G.R. No. L-45625; April 28, 1939
MARGARITA VILLANUEVA, as judicial administratrix of the deceased Lorenzo Villanueva, plaintiff-appellant, vs. JUAN SANTOS, defendant-appellee.

FACTS

Margarita Villanueva, as judicial administratrix of the estate of Lorenzo Villanueva, filed a case to annul a sale with the right to repurchase of two parcels of land executed by the deceased in favor of Juan Santos. The parties entered into a court-approved stipulation wherein Villanueva agreed to pay Santos P359.60 with legal interest by December 4, 1936, to repurchase the land. Failure to pay would render the sale final. On the last day of the period, Villanueva offered Santos a check for P421.04 in payment. Santos refused to accept the check, insisting on payment in money or legal tender. Villanueva then consigned (deposited) the check with the clerk of court. The trial court held the consignation invalid and ordered Villanueva to deliver possession of the land to Santos.

ISSUE

Whether the consignation (deposit) of a check with the court clerk constituted valid payment of the repurchase price, thereby effectively redeeming the property.

RULING

No. The Supreme Court affirmed the trial court’s order. Under Article 1170 of the Civil Code, payment of money debts must be made in the stipulated specie or, if not possible, in silver or gold coin legally current. The delivery of commercial paper like a check produces the effects of payment only when it is realized (encashed) or when its negotiability is lost through the creditor’s fault. A check does not constitute legal tender, and a creditor is not obligated to accept it. Since Santos validly refused the check, the consignation thereof was invalid and did not produce any legal effect as payment. The obligation to pay the repurchase price in legal tender was not fulfilled, thus the sale became final.

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