Credit Cases – 3rd meeting (Gavino)
Topic: Deposit
G.R. No. 142591. April 30, 2003
JOSEPH CHAN, WILSON CHAN and LILY CHAN, petitioners,
vs.
BONIFACIO S. MACEDA, JR., respondent.
A judgment of default does not automatically imply admission by the
defendant of the facts and causes of action of the plaintiff. The Rules of Court
require the latter to adduce evidence in support of his allegations as an
indispensable condition before final judgment could be given in his favor. The
trial judge has to evaluate the allegations with the highest degree of
objectivity and certainty. He may sustain an allegation for which the plaintiff
has adduced sufficient evidence, otherwise, he has to reject it. In the case at
bar, judicial review is imperative to avert the award of damages that is
unreasonable and without evidentiary support.
Assailed in this petition for review under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, is the Decision dated June 17, 1999 of the Court of
Appeals in CA-G.R. CV No. 57323, entitled Bonifacio S. Maceda, Jr. versus
Joseph Chan, et. al., affirming in toto the Decision dated December 26, 1996
of the Regional Trial Court, Branch 160, Pasig City, in Civil Case No. 53044.
The essential antecedents are as follows:
On July 28, 1976, Bonifacio S. Maceda, Jr., herein respondent, obtained a P7.3
million loan from the Development Bank of the Philippines for the
construction of his New Gran Hotel Project in Tacloban City.
Thereafter, on September 29, 1976, respondent entered into a building
construction contract with Moreman Builders Co., Inc., (Moreman). They
agreed that the construction would be finished not later than December 22,
1977.
Respondent purchased various construction materials and equipment in
Manila. Moreman, in turn, deposited them in the warehouse of Wilson and
Lily Chan, herein petitioners. The deposit was free of charge.
Unfortunately, Moreman failed to finish the construction of the hotel at the
stipulated time. Hence, on February 1, 1978, respondent filed with the then
Court of First Instance (CFI, now Regional Trial Court), Branch 39, Manila, an
action for rescission and damages against Moreman, docketed as Civil Case
No. 113498.
On November 28, 1978, the CFI rendered its Decision[4] rescinding the
contract between Moreman and respondent and awarding to the
latter P 445,000.00 as actual, moral and liquidated damages; P20,000.00
representing the increase in the construction materials; and P35,000.00 as
attorneys fees. Moreman interposed an appeal to the Court of Appeals but
the same was dismissed on March 7, 1989 for being dilatory. He elevated the
case to this Court via a petition for review on certiorari. In a Decision[5] dated
February 21, 1990, we denied the petition. On April 23, 1990,[6] an Entry of
Judgment was issued.
Meanwhile, during the pendency of the case, respondent ordered petitioners
to return to him the construction materials and equipment which Moreman
deposited in their warehouse. Petitioners, however, told them that Moreman
withdrew those construction materials in 1977.
Hence, on December 11, 1985, respondent filed with the Regional Trial Court,
Branch 160, Pasig City, an action for damages with an application for a writ of
preliminary attachment against petitioners,[7] docketed as Civil Case No.
53044.
In the meantime, on October 30, 1986, respondent was appointed Judge of
the Regional Trial Court, Branch 12, San Jose Antique.[8]
On August 25, 1989, or after almost four (4) years, the trial court dismissed
respondents complaint for his failure to prosecute and for lack of
interest.[9] On September 6, 1994, or five years thereafter, respondent filed a
motion for reconsideration, but the same was denied in the Order dated
September 9, 1994 because of the failure of respondent and his counsel to
appear on the scheduled hearing.[10]
On October 14, 1994, respondent filed a second motion for
reconsideration. This time, the motion was granted and the case was
ordered reinstated on January 10, 1995, or ten (10) years from the time the
action was originally filed.[11] Thereafter, summons, together with the copies
of the complaint and its annexes, were served on petitioners.
On March 2, 1995, counsel for petitioners filed a motion to dismiss on several
grounds.[12] Respondent, on the other hand, moved to declare petitioners in
default on the ground that their motion to dismiss was filed out of time and
that it did not contain any notice of hearing.[13]
On April 27, 1995, the trial court issued an order declaring petitioners in
default.[14]
Petitioners filed with the Court of Appeals a petition for certiorari[15] to annul
the trial courts order of default, but the same was dismissed in its
Order[16] dated August 31, 1995. The case reached this Court, and in a
Resolution dated October 25, 1995,[17] we affirmed the assailed order of the
Court of Appeals. On November 29, 1995,[18] the corresponding Entry of
Judgment was issued.
Thus, upon the return of the records to the RTC, Branch 160, Pasig City,
respondent was allowed to present his evidence ex-parte.
Upon motion of respondent, which was granted by the trial court in its Order
dated April 29, 1996,[19] the depositions of his witnesses, namely, Leonardo
Conge, Alfredo Maceda and Engr. Damiano Nadera were taken in the
Metropolitan Trial Court in Cities, Branch 2, Tacloban City.[20] Deponent
Leonardo Conge, a labor contractor, testified that on December 14 up to
December 24, 1977, he was contracted by petitioner Lily Chan to get bags of
cement from the New Gran Hotel construction site and to store the same into
the latters warehouse in Tacloban City. Aside from those bags of cement,
deponent also hauled about 400 bundles of steel bars from the same
construction site, upon order of petitioners. Corresponding delivery receipts
were presented and marked as Exhibits A, A-1,A-2,A-3 and A-4.[21]
Deponent Alfredo Maceda testified that he was respondents Disbursement
and Payroll Officer who supervised the construction and kept inventory of the
properties of the New Gran Hotel. While conducting the inventory on
November 23, 1977, he found that the approximate total value of the
materials stored in petitioners warehouse was P214,310.00. This amount was
accordingly reflected in the certification signed by Mario Ramos, store clerk
and representative of Moreman who was present during the inventory.[22]
Deponent Damiano Nadera testified on the current cost of the architectural
and structural requirements needed to complete the construction of the New
Gran Hotel.[23]
On December 26, 1996, the trial court rendered a decision in favor of
respondent, thus:
WHEREFORE, foregoing considered, judgment is hereby rendered ordering
defendants to jointly and severally pay plaintiff:
1) P1,930,000.00 as actual damages;
2) P2,549,000.00 as actual damages;
3) Moral damages of P150,000.00; exemplary damages of P50,000.00 and
attorneys fees of P50,000.00 and to pay the costs.
SO ORDERED.
The trial court ratiocinated as follows:
The inventory of other materials, aside from the steel bars and cement is
found highly reliable based on first, the affidavit of Arthur Edralin dated
September 15, 1979, personnel officer of Moreman Builders that he was
assigned with others to guard the warehouse; (Exhs. M & O); secondly, the
inventory (Exh. C) dated November 23, 1977 shows (sic) deposit of assorted
materials; thirdly, that there were items in the warehouse as of February 3,
1978 as shown in the balance sheet of Moremans stock clerk Jose Cedilla.
Plaintiff is entitled to payment of damages for the overhauling of materials
from the construction site by Lily Chan without the knowledge and consent
of its owner. Article 20 of the Civil Code provides:
Art. 20. Every person who contrary to law, willfully or negligently caused
damage to another, shall indemnify the latter for the same.
As to the materials stored inside the bodega of defendant Wilson Chan, the
inventory (Exh. C) show (sic), that the same were owned by the New Gran
Hotel. Said materials were stored by Moreman Builders Co., Inc. since it was
attested to by the warehouseman as without any lien or encumbrances, the
defendants are duty bound to release it. Article 21 of the Civil Code provides:
Art. 21. Any person who willfully caused loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate
the latter for the damage.
Plaintiff is entitled to payment of actual damages based on the inventory as
of November 23, 1977 amounting to P1,930,080.00 (Exhs. Q & Q-1). The
inventory was signed by the agent Moreman Builders Corporation and
defendants.
Plaintiff is likewise entitled to payment of 12,500 bags of cement and 400
bundles of steel bars totaling P2,549,000.00 (Exhs. S & S-1; Exhs. B & B-3).
Defendants should pay plaintiff moral damages of P150,000.00; exemplary
damages of P50,000.00 and attorneys fees of P50,000.00 and to pay the
costs.
The claim of defendant for payment of damages with respect to the materials
appearing in the balance sheets as of February 3, 1978 in the amount
of P3,286,690.00, not having been established with enough preponderance
of evidence cannot be given weight.[24]
Petitioners then elevated the case to the Court of Appeals, docketed as CA-
G.R. CV No. 57323. On June 17, 1999, the Appellate Court rendered the
assailed Decision[25] affirming in toto the trial courts judgment, ratiocinating
as follows:
Moreover, although the prayer in the complaint did not specify the amount
of damages sought, the same was satisfactorily proved during the trial. For
damages to be awarded, it is essential that the claimant satisfactorily prove
during the trial the existence of the factual basis thereof and its causal
connection with the adverse partys act (PAL, Inc. vs. NLRC, 259 SCRA 459. In
sustaining appellees claim for damages, the court a quo held as follows:
The Court finds the contention of plaintiff that materials and equipment of
plaintiff were stored in the warehouse of defendants and admitted by
defendants in the certification issued to Sheriff Borja. x x x
Evidence further revealed that assorted materials owned by the New Gran
Hotel (Exh. C) were deposited in the bodega of defendant Wilson Chan with
a total market value of P1,930,000.00, current price.
The inventory of other materials, aside from the steel bars and cement, is
highly reliable based on first, the affidavit of Arthur Edralin dated September
15, 1979, personnel officer of Moreman Builders; that he was assigned, with
others to guard the warehouse (Exhs. M & O); secondly, the inventory (Exh.
C) November 23, 1977 shows deposit of assorted materials; thirdly, that there
were items in the warehouse as of February 3, 1978, as shown in the balance
sheet of Moremans stock clerk, Jose Cedilla (pp. 60-61, Rollo).
The Court affirms the above findings.
Well settled is the rule that absent any proper reason to depart from the rule,
factual conclusions reached by the trial court are not to be disturbed (People
vs. Dupali, 230 SCRA 62). Hence, in the absence of any showing that serious
and substantial errors were committed by the lower court in the appraisal of
the evidence, the trial judges assessment of the credibility of the witnesses is
accorded great weight and respect (People vs. Jain, 254 SCRA 686). And, there
being absolutely nothing on record to show that the court a quo overlooked,
disregarded, or misinterpreted facts of weight and significance, its factual
findings and conclusions must be given great weight and should not be
disturbed on appeal.
WHEREFORE, being in accord with law and evidence, the appealed decision is
hereby AFFIRMED in toto.
Hence, this petition for review on certiorari anchored on the following
grounds:
I. The Court of Appeals acted with grave abuse of discretion and under a
misapprehension of the law and the facts when it affirmed in toto the
award of actual damages made by the trial court in favor of respondent in
this case.
II. The awards of moral and exemplary damages of the trial court to
respondent in this case and affirmed in toto by the Court of Appeals are
unwarranted by the evidence presented by respondent at the ex
partehearing of this case and should, therefore, be eliminated or at least
reduced.
III. The award of attorneys fees by the trial court to respondent in this case
and affirmed by the Court of Appeals should be deleted because of the
failure of the trial court to state the legal and factual basis of such award.
Petitioners contend inter alia that the actual damages claimed by respondent
in the present case were already awarded to him in Civil Case No.
113498[26] and hence, cannot be recovered by him again. Even assuming that
respondent is entitled to damages, he can not recover P4,479,000.00 which
is eleven (11) times more than the total actual damages of P365,000.00
awarded to him in Civil Case No. 113498.[27]
In his comment on the petition, respondent maintains that petitioners, as
depositaries under the law, have both the fiduciary and extraordinary
obligations not only to safely keep the construction material deposited, but
also to return them with all their products, accessories and accessions,
pursuant to Articles 1972,[28] 1979,[29] 1983,[30] and 1988[31] of the Civil
Code. Considering that petitioners duty to return the construction materials
in question has already become impossible, it is only proper that the prices of
those construction materials in 1996 should be the basis of the award of
actual damages. This is the only way to fulfill the duty to return contemplated
in the applicable laws.[32] Respondent further claims that petitioners must
bear the increase in market prices from 1977 to 1996 because liability for
fraud includes all damages which may be reasonably attributed to the non-
performance of the obligation. Lastly, respondent insists that there can be no
double recovery because in Civil Case No. 113498,[33] the parties were
respondent himself and Moreman and the cause of action was the rescission
of their building contract. In the present case, however, the parties are
respondent and petitioners and the cause of action between them is for
recovery of damages arising from petitioners failure to return the
construction materials and equipment.
Obviously, petitioners assigned errors call for a review of the lower courts
findings of fact.
Succinct is the rule that this Court is not a trier of facts and does not normally
undertake the re-examination of the evidence submitted by the contending
parties during the trial of the case considering that findings of fact of the
Court of Appeals are generally binding and conclusive on this Court.[34] The
jurisdiction of this Court in a petition for review on certiorari is limited to
reviewing only errors of law,[35] not of fact, unless it is shown, inter
alia, that: (1) the conclusion is a finding grounded on speculations, surmises
or conjectures; (2) the inference is manifestly mistaken, absurd and
impossible; (3) there is grave abuse of discretion; (4) the judgment is based
on misapprehension of facts; (5) the findings of fact are conflicting;
and (6) the Court of Appeals, in making its findings went beyond the issues of
the case and the same is contrary to the admission of both parties.[36]
Petitioners submit that this case is an exception to the general rule since both
the trial court and the Court of Appeals based their judgments on
misapprehension of facts.
We agree.
At the outset, the case should have been dismissed outright by the trial court
because of patent procedural infirmities. It bears stressing that the case was
originally filed on December 11, 1985. Four (4) years thereafter, or on August
25, 1989, the case was dismissed for respondents failure to prosecute. Five
(5) years after, or on September 6, 1994, respondent filed his motion for
reconsideration.From here, the trial court already erred in its ruling because
it should have dismissed the motion for reconsideration outright as it was
filed far beyond the fifteen-day reglementary period.[37] Worse, when
respondent filed his second motion for reconsideration on October 14, 1994,
a prohibited pleading,[38] the trial court still granted the same and reinstated
the case on January 10, 1995. This is a glaring gross procedural error
committed by both the trial court and the Court of Appeals.
Even without such serious procedural flaw, the case should also be dismissed
for utter lack of merit.
It must be stressed that respondents claim for damages is based on
petitioners failure to return or to release to him the construction materials
and equipment deposited by Moreman to their warehouse. Hence, the
essential issues to be resolved are: (1) Has respondent presented proof that
the construction materials and equipment were actually in petitioners
warehouse when he asked that the same be turned over to him? (2) If so,
does respondent have the right to demand the release of the said materials
and equipment or claim for damages?
Under Article 1311 of the Civil Code, contracts are binding upon the parties
(and their assigns and heirs) who execute them. When there is no privity of
contract, there is likewise no obligation or liability to speak about and thus
no cause of action arises. Specifically, in an action against the depositary, the
burden is on the plaintiff to prove the bailment or deposit and the
performance of conditions precedent to the right of action.[39] A depositary is
obliged to return the thing to the depositor, or to his heirs or successors, or
to the person who may have been designated in the contract. [40]
In the present case, the record is bereft of any contract of deposit, oral or
written, between petitioners and respondent. If at all, it was only between
petitioners and Moreman. And granting arguendothat there was indeed a
contract of deposit between petitioners and Moreman, it is still incumbent
upon respondent to prove its existence and that it was executed in his
favor. However, respondent miserably failed to do so. The only pieces of
evidence respondent presented to prove the contract of deposit were
the delivery receipts.[41] Significantly, they are unsigned and not duly
received or authenticated by either Moreman, petitioners or respondent or
any of their authorized representatives. Hence, those delivery receipts have
no probative value at all. While our laws grant a person the remedial right to
prosecute or institute a civil action against another for the enforcement or
protection of a right, or the prevention or redress of a wrong,[42] every cause
of action ex-contractumust be founded upon a contract, oral or written,
express or implied.
Moreover, respondent also failed to prove that there were construction
materials and equipment in petitioners warehouse at the time he made a
demand for their return.
Considering that respondent failed to prove (1) the existence of any contract
of deposit between him and petitioners, nor between the latter and
Moreman in his favor, and (2) that there were construction materials in
petitioners warehouse at the time of respondents demand to return the
same, we hold that petitioners have no corresponding obligation or liability
to respondent with respect to those construction materials.
Anent the issue of damages, petitioners are still not liable because, as
expressly provided for in Article 2199 of the Civil Code,[43] actual or
compensatory damages cannot be presumed, but must be proved with
reasonable degree of certainty. A court cannot rely on speculations,
conjectures, or guesswork as to the fact and amount of damages, but must
depend upon competent proof that they have been suffered by the injured
party and on the best obtainable evidence of the actual amount thereof. It
must point out specific facts which could afford a basis for measuring
whatever compensatory or actual damages are borne.[44]
Considering our findings that there was no contract of deposit between
petitioners and respondent or Moreman and that actually there were no
more construction materials or equipment in petitioners warehouse when
respondent made a demand for their return, we hold that he has no right
whatsoever to claim for damages.
As we stressed in the beginning, a judgment of default does not automatically
imply admission by the defendant of plaintiffs causes of action. Here, the trial
court merely adopted respondents allegations in his complaint and evidence
without evaluating them with the highest degree of objectivity and certainty.
WHEREFORE, the petition is GRANTED. The challenged Decision of the Court
of Appeals dated June 17, 1999 is REVERSED and SET ASIDE. Costs against
respondent.
G.R. No. L-7593 March 27, 1913
THE UNITED STATES, plaintiff-appellee,
vs.
JOSE M. IGPUARA, defendant-appellant.
The defendant therein is charged with the crime of estafa, for having
swindled Juana Montilla and Eugenio Veraguth out of P2,498 Philippine
currency, which he had take on deposit from the former to be at the latter's
disposal. The document setting forth the obligation reads:
We hold at the disposal of Eugenio Veraguth the sum of two thousand four
hundred and ninety-eight pesos (P2,498), the balance from Juana Montilla's
sugar. — Iloilo, June 26, 1911, — Jose Igpuara, for Ramirez and Co.
The Court of First Instance of Iloilo sentenced the defendant to two years
of presidio correccional, to pay Juana Montilla P2,498 Philippine currency,
and in case of insolvency to subsidiary imprisonment at P2.50 per day, not to
exceed one-third of the principal penalty, and the costs.
The defendant appealed, alleging as errors: (1) Holding that the document
executed by him was a certificate of deposit; (2) holding the existence of a
deposit, without precedent transfer or delivery of the P2,498; and (3)
classifying the facts in the case as the crime of estafa.
A deposit is constituted from the time a person receives a thing belonging to
another with the obligation of keeping and returning it. (Art. 1758, Civil
Code.)
That the defendant received P2,498 is a fact proven. The defendant drew up
a document declaring that they remained in his possession, which he could
not have said had he not received them. They remained in his possession,
surely in no other sense than to take care of them, for they remained has no
other purpose. They remained in the defendant's possession at the disposal
of Veraguth; but on August 23 of the same year Veraguth demanded for him
through a notarial instrument restitution of them, and to date he has not
restored them.
The appellant says: "Juana Montilla's agent voluntarily accepted the sum of
P2,498 in an instrument payable on demand, and as no attempt was made to
cash it until August 23, 1911, he could indorse and negotiate it like any other
commercial instrument. There is no doubt that if Veraguth accepted the
receipt for P2,498 it was because at that time he agreed with the defendant
to consider the operation of sale on commission closed, leaving the collection
of said sum until later, which sum remained as a loan payable upon
presentation of the receipt." (Brief, 3 and 4.)
Then, after averring the true facts: (1) that a sales commission was precedent;
(2) that this commission was settled with a balance of P2,498 in favor of the
principal, Juana Montilla; and (3) that this balance remained in the possession
of the defendant, who drew up an instrument payable on demand, he has
drawn two conclusions, both erroneous: One, that the instrument drawn up
in the form of a deposit certificate could be indorsed or negotiated like any
other commercial instrument; and the other, that the sum of P2,498
remained in defendant's possession as a loan.
It is erroneous to assert that the certificate of deposit in question is
negotiable like any other commercial instrument: First, because every
commercial instrument is not negotiable; and second, because only
instruments payable to order are negotiable. Hence, this instrument not
being to order but to bearer, it is not negotiable.
It is also erroneous to assert that sum of money set forth in said certificate is,
according to it, in the defendant's possession as a loan. In a loan the lender
transmits to the borrower the use of the thing lent, while in a deposit the use
of the thing is not transmitted, but merely possession for its custody or safe-
keeping.
In order that the depositary may use or dispose oft he things deposited, the
depositor's consent is required, and then:
The rights and obligations of the depositary and of the depositor shall cease,
and the rules and provisions applicable to commercial loans, commission, or
contract which took the place of the deposit shall be observed. (Art. 309,
Code of Commerce.)
The defendant has shown no authorization whatsoever or the consent of the
depositary for using or disposing of the P2,498, which the certificate
acknowledges, or any contract entered into with the depositor to convert the
deposit into a loan, commission, or other contract.
That demand was not made for restitution of the sum deposited, which could
have been claimed on the same or the next day after the certificate was
signed, does not operate against the depositor, or signify anything except the
intention not to press it. Failure to claim at once or delay for sometime in
demanding restitution of the things deposited, which was immediately due,
does not imply such permission to use the thing deposited as would convert
the deposit into a loan.
Article 408 of the Code of Commerce of 1829, previous to the one now in
force, provided:
The depositary of an amount of money cannot use the amount, and if he
makes use of it, he shall be responsible for all damages that may accrue and
shall respond to the depositor for the legal interest on the amount.
Whereupon the commentators say: does not penalize refusal to restore but denial of having received. So much
In this case the deposit becomes in fact a loan, as a just punishment imposed for the crime of omission; now with reference to the crime of commission, it
upon him who abuses the sacred nature of a deposit and as a means of was not held in that decision that appropriation or diversion of the thing
preventing the desire of gain from leading him into speculations that may be deposited would not constitute the crime of estafa.
disastrous to the depositor, who is much better secured while the deposit In the second of said decisions, the accused "kept none of the proceeds of
exists when he only has a personal action for recovery. the sales. Those, such as they were, he turned over to the owner;" and there
According to article 548, No. 5, of the Penal Code, those who to the prejudice being no proof of the appropriation, the agent could not be found guilty of
of another appropriate or abstract for their own use money, goods, or other the crime of estafa.
personal property which they may have received as a deposit, on Being in accord and the merits of the case, the judgment appealed from is
commission, or for administration, or for any other purpose which produces affirmed, with costs.
the obligation of delivering it or returning it, and deny having received it, shall
suffer the penalty of the preceding article," which punishes such act as the
crime of estafa. The corresponding article of the Penal Code of the Philippines
in 535, No. 5.
In a decision of an appeal, September 28, 1895, the principle was laid down
that: "Since he commits the crime of estafa under article 548 of the Penal
Code of Spain who to another's detriment appropriates to himself or
abstracts money or goods received on commission for delivery, the court
rightly applied this article to the appellant, who, to the manifest detriment of
the owner or owners of the securities, since he has not restored them,
willfully and wrongfully disposed of them by appropriating them to himself
or at least diverting them from the purpose to which he was charged to
devote them."
It is unquestionable that in no sense did the P2,498 which he willfully and
wrongfully disposed of to the detriments of his principal, Juana Montilla, and
of the depositor, Eugenio Veraguth, belong to the defendant.
Likewise erroneous is the construction apparently at tempted to be given to
two decisions of this Supreme Court (U. S. vs. Dominguez, 2 Phil. Rep., 580,
and U. S. vs. Morales and Morco, 15 Phil. Rep., 236) as implying that what
constitutes estafa is not the disposal of money deposited, but denial of
having received same. In the first of said cases there was no evidence that the
defendant had appropriated the grain deposited in his possession.
On the contrary, it is entirely probable that, after the departure of the
defendant from Libmanan on September 20, 1898, two days after the
uprising of the civil guard in Nueva Caceres, the rice was seized by the
revolutionalists and appropriated to their own uses.
In this connection it was held that failure to return the thing deposited was
not sufficient, but that it was necessary to prove that the depositary had
appropriated it to himself or diverted the deposit to his own or another's
benefit. He was accused or refusing to restore, and it was held that the code
G.R. No. 160544. February 21, 2005
TRIPLE-V FOOD SERVICES, INC.
vs.
FILIPINO MERCHANTS INSURANCE COMPANY, INC.
Quoted hereunder, for your information, is a resolution of this Court
dated FEB 21 2005.
G.R. No. 160544 (Triple-V Food Services, Inc. vs. Filipino Merchants Insurance
Company, Inc.)
Assailed in this petition for review on certiorari is the decision[1]cralaw dated
October 21, 2003 of the Court of Appeals in CA-G.R. CV No. 71223, affirming
an earlier decision of the Regional Trial Court at Makati City, Branch 148, in
its Civil Case No. 98-838, an action for damages thereat filed by respondent
Filipino Merchants Insurance, Company, Inc., against the herein petitioner,
Triple-V Food Services, Inc.
On March 2, 1997, at around 2:15 o'clock in the afternoon, a certain Mary Jo-
Anne De Asis (De Asis) dined at petitioner's Kamayan Restaurant at 15 West
Avenue, Quezon City. De Asis was using a Mitsubishi Galant Super Saloon
Model 1995 with plate number UBU 955, assigned to her by her employer
Crispa Textile Inc. (Crispa). On said date, De Asis availed of the valet parking
service of petitioner and entrusted her car key to petitioner's valet counter.
A corresponding parking ticket was issued as receipt for the car. The car was
then parked by petitioner's valet attendant, a certain Madridano, at the
designated parking area. Few minutes later, Madridano noticed that the car
was not in its parking slot and its key no longer in the box where valet
attendants usually keep the keys of cars entrusted to them. The car was never
recovered. Thereafter, Crispa filed a claim against its insurer, herein
respondent Filipino Merchants Insurance Company, Inc. (FMICI). Having
indemnified Crispa in the amount of P669.500 for the loss of the subject
vehicle, FMICI, as subrogee to Crispa's rights, filed with the RTC at Makati City
an action for damages against petitioner Triple-V Food Services, Inc., thereat
docketed as Civil Case No. 98-838 which was raffled to Branch 148.
In its answer, petitioner argued that the complaint failed to aver facts to
support the allegations of recklessness and negligence committed in the
safekeeping and custody of the subject vehicle, claiming that it and its
employees wasted no time in ascertaining the loss of the car and in informing
De Asis of the discovery of the loss. Petitioner further argued that in accepting
the complimentary valet parking service, De Asis received a parking ticket
whereunder it is so provided that "[Management and staff will not be
responsible for any loss of or damage incurred on the vehicle nor of valuables
contained therein", a provision which, to petitioner's mind, is an explicit
waiver of any right to claim indemnity for the loss of the car; and that De Asis
knowingly assumed the risk of loss when she allowed petitioner to park her
vehicle, adding that its valet parking service did not include extending a
contract of insurance or warranty for the loss of the vehicle.
During trial, petitioner challenged FMICI's subrogation to Crispa's right to file
a claim for the loss of the car, arguing that theft is not a risk insured against
under FMICI's Insurance Policy No. PC-5975 for the subject vehicle.
In a decision dated June 22, 2001, the trial court rendered judgment for
respondent FMICI, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the plaintiff (FMICI) and against the defendant Triple V (herein petitioner) and
the latter is hereby ordered to pay plaintiff the following:
1. The amount of P669,500.00, representing actual damages plus
compounded (sic);
2. The amount of P30,000.00 as acceptance fee plus the amount equal to
25% of the total amount due as attorney's fees;
3. The amount of P50,000.00 as exemplary damages;
4. Plus, cost of suit.
Defendant Triple V is not therefore precluded from taking appropriate action
against defendant Armando Madridano.
SO ORDERED.
Obviously displeased, petitioner appealed to the Court of Appeals reiterating
its argument that it was not a depositary of the subject car and that it
exercised due diligence and prudence in the safe keeping of the vehicle, in
handling the car-napping incident and in the supervision of its employees. It
further argued that there was no valid subrogation of rights between Crispa
and respondent FMICI.
In a decision dated October 21, 2003,[2]cralaw the Court of Appeals dismissed
petitioner's appeal and affirmed the appealed decision of the trial court, thus:
WHEREFORE, based on the foregoing premises, the instant appeal is hereby
DISMISSED. Accordingly, the assailed June 22, 2001 Decision of the RTC of
Makati City - Branch 148 in Civil Case No. 98-838 is AFFIRMED.
SO ORDERED.
In so dismissing the appeal and affirming the appealed decision, the appellate
court agreed with the findings and conclusions of the trial court that: (a)
petitioner was a depositary of the subject vehicle; (b) petitioner was negligent
in its duties as a depositary thereof and as an employer of the valet attendant;
and (c) there was a valid subrogation of rights between Crispa and
respondent FMICI.
Hence, petitioner's present recourse.
We agree with the two (2) courts below.
When De Asis entrusted the car in question to petitioners valet attendant
while eating at petitioner's Kamayan Restaurant, the former expected the
car's safe return at the end of her meal. Thus, petitioner was constituted as a
depositary of the same car. Petitioner cannot evade liability by arguing that
neither a contract of deposit nor that of insurance, guaranty or surety for the
loss of the car was constituted when De Asis availed of its free valet parking
service.
In a contract of deposit, a person receives an object belonging to another with
the obligation of safely keeping it and returning the same.[3]cralaw A deposit
may be constituted even without any consideration. It is not necessary that
the depositary receives a fee before it becomes obligated to keep the item
entrusted for safekeeping and to return it later to the depositor.
Specious is petitioner's insistence that the valet parking claim stub it issued
to De Asis contains a clear exclusion of its liability and operates as an explicit
waiver by the customer of any right to claim indemnity for any loss of or
damage to the vehicle.
The parking claim stub embodying the terms and conditions of the parking,
including that of relieving petitioner from any loss or damage to the car, is
essentially a contract of adhesion, drafted and prepared as it is by the
petitioner alone with no participation whatsoever on the part of the
customers, like De Asis, who merely adheres to the printed stipulations
therein appearing. While contracts of adhesion are not void in themselves,
yet this Court will not hesitate to rule out blind adherence thereto if they
prove to be one-sided under the attendant facts and circumstances.[4]cralaw
Hence, and as aptly pointed out by the Court of Appeals, petitioner must not
be allowed to use its parking claim stub's exclusionary stipulation as a shield
from any responsibility for any loss or damage to vehicles or to the valuables
contained therein. Here, it is evident that De Asis deposited the car in
question with the petitioner as part of the latter's enticement for customers
by providing them a safe parking space within the vicinity of its restaurant. In
a very real sense, a safe parking space is an added attraction to petitioner's
restaurant business because customers are thereby somehow assured that
their vehicle are safely kept, rather than parking them elsewhere at their own
risk. Having entrusted the subject car to petitioner's valet attendant,
customer De Asis, like all of petitioner's customers, fully expects the security
of her car while at petitioner's premises/designated parking areas and its safe
return at the end of her visit at petitioner's restaurant.
Petitioner's argument that there was no valid subrogation of rights between
Crispa and FMICI because theft was not a risk insured against under FMICI's
Insurance Policy No. PC-5975 holds no water.
Insurance Policy No. PC-5975 which respondent FMICI issued to Crispa
contains, among others things, the following item: "Insured's Estimate of
Value of Scheduled Vehicle- P800.000".[5]cralaw On the basis of such item,
the trial court concluded that the coverage includes a full comprehensive
insurance of the vehicle in case of damage or loss. Besides, Crispa paid a
premium of P10,304 to cover theft. This is clearly shown in the breakdown of
premiums in the same policy.[6]cralaw Thus, having indemnified CRISPA for
the stolen car, FMICI, as correctly ruled by the trial court and the Court of
Appeals, was properly subrogated to Crispa's rights against petitioner,
pursuant to Article 2207 of the New Civil Code[7].
Anent the trial court's findings of negligence on the part of the petitioner,
which findings were affirmed by the appellate court, we have consistently
ruled that findings of facts of trial courts, more so when affirmed, as here, by
the Court of Appeals, are conclusive on this Court unless the trial court itself
ignored, overlooked or misconstrued facts and circumstances which, if
considered, warrant a reversal of the outcome of the case.[8]cralaw This is not
so in the case at bar. For, we have ourselves reviewed the records and find
no justification to deviate from the trial court's findings.
WHEREFORE, petition is hereby DENIED DUE COURSE.
G.R. No. 90027 March 3, 1993
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner,
vs.
THE HONORABLE COURT OF APPEALS and SECURITY BANK AND TRUST
COMPANY, respondents.
Is the contractual relation between a commercial bank and another party in
a contract of rent of a safety deposit box with respect to its contents placed
by the latter one of bailor and bailee or one of lessor and lessee?
This is the crux of the present controversy.
On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the
spouses Ramon and Paula Pugao entered into an agreement whereby the
former purchased from the latter two (2) parcels of land for a consideration
of P350,625.00. Of this amount, P75,725.00 was paid as downpayment while
the balance was covered by three (3) postdated checks. Among the terms and
conditions of the agreement embodied in a Memorandum of True and Actual
Agreement of Sale of Land were that the titles to the lots shall be transferred
to the petitioner upon full payment of the purchase price and that the
owner's copies of the certificates of titles thereto, Transfer Certificates of
Title (TCT) Nos. 284655 and 292434, shall be deposited in a safety deposit box
of any bank. The same could be withdrawn only upon the joint signatures of
a representative of the petitioner and the Pugaos upon full payment of the
purchase price. Petitioner, through Sergio Aguirre, and the Pugaos then
rented Safety Deposit Box No. 1448 of private respondent Security Bank and
Trust Company, a domestic banking corporation hereinafter referred to as
the respondent Bank. For this purpose, both signed a contract of lease
(Exhibit "2") which contains, inter alia, the following conditions:
13. The bank is not a depositary of the contents of the safe and it has neither
the possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein
expressly provided, and it assumes absolutely no liability in connection
therewith.1
After the execution of the contract, two (2) renter's keys were given to the
renters — one to Aguirre (for the petitioner) and the other to the Pugaos. A
guard key remained in the possession of the respondent Bank. The safety
deposit box has two (2) keyholes, one for the guard key and the other for the
renter's key, and can be opened only with the use of both keys. Petitioner
claims that the certificates of title were placed inside the said box.
Thereafter, a certain Mrs. Margarita Ramos offered to buy from the
petitioner the two (2) lots at a price of P225.00 per square meter which, as
petitioner alleged in its complaint, translates to a profit of P100.00 per square
meter or a total of P280,500.00 for the entire property. Mrs. Ramos
demanded the execution of a deed of sale which necessarily entailed the
production of the certificates of title. In view thereof, Aguirre, accompanied
by the Pugaos, then proceeded to the respondent Bank on 4 October 1979 to
open the safety deposit box and get the certificates of title. However, when
opened in the presence of the Bank's representative, the box yielded no such
certificates. Because of the delay in the reconstitution of the title, Mrs. Ramos
withdrew her earlier offer to purchase the lots; as a consequence thereof, the
petitioner allegedly failed to realize the expected profit of P280,500.00.
Hence, the latter filed on 1 September 1980 a complaint2 for damages against
the respondent Bank with the Court of First Instance (now Regional Trial
Court) of Pasig, Metro Manila which docketed the same as Civil Case No.
38382.
In its Answer with Counterclaim,3 respondent Bank alleged that the petitioner
has no cause of action because of paragraphs 13 and 14 of the contract of
lease (Exhibit "2"); corollarily, loss of any of the items or articles contained in
the box could not give rise to an action against it. It then interposed a
counterclaim for exemplary damages as well as attorney's fees in the amount
of P20,000.00. Petitioner subsequently filed an answer to the counterclaim.4
In due course, the trial court, now designated as Branch 161 of the Regional
Trial Court (RTC) of Pasig, Metro Manila, rendered a decision5 adverse to the
petitioner on 8 December 1986, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing
plaintiff's complaint.
On defendant's counterclaim, judgment is hereby rendered ordering plaintiff
to pay defendant the amount of FIVE THOUSAND (P5,000.00) PESOS as
attorney's fees.
With costs against plaintiff.6
The unfavorable verdict is based on the trial court's conclusion that under
paragraphs 13 and 14 of the contract of lease, the Bank has no liability for the
loss of the certificates of title. The court declared that the said provisions are
binding on the parties.
Its motion for reconsideration7 having been denied, petitioner appealed from
the adverse decision to the respondent Court of Appeals which docketed the
appeal as CA-G.R. CV No. 15150. Petitioner urged the respondent Court to
reverse the challenged decision because the trial court erred in (a) absolving
the respondent Bank from liability from the loss, (b) not declaring as null and
void, for being contrary to law, public order and public policy, the provisions
in the contract for lease of the safety deposit box absolving the Bank from
any liability for loss, (c) not concluding that in this jurisdiction, as well as under
American jurisprudence, the liability of the Bank is settled and (d) awarding
attorney's fees to the Bank and denying the petitioner's prayer for nominal
and exemplary damages and attorney's fees.8
In its Decision promulgated on 4 July 1989,9 respondent Court affirmed the
appealed decision principally on the theory that the contract (Exhibit "2")
executed by the petitioner and respondent Bank is in the nature of a contract
of lease by virtue of which the petitioner and its co-renter were given control
over the safety deposit box and its contents while the Bank retained no right
to open the said box because it had neither the possession nor control over
it and its contents. As such, the contract is governed by Article 1643 of the
Civil Code 10 which provides:
Art. 1643. In the lease of things, one of the parties binds himself to give to
another the enjoyment or use of a thing for a price certain, and for a period
which may be definite or indefinite. However, no lease for more than ninety-
nine years shall be valid.
It invoked Tolentino vs. Gonzales 11 — which held that the owner of the
property loses his control over the property leased during the period of the
contract — and Article 1975 of the Civil Code which provides:
Art. 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 preserve 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.
and then concluded that "[c]learly, the defendant-appellee is not under any
duty to maintain the contents of the box. The stipulation absolving the
defendant-appellee from liability is in accordance with the nature of the
contract of lease and cannot be regarded as contrary to law, public order and
public policy." 12 The appellate court was quick to add, however, that under
the contract of lease of the safety deposit box, respondent Bank is not
completely free from liability as it may still be made answerable in case
unauthorized persons enter into the vault area or when the rented box is
forced open. Thus, as expressly provided for in stipulation number 8 of the
contract in question:
8. The Bank shall use due diligence that no unauthorized person shall be
admitted to any rented safe and beyond this, the Bank will not be responsible
for the contents of any safe rented from it. 13
Its motion for reconsideration 14 having been denied in the respondent
Court's Resolution of 28 August 1989, 15petitioner took this recourse under
Rule 45 of the Rules of Court and urges Us to review and set aside the
respondent Court's ruling. Petitioner avers that both the respondent Court
and the trial court (a) did not properly and legally apply the correct law in this
case, (b) acted with grave abuse of discretion or in excess of jurisdiction
amounting to lack thereof and (c) set a precedent that is contrary to, or is a
departure from precedents adhered to and affirmed by decisions of this Court
and precepts in American jurisprudence adopted in the Philippines. It
reiterates the arguments it had raised in its motion to reconsider the trial
court's decision, the brief submitted to the respondent Court and the motion
to reconsider the latter's decision. In a nutshell, petitioner maintains that
regardless of nomenclature, the contract for the rent of the safety deposit
box (Exhibit "2") is actually a contract of deposit governed by Title XII, Book
IV of the Civil Code of the Philippines. 16 Accordingly, it is claimed that the
respondent Bank is liable for the loss of the certificates of title pursuant to
Article 1972 of the said Code which provides:
Art. 1972. The depositary is obliged to keep the thing safely and to return it,
when required, to the depositor, or to his heirs and successors, or to the
person who may have been designated in the contract. His responsibility,
with regard to the safekeeping and the loss of the thing, shall be governed by
the provisions of Title I of this Book.
If the deposit is gratuitous, this fact shall be taken into account in determining
the degree of care that the depositary must observe.
Petitioner then quotes a passage from American Jurisprudence 17 which is
supposed to expound on the prevailing rule in the United States, to wit:
The prevailing rule appears to be that where a safe-deposit company leases
a safe-deposit box or safe and the lessee takes possession of the box or safe
and places therein his securities or other valuables, the relation of bailee and
bail or is created between the parties to the transaction as to such securities
or other valuables; the fact that the safe-deposit company does not know,
and that it is not expected that it shall know, the character or description of
the property which is deposited in such safe-deposit box or safe does not
change that relation. That access to the contents of the safe-deposit box can
be had only by the use of a key retained by the lessee ( whether it is the sole
key or one to be used in connection with one retained by the lessor) does not
operate to alter the foregoing rule. The argument that there is not, in such a
case, a delivery of exclusive possession and control to the deposit company,
and that therefore the situation is entirely different from that of ordinary
bailment, has been generally rejected by the courts, usually on the ground
that as possession must be either in the depositor or in the company, it
should reasonably be considered as in the latter rather than in the former,
since the company is, by the nature of the contract, given absolute control of
access to the property, and the depositor cannot gain access thereto without
the consent and active participation of the company. . . . (citations omitted).
and a segment from Words and Phrases 18 which states that a contract for the
rental of a bank safety deposit box in consideration of a fixed amount at
stated periods is a bailment for hire.
Petitioner further argues that conditions 13 and 14 of the questioned
contract are contrary to law and public policy and should be declared null and
void. In support thereof, it cites Article 1306 of the Civil Code which provides
that parties to a contract may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order or public policy.
After the respondent Bank filed its comment, this Court gave due course to
the petition and required the parties to simultaneously submit their
respective Memoranda.
The petition is partly meritorious.
We agree with the petitioner's contention that the contract for the rent of
the safety deposit box is not an ordinary contract of lease as defined in Article
1643 of the Civil Code. However, We do not fully subscribe to its view that
the same is a contract of deposit that is to be strictly governed by the
provisions in the Civil Code on deposit; 19 the contract in the case at bar is a
special kind of deposit. It cannot be characterized as an ordinary contract of
lease under Article 1643 because the full and absolute possession and control
of the safety deposit box was not given to the joint renters — the petitioner
and the Pugaos. The guard key of the box remained with the respondent
Bank; without this key, neither of the renters could open the box. On the
other hand, the respondent Bank could not likewise open the box without the
renter's key. In this case, the said key had a duplicate which was made so that
both renters could have access to the box.
Hence, the authorities cited by the respondent Court 20 on this point do not
apply. Neither could Article 1975, also relied upon by the respondent Court,
be invoked as an argument against the deposit theory. Obviously, the first
paragraph of such provision cannot apply to a depositary of certificates,
bonds, securities or instruments which earn interest if such documents are
kept in a rented safety deposit box. It is clear that the depositary cannot open
the box without the renter being present.
We observe, however, that the deposit theory itself does not altogether find
unanimous support even in American jurisprudence. We agree with the
petitioner that under the latter, the prevailing rule is that the relation
between a bank renting out safe-deposit boxes and its customer with respect
to the contents of the box is that of a bail or and bailee, the bailment being
for hire and mutual benefit. 21 This is just the prevailing view because:
There is, however, some support for the view that the relationship in question
might be more properly characterized as that of landlord and tenant, or lessor
and lessee. It has also been suggested that it should be characterized as that
of licensor and licensee. The relation between a bank, safe-deposit company,
or storage company, and the renter of a safe-deposit box therein, is often
described as contractual, express or implied, oral or written, in whole or in
part. But there is apparently no jurisdiction in which any rule other than that
applicable to bailments governs questions of the liability and rights of the
parties in respect of loss of the contents of safe-deposit boxes. 22 (citations
omitted)
In the context of our laws which authorize banking institutions to rent out
safety deposit boxes, it is clear that in this jurisdiction, the prevailing rule in
the United States has been adopted. Section 72 of the General Banking
Act 23pertinently provides:
Sec. 72. In addition to the operations specifically authorized elsewhere in this
Act, banking institutions other than building and loan associations may
perform the following services:
(a) Receive in custody funds, documents, and valuable objects, and rent
safety deposit boxes for the safeguarding of such effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b) and
(c) of this section as depositories or as agents. . . . 24 (emphasis supplied)
Note that the primary function is still found within the parameters of a
contract of deposit, i.e., the receiving in custody of funds, documents and
other valuable objects for safekeeping. The renting out of the safety deposit
boxes is not independent from, but related to or in conjunction with, this
principal function. A contract of deposit may be entered into orally or in
writing 25 and, pursuant to Article 1306 of the Civil Code, the parties thereto
may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. The depositary's responsibility for the
safekeeping of the objects deposited in the case at bar is governed by Title I,
Book IV of the Civil Code. Accordingly, the depositary would be liable if, in
performing its obligation, it is found guilty of fraud, negligence, delay or
contravention of the tenor of the agreement. 26 In the absence of any
stipulation prescribing the degree of diligence required, that of a good father
of a family is to be observed. 27 Hence, any stipulation exempting the
depositary from any liability arising from the loss of the thing deposited on
account of fraud, negligence or delay would be void for being contrary to law
and public policy. In the instant case, petitioner maintains that conditions 13
and 14 of the questioned contract of lease of the safety deposit box, which
read:
13. The bank is not a depositary of the contents of the safe and it has neither
the possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein
expressly provided, and it assumes absolutely no liability in connection
therewith. 28
are void as they are contrary to law and public policy. We find Ourselves in
agreement with this proposition for indeed, said provisions are inconsistent
with the respondent Bank's responsibility as a depositary under Section 72(a)
of the General Banking Act. Both exempt the latter from any liability except
as contemplated in condition 8 thereof which limits its duty to exercise
reasonable diligence only with respect to who shall be admitted to any rented
safe, to wit:
8. The Bank shall use due diligence that no unauthorized person shall be
admitted to any rented safe and beyond this, the Bank will not be responsible
for the contents of any safe rented from it. 29
Furthermore, condition 13 stands on a wrong premise and is contrary to the
actual practice of the Bank. It is not correct to assert that the Bank has neither
the possession nor control of the contents of the box since in fact, the safety
deposit box itself is located in its premises and is under its absolute control;
moreover, the respondent Bank keeps the guard key to the said box. As
stated earlier, renters cannot open their respective boxes unless the Bank
cooperates by presenting and using this guard key. Clearly then, to the extent
above stated, the foregoing conditions in the contract in question are void
and ineffective. It has been said:
With respect to property deposited in a safe-deposit box by a customer of a
safe-deposit company, the parties, since the relation is a contractual one,
may by special contract define their respective duties or provide for
increasing or limiting the liability of the deposit company, provided such
contract is not in violation of law or public policy. It must clearly appear that
there actually was such a special contract, however, in order to vary the
ordinary obligations implied by law from the relationship of the parties;
liability of the deposit company will not be enlarged or restricted by words of
doubtful meaning. The company, in renting
safe-deposit boxes, cannot exempt itself from liability for loss of the contents
by its own fraud or negligence or that of its agents or servants, and if a
provision of the contract may be construed as an attempt to do so, it will be
held ineffective for the purpose. Although it has been held that the lessor of
a safe-deposit box cannot limit its liability for loss of the contents thereof
through its own negligence, the view has been taken that such a lessor may
limits its liability to some extent by agreement or stipulation. 30 (citations
omitted)
Thus, we reach the same conclusion which the Court of Appeals arrived at,
that is, that the petition should be dismissed, but on grounds quite different
from those relied upon by the Court of Appeals. In the instant case, the
respondent Bank's exoneration cannot, contrary to the holding of the Court
of Appeals, be based on or proceed from a characterization of the impugned
contract as a contract of lease, but rather on the fact that no competent proof
was presented to show that respondent Bank was aware of the agreement
between the petitioner and the Pugaos to the effect that the certificates of
title were withdrawable from the safety deposit box only upon both parties'
joint signatures, and that no evidence was submitted to reveal that the loss
of the certificates of title was due to the fraud or negligence of the
respondent Bank. This in turn flows from this Court's determination that the
contract involved was one of deposit. Since both the petitioner and the
Pugaos agreed that each should have one (1) renter's key, it was obvious that
either of them could ask the Bank for access to the safety deposit box and,
with the use of such key and the Bank's own guard key, could open the said
box, without the other renter being present.
Since, however, the petitioner cannot be blamed for the filing of the
complaint and no bad faith on its part had been established, the trial court
erred in condemning the petitioner to pay the respondent Bank attorney's
fees. To this extent, the Decision (dispositive portion) of public respondent
Court of Appeals must be modified.
WHEREFORE, the Petition for Review is partially GRANTED by deleting the
award for attorney's fees from the 4 July 1989 Decision of the respondent
Court of Appeals in CA-G.R. CV No. 15150. As modified, and subject to the
pronouncement We made above on the nature of the relationship between
the parties in a contract of lease of safety deposit boxes, the dispositive
portion of the said Decision is hereby AFFIRMED and the instant Petition for
Review is otherwise DENIED for lack of merit. No pronouncement as to costs.

G.R. No. 4015 August 24, 1908
ANGEL JAVELLANA, plaintiff-appellee,
vs.
JOSE LIM, ET AL., defendants-appellants.
The attorney for the plaintiff, Angel Javellana, file a complaint on the 30th of
October, 1906, with the Court of First Instance of Iloilo, praying that the
defendants, Jose Lim and Ceferino Domingo Lim, he sentenced to jointly and
severally pay the sum of P2,686.58, with interest thereon at the rate of 15
per cent per annum from the 20th of January, 1898, until full payment should
be made, deducting from the amount of interest due the sum of P1,102.16,
and to pay the costs of the proceedings.
Authority from the court having been previously obtained, the complaint was
amended on the 10th of January, 1907; it was then alleged, on the 26th of
May, 1897, the defendants executed and subscribed a document in favor of
the plaintiff reading as follows:
We have received from Angel Javellana, as a deposit without interest, the
sum of two thousand six hundred and eighty-six cents of pesos fuertes, which
we will return to the said gentleman, jointly and severally, on the 20th of
January, 1898. — Jaro, 26th of May, 1897. — Signed Jose Lim. — Signed:
Ceferino Domingo Lim.
That, when the obligation became due, the defendants begged the plaintiff
for an extension of time for the payment thereof, building themselves to pay
interest at the rate of 15 per cent on the amount of their indebtedness, to
which the plaintiff acceded; that on the 15th of May, 1902, the debtors paid
on account of interest due the sum of P1,000 pesos, with the exception of
either capital or interest, had thereby been subjected to loss and damages.
A demurrer to the original complaint was overruled, and on the 4th of
January, 1907, the defendants answered the original complaint before its
amendment, setting forth that they acknowledged the facts stated in Nos. 1
and 2 of the complaint; that they admitted the statements of the plaintiff
relative to the payment of 1,102.16 pesos made on the 15th of November,
1902, not, however, as payment of interest on the amount stated in the
foregoing document, but on account of the principal, and denied that there
had been any agreement as to an extension of the time for payment and the
payment of interest at the rate of 15 per cent per annum as alleged in
paragraph 3 of the complaint, and also denied all the other statements
contained therein.
As a counterclaim, the defendants alleged that they had paid to the plaintiff
sums which, together with the P1,102.16 acknowledged in the complaint,
aggregated the total sum of P5,602.16, and that, deducting therefrom the
total sum of P2,686.58 stated in the document transcribed in the complaint,
the plaintiff still owed the defendants P2,915.58; therefore, they asked that
judgment be entered absolving them, and sentencing the plaintiff to pay
them the sum of P2,915.58 with the costs.
Evidence was adduced by both parties and, upon their exhibits, together with
an account book having been made of record, the court below rendered
judgment on the 15th of January, 1907, in favor of the plaintiff for the
recovery of the sum of P5,714.44 and costs.
The defendants excepted to the above decision and moved for a new trial.
This motion was overruled and was also excepted to by them; the bill of
exceptions presented by the appellants having been approved, the same was
in due course submitted to this court.
The document of indebtedness inserted in the complaint states that the
plaintiff left on deposit with the defendants a given sum of money which they
were jointly and severally obliged to return on a certain date fixed in the
document; but that, nevertheless, when the document appearing as Exhibits
2, written in the Visayan dialect and followed by a translation into Spanish
was executed, it was acknowledged, at the date thereof, the 15th of
November, 1902, that the amount deposited had not yet been returned to
the creditor, whereby he was subjected to losses and damages amounting to
830 pesos since the 20th of January, 1898, when the return was again
stipulated with the further agreement that the amount deposited should
bear interest at the rate of 15 per cent per annum, from the aforesaid date
of January 20, and that the 1,000 pesos paid to the depositor on the 15th of
May, 1900, according to the receipt issued by him to the debtors, would be
included, and that the said rate of interest would obtain until the debtors on
the 20th of May, 1897, it is called a deposit consisted, and they could have
accomplished the return agreed upon by the delivery of a sum equal to the
one received by them. For this reason it must be understood that the debtors
were lawfully authorized to make use of the amount deposited, which they
have done, as subsequent shown when asking for an extension of the time
for the return thereof, inasmuch as, acknowledging that they have subjected
the letter, their creditor, to losses and damages for not complying with what
had been stipulated, and being conscious that they had used, for their own
profit and gain, the money that they received apparently as a deposit, they
engaged to pay interest to the creditor from the date named until the time
when the refund should be made. Such conduct on the part of the debtors is
unquestionable evidence that the transaction entered into between the
interested parties was not a deposit, but a real contract of loan.
Article 1767 of the Civil Code provides that —
The depository can not make use of the thing deposited without the express
permission of the depositor.
Otherwise he shall be liable for losses and damages.
Article 1768 also provides that —
When the depository has permission to make use of the thing deposited, the
contract loses the character of a deposit and becomes a loan or bailment.
The permission shall not be presumed, and its existence must be proven.
When on one of the latter days of January, 1898, Jose Lim went to the office
of the creditor asking for an extension of one year, in view of the fact the
money was scare, and because neither himself nor the other defendant were
able to return the amount deposited, for which reason he agreed to pay
interest at the rate of 15 per cent per annum, it was because, as a matter of
fact, he did not have in his possession the amount deposited, he having made
use of the same in his business and for his own profit; and the creditor, by
granting them the extension, evidently confirmed the express permission
previously given to use and dispose of the amount stated as having bee
deposited, which, in accordance with the loan, to all intents and purposes
gratuitously, until the 20th of January, 1898, and from that dated with
interest at 15 per cent per annum until its full payment, deducting from the
total amount of interest the sum of 1,000 pesos, in accordance with the
provisions of article 1173 of the Civil Code.
Notwithstanding that it does not appear that Jose Lim signed the document
(Exhibit 2) executed in the presence of three witnesses on the 15th of
November, 1902, by Ceferino Domingo Lim on behalf of himself and the
former, nevertheless, the said document has not been contested as false,
either by a criminal or by a civil proceeding, nor has any doubt been cast upon
the authenticity of the signatures of the witnesses who attested the
execution of the same; and from the evidence in the case one is sufficiently
convinced that the said Jose Lim was perfectly aware of and authorized his
joint codebtor to liquidate the interest, to pay the sum of 1,000 pesos, on
account thereof, and to execute the aforesaid document No. 2. A true
ratification of the original document of deposit was thus made, and not the
least proof is shown in the record that Jose Lim had ever paid the whole or
any part of the capital stated in the original document, Exhibit 1.
If the amount, together with interest claimed in the complaint, less 1,000
pesos appears as fully established, such is not the case with the defendant's
counterclaim for P5,602.16, because the existence and certainty of said
indebtedness imputed to the plaintiff has not been proven, and the
defendants, who call themselves creditors for the said amount have not
proven in a satisfactory manner that the plaintiff had received partial
payments on account of the same; the latter alleges with good reason, that
they should produce the receipts which he may have issued, and which he
did issue whenever they paid him any money on account. The plaintiffs
allegation that the two amounts of 400 and 1,200 pesos, referred to in
documents marked "C" and "D" offered in evidence by the defendants, had
been received from Ceferino Domingo Lim on account of other debts of his,
has not been contradicted, and the fact that in the original complaint the sum
of 1,102.16 pesos, was expressed in lieu of 1,000 pesos, the only payment
made on account of interest on the amount deposited according to
documents No. 2 and letter "B" above referred to, was due to a mistake.
Moreover, for the reason above set forth it may, as a matter of course, be
inferred that there was no renewal of the contract deposited converted into
a loan, because, as has already been stated, the defendants received said
amount by virtue of real loan contract under the name of a deposit, since the
so-called bailees were forthwith authorized to dispose of the amount
deposited. This they have done, as has been clearly shown.
The original joint obligation contracted by the defendant debtor still exists,
and it has not been shown or proven in the proceedings that the creditor had
released Joe Lim from complying with his obligation in order that he should
not be sued for or sentenced to pay the amount of capital and interest
together with his codebtor, Ceferino Domingo Lim, because the record offers
satisfactory evidence against the pretension of Jose Lim, and it further
appears that document No. 2 was executed by the other debtor, Ceferino
Domingo Lim, for himself and on behalf of Jose Lim; and it has also been
proven that Jose Lim, being fully aware that his debt had not yet been settled,
took steps to secure an extension of the time for payment, and consented to
pay interest in return for the concession requested from the creditor.
In view of the foregoing, and adopting the findings in the judgment appealed
from, it is our opinion that the same should be and is hereby affirmed with
the costs of this instance against the appellant, provided that the interest
agreed upon shall be paid until the complete liquidation of the debt. So
ordered.
G.R. Nos. L-26948 and L-26949 October 8, 1927
SILVESTRA BARON, plaintiff-appellant,
vs.
PABLO DAVID, defendant-appellant.
And
GUILLERMO BARON, plaintiff-appellant,
vs.
PABLO DAVID, defendant-appellant.
These two actions were instituted in the Court of First Instance of the
Province of Pampanga by the respective plaintiffs, Silvestra Baron and
Guillermo Baron, for the purpose of recovering from the defendant, Pablo
David, the value of palay alleged to have been sold by the plaintiffs to the
defendant in the year 1920. Owing to the fact that the defendant is the same
in both cases and that the two cases depend in part upon the same facts, the
cases were heard together in the trial court and determined in a single
opinion. The same course will accordingly be followed here.
In the first case, i. e., that which Silvestra Baron is plaintiff, the court gave
judgment for her to recover of the defendant the sum of P5,238.51, with
costs. From this judgment both the plaintiff and the defendant appealed.
In the second case, i. e., that in which Guillermo Baron, is plaintiff, the court
gave judgment for him to recover of the defendant the sum of P5,734.60,
with costs, from which judgment both the plaintiff and the defendant also
appealed. In the same case the defendant interposed a counterclaim in which
he asked credit for the sum of P2,800 which he had advanced to the plaintiff
Guillermo Baron on various occasions. This credit was admitted by the
plaintiff and allowed by the trial court. But the defendant also interposed a
cross-action against Guillermo Baron in which the defendant claimed
compensation for damages alleged to have Ben suffered by him by reason of
the alleged malicious and false statements made by the plaintiff against the
defendant in suing out an attachment against the defendant's property soon
after the institution of the action. In the same cross-action the defendant also
sought compensation for damages incident to the shutting down of the
defendant's rice mill for the period of one hundred seventy days during which
the above-mentioned attachment was in force. The trial judge disallowed
these claims for damages, and from this feature of the decision the defendant
appealed. We are therefore confronted with five distinct appeals in this
record.
Prior to January 17, 1921, the defendant Pablo David has been engaged in
running a rice mill in the municipality of Magalang, in the Province of
Pampanga, a mill which was well patronized by the rice growers of the vicinity
and almost constantly running. On the date stated a fire occurred that
destroyed the mill and its contents, and it was some time before the mill
could be rebuilt and put in operation again. Silvestra Baron, the plaintiff in
the first of the actions before us, is an aunt of the defendant; while Guillermo
Baron, the plaintiff in the other action; is his uncle. In the months of March,
April, and May, 1920, Silvestra Baron placed a quantity of palay in the
defendant's mill; and this, in connection with some that she took over from
Guillermo Baron, amounted to 1,012 cavans and 24 kilos. During
approximately the same period Guillermo Baron placed other 1,865 cavans
and 43 kilos of palay in the mill. No compensation has ever been received by
Silvestra Baron upon account of the palay delivered by Guillermo Baron, he
has received from the defendant advancements amounting to P2,800; but
apart from this he has not been compensated. Both the plaintiffs claim that
the palay which was delivered by them to the defendant was sold to the
defendant; while the defendant, on the other hand, claims that the palay was
deposited subject to future withdrawal by the depositors or subject to some
future sale which was never effected. He therefore supposes himself to be
relieved from all responsibility by virtue of the fire of January 17, 1921,
already mentioned.
The plaintiff further say that their palay was delivered to the defendant at his
special request, coupled with a promise on his part to pay for the same at the
highest price per cavan at which palay would sell during the year 1920; and
they say that in August of that year the defendant promised to pay them
severally the price of P8.40 per cavan, which was about the top of the market
for the season, provided they would wait for payment until December. The
trial judge found that no such promise had been given; and the incredulity of
the court upon this point seems to us to be justified. A careful examination of
the proof, however, leads us to the conclusion that the plaintiffs did, some
time in the early part of August, 1920, make demand upon the defendant for
a settlement, which he evaded or postponed leaving the exact amount due
to the plaintiffs undetermined.
It should be stated that the palay in question was place by the plaintiffs in the
defendant's mill with the understanding that the defendant was at liberty to
convert it into rice and dispose of it at his pleasure. The mill was actively
running during the entire season, and as palay was daily coming in from many
customers and as rice was being constantly shipped by the defendant to
Manila, or other rice markets, it was impossible to keep the plaintiffs' palay
segregated. In fact the defendant admits that the plaintiffs' palay was mixed
with that of others. In view of the nature of the defendant's activities and the
way in which the palay was handled in the defendant's mill, it is quite certain
that all of the plaintiffs' palay, which was put in before June 1, 1920, been
milled and disposed of long prior to the fire of January 17, 1921. Furthermore,
the proof shows that when the fire occurred there could not have been more
than about 360 cavans of palay in the mill, none of which by any reasonable
probability could have been any part of the palay delivered by the plaintiffs.
Considering the fact that the defendant had thus milled and doubtless sold
the plaintiffs' palay prior to the date of the fire, it result that he is bound to
account for its value, and his liability was not extinguished by the occurence
of the fire. In the briefs before us it seems to have been assumed by the
opposing attorneys that in order for the plaintiffs to recover, it is necessary
that they should be able to establish that the plaintiffs' palay was delivered
in the character of a sale, and that if, on the contrary, the defendant should
prove that the delivery was made in the character of deposit, the defendant
should be absolved. But the case does not depend precisely upon this explicit
alternative; for even supposing that the palay may have been delivered in the
character of deposit, subject to future sale or withdrawal at plaintiffs'
election, nevertheless if it was understood that the defendant might mill the
palay and he has in fact appropriated it to his own use, he is of course bound
to account for its value. Under article 1768 of the Civil Code, when the
depository has permission to make use of the thing deposited, the contract
loses the character of mere deposit and becomes a loan or a commodatum;
and of course by appropriating the thing, the bailee becomes responsible for
its value. In this connection we wholly reject the defendant's pretense that
the palay delivered by the plaintiffs or any part of it was actually consumed
in the fire of January, 1921. Nor is the liability of the defendant in any wise
affected by the circumstance that, by a custom prevailing among rice millers
in this country, persons placing palay with them without special agreement
as to price are at liberty to withdraw it later, proper allowance being made
for storage and shrinkage, a thing that is sometimes done, though rarely.
In view of what has been said it becomes necessary to discover the price
which the defendant should be required to pay for the plaintiffs' palay. Upon
this point the trial judge fixed upon P6.15 per cavan; and although we are not
exactly in agreement with him as to the propriety of the method by which he
arrived at this figure, we are nevertheless of the opinion that, all things
considered, the result is approximately correct. It appears that the price of
palay during the months of April, May, and June, 1920, had been excessively
high in the Philippine Islands and even prior to that period the Government
of the Philippine Islands had been attempting to hold the price in check by
executive regulation. The highest point was touched in this season was
apparently about P8.50 per cavan, but the market began to sag in May or
June and presently entered upon a precipitate decline. As we have already
stated, the plaintiffs made demand upon the defendant for settlement in the
early part of August; and, so far as we are able to judge from the proof, the
price of P6.15 per cavan, fixed by the trial court, is about the price at which
the defendant should be required to settle as of that date. It was the date of
the demand of the plaintiffs for settlement that determined the price to be
paid by the defendant, and this is true whether the palay was delivered in the
character of sale with price undetermined or in the character of deposit
subject to use by the defendant. It results that the plaintiffs are respectively
entitle to recover the value of the palay which they had placed with the
defendant during the period referred to, with interest from the date of the
filing of their several complaints.
As already stated, the trial court found that at the time of the fire there were
about 360 cavans of palay in the mill and that this palay was destroyed. His
Honor assumed that this was part of the palay delivered by the plaintiffs, and
he held that the defendant should be credited with said amount. His Honor
therefore deducted from the claims of the plaintiffs their respective
proportionate shares of this amount of palay. We are unable to see the
propriety of this feature of the decision. There were many customers of the
defendant's rice mill who had placed their palay with the defendant under
the same conditions as the plaintiffs, and nothing can be more certain than
that the palay which was burned did not belong to the plaintiffs. That palay
without a doubt had long been sold and marketed. The assignments of error
of each of the plaintiffs-appellants in which this feature of the decision is
attacked are therefore well taken; and the appealed judgments must be
modified by eliminating the deductions which the trial court allowed from the
plaintiffs' claims.
The trial judge also allowed a deduction from the claim of the plaintiff
Guillermo Baron of 167 cavans of palay, as indicated in Exhibit 12, 13, 14, and
16. This was also erroneous. These exhibits relate to transactions that
occurred nearly two years after the transactions with which we are here
concerned, and they were offered in evidence merely to show the character
of subsequent transactions between the parties, it appearing that at the time
said exhibits came into existence the defendant had reconstructed his mill
and that business relations with Guillermo Baron had been resumed. The
transactions shown by these exhibits (which relate to palay withdrawn by the
plaintiff from the defendant's mill) were not made the subject of controversy
in either the complaint or the cross-complaint of the defendant in the second
case. They therefore should not have been taken into account as a credit in
favor of the defendant. Said credit must therefore be likewise of course be
without prejudice to any proper adjustment of the rights of the parties with
respect to these subsequent transactions that they have heretofore or may
hereafter effect.
The preceding discussion disposes of all vital contentions relative to the
liability of the defendant upon the causes of action stated in the complaints.
We proceed therefore now to consider the question of the liability of the
plaintiff Guillermo Baron upon the cross-complaint of Pablo David in case R.
G. No. 26949. In this cross-action the defendant seek, as the stated in the
third paragraph of this opinion, to recover damages for the wrongful suing
out of an attachment by the plaintiff and the levy of the same upon the
defendant's rice mill. It appears that about two and one-half months after
said action was begun, the plaintiff, Guillermo Baron, asked for an
attachment to be issued against the property of the defendant; and to
procure the issuance of said writ the plaintiff made affidavit to the effect that
the defendant was disposing, or attempting the plaintiff. Upon this affidavit
an attachment was issued as prayed, and on March 27, 1924, it was levied
upon the defendant's rice mill, and other property, real and
personal. 1awph!l.net
Upon attaching the property the sheriff closed the mill and placed it in the
care of a deputy. Operations were not resumed until September 13, 1924,
when the attachment was dissolved by an order of the court and the
defendant was permitted to resume control. At the time the attachment was
levied there were, in the bodega, more than 20,000 cavans of palay belonging
to persons who held receipts therefor; and in order to get this grain away
from the sheriff, twenty-four of the depositors found it necessary to submit
third-party claims to the sheriff. When these claims were put in the sheriff
notified the plaintiff that a bond in the amount of P50,000 must be given,
otherwise the grain would be released. The plaintiff, being unable or
unwilling to give this bond, the sheriff surrendered the palay to the claimants;
but the attachment on the rice mill was maintained until September 13, as
above stated, covering a period of one hundred seventy days during which
the mill was idle. The ground upon which the attachment was based, as set
forth in the plaintiff's affidavit was that the defendant was disposing or
attempting to dispose of his property for the purpose of defrauding the
plaintiff. That this allegation was false is clearly apparent, and not a word of
proof has been submitted in support of the assertion. On the contrary, the
defendant testified that at the time this attachment was secured he was
solvent and could have paid his indebtedness to the plaintiff if judgment had
been rendered against him in ordinary course. His financial conditions was of
course well known to the plaintiff, who is his uncle. The defendant also states
that he had not conveyed away any of his property, nor had intended to do
so, for the purpose of defrauding the plaintiff. We have before us therefore
a case of a baseless attachment, recklessly sued out upon a false affidavit and
levied upon the defendant's property to his great and needless damage. That
the act of the plaintiff in suing out the writ was wholly unjustifiable is perhaps
also indicated in the circumstance that the attachment was finally dissolved
upon the motion of the plaintiff himself.
The defendant testified that his mill was accustomed to clean from 400 to
450 cavans of palay per day, producing 225 cavans of rice of 57 kilos each.
The price charged for cleaning each cavan rice was 30 centavos. The
defendant also stated that the expense of running the mill per day was from
P18 to P25, and that the net profit per day on the mill was more than P40. As
the mill was not accustomed to run on Sundays and holiday, we estimate that
the defendant lost the profit that would have been earned on not less than
one hundred forty work days. Figuring his profits at P40 per day, which would
appear to be a conservative estimate, the actual net loss resulting from his
failure to operate the mill during the time stated could not have been less
than P5,600. The reasonableness of these figures is also indicated in the fact
that the twenty-four customers who intervened with third-party claims took
out of the camarin 20,000 cavans of palay, practically all of which, in the
ordinary course of events, would have been milled in this plant by the
defendant. And of course other grain would have found its way to this mill if
it had remained open during the one hundred forty days when it was closed.
But this is not all. When the attachment was dissolved and the mill again
opened, the defendant found that his customers had become scattered and
could not be easily gotten back. So slow, indeed, was his patronage in
returning that during the remainder of the year 1924 the defendant was able
to mill scarcely more than the grain belonging to himself and his brothers;
and even after the next season opened many of his old customers did not
return. Several of these individuals, testifying as witnesses in this case, stated
that, owing to the unpleasant experience which they had in getting back their
grain from the sheriff to the mill of the defendant, though they had previously
had much confidence in him.
As against the defendant's proof showing the facts above stated the plaintiff
submitted no evidence whatever. We are therefore constrained to hold that
the defendant was damaged by the attachment to the extent of P5,600, in
profits lost by the closure of the mill, and to the extent of P1,400 for injury to
the good-will of his business, making a total of P7,000. For this amount the
defendant must recover judgment on his cross-complaint.
The trial court, in dismissing the defendant's cross-complaint for damages
resulting from the wrongful suing out of the attachment, suggested that the
closure of the rice mill was a mere act of the sheriff for which the plaintiff was
not responsible and that the defendant might have been permitted by the
sheriff to continue running the mill if he had applied to the sheriff for
permission to operate it. This singular suggestion will not bear a moment's
criticism. It was of course the duty of the sheriff, in levying the attachment,
to take the attached property into his possession, and the closure of the mill
was a natural, and even necessary, consequence of the attachment. For the
damage thus inflicted upon the defendant the plaintiff is undoubtedly
responsible.
One feature of the cross-complaint consist in the claim of the defendant
(cross-complaint) for the sum of P20,000 as damages caused to the
defendant by the false and alleged malicious statements contained in the
affidavit upon which the attachment was procured. The additional sum of
P5,000 is also claimed as exemplary damages. It is clear that with respect to
these damages the cross-action cannot be maintained, for the reason that
the affidavit in question was used in course of a legal proceeding for the
purpose of obtaining a legal remedy, and it is therefore privileged. But though
the affidavit is not actionable as a libelous publication, this fact in no obstacle
to the maintenance of an action to recover the damage resulting from the
levy of the attachment.
Before closing this opinion a word should be said upon the point raised in the
first assignment of error of Pablo David as defendant in case R. G. No. 26949.
In this connection it appears that the deposition of Guillermo Baron was
presented in court as evidence and was admitted as an exhibit, without being
actually read to the court. It is supposed in the assignment of error now under
consideration that the deposition is not available as evidence to the plaintiff
because it was not actually read out in court. This connection is not well
founded. It is true that in section 364 of the Code of Civil Procedure it is said
that a deposition, once taken, may be read by either party and will then be
deemed the evidence of the party reading it. The use of the word "read" in
this section finds its explanation of course in the American practice of trying
cases for the most part before juries. When a case is thus tried the actual
reading of the deposition is necessary in order that the jurymen may become
acquainted with its contents. But in courts of equity, and in all courts where
judges have the evidence before them for perusal at their pleasure, it is not
necessary that the deposition should be actually read when presented as
evidence.
From what has been said it result that judgment of the court below must be
modified with respect to the amounts recoverable by the respective plaintiffs
in the two actions R. G. Nos. 26948 and 26949 and must be reversed in
respect to the disposition of the cross-complaint interposed by the defendant
in case R. G. No. 26949, with the following result: In case R. G. No. 26948 the
plaintiff Silvestra Baron will recover of the Pablo David the sum of P6,227.24,
with interest from November 21, 1923, the date of the filing of her complaint,
and with costs. In case R. G. No. 26949 the plaintiff Guillermo Baron will
recover of the defendant Pablo David the sum of P8,669.75, with interest
from January 9, 1924. In the same case the defendant Pablo David, as plaintiff
in the cross-complaint, will recover of Guillermo Baron the sum of P7,000,
without costs. So ordered.
Avanceña, C.J., Johnson, Malcolm, Villamor, Romualdez and Villa-Real, JJ.,
concur.
Separate Opinions
JOHNS, J., dissenting and concurring:
The plaintiff Silvestra Baron is the aunt of the defendant, and Guillermo
Baron, the plaintiff in the other action, is his uncle. There is no dispute as to
the amount of palay which each delivered to the mill of the defendant. Owing
to the fact that they were relatives and that the plaintiffs reposed special
reposed special trust and confidence in the defendant, who was their
nephew, they were not as careful and prudent in their business dealings with
him as they should have been. Plaintiffs allege that their respective palay was
delivered to the defendant at his mill with the understanding and agreement
between them that they should receive the highest market price for the palay
for that season, which was P8.50 per cavan. They further allege that about
August first they made another contract in and by which he promised and
agreed to pay them P8.40 per cavan for their palay, in consideration of which
they agreed to extend the time for payment to the first of December of that
year. The amount of palay is not in dispute, and the defendant admits that it
was delivered to his mill, but he claims that he kept it on deposit and as bailee
without hire for the plaintiffs and at their own risk, and that the mill was
burned down, and that at the time of the fire, plaintiffs' palay was in the mill.
The lower court found as a fact that there was no merit in that defense, and
that there was but little, if any, palay in the mill at the time of the fire and
that in truth and in fact that defense was based upon perjured testimony.
The two cases were tried separately in the court below, but all of the evidence
in the case was substituted and used in the other. Both plaintiffs testified to
the making of the respective contracts as alleged in their complaint; to wit,
that they delivered the palay to the defendant with the express
understanding and agreement that he would pay them for the palay the
highest market price for the season, and to the making of the second contract
about the first of August, in which they had a settlement, and that the
defendant then agreed to pay them P8.40 per cavan, such payment to be
made on December first. It appears that the highest market price for palay
for that season was P8.50 per cavan. The defendant denied the making of
either one of those contracts, and offered no other evidence on that
question. That is to say, we have the evidence of both Silvestra Baron and
Guillermo Baron to the making of those contracts, which is denied by the
defendant only. Plaintiffs' evidence is also corroborated by the usual and
customary manner in which the growers sell their palay. That is to say, it is
their custom to sell the palay at or about the time it is delivered at the mill
and as soon as it is made ready for market in the form of rice. As stated the
lower court found as a fact that the evidence of the defendants as to
plaintiffs' palay being in the mill at the time of the fire was not worthy of
belief, and that in legal effect it was a manufactured defense. Yet, strange as
it may seem, both the lower court and this court have found as a fact that
upon the question of the alleged contracts, the evidence for the defendant is
true and entitled to more weight than the evidence of both plaintiffs which is
false.
It appears that the plaintiff Silvestra Baron is an old lady about 80 years of
age and the aunt of the defendant, and Guillermo Baron is the uncle. Under
the theory of the lower court and of this court, both of them at all the time
during the high prices held their palay in defendant's mill at their own risk,
and that upon that point the evidence of the defendant, standing alone is
entitled to more weight and is more convincing than the combined evidence
of the two plaintiffs. In the very nature of things, if defendant's evidence upon
that point is true, it stands to reason that, following the custom of growers,
the plaintiffs would have sold their palay during the period of high prices, and
would not have waited until it dropped from P8.50 per cavan to P6.15 per
cavan about the first of August. Upon that question, both the weight and the
credibility of the evidence is with the plaintiffs, and they should have
judgment for the full amount of their palay on the basis of P8.40 per cavan.
For such reason, I vigorously dissent from the majority opinion.
I frankly concede that the attachment was wrongful, and that it should never
have been levied. It remained in force for a period of one hundred and
seventy days at which time it was released on motion of the plaintiffs. The
defendant now claims, and the majority opinion has allowed him, damages
for that full period, exclusive of Sundays, at the rate, of P40 per day, found to
be the net profit for the operation of the rice mill. It further appears, and this
court finds, that the defendant was a responsible man, and that he had ample
property out which to satisfy plaintiffs' claim. Assuming that to be true, there
was no valid reason why he could not had given a counter bond and released
the attachment. Upon the theory of the majority opinion, if the plaintiffs had
not released the attachment, they would still be liable to the defendant at
the rate of P40 per day up to the present time. When the mill was attached,
if he was in a position to do so, it was the duty of the defendant to give a
counter bond and release the attachment and resume its operation. The
majority opinion also allowed the defendant P1,400 "for injury to the
goodwill of his business." The very fact that after a delay of about four years,
both of the plaintiffs were compelled to bring to their respective actions
against the defendant to recover from him on a just and meritorious claim,
as found by this court and the lower court, and the further fact that after such
long delay, the defendant has sought to defeat the actions by a sham and
manufactured defense, as found by this and the lower court, would arouse
the suspicion of any customers the defendant ever had, and shake their
confidence in his business honor and integrity, and destroy any goodwill
which he ever did have. Under such conditions, it would be strange that the
defendant would have any customers left. He is not entitled to any
compensation for the loss of goodwill, and P5,000 should be the very limit of
the amount of his damages for the wrongful attachment, and upon that point
I vigorously dissent. In all other respects, I agree with the majority opinion.