ANDREA B. LOCSIN, AS SUBSTITUTED BY ROSALINA B.

LORILLA, PETITIONER
VS. RAYMUND J. AUSTRIA, RESPONDENT

G.R. No. 213001, August 04, 2021

Hernando, J. – Third Division

NATURE OF THE ACTION:

Petition for Review on Certiorari seeking to reverse and set aside the Decision and
Resolution of the Court of Appeals, which overturned the Decision of the Regional Trial Court.

FACTS:

On August 18, 2006, Andrea Locsin executed a Deed of Real Estate Mortgage in favor of
Raymund Austria, over a parcel of land, to secure her loan in the amount of P215,000.00. In
March 2007, Raymund demanded from Andrea the payment of the principal loan with interests
and penalty. Andrea, thru a letter, signified to Raymund his readiness to pay in full the loan
obligation. However, Raymund refused to accept the payment and return the owner’s duplicate
copy. Consequently, a formal demand was sent to Raymund for the acceptance of payment. As
the demand to accept the payment went unheeded, Andrea filed a complaint for specific
performance, praying that Andrea be allowed to consign the payment of her obligation.

The RTC ruled in favor of Andrea. On appeal, the CA reversed the Decision of the RTC.
the CA underscored the requirements in consignation that the debt must already be due and that
the refusal to accept payment is not justified. In this case, the CA pointed out that Andrea's
obligation was payable from August 31, 2006 to August 31, 2007. Thus, when Andrea filed the
complaint on July 20, 2007, and the motion for leave to allow consignation of payment on
August 7, 2007, the same were made before the stipulated period of maturity of the obligation.
Accordingly, the CA ruled that Raymund could not be compelled to receive the amount of
P344,000.000 as full settlement of Andrea's loan because her obligation was not yet due and
demandable when she filed the complaint and the motion for consignation.

ISSUE:

Whether or not there was no valid consignation made by Andrea.

RULING:

The Petition is DENIED.

Consignation is the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment, and it generally requires a
prior tender of payment. In order that consignation may be effective, the debtor must show that:
(1) there was a debt due; (2) the consignation of the obligation had been made because the
creditor to whom tender of payment was made refused to accept it, or because he was absent or
incapacitated, or because several persons claimed to be entitled to receive the amount due or
because the title to the obligation has been lost; (3) previous notice of the consignation had been
given to the person interested in the performance of the obligation; (4) the amount due was
placed at the disposal of the court; and (5) after the consignation had been made the person
interested was notified thereof. Failure in any of these requirements is enough ground to render a
consignation ineffective.
 In this case, the Court finds that the first requisite in a valid consignation is absent.

The first requisite for a valid consignation is still wanting in this case, for the simple
reason that there was no existing debt at the time of the filing of the complaint and motion for
consignation. It may be recalled that on May 23, 2007, or subsequent to the sending of demand
letters after the loan obligation became due, Andrea and Raymund executed another and separate
contract, the deed of sale, wherein the former sold to the latter the subject property for and in
consideration of the sum of P915,000.00. As explained by Raymund, Andrea could no longer
pay her debt, thus, she sold the subject property so that she would be relieved from paying her
obligation as evidenced by the deed of sale. Otherwise stated, Raymund and Andrea had actually
entered into a daci6n en pago transaction.