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  • PNB Vs Chan

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    Daniela Erika Beredo Inandan
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    PNB leased commercial property from Lilibeth Chan from 1999 to 2004, then continued occupying it month-to-month. In 2005, Chan filed an unlawful detainer complaint against PNB for unpaid rent from October 2004 to August 2005. PNB claimed it applied rent to Chan's outstanding loan and then deposited subsequent rent in a non-drawing account due to a claim by a third party. The court ruled that PNB's deposit was not a valid consignment since consignment must be made through the court. As PNB's consignment was not made until May 2006, it was liable to pay interest for late payment of rent from January 2005 to March 2006 when it vacated the property.

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    PNB vs Chan

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    PNB leased commercial property from Lilibeth Chan from 1999 to 2004, then continued occupying it month-to-month. In 2005, Chan filed an unlawful detainer complaint against PNB for unpaid rent from October 2004 to August 2005. PNB claimed it applied rent to Chan's outstanding loan and then deposited subsequent rent in a non-drawing account due to a claim by a third party. The court ruled that PNB's deposit was not a valid consignment since consignment must be made through the court. As PNB's consignment was not made until May 2006, it was liable to pay interest for late payment of rent from January 2005 to March 2006 when it vacated the property.

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    720 views1 page

    PNB Vs Chan

    Uploaded by

    Daniela Erika Beredo Inandan
    PNB leased commercial property from Lilibeth Chan from 1999 to 2004, then continued occupying it month-to-month. In 2005, Chan filed an unlawful detainer complaint against PNB for unpaid rent from October 2004 to August 2005. PNB claimed it applied rent to Chan's outstanding loan and then deposited subsequent rent in a non-drawing account due to a claim by a third party. The court ruled that PNB's deposit was not a valid consignment since consignment must be made through the court. As PNB's consignment was not made until May 2006, it was liable to pay interest for late payment of rent from January 2005 to March 2006 when it vacated the property.

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    of 1

    G.R. No. 206037. March 13, 2017.

    *
    PHILIPPINE NATIONAL BANK, petitioner, vs. LILIBETH S. CHAN, respondent.

    FACTS:
    Respondent Lilibeth S. Chan owns a three-story commercial building which she leased to
    petitioner Philippine National Bank (PNB) for a period of five years from December 15, 1999 to
    December 14, 2004. When the lease expired, PNB continued to occupy the property on a month-
    to-month basis. PNB vacated the premises on March 23, 2006. Meanwhile, on January 22, 2002,
    respondent obtained a P1,500,000.00 loan from PNB which was secured by a Real Estate Mortgage
    constituted over the leased property. In addition, respondent executed a Deed of Assignment over
    the rental payments in favor of PNB. The amount of the respondent’s loan was subsequently
    increased to P7,500,000.00. Consequently, PNB and the respondent executed an “Amendment to
    the Real Estate Mortgage by Substitution of Collateral” on March 31, 2004, where the mortgage
    over the leased property was released and substituted by a mortgage over another parcel of land.
    On August 26, 2005, respondent filed a Complaint for Unlawful Detainer before the Metropolitan
    Trial Court (MeTC) alleging that the latter failed to pay its monthly rentals from October 2004
    until August 2005. In its defense, PNB claimed that it applied the rental proceeds from October
    2004 to January 15, 2005 as payment for respondent’s outstanding loan which became due and
    demandable in October 2004. As for the monthly rentals from January 16, 2005 to February 2006,
    PNB explained that it received a demand letter from a certain Lamberto Chua (Chua) who claimed
    to be the new owner of the leased property and requested that the rentals be paid directly to him.
    PNB thus deposited the rentals in a separate non-drawing savings account for the benefit of the
    rightful party. PNB consigned the amount of P1,348,643.92, representing the rentals due from
    January 16, 2005 to February 2006, with the court on May 31, 2006.

    ISSUE:
    Whether or not there was proper consignment done by PNB to make it not liable to pay interest
    due to delay?
    RULING:
    NO. PNB’s deposit of the subject monthly rentals in a non-drawing savings account is not the
    consignation contemplated by law, precisely because it does not place the same at the disposal of
    the court. Consignation is necessarily judicial; it is not allowed in venues other than the courts.
    Consequently, PNB’s obligation to pay rent for the period of January 16, 2005 up to March 23,
    2006 remained subsisting, as the deposit of the rentals cannot be considered to have the effect of
    payment. It is important to point out that PNB’s obligation to pay the subject monthly rentals had
    already fallen due and demandable before PNB consigned the rental proceeds with the MeTC on
    May 31, 2006. Although it is true that consignment has a retroactive effect, such payment is
    deemed to have been made only at the time of the deposit of the thing in court or when it was
    placed at the disposal of the judicial authority. Based on these premises, PNB’s payment of the
    monthly rentals can only be considered to have been made not earlier than May 31, 2006. Given
    its belated consignment of the rental proceeds in court, PNB clearly defaulted in the payment of
    monthly rentals to the respondent for the period January 16, 2005 up to March 23, 2006, when it
    finally vacated the leased property. As such, it is liable to pay interest in accordance with Article
    2209 of the Civil Code.

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