ARTICLE 1978

When the depositary has permission to use the

thing deposited, the contract loses the concept
of a deposit and becomes a loan or
commodatum, except where safekeeping is still
the principal purpose of the contract.
The permission shall not be presumed, and its
existence must be proved.
EFFECT IF PERMISSION TO USE IS GIVEN.

Thing deposited, non-consumable

- If the thing deposited is non-consumable
and the depositary has permission to use the
thing, the contract loses the character of a
deposit and acquires that of a commodatum,
unless safekeeping is still the principal purpose
of the contract.
EFFECT IF PERMISSION TO USE IS GIVEN.
Thing deposited, money or other consumable
thing.
-If the thing deposited is money or other
consumable thing, the permission to use it will
result in its consumption and converts the
contract into a simple loan or mutuum. But if
safekeeping is still the principal purpose of the
contract, it is still a deposit but an irregular
one.
EXAMPLE:

D, who was transferring residence, deposited

his laptop with C while he was moving his
things to his new location. He told C that he
would get the laptop after one week. In the
meantime, D told C that he may use the laptop
if he had need for it.
ANSWER:

Since the purpose of the delivery of the laptop

with C is for safekeeping and its use by C is only
incidental, the contract remains to be one of
deposit. However, if the thing was delivered by
D to C so that the latter may use it, then the
contract is one of commodatum not of deposit.
ARTICLE 1979
The depositary is liable for the loss of the thing
through a fortuitous event:
(1) If it is so stipulated;
(2) If he uses the thing without the depositors
permission
(3) If he delays its return;
(4) If he allows others to use it, even though he
himself, may have been authorized to use the
same.
ARTICLE 1980

Fixed, savings, and current deposits of money

in banks and similar institutions shall be
governed by the provisions concerning simple
loan.
RELATION BETWEEN BANK AND DEPOSITOR

(1) Contract of loan- Deposits of money in banks

whether fixed, savings and current are really
loans to a bank because the bank can use the
same for its ordinary transactions and for
banking business in which it is engaged.
(2) Relation of debtor and creditor- Accordingly,
the relation between a depositor and a bank is
that of a creditor and a debtor.
Note: In a true deposit, compensation is not
allowed.
EXAMPLE:
A owes B P10,000. B, in turn, owes A the
amount of P10,000 representing the value of a
ring deposited by A with B which B failed to
return.
-In this case B, who is the depositary, cannot
claim legal compensation even if A fails to pay
his obligation. The remedy of B is to file an
action against A for the recovery of the amount
P10,000.
 The relation of the depositary to the depositors
is fiduciary in character since it based on trust
and confidence. Bs claim for compensation
against A would involve a breach of that
confidence.
ARTICLE 1981

When the thing deposited is delivered closed

and sealed, the depositary must return it in the
same condition, and he shall be liable for
damages should the seal or lock be broken
through his fault.
Fault on the part of the depositary is presumed,
unless there is proof to the contrary.
ARTICLE 1981
As regards the value of the thing deposited, the
statement of the depositor shall be accepted,
when the forcible opening is imputable to the
depositary, should there be no proof to the
contrary. However, the courts may pass upon the
credibility of the depositor with respect to the
value claimed by him.
When the seal or lock is broken, with or without
the depositarys fault, he shall keep the secret of
the deposit.
OBLIGATIONS OF DEPOSITARY WHERE THING DEPOSITED
DELIVERED CLOSED AND SEALED.

Return the thing deposited when delivered

closed and sealed, in the same condition.
Pay for damages should seal or lock be broken
through his fault which is presumed unless
proved otherwise.
Keep the secret of the deposit when the seal or
lock is broken with or without his fault.
ARTICLE 1982

When it becomes necessary to open a locked

box or receptacle, the depositary is presumed
authorized to do so, if the key has been
delivered to him; or when the instructions of
the depositor as regards the deposit cannot be
executed without opening the box or
receptacle.
EXAMPLE:

D deposited a locked jewelry box with C. D gave

C a special power of attorney to constitute a
chattel mortgage on the jewelry inside the box
to secure a loan which D was negotiating with B
bank. B Banks appraiser wanted to see the
jewelry to determine the amount loanable to D.
Is C authorized to open the locked jewelry box?
ANSWER:

Yes, since the act to be performed by C, the

constitution of chattel mortgage on the jewelry,
can only be executed by opening the jewelry
box.
ARTICLE 1983

The thing deposited shall be returned with all

its products, accessories and accessions.
Should the deposit consist of money, the
provisions related to agents in article 1896
shall be applied to the depositary.
ARTICLE 1984

The depositary cannot demand that the

depositor prove his ownership of the thing
deposited.
Nevertheless, should he discover that the thing
has been stolen and who its true owner is he
must advise the latter of the deposit.
ARTICLE 1984
If the owner, in spite of such information, does
not claim it within the period of one month the
depositary shall be relieved of all responsibility
by returning the thing deposited 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.
ARTICLE 1985

When there are two or more depositors, if they are

not solidary, and the thing admits of division, each
one cannot demand more than his share.
When there is solidarity or the thing does not
admit of division, the provisions of article 1212
and 1214 shall govern. However, if there is a
stipulation that the thing should be returned to
one of the depositors, the depositary shall return
it, only to the person designated.
RIGHT OF TWO OR MORE DEPOSITORS TO DEMAND RETURN OF
THEIR RESPECTIVE SHARES

Thing deposited divisible and depositors not

solidary.
Obligation solidary or thing deposited not
divisible.
Return to one of depositors stipulated.
EXAMPLE:

If A and B deposit 500 and 200 sacks of rice,

respectively, A can demand only 500 sacks.
If A and B deposited a car, the depositary can
return to either, in the absence of a contrary
stipulation. (See Arts. 1212 and 1214, Civil
Code).