Brief Summary
This video explains special modes of payment, loss of the thing due, condonation, and confusion as ways to extinguish obligations under Articles 1231-1304 of the Civil Code. It covers application of payment, dation in payment, payment by cession, tender of payment, consignation, and the legal implications of loss of a specific thing, including scenarios involving fortuitous events and criminal offenses. The video also discusses condonation or remission of debt, and confusion or merger of rights, detailing their effects on obligations and related legal presumptions.
- Special modes of payment include application of payment, dation in payment, payment by cession, and tender of payment with consignation.
- Loss of a specific thing due to fortuitous events generally extinguishes the obligation, with exceptions.
- Condonation or remission of debt involves gratuitous forgiveness of the obligation.
- Confusion or merger occurs when the roles of creditor and debtor merge into one person, extinguishing the obligation.
Introduction to Extinguishment of Obligations
The video introduces the second part of the series on obligations and contracts, focusing on the extinguishment of obligations through special modes of payment, loss of the thing due, condonation, and confusion, based on articles 1231 to 1304 of the Civil Code. The content to be covered includes application of payment, dation in payment, payment by cession, tender of payment, and consignation. The video also mentions that the next part will cover compensation and novation.
Special Modes of Payment: Application of Payment
This section discusses application of payment, where a debtor with several debts of the same kind to the same creditor can specify which debt a payment applies to, provided certain conditions are met. These conditions include having at least two debts due, one debtor and one creditor, debts of the same kind, and the payment not covering all debts. The creditor's acceptance of a receipt indicating the application of payment binds the debtor, unless there's a cause for invalidating the contract. If the debt produces interest, the payment applies to the interest first.
Rules for Application of Payment
When the payment cannot be applied by the debtor or inferred from circumstances, the debt that is most onerous to the debtor is deemed satisfied first. If the debts are of the same nature and burden, the payment is applied proportionately. An example illustrates how a debtor with multiple debts and limited funds can apply payment based on these rules, considering due dates, interest, and security. The general rule is that the debtor chooses where the payment is applied, but if they don't, the creditor can specify, and if neither does, the most burdensome debt is paid first, or payment is proportional.
Payment by Cession vs. Dation in Payment
This portion explains payment by cession, where a debtor assigns their property to creditors in payment of debts, releasing the debtor from responsibility only for the net proceeds of the assigned assets. It distinguishes payment by cession from dation in payment, noting that cession requires the debtor to be insolvent and involves multiple creditors, affecting all the debtor's properties (except those exempt by law). In contrast, dation in payment doesn't require insolvency or multiple creditors, and only the specific property chosen for payment is affected, with ownership passing to the creditor.
Tender of Payment and Consignation
Tender of payment is the act of the debtor showing intention to comply with the obligation. For a tender of payment to be valid, it must involve legal tender, which includes bills and coins issued by the Bangko Sentral ng Pilipinas (BSP), with certain limitations on the amounts for coins. Consignation involves depositing the thing due with judicial authority, typically when the creditor refuses to accept payment without a valid reason. Generally, consignation requires a valid tender of payment, but there are exceptions.
Requisites for Valid Tender of Payment and Consignation
The requisites for a valid tender of payment and consignation include the debt being due, the creditor refusing payment without valid cause, notice of consignation to interested parties, actual consignation with the court, and notice to interested parties after the consignation is made. The expenses of consignation are charged against the debtor. The debtor can ask the judge to cancel the obligation once consignation has been duly made, but before the creditor accepts or the court declares the consignation proper, the debtor can withdraw the deposit, leaving the obligation in force.
Effects of Consignation and Withdrawal
If the creditor authorizes the debtor to withdraw the consignation, any co-debtors, guarantors, or solidary debtors are not released from their obligations. The discussion covers scenarios where the creditor has not accepted the consignation or the court has not declared it properly made, allowing the debtor to withdraw the deposit. However, once the creditor accepts the consignation or the court declares it valid, the debtor cannot withdraw the deposit without affecting the obligations of other interested parties.
Loss of the Thing Due
This section addresses the extinguishment of obligations due to the loss of the thing, particularly when the obligation involves delivering a specific thing. An obligation to deliver a determinate thing is extinguished if it's lost or destroyed without the debtor's fault (due to a fortuitous event), with exceptions. The loss of a generic thing does not extinguish the obligation. The court determines if a partial loss is significant enough to extinguish the obligation. There's a presumption that the loss was due to the debtor's fault if the thing was in their possession.
Impossibility of Performance and Criminal Offenses
A debtor is released from an obligation to do something when the performance becomes legally or physically impossible without their fault. If the service becomes so difficult that it's manifestly beyond the contemplation of the parties, the obligor may also be released. However, if the debt of a certain indeterminate thing proceeds from a criminal offense, the debtor is not exempted from paying its price, regardless of the cause of the loss, unless the debtor offered the thing to the person who should retrieve it, and the latter refused without justification.
Rights of Creditor and Action Against Third Parties
When an obligation is extinguished by the loss of the thing, the creditor has all the rights of action that the debtor may have against third persons because of the loss. For example, if a specific car to be delivered is lost due to the fault of a third person, the creditor has the right of action against that third person.
Condonation or Remission of Debt
Condonation or remission is essentially forgiving the obligation, which is gratuitous and requires acceptance by the obligor. It can be made expressly or impliedly and is subject to the rules governing officious donations. The voluntary delivery of a private document evidencing a credit by the creditor to the debtor implies renunciation of the action, unless claimed to be inofficious. If the document is found in the debtor's possession, it's presumed the creditor delivered it voluntarily, unless proven otherwise.
Renunciation of Principal and Accessory Obligations
The renunciation of the principal debt extinguishes the accessory obligations, but the waiver of the latter leaves the former in force. For example, if a debt secured by a chattel mortgage is condoned, the mortgage is also extinguished. However, if only the chattel mortgage is waived, the principal debt remains. It is presumed that the accessory obligation of pledge has been remitted when the thing pledged is found in the possession of the creditor after its delivery.
Confusion or Merger of Rights
Confusion or merger occurs when the qualities of creditor and debtor meet in the same person, extinguishing the obligation. Merger in the person of the principal debtor or creditor benefits the guarantors. Confusion in the person of any of the latter does not extinguish the obligation. Confusion does not extinguish a joint obligation except as regards the share corresponding to the creditor or debtor in whom the two characters concur.
