BPI vs.
Intermediate Appellate Court GR# L-66826, August 19, 1988 the charges for commission, documentary stamp tax and others totalling
Facts: Rizaldy T. Zshornack and his wife maintained in COMTRUST a
dollar savings account and a peso current account. An application for a
dollar drat was accomplished by Virgillo Garcia branch manager of
COMTRUST payable to a certain Leovigilda Dizon. In the application,
Garcia indicated that the amount was to be charged to the dollar savings
account of the Zshornacks. There wasa no indication of the name of the
purchaser of the dollar draft. Comtrust issued a check payable to the order
of Dizon. When Zshornack noticed the withdrawal from his account, he
demanded an explainaiton from the bank. In its answer, Comtrust claimed
that the peso value of the withdrawal was given to Atty. Ernesto Zshornack,
brother of Rizaldy. When he encashed with COMTRUST a cashiers check
for P8450 issued by the manila banking corporation payable to Ernesto.
Issue: Whether the contract between petitioner and respondent bank is a
deposit?
Held: The document which embodies the contract states that the
US$3,000.00 was received by the bank for safekeeping. The subsequent
acts of the parties also show that the intent of the parties was really for the
bank to safely keep the dollars and to return it to Zshornack at a later time.
Thus, Zshornack demanded the return of the money on May 10, 1976, or
over five months later.
The above arrangement is that contract defined under Article 1962, New
Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment a person receives a
thing belonging to another, with the obligation of safely keeping it and of
returning the same. If the safekeeping of the thing delivered is not the
principal purpose of the contract, there is no deposit but some other
contract.
Bank of the Philippine Islands vs. IAC & Rizaldy T. Zshornack, G.R.
No. L-66826, August 19, 1988 (164 SCRA 630)
Facts: Rizaldy Zshornack and his wife, Shirley Gorospe, maintained in
COMTRUST, Quezon City Branch, a dollar savings account and a peso
current account.
On October 27, 1975, an application for a dollar draft was accomplished
by Virgilio V. Garcia, Assistant Branch Manager of COMTRUST Quezon
City, payable to a certain Leovigilda D. Dizon in the amount of $1,000.00.
In the application, Garcia indicated that the amount was to be charged to
Dollar Savings Acct. No. 25-4109, the savings account of the Zshornacks;
P17.46 were to be charged to Current Acct. No. 210-465-29, again, the
current account of the Zshornacks. There was no indication of the name of
the purchaser of the dollar draft.
On the same date, October 27, 1975, COMTRUST, under the signature of
Virgilio V. Garcia, issued a check payable to the order of Leovigilda D.
Dizon in the sum of US$1,000 drawn on the Chase Manhattan Bank, New
York, with an indication that it was to be charged to Dollar Savings Acct.
No. 25-4109.
When Zshornack noticed the withdrawal of US$1,000.00 from his account,
he demanded an explanation from the bank. In answer, COMTRUST
claimed that the peso value of the withdrawal was given to Atty. Ernesto
Zshornack, Jr., brother of Rizaldy, on October 27,1975 when he (Ernesto)
encashed with COMTRUST a cashier's check for P8,450.00 issued by the
Manila Banking Corporation payable to Ernesto.
In its desperate attempt to justify its act of withdrawing from its depositor's
savings account, the bank has adopted inconsistent theories. First, it still
maintains that the peso value of the amount withdrawn was given to Atty.
Ernesto Zshornack, Jr. when the latter encashed the Manilabank Cashier's
Check. At the same time, the bank claims that the withdrawal was made
pursuant to an agreement where Zshornack allegedly authorized the bank
to withdraw from his dollar savings account such amount which, when
converted to pesos, would be needed to fund his peso current account.
Zshornack also entrusted to COMTRUST, thru Garcia, US$3,000.00 cash
(popularly known as greenbacks) for safekeeping. Despite demand, the
bank refused to return the money. COMTRUST averred that the US$3,000
was credited to Zshornack's peso current account at prevailing conversion
rates.
BPI later absorbed COMTRUST. Zshornack filed a case against BPI. The
trial court ruled for Zshornack.
Issue: Whether money that is given to the bank for safekeeping is a
deposit.
Ratio: Yes. Modified.
Ratio: The explanations of the bank are unavailing. With regard to the first
explanation, petitioner bank has not shown how the transaction involving
the cashier's check is related to the transaction involving the dollar draft in
favor of Dizon financed by the withdrawal from Rizaldy's dollar account.
The two transactions appear entirely independent of each other. Moreover,
Ernesto Zshornack, Jr., possesses a personality distinct and separate from
1
Rizaldy Zshornack. Payment made to Ernesto cannot be considered
payment to Rizaldy. As to the second explanation, even if we assume that
there was such an agreement, the evidence do not show that the
withdrawal was made pursuant to it. Instead, the record reveals that the
amount withdrawn was used to finance a dollar draft in favor of Leovigilda
D. Dizon, and not to fund the current account of the Zshornacks. There is
no proof whatsoever that peso Current Account No. 210-465-29 was
ever credited with the peso equivalent of the US$1,000.00 withdrawn on
October 27, 1975 from Dollar Savings Account No. 25-4109.
The arrangement between the bank and Zshoranck is that contract defined
under Article 1962, New Civil Code -- A deposit is constituted from the
moment a person receives a thing belonging to another, with the obligation
of safely keeping it and of returning the same. If the safekeeping of the
thing delivered is not the principal purpose of the contract, there is no
deposit but some other contract.
Note that the object of the contract between Zshornack and COMTRUST
was foreign exchange. Hence, the transaction was covered by Central
Bank Circular No. 20, Restrictions on Gold and Foreign Exchange
Transactions, promulgated on December 9,
1949, which was in force at the time the parties entered into the transaction
involved in this case. The circular requires all persons to sell to the
Central Bank all foreign exchange received within one business day
following such receipt. This was modified by CB Circular No. 281 which
limited the restriction to Philippine residents.
The document and the subsequent acts of the parties show that they
intended the bank to safekeep the foreign exchange, and return it later to
Zshornack, who alleged in his complaint that he is a Philippine resident.
The parties did not intend to sell the US dollars to the Central Bank within
one business day from receipt. Otherwise, the contract of depositum would
never have been entered into at all. Since the mere safekeeping of the
greenbacks, without selling them to the Central Bank within one business
day from receipt, is a transaction which is not authorized by CB Circular
No. 20, it must be considered as one which falls under the general class of
prohibited transactions. Hence, pursuant to Article 5 of the Civil Code, it is
void, having been executed against the provisions of a
mandatory/prohibitory law. More importantly, it affords neither of the
parties a cause of action against the other.
We thus rule that Zshornack cannot recover under the second cause of
action.
The Roman Catholic Bishop of Jaro vs. Gregorio de la Peña,
administrator of the estate of Fr. Agustin de la Peña, G.R. No. 6913,
November 21, 1913 (26 Phil 144)
Facts: The plaintiff is the trustee of a charitable bequest made for the
construction of a leper hospital, and Father Agustin de la Peña was the
duly authorized representative of the plaintiff to receive the legacy. The
defendant is the administrator of the estate of Father De la Peña. In the
year 1898, the books of Father de la Peña, as trustee, showed that he had
on hand as such trustee the sum of P6,641, collected by him for the
charitable purposes aforesaid. In the same year, he deposited in his
personal account P19,000 in the Hongkong and Shanghai Bank at Iloilo.
Shortly thereafter and during the war of the revolution, Father dela Peña
was arrested by the military authorities as a political prisoner, and
while thus detained made an order on said bank in favor of the United
States Army officer under whose charge he then was so for the sum thus
deposited in said bank. The arrest of Father de la Peña and the
confiscation of the funds in the bank were the result of the claim of the
military authorities that he was an insurgent and that the funds thus
deposited had been collected by him for revolutionary purposes. The
money was taken from the bank by the military authorities by virtue of such
order, was confiscated and turned over to the Government.
The plaintiff filed this case to recover the confiscated money from the
estate of Fr. de la Peña. The lower court ruled for the plaintiff.
Issue: Whether the depositary is liable for unforeseeable and inevitable
events that lead to the loss of the thing deposited.
Held: No. Reversed.
Ratio: The branch of the law know in England and America as the law of
the trusts had no exact counterpart in the Roman law and is more has none
under the Spanish law, In this jurisdiction, therefore, Father dela Peña's
liability is determined by those portions of the Civil Code which relate to
obligations (Book 4, Title 1.)
Although the Civil Code states that a "person obliged to give something is
also bound to preserve it with the diligence pertaining to a good father of a
family" (art.
1094), it also provides, following the principle of the Roman law, major
casus est, cui humana infirmitas resistere non potest, that "no one shall be
liable for events which could not be foreseen, or which having been
foreseen were inevitable, with the exceptions of the cases expressly
mentioned in the law of those in which the obligation so declares." (Art.
1105).
2
By placing the money in the bank and mixing it with his personal funds, De
la Peña did not thereby assume an obligation different from that under
which he would have lain if such deposit had not been made, nor did he
thereby make himself liable to repay the money at all hazards. If the money
had been forcibly taken from his pocket or from his house by the military
forces of one of the combatants during a state of war, it is clear that under
the provisions of the Civil Code he would have been exempt from
responsibility. The fact that he placed the trust fund in the bank in his
personal account does not add to his responsibility. Such deposit did not
make him a debtor who must respond at all the hazards.
We do not enter into a discussion for the purpose of determining whether
he acted more or less negligently by depositing the money in the bank than
he would if had left it in his home: or whether he was more or less negligent
by depositing the money in his personal account than he would have been
if had deposited it in a separate account as trustee. We regard such
discussion as substantially fruitless, inasmuch as the precise question is
not one of the negligence. There was no law prohibiting him from
depositing it as he did and there was no law which changed his
responsibility by reason of the deposit. While it may be true that one who
is under obligation to do or give a things is duty-bound, when he sees
events approaching the results of which will be dangerous to his trust, to
take all reasonable means and measures to escape or, if unavoidable, to
temper the effects of those events, we do not feel constrained to hold that,
in choosing between two means equally legal, he is culpably negligent in
selecting one whereas he would not have been if he had selected the other.
Trent, dissenting: Technically speaking, whether Father De la Peña was a
trustee or an agent of the plaintiff his books showed that in 1898 he had in
his possessions as trustee or agent or a trustee or an agent of the plaintiff
his books showed that in 1898 he had in his possession as trustee or agent
the sum of P6,641 belonging to the plaintiff as the head of the church. This
money was then clothed with all the immunities and protection with which
the law seeks to invest trust funds. But when De la Peña mixed this trust
fund with his own and deposited the whole in the bank to his personal
account or credit, he, by this act, stamped on the said funds his own private
marks and unclothed it of all the protection it had. If this money had been
deposited in the name of De la Peña as trustee of agent of the plaintiff, I
think that it may be presumed that the military authorities would not have
confiscated it for the reason that they were looking for insurgent funds only.
Again, the plaintiff had no reason to suppose that De la Peña would attempt
to strip the fund of its identity, not had he said or done anything which
tended to relieve De la Peña from the legal responsibility which pertains to
the care and custody of trust funds.
The Supreme Court of the United States in United States vs. Thomas (82
U.S.,
337), at page 343, said: "Trustees are only bound to exercise the same
care and solicitude with regard to their own. Equity will not exact more of
them. They are not liable for a loss by theft without their fault. But this
exemption ceases when they mix the trust money with their own, whereby
it loses its identity, and they become mere debtors."
If De la Peña, after depositing the trust fund in his personal account, had
used this money for speculative purposes, such as the buying and selling
of sugar or other products of the country, thereby becoming a debtor, there
would have been no doubt as to the liability of his estate. Whether he used
this money for that purpose the record is silent, but it will be noted that a
considerable length of time intervened from the time of the deposit until the
funds were confiscated by the military authorities. In fact, the record shows
that De la Peña deposited on June 27, 1898, P5,259, on June 28 of that
year P3,280, and on August 5 of the same year P6,000. The record
also shows that these funds were withdrawn and again deposited all
together on the 29th of May, 1900, this last deposit amounting to P18,970.
These facts strongly indicate that De la Peña had as a matter of fact been
using the money in violation of the trust imposed in him.
CA Agro-Industrial vs CA, G.R. No. 90027 March 3, 1993
Facts
 Petitioner (through its President) purchased 2 parcels of land from
spouses Pugao for P350 K with a downpayment of P75 K.
 Per agreement, the land titles will be transferred upon full payment and
will be placed in a safety deposit box (SBDB) of any bank. Moreover,
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.
 Thereafter, Petitioner and spouses placed the titles in SDB of
Respondent Security Bank and signed a lease contract which
substantially states that the Bank will not assume liability for the
contents of the SDB.
 Subsequently, 2 renter's keys were given to the renters — one to the
Petitioner and the other to the Pugaos. A guard key remained in the
possession of the Respondent Bank. The SDB can only be opened
using these 2 keys simultaneously.
 Afterwards, a certain Mrs. Ramos offered to buy from the Petitioner the
2 lots that would yield a profit of P285K.
 Mrs. Ramos demanded the execution of a deed of sale which
necessarily entailed the production of the certificates of title. Thus,
3
 Petitioner with the spouses went to Respondent Bank to retrieve the
titles.
 However, when opened in the presence of the Bank's representative,
the SDB 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, the
Petitioner allegedly failed to realize the expected profit of P285K.
 Hence, Petitioner filed a complaint for damages against Respondent
Bank.
 Lower courts ruled in favour of Respondent Bank. Thus, this petition.
Issues:
1. Whether or not the disputed contract is an ordinary contract of lease?
2. Whether or not the provisions of the cited contract are valid?
3. Whether or not Respondent Bank is liable for damages?
Ruling:
1. No. SC ruled that it is a special kind of deposit because:
 the full and absolute possession and control of the SDB 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 and
vice versa.
 In this case, the said key had a duplicate which was made so
that both renters could have access to the box.
 Moreover, the renting out of the SDBs is not independent from,
but related to or in conjunction with, the principal function of a
contract of deposit the receiving in custody of funds,
documents and other valuable objects for safekeeping.
2. NO. SC opined that it is void.
 Generally, the Civil Code provides that the depositary (Respondent
Bank) would be liable if, in performing its obligation, it is found guilty
of fraud, negligence, delay or contravention of the tenor of the
agreement.
 In the absence of any stipulation, the diligence of a good father of
a family is to be observed.
 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 (which is present in the disputed contract)
 Said provisions are inconsistent with the Respondent Bank's
responsibility as a depositary under Section 72(a) of the General
Banking Act.
3. NO. SC ruled that:
 no competent proof was presented to show that Respondent
Bank was aware of the private agreement between the
Petitioner and the Pugaos that the Land titles were
withdrawable from the SDB 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.
CA Agro-Industrial Development Corporation vs. CA & Security Bank
and Trust
Company, G.R. No. 90027, March 3, 1993 (219 SCRA 426)
Facts: 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. For this purpose, both signed
a contract of lease which contains the condition that the bank is not a
depositary of the contents of the safe and it has neither the possession nor
control of the same and that the bank has no interest whatsoever in
said contents, except herein expressly provided, and it assumes
absolutely no liability in connection therewith.
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.
4
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.
A complaint for damages was filed. It was dismissed by the trial
court.CA affirmed.
Issue: Whether the rental of a safety deposit box is a contract of deposit.
Held: Yes. Affirmed.
Ratio: 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. 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
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.
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 bailor and bailee, the bailment
being for hire and mutual benefit.
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.
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 pertinently provides that banks may receive in custody funds,
documents, and valuable objects, and rent safety deposit boxes for the
safeguarding of such effects. The banks shall perform the services
permitted under subsections (a), (b) and (c) of this section as depositories
or as agents.
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 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. In the absence of
any stipulation prescribing the degree of diligence required, that of a good
father of a family is to be observed. 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 are void as they
are contrary to law and public policy. We find Ourselves in agreement with
5
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. 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.
The petition is, nonetheless, dismissed 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.
ORTIZ CASE IN SEPARATE FILE (PDF)
Sia vs. CA
(G.R. No. 102970, May 13, 1993)
LUZAN SIA, petitioner, vs. COURT OF APPEALS and SECURITY BANK
and TRUST COMPANY, respondents.
FACTS:
Herein petitioner and respondent entered into a contract denominated as
a Lease Agreement whereby the former rented a safety deposit box owned
by the latter . Petitioner placed in the deposit box her stamp collection
which was subsequently lost and damaged due to a flood that took place
in 1985 and 1986. The defendant bank rejected the petitioner’ s claim for
compensation for his damaged stamps collection, so, the plaintiff instituted
an action for damages against the defendant bank.
The bank alleged that the contract was that of lease and its liability was
limited to the exercise of the diligence to prevent the opening of the safe
by any person other than the Renter, his authorized agent or legal
representative; The Bank is not a depository of the contents of the safe
and it has neither the possession nor the control of the same. The Bank
has no interest whatsoever in said contents, except as herein provided,
and it assumes absolutely no liability in connection therewith.
RTC ruled in favor of petitioner. CA reversed the decision .
ISSUE: Is SBTC liable for damages and loss? YES
HELD:
SBTC is a Depository Notwithstanding the Contract of Lease
In the recent case CA Agro-Industrial Development Corp. vs. Court of
Appeals, the Court held that the use of a safety deposit box is not a
contract of lease and that it is actually a special kind of deposit.
The prevailing rule in American jurisprudence — 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 bailor and bailee, the bailment for hire and
mutual benefit — has been adopted in this jurisdiction, thus:
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 [R.A. 337, as amended] pertinently 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 safequarding of such effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b)
and (c) of this section asdepositories or as agents. . . ."(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
6
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 (Art. 1969, Civil Code] 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 [Art. 1170, id.]. In the absence of any stipulation prescribing
the degree of diligence required, that of a good father of a family is to be
observed [Art. 1173, id.]. 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.
Condition 13 and 14 of the Contract of Lease are Void
Conditions 13 and l4 of the questioned contract of lease of the safety
deposit box, which read:
"13. The bank is 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 as
herein expressly provided, and it assumes absolutely no liability in
connection therewith."
Sia vs. Court of Appeals G.R. No. 102970, May 13, 1990
Contract of the use of a safety deposit box of a bank is not a deposit
but a lease under Sec 72, A of General Banking Act. Accordingly, it
should have lost no time in notifying the petitioner in order that the
box could have been opened to retrieve the stamps, thus saving the
same from further deterioration and loss. The bank’s negligence
aggravated the injury or damage to the stamp collection..
Facts: Plaintiff Luzon Sia rented a safety deposit box of Security Bank
and Trust Co. (Security Bank) at its Binondo Branch wherein he placed his
collection of stamps. The said safety deposit box leased by the plaintiff was
at the bottom or at the lowest level of the safety deposit boxes of the
defendant bank. During the floods that took place in 1985 and 1986,
floodwater entered into the defendant bank’s premises, seeped into the
safety deposit box leased by the plaintiff and caused, according damage
to his stamps collection. Security Bank rejected the plaintiff’s claim for
compensation for his damaged stamps collection.
Sia, thereafter, instituted an action for damages against the defendant
bank. Security Bank contended that its contract with the Sia over safety
deposit box was one of lease and not of deposit and, therefore, governed
by the lease agreement which should be the applicable law; the destruction
of the plaintiff’s stamps collection was due to a calamity beyond obligation
on its part to notify the plaintiff about the floodwaters that inundated its
premises at Binondo branch which allegedly seeped into the safety deposit
box leased to the plaintiff. The trial court rendered in favor of plaintiff Sia
and ordered Sia to pay damages.
Issue: Whether or not the Bank is liable for negligence.
Held: Contract of the use of a safety deposit box of a bank is not a deposit
but a lease. Section 72 of the General Banking Act [R.A. 337, as amended]
pertinently provides: 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 safequarding of such effects.
As correctly held by the trial court, Security Bank was guilty of negligence.
The bank’s negligenceaggravated the injury or damage to the stamp
collection. SBTC was aware of the floods of 1985 and 1986; it also knew
that the floodwaters inundated the room where the safe deposit box was
located. In view thereof, it should have lost no time in notifying the
petitioner in order that the box could have been opened to retrieve the
stamps, thus saving the same from further deterioration and loss. In this
respect, it failed to exercise the reasonable care and prudence expected
of a good father of a family, thereby becoming a party to the aggravation
of the injury or loss. Accordingly, the aforementioned fourth characteristic
of a fortuitous event is absent. Article 1170 of the Civil Code, which reads
“Those who in the performance of their obligation are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor
thereof, are liable for damages” is applicable. Hence, the petition was
granted.
The provisions contended by Security Bank in the lease agreement which
are meant to exempt SBTC from any liability for damage, loss or
destruction of the contents of the safety deposit box which may arise from
its own agents’ fraud, negligence or delay must be stricken down for being
contrary to law and public policy.
G.R. No. 102970 May 13, 1993
7
LUZAN SIA,vs. COURT OF APPEALS and SECURITY BANK and
TRUST COMPANY, respondents.
FACTS: The plaintiff rented on March 22, 1985 the Safety Deposit Box No.
54 of the defendant bank at its Binondo Branch wherein he placed his
collection of stamps. The said safety deposit box leased by the plaintiff was
at the bottom or at the lowest level of the safety deposit boxes of the
defendant bank .During the floods that took place, floodwater entered into
the defendant bank's premises, seeped into the safety deposit box leased
by the plaintiff and caused, according to the plaintiff, damage to his stamps
collection. The defendant bank rejected the plaintiff's claim for
compensation for his damaged stamps collection, so, the plaintiff instituted
an action for damages against the defendant bank.
ISSUE: Whether it was a grave error or an abuse of discretion on the part
of the respondent court when it ruled that respondent SBTC did not fail to
exercise the required diligence in maintaining the safety deposit box
RULING: 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 (Art. 1969, Civil Code] 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.
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 [Art. 1170, id.]. In the absence of any stipulation prescribing
the degree of diligence required, that of a good father of a family is to be
observed [Art. 1173, id.]. 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 l4 of the questioned contract of lease of the safety deposit box, which
read:
"13. The bank is 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 as
herein expressly provided, and it assumes absolutely no liability in
connection therewith." are void as they are contrary to law and public
policy.
Public respondent further postulates that SBTC cannot be held responsible
for the destruction or loss of the stamp collection because the flooding was
a fortuitous event and there was no showing of SBTC's participation in the
aggravation of the loss or injury. Both the law and authority cited are clear
enough and require no further elucidation. Unfortunately, however, the
public respondent failed to consider that in the instant case, as correctly
held by the trial court, SBTC was guilty of negligence. thus comes to the
succor of the petitioner. The destruction or loss of the stamp collection
which was, in the language of the trial court, the "product of 27 years of
patience and diligence" caused the petitioner pecuniary loss; hence, he
must be compensated therefor.
Javellana vs. Lim
(G.R. No. 4015, August 24, 1908)
ANGEL JAVELLANA, plaintiff-appellee, vs. JOSE LIM, ET AL.,
defendants-appellants
FACTS:
Angel Javellana filed a complaint on the 30th of October, 1906 against
Jose Lim and Ceferino Domingo Lim. It was then alleged that on the 26th
of May, 1897, Lim executed and subscribed a document, in favor of
Javellana, 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.
It was also alleged that, when the obligation became due, Lim begged
Javellana 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 Javellana 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.
Lim answered 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.
ISSUE: WON the contract is a deposit. NO, it was a contract of loan.
8
HELD:
The document of indebtedness inserted in the complaint states that the
Javellana left on deposit with Lim 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 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 Javellana. 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 January 20. 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.
Depository making use of the thing deposited: 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;
Express permission: Javellana, the creditor, by granting them the
extension, evidently confirmed the express permission previously given to
use and dispose of the amount stated as having been 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
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.
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.
JAVELLANA VS. LIM
FACTS:
Defendants (Jose Lim and Ceferino Domingo Lim) executed a document
in favor of plaintiff-appellee (Angel Javellana) wherein it states that they
have received, as a deposit, without interest, money (2,686.58) from
plaintiff-appellee and agreed upon a date (January 20, 1898) when they
will return the money. Upon the stipulated due date, defendants asked for
an extension to pay and binding themselves to pay 15% interest per annum
9
on the amount of their indebtedness, to which the plaintiff-appellee
acceded. The defendants were not able to pay the full amount of their
indebtedness (Paid only 1,000 in interest) notwithstanding the request
made by plaintiff-appellee. The lower court ruled in favor of plaintiff-
appellee for the recovery of the amount due.
ISSUE: Whether the agreement entered into by the parties is one of
loan or of deposit?
HELD: The document executed was a contract of loan. Where money,
consisting of coins of legal tender, is deposited with a person and the latter
is authorized by the depositor to use and dispose of the same, the
agreement is not a contract of deposit, but a loan. A subsequent agreement
between the parties as to interest on the amount said to have been
deposited, because the same could not be returned at the time fixed
therefore, does not constitute a renewal of an agreement of deposit, but it
is the best evidence that the original contract entered into between therein
was for a loan under the guise of a deposit.
Chan vs. Maceda
(402 SCRA 352, G.R. No. 142591, April 30, 2003)
JOSEPH CHAN, WILSON CHAN and LILY CHAN, petitioners, vs.
BONIFACIO S. MACEDA, JR., * respondent.
FACTS:
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.
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.
ISSUES:
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? NO
2. If so, does respondent have the right to demand the release of the said
materials and equipment or claim for damages? NO
HELD:
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. 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.
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 arguendo that 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. 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, every cause
of action ex-contractu must 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.
10
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 respondent's 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, 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.
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.
MANUEL M. SERRANO, petitioner, vs.
CENTRAL BANK OF THE PHILIPPINES; OVERSEAS BANK OF
MANILA; EMERITO M. RAMOS, SUSANA B. RAMOS, EMERITO B.
RAMOS, JR., JOSEFA RAMOS DELA RAMA, HORACIO DELA RAMA,
ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO
LEDESMA, VICTORIA RAMOS TANJUATCO, and TEOFILO
TANJUATCO, respondents.
February 14, 1980
FACTS
On October 13, 1966 and December 12, 1966, petitioner made a time
deposit, for one year with 6% interest, of P150,000.00 with the respondent
Overseas Bank of Manila. Concepcion Maneja also made a time deposit,
for one year with 6-½% interest, on March 6, 1967, of Two Hundred
Thousand Pesos (P200,000.00) with the same respondent Overseas Bank
of Manila. On August 31, 1968, Concepcion Maneja, married to Felixberto
M. Serrano, assigned and conveyed to petitioner Manuel M. Serrano, her
time deposit of P200,000.00 with respondent Overseas Bank of Manila.
Notwithstanding series of demands for encashment of the aforementioned
time deposits from the respondent Overseas Bank of Manila, dating from
December 6, 1967 up to March 4, 1968, not a single one of the time deposit
certificates was honored by respondent Overseas Bank of Manila.
The Petitioner filed a petition for mandamus and prohibition, with
preliminary injunction, that seeks the establishment of joint and solidary
liability to the amount of Three Hundred Fifty Thousand Pesos, with
interest, against the respondents, on the alleged failure of the Overseas
Bank of Manila to return the time deposits made by petitioner. The petition
was dismissed because of lack of merit.
ISSUE
Whether or not the petitioner had the right to intervene and file a case
against Central Bank of the Philippines and Overseas Bank of Manila and
its stockholders on the alleged failure of the Overseas Bank of Manila to
return the time deposits made by the depositors.
HELD
No. The court did not allow the petitioner to intervene in that case, on the
ground that his claim as depositor of the Overseas Bank of Manila should
properly be ventilated in the Court of First Instance, and if this Court were
to allow Serrano to intervene as depositor in G.R. No. L-29352, thousands
of other depositors would follow and thus cause an avalanche of cases in
this Court.
Furthermore, both parties overlooked one fundamental principle in the
nature of bank deposits when the petitioner claimed that there should be
created a constructive trust in his favor when the respondent Overseas
Bank of Manila increased its collaterals in favor of respondent Central Bank
for the former's overdrafts and emergency loans, since these collaterals
were acquired by the use of depositors' money.
SERRANO VS CENTRAL BANK
Petition for mandamus and prohibition, with preliminary injunction that
pursues the creation of joint and solidary liability against the respondent.
FACTS
Serrano filed a case against Overseas Bank and Central bank so that they
may jointly separately liable, because, the P350K worth of time deposits
by Serrano in overseas bank of Manila is not successful when he made a
series of encashment, because on the alleged failure of the Overseas Bank
of Manila to return the time deposits made by petitioner and assigned to
him, because respondent Central Bank failed in its duty to exercise strict
11
supervision over respondent Overseas Bank of Manila to protect
depositors and the general public.
ISSUE
Whether the Central Bank is Liable for the case filed?
HELD
No, Bank deposits are in the nature of irregular deposits. They are really
loans because they earn interest. All kinds of bank deposits, whether fixed,
savings, or current are to be treated as loans and are to be covered by the
law on loans. Current and savings deposit are loans to a bank because it
can use the same. The petitioner here in making time deposits that earn
interests with respondent Overseas Bank of Manila was in reality a creditor
of the respondent Bank and not a depositor. The respondent Bank was in
turn a debtor of petitioner. Failure of the respondent Bank to honor the time
deposit is failure to pay s obligation as a debtor and not a breach of trust
arising from depositary’s failure to return the subject matter of the deposit
WHEREFORE, the petition is dismissed for lack of merit, with costs against
petitioner.
SO ORDERED.
SERRANO vs CENTRAL BANK
Facts: Serrano had P350K worth of time deposits in Overseas Bank of
Manila. He made a series of encashment but was not successful. He filed
a case against Overseas Bank & he also included the Central Bank so that
the latter may also be jointly and severally liable. Serrano argued that the
CB failed to supervise the acts of Overseas Bank and protect the interests
of its depositors by virtue of constructive trust.
Issue:W/N the Central Bank is liable?
Ruling: No. There is no breach of trust from a bank’s failure to
return the subject matter of the deposit. Bank deposits are in the nature of
irregular deposits. All kinds of bank deposits are to be treated as loans and
are to be covered by the law on loans Art.1980. In reality the depositor is
the creditor while the bank is the debtor. Failure of the respondent bank to
honor the time deposit is failure to pay its obligation as a debtor.
Durban Apartments vs. Pioneer
(639 SCRA 441, G.R. No. 179419, January 12, 2011)
DURBAN APARTMENTS CORPORATION, doing business under the
name and style of City Garden Hotel, Petitioner, vs. PIONEER
INSURANCE AND SURETY CORPORATION,Respondent.
FACTS:
 For review is the Decision of the CA which affirmed the decision of the
RTC holding petitioner Durban Apartments Corporation solely liable to
respondent Pioneer Insurance and Surety Corporation for the loss of
Jeffrey See’s (See’s) vehicle.
 On July 22, 2003, Pioneer Insurance and Surety Corporation, by right
of subrogation, filed [with the RTC of Makati City] a Complaint for
Recovery of Damages against Durban Apartments Corporation, doing
business under the name and style of City Garden Hotel, and
[defendant before the RTC] Vicente Justimbaste.
Respondent’s contention:
 Respondent averred that it is the insurer for loss and damage of Jeffrey
See’s Suzuki Grand Vitara (Plate No. XBH-510) in the amount of
P1,175,000.
 On April 30, 2002, See arrived and checked in at the City Garden Hotel
in Makati corner Kalayaan Avenues, Makati City before midnight, and
its parking attendant, defendant Justimbaste got the key to said Vitara
from See to park it.
 On May 1, 2002 (1am) – the Hotel Chief Security Officer informed him
that his car was carnapped while it was parked unattended at the
parking area of Equitable PCI Bank along Makati Ave.
 See then reported the incident to the Operations Division of Makati City
Police Anti-Carnapping unit and then conducted investigation.
 The car has not yet been recovered since July 23, 2002.
 Respondent paid P1,163,250 money claim of See and mortagee ABN
AMRO Savings Bank as indemnity for the loss of the car.
 The car was lost due to the negligence of Durban Apartments and
Justimbaste because it was discovered that this was the second time
that a similar incident of carnapping happened in the valet parking
service of Durban Apartments and no necessary precautions were
taken to prevent its repetition.
 Defendant Justimbaste and Durban Apartments failed and refused to
pay Pioneer’s valid, just, and lawful claim despite written demands.
12
Petitioner’s contention:
 See did not check in at its hotel, on the contrary, he was a guest of a
certain Ching Montero x x x; defendant x x x Justimbaste did not get
the ignition key of See’s Vitara, on the contrary, it was See who
requested a parking attendant to park the Vitara at any available
parking space, and it was parked at the Equitable Bank parking area,
which was within See’s view, while he and Montero were waiting in
front of the hotel.
 They made a written denial of the demand of [respondent] Pioneer
Insurance for want of legal basis; valet parking services are provided
by the hotel for the convenience of its customers looking for a parking
space near the hotel premises; it is a special privilege that it gave to
Montero and See; it does not include responsibility for any losses or
damages to motor vehicles and its accessories in the parking area; and
the same holds true even if it was See himself who parked his Vitara
within the premises of the hotel as evidenced by the valet parking
customer’s claim stub issued to him.
 Defendant Justimbaste saw the Vitara speeding away from the place
where it was parked; he tried to run after it, and blocked its possible
path but to no avail.
 RTC ruled in favor of respondent and ordered Durban Apartment to
pay respondent the sum of P1, 163, 250.00. CA affirmed the decision
of RTC. Hence, present petition.
ISSUE: WON petitioner is liable to respondent for the loss of See’s
vehicle.YES.
HELD:
 In this case, respondent substantiated the allegations in its
complaint, i.e., a contract of necessary deposit existed
between the insured See and petitioner.
 On this score, we find no error in the following disquisition of the
appellate court:[The] records also reveal that upon arrival at the
City Garden Hotel, See gave notice to the doorman and parking
attendant of the said hotel, x x x Justimbaste, about his Vitara when
he entrusted its ignition key to the latter. x x x Justimbaste issued
a valet parking customer claim stub to See, parked the Vitara at
the Equitable PCI Bank parking area, and placed the ignition key
inside a safety key box while See proceeded to the hotel lobby to
check in. The Equitable PCI Bank parking area became an annex
of City Garden Hotel when the management of the said bank
allowed the parking of the vehicles of hotel guests thereat in the
evening after banking hours.
 Article 1962, in relation to Article 1998, of the Civil Code defines a
contract of deposit and a necessary deposit made by persons in
hotels or inns:
Art. 1962. A deposit is constituted from the moment a person receives a
thing belonging to another, with the obligation of safely keeping it and
returning the same. If the safekeeping of the thing delivered is not the
principal purpose of the contract, there is no deposit but some other
contract.
Art. 1998. The deposit of effects made by travelers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be
responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that,
on the part of the latter, they take the precautions which said hotel-keepers
or their substitutes advised relative to the care and vigilance of their effects.
 Plainly, from the facts found by the lower courts, the insured See
deposited his vehicle for safekeeping with petitioner, through
the latter’s employee, Justimbaste. In turn, Justimbaste
issued a claim stub to See. Thus, the contract of deposit was
perfected from See’s delivery, when he handed over to
Justimbaste the keys to his vehicle, which Justimbaste
received with the obligation of safely keeping and returning it.
Ultimately, petitioner is liable for the loss of See’s vehicle.
POLICY: A deposit is constituted from the moment a person receives a
thing belonging to another, with the obligation of safely keeping it and
returning the same.
YHT Realty vs. CA (451 SCRA 638, G.R. No. 126780, February 17, 2005)
FACTS:
 McLoughlin (private respondent) an Australian businessman
regularly stayed at Sheraton Hotel during trips to Philippines.
 McLoughlin became friends with Tan, who convinced the former to
transfer from Sheraton Hotel to Tropicana Hotel were (petitioners)
Lainez, Payam and Lopez. Lopez served as manager while Lainez
and Payam had custody of the keys for the safety deposit boxes of
Tropicana Hotel.
13
  The procedure for the safety deposit box at Tropicana Hotel was
that it can be opened by 2 keys only. 1 key is given to the registered
hotel guest while the other key is held by the hotel management.
 McLoughlin deposited $15,000 (US) and $10,000 (AUS) as well as
letters, bankbooks, credit cards and a checkbook in the safety
deposit box during his stay at Tropicana Hotel.
 After his trips abroad, McLoughlin discovered that some cash and
valuables he deposited in the safety deposit box were missing.
 McLoughlin immediately confronted Lainez and Payam. Both
admitted that Tan opened the safety deposit box with the key
assigned to him.
 When McLoughlin confronted Tan, she admitted to have stolen the
key with the assistance of Lopez, Payam and Lainez.
 A promissory note was written by Lopez, promising to pay the
amount of $4,000 (AUS) and $2,000 (US).
 McLoughlin insisted that Tropicana Hotel be responsible for the
loss. However, Lopez refused and relied on the conditions for
renting the safety deposit box which provides that the hotel is free
from any liability arising from loss should the key be lost and to
return the key and execute the release in favor of the hotel upon
giving up the use of the box.
 McLoughlin filed a case against petitioners. RTC ruled in favor of
McLoughlin, making petitioners jointly and severally liable for the
losses plus damages. The hotel conditions were ruled not valid for
being contrary to Art 2003 of the NCC and public policy. The CA
also ruled in favor of McLoughlin.
ISSUE: WON YHT Corporation is jointly and severally liable for the losses
suffered by McLoughlin? – YES.
HELD:
 SC appreciated the facts found and proven by the lower court that
McLoughlin indeed deposited such cash and valuables as he
claimed.
 The evidence also revealed that the hotel guest alone cannot open
the safety deposit box without the assistance of the hotel
management or its employees. In case of loss of any item
deposited, it is inevitable to conclude that the management had at
least a hand in the consummation of the taking, unless the reason
for the loss is force majeure.
 Noteworthy is the fact that Payam and Lainez, who were
employees of Tropicana, had custody of the master key of the
management when the loss took place. They even admitted that
they assisted Tan on 3 separate occasions in opening
McLoughlin’s safety deposit box.
 It is proved that Tropicana had prior knowledge that a person aside
from the registered guest had access to the safety deposit box. Yet
the management failed to notify McLoughlin of the incident and
waited for him to discover the taking before it disclosed the matter
to him.
 Therefore, Tropicana should be held responsible for the damage
suffered by McLoughlin by reason of the negligence of its
employees.
 Tan’s acts should have prompted the management to investigate
her relationship with McLoughlin. Then, petitioners would have
exercised due diligence required of them. Failure to do so warrants
the conclusion that the management had been remiss in complying
with the obligations imposed upon hotel-keepers under the law.
 Under Art 1170 of NCC, those who, in the performance of their
obligations, are guilty of negligence, are liable for damages. As to
who shall bear the burden of paying damages, Art 2180 Par (4) of
NCC provides that the owners and managers of an establishment
are likewise responsible for damages caused by their employees
in the service of the branches in which the latter are employed or
on the occasion of their functions.
 Also, this Court has ruled that if an employee is found negligent, it
is presumed that the employer was negligent in selecting and/or
supervising him for it is hard for the victim to prove the negligence
of such employer.
 Thus, given the fact that the loss of McLoughlin’s money was
consummated through the negligence of Tropicana’s employees in
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 allowing Tan to open the safety deposit box without the guest’s
consent, both the assisting employees and YHT Realty
Corporation itself, as owner and operator of Tropicana, should be
held solidarily liable pursuant to Article 2193.
 Also, Art 2003 is controlling which provides that the hotel-keeper
cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the guest. Any
stipulation between the hotel-keeper and the guest whereby the
responsibility of the former as set forth in Articles 1998 to 2001 is
suppressed or diminished shall be void.
 Petitioners contend that McLoughlin’s case was mounted on the
theory of contract, but the trial court and the appellate court upheld
the grant of the claims of the latter on the basis of tort. There is
nothing anomalous in how the lower courts decided the
controversy for this Court has pronounced a jurisprudential rule
that tort liability can exist even if there are already contractual
relations. The act that breaks the contract may also be tort.
 CA decision AFFIRMED.
YHT REALTY CORPORATION VS. CA, GR. No. 126780, February 17,
2005
FACTS: Maurice Mcloughlin is an Australian philanthropist,
businessman, and a tourist. In his various trips from Australia going to
different countries, one of which is the Philippines, he would stay in
Tropicana Inn which is owned by YHT Realty Corp. After series of
transactions with the inn as depositary of his belongings, he noticed that
his money and several jewelries would be either reduced or lost. He then
decided to file an action against Tropicana and its innkeepers. However,
the latter argued that they have no liability with regard to the loss by
virtue of the undertaking signed by Mcloughlin. Such undertaking is a
waiver of the inn’s liability in case of any loss. The RTC and CA both
decided that such undertaking is null and void as contrary to
the express provisions of the law. Hence, the petition.
ISSUE: Whether or not the subject undertaking is null and void
HELD: The court ruled in the affirmative. Art. 2003 of the Civil Code
provides that, the hotelkeeper cannot free himself from responsibility by
posting notices to the effect that he is not liable for the articles brought by
the guest. Any stipulation between the hotel-keeper and the guest
whereby the responsibility of the former as set forth in Articles 1998 to
2001 is suppressed or diminished shall be void.
TRIPLE-V FOOD SERVICES INC. vs. FILIPINO MERCHANTS
INSURANCE
COMPANY, GR. No. 160554, February 21, 2005
FACTS: Mary Jo-Anne De Asis dined at petitioner's Kamayan
Restaurant. De Asis was using a Mitsubishi Galant Super Saloon Model
1995 issued by her employer Crispa Textile Inc.. On said date, De Asis
availed of the valet parking service of petitioner and entrusted her car key
to petitioner's valet counter. Afterwards, a certain Madridano, valet
attendant, 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. Having indemnified Crispa 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. Petitioner claimed that the complaint failed to
adduce facts to support the allegations of recklessness and negligence
committed in the safekeeping and custody of the subject vehicle.
Besides, when De Asis availed the free parking stab which contained a
waiver of petitioner’s liability in case of loss, she had thereby waived her
rights.
ISSUE: Whether or not petitioner Triple-V Food Services, Inc. is liable for
the loss.
HELD: The Supreme Court ruled in the affirmative. In a contract of
deposit, a person receives an object belonging to another with the
obligation of safely keeping it and returning the same. 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. 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.
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