Cebu International Finance Corporation v. Court of Appeals

Summary

This case involves a money market investment dispute where Vicente Alegre invested P500,000 with Cebu International Finance Corporation (CIFC). When CIFC's maturity check was dishonored by BPI due to an investigation of counterfeit checks, CIFC refused to pay Alegre in cash while demanding return of the original check. The Supreme Court affirmed lower courts' ruling that CIFC remained liable to pay Alegre, holding that Article 1249 of the Civil Code governs such money market transactions. The Court ruled that BPI's retention and deduction of the check amount from CIFC's account did not constitute valid payment to Alegre since the money was not delivered to the creditor but was offset against alleged forgery losses. The compromise agreement between CIFC and BPI could not bind Alegre as a non-party, and BPI's appropriation of Alegre's funds constituted improper garnishment without court authority. The decision establishes that in money market transactions, checks serve only as substitutes for money and do not discharge obligations until actually encashed by the payee.