Case Summary (G.R. No. 171298)
Procedural History Before the RTC
In July 2003 the Cacayorins filed Civil Case No. 3812 in the RTC of Puerto Princesa, praying for consignation of the loan amount, computation and consignation of interest, turnover of loan records and title, declaration of full payment, cancellation of the mortgage annotation, and return of the title free from encumbrance. AFPMBAI moved to dismiss for lack of jurisdiction, contending that the HLURB had exclusive jurisdiction under PD 957 and that no valid tender had been made. The RTC denied the motion on October 16, 2003 and again on March 19, 2004.
Court of Appeals Decision on Jurisdiction
AFPMBAI filed a petition for certiorari in the CA, which on September 29, 2005 vacated the RTC orders. The CA held that the action sought specific performance of contractual obligations under PD 957, placing it within the exclusive jurisdiction of the HLURB. A motion for reconsideration was denied on January 12, 2006.
Issue Before the Supreme Court
Whether the Cacayorins’ complaint constitutes a judicial action for consignation—thus falling under the jurisdiction of the regular courts—or whether it is a claim for specific performance under PD 957, exclusively cognizable by the HLURB.
Petitioners’ Contentions
The Cacayorins maintain that the elements of consignation are present: two entities claim the right to receive payment, the creditor is effectively “unknown,” and they are ready to pay. They argue that title has been issued in their favor and no contractual performance remains to be enforced under PD 957.
Respondent’s Position
AFPMBAI contends that the dispute arises from a subdivision sale, involving reciprocal obligations to deliver title and pay the purchase price, which is exclusively governed by PD 957 and the jurisdiction of the HLURB.
Nature of Action and Jurisdictional Principle
Under settled jurisprudence, the complaint’s allegations determine the nature of the action and the court’s jurisdiction. A valid action for consignation exists when the creditor is absent or unknown, incapacitated, refuses receipt without cause, multiple claimants exist, or the obligation’s title is lost (Art. 1256, Civil Code). Consignation must be effected judicially by deposit with a court (Art. 1258).
Application of Consignation Requirements
Here, two entities claim entitlement to the loan proceeds—the receiver (PDIC) and AFPMBAI, which holds the documents and title. The Cacayorins cannot identify the proper payee and were never informed of AFPMBAI’s possession of the documents. They have offered to pay in full and seek judicial consignation to discharge their obligation and clear their title. The absence of prior tender is excused by Article 1256(1) and (4), as the creditor is effectively unknown and multiple claimants
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Facts of the Case
- Petitioners Oscar and Thelma Cacayorin entered into a Loan and Mortgage Agreement on July 4, 1994 with the Rural Bank of San Teodoro under the Pag-IBIG Home Financing Program for ₱77,418.00 to purchase Lot 5, Block 8, Phase I, Kalikasan Mutual Homes, San Pedro, Puerto Princesa City, owned by AFPMBAI.
- The Rural Bank issued a guaranty letter on August 22, 1994 directing release of loan proceeds to AFPMBAI upon transfer of title and annotation of mortgage.
- AFPMBAI executed a Deed of Absolute Sale in favor of petitioners; Transfer Certificate of Title No. 37017 was issued to them with Mortgage Annotation Entry No. 3364.
- The Pag-IBIG loan fell through; the Rural Bank closed and was placed under receivership by PDIC, which could not locate petitioners’ loan records.
- AFPMBAI retained possession of petitioners’ loan documents and TCT No. 37017 and demanded payment of the purchase price.
- Petitioners, ready to pay in full, were uncertain whether to pay PDIC (as receiver of the Rural Bank) or AFPMBAI.
Procedural Posture
- July 2003: Petitioners filed a Complaint for consignation of loan payment, recovery of title and cancellation of mortgage annotation against AFPMBAI, PDIC and the Register of Deeds, docketed as Civil Case No. 3812 before RTC, Branch 47, Puerto Princesa.
- AFPMBAI moved to dismiss for lack of jurisdiction, arguing that the case belonged to HLURB under PD 957 and was defective for lack of prior tender.
- October 16, 2003: RTC denied AFPMBAI’s Motion to Dismiss and declared PDIC in default.
- March 19, 2004: RTC denied AFPMBAI’s Motion for Reconsideration.
- AFPMBAI filed CA G.R. SP No. 84446 (Petition for Certiorari) before the Court of Appeals aiming to nullify the RTC orders.
- September 29, 2005: CA granted certiorari, vacated and set aside the RTC orders.
- January 12, 2006: CA denied peti