[ G.R. No.

129018, November 15, 2001 ]

CARMELITA LEAÑO, ASSISTED BY HER HUSBAND GREGORIO CUACHON, PETITIONER, VS. COURT OF APPEALS AND HERMOGENES
FERNANDO, RESPONDENTS.

FACTS: On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita Leaño, as vendee executed a contract to sell involving a piece
of land, Lot No. 876-B, with an area of 431 square meters, located at Sto. Cristo, Baliuag, Bulacan. In the contract, Carmelita Leaño bound
herself to pay Hermogenes Fernando the sum of one hundred seven thousand and seven hundred and fifty pesos (P107,750.00) as the total
purchase price of the lot.

P10,775.00 shall be paid at the signing of this contract as DOWN PAYMENT, the balance of P96,975.00 shall be paid within a period of TEN (10)
years at a monthly amortization of P1,747.30 to begin from December 7, 1985 with interest at eighteen per cent (18%) per annum based on
balances."

The contract also provided for a grace period of one month within which to make payments, together with the one corresponding to the
month of grace. Should the month of grace expire without the installments for both months having been satisfied, an interest of 18% per
annum will be charged on the unpaid instalments. Should a period of ninety (90) days elapse from the expiration of the grace period without
the overdue and unpaid installments having been paid with the corresponding interests up to that date, respondent Fernando, as vendor, was
authorized to declare the contract cancelled and to dispose of the parcel of land, as if the contract had not been entered into. The payments
made, together with all the improvements made on the premises, shall be considered as rents paid for the use and occupation of the premises
and as liquidated damages.

On September 16, 1991, the trial court rendered a decision in an ejectment case earlier filed by respondent Fernando ordering petitioner
Leaño to vacate the premises and to pay P250.00 per month by way of compensation for the use and occupation of the property from May 27,
1991 until she vacated the premises, attorney's fees and costs of the suit.

On September 27, 1993, petitioner Leaño filed with the Regional Trial Court of Malolos, Bulacan a complaint for specific performance with
preliminary injunction.

ISSUE: whether petitioner was in delay in the payment of the monthly amortizations

RULING: YES. What was transferred was the possession of the property, not ownership. The possession is even limited by the following: (1)
that the vendee may continue therewith "as long as the VENDEE complies with all the terms and conditions mentioned," and (2) that the buyer
may not sell, cede, assign, transfer or mortgage or in any way encumber any right, interest or equity that she may have or acquire in and to the
said parcel of land nor to lease or to sublease it or give possession to another person without the written consent of the seller.

While the contract provided that the total purchase price was payable within a ten-year period, the same contract specified that the purchase
price shall be paid in monthly installments for which the corresponding penalty shall be imposed in case of default. Petitioner Leaño cannot
ignore the provision on the payment of monthly installments by claiming that the ten-year period within which to pay has not elapsed.

Article 1169 of the Civil Code provides that in reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other
begins.

In the case at bar, respondent Fernando performed his part of the obligation by allowing petitioner Leaño to continue in possession and use of
the property. Clearly, when petitioner Leaño did not pay the monthly amortizations in accordance with the terms of the contract, she was in
delay and liable for damages. However, we agree with the trial court that the default committed by petitioner Leaño in respect of the
obligation could be compensated by the interest and surcharges imposed upon her under the contract in question.
 [ G.R. No. 127695, December 03, 2001 ]

HEIRS OF LUIS BACUS, NAMELY: CLARA RESMA BACUS, ROQUE R. BACUS, SR., SATURNINO R. BACUS, PRISCILA VDA. DE CABANERO,
CARMELITA B. SUQUIB, BERNARDITA B. CARDENAS, RAUL R. BACUS, MEDARDO R. BACUS, ANSELMA B. ALBAN, RICARDO R. BACUS,
FELICISIMA B. JUDICO, AND DOMINICIANA B. TANGAL, PETITIONERS, VS. HON. COURT OF APPEALS AND SPOUSES FAUSTINO DURAY AND
VICTORIANA DURAY, RESPONDENTS.

FACTS: On June 1, 1984, Luis Bacus leased to private respondent Faustino Duray a parcel of agricultural land in Bulacao, Talisay, Cebu.
Designated as Lot No. 3661-A-3-B-2, it had an area of 3,002 square meters, covered by Transfer Certificate of Title No. 48866. The lease was for
six years, ending May 31, 1990. The contract contained an option to buy clause. Under said option, the lessee had the exclusive and
irrevocable right to buy 2,000 square meters of the property within five years from a year after the effectivity of the contract, at P200 per
square meter. That rate shall be proportionately adjusted depending on the peso rate against the US dollar, which at the time of the execution
of the contract was fourteen pesos.

Close to the expiration of the contract, Luis Bacus died on October 10, 1989. Thereafter, on March 15, 1990, the Duray spouses informed
Roque Bacus, one of the heirs of Luis Bacus, that they were willing and ready to purchase the property under the option to buy clause. On
March 30, 1990, due to the refusal of petitioners to sell the property, Faustino Duray's adverse claim was annotated by the Register of Deeds
of Cebu. Subsequently, on April 5, 1990, Duray filed a complaint for specific performance against the heirs of Luis Bacus with the Lupon
Tagapamayapa of Barangay Bulacao, asking that he be allowed to purchase the lot specifically referred to in the lease contract with option to
buy.

Having failed to reach an agreement before the Lupon, on April 27, 1990, private respondents filed a complaint for specific performance with
damages against petitioners before the Regional Trial Court, praying that the latter, (a) execute a deed of sale over the subject property in
favor of private respondents; (b) receive the payment of the purchase price; and (c) pay the damages.

On the other hand, petitioners alleged that before Luis Bacus' death, private respondents conveyed to them the former's lack of interest to
exercise their option because of insufficiency of funds, but they were surprised to learn of private respondents' demand. In turn, they
requested private respondents to pay the purchase price in full but the latter refused. They further alleged that private respondents did not
deposit the money as required by the Lupon and instead presented a bank certification which cannot be deemed legal tender.

ISSUE:

a) When private respondents opted to buy the property covered by the lease contract with option to buy, were they already required to
deliver the money or consign it in court before petitioner executes a deed of transfer?

b) Did private respondents incur in delay when they did not deliver the purchase price or consign it in court on or before the expiration of
the contract?

RULING: No. Obligations under an option to buy are reciprocal obligations.[12] The performance of one obligation is conditioned on the
simultaneous fulfillment of the other obligation.[13] In other words, in an option to buy, the payment of the purchase price by the creditor is
contingent upon the execution and delivery of a deed of sale by the debtor. In this case, when private respondents opted to buy the property,
their obligation was to advise petitioners of their decision and their readiness to pay the price. They were not yet obliged to make actual
payment. Only upon petitioners' actual execution and delivery of the deed of sale were they required to pay.

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 it generally requires a prior tender of payment. In instances, where no debt is due and owing, consignation is not
proper. Therefore, petitioners' contention that private respondents failed to comply with their obligation under the option to buy because
they failed to actually deliver the purchase price or consign it in court before the contract expired and before they execute a deed, has no leg
to stand on.

Corollary, private respondents did not incur in delay when they did not yet deliver payment nor make a consignation before the expiration of
the contract. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin.

In this case, private respondents, as early as March 15, 1990, communicated to petitioners their intention to buy the property and they were
at that time undertaking to meet their obligation before the expiration of the contract on May 31, 1990. However, petitioners refused to
execute the deed of sale and it was their demand to private respondents to first deliver the money before they would execute the same which
prompted private respondents to institute a case for specific performance in the Lupong Tagapamayapa and then in the RTC. On October 30,
1990, after the case had been submitted for decision but before the trial court rendered its decision, private respondents issued a cashier's
check in petitioners' favor purportedly to bolster their claim that they were ready to pay the purchase price. The trial court considered this in
private respondents' favor and we believe that it rightly did so, because at the time the check was issued, petitioners had not yet executed a
deed of sale nor expressed readiness to do so. Accordingly, as there was no compliance yet with what was incumbent upon petitioners under
the option to buy, private respondents had not incurred in delay when the cashier's check was issued even after the contract expired.
 [ G.R. No. 181206, October 09, 2009 ]

MEGAWORLD GLOBUS ASIA, INC., PETITIONER, VS. MILA S. TANSECO, RESPONDENT.

FACTS: On July 7, 1995, petitioner Megaworld Globus Asia, Inc. (Megaworld) and respondent Mila S. Tanseco (Tanseco) entered into a Contract
to Buy and Sell a 224 square-meter (more or less) condominium unit at a pre-selling project, "The Salcedo Park," located along Senator Gil
Puyat Avenue, Makati City. The purchase price was P16,802,037.32, to be paid as follows: (1) 30% less the reservation fee of P100,000, or
P4,940,611.19, by postdated check payable on July 14, 1995; (2) P9,241,120.50 through 30 equal monthly installments of P308,037.35 from
August 14, 1995 to January 14, 1998; and (3) the balance of P2,520,305.63 on October 31, 1998, the stipulated delivery date of the
unit; provided that if the construction is completed earlier, Tanseco would pay the balance within seven days from receipt of a notice of
turnover.

Tanseco paid all installments due up to January, 1998, leaving unpaid the balance of P2,520,305.63 pending delivery of the unit. Megaworld,
however, failed to deliver the unit within the stipulated period on October 31, 1998 or April 30, 1999, the last day of the six-month grace
period.

A few days shy of three years later, Megaworld, by notice dated April 23, 2002 (notice of turnover), informed Tanseco that the unit was ready
for inspection preparatory to delivery. Tanseco replied through counsel, by letter of May 6, 2002, that in view of Megaworld's failure to deliver
the unit on time, she was demanding the return of P14,281,731.70 representing the total installment payment she had made, with interest
at 12% per annum from April 30, 1999, the expiration of the six-month grace period. Tanseco pointed out that none of the excepted causes of
delay existed. Her demand having been unheeded, Tanseco filed on June 5, 2002 with the Housing and Land Use Regulatory Board's (HLURB)
Expanded National Capital Region Field Office a complaint against Megaworld for rescission of contract, refund of payment, and damages.

In its Answer, Megaworld attributed the delay to the 1997 Asian financial crisis which was beyond its control; and argued that default had not
set in, Tanseco not having made any judicial or extrajudicial demand for delivery before receipt of the notice of turnover.

ISSUE: Whether there was a delay on the part of Megaworld in the delivery of the condo unit

RULING: YES. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner
with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. The Contract to Buy
and Sell of the parties contains reciprocal obligations, i.e., to complete and deliver the condominium unit on October 31, 1998 or six months
thereafter on the part of Megaworld, and to pay the balance of the purchase price at or about the time of delivery on the part of Tanseco.
Compliance by Megaworld with its obligation is determinative of compliance by Tanseco with her obligation to pay the balance of the purchase
price. Megaworld having failed to comply with its obligation under the contract, it is liable therefor.

That Megaworld's sending of a notice of turnover preceded Tanseco's demand for refund does not abate her cause. For demand would have
been useless, Megaworld admittedly having failed in its obligation to deliver the unit on the agreed date. The Court cannot generalize the 1997
Asian financial crisis to be unforeseeable and beyond the control of a business corporation. A real estate enterprise engaged in the pre-selling
of condominium units is concededly a master in projections on commodities and currency movements, as well as business risks. The
fluctuating movement of the Philippine peso in the foreign exchange market is an everyday occurrence, hence, not an instance of caso
fortuito. Megaworld's excuse for its delay does not thus lie.

The July 7, 1995 Contract to Buy and Sell between the parties is cancelled. Petitioner, Megaworld Globus Asia, Inc., is directed to pay
respondent, Mila S. Tanseco, the amount of P14,281,731.70, to bear 6% interest per annum starting May 6, 2002 and 12% interest per annum
from the time the judgment becomes final and executory; and to pay P200,000 attorney's fees, P100,000 exemplary damages, and costs of
suit.
 [ G.R. No. 193723, July 20, 2011 ]

GENERAL MILLING CORPORATION, PETITIONER, VS. SPS. LIBRADO RAMOS AND REMEDIOS RAMOS, RESPONDENTS.

FACTS: On August 24, 1989, 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 in Barangay Banaybanay, Lipa
City, Batangas. 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. The spouses further agreed to put up a surety bond at the rate of PhP 20,000 per 1,000
chicks delivered by GMC. The Deed of Real Estate Mortgage extended to Spouses Ramos a maximum credit line of PhP 215,000 payable within
an indefinite period with an interest of twelve percent (12%) per annum.

Spouses Ramos eventually 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.

On March 31, 1997, 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. It was foreclosed for PhP 935,882,075, an amount
representing the losses on chicks and feeds exclusive of interest at 12% per annum and attorney's fees.

GMC argued that it repeatedly reminded Spouses Ramos of their liabilities under the Growers Contract. It argued that it was compelled to
foreclose the mortgage because of Spouses Ramos' failure to pay their obligation.

ISSUE: Was there sufficient demand?

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. [21]

According to the CA, GMC did not make a demand on Spouses Ramos but merely requested them to go to GMC's 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; x x x

As the contract in the instant case carries no such provision on demand not being necessary for delay to exist, We agree with the appellate
court that GMC should have first made a demand on the spouses before proceeding to foreclose the real estate mortgage. The issue of
whether demand was made before the foreclosure was effected is essential. If demand was made and duly received by the respondents and
the latter still did not pay, then they were already in default and foreclosure was proper. However, if demand was not made, then the loans
had not yet become due and demandable. This meant that respondents had not defaulted in their payments and the foreclosure by petitioner
was premature. Foreclosure is valid only when the debtor is in default in the payment of his obligation.
 [ G.R. No. 191431, March 13, 2013 ]

RODOLFO G. CRUZ AND ESPERANZA IBIAS, PETITIONERS, VS. ATTY. DELFIN GRUSPE, RESPONDENT.

FACTS: The claim arose from an accident that occurred on October 24, 1999, when the mini bus owned and operated by Cruz and driven by
one Arturo Davin collided with the Toyota Corolla car of Gruspe; Gruspe’s car was a total wreck. The next day, on October 25, 1999, Cruz,
along with Leonardo Q. Ibias went to Gruspe’s office, apologized for the incident, and executed a Joint Affidavit of Undertaking promising
jointly and severally to replace the Gruspe’s damaged car in 20 days, or until November 15, 1999, of the same model and of at least the same
quality; or, alternatively, they would pay the cost of Gruspe’s car amounting to P350,000.00, with interest at 12% per month for any delayed
payment after November 15, 1999, until fully paid.

When Cruz and Leonardo failed to comply with their undertaking, Gruspe filed a complaint for collection of sum of money against them on
November 19, 1999 before the RTC.

In their answer, Cruz and Leonardo denied Gruspe’s allegation, claiming that Gruspe, a lawyer, prepared the Joint Affidavit of Undertaking and
forced them to affix their signatures thereon, without explaining and informing them of its contents; Cruz affixed his signature so that his mini
bus could be released as it was his only means of income; Leonardo, a barangay official, accompanied Cruz to Gruspe’s office for the release
of the mini bus, but was also deceived into signing the Joint Affidavit of Undertaking.

Cruz and Esperanza claim claim that prior to the filing of the complaint for sum of money, Gruspe did not make any demand upon
them. Hence, pursuant to Article 1169 of the Civil Code, they could not be considered in default. Without this demand, Cruz and Esperanza
contend that Gruspe could not yet take any action.

ISSUE: When was there demand?

RULING: CA glossed over the issue of demand which is material in the computation of interest on the amount due. The RTC ordered Cruz and
Leonardo to pay Gruspe “P350,000.00 as cost of the car xxx plus fifteen percent (15%) per annum from November 15, 1999 until fully paid[.]”

The 15% interest (later modified by the CA to be 12%) was computed from November 15, 1999 – the date stipulated in the Joint Affidavit of
Undertaking for the payment of the value of Gruspe’s car.

In the absence of a finding by the lower courts that Gruspe made a demand prior to the filing of the complaint, the interest cannot be
computed from November 15, 1999 because until a demand has been made, Cruz and Leonardo could not be said to be in default. “In order
that the debtor may be in default[,] it is necessary that the following requisites be present: (1) that the obligation be demandable and already
liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the performance judicially and extrajudicially.” Default
generally begins from the moment the creditor demands the performance of the obligation. In this case, demand could be considered to
have been made upon the filing of the complaint on November 19, 1999, and it is only from this date that the interest should be computed.

WHEREFORE, we AFFIRM the decision dated July 30, 2009 and the resolution dated February 19, 2010 of the Court of Appeals in CA-G.R. CV
No. 86083, subject to the MODIFICATION that the twelve percent (12%) per annum interest imposed on the amount due shall accrue only from
November 19, 1999, when judicial demand was made.