General Milling Corporation v. Sps.

Librado Ramos

FACTS:

Spouses Librado entered into a Growers Contract with General Milling Corporation. Under the
contract, GMC will supply broiler chickens for the spouses. The spouses executed a Deed of
Real Estate Mortgage (REM) over a piece of real property, being the debtors of GMC.

Subsequently, the spouses failed to settle their account with GMC. Hence, GMC began to
institute a foreclosure proceeding on their mortgaged property. Thereafter, the spouses moved
to invalidate the Deed of REM and the extrajudicial foreclosure.

ISSUES:
1. WON the extrajudicial foreclosure was valid.

RULING:
I.

The extrajudicial foreclosure was not valid.

Under the law, a foreclosure is valid only when the debtor is in default in the payment of his
obligation. A debtor/obligor who is obliged to deliver or to do something incur in delay from the
time the creditor/obligee judicially or extrajudicially demands from them the fulfilment of their
obligation.

In this case, the creditor, GMC, failed to make any demand on the debtor-spouses before
proceeding to the foreclosure of the REM. Hence, the spouses did not incur a delay from their
obligation to pay GMC

Therefore, the foreclosure was not valid as the debtor-spouses were not considered in default of
their obligation.

POINTS TO REMEMBER:

General Rule:
There is no delay when there is no demand.
Exception:
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 (in this case, there
is nothing in the Growers Contract which dispenses the need for a demand in order to
put the debtor in delay/default)