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 into by A and B with respect to the passenger Jeepney that was loaned by A to B to transport the latter’s sick wife to Manila?
2) Is B obliged to pay A for the use of the passenger jeepney?
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 return the 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 extra-ordinary 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 van’s fuel, oil and other materials while it was with Tito? Explain.
SUGGESTED ANSWER:
Tito must also pay for the ordinary expenses for the use and preservation of the 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 even 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 the Civil Code, there are only 3 instances when the bailor could validly ask for the return 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 the 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 of the 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 the Civil 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 thing loaned 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 another’s property, while commodatum creates only a purely personal right to use another’s 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 subject-matter 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 [1974]). 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 that 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 OB’s action be just and valid? Why? Has TY a remedy against the imposition of the rate increase? Explain.
SUGGESTED ANSWER:
OB’s 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.
From the ANSWERS TO BAR EXAMINATION QUESTIONS in CIVIL LAW by the UP LAW COMPLEX and PHILIPPINE ASSOCIATION OF LAW SCHOOLS.
