PHILIPPINE NATIONAL BANK, PLAINTIFF AND APPELLEE VS. PEDRO C. RELATIVO, ET AL., DEFENDANTS AND APPELLANTS.

The defendant-appellant Pedro C. Relativo owed the Philippine
National Bank the sum of P600 for which he executed a promissory note jointly
and severally, with two other persons, now dead. The debt was payable within six
months counted from February 12, 1947.

In this suit by the Bank for collection, he asserts the
obligation has already been paid because, on June 23, 1949 “he presented himself
at the Naga Agency of the plaintiff and tendered payment of the loan out of a
check for P5,000 issued by the U. S. Treasury in favor of Bernarda Vda. de
Rullas, who then accompanied said defendant, demanding that her check be cashed.
This defendant identified her as the payee, but plaintiff’s Assistant Agent,
Martin Saludo of the Naga Agency, dishonored the check on the ground that the
identification and guaranty offered by the defendant were not sound and not free
from suspicion. The same check was, however, honored and cashed at a latter
date by the Legaspi Branch of the plaintiff through identification of another
counsel hired by the payee.”

Therefore the issue is whether the tender of payment in the
manner above described resulted in the discharge of defendant-appellant’s
monetary undertaking.

We are clearly of the opinion that it did not, for several
reasons, principally the following:

First.—The promissory note executed by
appellant undertook to pay in the Philippine currency; and according to the
trial judge, as “the tender of payment was made in check, and not his own at
that, the plaintiff acted rightly in refusing it. This is true even if the check
may be good.” (Belisario vs. Natividad, 60 Phil., 156, and Villanueva vs. Santos
Off. Gaz., March 1941, 681.)

Second.—The tender of payment was conditional. Under the Civil
Code, a tender of payment, to be valid, must be unconditional.^[1] In offering the
check, the defendant debtor, practically told the Bank, “Here is P600 but you
must pay the remainder of the check, (P4,400) to Bernarda Vda. de Rullas”. That
condition the Bank’s Agency was unwilling to accept.

And without in any manner implying that the creditor’s refusal
to accept the condition should be justified, we may state that the Bank in this
case had some reasons to reject the condition, because of the financial risk it
takes in making the payment, in connection with the identity of the payee, or
the genuineness of the check or other possible infirmities of the commercial
paper which banking institutions are expected to foresee or provide against.

The appellant labors under the impression that it was the duty
of the Bank to honor and cash the check when and if the payee Vda. de Rullas
presented it. The check is not before us, but we may grant appellant all
favorable presumptions. We may assume that the check was in fact genuine, that
it was negotiable, that it was drawn upon the Philippine National Bank, that the
person presenting the check was in reality the payee Bernarda Vda. de Rullas,
and that the drawer had enough funds in the hands of the plaintiff bank. Still,
and in spite of the above circumstances, Bernarda Vda. de Rullas could not
compel nor sue the Bank to obtain payment of the check, because it does not
appear that it had been accepted. (Sec. 189, Neg. Inst. Law.)

“The payee of a check unaccepted cannot maintain an action on
it against the bank on which it is drawn.” (General American Life Ins. Co. vs.
Stadium, N. C. 1943, 25 S. E. 2d, 202)

“The reason why the holder of the check is not permitted to sue
the bank has been stated by the authorities to be, that there is no privity
between the holder and the bank until by certification of the check or the
acceptance thereof, express or implied, or by any other act or conduct, it has
made itself directly liable to the holder.” (Standard Trust Co. us. Commercial
Nat. Bank, 1914, SI S. E. 1074, 166 N. C., 112.)

“The holder’s remedy is against the drawer where payment of a
check is refused.” (Pease, etc., Co. vs. State Nat. Bank, 1905, 88 S. W., 172,
114 Tenn., 693.)

“The bank is liable only to the drawer for a refusal to pay a
check unless the check has been accepted or certified.” (Farmers’, etc., Nat.
Bank vs. Elizabethtown Nat. Bank, i906, 30 Pa. Super. Ct., 271.)

If the Bank was not the drawee, appellant’s case would be less
meritorious.

“The payee of an unaccepted check cannot maintain an action
against a bank, other than the drawee, which refuses to pay the check on
demand.” (Independent Oil Men’s Assoc. vs. Ft. Dearborn Nat. Bank, 1924, 142 N.
E. 458, 311 111., 278, affirming 226 111. App. 570.)

The foregoing exposition of the right—or lack of right—of
Bernarda Vda. de Rullas to get payment should be enough answer should appellant
insist in his position that the Bank caused him damage—and therefore he has a
counterclaim—for depriving him of the opportunity to earn the money he could
have earned upon payment of the check through his services or cooperation. As
there was no duty of the bank enforceable by Rullas, (nor by this defendant), no
wrong was done, for which damage could be claimed.

Third.—Tender of payment even if valid, does not by itself
produce legal payment, unless it is completed by consignation.

The effect of a valid tender of payment is merely to exempt the
debtor from payment of interest and/or damages.^[2]

Tender of payment alone is not a mode of extinguishing
obligations. Tender of payment in the Civil Code is treated as subtitle in the
section on Payment as a mode of extinguishing obligations. But the subtitle is
“Tender of payment and consignation”. And article 1176 provides that after a
valid tender of payment “the debtor shall be released from responsibility by the
consignation of the thing or sum due”. As’a complement, article 1180 says that
“after the consignation has been duly made, the debtor may petition the judge to
order the cancellation of the obligation.” All of which patently indicate that
consignation must follow, supplement or complete the tender of payment if
discharge of the obligation is to be obtained.^[3]

“B. Ofrecimicnto de pago y consignacion.—Consiste el primero
en una declaracion de voluntad dirigida al acreedor, por la que el deudor
manifiesta su firme decision dc cumplir immediatamente la obligation; y la
segunda en el deposito que en forma legal hace el deudor de la cosa objeto de la
obligacion, cuando el acreedor no quiere o no puede recibirla. Solo la
consignacion es forma de pago. La oferta unicamente nos interesa aqui en cuanto
es un acto preparatorio.de la consignacion.” (Castan, Derecho Civil, Vol. 2, p.
521.).

“A. In General.—Under a statute in some jurisdictions an
obligation for the payment of money is extinguished by a due offer of payment,
if the amount is immediately deposited in accordance with the statute. In the
absence of such statute, or if there is a failure to comply with the statute) a
tender of money does not ordinarily operate as a satisfaction of the debt. * *
*” (62 Corpus Juris, p. 683.)

The appellant cites article 1170 of the Civil Code providing
that delivery to the creditor of a check “shall produce the effects of payment
only when realized or when by the fault of such creditor the privileges inherent
in their negotiable character have been lost“; and he argues, that the
underlined portion applies to his defense against the Bank. Yet it appears that
the refusal of the plaintiff’s Naga Branch did not impair the check. So much so
that it was subsequently honored and cashed by the Legaspi branch.

Wherefore, the judgment of the court of first instance of
(Jamarines Sur requiring this defendant-appellant to pay the debt with interest,
attorneys fees and costs is hereby affirmed. He shall also defray the costs of
this appeal.

Paras, C. J., Pablo, Padilla, Montemayor, Jugo, Bautista Angelo,
and Labrador, JJ., concur.

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[1] Decision of the Supreme Court of Spain cited in footnote, Castan Tobeñas, Derecho Civil, (1943) Vol. 2 p. 522.

[2] See 62 Corpus Juris p. 682.

[3] See Llamas vs. Abaya, 60 Phil., 502 and Asturias Sugar Central vs. Pure Cane, 60 Phil., p. 255.