POST MT OBLIGATIONS Flashcards
Consignation
One of the modes of extinguishing an obligation.
A debtor resorts to consignation if the creditor rejects a valid payment or it’s not prudent or advisable for the debtor to pay the creditor – meaning tender of payment is excused.
What must the debtor do in a consignation?
Debtor must file an action in court for the purpose of placing the payment at the court’s disposal
If Creditor refused, does Debtor still have to pay interest + principal?
YES! Because D has not paid the obligation and continues to use the money. Tender of payment does not extinguish an obligation,
Will the debtor be considered in default, therefore has to pay the penalty?
No
Requirements for a valid consignation.
- There must be a valid debt due
- There must be an unjust refusal by the creditor after tender of payment or there must be a reason why the payment cannot be made
- There must be prior notice to the parties interested in the fulfillment of the obligation
- There must be actual consignation in court by having the thing deposited at the disposal of the judicial authority
- Subsequent notice to the creditors as well
T or F: The debtor can consign when the creditor rejects the payment because the debtor paid early.
F. The creditor has the full benefit of the term so in consignation, the debt MUST be due.
What is a valid tender of payment?
Debtor manifests to the creditor that the debtor is ready to fulfill the obligation with an offer of immediate compliance.
NOTE: Anything short of showing the cash payment or other form of payment agreed upon by the parties will not amount as payment
When is tender of payment not a requisite to consignation?
- When the creditor is absent or unknown, or does not appear at the place of payment;
- When she is incapacitated to receive the payment at the time it is due;
- When, without just cause, she refuses to give a receipt;
- When two or more persons claim the same right to collect; or
- When the title to the obligation has been lost.
When does the first situation happen?
In cases where there is no determinable creditor at that time, like in an instrument payable to bearer and you don’t know who the bearer is
Can the debtor tender payment and give prior notice simultaneously?
Yes, example – Borrower told Bank that Borrower would consign should Bank refuse to accept the tender of payment
What if the payment to be consigned is based on a contract of lease which is payable every month?
If it’s a lease contract and rent is due every month, the debtor has to repeat the steps every month.
Can a debtor set up an account and place all accruing debt in that account?
No, payments must be placed at the Court’s disposal. The debtor can set up an account upon the order and under the control of the court.
When is it best for the creditor to accept an incomplete payment consigned in the court?
Only accept when it’s deposited in court or after filing of the complaint.
Who pays for a valid consginment?
Creditor
BREAKDOWN OF STEPS:
Debt Due
Tender of payment → unjustly refused
First notice
Judicial Deposit
Second notice
Judicial approval/disapproval
When will the debt be considered paid?
- Upon judicial approval of the consignation
- Upon acceptance of the
payment by the creditor without any reservation or qualification.
Can a creditor reserve the right to a full payment?
Yes
What is the retroactive effect of a valid consignment?
Judicial approval retroacts to the day of the judicial deposit.
Can debtor withdraw the deposit? When?
Yes, before the creditor has accepted the consignation
and before a judicial confirmation that the consignation has been properly made
Can creditor prevent withdrawal? How?
Yes, accepting the amount but with express reservations of other claims.
What is the doctrine of Legaspi?
Tender of payment enough to preserve the right of repurchase.
Doctrine of Heirs of Bacus?
In an option to buy, no need to consign, just need to merely inform your intent.
Hulganza Doctrine
Right to redeem is exercised through the filing of judicial action within the period of redemption prescribed by the law.
Define loss of the thing due.
Refers to legal or physical impossibility AFTER constitution of the obligation
Loss of a determinate thing
Extinguishes the obligation if the debtor is without fault or not in default
Can a debtor be extinguised from liability if it was after default?
No, loss of the thing due w/o fault must be before default.
Loss of a generic thing
Loss does not extinguish the obligation, unless the entire class becomes impossible.
Loss in an obligation to do
Loss extinguishes the obligation when the prestation becomes impossible
Presumption of fault
There is always presumption of fault on the part of the debtor because he was the one in control of the thing at the time of the loss.
Why?
The debtor in possession of the thing is in the best position to avoid any damage or loss by exercising the appropriate diligence.
How can the debtor free himself from liability?
Show he exercised the necessary diligence/invoke FE
Who will be liable for the loss if the debtor can prove he is not at fault?
Creditor
Who has the burden of proof when the debtor invokes a FE?
Burden of proof falls on the creditor that there was fault or default on the part of the debtor.
REQUISITES OF DOCTRINE OF UNFORESEEN EVENT
- The event or change in circumstance could not have been foreseen at the time of the execution of the contract.
- It makes the performance of the contract extremely difficult but not impossible.
- It must not be due to the act of any of the parties.
- The contract is for a future prestation.
What is condonation?
An act of liberality by virtue of which, without receiving any equivalent, the creditor renounces the enforcement of the obligation, which is extinguished in its entirety or in that part
What is the nature of condonation?
Gratuitous
Requirement
An express condonation must comply with the form of a valid donation
What is the limitation of a condonation?
Subject to the rules governing inofficious donations i.e. impairing legitime of compulsory heirs
Requirements of real/immovable property
1) Donation must be in a public instrument (notarized)
2) Donee must accept the donation in the same deed or in a separate public document made known to the donor
Requirements of movable property
Value > 5,000 = donation and acceptance must be in writing
Value < 5,000 = verbal but with simultaneous delivery and acceptance
What is confusion?
Debtor and the creditor become the same person with respect to the same obligation
Does a guaranty or security get extinguished if the principal is extinguished?
YES, but extinction of the accessory contract will not extinguish the principal loan obligation.
What is novation?
Substitution or change of the obligation by a subsequent one which extinguishes or modifies the first
How do you novate?
- Either by changing the object or principal conditions, or
- By substituting another in place of the debtor, or
- By subrogating a third person in the rights of the creditor
What are the classifications of novation?
Extinctive or Total novation
Modificatory or Partial novation
What is extinctive novation?
The old obligation is terminated and superseded by the new obligation (Extinction)
What is modificatory novation?
Only certain terms and conditions of the original obligation are altered. The old obligation subsists to the extent that it remains compatible with the amendatory agreement
Requisites of novation
A previous valid obligation
A new valid obligation
The new obligation extinguished or modifies the old obligation in terms of object and/or subjects/s
Two modes for extinctive novation
An express agreement of the parties to extinguish the old obligation (express) or utter incompatibility of the old and new obligations (implied)
What is objective novation?
Change of obligation, ex: dacion en pago
What is subjective novation?
Change of a party or parties
What are the kinds of debtor substitution?
Delegacion: Substitution of a debtor at the instance of the original debtor
Expromision: Substitution of the debtor without the knowledge or consent of the debtor
KINDS OF CREDITOR SUBSTITUTION:
By agreement of the parties (conventional subrogation)
By operation of law (legal subrogation)
PRESUMPTION OF LEGAL SUBROGATION:
- A creditor pays a preferred creditor even without the debtor’s knowledge
- Third party pays with the express or implied consent of the debtor
- A person interested in the fulfillment of the principal obligation pays even without the debtor’s knowledge (
Why may a guarantor be subograted to a creditor’s rights?
Because a guarantor is an interest party in the contracted
If there is no consent or knowledge from the debtor is it under legal subrogation?
No
T or F: Novation need not be clearly stipulated.
False
May novation prevent criminal liability?
Yes, if novation happens before the attachment of criminal liability.
WHO SHOULD CONSENT TO NOVATION?
GR: All parties to the old and new obligation
What are the XPNs?
Legal subrogation through the payment by a creditor of a preferred creditor or expromission
