Short answer. Philippine law treats a deposit as gratuitous by default — the depositary keeps the property without compensation. However, two exceptions exist: if the parties agree otherwise, or if the depositary is in the business of storing goods professionally, then compensation may be involved.
What the law says
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.
Civil Code, Article 1965 — Deposit Generally Gratuitous. Read the full provision →
The default rule: a deposit is gratuitous
Article 1965 of the Civil Code establishes that a deposit is a gratuitous contract unless the parties agree otherwise or the depositary is a professional. Gratuitous means the depositary — the person who receives and keeps the property — renders that service without any obligation to be paid for it. This is consistent with the nature of a deposit as an act of friendship or accommodation, where one person entrusts something to another for safekeeping without expecting payment in return.
The two exceptions to gratuitousness
Article 1965 creates two situations where the deposit need not be free. The first is an agreement to the contrary — if the depositor and depositary contract for compensation, that stipulation is enforceable and the deposit becomes onerous. The second is when the depositary is engaged in the business of storing goods. A commercial warehouse, a cold-storage facility, or a professional custodian does not hold property for free — the business model is built on charging for storage. When the depositary is in that trade, compensation is presumed to be part of the arrangement even without an explicit agreement.
Why the distinction matters
Whether a deposit is gratuitous or onerous affects the standard of care the depositary owes. A depositary who receives compensation, or who is in the storage business, is generally held to a higher standard of diligence than one who agreed to keep the property as a favor. If goods are damaged or lost, the liability analysis depends in part on whether the depositary was paid. A friend who kept your belongings during a move, with nothing owed to them, may be judged by a different measure than a commercial warehouse that charged monthly fees for the same goods.
Extrajudicial deposit compared to other contracts
The Civil Code distinguishes between extrajudicial and judicial deposits. Extrajudicial deposit is the kind between private parties described in Article 1965. Judicial deposit, by contrast, arises from a court order and is not purely voluntary. The gratuitousness rule of Article 1965 applies to extrajudicial deposits. In practice, many storage arrangements between businesses are onerous by agreement, but between individuals acting informally, the default remains that the depositary is not owed payment unless something was agreed or unless the situation falls within the professional-business exception.
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.
- Delfina Vda. De Rigonan, et al. vs. Zoroaster Derecho, et al, G.R. No. 159571, July 15, 2005 — read the decision on LawPhil →