Legal tender is a medium of payment recognized by a legal system to be valid

for meeting a financial obligation. Paper currency and coins are common forms of
legal tender in many countries. Legal tender is variously defined in different
jurisdictions. Formally, it is anything which when offered in payment extinguishes
the debt. Thus, personal cheques, credit cards, and similar non-cash methods of
payment are not usually legal tender. The law does not relieve the debt obligation
until payment is tendered. Coins and banknotes are usually defined as legal
tender. Some jurisdictions may forbid or restrict payment made other than by
legal tender. For example, such a law might outlaw the use of foreign coins and
bank notes or require a license to perform financial transactions in a foreign
currency. Denomination of a country's currency that, by law, must be accepted as
a medium for commercial exchange and payment for a money debt. While
usually all denominations of the circulating paper money are legal tenders, the
denomination and amount in coins acceptable as legal tender varies from country
to country. Checks and postal orders are not legal tenders and are accepted only
at the option of the creditor, lender, or seller. Also called lawful money.

Retirement of Old notes and coins

The bangko central may call in for for replacement notes of any series of
denomination which are more than five years and old coins which are more than
10 years old.
Notes and coins called in for replacement in accordance with this provision shall
remain legal tender for a period of 1 year from the date of call. After this period,
they may cease to be legal tender but during the following year, or for such
longer period as the monetary board may determine, they may be exchange at
par and without charge in the Bangko Sentral and by agents duly authorized by
the Bangko Sentral and by agents duly authorized by the bangko sentral for this
purpose. After the expiration of this later period, the notes and coins which shall
not been exchanged shall cease to be a liability of the Bangko Sentral and shall
be demonetized. The Banko Sentral shall also demonetize all coins which have
been called in and replaced.

Demonetization is the act of stripping a currency unit of its status as legal

tender. It occurs whenever there is a change of national currency: The current
form or forms of money is pulled from circulation and retired, often to be replaced
with new notes or coins. Process of removing a currency from general usage, or
circulation. Gold was demonetized in this way when it ceased to be used as an
everyday currency
What does legal tender power of a currency mean?

Legal tender power means that when the currency is offered in payment of a debt,
public or private, the same must be accepted.

Is there a limit to the legal tender power of Philippine currency notes and coins?
Philippine currency notes have no limit to their legal tender power. In particular, all notes
and coins issued by the BSP 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, as stipulated under Section 52 of the New Central Bank Act.
However, in the case of coins in denomination of 1-, 5- and 10-piso they shall be legal
tender in amounts not exceeding P1,000.00 while coins in denomination of 1-, 5- and
10- and 25- sentimo shall be legal tender in amounts not exceeding P100.00, pursuant
to BSP Circular No. 537, Series of 2006.

SECTION 57. Retirement of Old Notes and Coins. The Bangko Sentral may call in
for replacement notes of any series or denomination which are more than five (5) years
old and coins which are more than (10) years old.

Notes and coins called in for replacement in accordance with this provision shall remain
legal tender for a period of one (1) year from the date of call. After this period, they shall
cease to be legal tender but during the following year, or for such longer period as the
Monetary Board may determine, they may be exchanged at par and without charge in
the Bangko Sentral and by agents duly authorized by the Bangko Sentral for this
purpose. After the expiration of this latter period, the notes and coins which have not
been exchanged shall cease to be a liability of the Bangko Sentral and shall be
demonetized. The Bangko Sentral shall also demonetize all notes and coins which have
been called in and replaced.

What is demonetization of currency?

Demonetization is the process of removing the monetary value of a legal tender

currency by the issuing authority. Demonetized currency shall no longer be accepted for
payment of goods and services.
Under what authority does the Bangko Sentral ng Pilipinas (BSP) demonetize
currency?
Section 57 of R.A. No. 7653 provides that the Bangko Sentral may call in for
replacement notes of any series or denomination which are more than five (5) years old
and coins which are more than ten (10) years old.

Notes and coins called in for replacement shall remain legal tender for a period of one
year from the date of call. After this period, they shall cease to be legal tender but
during the following year, or for such longer period as the Monetary Board may
determine, they may be exchanged at par and without charge in the Bangko Sentral
and by agents duly authorized by the Bangko Sentral for this purpose. After the
expiration of this latter period, the notes and coins which have not been exchanged
shall cease to be a liability of the Bangko Sentral and shall be demonetized.