MEMORY AID IN LAW (ALINSOD)
CREDIT TRANSACTIONS
 Include all transactions involving the
purchase or loan of goods, services, or
money in PRESENT with a promise to
pay or deliver in the FUTURE
Bailment – fr. bailler (to deliver) // the delivery
of property by one person to another in trust
for a specific purpose.
1. Bailor – giver
2. Bailee – receiver
LOAN
Characteristics of Loan
1. Real – delivery is necessary
2. Unilateral – once perfected creates
obligations on only one party
 Article 1934 — accepted promise to deliver
something is binding ONLY consensual.
After delivery, REAL contract will arise.
Kinds of Loan
1. Commodatum
2. Mutuum or Simple Loan
COMMODATUM
 A contract of loan whereby one of the
parties delivers to another something
NOT CONSUMABLE so that the latter
may use the same for a certain time and
return it.
 Essentially gratuitous
Kinds of Commodatum
1. Ordinary Commodatum
2. Precarium – bailor may demand thing
loaned at will
Subject Matter of Commodatum
Generally, NON-CONSUMABLE
Unless, it is CONSUMABLE but is used for the
purpose of exhibition/not consuming it.
Obligations of the Bailee
 Pay for the ordinary expenses for use and
preservation of thing
 When Bailee still liable in loss through a
fortuitous event:
1. Thing used on different purpose.
2. Thing kept longer than stipulated.
3. Thing loaned delivered with appraisal of
its value, ignore if stipulated na pwede.
4. Thing was lent or leased to a third
person, who is not a member of the
household.
5. Thing was not given priority in saving
versus bailees own things.
 Bailee cannot retain thing on the ground
that bailor owes him something. Exception:
Article 1951
 If there are two or more bailees, they are
liable solidarily.
 Bailee may make use of the fruits of thing
loaned through valid stipulation.
Obligations of the Bailor
 Bailor need not be owner of the thing
loaned.
 Bailor cannot demand return of thing until
after expiration of period stipulated.
HOWEVER, he can demand return…
(a) for temporary use in urgent need, thus
commodatum is suspended.
(b) if precarium
(c) if bailor commits act of ingratitude
 Bailor shall refund extraordinary expenses.
 Bailor should be NOTIFIED, unless di na
keri kasi dangerous na.
 If ExOrEx arised on the occasion of the
actual use of the thing: 50/50, unless
otherwise stipulated.
 Bailor should advise bailee if thing has flaws
OTHERWISE, Bailor shall be held liable if
Bailee suffers damages,
 Bailor cannot exmept himself from payment
of expenses or damages by abandoning the
thing to the bailee.
Extinguishment of Commodatum
 Stipulated in the contract
 Death of either parties
MEMORY AID IN LAW (ALINSOD)

MUTUUM Rules on Interest

 A contract whereby one of the parties For interest to be chargeable:

delivers to another money or other
 Payment must be in express stipulation,
CONSUMABLE thing with the
 Agreement in Writing
understanding that the same amount of
 Interest is LAWFUL
the same kind and quality shall be paid.
o If not mentioned, legal rate
 a k a. SIMPLE LOAN
shall be imposed.
Subject Matter of Mutuum
EXCEPTIONS:
Consumable Things It’s considered as one
depending on its nature.  Article 2209 – debtor in delay is liable
 Fungible Thing to pay legal interest as indemnity even
It’s considered as one
 Money depending on its intention if there is no stipulation.
 Article 2212 – Interest due shall earn
legal interest from the time it is
Payment of Mutuum judicially demanded

In Money: Legal Tender in the Philippines

 In case of inflation or deflation, basis of DIFFERENCE OF COMMODATUM and

amount is at the time of creation of MUTUUM
obligation. COMMODATUM MUTUUM
In Fungible thing: same kind, quality, quantity Subject Matter is Subject Matter is
ordinarily NOT MONEY or
 If IMPOSSIBLE, pay at value at the time CONSUMBALE CONSUMABLE THING
of the perfection of loan. Ownership retained Ownership
transferred
Interest of Mutuum Essentially gratuitous May by gratuitous or
def. the compensation allowed by law or fixed by
onerous
the parties for the loan or forbearance of Must return same Pay same amount of
thing the same kind and
money, goods, or credits.
quality
Kinds of Interest Real or Personal Personal Property
Property only
1. Simple Interest Loan for use Loan for
2. Compound Interest consumption
3. Legal Interest – 6% // in the absence of Bailor may demand Lender may not
any agreement. in case of urgent demand until term
4. Lawful Interest – within MAXIMUM need agreed
prescribed by law. LOSS suffered by LOSS suffered by
5. Unlawful or Usurious Interest – beyond BAILOR BORROWER
MAXIMUM.