Civil Law and Land Titles and Deeds › Special Contracts › Credit Transactions

2. Deposit

Characteristics

  • Real - because it is perfected only by the delivery of the subject matter
  • BUT: An agreement to constitute a deposit is binding and enforceable, since it is merely consensual
  • Unilateral - if gratuitous
  • Bilateral - if with compensation

Creation of deposit (Art. 1964)

  • By virtue of a court order; or
  • By law
  • By the will of the parties

Exceptions:

  • When there is a contrary Stipulation
  • Where depositary is Engaged in the business of storing goods
  • Where property is Saved from destruction without knowledge of the owner (a necessary deposit)
  • Judicial deposit
JUDICIAL EXTRA-JUDICIAL
Creation Will of the court Will of the contracting parties
Purpose Security or to ensure the right of a party to the property or to recover in case of favorable judgment Custody and safekeeping
Subject Matter Movable or immovable property, but generally immovable Movables only
Cause Always onerous May be compensated but generally gratuitous
Return of thing Upon order of the court / end of litigation Whether gratuitous or compensated, upon demand of the depositor even before the agreed return date, except when the thing is judicially attached in the depositary’s possession or the depositary has been notified of a third person’s opposition to its return or removal (Art. 1988). Unless the deposit is for valuable consideration, the depositary may return the thing early for justifiable reasons (Art. 1989). The depositary may retain the thing in pledge until full payment of what may be due him by reason of deposit (Art. 1994)
In whose behalf it is held Person who has a right Depositor or 3rd person designated

Subject Matter of Deposit (Art. 1966)

  • As to the thing itself
  • General rule: Only movable or personal property may be the object of deposit (whether voluntary or necessary); however, deposit does not include incorporeal/intangible property, such as rights and actions, for it follows the owner, wherever he goes and not susceptible of custody
  • Exception: In judicial deposit, it may cover both movable and immovable property
  • As to ownership
  • The depositor need not be the owner of the thing deposited (Civil Code, Art. 1984)
  • A deposit may be made by one who is not its owner
  • When two or more persons claiming to be entitled to a thing may deposit the same with a third person. In such case, the third person assumes the obligation to deliver to the one to whom it belongs.
  • Interpleader – an action by a stakeholder who claims no interest in the subject matter, or whose interest is not disputed, to require persons making conflicting claims to litigate their respective claims (Rules of Court, Rule 62, Sec. 1).

Form of Contract of Deposit

General rule: A contract of deposit may be entered into (but not perfected) orally or in writing (Art. 1969)

However: Delivery of the thing deposited is needed for perfection.

Conversion of Deposit to Mutuum

If the thing deposited is money or other consumable thing, the permission to use it will result in its consumption and converts the contract into a simple loan or mutuum. However, if safekeeping is still the principal purpose of the contract, it is still a deposit but an irregular one; hence, an Irregular Deposit. An ordinary bank deposit is governed by the rules on simple loan (mutuum), not by the rules on deposit (Civil Code, Art. 1980; Serrano v. Central Bank of the Philippines, G.R. No. L-30511, February 14, 1980).

BASIS IRREGULAR DEPOSIT MUTUUM
Demandability Demandable at will of the irregular depositor for whose benefit the deposit has been constituted Lender is bound by the provisions of the contract and cannot seek restitution until the time of payment as provided in the contract has arisen (except under Art. 1198)
Benefit Benefit accrues to the depositor If with interest, benefit of both parties

Effects:

  • The various depositors of the mingled goods shall own the entire mass in common
  • Each depositor shall be entitled to such portion of the entire mass as the amount deposited by him bears the whole

Exception: When there is a stipulation to the contrary

Extrajudicial Deposit: Necessary Deposit

Consignation

Consignation is the deposit of the thing or sum due with the proper judicial authority. It generally follows a tender of payment that the creditor refuses without just cause.

Requirements for valid consignation

  • A valid debt exists.
  • The creditor unjustifiably refuses a valid tender of payment, unless prior tender is excused.
  • The persons interested in the fulfillment of the obligation receive prior notice of the intended consignation (Civil Code, Art. 1257).
  • The thing or sum due is deposited with the proper judicial authority.
  • Notice is given after the consignation.

When prior tender is unnecessary

Under Civil Code, Art. 1256, consignation alone has the same effect when:

  • The creditor is absent or unknown, or does not appear at the place of payment.
  • The creditor is incapacitated to receive payment when it is due.
  • The creditor refuses without just cause to issue a receipt.
  • Two or more persons claim the same right to collect.
  • The title of the obligation has been lost.

Authorities

  • Civil Code
  • CIVIL CODE, Sec. 1256
  • CIVIL CODE, Sec. 1257
  • Civil Code, Sec. 1969
  • Civil Code, Sec. 1988
  • Civil Code, Sec. 1989
  • Civil Code, Sec. 1994
  • Kapisanan Banahaw, Inc. v. Dejarme, G.R. No. 32908, 28 November 1930