G.R. No. 101083 , July 30, 1993
METROPOLITAN BANK AND TRUST COMPANY, Petitioner, vs. HON. COURT OF APPEALS AND SPOUSES FORTUNATO AND VIRGINIA VANGUARDIA, Respondents.

FACTS

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

ISSUE

Whether the tender of payment by means of a manager’s check, within the redemption period, constitutes valid exercise of the right of redemption under Act No. 3135 .

RULING

YES. The Supreme Court affirmed the decisions of the lower courts. The right of redemption is not defeated by the manner of payment, provided the payment is made within the redemption period. The law ( Act No. 3135 ) does not prescribe a specific mode of payment for redemption. While a manager’s check is not legal tender, it is considered as “cash” or the equivalent of a cash payment in commercial transactions because it is drawn by the bank upon itself and is accepted in advance by the act of its issuance. The bank becomes primarily liable thereon. By tendering a manager’s check for the full amount, the Vanguardias effectively made an unconditional offer to pay which Metrobank unreasonably refused. The consignation was therefore valid and effected the redemption. The Court emphasized that the redemptioner is only required to pay the redemption price, not in any specific form of currency, and Metrobank’s refusal to accept the manager’s check was unjustified.