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  • Meat Packing Corp. v Sandiganbayan: Tender of Payment Can Prevent Rescission

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    The Meat Packing Corporation (petitioner) entered into a lease-purchase agreement with the Philippine Integrated Meat Corporation (PIMECO) that contained a rescission clause if PIMECO defaulted on payments equivalent to three annual installments. When PIMECO failed to pay, petitioner rescinded the agreement. However, the Presidential Commission on Good Government (PCGG) later tendered payments of accrued rentals, which petitioner refused. The Supreme Court ruled that the tender of payments was valid and the refusal unjustified, as it reduced the unpaid amount to less than three annual installments. Valid tender and consignation extinguishes the obligation by producing the effect of payment.

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    #16_CLRII G02 Meat Packing Corp. v Sandiganbayan

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    The Meat Packing Corporation (petitioner) entered into a lease-purchase agreement with the Philippine Integrated Meat Corporation (PIMECO) that contained a rescission clause if PIMECO defaulted on payments equivalent to three annual installments. When PIMECO failed to pay, petitioner rescinded the agreement. However, the Presidential Commission on Good Government (PCGG) later tendered payments of accrued rentals, which petitioner refused. The Supreme Court ruled that the tender of payments was valid and the refusal unjustified, as it reduced the unpaid amount to less than three annual installments. Valid tender and consignation extinguishes the obligation by producing the effect of payment.

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    © All Rights Reserved
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    54 views1 page

    Meat Packing Corp. v Sandiganbayan: Tender of Payment Can Prevent Rescission

    Uploaded by

    SB
    The Meat Packing Corporation (petitioner) entered into a lease-purchase agreement with the Philippine Integrated Meat Corporation (PIMECO) that contained a rescission clause if PIMECO defaulted on payments equivalent to three annual installments. When PIMECO failed to pay, petitioner rescinded the agreement. However, the Presidential Commission on Good Government (PCGG) later tendered payments of accrued rentals, which petitioner refused. The Supreme Court ruled that the tender of payments was valid and the refusal unjustified, as it reduced the unpaid amount to less than three annual installments. Valid tender and consignation extinguishes the obligation by producing the effect of payment.

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    © All Rights Reserved
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    of 1

    WEEK03 #16 Meat Packing Corp.

    v Sandiganbayan PIMECO be considered as sufficient payment in order to forestall the


    G.R. No. 103068 | 22 June 2001 rescission clause?

    RULING:
    Topic: Special forms of payment; Tender of payment and consignation Yes, the refusal of petitioner to accept the tender of payments in
    Petitioner: MEAT PACKING CORPORATION OF THE PHILIPPINES arrears was unjustified. Surely, the acceptance by petitioners of
    Respondent: THE HONORABLE SANDIGANBAYAN, THE PRESIDENTIAL such payments for rentals and amortizations negates any rescission
    COMMISSION ON GOOD GOVERNMENT and PHILIPPINE INTEGRATED of the lease-purchase agreement.
    MEAT CORPORATION
    Ponente: Ynares-Santiago, J. Under the terms of the lease-purchase agreement, the amount of arrears
    in rentals or amortizations must be equivalent to the cumulative sum of
    3 annual installments, in order to warrant the rescission of the contract.
    FACTS: Therefore, it must be shown that PIMECO failed to pay the aggregate
    Petitioner, as lessor, and the Philippine Integrated Meat Corporation amount of at least P10,038,809.10 before the lease-purchase agreement
    (PIMECO), as lessee, entered into a Lease-Purchase Agreement. It can be deemed automatically cancelled. Assuming in the extreme that
    contained a rescission clause stating that if the lessee-vendee should the arrears amounted to P12,578,171 the tender and consignation of the
    default in payment for a cumulative sum of 3 years, the Agreement is sum of P5,000,000 which had the effect of payment, reduced the back
    automatically cancelled and forfeited. rentals to only P7,578,171, an amount less than the equivalent of three
    annual installments.
    Subsequently, the PCGG sequestered all properties of PIMECO, including
    the property and the Lease-Purchase Agreement. Petitioner then sent a Consignation is the act of depositing the thing due with the court or
    notice to PIMECO for the rescission of the Lease-Purchase Agreement judicial authorities whenever the creditor cannot accept or refuses to
    due to non-payment. Petitioner then sought the turnover of their accept payment, and it generally requires a prior tender of payment.
    property from the PCGG because of the rescission of the Lease-Purchase Tender is the antecedent of consignation, that is, an act preparatory to
    Agreement with PIMECO. The PCGG denied. the consignation, which is the principal, and from which are derived the
    immediate consequences which the debtor desires or seeks to obtain.
    PCGG then tendered payments of accrued rentals on the property. Tender of payment may be extrajudicial, while consignation is
    Petitioner refused to accept these, on the theory that the Lease-Purchase necessarily judicial, and the priority of the first is the attempt to make a
    Agreement had already been rescinded. private settlement before proceeding to the solemnities of consignation.

    ISSUE: DOCTRINE:
    Whether the tender of payment by the PCGG for the unpaid rentals due Valid tender and consignation produces the effect of payment and
    to the sequestered Lease-Purchase Agreement between petitioner and extinguishes the obligation.

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