CASE:

Social Security System, petitioner vs. Moonwalk Development and Housing Corporation, et al, respondents.
G.R. No. 73345. April 7, 1993 221 SCRA 119

Petition for review on certiorari of the decision of the then Intermediate Appellate Court affirming in toto the decision of the former Court of First Instance of Rizal, Seventh Judicial District, Branch XXIX, Pasay City.

FACTS:
On February 20, 1980, the petitioner Social Security System filed a complaint in the Court of First Instance of Rizal against the respondent Moonwalk Development and Housing Corporation. The petitioner alleged that it had committed an error in failing to compute the 12% interest due on delayed payments on the loan of the respondent and also in not reflecting in its statement of account an unpaid balance on the said penalties for delayed payments. The respondent answered denying the claims and asserting that the petitioner had the opportunity to ascertain the truth but it failed to do so. Decision of the Court of First Instance: The Court of First Instance dismissed the complaint on the ground that the obligation was already extinguished by the payment by the respondent of its indebtedness to the petitioner and by the latters cancellation of the real estate mortgages executed in its favor by the defendant. The Motion for Reconsideration filed by the petitioner was dismissed by the trial court. Decision of the Intermediate Appellate Court: The respondent court held that the respondents obligation was extinguished and affirmed the decision of the trial court.

Obligations; Requisites in order that debtor may be in default; Necessity of demand. To be in default x x x is different from mere delay in grammatical sense, because it involves the beginning of a special condition or status which has its own peculiar effects or results. In order that the debtor may be in default it is necessary that the following requisites be present: (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. Default generally begins from the moment the creditor demands the performance of the obligation.

ISSUE:
Whether or not respondent Moonwalk Development and Housing Corporation incurred delay in the performance of its obligation.

RULING:
Under the Civil Code, delay begins from the time the obligee judicially or extrajudicially demands from the obligor the performance of the obligation. (Article 1169 of the Civil Code) Article 1169 of the Civil Code provides for three (3) instances when demand in not necessary to render the obligation in default: (1) When the obligation or the law expressly so declares; (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service to be rendered was a controlling motive for the establishment of the contract; (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform. The case at bar does not fall within any of the established exceptions. Hence, petitioner is not excused from making a demand. It is true that respondent has long been delinquent in meeting its monthly arrears and in paying the full amount of the loan itself as the obligation matured sometime in January, 1977. But mere delinquency in payment does not necessarily mean delay in the legal concept. Default generally begins from the moment the creditor demands the performance of the obligation. In the present case, the petitioner never demanded from the respondents the payment of its monthly amortizations. It was clear that respondent was never in default because petitioner never compelled performance.

The petition was DISMISSED and the decision of the Intermediate Appellate Court was AFFIRMED.