Presentation Credit Transactions 2008 Converted

8/3/2019 Presentation Credit Transactions 2008 Converted

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LOANS

Bailment defined - a consignment of goods for sale

- also, the delivery of property by one person toanother in trust for a specific purpose, with a contract,

express or implied, that the trust shall be faithfullyexecuted and the property returned or duly accountedfor when the special purpose is accomplished or keptuntil the bailor reclaims it

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LOANS

Parties:BailorBailee

2007 Bar Exam (Civil Law):The parties to a bailment are the:a) bailorb) bailee

c) comodatariod) all of the abovee) letters a and b

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LOANS

Classes:

Commodatum - loan for useMutuum simple loan or loan of consumption

Other classification of contractual bailment:

- those for the benefit of the bailor- those for the sole benefit of the bailee

- those for the benefit of both parties

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LOANS

Characteristics:

Real perfected by delivery

Unilateral obligation pertains only to the borrower

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LOANS

Distinctions and Differences:

As to: Commodatum MutuumA. Character Essentially gratuitous Naturally gratuitousB. Object Non-fungible object (but

may be consumable) Object is money orfungible thingC. Purpose Transfer its use Transfer ownershipD. Effect Restoration of the very

things loaned Restoration of an equalquantity and qualityE. Risk On the lender (as owner) On the borrower (as

debtor of a generic thing)F. Duration May be claimed before

the end of the term ifurgently needed (1946)

May not be claimed untilthe term expires or isforfeited 5


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COMMODATUM

Concept

Cases:

Republic vs. Bagtas - commodatum isessentially gratuitous

Mina vs. Pascual commodatum is for a certainperiod

- It is an essential feature of commodatum(ordinary) that the use of the thing belonging toanother shall be for a certain period.

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COMMODATUM

Cases (contd.):

Catholic Vicar vs. CA effect of adversepossession for 11 years

- The bailees failure to return the subjectmatter of commodatum to the bailor did notmean adverse possession on the part of theborrower. The bailee held in trust the propertysubject of the commodatum.

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COMMODATUM

Cases (contd.):

Republic vs. CA and Baloy effect of suspension ofpossessory rights

- The US possession of the area partook of the

nature of commodatum, hence, it merely suspendedbut not cause the loss of the possessory rights ofBaloy by prescription. Ones possession may be lostby prescription by reason of anothers possession ifsuch possession be under claim of ownership, not

where the possession is only intended to betransient, as in the case of the US Navys occupationof the land concerned in which case the owner is notdivested of his title, although it cannot be exercisedin the meantime.

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COMMODATUM

Kinds of commodatum:

Ordinary

Precarium

- no time stipulated (Quintos case)

- use is merely tolerated (Catholic Vicarcase)

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COMMODATUM

Pactum de commodando - accepted promise to deliversomething by way of commodatum

Saura Import and Export Co., Inc. vs. DBP- We hold that there was indeed a perfected

consensual contract, as recognized in Article1934 of the Civil Code, which provides:

ART. 1954. An accepted promise to deliver

something, by way of commodatum or simple loanis binding upon the parties, but the commodatumor simple loan itself shall not be perfected until thedelivery of the object of the contract.

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COMMODATUM

Requisites:

a) capacity - no special capacity required

b) object non fungible- Mina vs. Pascual- Quintos vs. Beck

c) consideration contract must be gratuitous- Republic vs. Bagtas

d) form - no special form required

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COMMODATUMRights and obligations of the parties

Rights and obligations of the bailee:

a) Right personal right to use the thingb) Duties/liabilities

1) preserve the thing

2) expenses for use and preservationof the thing

3) return the thingi) Effect of failure to return:

Quintos vs. Beck

Catholic Vical Apostolic vs.CA

4) damagesDe los Santos vs. Jarra

5) loss

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COMMODATUM Rights and Obligations of the Parties

Rights and obligations of the bailee (contd.):

b) Duties 5) loss- if due to fortuitous event

i) General ruleii) Exceptions:

- different use- delay- appraisal- lending to stranger

- failure to save6) Nature of liability if there are two or more

borrowers

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COMMODATUM Rights and Obligations of the Parties

Obligations of the bailor:A. Primary obligation of the bailor

B. Effects as to the lender/bailor:a) To pay extraordinary expenses of

preservation- when- rule if incurred on the occasion

of actual use

b) To answer for damages to theborrower

- when- abandonment 14


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COMMODATUM - Termination

Causes of extinguishment:

a) Expiration of time or use stipulatedb) Claim of the lender

- ground- exception

c) Destruction of the thingd) Death of borrower

e) Ingratitude1) Instances

- commission of offense- imputation of criminal offense- refusal to support

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MUTUUM

Concept - contract whereby one party delivers to anothermoney or a fungible thing, on the condition of returningthe same kind, amount and quality.

Distinguished from:a) Commodatum

Chee Kiong Yam vs. Malik - In simple loan(mutuum), as contrasted to commodatum, theborrower acquires ownership of the money, goodsor personal property borrowed. Being the owner,

the borrower can dispose of the thing borrowed(Article 248, Civil Code) and his act will not beconsidered misappropriation thereof.

b) Barter 16


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MUTUUM Distinctions

c) LeaseTolentino vs. Gonzalez Sy Chiam - A contract for the lease of

property is not a loan. A contract of loan is differed from acontract of lease or rent.

- a loan signifies the delivery of money, goods or credit toanother with a promise to repay an equivalent amount ofthe same kind and quality, but a promise to return the same

thing loaned; while a rent signifies the delivery to another ofsome non-consumable thing in order that the latter may useit during a certain period and return it to the former

- in loan, the relation between the parties is that of obligorand obligee, while in rent the relation is that of landlord and

tenant- in loan, the creditor receives payment for his loan, while in

rent, the owner of the property receives compensation orprice either in money, provisions, chattels, or labor fromthe occupant in return for its use 17


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MUTUUM Distinctions

d) Estafa

Liwanag v. CA:Estafa is a crime committed by a person

who defrauds another causing him to sufferdamages, by means of unfaithfulness or abuse of

confidence, or of false pretenses of fraudulent acts.The transaction between Rosales and

Liwanag could not be a loan for in a contract ofloan once the money is received by the debtor,ownership over the same is transferred. Being theowner, the borrower can dispose of it for whateverpurpose he may deem proper.

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MUTUUM

Kinds:

a) gratuitousb) with interest

Requisites:

a) capacity of the partiesb) object

c) consideration

d) form

i) form accepted promise to deliver something byway of simple loan

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MUTUUM

Obligations of the borrower:

a) To return the thing or amount borrowed1) Rule if the thing borrowed is money

Roo vs. GomezRoos undertaking:

I affirm the legal tender, currency or anymedium of exchange, or money in this sumof P4,000 will be paid by me to Jose L.Gomez one year after this date, October 5,1944.

Issue:Can Roo insist on paying in mickey mousemoney?

Held:

No.

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MUTUUM Rule if the thing borrowed is money

Roo vs. Gomez(contd.)One basic principle of the law on contracts of theCivil Code is that "the contracting parties mayestablish any pacts, clauses and conditions they

may deem advisable, provided they are not contraryto law, morals or public order." (Article 1255.)Another principle is that "obligations arising fromcontracts shall have the force of law between thecontracting parties and must be performed inaccordance with their stipulations"

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Is a stipulation not to pay while the war was going on valid?

Nepomuceno vs. Narciso:

One of the stipulations is that while the war goes on, themortgagor, his administrators or assigns, cannot redeem

the property mortgaged.

Issue:Is the stipulation contrary to public policy?

Held:No.

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Ruling:

We find nothing immoral or violative of public orderin that stipulation.

It was a perfectly equitable and valid transaction, inconformity with the provision of the Civil Code

hereinabove quoted.Appellants were bound by said contract and

appellees were not obligated to receive the paymentbefore it was due. Hence the latter had reason not to

accept the tender of payment made to them by theformer.

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MUTUUM Obligations of the borrower

Rule if the thing borrowed is not money:

- to return the same amount even if the price orvalue has changed

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MUTUUM Obligations of the borrower

b) To pay interest

1) When

2) Rule if interest is fixed for a certain periodJardenil vs. Solas:Issue:

Is Solas bound to pay the stipulated interestonly up to the date of maturity as fixed in thepromissory note, or up to the date paymentis effected?

Held:Only up to the date of maturity.

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MUTUUM

Jardinel vs. Solas(contd.):

Ruling of the court:- Defendant-appellee has, therefore, clearly agreedto pay interest only up to the date of maturity, or untilMarch 31, 1934. As the contract is silent as to whether

after that date, in the event of non-payment, the debtorwould continue to pay interest, we cannot in law,indulge in any presumption as to such interest;otherwise, we would be imposing upon the debtor anobligation that the parties have not chosen to agreeupon. Article 1755 (now 1956) of the Civil Codeprovides that "interest shall be due only when it hasbeen expressly stipulated."

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MUTUUM Obligation to pay interest

Rule if stipulation to pay interest is verbal

- generally- exception (voluntary payment)

Rule if interest is paid even if not stipulated- generally- exception

Rule if interest is payable in kind

Rule on compounding of interest- generally- exception

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What are not considered interest:

- Increase in the priceManila Trading vs. Tamaraw Plantation- The interest of theprice of the thing sold on credit over its cash sale price is notinterest within the purview of the Usury Law, if the sale ismade in good faith and not as mere pretext to cover ausurious loan.

- Attorneys fees and costs of collectionAndreas vs. Green- The lender may without violating the Usury

Law provide in a note for an attorneys fee to cover the cost of

collection. The purpose of a stipulation in a note forreasonable attorneys fees is not to give the lender a large

compensation for the loan than the law allows, but is tosafeguard the lender against future loss or damage by beingcompelled to retain counsel to institute judicial proceedings tocollect his debt.

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What are not considered interest (contd.):

- Penalty for breachSentinel Insurance Co., Inc. vs. CA

- The damage dues in this case (2% interest every

45 days) do not include and are not included in thecomputation of interest as the two are of differentcategories and are distinct claims which may bedemanded separately, in the same manner thatcommissions, fines and penalties are excluded inthe computation of interest where the loan orforbearance is not secured in whole or in part byreal estate or an interest therein.

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MUTUUM

Nature of bank depositsGopoco Grocery vs. Pacific Coast Biscuit Co. (1938):

- The so-called current account and savings deposit x x xare converted into simple commercial loans x x x. Thedeposits created a juridical relation of creditor and debtor.The bank acquired ownership of the money deposited.

Central Bank of the Phil. vs. Morfe(1975):- It should be noted that fixed, savings, and current

deposits of money in banks and similar institutions arenot true deposits. They are considered simple loans and,as such, are not preferred credits

Serrano vs. Central Bank of the Phil. (1980):- Bank deposits are in the nature of irregular deposits. They arereally loans because they earn interest. All kinds of bankdeposits, whether fixed, savings, or current are to be treated asloans and are to be covered by the law on loans. 30


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MUTUUM Bank deposits

Liability for failure to return savings deposit

Guingona vs. City Fiscal of Manila:

- While the Bank has the obligation to return theamount deposited, it has, however, no obligation toreturn or deliver the same moneythat wasdeposited. And, the failure of the Bank to return theamount deposited will not constitute estafa throughmisappropriation punishable under Article 315, par.l(b) of the Revised Penal Code, but it will only give

rise to civil liability over which the publicrespondents have no- jurisdiction.

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Presentation Credit Transactions 2008 Converted

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