Loan - Mutuum Flashcards
What is a mutuum?
One of the parties delivers to another, either something not consumable, consumable, or money, upon the condition that the same amount of the same kind and quality shall be paid.
How is a contract of mutuum perfected?
An accepted promise to deliver something is binding between the parties, but the contract of mutuum is not perfected until the delivery of the thing loaned.
What is a barter?
A barter is a contract where one person transfers the ownership of a non-fungible thing to another, with the the obligation on the part of the latter to give things of the same kind, quantity, and quality.
If a deed of sale with right to repurchase is given as security for a loan, how is the sale regarded?
An equitable mortgage.
What is the difference between Central Bank Circular No. 416 and BSP Circular No. 799 Series of 2013 when it comes to interest?
Central Bank Circular No. 416 fixes the rate of interest at 12% per annum and deals with loans, forbearance of any money, goods, or credit, and judgments.
BSP Circular No. 799 Series of 2013 on the other hand, fixes the rate of interest at 6% per annum, in the absence of stipulation.
Central Bank Circular No. 416 applies to judgments. What judgments specifically? What judgments does it not apply?
(a) It applies to judgments in litigation involving loans, or forbearance of money, goods, or credits.
(b) It does not apply to judgments involving damages and compensation in expropriation proceedings.
What is the rule with regards to the purpose of the loan?
You should prove the purpose of the loan. If it is for profit, the Court will allow a higher interest rate. if not, the Court would not allow a high interest rate.
In the case of Asian Construction and Development Corporation v. Cathay Pacific Steel, how did the Court ruled the interest rate of 24% per annum?
The Court upheld the validity of the 24% per annum that was expressly stipulated in the sales invoices. This is because the construction company is presumed to have full knowledge of the terms and conditions of the contract, and that by not objecting to the stipulation therein, it bound itself to pay not only the stated selling price but also the interest rate of 24% per annum.
What is an escalation clause?
Some contracts contain escalation clause, which is defined as one in which the contract fixes a base price but contains a provision that in the event of specified cost increases, the seller may raise the price up to a fixed percentage based.
In order for an escalation clause to be valid, it must have a deescalation clause.
What is the rule with regards to payment and its currency?
The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines.
With regards to penalties, what is the rule?
Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.
It may be intended as an indemnity or penalty, but it must be reduced if iniquitous or unconscionable.
What if there is an inflation or deflation of the currency stipulated by the parties?
The fair and just rule is for the debtor to pay the actual value or worth of the loan at the time it was contracted in the currency in existence at the time of payment, as it would be unfair and unjust for the loan to be decreased or completely wiped out due to a change in the currency.
What is a usury and its elements?
A usury is contracting for or receiving something in excess of the amount allowed by law for the loan or forbearance of money, goods, or chattels.
Its elements are the following:
(a) A loan or forbearance
(b) An understanding between the parties that the loan shall or may be returned
(c) An unlawful intent to take more than the legal rate for the use of the money or its equivalent
(d) The taking or agreeing to take for the use of the loan of something in excess of what is allowed by law
Absent stipulation, what is the legal rate of interest for the loan or forbearance of any money?
The Monetary Board of the Central Bank has prescribed that the legal rate of interest for the loan or forbearance of any money, goods, or credits and the rate allowed in judgment, in the express of express contract, as to such rate, shall be 12% per annum.
If the loan is usurious, is the obligation void?
In usurious loans, the entire obligation does not become void because of an agreement for usurious interest; the unpaid principal debt still stands and remains valid but the stipulation as to the usurious interest is void, consequently, the debt is to be considered without stipulation as to the interest.
