G.R. No. 112392. February 29, 2000
Ariel Reyes, the
BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs.
COURT OF APPEALS and BENJAMIN C.
NAPIZA, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari of the
Decision1 of the Court of Appeals in CA-G.R. CV No.
37392 affirming in toto that of the Regional Trial
Court of Makati, Branch 139,2 which dismissed the
complaint filed by petitioner Bank of the Philippine
Islands against private respondent Benjamin C.
Napiza for sum of money.d
On September 3, 1987, private respondent deposited
in Foreign Currency Deposit Unit (FCDU) Savings
Account No. 028-1873 which he maintained in
petitioner banks Buendia Avenue Extension Branch,
Continental Bank Managers Check No.
4
00014757  dated August 17, 1984, payable to "cash"
in the amount of Two Thousand Five Hundred
Dollars ($2,500.00) and duly endorsed by private
respondent on its dorsal side.5 It appears that the
check belonged to a certain Henry Chan who went to
the office of private respondent and requested him to
deposit the check in his dollar account by way of
accommodation and for the purpose of clearing the
same. Private respondent acceded, and agreed to
deliver to Chan a signed blank withdrawal slip, with
the understanding that as soon as the check is
cleared, both of them would go to the bank to
withdraw the amount of the check upon private
respondents presentation to the bank of his
passbook.
Using the blank withdrawal slip given by private
respondent to Chan, on October 23, 1984, one Ruben
Gayon, Jr. was able to withdraw the amount of
$2,541.67 from FCDU Savings Account No. 028-187.
Notably, the withdrawal slip shows that the amount
was payable to Ramon A. de Guzman and Agnes C. de
Guzman and was duly initialed by the branch
assistant manager, Teresita
Lindo.6crä lä wvirtualibrä ry
On November 20, 1984, petitioner received
communication from the Wells Fargo Bank
International of New York that the said check
deposited by private respondent was a counterfeit
check7 because it was "not of the type or style of
checks issued by Continental Bank
International."8 Consequently, Mr.
manager of petitioners Buendia Avenue Extension
Branch, instructed one of its employees, Benjamin D.
Napiza IV, who is private respondents son, to inform
his father that the check bounced.9 Reyes himself sent
a telegram to private respondent regarding the
dishonor of the check. In turn, private respondents
son wrote to Reyes stating that the check had been
assigned "for encashment" to Ramon A. de Guzman
and/or Agnes C. de Guzman after it shall have been
cleared upon instruction of Chan. He also said that
upon learning of the dishonor of the check, his father
immediately tried to contact Chan but the latter was
out of town.10crä lä wvirtualibrä ry
Private respondents son undertook to return the
amount of $2,500.00 to petitioner bank. On
December 18, 1984, Reyes reminded private
respondent of his sons promise and warned that
should he fail to return that amount within seven (7)
days, the matter would be referred to the banks
lawyers for appropriate action to protect the banks
interest.11 This was followed by a letter of the banks
lawyer dated April 8, 1985 demanding the return of
the $2,500.00.12crälä wvirtualibrä ry
In reply, private respondent wrote petitioners
counsel on April 20, 198513 stating that he deposited
the check "for clearing purposes" only to
accommodate Chan. He added:
"Further, please take notice that said check was
deposited on September 3, 1984 and withdrawn on
October 23, 1984, or a total period of fifty (50) days
had elapsed at the time of withdrawal. Also, it may
not be amiss to mention here that I merely signed an
authority to withdraw said deposit subject to its
clearing, the reason why the transaction is not
reflected in the passbook of the account. Besides, I
did not receive its proceeds as may be gleaned from
the withdrawal slip under the captioned signature of
recipient.
If at all, my obligation on the transaction is moral in
nature, which (sic) I have been and is (sic) still
exerting utmost and maximum efforts to collect from
Mr. Henry Chan who is directly liable under the
circumstances.
xxx......xxx......xxx."
On August 12, 1986, petitioner filed a complaint
against private respondent, praying for the return of
the amount of $2,500.00 or the prevailing peso
equivalent plus legal interest from date of demand to
date of full payment, a sum equivalent to 20% of the
total amount due as attorney's fees, and litigation
and/or costs of suit.
Private respondent filed his answer, admitting that
he indeed signed a "blank" withdrawal slip with the
understanding that the amount deposited would be
withdrawn only after the check in question has been
cleared. He likewise alleged that he instructed the
party to whom he issued the signed blank withdrawal
slip to return it to him after the bank drafts clearance
so that he could lend that party his passbook for the
purpose of withdrawing the amount of $2,500.00.
However, without his knowledge, said party was able
to withdraw the amount of $2,541.67 from his dollar
savings account through collusion with one of
petitioners employees. Private respondent added
that he had "given the Plaintiff fifty one (51) days
with which to clear the bank draft in question."
Petitioner should have disallowed the withdrawal
because his passbook was not presented. He claimed
that petitioner had no one to blame except itself "for
being grossly negligent;" in fact, it had allegedly
admitted having paid the amount in the check "by
mistake" x x x "if not altogether due to collusion
and/or bad faith on the part of (its) employees."
Charging petitioner with "apparent ignorance of
routine bank procedures," by way of counterclaim,
private respondent prayed for moral damages of
P100,000.00, exemplary damages of P50,000.00 and
attorneys fees of 30% of whatever amount that
would be awarded to him plus an honorarium of
P500.00 per appearance in court.
Private respondent also filed a motion for admission
of a third party complaint against Chan. He alleged
that "thru strategem and/or manipulation," Chan was
able to withdraw the amount of $2,500.00 even
without private respondents passbook. Thus, private
respondent prayed that third party defendant Chan
be made to refund to him the amount withdrawn and
to pay attorneys fees of P5,000.00 plus P300.00
honorarium per appearance.
Petitioner filed a comment on the motion for leave of
court to admit the third party complaint, wherein it
asserted that per paragraph 2 of the Rules and
Regulations governing BPI savings accounts, private
respondent alone was liable "for the value of the
credit given on account of the draft or check
deposited." It contended that private respondent was
estopped from disclaiming liability because he
himself authorized the withdrawal of the amount by
signing the withdrawal slip. Petitioner prayed for the
denial of the said motion so as not to unduly delay
the disposition of the main case asserting that private
respondents claim could be ventilated in another
case.
Private respondent replied that for the parties to
obtain complete relief and to avoid multiplicity of
suits, the motion to admit third party complaint
should be granted. Meanwhile, the trial court issued
orders on August 25, 1987 and October 28, 1987
directing private respondent to actively participate in
locating Chan. After private respondent failed to
comply, the trial court, on May 18, 1988, dismissed
the third party complaint without prejudice.
On November 4, 1991, a decision was rendered
dismissing the complaint. The lower court held that
petitioner could not hold private respondent liable
based on the checks face value alone. To so hold him
liable "would render inutile the requirement of
clearance from the drawee bank before the value of a
particular foreign check or draft can be credited to
the account of a depositor making such deposit." The
lower court further held that "it was incumbent upon
the petitioner to credit the value of the check in
question to the account of the private
respondent only upon receipt of the notice of final
payment and should not have authorized the
withdrawal from the latters account of the value or
proceeds of the check." Having admitted that it
committed a "mistake" in not waiting for the
clearance of the check before authorizing the
withdrawal of its value or proceeds, petitioner should
suffer the resultant loss. Supremax
On appeal, the Court of Appeals affirmed the lower
courts decision. The appellate court held that
petitioner committed "clear gross negligence" in
allowing Ruben Gayon, Jr. to withdraw the money
without presenting private respondents passbook
and, before the check was cleared and in crediting the
amount indicated therein in private respondents
account. It stressed that the mere deposit of a check
in private respondents account did not mean that the
check was already private respondents property. The
check still had to be cleared and its proceeds can only
be withdrawn upon presentation of a passbook in
accordance with the banks rules and regulations.
Furthermore, petitioners contention that private
respondent warranted the checks genuineness by
endorsing it is untenable for it would render useless
the clearance requirement. Likewise, the
requirement of presentation of a passbook to
ascertain the propriety of the accounting reflected
would be a meaningless exercise. After all, these
requirements are designed to protect the bank from
deception or fraud.
The Court of Appeals cited the case of Roman Catholic
Bishop of Malolos, Inc. v. IAC,14 where this Court stated
that a personal check is not legal tender or money,
and held that the check deposited in this case must be
cleared before its value could be properly transferred
to private respondent's account.
Without filing a motion for the reconsideration of the
Court of Appeals Decision, petitioner filed this
petition for review on certiorari, raising the following
issues:
1.......WHETHER OR NOT RESPONDENT NAPIZA IS
LIABLE UNDER HIS WARRANTIES AS A GENERAL
INDORSER.
2.......WHETHER OR NOT A CONTRACT OF AGENCY
WAS CREATED BETWEEN RESPONDENT NAPIZA
AND RUBEN GAYON.
3.......WHETHER OR NOT PETITIONER WAS GROSSLY
NEGLIGENT IN ALLOWING THE WITHDRAWAL.
Petitioner claims that private respondent, having
affixed his signature at the dorsal side of the check,
should be liable for the amount stated therein in
accordance with the following provision of the
Negotiable Instruments Law (Act No. 2031):
"SEC. 66. Liability of general indorser. Every indorser
who indorses without qualification, warrants to all
subsequent holders in due course
(a)......The matters and things mentioned in
subdivisions (a), (b), and (c) of the next preceding
section; and
(b)......That the instrument is at the time of his
indorsement, valid and subsisting.
And, in addition, he engages that on due presentment,
it shall be accepted or paid, or both, as the case may
be, according to its tenor, and that if it be dishonored,
and the necessary proceedings on dishonor be duly
taken, he will pay the amount thereof to the holder,
or to any subsequent indorser who may be compelled
to pay it."
Section 65, on the other hand, provides for the
following warranties of a person negotiating an
instrument by delivery or by qualified indorsement:
(a) that the instrument is genuine and in all respects
what it purports to be; (b) that he has a good title to
it, and (c) that all prior parties had capacity to
contract.15 In People v. Maniego,16 this Court described
the liabilities of an indorser as follows:
"Appellants contention that as mere indorser, she
may not be liable on account of the dishonor of the
checks indorsed by her, is likewise untenable. Under
the law, the holder or last indorsee of a negotiable
instrument has the right to enforce payment of the
instrument for the full amount thereof against all
parties liable thereon. Among the parties liable
thereon is an indorser of the instrument, i.e., a person
placing his signature upon an instrument otherwise
than as a maker, drawer or acceptor * * unless he
clearly indicated by appropriate words his intention
to be bound in some other capacity. Such an indorser
who indorses without qualification, inter alia engages
that on due presentment, * * (the instrument) shall
be accepted or paid, or both, as the case may be,
according to its tenor, and that if it be dishonored,
and the necessary proceedings on dishonor be duly
taken, he will pay the amount thereof to the holder,
or any subsequent indorser who may be compelled to
pay it. Maniego may also be deemed an
accommodation party in the light of the facts, i.e., a
person who has signed the instrument as maker,
drawer, acceptor, or indorser, without receiving
value therefor, and for the purpose of lending his
name to some other person. As such, she is under the
law liable on the instrument to a holder for value,
notwithstanding such holder at the time of taking the
instrument knew * * (her) to be only an
accommodation party, although she has the right,
after paying the holder, to obtain reimbursement
from the party accommodated, since the relation
between them is in effect that of principal and surety,
the accommodation party being the surety."
It is thus clear that ordinarily private respondent
may be held liable as an indorser of the check or even
as an accommodation party.17 However, to hold
private respondent liable for the amount of the check
he deposited by the strict application of the law and
without considering the attending circumstances in
the case would result in an injustice and in the
erosion of the public trust in the banking system. The
interest of justice thus demands looking into the
events that led to the encashment of the check.
Petitioner asserts that by signing the withdrawal slip,
private respondent "presented the opportunity for
the withdrawal of the amount in question." Petitioner
relied "on the genuine signature on the withdrawal
slip, the personality of private respondents son and
the lapse of more than fifty (50) days from date of
deposit of the Continental Bank draft, without the
same being returned yet."18 We hold, however, that
the propriety of the withdrawal should be gauged by
compliance with the rules thereon that both
petitioner bank and its depositors are duty-bound to
observe.
In the passbook that petitioner issued to private
respondent, the following rules on withdrawal of
deposits appear:
"4.......Withdrawals must be made by the depositor
personally but in some exceptional circumstances,
the Bank may allow withdrawal by another upon the
depositors written authority duly authenticated; and
neither a deposit nor a withdrawal will be permitted
except upon the presentation of the depositors
savings passbook, in which the amount deposited
withdrawn shall be entered only by the Bank.
5.......Withdrawals may be made by draft, mail or
telegraphic transfer in currency of the account at the
request of the depositor in writing on the withdrawal
slip or by authenticated cable. Such request must
indicate the name of the payee/s, amount and the
place where the funds are to be paid. Any stamp,
transmission and other charges related to such
withdrawals shall be for the account of the depositor
and shall be paid by him/her upon demand.
Withdrawals may also be made in the form of
travellers checks and in pesos. Withdrawals in the
form of notes/bills are allowed subject however, to
their (availability).
6.......Deposits shall not be subject to withdrawal by
check, and may be withdrawn only in the manner
above provided, upon presentation of the depositors
savings passbook and with the withdrawal form
supplied by the Bank at the
counter."19crä lä wvirtualibrä ry
Under these rules, to be able to withdraw from the
savings account deposit under the Philippine foreign
currency deposit system, two requisites must be
presented to petitioner bank by the person
withdrawing an amount: (a) a duly filled-up
withdrawal slip, and (b) the depositors passbook.
Private respondent admits that he signed a blank
withdrawal slip ostensibly in violation of Rule No. 6
requiring that the request for withdrawal must name
the payee, the amount to be withdrawn and the place
where such withdrawal should be made. That the
withdrawal slip was in fact a blank one with only
private respondents two signatures affixed on the
proper spaces is buttressed by petitioners allegation
in the instant petition that had private respondent
indicated therein the person authorized to receive
the money, then Ruben Gayon, Jr. could not have
withdrawn any amount. Petitioner contends that
"(i)n failing to do so (i.e., naming his authorized
agent), he practically authorized any possessor
thereof to write any amount and to collect the
same."20crälä wvirtualibrä ry
Such contention would have been valid if not for the
fact that the withdrawal slip itself indicates a special
instruction that the amount is payable to "Ramon A.
de Guzman &/or Agnes C. de Guzman." Such being
the case, petitioners personnel should have been duly
warned that Gayon, who was also employed in
petitioners Buendia Ave. Extension branch,21 was not
the proper payee of the proceeds of the check.
Otherwise, either Ramon or Agnes de Guzman should
have issued another authority to Gayon for such
withdrawal. Of course, at the dorsal side of the
withdrawal slip is an "authority to withdraw" naming
Gayon the person who can withdraw the amount
indicated in the check. Private respondent does not
deny having signed such authority. However,
considering petitioners clear admission that the
withdrawal slip was a blank one except for private
respondents signature, the unavoidable conclusion is
that the typewritten name of "Ruben C. Gayon, Jr."
was intercalated and thereafter it was signed by
Gayon or whoever was allowed by petitioner to
withdraw the amount. Under these facts, there could
not have been a principal-agent relationship between
private respondent and Gayon so as to render the
former liable for the amount withdrawn.
Moreover, the withdrawal slip contains a boxed
warning that states: "This receipt must be signed and
presented with the corresponding foreign currency
savings passbook by the depositor in person. For
withdrawals thru a representative, depositor should
accomplish the authority at the back." The
requirement of presentation of the passbook when
withdrawing an amount cannot be given mere lip
service even though the person making the
withdrawal is authorized by the depositor to do so.
This is clear from Rule No. 6 set out by petitioner so
that, for the protection of the banks interest and as a
reminder to the depositor, the withdrawal shall be
entered in the depositors passbook. The fact that
private respondents passbook was not presented
during the withdrawal is evidenced by the entries
therein showing that the last transaction that he
made with the bank was on September 3, 1984, the
date he deposited the controversial check in the
amount of $2,500.00.22crä lä wvirtualibrä ry
In allowing the withdrawal, petitioner likewise
overlooked another rule that is printed in the
passbook. Thus:
"2.......All deposits will be received as current funds and
will be repaid in the same manner; provided,
however, that deposits of drafts, checks, money
orders, etc. will be accepted as subject to collection
only and credited to the account only upon receipt of
the notice of final payment. Collection charges by the
Banks foreign correspondent in effecting such
collection shall be for the account of the depositor. If
the account has sufficient balance, the collection shall
be debited by the Bank against the account. If, for any
reason, the proceeds of the deposited checks, drafts,
money orders, etc., cannot be collected or if the Bank
is required to return such proceeds, the provisional
entry therefor made by the Bank in the savings
passbook and its records shall be deemed
automatically cancelled regardless of the time that
has elapsed, and whether or not the defective items
can be returned to the depositor; and the Bank is
hereby authorized to execute immediately the
necessary corrections, amendments or changes in its
record, as well as on the savings passbook at the first
opportunity to reflect such cancellation." (Italics and
underlining supplied.)
As correctly held by the Court of Appeals, in
depositing the check in his name, private respondent
did not become the outright owner of the amount
stated therein. Under the above rule, by depositing
the check with petitioner, private respondent was, in
a way, merely designating petitioner as the collecting
bank. This is in consonance with the rule that a
negotiable instrument, such as a check, whether a
managers check or ordinary check, is not legal
tender.23 As such, after receiving the deposit, under
its own rules, petitioner shall credit the amount in
private respondents account or infuse value thereon
only after the drawee bank shall have paid the
amount of the check or the check has been cleared for
deposit. Again, this is in accordance with ordinary
banking practices and with this Courts
pronouncement that "the collecting bank or last
endorser generally suffers the loss because it has the
duty to ascertain the genuineness of all prior
endorsements considering that the act of presenting
the check for payment to the drawee is an assertion
that the party making the presentment has done its
duty to ascertain the genuineness of the
endorsements."24 The rule finds more meaning in this
case where the check involved is drawn on a foreign
bank and therefore collection is more difficult than
when the drawee bank is a local one even though the
check in question is a managers
check.25crä lä wvirtualibrä ry
In Banco Atlantico v. Auditor General,[26] Banco
Atlantico, a commercial bank in Madrid, Spain, paid
the amounts represented in three (3) checks to
Virginia Boncan, the finance officer of the Philippine
Embassy in Madrid. The bank did so without
previously clearing the checks with the drawee bank,
the Philippine National Bank in New York, on account
of the "special treatment" that Boncan received from
the personnel of Banco Atlanticos foreign
department. The Court held that the encashment of
the checks without prior clearance is "contrary to
normal or ordinary banking practice specially so
where the drawee bank is a foreign bank and the
amounts involved were large." Accordingly, the Court
approved the Auditor Generals denial of Banco
Atlanticos claim for payment of the value of the
checks that was withdrawn by Boncan.
Said ruling brings to light the fact that the banking
business is affected with public interest. By the
nature of its functions, a bank is under obligation to
treat the accounts of its depositors "with meticulous
care, always having in mind the fiduciary nature of
their relationship."27 As such, in dealing with its
depositors, a bank should exercise its functions not
only with the diligence of a good father of a family
but it should do so with the highest degree of care.
[28]
In the case at bar, Petitioner, in allowing the
withdrawal of private respondents deposit, failed to
exercise the diligence of a good father of a family. In
total disregard of its own rules, petitioners personnel
negligently handled private respondents account to
petitioners detriment. As this Court once said on this
matter:
"Negligence is the omission to do something which a
reasonable man, guided by those considerations
which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a
prudent and reasonable man would do. The seventy-
eight (78)-year-old, yet still relevant, case of Picart v.
Smith, provides the test by which to determine the
existence of negligence in a particular case which
may be stated as follows: Did the defendant in doing
the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would
have used in the same situation? If not, then he is
guilty of negligence. The law here in effect adopts the
standard supposed to be supplied by the imaginary
conduct of the discreet pater-familias of the Roman
law. The existence of negligence in a given case is not
determined by reference to the personal judgment of
the actor in the situation before him. The law
considers what would be reckless, blameworthy, or
negligent in the man of ordinary intelligence and
prudence and determines liability by
that."29crälä wvirtualibrä ry
Petitioner violated its own rules by allowing the
withdrawal of an amount that is definitely over and
above the aggregate amount of private respondents
dollar deposits that had yet to be cleared. The banks
ledger on private respondents account shows that
before he deposited $2,500.00, private respondent
had a balance of only $750.00.30 Upon private
respondents deposit of $2,500.00 on September 3,
1984, that amount was credited in his ledger as a
deposit resulting in the corresponding total balance
of $3,250.00.31 On September 10, 1984, the amount of
$600.00 and the additional charges of $10.00 were
indicated therein as withdrawn thereby leaving a
balance of $2,640.00. On September 30, 1984, an
interest of $11.59 was reflected in the ledger and on
October 23, 1984, the amount of $2,541.67 was
entered as withdrawn with a balance of $109.92.32 On
November 19, 1984 the word "hold" was written
beside the balance of $109.92.33 That must have been
the time when Reyes, petitioners branch manager,
was informed unofficially of the fact that the check
deposited was a counterfeit, but petitioners Buendia
Ave. Extension Branch received a copy of the
communication thereon from Wells Fargo Bank
International in New York the following day,
November 20, 1984.34 According to Reyes, Wells
Fargo Bank International handled the clearing of
checks drawn against U.S. banks that were deposited
with petitioner.35crälä wvirtualibrä ry
While it is true that private respondents having
signed a blank withdrawal slip set in motion the
events that resulted in the withdrawal and
encashment of the counterfeit check, the negligence
of petitioners personnel was the proximate cause of
the loss that petitioner sustained. Proximate cause,
which is determined by a mixed consideration of
logic, common sense, policy and precedent, is "that
cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause,
produces the injury, and without which the result
would not have occurred."37 The proximate cause of
the withdrawal and eventual loss of the amount of
$2,500.00 on petitioners part was its personnels
negligence in allowing such withdrawal in disregard
of its own rules and the clearing requirement in the
banking system. In so doing, petitioner assumed the
risk of incurring a loss on account of a forged or
counterfeit foreign check and hence, it should suffer
the resulting damage.
WHEREFORE , the petition for review on certiorari is
DENIED. The Decision of the Court of Appeals in CA-
G.R. CV No. 37392 is AFFIRMED.
SO ORDERED.

From these facts on record, it is at once apparent that

petitioners personnel allowed the withdrawal of an
amount bigger than the original deposit of $750.00
and the value of the check deposited in the amount of
$2,500.00 although they had not yet received notice
from the clearing bank in the United States on
whether or not the check was funded. Reyes
contention that after the lapse of the 35-day period
the amount of a deposited check could be withdrawn
even in the absence of a clearance thereon, otherwise
it could take a long time before a depositor could
make a withdrawal,36 is untenable. Said practice
amounts to a disregard of the clearance requirement
of the banking system.
G.R. Nos. 173654-765             August 28, 2008
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
TERESITA PUIG and ROMEO PORRAS, respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review under Rule 45 of the
Revised Rules of Court with petitioner People of the
Philippines, represented by the Office of the Solicitor
General, praying for the reversal of the Orders dated
30 January 2006 and 9 June 2006 of the Regional
Trial Court (RTC) of the 6th Judicial Region, Branch
68, Dumangas, Iloilo, dismissing the 112 cases of
Qualified Theft filed against respondents Teresita
Puig and Romeo Porras, and denying petitioner’s
Motion for Reconsideration, in Criminal Cases No. 05-
3054 to 05-3165.
The following are the factual antecedents:
On 7 November 2005, the Iloilo Provincial
Prosecutor’s Office filed before Branch 68 of the RTC
in Dumangas, Iloilo, 112 cases of Qualified Theft
against respondents Teresita Puig (Puig) and Romeo
Porras (Porras) who were the Cashier and
Bookkeeper, respectively, of private complainant
Rural Bank of Pototan, Inc. The cases were docketed
as Criminal Cases No. 05-3054 to 05-3165.
The allegations in the Informations1 filed before the
RTC were uniform and pro-forma, except for the
amounts, date and time of commission, to wit:
INFORMATION
That on or about the 1st day of August, 2002,
in the Municipality of Pototan, Province of
Iloilo, Philippines, and within the jurisdiction
of this Honorable Court, above-named
[respondents], conspiring, confederating, and
helping one another, with grave abuse of
confidence, being
the Cashier and Bookkeeper of the Rural
Bank of Pototan, Inc., Pototan, Iloilo, without
the knowledge and/or consent of the
management of the Bank and with intent of
gain, did then and there willfully, unlawfully
and feloniously take, steal and carry away the
sum of FIFTEEN THOUSAND PESOS
(P15,000.00), Philippine Currency, to the
damage and prejudice of the said bank in the
aforesaid amount.
After perusing the Informations in these cases, the
trial court did not find the existence of probable
cause that would have necessitated the issuance of a
warrant of arrest based on the following grounds:
(1) the element of ‘taking without the
consent of the owners’ was missing on the
ground that it is the depositors-clients, and
not the Bank, which filed the complaint in
these cases, who are the owners of the money
allegedly taken by respondents and hence,
are the real parties-in-interest; and
(2) the Informations are bereft of the phrase
alleging "dependence, guardianship or
vigilance between the respondents and
the offended party that would have
created a high degree of confidence
between them which the respondents
could have abused."
It added that allowing the 112 cases for Qualified
Theft filed against the respondents to push through
would be violative of the right of the respondents
under Section 14(2), Article III of the 1987
Constitution which states that in all criminal
prosecutions, the accused shall enjoy the right to be
informed of the nature and cause of the accusation
against him. Following Section 6, Rule 112 of the
Revised Rules of Criminal Procedure, the RTC
dismissed the cases on 30 January 2006 and refused
to issue a warrant of arrest against Puig and Porras.
A Motion for Reconsideration2 was filed on 17 April
2006, by the petitioner.
On 9 June 2006, an Order3 denying petitioner’s
Motion for Reconsideration was issued by the RTC,
finding as follows:
Accordingly, the prosecution’s Motion for
Reconsideration should be, as it hereby,
DENIED. The Order dated January 30, 2006
STANDS in all respects.
Petitioner went directly to this Court via Petition for
Review on Certiorari under Rule 45, raising the sole
legal issue of:
 WHETHER OR NOT THE 112 INFORMATIONS
FOR QUALIFIED THEFT SUFFICIENTLY
ALLEGE THE ELEMENT OF TAKING
WITHOUT THE CONSENT OF THE OWNER,
AND THE QUALIFYING CIRCUMSTANCE OF
GRAVE ABUSE OF CONFIDENCE.
Petitioner prays that judgment be rendered annulling
and setting aside the Orders dated 30 January 2006
and 9 June 2006 issued by the trial court, and that it
be directed to proceed with Criminal Cases No. 05-
3054 to 05-3165.
Petitioner explains that under Article 1980 of the
New Civil Code, "fixed, savings, and current deposits
of money in banks and similar institutions shall be
governed by the provisions concerning simple loans."
Corollary thereto, Article 1953 of the same Code
provides that "a person who receives a loan of money
or any other fungible thing acquires the ownership
thereof, and is bound to pay to the creditor an equal
amount of the same kind and quality." Thus, it posits
that the depositors who place their money with the
bank are considered creditors of the bank. The bank
acquires ownership of the money deposited by its
clients, making the money taken by respondents as
belonging to the bank.
Petitioner also insists that the Informations
sufficiently allege all the elements of the crime of
qualified theft, citing that a perusal of the
Informations will show that they specifically allege
that the respondents were the Cashier and
Bookkeeper of the Rural Bank of Pototan, Inc.,
respectively, and that they took various amounts of
money with grave abuse of confidence, and without
the knowledge and consent of the bank, to the
damage and prejudice of the bank.
Parenthetically, respondents raise procedural issues.
They challenge the petition on the ground that a
Petition for Review on Certiorari via Rule 45 is the
wrong mode of appeal because a finding of probable
cause for the issuance of a warrant of arrest
presupposes evaluation of facts and circumstances,
which is not proper under said Rule.
Respondents further claim that the Department of
Justice (DOJ), through the Secretary of Justice, is the
principal party to file a Petition for Review on
Certiorari, considering that the incident was indorsed
by the DOJ.
We find merit in the petition.
The dismissal by the RTC of the criminal cases was
allegedly due to insufficiency of the Informations and,
therefore, because of this defect, there is no basis for
the existence of probable cause which will justify the
issuance of the warrant of arrest. Petitioner assails
the dismissal contending that the Informations for
Qualified Theft sufficiently state facts which
constitute (a) the qualifying circumstance of grave
abuse of confidence; and (b) the element of taking,
with intent to gain and without the consent of the
owner, which is the Bank.
In determining the existence of probable cause to
issue a warrant of arrest, the RTC judge found the
allegations in the Information inadequate. He ruled
that the Information failed to state facts constituting
the qualifying circumstance of grave abuse of
confidence and the element of taking without the
consent of the owner, since the owner of the money is
not the Bank, but the depositors therein. He also
cites People v. Koc Song,4 in which this Court held:
There must be allegation in the information
and proof of a relation, by reason of
dependence, guardianship or vigilance,
between the respondents and the offended
party that has created a high degree of
confidence between them, which the
respondents abused.
At this point, it needs stressing that the RTC Judge
based his conclusion that there was no probable cause
simply on the insufficiency of the allegations in the
Informations concerning the facts constitutive of the
elements of the offense charged. This, therefore, makes
the issue of sufficiency of the allegations in the
Informations the focal point of discussion.
Qualified Theft, as defined and punished under
Article 310 of the Revised Penal Code, is committed
as follows, viz:
ART. 310. Qualified Theft. – The crime of theft
shall be punished by the penalties next higher
by two degrees than those respectively
specified in the next preceding article, if
committed by a domestic servant, or with
grave abuse of confidence, or if the property
stolen is motor vehicle, mail matter or large
cattle or consists of coconuts taken from the
premises of a plantation, fish taken from a
fishpond or fishery or if property is taken on
the occasion of fire, earthquake, typhoon,
volcanic eruption, or any other calamity,
 vehicular accident or civil disturbance.
(Emphasis supplied.)
Theft, as defined in Article 308 of the Revised Penal
Code, requires the physical taking of another’s
property without violence or intimidation against
persons or force upon things. The elements of the
crime under this Article are:
1. Intent to gain;
2. Unlawful taking;
3. Personal property belonging to another;
4. Absence of violence or intimidation against
persons or force upon things.
To fall under the crime of Qualified Theft, the
following elements must concur:
1. Taking of personal property;
2. That the said property belongs to another;
3. That the said taking be done with intent to
gain;
4. That it be done without the owner’s
consent;
5. That it be accomplished without the use of
violence or intimidation against persons, nor
of force upon things;
6. That it be done with grave abuse of
confidence.
On the sufficiency of the Information, Section 6, Rule
110 of the Rules of Court requires, inter alia, that the
information must state the acts or omissions
complained of as constitutive of the offense.
On the manner of how the Information should be
worded, Section 9, Rule 110 of the Rules of Court, is
enlightening:
Section 9. Cause of the accusation. The acts or
omissions complained of as constituting the
offense and the qualifying and aggravating
circumstances must be stated in ordinary and
concise language and not necessarily in the
language used in the statute but in terms
sufficient to enable a person of common
understanding to know what offense is being
charged as well as its qualifying and
aggravating circumstances and for the court
to pronounce judgment.
It is evident that the Information need not use the
exact language of the statute in alleging the acts or
omissions complained of as constituting the offense.
The test is whether it enables a person of common
understanding to know the charge against him, and
the court to render judgment properly.5
The portion of the Information relevant to this
discussion reads:
A]bove-named [respondents], conspiring, confederating, and helping one
another, with grave abuse of confidence, being the Cashier and
Bookkeeper of the Rural Bank of Pototan, Inc., Pototan, Iloilo, without the
knowledge and/or consent of the management of the Bank x x x.
It is beyond doubt that tellers, Cashiers, Bookkeepers
and other employees of a Bank who come into
possession of the monies deposited therein enjoy the
confidence reposed in them by their employer.
Banks, on the other hand, where monies are
deposited, are considered the owners thereof. This is
very clear not only from the express provisions of the
law, but from established jurisprudence. The
relationship between banks and depositors has been
held to be that of creditor and debtor. Articles 1953
and 1980 of the New Civil Code, as appropriately
pointed out by petitioner, provide as follows:
Article 1953. A person who receives a loan of
money or any other fungible thing acquires
the ownership thereof, and is bound to pay to
the creditor an equal amount of the same
kind and quality.
Article 1980. Fixed, savings, and current
deposits of money in banks and similar
institutions shall be governed by the
provisions concerning loan.
In a long line of cases involving Qualified Theft, this
Court has firmly established the nature of possession
by the Bank of the money deposits therein, and the
duties being performed by its employees who have
custody of the money or have come into possession
of it. The Court has consistently considered the
allegations in the Information that such employees
acted with grave abuse of confidence, to the damage
and prejudice of the Bank, without particularly
referring to it as owner of the money deposits, as
sufficient to make out a case of Qualified Theft. For a
graphic illustration, we cite Roque v. People,6 where
the accused teller was convicted for Qualified Theft
based on this Information:
That on or about the 16th day of November,
1989, in the municipality of Floridablanca,
province of Pampanga, Philippines and within
the jurisdiction of his Honorable Court, the
above-named accused ASUNCION GALANG
ROQUE, being then employed as teller of the
Basa Air Base Savings and Loan Association
Inc. (BABSLA) with office address at Basa Air
Base, Floridablanca, Pampanga, and as such
was authorized and reposed with the
responsibility to receive and collect capital
contributions from its member/contributors
of said corporation, and having collected and
received in her capacity as teller of the
BABSLA the sum of TEN THOUSAND PESOS
(P10,000.00), said accused, with intent of
gain, with grave abuse of confidence and
without the knowledge and consent of said
corporation, did then and there willfully,
unlawfully and feloniously take, steal and
carry away the amount of P10,000.00,
Philippine currency, by making it appear that
a certain depositor by the name of Antonio
Salazar withdrew from his Savings Account
No. 1359, when in truth and in fact said
Antonio Salazar did not withdr[a]w the said
amount of P10,000.00 to the damage and
prejudice of BABSLA in the total amount
of P10,000.00, Philippine currency.
In convicting the therein appellant, the Court held
that:
[S]ince the teller occupies a position of
confidence, and the bank places money in the
teller’s possession due to the confidence
reposed on the teller, the felony of qualified
theft would be committed.7
Also in People v. Sison,8 the Branch Operations
Officer was convicted of the crime of Qualified Theft
based on the Information as herein cited:
That in or about and during the period
compressed between January 24, 1992 and
February 13, 1992, both dates inclusive, in
the City of Manila, Philippines, the said
accused did then and there wilfully,
unlawfully and feloniously, with intent of gain
and without the knowledge and consent of
the owner thereof, take, steal and carry away
the following, to wit:
Cash money amounting to P6,000,000.00 in
different denominations belonging to the
PHILIPPINE COMMERCIAL INTERNATIONAL
BANK (PCIBank for brevity), Luneta Branch,
Manila represented by its Branch Manager,
HELEN U. FARGAS, to the damage and
prejudice of the said owner in the aforesaid
amount of P6,000,000.00, Philippine
Currency.
That in the commission of the said offense,
herein accused acted with grave abuse of
confidence and unfaithfulness, he being
the Branch Operation Officer of the said
complainant and as such he had free access to
the place where the said amount of money
was kept.
The judgment of conviction elaborated thus:
The crime perpetuated by appellant against
his employer, the Philippine Commercial and
Industrial Bank (PCIB), is Qualified Theft.
Appellant could not have committed the
crime had he not been holding the position of
Luneta Branch Operation Officer which gave
him not only sole access to the bank vault xxx.
The management of the PCIB reposed its trust
and confidence in the appellant as its Luneta
Branch Operation Officer, and it was this trust
and confidence which he exploited to enrich
himself to the damage and prejudice of PCIB x
x x.9
From another end, People v. Locson,10 in addition
to People v. Sison, described the nature of possession
by the Bank. The money in this case was in the
possession of the defendant as receiving teller of the
bank, and the possession of the defendant was the
possession of the Bank. The Court held therein that
when the defendant, with grave abuse of confidence,
removed the money and appropriated it to his own
use without the consent of the Bank, there was taking
as contemplated in the crime of Qualified Theft.11
Conspicuously, in all of the foregoing cases, where
the Informations merely alleged the positions of the
respondents; that the crime was committed with
grave abuse of confidence, with intent to gain and
without the knowledge and consent of the Bank,
without necessarily stating the phrase being
assiduously insisted upon by respondents, "of a
relation by reason of dependence, guardianship or
vigilance, between the respondents and the
offended party that has created a high degree of
confidence between them, which respondents
abused,"12 and without employing the word "owner"
in lieu of the "Bank" were considered to have
satisfied the test of sufficiency of allegations.
As regards the respondents who were employed as
Cashier and Bookkeeper of the Bank in this case,
there is even no reason to quibble on the allegation in
the Informations that they acted with grave abuse of
confidence. In fact, the Information which alleged
grave abuse of confidence by accused herein is even
more precise, as this is exactly the requirement of the
law in qualifying the crime of Theft.
In summary, the Bank acquires ownership of the
money deposited by its clients; and the employees of
the Bank, who are entrusted with the possession of
money of the Bank due to the confidence reposed in
them, occupy positions of confidence. The
Informations, therefore, sufficiently allege all the
essential elements constituting the crime of Qualified
Theft.
On the theory of the defense that the DOJ is the
principal party who may file the instant petition, the
ruling in Mobilia Products, Inc. v. Hajime Umezawa13 is
instructive. The Court thus enunciated:
In a criminal case in which the offended party
is the State, the interest of the private
complainant or the offended party is limited
to the civil liability arising therefrom. Hence,
if a criminal case is dismissed by the trial
court or if there is an acquittal, a
reconsideration of the order of dismissal or
acquittal may be undertaken, whenever
legally feasible, insofar as the criminal aspect
thereof is concerned and may be made only
by the public prosecutor; or in the case of an
appeal, by the State only, through the OSG. x x
x.
On the alleged wrong mode of appeal by petitioner,
suffice it to state that the rule is well-settled that in
appeals by certiorari under Rule 45 of the Rules of
Court, only errors of law may be raised,14 and herein
petitioner certainly raised a question of law.
As an aside, even if we go beyond the allegations of
the Informations in these cases, a closer look at the
records of the preliminary investigation conducted
will show that, indeed, probable cause exists for the
indictment of herein respondents. Pursuant to
Section 6, Rule 112 of the Rules of Court, the judge
shall issue a warrant of arrest only upon a finding of
probable cause after personally evaluating the
resolution of the prosecutor and its supporting
evidence. Soliven v. Makasiar,15 as reiterated
in Allado v. Driokno,16 explained that probable cause
for the issuance of a warrant of arrest is the existence
of such facts and circumstances that would lead a
reasonably discreet and prudent person to believe
that an offense has been committed by the person
sought to be arrested.17 The records reasonably
indicate that the respondents may have, indeed,
committed the offense charged.
Before closing, let it be stated that while it is truly
imperative upon the fiscal or the judge, as the case
may be, to relieve the respondents from the pain of
going through a trial once it is ascertained that no
probable cause exists to form a sufficient belief as to
the guilt of the respondents, conversely, it is also
equally imperative upon the judge to proceed with
the case upon a showing that there is a prima
facie case against the respondents.
WHEREFORE, premises considered, the Petition for
Review on Certiorari is hereby GRANTED. The
Orders dated 30 January 2006 and 9 June 2006 of the
RTC dismissing Criminal Cases No. 05-3054 to 05-
3165 are REVERSED and SET ASIDE. Let the
corresponding Warrants of Arrest issue against
herein respondents TERESITA PUIG and ROMEO
PORRAS. The RTC Judge of Branch 68, in Dumangas,
Iloilo, is directed to proceed with the trial of Criminal
Cases No. 05-3054 to 05-3165, inclusive, with
reasonable dispatch. No pronouncement as to costs.
SO ORDERED.
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.
Dolorfino & Dominguez Law Offices for petitioner.
Danilo B. Banares for private respondent.
DAVIDE, JR., J.:
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?
This is the crux of the present controversy.
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.1
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 complaint2 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,3 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.4
In due course, the trial court, now designated as
Branch 161 of the Regional Trial Court (RTC) of
Pasig, Metro Manila, rendered a decision5 adverse to
the petitioner on 8 December 1986, the dispositive
portion of which reads:
WHEREFORE, premises considered,
judgment is hereby rendered
dismissing plaintiff's complaint.
On defendant's counterclaim,
judgment is hereby rendered ordering
plaintiff to pay defendant the amount
of FIVE THOUSAND (P5,000.00)
PESOS as attorney's fees.
With costs against plaintiff.6
The unfavorable verdict is based on the trial court's
conclusion that under paragraphs 13 and 14 of the
contract of lease, the Bank has no liability for the loss
of the certificates of title. The court declared that the
said provisions are binding on the parties.
Its motion for reconsideration7 having been denied,
petitioner appealed from the adverse decision to the
respondent Court of Appeals which docketed the
appeal as CA-G.R. CV No. 15150. Petitioner urged the
respondent Court to reverse the challenged decision
because the trial court erred in (a) absolving the
respondent Bank from liability from the loss, (b) not
declaring as null and void, for being contrary to law,
public order and public policy, the provisions in the
contract for lease of the safety deposit box absolving
the Bank from any liability for loss, (c) not concluding
that in this jurisdiction, as well as under American
jurisprudence, the liability of the Bank is settled and
(d) awarding attorney's fees to the Bank and denying
the petitioner's prayer for nominal and exemplary
damages and attorney's fees.8
In its Decision promulgated on 4 July
1989,9 respondent Court affirmed the appealed
decision principally on the theory that the contract
(Exhibit "2") executed by the petitioner and
respondent Bank is in the nature of a contract of
lease by virtue of which the petitioner and its co-
renter were given control over the safety deposit box
and its contents while the Bank retained no right to
open the said box because it had neither the
possession nor control over it and its contents. As
such, the contract is governed by Article 1643 of the
Civil Code 10 which provides:
Its motion for reconsideration 14 having been denied
in the respondent Court's Resolution of 28 August
Art. 1643. In the lease of things, one of
the parties binds himself to give to
another the enjoyment or use of a
thing for a price certain, and for a
period which may be definite or
indefinite. However, no lease for more
than ninety-nine years shall be valid.
It invoked Tolentino vs. Gonzales  11 — which
held that the owner of the property loses his
control over the property leased during the
period of the contract — and Article 1975 of
the Civil Code which provides:
Art. 1975. The depositary holding
certificates, bonds, securities or
instruments which earn interest shall
be bound to collect the latter when it
becomes due, and to take such steps
as may be necessary in order that the
securities may preserve their value
and the rights corresponding to them
according to law.
The above provision shall not apply to
contracts for the rent of safety deposit
boxes.
and then concluded that "[c]learly, the
defendant-appellee is not under any duty to
maintain the contents of the box. The
stipulation absolving the defendant-appellee
from liability is in accordance with the nature
of the contract of lease and cannot be
regarded as contrary to law, public order and
public policy." 12 The appellate court was
quick to add, however, that under the
contract of lease of the safety deposit box,
respondent Bank is not completely free from
liability as it may still be made answerable in
case unauthorized persons enter into the
vault area or when the rented box is forced
open. Thus, as expressly provided for in
stipulation number 8 of the contract in
question:
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. 13
1989, 15 petitioner took this recourse under Rule 45
of the Rules of Court and urges Us to review and set
aside the respondent Court's ruling. Petitioner avers
that both the respondent Court and the trial court (a)
did not properly and legally apply the correct law in
this case, (b) acted with grave abuse of discretion or
in excess of jurisdiction amounting to lack thereof
and (c) set a precedent that is contrary to, or is a
departure from precedents adhered to and affirmed
by decisions of this Court and precepts in American
jurisprudence adopted in the Philippines. It reiterates
the arguments it had raised in its motion to
reconsider the trial court's decision, the brief
submitted to the respondent Court and the motion to
reconsider the latter's decision. In a nutshell,
petitioner maintains that regardless of nomenclature,
the contract for the rent of the safety deposit box
(Exhibit "2") is actually a contract of deposit
governed by Title XII, Book IV of the Civil Code of the
Philippines. 16 Accordingly, it is claimed that the
respondent Bank is liable for the loss of the
certificates of title pursuant to Article 1972 of the
said Code which provides:
Art. 1972. The depositary is obliged to
keep the thing safely and to return it,
when required, to the depositor, or to
his heirs and successors, or to the
person who may have been
designated in the contract. His
responsibility, with regard to the
safekeeping and the loss of the thing,
shall be governed by the provisions of
Title I of this Book.
If the deposit is gratuitous, this fact
shall be taken into account in
determining the degree of care that
the depositary must observe.
Petitioner then quotes a passage from
American Jurisprudence 17 which is supposed
to expound on the prevailing rule in the
United States, to wit:
The prevailing rule appears to be that
where a safe-deposit company leases
a safe-deposit box or safe and the
lessee takes possession of the box or
safe and places therein his securities
or other valuables, the relation of
bailee and bail or is created between
the parties to the transaction as to
such securities or other valuables; the
fact that the
safe-deposit company does not know,
and that it is not expected that it shall
know, the character or description of
the property which is deposited in
such safe-deposit box or safe does not
change that relation. That access to
the contents of the safe-deposit box
can be had only by the use of a key
retained by the lessee ( whether it is
the sole key or one to be used in
connection with one retained by the
lessor) does not operate to alter the
foregoing rule. The argument that
there is not, in such a case, a delivery
of exclusive possession and control to
the deposit company, and that
therefore the situation is entirely
different from that of ordinary
bailment, has been generally rejected
by the courts, usually on the ground
that as possession must be either in
the depositor or in the company, it
should reasonably be considered as in
the latter rather than in the former,
since the company is, by the nature of
the contract, given absolute control of
access to the property, and the
depositor cannot gain access thereto
without the consent and active
participation of the company. . . .
(citations omitted).
and a segment from Words and
Phrases 18 which states that a contract for the
rental of a bank safety deposit box in
consideration of a fixed amount at stated
periods is a bailment for hire.
Petitioner further argues that conditions 13 and 14 of
the questioned contract are contrary to law and
public policy and should be declared null and void. In
support thereof, it cites Article 1306 of the Civil Code
which provides that parties to a contract 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.
After the respondent Bank filed its comment, this
Court gave due course to the petition and required
the parties to simultaneously submit their respective
Memoranda.
The petition is partly meritorious.
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; 19 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 20 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.
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. 21 This is
just the prevailing view because:
There is, however, some support for
the view that the relationship in
question might be more properly
characterized as that of landlord and
tenant, or lessor and lessee. It has also
been suggested that it should be
characterized as that of licensor and
licensee. The relation between a bank,
safe-deposit company, or storage
company, and the renter of a safe-
deposit box therein, is often described
as contractual, express or implied,
oral or written, in whole or in part.
But there is apparently no jurisdiction
in which any rule other than that
applicable to bailments governs
questions of the liability and rights of
the parties in respect of loss of the
contents of safe-deposit
boxes. 22 (citations omitted)
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 23 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. . . . 24 (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 25 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. 26 In the absence of any stipulation
prescribing the degree of diligence required, that of a
good father of a family is to be observed. 27 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. 28
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. 29
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. 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 limits its liability to some
extent by agreement or
30
stipulation.   (citations omitted)
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.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 126780             February 17, 2005
YHT REALTY CORPORATION, ERLINDA LAINEZ
and ANICIA PAYAM, petitioners,
vs.
THE COURT OF APPEALS and MAURICE
McLOUGHLIN, respondents.
DECISION
TINGA, J.:
The primary question of interest before this Court is
the only legal issue in the case: It is whether a hotel
may evade liability for the loss of items left with it for
safekeeping by its guests, by having these guests
execute written waivers holding the establishment or
its employees free from blame for such loss in light of
Article 2003 of the Civil Code which voids such
waivers.
Before this Court is a Rule 45 petition for review of
the Decision1 dated 19 October 1995 of the Court of
Appeals which affirmed the Decision2 dated 16
December 1991 of the Regional Trial Court (RTC),
Branch 13, of Manila, finding YHT Realty Corporation,
Brunhilda Mata-Tan (Tan), Erlinda Lainez (Lainez)
and Anicia Payam (Payam) jointly and solidarily
liable for damages in an action filed by Maurice
McLoughlin (McLoughlin) for the loss of his American
and Australian dollars deposited in the safety deposit
box of Tropicana Copacabana Apartment Hotel,
owned and operated by YHT Realty Corporation.
The factual backdrop of the case follow.
Private respondent McLoughlin, an Australian
businessman-philanthropist, used to stay at Sheraton
Hotel during his trips to the Philippines prior to 1984
when he met Tan. Tan befriended McLoughlin by
showing him around, introducing him to important
people, accompanying him in visiting impoverished
street children and assisting him in buying gifts for
the children and in distributing the same to
charitable institutions for poor children. Tan
convinced McLoughlin to transfer from Sheraton
Hotel to Tropicana where Lainez, Payam and Danilo
Lopez were employed. Lopez served as manager of
the hotel while Lainez and Payam had custody of the
keys for the safety deposit boxes of Tropicana. Tan
took care of McLoughlin's booking at the Tropicana
where he started staying during his trips to the
Philippines from December 1984 to September
1987.3
On 30 October 1987, McLoughlin arrived from
Australia and registered with Tropicana. He rented a
safety deposit box as it was his practice to rent a
safety deposit box every time he registered at
Tropicana in previous trips. As a tourist, McLoughlin
was aware of the procedure observed by Tropicana
relative to its safety deposit boxes. The safety deposit
box could only be opened through the use of two
keys, one of which is given to the registered guest,
and the other remaining in the possession of the
management of the hotel. When a registered guest
wished to open his safety deposit box, he alone could
personally request the management who then would
assign one of its employees to accompany the guest
and assist him in opening the safety deposit box with
the two keys.4
McLoughlin allegedly placed the following in his
safety deposit box: Fifteen Thousand US Dollars
(US$15,000.00) which he placed in two envelopes,
one envelope containing Ten Thousand US Dollars
(US$10,000.00) and the other envelope Five
Thousand US Dollars (US$5,000.00); Ten Thousand
Australian Dollars (AUS$10,000.00) which he also
placed in another envelope; two (2) other envelopes
containing letters and credit cards; two (2)
bankbooks; and a checkbook, arranged side by side
inside the safety deposit box.5
On 12 December 1987, before leaving for a brief trip
to Hongkong, McLoughlin opened his safety deposit
box with his key and with the key of the management
and took therefrom the envelope containing Five
Thousand US Dollars (US$5,000.00), the envelope
containing Ten Thousand Australian Dollars
(AUS$10,000.00), his passports and his credit
cards.6 McLoughlin left the other items in the box as
he did not check out of his room at the Tropicana
during his short visit to Hongkong. When he arrived
in Hongkong, he opened the envelope which
contained Five Thousand US Dollars (US$5,000.00)
and discovered upon counting that only Three
Thousand US Dollars (US$3,000.00) were enclosed
therein.7 Since he had no idea whether somebody else
had tampered with his safety deposit box, he thought
that it was just a result of bad accounting since he did
not spend anything from that envelope.8
After returning to Manila, he checked out of
Tropicana on 18 December 1987 and left for
Australia. When he arrived in Australia, he
discovered that the envelope with Ten Thousand US
Dollars (US$10,000.00) was short of Five Thousand
US Dollars (US$5,000). He also noticed that the
jewelry which he bought in Hongkong and stored in
the safety deposit box upon his return to Tropicana
was likewise missing, except for a diamond bracelet.9
When McLoughlin came back to the Philippines on 4
April 1988, he asked Lainez if some money and/or
jewelry which he had lost were found and returned
to her or to the management. However, Lainez told
him that no one in the hotel found such things and
none were turned over to the management. He again
registered at Tropicana and rented a safety deposit
box. He placed therein one (1) envelope containing
Fifteen Thousand US Dollars (US$15,000.00), another
envelope containing Ten Thousand Australian
Dollars (AUS$10,000.00) and other envelopes
containing his traveling papers/documents. On 16
April 1988, McLoughlin requested Lainez and Payam
to open his safety deposit box. He noticed that in the
envelope containing Fifteen Thousand US Dollars
(US$15,000.00), Two Thousand US Dollars
(US$2,000.00) were missing and in the envelope
previously containing Ten Thousand Australian
Dollars (AUS$10,000.00), Four Thousand Five
Hundred Australian Dollars (AUS$4,500.00) were
missing.10
When McLoughlin discovered the loss, he
immediately confronted Lainez and Payam who
admitted that Tan opened the safety deposit box with
the key assigned to him.11 McLoughlin went up to his
room where Tan was staying and confronted her. Tan
admitted that she had stolen McLoughlin's key and
was able to open the safety deposit box with the
assistance of Lopez, Payam and Lainez.12 Lopez also
told McLoughlin that Tan stole the key assigned to
McLoughlin while the latter was asleep.13
McLoughlin requested the management for an
investigation of the incident. Lopez got in touch with
Tan and arranged for a meeting with the police and
McLoughlin. When the police did not arrive, Lopez
and Tan went to the room of McLoughlin at
Tropicana and thereat, Lopez wrote on a piece of
paper a promissory note dated 21 April 1988. The
promissory note reads as follows:
I promise to pay Mr. Maurice McLoughlin the amount
of AUS$4,000.00 and US$2,000.00 or its equivalent in
Philippine currency on or before May 5, 1988.14
Lopez requested Tan to sign the promissory note
which the latter did and Lopez also signed as a
witness. Despite the execution of promissory note by
Tan, McLoughlin insisted that it must be the hotel
who must assume responsibility for the loss he
suffered. However, Lopez refused to accept the
responsibility relying on the conditions for renting
the safety deposit box entitled "Undertaking For the
Use Of Safety Deposit Box,"15 specifically paragraphs
(2) and (4) thereof, to wit:
2. To release and hold free and blameless
TROPICANA APARTMENT HOTEL from any liability
arising from any loss in the contents and/or use of
the said deposit box for any cause whatsoever,
including but not limited to the presentation or use
thereof by any other person should the key be lost;
...
4. To return the key and execute the RELEASE in
favor of TROPICANA APARTMENT HOTEL upon
giving up the use of the box.16
On 17 May 1988, McLoughlin went back to Australia
and he consulted his lawyers as to the validity of the
abovementioned stipulations. They opined that the
stipulations are void for being violative of universal
hotel practices and customs. His lawyers prepared a
letter dated 30 May 1988 which was signed by
McLoughlin and sent to President Corazon
Aquino.17 The Office of the President referred the
letter to the Department of Justice (DOJ) which
forwarded the same to the Western Police District
(WPD).18
After receiving a copy of the indorsement in
Australia, McLoughlin came to the Philippines and
registered again as a hotel guest of Tropicana.
McLoughlin went to Malacaň ang to follow up on his
letter but he was instructed to go to the DOJ. The DOJ
directed him to proceed to the WPD for
documentation. But McLoughlin went back to
Australia as he had an urgent business matter to
attend to.
For several times, McLoughlin left for Australia to
attend to his business and came back to the
Philippines to follow up on his letter to the President
but he failed to obtain any concrete assistance.19
McLoughlin left again for Australia and upon his
return to the Philippines on 25 August 1989 to
pursue his claims against petitioners, the WPD
conducted an investigation which resulted in the
preparation of an affidavit which was forwarded to
the Manila City Fiscal's Office. Said affidavit became
the basis of preliminary investigation. However,
McLoughlin left again for Australia without receiving
the notice of the hearing on 24 November 1989.
Thus, the case at the Fiscal's Office was dismissed for
failure to prosecute. Mcloughlin requested the
reinstatement of the criminal charge for theft. In the
meantime, McLoughlin and his lawyers wrote letters
of demand to those having responsibility to pay the
damage. Then he left again for Australia.
Upon his return on 22 October 1990, he registered at
the Echelon Towers at Malate, Manila. Meetings were
held between McLoughlin and his lawyer which
resulted to the filing of a complaint for damages on 3
December 1990 against YHT Realty Corporation,
Lopez, Lainez, Payam and Tan (defendants) for the
loss of McLoughlin's money which was discovered on
16 April 1988. After filing the complaint, McLoughlin
left again for Australia to attend to an urgent
business matter. Tan and Lopez, however, were not
served with summons, and trial proceeded with only
Lainez, Payam and YHT Realty Corporation as
defendants.
After defendants had filed their Pre-Trial Brief
admitting that they had previously allowed and
assisted Tan to open the safety deposit box,
McLoughlin filed an Amended/Supplemental
Complaint20 dated 10 June 1991 which included
another incident of loss of money and jewelry in the
safety deposit box rented by McLoughlin in the same
hotel which took place prior to 16 April 1988.21 The
trial court admitted the Amended/Supplemental
Complaint.
During the trial of the case, McLoughlin had been in
and out of the country to attend to urgent business in
Australia, and while staying in the Philippines to
attend the hearing, he incurred expenses for hotel
bills, airfare and other transportation expenses, long
distance calls to Australia, Meralco power expenses,
and expenses for food and maintenance, among
others.22
After trial, the RTC of Manila rendered judgment in
favor of McLoughlin, the dispositive portion of which
reads:
WHEREFORE, above premises considered, judgment
is hereby rendered by this Court in favor of plaintiff
and against the defendants, to wit:
1. Ordering defendants, jointly and severally,
to pay plaintiff the sum of US$11,400.00 or its
equivalent in Philippine Currency of
₱342,000.00, more or less, and the sum of
AUS$4,500.00 or its equivalent in Philippine
Currency of ₱99,000.00, or a total of
₱441,000.00, more or less, with 12% interest
from April 16 1988 until said amount has
been paid to plaintiff (Item 1, Exhibit CC);
2. Ordering defendants, jointly and severally
to pay plaintiff the sum of ₱3,674,238.00 as
actual and consequential damages arising
from the loss of his Australian and American
dollars and jewelries complained against and
in prosecuting his claim and rights
administratively and judicially (Items II, III,
IV, V, VI, VII, VIII, and IX, Exh. "CC");
3. Ordering defendants, jointly and severally,
to pay plaintiff the sum of ₱500,000.00 as
moral damages (Item X, Exh. "CC");
4. Ordering defendants, jointly and severally,
to pay plaintiff the sum of ₱350,000.00 as
exemplary damages (Item XI, Exh. "CC");
5. And ordering defendants, jointly and
severally, to pay litigation expenses in the
sum of ₱200,000.00 (Item XII, Exh. "CC");
6. Ordering defendants, jointly and severally,
to pay plaintiff the sum of ₱200,000.00 as
attorney's fees, and a fee of ₱3,000.00 for
every appearance; and
7. Plus costs of suit.
SO ORDERED.23
The trial court found that McLoughlin's allegations as
to the fact of loss and as to the amount of money he
lost were sufficiently shown by his direct and
straightforward manner of testifying in court and
found him to be credible and worthy of belief as it
was established that McLoughlin's money, kept in
Tropicana's safety deposit box, was taken by Tan
without McLoughlin's consent. The taking was
effected through the use of the master key which was
in the possession of the management. Payam and
Lainez allowed Tan to use the master key without
authority from McLoughlin. The trial court added that
if McLoughlin had not lost his dollars, he would not
have gone through the trouble and personal
inconvenience of seeking aid and assistance from the
Office of the President, DOJ, police authorities and the
City Fiscal's Office in his desire to recover his losses
from the hotel management and Tan.24
As regards the loss of Seven Thousand US Dollars
(US$7,000.00) and jewelry worth approximately One
Thousand Two Hundred US Dollars (US$1,200.00)
which allegedly occurred during his stay at Tropicana
previous to 4 April 1988, no claim was made by
McLoughlin for such losses in his complaint dated 21
November 1990 because he was not sure how they
were lost and who the responsible persons were. But
considering the admission of the defendants in their
pre-trial brief that on three previous occasions they
allowed Tan to open the box, the trial court opined
that it was logical and reasonable to presume that his
personal assets consisting of Seven Thousand US
Dollars (US$7,000.00) and jewelry were taken by Tan
from the safety deposit box without McLoughlin's
consent through the cooperation of Payam and
Lainez.25
The trial court also found that defendants acted with
gross negligence in the performance and exercise of
their duties and obligations as innkeepers and were
therefore liable to answer for the losses incurred by
McLoughlin.26
Moreover, the trial court ruled that paragraphs (2)
and (4) of the "Undertaking For The Use Of Safety
Deposit Box" are not valid for being contrary to the
express mandate of Article 2003 of the New Civil
Code and against public policy.27 Thus, there being
fraud or wanton conduct on the part of defendants,
they should be responsible for all damages which
may be attributed to the non-performance of their
contractual obligations.28
The Court of Appeals affirmed the disquisitions made
by the lower court except as to the amount of
damages awarded. The decretal text of the appellate
court's decision reads:
THE FOREGOING CONSIDERED, the appealed
Decision is hereby AFFIRMED but modified as
follows:
The appellants are directed jointly and severally to
pay the plaintiff/appellee the following amounts:
1) ₱153,200.00 representing the peso
equivalent of US$2,000.00 and AUS$4,500.00;
2) ₱308,880.80, representing the peso value
for the air fares from Sidney [sic] to Manila
and back for a total of eleven (11) trips;
3) One-half of ₱336,207.05 or ₱168,103.52
representing payment to Tropicana
Apartment Hotel;
4) One-half of ₱152,683.57 or ₱76,341.785
representing payment to Echelon Tower;
5) One-half of ₱179,863.20 or ₱89,931.60 for
the taxi xxx transportation from the residence
to Sidney [sic] Airport and from MIA to the
hotel here in Manila, for the eleven (11) trips;
6) One-half of ₱7,801.94 or ₱3,900.97
representing Meralco power expenses;
7) One-half of ₱356,400.00 or ₱178,000.00
representing expenses for food and
maintenance;
8) ₱50,000.00 for moral damages;
9) ₱10,000.00 as exemplary damages; and
10) ₱200,000 representing attorney's fees.
With costs.
SO ORDERED.29
Unperturbed, YHT Realty Corporation, Lainez and
Payam went to this Court in this appeal by certiorari.
Petitioners submit for resolution by this Court the
following issues: (a) whether the appellate court's
conclusion on the alleged prior existence and
subsequent loss of the subject money and jewelry is
supported by the evidence on record; (b) whether the
finding of gross negligence on the part of petitioners
in the performance of their duties as innkeepers is
supported by the evidence on record; (c) whether the
"Undertaking For The Use of Safety Deposit Box"
admittedly executed by private respondent is null
and void; and (d) whether the damages awarded to
private respondent, as well as the amounts thereof,
are proper under the circumstances.30
The petition is devoid of merit.
It is worthy of note that the thrust of Rule 45 is the
resolution only of questions of law and any
peripheral factual question addressed to this Court is
beyond the bounds of this mode of review.
Petitioners point out that the evidence on record is
insufficient to prove the fact of prior existence of the
dollars and the jewelry which had been lost while
deposited in the safety deposit boxes of Tropicana,
the basis of the trial court and the appellate court
being the sole testimony of McLoughlin as to the
contents thereof. Likewise, petitioners dispute the
finding of gross negligence on their part as not
supported by the evidence on record.
We are not persuaded.l^vvphi1.net We adhere to the
findings of the trial court as affirmed by the appellate
court that the fact of loss was established by the
credible testimony in open court by McLoughlin. Such
findings are factual and therefore beyond the ambit
of the present petition.1awphi1.nét
The trial court had the occasion to observe the
demeanor of McLoughlin while testifying which
reflected the veracity of the facts testified to by him.
On this score, we give full credence to the
appreciation of testimonial evidence by the trial
court especially if what is at issue is the credibility of
the witness. The oft-repeated principle is that where
the credibility of a witness is an issue, the established
rule is that great respect is accorded to the evaluation
of the credibility of witnesses by the trial court. 31 The
trial court is in the best position to assess the
credibility of witnesses and their testimonies because
of its unique opportunity to observe the witnesses
firsthand and note their demeanor, conduct and
attitude under grilling examination.32
We are also not impressed by petitioners' argument
that the finding of gross negligence by the lower
court as affirmed by the appellate court is not
supported by evidence. The evidence reveals that two
keys are required to open the safety deposit boxes of
Tropicana. One key is assigned to the guest while the
other remains in the possession of the management.
If the guest desires to open his safety deposit box, he
must request the management for the other key to
open the same. In other words, the guest alone
cannot open the safety deposit box without the
assistance of the management or its employees. With
more reason that access to the safety deposit box
should be denied if the one requesting for the
opening of the safety deposit box is a stranger. Thus,
in case of loss of any item deposited in the safety
deposit box, it is inevitable to conclude that the
management had at least a hand in the
consummation of the taking, unless the reason for the
loss is force majeure.
Noteworthy is the fact that Payam and Lainez, who
were employees of Tropicana, had custody of the
master key of the management when the loss took
place. In fact, they even admitted that they assisted
Tan on three separate occasions in opening
McLoughlin's safety deposit box.33 This only proves
that Tropicana had prior knowledge that a person
aside from the registered guest had access to the
safety deposit box. Yet the management failed to
notify McLoughlin of the incident and waited for him
to discover the taking before it disclosed the matter
to him. Therefore, Tropicana should be held
responsible for the damage suffered by McLoughlin
by reason of the negligence of its employees.
The management should have guarded against the
occurrence of this incident considering that Payam
admitted in open court that she assisted Tan three
times in opening the safety deposit box of
McLoughlin at around 6:30 A.M. to 7:30 A.M. while
the latter was still asleep.34 In light of the
circumstances surrounding this case, it is undeniable
that without the acquiescence of the employees of
Tropicana to the opening of the safety deposit box,
the loss of McLoughlin's money could and should
have been avoided.
The management contends, however, that
McLoughlin, by his act, made its employees believe
that Tan was his spouse for she was always with him
most of the time. The evidence on record, however, is
bereft of any showing that McLoughlin introduced
Tan to the management as his wife. Such an inference
from the act of McLoughlin will not exculpate the
petitioners from liability in the absence of any
showing that he made the management believe that
Tan was his wife or was duly authorized to have
access to the safety deposit box. Mere close
companionship and intimacy are not enough to
warrant such conclusion considering that what is
involved in the instant case is the very safety of
McLoughlin's deposit. If only petitioners exercised
due diligence in taking care of McLoughlin's safety
deposit box, they should have confronted him as to
his relationship with Tan considering that the latter
had been observed opening McLoughlin's safety
deposit box a number of times at the early hours of
the morning. Tan's acts should have prompted the
management to investigate her relationship with
McLoughlin. Then, petitioners would have exercised
due diligence required of them. Failure to do so
warrants the conclusion that the management had
been remiss in complying with the obligations
imposed upon hotel-keepers under the law.
Under Article 1170 of the New Civil Code, those who,
in the performance of their obligations, are guilty of
negligence, are liable for damages. As to who shall
bear the burden of paying damages, Article 2180,
paragraph (4) of the same Code provides that
the owners and managers of an establishment or
enterprise are likewise responsible for damages
caused by their employees in the service of the
branches in which the latter are employed or on the
occasion of their functions. Also, this Court has ruled
that if an employee is found negligent, it is presumed
that the employer was negligent in selecting and/or
supervising him for it is hard for the victim to prove
the negligence of such employer.35 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 2193.36
The issue of whether the "Undertaking For The Use of
Safety Deposit Box" executed by McLoughlin is tainted
with nullity presents a legal question appropriate for
resolution in this petition. Notably, both the trial
court and the appellate court found the same to be
null and void. We find no reason to reverse their
common conclusion. Article 2003 is controlling, thus:
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 200137 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.
38 
In an early case, the Court of Appeals through its
then Presiding Justice (later Associate Justice of the
Court) Jose P. Bengzon, ruled that to hold
hotelkeepers or innkeeper liable for the effects of
their guests, it is not necessary that they be actually
delivered to the innkeepers or their employees. It is
enough that such effects are within the hotel or
inn.39 With greater reason should the liability of the
hotelkeeper be enforced when the missing items are
taken without the guest's knowledge and consent
from a safety deposit box provided by the hotel itself,
as in this case.
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.40 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.41 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.42
Petitioners likewise anchor their defense on Article
200243 which exempts the hotel-keeper from liability
if the loss is due to the acts of his guest, his family, or
visitors. Even a cursory reading of the provision
would lead us to reject petitioners' contention. The
justification they raise would render nugatory the
public interest sought to be protected by the
provision. What if the negligence of the employer or
its employees facilitated the consummation of a
crime committed by the registered guest's relatives
or visitor? Should the law exculpate the hotel from
liability since the loss was due to the act of the visitor
of the registered guest of the hotel? Hence, this
provision presupposes that the hotel-keeper is not
guilty of concurrent negligence or has not
contributed in any degree to the occurrence of the
loss. A depositary is not responsible for the loss of
goods by theft, unless his actionable negligence
contributes to the loss.44
In the case at bar, the responsibility of securing the
safety deposit box was shared not only by the guest
himself but also by the management since two keys
are necessary to open the safety deposit box. Without
the assistance of hotel employees, the loss would not
have occurred. Thus, Tropicana was guilty of
concurrent negligence in allowing Tan, who was not
the registered guest, to open the safety deposit box of
McLoughlin, even assuming that the latter was also
guilty of negligence in allowing another person to use
his key. To rule otherwise would result in
undermining the safety of the safety deposit boxes in
hotels for the management will be given imprimatur
to allow any person, under the pretense of being a
family member or a visitor of the guest, to have
access to the safety deposit box without fear of any
liability that will attach thereafter in case such
person turns out to be a complete stranger. This will
allow the hotel to evade responsibility for any
liability incurred by its employees in conspiracy with
the guest's relatives and visitors.
Petitioners contend that McLoughlin's case was
mounted on the theory of contract, but the trial court
and the appellate court upheld the grant of the claims
of the latter on the basis of tort.45 There is nothing
anomalous in how the lower courts decided the
controversy for this Court has pronounced a
jurisprudential rule that tort liability can exist even if
there are already contractual relations. The act that
breaks the contract may also be tort.46
As to damages awarded to McLoughlin, we see no
reason to modify the amounts awarded by the
appellate court for the same were based on facts and
law. It is within the province of lower courts to settle
factual issues such as the proper amount of damages
awarded and such finding is binding upon this Court
especially if sufficiently proven by evidence and not
unconscionable or excessive. Thus, the appellate
court correctly awarded McLoughlin Two Thousand
US Dollars (US$2,000.00) and Four Thousand Five
Hundred Australian dollars (AUS$4,500.00) or their
peso equivalent at the time of payment,47 being the
amounts duly proven by evidence.48 The alleged loss
that took place prior to 16 April 1988 was not
considered since the amounts alleged to have been
taken were not sufficiently established by evidence.
The appellate court also correctly awarded the sum
of ₱308,880.80, representing the peso value for the
air fares from Sydney to Manila and back for a total of
eleven (11) trips;49 one-half of ₱336,207.05 or
₱168,103.52 representing payment to
Tropicana;50 one-half of ₱152,683.57 or ₱76,341.785
representing payment to Echelon Tower;51 one-half of
₱179,863.20 or ₱89,931.60 for the taxi or
transportation expenses from McLoughlin's
residence to Sydney Airport and from MIA to the
hotel here in Manila, for the eleven (11) trips;52 one-
half of ₱7,801.94 or ₱3,900.97 representing Meralco
power expenses;53 one-half of ₱356,400.00 or
₱178,000.00 representing expenses for food and
maintenance.54
The amount of ₱50,000.00 for moral damages is
reasonable. Although trial courts are given discretion
to determine the amount of moral damages, the
appellate court may modify or change the amount
awarded when it is palpably and scandalously
excessive.l^vvphi1.net Moral damages are not
intended to enrich a complainant at the expense of a
defendant.l^vvphi1.net They are awarded only to
enable the injured party to obtain means, diversion
or amusements that will serve to alleviate the moral
suffering he has undergone, by reason of defendants'
culpable action.55
The awards of ₱10,000.00 as exemplary damages and
₱200,000.00 representing attorney's fees are
likewise sustained.
WHEREFORE, foregoing premises considered,
the Decision of the Court of Appeals dated 19 October
1995 is hereby AFFIRMED. Petitioners are directed,
jointly and severally, to pay private respondent the
following amounts:
(1) US$2,000.00 and AUS$4,500.00 or their
peso equivalent at the time of payment;
(2) ₱308,880.80, representing the peso value
for the air fares from Sydney to Manila and
back for a total of eleven (11) trips;
(3) One-half of ₱336,207.05 or ₱168,103.52
representing payment to Tropicana
Copacabana Apartment Hotel;
(4) One-half of ₱152,683.57 or ₱76,341.785
representing payment to Echelon Tower;
(5) One-half of ₱179,863.20 or ₱89,931.60 for
the taxi or transportation expense from
McLoughlin's residence to Sydney Airport
and from MIA to the hotel here in Manila, for
the eleven (11) trips;
(6) One-half of ₱7,801.94 or ₱3,900.97
representing Meralco power expenses;
(7) One-half of ₱356,400.00 or ₱178,200.00
representing expenses for food and
maintenance;
(8) ₱50,000.00 for moral damages;
(9) ₱10,000.00 as exemplary damages; and
 (10) ₱200,000 representing attorney's fees.

With costs.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., and Chico-Nazario, JJ.,

concur.
Austria-Martinez, J., no part.

[G.R. No. 160544.  February 21, 2005]
TRIPLE-V vs. FILIPINO MERCHANTS
THIRD DIVISION
Gentlemen:
Quoted hereunder, for your information, is a
resolution of this Court dated FEB 21 2005.
G.R. No. 160544 (Triple-V Food Services, Inc. vs.
Filipino Merchants Insurance Company, Inc.)
Assailed in this petition for review on certiorari is the
decision[1]cralaw dated October 21, 2003 of the Court
of Appeals in CA-G.R. CV No. 71223, affirming an
earlier decision of the Regional Trial Court at Makati
City, Branch 148, in its Civil Case No. 98-838, an
action for damages thereat filed by respondent
Filipino Merchants Insurance, Company, Inc., against
the herein petitioner, Triple-V Food Services, Inc.
On March 2, 1997, at around 2:15 o'clock in the
afternoon, a certain Mary Jo-Anne De Asis (De Asis)
dined at petitioner's Kamayan Restaurant at 15 West
Avenue, Quezon City. De Asis was using a Mitsubishi
Galant Super Saloon Model 1995 with plate number
UBU 955, assigned to her by her employer Crispa
Textile Inc. (Crispa). On said date, De Asis availed of
the valet parking service of petitioner and entrusted
her car key to petitioner's valet counter. A
corresponding parking ticket was issued as receipt
for the car. The car was then parked by petitioner's
valet attendant, a certain Madridano, at the
designated parking area. Few minutes later,
Madridano noticed that the car was not in its parking
slot and its key no longer in the box where valet
attendants usually keep the keys of cars entrusted to
them. The car was never recovered. Thereafter,
Crispa filed a claim against its insurer, herein
respondent Filipino Merchants Insurance Company,
Inc. (FMICI). Having indemnified Crispa in the
amount of P669.500 for the loss of the subject
vehicle, FMICI, as subrogee to Crispa's rights, filed
with the RTC at Makati City an action for damages
against petitioner Triple-V Food Services, Inc.,
thereat docketed as Civil Case No. 98-838 which was
raffled to Branch 148.
In its answer, petitioner argued that the complaint
failed to aver facts to support the allegations of
recklessness and negligence committed in the
safekeeping and custody of the subject vehicle,
claiming that it and its employees wasted no time in
ascertaining the loss of the car and in informing De
Asis of the discovery of the loss. Petitioner further
argued that in accepting the complimentary valet
parking service, De Asis received a parking ticket
whereunder it is so provided that "[Management and
staff will not be responsible for any loss of or damage
incurred on the vehicle nor of valuables contained
therein", a provision which, to petitioner's mind, is an
explicit waiver of any right to claim indemnity for the
loss of the car; and that De Asis knowingly assumed
the risk of loss when she allowed petitioner to park
her vehicle, adding that its valet parking service did
not include extending a contract of insurance or
warranty for the loss of the vehicle.
During trial, petitioner challenged FMICI's
subrogation to Crispa's right to file a claim for the
loss of the car, arguing that theft is not a risk insured
against under FMICI's Insurance Policy No. PC-5975
for the subject vehicle.
In a decision dated June 22, 2001, the trial court
rendered judgment for respondent FMICI, thus:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiff (FMICI) and
against the defendant Triple V (herein petitioner)
and the latter is hereby ordered to pay plaintiff the
following:
1.  The amount of P669,500.00, representing actual
damages plus compounded (sic);
2.  The amount of P30,000.00 as acceptance fee plus
the amount equal to 25% of the total amount due as
attorney's fees;
3.  The amount of P50,000.00 as exemplary damages;
4.  Plus, cost of suit.
Defendant Triple V is not therefore precluded from
taking appropriate action against defendant
Armando Madridano.
SO ORDERED.
Obviously displeased, petitioner appealed to the
Court of Appeals reiterating its argument that it was
not a depositary of the subject car and that it
exercised due diligence and prudence in the safe
keeping of the vehicle, in handling the car-napping
incident and in the supervision of its employees. It
further argued that there was no valid subrogation of
rights between Crispa and respondent FMICI.
In a decision dated October 21, 2003,[2]cralaw the
Court of Appeals dismissed petitioner's appeal and
affirmed the appealed decision of the trial court, thus:
WHEREFORE, based on the foregoing premises, the
instant appeal is hereby DISMISSED. Accordingly, the
assailed June 22, 2001 Decision of the RTC of Makati
City - Branch 148 in Civil Case No. 98-838 is
AFFIRMED.
SO ORDERED.
In so dismissing the appeal and affirming the
appealed decision, the appellate court agreed with
the findings and conclusions of the trial court that:
(a) petitioner was a depositary of the subject vehicle;
(b) petitioner was negligent in its duties as a
depositary thereof and as an employer of the valet
attendant; and (c) there was a valid subrogation of
rights between Crispa and respondent FMICI.
Hence, petitioner's present recourse.
We agree with the two (2) courts below.
When De Asis entrusted the car in question to
petitioners valet attendant while eating at
petitioner's Kamayan Restaurant, the former
expected the car's safe return at the end of her meal.
Thus, petitioner was constituted as a depositary of
the same car. Petitioner cannot evade liability by
arguing that neither a contract of deposit nor that of
insurance, guaranty or surety for the loss of the car
was constituted when De Asis availed of its free valet
parking service.
In a contract of deposit, a person receives an object
belonging to another with the obligation of safely
keeping it and returning the same.[3]cralaw 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.
Specious is petitioner's insistence that the valet
parking claim stub it issued to De Asis contains a
clear exclusion of its liability and operates as an
explicit waiver by the customer of any right to claim
indemnity for any loss of or damage to the vehicle.
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.[4]cralaw
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]cralaw On the basis
of such item, the trial court concluded that the
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]cralaw Thus, having indemnified
CRISPA for the 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]cralaw This is
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.

WHEREFORE, petition is hereby DENIED DUE

COURSE.

SO ORDERED.
G.R. No. 179382               January 14, 2013
SPOUSES BENJAMIN C. MAMARIL AND SONIA P.
MAMARIL, Petitioners,
vs.
THE BOY SCOUT OF THE PHILIPPINES, AIB
SECURITY AGENCY, INC., CESARIO PEÑA,* AND
VICENTE GADDI, Respondents.
DECISION
PERLAS-BERNABE, J.:
This is a Petition for Review on Certiorari assailing
the May 31, 2007 Decision1 and August 16, 2007
Resolution2 of the Court of Appeals (CA) in CA-G.R. CV
No. 75978. The dispositive portion of the said
Decision reads:
WHEREFORE, the Decision dated November 28, 2001
and the Order dated June 11, 2002 rendered by the
Regional Trial Court of Manila, Branch 39 is hereby
MODIFIED to the effect that only defendants AIB
Security Agency, Inc., Cesario Peñ a and Vicente Gaddi
are held jointly and severally liable to pay plaintiffs-
appellees Spouses Benjamin C. Mamaril and Sonia P.
Mamaril the amount of Two Hundred Thousand
Pesos (₱200,000.00) representing the cost of the lost
vehicle, and to pay the cost of suit. The other
monetary awards are DELETED for lack of merit
and/or basis.
Defendant-Appellant Boy Scout of the Philippines is
absolved from any liability.
SO ORDERED.3
The Antecedent Facts
Spouses Benjamin C. Mamaril and Sonia P. Mamaril
(Sps. Mamaril) are jeepney operators since 1971.
They would park their six (6) passenger jeepneys
every night at the Boy Scout of the Philippines' (BSP)
compound located at 181 Concepcion Street, Malate,
Manila for a fee of ₱300.00 per month for each unit.
On May 26, 1995 at 8 o'clock in the evening, all these
vehicles were parked inside the BSP compound. The
following morning, however, one of the vehicles with
Plate No. DCG 392 was missing and was never
recovered.4 According to the security guards Cesario
Peñ a (Peñ a) and Vicente Gaddi (Gaddi) of AIB
Security Agency, Inc. (AIB) with whom BSP had
contracted5 for its security and protection, a male
person who looked familiar to them took the subject
vehicle out of the compound.
On November 20, 1996, Sps. Mamaril filed a
complaint6 for damages before the Regional Trial
Court (RTC) of Manila, Branch 39, against BSP, AIB,
Peñ a and Gaddi. In support thereof, Sps. Mamaril
averred that the loss of the subject vehicle was due to
the gross negligence of the above-named security
guards on-duty who allowed the subject vehicle to be
driven out by a stranger despite their agreement that
only authorized drivers duly endorsed by the owners
could do so. Peñ a and Gaddi even admitted their
negligence during the ensuing investigation.
Notwithstanding, BSP and AIB did not heed Sps.
Mamaril's demands for a conference to settle the
matter. They therefore prayed that Peñ a and Gaddi,
together with AIB and BSP, be held liable for: (a) the
value of the subject vehicle and its accessories in the
aggregate amount of ₱300,000.00; (b) ₱275.00
representing daily loss of income/boundary
reckoned from the day the vehicle was lost; (c)
exemplary damages; (d) moral damages; (e)
attorney's fees; and (f) cost of suit.
In its Answer,7 BSP denied any liability contending
that not only did Sps. Mamaril directly deal with AIB
with respect to the manner by which the parked
vehicles would be handled, but the parking
ticket8 itself expressly stated that the "Management
shall not be responsible for loss of vehicle or any of
its accessories or article left therein." It also claimed
that Sps. Mamaril erroneously relied on the Guard
Service Contract. Apart from not being parties
thereto, its provisions cover only the protection of
BSP's properties, its officers, and employees.
In addition to the foregoing defenses, AIB alleged that
it has observed due diligence in the selection, training
and supervision of its security guards while Peñ a and
Gaddi claimed that the person who drove out the lost
vehicle from the BSP compound represented himself
as the owners' authorized driver and had with him a
key to the subject vehicle. Thus, they contended that
Sps. Mamaril have no cause of action against them.
The RTC Ruling
After due proceedings, the RTC rendered a
Decision9 dated November 28, 2001 in favor of Sps.
Mamaril. The dispositive portion of the RTC decision
reads:
WHEREFORE, judgment is hereby rendered ordering
the defendants Boy Scout of the Philippines and AIB
Security Agency, with security guards Cesario Pena
and Vicente Gaddi: -
1. To pay the plaintiffs jointly and severally
the cost of the vehicle which is ₱250,000.00
plus accessories of ₱50,000.00;
2. To pay jointly and severally to the plaintiffs
the daily loss of the income/boundary of the
said jeepney to be reckoned fromits loss up to
the final adjudication of the case, which is
₱275.00 a day;
3. To pay jointly and severally to the plaintiffs
moral damages in the amount of ₱50,000.00;
4. To pay jointly and severally to the plaintiffs
exemplary damages in the amount of
₱50,000.00;
5. To pay jointly and severally the attorney's
fees of ₱50,000.00 and appearances in court
the amount of ₱1,500.00 per appearance; and
6. To pay cost.
SO ORDERED. 10
The RTC found that the act of Peñ a and Gaddi in
allowing the entry of an unidentified person and
letting him drive out the subject vehicle in violation
of their internal agreement with Sps. Mamaril
constituted gross negligence, rendering AIB and its
security guards liable for the former's loss. BSP was
also adjudged liable because the Guard Service
Contract it entered into with AIB offered protection
to all properties inside the BSP premises, which
necessarily included Sps. Mamaril's vehicles.
Moreover, the said contract stipulated AIB's
obligation to indemnify BSP for all losses or damages
that may be caused by any act or negligence of its
security guards. Accordingly, the BSP, AIB, and
security guards Peñ a and Gaddi were held jointly and
severally liable for the loss suffered by Sps. Mamaril.
On June 11, 2002, the RTC modified its decision
reducing the cost of the stolen vehicle from
₱250,000.00 to ₱200,000.00.11
Only BSP appealed the foregoing disquisition before
the CA.
The CA Ruling
In its assailed Decision,12 the CA affirmed the finding
of negligence on the part of security guards Peñ a and
Gaddi. However, it absolved BSP from any liability,
holding that the Guard Service Contract is purely
between BSP and AIB and that there was nothing
therein that would indicate any obligation and/or
liability on the part of BSP in favor of third persons,
such as Sps. Mamaril. Nor was there evidence
sufficient to establish that BSP was negligent.
It further ruled that the agreement between Sps.
Mamaril and BSP was substantially a contract of lease
whereby the former paid parking fees to the latter for
the lease of parking slots. As such, the lessor, BSP,
was not an insurer nor bound to take care and/or
protect the lessees' vehicles.
On the matter of damages, the CA deleted the award
of ₱50,000.00 representing the value of the
accessories inside the lost vehicle and the ₱275.00 a
day for loss of income in the absence of proof to
support them. It also deleted the award of moral and
exemplary damages and attorney's fees for lack of
factual and legal bases.
Sps. Mamaril's motion for reconsideration thereof
was denied in the August 16, 2007 Resolution.13
Issues Before the Court
Hence, the instant petition based on the following
assignment of errors, to wit:
I.
THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN ABSOLVING
RESPONDENT BOY SCOUT OF THE
PHILIPPINES FROM ANY LIABILITY.
II.
THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS MISTAKE WHEN IT
RULED THAT THE GUARD SERVICE
CONTRACT IS PURELY BETWEEN BOY
SCOUT OF THE
PHILIPPINES AND AIB SECURITY AGENCY,
INC., AND IN HOLDING THAT THERE IS
ABSOLUTELY NOTHING IN THE SAID
CONTRACT THAT WOULD INDICATE ANY
 OBLIGATION AND/OR LIABILITY ON THE
PART OF THE PARTIES THEREIN IN FAVOR
OF THIRD PERSONS, SUCH AS PETITIONERS
HEREIN.
III.
THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS ERROR IN THE
INTERPRETATION OF LAW WHEN IT
CONSIDERED THE AGREEMENT BETWEEN
BOY SCOUT OF THE PHILIPPINES AND
PETITIONERS A CONTRACT OF LEASE,
WHEREBY THE BOY SCOUT IS NOT DUTY
BOUND TO PROTECT OR TAKE CARE OF
PETITIONERS' VEHICLES.
IV.
THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED WHEN IT RULED THAT
PETITIONERS ARE NOT ENTITLED TO
DAMAGES AND ATTORNEY'S FEES.14
In fine, Sps. Mamaril maintain that: (1) BSP should be
held liable for the loss of their vehicle based on the
Guard Service Contract and the parking ticket it
issued; and (2) the CA erred in deleting the RTC
awards of damages and attorney's fees.
The Court's Ruling
The petition lacks merit.
Article 20 of the Civil Code provides that every
person, who, contrary to law, willfully or negligently
causes damage to another, shall indemnify the latter
for the same. Similarly, Article 2176 of the Civil Code
states:
Art. 2176. Whoever by act or omission causes
damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or
negligence, if there is no preexisting contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
In this case, it is undisputed that the proximate cause
of the loss of Sps. Mamaril's vehicle was the negligent
act of security guards Peñ a and Gaddi in allowing an
unidentified person to drive out the subject vehicle.
Proximate cause has been defined as that cause,
which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces the
injury or loss, and without which the result would
not have occurred.15
Moreover, Peñ a and Gaddi failed to refute Sps.
Mamaril's contention16 that they readily admitted
being at fault during the investigation that ensued.
On the other hand, the records are bereft of any
finding of negligence on the part of BSP. Hence, no
reversible error was committed by the CA in
absolving it from any liability for the loss of the
subject vehicle based on fault or negligence.
Neither will the vicarious liability of an employer
under Article 218017 of the Civil Code apply in this
case. It is uncontested that Peñ a and Gaddi were
assigned as security guards by AIB to BSP pursuant
to the Guard Service Contract. Clearly, therefore, no
employer-employee relationship existed between
BSP and the security guards assigned in its premises.
Consequently, the latter's negligence cannot be
imputed against BSP but should be attributed to AIB,
the true employer of Peñ a and Gaddi.18
In the case of Soliman, Jr. v. Tuazon,19 the Court
enunciated thus:
It is settled that where the security agency, as here,
recruits, hires and assigns the work of its watchmen
or security guards, the agency is the employer of such
guards and watchmen. Liability for illegal or harmful
acts committed by the security guards attaches to the
employer agency, and not to the clients or customers
of such agency. As a general rule, a client or customer
of a security agency has no hand in selecting who
among the pool of security guards or watchmen
employed by the agency shall be assigned to it; the
duty to observe the diligence of a good father of a
family in the selection of the guards cannot, in the
ordinary course of events, be demanded from the
client whose premises or property are protected by
the security guards. The fact that a client company
may give instructions or directions to the security
guards assigned to it, does not, by itself, render the
client responsible as an employer of the security
guards concerned and liable for their wrongful acts
or omissions. Those instructions or directions are
ordinarily no more than requests commonly
envisaged in the contract for services entered into
with the security agency.20
Nor can it be said that a principal-agent relationship
existed between BSP and the security guards Peñ a
and Gaddi as to make the former liable for the latter's
complained act. Article 1868 of the Civil Code states
that "by the contract of agency, a person binds
himself to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter." The basis for
agency therefore is representation,21 which element
is absent in the instant case. Records show that BSP
merely hired the services of AIB, which, in turn,
assigned security guards, solely for the protection of
its properties and premises. Nowhere can it be
inferred in the Guard Service Contract that AIB was
appointed as an agent of BSP. Instead, what the
parties intended was a pure principal-client
relationship whereby for a consideration, AIB
rendered its security services to BSP.
Notwithstanding, however, Sps. Mamaril insist that
BSP should be held liable for their loss on the basis of
the Guard Service Contract that the latter entered
into with AIB and their parking agreement with BSP.
Such contention cannot be sustained.
Article 1311 of the Civil Code states:
Art. 1311. Contracts take effect only between the
parties, their assigns and heirs, except in case where
the rights and obligations arising from the contract
are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not
liable beyond the value of the property he received
from the decedent.
If a contract should contain some stipulation in favor
of a third person, he may demand its fulfillment
provided he communicated his acceptance to the
obligor before its revocation. A mere incidental
benefit or interest of a person is not sufficient. The
contracting parties must have clearly and
deliberately conferred a favor upon a third person.
Thus, in order that a third person benefited by the
second paragraph of Article 1311, referred to as a
stipulation pour autrui, may demand its fulfillment,
the following requisites must concur: (1) There is a
stipulation in favor of a third person; (2) The
stipulation is a part, not the whole, of the contract;
(3) The contracting parties clearly and deliberately
conferred a favor to the third person - the favor is not
merely incidental; (4) The favor is unconditional and
uncompensated; (5) The third person communicated
his or her acceptance of the favor before its
revocation; and (6) The contracting parties do not
represent, or are not authorized, by the third
party.22 However, none of the foregoing elements
obtains in this case.
It is undisputed that Sps. Mamaril are not parties to
the Guard Service Contract.1âwphi1 Neither did the
subject agreement contain any stipulation pour
autrui. And even if there was, Sps. Mamaril did not
convey any acceptance thereof. Thus, under the
principle of relativity of contracts, they cannot validly
claim any rights or favor under the said
agreement.23 As correctly found by the CA:
First, the Guard Service Contract between defendant-
appellant BSP and defendant AIB Security Agency is
purely between the parties therein. It may be
observed that although the whereas clause of the said
agreement provides that defendant-appellant desires
security and protection for its compound and all
properties therein, as well as for its officers and
employees, while inside the premises, the same
should be correlated with paragraph 3(a) thereof
which provides that the security agency shall
indemnify defendant-appellant for all losses and
damages suffered by it attributable to any act or
negligence of the former's guards.
Otherwise stated, defendant-appellant sought the
services of defendant AIB Security Agency for the
purpose of the security and protection of its
properties, as well as that of its officers and
employees, so much so that in case of loss of [sic]
damage suffered by it as a result of any act or
negligence of the guards, the security agency would
then be held responsible therefor. There is absolutely
nothing in the said contract that would indicate any
obligation and/or liability on the part of the parties
therein in favor of third persons such as herein
plaintiffs-appellees.24
Moreover, the Court concurs with the finding of the
CA that the contract between the parties herein was
one of lease25 as defined under Article 164326 of the
Civil Code. It has been held that the act of parking a
vehicle in a garage, upon payment of a fixed amount,
is a lease.27 Even in a majority of American cases, it
has been ruled that where a customer simply pays a
fee, parks his car in any available space in the lot,
locks the car and takes the key with him, the
possession and control of the car, necessary elements
in bailment, do not pass to the parking lot operator,
hence, the contractual relationship between the
parties is one of lease.28
In the instant case, the owners parked their six (6)
passenger jeepneys inside the BSP compound for a
monthly fee of ₱300.00 for each unit and took the
keys home with them. Hence, a lessor-lessee
relationship indubitably existed between them and
BSP. On this score, Article 1654 of the Civil Code
provides that "the lessor (BSP) is obliged: (1) to
deliver the thing which is the object of the contract in
such a condition as to render it fit for the use
intended; (2) to make on the same during the lease
all the necessary repairs in order to keep it suitable
for the use to which it has been devoted, unless there
is a stipulation to the contrary; and (3) to maintain
the lessee in the peaceful and adequate enjoyment of
the lease for the entire duration of the contract." In
relation thereto, Article 1664 of the same Code states
that "the lessor is not obliged to answer for a mere
act of trespass which a third person may cause on the
use of the thing leased; but the lessee shall have a
direct action against the intruder." Here, BSP was not
remiss in its obligation to provide Sps. Mamaril a
suitable parking space for their jeepneys as it even
hired security guards to secure the premises; hence,
it should not be held liable for the loss suffered by
Sps. Mamaril.
It bears to reiterate that the subject loss was caused
by the negligence of the security guards in allowing a
stranger to drive out plaintiffs-appellants' vehicle
despite the latter's instructions that only their
authorized drivers may do so. Moreover, the
agreement with respect to the ingress and egress of
Sps. Mamaril's vehicles were coordinated only with
AIB and its security guards,29 without the knowledge
and consent of BSP. Accordingly, the mishandling of
the parked vehicles that resulted in herein
complained loss should be recovered only from the
tort feasors (Peñ a and Gaddi) and their employer,
AIB; and not against the lessor, BSP.30
On the matter of damages, the Court noted that while
Sonia P. Mamaril testified that the subject vehicle had
accessories worth around !J50,000.00, she failed to
present any receipt to substantiate her
claim.34 Neither did she submit any record or journal
that would have established the purported
₱275.0035 daily earnings of their jeepney. It is
axiomatic that actual damages must be proved with
reasonable degree of certainty and a party is entitled
only to such compensation for the pecuniary loss that
was duly proven. Thus, absent any competent proof
of the amount of damages sustained, the CA properly
deleted the said awards.36
Similarly, the awards of moral and exemplary
damages and attorney's fees were properly
disallowed by the CA for lack of factual and legal
bases. While the RTC granted these awards in the
dispositive portion of its November 28, 2001
decision, it failed to provide sufficient justification
therefor.37
WHEREFORE premises considered, the instant
petition is DENIED. The May 31, 2007 Decision and
August 16, 2007 Resolution of the Court of Appeals in
CA-G.R. CV No. 75978 are AFFIRMFED.
SO ORDERED.

Anent Sps. Mamaril's claim that the exculpatory

clause: "Management shall not be responsible for loss
of vehicle or any of its accessories or article left
therein"31 contained in the BSP issued parking ticket
was void for being a contract of adhesion and against
public policy, suffice it to state that contracts of
adhesion are not void per se. It is binding as any
other ordinary contract and a party who enters into it
is free to reject the stipulations in its entirety. If the
terms thereof are accepted without objection, as in
this case, where plaintiffs-appellants have been
leasing BSP's parking space for more or less 20
years,32 then the contract serves as the law between
them.33 Besides, the parking fee of ₱300.00 per month
or ₱10.00 a day for each unit is too minimal an
amount to even create an inference that BSP
undertook to be an insurer of the safety of plaintiffs-
appellants' vehicles.