PINEDA V. ZUNIGA VDA.

DE VEGA
Article 1169 Date of Case Ponente
Loan and Mortgage / Delay Created by: Marga V
Petitioners Respondents
Ma. Luisa A. Pineda Virginia Zuniga vda. De Vega
Case Summary
De Vega (respondent) borrowed from Pineda (petitioner) P500,000 payable within one year
with an interest rate of 8% per month. To secure this loan, De Vega executed a real estate
mortgage over a land (2003 Agreement). Upon maturity, De Vega failed to pay the loan despite
demand. The RTC ruled in favor of Pineda stating that the existence of the loan and the real
estate mortgage had been established; thus, judicial foreclosure would be proper given De
Vega’s non-compliance. However, the CA reversed this decision because Pineda failed to
prove that prior demand had been made upon respondent for the full payment of the latter’s
obligation.

The Court agrees with the factual findings of the CA that the petitioner failed to present and
offer to evidence the registry receipt return card accompanying the demand letter — thus, there
is no satisfactory proof that the letter was received by the respondent. However, the Court
ruled that the appellate court’s legal conclusion is wrong. The agreement between the parties is
a Contract of Loan. According to the provisions on delay or mora governed by Article 1169,
when the demand is judicial or extrajudicial, if the obligor or debtor fails to fulfill or perform
his obligations, like payment of a loan, as in this case, he is in mora solvendi and thus, liable
for damages. This delay was triggered when the petitioner demanded for the payment
extrajudicially. the RTC's ruling that in default of respondent's payment, petitioner can
foreclose on the mortgage is erroneous. RTC Decision is reinstated.

Petition is granted. De Vega must pay the loan with interest.

Facts of the Case

• Petitioner filed a complaint against the respondent praying for the payment of the
latter’s principal obligation and the interest thereon or, in default of such payment, the
foreclosure of the property subject of a real estate mortgage.
• Pineda alleges that De Vega borrowed P500,000 from her payable within one
year with an interest rate of 8% per month.
• To secure the loan, De Vega executed a real estate mortgage (2003 Agreement)
over a parcel of land, together with all the buildings and improvements existing
thereto.
• Upon the loan’s maturity, De Vega failed to pay her load despite demand. As of
May 2005, she accumulated interest worth P232,000.

• De Vega argues that she did not receive P500,000 from Pineda, and that the amount
was the accumulated amount of another obligation she earlier secured from petitioner.
• The original loan De Vega admitted in 2000 was only P200,000 with an
undertaking to pay 3% per month.
• Pineda admits that the P500,000 indicated in the 2003 Agreement referred to
the previously executed undated real estate mortgage (undated Agreement)
between the parties — the P200,000 loan.

• RTC Decision: The existence of the loan and the real estate mortgage had been
extrajudicially. the RTC's ruling that in default of respondent's payment, petitioner can
foreclose on the mortgage is erroneous. RTC Decision is reinstated.

Petition is granted. De Vega must pay the loan with interest.

Facts of the Case

• Petitioner filed a complaint against the respondent praying for the payment of the
latter’s principal obligation and the interest thereon or, in default of such payment, the
foreclosure of the property subject of a real estate mortgage.
• Pineda alleges that De Vega borrowed P500,000 from her payable within one
year with an interest rate of 8% per month.
• To secure the loan, De Vega executed a real estate mortgage (2003 Agreement)
over a parcel of land, together with all the buildings and improvements existing
thereto.
• Upon the loan’s maturity, De Vega failed to pay her load despite demand. As of
May 2005, she accumulated interest worth P232,000.

• De Vega argues that she did not receive P500,000 from Pineda, and that the amount
was the accumulated amount of another obligation she earlier secured from petitioner.
• The original loan De Vega admitted in 2000 was only P200,000 with an
undertaking to pay 3% per month.
• Pineda admits that the P500,000 indicated in the 2003 Agreement referred to
the previously executed undated real estate mortgage (undated Agreement)
between the parties — the P200,000 loan.

• RTC Decision: The existence of the loan and the real estate mortgage had been
established; thus, judicial foreclosure would be proper given De Vega’s non-
compliance.

• CA reversed and set aside the RTC decision because Pineda failed to prove that prior
demand had been made upon respondent for the full payment of the latter’s obligation.
• While the complaint alleged and petitioner testified that demand was sent to
respondent by registered mail and received on September 7, 2004, the registry
return card evidencing such receipt was not specifically and formally offered in
evidence.
• According to the CA, it thoroughly reviewed petitioner's formal offer and found
no reference to the registry receipt card or any competent proof, like a postman
certificate or the testimony of the postman, that respondent actually received
the demand letter.
• The CA concluded that for failing to prove the requisite demand under Article
1169 of the Civil Code, respondent could not be considered in default and
petitioner's case must fail.

Issues Ruling

W/N a demand letter was sent by the

petitioner and was received by the No. Court affirms CA findings.
respondent? (FYI this was the issue explicit stated in
the case)

Rationale/Analysis/Legal Basis

• Court agrees with CA in finding that the respondent made no reference to the registry
receipt card or any other competent proof that she actually received the said demand
letter.
W/N a demand letter was sent by the
petitioner and was received by the No. Court affirms CA findings.
respondent? (FYI this was the issue explicit stated in
the case)

Rationale/Analysis/Legal Basis

• Court agrees with CA in finding that the respondent made no reference to the registry
receipt card or any other competent proof that she actually received the said demand
letter.
• After the CA found that petitioner failed to prove that extrajudicial demand was made
upon respondent as required by law and after it had observed that petitioner had not
asserted any of the exceptions to the requisite demand under Article 1169 of the Civil
Code, the CA concluded that respondent could not be considered in default.
Necessarily, petitioner's case should fail.
• The court affirms the CA’s factual finding but ruled that its legal conclusion is flawed.
• What petitioner seeks to enforce against respondent is a contract of loan, which is
secured by a real estate mortgage.
• Based on the sources of obligations enumerated under Article 1157 of the Civil
Code, the obligation that petitioner seeks to make respondent liable for is one
which arises from contract.
• Liability for damages arises pursuant to Article 1170 of the Civil Code against
"[t]hose who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor
thereof."
• While delay on the part of respondent was not triggered by an extrajudicial demand
because petitioner had failed to so establish receipt of her demand letter, this delay was
triggered when petitioner judicially demanded the payment of respondent's loan from
petitioner.
• While delay on the part of respondent was not triggered by an extrajudicial demand
because petitioner had failed to so establish receipt of her demand letter, this delay was
triggered when petitioner judicially demanded the payment of respondent's loan from
petitioner.
• While the CA was correct in observing that default generally begins from the
moment the creditor demands the performance of the obligation, and without
such demand, judicial or extrajudicial, the effects of default will not arise, it
failed to acknowledge that when petitioner filed her complaint dated June 10,
2005, such filing constituted the judicial demand upon respondent to pay the
latter's principal obligation and the interest thereon.
• Respondent, having thus incurred in delay (counted from the filing of the
complaint), is liable for damages pursuant to Article 1170 of the Civil Code.
• The Court sustains the RTC's ruling which orders respondent to pay petitioner the
loaned amount of P200,000.00.

Brief Discussion of OBLICON Concept

ART. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment 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; or

(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 is to be rendered
was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.
 complaint), is liable for damages pursuant to Article 1170 of the Civil Code.
• The Court sustains the RTC's ruling which orders respondent to pay petitioner the
loaned amount of P200,000.00.

Brief Discussion of OBLICON Concept

ART. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment 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; or

(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 is to be rendered
was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills
his obligation, delay by the other begins.

Default or mora, which is a kind of voluntary breach of an obligation, signifies the idea of
delay in the fulfillment of an obligation with respect to time.

In positive obligations, like an obligation to give, the obligor or debtor incurs in delay from the
time the obligee or creditor demands from him the fulfillment of the obligation. Demand may
be judicial — if the creditor files a complaint against the debtor for the fulfillment of the
obligation — or extrajudicial — if the creditor demands from the debtor the fulfillment of the
obligation either orally or in writing.

Whether the demand is judicial or extrajudicial, if the obligor or debtor fails to fulfill or
perform his obligations, like payment of a loan, as in this case, he is in mora solvendi, and,
thus, liable for damages.