Cacayorin vs. AFPMBAI

[Civil Law: Obligations and Contracts; consignation; judicial in character]

Spouses Oscar and Thelma Cacayorin, Petitioners, vs.

Armed Forces and Police Mutual Benefit Association, Inc. (AFPMBAI), Respondent.

G.R. No. 171298; April 15, 2013

Facts:  Oscar Cacayorin  filed an application with AFPMBAI to purchase a property which the latter owned through a loan facility. Oscar and his wife, Thelma, and the Rural Bank of San Teodoro executed a Loan and Mortgage Agreement with the former as borrowers and the Rural Bank as lender, under the auspices of PAG-IBIG. On the basis of the Rural Bank's letter of guaranty, AFPMBAI executed in petitioners' favor a Deed of Absolute Sale, and a new title was issued in their name. Then, the PAG-IBIG loan facility did not push through and the Rural Bank closed. Meanwhile, AFPMBAI somehow was able to take possession of petitioners' loan documents and the TCT, while petitioners were unable to pay the loan for the property. AFPMBAI made written demands for petitioners to pay the loan for the property. Then, petitioners filed with the RTC a complaint for consignation of loan payment, recovery of title and cancellation of mortgage annotation against AFPMBAI, PDIC and the Register of Deeds of Puerto Princesa City. AFPMBAI filed a motion to dismiss claiming that petitioners' Complaint falls within the jurisdiction of the Housing and Land Use Regulatory Board (HLURB), as it was filed by petitioners in their capacity as buyers of a subdivision lot and it prays for specific performance of contractual and legal obligations decreed under Presidential Decree No. 957(PD 957). It added that since no prior valid tender of payment was made by petitioners, the consignation case was fatally defective and susceptible to dismissal.

Issue: Whether or not the case falls within the exclusive jurisdiction of the HLURB.

Ruling:  No. Unlike tender of payment which is extrajudicial, consignation is necessarily judicial; hence, jurisdiction lies with the RTC, not with the HLURB. Under Article 1256 of the Civil Code, 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. The said provision clearly precludes consignation in venues other than the courts.