VAZQUEZ ET AL vs.

AYALA CORP

FACTS:

 On April 23, 1981, spouses Vasquez and Ayala Corp. signed a Memorandum of Agreement in
which Ayala bought all of the Vazquez spouses' shares of stock in Conduit Development, Inc.
 The principal asset was a site in Ayala Alabang that Conduit was developing following a
development plan that separated the area into Villages 1, 2, and 3. G.P. was in charge of the
development at the time. Corporation for Construction and Development Ayala was required by
the MOA to develop the entire site, excluding the "Retained Area." The Vazquez spouses were to
keep this "Retained Area."
 The "Remaining Area" was the name given to the area that Ayala planned to develop. There were
four lots next to the "Retained Area" in this "Remaining Area," and Ayala promised to sell these
lots to the spouses at the prevailing price at the time of acquisition. Ayala caused the project's
development on Village 1 to be halted after the MOA was signed. Following that, Ayala received
a letter from Lancer General Builder Corp., claiming a specific sum as a subcontractor. G.P.
 Lancer sued G.P. Construction after Construction was unable to reach an amicable agreement
with Lancer. Ayala, Construction, and Conduit in the courtroom. G.P. Both Construction and
Lancer attempted to prevent Ayala from developing the site.
o Only in 1987 did the litigation come to an end. The Vasquez couples sent multiple
"reminder" letters of the impending so-called deadline, claiming that Ayala was obligated
to sell the 4 parcels close to the "Retained Area" within 3 years of the MOA's date.
 The Vasquez couples, on the other hand, never asked Ayala to sell the four lots after 1984. On the
contrary, one of the letters signed by their authorized agent indicated unequivocally that they
expected Phase 1 development to be completed three years after the legal issues with the prior
contractor were resolved.
 Ayala had completed the development of the area by early 1990. In 1990, the four lots were
offered to the Vasquez spouses for sale at market value. The Vasquez spouses refused, preferring
to pay at 1984 pricing, resulting in the lawsuit below.

ISSUE:

Whether or not respondent incurred default or delay in the fulfillment of its obligation.

RULING:

No. The following conditions must be met in order for the debtor to be considered in
default: (1) that the obligation be demandable and already liquidated; (2) that the debtor delays
performance; and (3) that the creditor requires the performance judicially or extrajudicially.

Article 1193 of the Civil Code states that duties for which a specific date has been set are only
demandable when that day arrives. In the MOA, however, no such date was specified. As a result,
petitioners are unable to seek performance after the three-year time established under the MOA for the
construction of the property's first phase, as this is not the same period intended for the development of
the subject lots. Because the MOA did not establish a time frame for the development of the subject lots,
petitioners should have asked the court to set one under Article 1197 of the Civil Code.

Petitioners' complaint for particular performance was premature because no such action had been
filed, and the duty was not demandable at the time. As a result, Ayala Corp. cannot be accused of
delaying fulfillment of the obligation. Even if the MOA requires Ayala Corp. to develop the subject
properties within three years of the date of the agreement, Ayala Corp. could not be considered in default
because petitioners made no claim for fulfillment of its obligation. Furthermore, the letters were merely
reminders, not definitive mandates.

Before the requirement could be legally enforced, these letters were sent. More crucially,
petitioners waived the three-year period, as demonstrated by their agent's letter stating that petitioners
agreed that the three-year period should begin when Lancer's case was dismissed.