Chan vs.

Maceda
(402 SCRA 352, G.R. No. 142591, April 30, 2003)
JOSEPH CHAN, WILSON CHAN and LILY CHAN, petitioners, vs. BONIFACIO S. MACEDA, JR., * respondent.
FACTS:
On July 28, 1976, Bonifacio S. Maceda, Jr., herein respondent, obtained a P7.3 million loan from the Development Bank of
the Philippines for the construction of his New Gran Hotel Project in Tacloban City. Thereafter, on September 29, 1976,
respondent entered into a building construction contract with Moreman Builders Co., Inc., (Moreman). They agreed that the
construction would be finished not later than December 22, 1977.
Respondent purchased various construction materials and equipment in Manila. Moreman, in turn, deposited them in the
warehouse of Wilson and Lily Chan, herein petitioners. The deposit was free of charge. Unfortunately, Moreman failed to
finish the construction of the hotel at the stipulated time. Hence, on February 1, 1978, respondent filed with the then Court
of First Instance (CFI, now Regional Trial Court), Branch 39, Manila, an action for rescission and damages against Moreman,
docketed as Civil Case No. 113498.
Meanwhile, during the pendency of the case, respondent ordered petitioners to return to him the construction materials
and equipment which Moreman deposited in their warehouse. Petitioners, however, told them that Moreman withdrew
those construction materials in 1977.
Hence, on December 11, 1985, respondent filed with the Regional Trial Court, Branch 160, Pasig City, an action for damages
with an application for a writ of preliminary attachment against petitioners, 7 docketed as Civil Case No. 53044.
ISSUES:
1. Has respondent presented proof that the construction materials and equipment were actually in petitioners' warehouse
when he asked that the same be turned over to him? NO
2. If so, does respondent have the right to demand the release of the said materials and equipment or claim for damages?
NO
HELD:
Under Article 1311 of the Civil Code, contracts are binding upon the parties (and their assigns and heirs) who execute them.
When there is no privity of contract, there is likewise no obligation or liability to speak about and thus no cause of action
arises. Specifically, in an action against the depositary, the burden is on the plaintiff to prove the bailment or deposit and the
performance of conditions precedent to the right of action. A depositary is obliged to return the thing to the depositor, or to
his heirs or successors, or to the person who may have been designated in the contract.
In the present case, the record is bereft of any contract of deposit, oral or written, between petitioners and respondent. If at
all, it was only between petitioners and Moreman. And granting arguendo that there was indeed a contract of deposit
between petitioners and Moreman, it is still incumbent upon respondent to prove its existence and that it was executed in
his favor. However, respondent miserably failed to do so. The only pieces of evidence respondent presented to prove the
contract of deposit were the delivery receipts. Significantly, they are unsigned and not duly received or authenticated by
either Moreman, petitioners or respondent or any of their authorized representatives. Hence, those delivery receipts have
no probative value at all. While our laws grant a person the remedial right to prosecute or institute a civil action against
another for the enforcement or protection of a right, or the prevention or redress of a wrong, every cause of action excontractu must be founded upon a contract, oral or written, express or implied.
Moreover, respondent also failed to prove that there were construction materials and equipment in petitioners' warehouse
at the time he made a demand for their return.
Considering that respondent failed to prove (1) the existence of any contract of deposit between him and petitioners, nor
between the latter and Moreman in his favor, and (2) that there were construction materials in petitioners' warehouse at
the time of respondent's demand to return the same, we hold that petitioners have no corresponding obligation or liability
to respondent with respect to those construction materials.
Anent the issue of damages, petitioners are still not liable because, as expressly provided for in Article 2199 of the Civil
Code, actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of certainty. A
court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon
competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual
amount thereof. It must point out specific facts which could afford a basis for measuring whatever compensatory or actual
damages are borne.
Considering our findings that there was no contract of deposit between petitioners and respondent or Moreman and that
actually there were no more construction materials or equipment in petitioners' warehouse when respondent made a
demand for their return, we hold that he has no right whatsoever to claim for damages.

Manol Sala

SWU School of Law

CA Agro-Industrial vs. CA
(G.R. No. 90027, March 3, 1993)
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner, vs. THE HONORABLE COURT OF APPEALS and SECURITY BANK
AND TRUST COMPANY, respondents.
FACTS:
On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the spouses Ramon and Paula Pugao entered into an
agreement whereby the former purchased from the latter two (2) parcels of land for a consideration of P350,625.00. Of this
amount, P75,725.00 was paid as downpayment while the balance was covered by three (3) postdated checks. Among the
terms and conditions of the agreement embodied in a Memorandum of True and Actual Agreement of Sale of Land were
that the 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, Transfer Certificates of Title (TCT) Nos. 284655 and 292434, 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 and the Pugaos upon full payment of the purchase price. Petitioner, through Sergio Aguirre, and the Pugaos then
rented Safety Deposit Box No. 1448 of private respondent Security Bank and Trust Company, a domestic banking
corporation hereinafter referred to as the respondent Bank. For this purpose, both signed a contract of lease (Exhibit "2")
which contains, inter alia, 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 keys were given to the renters one to Aguirre (for the petitioner) and
the other to the Pugaos. A guard key remained in the possession of the respondent Bank. The safety deposit box has two (2)
keyholes, one for the guard key and the other for the renter's key, and can be opened only with the use of both keys.
Petitioner claims that the certificates of title were placed inside the said box.
Thereafter, a certain Mrs. Margarita Ramos offered to buy from the petitioner the two (2) lots at a price of P225.00 per
square meter which, as petitioner alleged in its complaint, translates to a profit of P100.00 per square meter or a total of
P280,500.00 for the entire property. Mrs. Ramos demanded the execution of a deed of sale which necessarily entailed the
production of the certificates of title. In view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the
respondent Bank on 4 October 1979 to open the safety deposit box and get the certificates of title. However, when opened
in the presence of the Bank's representative, the box yielded no such certificates. Because of the delay in the reconstitution
of the title, Mrs. Ramos withdrew her earlier offer to purchase the lots; as a consequence thereof, the petitioner allegedly
failed to realize the expected profit of P280,500.00. Hence, the latter filed on 1 September 1980 a complaint for damages
against the respondent Bank with the Court of First Instance (now Regional Trial Court) of Pasig, Metro Manila which
docketed the same as Civil Case No. 38382.
In its Answer with Counterclaim, respondent Bank alleged that the petitioner has no cause of action because of paragraphs
13 and 14 of the contract of lease (Exhibit "2"); corollarily, loss of any of the items or articles contained in the box could not
give rise to an action against it. It then interposed a counterclaim for exemplary damages as well as attorney's fees in the
amount of P20,000.00. Petitioner subsequently filed an answer to the counterclaim.
ISSUE: Is the contractual relation between a commercial bank and another party in a contract of rent of a safety deposit box
with respect to its contents placed by the latter one of bailor and bailee or one of lessor and lessee? BAILOR AND BAILEE.
HELD:
We agree with the petitioner's contention that the contract for the rent of the safety deposit box is not an ordinary contract
of lease as defined in Article 1643 of the Civil Code. However, We do not fully subscribe to its view that the same is a
contract of deposit that is to be strictly governed by the provisions in the Civil Code on deposit; the contract in the case at
bar is a special kind of deposit. It cannot be characterized as an ordinary contract of lease under Article 1643 because the
full and absolute possession and control of the safety deposit box was not given to the joint renters the petitioner and
the Pugaos. The guard key of the box remained with the respondent Bank; without this key, neither of the renters could
open the box. On the other hand, the respondent Bank could not likewise open the box without the renter's key. In this
case, the said key had a duplicate which was made so that both renters could have access to the box.
Hence, the authorities cited by the respondent Court on this point do not apply. Neither could Article 1975, also relied upon
by the respondent Court, be invoked as an argument against the deposit theory. Obviously, the first paragraph of such
provision cannot apply to a depositary of certificates, bonds, securities or instruments which earn interest if such
documents are kept in a rented safety deposit box. It is clear that the depositary cannot open the box without the renter
being present.

Manol Sala

SWU School of Law

We observe, however, that the deposit theory itself does not altogether find unanimous support even in American
jurisprudence. We agree with the petitioner that under the latter, the prevailing rule is that the relation between a bank
renting out safe-deposit boxes and its customer with respect to the contents of the box is that of a bail or and bailee, the
bailment being for hire and mutual benefit.
In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is clear that in this
jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of the General Banking Act pertinently
provides:
Sec. 72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions other than building
and loan associations may perform the following services:
(a) Receive in custody funds, documents, and valuable objects, and rent safety deposit boxes for the safeguarding of such
effects. xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b) and (c) of this section as depositories or as
agents. . . .
Note that the primary function is still found within the parameters of a contract of deposit, i.e., the receiving in custody of
funds, documents and other valuable objects for safekeeping. The renting out of the safety deposit boxes is not
independent from, but related to or in conjunction with, this principal function. A contract of deposit may be entered into
orally or in writing and, pursuant to Article 1306 of the Civil Code, the parties thereto may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs,
public order or public policy. The depositary's responsibility for the safekeeping of the objects deposited in the case at bar is
governed by Title I, Book IV of the Civil Code. Accordingly, the depositary would be liable if, in performing its obligation, it is
found guilty of fraud, negligence, delay or contravention of the tenor of the agreement. In the absence of any stipulation
prescribing the degree of diligence required, that of a good father of a family is to be observed. Hence, any stipulation
exempting the depositary from any liability arising from the loss of the thing deposited on account of fraud, negligence or
delay would be void for being contrary to law and public policy. In the instant case, petitioner maintains that conditions 13
and 14 of the questioned contract of lease of the safety deposit box, which read:
13. The bank is not a depositary of the contents of the safe and it has neither the possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein expressly provided, and it assumes absolutely no
liability in connection therewith.
are void as they are contrary to law and public policy. We find Ourselves in agreement with this proposition for indeed, said
provisions are inconsistent with the respondent Bank's responsibility as a depositary under Section 72(a) of the General
Banking Act. Both exempt the latter from any liability except as contemplated in condition 8 thereof which limits its duty to
exercise reasonable diligence only with respect to who shall be admitted to any rented safe, to wit:
8. The Bank shall use due diligence that no unauthorized person shall be admitted to any rented safe and beyond this, the
Bank will not be responsible for the contents of any safe rented from it.
Furthermore, condition 13 stands on a wrong premise and is contrary to the actual practice of the Bank. It is not correct to
assert that the Bank has neither the possession nor control of the contents of the box since in fact, the safety deposit box
itself is located in its premises and is under its absolute control; moreover, the respondent Bank keeps the guard key to the
said box. As stated earlier, renters cannot open their respective boxes unless the Bank cooperates by presenting and using
this guard key. Clearly then, to the extent above stated, the foregoing conditions in the contract in question are void and
ineffective.
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.

Manol Sala

SWU School of Law

c. Sia vs. CA
(G.R. No. 102970, May 13, 1993)
LUZAN SIA, petitioner, vs. COURT OF APPEALS and SECURITY BANK and TRUST COMPANY, respondents.
FACTS:
Herein petitioner and respondent entered into a contract denominated as a Lease Agreement whereby the former rented a
safety deposit box owned by the latter . Petitioner placed in the deposit box her stamp collection which was subsequently
lost and damaged due to a flood that took place in 1985 and 1986. The defendant bank rejected the petitioner s claim for
compensation for his damaged stamps collection, so, the plaintiff instituted an action for damages against the defendant
bank.
The bank alleged that the contract was that of lease and its liability was limited to the exercise of the diligence to prevent
the opening of the safe by any person other than the Renter, his authorized agent or legal representative; The Bank is not a
depository of the contents of the safe and it has neither the possession nor the control of the same. The Bank has no
interest whatsoever in said contents, except as herein provided, and it assumes absolutely no liability in connection
therewith.
RTC ruled in favor of petitioner. CA reversed the decision .
ISSUE: Is SBTC liable for damages and loss? YES
HELD:
SBTC is a Depository Notwithstanding the Contract of Lease
In the recent case CA Agro-Industrial Development Corp. vs. Court of Appeals, the Court held that the use of a safety deposit
box is not a contract of lease and that it is actually a special kind of deposit.
The prevailing rule in American jurisprudence that the relation between a bank renting out safe deposit boxes and its
customer with respect to the contents of the box is that of a bailor and bailee, the bailment for hire and mutual benefit
has been adopted in this jurisdiction, thus:
In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is clear that in this
jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of the General Banking Act [R.A. 337, as
amended] pertinently provides:
"Sec. 72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions other than building
and loan associations may perform the following services:
(a) Receive in custody funds, documents, and valuable objects, and rent safety deposit boxes for the safequarding of such
effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b) and (c) of this section asdepositories or as agents. .
. ."(emphasis supplied)
Note that the primary function is still found within the parameters of a contract of deposit, i.e., the receiving in custody of
funds, documents and other valuable objects for safekeeping. The renting out of the safety deposit boxes is not
independent from, but related to or in conjunction with, this principal function. A contract of deposit may be entered into
orally or in writing (Art. 1969, Civil Code] and, pursuant to Article 1306 of the Civil Code, the parties thereto may establish
such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy. The depositary's responsibility for the safekeeping of the objects
deposited in the case at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary would be liable if, in
performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreement [Art.
1170, id.]. In the absence of any stipulation prescribing the degree of diligence required, that of a good father of a family is
to be observed [Art. 1173, id.]. Hence, any stipulation exempting the depositary from any liability arising from the loss of the
thing deposited on account of fraud, negligence or delay would be void for being contrary to law and public policy.
Condition 13 and 14 of the Contract of Lease are Void
Conditions 13 and l4 of the questioned contract of lease of the safety deposit box, which read:
"13. The bank is a depositary of the contents of the safe and it has neither the possession nor control of the same.
"14. The bank has no interest whatsoever in said contents, except as herein expressly provided, and it assumes absolutely no
liability in connection therewith." are void as they are contrary to law and public policy. Said provisions are inconsistent with
the respondent Bank's responsibility as a depositary under Section 72 (a) of the General Banking Act.
Furthermore, condition 13 stands on a wrong premise and is contrary to the actual practice of the Bank. It is not correct to
assert that the Bank has neither the possession nor control of the contents of the box since in fact, the safety deposit box

Manol Sala

SWU School of Law

itself is located in its premises and is under its absolute control; moreover, the respondent Bank keeps the guard key to the
said box. As stated earlier, renters cannot open their respective boxes unless the Bank cooperates by presenting and using
this guard key. Clearly then, to the extent above stated, the foregoing conditions in the contract in question are void and
ineffective. It has been said:
"With respect to property deposited in a safe-deposit box by a customer of a safe-deposit company, the parties, since the
relation is a contractual one, may by special contract define their respective duties or provide for increasing or limiting the
liability of the deposit company, provided such contract is not in violation of law or public policy. It must clearly appear
that there actually was such a special contract, however, in order to vary the ordinary obligations implied by law from the
relationship of the parties; liability of the deposit company will not be enlarged or restricted by words of doubtful meaning.
The company, in renting safe-deposit boxes, cannot exempt itself from liability for loss of the contents by its own fraud or
negligence or that, of its agents or servants, and if a provision of the contract may be construed as an attempt to do so, it
will be held ineffective for the purpose. Although it has been held that the lessor of a safe-deposit box cannot limit its
liability for loss of the contents thereof through its own negligence, the view has been taken that such a lessor may limit its
liability to some extent by agreement or stipulation.
SBTC is Negligent
Respondent cannot invoke fortuitous event under Article 1174by reason of its negligence . SBTC's negligence aggravated
the injury or damage to the stamp collection. SBTC was aware of the floods of 1985 and 1986; it also knew that the
floodwaters inundated the room where Safe Deposit Box No. 54 was located. In view thereof, it should have lost no time in
notifying the petitioner in order that the box could have been opened to retrieve the stamps, thus saving the same from
further deterioration and loss. In this respect, it failed to exercise the reasonable care and prudence expected of a good
father of a family, thereby becoming a party to the aggravation of the injury or loss. Accordingly, the aforementioned fourth
characteristic of a fortuitous event is absent Article 1170 of the Civil Code is therefore applicable ;
Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any manner
contravene the tenor thereof, are liable for damages

b. Durban Apartments vs. Pioneer

(639 SCRA 441, G.R. No. 179419, January 12, 2011)
DURBAN APARTMENTS CORPORATION, doing business under the name and style of City Garden Hotel, Petitioner, vs.
PIONEER INSURANCE AND SURETY CORPORATION,Respondent.
FACTS:
For review is the Decision of the CA which affirmed the decision of the RTC holding petitioner Durban Apartments
Corporation solely liable to respondent Pioneer Insurance and Surety Corporation for the loss of Jeffrey Sees (Sees) vehicle.
On July 22, 2003, Pioneer Insurance and Surety Corporation, by right of subrogation, filed [with the RTC of Makati City] a
Complaint for Recovery of Damages against Durban Apartments Corporation, doing business under the name and style of
City Garden Hotel, and [defendant before the RTC] Vicente Justimbaste.
Respondents contention:
Respondent averred that it is the insurer for loss and damage of Jeffrey Sees Suzuki Grand Vitara (Plate No. XBH-510) in
the amount of P1,175,000.
On April 30, 2002, See arrived and checked in at the City Garden Hotel in Makati corner Kalayaan Avenues, Makati City
before midnight, and its parking attendant, defendant Justimbaste got the key to said Vitara from See to park it.
On May 1, 2002 (1am) the Hotel Chief Security Officer informed him that his car was carnapped while it was parked
unattended at the parking area of Equitable PCI Bank along Makati Ave.
See then reported the incident to the Operations Division of Makati City Police Anti-Carnapping unit and then conducted
investigation.
The car has not yet been recovered since July 23, 2002.
Respondent paid P1,163,250 money claim of See and mortagee ABN AMRO Savings Bank as indemnity for the loss of the
car.
The car was lost due to the negligence of Durban Apartments and Justimbaste because it was discovered 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.

Manol Sala

SWU School of Law

 Defendant Justimbaste and Durban Apartments failed and refused to pay Pioneers valid, just, and lawful claim despite
written demands.
Petitioners contention:
See did not check in at its hotel, on the contrary, he was a guest of a certain Ching Montero x x x; defendant x x x
Justimbaste did not get the ignition key of Sees Vitara, on the contrary, it was See who requested a parking attendant to
park the Vitara at any available parking space, and it was parked at the Equitable Bank parking area, which was within Sees
view, while he and Montero were waiting in front of the hotel.
They made a written denial of the demand of [respondent] Pioneer Insurance for want of legal basis; valet parking services
are provided by the hotel for the convenience of its customers looking for a parking space near the hotel premises; it is a
special privilege that it gave to Montero and See; it does not include responsibility for any losses or damages to motor
vehicles and its accessories in the parking area; and the same holds true even if it was See himself who parked his Vitara
within the premises of the hotel as evidenced by the valet parking customers claim stub issued to him.
Defendant Justimbaste saw the Vitara speeding away from the place where it was parked; he tried to run after it, and
blocked its possible path but to no avail.
RTC ruled in favor of respondent and ordered Durban Apartment to pay respondent the sum of P1, 163, 250.00. CA
affirmed the decision of RTC. Hence, present petition.
ISSUE: WON petitioner is liable to respondent for the loss of Sees vehicle.YES.
HELD:
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.
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 latters employee, Justimbaste. In turn, Justimbaste issued a claim stub to See. Thus, the contract of deposit
was perfected from Sees 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 Sees vehicle.
POLICY: 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.

Manol Sala

SWU School of Law