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Credit Transactions

Credit Transactions

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Published by taylorzero

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Categories:Types, Business/Law
Published by: taylorzero on Oct 30, 2010
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A
TENEO
C
ENTRAL
B
AR
O
PERATIONS
2007
Civil Law
SUMMER REVIEWER
 
 —Adviser:
Dean Cynthia Roxas-Del Castillo
; Heads:
Joy Marie Ponsaran, Eleanor Mateo
; Understudies:
Joy StephanieTajan, John Paul Lim
;
 
Subject Head:
Sarah Lopez
; Pledgee:
Aiza Constantino
 —
 
2 TYPES OF CREDIT TRANSACTIONS:1. secured transactions
– those supported bya collateral or an encumbrance of property
2.
 
unsecured transactions
– those supportedonly by a promise to pay or the personalcommitment of another such as a guarantoror surety
SECURITY
is something given, deposited or servingas a means to ensure the fulfillment or enforcementof an obligation or of protecting some interest in theproperty
2 TYPES OF SECURITY:
1.
personal
– when an individual becomes asurety or a guarantor2.
real or property
– when an emcumbrance ismade on property
BAILMENT
is the delivery of property of one personto another in trust for a specific purpose, with acontract, express or implied, that the trust shall befaithfully executed and the property returned or dulyaccounted for when a special purpose isaccomplished or kept until the bailor reclaims it.
PARTIES IN BAILMENT
1.
bailor
 – the giver, the party who deliverspossession/custody of the thing bailed2.
bailee
– the recipient, the party who receivesthe possession/custody of the thing delivered
KINDS OF CONTRACTUAL BAILMENT W/REFERENCE TO COMPENSATION
1. for the sole benefit of the bailor (gratuitous)e.g. gratuitous deposit, mandatum (do someact w/ respect to a thing)
2.
for the sole benefit of the bailee (gratuitous)e.g. commodatum, gratuitous simple loan ormutuum3. for the benefit of both parties e.g. deposit
for
compensation, involuntary deposit, pledgeand
bailments for hire
:a. hire of things – temporary useb. hire of service – for work or laborc. hire of carriage of goods – for carriaged. hire of custody – for storage
LOANCHARACTERISTICS
1.
real contract
– delivery is essential forperfection of the loan (BUT a promise tolend, being consensual, is binding upon theparties)2.
unilateral contract
- only the borrower hasthe obligation
KINDS
1.
commodatum
– where the bailor delivers tothe bailee a non-consumable thing so thatthe latter may use it for a certain time andreturn the identical thing
kinds of commodatum:
a. ordinary commodatum – use by thebailee of the thing is for a certainperiod of timeb. precarium one whereby the bailormay demand the thing loaned at will;exists in cases where:i. neither the duration of thecontract nor the use to whichthe thing loaned should bedevoted has been stipulatedii. if the use of the thing is merelytolerated by the owner2.
mutuum or simple loan
- where the lenderdelivers to the borrower money or otherconsumable thing upon the condition that thelatter will pay the same amount of the samekind and quality (when it is consumed in amanner appropriate to its purpose)
LOAN CREDIT
1. delivery by one partyand the receipt bythe other party of agiven sum of moneyor other consumablething upon anagreement, expressor implied2. to repay the sameamount of the samekind and quality, w/ or w/o interestThe ability of anindividual to borrowmoney or things by virtueof the confidence or trustreposed by a lender thathe will pay what he maypromise w/in a specifiedperiod
CREDIT TRANSACTIONS
include all transactionsinvolving the purchase or loan of goods, services ormoney in the present with a promise to pay or deliverin the future (contract of security)
 
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Civil Law Summer Reviewer
 
A
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Page 191 of 297
LOAN DISCOUNTING PAPERInterest is usually takenat the expiration of acreditInterest is deducted inadvanceAlways on single-namepaperDouble name paperMore expensive for theborrower becauseinterest is calculated onthe amount loaned andnot the amount actuallyreceived
COMMODATUM MUTUUM(SIMPLE LOAN)
Object Ordinarily non-consumableMoney or otherconsumable thingOwnershipof the thingOwnership isretained by thelenderOwnership istransferred to theborrowerCause EssentiallygratuitousGratuitous oronerous (w/ stipulation to payinterest)Thing to bereturnedBorrower mustreturn the samething loanedBorrower needonly pay the sameamount of thesame kind andqualitySubjectMatterMay involve realor personalpropertyOnly personalpropertyPurpose Loan for use ortemporarypossessionLoan forconsumptionWhen toreturnBailor maydemand thereturn of thething loanedbefore theexpiration of theterm in case ofurgent needLender may notdemand its returnbefore the lapse ofthe term agreeduponWho bearsrisk of loss
 
Loss of thesubject matter issuffered by thebailor since he isthe ownerBorrower suffersthe loss (even ifcaused exclusivelyby a fortuitousevent and he isnot thereforedischarged fromhis duty to pay)Nature Purely personal Not purelypersonal
COMMODATUM(Articles 1935-1952)
1.
cause:
essentially gratuitous (otherwise, ifthere Is compensation, it might be lease)2.
purpose
: temporary use of the thing loanedbut not its fruits, unless stipulated or isincidental (otherwise, if the bailee is notentitled to the use of the thing, it might bedeposit)3.
subject matter
: generally non-consumablegoods but if the consumable goods are notfor consumption, such may be the subject ofthe commodatum, as when merely forexhibition (Art. 1936)4.
bailor need not be the owner of the thingloaned
(Art 1938)
it is sufficient that he has a possessoryinterest
a mere lessee or usufructuary may lendbut the borrower or bailee himself maynot lend not lease the thing loaned to himto a third person (Art. 1932[2])
5. purely personal
a. death of either party terminates thecontract UNLESS there is stipulation to thecontraryb. generally, bailee can neither lend norlease the object to a 3
rd
person in theabsence of some agreement to that effectc. use of the thing loaned may extend to thebailee’s household (who are not considered3
rd
persons) except:1. when there is a contrary stipulation2. nature of the thing forbids such use6.
enjoyment of fruits
 – a stipulation to makeuse of fruits is valid, but it is never presumed.The enjoyment of the fruits must only beincidental to the use of the thing itself, for if itis the main cause, the contract may be oneof usufruct.
OBLIGATIONS OF THE BAILEE (Arts 1941-1945)
(COOLRD2)
1. To pay for the ordinary expenses for the useand preservation of the thing loaned
(Art.1941)
2. To pay for all other expenses other than thosereferred to in Art. 1941 and 1949 (refund ofextraordinary expenses either in full or in half)
 (Art. 1950)
REASON: Bailee makes use of the thing.Expenses for ostentation are to borne by the
 
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Civil Law Summer Reviewer
 
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Page 192 of 297
bailee because they are not necessary for thepreservation of the thing3. To take good care of the thing with thediligence of a good father of a family
(Art.1163)
4. To be liable for loss even if due to a fortuitousevent:
 
GR 
:
the bailee is not liable for loss or damagedue to a fortuitous event
(Art. 1174)
 Reason: the bailor retains the ownership of thething loaned
Exceptions 
:
(
Art. 1942
– punishes the baileefor his improper acts although theymay not be the proximate cause ofthe loss)a. Bad faith – if the bailee devotes the thing toany purpose different from that for which ithas been loanedb. Delay - he keeps it longer than the periodstipulated or after the accomplishment of theuse for which the commodatum has beenconstitutedc. Has been delivered with appraisal -the thingloaned has been delivered with appraisal ofits value, UNLESS there is a stipulationexempting the bailee from responsibility incase of a fortuitous eventd. Lends the subject matter to a 3
rd
person - helends or leases the thing to a third personwho is not a member of his householde. Ingratitude - being able to save the thingborrowed or his own thing, he chose to savethe latter5. The bailee has NO RIGHT to retain the thingloaned as security for claims he has againstthe bailor, even though they may be by reasonof extraordinary expenses
(Art. 1944)
Reasons:a. Ownership remains in bailor – the baileeacquires only the use of thing, the ownershipof which remains w/ the bailorb. Only temporary use given to bailee – thebailee would be violating the bailor’s trust inhim to return the thing as soon as the periodstipulated expires or the purpose has beenaccomplished
Exception:
Claim for damages sufferedbecause the bailor doesn’t advise bailee ofthe flaws known to him
(Art. 1951)
 6. A bailee doesn’t answer for the deterioration ofthe thing loaned due
 
only to the use
thereofand
without his fault 
 7. Liability when there are 2 or more bailees: Thepresumption is that they are solidarily liable
 (Art. 1945)
Reason for the presumption: to safeguardeffectively the right of the bailor. The lawpresumes that the bailor takes into account thepersonal integrity and responsibility of all thebailees and that, therefore, he would not haveconstituted the commodatum if there were onlyone bailee
OBLIGATIONS OF THE BAILOR
(AD-READ-HA)1.
 
Primary obligation of the bailor:
GR
: To allow the bailee the use of the thing loanedfor the duration of the period stipulated or until theaccomplishment of the purpose for w/c thecommodatum was constituted
Exceptions 
: the bailor may demand the return orits temporary use upon:a. bailor has an urgent need for the thing (Art.1946) – the contract is suspended
Reason: the right of the bailor is based onthe fact that commodatum is essentiallygratuitousb. bailee commits an act of ingratitude (Art.1948)
if the bailee should commit an offenseagainst the person, the honor or theproperty of the bailor, or of the wife orchildren under his parental authority
if the bailee imputes to the bailor anycriminal offense, or any act involvingmoral turpitude, even though he shouldprove it, unless the crime or the act hasbeen committed against the baileehimself, his wife, or children under hisauthority; and
if the bailee unduly refuses the bailorsupport when the bailee is legally ormorally bound to give support to thebailor
Reason: the person who commits any ofthe acts of ingratitude makes himselfunworthy of the trust reposed upon himby the bailor.
 2. May demand the thing at will when the contract isprecarium
 
PRECARIUM
– a kind of commodatumwhere the bailor may demand the thing atwill. It has been defined as a contract bywhich the owner of a thing, at the request ofanother person, gives the latter the thing foruse as long as the owner shall please3. To refund the extraordinary expenses
(Art. 1949)

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