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CHAPTER 1 DEPOSIT IN GENERAL AND ITS DIFFERENT KINDS No.

No. Deposit is a real contract and requires delivery of the subject matter in order to be perfected.
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to Is there a contract at this point?
another, with the obligation of safely keeping it and of returning the same. If the safekeeping of Yes, there is a contract. It is a contract of future deposit. It is perfected by mere consent, and is
the thing delivered is not the principal purpose of the contract, there is no deposit but some other binding upon the parties.
contract. Art. 1964. A deposit may be constituted judicially or extrajudicially.
What is the contract of deposit? Kinds of Deposit
It is the receipt by a person of a thing belonging to another with the obligation of safely keeping it 1. Judicial takes place when an attachment or seizure of property in litigation is ordered
and of returning it. 2. Extra-judicial
It is essential that the depositary is not the owner of the property deposited. (a) Voluntary delivery is made by the will of the depositor or by two or more persons each of
What are the characteristics of the contract of deposit? whom believes himself entitled to the thing deposited; or
1. Real contract Deposit is perfected by the delivery of the subject matter (b) Necessary made in compliance with a legal obligation, or on the occasion of any calamity, or
2. Unilateral if the deposit is gratuitous because only the depositary has an obligation; by travelers in hotels and inns, or by travelers with common carriers.
Bilateral if the deposit is for compensation gives rise to obligations on the part of both the Art. 1965. A deposit is a gratuitous contract except when there is an agreement to the contrary or
depositary and the depositor. unless the depositary is engaged in the business of storing goods.
What is the principal purpose of the contract of deposit? GENERAL RULE: Deposit is gratuitous.
The principal purpose is the safekeeping of the thing delivered. If safekeeping is merely an EXCEPTIONS:
accessory or secondary obligation, it is not a deposit, but another contract, such as 1. Contrary stipulation
commodatum, lease, or agency. 2. Depositary is engaged in business of storing goods ex. A warehouseman
What is the subject matter in deposit? 3. Where property is saved from destruction without knowledge of the owner In this case, the
Only movables can be the subject matter of deposit. (Extrajudicial) owner is bound to pay the person who saved his property just compensation
Art. 1966. Only movable things may be the object of deposit.
This applies only to an extra-judicial deposit, whether voluntary or necessary.
Reason: The main purpose of deposit is safekeeping. Since real property may not disappear or
may not be lost, there is no point in entrusting them to someone for safekeeping.

A gives the keys to his house to B for safekeeping. Is this a deposit of the house? No,
since the house is an immovable which cannot be the proper subject matter of deposit.
The relationship is an agency.
But if it is a judicial deposit, even immovable property can be a valid subject matter. The reason
is that the purpose of a judicial deposit is different. It is to protect the rights of the parties to the
suit.
Art. 1963. An agreement to constitute a deposit is binding, but the deposit itself is not perfected Art. 1967. An extra-judicial deposit is either voluntary or necessary.
until the delivery of the thing. GENERAL RULE: Deposit is voluntary.
A: I will deposit my car in your garage at 8 a.m. tomorrow. EXCEPTIONS:
B: Okay. Deposit is necessary in the following cases: (See discussion under necessary deposit)
Is there a contract of deposit at this point? 1. if made in compliance with a legal obligation;
2. if it takes place on the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, compelled to return the thing by the guardian, or administrator or the person who made the
or other similar events; deposit or by the latter himself if he should acquire capacity.
3. Deposit of effects made by travelers in hotels or inns X, who is insane, deposits her basketball with Boy-B. Can Boy-B refuse to return the
4. Deposit of goods made by travelers or passengers with common carriers basketball later on, on the ground that the deposit was not valid because of the incapacity
of X?
CHAPTER 2 VOLUNTARY DEPOSIT No. If the depositary is capacitated, he is subject to all the obligations of a depositary whether or
Section 1 General Provisions not the depositor is capacitated. Hence, he must return the property to the legal representative of
Art. 1968. A voluntary deposit is that wherein the delivery is made by the will of the depositor. A X or to X herself if she should recover sanity. Persons who are capacitated cannot allege the
deposit may also be made by two or more persons each of whom believes himself entitled to the incapacity of those with whom they contract.
thing deposited with a third person, who shall deliver it in a proper case to the one to whom it JPSP example: Five teenagers aged 13 to 15 check into a hotel to go on a drinking binge.
belongs. They deposit some jewelry at the front desk for safekeeping.
What is voluntary deposit? Is there a valid deposit?
Deposit wherein delivery is made by the will of the depositor. Yes, but it may be annulled for want of capacity of the teenagers. Its actually a voidable contract,
What is the distinction between voluntary and necessary deposit? which is valid until annulled.
The main difference is that in voluntary deposit, the depositor is free to choose the The teenagers, at the end of their drinking binge, go to the front desk and ask for the
depositary. In necessary deposit, the depositor lacks the freedom to choose the depositary. return of the jewelry. What should the hotel do?
Does the depositor have to be the owner of the thing deposited? The hotel should return the jewelry to their legal representative. The hotel should not return to
Generally, the depositor should be the owner of the thing, but it is not an essential element of the teenagers because if subsequently, the teenagers lose the jewelry, the hotel could be made
deposit. The depositary cannot even require the depositor to prove that he is the owner of liable for the loss. But definitely, the hotel cannot retain the jewelry, or else, its personnel would
the thing. be liable for estafa.
When there are several depositors: Art. 1971. If the deposit has been made by a capacitated person with another who is not, the
If there are two or more persons each claiming the rightful ownership of a thing, pending the depositor shall only have an action to recover the thing deposited while it is still in the possession
resolution of their conflicting claims, they may deposit the thing with a third person. The third of the depositary, or to compel the latter to pay him the amount by which he may be enriched or
person assumes the obligation to deliver to the person to whom it belongs. The depositary can benefited himself with the thing or its price. However, if a third person who acquired the thing
file an action for interpleader to compel the depositors to settle their conflicting claims. acted in bad faith, the depositor may bring an action against him for its recovery.
This is the rule that applies if you deposit with a minor or other incapacitated person.
Ex: A and B both claim to own a dog. While they are trying to settle the ownership of the dog, If the depositary is incapacitated, while the depositor is capacitated, the incapacitated
they can deposit the dog with C. C can file an action for interpleader to compel A and B to does not incur the obligations of a depositary.
settle the ownership of the dog. Cs obligation is to eventually deliver the dog to whomever is The incapacitated is liable only:
the rightful owner. (1) to return the thing deposited if it is still in his possession; or
Art. 1969. A contract of deposit may be entered into orally or in writing. (2) to pay the depositor the amount by which he may have benefited through the thing or its price
There are no formal requirements for the validity of a contract of deposit. The only thing if the incapacitated is no longer in possession
necessary is delivery of the thing. If the thing was transferred to a third person who was in bad faith, the depositor can recover the
Art. 1970. If a person having capacity to contract accepts a deposit made by one who is thing from him. If the transferee was in good faith, the depositor cannot recover from him. The
incapacitated, the former shall be subject to all the obligations of the depositary, and may be depositor can only go after the incapacitated for the value of the thing.
Boy-B deposits his watch with X, who looks like shes 22 but is actually 13. Can Boy-B recover Duty of Returning the Thing
the watch?
If the watch is still in the possession of X, Boy-B can recover the watch itself from X. The thing deposited must be returned to the depositor when he claims it, even though a specified
If X has already sold the watch to Hon, a buyer in good faith and for value, Boy-B cannot recover term or time for such may have been stipulated in the contract and such time has not yet expired.
the watch. He can only compel X to return the price that Hon paid for the watch (the benefit that
X received from the sale of the watch). So if the watch is worth P10,000 but X sold it to Hon for Art. 1973. Unless there is a stipulation to the contrary, the depositary cannot deposit the thing
P5,000, Boy-B can only recover P5,000 from X. with a third person. If deposit with a third person is allowed, the depositary is liable for the loss if
But if Hon was a buyer in bad faith, Boy-B can recover the watch itself from Hon. he deposited the thing with a person who is manifestly careless or unfit. The depositary is
Section 2 Obligations of the Depositary responsible for the negligence of his employees.
Art. 1972. The depositary is obliged to keep the thing safely and to return it, when required, to the
depositor or to his heirs and successors, or to the person who may have been designated in the GENERAL RULE: The depositary cannot deposit the thing with a third person.
contract. His responsibility with regard to the safekeeping and loss of the thing shall be governed Reason for the rule: Deposit is founded on trust and confidence. It is presumed that in choosing
by the provisions of Title I of this Book. the depositary, the depositor took into account his personal qualifications.
If the deposit is gratuitous, this fact shall be taken into account in determining the degree of care EXCEPTION: The parties may stipulate that the depositary may deposit the thing with a third
that the depositary must observe. person. But there is a limitation the depositary cannot choose a third person who is manifestly
Primary obligations of the depositary: careless or unfit.
1. Safekeeping What happens if the depositary deposits the thing with a third person, and it is lost?
2. Return of the thing, but only when required 1. If there is no stipulation allowing him to deposit with a third person, he is liable for the loss,
Duty of Safekeeping whether it was through his or the third persons fault or through fortuitous event.
What is the degree of care required of the depositary? 2. Generally, if the thing is deposited with a third person with permission of the depositor, and the
As a general rule, the depositary must exercise the same diligence as he would exercise over his thing is lost through fortuitous event, the depositary is not liable for the loss.
OWN property. He should exercise the diligence of a good father of a family. The reasons for However, if he deposits it with a person who is manifestly careless or unfit, even if there is no
this rule are: negligence or even if the loss was through fortuitous event, the depositary is liable for the loss.
3. If the thing is lost through the negligence of the depositarys employees, the depositary is liable
1. Because the contract of deposit involves the depositors confidence in the depositarys good for the loss (The employee is the agent of the depositary; principal bears the loss resulting from
faith and trustworthiness; and the negligence of his agent). Here, it is not necessary that the employees be manifestly careless
2. Because it is presumed that the depositor, in choosing the depositary, took into account the or unfit, but it is necessary that the loss be through negligence.
diligence which the depositary normally exercises with respect to his own property. Art. 1974. The depositary may change the way of the deposit if under the circumstances he may
reasonable presume that the depositor would consent to the change if he knew of the facts of the
BUT, if under the circumstances, a greater degree of care towards the thing deposited is situation. However, before the depositary may make such change, he shall notify the depositor
necessary, the depositary must exercise such extraordinary care. If, in this case, the thing thereof and wait for his decision, unless delay would cause danger.
deposited is lost and the depositary only exercised the same diligence as he would towards his
own property, he is liable to the depositor for the loss. GENERAL RULE: The depositary should not change the way or manner of the deposit as
The loss of the thing while it is in the possession of the depositary raises a presumption of fault agreed upon.
on his part.
EXCEPTION: The depositary may change it if there are circumstances indicating that the It is actually a special kind of deposit. It is a contractual relation between the parties. The
depositor would consent to the change. However, the depositary should first notify and wait for liability rules are governed by the Civil Code provisions on obligations and contracts, and not on
the decision of the depositor. donations.
If delay would cause danger, the depositary need not wait for the consent of the depositor. Is a stipulation which exempts the bank from liability for the things contained in the safety
Notice to the depositor of the change is sufficient. deposit box valid?
The stipulation is void. Even if as a rule, the Bank may limit its liability to some extent by
JPSP example: agreement or stipulation, the agreement or stipulation must not be contrary to law and public
A deposited jewelry with B, a resident of Lamitan. B did not feel so secure with the jewelry in policy. The law on deposit provides that the depositary is liable for loss due to fraud, negligence,
Lamitan, so he deposited the jewelry with a bank in Davao. A sued B for damages for depositing delay, or contravention of the tenor of the agreement. Any contrary stipulation would be void.
the jewelry with a third person without As authorization. What is Bs defense? Art. 1976. Unless there is a stipulation to the contrary, the depositary may commingle grain or
B can invoke Article 1974. Under the circumstances, B can infer that A would consent to the other articles of the same kind and quality, in which case the various depositors shall own or have
change of the manner of deposit. a proportionate interest in the mass.
Art. 1975. The depositary holding certificates, bonds, securities or instruments which earn interest GENERAL RULE: The depositary may commingle grain or other articles of the same kind
shall be bound to collect the latter when it becomes due, and to take such steps as may be and quality.
necessary in order that the securities may preserve their value and the rights corresponding to EXCEPTION: If there is a contrary stipulation
them according to law. De Leon example:
The above provision shall not apply to contracts for the rent of safety deposit boxes. A, depositary, received the following:
What are the obligations of the depositary if the thing earns interest? from B: 30 cavans of rice from C: 20 cavans of rice from D: 10 cavans of rice
1. Collect the interest, as well as the capital, as it becomes due; and The rice was of the same kind and quality.
2. Take such steps as may be necessary to preserve its value and the rights corresponding to it. Can A put all of the rice together?
Ex: Depositary of a negotiable instrument should give notice of dishonor to all parties secondarily Yes, since there is no stipulation forbidding it. B will own 30/60 or of the whole pile; C will
liable, or else these parties would be discharged. own 20/60 or 1/3; and D will own 10/60 or 1/6.
JPSP example: But if the articles deposited by different depositors are not of the same kind and quality, or
A deposits to B a promissory note payable to A or order. Can B collect accrued interests on the if there is a stipulation forbidding it, the depositary must keep them separate or at least
note? identifiable, since he must return to each depositor the very same thing deposited.
No. The instrument is an order instrument. B cannot collect the interest due on it because he is Art. 1977. The depositary cannot make use of the thing deposited without the express permission
neither an indorsee nor an authorized agent of A. of the depositor.
Therefore, Art. 1975 really applies only to BEARER instruments. If it is an order instrument, Otherwise, he shall be liable for damages.
there is a need for an indorsement or at least, a special power of attorney, to enable the However, when the preservation of the things deposited requires its use, it must be used but only
depositary to collect the interest and capital when due. for that purpose.
Safety Deposit Boxes
The contract for rent of safety deposit boxes is not an ordinary contract of lease of things because GENERAL RULE: The depositary CANNOT make use of the thing deposited.
the full and absolute possession and control of the safety deposit box is not given to the party EXCEPTIONS:
renting. 1. When the depositor has expressly given his permission. Permission cannot be implied, and it
is not presumed.
2. When the preservation of the thing requires its use, it may be used but only for that purpose.
4. If he allows others to use it also a breach
Ex: When you deposit a car with someone for a week, the depositary should start the car Take note that the rule is different in commodatum. In commodatum, the members of the
everyday, in order to prevent the battery from getting discharged. borrowers household are allowed to use the thing without liability on the part of the borrower.
Reason for the rule: The principal purpose of deposit is safekeeping, not use of the thing. If the If the thing is lost in the custody of the depositary, the presumption is that it was lost through his
purpose is use, it is not deposit anymore. fault. He has the burden of proving that the loss was not due to his own fault.
If the depositary uses the thing deposited without permission of the depositor, he shall be liable
for damages. In addition, if the thing is lost even through fortuitous event, the depositary shall Art. 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be
bear the loss. governed by the provisions concerning simple loan.
Nature of Bank Deposits
Art. 1978. When the depositary has permission to use the thing deposited, the contract loses the Bank deposits are really loans to a bank because the bank has the obligation to pay the depositor
concept of a deposit and becomes a loan or commodatum, except where safekeeping is still the the amount deposited, but not the exact same money that was deposited (as in deposit).
principal purpose of the contract. Since they are loans, they are governed by the provisions concerning mutuum or simple loan, not
deposits.
The permission shall not be presumed, and its existence must be proved. Relationship is Debtor-Creditor
What happens if the depositor gives the depositary permission to use the thing? The relationship between the bank and its depositors is thus that of debtor (bank) and creditor
It depends. (depositor). Hence:
If the principal purpose is still safekeeping, it retains its character as deposit. However, if the thing 1. If the bank fails to pay its obligation to the depositor, it is not a breach of trust arising from the
deposited is money or other consumable thing and the principal purpose is still safekeeping, it is depositarys failure to return the subject matter of the deposit. Since there is no breach of trust, it
an irregular deposit. will not constitute estafa through misappropriation.
If the purpose has become use or consumption of the thing: 2. A bank can generally compensate or set off the deposit in its hands for the payment of any
1. It becomes commodatum if the thing deposited is non-consumable. indebtedness to it on the part of the depositor, provided that the legal requisites of compensation
2. It becomes simple loan or mutuum if the thing deposited is money or other consumable thing. are present. In a true deposit, compensation is not allowed.
Bank deposits are in the nature of an irregular deposit but they are really loans (See Article Art. 1981. When the thing deposited is delivered closed and sealed, the depositary must return it
1980). in the same condition, and he shall be liable for damages should the seal or lock be broken
Art. 1979. The depositary is liable for the loss of the thing through a fortuitous event: through his fault.
(1) If it is so stipulated; Fault on the part of the depositary is presumed, unless there is proof to the contrary.
(2) If he uses the thing without the depositors permission; As regards the value of the thing deposited, the statement of the depositor shall be accepted,
(3) If he delays its return; when the forcible opening is imputable to the depositary, should there be no proof to the contrary.
(4) If he allows others to use it, even though he himself may have been authorized to use the However, the courts may pass upon the credibility of the depositor with respect to the value
same. claimed by him.
GENERAL RULE: The depositary is not liable for loss of the thing through fortuitous event. When the seal or lock is broken, with or without the depositarys fault, he shall keep the secret of
EXCEPTIONS: the deposit.
1. Stipulation
2. If he uses it without the depositors permission this is breach/ contravention of the tenor of Art. 1982. When it becomes necessary to open a locked box or receptacle, the depositary is
the obligation presumed authorized to do so, if the key has been delivered to him; or when the instructions of
3. Delay in return this is default the depositor as regards the deposit cannot be executed without opening the box or receptacle.
A delivers a locked baul to B for safekeeping. What are Bs obligations? Art. 1984. The depositary cannot demand that the depositor prove his ownership of the thing
deposited.
1. B must return the baul in the same condition it must be locked when returned. Nevertheless, should he discover that the thing has been stolen and who its true owner is, he
2. If the lock of the baul is broken through Bs fault, he shall be liable to A for damages. B is must advise the latter of the deposit.
presumed negligent until proved otherwise. If the owner, in spite of such information, does not claim it within the period of one month, the
How is the value of the thing determined in case the baul is opened? Ultimately, the court will depositary shall be relieved of all responsibility by returning the thing deposited to the depositor.
decide the value of damages that B should pay, since the parties will always get into a dispute If the depositary has reasonable grounds to believe that the thing has not been lawfully acquired
over the value of the thing (i.e. A would inflate the price, B would undervalue it, etc.) by the depositor, the former may return the same.
3. If the lock of the baul is broken, with or without Bs fault, B must keep the secret of the deposit. The depositary cannot demand that the depositor prove his ownership of the thing deposited.
If the contents of the baul turn out to be illegal shabu, a dead body, a bloody bolo the This is because it is not essential that the depositor be the owner of the thing deposited.
depositary should immediately call the cops. He may still be held liable for the breach of his When a third person appears to be the owner of the thing:
obligation as depositary but at least he knows that he has done a greater good to society by 1. If the depositary finds out that the thing was stolen AND he knows the real owner, his
reporting the dastardly deed to the authorities. The court just might exonerate him of liability for obligation is to INFORM the real owner of the deposit (it is not to return the thing to the real owner
the breach because of his fulfillment of a civic duty. Besides, I think that if he keeps these things yet).
a secret, he can even be liable as an accessory to the crime for helping conceal it. The real owner must claim the thing within one month. If he claims it within a month, the
When may B open the baul? depositary should give it to the real owner. If the real owner fails to make a claim within a month,
1. When there is presumed authority authority is presumed if the key has been delivered to him; the depositarys obligation will be extinguished by returning the thing to the depositor.
or 2. If the depositary has reasonable grounds to believe that the thing has not been lawfully
2. When there is necessity for opening the box in order to execute the instructions of the acquired by the depositor, the depositary may return the thing to the depositor (not to the real
depositor as regards the deposit owner, since in this case, the real owner is not known).
JPSP example: But according to JPSP, if the depositary discovers that the thing was stolen and
Shakadivas delivers a locked box to Tuks for deposit. Shak leaves right away without giving Tuks someone else is claiming to be the real owner, the more prudent thing to do would be
an opportunity to ask him why there is a ticking sound coming from inside the box. Tuks is afraid to file an action for interpleader and consign the thing in court. It is not safe to follow
that it might be a bomb. Can he open it without liability? 1984 because if the claim of the alleged real owner turns out to be false, the depositary
Tuks cannot. The only instances when a depositary can open the box without incurring liability is will be liable for giving the thing to someone else or for refusing to return it to the
if there is presumed authority or if there is necessity for opening it in order to execute the depositor (estafa).
instructions of the depositor. These two instances are not present in the situation of Tuks. He Art. 1985. When there are two or more depositors, if they are not solidary, and the thing admits of
should just hope and pray that its just a watch in there. division, each one cannot demand more than his share.
Art. 1983. The thing deposited shall be returned with all its products, accessories, and When there is solidarity or the thing does not admit of division, the provisions of Articles 1212 and
accessions. 1214 shall govern. However, if there is a stipulation that the thing should be returned to one of
Should the deposit consist of money, the provisions relative to agents in article 1896 shall be the depositors, the depositor shall return it only to the person designated.
applied to the depositary. When there are two or more depositors, the default rule is like that in joint obligations
The obligation of the depositary is to return the thing when the depositor demands, along with all each depositor cannot demand more than his share from the depositary. This rule applies if the
its products, accessories, and accessions. The depositor is entitled to the products, accessories, thing is divisible and there is no solidarity among the depositors.
and accessions of the thing because he is the owner of the thing. If there is solidarity or if the thing is indivisible, the rule on solidary obligations is applicable. Each
one of the depositors may do whatever may be useful to the others but not anything which may
be prejudicial. The depositary can return the thing deposited to any of the depositors unless a agreed upon. This is because the period in this case is for the benefit of both the depositary and
demand for its return has been made by one of them, in which case, delivery should be made to the depositor.
him who made the demand. EXCEPTION TO THE GENERAL RULE: The depositary should not return the thing to the
The parties may also stipulate that the thing be returned to a specific depositor. In this case, the depositor if there is a court order enjoining him from returning the thing to the depositor (when
depositary can only return to the depositor stipulated, even if he does not make a demand. there is attachment).
Art. 1986. If the depositor should lose his capacity to contract after having made the deposit, the The law says that the depositary can also refuse to return the thing if there is an opposition to its
thing cannot be returned except to the persons who may have the administration of his property return by a third person (here, there is no court order). However, as discussed earlier, the more
and rights. prudent thing to do in this case is not to refuse to return the thing to the depositor but to file an
The thing deposited must be returned only to a person who is capacitated. If the depositor should action for interpleader because there is a danger that the depositary would be liable for damages
subsequently lose capacity, the depositary should return it to his representative. if the claim of the third person turns out to be false.
(See discussion under Article 1970 on deposit by teenagers)
Art. 1989. Unless the deposit if for a valuable consideration, the depositary who may have
Art. 1987. If at the time the deposit was made a place was designated for the return of the thing, justifiable reasons for not keeping the thing deposited may, even before the time designated,
the depositary must take the thing deposited to such place; but the expenses for transportation return it to the depositor; and if the latter should refuse to receive it, the depositary may secure its
shall be borne by the depositor. consignation from the court.
If no place has been designated for the return, it shall be made where the thing deposited may As a general rule, the depositary should wait for either the period of the deposit to lapse or for the
be, even if it should not be the same place where the deposit was made, provided that there was depositor to demand the return of the thing before he can return the thing deposited.
no malice on the part of the depositary. But, if the following requisites are present, he may return the thing to the depositor even
Where to return the thing deposited: before the period of the deposit has lapsed or before it is demanded:
1. First, follow the stipulation of the parties. The expenses for transportation shall be borne by the 1. The deposit must be gratuitous; and 2. There must be a justifiable reason.
depositor since the deposit was constituted for his benefit. If the depositary refuses to accept, the depositor can consign the thing in court.
2. If there is no stipulation, follow 1987 the thing should be returned at the place where the thing But if the deposit is for compensation, the depositary cannot return the thing until the expiration of
deposited may be, even if it was not the same place where the deposit was constituted. the period or until it is demanded by the depositor.
However, there must be no malice on the part of the depositary. For example, the depositary, not Art. 1990. If the depositary by force majeure or government order loses the thing and receives
wanting to return the thing anymore, moves it to the Cordillera mountains, so that the depositor money or another thing in its place, he shall deliver the sum or the thing to the depositor.
would have a hard time claiming it. In this case, the depositary would be liable for damages. The depositary is not liable for the loss of the thing either by force majeure or government order.
Art. 1988. The thing deposited must be returned to the depositor upon demand even though a But, if in place of the thing lost, the depositary receives money or another thing, he must deliver it
specified period of time for such return may have been fixed. to the depositor.
This provision shall not apply when the thing is judicially attached while in the depositarys Ex: If the thing is expropriated by the government, the indemnity paid by the government must be
possession or should he have been notified of the opposition of a third person to the return or the turned over by the depositary to the depositor.
removal of the thing deposited. In these cases, the depositary must immediately inform the Art. 1991. The depositors heir who in good faith may have sold the thing which he did not know
depositor of the attachment or opposition. was deposited, shall only be bound to return the price he may have received or to assign his right
GENERAL RULE: The depositary must return the thing upon demand by the depositor of action against the buyer in case the price has not been paid him.
even if the period for the deposit has not lapsed. First, take note that there seems to be a typo in this provision: it should read The depositarys
If the deposit is for compensation, and the depositor demands the return of the thing before the heir if it is to make any sense.
period for deposit has lapsed, the depositor must still pay the depositary the full compensation This contemplates the following situation:
A deposits a car with B. While the car is still in Bs custody, B dies. C, Bs son, finds the car 2. If at the time of the deposit, the depositor was not expected to know the dangerous character
among his dads stuff and thinks that the car belonged to his dad. C sells the car to D. What are of the thing;
the liabilities of C? 3. If the depositor notified the depositary of the dangerous character of the thing; or
If D has already paid C, C must return to A the price that D paid for the car (not the value of the 4. If the depositary was aware of the dangerous character of the thing even without the advice of
car). the depositor.
If D has not yet paid, C may assign to A his right to collect from D the selling price of the car. Art. 1994. The depositary may retain the thing in pledge until full payment of what may be due
Take note that A has no right to recover the car itself. Also, there must be good faith on the part him by reason of the deposit.
of the heir and the third party buyer. If there was bad faith, the depositor can recover the car This is an example of a pledge created by operation of law. The depositary may keep the thing
itself. Moreover, the heir will be liable for estafa. deposited as a security for anything that the depositor may owe him, but it has to be by reason of
Section 3 Obligations of the Depositor the deposit.
Art. 1992. If the deposit is gratuitous, the depositor is obliged to reimburse the depositary for the Compare this rule with the rule in commodatum, in which the borrower may generally not retain
expenses he may have incurred for the preservation of the thing deposited. the thing as a security for anything that the lender may owe him (remember the frisbee
If the deposit is gratuitous, the depositor should shoulder the costs of preservation because he is example?).
the owner of the thing. Art. 1995. A deposit is extinguished:
If the deposit is for compensation, the depositary should shoulder the costs of preservation of the (1) Upon the loss or destruction of the thing deposited;
thing because the compensation is deemed to include the costs of preservation. (2) In case of a gratuitous deposit, upon the death of either the depositor or the depositary.
Example: A deposits a dog with B for 30 days for a compensation of P500. B buys a sack of dog Causes for extinguishment of deposit:
food. By the 10th day, the dog food has run out. Can B ask for more money from A? 1. loss or destruction of the thing deposited 2. In case of gratuitous deposit, upon the death of
A can refuse to give more money and argue that in charging the compensation for the deposit, B either the depositor or the depositary
should have factored in the expected expenses of preserving the dog. But it still depends on the But if the deposit is for compensation, it is not extinguished by the death of either party since it is
intention of the parties. not personal in nature. Hence, the rights and obligations of the parties are transmissible to their
heirs.
Art. 1993. The depositor shall reimburse the depositary for any loss arising from the character of 3. return of the thing
the thing deposited, unless at the time of the constitution of the deposit, the former was not aware 4. novation
of, or was not expected to know the dangerous character of the thing, or unless he notified the 5. merger
depositary of the same, or the latter was aware of it without advice from the depositor. 6. expiration of the term
GENERAL RULE: The depositor should compensate the depositary for any loss that the 7. fulfillment of resolutory condition
depositary may suffer from the character of the thing deposited.
Example: A deposits a dog with B. It turns out that the dog has rabies. The dog bites B, and as CHAPTER 3 NECESSARY DEPOSIT
a result, B has to get anti-rabies shots. A must pay for the damage caused and the cost of Bs Art. 1996. A deposit is necessary:
shots. (1) When it is made in compliance with a legal obligation;
EXCEPTIONS: In the following cases, the depositor need not reimburse the depositary for any (2) When it takes place on the occasion of any calamity, such as fire, storm, flood, pillage,
loss arising from the character of the thing deposited: shipwreck, or other similar events.
1. If at the time of the deposit, the depositor was not aware of the dangerous character of the Art. 1997. The deposit referred to in No. 1 of the preceding article shall be governed by the
thing; provisions of the law establishing it, and in case of its deficiency, by the rules on ordinary deposit.
The deposit mentioned in No. 2 of the preceding article shall be regulated by the provisions The liability extends not just to effects inside the rooms but also to property of the guests in the
concerning voluntary deposit and by article 2168. annexes, such as cars in the garage.
Art. 1998. The deposit of effects made by travelers in hotels or inns shall also be regarded as Example: You go to Edsa Shangri-La to eat at the Garden Caf. You turn your car over to the
necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided valet. Is there a contract of deposit?
that notice was given to them, or to their employees, of the effects brought by the guests and that, Yes. You dont have to actually get a room in order to be considered a guest for purposes of
on the part of the latter, they take the precautions which said hotel-keepers or their substitutes constituting the contract of deposit with the hotel. As long as you use the main facilities of the
advised relative to the care and vigilance of their effects. hotel, youre considered a guest.
Art. 1999. The hotel-keeper is liable for the vehicles, animals and articles which have been What if you wanted to shop in Megamall, but since you didnt want to go through the trouble of
introduced or placed in the annexes of the hotel. looking for parking in Megamall, you just used the Edsa Shangri-La valet service are you still a
Art. 2168. When during a fire, flood, story, or other calamity, property is saved from destruction by guest?
another person without the knowledge of the owner, the latter is bound to pay the former just No. Although you need not check-in in order to be considered a guest, you must at least use the
compensation. principal services of the hotel the gym, the pool, meeting place at the lobby, etc. Valet parking
is not a principal service of the hotel.
What are the instances when deposit is NECESSARY? If youre the guest, you should: (a) give notice to the hotel of the effects you have brought into the
There are FOUR instances/ examples of necessary deposit: hotel and (b) take the precautions prescribed for their safekeeping.
1. Deposit made in compliance with a legal obligation But do you need to give an itemized listing of your valuables every time you go into a hotel?
2. Deposit that takes place on the occasion of any calamity No. Constructive notice to the employees of the hotel is enough. It is sufficient that you bring in
3. Deposit of effects made by travelers in hotels or inns your personal effects and the hotel personnel see them.
4. Deposit of goods with common carriers 4. Deposit of goods with common carriers
1. Deposit made in compliance with a legal obligation This is governed by Articles 1733, 1734, 1735 of the Civil Code under Lease. Common carriers
Example: are generally responsible for the loss, destruction, and deterioration of the goods, unless due to
In pledge, when the creditor uses the thing pledged without the authority of the owner or misuses fortuitous event or the fault of the owner of the goods.
it in any other way, the owner may ask that it be judicially or extrajudicially deposited. Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or
2. Deposit that takes place on the occasion of any calamity injury to the personal property of the guests caused by the servants or employees of the keepers
Example: A fire razes Ys house. X goes inside and gets Ys TV for the purpose of saving it. X of hotels or inns as well as by strangers; but not that which may proceed from any force majeure.
becomes the depositary of the TV. The fact that travelers are constrained to rely on the vigilance of the keeper of the hotels or inn
The relationship of X and Y, being a deposit, is governed by the provisions on voluntary deposit. shall be considered in determining the degree of care required of him.
But in addition, it is also governed by Art. 2168 on quasicontracts. Art. 2168 says that the owner Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure,
of the thing should pay the depositary just compensation for his expenses in preserving the thing. unless it is done with the use of arms or through an irresistible force.
So unlike a voluntary deposit, which is by default gratuitous, this kind of necessary deposit is, by Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the
express provision of law, for compensation. guests, his family, servants or visitors, or if the loss arises from the character of the things
3. Deposit of effects made by travelers in hotels or inns brought into the hotel.
Requisites before the hotel or inn may be held responsible as depositary: When is the hotel liable for the loss of the effects of its guests?
a. The hotel or inn should have been previously informed about the effects brought by the guests; 1. When the loss is caused by the employees of the hotel or by strangers, provided the guest
and followed the two requisites under Art. 1998 (notice and precaution).
b. The guests have taken the precautions prescribed regarding their safekeeping.
2. When the loss is caused by the act of a thief or a robber done without the use of arms and CHAPTER 4 SEQUESTRATION OR JUDICIAL DEPOSIT
irresistible force.
When is the hotel NOT liable? Art. 2005. A judicial deposit or sequestration takes place when an attachment or seizure of
1. When the loss or injury is caused by force majeure, like flood, fire, theft or robbery by a property in litigation is ordered.
stranger with the use of arms or irresistible force, UNLESS the hotel-keeper is guilty of fault or Art. 2006. Movable as well as immovable property may be object of sequestration.
negligence in failing to provide against the loss or injury from this cause. Art. 2007. The depositary of property or objects sequestrated cannot be relieved of his
So as a general rule, if armed men enter the hotel and steal your things, the hotel is excused from responsibility until the controversy which gave rise thereto has come to an end, unless the court
liability because it is considered a fortuitous event. However, if the hotel failed to take reasonable so orders.
precautions (ex: secluded island with only one security guard stationed near the shore and lots of Art. 2008. The depositary of property sequestrated is bound to comply, with respect to the same,
foreigners checked in), it will still be liable for its negligence. with all the obligations of a good father of a family.
2. When the loss is due to the acts of the guest (who is the owner of the thing), his family, What is judicial deposit?
servants, or visitors; and Judicial deposit is a deposit pursuant to a court order when an attachment or seizure of
3. When the loss arises from the character of the things brought into the hotel property in litigation is ordered by a court.
Example of thing where the loss arises from the character of the thing: If you bring a Dalmatian, Examples:
or a snake, or Cyrus pet hamster into the hotel, by the very nature of these pets, they could 1. Attachment of properties by sheriff upon the filing of a complaint
easily get lost in the premises. 2. Garnishment of money
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect 3. Receiver may be appointed by the court to administer and preserve the property in litigation
that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper 4. Personal property may be seized by the sheriff in suits of replevin
and the guest whereby the responsibility of the former as set forth in Articles 1998 to 2001 is
suppressed or diminished shall be void. What is the purpose of judicial deposit?
Even if the hotel-keeper posts signs or puts these little fine-print stipulations that it is not liable for Unlike extra-judicial deposit, where the purpose is safekeeping, the purpose of judicial deposit is
any loss, it cannot escape its liabilities as a depositary under Articles 1998 to 2001. to maintain the status quo during the pendency of the litigation to insure the right of the parties to
Reason: You cannot waive the liability of one who is guilty of gross negligence. Gross negligence the property in case of a favorable judgment. This means that in case of favorable judgment, the
is equivalent to fraud or bad faith. And as we all know, a waiver of future fraud is void. It is party will be assured that there will be property to satisfy the execution of the judgment.
contrary to law, morals, and public policy.
However, this only applies to a contract of deposit. In the case of carparks, the fine print on the What may be the object of judicial deposit?
tickets always contains a waiver of liability by the owner of the carpark for any loss within its Unlike extra-judicial deposit, where the object must be a movable, a judicial deposit can cover
premises. This waiver is valid because, as discussed already, the contract with the carpark is not both movable and immovable property.
a deposit but only a short-term lease.
Art. 2004. The hotel-keeper has a right to retain the things brought into the hotel by the guest, as How do you deposit an immovable?
a security for credits on account of lodging, and supplies usually furnished to hotel guests. You annotate the attachment on the title with the Register of Deeds.
This is another pledge created by operation of law. If you do not pay your hotel bills, the hotel What are the obligations of the depositary of sequestrated property?
can keep your stuff as a security. Moreover, you will be liable for estafa. The person appointed by the court as depositary has the obligation to take care of the thing with
the diligence of a good father of a family. He may not be relieved of his responsibility until the
litigation is ended or until the court so orders.