ARTICLE 1973: Unless there is a stipulation to the contrary, the depository

cannot deposit the thing with a third person. If deposit with a third person is
allowed, the depository is liable for the loss if he deposited the thing with a
person who is manifestly careless or unfit. The depository is responsible for the
negligence of his employees.
Obligation not to transfer deposit
Unless authorized by express stipulation, the depositary is not allowed to deposit
the thing with a third person because a deposit is founded on trust and confidence and it
can be supposed that the depositor, in choosing the depository, has taken into
consideration the latter’s qualification.
1. Liability for loss – Under this article, the depositor is liable for the loss of the
thing deposited if:
a. He transfers the deposit with a third person without authority although there is
no negligence on his part and the third person,
b. He deposits the thing with a third person who is manifestly careless or unfit
although authorized, even in the absence of negligence, or
c. The thing is lost through the negligence of his employees whether the latter
are manifestly careless or not.
2. Exemption from liability – The depositor is not responsible in case the thing is
lost without negligence of the third person with whom he was allowed to deposit
the thing if such third person is not “manifestly careless or unfit”.

ARTICLE 1074: The depositary may change the way of the deposit if under the
circumstances he may reasonably presume that the depositor would consent to
the change if he knew of the facts of the situation. However, before the depositary
may make such change, he shall notify the depositor thereof and wait for his
decision, unless delay would cause danger.

ARTICLE 1975: The depositary holding certificates, bonds, securities or

instruments which earn interest shall be bound to collect the latter when it
becomes due, and to take such steps as may be necessary in order that the
securities may presence their value and the rights corresponding to them
according to law.
The above provision shall not apply to contracts for the rent of safety
deposit boxes.
ARTICLE 1976: Unless there is a stipulation to the contrary, the depositary may
commingle grain or other articles of the same kind and quality, in which case the
various depositors shall own or have a proportionate interest in the mass.

ARTICLE 1977: The depositary cannot make sure use of the thing deposited
without the express permission of the depositor.
Otherwise, he shall be liable for damages.
However, when the preservation of the thing deposited requires its use, it
must be used but only for that purpose.

ARTICLE 1978: When the depositary has permission to use the thing deposited,
the contract loses the concept of a deposit and becomes a loan or commodatum,
except where safekeeping is still the principal purpose of the contract.
The permission shall not be presumed, and its existence must be proved.
Effect if permission to use is given
1. The deposited, non-consumable – if the thing deposited is non-consumable
and the depositary has permission to use the thing, the contact loses the
character of a deposit and acquires that of a commodatum despite the fact that
the parties may have denominated it has a deposit, unless safekeeping is still the
principal purpose of the contract.
2. Thing deposited, money or other non-consumable thing – if the thing
deposited is money or other consumable thing, the permission to use it will result
in its consumption and converts the contract into a simple loan or mutuum. But if
safekeeping is still the principal purpose of the contract, it is still a deposit but an
irregular one; hence, it is called irregular deposit. Bank deposit are in the nature
pf irregular deposits but they are really loans governed by the law on loans.

Permission to use not presumed

In a deposit, the permission to use is not presumed except when such use is
necessary for the preservation of the thing deposited. The burden is on the depositary
to prove that permission has been given.
Problem
Statement 1: Unless there is a stipulation to the contrary, the depository can deposit the
thing with a third person.
Statement 2: In a deposit, the permission to use is not presumed exempt when such
use is necessary for the preservation of the thing deposited.
a. False, False
b. False, True
c. True, False
d. True, True

Answer: B

Multiple Choice
1. The depositor is not responsible in case the thing is lost without negligence of the
third person with whom he was allowed to deposit the thing if such third person is
not “manifestly careless or unfit”.
a. Liability for loss
b. Exemption from liability
c. All of the above
d. None of the above

Answer: B
2. The depositary may change the way of the deposit if under the circumstances he
may reasonably presume that the depositor would consent to the change if he
knew of the facts of the situation. However, Before the depositary may make
such change, he shall notify the depositor thereof and wait for his
decision,_____________.
a. Unless delay would cause danger.
b. Unless delay would cause advantage
c. Unless delay would cause changes
d. Unless delay would cause agreement.

Answer: A
3. The depositary may commingle grain or other articles of the same kind and
quality, in which case the various depositors shall own or have a proportionate
interest in the mass.
a. Unless there is an agreement
b. Unless there is a liability
 c. Unless there is a stipulation to the contrary
d. Unless there is advantages

Answer: C
4. When the depositary has permission to use the thing deposited, __________the
concept of a deposit and becomes a loan or commodatum, except where
safekeeping is still the principal purpose of the contract.
a. the contract extended
b. the contract loses
c. the contract changes
d. none of the above

Answer: B