G.R. No. L-15915. May 26, 1962.
MARCELINO T. MACARAEG and ASUNCION V. SISON-MACARAEG, petitioners-appellees, vs. PHILIPPINE NATIONAL BANK, respondent-appellant.

FACTS

The spouses Marcelino T. Macaraeg and Asuncion V. Sison-Macaraeg were indebted to the Philippine National Bank (PNB) in the amount of P11,400, secured by a real estate mortgage. On July 15, 1953, they reduced the debt to P9,500. On December 20, 1955, and again on June 11, 1956, the spouses offered to pay the remaining balance using a Certificate of Indebtedness (Backpay Certificate) No. 5629 issued by the Bureau of Treasury in favor of Marcelino Macaraeg. PNB refused to accept the certificate, citing Republic Act No. 1576 , which took effect on June 16, 1956, and prohibited government-owned banks from accepting backpay certificates as payment.
Consequently, the spouses filed a petition in the Court of First Instance of Pangasinan to compel PNB to accept the tender of payment, to be relieved from paying interest from the date of the first tender (December 20, 1955), to be reimbursed for interest already paid, and to recover litigation expenses. The trial court ruled in favor of the spouses, ordering PNB to accept the certificate, refund the interest, and pay attorney’s fees. PNB appealed.

ISSUE

Whether the Philippine National Bank was legally obligated to accept the spouses’ backpay certificate as payment for their loan balance, given the enactment of Republic Act No. 1576 which prohibited such acceptance.

RULING

The Supreme Court affirmed the trial court’s decision, ruling that PNB was obligated to accept the tender of payment made on December 20, 1955. The legal logic hinges on the applicable law at the time of the valid tender. While Republic Act No. 1576 (effective June 16, 1956) indeed prohibited PNB from accepting backpay certificates, the prior law, Republic Act No. 897 (effective June 20, 1953), expressly allowed the payment of obligations to government-owned or controlled corporations using such certificates. The spouses’ loan existed before RA 897 took effect, and their tender of payment on December 20, 1955, was made during the period when RA 897 was in full force. Therefore, the right to pay using the certificate was vested and enforceable at that time.
Since the tender on December 20, 1955, was valid and effective under the law then prevailing, the accrual of interest on the loan balance was extinguished from that date. Consequently, PNB was ordered to refund the interest of P269.06 paid by the spouses for the period after the tender. The award of P500 as attorney’s fees was deemed reasonable. The subsequent prohibition under RA 1576 could not retroactively invalidate a right already perfected under the earlier statute.