DEPOSIT
A 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. If the safekeeping of the
thing delivered is not the principal purpose of
the contract, there is no deposit but some
other contract.
CHARACTERISTIC
DEPOSIT
CONTRACT
OF
Characteristics of contract of deposit (1) It
is a real contract like commodatum and mutuum
because it is perfected by the delivery of the
subject matter.
(2) When the deposit is gratuitous, it is a
unilateral
contract
because
only
the
depositary (depositorio) has an obligation. But
when the deposit is for compensation, the
juridical relation created becomes bilateral
because it gives rise to obligations on the part
of both the depositary and depositor
(depositante).
KINDS OF DEPOSIT
Deposit is either:
(1) judicial or one which takes place when an
attachment or seizure of property in litigation
is ordered (for movables and immovables); or
(2) extrajudicial which may be (for movables
only);
(a) voluntary or 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; or
(b) necessary or one made in compliance with a
legal obligation, or on the occasion of any
calamity, or by travellers in hotels and inns or
by travellers with common carriers.
Generally, the depositor must be the owner of
the thing deposited. But it may belong to a
person other than the depositor. Thus, a
carrier, commission agent, a lessee, etc. may
deposit goods temporarily in his possession
considering that the contract does not involve
the transfer of ownership. As a matter of fact,
the depositary cannot dispute the title of the
depositor to the thing deposited.
Obligation to keep the thing deposited and
return it.
The safekeeping and the return of the thing
when required, are the two primary obligations
of the depositary.
(1) Degree of care. — Ordinarily, the
depositary must exercise over the thing
deposited the same diligence as he would
exercise over his property.
(2) Rules applicable. — The liability of the
depositary for the care and delivery of the
thing is governed by the rules on obligations.
(a) He is liable if the loss occurs through his
fault or negligence even if the thing was
insured.
(b) The loss of the thing while in his possession,
ordinarily raises a presumption of fault on his
part.
(c) The required degree of care is greater if
the deposit is for compensation than when it is
gratuitous. This is similar to the rule in agency
(Art. 1909.) and common carriers. But even
when it is gratuitous, due care must still be
exercised.
(3) Return before specified term. — The thing
deposited must be returned to the depositor
whenever he claims it, even though a specified
term or time for such may have been stipulated
in the contract.
The depositor is the owner or at least
represents the owner of the thing deposited.
The depositary must, therefore, return not
only the thing itself but also all its products,
accessions and accessories which are a
consequence of ownership. Thus, the young of
an animal which was deposited shall be
returned to the depositor.
The depositary who receives the thing in
deposit cannot require that the depositor
prove his ownership over the thing. To
constitute a deposit, it is not essential that the
depositor be the owner of the thing deposited.
Furthermore, to acquire proof of ownership
may open the door to fraud and bad faith, for
the depositary, on the pretense of requiring
proof of ownership, may be able to retain the
thing.
The depositary is obliged to return the thing
deposited, when required, to the depositor, to
his heirs and successors, or to the person who
may have been designated in the contract. If
the depositor was incapacitated at the time of
making the deposit, the property must be
returned to his guardian or administrator or
the person who made the deposit or to the
depositor himself should he acquire capacity.
Even if the depositor had capacity at the time
of making the deposit but he subsequently
loses his capacity during the deposit, the thing
must be returned to his legal representative.
GUARANTY (Art. 2047)
In a contract of guaranty, a person, called the
guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in
case the latter should fail to do so. It is a
contract between the guarantor and creditor.
In its broad sense, guaranty includes pledge
and mortgage because the purpose of guaranty
may be accomplished not only by securing the
fulfillment of an obligation contracted by the
principal debtor through the personal guaranty
of a third person but also by furnishing to the
creditor for his security, property with
authority to collect the debt from the
proceeds of the same in case of default.
Characteristics of the contract
(1) It is accessory because it is dependent for
its existence upon the principal obligation
guaranteed by it;
(2) It is subsidiary and conditional because it
takes effect only when the principal debtor
fails in his obligation subject to limitations;
(3) It is unilateral because it gives rise only to
a duty on the part of the guarantor in relation
to the creditor and not vice versa although
after its fulfillment, the principal debtor
becomes liable to indemnify the guarantor but
this is merely an incident of the contract; and
also because it may be entered into even
without the intervention of the principal
debtor;
(4) It is a contract which requires that the
guarantor must be a person distinct from the
debtor because a person cannot be the
personal guarantor of himself.
SURETYSHIP
Suretyship may be defined as a relation which
exists where one person (principal or obligor)
has undertaken an obligation and another
person (surety) is also under a direct and
primary obligation or other duty to a third
person (obligee), who is entitled to but one
performance, and as between the two who are
bound, the one rather than the other should
perform.
Nature of surety
(1) Liability is contractual and accessory but
direct. — Suretyship is a contractual
relation. The surety’s obligation is not an
original and direct one for the
performance of his act, but merely
accessory or collateral to the obligation
contracted by the principal. Nevertheless,
his liability to the creditor is said to be
direct, immediate, primary and absolute.
(2) Liability is limited by terms of contract. —
It is basic that liability on a bond is contractual
in nature and is ordinarily restricted to the
obligation expressly assumed therein. A
contract of surety is not presumed; it cannot
extend to more than what is stipulated. The
extent of the surety’s liability is determined
only by the clause of the contract of
suretyship as well as the conditions stated in
the bond. It cannot be extended by implication
beyond the terms of the contract.
(3) Liability arises only if principal debtor is
held liable. — A surety contract is made
principally for the benefit of the creditor
oblige and this is ensured by the solidary
nature of the surety undertaking. The surety
is “considered in law as being the same party
as the debtor in relation to whatever is
adjudged touching the obligation of the
latter,” or the liabilities of the two “are so
interwoven and dependent as to be
inseparable.”
(4) Surety is not entitled to exhaustion. — A
surety is not entitled to the exhaustion of the
properties of the principal debtor.
(5) Undertaking is to creditor, not to debtor.
— The principal cannot claim that there has
been a breach of the surety’s obligation to him
under the suretyship contract when the surety
fails or refuses to pay the debt for the
principal’s account. And such failure or refusal
does not have the effect of relieving the
principal of his obligation to pay the premium
on the bond furnished by the surety in
consideration of the premium, as long as the
liability of the surety to the obligee subsists.
(6) Surety is not entitled to notice of
principal’s default. — Demand on the surety is
not necessary before bringing suit against
them, since the commencement of the suit is a
sufficient demand. A surety is not even
entitled, as a matter of right, to be given
notice of the principal’s default.
(7) Prior demand by the creditor upon principal
not required. — A creditor’s right to proceed
against the surety alone exists independently
of his right to proceed against the principal
where both principal and surety are equally
bound. As soon as the principal is in default,
the surety likewise is in default. The proper
remedy of the surety is to pay the debt and
pursue the principal for reimbursement.
MCQ
1. 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.
a. Mutuum
b. Commodatum
c. Barter
d. Dacion en pago
2. One of the parties delivers to another
money or other consumable thing, upon the
condition that the same amount of the same
kind and quality shall be paid.
a. Mutuum
b. Commodatum
c. Barter
d. Dacion en pago
3. I. Commodatum is essentially onerous.
II. Simple loan may be gratuitous or with a
stipulation to pay interest.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
4. I. In simple loan, the bailor retains the
ownership of the thing loaned, while in
commodatum, ownership passes to the
borrower.
II. Consumable goods may be the subject of
commodatum if the purpose of the contract is
not the consumption of the object, as when it
is merely for exhibition.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
5. A movable property which cannot be used in
a manner appropriate to their nature without
being consumed.
a. Consumable
b. Non-consumable
c. Fungible
d. Non-fungible
6. I. Loan is a real contract which means that
it is perfected by delivery.
II. Sale is a consensual contract which means
that it is perfected by mere consent.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
7. I. An accepted promise to deliver something
by way of commodatum or simple loan is binding
upon parties.
II. The commodatum or simple loan shall be
perfected upon the meeting of the minds.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
8. It is where the bailor may demand the thing
at will.
a. Ordinary commodatum
b. Ordinary mutuum
c. Precarium
d. None of the above
9. I. Movable or immovable property may be
the object of commodatum.
II. When the intention of the parties is to lend
consumable goods and to have the very
same goods returned at the end of the period
agreed upon, the loan is a commodatum and not
a mutuum.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
10.I. In simple loan (mutuum), the borrower
acquires ownership of the money, goods or
personal property borrowed.
II. A contract whereby one person transfers
the ownership of non-fungible 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 commodatum.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
11.I. Guaranty exists for the benefit of the
creditor and not for the benefit of the
principal debtor as he is not a party to the
contract of guaranty.
II. Guaranty may be constituted to guarantee
the
performance
of
a
voidable
or
unenforceable contract.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
12. I. Although a surety contract is secondary
to the principal obligation, the liability of the
surety is direct, primary and absolute; or
equivalent to that of a regular party to the
undertaking.
II. A surety is an insurer of the debt, whereas
a guarantor is an insurer of the solvency of the
debtor.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
13.I. Generally, it is necessary for the creditor
to proceed against a principal in order to hold
the surety liable.
II. The contract of guaranty and suretyship
must be in writing to be valid.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
14.I. A guaranty is onerous, unless there is a
stipulation to the contrary.
II. A guaranty may also be constituted, not
only in favor of the principal debtor, but also
in favor of the other guarantor, with the
latter’s consent, or without his knowledge, or
even over his objection.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
15. I. A guaranty can exist without a valid
obligation.
II. A guaranty may be constituted to
guarantee the performance of a voidable or an
unenforceable contract. It may also guarantee
a natural obligation.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
16. I. An agreement to constitute a deposit is
binding, but the deposit itself is not perfected
until the delivery of the thing.
II. A contract of deposit is perfected by
meeting of the minds.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
17. I. A deposit is an onerous contract.
II. The depositor need not be the owner of the
thing deposited because the purpose of the
contract is safekeeping and not transfer of
ownership.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
18. I. In extrajudicial deposit, only movable
things may be the object of a deposit.
II. In the case of judicial deposit, the objects
can either be movable or immovable things.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
19. I. A contract of deposit may be entered
into orally or in writing.
II. If a person having capacity to contract
accepts a deposit made by one who is
incapacitated, the former shall be subject to
all the obligations of a depositary.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
20.I. The 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.
II. Unless there is a stipulation to the
contrary, the depositary can deposit the thing
with a third person.
a. Ony I is true.
b. Only II is true.
c. Both are true.
d. Both are false.
1. A movable property which cannot be used in
a manner appropriate to their nature without
their being consumed.
a. Consumable
b. Non-consumable
c. Fungible
d. Non-fungible
2. A movable property which can be used in a
manner appropriate to their nature without
their being consumed.
a. Consumable
b. Non-consumable
c. Fungible
d. Non-fungible
3. It is where the bailor may demand the thing
at will.
a. Ordinary commodatum
b. Ordinary mutuum
c. Precarium
d. None of the above
4. The bailee is liable for the loss of the thing,
even if it should be through a fortuitous event,
except:
a. If he devotes the thing to any purpose
different from that for which it has been
loaned.
b. If he keeps it longer than the stipulated, or
after the accomplishment of the use for which
the commodatum has been constituted
c. If the thing loaned has been delivered with
appraisal of its value, unless there is a
stipulation exempting the bailee from
responsibility in case of a fortuitous event.
d. If he lends or leases the thing to a third
person, who is a member of his household.
5. If the use of the thing is merely tolerated
by the bailor, he can demand the return of the
thing at will, in which case the contractual
relation is
a. Precarium
b. Ordinary commodatum
c. Ordinary mutuum
d. Deposit
6. Is a compensation fixed by the parties for the
use or forbearance of money.
a. Compensatory interest
b. Monetary interest
c. Penalty
d. Damages
7. Was defined as a “contractual obligation of lender
or creditor to refrain during a given period of time,
from requiring the borrower or debtor to repay a
loan or debt then due and payable.”
a. Interest
b. Forbearance
c. Damages
d. Penalty
8. A person, called the guarantor, binds himself to
the creditor to fulfill the obligation of the principal
debtor in case the latter should fail to do so.
a. Pledge
b. Guaranty
c. Mortgage
d. Suretyship
9. Refers to an agreement whereunder one person,
the surety, engages to be answerable for the debt,
default, or miscarriage of another known as the
principal.
a. Pledge
b. Guaranty
c. Mortgage
d. Suretyship
10. 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.
a. Guaranty
b. Deposit
c. Pledge
d. Loan