Hernandez Adriano ObliCon

Spouses GO CINCO, Petitioner, TENDER OF PAYMENT - an unconditional offer by a debtor or

vs. obligor to pay another, in current coin of the realm, a sum not
COURT OF APPEALS. less in amount than that due on a specified debt or obligation.
Topic: Tender of Payment
SHORT ANSWERS:
Petitioner: Sps. GO CINCO 1 When did the problem start: When Ester Servacio refused to
Respondent: Court of Appeals accept the proceeds of the mortgage loan of Sps. Go Cinco
1. Who is chasing who: Sps. Go Cinco filed for specific performance
DOCTRINE: to compel Ester Servacio to accept payment.
In the case at bar, the equivalent of a tender of payment cannot 1. Where does the obligation arise: When the loan of Sps. Go Cinco
have legal effect if it cannot be consigned to a court. matured and became due and demandable

Art 1252, Civil Code: FACTS:

Art. 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 thing 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;
Petitioner Manuel Cinco obtained a loan in the amount
700,000.00 from respondent Maasin Traders Lending
Corporation (MTLC). The loan was evidenced by the promissory
note, and secured by a real estate mortgage over the spouses
Cincos land and 4-storey building.
To pay the loan in favor of MTLC, the spouses Cinco applied for
a loan with the Philippine National Bank (PNB), and offered the
same properties they previously mortgage to MTLC. The PNB
approved the load application for 1.3 Million; the release was,
however, conditioned on the cancellation of the mortgage in
favor of MTLC.

(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
VOCABULARY
Manuel went to Ester Servacio (Ester), MTLCs President to
inform her that there was money with PNB for Payment of his
loan. Manuel executed a Special Power of Attorney (SPA)
authorizing Ester to collect the proceeds of the loan. Ester went
to the PNB to inquire, the second time around, about the
proceeds. The bank officer confirmed the existence of such loan,
but they required Ester to first sign a deed of
release/cancellation of the mortgage before they could release
 Hernandez Adriano ObliCon

the proceeds of the loan to her. Outraged, Ester refused the
deed and did not collect the 1.3 Million.
Ester instituted foreclosure proceeding. To prevent the
foreclosure, the spouses Cinco filed an action for specific
performance, damages, and preliminary injunction
ISSUE: WON the unjust refusal of payment released Go Cinco from the
Responsibility of paying.
HELD: NO.
A sad twist in this case for Manuel was that he could not avail of
consignation to extinguish his obligation to MTLC, as PNB would
not release the proceeds of the loan unless and until Ester had
signed the deed of release/cancellation of mortgage, which she
unjustly refused to do. Hence, to compel Ester to accept the loan
proceeds and to prevent their mortgaged properties from being
foreclosed, the spouses Go Cinco found it necessary to institute
the present case for specific performance and damages.
alleged that the SPA merely authorized her to collect the
proceeds of the loan; there was no explicit agreement that the
MTLC loan would be paid out of the proceeds of the PNB loan.
There is nothing legally objectionable in a mortgagors act of
taking a second or subsequent mortgage on a property already
mortgaged; a subsequent mortgage is recognized as valid by
law and by commercial practice, subject to the prior rights of
previous mortgages. Section 4, Rule 68 of the 1997 Rules of
Civil Procedure on the disposition of the proceeds of sale after
foreclosure
Ester Servacio abused her rights according to Article 19 of the
Civil Code where the unjust refusal was contrary to the duty to
act with honesty and good faith.

Ester refused to accept the payment because the bank required

her to first sign a deed of release/cancellation of the mortgage
before the proceeds of the PNB loan could be released. As a
prior mortgagee, she claimed that the spouses Go Cinco should
have obtained her consent before offering the properties already
mortgaged to her as security for the PNB loan. Moreover, Ester