Form and interpretation of nil

Caltex (Philippines) vs. CA, 212 SCRA 448, Aug. 10, 1992 how negotiability is determined

Caltex Philippines, Inc. v. Court of Appeals

Facts: 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 deliver the CTD to petition 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.
Issue: Whether or not the Certificate of Time Deposit (CTD) is a negotiable
instrument
Held: 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. The duty of the court in such case is to ascertain, not
what the parties may have secretly intended as contra distinguished from what
their words express, but what is the meaning of the words they have used. What the
parties meant must be determined by what they said.

Banco de Oro vs. Equitable Banking Corp.; 157 SCRA 188 (1988) effect of estoppel

Banco de Oro vs. Equitable Banking Corporation

Facts: Banco De Oro drew six crossed managers check payable to certain member
establishments of Visa Card. The checks were deposited with Equitable Bank. After
stamping at the bank the usual endorsements, the checks were sent for clearing
through the PCHC. Banco De Oro paid the checks. Thereafter, Banco De Oro
discovered that the endorsements appearing at the back of the Checks were forged
and/or unauthorized, hence he claimed reimbursement from Equitable bank.
Issue: Whether or not Banco de Oro could collect reimbursement from Equitable
Bank.
Held: Yes. The petitioner having stamped its guarantee and indorsed is estopped
from claiming that the checks under consideration are not negotiable instruments.
The collecting bank or last endorser generally suffers the loss because it has the
duty to ascertain the genuineness of all prior indorsements.

Phil. Bank of Commerce vs. Aruego, 102 SCRA 530, Jan. 31, 1981 effect of estoppel

Philippine Bank of Commerce vs. Aruego

Facts: Plaintiff instituted an action against defendant Aruego for recovery of money
signed by the defendent. The latter interposes that he signed the drafts in a
representative capacity, that he signed only as an accommodation party and that
he is not liable. The court denied the motion and rendered judgement against the
defendant. Hence this petition.
Issue: Whether or not defendant is liable by accepting the instrument?
Held: Yes, an inspection of the drafts accepted by the defendant shows that
nowhere has he disclosed that he was signing as representative of the Philippine
Education Foundation Company. For failure to disclose his principal as required
under Section 20 of the NIL, he is personally liable for the drafts he accepted.

Metropolitan Bank vs. CA, 194 SCRA 169, Feb. 18, 1991 - unconditional promise or order to pay a sum
certain in money

Facts:
Eduardo Gomez opened an account with Golden Savings and deposited 38 treasury
warrants. All warrants were subsequently indorsed by Gloria Castillo as Cashier of Golden
Savings and deposited to its Savings account in Metrobank branch in Calapan, Mindoro. They
were sent for clearance. Meanwhile, Gomez is not allowed to withdraw from his account, later,
however, exasperated over Floria repeated inquiries and also as an accommodation for a
valued client Metrobank decided to allow Golden Savings to withdraw from proceeds of the
warrants. In turn, Golden Savings subsequently allowed Gomez to make withdrawals from his
own account. 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. The demand was rejected.
Metrobank then sued Golden Savings.
Issue: whether or not there is an unconditional promise to pay
Held: none. Sec. 3. When promise is unconditional. An unqualified order or promise to

pay is unconditional within the meaning of this Act though coupled with
(a) An indication of a particular fund out of which reimbursement is to be made or a
particular account to be debited with the amount; or
(b) A statement of the transaction which gives rise to the instrument judgment.
But an order or promise to pay out of a particular fund as in this case is not
unconditional, and therefore not a negotiable instrument under the purview of NIL

Pay vs. Palanca, 57 SCRA 618 on demand or at a fixed determinable future time
FACTS
The promissory note indicated payment upon demand. Petitioner relied on this to mean that prescription
would not lie unless there is demand from them. The petition was filed fifteen years after its issuance.
ISSUE
Whether or not a promissory note to be paid upon demand is immediately due and demandable.
RULING
YES. Every obligation whose performance does not depend upon a future or uncertain event, or upon a
past event unknown to the parties, is demandable at once (Art. 1179 of the New Civil Code). The
obligation being due and demandable in this case, it would appear that the filing of the suit after fifteen
years was much too late.

Ang Tek Lian vs. CA, 87 Phil 383, Sept. 25, 1950 payable to order or bearer
FACTS
Petitioner drew a check payable to the order of cash knowing that he had no funds. He delivered it in
exchange of money. Petitioner was found guilty of estafa, but petitioner argued that the check had not
been indorsed by him, hence, he should not be held guilty thereof.
ISSUE
Whether or not the instrument is a bearer or an order instrument and indorsement is necessary to
negotiate a check payable to the order of cash.
RULING
An instrument made payable to the order of cash is a bearer instrument. Indorsement is no longer
necessary. Under the Negotiable Instruments Law (Sec. 9 [d]), a check drawn payable to the order of
cash is a check payable to bearer, and the bank may pay it to the person presenting it for payment
without the drawers indorsement. Being a bearer instrument, negotiation may be done by mere delivery
of the instrument.