REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

COVERAGE:
A. Contract of Pledge
B. Contract of Real Estate Mortgage
C. Contract of Chattel Mortgage
D. Contract of Antichresis
E. Contract of Agency

Direction: Read an d study the following concep ts.

1. Essential requisites of the contracts of pledge, real estate mortgage a n d chattel mortgage

a. T h a t they be constituted to secure the fulfillment of a principal obligation o r contract of loan.

i. Kinds of principal obligations t hat m a y be secured by a pledge o r mortgage
1. Pure obligation
2. Conditional obligations whether suspensive or resolutory
3.  Natural obligations
4. Rescissible obligations
5. Voidable obligations
6. Unenforceable obligations

b. T h a t the pledgor o r m o rt ga gor be the absolute owner of the thing pledged o r mortgaged.
i. Period the pledgor o r m o rt gag or req ui re d to be the owner of the thing pledged o r
mortgaged for the validity of contract of pledge o r mortgage
1. At the time the pledge or mortgage is constituted

c. T h a t the persons constituting the pledge o r mortgage have the free disposal of their property, a n d
in the absence thereof, t hat they be legally authorized for the purpose.

d. T h a t when the principal obligation becomes due, the things in which the pledge o r mortgage
consists m a y be alienated for the p ay m ent of the creditor.
i. P a c t u m Commissorium   is a stipulation whereby the thing pledged or mortgaged shall
automatically become the property of the creditor in the event of non-payment of the debt within
the term fixed. This stipulation is null and void for being contrary to law and public policy.

2. Th e following a r e the instances where the thing pledged o r mortgaged m a y be sold o r alienated in public
auction for the pay m en t of the secured contract of loan o r principal obligations
a. If the pledgor or mortgagor fails to fulfill certain conditions and such violation would make the debt due
and demandable.
 b. If the debtor has lost the right to make use of the period or where there is an acceleration
clause in the
 payment of installment.
c. Upon default to pay the obligation at maturity.

3. Indivisibility of contract of pledge o r mortgage o r antichresis

4. C on t rac t of pledge  is a contract by virtue of which the debtor delivers to the creditor or to a third person a
movable, or instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all
its fruits and accessions.

5. Characteristics of a contract of pledge

a. Real  – It is perfected by delivery of the subject matter.
 b. Accessory  – It has no independent existence of its own.
c. Unilaterial  – It creates an obligation on the part of the creditor to return the thing upon the fulfillment of
the principal obligation.
d. Subsidiary  – The obligation incurred does not arise until the fulfillment of the principal obligation which
is secured.
e. Indivisible  – It creates a lien on the whole or all of the properties mortgaged, which lien continues until
the obligation is secures has been fully paid.

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6. Essential requisites of conventional pledge o r contract of pledge
a. That it be constituted to secure the fulfillment of a principal obligation.
 b. That the pledgor be the absolute owner of the thing pledged.
c. That person constituting the pledge has the free disposal of his property, and in the absence thereof, that
he be legally authorized for the purpose.
d. That the thing pledged be placed in the possession of the creditor, or a third person by common
agreement.

7. Subject m a t t e r of a contract of pledge

a. All movable or personal property susceptible of possession.
 b. Incorporeal rights or intangible assets which are evidenced by negotiable instruments, bill of lading, shares
of stocks, bonds, warehouse receipts and similar documents.

8. F o r m of contract of pledge for validity o r to bi nd contracting parties vs. form of contract of pledge to bind
t h i r d persons

9. N at u re of a contract to constitute a pledge vs. n a t u r e of contract of pledge

10. Rights of the debtor-pledgor

a. To alienate, with the consent of the pledgee, the thing pledged.
 b. To continue to be the owner of the thing pledged unless it is expropriated.
c. To ask for the return of the thing pledged after he has paid the debt and its interest, with expenses in a
 proper case.
d. To ask that the thing pledged be judicially or extra-judicially deposited if it is used without authority or for
a purposes other than for its preservation.
e. To require that the thing be deposited with a third person if it is in danger of being lost or impaired through
the negligence or willful act of the pledgee.
f. To demand the return of the thing pledged, upon offering another thing in pledge, provided the latter is of
the same kind and quality, if there are reasonable grounds to fear the destruction or impairment of the thing
pledged without the fault of the pledgee. This right is without prejudice to the right of the pledgee to have
the thing sold at a public sale. However, the pledgee is bound to advise the pledgor, without delay,
of any danger to the thing pledged.
g. In case of a pledge of animals, their offspring shall pertain to the pledgor or owner of animals pledged,
 but shall be subject to the pledge, if there is no stipulation to the contrary.

11. Obligations of the debtor-pledgor

a. To pay the debt and its interest, with expenses, in a property case, when they are due.
 b. To pay damages that the pledgee may suffer by reason of the flaws of the thing pledged, if he was aware
of such flaws but did not advise the pledgee of the same.
c. To pay for the expenses which are necessary for the preservation of the thing pledged.

12. Rights of the creditor-pledgee

a. To retain in his possession the thing pledged until the debt is paid.
 b. To demand reimbursement of the expenses made for the preservation of the thing pledged.
c. To bring actions which pertain to the owner of the thing pledged in order to recover it from, or defend it
against third person.
d. To use the thing pledged if he is authorized to do so, or when its use is necessary of the preservation of the
thing.
e. To cause the sale of the thing pledged at a public sale, if there is a danger of destruction, impairment or
diminution of value of the thing pledged without his fault.
f. To collect and receive the amount due if the thing pledged is a credit which becomes due before it is
redeemed, and to apply the same to the payment of his claim.
g. To sell the thing pledged upon default of the debtor.
h. To appropriate the thing pledged upon failure to sell the property in two public auctions

13. Obligations of creditor-pledgee

a. To take care of the thing pledged with the diligence of a good father of a family.
 b. To be liable for the loss or deterioration of the thing pledged unless it is due to a fortuitous event.
c.  Not to deposit the thing pledged with a third person unless ordered by the court.
d. To be responsible for the acts of his agents or employees with respect to the thing pledged.
e.  Not to use the thing pledged except when he is authorized by the owner or when the use of the thing is
necessary for its preservation.
f. To deliver to the debtor the surplus after paying his claim from what he has collected on a credit that was
 pledged and which has become due before it is redeemed.
g. If the pledge earns or produces fruits, income, dividends, or interests, the creditor shall compensate what
he receives with those which are owing him; but if none are owing him, or insofar as the amount may
exceed that which is due, he shall apply it to the principal. Unless there is a stipulation to the contrary, the
 pledge shall extend to the interest and earnings of the right pledged.

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14. Instances when a t h i rd pers on who pledges his own movable p rop ert y to secure the debt of an ot h er shall be
released fro m liability
a. If the creditor voluntarily accepts immovable or other property in payment of the debt even if the creditor
thereafter loses the same by eviction.
 b. If an extension of time is granted to the debtor by the creditor without pledgor’s consent.
c. If through some act of the creditor, the pledgor cannot be subrogated to the rights, mortgages and
 preferences of the creditor.
d. If the thing pledged is deteriorated on the fault of the pledgee.

15. Modes of extinguishment of a contract of pledge

a. Indirect M ode of Extinguishment

i. When the principal obligation secured by the pledged is extinguished.

 b. Direct Modes of Extinguishment of contract of pledge b u t do not extinguish the contract of
loan

i. Return by the pledgee of the thing pledged to the pledgor or owner.

ii. Renunciation or abandonment in writing by the pledgee of the contract of pledge.

c. Direct Modes of Extinguishment of contract of pledge b u t also extinguish the contract of loan

i. Sale of the thing pledged regardless of the net proceeds of the sale.

1. Rule in case of deficiency

a. The pledgee can never recover the deficiency despite stipulation for recovery.

2. Rule in case of excess

a. The pledgee is generally entitled to the excess in the absence of stipulation to the
contrary.

ii. Appropriation of the thing pledged by the pledgee if the thing pledged is not sold in the first and
second auctions.

I. A stipulation which provides that the pledge is not extinguished by the return of the thing pledged.
16. Null a n d void stipulations in a contract of pledge
II. A stipulation allowing the automatic appropriation by the pledgee of the thing pledged in case of default of
the debtor.
III. A stipulation for the recovery of deficiency in case the proceeds from the sale of the thing pledged is less than
the amount of the obligation.

17. Legal Pledge  is a type of pledge which refers to the right of a person to retain a thing until he receives payment of
his claim.

18. Examples of legal pledge

a. A possessor in good faith may retain the movable upon which he has incurred necessary and useful
expenses until he has been reimbursed therefore.
 b. He who has executed work upon movable has a right to retain it by way of pledge until he is paid.
c. The depositary may retain the thing deposited until the full payment of what may have been due
from him
 by reason of the deposit.

19. C on t rac t of o r Conventional pledge vs. Legal pledge

a. The deficiency in foreclosure sale in contract of pledge can never be recovered by the pledgee but the
deficiency in public sale in legal pledge can be recovered by the creditor.
 b. The excess in foreclosure sale in contract of pledge will generally go to the pledgee in the absence of
stipulation to the contrary but the excess in the public sale in legal pledge will go to the debtor.

20. Essential requisites of a contract of real estate mortgage

a. That it be constituted to secure the fulfillment of a principal obligation or contract of loan.
 b. That the mortgagor be the absolute owner of the thing mortgaged.
c. That the person constituting the mortgage must have the free disposal of his property, and in the absence
thereof, that he be legally authorized for the purpose.

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21. I m p o r t a n t characteristics of real estate mortgage

a. Accessory  – It cannot exist without a principal obligation or contract of loan.

 b. Indivisible  – It creates a lien on the whole or all of the properties mortgaged, which lien continues until
the obligation is secures has been fully paid.
c. Inseparable  – It subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted.
d. Real right  – It creates a lien on the property mortgaged.
e. Consentual contract  – It is perfected by mere consent.

22. Types of real estate mortgage

a. Conventional real estate mortgage  is one which is created by the agreement of the parties.
 b. Legal mortgage  is one executed pursuant, to an express requirement of a provision of law.
c. Equitable mortgage   is one which although lacks certain formality, form or words or other
requisites
 provided by statute, but the facts show the intention of the parties to charge the real property as a security
for a debt and contains nothing contrary to law. The remedy of the injured party is to file an action for
reformation of instrument.

23. Subject m a t t e r of contract of real estate mortgage

a. Immovable property
 b. Rights on immovable property

24. Formality of a contract of real estate mortgage for validity vs. Formality of a contract of real estate
mortgage to bi nd t h i r d persons

25. Foreclosure - refers to the remedy available to the mortgagee by which he subjects the property mortgaged to the
satisfaction of the obligation secured when the principal obligation is not paid when due or when there is any
violation of any condition, stipulation or warranty by the mortgagor.

26. Types of Foreclosure of Real Estate Mortgage

a. Judicial Foreclosure is a type of foreclosure made through the filling of a petition in court under Rule
68 of Rules of Court and availed of when the deed of real estate mortgage does not provide for special
 power of attorney (SPA) authorizing the mortgagee-creditor to foreclosure it extrajudicially.

i. Equity of Redemption  – The judgment debtor/mortgagor has a period of not less than 90 days
nor more than 120 days from the entry of judgment to pay his liability to prevent the public sale of
his mortgaged property.

ii. Right of Redemption  – The judgment debtor/mortgagor is not generally allowed to repurchase
the property sold in public auction in judicial foreclosure unless a special law allows.

 b. Extrajudicial Foreclosure  is a type of foreclosure made in compliance with Act No. 3135 and available
when there is a stipulation in the mortgage contract that the mortgage may be foreclosed extrajudicially or
when such foreclosure sale is made under a special power of attorney inserted in the contract of mortgage.

i. Equity of Redemption  – The mortgagor may pay his obligation to prevent the public sale of his
 property in the grace period given by the mortgagee.

ii. Right of Redemption  – The mortgagor may repurchase the property sold in public auction within
a period of:

1. Generally within 12 months or 1 year from public sale

2. Exceptionally within 3 months or 90 days from public sale if the mortgagee is a bank and
the mortgagor is a juridical or artificial person.

27. Rules in deficiency o r excess in foreclosure of real estate mortgage

a. Rule in case deficiency

i. The mortgagee can recover the deficiency in the absence of stipulation to the contrary.

b. Rule in case of excess

i. The mortgagor is entitled to the excess in the absence of stipulation to the contrary.

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28. C hattel mortgage   is a conditional sale of personal property as security for the payment of a debt, or the
 performance of some other obligation specified therein, the condition being that the sale shall be void upon the
seller paying to the purchaser a sum of money or doing some other act named. If the condition is performed
according to its terms the mortgage and sale immediately become void, and the mortgagee is thereby divested of
his title.

29. Essential requisites of contract of chattel mortgage

a. That it be constituted to secure the fulfillment of a principal obligation or contract of loan.
 b. That the mortgagor be the absolute owner of the thing mortgaged.
c. That the person constituting the mortgage must have the free disposal of his property, and in the absence
thereof, that he be legally authorized for the purpose.
d. That the document in which the mortgage appears be recorded in the Chattel Mortgage Register.

30. I m p o r t a n t characteristics C on t ract of chattel mortgage

a. Accessory  – It cannot exist without a principal obligation.
 b. Indivisible  – It creates a lien on the whole or all of the properties mortgaged, which lien continues until
the obligation is secures has been fully paid.
c. Inseparable  – It subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted.
d. F o rm a l contract  – It is perfected by the registration if the chattel mortgage register.

31. Subject m a t t e r of chattel mortgage

a. Personal property
 b. Movable property

32. Rules for the place of registration of Chattel Mort gage

a. As a general rule, it must be recorded in the Chattel Mortgage Register of the province where the
mortgagor resides.
 b. If must be recorded in the both Chattel Mortgage Registers of the provinces where the mortgagor resides and
where the property is located if the property is not located in the province of domicile of the mortgagor.
c. If the mortgagor is domiciled outside the Philippines, the mortgage must be registered in the Chattel
Mortgage Register where the property is located.
d. With respect to motor vehicles, it must be registered Chattel Mortgage Register where the mortgagor
resides and LTO.
e. With respect to shares of stock, Chattel Mortgage Register in the province where the corporation has its
 principal office and in the domicile of the mortgagor.
f. With respect to vessel, Bureau of Customs at port of entry.

33. Rules in deficiency o r excess in foreclosure of chattel mortgage

a. Rule in case of deficiency

i. The mortgagee can recover the deficiency in the absence of stipulation to the contrary.

b. Rule in case of excess

i. The mortgagor is entitled to the excess in the absence of stipulation to the contrary.

34. Antichresis   is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation,
especially subjecting to such security, immovable property or real rights over immovable property in case the
 principal obligation is not complied with at the time stipulated. In this contract, the creditor acquires the right to
receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, if
owing, and thereafter to the principal of his credit.

35. I m p o r t a n t characteristics C on t ract of Antichresis

a. Accessory  – It cannot exist without a principal obligation.
 b. Indivisible  – It creates a lien on the whole or all of the properties mortgaged, which lien continues until
the obligation is secures has been fully paid.
c. Inseparable  – It subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted.
d. F o rm a l contract  – It is perfected by the written agreement on the contract of antichresis including the
 principal and interest of the loan.

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 C om pari son of Pledge, Real Mortgage, Chattel M ortgage a n d Antichresis
Basis of Conventional Pledge Real Estate Mortgage Chattel Mortgage Antichresis
Difference
Type of Real  –  By delivery of Consensual  –  By Formal  –  By Formal  –  By execution of
Contract as to mere object consent registration the of written agreement of
 perfection contract of chattel antichresis
mortgage in the Chattel
Mortgage Registry with statement of the
amount of principal and
To bind third Must be in a public Must be registered in Must be accompanied interest
 persons instrument showing a the Registry of Property  by affidavit of good of the contract of loan.
description of the faith Must be registered in the
thing pledged and the Registry of Property
date of the pledge
Object of Movable or personal Immovable or real Movable or personal Immovable or real
contract  property  property  property  property
Prohibition Applicable Applicable Applicable Applicable
against pactum
commissorium
Indivisibility of Indivisible Indivisible Indivisible Indivisible
the contract
Remedy of Foreclose security and Foreclose security and Foreclose security and Gather the fruits of the
Creditor in case sell the collateral in sell the collateral in sell the collateral in land and apply the fair
of Debtor’s  public action with the  public action with the  public action with the market value of the fruits
default  proceeds to be applied  proceeds to be applied  proceeds to be applied at the time of application
to the unpaid to the unpaid obligation to the unpaid obligation first to the interest of the
obligation loan and the remainder
to the principal of the
loan.
As to Deficiency can never Deficiency can be Deficiency can be Deficiency can be
deficiency  be recovered even if recovered unless there recovered unless there recovered through
there is a stipulation. is stipulation to the is stipulation to the continuous gathering of
Any stipulation for contrary. contrary. (Except in fruits.
recovery of deficiency case of personal
is null and void.  property sold
(Exception installment
–
 P eldge) Legal Recto Law) in
As to excess of Excess belongs to the Excess belongs to the Excess belongs tounderthe Excess fruits belongs to
 proceeds  pledgee-creditor mortgagor unless there mortgagor unless there the owner of the land or
unless there is is stipulation to the the is stipulation to the antichretic debtor.
stipulation to contrary. contrary.
contrary. (Exception  – 
Legal Pledge)
As to The pledgee The mortgagee cannot The mortgagee cannot The antichretic creditor
appropriation may appropriate the appropriate the thing appropriate the thing cannot appropriate the
of property thing mortgaged. mortgaged. land used as collateral
 pledged if the same is  but may sell the fruits to
not sold in two public  be applied to interest and
auctions.  principal of loan.
As to selling of The pledgor may only The mortgagor can sell The mortgagor can sell The antichretic debtor
 property after sell the property with the property. Any the property. Any can sell the land.
the pledge or the consent of the stipulation prohibiting stipulation prohibiting
mortgage by  pledgee. the mortgagor to sell the mortgagor to sell
the owner. the property is void. the property is void.

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36. Agency  is a contract, whereby a person binds himself to render some service or to do something in representation
or in behalf of another, with the consent and authority of the latter.

37. Characteristics of a contract of agency

a. Principal – it can stand by itself.
 b. Preparatory – It is a
means by which other contracts may
be entered into.
c. Consensual – It is perfected by
mere consent.
d. Onerous – It is generally
presumed to be with just
compensation.
e.  Nominate – It has a name given
to it by law.
f. Bilateral – The parties are
bound reciprocally to it by law.
g. Commutative – The parties give
and receive almost equivalent
values.

38. Instances of implied contract of

agency
a. Acts of the principal
 b. Silence of the principal
c. Lack of action of the principal
d. Failure of the principal to repudiate the agency knowing that another person is acting in his behalf without
authority.
e. Special power of attorney

39. Status of contract of entered into by the agent in behalf of the principal

40. Acts of Administration vs. Acts of Strict Dominion

41. Basic principles of contract of agency

a. The agent must act within the scope of his authority.
 b. The agent may do such acts as may be conducive to the accomplishment of the purpose of the
agency.
c. The limits of the agent’s authority shall not be considered exceeded even it has been performed in a
manner more advantageous to the principal than that specified by him.
d. The agent must act in behalf of his principal and should disclose the principal.

42. Effects if the agent acts within the scope of his authority but in his (agent’s) behalf or without disclosing the
principal
a. The principal has no right of action against the person with whom the agent has contracted.
 b. The person with whom the agent has contracted has no right of action against the principal.
c. The agent is directly bound in favor of the one with whom he has contracted.
d. The contract binds the third person and the principal even if the contract involves thing belonging to the
 principal.

43. G eneral obligations of a n agent

a. To carry out the agency.
 b. To be liable for
damages through the non-
performance, the principal
may suffer.
c. He shall observe diligence of a good father of a family in the custody and preservation of the goods if he
declines the proposed agency.
d. To finish the business already begun on the death of the principal, should delay entail any danger.
e.  Not to continue the agency despite the fact that its execution would manifestly result in loss or damage.

44. Special obligations of a n agent

a. To advance the necessary funds if there was stipulation to that effect except when the principal is
insolvent.
 b. To act in accordance with the instructions of the principal in the execution of the agency and in the
absence of instructions of the principal, he shall exercise the diligene of a good father of a family.
c.  No to carry out an agency if the execution would manifestly result in loss or damage to the principal.
d. To be liable for damages if there being a conflict between interest and that of the principal, he should
 prefer his own.
e. To lend money to the principal at current interest rate if he has been authorized to borrow money. Page 7 of 9
f.  Not to borrow money of the principal at current interest rate without the principal’s conse nt, if the latter
has authorized him to lend principal’s money at interest.
g. To render an accounting of his transactions and to deliver to the principal whatever he may have received
45. Rules t h at shall be observed as reg ards to the liability of agent when he appoints a substitute
a. If the agent is not prohibited to appoint a substitute, the agent may appoint a substitute but he shall be
responsible for the acts of the substitute.
 b. If the agent is authorized to appoint a substitute and the principal designated the person to be
appointed as
substitute, the agent is not responsible for the acts of the substitute.
c. If the agent is authorized to appoint a substitute and the principal does not designate the person to be
appointed as a substitute, the agent shall be liable if the person appointed as substitute is notoriously
incompetent or insolvent man.
d. If the agent is prohibited to appoint a substitute, the agent cannot appoint a substitute. If he appoints one,
all the acts of the substitute shall be void.

46. Degree of liability of two o r m o re agents vs. Degree of liability of two o r m o re principals

47. Obligations of the principal in the contract of agency

a. To comply with all the obligations which the agent may have contracted within the scope of his authority.
 b. To be bound for any obligation wherein the agent exceeded his power if he ratifies such obligation
expressly or tacitly.
c. To be solidarily liable with the agent if he allowed the latter to act as though he had full powers when the
agent exceeded his authority.
d. To advance to the agent the sums necessary for the execution of the agency should the agent so request.
e. To reimburse the agent the sums advanced by the seller even if the business or undertaking was not
successful provided that the agent is free from fault including the interest on the sum.
f. To indemnify the agent for all damages which the execution of the agency may have caused the latter,
without the fault or negligence on his part.
g. When two or more persons have appointed an agent for a common transaction or undertaking, the
 principals shall be solidarily liable for all the consequences of the agency.

48. Instances wherein the principal shall not be liable for the expenses i n curr ed by the agent
a. When the agent acted in contravention of the principal’s instructions and the principal avails himself of
the benefits derived from the contract.
 b. When the expenses were not due to the fault of the agent.
c. When the agent incurred them with knowledge that an unfavorable result would ensue if the principal was
not aware thereof.
d. When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed
only a certain amount.

49. Modes of extinguishment of agency: (EDWARD)

a. E – Expiration of the period for which the agency was constituted.
 b. D – Death, Civil interdiction, Insanity or Insolvency of the principal or agent.
c. W – Withdrawal of the agent.
d. A – Accomplishment of the object or purpose of the agency.
e. R – Revocation of the agency by the principal.
f. D – Dissolution of the firm or corporation which entrusted or accepted the agency.

50. Implied revocation of contract of agency

a. When a new agent is appointed for the same business or transaction.
 b. If the principal directly manages the business entrusted to the agent, dealing directly with third
persons.
c. When a special power of attorney is granted to an agent with a general power of attorney.

51. Instances when agency m a y not be revoked a t will by the principal

a. If a bilateral contract depends upon an agency.
 b. If the agency is a means of fulfilling an obligation already contracted.
c. If a partner appointed a manager of a partnership in the contract of partnership and his removal from the
management is unjustifiable.

52. Principles concerning revocation

a. If the agency has been entrusted for the purpose of contracting with specified persons, the principal must
give a timely notice of the revocation to such third persons.
 b. If the agent had general powers, he was entrusted to contract with general public or any person, revocation
of the agency does not prejudice third persons who acted in good faith and without knowledge of the
revocation.
c.  Notice of revocation of general powers in a newspaper of general circulation is sufficient warning to third
 persons.
d. Revocation binds third persons who had knowledge thereof.

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 53. Principles concerning withdrawal by the agent
a. The agent must give notice to the principal of the withdrawal.
 b. The agent must indemnify the principal for any damage suffered by reason of the withdrawal.
c. The agent shall not be liable for withdrawal if it is based upon the impossibility of continuing the
 performance of the agency without grave detriment to himself.
d. The agent who withdraws should take care of the object of the agency if his reason is valid.

54. Instances when the agency is not extinguished by the death of t h e principal.
a. If the agency has been constituted in the common interest of the principal and the agent.
 b. If the agency has been constituted in the interest of a third person who has accepted the stipulation in his
favor.
c. In so far as to finish the business already begun on the death of the principal, should delay entail any
danger.

Compa r i son of Special Cont ra c t s

Name of C on tr a ct of Contract of L oa n or C on t r a c t of Deposit Co nt r a c t of Lease
Cont ra c t Commodatum Mutuum
Definition It is a contract wherein It is a contract wherein It is a contract wherein It is a contract wherein
one of the parties one of the parties delivers a person receives a one party binds himself to
delivers to another, to another money or thing belonging to give another the
either something not other consumable thing, another, with the enjoyment or use of a
consumable so that the upon the condition that obligation of safely thing for a price certain,
latter may use the same the same amount of the keeping it and of and for a period which
for a certain time and same kind and quality returning the same and may be definite or
return it. shall be the the safekeeping of indefinite.
 paid. the thing delivered is
the principal purpose of
the contract.

Subject matter 1.Non-consumable thing 1. Money 1. Consumable thing 1. Real property

2.Consumable thing but 2. Consumable thing 2.Non-consumable 2. Personal property
only for purpose of thing
exhibit
3. Real
Characteristics 4. Essentially gratuitous 1. Real 1. Real 1. Consensual
2. Onerous if there is 2.Onerous if there 2. Onerous
interest or gratuitous if depositary fee or
there is no interest. gratuitous if for free.

-E ND-

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