Credit Transactions: Arts. 1933-1966, Civil Code

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Title XI.

- LOAN stipulated, or after the accomplishment of the use for which the commodatum has been constituted.
GENERAL PROVISIONS However, if in the meantime, he should have urgent need of the thing, he may demand its return or
temporary use.
Art. 1933. By the contract of loan, one of the parties delivers to another, either something not In case of temporary use by the bailor, the contract of commodatum is suspended while the thing is in
consumable so that the latter may use the same for a certain time and return it, in which case the the possession of the bailor. (1749a)
contract is called a commodatum; or money or other consumable thing, upon the condition that the Art. 1947. The bailor may demand the thing at will, and the contractual relation is called a precarium,
same amount of the same kind and quality shall be paid, in which case the contract is simply called a in the following cases:
loan or mutuum. (1) If neither the duration of the contract nor the use to which the thing loaned should be
Commodatum is essentially gratuitous. devoted, has been stipulated; or
Simple loan may be gratuitous or with a stipulation to pay interest. (2) If the use of the thing is merely tolerated by the owner. (1750a)
In commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownership Art. 1948. The bailor may demand the immediate return of the thing if the bailee commits any act of
passes to the borrower. (1740a) ingratitude specified in Article 765. (n)
Art. 1934. An accepted promise to deliver something by way of commodatum or simple loan is binding Art. 1949. The bailor shall refund the extraordinary expenses during the contract for the preservation of
upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the the thing loaned, provided the bailee brings the same to the knowledge of the bailor before incurring
object of the contract. (n) them, except when they are so urgent that the reply to the notification cannot be awaited without
danger.
CHAPTER 1 If the extraordinary expenses arise on the occasion of the actual use of the thing by the bailee, even
COMMODATUM though he acted without fault, they shall be borne equally by both the bailor and the bailee, unless there
SECTION 1 - Nature of Commodatum is a stipulation to the contrary. (1751a)
Art. 1950. If, for the purpose of making use of the thing, the bailee incurs expenses other than those
Art. 1935. The bailee in commodatum acquires the used of the thing loaned but not its fruits; if any referred to in Articles 1941 and 1949, he is not entitled to reimbursement. (n)
compensation is to be paid by him who acquires the use, the contract ceases to be a commodatum. Art. 1951. The bailor who, knowing the flaws of the thing loaned, does not advise the bailee of the
(1941a) same, shall be liable to the latter for the damages which he may suffer by reason thereof. (1752)
Art. 1936. Consumable goods may be the subject of commodatum if the purpose of the contract is not Art. 1952. The bailor cannot exempt himself from the payment of expenses or damages by abandoning
the consumption of the object, as when it is merely for exhibition. (n) the thing to the bailee. (n)
Art. 1937. Movable or immovable property may be the object of commodatum. (n)
Art. 1938. The bailor in commodatum need not be the owner of the thing loaned. (n) CHAPTER 2
Art. 1939. Commodatum is purely personal in character. Consequently: SIMPLE LOAN OR MUTUUM
(1) The death of either the bailor or the bailee extinguishes the contract;
(2) The bailee can neither lend nor lease the object of the contract to a third person. Art. 1953. A person who receives a loan of money or any other fungible thing acquires the ownership
However, the members of the bailee's household may make use of the thing loaned, unless thereof, and is bound to pay to the creditor an equal amount of the same kind and quality. (1753a)
there is a stipulation to the contrary, or unless the nature of the thing forbids such use. (n) Art. 1954. A contract whereby one person transfers the ownership of non-fungible things to another
Art. 1940. A stipulation that the bailee may make use of the fruits of the thing loaned is valid. (n) with the obligation on the part of the latter to give things of the same kind, quantity, and quality shall
be considered a barter. (n)
SECTION 2. - Obligations of the Bailee Art. 1955. The obligation of a person who borrows money shall be governed by the provisions of
Articles 1249 and 1250 of this Code.
Art. 1941. The bailee is obliged to pay for the ordinary expenses for the use and preservation of the If what was loaned is a fungible thing other than money, the debtor owes another thing of the same
thing loaned. (1743a) kind, quantity and quality, even if it should change in value. In case it is impossible to deliver the same
Art. 1942. The bailee is liable for the loss of the thing, even if it should be through a fortuitous event: kind, its value at the time of the perfection of the loan shall be paid. (1754a)
(1) If he devotes the thing to any purpose different from that for which it has been loaned; Art. 1956. No interest shall be due unless it has been expressly stipulated in writing. (1755a)
(2) If he keeps it longer than the period stipulated, or after the accomplishment of the use Art. 1957. Contracts and stipulations, under any cloak or device whatever, intended to circumvent the
for which the commodatum has been constituted; laws against usury shall be void. The borrower may recover in accordance with the laws on usury. (n)
(3) If the thing loaned has been delivered with appraisal of its value, unless there is a Art. 1958. In the determination of the interest, if it is payable in kind, its value shall be appraised at the
stipulation exemption the bailee from responsibility in case of a fortuitous event; current price of the products or goods at the time and place of payment. (n)
(4) If he lends or leases the thing to a third person, who is not a member of his household; Art. 1959. Without prejudice to the provisions of Article 2212, interest due and unpaid shall not earn
(5) If, being able to save either the thing borrowed or his own thing, he chose to save the interest. However, the contracting parties may by stipulation capitalize the interest due and unpaid,
latter. (1744a and 1745) which as added principal, shall earn new interest. (n)
Art. 1943. The bailee does not answer for the deterioration of the thing loaned due only to the use Art. 1960. If the borrower pays interest when there has been no stipulation therefor, the provisions of
thereof and without his fault. (1746) this Code concerning solutio indebiti, or natural obligations, shall be applied, as the case may be. (n)
Art. 1944. The bailee cannot retain the thing loaned on the ground that the bailor owes him something, Art. 1961. Usurious contracts shall be governed by the Usury Law and other special laws, so far as
even though it may be by reason of expenses. However, the bailee has a right of retention for damages they are not inconsistent with this Code. (n)
mentioned in Article 1951. (1747a)
Art. 1945. When there are two or more bailees to whom a thing is loaned in the same contract, they are
liable solidarily. (1748a)

SECTION 3. - Obligations of the Bailor

Art. 1946. The bailor cannot demand the return of the thing loaned till after the expiration of the period

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