Part Three: Deposits

In General: NCC, Articles 1962 to 1967

Voluntary Deposit: NCC, Articles 1968 to 1995
Necessary Deposit: NCC, Articles 1996 to 2009

Cases:
Calibo v. CA, 350 SCRA 427 (2001)
Bishop of Jaro v. Dela Peñ a 26 Phil 144 (1913)
CA Agro Industrial Development Corp. v CA, 219 SCRA 426(1993)
Javellana v. Lim, 11 Phil 141 (1908)
Gavieres v. Pardo de Tavera, 1 Phil 71 (1901)
Baron v. David, 51 Phil 1 (1927)
U.S. v. Igpuara, 27 Phil 619 (1913)
Palacio v. Sudario, 7 Phil 275 (1907)
Gullas v. PNB, 62 Phil. 519 (1935)
Serrano v. Central Bank 96 SCRA 96 (1980)
YHT Realty v CA, 451 SCRA 638 (2005)
Durban Apartments v. Pioneer Insurance, 639 SCRA 441 (2011)
Sulpicio Lines v. Sesante, G.R. No. 172682 (2016)
-BPI v. IAC, 164 SCRA 630 (1988)
-BPI v. CA, 232 SCRA 302 (1994)
-Serrano v. CB, 96 SCRA 96 (1980)
-Lua Kian v. Manila Railroad, 19 SCRA 5 (1967)
-Javellana v. Lim, 11 Phil 141 (1908)
-Baron v. David, 51 Phil 2 (1927)
-Vintola v. IBAA, 150 SCRA 578, G.R. 73721 (1987)
-Sia v. People, 121 SCRA 661 (1983)
-Gonzales v. Go Tiong and Luzon Surety, 104 Phil 492 (1958)
-Consolidated Terminals v. Artex Development Co., 63 SCRA 46 (1975)
Roman Catholic Bishop v. de la Pena, 26 Phil 144 (1913)
Calibo v. CA, 350 SCRA 427 (2001)
**Facts:**
1. Pablo U. Abella purchased an MF 210 agricultural tractor and used it on his farm in
Dagohoy, Bohol.
2. Mike Abella, Pablo's son, rented a house from Dionisio R. Calibo, Jr., in Tagbilaran City. He
later left the tractor in Calibo's garage for safekeeping.
3. Mike failed to pay rent and utility bills, offering the tractor as security for his debts to
Calibo.
4. Calibo visited Mike multiple times to collect payment but was unsuccessful.
5. Pablo Abella, Mike's father and the owner of the tractor, attempted to reclaim it from
Calibo but was unsuccessful.
6. Private respondent (Pablo Abella) filed a replevin action to recover possession of the
tractor from Calibo.

**Issues:**
1. Whether the tractor was validly pledged to Calibo by Mike Abella to secure Mike's debts.
2. Whether there was an implied agency relationship between Mike Abella and Pablo Abella
that would bind Pablo to the pledge.
3. Whether there was a valid deposit of the tractor with Calibo.
4. Whether Calibo had the right to refuse delivery of the tractor to its lawful owner.
5. Whether there were irregularities in the trial court proceedings, which Calibo raised as
an additional issue.

**Decisions:**
1. The Court ruled that the tractor was not validly pledged to Calibo because Mike Abella,
who pledged it, was not the absolute owner of the tractor.
2. There was no implied agency between Mike and Pablo Abella, as Pablo was unaware of
and did not authorize Mike's actions regarding the tractor.
3. The Court also found that there was no valid deposit since Calibo received the tractor as
security for payment, not for safekeeping.
4. Calibo had no right to refuse delivery of the tractor to its lawful owner, Pablo Abella.
5. The Court did not address Calibo's allegations of irregularities in the trial court
proceedings, as a petition for review on certiorari was not the appropriate avenue for such
claims.

**Conclusion:**
The petition by Dionisio Calibo, Jr. was denied, affirming the decision of the Court of
Appeals, which ruled in favor of Pablo Abella, the lawful possessor of the tractor. Costs
were imposed against Calibo.
Bishop of Jaro v. Dela Peña 26 Phil 144 (1913)
**Facts:**

1. The plaintiff is the trustee of a charitable bequest intended for the construction of a leper
hospital.
2. Father Agustin de la Peñ a was the authorized representative of the plaintiff to receive the
legacy.
3. In 1898, Father de la Peñ a, acting as trustee, had P6,641 in trust funds in his possession.
4. Father de la Peñ a deposited P19,000 in his personal account at the Hongkong and
Shanghai Bank in Iloilo, which included the trust funds.
5. During the revolution, Father de la Peñ a was arrested as a political prisoner, and the
military authorities confiscated the funds in the bank, including the trust funds, claiming
they were collected for revolutionary purposes.

**Issues:**

1. Whether Father de la Peñ a, as trustee, is liable for the loss of the trust funds due to their
confiscation by the military authorities.
2. Whether the deposit of the trust funds into Father de la Peñ a's personal bank account
affected his liability as a trustee.

**Decisions:**

Majority Opinion:

1. The liability of Father de la Peñ a as a trustee is determined by the Civil Code provisions
regarding obligations.
2. Placing the trust funds in his personal account and mixing them with his own funds did
not change Father de la Peñ a's obligation or make him liable to repay the money
unconditionally.
3. The confiscation of the funds by the military authorities due to fuerza mayor (act of God
or force majeure) relieves Father de la Peñ a from responsibility.
4. The deposit of the trust funds into Father de la Peñ a's personal account did not increase
his liability, as there was no law prohibiting such a deposit or changing his responsibility
because of it.

Dissenting Opinion:
1. Father de la Peñ a, by depositing the trust funds into his personal account and mixing
them with his own funds, removed the protections afforded to trust funds under the law.
2. If the funds had been deposited in the name of Father de la Peñ a as trustee or agent of
the plaintiff, they might not have been confiscated by the military authorities.
3. The majority opinion's interpretation allows trustees to avoid responsibility by mixing
trust funds with personal funds, potentially leading to misuse of trust funds and
undermining the position of trustees.
CA Agro Industrial Development Corp. v CA, 219 SCRA 426(1993)
https://jur.ph/jurisprudence/v/digest/ca-agro-industrial-development-corp-v-court-of-
appeals?q=G.R.+No.+90027

**Facts:**
1. Petitioner, through its President Sergio Aguirre, purchased two parcels of land from
spouses Ramon and Paula Pugao.
2. As part of the agreement, the titles to the lots were to be transferred to the petitioner
upon full payment, and the titles were to be deposited in a safety deposit box in a bank.
3. Petitioner and the Pugaos rented Safety Deposit Box No. 1448 of Security Bank and Trust
Company.
4. The contract of lease for the safety deposit box contained provisions absolving the bank
from liability for the contents of the box.
5. When the petitioner attempted to retrieve the certificates of title from the safety deposit
box, they were not found.
6. As a result, a potential sale of the lots fell through, causing the petitioner to lose expected
profits.
7. Petitioner filed a complaint for damages against the bank, which was dismissed by the
trial court.
8. The trial court held that the bank was not liable based on the provisions of the contract
of lease.
9. Petitioner appealed to the Court of Appeals, which affirmed the trial court's decision.
10. The Court of Appeals held that the contract was a lease, and the bank had no liability for
the loss of the certificates of title.
11. Petitioner appealed to the Supreme Court, arguing that the contract was a deposit and
the bank was liable for the loss.

**Issues:**
1. Whether the contractual relation between the bank and the petitioner is one of bailor
and bailee or lessor and lessee.
2. Whether the bank is liable for the loss of the certificates of title.

**Decisions:**
1. The Supreme Court agreed with the petitioner that the contract was not an ordinary
lease but a special kind of deposit.
2. The bank's exoneration from liability was not based on the characterization of the
contract as a lease but on the lack of evidence showing the bank's awareness or negligence
in the loss of the certificates.
3. The Supreme Court modified the decision of the Court of Appeals by deleting the award
for attorney's fees but affirmed the decision in all other aspects.

In summary, the Supreme Court determined that the contractual relation between the bank
and the petitioner was a special kind of deposit, and the bank was not liable for the loss of
the certificates of title due to lack of evidence of its negligence or awareness.
Javellana v. Lim, 11 Phil 141 (1908)
https://jur.ph/jurisprudence/v/digest/javellana-v-lim?q=G.R.+No.+4015

**Facts:**

1. Angel Javellana, the plaintiff, filed a complaint against Jose Lim and Ceferino Domingo
Lim, the defendants, on October 30, 1906.
2. The complaint sought payment of a sum of P2,686.58, with interest at 15% per annum
from January 20, 1898.
3. The defendants acknowledged a document dated May 26, 1897, where they promised to
return the deposited sum by January 20, 1898, without interest.
4. The defendants later requested an extension for repayment and agreed to pay interest at
15% per annum, to which the plaintiff agreed.
5. Despite partial payments on account of interest, the defendants failed to repay the
principal sum, causing losses and damages to the plaintiff.

**Issues:**

1. Whether the transaction between the parties was a deposit or a loan.

2. Whether the defendants had permission to use the deposited sum, transforming the
contract into a loan.
3. Whether the defendants effectively acknowledged the debt and agreed to pay interest.
4. Whether the defendants provided sufficient evidence for their counterclaim.
5. Whether there was a renewal of the contract or release of one of the debtors from their
obligation.

**Decisions:**

1. The court determined that the transaction was a loan rather than a deposit based on the
defendants' actions and agreements.
2. The defendants had permission to use the deposited sum, converting the contract into a
loan.
3. The defendants effectively acknowledged the debt and agreed to pay interest.
4. The defendants failed to provide sufficient evidence for their counterclaim, and the
plaintiff's allegations remained uncontradicted.
5. There was no renewal of the contract, and both defendants remained obligated to repay
the debt.

**Final Decision:**

The court affirmed the judgment in favor of the plaintiff, ordering the defendants to pay the
principal sum with interest until full liquidation of the debt, along with the costs of the
proceedings.
Gavieres v. Pardo de Tavera, 1 Phil 71 (1901)
**Facts:**

1. The case involves a declarative action filed by Don Manuel Garcia Gavieres against Don
Trinidad H. Pardo de Tavera in the Court of First Instance of Tondo.
2. The action concerns the collection of a balance of 1,423 pesos 75 cents, which remains
due on an original obligation of 3,000 pesos.
3. The original obligation arose from a deposit made by Doñ a Ignacia de Gorricho to Don
Felix Pardo de Tavera on January 31, 1859.
4. The document representing the agreement states that the deposit was payable on two
months' notice in advance, with an interest rate of 6% per annum, and an hypothecation of
the depositor's goods as security.
5. The defendant, Don Trinidad H. Pardo de Tavera, argues that the document was not a
contract of deposit but a contract of loan, and that the action is barred by prescription.
6. The defendant claims that the obligation has been extinguished due to payment and the
lapse of the prescriptive period for personal actions.

**Issues:**

1. Whether the document represents a contract of deposit or a contract of loan.

2. Whether the action is barred by prescription.
3. Whether the payment made by the defendant's representative extinguished the
obligation.
4. Whether the lapse of time and lack of evidence affect the validity of the claim.

**Decisions:**

1. The court affirms the judgment of the Court of First Instance, ruling in favor of the
defendant.
2. The court finds that the document, despite referring to a deposit, constitutes a contract of
loan based on the terms and circumstances.
3. The court holds that the action is barred by prescription, citing the lapse of time since the
execution of the document in 1859.
4. The court considers the payment made by the defendant's representative as sufficient to
satisfy the obligation.
5. The court implies that the lack of evidence or delay in presenting evidence by the
plaintiff contributes to the decision in favor of the defendant.
Baron v. David, 51 Phil 1 (1927)
https://jur.ph/jurisprudence/v/digest/baron-v-david?q=G.R.+Nos.+L-26948

**Facts:**
1. Two separate cases were filed in the Court of First Instance of the Province of Pampanga
by Silvestra Baron and Guillermo Baron against Pablo David.
2. Both cases involved the recovery of the value of palay allegedly sold by the plaintiffs to
the defendant in 1920.
3. The cases were heard together as they depended on similar facts.
4. Silvestra Baron claimed P5,238.51, while Guillermo Baron claimed P5,734.60 from the
defendant.
5. Pablo David counterclaimed against Guillermo Baron for P2,800 advanced to him and
sought compensation for damages caused by malicious statements and the temporary
shutdown of his rice mill due to an attachment.
6. Prior to January 17, 1921, Pablo David's rice mill was destroyed by fire.
7. The plaintiffs alleged that their palay was sold to the defendant, while the defendant
claimed it was deposited for future sale or withdrawal.
8. The defendant's mill processed palay from various customers, making it impossible to
segregate the plaintiffs' palay.
9. The trial judge found that the defendant had milled and sold the plaintiffs' palay before
the fire.
10. The plaintiffs demanded payment from the defendant in August 1920, but the exact
amount was undetermined.
11. The trial judge determined the value of the palay at P6.15 per cavan based on market
prices and the demand for settlement.
12. The trial judge deducted a portion of palay destroyed in the fire from the plaintiffs'
claims, which the appellate court found erroneous.
13. The trial judge also deducted palay withdrawn by Guillermo Baron in subsequent
transactions, which was deemed irrelevant to the case.
14. Guillermo Baron obtained an attachment against Pablo David's property, leading to the
closure of the rice mill for 170 days.
15. The attachment was based on false allegations by Guillermo Baron, causing financial
losses to Pablo David.
16. Pablo David claimed damages for lost profits and damage to his business reputation
due to the wrongful attachment.
17. The trial court dismissed Pablo David's claim for additional damages but awarded him
compensation for lost profits and damage to business reputation.
18. Guillermo Baron's deposition was admitted as evidence without being read aloud in
court, which the defendant argued was not valid evidence.

**Issues:**
1. Whether the palay delivered to the defendant was sold or deposited for future
sale/withdrawal.
2. Whether the defendant is liable for the value of the palay delivered by the plaintiffs.
3. Whether the trial court correctly calculated the value of the palay.
4. Whether the deductions made by the trial court from the plaintiffs' claims were
appropriate.
5. Whether Guillermo Baron's attachment against Pablo David's property was wrongful.
6. Whether Pablo David is entitled to damages for lost profits and damage to business
reputation due to the attachment.
7. Whether Guillermo Baron's deposition was admissible as evidence without being read
aloud in court.

**Decisions:**
1. The plaintiffs are entitled to recover the value of the palay they delivered to the
defendant, as it was established that the defendant had milled and sold the palay before the
fire.
2. The trial court's calculation of the value of the palay at P6.15 per cavan was deemed
appropriate.
3. The deductions made by the trial court from the plaintiffs' claims were found to be
erroneous and were reversed.
4. Guillermo Baron's attachment against Pablo David's property was deemed wrongful, and
Pablo David is entitled to compensation for lost profits and damage to business reputation.
5. Guillermo Baron's deposition was deemed admissible as evidence, even though it was
not read aloud in court, as per court procedures.
U.S. v. Igpuara, 27 Phil 619 (1913)
**Facts:**
1. The defendant was charged with estafa for allegedly swindling Juana Montilla and
Eugenio Veraguth out of P2,498 Philippine currency.
2. The defendant received P2,498, which was supposed to be at the disposal of Eugenio
Veraguth, according to a document signed by the defendant.
3. Veraguth demanded restitution of the money through a notarial instrument, but the
defendant did not return it.
4. The defendant argued that the document was a certificate of deposit and that the money
remained with him as a loan until demanded.

**Issues:**
1. Whether the document executed by the defendant was indeed a certificate of deposit.
2. Whether there was a valid deposit of P2,498.
3. Whether the defendant's actions constituted the crime of estafa.

**Decisions:**
1. The court found that the document was not a negotiable instrument and did not
constitute a loan, but rather a deposit, based on legal definitions and the absence of
evidence of authorization to use the money.
2. The court ruled that a valid deposit was established when the defendant received the
money, as per Civil Code provisions.
3. The court affirmed the judgment of the Court of First Instance, holding the defendant
guilty of estafa. The defendant's actions of appropriating or diverting the deposited money
to his own benefit constituted the crime of estafa, according to Penal Code provisions.

In summary, the court upheld the lower court's decision, concluding that the defendant's
actions amounted to estafa, as he wrongfully disposed of the deposited money to the
detriment of the depositors.
Palacio v. Sudario, 7 Phil 275 (1907)
**Facts:**
- The plaintiff engaged in an agreement with the defendant, who was also the president of
the municipality, and three herdsmen for the pasturing of eighty-one head of cattle.
According to the terms of the agreement, the plaintiff was to provide one-half of the calves
born and pay the defendant one-half peso for each calf branded.
- Subsequently, forty-eight head of cattle were returned to the plaintiff, leaving thirty-three
still unaccounted for.
- The plaintiff initiates legal action to recover the remaining thirty-three head of cattle.

**Issues:**
1. **Nature of the Agreement:** The primary issue is whether the arrangement for
pasturing cattle was between the plaintiff and the defendant directly or if the defendant
acted only as a facilitator while the agreement was actually made between the plaintiff and
the herdsmen.
2. **Cause of Loss of Cattle:** The second issue pertains to the cause of the loss of the
thirty-three head of cattle. The defendant claims that they either died due to disease or
were lost in a flood. The court needs to determine the validity of this claim and whether the
defendant is liable for the loss.
3. **Nature of the Contract:** Another issue is to ascertain the nature of the contract
between the parties. Specifically, whether it constitutes a deposit arrangement, subject to
the relevant provisions of the Civil Code, or if it falls under a local custom for pasturing
cattle.
4. **Liability for Loss:** If the contract is deemed to be one of deposit, the court must
determine whether the defendant, as the depositary, bears liability for the loss of the cattle.
This involves assessing whether the loss occurred due to fault on the defendant's part or if
it was caused by force majeure.
5. **Statute of Limitations:** Additionally, the defendant raises the defense of the statute of
limitations, arguing that the plaintiff's claim is barred by the six-year statute provided in
the current Code of Civil Procedure. The court needs to decide whether this defense is valid
or if the fifteen-year prescription period under the preexisting law applies.

**Detailed Decisions:**
1. **Nature of Agreement:** The court finds that the agreement was indeed made between
the plaintiff and the defendant, supported by evidence such as a letter from the defendant
acknowledging his involvement.
2. **Cause of Loss:** The court determines that the defendant's claim regarding the cause
of loss of the cattle is unsubstantiated by clear evidence. Some of the cattle were alive at the
time of the return of the forty-eight head, casting doubt on the defendant's explanation.
3. **Nature of Contract:** Regardless of whether the contract is considered one of deposit
or according to local custom, the court holds that the obligations of the parties remain
unchanged.
4. **Liability for Loss:** The court concludes that the defendant has failed to demonstrate
that the loss occurred without fault on his part or due to force majeure. Consequently, the
defendant is held liable for the loss of the cattle.

5. **Statute of Limitations:** The court rejects the defendant's defense based on the six-
year statute of limitations, determining that the action is governed by the fifteen-year
prescription period under the preexisting law.
6. **Final Judgment:** The court affirms the judgment of the lower court, ordering the
defendant to bear the costs of both instances. The case is remanded for execution after the
specified time period.

Gullas v. PNB, 62 Phil. 519 (1935)

**Facts:**
1. Paulino Gullas, a member of the Philippine Bar residing in Cebu City, and the Philippine
National Bank (PNB) are parties to the case.
2. Gullas held a current account with PNB.
3. On August 2, 1933, a United States treasury warrant for $361, payable to Francisco
Sabectoria Bacos, was cashed by PNB with endorsements from Gullas and Pedro Lopez.
4. The treasury warrant was later dishonored by the Insular Treasurer.
5. Gullas had an outstanding balance of P509 in his account at the time.
6. Gullas left for Manila on August 20, 1933, and was not available to receive notices from
the bank regarding the dishonor of the treasury warrant.
7. PNB applied the outstanding balance in Gullas's account towards the payment of the
dishonored treasury warrant without waiting for action from Gullas.
8. Gullas returned to Cebu on August 31, 1933, and paid the unpaid balance of the treasury
warrant.

**Issues:**
1. Whether PNB had the right to apply a deposit to the debt of a depositor without proper
notice.
2. The amount of damages, if any, to be awarded to Gullas.

**Decisions:**
1. The court held that PNB's action of applying the deposit to the debt without proper
notice was prejudicial to Gullas.
2. While it was difficult to determine exact damages, the court awarded nominal damages
of P250 to Gullas for the disturbance caused to his finances and his inability to protect his
interests due to the premature action of the bank.
3. The judgment of the trial court was modified, and PNB was sentenced to pay Gullas the
sum of P250, along with the costs of both instances.
In summary, the case revolves around PNB's premature action in applying Gullas's deposit
to a debt without proper notice, leading to Gullas being awarded nominal damages by the
court.

Serrano v. Central Bank 96 SCRA 96 (1980)

**Facts:**
1. Petitioner made time deposits with Overseas Bank of Manila in 1966 and 1967.
2. Despite demands for encashment, Overseas Bank of Manila did not honor the time
deposit certificates.
3. Respondent Central Bank exercised supervision over banks, including Overseas Bank of
Manila, but denied strict duty of supervision.
4. Overseas Bank of Manila had limited operations due to reserve deficiencies.
5. Petitioner filed a motion to intervene in another case involving Overseas Bank of Manila,
which was denied by the court.
6. Court decision favored Overseas Bank of Manila in the previous case.
7. Petitioner sought judgment against Central Bank for joint liability with Overseas Bank of
Manila.
8. The court dismissed the petition, stating that petitioner's claims should be filed in the
Court of First Instance.

**Issues:**
1. Whether Central Bank had a duty to exercise strict supervision over Overseas Bank of
Manila.
2. Whether Central Bank can be held liable for petitioner's time deposits.
3. Whether petitioner's claims should be pursued in the Court of First Instance.

**Decisions:**
1. The court found no clear abuse of discretion by Central Bank in supervising Overseas
Bank of Manila.
2. Central Bank cannot be held liable for petitioner's time deposits.
3. Petitioner's claims should be filed in the Court of First Instance, not through a petition
for mandamus and prohibition.

**Additional Insights:**
1. Bank deposits are treated as loans, with depositors acting as creditors and banks as
debtors.
2. Petitioner's remedy is to file claims in the liquidating proceeding of Overseas Bank of
Manila.

**Separate Opinion:**
1. Justice Aquino concurred with the decision, stating that petitioner's claims cannot be
granted through mandamus and prohibition.
2. He suggested filing claims in the liquidating proceeding of Overseas Bank of Manila.
Overall, the court dismissed the petition for lack of merit, directing the petitioner to pursue
his claims through the appropriate legal channels.

YHT Realty v CA, 451 SCRA 638 (2005)

The case discussed presents a legal question regarding the liability of a hotel for the loss of
items deposited by its guests in a safety deposit box, particularly in relation to the validity
of waivers signed by the guests releasing the hotel from liability for such losses.

**Facts:**
- Maurice McLoughlin, an Australian businessman-philanthropist, stayed at Tropicana
Copacabana Apartment Hotel, owned by YHT Realty Corporation, where he deposited
money and valuables in a safety deposit box.
- McLoughlin alleged that money and jewelry were stolen from his safety deposit box on
multiple occasions, with hotel employees assisting the thief in gaining access.
- McLoughlin filed a complaint against the hotel and its employees for the losses incurred.
- The trial court found the hotel and its employees liable for the losses and awarded
damages to McLoughlin, which was affirmed by the Court of Appeals.

**Issues:**
1. Whether the appellate court's conclusion on the prior existence and subsequent loss of
money and jewelry is supported by evidence.
2. Whether the finding of gross negligence on the part of the hotel and its employees is
supported by evidence.
3. Whether the waivers signed by McLoughlin releasing the hotel from liability are valid.
4. Whether the damages awarded to McLoughlin are proper under the circumstances.

**Decisions:**
1. The Court upheld the lower courts' findings regarding the existence and loss of
McLoughlin's money and jewelry, based on his credible testimony and the negligence of the
hotel and its employees.
2. The Court affirmed the finding of gross negligence on the part of the hotel and its
employees, as evidenced by their failure to prevent unauthorized access to the safety
deposit box.
3. The Court declared the waivers signed by McLoughlin as null and void, citing Article
2003 of the Civil Code, which prohibits hotel-keepers from evading responsibility through
such waivers.
4. The Court upheld the damages awarded to McLoughlin, finding them to be based on
evidence and within the discretion of the lower courts.

**Conclusion:**
The case underscores the responsibility of hotels to safeguard the belongings of their
guests and highlights the invalidity of waivers that attempt to release hotels from liability
for such losses. It affirms the principle that hotels are liable for damages caused by their
negligence or that of their employees, even if the loss is due to the actions of the guest's
family or visitors.

Durban Apartments v. Pioneer Insurance, 639 SCRA 441 (2011)

**Facts:**
1. Respondent Pioneer Insurance and Surety Corporation filed a complaint against
petitioner Durban Apartments Corporation and defendant Vicente Justimbaste for the
recovery of damages.
2. Respondent alleged that it insured Jeffrey See's vehicle and paid his claim after the
vehicle was stolen from the parking area of City Garden Hotel, where Justimbaste worked
as a parking attendant.
3. See parked his vehicle at the hotel, and it was later found stolen.
4. The lower court granted respondent's motion to present evidence ex parte due to
petitioner's failure to appear at the pre-trial conference and file a pre-trial brief.
5. See and other witnesses testified about the incident, and evidence was presented to
support respondent's claim.
6. The trial court ruled in favor of respondent, ordering petitioner to pay damages,
including attorney's fees.
7. The appellate court affirmed the trial court's decision.

**Issues:**
1. Whether petitioner's failure to appear at the pre-trial conference and file a pre-trial brief
justified the trial court's decision to allow respondent to present evidence ex parte.
2. Whether petitioner is liable for respondent's attorney's fees.
3. Ultimately, whether petitioner is liable for the loss of See's vehicle.

**Decisions:**
1. The lower courts correctly declared petitioner in default for its failure to appear at the
pre-trial conference and file a pre-trial brief, and allowing respondent to present evidence
ex parte was justified.
2. Petitioner is liable for respondent's attorney's fees because its refusal to answer for the
loss of See's vehicle compelled respondent to litigate and incur expenses.
3. Petitioner is ultimately liable for the loss of See's vehicle, as it had a contract of deposit
with See when he handed over the vehicle keys to Justimbaste, an employee of petitioner.

**Analysis:**
The court upheld the lower courts' decisions, emphasizing the mandatory nature of pre-
trial procedures and the consequences of non-compliance. Petitioner's failure to appear at
the pre-trial conference and file a pre-trial brief deprived it of the opportunity to
participate in the proceedings fully. Moreover, the court found that petitioner's refusal to
take responsibility for the loss of See's vehicle justified the award of attorney's fees to
respondent. The court's decision underscores the importance of adhering to procedural
rules and fulfilling contractual obligations.
Sulpicio Lines v. Sesante, G.R. No. 172682 (2016)
**Facts:**
- The Court of Appeals (CA) enumerated negligent acts committed by the officers and crew of
M/V Princess of the Orient, which led to its sinking.
- Negligent acts included failure to conduct stability calculations, prepare cargo stowage plans,
conduct soundings of ballast tanks, execute and supervise abandonship procedures, and send
distress signals.
- The crew's negligence, coupled with the erroneous maneuvering command of Captain Esrum
Mahilum and adverse weather conditions, caused the sinking.
- The petitioner, Sulpicio Lines, was found liable for moral and temperate damages, as well as
exemplary damages, for its negligence.

**Issues:**
1. Is notification required before the common carrier becomes liable for lost belongings that
remained in the custody of the passenger?
2. Should the petitioner be further held liable for exemplary damages?

**Decisions:**
1. Notification is not required for the common carrier to be liable for lost belongings that
remained in the custody of the passenger. The carrier is always responsible for the passenger's
baggage during the voyage, and liability attaches regardless of notification.
2. Exemplary damages were awarded due to the wanton, fraudulent, reckless, oppressive, or
malevolent manner in which the petitioner and its agents acted. The awarded amount of
₱1,000,000.00 serves the objective of exemplarity among common carriers.

The court affirmed the decision of the CA with modifications in the amounts awarded for moral,
exemplary, and temperate damages, all to be paid to the heirs of the late Napoleon Sesante, with
interest of 6% per annum until fully paid. Costs of the suit were to be paid by the petitioner.
++++++++++++++++++++++++++
The detailed facts surrounding the sinking of the M/V Princess of the Orient and the subsequent
legal proceedings include:

1. **Sinking of M/V Princess of the Orient:** The M/V Princess of the Orient, a vessel owned
and operated by Sulpicio Lines, was navigating from Manila to Cebu on September 18, 1998.
During its voyage, adverse weather conditions, including strong winds and high waves, were
encountered. Despite these conditions, the vessel continued its journey. The captain, Captain
Esrum Mahilum, allegedly made erroneous maneuvering commands, contributing to the vessel's
instability.

2. **Negligent Acts of Officers and Crew:** The Court of Appeals (CA) enumerated several
negligent acts committed by the officers and crew of the M/V Princess of the Orient, which
contributed to the sinking:
- Failure to conduct stability calculations of the ship's cargo and know the metacentric height
(GM) of the ship.
- Failure to prepare a detailed report of the ship's cargo stowage plan.
- Failure to conduct soundings (measurements) of the ballast tanks before departure.
- Failure to execute and supervise the abandonship procedure properly, including the lack of
announcements, distribution of life jackets, and orderly launching of life rafts.
- Miscalculation in judgment by the captain, Captain Esrum Mahilum, in navigating the ship
during critical moments.
- Inadequate supervision by deck and engine officers in the execution of the abandonship
procedure.
- Failure of the Radio Officer (spark) to send distress signals using the internationally accepted
communication network (VHF Channel 16).

3. **Investigation Findings:** The Board of Marine Inquiry (BMI) conducted an investigation

into the sinking of the M/V Princess of the Orient. The BMI found that the erroneous maneuvers
made by Captain Mahilum during adverse weather conditions contributed to the vessel's
instability and sinking. The BMI concluded that the vessel's crew failed to respond adequately to
the emergency situation.
4. **Legal Proceedings:** Napoleon Sesante, a survivor of the sinking, filed a legal complaint
seeking damages against Sulpicio Lines for its negligence. The trial court initially ruled in favor
of Sesante, awarding moral and temperate damages. Sulpicio Lines appealed the decision to the
CA, which affirmed the trial court's ruling but modified the amounts of damages awarded.

5. **Award of Damages:** The CA awarded moral damages to Sesante for the mental anguish,
agony, and pain suffered during and after the sinking of the vessel. The court recognized the
traumatic experience of surviving the tragedy and the subsequent emotional distress endured by
Sesante. Additionally, the CA awarded temperate damages to Sesante for the pecuniary loss
suffered due to the loss of personal belongings during the sinking.

6. **Exemplary Damages:** The CA further awarded exemplary damages against Sulpicio Lines
due to its wanton, fraudulent, reckless, oppressive, or malevolent manner in handling the
situation leading to the sinking of the vessel. The court emphasized the need to deter similar
conduct by imposing exemplary damages.

In summary, the sinking of the M/V Princess of the Orient was attributed to a combination of
adverse weather conditions and negligent acts by the vessel's officers and crew, including the
captain. Legal proceedings resulted in the awarding of damages to a survivor of the sinking,
including moral, temperate, and exemplary damages, based on findings of negligence and
misconduct by the vessel's operator, Sulpicio Lines.
Roman Catholic Bishop v. de la Pena, 26 Phil 144 (1913)
https://jur.ph/jurisprudence/v/digest/roman-catholic-bishop-of-jaro-v-de-la-pena?
q=BISHOP+OF+JARO
**Facts:**
1. The plaintiff is the trustee of a charitable bequest intended for the construction of a leper
hospital.
2. Father Agustin de la Peña was the authorized representative of the plaintiff to receive the
legacy.
3. In 1898, Father de la Peña, acting as trustee, had P6,641 in trust funds in his possession.
4. Father de la Peña deposited P19,000 in his personal account at the Hongkong and Shanghai
Bank in Iloilo, which included the trust funds.
5. During the revolution, Father de la Peña was arrested as a political prisoner, and the military
authorities confiscated the funds in the bank, including the trust funds, claiming they were
collected for revolutionary purposes.

**Issues:**
1. Whether Father de la Peña, as trustee, is liable for the loss of the trust funds due to their
confiscation by the military authorities.
2. Whether the deposit of the trust funds into Father de la Peña's personal bank account affected
his liability as a trustee.

**Decisions:**
Majority Opinion:
1. The liability of Father de la Peña as a trustee is determined by the Civil Code provisions
regarding obligations.
2. Placing the trust funds in his personal account and mixing them with his own funds did not
change Father de la Peña's obligation or make him liable to repay the money unconditionally.
3. The confiscation of the funds by the military authorities due to fuerza mayor (act of God or
force majeure) relieves Father de la Peña from responsibility.
4. The deposit of the trust funds into Father de la Peña's personal account did not increase his
liability, as there was no law prohibiting such a deposit or changing his responsibility because of
it.
Dissenting Opinion:

1. Father de la Peña, by depositing the trust funds into his personal account and mixing them
with his own funds, removed the protections afforded to trust funds under the law.
2. If the funds had been deposited in the name of Father de la Peña as trustee or agent of the
plaintiff, they might not have been confiscated by the military authorities.
3. The majority opinion's interpretation allows trustees to avoid responsibility by mixing trust
funds with personal funds, potentially leading to misuse of trust funds and undermining the
position of trustees.

In summary, the majority opinion holds that Father de la Peña is not liable for the loss of the trust
funds due to their confiscation, while the dissenting opinion argues that his actions in depositing
the funds into his personal account removed the protections afforded to trust funds and may
indicate misuse of the funds.