On various dates, defendant, a commercial banking institution, through its Sucat Branch issued 280 certificates of time deposit (CTDs) in favor of one Angel dela Cruz who deposited with herein defendant the aggregate amount of P1,120,000.00. Angel dela Cruz delivered the said certificates of time deposit (CTDs) to herein plaintiff in connection with his purchase of fuel products from Caltex (inc).
Sometime in March 1982, Angel dela Cruz informed Mr. Timoteo Tiangco, the Sucat Branch Manager, that he lost all the certificates of time deposit in dispute. Mr. Tiangco advised said depositor to execute and submit a notarized Affidavit of Loss, as required by defendant bank's procedure, if he desired replacement of said lost CTDs . Angel dela Cruz executed and delivered to defendant bank the required Affidavit of Loss. On the basis of said affidavit of loss, 280 replacement CTDs were issued in favor of said depositor .On March 25, 1982, Angel dela Cruz negotiated and obtained a loan from defendant bank in the amount of Eight Hundred Seventy Five Thousand Pesos (P875,000.00). On the same date, said depositor executed a notarized Deed of Assignment of Time Deposit stating that dela Cruz, surrenders to the bank the ful control of the indicated time deposits from and after date of the assignment and further authorizes said bank to pre-terminate, set-off and 'apply the said time deposits to the payment of whatever amount or amounts may be due' on the loan upon its maturity. Sometime in November, 1982, Mr. Aranas, Credit Manager of plaintiff Caltex (Phils.) Inc. went to the defendant bank's Sucat branch 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 . On November 26, 1982, defendant received a letter from herein plaintiff formally informing it of its possession of the CTDs in question and of