Chapter 4- Oblicon - CONTRACTS PDF

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LAW1101| LAW ON OBLIGATIONS AND CONTRACTS 2ND SEMESTER I LECTURE FAR EASTERN UNIVERSITY I INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE CHAPTER 5: CONDONATION OR REMISSION OF DEBT ARTICLE 1270: Condonation or Remission is essentially gratuitous, and requires the acceptance of the obligor. It may be expressly or impliedly. One and other kind shall be subject to the rules which govern inofficious donations. Express condonation shall, furthermore, comply with the forms of donation. (1187) CONDONATION OR REMISSION In the form of a donation For the donation to be valid, there should be acceptance from the other party; they should accept the generosity of the obligor Gratuitous abandonment by the creditor of his rights against the debtor REQUISITES OF CONDONATION OR REMISSION 1) 2) 3) 4) 5)

Gratuitous Accepted by the obligor Parties must have capacity Not in-officious If made expressly, it must comply with the forms of donation.

KINDS OF REMISSION 1. As to its extent a. Complete – covers the entire obligation b. Partial – does not cover the entire obligation 2.

As to its form a. Express – when it is made either verbally or in writing b. Implied – when it can only be inferred from conduct

3.

As to its date of effectivity a. Inter vivos – take effect during the lifetime of the donor b. Mortis causa – effective upon the death of the donor; comply with the formalities of a will

EFFECT OF INOFFICIOUS REMISSION While a person may make donation, no one can give beyond that he can give by will; otherwise, the excess shall be inofficious and shall be reduced by the court accordingly. ARTICLE 1271: The delivery of a private document evidencing a credit, made voluntarily by the creditor to the debtor, implies the

renunciation of the action which is the former had against the latter. If in order to nullify this waiver it should be claimed to be inofficious, the debtor and his heirs may uphold it by providing that the delivery of the document was made in virtue of payment of the debt. (1188) EXAMPLE: X is indebted to W in the sum of P2,000 evidenced by a promissory note executed in long hand by X. If W returns the promissory note to X, what is the presumption? (Art. 1271 par. 1) The presumption leads to the condonement of the creditor to the obligation because he must be holding on to the promissory note as it is the evidence of the obligation of the debtor and he should be showing that to the debtor at the time of due date. When the debtor pays, the creditor must surrender the promissory note that shall be then destroyed by the debtor as a sign of payment. The law presumes that the creditor must return the promissory note because he already condones or remits the debt but it is rebuttable/disputable/ prima facie. o The creditor can show proof that he did not condone or remit the obligation but when he returned the promissory note, he is just showing it to the debtor so that he can prepare for the payment of the obligation. o If there is proof, the presumption is destroyed. But the document shall be a private document or not notarized – only the creditor has a copy. o If the creditor returned the private documents and it is in the possession of the debtor, it is presumed that there is a condonation. If the debtor already possesses the documents without our knowledge, it is presumed that it is voluntarily returned by the creditor. And the presumption is that it is already paid unless proven that it condoned or remitted. Note: Promissory notes were only returned when there is payment If the amounts exceed to 5000, the condonation should be in writing (Article 1273). One of the ways of extinguishing an obligation is through condonation or remission of the debt. EXAMPLE: W is indebted to Y for P5,000 secured by a pledge of wristwatch. If Y condones the debt in the sum of P5,000, what is the effect? (Art.1273)

LAW1101| LAW ON OBLIGATIONS AND CONTRACTS 2ND SEMESTER I LECTURE FAR EASTERN UNIVERSITY I INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE -

The promissory and the pledged object is under the possession of the creditor If it is already paid fully, the promissory note and pledged object shall be returned to the debtor

PLEDGED Collateral SECURITY CONTRACT PRESUMPTION IN CASE OF VOLUNTARY DELIVERY OF DOCUMENT OF INDEBTEDNESS BY CREDITOR. (1) Presumption of implied remission. - This article gives example of implied or tacit remission. If the debt is not yet paid, the creditor would need the document to enforce payment. In case he voluntarily delivers it to the debtor, the only logical inference is that he is renouncing his right (2) Contrary evidence. - The presumption is prima facie or rebuttable by contrary evidence. Evidence is admissible to show otherwise, as when a receipt signed by the creditor was delivered only for examination by the debtor client (lawyer) of the amount of attorney's fees to be paid by the latter. (3) Extent of remission. - If the obligation is joint, the presumption of remission pertains only to the share of the debtor who is in possession of the document; if solidary, to the total obligation. (4) Presumption applicable only to private document. – Article 1271 speaks of a private document. The legal presumption of remission does not apply in the case of a public document because it is easy to obtain a copy of the same, being a public record. PAYMENT, NOT REMISSION OF DEBT. Under the second paragraph of Article 1271, the debtor may be nullified or invalidated by a showing that the renunciation of the action which the creditor had against the waiver is inofficious. In other words, the remission becomes null and void upon proof that it is inofficious. The debtor or his heirs may prove that the delivery of the document was really made in virtue of payment of the debt and not of remission ARTICLE 1272: Whenever the private document in which the debt appears is found in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved. (1189)

PRESUMPTION IN CASE DOCUMENT FOUND IN POSSESSION OF DEBTOR. Ordinarily, the document evidencing the debt is in the possession of the creditor He has in his favor the legal presumption that his credit is as yet uncollected, unless the debtor proves satisfactorily, by one (1) of the rules recognized in law, that he has already paid the claim. If the document is later found in the hands of the debtor and it is not known how he came into possession of the same, the presumption is that it was voluntarily delivered by the creditor. This presumption of voluntary delivery, in turn, gives rise to the presumption of remission. (Art. 1271.) It is believed, however, that the presumption of voluntary delivery should give rise to the presumption of payment and only when it is known that indeed there is no payment should there be a presumption of remission. EXAMPLE: Dowes C P1,000 evidenced by a promissory note. The note, signed by D, is given to C. If the promissory note is voluntarily delivered to D, the presumption is that the debt must have been paid by D. If it is known that D has not yet paid C, it must be presumed that the obligation has been remitted by C. (Art.1271) Suppose it is not known how D came into possession of the promissory note. The presumption is that it was voluntarily delivered by C, unless C proves the contrary. (Art. 1272.) ART. 1273. The renunciation of the principal debt shall extinguish the accessory obligations; but the waiver of the latter shall leave the former in force. (1190) EFFECT OF RENUNCIATION OF THE PRINCIPAL DEBT OF THE ACCESSORY OBLIGATION. The above provision follows the rule that the accessory follows the principal. While the accessory obligations cannot exist without the principal obligation, the latter may exist without the former. (Art. 1230.) EXAMPLE: D owes C P1,000 with G as guarantor. The principal debt here is the P1,000, while the accessory obligation is the guaranty of G. The remission of the debt of D by C shall extinguish the guaranty of G. But if only the guaranty of G is condoned, the obligation of D shall remain in force. ARTICLE 1274: It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery

LAW1101| LAW ON OBLIGATIONS AND CONTRACTS 2ND SEMESTER I LECTURE FAR EASTERN UNIVERSITY I INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE to the creditor, is found in the possession of the debtor, or of a third person who owns the thing. (1191a) PRESUMPTION IN CASE THING PLEDGED FOUND IN POSSESSION OF DEBTOR In a contract of pledge, it is necessary that the thing pledged be placed in the possession of the creditor, or a third person by common agreement. (Art. 2093.) A third person who is not a party to the principal obligation may secure the latter by pledging his own property (Art.2085, last par.) If the thing pledged is later found in the hands of the debtor or the third person only the accessory obligation of the pledge is presumed remitted, not the obligation itself. The debtor shall continue to be indebted but he does not have to return the thing pledged. The presumption yields to contrary evidence. It does not arise if the third person in possession of the thing pledged does not own the same. EXAMPLE: D delivers to C his diamond ring in pledge to guarantee the payment of a loan. If later on the ring is found in the possession of D, the presumption is that C has agreed to the loan without the pledge. C may prove that he returned the ring to D upon the latter's request to be delivered back to him.

CHAPTER 6: MERGER OR CONFUSION OF RIGHTS ARTICLE 1257: The obligation is extinguished from the time the characters of creditor and debtor are merged in the same person. CONFUSION OR MERGER Meeting in one person the qualities of the creditor and debtor in one and the same or with respect to the same obligation NEGOTIABLE PROMISSORY NOTE Conforms with all the requirements of the law Seen as a substitute for money NOTE: if there’s a confusion or merger of rights, the obligation is extinguished

CHAPTER 7: COMPENSATION ARTICLE 1278: Compensation takes place when 2 persons, in their own rights, are debtors and creditors of each other

May be total or partial Contract of Como datum Lending something to someone for free...