Commodatum, Simple Loan/Mutuum, Deposit

(1)

COMMODATUM

Object:

!

! Non-consu Non-consumable, either mmable, either movable or imovable or immovablemovable !

! May be consumable if purpose is not for consumption (exhibition)May be consumable if purpose is not for consumption (exhibition)

Use of the thing:

!

! May use the thing, but not its fruits (a stipulation to make use ofMay use the thing, but not its fruits (a stipulation to make use of

the fruits is valid) the fruits is valid)

!

! Cannot lend or lease the object to a third person (unless otherwiseCannot lend or lease the object to a third person (unless otherwise

stipulated) stipulated)

!

! Members of household may use the thing unless otherwiseMembers of household may use the thing unless otherwise

stipulated or unless the nature of the thing forbids such use. stipulated or unless the nature of the thing forbids such use.

Expenses:

!

! Bailee shall pay ORDINARY expenses for USE andBailee shall pay ORDINARY expenses for USE and

PRESERVATION PRESERVATION

!

! Bailor shall refund the Bailor shall refund the EXTRAORDINAREXTRAORDINARY expenses forY expenses for

PRESERVATION, during the

PRESERVATION, during the contract,contract, providedprovided the bailee the bailee notifies

notifies the bailor before incurring them, the bailor before incurring them, exceptexceptwhenwhen urgenturgent that that a reply cannot be awaited due to the

a reply cannot be awaited due to the dangerdanger

!

! EXTRAORDINARY expenses arising from USE, even thoughEXTRAORDINARY expenses arising from USE, even though

bailee acted w

bailee acted without fault, shaithout fault, shall be borne EQll be borne EQUALLY by both UALLY by both ofof them (unless otherwise stipulated)

them (unless otherwise stipulated)

!

! Bailor cannot exempt himself from paying by abandoning the thingBailor cannot exempt himself from paying by abandoning the thing

to bailee to bailee

Liabilities (Bailee):

!

! Liable for loss of Liable for loss of the thing even through a fortuitous event, if:the thing even through a fortuitous event, if:

a)

a) Used for a different purposeUsed for a different purpose b)

b) Kept longer than period allowed or after purpose has beenKept longer than period allowed or after purpose has been accomplished

accomplished c)

c) Delivered with appraisal of its valueDelivered with appraisal of its value d)

d) Lent or leased to Lent or leased to a third persona third person e)

e) Chose to save his own thing rather than the thing borrowedChose to save his own thing rather than the thing borrowed

!

! Does not answer for deterioration if only due to natural use andDoes not answer for deterioration if only due to natural use and

without his fault without his fault

!

! Solidary liability if there are Solidary liability if there are two or more baileestwo or more bailees

Return of the thing:

!

! BailorBailor cannot demand returncannot demand return of the thing until expiration of of the thing until expiration of

period or acc

period or accomplishmenomplishment of the use,t of the use, exceptexcept if there is an if there is an urgenturgent need

need, he may demand its return or temporary use (contract of, he may demand its return or temporary use (contract of commodatum is suspended while thing is in the possession of the commodatum is suspended while thing is in the possession of the bailor).

bailor).

!

! BailorBailor may demand returnmay demand return if if bailee commitsbailee commits acts of ingratitudeacts of ingratitude::

a)

a) Commits offenses against person/honor/property of theCommits offenses against person/honor/property of the bailor or his wife

bailor or his wife/children un/children under parental ader parental authorityuthority b)

b) Imputes to bailor any criminal offense, or any act Imputes to bailor any criminal offense, or any act involvinginvolving moral turpitude even if proven,

moral turpitude even if proven, exceptexcept if the crime has been if the crime has been committed against bailee/his

committed against bailee/his wife/childrenwife/children c)

c) Refuses the bailor support when there is legal or Refuses the bailor support when there is legal or moralmoral obligation to do so

obligation to do so

!

! In a Precarium, bailorIn a Precarium, bailor may demand the thing at willmay demand the thing at will. There is a. There is a

Precarium when the period and the use of the loan has not been Precarium when the period and the use of the loan has not been stipulated, or if the use of the thing is merely tolerated by the stipulated, or if the use of the thing is merely tolerated by the owner.

owner.

!

! BaileeBailee cannot retain the thingcannot retain the thing, even if by reason of expenses,, even if by reason of expenses,

unless

unless for damages due to hidden defects for damages due to hidden defects o

o If bailor isIf bailor is aware of a defect/flawaware of a defect/flaw in the thing loaned, and in the thing loaned, and does not advice

does not advice bailee of it, and the bailee bailee of it, and the bailee sufferssuffers damages

damages by such defect/flaw, bailor is by such defect/flaw, bailor is liable for damages.liable for damages.

Important:

!

! By this contract, one delivers to another something not consumableBy this contract, one delivers to another something not consumable

so that he may use the same for a certain time and return it. so that he may use the same for a certain time and return it.

!

! This is a This is a REAL CONTRACT, delivery is needed for perfectionREAL CONTRACT, delivery is needed for perfection !

! It isIt is essentially GRATUITOUSessentially GRATUITOUS, and if any compensation is to be, and if any compensation is to be

paid, the con

paid, the contract ceases to btract ceases to be a commode a commodatumatum

!

! Bailor need not be owner of Bailor need not be owner of the thing, possessory interest isthe thing, possessory interest is

enough enough

!

! Purely personal - Death of either bailor or bailee extinguishes thePurely personal - Death of either bailor or bailee extinguishes the

contract

contract exceptexcept if there are two or more borrowers, death of one if there are two or more borrowers, death of one does not

does not extinguish contract (unless otherwise stipulated)extinguish contract (unless otherwise stipulated)

!

! Mere failure to ask for return of object does not constitute adverseMere failure to ask for return of object does not constitute adverse

possession possession

(2)

SIMPLE LOAN OR MUTUUM

Object:

! Money or any other consumable/fungible thing. Real Contract

Payment:

! Payment shall be in PESOS unless otherwise stipulated

! If there is extraordinary inflation/deflation, value of currency at

time of perfection shall be paid

! If a fungible thing other than money is loaned, another thing of

same kind and quality shall be paid even if it should change in value. If it is impossible to deliver the same kind, its value at perfection shall be paid

Interest:

! Must be expressly stipulated in writing except when it is an

indemnity for damages or interest accruing from unpaid interest

! If exact rate is not mentioned, then legal rate of 6%

! In the determination of interest, if the loan is payable in kind, its

value shall be appraised at the current price of the products or goods at the time of payment

! Interest due and unpaid shall not earn interest (accrued interest),

unless there is judicial demand or a stipulation otherwise

! If interest is paid when there is no stipulation, provisions on solutio

indebiti or natural obligations shall be applied

Interest Doctrines:

! It is only in contracts of loan that interest may be stipulated and

demanded

! Unilateral impositions of interest do not suffice as proof of an

agreement to pay interest

! Escalation clauses cannot solely depend on the will of a creditor.

There should always be a reference rate upon which to peg such variable and there must always be de-escalation clause stipulated

! Sales invoices or slips issued by stores in the usual printed forms

without the signature of the obligor do not constitute the express stipulation required

! Contracts/stipulations intended to circumvent usury law are void

LOAN OR FORBEARANCE !"#$%&'"#() +'", -%, "#., #)",+,!" ! ! -,&#/,+0 " ! 12 -,&#/,+0 " " !"#$%&'",- -,&#/,+0 $,)'&"0 ! 12 34,3 -,.')-" ! !"#$%&'",- 5678 34,3 -,.')-" " !"#$%&'",- 34,3 -,.')-#)",+,!" () #)",+,!" 6% 3%-#9#'&

-,.')-NOT LOAN OR FORBEARANCE

! Court has discretion. (ex. awarding of damages due to quasi-delict)

! Damages:

o If liquidated, from judicial or extrajudicial demand.

o If not liquidated, runs from first judgment, whether RTC

or labor arbiter or other quasi judicial agency

! 12% if before - July 1, 2013 - 6% if after

From Finality of Judgment until Payment:

! Legal Interest: 12% if before - July 1, 2013 - 6% if after

(3)

DEPOSIT

Object:

! Only movable things except in judicial deposit

Purpose:

! Constituted from the moment a person receives a thing belonging

to another, with the obligation of safely keeping it and of returning the same

! If safekeeping is not the principal purpose, it is not a deposit

! It is a real contract perfected by delivery

! May be constituted either judicially or extrajudicially

! Extrajudicial deposit is either voluntary or necessary

Nature of Compensation:

! A gratuitous contract, unless when there is an agreement for

compensation, or when the depositary is engaged in the business of storing goods, or in involuntary deposit, where a property is saved from destruction from a calamity without the knowledge of the owner

VOLUNTARY DEPOSIT

How Constituted:

! Delivery is made by the will of the depositor

! May also be made by two or more persons each of whom believes

himself entitled to the thing deposited with a third person, who shall deliver the thing to whom it belongs; the action to compel depositors to settle their conflicting claims is in the nature of an interpleader

! May be oral or in writing

Incapacity Rules:

! If the depositor is incapacitated, the depositary may be compelled

to return the thing by the guardian/administrator or by the depositor himself if he acquires capacity. He is also subject to the obligations of a depositary. If he loses his capacity after making the deposit, the thing cannot be returned except to persons who may have administration of his property and rights.

! If the depositary is incapacitated, he does not incur the

obligations of a depositary, but the depositor may recover the thing while in the possession of the depositary, or compel the latter to pay him the amount which he may have enriched or benefited himself. However, if a third person in bad faith obtained it, depositor can bring an action to recover.

Obligations of Depositary:

! Keep the thing safely and return it when required. Whether the

deposit is gratuitous will be taken into account in determining the degree of care needed.

! Thing deposited shall be returned with all its products, accessories

and accessions.

! If holding instruments earning interest, bound to collect such

interest when it becomes due, and may take steps necessary to preserve their value. Not only the interest, but also the capital,

must be collected. Does not apply to rent of safety deposit boxes, which are in the nature of a special kind of deposit (bailor and bailee)

! When thing is closed and sealed, it must be returned in same

condition. If the lock or seal breaks through his fault, he is liable for damages. Fault is presumed unless proof to the contrary. He must keep the secret of the deposit in all cases if the lock or seal breaks. As regards the value of the thing deposited, statement of

depositor shall be accepted when the forcible opening is imputable to the depositary, but courts may pass upon the credibility of the depositor.

! When it becomes necessary to open a locked box or receptacle ,

depositary is presumed authorized if the key has been delivered to him or when the instructions of the depositor cannot be executed without opening it.

! If the thing is lost due to force majeure or government order ,

and the he receives money or another thing in its place, he shall deliver the sum or other thing to the depositor.

(4)

Allowed Acts:

! Depositary may change the way of the deposit if he can

reasonably presume that the depositor would consent if he knew the facts. Notification to depositor is required before such change and his decision must be awaited unless delay would cause danger.

! Depositary may commingle grant or other same kind/quality

articles, in which case the various depositors shall own a proportionate interest in the mass (unless prohibited from

commingling by stipulation)

! If the depositary has reasonable grounds to believe that the thing

has not been lawfully acquired, he may return it to the depositor.

! Depositary may retain the thing in pledge until full payment of

what may be due him by reason of the deposit.

Restrictions:

! Cannot deposit the thing with a third person, unless otherwise

stipulated. If allowed, liable for the loss if deposited with a person who is manifestly careless or unfit. The depositary is responsible for the negligence of his employees

! Cannot use the thing without EXPRESS permission, otherwise

he is liable for damages, except when preservation of the thing requires its use. If there is permission to use the thing, the contract loses the concept of a deposit and becomes a loan or commodatum except where safekeeping is still the principal purpose.

! Cannot demand that depositor prove his ownership , but if he

discovers that the thing is stolen and knows who its true owner is, he must advise such owner of the deposit. If owner does not claim within one month, depositary is relieved of responsibility by returning the thing to the depositor.

Liabilities:

! Depositary is liable for loss through fortuitous event if:

a) Stipulated

b) Uses thing without permission c) Delays its return

d) Allows others to use it even if he is authorized to use it himself

! Depositor's heir who in good faith sold the thing not knowing it

was deposited shall only be bound to return the price he received

or to assign his right of action against the buyer in case the price has not been paid.

Return:

! Thing must be returned at the place agreed upon (expenses for

transportation borne by the depositor) or in the absence of such, it shall be made where the thing deposited might be, even if it should not be the same place where the deposit was made, provided that there is no malice on the part of the depositary.

! Thing must be returned upon demand, even though a period has

been fixed, except:

a) When it is judicially attached while in depositary's possession

b) When notified of the opposition of a third person to the return or removal of the thing

In these cases, depositary must immediately inform the depositor of the attachment or opposition.

! Depositary who may have justifiable reasons for not keeping the

thing deposited, even before the designated time, may return it to the depositor, and consign it in court upon refusal to receive it unless the deposit is for compensation.

! If the depositary has reasonable grounds to believe that the thing

has not been lawfully acquired, he may return it.

! If there are 2 or more depositors, if they are not solidary and the

thing can be divided, they cannot demand more than their share. But if there is a stipulation that the thing be returned to one of the depositors, depositary shall return it only to that person.

Obligations of Depositor:

! If deposit is gratuitous, he is obliged to reimburse ordinary and

extraordinary expenses for PRESERVATION of the thing. If for compensation, such expense is deemed included in the

compensation.

! He must reimburse any loss arising from the character of the thing

deposited unless at the time of perfection he is not aware of, or was not expected to know, the dangerous character of the thing, or unless he notified the depositary, or the latter already knew about it without advice from him.

(5)

Extinguishment:

! A deposit is extinguished when (not exclusive):

a) Upon the loss or destruction of the thing deposited b) In gratuitous deposit, upon death of either party

NECESSARY DEPOSIT

When Constituted:

! A deposit is necessary when:

a) Made in compliance with a legal obligation

b) It takes place on the occasion of any calamity (fire, flood) c) Made by travelers in hotels or inns ( Due diligence)

d) Made by passengers with common carriers ( Extraordinary Diligence)

Hotel-Keeper Liabilities and Right of Retention:

! Hotel-keeper is responsible for the deposit of effects made by

travellers, provided that notice was given to them of the effects brought by guests and that the guests take the precautions which

said hotel-keeper advised relative to the care and vigilance of their effects.

! Hotel-keeper is also liable for the vehicles, animals, and articles,

which have been placed in the annexes of the hotel.

! Liability of hotel-keepers include loss or injury to personal

property caused by servants or employees and even strangers, but not that which may proceed from force majeure. Act of a thief or robber is not deemed a force majeure unless done with the use of arms or irresistible force.

! Hotel-keeper is not liable if loss is due to the acts of the guest, his

family, servants, visitors, or if the loss arising from the character of the thing.

! Any stipulation which suppresses or diminishes the liabilities of

the hotel-keeper shall be void.

! Hotel-keeper has a right to retain the things brought into the hotel

by the guest as a security for credits on account of lodging and other supplies usually furnished to hotel guests. (Pledge)

JUDICIAL DEPOSIT

When Constituted:

! A judicial deposit or sequestration takes place when an attachment

or seizure of property in litigation is ordered

Object:

! Movable or immovable property

Purpose:

! To secure the right of a party to recover in case of favorable

judgment

Obligations:

! Depositary cannot be relieved of his responsibility until the

controversy has come to an end or unless the court orders

Compensation:

! Always remunerated (onerous)

Others:

! Escrow - a written instrument which by its terms imports a legal

obligation and which is deposited by the grantor, promisor, or obligor, or his agent with a stranger or third party, to be kept by the depositary until the performance of a condition or the happening of a certain event, and then to be delivered over to the grantee, promisee, or obligee. Thus, the deposit of rentals in escrow with a bank, in the name of the court, may be duly ordered by the court.