CREDIT – ATTY.

GOZON - Real contract because it requires delivery of the

- Close book recit. Open notes. No codals allowed in class. object in order to perfect or consummate contract.
- Recitation - Example: A has his car and after class B would be
- Exam – no prelims dating his girlfriend. B said to A, may date kami but
- Grades – divided into 3. wala akong car. Nkakahiyang pumasok sa Victoria
- Avoid erasures in midterms. without car. A: No problem, my car is heavily tinted.
- Talk with confidence during recitation either you’re right No need to pay. “Papahiram ko sa’yo car ko.”
or wrong. “Salamat”.
- As regards cases, hindi lang credit tinatanong sa cases. - No commodatum.
Lahat, even remedial law. You can appreciate the law if - Perfected contract. Innominate. “I give that you give”
you can correlate it with different laws and not be
confined with credit only. You cannot study in isolation. After class, inabot car keys, perfected na. Upon delivery of key,
- Textbook: I do not prescribe any. delivery of key is delivery of object. Symbolic delivery.
Pwede ring, B: Peram kotse. A: Sige bukas yan, andun yung key
Credit Transactions sa loob.
- Could be likened to a big umbrella under which are - Delivery by tradition longa manu, symbolic delivery
different contracts. din.
Nominate contracts - specifically named in civil code but there Pwede ring B: Peram kotse. A: Sige, yan (tinuro malapit lang)
are also contracts not name which are called innominate - Delivery by short or tradio brevi manu.
contracts.
Q: Bakit may commodatum, e walang pambayad si B?
Q: What are the nominate contracts under the skirt of credit - Because commodatum is essentially gratuitous. Kasi
transactions? kung nagbayad, contract of lease.
Principal Contracts – to assure that obligor will perform
what is encumbent upon him. Kapag nag-hire ka ng babae, contract for a piece of work.
- Contract of commodatum A being owner, bearor. B, bearee.
- Mutuum (simple loan) After date, B is supposed to deliver the same car because in
- Deposit commodatum, object is always specific. Non-fungible thing.
Accessory Contracts – sometime entered into to assure Meaning, you cannot replace thing even of the same kind or
compliance with obligation quality.
- Mortgage (real and chattel)
- Pledge Q: Aside from these contracts, is there any other subject
- Antichresis included in the umbrella of credit transaction? What scheme?
- Contract of guaranty - When assets of obligor are insufficient to pay his
- Contract of suretyship debts, this scheme is concurrence and preference of
credit.
Q: What are the contracts that fulfill security of obligation? - Accessory contract we have discussed are material.
- Contract of mortgage – chattel (movable/personal - Classification between secured creditor and
property) unsecured.
- Real estate mortgage (immovable property)
- Sometimes security is not within chattel/real, Contracts meeting of minds – consensual
sometimes it has to be delibered by the obligor to the Contracts that require delivery of the thing – real contract.
obligee. – contract of pledge. Contracts that require particular form – formal contracts.
- Sometimes security is not land per se or personal - Statue of frauds.
property per se, sometimes for fulfillment of - Requires certain contracts to be in writing in order to
obligation, sometime it is the fruits or produce. – make it enforceable. Otherwise, you cannot go to
contract of antichresis. court enforce.
- Perfected but unenforceable if not in writing.
Q: Sub-specie of commodatum
- Precarium Parole evidence rule is different from statute of frauds.
One example that consent must be in writing is contract of
Q: Guaranty guaranty. If not reduced, you cannot go to court to enforce. If
- Arrangement of solidary obligation is also a contract. you go to court, action for specific performance, where do you
– contract of suretyship. file?
The three principal contracts may be guaranteed by the
accessory. Best evidence rule. Anong relasyon sa credit? In the course of
our discussion I will show how these are applicable in our
Commodatum discussion.
Prestation – active subject = obligee (may demand) creditor
Passive subject = obligor (party bound to perform fulfillment
of obligation) debtor
G.Rs: Contract perfected upon meeting of minds -> consensual
: Contract may be in writing or not.
: Meeting of minds may be expressed/implied
Contract of sale
Example: I am creditor, she may pay me by turning over
possession of new bag instead of bag which is called dacion en
pago.
1245. Even if partners are not _____ on it, governed by
contract of sale.
Special contracts are nominate: named by the civil code (study
latin)
Innominate (4 innominate contracts) valid contracts under
eyes of the law but we have no appellation on that.
Main contracts/principal
1. COmmodatum
2. Mutuum (simple loan)
3. Deposit
Secured Transactions – there is principal and guaranteed by an
accessory contract.
Example: If you have boyfriend and you agreed to share
intimacy without blessing of marriage, that is unsecured
transaction. You are not tied to each other.
Unsecured Transactions
Example: but if you did it after celebration of marriage, you are
tied. That is vinculum juris (legal tie) vinculum – bind. Juris
(legal)
Example: Bumili Vios 1M, but wala siya nun. So kailangan
somebody to finance the car she is buying.
Toyota: “A, just pay 150k down, while remaining wil be on
financial basis. We will look for bank that will..”
BPI: Okay, I will finance the balance.
So si Toyota magbabayad 850k. What is relationship of A with
BPI? (which paid remaining balance) contract of mutuum with
BPI. But BPI is so much intelligent it did not allow to loan
without collateral. So A executed chattel mortgage to
guarantee fulfillment of obligation. Kapag bayad na, then I will
release chattel mortgage. Meaning your car will be yours
without a lien. This example is a secured transaction.
How did car become security for loan? By constituting chattel
mortgage for the car. Meaning, kapag hinid nagbayad si A, car
will be foreclosed. It will be sold at public auction at 850,000.
Proceeds will be paid by buyer of car to BPI. Once received by
BPI, 850 will be applied by bank in payment of loan of A.
Accountant words:
Positive/negative networth
In the red ink
In the woods (Para kang naliligaw)
Unsecured Transaction
Example: A asked B kulang pera niya to buy, pwede pautang
850k. B: Kaklase kita, tiwala ako sa’yo. No collateral, no
security. Contract of mutuum. Unsecured transaction.
Dumating panahon na walang pera si A.
If you are unsecured creditor, kapag si A insolvent (more
liabilities than assets) it means you cannot pay obligation. SI B,
because unsecured creditor, si C may utang din siya kay A. Si D
nagpautang din kay A. B- 850 C- 20k D-20k. In event that she
cannot pay all her obligations, all of them unsecured. All of us
are “pari pasu” in “equal footing”. Insert application of
payment (proportionately) Article 1254.
Example si B may chattel mortgage. Inexercise right over
chattel mortgage. Siya babayaran kasi siya yung secured. She
has lien over the car.
Pledge – real accessory contract.
Example: A may date latter e walang pera. Punta kay B” Pare
gusto kita pautangin pero binibiliang ng asawa ko pera ko.
Ginawa ni A pumunta sa pawnshop: Ma’am utang ako sa’yo 3k
P: SIge sir, ano prenda mo? Etong relo ko, mamahalin ito.
Pawnshop gave 3k. A left watch. We will be holding this. 3k,
babawasan natin ng P500 advanced interest. 2400 nalang. We
have contract of pledge (sangla).
Constructive delivery of land: registration of land in her name.
Example: Registering motor with the LTO. Certificate of
registration kaya may nakalagay na encumbered in favor of
BPI.
Guaranty – A umutang kay B ng 50k. B sige (accountant) sino
ba pwede kong maging guarantor dyan na kung di ka
makabayad, siya sisingilin ko. Si G ginaguarantee. Kapag di
nakabayad, in essence, si B, yung hahabulin si G because
contract of guaranty.
B: Ayaw guarantor. Gusto, contract of suretyship. Gusto ko C
will Guaranty in his capacity as surety. C agreed. Here, we go
back in law of contract about solidary obligation. Solidary
creditor can collect the whole obligation’s fulfillment. Q: Kung
surety si C, ibig sabihin immediately B can demand fulfilment
of obligation from na without first demanding from A?
“Jointly severally” – solidary yan
De Leon: same solidary and surety
Tolentino: The surety is not equivalent per se to solidary co-
debtor because surety is actually only in “Frador and solidum”
Distinction is more of theoretical.
Sir: I think mas tama Tolentino because surety guarantees
solvency of debtor.
Antichresis – here, by agreement of the parties debtor will be
paying creditor in terms of harvest of produce. Accessory
contacts cannot exist without principal. It derives its existence
from the principal such that if principal is void, accessory
contract has no basis to have independent existence.
- Accessory could be likened to parasite, it cannot exist
without host.
Object in commodatum is non-fungible. Determinate/specific
Fungible – cannot be used without being consumed.
Non-fungible – non-consumable.
There are those which are fungible but becomes non-fungible
by intention. Example: 10 peso bill was actually fungible
because replaceable by another ten/coins but because my
classmate used it just as show money, non-fungible.
A umutang kay B P3,000. Sige later, after class, inabot 3k.
Perfected. Real contract. After class, binayad, 30 pieces of 100
peso bill. Pwede bang sabihin ni B na yung same 3 bills parin?
No. because object is fungible. Consumable.
Fungible/Non-fungible
Attributes of ownership – right to possess
- Jus possedendi (right to possess)
- Jus vindicandi (right to vindicate)
Somebody used your property without permission or took
your property without permission.
Accion interdictal – unlawful detainer and forcible entry. MTC.
Accion pauliana – after one year. RTC.
- Jus fruendi (right to fruits)
A utang kay B. 3k. May interest. 3,300 babalik. Interest is fruit
of property.
Civil fruits: interest
Natural fruits: namunga, nanganak.
- Jus disponendi (right to dispose)
A owner ng marker, I can donate it to B. Pagpalagay na hiniram
ko lang kay Arellano, can I donate it? NO.
- Jus abutendi (right to abuse property bears right to
destroy
I can destroy marker, itapon, sunugin.
If you have these rights, you are the absolute owner. You are
the “owner in fee simple”.
Connection with commodatum. A, at the end of the day he is
obliged to return the same. B gave A the rights/attributes of
ownership.
May right to posses, vindicate, and fruits. But the disponendi
and abutendi cannot be trasferred because these are “acts of
pure ownership.”
A called to get bill P2,500 for accommodation and food. 3,000
sinuklian 500.
- Bakit kanina example isosoli same car, specific and
determinate. Why is it that T when he will be paying
E, what he had borrowed from E he can be paying
with different denominationpero 3l iba na.
- Because object in contract of mutuum is fungible.
- Same, sometimes better value.
- All attributes of ownership are transferred even
disponendi and abutendi. This differentiates mutuum
from commodatum.
- All rights are concomitant with physical transfer of
object.
- Spending money value lessened. He is exercising jus
abutendi.
Example with stipulated interest 300. Why did we use
promisorry note Article 1956.
- For interest to be collectible and enforceavle by court
action then interest must be reduced in writing.
Pagpasok ng kotse, garahe ng Victoria, there is again another
contract. Pag-akyat, Tom removed clothes, may contract
entered into ulit by operation of law. GF naghubad din. Laht
branded din. What contract with establshment? Personal
belongings are brought inside. Contract of Deposit (contract of
necessary deposit legal deposit because that contract was
created by operation of law “ope legis”
Contract created by what we call this legal or necessary
deposit.
Opration of law. Motel, hotel, house – ejusdem generis
But most common of creating contract of deposit is by
agreement of parties. We call them as conventional
A is our beadle. I told her, pwede bang ikaw na lagi magtago ng
marker and eraser, labos mo tuwing kailangan. There was
delivery. Deposit is a real contract. Purpose of deposit is
safekeeping. In Commodatum, purpose is use.
B turned over to A three 1k peso bills for his consumption.
Which is the purpose of consumption.
Establishment notices: The establishment will not be liable for
loss of things.
- It has already been decided by the Supreme Court na
hindi sila naeexcuse by mere invocation of notice.
Legal Processes
- If deposit is created by legal processes such as writ of
attachment, replevin, receivership proceedings,
arrest, we call theses judicial deposit/sequestration.
- Rule 57, ROC.
Attachment/Replevin/Receivership/Search Warrant.
- Act 3815. Rule 68 – Applicable in relation to judicial
foreclosure of mortgage.
2 modes of foreclosure:
1. Judicial – when you file with court
2. Extrajudicial
Attachment – when you file a case, all properties constituted
by virtue of judicial deposit, we call theses “properties
custodial legis”.
Deposit
1. Conventional – chattel/ personal
2. Legal – chattel/personal
3. Judicial – chattel/real.
“Depositary” “Depositor”
Object: Safekeeping
1. Conventional
Means that contract is voluntarily entered into by the parties.
By convention.
Object: Always movable property of chattel where depositor
delivers property to depositary for safekeeping of the object.
In commodatum, the ____ is under obligation to observe the
dilifence of a good father of a family while object is in his
possession.
In deposit, in absence of express stipulation, ordinary
diligence. OD is diligence of a good father of a family. Diligence
con bonum pater familias. (con = with) (bonum = good)
May be for compensation or without. Notwithstanding, the
diligence is always diligence of a good father of a family. Why?
- Principle of incorporation. The law/laws are deemed
incorporated into the contract despite the absence of
agreement of the parties to that effect.
Q: Would be possible on part of parties to waive that degree
of care?
NO. Contrary to public Policy. VOID> As if stipulation was never
agreed to.
2. Legal/Necessary Deposit
Example: V may date after class. Yung damit and car example.
What contract?
For room, a) Contract of lease
Accommodation b) Contract of necessary deposit. Hotel is
responsible to safely keep your personal belongings kahit suot
mo pa yan. And hotel cannot post that management will not
be responsible for loss of any personal belongings.
Example: Tree was uprooted. Transferred to another estate
belonging to another by flood. There is legal deposit created
by operation of law.
- Tree, real property as long as attached to land.
- Tree personal when uprooted.
3. Judicial Process
Example: A abogado na. Filing civil case on behalf of client. Let
us assume there is ground to issue writ of preliminary
attachment (meaning that at the time of the commencement
of the action, T, sheriff, B, Judge, issued writ of preliminary
attachment of properties of E consisting of personal and real
property. (beach house and car) Sheriff served summons
(demanda) and part is the writ yung properties mo naattach
namin. Kukunin ko properties mo, your land will also be
attached.
Personal properties will be physical taken and brought to
court. Howe will you attach beach house? By annotating the
title of the land that annotation is equivalent to judicial
deposit.
In judicial deposit, both species of property, real or personal,
may be subject.
Example: intangible. Shares of stock (certificate of shares of
stock) How? Bring preliminary attachment to corporation
secretary so the latter may make necessary annotations in the
books of corporation that shares is subject.
Rationale? Possible na pag nanalo ka kasi, wala nang property
na makukuha. Properties will be sold to public auction which
will be applied in satisfaction of debt in favor of ____
Properties under custody are called? Properties in custodial
egis. You cannot attach, dispose, enjoy property without
permission from the Court.
Payment is performance of obligation in any other manner
(payment in money/performed extinguishing obligation:
Nocomerepalo.
Magbabayad ako sa’yo -> tender of payment.
- Consignation is equivalent to payment.
Conventional Interpleader
Eraser and whiteboard marker. Owned by Arellano pero
pagpalagay natin na akin ‘tp. O kaya sa Arellano ‘to.
Commodatum. Permitted to use. Later on, ayaw ko na
magturo, kinukuha ko kay B yung object. Arellano: do not give
that to Atty because we are the owner of those properties in
your possession. Sir: ibigay mo sakin yan. Sino ba nagbigay
sa’yo nyan? Si Atty Bubut o ako? Arellano: Kakasuhan ka
namin. Sir: Kakasuhan kita damages.
Remedy: Action for Interpleader (meaning, between).
- A will filed case against prof and arellano. Kung sino
Manalo, doon ibibgay yung marker. If sinabi ng court
na si Arellano, Atty. Cannot file complaint for
damages anymore.
- Based on amount daw yung jurisdiction. Ruling ng SC
– use this for purpose of bar exams.
- Personally, for sir, RTC because incapable of
pecuniary estaimation. Pero nadecide na kasi ng SC e.
Judicial
- Attachment
- Consignation
- Garnishemnet
- Replevin
- It is also possible that person or corporation under
liquidation, meaning, insolvency. Kailangan i- ____
yung property.
Example: Balik sa example with THads and Eloi. Ginawa ni
Thaads, Pinadalhan ng notice of garnishment sa lahat ng bank.

Example: Sheriff pinadalhan lahat ng bank. IBig sabihn all bank,

I have here writ of execution to the effect that Eloisa should
pay 2M. I fyou have deposit in your bank of Atty. Eloisa’s,
freeze that amount to the extend of amount and deliver that
to me. This is a judicial deposit. A property in custodial egis.

Receivership
- Duty is to preserve assets of corporations in order to
prevent loss of property. Under judicial deposit,
custodia legis.

Replevin
- Action for party deprived of property
- Availed of mortgage creditor preparatory to…
Example: Vincent bumili car on insatllemtn, balance, paid
100k. Car was for 1M so may balance 900k na inutang niya sa
BPI. Filure to pay 2 or more installemtns will make the whole
obligation immediately due and demanable (called
acceleration clause). IN order to foreclose, BPI should have
physical possession of car. Sherriff should have in his
possession physical possession of car. Kapag wala sa BPI
physical possession, pwede magfile ng writ of replevin. Sheriff
will get physical possession and will be brought to court.
Property is now considered as under custodia legis/judicial
depost.

In regard to consittuiton of judicial deposit, the following are

the modes of constituting judicial deposit:
1. Attachment – has condition sine qua non – Bond.
2. Consignation
3. Garnishment
4. Receivership
5. Replevin
Whether conventional, legal, or theses enumeration, there is
always a degree of care.

Example: Nasira yung property, go gainst bond of the receiver/

…. (kung ano l)

State is immune from suit. Damnun absque injuria (check

meaning)
What do you understand by contract of commodatum?
In your law on contract, who is obligor and obligee?
Bailor v. Bailee
Raison de etre “Rayson detruh”
What is consideration?
Consent? Minding of minds of parties
Object – Item
Cause or consideration –
Would it be possible to have contract in absence of monetary
consideration? YES
Perfection of contract?
As a rule: meeting of the minds
In commodatum, how do we perfect contract?
When we say delivery, is actual/physical required?
Is there a need to fix a period?
What if parties instead of fixing period, stipulated the
purpose of the thing?
- In fact, parties may be silent with purpose, may or
may not be agreed to by the parties.
Duration – same, absence of period will not invalidate the
contract. Why?
Would it be possible….
- Yes, as a rule. However, there can be no stipulation
lower than that degree of care.
What is the effect?
- None (ako lang ‘to)
- As if not written in contract
Would it be possible to stipulate higher degree of care?
YES
Effect if parties stipulated that certain amount or portion of
harvest will be given to bailor in exchange of lending.
- Presence of consideration (money/kind) defeats
contract of commodatum.
How do you call that contract?
- Lease or any other but definitely not commodatum.
Would it be possible for a person who is not the owner of the
property to be not the bailor?
The bailor need not be the owner of the thing.
Would it be possible for the lessee to be the bailor?
The lessee is no
“neither lend nor lease”
Lessee may be the bailor in contract of commodatum
because law does not require that bailor owns.
What if may contrary stipulation?
Lessee does not “borrow” the thing. He leases the thing.
Obligations of bailee (enumerate)
Obligations of bailor (enumerate)
There is prohibition to sublease. And that prohibition will
make lessee incompetent to enter into a contract.
- The prohibition on part of lessee to enter into
contract of sublease would not prevent…why?
Contract of commodatum is not within the purview of that
prohibition. Why?
The contract of lease containing prohibition to sublease
would not prohibit entering into contract of commodatum. It
is so because in contract commodatum is different from
lease. When you sublease you are receiving monetary
consideration. In commodatum, it is not tantamount into
entering into contract of sublease. In sublease, lesee will
become sublessor.
Prohibition lessee cannot enter into contract of sublease.
Contract of commodatum is not within the purview of
contract of lease because commodatum is essentially
gratuitous.
Lessee may be bailor in contract of commodatum. Why is it
legally possible?
- Possible for sublessee to be bailor because under the
law, lessor need not be the owner of the contract.
- When bailor transfers contract to bailor, what are
the rights transferred?
Of bailee would be allowed to use a thing, would that enable
him as usufruct?
Bundle of rights of bailee
Use, possess, vindicate, fruits (only if stipulated).
Why is it that the right to abuse is not included? As well as
right to destroy?
- Acts of pure ownership. These are rights of owner.
Without these right it means that holder is only
allowed to use, possess, vindicate, fruits (if
stipulated).
Commodatum is not equal to sublease of property
Obligation of bailor
Ordinary expenses? Wear and tear (see prop)
Ordinary expenses v. extraordinary/necessary expenses (see
prop)

Example: I’m owner of taxi. Instead of me driving taxi for me

to earn living. Boss, peram taxi. SIge soli mo sakin an on 28.
You did not return on September 28th.
- Bailor could have had..

What do you mean by opportunity lost?

- Amount of unrealized profit/ lucrum cessans

There can be no award of exemplary damage unless there is

moral damage.

What about if object is lost, who is liable?

Rule: Not liable si bailee. Why?

Legal principle where owner burdens loss.

What do you understand by fortuitous event? 1174.

Events which could not be foreseen or which though foreseen
were inevitable.

Damages (define-define lang’to)

- Actual
- Moral
- Nominal
- Temperate/moderate
- Liquidated
- Exemplary damages

Republic v. Bagtas
Sino Ponente?
Scra Volume Number?
Year?
Kailan nagsimula scra? 1961
Phil. Report 1601-1961
Originated in what court? CFI
Name of court of origin?
Why called CFI? In original court who was plaintiff?
What do you understand by word plaintiff?
Republic of the Philippines represented by the