In order to secure a bank loan, XYZ Corporation surrendered its deposit certificate, with a maturity date
of 01 September 1997 to the bank. The corporation defaulted on the due repayment of the loan, prompting the bank to encash the deposit certificate. XYZ Corporation questioned the above action taken by the bank as being a case of pactum commissorium. The bank disagrees. What is your opinion? (1997 BAR)
There is no pactum commissorium here. Deposits of money in banks and similar institutions are governed by the provisions on simple loans (Art. 1980). The relationship between the depositor and a bank is one of creditor and debtor. Basically this is a matter of compensation as all the elements of compensation are present in this case (BPI v. CA, G.R. No. 104612, May 10, 1994).
X, who has a savings deposit with Y Bank in the sum of P1, 000, 000.00 incurs a loan obligation with the said Bank in the sum of P800 000.00 which has become due. When X tries to withdraw his deposit, Y Bank allows only P200, 000.00 to be withdrawn, less service charges, claiming that compensation has extinguished its obligation under the savings account to the concurrent amount of X’s debt. X contends that compensation is improper when one of the debts, as here, arises from a contract of deposit. Assuming that the promissory note signed by X to evidence the loan does not provide for compensation between said loan and his savings deposit, who is correct? (1998 BAR)
Y Bank is correct. Art. 1287, Civil Code, does not apply. All the requisites of Art. 1279, Civil Code are present. In the case of Gullas v. PNB (62 Phil. 519), The Supreme Court held:
“The Civil Code contains provisions regarding compensation (set off) and deposit. These portions of Philippine Law provide that compensation shall take place when two persons are reciprocally creditor and debtor of each other. In this connection, it has been held that the relation existing between a depositor and a bank is that of creditor and debtor. xxx As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the part of a depositor.” Hence, compensation took place between the mutual obligations of X and Y Bank.
Ana rented a safety deposit box at the Alto Bank, paid the rental fee and was given the key. Ana put her jewelry and gold coins in the box. Days after, three armed men gained entry into the Alto Bank, opening its vault and several safety deposit boxes, including Ana’s and emptied them of their contents.
Could Ana hold the Alto Bank liable for the loss of the contents of her deposit box? Explain
No, because under Art. 1990 of the Civil Code, if the depository by force majueure loses the thing and receives money or another thing in its place, he shall deliver the sum or other thing to be depositor. There being no showing that there was anything received in place of the things deposited, the Alto Bank is not liable for the contents of the safety box
X boarded an airconditioned Pantranco Bus bound for Baguio. X was given notice that the carrier is not liable for baggage brought in by passengers. X kept in his custody his attache case containing $10,000. In Tarlac, all the passengers, including X, were told to get off and to take their lunch, the cost of which is included in the ticket. X left his attaché case on his seat as the door of the bus was locked. After lunch and when X returned to the bus, he discovered that his attaché case was missing. A vendor said that a man picked the lock of the door, entered the bus and ran away with the attaché case. What, if any, is the liability of the carrier?
Hand-carried pieces of luggage of passengers are governed by the rules on necessary deposit. Under Article 2000 of the Civil Code the responsibility of the depository shall, among other cases, include the loss of property of the guest caused by strangers but not that which may proceed from force majeure. Article 2001 of the same Code considers an act of a thief as not one of force majeure unless done with the use of arms or through an irresistible force. Accordingly, the carrier may, given the factual setting in the problem, still be held liable.
X took the Benguet Bus from Baguio going to Manila. He deposited his maleta in the baggage compartment of the bus common to all passengers. He did not declare his baggage nor pay its charges contrary to the regulations of the bus company. When X got off, he could not find his baggage which obviously was taken by another passenger. Determine the liability of the bus company.
The bus company is liable for the loss of the maleta. The duty of extraordinary diligence in the vigilance over the goods is due on such goods as are deposited or surrendered to the common carrier for transportation. The fact that the maleta was not declared nor the charges paid thereon, would not be consequential so long as it was received by the carrier for transportation.
X and Y staged a daring bank robbery in Manila at 10:30 AM in the morning of a regular business day, and escaped with their loot of two (2) bags, each bag containing P50,000,00. During their flight to elude the police, X and Y entered the nearby locked house of A, then working in his Quezon City office. From A’s house, X and Y stole a box containing cash totaling P50,000.00 which box A had been keeping in deposit for his friend B.
In their hurry, X and Y left in A’s bedroom one (1) of the bags which they had taken from the bank.
With X and Y now at large and nowhere to be found, the bag containing P50.000.00 is now claimed by B, by the Mayor of Manila, and by the bank.
B claims that the depository. A, by force majeure had obtained the bag of money in place of the box of money deposited by B. The Mayor of Manila, on the other hand, claims that the bag of money should be deposited with the Office of the Mayor as required of the finder by the provisions of the Civil Code.
The bank resists the claims of B and the Mayor of Manila.
To whom should A deliver the bag of money? Decide with reasons.
B would have no right to claim the money. Article 1990 of the Civil Code is not applicable. The law refers to another thing received in substitution of the object deposited and is predicated upon something exchanged.
The Mayor of Manila cannot invoke Article 719 of the Civil Code, which requires the finder to deposit the thing with the Mayor only when the previous possessor is unknown.
In this case, A must return the bag of money to the bank as the previous possessor and known owner (Arts. 719 and 1990. Civil Code.)
For a cargo of machinery shipped from abroad to a sugar central in Dumaguete, Negros Oriental, the Bill of Lading (B/L) stipulated “to shipper’s order,” with notice of arrival to be addressed to the Central. The cargo arrived at its destination and was released to the Central without surrender of the B/L on the basis of the latter’s undertaking to hold the carrier free and harmless from any liability.
Subsequently, a Bank to whom the central was indebted, claimed the cargo and presented the original of the B/L stating that the Central had failed to settle its obligations with the Bank.
Was there misdelivery by the carrier to the sugar central considering the non-surrender of the B/L? Why?
A: There was no misdelivery by the carrier since the cargo was considered consigned to the Sugar central per the “Shipper’s Order” (Eastern Shipping Lines v CA 190 s 512)
What is a deposit?
A contract constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same.
What are the characteristics of a deposit?
- Real Contract - contract is perfected by the delivery of the subject matter.
- Unilateral (gratutitous deposit) - only the depositary has an obligation.
- Bilateral (onerous deposit) - gives rise to obligations on the part of both the depositary and depositor.
Distinguish between deposit and mutuum
Deposit Mutuum
1. Purpose
Principal purpose is safekeeping or custody Principal purpose is consumption
2. When to Return
Depositor can demand the return of the subject matter at will The lender must wait until the expiration of the period granted to the debtor
3. Subject Matter
Subject matter may be movable or immovable property Subject matter is only money or other fungible thing
4. Relationship
Relationship is that of lender (creditor) and borrower (debtor).
Relationship is that of depositor and depositary.
5. Compensation
There can be compensation of credits. NO compensation of things deposited with each other (except by mutual agreement).
Distinguish between deposit and commodatum
Deposit Commodatum
- Purpose is Safekeeping
- Purpose is the transfer of the use
- May be gratuitous
- Essentially and always gratuitous
- Movable/corporeal things only in case of extrajudicial deposit
- Both movable and immovable may be the object
What are the kinds of deposit?
- Judicial (Sequestration) –takes place when an attachment or seizure of property in litigation is ordered.
- Extra-judicial
a. Voluntary – one wherein the delivery is made by the will of the depositor or by two or more persons each of whom believes himself entitled to the thing deposited. (Arts 1968 – 1995)
b. Necessary – one made in compliance with a legal obligation, or on the occasion of any calamity, or by travellers in hotels and inns (Arts 1996 - 2004), or by travellers with common carriers (Art 1734 – 1735).
What is the difference between a judicial and extrajudicial deposit?
Judicial Extra-judicial
1. Creation
Will of the court Will of the parties or contract
2. Purpose
Security or to insure the right of a party to property or to recover in case of favorable judgment Custody and safekeeping
3. Subject Matter
Movables or immovables,
but generally immovables Movables only
4. Cause
Always onerous May be compen-sated or not, but generally gratuitous
5. When must the thing be returned
Upon order of the court or when litigation is ended Upon demand of depositor
6. In whose behalf it is held
Person who has a right Depositor or third person designated
When is a contract of deposit onerous?
GENERAL RULE: Contract of deposit is gratuitous (Art 1965)
EXCEPTIONS:
1. when there is contrary stipulation
2. depositary is engaged in business of storing goods
3. property saved from destruction without knowledge of the owner
NOTES:
Article 1966 does not embrace incorporeal property, such as rights and actions, for it follows the person of the owner, wherever he goes.
A contract for the rent of safety deposit boxes is not an ordinary contract of lease of things but a special kind of deposit; hence, it is not to be strictly governed by the provisions on deposit. The relation between a bank and its customer is that of a bailor and bailee. (CA Agro vs CA, 219 SCRA 426)
What are the obligations of the Depositary (Art 1972 –1991):
- To keep the thing safely (Art 1972)
Exercise over the thing deposited the same diligence as he would exercise over his property - To return the thing (Art 1972)
Person to whom the thing must be returned:
a. Depositor, to his heirs and successors, or the person who may have been designated in the contract
b. If the depositary is capacitated - he is subject to all the obligations of a depositary whether or not the depositor is capacitated. If the depositor is incapacitated, the depositary must return the property to the legal representative of the incapacitated or to the depositor himself if he should acquire capacity (Art 1970).
c. If the depositor is capacitated and the depositary is incapacitated - the latter does not incur the obligation of a depositary but he is liable:
i..to return the thing deposited while still in his possession;
ii.to pay the depositor the amount which he may have benefited himself with the thing or its price subject to the right of any third person who acquired the thing in good faith (Art 1971)
Time of return:
a. Upon demand even though a specified period or time for such return may have been fixed except when the thing is judicially attached while in the depositary’s possession or should he have been notified of the opposition of a third person to the return or the removal of the thing deposited. (Art 1998)
b. If deposit gratuitous, the depositary may return the thing deposited notwithstanding that a period has been fixed for the deposit if justifiable reasons exists for its return.
c. If the deposit is for a valuable consideration, the depositary has no right to return the thing deposited before the expiration of the time designated even if he should suffer inconvenience as a consequence.(Art 1989)
What to return: product, accessories, and accessions of the thing deposited (Art 1983)
3. Not to deposit the thing with a third person unless authorized by express stipulation (Art 1973)
The depositor is liable for the loss of the thing deposited under Article 1973 if:
a. he transfers the deposit with a third person without authority although there is no negligence on his part and the third person;
b. he deposits the thing with a third person who is manifestly careless or unfit although authorized even in the absence of negligence; or
c. the thing is lost through the negligence of his employees whether the latter are manifestly careless or not.
4. If the thing deposited should earn interest (Art 1975):
a. to collect interest and the capital itself as it fall due
b. to take steps to preserve its value and rights corresponding to it
5. Not to commingle things deposited if so stipulated (Art 1976)
6. Not to make use of the thing deposited unless authorized (Art 1977)
GENERAL RULE: Deposit is for safekeeping of the subject matter and not for use. The unauthorized use by the depositary would make him liable for damages.
EXCEPTIONS:
1. When the preservation of the thing deposited requires its use
2. When authorized by the depositor
8. To change the way of the deposit if under the circumstances, the depositary may reasonably presume that the depositor would consent to the change if he knew of the facts of the situation, provided, that the former notifies the depositor thereof and wait for his decision, unless delay would cause danger
9. To pay interest on sums converted to personal use if the deposit consists of money (Art 1983)
10. To be liable for loss through fortuitous event (SUDA): (Art 1979):
a. if stipulated
b. if he uses the thing without the depositor’s permission
c. if he delays its return
d. if he allows others to use it, even though he himself may have been authorized to use the same
The depositor is liable for the loss of the thing deposited under Article 1973 if:
a. he transfers the deposit with a third person without authority although there is no negligence on his part and the third person;
b. he deposits the thing with a third person who is manifestly careless or unfit although authorized even in the absence of negligence; or
c. the thing is lost through the negligence of his employees whether the latter
Deposit is for safekeeping of the subject matter and not for use. The unauthorized use by the depositary would make him liable for damages except when?
- When the preservation of the thing deposited requires its use
- When authorized by the depositor
Effect if permission to use is given (Art 1978):
- If thing deposited is non-consumable, the contract loses the character of a deposit and acquires that of a commodatum despite the fact that the parties may have denominated it as a deposit, unless safekeeping is still the principal purpose.
- If thing deposited consists of money/consumable things, the contract is converted into a simple loan or mutuum unless safekeeping is still the principal purpose in which case it is called an irregular deposit. Example: bank deposits are irregular deposits in nature but governed by law on loans.
what is the obligation of the depositary When the thing deposited is delivered sealed and closed
a. to return the thing deposited in the same condition
b. to pay for damages should the seal or lock be broken through his fault, which is presumed unless proved otherwise
c. to keep the secret of the deposit when the seal or lock is broken with or without his fault (Art 1981)
NOTE: The depositary is authorized to open the thing deposited which is closed and sealed when (Art 1982):
i. there is presumed authority (i.e. when the key has been delivered to him or the instructions of the depositor cannot be done without opening it)
ii. necessity
When is depositary liable for loss through fortuitous event (SUDA): (Art 1979):
a. if stipulated
b. if he uses the thing without the depositor’s permission
c. if he delays its return
d. if he allows others to use it, even though he himself may have been authorized to use the same
Distinguish between irregular deposit and mutuum
Irregular deposit Mutuum
- The consumable thing deposited may be demanded at will by the depositor
- Lender is bound by the provisions of the contract and cannot demand restitution until the time for payment, as provided in the contract, has arisen
- The only benefit is that which accrues to the depositor
- Essential cause for the transaction is the necessity of the borrower
- The irregular depositor has a preference over other creditors with respect to the thing deposited
- Common creditors enjoy no preference in the distribution of the debtor’s property
Rule when there are two or more depositors (Art 1985):
- If thing deposited is divisible and depositors are not solidary: Each depositor can demand only his proportionate share thereto.
- If obligation is solidary or if thing is not divisible: Rules on active solidarity shall apply, i.e. each one of the solidary depositors may do whatever may be useful to the others but not anything which may be prejudicial to the latter, (Art. 1212) and the depositary may return the thing to anyone of the solidary depositors unless a demand, judicial or extrajudicial, for its return has been made by one of them in which case, delivery should be made to him (Art. 1214).
- Return to one of depositors stipulated. The depositary is bound to return it only to the person designated although he has not made any demand for its return.
NOTES:
The depositary may retain the thing in pledge until full payment of what may be due him by reason of the deposit (Art 1994).
The depositor’s 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 (Art 1991).
Obligations of the Depositor (Art 1992 – 1995):
- To pay expenses for preservationa. If the deposit is gratuitous, the depositor is obliged to reimburse the depositary for expenses incurred for the preservation of the thing deposited (Art 1992)
b. If the deposit is for valuable consideration, expenses for preservation are borne by the depositary unless there is a contrary stipulation - To pay loses incurred by the depositary due to the character of the thing deposited
GENERAL RULE: The depositor shall reimburse the depositary for any loss arising from the character of the thing deposited. what are the exceptions?
- at the time of the deposit, the depositor was not aware of the dangerous character of the thing
- when depositor was not expected to know the dangerous character of the thing
- when the depositor notified the depository of the same
- the depositary was aware of it without advice from the depositor
