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I. Introduction
A. Meaning and scope of credit transactions
II. Loan
A. General Principles
a) Commodatum
b) Mutuum
d) Credit
B. Commodatum
a) Obligation to take good care of thing with the diligence of a good father of the family (Art. 1163)
b) Obligation to use thing loan loaned only for the purpose for which it was loaned and for no other
purpose (Arts. 1935, 1939, 1940)
c) Obligation to return and to not retain the thing loaned except under certain circumstances (Arts.
1944, 1946)
d) Obligation to pay ordinary expenses for the use and preservation of the thing and portion of
extra-ordinary expenses arising from the actual use of the thing (Arts. 1941, 1943, 1945, 1949,
1950)
e) Obligation to be solidary liable when there are two or more bailees to whom a thing is loaned in
the same contract (Arts. 1207, 1945)
a) Obligation to refund extraordinary expenses for the preservation of the thing loaned (Arts. 1949)
b) Obligation to refund portion of extraordinary expenses arising from the actual use of the thing
(Art. 1949)
c) Obligation to pay damages for known hidden flaws (Arts. 1951, 1952)
C. Mutuum
5. Form of contract
a) Obligation to pay to the creditor an equal amount of the same kind and quality (Arts. 1249,
1250, 1953, 1955; Arts. 1197, 1198, 1251)
b) Obligation to pay interest (if stipulated) (Arts. 1169, 1226, 1253, 1423, 1933, 1956-1961, 2154,
2209, 2212, 2213; BSP Circular No. 799, series of 2013)
a) General rule
b) Exception
d) Commodatum
III. Deposit
A. Introduction
1. Concept (Art. 1962)
B. Voluntary deposit
b) Obligation to not use the thing unless authorized (Arts. 1977, 1978)
c) Obligation to return thing (Arts. 1972, 1984, 1985, 1987, 1988, 1990, 1991, 1994)
– Obligation to return the thing with products, accessories and accessions (Art. 1983)
– what (Arts. 1962, 1972, 1976, 1983, 1990, 1991), to whom (Arts. 1212, 1214, 1972, 1984, 1985,
1986), when (Arts. 1988, 1994), where (Art. 1987)
b) Obligation to reimburse the depositary for any loss arising from the character of the thing (Art.
1933)
9. Extinguishment
C. Necessary deposit
2. Types
– governing law
– examples
b) depositum miserabile
– governing law
– examples
c) deposit of passengers with common carriers (Art. 1754)
– governing law
– examples
3. Obligations of depositary
– Obligation to take care of the thing with the diligence of a good father of the family (Art. 2008)
IV. Guaranty
A. Concept (Art. 2047)
1. Persons involved
a) in writing
b) not presumed
a) principal obligations
b) accessory obligations such as judicial costs
4. Payment made without the knowledge or against the consent of the debtor (Arts. 1236, 1237,
2050)
a) amount benefited
b) no subrogation
b) rationale
c) requisites
– waiver, solidarily liability, insolvency, absconded/cannot be sued, execution will not result in
satisfaction (Art. 2058)
– failure to set it up and point out Philippine properties (Art. 2059); effect of negligence of creditor
e) typical procedure
– suit by creditor against debtor (and in certain cases, against guarantor); notice to guarantor (Art.
2062)
b) rationale
1. Effect of payment (with and without the consent/knowledge of the debtor): in general
6. Effect of request made by a person for guarantee of debt of third person (Art. 2072)
J. Extinguishment of the guaranty; defenses available to the guarantor (Arts. 1397, 2076-2081)
(c) Defenses derived from the conduct of the creditor (Arts. 2061, 2079, 2080)
1. Warranty
a) Definition
b) Law applicable
M. Practical considerations
– rationale
– rationale
c) persons constituting the pledge or mortgage have the free disposal of their property
– rationale
(a) rationale
(c) requisites
B. Pledge
1. Concept (Arts. 2085, 2087, 2123); Types (Art. 2121)
– incorporeal rights
– nature of delivery
– to whom delivered
4. Parties to the contract (Arts. 2085, 2103; Family Code, art. 111)
a) Obligation to allow the alienation of the thing in the event the principal obligation becomes due
(Art. 2087)
b) Obligation to pay damages for known hidden flaws (Arts. 2101, 1951)
b) Obligation to not deposit the thing pledged with a third party (Art. 2100)
c) Obligation with respect to matured credits, and to fruits, income dividends, or interests (Arts.
2118, 2102)
8. Special rules
– rules with respect to ownership of the thing pledged (Arts. 2103, 2097, 2120)
c) Stipulations
– option to buy
– acceleration clause
11. Extinguishment
12. Distinguished from an equitable mortgage (Arts. 1602, 1603, 1604, 1605)
D. Chattel mortgage
b) Object of the contract (Arts. 416, 417, 2124; Chattel Mortgage Law, sec. 2)
a) Right to possession
b) Right to foreclose (Chattel Mortgage Law, secs. 8, 13, 14)
– procedure
a) registration of chattel mortgage (Art. 2140; Chattel Mortgage Law, sec. 4; P.D. No. 1529, secs.
114, 115)
– effect of registration
VI. Antichresis
A. Concept (Art. 2132)
1. Obligation to apply fruits to interest and principal (Arts. 2132, 2133, 2138)
2. Obligation to pay taxes and charges upon the estate (Art. 2135)
I. Extinguishment
1. Pledge
2. Mortgage
K. Practical considerations
D. General rules
(b) properties exempt from execution under the Rules of Court (Rules of Court, rule 39, sec. 13);
(d) concurrence and preference of credits in an insolvency situation (FRIA, secs. 53(a), 53(d),
92(i), 133, 136))
F. Classification of credits
1. Preferred credits with respect to specific movable property (Arts. 2241, 2243, 2246, 2247, 2250)
2. Preferred credits with respect to specific immovable property (Arts. 2242, 2243, 2248, 2249,
2250)
3. Order of preference with respect to other properties of the debtor (Art. 2244)
2. Concepts
– Extra-judicial
(b) Benefits
– Extra-judicial
4. Suspension of payment
(c) Procedure
5. Rehabilitation
(b) Types
(c) Who may file petition (secs. 12, 13, 76, 83)
– Grant of due course to, or dismissal of, the petition; convert into liquidation proceedings (secs.
25, 26, 27, 92)
– Preparation of rehabilitation plan by receiver; consultation with debtors and creditors; formation
of creditors’ committee (secs. 42, 43, 63, 64)
(f) Procedure for out of court or informal restructuring agreements or rehabilitation plans
6. Liquidation
– Voluntary
– Involuntary
– Hearing
7. Treatment of secured creditors (secs. 4(jj), 4(kk),4(ll), 51, 53, 60, 61, 62(j), 96, 101, 106, 114)
1. Purpose (sec. 2)
2. Coverage (sec. 3)
1. Letters of credit
2. Governing Law
3. Concept
4. Parties
5. Types
6. Principles applicable
– strict compliance
– independence
D. Usury Law
1. Interest
(a) concept
(b) kinds
2. Usury
(a) concept
(c) transactions to which the Usury Law apply and do not apply
4. Power of BSP Monetary Board to prescribe rates of interest (Usury Law, secs. 1, 1-, 4-A, 4-B, 9-
A)
5. Interest under the Usury Law and BSP Circular No. 799, s. 2013 (secs. 1, 2, 3, 5)
(a) Rates of interest under the Usury Law (Usury Law, secs. 2, 3, 4)
– legal rate
– attorney’s fees
(a) taking or receiving usurious interest under section 2 of the Usury Law
(b) agreeing to charge usurious interest under section 3 of the Usury Law
(c) agreeing to charge or receiving usurious interest under section 4 of the Usury Law; dividing
pawn; payment of insurance premium under section 4 of the Usury Law
(a) recovery of usurious interest (Civil Code, arts. 1413, 1957; Usury Law, sec. 6)
(b) recovery of commissions, premiums, penalties and surcharges (Usury Law, sec. 6)
2. Concepts
(a) Warehouse
(a) Negotiable
– definition (sec. 5)
– rights of persons to whom negotiable instrument was transferred but not negotiated (secs. 39,
42)
– rights of person to whom negotiable receipt was transferred without indorsement (sec. 43)
(b) Non-negotiable
– definition (sec. 4)
5. Obligations of warehouseman
– when (sec. 8)
– grounds for refusal to deliver (secs. 10, 16, 17, 18, 25, 26, 36)
(c) Obligation to stamp “duplicate” on copies of negotiable receipt (secs. 6, 15, 52)
(d) Obligation to place “non-negotiable” or “not negotiable” on a non-negotiable receipt (sec. 7);
(e) Obligation to cancel negotiable receipts upon delivery or part delivery (secs. 11, 12, 14, 36, 54)
(g) Obligation to not issue receipt if goods are not existent (secs. 20, 50)
(h) Obligation to properly describe the goods covered by the receipt (sec. 20)
(i) Obligation to keep the goods separate and to not comingle the goods (secs. 22-24; Civil Code,
art. 1976)
(e) remedies available to the warehouseman (sec. 31, 32, 33, 34, 35, 36)
(d) issuance of receipts that do not say that warehouseman is the owner (sec. 53)
(a) Consent
(c) Cause
(a) Obligation hold the designated goods, documents or instruments in trust for the entruster
(secs. 4, 9)
(b) Obligation to sell or otherwise dispose of the goods, documents or instruments strictly in
accordance with the trust receipts (secs. 4, 9)
– purchaser for value and in good faith acquires property free from lien (sec. 11)
(c) Obligation to receive the proceeds in trust for the entruster and turn over the same to the
entruster to the extent of the amount owing to the entruster or as appears on the trust receipt
(secs. 4, 9)
(d) Obligation to insure the goods for their total value against loss from fire, theft, pilferage or other
casualties (sec. 9)
(e) Obligation to keep said goods or proceeds thereof whether in money or whatever form,
separate and capable of identification as property of the entruster (sec. 9)
(f) Obligation to return the goods, documents or instruments in the event of non-sale or upon
demand of the entruster (sec. 9)
(g) Obligation to observe all other terms and conditions of the trust receipt not contrary to the
provisions of the Trust Receipts Law (sec. 9)
(c) Right to cancel the trust and take possession upon default of entrustee
(d) Right to avail of other remedies