LOAN

a.

Art. 1933: By the contract of loan, one of the

parties delivers to another, either something not
consumable so that the latter may use the same for
a certain time and return it, in which case the
contract is called a commodatum; or money or other
consumable thing, upon the condition that the same
amount of the same kind and quality shall be paid, in
which case the contract is simply called a loan or
mutuum.

b.

Exception:
a. If bailor have the urgent need of the
thing, he may demand its return or
temporary use.

Commodatum is essentially gratuitous.

b.

Simple loan may be gratuitous or with a stipulation

to pay interest.
In commodatum the bailor retains the ownership of
the thing loaned, while in simple loan, ownership
passes to the borrower.

Obligation
to
refund
extraordinary
expenses during the contract for the
preservation of the thing loaned.
Requisites:
i. 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.
*Extraordinary expenses arise on the
occasion of the actual use if the thing by the
bailee, even though he acted without fault,
they shall be borne equally by the bailee
and bailor, unless there is stipulation to the
contrary

COMMODATUM
Obligations of the Bailee
1. Payment for ordinary expenses for the use
and preservation of the thing loaned. (Art.
1941)
2. Liable for fortuitous event if:
a. If he devotes the thing to any
purpose different from that for
which it has been loaned;
b. If he keeps it longer than the period
stipulated,
or
after
the
accomplishment of the use for which
the commodatum is established;
c. If the thing loaned has been
delivered with its appraisal of its
value, unless there is a stipulation
exempting
the
bailee
from
responsibility in case of a fortuitous
event.
d. If he lends or leases the thing to a
third person, who is not a member
of his household;
e. If, being able to save either the
thing borrowed or his own thing, he
chose to have the latter.
3. Obligation to return the thing (Bailee cannot
retain the thing loaned on the ground that
the bailor owes him something)
But has a right of retention for
damages
4. Solidary liability when there are two or more
bailees
5. Deterioration due to ordinary wear and tear
(ordinary use): Bailee is not liable
II.

Obligations of the Bailor

1. Bailor cannot demand the return of the
thing loaned till:

The contract of commodatum is

suspended while the thing is in the
possession of the bailor.
Bailor may demand immediate
return if the bailee commits any act
of ingratitude specified in Art. 765.

2.

Art. 1934. An accepted promise to deliver

something by way of commodatum or simple loan is
binding upon parties, but the commodatum or simple
loan itself shall not be perfected until the delivery of
the object of the contract. (
I.

After the expiration of the

period stipulated;
After the accomplishment of its
use for which the commodatum
has been constituted.

*Expenses other than ordinary expenses,

extraordinary expenses during the contract
for preservation and extraordinary expenses
on the occasion of the actual use of the
thing
IS
NOT
ENTITLED
FOR
REIMBURSEMENT
3. Bailor shall be liable for damages if:
A. has knowledge of the flaws of the thing
loaned and does not advise the bailee of
the said flaws (Art. 1951)
B. if he abandons the thing to the bailee
(Art. 1952)
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.
DEPOSIT
I.

Voluntary Deposit

A voluntary deposit is that wherein the delivery is

made by the will of the depositor. (Art. 1968)
A deposit 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 it in a proper case to the one to whom it
belongs.
Form of Contract: orally or in writing (Art. 1969)
Rule if depositor is incapacitated:
1. The depositary shall be subject to all
the obligations of a depositary, and
may be compelled to return the thing
by the guardian, or administrator, or
the person who made the deposit, or by
the latter himself if he should acquire
capacity. (Art. 1970)
Rule if depositary is incapacitated:
1. The depositor shall only have an action
to recover the thing deposited while it
is still in the possession of the
depositary; or
2. Compel the latter to pay him the
amount by which he may have enriched
or benefited himself with the thing or
its price.
If a third person who acquired the thing
acted in bad faith, the depositor may
bring an action against him for its
recovery.
II. Obligations of the Depositary
1. To keep the thing safely (Art. 1972)
Every person who is obliged to give
something is also obliged to take care
of it with the proper diligence of a good
father of a family, unless the law or
stipulation of the parties requires
another standard of care. (Art. 1163)
Those who in the performance of their
obligations
are
guilty
of
fraud,
negligence, or delay, and those who in
any manner contravene the tenor
thereof, are liable for damage. (Art.
1170)
The depositary is liable for the loss of
the thing through a fortuitous event:
(Art. 1979)
a. If it is so stipulated;
b. If he uses the thing without
the depositors consent;
c. If he delays its return;
d. If he allows others to use it,
even though he himself may
have been authorized to use
the same.
2.

To return the thing, when required

by the depositor, or his heirs and

successors, or to the person who may

have been designated in the contract.
(Art. 1972)
The thing deposited must be returned
to the depositor upon demand, even
though a specified period or time for
such return may have been fixed. (Art.
1988)
Exception: Return upon demand
shall not apply when:
a. The thing is judicially
attached
in
the
depositarys
possession;
b. The depositary have
been notified of the
opposition of a third
person to the return
or the removal of the
thing deposited.
In these cases, the depositary
must immediately inform the
depositor of the attachment or
opposition.
The thing deposited shall be returned
with all its products, accessories and
accessions. (Art. 1983)
If the deposit consists of money,
the provision on Art. 1896 shall be
applied to the depositary.
Art. 1896: The agent owes interest
on the sums he has applied to his
own use from the day on which he
did so, and on those which he still
owes after the extinguishment of
the agency.
The thing deposited must be returned
to the place designated for the return
of the thing.
The expenses for transportation
shall be borne by the depositor.
If no place has been designated for the
return, it shall be made where the thing
deposited may be, even if it should not
be the same place where the deposit
was made, provided that there was no
malice on the part of the depositary.
Rule if the thing deposited is closed or
sealed:
If the thing deposited is delivered
closed and sealed: The depositary
must return it in the same
condition. (Art. 1981)
If the seal or lock be broken
without the depositarys fault, he
shall keep the secret of the
deposit.

If the seal or lock be broken

through his fault, he shall be liable
for damages.

Before the depositary may make

such change, he shall notify the
depositor thereof and wait for his
decision, unless delay would cause
danger.

Fault is presumed unless there is

proof to the contrary.
6.

When it becomes necessary to

open a locked box or receptacle,
the
depositary
is
presumed
authorized to do so if:
i. The key has been
delivered to him; or
ii. When the instructions
of the depositor as
regards the deposit
cannot be executed
without opening the
box or receptacle.
(Art. 1982)
3.

If the depositary has reasonable

grounds to believe that the thing
has not been lawfully acquired by
the depositor, the former may
return the same.

The depositary cannot make use of

the thing deposited without the express
permission of the depositor.
Liability in case of use: damages

7.

If
the
thing
deposited
(holding
certificates,
bonds,
securities
or
instruments) earns interest: (Art. 1975)
a. The depositary is bound to
collect the interest when it
becomes due;
b. Take necessary steps in order
that
the
securities
may
preserve their value and the
rights corresponding to them
according to law.
Exception: Shall not apply to contracts
of rent and safety deposit boxes.

8.

Obligation not to commingle things

Exception:

Exception: If for the preservation of the

thin deposited requires its use, it must
be used but only for that purpose. (Art.
1977)
When the depositor has permission to
use the thing deposited: the contract
becomes a loan or commodatum and
loses the concept of deposit.
Exception: Where the safekeeping is
still the principal purpose of the
contract.
*Permission shall not be presumed and
must be proved. (Art. 1978)
4.

The depositary cannot deposit the

thing to a third person. (Art. 1973)

III. Obligation of the Depositor

1. Obligation to reimburse the depositary for
expenses for the preservation of the thing
deposited if the deposit is GRATUIOUS. (Art.
1992)
2.

Exception: When there is a stipulation

to the contrary.
Liability for loss is on the
depositary if he deposited the thing
to a third person who is manifestly
careless or unfit.

Obligation not to change the way of the

deposit
Exception:
When
under
the
circumstances the depositary may
reasonably presume that the depositor
would consent to the change if he knew
the facts of the situation.

Obligation to reimburse for LOSS arising

from the character of the thing deposited.
(Art. 1993)
Exception: Unless at the time of the
constitution of the deposit the depositor was
not aware of, or was not expected to know
the dangerous character of the thing, or
unless he notified the depositary of the
same, or the latter was aware of it without
advice of the depositor.

The depositary is also responsible

for
the
negligence
of
his
employees.
5.

The depositary cannot demand that

the depositor prove his ownership of
the thing deposited.
Nevertheless, should he discover
that the thing has been stolen and
while its true owner is, he must
advise the latter of the deposit.

3.

Obligation to pay the depositary in full (Art.

1994)
Remedy of the depositary in case
of non-payment: he may retain the
thing in pledge.

IV. Extinguishment of Deposit (Art. 1995)

1. Upon the loss or destruction of the thing
deposited;

2.

Death of either the depositor or depositary,

in cases of gratuitous deposit.

V. Necessary Deposit
When is a deposit necessary? (Art. 1996)
1. When it is made in compliance with a legal
obligation;
(1) Shall be governed by the
provisions
of
the
law
establishing it, and in case of
deficiency, by the rules of
voluntary deposit (Art. 1997)
2.

2.

Exception:
a. force majure

When it takes place on the occasion of any

calamity such as fire, storm, flood, pillage,
shipwreck, or other similar events.
(1) Shall be governed by the
provisions
concerning
voluntary deposit and Art.
2168. (Art. 1997)

The act of a thief or

robber, who entered the
hotel is not force majure,
unless it is done with the
use of arms or through
and irresistible force. (Art.
2001)

Art. 2168: When during a fire,

flood, storm, or other calamity,
property is saved from destruction
by another person without the
knowledge of the owner, the latter
is bound to pay the former just
compensation.
3.

introduced or placed in the

annexes of the hotel. (Art.
1991)
Liable for loss of, injury to
personal
property
of
the
guests caused by the servants
or employees of the keepers of
hotel or inns as well as by
strangers. (Art. 2000)

The deposit of effects made by travellers in

hotels or inns shall also be regarded as
necessary. (Art. 1998)
The keepers of hotels or inns shall
be
regarded
as
depositaries,
provided that notice was given to
them, or to their employees, of the
effects brought by the guests and
that, on the part of the latter, they
take the precautions which said
hotel-keepers or their substitutes
advised relative to the care and
vigilance of their effects.

Liability
substitutes:

of
1.

hotel-keepers

or

their

The hotel-keeper is liable for

the vehicles, animals and
articles which have been

b.

3.

it the loss is due to the

acts of the guest, his
family,
servants
or
visitors, (Art. 2002)
c. if the loss arises from the
character of the things
brought into the hotel
(Art. 2002)
Liable for loss even though he
posts notices to the effect that
he is not liable for the articles
brought by the guest.
Any stipulation between the
hotel-keeper and the guest
whereby the responsibility of
the former as set forth in Art.
1998 2001 is suppressed or
diminished shall be void.

Right of the hotel-keeper / inn-keeper to

remain the things brought into the hotel by
the guest as security for credits on account
of lodging, and supplies usually furnished to
hotel guests.