NEW PACIFIC TIMBER & SUPPLY COMPANY, INC.

v SENERIS
G.R. No. L-41764 December 19, 1980  

FACTS:  

Respondent Judge rendered a compromise judgment based on the amicable

settlement entered by the parties wherein petitioner will pay to private respondent
P54, 500.00 at 6% interest per annum and P6, 000.00 as attorney's fee of which
P5,000.00 has been paid. Upon failure of the petitioner to pay the judgment
obligation, a writ of execution worth P63, 130.00 was issued levied on the personal
properties of the petitioner. New Pacific Timber deposited with the Clerk of Court
in his capacity as the Ex-Officio Sheriff P50, 000.00 in Cashier's Check of the
Equitable Banking Corporation and P13, 130.00 in cash for a total of P63, 130.00,
before the date of the auction sale. Private respondent refused to accept the check
and the cash and requested for the auction sale to proceed. The properties were
sold for P50, 000.00 to the highest bidder with a deficiency of P13, 130.00.  

New Pacific Timber then filed an ex-parte motion for issuance of certificate of
satisfaction of judgment which was denied by the respondent Judge. Hence this
present petition, they alleged that the respondent Judge capriciously and
whimsically abused his discretion in not granting the requested motion for the
reason that the judgment obligation was fully satisfied before the auction sale with
the deposit made by the petitioner to the Ex-Officio Sheriff.  

The respondent Judge cited Article 1249 of the New Civil Code which provides
that payments of debts shall be made in the currency which is the legal tender of
the Philippines and Section 63 of the Central Bank Act which provides that checks
representing deposit money do not have legal tender power, in upholding the
refusal of the private respondent to accept the check. In sustaining the contention
of the private respondent to refuse the acceptance of the cash, the respondent Judge
cited Article 1248 of the New Civil Code which provides that creditor cannot be
compelled to accept partial payment unless there is an express stipulation to the
contrary.  

ISSUE: Can the check be considered a valid payment of the judgment obligation?  

RULING: YES. It is to be emphasized that it is a well-known and accepted

practice in the business sector that a Cashier's Check is deemed cash. Moreover,
since the check has been certified by the drawee bank, this certification implies
that the check is sufficiently funded in the drawee bank and the funds will be
applied whenever the check is presented for payment. The object of certifying a
check is to enable the holder to use it as money. When the holder procures the
check to be certified, it operates as an assignment of a part of the funds to the
creditors. Hence, the exception provided in Section 63 of the Central Bank Act
which states that checks which have been cleared and credited to the account of the
creditor shall be equivalent to a delivery to the creditor in cash the amount equal to
that which is credited to his account. The Cashier's Check and the cash are valid
payment of the obligation of the petitioner. The private respondent has no valid
reason to refuse the acceptance of the check and cash as full payment of the
obligation.