Beruflich Dokumente
Kultur Dokumente
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CREDIT TRANSACTIONS
CREDIT TRANSACTIONS All transactions involving the purchase or loan of goods, services, or money in the present with a promise to pay or deliver in the future Contracts of security Types: 1. Secured transactions or contracts of real security - supported by a collateral or an encumbrance of property 2. Unsecured transactions or contracts of personal security - supported only by a promise or personal commitment of another such as a guarantor or surety Security Something given, deposited, or serving as a means to ensure fulfilment or enforcement of an obligation or of protecting some interest in property Types of Security a. personal when an individual becomes surety or guarantor b. real or property when a mortgage, pledge, antichresis, charge or lien or other device used to have property held, out of which the person to be made secure can be compensated for loss Bailment The delivery of property of one person to another in trust for a specific purpose, with a contract, express or implied, that the trust shall be faithfully executed and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor claims it. Parties: 1. bailor - the giver; one who delivers property 2. bailee- the recipient; one who receives the custody or possession of the thing thus delivered CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
LOAN (Articles 1933 1961) A contract wherein one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. (Art 1933) Characteristics: 1. Real Contract delivery of the thing loaned is necessary for the perfection of the contract NOTE: An accepted promise to make a future loan is a consensual contract, and therefore binding upon the parties but it is only after delivery, will the real contract of loan arise. (Art 1934) 2. Unilateral Contract - once the subject matter has been delivered, it creates obligations on the part of only one of the parties (i.e. borrower). Kinds: 1. Commodatum when the bailor (lender) delivers to the bailee (borrower) a non-consumable thing so that the latter may use it for a certain time and return the identical thing. Kinds of commodatum: a. Ordinary Commodatum use by the borrower of the thing is for a certain period of time b. Precarium - one whereby the bailor may demand the thing loaned at will and it exists in the following cases: i. neither the duration nor purpose of the contract is stipulated ii. the use of the thing is merely tolerated by the owner
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COMMODATUM (Articles 1935 1952) Nature: 1. PURPOSE: Bailee in commodatum acquires the temporary use of the thing but not its fruits (unless stipulated as an incidental part of the contract).(Art 1935) Use must be temporary, otherwise the contract may be a deposit. 2. CAUSE: Essentially gratuitous; it ceases to be a commodatum if any compensation is to be paid by the borrower who acquires the use, in such case there arises a lease contract. Similar to a donation in that it confers a benefit to the recipient. The presumption is that the bailor has loaned the thing for having no need therefor. 3. SUBJECT MATTER: Generally nonconsumable whether real or personal but if the consumable goods are not for consumption as when they are merely for exhibition, consumable goods may be the subject of the commodatum. (Art 1936) 4. Bailor need not be the owner of the thing owned (Art. 1938) since by the loan, ownership does not pass to the borrower. A mere lessee or usufructuary may lend but the borrower or bailee himself may not lend nor lease the thing loaned to him to a third person (Art 1932[2]) 5. Purely Personal (Art 1939): Death of either party terminates the contract unless by stipulation, the commodatum is transmitted to the heirs of either or both parties. Bailee can neither lend nor lease the object of the contract to a third person.
Loan
Delivery by one party and the receipt of other party of a given sum of money or other consumable thing upon an agreement, express or implied, to repay the same.
Credit
Ability of a person to borrow money or things by virtue of the trust or confidence reposed by the lender that he will pay what he promised.
Loan
1. Interest taken at the expiration of the credit 2. Always on a double name paper (two signatures appear with both parties held liable for payment)
Credit
Interest is taken in advance Always on a single name paper (i.e. promissory note with no indorse-ment other than the maker)
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extends no further than retention of the thing loaned until he is reimbursed for the damages suffered by him. He cannot lawfully sell the thing to satisfy such damages without courts approval. In case there are two or more bailees, their obligation shall be solidary.
Obligations of the bailor (Art 1946 Art 1952): 1. To respect the duration of the loan GENERAL RULE: Allow the bailee the use of the thing loaned for the duration of the period stipulated or until the accomplishment of the purpose for which the commodatum was instituted. EXCEPTIONS: a. In case of urgent need in which case bailee may demand its return or temporary use; b. The bailor may demand immediate return of the thing if the bailee commits any act of ingratitude specified in Art. 765. 2. To refund to the bailee extraordinary expenses for the preservation of the thing loaned, provided the bailee brings the same to the knowledge of the bailor before incurring them, except when they are so urgent that the reply to the notification cannot be awaited without danger. 3. To be liable to the bailee for damages for known hidden flaws. Requisites: a. There is flaw or defect in the thing loaned; b. The flaw or defect is hidden; c. The bailor is aware thereof; d. He does not advise the bailee of the same; and e. The bailee suffers damages by reason of said flaw or defect
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3. Relationship between the parties is that of obligorobligee 4. Creditor receives payment for his loan
Relationship is that of a landlord and tenant Owner of the property rented receives compensation or price either in money, provisions, chattels, or labor from the occupant thereof in return for its use (Tolentino vs Gonzales, 50 Phil 558 1927)
Loan
1. Real contract
Sale
Consensual contract Bilateral reciprocal and
NOTE: If the property is sold, but the real intent is only to give the object as security for a debt as when the price is comparatively small there really is a contract of loan with an equitable mortgage. Commodatum/ Mutuum
1. Subject matter is money or fungible things 2. In commodatum, the bailee is bound to return the identical thing borrowed when the time has expired or purpose served 3. Mutuum may be gratuitous and commodatum is always gratuitous
Barter
Subject matter is non-fungible, (non consumable) things The thing with equivalent value is given in return for what has been received
Rent
Delivery of some non-consumable thing in order that the other may use it during a certain period and return it to the former. There is no transfer of ownership of the thing delivered
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b) With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: i. When the obligation breached consists of payment of a sum of money (loan or forbearance of money), the interest shall be that which is stipulated or agreed upon by the parties. In absence of an agreement, the rate shall be the legal rate (i.e. 12% per annum) computed from default. NOTE: The interest due shall itself earn legal interest from the time it is judicially demanded ii. In other cases, the rate of interest shall be six percent (6%) per annum. NOTE: No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. When the demand cannot be established, the interest shall begin to run only from the date of the judgment of the court is made. iii. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph i or ii above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. (Eastern Shipping Lines vs. CA, July 12, 1994) NOTES: Central Bank Circular No. 416 fixing the rate of interest at 12% per annum deals with loans, forbearance of any money, goods or credits and
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Validity of unconscionable interest rate in a loan Supreme Court in Sps. Solangon vs. Jose Salazar, G.R. No. 125944, June 29, 2001, said that since the usury law had been repealed by CB Cir. No. 905 there is no more maximum rate of interest and the rate will just depend on the mutual agreement of the parties (citing Lim Law vs. Olympic Sawmill Co., 129 SCRA 439). But the Supreme Court said that nothing in said circular grants lenders carta blanche authority to raise interest rates to level which will either enslave their borrowers or lead to a hemorrhaging of their assets (citing Almeda vs. CA, 256 SCRS 292). In Medel vs. CA, 299 SCRA 481, it was ruled that while stipulated interest of 5.5% per month on a loan is usurious pursuant to CB Circular No. 905, the same must be equitably reduced for being iniquitous, unconscionable and exorbitant. It is contrary to morals, (contra bonos mores). It was reduced to 12% per annum in consonant with justice and fair play. DEPOSIT (Articles 1962 2009) A contract constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. Characteristics: 1. Real Contract - contract is perfected by the delivery of the subject matter. CIVIL LAW COMMITTEE
Deposit
1. Purpose is Safekeeping 2. May be gratuitous 3. Movable/corporeal things only in case of extrajudicial deposit
Commodatum
1. Purpose is the transfer of the use 2. Essentially and always gratuitous 3. Both movable and immovable may be the object
Kinds of Deposit: 1. Judicial (Sequestration) takes place when an attachment or seizure of property in litigation is ordered. 2. Extra-judicial a. Voluntary one wherein the delivery is made by the will of the depositor or by two or more persons each of whom believes himself entitled to the thing deposited. (Arts 1968 1995)
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
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1. Creation Will of the court Will of the parties or contract 2. Purpose Security or to insure Custody and the right of a party safekeeping to property or to recover in case of favorable judgment 3. Subject Matter Movables or Movables only immovables, but generally immovables Always onerous 4. Cause May be compensated or not, but generally gratuitous
5. When must the thing be returned Upon order of the Upon demand of court or when depositor litigation is ended 6. In whose behalf it is held Person who has a Depositor or third right person designated
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5. Not to commingle things deposited if so stipulated (Art 1976) 6. Not to make use of the thing deposited unless authorized (Art 1977) GENERAL RULE: Deposit is for safekeeping of the subject matter and not for use. The unauthorized use by the depositary would make him liable for damages. EXCEPTIONS: 1. When the preservation of the thing deposited requires its use 2. When authorized by the depositor NOTE: The permission to use is NOT presumed except when such use is necessary for the preservation of the thing deposited. Effect if permission to use is given (Art 1978): 1. If thing deposited is nonconsumable, the contract loses the character of a deposit and acquires that of a commodatum despite the fact that the parties may have denominated it as a deposit, unless safekeeping is still the principal purpose. 2. If thing deposited consists of money/consumable things, the contract is converted into a simple loan or mutuum unless safekeeping is still the principal purpose in which case it is called an irregular deposit. Example: bank deposits are irregular deposits in nature but governed by law on loans. 7. When the thing deposited is delivered sealed and closed : a. to return the thing deposited in the same condition b. to pay for damages should the seal or lock be broken through his fault, which is presumed unless proved otherwise c. to keep the secret of the deposit when the seal or lock is broken with or without his fault (Art 1981) NOTE: The depositary is authorized to open the thing
What
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2. The only benefit is that which accrues to the depositor 3. The irregular depositor has a preference over other creditors with respect to the thing deposited
2. Essential cause for the transaction is the necessity of the borrower 3. Common creditors enjoy no preference in the distribution of the debtors property
Rule when there are two or more depositors (Art 1985): 1. If thing deposited is divisible and depositors are not solidary: Each depositor can demand only his proportionate share thereto. 2. If obligation is solidary or if thing is not divisible: Rules on active solidarity shall apply, i.e. each one of the solidary depositors may do whatever may be useful to the others but not anything which may be prejudicial to the latter, (Art. 1212) and the depositary may return the thing to anyone of the solidary depositors unless a demand, judicial or extrajudicial, for its return has been made by one of them in which case, delivery should be made to him (Art. 1214). 3. Return to one of depositors stipulated. The depositary is bound to return it only to the person designated although he has not made any demand for its return. NOTES: The depositary may retain the thing in pledge until full payment of what may be due him by reason of the deposit (Art 1994). The depositors heir who in good faith may have sold the thing which he did not know was deposited, shall only be bound to return the price he may have received or to assign his right of action against the buyer in case the price has not been paid him (Art 1991). Obligations of the Depositor (Art 1992 1995): 1. To pay expenses for preservation
Mutuum
1. Lender is bound by the provisions of the contract and cannot demand restitution until the time for payment, as provided in the contract, has arisen
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2.
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same as a solidary debtor, except that he himself is a principal debtor. In suretyship, there is but one contract, and the surety is bound by the same agreement which binds the principal. A surety is usually bound with the principal by the same instrument, executed at the same time and upon the same consideration (Palmares vs CA, 288 SCRA 422) It is not for the obligee to see to it that the principal debtor pays the debt or fulfill the contract, but for the surety to see to it that the principal debtor pays or performs (Paramount Insurance Corp vs CA, 310 SCRA 377)
Nature of Suretys undertaking: 1. Liability is contractual and accessory but direct NOTE: He directly, primarily and equally binds himself with the principal as original promisor, although he possesses no direct or personal interest over the latters obligation, nor does he receive any benefits therefrom. (PNB vs CA, 198 SCRA 767) 2. Liability limited by the terms of the contract. NOTE: It cannot be extended by implication beyond the terms of the contract (PNB vs CA, 198 SCRA 767) 3. Liability arises only if principal debtor is held liable. NOTES: The creditor may sue separately or together the principal debtor and the surety. Where there are several sureties, the obligee may proceed against any one of them. In the absence of collusion, the surety is bound by a judgment against the principal even though he was not a party to the proceedings. The nature of its undertaking makes it privy to all proceedings against its principal (Finman General Assurance Corp. vs. Salik, 188 SCRA 740)
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does, his liability shall be reduced to the limits of that of the debtor. 2. Subsidiary and Conditional - takes effect only in case the principal debtor fails in his obligation. NOTES: The guarantor cannot bind himself for more than the principal debtor and even if he does, his liability shall be reduced to the limits of that of the debtor. But a guarantor may bind himself for less than that of the principal (Art 2054) A guaranty may be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated. A conditional obligation may also be secured. (Art 2053) Unilateral - may be entered even w/o the intervention of the principal debtor, in which case Art. 1236 and 1237 shall apply and it gives rise only to a duty on the part of the guarantor in relation to the creditor and not vice versa. Nominate Consensual It is a contract between the guarantor/surety and creditor. NOTES: Acceptance of guaranty by creditor and notice thereof to guarantor: In declaring that guaranty must be express, the law refers solely and exclusively to the obligation of the guarantor because it is he alone who binds himself by his acceptance. With respect to the creditor, no such requirement is needed because he binds himself to nothing. However, when there is merely an offer of a guaranty, or merely a conditional guaranty, in the
3.
4. 5. 6.
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that the contract is one of suretyship or guaranty. It cannot be used as an aid in determining whether a partys undertaking is that of a surety or guarantor. (Palmares vs CA, 288 SCRA 292) It does not apply in case of compensated sureties. 10. It is a contract which requires that the guarantor must be a person distinct form the debtor because a person cannot be the personal guarantor of himself. NOTE: However, in a real guaranty, like pledge and mortgage, a person may guarantee his own obligation with his personal or real properties. Guaranty
1. Liability depends upon an independent agreement to pay the obligation if primary debtor fails to do so 2. Collateral taking underis
Suretyship
1. Surety assumes liability as regular party to the undertaking 2. Surety is original promisor 3. Surety primarily liable an is
4. Guarantor binds himself to pay if the principal CANNOT PAY 5. Insurer of solvency of debtor 6. Guarantor can avail of the benefit of excussion and division in case creditor proceeds against him
4. Surety undertakes to pay if the principal DOES NOT PAY 5. Insurer of the debt 6. Surety cannot avail of the benefit of excussion and division
Indorsement
1. Primarily transfer of
Guaranty
1. Contract security of
2. Unless the note is promptly presented for payment at maturity and due notice of dishonor given to the indorser within a reasonable
2. Failure in either or both of these particulars does not generally work as an absolute discharge of a guarantors liability, but his is
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discharged only to the extent of the loss which he may have suffered in consequence thereof
Double or sub-guaranty (Art 2051 2nd par) One constituted to guarantee the obligation of a guarantor Continuing guaranty (Art 2053) One which is not limited to a single transaction but which contemplates a future course of dealings, covering a series of transactions generally for an indefinite time or until revoked. NOTES: Prospective in operation (Dio vs CA, 216 SCRA 9) Construed as continuing when by the terms thereof it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the guaranty is expressly reserved (Dio vs CA, 216 SCRA 9) Future debts may also refer to debts existing at the time of the constitution of the guaranty but the amount thereof is unknown and not to debts not yet incurred and existing at that time. Exception to the concept of continuing guaranty is chattel mortgage. A chattel mortgage can only cover obligations existing at the time the mortgage is constituted and not those contracted subsequent to the execution thereof (The Belgian Catholic Missionaries, Inc. vs. Magallanes Press, Inc., 49 Phil 647). An exception to this is in case of stocks in department stores, drug stores, etc. (Torres vs. Limjap, 56 Phil 141). Extent of Guarantors liability: (Art 2055) 1. Where the guaranty definite: It is limited in whole or in part to the principal debt, to the exclusion of accessories. 2. Where guaranty indefinite or simple: It shall comprise not only the principal obligation, but also all its accessories, including the judicial costs, provided with respect to the
Guaranty
A contract by which a person is bound to another for the fulfilment of a promise or engagement of a third party
Warranty
An undertaking that the title, quality, or quantity of the subject matter of the contract is what it has been represented to be, and relates to some agreement made ordinarily by the party who makes the warranty
NOTES: A guaranty is gratuitous, unless there is a stipulation to the contrary. The cause of the contract is the same cause which supports the obligation as to the principal debtor. The peculiar nature of a guaranty or surety agreement is that is is regarded as valid despite the absence of any direct consideration received by the guarantor or surety either from the principal debtor or from the creditor; a consideration moving to the principal alone will suffice. It is never necessary that the guarantor or surety should receive any part or benefit, if such there be, accruing to the principal. (Willex Plastic Industries Corp. vs. CA, 256 SCRA 478)
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2.
3. 4. 5.
judicially declared insolvent or bankrupt When he has absconded, or cannot be sued within the Philippines unless he has left a manager or representative In case of insolvency of the debtor Must be actual If the guarantor has expressly renounced it If he has bound himself solidarily with the debtor
Other grounds: (BIPS) 6. If he is a judicial bondsman or subsurety 7. If he fails to interpose it as a defense before judgment is rendered against him 8. If the guarantor does not set up the benefit against the creditor upon the latters demand for payment from him, and point out to the creditor available property to the debtor within Philippine territory, sufficient to cover the amount of the debt (Art 2060) Demand can be made only after judgment on the debt Demand must be actual; joining the guarantor in the suit against the principal debtor is not the demand intended by law 9. Where the pledge or mortgage has been given by him as special security Benefit of Division (Art 2065) Should there be several guarantors of only one debtor and for the same debt, the obligation to answer for the same is divided among all. Liability: Joint NOTES: The creditor can claim from the guarantors only the shares they are respectively bound to pay except when solidarity is stipulated or if any of the circumstances enumerated in Article 2059 should take place. The right of contribution of guarantors who pays requires that the payment must have been made (a) in virtue of a judicial demand, or
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Procedure when creditor sues: (Art. 2062) The creditor must sue the principal alone; the guarantor cannot be sued with his principal, much less alone except in Art. 2059. 1. Notice to guarantor of the action The guarantor must be NOTIFIED so that he may appear, if he so desires, and set up defenses he may want to offer. If the guarantor appears, he is still given the benefit of exhaustion even if judgment should be rendered against him and principal debtor. His voluntary appearance does not constitute a renunciation of his right to excussion (see Art. 2059(1)). Guarantor cannot set up the defenses if he does not appear and it may no longer be possible for him to question the validity of the judgment rendered against the debtor.
EXCEPTIONS:
1. Where the constituted guaranty without is the
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against the guarantor those defenses which he could have set up against the creditor at the time the payment was made, e.g. the debtor can set up against the guarantor the defense of previous extinguishment of the obligation by payment. 2. Before Maturity (Art 2069) Not entitled to reimbursement unless the payment was made with the consent or has been ratified by the debtor Effect of Repeat Payment by debtor: (Art 2070) GENERAL RULE: Before guarantor pays the creditor, he must first notify the debtor (Art. 2068). If he fails to give such notice and the debtor repeats payment, the guarantor can only collect from the creditor and guarantor has no cause of action against the debtor for the return of the amount paid by guarantor even if the creditor should become insolvent.
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Art. 2071
Provides for his protection before he has paid but after he has become liable
by the fact that they are given in virtue of a judicial order. If the person required to give a legal or judicial bond should not be able to do so, a pledge or mortgage sufficient to cover the obligation shall admitted in lieu thereof (Art 2083) A judicial bondsman and the subsurety are NOT entitled to the benefit of excussion because they are not mere guarantors, but sureties whose liability is primary and solidary. (Art 2084)
Extinguishment of guaranty: (RA2CE2) 1. Release in favor of one of the guarantors, without the consent of the others, benefits all to the extent of the share of the guarantor to whom it has been granted (Art 2078); 2. If the creditor voluntarily accepts immovable or other properties in payment of the debt, even if he should afterwards lose the same through eviction or conveyance of property (Art 2077); 3. Whenever by some act of the creditor, the guarantors even though they are solidarily liable cannot be subrogated to the rights, mortgages and preferences of the former (Art 2080); 4. For the same causes as all other obligations (Art 1231); 5. When the principal obligation is extinguished; 6. Extension granted to the debtor by the creditor without the consent of the guarantor (Art 2079) BOND An undertaking that is sufficiently secured, and not cash or currency Bondsman (Art 2082) A surety offered in virtue of a provision of law or a judicial order. He must have the qualifications required of a guarantor and in special laws like the Rules of Court. NOTES: Judicial bonds constitute merely a special class of contracts of guaranty CIVIL LAW COMMITTEE
PLEDGE, MORTGAGE AND ANTICHRESIS I. Common Elements of Pledge, Mortgage, and Antichresis (Articles 2085 2092) A. Essential Requisites (SOD) (Art 2085) 1. Secures the fulfillment of a principal obligation; 2. Pledgor, mortgagor, antichretic debtor must be the absolute owner of the thing pledged or mortgaged; and The reason being that in anticipation of a possible foreclosure sale in case of default which is still a sale, the rule is that the seller must be the owner of the thing sold (Cavite Development Bank vs. Lim, 324 SCRA 346) 3. Pledgor, mortgagor, antichretic debtor must have free disposal of their property, or be legally authorized for such purpose. NOTES: Third persons can pledge or mortgage their own property to secure the principal obligation. It is not necessarily void simply because the accommodation pledgor or mortgagor did not benefit from the same. So long as valid consent was given, the fact that the loan was given solely for the benefit of the principal debtor would not invalidate the mortgage (GSIS vs CA, 170 SCRA 533)
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
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B. Prohibition against Pactum Commissorium (Art 2088; 2137) Pactum Commissorium Stipulation whereby the thing pledged or mortgaged, or under antichresis shall automatically become the property of the creditor in the event of non-payment of the debt within the term fixed. Requisites: 1. There should be a pledge, mortgage, or antichresis of property by way of security for the payment of the principal obligation; and 2. There should be a stipulation for an automatic appropriation by the creditor of the property in event of nonpayment of the obligation within the stipulated period.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
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E. When the principal obligation becomes due, the things in which the pledge, mortgage, or antichresis consists may be alienated for the payment to the creditor. (Art. 2087) NOTES: If the debtor fails to comply with the obligation at the time it falls due, the creditor is merely entitled to move for the sale of the thing pledged or mortgaged in order to collect the amount of his claim from the proceeds. If he wishes to secure a title to the mortgaged property, he can buy it in the foreclosure sale (Montevirgin vs. CA, 112 SCRA 641) F. Pledgor, mortgagor, antichretic debtor retains ownership of the thing given as a security PLEDGE (Arts 2093 2123) A contract wherein the debtor delivers to the creditor or to a third person a movable or document evidencing incorporeal rights for the purpose of securing fulfilment of a principal obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and accessions. Special Requisites (in addition to the common essential requisites): 1. Possession of the thing pledged must be transferred to the creditor or a third person by agreement (Art 2093); 2. It can only cover movable property and incorporeal rights evidenced by documents of title and the instruments proving the right pledged shall be delivered to the creditor, and if negotiable must be endorsed (Art 2094); and 3. The description of the thing pledged and the date must appear in a public instrument to bind third persons, but not for the validity of the contract (Art 2096). CIVIL LAW COMMITTEE
Kinds: 1. Conventional /Voluntary created by contract 2. Legal created by operation of law (examples: Art. 546, 1731 and 1914 NCC) NOTES: The provisions of possession, care and sale of the thing as well as on the termination of the pledge governing conventional pledges are applicable to pledges created by operation of law (Art 2121) Unlike, however, in conventional pledge where the debtor is not entitled to the excess unless it is otherwise agreed, in legal pledge, the remainder of the price of the sale after payment of the debt and expenses, shall be delivered to the debtor. In legal pledge, there is no definite period for the payment of the principal obligation. The pledgee must make a demand for the payment of the amount due him; otherwise he cannot exercise the right of sale at public auction (Art 2122) Characteristics: 1. Real contract it is perfected by the delivery of the thing pledged by the debtor who is called the pledgor to the creditor who is called the pledgee, or to a third person by common agreement; 2. Accessory contract it has no independent existence of its own; 3. Unilateral contract it creates an obligation solely on the part of the creditor to return the thing subject thereof upon the fulfilment of the principal obligation; and 4. Subsidiary contract the obligation incurred does not arise until the fulfilment of the principal obligation which is secured. Consideration in pledge: Insofar as the pledgor is concerned, the cause is the principal obligation.
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
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MEMORY AID IN CIVIL LAW If the pledgor is not the debtor, the
10. To be reimbursed for the expenses made for the preservation of the thing pledged (Art 2099) 11. To object to the alienation of the thing 12. To possess the thing (Art 2098) 13. To sell at public auction in case of non-payment of debt at maturity (Art 2112) To choose which of the several things pledged shall be sold (Art 2119) 14. Option to demand replacement or immediate payment of the debt in case of deception as to substance or quality (Art 2109) 15. To sell at public auction in case of reasonable grounds to fear destruction or impairment of the thing without his fault (Art 2108) 16. To bring actions pertaining to the owner (Art 2103) 17. To choose which of several things pledged shall be sold 18. To bid at the public auction (Art 2113) 19. To appropriate the thing in case of failure of the 2nd public auction (Art 2112) 20. To apply said fruits, interests or earnings to the interest, if any, then to the principal of the credit (Art 2102) 21. To retain excess value received in the public sale (Art 2115) 22. To retain the thing until after full payment of the debt (Art 2098) 23. To be reimbursed for the expenses made for the preservation of the thing pledged (Art 2099) 24. To object to the alienation of the thing 25. To possess the thing (Art 2098) 26. To sell at public auction in case of non-payment of debt at maturity (Art 2112) 27. To choose which of the several things pledged shall be sold (Art 2119) Obligations of the Pledgee KEY: CUDA3 1. Take care of the thing with the diligence of a good father of a family (Art 2099) 2. Not to use thing unless authorized or by the owner or its preservation requires its use (Art 2104)
cause is the compensation stipulated for the pledge or the mere liberality of the pledgor.
Extent of pledge: Unless stipulated otherwise, pledge extends to the fruits, interests or earnings of the thing. Rights and Obligations of a Pledgor Rights Obligations
1. To demand return in case of reasonable grounds to fear destruction or impairment of the thing without the pledgees fault, subject to the duty of replacement (Art 2107) 2. To bid and be preferred at the public auction (Art 2113) 3. To alienate the thing pledged provided the pledgee consents to the sale (Art 2097) 4. To ask that the thing pledged be deposited (Arts 2104 & 2106) 1. To advise the pledgee of the flaws of the thing (Art 2101) 2. Not to demand the return of the thing until after full payment of the debt, including interest due thereon and expenses incurred for its preservation (Art 2105)
Rights of the Pledgee KEY: D SBC BA2R2OPS2 1. Option to demand replacement or immediate payment of the debt in case of deception as to substance or quality (Art 2109) 2. To sell at public auction in case of reasonable grounds to fear destruction or impairment of the thing without his fault (Art 2108) 3. To bring actions pertaining to the owner (Art 2103) 4. To choose which of several things pledged shall be sold 5. To bid at the public auction (Art 2113) 6. To appropriate the thing in case of failure of the 2nd public auction (Art 2112) 7. To apply said fruits, interests or earnings to the interest, if any, then to the principal of the credit (Art 2102) 8. To retain excess value received in the public sale (Art 2115) 9. To retain the thing until after full payment of the debt (Art 2098) CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
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rise to a prima facie presumption that the thing has been returned and, therefore, that the pledge has been extinguished but not the principal obligation itself. (Art 2110) Requirements for sale of thing pledged at public auction: (Art 2112) 1. The debt is due and unpaid 2. Sale must be at a public auction 3. there must be notice to the pledgor and owner, stating the amount due 4. Sale must be with the intervention of a notary public Effect of sale of the thing pledged: (Art 2115) 1. The sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation, interest and expenses in a proper case 2. If the price of the sale is more than the amount due the creditor, the debtor is not entitled to the excess unless the contrary is provided 3. If the price of the sale is less, the creditor is not entitled to recover the deficiency even if there is a stipulation to that effect REAL ESTATE 2124-2131) MORTGAGE (Articles
A contract whereby the debtor secures to the creditor the fulfilment of a principal obligation, specially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated. Characteristics of the contract: 1. Real 2. Accessory 3. Subsidiary 4. Unilateral it creates only an obligation on the part of the creditor who must free the property from the encumbrance once the obligation is fulfilled.
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NOTE: Where a mortgage is not valid or false, the principal obligation which it guarantees is not rendered null and void. What is lost only is the right to foreclose the mortgage as a special remedy for satisfying or settling the indebtedness which is the principal obligation but the mortgage deed remains as evidence or proof of a personal obligation of the debtor and the amount due to the creditor may be enforced in an ordinary personal action. Kinds: 1. Voluntary agreed to by the parties or constituted by the will of the owner of the property on which it is created 2. Legal one required by law to be executed in favour of certain persons The persons in whose favour the law establishes a mortgage have no other right than to demand the execution and the recording of the document in which the mortgage is formalized (Art 2125 par 2) 3. Equitable one which, although lacking the formalities of a mortgage, shows the intention of the parties to make the property a security for a debt PLEDGE
1. Constituted on movables 2. Property is delivered to pledgee or by common consent to a third person 3. Not valid against third persons unless a description of the thing pledged and date of pledge appear in a public instrument
REAL MORTGAGE
1. Constituted on immovables 2. Delivery is not necessary
Extent of Mortgage: Absent express stipulation to the contrary, the mortgage includes the accessions, improvements, growing fruits and income of the property not yet received when the obligation becomes due and to the amount of the indemnity granted or owing to
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Kinds: 1. Judicial ordinary action for foreclosure under Rule 68 of the Rules of Court 2. Extrajudicial when mortgagee is given a special power of attorney to sell the mortgaged property by public auction, under Act No. 3135 Judicial foreclosure
1. There is court intervention 2. Decisions are appealable 3. Order of court cuts off all rights of the parties impleaded 4. There is equity of redemption except on banks which provides for a right of redemption 5. Period of redemption starts from the finality of the judgment until order of confirmation 6. No need for a special power of attorney in the contract of mortgage
Extrajudicial foreclosure
1. No court intervention 2. Not appealable because it is immediately executory 3. Foreclosure does not cut off right of all parties involved 4. There is right of redemption
5. Period to redeem start from date of registration of certificate of sale 6. Special power of attorney in favor of mortgagee is needed in the contract
NOTES: A foreclosure sale retroacts to the date of registration of the mortgage and that a person who takes a mortgage in good faith and for valuable consideration, the record showing clear title to the mortgagor, will be protected against equitable claims on the title in favor of third persons, of which he had no actual or constructive notice (St. Dominic Corporation vs. IAC 151 SCRA 577).
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inadequacy of price is not material because the judgment debtor may reacquire the property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason of the price obtained at the auction sale and consequently not sufficient to set aside the sale. Mere inadequacy of the price obtained at the sheriffs sale will not be sufficient to set aside the sale unless the price is so inadequate as to shock the conscience of the court taking into consideration the peculiar circumstances attendant thereto. (Sulit vs. CA, 268 SCRA 441) Should there remain a balance due to the mortgagee after applying the proceeds of the sale, the mortgagee is entitled to recover the deficiency. This rule applies both to judicial and extra-judicial foreclosure real mortgage. The action to recover a deficiency after foreclosure prescribes after 10 years from the time the right of action accrues (Arts 1142 & 1144).
Stipulation of upset price or tipo It is a stipulation in a mortgage of real property of minimum price at which the property shall be sold, to become operative in the event of a foreclosure sale at public auction. It is null and void for the property must be sold to the highest bidder. Parties cannot, by agreement, contravene the law and interfere with the lawful procedure of the courts (BPI vs Yulo, 31 Phil 476) Extrajudicial foreclosure real property (Act No. 3135) The law covers only real estate mortgages. It is intended merely to regulate the extrajudicial sale of the property mortgaged if and when the mortgagee is given a special power of express authority to do so in the deed itself or in a document annexed thereto. The authority to sell is not extinguished by the death of the mortgagor (or mortgagee) as it is an essential and inseparable part of a CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD), Ma. Ricasion Tugadi (Conflicts of Law)
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Pledge
1. Refers to personal property 2. Perfected by delivery of the thing pledged 3. Consensual contract 3. Real Contract
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Real Mortgage
1. Debtor usually retains possession of the property 2. Creditor does not have any right to receive the fruits; but the mortgage creates a real right over the property 3. The creditor has no such obligation
2. Creditor acquires only the right to receive the fruits of the property, hence, it does not produce a real right 3. The creditor, unless there is stipulation to the contrary, is obliged to pay the taxes and charges upon the estate 4. It is expressly 4. There is no such stipulated that the obligation on part of creditor given mortgagee possession of the property shall apply all the fruits thereof to the payment of interest, if owing, and thereafter to the principal Subject matter of both is real property
NOTES: The parties, however, may agree on an extrajudicial foreclosure in the same manner as they are allowed in contracts of mortgage and pledge (Tavera vs. El Hogar Filipino, Inc., 68 Phil 712). A stipulation authorizing the antichretic creditor to appropriate the property upon the non-payment of the debt within the agreed period is void (Art 2088). CHATTEL MORTGAGE (Articles 21402141) A contract by virtue of personal property is recorded Chattel Mortgage Register security for the performance obligation (Art 2140). which in the as a of an
Obligations of antichretic creditor: 1 To pay taxes and charges on the estate, including necessary expenses NOTE: Creditor may avoid said obligation by: a. compelling debtor to reacquire enjoyment of the property or b. by stipulation to the contrary 2 To apply all the fruits, after receiving them, to the payment of interest, if owing, and thereafter to the principal 3 To render an account of the fruits to the debtor 4 To bear the expenses necessary for its preservation and repair Remedies of creditor in case of nonpayment of debt 1. Bring an action for specific performance; or 2. Petition for the sale of the real property as in a foreclosure of mortgages under Rule 68 of the Rules of Court.(Art 2137)
Characteristics 1. Accessory contract it is for the purpose of securing the performance of a principal obligation 2. Formal contract registration in the Chattel Mortgage Register is indispensable for its validity 3. Unilateral contract it produces only obligations on the part of the creditor to free the thing from the encumbrance on fulfilment of the obligation. Special Requisites (in addition to the common essential requisites): 1. It can cover only personal or movable property in general; however, the parties may treat as personal property that which by its nature would be real property; 2. Registration of the mortgage with the Chattel Mortgage Register where the mortgagor resides; if property is located in a different province, registration in both provinces required; 3. Description of the property as would enable the parties or other persons to identify the same after reasonable investigation and inquiry; and 4. Accompanied by an affidavit of good faith to bind third persons, but not for the validity of the contract.
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right to a conveyance and to be placed in possession thereof. NOTES: Purchaser is not obliged to bring a separate suit for possession. He must invoke the aid of the courts and ask for a WRIT OF POSSESSION. Section 7 of Act No. 3135 allows the purchaser to take possession of the foreclosed property during the period of redemption upon filing of an ex parte application and approval of a bond. 2. Chattel mortgage When default occurs and the creditor desires to foreclose, the creditor has the right to take the property as a preliminary step for its sale. NOTE: Where the debtor refuses to yield the property, the creditors remedy is to institute an action either to effect judicial foreclosure directly or to secure possession (REPLEVIN) as a preliminary to the sale contemplated in Section 14 or Act. No. 1508 CONCURRENCE AND PREFERENCE OF CREDITS (Articles 2236 2251) Concurrence of Credits Possession by two or more creditors of equal rights or privileges over the same property or all of the property of the debtor Preference of Credits Right held by a creditor to be preferred in the payment of his claim above others out of the debtors assets. NOTES: The rules on preference of credits apply only when two or more creditors have separate and distinct claims against the same debtor who has insufficient property. Preference creates no lien on property, and, therefore, gives no interest in property, specific or general, to the preferred creditor
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Lien
Creates a charge on a particular property
Liability of debtors property for his obligations GENERAL RULE: Debtor is liable with all his property, present and future, for the fulfilment of his obligations. (Art 2236)
EXEMPT PROPERTY:
1. Present property those provided under Arts. 155 and 205 of the Family Code, Sec. 13, Rule 39 of the Rules of Court, and Sec. 118 of the Public Land Act 2. Future property a debtor who obtains a discharge from his debts on account of his insolvency, is not liable for the unsatisfied claims of his creditors with said property subject to certain exceptions expressly provided by law. (Secs. 68, 69, The Insolvency Law [Act No. 1956]) 3. Property under legal custody and those owned by municipal corporations necessary for governmental purposes General Categories of Credit: 1. Special Preferred Credits - those listed in Arts. 2241 and 2242 shall be considered as mortgages and pledges of real or personal property or liens (Art. 2243). Hence, they are not included in the insolvent debtor's assets.
NOTES: Arts. 2241 and 2242 do not give the order of preference or priority of payment. They merely enumerate the credits which enjoy preference with respect to specific movables or immovables. With respect to the same specific movables or immovables, creditors, with the exception of the State (No. 1), merely concur. They only find application when there is a concurrence of credits, i.e., when the same specific property of the debtor is subjected to the claims of several creditors and the value of such property is insufficient to pay in full all the creditors. In such a situation, the question of preference will arise. Article 2242 makes no distinction between registered and unregistered vendors lien (No. 2). Hence, any lien of that kind enjoys the preferred credit status. Unlike the unpaid price of real property sold, mortgage credits (No. 5), in order to be given preference, should be recorded in the Registry of Property. But a recorded mortgage credit is superior to an unrecorded unpaid vendors lien (De Barretto vs. Villanueva, 1 SCRA 288) The priority rule applies to credits annotated in the Registry of Property. As to credits mentioned in No. 7 of Article 2242, there is preference among the attachments or executions according to the order of the time they were levied upon the property. The pro rata rule in Article 2249 does not apply; otherwise, the result would be absurd. The preference of a credit annotated by an attachment or execution could be defeated by simply obtaining a writ of attachment or execution, no matter how much later (Manabat vs Laguna Federation of Facomas, Inc., 19 SCRA 621). The last paragraph of Article 2241 applies only when the right of ownership in such property continues in the debtor, and, therefore, it is
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preference with respect to specific property because they are not among those mentioned in Arts. 2241 and 2242 and those while included in said articles are unpaid because the value of the property to which the preference refers is less than the preferred credit or credits, shall be satisfied in the order established in Art. 2244 with reference to other real and/or personal property. Common credits or those which do not fall under Arts. 2241, 2242, and 2244 do not enjoy any preference and shall be paid pro rata regardless of dates.