RESEARCH

Facts:

Our cilent is engaged in the residential development. They have entered into a deal with the
Bank to extend loan/mortgage to their subdivision buyers. The bank to protect themselves ask
our client to enter into a Buy Back Guarantee with conformity from the Buyer.

Now, the Buyer was unable to deliver the correct TIN and the BIR tax payment clearance was
not processed so the Bank told our client to Buy Back. Yes, it is in the agreement, if our client
fails to deliver the documents on time for the collateral then we have to buy back.

Issue:

The question now is, how do we go against the Buyer? Yes, the Buyer has also failed to pay for a
year already.

LAWS:

Article 1232. Payment means not only the delivery of money but also the performance, in any
other manner, of an obligation.

Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions
of the law governing the form of contracts.

Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in
good faith is liable shall be those that are the natural and probable consequences of the breach of
the obligation, and which the parties have foreseen or could have reasonably foreseen at the time
the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation.

Article 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill
the obligation of the principal debtor in case the latter should fail to do so.

Article 2058. The guarantor cannot be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor, and has resorted to all the legal remedies against
the debtor. (1830a)
Article 2059. The excussion shall not take place:

(1) If the guarantor has expressly renounced it;

(2) If he has bound himself solidarily with the debtor;

(3) In case of insolvency of the debtor;

(4) When he has absconded, or cannot be sued within the Philippines unless he has left a
manager or representative;

(5) If it may be presumed that an execution on the property of the principal debtor would
not result in the satisfaction of the obligation. (1831a)

Article 2060. In order that the guarantor may make use of the benefit of exclusion, he must set it
up against the creditor upon the latter's demand for payment from him, and point out to the
creditor available property of the debtor within Philippine territory, sufficient to cover the
amount of the debt.

JURISPRUDENCE: