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Case Number 2

G.R. No. 97753. August 10, 1992

Topic: Negotiability

Defendant bank issued 280 certificates of time deposit (CTD) in favor of Angela Dela Cruz upon
deposit in the amount of P1,120,000. A sample text of the CTD is as follows: This is to certify
that BEARER has deposited in this Bank the sum of Four Thousand Only... Dela Cruz delivered
the CTD to petitioner for the purchase of fuel products. Thereafter, he informed the branch
manager that the CTD was lost based on her affidavit, which the branch manager accepted and
issued a replacement. Thereafter, Dela Cruz negotiated and obtained a loan from the bank in the
amount of P875,00 and executed a notarized Deed of Assignment of time deposit. In 1982, Credit
Manager of Caltex went to the defendant bank's and presented for verification the CTDs declared
lost by Angel Dela Cruz alleging that the same were delivered to herein plaintiff "as security for
purchases made with Caltex Philippines, Inc." by said depositor. However, this was rejected by
the defendant. When the loan of Dela Cruz fell due, the latter set-off and applied the time deposits
in question to the payment of the matured loan. However, the plaintiff filed the instant complaint,
praying that defendant bank be ordered to pay it the aggregate value of the certificates of time
deposit of P1,120,000.00 plus accrued interest and damages as well as attorney's fees. On
appeal, the CA held in favor of defendant bank on the basis that CTD was not a negotiable
instrument, hence, Caltex cannot be a holder in due course.

Whether or not the Certificate of Time Deposit (CTD) is a negotiable instrument.

The Certificate of Time Deposit is a negotiable instrument. The negotiability or non-negotiability
of an instrument is determined from the writing, that is, from the face of the instrument itself. What
the parties meant must be determined by what they said. However, Petitioner's insistence that
the CTDs were negotiated to it begs the question. Under the Negotiable Instruments Law, an
instrument is negotiated when it is transferred from one person to another in such a manner as to
constitute the transferee the holder thereof, and a holder may be the payee or indorsee of a bill
or note, who is in possession of it, or the bearer thereof. In the present case, however, there was
no negotiation in the sense of a transfer of the legal title to the CTDs in favor of petitioner in which
situation, for obvious reasons, mere delivery of the bearer CTDs would have sufficed.