G.R. No. 172577; January 19, 2011
SOLEDAD DALTON, Petitioner, vs. FGR REALTY AND DEVELOPMENT CORPORATION, FELIX NG, NENITA NG, and FLORA R. DAYRIT or FLORA REGNER, Respondents.

FACTS

Flora R. Dayrit owned a parcel of land in Cebu City leased to petitioner Soledad Dalton and others. In June 1985, Dayrit sold the property to respondent FGR Realty and Development Corporation. In August 1985, Dayrit and FGR stopped accepting rental payments to terminate the lease agreements. On 11 September 1985, Dalton and the other lessees consigned the rental payments with the Regional Trial Court (RTC) but failed to notify Dayrit and FGR of this consignation. Dayrit and FGR subsequently withdrew the consigned rentals through several motions, reserving their right to question the consignation’s validity. Dayrit, FGR, and the other lessees (except Dalton) later entered into compromise agreements to abandon all claims against each other. The RTC dismissed Dalton’s complaint, ordered her to vacate the property, and ruled her consignation invalid due to non-compliance with mandatory notice requirements. The Court of Appeals affirmed the RTC decision.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s dismissal of the complaint and in ruling that petitioner Soledad Dalton did not effect a valid consignation of her rental payments.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ Decision and Resolution. The Court held that no valid consignation was made by Dalton. For consignation to be effective, the debtor must comply with all mandatory requisites under the Civil Code, including: (1) the existence of a debt; (2) consignation made due to the creditor’s refusal to accept payment, absence, incapacity, multiple claimants, or lost title; (3) previous notice of consignation given to the interested person; (4) the amount due placed at the court’s disposal; and (5) notification to the interested person after the consignation. The Court emphasized that these requisites are mandatory and must be strictly complied with; substantial compliance is insufficient. Dalton failed to give prior and subsequent notices of the consignation to Dayrit and FGR. Her claim that service of the complaint constituted substantial compliance was rejected. Furthermore, the evidence supported the findings that Dalton was no longer residing at the leased premises and was using it for business purposes, not as a dwelling, which justified the order for her to vacate. The factual findings of the lower courts, being supported by evidence, are binding on the Supreme Court.