Title
Spouses Cacayorin vs. Armed Forces and Police Mutual Benefit Association, Inc.
Case
G.R. No. 171298
Decision Date
Apr 15, 2013
Spouses Cacayorin sought consignation of loan payment after Pag-IBIG loan failed; SC ruled RTC, not HLURB, had jurisdiction.
consignation
loan payment
jurisdiction

Case Summary (G.R. No. 171298)

Factual Background

The petitioners sought to purchase Lot 5, Block 8, Phase I, Kalikasan Mutual Homes, San Pedro, Puerto Princesa City from AFPMBAI under a loan facility. On July 4, 1994, petitioners executed a Loan and Mortgage Agreement with the Rural Bank of San Teodoro as lender. The Rural Bank issued an August 22, 1994 letter of guaranty stating that proceeds in the amount of P77,418.00 would be released to AFPMBAI after transfer of title and registration of the mortgage. On that basis AFPMBAI executed a Deed of Absolute Sale in favor of petitioners and a Transfer Certificate of Title No. 37017 was issued in their names with an annotation of the mortgage under Entry No. 3364. The Pag-IBIG loan did not materialize, the Rural Bank closed and PDIC was appointed receiver. Thereafter AFPMBAI obtained possession of petitioners’ loan documents and TCT No. 37017 and made demands for payment, while petitioners remained unable to pay the purchase price.

Complaint and Prayer

In July 2003 petitioners filed Civil Case No. 3812 against AFPMBAI, the Philippine Deposit Insurance Corporation, and the Register of Deeds of Puerto Princesa City. The Complaint expressly prayed for, among other reliefs, an order allowing consignation of P77,418.00; computation and consignation of interest; turnover to the court of loan records and TCT No. 37017 if in respondent’s custody; declaration of full payment and discharge of mortgage; and cancellation of the mortgage annotation and delivery of title free from encumbrance.

Trial Court Proceedings

AFPMBAI moved to dismiss for lack of jurisdiction, asserting that the matter fell within the exclusive competence of the HLURB under PD 957, and that the consignation claim was defective for lack of prior tender. The Puerto Princesa RTC denied the Motion to Dismiss by Order of October 16, 2003 and denied a motion for reconsideration on March 19, 2004. The RTC concluded that title had already been transferred to petitioners and that the case involved consignation of loan payments, thereby vesting jurisdiction in the regular court.

Court of Appeals Decision

AFPMBAI filed a petition for certiorari in the Court of Appeals challenging the RTC’s denial of its motion to dismiss. On September 29, 2005 the CA granted the petition, set aside the RTC orders, and held that the action essentially sought specific performance of contractual and statutory obligations by an owner-developer of a subdivision lot. The CA ruled that PD 957 applied and that the Housing and Land Use Regulatory Board had exclusive jurisdiction, especially because petitioners sought delivery of the title.

Parties’ Contentions before the Supreme Court

Petitioners argued that the Complaint presented a valid case for consignation under the Civil Code because title had been transferred and possession delivered, leaving no substantive unresolved developer obligation under PD 957, and thus the HLURB no longer had jurisdiction. Petitioners further contended that lack of prior tender was not fatal because consignation may be permitted where the creditor is unknown or where two or more persons claim the right to collect. AFPMBAI maintained that the dispute arose from the buyer-seller relationship governed by PD 957, that petitioners effectively sought specific performance, and that jurisdiction therefore lay exclusively with the HLURB.

Issue Presented

The sole issue framed by the Court was whether the Complaint in Civil Case No. 3812 fell within the exclusive jurisdiction of the HLURB.

Supreme Court Ruling

The Supreme Court granted the petition and annulled and set aside the CA Decision and Resolution. The Court reinstated the Puerto Princesa RTC orders of October 16, 2003 and March 19, 2004 and remanded the case for further proceedings.

Legal Basis and Reasoning

The Court held that the nature of the action is determined by the allegations of the Complaint and that petitioners pleaded a case for consignation. The Complaint alleged that PDIC, as receiver of the Rural Bank, had no record of petitioners’ loan; that AFPMBAI possessed the loan documents and title; and that petitioners were ready to pay but did not know to whom tender should be made. Under Article 1256 of the Civil Code consignation produces release of the debtor where the creditor is absent or unknown or where two or more persons claim the right to collect. The Court found that the Complaint presented either an unknown creditor situation or competing claims to collect by two entities, to wit, the Rural Bank through PDIC and AFPMBAI in possession of documents and making demands. The Court emphasized that consignation is necessarily judicial under Article 1258 of the Civil Code, which prescribes depositing the thing due at the disposal of judicial authority. The Court explained the distinction between extrajudicial tender and judicial consignation and observed that lack of prior tender was not fatal because consignation is authorized without prior tender in the circum

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