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G.R. No. 193723. July 20, 2011.*

GENERAL MILLING CORPORATION, petitioner, vs. SPS.

LIBRADO RAMOS and REMEDIOS RAMOS, respondents.

Appeals; Pleadings, Practice and Procedure; Assignment of

Errors; The Court of Appeals has a broad discretionary power in
waiving the lack of assignment of errors.—In Diamonon v.
Department of Labor and Employment, 327 SCRA 283 (2000), We
explained that an appellate court has a broad discretionary power
in waiving the lack of assignment of errors in the following
instances: (a) Grounds not assigned as errors but affecting the
jurisdiction of the court over the subject matter; (b) Matters not
assigned as errors on appeal but are

_______________

** Designated acting member per Special Order No. 1006 dated 10 June 2011.

*** Designated acting member per Special Order No. 1040 dated 6 July 2011.

* THIRD DIVISION.

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General Milling Corporation vs. Ramos

evidently plain or clerical errors within contemplation of 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 piecemeal justice; (d) Matters not specifically
assigned as errors on appeal but raised in the trial court and are
matters of record having some bearing on the issue submitted
which the parties failed to raise or which the lower court ignored;
(e) Matters not assigned as errors on appeal but closely related to
an error assigned; (f) Matters not assigned as errors on appeal but
upon which the determination of a question properly assigned, is
dependent. Paragraph (c) above applies to the instant case, for
there would be a just and complete resolution of the appeal if

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there is a ruling on whether the Spouses Ramos were actually in

default of their obligation to GMC.
Actions; Default; Requisites.—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.
Same; Same; Foreclosure of Mortgage; Foreclosure is valid
only when the debtor is in default in the payment of his obligation.
—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. Development Bank of the Philippines v. Licuanan, 516
SCRA 644 (2007), finds application to the instant case: 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.
Appeals; Questions of Law; Questions of Fact; For a question
to be one of law, it must not involve an examination of the
probative value of the evidence presented by the litigants or any of
them—once

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258 SUPREME COURT REPORTS ANNOTATED

General Milling Corporation vs. Ramos

it is clear that the issue invites a review of the evidence presented,

the question posed is one of fact.—In turn, whether or not demand
was made is a question of fact. This petition filed under Rule 45 of
the Rules of Court shall raise only questions of law. For a
question to be one of law, it must not involve an examination of
the probative value of the evidence presented by the litigants or
any of them. The resolution of the issue must rest solely on what
the law provides on the given set of circumstances. Once it is clear
that the issue invites a review of the evidence presented, the
question posed is one of fact. It need not be reiterated that this
Court is not a trier of facts. We will defer to the factual findings of

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the tr ial court, because petitioner GMC has not shown any
circumstances making this case an exception to the rule.

PETITION for review on certiorari of a decision of the

Court of Appeals.
   The facts are stated in the opinion of the Court.
  Kho, Bustos, Malcontento, Argosino Law Offices for
petitioner.
  Exconde & Exconde Law Offices for respondents.

VELASCO, JR., J.:

The Case

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 the May 31, 2005 Decision of the Regional Trial
Court (RTC), Branch 12 in Lipa City, in Civil Case No. 00­
0129 for Annulment and/or Declaration of Nullity of
Extrajudicial Foreclosure Sale with Damages.

The Facts

On August 24, 1989, General Milling Corporation (GMC)

entered into a Growers Contract with spouses Librado and

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General Milling Corporation vs. Ramos

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
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.2
The Deed of Real Estate Mortgage contained the
following provision:

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“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, Municipality of Lipa City, Province of
Batangas, Philippines, his/her/their title/s thereto being evidenced
by Transfer Certificate/s No./s T­9214 of the Registry of Deeds for
the Province of Batangas in the amount of TWO HUNDRED
FIFTEEN THOUSAND (P 215,000.00), Philippine Currency,
which the maximum credit line payable within a x x x day term
and to secure the payment of the same plus 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.3

_______________

1 Rollo, p. 37.
2 Id., at p. 13.
3 Id., at p. 113.

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260 SUPREME COURT REPORTS ANNOTATED

General Milling Corporation vs. Ramos

On March 31, 1997, the counsel for GMC notified Spouses

Ramos that GMC would institute foreclosure proceedings
on their mortgaged property.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 attorney’s fees.6
To complicate matters, on October 27, 1997, GMC informed
the spouses that its Agribusiness Division had closed its
business and poultry operations.7
On March 3, 2000, Spouses Ramos filed a Complaint for
Annulment and/or Declaration of Nullity of the
Extrajudicial Foreclosure Sale with Damages. They
contended that the extrajudicial foreclosure sale on June
10, 1997 was null and void, since there was no compliance
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with the requirements of posting and publication of notices

under Act No. 3135, as amended, or An Act to Regulate the
Sale of Property under Special Powers Inserted in or
Annexed to Real Estate Mortgages. They likewise claimed
that there was no sheriff’s affidavit to prove compliance
with the requirements on posting and publication of
notices. It was further alleged that the Deed of Real Estate
Mortgage had no fixed term. A prayer for moral and
exemplary damages and attorney’s fees was also included
in the complaint.8 Librado Ramos alleged that, when the
property was foreclosed, GMC did not notify him at all of
the foreclosure.9

_______________

4 Id., at p. 37.
5 Id.
6 Id., at p. 117.
7 Id., at p. 114.
8 Id., at pp. 37­38.
9 Id., at p. 117.

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VOL. 654, JULY 20, 2011 261

General Milling Corporation vs. Ramos

During the trial, the parties agreed to limit the issues to

the following: (1) the validity of the Deed of Real Estate
Mortgage; (2) the validity of the extrajudicial foreclosure;
and (3) the party liable for damages.10
In its Answer, 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. GMC insisted that it had observed all the
requirements of posting and publication of notices under
Act No. 3135.11

The Ruling of the Trial Court

Holding in favor of Spouses Ramos, the trial court ruled

that the Deed of Real Estate Mortgage was valid even if its
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
commenced by the mortgagee against the mortgagor for the
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purpose of having the court fix the date on and after which
the instrument is payable and the date of maturity is fixed
in pursuance thereto.”12
The trial court held that the action of GMC in moving
for the foreclosure of the spouses’ properties was
premature, because the latter’s obligation under their
contract was not yet due.
The trial court awarded attorney’s fees because of the
premature action taken by GMC in filing extrajudicial
foreclosure proceedings before the obligation of the spouses
became due.
The RTC ruled, thus:

_______________

10 Id., at p. 115.
11 Id., at p. 38.
12 Id., at p. 123. (Citation omitted.)

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262 SUPREME COURT REPORTS ANNOTATED

General Milling Corporation vs. Ramos

“WHEREFORE, premises considered, judgment is rendered as

follows:
1. The Extra­Judicial Foreclosure Proceedings under docket
no. 0107­97 is hereby declared null and void;
2. The Deed of Real Estate Mortgage is hereby declared valid
and legal for all intents and puposes;
3. Defendant­corporation General Milling Corporation is
ordered to pay Spouses Librado and Remedios Ramos attorney’s
fees in the total amount of P57,000.00 representing acceptance fee
of P30,000.00 and P3,000.00 appearance fee for nine (9) trial
dates or a total appearance fee of P 27,000.00;
4. The claims for moral and exemplary damages are denied
for lack of merit.
IT IS SO ORDERED.”13

The Ruling of the Appellate Court

On appeal, GMC argued that the trial court erred in: (1)
declaring the extrajudicial foreclosure proceedings null and
void; (2) ordering GMC to pay Spouses Ramos attorney’s
fees; and (3) not awarding damages in favor of GMC.
The CA sustained the decision of the trial court but
anchored its ruling on a different ground. Contrary to the
findings of the trial court, the CA ruled that the
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requirements of posting and publication of notices under

Act No. 3135 were complied with. The CA, however, still
found that GMC’s action against Spouses Ramos was
premature, as they were not in default when the action was
filed on May 7, 1997.14
The CA ruled:

“In this case, a careful scrutiny of the evidence on record shows

that defendant­appellant GMC made no demand to spouses
Ramos for the full payment of their obligation. While it was
alleged in the Answer as well as in the Affidavit constituting the
direct testimony

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13 Id., at p. 127. Penned by Judge Vicente F. Landicho.

14 Id., at pp. 40­41.

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VOL. 654, JULY 20, 2011 263

General Milling Corporation vs. Ramos

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
presented and offered as evidence by defendant­appellant GMC
did not “demand” but only request spouses Ramos to go to the
office of GMC to “discuss” the settlement of their account.”15

According to the CA, however, the RTC erroneously

awarded attorney’s fees to Spouses Ramos, since the
presumption of good faith on the part of GMC was not
overturned.
The CA disposed of the case as follows:

“WHEREFORE, and in view of the foregoing considerations,

the Decision of the Regional Trial Court of Lipa City, Branch 12,
dated May 21, 2005 is hereby AFFIRMED with MODIFICATION
by deleting the award of attorney’s fees to plaintiffs­appellees
spouses Librado Ramos and Remedios Ramos.”16

Hence, We have this appeal.

The Issues

 
A. WHETHER [THE CA] MAY CONSIDER ISSUES NOT ALLEGED
AND DISCUSSED IN THE LOWER COURT AND LIKEWISE

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NOT RAISED BY THE PARTIES ON APPEAL, THEREFORE

HAD DECIDED THE CASE NOT IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT.
B. WHETHER [THE CA] ERRED IN RULING THAT PETITIONER
GMC MADE NO DEMAND TO RESPONDENT SPOUSES FOR
THE FULL PAYMENT OF THEIR OBLIGATION CONSIDERING
THAT THE LETTER DATED MARCH 31, 1997 OF PETITIONER
GMC TO RESPONDENT SPOUSES IS TANTAMOUNT

_______________

15 Id., at p. 41.

16 Id., at pp. 36­44. Penned by Associate Justice Priscilla J. Baltazar­Padilla and concurred in

by Associate Justices Fernanda Lampas Peralta and Manuel B. Barrios.

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264 SUPREME COURT REPORTS ANNOTATED

General Milling Corporation vs. Ramos

TO A FINAL DEMAND TO PAY, THEREFORE IT DEPARTED

FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS.17

The Ruling of this Court

Can the CA consider matters not alleged?

GMC asserts that since the issue on the existence of the
demand letter was not raised in the trial court, the CA, by
considering such issue, violated the basic requirements of
fair play, justice, and due process.18
In their Comment,19 respondents­spouses aver that the
CA has ample authority to rule on matters not assigned as
errors on appeal if these are indispensable or necessary to
the just resolution of the pleaded issues.
In Diamonon v. Department of Labor and Employment,20
We explained that an appellate court has a broad
discretionary power in waiving the lack of assignment of
errors in the following instances:

(a) Grounds not assigned as errors but affecting the

jurisdiction of the court over the subject matter;
(b) Matters not assigned as errors on appeal but are evidently
plain or clerical errors within contemplation of 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 piecemeal justice;
(d) Matters not specifically assigned as errors on appeal but
raised in the trial court and are matters of record having some

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bear­

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17 Id., at p. 18.
18 Id., at p. 19.
19 Id., at pp. 194­199.
20  G.R. No. 108951, March 7, 2000, 327 SCRA 283, 288­289. See also Kulas
Ideas & Creations v. Alcoseba, G.R. No. 180123, February 18, 2010, 613 SCRA 217,
231.

265

VOL. 654, JULY 20, 2011 265

General Milling Corporation vs. Ramos

ing on the issue submitted which the parties failed to raise or

which the lower court ignored;
(e) Matters not assigned as errors on appeal but closely
related to an error assigned;
(f) Matters not assigned as errors on appeal but upon which
the determination of a question properly assigned, is dependent.

Paragraph (c) above applies to the instant case, for there

would be a just and complete resolution of the appeal if
there is a ruling on whether the Spouses Ramos were
actually in default of their obligation to GMC.
Was there sufficient demand?
We now go to the second issue raised by GMC. GMC
asserts error on the part of the CA in finding that no
demand was made on Spouses Ramos to pay their
obligation. On the contrary, it claims that its March 31,
1997 letter is akin to a demand.
We disagree.
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.

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21    Selegna Management and Development Corporation v. United

Coconut Planters Bank, G.R. No. 165662, May 3, 2006, 489 SCRA 125,
138.

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266 SUPREME COURT REPORTS ANNOTATED

General Milling Corporation vs. Ramos

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.
Development Bank of the Philippines v. Licuanan finds
application to the instant case:

“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.”22

In turn, whether or not demand was made is a question

of fact.23 This petition filed under Rule 45 of the Rules of
Court shall raise only questions of law. For a question to be
one of law, it must not involve an examination of the
probative value of the evidence presented by the litigants
or any of them. The resolution of the issue must rest solely
on what the law pro­

_______________

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22  G.R. No. 150097, February 26, 2007, 516 SCRA 644, 650. (Emphasis
supplied.)
23  Id.

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General Milling Corporation vs. Ramos

vides on the given set of circumstances. Once it is clear that

the issue invites a review of the 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 circumstances making this case an
exception to the rule.
WHEREFORE, the petition is DENIED. The CA
Decision in CA­G.R. CR­H.C. No. 85400 is AFFIRMED.
 SO ORDERED.

Carpio,** Leonardo­De Castro,*** Abad and Mendoza,

JJ., concur.

Petition denied, judgment affirmed.

Note.—A stipulation that should the vendor fail to

comply with the terms and conditions of the purported
contract of sale, then the property shall by virtue thereof
become the property of the vendee is contrary to the nature
of a true pacto de retro sale—it is considered a pactum
commissorium, enabling the mortgagee to acquire
ownership of the mortgaged properties without need of
foreclosure proceedings. (Legaspi vs. Ong, 459 SCRA 122
[2005])
——o0o—— 

_______________
24  Tirazona v. Court of Appeals, G.R. No. 169712, March 14, 2008, 548
SCRA 560, 581.
25  Heirs of Completo & Abiad v. Sgt. Albayda, G.R. No. 172200, July 6,
2010, 624 SCRA 97, 110.
** Additional member per Special Order No. 1042 dated July 6, 2011.
*** Additional member per raffle dated July 13, 2011.

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