C.

DEPOSIT

1. US vs. Igpuara, G.R. No. L-7593, March 27, 1913, 27 Phil 619

FACTS: 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 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 theo bligation 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 to two years of presidio correccional, to
pay Juana Montilla P2,498 Philippine currency, and in case of insolvency to subsidiary
imprisonment at P2.50 per day, not to exceed one-third of the principal penalty, and the costs.

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.

ISSUE: May he use the thing deposited?

HELD: NO.

RATIO

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 August23, 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."

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 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: The rights and obligations of the depositary and of the depositor shall cease, and the
rules and 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

2. BPI vs. IAC, 164 SCRA 630

Facts:

A contract of depositum was entered into by Garcia, on behalf of COMTRUST (BPI), wherein he received
US $3,000 (foreign exchange) from Zshornack for safekeeping. Later on or over five months later,
Zshornack demanded the return of the money but the bank refused alleging that the amount was sold
and transferred to her current account.

Arguments:

COMTRUST (BPI): The parties entered into a contract of depositum which banks do not enter into. Thus,
Garcia exceeded his powers when he entered into the contract on behalf of the bank, hence, the bank
cannot be liable under the contract.

Issue: WON the contract entered into is a contract of depositum.

Held:

Yes. The situation is one contemplated in Art. 1962 of the NCC:

Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another,
with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing
delivered is not the principal purpose of the contract, there is no deposit but some other contract.

Note: But because the subject of the contract here is a foreign exchange, it is covered by Central Bank
Circular No. 20 which requires that, “All receipts of foreign exchange by any resident person, firm,
company or corporation shall be sold to authorized agents of the Central Bank by the recipients within
one business day following the receipt of such foreign exchange.”
Since the document and the subsequent acts of the parties show that they intended the bank to
safekeep the foreign exchange, and return it later to Zshornack, who alleged in his complaint that he is a
Philippine resident, the parties did not intend to sell the US dollars to the Central Bank within one
business day from receipt. Otherwise, the contract of depositum would never have been entered into at
all.

In other words, the transaction between Zshornack and the bank was void having been executed against
the provisions of a mandatory law (CB Circ No. 20). Being in pari delicto, the law cannot afford either of
them remedy.

3. CA Agro-Industrial Devt. Corp. vs. CA, G.R. No. 90027, March 3, 1993

Facts:

CA Agro (through its President, Aguirre) and spouses Pugao entered into an agreement whereby the

former purchased two parcels of land for P350, 525 with a P75, 725 down payment while the balance
was covered by three (3) postdated checks. Among the terms embodied in a Memorandum of True and
Actual Agreement of Sale of Land were that titles to the lots shall be transferred to the petitioner upon
full payment of the purchase price and that the owner’s copies of the certificates of titles thereto shall
be deposited in a safety deposit box of any bank. The same could be withdrawn only upon the joint
signatures of a representative of the petitioner upon full payment of the purchase price. They then
rented Safety Deposit box of private respondent Security Bank and Trust Company (SBTC). For this
purpose, both signed a contract of lease which contains the following conditions:

13. The bank is not a depositary of the contents of the safe and it has neither the possession nor
control of the same.

14. The bank has no interest whatsoever in said contents, except herein expressly provided, and it
assumes absolutely no liability in connection therewith.

After the execution of the contract, two (2) renter’s key were given to Aguirre, and Pugaos. A key guard
remained with the bank. The safety deposit box has two key holes and can be opened with the use of
both keys. Petitioner claims that the CTC were placed inside the said box.

Thereafter, a certain Mrs. Ramos offered to buy from the petitioner the two (2) lots at a price of P225
per sqm. Mrs. Ramose demanded the execution of a deed of sale which necessarily entailed the
production of the CTC. Aguirre and Pugaos then proceeded to the bank to open the safety deposit box.
However, when opened in the presence of bank’s representative, the box yielded no certificates.
Because of the delay in reconstitution of title, Mrs. Ramos withdrew her earlier offer and as a
consequence petitioner failed to realize the expected profit of P280 , 500. Hence, the latter filed a
complaint for damages.

RTC: Dismissed the complaint CA: Affirmed

Issue:

Whether or not the contractual relation between a commercial bank and another party in the contract
of rent of a safety deposit box is one of bailor and bailee.

Ruling:

Yes.

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 Pugaos.

American Jurisprudence:

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 bailee, the bailment being for hire and mutual
benefit.

Our provisions on safety deposit boxes are governed by Section 72 (a) of the General Banking Act, and
this primary function is still found within the parameters of a contract of deposit like 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.
Thus, depositary’s liability is governed by our civil code rules on obligation and contracts, and thus the
SBTC would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or
contravention of the tenor of the agreement.

4. Javellana vs. Lim, 11 Phil 141

DOCTRINE: Obligation not to make use of a thing deposited unless expressly authorized. When there is
permission to make use of the thing, the contract becomes either loan or bailment.

FACTS:

Jose, Ceverino and Domingo Lim, defendants, executed a document in favor of Angel Javellana, plaintiff-
appellee, wherein it states that:

―they, defendants, have received, as a deposit, without interest, money from plaintiff-appellee and
agreed upon a date when they will return the money. Upon the stipulated due date, defendants asked
for an extension to pay and binding themselves to pay 15% interest per annum on the amount of their
indebtedness, to which the plaintiff-appellee acceded.‖
The defendants were not able to pay the full amount of their indebtedness notwithstanding the request
made by plaintiff-appellee. As they were able to pay P1,000,on May 15, 1900 while the plaintiff incurred
damages amounting to P830 since Jaunary 20, 1898.

The lower court ruled in favor of plaintiff-appellee for the recovery of the amount of P5,714.44. While a
motion for new trial was granted.

ISSUE:

Whether the agreement entered into by the parties is one of loan or of deposit?

HELD:

The document executed was a contract of loan. The court affirmed the trial court’s decision and
favoredJavellana, and directed the defendants to pay the debt and interest.

―Moreover, for the reason above set forth it may, as a matter of course, be inferred that there was no
renewal of the contract deposited converted into a loan, because, as has already been stated, the
defendants received said amount by virtue of real loan contract under the name of a deposit, since the
so-called bailees were forthwith authorized to dispose of the amount deposited. This they have done, as
has been clearly shown.‖

Where money, consisting of coins of legal tender, is deposited with a person and the latter is authorized
by the depositor to use and dispose of the same, the agreement is not a contract of deposit, but a loan.
A subsequent agreement between the parties as to interest on the amount said to have been deposited,
because the same could not be returned at the time fixed therefor, does not constitute a renewal of an
agreement of deposit, but it is the best evidence that the original contract entered into between therein
was for a loan under the guise of a deposit. In this case, the appleants were lawfully authorized to make
use of the amount deposited, which they have done. Jose Lim came to the plaintiff to be able to ask for
an extension of payment since he have used the amount deposited to him, with the condition that 15%
interest shall we included in the contract.

The law provides:

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 shall not be presumed, and its existence must be proven.
5. Gullas vs. PNB, 62 Phil 519

FACTS:

The parties to the case are PaulinoGullas and the Philippine National Bank. The first named is a member
of the Philippine Bar, resident in the City of Cebu. The second named is a banking corporation with a
branch in the same city. Attorney Gullas has had a current account with the bank.

It appears from the record that on August 2, 1933, the Treasurer of the United States for the United
States Veterans Bureau issued a Warrant in the amount of $361, payable to the order of Francisco
SabectoriaBacos. PaulinoGullas and Pedro Lopez signed as endorsers of this check. Thereupon it was
cashed by the Philippine National Bank.

Subsequently the treasury warrant was dishonored by the Insular Treasurer.

At that time the outstanding balance of Attorney Gullas on the books of the bank was P509. Against this
balance he had issued certain cheeks which could not be paid when the money was sequestered by the
On August 20, 1933, Attorney Gullas left his residence for Manila.

The bank on learning of the dishonor of the treasury warrant sent notices by mail to Mr. Gullas which
could not be delivered to him at that time because he was in Manila. In the bank's letter of August 21,
1933, addressed to Messrs. PaulinoGulla and Pedro Lopez, they were informed that the United States
Treasury warrant No. 20175 in the name of Francisco SabectoriaBacos for $361 or P722, the payment
for which had been received has been returned by our Manila office with the notation that the payment
of his check has been stopped by the Insular Treasurer. "In view of this therefore we have applied the
outstanding balances of your current accounts with us to the part payment of the foregoing check",
namely, Mr. PaulinoGullas P509. On the return of Attorney Gullas to Cebu on August 31, 1933, notice of
dishonor was received and the unpaid balance of the United States Treasury warrant was immediately
paid by him.

As a consequence of these happenings, two occurrences transpired which inconvenienced Attorney

Gullas. In the first place, as above indicated, checks including one for his insurance were not paid
because of the lack of funds standing to his credit in the bank. In the second place, periodicals in the
vicinity gave prominence to the news to the great mortification of Gullas.

A variety of incidental questions have been suggested on the record which it can be taken for granted as
having been adversely disposed of in this opinion.

ISSUE: Does the Philippine National Bank have the right to apply a deposit to the debt of depositor to
the bank?

HELD: Generally YES. However, in this case, NO.

RATIO
The Civil Code contains provisions regarding compensation (set off) and deposit. (Articles 1195 et seq.,
1758 et seq. The portions of Philippine law provide that compensation shall take place when two
persons are reciprocally creditor and debtor of each other (Civil Code, article 1195). In his connection, it
has been held that the relation existing between a depositor and a bank is that of creditor and debtor.
(Fulton Iron Works Co. vs. China Banking Corporation [1933], 59 Phil., 59.)

As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any
indebtedness to it on the part of a depositor. In Louisiana, however, a civil law jurisdiction, the rule is
denied, and it is held that a bank has no right, without an order from or special assent of the depositor
to retain out of his deposit an amount sufficient to meet his indebtedness. The basis of the Louisiana
doctrine is the theory of confidential contracts arising from irregular deposits, e. g., the deposit of
money with a banker. With freedom of selection and after full preference to the minority rule as more in
harmony with modern banking practice.

Starting, therefore, from the premise that the Philippine National Bank had with respect to the deposit
of Gullas a right of set off, we next consider if that remedy was enforced properly. The fact we believe is
undeniable that prior to the mailing of notice of dishonor, and without waiting for any action by Gullas,
the bank made use of the money standing in his account to make good for the treasury warrant. At this
point recall that Gullas was merely an indorser and had issued in good faith.

As to a depositor who has funds sufficient to meet payment of a check drawn by him in favor of a third
party, it has been held that he has a right of action against the bank for its refusal to pay such a check in
the absence of notice to him that the bank has applied the funds so deposited in extinguishment of past
due claims held against him. (Callahan vs. Bank of Anderson [1904], 2 Ann. Cas., 203.) The decision cited
represents the minority doctrine, for on principle it would seem that notice is not necessary to a maker
because the right is based on the doctrine that the relationship is that of creditor and debtor. However
this may be, as to an indorser the situation is different, and notice should actually have been given him
in order that he might protect his interests.

Agreeable to the foregoing, the errors assigned by the parties will in the main be overruled, with the
result that the judgment of the trial court will be modified by sentencing the defendant to pay the
plaintiff the sum of P250, and the costs of both instances.

6. Associated Bank (Now Westmont Bank) vs. Tan, G.R. No. 156940, Dec. 14, 2004

Facts

Respondent Tan is a businessman and a regular depositor-creditor of the petitioner, Associated Bank.
Sometime in September 1990, he deposited a postdated check with the petitioner in the amount of
P101,000 issued to him by a certain Willy Cheng from Tarlac. The check was duly entered in his bank
record. Allegedly, upon advice and instruction of petitioner that theP101,000 check was already
cleared and backed up by sufficient funds, respondent, on the same date, withdrew the sum of
P240,000 from his account leaving a balance of P57,793.45. A day after, TAN deposited the amount of
P50,000 making his existing balance in the amount of P107,793.45, because he has issued several checks
to his business partners. However, his suppliers and business partners went back to him alleging that
the checks he issued bounced for insufficiency of funds. Thereafter, respondent informed petitioner
to take positive steps regarding the matter for he has adequate and sufficient funds to pay the amount
of the subject checks. Nonetheless, petitioner did not bother nor offer any apology regarding the
incident. Respondent Tan filed a Complaint for Damages on December 19, 1990, with the RTC against
petitioner. The trial court rendered a decision in favor of respondent and ordered petitioner to pay
damages and attorney’s fees. Appellate court affirmed the lower court’s decision. CA ruled
that the bank should not have authorized the withdrawal of the value of the deposited check
prior to its clearing. Petitioner filed a Petition for Review before the Supreme Court

ISSUE

W/N petitioner has the right to debit the amount of the dishonored check from the account of
respondent on the ground that the check was withdrawn by respondent prior to its clearing

HELD

The Petition has no merit.

The real issue here is not so much the right of petitioner to debit respondent’s account but, rather,
themanner in which it exercised such right. Banks are granted by law the right to debit the value of
adishonored check from a depositor’s account but they must do so with the highest degree of care, so
asnot to prejudice the depositor unduly. The degree of diligence required of banks is more than that of
agood father of a family where the fiduciary nature of their relationship with their depositors is
concerned.In this case, petitioner did not treat respondent’s account with the highest degree of care.
Respondentwithdrew his money upon the advice of petitioner that his money was already cleared. It is
petitioner’spremature authorization of the withdrawal that caused the respondent’s account
balance to fall toinsufficient levels, and the subsequent dishonor of his own checks for lack of funds.

7. Guingona vs. City Fiscal of Manila,G.R. No. L-60033, April 4, 1984

Nature: Petition for prohibition and injunction with a prayer for the immediate issuance of restraining
order and/or writ of preliminary injunction seeking to prohibit the public respondent which is the City
Fiscal of Manila from proceeding with the preliminary investigation, in which they were charged by
private respondent Clement David

Keywords: Bank deposits are loans, mutuum, estafa, criminal charge, civil case, thrift bank, NSLA

Summary: From March 1979 to March 1981, Clement David made several investments with the National
Savings and Loan Association (NSLA). On March 21, 1981, the Bangko Sentral placed the bank under
receivership. Upon David’s request, petitioners Guingona and Martin issued a joint promissory note,
absorbing the obligations of the bank. On July 17, 1981, they divided the indebtedness. David filed a
complaint for estafa and violation of Central Bank Circular No. 364 and related regulations regarding
foreign exchange transactions before the Office of the City Fiscal of Manila. Petitioners filed the herein
petition for prohibition and injunction with a prayer for immediate issuance of restraining order and/or
writ of preliminary injunction to enjoin the public respondents to proceed with the preliminary

investigation on the ground that the petitioners’ obligation is civil in nature.

MAKASIAR, Actg. C.J.

Facts: David invested several deposits with the Nation Savings and Loan Association [NSLA]. He said that
he was induced into making said investments by an Australian national who was a close associate of the
petitioners [NSLA officials]. On March 1981, NSLA was placed under receivership by the Central Bank, so
David filed claims for his and his sister’s investments.

On June 1981, Guingona and Martin, upon David’s request, assumed the bank’s obligation to David by
executing a joint promissory note. On July 1981, David received a report that only a portion of his
investments was entered in the NSLA records.

On December 1981, David filed I.S. No. 81-31938 in the Office of the City Fiscal, which case was assigned
to Asst. City Fiscal Lota for preliminary investigation. David charged petitioners with estafa and violation
of Central Bank Circular No. 364 and related regulations on foreign exchange transactions.

Petitioners moved to dismiss the charges against them for lack of jurisdiction because David's claims
allegedly comprised a purely civil obligation, but the motion was denied. After the presentation of
David's principal witness, petitioners filed this petition for prohibition and injunction because:

a. The production of various documents showed that the transactions between David and NSLA were
simple loans (civil obligations which were novated when Guingona and Martin assumed them)

b. David's principal witness testified that the duplicate originals of the instruments of indebtedness were
all on file with NSLA.

A TRO was issued ordering the respondents to refrain from proceeding with the preliminary
investigation in I.S. No. 81-31938.

Petitioners’ liability is civil in nature, so respondents have no jurisdiction over the estafa charge. TRO
CORRECTLY ISSUED.

Issue:

1. Whether the contract between NSLA and David is a contract of depositor or a contract of loan, which
answer determines whether the City Fiscal has the jurisdiction to file a case for estafa

2. Whether there was a violation of Central Bank Circular No. 364

Held:

1. When David invested his money on time and savings deposits with NSLA, the contract that was
perfected was a contract of simple loan or mutuum and not a contract of deposit. Hence, the
relationship between David and NSLA is that of creditor and debtor, consequently, the ownership of the
amount deposited was transmitted to the Bank upon the perfection of the contract and it can make use
of the amount deposited for its banking operations, such as to pay interests on deposits and to pay
withdrawals..

While the Bank has the obligation to return the amount deposited, it has no obligation to return or
deliver the same money that was deposited. NSLA’s failure to return the amount deposited will not
constitute estafa through misappropriation punishable under Article 315, par. L (b) of the Revised Penal
Code, but it will only give rise to civil liability over which the public respondents have no jurisdiction.

Considering that petitioners’ liability is purely civil in nature and that there is no clear showing that they
engaged in foreign exchange transactions, public respondents acted without jurisdiction when they
investigated the charges against the petitioners. Public respondents should be restrained from further
proceeding with the criminal case for to allow the case to continue would work great injustice to
petitioners and would render meaningless the proper administration of justice.

Even granting that NSLA’s failure to pay the time and savings deposits would constitute a violation of
RPC 315, paragraph 1(b), any incipient criminal liability was deemed avoided. When NSLA was placed
under receivership, Guingona and Martin assumed the obligation to David, thereby resulting in the
novation of the original contractual obligation. The original trust relation between NSLA and David was
converted into an ordinary debtor-creditor relation between the petitioners and David. While it is true
that novation does not extinguish criminal liability, it may prevent the rise of criminal liability as long as
it occurs prior to the filing of the criminal information in court.

2. Petitioner Guingona merely accommodated the request of the Nation Savings and loan Association in
order to clear the bank draft through his dollar account because the bank did not have a dollar account.
Immediately after the bank draft was cleared, petitioner Guingona authorized Nation Savings and Loan
Association to withdraw the same in order to be utilized by the bank for its operations. It is safe to
assume that the U.S. dollars were converted first into Philippine pesos before they were accepted and
deposited in Nation Savings and Loan Association, because the bank is presumed to have followed the
ordinary course of the business which is to accept deposits in Philippine currency only, and that the
transaction was regular and fair, in the absence of a clear and convincing evidence to the contrary.

In conclusion, considering that the liability of the petitioners is purely civil in nature and that there is no
clear showing that they engaged in foreign exchange transactions, We hold that the public respondents
acted without jurisdiction when they investigated the charges against the petitioners. Consequently,
public respondents should be restrained from further proceeding with the criminal case for to allow the
case to continue, even if the petitioners could have appealed to the Ministry of Justice, would work
great injustice to petitioners and would render meaningless the proper administration of justice

Ruling: WHEREFORE, THE PETITION IS HEREBY GRANTED; THE TEMPORARY RESTRAINING ORDER
PREVIOUSLY ISSUED IS MADE PERMANENT.

Note:
GENERAL RULE: Criminal prosecution may not be blocked by court prohibition or injunction.

EXCEPTIONS

1. For the orderly administration of justice

2. To prevent the use of the strong arm of the law in an oppressive and vindictive manner

3. To avoid multiplicity of actions

4. To afford adequate protection to constitutional rights

5. In proper cases, because the statute relied upon is unconstitutional or was held invalid

8. Guingona vs. City Fiscal of Manila, 137 SCRA 597 (MR of April 4, 1984 SC decision)

9. Compania Maritima vs. CA, 135 SCRA 594

10. YHT Realty Corp. vs. CA, GR No. 126780, Feb. 17, 2005

Facts

McLoughlin was an Australian businessman-philanthropist who met a certain Bhrunilda Mata – Tan and
befriended him. Tan convinced McLoughlin to transfer from Sheraton Hotel and stay at Tropicana Hotel
during trips to the Philippines. Petitioners Lainez, as manager, Payam and Danilo Lopez, had the custody
of the keys for the safety deposit boxes, were all employees at Tropicana. McLoughlin started staying at
said Tropicana Hotel and registered therein from December 1984 to 1987. On October 30, 1987,
McLoughlin arrived from Australia and registered with Tropicana. He rented a safety deposit box which
could only be opened through the use of 2 keys, one of which is given to the registered guest, and the
other remaining in the possession of the management of the hotel. When a registered guest wished to
open his safety deposit box, he alone could personally request the management who then would assign
one of its employees to accompany the guest and assist him in opening the safety deposit box with the
two keys.

When McLoughlin went for a trip in Hong Kong and without checking out the hotel, he left some US and
Australian dollars in the safety deposit box. Upon his return, he went back to Australia; there he noticed
that some USD5000 and jewelry he bought from Hong Kong were missing. When he came back to the
Philippines, again registered and rented a safety deposit box with Tropicana, placing therein some
USD15000, AUD10000 and some important documents. He requested to open the safety deposit box,
but he found out that USD2000, and AUD4500 were missing. He confronted Lainez and Payam; they told
him that Tan was able to open the safety deposit box. Tan admitted to the said actuation and added that
she was assisted by Lainez, Lopez and Payam. Lopez wrote a PN and requested Tan to sign it, which the
latter did. Despite the execution of the PN, McLoughlin insisted that it must be the hotel who must
assume responsibility for the loss he suffered. However, Lopez refused to accept the responsibility
relying on the conditions for renting the deposit box, which held free and blameless Tropicana for any
loss in the contents of the safety deposit box.

Issue

May a hotel evade liability for the loss of items left with it for safekeeping by its guests, by having these
guests execute written waivers holding the establishment or its employees free from blame for such loss
in light of Article 2003 of the Civil Code which voids such waivers?

Held

No. Petitioners were directed, jointly and severally, to pay private respondent.

Ratio

For the main issue:

Article 2003 provides that the hotel-keeper cannot free himself from responsibility by posting notices to
the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-
keeper and the guest whereby the reasonability of the former as set for the in articles 1998 to 2001 is
suppressed or diminished shall be void. The hotel business like the common carrier's business is imbued
with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel
guests and security to their persons and belongings. The twin duty constitutes the essence of the
business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary
stipulation in so-called "undertakings" that ordinarily appear in prepared forms imposed by hotel
keepers on guests for their signature.

In an early case, to hold hotel-keepers or innkeepers liable for the effects of their guests, it is not
necessary that they be actually delivered to the innkeepers or their employees. It is enough that such
effects are within the hotel or inn. With greater reason should the liability of the hotelkeeper be
enforced when the missing items are taken without the guest’s knowledge and consent from a safety
deposit box provided by the hotel itself. The undertaking manifestly contravened Article 2003 of the
Civil Code it allowed Tropicana to be released from liability arising from any loss in the contents of the
safety deposit box for any cause whatsoever. Evidently, the undertaking was intended to bar any claim
against Tropicana for any loss of the contents of the safety deposit box whether or not negligence was
incurred by Tropicana or its employees. The New Civil Code is explicit that the responsibility of the hotel-
keeper shall extend to loss of, or injury to, the personal property of the guests even if caused by
servants or employees of the keepers of hotels or inns as well as by strangers, except as it may proceed
from any force majeure. It is the loss through force majeure that may spare the hotel-keeper from
liability. In the case at bar, there is no showing that the act of the thief or robber was done with the use
of arms or through an irresistible force to qualify the same as force majeure

(for the benefit of all - Supplemental reasoning of the Court)

We are also not impressed by petitioners' argument that the finding of gross negligence by the lower
court as affirmed by the appellate court is not supported by evidence. The evidence reveals that two
keys are required to open the safety deposit boxes of Tropicana. One key is assigned to the guest while
the other remains in the possession of the management. If the guest desires to open his safety deposit
box, he must request the management for the other key to open the same. In other words, the guest
alone cannot open the safety deposit box without the assistance of the management or its employees.
With more reason that access to the safety deposit box should be denied if the one requesting for the
opening of the safety deposit box is a stranger. Thus, in case of loss of any item deposited in the safety
deposit box, it is inevitable to conclude that the management had at least a hand in the consummation
of the taking, unless the reason for the loss is force majeure.

Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had custody of the
master key of the management when the loss took place. In fact, they even admitted that they assisted
Tan on three separate occasions in opening McLoughlin's safety deposit box. This only proves that
Tropicana had prior knowledge that a person aside from the registered guest had access to the safety
deposit box. Yet the management failed to notify McLoughlin of the incident and waited for him to
discover the taking before it disclosed the matter to him. Therefore, Tropicana should be held
responsible for the damage suffered by McLoughlin by reason of the negligence of its employees.

The management should have guarded against the occurrence of this incident considering that Payam
admitted in open court that she assisted Tan three times in opening the safety deposit box of
McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was still asleep. In light of the
circumstances surrounding this case, it is undeniable that without the acquiescence of the employees of
Tropicana to the opening of the safety deposit box, the loss of McLoughlin's money could and should
have been avoided.
The management contends, however, that McLoughlin, by his act, made its employees believe that Tan
was his spouse for she was always with him most of the time. The evidence on record, however, is
bereft of any showing that McLoughlin introduced Tan to the management as his wife. Such an
inference from the act of McLoughlin will not exculpate the petitioners from liability in the absence of
any showing that he made the management believe that Tan was his wife or was duly authorized to
have access to the safety deposit box. Mere close companionship and intimacy are not enough to
warrant such conclusion considering that what is involved in the instant case is the very safety of
McLoughlin's deposit. If only petitioners exercised due diligence in taking care of McLoughlin's safety
deposit box, they should have confronted him as to his relationship with Tan considering that the latter
had been observed opening McLoughlin's safety deposit box a number of times at the early hours of the
morning. Tan's acts should have prompted the management to investigate her relationship with
McLoughlin. Then, petitioners would have exercised due diligence required of them. Failure to do so
warrants the conclusion that the management had been remiss in complying with the obligations
imposed upon hotel-keepers under the law.

Under Article 1170 of the New Civil Code, those who, in the performance of their obligations, are guilty
of negligence, are liable for damages. As to who shall bear the burden of paying damages, Article 2180,
paragraph (4) of the same Code provides that the owners and managers of an establishment or
enterprise are likewise responsible for damages caused by their employees in the service of the
branches in which the latter are employed or on the occasion of their functions. Also, this Court has
ruled that if an employee is found negligent, it is presumed that the employer was negligent in selecting
and/or supervising him for it is hard for the victim to prove the negligence of such employer.Thus, given
the fact that the loss of McLoughlin's money was consummated through the negligence of Tropicana's
employees in allowing Tan to open the safety deposit box without the guest's consent, both the assisting
employees and YHT Realty Corporation itself, as owner and operator of Tropicana, should be held
solidarily liable pursuant to Article 2193.

Petitioners likewise anchor their defense on Article 2002 which exempts the hotel-keeper from liability if
the loss is due to the acts of his guest, his family, or visitors. Even a cursory reading of the provision
would lead us to reject petitioners' contention. The justification they raise would render nugatory the
public interest sought to be protected by the provision. What if the negligence of the employer or its
employees facilitated the consummation of a crime committed by the registered guest's relatives or
visitor? Should the law exculpate the hotel from liability since the loss was due to the act of the visitor of
the registered guest of the hotel? Hence, this provision presupposes that the hotel-keeper is not guilty
of concurrent negligence or has not contributed in any degree to the occurrence of the loss. A
depositary is not responsible for the loss of goods by theft, unless his actionable negligence contributes
to the loss.
In the case at bar, the responsibility of securing the safety deposit box was shared not only by the guest
himself but also by the management since two keys are necessary to open the safety deposit box.
Without the assistance of hotel employees, the loss would not have occurred. Thus, Tropicana was guilty
of concurrent negligence in allowing Tan, who was not the registered guest, to open the safety deposit
box of McLoughlin, even assuming that the latter was also guilty of negligence in allowing another
person to use his key. To rule otherwise would result in undermining the safety of the safety deposit
boxes in hotels for the management will be given imprimatur to allow any person, under the pretense of
being a family member or a visitor of the guest, to have access to the safety deposit box without fear of
any liability that will attach thereafter in case such person turns out to be a complete stranger. This will
allow the hotel to evade responsibility for any liability incurred by its employees in conspiracy with the
guest's relatives and visitors.

Petitioners contend that McLoughlin's case was mounted on the theory of contract, but the trial court
and the appellate court upheld the grant of the claims of the latter on the basis of tort.There is nothing
anomalous in how the lower courts decided the controversy for this Court has pronounced a
jurisprudential rule that tort liability can exist even if there are already contractual relations. The act
that breaks the contract may also be tort.

11. Durban Apartments Corporation vs. Pioneer Insurance and Surety Corporation, G.R. No.
179419, January 12, 2011

Facts:

On July 22, 2003, Pioneer Insurance and Surety Corporation, by right of subrogation, filed a Complaint
for Recovery of Damages against Durban Apartments Corporation, doing business under the name and
style of City Garden Hotel, and Vicente Justimbaste

Pioneer averred that:

• it is the insurer for loss and damage of Jeffrey S. See’s [the insured’s] 2001 Suzuki Grand Vitara
in the amount of P1,175,000.00;

• on April 30, 2002, See arrived and checked in at the City Garden Hotel in Makati corner Kalayaan
Avenues, Makati City before midnight, and See gave notice to the doorman and parking attendant of the
said hotel, Justimbaste, about his Vitara when he entrusted its ignition key to the latter. Justimbaste
issued a valet parking customer claim stub to See, parked the Vitara at the Equitable PCI Bank parking
area, and placed the ignition key inside a safety key box while See proceeded to the hotel lobby to check
in. The Equitable PCI Bank parking area became an annex of City Garden Hotel when the management of
the said bank allowed the parking of the vehicles of hotel guests thereat in the evening after banking
hours.

• May 1, 2002, at about 1:00 o’clock in the morning, See was awakened in his room by [a]
telephone call from the Hotel Chief Security Officer who informed him that his Vitara was carnapped
while it was parked unattended at the parking area of Equitable PCI Bank along Makati Avenue between
the hours of 12:00 [a.m.] and 1:00 [a.m.];

• See went to see the Hotel Chief Security Officer, thereafter reported the incident to the
Operations Division of the Makati City Police Anti-Carnapping Unit,

• the Vitara has not yet been recovered since July 23, 2002 as evidenced by a Certification of Non-
Recovery issued by the PNP TMG;

• Pioneer paid the P1,163,250.00 money claim of See and mortgagee ABN AMRO Savings Bank,
Inc. as indemnity for the loss of the Vitara;

• the Vitara was lost due to the negligence of Durban Apartments and Justimbaste because it was
discovered during the investigation that this was the second time that a similar incident of carnapping
happened in the valet parking service of Durban Apartments and no necessary precautions were taken
to prevent its repetition;

• Durban Apartments was wanting in due diligence in the selection and supervision of its
employees particularly defendant Justimbaste;

• and defendant Justimbaste and Durban Apartments failed and refused to pay its valid, just, and
lawful claim despite written demands.

The RTC rendered its decision in favor of the respondent:

WHEREFORE, judgment is hereby rendered ordering [petitioner Durban Apartments Corporation] to pay
[respondent Pioneer Insurance and Surety Corporation] the sum of P1,163,250.00 with legal interest
thereon from July 22, 2003 until the obligation is fully paid and attorney’s fees and litigation expenses
amounting to P120,000.00

on appeal, the appellate court affirmed the decision of the trial court, viz.:
 WHEREFORE, premises considered, the Decision dated January 27, 2006 of the RTC, Branch 66,
Makati City in Civil Case No. 03-857 is hereby AFFIRMED insofar as it holds [petitioner] Durban
Apartments Corporation solely liable to [respondent] Pioneer Insurance and Surety Corporation for the
loss of Jeffrey See’s Suzuki Grand Vitara.

Issue:

whether petitioner is liable to respondent for the loss of See’s vehicle.

Ruling:

Yes.

In this case, respondent substantiated the allegations in its complaint, i.e., a contract of necessary
deposit existed between the insured See and petitioner. On this score, we find no error in the following
disquisition of the appellate court:

[The] records also reveal that upon arrival at the City Garden Hotel, See gave notice to the doorman and
parking attendant of the said hotel, x x x Justimbaste, about his Vitara when he entrusted its ignition key
to the latter. x x x Justimbaste issued a valet parking customer claim stub to See, parked the Vitara at
the Equitable PCI Bank parking area, and placed the ignition key inside a safety key box while See
proceeded to the hotel lobby to check in. The Equitable PCI Bank parking area became an annex of City
Garden Hotel when the management of the said bank allowed the parking of the vehicles of hotel guests
thereat in the evening after banking hours.[11]

Article 1962, in relation to Article 1998, of the Civil Code defines a contract of deposit and a
necessary deposit made by persons in hotels or inns:

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 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.
 Art. 1998. The deposit of effects made by travelers in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that
notice was given to them, or to their employees, of the effects brought by the guests and that, on the
part of the latter, they take the precautions which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects.

Plainly, from the facts found by the lower courts, the insured See deposited his vehicle for
safekeeping with petitioner, through the latter’s employee, Justimbaste. In turn, Justimbaste issued a
claim stub to See. Thus, the contract of deposit was perfected from See’s delivery, when he handed over
to Justimbaste the keys to his vehicle, which Justimbaste received with the obligation of safely keeping
and returning it. Ultimately, petitioner is liable for the loss of See’s vehicle.

13. Triple V Food Services vs Filipino Merchant GR. No. 160544, February 21, 2005

Facts:

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.

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.

The RTC issued its judgment in favor of the plaintiff (FMICI) and against the defendant Triple V (herein
petitioner). On appeal, petitioner contended that it was not a depositary of the subject car and that it
exercised due diligence and prudence in the safe keeping of the vehicle, in handling the car-napping
incident and in the supervision of its employees. It further argued that there was no valid subrogation of
rights between Crispa and respondent FMICI. The Court of Appeals dismissed petitioner's appeal and
affirmed the appealed decision of the trial court.

Issue: Whether or not petitioner should be held liable for the loss of De Asis' car.

Held:

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.alaw 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.

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.

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.

14. Serrano vs Central Bank Feb 14, 1980

Facts:

Petitioner made a time deposit, for one year with 6% interest, of One Hundred Fifty Thousand Pesos
(P150,000.00) with the respondent Overseas Bank of Manila. Concepcion Maneja also made a time
deposit, for one year with 6-½% interest, on March 6, 1967, of Two Hundred Thousand Pesos
(P200,000.00) with the same respondent Overseas Bank of Manila.

On August 31, 1968, Concepcion Maneja, married to Felixberto M. Serrano, assigned and conveyed to
petitioner Manuel M. Serrano, her time deposit of P200,000.00 with respondent Overseas Bank of
Manila.

Notwithstanding series of demands for encashment of the aforementioned time deposits from the
respondent Overseas Bank of Manila, dating from December 6, 1967 up to March 4, 1968, not a single
one of the time deposit certificates was honored by respondent Overseas Bank of Manila.

In the case of Ramos vs. Central Bank of the Philippines,petitioner Manuel Serrano filed on September 6,
1968, a motion to intervene on the ground that Serrano had a real and legal interest as depositor of the
Overseas Bank of Manila in the matter in litigation in that case. This was denied on the ground that his
claim as depositor of the Overseas Bank of Manila should properly be ventilated in the Court of First
Instance, and if this Court were to allow Serrano to intervene as depositor, thousands of other
depositors would follow and thus cause an avalanche of cases in this Court.

Issue: Whether or not plaintiff is entitled to the relief sought.

Held:

This case isfor the recovery of time deposits plus interest from respondent Overseas Bank of Manila, and
recovery of damages against respondent Central Bank for its alleged failure to strictly supervise the acts
of the other respondent Bank and protect the interests of its depositors by virtue of the constructive
trust created when respondent Central Bank required the other respondent to increase its collaterals for
its overdrafts said emergency loans, said collaterals allegedly acquired through the use of depositors
money.

Claims of these nature are not proper in actions for mandamus and prohibition as there is no shown
clear abuse of discretion by the Central Bank in its exercise of supervision over the other respondent
Overseas Bank of Manila, and if there was, petitioner here is not the proper party to raise that question,
but rather the Overseas Bank of Manila.

Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All
kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are to be
covered by the law on loans. 14 Current and savings deposit are loans to a bank because it can use the
same. The petitioner here in making time deposits that earn interests with respondent Overseas Bank of
Manila was in reality a creditor of the respondent Bank and not a depositor. The respondent Bank was in
turn a debtor of petitioner. Failure of he respondent Bank to honor the time deposit is failure to pay s
obligation as a debtor and not a breach of trust arising from depositary's failure to return the subject
matter of the deposit.

Petition is dismissed.

15. People vs Puig, August 28, 2008

PEOPLE V. PUIG AND PORRAS

(Simple Loan)

· Depositors who place their money with the bank are considered creditors of the bank. The bank
acquires ownership of the money deposited by its clients, making the money taken by respondents as
belonging to the bank.

· The relationship between banks and depositors has been held to be that of creditor and debtor.
Articles 1953 and 1980 of the New Civil Code, as appropriately pointed out by petitioner, provide as
follows:

· Article 1953. A person who receives a loan of money or any other fungible thing acquires the
ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality.

· Article 1980. (supra)

· In summary, the Bank acquires ownership of the money deposited by its clients; and the
employees of the Bank, who are entrusted with the possession of money of the Bank due to the
confidence reposed in them, occupy positions of confidence. The Informations, therefore, sufficiently
allege all the essential elements constituting the crime of Qualified Theft.
Facts

A case of Qualified Theft was filed against the respondents. This was filed by the Iloilo provincial
prosecutor, for the private complainant, Rural Bank of Potoan. It was alleged in the complaint that Puig
was the cashier & Porras was the Bookkeeper in the said bank, and that they took away money
amounting to 15k without the consent of the bank owner, to the prejudice of the bank. However, the
RTC dismissed the complaint for insufficiency of the information ruling that the real parties in interest
are the depositors-clients and not the bank because the bank does not acquire ownership of the money
deposited in it. It also denied the MR.

Issue: WON the bank was the owner and thus, the real party in interest?

Held & Rationale

Yes. Under Art 1980 of the CC, "fixed, savings, and current deposits of money in banks shall be governed
by the provisions concerning simple loans." And, Art 1953 provides that "a person who receives a loan of
money acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the
same kind and quality." Thus, it posits that the depositors who place their money with the bank are
considered creditors of the bank. The bank acquires ownership of the money deposited by its clients,
making the money taken by respondents as belonging to the bank. Allegations in the Information that
such employees acted with grave abuse of confidence, to the damage and prejudice of the Bank,
without particularly referring to it as owner of the money deposits, as sufficient to make out a case of
Qualified Theft.