III.

DEPOSIT
A. INTRO DUCTIO N A R T . 1 9 6 3, C C
An agreement to constitute a deposit is binding, but
1. Definition the deposit itself is not perfected until the delivery of
the thing. (n)
A R T . 1 9 6 2, C C
A deposit is constituted from the moment a person The contract of deposit is perfected upon the delivery of the
receives a thing belonging to another, with the thing, but a contract of future deposit or contract to deposit is
obligation of safely keeping it and of returning the perfected by mere consent. The nature and primary obligation is
same. If the safekeeping of the thing delivered is not that a thing must be kept—without delivery, this nature cannot
the principal purpose of the contract, there is no be satisfied.
deposit but some other contract. (1758a)
b. Unilateral or bilateral
In a deposit, one person receives something belonging to
another, with the obligations to safely keep and return it. It is unilateral if no compensation has been paid to the
depositary, and bilateral if compensation has been paid.
2. Types
c. Principal
A R T . 1 9 6 4, C C
A deposit may be constituted judicially or A voluntary deposit is principal, not dependent on another
extrajudicially. (1759) contract.

A R T . 1 9 6 7, C C d. Informal
An extrajudicial deposit is either voluntary or
necessary. (1762) A R T . 1 9 6 9, C C
A contract of deposit may be entered into orally or in
Kinds of deposit writing. (n)
1. Extrajudicial—No court intervention
a. Voluntary It may be constituted either orally or in writing.
b. Necessary
2. Judicial—Court intervention e. Nominate

B. VO LUNTARY DEPO SIT It is nominate because the Civil Code said so. Yes indeed!

1. Concept f. Onerous or gratuitous

A R T . 1 9 6 8, C C A R T . 1 9 6 5, C C
A voluntary deposit is that wherein the delivery is A deposit is a gratuitous contract, except when there
made by the will of the depositor. A deposit may also is an agreement to the contrary, or unless the
be made by two or more persons each of whom depositary is engaged in the business of storing
believes himself entitled to the thing deposited with a goods. (1760a)
third person, who shall deliver it in a proper case to
the one to whom it belongs. (1763) Summary of rules on whether onerous/gratuitous
General rule: Gratuitous
Deposit and credit Exceptions: Onerous in cases of—
A voluntary deposit involves a relationship of trust, 1. Contrary stipulation
which takes into account the depositary’s personal 2. Depositary engaged in business of storing goods
quality of trustworthiness. It is a contract of 3. Property was saved from destruction, without the
confidence. knowledge of the owner—The owner is bound to
pay the depositary just compensation
2. Characteristics 3. Essential requisites
Characteristics of voluntary deposit (RUBPINGO) a. Consent
1. Real
2. Either unilateral or bilateral A R T . 1 9 7 0, C C
3. Principal If a person having capacity to contract accepts a
4. Informal deposit made by one who is incapacitated, the former
5. Nominate shall be subject to all the obligations of a depositary,
6. Either gratuitous or onerous and may be compelled to return the thing by the
guardian, or administrator of the person who made
a. Real the deposit, or by the latter himself if he should
acquire capacity. (1764)
Art. 1316, supra

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A R T . 1 9 7 1, C C d. Delivery
If the deposit has been made by a capacitated person
with another who is not, the depositor shall only have Deposit being a real contract, delivery is an essential requisite to
an action to recover the thing deposited while it is still its perfection.
in the possession of the depositary, or to compel the
latter to pay him the amount by which he may be 4. Parties
enriched or benefited himself with the thing or its See also discussion on consent as an essential requisite.
price. However if a third person who acquired the
thing acted in bad faith, the depositor may bring an Characteristics of the parties to a deposit
action against him for its recovery. (1765a) Depositor Depositary
Makes the deposit Receives thing in deposit
A R T . 1 9 8 6, C C
Not required to be the owner May not transfer the deposit
If the depositor should lose his capacity to contract
of the thing deposited, since to third persons2
after having made the deposit, the thing cannot be
deposit does not transfer
returned except to the persons who may have the
ownership
administration of his property and rights. (1773)
Not required that the
depositor prove his ownership
Rules on incapacity of parties to deposit
of the thing to the depositary1
Incapacity Effect 1
via Art. 1984
Return must be made to: 2
via Art. 1973
Depositor
- The depositary’s guardian/administrator
does not have
- Depositor himself, once he acquires/regains 5. Obligations of the depositary
capacity
capacity
- If thing is still in depositary’s possession, the Summary of obligations of the depositary
depositor may recover it A. Keep the thing
- If thing is in the possession of another who - Safely keep the thing
Depositary has acquired it in good faith, then the
- Not to transfer the deposit
does not have depositor may recover the thing deposited
- Not to change way of deposit
capacity AND be paid the amount by which the
- Collect interest on choses in action
depositary has been enriched
- Not to commingle things, if so stipulated
- If third person has acquired it in bad faith,
then the depositor may recover it
B. Not to use the thing, unless authorized
Either one
incapacitated Contract is voidable
C. Return the thing
at perfection
- Return the thing closed and sealed
Both
- Return the thing with its products,
incapacitated Contract is unenforceable
accessories, and accessions
at perfection

b. Object a. Keep the thing

A R T . 1 9 6 6, C C
Safely keep the thing
Only movable things may be the object of a deposit.
A R T . 1 9 7 2, C C
(1761)
The depositary is obliged to keep the thing safely and
to return it, when required, to the depositor, or to his
Only movables may be the object of extrajudicial deposit,
heirs and successors, or to the person who may have
whether voluntary or necessary. However, other forms of deposit,
been designated in the contract. His responsibility,
i.e. judicial deposit, may cover both movable and immovable
with regard to the safekeeping and the loss of the
property.
thing, shall be governed by the provisions of Title I of
this Book.
Art. 1966, however, does not cover rights and actions.
If the deposit is gratuitous, this fact shall be taken
into account in determining the degree of care that
c. Cause
the depositary must observe. (1766a)
Art. 1965, supra
The degree of care required of the depositary is the same
The cause for a deposit may be either mere liberality of the diligence that he would exercise over his own property. This is
depositary (if gratuitous) or the payment of compensation (if because deposit is a contract of confidence: the depositor is
onerous). presumed to have chosen the depositary by considering the
latter’s good faith and trustworthiness.

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 CREDIT TRANSACTIONS 17

Not to transfer the deposit In case the depositary is permitted to commingle grain or other
articles, the various depositors of the mingled goods shall own
A R T . 1 9 7 3, C C the entire mass in common. Each of them shall be entitled to the
Unless there is a stipulation to the contrary, the portion of the entire mass corresponding to their share, i.e. the
depositary cannot deposit the thing with a third amount they deposited.
person. If deposit with a third person is allowed, the
depositary is liable for the loss if he deposited the If there is stipulation that prohibits commingling, the depositary
thing with a person who is manifestly careless or unfit. cannot commingle goods, even if they are of the same kind and
The depositary is responsible for the negligence of his quality.
employees. (n)
b. Not to use the thing, unless
The depositary is not allowed to deposit the thing with a third authorized
person, unless authorized by express stipulation. Unauthorized
transfer would make him liable for damages. A R T . 1 9 7 7, C C
The depositary cannot make use of the thing
Not to change the way of deposit deposited without the express permission of the
depositor.
A R T . 1 9 7 4, C C Otherwise, he shall be liable for damages.
The depositary may change the way of the deposit if However, when the preservation of the thing
under the circumstances he may reasonably presume deposited requires its use, it must be used only for
that the depositor would consent to the change if he that purpose. (1767a)
knew the facts of the situation. However, before the
depositary may make such change, he shall notify the Summary of rules on use of the thing deposited
depositor thereof and wait for his decision. (n) General rule: Not allowed
Exceptions:
The exceptions under the obligation not to change the way of the 1. When stipulated in writing
deposit are: 2. When such use is necessary to the preservation of
1. That there is stipulation allowing it; or the thing
2. The depositor consents, after being notified.
Failure to observe this obligation makes the depositary liable for
When effected without stipulation or depositor’s consent, the damages.
depositary becomes liable for damages.
A R T . 1 9 7 8, C C
Collect interest on choses in action When the depositary has permission to use the thing
deposited, the contract loses the concept of a deposit
A R T . 1 9 7 5, C C and becomes a loan or commodatum, except where
The depositary holding certificates, bonds, securities, safekeeping is still the principal purpose of the
or instruments which earn interest shall be bound to contract.
collect the latter when it becomes due, and to take The permission shall not be presumed, and its
such steps as may be necessary in order that the existence must be proved. (1768a)
securities may preserve their value and the rights
corresponding to them according to law. Effects if permission to use is given
The above provision shall not apply to contracts Thing deposited Effect
for the rent of safety deposit boxes. (n) Contract loses character of deposit and
Non-consumable becomes commodatum, unless
If the thing deposited earns interest, the depositary is obligated thing safekeeping is still the principal purpose of
to: the contract
1. Collect the interest, and also the capital itself, as it Permission to use results in consumption,
becomes due; and Money or other converting contract into a mutuum
2. Take the necessary steps to preserve the value and consumable thing If safekeeping is still principal purpose of
rights corresponding to the property contract, an irregular deposit results

Not to commingle things, if so Irregular deposit

stipulated Where money or other consumable thing is deposited
for safekeeping, and is demandable at will by the
A R T . 1 9 7 6, C C depositor, the contract is an irregular deposit.
Unless there is a stipulation to the contrary, the
depositary may commingle grain or other articles of c. Return the thing
the same kind and quality, in which case the various
depositors shall own or have a proportionate interest A R T . 1 9 8 3, C C
in the mass. (n) The thing deposited shall be returned with all its
products, accessories, and accessions.
Should the deposit consist of money, the

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 CREDIT TRANSACTIONS 18

provisions relative to agents in Article 1896 shall be Art. 1986, supra

applied to the depositary. (1770)
To whom depository is bound to return thing deposited
A R T . 1 9 9 0, C C Who made deposit To whom return must be made
If the depositary by force majeure or government order Depositor, his heirs and successors, or to
loses the thing and receives money or another thing in General rule the person who may have been
its place, he shall deliver the sum or other thing to the designated in the contract
depositor. (1776a) Each of them, returning the thing only to
Joint depositors
the extent that they claim
A R T . 1 9 9 1, C C Any of them, unless one has been
The depositor’s heir who in good faith may have sold Solidary depositors specifically designated; then return must
the thing which he did not know was deposited, shall be made to him
only be bound to return the price he may have
Incapacity at time deposit was made—
received or to assign his right of action against the
Guardian, administrator, or depositor
buyer in case the price has not been paid by him. Incapacitated
himself, should he acquire capacity
(1778) depositor
Capacity lost later, during deposit—
Legal representative
What depositary is bound to return
True owner, if depositary knows who it is,
Condition What must be returned Depositor of stolen
and after advising true owner of the
Identical thing thing
deposit
General rule Its products, accessories,
and accessions A R T . 1 9 8 7, C C
Loss (force majeure or Sum received as If at the time the deposit was made a place was
government order) compensation designated for the return of the thing, the depositary
Sale by depositary’s Sum received as a result must take the thing deposited to such place; but the
heir in good faith of the sale expenses for transportation shall be borne by the
Exceptions
Deposit of a fungible depositor.
Thing of the same value
thing If the depositor has been designated for the
Thing of same kind or return, it shall be made where the thing deposited
Commingling may be, even if it should not be the same place where
quality
the deposit was made, provided that there was no
A R T . 1 9 8 4, C C malice on the part of the depositary. (1774)
The depositary cannot demand that the depositor
prove his ownership of the thing deposited. Where depositary is bound to make return
Nevertheless, should he discover that the thing 1. Place agreed upon by the parties, with expenses
has been stolen and who its true owner is, he must for transportation being borne by the depositor; or
advise the latter of the deposit. 2. Absent stipulation, at the place where the thing
If the owner, in spite of such information, does not deposited should be, even if this is not the same
claim it within the period of one month, the depositary place where the deposit was originally made,
shall be relieved of all responsibility by returning the provided that the transfer is made without bad
thing deposited to the depositor. faith on the part of the depositary.
If the depositary has reasonable grounds to
believe that the thing has not been lawfully acquired What happens in case there is malice/bad faith?
by the depositor, the former may return the same. If the malice spoken of in Art. 1987 is present when
(1771a) the depositary brings the thing to the wrong place,
what may he be liable for? Sir believes that aside from
Requisites of requirement to advise true owner damages, the depositary may be liable for the
For paragraph 2 of Art. 1984 to apply, the following expenses of bringing the thing to the original place.
requisites must be met:
1. The thing deposited must be stolen; and A R T . 1 9 8 8, C C
2. The depositary must know who its true owner is. The thing deposited must be returned to the depositor
upon demand, even though a specified period or time
A R T . 1 9 8 5, C C for such return may have been fixed.
When there are two or more depositors, if they are not This provision shall not apply when the thing is
solidary, and the thing admits of division, each one judicially attached while in the depositary’s
cannot demand more than his share. possession, or should he have been notified of the
When there is solidarity or the thing does not opposition of a third person to the return or the
admit of division, the provisions of Articles 1212 and removal of the thing deposited. In these cases, the
1214 shall govern. However, if there is a stipulation depositary must immediately inform the depositor of
that the thing should be returned to one of the the attachment or opposition. (1775)
depositors, the depositary shall return it only to the
person designated. (1772a) A R T . 1 9 9 4, C C
The depositary may retain the thing in pledge until

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CREDIT TRANSACTIONS 19

the full payment of what may be due him by reason of unpaid amounts
the deposit. (1780) 4. Pay fees for deposit
When payment must be made A R T . 1 9 9 2, C C
General rule: Upon demand (given a reasonable time), If the deposit is gratuitous, the depositor is obliged to
regardless of the period agreed upon reimburse the depositary for the expenses he may
have incurred for the preservation of the thing
Exceptions: deposited. (1779a)
1. Judicial attachment
2. Opposition by third person This applies only to gratuitous deposits, because these expenses
3. Right of retention, whereby depositary must be would have been incurred by the depositor had he not made the
compensated first deposit.

Return the thing closed & sealed If the deposit were onerous, the expenses of preservation would
be deemed included in the compensation paid to the depositary.
A R T . 1 9 8 1, C C Such expenses are therefore for his account.
When the thing deposited is delivered closed and
sealed, the depositary must return it in the same The right to reimbursement covers all expenses for preservation,
condition, and he shall be liable for damages should whether ordinary or extraordinary.
the seal or lock be broken through his fault.
Fault on the part of the depositary is presumed A R T . 1 9 9 3, C C
unless there is proof to the contrary. The depositor shall reimburse the depositary for any
As regards the value of the thing deposited, the loss arising from the character of the thing deposited,
statement of the depositor shall be accepted, when unless at the time of the constitution of the deposit
the forcible opening is imputable to the depositary, the former was not aware of, or was not expected to
should there be no proof to the contrary. However, the know the dangerous character of the thing, or unless
courts may pass upon the credibility of the depositor he notified the depositary of the same, or the latter
with respect to the value claimed by him. was aware of it without advice from the depositor. (n)
When the seal or lock is broken, with or without
the depositary’s fault, he shall keep the secret of the Exceptions under Art. 1993
deposit. (1769a) In an onerous deposit, the depositor shall reimburse
the depositary for losses arising from the character of
Obligations & liabilities under Art. 1981 the thing, except if:
The depositary has the ff. obligations & liabilities: 1. The depositor was not aware of the thing’s
1. When thing deposited has been delivered closed dangerous character;
and sealed, return it in the same condition; 2. The depositor could not have been expected to
2. Pay for damages should the seal or lock be broken know the thing’s dangerous character;
through his fault, which is presumed unless proven 3. Depositary was notified of such character
otherwise; (assumption of risk);
3. Keep the secret of the deposit when the seal or lock 4. Depositary was aware of such character, even
is broken, whether or not with his fault. without advice from the depositor.

A R T . 1 9 8 2, C C A R T . 1 9 9 4, C C
When it becomes necessary to open a locked box or The depositary may retain the thing in pledge until
receptacle, the depositary is presumed authorized to the full payment of what may be due him by reason of
do so, if the key has been delivered to him; or when the deposit. (1780)
the instructions of the depositor cannot be executed
without opening the box or receptacle. (n) What the depositary is entitled to
The depositary may exercise his right of retention if he
When depositary is justified to open sealed thing has not been paid:
1. Presumed authority —Key has been delivered to 1. Reimbursement for necessary expenses; or
him; or 2. Liability for losses (damages).
2. Necessity—Depositor’s wishes cannot be carried
out without opening the sealed thing. 7. Risk of loss and deterioration

6. Obligations of the depositor A R T . 1 9 4 7, C C

The depositary is liable for the loss of the thing
Summary of obligations of the depositor through a fortuitous event:
(1) If it is so stipulated;
1. If deposit gratuitous, reimburse depositary for
(2) If he uses the thing without the depositor’s
expenses incurred to preserve thing
permission;
2. If deposit onerous, reimburse depositary only for
(3) If he delays its return;
losses incurred or arising from character of thing
(4) If he allows others to use it, even though he
deposit
himself may have been authorized to use the
3. Respect depositary’s right to retain things for

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 CREDIT TRANSACTIONS 20

same. (n) (2) When it takes place on the occasion of any

calamity, such as fire, storm, flood, pillage,
Summary of rules on who bears the risk of loss shipwreck, or other similar events. (1781a)
General rule: Depositor shall bear the risk of loss (res
perit domino) A R T . 1 9 9 7, C C
The deposit referred to in No. 1 of the preceding article
Exceptions: Depositary shall bear the risk of loss if— shall be governed by the provisions of the law
1. Stipulation by the parties to the effect that the establishing it, and in case of its deficiency, by the
depositor shall be paid indemnity for the loss of rules on voluntary deposit.
the thing while in the depositary’s hands; The deposit mentioned in No. 2 of the preceding
2. Depositary uses thing without permission from article shall be regulated by the provisions concerning
depositor; voluntary deposit and by Article 2168. (1782)
3. Depositary incurs in delay, i.e. failure to return
upon demand or after the period; 2. Types
4. Depository was allowed to use the thing, but he let
third parties use it Types of necessary deposits and their governing laws
Kind of necessary deposit Governing law
8. Extinguishment Provisions of the law that
Made in compliance with a established the obligation +
A R T . 1 9 8 8, C C legal obligation provisions on voluntary
The thing deposited must be returned to the depositor deposit
upon demand, even though a specified period or time Taking place on calamitous
for such return may have been fixed. Art. 2168 + provisions on
occasions (deposito/depositum
This provision shall not apply when the thing is voluntary deposit
miserabile)
judicially attached while in the depositary's Made by travellers in hotels or
possession, or should he have been notified of the Arts. 1998 to 2004
inns
opposition of a third person to the return or the Made by passengers with
removal of the thing deposited. In these cases, the Art. 1754
common carriers
depositary must immediately inform the depositor of
the attachment or opposition. (1775) a. Made in compliance with a legal
obligation
A R T . 1 9 8 9, C C
Unless the deposit is for a valuable consideration, the Some examples of this kind of deposit:
depositary who may have justifiable reasons for not 1. Judicial deposit of a thing whose possession is being disputed
keeping the thing deposited may, even before the in litigation;
time designated, return it to the depositor; and if the 2. Deposit to guarantee contracts with the government;
latter should refuse to receive it, the depositary may 3. Other deposits required in suits, as provided by the Rules of
secure its consignation from the court. (1776a) Court.

Summary of ways to extinguish deposit b. Deposito miserabile

Under the general provisions1 on extinguishment:
1. Return of thing A R T . 2 1 6 8, C C
2. Loss or destruction of thing When during a fire, flood, storm, or other calamity,
3. Condonation property is saved from destruction by another person
4. Confusion/merger without the knowledge of the owner, the latter is
5. Novation bound to pay the former just compensation.
6. Expiration of term
7. Fulfillment of resolutory condition These deposits occur when movable things pass from one person
to another by accident/fortuitous event. The more immediate
Specific to gratuitous deposits: object of the deposit is to save the property, rather than to safely
1. Death of either party keep it.
2. Return by depositary for justifiable reason
1
As per Art. 1287, compensation It is governed by Art. 2168, which establishes a quasi-contract:
does not apply to deposit. the owner of the thing becomes liable to pay the person who
saved his property just compensation.
C. NECESSARY DEPO SIT
c. Made by travellers in hotels or inns
1. Concept
A R T . 1 9 9 8, C C
A R T . 1 9 9 6, C C The deposit of effects made by the travellers in hotels
A deposit is necessary: or inns shall also be regarded as necessary. The
(1) When it is made in compliance with a legal keepers of hotels or inns shall be responsible for them
obligation; as depositaries, provided that notice was given to

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 CREDIT TRANSACTIONS 21

them, or to their employees, of the effects brought by liable, regardless of caused by servants, employees, or
the guests and that, on the part of the latter, they take amount of care strangers
the precautions which said hotel-keepers or their exercised Theft by stanger, without use of arms
substitutes advised relative to the care and vigilance and/or irresistible force (due to apparent
of their effects. (1783) negligence)
Force majeure
A R T . 1 9 9 9, C C Roberry with the use of arms/irresistible
The hotel-keeper is liable for the vehicles, animals force
and articles which have been introduced or placed in When not liable Loss due to acts of guests, and their
the annexes of the hotel. (n) family, servants, or visitors
Loss arises from character of things
This kind of deposit is embedded in a contract of lodging. brought into the hotel
Coverage of law on hotel/inn deposits A R T . 2 0 0 4, C C
Travellers’ personal effects The hotel-keeper has a right to retain the things
Vehicles brought into the hotel by the guest, as a security for
Items covered
Animals credits on account of lodging, and supplies usually
Articles introduced or placed in hotel premises furnished to hotel guests. (n)
Hotel rooms and common areas
Places covered
Hotel annexes, e.g. parking lots This right of retention may be enforced against guests who have
yet to fully pay the fees for the lodging received and amenities
A R T . 2 0 0 0, C C used.
The responsibility referred to in the two preceding
articles shall include the loss of, or injury to the d. Made by passengers with common
personal property of the guests caused by the carriers
servants or employees of the keepers of hotels or inns
as well as strangers; but not that which may proceed A R T . 1 7 5 4, C C
from any force majeure. The fact that travellers are The provisions of Articles 1733 to 17531 shall apply to
constrained to rely on the vigilance of the keeper of the passenger's baggage which is not in his personal
the hotels or inns shall be considered in determining custody or in that of his employee. As to other
the degree of care required of him. (1784a) baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
A R T . 2 0 0 1, C C applicable.
1
The act of a thief or robber, who has entered the hotel The provisions on common carriers.
is not deemed force majeure, unless it is done with the
use of arms or through an irresistible force. (n) D. SEQUESTRATION/JUDICIAL DEPOSIT

A R T . 2 0 0 2, C C 1. Concept
The hotel-keeper is not liable for compensation if the
loss is due to the acts of the guest, his family, servants A R T . 2 0 0 5, C C
or visitors, or if the loss arises from the character of A judicial deposit or sequestration takes place when
the things brought into the hotel. (n) an attachment or seizure of property in litigation is
ordered. (1785)
A R T . 2 0 0 3, C C
The hotel-keeper cannot free himself from A R T . 2 0 0 9, C C
responsibility by posting notices to the effect that he is As to matters not provided for in this Code, judicial
not liable for the articles brought by the guest. Any sequestration shall be governed by the Rules of Court.
stipulation between the hotel-keeper and the guest (1789)
whereby the responsibility of the former as set forth in
articles 1998 to 2001 is suppressed or diminished Nature and purpose of judicial deposit
shall be void. (n) Judicial deposit is auxiliary to a case pending in court.
It is remedial or procedural in nature; hence, it is
Requisites for liability governed by the Rules of Court. Its purpose is to
1. Hotel/innkeeper must have been previously maintain the status quo during the pendency of the
informed about the effects brought by guests; and litigation, or insure the right of the parties to the
2. Guests have taken the prescribed precautions for property in case of a favorable judgment.
safekeeping their items;
2. Object
Extent of liability
All those who offer lodging for A R T . 2 0 0 6, C C
Who is responsible Movable as well as immovable property may be the
compensation, whatever their character
When hotel-keeper Loss or injury to guests’ personal property object of sequestration. (1786)

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 CREDIT TRANSACTIONS 22

Generally, immovable property is sequestrated, though either May be either onerous or Essentially and always
movables or immovables may be the object of judicial deposit. gratuitous gratuitous
(Extrajudicial deposit) Only Both movable and
3. Obligation of the depositary movable (corporeal) things immovables may be given
may be given
A R T . 2 0 0 8, C C
The depositary of property sequestrated is bound to F. JUDICIAL DEPO SIT vs.
comply, with respect to the same, with all the EXTRAJUDICIAL DEPO SIT
obligations of a good father of a family. (1788)
Distinguishing loan from barter
The depositary is a person appointed by the court. He has the Judicial deposit Extrajudicial deposit
obligation to take care of the property with the diligence of a By the will of the court By the will of the
Cause/origin
good father of a family. (no contract) parties (contract)
As security, to secure
Custody and
4. Term & extinguishment the right of a party to
Purpose safekeeping of the
recover in case of a
thing
A R T . 2 0 0 7, C C favorable judgment
The depositary of property or objects sequestrated Either movable or
cannot be relieved of his responsibility until the immovable, though Only movable
Subject matter
controversy which gave rise thereto has come to an generally immovable, property
end, unless the court so orders. (1787a) property
Generally gratuitous,
Always onerous
E. DEPO SIT DISTINGUISHED FRO M Remuneration but may be
(remunerated)
O THER CO NTRACTS compensated or not
In behalf of person In behalf of depositor
In whose
1. From mutuum behalf held
who, by the judgment, or third person
has a right designated
A R T . 1 9 8 0, C C
Fixed, savings, and current deposits of money in banks BPI v. IAC (1988)
and similar institutions shall be governed by the
provisions concerning simple loan. (n) The primary purpose of the contract of deposit is
the safekeeping of the depositor’s property by
Deposit vs. mutuum placing possession thereof in the hands of the
Deposit Mutuum depositary—the depositary may not put what is
Principal purpose = Consumption of thing given deposited to any use.
safekeeping/mere custody
Depositor can demand return Creditor must wait until the Facts: Rizaldy entrusted, through the bank’s manager (Garcia),
of thing given at will expiration of the period 3000usd with the bank for safekeeping—the terms of their
granted to the debtor agreement expressly stipulate that the purpose of their
Both movable and immovable Only money and other arrangement was safekeeping. When Rizaldy asked for the
property may be given fungible things may be given return of the sum deposited, the bank stated that dollars he had
deposited had been credited to his account in its peso equivalent.
Irregular deposit v. mutuum Further, the bank denied the existence of a contract of depositum
Irregular deposit Mutuum by alleging that Garcia exceeded his authority when he entered
Consumable thing may be Creditor cannot seek into the same in the name of the bank.
demanded at will by depositor restitution until time for
payment as provided in Issue: WON a contract of depositum existed—YES
contract has arisen
Benefit accrues only to the Essential cause for transaction Ratio: The wording of the agreement between the bank and
depositor = debtor’s necessity Rizaldy and their subsequent acts clearly point to the fact that
Depositor has preference over Common creditors enjoy no what they intended to exist between them was a contract of
other creditors with respect to preference in the distribution depositum. While the bank is technically in breach of its
thing deposited of debtor’s property obligation to safeguard the thing and return it as it was received,
Rizaldy cannot recover because the transaction that they entered
2. From commodatum into is against the law; in pari delicto.

Art. 1978, supra TRIPLE V v. FILIPINO MERCHANTS (2005)

Deposit v. commodatum Valet car services are in the nature of deposits

Deposit Commodatum made by the car owner to the valet service
Principal purpose = Transfer of use provider. Provisions that exempt the service
safekeeping/mere custody provider from liability in case of loss are in the

APO ESPAÑOLA & CARLOS MARIN BLOCK A 2016 PROF. HECTOR DE LEON, JR.
 CREDIT TRANSACTIONS 23

nature of contracts of adhesion and are void; it liable unless his negligence led to its loss.
would be contrary to the nature of a deposit.
Facts: Father de la Pena had in his possession as a trustee money
Facts: De Asis ate at Kamayan restaurant where she entrusted that was meant to be used for the construction of a leper
her car to the restaurant’s valet service. After eating her fill, she hospital. He deposited the money in his own bank account.
discovered that her car had been stolen. FMICI, the insurer of De During the war, the military authorities confiscated all the money
Asis’s vehicle, paid her insurance claim and proceeded against in his account with HSBC because he was accused of being an
Triple V by virtue of subrogation. Triple V argued that it was not insurgent and that the money in his account was suspected to be
negligent in parking her car and that the valet ticket included a used for revolutionary purposes.
stipulation that they could not be sued for any loss incurred by
the depositor of the car. Issue: WON Father de la Pena is liable for the loss of the money –
NO
Issue: WON a deposit contract existed between the two parties
that could become the source of Triple V’s liability – YES Ratio: Being that the war is a fortuitous cause in the eyes of the
law, he cannot be held liable for its loss on occasion thereof.
Ratio: As regards negligence, the Court held that it was There was no stipulation or law that prevented him from
immaterial because this was an action premised on contractual depositing the money into his account.
breach—the breach occurred when Kamayan failed to secure the
car from theft. The contract of deposit was constituted the Dissent: The moment he deposited the money into his personal
moment possession of the car was placed in the hands of the account, it (the money) lost the protection and immunities
restaurant’s valet drivers; it did not matter that the service was accorded by the law.
gratuitous.
DURBAN APARTMENTS v. PIONEER (2011)
CA AGRO-INDUSTRIAL DEV’T. v. CA (1993)
Hotels are liable for the loss of the possessions of
The relation between a bank renting out safe- its guests that are deposited to its staff or
deposit boxes and its clients is that of a bailor and facilities. Under Art. 1968, such deposits are in the
bailee. It cannot disclaim liability from the loss of nature of necessary deposits and are valid sources
the objects inside its safety deposit boxes by of liabilities.
claiming that the same is in the nature of a
contract of lease Facts: See checked in at the City Garden Hotel and left the key of
his car with a hotel employee for the purpose of valet parking.
Facts: Titles of parcels of land that were the subject of The car was stolen and the insurance company after settling
transactions were placed in the bank’s safety-deposit box. When See’s claims proceeded against the hotel.
the parties to the transaction opened the safety-deposit box to
get the titles, the same were not inside. CA Agro then filed a Issue: WON Durban Apartments is liable for the loss of the car—
complaint for damages against the bank. The CA absolved the YES
bank of liability on the strength of its opinion that the
relationship between the bank and CA Agro was that of lessee Ratio: It is obvious that See deposited his vehicle for safekeeping
and lessor and not of bailor and bailee. with the staff of the hotel—the contract of deposit was perfected
the moment See turned over his keys to the valet service staff.
Issue: WON the relationship between a bank and those who rent
its safety-deposit boxes is that of a lessor and lessee – NO, it is in CHAN v. MACEDA (2003)
the nature of bailor-bailee relationship.
In order for a party claiming damages arising from
Ratio: It cannot be deemed as an ordinary lease because full and a contract of deposit he must prove two things:
absolute possession of the boxes was never given to CA Agro. 1. That a contract of deposit exists between him
Under prevailing jurisprudence, it is in the nature of a special and the party he seeks to hold liable
deposit. As such, the bank may be made liable if it is found that it 2. That the things sought to be withdrawn were in
was in breach of its obligation to keep whatever is stored inside the depositary’s possession at the time
safe (fraud, negligence, delay, etc.); the degree to be observed is demand was made
that of a good father of a family (though as one of the parties is a
bank it may be argued that extraordinary diligence should be Facts: Maceda and Moreman entered into a building construction
observed). However, this was dismissed because it was not contract. Maceda bought various construction materials that
proven that the bank was in breach of its contractual obligation Moreman deposited in the warehouse of the Chans. Moreman
to keep the titles safe—it did not know about the agreement that failed to construct the building within the period agreed upon so
both transacting parties must be present in order to withdraw Maceda filed an action for rescission. While the case was
the titles. pending, Maceda made demand upon Chans to return the
deposited materials. The latter replied that Moreman had
BISHOP of JARO v. DE LA PEÑA (1913) already withdrawn the materials. Maceda then sued them for
damages.
When the thing deposited is lost through
fortuitous event, the depositary will not be held

APO ESPAÑOLA & CARLOS MARIN BLOCK A 2016 PROF. HECTOR DE LEON, JR.
 CREDIT TRANSACTIONS 24

Issue: WON the Chans are liable for the loss of the materials
because of Moreman’s withdrawal – NO

Ratio: First, Bonifacio failed to prove the existence of a contract

of deposit; if anything, it would have existed between the Chans
and Moreman. Second, Maceda did not prove that the Chans still
had possession of the materials when he made demand.

YHT REALTY v. CA (2005)

Since the hotel industry is impressed with public

interest and that the law creates necessary
deposits between hotels and their clients, they
(hotels) cannot exempt themselves from liability
caused by mishandling the property of their
guests through waivers and notices.

Facts: McLoughlin deposited various amounts of money and

jewelry in the safety deposit boxes of YHT hotel. Whatever he
deposited would consistently be diminished upon subsequent
inspection. He found out that the hotel staff had been allowing
his companion/lover/tour guide to open the safety deposit box
that was assigned exclusively to him. He sued the hotel for
damages. Hotel tried to escape liability by pointing to the terms
and conditions regarding the use of their safety deposit boxes
that stated that it would not be liable for any loss incurred
through the use of such.

Issue: WON the hotel is liable for the loss of McLoughlin’s

possessions – YES

Ratio: If the hotel had exercised due diligence in taking care of

McLoughlin’s property, then no loss would have occurred; two
key system. Further, the waivers and notices that claim that the
hotel is exempt from liability from the loss of things deposited
are in contravention of the law and are void.

APO ESPAÑOLA & CARLOS MARIN BLOCK A 2016 PROF. HECTOR DE LEON, JR.