CIVIL LAW REVIEW

CREDIT TRANSACTIONS

TITLE XI. ART 1942. The bailee is liable for the loss of the
LOAN thing, even if it should be through a fortuitous
event:
GENERAL PROVISIONS (1) If he devotes the thing to any purpose
ART. 1933. By the contract of loan, one of the different from that for which it has been loaned;
parties delivers to another, either something not (2) if he keeps it longer that the period
consumable so that the latter may use the same stipulated, or after the accomplishment of the
for a certain time and return it, in which case the use for which the commodatum has been
contract is called a commodatum; or money or constituted;
other consumable thing, upon the condition that (3) If the thing loaned has been delivered
the same amount of the same kind and quality with appraisal of its value, unless there is a
shall be paid, in which case the contract is simply stipulation exempting the bailee from
called a loan, or mutuum. responsibility in case of a fortuitous event;
Commodatum is essentially gratuitous. (4) If he lends or leases the thing to a third
Simple loan may be gratuitous or with a person, who is not a member of his household;
stipulation to pay interest. (5) If, being able to save either the thing
In commodatum the bailor retains the borrowed or his own thing, he chose to have the
ownership of the thing loaned, while in simple latter.
loan, ownership passes to the borrower.
ART 1943. The bailee does not answer for the
ART 1934. An accepted promise to deliver something deterioration of the thing loaned due only to the
by way of commodatum or simple loan is binding upon use thereof and without his fault.
the parties, but the commodatum or simple loan itself
shall not be perfected until the delivery of the object
of the contract. ART 1944. The bailee cannot retain the thing
loaned on the ground that the bailor owes him
CHAPTER 1 something, even though it may be by reason of
COMMODATUM expenses. However, the bailee has a right of
retention for damages mentioned in Art 1951.
SECTION 1- NATURE OF COMMODATUM
ART 1935. The bailee in commodatum acquires the ART 1945. When there are two or more bailees to
use of the thing loaned but not its fruits; if any whom a thing is loaned in the same contract, they
compensation is to be paid by him who acquires the use, are liable solidarily.
the contract ceases to be a commodatum.
SECTION 3. – OBLIGATIONS OF THE BAILOR
ART 1936. Consumable goods may be the subject of ART 1946. The bailor cannot demand the return
commodatum if the purpose of the contract is not the
of the thing loaned till after the expiration of the
consumption of the object, as when it is merely for
exhibition. period stipulated, or after the accomplishment of
the use for which the commodatum has been
ART 1937. Movable or immovable property may be the constituted. However, if in the meantime, he
object of commodatum. should have urgent need of the thing, he may
demand its return or temporary use.
ART 1938. The bailor in commodatum need not be the In case of temporary use by the bailor, the
owner of the thing loaned. contract of commodatum is suspended while the
thing is in the possession of the bailor.
ART 1939. Commodatum is purely personal in
character. Consequently:
(1) The death of either the bailor or the bailee ART 1947. The bailor may demand the thing at
extinguishes the contract; will, and the contractual relation is called
(2) The bailee can neither lend nor lease the object precarium, in the following cases:
of the contract to a third person. However, the (1) If neither the duration of the contract nor
members of the bailee’s household may make use of the the use to which the thing loaned should be
thing loaned, unless there is a stipulation to the
devoted, has been stipulated; or
contrary, or unless the nature of the thing forbids such
use. (2) Of the use of the thing is merely tolerated
by the owner.
ART 1940. A stipulation that the bailee may make use
of the fruits of the thing loaned is valid. ART 1948. The bailor may demand immediate
return of the thing if the bailee commits any acts
SECTION 2- OBLIGATIONS OF THE BAILEE of ingratitude specified in Art 765.
ART 1941. The bailee is obliged to pay for the
ordinary expenses for the use and preservation ART 1949. The bailor shall refund the
of the thing loaned. extraordinary expenses during the contract for
the preservation of the thing loaned, provided the

ENGR. ARIEL MARK PILOTIN 1

 CIVIL LAW REVIEW
CREDIT TRANSACTIONS

bailee brings the same to the knowledge of the time and place of payment.
bailor before incurring them, except when they
are so urgent that the reply to the notification ART 1959. Without prejudice to the provisions of
cannot be awaited without danger. Art 2212, interest due and unpaid shall not earn
If the extraordinary expenses arise on the interest. However, the contracting parties may by
occasion of the actual use of the thing by the stipulation capitalize the interest due and unpaid,
bailee, even though he acted without fault, they which as added principal, shall earn new interest.
shall be borne equally by both the bailor and the
bailee, unless there is a stipulation to the ART 1960. If the borrower pays interest when
contrary. there has been no stipulation therefor, the
provisions of this Code concerning solution
ART 1950. If, for the purpose of making use of indebiti, or natural obligations, shall be applied,
the thing, the bailee incurs expenses other than as the case may be.
those referred to in Articles 1941 and 1949, he is
not entitled to reimbursement. ART 1961. Usurious contracts shall be governed by
the Usury law and other special laws, so far as
ART 1951. The bailor who, knowing the flaws of they are not inconsistent with this Code.
the thing loaned, does not advise the bailee of
the same, shall be liable to the latter for the
damages which he may suffer by reason thereof.

ART 1952. The bailor cannot exempt himself

from the payment of expenses or damages by
abandon the thing to the bailee.

CHAPTER 2
SIMPLE LOAN OR MUTUUM
ART 1953. A person who receives a loan of money
or any other fungible thing acquires the
ownership thereof, and is bound to pay to the
creditor an equal amount of the same kind and
quality.

ART 1954. A contract whereby one person

transfers the ownership of non-fungible thing to
another with the obligation on the part of the
latter to give things of the same kind, quantity,
and quality shall be considered a barter.

ART 1955. The obligation of a person who

borrows money shall be governed by the
provisions of Articles 1249 and 1250 of this Code.
If what was loaned is a fungible thing other
than money, the debtor owes another thing of the
same kind, quantity 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.

ART 1956. No interest shall be due unless it has

been expressly stipulated in writing.

ART 1957. Contracts and stipulations, under any

cloak or device whatever, intended to circumvent
the laws against usury shall be void. The
borrower may recover in accordance with the
laws on usury.

ART 1958. In the determination of the interest, if

it is payable in kind, its value shall be appraised
at the current price of the product or goods at the

ENGR. ARIEL MARK PILOTIN 2

 CIVIL LAW REVIEW
CREDIT TRANSACTIONS

TITLE XII. DEPOSIT

CHAPTER 1.
DEPOSIT IN GENERAL AND ITS DIFFERENT KINDS

CHAPTER 2.
VOLUNTARY DEPOSIT

SECTION 1. -GENERAL PROVISIONS

SECTION 2. – OBLIGATIONS OF THE DEPOSITARY

SECTION 3. OBLIGATIONS OF THE DEPOSITOR

CHAPTER 3
NECESSARY DEPOSIT

CHAPTER 4
SEQUESTRATION OR JUDICIAL DEPOSIT

ENGR. ARIEL MARK PILOTIN 3