7/1/2018 CEBU INTERNATIONAL V.

CA 316 SCRA 488

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CEBU INTERNATIONAL V. CA
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
Alegre’s placement plus interest. On the maturity of the note, petitioner issued a check payable to Alegre, covering the whole
amount due. It was drawn from petitioner’s 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:
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7/1/2018 CEBU INTERNATIONAL V. CA 316 SCRA 488
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 don’t 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 is not legal tender, and therefore cannot constitute valid tender of
payment.

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