12 million. Dela Cruz
delivered the CTDs to Caltex in connection with his purchase of fuel products from the
latter. Subsequently, dela Cruz informed the bank that he lost all the CTDs, and thus
executed an affidavit of loss to facilitate the issuance of the replacement CTDs. When
Caltex presented said CTDs for verification with the bank and formally informed the
bank of its decision to preterminate 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:
Whether the Certificates of Time Deposit (CTDs) are negotiable instruments.

RULING:
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.

**The accepted rule is that the negotiability or non-negotiability of an instrument is determined

from the writing, that is, from the face of the instrument itself. 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.