Credit Transactions Prelims

Exam Coverage

-Loans
-Deposit
-Warehouse Receipts

LOANS
Two kinds of loan:

1. Commodatum – where one person called the bailor (lender) delivers to another called the baille (borrower) a non-consumable thing so that the latter may use it for a certain time and return the identical thing.
2. Mutuum – where the lender delivers to the borrower money or other consumable thing upon the condition that the latter shall pay the same amount of the same kind and quality.

Distinctions of commodatum and mutuum:

1. Commodatum ordinarily involves something not consumable, while in mutuum, the subject matter is money or other consumable thing;
2. In commodatum, ownership of the thing loaned is retained by the lender, while in mutuum, the ownership is transferred to the borrower;
3. Commodatum is essentially gratuitous, while mutuum may be gratuitous or may be onerous, that is, with stipulation to pay interest;
4. In commodatum, the borrower must return the same thing loaned, while in mutuum, the borrower need only pay the same amount of the same kind and quality;
5. Commodatum may involve real or personal property, while mutuum refers only to personal property;
6. Commodatum is a loan for use or temporary possession, while mutuum is a loan for consumption;
7. In commodatum, the bailor may demand the return of the thing loaned before the expiration of the term in case of urgent need, while in mutuum, the lender may not demand the return of the thing before the lapse of the term agreed upon;
8. In commodatum, the loss of the thing loaned is suffered by the bailor since he is the owner, while in mutuum, the borrower suffers the loss even if it is caused by a fortuitous event and he is not therefore discharged from his duty to pay;
9. Commodatum is purely personal in character, while mutuum is not so.

Kinds of Commodatum

1. Ordinary commodatum – (as defined above)
2. Precarium – where the bailor may demand the thing loaned at will

Characteristics of commodatum:

1. Real – delivery is necessary for the perfection of the contract.
2. Unilateral – once the subject matter has already been delivered, it creates on the part of the borrower the obligation to return the identical thing

Commodatum notes-

1. Similar to donation in that in confers a benefit to the recipient
2. The borrower may not use the fruits of the thing loaned, unless there is a stipulation to the contrary.
3. The bailor need not be the owner of the thing loaned since by loan, ownership does not pass to the borrower.
4. The death of either the bailor or the bailee extinguishes the commodatum, being a contract which is purely personal in character.
5. The borrower may not lend the thing loaned to a third person. However, it may extend to the members of his household, unless there is a stipulation to the contrary or unless the nature of the thing forbids such use.

Obligations of the Bailee

1. To pay for the ordinary expenses for the use and preservation of the thing loaned.
2. To pay for the loss of the thing even if it is caused by fortuitous event in the following cases:
• If he devotes the thing to any purpose other than that intended (he acts in bad faith)
  
• If he retains the thing beyond the agreed term or after the accomplishment of its use (he incurs delay)
  
• If the thing loan was delivered with an appraisal of its value, unless there is a stipulation exempting the bailee from liability in case of fortuitous event (presumed by law)
  
• If he lends or leases the thing to third persons (commodatum is purely personal)
• If, being able to save the thing borrowed or his own thing, he chooses to save the latter (ingratitude).
  
3. To return the thing loaned. The bailee may only retain the thing IF he suffered losses or damages because of the flaws of the thing loaned.
4. To be solidarity liable in case there are two or more bailees.
   

Obligations of the Bailor

1. To respect the duration of the loan, unless he should have urgent need of the thing.
2. To refund the extraordinary expenses.
3. To pay the damages caused by known hidden flaws. Requisites:
• There is a flaw or defect in the thing loaned;
• The flaw or defect is hidden
• The bailor is aware thereof
• He does not advise th bailee of the same; and
• The bailee suffers damages by reason the the said flaw or defect
  

Mutuum, notes-

1. The borrower acquires ownership of the thing loaned.
2. The relationship of the parties is that of obligor-obligee.
3. Muttum involves money or any other fungible things.
4. It may be gratuitous.
5. No interest shall be due unless it has been expressly stipulated in writing. In case the payment of interest is agreed and in writing, but the interest rate is not indicated, the legal interest rate of 12% shall apply. Exceptions to the rule when interest may be due even in the absence of stipulation:
• Indemnity for damages due to delay
• Interest accruing from unpaid interest - when judicially demanded or stipulated (presupposes a stipulated interest, the interest contemplated in this exception is the interest of the defaulted interest payments)

DEPOSITS
A deposit is constituted from the moment a person receives a thing belonging to another with the obligation of safly keeping it and of retuning the same.

Characteristics of deposit:

1. Real - delivery is necessary for the perfection of the contract
2. Unilateral (when gratuitous) - only the depositary has the obligation of safely keeping the thing deposited
   
3. Bilateral (when onerous) - the depositary has the obligation of safely keeping the thing deposited and the depositor has the obligation therefor to pay the fees associated with the deposit.

Distinctions between deposit and mutuum

1. In deposit, the principal purpose is the safekeeping or mere custody, while in mutuum, the consumption of the subject matter;
2. In deposit, the depositor can demand the return of the subject matter at will, while in mutuum, th lender must wait until the expiration of the period granted to the debtor;
3. In deposit, both movable and immovable property may be the object, while in mutuum, only money and other fungible thing.

Disctinctions between deposit and commodatum

1. In deposit, the principal purpose is the safekeeping or mere custody, while in commodatum, the transfer of the use;
2. Deposit may be gratuitous or onerous, while commodatum is essentially and always gratuitous;
3. In extrajudicial deposit, only movable things may be the object, while in commodatum, both movable and immovable property may be the object.

Kinds of deposit

1. Judicial - one which takes place when an attachment or seizure of property in litigation is ordered; it may involve movable or immovable property
   
2. Extrajudicial - which may be further classified into:
• Voluntary - one wherein the delivery is made by the will of the depositor/s
• Necessary - one made in compliance with a legal obligation, or on th occasion of a calamity, or by travelers in hotels and inns or with common carriers.

Deposit, notes-

1. A deposit is a gratuitous contract, except
• when there is contrary stipulation
• where the depositary is engaged in the business of storing goods
• where the property is saved from the destruction without knowledge of the owner - negotiorum gestio applies
2. Deposit only contemplates corporeal things
3. Interpleader is an action to compel the depositors to settle their conflicting claims among themselves.
4. A contract of deposit may be entered into orally or in writing.
5. When the deposit is made by an incapacitated person to a depositary who is a capacitated person, the latter incurs all the obligations of a depositary and must return the property to the legal representative of the incapacitated or to the depositor himself if he should acquire capacity.
6. When the deposit is made by a capacitated person to a depositary who is incapacitated, the latter does not incur all the obligations of a depositary but he must return the thing deposited while it is still in his possession, and to pay the depositor the amount by which he may have benefited himself with the thing or its price subject to the right of any third person who acquired the thing in good faith.
7. Permission is not presumed. The burden of proof is on the depositary to prove that permission has been given.
8. Fault on the part of the depositary is presumed, unless there is proof to the contrary.
9. The depositary cannot demand that the depositor prove the ownership of the thing. But, if he discovers that the thing deposited has been stolen, the depositary has the duty to inform the true owner of such fact.
   

Obligations of the Depositary

1. To keep the thing deposited and return it.
2. Not to transfer the deposit, unless there is stipulation to the contrary.
3. Not to change the way of deposit, unless consented by the depositor.
4. To collect interest on choses in action deposited.
5. Not to co-mingle things if such is stipulated.
6. Not to make use of the things deposited unless authorized.
7. Liability for th loss of the thing through a fortuitous event if:
• it is so stipulated
• if he uses the thing without permission
• if he incurs delay in returning the thing
• if he allows other persons to use the thing deposited
8. Return the thing deposited when delivered closed and sealed, in the same condition.
9. Pay for damages should the seal or lock be broken through his fault.
10. Keep the secret of the deposit when the seal or lock is broken, with or without his fault.
11. Return the deposit with its products, accessions, and accessories.
12. Pay interest on sums converted for personal use.
    

Irregular deposit distinguished from mutuum

1. In an irregular deposit, the consumable thing deposited may be demanded at will by the irregular depositor, while in mutuum, the lender is bound to respect the time agreed upon by the parties.
2. In an irregular deposit, the only benefit is that which accrues to the depositor, while in mutuum, the essential cause for the transaction is the necessity of the borrower.
3. The depositor in an irregular deposit has preference over other creditors with respect to the thing deposited, while common creditors enjoy no preference in the distribution of the debtor's property.

i am tired of reading deposits... let's jump to....

WAREHOUSE RECEIPTS
A warehouse receipt is a written acknowledgment by a warehouseman that he has received and holds certain goods therein described in store for the person to whom it is issued. It is also the simple written contract between the owner of the goods and the warehouseman to pay the compensation for that service.

Contents of the warehouse receipt:

1. Location of the warehouse
   
2. Date of issue of receipt
3. Consecutive number of receipt
4. Person to whom goods are deliverable
5. Rate of storage charges
6. Description of goods or packages
7. Signature of warehouseman
8. Warehouseman's ownership of or interest in goods
9. Statement of advances made and liabilities incurred.

Obligations of the warehouseman:

1. to take good care of the goods entrusted to his safekeeping
2. to deliver them to the holder of the receipt or the depositor provided the following conditions are complied:
• demand was made, accompanied by:
• an offer to satisfy the warehouseman's lien
• an offer to surrender the receipt
• a readiness and willingness to sign the receipt

Person to whom goods must be delivered:

1. person lawfully entitled to possession of goods or his agent
2. person entitled to delivery under a non-negotiable receipt or with written authority
3. person in possession of a non-negotiable receipt

Acts for which warehouseman is liable:

1. Failure to stamp "duplicate" on copies of a negotiable receipt
• the warehouseman shall be liable for all damages caused to any one who purchased the subsequent receipt for value
  
2. Failure to place "non-negotiable" or "not-negotiable" on a non-negotiable receipt
• the warehouse receipt shall be considered negotiable provided the holder of such unmarked receipt purchased it for value supposing it to be negotiable
  
3. Misdelivery of the goods
• the warehouseman has a liability similar to a bank paying a forged check and also a liability as for conversion (whatever that means?)
  
4. Failure to effect cancellation of a negotiable receipt upon delivery of the goods
• the warehouseman shall be liable to anyone who purchases for value in good faith such receipt which have not been cancelled, after such purchaser acquired title to the receipt
  
5. Issuing receipt for non-existing goods or misdescribed goods
• warehouseman shall be liable for damages
  
6. Failure to take care of the goods
• the warehouseman in liable for any loss or injury to the goods caused by his failure to exercise ordinary or reasonable care in the custody of the goods
  
7. Failure to give notice in case of sale of goods to satisfy his lien or because goods are perishable or hazardous.
• the warehouseman shall be severally liable to each depositor for the care and redelivery of his share of such mass to the same extent and under the same circumstances as if the goods had been kept separate.

NO MORE UPDATES FOR TODAY... (--, ) 12/20/2007