A and B entered into a contract of absolute sale
whereby A sought to delivery to B a parcel of
land for 1M payable in 10 equal monthly
installments until fully paid. The contracts was
entered in Jan 1, 2015. Part and partial of the
agreement is that A is given a grace period of 60
days from the time of his failure to pay any of
the installments due. Assume that on January
31, 2015, A failed to pay the 1st installment. On
Feb 28, 2015, A paid to B the amount of
200,000. So the first 2 installments were fully
paid. March 31, 2015, despite repeated
demands, A failed to pay the installment that
fell due on March 31, 2015. Now, there is also in
the contract what we call this acceleration
clause that if and when A fails to pay any
installments due the entire balance will become
due and demandable. So on March 31, 2015, B
demanded to A the payment of all the third
installment and A fails to pay. With that can B
immediately ask for the rescission of the
contract to sale? Why is it B upon failure of A to
pay despite demand cannot immediately
maintain an action against A for the rescission
of the contract under Article 1191?
- The effect of grace period on delay
- A grace period is a right, not an
obligation, of the debtor. When
unconditionally conferred, such as in
this case, the grace period is effective
without further need of demand either
calling for the payment of the obligation
or for honoring the right. xxx the sixty-
day grace period under the terms of the
contracts to sell became ipso facto
operative from the moment the due
payments were not met at their stated
maturities. On this score, the provisions
of Article 1169 of the Civil Code would
find no relevance whatsoever.
(Bricktown Development Corp. vs Amor
Tierra Development Corp.
What is a grace period?
How to compute the period?
- Article 13
- “in computing a period, the first day
shall be excluded, and the last day
included”
Prior to the expiration of this grace period the
creditor cannot maintain an action to rescind
the contract. Not even the exact fulfillment of
the obligation precisely because of the grace
period.
Article 1174
Exceptions: The debtor is not excused by the
fortuitous event from performing his obligation
1. In cases expressly specified by the law
Illustration:
Article 1165, par 3 (Comparison)
o A bound himself to deliver a
particular car to B and C in one
single contract on or before Feb
14, 2016. On Feb 5, 2016 the
car is totally destroyed by a
lightning. Is A liable to
damages?
No. B and C have the same
interest.
In a contract where there are
several creditors or several
debtors it does not necessarily
follow that there is a solidary
obligation or solidary credit like
in this case. There may be
plurality on the side of the
passive subject of the
obligation. But just the same it
does not necessarily follow that
the subjects do not have the
same interest over the thing
they have such that upon the
delivery of the car to B and C,
they will become the joint
 owners of the car. (Co-
Ownership in Property)
o January 1, 2016, A bound
himself to give B a specific car
on Dec 31, 2016. Feb 2, 2106 A
bound himself the same car to
C on Oct 1, 2106. Feb 10, 2016
the car was completely
destroyed because of a
fortuitous event. Is A liable for
damages?
A is liable to B and C.
A promises to deliver the same
car, a determinate and specific
thing, to 2 or more person who
do not have the same interest.
Any loss or injury regardless of
the cause whether it be by
fortuitous event, he is always
liable for damages
o A bound himself to deliver a
particular car to B on Dec 31,
2015. Dec 31, 2015 arrived A
failed to deliver the car to B.
However, yesterday Feb 12,
2016, the car was totally
destroyed by a lightning while
in the possession of A. Is A
liable for damages?
A is not liable. A was not in
delay. There being no demand
from B.
a. Article 552
- “A possessor in bad faith shall be liable
for deterioration or loss in every case,
even if caused by a fortuitous event
b. Article 1268
- “When the debt of a thing certain and
determinate proceeds from a criminal
offense, the debtor shall not be
exempted from the payment of its
price, whatever may be the cause for
the loss, unless the thing having been
offered by him to the person who
should receive it, the latter refused
without justification to accept it.”
Illustration:
A is the owner of a particular
Rolex watch. B stole the watch from A.
B was convicted of the crime of robbery
or theft as the case may be.
Immediate consequence of Conviction
by final judgement:
o Article 105 or the RPC
(Restitution)
B is bound to return the Rolex
watch to A. The judgement has become
final and executory. B was ordered by
the court to return the watch to A.
While on his way to deliver the watch to
A. The Rolex watch was also stolen by
another person. Is A absolve from any
liabilities for damages?
o No. because no tender of
delivery yet and there is no
unjust refusal on the part of A.
o The theft is considered as a
possessor in bad faith
Suppose, B went to A after the
conviction and tendered to him the
return of the delivery of the watch he
stole from A. Then B unjustly refused to
accept the watch. A went home while
on his way, he was robbed of the watch.
Is A absolve from any liabilities for
damages?
o Yes.
c. Article 1569
- “If the thing sold had any hidden fault
at the time of the sale, and should
thereafter be lost by a fortuitous event
or through the fault of the vendee, the
latter may demand of the vendor the
 price which he paid, less the value
which the thing had when it was lost.
If the vendor acted in bad faith, he shall
pay damages to the vendee”
Illustration:
Also in Sales of goods or
personal property that are suffering
from legal defects, the vendor is not
absolve from any liability for damages
even if the loss of the things suffering
from any defect is caused by a
fortuitous event.
Even if in the vault of the
vendee, the thing sold suffering from
any defect is lost. The vendor is liable
for damages equivalent to the value of
the thing at the time of the lost.
2. Otherwise declared by stipulation
3. The nature of the obligation requires
the assumption of risk
- Normally applies to aleatory contracts
like insurance policy
- Illustration:
A is the owner of a particular
car insured with FDU against
theft, total loss, damage etc.
Feb 2, 2016 the car was
destroyed by a fortuitous event.
Is FDU liable to pay A the value
of the car?
Yes. It is because the nature of
the insurance obligation
requires the assumption of risk.
Article 1177
A on Jan 1, 2015, borrowed money from B
amounting to 5M that became due on Jan 31,
2016. To defraud B, A sold his only property to X
for only 300,000. There were also delivery of
the property. Jan 31, 2016 arrives, B demanded
to A the payment of the 5M. A refused to pay.
Can B immediately proceed to have the contract
of sale between A and B rescinded?
A borrowed money from B. A bound himself to
pay B 5M upon demand. The obligation is
evidenced by a promissory note. 5M is payable
to B for order upon demand. B negotiated the
note to C. Inducement plus delivery. C
demanded from A the payment of the 5M
obligation. A refused to pay. Can C immediately
proceed against B?
There are different kinds of inducement.
General inducement and limited inducement.
Regardless of the nature of the inducement.
The (warranties or guaranties) are almost the
same. With that the endorser of the person
negotiating the document, he warrants that
upon the presentment of the note to the
maker, the same will be paid such that if and
when, the holder is not paid by the maker of
that instrument, recourse can be had against
the immediate endorser.
Why is it that there is no need for the endorsee
to exhaust the property of the maker of the
instrument? Because the remedy of the
immediate collection or payment from the
immediate endorser is provided by the
negotiable instrument law.
How many remedies are there?
- 3
How may these remedies be exercised?
- In succession
1. There must first be a demand
2. Exhaust all the properties
3. Accion suborgatoria
4. Accion Pauliana
Jan 1, 2015, A borrowed money from B
amounting 1M demandable Dec 31, 2015. X
preceded to A 300,000 payable on Oct 1, 2015.
A has 2 parcels of lands. To evade the
performance of his obligation or in order to
defraud B, A and C entered to a contract of sale
whereby A sought to deliver a parcel of his land
to C for only 300,000. Dec 31, 2105 arrived B
demanded the payment of 1M from A. A
refused to pay. Let us assume that the 300,000
obligation in favour of A is not yet paid as of
now. There being a delay on the part of A, if you
are B what will you do to protect your interest?
You file an action against the debtor. The nature
of the complaint is for the collection or payment
of the 1M obligation. You obtained a favourable
judgement. Let us assume that on Feb 2, 2106,
B obtained a favourable action from the court.
Motion for execution is granted. The Sheriff sold
his property for 500,000. The obligation is not
yet paid. What must be done to satisfy the
whole credit?
After the properties are exhausted, by court
action or extra-judicially B may compel A to
subrogate his rights. B can put himself in the
place of A and collect from X the 300,000.
Why is Accion suborgatoria available to the
aggrieved creditor in case the debtor fails or
refuses to pay? What is the reason behind
Accion Suborgatoria?
- my debtor's debtor is my own debtor
[el deudor de mi deudor es deudor mio]
(Gold Star Mining Co., Inc., vs. Jimena)
- Metropolitan Case (TBA)
Now, there is still a balance of 200,000? What
should B do next?
- B now may institute Accion pauliana.
The action to rescind the contract of
sale between A and C. Not under Art.
1191 but under Art.1380, 1381, 1389.
- There is difference. UFC vs. CA
Why is it Accion Pauliana is not made as the first
remedy for aggrieved creditor under Art. 1177?
- Good faith is presumed because we
have to maintain the stability of the
conduct of relationship. Because if it
were made the first remedy available to
the aggrieved creditor, then almost all
the contracts would be unstable for fear
that somebody might attack the validity
of the contract on the presumption or
mere allegation that same was made to
defraud creditors.
- (Gold Star Mining Co., Inc., vs. Jimena)
H&W got married sometime in 2005 before and
during their marriage they did not enter into a
marriage settlement. So under the FC, absolute
community of property governs their property
relations. Jan 15, 2015, by reason of the
negligence on the part of A, X suffered injuries
and damages amounting to 3M. From the time
of their marriage until now, H&W were able to
acquire properties amounting to 15M. Quasi-
delict is an independent source of obligation. X
obtained a favourable judgement against A. The
judgement became final and executory. A has
no more exclusive property. Can the 3M be
charged against the absolute community of
property?
- Article 94 (9) of the Family Code
“liabilities incurred by either spouse by
reason of a crime or a quasi-delict, in
case of absence or insufficiency of the
exclusive property of the debtor-
spouse, the payment of which shall be
considered as advances to be deducted
from the share of the debtor-spouse
upon liquidation of the community
H&W got married in 2005 in their marriage
settlement executed before their marriage they
agreed that the regime of conjugal partnership
shall govern their property relations. During the
subsistence of their marriage, they were able to
acquire 15M property. Jan 15, 2015 by reason
of the negligence on the part of A, X suffered
injuries and damages amounting to 3M. There
was judgement which became final and
executory. A has no more exclusive property.
Can the 3M be charged against the conjugal
partnership of the property?

- Article 122 (3) of the Family Code

“the payment of personal debts
contracted by either spouse before the
marriage, that of fines and indemnities
imposed upon them, as well as the
support of illegitimate children of either
spouse, may be enforced against the
partnership asset after the
responsibilities enumerated in the
preceding Article have been covered if
the spouse who is bound should have
no exclusive property or if it should be
insufficient; but at the time of the
liquidation of the partnership, such
spouse shall be charged for what has
been paid for the purposes above-
mentioned”