Short answer. A deposit begins the moment a person receives something belonging to another with the duty to keep it safely and return the same thing. Delivery is what starts it, not the signing of a paper. And if safekeeping is not the main purpose of the arrangement, it is some other contract.
What the law says
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.
Civil Code, Article 1962 — Deposit Defined. Read the full provision →
The three elements
Article 1962 defines it: 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. Three elements sit in that line. The thing must belong to someone else. The person receiving it must be under a duty to keep it safely. And he must give back the same thing, not an equivalent. That last word is what separates a deposit from a loan: a borrower of rice returns other rice, while a keeper must hand back the very item that was entrusted to him.
Delivery is what starts it
The contract is constituted from the moment a person receives the thing. Talking about it creates nothing; handing the thing over creates everything. This matters in ordinary life. A promise to look after a neighbour's equipment next month binds nobody as a keeper until the equipment is actually delivered. It also means no written document is essential — most deposits arise from a box passed across and a nod — though a receipt describing what was handed over, in what condition and on what date, turns out to be worth far more than either side expects once a dispute starts.
The main-purpose test
The second sentence keeps the definition honest: If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. Things change hands for all kinds of reasons. A watch left with a repairer is there to be fixed. A vehicle in a paid parking space may involve a lease of the space. Goods handed to a carrier are there to be moved. In each, safekeeping happens along the way but is not the point. What the parties called the arrangement counts for far less than why the thing was delivered.
What follows once it is a deposit
The label carries consequences. A keeper must preserve the thing and return it with whatever it produced; he may not use it without permission; and if he uses it, or delays returning it, he can be made to answer even for a loss caused by pure accident. Money placed with a bank is a different matter and follows the rules of that relationship and the account terms. If you are handing something over, list what it is and its condition, say when you want it back, and keep a copy. If it is not returned, demand it in writing — the date of that demand often decides everything.
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.
- Bank Of The Philippine Islands vs. Jesusa P. Reyes, et al, G.R. No. 157177, February 11, 2008 — read the decision on LawPhil →
- Superlines Transportation Co., Inc. vs. PNCC, et al, G.R. No. 169596, March 28, 2007 — read the decision on LawPhil →