Tender Of Payment And Consignation Flashcards
Article 1256
ART. 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.
Meaning of tender of payment
(1) Tender of payment is the act, on the part of the debtor, of offering to the creditor the thing or amount due. The debtor must show that he has in his possession the thing or money to be delivered at the time of the offer. It is an act preparatory to consignation, which is the principal, and from which are derived the immediate consequences which the debtor desires or seeks to obtain.
What is consignation?
Consignation is the act of depositing the thing or amount due with the proper court when the creditor does not desire, or refuses to accept payment, or cannot receive it, after complying with the formalities required by law. It is always judicial and it generally requires a prior tender of payment which is by its very nature extra- judicial.
Nature of and rationale for consignation.
(1) A facultative remedy. — Consignation is a facultative remedy which the debtor may or may not avail of.
2) Avoidance of greater liability. — Tender of payment and consig- nation, where validly made, or consignation alone in any of the cases enumerated in Article 1256, produces the effect of payment and ex- tinguishes an obligation. The rationale for this remedy is to avoid the performance of an obligation more onerous to the debtor by reason of causes not imputable to him
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Requisites of a valid consignation.
In order that the debtor may be released from his obligation by the consignation of the thing or sum due,11 the following requisites must be observed:
(1) existence of a valid debt which is due (Art. 1256, par. 1.);
(2) tender of payment by the debtor and refusal without justifiable reason by the creditor to accept it (Ibid.);
(3) previous notice of consignation to persons interested in the fulfillment of the obligation (Art. 1257, par. 1.);
(4) consignation of the thing or sum due (Art. 1258, par. 1.); and
(5) subsequent notice of consignation made to the interested parties.
Can consignation to performed without existence of a valid debt?
Consignation is proper only where there is a valid debt which is due. A creditor-debtor relationship must exist between the parties otherwise the legal effects thereof cannot be availed of.
Thus, where the possession of property by petitioners being by mere tolerance or permission of respondent as they failed to establish through competent evidence the existence of any contractual relations between them, the latter, not being a creditor, has no obligation to receive any payment from them. Without any contract, they are necessarily bound by an implied promise that they will vacate upon demand, failing which, a summary action for ejectment is the proper remedy against them. (Llobrera vs. Fernandez,
Requirements for valid tender of payment.
2001].)
(1) Tender of payment must comply with the rules on payment. (Arts. 1256-1258.) Thus, a check, whether a manager’s check or ordinary check, is not legal tender (see Art. 1249.), and an offer of a check in payment of a debt is not a valid tender and may be refused by the creditor.
2) It must be unconditional and for the whole be presumed by a mere inference from surrounding circum- stances. The tender of payment of only a portion of an ob- ligation when the contract gives to the creditor the right to require payment of the whole amount due and still unpaid upon default of an installment, may be validly refused by the creditor:
3 It must be actually made. The manifestation of a desire or intention to pay is not enough.
Facts: D owed C (bank) the sum of P600.00 for which D executed a promissory note. In a suit by C for collection, D claimed that the loan had already been paid because he had tendered payment at C’s Naga Agency, of the loan out of a check for P5,000.00 issued by the United States Treasury in favor of X, who accompanied D, demanding that his check be cashed but the agency dishonored the check which was honored and cashed at a later date by the Legaspi branch of C.
Issue: Did the tender of payment by D result in the discharge of his obligation?
Held: No, for the following reasons: First, the promissory note executed by D undertook to pay in Philippine currency, and as the tender of payment was made in check, and not his own at that, C acted rightly in refusing it. This is true even if the check may be good. Second, the tender of payment was conditional. In offering the check, D practically told C: “Here is P600.00 but you must pay the remainder of the check (P4,400.00) to X.” Third, tender of payment, even if valid, does not by itself produce legal payment, unless it is completed by consignation.
Proof of tender of payment
As tender of payment must precede consignation, the tender must be proved by the debtor in the proper case. (Art. 1256, par. 1.) In other cases, when tender is not required (Ibid., par. 2.), only prior notice to interested persons of the consignation need be proved.
When tender of payment not required.
(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 claimt he same l right to collect;
(5) When the title of the obligation has been lost.
Conditions for release of the obligor due through consignation
ART. 1257. In order that the consignation of the thing due may release the obligor, it must first be announced to the per- sons interested in the fulfillment of the obligation.
The consignation shall be ineffectual if it is not made strict- ly in consonance with the provisions which regulate payment.
Article 1258
How is consignation made
ART. 1258. Consignation shall be made by depositing the things due at the disposal of judicial authority, before whom the tender of payment shall be proved, in a proper case, and the an- nouncement of the consignation in other cases.
The consignation having been made, the interested parties shall also be notified thereof.
Purpose of notice given to interested parties of consignation made
The purpose of the notice is to give the creditor a chance to reflect on his previous refusal to accept payment considering that the expenses of consignation shall be charged against him (Art. 1259.) and that in case of loss of the thing consigned, he shall bear the risk thereof.
The purpose of the second notice is to enable the creditor to withdraw the thing or sum deposited or take possession in case he accepts the consignation.
Who shall pay for the expenses of consignation?
ART. 1259. The expenses of consignation, when properly made, shall be charged against the creditor.
When consignation deemed properly made.
In any of the following cases:
(1) When the creditor accepts the thing or sum deposited, without objection, as payment of the obligation (Art. 1260, par. 2.);
(2) When the creditor questions the validity of the consignation, and the court, after hearing, declares that it has been properly made (Ibid.); and
(3) When the creditor neither accepts nor questions the validity of the consignation, and the court after hearing, orders the cancellation of the obligation. (Art. 1260, par. 1; Salaria vs. Buenviaje, 81 SCRA 722 [1978]; Ponce de Leon vs. S. Syjuico, Inc., 90 Phil. 311 [1951].)
The creditor may accept the consignation with reservation or qualification; therefore, he is not barred from raising the claims he reserved against the debtor.
