Title
New Pacific Timber and Supply Co., Inc. vs. Seneris
Case
G.R. No. L-41764
Decision Date
Dec 19, 1980
Petitioner deposited full payment (cashier's check + cash) for judgment obligation, but auction proceeded. SC ruled payment valid, auction void, and judge abused discretion.
cash
auction sale
levied properties
A

Case Summary (G.R. No. L-41764)

Key Dates and Procedural Posture

Compromise judgment entered: July 19, 1974 (terms provided by the parties and approved by the trial court).
Writ of execution issued: December 21, 1974.
Scheduled auction dates and related events: January 15–16, 1975 (postponements, deposit, refusal to accept).
Ex parte motion for certificate of satisfaction filed by petitioner: January 17, 1975.
Trial court order denying the ex parte motion: August 28, 1975.
Relief sought in the petition: Annulment/modification of the August 28, 1975 order, annulment of the auction and sheriff’s certificate of sale, directive that the judgment be deemed satisfied and levied properties released to petitioner.

Applicable constitution for analytical context: the 1973 Philippine Constitution (decision predates the 1987 Constitution). Applicable statutes and rules relied upon in the decision: Central Bank Act (Sec. 63), New Civil Code (Arts. 1248–1249), Negotiable Instruments Law (Secs. 187, 189), and Rule 39, Section 24 of the Rules of Court (notice of sale).

Compromise Judgment Terms and Obligation

The parties entered into and the trial court rendered a compromise judgment specifying that the defendant (petitioner) would pay P54,500 at 6% interest from August 25, 1972; pay P6,000 as attorney’s fees (of which P5,000 was acknowledged received, leaving P1,000 due); that the entire amount (P54,500 plus interest plus P1,000) be paid within five months from July 19, 1974; and that failure to comply would permit issuance of a writ of execution for satisfaction of the obligation. The writ of execution later specified an amount of P63,130.00.

Deposit of Funds with the Sheriff and Private Respondent’s Refusal

Prior to the scheduled auction, petitioner deposited with the Clerk of Court in the sheriff’s custody the amount of P63,130.00 consisting of a P50,000 Cashier’s Check (Equitable Banking Corporation, Cashier’s Check No. S-314361) dated January 3, 1975, and P13,130.00 in cash. On January 14, 1975, private respondent, through counsel, communicated to the Ex-Officio Sheriff a refusal to accept the check and cash deposit and instructed that the auction proceed if the petitioner could not produce cash. The sale was postponed multiple times for settlement attempts; on January 16, 1975, petitioner’s representatives requested a brief delay to contact counsel, but they did not return and the sheriff proceeded with the auction.

Conduct and Result of the Auction Sale

At the execution sale on January 16, 1975, the levied personal properties were sold item by item. Deputy Sheriff Castro declared the private respondent the highest bidder at P50,000.00. The sheriff declared a deficiency of P13,130.00 (the balance between the bid and the writ amount) and issued a Sheriff’s Certificate of Sale in favor of private respondent for P50,000.00.

Trial Court’s Denial of Certificate of Satisfaction and Grounds Cited by the Trial Court

Petitioner filed an ex parte motion for issuance of a certificate of satisfaction of judgment on January 17, 1975. The trial court denied this motion by order dated August 28, 1975. In upholding the private respondent’s refusal to accept the payment, the trial court relied upon: Central Bank Act, Sec. 63 (checks do not have legal tender power and acceptance of checks as payment is at creditor’s option, except where a check has been cleared and credited); New Civil Code Art. 1249 (payment in currency and the rule that promissory notes or bills produce payment effect only when cashed); and Art. 1248 (creditor not compelled to accept partial payments).

Central Legal Issue Presented to the High Court

Whether the private respondent validly refused acceptance of the payment of the judgment obligation made by petitioner—specifically a P50,000 Cashier’s Check plus P13,130 in cash—deposited with the sheriff before the scheduled auction sale, thereby justifying the execution sale and the issuance of a sheriff’s certificate of sale.

Legal Analysis on Character and Effect of the Cashier’s Check

The Supreme Court emphasized that the P50,000 instrument was not an ordinary personal check but a cashier’s check of a reputable bank, and that the sheriff testified it was a certified crossed check. The Court recited established principles: a certified (cashier’s) check is treated as equivalent to cash because certification by the drawee bank implies acceptance and the setting apart of funds for satisfaction of the check. The Negotiable Instruments Law (Sec. 187) equates certification with acceptance; Sec. 189 recognizes that a check operates as an assignment only when accepted or certified. The Court cited precedent and authorities to show that certification transfers the rights and duties analogous to those of a depositor and enables the check to be used commercially as money.

Application of the Law to the Facts — Exception to the Central Bank Act Provision

Given that the Cashier’s Check had been certified by the drawee bank, the Court applied the exception in Central Bank Act Sec. 63—i.e., a check that has been cleared and credited to the creditor’s account is equivalent to delivery of cash. Because the cashier’s check was certified (and later was replaced by cash pursuant to an agreement), the funds represented by the check were, for all intents and purposes, available to satisfy the judgment. The entire deposited sum (P50,000 cashier’s check + P13,130 cash) corresponded to the writ amount. Under these facts, private respondent had no valid basis to refuse satisfaction of the judgment by tender of those funds.

Trial Court’s Abuse of Discretion and Invalidity of the Auction Sale

The Supreme Court concluded that the trial judge gravely abused his discretion in denying petitioner’s motion for issuance of a certificate of satisfaction and in allowing the execution sale to proceed despite the deposit that fully covered the judgment obligation. The auction sale and the sheriff’s certificate of sale were therefore deemed uncalled for and invalid because the payment tendered and on deposit satisfied the judgment debt.

Additional Factual Point: Subsequent Replacement of Check by Cash

The record showed that petitioner withdrew the Cashier’s Check on January 17, 1975 and replaced it with P50,000 in cash on January 27, 1975 pursuant to an agreement among the parties at the judge’s instance; even after replacement with cash, private respondent still refused to accept the money, indicating a preference for the levied properties over satisfaction of the judgment.

Remedy, Holdings, and Orders Issued by the Supreme Court

The Supreme Court granted the petition and rendered the following relief: declared null and void the trial court’s August 28, 1975 order denying the certificate of sat

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