G.R. No. L-5298 October 29, 1952
PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs. PEDRO RELATIVO, ET AL., defendants-appellants.

FACTS

The defendant-appellant Pedro C. Relativo owed the Philippine National Bank (PNB) the sum of P600 under a promissory note executed jointly and severally with two other persons (now deceased), payable within six months from February 12, 1947. In a suit for collection by the bank, Relativo asserted that the obligation had been paid. His defense was that on June 23, 1949, he presented himself at the Naga Agency of PNB and tendered payment of the loan using a check for P5,000 issued by the U.S. Treasury in favor of Bernarda Vda. de Rullas, who accompanied him. He demanded that her check be cashed. The plaintiff’s Assistant Agent, Martin Saludo, dishonored the check on the ground that “the identification and guaranty offered by the defendant were not sound and not free from suspicion.” The same check was later honored and cashed by the Legaspi Branch of PNB through identification provided by another counsel hired by the payee.

ISSUE

Whether the tender of payment in the manner described (using a third party’s check and conditioning it on cashing the remainder for the payee) resulted in the discharge of the defendant-appellant’s monetary obligation.

RULING

No, the tender of payment did not discharge the obligation. The Supreme Court affirmed the judgment of the Court of First Instance of Camarines Sur requiring the defendant-appellant to pay the debt with interest, attorney’s fees, and costs. The Court provided three principal reasons:
1. The tender was not in the stipulated currency. The promissory note required payment in Philippine currency. The tender was made using a check, and not even the debtor’s own check. The plaintiff bank rightfully refused it, as a check does not constitute legal tender for payment of a debt, even if the check is good.
2. The tender of payment was conditional. Under the Civil Code, a valid tender of payment must be unconditional. The defendant debtor effectively imposed a condition by offering the check, telling the Bank, “Here is P600 but you must pay the remainder of the check (P4,400) to Bernarda Vda. de Rullas.” The Bank’s agency was unwilling to accept this condition. The Court noted the Bank had reasons to reject it due to financial risks concerning the payee’s identity, the check’s genuineness, or other possible infirmities. Furthermore, the payee of an unaccepted check cannot compel the drawee bank to pay it; her remedy is against the drawer. Since the bank had no enforceable duty to pay Rullas, no wrong was done to the defendant, and thus no counterclaim for damages could arise.
3. Tender of payment alone does not produce legal payment; it must be completed by consignation. A valid tender merely exempts the debtor from interest and/or damages but does not extinguish the obligation. To obtain discharge, consignation (deposit) of the sum due must follow the tender. The defendant did not make a consignation. The Court also addressed the defendant’s reliance on Article 1170 of the Civil Code, noting that the bank’s refusal did not impair the check’s negotiability, as it was later cashed, so the cited provision did not apply.
Therefore, the obligation was not extinguished.