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G.R.No.193723

TodayisThursday,November10,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION
G.R.No.193723July20,2011
GENERALMILLINGCORPORATION,Petitioner,
vs.
SPS.LIBRADORAMOSandREMEDIOSRAMOS,Respondents.
DECISION
VELASCO,JR.,J.:
TheCase
This is a petition for review of the April 15, 2010 Decision of the Court of Appeals (CA) in CAG.R. CRH.C. No.
85400 entitled Spouses Librado Ramos & Remedios Ramos v. General Milling Corporation, et al., which affirmed
theMay31,2005DecisionoftheRegionalTrialCourt(RTC),Branch12inLipaCity,inCivilCaseNo.000129for
Annulmentand/orDeclarationofNullityofExtrajudicialForeclosureSalewithDamages.
TheFacts
OnAugust24,1989,GeneralMillingCorporation(GMC)enteredintoaGrowersContractwithspousesLibradoand
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.1 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
conjugalhomewasbuilt.ThespousesfurtheragreedtoputupasuretybondattherateofPhP20,000per1,000
chicksdeliveredbyGMC.TheDeedofRealEstateMortgageextendedtoSpousesRamosamaximumcreditlineof
PhP215,000payablewithinanindefiniteperiodwithaninterestoftwelvepercent(12%)perannum.2
TheDeedofRealEstateMortgagecontainedthefollowingprovision:
WHEREAS, the MORTGAGOR/S has/have agreed to guarantee and secure the full and faithful compliance of
[MORTGAGORS] obligation/s with the MORTGAGEE by a First Real Estate Mortgage in favor of the
MORTGAGEE, over a 1 parcel of land and the improvements existing thereon, situated in the Barrio/s of
Banaybanay,MunicipalityofLipaCity,ProvinceofBatangas,Philippines,his/her/theirtitle/stheretobeingevidenced
byTransferCertificate/sNo./sT9214oftheRegistryofDeedsfortheProvinceofBatangasintheamountofTWO
HUNDRED FIFTEEN THOUSAND (P 215,000.00), Philippine Currency, which the maximum credit line payable
withinaxxxdaytermandtosecurethepaymentofthesameplusinterestoftwelvepercent(12%)perannum.
SpousesRamoseventuallywereunabletosettletheiraccountwithGMC.Theyallegedthattheysufferedbusiness
lossesbecauseofthenegligenceofGMCanditsviolationoftheGrowersContract.3
On March 31, 1997, the counsel for GMC notified Spouses Ramos that GMC would institute foreclosure
proceedingsontheirmortgagedproperty.4
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.5 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 attorneys fees.6 To complicate matters, on October 27, 1997, GMC
informedthespousesthatitsAgribusinessDivisionhadcloseditsbusinessandpoultryoperations.7
OnMarch3,2000,SpousesRamosfiledaComplaintforAnnulmentand/orDeclarationofNullityoftheExtrajudicial
ForeclosureSalewithDamages.TheycontendedthattheextrajudicialforeclosuresaleonJune10,1997wasnull
andvoid,sincetherewasnocompliancewiththerequirementsofpostingandpublicationofnoticesunderActNo.
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3135,asamended,orAnActtoRegulatetheSaleofPropertyunderSpecialPowersInsertedinorAnnexedtoReal
Estate Mortgages. They likewise claimed that there was no sheriffs affidavit to prove compliance with the
requirementsonpostingandpublicationofnotices.ItwasfurtherallegedthattheDeedofRealEstateMortgagehad
nofixedterm.Aprayerformoralandexemplarydamagesandattorneysfeeswasalsoincludedinthecomplaint.8
LibradoRamosallegedthat,whenthepropertywasforeclosed,GMCdidnotnotifyhimatalloftheforeclosure.9
During the trial, the parties agreed to limit the issues to the following: (1) the validity of the Deed of Real Estate
Mortgage(2)thevalidityoftheextrajudicialforeclosureand(3)thepartyliablefordamages.10
In its Answer, GMC argued that it repeatedly reminded Spouses Ramos of their liabilities under the Growers
Contract.ItarguedthatitwascompelledtoforeclosethemortgagebecauseofSpousesRamosfailuretopaytheir
obligation. GMC insisted that it had observed all the requirements of posting and publication of notices under Act
No.3135.11
TheRulingoftheTrialCourt
HoldinginfavorofSpousesRamos,thetrialcourtruledthattheDeedofRealEstateMortgagewasvalidevenifits
term was not fixed. Since the duration of the term was made to depend exclusively upon the will of the debtors
spouses, the trial court cited jurisprudence and said that "the obligation is not due and payable until an action is
commencedbythemortgageeagainstthemortgagorforthepurposeofhavingthecourtfixthedateonandafter
whichtheinstrumentispayableandthedateofmaturityisfixedinpursuancethereto."12
ThetrialcourtheldthattheactionofGMCinmovingfortheforeclosureofthespousespropertieswaspremature,
becausethelattersobligationundertheircontractwasnotyetdue.
The trial court awarded attorneys fees because of the premature action taken by GMC in filing extrajudicial
foreclosureproceedingsbeforetheobligationofthespousesbecamedue.
TheRTCruled,thus:
WHEREFORE,premisesconsidered,judgmentisrenderedasfollows:
1.TheExtraJudicialForeclosureProceedingsunderdocketno.010797isherebydeclarednullandvoid
2.TheDeedofRealEstateMortgageisherebydeclaredvalidandlegalforallintentsandpuposes
3. Defendantcorporation General Milling Corporation is ordered to pay Spouses Librado and Remedios
Ramos attorneys fees in the total amount of P 57,000.00 representing acceptance fee of P30,000.00 and
P3,000.00appearancefeefornine(9)trialdatesoratotalappearancefeeofP27,000.00
4.Theclaimsformoralandexemplarydamagesaredeniedforlackofmerit.
ITISSOORDERED.13
TheRulingoftheAppellateCourt
Onappeal,GMCarguedthatthetrialcourterredin:(1)declaringtheextrajudicialforeclosureproceedingsnulland
void(2)orderingGMCtopaySpousesRamosattorneysfeesand(3)notawardingdamagesinfavorofGMC.
TheCAsustainedthedecisionofthetrialcourtbutanchoreditsrulingonadifferentground.Contrarytothefindings
ofthetrialcourt,theCAruledthattherequirementsofpostingandpublicationofnoticesunderActNo.3135were
complied with. The CA, however, still found that GMCs action against Spouses Ramos was premature, as they
werenotindefaultwhentheactionwasfiledonMay7,1997.14
TheCAruled:
Inthiscase,acarefulscrutinyoftheevidenceonrecordshowsthatdefendantappellantGMCmadenodemandto
spousesRamosforthefullpaymentoftheirobligation.WhileitwasallegedintheAnsweraswellasintheAffidavit
constituting the direct testimony of Joseph Dominise, the principal witness of defendantappellant GMC, that
demands were sent to spouses Ramos, the documentary evidence proves otherwise. A perusal of the letters
presentedandofferedasevidencebydefendantappellantGMCdidnot"demand"butonlyrequestspousesRamos
togototheofficeofGMCto"discuss"thesettlementoftheiraccount.15
According to the CA, however, the RTC erroneously awarded attorneys fees to Spouses Ramos, since the
presumptionofgoodfaithonthepartofGMCwasnotoverturned.
TheCAdisposedofthecaseasfollows:
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WHEREFORE, and in view of the foregoing considerations, the Decision of the Regional Trial Court of Lipa City,
Branch12,datedMay21,2005isherebyAFFIRMEDwithMODIFICATIONbydeletingtheawardofattorneysfees
toplaintiffsappelleesspousesLibradoRamosandRemediosRamos.16
Hence,Wehavethisappeal.
TheIssues
A. WHETHER [THE CA] MAY CONSIDER ISSUES NOT ALLEGED AND DISCUSSED IN THE LOWER
COURTANDLIKEWISENOTRAISEDBYTHEPARTIESONAPPEAL,THEREFOREHADDECIDEDTHE
CASENOTINACCORDWITHLAWANDAPPLICABLEDECISIONSOFTHESUPREMECOURT.
B. WHETHER [THE CA] ERRED IN RULING THAT PETITIONER GMC MADE NO DEMAND TO
RESPONDENTSPOUSESFORTHEFULLPAYMENTOFTHEIROBLIGATIONCONSIDERINGTHATTHE
LETTERDATEDMARCH31,1997OFPETITIONERGMCTORESPONDENTSPOUSESISTANTAMOUNT
TO A FINAL DEMAND TO PAY, THEREFORE IT DEPARTED FROM THE ACCEPTED AND USUAL
COURSEOFJUDICIALPROCEEDINGS.17
TheRulingofthisCourt
CantheCAconsidermattersnotalleged?
GMCassertsthatsincetheissueontheexistenceofthedemandletterwasnotraisedinthetrialcourt,theCA,by
consideringsuchissue,violatedthebasicrequirementsoffairplay,justice,anddueprocess.18
IntheirComment,19respondentsspousesaverthattheCAhasampleauthoritytoruleonmattersnotassignedas
errorsonappealiftheseareindispensableornecessarytothejustresolutionofthepleadedissues.
In Diamonon v. Department of Labor and Employment,20 We explained that an appellate court has a broad
discretionarypowerinwaivingthelackofassignmentoferrorsinthefollowinginstances:
(a)Groundsnotassignedaserrorsbutaffectingthejurisdictionofthecourtoverthesubjectmatter
(b)Mattersnotassignedaserrorsonappealbutareevidentlyplainorclericalerrorswithincontemplationof
law
(c) Matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just
decision and complete resolution of the case or to serve the interests of a justice or to avoid dispensing
piecemealjustice
(d)Mattersnotspecificallyassignedaserrorsonappealbutraisedinthetrialcourtandaremattersofrecord
havingsomebearingontheissuesubmittedwhichthepartiesfailedtoraiseorwhichthelowercourtignored
(e)Mattersnotassignedaserrorsonappealbutcloselyrelatedtoanerrorassigned
(f) Matters not assigned as errors on appeal but upon which the determination of a question properly
assigned,isdependent.
Paragraph(c)aboveappliestotheinstantcase,fortherewouldbeajustandcompleteresolutionoftheappealif
thereisarulingonwhethertheSpousesRamoswereactuallyindefaultoftheirobligationtoGMC.
Wastheresufficientdemand?
WenowgotothesecondissueraisedbyGMC.GMCassertserroronthepartoftheCAinfindingthatnodemand
wasmadeonSpousesRamostopaytheirobligation.Onthecontrary,itclaimsthatitsMarch31,1997letterisakin
toademand.
Wedisagree.
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 debtors
performance.21
AccordingtotheCA,GMCdidnotmakeademandonSpousesRamosbutmerelyrequestedthemtogotoGMCs
officetodiscussthesettlementoftheiraccount.Inspiteofthelackofdemandmadeonthespouses,however,GMC
proceededwiththeforeclosureproceedings.NeitherwasthereanyprovisionintheDeedofRealEstateMortgage
allowingGMCtoextrajudiciallyforeclosethemortgagewithoutneedofdemand.
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Indeed,Article1169oftheCivilCodeondelayrequiresthefollowing:
Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially
demandsfromthemthefulfilmentoftheirobligation.
However,thedemandbythecreditorshallnotbenecessaryinorderthatdelaymayexist:
(1)Whentheobligationorthelawexpresslysodeclaresxxx
Asthecontractintheinstantcasecarriesnosuchprovisionondemandnotbeingnecessaryfordelaytoexist,We
agree with the appellate court that GMC should have first made a demand on the spouses before proceeding to
foreclosetherealestatemortgage.
DevelopmentBankofthePhilippinesv.Licuananfindsapplicationtotheinstantcase:
Theissueofwhetherdemandwasmadebeforetheforeclosurewaseffectedisessential. Ifdemandwasmadeand
dulyreceivedbytherespondentsandthelatterstilldidnotpay,thentheywerealreadyindefaultandforeclosure
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.
Foreclosureisvalidonlywhenthedebtorisindefaultinthepaymentofhisobligation.22
1avvphi1

Inturn,whetherornotdemandwasmadeisaquestionoffact.23ThispetitionfiledunderRule45oftheRulesof
Courtshallraiseonlyquestionsoflaw.Foraquestiontobeoneoflaw,itmustnotinvolveanexaminationofthe
probativevalueoftheevidencepresentedbythelitigantsoranyofthem.Theresolutionoftheissuemustrestsolely
onwhatthelawprovidesonthegivensetofcircumstances.Onceitisclearthattheissueinvitesareviewofthe
evidence presented, the question posed is one of fact.24 It need not be reiterated that this Court is not a trier of
facts.25 We will defer to the factual findings of the trial court, because petitioner GMC has not shown any
circumstancesmakingthiscaseanexceptiontotherule.
WHEREFORE,thepetitionisDENIED.TheCADecisioninCAG.R.CRH.C.No.85400isAFFIRMED.
SOORDERED.
PRESBITEROJ.VELASCO,JR.
AssociateJustice
WECONCUR:
ANTONIOT.CARPIO*
AssociateJustice
TERESITAJ.LEONARDODECASTRO**
AssociateJustice

ROBERTOA.ABAD
AssociateJustice

JOSECATRALMENDOZA
AssociateJustice
ATTESTATION
IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassigned
tothewriteroftheopinionoftheCourtsDivision.
PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairpersonsAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourtsDivision.
RENATOC.CORONA
ChiefJustice

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Footnotes
*AdditionalmemberperSpecialOrderNo.1042datedJuly6,2011.
**AdditionalmemberperraffledatedJuly13,2011.
1Rollo,p.37.
2Id.at13.
3Id.at113.
4Id.at37.
5Id.
6Id.at117.
7Id.at114.
8Id.at3738.
9Id.at117.
10Id.at115.
11Id.at38.
12Id.at123.(Citationomitted.)
13Id.at127.PennedbyJudgeVicenteF.Landicho.
14Id.at4041.
15Id.at41.
16 Id. at 3644. Penned by Associate Justice Priscilla J. BaltazarPadilla and concurred in by Associate

JusticesFernandaLampasPeraltaandManuelB.Barrios.
17Id.at18.
18Id.at19.
19Id.at194199.
20G.R.No.108951,March7,2000,327SCRA283,288289.SeealsoKulasIdeas&Creationsv.Alcoseba,

G.R.No.180123,February18,2010,613SCRA217,231.
21SelegnaManagementandDevelopmentCorporationv.UnitedCoconutPlantersBank,G.R.No.165662,

May3,2006,489SCRA125,138.
22G.R.No.150097,February26,2007,516SCRA644,650.(Emphasissupplied.)
23Id.
24Tirazonav.CourtofAppeals,G.R.No.169712,March14,2008,548SCRA560,581.
25HeirsofCompleto&Abiadv.Sgt.Albayda,G.R.No.172200,July6,2010,624SCRA97,110.
TheLawphilProjectArellanoLawFoundation

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