A bank rented the property of my uncle. They failed to pay six months of rental to my uncle. The bank did not directly pay my uncle as the obligation fell due. My uncle never left his residence during such time. It even failed to notify him that it made some “consignation” in court. My uncle can prove that the bank made the deposit to the court two months later when its obligation fell due. My uncle now seeks payment from the bank with interest. The bank now argues that since it “consigned” the money to the court, it cannot be made liable to pay the interest. What does the bank mean when it “consigned” the money? Are there requirements for it? Can it be relieved of paying interest in doing so?
Fairly recent, is the case of PNB v. Lilibeth Chan (G.R. No. 206037, March 13, 2017) penned by Associate Justice Mariano del Castillo, who clearly discussed about what constitutes consignation and its requisites, viz.:
““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. It generally requires a prior tender of payment.”
Under Article 1256 of the Civil Code, consignation alone is sufficient even without a prior tender of payment a) when the creditor is absent or unknown or does not appear at the place of payment; b) when he is incapacitated to receive the payment at the time it is due; c) when, without just cause, he refuses to give a receipt; d) when two or more persons claim the same right to collect; and e) when the title of the obligation has been lost.
For consignation to be valid, the debtor must comply with the following requirements under the law:
1) there was a debt due;
2) valid prior tender of payment, unless the consignation was made because of some legal cause provided in Article 1256;
3) previous notice of the consignation has been given to the persons interested in the performance of the obligation;
4) the amount or thing due was placed at the disposal of the court; and,
5) After the consignation had been made, the persons interested were notified thereof.
“Failure in any of these requirements is enough ground to render consignation ineffective.”” [Emphasis supplied]
Applying the above definition and requirements, considering that there was neither incapacity nor unjust refusal on the part of your uncle to accept the payment of the bank and that the latter’s obligation already fell due, the consignation made in relation to the bank’s obligation may be considered ineffective. Moreover, when the bank consigned the money beyond the due date, it is apparent that they may be held liable in the payment of interests, as well. Hence, given the circumstances you mentioned, mere allegation that they have consigned cannot relieve them of paying what is due. The requirements of law on consignation of payment must first be satisfied in order for it to reap its benefits.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
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