Law 107: CREDIT TRANSACTIONS I.

The Concept of Credit DEPOSIT A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. (1962) - contract TO deposit is binding EXTRAJUDICIAL JUDICIAL VOLUNTARY NECESSARY A deposit is necessary: A voluntary deposit is that wherein the delivery is made by the will of the depositor. A deposit may also be made by two or more persons each of whom believes himself entitled to the thing deposited with a third person, who shall deliver it in a proper case to the one to whom it belongs. (1969) (1) When it is made in compliance with a legal obligation; (2) When it takes place on the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, or other similar events. (1996) Perfected by delivery Law or quasicontract Movable things (1966)

LOAN Real contract, perfected by delivery (1934) - But a contract TO loan is consensual

COMMODATUM

SIMPLE LOAN By the contract of loan, one of the parties delivers to another, money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum. (1933)

DEFINITION

By the contract of loan, 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, in which case the contract is called commodatum. (1933)

A judicial deposit or sequestration takes place when an attachment or seizure of property in litigation is ordered (2005)

NATURE

Purely personal in character (1939) Perfected by delivery

Perfected by delivery

Perfected by delivery Auxiliary to a case pending in court Law (resulting in a judicial order) Movable as well as immovables (2006)

Perfected by delivery

SOURCE OF OBLIGATION OBJECT

Contract GR: Non-consumable property, whether movable or immovable (1933, 1937)

Contract Money or other consumable property fungibles = property

Contract Movable things (1966)

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XPN: Consumable goods if the purpose of the contract is not the consumption of the object, as when it is merely for exhibition (1933) Essentially gratuitous (1933) CONSIDERA TION If any compensation is to be paid by him who acquires the use, the contract ceases to be a commodatum (1935)

commercially interchangeable with other property of the same kind

GR: gratuitous May be gratuitous or with a stipulation to pay interest (1933) XPNS: 1. There is an agreement to the contrary 2. The depositary is engaged in the business of storing goods May be entered into orally or in writing (1969) DEPOSITOR RIGHTS: OBLIGATIONS: 1) Liability for loss/ damage GR: depositor delivers a thing the character of which causes any loss to the depositary XPNS: 1. At the time of the constitution of the deposit, depositor was not aware of, or was not expected to know the dangerous character of the thing; 2. Depositary was notified of the character 3. Depositary was in any case aware 2) Liable for expenses if N/A Always with remuneration

FORM PARTIES

No required form BAILOR RIGHTS: 1) Ownership need not be the owner of the thing loaned but against the bailee, he retains the ownership of the thing loaned (1938, 1933) 2) To demand immediate return if bailee commits any act of ingratitude (1) If the bailee should commit some offense against the person, the honor or the property of the bailor, or of his wife or children under his parental authority; (2) If the bailee imputes to

No required form LENDER RIGHTS: 1) To be paid OBLIGATIONS: 1) To deliver property to the borrower

Judicial order DEPOSITOR Kinds of necessary deposit: 1. in compliance with a legal obligation 2. on the occasion of any calamity 3. made by travellers in hotels and inns The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given
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DEPOSITOR

the bailor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the bailee himself, his wife or children under his authority; (3) If he unduly refuses him support when the bailee is legally or morally bound to give support to the donor. OBLIGATIONS: 1) Shoulder expenses for deterioration due to the use of the thing without bailees fault (1943) 2) Equally bear extraordinary expenses arising on the occasion of the actual use even without bailees fault XPN: stipulation to the contrary (1949) bailor cannot exempt himself from the payment of expenses or damages by abandoning the thing to the bailee (1952) 3) Liablefor loss Because the bailor is the

gratuitous

to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotelkeepers or their substitutes advised relative to the care and vigilance of their effects. The hotelkeeper is liable for the vehicles, animals and articles which have been introduced or placed in the annexes of the hotel 4. passengers with common carriers passenger baggage being transported by the common carrier that is not in the custody of the passenger or of the passengers employees. CC 1733 requires extraordinary diligence in the
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owner, he bears the loss. However, there are instances when bailee bears the loss whether due to a fortuitous event or not: (1) If he devotes the thing to any purpose different from that for which it has been loaned; (2) If he keeps it longer than the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted; (3) If the thing loaned has been delivered with appraisal of its value, UNLESS there is a stipulation exemption the bailee from responsibility in case of a fortuitous event; (4) If he lends or leases the thing to a third person, who is not a member of his household; (5) If, being able to save either the thing borrowed or his own thing, he chose to save the latter. (1942) 4) Liability for damages if knowing the flaws of the thing loaned, does not advise the bailee of the same, shall be liable to the latter for the damages which he may suffer by reason thereof NOTE: Bailee will have a right to retain the thing until the bailor answers for

vigilance over the goods. Passenger baggage deposited with the common carrier by the passenger shall be considered necessary deposit.

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damages (1944)

BAILEE RIGHTS: 1) Permissive Use of the thing loaned but not its fruits (1935) but a stipulation that the bailee may make use of the fruits of the thing loaned is valid (1940) GR: can neither lease nor lend the object of the contract to a 3rd person XPN: Members of bailees household can make use of the thing loaned XPNS to XPN: 1. Stipulation to the contrary 2. nature of the property forbids its use by anyone other than the bailee 2) To be reimbursed for extraordinary expenses for the preservation of the thing loaned provided the bailee brings the same to the knowledge of the bailor before incurring them XPN: when they are so

BORROWER RIGHTS: 1) Ownership OBLIGATIONS: 1) Pay In case it is impossible to deliver the same kind, its value at the time of perfection of the loan shall be paid If loan is in money, payment must be made in the currency stipulated or currency which is the legal tender in the Philippines; in case of extraordinary inflation or deflation, the basis of payment shall be the value of the currency at the time of the creation of the obligation 2) Liable for loss RIGHTS:

DEPOSITARY

DEPOSITARY

DEPOSITARY

1) Use the thing GR: cannot use the thing XPNS: 1. If with the express permission of the depositor contract becomes a loan or commodatum, except where safekeeping is still the principal purpose of the contract 2. When the preservation o the thing requires its use but it shall only be used for that purpose 2) Retain thing in pledge until payment of what may be due him by reason of the deposit OBLIGATIONS: 1) Safekeeping Way of the deposit = manner by which the object was delivered GR: cannot change the way of the deposit XPN: 1. He may reasonably presume that the depositor will consent to the change if he knew of the
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urgent that the reply to the notification cannot be awaited without danger (1949) but if, for the purpose of making use of the thing, he incurs expenses other than ordinary or extraordinary, he is not entitled to reimbursement (1950) OBLIGATIONS: 1) Return the very same property GR: Bailor cannot demand return till after the expiration of the period stipulated or after the accomplishment of the use for which the commodatum has been constituted XPN: Bailor should have urgent need of the thing, he may demand its return or temporary use (commodatum is suspended while the thing is in the possession of the bailor) precarium: a contractual relation wherein the bailor may demand the thing at will; (1) If neither the duration of the contract nor the use to which the thing loaned should be devoted, has been stipulated; or (2) If the use of the thing is merely tolerated by the owner.

facts of the situation AND 2. He notifies and waits for the decision of the depositor UNLESS delay would cause danger. Objects that earn interest 1. He must collect interest as they become due AND 2. Take necessary steps to preserve their value as well as their rights according to law XPN: contracts for the rent of safety deposit boxes Grain and articles of the same kind and quality GR: may be commingled and various depositors shall own or shall have a proportionate interest in the mass XPN: stipulation to the contrary Thing is delivered closed and sealed He must return it in the same condition otherwise he is liable for damages should the seal/lock be broken through his fault (presumed) He shall keep secret the deposit Locked box or receptacle Depositary will be presumed to be authorized to do so when: 1. The key has been delivered to him 2. Instructions of the depositor as regards the deposit cannot be executed without reopening
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the box or receptacle 2) Ordinary Expenses for the use and preservation of the thing loaned (1941) not liable for the deterioration of the thing loaned due only to the use thereof and without his fault (1943) Solidary liability When there are two or more bailees to whom a thing is loaned in the same contract, they are liable solidarily (1940) 3) Equally bear extraordinary expenses arising on the occasion of the actual use even without bailees fault XPN: stipulation to the contrary (1949) 2) Liability for loss and damages 1. If he deposits the object to a 3rd person XPN: stipulation to the contrary 2. Deposit to 3rd person is allowed but depositary deposits the thing with a person who is manifestly careless of unfit 3. employees of the depositary are negligent 4. Depositary uses the object unless under the xpns 5. Seal or lock was broken through his fault 6. Even if due to fortuitous event when: (1) If it is so stipulated; (2) If he uses the thing without the depositor's permission; (3) If he delays its return; (4) If he allows others to use it, even though he himself may have been authorized to use the same. 3) Immediate return of the thing upon demand To whom: 1. Depositor 2. Depositors heirs and successors 3. Person who may have been designated in the contract
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Depositor: Incapacitated, Depositary: Capacitated - depositary may be compelled to return by the guardian or administrator of the depositor or by the latter himself if he should acquire capacity Depositor: Capacitated, Depositary: Incapacitated GR: Depositor only has an action against the depositary 1.For recovery, while depositary is still in possession OR 2. Compel him to pay amount by which he may have been benefitted OR its price XPN: may file action to recover against 3rd person acting in BF If the thing was stolen and depositary discovers the true owner: - advise the owner of the deposit - if not claimed within a month, depositary will be relieved of all responsibilities by returning the object to the depositor if he has reasonable grounds to believe that the thing had not been lawfully acquired by the depositor, he may return the same joint depositors, divisible object each one receives only his share solidary creditors/ indivisible object return to any one but if any demand has been made by one of them, payment should be
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made to him XPN: stipulation designating person to whom thing should be returned What thing deposited + products, accessories and accessions Where - Place designated at the time the deposit was made but depositor shall bear transportation expenses - if none, in the place where the thing is located even if its different from the place where it was deposited UNLESS with malice When GR: Upon demand regardless of specified period XPNS: 1. Thing judicially attached while with the depositary 2. depositary was notified of the opposition of a 3rd person to the return or removal of the thing 4) Liable for expenses if onerous Death of either bailor or bailee (1939) EXTINGUISH ED BY When bailor demands immediate return upon bailees commission of an act of ingratitude under Art 765 1. Loss or destruction of thing deposited 2. In case of gratuitous deposit, death of either the depositor or the depositary

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