Published — August 22, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
After reading “What are the instances where a consignation produces the effect of payment even without prior tender of payment?”, read also “Payment of Divididends”
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The creditor is absent or unknown, or does not appear at the place of payment.
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The creditor is incapacitated to receive the payment at the time it is due;
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The creditor refuses to give a receipt without just cause;
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Two or more persons claim the right to collect; and
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The title to the obligation has been lost.
Cosignation refers to the deposit in court by the debtor of the object of the obligation if the creditor does not want or cannot receive the same. It 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. (Pabugais v. Sahijwani, G.R. No. 156546, February 23, 2004)
Consignation may produce the effect of payment even without prior tender of payment.
The law says:
Article 1256 of the New Civil Code of the Philippines (NCC) states that:
Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due.
Consignation alone shall produce the same effect in the following cases:
(1) When the creditor is absent or unknown, or does not appear at the place of payment;
(2) When he is incapacitated to receive the payment at the time it is due;
(3) When, without just cause, he refuses to give a receipt;
(4) When two or more persons claim the same right to collect;
(5) When the title of the obligation has been lost.
What is the effect of a valid tender of payment?
Jurisprudence says:
In the case of Sps. Cannu v. Sps. Galang (G.R. No. 139523, May 26, 2005), the Supreme Court held that “tender of payment does not by itself produce legal payment, unless it is completed by consignation.”
The effect of a valid tender of payment is merely to exempt the debtor from payment of interest and/or damages. (Philippine National Bank v. Relativo, G.R. No. L-5298, October 29, 1952).
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. (Sps. Cacayorin v. AFPMBAI, G.R. No. 171298, April 15, 2013.)
In the case of Sps. Bonrostro v. Sps. Luna (G.R. No. 172346, July 24, 2013), the Supreme Court ruled that:
“Tender of payment is the manifestation by the debtor of a desire to comply with or pay an obligation. If refused without just cause, the tender of payment will discharge the debtor of the obligation to pay but only after a valid consignation of the sum due shall have been made with the proper court.”
Furthermore, it was held in the same case that:
“When a tender of payment is made in such a form that the creditor could have immediately realized payment if he had accepted the tender, followed by a prompt attempt of the debtor to deposit the means of payment in court by way of consignation, the accrual of interest on the obligation will be suspended from the date of such tender. But when the tender of payment is not accompanied by the means of payment, and the debtor did not take any immediate step to make a consignation, then interest is not suspended from the time of such tender.”
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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