G.R. No. 156846, 23 February 2004

FACTS:

Pursuant to an Agreement and Undertaking, petitioner Teddy G. Pabugais agreed to sell to respondent Dave P. Sahijwani a lot.  Respondent paid petitioner an option/reservation fee and the balance to be paid within 60 days from the execution of the contract. The parties further agreed that failure on the part of respondent to pay the balance of the purchase price entitles petitioner to forfeit the option/reservation fee; while non-delivery by the latter of the necessary documents obliges him to return to respondent the said option/reservation fee with interest at 18% per annum.

Petitioner failed to deliver the required documents. In compliance with their agreement, he returned to respondent the latter’s option/reservation fee by way of manager’s check which was, however, dishonored.

Petitioner claimed that he twice tendered to respondent, through his counsel, in the form of Far East Bank & Trust Company Managers Check but said counsel refused to accept the same. He wrote a letter to respondent saying that he is consigning the amount tendered, thus petitioner filed a complaint for consignation.

ISSUE:

  1. WHETHER OR NOT there was a valid consignation.
  2. WHETHER OR NOT petitioner can withdraw the amount consigned as a matter of right.

RULING:

  1. Yes. As testified by the counsel for respondent, the reasons why his client did not accept petitioners tender of payment were (1) the check mentioned in the August 5, 1994 letter of petitioner manifesting that he is settling the obligation was not attached to the said letter; and (2) the amount tendered was insufficient to cover the obligation. It is obvious that the reason for respondents non-acceptance of the tender of payment was the alleged insufficiency thereof and not because the said check was not tendered to respondent, or because it was in the form of managers check. While it is true that in general, a manager’s check is not legal tender, the creditor has the option of refusing or accepting it. Payment in check by the debtor may be acceptable as valid, if no prompt objection to said payment is made.
  1. No. The amount consigned with the trial court can no longer be withdrawn by petitioner because respondent’s prayer in his answer that the amount consigned be awarded to him is equivalent to an acceptance of the consignation, which has the effect of extinguishing petitioner’s obligation. Petitioner failed to manifest his intention to comply with the Agreement and Undertaking by delivering the necessary documents and the lot subject of the sale to respondent in exchange for the amount deposited. Withdrawal of the money consigned would enrich petitioner and unjustly prejudice respondent.

* Case digest by  Prince Dave C. Santiago, LLB-1, Andres Bonifacio Law School, SY 2017-2018