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Topic: DEMAND (1st Case)

GENERAL MILLING CORPORATION


vs.
SPS. LIBRADO RAMOS and REMEDIOS RAMOS
Facts: General Milling Corporation entered into a Growers Contract with spouses Librado and
Remedios Ramos. GMC was to supply broiler chickens for the spouses. To guarantee full
compliance, the Growers Contract was accompanied by a Deed of Real Estate Mortgage
over a piece of real property upon which their conjugal home was built. Eventually, spouses
Ramos were unable to settle their account with GMC. They alleged that they suffered
business losses because of the negligence of GMC and its violation of the Growers Contract.
Thereafter, the counsel for GMC notified Spouses Ramos that GMC would institute
foreclosure proceedings on their mortgaged property. On May 7, 1997, GMC filed a Petition
for Extrajudicial Foreclosure of Mortgage. On June 10, 1997, the property subject of the
foreclosure was subsequently sold by public auction to GMC after the required posting and
publication
Issue(s):

(1) WON the Deed of Real Estate Mortgage was valid?


(2) WON the extrajudicial foreclosure was valid?
(3) WON there was demand on spouses Ramos for the full payment of their
obligation? (was only raised at CA and SC level)

Ruling of RTC:
(1)The trial court ruled that the Deed of Real Estate Mortgage was valid even if its term was not
fixed. Since the duration of the term was made to depend exclusively upon the will of the debtorsspouses, the trial court cited jurisprudence and said that "the obligation is not due and payable until
an action is commenced by the mortgagee against the mortgagor for the purpose of having the court
fix the date on and after which the instrument is payable and the date of maturity is fixed in
pursuance thereto."
(2) The trial court held that the action of GMC in moving for the foreclosure of the spouses
properties was premature, because the latters obligation under their contract was not yet due.

Ruling of CA:

The CA sustained the decision of the trial court but anchored its ruling on a different ground. It ruled
that the requirements of posting and publication of notices under Act No. 3135 were complied with.
However, CA still found that GMCs action against Spouses Ramos was premature, as they were not
in default.

Ruling of SC:

The SC agreed to the decision of CA that GMC did not make a demand on Spouses Ramos but
merely requested them to go to GMCs office to discuss the settlement of their account. In spite of
the lack of demand made on the spouses, however, GMC proceeded with the foreclosure
proceedings. Neither was there any provision in the Deed of Real Estate Mortgage allowing GMC to
extrajudicially foreclose the mortgage without need of demand.

Indeed, Article 1169 of the Civil Code on delay requires the following:
Those obliged to deliver or to do something incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfilment of their obligation. However, the demand by the
creditor shall not be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declares; ***
As the contract in the instant case carries no such provision on demand not being necessary for
delay to exist, The SC agreed with the appellate court that GMC should have first made a demand
on the spouses before proceeding to foreclose the real estate mortgage. This meant that
respondents had not defaulted in their payments and the foreclosure by petitioner was premature.

Demand ka ba?
Kasi kelangan kita bago maforeclose ang puso ko!

-donmiguel
Topic: VALID CONSIGNATION (16TH Case)

SOLEDAD DALTON,
vs
FGR REALTY AND DEVELOPMENT CORPORATION, et.al

Facts: A Parcel of land owned by respondent Flora R. Dayrit was leased to petitioners Soledad
Dalton, et.al. Eventually, said land was sold to respondent FGR Realty and Development
Corporation. FGR and Dayrit decided not to accept payments from Dalton, et.al, for the
purpose of terminating the lease agreement. Dalton et.al filed a complaint with the RTC and
attached was a consignation of the rental payments. However, they failed to notify the other
party of such action. FGR and Dayrit withdrew the consigned amount with reservation to
question the validity of the consignation.

Issue: WON the consignation made by Dalton was valid?

Ruling of RTC:

It is very clear from the facts that there was no valid consignation made. The requisites of
consignation are as follows: (1) The existence of a valid debt (2) Valid prior tender, unless tender is
excuse (3) Prior notice of consignation (before deposit) (4) Actual consignation (deposit)
(5)Subsequent notice of consignation. Requisite Nos. 3 and 5 are absent or were not complied with.
It is very clear that there were no prior notices of consignation (before deposit) and subsequent
notices of consignation (after deposit)

Ruling of CA:

The CA found no valid consignation. 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 and
generally requires a prior tender of payment. No error, therefore, can be attributed to the lower court
when it held that the consignation made by the plaintiff-appellant was invalid for failure to meet
requisites 3 and 5 of a valid consignation (i.e., previous notice of the consignation given to the
person interested in the performance of the obligation and, after the consignation had been made,
the person interested was notified thereof).

Ruling of SC:

Compliance with the requisites of a valid consignation is mandatory. Failure to comply strictly with
any of these requisites will render the consignation void. Substantial compliance is not enough. The
giving of notice to the persons interested in the performance in the performance of the obligation is
mandatory. Under Art.1257 of our NCC, in order that consignation of the thing due may release the
obligor, it must first be announced to the persons interested in the fulfillment of the obligation. The
consignation shall be ineffectual if it is not made strictly in consonance with the provisions which
regulate payment. Article 1258, further provides that consignation having been made, the interested
party shall also be notified thereof.

The SC ruled that the essential requisites of a valid consignation must be complied with fully and
strictly in accordance with the law, Articles 1256 to 1261, New Civil Code. That these Articles must
be accorded a mandatory construction is clearly evident and plain from the very language of the
codal provisions themselves which require absolute compliance with the essential requisites therein
provided. Substantial compliance is not enough for that would render only a directory construction to
the law. The use of the words "shall" and "must" which are imperative, operating to impose a duty
which may be enforced, positively indicate that all the essential requisites of a valid consignation
must be complied with. The Civil Code Articles expressly and explicitly direct what must be
essentially done in order that consignation shall be valid and effectual.

I-inform mo kasi muna yung mga taong maapektohan bago ka gumawa ng hakbang!
-donmiguel

Topic: CONTRACT TO SELL; DACION EN PAGO (14TH CASE)

LUZON DEVELOPMENT BANK vs


ANGELES CATHERINE ENRIQUEZ
x ----x
DELTA DEVELOPMENT and MANAGEMENT SERVICES, INC., vs
ANGELES CATHERINE ENRIQUEZ and LUZON DEVELOPMENT BANK

Facts: The BANK is a domestic financial corporation that extends loans to subdivision
developers/owners. Petitioner DELTA is a domestic corporation engaged in the business of
developing and selling real estate properties, particularly Delta Homes I in Cavite. DELTA is
owned by Ricardo De Leon (De Leon), who is the registered owner of a parcel of land which
corresponds to Lot 4 of Delta Homes, the subject matter of these cases. In 1995, De Leon
and his spouse obtained a P4 million loan from the BANK for the express purpose of
developing Delta Homes I. To secure the loan, the spouses De Leon executed in favor of the
BANK a real estate mortgage (REM) on several of their properties, including Lot 4.

Sometime in 1997, DELTA executed a Contract to Sell with respondent Angeles Catherine
Enriquez (Enriquez) over the house and lot in Lot 4.

When DELTA defaulted on its loan obligation, the BANK, instead of foreclosing the REM,
agreed to a dation in payment or a dacion en pago.

Issue(s): (1) WON Contract to Sell conveys ownership?


(2) WON the dacion en pago extinguished the loan obligation, such that DELTA has no
more obligations to the bank?

Ruling of CA:

(2) The CA ruled against the validity of the dacion en pago on the ground that DELTA had earlier
relinquished its ownership over Lot 4 in favor of Enriquez via the Contract to Sell. Since the dacion
en pago is invalid with respect to Lot 4, the appellate court held that DELTA remained indebted to the
BANK to the extent of Lot 4s value.

Ruling of SC:

(1) Contract to sell does not transfer ownership. A contract to sell is one where the prospective seller
reserves the transfer of title to the prospective buyer until the happening of an event, such as full
payment of the purchase price. What the seller obliges himself to do is to sell the subject property
only when the entire amount of the purchase price has already been delivered to him. "In other
words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment
of which prevents the obligation to sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the prospective buyer." It does not, by itself, transfer
ownership to the buyer

Since the Contract to Sell did not transfer ownership of Lot 4 to Enriquez, said ownership remained
with DELTA. DELTA could then validly transfer such ownership (as it did) to another person (the
BANK).
(2) Dacion en pago extinguished the loan obligation. Like in all contracts, the intention of the parties
to the dation in payment is paramount and controlling. The contractual intention determines whether
the property subject of the dation will be considered as the full equivalent of the debt and will
therefore serve as full satisfaction for the debt. "The dation in payment extinguishes the obligation to
the extent of the value of the thing delivered, either as agreed upon by the parties or as may be
proved, unless the parties by agreement, express or implied, or by their silence, consider the thing
as equivalent to the obligation, in which case the obligation is totally extinguished." 69
In the case at bar, the Dacion en Pago executed by DELTA and the BANK indicates a clear intention
by the parties that the assigned properties would serve as full payment for DELTAs entire obligation

Dacion ka ba?
Ikaw kasi ang pundacion ng buhay ko eh!

-donmiguel