Monday, January 25, 2016

General Milling Corporation vs. Spouses Ramos [GR No. 193723, July 20, 2011]

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.

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