Commodatum is when one party (bailor) delivers a non-consumable thing to another (bailee) so that the latter may use it for a specific time and return the same. (Article 1933 New Civil Code). Let’s break the elements down:
- “one party” – this is the bailor. He need not be the absolute or naked owner because there is no transfer of ownership in a commodatum. Bailor can be a usufructuary or lessor.
- “delivers” – is essential for bailment because the original word for bailment is the French word “Bailler” which means “to deliver.” This delivery is essentially gratuitous without onerous cause. This is a manifestation of trust and confidence on the bailor’s part.
- “a thing” “return the same”– this object must generally be non-consumable since the primary purpose of bailment is the use of the thing and the return of the same. If it is consumable, it must only be for exhibition purposes. (Art. 1936) This object may be movable or immovable. (personal or real property) (Article 1937)
| Element | Commodatum | Mutuum | Barter |
|---|---|---|---|
| “Thing” | non-consumable; movable or immovable | fungible and consumable | Non-fungible |
For example, if the money was physically delivered for the purpose of show money (visa application) or as a capitalization requirement for the incorporation of a company with SEC, the contract appears to be a commodatum. However, if the money was deposited and withdrawn after 30 days, it will not be “the same thing returned” – hence, the better answer is mutuum.
“may use the thing” – the use of the thing must be without compensation; otherwise, the contract ceases to be a commodatum. (Art. 1935) The thing is essentially for the use of the bailee. If the purpose for example is for safekeeping, the contract may be a deposit, and not commodatum.
The thing cannot be leased to third persons except to members of the household of the bailee, unless there is a stipulation to the contrary, or unless the nature of the thing forbids such use. (Art. 1939)
The thing must be non-consumable. The nature of the obligation is to return the thing in the same kind and individuality when it was loaned. Like any other contract, the object must not be outside the commerce of man.
“for a certain time” – there is a period upon which the bailee will use the thing. The bailor can demand the thing back (a) after a period of time; (b) anytime if it is a precarium; (c) or the bailor has an urgent need.
“and return the same” – The expectation that the bailee will return the thing is based on trust. If someone lent money to an exhibition and deposited it in the bank, there is no assurance that the same serial numbers will be returned. It ceased to be commodatum unless, upon return, the same bills were returned.
An accepted promise to deliver a thing but not the same thing is not commodatum but a contract of loan.
Parties
bailor and bailee
Purpose of commodatum
The temporary use of the bailee of the thing loaned from the bailor
Form
As an informal contract, a contract of commodatum is usually given in a verbal manner.
Nature of commodatum
Essentially a contract
Hence, it must have the essential requisites of a contract.
It has the following contract classifications:
It is a real contract, hence, there must be delivery and not just mutual consent. A principal contract, hence, there need not be other contracts. A unilateral contract and not bilateral contract because after a thing is delivered to the bailee, the bailor has no other obligations. The obligation of the bailor only arises when the bailee incurred extraordinary expenses, or suffered damages because of the undisclosed hidden defects. It is nominate contract because it has a name.
Binding Nature and Perfection
An accepted promise to deliver a thing is binding upon the parties only; But the delivery of the object of the contract perfects the contract. (Art. 1934)
Essentially gratuitous
A contract of commodatum is essentially a gratuitous contract. (Art. 1933). Hence, by nature, this is common among friends but not in the commercial world.
If bailee pays for the thing loaned or used, the contract ceases to be a commodatum. (Art. 1935)
Bailee may or may not use the fruits
Generally, the fruits of a thing is not for the use of the bailee but a stipulation that he may use them is valid. (Art. 1940)
Ownership is retained by the bailor
and does not pass to the borrower. But the bailor need not be the owner. (Art. 1933)
Purely personal in character
GR: Rights and obligations are transmissible. But this is the exception – once a bailor dies, the contract of commodatum is generally extinguished; hence, the right to use the bailee ceases. An exception is when there is a stipulation that the commodatum be transmitted to the heirs. (Art. 1939)
2 Kinds of Commodatum
- Precarium – precarious means unstable. bailor can demand the return of the thing at will.
- Commodatum with a period or purpose – there is a period by which a bailee can enjoy the thing. Exceptions: (1) when the bailor has an urgent need. But urgency does not suspend the bailment. Bailor has to return to bailee. (2) act of ingratitude.
English