Consignation as a mode of extinguishing an obligation

Dear PAO,

I rented out a commercial space with a fixed contract of 5 years and with a monthly rental of P35,000. Recently, the property owners refused to accept my rental payments because they wanted to terminate our lease contract. No valid reasons were provided by them as to why they want to terminate our contract, which is not even allowed under our lease agreement. What should I do with the accumulating rental payments which the property owners refuse to receive?

Olive

Dear Olive,

Prompt payment of monthly rental is indeed necessary on your part, as it will be in faithful compliance of your obligation under your lease agreement. To relieve you of the burden resulting from the undue refusal of your lessor to accept the rental payment, you need to make a valid tender of payment, which is the act of offering to the creditor the payment due to him and a demand that he accepts the same. If your valid offer is rejected and it is without justifiable cause, you can consign the amount due to the court to effectively discharge you of your obligation. In the case of Philippine National Bank v. Lilibeth S. Chan (GR 206037, March 13, 2017, Ponente: Associate Justice Mariano del Castillo), the Supreme Court explained the concept of consignation, to wit:

«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. It generally requires a prior tender of payment.

»Under Article 1256 of the Civil Code, consignation alone is sufficient even without a prior tender of payment a) when the creditor is absent or unknown or does not appear at the place of payment; b) when he is incapacitated to receive the payment at the time it is due; c) when, without just cause, he refuses to give a receipt; d) when two or more persons claim the same right to collect; and e) when the title of the obligation has been lost.

«For consignation to be valid, the debtor must comply with the following requirements under the law: 1) there was a debt due; 2) valid prior tender of payment, unless the consignation was made because of some legal cause provided in Article 1256; 3) previous notice of the