Caltex vs.

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

FACTS: Defendant Bank(Security Bank and Trust Co.) issued (280) certificates of time
deposit(CTDs) in favor of Angel dela Cruz who deposited Php 1,120,000.xx.
Dela Cruz delivered to plaintiff(Caltex) said certificates, in connection to the formers
fuel purchases.
Dela Cruz then informed the Bank that all the CTDs were lost and requested by the
Bank to procure an affidavit of loss.
After submitting the affidavit, (280) CTDs were issued in replacement.
Subsequently, dela Cruz obtained a loan from the Bank and surrendered full control of
the CTDs for whatever amount may be due on the load upon its maturity.
Petitioner presented the CTDs for verification, but was rejected by the bank.
Petitioner then filed a complaint which was dismissed on the ground that the CTDs were
non-negotiable.

ISSUE: Whether or not the CTDs were negotiable instruments.

RULING: Yes. The CTDs were negotiable as they met the requirements of the law for
negotiability as provided in Section 1 of the NIL.
The documents provide that the amounts deposited shall be payable to the depositor,
and in this case, the depositor is the bearer as indicated in the document.
The document does no say that the amounts deposited are payable to Angel dela Cruz
and that the amounts are payable specifically to him.
However, plaintiff cannot recover the CTDs because a valid negotiation would require
both delivery and endorsement. In this case, there was no endorsement as the CTDs
were not delivered as payment but as security for dela Cruz purchases.
The accepted rule is that the negotiability of an instrument is determined from the
writing thereof.

G.R. No. 74451 May 25, 1988

EQUITABLE BANKING CORPORATION vs. IAC

FACTS: Liberato Casals of Casville Enterprises, went to buy two garrett skidders
(bulldozers) from Edward J. Nell Company amounting to P970,000.00. To pay the
bulldozers, Casals agreed to open a letter of credit with the Equitable Banking
Corporation. Nell Company shipped one of the bulldozers to Casville. Casville advised
Nell Company that in order for the letter of credit to be opened, Casville needed to
deposit P427,300.00 with Equitable Bank, and that since Casville was a little short, it
requested Nell Company to pay the deposit in the meantime.

Nell Company agreed and sent a check in the amount of P427,300.00. The check read:
Pay to the EQUITABLE BANKING CORPORATION Order of A/C OF CASVILLE
ENTERPRISES
Nell Company sent the check to Casville so that it would be the latter who would send it
to Bank to cover the deposit in lieu of the letter of credit. When Casals received the
check, he went to the Bank, and the teller received the check. The teller, instead of
applying the amount as deposit in lieu of the letter of credit, credited the check to
Casvilles account with Equitable Bank. Casals later withdrew all the P427,300.00 and
appropriated it to himself.

ISSUE: Won the Bank was liable to Nell company.

HELD: No. Contrary to the findings of the Trial Court, Equitable Bank was not liable
because of its employees mistake but it was Nell Companys fault due to how the check
was worded.
The subject check was equivocal and patently ambiguous. By making the check read:
Pay to the EQUITABLE BANKING CORPORATION Order of A/C OF
CASVILLE ENTERPRISES, INC.
the payee ceased to be indicated with reasonable certainty in contravention of Section 8
of the Negotiable Instruments Law. As worded, it could be accepted as deposit to the
account of the party named after the symbols "A/C," or payable to the Bank as trustee,
or as an agent, for Casville Enterprises, Inc., with the latter being the ultimate

beneficiary. That ambiguity is to be taken contra proferentem that is, construed against
NELL who caused the ambiguity and could have also avoided it by the exercise of a
little more care. Thus, Article 1377 of the Civil Code, provides:
Art. 1377. The interpretation of obscure words or stipulations in a contract
shall not favor the party who caused the obscurity.
Yang V. CA
138074 August 15, 2003
FACTS: Cely Yang and Prem Chandiramani entered into an agreement whereby Yang
was to give 2 P2.087M PCIB managers check in the amount of P4.2 million both
payable to the order of Fernando David. Yang and Chandiramani agreed that the
difference of P26K in the exchange would be their profit to be divided equally between
them.
Yang and Chandiramani also further agreed that the Yang would secure from FEBTC a
dollar draft in the amount of US$200K, payable to PCIB FCDU Account No. 419501165-2, which Chandiramani would exchange for another dollar draft in the same
amount to be issued by Hang Seng Bank Ltd. of Hong Kong.
Yang gave the cashiers checks and dollar drafts to her business associate, Albert
Liong, to be delivered to Chandiramani by Liongs messenger, Danilo Ranigo. Ranigo
was to meet Chandiramani at 2 p.m. but Chandiramani did not appear.
Ranigo reported the alleged loss of the checks and the dollar draft to Liong. But
Chandiramani was able to get hold of the instruments and delivered the 2 cashiers
checks to Fernando. In exchange, he got US$360K from David, which he deposited in
the savings account of his wife and his mother and also deposited the FEBTC Dollar
Draft
Yang requested FEBTC and Equitable to stop payment on the instruments she believed
to be lost and oth banks complied with her request.
Yang filed against David and Chandiramani. The CA affirms the decision of the RTC in
favor of David
ISSUE: Whether or not David is a holder in due course
HELD: YES. Section 24 of the Negotiable Instruments Law creates a presumption that
every party to an instrument acquired the same for a consideration or for value

David took the step of asking the manager of his bank to verify from FEBTC and
Equitable as to the genuineness of the checks and only accepted the same after
being assured that there was nothing wrong with said checks
David did not close his eyes deliberately to the nature or the particulars of a fraud
allegedly committed by Chandiramani upon the petitioner, absent any knowledge on
his part that the action in taking the instruments amounted to bad faith.