Credit Transactions

Kinds of loans
1. Commodatum
2. Mutuum

Characteristics of loan
1. Real contract-a promise to give a loan is not a true contract but an
innominate contract otherwise known as Pactum de Commodando vel
mutuando
2. Unilateral Contract- produces only obligation for the borrower

Loan
Means the delivery by the party and the
receipt by the other party of a given
sum of money upon an agreement
express or implied to repay the sum
loaned with or without interest
Credit
Refers to the ability of an individual to
borrow money by virtue of the
confidence or trust reposed by a lender
that he will pay what he may promise

Consideration of loan
As regards the borrower, the cause is As regards the lender, the cause is the
the acquisition of the thing right to demand the return of the same
thing

Perfection Perfected by delivery

Distinctions

Commodatum Mutuum
Concept Contract whereby one Contract whereby the
party gratuitously parties delivers to
delivers to the other a another money or
non fungible thing for fungible thing on the
temporary use under the condition of returning the
obligation to return the same kind, quality and
very thing borrowed amount
Nature Essentially gratuitous Naturally gratuitous or
with interest
Object Generally, non Money or fungible thing
consumable or consumable thing
Non fungible but may be
consumable
Purpose Transfer of use Transfer of ownership or
Ownership is retained consumption
Effect Duty to restore the very Duty to restore an equal
thing loaned quantity and quality as
that borrowed
risk lender Borrower

Obligation to return Bailee must return the Bailee must return the
thing loaned same amount of the
same kind and quality
extinguishment May be claimed before May not be claimed until
the end of the stipulated the term expires or is
term if urgently needed forfeited

Types of Property

Immovable By their intrinsic quality, have no utility

except in a fixed place
Movables Personal property
Fungible Replaceable by equal quantity either by
nature or by agreement
Fungible goods These are goods which any units is from
its nature or y mercantile custom
treated as the equivalent of any other
unit
Non fungibles Irreplaceable by equal quantity and
quality
Consumable goods That cannot be used in a manner
appropriate to them without being
consumed
Corporeal All property the existence of which can
be determined by senses
incorporeal Thing having abstract existence created
by man and representing value

Commodatum
Concept
A contract whereby one of the parties called the bailor or lender delivers to another
called the bailee or borrower something not consumable so that the latter may use
it for a certain time and return it.
Characteristics
1. Principal
2. Real
3. Gratuitous
4. Nominate
5. Personal
Kinds of Commodatum
1. Ordinary
2. Precarium
Pactum de commodando is an accepted promise to deliver something by way of
commodatum. It is valid as a contract but no commodatum is perfected until
delivery of the thing loaned.
Requisites of commodatum

Consent No special capacity is required. Any

person entitled to possession may be a
lender so long as his rights to the thing
are not strictly personal
The lender not be the owner
object Consumable goods may be the subject

Cause
Form
Rights of the borrower
1. He has a personal right to use the thing but not to use its fruits unless so
stipulated otherwise the contract will become usufruct
2. He cannot lend nor lease the thing to a stranger not a member of his
household
Except when there is a stipulation prohibiting such use by the members of
the bailees household or when the nature of the thing forbids such use
Obligations of the borrower
1. To preserve the thing like a good
father of the family
2. To pay for the expenses required
by the use and preservation of
the thing without reimbursement
3. To return the thing at the
expiration of the contract
4. The borrower does not answer for
damages due to use ordinary
wear and tear
5. The bailee/borrower is liable for
the loss of the thing even if
should be through a fortuitious
event in the following cases:
of commodatum if the purpose is nor
consumption but for exhibition.
It may also be movable or immovable
which are noncimumable since the
thing borrowed must be returned
Must be nonfungible but may be
consumable so long as the use agreed
upon will not consume it. It may be real
or personal
Contract must be gratuitous or
generosity of the lender. If the
compensation is paid it becomes a
contract of lease
No special form required but the thing
loaned must be delivered
He cannot retain the thing borrowed n
account of the lenders obligations or if
the lender owes him something even
for extraordinary expenses which are to
be shouldered by the bailor. If the
bailee suffers injury on account of flaws
of the thing loaned which the bailor
knew but did not make known to the
bailee, the bailee shall have the right to
retain the thing loaned until he has
been compensated for the damages
suffered.
Except when such damage is due to his
fault
a. When the thing is devoted by
him to a different use than
agreed upon
b. If the return of the thing is
delayed
c. If the thing was appraised, the
borrower answers for the price
unless the contrary is stipulated
as the appraisal indicated that
the risk is borrowers risk
d. The borrower lends the thing to a
stranger
 e. If the borrower did not save it
when he could, choosing to save
his own property

Liability of two borrowers

The liability is solidary because it was constituted on their joint personal guaranty
Obligations of the lender
1. To pay for extraordinary expenses of preservation if notifies by the borrower.
The borrower may incur them without notice only if urgent. Extraordinary
expenses due to use are borne equally
2. To answer for damages to the borrower if due to defects known and not
disclosed. He does not answer or unknown defects as in sale or lease
because commodatum is gratuitous. The lender cannot evade liability by
abandonment of the thing.

Obligations of the bailor

1. The bailor should allow the bailee
to use the thing for the period
agreed upon or until the purpose
of the bailee is accomplished.
The bailor cannot demand the return of
the thing
a. Until after the expiration of the
period stipulated or
b. Until after the accomplishment of
the use for which the
commodatum has been
constituted
Except:
1. If the bailor or lender should
have an urgent need of the thing
loaned

2. When the contractual relation is

one of precarium such as
If neither the duration of the
contract nor the use to which the
thing loaned should be devoted
has been stipulated or
If the use of the thing is merely
tolerated by the owner

3. If the bailee commits an act of

ingratitude
Acts of Ingratitude
1. If the bailee should commit some
offense against the person, the
honor or the property of the
bailor or of his wife or children
under his parental authority
2. If the imputed to the bailor any
criminal offense or any act
involving moral turpitude even
though he should prove it unless
the crime or the act has been
committed against the bailee
himself, his wife or children
under parental authority
 3. If the bailee unduly refuses the
bailor support when the bailee is
legally or morally bound to give
support to the bailor

4. When either of the party dies

5. When the bailee or borrower
lends or leases the thing loaned
to a third person

2. The bailor shall refund the bailee a. For expenses of preservation

for the expenses incurred 1. Ordinary expenses
The bailee shoulders the
ordinary expenses for the use
and the preservation