AUTORIZACIÓN PARA UTILIZACIÓN DE LAS PROTECCIONES COLECTIVAS:

Art. 1270. Condonation or remission is essentially gratuitous, and requires the acceptance by the obligor. It may be made expressly or impliedly.

One and the other kind shall be subject to the rules which govern inofficious donations. Express condonation shall, furthermore, comply with the forms of donation.

• Condonation or remission is an act of liberality by virtue of which, without receiving any equivalent, the creditor renounces enforcement of an obligation which is extinguished in whole or in part.

• Requisites

a. The debt must be existing

• You can remit a debt even before it is due.

• Doesn’t have to be due. But you can’t make one if there is no debt yet

• Balane cannot say that “tomorrow, I will enter into a loan with you and then I will condone it.” That’s not a condonation. If today Balane contracts a loan with Fajardo, tomorrow he can

condone it even if it’s due next week. Example: I owe A P1M. I promised to pay on July 31, 2002 with interest. On May 31, A condones the obligation. The obligation is existing but not yet due but it can be condoned.

b. The renunciation must be gratuitous

• If renunciation is for a consideration, the mode of extinguishment may be something else. It may be novation, compromise or dacion en pago for example.

c. There must be acceptance by the debtor d. The parties must have capacity

• The creditor must have capacity to give away. • The debtor must have capacity to accept. • Form

a. If the renunciation is express, then it is a donation.

o The form of donation must be observed. If the condonation involves movables, apply Article 748.34 _{If it involves immovables, apply Article 749.}35

34 _{Art. 748. The donation of a movable may be made orally or in writing.}

An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated. If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing, otherwise, the donation shall be void.

35 _{Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying}

therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

Digests by 4A 2015

Yam v. CA: Yam entered into three loan agreements with Manphil. These agreements were attended with penalties for non-payment such as 12% annual interest, 2% monthly penalty, 1 1.2% monthly service charge and 10% attorney's fees. Yam, after paying the first loan, only paid the second loan partially. Yam wrote a letter to Manphil proposing to settle their obligation and Manphil replied with an offer to reduce the penalty charges should the loan be paid on a certain date. The debt was not paid so Manphil sent 2 demand letters. Yam contended that they fully paid their obligation with Manphil's president agreed to waive the penalties. Held: Yam liable for the payment of the penaties. Art. 1270 provides that express condonation must comply with the forms of donation. Art. 748, par. 3 provides that the donation and acceptance of a movable, the value of which exceeds P5,000,00, must be made in writing, otherwise the same shall be void. Under Art. 417, par. 1, obligations, actually referring to credits, are considered movable property. It is undisputed than the alleged agreement to condone P266,196.88 of the second IGLF loan was not reduced in writing.

b. If the renunciation is implied, then it is tantamount to a waiver.

o There is no prescribed form in a waiver (Article 6).36 _{For example, the creditor can just refuse} to collect the debt.

• Ways of Remission a. will

b. agreement

Art. 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 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 proving that the delivery of the document was made in virtue of payment of the debt.

Art. 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.

• According to Balane, Articles 1271 and 1272 refer to a kind of implied renunciation when the creditor divests himself of the proof credit.

• The delivery of a private document, evidencing a credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action which 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 (Article 1271).

36 _{Art. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good}

Digests by 4A 2015

• Article 1271 has no application to public documents because there is always a copy in the archives which can be used to prove the credit. Private document refers to the original in order for Article 1271 to apply.

• By delivering the private document, the creditor deprives himself of proof.

• The second paragraph of Article 1271 implies that the voluntary return of the title of credit is presumed to be by reason of remission and not by reason of the payment of debt. According to Professor Balane, this is anomalous. This provision is absurd and immoral in that it authorizes the debtor and his heirs to prove that they paid the debt, when the provision itself assumes that there has been a remission, which is gratuitous.

• You are encouraging him to tell a lie.

• 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 (Article 1272).

• 2 Presumptions: A presumption based on a presumption!

i. If a private document is found in the possession of the debtor, then it is presumed that the creditor voluntarily delivered it to him

ii. Since the creditor voluntarily delivered the private document, then there is a presumption of remission

Trans-Pacific v. CA: Trans-Pacific applied for and was granted loan accommodations by Associated Bank. The loans were evidenced by 4 promissory notes and secured by 4 mortgages. Unable to settle its obligation in full, Trans-Pacific asked for a restructuring of the remained of the loan, which Associated Bank accepted. The restructured loan was evidenced by 3 new promissory notes. 3 new mortgages were fixed, and the 4 original mortgages were released. Trans-Pacific sold the parcels of land making up the 4 original mortgages, and the proceeds were used to pay off the restructured loans. Subsequently, Associated Bank returned the duplicate original copies of the 3 new promissory notes to Trans-Pacific with the word “PAID” stamped thereon. However, Associated Bank

demanded from Trans-Pacific the value of the interest accrued from the loan. The Bank claimed that the promissory notes were erroneously returned. Initially, Trans-Pacific wanted to settle the interest payment, but had a change of heart and instead filed a case for specific performance, demanding the Bank to release the mortgages, and to have the loan be declared fully paid. Held: Trans-Pacific did not pay its loan in full. The presumption created by the Art. 1271 is not conclusive but merely prima facie. Here, there’s sufficient justification to overthrow the presumption of payment generated by the delivery of the documents evidencing petitioners indebtedness. There is no document presented by Trans-Pacific showing that the debt has been fully paid. The testimony an employee of the Bank reiterated that the interest had not been paid, though the principal obligation had already been “removed from [their] books.” A letter from Trans-Pacific to the Bank showed that Trans-Pacific proposed to have the interest payment be settled by dacion en pago instead, and also they

acknowledged the existence of the obligation to pay the interest. The returned document was not an original copy, but an original duplicate. Art. 1271 raises a presumption, not of payment, but of the renunciation of the credit where more convincing evidence would be required than what normally would be called for to prove payment. The rationale for allowing the presumption of renunciation in the delivery of a private instrument is that, unlike that of a public instrument, there could be just one copy of the evidence of credit. Where several originals are made out of a private document, the

Digests by 4A 2015

intendment of the law would thus be to refer to the delivery only of the original rather than to the original duplicate of which the debtor would normally retain a copy. It would thus be absurd if Art.1271 were to be applied differently.

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.

Art. 1274. It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing.

• Effect of Partial Remission

• The renunciation of the principal debt shall extinguish the accessory obligations; but the waiver of the latter shall leave the former in force (Article 1273).

• Example: Loan secured by a mortgage. If I condone the loan, I condone the mortgage. But if I condone the mortgage, I do not condone the loan which merely becomes unsecured.

• The obligation of the guarantor is extinguished at the same time as that of the debtor, and for the same causes as all other obligations (Article 2076).

• The guarantors, even though they be solidary, are released from their obligation whenever by some act of the creditor they cannot be subrogated to the rights, mortgages, and preferences of the latter (Article 2080).

• It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing (Article 1274).

• Based on 209337

• According to Professor Balane, the accessory obligation of pledge is extinguished because pledge is a possessory lien. The presumption in this case is that the pledgee has surrendered the thing pledged to the pledgor. However, this is not a conclusive presumption according to Art.2110, ¶2. • This presumption is not applicable in a mortgage since there is no possessory lien.

• In addition to the requisites prescribed in article 2085, it is necessary, in order to constitute the contract of pledge, that the thing pledged be placed in the possession of the creditor, or of a third person by common agreement (Article 2093)

• The debtor cannot ask for the return of the thing pledged against the will of the creditor, unless and until he has paid the debt and its interest, with expenses in a proper case (Article 2105).