‘Credit Transactions BPI vs. Intermediate Appellate Court GR# L-66826, August 19, 1988 Facts: Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings account and a peso current account. An application for a dollar drat was accomplished by Virgillo Garcia branch manager of COMTRUST payable to a certain Leovigilda Dizon. In the PPLICtion, Garcia indicated that the amount was to be charged to the dolar savings account of the Zshomacks. There wasa no indication of the name of the purchaser of the dollar draft. Comtrust issued a check payable to the order of Dizon. When Z7shomack noticed the withdrawal from his account, he demanded an explainaiton from the bank. In its answer, Comtrust claimed that the peso value of the withdrawal was given to Atty. Emesto Zshomack, brother of Rizaldy. When he encashed with COMTRUST a cashiers check for P8450 issued by the manila banking corporation payable to Ernesto. Issue: Whether the contract between petitioner and respondent bank Is a deposit?Held: The document which embodies the contract states that the USS3,000.00 was received by the bank for safekeeping. The subsequent acts of the parties also show that the intent of the parties was really for the bank to safely keep the dollars and to retum it to Zshornack at a later time. Thus, Zshornack demanded the return of the money on May 10, 1976, or over five months later. The above arrangement is that contract defined under Article 1962, New Civil Code, which reads: Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract.Sia vs. Court of Appeals G.R. No. 102970, May 13, 1990 @ MARCH 16,2014 Bu ACOMMENT Contract of the use of a safety deposit box of a bank is not a deposit but a lease under Sec 72, A of General Banking Act. Accordingly, it should have lost no time in notifying the petitioner in order that the box could have been opened to retrieve the stamps, thus saving the same from further deterioration and loss. The bank's negligence aggravated the injury or damage to the stamp collection.. Facts: Plaintiff Luzon Sia rented a safety deposit box of Security Bank and Trust Co. (Security Bank) at its Binondo Branch wherein he placed his collection of stamps. The said safety deposit box leased by the plaintiff was at the bottom or at the lowest level of the safety deposit boxes of the defendant bank. During the floods that took place in 1985 and 1986, floodwater entered into the defendant bank's premises, seeped into the safety deposit box leased by the plaintiff and caused, according damage to his stamps collection. Security Bank rejected the plaintiff's claim for compensation for his damaged stamps collection. Sia, thereafter, instituted an action for damages against the defendant bank. Security Bank contended that its contract with the Sia over safety deposit box was one of lease and not of deposit and, therefore, governed by the lease agreement which should be the applicable law; the destruction of the plaintiff's stamps collection was due to a calamity beyond obligation on its part to notify the plaintiff about the floodwaters that inundated its premises at Binondo branch which allegedly seeped into the safety deposit box leased to the plaintiff. The trial court rendered in favor of plaintiff Sia andordered Sia to pay damages. Issue: Whether or not the Bank is liable for negligence. Held: Contract of the use of a safety deposit box of a bank is not a deposit but a lease. Section 72 of the General Banking Act (R.A. 337, as amended] pertinently provides: In addition to the operations specifically authorized elsewhere in this Act, banking institutions other than building and loan associations may perform the following services (a) Receive in custody funds, documents, and valuable objects, and rent safety deposit boxes for the safequarding of such effects. As correctly held by the trial court, Security Bank was guilty of negligence. The bank's 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 the safe deposit box was located. In view thereof, it should have lost no time in notifying the petitioner in order that the box could have been opened to retrieve the stamps, thus saving the same from further deterioration and loss. In this respect. it failed to exercise the reasonable care and prudence expected of a good father of a family, thereby becoming a party to the aggravation of the injury or loss. Accordingly, the aforementioned fourth characteristic of a fortuitous event is absent. Article 1170 of the Civil Code, which reads “Those who in the performance of their obligation are guilty of fraud. negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages” is applicable. Hence, the petition was granted. The provisions contended by Security Bank in the lease agreement which are meant to exempt SBTC from any liability for damage, loss or destruction of the contents of the safety deposit box which may arise from its own agents’ fraud, negligence or delay must be stricken down for being contrary to law and public policy.&- (GOMmpaiiial agricola vs. Nepomuceno (G.R. No. L-32778, November 14, 1930) Involuntary insolvency of Mariano Velasco and Co., et al. COMPANIA AGRICOLA DE ULTRAMAR, claimant-appellee, v5. VICENTE NEPOMUCENO, assipnee-appellant. FACTS: * On the 16th day of April, 19.27, the Compania Agricola de Ultramar filed a claim against one of the insolvent: Mariano Velasco & Co., claiming the sum of F10,000, with the agreed interest thereon at the rate of 6 per cent per annum from April 5, 1948, until its full payment wat a deposit with said Mariano Velasco & Co. and asked the court to dectare 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 dectaring that the alleged deposit was a preferred claim for the sum mentioned, with interest at 6 per cent per annum from Apqil 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, Pi, April 5, 1918. Received from the “Compania Agricola de Ultramar” the sum of ten thousand Philippine pesos at a deposit at the interest of six per cent annually, for the term of three months from date. In witness thereof, | sign the present. MARIANO VELASCO & CD. By (SgdL) JOSE VELASCO: Manager. 10,000.00.> Im his testimony, Jose Velesen stated thet his sisnature on. ‘the receipt wes suthentic end thot he received the seid sum ‘af FA0,000 from the eapeliee and deposited it with the bank in the current account of Mariano Velasco & Co. ISSUE: WON the clnim filed is that ef a deposit or loan? LoaN HEL: tn the case of Gowinrer ve. Oe Tovora(1 hit, 171, ‘very timiter to the precent care, tic court meld tnet tne ‘earcaction therein involwed was @ loan and not a deposit. The facts of the case were that in 4895 Inacis de Garricho delivered F3,00 to Felix Fardo de Tavera, After the desth of both parties, Gavieres, ss plsintit ‘and successor in interest of the decensed lenacs de Gorricho, brought the action amainst Trinidad H. Pardo Ge Tawers, the successor in interest of the deceased Felix Ferdo de Tavera, Yor the collection of the sum of F4,423.7, the remaining, (portion of the 3,000 paras. The plsintin Gavieres alleged that ‘the money was delivered to Felix Pardo de Tavera as & ‘deposit, but the defendant insisted that the agreement above quoted was nat » contract of Gepasit but one of losn, The ‘court sic: Annough in the document in question s deposit is ‘spoken of, nevertheless trom an examination of the entire document it clearly appeers that the contract was = loan ‘and that such wes the intention of the parties. It is unnecessary to recur to the cannons of interpretation to ‘arrive at this conciusion. The obligation of tne depository to [poy interest at the rate of 6 per cent to the depositor suffices to cause the obtigstion ta be considered asa loan ‘anc makes it likewise evident that it wes the intention of ‘the parties that the depository should have the right to make use of te amount ceposites, since it was stipuiated ‘that the amount could be collected after notice of two menths im sdwance. Such being the case. the contract lost tthe character of » deposit and acquired that of m Joan. (art. +1768, Civ Cote.) ‘Artie 4757 of the Civil Cade provices that —"Tha Gepository connat mate use af tie thing dgpasited without {Ehg axpness permission of tne agpozitor.” “otnerwire no sha pe Jiopie for forras ana samages. Boticie 1768 nlso provides that — “Whee the sopositery has permission to make usaf the thing deposited, the rontract loses tne character ‘of @ deposit ona ecomes c ioare or Daiiment.” “Tha permission not be presumed. and its existence must be proven.” Moreover it may, as 8 matter of course, be inferred tet tere war no renewal of the contract of deposit comerted into 9 loon, becouse, ax hes alreedy been stated, the defendants received spid amount by virtue of areal loon contract under the name of a deposit, since the so-called Deitees were torswwitn authorizes to dispose of the smount ‘deposited. This they nave dane, a: har Deen Cleary shown. Ivtura wg second issue pero port iong so moin issue}: Bur the ‘appellee argues thet it is at least on *irrezuler deposit" Manresa, in his Commentaries on the Civil Code ‘Mister that there are three points of ciference between = tosn snd an irregutar deposit. The frst citference which he paints out consists in the fect that in an ireuier depasit the only Benefit. is that which pecrues to the depositor, white in a loan the essential ‘cause for the transaction is tne metestity of the Dorrower. ‘The contract in question does not fulfil this requirement of ‘an irreguier deposit. Nor does the contract in question futfill the third requisite indicates by Manresa, which is, thet in en inveguiar deposit, ine depositor can demand the return of the stice st any time, while 2 ender ir bound by the provisions bf the contract snc cannot seek restitution until tne time tor poyment, ss provided im the contract, hes erisen. Ris ‘spporent from the terms of this Gocuments thet the plaintit could not demand his money st any time. He was Dound to (Five notice of his Gesire for its meturn and then to wait for six momtns before he cous insist won payment. Jn the present case the transection in question was dearly not for tke sole benefit of the Compania Sigricola de Ultramar; it wes evidently for the benefit of both pasties. Neither could the alleged depositor cemsnd payment untit the expiration of the term of three months. For the reasons stated, the appenied judgment is reversed, ano we hold that the transection in question must be regarced ase losn, without preference, Without costs. ho Rogers ws. Smith [20 Phil. 327. GA, No. 4347, March 9, 1908) HOSE ROGERS, plsintit-oppeiant, vs. SMITH, BELL, & COW. efencents-appeliees. ACIS: Piaintit? lose Rogers (Rapers} brourhé this action in the CFI city of Manila upon the following, documert-{the subject Decument oF tne casa}G.R. No. 1899098 : August 29, 2012 MAKATI SHANGRI-LA HOTEL AND RESORT, INC., Petitioner, v. ELLEN JOHANNE HARPER, JONATHAN CHRISTOPHER HARPER, and RIGOBERTO GILLERA, Respondents. BERSAMIN, J.: FACTS: In the first week of November 1999, Christian Harper (Harper) came to Manila on a business trip. He checked in at the Makati Shangri-La Hotel and was billeted at Room 1428. He was due to check out on November 6, 1999. In the early morning of that date, however, he was murdered inside his hotel room by still unidentified malefactors. Thus, the heirs of Christian Harper sued the hotel for damages. Col. Rodrigo de Guzman, the hotels Security Manager, testified that the management practice prior to the murder of Harper had been to deploy only one security or roving guard for every three or four floors of the building; that such ratio had not been enough considering the L-shape configuration of the hotel that rendered the hallways not visible from one or the other end; and that he had recommended to management to post a guard for each floor, but his recommendation had been disapproved because the hotel "was not doing well" at that particular time.And to prove heirship of the plaintiffs-appellees, they presented several documents which were all kept in Norway. The documents had been authenticated by the Royal Norwegian Ministry of Foreign Affairs and also bore the official seal of the Ministry and signature of one, Tanja Sorlie. The documents were also accompanied by an Authentication by the Consul, Embassy of the Republic of the Philippines in Stockholm, Sweden to the effect that, Tanja Sorlie was duly authorized to legalize official documents for the Ministry. The RTC ruled in favor of Christian Harpers heirs and found the hotel negligent. On appeal, the CA affirmed the RTC. ISSUES: |. Whether or not the heirs substantially complied with the rules on the authentication and proof of documents set by Section 24 and Section 25 of Rule 132 of the Rules of Court? I Whether or not Makati Shangri-La Hote! is liable to pay damages? HELD: FIRST ISSUE: The requirements for authentication of documents establishing respondents legal relationship with the victim as his heirs were complied with. REMEDIAL LAW: Although Exhibit Q, Exhibit Q-1, Exhibit R and Exhibit R-1 were not attested by the officer having the legal custody of the record or by his deputy in themanner required in Section 25 of Rule 132, and said documents did not comply with the requirement under Section 24 of Rule 132 to the effect that if the record was not kept in the Philippines a certificate of the person having custody must accompany the copy of the document that was duly attested stating that such person had custody of the documents, the deviation was not enough reason to reject the utility of the documents for the purposes they were intended to serve. The official participation in the authentication process of Tanja Sorlie of the Royal Ministry of Foreign Affairs of Norway and the attachment of the official seal of that office on each authentication. indicated that Exhibit Q, Exhibit R, Exhibit Q-1 and Exhibit R-1 were documents of a public nature in Norway, not merely private documents. That rules of procedure may be mandatory in form and application does not forbid a showing of substantial compliance under justifiable circumstances, because substantial compliance does not equate to a disregard of basic rules. For sure, substantial compliance and strict adherence are not always incompatible and do not always clash in discord. SECOND ISSUE: Petitioner was liable due to its own negligence. CIVIL LAW: The CA resolved petitioners arguments thuswise: "negligence is defined as the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. It is a relative or comparative, not an absolute, term and its application depends upon the situation of the parties and the degree of careand vigilance which the circumstances reasonably require. In determining whether or not there is negligence on the part of the parties in a given situation, jurisprudence has laid down the following test:Did defendant, in doing the alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, the person is guilty of negligence. The law, in effect, adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater familias of the Roman law. Liability on the part of the defendant is based upon the fact that he was in a better situation than the injured person to foresee and prevent the happening of the injurious occurrence. Moreover, in applying the premises liability rule in the instant case as it is applied in some jurisdiction in the United States, it is enough that guests are injured while inside the hotel premises to make the hotelkeeper liable." Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces, the injury, and without which the result would not have occurred. More comprehensively, proximate cause is that cause acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. To reiterate, defendant-appellant is engaged in a business imbued with public interest, ergo, it is bound to provide adequate security to its guests. CA AFFIRMED.88. LAND BANK OF THE PHILIPPINES vs PAGAYATAN G.R.NO. 182572, JUNE 18, 2012 SERENO, J. FACTS: Lubrica is the assignee of Federico C. Suntay over certain parcels of agricultural land a portion of the said property with an area of 311.7682 hectares, was placed under the land reform. The Department of Agrarian Reform (DAR) and the LBP fixed the value of the land at P5,056,833.54 which amount was deposited in cash and bonds in favor of Lubrica Petitioners rejected the valuation of their properties, hence the Office of the Provincial Agrarian Reform Adjudicator (PARAD) conducted summary administrative proceedings for determination of just compensation and thereafter fixed the preliminary just compensation at P51,800 286.43 for the 311.7682 hectares and P21 608,215 28 for the 128.7161 hectares. LBP Contested it before RTCPetitioners filed separate Motions to Deposit the Preliminary Valuation , praying among others that LEP deposit the preliminary compensation determined by the PARAD. The Court of Appeals held that the trial court correctly ordered LBP to deposit the amounts provisionally determined by the PARAD as there is no law which prohibits LBP to make a deposit pending the fixing of the final amount of just ‘compensation. A TRO was subsequenty issued enjoining the owners to collect the provisional value of the land determinded by PARAD, notwithstanding approval of ‘the court for LBP to make such deposit provisionally determined. An order was made to the effect that the cash deposit and bonds be tumed ower to clerk of court. One of the heirs contended that it is in violation of the TRO enjoining collection and that there was no necessity to physically transfer possession to latter since the bonds and MC was in clerk of court's name ISSUE: Whether TRO on collection of monetary proceeds proscribes such amount to be placed in custodia legis HELD: NO. There is an existing order for LBP to pay the provisional amount determined by PARAD but was subject to TRO on collection. If collection is enjoined and the money ordered be not delivered it is improper if the interested party will be the depositor and depositary at the same time. The solution of court a quo to place it in custodial legis is perfectly valid and called upon by aforementioned fact. For property to be in custodia legis, it must have been lawfully seized and taken by legal process and authority, and placed in the possession of a public officer such as a shenff, or of an officer of the court empowered to hold it such as a receiver [15] Therefore, it was only a natural consequence for respondent judge to order the physical turnover of the deposits, which had already been placed under the name of the Clerk of Court Lubrica is the assignee of Federico C. Suntay over certain parcels of agricultural land a portion of the said property with an area of 311.7682 hectares, was placed under the land reform.The Department of Agrarian Reform (DAR) and ‘the LBP fixed the value of the land at P5,056,922.54 which amount was deposited in cash and bonds in favor of Lubrica. Petitioners rejected the valuation of their properties, hence the Office of the Provincial Agrarian Reform Adjudicator (PARAD) conducted summary administrative proceedings for determination of just compensation and thereafter fixed the preliminary just compensation at P51,800,296.43 for the 311.7682 hectares and P21,608,215.28 for the 128.7161 hectares. LBP Contested it before RTC Petitioners filed separate Motions to Deposit the Preliminary Valuation , praying among others that LEP deposit the preliminary compensation determined by the PARAD.The Court of Appeals held that the trial court correctly ordered LBP to deposit the amounts provisionally determined by the PARAD as there is no law which prohibits LBP to make a deposit pending the fixing of the final amount of just ‘compensation. A TRO was subsequenty issued enjoining the owners to coflect the provisional value of the land determinded by PARAD, notwithstanding approval of the court for LAP to make such deposit provisionally determined. An order was made to the effect that the cash deposit and bonds be tumed over to derk of court, One of the heirs contended that it is in violation of the TRO enjoining collection and that there was no necessity to physically transfer possession to latter since the bonds and MC was in clerk of court's name.PROVINCE OF BATAAN VS. VILLAFUERTE (G.R. No. 129995, October 19, 2001) FACTS: In its order, the lower court directed that petitioner Province of Bataan to remit to said court whatever lease rentals petitioner may receive from lessees 7-R Port and Marina Port Services, and that such lease rentals be placed under a special time deposit with the Land Bank for the account of the RTC-Balanga Branch 4, in escrow, for the person or persons, natural or jundical, who may be adjudged lawfully entitled thereto. The order denied herein petitioner's motion for reconsideration of the 28 July, 1993 order. Pursuant to Presidential Decree No. 464, otherwise known as the Real Property Tax Code of 1974, the Provincial Treasurer of Bataan advertised for auction sale the BASECO property due to real estate tax delinquency amounting to P7,914,281.72, inclusive of penalties. At the auction sale, no bidder vied for said property as a result of which, the Provincial Treasurer of Bataan adjudged the property to, and acquired thesame for, and in the name of herein petitioner Province of Bataan. Upon the expiration of the one-year redemption period. and without the owner exercising its rightto redeem the subject propery. the Provinil Goverment of Bataan consolidated its tile thereon, comesponding certifeates of ttle ies issued in the name of herein petitoner Province of Bataan. Eventually. petitioner. thru then Provincial Govemer Enrique T. Garcia. entered into a ten-year contact of lease wih T-R Port Services, Inc., whereby portions of the BASECO property inching facilities and fs thereon, were leased to the latter fora minimum escalating annual rental of P1€ million. Petitioner forged another contract of lease with Marina Port Services, over a ten- hectare portion of the BASECO property. Private respondent filed for annulment of sale, principally assaling the valdty of the tax delinquency sale of the BASECO property in favor of pettioner Province of Bataan. PCGG fied for writ of preliminary injunction to enjoin herein pettioner “fom entering into a lease contract. with Marina Port Services, Inc. (Marina), or any other entity, and/or from implementing/enforcing such lease contract, if one has already been executed, and to maintain the status quo until further orders from the Court” The lower court denied the motion ratiocinating that the lease contract with Marina was already a faif accompli when the motion was fied, and that Marina was net 2 party to the su for nat having been impleaded as The PCGG filed with the lower court an “Urgent Motion to Deposit Lease Rentals,” alleging inter alia that the rentals amounting to “Hundreds of Millions. of Pesos” are “in danger of being unlawiully spent, squandered and dissipated to the great and imeparable damage of plaintiffs who are the rightlul owners of the property leased.” The lower court granted the POGG's urgent motion and ordered the defendant Province of Bataan to remit to the court the lease rentals it may recewe from the defendant 7-R Port Services and the Marina Port Services from the receipt of this order. It also ordered the derk of court to deposi the amount under special time deposit with the Land Bank in the Tame or account of the Court to be held in ust for the person. natural or juridical, who may lawfully be entitled thereto. ISSUE: Whether or not the deposit of rentals in esorow was proper. YES HELD: in the main, petitioner insists that the issuance of the escrow order by the trial court ‘was patently imegular, # not downright anomalous”. reasoning that “nowhere in the Revised Rules of Court is the tial court, or any coumt for that matter, authorized to issue such escrow onder. whether as a provisional or permanent remexiy.” See eae et ean ae alone void ab initio for having been issued absent any legal basis" and are “merely calculated to prejudice the petitioner province without any practical or worthwhile, much less legal objective.” The court does not agree. An escrow fills a definite niche in the body of the law, thas a distinct legal character. The usual definition is that an escrow is a written instrument wétich by its terms imports a legal obigation and which is deposited by the grantor, promisor, or obligor, or his agent with a stranger or third party, to be kept by the depositary until the performance of a condition or the happening of a certain event, and then to be delivered over to the grantee, promisee, or obligee. While originally, the doctrine of escrow applied only to deeds by way of grant, or as otherwise stated, instruments for the conveyance of land, under modem theories. of law, the tenn escrow is not limited in ts application to deeds, but is appled to the deposit of any written instrument with a third person. Particular instruments which have been held to be the subject of an escrow include bonds or covenants, deeds, mortgages, oil and gas leases, contracts for eee of kaw ke pa personal property, comporate stocks and stock subscriptions, promissory notes or a commercial paper, insurance applications ani policies, cae tor be soon of wa contest cases, indentures of aebeeip, receipts assigning concessions discontinuances and releases of causes ie action. Moreover, it is no longer open to question that money may be delivered insure, placing property in [tigation under judicial possession, whether in the hands of a receiver, and administrator, or as in this case, in a to disturb the questioned orders of the lower court and in effect uphold the propriety of the subject escrow onders.