b. Mutuum

Perfection of contract of loan

An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract. (NCC, Art. 1934)

Characteristics of Loans

• Real Contract – delivery is essential for perfection of the loan (BUT a promise to lend, being consensual, is binding upon the parties)
• Upon delivery of the loan’s object, the loan is perfected; in mutuum, the borrower then becomes obliged to pay an equal amount of the same kind and quality.

Art. 1933: If the bailor delivers to the bailee a non-consumable thing so that bailee may use the same for a certain time and return the identical thing, the contract perfected is a contract of commodatum. There is NO TRANSFER OF OWNERSHIP (BAR AREA)

In mutuum, the object borrowed must be a consumable thing the OWNERSHIP OF WHICH IS TRANSFERRED to the borrower who incurs the obligation to pay the lender an equal amount of the same kind and quality.

SIMPLE LOAN

Mutuum or Simple Loan - a person who receives a loan of money or any other fungible thing acquires ownership thereof and is bound to pay the creditor an equal amount of the same kind and quality (Art. 1953)

Obligations of a borrower in a simple loan or mutuum

• Pay the creditor an equal amount of the same kind and quality. (Art. 1953)
• Pay interest, if stipulated in writing. (Art. 1956)