Tibajia vs. Court of Appeals

A check, including a cashier's or manager's check, is not legal tender. An offer of a check in payment of a monetary obligation is not a valid tender of payment and may be refused by the creditor at their option.

Private respondent Eden Tan obtained a final and executory judgment for a sum of money against petitioners Norberto Tibajia, Jr. and Carmen Tibajia. During the proceedings, a sum of money deposited by the petitioners in another court was garnished. Upon execution, the petitioners delivered a cashier's check and cash to the sheriff, but Tan refused the payment, insisting that the garnished funds be used to satisfy the judgment.

• Nature of the Case: The case originated from a collection suit (Civil Case No. 54863) filed by Eden Tan against the Tibajia spouses.
• Garnishment and Judgment: A writ of attachment was issued, garnishing P442,750.00 deposited by the Tibajias in another court. The RTC later rendered a judgment in favor of Tan for over P300,000.00, which was modified on appeal but ultimately became final.
• Tender of Payment: On 14 December 1990, the Tibajia spouses delivered to the sheriff a BPI cashier's check for P262,750.00 and cash of P135,733.70, totaling P398,483.70, to satisfy the judgment.
• Refusal and Motion: Eden Tan refused the payment, insisting the garnished funds be used. The Tibajias filed a motion to lift the writ of execution, claiming the debt was paid.
• Lower Court Rulings: The RTC denied the motion, holding that payment by cashier's check is not legal tender and that payment was made by a third party. The Court of Appeals upheld this denial.

• Legal Tender Character of Cashier's Check: Petitioners argued that a BPI cashier's check, being a crossed check marked "For Payee's Account Only" and issued by a reputable bank, should be considered legal tender. They cited New Pacific Timber and Supply Co., Inc. v. Señeris, where a cashier's check was deemed "as cash" in business practice.
• Valid Tender of Payment: Petitioners maintained that the combined tender of the cashier's check and cash constituted a valid discharge of their monetary obligation, which the creditor could not rightfully refuse.

• Statutory Prohibition: Respondent countered that under Republic Act No. 529 and the Central Bank Act, a check is not legal tender. The creditor's option to refuse payment by check is expressly provided by law.
• Distinguishing Precedent: Respondent argued that the New Pacific Timber case cited by petitioners was inapplicable, as subsequent jurisprudence (PAL v. CA, Roman Catholic Bishop of Malolos v. IAC) had definitively ruled that checks are not legal tender.

• Legal Tender Status: Whether a cashier's check constitutes legal tender for the payment of obligations under Philippine law.
• Validity of Refusal: Whether a creditor may validly refuse an offer of payment consisting partly of a cashier's check and partly in cash.

• Legal Tender Status: A cashier's check is not legal tender. The governing statutes—Article 1249 of the Civil Code, R.A. No. 529, and Section 63 of R.A. No. 265 (Central Bank Act)—explicitly provide that only coins and currency issued by the Central Bank are legal tender. Checks, including cashier's checks, do not have legal tender power.
• Validity of Refusal: The creditor's refusal was valid. Under the law, the acceptance of a check in payment of a debt is at the option of the creditor. Since the creditor did not accept the cashier's check, the tender of payment was ineffective, and the obligation remained unsatisfied.

• Legal Tender Doctrine — Legal tender refers to the coins and currency issued by the Bangko Sentral ng Pilipinas which, by law, must be accepted for the payment of debts. Checks, bills of exchange, or promissory notes are not legal tender, and their acceptance is at the creditor's discretion. The Court applied this to deny the petitioners' claim that their cashier's check discharged the obligation.
• Creditor's Option to Refuse Payment by Check — Pursuant to Section 63 of the Central Bank Act, a creditor has the option to refuse payment made through a check, whether it is a personal, manager's, or cashier's check. This option is absolute unless the check has been cleared and credited to the creditor's account.

• "A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor." — This passage succinctly states the controlling rule applied by the Court.
• "We are not, by this decision, sanctioning the use of a check for the payment of obligations over the objection of the creditor." — Quoted from Fortunado v. Court of Appeals to reinforce the creditor's option to refuse check payments.

• Philippine Airlines, Inc. v. Court of Appeals, G.R. No. 49188, 181 SCRA 557 (1990) — Cited as controlling precedent holding that a check is not legal tender and its offer may be refused by the creditor.
• Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, G.R. No. 72110, 191 SCRA 411 (1990) — Followed for the same principle that checks are not legal tender.
• Fortunado v. Court of Appeals, G.R. No. 78556, 196 SCRA 269 (1991) — Applied to stress that the Court does not sanction check payment over a creditor's objection.
• New Pacific Timber and Supply Co., Inc. v. Señeris, G.R. No. L-41764, 101 SCRA 686 (1980) — Distinguished; its statement that a cashier's check is "deemed as cash" in business practice was held not to override the explicit statutory provisions on legal tender.

• Article 1249, Civil Code — Provides that payment of debts in money shall be made in the currency stipulated or in legal tender. It also states that the delivery of mercantile documents (like checks) produces the effect of payment only when cashed.
• Section 1, Republic Act No. 529 (An Act to Assure the Uniform Value of Philippine Coin and Currency) — Declares that every obligation shall be discharged upon payment in any coin or currency which is legal tender in the Philippines.
• Section 63, Republic Act No. 265 (The Central Bank Act) — Explicitly states that checks do not have legal tender power and their acceptance in payment of debts is at the option of the creditor.

• Chief Justice Andres R. Narvasa
• Justice Ricardo J. Regalado
• Justice Jose C. Nocon

N/A — The decision was unanimous.