Definition | Deposit | CREDIT TRANSACTIONS

CIVIL LAW > VIII. CREDIT TRANSACTIONS > B. Deposit > 1. Definition

I. Legal Definition

Under Philippine law, specifically Articles 1962 to 2009 of the Civil Code of the Philippines, deposit is a contract whereby a person (the depositor) delivers a thing to another (the depositary) for safekeeping, under the obligation of the latter to return the thing upon demand or at the expiration of the agreed term.

II. Types of Deposit

The law recognizes two types of deposits:

  1. Judicial Deposit (Sequestration) - Deposit made in compliance with a court order or judicial proceeding.

    • Governed by Articles 2005-2009 of the Civil Code.
    • Example: Deposit of disputed goods during litigation.

  2. Extrajudicial Deposit

    • Voluntary Deposit (Article 1968): Constituted by the will of the parties; the depositor freely delivers the thing to the depositary.
    • Necessary Deposit (Article 1996): Arises due to unforeseen events, such as calamities or urgent situations, where a person is compelled to deposit something in order to save it from harm.

III. Characteristics of Deposit

  1. Principal Purpose: Safekeeping of the thing.
  2. Nature of the Contract: Essentially a real contract perfected upon delivery of the thing, unless it is an irregular deposit (e.g., involving money), where it becomes a consensual contract.
  3. Fiduciary Relationship: Based on trust and confidence between the depositor and the depositary.

IV. Essential Requisites

  1. Delivery of the Thing:

    • The depositor must place the thing in the possession of the depositary.
    • Can be actual or constructive.

  2. Purpose of Safekeeping:

    • The thing is delivered for the primary purpose of being safeguarded and returned.

  3. Return of the Thing:

    • The depositary is obligated to return the same thing delivered, except in specific instances involving irregular deposits (e.g., money that is commingled and considered fungible).

V. Duties and Obligations

  1. Obligations of the Depositary:

    • To safely keep the thing and exercise diligence as required by the nature of the thing (Article 1972).
    • To return the thing upon demand or upon the expiration of the agreed term.
    • Not to use the thing without the depositor’s permission (Article 1977), except:
      • When authorized by the depositor.
      • In cases of preservation where use is necessary.
    • To be liable for losses or damages caused by negligence or unauthorized use.

  2. Obligations of the Depositor:

    • To reimburse the depositary for expenses incurred in preserving the thing (Article 1978).
    • To indemnify the depositary for losses suffered due to the deposit, unless such losses are due to the depositary's fault.

VI. Subject Matter

  1. Things that can be Deposited:

    • Movable property: Always subject to deposit.
    • Immovable property: Subject to judicial sequestration only.

  2. Deposits of Fungible or Consumable Goods:

    • When the deposit involves fungible goods (e.g., money), it is called an irregular deposit (Article 1980). The depositary can use the goods but is obligated to return an equivalent of the same quantity and quality.

VII. Termination of the Deposit

  1. By Demand for Return:

    • The depositor may demand the return of the thing at any time unless a specific term was agreed upon (Article 1988).

  2. By Fulfillment of Purpose or Term:

    • The deposit ends when the agreed term expires or the purpose for which the deposit was made is achieved.

  3. By Loss or Destruction of the Thing:

    • If the thing deposited is lost or destroyed without the fault of the depositary, the deposit is extinguished.

  4. By Agreement of the Parties:

    • Parties may mutually agree to terminate the deposit at any time.

VIII. Judicial and Necessary Deposits

  1. Judicial Deposits:

    • May involve things seized in judicial proceedings.
    • Governed by court orders and procedural rules.

  2. Necessary Deposits:

    • Arise due to emergencies like fire, theft, or natural calamities (Article 1996).
    • Involve implied consent due to the urgency of the situation.

IX. Irregular Deposit (Article 1980)

  1. Definition:

    • Deposit involving fungible goods like money, where the depositary is allowed to make use of the goods but must return an equivalent amount or quality.

  2. Nature:

    • Treated as a loan for legal purposes, but the primary intent remains safekeeping.

  3. Implications:

    • Depositary becomes a debtor rather than a mere custodian.

X. Special Rules and Applications

  1. Compensation (Article 1991):

    • The depositary may retain the thing until reimbursement of necessary expenses incurred in its preservation.

  2. Multiple Depositors (Article 1987):

    • If the same thing is deposited by different people, the depositary must retain the thing until their claims are settled, unless one presents a valid title.

  3. Deposits by Minors or Incapacitated Persons (Article 1992):

    • The depositary may only return the thing to the guardian or legal representative, except when the minor has independently managed their own property.

  4. Secrecy of Deposit:

    • Deposit contracts often involve confidentiality unless disclosure is required by law or public policy.

XI. Remedies

  1. For Depositor:

    • Demand return of the thing.
    • Sue for damages in case of negligence or unauthorized use by the depositary.

  2. For Depositary:

    • Claim reimbursement for necessary expenses.
    • Exercise retention rights over the deposited thing if unpaid.

This comprehensive understanding of the Civil Law provision on Deposit ensures that the principles, obligations, and remedies related to this credit transaction are adhered to in the Philippines.

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