G.R. No.

123031 October 12, 1999

CEBU INTERNATIONAL FINANCE CORPORATION,
APPEALS, VICENTE ALEGRE, 316 SCRA 488

vs.

COURT

OF

FACTS
Cebu International Finance Corporation (CIFC), a quasi-banking
institution, is engaged in money market operations. Vicente Alegre invested
with Cebu International Finance Corporation (CIFC) P500,000 in cash. CIFC
issued promissory note which covered private respondents 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 CIFCs 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 checks 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
No. 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)