Condonation or Remission of Debt
Condonation or remission is an act of liberality by the creditor who, without receiving any equivalent, renounces the enforcement of the debtor’s obligation resulting in its partial or total extinguishment. As condonation is essentially gratuitous, it is subject to the rules on inofficious donations. Thus, remission has to be accepted by the obligor.
Remission may be either be express or implied. For express condonation, it must be done in accordance with the forms of donation. Unless proved to the contrary, there is implied renunciation when the creditor voluntarily delivers to the debtor the private document evidencing the credit.
Example 1: A lending institution may expressly forgive a debt owed by a debtor. To properly do so, the lending institution has to execute a document evidencing the condonation as it was effectively a donation.
Example 2: A bank may impliedly forgive a debt if the loan document evidencing the credit is delivered to the debtor.
Best Legal Practices:
Obtain a document evidencing condonation – The debtor should obtain a document evidencing the condonation or forgiveness of the debt, particularly if the remission is done expressly.
There exists a presumption that the creditor voluntarily delivered the credit document to the debtor who is in possession thereof except as otherwise proved. If the waiver is claimed to be invalid, the debtor or his successors in interest may uphold the remission by establishing that the delivery of the credit document was done as evidence of payment of the debt.
The renunciation of the principal debt results in the extinguishment of the accessory obligations. However, the waiver of the accessory obligations does not extinguish the principal debt.