Voluntary Deposit 356a

VOLUNTARY DEPOSIT GENERAL PROVISIONS Art. 1968. 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. (1763)

VOLUNTARY DEPOSIT

tary cannot dispute the title of the depositor to the thing deposited

WHERE THERE ARE SEVERAL DEPOSITORS

the same with a third person

Art. 1969. A contract of deposit may be entered into orally or in writing. (n)

Art. 1970. 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 , of the person who made the deposit, or by the latter himself if he should acquire capacity. (1764)

WHERE DEPOSITARY CAPACITATED AND THE DEPOSITOR INCAPACITATED the depositary is capacitated, he is subject to all the obligations of a depositary, whether or not the depositor is capacitated

the incapacitated or the depositor himself if he should acquire capacity

WHAT IF THE CAPACITATED DEPOSITOR CANNOT RETURN IT TO THE LEGAL REPRESENTATIVE? He can be held liable for estafa.

WHAT CAN HE OPT TO DO? Consignation is not advisable. It is too costly.

Art. 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. (1765a)

WHERE DEPOSITARY INCAPACITATED AND THE DEPOSITOR CAPACITATED

o

To return the thing deposited while still in his possession

o To the pay the depositor the amount by which he may have benefited himself with the thing or its price subject to the right of a third person who acquired the thing in good faith

WHAT IS THE BENEFIT CONTEMPLATED BY LAW? Reasonable and judicious use

OBLIGATIONS OF THE DEPOSITARY

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 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.

If the deposit is gratuitous, this fact shall be taken into in determining the degree of care that the depositary must observe. (1766a)

OBLIGATION TO KEEP THE THING DEPOSITED AND RETURN IT 1. Degree of care—ordinarily, the depositor must exercise over the thing deposited the same diligence as he would exercise over his property a. Because it is an essential requisite of the judicial relation which involves the depositor’s confidence in good faith and trustworthiness

b. Presumption that the depositor in choosing the depositary took into the diligence which the depositary is accustomed with respect to his own property 2. Rules applicable a. Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a) b. Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. (1101) c. Art. 1265. Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault, unless there is proof to the contrary, and without prejudice to the provisions of article 1165. This presumption does not apply in case of earthquake, flood, storm, or other natural calamity. (1183a) d. The required degree of care is greater if the deposit is made for compensation than when it is gratuitous. 3. Return before specified term—the thing deposited must be returned to the depositor whenever he claims it, even though a specified term or time for such may have been stipulated in the contract.

CAN THERE BE A STIPULATION FOR A LESSER DEGREE OF CARE? Yes.

CAN THERE BE STIPULATION THAT THERE WOULD ONLY BE LIABILITY WITH REGARD GROSS NEGLIGENCE AND NOT ORDINARY NEGLIGENCE? Yes.

Art. 1973. Unless there is a stipulation to the contrary, the depositary cannot deposit the thing with a third person. 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. The depositary is responsible for the negligence of his employees. (n)

OBLIGATION NOT TO TRANSFER DEPOSIT 1. Liability for loss a. If he deposits it with a third person without authority even if there has been no negligence

from his part and on the third person b. If deposit with a third person is allowed, he is liable still if he deposited the thing with a person who is manifestly careless or unfit 2. Exemption from liability a. The depositor is not responsible in case the thing is lost without negligence of the third person with whom he was allowed to deposit the thing if such person is not manifestly careless or unfit Art. 1974. 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, unless delay would cause danger. (n)

Art. 1975. 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.

The above provision shall not apply to contracts for the rent of safety deposit boxes. (n)

IF THE THING DEPOSITED SHOULD EARN INTEREST, THE DEPOSITARY IS UNDER THE OBLIGATION 1. To collect the interest as it becomes due 2. To take steps as may be necessary to preserve its value and the rights corresponding to it SAFETY DEPOSIT BOXES y deposit boxes is not an ordinary contract of lease of things because the full and absolute possession and control of the safety deposit box is not given to the party renting. ntractual relation between the parties. The liability rules are governed by the Civil Code provisions on obligations and contracts, and not on donations.

IS A STIPULATION WHICH EXEMPTS THE BANK FROM LIABILITY FOR THE THINGS CONTAINED IN THE SAFETY DEPOSIT BOX VALID?

some extent by agreement or stipulation, the agreement or stipulation must not be contrary to law and public policy.

delay, or contravention of the tenor of the agreement. void.

Any contrary stipulation would be

Art. 1976. Unless there is a stipulation to the contrary, 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. (n)

Art. 1977. The depositary cannot make use of the thing deposited without the express permission of the depositor.

Otherwise, he shall be liable for damages.

However, when the preservation of the thing deposited requires its use, it must be used but only for that purpose. (1767a)

GENERALLY THE DEPOSITARY CANNOT MAKE USE OF THE THING DEPOSITED WITHOUT THE EXPRESS PERMISSION OF THE DEPOSITOR. WHAT ARE THE EXCEPTIONS? 1. When the depositor has given his express permission to the depositary to use the thing deposited 2. When the preservation of the thing deposited requires its use, it must be used but only for that purpose

WHAT IS THE REASON FOR THIS RULE?

it is not deposit anymore.

shall be liable for damages. In addition, if the thing is lost even through fortuitous event, the depositary shall bear the loss.

Art. 1978. When the depositary has permission 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 principal purpose of the contract.

The permission shall not be presumed, and its existence must be proved. (1768a)

WHAT HAPPENS IF THE DEPOSITARY IS GIVEN PERMISSION TO USE? 1. If the purpose of the contract is still for safekeeping, then it retains its concept as a deposit 2. If the purpose has become for the use or consumption of the thing a.

Commodatum—if the purpose is for a non-consumable thing

b. Mutuum—if the purpose is for a consumable thing or money

Art. 1979. 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.(n)

WHEN IS THE DEPOSITARY 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. (n)

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

Art. 1981. 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.

Fault on the part of the depositary is presumed, unless there is proof to the contrary.

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 upon the credibility of the depositor with respect to the value claimed by him. When the seal or lock is broken, with or without the depositary's fault, he shall keep the secret of the deposit. (1769a)

Art. 1982. 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. (n)

Art. 1983. The thing deposited shall be returned with all its products, accessories and accessions.

Should the deposit consist of money, the provisions relative to agents in article 1896 shall be applied to the depositary. (1770)

OBLIGATION TO RETURN PRODUCTS, ACCESSORIES, AND ACCESSIONS

so all its products, accessions and accessories which are a consequence of ownership

OBLIGATION TO PAY INTEREST ON SUMS CONVERTED TO PERSONAL USE ereof and therefore, he is not liable to pay interest

liable for interest as indemnity applied to his own use from the day on which he did so, and those which he still owes after the extinguishment of the deposit

Art. 1984. The depositary cannot demand that the depositor prove his ownership of the thing deposited.

Nevertheless, should he discover that the thing has been stolen and who its true owner is, he must advise the latter of the deposit.

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.

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. (1771a)

DEPOSITOR NEED NOT PROVE OWNERSHIP

prove his ownership over the thing

WHERE THIRD PERSON APPEARS TO BE THE OWNER he discover that the thing has been stolen and who its true owner is, he must advise the latter of the deposit

month, the depositary shall be relieved of all responsibility by returning the thing deposited to the depositor

acquired by the depositor, the former may return the same.

CAN THE DEPOSITARY REQUIRE THE PRESENTATION OF AN ID? Yes.

Proof of identification is different from proof of ownership.

CAN THE DEPOSITARY REQUIRE THE PRESENTATION OF THE RECEIPT? Yes.

It is only a proof of identification and not ownership.

IN DEPOSIT, WHAT SHOULD BE ASCERTAINED AT THE VERY LEAST? Authority to make deposit should be ascertained. Take note that before the deposit, proof of ownership may be required. The prohibition applies subsequent to the deposit. There is required due diligence review.

Art. 1985. When there are two or more depositors, if they are not solidary, and the thing its of division, each one cannot demand more than his share.

When there is solidarity or the thing does not it 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. (1772a)

RIGHT OF TWO OR MORE DEPOSITORS 1. Thing deposited divisible and depositors not solidary—if the thing deposited is divisible and there are two or more depositors who are not solidary, each one can demand only his proportionate share thereto 2. Obligation solidary or thing deposited not divisible—if the obligation is solidary or the thing is not divisible, the rules on active solidarity shall apply, to the effect that each one of the solidary depositors may do whatever may be useful to the others but not anything which may be prejudicial to the latter, and the depositary may return the thing to any one of the solidary depositors unless a demand for its return has been made by one of them in which case delivery should be made to him 3. Return to one of depositors stipulated—if by stipulation the thing should be returned to one of the depositors, the depositary is bound to return it only to the person designated although he has not made any demand for its return.

Art. 1986. 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 istration of his property and rights. (1773)

PERSON TO WHOM RETURN MUST BE MADE 1. The depositary is obliged to return the thing deposited when required, to the depositor, to his heirs and successors, or to the person who may have been designated in the contract 2. If the person was incapacitated at the time of making the deposit, the property must be returned to his guardian or or the person who made the deposit or to the depositor himself should he acquire capacity 3. Even if the depositor had capacity at the time of making the deposit but he subsequently loses his capacity during the deposit, the thing must be returned to his legal representative

Art. 1987. 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.

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. (1774)

PLACE OF RETURN of stipulation, at the place where the thing deposited might even if it shouldn’t be the same place where the original deposit was made provided the transfer was accomplished without malice on the part of the depositary

just because the deposit is constituted for the benefit of the depositor and not the depositary who assumes no more than the safekeeping and the return of the thing

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 been fixed.

This provision 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. (1775)

TIME OF RETURN d at will and this is true whether the period has been stipulated or not

whole period. In this case, the period is for both the depositor and depositary.

WHEN DEPOSITARY IS NOT OBLIGED TO RETURN THING DEPOSITED 1. When the thing has been judicially attached while in the depositary’s possession—he would be disobeying the judicial order of attachment 2. When he has been notified of the opposition of a third person to the return or removal of the thing deposited

Art. 1989. 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. (1776a)

RIGHT OF DEPOSITARY TO RETURN THING DEPOSITED 1. Deposit gratuitous—the depositary may likewise return the thing deposited notwithstanding that a period has been fixed for the thing if a.

The deposit is gratuitous

b. Justifiable reasons 2. Deposit for a valuable consideration—if the deposit is for a valuable consideration, the depositary has no right to return the thing deposited before the expiration of the time designated even if he should suffer inconvenience as a consequence

Art. 1990. 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. (1777a)

LIABILITY FOR LOSS BY FORCE MAJEURE OR GOVERNMENT ORDER

ng, he has the duty to deliver to the depositor what he has acquired otherwise, he would enrich himself at the expense of the depositor

Art. 1991. 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. (1778)

ALIENATION IN GOOD FAITH BY DEPOSITARY’S HEIR envisions a situation where the depositary dies and the object of the deposit is left with his heir who, in good faith, sells it right to collect the same if it hasn’t been paid and not the real value of the thing

action against him for its recovery

constitutes estafa.

OBLIGATIONS OF THE DEPOSITOR

Art. 1992. 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. (1779a)

OBLIGATION TO PAY EXPENSES OF PRESERVATION 1. Deposit gratuitous—the above article applies only if the deposit is gratuitous. It rests on equity. The depositor would have incurred just the same had the thing remained with him. Without the duty of reimbursement imposed by the article, the depositor would be enriching himself at the expense of the depositary. The rule is different in commodatum. 2. Deposit for compensation—if the deposit is for valuable consideration, the expenses of preservation are borne by the depositary because they are deemed included in the compensation. There can however be a contrary stipulation.

Art. 1993. The depositor shall reimburse the depositary for any loss arising from the character of the thing deposited, unless at the time of the constitution of the deposit the former was not aware of, or was not expected to know the dangerous character of the thing, or unless he notified the depositary of the same, or the latter was aware of it without advice from the depositor. (n)

Art. 1994. The depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. (1780)

DEPOSITARY’S RIGHT OF RETENTION

thing retained serves as security for payment of what may be due to the depositary by reason of the deposit

Art. 1995. A deposit its extinguished:

(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. (n)

CAUSES OF EXTINGUISHMENT OF DEPOSIT

causes such as return of the thing, Novation, merger, expiration of term, fulfillment of resolutory condition

EFFECT OF DEATH OF DEPOSITOR OR DEPOSITARY 1. Deposit gratuitous—if the deposit is gratuitous, the death of either the depositor or depositary extinguishes the deposit. 2. Deposit for compensation—a deposit for a compensation isn’t extinguished by the death of either party because unlike a gratuitous deposit, an onerous deposit isn’t personal in nature. Hence, the rights and obligations arising therefrom are transmissible to their respective heirs. But the heirs of either party have a right to terminate the deposit even before the expiration of the term.