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Aggabao, Carlo Ray V.

Atty. Irvin Joseph Fabella

Credit Transactions

Art. 1995. A deposit is extinguished:

(1) Upon the loss or destruction of the thing deposited;
(2) In case of a gratuitous deposit, upon the death of either the depositor or the
Other causes of extinguishment should be added:

Expiration of the term;

Mutual withdrawal from the contract;
Demand at will by the depositor;
If the deposit is onerous, it can be terminated by the heirs of either party;
And other causes mentioned in Art. 1231.

The provision is lacking of other causes of extinguishment of a contract of deposit. Other

causes mentioned under the law must be supplemented to be plain and precise and to avoid
confusion as to what circumstances the contract of deposit may be extinguished.
Expiration of the term. Upon expiration of the term agreed upon by the depositor and
the depositary, it follows that the contract of deposit is terminated and it is the duty of the
depositary to return the thing deposited to the depositor unless the depositary retain the thing
for non-payment of what may be due him by reason of the deposit (Art. 1994).
Mutual withdrawal from the contract. The contract of deposit may be extinguished
with the consent of both depositary and depositor.
Demand at will by the depositor. The depositor may demand the return of the thing
deposited notwithstanding the fact that a period is fixed for the return. In a deposit, the
depositor can seek the return of the thing any time from the depositor. If there is a period
stipulated for the return, it may be waived by him because the same is for the benefit of the
depositor. However, the return of the thing upon demand of the depositor is not applicable in
some instances provided by law as when the thing is judicially attached, non-payment of
compensation (Art. 1994) and when the thing is stolen and the period of 30 days from notice
to the true owner for him to claim had not lapsed yet (Art. 1982 par. 2).
Deposit for compensation. Article 1995 only contemplates gratuitous deposit, there is
no mention if the deposit is an onerous one. A deposit for compensation is not extinguished
by the death of either party. The rights and obligations arising therefrom are transmissible to
their respective heirs not being personal in nature. The heirs of either party may even
extinguish the contract of deposit before the expiration of the term.

Other causes under Art. 1231.The Article should make express reference to Article
1231 to carry the implication that there are other causes of extinguishing the contract of
Art. 2071. The guarantor, even before having paid, may proceed against the
principal debtor:
(2) In case of insolvency of the principal debtor;
(7) If the principal debtor is in imminent danger of becoming insolvent.
The 2nd and 7th paragraph must be deleted precisely because a guarantor insures the
solvency of the debtor (Ong vs. PCIB, G.R. No. 160466. January 17, 2005). Hence, he binds
himself to pay if the principal debtor is unable to pay. A guarantor does not contract that the
principal debtor will pay but to ensure that he is able to do so.
The provisions mentioned runs counter to the very purpose of guaranty which is for the
creditor to proceed against the guaranty if the debtor defaults in his obligation. The guarantor
undertakes to answer for the debt of another person in case he is unable to pay.