the obligation of law to

return or pay

Cost of Money

RUNS: date due (stipulated)

Interest agreed to by the

until date of payment

parties themselves

Definition

Debt

DEFINITION

Express stipulation

In WRITING

REQUISITES

Must be Lawful

Regular interest

Monetary Interest
payment of both principal

Conventional Interest

Conventional Interest in a

and interest is made in

simple loan of money

money

Interest

Must be paired de-escalation

clause

exc. may be waived

written notice

Mutuality

Requisites

Must be pegged at prevailing

market rates

Escalation Clauses

refer to stipulations allowing

an increase in the interest

DEFINITION

rate agreed upon by the

Ability to borrow money by

contracting parties
Credit

Definition

virtue of the confidence or

Granting of loans up to the

trust reposed by a lender

limit of amount fixed in the

that he will pay what he had

"credit"

promised
Polotan and Solidbank

CASES where it was upheld

Delivery by one party and

accessory obligation of debtor

may be equitably reduced by

the receipt by the other party

to assume greater liability in

the court if unconscionable

penalty clause

case of breach of a principal

or irregularly complied with

stipulated

KINDS

obligation

of a given sum of money,

Contract of PERMISSIVE

upon an agreement, to repay

USE

REAL CONTRACT

the sum loaned, with or

without interest
legal rate (interest)

not stipulated

The act by which the res or

substance thereof is placed
Definition

Contract OF Loan

Real Contract

Perfected by delivery

within the actual or

obligation that consists in a

constructive possession or

sum of money

control of another

EXC.Precarium

REQUISITES
Compensatory Interest
default

Perfected by mere

Consensual Contract

EXC. Urgent need of the

may demand its return or

thing

temporary use

agreement or consent

if temporary use,
COMMODATUM is
SUSPENDED

indemnity for damages

Contract TO Loan

ARISING FROM DELAY on

BOR cannot demand the

An accepted promise to

the part of debtor in an

deliver either non-

obligation CONSISTING IN A

consumable or consumable

PAYMENT FOR A SUM OF

property

To return

donee should commit some

return of until expiration or

offense vs honor or property

accomplishment

of donor, his wife, or

children under his authority

MONEY

Consideration

Gratuitous; Liberality
EXC. IMMEDIATE return

EXC. stipulation to use

imputes to the donor any

demandable if BAILEE

accrued interest as capital

Property that is non-

as added principal

consumable
GR: Accrued interest (Interest
due and unpaid) shall not earn

commits acts of ingratitude

contrary

allowed if purpose is not to

consume; ie Exhibition

judicially demanded (altho

obligation is silent)

Cannot lend or lease the

EXC. Members of Bailee's

thing to a third person

household may make use

or legally bound to do so
EE: nature of the thing

the moment of delivery of

another for the purpose of

if he unduly refuses to
support when he is morally

Obligation constituted from

property belonging to

moral turpitude, unless it was

EE: Stipulation to the

EXC. Consumable goods are

interest from the time it is

criminal offense involving

against him

OBJECT

INTEREST ON INTEREST

interest

Interest due shall earn legal

ACTS OF INGRATITUDE

forbids such use

Obligation of Debtor
Solidary liability if 2 or more

DEFINITION

BEEs

safekeeping and eventual

return
Pay for the ordinary expenses
for the use and preservation of
the thing

Obligation arises as a
consequence of a law
allowing the issuance of a
judicial order constituting a

Expenses for the

deposit

deterioration of the thing

ONLY IF IT WAS HIS FAULT

Takes place when an

attachment or seizure in the

Other Expenses

property in litigation is

(Ostentation)

One of the parties delivers

ordered

something not consumable

Judicial

so that the latter may use

Movable

the same for a certain time

Acquires the USE of the

Does not acquire the use of its

and return it

thing loaned

fruits

OBJECT

EXC. Stipulation allows it

Debtor (Bailee)

Immovable

If he devotes the thing to

any other purpose

Depositary cannot relieve

EXC. Court so orders

himself until end of

keeps it longer than the

controversy

period stipulated
EFFECTS

Depositary of property

Liable for loss

sequestered is bound to

EXC. Fortuitous Event

Exc. to Exc.

EXC. stipulation exempting

Appraised

bailee

comply, with the obligations

of GFoaF
Lends or leases thing to a
third person

Delivery arises by the will of

the debtor

He chose to save himself

DEFINITION

2 or more persons each of whom

Credit Transactions

believes himself entitled to the

thing, delivers it to a third

EXC. 1951: Bailor did not advise

person

re flaws of the thing--liable for

GR: no right of retention

damages BEE may retain until

payment of damages

Orally
FORM
PARTIES

In writing

ONLY MOVABLES

As against the bailee, it is

Need not be owner of the

Commodatum

the bailor who retains

thing loaned

ownership

OBJECT
Bailor (Creditor) retains
ownership of the thing

EXC. Agreement to the

contrary
Creditor (Bailor)
GR; Gratuitious

To deliver the thing

CONSIDERATION

Exc. Depositary is engaged

in the business of storing
goods

Refund the extraordinary expenses

BAILEE MUST bring this to

during the contract for the

the knowledge of BOR

preservation

before incurring them

Loan

EXC. Urgency; Danger

Obligation of Creditor
Extraordinary expenses due
to the actual use of the thing

Person who, for purposes of

EXC. stipulation to contrary

by BAILEE: equal liability

safekeeping, delivers or formally

transfers control of a movable
Entitled to damages

property to another person who is

If delivered the thing closed

not the owner who receives it

and sealed, demand that it

Failure with fault?

Fault of depositary

Advise BEE regarding flaws

To Deliver the thing

be returned in the same

of the thing loaned

Liable for damages

condition

presumed

Depositor

Death of either party =

Contract is highly personal

Obligation

Reimburse for any loss

Extinguishment

arising from character of the

thing unless he notified,
DRY was aware, or he didn't

a kind of commodatum

Rights and Obligations

whereby the bailor may

know or was not expected to

know at time of constitution

demand the thing loaned at

Reimburse depositary for expenses

he may have incurred for

will

IF GRATUITOUS deposit

preservation of the thing

Precarium
Neither duration or use to which

GR: Statement of DOR as re:

EXC. may impugn credibility

the thing should be devoted was

value of the thing is

re: value in court

stipulated

accepted when forcible

Grounds

opening is imputed to DRY

if the use of the thing is

merely tolerated by the

this is the principal

owner

action to recover ONLY

condition

WHILE thing is still in the

possession of DRY
Gratuitous

modification must be

Consideration
Compel DRY to pay him

IF capacitated DOR and

amount by which he may have

incapacitated DRY

mutually agreed upon

Rights
Onerous

OTHERWISE it has no

Conventional Interest

binding effect

enriched himself with the price

Money
3rd Person acquired the

action for recovery

thing in Bad Faith?

Demand only up to his share

PAYABLE IN

In Kind

NOT SOLIDARY
PARTIES

2 OR MORE DEPOSITOR
but may not do prejudicial

may do whatever may be

acts

useful to the others

Rate

OBJECT

SOLIDARY

Money or other consumable

Ownership is transferred to

property

the borrower (debtor)

Not owner of the property

ownership is transferred as

who receives the thing

a consequence of the need

delivered for safekeeping

IF under the circumstances

to consume the thing to use

in can be presumed that

DOR would consent to the

PURPOSE: Permissive use

change

Mutuum

Before change: DRY must

Legal Tender in the

to another, money or other

If purpose is to transfer

consumable thing, upon the

ownership: BARTER

Philippines

Payment only when already

encashed

condition that the same

notify DOR and wait for his

danger

IMPOSSIBLE?

parties delivers something

deposit

EXC. Delay would cause

it

SIMPLE LOAN: One of the

May change way of the

amount of the same kind

decision
Usury

and quality be paid

Money

made in the currency

stipulated

Promissory notes, bills of

exchange, etc

Payment only when through

fault of debtor they have
been impaired

For certificates, bonds,

securities, instruments
which earn interests (BSII)
Extraordinary inflation or
deflation?

KINDS

value currency at the time of the

establishment of the obligation shall

EXC. agreement to contrary

be the basis of payment

Collect interest

take necessary steps in

order to preserve their value

same thing of the same kind

Debtor

Obligation of Debtor

Not money

and quality even if it should

IMPOSSIBLE?

change it value

pay value AT THE TIME OF

THE PERFECTION

EXC. DOES NOT APPLY TO

If debt has interest:

SAFETY DEPOSIT BOXES

INTEREST FIRST BEFORE

PRINCIPAL
EXC. Stipulation to the

EXC. Stipulated in Writing

Depositary

contrary
Commingle grain or other

IF principal is payable in

articles of the same kind and

kind and there is interest

PARTIES

quality (FUNGIBLES)

depositors shall own a

Pay Interest

stipulated

GR: No interest due

proportionate interest in the

mass

BUT safekeeping is still

Ceases to be a contract of

principal purpose to remain

deposit but becomes

DEPOSIT

COMMODATUM
Return if Payment through
Mistake

Liable for damages

without permission?

Creditor

Make use of the thing

deposited WITH EXPRESS

Retain if Voluntarily paid by

PERMISSION (IRREGULAR

Debtor

Permission never presumed

DEPOSIT)

and must be proved

in such case, may be used

EXC. preservation requires

ONLY FOR THAT PURPOSE

its use
Deposit

Voluntary

Rights
EXC. at the time of
constitution DOR not aware
of or was not expected to
know dangerous character

Rights and Obligations

of the thing

Reimbursed for any loss

arising from the character of
the thing deposited

Obligation arises as a

EXC. he notified the DRY

consequence of a contract

EXC. DRY was aware of it

binding

without advice

Contract TO Deposit

Demand expenses for

transportation costs for
return of the thing if place is
designated

Retain the thing in pledge

until full payment of the
deposit

Liable for loss if third person

is manifestly careless or

EXC. stipulation to the

Must not deposit the thing

contrary

with a third person

unfit

Keep the thing safely

bears expenses for

IF Onerous deposit

preservation

Preserve the thing

WHO? Depositor, his heirs,

assignees, or to persons
who may have been
designated in the contract

thing can only be returned to

IF incapacitated depositor

persons who may have

If loses capacity after

and DRY accepts, may be

administration over his

deposit

compelled to return the thing

property and rights

by guardian/administrator

Depository owes interest on the

Return the thing on demand

sums he applied to his own use

from that date and on those

the thing with all its fruits,

IF MONEY, 1896 APPLIES

accessories, and accessions

which he still owes after

WHAT TO RETURN?

extinguishment of deposit
when the thing is judicially
attached while in DRY's
possession
Obligation
EXC to the obligation to
Return

DRY was notified of the

Note: does

opposition of a 3rd person to

not extinguish obligation to

the return/removal of thing

return but only exception to

deposited

return the thing UPON

perfected by delivery

DEMAND

Contract OF Deposit

Loss or destruction
EXTINGUISHED
Gratuitous Deposit: Death of

DRY MUST IMMEDIATELY

INFORM DOR of attachment

either Depositor or Depositary

IN THESE CASES

or opposition

NOTE: cannot demand from

DOR to rpove his ownership

RELIEVED OF ALL
LIABILITY

If he finds out that DOR not

Advice True Owner of

owner

Deposit
Extrajudicial

if unclaimed for 1 month

IF reasonable grounds to

Return the thing motu

believe that thing not

proprio

lawfully acquired

PAY solidary depositor

EXC. Demand (J or EJ) payment

(creditor) GR: anyone of

should be made to him

them

If so stipulated

Liable for damages if he

makes use of the thing
without permission or
outside its purpose
1979: LIABLE EVEN IF
FORTUITOUS EVENT
delays its return

he allows others to use it

even though he was
authorized to use the same

If he deposits thing with 3rd

person (when allowed) to
someone manifestly

Of Depositary

careless or unfit
Fault presumed

If opened WON through his

Liable for damages if

Liable for negligence of his

opened through his fault

employees

fault, he shall keep the

secret of the deposit
Must return it in the same

Sealed Object

condition
Presumed authorized to do
so if key was delivered or
instructions cannot be

EXC. necessary to open?

followed unless you open

LIABILITY FOR LOSS AND

the box or receptacle

IF: THROUGH FORCE

DAMAGE

he must deliver the sum or

MAJEURE OR GOVT ORDER

other thing to the depositor

HE LOSES THE THING AND

WAS PAID FOR IT

preservation of the thing if

onerous deposit

Preservation of the thing if

gratuitous

EXC. he doesn't know or is

LIABLE FOR VEHICLES,

not expected to know about

ANIMALS, AND ARTICLES

the dangerous character at

which may have been placed

the time of constitution

Of Depositor

delivers a thing to DRY

in the annexes of hotels

which causes any loss to

depositary

DEPOSITOR: notice was given to

DRY (KEEPERS) or their
Keepers have right to retain

employees of the effects brought

EXC. he notified DRY or DRY

by guests

knows without advice

Arises as a consequence of law or a

quasi-contract

things brought into the hotel

by guest as SECURITY for

PAY KEEPERS (DRY)

lodging and supplies

ordinary furnished

OBLIGATIONS

keepers are depositaries

HOTELS OR INNS

In compliance with LEGAL

An extrajudicial deposit

OBLIGATION

constituted over property as a

Takes Place When

EXC. use of arms or

irresistable force

Theft or Robbery NOT FM

EXC. Force majeure

consequence of law or quasi-

Depositary: Persons who

contract so that no unjust

saves movable property from

On the Occassion of

enrichment will result from the

Calamity

juridical relation

destruction without knowledge

2168

Necessary

of owner
MOVABLES

LIABLE for loss or injury

OBJECT

NOT LIABLE if loss is due to

acts of guest, his family,

SAFEKEEPING

servants, or visitors
PRINCIPAL OBLIGATION
EVENTUAL RETURN
DEPOSITARY: keepers are
NOT LIABLE if loss arises from
the character of things brought

Cannot free himself from

stipulation to diminish

liability by posting notices to

liability VOID

the effect that he is not liable

for the articles brought by
the guest

obliged to take precautions

Obligation of Creditor

No stipulation but buyer

Natural Obligations/Solutio

pays

Indebitii

value of principal shall be

appraised AT CURRENT
PRICE AT TIME OF
PAYMENT