Commodatum Mutuum Deposit

Concept

Commodatum is

a loan for use of

the

thing loaned but

not its fruits.

A mutuum is thus a loan

for consumption,

whereby a transfer of

ownership occurs.

In a deposit, one person

receives something

belonging to

another, with the

obligations to safely

keep and return it.

Purpose of the contract

Use of the thing

given, but not its

fruitsConsumption of the

thing given

Safekeeping, mere

custody

Characteristics

Real

Unilateral

Nominate

Principal

Informal

Essentially

gratuitous

Real

Unilateral

Nominate

Principal

Informal

Either gratuitous or

onerous

Real

Either unilateral or

bilateral

Principal

Informal

Nominate

Either gratuitous or

onerous

Object of the contract (i.e.,

movable vs. immovable,

consumable vs. non-

consumable, fungible vs.

non-fungible)

Non-consumable

goods;

consumable but

only for

exhibition;

movable or

immovable

propertyMoney, or other fungible

thing

Extrajudicial deposit =

Movable things

Judicial deposit =

movable or immovable

Need for delivery Essential Essential Essential

Cause of the contract

Liberality of the

bailor since it is

essentially

gratuitous

If gratuitous i.e. without

interest, the cause is the

mere liberality of the

creditor. If onerous, the

payment of interest is the

cause.

Liberality of the

depositary if gratuitous

or payment of

compensation if onerous

Parties

Lender = Bailor

Borrower =

BaileeLender = creditor

Borrower = debtor

Depositor

Depositary

Rules/consequences if one

or both parties

incapacitated to give

consent to the contract

Requirement that the party

delivering the thing be the

owner of the thing

Bailor need not

be the owner of

the thing loaned

Creditor must have

capacity to transfer

ownership of the thing to

the debtor

Depositor is not required

to be the owner

of the thing deposited,

since deposit does not

transfer ownership.

Depositary cannot

demand that the

depositor

prove his ownership of

the thing deposited

Transfer of ownership of the

thing delivered

No transfer of

ownership

Lender should have

capacity to transfer

ownership

Contract of trust and

confidence

A voluntary deposit

involves a relationship

of trust,

which takes into

account the

depositary’s personal

quality of

trustworthiness. It is a

contract of

confidence.

Ability of person in

possession to use the thing

or to allow  others to use

thing loaned

GR: Only bailee

may use the

thing.

Exception: Use

General rule: Depositary

is not allowed to use the

thing

Exceptions:

may extend to

members of the

bailee’s

household

Exception to the

exception:

Stipulation

prohibits such

use, or the

nature of the

thing forbids

such use

1. When stipulated in

writing

2. When such use is

necessary to the

preservation of

the thing.

Depositary may not

transfer the deposit

to third persons (Art.

1973)

Obligations of the person in

possession of the thing

1. Take good

care of the thing

with the

diligence of a

good

father of the

family

2. Use the thing

loaned only

for the purpose

for which it

was loaned, and

for no

other purpose

3. Pay ordinary

expenses for

the use and

preservation of

the thing, and

portion of

extraordinary

expenses for

the actual use of

the thing

4. Return and

not retain thing

1. Pay the creditor an

equal amount of the

same kind

and quality

2. Pay interest, if

stipulated in writing

A. Keep the thing

- Safely keep the thing

- Not to transfer the

deposit

- Not to change way of

deposit

- Collect interest on

choses in action

- Not to commingle

things, if so stipulated

B. Not to use the thing,

unless authorized

C. Return the thing

- Return the thing closed

and sealed

- Return the thing with

its products,

accessories, and

accessions

loaned, except

under

certain

circumstances

What must be returned/paid The thing loaned

Pay the creditor an equal

amount of the same kind

and quality, even if it

should change in

value. In case it is

impossible to deliver the

same kind,

its value at the time of

the perfection of the loan

shall

be paid; pay interest, if

stipulated in writing The thing deposited

When the thing delivered

must be returned/paid

General rule: If a

term has been

constituted, the

bailor must

respect it

Exceptions:

1. If the bailor

has urgent need

of the thing, he

may

demand its

return

temporarily or

permanently;

or

2. If the contract

is one of

precarium i.e. no

period has been

agreed

upon, or no

Payment must be made

on the maturity date

stipulated between the

parties.

Exceptions:

1. Prepayment—

Acceptable if the

mutuum is

gratuitous; if onerous,

then acceptable only if

so

stipulated;

2. Debtor is insolvent;

3. Debtor fails to give

guaranties/securities that

have

been promised;

4. Debtor impairs the

guaranties/securities

through

his own acts;

General rule: Upon

demand (given a

reasonable time),

regardless of the period

agreed upon

Exceptions:

1. Judicial attachment

2. Opposition by third

person

3. Right of retention,

whereby depositary

must be

compensated first

purpose has

been

established, or

the use

of the thing is

merely tolerated

by its owner.

5. Debtor violates an

undertaking, in

consideration of

which the creditor had

agreed to the period; and

6. Debtor attempts to

abscond.

Where the thing delivered

must be returned/paid

Payment may be made in

these places:

1. The place agreed

upon by the parties;

2. Absent such

agreement, where the

mutuum was constituted;

or

3. The debtor’s

domicile.

1. Place agreed upon

by the parties, with

expenses

for transportation being

borne by the depositor;

or

2. Absent stipulation,

at the place where the

thing

deposited should be,

even if this is not the

same

place where the deposit

was originally made,

provided that the

transfer is made

without bad

faith on the part of the

depositary.

To whom should the thing

be returned/paid Bailor Creditor Depositor

Consequences of failure to

return/pay

Failure to return

would be a

violation of the

trust reposed by

the bailor in the

bailee.

Breach of this

obligation makes

Failure to pay the value

of the loan makes the

debtor liable for

damages, which may be

in the form of an

interest.

the bailee liable

for damages and

even estafa

Consequences of breach of

other obligations

In case of failure to pay

interest, creditor can

avail of specific

performance. He cannot

avail of rescission under

Art. 1911 because this

applies to reciprocal

obligations and not to

unilateral ones like

mutuum.

Liability for estafa

Failure to return

may render

bailee liable for

estafa

Obligations of person who

delivered the thing

1. Refund

extraordinary

expenses for

the

preservation of

the thing loaned

2. Refund

portion of

extraordinary

expenses

arising from the

actual use of the

thing

3. Pay damages

for known hidden

flaws

1. If deposit gratuitous,

reimburse depositary

for

expenses incurred to

preserve thing

2. If deposit onerous,

reimburse depositary

only for

losses incurred or

arising from character

of thing

deposit

3. Respect depositary’s

right to retain things

for unpaid amounts

4. Pay fees for deposit

Right of the person who

delivered to demand the

Bailor may

demand the

return/payment of the thing

delivered

return if:

1. The term of

the loan has

ended

2. Bailor has

urgent need of

the thing

3. Contract is

one of precarium

4. Act of

ingratitude of

the bailee as

specified in Art.

765

Who suffers risk of loss as a

result of force majeure

Bailor bears risk

of loss

Debtor-owner bears risk

of loss, because of

ownership

Term of the contract

Period agreed

upon by the

parties, or period

required

for the

accomplishment

of the purpose,

for which the

thing will be

loaned

Causes for the

extinguishment of the

contract

1. Loss of thing

2. Condonation

3.

Confusion/merge

r

4. Novation

Specific to

commodatum:

Payment of the loan

Condonation or

remission

Confusion or merger

Compensation

Novation

1. Return of the

thing

2. Death of

either party

Compensation and loss of

the thing as ground for the

extinguishment of the

contract

Compensation

does not apply to

commodatum

Not extinguished by loss

since there is no

obligation to return the

same thing anyway.

Compensation may

apply

2. You must learn the similarities and differences between an extra-judicial deposit and a judicial

deposit:

Extra-judicial Judicial

Cause or origin

Purpose

Subject matter

Remuneration

In whose behalf held

Termination

Principle applicable