PRINCIPAL CONTRACTS
LOAN DEPOSIT
PARTIES Creditor - Debtor
Bailor - Bailee
OBJECT Commodatum:
non-consumable (real or
personal property)
Mutuum: Consumable
(personal property only)
PURPOSE Commodatum: Use or
temporary possession
Mutuum: Consumption
*Loans are generally
gratuitous. Hence, if there
is consideration for the use,
then it is not a loan but a
lease.
FORM Not necessarily written;
*Art. 1356. but enforceability may
Contracts are be a problem if not
binding in
written.
whatever form
(written/oral)
unless a specific
law requires it to
be in some form
in order for it to
be valid or
enforceable. (See
Art. 1403)
GUARANTY
Depositor - Depositary
Non-consumable; may
be movable or
immovable property.*in
case of extrajudicial
deposit, only
movable/corporeal things
For safekeeping
* Is the depositary allowed
to use the object?
Generally, no, but there are
exceptions.
*Generally gratuitous;
Exceptions:
A. Contrary stipulation;
B. Depositary is engaged in
storage business;
C. Property saved from
destruction w/o knowledge of
owner.
May be written or oral.
(Art. 1969)
*Depositary may use the
object if expressly
authorized by depositor.
**Effect of authorization:
a. If non-consumable:
contract becomes a
commodatum unless
safekeeping is still primary
purpose thereof.
b. If money/consumable:
contact becomes a mutuum
unless safekeeping is still
primary purpose, then it
will be an irregular deposit.
***Depositary will be liable
for loss in case of fortuitous
event if so stipulated
ACCESSORY CONTRACTS
PLEDGE MORTGAGE
Creditor - Debtor +
Guarantor
*Guarantor must be a
person distinct from debtor
since a person cannot be
the personal guarantor of
himself. (See Arts2056-2057
for qualifications.)
Always movable
properties.
Security over principal
obligation
*Generally gratuitous
unless there is contrary
stipulation. (Art. 2048);
** For the performance of
a voidable/unenforceable
contract;
***Guarantor cannot bind
himself for more than the
principal debtor.
Must be expressed and
reduced in writing;
cannot extend to more
than what is stipulated
therein (Art. 2055)
*Cannot be presumed.
**A power of attorney to
loan money does not
authorize the agent to
make the principal liable
as a surety for the
payment of the debt of a
3rd person.
*** Falls under Statute of
Frauds (Art. 1403);
special promise to pay.
Pledgor - Pledgee
Only movable or
incorporeal properties
*Unless stipulated
otherwise, pledge extends
to the fruits, interests or
earnings of the thing.
Security over principal
obligation
The description of the
thing pledged and the
date must appear in a
public instrument to
bind third persons but
not for the validity of
the contract.
*Warehouse Receipts
Law
*Trust Receipts Law
remedy for settling the
ANTICHRESIS
Mortgagor - Mortgagee
Chattel mortgage: Personal
Property, alienable rights
Real mortgage: real
property, immovables.
*Not applicable to future
property.
Security over principal
obligation
Real estate mortgage:
Must appear in a public
instrument (Art. 2125);
covered by Sec. 19,
Rule 132 of the RoC.
*Registration in the registry
of property is necessary to
bind 3rd persons but not for
its validity.
** Where a mortgage is not
valid or false, the principal
obligation which it
guarantees is not rendered
null and void. What is lost is
only the right to foreclose the
mortgage as a special
indebtedness; mortgage deed
remains proof of obligation.
Creditor - Antichretic
debtor
Only covers the fruits
of real/immovable
properties.
Recovery of the fruits.
*Apply the fruits of
property first to the
interest, if there is any,
then to the principal
obligation.
**May guarantee all
kinds of obligations, pure
or conditional.
Art. 1956. No Interest
shall be due unless
expressly stipulated in
writing.
Art. 2134. Amount of
principal and interest
shall be in writing
otherwise contract of
antichresis shall be
void.
 PRINCIPAL CONTRACTS ACCESSORY CONTRACTS
LOAN DEPOSIT GUARANTY PLEDGE MORTGAGE ANTICHRESIS

DELIVERY Required Required Not required Required No Delivery Required

OWNERSHIP Commodatum: there is There is delivery but no
only transfer of transfer of ownership.
possession; * The thing deposited
must be returned with all
bailor/creditor retains
its products, accessories,
ownership thereof
and accessions. (Art.
Mutuum: There is
1983)
transfer of both
**If onerous, depositary
possession and may retain the object until
ownership to full payment of
debtor/bailee consideration. (Art. 1994).
TIME OF Commodatum: Time of Return:
GR: Upon demand or at will,
RETURN In case of urgent need, whether or not a period has been
even before the expiration stipulated.
(Principal
of the term, creditor/bailor Exceptions:
Contracts)/ a) thing is judicially attached
may demand for return of b) depositary was notified of the
FORECLOSURE
the thing lent. opposition of a third person to
(Accessory the return or the removal of the
Mutuum: thing deposited (Article 1986)
contracts)
Only after the expiration of Right to return:
a. Gratuitous: For justifiable
the term fixed.
reasons, depositary may return
the return the thing
notwithstanding that a period has
been fixed.
b. Onerous: Depositary has no
right to return the thing before
the expiration of the fixed period
even if he shall suffer
inconvenience.
*Guarantor may set up
the defense of excussion
(guarantor cannot be
compelled to be liable
unless creditor has
exhausted all properties of
principal debtor and has
resorted to all available
legal remedies.)
No transfer of ownership.
*Should there be several
guarantors of only one
debtor and for the same
debt, obligation to answer
for the same is divided
among all; liability is joint.
**Liability may be
solidary if so stipulated or
if any of the
circumstances under Art
2056 are present.
*** Guarantor can claim
reimbursement from
principal debtor.
Foreclosure not
applicable.
*Creditor may proceed
against guarantor if
*contract of pledge is
perfected upon delivery of
the thing pledged.
There is delivery but no
transfer of ownership.
*Requires that the
pledgor/mortgagor be the
absolute owner of the
thing and must have free
disposal of the object or
that they be legally
authorized for the
purpose.[Art. 2085, (2) &
(3)]
**Pledgee may not
immediately appropriate
object upon failure of
pledgee to comply with
the principal obligation.
***Thing delivered must
be returned with all its
fruits and accessions.
No foreclosure, just notice
of public auction.
*Requirements for sale:
a. Debt is due and unpaid;
b. Sale must be at a public
auction;
c. There must be notice to
pledgor and owner, stating
the amount due;
d. Sale must be with the
intervention of a notary
public.
**if price of sale more than
amount due, creditor not
entitled to the excess unless
the contrary is provided.
Ownership and
possession is retained
by mortgagor.
*Requires that the
pledgor/mortgagor be the
absolute owner of the
thing and must have free
disposal of the object or
that they be legally
authorized for the
purpose. [Art. 2085, (2) &
(3)]
Yes, there must be a
foreclosure sale.
*In case of real mortgage: 1
year redemption period
applies
*An order of foreclosure
cannot be refused on the
ground that the mortgage
has not been registered
provided no innocent 3rd
parties are involved.
***As opposed to a pledge, a
mortgagee is entitled to
recover deficiency if proceeds
from the sale is not sufficient
to cover the debt; action
prescribes in 10 years.
*Express agreement that
debtor will give
possession to creditor and
that latter will apply the
fruits to the interest, if
any, then to the principal
of his credit. (Art. 2132)
No transfer of
ownership.
*Creditor acquires only
the right to receive fruits,
hence, it does not produce
a real right.
**Creditor, unless there is
contrary stipulation, is
obliged to pay the taxes
and charges upon the
estate.
Remedy of Creditor in Case
of Default
a. Action for specific
performance;
b. Petition for the sale of the
real property as in a
foreclosure of mortgages
under Rule 68 of the Rules of
Court. The parties, however,
may agree on an extrajudicial
foreclosure in the same
manner as they are allowed
in contracts of mortgage and
pledge (see Article 1307;
Tavera vs. El Hogar Filipino,
Inc. 68 Phil. 712 [1939]).
 PRINCIPAL CONTRACTS ACCESSORY CONTRACTS
LOAN DEPOSIT GUARANTY PLEDGE MORTGAGE ANTICHRESIS

EXTINGUISH- a. For the same causes as all a. For the same causes
other obligations (Art. 1231);
MENT b. creditor has released the as all other obligations
guarantor although the (Art. 1231);
principal obligation remains b. Return of the thing
(Article 2078);
c. Material alteration w/c pledged by the pledgee
imposes a new obligation or to the pledgor;
added burden on the party c. Statement in writing
promising, or which takes
away some obligation already by the pledgee that he
imposed, changing the legal renounces or abandons
effect of the original contract
and not merely the form
the pledge (Art. 2111);
thereof; d. Sale of the thing
d. Release of one guarantor pledged at a public
by the creditor without the
consent of the other
auction (Art. 2115).
guarantors benefits all to the
extent of the share of the
guarantor released (Article
2078);
e. An extension of the term
granted by the creditor to the
debtor without guarantors
consent extinguishes the
guaranty (Article 2029).
f. The guarantor who pays is
entitled to be subrogated to
all the rights of the creditor
(Article 2067). If there can be
no subrogation because of
the fault of the creditor, as
when the creditor releases or
fails to register a mortgage,
the guarantors are thereby
released. The same rules
apply even though the
guarantors be solidarily
(Article 2080)