Definition

Purpose

Subject Matter

COMMODATUM
A contract of loan where the bailor
delivers to the bailee a non-consumable
thing so that the latter may use it for a
certain time and return the identical
thing.
Transmission of the enjoyment or use of
the thing to another for a certain time;
loan for use or temporary possession.
Non-Fungible Things

MUTUUM
A contract of loan where the lender
delivers to the borrower money or other
consumable or fungible thing thereof
upon the condition that the latter shall
pay the same amount of the same kind
and quality, with or without interest.
Loan for consumption of the subject
matter.

DEPOSIT
It is constituted from the moment a
person receives a thing belonging to
another, with the obligation of safely
keeping it and of returning the same.

LEASE
An agreement whereby the lessor binds
himself to grant temporarily the
enjoyment or use of the thing or to
render some work or service to the lessee
who
undertakes
to
pay
rent,
compensation or price therefor.
Renting out of the thing for
consideration.

Money or any other Fungible Thing

Safekeeping or custody of the thing

delivered; not for the use of the thing
deposited.
Fungible or Non-fungible Things

Consumable thing

Consumable or non-consumable thing

Non-consumable thing except when they

are merely to be exhibited or when they
are accessory to an industrial
establishment.

Movable or immovable property. If it is

extrajudicial, only movable things.

Both movable and immovable property

Movable property

Generally, non-consumable thing.

However, consumable thing may be the
subject of commodatum if the purpose of
the contract is not the consumption of
the object, but for its exhibition.

Non-Fungible Things. Fungible things

which are consumed by use cannot be
the subject matter of lease.

Movable or immovable property

Real and/or Personal Property

Real and/or Personal Property

Real and/or Personal Property
Nature

Consensual contract and therefore,

binding upon the parties but it is only
after delivery, will the contract of loan
arise.
Purely a Personal Contract

Unilateral Contract (because once the

subject matter has been delivered, it
creates obligations on the part of only
one of the parties, i.e. borrower)
Essentially gratuitous

Personal Property
Consensual contract and therefore,
binding upon the parties but it is only
after delivery, will the contract of simple
loan arise.
Real Contract (perfected upon
delivery of the thing)

the

Unilateral Contract (because once the

subject matter has been delivered, it
creates obligations on the part of only
one of the parties, i.e. borrower)
May be gratuitous or with a stipulation
or it may be onerous, that is with
stipulation to pay interest.

Consensual Contract (future deposit)

agreement between the parties is binding
and enforceable upon the parties.
Real Contract (perfected upon
delivery of the thing)

Consensual Contract

the

Unilateral Contract. However, when the

deposit is for compensation, the juridical
relation created becomes a bilateral
contract.

Bilateral Contract

May be Gratuitous.
Deposit is NOT gratuitous:
1.
When there is stipulation;
2.
Depositary is engaged in
business of storing goods;
3.
Property
saved
from
destruction
without
knowledge of the owner.

An Onerous contract since compensation

is to be paid by the lessee who acquires
the use of the thing, although rent may
subsequently be condoned or remitted

Personal Right. It is a Real Right in case

of judicial deposit.

Personal Right
Personal Right

Kinds

1.

2.

A personal right. It is a real right only by

exception as in the case of lease of real
estate recorded in the Registry of
Property which makes it binding upon
third persons, like a purchaser

Ordinary Commodatum
The bailor cannot just demand
the return of the thing at will
because there is a period
agreed upon which must be
respected.
Precarium
The bailor may demand the
thing loaned at will. Thus, the
bailee is bound to return the
thing upon the demand of the
bailor.
A. if neither the duration of
the contract nor the use to
which the thing loaned should
be
devoted,
has
been
stipulated or
B. if the use of the thing is
merely tolerated by the owner.

Simple loan

1.
-

As to Interest:
1.
Simple
Certain rate stipulated in
writing by the parties.
2.
Compound
Interest which is imposed
upon the accrued interest.
3.
Legal
Law directs to be paid in the
absence of any agreement.
a.
-

b.
-

Monetary Interest
Interest may be paid either as
compensation for the use of
the money.
Compensatory Interest
Imposed by law or by courts
as penalty or indemnity for
damages.

2.

Judicial
4.
There is a court order for
attachment or seizure of 5.
6.
property in litigation.
Extrajudicial
a.
Voluntary
- the delivery is made by
the will of the depositor
or by two or more
persons each of which
believes himself entitled
to the thing deposited;
free to choose his
depositary
b.
Necessary
- made in compliance
with the legal obligation,
or on the occasion of any
calamity, or by travelers
in hotels, and inns; lack
of free choice on the
depositor

Lease of things or property whether

movable or immovable
Lease of work
Lease of service

Parties

Giver; the party who delivers the

possession or custody of the
thing:

Bailor

Creditor/Obligee

Depositary

Lessor/Landlord

Recipient; the party who receives

the possession or custody of the
thing thus delivered:

Bailee

Debtor/Obligor

Depositor

Lessee/Tenant

Manner of Execution

Can be orally or in writing

For whose benefit?

It confers benefit to the recipient

(bailee).

Rights and Obligations

On the part of the BAILOR:

Generally, The bailor cannot just demand

Can be orally or in writing. In case of

interest, the same shall be made in
writing.
For the benefit of the debtor. Essential
cause for the transaction is the necessity
of the borrower.
On
the
part
CREDITOR/OBLIGEE:

of

the

Can be orally or in writing

The only benefit is that which accrues to

the depositor

Can be orally or in writing

For the benefit of both the lessor and the

lessee. For the lessor, with respect to the
rents while for the lessee, with respect to
the use of the thing.
On the part of the DEPOSITOR
On the part of the LESSOR:
1.
To pay expenses for preservation To deliver the thing which is the

the return of the thing at will because

there is a period agreed upon which must
be respected or after the accomplishment
of the use for which the commodatum
has been constituted.
However, the bailor may demand the
return its temporary use of the thing
loaned in the meantime before the
expiration of the term in case of urgent
need of the thing or in case of
precarium.
In the case of temporary use by the
bailor, the contract of commodatum is
suspended while the thing is in the
possession of the bailor.

The lender may not demand its return

before the lapse of the term agreed upon.

The bailor is naturally entitled to the

fruits of the thing.

The creditor receives the payment for

his loan

Common creditors enjoy no preference

in the distribution of the debtors
property.

The bailor retains the ownership of the

loaned.

The bailor need not be the owner of the

thing loaned.
In an ordinary commodatum, the bailor
may demand the immediate return of the
thing if the bailee commits any acts of
ingratitude specified in Article 765
(speaks of donee). Article 765 is
applicable because like donation,
commodatum is essentially gratuitous.
The bailee who commits any of the acts
of ingratitude makes himself unworthy
of the trust reposed upon him by the
bailor. Hence, the right given to the
bailor to demand the immediate return of
the thing.
The following constitutes act of
ingratitude:
If the baileee should commit some
offenses against the person, the
honor or the property of the bailor,
or his wife or children under his
parental authority;
If the bailee imputes to the bailor
any criminal offense, or any act
involving moral turpitude, even
though he should prove it, unless

The obligee transfers the ownership of

the thing to the obligor.
Creditor must be owner of the thing
loaned.

(contemplates
ordinary
and
object of the contract in such
extraordinary expenses)
conditions as to render it fit for the
a.
If the deposit is gratuitous,
use intended;
the depositor is obliged to To make on the same during the
reimburse the depositary for
lease all the necessary repairs in
expenses incurred for the
order to keep it suitable for the use
preservation of the thing
to which it has been devoted, unless
deposited;
there is a stipulation to the contrary;
b.
If the deposit is for the To maintain the lessee in the
valuable
consideration,
peaceful and adequate enjoyment of
expenses for preservation are
the lease for the entire duration of
borne by the depositary
the contract
unless there is a contrary
stipulation
The owner of the property reneted
2.
To pay the losses incurred by the receives compensation or price
depositary due to the character of either in money provisions, chattels, or
the thing deposited.
labor from the occupant thereof in return
General rule: the depositor shall for its use.
reimburse the depositary for any loss
arising from the character of the thing
deposited.
The lessor retains the ownership of the
Exceptions:
thing leased.
a.
At the time of the deposit, the
depositor was not aware of the Generally, the lessor must be the owner
dangerous character of the thing;
of the thing leased. However, the lessor
b.
When the depositor was not
need not be the owner of the thing leased
expected to know the dangerous
in the case of a sublessee wherein the
character of the thing;
c.
When the depositor notified the latter can sublet the thing to a third
person.
depositary of the same;
d.
The depositary was a aware of it
without advice from the depositor Failure of the lessor to fulfill any of these
obligations will render him liable for
damages
Depositor retains the ownership of the He cannot alter the form of the thing
leased in such a way as to impair the
thing loaned.
use to which the thing is devoted
under the terms of the lease;
Right to fix the rents;
Generally, the depositor must be the The lessor has not only the right to
terminate the lease upon expiration
owner of the thing deposited. But it may
of the term but also to increase the
belong to another person other than the
rent in case of renewal.
depositor.
Where the lessee fails to pay on time the
stipulated rents, the lessor has the
right to: rescind the contract, recover
the unpaid rents and eject the lessee
The lessor is not obliged to answer for a
mere act of trespass which a third
person may cause on the use of the
thing leased.

the crime or act has been committed

against the bailee himself, his wife
or children under his authority; and
If the bailee unduly refuses the
bailor support when the bailee is
legally or morally bound to give
support to the bailor.

On the part of the BAILEE:

The borrower must return the same thing
loaned.

Acquires the use of the thing loaned but

not its fruits unless there is a stipulation
to the contrary.
The bailee can neither lend nor lease the
object of the contract to a third person.
However, the members of the bailees
household may make use of the thing
loaned, unless there is a stipulation to the
contrary, or unless the nature of the thing
forbids such use.
The bailee cannot retain the thing loaned
on the ground that the bailor owes him
something. Even though it may be by
reason of expenses. However, the bailee
has a right of retention for damages

On the part of the DEBTOR/OBLIGOR:

The borrower need only pay the same
amount of the same kind and quality.
Ownership over the money, goods, or
personal property passes to the borrower.
Being the owner, the borrower can
dispose of the thing borrowed and his act
will not be considered misappropriation
thereof.

The lessor may judicially eject the lessee

for any of the following causes:
When the period agreed upon,
or that which is fixed for the
duration of lease under
Articles 1682 and 1687, has
expired;
Lack of payment of the price
stipulated;
Lack of payment of the price
stipulated;
Violation of any of the
conditions agreed upon in the
contract;
When the lessee devotes the
thing leased to any use or
service not stipulated which
causes
the
deterioration
thereof; or if he does not
observe the diligence of a
good father of the family
requirement as regards the
use thereof;
The ejectment of tenants of
agricultural lands is governed by
special laws.
On the part of the LESSEE:
To pay the price of the lease
according to the terms stipulated;
To use the thing leased as a diligent
father of a family, devoting it to the
use stipulated; and in the absence of
stipulation, to that which may be
inferred from the nature of the thing
leased, according to the custom of
the place;
To pay the expenses for the deed of
lease.

On the part of the DEPOSITARY:

1.
To keep the thing safely
2.
To return the thing
To whom? Depositor, his heirs,
and successors, or the person who
may have been designated in the
contract.
3.
Not to deposit the thing with a
third person unless authorized by
express stipulation
4.
To change the way of the deposit
if under the circumstances the
depositary
may
reasonably
presume that the depositor would
The lessee is obliged to notify the lessor
consent to the change if he knew
of the urgency of necessary repairs.
of the facts of the situation,
He may ask for the rescission of the lease
provided, the former notifies the
contract and indemnification for
depositor thereof and wait for his
damages or only the latter, allowing
decision, unless delay would cause
the contract to remain in force.
danger
To notify the lessor of every usurpation
5.
If the thing deposited should earn
or untoward act by any third person
interest:
and of the necessity or urgent
a.
To collect interest and the
repairs.
capital itself as it fall due;

mentioned in Article 1951.

However, claims for damages which the
bailee suffered by reason of hidden
effects or flaws of the thing loaned,
which he was not warned or advised by
the bailor. Moreover, his right is only to
retain the thing until he is finally
reimbursed. He has no right to sell the
thing to satisfy his claims.

6.

When there are two or more bailees to

whom a thing is loaned in the same
contract, they are all liable solidarily.
In an ordinary commodatum, the
possession of the bailee is more secure
for he has the right to retain the thing
loaned until the expiration of the period
agreed upon, or the accomplishment of
the use for which the commodatum has
been constituted.

To take steps to preserve its The lessee may suspend the payment of
value and rights with regard
the rent in case the lessor fails to
to it
make the necessary repairs or to
Not
to
commingle
things
maintain the lessee in peaceful and
deposited if so stipulated
adequate enjoyment of the property

Depositary can only

leased.
commingle
if
the The lessee shall be liable for the
articles are of the same
damages which, through his
kind and quality
negligence, may be suffered by the

If commingling is
proprietor.
allowed, each depositor If the lessor fails to make urgent repairs,
shall be entitled to each
the lessor, in order to avoid an
portion of the entire
imminent danger, may order the
mass as the amount
repairs at the lessors cost.
deposited by him bears The lessee shall have a direct action
to the whole.
against the intruder of the thing leased.
Not to make use of the thing
deposited unless authorized
In case of lease of rural lands, the
Exceptions:
a.
When the deposit of the outgoing lessee shall allow the incoming
thing requires its use, it must lessee or the lessor the use of the
premises and other means necessary for
be used only for that purpose
b.
When authorized by the the preparatory labor for the following
depositor. The authorization year; and reciprocally, the incoming
shall not be presumed and its lessee or the lessor is under obligation to
permit the outgoing lessee to do
existence must be proved.
To be able for loss through whatever may be necessary for the
gathering or harvesting and utilization of
fortuitous event
When the thing deposited is closed the fruits, all in accordance with the
and sealed:
custom of the place.
a.
To return the thing deposited

The privilege given to the

in the same condition
outgoing lessee to harvest the
b.
To pay for damages should
fruits evidently indicates that
the seal or lock be broken
existing
crops
at
the
through his fault, which is
termination of the lease
presumed unless proven
belong to him.
otherwise
c.
To keep the secret of the
deposit when the seal or lock
is broken with or without his
fault.
To pay interest in sums converted
to personal use if the deposit
consists of money from the day of
conversion

Fixed, savings, and

current deposits of
money in banks and
similar
institutions
shall be governed by
the
provisions
concerning
simple
b.

7.

8.
9.

10.

11.

loan.
To advise the true owner that the
deposit has been made should he
discover that the thing deposited
was stolen from the owner.

If the owner despite

such information does
not claim it within the
period of 1 month, the
depositary shall be
relieved
from
all
responsibility
by
returning the same to
the depositor.
*if the depositary has
reasonable
grounds
to
believe that the thing has not
been lawfully acquired by
the depositor, the former
may return the same.
The depositary may retain the
thing in pledge until full payment
of what may be due to him by
reason of the deposit.

Diligence of a Good Father of a Family

on the part of the depositary unless a
higher degree of diligence is stipulated
by the parties.

Diligence of a Good Father of a Family

on the part of the bailee.

Diligence of a Good Father of a Family

on the part of the lessee.

Diligence of a Good Father of a Family

on the part of the debtor.

Degree of Care required over the

Thing:
Liability

Purely personal in character, and

consequently, the death of either the
bailor or the bailee extinguishes the
contract.
The bailor, who, knowing the flaws of
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. (There is a
tort/quasi-delict for which the bailor is
liable. Hence, the bailor is made liable
for his bad faith. The bailee is given the
right of retention until he is paid
damages.)
If both are aware of the flaws/defects,
the bailee is deemed to have assumed the
risk.
The bailor cannot exempt himself from
the payment of expenses or damages by
abandoning the thing to the bailee.

Not purely personal in character.

Personal in character.
The liability of the depositary for the
care and delivery of the thing is
governed by the rules on obligations.
a.
He is liable if the loss occurs
through
his
fault
or
negligence but not when the
loss is due to a fortuitous
event;
b.
The loss of the thing while in
his possession, ordinarily
raises a presumption on his
part;
c.
The required degree of care is
greater if the deposit is for
compensation than when it is
gratuitous. This is similar to
the rule in agency and
common carriers. But even
when it is gratuitous, due care
must still be exercised.
The keepers of hotels or inns shall be
responsible as depositaries for the
deposit of the effects made by the
travelers provided:
a.
Notice was given to them or
to their employees of the
effects brought by the guest;
and
b.
The
guests
take
the
precautions which said hotel
keepers or their substitutes
advised relative for the care
and vigilance of their effects.

This also applies to the

passengers baggage which is
in his personal custody.

Liability extends to vehicles,

animals, and articles which
have been introduced or
placed in the annexes of the
hotel

Not essentially personal in character, the

rights and obligations therein are
generally transmissible to the heirs of the
lessor or the lessee

When the hotel-keeper LIABLE: when

the loss or injury is caused:
a.
By his servant or employees
as well as by strangers
provided, that the notice has
been given and proper
precautions taken; and
b.
By the act of a thief or robber
done without the use of arms
and irresistible force , for in
this case, the hotel keeper is
apparently negligent.
When hotel-keeper is NOT LIABLE:
when the loss or injury is caused by:
A. Force majeure, theft by a
stranger with the use of arms
or irresistible force;
B. The acts of guests. His
family, servants or visitors; or
C. Arises from the character of
the things brought into the
hotel
Under Art. 2003, the hotel keeper cannot
free himself from the responsibility by
posting notices to the effect that he is not
liable for the articles brought by the
guests. Any stipulation to such effect
shall be void.
To be liable for loss through fortuitous
event:
A. If stipulated;
B. If he uses the thing without
the depositors permission;
C. If he delays its return;
D. If he allows others to use it,
even though he himself may
have been authorized to use
the same;
E. If there is fraud or negligence
on his part.

Generally, the bailee is not liable for loss

or damage due to a fortuitous event.
However, the bailee is liable for the loss
of the thing, even if it should be through
a fortuitous event:
If he devotes the thing to any
purpose different from that for
which it has been loaned; (bad

The depositary is liable for loss if he

deposited the thing with a person who is
manifestly careless or unfit. The
depositary is responsible for the
negligence for his employees.
If a person having capacity to contract
accepts a deposit made by one who is
incapacitated, the former shall be subject

The

lessee

is

responsible

for

the

In case of loss or deterioration of the

thing:

faith)
If he keeps it longer than the period
stipulated
or
after
the
accomplishment of the use for
which the commodatum has been
constituted; (default, due to delay)
If the thing loaned has been
delivered with appraisal of its value
unless there is a stipulation
exempting the bailee
from
responsibility in case of a fortuitous
event; (law presumes that the
borrower shall be liable for
otherwise, they would not have
appraised the thing)
If he lends or leases the thing to a
third person, who is not a member
of his household; (abused the trust)
If being able to save either the thing
borrowed or his own thing, he chose
to save the latter. (ingratitude)

The loss of the subject matter is suffered

by the bailor since he is the owner.
The bailee does not answer for the
deterioration of the thing loaned due
only to the use thereof and without his
fault. Hence, the depreciation caused by
the reasonable and natural use of the
thing is borne by the bailor. However, if
the deterioration is caused by the
fault/negligence of the bailee, he is
responsible for it.
The bailee is obliged to pay for the
ordinary expenses for the use and
preservation of the thing loaned.
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 them, except when they are so
urgent that the reply to the notification
cannot be awaited without danger.
If the extraordinary expenses arise on the
occasion of the actual use of the thing by
the bailee, even though he acted without

The borrower suffers the loss even if

caused exclusively by a fortuitous event
and he is not, therefore, discharged from
his duty to pay.

to all the obligations of a depositary, and

may be compelled to return the thing by
the guardian, or administrator of the
person who made the deposit, or by the
latter himself if he should acquire
capacity.

deterioration or loss of the thing leased,

unless he proves that it took place
without his fault. This burden of proof on
the lessee is does not apply when the
destruction is due to earthquake, flood,
storm or other natural calamity.

If the deposit has been made by a

capacitated person with another who is
not, the depositor shall only have an
action to recover the thing deposited
while it is still in the possession of the
depositary, or to compel the latter to pay
him the amount by which he may be
enriched or benefited himself with the
thing or its price. However, if a third
person who acquired the thing acted in
bad faith, the depositor may bring an
action against him for its recovery.

The lessee is not liable for loss or

depreciation due to:

Lapse of time;

Ordinary wear and tear;

Inevitable cause or fortuitous

event.

The owner-depositor bears the loss as

long as the depositary is not at fault.
The depositor is liable for loss under the
following instances:
a.
He transfers the deposit with a
third person without authority,
although there is no negligence on
his part and the third person;
b.
He deposits the thing with a third
person who is manifestly careless
or unfit, although authorized, even
in the absence of negligence; or
c.
The thing is lost through the
negligence of his employees
whether the latter is manifestly
careless or not.

The lessee is liable for any deterioration

caused by the members of his household
and by guests and visitors.
If the lessee continues enjoying the thing
after the expiration of the contract, over
the lessors objection, the former shall be
subject to the responsibilities of a
possessor in bad faith and subjects
himself to the liabilities of such
possessor.
In lease of urban lands, the lessor is
obliged to make the necessary repairs on
the property leased. The kind of repairs
he is required to make is that provided in
the lease agreement, and in the absence
of a special stipulation, the same must be
determined in accordance with the
custom of the place. In case of doubt as
to who shall bear the cost of the repairs,
it is understood that it is chargeable
against the lessor.
If the lessee makes in good faith, useful
improvements which are suitable to the
use for which the lease is intended,
without altering the form or substance of
the property leased, the lessor upon the
termination of the lease shall pay the
lessee one-half of the value of the
improvements at that time. Should the
lessor refuse to to reimburse said
amount, the lessee may remove the
improvements, even though the principal
thing may suffer damage thereby. He

Improvements on the Thing:

fault, they shall be borne equally by both

the bailor and the bailee, unless there is
stipulation to the contrary.
o
Extraordinary expenses for
the preservation of the thing
loaned shall be borne by the
bailor since it is he who is
profited by the said expenses.
As a rule, before the bailee
incurs such expenses, notice
notice is required because it is
possible that the bailor may
not want to incur the
extraordinary expenses at all.
He should be given discretion
as to what must be done with
his property. An exception lies
when they are so urgent.
o
Extraordinary
expenses
arising from actual use of
the thing loaned- such
expenses (caused by fortuitous
event) arising on the occasion
of the actual use of the thing
loaned shall be borne by the
bailor and the bailee alike on a
50-50 basis on the basis of
equitable solution wherein the
bailee pays one-half because
of the benefit derived form the
use of the thing loaned to him
and the bailor pays for the
other half because he is the
owner of the and the thing will
be returned to him. The
parties, however, may, by
stipulation, provide for a
different apportionment of
such expenses, or that they
shall be borne by the bailee or
bailor only.
If, for the purpose of making use of the
thing, the bailee incurs expenses other
than those referred to in Article 1941
(ordinary expenses) and Article 1949
extraordinary expenses), he is not
entitled to reimbursement.
The bailee may seek the following

shall not, however cause any more

impairment upon the property leased
than is necessary.
With regard to ornamental expenses, the
lessee shall not be entitled to any
reimbursement, but he may remove the
ornamental objects, provided no damage
is caused to the principal thing, and the
lessor does not choose to retain them by
paying their value at the time the lease is
extinguished.
The lessee is entitled to the reduction of
the rent if the following requisites are
present:

The land leased is rural;

More than one-half of the

fruits have been lost;

The loss occurred through

extraordinary and unforeseen
fortuitous event; and

There
is
no
specific
stipulation that the lessee is
nevertheless not entitled to
reduction.
The lessee is NOT entitled to reduction
of rent in rural lands in the following
cases:

On account of the sterility of

the land leased;

By reason of the loss of the

fruits due to ordinary
fortuitous events, regardless
of the extent of the loss;

By reason of the loss of less

than one-half of the fruits
even though extraordinary
and unforeseen events;

By reason of the loss of the

fruits through extraordinary
but foreseen events regardless
of the extent of the loss;

By reason of the loss of more

than one-half of the fruits
through extraordinary and
unforeseen events, where
there is a specific stipulation
to the contrary; and

remedies:
Rescission
Specific Performance
Damages

Where the loss of the fruits

occurred after they have
already
been
gathered,
regardless of the extent of the
loss.

The lessor may seek the following

remedies:
Unlawful Detainer
Specific Performance
Damages
Rescission
Depositary may be criminally liable for
the crime of estafa if he appropriates or
diverts the thing deposited to his own use
without the consent of the depositor or
civilly liable for damages against the
depositor.

The creditor may seek the following

remedies:
Rescission
Specific Performance
Damages

Remedies in case of breach of

contract/inability to perform the
contract:
Effect of the Transfer of the Thing to
the Recipient

Ownership of the thing loaned is retained

by the lender.

The ownership over the

transferred to the borrower.

is

The ownership over the thing is not

transferred to the depositary because the
purpose of the contract is only for
safekeeping.

Demand to Return the thing by the

Owner

Generally, The bailor cannot just demand

the return of the thing at will because
there is a period agreed upon which must
be respected.
However, the bailor may demand the
return of the thing loaned before the
expiration of the term in case of urgent
need or in case of precarium.
Generally definite.

The lender may not demand its return

before the lapse of the term agreed upon.

Depositor can demand the return of the

subject matter at will.

Generally definite especially with regard

to the payment of the interest.

Generally definite, there being an

obligation on the part of the depositary to
return the thing.

Period

thing

The owner or the lessor of the property

does not lose his ownership. He simply
loses his control over the property rented
during the period of the contract. Only
the enjoyment or the use of the thing is
being transferred.
The lessor cannot demand the thing
leased before the expiration of the
contract.

May be definite or indefinite but in no

case can it exceed more than 99 years.
May be CONVENTIONAL (fixed by the
agreement of the parties) or LEGAL
(fixed by law in accordance with Article
1682 in case of rural leases and Article
1687 in case of urban leases).
The lease of a piece of rural land, when
its duration has not been fixed, is
understood to have been made for all the
time necessary for the gathering of the
fruits which the whole estate leased may
yield one year, or which it may yield
once, although two or more years may
have to elapse for the purpose.
In case of lease of urban lands, if the
period for the lease has not been fixed:
it is understood to be from
year to year, if the rent

agreed upon is annual;

from month to month, if the
it is monthly;
from week to week, if the
rent is weekly;
and from day to day, if the
rent is to be paid daily.
However, even though a monthly
rent is paid, and no period for the
lease has been set, the courts may
fix a longer term for the lease after
the lessee has occupied the
premises for over one year. If the
rent is weekly, the courts may
likewise determine a longer period
after the lessee has been in
possession for over six months. In
case of daily rent, the courts may
also fix a longer period after the
lessee has stayed in the place for
over one month.

Extinguishment of the Contract

Upon the return of the identical thing

loaned to the bailor when the time has
expired or the purpose has been served.

The consumption of the thing loaned and

the payment of the same amount of the
same kind and quality, with or without
interest (as to the interest, depending on
the stipulation between the parties).

A deposit is extinguished:
a.
upon the loss or destruction
of the thing deposited;
b.
in case of gratuitous deposit,
upon the death of either the
depositor or the depositary.
A deposit for compensation is not
extinguished by the death of either party
because, unlike a gratuitous deposit, an
onerous deposit is not personal in nature.
Upon the demand for the return of the
identical thing deposited to the
depositary even though a specified
period or time for such return may have
been fixed.
Exception:
a.
when the thing is judicially
attached
while
in
the
depositarys possession.
b.
Should he have been notified
of the opposition of a third

When the lessor of a house, or part

thereof, used as a dwelling for a family,
or when the lessor of a store, or
industrial establishment, also leases the
furniture, the lease of the latter shall be
deemed to be for the duration of the ease
of the premises.
If the thing leased is totally destroyed by
a fortuitous event, the lease is
extinguished. If the destruction is partial,
the lessee may choose between a
proportional reduction of the rent and a
rescission of the lease.
The lessee may terminate the lease at
once by notice to the lessor in case the
dwelling place or any other building is
unfit for human habitation and is
dangerous to life or health. The right is
given to the lessee even if the at the time
the contract was perfected, the lessee
knew of the dangerous condition or
waived the right to rescind the lease on
account of said condition.
At the expiration of the lease, the lessee
must return the property to the lessor in
the same condition as he received it.

person to the return or

removal
of
the
thing
deposited in such instance,
the
depositary
must
immediately
inform
the
depositor of the of the
attachment or opposition
If the deposit is gratuitous, the
depositary may return the thing
deposited notwithstanding that a period
has been fixed for the deposit if
justifiable reasons exists for its return. If
the depositor refuses to receive it, the
depositary may secure its consignation
form the court.
If the deposit is for a valuable
consideration, period must be followed
even if
the
depositary suffers
inconvenience as a consequence.
What to return:
A. product, accessories, and
accessions of the thing
deposited;
B. if by force majeure or
government
order,
the
depositary loses the thing and
receives the money or another
thing in its place, he shall
deliver the sum or other thing
to the depositor
Where to return:
a.
place agreed upon by the
parties; or
b.
at the place where the thing
deposited might be even if it
should not be the same place
where the deposit was made
provided there was no malice
on the part of depositary.
Extinguishment of Voluntary Deposit:
-the same as the causes for
extinguishment of obligations in Art.
1231 of the New Civil Code
a. novation
b. compensation

If the lease was made for a determinate

time, it ceases upon the day fixed,
without the need of a demand or notice
to vacate and return the possession
The continuous possession of the leased
premises after the end or expiration of
the time fixed in the contract, with the
acquiescence of the lessor constitutes an
implied renewal of the lease, not for the
period of the original contract but for the
time established in Articles 1682 and
1687, so that if rentals were stipulated to
be paid monthly, the new lease is
deemed to have been renewed form
month to month and may be terminated
each month upon demand.
Instances when implied renewal is NOT
applicable:
Stipulation
against
implied
renewal;
Invalidity of original lease;
Acceptance of rentals beyond the
original term;
Acceptance of rentals less than
amounts stipulated;
Non-payment of rentals.
Causes or Modes by which the
agricultural leasehold relation may be
extinguished:
a.
Abandonment
of
the
landholding
without
the
knowledge of the lessor;
b.
Voluntary surrender of the
landholding by the lessee,
written notice of which shall
be served three months in
advance;
c.
Absence of a successor or
heir in the event of death or
permanent incapacity;
d.
Termination of the leasehold
by the lessee;
e.
Acquisition of the land in
question by the lessee;
f.
Mutual consent of the parties;
g.
Judicial ejectment of the
lessee.

Statute of Frauds

May be governed by the Statute of

Frauds

Not governed by the Statute of Frauds.

c. merger
d. remission
e. payment
f. loss
g. prescription
h. fulfillment of the resolutory condition
i. annulment
j. rescission
Not governed by the Statute of Frauds.

Usury Law

Not governed by the Usury Law

Governed by the Usury Law

Not governed by the Usury Law

Governed by the Statute of Frauds where

the thing leased is real property for more
than one year.
Not governed by the Usury Law