G.R. No.

97753 August 10, 1992

CALTEX (PHILIPPINES), INC., petitioner,

vs.

COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY,

respondents.

FACTS:

These facts outline the sequence of events and transactions leading to the
legal dispute between Caltex (Philippines), Inc. and Security Bank regarding the
ownership and payment of the certificates of time deposit. Herein, the Security Bank
issued 280 certificates of time deposit (CTDs) to Angel dela Cruz, with a total value of
P1,120,000. These CTDs were issued on various dates in 1982. Angel dela Cruz later
delivered these CTDs to Caltex (Philippines), Inc. as part of a transaction related to fuel
products.In March 1982, Angel dela Cruz reported the loss of all the CTDs to the bank
and executed an Affidavit of Loss, as per the bank's procedures. Based on the Affidavit
of Loss, the bank issued replacement CTDs to Angel dela Cruz. In November 1982,
Caltex informed the bank that they possessed the CTDs and wanted to pre-terminate
them.The bank requested documents related to the guarantee agreement with Angel dela
Cruz, but Caltex did not provide them. In April 1983, the bank set-off and applied the
CTDs' value against Angel dela Cruz's matured loan. Caltex subsequently filed a
complaint demanding that the bank pay the total value of the CTDs, plus interest,
damages, and attorney's fees.

ISSUE:

Whether the CTDs were negotiable.

RULING:
Yes, the court ruled that the CTDs were negotiable instruments based on their
language, and their construction supported the idea that they were payable to the bearer,
not solely to Angel de la Cruz.

Negotiability: The court determined that the certificates of time deposit (CTDs) in
question were indeed negotiable instruments. This determination was based on the
language used in the CTDs, which indicated that they were payable to the "bearer" of the
documents rather than to a specific named individual. The court emphasized that
negotiability is determined from the face of the instrument itself, and the CTDs met the
legal requirements for negotiability.

Construction: The court also addressed the construction of the CTDs. It

emphasized that while the intention of the parties can be considered in the construction
of a bill or note, the primary focus should be on the language used in the instrument itself.
In this case, the CTDs clearly stated that they were payable to the bearer, and there was
no specific language indicating that they were only payable to Angel de la Cruz.

Therefore, the court held that the CTDs were payable to whoever held them at the
time of presentment.