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 must 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 constitutes legal tender sufficient to effect the redemption of a foreclosed property within the statutory redemption period.

RULING

No. The Supreme Court reversed the decisions of the lower courts. 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, the 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 designates Philippine currency issued by the Bangko Sentral as legal tender. A manager’s check, while a secure form of payment as it is drawn by the bank upon itself, is still a checka bill of exchange. It is not currency itself but merely a representation of money. Acceptance of a check is at the discretion of the creditor unless otherwise agreed. Since the law and the mortgage contract did not stipulate that a manager’s check is acceptable for redemption, Metrobank had the right to insist on payment in legal tender (cash). The tender of a manager’s check, therefore, did not constitute valid tender of payment and did not interrupt the running of the redemption period. Consequently, the right to redeem was lost upon the expiration of the period without valid redemption.