Dear PAO,
I am a small-business owner operating a Piso-net and Piso-Wi-Fi in our neighborhood. As my business continues to grow, I had to borrow money from a lender (Bumbay). When I tried to pay him P3,000.00 in coins, he refused to accept the payment and told me to pay in bills instead, saying that it was difficult to carry the coins on his motorcycle. Can he refuse my payment? Thank you.
-Igah
Dear Igah,
Before addressing the question, there is a need to discuss the nature and scope of legal tender in the Philippines.
Article 1249 of the New Civil Code of the Philippines 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.”
By definition, legal tender is that kind of currency which a debtor may compel a creditor to accept in satisfaction of a monetary obligation when tendered in the proper amount. Section 52 of Republic Act (RA) 7653, otherwise known as “The New Central Bank Act,” expressly states:
“All notes and coins issued by the Bangko Sentral shall be fully guaranteed by the Government of the Republic of the Philippines and shall be legal tender in the Philippines for all debts, both public and private; Provided, however, That, unless otherwise fixed by the Monetary Board, coins shall be legal tender in amounts not exceeding Fifty pesos (P50.00) for denominations of Twenty-five centavos and above, and in amounts not exceeding Twenty pesos (P20.00) for denominations of Ten centavos or less.”
Subsequently, RA 7653 was amended by RA 11211, which modified the legal tender limits for coins. Under the amended law and Bangko Sentral ng Pilipinas (BSP) Circular 1162, Series of 2022, centavo coins are legal tender only up to a maximum amount of P200.00, while P1.00, P5.00, P10.00 and P20.00 coins are legal tender only up to P2,000.00 per transaction. It bears emphasis that such limitation on the legal tender of coins applies to single transactions and does not prohibit payments exceeding the prescribed limits provided that there is prior and mutual agreement between the parties to accept such mode of payment.
On the other hand, notwithstanding the limitations applicable to coins, all BSP-issued notes or bills, regardless of denomination, shall be considered legal tender for the payment of any monetary obligation.
Applying the foregoing to your case, the tender of P3,000.00 paid entirely in coins for the payment of your loan does not constitute legal tender insofar as the amount exceeds P2,000.00. Consequently, the creditor may lawfully refuse to accept the excess amount beyond the limit set by law. To make a payment in legal tender, you may visit a bank to exchange coins for notes.
We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.
