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COMMODATUM MUTUUM DEPOSIT

Definition A contract of loan where the bailor delivers to A contract of loan where the lender delivers to It is constituted from the moment a person
the bailee a non-consumable thing so that the the borrower money or other consumable or receives a thing belonging to another, with the
latter may use it for a certain time and return fungible thing thereof upon the condition that obligation of safely keeping it and of returning
the identical thing. the latter shall pay the same amount of the the same.
same kind and quality, with or without
interest.
Purpose Transmission of the enjoyment or use of the Loan for consumption of the subject matter. Safekeeping or custody of the thing delivered;
thing to another for a certain time; loan for use not for the use of the thing deposited.
or temporary possession.
Subject Matter Non-Fungible Things Money or any other Fungible Thing Fungible or Non-fungible Things

Consumable thing Consumable or non-consumable thing


Generally, non-consumable thing.
However, consumable thing may be the subject
of commodatum if the purpose of the contract
is not the consumption of the object, but for its
exhibition.

Movable or immovable property


Movable or immovable property. If it is
Real and/or Personal Property Movable property extrajudicial, only movable things.

Real and/or Personal Property


Personal Property
Nature Consensual contract and therefore, binding Consensual contract and therefore, binding Consensual Contract (future deposit)
upon the parties but it is only after delivery, upon the parties but it is only after delivery, agreement between the parties is binding and
will the contract of loan arise. will the contract of simple loan arise. enforceable upon the parties.

Purely a Personal Contract Real Contract (perfected upon the delivery of Real Contract (perfected upon the delivery of
the thing) the thing)

Unilateral Contract (because once the subject Unilateral Contract. However, when the
Unilateral Contract (because once the subject matter has been delivered, it creates deposit is for compensation, the juridical
matter has been delivered, it creates obligations obligations on the part of only one of the relation created becomes a bilateral contract.
on the part of only one of the parties, i.e. parties, i.e. borrower)
borrower)
May be gratuitous or with a stipulation or it May be Gratuitous.
Essentially gratuitous may be onerous, that is with stipulation to pay Deposit is NOT gratuitous:
interest. 1. When there is stipulation;
2. Depositary is engaged in business of
storing goods;
3. Property saved from destruction
without knowledge of the owner.

Personal Right. It is a Real Right in case of


judicial deposit.

Personal Right

Personal Right
Kinds 1. Ordinary Commodatum Simple loan 1. Judicial
- The bailor cannot just demand the - There is a court order for attachment
return of the thing at will because there As to Interest: or seizure of property in litigation.
is a period agreed upon which must be 1. Simple 2. Extrajudicial
respected. - Certain rate stipulated in writing by a. Voluntary
2. Precarium the parties. - the delivery is made by the will
- The bailor may demand the thing 2. Compound of the depositor or by two or more
loaned at will. Thus, the bailee is bound - Interest which is imposed upon the persons each of which believes
to return the thing upon the demand of accrued interest. himself entitled to the thing
the bailor. 3. Legal deposited; free to choose his
A. if neither the duration of the contract - Law directs to be paid in the absence depositary
nor the use to which the thing loaned of any agreement. b. Necessary
should be devoted, has been stipulated - made in compliance with the
or a. Monetary Interest legal obligation, or on the
B. if the use of the thing is merely - Interest may be paid either as occasion of any calamity, or by
tolerated by the owner. compensation for the use of the travelers in hotels, and inns; lack
money. of free choice on the depositor
b. Compensatory Interest
- Imposed by law or by courts as
penalty or indemnity for damages.
Parties

Giver; the Bailor Creditor/Obligee Depositary


party who
delivers the
possession or
custody of the Bailee Debtor/Obligor Depositor
thing:

Recipient;
the party who
receives the
possession or
custody of the
thing thus
delivered:

Manner of Execution Can be orally or in writing Can be orally or in writing. In case of interest, Can be orally or in writing
the same shall be made in writing.
For whose benefit? It confers benefit to the recipient (bailee). For the benefit of the debtor. Essential cause The only benefit is that which accrues to the
for the transaction is the necessity of the depositor
borrower.
Rights and On the part of the BAILOR: On the part of the CREDITOR/OBLIGEE: On the part of the DEPOSITOR
Obligations Generally, The bailor cannot just demand the The lender may not demand its return before 1. To pay expenses for preservation
return of the thing at will because there is a the lapse of the term agreed upon. (contemplates ordinary and extraordinary
period agreed upon which must be respected or expenses)
after the accomplishment of the use for which a. If the deposit is gratuitous, the
the commodatum has been constituted. Common creditors enjoy no preference in the depositor is obliged to reimburse the
However, the bailor may demand the return its distribution of the debtors property. depositary for expenses incurred for
temporary use of the thing loaned in the the preservation of the thing
meantime before the expiration of the term in deposited;
case of urgent need of the thing or in case of b. If the deposit is for the valuable
precarium. consideration, expenses for
In the case of temporary use by the bailor, the preservation are borne by the
contract of commodatum is suspended while depositary unless there is a contrary
the thing is in the possession of the bailor. stipulation
2. To pay the losses incurred by the
The bailor is naturally entitled to the fruits of depositary due to the character of the
the thing. The creditor receives the payment for his thing deposited.
loan General rule: the depositor shall reimburse
The bailor retains the ownership of the loaned. the depositary for any loss arising from the
character of the thing deposited.
Exceptions:
The bailor need not be the owner of the thing a. At the time of the deposit, the depositor
loaned. was not aware of the dangerous character
of the thing;
In an ordinary commodatum, the bailor may b. When the depositor was not expected to
demand the immediate return of the thing if the The obligee transfers the ownership of the know the dangerous character of the
bailee commits any acts of ingratitude specified thing to the obligor. thing;
in Article 765 (speaks of donee). Article 765 is c. When the depositor notified the
applicable because like donation, commodatum Creditor must be owner of the thing loaned. depositary of the same;
is essentially gratuitous. The bailee who d. The depositary was a aware of it without
commits any of the acts of ingratitude makes advice from the depositor
himself unworthy of the trust reposed upon him
by the bailor. Hence, the right given to the
bailor to demand the immediate return of the Depositor retains the ownership of the thing
thing. loaned.
The following constitutes act of ingratitude:
If the baileee should commit some offenses
against the person, the honor or the property
of the bailor, or his wife or children under Generally, the depositor must be the owner of
his parental authority; the thing deposited. But it may belong to
If the bailee imputes to the bailor any another person other than the depositor.
criminal offense, or any act involving moral
turpitude, even though he should prove it,
unless the crime or act has been committed
against the bailee himself, his wife or
children under his authority; and
If the bailee unduly refuses the bailor
support when the bailee is legally or
morally bound to give support to the bailor.

On the part of the BAILEE: On the part of the DEBTOR/OBLIGOR: On the part of the DEPOSITARY:
The borrower must return the same thing The borrower need only pay the same amount 1. To keep the thing safely
loaned. of the same kind and quality. 2. To return the thing
To whom? Depositor, his heirs, and
Ownership over the money, goods, or personal successors, or the person who may have
property passes to the borrower. Being the been designated in the contract.
Acquires the use of the thing loaned but not its owner, the borrower can dispose of the thing 3. Not to deposit the thing with a third
fruits unless there is a stipulation to the borrowed and his act will not be considered person unless authorized by express
contrary. misappropriation thereof. stipulation
4. To change the way of the deposit if
The bailee can neither lend nor lease the object under the circumstances the depositary
of the contract to a third person. However, the may reasonably presume that the
members of the bailees household may make depositor would consent to the change if
use of the thing loaned, unless there is a he knew of the facts of the situation,
stipulation to the contrary, or unless the nature provided, the former notifies the
of the thing forbids such use. depositor thereof and wait for his
decision, unless delay would cause
The bailee cannot retain the thing loaned on the danger
ground that the bailor owes him something. 5. If the thing deposited should earn
Even though it may be by reason of expenses. interest:
However, the bailee has a right of retention for a. To collect interest and the capital
damages mentioned in Article 1951. itself as it fall due;
However, claims for damages which the bailee b. To take steps to preserve its value and
suffered by reason of hidden effects or flaws of rights with regard to it
the thing loaned, which he was not warned or 6. Not to commingle things deposited if
advised by the bailor. Moreover, his right is so stipulated
only to retain the thing until he is finally Depositary can only commingle
reimbursed. He has no right to sell the thing to if the articles are of the same kind
satisfy his claims. and quality
If commingling is allowed, each
When there are two or more bailees to whom a depositor shall be entitled to each
thing is loaned in the same contract, they are all portion of the entire mass as the
liable solidarily. amount deposited by him bears to
the whole.
In an ordinary commodatum, the possession of 7. Not to make use of the thing
the bailee is more secure for he has the right to deposited unless authorized
retain the thing loaned until the expiration of Exceptions:
the period agreed upon, or the accomplishment a. When the deposit of the thing
of the use for which the commodatum has been requires its use, it must be used only
constituted. for that purpose
b. When authorized by the depositor.
The authorization shall not be
presumed and its existence must be
proved.
8. To be able for loss through fortuitous
event
9. When the thing deposited is closed
and sealed:
a. To return the thing deposited in the
same condition
b. To pay for damages should the seal or
lock be broken through his fault,
which is presumed unless proven
otherwise
c. To keep the secret of the deposit
when the seal or lock is broken with
or without his fault.
10. To pay interest in sums converted to
personal use if the deposit consists of
money from the day of conversion
Fixed, savings, and current
deposits of money in banks and
similar institutions shall be
governed by the provisions
concerning simple loan.
11. To advise the true owner that the
deposit has been made should he discover
that the thing deposited was stolen from
the owner.
If the owner despite such
information does not claim it
within the period of 1 month, the
depositary shall be relieved from
all responsibility by returning the
same to the depositor.
*if the depositary has reasonable
grounds to believe that the thing has
not been lawfully acquired by the
depositor, the former may return the
same.

The depositary may retain the thing in


pledge until full payment of what may be
due to him by reason of the deposit.

Diligence of a Good Father of a Family on the


part of the depositary unless a higher degree
of diligence is stipulated by the parties.
Diligence of a Good Father of a Family on the
part of the bailee.

Diligence of a Good Father of a Family on the


part of the debtor.

Degree of Care
required over the
Thing:
Liability Purely personal in character, and consequently, Not purely personal in character. Personal in character.
the death of either the bailor or the bailee
extinguishes the contract. The liability of the depositary for the care and
delivery of the thing is governed by the rules
The bailor, who, knowing the flaws of the thing on obligations.
loaned, does not advise the bailee of the same, a. He is liable if the loss occurs through
shall be liable to the latter for the damages his fault or negligence but not when
which he may suffer by reason thereof. (There the loss is due to a fortuitous event;
is a tort/quasi-delict for which the bailor is b. The loss of the thing while in his
liable. Hence, the bailor is made liable for his possession, ordinarily raises a
bad faith. The bailee is given the right of presumption on his part;
retention until he is paid damages.) c. The required degree of care is greater
If both are aware of the flaws/defects, the bailee if the deposit is for compensation than
is deemed to have assumed the risk. when it is gratuitous. This is similar to
the rule in agency and common
The bailor cannot exempt himself from the carriers. But even when it is
payment of expenses or damages by gratuitous, due care must still be
abandoning the thing to the bailee. exercised.

The keepers of hotels or inns shall be


responsible as depositaries for the deposit of
the effects made by the travelers provided:
a. Notice was given to them or to their
employees of the effects brought by
the guest; and
b. The guests take the precautions which
said hotel keepers or their substitutes
advised relative for the care and
vigilance of their effects.
This also applies to the passengers
baggage which is in his personal
custody.
Liability extends to vehicles, animals,
and articles which have been
introduced or placed in the annexes of
the hotel

When the hotel-keeper LIABLE: when the


loss or injury is caused:
a. By his servant or employees as well
as by strangers provided, that the
notice has been given and proper
precautions taken; and
b. By the act of a thief or robber done
without the use of arms and
irresistible force , for in this case, the
hotel keeper is apparently negligent.
When hotel-keeper is NOT LIABLE: when
the loss or injury is caused by:
A. Force majeure, theft by a stranger
with the use of arms or irresistible
force;
B. The acts of guests. His family,
servants or visitors; or
C. Arises from the character of the things
brought into the hotel
Under Art. 2003, the hotel keeper cannot free
himself from the responsibility by posting
notices to the effect that he is not liable for the
articles brought by the guests. Any stipulation
to such effect shall be void.

To be liable for loss through fortuitous event:


A. If stipulated;
B. If he uses the thing without the
depositors permission;
C. If he delays its return;
D. If he allows others to use it, even
though he himself may have been
authorized to use the same;
E. If there is fraud or negligence on his
part.

The depositary is liable for loss if he deposited


the thing with a person who is manifestly
careless or unfit. The depositary is responsible
for the negligence for his employees.

If a person having capacity to contract accepts


a deposit made by one who is incapacitated,
the former shall be subject to all the
obligations of a depositary, and may be
Generally, the bailee is not liable for loss or compelled to return the thing by the guardian,
damage due to a fortuitous event. or administrator of the person who made the
However, the bailee is liable for the loss of the deposit, or by the latter himself if he should
thing, even if it should be through a fortuitous acquire capacity.
event:
If he devotes the thing to any purpose If the deposit has been made by a capacitated
different from that for which it has been person with another who is not, the depositor
loaned; (bad faith) shall only have an action to recover the thing
If he keeps it longer than the period deposited while it is still in the possession of
stipulated or after the accomplishment of the depositary, or to compel the latter to pay
the use for which the commodatum has him the amount by which he may be enriched
been constituted; (default, due to delay) or benefited himself with the thing or its price.
If the thing loaned has been delivered with The borrower suffers the loss even if caused However, if a third person who acquired the
In case of loss or appraisal of its value unless there is a exclusively by a fortuitous event and he is not, thing acted in bad faith, the depositor may
deterioration of the stipulation exempting the bailee from therefore, discharged from his duty to pay. bring an action against him for its recovery.
thing: responsibility in case of a fortuitous event;
(law presumes that the borrower shall be The owner-depositor bears the loss as long as
liable for otherwise, they would not have the depositary is not at fault.
appraised the thing)
If he lends or leases the thing to a third The depositor is liable for loss under the
person, who is not a member of his following instances:
household; (abused the trust) a. He transfers the deposit with a third
If being able to save either the thing person without authority, although there
borrowed or his own thing, he chose to save is no negligence on his part and the third
the latter. (ingratitude) person;
b. He deposits the thing with a third
The loss of the subject matter is suffered by the person who is manifestly careless or
bailor since he is the owner. unfit, although authorized, even in the
absence of negligence; or
The bailee does not answer for the deterioration c. The thing is lost through the
of the thing loaned due only to the use thereof negligence of his employees whether the
and without his fault. Hence, the depreciation latter is manifestly careless or not.
caused by the reasonable and natural use of the
thing is borne by the bailor. However, if the
deterioration is caused by the fault/negligence
of the bailee, he is responsible for it.
The bailee is obliged to pay for the ordinary
expenses for the use and preservation of the
thing loaned.

The bailor shall refund the extraordinary


expenses during the contract for the
preservation of the thing loaned, provided the
bailee brings the same to the knowledge of the
bailor before incurring them, except when they
are so urgent that the reply to the notification
cannot be awaited without danger.
If the extraordinary expenses arise on the
occasion of the actual use of the thing by the
bailee, even though he acted without fault, they
shall be borne equally by both the bailor and
the bailee, unless there is stipulation to the
contrary.
o Extraordinary expenses for
the preservation of the thing loaned
shall be borne by the bailor since it is he
who is profited by the said expenses. As
a rule, before the bailee incurs such
expenses, notice notice is required
because it is possible that the bailor may
not want to incur the extraordinary
expenses at all. He should be given
discretion as to what must be done with
his property. An exception lies when
they are so urgent.
o Extraordinary expenses
arising from actual use of the thing
loaned- such expenses (caused by
fortuitous event) arising on the occasion
of the actual use of the thing loaned
shall be borne by the bailor and the
bailee alike on a 50-50 basis on the
basis of equitable solution wherein the
bailee pays one-half because of the
benefit derived form the use of the thing
Improvements on loaned to him and the bailor pays for
the Thing: the other half because he is the owner of
the and the thing will be returned to
him. The parties, however, may, by
stipulation, provide for a different
apportionment of such expenses, or that
they shall be borne by the bailee or
bailor only.

If, for the purpose of making use of the thing,


the bailee incurs expenses other than those
referred to in Article 1941 (ordinary expenses)
and Article 1949 extraordinary expenses), he is
not entitled to reimbursement.

The bailee may seek the following remedies:


Rescission
Specific Performance
Damages
Depositary may be criminally liable for the
crime of estafa if he appropriates or diverts
the thing deposited to his own use without the
consent of the depositor or civilly liable for
damages against the depositor.
The creditor may seek the following remedies:
Rescission
Specific Performance
Damages

Remedies in case of
breach of
contract/inability to
perform the
contract:

Effect of the Ownership of the thing loaned is retained by The ownership over the thing is transferred to The ownership over the thing is not
Transfer of the the lender. the borrower. transferred to the depositary because the
Thing to the purpose of the contract is only for
Recipient safekeeping.
Demand to Return Generally, The bailor cannot just demand the The lender may not demand its return before Depositor can demand the return of the
the thing by the return of the thing at will because there is a the lapse of the term agreed upon. subject matter at will.
Owner period agreed upon which must be respected.
However, the bailor may demand the return of
the thing loaned before the expiration of the
term in case of urgent need or in case of
precarium.
Period Generally definite. Generally definite especially with regard to Generally definite, there being an obligation
the payment of the interest. on the part of the depositary to return the
thing.
Extinguishment of Upon the return of the identical thing loaned to The consumption of the thing loaned and the A deposit is extinguished:
the Contract the bailor when the time has expired or the payment of the same amount of the same kind a. upon the loss or destruction of the
purpose has been served. and quality, with or without interest (as to the thing deposited;
interest, depending on the stipulation between b. in case of gratuitous deposit, upon the
the parties). death of either the depositor or the
depositary.
A deposit for compensation is not
extinguished by the death of either party
because, unlike a gratuitous deposit, an
onerous deposit is not personal in nature.

Upon the demand for the return of the


identical thing deposited to the depositary
even though a specified period or time for
such return may have been fixed.
Exception:
a. when the thing is judicially attached
while in the depositarys possession.
b. Should he have been notified of the
opposition of a third person to the
return or removal of the thing
deposited in such instance, the
depositary must immediately inform
the depositor of the of the attachment
or opposition

If the deposit is gratuitous, the depositary


may return the thing deposited
notwithstanding that a period has been fixed
for the deposit if justifiable reasons exists for
its return. If the depositor refuses to receive
it, the depositary may secure its consignation
form the court.

If the deposit is for a valuable consideration,


period must be followed even if the depositary
suffers inconvenience as a consequence.

What to return:
A. product, accessories, and accessions
of the thing deposited;
B. if by force majeure or government
order, the depositary loses the thing
and receives the money or another
thing in its place, he shall deliver the
sum or other thing to the depositor

Where to return:
a. place agreed upon by the parties; or
b. at the place where the thing deposited
might be even if it should not be the
same place where the deposit was
made provided there was no malice on
the part of depositary.

Extinguishment of Voluntary Deposit:


-the same as the causes for extinguishment of
obligations in Art. 1231 of the New Civil
Code
a. novation
b. compensation
c. merger
d. remission
e. payment
f. loss
g. prescription
h. fulfillment of the resolutory condition
i. annulment
j. rescission
Statute of Frauds May be governed by the Statute of Frauds Not governed by the Statute of Frauds. Not governed by the Statute of Frauds.
Usury Law Not governed by the Usury Law Governed by the Usury Law Not governed by the Usury Law