7. SSS v.

Moonwalker
221 SCRA 119
APRIL 7, 1993
By: Madrid
Topic: Penal Clause; Waiver of Penal Clause
Petitioner: Social Security System (SSS)
Respondent: Moonwalk Development & Housing Corporation, Rosita U. Alberto, et.al.

Summary:
So ang nangyare dito is nag loan si Moonwalk kay SSS. Ngayon nabayaran rin naman ni Moonwalk yung
loan pero late. Pero narealize lang yun ni SSS after na mabayaran ni Moonwalk lahat ng payments and
after na cancel na ni SSS yung mortage. Ngayon sinisingil ni SSS si Moonwalk ng 12% penalty dahil late
siya sa pagbayad (nakalagay sa penal clause) pero sabi ni Moonwalk tapos na obligation ko eh nabayaran
ko na so kasalanan mo na yun kung di mo napansin na late yung mga payments ko sayo. Ngayon sabi ng
SC tama si Moonwalk. Although late yung payments ni Moonwalk, di parin siya macoconsider as in
delay/mora kasi never nag demand si SSS. Ang golden rule kasi, para maconsider ang isang party in
delay, dapat mag demand yung creditor. Eh hindi siya nag demand, so walang delay. Also, too late na
raw para mag demand si SSS sabi ni SC kasi the obligation has already been extinguished. So wala nang
legal tie; wala nang obligation; di na si Moonwalk liable.

Doctrine:
As to Default:
1. Default generally begins from the moment the creditor demands the performance of the
obligation unless such obligation falls within the exceptions of Art. 1169
2. Mere delinquency in payment does not necessarily mean delay in the legal concept.
As to Penalty:
1. A penalty is demandable in case of non-performance or late performance of the main
obligation.
2. There is a waiver of a penal clause when it is not demanded before the full obligation is fulfilled.

Facts:
- SSS approved the application of loan by respondent Moonwalk for 30M Pesos.
- Out of the 30M, 9.6M was released to respondent.
- A Third Amended Deed of First Mortgage was executed providing for restructuring of the payment of
the released amount of 9.6M.
- After considering additional releases in the amount of 2.7M, respondent Moonwalk delivered a
promissory note for 12M to petitioner.
- Moonwalk made a total payment of 23.7M to SSS for the loan principal of 12.3M. The last payment by
Moonwalk of 15M were based on the Statement of Account prepared by SSS.
- After settlement of the account, SSS issued to Moonwalk the RELEASE OF MORTGAGE FOR
MOONWALK’S MORTGAGED PROPERTIES.
- After 1 month, SSS sent a letter to Moonwalk alleging that SSS committed an honest mistake in
releasing Moonwalk since they still have 12% penalty for FAILURE TO PAY ON TIME THE
AMORTIZATION WHICH IS THE PENAL CLAUSE OF THE CONTRACT.
- Moonwalk replied that it had completely paid its obligations to SSS.
- SSS filed a complaint against respondent. SSS alleged that it committed an error in failing to compute
the 12% interest due on delayed payments on the loan and also in not reflecting in its statement of
account an unpaid balance on the said penalties for delayed payments.
- Moonwalk argued that it had completely paid its obligation to SSS and therefore there is no recovery of
any penalty.
- CFI dismissed the complaint stating that the obligation was already extinguished by the payment by
respondent of its indebtedness and by the SSS’s cancellation of the real estate mortgages.
- CA affirmed.

Issue/s:
1. WON respondent incurred delay in the performance of its obligation.
2. WON the penalty is demandable even after the extinguishment of the principal obligation.

Held:
1. No.
2. No.

Ratio:
1. Pursuant to Art. 1169 CC, delay begins from the time the oblige judicially/extrajudicially demands
from the obligor the performance of the obligation, EXCEPT: a.) when the obligation or the law
expressly so declares; b.) 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; c.) when demand would be useless, as when
the obligor has rendered it beyond his power to perform.

Since the case does not fall within any of the exceptions, petitioner is not excused from making a
demand. Hence, respondent does not incur any delay.
While respondent has long been delinquent, 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.

2. The penal clause has been waived since it was not demanded before the full obligation was fully paid
and extinguished.
Default begins from the moment the creditor demands the performance of the obligation.
In the case, although the payment of amortizations by Moonwalk were late, there was no demand made
by SSS. Hence, respondent is not in delay in the payment of the penalty. No delay occurred and there
was no occasion when the penalty became demandable and enforceable.

Decision:
Petition is dismissed, decision of CA affirmed.