2013 (Civil Law) Bar Exam Questions: Essay Question 6

[Discuss/answer the question below. Or see Civil Law Instructions; Civil Law Instructions; Civil Law Essay Questions: 1, 2, 3, 4, 57, 8, 9 and 10; Civil Law Multiple Choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]


Lito obtained a loan of P1,000,000 from Ferdie, payable within one year. To secure payment, Lito executed a chattel mortgage on a Toyota Avanza and a real estate mortgage on a 200-square meter piece of property.

(A) Would it be legally significant — from the point of view of validity and enforceability — if the loan and the mortgages were in public or private instruments? (6%)

(B) Lito’s failure to pay led to the extra-judicial foreclosure of the mortgaged real property. Within a year from foreclosure, Lito tendered amanager’s check to Ferdie to redeem the property. Ferdie refused to accept payment on the ground that he wanted payment
in cash: the check does not qualify as legal tender and does not include the interest payment. Is Ferdie’s refusal justified? (4%)


    1. Sa akin significant lang kung private or public instrument when it comes to the REM, because in chattel mortgage what is important is its registration in the chattel mortgage registry.

      1. I answered the same as you anon, for purposes of validity and enfoceability whether or not it is in a public/private is immaterial because all obligations between the parties are binding as to them. Di nako nag distinguish between the loan and mortgage. Kasi an unregistered mortgage is still valid & enforceable among the parties registry is for the protection of third parties.

  1. B. a check even a manager’s check is not a legal tender. the creditor has the right to refuse acceptance as form of payment. the payment power of check is realized until only it is encashed.

    1. My answer is in the same tenor, as to the interest payment I just mentioned that there is no liability for interest payment since there was no stipulation to that effect.

      1. as to question B: Whether or not the mode of payment is by CASH or CHECK is immaterial. The issue revolves around the question W/N the redemption of the foreclosed property creates/extinguishes an obligation. If it were the latter, I would have agreed with all of you because as we all know legal tender matters only in extinguishing obligations. But it seems that from the facts, the redemption made CREATED an obligation it did not concern the previously contracted loan.

      2. As to B i answered that he had no right to refuse, for the interest same as what you cited anon. For the payment of check i said he was wrong, payment through checks is allowed however the obligation will not be considered as payment until the check is encashed. The redemptioner has an absolute right to redeem during the period of redemption and the refusal of accepting the check tried to defeat the redemptioner’s right. The checked should have been accepted and if subsequently it bounced dun pa lang magkakaron ng non-payment. He had no valid ground to refuse the offer of redemption through a check especially a manager’s check which is guaranteed by the bank. (Mejo sketchy nga lang sagot ko kasi may halong commercial)

  2. While as a general rule, a check is not legal tender unlessed cashed.

    I think one can argue that the check is a MANAGER’S check. It is guaranteed by the bank. One can argue that it is as good as cash, debited na yon sa original account ng drawee. It is in theory, has sufficient funds.

    wala lungs. 🙂

  3. Why are there still discussions on this topic? Tapos na po ang exam, lumabas na ang result. Academic freedom is useless if there is no definite answer to base your argument. Kita kits na lang sa court para magkaalaman ng galing. Ang pwede lang magyabang dito ang mga topnotchers, if you’re not one of them better not insist on your answer even if its the essence of lawyering.

    1. Di justified ang refusal kasi cgurado ang manager’s check eh. d gusto ni ferdie na mabayaran. hahaha.

      1. I know This is water under the bridge, but i think in letter b the answer is that he cannot refuse payment through a check.

        General rule is that a creditor cannot be compelled to accept any payment except legal tender. But when the payment occurs not because of a debt but because of the exercise of the right of conventional redemption, as in the case above, he cannot refuse payment through a check since this is a right and not a duty. Refusal to accept payment through a check will impair the right of the redemptioner.

      2. I agree with that answer. Case of Fortunato v. CA, although it may not serve as a legal tender in the payment of an obligation, a check whether a cashier or manager check may be used in the exercise of a right, which is the right of redemption in this case.

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