GENERAL PROVISIONS ON LOAN
Art. 1933. By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower. (1740a)
CONTRACT OF LOAN
> The abovementioned defines the two kinds of loan and gives their characteristics
CHARACTERISTICS OF THE CONTRACT
1. Real contract—because the delivery of the thing loaned is necessary for the perfection of the contract
2. Unilateral contract—once the subject matter has been delivered, it creates obligations on the part of only one of the parties
CAUSE OR CONSIDERATION IN A CONTRACT OF LOAN
> For the borrower—the acquisition of the thing
> For the lender—the right to demand its return or its equivalent
KINDS OF LOAN
1. COMMODATUM—where the bailor delivers to the bailee a non-consumable thing so that the latter may use it for a certain time and return the identical thing
2. SIMPLE LOAN OR MUTUUM—where the lender delivers to the borrower money or other consumable thing upon the condition that the latter shall pay he same amount of the same kind and quality
WHEN IS A THING CONSUMABLE?
It is consumable when used in a manner appropriate for its purpose or nature, like gasoline, rice, money, fruit, firewood, etc.
1. In commodatum, if you do not return the thing when it is due, you will be liable for estafa because ownership of the property is not transferred to the borrower.
2. In loan, the borrower who does not pay is not criminally liable for estafa. His liability is only a civil liability for the breach of the obligation to pay. This is because in loan, ownership of the thing is transferred to the borrower, so there is no unlawful taking of property belonging to another.
Art. 1934. An accepted promise to deliver something by way of commodatum or simple loan is binding upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract. (n)
DELIVERY ESSENTIAL TO PERFECTION OF LOAN
> The abovementioned is a necessary consequence of the fact that commodatum and mutuum are real contracts which require the delivery of the subject matter thereof for their perfection
ACCEPTED PROMISE TO MAKE A FUTURE LOAN
> Is there a contract of loan at this point? No, because loan is a real contract and is perfected only upon delivery of the thing.
FORMALITY IN LOAN
> There are no formal requisites for the validity of a contract of loan except if there is a stipulation for the payment of interest. A stipulation for the payment of interest must be in writing.