Short answer. Yes. Article 1990 requires you, as depositary, to deliver that sum to the depositor when a government order or force majeure takes the deposited thing and you receive money or another thing in its place. You cannot keep the substitute payment simply because the original item is gone.
What the law says
If the depositary by force majeure 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.
Civil Code, Article 1990 — Loss by Force Majeure With Substitute. Read the full provision →
The substitute takes the place of the original item
Article 1990 addresses exactly the situation you describe: if the depositary by force majeure 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. The depositor's right does not evaporate simply because the specific item deposited no longer exists in your hands. The law treats whatever you received in exchange — money or some other thing — as effectively standing in for the original, and that substitute belongs to the depositor, not to you.
Why you do not get to keep it
As the depositary, you never owned the deposited item in the first place — you held it for the depositor's benefit. When a government order or force majeure event takes the item and something is given in exchange, that exchange happened only because you were the one holding the property at the time. Keeping the replacement for yourself would give you something you were never entitled to, purely because of an event connected to property that was never yours to begin with.
This applies whether you received money or another thing
The obligation is not limited to cash compensation. Whether the government paid you money for the item or gave you a different item in its place, the same duty to hand it over to the depositor applies. What matters is that whatever you received came to you specifically because you were holding the depositor's property when the government order or force majeure event occurred, not because of any independent transaction of your own.
What you should do next
If you have already received the money or the replacement thing, the practical step is to turn it over to the depositor promptly rather than treating the loss of the original item as closing the matter. If you have not yet received it, you should still expect to deliver it once it comes into your hands, since your obligation as depositary under this article follows the substitute automatically, without needing a separate agreement to that effect.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Spouses Rolando and Herminia Salvador vs. Spouses Rogelio and Elizabeth Rabaja and Rosario Gonzales, G.R. No. 199990, February 4, 2015 — read the decision on LawPhil →