G.R. No. 100290 - Tibajia, Jr. vs. Court of Appeals

Case Summary (G.R. No. 100290)

Factual Background

The case arose from Civil Case No. 54863, a suit for collection filed by Eden Tan against the spouses Norberto Tibajia, Jr. and Carmen Tibajia. The trial court issued a writ of attachment on 17 August 1987. On 17 September 1987 the Deputy Sheriff returned that a deposit of P442,750.00 made by the Tibajia spouses in the Regional Trial Court of Kalookan City had been garnished. The Regional Trial Court, Branch 151 of Pasig, Metro Manila rendered judgment for the plaintiff on 10 March 1988, ordering payment in excess of P300,000.00. The Court of Appeals modified the award by reducing moral and exemplary damages. After finality, Eden Tan filed a motion for execution and the garnished funds on deposit with the Pasig RTC cashier were levied.

Tender of Payment by the Tibajia Spouses

On 14 December 1990 the Tibajia spouses delivered to Deputy Sheriff Eduardo Bolima payment in the following form: Cashier’s check (BPI No. 014021) P262,750.00; cash P135,733.70; total P398,483.70. The cashier’s check was issued by the Bank of the Philippine Islands, crossed and marked “For Payee’s Account Only” and payable to Eden Tan. The private respondent refused to accept the payment and insisted that the garnished funds deposited with the Pasig RTC cashier be withdrawn to satisfy the judgment.

Trial Court Proceedings

The Tibajia spouses filed a motion to lift the writ of execution on 15 January 1991 on the ground that the judgment debt had been paid. On 29 January 1991 the trial court denied the motion, ruling that payment by cashier’s check is not payment in legal tender and that the payment was made by a third party other than the defendant. The motion for reconsideration was denied on 8 February 1991.

Court of Appeals Proceedings

The spouses Tibajia sought relief by petition for certiorari, prohibition, and injunction in the Court of Appeals. On 24 April 1991 the appellate court dismissed the petition, holding that payment by cashier’s check is not payment in legal tender as required by Republic Act No. 529. The Court of Appeals denied the subsequent motion for reconsideration on 27 May 1991.

Issues Presented to the Supreme Court

The Tibajia spouses presented two issues: whether BPI cashier’s check No. 014021 in the amount of P262,750.00 tendered for payment of the judgment debt constituted legal tender; and whether Eden Tan could validly refuse the tender made partly in check and partly in cash for satisfaction of the monetary obligation.

Petitioners’ Contentions

The petitioners contended that the cashier’s check, being issued by a bank of good standing and marked for the payee’s account and payable to Eden Tan, was to be regarded as cash. They relied on the Court’s earlier decision in New Pacific Timber and Supply Co., Inc. v. Seneris, where the Court had observed that a cashier’s check is deemed as cash in business practice.

Applicable Law and Precedent

The Court reviewed Article 1249, Civil Code, Section 1, Republic Act No. 529, and Section 63, Republic Act No. 265 (Central Bank Act). Article 1249 governs payment of monetary debts and the effect of delivering negotiable instruments. Section 1 of Republic Act No. 529 provides that obligations are discharged upon payment in any coin or currency that at the time of payment is legal tender. Section 63 of the Central Bank Act declares that checks representing deposit money do not have legal tender power and that acceptance of checks is at the creditor’s option, but a cleared and credited check is equivalent to cash delivery.

Supreme Court’s Analysis and Reasoning

The Court held that the petition must fail. It applied the statutory rule that a check is not legal tender and that a creditor may refuse payment by check. The Court cited its recent decisions, notably Philippine Airlines, Inc. v. Court of Appeals and Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, which held that 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 may be refused by the creditor. The Court observed that the petitioners’ reliance on the dissenting opinion in the Philippi

Case Syllabus (G.R. No. 100290)

Parties and Procedural Posture

Norberto Tibajia, Jr. and Carmen Tibajia were the petitioners before the Supreme Court seeking review of a Court of Appeals decision denying their petition for certiorari, prohibition, and injunction.
The Honorable Court of Appeals was the respondent in the petition for certiorari, prohibition, and injunction filed by the petitioners in the Court of Appeals.
Eden Tan was the private respondent and judgment creditor who opposed the tender of payment and whose suit in Civil Case No. 54863 resulted in the judgment against the petitioners.
The petition before the Supreme Court assailed the Court of Appeals decision dated 24 April 1991 in CA-G.R. SP No. 24164 which affirmed the trial court's refusal to lift a writ of execution.

Key Factual Allegations

Eden Tan obtained a judgment in Civil Case No. 54863 against the Sps. Norberto and Carmen Tibajia ordering payment in excess of P300,000.00, and the judgment was finalized after appeal.
A writ of attachment issued on 17 August 1987 led to garnishment of a deposit of P442,750.00 belonging to the petitioners in another case, and those funds were later levied by execution.
On 14 December 1990, the petitioners delivered payment by means of a BPI cashier's check in the amount of P262,750.00 and cash in the amount of P135,733.70, aggregating P398,483.70, which they tendered to Deputy Sheriff Eduardo Bolima for payment of the judgment.
Eden Tan refused to accept the tendered payment and insisted that the garnished funds on deposit with the cashier of the Regional Trial Court of Pasig be withdrawn to satisfy the judgment.

Procedural History

The trial court, Regional Trial Court, Branch 151, Pasig, denied the petitioners' motion to lift the writ of execution on 29 January 1991 on the ground that payment by cashier's check is not legal tender and that the payment was made by a third party other than the defendant.
The trial court denied a subsequent motion for reconsideration on 8 February 1991.
The petitioners filed a petition for certiorari, prohibition and injunction in the Court of Appeals, which dismissed the petition on 24 April 1991, and denied a motion for reconsideration on 27 May 1991.
The petitioners brought the matter to the Supreme Court by petition for review.

Issues Presented

Whether the BPI cashier's check No. 014021 in the amount of P262,750.00 tendered by the petitioners constituted legal tender sufficient to discharge their monetary obligation.
Whether Eden Tan could validly refuse the tender of payment made partly in check and partly in cash for satisfaction of the monetary obligation.

Statutory Framework

Article 1249 of the Civil Code provided that payment of debts in money shall be made in the currency stipulated or in the currency which is legal tender in the Philippines and that delivery of promissory notes or mercantile documents produces the effect of payment only when they have been cashed or impaired through the creditor's fault.
Republic Act No. 529, Section 1 provided that obligations shall be