I.

SHORT TITLE: Sesbreno vs Court of Appeals (1995)

II. FULL TITLE: RAUL H. SESBRENO, petitioner, vs. HONORABLE COURT
OF APPEALS and HERMILO RODIS, SR.,, respondents. – 240
SCRA 646, January 26, 1995, J. Quiason.

III. TOPIC: General Banking Laws

IV. STATEMENT OF FACTS:
Raul Sesbreno made a money market placement in the amount of P300,000
with PhilFinance, with a term of 32 days. PhilFinance issued to Sesbreno the
Certificate of Confirmation of Sale of a Delta Motor Corporation Promissory
Note (DMC PN No. 2731), the Certificate of Securities Delivery Receipt
indicating the sale of the Note with notation that said security was in the
custody of Pilipinas Bank, and postdated checks drawn against the Insular
Bank of Asia and America for P304,533.33 payable on 13 March 1981. The
checks were dishonored for having been drawn against insufficient
funds. Philfinance delivered to petitioner Denominated Custodian Receipt
(DCR).

Petitioner approached Ms. Elizabeth de Villa of private respondent Pilipinas,

and handed her a demand letter informing the bank that his placement with
Philfinance in the amount reflected in the DCR had remained unpaid and
outstanding, and that he in effect was asking for the physical delivery of the
underlying promissory note. Petitioner then examined the original of the
DMC PN No. 2731 and found: that the security had been issued on 10 April
1980; that it would mature on 6 April 1981; that it had a face value of
P2,300,833.33, with the Philfinance as “payee” and private respondent Delta
Motors Corporation (“Delta”) as “maker;” and that on face of the promissory
note was stamped “NON NEGOTIABLE.” Pilipinas did not deliver the Note,
nor any certificate of participation in respect thereof, to petitioner.

Petitioner later made similar demand letters again asking private respondent
Pilipinas for physical delivery of the original of DMC PN No. 2731.

Petitioner also made a written demand upon private respondent Delta for the
partial satisfaction of DMC PN No. 2731, explaining that Philfinance, as
payee thereof, had assigned to him said Note to the extent of P307,933.33.
Delta, however, denied any liability to petitioner on the promissory note.

As petitioner had failed to collect his investment and interest thereon, he

filed an action for damages against private respondents Delta and Pilipinas.
V. STATEMENT OF THE CASE:
On December 29, 1987, the appellate court rendered a decision upholding
private respondent’s contention that a money market placement is in the
nature of a loan which entails the transfer of ownership of the money so
invested and therefore the liability for its return is civil in nature.
VI. ISSUE:
Whether or not private respondent may be held liable for estafa
VII. RULING:
No. What is involved here is a money market transaction. The money market
is a market dealing in standardized short-term credit instruments where
lenders and borrowers do not deal directly with each other but through a
middle man or dealer in the open market. The CA correctly ruled that a
money market transaction partakes the nature of a loan and therefore
nonpayment thereof would not give rise to criminal liability for estafa
through misappropriation or conversion.
VIII. DISPOSITIVE PORTION:
WHEREFORE, the petition is DENIED and the Decision of the Court of
Appeals, as modified by its Resolution of May 27, 1988, is AFFIRMED in toto.