Case Summary (G.R. No. 97753)

Case Background

• Date: August 10, 1992
• G.R. No.: 97753
• Petitioner: Caltex (Philippines), Inc.
• Respondents: Court of Appeals and Security Bank and Trust Company

This case involves a petition for review on certiorari that challenges the decision of the Court of Appeals affirming the dismissal of Caltex's complaint against Security Bank regarding lost certificates of time deposit (CTDs).

Certificates of Time Deposit (CTDs)

• Definition: CTDs are negotiable instruments issued by banks certifying that a specified amount has been deposited for a fixed term.
• Key Details:
  • Issued to Angel dela Cruz totaling P1,120,000.
  • CTDs included specific serial numbers and amounts.

Loss of CTDs

• Incident: Angel dela Cruz reported the loss of CTDs in March 1982.
• Procedure for Replacement:
  • Required submission of a notarized Affidavit of Loss.
  • Replacement CTDs were issued based on this affidavit.

Loan Transaction

• Loan Amount: P875,000 obtained by Angel dela Cruz from Security Bank on March 25, 1982.
• Assignment of CTDs: Dela Cruz executed a notarized Deed of Assignment allowing the bank to apply the CTDs against the loan upon maturity.

Negotiability of CTDs

• Legal Issue: The Court of Appeals ruled the CTDs were non-negotiable, while the petitioner argued they were negotiable instruments.
• Legal Principle: Under Section 1 of Act No. 2031 (Negotiable Instruments Law), for an instrument to be negotiable, it must:
  • Be in writing and signed.
  • Contain an unconditional promise to pay a sum certain.
  • Be payable on demand or at a fixed date.
  • Be payable to order or bearer.
  • Name the drawee with reasonable certainty.
• Finding: The Supreme Court disagreed with the lower court's conclusion that the instruments were non-negotiable, citing that they met all necessary requirements for negotiability.

Delivery and Indorsement Requirements

• Legal Requirement: To negotiate a bearer instrument, both delivery and indorsement are essential.
• Petitioner's Position: Claimed CTDs were delivered as payment for fuel but were ultimately determined to be collateral for a loan.
• Consequences: The Supreme Court held that Caltex's failure to prove indorsement or provide a pledge agreement rendered their claim ineffective against Security Bank.

Respondent Bank’s Rights

• Set-Off: Security Bank applied the CTDs to the outstanding loan of dela Cruz, asserting its right due to the assignment made.
• Legal Compliance: The bank's assignment of the CTDs was executed in a public instrument, thus valid against third parties.

Negligence Claims

• Issue: Caltex raised arguments regarding the bank's handling of lost instruments.
• Court Ruling: The Supreme Court upheld that negligence was not included among the issues raised in lower courts, thus could not be addressed on appeal.
• Legal Principle: Issues not raised during trial cannot be introduced for the first time on appeal (principle of estoppel).

Key Takeaways

• The Supreme Court affirmed the lower courts' decisions, emphasizing:
  • The negotiability of CTDs issued to Angel dela Cruz.
  • The necessity of both delivery and indorsement for valid negotiation of bearer instruments.
  • Security Bank's rights to apply the CTDs against the loan.
  • The importance of raising all relevant issues during trial to avoid being barred from arguing t

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Case Syllabus (G.R. No. 97753)

Case Overview

• This case revolves around a petition for review on certiorari filed by Caltex (Philippines), Inc. challenging the decision of the Court of Appeals, which affirmed the dismissal of their complaint against Security Bank and Trust Company regarding certificates of time deposit (CTDs).
• The dispute primarily concerns the nature of the CTDs—whether they are negotiable instruments and the implications of their classification on the rights of the parties involved.

Background Facts

• Angel dela Cruz deposited P1,120,000.00 with Security Bank through 280 CTDs on various dates in February and March 1982.
• These CTDs were subsequently delivered to Caltex by Angel dela Cruz in connection with his fuel purchases.
• In March 1982, Angel dela Cruz reported the loss of these CTDs and executed an Affidavit of Loss, following which Security Bank issued replacement CTDs.
• On March 25, 1982, dela Cruz borrowed P875,000.00 from Security Bank and assigned the CTDs to the bank, allowing for set-off against any amounts due on the loan.
• In late 1982, Caltex informed the bank of its possession of the CTDs and its intention to pre-terminate them, which led to a series of communications between the parties.

Legal Proceedings and Lower Court Decisions

• Caltex filed a complaint seeking the value of the CTDs, plus interest, damages, and attorney’s fees after the bank rejected its claim.
• The Regional Trial Court dismissed the complaint, leading to Caltex's appeal to the Court of Appeals.
• The appellate court affirmed the lower court’s dismissal, leading to the present petition.

Central Issues

• The case presented several key issues for determination:
  • Are the CTDs in question negotiable instruments?
  • Did Caltex become a holde
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