Cebu Financial vs CA and Alegre Credit Digest

Cebu Financial vs CA and Alegre

GR No. 123031, 12 October 1999

316 SCRA 488

FACTS

Vicente Alegre invested with Cebu International Finance Corporation (CIFC) P500,000 in cash. CIFC issued promissory note which covered private respondent’s placement. CIFC issued BPI Check No. 513397 (the Check) in favor of private respondent as proceeds of his matured investment. Mrs. Alegre deposited the Check with RCBC but BPI dishonoured it, annotating therein that the “Check is subject of an investigation”. BPI took possession of the Check pending investigation of several counterfeit checks drawn against CIFC’s checking account. Private respondent demanded from CIFC that he be paid in cash but the latter refused. Private respondent Alegre filed a case for recovery of a sum of money against CIFC.

CIFC asserts that since BPI accepted the instrument, the bank became primarily liable for the payment of the Check. When BPI offset the value of the Check against the losses from the forged cheks allegedly committed by private respondent, the Check was deemed paid.

ISSUE

Whether or not petitioner CIFC is discharged from the liability of paying the value of the Check.

HELD

The Court held in the negative. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. A check is not legal tender, and therefore cannot constitute valid tender of payment. Since a negotiable instrument is only substitute for money and not money, the delivery of such an instrument does not by itself, operate as payment. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized. (Article 1249)

Petition denied.