Title XII (Deposit)

Question 1

🟢CHAPTER 1 - DEPOSITS IN GENERAL & ITS DIFFERENT KINDS🟢

what is a Deposit

Answer 1

Deposit is a contract where the depositor delivers a thing to the depositary for the principal purpose of safekeeping it with the obligation of returning it when demanded, [and] not to allow this other person to use the thing.

• However, if he should use, it is only incidental to the primary use which is preservation

Question 2

similarities with deposit & loan

Answer 2

real contract perfect by delivery of the thing to the depositary by the depositor

Question 3

similarities with deposit & mutuum

Answer 3

either onerous or gratuitous,

but if CoD (contract of deposit) is silent about consideration, PRESUMPTION is that it is gratuitous

Question 4

parties to CoD

Answer 4

Depositor - one who deposits
Depositary - obliged to safe keep

Question 5

knowledge check: what is a real contract?

Answer 5

obligation arises only upon the delivery of the subject matter by one party to the other

Question 6

Characteristics of a CoD

Answer 6

1. It is a real contract perfected by delivery (1963)
2. Naturally gratuitous, [unless]:
   - the contrary is stipulated
   - Depositary is engaged in the business of storing goods
3. The purpose is primarily custody
   - where the custody is
   secondary, it is NOT deposit.
4. The contract is unilateral or bilateral, according to whether
   it is gratuitous or compensated.
5. Depositary cannot use the thing deposited, [except]:

• Express permission of the depositor
• Preservation of the thing requires its use but only for
  said purpose

6. Only movables can be the object of a contractual deposit;

• Only applies to extrajudicial deposits.

Question 7

But if money is delivered to you in a deposit, and the depositor demands the return of the money after a certain period and depositary ask an extension to return the money,

• was the initial contract a deposit alone?
• was a deposit converted into a contract of loan?
• was it initially a contract of loan?

Answer 7

In the case of Javellana vs Lim, the court said, from the start it was a loan. Why would you extend the period if you did not allow the depositary to use the money in the first place?

Because if it is a deposit, you could have demanded for the return of the money anytime. And there will be no occasion to ask for an extension for the return.

Question 8

Can an Intangible be an object in a CoD?

Answer 8

No, there has to be actual delivery of the object that is why only movables can be the object of voluntary deposit

Question 9

Can documents evidencing ownership of an intangible thing be the object of deposit?

like a share of stock, it is intangible but what is tangible is its evidence of ownership which is the stock certificate

Answer 9

Yes, a stock certificate or documents evidencing ownership of an intangible can be the object of CoD

Question 10

What is the nature of a deposit?

Answer 10

A deposit is generally gratuitous except

• express provision that compensation be paid
• engage in the business of storing goods

Question 11

When is deposit considered as a loan?

Answer 11

If there is stipulation as to payment of interest, because interest can ONLY arise from a Contract of Loan

Question 12

knowledge check: what is a consensual agreement

Answer 12

consensual agreement, naay obligation mo arise which is to deliver the money/thing (not necessarily one year, can be any period stipulated as long as less than one year). if lapas one year, need na in writing to make it enforceable kay ma fall na sa statute of frauds.

after delivery, diha na ang commodatum/mutuum mo arise. hence, katong rules sa commodatum/mutuum mo apply like dapat i preserve ni bailee with diligence of a goof father and other obligations peculiar to a commodatum or mutuum.

Question 13

2025: Judge A promises to lend you 100k to support your review for the bar exam i

2027: You took the BAR exam and demanded 100k from Judge A and she refused

Can you compel Judge A?
What can Judge A do to ensure she is not compelled to give 100k?

Answer 13

[A]
No, the performance of obligation and one year has already passed (Statute of Frauds).

[B]
While the obligation is valid and binding, judge A can invoke the unenforceability of the contract

• Has to be in writing to be enforceable.

Question 14

if the agreement is to merely to constitute a deposit (consensual contract), is this valid?

Answer 14

Yes, it is valid but the obligation only arises upon actual delivery

Question 15

In most instances, the structure where he stores his goods is called a warehouse. That’s why the depositary is called a warehouseman, and because you deposit your goods to the warehouseman for storage, the warehouse man issues a receipt, the contract is called?

Answer 15

It is still a CoD, but is governed by Warehouse Receipt Law

Question 16

what is the rulings laid down in the case of

US v. Igpuara (1913) on the “Effect of balance of commission retained by agent”

Answer 16

• depositary requires depositor’s consent to use the thing deposited and the rights & obligations as depositary & depositor ceases and rules on loan or contract shall be observed
• failure to claim at once or delay for some time in demanding restitution of the thing deposited does NOT imply permission to use the thing deposited

Question 17

What is the transaction between a bank and a depositor

Answer 17

BPI v. IAC (1988)

it is that of creditor & debtor because the contract between them is a loan

Question 18

why is the classification of the contract as LOAN (mutuum) significant between a bank and a depositor?

Answer 18

upon deposit, ownership transfers to the debtor bank thus the bank can lend it to others

Question 19

If I deliver to you as a bank $3k for safekeeping and you converted that US dollar to Philippine Peso, could I successfully prosecute you for misappropriation or estafa?

Answer 19

No, as in the case of BPI v. IAC because of CB Circular No. 20 which require the foreign currency to be converted in Philippine peso

Yes, if there were no circular because I have the obligation to return the same amount of THE SAME KIND of what was delivered

Question 20

Petitioner entered into an agreement with Spouses Pugao for the sale of land. The certificates of title were placed in a safety deposit box at Security Bank, with the bank holding the guard key and the petitioner and Spouses Pugao each holding their own keys. When a third party, Ramos, sought to inspect the certificates, they were found missing. Ramos withdrew her offer to purchase, and the petitioner sued the bank for the loss of the certificates. The bank argued that the contract was a lease, limiting its liability. The petitioner contended it was a contract of deposit.

Issue: Whether the agreement between the petitioner and the bank is a lease or a deposit

Answer 20

LB: CA Agro-Industrial Corp v. CA

SC held that the contract was a special deposit, not a lease, and that the bank could be held liable for the loss of the certificates due to negligence or fraud.

It is a special deposit because of shared control.

[gpt]
In a normal deposit, the depositor typically has full access and control over the thing deposited. In this case, while the petitioner and the Pugaos held keys to the safety deposit box, the bank retained the guard key, which meant that the bank had to be involved in opening the box. This aspect of shared control made the deposit different from a traditional deposit, where the depositor would have sole control.

However, the case was dismissed because the petitioner failed to prove the bank’s negligence or fraud.

Question 21

in the case of CA Agro-Industrial Corp v. CA, what would it take or look like should it be a contract of lease?

Answer 21

for the bank to have absolute and full control to the effect that the bank can open the deposit box at anytime with the renter’s and guard’s key

Question 22

In the case of CA Agro-Inudstrial Corp v. CA

Is the bank liable for the loss of the certificates of title even when there is a disclaimer that the bank is NOT liable for any loss?

Answer 22

[SC]
Accordingly, the depositary would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreement…

Hence, any stipulation exempting the depositary from any liability arising from the loss of the thing deposited on account of fraud, negligence or delay would be VOID for being contrary to law and public policy.

Question 23

In the case of CA Agro-Industrial Corp. v. CA

was there negligence on part of the bank when the petitioner and spouses Pugao agreed between themselves that in order for them to open the safety deposit, both depositors’ signatures are required?

Answer 23

No, the Bank was not negligent because in the case, the depositors did not communicate to the bank the agreement that there must be both signatures of the depositors

Question 24

Suppose in the case of CA Agro-Industrial Corp v. CA Security Bank was negligent, what LB do you have for damages?

Answer 24

Art. 1170

“Those who in the performance of their obligations are guilty of [fnd] fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

Question 25

Sia rented a safety deposit box at Security Bank and Trust Company (SBTC), where he stored his stamp collection. During a flood, water seeped into the bank’s premises and damaged Sia’s collection. SBTC rejected Sia's claim for compensation, citing its "**Rules and Regulations Governing the Lease of Safe Deposit Boxes,** *par. 9 & 13*" which limit the bank's liability and state that SBTC is not responsible for the contents of the box. SBTC also argued that the contract was a lease, not a deposit, and that the flood was an event beyond its control. Issue: Is SBTC liable for the damage to Sia's stamp collection despite the provisions in its governing rules that limit liability?

Answer 25

**Sia vs. CA (1993)** [SC] - both **conditions No. 9 and No. 13 of the “Lease Agreement” covering the safety deposit box in question must be stricken down for being contrary to law and public policy** as they are meant to exempt SBTC from any liability for damage, loss or destruction of the contents of the safety deposit box *which may arise from its own or its agents’ fraud, negligence or delay*

Question 26

Lim and his co-debtors obtained a sum of P2,600 from Javellana. The document described the transaction as a "deposit without interest." When the obligation became due, Lim requested an extension of one year to repay the loan and agreed to pay interest at 15% per annum. Javellana granted the extension, and Lim acknowledged using the money. Issue: Was the transaction between Javellana and Lim a loan or a deposit?

Answer 26

**Javellana vs. Lim (1908)** It is a loan evidenced by the grant of extension confirming that the purpose of the 2600 was for Lim et al., to use the money. Thus, it is a CoLoan in spite of the contract providing for the word "deposit"

Question 27

knowledge check: what is novation and was there novation in the case of Javellana v. Lim

Answer 27

Novation refers to substitution of a contract to a new one. In this case, there was no novation from CoD to CoL as it was a CoLoan from the beginning.

Question 28

Kinds of Deposit

Answer 28

1. Judicial Deposit 2. Extrajudicial (voluntary/necessary) 3. Regular 4. Irregular [imo] - special deposit (CA Agro-Development Corp v. CA)

Question 29

what is a judicial deposit?

Answer 29

takes place when an **attachment** [or] **seizure** of the property in litigation is ordered by the court.

Question 30

what are extrajudical deposit

Answer 30

**voluntary deposit** - made by the will of the depositor with the consent of the depositary. **necessary d** - made in **compliance with a legal obligation**; on the occasion of a calamity; travelers in inns, hotels, common carriers.

Question 31

distinguish regular and irregular deposits

Answer 31

reg - -ary not allowed to use irreg - -ary allowed to use movable deposited

Question 32

Is a contract to make a future deposit binding?

Answer 32

Yes. An offer to make a contract for future deposit is merely consensual, but nevertheless, binding if the offer is accepted.

Question 33

How is deposit distinguished from sale or barter? insofar as: - ownership - nature - perfection

Answer 33

[Deposit] - ownership NOT transferred to depositary - may be gratuitous - real contract; requires delivery [Sale] - ownership transferred - onerous - consensual; sale refers to one party that obligates himself to transfer ownership [**and**] deliver a determinate thing [and] the other to pay a certain price [Barter] - ownership transferred - onerous - consensual

Question 34

Deposit v. Commodatum v.Mutuum as to; - purpose - nature - thing involved - when to demand

Answer 34

[Deposit] - safekeeping - *may* be gratuitous/onerous - **movable** only (extrajudicial D) - Depositor can demand at will [Commodatum] - **use** thing loaned - essentially *gratuitous* - movable [or] immovable - **Bailor** must wait until period stipulated lapse [unless] *precarium* [Mutuum] - **consumption** of object - *may* be gruitous/onerous - **money** [or] **fungible thing** - **Lender** must wait until period to lapse

Question 35

Deposit v. Simple Loan (Mutuum) - similarities - differences

Answer 35

[Sim] - actual delivery - real contracts [Diff] - purpose (safekeeping v. consumption

Question 36

🟢CHAPTER 2 - VOLUNTARY DEPOSIT🟢 what is a **voluntary deposit**

Answer 36

A contract where a thing is delivered at the will of a depositor to the depositary for the purpose of safekeeping by the latter coupled with the obligation of returning it upon demand.

Question 37

Is ownership required in deposit?

Answer 37

No, since ownership of the thing deposited is not transferred to the depositary

Question 38

Kinds of voluntary deposit

Answer 38

1. **Complete freedom** - Where deposit is by will of the depositor 2. **Conflicting adversarial claims** - Where the deposit is by two claimants, and the thing is to be delivered to the one found to be entitled to it. The ownership is litigated here. Litigate between themselves, and we call this litigation as “Interpleader”.

Question 39

Requisites of a Voluntary Deposit

Answer 39

1. **Capacity of the Parties** 2. Object 3. Consideration 4. Form

Question 40

knowledge check: civilly, what does **Incapacitated** mean

Answer 40

[gpt] incapacitated persons refer to those who are legally disqualified from entering into certain contracts or performing specific legal acts due to their **age, mental condition, or other legal impediments.**

Question 41

Requisites of a Voluntary Deposit > 1 Depositor (capacitated) Depositary (Incapacitated) -Ary disposes the movable What is -Or's remedies?

Answer 41

Art. **1971**, his only remedy is; - an action to **recover** thing deposited while in possession of -Ary, or - action to **compel** to pay him the price or amount of enrichment "Article 1971. 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. "

Question 42

what if the -Ary incapable disposed the thing to a 3rd person? can the 3rd person be compelled to return the thing?

Answer 42

Art. (1971) "...However, if a third person who acquired the thing acted in **bad faith**, the deposit**or** may bring an action against him for its **recovery.** " If **good faith**, -Or's remedy is only against the -Ary for the return of the price/amount he was benefitted

Question 43

What if the third person acted in good faith, but the depositary acted in bad faith? Can you impute bad faith on an incapacitated person and recover damages?

Answer 43

No, precisely because the depositary is **legally incapacitated** thus you cannot recover damages from him. It's a presumption that he can't distinguish between right and wrong.

Question 44

Requisites of a Voluntary Deposit > 1 Depositor (incapable) Depositary (capable) what is the remedy of the incapable depositor?

Answer 44

-Ary may be compelled to return the thing by the **guardian (administrator)** [or] by the -Or himself if he should acquire capacity (1970 & 1986)

Question 45

Requisites of a Voluntary Deposit > 1 Which is false Capacity is required in claiming the return Capacity is required in making the deposit

Answer 45

Capacity is NOT required when making a deposit BUT **is required** when claiming the return

Question 46

Requisites of a Voluntary Deposit > 2 when is an immovable property be the object of a deposit?

Answer 46

in **judicial deposit**

Question 47

knowledge check: what is the nature of the contract when one of the parties is incapable?

Answer 47

it is void**ABLE**. meaning valid until annulled

Question 48

A and B entered into a CoD where A knows that B is incapable. Can A later allege the incapacity of B?

Answer 48

No, as provided Art. **1397** "Article 1397. The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However, **persons who are capable cannot allege the incapacity of those with whom they contracted**; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base their action upon these flaws of the contract."

Question 49

knowledge check: does payment to an incapacitated by an incapacitated person extinguish an obligation?

Answer 49

No, it only extinguishes the obligation only **to the extent he was benefited**

Question 50

A minor, John, deposits a valuable painting with David, an adult depositary. Later, John demands the return of the painting. David, without verifying John's capacity, hands over the painting Can the parents of John hold David liable for the lost painting?

Answer 50

[gpt] Yes, David's obligation was to safekeep the painting is not extinguished because John, being incapacitated, could not fully benefit from receiving it back.

Question 51

**What are the obligations of the Depositary**

Answer 51

1. **Preserve** the thing - ordinary diligence unless a higher degree is stipulated 2. **Return** the thing

Question 52

Is the depositary liable for loss due to fortuitous event?

Answer 52

GR: No, no person shall be liable for those events which could **not be foreseen**, [or] although **foreseen were inevitable** XPN 1. if so **stipulated** 2. uses the thing **without permission** of -Or's 3. **delays** its return 4. **allows others to use** even if he himself may have been authorized to use the same [imo] 5. Negligence of the 'Ary

Question 53

Obligation of Depositary > Preserve the thing Can the depositary use the thing deposited?

Answer 53

GR: No, deposit is for safekeeping and not for use XPN 1. -Or' **expressly allows**. The CoD ceases and becomes Contract of Loan or Commodatum 2. If preservation requires its use, but only for such purpose.

Question 54

What is the effect of unauthorized use?

Answer 54

-Ary liable for **damages** (art. 1170)

Question 55

What are the effects of authorized use?

Answer 55

[**Non**-consumable Thing] - ceases to be CoD and becomes CoCommodatum xpn: safekeeping is still **principal purpose** of contract [Consumable thing/Money] - ceases to be CoD and becomes CoL xpn: if safekeeping still **principal purpose** of contract but now becomes **IRREGULAR DEPOSIT**

Question 56

Deposit to a 3rd Person Is the depositary allowed to the deposit the thing with a third person?

Answer 56

GR: No XPN: express stipulation XPN-XPN: -Ary deposits the thing to a person **manifestly careless & unfit**

Question 57

In what instances may the depositary be held liable?

Answer 57

-Ary is liable for **loss [or] damage** of the thing deposited when: 1. he transfers the deposit to a 3rd person w/o authority 2. deposits thing to 3rd person **manifestly unfit & careless** *even though authorized* 3. lost through the **negligence** of -Ary's employees

Question 58

What is the effect if the depositary delegates safekeeping

Answer 58

He can be liable for damages for whatever reason (even fortuitous events) for loss of the thing.

Question 59

When can he be exempt from liability if he delegates?

Answer 59

GR: -Ary liable XPN: delegated it to someone NOT manifestly unfit & careless if delegated to someone manifestly unfit, -Ary is liable

Question 60

Change In The Manner Of Deposit May the depositary **change the manner of deposit**?

Answer 60

GR: No, place of delivery & other conditions cannot be modified as gen rule XPN: When the -Ary may **reasonably PRESUME** that the -Or knew of the facts of the situation. Requisites: 1. -ary **notifies** -Or of such change 2. -Ary **must wait for reply** of -Or to the change [*unless*] delay would cause danger

Question 61

What if there is an imperative to change the manner and to transfer from one warehouse to another because of typhoon Yolanda? Can the -Ary change the manner of deposit?

Answer 61

GR: No XPN: -Ary reasonably presume -Or would agree to the modification so -ary can do so without permission

Question 62

There is a storm, and the warehouse where the deposited goods are located is along the coastal area of the locality and there’s a threat of a storm surge and so the depositary wanted to transfer the goods from that particular warehouse to the higher area of the same locality. He tried to contact the depositor to no avail. Since there’s an urgency to transfer the goods, he did not wait for the consent of the depositor and transferred the goods to the safer warehouse Unfortunately, that “safer” warehouse was also destroyed. Can the depositor hold the depositary liable for damages for changing the manner or way of the deposit?

Answer 62

GR: -Ary should not change the manner of deposit. If so, shall be liable XPN: When -Ary can **reasonably presume** that the -Or would agree to the modification if -Or knew the facts of the situation by 1. -ary **notifies** -or of such change 2. -ary **waits** for reply** from -or before the change. In that instant, the -Ary is NOT liable even

Question 63

Preservation of Value What is the rule if the thing deposited should earn interest

Answer 63

-Ary is obliged to: 1. collect interest 2. preserve its value & rights corresponding to it *note* -Ary bound to collect the **capital** [and] **interest** when due

Question 64

What if the security deposited by the depositor matures DURING the period of the deposit?

Answer 64

The deposit**ARY** must collect the proceeds from the securities. Otherwise, it might go stale. [gpt] If the depositary fails to collect the proceeds on time, the depositor could lose their right to claim the value of the matured security. This is because some financial instruments have expiration periods for claiming their value, and unclaimed amounts may "go stale."

Question 65

You pawn your camera for a loan of 5000php with 3% interest/month and received a **pawn ticket** you delivered this ticket to the depositary. what's the obligation of the depositARY? what is the obligation of the depositOR?

Answer 65

[-Ary] - **preserve** the value of the thing - **notify when pawn matures** or interest accrues (*unless*) it is a deposit box in a bank, then it is - Or's obligation to know material dates - keep **secrecy of deposit** *[unless]* it is a crime [-Or] - renew the pawn by paying interest

Question 66

liability of -Ary for keeping secret the object of deposits which are contrabands/drugs

Answer 66

-Ary liable as an **accessorry** to the crime for maintaining secrecy in an exceptional circumstance

Question 67

Secrecy of Deposit What are the depositary's obligations as regards closed and sealed deposits?

Answer 67

1. **Return the thing in the same condition** deposited when delivered closed and sealed * Exception: If safekeeping is still the **principal purpose** of the contract. 2. If the thing deposited is **money or other consumable thing**, the contract is **CONVERTED** into a simple loan or mutuum. (CoL) * Exception: If safekeeping is still the principal purpose of the contract, but it now becomes an **irregular deposit**. 3. **Pay for damages should the seal or lock be broken** through his fault which is presumed [*unless*] proven otherwise. 4. **Keep the secret of the deposit when the seal or lock is broken** with or without his fault. [XPN] - meaning -Ary can break/open the deposit as long as the primary purpose is its safekeeping

Question 68

If the object deposited is placed in a locked receptacle or any locked, sealed inside the box, accidentally opened without the fault of the depositary? What is the obligation of the depositary?

Answer 68

Maintain the secrecy of the deposit, unless, if keeping the secret would make him an accessory to the crime like what is sealed in the receptacle is a kilo of shabu, where he is no longer obliged to keep it as a secret.

Question 69

page 21

Question 79

On the xpn that deposit is gratuitous, a depositary who is engaged in the business of storing goods issues

Answer 79

warehouse receipt

Question 80

**Safety deposit boxes** are exclusive to banks T/F

Answer 80

False. Hotels can also have SDB

Question 81

If -Ary is incapable, sold the movable thing to a 3rd person and is yet to receive the amount, what is the remedy of the -Or?

Answer 81

Subgratory action to the third person

Question 82

What is delivered for deposit to you are sums of money with their particular serial number, it so happened that you used it but when the time to demand was made, you gave the same amount but of different serial number. Is this allowed?

Answer 82

Yes, **commingling** is allowed.

Question 83

Can the judgment obligee (Creditor) attach the deposit or the movable thing of the -Or(debtor)?

Answer 83

Yes

Question 84

knowledge check: (oblicon) if no stipulation where return is made, return will be made where?

Answer 84

At the time of demand without fault on the part of the -Ary (?)

Question 85

Can -ary seek reimbursement from -Or for **extraordinary expenses**

Answer 85

Law does not distinguish between ordinary and extraodrinary. Only ordinary and ornamental

Question 86

-Or deposits 100k to -Ary but is at the same time obliged to hand 100k. -Or now demands the 100k from safekeeping from -Ary Does -Ary have a right to ask for a set-off or call it quits?

Answer 86

No compensation arising from commodatum or depositum however if they agree then no problem but as a matter of right, -Ary cannot compel