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G.R. No. 97753 August 10, 1992 11. In April 1983, the loan of Angel dela Cruz with the
CALTEX (PHILIPPINES), INC., petitioner,  defendant bank matured and fell due and on August 5,
vs. 1983, the latter set-off and applied the time deposits in
COURT OF APPEALS and SECURITY BANK AND TRUST question to the payment of the matured loan (TSN,
COMPANY, respondents. February 9, 1987, pp. 130-131).
Bito, Lozada, Ortega & Castillo for petitioners. 12. In view of the foregoing, plaintiff filed the instant
Nepomuceno, Hofileña & Guingona for private. complaint, praying that defendant bank be ordered to
pay it the aggregate value of the certificates of time
REGALADO, J.: deposit of P1,120,000.00 plus accrued interest and
This petition for review on certiorari impugns and seeks the compounded interest therein at 16% per annum, moral
reversal of the decision promulgated by respondent court on and exemplary damages as well as attorney's fees.
March 8, 1991 in CA-G.R. CV No. 23615 1 affirming with After trial, the court a quo rendered its decision
modifications, the earlier decision of the Regional Trial Court of dismissing the instant complaint. 3
Manila, Branch XLII, 2 which dismissed the complaint filed therein On appeal, as earlier stated, respondent court affirmed the lower
by herein petitioner against respondent bank. court's dismissal of the complaint, hence this petition wherein
The undisputed background of this case, as found by the court a petitioner faults respondent court in ruling (1) that the subject
quo and adopted by respondent court, appears of record: certificates of deposit are non-negotiable despite being clearly
1. On various dates, defendant, a commercial banking institution, negotiable instruments; (2) that petitioner did not become a holder
through its Sucat Branch issued 280 certificates of time deposit in due course of the said certificates of deposit; and (3) in
(CTDs) in favor of one Angel dela Cruz who deposited with herein disregarding the pertinent provisions of the Code of Commerce
defendant the aggregate amount of P1,120,000.00, as follows: relating to lost instruments payable to bearer. 4
(Joint Partial Stipulation of Facts and Statement of Issues, The instant petition is bereft of merit.
Original Records, p. 207; Defendant's Exhibits 1 to 280); A sample text of the certificates of time deposit is reproduced
CTD CTD below to provide a better understanding of the issues involved in
Dates Serial Nos. Quantity Amount this recourse.
22 Feb. 82 90101 to 90120 20 P80,000 SECURITY BANK AND TRUST COMPANY
26 Feb. 82 74602 to 74691 90 360,000 6778 Ayala Ave., Makati No. 90101
2 Mar. 82 74701 to 74740 40 160,000 Metro Manila, Philippines
4 Mar. 82 90127 to 90146 20 80,000 SUCAT OFFICEP 4,000.00
5 Mar. 82 74797 to 94800 4 16,000 CERTIFICATE OF DEPOSIT
5 Mar. 82 89965 to 89986 22 88,000 Rate 16%
5 Mar. 82 70147 to 90150 4 16,000 Date of Maturity FEB. 23, 1984 FEB 22, 1982, 19____
8 Mar. 82 90001 to 90020 20 80,000 This is to Certify that B E A R E R has deposited in this
9 Mar. 82 90023 to 90050 28 112,000 Bank the sum of PESOS: FOUR THOUSAND ONLY,
9 Mar. 82 89991 to 90000 10 40,000 SECURITY BANK SUCAT OFFICE P4,000 & 00
9 Mar. 82 90251 to 90272 22 88,000 CTS Pesos, Philippine Currency, repayable to said
——— ———— depositor 731 days. after date, upon presentation and
Total 280 P1,120,000 surrender of this certificate, with interest at the rate
===== ======== of 16% per cent per annum.
2. Angel dela Cruz delivered the said certificates of time (CTDs) (Sgd. Illegible) (Sgd. Illegible)
to herein plaintiff in connection with his purchased of fuel products —————————— ———————————
from the latter (Original Record, p. 208). AUTHORIZED SIGNATURES 5
3. Sometime in March 1982, Angel dela Cruz informed Mr. Respondent court ruled that the CTDs in question are non-
Timoteo Tiangco, the Sucat Branch Manger, that he lost all the negotiable instruments, nationalizing as follows:
certificates of time deposit in dispute. Mr. Tiangco advised said . . . While it may be true that the word "bearer" appears
depositor to execute and submit a notarized Affidavit of Loss, as rather boldly in the CTDs issued, it is important to note that
required by defendant bank's procedure, if he desired after the word "BEARER" stamped on the space provided
replacement of said lost CTDs (TSN, February 9, 1987, pp. 48- supposedly for the name of the depositor, the words "has
50). deposited" a certain amount follows. The document further
4. On March 18, 1982, Angel dela Cruz executed and delivered to provides that the amount deposited shall be "repayable to
defendant bank the required Affidavit of Loss (Defendant's Exhibit said depositor" on the period indicated. Therefore, the text
281). On the basis of said affidavit of loss, 280 replacement CTDs of the instrument(s) themselves manifest with clarity that
were issued in favor of said depositor (Defendant's Exhibits 282- they are payable, not to whoever purports to be the "bearer"
561). but only to the specified person indicated therein, the
5. On March 25, 1982, Angel dela Cruz negotiated and obtained a depositor. In effect, the appellee bank acknowledges its
loan from defendant bank in the amount of Eight Hundred depositor Angel dela Cruz as the person who made the
Seventy Five Thousand Pesos (P875,000.00). On the same date, deposit and further engages itself to pay said depositor the
said depositor executed a notarized Deed of Assignment of Time amount indicated thereon at the stipulated date. 6
Deposit (Exhibit 562) which stated, among others, that he (de la We disagree with these findings and conclusions, and hereby
Cruz) surrenders to defendant bank "full control of the indicated hold that the CTDs in question are negotiable instruments.
time deposits from and after date" of the assignment and further Section 1 Act No. 2031, otherwise known as the Negotiable
authorizes said bank to pre-terminate, set-off and "apply the said Instruments Law, enumerates the requisites for an instrument to
time deposits to the payment of whatever amount or amounts become negotiable, viz:
may be due" on the loan upon its maturity (TSN, February 9, (a) It must be in writing and signed by the maker or drawer;
1987, pp. 60-62). (b) Must contain an unconditional promise or order to pay a
6. Sometime in November, 1982, Mr. Aranas, Credit sum certain in money;
Manager of plaintiff Caltex (Phils.) Inc., went to the defendant (c) Must be payable on demand, or at a fixed or determinable
bank's Sucat branch and presented for verification the CTDs future time;
declared lost by Angel dela Cruz alleging that the same were (d) Must be payable to order or to bearer; and
delivered to herein plaintiff "as security for purchases made with (e) Where the instrument is addressed to a drawee, he must
Caltex Philippines, Inc." by said depositor (TSN, February 9, be named or otherwise indicated therein with reasonable
1987, pp. 54-68). certainty.
7. On November 26, 1982, defendant received a letter The CTDs in question undoubtedly meet the requirements of the
(Defendant's Exhibit 563) from herein plaintiff formally informing it law for negotiability. The parties' bone of contention is with regard
of its possession of the CTDs in question and of its decision to to requisite (d) set forth above. It is noted that Mr. Timoteo P.
pre-terminate the same. Tiangco, Security Bank's Branch Manager way back in 1982,
8. On December 8, 1982, plaintiff was requested by herein testified in open court that the depositor reffered to in the CTDs is
defendant to furnish the former "a copy of the document no other than Mr. Angel de la Cruz.
evidencing the guarantee agreement with Mr. Angel dela Cruz" as x x x           x x x          x x x
well as "the details of Mr. Angel dela Cruz" obligation against Atty. Calida:
which plaintiff proposed to apply the time deposits (Defendant's q In other words Mr. Witness, you are saying that per books of
Exhibit 564). the bank, the depositor referred (sic) in these certificates
9. No copy of the requested documents was furnished herein states that it was Angel dela Cruz?
defendant. witness:
10. Accordingly, defendant bank rejected the plaintiff's demand a Yes, your Honor, and we have the record to show that Angel
and claim for payment of the value of the CTDs in a letter dated dela Cruz was the one who cause (sic) the amount.
February 7, 1983 (Defendant's Exhibit 566). Atty. Calida:
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q And no other person or entity or company, Mr. Witness? court below, moved for a bill of particularity therein 17 praying,
witness: among others, that petitioner, as plaintiff, be required to aver with
a None, your Honor. 7 sufficient definiteness or particularity (a) the due date or dates
xxx xxx xxx of payment of the alleged indebtedness of Angel de la Cruz to
Atty. Calida: plaintiff and (b) whether or not it issued a receipt showing that the
q Mr. Witness, who is the depositor identified in all of these CTDs were delivered to it by De la Cruz as payment of the latter's
certificates of time deposit insofar as the bank is concerned? alleged indebtedness to it, plaintiff corporation opposed the
witness: motion. 18 Had it produced the receipt prayed for, it could have
a Angel dela Cruz is the depositor. 8 proved, if such truly was the fact, that the CTDs were delivered as
x x x           x x x          x x x payment and not as security. Having opposed the motion,
On this score, the accepted rule is that the negotiability or non- petitioner now labors under the presumption that evidence willfully
negotiability of an instrument is determined from the writing, that suppressed would be adverse if produced. 19
is, from the face of the instrument itself.9 In the construction of a Under the foregoing circumstances, this disquisition in Intergrated
bill or note, the intention of the parties is to control, if it can be Realty Corporation, et al. vs. Philippine National Bank, et al.  20 is
legally ascertained. 10 While the writing may be read in the light of apropos:
surrounding circumstances in order to more perfectly understand . . . Adverting again to the Court's
the intent and meaning of the parties, yet as they have constituted pronouncements in Lopez, supra, we quote
the writing to be the only outward and visible expression of their therefrom:
meaning, no other words are to be added to it or substituted in its The character of the transaction between the parties is
stead. The duty of the court in such case is to ascertain, not what to be determined by their intention, regardless of what
the parties may have secretly intended as contradistinguished language was used or what the form of the transfer
from what their words express, but what is the meaning of the was. If it was intended to secure the payment of
words they have used. What the parties meant must be money, it must be construed as a pledge; but if there
determined by what they said. 11 was some other intention, it is not a pledge. However,
Contrary to what respondent court held, the CTDs are negotiable even though a transfer, if regarded by itself, appears to
instruments. The documents provide that the amounts deposited have been absolute, its object and character might still
shall be repayable to the depositor. And who, according to the be qualified and explained by contemporaneous writing
document, is the depositor? It is the "bearer." The documents do declaring it to have been a deposit of the property as
not say that the depositor is Angel de la Cruz and that the collateral security. It has been said that a transfer of
amounts deposited are repayable specifically to him. Rather, the property by the debtor to a creditor, even if sufficient on
amounts are to be repayable to the bearer of the documents or, its face to make an absolute conveyance, should be
for that matter, whosoever may be the bearer at the time of treated as a pledge if the debt continues in inexistence
presentment. and is not discharged by the transfer, and that
If it was really the intention of respondent bank to pay the amount accordingly the use of the terms ordinarily importing
to Angel de la Cruz only, it could have with facility so expressed conveyance of absolute ownership will not be given
that fact in clear and categorical terms in the documents, instead that effect in such a transaction if they are also
of having the word "BEARER" stamped on the space provided for commonly used in pledges and mortgages and
the name of the depositor in each CTD. On the wordings of the therefore do not unqualifiedly indicate a transfer of
documents, therefore, the amounts deposited are repayable to absolute ownership, in the absence of clear and
whoever may be the bearer thereof. Thus, petitioner's aforesaid unambiguous language or other circumstances
witness merely declared that Angel de la Cruz is the depositor excluding an intent to pledge.
"insofar as the bank is concerned," but obviously other parties not Petitioner's insistence that the CTDs were negotiated to it begs
privy to the transaction between them would not be in a position the question. Under the Negotiable Instruments Law, an
to know that the depositor is not the bearer stated in the CTDs. instrument is negotiated when it is transferred from one person to
Hence, the situation would require any party dealing with the another in such a manner as to constitute the transferee the
CTDs to go behind the plain import of what is written thereon to holder thereof, 21 and a holder may be the payee or indorsee of a
unravel the agreement of the parties thereto through bill or note, who is in possession of it, or the bearer thereof. 22 In
facts aliunde. This need for resort to extrinsic evidence is what is the present case, however, there was no negotiation in the sense
sought to be avoided by the Negotiable Instruments Law and calls of a transfer of the legal title to the CTDs in favor of petitioner in
for the application of the elementary rule that the interpretation of which situation, for obvious reasons, mere delivery of the bearer
obscure words or stipulations in a contract shall not favor the CTDs would have sufficed. Here, the delivery thereof only as
party who caused the obscurity. 12 security for the purchases of Angel de la Cruz (and we even
The next query is whether petitioner can rightfully recover on the disregard the fact that the amount involved was not disclosed)
CTDs. This time, the answer is in the negative. The records could at the most constitute petitioner only as a holder for value
reveal that Angel de la Cruz, whom petitioner chose not to by reason of his lien. Accordingly, a negotiation for such purpose
implead in this suit for reasons of its own, delivered the CTDs cannot be effected by mere delivery of the instrument since,
amounting to P1,120,000.00 to petitioner without informing necessarily, the terms thereof and the subsequent disposition of
respondent bank thereof at any time. Unfortunately for petitioner, such security, in the event of non-payment of the principal
although the CTDs are bearer instruments, a valid negotiation obligation, must be contractually provided for.
thereof for the true purpose and agreement between it and De la The pertinent law on this point is that where the holder has a lien
Cruz, as ultimately ascertained, requires both delivery and on the instrument arising from contract, he is deemed a holder for
indorsement. For, although petitioner seeks to deflect this fact, value to the extent of his lien. 23 As such holder of collateral
the CTDs were in reality delivered to it as a security for De la security, he would be a pledgee but the requirements therefor and
Cruz' purchases of its fuel products. Any doubt as to whether the the effects thereof, not being provided for by the Negotiable
CTDs were delivered as payment for the fuel products or as a Instruments Law, shall be governed by the Civil Code provisions
security has been dissipated and resolved in favor of the latter by on pledge of incorporeal rights, 24 which inceptively provide:
petitioner's own authorized and responsible representative Art. 2095. Incorporeal rights, evidenced by
himself. negotiable instruments, . . . may also be
In a letter dated November 26, 1982 addressed to respondent pledged. The instrument proving the right
Security Bank, J.Q. Aranas, Jr., Caltex Credit Manager, wrote: ". . pledged shall be delivered to the creditor, and
. These certificates of deposit were negotiated to us by Mr. Angel if negotiable, must be indorsed.
dela Cruz to guarantee his purchases of fuel products" (Emphasis Art. 2096. A pledge shall not take effect
ours.) 13 This admission is conclusive upon petitioner, its against third persons if a description of the
protestations notwithstanding. Under the doctrine of estoppel, an thing pledged and the date of the pledge do
admission or representation is rendered conclusive upon the not appear in a public instrument.
person making it, and cannot be denied or disproved as against Aside from the fact that the CTDs were only delivered but not
the person relying thereon. 14 A party may not go back on his own indorsed, the factual findings of respondent court quoted at the
acts and representations to the prejudice of the other party who start of this opinion show that petitioner failed to produce any
relied upon them. 15 In the law of evidence, whenever a party has, document evidencing any contract of pledge or guarantee
by his own declaration, act, or omission, intentionally and agreement between it and Angel de la Cruz. 25 Consequently, the
deliberately led another to believe a particular thing true, and to mere delivery of the CTDs did not legally vest in petitioner any
act upon such belief, he cannot, in any litigation arising out of right effective against and binding upon respondent bank. The
such declaration, act, or omission, be permitted to falsify it. 16 requirement under Article 2096 aforementioned is not a mere rule
If it were true that the CTDs were delivered as payment and not of adjective law prescribing the mode whereby proof may be
as security, petitioner's credit manager could have easily said so, made of the date of a pledge contract, but a rule of substantive
instead of using the words "to guarantee" in the letter law prescribing a condition without which the execution of a
aforequoted. Besides, when respondent bank, as defendant in the pledge contract cannot affect third persons adversely. 26
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On the other hand, the assignment of the CTDs made by Angel The use of the word "may" in said provision shows that it is not
de la Cruz in favor of respondent bank was embodied in a public mandatory but discretionary on the part of the "dispossessed
instrument. 27 With regard to this other mode of transfer, the Civil owner" to apply to the judge or court of competent jurisdiction for
Code specifically declares: the issuance of a duplicate of the lost instrument. Where the
Art. 1625. An assignment of credit, right or provision reads "may," this word shows that it is not mandatory
action shall produce no effect as against third but discretional. 34 The word "may" is usually permissive, not
persons, unless it appears in a public mandatory. 35 It is an auxiliary verb indicating liberty, opportunity,
instrument, or the instrument is recorded in the permission and possibility. 36
Registry of Property in case the assignment Moreover, as correctly analyzed by private respondent, 37 Articles
involves real property. 548 to 558 of the Code of Commerce, on which petitioner seeks
Respondent bank duly complied with this statutory requirement. to anchor respondent bank's supposed negligence, merely
Contrarily, petitioner, whether as purchaser, assignee or lien established, on the one hand, a right of recourse in favor of a
holder of the CTDs, neither proved the amount of its credit or the dispossessed owner or holder of a bearer instrument so that he
extent of its lien nor the execution of any public instrument which may obtain a duplicate of the same, and, on the other, an option
could affect or bind private respondent. Necessarily, therefore, as in favor of the party liable thereon who, for some valid ground,
between petitioner and respondent bank, the latter has definitely may elect to refuse to issue a replacement of the instrument.
the better right over the CTDs in question. Significantly, none of the provisions cited by petitioner
Finally, petitioner faults respondent court for refusing to delve into categorically restricts or prohibits the issuance a duplicate or
the question of whether or not private respondent observed the replacement instrument sans compliance with the procedure
requirements of the law in the case of lost negotiable instruments outlined therein, and none establishes a mandatory precedent
and the issuance of replacement certificates therefor, on the requirement therefor.
ground that petitioner failed to raised that issue in the lower WHEREFORE, on the modified premises above set forth, the
court. 28 petition is DENIED and the appealed decision is hereby
On this matter, we uphold respondent court's finding that the AFFIRMED.
aspect of alleged negligence of private respondent was not SO ORDERED.
included in the stipulation of the parties and in the statement of
issues submitted by them to the trial court. 29 The issues agreed
upon by them for resolution in this case are:
1. Whether or not the CTDs as worded are negotiable
instruments.
2. 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").
3. 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.
4. Whether or not plaintiff could compel defendant to
preterminate the CTDs before the maturity date provided
therein.
5. Whether or not plaintiff is entitled to the proceeds of
the CTDs.
6. Whether or not the parties can recover damages,
attorney's fees and litigation expenses from each other.
As respondent court correctly observed, with appropriate citation
of some doctrinal authorities, the foregoing enumeration does not
include the issue of negligence on the part of respondent bank.
An issue raised for the first time on appeal and not raised timely
in the proceedings in the lower court is barred by
estoppel. 30 Questions raised on appeal must be within the issues
framed by the parties and, consequently, issues not raised in the
trial court cannot be raised for the first time on appeal. 31
Pre-trial is primarily intended to make certain that all issues
necessary to the disposition of a case are properly raised. Thus,
to obviate the element of surprise, parties are expected to
disclose at a pre-trial conference all issues of law and fact which
they intend to raise at the trial, except such as may involve
privileged or impeaching matters. The determination of issues at
a pre-trial conference bars the consideration of other questions on
appeal. 32
To accept petitioner's suggestion that respondent bank's
supposed negligence may be considered encompassed by the
issues on its right to preterminate and receive the proceeds of the
CTDs would be tantamount to saying that petitioner could raise
on appeal any issue. We agree with private respondent that the
broad ultimate issue of petitioner's entitlement to the proceeds of
the questioned certificates can be premised on a multitude of
other legal reasons and causes of action, of which respondent
bank's supposed negligence is only one. Hence, petitioner's
submission, if accepted, would render a pre-trial delimitation of
issues a useless exercise. 33
Still, even assuming arguendo that said issue of negligence was
raised in the court below, petitioner still cannot have the odds in
its favor. A close scrutiny of the provisions of the Code of
Commerce laying down the rules to be followed in case of lost
instruments payable to bearer, which it invokes, will reveal that
said provisions, even assuming their applicability to the CTDs in
the case at bar, are merely permissive and not mandatory. The
very first article cited by petitioner speaks for itself.
Art 548. The dispossessed owner, no matter
for what cause it may be, may apply to the
judge or court of competent jurisdiction, asking
that the principal, interest or dividends due or
about to become due, be not paid a third
person, as well as in order to prevent the
ownership of the instrument that a duplicate be
issued him. (Emphasis ours.)
x x x           x x x          x x x