BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. THE INTERMEDIATE
APPELLATE COURT and RIZALDY T. ZSHORNACK respondents.G.R. No.
L-66826 | 1988-08-19
CORTES, J.:
The original parties to this case were Rizaldy T. Zshornack and
the Commercial Bank and Trust Company of the Philippines [hereafter
referred to as "COMTRUST."] In 1980, the Bank of the Philippine
Islands (hereafter referred to as "BPI") absorbed COMTRUST through
a corporate merger, and was substituted as party to the case.
Rizaldy Zshornack initiated proceedings on June 28, 1976 by
filing in the Court of First Instance of Rizal ---- Caloocan City a
complaint against COMTRUST alleging four causes of action. Except
for the third cause of action, the CFI ruled in favor of Zshornack.
The bank appealed to the Intermediate Appellate Court which
modified the CFI decision absolving the bank from liability on the
fourth cause of action. The pertinent portions of the judgment, as
modified, read:
IN VIEW OF THE FOREGOING, the Court renders judgment as
follows:
1. Ordering the defendant COMTRUST to restore to the dollar
savings account of plaintiff (No. 25-4109) the amount of U.S
$1,000.00 as of October 27, 1975 to earn interest together with the
remaining balance of the said account at the rate fixed by the bank
for dollar deposits under Central Bank Circular 343;
2. Ordering defendant COMTRUST to return to the plaintiff the
amount of U.S. $3,000.00 immediately upon the finality of this
decision, without interest for the reason that the said amount was
merely held in custody for safekeeping, but was not actually
deposited with the defendant COMTRUST because being cash currency,
it cannot by law be deposited with plaintiffs dollar account and
defendant's only obligation is to return the same to plaintiff upon
demand;
xxx xxx xxx
5. Ordering defendant COMTRUST to pay plaintiff in the amount of
P8,000.00 as damages in the concept of litigation expenses and
attorney's fees suffered by plaintiff as a result of the failure of
the defendant bank to restore to his (plaintiff's) account the
amount of U.S. $1,000.00 and to return to him (plaintiff) the U.S.
$3,000.00 cash left for safekeeping.
Costs against defendant COMTRUST.
SO ORDERED. [Rollo, pp. 47-48.]
Undaunted, the bank comes to this Court praying that it be
totally absolved from any liability to Zshornack. The latter not
having appealed the Court of Appeals decision, the issues facing
this Court are limited to the bank's liability with regard to the
first and second causes of action and its liability for
damages.
1. We first consider the first cause of action.
On the dates material to this case, 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; the charges for commission,
documentary stamp tax and others totalling 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.
Upon consideration of the foregoing facts, this Court finds no
reason to disturb the ruling of both the trial court and the
Appellate Court on the first cause of action. Petitioner must be
held liable for the unauthorized withdrawal of US$1,000.00 from
private respondent's dollar account.
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. If
indeed the peso equivalent of the amount withdrawn from the dollar
account was credited to the peso current account, why did the bank
still have to pay Ernesto?
At any rate, both explanations 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 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.
2. As for the second cause of action, the complaint filed with
the trial court alleged that on December 8, 1975, Zshornack
entrusted to COMTRUST, thru Garcia, US$3,000.00 cash (popularly
known as greenbacks) for safekeeping, and that the agreement was
embodied in a document, a copy of which was attached to and made
part of the complaint. The document reads:
Makati----Cable Address:
Philippines----"COMTRUST"
COMMERCIAL BANK AND TRUST COMPANYof the PhilippinesQuezon City
Branch
December 8, 1975
MR. RIZALDY T. ZSHORNACK&/OR MRS. SHIRLEY E. ZSHORNACK
Sir/Madam:
We acknowledged (sic) having received from you today the sum of
US DOLLARS: THREE THOUSAND ONLY (US$3,000.00) for safekeeping.
Received by:(Sgd.)
VIRGILIO V. GARCIA
It was also alleged in the complaint that despite demands, the
bank refused to return the money.
In its answer, COMTRUST averred that the US$3,000 was credited
to Zshornack's peso current account at prevailing conversion
rates.
It must be emphasized that COMTRUST did not deny specifically
under oath the authenticity and due execution of the above
instrument.
During trial, it was established that on December 8, 1975
Zshornack indeed delivered to the bank US$3,000 for safekeeping.
When he requested the return of the money on May 10, 1976, COMTRUST
explained that the sum was disposed of in this manner: US$2,000.00
was sold on December 29, 1975 and the peso proceeds amounting to
P14,920.00 were deposited to Zshornack's current account per
deposit slip accomplished by Garcia; the remaining US$1,000. 00 was
sold on February 3, 1976 and the peso proceeds amounting to
P8,350.00 were deposited to his current account per deposit slip
also accomplished by Garcia.
Aside from asserting that the US$3,000.00 was properly credited
to Zshornack's current account at prevailing conversion rates, BPI
now posits another ground to defeat private respondent's claim. It
now argues that the contract embodied in the document is the
contract of depositum (as defined in Article 1962, New Civil Code),
which banks do not enter into. The bank alleges that Garcia
exceeded his powers when he entered into the transaction. Hence, it
is claimed, the bank cannot be liable under the contract, and the
obligation is purely personal to Garcia.
Before we go into the nature of the contract entered into, an
important point which arises on the pleadings, must be
considered.
The second cause of action is based on a document purporting to
be signed by COMTRUST, a copy of which document was attached to the
complaint. In short, the second cause of action was based on an
actionable document. It was therefore incumbent upon the bank to
specifically deny under oath the due execution of the document, as
prescribed under Rule 8, Section 8, if it desired: (1) to question
the authority of Garcia to bind the corporation; and (2) to deny
its capacity to enter into such contract. [See, E.B. Merchant v.
International Banking Corporation, 6 Phil. 314 (1906).] No sworn
answer denying the due execution of the document in question, or
questioning the authority of Garcia to bind the bank, or denying
the bank's capacity to enter into the contract, was ever filed.
Hence, the bank is deemed to have admitted not only Garcia's
authority, but also the bank's power, to enter into the contract in
question.
In the past, this Court had occasion to explain the reason
behind this procedural requirement.
The reason for the rule enunciated in the foregoing authorities
will, we think, be readily appreciated. In dealing with
corporations the public at large is bound to rely to a large extent
upon outward appearances. If a man is found acting for a
corporation with the external indicia of authority, any person, not
having notice of want of authority, may usually rely upon those
appearances; and if it be found that the directors had permitted
the agent to exercise that authority and thereby held him out as a
person competent to bind the corporation, or had acquiesced in a
contract and retained the benefit supposed to have been conferred
by it, the corporation will be bound notwithstanding the actual
authority may never have been granted . . . Whether a particular
officer actually possesses the authority which he assumes to
exercise is frequently known to very few, and the proof of it
usually is not readily accessible to the stranger who deals with
the corporation on the faith of the ostensible authority exercised
by some of the corporate officers. It is therefore reasonable in a
case where an officer of a corporation has made a contract in its
name, that the corporation should be required, if it denies his
authority, to state such defense in its answer. By this means the
plaintiffs apprised of the fact that the agent's authority is
contested; and he is given an opportunity to adduce evidence
showing either that the authority existed or that the contract was
ratified and approved [Ramirez v. Orientalist Co. and Fernandez, 38
Phil. 634, 645-646 (1918).]
Petitioner's argument must also be rejected for another reason.
The practical effect of absolving a corporation from liability
every time an officer enters into a contract which is beyond
corporate powers, even without the proper allegation or proof that
the corporation has not authorized nor ratified the officer's act,
is to cast corporations in so perfect a mold that transgressions
and wrongs by such artificial beings become impossible [Bissell v.
Michigan Southern and N.I.R Cos, 22 N.Y 258 (1860).] "To say that a
corporation has no right to do unauthorized acts is only to put
forth a very plain truism; but to say that such bodies have no
power or capacity to err is to impute to them an excellence which
does not belong to any created existence with which we are
acquainted. The distinction between power and right is no more to
be lost sight of in respect to artificial than in respect to
natural persons." [Ibid.]
Having determined that Garcia's act of entering into the
contract binds the corporation, we now determine the correct nature
of the contract, and its legal consequences, including its
enforceability.
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.
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 provides:
xxx xxx xxx
2. Transactions in the assets described below and all dealings
in them of whatever nature, including, where applicable their
exportation and importation, shall NOT be effected, except with
respect to deposit accounts included in sub-paragraphs (b) and (c)
of this paragraph, when such deposit accounts are owned by and in
the name of banks.
(a) Any and all assets, provided they are held through, in, or
with banks or banking institutions located in the Philippines,
including money, checks, drafts, bullions, bank drafts deposit
accounts (demand, time and savings), all debts, indebtedness or
obligations, financial brokers and investment houses notes,
debentures, stocks, bonds, coupons, bank acceptances, mortgages,
pledges, liens or other rights in the nature of security, expressed
in foreign currencies, or if payable abroad, irrespective of the
currency in which they are expressed, and belonging to any person,
firm, partnership, association, branch office, agency, company or
other unincorporated body or corporation residing or located within
the Philippines;
(b) Any and all assets of the kinds included and or described in
subparagraph (a) above, whether or not held through, in, or with
banks or banking institutions, and existent within the Philippines,
which belong to any person, film, partnership, association, branch
office, agency, company or other unincorporated body or corporation
not residing or located within the Philippines;
(c ) Any and all assets existent within the Philippines
including money, checks, drafts, bullions, bank drafts, all debts,
indebtedness or obligations, financial securities commonly dealt in
by bankers, brokers and investment houses, notes, debentures,
stock, bonds, coupons, bank acceptances, mortgages, pledges, liens
or other rights in the nature of security expressed in foreign
currencies, or if payable abroad, irrespective of the currency in
which they are expressed, and belonging to any person, firm,
partnership, association, branch office, agency, company or other
unincorporated body or corporation residing or located within the
Philippines.
xxx xxx xxx
4. (a) All receipts of foreign exchange shall be sold daily to
the Central Bank by those authorized to deal in foreign exchange.
All receipts of foreign exchange by any person, firm, partnership,
association, branch office, agency, company or other unincorporated
body or corporation shall be sold to the authorized agents of the
Central Bank by the recipients within one business day following
the receipt of such foreign exchange. Any person, firm,
partnership, association, branch office, agency, company or other
unincorporated body or corporation, residing or located within the
Philippines, who acquires on and after the date of this Circular
foreign exchange shall not unless licensed by the Central Bank,
dispose of such foreign exchange in whole or in part, nor receive
less than its full value, nor delay taking ownership thereof except
as such delay is customary; Provided, further, That within one day
upon taking ownership, or receiving payment, of foreign exchange
the aforementioned persons and entities shall sell such foreign
exchange to designated agents of the Central Bank.
xxx xxx xxx
8. Strict observance of the provisions of this Circular is
enjoined; and any person, firm or corporation, foreign or domestic,
who being bound to the observance thereof, or of such other rules,
regulations or directives as may hereafter be issued in
implementation of this Circular, shall fail or refuse to comply
with, or abide by, or shall violate the same, shall be subject to
the penal sanctions provided in the Central Bank Act.
Xxx xxx xxx
Paragraph 4 (a) above was modified by Section 6 of Central Bank
Circular No. 281, Regulations on Foreign Exchange, promulgated on
November 26, 1969 by limiting its coverage to Philippine residents
only Section 6 provides:
SEC. 6. All receipts of foreign exchange by any resident person,
firm, company or corporation shall be sold to authorized agents of
the Central Bank by the recipients within one business day
following the receipt of such foreign exchange. Any resident
person, firm, company or corporation residing or located within the
Philippines, who acquires foreign exchange shall not, unless
authorized by the Central Bank, dispose of such foreign exchange in
whole or in part, nor receive less than Its full value, nor delay
taking ownership thereof except as such delay is customary;
Provided, That, within one business day upon taking ownership or
receiving payment of foreign exchange the aforementioned persons
and entities shall sell such foreign exchange to the authorized
agents of the Central Bank.
As earlier stated, 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
intended 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. "When the nullity
proceeds from the illegality of the cause or object of the
contract, and the act constitutes a criminal offense, both parties
being in pari delicto, they shall have no cause of action against
each other . . . " [Art. 1411, New Civil Code.] The only remedy is
one on behalf of the State to prosecute the parties for violating
the law.
We thus rule that Zshornack cannot recover under the second
cause of action.
3. Lastly, we find the P8,000.00 awarded by the courts a quo as
damages in the concept of litigation expenses and attorney's fees
to be reasonable. The award is sustained.
WHEREFORE, the decision appealed from is hereby MODIFIED.
Petitioner is ordered to restore to the dollar savings account of
private respondent the amount of US$1,000.00 as of October 27, 1975
to earn interest at the rate fixed by the bank for dollar savings
deposits. Petitioner is further ordered to pay private respondent
the amount of P8,000.00 as damages. The other causes of action of
private respondent are ordered dismissed.
SO ORDERED.THE ROMAN CATHOLIC BISHOP OF JARO,
plaintiff-appellee, vs. GREGORIO DE LA PENA, administrator of the
estate of Father Agustin de la Pena, defendant-appellant.G.R. No.
6913 | 1913-11-21
D E C I S I O N
MORELAND, J.:
This is an appeal by the defendant from a judgment of the Court
of First Instance of Iloilo, awarding to the plaintiff the sum of
P6,641, with interest at the legal rate from the beginning of the
action.
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 of Father de la Pea, as trustee,
shoed 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 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 so 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.
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 Pea'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).
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 money had been forcibly take 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 is 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 in 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 been
constrained to hold that, in choosing between two means equally
legal, he is culpably negligent in selecting negligent in selecting
one whereas he would not have been if he had selected the
other.
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.
The judgment is therefore reversed, and it is decreed that the
plaintiff shall take nothing by his complaint.CA AGRO-INDUSTRIAL
DEVELOPMENT CORP., petitioner, vs. THE HONORABLE COURT OF APPEALS
and SECURITY BANK AND TRUST COMPANY, respondents.G.R. No. 90027 |
1993-03-03
D E C I S I O N
DAVIDE, JR., J p:
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 complaint 2 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
decision 5 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 reconsideration 7 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, 15 petitioner 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 bailor 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 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 bailor 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
suggest that 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 23 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 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 limit 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.
SO ORDERED.ANGEL JAVELLANA, plaintiff-appellee, vs. JOSE LIM,
ET. AL., defendants-appellants.G.R. No. 4015 | 1908-08-24
D E C I S I O N
TORRES, J.:
The attorney for the plaintiff, Angel Javellana, filed 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, be 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, that 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 pesos
and fifty-eight cents of pesos fuentes, 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, binding
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 1,000 pesos, with the exception of which they had not paid
any other sum on account of either capital or interest,
notwithstanding the requests made by the plaintiff, who 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 l5th' 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 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 Exhibit 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, paid the creditor the said
amount in full. In this second document the contract between the
parties, which is a real loan of money with interest, appears
perfectly defined, notwithstanding the fact that in the original
document executed by the debtors, on the 26th of May, 1897, it is
called a deposit; so that when they bound themselves jointly and
severally to refund the sum of 2,686.58 pesos to the depositor,
Javellana, they did not engage to return the same coins received
and of which the amount deposited 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 subsequently shown when asking
for an extension of the time for the return thereof, inasmuch as,
acknowledging that they have subjected the lender, 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 depositary 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 depositary 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 that money was scarce, 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 them to use and dispose of the
amount slated as having been deposited, which, in accordance with
the terms of the law, must be considered as given them on loan, to
all intents and purposes gratuitously, until the 20th of January,
1898, and from that date 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 the fact 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 had
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 defendants' 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 plaintiff's 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 reasons above set forth it may, as a matter of
course, be inferred that there was no renewal of the contract of
deposit converted into a loan, because, as has already been stated,
the defendants received said amount by virtue of a real loan
contract under the name of a deposit, since the so-called bails
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
debtors still exists, and it has not been shown or proven in the
proceedings that the creditor had released Jose 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 appealedfrom, 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.JOSEPH CHAN,
WILSON CHAN and LILY CHAN, petitioners, vs. BONIFACIO S. MACEDA,
JR., respondent.G.R. No. 142591 | 2003-04-30
D E C I S I O N
SANDOVAL-GUTIERREZ, J.:
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.[1] 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[2] 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[3] 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 attorney's 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 respondent's 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 court's 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
latter's 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 respondent's
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 attorney's 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 Moreman's 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 attorney's 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 court's 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 party's act (PAL, Inc. vs. NLRC, 259 SCRA 459. In
sustaining appellee's 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 Moreman's 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 judge's 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 parte hearing of this case and should, therefore, be
eliminated or at least reduced.
III
The award of attorney's 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 court's 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 respondent's 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 respondent's 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
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.[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-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.
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,[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 plaintiff's
causes of action. Here, the trial court merely adopted respondent's
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.
SO ORDERED.YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA
PAYAM, Petitioners, versus THE COURT OF APPEALS and MAURICE
McLOUGHLIN, Respondents.G.R. No. 126780 | 2005-02-17
SECOND DIVISIONDECISION
TINGA, J.:
The primary question of interest before this Court is the only
legal issue in the case: It is whether a hotel may evade liability
for the loss of items left with it for safekeeping by its guests,
by having these guests execute written waivers holding the
establishment or its employees free from blame for such loss in
light of Article 2003 of the Civil Code which voids such
waivers.
Before this Court is a Rule 45 petition for review of the
Decision[1] dated 19 October 1995 of the Court of Appeals which
affirmed the Decision[2] dated 16 December 1991 of the Regional
Trial Court (RTC), Branch 13, of Manila, finding YHT Realty
Corporation, Brunhilda Mata-Tan (Tan), Erlinda Lainez (Lainez) and
Anicia Payam (Payam) jointly and solidarily liable for damages in
an action filed by Maurice McLoughlin (McLoughlin) for the loss of
his American and Australian dollars deposited in the safety deposit
box of Tropicana Copacabana Apartment Hotel, owned and operated by
YHT Realty Corporation.
The factual backdrop of the case follow.
Private respondent McLoughlin, an Australian
businessman-philanthropist, used to stay at Sheraton Hotel during
his trips to the Philippines prior to 1984 when he met Tan. Tan
befriended McLoughlin by showing him around, introducing him to
important people, accompanying him in visiting impoverished street
children and assisting him in buying gifts for the children and in
distributing the same to charitable institutions for poor children.
Tan convinced McLoughlin to transfer from Sheraton Hotel to
Tropicana where Lainez, Payam and Danilo Lopez were employed. Lopez
served as manager of the hotel while Lainez and Payam had custody
of the keys for the safety deposit boxes of Tropicana. Tan took
care of McLoughlins booking at the Tropicana where he started
staying during his trips to the Philippines from December 1984 to
September 1987.[3]
On 30 October 1987, McLoughlin arrived from Australia and
registered with Tropicana. He rented a safety deposit box as it was
his practice to rent a safety deposit box every time he registered
at Tropicana in previous trips. As a tourist, McLoughlin was aware
of the procedure observed by Tropicana relative to its safety
deposit boxes. The safety deposit box could only be opened through
the use of two keys, one of which is given to the registered guest,
and the other remaining in the possession of the management of the
hotel. When a registered guest wished to open his safety deposit
box, he alone could personally request the management who then
would assign one of its employees to accompany the guest and assist
him in opening the safety deposit box with the two keys.[4]
McLoughlin allegedly placed the following in his safety deposit
box: Fifteen Thousand US Dollars (US$15,000.00) which he placed in
two envelopes, one envelope containing Ten Thousand US Dollars
(US$10,000.00) and the other envelope Five Thousand US Dollars
(US$5,000.00); Ten Thousand Australian Dollars (AUS$10,000.00)
which he also placed in another envelope; two (2) other envelopes
containing letters and credit cards; two (2) bankbooks; and a
checkbook, arranged side by side inside the safety deposit
box.[5]
On 12 December 1987, before leaving for a brief trip to
Hongkong, McLoughlin opened his safety deposit box with his key and
with the key of the management and took therefrom the envelope
containing Five Thousand US Dollars (US$5,000.00), the envelope
containing Ten Thousand Australian Dollars (AUS$10,000.00), his
passports and his credit cards.[6] McLoughlin left the other items
in the box as he did not check out of his room at the Tropicana
during his short visit to Hongkong. When he arrived in Hongkong, he
opened the envelope which contained Five Thousand US Dollars
(US$5,000.00) and discovered upon counting that only Three Thousand
US Dollars (US$3,000.00) were enclosed therein.[7] Since he had no
idea whether somebody else had tampered with his safety deposit
box, he thought that it was just a result of bad accounting since
he did not spend anything from that envelope.[8]
After returning to Manila, he checked out of Tropicana on 18
December 1987 and left for Australia. When he arrived in Australia,
he discovered that the envelope with Ten Thousand US Dollars
(US$10,000.00) was short of Five Thousand US Dollars (US$5,000). He
also noticed that the jewelry which he bought in Hongkong and
stored in the safety deposit box upon his return to Tropicana was
likewise missing, except for a diamond bracelet.[9]
When McLoughlin came back to the Philippines on 4 April 1988, he
asked Lainez if some money and/or jewelry which he had lost were
found and returned to her or to the management. However, Lainez
told him that no one in the hotel found such things and none were
turned over to the management. He again registered at Tropicana and
rented a safety deposit box. He placed therein one (1) envelope
containing Fifteen Thousand US Dollars (US$15,000.00), another
envelope containing Ten Thousand Australian Dollars (AUS$10,000.00)
and other envelopes containing his traveling papers/documents. On
16 April 1988, McLoughlin requested Lainez and Payam to open his
safety deposit box. He noticed that in the envelope containing
Fifteen Thousand US Dollars (US$15,000.00), Two Thousand US Dollars
(US$2,000.00) were missing and in the envelope previously
containing Ten Thousand Australian Dollars (AUS$10,000.00), Four
Thousand Five Hundred Australian Dollars (AUS$4,500.00) were
missing.[10]
When McLoughlin discovered the loss, he immediately confronted
Lainez and Payam who admitted that Tan opened the safety deposit
box with the key assigned to him.[11] McLoughlin went up to his
room where Tan was staying and confronted her. Tan admitted that
she had stolen McLoughlins key and was able to open the safety
deposit box with the assistance of Lopez, Payam and Lainez.[12]
Lopez also told McLoughlin that Tan stole the key assigned to
McLoughlin while the latter was asleep.[13]
McLoughlin requested the management for an investigation of the
incident. Lopez got in touch with Tan and arranged for a meeting
with the police and McLoughlin. When the police did not arrive,
Lopez and Tan went to the room of McLoughlin at Tropicana and
thereat, Lopez wrote on a piece of paper a promissory note dated 21
April 1988. The promissory note reads as follows:
I promise to pay Mr. Maurice McLoughlin the amount of
AUS$4,000.00 and US$2,000.00 or its equivalent in Philippine
currency on or before May 5, 1988.[14]
Lopez requested Tan to sign the promissory note which the latter
did and Lopez also signed as a witness. Despite the execution of
promissory note by Tan, McLoughlin insisted that it must be the
hotel who must assume responsibility for the loss he suffered.
However, Lopez refused to accept the responsibility relying on the
conditions for renting the safety deposit box entitled Undertaking
For the Use Of Safety Deposit Box,[15] specifically paragraphs (2)
and (4) thereof, to wit:
2. To release and hold free and blameless TROPICANA APARTMENT
HOTEL from any liability arising from any loss in the contents
and/or use of the said deposit box for any cause whatsoever,
including but not limited to the presentation or use thereof by any
other person should the key be lost;
. . .
4. To return the key and execute the RELEASE in favor of
TROPICANA APARTMENT HOTEL upon giving up the use of the
box.[16]
On 17 May 1988, McLoughlin went back to Australia and he
consulted his lawyers as to the validity of the abovementioned
stipulations. They opined that the stipulations are void for being
violative of universal hotel practices and customs. His lawyers
prepared a letter dated 30 May 1988 which was signed by McLoughlin
and sent to President Corazon Aquino.[17] The Office of the
President referred the letter to the Department of Justice (DOJ)
which forwarded the same to the Western Police District
(WPD).[18]
After receiving a copy of the indorsement in Australia,
McLoughlin came to the Philippines and registered again as a hotel
guest of Tropicana. McLoughlin went to Malaca?ang to follow up on
his letter but he was instructed to go to the DOJ. The DOJ directed
him to proceed to the WPD for documentation. But McLoughlin went
back to Australia as he had an urgent business matter to attend
to.
For several times, McLoughlin left for Australia to attend to
his business and came back to the Philippines to follow up on his
letter to the President but he failed to obtain any concrete
assistance.[19]
McLoughlin left again for Australia and upon his return to the
Philippines on 25 August 1989 to pursue his claims against
petitioners, the WPD conducted an investigation which resulted in
the preparation of an affidavit which was forwarded to the Manila
City Fiscals Office. Said affidavit became the basis of preliminary
investigation. However, McLoughlin left again for Australia without
receiving the