Villanueva v. Santos
REITERATIONFacts
The Antecedents: Margarita Villanueva, as judicial administratrix of the deceased Lorenzo Villanueva, filed a civil case to annul a deed of sale with right of repurchase executed by Lorenzo Villanueva in favor of Juan Santos. Procedural History: The parties submitted a stipulation to the Court of First Instance of Bulacan, agreeing that the plaintiff would pay P359.60 with legal interest by December 4, 1936, to repurchase two parcels of land. Failure to pay would render the sale final, and the plaintiff would deliver possession. The court approved the stipulation and ordered strict compliance. The Petition: On December 4, 1936, the plaintiff offered a check for P421.04 to the defendant to repurchase the land. The defendant refused, stating payment must be in legal tender. The plaintiff then deposited the check with the clerk of court and filed a motion to deem payment effected, redeem the land, and claim damages. The court issued an order declaring the consignation invalid and the sale final, ordering the plaintiff to yield possession. The plaintiff appealed.
Issue(s)
Whether the consignation of a check with the clerk of court, when refused by the defendant, constitutes a valid payment for the repurchase of the land. Whether the sale with the right of repurchase became final due to the plaintiff's failure to make a valid payment within the stipulated period.
Ruling
The Supreme Court affirmed the order of the Court of First Instance, holding that the consignation of the check was invalid and did not produce the effect of payment, thus rendering the sale with the right of repurchase final.
Ratio Decidendi
On the validity of the consignation and payment: The Court held that the consignation of the check with the clerk of court was unavailing and did not produce any legal effect. Article 1170 of the Civil Code provides that payment of debts of money shall be made in the specie stipulated, or in silver or gold coin legally current if specie is not possible. The delivery of promissory notes, drafts, or other commercial paper only produces the effect of payment when they are realized or when, by the creditor's fault, their negotiable character is lost. Therefore, the defendant was not under a duty to accept the check because it does not constitute legal tender. The consignation, having been refused and not being in the form of legal tender, could not be considered as payment made by the plaintiff of the repurchase price. The Court cited Belisario vs. Natividad (1934) which held that a creditor is not bound to accept a check in satisfaction of his demand, as a check does not meet the requirements of legal tender. On the finality of the sale: Since the consignation was deemed invalid and did not constitute payment, the plaintiff failed to comply with the condition of paying the repurchase price within the stipulated period. Consequently, as per the stipulation approved by the court, the sale with the right of repurchase became final, and the plaintiff was obligated to deliver possession of the parcels of land to the defendant.
Main Doctrine
A consignation of a check with the clerk of court, when refused by the creditor on the ground that payment must be in legal tender, is invalid and does not produce the effect of payment, as a check does not constitute legal tender and the creditor is not bound to accept it.