Credit Transactions

Number of items: 5 questions

Coverage:
● Precarium (Art. 1947) - the bailor may demand the thing loaned at will
○ Article 1947. The bailor may demand the thing at will, and the contractual relation is
called a precarium, in the following cases:

(1) If neither the duration of the contract nor the use to which the thing loaned should
be devoted, has been stipulated; or

(2) If the use of the thing is merely tolerated by the owner.

● Statute of Frauds
○ Article 1403(2). Those that do not comply with the Statute of Frauds as set forth in
this number. In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum, thereof,
be in writing, and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the writing, or a secondary
evidence of its contents:

(a) An agreement that by its terms is not to be performed within a year from the
making thereof;

(b) A special promise to answer for the debt, default, or miscarriage of another;

(c) An agreement made in consideration of marriage, other than a mutual promise to

marry;

(d) An agreement for the sale of goods, chattels or things in action, at a price not less
than five hundred pesos, unless the buyer accept and receive part of such goods and
chattels, or the evidences, or some of them, of such things in action or pay at the
time some part of the purchase money; but when a sale is made by auction and entry
is made by the auctioneer in his sales book, at the time of the sale, of the amount
and kind of property sold, terms of sale, price, names of the purchasers and person
on whose account the sale is made, it is a sufficient memorandum;

(e) An agreement for the leasing for a longer period than one year, or for the sale of
real property or of an interest therein;

( f ) A representation as to the credit of a third person.

● Article 1956 - No interest shall be due unless it has been expressly stipulated in writing.
● Article 1980 - Fixed, savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan.
● Continuing guaranty
○ Article 2053 - A guaranty may also be given as security for future debts, the amount
of which is not yet known; there can be no claim against the guarantor until the debt
is liquidated. A conditional obligation may also be secured.
● Article 2058 - The guarantor cannot be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor, and has resorted to all the legal remedies against
the debtor.
● Contract of Deposit
○ Article 1962. A deposit is constituted from the moment a person receives a thing
belonging to another, with the obligation of safely keeping it and of returning the
same. If the safekeeping of the thing delivered is not the principal purpose of the
contract, there is no deposit but some other contract.
● Pactum Commissorium
○ Article 2088. The creditor cannot appropriate the things given by way of pledge or
mortgage, or dispose of them. Any stipulation to the contrary is null and void.
● RA No. 10142 - "Financial Rehabilitation and Insolvency Act (FRIA) of 2010"
○ Insolvent - shall refer to the financial condition of a debtor that is generally unable to
pay its or his liabilities as they fall due in the ordinary course of business or has
liabilities that are greater than its or his assets.
○ Insolvency proceedings - in rem (voluntary/involuntary)
■ Voluntary proceedings shall refer to proceedings initiated by the debtor.
■ Involuntary proceedings shall refer to proceedings initiated by creditors.