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Cebu Financial vs CA and Alegre Credit Digest

Cebu Financial vs CA and AlegreGR No. 123031, 12 October 1999

316 CRA !""

FAC#Vicente Alegre invested with Cebu International Finance Corporation (CIFC)

P500,000 in cash. CIFC issued proissor! note which covered privaterespondent"s placeent. CIFC issued #PI Chec$ %o. 5&'' (the Chec$) in

*avor o* private respondent as proceeds o* his atured investent. +rs.Alegre deposited the Chec$ with C#C but #PI dishonoured it, annotating

therein that the -Chec$ is subect o* an investigation/. #PI too$ possession o*the Chec$ pending investigation o* several counter*eit chec$s drawn against

CIFC"s chec$ing account. Private respondent deanded *ro CIFC that he be

paid in cash but the latter re*used. Private respondent Alegre *iled a case *orrecover! o* a su o* one! against CIFC.

CIFC asserts that since #PI accepted the instruent, the ban$ becaepriaril! liable *or the pa!ent o* the Chec$. hen #PI o**set the value o*

the Chec$ against the losses *ro the *orged che$s allegedl! coitted b!

private respondent, the Chec$ was deeed paid.

$%&hether or not petitioner CIFC is discharged *ro the liabilit! o* pa!ing thevalue o* the Chec$.

'&()

1he Court held in the negative. In a one! ar$et transaction, the investor

is a lender who loans his one! to a borrower through a iddlean ordealer. A chec$ is not legal tender, and there*ore cannot constitute validtender o* pa!ent. 2ince a negotiable instruent is onl! substitute *or

one! and not one!, the deliver! o* such an instruent does not b! itsel*,operate as pa!ent. +ere deliver! o* chec$s does not discharge the

obligation under a udgent. 1he obligation is not e3tinguished and reains

suspended until the pa!ent b! coercial docuent is actuall! reali4ed.(Article &6)

Petition denied.

316 SCRA 488

FACTS:

Petitioner is a quasi-banking institution involved in money market transactions. Alegre invested with petitioner P500,000. Petitioner issued then a

promissory note, which would mature approximately after a month. The note covered for Alegres placement plus interest. On the maturity of the note, petitioner

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issued a check payable to Alegre, covering the whole amount due. It was drawn from petitioners current account in BPI. When the wife of Alegre tried to

deposit the check, the bank dishonored the

check. Petitioner was notified of this matter and Alegre demanded the immediate payment in cash. In turn, petitioner promised to replace the check

on the impossible premise that the first issued be returned to them. This prompted Alegre to file a complaint against petitioner and petitioner in turn, filed a case

against BPI for allegedly unlawfully deducting from its account counterfeit checks. The trial court decided in favor of Alegre.

ISSUE:

Whether or not the Negotiable Instruments Law is applicable to the money market transaction held

between petitioner and Alegre?

HELD:

Considering the nature of the money market transaction, Article 1249 of the CC is the applicable provision should be applied. A money market has been

defined to be a market dealing in standardized short-term credit instruments where lenders and borrowers dont deal directly with each other but

through a middleman or dealer in the open market. In a money market transaction, the investor is the lender who loans his money to a borrower through a

middleman or dealer.

In the case at bar, the transaction is in the nature of a loan. Petitioner accepted the check but when he tried to encash it, it was dishonored. The holder

has an immediate recourse against the drawer, and consequently could immediately file an action for the recovery of the value of the check.

Further, in a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check. A check isnot legal tender, and therefore cannot constitute valid tender of

payment.