Dalton v. FGR Realty

G.R. No. 172577 (January 19, 2011)

Facts:

Flora R. Dayrit owned a parcel of land measuring 1,811 square meters located at the corner of Rama Avenue and Velez Street in Cebu City. The petitioner, Soledad Dalton, along with several others, had leased portions of this property. In June 1985, Dayrit sold the property to FGR Realty and Development Corporation (FGR). Following the sale, Dayrit and FGR ceased accepting rental payments from Dalton and the other lessees, intending to terminate the lease agreements.

On September 11, 1985, Dalton and the other lessees filed a complaint and consigned their rental payments with the Regional Trial Court (RTC). However, they did not notify Dayrit or FGR about this consignation. Subsequently, Dayrit and FGR withdrew the rental payments through several motions, explicitly reserving their right to contest the validity of the consignation.

In 1997, Dayrit, FGR, and the other lessees entered into compromise agreements, abandoning all claims against each other. Dalton, however, did not participate in these agreements. The RTC later ruled against Dalton, ordering her to vacate the property, stating that there was no valid consignation due to the failure to comply with the necessary legal requirements.

Legal Issues:

1. Was the consignation made by Dalton valid despite the lack of prior and subsequent notice to the respondents?
2. Did Dalton fail to pay the rent due under the lease agreement?

Arguments:

• Petitioner (Dalton): Dalton argued that the consignation was valid and that the withdrawal of the consigned amounts by Dayrit and FGR rendered the issue moot. She contended that the notice requirement was substantially complied with when the complaint was served to the respondents.

• Respondents (FGR, Dayrit): The respondents contended that the consignation was invalid due to Dalton's failure to provide prior notice of the consignation and subsequent notice after the deposit. They maintained that the requisites for a valid consignation, as outlined in the Civil Code, were not met.

Court's Decision and Legal Reasoning:

The Court affirmed the decisions of the lower courts, ruling that Dalton's consignation was indeed void due to non-compliance with the mandatory requisites for a valid consignation. The Court emphasized that:

1. Mandatory Compliance: The requisites for consignation, as stated in Articles 1256 to 1261 of the Civil Code, must be strictly adhered to. The absence of prior notice to the creditor before the deposit and subsequent notice after the deposit rendered the consignation ineffective.

2. Withdrawal with Reservation: The Court noted that the withdrawal of the consigned amounts by Dayrit and FGR was done with a reservation of rights, meaning they did not waive their claims regarding the validity of the consignation.

3. Failure to Pay Rent: The Court found that Dalton had not continuously paid her rent, which justified the lower court's order for her to vacate the premises. The factual findings of the lower courts were binding, and Dalton's claims were insufficient to overturn these findings.

Significant Legal Principles Established:

• The Court reiterated that the requisites for a valid consignation are mandatory and must be strictly complied with. Substantial compliance is not sufficient to validate a consignation.
• The acceptance of a consigned amount with reservations does not extinguish the creditor's right to contest the validity of the consignation.
• The factual findings of lower courts are generally binding unless specific exceptions apply, such as grave abuse of discretion or misapprehension of facts.