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A contract of commodatum was constituted between the parties involving certain
furniture (non consumable) belonging to the plaintiff for use by the defendant. This
contract was subject to the condition that the things loaned must be returned to the
plaintiff on her demand. When said demand was made, defendant responded by
informing plaintiff that the said furniture may be gotten from the house, he made no
efforts to deliver all of it to the plaintiff. As a result, plaintiff refused to get the
things subject of the loan from the house. Defendant then deposited the items with
the Sheriff.
In a contract of commodatum, does depositing of the thing loaned in court
extinguish the obligation on the part of the bailee to execute its return by delivery
to the bailor?
1) This was a contract of commodatum Gratuitous, ownership retained,
obligation to deliver the very thing loaned after expiry of period stipulated
(demand by plaintiff)
2) In a contract of commodatum, ownership is reserved in the bailor (plaintiff)
3) Since ownership of the thing/s does not pass to bailee, he is not entitled to
place the thing on deposit
4) In the instant case, the condition was return upon demand by the plaintiff,
the defendant, as bailee, in failing to execute the return of the thing loaned
upon plaintiffs demand, cannot resort to depositing the thing in court in
order to be freed from his obligation. He must deliver all of the furniture to
the plaintiffs residence or house; merely placing them at the plaintiffs
disposal and retaining for his benefit a portion of the furniture, is not
Defendant borrowed three bulls from plaintiff for which he paid a breeding fee of
10% of the book value of the bulls. Failed to return the same or pay its book value
as demanded after the expiry of the period stipulated (1 year), 1 bull died as a
result of a force majeure, other two were returned but with delay. Defendant claims
that the contract is a commodatum, hence ownership is retained by the plaintiff,
and as such, shall bear the loss caused by fortuitous events.
Does the payment of compensation for the thing loaned change the character of the
1) Commodatum ceases to be such once there is compensation paid for the
thing loaned - commodatum is essentially gratuitous (an act of liberality on
the part of the benefactor).
2) If compensation is to be paid by the bailee for the use of the thing, the
contract becomes a lease contract.

*Since contract is in the nature of a lease, liability attaches to defendant as

possessor in bad faith, having kept the thing after the expiry of the contract.
In a contract of commodatum, does liability for loss caused by the occurrence of a
fortuitous event attach to the bailee?
1) GR: Bailor retains ownership of the thing loaned and bears loss caused by FE.
2) EXC: 1942, however, provides that when the thing loaned is kept beyond the
period agreed upon, or thing was delivered with appraisal value unless it was
stipulated that defendant was exempt from liability for FE (no stipulation to
this effect in the case), etc., bailee is liable for loss due to FE.
Petitioner applied for a loan of P500,000 with respondent bank. The latter approved
the application through a board resolution. Thereafter, the corresponding mortgage
was executed and registered. However, because of acts attributable to petitioner,
the loan was not released. Later, petitioner instituted an action for damages.
Whether mere offer and acceptance is sufficient to perfect a contract of loan.
1) 1934 states that delivery of the thing loaned is necessary of the perfection of
a contract of loan as it is a real contract. The article, however, provides that
an accepted promise to deliver a thing by way of loan is binding upon the
parties. Hence, while a loan contract without delivery will not give rise to the
obligation of the borrower to return the thing loaned, it can give rise to an
action for damages.
2) However, since the fault was attributable to petitioner therein, the court did
not award damages.


Plaintiff overcharged defendant for deficit taxes and the latter paid the same
erroneously. The mistake gave rise to a claim for tax credit by the defendant of the
amount overpaid. Plaintiff was made to refund the excess.
Can an obligation to return, similar to that in a contract of loan, arise from an
unintentional transaction?
Yes. In the case of taxes which were erroneously paid, the BIR is legally required to
refund or credit the excess in favor of the taxpayer, similar to the type of return
demanded in a simple loan or mutuum, even if there is no contract. A contrary view
would unjustly enrich the tax collecting authority and unlawfully oppress the

Does a stipulation in a contract of simple loan or mutuum as to the date that

payments shall begin bind the borrower even when there has yet been a delivery
effected by the lender?
Plaintiff extended a loan to private respondents and the latter executed a mortgage
on their property pursuant thereto. The mortgage contract contained a stipulation
that amortization payments were to begin on May 1, 1981. The actual loan was,
however, released on September 13, 1982. Because of private respondents' failure
to pay the monthly amortization beginning May 1, 1981, plaintiff extrajudicially
foreclosed the property.
1) A loan contract is not a consensual contract but a real contract. It is
perfected only upon the delivery of the object of the contract.
*In the instant case, since the actual loan was released to the private
respondents on September 13, 1982, it is only during this time that there
existed a real contract of loan wherein borrowers obligation to pay became
2) A loan is a reciprocal obligation wherein the obligation or promise of each
party is the consideration for that of the other.
*The promise of plaintiff to extend and deliver the loan is upon the
consideration that private respondents shall pay the monthly amortization
commencing on May 1, 1981, one month after the supposed release of the
3) It is a basic principle in reciprocal obligations that it is only when a party
has performed his part of the contract can he demand that the other party
also fulfills his own obligation and if the latter fails, default sets in.
*Consequently, plaintiff could only demand for the payment of the monthly
amortization after September 13, 1982 for it was only then when it complied
with its obligation under the loan contract. Therefore, in computing the
amount due as of the date when plaintiff extrajudicially caused the
foreclosure of the mortgage, the starting date is October 13, 1982 (1 month
after release) and not May 1, 1981.

Relying on the assurances and representations of his neighbor and friend private
respondent issued a check in the amount of Two Hundred Thousand Pesos
(P200,000.00) in favor of the business of the borrower (Sterela) to aid in its
incorporation. He was assured private respondent that he could withdraw his money
from said account within a months time. It was, however, later discovered that
more than half of the deposit was already withdrawn by borrower and the balance
could not be withdrawn because of postdated checks issued by him. Borrower

issued several checks for an amount constituting the principle plus interest incurred
amount deposited in PRs favor to settle the loan however all were dishonored.
Can a commodatum exist even when the subject matter of a loan is a consumable
1) Article 1936 of the CC provides that consumable goods may very well be the
subject matter of a commodatum if loaned only for purposes other than
consumption like for exhibition only.
*Thus 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.
2) The rule is that the intention of the parties thereto shall be accorded
primordial consideration in determining the actual character of a contract. In
case of doubt, the contemporaneous and subsequent acts of the parties shall
be considered in such determination.
*evidence shows that private respondent agreed to deposit his money in the
savings account of Sterela specifically for the purpose of making it appear
that said firm had sufficient capitalization for incorporation, with the promise
that the amount shall be returned within thirty (30) days. Private respondent
merely accommodated borrower by lending his money without
consideration, as a favor to his good friend Sanchez. It was however clear to
the parties to the transaction that the money would not be removed from
Sterelas savings account and would be returned to private respondent after
thirty (30) days.
Does the mere fact of the payment of interest on the thing loaned, convert a
commodatum (being essentially gratuitous) into a mutuum?
1) The rule is that the intention of the parties thereto shall be accorded
primordial consideration in determining the actual character of a contract.
(see above)
*It was not the intent of the parties to stipulate an interest on the loan. The
additional amount that borrower attempted to pay corresponds to the fruits of
the lending of the P200,000.00.
2) Article 1935 of the CC: expressly states that [t]he bailee in commodatum
acquires the use of the thing loaned but not its fruits.
*Hence, it was only proper for Doronilla(borrower) to remit to private
respondent the interest accruing to the latters money deposited with
petitioner. It did not convert the clearly commodatum loan to a mutuum.

Petitioner executed a Kasunduan with private respondent, allowing the latter to live
in his house for free provided that PR maintains the cleanliness and orderliness of
the house. PR promised he would voluntarily vacate the premises on petitioners
demand. However, upon petitioners demand, PR refused to vacate the house. This
prompted the institution of ejectment proceedings against PR. In his Answer, PR
claimed that Petitioner had no valid title or right of possession over the lot where
the house stands because it is within the area set aside by Proclamation No. 137 for
socialized housing.
Issue: Whether the absence of a price certain is sufficient for a loan to be
considered a commodatum
Does a commodatum exist when a thing is loaned to another for free but with an
obligation to maintain it in good condition?
1) 1934: An essential feature of the commodatum is that it is gratuitous. (given
without exchange whatsoever)
*The accommodation accorded by A to B was not essentially gratuitous.
While the Kasunduan did not require Guevarra to pay rent, it obligated him to
maintain the property in good condition. The imposition of this obligation
makes the Kasunduan a contract different from a commodatum.
2) Better right to physical possession remained with A.
*Relationship based on tolerance as one that is akin to a landlord-tenant
relationship where the withdrawal of permission would result in the
termination of the lease. Thee tenants withholding of the property would
then be unlawful. B, having consented to the terms of the kasunduan and
benefitted from it is a possessor in bad faith for refusing to return the
property to A upon the latters demand.