Genareal Milling Corporation vs Ramos

FACTS: General Milling Corporation (GMC) entered into a Growers Contract with
spouses Librado and Remedios Ramos (Spouses Ramos). Under the contract, GMC
was to supply broiler chickens for the spouses to raise on their land. To guarantee full
compliance, the Growers Contract was accompanied by a Deed of Real Estate
Mortgage over a piece of real property and a surety bond. Spouses Ramos eventually
were unable to settle their account with GMC. The property was extrajudicially
foreclosed and GMC was the highest bidder. Spouses Ramos questioned the validity of
the foreclosure proceedings. The CA found that GMC made no demand to spouses
Ramos for the full payment of their obligation. A perusal of the letters presented and
offered as evidence by defendant-appellant GMC did not demand but only request
spouses Ramos to go to the office of GMC to discuss the settlement of their account.
ISSUE: Whether or not GMC made sufficient demand to the spouses Ramos to fulfill
their obligation
RULING: No. There are three requisites necessary for a finding of default. First, the
obligation is demandable and liquidated; second, the debtor delays performance; and
third, the creditor judicially or extrajudicially requires the debtor's performance. Article
1169 of the Civil Code states that: those obligated to deliver or to do something incur in
delay from the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation. However, the demand by the creditor shall not be
necessary in order that delay may exist, when the obligation or the law expressly so
declares. The contract in the instant case carries no such provision on demand not
being necessary for delay to exist. GMC should have first made.a demand on the
spouses before proceeding to foreclose the real estate mortgage.
Santos Ventura Foundation vs Santos
Facts:
Ernesto V. Santos and Santos Ventura Hocorma Foundation, Inc. (SVHFI) were
plaintiff and defendant,respectively, in several civil cases. On October 26,
1990, the parties executed a Compromise Agreement wherein Foundation
shall pay Santos P14.5 Million in the following manner:
a. P1.5 Million immediately upon the execution of this agreement; and
b. The balance of P13 Million shall be paid, whether in lump sum or in
installments, at the
discretion of the Foundation, within a period of not more than two (2) years
from the execution of this agreement.
In compliance, Santos moved for the dismissal of the cases, while SVHFI paid
the initial P1.5 million. After several demands, SVHFI failed to pay the
balance of P13 million, prompting Santos to apply for the issuance of a writ
of execution of the compromise judgment of the RTC dated September 30,
1991.Twice, SVHFIs properties were auctioned and sold to Riverland, Inc.
On June 2, 1995, Santos and Riverland Inc. filed a Complaint for Declaratory
Relief and Damages alleging delay on the part of SVHFI in paying the

balance. They further alleged that under the Compromise Agreement, the
obligation became due on October
26, 1992, but payment of the remaining balance was effected only on
November 22, 1994. Thus, respondents prayed that petitioner be ordered to
pay legal interest on the obligation, penalty, attorney's fees and costs
of litigation. SVHFI alleged that the legal interest on account of fault or delay
was not due and payable, considering that the obligation had been
superseded by the compromise agreement. Moreover, SVHFI argued that
absent a stipulation, Santos must ask for judicial intervention for purposes of
fixing the period.
Issue:
Whether or not SVHFI incurred in delay based on the compromise agreement
and thereby liable for legal interest
Ruling:
SVHFI is liable for legal interest as penalty on account of delay.
The Compromise Agreement was entered into on October 26, 1990.
It was judicially approved on September
30, 1991. Applying existing jurisprudence, the compromise agreement as a
consensual contract became binding between the parties upon its execution
and not upon its court approval. Hence, the two-year periodshould have
begun on October 26, 1990.
In this case, there was non-fulfillment of the obligation with respect to time.
The requisites of mora/default were all met:
(1)that the obligation be demandable and already liquidated

the two-year period already lapsed and

the amount of payment was already determined;
(2)that the debtor delays performance

SVHFI paid the balance beyond the two-year period; and

finally,
(3)that the creditor requires the performance judicially or extra-judicially

a demand letter was sent in

accordance with the extra-judicial demand as contemplated by law.
When the debtor knows the amount and period when he is to pay, interest as
damages is generally allowed as
a matter of right. The legal interest for loan as forbearance of money is 12%
per annum to be computed from
the time the demand was made under the provisions of Article 1169 of the
Civil Code