Sotto v.

Mijares, 28 SCRA 17(1969)

Facts:
The plaintiff, Cristina Sotto, filed a "Motion for Deposit" on November 13, 1962. She contends
that in accordance with the contract including the allied transactions as evidenced by other documents,
the balance indebtedness of the defendants in favor of the plaintiff is the amount of P5,106.00 only of
which the defendants alleging that they have offered the said amount to the plaintiff who refused to
receive it; that in view of the admission of the defendants of the same, it is fitting and proper that the
said amount of P5,106.00 be deposited in the Office of the Clerk of Court of this province or to deliver
the same to the plaintiff and/or her counsel.

Defendants in their answer signified their willingness to deposit the requested amount provided
that the complaint be dismissed and that they be absolved of all other liabilities, expenses and costs.

The RTC ordered defendants to deposit said amount to the Clerk of Court pending the final
termination of the case.

The plaintiff then filed for a motion for partial judgment modifying their previous request for
judicial deposit, which had already been granted. On the other hand, defendants moved to reconsider
the order of the RTC, explaining that through oversight they failed to allege in their "Opposition" that
the sum of P5,106.00 was actually secured by a real estate mortgage. They would thus premise their
willingness to deposit said amount upon the condition " that the plaintiff will cancel the mortgage
abovementioned and that the plaintiff be ordered to return to the defendants the Transfer Certificate of
Title of their land.

The lower court resolved both motions in effect denying them and reiterating its previous order.

Issue: Whether or not the RTC erred in denying the motion of the defendants.

Ruling:
The decision regarding the motion of the defendant, if one has been rendered, since no
injunction was sought in or granted by this Court, must have rendered this appeal moot and academic,
considering that the defendants admit their indebtedness to the plaintiff but object merely to their
being compelled to deposit the amount thereof in court during the pendency of the foreclosure case.

Whether or not to deposit at all the amount of an admitted indebtedness, or to do so under

certain conditions, is a right which belongs to the debtor exclusively. If he refuses he may not be
compelled to do so, and the creditor must fall back on the proper coercive processes provided by law to
secure or satisfy his credit, as by attachment, judgment and execution. From the viewpoint of the debtor
a deposit such as the one involved here is in the nature of consignation, and consignation is a facultative
remedy which he may or may not avail himself of. If made by the debtor, the creditor merely accepts it,
if he wishes; or the court declares that it has been properly made, in either of which events the
obligation is ordered cancelled. Indeed, the law says that "before the creditor has accepted the
consignation or before a judicial declaration that the consignation has been properly made, the debtor
may withdraw the thing or the sum deposited, allowing the obligation to remain in force." 2 If the debtor
has such right of withdrawal, he surely has the right to refuse to make the deposit in the first place. For
the court to compel him to do so was a grave abuse of discretion amounting to excess of jurisdiction.

Meat Packing Corp. v. Sandiganbayan, 359 SCRA

Petitioner Meat Packing Corporation of the Philippines (MPCP), is a corporation wholly owned
by the Government Service Insurance System (GSIS). It is the owner of three (3) parcels of land, as well
as the meat processing and packing plant thereon. On November 3, 1975, MPCP and the Philippine
Integrated Meat Corporation (PIMECO) entered into an Agreement whereby MPCP leased to PIMECO,
under a lease-purchase arrangement, its aforesaid property at an annual rental rate of P1,375,563.92,
payable over a period of twenty-eight years commencing on the date of execution of the Agreement, or
for a total consideration of P38,515,789.87. Subsequently, they entered into a Supplementary and Loan
Agreement, which the total contract price of the lease-purchase agreement was increased to
P93,695,552.59, payable over a period of twenty-eight years commencing on January 1, 1981, at the
annual rental rate of P3,346,269.70.

On March 17, 1986 the PCGG, sequestered all the assets, properties and records of PIMECO. The
sequestration included the meat packing plant and the lease-purchase agreement. MPCP wrote a letter
on to PIMECO, giving notice of the rescission of the lease-purchase agreement on the ground, among
others, of non-payment of rentals of more than P2,000,000.00 for the year 1986.

GSIS asked the PCGG to exclude the meat packing plant from the sequestered assets of PIMECO,
inasmuch as the same is owned by MPCP. However, PCGG denied the request. Likewise, MPCP sought
the turnover to it of the meat packing plant on the ground that the lease-purchase agreement had
already been rescinded. PCGG then passed a Resolution,
a. Ordered the transfer of subject property, consisting of a meat packing complex including the
land to the GSIS under the condition then that the PCGG management team might continue its
operations for the purpose of completing the outstanding orders up to December 1988

b. whatever claim PIMECO had to the complex under its so-called agreement to lease/purchase
with GSIS/MPCP has been validly rescinded by the GSIS; and that the projected turn-over to the
GSIS will not adversely affect the ill-gotten wealth case pending against crony Peter Sabido
before the Sandiganbayan

c. the turn-over to the GSIS has the following conditions,: (a) joint PCGG-COA audit; (b) approval by
the Sandiganbayan; and (c) execution of a Memorandum of Agreement

The Sandiganbayan received a letter from members of the PIMECO Labor Union, praying for the
maintenance of the status quo  to enable PIMECO to continue its business operations and to ensure their
continuity of work and security of tenure of which a temporary restraining order is hereby issued
commanding the PCGG, their officers, agents, representatives, monitors or persons acting in their behalf
or stead, to cease and desist from enforcing the contemplated turnover of the management, control and
possession of PIMECO to the Meat Packing Corporation of the Philippines until further orders. 

The Sandiganbayan, finding that the PCGG committed grave abuse of authority, power and
discretion in unilaterally terminating the lease-purchase agreement of PIMECO with MPCP and in
turning over its management, control and operation to the latter, ordered the issuance of a writ of
preliminary injunction.

PCGG filed a motion for reconsideration which was granted by the Sandiganbayan. Thereafter,
the Sandiganbayan continued to conduct hearings on the issue of the validity of the turn-over of the
meat packing plant to GSIS. It issued a Resolution disposing that the PCGG gravely abused its discretion
when it passed the resolutions turning over the meat packing complex; That the PCGG commissioner
concerned exceeded his authority when he executed the Memorandum of Agreement with transferring
the management and operation of PIMECO to the GSIS/MPCP; That, the said turnovers or transfers are
declared null and void ab initio; and that the PCGG, its commissioners, officers, representatives, and
agents are permanently enjoined from implementing the same turnovers or transfers.

PIMECO filed with the Sandiganbayan a petition for Declaratory Relief and Other Similar Remedies
against MCPC and PCGG.

In its petition, PIMECO alleged that from 1981 to 1985, PIMECO has been regularly paying the
annual rentals in the amount of P3,346,269.70; and that prior to its sequestration in January 1986,
PIMECO was able to pay MPCP the amount of P846,269.70. However, after its sequestration, the PCGG
Management Team that took over the plant became erratic and irregular in its payments of the annual
rentals to MPCP, thus presenting the danger that PIMECO may be declared in default in the payment of
rentals equivalent to three (3) annual installments and causing the cancellation of the lease-purchase
agreement. Hence, PIMECO prayed for a declaration that it is no longer bound by the provisions of the
paragraph 5 of the lease-purchase agreement.

PCGG tendered to MPCP two checks in the amounts of P3,000,000.00 and P2,000,000.00, or a total
of P5,000,000.00, representing partial payment of accrued rentals on the meat packing plant, which
MPCP refused to accept on the theory that the lease-purchase agreement had been rescinded. Thus, the
PCGG filed an Urgent Motion praying that the Sandiganbayan order MPCP to accept the tendered
amount of P5,000,000.00.

The Sandiganbayan declares that the tender of payment and consignation of P5,000,000.00 in the
form of two checks, namely: China Banking Corporation Check No. LIB M 003697 for P3,000,000.00 and
Far East Bank and Trust Company Check No. 29A A 021341 for P2,000,000.00, payable to GSIS-MPCP,
have been validly made in accordance with law and, accordingly, orders Meat Packing Corporation of
the Philippines to accept the payment and issue the corresponding receipt.
MPCP filed a Motion for Reconsideration.

The Sandiganbayan said in its Resolution that when the PCGG sequestered the assets and
records of PIMECO, including the lease-purchase agreement over MPCPs meat packing plant, it assumed
the duty to preserve and conserve those assets and documents while they remained in its possession
and control. That duty did not disappear when the writ was deemed ipso facto lifted. On the contrary, it
continued until the sequestered assets and records where returned to PIMECO. And in the performance
of that duty in order to prevent the cancellation of the lease-purchase agreement by reason of the
failure to pay three accumulated yearly rentals-installments, the PCGG made the timely tender of
payment and consignation which the Resolution sought to be reconsidered sustained.

Issue:
Whether or not the Sandiganbayan erred approving the consignation by PCGG.

Ruling:

MPCPs refusal to accept the same, on the ground merely that its lease-purchase agreement with
PIMECO had been rescinded, was unjustified.

In the assailed resolutions, the Sandiganbayan approved the consignation by PCGG of the amount
of P5,000,000.00 as payment for back rentals or accrued amortizations on the meat packing plant, after
the MPCP refused the tender of payment of the same.

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. It should be distinguished from tender of payment. 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. Tender and consignation,
where validly made, produces the effect of payment and extinguishes the obligation.

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.

In the case at bar, there was prior tender by PCGG of the amount of P5,000,000.00 for payment of
the rentals in arrears. MPCPs refusal to accept the same, on the ground merely that its lease-purchase
agreement with PIMECO had been rescinded, was unjustified. As found by the Sandiganbayan, from
January 29, 1986 to January 30, 1990, PIMECO paid, and GSIS/MPCP received, several amounts due
under the lease-purchase agreement, such as annual amortizations or rentals, advances, insurance, and
taxes, in total sum of P15,921,205.83. Surely, the acceptance by MPCP and GSIS of such payments for
rentals and amortizations negates any rescission of the lease-purchase agreement.

Assuming in the extreme that, as alleged by MPCP, the arrears at the time of tender on January 30,
1991 amounted to P12,578,171.00, the tender and consignation of the sum of P5,000,000.00, which had
the effect of payment, reduced the back rentals to only P7,578,171.00, an amount less than the
equivalent of three annual installments. Thus, with the Sandiganbayans approval of the consignation
and directive for MPCP to accept the tendered payment, the lease-purchase agreement could not be
said to have been rescinded.