CA Agro-Industrial Dev. Corp. v.

Court of Appeals and Security

Bank and Trust Company, G.R. No. 90027, march 3, 1993, 219
SCRA 426
Facts:
Petitioner 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be withdrawn only upon the joint signatures of a representative of the petitioner and the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 complaint for damages against
the respondent Bank with the Court of First Instance (now Regional Trial Court) of Pasig, Metro
Manila
The RTC ruled against petitioner. The CA affirmed the lower court ruling.

Issue:

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?

Ruling:
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
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 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 on this
point do not apply.
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.

The Roman Catholic Bishop of Jaro v. De La Pena, G.R. No. L6913, November 21, 1913, 26 Phil. 144
Facts:
It is established in this case that the plaintiff is the trustee of a charitable bequest made for
the construction of a leper hospital and that father Agustin de la Pea was the duly
authorized representative of the plaintiff to receive the legacy. The defendant is the
administrator of the estate of Father De la Pea. In the year 1898 the books Father De la
Pea, 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 De la Pea 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 for the sum thus deposited in said
bank. The arrest of Father De la Pea 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.
While there is considerable dispute in the case over the question whether the P6,641 of trust
funds was included in the P19,000 deposited as aforesaid, nevertheless, a careful
examination of the case leads us to the conclusion that said trust funds were a part of the
funds deposited and which were removed and confiscated by the military authorities of the
United States.
The CFI ruled in favor of plaintiff. Hence this appeal by defendant.
Issue:
Whether or not Dela Pena is liable as depositary after the US military confiscated the funds
deposited to him
Ruling:
By placing the money in the bank and mixing it with his personal funds De la Pea 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 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 hazards.
The court, therefore, finds and declares that the money which is the subject matter of this
action was deposited by Father De la Pea in the Hongkong and Shanghai Banking
Corporation of Iloilo; that said money was forcibly taken from the bank by the armed forces
of the United States during the war of the insurrection; and that said Father De la Pea was
not responsible for its loss.

YHT Realty Corporation v. Court of Appeals, G.R. No. 126780,

February 17, 2005, 451 SCRA 638

Facts:

Private Respondent Maurice McLoughlin would always stay at Tropicana Hotel from Sheraton
Hotel during his stay in the Philippines. Normally, he would a rent a safety deposit box, which
could only be opened through the use of two keysone given and possessed by the
registered guest and another by an employee of the hotel. Inside the said safety deposit box,
McLoughlin alleged placed 2 envelopes containing US Dollars, one envelope containing
Australian Dollars, credit cards, bankbooks and a checkbook.
Before leaving for a brief trip, McLoughlin took some items from said deposit box, while the
remaining of his items were left therein. Upon arrival, he discovered that some of the dollars
and the jewelry were missing. By this reason, Mcloughlin confronted Erlinda Lainez, Anicia
Payam, and Brunhilda Mata-Tan, who were employees of the hotel, regarding the missing
items. They later admitted that Tan opened the said box with the key assigned to him, which
was admittedly stolen when Mcloughlin was still asleep. McLoughlin thus insisted that the
hotel must assume liability for the loss he suffered. Lopez, however, refused to take
responsibility for the missing items, relying on the conditions for the renting of the Safety
Deposit Box.
After trial on the merilts, RTC-Manila ruled in favor of McLoughlin. On appeal, the CA
affirmed, with modifications, the ruling of the trial court. Hence, this Petition.
Issue:
Whether or not the Contract for the Use of Safety Deposit Box is void
Ruling:
Yes. The evidence reveals that two keys are required to open the safety deposit boxes of
Tropicana. One key is assigned to the guest while the other remains in the possession of the
management. If the guest desires to open his safety deposit box, he must request the
management for the other key to open the same. In other words, the guest alone cannot
open the safety deposit box without the assistance of the management or its employees.
With more reason that access to the safety deposit box should be denied if the one
requesting for the opening of the safety deposit box is a stranger. Thus, in case of loss of any
item deposited in the safety deposit box, 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. In fact, they even
admitted that they assisted Tan on three separate occasions in opening McLoughlins safety
deposit box. This only proves 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.
The management should have guarded against the occurrence of this incident
considering that Payam admitted in open court that she assisted Tan three times in opening
the safety deposit box of McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was
still asleep. In light of the circumstances surrounding this case, it is undeniable that without
the acquiescence of the employees of Tropicana to the opening of the safety deposit box, the
loss of McLoughlins money could and should have been avoided.
The management contends, however, that McLoughlin, by his act, made its employees
believe that Tan was his spouse for she was always with him most of the time. The evidence
on record, however, is bereft of any showing that McLoughlin introduced Tan to the
management as his wife. Such an inference from the act of McLoughlin will not exculpate the
petitioners from liability in the absence of any showing that he made the management
believe that Tan was his wife or was duly authorized to have access to the safety deposit box.
Mere close companionship and intimacy are not enough to warrant such conclusion
considering that what is involved in the instant case is the very safety of McLoughlins
deposit. If only petitioners exercised due diligence in taking care of McLoughlins safety
deposit box, they should have confronted him as to his relationship with Tan considering that
the latter had been observed opening McLoughlins safety deposit box a number of times at
the early hours of the morning. Tans 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 Article 1170 of the New Civil Code, 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, Article 2180, paragraph (4) of the same Code provides that the owners
and managers of an establishment or enterprise 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 McLoughlins money was consummated through the negligence of Tropicanas
employees in allowing Tan to open the safety deposit box without the guests 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. [

The issue of whether the Undertaking For The Use of Safety Deposit Box executed by
McLoughlin is tainted with nullity presents a legal question appropriate for resolution in this
petition. Notably, both the trial court and the appellate court found the same to be null and
void. We find no reason to reverse their common conclusion. Article 2003 is controlling, thus: