Cacayorin v. Armed Forces & Police Mutual Benefit Assn.
REITERATIONFacts
The Antecedents: Spouses Oscar and Thelma Cacayorin applied to purchase a property from the Armed Forces and Police Mutual Benefit Association, Inc. (AFPMBAI) through a loan facility. They executed a Loan and Mortgage Agreement with the Rural Bank of San Teodoro (Rural Bank) for P77,418.00, with a letter of guaranty from the Rural Bank to AFPMBAI. Based on this guaranty, AFPMBAI executed a Deed of Absolute Sale in favor of the Cacayorins, and a Transfer Certificate of Title (TCT) was issued in their name with the mortgage annotation. However, the Pag-IBIG loan did not materialize, the Rural Bank closed and was placed under receivership by the Philippine Deposit Insurance Corporation (PDIC). AFPMBAI took possession of the loan documents and TCT No. 37017, while the Cacayorins were unable to pay the loan/consideration for the property and received demands for payment from AFPMBAI. Procedural History: The Cacayorins filed 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. They alleged confusion regarding whom to pay due to the Rural Bank's closure and PDIC's inability to locate the loan records, and AFPMBAI's possession of the title and loan documents. The Regional Trial Court (RTC) denied AFPMBAI's Motion to Dismiss, asserting jurisdiction. AFPMBAI filed a Petition for Certiorari with the Court of Appeals (CA), arguing that the case falls under the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB) as it involves a subdivision lot sale under Presidential Decree No. 957. The CA granted the petition, vacated the RTC orders, and ruled that the case is cognizable by the HLURB. The Cacayorins' motion for reconsideration was denied. The Petition: The Cacayorins filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision and resolution. They argue that their complaint clearly establishes a case for consignation, as they are unable to determine the proper creditor to whom payment should be made due to the conflicting claims and circumstances involving the Rural Bank (through PDIC) and AFPMBAI. They contend that consignation is necessarily judicial and thus falls under the jurisdiction of the RTC, not the HLURB, especially since the title has already been transferred to their names and they are ready to pay the full loan amount. The Cacayorins pray for the annulment of the CA's decision and the reinstatement of the RTC's orders, allowing the case to proceed in the RTC.
Issue(s)
Whether the Complaint in Civil Case No. 3812 falls within the exclusive jurisdiction of the HLURB. Whether the allegations in the Complaint constitute a valid case for consignation.
Ruling
The Supreme Court granted the Petition, annulled and set aside the Decision and Resolution of the Court of Appeals, and reinstated the Orders of the Regional Trial Court, remanding the case for continuation of proceedings. The Court held that consignation is necessarily judicial and falls within the jurisdiction of the RTC.
Ratio Decidendi
On the issue of jurisdiction: The Court held that the allegations in the Complaint, not the petitioners' entitlement to recover, determine jurisdiction. The Court clarified that even though the underlying transaction involved a subdivision lot sale, the nature of the action as one for consignation placed it within the jurisdiction of the RTC, not the HLURB. On the issue of whether the Complaint constitutes a valid case for consignation: The Court held that the allegations in the Complaint clearly make out a case for consignation. The petitioners' debt was outstanding, but the Rural Bank's receiver, PDIC, had no record of the loan, and AFPMBAI was in possession of the loan documents and the title, while simultaneously demanding payment. This situation created a quandary for the petitioners as to whom to tender payment. Article 1256 of the Civil Code provides for release from responsibility by consignation without prior tender of payment when the creditor is absent or unknown, incapacitated, when two or more persons claim the right to collect, or when the title to the obligation has been lost. The Court found that the petitioners' situation fit these grounds, as there were two entities (Rural Bank/PDIC and AFPMBAI) who appeared to have a claim to collect the payment, or the creditor was effectively unknown to the petitioners. The Court further clarified that consignation is necessarily judicial, as provided by Article 1258 of the Civil Code, which mandates depositing the thing due at the disposal of judicial authority. This provision precludes consignation in venues other than courts. The lack of prior tender of payment was not fatal because the petitioners filed the case precisely because they were uncertain whom to pay, and Article 1256 allows for consignation alone in such circumstances. The Court noted that AFPMBAI's demand for payment and subsequent motion to dismiss was contradictory to the petitioners' intent to settle their obligation.
Main Doctrine
Consignation is necessarily judicial and falls within the jurisdiction of the Regional Trial Court (RTC), not the Housing and Land Use Regulatory Board (HLURB), even if the underlying transaction involves a subdivision lot sale, when the primary relief sought is the deposit of payment with judicial authority due to uncertainty regarding the proper creditor.