Commodatum, Loan & Deposit Art. 1933 Art.

. 2009 Credit Transactions include all transactions involving the purchase or loan of goods, services, or money in the present with a promise to pay or deliver in the future. (i.e. consignment of goods for sale) LOANS Art. 1933. By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a oan or mutuum. ommodatum is essentially gratuitous. !imple loan may be gratuitous or with a stipulation to pay interest. "n commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower. !es "erit Domino the rule on thing perishes with the owner is applicable to commodatum as bailor#lender bears the risk of loss. Art. 193#. $n accepted promise to deliver something by way of commodatum or simple loan is binding upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the ob%ect of the contract. &actum de commodando onsensual ontract to onstitute a 'oan onsensual ontract of (uture 'oan $ai ment a consignment of goods for sale; also the delivery of property by one person to another in trust for a specific purpose, with a contract, e)press or implied, that the trust shall be faithfully e)ecuted and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor reclaims it; comes from a (rench word bailer, which means to deliver &arties* Bailor +giver, or the party who delivers the property Bailee +receiver, or the party to whom the thing is delivered -uestion* .he parties to the bailment are the* a. bailor b. bailee c. commodatorio (bailee in commodatum)

d. e.

a o% t&e a'o(e letters a / b

onsideration or cause in bailment of loan* "nsofar as the borrower is concerned, the cause is the acquisition of the thing; insofar as the lender is concerned, it is the right to require the return of the same thing or its equivalent. lasses* 0. commodatum loan for use; generally, ob%ect of commodatum is not consumable; e)ception if for e)hibition purposes 1. mutuum simple loan or loan of consumption 2ther classification of contractual bailment* those for the benefit of the bailor those for the benefit of the bailee those for the benefit of both parties C&aracteristics) *!"+" !ea , "rincipa , +ratuitous, "ersona , real perfected by delivery of the ob%ect of the loan; prior to delivery, no obligation to deliver by the bailor; after delivery, obligation pertains solely to the bailee to return the very same thing b. unilateral obligation pertains only to the borrower 3)ception* consensua contracts contract is constituted by mere consent of both parties; delivery is demandable but not based on the real contract of loan; i.e. consensual contract to constitute a loan in the future. D-L./-!0) .o effect either a commodatum or muttum, a delivery, either real or constructive, is essential. .his is so because unless there is delivery, the borrower in commodatum cannot e)ercise due diligence over the thing loaned. onsent of the parties* .he borrower and the lender must of course consent either personally or through an authori4ed agent, as in every obligation founded upon a contract. 5owever, the necessary acceptance need not be actual but may be implied from circumstances. Consensua contract o% %uture oans) $side from the real contracts of commodatum and loan, there can also be a consensual contract created by an accepted promise to deliver something by way of commodatum or simple loan, i.e. $ promised to lend 0,666 to B. .he promise was accepted by B. .his contract (consensual) is already binding upon the parties so that if $ does not fulfill his promise, B has the right to demand compliance thereof. But note here that the real contract of loan does not yet e)ist. a.

7istinctions* ommodatum 3ssentially gratuitous (do not pay any consideration for the use of the thing); referred to as loan for consumption 8utuum 9aturally gratuitous (can be compensatory); may be gratuitous or onerous; referred to as loan for use or temporary possession 9ote* presumption is that contract is gratuitous; consideration of gratuitous contracts is pure liberality or generosity of the bailor 2b%ect is mone3 or %un2i' e t&in2; equivalent amount to be returned; refers to personal property only .ransfer its ownership; ownership goes to borrower or bailee :estoration of an equal quantity and quality (equivalent amount) 2n the borrower (as debtor of a generic thing); borrower because of his ownership bears risk of loss 9ot personal in character :eferred to as loan for consumption 8ay not be claimed until the term e)pires or is forfeited; can be generally obliged to pay only at end of period 3* $rt. 00=> $rt. 00=>. .he debtor shall lose every right to make use

the return can be demanded even before the end of the period

of the period* (0) <hen after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt; (1) <hen he does not furnish to the creditor the guaranties or securities which he has promised; (?) <hen by his own acts he has impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory; (@) <hen the debtor violates any undertaking, in consideration of which the creditor agreed to the period; (A) <hen the attempts to abscond. debtor

haracter

2b%ect

&urpose

Non1%un2i' e ob%ect (but may be consumable); same thing to be returned; may involve real and personal property .ransfer its use; ownership retained by lender or bailor :estoration of the very same thing loaned 2n the lender ($s owner); lender, because of his ownership, bears risk of loss ;:* Bailee does not bear the risk of loss &ersonal in character :eferred to as loan for use or temporary possession ;:* (or a fi)ed period 3* 8ay be claimed before the end of the term if urgently needed <hile generally obliged to return ob%ect at end of period, still in some cases

3ffect :isk of 'oss

9ature 9omenclature 7uration

4un2i' e) those that can be substituted and those that cannot be used without being consumed; if the intention is to allow a substitution of the thing given Non1%un2i' e) if the intention is to compel a return of the identical thing given Consuma' e) a movable which cannot be used in a manner appropriate to its nature without its being consumed, i.e. gasoline Non1consuma' e) a movable which can be used in a manner appropriate to its nature without its being consumed, i.e. a book Bailor does not necessarily mean the owner of the ob%ect of commodatum.

9ot all contracts of loan are secured. C5A"T-! 1 Commodatum Section 1 Nature o% Commodatum Art. 1936. .he bailee in commodatum acquires the used of the thing loaned but not its fruits; if any compensation is to be paid by him who acquires the use, the contract ceases to be a commodatum. Bus utendi not %us fruendi Art. 1937. onsumable goods may be the sub%ect of commodatum if the purpose of the contract is not the consumption of the ob%ect, as when it is merely for e8&i'ition. Art. 1939. 8ovable or immovable property may be the ob%ect of commodatum. Art. 193:. .he bailor in commodatum need not be the owner of the thing loaned. Art. 1939. ommodatum is pure 3 persona in character. onsequently*

Mina vs Pascual "t is an essential feature of commodatum (ordinary) that the use of the thing belonging to another shall be for a certain period. .he title# denomination given by the parties +commodatum, is not determinative of the nature of the contract but that which is defined by the law. !ince (rancisco (ontanilla did not fi) any definite period, it cannot be a commodatum. ?. 3ffect of adverse possession for 00 years

Catholic Vicar vs CA .here was no period agreed upon and the use was merely tolerated. BaileeFs failure to return the sub%ect matter of the commodatum is not the adverse possession which enables the bailee to acquire the property by prescription. "t must be in the concept of an owner. @. 3ffect of suspension of possessory rights for more than A6 years

(0) .he death of either the bailor or the bailee e)tinguishes the contract; (1) .he bailee can neither lend nor lease the ob%ect of the contract to a third person. 5owever, the members of the baileeCs household may make use of the thing loaned, unless there is a stipulation to the contrary, or unless the nature of the thing forbids such use. Art. 19#0. $ stipulation that the bailee may make use of the fruits of the thing loaned is valid. ". ontract of ommodatum contract whereby one party gratuitously delivers a nonD fungible thing to another for temporary use of the bailee who is under obligation to return the very same thing $. 0. oncept ommodatum is essentially gratuitous

Republic vs CA "n the interim of AG years, the possessory rights of Baloy were merely suspended, not lost by prescription. 5is possession was interrupted by the occupation of the H! 9avy for recreational purposes. !uch possession is not in the concept of the owner. "t partakes the character of commodatum. Iinds of 0. ommodatum* 2rdinary commodatum the possession of the bailee is more secure for he has the right to retain the thing loaned until the expiration of the period agreed upon, or the accomplishment of the use for which the commodatum has been constituted. &recarium a kind of commodatum where the bailor may demand the thing at will . "t has been defined as a +contract by which the owner of a thing, at the request of another person, gives the latter the thing for use as long as the owner shall please; presumed that the use of the thing has been granted subject to revocation by the bailor at any time, whether or not the use for which the thing has been loaned has been accomplished. no time stipulated Quintos vs. Beck "n the contract, neither the duration nor the use of the thing loaned was stipulated. Beck, therefore, bounds himself to return to -uintos the furniture upon demand. Beck did not comply with this obligation when he nerely placed them J the disposal of the sheriff, retaining the gas heaters and the electric lamps.

1.

Republic vs Bagtas .he contention that the contract is commodatum and the :epublic retained possession over the ? bulls and should therefore, suffer the loss due to force ma%eure is untenable. .he charge of breeding fee of 06E of the book value of the bulls is considered a form of compensation which converts the transaction into a lease. 1. ommodatum is for a certain period

use is merely tolerated ( atholic Kicar case)

the contract e)pressly so provide and the nature of the thing prohibits such use, such as laptop with a confidential information in workDrelated activites) <hat Bailee in ommodatum acquires* t&e ri2&t to t&e %ruits ; otherwise, the stipulation that the bailee may make use case, however, the right to get the fruits contract. ommodatum give the ri2&t to t&e use and not contract may be one of usufruct. But of course a of the fruits of the thing loaned is valid. "n such a is merely incidental and not the main cause of the

1.) "f neither the duration of the contract nor the use of the thing loaned is stipulated Quintos vs Beck 2.) "f the use of the thing is merely tolerated Catholic icar vs C! &actum de ommodando consensual contract to constitute a loan

3ffect of approval of loan application Saura Import and !port vs "BP .here was a perfected consensual contract of future loan which was an accepted promise to deliver something by way of simple loan but due to non compliance with certain conditions and subsequent request for diversion of loan proceeds, it was e)tinguished by mutual desistance. B. :equisites

$ai or need not 'e t&e o;ner * :eason the contract of commodatum does not transfer ownership. $ll that is required is that the bailor has the right to use of the property which he is lending, and that he be allowed to alienate this right to use. 5ence, in lease for eample, a lessee may become a subDlessor, unless he has been e)pressly prohibited to do so in the contract of lease. &ersonal nature of commodatum* .he 9 considers commodatum as purely personal and this constitutes an e)ception to the rule that all rights acquired by virtue of an obligation are transmissible. 7oes bailee have a right to use the fruitsM $s a rule, the bailee is not entitled to the fruits, otherwise the contract may be one of usufruct. "t should be noted that the right to use is distinct from the right to en%oy the fruits, since under the law fruits should as a rule pertain to the owner of the thing producing the fruits. 5owever, to stipulate that the bailee makes use of the fruits would not destroy the essence of a commodatum, for liberality is still the actual cause or consideration of the contract. S-CT.ON 2. 1 O' i2ations o% t&e $ai ee Art. 19#1. .he bailee is obliged to pay for the ordinar3 e8penses for the use and preservation of the thing loaned. Art. 19#2. .he bailee is liable for the loss of the thing, even if it should be through a fortuitous event* (0) "f he de(otes t&e t&in2 to an3 purpose di%%erent from that for which it has been loaned; (1) "f he keeps it on2er t&an t&e period stipulated, or after the accomplishment of the use for which the commodatum has been constituted; (?) "f the thing loaned has been delivered with appraisa o% its (a ue, unless there is a stipulation e)emption the bailee from responsibility in case of a fortuitous event;

a) apacity D no special capacity required; need not be the owner of the ob%ect of commodatum; theft may be bailor; lesse may also be a bailor b) 2b%ect non fungible (can be used without being consumed)

L 2b%ects of commodatum* D "ina vs# $ascual (use of the lot by erecting a warehouse thereon) D Quintos vs# Beck (use of the furniture) c) onsideration contract must be gratuitous

3.) 3ffect if consideration is paid* %epublic vs# Bagtas d) . a. b. c. d. (orm D no special form required

haracteristics (as a contract) :eal (because perfected by delivery) &rincipal (because it can stand alone by itself; does not depend on the e)istence and validity of another contract as differentiated from an accessory contract such as pledge) ;ratuitous (otherwise, contract is one of lease) &ersonal in nature (because of the trust; only the bailee can use the ob%ect of the contract and members of his family. 5owever, members of his family cannot use if

(@) "f he ends or eases t&e t&in2 to a t&ird person , who is not a member of his household; (A) "f, 'ein2 a' e to sa(e eit&er t&e t&in2 'orro;ed or &is o;n t&in2 , he chose to save the latter. Art. 19#3. .he bailee does not ans;er %or t&e deterioration of the thing loaned due only to the use thereof and without his fault. Art. 19##. .he bailee cannot retain the thing loaned on the ground that the bailor owes him something, even though it may be by reason of e)penses. 5owever, the bailee has a ri2&t o% retention %or dama2es mentioned in $rticle 0=A0. Art. 19#6. <hen there are two or more bailees to whom a thing is loaned in the same contract, they are liable so idari 3. ". :ights and obligations of the parties $. :ights and obligations of the borrower a. b. :ights* to personally use the thing 2bligations or duties* i. .o preserve the thing or take case of it with the di i2ence o% a 2ood %at&er o% a %ami 3 ii. .o shoulder the ordinar3 e8penses for the use and preservation of the thing loaned iii. .o return the identical thing after the e)piration of the period of the contract of commodatum or in case of precarium, upon demand ases* 3ffect of failure to return a# Quintos vs Beck b# Catholic icar !postolic vs C!

BaileeFs failure to return not become the owner, but he can become owner by acquisitive prescription (adverse possession) 'iability for loss due to a fortuitous event* $s a rule, a debtor of a thing is not responsible for its loss through a fortuitous event. $rt. 0=@1 gives the e)ception in a case of commodatum. :eason for the law in $rt. 0=@1* &ar. 0 this amounts to bad faith or abuse of generosity considering the fact that commodatum is gratuitous &ar. 1 he is guilty of a certain kind of default &ar. ? evidently, the giving of the value was made to hold the bailee liable after all this is not a sale, and neither is ownership transferred in commodatum (3)ception* when there is a stipulation to the contrary. "t may in a sense be said that the appraisal converts the commodatum into a mutuum) &ar. @ .his is prohibited by the law for it amounts to a violation of the personal character of commodatum &ar. A this amounts to an act of ingratitude and to a failure to e)ercise due diligence, considering the fact that comodatum is gratuitous 8isuse or abuse* $ misuse or abuse of the property is ordinarily a conversion for which the bailee is generally held responsible, to the full e)tent of the loss. S-CT.ON 3. 1 O' i2ations o% t&e $ai or Art. 19#7. .he bailor cannot demand the return of the thing loaned till after the e)piration of the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted. 5owever, if in the meantime, he should have urgent need of the thing, he may demand its return or temporary use. "n case of temporary use by the bailor, the contract of commodatum is suspended while the thing is in the possession of the bailor. Art. 19#9. .he bailor may demand the thing at will, and the contractual relation is called a precarium, in the following cases* (0) "f neither the duration of the contract nor the use to which the thing loaned should be devoted, has been stipulated; or

c. "e los Santos vs #arra .he obligation of the bailee and his successorDinDinterest to return either the thing loaned or its value or to pay him damages if, thru the fault of abilee, the thing has been lost or in%ured. But bailee is not liable for the @ carabaos who died due to rinderpest since they were lost due to fortuitous events. an the bailee retain the thing because the bailor owes him somethingM ;enerally, 9o, because bailment implies a trust that as soon as the time has e)pired, or the purpose accomplished, the bailed property must be restored to the bailor. 3)ception* $rt. 0=A0; 5owever, the parties may agree on conventional compensation, that is, they may agree that the ob%ect of commodatum may serve as payment for the debt of the bailor.

(1) "f the use of the thing is merely tolerated by the owner. Art. 19#:. .he bailor may demand the immediate return of the thing if the bailee commits any act of ingratitude specified in $rticle GNA. Art. 19#9. .he bailor shall refund the e)traordinary e)penses during the contract for the preservation of the thing loaned, provided the bailee brings the same to the knowledge of the bailor before incurring them, e)cept when they are so urgent that the reply to the notification cannot be awaited without danger. "f the e)traordinary e)penses arise on the occasion of the actual use of the thing by the bailee, even though he acted without fault, they shall be borne equally by both the bailor and the bailee, unless there is a stipulation to the contrary. Art. 1960. "f, for the purpose of making use of the thing, the bailee incurs e)penses other than those referred to in $rticles 0=@0 and 0=@=, he is not entitled to reimbursement. (n) Art. 1961. .he bailor who, knowing the flaws of the thing loaned, does not advise the bailee of the same, shall be liable to the latter for the damages which he may suffer by reason thereof. Art. 1962. .he bailor cannot e)empt himself from the payment of e)penses or damages by abandoning the thing to the bailee. ". :ights and obligations of the parties &rimary obligation of the bailor is to allow the bailee the use of the thing loaned for the duration of the period stipulated or until the accomplishment of the purpose for which the commodatum was constituted. .he reason is that the bailor is bound by the terms of the contract of commodatum which is +for a certain time,. 3)ception* if bailor should have an urgent need of the thing or if bailee commits an act of ingratitude, he may demand its return or temporary use. $. 3ffects as to the lender a. .o pay e)traordinary e)penses of preservation ($rt. 0=@=)

:eason for the 1nd par. in $rt. 0=@= ($ctual use by the bailee)* .his is an equitable solution. .he bailee pay O because of the benefit derived from the use of the thing loaned to him, and the bailor pays the other half because he is the owner and the thing will be returned to him. b. .o answer for damages to the borrower ($rt. 0=A0)

:eason* <hen a person lends, he ought to confer a benefit, and not to do a mischief. "f he does not reveal the flaws, he is liable for his bad faith. 9ote* but the obligation of a gratuitous lender goes no further than this, he cant therefore be made liable for not communicating anything which he did not know, whether he ought to have known it or not. "t is evident that the flaws referred to in this article are hidden defects, not obvious ones (patent, visible, apparent.) :ight of retention* for the damages spoken in this article, the bailee has the right of retention until paid of said damages. ($rt. 0=@@) i. .he lender cannot evade liability by abandonment of the thing ($rt.0=A1) :eason* .he value of the thing borrowed might be less than the value of the e)penses or damages

"". .ermination $. auses a. b. c. d. e. of e)tinguishment 3)piration of the time or use stipulated laim of the lender 7estruction of the thing 7eath of the borrower "ngratitude of the borrower ($rt. 0=@>)

$rt. GNA. .he donation may also be revoked at the instance of the donor, by reason of ingratitude in the following cases* (0) "f the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority; (1) "f the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority;

$s a rule, the e)traordinary e)penses should be paid by the bailor because it is he who profits by said e)penses; otherwise, the thing borrowed would be destroyed. ;enerally, notice is required because the bailor should be given discretion as to what he wants to do with his own property.

(?) "f he unduly refuses him support when the donee is legally or morally bound to give support to the donor. C5A"T-! 2 S.<"L- LOAN O! <=T==< Art. 1963. $ person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality. Art. 196#. $ contract whereby one person transfers the ownership of nonDfungible things to another with the obligation on the part of the latter to give things of the same kind, quantity, and quality shall be considered a barter. Art. 1966. .he obligation of a person who borrows money shall be governed by the provisions of $rticles 01@= and 01A6 of this ode. "f what was loaned is a fungible thing other than money, the debtor owes another thing of the same kind, quantity and quality, even if it should change in value. "n case it is impossible to deliver the same kind, its value at the time of the perfection of the loan shall be paid. Art. 1967. 9o interest shall be due unless it has been e)pressly stipulated in writing. Art. 1969. ontracts and stipulations, under any cloak or device whatever, intended to circumvent the laws against usury shall be void. .he borrower may recover in accordance with the laws on usury. Art. 196:. "n the determination of the interest, if it is payable in kind, its value shall be appraised at the current price of the products or goods at the time and place of payment. Art. 1969. <ithout pre%udice to the provisions of $rticle 1101, interest due and unpaid shall not earn interest. 5owever, the contracting parties may by stipulation capitali4e the interest due and unpaid, which as added principal, shall earn new interest. Art. 1970. "f the borrower pays interest when there has been no stipulation therefor, the provisions of this ode concerning solutio indebiti, or natural obligations, shall be applied, as the case may be. &resumption* Koluntary &ayment was made. Art. 1971. Hsurious contracts shall be governed by the Hsury 'aw and other special laws, so far as they are not inconsistent with this ode. ". !imple loan (8utuum, loan of consumption)

8utuum is a contract whereby one of the parties delivers to another money or other consumable thing with the understanding that the same amount of the same kind and quality shall be paid. ommodatum vs 8utuum* ommodatum, ob%ect is nonDfungible; 8utuum, ob%ect is fungible.

Barter ob%ect is nonDfungible but with the obligation to return the same kind or quality. 'oan only civil liability; no criminal liability "n trust or responsibility to account guilty of estafa ases* a. 8utuum vs commodatum Chee $iong %am vs Malik (acts in the complaint does not constitute estafe thru misappropriation but simple loan. .he borrower acquired ownership over the money and he can dispose of the thin borrowed. 5is act will not be considered a misappropriation thereof. b. 8utuum vs lease &olentino vs 'on(ales S) Chiam 7uring the period of redemption, the vendor was the tenant of the purchaser. .his is a contract of rent and not of loan. c. 8utuum vs 3stafa *i+anag vs CA 9ot a contract of loan as there was no transfer of ownership. 'iwanag cannot dispose of the money as she pleases as it was delivered to her for a specific purpose, namely, the purchase of cigarettes for their buy and sell business. $. Iinds a. ;ratuitous or onerous b. <ith interest (must be e)pressly stipulated and in writing)

B. :equisites a. b. c. d. apacity of the parties basic legal capacity plus lender must be the owner of the thing 2b%ect fungible or money onsideration liberality on the part of the lender for gratuitous kind of loan; interest on the part of the lender, use of the money on the part of the borrower for onerous kind of loan (orm in whatever form; not a formal but a real contract, thus, form is not essential for its validity

3)ception* consensual contracts ase* 0. $ccepted promise to deliver something by way of simple loan &aura 'mport ( )xport Co# 'nc# vs *B$ 7. 3ffects* 2bligation of the borrower (only) a. .o return the thing or amount (same amount, kind or quality) borrowed -

1.) !tipulation not to pay while war ongoing ,epomuceno vs ,arciso Kalid stipulation that mortgagor, his administrators and assigns cannot redeem the property while the war is ongoing. 8ortgagees apparently did not want to be paid with Bapanese military notes. ii. "f the thing borrowed is not money

<henM $t the period stipulated i. :ule if the thing borrowed is money

:eturn or payment of the numerical value "f currency not stipulated pay in legal tender .ake into consideration e)traordinary inflation $rt. 01@=. .he payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the &hilippines. .he delivery of promissory notes payable to order, or bills of e)change or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired. "n the meantime, the action derived from the original obligation shall be held in the abeyance. $rt. 01A6. "n case an e)traordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary. ases* 0.) &ayment in currency stipulated

.o pay another thing of the same kind, quantity and quality, even if it should change in value. "n case it is impossible to deliver the same kind, its value at the time of the perfection of the loan shall be paid. 3)ample* $ borrowed from B five sacks of rice. $t the time the loan was perfected, each sack cost 0,>66. 3ven if at the time of payment, the price would change, A sacks of the same kind and quality of rice should be returned. 5owever, if it is impossible to deliver the same kind, 0,>66 should be paid. 9ote that the value at the time of &3:(3 ."29 (not payment) applies. !tipulation* 9o payment shall be made within a period, payment shall be made after the said period valid; for the benefit of the lender to earn interest b. .o pay interest

<hen to payM "f e)pressly stipulated in writing $rt. 1101. "nterest due shall earn legal interest from the time it is %udicially demanded, although the obligation may be silent upon this point. ('egal interest in legal delay after %udicial demand is not contractual interest agreed by the parties but serves as a penalty or damage dues) <hen unpaid interest earns interestM o ;:* $ccrued interest (interest due and unpaid) shall not earn interest e)cept in 1 instances* <hen %udicially demanded as provided for in $rt. 1101 <hen there is an e)press stipulation made by the parties that the interest due and unpaid shall be added to the principal obligation and the resulting total amount shall earn interest. .his practice is called compounding interest. i. ase* 'iability for contractual interest after maturity of note

Rono vs 'ome( .he agreement was to pay the debt one year after in the currency prevailing which is &hilippine peso, not Bapanese money. .his is legal and obligatory as the increase in the intrinsic value and purchasing power of the current money is a consequence of an event which neither party knew would happen. (aleatory contracts)

#ardenil vs Solas !tipulated interest up to date of maturity and legal interest from maturity up to date of payment. ii. 3ffect if interest is paid even if not stipulated

"f unstipulated interest (it is, therefore, not due) is paid by mistake, the debtor may recover as this would be a case of solutio indebiti or undue payment. But when the unstipulated interest, or interest stipulated, there being a stipulation but it is not in writing, is paid voluntarily because the debtor feels morally obliged to do so, there can be no recovery as in the case of natural obligations. "nterest in kind value should be determined at the time and place of payment. 3)ample* B borrowed 0,666 from ' payable in palay in 0 year which shall be appraised at the current market price at the time and place of payment. <hen the contract was entered into, the price per cavan of palay was A66. 2n the due date of the loan, the price increased to N66. "n this case, the value of the palay shall be appraised at N66 per cavan. "n interest in kind, if the thing is not available, monetary value of the interest shall be paid. Hnconscionable interest too high iii. <hat is not considered as interest ases* 0. "ncrease in the price when sale is on installment 1. $ttorneyFs fees ?. &enalty for breach Sentinel Insurance Co. vs CA +.o pay interest on principal obligation of 0@E p.a. J rate of 1E every @A days,, not intended by court as interest but as damage dues and therefore, cannot be considered usurious.

$ssets of an insolvent bank are held in trust for the equal benefit of all its creditors. $ll depositors and creditors should file their claims in the liquidation court, not secure final %udgments. .he effect of %udgment obtained by the depositorDcreditor, if any, is to fi) the amount of debt. 5e cannot acquire a lien which will give him preference over other creditors. 1. 'iability for failure to return savings deposit 'uingona vs Cit) .iscal o- Manila &romissory notes, bankerFs acceptances, certificates of time deposits, savings accounts are simple loans. 'iability pertaining to them are purely civil in nature. :espondent court has no %urisdiction for estafa. 73&2!". Tit e >... 1 D-"OS.T C5A"T-! 1 D-"OS.T .N +-N-!AL AND .TS D.44-!-NT ?.NDS Art. 1972. $ deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. "f the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. Art. 1973. $n agreement to constitute a deposit is binding, but the deposit itself is not perfected until the delivery of the thing. Art. 197#. $ deposit may be constituted %udicially or e)tra%udicially. Art. 1976. $ deposit is a gratuitous contract, e)cept when there is an agreement to the contrary, or unless the depositary is engaged in the business of storing goods. (<arehouse warehouseman warehouse receipt) Art. 1977. 2nly movable things may be the ob%ect of a deposit. Art. 1979. $n e)tra%udicial deposit is either voluntary or necessary. ". oncept

3. Bank deposits ases* 0. $re not deposits in the legal sense of the word .hey are also called irregular deposits $re simple loans and governed by the law on mutuum .hus, liability is only civil in nature 9ature of bank deposits 'opoco 'rocer) vs Paci-ic Coast Biscuit urrent / savings accounts have lost their character of being deposits and are now convertible to +simple commercial loans, because banks have already made use of the money in the ordinary course of its business. "t is proper that setDoffs be made as the bank and the appellants are reciprocally debtors and creditors of each other. Central Bank o- the Phils. vs Mor-e

7eposit a contract whereby a person (depositor) delivers a movable property to another person (depositary) e8c usi(e 3 %or sa%e @eepin2 and with the obligation of returning the same upon demand.

"".

haracteristics (as a contract) $. :eal contract perfected by delivery of the sub%ect matter B. 9aturally or generally gratuitous no consideration; deposit presumed to be gratuitous; unless there is an agreement to the contrary or unless the depositary is engaged in the business of storing goods . &urpose is primarily for custody ases* a. 3ffect if balance of commission retained by agent -

safekeeping is not the principal purpose, there is no deposit but some other contract, like one of lease or commodatum. 3)ample for +its use is to preserve the thing,* car engine must be turned on in order to preserve it ase* a. 3ffect of agreement to e)tend payment of money deposited and to pay interest +avellana vs ,im

(. 2nly movables can be ob%ect thereof an intangibles (shares of stock) be the ob%ect of a depositM 9o, but evidence (the paper) of shares of stock may be the sub%ect of deposit

/S vs Igpuara (ailure to turnover the balance of the commission or if it is retained by the agent, makes you liable for the crime of estafa. b. 3ffect if foreign currency deposited is sold by the bank

""". Iinds $. a) 3)tra%udicial maybe voluntary (constituted by consent or mutual consent of the parties); or necessary (constituted in compliance with a legal obligation or on the occasion of a calamity or made by travelers in inns, hotels or made by travelers with common carriers) b) Budicial (sequestration) when an attachment or sei4ure of property in litigation is ordered a) :egular canFt use the thing b) "rregular may use the thing deposited, such as bank deposits

BPI vs IAC .he mere keeping of foreign e)change, without selling them to entral Bank within 0 business day from receipt is a transaction which not authori4ed by B ircular 9o. 16 which makes it a prohibited transaction. <hen the nullity proceeds from the illegality of the cause#ob%ect, both parties are in pari delicto and will have no cause of action against each other. c. 9ature of rental of safety deposit bo)

B.

CA Agro0Industrial "ev.1t Corp. vs CA :ental of a safety deposit bo) is not purely deposit and not purely lease but a specia @ind o% deposit . 9ormally, banks can be held liable as a depositary even if with stipulations to the contrary but this case is an e)ception since bank was not aware of the agreement between the plaintiffs as to the keys and the agreement of the intended sale to :amos. 7. 3ither unilateral or bilateral when the deposit is gratuitous, it is a unilateral contract because only the depositary has an obligation. But when the deposit is %or compensation , the %uridical relation created becomes 'i atera because it gives rise to obligations on the part of both the depositary and the depositor. 9onDuse by depositary of the thing deposited 5e canFt make use of the thing unless there is a stipulation or when the preservation of the thing deposited requires its use, it must be used but only for that purpose but main purpose should be for safekeeping only. 2f course, if

4.) 7ifference between deposit and sale#barter o 3ffect* 7eposit, ownership is not transferred; sale#barter, ownership is transferred upon delivery o onsideration* 7eposit is naturally gratuitous; sale#barter is always onerous o 7eposit, real contract; sale#barter, consensual contract 5.) 7ifference between deposit and commodatum o &urpose* 7eposit is for safekeeping or mere custody; commodatum is to use o onsideration* 7eposit may be gratuitous; commodatum is essentially and always gratuitous 6.) 7ifference between deposit and mutuum o &urpose* 7eposit is for safekeeping or mere custody; mutuum is the consumption of the sub%ect matter

3. -

7emand* 7epositor can demand the return of the sub%ect matter at will; mutuum, lender must wait until the e)piration of the period granted to the debtor 2b%ect* 7eposit must be movable property; mutuum, only money and any other fungible thing -

0. 1.

<here the depositor has complete freedom in choosing the depositary <here two or more persons each claiming to be entitled to a thing may deposit the same with a third person. "n such case, the third person assumes the obligation to deliver to the one to whom it belongs.

"K. "rregular deposit vs simple loan ases* 0. 1. 7eposit with interest 3)tension of time for payment #avellana vs *im !ince the debtors asked for the e)tension of the time for the return of the money, they were therefore, lawfully authori4ed to make use of the amount deposited. ?. 7eposit of palay with permission to mill

.he action to compel the depositors to settle their conflicting claims among themselves would be in the nature of an interpleader. 5ere, one of the depositors is not the owner.

B. :equisites a. apacity of the parties depositor need not be the owner of the thing

C5A"T-! 2 /OL=NTA!0 D-"OS.T S-CT.ON 1. 1 +enera "ro(isions Art. 197:. $ voluntary deposit is that wherein the delivery is made by the will of the depositor. $ 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. Art. 1979. $ contract of deposit may be entered into orally or in writing. Art. 1990. "f a person having capacity to contract accepts a deposit made by one who is incapacitated, the former shall be sub%ect to all the obligations of a depositary, and may be compelled to return the thing by the guardian, or administrator, of the person who made the deposit, or by the latter himself if he should acquire capacity. Art. 1991. "f 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. 5owever, if a third person who acquired the thing acted in bad faith, the depositor may bring an action against him for its recovery. ". Koluntary deposit $. Iinds

<here depositary capacitated and depositor incapacitated* "f the depositary is capacitated, he is sub%ect to all the obligations of a depositary whether or not the depositor is capacitated. "n the latter case, the depositary must return the property to the legal representatives of the incapacitated or to the depositor himself if he should acquire capacity. -8amp e) $ accepted a deposit from B, an insane individual. $s long as B is insane, he cannot by himself compel the return of the thing. 5e must act through his guardian or administrator. !hould B be of sound mind again, he can by himself compel the return of what has been deposited.

Hnder the law, persons who are capable cannot allege the incapacity of those with whom they contract. :eturn of the depositary e)tinguishes the obligation under oblicon <here depositary incapacitated and depositor capacitated* .he incapacitated depositary does not incur the obligation of a depositary. 5owever, he is liable (0) to return the thing deposited while still in his possession and (1) to pay the depositor the amount by which he may have benefited himself with the thing or its price sub%ect to the right of any third person who acquired the thing in good faith -8amp e) $ deposited a watch with B, a minor who sold it to . "f acted in bad faith, $ may recover the watch from him. But if acted in good faith, $Fs only recourse is against B to compel him to return the price received for the watch or the amount by which he may have benefited himself. b. c. 2b%ect not intangibles and immovable but only movable or corporeal (ormalities no form required because it is a real contract

S-CT.ON 2. 1 O' i2ations o% t&e Depositar3

Art. 1992. .he 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. 5is responsibility, with regard to the safekeeping and the loss of the thing, shall be governed by the provisions of .itle " of this Book. "f the deposit is gratuitous, this fact shall be taken into account in determining the degree of care that the depositary must observe. Art. 1993. Hnless there is a stipulation to the contrary, the depositary cannot deposit the thing with a third person. "f 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. .he depositary is responsible for the negligence of his employees. Art. 199#. .he 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. 5owever, before the depositary may make such change, he shall notify the depositor thereof and wait for his decision, unless delay would cause danger. Art. 1996. .he 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. .he above provision shall not apply to contracts for the rent of safety deposit bo)es. Art. 1997. Hnless 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. Art. 1999. .he depositary cannot make use of the thing deposited without the e)press permission of the depositor. 2therwise, he shall be liable for damages. 5owever, when the preservation of the thing deposited requires its use, it must be used but only for that purpose. Art. 199:. <hen the depositary has permission to use the thing deposited, the contract loses the concept of a deposit and becomes a loan or commodatum, e)cept where safekeeping is still the principal purpose of the contract. .he permission shall not be presumed, and its e)istence must be proved. Art. 1999. .he depositary is liable for the loss of the thing through a fortuitous event*

(0) "f it is so stipulated; (1) "f he uses the thing without the depositorCs permission; (?) "f he delays its return; (@) "f he allows others to use it, even though he himself may have been authori4ed to use the same. Art. 19:0. (i)ed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. Art. 19:1. <hen 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. (ault on the part of the depositary is presumed, unless there is proof to the contrary. $s 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. 5owever, the courts may pass upon the credibility of the depositor with respect to the value claimed by him. <hen the seal or lock is broken, with or without the depositaryCs fault, he shall keep the secret of the deposit. Art. 19:2. <hen it becomes necessary to open a locked bo) or receptacle, the depositary is presumed authori4ed to do so, if the key has been delivered to him; or when the instructions of the depositor as regards the deposit cannot be e)ecuted without opening the bo) or receptacle. Art. 19:3. .he thing deposited shall be returned with all its products, accessories and accessions. !hould the deposit consist of money, the provisions relative to agents in article 0>=N shall be applied to the depositary. Art. 19:#. .he depositary cannot demand that the depositor prove his ownership of the thing deposited. 9evertheless, should he discover that the thing has been stolen and who its true owner is, he must advise the latter of the deposit.

"f 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. "f the depositary has reasonable grounds to believe that the thing has not been lawfully acquired by the depositor, the former may return the same. Art. 19:6. <hen there are two or more depositors, if they are not solidary, and the thing admits of division, each one cannot demand more than his share. <hen there is solidarity or the thing does not admit of division, the provisions of $rticles 0101 and 010@ shall govern. 5owever, 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. Art. 19:7. "f the depositor should lose his capacity to contract after having made the deposit, the thing cannot be returned e)cept to the persons who may have the administration of his property and rights. Art. 19:9. "f 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 e)penses for transportation shall be borne by the depositor. "f 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. Art. 19::. .he thing deposited must be returned to the depositor upon demand, even though a specified period or time for such return may have been fi)ed. .his provision shall not apply when the thing is %udicially attached while in the depositaryCs possession, or should he have been notified of the opposition of a third person to the return or the removal of the thing deposited. "n these cases, the depositary must immediately inform the depositor of the attachment or opposition. Art. 19:9. Hnless the deposit is for a valuable consideration, the depositary who may have %ustifiable 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. Art. 1990. "f the depositary by force ma%eure 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.

Art. 1991. .he depositorCs 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. ". :ights and obligations of the parties $. 2bligations of the depositary a. .o preserve the thing 0. $greement that the depositary may use the thing deposited* 8ay agree that the depositary may use the thing deposited for purposes of preservation; and if depositary uses the thing not for preservation purposes, he may be liable for damages 1. 7elegation of custody* anFt delegate custody, if delegate then liable 3)ception* "f with consent or permission of the depositor not liable 3)ception to the e)ception* "f ? rd person to whom custody is delegated is manifestly careless, negligent or unfit liable 3)ception to the e)ception to the e)ception* "f such third person is chosen or nominated by the depositor not liable ?. hange of the manner of deposit* anFt change the manner of deposit unless there are circumstances that he may reasonably presume that the depositor would consent to the change if he knew of the facts of the situation. 5owever, before the depositary may make such change, he shall notify the depositor thereof and wait for his decision, unless delay would cause danger. @. &reservation of the value* .he 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 preser(e t&eir (a ue and the rights corresponding to them according to law. !uch rule shall not apply to contracts for the rent of safety deposit bo)es. L &awn ticket duty is to renew A. !ecrecy of deposit* <hen the thing deposited is delivered closed and sealed, the depositary must return it in the same condition, and he shall be ia' e %or dama2es s&ou d t&e sea or oc@ 'e 'ro@en t&rou2& &is %au t.

(ault on the part of the depositary is presumed, unless there is proof to the contrary. $s 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. 5owever, the courts may pass upon the credibility of the depositor with respect to the value claimed by him. A&en t&e sea or oc@ is 'ro@en, ;it& or ;it&out t&e depositar3Bs %au t, &e s&a @eep t&e secret o% t&e deposit. b. .o return the thing 0. .o whomM 7epositor, or to his heirs and successors or third person designated in the contract "f depositor was incapacitated at the time of making the deposit, to his guardian or administrator or the person who made the deposit or to the depositor himself should he acquire capacity "f depositor subsequently loses capacity persons who may have the administration of his property and rights or legal representative. "f the thing belongs to a third person, depositary knows but does not know owner, depositary cant compel depositor to prove his ownership of the thing 5owever, if stolen and depositary knows the owner depositary can refuse to return the thing and notify the owner and give him ?6 days to claim, if owner doesnFt claim, then he may return the deposit to the depositor .hing deposited divisible and depositors not solidary each one can demand only his share proportionate thereto 2bligation solidary or thing deposited not divisible obligation is solidary, depositary can return the thing deposited to any of the depositors, if 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 butvnot anything which may be pre%udicial to the latter, and the depositary may return the thing to any one of the solidary depositors unless a demand, %udicial or e)tra%udicial, for its return has been made by one of them in which case delivery should be made to him :eturn to one of depositors stipulated return only to the person designated 1. <hat is to be returnedM i. "f money numerical value of the money "nstances to pay interest* ii.

0.) guilty of default 1.) use w#o permission "f specific thing the thing itself and its products, accessions and accessories. .hus, the young of an animal which was deposited shall be returned to the depositor.

"f replacement is given, replacement must be delivered to the depositor &roceeds in e)propriation must be given to the depositor .he depositorCs 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. iii. "f generic thing depositary can commingle funds of depositor; Hnless 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; coDowner is interested only to the e)tent of the amount deposited ase* ommingling of funds

Roman Catholic Bishop o- #aro vs "e la Pena (r. 7e la &ena is e)empt from liability even with the placing of the trust money in the bank and the mi)ing of it with his personal funds since the money was forcibly taken from the bank by armed forces of H! military during war#insurrection. ?. (orm or manner of return "f sealed and locked return sealed and locked; presumed open Basis for determining value statement of the depositor <hen it becomes necessary to open a locked bo) or receptacle, the depositary is presumed authori4ed to do so, if the key has been delivered to him; or when the instructions of the depositor as regards the deposit cannot be e)ecuted without opening the bo) or receptacle. @. &lace or return &lace stipulated, if none, place where the thing is at the time it is claimed "f 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 e)penses for transportation shall be borne by the depositor.

"f 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. A. .ime of return ase* 2bligation for money taken by force ma%eure %oman Catholic Bishop of +aro vs *e la $ena $t any time claimed by depositor even if there is stipulation , unless when the deposit is %udicially attached while in the depositaryFs possession or should the depositary have been notified of the opposition of a third person to the return or the removal of the thing deposited $s a rule, the depositor can demand the return of the thing deposited at will and this is true whether a period has been stipulated or not. "n a deposit, whenever a period is agreed to, the same is for the benefit of the depositor, but may be validly waived by him. But the period is generally binding upon the depositary. "f the deposit is for compensation, depositary still cant refuse to return, but he is entitled to the compensation corresponding to the entire period. 7eposit gratuitous the depositary may likewise return the thing deposited nothwithstanding that a period has been fi)ed for the deposit if (a) the deposit is gratuitous and (b) %ustifiable reasons (e.g. necessity of his going abroad) e)ist for its return. "n case the depositor refuses to receive the thing, the depositary may deposit the thing at the disposal of %udicial authority. 7eposit for a valuable consideration depositary has no right to return the thing deposited before the e)piration of the time designated even if he should suffer inconvenience as a consequence. 5e is bound by the period and restitution before its e)piration constitutes a breach of his obligation. N. !etDoff Bank deposits can be setDoff with the obligation of the depositor to the bank o $ (depositor) B (bank)* $ deposited 066,666 to the bank and $ also loaned 066,666 to the bank. "n effect, there are 1 contracts of loan. Bank cannot demand payment of the loan until maturity .his is legal compensation by operation of law even without the parties knowing it; no need of consent by the depositor

dishonor if not accepted. .he premature action of the bank was pre%udicial to ;ullas. Associated Bank 2,o+ 3estmont Bank4 vs &an .he bankFs right to debit the account of the client for a check deposit dishonored by the drawee bank should be done with highest degree of care. .he bankFs act of premature authori4ation of the withdrawal, by way of accommodation, resulted in the falling of the account balance to insufficient levels and the subsequent dishonor of the checks of the client. G. BankFs failure to return amount 'iability of bank and its employees is only civil in nature; money is not misappropriated since nature of bank deposits is a contract of loan

ase* 'iability for failure to return bank deposit -uingona vs City .iscal of "anila >. <hen bank officials may be guilty of estafa 'edger* not credited the e)act amount misappropriated the money bank officer liable for estafa

ase* -uingona vs City .iscal of "anila =. 3arnest money 8oney given to the seller as part of the purchase price 8anifestation to buy !eller is obliged to return the earnest money of sale to the buyer if sale did not materiali4e on account of the seller; in this case, seller would only become a depositary

ase* 2bligation if sale did not materiali4e Compania Maritima vs CA .he buyer may still recover the earnest money as this downpayment merely becomes a deposit which must be returned by the governmentDseller. S-CT.ON 3. 1 O' i2ations o% t&e Depositor Art. 1992. "f the deposit is gratuitous, the depositor is obliged to reimburse the depositary for the e)penses he may have incurred for the preservation of the thing deposited.

ases* :ight of bank to apply a deposit to the debt of a depositor 'ullas vs P,B 9o legal (automatic) compensation should be made between money and treasury warrant which is a form of negotiable instrument since the latter requires a notice of

Art. 1993. .he 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 e)pected 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. Art. 199#. .he depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. Art. 1996. $ deposit its e)tinguished* (0) Hpon the loss or destruction of the thing deposited; (1) "n case of a gratuitous deposit, upon the death of either the depositor or the depositary. ". :ights and obligations of the parties $. 2bligations of the depositor "f the deposit is gratuitous, no obligation to pay compensation "f engaged in the business of storing goods or if there is stipulation to pay compensation onerous; to pay compensation 9o e)penses for the use because depositary is not allowed to use ;ratuitous contracts depositor liable for preservation of the deposit, whether necessary or e)traordinary 2nerous depositary liable for preservation because deemed included in the compensation 7epositor may indemnify the depositary damages 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 e)pected 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. B. !ecurity of the depositary 7epositary has claims against the depositor arising out of the deposit for* o ompensation not paid o (or e)penses of preservation not reimbursed o (or damages not indemnified 7epositary has a right to retain or e)ercise possessory lien until he is paid of the above cases, unless agreed upon for conventional compensation; however, such right is lost if thing is returned but claims are not lost; in this case, there is a pledge created by operation of law

9o right of lien if claim arises from another contract, i.e. 7epositor deposits a determinate thing to the bank, then depositor also loaned money worth 066,666 from the bank. "n this case, there is a contract of deposit and contract of loan. "n commodatum, baileeFs only right to retain is claim for damages

"". .ermination of the contract $. 3)tinguishment 0. ;eneral causes 'oss or destruction "f depositor claims or demands for the thing "f depositary renounces the deposit in case he has %ustifiable reasons or reasonable grounds to believe that the thing was obtained illegally 3)piration of the term .ermination of the purpose of the deposit or fulfillment of the resolutory condition 8utual withdrawal from the contract (or gratuitous contracts, death of either party, contract is e)tinguished o (or onerous contracts, deposit is not e)tinguished due to death of either parties. 7eposit is e)tinguished only when deposit is terminated by the heirs of the depositor. 1. 2ther causes Art. 1231. 2bligations are e)tinguished* (0) By payment or performance* (1) By the loss of the thing due* (?) By the condonation or remission of the debt; (@) By the confusion or merger of the rights of creditor and debtor; (A) By compensation; (N) By novation. 2ther causes of e)tinguishment of obligations, such as annulment, rescission, fulfillment of a resolutory condition, and prescription, are governed elsewhere in this ode. C5A"T-! 3 N-C-SSA!0 D-"OS.T

Art. 1997. $ deposit is necessary* (0) <hen it is made in compliance with a legal obligation; (1) <hen it takes place on the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, or other similar events. Art. 1999. .he deposit referred to in 9o. 0 of the preceding article shall be governed by the provisions of the law establishing it, and in case of its deficiency, by the rules on voluntary deposit. .he deposit mentioned in 9o. 1 of the preceding article shall be regulated by the provisions concerning voluntary deposit and by $rticle 10N>. Art. 199:. .he deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. .he keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotelDkeepers or their substitutes advised relative to the care and vigilance of their effects. Art. 1999. .he hotelDkeeper is liable for the vehicles, animals and articles which have been introduced or placed in the anne)es of the hotel. Art. 2000. .he responsibility referred to in the two preceding articles shall include the loss of, or in%ury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force ma%eure. .he fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him. Art. 2001. .he act of a thief or robber, who has entered the hotel is not deemed force ma%eure, unless it is done with the use of arms or through an irresistible force. Art. 2002. .he hotelDkeeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel. Art. 2003. .he hotelDkeeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. $ny stipulation between the hotelDkeeper and the guest whereby the responsibility of the former as set forth in articles 0==> to 1660 is suppressed or diminished shall be void.

Art. 200#. .he hotelDkeeper has a right to retain the things brought into the hotel by the guest, as a security for credits on account of lodging, and supplies usually furnished to hotel guests. ". 9ecessary deposit 7ifference between necessary deposit and voluntary deposit o $ voluntary deposit is made by the free will of the depositor. "n a necessary deposit, this freedom of choice is absent. $. Iinds

0. "n compliance with legal obligations governed by the law establishing them and in default thereof, by the rules on voluntary deposit .he %udicial deposit of a thing the possession of which is being disputed in a litigation by 1 or more persons ($rt. A?>) .he deposit with a bank or public institution of public bonds or instruments of credit payable to order or bearer given in usufruct when the usufructuary does not give proper security for their conservation ($rt. A>N) .he deposit of a thing pledged when the creditor uses the same without authority of the owner or misuses it in any other way ($rt. 106@) .hose required in suits as provided in the :ules of ourt .hose constituted to guarantee contracts with government. 1. 8ade on the occasion of any calamity such as fire, storm, food, pillage, shipwreck, or other similar events regulated by the provisions concerning voluntary deposit ?. .ransients in inns, hotels and motels (motorist hotels) 9ot applicable to boarding houses; refers not to boarders; nonDtransients are governed by the rules on lease

2bligations of the transients* o .o notify the hotel keeper of the goods doesnFt need to enumerate them o .ake necessary precautions prescribed regarding their safekeeping .he hotelDkeeper is liable for the vehicles, animals and articles which have been introduced or placed in the anne)es of the hotel. .he hotelDkeeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. $ny stipulation between the hotelDkeeper and the guest whereby the responsibility of the former as set forth in articles 0==> to 1660 is suppressed or diminished shall be void.

.he act of a thief or robber, who has entered the hotel is not deemed force ma%eure, unless it is done with the use of arms or through an irresistible force thus, use of force must be by strangers, not by employees, if employees, hotel keeper is liable 5otel keeper is liable for the acts of its employees regardless of the manner but not that which may proceed form any force ma%eure <hen liability commencesM (rom the time the guests manifest their evident intention to avail the accommodations of the hotel .he hotelDkeeper has a right to retain the things brought into the hotel by the guest, as a security for credits on account of lodging, and supplies usually furnished to hotel guests. @. &assengers with common carriers

Art. 200:. .he depositary of property sequestrated is bound to comply, with respect to the same, with all the obligations of a good father of a family. Art. 2009. $s to matters not provided for in this governed by the :ules of ourt. ". ode, %udicial sequestration shall be

Budicial deposit (sequestration of property in litigation) Budicial deposit takes place when an attachment or sei4ure of property in litigation is ordered by a court 3)amples* o &roperties attached by the sheriff upon the filing of a complaint o $ receiver (disinterested party) may be appointed by the court to administer and preserve the property in litigation o "n suits of replevin or manual delivery of personal property o ;arnishment o 'evy !pecial :ule .he depositary of sequestrated property is the person appointed by the court. 2bligations* o .ake care of the property with the diligence of a good father of a family o 8ay not be relieved of his responsibility until the litigation is ended or the court so orders 7istinguished from e)tra%udicial deposit Dudicia Deposit -8traEudicia Deposit By the will of the parties (or safeDkeeping &ersonal property ;enerally gratuitous (or the benefit of depositor

!ame rules for transients but such rules is applicable only to handDcarry baggages; ordinary diligence is required &rovisions on common carrier will apply with respect to those baggages not in personal custody or handDcarry .he provisions of $rticles 0G?? to 0GA? shall apply to the passengerCs baggage which is not in his personal custody or in that of his employee. $s to other baggage, the rules in $rticles 0==> and 1666 to 166? concerning the responsibility of hotelD keepers shall be applicable. ontributory negligence if guest negligent in not observing necessary precautions a situation of constructive or active negligence

$. -

ase* %5& Realt) vs. CA .he responsibility of the hotel keeper shall e)tend to the loss or in%ury to the property of the guests even if caused by servants, employees, as well as strangers e)cept as it may proceed from force ma%eure. "n this case, .ropicana "nn was guilty of concurrent negligence due to its employeesF act of allowing .an (companion) in opening 8c'oughinFs safety deposit bo). C5A"T-! # S-C=-ST!AT.ON O! D=D.C.AL D-"OS.T Art. 2006. $ %udicial deposit or sequestration takes place when an attachment or sei4ure of property in litigation is ordered. Art. 2007. 8ovable as well as immovable property may be the ob%ect of sequestration. Art. 2009. .he depositary of property or ob%ects sequestrated cannot be relieved of his responsibility until the controversy which gave rise thereto has come to an end, unless the court so orders.

B.

$s to source $s to purpose $s to ob%ect $s to cause $s to possession

By court order .o secure the ownerFs right 8ay be real or personal property :emuneratory (or the benefit of the owner

the