Chapter 1 The depositor can The lender must wait

DEPOSIT IN GENERAL AND ITS demand the return of until the expiration of
the subject matter at the period granted to
DIFFERENT KIND
will the debtor
Subject matter
ART. 1962. A deposit is constituted from the Both movable and
Only money and any
moment a person receives a thing belonging to immovable property
other fungible thing.
another, with the obligation of safely keeping it may be the object
and of returning the same. If the safekeeping of Relationship
the thing delivered is not the principal purpose of Depositor and
the contract, there is no deposit but some other Lender and borrower
depositary
Compensation
Generally gratuitous
Characteristics of a contract of deposit (RUB) (except by mutual May be gratuitous, or
Perfected upon delivery of the agreement or with a stipulation to
Real
subject matter depositary is engaged in pay interest
Unilateral storing goods)
Only the depositary has an
(when
obligation
gratuitous) Deposit vs. Commodatum (PTSC)
Bilateral It gives rise to obligations on part DEPOSIT COMMODATUM
(when for of both the depositary and the Purpose
compensation) depositor For safekeeping or mere
Transfer of the use
custody
Principal purpose: SAFEKEEPING of the thing Compensation
delivered essentially and always
may be gratuitous
If safekeeping is only an accessory or secondary gratuitous
obligation: Deposit NOT constituted but some Subject matter
other contract like lease, commodatum, or agency. Extrajudicial deposit:
(Art. 1868) only movable
(corporeal) things Both movable and
 Delivery of documents or records to a lawyer
immovable property
hired to represent a party to a suit, cannot be
regarded as constituting a deposit, but only as Judicial deposit: any
an agency. Here, the principal end of the property
contract is representation of one by another Time of return
and not the custody and preservation of the The borrower can use
thing delivered. the thing for the period
 Where the balance of a commission account stipulated and can be
remains in the possession of the agent at the Depositary can always required to return only
principal’s disposal, the same acquires at once
be required to return in case of urgent need
the character of a deposit which the former must
the thing at any time or when the bailee has
return or restore to the latter at any time it is
demanded. committed any of the
acts of ingratitude
Deposit vs. Mutuum (PT-SRC) under Art. 765
DEPOSIT MUTUUM
Purpose Deposit vs. Sale and Barter (TNC)
For safekeeping or mere Consumption of the DEPOSIT SALE and BARTER
custody subject matter Transfer of ownership
Time of return Ownership is not Ownership is

1
 transferred upon 3) by travelers in hotels
transferred
delivery and inns
Nature 4) by travelers with
Real Consensual common carriers
Consideration
Generally gratuitous Always onerous Judicial vs. Extra-judicial deposit (PTSCC-W)
JUDICIAL EXTRAJUDICIAL
Purpose
ART. 1963. An agreement to constitute a deposit Insures the right of a
is binding, but the deposit itself is not perfected Custody and
party to property or to
until the delivery of the thing. contract. safekeeping of the thing
recover in case of
deposited
Reason: A deposit is a real contract – perfected only favorable judgment
upon delivery of the object Time of return
No delivery, but merely an agreement to deposit: Upon order of the court
Upon demand of
binding and enforceable upon the parties. or when litigation is
depositor
ended
 A contract of future deposit is CONSENSUAL. Subject matter
Movables only
Movable and immovable
ART. 1964. A deposit may be constituted judicially property
Reason: object is
or extrajudicially.
safekeeping; the
Reason: the purpose of
Creation of deposit possibility that the
deposit is to protect the
 may be created by virtue of a court order or thing may disappear or
rights of the parties to a
by law and not by the will of the parties may be lost is not
suit
 reason why the Code employs the word present in real property
“constituted” in defining (Art. 1962.) and Creation
classifying (Art. 1964.) deposit Will of the court Will of the parties
 it is essential that the depositary is NOT Cause
the owner of the property deposited Always onerous Generally gratuitous
In whose behalf it is held
Kinds of deposit Person who has a right depositor
one which takes place when
an attachment or seizure of
JUDICIAL ART. 1965. A deposit is a GRATUITOUS contract,
property in litigation is
EXCEPT when there is an agreement to the
ordered
contrary, or unless the depositary is engaged in
EXTRAJUDICIA
the business of storing goods.
L
one wherein the delivery is
GENERAL RULE: A contract of deposit generally
made by the will of the gratuitous
depositor or by two or EXCEPTIONS: (CES)
a. Voluntary
more persons each of whom 1) Where there is contrary stipulation
believes himself entitled to  provided it is not contrary to law,
the thing deposited morals, good customs, public
order, or public policy.
b. Necessary one made in compliance with:
2) Where depositary engaged in business of
(LOTT)
storing goods
1) a legal obligation,  Reason: receives goods for
2) on the occasion of any compensation and not out of pure
calamity generosity

2
 3) When a property is saved from destruction
without the knowledge of the owner
 In involuntary deposit, the owner
is bound to pay the person who
saved the property just Chapter 2
compensation VOLUNTARY DEPOSIT

SECTION 1. — General Provisions

ART. 1966. Only movable things may be the object
of a deposit. ART. 1968. A voluntary deposit is that wherein
the delivery is made by the will of the depositor.
Subject matter of deposit
 Only movable or personal property may be the A deposit may also be made by two or more
object of EXTRAJUDICIAL deposit, whether persons each of whom believes himself entitled to
voluntary or necessary or necessary. the thing deposited with a third person, who shall
 Reason: Article 1966 proceeds from deliver it in a proper case to the one to whom it
the object of a deposit which is
safekeeping of a thing. The possibility
that the thing may disappear or may
be lost or stolen is not present in real Voluntary deposit
property.  one wherein the delivery is made by the
 Thus, the delivery of the keys of a will of the depositor
house cannot be considered as a
deposit of the same, and entrusting its  Ordinarily, there are only two persons involved.
care and custody is, juridically, an Sometimes, however, the depositary may be a
agency. third person
 Judicial deposits, however, may cover movable
as well as immovable property its purpose being Voluntary vs. Necessary Deposit
to protect the rights of parties to a suit. VOLUNTARY NECESSARY
Depositor has complete
There is lack of free
Only corporeal things contemplated. freedom in choosing the
 Article 1966 does not embrace incorporeal or choice in the depositor
depositary
intangible property, such as rights and actions,
 Reason: it follows the person of the  Generally, the depositor must be the owner of
owner, wherever he goes, and is not, the thing deposited. But it may belong to a
susceptible of custody in the tangible person other than the depositor.
sense that deposit is juridically Reason: Does not involve transfer of ownership
understood  Thus, a carrier, commission agent, a
lessee, etc. may deposit goods
ART. 1967. An extrajudicial deposit is either temporarily in his possession
considering that the contract does not
voluntary or necessary.
involve the transfer of ownership.

Where there are several depositors

 The third person assumes the obligation to

deliver to the one to whom it belongs
 The action to compel the depositors to settle
their conflicting claims among themselves would
be in the nature of an interpleader. Here, one of
the depositors is not the owner.

3
 (capacitated) (INcapacitated)
ART. 1969. A contract of deposit may be entered Depositary shall be: The depositary does not
into orally or in writing.
1) subject to all the incur the obligation of a

GENERAL RULE: Contracts shall be obligatory in obligations of a depositary.

whatever form they may have been entered into depositary
provided all the essential requisites for their validity 2) may be compelled The depositor shall:
are present. to return the thing 1) only have an action
by the guardian, or to recover the
administrator of thing deposited
the depositor, or by while it is still in
the latter himself the possession of
if he should the depositary, or
acquire capacity 2) to compel the
depositary to pay

ART. 1970. Where depositary capacitated and him the amount by

depositor incapacitated which he may be
enriched or
If a person having capacity to contract accepts a benefited himself
deposit made by one who is incapacitated, the with the thing or
former shall be:
its price.
1) subject to all the obligations of a depositary,
3) If a third person
and
who acquired the
2) may be compelled to return the thing by the
guardian, or administrator of the person who thing acted in bad
made the deposit, or by the latter himself if faith, the depositor
may bring an
action against him
 Art. 1397: Persons who are capable cannot for its recovery.
allege the incapacity of those with whom they NOTE: Persons who are capable cannot allege the
contract incapacity of those with whom they contract (1397).

ART. 1971. Where depositary incapacitated and EXAMPLE:

depositor capacitated A deposited a watch with B, a minor who sold it to C.
If C acted in bad faith, A may recover the watch from
If the deposit has been made by a capacitated him. But if C acted in good faith, A’s only recourse is
person with another who is not, the depositor shall against B to compel him to return the price received
only have an action to recover the thing deposited for the watch or the amount by which he may have
while it is still in the possession of the depositary, benefited himself.
or to compel the latter to pay him the amount by
which he may be enriched or benefited himself
with the thing or its price.
However, if a third person who acquired the thing SECTION 2. — Obligations of the Depositary
acted in bad faith, the depositor may bring an
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
Effects of incapacity of depositor or depositary person who may have been designated in the
contract. His responsibility, with regard to the
Depositor Depositor
safekeeping and the loss of the thing, shall be
(INcapacitated) (capacitated)
governed by the provisions of Title I of this Book.
Depositary Depositary If the deposit is gratuitous, this fact shall be taken

4
 REASON: Deposit is founded upon trust and
confidence
Obligation 1: To keep the thing deposited Liability for loss
Reasons: 1) he transfers the deposit with a third person
1) It is an essential requisite of the judicial without authority although there is no
relation which involves the depositor’s negligence on his part and the third person
confidence in his good faith and 2) he deposits the thing with a third person
trustworthiness who is manifestly careless or unfit although
2) Presumption that the depositor, in choosing authorized, even in the absence of
the depositary, took into account the negligence
diligence which the depositary is 3) the thing is lost through the negligence of
accustomed with respect to his own his employees whether the latter are
property manifestly careless or not

Rules applicable: Exemption from liability: The depositor is not

1) He is liable if the loss occurs through his responsible in case the thing is lost without
fault or negligence even if the thing was negligence of the third person with whom he was
insured allowed to deposit the thing if such third person is
2) The loss of the thing while in his not “manifestly careless or unfit
possession, ordinarily raises a presumption
of fault on his part Obligation 4:
3) The required degree of care is greater if the
deposit is for compensation than when it is
ART. 1974. The depositary may change the way
gratuitous.
of the deposit if under the circumstances he may
reasonably presume that the depositor would
 The thing deposited must be returned to the
consent to the change if he knew of the facts of the
depositor whenever he claims it, EVEN
situation. However, before the depositary may
THOUGH a specified term or time for such may
make such change, he shall notify the depositor
have been stipulated in the contract.
thereof and wait for his decision, unless delay

GENERAL RULE: Diligence of a good father of a

family
EXCEPTIONS: Degree of care required is greater:
1) If the depositary voluntarily offered to keep
Obligation 5:
the thing
2) The deposit is compensated ART. 1975. The depositary holding certificates,
3) The deposit produces benefit to the bonds, securities or instruments which earn
depositary interest shall be bound to collect the latter when it
becomes due, and to take such steps as may be
Obligation 2: To return the thing necessary in order that the securities may
preserve their value and the rights corresponding
Obligation 3: To not deposit the thing with a third to them according to law. The above provision
person unless authorized by express stipulation

ART. 1973. Unless there is a stipulation to the

contrary, the depositary cannot deposit the thing Contract for rent of safety deposit boxes
with a third person. If deposit with a third person  special kind of deposit
is allowed, the depositary is liable for the loss if he  not governed strictly by provisions on
deposited the thing with a person who is deposit
manifestly careless or unfit. The depositary is  a contract of bailment for hire and mutual
benefit

5
  the relation between a bank renting entire 60 cavans in the proportion of 1/2, 1/3, and 1/6,
out safe-deposit boxes and its respectively.
customer with respect to the contents
of the box is that of bailor and bailee Obligation 7: Not to make use of the thing deposited
 Where a safe-deposit company leases a safe- unless authorized
deposit box or safe and the lessee takes
possession of the box or safe and places therein ART. 1977. The depositary cannot make use of
his securities or other valuables, the relation of
the thing deposited without the express
bailee and bailor is created between the parties
permission of the depositor. Otherwise, he shall
to the transaction as to such securities or other
be liable for damages. However, when the
valuables; the fact that the safe deposit company
preservation of the thing deposited requires its
does not know, and that it is not expected that it
shall know, the character or description of the GENERAL RULE: Deposit is for safekeeping of the
property which is deposited in such safe-deposit subject matter and not for its use. Unauthorized use
box or safe does not change that relation. That by the depositary would make him liable for
access to the contents of the safedepoit box can damages.
be had only by the use of a key retained by the EXCEPTION: The depositary may make use of the
lessee (whether it is the sole key or one to be thing deposited even without the express permission
used in connection with one retained by the of the depositor where such use is necessary for its
lessor) does not operate to alter the foregoing preservation but in such case the use is limited for
rule. that purpose only.

**Read pages 119-124 EXAMPLE: radio (to prevent buildup of moisture)

Obligation 6: Not to commingle things of the same ART. 1978. When the depositary has permission
kind and quality deposited if so stipulated 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
ART. 1976. Unless there is a stipulation to the
principal purpose of the contract. The permission
contrary, the depositary may commingle grain or
shall not be presumed, and its existence must be
other articles of the same kind and quality, in
proved.
which case the various depositors shall own or
have a proportionate interest in the mass.

Effect if permission to use is given:

Depositary MAY commingle if:
1) If the thing is non-consumable, the contract
1) They are of the same kind and quality
becomes a commodatum
2) There is no contrary stipulation
Exception: The principal purpose is
safekeeping
Effect: The various depositors of the mingled goods
2) If it is money or other consumables, it will
shall own the entire mass in common and each result in its consumption and converts the
depositor shall be entitled to such portion of the
contract to a mutuum
entire mass as the amount deposited by him bears to
the whole.
DELGADO vs. BONNEVIE: Things received on
deposit do not prescribe, since the depositary cannot
EXAMPLE: claim that ownership of the thing deposited was
transferred to him, but simply the custody thereof.
A received from B for deposit 30 cavans of rice, from
C, 20 cavans, and from D, 10 cavans, the rice being of **Read pgs. 126-127
the same kind and quality. In the absence of any
contrary stipulation, A can commingle the 60 cavans
Irregular deposit vs. Mutuum
and B, C, and D would become the co-owners of the
IRREGULAR
MUTUUM
DEPOSIT

6
 Demand by depositor deposited, which was immediately due, does not
The lender is bound by imply such permission to use the thing
The consumable thing the provisions of the deposited as would convert the deposit into loan

deposited may be contract and cannot

Obligation 8: To be liable for loss through fortuitous
demanded at will by the seek restitution until
event
irregular depositor the time for payment
has arisen
ART. 1979. The depositary is liable for the loss of
Accrual of benefit
the thing through a fortuitous event: (SUDA)
The essential cause for
The only benefit is that 1) If it is so stipulated;
the transaction is the
which accrues to the 2) If he uses the thing without the
necessity of the depositor’s permission;
depositor
borrower 3) If he delays its return;
Preference of credit 4) If he allows others to use it, even though
The depositor in an
Common creditors enjoy
irregular deposit has
no preference in the
preference over other
distribution of the
creditors with respect to GENERAL RULE: The depositary is not liable for
debtor’s property
the thing deposited loss through a fortuitous event without his fault
EXCEPTIONS: (4) instances above
ILLUSTRATIVE CASES:
1) Amount is received “as a deposit” but debtor
binds himself to pay interest. ART. 1980. Fixed, savings, and current deposits
of money in banks and similar institutions shall be
HELD: The obligation of B to pay interest to L governed by the provisions concerning simple loan.
suffices to cause the obligation to be considered
a loan and makes it likewise evident that it was Relation between bank and depositor
the intention of the parties that B should have a  Deposits of money in banks, whether fixed,
right to make use of the amount deposited, since savings, and current, are REALLY LOANS to a
it was stipulated that the amount should be bank because the bank can use the same for its
collected after notice of two months in advance ordinary transactions and for the banking
business in which it is engaged.
2) Depositary was allowed to mill the palay  Bank deposits are in the nature of irregular
deposited and had milled and appropriated it to deposits; they are really loans because they earn
his own use before his rice mill was burned. interest. Hence, such deposits are governed by
the provisions on mutuum or simple loan, and
HELD: Even supposing that the palay may have the rules on the imposition of legal interest.
been delivered in the character of deposit,
subject to future sale or withdrawal at R’s Relation between depositor and bank
(depositor’s) election, nevertheless, if it was
understood that Y (depositary) might mill the ART.
 1981. When the
The relation thing deposited
between is and
a depositor delivered
a
palay and he has, in fact, appropriated it to his closed and
bank sealed, the
is that ofdepositary must return
a creditor (depositor) it in
and a
own use, he is, of course, bound to account for its the same condition,
debtor (bank)and he shall be liable for
value. Under Article 1978, “the contract loses damages
 Ashouldbank’s the sealto
failure orhonor
lock be broken through
a deposit is
the concept of a deposit and becomes a loan his fault.failure to pay its obligation as debtor and
not a breach of trust arising from a
3) Depositary appropriated to his personal benefi t Fault ondepositary’s
the part of the depositary
failure is the
to return presumed,
subject
money deposited which depositor failed to claim unless there is proof to the
matter of the deposit contrary. As regards
at once. the value of the thing deposited, the statement of
the depositor shall be accepted, when the forcible
HELD: Failure to claim at once or delay for opening is imputable to the depositary, should
some time in demanding restitution of the thing 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 7
him.
 REASON: The depositor is the owner or at least
represents the owner of the thing deposited. The
depositary must, therefore, return not only the thing
itself but also all its products, accessions and
accessories which are a consequence of ownership

Obligation 11: To pay interest on sums converted to

personal use from the day of conversion if the deposit
Obligation 9: Liability when the thing is delivered consists of money
closed and sealed
1) To return the thing in the same condition Obligation 12: To advise the true owner that a
2) To pay for damages should the seal or lock deposit has been made should he discover that the
be broken through his fault, which is thing deposited was stolen from the owner
presumed unless proven otherwise
3) To keep the secret of the deposit when the ART. 1984. The depositary cannot demand that
seal or lock is broken with or without his the depositor prove his ownership of the thing
fault deposited. Nevertheless, should he discover that
the thing has been stolen and who its true owner
REASON: Without the rule, irresponsible is, he must advise the latter of the deposit.
depositaries may violate their trusts with impunity.
If the owner, in spite of such information, does not
ART. 1982. When it becomes necessary to open a claim it within the period of one month, the
locked box or receptacle, the depositary is depositary shall be relieved of all responsibility by
presumed authorized to do so, if the key has been returning the thing deposited to the depositor. If
delivered to him; or when the instructions of the the depositary has reasonable grounds to believe
depositor as regards the deposit cannot be
executed without opening the box or receptacle.

ART. 1985. When there are two or more

When depositary is authorized to open the depositors, if they are not solidary, and the thing
admits of division, each one cannot demand more
thing sealed or closed:
than his share.
1) Presumed authority (key is delivered)
2) Necessity to do so (instructions of depositor
When there is solidarity or the thing does not
cannot be executed without opening the
admit of division, the provisions of Articles 1212
box)
and 1214 shall govern. However, if there is a
stipulation that the thing should be returned to

Rules when there are two or more depositors

Divisibility of Obligation of
Effect
thing the depositors
Divisible Not solidary Each one can
Obligation 10: To return products, accessories, and
accessions demand only
his share
ART. 1983. The thing deposited shall be returned
with all its products, accessories and accessions. proportionate
Should the deposit consist of money, the provisions
relative to agents in Article 1896 shall be applied 8
to the depositary.
 thereto divisibility
The rules on
active  If by stipulation the thing should be returned to
solidarity one of the depositors, the depositary is bound to
return it only to the person designated although
(solidarity
he has not made any demand for its return.
among
ART. 1986. If the depositor should lose his
creditors) shall
capacity to contract after having made the deposit,
apply, to the
the thing cannot be returned except to the persons
effect that who may have the administration of his property
each one of and right
the solidary
depositors
Person to whom return must be made:
(creditors) 1) To the depositor, to his heirs and
may do successors, or to the person who may have
whatever may been designated in the contract.
be useful to 2) If the depositor was incapacitated at the
time of making the deposit, the property
the others but
must be returned to his guardian or
Solidary not anything administrator or the person who made the
(i.e., the which may be deposit or to the depositor himself should
depositary can prejudicial to he acquire capacity.
Not divisible return the 3) Even if the depositor had capacity at the
the latter, and
thing deposited time of making the deposit but he
the depositary
subsequently loses his capacity during the
to any of the
(debtor) may deposit, the thing must be returned to his
depositors
return the legal representative.
thing to any
one of the ART. 1987. If at the time the deposit was made a
solidary place was designated for the return of the thing,
depositors the depositary must take the thing deposited to
such place; but the expenses for transportation
(creditors)
shall be borne by the depositor.
Exception: a
demand, If no place has been designated for the return, it
judicial or shall be made where the thing deposited may be,
extrajudicial, even if it should not be the same place where the
for its return deposit was made, provided that there was no
has been made
by one of them
in which case REASON (for depositor bearing the expenses of
delivery should transportation): the deposit is constituted for the
be made to benefit of the depositor and not the depositary who
him. assumes no more than the safekeeping and the
Indivisible Solidary/Not The same rule return of the thing.

solidary when the

EXAMPLE:
obligation is
Suppose the deposit was made in the residence of A
solidary,
in Manila and A transfers his residence to Pateros,
regardless of
Metro Manila and he has to bring the thing deposited

9
to his new place of residence. In the absence of a
contrary stipulation, the place of return is the ART. 1989. Unless the deposit is for a valuable
consideration, the depositary who may have
residence of A in Pateros, Metro Manila, provided
justifiable reasons for not keeping the thing
there was no malice on the part of A.
deposited may, even before the time designated,
return it to the depositor; and if the latter should
refuse to receive it, the depositary may secure its
consignation from the court.
ART. 1988. The thing deposited must be returned
to the depositor upon demand, even though a
specified period or time for such return may have
Right of depositary to return the thing
been fixed.
deposited
The depositary may return
This provision shall not apply when the thing is
judicially attached while in the depositary’s the thing deposited
possession, or should he have been notified of the notwithstanding that a
opposition of a third person to the return or the period has been fixed for the
removal of the thing deposited. In these cases, the deposit if
GRATUITOUS 1) the deposit is
Time of return
gratuitous
GENERAL RULE: The depositor can demand the
2) justifiable reasons
return of the thing deposited at will and this is true
whether a period has been stipulated or not. (e.g., necessity of
EXCEPTIONS: his going abroad)
1) When the thing is judicially attached while exist for its return
in depositary’s possession depositary has no right to
 REASON: Otherwise, he would return the thing deposited
be disobeying the judicial order of
FOR VALUABLE before the expiration of the
attachment
CONSIDERATION time designated even if he
2) Should the depositary be notified of the
opposition of a third person to the return of should suffer inconvenience
the thing as a consequence
 REASON: To permit the
depositary to refuse to return the
ART. 1990. If the depositary by force majeure or
thing deposited simply because of
government order loses the thing and receives
the opposition of another, is a
money or another thing in its place, he shall
power very prone to abuse and
deliver the sum or other thing to the depositor
mischief. If at all, the depositary
should only be authorized in case
of conflicting claims to consign GENERAL RULE: Depositary is not liable for loss of
the thing in court through an the thing by force majeure or by government order.
action of interpleader EXCEPTION: If in place of the thing he receives
 In a deposit, whenever a period is agreed to, the money or another thing, he has the duty to deliver to
same is for the benefit of the depositor, but it the depositor what he has received otherwise, he
may be validly waived by him. But the period is would enrich himself at the expense of the depositor.
generally binding upon the depositary.
 If the deposit is for a compensation, the
ART. 1991. The depositor’s heir who in good faith
depositary is entitled to the compensation
may have sold the thing which he did not know
corresponding to the entire period. In this case,
was deposited, shall only be bound to return the
the period is also for the benefit of the
price he may have received or to assign his right of
depositary. The rule in commodatum is
action against the buyer in case the price has not
different.

10
 The above article envisions a situation where
the depositary dies and the object of the deposit Obligation 2: To pay for the losses incurred by the
is left with his heir who, in good faith, sells it. depositary due to the character of the thing deposited
 OBLIGATION of HEIR: Limited to the return of
the price received or to assign the right to collect
the same if it has not been paid and not the real GENERAL RULE: The depositor shall reimburse the
value of the thing depositary for any loss arising from the character of
 REASON: equity the thing deposited
 If the heir acts in bad faith, he is liable for EXCEPTIONS:
damages. The sale or appropriation of the thing 1) At the time of the deposit, the depositor is
deposited constitutes estafa. not aware of the dangerous character of the
thing
EXAMPLE: 2) Depositor was not expected to know the
Believing in good faith that the thing deposited by A dangerous character of the thing
with B, worth P10,000.00 belonged to B, C, heir of B, 3) Depositor notified the depository of the
sold the thing to D who paid him P8,000.00. same
4) Depositary was aware of it without advice
Under Article 1991, C is bound to return to A from the depositor
P8,000.00, the price he received, and not P10,000.00
or C may assign to A the right to collect from D the ART. 1994. The depositary may retain the thing
P8,000.00 if it has not been paid. in pledge until the full payment of what may be
due him by reason of the deposit.
If C acted in bad faith, he is liable to pay A
P10,000.00 plus damages which A may have suffered.
C is also criminally liable for estafa.
ART. 1995. A deposit is extinguished:
1) Upon the loss or destruction of the thing
SECTION 3. — Obligations of the Depositor deposited;
2) In case of a gratuitous deposit, upon the
Obligation 1: To pay expenses for preservation if the death of either the depositor or the
deposit is gratuitous depositary

ART. 1992. If the deposit is gratuitous, the  The causes mentioned in Article 1995 are not
depositor is obliged to reimburse the depositary for exclusive (novation, merger, expiration of the
the expenses he may have incurred for the term, fullfillment of the resolutory condition).
preservation of the thing deposited.
Effect of death of depositor or depositary
 If the deposit is for a valuable consideration, the
expenses of preservation are borne by the the death of either the
depositary because they are deemed included in GRATUITOUS depositor or depositary
the compensation. There can, however, be a extinguishes the deposit
contrary stipulation. FOR VALUABLE not extinguished by the
CONSIDERATION death of either party
because, unlike a gratuitous
ART. 1993. The depositor shall reimburse the
depositary for any loss arising from the character deposit, an onerous deposit
of the thing deposited, unless at the time of the is not personal in nature.
constitution of the deposit the former was not Hence, the rights and
aware of, or was not expected to know the obligations arising therefrom
dangerous character of the thing, or unless he are transmissible to their
notified the depositary of the same, or the latter
respective heirs. But the

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 heirs of either party have a 3) The deposit of a thing pledged when the
right to terminate the creditor uses the same without the
authority of the owner or misuses it in any
deposit even before the
other way (Art. 2104.);
expiration of the term
4) Those required in suits as provided in the
Rules of Court; and
5) Those constituted to guarantee contracts
with the government. In this last case, the
deposit arises from an obligation of public
or administrative character.

Necessary deposit made on the occasion of any

calamity
 The possession of movable property passes from
one person to another by accident or fortuitously
through force of circumstances and which the
law imposes on the recipient the obligations of a
bailee.
 The more immediate object is to save the
Chapter 3
property rather than its safekeeping. Thus, if X
NECESSARY DEPOSIT
saves Y’s television set in a fire, X is supposed to
be its depositary.
ART. 1996. A deposit is necessary:
 Such a quasi-bailment is ordinarily
1) When it is made in compliance with a
distinguished by the name involuntary bailment
legal obligation;
or involuntary deposit. There must be a causal
2) When it takes place on the occasion of relation between the calamity and the
any calamity, such as fi re, storm, flood, constitution of the deposit. Another name given
pillage, shipwreck, or other similar to it is “deposito miserable.”

ART. 1997. The deposit referred to in No. 1 of the ART. 1998. The deposit of effects made by
preceding article shall be governed by the travellers in hotels or inns shall also be regarded
provisions of the law establishing it, and in case of as necessary.
its deficiency, by the rules on voluntary deposit.
The deposit mentioned in No. 2 of the preceding The keepers of hotels or inns shall be responsible
article shall be regulated by the provisions for them as depositaries, provided that notice was
given to them, or to their employees, of the effects
brought by the guests and that, on the part of the
latter, they take the precautions which said hotel-
Necessary deposit in compliance with a legal
obligation.
The following are examples of such deposit: (
1) The judicial deposit of a thing the
possession of which is being disputed in a ART. 1999. The hotel-keeper is liable for the
litigation by two or more persons (Art. vehicles, animals and articles which have been
538.); introduced or placed in the annexes of the hotel.
2) The deposit with a bank or public
institution of public bonds or instruments
Before keepers of hotels or inns may be held
of credit payable to order or bearer given in
responsible as depositaries with regard to the effects
usufruct when the usufructuary does not
of their guests, the following elements must concur:
give proper security for their conservation
1) They have been previously informed about
(Art. 586.);
the effects brought by the guests;

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 2) The latter have taken the precautions
prescribed regarding their safekeeping.
ART. 2007. The depositary of property or objects
ART. 2000. The responsibility referred to in the sequestrated cannot be relieved of his
two preceding articles shall include the loss of, or responsibility until the controversy which gave
injury to the personal property of the guests rise thereto has come to an end, unless the court
caused by the servants or employees of the keepers
of hotels or inns as well as by strangers; but not
that which may proceed from any force majeure. ART. 2008. The depositary of property
The fact that travellers are constrained to rely on sequestrated is bound to comply, with respect to
the vigilance of the keeper of the hotel or inn shall the same, with all the obligations of a good father
of a family.

When judicial deposit takes place.

ART. 2001. The act of a thief or robber, who has
 A deposit may be constituted judicially or
entered the hotel is not deemed force majeure, extrajudicially.
unless it is done with the use of arms or through
an irresistible force. Judicial deposit or sequestration
 takes place when an attachment or seizure
of property in litigation is ordered by a
ART. 2002. The hotel-keeper is not liable for court.
compensation if the loss is due to the acts of the  For example, properties may be attached by
guests, his family, servants or visitors, or if the the sheriff upon the fi ling of a complaint
loss arises from the character of the things (Rule 57, Rules of Court.), or a receiver (a
brought into the hotel. disinterested party) may be appointed by
the court to administer and preserve the
property in litigation or personal property
ART. 2003. The hotel-keeper cannot free himself may be seized by the sheriff in suits of
from responsibility by posting notices to the effect replevin or manual delivery of personal
that he is not liable for the articles brought by the property.
guest. Any stipulation between the hotel-keeper
and the guest whereby the responsibility of the Nature and purpose of judicial deposit.
former as set forth in Articles 1998 to 2001 is  The deposit is judicial because it is auxiliary to
a case pending in court.
 The purpose is to maintain the status quo
during the pendency of the litigation or to
ART. 2004. The hotel-keeper has a right to retain insure the right of the parties to the property in
the things brought into the hotel by the guest, as a case of a favorable judgment.
security for credits on account of lodging, and
supplies usually furnished to hotel guests Obligation of depositary of sequestrated
property
 The depositary of sequestrated property is the
Chapter 4 person appointed by the court. (Art. 2007.)
SEQUESTRATION OR JUDICIAL DEPOSIT  He has the obligation to take care of the
property with the diligence of a good father of a
ART. 2005. A judicial deposit or sequestration family (Art. 2008.) and he may not be relieved of
takes place when an attachment or seizure of his responsibility until the litigation is ended or
property in litigation is ordered. the court so orders. (Art. 2007.)

ART. 2006. Movable as well as immovable Judicial and extrajudicial deposits

property may be the object of sequestration distinguished.

13
The differences between judicial and extrajudicial has a right; extrajudicial, in behalf of the
deposits are: depositor or third person designated.
1) Cause or origin. — judicial, by the will of
the court; extrajudicial, by the will of the ART. 2009. As to matters not provided for in this
parties; hence, there is a contract; Code, judicial sequestration shall be governed by
2) Purpose. — judicial, as security and to the Rules of Court.
secure the right of a party to recover in
case of a favorable judgment; extrajudicial,
custody and safekeeping of the thing;  The law on judicial deposit is remedial or
3) Subject matter. — judicial, either movable procedural in nature. Hence, the Rules of Court
or immovable property but generally are applicable.
immovable property; extrajudicial, only  The relevant provisions of the Rules of Court are
movable property; Rule 57 (Preliminary Attachment), Rule 59
4) Remuneration. — judicial, always (Receivership), and Rule 60 (Replevin).
remunerated (onerous); extrajudicial, may  The Rules of Court provide also for attachment
be compensated or not, but generally in criminal cases. (Rule 127 thereof.)
gratuitous; and
5) In whose behalf it is held. — judicial, in
behalf of the person who, by the judgment,

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