Commodatum vs.

Mutuum
What are Differences Between the Two Kinds of Loan?
COMMODATUM
Ordinarily not consumable

MUTUUM (SIMPLE LOAN)

Money or other consumable thing

Ownership is retained by the lender

Ownership is transferred to the borrower

Essentially gratuitous

Gratuitous or onerous, that is with stipulation to pay

interest

Borrower must return the same thing loaned

Borrower need only pa the same amount of the same

kind and quality

May involve real or personal property

Only personal property

Loan for use or temporary possession

Loan for consumption

Bailor may demand the return of the thing loaned

before the expiration of the term in case of urgent
need

Lender may not demand its return before the lapse of

the term agreed upon

Loss of the subject matter is suffered by the bailor

since he is the owner

Borrower suffers the loss even if caused exclusively

by a fortuitous event and he is not therefore
discharged from his duty to pay

Purely personal

Not purely personal

Commodatum (1993)
A, upon request, loaned his passenger Jeepney
to B to enable B to bring his sick wife from
Paniqui. Tarlac to the Philippine General
Hospital in Manila for treatment. On the way back
to Paniqui, after leaving his wife at the hospital,
people stopped the passenger Jeepney. B stopped
for them and allowed them to ride on
board, accepting payment from them just as in the
case of ordinary passenger Jeepneys plying their
route. As B was crossing Bamban, there was an
onrush of Lahar from Mt Pinatubo, the Jeep
that was loaned to him was wrecked.
1)
What do you call the contract that was entered int
o by A and B with respect to the passenger
Jeepney that was loaned by A to B to transport the
latters sick wife to Manila?
2)
Is B obliged to pay A for the use of the passenger j
eepney?
3) Is B liable to A for the loss of the Jeepney?
SUGGESTED ANSWER:

1) The contract is called commodatum. [Art.

1933. Civil Code). COMMODATUM is a contract by
which one of the parties (bailor) delivers to
another (bailee) something not consumable so
that the latter may use it for a certain time and
return it.
2) No, B is not obliged to pay A for the use of the
passenger Jeepney because commodatum is
essentially gratuitous. (Art. 1933. Civil Code]
3) Yes, because B devoted the thing to a purpose
different from that for which it has been loaned
(Art. 1942, par. 2, Civil Code)
ALTERNATIVE ANSWER:
No, because an obligation which consists in the
delivery of a determinate thing shall be
extinguished if it should be lost or destroyed
without the fault of the debtor, and before he has
incurred in delay. (Art. 1262. Civil Code)
Commodatum (2005)
Before he left for Riyadh to work as a mechanic,
Pedro left his Adventure van with Tito, with the
understanding that the latter could use it for one
year for his personal or family use while Pedro
works in Riyadh. He did not tell Tito that the

brakes of the van were faulty. Tito had the van

tuned up and the brakes repaired. He spent a total
amount of P15,000.00. After using the vehicle for
two weeks, Tito discovered that it consumed too
much fuel. To make up for the expenses, he leased
it to Annabelle.
Two months later, Pedro returned to the
Philippines and asked Tito to returnthe van.
Unfortunately, while being driven by Tito, the van
was
accidentally
damaged
by
a cargo
truck without his fault.
a) Who shall bear the P15,000.00 spent for the
repair of the van? Explain.
ALTERNATIVE ANSWER:
Tito must bear the P15,000.00 expenses for the
van. Generally, extraordinary expenses for the
preservation of the thing loaned are paid by the
bailor, he being the owner of the thing loaned. In
this case however, Tito should bear the expenses
because he incurred the expenses without first
informing Pedro about it. Neither was the repair
shown to be urgent. Under Article 1949 of
the Civil Code, bailor generally bears the
extraordinary expenses for the preservation of
the thing and should refund the said expenses
if made by the bailee; Provided, The bailee brings
the same to the attention of the bailor before
incurring them, except only if the repair is urgent
that reply cannot be awaited.
ALTERNATIVE ANSWER:
The P15,000.00 spent for the repair of the van
should be borne by Pedro. Where the bailor
delivers to the bailee a non-consummable thing so
that the latter may use it for a certain time and
return the identical thing, the contract perfected is
a Contract of Commodatum. (Art. 1933, Civil Code)
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 the same, except when they are so
urgent that the reply to the notification cannot be
awaited without danger. (Art. 1949 of
the Civil Code)
In the given problem, Pedro left his Adventure van
with Tito so that the latter could use it for one
year while he was in Riyadh. There was no
mention of a consideration. Thus, the contract
perfected was commodatum. The amount of
P15,000.00 was spent by Tito to tune up the van
and to repair its brakes. Such expenses are extraordinary expenses because they are necessary for
the preservation of the van Thus, the same should
be borne by the bailor, Pedro.

b) Who shall bear the costs for the vans fuel, oil a
nd other materials while it was with Tito? Explain.
SUGGESTED ANSWER:
Tito must also pay for the ordinary expenses for
the use and preservation ofthe thing loaned. He
must pay for the gasoline, oil, greasing and
spraying. He cannot ask for reimbursement
because he has the obligation to return the
identical thing to the bailor. Under Article 1941 of
the Civil Code, the bailee is obliged to pay for the
ordinary expenses for the use and preservation
of the thing loaned.
c) Does Pedro have the right to retrieve the van e
ven before the lapse of one year? Explain.
ALTERNATIVE ANSWER:
No, Pedro does not have the right to retrieve the
van before the lapse of one year. The parties are
mutually bound by the terms of the contract.
Under theCivil Code, there are only 3 instances
when the bailor could validly ask for thereturn of
the thing loaned even before the expiration of the
period. These are when: (1) a precarium
contract was entered (Article 1947); (2) if the
bailor urgently needs the thing (Article 1946); and
(3) if the bailee commits acts of ingratitude
(Article 1948). Not one of the situations is
present in this case.
The fact that Tito had leased the thing loaned to
Annabelle would not justify the demand for
the return of the thing loaned before expiration of
the period. Under Article 1942 of the Civil Code,
leasing of the thing loaned to a third person not
member of the household of the bailee, will only
entitle bailor to hold bailee liable for the loss
of the thing loaned.
ALTERNATIVE ANSWER:
As a rule, Pedro does not have the right to retrieve
the van before the lapse of one year. Article 1946
of the Code provides that 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 the given problem, Pedro allowed Tito to use th
e van for one year. Thus, he should be bound by
the said agreement and he cannot ask for
the return of the car before the expiration of the
one year period. However, if Pedro has urgent
need of the van, he may demand for its return or
temporary use.

d) Who shall bear the expenses for the accidental

damage caused by the cargo truck, granting that
the driver and truck owner are insolvent? Explain.
SUGGESTED ANSWER:
Generally, extraordinary expenses arising on the
occasion of the actual use ofthe thing loaned by
the bailee, even if incurred without fault of the
bailee, shall be shouldered equally by the bailor
and the bailee. (Art. 1949 of theCivil Code).
However, if Pedro had an urgent need for the
vehicle, Tito would be in delay for failure to
immediately return the same, then Tito would be
held liable for the extraordinary expenses.
Commodatum vs. Usufruct (1998)
Distinguish usufruct from commodatum and state
whether these may be constituted over
consumable goods.
SUGGESTED ANSWER:
1. USUFRUCT is a right given to a person
(usufructuary) to enjoy the property of another
with the obligation of preserving its form and
substance. (Art. 562. Civil Code)
On the other hand, COMMODATUM is a
contract by which one of the parties (bailor)
delivers to another (bailee) something not
consumable so that the latter may use it for a
certain time and return it.
In usufruct the usufructuary gets the right to the
use and to the fruits of the same, while in
commodatum, the bailee only acquires the use
of the thingloaned but not its fruits.
Usufruct may be constituted on the whole or a
part of the fruits of the thing. (Art.
564. Civil Code). It may even be constituted over
consumables
like
money (Alunan v. Veloso, 52 Phil. 545). On the
other hand, in commodatum, consumable goods
may be subject thereof only when the purpose of
the contract is not the consumption of the
object, as when it is merely for exhibition. (Art.
1936, Civil Code)
ANOTHER ANSWER:
1. There are several points of distinction
between usufruct and commodatum. Usufruct is
constituted by law, by contract, by testamentary
succession, or by prescription (Art. 1933. Civil
Code). Usufruct creates a real right to the fruits of
anothers property, while commodatum creates
only a purely personal right to use anothers
property, and requires a stipulation to enable the
bailee to make use of the fruits (Arts. 1939&
1940, Civil Code). Usufruct maybe onerous while
commodatum is always or essentially gratuitous
(Arts. 1933 & 1935, Civil Code). The contract
constituting usufruct is consensual, while

commodatum is a real contract (perfected only

by delivery of the subject matter thereof).
However, both involve the enjoyment by a person
of the property of another, differing only as to the
extent and scope of such enjoyment [jus fruendi in
one and Jus utendi in the other); both may have as
subject matter either an immovable or a movable;
and, both maybe constituted over consumable
goods (Arts. 574 & 1936, Civil Code).
A consumable thing may be the subjectmatter of an abnormal usufruct but in a normal
usufruct, the subject- matter may be used only for
exhibition. A commodatum of a consumable thing
may be only for the purpose of exhibiting, not
consuming it.
Mutuum vs. Commodatum (2004)
Distinguish briefly but clearly between
mutuum and commodatum.
SUGGESTED ANSWER:
In MUTUUM, the object borrowed must be a
consumable thing the ownership of which is
transferred to the borrower who incurs the
obligation to return the same consumable to the
lender in an equal amount, and of the same kind
and quality. In COMMODATUM, the object
borrowed is usually a non-consumable thing the
ownership of which is not transferred to the
borrower who incurs the obligation to return the
very thing to the lender.
Mutuum; Interests (2001)
Samuel borrowed P300,000.00 housing loan from
the bank at 18% per annum interest. However, the
promissory note contained a proviso that the bank
"reserves the right to increase interest within the
limits allowed by law," By virtue of such proviso,
over the objections of Samuel, the bank increased
the interest rate periodically until it reached 48%
per annum. Finally, Samuel filed an action
questioning the right of the bank to increase the
interest rate up to 48%. The bank raised the
defense that the Central Bank of the Philippines
had already suspended the Usury Law. Will the
action prosper or not? Why?
SUGGESTED ANSWER:
The action will prosper. While it is true that the
interest ceilings set by the Usury Law are no
longer in force, it has been held that PD No.
1684 and CB Circular No. 905 merely allow
contracting parties to stipulate freely on any
adjustment in the interest rate on a loan or
forbearance of money but do not authorize a
unilateral increase of the interest rate by one
party
without
the
other's
consent (PNB v. CA, 238 SCRA 2O [1994]).
To
say otherwise will violate the principle of

mutuality of contracts under Article 1308 of the

Civil Code. To be valid, therefore, any change of
interest must be mutually agreed upon by the
parties (Dizon v. Magsaysay, 57 SCRA 25O [197
4]). In the present problem, the debtor not having
given his consent to the increase in interest, the
increase is void.
Mutuum; Interests (2002)
Carlos sues Dino for (a) collection on a promissory
note for a loan, with no agreement on interest,
on which Dino defaulted, and (b) damages caused
by Dino on his (Carlos) priceless Michaelangelo
painting on which Dino is liable on the promissory
note and awards damages to Carlos for the
damaged painting, with interests for both
awards. What rates of interest may the court
impose with respect to both awards? Explain.
SUGGESTED ANSWER:
With respect to the collection of money or
promissory note, it being a forbearance of money,
the legal rate of interest for having defaulted on
the payment of 12% will apply. With respect to
the damages to the painting, it is 6% from the time
of the final demand up to the time of finality of
judgment until judgment credit is fully paid. The
court considers the latter as a forbearance of

money. (Eastern Shipping Lines, Inc. v. CA. 234

SCRA 78 [1994]; Art. 2210 and 2211, CC)
Mutuum; Interests (2004)
The parties in a contract of loan of money agreed t
hat the yearly interest rate is 12% and it can be
increased if there is a law that would authorize the
increase of interest rates. Suppose OB, the lender,
would increase by 5% the rate of interest to be
paid by TY, the borrower, without a law
authorizing such increase, would OBs action be
just and valid? Why? Has TY a remedy against the
imposition of the rate increase? Explain.
SUGGESTED ANSWER:
OBs action is not just and valid. The debtor cannot
be required to pay the increase in interest there
being no law authorizing it, as stipulated in the
contract. Increasing the rate in the absence of such
law violates the principle of mutuality of
contracts.
ALTERNATIVE ANSWER:
Even if there was a law authorizing the increase in
interest rate, the stipulation is still void because
there is no corresponding stipulation to decrease
the interest due when the law reduces the rate of
interest.