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 on the loan. Metrobank extrajudicially foreclosed the mortgage. The property was sold at a 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 payment must be made in legal tender (cash) only. 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 the decision. Metrobank appealed to the Supreme Court.

ISSUE

Whether a manager’s or cashier’s check is a sufficient tender of payment for the exercise of the right of redemption over an extrajudicially foreclosed property.

RULING

Yes. The Supreme Court denied Metrobank’s petition and affirmed the decisions of the lower courts. The Court held that a manager’s or cashier’s check, which is a bank’s own check drawn against itself and deemed accepted in advance upon issuance, is considered as cash and constitutes legal tender for the purpose of exercising the statutory right of redemption. The Court emphasized that the redemptioner is only required to pay the redemption price in “legal tender,” which includes not only government-issued currency but also checks that are universally treated as cash in commercial transactions. Metrobank’s refusal to accept the manager’s check was unjustified and constituted a waiver of its right to receive payment in any specific form, thereby validating the consignation made by the Vital spouses. The one-year redemption period is a substantive right in favor of the debtor, and any tender of payment complying with legal requirements effectively exercises that right.