CREDIT TRANSACTIONS > Includes all transactions involving the purchase or loan of goods, services, money in the present with

a promise to pay or deliver in the future > Bailment contracts, contracts of guaranty and suretyship, mortgage, antichresis, and concurrence and preference of credits CREDIT TRANSACTIONS ARE REALLY CONTRACTS OF SECURITY. THEY ARE TWO TYPES: 1. SECURED TRANSACTIONS OR CONTRACTS OF REAL SECURITY—Those supported by a collateral or an encumbrance of property 2. UNSECURED TRANSACTIONS OR CONTRACTS OF PERSONAL SECURITY—those the fulfillment

of which by the principal debtor is secured or supported only by a promise to pay or the personal commitment of another such as a guarantor or surety

COMMODATUM NATURE OF COMMODATUM Art. 1935. The bailee in commodatum acquires the used of the thing loaned but not its fruits; if any compensation is to be paid by him who acquires the use, the contract ceases to be a commodatum. (1941a) KINDS OF COMMODATUM 1. ORDINARY COMMODATUM 2. PRECARIUM—one whereby the bailor may demand the thing loaned at will Art. 1936. Consumable goods may be the subject of commodatum if the purpose of the contract is not the consumption of the object, as when it is merely for exhibition. (n) Art. 1937. Movable or immovable property may be the object of commodatum. (n) Art. 1938. The bailor in commodatum need not be the owner of the thing loaned. (n) Art. 1939. Commodatum is purely personal in character . Consequently:

4. EXTENT OF BAILEE’S RIGHT TO USE is limited to the thing loaned but not to the fruits unless there is stipulation to the contrary a. If the bailee is not entitled to the use of the thing loaned. unless there is a stipulation to the contrary. 1940. then the contract may that one of a usufruct. whether real or personal a. As the bailor is the owner of the thing loaned. Commodatum is PURELY PERSONAL in character. the bailor is naturally entitled to its fruits 3. A commodatum is similar to a donation in that it confers a benefit to the recipient 2. CAN THERE BE A STIPULATION GRANTING THE BAILEE USE OF THE FRUITS? Of course. Because if it is the main cause. The PURPOSE of a commodatum is the temporary use of thing loaned a. . If this is the case. It may be the case that the purpose is for exhibition only of the thing loaned. then the subject matter may be that of a consumable thing 6. A commodatum is essentially gratuitous b. COMMODATUM IS ESSENTIALLY GRATUITOUS a. (n) NATURE OF COMMODATUM SUMMARIZED 1. (n) Art. the members of the bailee's household may make use of the thing loaned. The bailor NEED NOT BE THE OWNER of thing loaned 7. the contract may be that of deposit 5. The contract ceases to be a commodatum if any compensation is to be paid by the borrower who acquires the use c. However. (2) The bailee can neither lend nor lease the object of the contract to a third person. or unless the nature of the thing forbids such use. The SUBJECT MATTER is generally a non-consumable things.(1) The death of either the bailor or the bailee extinguishes the contract. A stipulation that the bailee may make use of the fruits of the thing loaned is valid. The law sanctions such stipulation BUT such use should only be incidental and not the main cause of the contract.

in which case the contract is called a commodatum. the members of the bailee's household may make use of the thing loaned. However. Real contract—because the delivery of the thing loaned is necessary for the perfection of the contract 2.Consequently: a. The death of either the bailor or the bailee extinguishes the contract. one of the parties delivers to another. ownership passes to the borrower. Unilateral contract—once the subject matter has been delivered. upon the condition that the same amount of the same kind and quality shall be paid. By the contract of loan. either something not consumable so that the latter may use the same for a certain time and return it. 1933. b. or money or other consumable thing. it creates obligations on the part of only one of the parties CAUSE OR CONSIDERATION IN A CONTRACT OF LOAN > > For the borrower—the acquisition of the thing For the lender—the right to demand its return or its equivalent . or unless the nature of the thing forbids such use. GENERAL PROVISIONS ON LOAN Art. Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a stipulation to pay interest. The bailee can neither lend nor lease the object of the contract to a third person. unless there is a stipulation to the contrary. while in simple loan. in which case the contract is simply called a loan or mutuum. In commodatum the bailor retains the ownership of the thing loaned. (1740a) CONTRACT OF LOAN > The abovementioned defines the two kinds of loan and gives their characteristics CHARACTERISTICS OF THE CONTRACT 1.

like gasoline. rice. A stipulation for the payment of interest must be in writing. . etc. Art. An accepted promise to deliver something by way of commodatum or simple loan is binding upon parties. This is because in loan. His liability is only a civil liability for the breach of the obligation to pay. (n) DELIVERY ESSENTIAL TO PERFECTION OF LOAN > The abovementioned is a necessary consequence of the fact that commodatum and mutuum are real contracts which require the delivery of the subject matter thereof for their perfection ACCEPTED PROMISE TO MAKE A FUTURE LOAN > Is there a contract of loan at this point? No. money. In loan. In commodatum. the borrower who does not pay is not criminally liable for estafa. so there is no unlawful taking of property belonging to another. if you do not return the thing when it is due.KINDS OF LOAN 1. 2. SIMPLE LOAN OR MUTUUM—where the lender delivers to the borrower money or other consumable thing upon the condition that the latter shall pay he same amount of the same kind and quality WHEN IS A THING CONSUMABLE? It is consumable when used in a manner appropriate for its purpose or nature. because loan is a real contract and is perfected only upon delivery of the thing. FORMALITY IN LOAN > There are no formal requisites for the validity of a contract of loan except if there is a stipulation for the payment of interest. but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract. 1. 1934. you will be liable for estafa because ownership of the property is not transferred to the borrower. ownership of the thing is transferred to the borrower. fruit. firewood. COMMODATUM—where the bailor delivers to the bailee a non-consumable thing so that the latter may use it for a certain time and return the identical thing 2.

For the benefit of both parties a. Commodatum and the simple loan or mutuum 3. express or implied. or otherwise to do something with respect to it gratuitously 2. For the sole benefit of the bailor a. it must contain the essential elements of a valid contract It may also be created by operation of law PARTIES TO A BAILMENT 1. . pledge. the party who delivers the possession or custody of the thing bailed 2.BAILMENT > Delivery of property of one person to another in trust for a specific purpose. with a contract. Bailor—the giver. Deposit for a compensation. or keep it. as simply to carry it. Mandatum—bailment of the goods without recompense where the mandatory or person to whom the property is delivered undertakes to do some act with respect to the same. bailments for hire > The first two kinds are GRATUITOUS BAILMENTS—there is really no consideration for they are considered more as a favor by one party to the party benefited > The third kind usually results from bailments involving business transactions—MUTUAL-BENEFIT BAILMENTS KINDS OF BAILMENT FOR HIRE > Bailment for hire arises when goods are left with the bailee for some use or service by him and is always for some compensation. a bailment may be said to be a contractual relation To be legally enforceable. involuntary deposit. that the trust shall be faithfully executed and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor reclaims it CREATION OF BAILMENT > > > Generally. Under this first kind belongs the gratuitous deposit and the mandatum b. For the sole benefit of the bailee a. the party who receives the possession and custody of the thing thus delivered KINDS OF CONTRACTUAL BAILMENT 1. Bailee—the recipient.

pledge. deposited. Hire for carriage of goods (locatio operis mercium vehemdarum)—where goods are delivered either to a common carrier or to a private person for the person of being carried from place to place 4. or a PROPERTY OR REAL SECURITY. out of which the person to be made secure can be compensated for loss . as when the individual becomes a surety or a guarantor. Hire of things (locatio rei)—where goods are delivered for the temporary use of the hirer 2. antichresis. Hire of service (locatio operis faciendi)—where goods are delivered for some work or labor upon it by the bailee 3.1. charge or lien or other device used to have property held. as when a mortgage. Hire of custody (locatio custodae)—where goods are delivered for storage WHAT IS A SECURITY? It is something given. or serving as a means to ensure the fulfillment or enforcement of an obligation or of protecting some interest in property May be PERSONAL SECURITY.

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