Perez Vs Ca.docx

Perez vs. CA Facts: CONGENERIC Development & Finance Corporation, a company engaged in “money market” operations, issued promissory notes to Ramon Mojica amounting to 111,973.58 (Bill 1298) and 208,666.67 (Bill 1419) pesos in 2 different transactions. MEVER Films, Inc. private respondent, borrowed P500,000.00 (NCI-0352) note from CONGENERIC. CONGENERIC received P200,000.00 from petitioner, Corazon Perez. *SEE DEFINITION OF MONEY MARKET TRANSACTION IN HELD* On August 5, 1974, CONGENERIC collected in behalf of CORAZON; and ALL OF CONGENERIC’S INTEREST was transferred TO HER. On August 5, 1974, MEVER paid P100,000.00 to CONGENERIC on account of NCI-0352. (b) On the same date of August 5, 1974, CONGENERIC paid CORAZON the sum of P103,483.33, the P3,483.33 coming from its own funds. On August 6, 1974, CONGENERIC paid MOJICA the interest due on Bill 1298, the principal being rolled-over to mature on October 4, 1974. On August 13, 1974, CONGENERIC paid MOJICA the interest due on Bill 1419, the principal being rolled-over to mature on October 11, 1974. On September 9, 1974, MOJICA assigned Bill 1298 and Bill 1419 to MEVER through a notarized deed. On October 3, 1974, MEVER surrendered the originals of Bill 1298 and Bill 1419 to CONGENERIC, and asked the latter to compute MEVER’s balance with CONGENERIC, which MEVER must pay. On October 7, 1974, MEVER was served with garnishment by the Provincial Sheriff of Rizal in two collection cases filed against CONGENERIC by two of its creditors whose credits totaled P185,693.78. On October 8, 1974, CONGENERIC confirmed in writing to MEVER the previous “sale” of P200,000.00 out of the P500,000.00 amount of NCI-0352; and advised that it could not take account of the assignment to MEVER of Bill 1298 and Bill 1419. On July 14, 1975, CORAZON filed suit before the Court of First Instance of Rizal against MEVER for the recovery of P100,000.00, plus interest, damages, and attorney’s fees. She admits that CS0366 issued to her by CONGENERIC was a “without recourse” instrument. The Trial Court rendered judgment in favor of CORAZON and, upon her filing a bond, she was able to have execution pending appeal. MEVER had to pay her P131,166.00 under the Trial Court’s judgment. On Mever’s appeal, the Court of Appeals reversed the judgment of the Trial Court. Hence this petition Issue: Whether assignment of rights before compensation even without debtor’s consent can take place in a money market transaction

Held: Yes. Assignment of rights before can compensation can take place even without the consent of the debtor in a money market transaction. Money market is a market dealing in standardized short-term credit instruments where lenders and borrowers conduct transactions through a middle man in the open market. It involves commercial papers which are conveyed to another person or entity, with or without recourse”. The fundamental function of the money market device in its operation is to match in a most impersonal manner both “fund users” and “fund suppliers” free from personal considerations. The market mechanism is intended to provide quick mobility of money and securities.” In money market transactions, no notice is given to the commercial paper issuer of its sale to the investor. Art. 1285, 1st paragraph of N.C.C. applicable in such cases as to bar legal compensation between debtor and assignee of creditor’s rights. The impersonal character of the money market device overlooks the parties concerned. Commercial paper issuer in the money market necessarily knows in advance that it would be expeditiously transacted to any investor/lender without need of notice to said issuer. In practice, no notification is given to the issuer of commercial paper of the transfer to the investor.