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F. Deposit

1. CONCEPT

A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. (Article 1962, Civil Code)

a. Delivery required for perfection

An agreement to constitute a deposit is binding, but the deposit itself is not perfected until the delivery of the thing. (Article 1963, Ibid.)

b. Gratuitous act

GENERAL RULE: A deposit is a gratuitous contract. (Article 1965, Ibid.)

EXCEPTIONS:

1) When there is an agreement to the contrary; or

2) Unless the depositary is engaged in the business of storing goods. (Article 1965, Ibid.)

c. Limited to movables

Only movable things may be the object of a deposit. (Article 1966, Ibid.)

d. Fixed, savings, and current deposits of money in banks and similar institutions

Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. (Article 1980, Ibid.)

e. Kinds of deposit

A deposit may be constituted judicially or extrajudicially. (Article 1964, Ibid.)

An extrajudicial deposit is either voluntary or necessary. (Article 1967, Ibid.)

2. JUDICIAL DEPOSIT (OR SEQUESTRATION)

a. Concept

A judicial deposit or sequestration takes place when an attachment or seizure of property in litigation is ordered. (Article 2005, Ibid.)

b. Coverage

Movable as well as immovable property may be the object of sequestration. (Article 2006, Ibid.)

c. When depositary may be relieved of responsibility

The depositary of property or objects sequestrated cannot be relieved of his responsibility until the controversy which gave rise thereto has come to an end, unless the court so orders. (Article 2007, Ibid.)

d. Good father of a family

The depositary of property sequestrated is bound to comply, with respect to the same, with all the obligations of a good father of a family.(Article 2008, Ibid.)

3. EXTRAJUDICIAL DEPOSIT

a. VOLUNTARY DEPOSIT

A voluntary deposit is that wherein the delivery is made by the will of the depositor. A deposit may also be made by two or more persons each of whom believes himself entitled to the thing deposited with a third person, who shall deliver it in a proper case to the one to whom it belongs. (Article 1968, Ibid.)

b. Contract of deposit

A contract of deposit may be entered into orally or in writing. (Article 1969, Ibid.)

c. Incapacity

1) By the depositor

If a person having capacity to contract accepts a deposit made by one who is incapacitated, the former shall be subject to all the obligations of a depositary, and may be compelled to return the thing by the guardian, or administrator, of the person who made the deposit, or by the latter himself if he should acquire capacity. (Article 1970, Ibid.)

2) By the depositary

If the deposit has been made by a capacitated person with another who is not, the depositor shall only have an action to recover the thing deposited while it is still in the possession of the depositary, or to compel the latter to pay him the amount by which he may have enriched or benefited himself with the thing or its price. However, if a third person who acquired the thing acted in bad faith, the depositor may bring an action against him for its recovery. (Article 1971, Ibid.)

d. Multiple depositors who are not solidary

1) If thing admits of division

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. (Article 1985, Ibid.)

2) If thing does not admit division

When there is solidarity or the thing does not admit of division, the provisions of Articles 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. (Paragraph 2, Article 1985, Ibid.)

If the depositor should lose his capacity to contract after having made the deposit, the thing cannot be returned except to the persons who may have the administration of his property and rights. (Article 1986, Ibid.)

e. Consignation by depositary

Unless the deposit is for a valuable consideration, the depositary who may have justifiable reasons for not keeping the thing 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.(Article 1989, Ibid.)

f. Right to retain thing deposited in pledge

The depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. (Article 1994, Ibid.)

g. Obligations of the Depositary

1) To safekeep the thing deposited

2) To return the thing deposited

The depositary is obliged to keep the thing safely and to return it, when required, to the depositor, or to his heirs and successors, or to the person who may have been designated in the contract. His responsibility, with regard to the safekeeping and the loss of the thing, shall be governed by the provisions of Title I of this Book.(Article 1972, Ibid.)

If the deposit is gratuitous, this fact shall be taken into account in determining the degree of care that the depositary must observe. (Paragraph 2, Article 1972, Ibid.)

3) To not re-deposit with a third person – unless allowed

Unless there is a stipulation to the contrary, the depositary cannot deposit the thing with a third person.(Article 1973, Ibid.)

a) If allowed, depositary liable if third person is manifestly careless or unfit

If deposit with a third person is allowed, the depositary is liable for the loss if he deposited the thing with a person who is manifestly careless or unfit. (Ibid.)

4) To be liable for negligence of employees

The depositary is responsible for the negligence of his employees. (Ibid.)

5) To notify depositor and wait for decision, before changing way of deposit

GENERAL RULE: The depositary may change the way of the deposit if under the circumstances he may reasonably presume that the depositor would consent to the change if he knew of the facts of the situation. However, before the depositary may make such change, he shall notify the depositor thereof and wait for his decision. (Article 1974, Ibid.)

EXCEPTION: … unless delay would cause danger.(Ibid.)

6) To collect when securities or instruments which earn interest become due

7) To take necessary steps to preserve value of securities and rights thereto

The depositary holding certificates, bonds, securities or instruments which earn interest shall be bound to collect the latter when it becomes due, and to take such steps as may be necessary in order that the securities may preserve their value and the rights corresponding to them according to law.(Article 1975, Ibid.)

The above provision shall not apply to contracts for the rent of safety deposit boxes. (Paragraph 2, Article 1972, Ibid.)

8) To avoid using thing deposited

GENERAL RULE: The depositary cannot make use of the thing deposited without the express permission of the depositor. (Article 1977, Ibid.)

Otherwise, he shall be liable for damages.(Paragraph 2, Article 1977, Ibid.)

EXCEPTION: However, when the preservation of the thing deposited requires its use, it must be used but only for that purpose.(Paragraph 3, Article 1977, Ibid.)

a) Permission

The permission shall not be presumed, and its existence must be proved. (Paragraph 2, Article 1978, Ibid.)

b) When depositary becomes a loan or commodatum

GENERAL RULE: When the depositary has permission to use the thing deposited, the contract loses the concept of a deposit and becomes a loan or commodatum.(Article 1978, Ibid.)

EXCEPTION:… except where safekeeping is still the principal purpose of the contract.(Article 1978, Ibid.)

9) To avoid commingling grain or other articles – if stipulated

GENERAL RULE: … the depositary may commingle grain or other articles of the same kind and quality, in which case the various depositors shall own or have a proportionate interest in the mass. (Article 1976, Ibid.)

EXCEPTION:Unless there is a stipulation to the contrary… (Article 1976, Ibid.)

10) To be liable for fortuitous event – in certain cases

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 depositor’s 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 1979, Ibid.)

11) To keep secrecy – if seal or lock is broken

When the seal or lock is broken, with or without the depositary’s fault, he shall keep the secret of the deposit. (Paragraph 4, Article 1981, Ibid.)

a) Where it becomes necessary to open locked box or receptacle

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. (Article 1982, Ibid.)

11) To refrain from demanding that depositor prove ownership

The depositary cannot demand that the depositor prove his ownership of the thing deposited. (Article 1984, Ibid.)

12) To advise true owner if thing deposited is stolen

Nevertheless, should he discover that the thing has been stolen and who its true owner is, he must advise the latter of the deposit. (Paragraph 2, Article 1984, Ibid.)

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.(Paragraph 3, Article 1984, Ibid.)

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. (Paragraph 4, Article 1984, Ibid.)

13) To deliver sum or other thing received for loss of thing deposited

a) In case of force majeure or government order

If the depositary by force majeure or government order loses the thing and receives money or another thing in its place, he shall deliver the sum or other thing to the depositor.(Article 1990, Ibid.)

b) Depositor’s heir

The depositor’s heir who in good faith may have sold the thing which he did not know was deposited, shall only be bound to return the price he may have received or to assign his right of action against the buyer in case the price has not been paid him.(Article 1991, Ibid.)

14) To return the thing deposited – with all products, accessories, and accessions

The thing deposited shall be returned with all its products, accessories and accessions. (Article 1983, Ibid.)

Should the deposit consist of money, the provisions relative to agents in article 1896 shall be applied to the depositary.(Paragraph 2, Article 1983, Ibid.)

The agent owes interest on the sums he has applied to his own use from the day on which he did so, and on those which he still owes after the extinguishment of the agency. (Article 1896, Ibid.)

15) To return the thing deposited – in same condition, if thing deposited is closed and sealed

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. (Article 1981, Ibid.)

a) Presumption against depositary

Fault on the part of the depositary is presumed, unless there is proof to the contrary. (Paragraph 2, Article 1981, Ibid.)

b) Value of the thing

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. (Paragraph 3, Article 1981, Ibid.)

16) To return the thing deposited – to designated place

a) If stipulated

If at the time the deposit was made a place was designated for the return of the thing, the depositary must take the thing deposited to such place; but the expenses for transportation shall be borne by the depositor. (Article 1987, Ibid.)

b) If not stipulated

If no place has been designated for the return, it shall be made where the thing deposited may be, even if it should not be the same place where the deposit was made, provided that there was no malice on the part of the depositary. (Paragraph 2, article 1987, Ibid.)

17) To return the thing deposited – upon demand

a) Even though a specified person or time has been fixed

The thing deposited must be returned to the depositor upon demand, even though a specified period or time for such return may have been fixed. (Article 1988, Ibid.)

b) When not applicable

The immediately preceding paragraph shall not apply when the thing is judicially attached while in the depositary’s possession, or should he have been notified of the opposition of a third person to the return or the removal of the thing deposited. In these cases, the depositary must immediately inform the depositor of the attachment or opposition. (Paragraph 2, Article 1988, Ibid.)

c. Obligations or depositor

1) To reimburse the depositary

a) Preservation expenses

If the deposit is gratuitous, the depositor is obliged to reimburse the depositary for the expenses he may have incurred for the preservation of the thing deposited. (Article 1992, Ibid.)

b) Loss of the thing deposited

GENERAL RULE: The depositor shall reimburse the depositary for any loss arising from the character of the thing deposited… (Article 1993, Ibid.)

EXCEPTIONS:

1) Unless at the time of the constitution of the deposit the depositor was not aware of, or was not expected to know the dangerous character of the thing; or

2) Unless depositor notified the depositary of the same; or

3) Unless the depositary was aware of it without advice from the depositor. (Ibid.)

d. When deposit is extinguished

A deposit its extinguished:

1) Upon the loss or destruction of the thing deposited;

2) Upon the death of either the depositor or the depositary, in case of a gratuitous deposit. (Article 1995, Ibid.)

4. NECESSARY DEPOSIT

a. Concept

A deposit is necessary:

1) When it is made in compliance with a legal obligation;

2) When it takes place on the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, or other similar events. (Article 1996, Ibid.)

The deposit referred to in No. 1 of the preceding article shall be governed by the provisions of the law establishing it, and in case of its deficiency, by the rules on voluntary deposit.(Article 1997, Ibid.)

The deposit mentioned in No. 2 of the preceding article shall be regulated by the provisions concerning voluntary deposit and by Article 2168.(Paragarph 2, Article 1997, Ibid.)

b. Hotels or inns

1) Deposit of effects of travellers

The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible 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-keepers or their substitutes advised relative to the care and vigilance of their effects. (Article 1998, Ibid.)

2) Vehicles, animals, articles

The hotel-keeper is liable for the vehicles, animals and articles which have been introduced or placed in the annexes of the hotel.(Article 1999, Ibid.

3) Loss of or injury to personal property of guests

a) When hotel-keepers are liable

The responsibility referred to in the two preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him. (Article 2000, Ibid.)

b) When hotel-keepers are not liable

Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel.(Article 2002, Ibid.

4) Thief or robber entering a hotel – not a force majeure

The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (Article 2001, Ibid.)

5) Posting notices on non-liability, void

The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void. (Article 2003, Ibid.)

6) Right to retain things

The hotel-keeper has a right to retain the things brought into the hotel by the guest, as a security for credits on account of lodging, and supplies usually furnished to hotel guests. (Article 2004, Ibid.)

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