CREDIT TRANSACTIONS includes all transactions involving the purchases or loans of goods services or money in the present with

the promise to pay or deliver in the future CHAPTER 1 Kinds of Loans Commodatum Mutuum (simple loan) Mutuum -consumable -delivers another a money or thing with the condition that the same amount be of the same kind and quality shall be paid -may be gratuitous or with a stipulation

BAILOR in commodatum need not be the owner of the thing loaned. COMMODATUM is purely personal in character Death of either Bailor or Bailee extinguishes the contract Bailee can netiher lend nor lease the object of the contract to a third person.However the members of the BAILEEs household may use the thing loaned, UNLESS there is a stipulation to the contrary or UNLESS the nature of the thing forbid such use.

Commodatum -Not consumable -delivers another a thing to use the same for a certain time and return it

The BAILEE is obliged to pay for the ORDINARY EXPENSES for the USE and PRESERVATION of the thing loaned (Art.1941)

-essentially gratuitous

The BAILEE is liable for the LOSS OF THE THING even if it should be through FORTUITOUS EVENT. he devotes the thing to any purpose different from that of which it has been intended if he keeps it longer than what is stipulated thing loaned has been delivered with appraisal value, unless there is a stipulation exempting the bailee from responsibility in cases of fortuitous event. if he lends or leases the thing not a member of his household if being able to save either the thing borrowed or his own thing, he chose to save the LATTER.

Kinds of Commodatum Ordinary commodatum Precarium

ACCEPTED PROMISE to deliver something by way of commodatum or simple loan is BINDING upon the parties Commodatum or simple loan ITSELF SHALL NOT BE PERFECTED until DELIVERY of the OBJECT of the contract. Commodatum and Mutuum are real contracts. BAILOR giver/ the one who delivers the object to the bailee BAILEE borrower/ recipient BAILEE acquires the use of the thing loaned BUT NOT ITS FRUITS. If any compensation is to be paid by the BAILEE the contract CEASES to be a COMMODATUM. COMMODATUM is essentially gratuitous Transient possession of a person (not in the conept of an owner) by an owners land partakes of the character of a commodatum IT DOES NOT MILITATE AGAINST THE TITLE OF THE OWNER. Fruits and its use shall go to the owner. However a STIPULATION that the bailee may make use of the fruits of the thing loaned is VALID.

If the thing loaned (Carabao) is not returned upon the demand of the BAILOR the BAILEE is liable to indemnify the owner thereof by PAYING HIM THE VALUE. BAILEE does not answer for the deterioration of the thing loaned due only to the use thereof and without his fault. The Bailee has NO RIGHT OF RETENTION to the thing loaned on the ground that the BAILOR OWES HIM SOMETHING even though arising from expenses. However THERE IS A RIGHT OF RETENTION for damages incurred by the Bailee for the Bailors failure to inform him of the thing loaned. The failure of the BAILEE to return the thing loaned DID NOT MEAN ADVERSE POSSESSION He held in trust for the owner UNTIL REPUDIATED the TRUST by declaring the property in his name for taxation purposes. Catholic Vicar Apostolic of the Mt. Province vs. Court of Appeals

Consumable goods may be a subject of COMMODATUM if the PURPOSE is NOT the CONSUMPTION of the object. Movable and Immovable Property may be the Object of COMMODATUM COMMODATUM of: Personal Property -granting the use of a certain personal property ex. furniture reserving the ownership for herself thereof Real Property -granting the use of a lot which allows another to erect a house w/out any consideration or price

If there are two or more BAILEES of the thing loaned in the same contract, they are SOLIDARILY LIABLE. The BAILOR cannot demand the return of th thing loaned till AFTER THE EXPIRATION of the period stipulated or AFTER THE ACCOMPLISHMENT of the use for which the commodatum has been constituted. However, if in the meantime he should have urgent need of the thing he MAY DEMAND temporary use by the bailor. -the contract of commodatum is SUSPENDED while the thing is in possession of the BAILOR.

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PRECARIUM the bailor may demand the thing at will in 2 instances: If there is no stipulation as to the duration of the use of the thing If the use of the thing is merely tolerated by the owner

The BAILOR may demand the immediate return of the thing if the BAILEE commits any act of ingratitude. Refer to Art.765 of the CIVIL CODE BAILEE (DONEE) commits offense against the person, honor, or the property of the BAILOR (DONOR) or his wife or children under parental authority. BAILEE (DONEE) imputes to the BAILOR(DONOR) 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(DONEE) himself, his wife or children under his authority.

The Bailor shall REFUND 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 the when it is so urgent that reply to the notification cannot be awaited without danger. (Art.1949)

If the extraordinary expenses arise on the actual use of the thing by the bailee even though he acted without fault, they shall be BORNE EQUALLY by both BAILOR and BAILEE unless there is a stipulation to the contrary. (Art.1949) If for the purpose of making use of the thing, the BAILEE INCURS EXPENSES OTHER THAN those referred in articles Art.1941 and Art.1949, he is not entitled to reimbursement.

The BAILOR who, 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. The BAILOR cannot exempt himself from the payment of expenses or damages by ABANDONING THE THING TO THE BAILEE.

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