Meat Packing Corp. v.

Sandiganbayan

FACTS:
Meat Packing Corp of Phil (MPCP) entered into a lease to purchase agreement (28 years) with PIMECO
which stipulates that the contract is automatically deemed cancelled and forfeited upon default in payments
of rental equivalent to the cumulative total of 3 annual payments. (at P3.3M per year)
In 1986, PCGG sequestered all assets of PIMECO including the leased property MPCP sent PIMECO a
notice of rescission for non-payment of rentals.
PCGG tendered to MPCP checks amounting to P5M which the MPCP refused arguing that the agreement
already rescinded since the outstanding debt of more than P12M is already more than 3 years worth of
installments.

ISSUE: WON MPCPs refusal to accept the payment was unjustified. YES

HELD:
The Sandiganbayan already approved the consignation by the PCGG wherein consignation is
the act of depositing the thing due with the court or judicial authorities whenever the creditor
cannot accept or refuses to accept payment, and it generally requires a a prior tender of
payment.
Tender on the other hand is the antecedent of consignation, an act preparatory to the
consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain.
Tender of payment maybe extrajudicial while consigning is necessarily judicial.
The priority of tendering payment is to attempt to make a private settlement before
proceeding to the solemnities of consignation.
Both tender and consignation validly made produces the effect of payment and extinguishes
the obligation. Refusal due to the said rescission of contract is untenable since MPCP
accepted annual amortizations or rentals, advances, insurance, and taxes from PIMECO. The
acceptance negates the said rescission.

MPCPs ground for refusal of tender of payment is the rescission clause. However, since PCGGs tender and
consignation of P5M was approved by Sandiganbayan and is therefore a valid tender, the accumulated back
rental were reduced to around P7M, which is less than 3 years worth of installments. As such rescission cannot
lie.