Sunday, September 13, 2015

Consignation and tender of payment distinguished; HLURB has no jurisdiction over consignation cases.




SPOUSES OSCAR AND THELMA CACAYORIN VS. ARMED FORCES AND POLICE MUTUAL BENEFIT ASSOCIATION, INC., G.R. No. 171298, April 15, 2013


“x x x.


The Issue:

Whether or not the HLURB had jurisdiction over the complaint for consignation.


X x x.

The Complaint makes out
a case for consignation.

X x x.

Under Article 1256 of the Civil Code,4  the debtor shall be released from responsibility by the consignation of the thing or sum due, without need of prior tender of payment, when the creditor is absent or unknown, or when he is incapacitated to receive the payment at the time it is due, or when two or more persons claim the same right to collect, or when the title to the obligation has been lost.

Applying Article 1256 to the petitioners’ case as shaped by the allegations in their Complaint, the Court finds that a case for consignation has been made out, as it now appears that there are two entities which petitioners must deal with in order to fully secure their title to the property:

1) the Rural Bank (through PDIC), which is the apparent creditor under the July 4, 1994 Loan and Mortgage Agreement; and

2) AFPMBAI, which is currently in possession of the loan documents and the certificate of title, and the one making demands upon petitioners to pay.

Clearly, the allegations in the Complaint present a situation where the creditor is unknown, or that two or more entities appear to possess the same right to collect from petitioners.

Whatever transpired between the Rural Bank or PDIC and AFPMBAI in respect of petitioners’ loan account, if any, such that AFPMBAI came into possession of the loan documents and TCT No. 37017, it appears that petitioners were not informed thereof, nor made privy thereto.

Indeed, the instant case presents a unique situation where the buyer, through no fault of his own, was able to obtain title to real property in his name even before he could pay the purchase price in full. There appears to be no vitiated consent, nor is there any other impediment to the consummation of their agreement, just as it appears that it would be to the best interests of all parties to the sale that it be once and for all completed and terminated. For this reason, Civil Case No. 3812 should at this juncture be allowed to proceed.

Moreover, petitioners’ position is buttressed by AFPMBAI’s own admission in its Comment5  that it made oral and written demands upon the former, which naturally aggravated their confusion as to who was their rightful creditor to whom payment should be made – the Rural Bank or AFPMBAI. Its subsequent filing of the Motion to Dismiss runs counter to its demands to pay. If it wanted to be paid with alacrity, then it should not have moved to dismiss Civil Case No. 3812, which was brought precisely by the petitioners in order to be able to finally settle their obligation in full.

Finally, the lack of prior tender of payment by the petitioners is not fatal to their consignation case. They filed the case for the exact reason that they were at a loss as to which between the two – the Rural Bank or AFPMBAI – was entitled to such a tender of payment. Besides, as earlier stated, Article 1256 authorizes consignation alone, without need of prior tender of payment, where the ground for consignation is that the creditor is unknown, or does not appear at the place of payment; or is incapacitated to receive the payment at the time it is due; or when, without just cause, he refuses to give a receipt; or when two or more persons claim the same right to collect; or when the title of the obligation has been lost.

Consignation is necessarily judicial;
hence, jurisdiction lies with the RTC,
not with the HLURB.

On the question of jurisdiction, petitioners’ case should be tried in the Puerto Princesa RTC, and not the HLURB. Consignation is necessarily judicial, 6  as the Civil Code itself provides that consignation shall be made by depositing the thing or things due at the disposal of judicial authority, thus:

Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial authority, before whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases.

The consignation having been made, the interested parties shall also be notified thereof. (Emphasis and underscoring supplied).

The above provision clearly precludes consignation in venues other than the courts. Elsewhere, what may be made is a valid tender of payment, but not consignation. The two, however, are to be distinguished.

Tender of payment must be distinguished from consignation. Tender is the antecedent of consignation, that is, 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 may be extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt to make a private settlement before proceeding to the solemnities of consignation. (8 Manresa 325).7

While it may be true that petitioners’ claim relates to the terms and conditions of the sale of AFPMBAI’s subdivision lot, this is overshadowed by the fact that since the Complaint in Civil Case No. 3812 pleads a case for consignation, the HLURB is without jurisdiction to try it, as such case may only be tried by the regular courts.

X x x.”


Cases Cited:

1 Bulao v. Court of Appeals, G.R. No. 101983, February 1, 1993, 218 SCRA 321, 323, citing Magay v. Estiandan, 161 Phil. 586, 590 (1976).

x x x.

4 Art. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due.

Consignation alone shall produce the same effect in the following cases:

(1) When the creditor is absent or unknown, or does not appear at the place of payment;
(2) When he is incapacitated to receive the payment at the time it is due;
(3) When, without just cause, he refuses to give a receipt;
(4) When two or more persons claim the same right to collect;
(5) When the title of the obligation has been lost.

x x x.

6 Soco v. Hon. Militante, 208 Phil. 151, 159 (1983); Mclaughlin v. Court of Appeals, 229 Phil. 8, 18 (1986); Meat Packing Corporation of the Philippines v. Sandiganbayan, 411 Phil. 959, 973 (2001); B.E. San Diego, Inc. v. Alzul, G.R. No. 169501, June 8, 2007, 524 SCRA 402, 426, 428-429.


7 Soco v. Hon. Militante, supra at 160-161.