RFBT

• Kinds of Fraud


  • Dolo causante (fraud in obtaining consent)
  • Dolo incidente (fraud in the performance of the obligation)
• Negligence


  Consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place
• Degrees of Care Required


  • That required by law
  • That agreed upon by the parties
  • Diligence of a good father of a family
• Kinds of Negligence as to Source

  • Culpa Contractual (contractual negligence)
  • Culpa Aquiliana (civil negligence or quasi-delict)
  • Culpa Criminal (criminal negligence)
• Negligence on the part of the injured party

  • If his negligence was the immediate and proximate cause of the injury, there is no recovery for damages
  • If his negligence was only contributory, he may still recover damages, but the courts can mitigate or reduce the same
• Kinds of Delay


  • Mora Solvendi (delay on the part of the debtor)
  • Mora Accipiendi (delay on the part of the creditor)
  • Compensatio Morae (delay on the part of both parties)
• Exceptions to Fortuitous Event as an excuse for non-performance

  • Declared by stipulation
  • When the nature of the obligation requires the assumption of risk
  • Expressly specified by law
  • When negligence, delay or fraud concurred with the fortuitous event
• Modes of Extinguishment of Obligations

  • Payment or performance
  • Loss of the thing due
  • Condonation or remission of the debt
  • Confusion or merger of the rights of creditor and debtor
  • Compensation
  • Novation
• Other Causes of Extinguishment of Obligations

  • Annulment
  • Rescission
  • Fulfillment of a resolutory condition
  • Prescription
• Payment


  Means not only the delivery of money but also the performance, in any other manner, of an obligation
• Provisions as to the Payor

  • Payment made with consent of the debtor/with interest in the fulfillment of the obligation
  • Payment made without knowledge/consent of the debtor
• Person who has interest in the fulfillment of the obligation

  Include those subsidiarily liable such as guarantors and co-debtors (including joint co-debtors), even third party-mortgagors whose properties secure the obligation
• Capacity and Free Disposal


  The payor should have capacity to alienate and the free disposal of the thing due for payment to be effective
• Persons to whom payment may be made

  • Person in whose favor the obligation has been constituted
  • His successor in interest
  • Any person authorized to receive it
  • Third party if it redounds to the benefit of the creditor
• Payment to an incapacitated person


  Valid only if the incapacitated person kept the thing delivered or insofar as it was beneficial to him
• Delivery of a specific thing

  The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as, or more valuable than that which is due
• Delivery of a generic thing

  Whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality
• Obligations to do or not to do

  An act or forbearance cannot be substituted by another act or forbearance against the obligee's will
• Legal Tender


  Coins and currencies issued by the BSP have legal tender power, with limits on the amount for coins
• Negotiable Instruments and Checks

  Not considered legal tender, their acceptance is dependent on the creditor. They do not produce the effect of payment, or extinguish the obligation, until encashed or their value becomes impaired
• Extraordinary inflation or deflation


  The value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary
• Provisions as to the Place of Payment


  • In the place designated in the obligation
  • Where the thing might be at the moment the obligation was constituted
  • The domicile of the debtor
• Dation in Payment


  The delivery or transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation
• Application of Payment


  The designation of the debt which is being paid by a debtor who has several obligations of the same kind in favor of the creditor to whom payment is made
• Limitations on the Debtor's Right to Apply Payment

  • Creditor cannot be compelled to accept partial payment
  • Debtor cannot apply payment to principal if interest has not been paid
  • The debt must be liquidated, except when the parties agree otherwise
  • Cannot be made when the period has not arrived and such period was constituted in favor of the creditor, except with the consent of the creditor
  • When there is agreement as to which debt must be paid first
• Cession


  When the debtor delivers to all his creditors all his properties for the purpose of selling and applying the proceeds to settle his obligations to them
• Kinds of Cession


  • Voluntary
  • Judicial
• Dation in Payment vs Cession

  Dation in payment involves transfer of ownership to the creditor, while cession does not involve such transfer
• Voluntary cession


  Under Art. 1255, the debtor may cede or assign his property to his creditors in payment of his debts; extent of extinguishment is only up to the amount of the proceeds
• Judicial cession


  Under the Financial Rehabilitation and Insolvency Act
• Advantages of judicial cession

  • The court discharges the debtor of his debts and the obligations are extinguished
• Properties exempt from Execution are generally not covered by cession, except if the debtor waives such exemption
• Dation in payment


  Ownership of the thing is transferred to the creditor; Obligation may be totally extinguished if agreed upon by the parties or by their silence, consider the thing equivalent to the obligation
• Cession or Assignment


  No transfer of ownership; Obligation is extinguished only insofar as the net proceeds (except: otherwise stipulated); Involves plurality of creditors; Involves all the properties of the debtor unless exempt from execution; Supposes financial difficulty on the part of the debtor
• Dation in payment may be made even by a solvent debtor; merely involves a change of the object of the obligation by agreement of the parties and at the same time fulfilling the same voluntarily
• How proceeds distributed to the creditors

  • Stipulation
  • Preference of credit
• Tender of Payment


  Manifestation made by the debtor to the creditor of his desire to comply with his obligation, with the offer of immediate performance; It is a PREPARATORY ACT to consignation and in itself DOES NOT extinguish the obligation
• Consignation


  The deposit of the object of the obligation in a competent court in accordance with rules prescribed by law, AFTER the tender of payment has been refused or because of circumstances which render direct payment to the creditor impossible; It extinguishes the obligation
• Consignation applies only to extinguish of obligation not to exercise a right
• Requisites for consignation


  • There exists a valid debt that is due
  • There is legal cause to consign
  • There is previous notice to consign to the persons having interest in the fulfilment of the obligation
  • The amount or thing due is deposited in court