Facts:
The property subject matter of the contract consists of a parcel of land in the Province of Bulacan, issued and registered in the name of the petitioner which it sold to the private respondent.
On July 7, 1971, the subject contract over the land in question was executed between the petitioner as vendor and the private respondent through its then president, Mr. Carlos F. Robes, as vendee, stipulating for a downpayment of P23,930.00 and the balance of P100,000.00 plus 12% interest per annum to be paid within four (4) years from execution of the contract. The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of the land in question in case the private respondent would fail to complete payment within the said period.
After the expiration of the stipulated period for payment, Atty. Adalia Francisco (president of the company who bought land) wrote the petitioner a formal request that her company be allowed to pay the principal amount of P100,000.00 in three (3) equal installments of six (6) months each with the first installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request.
The petitioner formally denied the said request of the private respondent, but granted the latter a grace period of five (5) days from the receipt of the denial to pay the total balance of P124,000.00. The private respondent wrote the petitioner requesting an extension of 30 days from said date to fully settle its account but this was still denied.
After the expiration of the stipulated period for payment, Atty. Adalia Francisco (president of the company who bought land) wrote the petitioner a formal request that her company be allowed to pay the principal amount of P100,000.00 in three (3) equal installments of six (6) months each with the first installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request.
The petitioner formally denied the said request of the private respondent, but granted the latter a grace period of five (5) days from the receipt of the denial to pay the total balance of P124,000.00. The private respondent wrote the petitioner requesting an extension of 30 days from said date to fully settle its account but this was still denied.
Consequently, Atty. Francisco wrote a letter directly addressed to the petitioner, protesting the alleged refusal of the latter to accept tender of payment made by the former on the last day of the grace period. But the private respondent demanded the execution of a deed of absolute sale over the land in question
Atty. Fernandez, wrote a reply to the private respondent stating the refusal of his client to execute the deed of absolute sale so the petitioner cancelled the contract and considered all previous payments forfeited and the land as ipso facto reconveyed.
From a perusal of the foregoing facts, we find that both the contending parties have conflicting versions on the main question of tender of payment.
According to the trial court:
. . . What made Atty. Francisco suddenly decide to pay plaintiff’s obligation on tender her payment, when her request to extend the grace period has not yet been acted upon? Atty. Francisco’s claim that she made a tender of payment is not worthy of credence.
Atty. Fernandez, wrote a reply to the private respondent stating the refusal of his client to execute the deed of absolute sale so the petitioner cancelled the contract and considered all previous payments forfeited and the land as ipso facto reconveyed.
From a perusal of the foregoing facts, we find that both the contending parties have conflicting versions on the main question of tender of payment.
According to the trial court:
. . . What made Atty. Francisco suddenly decide to pay plaintiff’s obligation on tender her payment, when her request to extend the grace period has not yet been acted upon? Atty. Francisco’s claim that she made a tender of payment is not worthy of credence.
The trial court considered as fatal the failure of Atty. Francisco to present in court the certified personal check allegedly tendered as payment or, at least, its xerox copy, or even bank records thereof.
Not satisfied with the said decision, the private respondent appealed to the IAC. The IAC reversed the decision of the trial court. The IAC, in finding that the private respondent had sufficient available funds, ipso facto concluded that the latter had tendered payment.
ISSUE:
- Whether or not the finding of the IAC that Atty. Francisco had sufficient available funds did tender payment for the said obligation.
- Whether or not an offer of a check is a valid tender of payment of an obligation under a contract which stipulates that the consideration of the sale is in Philippine Currency.
HELD:
1. No. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same. Thus, tender of payment cannot be presumed by a mere inference from surrounding circumstances. At most, sufficiency of available funds is only affirmative of the capacity or ability of the obligor to fulfill his part of the bargain. The respondent court was therefore in error.
2. No. In the case of Philippine Airlines v. Court of Appeals:
Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment. A check, whether a manager’s check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. The tender of payment by the private respondent was not valid for failure to comply with the requisite payment in legal tender or currency stipulated within the grace period
the DECISION of the IAC is hereby SET ASIDE and ANNULLED and the DECISION of the trial court is REINSTATED.
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