CALTEX (PHILIPPINES), INC., vs. COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY.
- G.R. Number: G.R. No. 97753
- Promulgated: 1992-08-10
- Ponente: Regalado, J.
Doctrine
An instrument satisfying the requisites of Act No. 2031 (Negotiable Instruments Law) is a negotiable instrument.
Negotiation of bearer instruments for the parties' true purposes generally requires both delivery and indorsement; mere delivery as security does not effect a valid negotiation in favor of the recipient.
The use of 'may' in statutes confers discretion; Articles 548–558 of the Code of Commerce grant remedial recourse to dispossessed holders but do not make issuance of duplicates mandatory absent compliance.
Facts
Petitioner seeks review of CA decision of 8 March 1991 affirming with modifications the RTC dismissal of petitioner's complaint against respondent bank in CA-G.R. CV No. 23615.
The controversy concerns certain Certificate of Time Deposit (CTDs) alleged to be bearer negotiable instruments and worth P1,120,000.00, which were delivered by Angel de la Cruz to petitioner.
Respondent bank asserted rights over the CTDs and complied with statutory requirements concerning replacement of lost negotiable instruments.
Petitioner did not implead Angel de la Cruz and allegedly treated the CTDs as payment, while respondent contends they were delivered as security.
Issues
Whether or not the CTDs as worded are negotiable instruments.
Whether or not defendant could legally apply the amount covered by the CTDs against the depositor's loan by virtue of the assignment (Annex "C").
Whether or not there was legal compensation or set off involving the amount covered by the CTDs and the depositor's outstanding account with defendant, if any.
Whether or not plaintiff is entitled to the proceeds of the CTDs.
Ruling
The petition is DENIED and the appealed decision is AFFIRMED.
The Court held the CTDs are negotiable instruments but petitioner cannot recover because the CTDs, though bearer instruments, required both delivery and indorsement and were in fact delivered as security by De la Cruz; petitioner failed to prove its credit, lien, or requisite public instrument.
The Court further ruled that the statutory provision permitting application to court for a duplicate of a lost instrument uses 'may' and is permissive; Articles 548–558 of the Code of Commerce provide recourse but do not categorically prohibit issuance of a duplicate without strict compliance.
Keywords
G.R. No. 97753, Certificates of Time Deposit (CTDs), negotiable instruments, non-negotiable instruments, holder in due course, Affidavit of Loss, Deed of Assignment of Time Deposit, Act No. 2031 (Negotiable Instruments Law), payable to bearer, payable to order, unconditional promise or order to pay, sum certain in money, payable on demand, fixed or determinable future time, Regional Trial Court, Court of Appeals, pre-terminate, set-off, deposit, angel dela cruz