ROMAN CATHOLIC BISHOP OF MALOLOS, INC., petitioner, vs.

INTERMEDIATE APPELLATE COURT,

and ROBES-FRANCISCO REALTY AND DEVELOPMENT CORPORATION, respondents.
Roman Catholic of Malolos v IAC
GR 72110 | November 16, 1990 | Sarmiento, J.
Modes of Extinguishment of Obligations
ELAM

Doctrine: Since a negotiable instrument (e.g. checks) is only a substitute for money and not money, the delivery of
such an instrument does not, by itself, operate as valid tender of payment.

FACTS:
 The property subject of the contract consists of a 20k sqm parcel of land in Bulacan, registered under the name
of Roman Catholic Bishop of Malolos (petitioner RCBM=vendor ) which it sold to Robes-Francisco Realty
(respondent Robes Realty=vendee).
 July 1971 - Contract over property in question was executed between RCBM, and Robes Realty through its
president, Mr. Robes, stipulating for a DP of P23,930, and the balance of P100k plus 12% interest per annum to
be paid within 4 years from execution of contract.
o The contract likewise provides for cancellation, forfeiture of payments, and reconveyance for
noncompliance.

 After the expiration of the period for payment, Robes Realty wrote RCBM a formal request that her company
be allowed to pay the principal amount of P100k in 3 equal installments of 6 months each with the first
installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request. . .
RCBM denied the request, but granted Robes Realty a grace period of 5 days from the receipt of denial to pay
the total balance of P124,000.00.
 On Aug 4, Robes Realty requested from RCBM another extension of 30 days to fully settle its account . . . and
this was granted by RCBM.

 Robes Realty wrote a letter to RCBM protesting the refusal of RCBM to accept the tender of payment it made
on Aug 5. Robes Realty demanded for the execution of a deed of absolute sale.
 RCBM denied Robes Realty made a tender of payment on Aug 5. RCBM cancelled the contract, considered all
payments forfeited and the land as reconveyed.

 Robes Realty filed case against RCBM.

 Trial Court: Robes Realty did not make a valid tender of payment; failure to present in court the certified
personal check tendered as payment or its photox is fatal to their case; found that Robes Realty had insufficient
funds to fulfill the obligation since it only had a savings account deposit of P64k.
 IAC: reversed TC decision; found Robes Realty had sufficient available funds (about 300k in money market
placements), and concluded that it had tendered payment.
 RCBM files petition for review on certiorari to reverse IAC ruling.

ISSUES:
1. WoN the finding of the IAC that since Robes Realty had sufficient available funds, therefore, it made a tender
payment. --NO
2. WoN an offer of a check is a valid tender of payment. --NO

RULING:
1.
Robes Royalty averred/IAC ruled: that since Robes Realty has sufficient available funds, it made a tender of
payment.
RCBM averred: there was no tender of payment by Robes Realty
Court ruled (in favor RCBM):
 A finding that a party had sufficient available funds on or before the grace period for the payment of obligation
does not constitute proof of tender of payment.
 Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as
payment to the obligee for the former’s obligation and demanding that the latter accept the same. Thus, tender
of payment cannot be presumed by a mere inference from surrounding circumstances. Tender of payment
means that obligor is able, and willing, and most importantly in the act of performing his obligation. (TOP =
offer of payment + demand that creditor accept payment)
 At most, sufficiency of available funds is only affirmative of the capacity or ability of the obligor to fulfill his
part of the bargain. IAC was therefore, in error.

2.
Robes Royalty averred: a check is a valid tender of payment
Court ruled (in favor of RCBM): check is not valid TOP
 Art. 1249 of the Civil Code provides that “the payment of debts in money shall be made in the currency
stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the
Philippines.”
 In Philippine Airlines v. Court of Appeals:
o Since a negotiable instrument (e.g. checks) is only a substitute for money and not money, the delivery of
such an instrument does not, by itself, operate as payment.
o 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.
o The tender of payment by the private respondent was not valid for failure to comply with the requisite
payment in legal tender or currency stipulated within the grace period.
 RCBM was correct in refusing the check since it is not valid TOP. It validly cancelled the contract, and validly
forfeited payments.

DISPOSITION:
the DECISION of the IAC is hereby SET ASIDE and ANNULLED and the DECISION of the trial court is
REINSTATED.

NOTES:
SIDE-ISSUE:
WoN it is the obligation of the RCBM to convey deed of sale even if Robes Realty has not paid, considering that the
contract stipulates that the conveyance of deed of sale is conditioned on the full payment by Robes Realty. –NO

Court ruled: Art. 1159 of the Civil Code of the Philippines provides that “obligations arising from contracts have
the force of law between the contracting parties and should be complied with in good faith.”