THE ROMAN CATHOLIC BISHOP OF JARO vs.

GREGORIO DE LA PEA
FACTS : 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.
ISSUE : Whether or not Father de la Pea is liable for
the loss of the money under his trust?
RULINGS : 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.
Father De la 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 exception of the
cases expressly mentioned in the law or 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 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.
CA AGRO-INDUSTRIAL DEVELOPMENT
HONORABLE COURT OF APPEALS

CORP.

vs. THE

FACTS : 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?
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.
P75,725.00 was paid as downpayment while the balance was
covered by three (3) postdated checks and based on the
agreement 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 stating that the nank is not depositary of the
contents of the safe neither the possession nor control of the same
and assumes absolutely no liability in connection therewith.
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. Hence, the latter filed on 1 September
1980 a complaint 2 for damages against the respondent Bank with
the Court of First Instance. In its answer with counterclaim,
respondent bank alleges that the petitioner has no cause of action
because of the provisions stated in the contract of lease.

The trial court rendered a decision adverse to the petitioner. 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.
ISSUE : 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?
RULINGS : We observe, however, that the deposit theory itself
does not altogether find unanimous support even in American
jurisprudence. We agree with the petitioner that under the latter,
the prevailing rule is that the relation between a bank renting out
safe-deposit boxes and its customer with respect to the contents of
the box is that of a bail or and bailee, the bailment being for hire
and mutual benefit. 21 This is just the prevailing view because:
There is, however, some support for the view that the
relationship in question might be more properly
characterized as that of landlord and tenant, or lessor and
lessee. It has also been suggested that it should be
characterized as that of licensor and licensee. The relation
between a bank, safe-deposit company, or storage
company, and the renter of a safe-deposit box therein, is
often described as contractual, express or implied, oral or
written, in whole or in part. But there is apparently no
jurisdiction in which any rule other than that applicable to
bailments governs questions of the liability and rights of the
parties in respect of loss of the contents of safe-deposit
boxes. 22 (citations omitted)
It is not correct to assert that the Bank has neither the possession
nor control of the contents of the box since in fact, the safety
deposit box itself is located in its premises and is under its
absolute control; moreover, the respondent Bank keeps the guard
key to the said box. As stated earlier, renters cannot open their
respective boxes unless the Bank cooperates by presenting and
using this guard key. Clearly then, to the extent above stated, the
foregoing conditions in the contract in question are void and
ineffective. It has been said:
With respect to property deposited in a safe-deposit box
by a customer of a safe-deposit company, the parties,
since the relation is a contractual one, may by special
contract define their respective duties or provide for
increasing or limiting the liability of the deposit company,
provided such contract is not in violation of law or public
policy. It must clearly appear that there actually was such
a special contract, however, in order to vary the ordinary
obligations implied by law from the relationship of the
parties; liability of the deposit company will not be
enlarged or restricted by words of doubtful meaning. The
company, in renting safe-deposit boxes, cannot exempt
itself from liability for loss of the contents by its own fraud
or negligence or that of its agents or servants, and if a
provision of the contract may be construed as an attempt
to do so, it will be held ineffective for the purpose.
Although it has been held that the lessor of a safe-deposit
box cannot limit its liability for loss of the contents thereof
through its own negligence, the view has been taken that
such a lessor may limits its liability to some extent by
agreement or stipulation. 30 (citations omitted)
Thus, we reach the same conclusion which the Court of Appeals
arrived at, that is, that the petition should be dismissed, but on

grounds quite different from those relied upon by the Court of

Appeals. In the instant case, the respondent Bank's exoneration
cannot, contrary to the holding of the Court of Appeals, be based
on or proceed from a characterization of the impugned contract as
a contract of lease, but rather on the fact that no competent proof
was presented to show that respondent Bank was aware of the
agreement between the petitioner and the Pugaos to the effect
that the certificates of title were withdrawable from the safety
deposit box only upon both parties' joint signatures, and that no
evidence was submitted to reveal that the loss of the certificates of
title was due to the fraud or negligence of the respondent Bank.
This in turn flows from this Court's determination that the contract
involved was one of deposit. Since both the petitioner and the
Pugaos agreed that each should have one (1) renter's key, it was
obvious that either of them could ask the Bank for access to the
safety deposit box and, with the use of such key and the Bank's
own guard key, could open the said box, without the other renter
being present.
ANGEL JAVELLANA vs. JOSE LIM, ET AL.
FACTS : The attorney for the plaintiff, Angel Javellana, file a
complaint on the 30th of October, 1906, with the Court of First
Instance of Iloilo, praying that the defendants, Jose Lim and
Ceferino Domingo Lim, he sentenced to jointly and severally pay
the sum of P2,686.58, with interest thereon at the rate of 15 per
cent per annum from the 20th of January, 1898, until full payment
should be made, deducting from the amount of interest due the
sum of P1,102.16, and to pay the costs of the proceedings.
Authority from the court having been previously obtained, the
complaint was amended on the 10th of January, 1907; it was then
alleged, on the 26th of May, 1897, the defendants executed and
subscribed a document in favor of the plaintiff reading as follows:
We have received from Angel Javellana, as a deposit without
interest, the sum of two thousand six hundred and eighty-six cents
of pesos fuertes, which we will return to the said gentleman, jointly
and severally, on the 20th of January, 1898. - Jaro, 26th of May,
1897. - Signed Jose Lim. - Signed: Ceferino Domingo Lim.
That, when the obligation became due, the defendants begged the
plaintiff for an extension of time for the payment thereof, building
themselves to pay interest at the rate of 15 per cent on the amount
of their indebtedness, to which the plaintiff acceded; that on the
15th of May, 1902, the debtors paid on account of interest due the
sum of P1,000 pesos, with the exception of either capital or
interest, had thereby been subjected to loss and damages.
A demurrer to the original complaint was overruled, and on the 4th
of January, 1907, the defendants answered the original complaint
before its amendment, setting forth that they acknowledged the
facts stated in Nos. 1 and 2 of the complaint; that they admitted
the statements of the plaintiff relative to the payment of 1,102.16
pesos made on the 15th of November, 1902, not, however, as
payment of interest on the amount stated in the foregoing
document, but on account of the principal, and denied that there
had been any agreement as to an extension of the time for
payment and the payment of interest at the rate of 15 per cent per
annum as alleged in paragraph 3 of the complaint, and also denied
all the other statements contained therein.
As a counterclaim, the defendants alleged that they had paid to
the plaintiff sums which, together with the P1,102.16
acknowledged in the complaint, aggregated the total sum of
P5,602.16, and that, deducting therefrom the total sum of
P2,686.58 stated in the document transcribed in the complaint, the

plaintiff still owed the defendants P2,915.58; therefore, they asked

that judgment be entered absolving them, and sentencing the
plaintiff to pay them the sum of P2,915.58 with the costs.
Evidence was adduced by both parties and, upon their exhibits,
together with an account book having been made of record, the
court below rendered judgment on the 15th of January, 1907, in
favor of the plaintiff for the recovery of the sum of P5,714.44 and
costs.
The defendants excepted to the above decision and moved for a
new trial. This motion was overruled and was also excepted to by
them; the bill of exceptions presented by the appellants having
been approved, the same was in due course submitted to this
court.
The document of indebtedness inserted in the complaint states
that the plaintiff left on deposit with the defendants a given sum of
money which they were jointly and severally obliged to return on a
certain date fixed in the document; but that, nevertheless, when
the document appearing as Exhibits 2, written in the Visayan
dialect and followed by a translation into Spanish was executed, it
was acknowledged, at the date thereof, the 15th of November,
1902, that the amount deposited had not yet been returned to the
creditor, whereby he was subjected to losses and damages
amounting to 830 pesos since the 20th of January, 1898, when the
return was again stipulated with the further agreement that the
amount deposited should bear interest at the rate of 15 per cent
per annum, from the aforesaid date of January 20, and that the
1,000 pesos paid to the depositor on the 15th of May, 1900,
according to the receipt issued by him to the debtors, would be
included, and that the said rate of interest would obtain until the
debtors on the 20th of May, 1897, it is called a deposit consisted,
and they could have accomplished the return agreed upon by the
delivery of a sum equal to the one received by them. For this
reason it must be understood that the debtors were lawfully
authorized to make use of the amount deposited, which they have
done, as subsequent shown when asking for an extension of the
time for the return thereof, inasmuch as, acknowledging that they
have subjected the letter, their creditor, to losses and damages for
not complying with what had been stipulated, and being conscious
that they had used, for their own profit and gain, the money that
they received apparently as a deposit, they engaged to pay
interest to the creditor from the date named until the time when the
refund should be made. Such conduct on the part of the debtors is
unquestionable evidence that the transaction entered into between
the interested parties was not a deposit, but a real contract of loan.
Article 1767 of the Civil Code provides that The depository can not make use of the thing deposited
without the express permission of the depositor.
Otherwise he shall be liable for losses and damages.
Article 1768 also provides that When the depository has permission to make use of the
thing deposited, the contract loses the character of a
deposit and becomes a loan or bailment.
The permission shall not be presumed, and its existence
must be proven.
When on one of the latter days of January, 1898, Jose Lim went to
the office of the creditor asking for an extension of one year, in

view of the fact the money was scare, and because neither himself
nor the other defendant were able to return the amount deposited,
for which reason he agreed to pay interest at the rate of 15 per
cent per annum, it was because, as a matter of fact, he did not
have in his possession the amount deposited, he having made use
of the same in his business and for his own profit; and the creditor,
by granting them the extension, evidently confirmed the express
permission previously given to use and dispose of the amount
stated as having bee deposited, which, in accordance with the
loan, to all intents and purposes gratuitously, until the 20th of
January, 1898, and from that dated with interest at 15 per cent per
annum until its full payment, deducting from the total amount of
interest the sum of 1,000 pesos, in accordance with the provisions
of article 1173 of the Civil Code.
Notwithstanding that it does not appear that Jose Lim signed the
document (Exhibit 2) executed in the presence of three witnesses
on the 15th of November, 1902, by Ceferino Domingo Lim on
behalf of himself and the former, nevertheless, the said document
has not been contested as false, either by a criminal or by a civil
proceeding, nor has any doubt been cast upon the authenticity of
the signatures of the witnesses who attested the execution of the
same; and from the evidence in the case one is sufficiently
convinced that the said Jose Lim was perfectly aware of and
authorized his joint codebtor to liquidate the interest, to pay the
sum of 1,000 pesos, on account thereof, and to execute the
aforesaid document No. 2. A true ratification of the original
document of deposit was thus made, and not the least proof is
shown in the record that Jose Lim had ever paid the whole or any
part of the capital stated in the original document, Exhibit 1.
If the amount, together with interest claimed in the complaint, less
1,000 pesos appears as fully established, such is not the case with
the defendant's counterclaim for P5,602.16, because the existence
and certainty of said indebtedness imputed to the plaintiff has not
been proven, and the defendants, who call themselves creditors
for the said amount have not proven in a satisfactory manner that
the plaintiff had received partial payments on account of the same;
the latter alleges with good reason, that they should produce the
receipts which he may have issued, and which he did issue
whenever they paid him any money on account. The plaintiffs
allegation that the two amounts of 400 and 1,200 pesos, referred
to in documents marked "C" and "D" offered in evidence by the
defendants, had been received from Ceferino Domingo Lim on
account of other debts of his, has not been contradicted, and the
fact that in the original complaint the sum of 1,102.16 pesos, was
expressed in lieu of 1,000 pesos, the only payment made on
account of interest on the amount deposited according to
documents No. 2 and letter "B" above referred to, was due to a
mistake.
Moreover, for the reason above set forth it may, as a matter of
course, be inferred that there was no renewal of the contract
deposited converted into a loan, because, as has already been
stated, the defendants received said amount by virtue of real loan
contract under the name of a deposit, since the so-called bailees
were forthwith authorized to dispose of the amount deposited. This
they have done, as has been clearly shown.
The original joint obligation contracted by the defendant debtor still
exists, and it has not been shown or proven in the proceedings
that the creditor had released Joe Lim from complying with his
obligation in order that he should not be sued for or sentenced to
pay the amount of capital and interest together with his codebtor,
Ceferino Domingo Lim, because the record offers satisfactory
evidence against the pretension of Jose Lim, and it further appears
that document No. 2 was executed by the other debtor, Ceferino
Domingo Lim, for himself and on behalf of Jose Lim; and it has

also been proven that Jose Lim, being fully aware that his debt
had not yet been settled, took steps to secure an extension of the
time for payment, and consented to pay interest in return for the
concession requested from the creditor.
In view of the foregoing, and adopting the findings in the judgment
appealed from, it is our opinion that the same should be and is
hereby affirmed with the costs of this instance against the
appellant, provided that the interest agreed upon shall be paid until
the complete liquidation of the debt. So ordered.
Arellano, C.J., Carson, Willard and Tracey, JJ., concur.

in force. The date of the document is January 31, 1859. The proof
of payment in support of the defense we consider likewise
sufficient to establish such defense. The document dated January
8, 1869, executed by Don Felix Garcia Gavieres, husband and
legal representative of Doa Ignacia Gorricho, acknowledges the
receipt of 1,224 pesos from Don Manuel Darvin, representative of
the deceased Don Felix Pardo de Tavera. This sum is declared in
said document to be the balance due upon the debt of 2,000
pesos. This was slightly more or less the amount which remained
as due upon the original obligation after deducting the payment
which are admitted to have been made. In the absence of
evidence disclosing that there were other claims in favor of
Gavieres it is reasonably to be supposed that this payment was
made to satisfy the balance due upon the original obligation.

MANUEL GARCIA GAVIERES vs. T.H. PARDO DE TAVERA

The present appeal has been interposed in the declarative action
of greater import filed in the Court of First Instance of Tondo,
commenced on January 10, 1900, by Don Manuel Garcia
Gavieres as plaintiff and successor in interest of the deceased
Doa Ignacia de Gorricho against Don Trinidad H. Pardo de
Tavera as universal heir of the deceased Don Felix Pardo de
Tavera for the collection of a balance of 1,423 pesos 75 cents,
remaining due on an original obligation of 3,000 pesos which, as
the plaintiff alleges, was the amount of a deposit delivered by
Doa Ignacia Gorricho, deceased, to Don Felix Pardo de Tavera,
deceased, on the 31st day of October, 1859. The agreement
between the parties appears in the following writing:

Received of Seorita Ignacia de Gorricho the sum of 3,000

pesos, gold (3,000 pesos), as a deposit payable on two
months' notice in advance, with interest at 6 per cent per
annum with an hypothecation of the goods now owned by me
or which may be owned hereafter, as security of the payment.
In witness whereof I sign in Binondo, January 31, 1859.
FELIX PARDO DE TAVERA.

The defendant answering complaint of plaintiff alleges among

other things as a defense, that the document upon which the
complaint is based was not a contract of deposit as alleged in the
complaint, but a contract of loan, and setting forth furthermore the
payment of the original obligation as well as the prescription of the
action. The defendant contends that the document upon which the
action is based is not evidence of a deposit, as the plaintiff
maintains, but of a contract of loan, and that the prescription
applicable to loans has extinguished the right of action. Although in
the document in question a deposit is spoken of, nevertheless
from an examination of the entire document it clearly appears that
the contract was a loan and that such was the intention of the
parties. It is unnecessary to recur to the canons of interpretation to
arrive at this conclusion. The obligation of the depositary to pay
interest at the rate of 6 per cent to the depositor suffices to cause
the obligation to be considered as a loan and makes it likewise
evident that it was the intention of the parties that the depositary
should have the right to make use of the amount deposited, since
it was stimulated that the amount could be collected after notice of
two months in advance. Such being the case, the contract lost the
character of a deposit and acquired that of a loan. (Art. 1768, Civil
Code.)
All personal actions, such as those which arise from a contract of
loan, cease to have legal effect after twenty years according to the
former law and after fifteen years according to the Civil Code now

The original contract between the parties was celebrated nearly a

half century ago; the contracting parties have ceased to exist long
since; it may be that there exists or may have existed documents
proving a total payment between the parties and that this
document has some time ago suffered the common fate of
perishable things. He who by laches in the exercise of his rights
has caused a failure of proof has no right to complain if the court
does not apply the strict rules of evidence which are applicable in
ordinary cases, and admits to a certain extent the presumption to
which the conduct of the interest party himself naturally gives rise.
It is our opinion that the judgment of the Court of First Instance
should be affirmed, and it is so ordered, with costs of appeal taxed
against the appellant.
Arellano, C.J., Torres, Willard, and Mapa, JJ., concur.
VICENTE DELGADO vs. PEDRO BONNEVIE
When Pedro Bonnevie and Francisco Arandez formed in Nueva
Caceres, Ambos Camarines, a regular general partnership for
engaging in the business of threshing paddy, Vicente Delgado
undertook to deliver to them paddy for this purpose to be cleaned
and returned to him as rice, with the agreement of payment them
10 centimos for each cavan and to have returned in the rice onehalf the amount received as paddy. The paddy received for this
purpose was credited by receipts made out in this way: "Receipt
for (number) cavanes of paddy in favor of (owner of the paddy),
Nueva Caceres, (day) of (month), 1898." And they issued to
Vicente Delgado receipts Nos. 86-99 for a total of
2,003 cavanes and a half of paddy, from April 9 to June 8, 1898.
On February 6, 1909, Vicente Delgado appeared in the Court of
First Instance of Ambos Camarines with said receipts, demanding
return of the said 2,003 and a half cavanes of paddy, or in the
absence thereof, of the price of said article at the rate of 3 pesos
the cavan of 6,009 pesos and 50 centimos, with the interest
thereon at 6 percent a year reckoning from, November 21, 1905,
until complete payment, and the costs. The plaintiff asked that the
interest run from November 21, 1905, because on that date his
counsel demanded of the defendants, Bonnevie and Arandez, their
partnership having been dissolved, that they settle the accounts in
this matter.
The court decided the case by sentencing the defendant, Pedro
Bonnevie and Francisco Arandez, to pay to Vicente Delgado two
thousand
seven
hundred
and
fifty-four
pesos
and
81 centimos (2,754.81), the value of 2,003 cavanes of paddy at
the rate of 11 reales the cavan and 6 percent interest on said sum
reckoned from November 21, 1905, and the costs.

On appeal to this Supreme Court, the only grounds of error

assigned are: (1) Violation of articles 532 and 950 of the Code of
Commerce; (2) violation of articles 309 of the Code of Commerce
and 1955 and 1962 of the Civil Code; and (3) violation of section
296 of the Code of Civil Procedure.
With reference to the first assignment of error it is alleged that the
receipts in question, the form whereof has been set forth, were all
issued before July 11, 1898, and being credit paper as defined in
paragraph 2 of article 532 of the Code of Commerce, the right of
action arising therefrom prescribed before July 11, 1901, in
accordance with article 950 of the Code of Commerce.
This conclusion is not admissible. It is true that, according to the
article 950 of the Code of Commerce, actions arising from bills of
exchange, drafts, notes, checks, securities, dividends, coupons,
and the amounts of the amortization of obligations issued in
accordance with said code, shall extinguish three years after they
have fallen due; but it is also true that as the receipts in question
are not documents of any kinds enumerated in said article, the
actions arising therefrom do not extinguish three years from their
date (that, after all, they do not fall due). It is true that paragraph 2
of article 950 also mentions, besides those already stated, "other
instruments of draft or exchange;" but it is also true that the
receipts in this case are not documents of draft or exchange, they
are not drafts payable to order, but they are, as the appellants
acknowledge, simple promises to pay, or rather mere documents
evidencing the receipt of some cavanes of paddy for the purpose
already stated, which is nothing more than purely for industrial,
and not for mercantile exchange. They are documents such as
would be issued by the thousand so-called rice-mills scattered
throughout the Islands, wherein a few poor women of the people in
like manner clean the paddy by pounding it with a pestle and
return hulled rice. The contract whereby one person receives from
another a quantity of unhulled rice to return it hulled, for a fixed
compensation or renumeration, is an industrial, not a commercial
act; it is, as the appellant say, a hire of services without mercantile
character, for there is nothing about the operation of washing
clothes. Articles 532 and 950 of the Code of Commerce have not,
therefore, been violated, for they are not applicable to the case at
bar.
Neither are articles 309 of the Code of Commerce and 1955 and
1962 of the Civil Code applicable. The first of these articles reads
thus:
Whenever, with the consent of the depositor, the
depositary disposes of the articles on deposit either for
himself or for his business, or for transactions intrusted to
him by the former, the rights and obligations of the
depositary and of the depositor shall cease, and the rules
and provisions applicable to the commercial loans,
commission, or contract which took place of the deposit
shall be observed.
The appellants say that, in accordance with this legal provision,
the puddy received on deposit ceased to continue under such
character in order to remain in their possession under the contract
of hire of services, in virtue whereof they could change it by
returning rice instead of paddy and a half less than the quantity
received. They further say that the ownership of personal property,
according to article 1955 of the Civil Code, prescribes by
uninterrupted possession for six years, without necessity of any
other condition, and in accordance with article 1962 of the same
Code real actions, with regard to personal property, prescribe after
the lapse of six years from the loss of possession.

Two questions are presented in these allegations: One regarding

the nature of the obligation contracted by the appellants; and the
other regarding prescription, not for a period of three years, but of
six years.
With reference to the first, it is acknowledged that the obligation of
the appellants arose primarily out of the contract of deposit, but
this deposit was later converted into a contract of hire of services,
and this is true. But it is also true that, after the object of the hire of
services had been fulfilled, the rice in every way remained as a
deposit in the possession of the appellants for them to return to the
depositor at any time they might be required to do so, and nothing
has relieved them of this obligation; neither the dissolution of the
partnership that united them, nor the revolutionary movement of a
political character that seems to have occurred in 1898, nor the
fact that they may at some time have lost possession of the rice.
With reference to the second question, or under title of deposit or
hire of services, the possession of the appellants can in no way
amount to prescription, for the thing received on deposit or for hire
of services could not prescribe, since for every prescription of
ownership the possession must be in the capacity of an owner,
public, peaceful, and uninterrupted (Civil Code, 1941); and the
appellants could not possess the rice in the capacity of owners,
taking for granted that the depositor or lessor never could have
believed that he had transferred to them ownership of the thing
deposited or leased, but merely the care of the thing on deposit
and the use or profit thereof; which is expressed in legal terms by
saying that the possession of the depositary or of the lessee is not
adverse to that of the depositor or lessor, who continues to be the
owner of the thing which is merely held in trust by the depositary or
lessee.
In strict law, the deposit, when it is of fungible goods received by
weight, number or measurement, becomes a mutual loan, by
reason of the authorization which the depositary may have from
the depositor to make use of the goods deposited. (Civil Code,
1768, and Code of Commerce, 309.) .
But in the present case neither was there for authorization of the
depositor nor did the depositaries intend to make use of the rice
for their own consumption or profit; they were merely released
from the obligation of returning the same thing and contracted in
lieu thereof the obligation of delivering something similar to the half
of it, being bound by no fixed terms, the opposite of what happens
in a mutual loan, to make the delivery or return when and how it
might please the depositor.
In fact, it has happened that the depositaries have, with the
consent of the depositor, as provided in article 309 of the Code of
Commerce, disposed of the paddy "for transactions he intrusted to
them," and that in lieu of the deposit there has been a hire of
services, which is one entered into between the parties to the end
that one should return in rice half of the quantity of paddy delivered
by the other, with the obligation on the latter's part of paying
10centimos for each cavan of hulled rice. The consequence of this
is that the rules and regulations for contract of hire of services
must be applied to the case, one of which is that the thing must be
returned after the operation entrusted and payment of
compensation, and the other that the action for claiming the thing
leased, being personal, does not prescribe for fifteen years under
article
1964
of
the
Civil
Code.chanroblesvirtualawlibrary chanrobles virtual law library
If the action arising from the receipts in question does not
prescribe in three years, as does that from bills of exchange,
because they are not drafts payable to order or anything but

receipts that any warehouseman would sign; if the possession of

the paddy on the part of those who received it for threshing is not
in the capacity of owner but only in that of depositary or lessor of
services and under such character ownership thereof could not
prescribe in six years, or at any time, because adverse possession
and not mere holding in trust is required prescription; if the action
to recover the paddy so delivered is not real with regard to
personal property, possession whereof has been lost, but a
personal obligation arising from contract of lease for recovery of
possession that has not been lost but maintained in the lessee in
the name of the lessor; if prescription of any kind can in no way be
held, only because there could not have been either beginning or
end of a fixed period for the prescription, it is useless to talk of
interruption of the period for the prescription, to which tends the
third assignment of error, wherein it is said that the court violated
article 296 of the Code of Civil Procedure in admitting as proven
facts not alleged in the complaint, justas if by admitting them there
would have been a finding with regard to the computation of the
period for timely exercise of the action, taking into consideration
the legal interruptions of the running of the period of prescription.
The court has made no finding in the sense that this or that period
of time during which these or those facts occured must be counted
out, and therefore the action has not prescribed, because by
eliminating such period of time and comparing such and such date
the action has been brought in due time. Prescription of three or
six years cannot be presupposed in the terms alleged, but only of
fifteen years, which is what is proper to oppose to the exercise of a
right of action arising from hire of services and even of deposit or
mutual loan, whether common or mercantile; and such is the
prescription considered possible by the trial court, in conformity
with articles 943 of the Code of Commerce and 1964 of the Civil
Code.chanroblesvirtualawlibrary chanrobles virtual law library
The trial judge confined himself to sentencing the defendants to
payment of the price of the paddy, ignoring the thing itself, return
whereof ought to have been the subject of judgment in the first
place, because the thing itself appears to have been extinguished
and its price has taken its place. But the assigning of legal interest
from November 21, 1905, can have no other ground than the
demand made by plaintiff's counsel upon the defendants to settle
this matter. Legal interest on delinquent debts can only be owed
from the time the principal amount constitutes a clear and certain
debt, and in the present case the principal debt has only been
clear and certain since the date of the judgment of the lower court;
so the legal interest can be owed. only since then.
The judgment appealed from is affirmed, except that the legal
interest shall be understood to be owed from the date thereof; with
the costs of this instance against the appellants.
Torres, Mapa, Johnson and Carson, JJ., concur.
SILVESTRA BARON vs. PABLO DAVID
These two actions were instituted in the Court of First Instance of
the Province of Pampanga by the respective plaintiffs, Silvestra
Baron and Guillermo Baron, for the purpose of recovering from the
defendant, Pablo David, the value of palay alleged to have been
sold by the plaintiffs to the defendant in the year 1920. Owing to
the fact that the defendant is the same in both cases and that the
two cases depend in part upon the same facts, the cases were
heard together in the trial court and determined in a single opinion.
The same course will accordingly be followed here.
In the first case, i. e., that which Silvestra Baron is plaintiff, the
court gave judgment for her to recover of the defendant the sum of

P5,238.51, with costs. From this judgment both the plaintiff and the
defendant appealed.
In the second case, i. e., that in which Guillermo Baron, is plaintiff,
the court gave judgment for him to recover of the defendant the
sum of P5,734.60, with costs, from which judgment both the
plaintiff and the defendant also appealed. In the same case the
defendant interposed a counterclaim in which he asked credit for
the sum of P2,800 which he had advanced to the plaintiff
Guillermo Baron on various occasions. This credit was admitted by
the plaintiff and allowed by the trial court. But the defendant also
interposed a cross-action against Guillermo Baron in which the
defendant claimed compensation for damages alleged to have
Ben suffered by him by reason of the alleged malicious and false
statements made by the plaintiff against the defendant in suing out
an attachment against the defendant's property soon after the
institution of the action. In the same cross-action the defendant
also sought compensation for damages incident to the shutting
down of the defendant's rice mill for the period of one hundred
seventy days during which the above-mentioned attachment was
in force. The trial judge disallowed these claims for damages, and
from this feature of the decision the defendant appealed. We are
therefore confronted with five distinct appeals in this record.
Prior to January 17, 1921, the defendant Pablo David has been
engaged in running a rice mill in the municipality of Magalang, in
the Province of Pampanga, a mill which was well patronized by the
rice growers of the vicinity and almost constantly running. On the
date stated a fire occurred that destroyed the mill and its contents,
and it was some time before the mill could be rebuilt and put in
operation again. Silvestra Baron, the plaintiff in the first of the
actions before us, is an aunt of the defendant; while Guillermo
Baron, the plaintiff in the other action; is his uncle. In the months of
March, April, and May, 1920, Silvestra Baron placed a quantity of
palay in the defendant's mill; and this, in connection with some that
she took over from Guillermo Baron, amounted to 1,012 cavans
and 24 kilos. During approximately the same period Guillermo
Baron placed other 1,865 cavans and 43 kilos of palay in the mill.
No compensation has ever been received by Silvestra Baron upon
account of the palay delivered by Guillermo Baron, he has
received from the defendant advancements amounting to P2,800;
but apart from this he has not been compensated. Both the
plaintiffs claim that the palay which was delivered by them to the
defendant was sold to the defendant; while the defendant, on the
other hand, claims that the palay was deposited subject to future
withdrawal by the depositors or subject to some future sale which
was never effected. He therefore supposes himself to be relieved
from all responsibility by virtue of the fire of January 17, 1921,
already mentioned.
The plaintiff further say that their palay was delivered to the
defendant at his special request, coupled with a promise on his
part to pay for the same at the highest price per cavan at which
palay would sell during the year 1920; and they say that in August
of that year the defendant promised to pay them severally the
price of P8.40 per cavan, which was about the top of the market
for the season, provided they would wait for payment until
December. The trial judge found that no such promise had been
given; and the incredulity of the court upon this point seems to us
to be justified. A careful examination of the proof, however, leads
us to the conclusion that the plaintiffs did, some time in the early
part of August, 1920, make demand upon the defendant for a
settlement, which he evaded or postponed leaving the exact
amount due to the plaintiffs undetermined.
It should be stated that the palay in question was place by the
plaintiffs in the defendant's mill with the understanding that the
defendant was at liberty to convert it into rice and dispose of it at

his pleasure. The mill was actively running during the entire
season, and as palay was daily coming in from many customers
and as rice was being constantly shipped by the defendant to
Manila, or other rice markets, it was impossible to keep the
plaintiffs' palay segregated. In fact the defendant admits that the
plaintiffs' palay was mixed with that of others. In view of the nature
of the defendant's activities and the way in which the palay was
handled in the defendant's mill, it is quite certain that all of the
plaintiffs' palay, which was put in before June 1, 1920, been milled
and disposed of long prior to the fire of January 17, 1921.
Furthermore, the proof shows that when the fire occurred there
could not have been more than about 360 cavans of palay in the
mill, none of which by any reasonable probability could have been
any part of the palay delivered by the plaintiffs. Considering the
fact that the defendant had thus milled and doubtless sold the
plaintiffs' palay prior to the date of the fire, it result that he is bound
to account for its value, and his liability was not extinguished by
the occurence of the fire. In the briefs before us it seems to have
been assumed by the opposing attorneys that in order for the
plaintiffs to recover, it is necessary that they should be able to
establish that the plaintiffs' palay was delivered in the character of
a sale, and that if, on the contrary, the defendant should prove that
the delivery was made in the character of deposit, the defendant
should be absolved. But the case does not depend precisely upon
this explicit alternative; for even supposing that the palay may
have been delivered in the character of deposit, subject to future
sale or withdrawal at plaintiffs' election, nevertheless if it was
understood that the defendant might mill the palay and he has in
fact appropriated it to his own use, he is of course bound to
account for its value. Under article 1768 of the Civil Code, when
the depository has permission to make use of the thing deposited,
the contract loses the character of mere deposit and becomes a
loan or acommodatum; and of course by appropriating the thing,
the bailee becomes responsible for its value. In this connection we
wholly reject the defendant's pretense that the palay delivered by
the plaintiffs or any part of it was actually consumed in the fire of
January, 1921. Nor is the liability of the defendant in any wise
affected by the circumstance that, by a custom prevailing among
rice millers in this country, persons placing palay with them without
special agreement as to price are at liberty to withdraw it later,
proper allowance being made for storage and shrinkage, a thing
that is sometimes done, though rarely.
In view of what has been said it becomes necessary to discover
the price which the defendant should be required to pay for the
plaintiffs' palay. Upon this point the trial judge fixed upon P6.15 per
cavan; and although we are not exactly in agreement with him as
to the propriety of the method by which he arrived at this figure, we
are nevertheless of the opinion that, all things considered, the
result is approximately correct. It appears that the price of palay
during the months of April, May, and June, 1920, had been
excessively high in the Philippine Islands and even prior to that
period the Government of the Philippine Islands had been
attempting to hold the price in check by executive regulation. The
highest point was touched in this season was apparently about
P8.50 per cavan, but the market began to sag in May or June and
presently entered upon a precipitate decline. As we have already
stated, the plaintiffs made demand upon the defendant for
settlement in the early part of August; and, so far as we are able to
judge from the proof, the price of P6.15 per cavan, fixed by the trial
court, is about the price at which the defendant should be required
to settle as of that date. It was the date of the demand of the
plaintiffs for settlement that determined the price to be paid by the
defendant, and this is true whether the palay was delivered in the
character of sale with price undetermined or in the character of
deposit subject to use by the defendant. It results that the plaintiffs
are respectively entitle to recover the value of the palay which they
had placed with the defendant during the period referred to, with
interest from the date of the filing of their several complaints.

As already stated, the trial court found that at the time of the fire
there were about 360 cavans of palay in the mill and that this palay
was destroyed. His Honor assumed that this was part of the palay
delivered by the plaintiffs, and he held that the defendant should
be credited with said amount. His Honor therefore deducted from
the claims of the plaintiffs their respective proportionate shares of
this amount of palay. We are unable to see the propriety of this
feature of the decision. There were many customers of the
defendant's rice mill who had placed their palay with the defendant
under the same conditions as the plaintiffs, and nothing can be
more certain than that the palay which was burned did not belong
to the plaintiffs. That palay without a doubt had long been sold and
marketed. The assignments of error of each of the plaintiffsappellants in which this feature of the decision is attacked are
therefore well taken; and the appealed judgments must be
modified by eliminating the deductions which the trial court allowed
from the plaintiffs' claims.
The trial judge also allowed a deduction from the claim of the
plaintiff Guillermo Baron of 167 cavans of palay, as indicated in
Exhibit 12, 13, 14, and 16. This was also erroneous. These
exhibits relate to transactions that occurred nearly two years after
the transactions with which we are here concerned, and they were
offered in evidence merely to show the character of subsequent
transactions between the parties, it appearing that at the time said
exhibits came into existence the defendant had reconstructed his
mill and that business relations with Guillermo Baron had been
resumed. The transactions shown by these exhibits (which relate
to palay withdrawn by the plaintiff from the defendant's mill) were
not made the subject of controversy in either the complaint or the
cross-complaint of the defendant in the second case. They
therefore should not have been taken into account as a credit in
favor of the defendant. Said credit must therefore be likewise of
course be without prejudice to any proper adjustment of the rights
of the parties with respect to these subsequent transactions that
they have heretofore or may hereafter effect.
The preceding discussion disposes of all vital contentions relative
to the liability of the defendant upon the causes of action stated in
the complaints. We proceed therefore now to consider the
question of the liability of the plaintiff Guillermo Baron upon the
cross-complaint of Pablo David in case R. G. No. 26949. In this
cross-action the defendant seek, as the stated in the third
paragraph of this opinion, to recover damages for the wrongful
suing out of an attachment by the plaintiff and the levy of the same
upon the defendant's rice mill. It appears that about two and onehalf months after said action was begun, the plaintiff, Guillermo
Baron, asked for an attachment to be issued against the property
of the defendant; and to procure the issuance of said writ the
plaintiff made affidavit to the effect that the defendant was
disposing, or attempting the plaintiff. Upon this affidavit an
attachment was issued as prayed, and on March 27, 1924, it was
levied upon the defendant's rice mill, and other property, real and
personal.
Upon attaching the property the sheriff closed the mill and placed it
in the care of a deputy. Operations were not resumed until
September 13, 1924, when the attachment was dissolved by an
order of the court and the defendant was permitted to resume
control. At the time the attachment was levied there were, in the
bodega, more than 20,000 cavans of palay belonging to persons
who held receipts therefor; and in order to get this grain away from
the sheriff, twenty-four of the depositors found it necessary to
submit third-party claims to the sheriff. When these claims were
put in the sheriff notified the plaintiff that a bond in the amount of
P50,000 must be given, otherwise the grain would be released.
The plaintiff, being unable or unwilling to give this bond, the sheriff
surrendered the palay to the claimants; but the attachment on the

rice mill was maintained until September 13, as above stated,

covering a period of one hundred seventy days during which the
mill was idle. The ground upon which the attachment was based,
as set forth in the plaintiff's affidavit was that the defendant was
disposing or attempting to dispose of his property for the purpose
of defrauding the plaintiff. That this allegation was false is clearly
apparent, and not a word of proof has been submitted in support of
the assertion. On the contrary, the defendant testified that at the
time this attachment was secured he was solvent and could have
paid his indebtedness to the plaintiff if judgment had been
rendered against him in ordinary course. His financial conditions
was of course well known to the plaintiff, who is his uncle. The
defendant also states that he had not conveyed away any of his
property, nor had intended to do so, for the purpose of defrauding
the plaintiff. We have before us therefore a case of a baseless
attachment, recklessly sued out upon a false affidavit and levied
upon the defendant's property to his great and needless damage.
That the act of the plaintiff in suing out the writ was wholly
unjustifiable is perhaps also indicated in the circumstance that the
attachment was finally dissolved upon the motion of the plaintiff
himself.
The defendant testified that his mill was accustomed to clean from
400 to 450 cavans of palay per day, producing 225 cavans of rice
of 57 kilos each. The price charged for cleaning each cavan rice
was 30 centavos. The defendant also stated that the expense of
running the mill per day was from P18 to P25, and that the net
profit per day on the mill was more than P40. As the mill was not
accustomed to run on Sundays and holiday, we estimate that the
defendant lost the profit that would have been earned on not less
than one hundred forty work days. Figuring his profits at P40 per
day, which would appear to be a conservative estimate, the actual
net loss resulting from his failure to operate the mill during the time
stated could not have been less than P5,600. The reasonableness
of these figures is also indicated in the fact that the twenty-four
customers who intervened with third-party claims took out of
the camarin 20,000 cavans of palay, practically all of which, in the
ordinary course of events, would have been milled in this plant by
the defendant. And of course other grain would have found its way
to this mill if it had remained open during the one hundred forty
days when it was closed.
But this is not all. When the attachment was dissolved and the mill
again opened, the defendant found that his customers had
become scattered and could not be easily gotten back. So slow,
indeed, was his patronage in returning that during the remainder of
the year 1924 the defendant was able to mill scarcely more than
the grain belonging to himself and his brothers; and even after the
next season opened many of his old customers did not return.
Several of these individuals, testifying as witnesses in this case,
stated that, owing to the unpleasant experience which they had in
getting back their grain from the sheriff to the mill of the defendant,
though they had previously had much confidence in him.
As against the defendant's proof showing the facts above stated
the plaintiff submitted no evidence whatever. We are therefore
constrained to hold that the defendant was damaged by the
attachment to the extent of P5,600, in profits lost by the closure of
the mill, and to the extent of P1,400 for injury to the good-will of his
business, making a total of P7,000. For this amount the defendant
must recover judgment on his cross-complaint.
The trial court, in dismissing the defendant's cross-complaint for
damages resulting from the wrongful suing out of the attachment,
suggested that the closure of the rice mill was a mere act of the
sheriff for which the plaintiff was not responsible and that the
defendant might have been permitted by the sheriff to continue
running the mill if he had applied to the sheriff for permission to

operate it. This singular suggestion will not bear a moment's

criticism. It was of course the duty of the sheriff, in levying the
attachment, to take the attached property into his possession, and
the closure of the mill was a natural, and even necessary,
consequence of the attachment. For the damage thus inflicted
upon the defendant the plaintiff is undoubtedly responsible.
One feature of the cross-complaint consist in the claim of the
defendant (cross-complaint) for the sum of P20,000 as damages
caused to the defendant by the false and alleged malicious
statements contained in the affidavit upon which the attachment
was procured. The additional sum of P5,000 is also claimed as
exemplary damages. It is clear that with respect to these damages
the cross-action cannot be maintained, for the reason that the
affidavit in question was used in course of a legal proceeding for
the purpose of obtaining a legal remedy, and it is therefore
privileged. But though the affidavit is not actionable as a libelous
publication, this fact in no obstacle to the maintenance of an action
to recover the damage resulting from the levy of the attachment.
Before closing this opinion a word should be said upon the point
raised in the first assignment of error of Pablo David as defendant
in case R. G. No. 26949. In this connection it appears that the
deposition of Guillermo Baron was presented in court as evidence
and was admitted as an exhibit, without being actually read to the
court. It is supposed in the assignment of error now under
consideration that the deposition is not available as evidence to
the plaintiff because it was not actually read out in court. This
connection is not well founded. It is true that in section 364 of the
Code of Civil Procedure it is said that a deposition, once taken,
may be read by either party and will then be deemed the evidence
of the party reading it. The use of the word "read" in this section
finds its explanation of course in the American practice of trying
cases for the most part before juries. When a case is thus tried the
actual reading of the deposition is necessary in order that the
jurymen may become acquainted with its contents. But in courts of
equity, and in all courts where judges have the evidence before
them for perusal at their pleasure, it is not necessary that the
deposition should be actually read when presented as evidence.
From what has been said it result that judgment of the court below
must be modified with respect to the amounts recoverable by the
respective plaintiffs in the two actions R. G. Nos. 26948 and 26949
and must be reversed in respect to the disposition of the crosscomplaint interposed by the defendant in case R. G. No. 26949,
with the following result: In case R. G. No. 26948 the plaintiff
Silvestra Baron will recover of the Pablo David the sum of
P6,227.24, with interest from November 21, 1923, the date of the
filing of her complaint, and with costs. In case R. G. No. 26949 the
plaintiff Guillermo Baron will recover of the defendant Pablo David
the sum of P8,669.75, with interest from January 9, 1924. In the
same case the defendant Pablo David, as plaintiff in the crosscomplaint, will recover of Guillermo Baron the sum of P7,000,
without costs. So ordered.
Avancea, C.J., Johnson, Malcolm, Villamor, Romualdez and
Villa-Real, JJ., concur.