Obligation and Contract
Lara Bianca Cabulong
BSBA 3-2-1
Subsection 3. Tender of Payment and Consignation
Tender
the act of offering the creditor what is due him together with a demand that the creditor
accept the same (When creditor refuses w/o just cause to accept payment, he becomes in
mora accepiendi & debtor is released from responsibility if he consigns the thing or sum
due)
Consignation
The act of depositing the thing due with the court or judicial authorities whenever
the creditor cannot accept or refuses to accept payment; generally requires prior tender of
payment
Tender of Payment and Consignation
Tender of payment – The act of the debtor of offering to the creditor the thing or
amount due
Consignation – Deposit of the object or the amount due with the proper court after
refusal or inability of the creditor to accept the tender of payment
1. Requisites of Consignation
a. Debt Due
b. Tender of payment by debtor and refusal by creditor to accept it without
justifiable reason
c. Previous notice of the consignation had been given to persons interested in
fulfillment of obligation
d. Thing or amount due has been deposited with judicial authority
e. Subsequent notice of consignation to interested parties
2. Exception to requirement for tender of payment
a. When creditor is absent or unknown or does not appear at place of payment
b. When he is incapacitated to receive payment
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Obligation and Contract
c. When he refuses to give receipt, without just cause
d. When two or more persons claim same right to collect
e. When title of the obligation has been lost
Article 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 things 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. (1176a)
Consignation is a facultative remedy: domination is a facultative remedy which the
debtor may or may not avail of and if made by the debtor the creditor merely accepted if
it he wishes or the court declares that it has been property made.
For requirement of Consignation
1. Existence of valid indebtedness
2. There must be valid Tender of Payment and refusal to accept without justifiable
reason
3. There must be notice of consignation to the persons interested and after the
deposit
4. Deposit with the judicial authority
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Effect of absence Suppose: Y is absent at the place of payment, then X could
Consign the amount in court
Incapacity to receive payment: Suppose Y because insane at the time payment became
due, and then X also could make consignation
Two or more persons claim same right to collect: Suppose Z aside from Y also
claimed payment of 10,000 from X and the latter could not determine to whom payment
should be made then X could consign the amount in the court.
When the title of the obligation is lost: Suppose Y cannot return the document evidence
The obligation, Then X can make consignation in court
Rejection of tender payment: The tender payment which are rejected by the creditor
does not ripen into payment because of such rejection
Tender of payment by check: A check intended to pay a debt, if refused by the oblige or
creditor id not a valid tender of payment
Tender of payment must be unconditional: An offer to deposit payment due in trust or
in escrow cannot be considered payment since it conditional tender and would have left
the creditor unable to make use of the money rightfully due to it. A tender unconditional
Art. 1257. In order that the consignation of the thing due may release the obligor, it must
first be announced to the persons interested in the fulfillment of the obligation.
Purpose of noticed to creditor: id to give the creditor a chance to reflect ob the whether
or not to accept payment and of the debtor does not give notice to the creditor of
consignment.
Requisition of Consignment: under Article 1257 of our civil code ob order that
consignation of the things die may released the obligor.
Art. 1258. Consignation shall be made by depositing the things due at the disposal of
judicial authority, before which the tender of payment shall be proved, in a proper case,
and the announcement of the consignation in other cases.
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Art. 1259. The expenses of consignation, when properly made, shall be charged against
the creditor. (1178)
Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to
order the cancellation of the obligation.
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. (1180)
Art. 1261. If, the consignation having been made, the creditor should authorize the debtor
to withdraw the same, he shall lose every preference which he may have over the thing.
The co-debtors, guarantors and sureties shall be released. (1181a)
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