COMMODATUM

NATURE, PURPOSE AND CHARACTERISTICS

Simple Loan (Mutuum) Defined
Art. 1933: By a contract of loan, one of the parties delivers to another xxx 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.
Tolentino vs. Gonzalez Sy Chiam 50 Phil 558
Tolentino purchased land from Luzon Rice Mills for Php25,000 payable in three
installments. Tolentino defaulted on the balance so the owner sent a letter of
demand to him. To pay, Tolentino applied for loan from Gonzalez on condition that
he would execute a pacto de retro sale on the property in favor of Gonzalez. Upon
maturation of loan, Tolentino defaulted so Gonzalez is demanding recovery of the
land. Tolentino contends that the pacto de retro sale is a mortgage and not an
absolute sale.
The Supreme Court held that upon its terms, the deed of pacto de retro sale is an
absolute sale with right of repurchase and not a mortgage. Thus, Gonzalez is the
owner of the land and Tolentino is only holding it as a tenant by virtue of a
contract of lease.
**LOAN: A contract of loan signifies the giving of a sum of money, goods or
credits to another, with a promise to repay, but not a promise to return the same
thing. It has been defined as an advancement of money, goods, or credits upon a
contract or stipulation to repay, not to return, the thing loaned at some future day
in accordance with the terms of the contract. The moment the contract is
completed, the money, goods or chattels given cease to be the property of the
former owner and become the property of the obligor to be used according to his
own will, unless the contract itself expressly provides for a special or specific use
of the same. At all events, the money, goods or chattels, the moment the contract
is executed, cease to be the property of the former owner and become the sole
property of the obligor.
Commodatum Defined
Art. 1933: By the contract of loan, one of the parties delivers to another
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. xxx
- the bailee acquires the use of the thing loaned but not its fruits (Art. 1935),
EXCEPT if the parties stipulate use of fruits (Art. 1940)
Pajuyo v. CA, G.R. No. 146364, June 3, 2004

Pajuyo purchased the rights over a property from Pedro Perez. Thereafter, he
constructed a house and he and his family lived there. Later, Pajuyo agreed to let
Guevarra live in the house for free provided that Guevarra maintain cleanliness
and orderliness of the house. They also agreed that Guevarra should leave upon
demand. But when Pajuyo later told Guevarra that he needed the house, Guevarra
refused, hence an ejectment case was filed.
Supreme Court held that the contract is not a commodatum. In a contract of
commodatum, one of the parties delivers to another something not consumable
so that the latter may use the same for a certain time and return it. An essential
feature of commodatum is that it is gratuitous. Another feature of commodatum is
that the use of the thing belonging to another is for a certain period. Thus, the
bailor cannot demand the return of the thing loaned until after expiration of the
period stipulated, or after accomplishment of the use for which the commodatum
is constituted. If the bailor should have urgent need of the thing, he may demand
its return for temporary use. If the use of the thing is merely tolerated by the
bailor, he can demand the return of the thing at will, in which case the contractual
relation is called a precarium. Under the Civil Code, precarium is a kind of
commodatum.
Distinctions
RENT v. LOAN (Tolentino v. Gonzalez Sy Chiam, supra): A contract of lease of
property is not a loan. A loan signifies the giving of a sum of money, goods or
credit to another, with a promise to repay, but not a promise to return the same
thing. In a contract of rent, the owner of the property does not lose his ownership.
He simply loses his control over the property rented during the period of the
contract. In a contract of rent the relation between the contractors is that of
landlord and tenant. In a contract of loan of money, goods, chattels, or credits, the
relation between the parties is that of obligor and obligee.
COMMODATUM v. MUTUUM
1. As to parties commodatum: bailor and bailee; mutuum: obligor and obligee
2. As to object commodatum: non-consumable or non-fungible thing; mutuum:
money or any consumable or fungible thing
3. As to consideration commodatum: use of the thing and return it; mutuum: use
and own the thing and pay the same amount of the same kind and quality
4. commodatum: gratuitous; mutuum: may be gratuitous or onerous
5. commodatum: ownership of the thing is retained by the bailor; mutuum:
ownership is transferred to the obligee
6. commodatum: real or personal property; mutuum: personal property
7. As to purpose commodatum: use or temporary possession of the thing; mutuum:
consumption of the thing
8. commodatum: bailor may demand the return of the thing before expiration of
term in case of urgent need or precarium; mutuum: no demand before lapse of
the term

9. commodatum: bailor suffers the loss of the thing; mutuum: obligee suffers the
loss of the thing
Purpose
- to transfer either the use or possession of the thing loaned; for safekeeping of
the thing delivered and returning it
Characteristics of Commodatum
perfected upon delivery of the thing loaned (real contract)
Q: Is there a perfected contract of commodatum before delivery?
A: No. A contract of commodatum is a real contract and therefore requires
delivery for its perfection. There can be no perfected contract of commodatum
but there can be a binding accepted promise to deliver by the bailor. In which
case, commodatum is a unilateral contract in that only one party, the bailor, has
the obligation to deliver the object.
accepted promise to deliver by commodatum or mutuum is binding (unilateral
contract)
purely personal in character: a) death of bailor or bailee extinguishes contract; b)
bailee cannot lend or lease the object loaned to third parties EXCEPT if members
of his household, UNLESS there is a stipulation against or the use is prohibited by
nature of the thing (art. 1949)
Q: If there are two or more borrowers, would the commodatum be
extinguished upon the death of one?
A: The contract is not extinguished in the absence of a contrary stipulation. The
borrowers are considered solidary debtors (art. 1945) and for this reason, the
bailor or creditor has the right to demand from either one of them the thing
loaned. This is an exception the general rule that the concurrence of two or more
debtors gives rise only to a joint obligation. The reason is that in a commodatum,
it is presumed that the bailor took into account the character of each of the
bailees in lending the thing and that therefore he would not have constituted the
contract if there were only one bailee.

1.
2.

Q: Even if death of the parties extinguishes a contract of commodatum,

is it possible for the heirs to acquire rights to the obligation?
A: Ordinarily in a contract of commodatum, the death of the parties extinguishes
the contract. That is because commodatum, being essentially gratuitous, takes
into account the character, credit and conduct of the bailee. However, there can
be a valid stipulation stating that the contract be transmitted to the heirs of the
parties.
bailor has the right to demand the thing at will if:
he has urgent need, demand the return or its temporary use (art. 1946)
(art. 1947) PRECARIUM: (1) if neither the duration or the use of thing has been
stipulated; (2) if the use of the thing is by mere tolerance of the owner
essentially gratuitous (art. 1933)

PARTIES AND REQUIREMENTS FOR VALIDITY AND PERFECTION

Parties
- bailor and bailee
Requirements for Validity and Perfection
CONSENT
Art. 1315: Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.
OBJECT
Art. 1937: Movable or immovable property may be the object of commodatum.
- MOVABLE: non-consumable or non-fungible EXCEPT that consumable thing may
be the object if the purpose is only for exhibition
Mina v. Pascual, 25 Phil 540
Francisco is the owner of land and he allowed his brother, Andres, to erect a
warehouse in that lot. Both Francisco and Andres died and their children became
their respective heirs: Mina for Francisco and Pascual for Andres. Pascual sold his
share of the warehouse and lot. Mina opposed because the lot is hers because her
predecessor (Francisco) never parted with its ownership when he let Andres
construct a warehouse, hence, it was a contract of commodatum. What is the
nature of the contract between Francisco and Andres?
The Supreme Court held that it was not a commodatum. It is an essential feature
of commodatum that the use of the thing belonging to another shall be for a
certain period. The parties never fixed a definite period during which Andres could
use the lot and afterwards return it.
NOTA BENE: It would seem that the Supreme Court failed to consider the
possibility of a contract of precardium between Francisco and Andres. Precardium
is a kind of commodatum wherein the bailor may demand the object at will if the
contract does not stipulate a period or use to which the thing is devoted.
Producers Bank of the Philippines v. CA, 397 SCRA 651
Doronilla is in the process of incorporating his business and to comply with one of
the requirements of incorporation, he caused Vives to issue a check which was
then deposited in Doronillas savings account. It was agreed that Vives can
withdraw his money in a months time. However, what Doronilla did was to open a
current account and instructed the bank to debit from the savings account and
deposit it in his current account. So when Vives checked the savings account, the
money was gone. Is the contract a mutuum or commodatum?

Supreme Court held that the contract is a commodatum. Although in a

commodatum, the object is a non-consumable thing, there are instances where a
consumable thing may be the object of a commodatum, such as when the
purpose is not for consumption of the object but merely for exhibition (Art. 1936).
Thus, if consumable goods are loaned only for purposes of exhibition, or when the
intention of the parties is to lend consumable goods and to have the very same
goods returned at the end of the period agreed upon, the loan is a commodatum
and not a mutuum.
CONSIDERATION
Art. 1933: xxx Commodatum is essentially gratuitous.
Art. 1935: xxx if any compensation is to be paid by him who acquires the use, the
contract ceases to be a commodatum.
DELIVERY
- perfects the contract
Central Bank of the Philippines v. CA, 139 SCRA 46 (1985)
Tolentino made a loan from Island Savings Bank secured by a mortgage. The Bank
did not release the whole amount but only a portion thereof. Later, the Bank
experienced liquidity problems and the Monetary Board of Central Bank prohibited
it from making new loans and much later, from doing business in the Philippines.
Thereafter, the Acting Superintendent of Central Bank took charge of its assets.
Upon expiration of the loan term, the Bank filed extrajudicial foreclosure of the
mortgage. Was there a perfected contract of loan when only a portion of the
amount was delivered?
The Supreme Court held that there was only partial delivery. As such, the contract
is deemed perfect only in so far as what has been delivered. The mortgage cannot
be entirely foreclosed, except for up to the amount of the actual amount released,
but the Bank can recover the interest of the partial loan. Tolentino cannot
anymore demand the remaining amount of the loan from the Bank because he
defaulted on his payment. His liability offsets the liability of the Bank to him.
RIGHTS AND OBLIGATIONS OF THE PARTIES
Obligations of the Bailee
- to return the object
pay for the ordinary expenses for the use and preservation of the thing loaned
- no reimbursement for ordinary expenses
liable for loss of the thing even if fortuitous if:
1. he devotes the thing for a different purpose
2. he keeps it longer than the period stipulated or after the accomplishment of the
use for which the commodatum has been constituted
3. thing loaned has been delivered with appraisal of its value, unless there is a
stipulation exempting bailee from fortuitous event
4. lends or leases the thing to a third person not a member of the household

5. being able to save either the thing borrowed or his own thing, he chose to save
his
not answer for the deterioration of the thing loaned due to use thereof and
without fault
bailee cannot retain on ground that the bailor owes him something, even if
expenses
- but if bailor knew of defect and did not advise the bailee about it, then bailee
has the right of retention but only to recover damages
bailee is not entitled to the fruits of the thing loaned, EXCEPT if there is a
stipulation to the contrary
bailee must take care good care of the thing with the diligence of a good father of
the family (art. 1163)
Q: If the parties in a commodatum can stipulate that the bailee may
make use of the fruits, wouldnt that make the contract one of usufruct?
A: A usufruct is a contract by which the usufructuary is allowed by the owner to
enjoy the fruits. By that, it means that the main cause of the usufruct is to enjoy
the fruits. In a contract of commodatum, the consideration is the use of the thing
and if there is a stipulation for the enjoyment of the fruits, it must only be
incidental to the use of the thing itself.
Republic v. Bagtas, 6 SCRA 262 (1962)
Bagtas borrowed three bulls from the Bureau of Animal Industry for a period of
one year with breeding charge at 10% of book value. After one year, the contract
was renewed only for one bull but Bagtas did not return the two, one of which
died because of gunshot wound during the Huk raid. Is Bagtas liable for the loss of
the bull?
Supreme Court held that Bagtas was liable for the loss of the bull even though it
was caused by a fortuitous event. If the contract was one of lease, then the 10%
breeding charge is compensation (rent) for the use of the bull and Bagtas, as
lessee, is subject to the responsibilities of a possessor. He is also in bad faith
because he continued to possess the bull even though the term of the contract
has already expired. If the contract was one of commodatum, he is still liable
because: (1) he kept the bull longer than the period stipulated; and (2) the thing
loaned has been delivered with appraisal of its value (10%).
Obligations of the Bailor
respect the duration of the loan, EXCEPT if there is urgent need or precarium
demand immediate return if the bailee commits acts of ingratitude
- Art. 765: a) bailee commits offenses against the person, honor or property of the
bailor or that of his wife and children under his parental authority; b) bailee
imputes any criminal offense or any act involving moral turpitude on the bailor,
even if he should prove it, EXCEPT if the act was committed against the bailee or
his family; and c) bailee unduly refuses to give support to the bailor when he was
morally bound to do so

 refund extraordinary expenses

- provided that the bailee informs the bailor about it before incurring them,
EXCEPT if the need is urgent; HOWEVER, if extraordinary expenses arise on the
occasion of actual use of the thing, whether bailee is at fault or not, they shall be
borne by both bailor and bailee EXCEPT if there is a contrary stipulation (art.
1949)
no right of abandonment for expenses and damages
- because the expenses and damages may exceed the value of the thing loaned
liable for damages if he knew of the flaws of the thing loaned and did not inform
the bailee, who incurs damages by reason thereof
- REQUISITES:
1. there is a flaw or defect in the thing loaned
2. the flaw or defect is hidden
3. the bailor is aware thereof
4. he does not advise the bailee of the same
5. the bailee suffers damages by reason of such flaw or defect
- liability is by reason of bailors bad faith so if bailor is not aware of the defect, he
is not liable