GR 97753, 10 August 1992

FACTS
On various dates, Security Bank and Trust Co. (SEBTC), through its Sucat branch,
issued 280 certificates of time deposit (CTD) in favor of one Angel dela Cruz who
deposited with the bank the aggregate amount of P1.12 million. Anger de la 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.
De la Cruz was able to obtain a loan of P875,000 from the bank, and in turn, he
executed a notarized Deed of Assignment of Time Deposit in favor of the bank.
Thereafter, Caltex presented for verification the CTDs (which were declared lost by
de la Cruz) with the bank. Caltex formally informed the bank of its possession of the
CTDs and its decision to preterminate the same. The bank rejected Caltex’ claim and
demand, after Caltex failed to furnish copy of the requested documents evidencing the
guarantee agreement, etc. In 1983, de la Cruz’ loan matured and the bank set-off and
applied the time deposits as payment for the loan. Caltex filed the complaint, but
which was dismissed.
ISSUE [1]:
1) Whether the Certificates of Time Deposit (CTDs) are negotiable instruments.

Ruling:
In resolving the the first issue, the Supreme Courts noted that the CTDs in question
meet the requirements of the law for negotiability. Contrary to the lower court’s
findings, the CTDs are negotiable instruments (Section 1). Negotiability or non-
negotiability of an instrument is determined from the writing, i.e. from the face of the
instrument itself. The documents provided that the amounts deposited shall be
repayable to the depositor. The amounts are to be repayable to the bearer of the
documents, i.e. whosoever may be the bearer at the time of presentment.

G.R. No. 88866 February 18, 1991

METROPOLITAN BANK & TRUST COMPANY, petitioner,
vs.
COURT OF APPEALS

FACTS:
Eduardo Gomez opened an account with Golden Savings and Loan Association and
deposited over a period of two months 38 treasury warrants with a total value of
P1,755,228.37. All these warrants were subsequently indorsed by Gloria Castillo as
Cashier of Golden Savings and deposited to its savings account in the Metrobank
branch in Calapan, Mindoro. They were then sent for clearing by the branch office to
the principal office of Metrobank, which forwarded them to the Bureau of Treasury
for special clearing. Before they were cleared, petitioner decided to allow Golden
Savings to withdraw from the proceeds of the warrants. Golden Savings in turn
subsequently allowed Gomez to make withdrawals from his own
account. Subsequently, Metrobank informed Golden Savings that 32 of the warrants
had been dishonored by the Bureau of Treasury and demanded the refund by Golden
Savings of the amount it had previously withdrawn, to make up the deficit in its
account. Metrobank contends that by indorsing the warrants in general, Golden
Savings assumed that they were "genuine and in all respects what they purport to be,"
in accordance with Section 66 of the Negotiable Instruments Law.

ISSUE:
Whether petitioner can hold Golden Savings liable as an indorser of the treasury
warrants based on the predication that the treasury warrants involved in this case are
negotiable instruments.

RULING:
Clearly stamped on the face of the treasury warrants is the word "non-negotiable." It
is also indicated that they are payable from a particular fund, to wit, Fund 501. The
indication of Fund 501 as the source of the payment to be made on the treasury
warrants makes the order or promise to pay "not unconditional" and the warrants
themselves non-negotiable. Petitioner cannot hold Golden Savings liable as an
indorser under Section 66 of the NIL for the simple reason that this law is not
applicable to the non-negotiable treasury warrants.