CONTRACT OF DEPOSIT
- Refers to a contract whereby there is delivery of a movable or a personal property by
the depositor to the depository for purposes of safekeeping
● DEPOSIT
- Contract which is constituted from the moment a person receives a thing
belonging to another with the obligation to another with the obligation of safely
keeping it and of returning the same.
Q. Is the deposit of money in banks or other similar institutions governed by the law on
deposits?
- Under Art. 1980 of the Civil Code, fix savings and current deposit of money in the banks
it is not covered by the rule on deposit rather it is covered by the the rule on simple loan
(mutuum) whereby there is a creation of relationship between the debtor and a creditor
between the depositor and depository
Characteristics of Contract of Deposit
1. It is a real contract perfected by delivery.
2. The principal purpose is the safekeeping of the thing delivered.
- If safekeeping is not the primary motive for the establishment of that contract,
then it is not a deposit. It is possible that it is a contract of commodatum, lease
or agency because safekeeping is an obligation and secondary objective of each
establishment
3. The depositary cannot use the thing deposited EXCEPT:
a. Express permission of the depositor
b. When it is necessary for the preservation of the thing deposited
4. As to object: - it is only movable that can be made the object.
5. It is gratuitous contract EXCEPT
a. Onerous - if there’s an agreement as to the payment of compensation
b. Engaged in the business of storing
6. The contract is either unilateral or bilateral - which depends whether the contract is
gratuitous (uni) or onerous (bi).
Kinds of Deposit
● Judicial (Sequestration)
- immovable properties will be given in order to preserve the rights and claims and
interests
● Extrajudicial
○ Voluntary - created upon the will of the parties
○ Necessary - created by situations
I. Voluntary Deposit
- Made by the will of the depositor
- General rule: The depositor must be the owner of the thing deposited
- Exception: Commission agents, carriers
- Provision of 1968, deposit may also be made by two or more persons each whom
believes himself entitled to the thing deposited with the third person who shall in
a proper case to the one who it belongs
A. Form
● Oral
● Written
B. Effect of Incapacity
● Depositor is incapacitated and depositary is capacitated
- Art. 1970
● Depositor is capacitated and depositary is incapacitated
- Art. 1971
● Effect of bad faith on the part of the third person
- If the third person acted in good faith, you can no longer can
recover the thing
- If the third person acted in bad faith, the depositor can recover
the thing
Obligations of Depositary
1. To keep the thing safely
- Rule: If the contract is gratuitous or free, the depositary is expected to preserve
the thing using ordinary diligence or the diligence of a good father of a family
- If the depositary will be compensated for the services rendered or an onerous
deposit, then the higher degree or extraordinary diligence is required
Q. In the performance of the depositary of his obligation to preserve or to safe keep the thing,
is the depositary allowed to deposit the thing to another depositary so the depositary depositing
the thing to another depositary?
A. Under Art. 1973 of the Civil Code, the depositary cannot deposit it with the third person
unless he is expressly allowed. If ever he is allowed, the depositary who deposited the thing to
a third person will be held liable for the loss if that new depositary or third person whom the
depositary has deposited the thing is manifestly careless or unfit to safe keep the thing
deposited.
General rule: Depositary cannot deposit it to another depositary. If he is allowed to deposit, he
is liable for the negligence of that person whom he made the deposit
(Check Art. 1974-1976)
2. To collect INTEREST earned by certificates, bonds, securities or instruments in
possession and to preserve their value
3. Not to use it WITHOUT express permission of DEPOSITOR
4. To keep the secret of the deposit (Art. 1981)
5. To return the thing with all its products, accessories and accessions (Art. 1983)
6. To RETURN the thing deposited (Art. 1984)
Liabilities in case of fortuitous event:
● It is so stipulated
○ General rule: No person shall be liable for those events which cannot be foreseen
or which through foreseen is inevitable. If stipulated that the depositary is liable
in case of fortuitous events, then he should be liable.
● Uses the thing without the depositor’s permission
○ General rule: Depositary should not use the thing deposited unless it’s expressly
authorized or when it is necessary for the preservation of the thing deposited
● He delays its return
○ You are already liable for such loss
● He allows others to use it, even though he himself may have been authorized to use the
same
○ Depositary is still liable
Rule if there are two or more depositors:
● If the thing DEPOSITED is NOT DIVISIBLE and DEPOSITORS not solidary
○ Each one can get a proportionate share or claim
● If OBLIGATION is SOLIDARY or thing DEPOSITED IS NOT DIVISIBLE
○ Rule: Depositary can actually return the thing deposited to any one of the
depositors. The act of one is deemed the act of the others.
● If there is a STIPULATION
Rule if depositor becomes incapacitated after deposit:
● Deliver the deposit to his heirs or successors in interest - person who has administration
of his property.
Where to return the thing:
A. If a place was designated
B. If no place was designated
*Expenses for transportation will be at the expense of the depositor
*If there is no place where the thing has been deposited, it is expected to return it at
the same place where the thing has been deposited
When to return the thing:
● General rule: Upon DEMAND
● Exceptions:
○ When judicially attached
○ When 3rd person opposes the return or removal of the thing deposited
Alienation by depositary’s heir in good faith
● To RETURN the price he may have received; or
● To ASSIGN his right of action to collect the price if it has not been paid
Obligations of the Depositor
1. If DEPOSIT is GRATUITOUS - to REIMBURSE the expenses for the PRESERVATION
incurred by the DEPOSITARY (Art. 1994)
2. To pay the DEPOSITARY for the losses he incurred by reason of the NATURE of the
DEPOSIT
Exceptions:
❖ Depositor is NOT aware or is NOT EXPECTED to know the
DANGEROUS character of the DEPOSIT
❖ Depositor has NOTIFIED the DEPOSITARY of such character
❖ Depositary is AWARE of the dangerous character even without the
advice
Extinguishment of Deposit
1. Loss or destruction of the thing deposited
2. In case of gratuitous deposit - DEATH of either DEPOSITOR or DEPOSITARY
Necessary Deposit (Art. 1996)
- Created by operation of law
1. Made in compliance with a legal obligation
2. Made on the occasion of calamity
3. Made by travelers in hotels or inns
4. Made by travelers with common carriers
Sequestration or Judicial Deposit
- Art. 2005, judicial deposit or sequestration takes place when there is an attachment or
seizure of property involved in a litigation
A. Subject matter (Art. 2006)
● Movable
● Immovable
(Check Art. 2007)
Obligations of the Depositor
1. If Onerous
- To pay the price agreed upon
- To indemnify for damages caused by the depositor himself
2. If Gratuitous
- To pay the necessary expenses
- To indemnify for damages caused by the depositor himself
Q? HOW ABOUT IF THE DEPOSITOR REFUSES TO PAY FOR THE CONSIDERATION OF THE
DEPOSIT? WHAT IS THE RIGHT OF THE DEPOSITARY?
A. The depositary may retain the thing in pledge until the full payment of what may be due him
by reason of the deposit.
Modes of Extinguishing Contract of Deposit
1. Upon the loss or destruction of the thing deposited;
2. In case of a gratuitous deposit, upon the death of either the depositor or the depositary;
3. Other grounds like the expiration of the period or mutual withdrawal from the contract.
