Deposit | CREDIT TRANSACTIONS

CIVIL LAW: CREDIT TRANSACTIONS

B. Deposit

Under Philippine law, Deposit is a credit transaction governed by the provisions of the Civil Code (Articles 1962-2009). It involves the delivery of a thing by one party (the depositor) to another (the depositary) with the obligation of the latter to return the same upon demand or upon the fulfillment of the purpose of the deposit.

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I. NATURE AND DEFINITION

1. Deposit Defined (Article 1962):
   Deposit is a contract whereby a person (depositor) delivers a thing to another (depositary) for safekeeping, under the obligation of the latter to return it when requested or after a specified period.

2. Kinds of Deposit:
   a. Judicial Deposit (Sequestration):

   • Ordered by a court in a case where property is subject to litigation.
   • Governed by the rules of court.
   • Articles 2005-2009 of the Civil Code provide limited guidance.

   b. Extrajudicial Deposit:

   • Voluntarily constituted by agreement between parties.
   • Divided into: i. Voluntary Deposit (Article 1966): Arises from the agreement of the depositor and depositary.
     ii. Necessary Deposit (Article 1996): Constituted by law or due to urgent circumstances.

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II. ELEMENTS OF A DEPOSIT

1. Delivery: The actual physical transfer of possession of the object to the depositary.
2. Purpose: Safekeeping of the thing, not its use.
3. Obligation to Return: The depositary must return the same object upon demand or upon fulfillment of the deposit's purpose.

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III. RULES GOVERNING EXTRAJUDICIAL DEPOSIT

A. Voluntary Deposit (Articles 1966-1995)

1. Parties:

   • Depositor: Must have capacity to contract.
   • Depositary: Can be any person capable of holding possession.

2. Obligations of the Depositary:
   a. Safeguard the thing with due diligence (Article 1972).
   b. Not use the thing without the depositor's consent (Article 1977).
   c. Return the identical thing upon demand, with accessories or fruits (Article 1983).

3. Rights of the Depositary:
   a. Retain the deposit for expenses or losses incurred (Article 1994).
   b. Compensation for extraordinary expenses (Article 1973).

4. Loss of Thing Deposited:
   a. Depositary is not liable if the loss is due to fortuitous events unless:

   • He expressly assumed responsibility (Article 1979).
   • The thing is delivered sealed or closed, and the seal is broken (Article 1981).

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B. Necessary Deposit (Articles 1996-2004)

1. Concept:
   A deposit made:

   • In compliance with a legal obligation.
   • On account of an emergency (e.g., fire, earthquake).

2. Rules for Hotelkeepers (Articles 1998-2004):

   • Hotelkeepers are liable for loss of personal property of guests, unless: a. Due to force majeure.
     b. The guest's negligence contributed to the loss (Article 2000).
   • Exclusion of liability is not allowed through stipulation (Article 2003).
   • Hotelkeeper's liability extends to loss caused by employees or other guests (Article 2001).

3. Compensation for the Depositary:

   • Necessary deposit allows for reasonable compensation for the depositary's efforts and expenses.

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IV. JUDICIAL DEPOSIT (SEQUESTRATION) (Articles 2005-2009)

1. Concept:

   • Constituted by virtue of a court order to preserve property in litigation.
   • Custody is placed with a designated depositary (often a third party).

2. Characteristics:

   • Involves property subject to conflicting claims or pending litigation.
   • Custodian must act according to the court's instructions.

3. Obligations of the Judicial Depositary:

   • To comply strictly with court orders.
   • To return the thing upon resolution of the case.

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V. SPECIAL RULES AND NOTES

1. Objects of Deposit (Article 1966):

   • Deposit may involve movable or immovable property, though the rules generally apply to movables.

2. Depositor's Ownership Not Required:

   • A depositor does not need to be the owner of the thing deposited, provided they have the right to deliver it.

3. Breach of Deposit Contract:

   • Failure to return the thing upon demand may give rise to liability for damages and possibly criminal liability under Estafa (Article 315, Revised Penal Code).

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VI. TERMINATION OF DEPOSIT

1. Fulfillment of the purpose or expiration of the term.
2. Demand by the depositor for the return of the object.
3. Mutual agreement between the parties.
4. Fortuitous loss or destruction of the object.

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By understanding these provisions, parties can navigate the nuances of deposit agreements and safeguard their interests under Philippine law.