Tibajia v. Court of Appeals
REITERATIONFacts
The Antecedents: Eden Tan filed a suit for collection of a sum of money against spouses Norberto and Carmen Tibajia. A writ of attachment was issued, and a deposit made by the Tibajia spouses in another case was garnished. The Regional Trial Court (RTC) rendered judgment in favor of Eden Tan. The Court of Appeals (CA) modified the decision by reducing damages. The decision became final, and Eden Tan filed a motion for execution. Procedural History: The Tibajia spouses delivered payment to the Deputy Sheriff, consisting of a Cashier's Check for P262,750.00 and cash for P135,733.70, totaling P398,483.70. Eden Tan refused to accept this payment, insisting on the withdrawal of the garnished funds. The Tibajia spouses filed a motion to lift the writ of execution, claiming the debt was paid. The RTC denied the motion, stating that payment by cashier's check is not legal tender and was made by a third party. The CA dismissed the Tibajia spouses' petition for certiorari, prohibition, and injunction, holding that payment by cashier's check is not legal tender as required by Republic Act No. 529. The CA denied their motion for reconsideration. The Petition: The Tibajia spouses filed a petition for review before the Supreme Court, raising issues on whether a BPI cashier's check constitutes legal tender and whether the private respondent could validly refuse the tender of payment partly in check and partly in cash.
Issue(s)
Whether or not a BPI cashier's check in the amount of P262,750.00 tendered by petitioners for payment of the judgment debt is "legal tender", and whether or not the private respondent may validly refuse the tender of payment partly in check and partly in cash made by petitioners for the satisfaction of the monetary obligation of petitioners-spouses.
Ruling
The petition is DENIED. The appealed decision of the Court of Appeals is AFFIRMED, with costs against the petitioners.
Ratio Decidendi
On the issue of whether a cashier's check constitutes legal tender and whether the private respondent could validly refuse the tender of payment: The Court held that a check, whether a manager's check or an ordinary check, is not legal tender. This is in accordance with Article 1249 of the Civil Code, which states that payment of debts in money shall be made in legal tender. The delivery of mercantile documents like bills of exchange or checks only produces the effect of payment when they have been cashed or when through the fault of the creditor they have been impaired. Section 63 of Republic Act No. 265 (Central Bank Act) explicitly states that checks representing deposit money do not have legal tender power and their acceptance is at the option of the creditor. Therefore, the creditor, Eden Tan, could validly refuse payment made by way of a cashier's check. The Court affirmed the ruling that the private respondent could validly refuse the tender of payment made partly in cash and partly by cashier's check. The law requires payment in legal tender for the discharge of a monetary obligation. While the cash portion of the payment was in legal tender, the inclusion of a cashier's check, which is not legal tender, gave the creditor the option to refuse the entire tender. The Supreme Court reiterated its pronouncements in previous cases, such as Philippine Airlines, Inc. vs. Court of Appeals and Roman Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court, that a check is not legal tender and may be refused by the obligee. The Court clarified that the petitioners' reliance on a dissenting opinion in a previous case was misplaced, as that opinion did not assert that a check is legal tender but rather discussed the consequences if the checks had not been encashed.
Main Doctrine
A check, including a cashier's check, is not legal tender, and a creditor may validly refuse payment by check. Payment by check only produces the effect of payment when it has been cashed or when through the fault of the creditor it has been impaired.