G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES FORTUNATO and VIRGINIA VITAL, respondents.

July 30, 1996

FACTS

Spouses Fortunato and Virginia Vital obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted. Metrobank extrajudicially foreclosed the mortgage, and the property was sold at public auction where Metrobank was the highest bidder. A certificate of sale was issued and registered. Within the one-year redemption period, the Vital spouses offered to redeem the property by tendering a manager’s check for the full redemption price. Metrobank refused to accept the tender, insisting that redemption could only be made in legal tender (cash). The Vital spouses filed an action for consignation. The trial court ruled in their favor, ordering Metrobank to accept the manager’s check and execute the deed of redemption. The Court of Appeals affirmed. Metrobank appealed, arguing that a manager’s check is not legal tender and redemption must be made in cash.

ISSUE

Whether a manager’s check is a proper medium for the payment of the redemption price in an extrajudicial foreclosure of a real estate mortgage.

RULING

Yes. The Supreme Court affirmed the decision of the Court of Appeals. A manager’s check is a cashier’s check issued by a bank’s manager, drawn against the bank’s own funds. It is a primary obligation of the issuing bank and is accepted in the banking community as equivalent to cash. The purpose of the redemption period is to give the mortgagor a chance to recover their property, and requiring strict cash payment would defeat this equitable purpose, especially where a manager’s check is a secure and immediate form of payment. The law does not expressly require payment in legal tender for redemption. Since the tender of a manager’s check was for the full amount due and was unconditional, it constituted valid tender of payment. Metrobank’s refusal to accept it was unjustified. The consignation was therefore valid and effective, and the Vital spouses were entitled to redeem their property.