G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES ANTONIO and VIOLETA DY, respondents.

Promulgated: July 11, 1996

FACTS

Spouses Antonio and Violeta Dy 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 purchased the property as the highest bidder at the public auction. A certificate of sale was issued and registered. Within the one-year redemption period, the Dy 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 must be made in legal tender (cash). The Dy spouses filed an action for consignation. The trial court ruled in their favor, ordering Metrobank to accept the manager’s check and execute a 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 constitutes legal tender sufficient to effect redemption of a foreclosed property within the statutory redemption period.

RULING

NO. The Supreme Court REVERSED the Court of Appeals.
A manager’s check is not legal tender. Legal tender refers to currency (coins and notes) which the law compels a creditor to accept in payment of a debt when tendered by the debtor in the right amount. Under the Civil Code (Article 1249), payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines. The Central Bank Act specifies that Philippine currency (notes and coins) issued by the Bangko Sentral are legal tender. A manager’s check, while a secure financial instrument equivalent to cash for many commercial purposes, is still a checka bill of exchange drawn by a bank upon itself. It is not currency issued by the sovereign and does not fall within the statutory definition of legal tender. The right of redemption is statutory and must be exercised in the manner prescribed by law. The applicable law (then Act No. 3135 , as amended) and jurisprudence require redemption to be made in “legal tender.” Therefore, the tender of a manager’s check, not being legal tender, was not a valid tender of redemption price. Metrobank was within its rights to refuse it. The consignation was invalid for lack of a valid prior tender.