G.R. No.
L-7593            March 27, 1913 The rights and obligations of the depositary and of the depositor shall cease, and the rules and
THE UNITED STATES, plaintiff-appellee,
vs.
JOSE M. IGPUARA, defendant-appellant.
The defendant therein is charged with the crime of estafa, for having swindled Juana Montilla and Eugenio Veraguth out of
P2,498 Philippine currency, which he had take on deposit from the former to be at the latter's disposal. The document
setting forth the obligation reads:
We hold at the disposal of Eugenio Veraguth the sum of two thousand four hundred and ninety-eight pesos (P2,498), the
balance from Juana Montilla's sugar. — Iloilo, June 26, 1911, — Jose Igpuara, for Ramirez and Co.
The Court of First Instance of Iloilo sentenced the defendant.
The defendant appealed, alleging as errors: (1) Holding that the document executed by him was a
certificate of deposit; (2) holding the existence of a deposit, without precedent transfer or delivery of the
P2,498; and (3) classifying the facts in the case as the crime of estafa.
A deposit is constituted from the time a person receives a thing belonging to another with the obligation
of keeping and returning it. (Art. 1758, Civil Code.)
That the defendant received P2,498 is a fact proven. The defendant drew up a document declaring that
they remained in his possession, which he could not have said had he not received them. They remained
in his possession, surely in no other sense than to take care of them, for they remained has no other
purpose. They remained in the defendant's possession at the disposal of Veraguth; but on August 23 of
the same year Veraguth demanded for him through a notarial instrument restitution of them, and to date
he has not restored them.
The appellant says: "Juana Montilla's agent voluntarily accepted the sum of P2,498 in an instrument
payable on demand, and as no attempt was made to cash it until August 23, 1911, he could indorse and
negotiate it like any other commercial instrument. There is no doubt that if Veraguth accepted the receipt
for P2,498 it was because at that time he agreed with the defendant to consider the operation of sale on
commission closed, leaving the collection of said sum until later, which sum remained as a loan payable
upon presentation of the receipt." (Brief, 3 and 4.)
Then, after averring the true facts: (1) that a sales commission was precedent; (2) that this commission
was settled with a balance of P2,498 in favor of the principal, Juana Montilla; and (3) that this balance
remained in the possession of the defendant, who drew up an instrument payable on demand, he has
drawn two conclusions, both erroneous: One, that the instrument drawn up in the form of
a deposit certificate could be indorsed or negotiated like any other commercial instrument; and the other,
that the sum of P2,498 remained in defendant's possession as a loan.
It is erroneous to assert that the certificate of deposit in question is negotiable like any other commercial
instrument: First, because every commercial instrument is not negotiable; and second, because only
instruments payable to order are negotiable. Hence, this instrument not being to order but to bearer, it is
not negotiable.
It is also erroneous to assert that sum of money set forth in said certificate is, according to it, in the
defendant's possession as a loan. In a loan the lender transmits to the borrower the use of the thing lent,
while in a deposit the use of the thing is not transmitted, but merely possession for its custody or safe-
keeping.
In order that the depositary may use or dispose of the things deposited, the depositor's consent is
required, and then:
provisions applicable to commercial loans, commission, or contract which took the place of the deposit
shall be observed. (Art. 309, Code of Commerce.)
The defendant has shown no authorization whatsoever or the consent of the depositary for using or
disposing of the P2,498, which the certificate acknowledges, or any contract entered into with the
depositor to convert the deposit into a loan, commission, or other contract.
That demand was not made for restitution of the sum deposited, which could have been claimed on the
same or the next day after the certificate was signed, does not operate against the depositor, or signify
anything except the intention not to press it. Failure to claim at once or delay for sometime in demanding
restitution of the things deposited, which was immediately due, does not imply such permission to use
the thing deposited as would convert the deposit into a loan.
Article 408 of the Code of Commerce of 1829, previous to the one now in force, provided:
The depositary of an amount of money cannot use the amount, and if he makes use of it, he shall be
responsible for all damages that may accrue and shall respond to the depositor for the legal interest on
the amount.
Whereupon the commentators say:
In this case the deposit becomes in fact a loan, as a just punishment imposed upon him who abuses the sacred nature of
a deposit and as a means of preventing the desire of gain from leading him into speculations that may be disastrous to
the depositor, who is much better secured while the deposit exists when he only has a personal action for recovery.
According to article 548, No. 5, of the Penal Code, those who to the prejudice of another appropriate or abstract for their
own use money, goods, or other personal property which they may have received as a deposit, on commission, or for
administration, or for any other purpose which produces the obligation of delivering it or returning it, and deny having
received it, shall suffer the penalty of the preceding article," which punishes such act as the crime of estafa. The
corresponding article of the Penal Code of the Philippines in 535, No. 5.
In a decision of an appeal, September 28, 1895, the principle was laid down that: "Since he commits the
crime of estafa under article 548 of the Penal Code of Spain who to another's detriment appropriates to
himself or abstracts money or goods received on commission for delivery, the court rightly applied this
article to the appellant, who, to the manifest detriment of the owner or owners of the securities, since he
has not restored them, willfully and wrongfully disposed of them by appropriating them to himself or at
least diverting them from the purpose to which he was charged to devote them."
It is unquestionable that in no sense did the P2,498 which he willfully and wrongfully disposed of to the
detriments of his principal, Juana Montilla, and of the depositor, Eugenio Veraguth, belong to the
defendant.
Likewise erroneous is the construction apparently at tempted to be given to two decisions of this Supreme
Court (U. S. vs. Dominguez, 2 Phil. Rep., 580, and U. S. vs. Morales and Morco, 15 Phil. Rep., 236) as
implying that what constitutes estafa is not the disposal of money deposited, but denial of having
received same. In the first of said cases there was no evidence that the defendant had appropriated the
grain deposited in his possession.
On the contrary, it is entirely probable that, after the departure of the defendant from Libmanan on
September 20, 1898, two days after the uprising of the civil guard in Nueva Caceres, the rice was seized
by the revolutionalists and appropriated to their own uses.
In this connection it was held that failure to return the thing deposited was not sufficient, but that it was necessary to
prove that the depositary had appropriated it to himself or diverted the deposit to his own or another's benefit. He was
accused or refusing to restore, and it was held that the code does not penalize refusal to restore but denial of having
received. So much for the crime of omission; now with reference to the crime of commission, it was not held in that
decision that appropriation or diversion of the thing deposited would not constitute the crime of estafa.
In the second of said decisions, the accused "kept none of the proceeds of the sales. Those, such as they were, he turned
over to the owner;" and there being no proof of the appropriation, the agent could not be found guilty of the crime
of estafa.
G.R. No. L-32778             November 14, 1930
Involuntary insolvency of Mariano Velasco and Co., et al. COMPAÑIA AGRICOLA DE
ULTRAMAR, claimant-appellee,
vs.
VICENTE NEPOMUCENO, assignee-appellant.
It appears from the record that on March 17, 1927, the registered partnerships, Mariano Velasco & Co.,
Mariano Velasco, Sons, & Co., and Mariano Velasco & Co., Inc., were, on petition of the creditors,
declared insolvent by the Court of First Instance of Manila.
On the 16th day of April, 1927, the Compania Agricola de Ultramar filed a claim against one of the
insolvents Mariano Velasco & Co., claiming the sum of P10,000, with the agreed interest thereon at the
rate of 6 per cent per annum from April 5, 1918, until its full payment was a deposit with said Mariano
Velasco & Co. and asked the court to declare it a preferred claim.
The assignee of the insolvency answered the claim by interposing a general denial. The claim was
thereupon referred by the court to a Commissioner to receive the evidence, and on September 23, 1929,
the court rendered a decision declaring that the alleged deposit was a preferred claim for the sum
mentioned, with interest at 6 per cent per annum from April 5, 1918, until paid. From this decision the
assignee appealed.
The evidence presented by the claimant Compania Agricola de Ultramar consisted of a receipt in writing,
and the testimony of Jose Velasco who was manager of Mariano Velasco & Co. at the time the note was
executed. The receipt reads as follow (translation):
MANILA, P. I., April 5, 1918.
Received from the "Compania Agricola de Ultramar" the sum of ten thousand Philippine pesos as a deposit at the interest
of six per cent annually, for the term of three months from date.
In witness thereof, I sign the present.
MARIANO VELASCO & CO.
By (Sgd.) JOSE VELASCO
Manager.          deposited should bear interest at the rate of 15 per cent per annum from the aforesaid date of January
P10,000.00.
In his testimony, Jose Velasco stated that his signature on the receipt was authentic and that he received
the said sum of P10,000 from the appellee and deposited it with the bank in the current account of
Mariano Velasco & Co.
In our opinion the court below erred in finding that the claim of the appellee should be considered a
deposit and a preferred claim. In the case of Gavieres vs. De Tavera (1 Phil., 17), very similar to the
present case, this court held that the transaction therein involved was a loan and not a deposit. The facts
of the case were that in 1859 Ignacia de Gorricho delivered P3,000 to Felix Pardo de Tavera. The
agreement between them read as follows (translation):
Received of Señorita 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 percent per annum with a 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
After the death of both parties, Gavieres, as plaintiff and successor in interest of the deceased Ignacia de
Gorricho, brought the action against Trinidad H. Pardo de Tavera, the successor in interest of the
deceased Felix Pardo de Tavera, for the collection of the sum of P1,423.75, the remaining portion of the
3,000 pesos. The plaintiff Gavieres alleged that the money was delivered to Felix Pardo de Tavera as a
deposit, but the defendant insisted that the agreement above quoted was not a contract of deposit but
one of loan. This court said:
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 cannons of interpretation to arrive at this conclusion. The
obligation of the depository 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 depository should have the right to make use of the amount deposited, since it was
stipulated 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.)
In the case of Javellana vs. Lim (11 Phil., 141) this court, speaking through Justice Torres said:
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 fuertes, which we will return to the said
gentleman, jointly and severally on the 20th of January, 1898. — Jaro, 26th of May 1879. — 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.
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
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 in to between the interested parties was not a deposit, but a real
contract of loan.
Article 1767 of the Civil Code provides that —
"The depository cannot 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 not be presumed, and its existence must be proven."
G.R. No. 90027 March 3, 1993
Moreover, for the reasons above set forth it may, as a matter of course, be inferred that there was no
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner,
renewal of the contract of deposit converted into a loan, because, as has already been stated, the
vs.
defendants received said amount by virtue of a real loan contract under the name of a deposit, since the
THE HONORABLE COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY, respondents.
so-called bailees were forthwith authorized to dispose of the amount deposited. This they have done, as
has been clearly shown.lawphil.net
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
The two cases quoted are sufficient to show that the ten thousand pesos delivered by the appellee to
lessee?
Mariano Velasco & Co. cannot de regarded as a technical deposit. But the appellee argues that it is at
least an "irregular deposit." This argument is, we think, sufficiently answered in the case of Rogers vs.
This is the crux of the present controversy.
Smith, Bell & Co. (10 Phil., 319). There this court said:
On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the spouses Ramon and Paula
. . . Manresa, in his Commentaries on the Civil Code (vol. 11, p. 664), states that there are three points
Pugao entered into an agreement whereby the former purchased from the latter two (2) parcels of land
of difference between a loan and an irregular deposit. The first difference which he points out consists in
for a consideration of P350,625.00. Of this amount, P75,725.00 was paid as downpayment while the
the fact that in an irregular deposit the only benefit is that which accrues to the depositor, while in a
balance was covered by three (3) postdated checks. Among the terms and conditions of the agreement
loan the essential cause for the transaction is the necessity of the borrower. The contract in question
embodied in a Memorandum of True and Actual Agreement of Sale of Land were that the titles to the lots
does not fulfill this requirement of an irregular deposit. It is very apparent that it was not for the sole
shall be transferred to the petitioner upon full payment of the purchase price and that the owner's copies
benefit of Rogers. It, like any other loan of money, was for the benefit of both parties. The benefit which
of the certificates of titles thereto, Transfer Certificates of Title (TCT) Nos. 284655 and 292434, shall be
Smith, Bell & Co. received was the use of the money; the benefit which Rogers received was the interest
deposited in a safety deposit box of any bank. The same could be withdrawn only upon the joint
on his money. In the letter in which Smith, Bell & Co. on the 30th of June, 1888, notified the plaintiff of
signatures of a representative of the petitioner and the Pugaos upon full payment of the purchase price.
the reduction of the interest, they said: "We call your attention to this matter in order that you may if
Petitioner, through Sergio Aguirre, and the Pugaos then rented Safety Deposit Box No. 1448 of private
you think best employ your money in some other place."
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
Nor does the contract in question fulfill the third requisite indicated by Manresa, which is, that in an
alia, the following conditions:
irregular deposit, the depositor can demand the return of the article at any time, while a lender is bound
13. The bank is not a depositary of the contents of the safe and it has neither the possession nor control
by the provisions of the contract and cannot seek restitution until the time for payment, as provided in
of the same.
the contract, has arisen. It is apparent from the terms of this documents that the plaintiff could not
14. The bank has no interest whatsoever in said contents, except herein expressly provided, and it
demand his money at any time. He was bound to give notice of his desire for its return and then to wait
assumes absolutely no liability in connection therewith.1
for six months before he could insist upon payment.

In the present case the transaction in question was clearly not for the sole benefit of the Compania
Agricola de Ultramar; it was evidently for the benefit of both parties. Neither could the alleged depositor
demand payment until the expiration of the term of three months.
For the reasons stated, the appealed judgment is reversed, and we hold that the transaction in question
must be regarded as a loan, without preference. Without costs. So ordered.
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 decision5 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.
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 bail or is created between the parties to the transaction as to such securities
or other valuables; the fact that the safe-deposit company does not know, and that it is not expected
that it shall know, the character or description of the property which is deposited in such safe-deposit
box or safe does not change that relation. That access to the contents of the safe-deposit box can be
had only by the use of a key retained by the lessee ( whether it is the sole key or one to be used in
connection with one retained by the lessor) does not operate to alter the foregoing rule. The argument
that there is not, in such a case, a delivery of exclusive possession and control to the deposit company,
and that therefore the situation is entirely different from that of ordinary bailment, has been generally
rejected by the courts, usually on the ground that as possession must be either in the depositor or in
the company, it should reasonably be considered as in the latter rather than in the former, since the
company is, by the nature of the contract, given absolute control of access to the property, and the
depositor cannot gain access thereto without the consent and active participation of the company.
and a segment from Words and Phrases 18 which states that a contract for the rental of a bank safety
deposit box in consideration of a fixed amount at stated periods is a bailment for hire.
Petitioner further argues that conditions 13 and 14 of the questioned contract are contrary to law and
public policy and should be declared null and void. In support thereof, it cites Article 1306 of the Civil
Code which provides that parties to a contract may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good customs,
public order or public policy.
After the respondent Bank filed its comment, this Court gave due course to the petition and required the
parties to simultaneously submit their respective Memoranda.
The petition is partly meritorious.
We agree with the petitioner's contention that the contract for the rent of the safety deposit box is not an
ordinary contract of lease as defined in Article 1643 of the Civil Code. However, We do not fully subscribe
to its view that the same is a contract of deposit that is to be strictly governed by the provisions in the
Civil Code on deposit; 19 the contract in the case at bar is a special kind of deposit. It cannot be
characterized as an ordinary contract of lease under Article 1643 because the full and absolute possession
and control of the safety deposit box was not given to the joint renters — the petitioner and the Pugaos.
The guard key of the box remained with the respondent Bank; without this key, neither of the renters
could open the box. On the other hand, the respondent Bank could not likewise open the box without the
renter's key. In this case, the said key had a duplicate which was made so that both renters could have
access to the box.
Hence, the authorities cited by the respondent Court 20 on this point do not apply. Neither could Article
1975, also relied upon by the respondent Court, be invoked as an argument against the deposit theory.
Obviously, the first paragraph of such provision cannot apply to a depositary of certificates, bonds,
securities or instruments which earn interest if such documents are kept in a rented safety deposit box. It
is clear that the depositary cannot open the box without the renter being present.
We observe, however, that the deposit theory itself does not altogether find unanimous support even in
American jurisprudence. We agree with the petitioner that under the latter, the prevailing rule is that the
relation between a bank renting out safe-deposit boxes and its customer with respect to the contents of
the box is that of a bail or and bailee, the bailment being for hire and mutual benefit. 21 This is just the
prevailing view because:
There is, however, some support for the view that the relationship in question might be more properly
characterized as that of landlord and tenant, or lessor and lessee. It has also been suggested that it
should be characterized as that of licensor and licensee. The relation between a bank, safe-deposit
company, or storage company, and the renter of a safe-deposit box therein, is often described as
contractual, express or implied, oral or written, in whole or in part. But there is apparently no
jurisdiction in which any rule other than that applicable to bailments governs questions of the liability
and rights of the parties in respect of loss of the contents of safe-deposit boxes. 22 (citations omitted)
In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is clear
that in this jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of the
General Banking Act 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.
The banks shall perform the services permitted under subsections (a), (b) and (c) of this section
as depositories or as agents. . . . 24 (emphasis supplied)
Note that the primary function is still found within the parameters of a contract of deposit, i.e., the
receiving in custody of funds, documents and other valuable objects for safekeeping. The renting out of
the safety deposit boxes is not independent from, but related to or in conjunction with, this principal
function. A contract of deposit may be entered into orally or in writing 25 and, pursuant to Article 1306 of
the Civil Code, the parties thereto may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order or
public policy. The depositary's responsibility for the safekeeping of the objects deposited in the case at
bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary would be liable if, in
performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the
agreement. 26 In the absence of any stipulation prescribing the degree of diligence required, that of a
good father of a family is to be observed. 27 Hence, any stipulation exempting the depositary from any
liability arising from the loss of the thing deposited on account of fraud, negligence or delay would be void
for being contrary to law and public policy. In the instant case, petitioner maintains that conditions 13
and 14 of the questioned contract of lease of the safety deposit box, which read:
13. The bank is not a depositary of the contents of the safe and it has neither the possession nor control
of the same.
14. The bank has no interest whatsoever in said contents, except herein expressly provided, and it
assumes absolutely no liability in connection therewith. 28
are void as they are contrary to law and public policy. We find Ourselves in agreement with this
proposition for indeed, said provisions are inconsistent with the respondent Bank's responsibility as a
depositary under Section 72(a) of the General Banking Act. Both exempt the latter from any liability
except as contemplated in condition 8 thereof which limits its duty to exercise reasonable diligence only
with respect to who shall be admitted to any rented safe, to wit:
8. The Bank shall use due diligence that no unauthorized person shall be admitted to any rented safe
and beyond this, the Bank will not be responsible for the contents of any safe rented from it. 29
Furthermore, condition 13 stands on a wrong premise and is contrary to the actual practice of the Bank.
It is not correct to assert that the Bank has neither the possession nor control of the contents of the box
since in fact, the safety deposit box itself is located in its premises and is under its absolute control;
moreover, the respondent Bank keeps the guard key to the said box. As stated earlier, renters cannot
open their respective boxes unless the Bank cooperates by presenting and using this guard key. Clearly
then, to the extent above stated, the foregoing conditions in the contract in question are void and
ineffective. It has been said:
With respect to property deposited in a safe-deposit box by a customer of a safe-deposit company, the
parties, since the relation is a contractual one, may by special contract define their respective duties or
provide for increasing or limiting the liability of the deposit company, provided such contract is not in
violation of law or public policy. It must clearly appear that there actually was such a special contract,
however, in order to vary the ordinary obligations implied by law from the relationship of the parties;
liability of the deposit company will not be enlarged or restricted by words of doubtful meaning. The
company, in renting safe-deposit boxes, cannot exempt itself from liability for loss of the contents by
its own fraud or negligence or that of its agents or servants, and if a provision of the contract may be
construed as an attempt to do so, it will be held ineffective for the purpose. Although it has been held
that the lessor of a safe-deposit box cannot limit its liability for loss of the contents thereof through its
own negligence, the view has been taken that such a lessor may limits its liability to some extent by
agreement or stipulation. 30 (citations omitted)
Thus, we reach the same conclusion which the Court of Appeals arrived at, that is, that the petition
should be dismissed, but on grounds quite different from those relied upon by the Court of Appeals. In
the instant case, the respondent Bank's exoneration cannot, contrary to the holding of the Court of
Appeals, be based on or proceed from a characterization of the impugned contract as a contract of lease,
but rather on the fact that no competent proof was presented to show that respondent Bank was aware of
the agreement between the petitioner and the Pugaos to the effect that the certificates of title were
withdrawable from the safety deposit box only upon both parties' joint signatures, and that no evidence
was submitted to reveal that the loss of the certificates of title was due to the fraud or negligence of the
respondent Bank. This in turn flows from this Court's determination that the contract involved was one of
deposit. Since both the petitioner and the Pugaos agreed that each should have one (1) renter's key, it
was obvious that either of them could ask the Bank for access to the safety deposit box and, with the use
of such key and the Bank's own guard key, could open the said box, without the other renter being
present.
Since, however, the petitioner cannot be blamed for the filing of the complaint and no bad faith on its
part had been established, the trial court erred in condemning the petitioner to pay the respondent Bank
attorney's fees. To this extent, the Decision (dispositive portion) of public respondent Court of Appeals
must be modified.
WHEREFORE, the Petition for Review is partially GRANTED by deleting the award for attorney's fees from
the 4 July 1989 Decision of the respondent Court of Appeals in CA-G.R. CV No. 15150. As modified, and
subject to the pronouncement We made above on the nature of the relationship between the parties in a
contract of lease of safety deposit boxes, the dispositive portion of the said Decision is hereby AFFIRMED
and the instant Petition for Review is otherwise DENIED for lack of merit.

G.R. No. 102970 May 13, 1993
LUZAN SIA, petitioner,
vs.
COURT OF APPEALS and SECURITY BANK and TRUST COMPANY, respondents.
Civil Case No. 87-42601 is an action for damages arising out of the destruction or loss of the stamp collection of the
plaintiff (petitioner herein) contained in Safety Deposit Box No. 54 which had been rented from the defendant pursuant to a
contract denominated as a Lease Agreement. 3  In urging the public respondent to reverse the decision of the trial court, SBTC contended that the latter
The antecedent facts of the present controversy are summarized by the public respondent in its
challenged decision as follows:
The plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of the defendant bank at its
Binondo Branch located at the Fookien Times Building, Soler St., Binondo, Manila wherein he placed his
collection of stamps. The said safety deposit box leased by the plaintiff was at the bottom or at the
lowest level of the safety deposit boxes of the defendant bank at its aforesaid Binondo Branch.
During the floods that took place in 1985 and 1986, floodwater entered into the defendant bank's
premises, seeped into the safety deposit box leased by the plaintiff and caused, according to the
plaintiff, damage to his stamps collection. The defendant bank rejected the plaintiff's claim for
compensation for his damaged stamps collection, so, the plaintiff instituted an action for damages
against the defendant bank.
The defendant bank denied liability for the damaged stamps collection of the plaintiff on the basis of the
"Rules and Regulations Governing the Lease of Safe Deposit Boxes" (Exhs. "A-1", "1-A"), particularly
paragraphs 9 and 13, which reads (sic):
"9. The liability of the Bank by reason of the lease, is limited to the exercise of the diligence to prevent
the opening of the safe by any person other than the Renter, his authorized agent or legal
representative;
"13. The Bank is not a depository of the contents of the safe and it has neither the possession nor the
control of the same. The Bank has no interest whatsoever in said contents, except as herein provided,
and it assumes absolutely no liability in connection therewith."
The defendant bank also contended that its contract with the plaintiff over safety deposit box No. 54 was
one of lease and not of deposit and, therefore, governed by the lease agreement (Exhs. "A", "L") which
should be the applicable law; that the destruction of the plaintiff's stamps collection was due to a
calamity beyond obligation on its part to notify the plaintiff about the floodwaters that inundated its
premises at Binondo branch which allegedly seeped into the safety deposit box leased to the plaintiff.
The trial court then directed that an ocular inspection on (sic) the contents of the safety deposit box be
conducted, which was done on December 8, 1988 by its clerk of court in the presence of the parties and
their counsels. A report thereon was then submitted on December 12, 1988 (Records, p. 98-A) and
confirmed in open court by both parties thru counsel during the hearing on the same date (Ibid., p. 102)
stating:
"That the Safety Box Deposit No. 54 was opened by both plaintiff Luzan Sia and the Acting Branch
Manager Jimmy B. Ynion in the presence of the undersigned, plaintiff's and defendant's counsel. Said
Safety Box when opened contains two albums of different sizes and thickness, length and width and a
tin box with printed word 'Tai Ping Shiang Roast Pork in pieces with Chinese designs and character."
Condition of the above-stated Items —
"Both albums are wet, moldy and badly damaged.
1. The first album measures 10 1/8 inches in length, 8 inches in width and 3/4 in thick. The leaves of
the album are attached to every page and cannot be lifted without destroying it, hence the stamps
contained therein are no longer visible.
2. The second album measure 12 1/2 inches in length, 9 3/4 in width 1 inch thick. Some of its pages
can still be lifted. The stamps therein can still be distinguished but beyond restoration. Others have lost
its original form.
3. The tin box is rusty inside. It contains an album with several pieces of papers stuck up to the cover
of the box. The condition of the album is the second abovementioned album."5
The SECURITY BANK AND TRUST COMPANY, hereinafter referred to as SBTC, appealed the trial court's
decision to the public respondent Court of Appeals. The appeal was docketed as CA-G.R. CV No. 26737.
erred in (a) holding that the lease agreement is a contract of adhesion; (b) finding that the defendant had
failed to exercise the required diligence expected of a bank in maintaining the safety deposit box; (c)
awarding to the plaintiff actual damages in the amount of P20,000.00, moral damages in the amount of
P100,000.00 and attorney's fees and legal expenses in the amount of P5,000.00; and (d) dismissing the
counterclaim.
On 21 August 1991, the respondent promulgated its decision the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby REVERSED and instead the appellee's complaint is
hereby DISMISSED. The appellant bank's counterclaim is likewise DISMISSED. No costs.6
In reversing the trial court's decision and absolving SBTC from liability, the public respondent found and
ruled that:
a) the fine print in the "Lease Agreement " (Exhibits "A" and "1" ) constitutes the terms and conditions
of the contract of lease which the appellee (now petitioner) had voluntarily and knowingly executed with
SBTC;
b) the contract entered into by the parties regarding Safe Deposit Box No. 54 was not a contract of
deposit wherein the bank became a depositary of the subject stamp collection; hence, as contended by
SBTC, the provisions of Book IV, Title XII of the Civil Code on deposits do not apply;
c) The following provisions of the questioned lease agreement of the safety deposit box limiting SBTC's
liability:
9. The liability of the bank by reason of the lease, is limited to the exercise of the diligence to prevent
the opening of the Safe by any person other than the Renter, his authorized agent or legal
representative.
13. The bank is not a depository of the contents of the Safe and it has neither the possession nor the
control of the same. The Bank has no interest whatsoever in said contents, except as herein provided,
and it assumes absolutely no liability in connection therewith.
are valid since said stipulations are not contrary to law, morals, good customs, public order or public
policy; and
d) there is no concrete evidence to show that SBTC failed to exercise the required diligence in maintaining
the safety deposit box; what was proven was that the floods of 1985 and 1986, which were beyond the
control of SBTC, caused the damage to the stamp collection; said floods were fortuitous events which
SBTC should not be held liable for since it was not shown to have participated in the aggravation of the
damage to the stamp collection; on the contrary, it offered its services to secure the assistance of an
expert in order to save most of the stamps, but the appellee refused; appellee must then bear the lose
under the principle of "res perit domino."
Unsuccessful in his bid to have the above decision reconsidered by the public respondent, 7 petitioner filed
the instant petition wherein he contends that:
I. It was a grave error or an abuse of discretion on the part of the respondent court when it ruled that
respondent sbtc did not fail to exercise the required diligence in maintaining the safety deposit box of
the petitioner considering that substantial evidence exist (sic) proving the contrary.
II. The respondent court seriously erred in exculpating private respondent from any liability whatsoever
by reason of the provisions of paragraphs 9 and 13 of the agreement (exhs. "a" and "a-1").
III. The Respondent Court Seriously Erred In Not Upholding The Awards Of The Trial Court For Actual
And Moral Damages, Including Attorney's Fees And Legal Expenses, In Favor Of The Petitioner.8
We subsequently gave due course the petition and required both parties to submit their respective
memoranda, which they complied with.9
Petitioner insists that the trial court correctly ruled that SBTC had failed "to exercise the required
diligence expected of a bank maintaining such safety deposit box . . . in the light of the environmental
circumstance of said safety deposit box after the floods of 1985 and 1986." He argues that such a
conclusion is supported by the evidence on record, to wit: SBTC was fully cognizant of the exact location
of the safety deposit box in question; it knew that the premises were inundated by floodwaters in 1985
and 1986 and considering that the bank is guarded twenty-four (24) hours a day , it is safe to conclude
that it was also aware of the inundation of the premises where the safety deposit box was located;
despite such knowledge, however, it never bothered to inform the petitioner of the flooding or take any
appropriate measures to insure the safety and good maintenance of the safety deposit box in question.
SBTC does not squarely dispute these facts; rather, it relies on the rule that findings of facts of the Court
of Appeals, when supported by substantial exidence, are not reviewable on appeal by certiorari. 10
The foregoing rule is, of course, subject to certain exceptions such as when there exists a disparity
between the factual findings and conclusions of the Court of Appeals and the trial court. 11 Such a
disparity obtains in the present case.
As We see it, SBTC's theory, which was upheld by the public respondent, is that the "Lease Agreement "
covering Safe Deposit Box No. 54 (Exhibit "A and "1") is just that — a contract of lease — and not a
contract of deposit, and that paragraphs 9 and 13 thereof, which expressly limit the bank's liability as
follows:
9. The liability of the bank by reason of the lease, is limited to the exercise of the diligence to prevent
the opening of the Safe by any person other than the Renter, his autliorized agent or legal
representative;
13. The bank is not a depository of the contents of the Safe and it has neither the possession nor the
control of the same. The Bank has no interest whatsoever said contents, except as herein provided, and
it assumes absolutely no liability in connection therewith. 12
are valid and binding upon the parties. In the challenged decision, the public respondent further avers
that even without such a limitation of liability, SBTC should still be absolved from any responsibility for
the damage sustained by the petitioner as it appears that such damage was occasioned by a fortuitous
event and that the respondent bank was free from any participation in the aggravation of the injury.
We cannot accept this theory and ratiocination. Consequently, this Court finds the petition to be
impressed with merit.
In the recent case CA Agro-Industrial Development Corp. vs. Court of Appeals, 13 this Court explicitly
rejected the contention that a contract for the use of a safety deposit box is a contract of lease governed
by Title VII, Book IV of the Civil Code. Nor did We fully subscribe to the view that it is a contract of
deposit to be strictly governed by the Civil Code provision on deposit; 14 it is, as We declared, a special
kind of deposit. The prevailing rule in American jurisprudence — that the relation between a bank renting
out safe deposit boxes and its customer with respect to the contents of the box is that of a bailor and
bailee, the bailment for hire and mutual benefit 15 — has been adopted in this jurisdiction, thus:
In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is
clear that in this jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of the
General Banking Act [R.A. 337, as amended] pertinently provides:
"Sec. 72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions
other than building and loan associations may perform the following services:
(a) Receive in custody funds, documents, and valuable objects, and rent safety deposit boxes for the
safequarding of such effects.
The banks shall perform the services permitted under subsections (a), (b) and (c) of this section
as depositories or as agents. . . ."(emphasis supplied)
Note that the primary function is still found within the parameters of a contract of deposit,  i.e., the
receiving in custody of funds, documents and other valuable objects for safekeeping. The renting out of
the safety deposit boxes is not independent from, but related to or in conjunction with, this principal
function. A contract of deposit may be entered into orally or in writing (Art. 1969, Civil Code] and,
pursuant to Article 1306 of the Civil Code, the parties thereto may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. The depositary's responsibility for the safekeeping of the objects
deposited in the case at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary
would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or
contravention of the tenor of the agreement [Art. 1170, id.]. In the absence of any stipulation
prescribing the degree of diligence required, that of a good father of a family is to be observed [Art.
1173, id.]. Hence, any stipulation exempting the depositary from any liability arising from the loss of the
thing deposited on account of fraud, negligence or delay would be void for being contrary to law and
public policy. In the instant case, petitioner maintains that conditions 13 and l4 of the questioned
contract of lease of the safety deposit box, which read:
"13. The bank is a depositary of the contents of the safe and it has neither the possession nor control
of the same.
"14. The bank has no interest whatsoever in said contents, except as herein expressly provided, and it
assumes absolutely no liability in connection therewith."
are void as they are contrary to law and public policy. 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."
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 ."[10 AM JUR 2d., 466]. (citations omitted) 16
It must be noted that conditions No. 13 and No. 14 in the Contract of Lease of Safety Deposit Box in   CA
Agro-Industrial Development Corp. are strikingly similar to condition No. 13 in the instant case. On the
other hand, both condition No. 8 in CA Agro-Industrial Development Corp. and condition No. 9 in the
present case limit the scope of the exercise of due diligence by the banks involved to merely seeing to it
that only the renter, his authorized agent or his legal representative should open or have access to the
safety deposit box. In short, in all other situations, it would seem that SBTC is not bound to exercise
diligence of any kind at all. Assayed in the light of Our aforementioned pronouncements in  CA Agro-
lndustrial Development Corp., it is not at all difficult to conclude that both conditions No. 9 and No. 13 of
the "Lease Agreement" covering the safety deposit box in question (Exhibits "A" and "1") must be
stricken down for being contrary to law and public policy as they are meant to exempt SBTC from any
liability for damage, loss or destruction of the contents of the safety deposit box which may arise from its
own or its agents' fraud, negligence or delay. Accordingly, SBTC cannot take refuge under the said
conditions.
Public respondent further postulates that SBTC cannot be held responsible for the destruction or loss of
the stamp collection because the flooding was a fortuitous event and there was no showing of SBTC's
participation in the aggravation of the loss or injury. It states:
Article 1174 of the Civil Code provides:
"Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when
the nature of the obligation requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which, though foreseen, were inevitable.'
In its dissertation of the phrase "caso fortuito"  the Enciclopedia Jurisdicada Española  17 says: "In a legal
sense and, consequently, also in relation to contracts, a "caso fortuito" prevents (sic) 18 the following
essential characteristics: (1) the cause of the unforeseen ands unexpected occurrence, or of the failure
of the debtor to comply with his obligation, must be independent of the human will; (2) it must be
impossible to foresee the event which constitutes the "caso fortuito," or if it can be foreseen, it must be
impossible to avoid; (3) the occurrence must be such as to render it impossible for one debtor to fulfill
his obligation in a normal manner; and (4) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor." (cited in Servando vs. Phil., Steam Navigation
Co., supra). 19
Here, the unforeseen or unexpected inundating floods were independent of the will of the appellant bank
and the latter was not shown to have participated in aggravating damage (sic) to the stamps collection
of the appellee. In fact, the appellant bank offered its services to secure the assistance of an expert to
save most of the then good stamps but the appelle refused and let (sic) these recoverable stamps inside
the safety deposit box until they were ruined. 20
Both the law and authority cited are clear enough and require no further elucidation. Unfortunately,
however, the public respondent failed to consider that in the instant case, as correctly held by the trial
court, SBTC was guilty of negligence. The facts constituting negligence are enumerated in the petition
and have been summarized in this ponencia. SBTC's negligence  aggravated the injury or damage to the
stamp collection. SBTC was aware of the floods of 1985 and 1986; it also knew that the floodwaters
inundated the room where Safe Deposit Box No. 54 was located. In view thereof, it should have lost no
time in notifying the petitioner in order that the box could have been opened to retrieve the stamps, thus
saving the same from further deterioration and loss. In this respect, it failed to exercise the reasonable
care and prudence expected of a good father of a family, thereby becoming a party to the aggravation of
the injury or loss. Accordingly, the aforementioned fourth characteristic of a fortuitous event is absent
Article 1170 of the Civil Code, which reads:
Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof, are liable for damages,
thus comes to the succor of the petitioner. The destruction or loss of the stamp collection which was, in
the language of the trial court, the "product of 27 years of patience and diligence" 21 caused the petitioner
pecuniary loss; hence, he must be compensated therefor.
We cannot, however, place Our imprimatur on the trial court's award of moral damages. Since the
relationship between the petitioner and SBTC is based on a contract, either of them may be held liable for
moral damages for breach thereof only if said party had acted fraudulently or in bad faith. 22 There is here
no proof of fraud or bad faith on the part of SBTC.
WHEREFORE, the instant petition is hereby GRANTED. The challenged Decision and Resolution of the
public respondent Court of Appeals of 21 August 1991 and 21 November 1991, respectively, in CA-G.R.
CV No. 26737, are hereby SET ASIDE and the Decision of 19 February 1990 of Branch 47 of the Regional
Trial Court of Manila in Civil Case No. 87-42601 is hereby REINSTATED in full, except as to the award of
moral damages which is hereby set aside.
Costs against the private respondent.
[G.R. No. 160544.  February 21, 2005]
TRIPLE-V vs. FILIPINO MERCHANTS
On March 2, 1997, at around 2:15 o'clock in the afternoon, a certain Mary Jo-Anne De Asis (De Asis)
dined at petitioner's Kamayan Restaurant at 15 West Avenue, Quezon City. De Asis was using a
Mitsubishi Galant Super Saloon Model 1995 with plate number UBU 955, assigned to her by her employer
Crispa Textile Inc. (Crispa). On said date, De Asis availed of the valet parking service of petitioner and
entrusted her car key to petitioner's valet counter. A corresponding parking ticket was issued as receipt
for the car. The car was then parked by petitioner's valet attendant, a certain Madridano, at the
designated parking area. Few minutes later, Madridano noticed that the car was not in its parking slot and
its key no longer in the box where valet attendants usually keep the keys of cars entrusted to them. The
car was never recovered. Thereafter, Crispa filed a claim against its insurer, herein respondent Filipino
Merchants Insurance Company, Inc. (FMICI). Having indemnified Crispa in the amount of P669.500 for
the loss of the subject vehicle, FMICI, as subrogee to Crispa's rights, filed with the RTC at Makati City an
action for damages against petitioner Triple-V Food Services, Inc., thereat docketed as Civil Case No. 98-
838 which was raffled to Branch 148.
In its answer, petitioner argued that the complaint failed to aver facts to support the allegations of
recklessness and negligence committed in the safekeeping and custody of the subject vehicle, claiming
that it and its employees wasted no time in ascertaining the loss of the car and in informing De Asis of
the discovery of the loss. Petitioner further argued that in accepting the complimentary valet parking
service, De Asis received a parking ticket whereunder it is so provided that "[Management and staff will
not be responsible for any loss of or damage incurred on the vehicle nor of valuables contained therein",
a provision which, to petitioner's mind, is an explicit waiver of any right to claim indemnity for the loss of
the car; and that De Asis knowingly assumed the risk of loss when she allowed petitioner to park her
vehicle, adding that its valet parking service did not include extending a contract of insurance or warranty
for the loss of the vehicle.
During trial, petitioner challenged FMICI's subrogation to Crispa's right to file a claim for the loss of the
car, arguing that theft is not a risk insured against under FMICI's Insurance Policy No. PC-5975 for the
subject vehicle.
In a decision dated June 22, 2001, the trial court rendered judgment for respondent FMICI, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff (FMICI) and against the
defendant Triple V (herein petitioner) and the latter is hereby ordered to pay plaintiff.
Obviously displeased, petitioner appealed to the Court of Appeals reiterating its argument that it was not clearly shown in the breakdown of premiums in the same policy. [6]cralaw Thus, having indemnified
a depositary of the subject car and that it exercised due diligence and prudence in the safe keeping of the CRISPA for the stolen car, FMICI, as correctly ruled by the trial court and the Court of Appeals, was
vehicle, in handling the car-napping incident and in the supervision of its employees. It further argued properly subrogated to Crispa's rights against petitioner, pursuant to Article 2207 of the New Civil
that there was no valid subrogation of rights between Crispa and respondent FMICI. Code[7].

In a decision dated October 21, 2003,[2]cralaw the Court of Appeals dismissed petitioner's appeal and affirmed the appealed Anent the trial court's findings of negligence on the part of the petitioner, which findings were affirmed by
decision of the trial court, thus: the appellate court, we have consistently ruled that findings of facts of trial courts, more so when
In so dismissing the appeal and affirming the appealed decision, the appellate court agreed with the findings and
affirmed, as here, by the Court of Appeals, are conclusive on this Court unless the trial court itself
conclusions of the trial court that: (a) petitioner was a depositary of the subject vehicle; (b) petitioner was negligent in its
duties as a depositary thereof and as an employer of the valet attendant; and (c) there was a valid subrogation of rights
ignored, overlooked or misconstrued facts and circumstances which, if considered, warrant a reversal of
between Crispa and respondent FMICI. the outcome of the case.[8]cralaw This is not so in the case at bar. For, we have ourselves reviewed the
records and find no justification to deviate from the trial court's findings.
Hence, petitioner's present recourse. We agree with the two (2) courts below.
WHEREFORE, petition is hereby DENIED DUE COURSE.
When De Asis entrusted the car in question to petitioners valet attendant while eating at
petitioner's Kamayan Restaurant, the former expected the car's safe return at the end of her meal. Thus,
petitioner was constituted as a depositary of the same car. Petitioner cannot evade liability by arguing
that neither a contract of deposit nor that of insurance, guaranty or surety for the loss of the car was
constituted when De Asis availed of its free valet parking service.

In a contract of deposit, a person receives an object belonging to another with the obligation of safely
keeping it and returning the same. [3]cralaw A deposit may be constituted even without any consideration.
It is not necessary that the depositary receives a fee before it becomes obligated to keep the item
entrusted for safekeeping and to return it later to the depositor.

Specious is petitioner's insistence that the valet parking claim stub it issued to De Asis contains a clear
exclusion of its liability and operates as an explicit waiver by the customer of any right to claim indemnity
for any loss of or damage to the vehicle.

The parking claim stub embodying the terms and conditions of the parking, including that of relieving
petitioner from any loss or damage to the car, is essentially a contract of adhesion, drafted and prepared
as it is by the petitioner alone with no participation whatsoever on the part of the customers, like De Asis,
who merely adheres to the printed stipulations therein appearing. While contracts of adhesion are not
void in themselves, yet this Court will not hesitate to rule out blind adherence thereto if they prove to be
one-sided under the attendant facts and circumstances.[4]cralaw

Hence, and as aptly pointed out by the Court of Appeals, petitioner must not be allowed to use its parking
claim stub's exclusionary stipulation as a shield from any responsibility for any loss or damage to vehicles
or to the valuables contained therein. Here, it is evident that De Asis deposited the car in question with
the petitioner as part of the latter's enticement for customers by providing them a safe parking space
within the vicinity of its restaurant. In a very real sense, a safe parking space is an added attraction to
petitioner's restaurant business because customers are thereby somehow assured that their vehicle are
safely kept, rather than parking them elsewhere at their own risk. Having entrusted the subject car to
petitioner's valet attendant, customer De Asis, like all of petitioner's customers, fully expects the security
of her car while at petitioner's premises/designated parking areas and its safe return at the end of her
visit at petitioner's restaurant.

Petitioner's argument that there was no valid subrogation of rights between Crispa and FMICI because
theft was not a risk insured against under FMICI's Insurance Policy No. PC-5975 holds no water.

Insurance Policy No. PC-5975 which respondent FMICI issued to Crispa contains, among others things,
the following item: "Insured's Estimate of Value of Scheduled Vehicle- P800.000".[5]cralaw On the basis of
such item, the trial court concluded that the coverage includes a full comprehensive insurance of the
vehicle in case of damage or loss. Besides, Crispa paid a premium of P10,304 to cover theft. This is