CREDIT TRANS COVERAGE FOR SEPTEMBER 11, 2020 who may limit or expand the degree of diligence

1. Voluntary deposit required.

2. Necessary deposit  Absence of stipulation: LOWER =
3. Judicial sequestration gratuitous; HIGHER = w/ compensation
 Depositary must exercise same
I. Voluntary Deposit [Article 1968] diligence as he would over his OWN
property
 Voluntary Deposit – one wherein the delivery is made by the o Because of good faith and
will of the depositor trustworthiness
 May be entered into ORALLY or in WRITING [1969] o Because of the presumption that
o No required form the depositor, in choosing the
o Delivery perfects the contract depositary, took into account the
 If the depositary is CAPACITATED = he is subject to all the diligence which the depositary is
obligations of a depositary whether or not the DEPOSITOR is accustomed with respect to his
capacitated. [1970] own property
o Depositor cannot be compelled by the incapacitated  RULES APPLICABLE:
depositor to return the thing to such depositor o He is liable if the
o Depositary must return property to legal representative loss/deterioration of the thing
of the incapacitated or to the depositor himself should occurs through his fault or
he acquire capacity [in rel. 1986] negligence [1170] even if the
o “persons who are capable cannot allege the incapacity thing was insured [2207]
of those with whom they contract” [1397] o Loss of the thing while in his
 Incapacitated Depositary = does not incur the obligation of a possession, ordinarily raises a
depository but is liable to: presumption of fault on his part
o Return the thing deposited while still in his possession [1265]
o If not in his possession, pay the depositor the amount o If contract does not state the
by which he may have benefited/price diligence required, that which is
 Principal Obligations of the depositary: expected of a good father of a
o 1. Keep the thing family is required [1173]
 Keep the thing safely  INSURANCE: depositary [for gratuitous
 Not to deposit with 3rd person deposits] is not obligated to obtain
 To not change the way of deposit insurance for the thing deposited [xpn:
 Collect interest on certificates when they express stipulation]
become due and preserve the value of o 2. Not use the thing
securities o 3. Return the thing
 Not to commingle grain and other articles of the  To return the thing with all its products,
same kind and quality if there is a stipulation to accessions and accessories
the contrary  If depositary was not prohibited from
 DEGREE OF CARE: diligence required of the comingling grains and other articles of
depository is that agreed upon by the parties, the same kind and quality = depositary
 must return an article of the SAME KIND  GR: Depositary may
AND QUALITY [1976] deliver the thing to any
 Loss by Force majure and receives one of the depositors
money or another thing in its place =  XPN: if any demand
must deliver sum of money or thing [judicial/extrajudicial],
received delivery should be made
 Depositary’s heirs sells thing in GOOD to him
FAITH = bound to only return price he  WHEN to RETURN?
may have received o Willing at ALL TIMES to make
 DETERIORATION: return in the delivery to the depositor
deteriorated state o GR: return the thing deposited
o Absence of fault on depositary: UPON DEMAND
cannot be held liable for  WHERE TO RETURN?
deterioration o GR: Place designated for its
 Return the thing closed and sealed if delivered return
in such condition o Absence of stipulation:
 TO WHOM RETURNED:  Place where the thing
 Depositor deposited might be even
 Heirs if it should not be the
 Successors same place where the
 Peron designated in the contract original deposited was
 WHO HAS PRIORITY? made
o GR: assignee did not intervene  Transfer was
but was only appointed to accomplished without
receive, then the heir. malice on part of
o XPN: deposit was made for the depositary
benefit of assignee, then  BREACH OF OBLIGATION TO
assignee. RETURN
 CAN DEPOSITOR TERMINATE o Held liable for damages for
DESIGNATION? failure to return the thing [1170]
o GR: if the clause was for his o Held for ESTAFA if he
benefit [depositor], then YES. appropriates the thing [RPC 315]
o XPN: if clause was for the party, o In re: Mistake
then NO.  Good faith: not be held
 FOR 2/MORE DEPOSITORS: liable for damages but
o Solidarity + division = each one shall return the
cannot demand more than his price/assign right of
share action against buyer if
o Solidarity + no division = article price has not been paid
o In re: Force Majeure
1212, 1214 will apply.
  Without fault or  Bonds
negligence – not bound  Securities
to return the thing  Instruments which earn interest
 If he receives money or o XPN: rent of safety deposit boxes
thing in its place – must  It is a special kind of deposit not an ordinary
deliver said money/thing contract of lease
 Custody must be personal [1973]  Not strictly governed by the provisions on
o GR: cannot transfer deposit to 3rd person deposit
o XPN: express stipulation  Nature of relation – bailor and bailee
o LIABILITY for LOSS:  Box and contents are with the lessor but neither
 If he transfers deposit with 3rd person the lessor nor the renter can be given access to
WITHOUT AUTHORITY although there is no the contents of the box without the consent and
negligence on his part or the 3rd person cooperation of the other
 De deposits the thing with 3rd person who is  Obligation not to commingle things deposited if so stipulated
manifestly careless or unfit although authorized, [1976]
even in the absence of negligence o As long as it is the same KIND and QUALITY
 Thing is lost through negligence of his  When depositary has permission to use the thing = LOSES
employees whether the latter are manifestly CONCEPT OF DEPOSIT = becomes LOAN/ COMMODATUM
careless or not [1978]
o EXEMPTION from LIABILITY: o XPN: safekeeping is still the principal purpose of the
 If 3rd person is authorized/has been designated contract
by the depositor o Permission shall NOT be presumed
 Urgent cases/ necessary for the preservation of o Commodatum = non-consumable
the thing [but must inform the depositor of the o Loan = money/consumable
transfer of deposit after]  Safekeeping is still the principal purpose of the
 Obligation not to change way of deposit [1974] contract = irregular deposit
o GR: depositor may change the way or manner of the  Ex. Bank deposits
deposit if there are circumstances indicating that the  IRREGULAR DEPOSIT vs MUTUUM
depositor would consent to change given that the o Irregular Deposit – fungible things be deposited,
depositary notifies the depositor and waits for the ownership be transferred to the depositary and
decision depositary having the obligation to return another thing
o XPN: unless delay would cause danger of the same kind, quality and quantity
 Obligation to collect interest on choses in action
deposited [1975] Irregular Deposit Mutuum
o If thing deposited should earn interest, depositary is  consumable thing  due date is bound by
under the obligation: deposited may be demanded provisions of the contract
 Collect interest as it becomes due at will and cannot seek restitution
 Take such steps as may be necessary to until time for payment
preserve its value and rights corresponding to it  benefit only to  benefit of both
o Choses: depositor
 Certificates  depositor has  no preference
 preference over other  If depositor refuses to accept = to judicial
creditors to the thing authority’s disposal
deposited o Deposit for VALUABLE consideration
 No right to return before expiration of time
*in reality, there is no substantive distinction between an designated
irregular deposit and mutuum  Obligation to pay expenses for PRESERVATION [1992]
o Deposit is GRATUITOUS
 Depository is liable for loss through fortuitous event when: o Depositor obliged to reimburse depositary for
[1979] preservation expenses
o It’s stipulated  Necessary expenses
o Uses thing without depositor’s permission  Useful expenses and luxury expenses not
o Delays its return included
o Allows others to use it (even though he himself may  Obligation to pay losses incurred due to character of the thing
have been authorized to use the same) deposited
o GR: Not liable for loss through fortuitous event o GR: depositary be reimbursed for loss suffered by him
 Fixed, savings and current deposits of money in because of the CHARACTER OF THE THING
banks/similar institutions = simple loan deposited.
 Where thing deposited delivered closed and sealed [1981] o XPN:
o Obligations of depositary:  depositor was not aware
 Return the thing deposited when delivered  depositor not expected to know the dangerous
closed and sealed in the same condition character
 Pay for damages should seal or lock be broken  depositor notified depositary
through his fault (which is presumed unless  depositary was aware but did not inform
otherwise provided) depositor
 Keep the secret of the deposit when the seal or  Depositary’s right to RETENTION
lock is broken, with or without his fault o Until full payment of what may be DUE HIM by
o When depositary justified to open: REASON of the DEPOSIT
 Presumed authority o Includes expenses incurred under 1992 (preservation)
 Necessity  Causes of EXTINGHUISMENT of deposit
 Depositor need not prove his ownership. [1984] o Upon LOSS or DESTRUNCTION of the thing deposited
o Not essential that the depositor be the owner of the o Gratuitous = upon DEATH of the depositor/depositary
thing  XPN: deposit for compensation
o To require proof of ownership open the door to fraud o Article 1231 (condonation, confusion, merger, novation)
and bad faith o Return of the thing by depositary
o Requirement = 1 month when depositor is notified of o Conversion of a deposit into another contract if the
the fact that it was stolen depositor allows the depositary to use the thing
 Depositary relieved of responsibilities
 But true owner may still recover it through other II. Necessary Deposit [freedom of choice is absent]
legal processes
 Right of Depositary to return the thing deposited. [1990]  A deposit is necessary when:
o Deposit gratuitous and with justifiable reason
 o LEGAL DEPOSIT - Made in compliance with LEGAL  Hotel-keeper cannot free himself by posting notices that he is
OBLIGATION [1996] not liable for the articles brought by guests [2003]
 Examples: o Contrary to law, morals and public policy
 Judicial deposit of a thing under litigation o Hotel-keepers practically volunteer as depositaries
 Required in suits in the ROC o Hotel-keepers have supervision and control of their
 Constituted to guarantee contracts with inns and the premises
the Government  Hotel-keepers right to retain
o MISERABLE DEPOSIT - Takes place on the occasion o As a security for credits on account of LODGING and
of any CALAMITY, such as fire, storm, flood, pillage, SUPPLIES
shipwreck or other similar events [voluntary deposit
and 2168 (saved by another person without knowledge III. Sequestration or Judicial Deposit
of owner)] [1997]  Takes place when an attachment or seizure of property in
 Immediate object – SAVE the property rather litigation is ordered by a court.
than its SAFEKEEPING  Movable and immovable may be subject of sequestration
 Deposit made by travellers in hotels and inns  Depositary cannot be relieved of responsibility until
[1998] GR: keepers of hotels and inns are liable controversy has come to an end/unless court orders
for the loss of the effects of their guests  Depositary = bound to comply with all obligations of a good
provided that: father of a family
 Notice was given to hotel keepers/inn-  Deposit is JUDICIAL because it is AUXILIARY to a case
keepers/employees pending in court
 On the effects brought by the guests  PURPOSE: maintain status quo during the pendency of the
 They take the precautions relative to the litigation/ insure rights of the parties
care and vigilance of their effects  Depositary = person appointed BY THE COURT
 Deposit made my passengers with common
carriers [1754] Nature Judicial Deposit Extrajudicial
 When hotel-keeper LIABLE regardless of amount of care Deposit
extended: Cause/origin Will of the court Will of the parties
o Loss or injury is caused by servants/employees as well (contract)
as strangers provided that NOTICE has been given Purpose Security and secure the Custody and
and PRECAUTIONS taken right to recover in case of safekeeping of the
o Loss caused by thief or robber done without the use of favorable judgment thing
arms and irresistible force Subject Matter Movable or immovable Movable
 When hotel-keeper NOT LIABLE Renumeration Always renumerated May be
o Force majeure, theft/robber with use of arms/irresistible s (onerous) compensated or not,
force, guilty of fraud or negligence generally gratuitous
o Loss is due to the acts of guests, his family, servants, In whose Behalf of the person has a Depositor or third
or visitors [presupposes hotel-keeper is not guilty of behalf it is held right (from judgment of the person assigned
negligence or not contributed in any degree to the court)
occurrence of the loss] Termination Controversy which gave When depositor
o Loss arises from the character of the things brought rise has come to an end claims back the thing
into the hotel which is then
 returned to the
depositor
Principles CC and ROC (also CC
applicable remedial or procedural in
nature)