Deposit

A) Nature, Characteristics, Kinds

B) Voluntary deposit
C) Necessary deposit
D) Judicial deposit
E) Obligations
Cases:
Bank of the Philippine Islands v. The Intermediate Appellate Court and
Zshornack, G.R. No. L-66826 August 19, 1988, 164 SCRA 630.

FACTS:
The Original parties to this case were Rizaldy and Commercial Bank and
Trust Company (COMTRUST- absorbed by BPI through a corporate
merger). Rizaldy and wife Shirley Gorospe maintained in COMTRUST
(Quezon City Branch) a dollar savings account and a peso current
account. Virgilio Garcia, Assistant Branch manager, accomplished an
application for a dollar draft payable to a certain Leovigilda D. Dizon in
the amount of $1,000. The application indicated that the amount was to
be charged to the dollar savings account of the Zshornacks. Charges for
commission, documentary stamp tax and others totaling P 17.46 were to
be charged to the peso current account of the Zshornacks. The name of
the purchaser of the dollar draft was not indicated. COMTRUST, under
the signature of Virgilio V. Garcia, issued a check payable to the order of
Leovigilda D. Dizon in the sum of US $1,000 drawn on the Chase
Manhattan Bank, New York, with an indication that it was to be charged
to the dollar account of the Zshornacks. When Zshornack noticed the
withdrawal of US$1,000.00 from his account, he demanded an
explanation from the bank. In answer, COMTRUST claimed that the peso
value of the withdrawal was given to Atty. Ernesto Zshornack, Jr.,
brother of Rizaldy, on October 27, 1975 when he (Ernesto) encashed
with COMTRUST a cashier's check for P8,450.00 issued by the Manila
Banking Corporation payable to Ernesto. The second Allegation by
Rizaldy is that, Zshornack entrusted to COMTRUST, thru Garcia, US
$3,000.00 cash (popularly known as greenbacks) for safekeeping, and
that the agreement was embodied in a document, a copy of which was
attached to and made part of the complaint. Despite demand, the bank
refused to return the $3,000 deposited for safekeeping. For COMTRUST,
the $3,000 was credited to Zshornack’ s peso current account at the
prevailing conversion rates. COMTRUST did not specifically deny under
oath the authenticity and due execution of the instrument evidencing
the deposit. BPI argues that the contract embodied in the document is
the contract of depositum, which banks do not enter into. The bank
alleges that Garcia exceeded his powers when he entered into the
transaction. Hence, it is claimed, the bank cannot be liable under the
contract, and the obligation is purely personal to Garcia. CFI ruled in
favor of the Zshornacks except in the third cause of action. IAC modified
the decision of CFI and absolved the bank from liability on the fourth
cause of action.

ISSUE:
Whether the contract for safekeeping entered into by the bank and
Zshornack constitutes a contract of deposit
HELD:
The contract is one of deposit. Since it involves foreign exchange
transaction, it is covered by Central Bank Circular no. 20 (Agents of the
company must sell the foreign exchanged received by it to any of the
duly authorized representatives of BSP the day following the receipt of
such foreign exchange). The document and the subsequent acts of the
parties show that they intended the bank to safekeep the foreign
exchange, and return it later to Zshornack, who alleged in his complaint
that he is a Philippine resident. The parties did not intended to sell the
US dollars to the Central Bank within one business day from receipt.
Otherwise, the contract of depositum would never have been entered
into at all. Since the mere safekeeping of the greenbacks, without selling
them to the Central Bank within one business day from receipt, is a
transaction which is not authorized by CB Circular No. 20, it must be
considered as one which falls under the general class of prohibited
transactions. Hence, pursuant to Article 5 of the Civil Code, it is void,
having been executed against the provisions of a mandatory/prohibitory
law. More importantly, it affords neither of the parties a cause of action
against the other. "When the nullity proceeds from the illegality of the
cause or object of the contract, and the act constitutes a criminal
offense, both parties being in pari delicto, they shall have no cause of
action against each other. . ." Zshornack cannot recover under the
second cause of action. Under 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. As to liability, in
dealing with corporations the public at large is bound to rely to a large
extent upon outward appearances. If a man is found acting for a
corporation with the external indicia of authority, any person, not having
notice of want of authority, may usually rely upon those appearances;
and if it be found that the directors had permitted the agent to exercise
that authority and thereby held him out as a person competent to bind
the corporation, or had acquiesced in a contract and retained the
benefit supposed to have been conferred by it, the corporation will be
bound, notwithstanding the actual authority may never have been
granted. The practical effect of absolving a corporation from liability
every time an officer enters into a contract which is beyond corporate
powers, even without the proper allegation or proof that the
corporation has not authorized nor ratified the officer's act, is to cast
corporations in so perfect a mold that transgressions and wrongs by
such artificial beings become impossible.
Triple-V Food Services, Inc. v. Filipino Merchants Insurance Company,
Inc., G.R. No. 160544, February 21, 2005.
In a contract of deposit, a person receives an object belonging to
another with the obligation of safely keeping it and returning the same.
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.

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]  On the basis of such item, the trial court concluded that the
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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 clearly shown in the
breakdown of premiums in the same policy.[6]  Thus, having indemnified CRISPA for the
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stolen car, FMICI, as correctly ruled by the trial court and the Court of Appeals, was
properly subrogated to Crispa's rights against petitioner, pursuant to Article 2207 of the
New Civil Code[7].

Anent the trial court's findings of negligence on the part of the petitioner, which findings
were affirmed by the appellate court, we have consistently ruled that findings of facts of
trial courts, more so when affirmed, as here, by the Court of Appeals, are conclusive on this
Court unless the trial court itself ignored, overlooked or misconstrued facts and
circumstances which, if considered, warrant a reversal of the outcome of the case. [8]  This is
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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.

FACTS:

On March 2, 1997, at around 2:15 o'clock in the afternoon, a certain

Mary Jo-Anne 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.
Crispa filed a claim against its insurer, herein respondent FMICI. Having
indemnified Crispa in the amount of P669.500 for the loss of the 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 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 where under 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 ruled in favor
of FMICI. Seeking relief from the CA, petitioner appealed, but to no avail,
hence the recourse with the Supreme Court.
ISSUE:

1. WON petitioner is liable for the loss of the subject vehicle?

RULING:
1. The SC ruled in the affirmative. In a contract of deposit, a person
receives an object belonging to another with the obligation of safely
keeping it and returning the same. 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. 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. Furthermore, 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. WHEREFORE, petition is hereby DENIED DUE COURSE.

Contracts of adhesion, where one party imposes a ready-made form of

contract on the other, are not entirely prohibited. The one who adheres
to the contract is, in reality, free to reject it entirely; if he adheres, he
gives his consent.
CA Agro-Industrial Development Corporation v. Court of Appeals and
Security Bank and Trust Company, G.R. No. 90027, March 3, 1993, 219
SCRA 426.
Facts:
On July 3, 1979, CA Agro through its president, Sergio Aguirre entered
into a Conditional Contract of Sale with Spouses Pugao. It is stipulated
that upon payment of DP, the remaining balance shall be paid in 3
installment basis through issued post-dated checks. It is also part of the
condition that upon full payment of the purchase price and that the
Owner's copy of the said title shall be deposited at any bank.
It is likewise agreed that the deposit titles may be only be claimed by
joint signatures of the parties and upon full payment of the purchase
price. The parties, through Aguirre rented a safety deposit box with the
respondent security bank. For this purpose, Aguirre and Sps. Pugao
signed a contract of lease in which it is stipulated that:
"1. The bank is not the depositary of the contents of the safe and it has
neither the possession or control of the same.
2. That bank has no interest whatsoever in said contents, except herein
expressly provided, and it assumes absolutely no liability in connection
therewith."
Upon execution of the contract, each parties was given a key while the
guard key was remain in possession of the bank. The safety deposit bank
may only be unlock using the main key and the guard key.
Petitioner claimed that the title was placed inside the box.

Thereafter, Ms. Ramos offer to buy the said lot at a higher price (225/sq.
m) and demanded the immediate execution of deed of sale. Since the
Certificate of Title is necessary for the execution of deed, CA Agro and
Sps. Pugao went to the Bank together with its representative holding the
guard key to open the safety deposit box and claim the said titles.
However, they found no Certificate of Title inside the box.
Due to the delay in the execution of Deed of Sale caused by lost of Title,
Ms. Ramos withdraw her offer to purchase the land.
As a consequence thereof, CA Agro failed to realized its projected profit
of 280,500. Hence, the CA Agro file a complaint for damages against the
respondent bank.
In reply, respondent bank alleged that it is stipulated in the contract of
lease that: "loss of any items or articles contained in the box could not
give rise to an action against it.
RTC rendered judgement in favor of the respondent bank on the reason
that the provision in the contract of lease which excludes the latter from
liability in case of loss is binding upon the parties.
MR denied.
Appeal to the CA.

CA affirmed the decision of RTC on the ground that the contract

between the parties is Contract of Lease by virtue of which the renters
and co-renters were given full control over the safety deposit box and
retain no right to the bank to open the same.

Art. 1643 of NCC, in relation to the case of Tolentino v. Gonzales, "the

owner of the property loses its control over the property leased during
the period of the contract.
Further, Art. 1975 shall not be applied in case of Contract of Rent of
Depositary Boxes.

However, the Bank cannot be absolutely free from liability when an

unauthorized person enter to premises of the bank which the deposit
boxes are located or when the rented box was forced open.

MR Denied. Hence, this petition.

Issue: Whether the Contract entered into by the parties is in the nature
of Lease or Deposit.

Petitioner: claimed that the Bank is liable under Art. 1975 (Contract of
Deposit)
Respondent: The Contract is a contract of lease and is binding upon the
parties.
Ruling:
It is a Special Contract of Deposit.
It cannot be a simple contract of lease on the reason that the full control
of the box was not given to the lessee because the box cannot be open
without the guard key.
Art. 1975 and 1643 cannot be apply in this case.
The Supreme Court held that the prevailing rule in this case is Section 2
of General Banking Act which provides that:
"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. . . ."

However, the Bank cannot be held liable on the ground that Bank is not
aware of the agreements of the petitioner and Spouses Pugao that the
Certificate of Titles cannot be withdraw by the parties upon full payment
of the purchase price instead each of the renters were given their own
copies of key of the depositary box where at anytime either of the
renters may open the same.
It is therefore concluded that the loss of the Certificate of Titles was not
due to fraud or negligence of the parties and under the banking act, the
bank cannot be held liable.

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.

The Roman Catholic Bishop of Jaro v. De La Pena, G.R. No. L-6913,

November 21, 1913, 26 Phil 144.
MORELAND, J.:
***plaintiff is the trustee of a charitable bequest made for the construction of a leper
hospital and that father Agustin de la Peña was the duly authorized representative of
the plaintiff to receive the legacy. The defendant is the administrator of the estate of
Father De la Peña.***
1ST DECISION - awarding to the plaintiff the sum of P6,641, with interest at the legal
rate from the beginning of the action.
FACTS:

 In 1898, Father Agustin De la Peña, as trustee, had in his possession the

collected amount of P6,641, as shown in his book for the charitable purposes
of constructing a hospital for lepers.

 In the same year he deposited P19,000 in his personal account in the HSBC
Iloilo Branch

 during the war of the insurrection (Spanish-American), Father De la Peña was

arrested by the military authorities as a political prisoner and his funds in his
bank was also confiscated and turned over to the Government which made the
military authorities conclude that dela Pena was indeed an insurgent and that
the funds he collected was not for charitable purposes but for revolutionary
purposes.
ISSUE:

WHETHER FATHER DELA PENA IS LIABLE FOR THE LOSS OF THE TRUST
FUND

HELD:

The Court held NO and reversed the decision on awarding to the plaintiff the sum of
P6,641, with interest at the legal rate from the beginning of the action.

The Court concluded that the P6,641 trust fund was included in the 19k pesos that Fr.
Dela Pena deposited in his personal account.

Further, the Court held that "The fact that Fr. Dela Pena placed the trust fund in the
bank in his personal account does not add to his responsibility. Such deposit did not
make him a debtor who must respond at all hazards. . . . There was no law prohibiting
him from depositing it as he did, and there was no law which changed his
responsibility, by reason of the deposit."

The Court also discussed probabilities. On what if Fr. Dela Pena should have made a
separate acct for the trust fund or if Fr dela Pena should have just left it in his home.
But according to the Court, whatever way Fr Dela Pena do to the trust fund, he is not
responsible in either way.

Although the Civil Code states that "a person obliged to give something is also bound
to preserve it with the diligence pertaining to a good father of a family" (art. 1094), it
also provides, following the principle of the Roman law, major casus est, cui humana
infirmitas resistere non potest, that "no one shall be liable for events which could not
be foreseen, or which having been foreseen were inevitable, with the exception of the
cases expressly mentioned in the law or those in which the obligation so declares."
(Art. 1105.)

(the law of trusts in England and America had no exact counterpart in the Roman law
and has none under the Spanish law. In this jurisdiction, therefore, Father De la Peña's
liability is determined by those portions of the Civil Code which relate to obligations.
(Book 4, Title 1.))

The judgment is therefore reversed, and it is decreed that the plaintiff shall take
nothing by his complaint.

TRENT, J., dissenting:

If the trust fund had been deposited under Fr dela Pena’s name as trustee, the military
authorities would have not confiscated it because the said trust fund was clothed with
all the immunities and protection from the law and because the US military authorities
were looking for insurgent funds only.
Justice Trent mentioned the United State vs. Thomas (82 U. S., 337), case which said
that: "Trustees are only bound to exercise the same care and solicitude with regard to
the trust property which they would exercise with regard to their own. Equity will not
exact more of them. They are not liable for a loss by theft without their fault. But this
exemption ceases when they mix the trust-money with their own, whereby it loses its
identity, and they become mere debtors."

I assume that the court in using the language which appears in the latter part of the
above quotation meant to say that there was no statutory law regulating the question.
Questions of this character are not usually governed by statutory law. The law is to be
found in the very nature of the trust itself, and, as a general rule, the courts say what
facts are necessary to hold the trustee as a debtor.

If De la Peña, after depositing the trust fund in his personal account, had used this
money for speculative purposes, such as the buying and selling of sugar or other
products of the country, thereby becoming a debtor, there would have been no doubt
as to the liability of his estate. Whether he used this money for that purpose the record
is silent, but it will be noted that a considerable length of time intervened from the
time of the deposit until the funds were confiscated by the military authorities. In fact
the record shows that De la Peña deposited on June 27, 1898, P5,259, on June 28 of
that year P3,280, and on August 5 of the same year P6,000. The record also shows
that these funds were withdrawn and again deposited all together on the 29th of May,
1900, this last deposit amounting to P18,970. These facts strongly indicate that De la
Peña had as a matter of fact been using the money in violation of the trust imposed in
him. lawph!1.net

If the doctrine announced in the majority opinion be followed in cases hereafter

arising in this jurisdiction trust funds will be placed in precarious condition. The
position of the trustee will cease to be one of trust.

YHT Realty Corporation v. Court of Appeals, G.R. No. 126780, February

17, 2005, 451
SCRA 638.
Fact:
Private Respondent was an Australian businessman-philanthropist who
stayed in a Suites owned by the Petitioner. The Private Respondent
rented a safety deposit box with the said Suite. In Renting the box, he
was asked to sign a waiver “Undertaking For The Use of Safety Deposit
Box” which exonerating the Hotel, its Management and Employees from
liability in case of loss of the item in the box. The companion of the
respondent Tan, while the latter was sleeping with the assistance of the
staff of the Hotel, was allowed to open the depositary box of
Respondent. When the respondent opened the box, he Notice in a
number of occasion that the Money he placed in the box was either
missing or lacking. When he confronted the Management of the hotel,
the latter advised that it was his companion Tan who opened the box.
The respondent went to the RTC and filed a complaint against the
Petitioner. In the RTC, the Petitioner contented that the waiver signed
by the Respondent exonerate them from liabilities. the RTC found the
Management of the Hotel negligent for allowing a third person to open
the box which the Respondent rented from them. The RTC found the
Hotel and its staff liable for the actual and Moral damages that the
Respondent lost.
Petitioner went to CA to contest the decision. However, the CA agreed
with the decision of the RTC and dismissed the petition. Hence, the
Petitioner elevated the issue to the SC.
Issue:
1. Whether the Petitioner Committed Gross Negligence for the stolen
property of the Private Respondent?
2. Whether the “Undertaking For The Use of Safety Deposit Box”
executed by the Private Respondent to exonerate the hotel prom
liability is null and void?
Held:
1. 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. 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.
2. Yes, Art. 2003. 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 responsibility of the former as set forth in
Articles 1998 to 2001 is suppressed or diminished shall be void.Article
2003 was incorporated in the New Civil Code as an expression of public
policy precisely to apply to situations such as that presented in this case.
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.Paragraphs (2) and (4) of the “undertaking”
manifestly contravene Article 2003 of the New Civil Code for they allow
Tropicana to be released from liability arising from any loss in the
contents and/or use 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.
PICOP RESOURCES, INC., vs. HON. AUGUSTUS L. CALO, G.R. No. 161798.
October 20, 2004.
Petitioner PICOP Resources, Inc. (PICOP) owns and operates a multi-billion peso pulp and paper
manufacturing facility in Agusan del Norte.
PICOP holds government-issued Pulpwood and Timber License Agreement (PTLA) No. 47 and
Integrated Forest Management Agreement (IFMA) No. 35 which gave petitioner the exclusive right to
co-manage and develop with the State almost 130,000 hectares of forest land within the Agusan-
Davao-Surigao Forest Reserve.
Pursuant to three Memoranda, dated August 22, 1997, February 16, 2001, and April 6, 2001, PICOP
was designated by DENR as a depository and custodian for apprehended forest products and
conveyances within its concession.
On May 25, 2001, the Office of the CENRO-Bislig and Petitioner entered into a Memorandum of
Agreement (MOA) containing "Procedural Guidelines in the Conduct of Verification of Private Tree
Plantation." Pursuant to these Memoranda, petitioner's security personnel were deputized as DENR
officers to apprehend and seize the tools, equipment and conveyance used in the commission of
illegal logging and the forest products removed and possessed by the offenders.
PICOP security personnel, had on numerous occasions apprehended illegally cut forest products and
conveyances were kept in PICOP's impounding area
On June 18, 2001, by way of class suits, private respondents 1 - the members of the UNITED FARMERS
ASSOCIATION OF BISLIG (UFAB), filed a complaint for damages and injunction with prayer for issuance
of writ of preliminary mandatory injunction before the RTC against the DENR, PENRO 2, CENRO3 and
PICOP.
Private respondents-complainants were some of those apprehended by PICOP'S security officers
transporting without any permit several hundred cubic meters of falcata logs allegedly grown in
petitioner's plantation. The logs, trucks and other forms of conveyance on which they were carried
were confiscated and kept in petitioner's impounding area.

Private respondents alleged in their complaint that

 the Memoranda dated August 22, 1997, February 16, 2001 and April 6, 2001 and the MOA
dated May 25, 2001 were illegal for having been issued with grave abuse of discretion. They
sought to have the Memoranda declared null and void for this reason and also sought to
restrain the DENR and all those acting for and in their behalf, including herein petitioner,
from enforcing or implementing said Memoranda.

On September 21, 2001, the RTC ruled that

 sustained the validity of the Memoranda. The Memoranda were issuances of a duly-
authorized government agency in the normal and regular course of its duty to enforce
forestry laws and procedures.
 the application for the writ of preliminary injunction was the wrong remedy to assail the
legality of the Memoranda, such an action being merely a collateral attack. Private
respondents should instead have filed a petition to declare the Memoranda null and void.

1
Eduardo Casia, Rogelio Castillo, Uldarico Casinginan, Eladio Galano, Catalino Virtudazo, Ricardo Balad-on, Joel
Villareal, Tiburcio Impuerto, Hilario Fernandez, Andrea Vasquez, Spouses Remelito Codera and Marilyn Ranoso-
Codera, and Florio Josafat, Jr.
2
Provincial Environment and Natural Resources Offices (PENRO) 
3
Community Environment and Natural Resources Offices (CENRO)
  granted private respondent's prayer for preliminary mandatory injunction. It noted that
administrative or criminal cases had been filed against private respondents involving the
apprehended conveyances.
 ordered RED Elias R. Seraspio, Jr. to recall, withdraw and abrogate the enforcement of the
assailed Memorandum dated February 16, 2001 and commanded all those acting pursuant to
said Memorandum to refrain and desist from implementing the Memorandum.
 Petitioner was also ordered to release the confiscated falcata logs and vehicles to the owners
thereof, or to the CENRO-Bislig or the Office of the Government Prosecution-Surigao del Sur,
where the administrative and criminal proceedings were ongoing.

On August 15, 2003, petitioner filed a Motion for Reconsideration but this was denied in the
Resolution of January 16, 2003.

Petitioner then filed this Petition for Review. Petitioner argues that
 it is a proper party-in-interest, vested with a material interest in the outcome of the case. It
allegedly has more than just a contingent interest in the outcome of the dispute.

 that private respondents' intrusion was in violation of petitioner's PTLA No. 47 and IFMA No.
35. These license agreements gave petitioner the exclusive right to co-manage and develop
forest lands, and recognized petitioner as owner of the trees and other products in the
concession area. In filing this petition, petitioner is merely defending its subsisting
proprietary interest pursuant to these license agreements.

 Public respondents never refuted petitioner PICOP's allegation that private respondents
were apprehended by the DENR-deputized PICOP guards at its checkpoint within PICOP's
concession area. Private respondents also never denied that PICOP's guards had been
deputized as DENR officers to enforce the Memoranda. Petitioner was therefore within its
rights in exercising control over its concession area pursuant to its duty as DENR depository.

 the RTC intruded upon the primary jurisdiction of the DENR when it took cognizance of
private respondents' complaint for damages and issued the writ of injunction. Petitioner
invokes DENR Department Administrative Order (DAO) No. 97-3213 in asserting that it has
the obligation to keep custody of the apprehended forest products, tools and conveyances,
the disposal of which rests solely on the DENR.

 The RTC also allegedly committed grave abuse of discretion in granting private respondents'
prayer for issuance of injunction in violation of the doctrine of exhaustion of administrative
remedies. Petitioner argues that private respondents should have awaited the results of the
administrative procedure for summary administrative apprehensions and seizures of the
DENR under Sections 5 and 6 of DAO No. 97-32, instead of filing the complaint before the
trial court. This would have allegedly allowed the proper administrative officer to ascertain
whether a prima facie case lies against the offenders and whether the apprehended articles
should answer for the offense. By issuing the assailed writ of injunction, the trial court
arrogated unto itself the power to rule on the rightful possession of the subject conveyances.

 the injunctive writ was issued without due process of law since the transfer of custody of the
forest products and conveyances was not even sought by private respondents in their
complaint. Consequently, the matter of the return of the seized conveyances was never
ventilated during the hearing and the issuance of the writ not sought for violates the rules of
due process.

Issue: Whether the RTC’s order is correct

Held. Yes. The Supreme court held that:

Licensing agreement will not make PICOP as Party in interest

Held that petitioner has no material interest to protect in the confiscated forest products and
conveyances. It has no subsisting proprietary interest, as borne out by its licensing agreements, which
need to be protected by annulling the writ of injunction issued by the trial court. As observed by the
Court of Appeals, any interest petitioner has in the confiscated properties is dependent on the
outcome of the proceedings before the CENRO-Bislig and the Office of the Government Prosecution-
Surigao del Sur. The issue of ownership and possession of the confiscated products still has to be
determined in those proceedings. Petitioner had not refuted this.

Petitioner being merely depository cannot claim the right to retain custody
Held that Petitioner also cannot claim the right to retain custody of the apprehended logs and
conveyances by virtue of its being designated a depository of the DENR pursuant to the assailed
Memoranda. As such depository, petitioner merely holds the confiscated products and conveyances
in custody for the DENR while the administrative or criminal proceedings regarding said products is
pending.

Confiscated items must be given to Government for proper disposal

The trial court noted that the confiscated vehicles were already subject of administrative proceedings
before the CENRO-Bislig and criminal complaints before the Office of the Government Prosecution-
Surigao del Sur. There were also letters or notices to petitioner from officers of the CENRO and the
Office of the Government Prosecution requesting the release of some of the conveyances to their
owners.14 There is no reason for petitioner to refuse to hand over possession of the vehicles and
forest products since, being confiscated items, they will have to be handed over to the proper
government agencies for appropriate disposition proceedings.

Furthermore, the transfer of custody of the confiscated products and conveyances will not in any way
place petitioner at a disadvantage. Petitioner is merely a depository and the release of the
conveyances and products to the government agencies concerned has to be done but only in
compliance with lawful court orders.

Being Depository already revoked

It should also be remembered that the Memorandum dated February 16, 2001, which designated
petitioner as a DENR depository, had been revoked by the Memorandum of January 21, 2002. As of
the filing of the Petition for Review before this Court on March 11, 2004, petitioner no longer had any
right, as a depository, to retain possession of the conveyances.

No violation of the doctrines of primary jurisdiction and exhaustion of administrative remedies

The contention that the trial court violated the doctrines of primary jurisdiction and exhaustion of
administrative remedies should also fail. The transfer of custody of the confiscated products to the
CENRO and the Office of the Government Prosecution was for the purpose of resolving the cases with
dispatch.