Commodatum | Kinds of Loans | Loans | CREDIT TRANSACTIONS

CIVIL LAW > CREDIT TRANSACTIONS > LOANS > COMMODATUM

Commodatum is a type of gratuitous loan governed by Articles 1933 to 1952 of the Civil Code of the Philippines. It involves the delivery of a non-consumable thing by the owner (the lender or commodant) to another person (the borrower or commodatary) for the latter's use and for free, with the obligation to return the exact same thing after use.

Below is a meticulous discussion of the essential elements, characteristics, types, obligations of the parties, and other critical provisions related to commodatum:

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1. ESSENTIAL ELEMENTS

1. Delivery of the Thing

   • The lender delivers the thing to the borrower.
   • Ownership of the thing remains with the lender.

2. Non-consumable Thing

   • The thing lent is not intended to be consumed through use. (e.g., tools, vehicles, or books).
   • If consumable goods are lent but intended to be used for exhibition or display, it can still constitute commodatum.

3. Gratuitousness

   • Commodatum is always without compensation or consideration. If compensation is involved, it becomes another type of contract, such as a lease.

4. Obligation to Return

   • The exact same thing must be returned, not a similar or equivalent object.

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2. CHARACTERISTICS OF COMMODATUM

1. Real Contract

   • It is perfected upon the delivery of the thing. Mere agreement without delivery does not create the contract.

2. Unilateral or Bilateral

   • It is primarily unilateral, as only the borrower typically has obligations (to preserve and return the thing).
   • It may become bilateral when the lender assumes specific obligations (e.g., to reimburse necessary expenses).

3. Nominate Contract

   • It is specifically provided for and regulated under the Civil Code.

4. Gratuitous

   • The lender receives no compensation for lending the thing.

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3. KINDS OF COMMODATUM

1. Ordinary Commodatum

   • The thing is lent for the borrower's use for a specified time or purpose.

2. Precarium (Precarious Commodatum)

   • The lender may demand the return of the thing at will.
   • It arises when:
     • The borrower is allowed to use the thing by mere tolerance of the lender, or
     • No specific period or purpose is stated in the contract.

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4. OBLIGATIONS OF THE PARTIES

A. Obligations of the Commodatary (Borrower):

1. To Preserve the Thing

   • The borrower must exercise extraordinary diligence in the use and preservation of the thing (Art. 1941).

2. To Use the Thing According to its Purpose

   • The thing must be used only for the purpose stipulated or customary for its nature (Art. 1942).
   • Misuse or use beyond the agreed purpose may lead to liability or termination of the contract.

3. To Return the Thing

   • The exact same thing must be returned upon the expiration of the period or accomplishment of the purpose (Art. 1946).

4. Liability for Loss or Damage

   • The borrower is generally liable for the loss or deterioration of the thing if:
     • The loss is due to the borrower’s fault or negligence.
     • The borrower delays returning the thing.
     • The thing is used for purposes other than agreed or customary.
     • The borrower lends the thing to a third person without the lender’s consent (Art. 1942 and Art. 1949).

5. Reimbursement of Necessary Expenses

   • The borrower must reimburse the lender for extraordinary expenses incurred for the preservation of the thing (Art. 1949).

B. Obligations of the Commodant (Lender):

1. To Allow Use of the Thing

   • The lender must allow the borrower to use the thing for the agreed purpose or period.

2. To Reimburse Extraordinary Expenses

   • The lender is obligated to reimburse extraordinary expenses necessary for the preservation of the thing if incurred by the borrower (Art. 1949).

3. Liability for Defects

   • The lender is liable for damages arising from hidden defects in the thing which the lender knew or should have known but failed to disclose (Art. 1951).

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5. RIGHTS OF THE PARTIES

A. Rights of the Commodant (Lender):

1. To Demand Return

   • The lender may demand the return of the thing upon:
     • The expiration of the period.
     • Accomplishment of the purpose.
     • Breach by the borrower.

2. To Recover Damages

   • The lender may recover damages for any unauthorized use or deterioration due to the borrower’s fault.

3. To Demand Immediate Return (Precarium)

   • In precarious commodatum, the lender may demand the return of the thing at will.

B. Rights of the Commodatary (Borrower):

1. Right to Use

   • The borrower has the right to use the thing in accordance with the terms of the contract.

2. Right to Reimbursement

   • The borrower may demand reimbursement for extraordinary expenses incurred to preserve the thing.

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6. SPECIAL RULES

1. Loss of the Thing

   • The borrower is not liable for loss if:
     • The thing perishes due to fortuitous events, unless:
       • The borrower is in default.
       • The thing was used for unauthorized purposes.
       • The thing was lent to a third party without the lender’s consent.

2. Subleasing or Lending

   • The borrower cannot lend or sublease the thing to a third person without the lender’s consent. Violation makes the borrower liable for loss or deterioration (Art. 1942).

3. Termination of Commodatum

   • The contract terminates upon:
     • Expiration of the period.
     • Accomplishment of the purpose.
     • Demand for return in precarious commodatum.

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7. DIFFERENCES FROM MUTUUM (SIMPLE LOAN)

Aspect	Commodatum	Mutuum
Object	Non-consumable things	Consumable things (e.g., money, grains)
Ownership	Ownership remains with the lender	Ownership is transferred to the borrower
Return	Exact thing must be returned	Equivalent value must be returned
Compensation	Always gratuitous	May be gratuitous or onerous (with interest)

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By understanding these principles, you can properly evaluate and apply the rules on commodatum under Philippine law.