Characteristics of deposit contract

Deposit contracts are real contracts. They may be onerous or gratuitous. The discussion below is based on an outline by De Leon and De Leon, Jr. (2010) in their book on credit transactions. Please see citation below. Their books are available in fine bookstores nationwide.

[1] It is a real contract like commodatum and mutuum because it is perfected by the delivery of the subject matter.There are two reasons why a contract of deposit is a real contract. First is an express legal provision saying that a deposit is constituted "from the moment a person receives a thing." Second is the fact that the bailee in deposit cannot physically and legally perform his obligations over the thing unless he has it in his possession. Moreover, there can no breach of the contract without such delivery.

"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." (Article 1962 of the New Civil Code of the Philippines)

[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).

As a general rule, deposit is gratuitous. This means that the bailee in deposit receives no compensation from the bailor. However, there are cases where the contract of deposit is agreed to be compensated (onerous).

"A deposit is a gratuitous contract, except when there is an agreement to the contrary, or unless the depositary is engaged in the business of storing goods." (Article 1965)

It must be noted that a contract of deposit is, in essence, a contract of lease over a person's services of keeping, safekeeping and returning a depositor's property.

SOURCE: De Leon and De Leon, Jr. (2010). Comments and Cases on CREDIT TRANSACTIONS. 11th edition. ISBN 978-971-23-5535-6. Rex Books Store.