G.R. No. L-58961 June 28, 1983
SOLEDAD SOCO, petitioner, vs. HON. FRANCIS MILITANTE, Incumbent Presiding Judge of the Court of First Instance of Cebu, Branch XII, Cebu City and REGINO FRANCISCO, JR., respondents.

FACTS

Petitioner Soledad Soco is the owner-lessor of a commercial building leased to private respondent Regino Francisco, Jr. under a ten-year contract. A dispute arose when Soco filed an action for annulment or reformation of the lease contract in the Court of First Instance. Subsequently, claiming Francisco failed to pay rentals starting May 1977, Soco sent a notice to vacate and later filed an illegal detainer case in the City Court of Cebu. Francisco defended that he had made payments through checks issued by the Commercial Bank and Trust Company (Comtrust) and, upon Soco’s refusal to accept, by depositing the rental amounts with the Clerk of Court of the City Court. The City Court ruled in favor of Soco, ordering Francisco to vacate and pay arrears.
On appeal, the Court of First Instance reversed the City Court’s decision. It held that Francisco’s actions constituted substantial compliance with the requisites of consignation, thereby validating the rental payments. The CFI dismissed the complaint and ordered Soco to pay moral and exemplary damages and attorney’s fees. Soco elevated the case to the Supreme Court via petition for review, arguing the CFI committed grave abuse of discretion.

ISSUE

Whether the Court of First Instance erred in ruling that there was substantial compliance with the essential requisites of a valid consignation of rental payments.

RULING

The Supreme Court reversed the decision of the Court of First Instance and reinstated the judgment of the City Court. The Court held that the essential requisites for a valid consignation under Articles 1256 to 1261 of the New Civil Code are mandatory and must be strictly complied with; substantial compliance is insufficient. The law uses imperative terms such as “shall” and “must,” indicating that the prescribed steps are compulsory for the consignation to be effectual and to release the obligor.
Specifically, the law requires: (1) prior notice or announcement of the consignation to interested persons; (2) actual deposit of the amount due with a judicial authority; and (3) subsequent notification to interested parties of the accomplished consignation. The records failed to establish that Francisco strictly followed these mandatory steps. His act of depositing checks with a bank for Soco’s collection or even with the Clerk of Court, absent proof of the required prior announcement and subsequent notifications as dictated by law, did not constitute a valid consignation. Consequently, the payments were not validly effected, and his obligation to pay rent persisted. The CFI’s reliance on the doctrine of substantial compliance was a reversible error. The Supreme Court thus found the ejectment justified and set aside the award of damages and attorney’s fees against Soco.