Civil Code of the Philippines - Credit Transactions
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Questions and Answers

What is the responsibility of the depositary regarding interest from certificates or bonds?

  • Invest the interest into a separate account.
  • Return the certificates without collecting interest.
  • Ignore the interest unless instructed otherwise.
  • Collect the interest when it becomes due. (correct)

What can the depositary do with articles of the same kind and quality?

  • Use them as collateral for bank loans.
  • Commingle them for depositors' proportionate interest. (correct)
  • Keep them separate at all times.
  • Sell them individually.

What must the depositary obtain before using the deposited item?

  • A written contract from the depositor.
  • A general authorization from the bank.
  • The express permission of the depositor. (correct)
  • Consent from a legal authority.

When the depositary has permission to use the deposited item, what does the contract become?

<p>A loan or commodatum. (A)</p> Signup and view all the answers

What is the depositary liable for regarding fortuitous events?

<p>For the loss of the thing deposited. (C)</p> Signup and view all the answers

What must the depositary do when a delivered item is closed and sealed?

<p>Return it in the same condition. (C)</p> Signup and view all the answers

Who is presumed at fault if the seal or lock of a deposited item is broken?

<p>The depositary. (B)</p> Signup and view all the answers

What does the statement of the depositor regarding the value of the deposited item get accepted as?

<p>Valid unless there is proof to the contrary. (A)</p> Signup and view all the answers

What happens to the pledge or mortgage when the corresponding portion of debt is satisfied?

<p>The debtor has the right to extinguish it. (D)</p> Signup and view all the answers

Which of the following can be pledged?

<p>All movables within commerce. (A)</p> Signup and view all the answers

Under what condition can the pledge not take effect against third persons?

<p>If it is not recorded in a public instrument. (D)</p> Signup and view all the answers

What right does the contract of pledge give to the creditor?

<p>The right to retain possession until the debt is paid. (B)</p> Signup and view all the answers

What occurs if a promise to constitute a pledge is violated by misrepresentation?

<p>Criminal responsibility can be incurred. (D)</p> Signup and view all the answers

What is required in addition to the requisites in Article 2085 to establish a pledge?

<p>The thing pledged must be delivered to the creditor. (D)</p> Signup and view all the answers

What must happen for incorporeal rights to be validly pledged?

<p>The right must be proven by delivery of a document. (C)</p> Signup and view all the answers

What is the implication if the pledgee consents to the alienation of the pledged item?

<p>The ownership is transferred to the new buyer, with the pledge still in effect. (C)</p> Signup and view all the answers

What is the responsibility of the creditor regarding the pledged item?

<p>The creditor must take care of the item with the diligence of a good father of a family. (B)</p> Signup and view all the answers

What rights does the creditor have if the pledged item produces fruits or income?

<p>The creditor must apply the earnings to the principal if no debt is owed. (D)</p> Signup and view all the answers

Under what condition can the pledgee deposit the pledged item with a third person?

<p>If there is a stipulation authorizing it. (A)</p> Signup and view all the answers

What can the pledgor do if the pledged item is in danger due to the pledgee's negligence?

<p>The pledgor can require that it be deposited with a third person. (D)</p> Signup and view all the answers

If the creditor uses the pledged item without the owner's authority, what may the owner do?

<p>The owner may ask for the item to be judicially or extrajudicially deposited. (C)</p> Signup and view all the answers

What happens to the debtor’s ownership of the pledged item?

<p>The debtor continues to be the owner unless the item is expropriated. (D)</p> Signup and view all the answers

What is true about the return of the pledged item by the creditor?

<p>The debtor cannot ask for the return against the creditor's will until the debt is settled. (A)</p> Signup and view all the answers

What is the obligation of the pledgee regarding the acts of his agents or employees?

<p>The pledgee is responsible for the acts of his agents or employees. (D)</p> Signup and view all the answers

Who shall refund the extraordinary expenses incurred during the contract for the preservation of the loaned thing?

<p>Only the bailor (A)</p> Signup and view all the answers

What happens if extraordinary expenses arise due to the bailee's use of the loaned thing?

<p>Expenses are equally shared unless stated otherwise (C)</p> Signup and view all the answers

What type of loan allows the borrower to acquire ownership of fungible things?

<p>Simple loan or Mutuum (B)</p> Signup and view all the answers

What is the relationship between the bailee and the bailor regarding expenses incurred without prior notice?

<p>The bailee loses the right to claim any reimbursement (D)</p> Signup and view all the answers

What is required for a borrower to be entitled to interest on a loan?

<p>It must be documented in writing (A)</p> Signup and view all the answers

What must a bailor do if they are aware of flaws in the loaned thing?

<p>Advise the bailee of the flaws (A)</p> Signup and view all the answers

If a fungible thing other than money is loaned, what is expected from the debtor if it is impossible to deliver the same kind?

<p>They must pay the value at the time of the loan (D)</p> Signup and view all the answers

What is the consequence of contracts intended to circumvent usury laws?

<p>They are void (A)</p> Signup and view all the answers

What regulates the deposit mentioned for travelers in hotels or inns?

<p>Provisions concerning voluntary deposit (B)</p> Signup and view all the answers

When is the hotel-keeper not liable for lost property?

<p>Due to acts of the guest or their visitors (D)</p> Signup and view all the answers

What governs the duration and terms of the suspension of a civil action or proceeding?

<p>Provisions of the rules of court promulgated by the Supreme Court (C)</p> Signup and view all the answers

Which of the following articles specifies the hotel-keeper's liability for personal property loss caused by employees?

<p>Article 2000 (B)</p> Signup and view all the answers

Which situation qualifies as force majeure regarding theft in a hotel?

<p>The theft involves the use of arms (D)</p> Signup and view all the answers

Who must approve compromises entered into by guardians and parents?

<p>The court (D)</p> Signup and view all the answers

What right does the hotel-keeper have concerning the belongings of guests?

<p>To keep them as security for payment (C)</p> Signup and view all the answers

Which of the following is NOT valid for a compromise?

<p>Compromise surrounding future disputes (D)</p> Signup and view all the answers

What happens if a compromise includes a mistake, fraud, or undue influence?

<p>It is subject to specific provisions of the law (B)</p> Signup and view all the answers

What is true about notifications of non-liability posted by hotel-keepers?

<p>They are considered void regarding responsibility for guests' property (A)</p> Signup and view all the answers

What must guests do to ensure their belongings are protected in hotels?

<p>Follow precautions advised by hotel staff (D)</p> Signup and view all the answers

What must a compromise contain to be valid?

<p>Objects definitively stated within it (D)</p> Signup and view all the answers

Which article states that a thief's act is not considered force majeure unless done with irresistible force?

<p>Article 2001 (C)</p> Signup and view all the answers

How does a compromise affect the parties involved?

<p>It acts with the authority of res judicata (D)</p> Signup and view all the answers

What is the consequence if one party discovers documents related to the compromised dispute after the fact?

<p>It does not cause annulment unless documents were concealed (A)</p> Signup and view all the answers

What is the court's role in a compromise agreement involving a decedent's estate?

<p>The court must approve the compromise (A)</p> Signup and view all the answers

Flashcards

Bailor's Refund of Extraordinary Expenses

A bailor (the person who loans something) must repay extraordinary expenses incurred by the bailee (the person who borrows) to preserve the loaned item, if the bailee notified the bailor beforehand, unless the expenses are urgent.

Expenses During Actual Use

If extraordinary expenses are incurred during the bailee's actual use of the item, they are shared equally by both bailor and bailee, unless otherwise agreed upon.

Non-Reimbursable Expenses

Expenses incurred by the bailee for using the item beyond preservation are not recoverable.

Bailor's Liability for Hidden Flaws

A bailor who knows of flaws in the loaned item but fails to inform the bailee is responsible for any damages the bailee suffers.

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Loan of Fungible Items

The receiver of a loan that includes money or fungible (interchangeable) items gains ownership and must return an equal amount of the same kind and quality.

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Non-Fungible Loan

A contract where one person transfers ownership of non-fungible items with the obligation for the other party to provide similar items (type, amount and quality).

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Loan of Fungible Items (other than money)

If the loan is for a fungible item (not money), the debtor must repay an item of the same kind, quantity, and quality, calculated at the loan's inception, or pay the item's equivalent value.

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Interest on Loans

Interest on a loan is only due if explicitly agreed to in writing.

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Depositary's Duty Regarding Interest-Bearing Items

Depositaries (people holding items) must collect interest when due and take actions to maintain the securities' value and associated rights.

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Depositary's Right to Commingle Goods

If allowed, the depositary can combine similar grains or goods. Depositors then have proportionate ownership.

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Depositary's Use of Deposited Items

Depositaries cannot use deposited items without permission. Using without permission leads to damages.

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Contract Shifting to Loan/Commodatum

If a depositary is allowed to use a deposited item, the contract changes to a loan (or 'commodatum') unless safekeeping is the main reason.

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Depositary's Liability for Fortuitous Loss

The depositary is responsible for the loss of deposited items even in impossible circumstances(fortuitous events).

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Bank Deposits and Simple Loan

Bank deposits (fixed, savings, current) follow simple loan rules.

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Sealed Deposits Return

Depositaries must return sealed items as found. Depositary is responsible for damages if seal is broken due to fault.

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Presumption of Fault and Value Statements

If a seal is broken, the depositary is thought to be at fault unless proven otherwise. The depositor's worth estimate is commonly accepted, if not proven otherwise in court.

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Hotel Deposit

Items left by travelers in hotels are considered 'necessary deposits,' meaning the hotel is responsible for their safekeeping.

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Hotel Keeper's Responsibility

Hotel keepers must inform guests about precautions they should take to protect their belongings and are responsible for losses caused by their employees or strangers, except for force majeure.

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What is NOT considered force majeure?

A robbery in a hotel is NOT considered force majeure unless the robber uses weapons or irresistible force.

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Hotel Keeper's Liability Exceptions

Hotel keepers are NOT liable for losses caused by the guest, their family, servants, or visitors, or arising from the nature of the items brought into the hotel.

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Hotel Notices & Liability

Hotel keepers cannot escape responsibility by posting notices that they are not liable for guest belongings. Any agreement that reduces or removes their liability is void.

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Hotel Keeper's Right of Retention

Hotel keepers can hold onto guest belongings as security for payment of lodging and other services.

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Who pays for extraordinary expenses?

The bailor must repay extraordinary expenses incurred by the bailee to preserve the loaned item, if the bailee gave notice beforehand.

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Suspension of Civil Actions

Legal proceedings can be temporarily halted. The duration and terms of the suspension are determined by rules established by the Supreme Court.

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Amicable Compounders

These individuals are appointed to help parties reach a settlement agreement.

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Mitigation of Damages

Courts may lessen the damages paid by the losing party, especially if they show genuine effort to settle.

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Compromise Approval

Compromise agreements made by minors, guardians, absentees, and representatives of deceased estates need court approval.

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Compromise by Juridical Persons

Legal entities can compromise only if the agreement fulfills requirements for property transfer.

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Compromise in Criminal Cases

Civil liability from criminal offenses can be compromised, but the criminal charges remain unaffected.

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Effect of a Compromise Agreement

A compromise is binding on all parties involved, similar to a court decision. However, execution requires a judge's order.

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Invalid Compromise Agreements

Certain topics cannot be subject to a compromise, including the validity of a marriage, paternity, the state's right to prosecute, and the public order.

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Extinguishment of Pledge or Mortgage

When a portion of a debt is paid, the corresponding pledged or mortgaged item is released from its obligation. This applies to individual items pledged or mortgaged to secure specific parts of the debt.

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Indivisibility of Pledge or Mortgage (Debt Liability)

Even if debtors aren't individually liable for the entire debt, the pledge or mortgage remains indivisible. All pledged/mortgaged items are held until the entire debt is paid.

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What obligations can a pledge/mortgage secure?

Pledges and mortgages can secure any type of obligation: those due immediately or those dependent on a future event (condition).

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Promise to Pledge/Mortgage

A promise to create a pledge or mortgage only creates a personal obligation between the parties. It doesn't create the actual pledge/mortgage itself.

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Requirements for a Valid Pledge

Besides the general contract requirements, a pledge needs the pledged item to be physically placed in the creditor's (or a third party's) possession.

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What can be pledged?

Any movable item that can be physically possessed can be pledged (except for things outside of commerce).

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Pledging Incorporeal Rights

Rights represented by negotiable instruments (like shares, bonds) can be pledged. The instrument is delivered to the creditor, and if negotiable, must be endorsed.

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Pledge Validity Against Third Parties

A pledge is not valid against third parties unless the pledge is described in a public document with the date of the pledge.

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Creditor's Duty of Care

The creditor must take care of the pledged item with the diligence of a good father of a family, meaning they must act reasonably and responsibly in protecting it.

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Creditor's Reimbursement

The creditor has the right to be reimbursed for expenses they incurred to preserve the pledged item.

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Creditor's Liability

The creditor is liable for the loss or deterioration of the pledged item, except in cases of force majeure (unforeseen events).

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Pledgee's Deposit

The pledgee cannot give the pledged item to a third party without the pledgor's permission.

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Pledgee's Liability for Agents

The pledgee is responsible for the actions of their agents or employees regarding the pledged item.

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Pledgor's Responsibility

The pledgor has the same responsibility as a bailor (loaner) in a commodatum (loan for use) contract.

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Pledgee's Rights to Earnings

If the pledged item earns income, the creditor is entitled to apply those earnings to the debt owed, unless the contract states otherwise.

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Pledgor's Ownership

The debtor (pledgor) remains the owner of the pledged item, even though the creditor can act like an owner for certain purposes.

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Study Notes

Civil Code of the Philippines - Credit Transactions

  • Loan (Title XI): A contract where one party delivers something (non-consumable) for a specific time, with return expected, or a consumable item (money) with the agreement to return the same equivalent.
    • Commodatum: Gratuitous loan of a non-consumable item.
    • Simple Loan (Mutuum): Loan of a consumable item like money, with the agreement to return the same amount/kind. Can be with or without interest. Ownership of the thing passes to the borrower.
  • Commodatum (Chapter 1): The use of a loaned item is granted, but not the fruits. Compensation for use makes it no longer commodatum. Consumable goods can be the object if the purpose is not consumption.
  • Obligations of the Bailee: Responsible for ordinary expenses, and loss even due to fortuitous events, unless the situation was without fault on the bailee's part.
  • Obligations of the Bailor: Cannot demand return until the agreed-upon time or use is completed. Can demand return if necessary or in cases of ingratitude (as seen in article 765).
  • Simple Loan (Mutuum) (Chapter 2): Loan of money or fungible thing—the borrower acquires ownership, and an equivalent amount of the same kind must be repaid to the creditor.
  • Interest: Only due when expressly stipulated in writing; illegal interest (usury) is null and void.
  • Deposit (Title XII): The act of receiving something belonging to another with an obligation to keep it safe and return it.
  • Voluntary Deposit: Deposit made by the depositor's will. Can be done by multiple parties if each believes they are entitled to the deposited item.
  • Necessary Deposit: A deposit in cases of danger (e.g., emergencies, unforeseen situations).
  • Obligations of the Depositary: Duty to safely keep and return. Accountability related to the safekeeping and loss is determined by Title I of the current book. Care is expected comparable to that of a good father of a family. Liable for the use of the item if not permitted.
  • Obligations of the Depositor: Responsible for reimbursement of expenses made to keep the deposited object safe unless agreed otherwise, and liable for damages if the characteristics of the item cause damage.
  • Necessary Deposit (Chattel Mortgage): Recording items in a register, security in case of debts repayment. If movable pledged is to be delivered to the creditor the contract is a pledge not a chattel mortgage.
  • Aleatory Contracts (Title XIII): Insurance, Gambling: Contracts where a party is committed to do something or give something dependent on an uncertain or indeterminate event.
  • Guaranty (Title XV): A contract where a guarantor promises that the principal debtor/obligor will fulfill their obligation. There are different kinds of guarantys, legal and conventional.
  • Effects of Guaranty (Chapter 1 & 2): Covers responsibilities for the debtor, guarantor, and between guarantors. If the guarantor fulfills the obligations of the debtor, certain actions/rights are transferred.
  • Compromises (Title XIV): Contracts where parties make mutual concessions to avoid or settle litigation.
  • Arbitrations (Chapter 2): Submitting disputes with a third party decision maker for a resolution.
  • Pledge & Mortgage (Title XVI): The transfer of possession or title to a creditor until an obligation is fulfilled; security measures for obligations between parties, with conditions for sale, rights, and obligations if the debtor fails to do so.
    • Mortgages must be legally recorded.

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Civil Code of the Philippines Book IV Title XI-XVI Credit Transactions PDF

Description

Test your knowledge on the Credit Transactions outlined in the Civil Code of the Philippines. This quiz covers key concepts such as loans, obligations of bailees and bailors, and the specifics of comodatum and simple loans. Perfect for students studying Philippine law.

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