Commodatum

Credit Transactions
February 22, 2021
Commodatum

• \ ˌkä-mə-ˈdā-təm, ˌkō-mō-ˈdä-tu̇ m \ : a gratuitous loan of

movable property to be used and returned by the
borrower  (https://www.merriam-webster.com/legal/commodatum)

• Commodatum  refers to a gratuitous loan of a movable property

which is to be returned undamaged to the lender. This
arrangement is for the sole benefit of the borrower.
(https://definitions.uslegal.com/c/commodatum/)

• The word commodatum comes from the Latin word commodum

which means “usefulness.” The main purpose is use. (Credit Transaction by Timoteo B.
Aquino , 2021 Edition)
Kinds of Commodatum

1.   ORDINARY COMMODATUM - When the

debtor of a contract binds himself to return to
the creditor a movable property which the
creditor has given to the debtor for personal use,
without any consideration, then such contract is
called the contract of commodatum.
2.   PRECARIUM—one  whereby  the  bailor  may 
demand  the thing loaned at will
Parties to a Contract
of Commodatum

• bailor (lender)
• bailee (borrower)
Nature of Commodatum

• Art. 1935. The bailee in commodatum acquires the used of the thing
loaned but not its fruits; if any compensation is to be paid by him who
acquires the use, the contract ceases to be a commodatum.
• Art.   1936.   Consumable   goods   may   be   the   subject   of
commodatum  if  the  purpose  of  the  contract  is  not  the
consumption   of   the   object,   as   when   it   is   merely   for exhibition.
• Art.  1937.  Movable  or  immovable  property  may  be  the object of
commodatum.
• Art.  1938.  The  bailor  in  commodatum  need  not  be  the owner of
the thing loaned.
• Art.  1939.  Commodatum  is  purely  personal  in  character.
Obligations of the Bailee
Art.  1941.  The  bailee  is  obliged  to  pay  for  the  ordinary
expenses for the use and preservation of the thing loaned.
 
Art. 1942. The bailee is liable for the loss of the thing, even if it
should be through a fortuitous event:

• (1)  If  he  devotes  the  thing  to  any  purpose  different  from
that for which it has been loaned;

• (2) If he keeps it longer than the period stipulated, or after the

accomplishment of the use for which the commodatum has
been constituted;
 
Obligations of the Bailee

• (3) If the thing loaned has been delivered with appraisal of its
value, unless there is a stipulation exemption the bailee from
responsibility in case of a fortuitous event;

• (4) If he lends or leases the thing to a third person, who is not a

member of his household;

• (5) If, being able to save either the thing  borrowed  or  his own
thing, he chose to save the latter.
 
Obligations of the Bailee
Art. 1943. The bailee does not answer for the deterioration of
the thing loaned due only to the use thereof and without his
fault.
 
Art. 1944. The bailee cannot retain the thing loaned on the
ground that the bailor owes him something, even though it
may  be  by  reason  of  expenses.  However,  the  bailee  has  a
right  of  retention  for  damages  mentioned  in  Article  1951.

Art.  1945.  When there are two or more bailees to whom a

thing  is  loaned  in  the  same  contract,  they  are  liable
solidarily.
Obligations of the Bailor

Art. 1946. The bailor cannot demand the return of the thing loaned
till after the expiration of the period stipulated, or after the
accomplishment of the use for which the commodatum has been
constituted. However, if in the meantime, he should have urgent
need of the thing, he may demand its return or temporary use.

• In case of temporary use by the bailor, the contract

of commodatum is suspended while the thing is in the
possession of the bailor.
Obligations of the Bailor
• Art. 1947. The bailor may demand the thing at will, and the
contractual relation is called a precarium, in the following cases:

• (1) If neither the duration of the contract nor the use to which
the thing loaned should be devoted, has been stipulated; or

• (2) If the use of the thing is merely tolerated by the owner.

• Art. 1948. The bailor may demand the immediate return of the
thing if the bailee commits any act of ingratitude specified in
Article 765.
Obligations of the Bailor

• Art. 1949. 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 a stipulation to the contrary.
Obligations of the Bailor

• Art. 1950. If, for the purpose of making use of the thing, the
bailee incurs expenses other than those referred to in Articles
1941 and 1949, he is not entitled to reimbursement.

• Art. 1951. The bailor who, knowing the flaws of the thing
loaned, does not advise the bailee of the same, shall be liable to
the latter for the damages which he may suffer by reason
thereof.

• Art. 1952. The bailor cannot exempt himself from the payment
of expenses or damages by abandoning the thing to the bailee.
 Extinguishment of
Commodatum

• The  death   of  either  the  bailor   or  the 

bailee extinguishes the contract
Case Digest on Pajuyo vs CA
GR 146364, June 3, 2004, 430 SCRA 492
• Facts:
• In June 1979, petitioner Colito T. Pajuyo (Pajuyo) paid P400 to a certain Pedro Perez for the rights over a 250- square meter lot in Barrio Payatas, Quezon
City. Pajuyo then constructed a house made of light materials on the lot. Pajuyo and his family lived in the house from 1979 to 7 December 1985.
• On 8 December 1985, Pajuyo and private respondent Eddie Guevarra (Guevarra) executed a Kasunduan or agreement. Pajuyo, as owner of the house,
allowed Guevarra to live in the house for free provided Guevarra would maintain the cleanliness and orderliness of the house. Guevarra promised that he
would voluntarily vacate the premises on Pajuyo’s demand. In September 1994, Pajuyo informed Guevarra of his need of the house and demanded that
Guevarra vacate the house. Guevarra refused.
• Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of Quezon City, Branch 31 (MTC). In his Answer, Guevarra claimed that
Pajuyo had no valid title or right of possession over the lot where the house stands because the lot is within the 150 hectares set aside by Proclamation
No. 137 for socialized housing. Guevarra pointed out that from December 1985 to September 1994, Pajuyo did not show up or communicate with him.
Guevarra insisted that neither he nor Pajuyo has valid title to the lot.
• MTC: The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is the house and not the lot. Pajuyo is the owner of the house, and
he allowed Guevarra to use the house only by tolerance. Thus, Guevarras refusal to vacate the house on Pajuyos demand made Guevarra’s continued
possession of the house illegal.
• RTC: The RTC upheld the Kasunduan, which established the landlord and tenant relationship between Pajuyo and Guevarra. The terms of the Kasunduan
bound Guevarra to return possession of the house on demand. The RTC rejected Guevarra’s claim of a better right under Proclamation No. 137, the
Revised National Government Center Housing Project Code of Policies and other pertinent laws. In an ejectment suit, the RTC has no power to decide
Guevarra’s rights under these laws. The RTC declared that in an ejectment case, the only issue for resolution is material or physical possession, not
ownership.
• CA: Pajuyo and Guevarra are squatters. Pajuyo and Guevarra illegally occupied the contested lot which the government owned. Perez, the person from
whom Pajuyo acquired his rights, was also a squatter. Perez had no right or title over the lot because it is public land. Pajuyo and Guevarra are in pari
delicto or in equal fault. The court will leave them where they are.
• Kasunduan is not a lease contract but a commodatum because the agreement is not for a price certain.
• Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the appellate court held that Guevarra has a better right over the property
under Proclamation No. 137. President Corazon C. Aquino issued Proclamation No. 137 on 7 September 1987. At that time, Guevarra was in physical
possession of the property. Under Article VI of the Code of Policies Beneficiary Selection and Disposition of Homelots and Structures in the National
Housing Project (the Code), the actual occupant or caretaker of the lot shall have first priority as beneficiary of the project. The Court of Appeals
concluded that Guevarra is first in the hierarchy of priority.
Case Digest on Pajuyo vs CA
GR 146364, June 3, 2004, 430 SCRA 492

• Issue:
• WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY AND DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION:
1) in GRANTING, instead of denying, Private Respondent’s Motion for an Extension of thirty days to file
petition for review at the time when there was no more period to extend as the decision of the
Regional Trial Court had already become final and executory.
2) in giving due course, instead of dismissing, private respondent’s Petition for Review even though the
certification against forum-shopping was signed only by counsel instead of by petitioner himself.
3) in ruling that the Kasunduan voluntarily entered into by the parties was in fact a commodatum,
instead of a Contract of Lease as found by the Metropolitan Trial Court and in holding that "the
ejectment case filed against defendant-appellant is without legal and factual basis".
4) in reversing and setting aside the Decision of the Regional Trial Court in Civil Case No. Q-96-26943
and in holding that the parties are in pari delicto being both squatters, therefore, illegal occupants of
the contested parcel of land.
5) in deciding the unlawful detainer case based on the so-called Code of Policies of the National
Government Center Housing Project instead of deciding the same under the Kasunduan voluntarily
executed by the parties, the terms and conditions of which are the laws between themselves.13
Case Digest on Pajuyo vs CA
GR 146364, June 3, 2004, 430 SCRA 492
• Held:
• The Court do not subscribe to the CA’s theory that the Kasunduan is one of 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.
• The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra 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. The effects of the Kasunduan are also different
from that of a commodatum. Case law on ejectment has treated 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. The tenants withholding of
the property would then be unlawful. This is settled jurisprudence.
• Even assuming that the relationship between Pajuyo and Guevarra is one of commodatum, Guevarra as bailee would still have
the duty to turn over possession of the property to Pajuyo, the bailor. The obligation to deliver or to return the thing received
attaches to contracts for safekeeping, or contracts of commission, administration and commodatum. These contracts certainly
involve the obligation to deliver or return the thing received.
• Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a squatter. Squatters, Guevarra
pointed out, cannot enter into a contract involving the land they illegally occupy. Guevarra insists that the contract is void.
• Guevarra should know that there must be honor even between squatters. Guevarra freely entered into the Kasunduan. Guevarra
cannot now impugn the Kasunduan after he had benefited from it. The Kasunduan binds Guevarra.
• The Kasunduan is not void for purposes of determining who between Pajuyo and Guevarra has a right to physical possession of
the contested property. The Kasunduan is the undeniable evidence of Guevarras recognition of Pajuyos better right of physical
possession. Guevarra is clearly a possessor in bad faith. The absence of a contract would not yield a different result, as there
would still be an implied promise to vacate.
Case Digest on Producers Bank
of the Philippines vs CA
GR 115324, February 19, 2003, 397 SCRA 651
• Facts:
• Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and friend Angeles Sanchez to
help her friend and townmate, Col. Arturo Doronilla, by depositing amount of money in the bank account of
Sterela for purposes of its incorporation. She assured private respondent that he could withdraw his money
from said account within a month's time.
• On May 9, 1979, private respondent, Sanchez, Doronilla and a certain Estrella Dumagpi, Doronilla's private
secretary, met and discussed the matter. Thereafter, relying on the assurances and representations of Sanchez
and Doronilla, private respondent issued a check in the amount of Two Hundred Thousand Pesos (P200,000.00)
in favor of Sterela.
• Private respondent instructed his wife, Mrs. Inocencia Vives, to accompany Doronilla and Sanchez in opening a
savings account in the name of Sterela in the Buendia, Makati branch of Producers Bank of the Philippines.
However, only Sanchez, Mrs. Vives and Dumagpi went to the bank to deposit the check. They had with them an
authorization letter from Doronilla authorizing Sanchez and her companions, "in coordination with Mr. Rufo
Atienza," to open an account for Sterela Marketing Services in the amount of P200,000.00. In opening the
account, the authorized signatories were Inocencia Vives and/or Angeles Sanchez. A passbook for Savings
Account No. 10-1567 was thereafter issued to Mrs. Vives.
• Judgment was rendered sentencing defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the
Philippines to pay plaintiff Franklin Vives jointly and severally
Case Digest on Producers Bank
of the Philippines vs CA
GR 115324, February 19, 2003, 397 SCRA 651
• Issues:
• I.
• THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE TRANSACTION BETWEEN THE DEFENDANT
DORONILLA AND RESPONDENT VIVES WAS ONE OF SIMPLE LOAN AND NOT ACCOMMODATION;
• II.
• THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT PETITIONER’S BANK MANAGER, MR. RUFO ATIENZA,
CONNIVED WITH THE OTHER DEFENDANTS IN DEFRAUDING PETITIONER (Sic. Should be PRIVATE RESPONDENT) AND AS A
CONSEQUENCE, THE PETITIONER SHOULD BE HELD LIABLE UNDER THE PRINCIPLE OF NATURAL JUSTICE;
• III.
• THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE RECORDS OF THE REGIONAL TRIAL COURT AND
AFFIRMING THE JUDGMENT APPEALED FROM, AS THE FINDINGS OF THE REGIONAL TRIAL COURT WERE BASED ON A
MISAPPREHENSION OF FACTS;
• IV.
• THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE CITED DECISION IN SALUDARES VS. MARTINEZ, 29
SCRA 745, UPHOLDING THE LIABILITY OF AN EMPLOYER FOR ACTS COMMITTED BY AN EMPLOYEE IS APPLICABLE;
• V.
• THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE LOWER COURT THAT HEREIN PETITIONER
BANK IS JOINTLY AND SEVERALLY LIABLE WITH THE OTHER DEFENDANTS FOR THE AMOUNT OF P200,000.00 REPRESENTING
THE SAVINGS ACCOUNT DEPOSIT, P50,000.00 FOR MORAL DAMAGES, P50,000.00 FOR EXEMPLARY DAMAGES, P40,000.00
FOR ATTORNEY’S FEES AND THE COSTS OF SUIT.11
Case Digest on Producers Bank
of the Philippines vs CA
GR 115324, February 19, 2003, 397 SCRA 651
• Ruling:
• There is no merit in the petition hence denied.
• At the outset, it must be emphasized that only questions of law may be raised in a petition for review filed with this Court. The
Court has repeatedly held that it is not its function to analyze and weigh all over again the evidence presented by the parties
during trial. There is no showing of any misapprehension of facts on the part of the Court of Appeals in the case at bar that
would require this Court to review and overturn the factual findings of that court, especially since the conclusions of fact of
the Court of Appeals and the trial court are not only consistent but are also amply supported by the evidence on record.
• No error was committed by the Court of Appeals when it ruled that the transaction between private respondent and Doronilla
was a commodatum and not a mutuum. A circumspect examination of the records reveals that the transaction between them
was a commodatum.
• Neither does the Court agree with petitioner’s contention that it is not solidarily liable for the return of private respondent’s
money because it was not privy to the transaction between Doronilla and private respondent. The nature of said transaction,
that is, whether it is a mutuum or a commodatum, has no bearing on the question of petitioner’s liability for the return of
private respondent’s money because the factual circumstances of the case clearly show that petitioner, through its employee
Mr. Atienza, was partly responsible for the loss of private respondent’s money and is liable for its restitution.
• The foregoing shows that the Court of Appeals correctly held that under Article 2180 of the Civil Code, petitioner is liable for
private respondent's loss and is solidarily liable with Doronilla and Dumagpi for the return of the P200,000.00 since it is clear
that petitioner failed to prove that it exercised due diligence to prevent the unauthorized withdrawals from Sterela's savings
account, and that it was not negligent in the selection and supervision of Atienza.
• No error was committed by the appellate court in the award of actual, moral and exemplary damages, attorney's fees and
costs of suit to private respondent.
Case Digest on Republic vs. Bagtas,
GR. L-17474, October 25, 1962, 6 SCRA 262
• FACTS:
• May 8, 1948: Jose V. Bagtas borrowed from the Republic of the Philippines through the Bureau of Animal Industry three bulls: a
Red Sindhi with a book value of P1,176.46, a Bhagnari, of P1,320.56 and a Sahiniwal, of P744.46, for a period of 1 year for
breeding purposes subject to a breeding fee of 10% of the book value of the bulls
• May 7, 1949: Jose requested for a renewal for another year for the three bulls but only one bull was approved while the others
are to be returned
• March 25, 1950: He wrote to the Director of Animal Industry that he would pay the value of the 3 bulls
• October 17, 1950: he reiterated his desire to buy them at a value with a deduction of yearly depreciation to be approved by the
Auditor General.
• October 19, 1950: Director of Animal Industry advised him that either the 3 bulls are to be returned or their book value without
deductions should be paid not later than October 31, 1950 which he was not able to do
• December 20, 1950: An action at the CFI was commenced against Jose praying that he be ordered to return the 3 bulls or to pay
their book value of P3,241.45 and the unpaid breeding fee of P199.62, both with interests, and costs
• July 5, 1951: Jose V. Bagtas, through counsel Navarro, Rosete and Manalo, answered that because of the bad peace and order
situation in Cagayan Valley, particularly in the barrio of Baggao, and of the pending appeal he had taken to the Secretary of
Agriculture and Natural Resources and the President of the Philippines, he could not return the animals nor pay their value and
prayed for the dismissal of the complaint.
• RTC: granted the action
• December 1958: granted an ex-parte motion for the appointment of a special sheriff to serve the writ outside Manila
• December 6, 1958: Felicidad M. Bagtas, the surviving spouse of Jose who died on October 23, 1951 and administratrix of his
estate, was notified
• January 7, 1959: she file a motion that the 2 bulls where returned by his son on June 26, 1952 evidenced by recipt and the 3rd
bull died from gunshot wound inflicted during a Huk raid and prayed that the writ of execution be quashed and that a writ of
preliminary injunction be issued. 
Case Digest on Republic vs. Bagtas,
GR. L-17474, October 25, 1962, 6 SCRA 262

• ISSUE: WON the contract is commodatum and

NOT a lease and the estate should be liable for
the loss due to force majeure due to delay.
Case Digest on Republic vs. Bagtas,
GR. L-17474, October 25, 1962, 6 SCRA 262

• HELD: YES. writ of execution appealed from is set aside, without pronouncement as to costs
• If contract was commodatum then Bureau of Animal Industry retained ownership or title to
the bull it should suffer its loss due to force majeure. A contract of commodatum is
essentially gratuitous.  If the breeding fee be considered a compensation, then the contract
would be a lease of the bull. Under article 1671 of the Civil Code the lessee would be subject
to the responsibilities of a possessor in bad faith, because she had continued possession of
the bull after the expiry of the contract.  And even if the contract be commodatum, still the
appellant is liable if he keeps it longer than the period stipulated
• the estate of the late defendant is only liable for the sum of P859.63, the value of the bull
which has not been returned because it was killed while in the custody of the administratrix
of his estate
• Special proceedings for the administration and settlement of the estate of the deceased Jose
V. Bagtas having been instituted in the CFI, the money judgment rendered in favor of the
appellee cannot be enforced by means of a writ of execution but must be presented to the
probate court for payment by the appellant, the administratrix appointed by the court.
Case Digest on Quintos vs. Beck
GR L-46240, November 3, 1939, 69 Phil 108
• Facts:
• The defendant was a tenant of the plaintiff and as such occupied the latter's house
on M. H. del Pilar street, No. 1175. On January 14, 1936, upon the novation of the
contract of lease between the plaintiff and the defendant, the former gratuitously
granted to the latter the use of the furniture, subject to the condition that the
defendant would return them to the plaintiff upon the latter's demand.
• The plaintiff sold the property to Maria Lopez and Rosario Lopez and on September
14, 1936,... these three notified the defendant of the conveyance, giving him sixty
days to vacate the premises under one of the clauses of the contract of lease.
• On November 5, 1936, the defendant, through another person, wrote to the
plaintiff reiterating that she may call for the furniture in the ground floor of the
house.
• On November 15th, before vacating the house, the defendant deposited with the
Sheriff all the furniture belonging to the plaintiff and they are now on deposit in
the warehouse situated at No.1521, Rizal Avenue in the custody of the said sheriff.
Case Digest on Quintos vs. Beck
GR L-46240, November 3, 1939, 69 Phil 108
• Issues:
• Whether or not the trial court incorrectly applied the law:
• In holding that they violated the contract by not calling for all the furniture
on November 5, 1936, when the defendant placed them at their disposal;
• In not ordering the defendant to pay them the value of the furniture in
case they are not delivered;
• In holding that they should get all the furniture from the Sheriff at their
expenses;
• In ordering them to pay-half of the expenses claimed by the Sheriff for the
deposit of the furniture;
• In ruling that both parties should pay their respective legal expenses or the
costs;
• In denying pay their respective legal expenses or the costs;
Case Digest on Quintos vs. Beck
GR L-46240, November 3, 1939, 69 Phil 108
• Ruling:
• The contract entered into between the parties is one of commodatum, because under it the plaintiff gratuitously
granted the use of the furniture to the defendant, reserving for herself the ownership thereof, by this contract
the defendant bound himself to return the furniture to the plaintiff, upon the latter's demand.
• The trial court, therefore, erred when it came to the legal conclusion that the plaintiff failed to comply with her
obligation to get the furniture when they were offered to her. As the defendant had voluntarily undertaken to
return all the furniture to the plaintiff, upon the latter's demand, the Court could not legally compel her to bear
the expenses occasioned by the deposit of the furniture at the defendant's behest.
• The latter, as bailee, was not entitled to place the furniture on deposit; nor was the plaintiff under a duty to
accept the offer to return the furniture, because the defendant wanted to retain the three gas heaters and the
four electric lamps.
• As to the value of the furniture, the plaintiff is not entitled to the payment thereof by the defendant in case of his
inability to return some of the furniture because under paragraph 6 of the stipulation of facts, the defendant has
neither agreed to nor admitted the correctness of the said value. Should the defendant fail to deliver some of
the furniture, the value thereof should be latter determined by the trial Court through evidence which the
parties may desire to present.
• The costs in both instances should be borne by the defendant because the plaintiff is the prevailing party
(section 487 of the Code of Civil Procedure). The defendant was the one who breached the contract
of commodatum, and without any reason he refused to return and deliver all the furniture upon the plaintiff's
demand. In these circumstances, it is just and equitable that he pay the legal expenses and other judicial costs
which the plaintiff would not have otherwise defrayed.