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I. CONTRACTS OF BAILMENT
A. Bailment defined
B. Parties
C. Examples of bailments
Arts. 1933-1934
A. Loan defined
B. Kinds
1. Commodatum
2. Mutuum
C. Characteristics
1. Real
2. Unilateral
D. Distinctions
Commodatum Mutuum
Character Essentially gratuitous Naturally gratuitous
Object Non-fungible object (but may be Object is money or fungible thing
consumable)
Purpose Transfer its use Transfer its ownership
Effect Restoration of the very thing Restoration of an equal quantity
loaned and quality (equivalent amount)
Risk On the lender (as owner) On the borrower (as debtor of a
generic thing)
Personal in character Not personal in character
Referred to as loan for use or Referred to as loan for
temporary possession consumption
Duration May be claimed before the end of May not be claimed until the term
the term if urgently needed expires or is forfeited
III. CHAPTER I
COMMODATUM
Arts. 1935-1940
I. Contract of Commodatum
A. Concept
a. Cases:
1. Commodatum is essentially gratuitous
Republic vs. Bagtas, 6 SCRA 262
2. Commodatum is for a certain period
Mina vs. Pascual, Oct. 14, 1913
3. Effect of adverse possession for 11 years
Catholic Vicar vs. CA, 165 SCRA 515
4. Effect of suspension of possessory rights for more than 50 years
Republic vs. CA, 146 SCRA
b. Kinds – Commodatum is divided into
1. ordinary commodatum; and
2. precarium
Cases:
i) if neither the duration of the contract nor the use of the thing
loaned is stipulated
Quintos vs. Beck, No. 46240, November 3, 1939, 69 Phil 108
ii) if the use of the thing is merely tolerated
Catholic Vicar vs. CA, 165 SCRA 515
c. Pactum de commodando (1934)
B. Requisites
a. Capacity
b. Object
c. Consideration
d. Form
Arts. 1641-1945
Arts. 1946-1952
II. Termination
A. Causes of Extinguishment
a. Expiration of the time or use stipulated
b. Claim of the lender
c. Destruction of the thing
d. Death of the borrower or lender
e. Ingratitude of the borrower
IV. CHAPTER 2
SIMPLE LOAN OR MUTUUM
Arts. 1953-1961
E. Bank deposits
Cases:
a. Nature of bank deposits
Gopoco Grocery vs. Pacific Coast Biscuit Co., 65 Phil 443
Central Bank of the Phil. vs. Morfe, G.R. No. L-38427, March 12, 1975
Serrano vs. Central Bank of the Phil., 96 SCRA 102-103, GR L-30511, Feb.
14, 1980
b. Liability for failure to return savings deposit
Guingona vs. City Fiscal of Manila, G.R. No. L-60033, April 4, 1984
c. Bank as proper party in complaint for qualified theft
People vs. Puig, G.R. No. 173654, August 28, 2008
Arts. 1962-1967
I. Concept
II. Characteristics (as a contract)
A. Real
B. Naturally gratuitous
C. Primarily for custody
Cases:
a. Effect if balance of commission retained by agent
US vs. Igpuara, G.R. No. L-7593, March 27, 1913, 27 Phil 619
b. Effect if foreign currency deposited is sold by the bank
BPI vs. IAC, 164 SCRA 630
c. Nature of rental of safety deposit box
CA Agro-Industrial Devt. Corp. vs. CA, G.R. No. 90027, March 3, 1993
D. Either unilateral or bilateral
E. Non-use by depositary of the thing deposited
a. Nature of agreement to extend payment of money deposited and to pay
interest
Javellana vs. Lim, 11 Phil 141
F. Object of contractual deposit
III. Kinds
A. a) Extrajudicial
b) Judicial
B. a) Regular
b) Irregular (may use the thing deposited)
C. Voluntary or necessary
VI. CHAPTER 2
VOLUNTARY DEPOSIT
Arts. 1968-1971
I. Voluntary deposit
A. Kinds
B. Requisites
a. Capacity of the parties
b. Object
c. Formalities
Arts. 1972-1991
I. Rights and Obligations of the Parties
A. Obligations of the depositary
a. To preserve the thing
1. Agreement that the depositary may use the thing deposited
2. Delegation of custody
3. Change of the manner of deposit
4. Preservation of the value
5. Secrecy of deposit
b. To return the thing
1. To whom
2. What is to be returned
i) If money
ii) If specific thing
iii) If generic thing
3. Form or manner of return
4. Place of return
5. Time of return
6. Set off
i) Right of bank to apply a deposit to the debt of a depositor
Gullas vs. PNB, 62 Phil 519
Associated Bank (Now Westmont Bank) vs. Tan, G.R. No.
156940, Dec. 14, 2004
7. Bank’s failure to return amount
i) Liability for failure to return bank deposit
Guingona vs. City Fiscal of Manila,G.R. No. L-60033, April 4,
1984
8. When bank officials may be guilty of estafa
Guingona vs. City Fiscal of Manila, 137 SCRA 597 (MR of April 4,
1984 SC decision)
9. Earnest money
i) Obligation if sale did not materialize
Compania Maritima vs. CA, 135 SCRA 594
Arts. 1992-1995
I. Rights and obligations of the parties
A. Obligations of the depositor
B. Security of the depositary
II. Termination of the contract
A. Extinguishment
a. General causes
b. Other causes
VI. CHAPTER 3
NECESSARY DEPOSIT
Arts. 1996-2004
I. Necessary deposit (1996)
A. Kinds
a. In compliance with legal obligations
b. On the occasion of a calamity
c. By transients
1. Requisites to hold innkeeper/hotel liable
2. When liability commences
3. What liability includes
4. Effect of notices
5. Right of retention
6. Cases:
i) YHT Realty Corp. vs. CA, GR No. 126780, Feb. 17, 2005
ii) Durban Apartments Corporation vs. Pioneer Insurance and Surety
Corporation, G.R. No. 179419, January 12, 2011
d. In common carriers
VII. CHAPTER 4
SEQUESTRATION OR JUDICIAL DEPOSIT
Arts. 2005-2009
B. Of real security
1. Pledge
2. Real Estate Mortgage
3. Chattel Mortgage
4. Antichresis
III. Causa
Arts. 2049-2057
I. Kinds
A. By its origin
a. Conventional
b. Legal
c. Judicial
B. By extent
a. Indefinite or Unlimited or Simple
1. Rule if without knowledge or consent of debtor
Case:
Suit to recover from principal debtor who did not consent to the
guaranty
De Guzman vs. Santos, 68 Phil 371
b. Limited
C. By the person guaranteed
D. By the liability of the guarantor
a. Normal
b. Solidary
Cases:
Machetti vs. Hospicio de San Jose, supra
PNB vs. Luzon Surety Co., Inc., 68 SCRA 207
Ong v. PCIB, GR No. 160466, January 17, 2005
International Finance Corporation vs. Imperial Textile Mills, Inc., G.R.
160324, Nov. 15, 2005
X. CHAPTER 2
EFFECTS OF GUARANTY
Arts. 2058-2065
Arts. 2066-2072
Arts. 2073-2075
XI. CHAPTER 3
EXTINGUISHMENT OF GUARANTY
Arts. 2076-2081
I. Extinction of guaranty
A. Negligence of the creditor
Case:
Effect if there is impossibility of subrogation:
E. Zobel Inc. vs. CA, GR 113931, May 6, 1998, 290 SCRA 1
B. Extension of payment
a. Requisites
b. Who must grant extension
c. Guarantor’s consent
Cases:
i. Effect of extension of one installment:
Villa vs. Garcia Bosque, 49 Phil 126
ii. Effect of acceleration clause:
Radio Corp. vs. Roa, 52 Phil 926
iii. Effect of extension of time of payment:
Phil. Gen Insurance Co., vs. Mutuc, 61 SCRA 22
d. Effect on accommodation party
Case:
Prudential vs. CA, 143 SCRA 7
e. Mere failure to demand
Case:
Shannon vs. Phil. Lumber & Trans Co., 61 Phil 872
f. Undertaking to hold in abeyance any action
Case:
Cochingyan Jr. vs. R & B Surety and Ins. Co., Inc., 151 SCRA 339
C. Payment of the principal debt by the debtor
Hong Kong-Shanghai Banking Corp. vs. Aldanese, 48 Phil 990
D. Accidental loss of the thing due before default
E. Remission of debt
F. Merger
a. Between creditor and debtor
b. Between creditor and guarantor
c. Between debtor and guarantor
G. Compensation
H. Novation
a. When the principal obligation is extinguished
b. When the principal obligation is modified
I. Death
a. Of the guarantor
b. Of the debtor
Stronghold Insurance Company, Inc. vs. Republic-Asahi Glass Corporation,
G.R. 147561, June 22, 2006
J. Failure to send notice of default
XII. CHAPTER 4
LEGAL AND JUDICIAL BONDS
Arts. 2082-2084
I. Judicial Guaranty
Arts. 2085-2092
I. Common Characteristics (2085)
Case:
Flancia vs. CA, G.R. No. 146997, April 26, 2005
A. Constituted to secure fulfillment of a principal obligation (accessoriness) (2085)
Case:
Mortgage given to secure future advancements:
Mojica vs. CA, 201 SCRA 517, Sept. 11, 1991
B. Constituted only by the absolute owner of the thing pledged or mortgaged
Cases:
Mortgage constituted before issuance of patent to the mortgagor:
Vda. de Bautista vs. Marcos, 3 SCRA 434
Mortgage by surviving spouse of conjugal property:
PNB vs. CA, 98 SCRA 207, June 15, 1980
Property not owned by mortgagor at the time of mortgage:
DBP vs. CA, 253 SCRA 414, Feb. 9, 1996
National Investment and Development Corporation vs. Bautista, G.R. No. 150388,
March 13, 2009
C. Free disposal or legal authority of person constituting the pledge or mortgage
D. Things pledged or mortgaged may be alienated at the instance of the creditor
a. Benefit of exhaustion
Case:
Exhaustion applies only to personal guaranty:
Southern Motors, Inc. Barbosa, L-9306, May 25,1956
b. Pactum commissorium
Cases:
A. Francisco and Development Corp. vs. CA, 298 SCRA 349
Edralin vs. Philippine Veterans Bank, G.R. No. 168523, March 9, 2011
Ong vs. Roban Lending Corporation, G.R. No. 172592, July 9, 2008
E. Pledge and mortgage are indivisible
Cases:
Rule where debt is divisible or debtors are not solidarily liable:
Dayrit vs. CA, 36 SCRA, 548
Separate foreclosure of mortgaged properties:
Yu vs. PCIBank, GR No. 147902, March 17, 2006
a. Effect of partial payment
F. Promise to constitute pledge or mortgage gives rise to personal action only
Arts. 2093-2096
I. Concept
II. Requisites
Case:
Calibo vs. CA, G.R. No. 120528, Jan. 29, 2001
III. Elements:
A. Parties – Capacity
B. Object
Case:
Effect where carabaos pledged not actually delivered to the creditor:
Betita vs. Guanzon, 49 Phil 87, March 29, 1926
a. Incorporeal rights
Case:
Effect of stock assignment:
Lopez vs. CA, 114 SCRA 671, June 29, 1982
Paray vs. Rodriguez, G.R. No. 132287, January 24, 2006
b. Effect if credit pledged becomes due
C. Consideration
a. As to the debtor
b. As to the pledgee
D. Form
a. To affect third persons
Case:
Effect of pledge not in a public instrument:
Betita vs. Guanzon, supra
IV. Classes
A. Voluntary
B. Legal
Arts. 2097-2130
I. Effects as to the pledgee
A. Rights of the pledgee
a. Retention of the thing
1) Use of the thing
2) Deposit of the thing
b. Reimbursement
c. Compensation of fruits with what is due the creditor
d. Actions of recovery and defense
e. Preference of credit
f. Sale of the security
1) Grounds
i) Precautionary
ii) Foreclosure
2) Modes of foreclosure
i) Judicial
ii) Extra judicial
aa) Procedure
3) Rule if two or more things are pledged
4) Options of the pledgee
g. Collect credits pledged
B. Obligations of the pledgee
a. Preservation
1) Degree of diligence
2) Liability for acts of agents/employees
3) Deposit of the thing pledged
4) In case of danger to the thing pledged
5) Danger of loss through negligence of pledgee
6) In case of fear of destruction or impairment of the thing
b. Restitution
1) When
Case:
Sarmiento and Villaseñor vs. Javellana, 43 Phil 884, Oct. 2, 1922
2) Effect of return of the thing to pledgor
i) Effect of contrary stipulation
ii) Presumption if thing is in possession of the pledgor
II. Effects as to the pledgor
A. Rights of the pledgor
a. Remains the owner
b. May demand deposit of the thing
c. May substitute another thing
d. To bid and to preference at foreclosure sale
e. To the return of the thing
A-1 Rights of pledgor who is not the principal debtor
Case:
Southern Motors , Inc. vs. Barbosa, supra
B. Obligations of the pledgor
a. To notify the pledgee of flaws
III. Extinguishment of the pledge
A. Extinction of principal obligation
B. Destruction or loss
C. Return
D. Renunciation
E. Redemption
F. Other causes
Arts. 2121-2122
Art. 2123
I. Laws/Rules governing pawnshops
Arts. 2124-2131
I. Concept
A. As a right
B. As a contract
II. Elements
A. Parties
B. Object
C. Consideration
D. Form
a. For validity
Cuyco vs. Cuyco, G.R. No. 168736, April 19, 2006
b. Between the parties
Effect of unregistered mortgage between the parties:
Mobil Oil Phil. Inc. vs. Diocares, 29 SCRA 656, Sept. 30, 1969
c. As to strangers
Validity of private document evidencing mortgage:
Hechanova vs. Adil, G.R. L-49940, Sept. 25, 1986
F. Supplementary Laws
III. Classes
A. Voluntary
B. Legal
C. Equitable mortgage
IV. Effects
A. As to the property mortgaged
a. Creation of real right
Cases:
1. Effect of sale of mortgaged property:
Bonnevie vs. CA, 125 SCRA, 122, October 24, 1983
2. Right to foreclose when land was sold after the mortgage
Paredes vs. CA, G.R. No. 147074, July 15, 2005
3. Effect of death of mortgagor:
Jacob vs. CA, 184 SCRA 294, April 6, 1990
b. Extension to accessions and accessories
Cases:
1. Effect of mortgage of hacienda:
Bischoff vs. Pomar, 12 Phil 690, Feb. 2, 1909
2. Effect of mortgage of lots on houses built thereon:
Paderes vs. CA, G.R. No. 147074-75, July 15, 2005
c. Pactum de non alienando
Cases:
Servicewide Specialists, Inc. vs. CA, G.R. No. 116363, Dec. 10,
1999
Go Cinco vs. CA, G.R. No. 151903, Oct. 9, 2009
B. Effects as to the mortgagee
Case:
Where mortgagee transferred his credit:
Bischoff vs. Pomar, supra
V. Foreclosure – Modes
A. Judicial (See Rule 68, Rules of Court)
B. Extrajudicial
a. Procedure (See. A.M. No. 99-10-05-0, Aug. 7, 2001)
b. Deficiency rule
Cases:
DBP vs. Licuanan, GR No. 150097, February 26, 2007
PNB vs. Rocamora, G.R. No. 164549, September 18, 2009
VI. Redemption
A. Rules
a. Judicial foreclosure
b. Extrajudicial foreclosure
c. Right of redemption vs. equity of redemption
Case:
Huerta Alba Resort, Inc. v. Court of Appeals, G.R. No. 128567, Sept. 1,
2000
B. How done
Banco Filipino vs. CA, GR No. 143896, July 8, 2005
C. What is to be paid
Case:
China Banking Corp. v. CA, G.R. No.129644, 7 September 2001
Effect of tender of less than the purchase price:
BPI vs. Sps. Veloso, G.R. No. 141974, August 9, 2004
D. Effect of death of mortgagor
E. Remedies of mortgagee in equitable mortgage
Arts. 2132-2139
I. Concept
A. Similarities and differences with Real Estate Mortgage
a. Similarities
b. Differences
II. Elements
A. Parties
B. Object
C. Causa
D. Formalities
III. Effects
A. Rights of the antichretic creditor
a. To receive the fruits
b. Right of foreclosure
B. Obligations of the antichretic creditor
a. To bear necessary expenses
b. To pay taxes
1) Reason
2) Exception
3) Effect of non-fulfillment
C. Case:
Diego vs. Fernando, 109 Phil 143, August 25, 1960
Arts. 2140-2141
VIII. Distinctions:
Arts. 2236-2240
I. Concept and General Theory
A. Concurrence
B. Preference
C. Property not subject to preference and concurrence
Arts. 2241-2245
I. Classification of credits
A. General classification
a. Absolutely preferred
b. Specially preferred
c. Ordinary preferred
d. Common credits
B. As to specific movable property
a. Duties, taxes, etc.
b. Claims arising from misappropriation, etc.
c. Claim for unpaid price of movables sold
d. Credits guaranteed by
1) Pledge
2) Chattel mortgage
e. Refectionary credits
f. Claims for laborer’s wages
g. Other claims and credits
C. Rules as to preferred credits on specific movables
D. As to specific immovable property
E. Ordinary preferred credits
Arts. 2246-2251
I. Order of payment
A. Resumè:
a. Absolutely preferred credits
b. Specially preferred credits
1) As to specific chattels
2) As to specific immovables
c. Ordinary preferred credits
d. Non-preferred credits
XXI.