Cacayorin vs. AFPMBAI

Consignation is necessarily judicial and falls within the exclusive jurisdiction of the regular courts, not the HLURB, even if the underlying transaction involves the sale of a subdivision lot.

Oscar Cacayorin, a member of respondent Armed Forces and Police Mutual Benefit Association, Inc. (AFPMBAI), applied to purchase a subdivision lot through a Pag-IBIG loan facility. On July 4, 1994, petitioners executed a Loan and Mortgage Agreement with the Rural Bank of San Teodoro (RBST). RBST issued a letter of guaranty to AFPMBAI, prompting AFPMBAI to execute a Deed of Absolute Sale in petitioners' favor and for a new title to be issued in their names with the corresponding mortgage annotation. Subsequently, the Pag-IBIG loan did not materialize, RBST closed and was placed under PDIC receivership, and AFPMBAI took possession of the loan documents and petitioners' title. AFPMBAI then made demands upon petitioners for payment, creating confusion as to whether PDIC or AFPMBAI was the rightful creditor.

• Application for Purchase: Petitioner Oscar Cacayorin applied to purchase a lot owned by AFPMBAI at Kalikusan Mutual Homes, San Pedro, Puerto Princesa City through a loan facility.
• Loan and Mortgage Agreement: On July 4, 1994, petitioners executed a Loan and Mortgage Agreement with RBST under the Pag-IBIG Home Financing Program for ₱77,418.00.
• Execution of Sale: RBST issued a letter of guaranty to AFPMBAI. Relying on this guaranty, AFPMBAI executed a Deed of Absolute Sale in favor of petitioners. Transfer Certificate of Title No. 37017 was issued in petitioners' names, subject to the annotation of the mortgage agreement with RBST.
• Bank Closure and Confusion: The Pag-IBIG loan facility did not push through. RBST closed and was placed under PDIC receivership. PDIC informed petitioners it had no record of their loan. Meanwhile, AFPMBAI somehow gained possession of the loan documents and petitioners' title.
• Demand and Consignation: AFPMBAI made oral and written demands upon petitioners to pay the consideration for the property. Uncertain whether to pay PDIC or AFPMBAI, petitioners filed a complaint for consignation, recovery of title, and cancellation of mortgage annotation.

• Validity of Consignation: Petitioners argued that the elements of a valid consignation case are present, and the lack of prior tender of payment is not fatal because they were at a loss as to which entity was the rightful creditor.
• Jurisdiction: Petitioners maintained that the HLURB lost jurisdiction over the case because a deed of absolute sale had already been executed, title had been transferred to their names, and possession had been surrendered to them. Nothing remained to be done to perfect their title that would constitute specific performance under PD 957.

• Jurisdiction: Respondent countered that jurisdiction lies with the HLURB because the action springs from their contractual relation as seller and buyer of a subdivision lot. The prayer for the surrender of title upon full payment involves reciprocal obligations in a sale transaction covered by PD 957, effectively constituting a case for specific performance within the HLURB's exclusive jurisdiction.

• Jurisdiction: Whether the Complaint in Civil Case No. 3812 falls within the exclusive jurisdiction of the HLURB.
• Validity of Consignation: Whether the allegations in the Complaint make out a valid case for consignation notwithstanding the lack of prior tender of payment.

• Jurisdiction: Jurisdiction lies with the RTC, not the HLURB. The allegations of the complaint determine the nature of the action and the jurisdiction of the courts. Because the complaint pleads a case for consignation, and consignation is necessarily judicial under Article 1258 of the Civil Code, the case may only be tried by the regular courts. The fact that the claim relates to the terms of a subdivision lot sale is overshadowed by the nature of the action as consignation, which the HLURB cannot try.
• Validity of Consignation: A valid case for consignation was made out. Under Article 1256 of the Civil Code, consignation alone, without prior tender of payment, is authorized when the creditor is unknown, or when two or more persons claim the same right to collect. Petitioners were confronted with two entities claiming the right to collect—PDIC as the receiver of the apparent creditor, and AFPMBAI, which possessed the loan documents and title and was demanding payment. This confusion justified direct consignation without prior tender.

• Necessarily Judicial Nature of Consignation — Consignation must be made by depositing the things due at the disposal of judicial authority, precluding consignation in venues other than the courts. The Civil Code explicitly mandates judicial intervention for consignation.
• Distinction Between Tender of Payment and Consignation — Tender of payment is the extrajudicial antecedent act, preparatory to consignation, which is the principal act. Tender of payment may be extrajudicial, while consignation is necessarily judicial, prioritizing private settlement before resorting to the solemnities of consignation.
• Determination of Jurisdiction by Allegations — The allegations of the complaint determine the nature of the action and the corresponding jurisdiction of the courts, regardless of whether the plaintiff is ultimately entitled to recover upon the claims asserted.

• "Consignation is necessarily judicial. Article 1258 of the Civil Code specifically provides that consignation shall be made by depositing the thing or things due at the disposal of judicial authority. The said provision clearly precludes consignation in venues other than the courts."
• "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."

• Bulao v. Court of Appeals, G.R. No. 101983, February 1, 1993 — Followed. Cited for the principle that the allegations of the complaint determine the nature of the action and the jurisdiction of the courts.
• Soco v. Hon. Militante, 208 Phil. 151 (1983) — Followed. Cited for the doctrines that consignation is necessarily judicial and for the distinction between tender of payment and consignation.

• Article 1256, Civil Code — Applied to justify consignation without prior tender of payment. Consignation alone produces the effect of releasing the debtor when the creditor is absent or unknown, or when two or more persons claim the same right to collect, circumstances present when both PDIC and AFPMBAI appeared entitled to receive payment.
• Article 1258, Civil Code — Applied to establish RTC jurisdiction. Consignation shall be made by depositing the things due at the disposal of judicial authority, thereby requiring a judicial proceeding that only the regular courts can conduct.
• Presidential Decree No. 957 (Subdivision and Condominium Buyers' Protective Decree) — Distinguished and found inapplicable. While the transaction involved a subdivision lot, the action for consignation overshadowed the specific performance aspect, removing the case from the HLURB's exclusive jurisdiction.

Carpio (Chairperson), Peralta, Perez, Perlas-Bernabe