ALICIA MAE P.

PEREZ

ARTICLES 1953-1967

DEFINITION
Mutuum/Simple Loan
It is a contract whereby the lender delivers to another borrower, money or other
consumable thing subject to the condition that the same amount of the same kind and quantity
shall be paid.

Deposit
It is a contract whereby a person (depositor) delivers a thing to another (depositary), for
the principal purpose of safekeeping it, with the obligation of returning it when demanded.

TOPIC/S RELATED
Fungible things
They are usually dealt with by number, weight or measure so that any given unit or
portion is treated as the equivalent of any other unit or portion.

Usury
Receiving something in excess of the amount allowed by law for the loan or forbearance
of money, goods or chattels.

Forbearance
Signifies the contractual obligation of the creditor to forbear during a given period to
require of the debtor payment of an existing debt then due and payable.

Interest
Compensation allowed by law or fixed by the parties for the loan or forbearance of
money, goods, or credits.

PURPOSE
Determination of interest payable
To make usury harder to perpetrate

Purpose of contract of deposit

 Safekeeping of the thing delivered

CHARACTERISTIC/CLASSIFICATION
Characteristic of a contract mutuum:
Borrower acquires ownership of the thing

Nature of a contract of mutuum:

o The purpose of the contract is consumption
o The subject-matter is money or consumable
o Ownership passes to the borrower
o Real contract
o It may be gratuitous or with stipulation to pay interest
o Unilateral contract

Characteristics of contract of deposits:

o Real contract
o Unilateral contract – the depositary has an obligation
o Bilateral – when the deposit is for compensation
o Object of the contract must be a movable property
o Purpose is for the safekeeping of the thing deposited
o Gratuitous
o The depositary cannot use the thing deposited

FORMS/KINDS
Forms of Payment:
o Loan of money – payment must be made in the currency of the Philippines.
o Loan of fungible thing – the borrower is obligate to pay the lender another thing of the
same kind, quality, and quantity.

Kinds of Interest:
o Simple interest – paid together with the principal at a certain rate fixed or stipulated by the
parties.
o Compound interest – imposed upon interest due and unpaid.
o Legal interest – the law is the one who is in charge in the absence of any agreement as to
the rate between the parties.
o Lawful interest – the rate of interest is within the maximum prescribed by law.
o Unlawful/usurious interest – the rate of interest is beyond the maximum fixed by law.

Kinds of deposits:
o Judicial – when an attachment or seizure of property in litigation is ordered.
o Extrajudicial
 Voluntary – the delivery made by the will of the depositor or by two or more persons
each of whom believes himself entitled to the thing deposited
 Necessary – in compliance with a legal obligation, or on the occasion of any calamity, or
by travelers in hotels and inns or by travelers with common carriers

Kinds of extrajudicial deposit:

o In compliance with a legal obligation
o On the occasion of any calamity
o By travelers in hotels and inns
o By travelers with common carriers

Parties to a contract of deposit:

o Depositary – to whom the thing is deposited
o Depositor – the one who deposits the thing

REQUISITE/STIPULATION
For recovery of monetary interest:
o Payment must be expressly stipulated
o Agreement must be in writing
o Interest must be lawful

EXCEPTIONS
For recovery of monetary interest:
o The debtor in delay is liable to pay legal interest even in the absence of stipulation.
o Interest due shall earn legal interest from the time it is judicially demanded although the
obligation may be silent.

When unpaid interest earns interest:

o When judicially demanded
o When there is an express stipulation made by the parties
OBLIGATIONS OF PARTIES INCLUDED/LIABILITIES
Obligation of borrower is to “pay”
The contract of mutuum involves the return of the equivalent only and not the identical
thing because the borrower acquires ownership. The promise of the borrower to pay is the
consideration for the obligation of the lender to furbish the loan.

No criminal liability for failure to pay

Being the owner, the borrower can dispose of the thing borrowed and his act will not be
considered misappropriation. No estafa is committed by a person who refuses to pay his debt
or denies its existence.

EXTINGUISHMENT OF OBLIGATION
*N/A*

DISTINGUISHED FROM THE OTHER

Consumable things vs Non-consumable things
o Consumable – when a thing cannot be used in a manner appropriate to its nature without
being consumed.
o Non-consumable – when a thing is movable which can be used in a manner appropriate to
its nature without it being consumed.

Fungible and Non-fungible things

o Fungible thing – the parties have agreed to allow the substitution of the thing given or
delivered with an equivalent thing.
o Non-fungible thing – the parties have the intention of having the same identical thing
returned after the intended use.

Fungible and consumable things

o Fungible or not – depends upon the intention of the parties
o Consumable or not – depends upon its nature

Mutuum vs Barter
o Mutuum – money or any other fungible things
o Barter – non-fungible things
Commodatum vs Barter
o Commodatum – bailee is bound to return the identical thing borrowed when the time has
expired or the purpose has been served.
o Barter – the equivalent thing is given in return for what has been received.

Commodatum vs Mutuum
BASIS COMMODATUM MUTUUM
Object Non-consumable and Money or consumable thing
Non-fungible
Cause Gratuitous, otherwise lease May or may not be
gratuitous
Purpose Use or temporary possession Consumption
of the thing loaned
Subject matter Real or personal property Personal property
Ownership of the thing Retained by the bailor Passes to the debtor
Thing to be returned Exact thing loaned Equal amount of the same
kind and quality
Who bears the risk of loss Bailor Debtor
When to return In case of urgent, even Only after the expiration of
before the expiration of term the term
Contract Contract use Contract of consumption

Deposit vs Mutuum
Basis Deposit Mutuum
Purpose Safekeeping Subject matter
When to return The depositor can demand the The lender must wait until
return of the subject matter at expiration of the term
will
Object Movable and immovable Money and any other fungible
property thing

Deposit vs Commodatum
Basis Deposit Commodatum
Purpose Safekeeping Transfer of the use
Cause May be gratuitous Always gratuitous
Object Movable Movable and immovable
property