SIMPLE LOAN OR MUTUUM

Category: Obligations and Contracts

SIMPLE LOAN OR MUTUUM

 
Article 1953. A person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay the creditor an equal amount of the same kind and quality
 

SIMPLE LOAN OR MUTUUM

>     Contract  whereby  one  of  the  parties  delivers  to  another money    or    another    consumable    thing    with    the understanding that the same amount of the same kind and quality shall be paid
>     It  involves  the  return  of  the  equivalent  only  and  not  the identical  thing  because  the  borrower  acquires  ownership thereof
 

OBLIGATION OF DEBTOR IS TO PAY

>     The law uses the word to pay and the word return
>     The consumption of the thing loaned  is the distinguishing character   of   the   contract   of   mutuum   from   that   of commodatum
>     The promise of the borrower to pay is the consideration for the obligation of the lender to furnish the loan
>     A loan is a bilateral contract 

NO ESTAFA IS COMMITTED BY A PERSON WHO REFUSES TO PAY HIS DEBT OR DENIES ITS EXISTENCE

>     The borrower acquires ownership
>     Being  the  owner,  the  borrower  can  dispose  of  the  thing borrowed   and   his   act   will   not   be   considered   as appropriation thereof