Legacy CTDs are non- negotiable instruments. Period.

We were able to have an hour's chat with a PDIC lawyer and relayed to him a recent case of denial of an acquaintance of a DEADBOL member. The woman, a San Miguel retiree, had deposited in Dynamic bank (the one legacy bank where PDIC had admitted that its verification process had stalled due to the magnitude of missing documents). She had recently received a letter from PDIC stating that one of her claims for a 250k time deposit was denied because it was not listed in the bank's master list. The PDIC denial letter referenced Sec. 4 (g) which provided that "no owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless his name is registered as owner/holder thereof in the books of the issuing bank. (As amended by R.A. 9302, 12 August 2004)."

We told him in no uncertain terms that certificates of time deposits issued by the defunct Legacy banks were not negotiable instruments. We provided him the legal references including excerpts from Supreme Court cases and specifically cited a passage by the esteemed Professor of Law, Atty Timoteo Aquino, who in his book stated that ‘The rule has always been that the instrument in order to be considered negotiable must contain the so called “words of negotiability” – i.e., must be payable to “order” or “bearer.” These words serve as an expression of consent that the instrument may be transferred by negotiation. This consent is indispensable since the maker assumes greater risk under a negotiable instrument than under a non-negotiable one.’ Section 1 Act No. 2031, otherwise known as the Negotiable Instruments Law, enumerates the requisites for an instrument to become negotiable and it is clearly spelled out in requirement d) Must be payable to order or to bearer.

In the absence of the actual denial letter, the PDIC lawyer surmised that it may have been a promissory note or another paper, but not a CTD. And that PDIC uses different templates for different cases. However, the deadbol member clarified the matter with the claimant, and affirmed that the denial letter was in a general format: it stated CTD and PDIC (office of Atty Elaine Deticio) and the CTD number was handwritten on the blank portion in the letter.

If true, then PDIC will surely lose any legal case that based its denial on the negotiability of a Legacy bank CTD. However, the good news is that a denied claimant can seek reconsideration with the PDIC claims settlement office, and that PDIC is willing to consider other evidences of funds inflow, provided by the claimant. It is best to remind everybody concerned that in 2000, there was a precedent wherein PDIC accepted and paid out CTD claims of deposits made to the Rural Bank of San Miguel, even those without supporting bank records. If a bank depositor is sure that his or her money was actually deposited in the banks, then he or she is practically in almost-solid ground. We say almost, because this is the Philippines, and one can never be sure.