G.R. No. 123031 - Cebu International Fice Corp. vs. Court of Appeals

Cebu International Finance Corporation (CIFC), a quasi-banking institution engaged in money market operations, accepted a P500,000.00 investment from Vicente Alegre on April 25, 1991.
CIFC issued a promissory note maturing on May 27, 1991, for P516,238.67, representing the principal plus 20.5% interest for 32 days.

On May 27, 1991, CIFC issued BPI Check No. 513397 payable to Vicente Alegre for P514,390.94 as proceeds of the matured investment plus interest.
The check was drawn from CIFC’s current account maintained at Bank of the Philippine Islands (BPI), Makati branch.
Vicente Alegre’s wife deposited the check at Rizal Commercial Banking Corp. (RCBC) on June 17, 1991.
BPI dishonored the check with the annotation “Check (is) Subject of an Investigation,” retaining the original for investigation of a series of counterfeit checks charged against CIFC’s account.

Vicente Alegre notified CIFC of the dishonor and demanded payment in cash, which CIFC refused, opting instead to reconcile with BPI.
CIFC required the surrender of the original check as a condition for replacement, which Alegre could not comply with.
Alegre filed a complaint for recovery of money against CIFC on February 25, 1992, before RTC-Makati, Branch 132.

CIFC filed a civil action against BPI for recovering losses arising from counterfeit checks (including the amount of the dishonored check) before RTC-Makati, Branch 147.
CIFC moved to implead BPI as a third-party defendant in Alegre’s suit but the motion was dismissed due to lis pendens, considering the pendency of the case at Branch 147.
BPI admitted dishonor and retention of the check, later encashing and debiting the funds from CIFC’s account pursuant to a compromise agreement with CIFC.

BPI agreed to pay CIFC P1,724,364.58 plus litigation expenses as full settlement.
CIFC authorized BPI to debit P514,390.94 from its account representing payment/discharge of Check No. 513397 (payable to Alegre).
The agreement stipulated that if CIFC is found liable to Alegre in the dishonor case, CIFC cannot seek indemnity from BPI.

BPI filed a separate collection suit against Alegre, accusing him of forgery related to counterfeit checks.
The RTC-Makati, Branch 132, ruled in favor of Vicente Alegre on September 27, 1993, ordering CIFC to pay the principal and interest.
CIFC appealed, but the Court of Appeals affirmed the trial court’s decision.
Petitioner filed the present petition for review on certiorari assailing the COA decision.

Whether Article 1249, paragraph 2, of the Civil Code applies, or the Negotiable Instruments Law governs the transaction.
Whether BPI Check No. 513397 was validly discharged by CIFC through debit from its account by BPI.
Whether the dismissal of CIFC’s third-party complaint against BPI on ground of lis pendens was proper.