G.R. No. 102970 May 13, 1993
LUZAN SIA, petitioner,
vs.
COURT OF APPEALS and SECURITY BANK and TRUST COMPANY, respondents.
Asuncion Law Offices for petitioner.
Cauton, Banares, Carpio & Associates for private respondent.
DAVIDE, JR., J.:
The Decision of public respondent Court of Appeals in CA-G.R. CV No. 26737, promulgated on 21 August 1991, 1 reversing and setting aside the Decision, dated 19 February 1990, 2 of Branch 47 of the Regional Trial Court (RTC) of Manila in Civil Case No. 87-42601, entitled "LUZAN SIA vs. SECURITY BANK and TRUST CO.," is challenged in this petition for review on certiorari under Rule 45 of the Rules Court.
Civil
Case No. 87-42601 is an action for damages arising out of the
destruction or loss of the stamp collection of the plaintiff (petitioner
herein) contained in Safety Deposit Box No. 54 which had been rented
from the defendant pursuant to a contract denominated as a Lease
Agreement. 3 Judgment therein was rendered in favor of the dispositive portion of which reads:
WHEREFORE,
premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendant, Security Bank & Trust Company,
ordering the defendant bank to pay the plaintiff the sum of —
a) Twenty Thousand Pesos (P20,000.00), Philippine Currency, as actual damages;
b) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as moral damages; and
c) Five Thousand Pesos (P5,000.00), Philippine Currency, as attorney's fees and legal expenses.
The counterclaim set up by the defendant are hereby dismissed for lack of merit.
No costs.
SO ORDERED. 4
The antecedent facts of the present controversy are summarized by the public respondent in its challenged decision as follows:
The
plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of the
defendant bank at its Binondo Branch located at the Fookien Times
Building, Soler St., Binondo, Manila wherein he placed his collection of
stamps. The said safety deposit box leased by the plaintiff was at the
bottom or at the lowest level of the safety deposit boxes of the
defendant bank at its aforesaid Binondo Branch.
During the floods that took place in 1985 and 1986,
floodwater entered into the defendant bank's premises, seeped into the
safety deposit box leased by the plaintiff and caused, according to the
plaintiff, damage to his stamps collection. The defendant bank rejected
the plaintiff's claim for compensation for his damaged stamps
collection, so, the plaintiff instituted an action for damages against
the defendant bank.
The defendant bank denied liability for the damaged
stamps collection of the plaintiff on the basis of the "Rules and
Regulations Governing the Lease of Safe Deposit Boxes" (Exhs. "A-1",
"1-A"), particularly paragraphs 9 and 13, which reads (sic):
"9. The liability of the Bank by reason of the lease,
is limited to the exercise of the diligence to prevent the opening of
the safe by any person other than the Renter, his authorized agent or
legal representative;
xxx xxx xxx
"13. The Bank is not a depository of the contents of
the safe and it has neither the possession nor the control of the same.
The Bank has no interest whatsoever in said contents, except as herein
provided, and it assumes absolutely no liability in connection
therewith."
The defendant bank also contended that its contract
with the plaintiff over safety deposit box No. 54 was one of lease and
not of deposit and, therefore, governed by the lease agreement (Exhs.
"A", "L") which should be the applicable law; that the destruction of
the plaintiff's stamps collection was due to a calamity beyond
obligation on its part to notify the plaintiff about the floodwaters
that inundated its premises at Binondo branch which allegedly seeped
into the safety deposit box leased to the plaintiff.
The trial court then directed that an ocular inspection on (sic)
the contents of the safety deposit box be conducted, which was done on
December 8, 1988 by its clerk of court in the presence of the parties
and their counsels. A report thereon was then submitted on December 12,
1988 (Records, p. 98-A) and confirmed in open court by both parties thru
counsel during the hearing on the same date (Ibid., p. 102) stating:
"That the Safety Box Deposit No. 54 was opened by
both plaintiff Luzan Sia and the Acting Branch Manager Jimmy B. Ynion in
the presence of the undersigned, plaintiff's and defendant's counsel.
Said Safety Box when opened contains two albums of different sizes and
thickness, length and width and a tin box with printed word 'Tai Ping
Shiang Roast Pork in pieces with Chinese designs and character."
Condition of the above-stated Items —
"Both albums are wet, moldy and badly damaged.
1. The first album measures 10 1/8 inches in length, 8
inches in width and 3/4 in thick. The leaves of the album are attached
to every page and cannot be lifted without destroying it, hence the
stamps contained therein are no longer visible.
2. The second album measure 12 1/2 inches in length, 9
3/4 in width 1 inch thick. Some of its pages can still be lifted. The
stamps therein can still be distinguished but beyond restoration. Others
have lost its original form.
3.
The tin box is rusty inside. It contains an album with several pieces
of papers stuck up to the cover of the box. The condition of the album
is the second abovementioned album." 5
The
SECURITY BANK AND TRUST COMPANY, hereinafter referred to as SBTC,
appealed the trial court's decision to the public respondent Court of
Appeals. The appeal was docketed as CA-G.R. CV No. 26737.
In urging the public respondent to reverse the
decision of the trial court, SBTC contended that the latter erred in (a)
holding that the lease agreement is a contract of adhesion; (b) finding
that the defendant had failed to exercise the required diligence
expected of a bank in maintaining the safety deposit box; (c) awarding
to the plaintiff actual damages in the amount of P20,000.00, moral
damages in the amount of P100,000.00 and attorney's fees and legal
expenses in the amount of P5,000.00; and (d) dismissing the
counterclaim.
On 21 August 1991, the respondent promulgated its decision the dispositive portion of which reads:
WHEREFORE,
the decision appealed from is hereby REVERSED and instead the
appellee's complaint is hereby DISMISSED. The appellant bank's
counterclaim is likewise DISMISSED. No costs. 6
In reversing the trial court's decision and absolving SBTC from liability, the public respondent found and ruled that:
a) the fine print in the "Lease Agreement " (Exhibits
"A" and "1" ) constitutes the terms and conditions of the contract of
lease which the appellee (now petitioner) had voluntarily and knowingly
executed with SBTC;
b) the contract entered into by the parties regarding
Safe Deposit Box No. 54 was not a contract of deposit wherein the bank
became a depositary of the subject stamp collection; hence, as contended
by SBTC, the provisions of Book IV, Title XII of the Civil Code on
deposits do not apply;
c) The following provisions of the questioned lease agreement of the safety deposit box limiting SBTC's liability:
9.
The liability of the bank by reason of the lease, is limited to the
exercise of the diligence to prevent the opening of the Safe by any
person other than the Renter, his authorized agent or legal
representative.
xxx xxx xxx
13. The bank is not a depository of the contents of
the Safe and it has neither the possession nor the control of the same.
The Bank has no interest whatsoever in said contents, except as herein
provided, and it assumes absolutely no liability in connection
therewith.
are valid since said stipulations are not contrary to law, morals, good customs, public order or public policy; and
d) there is no concrete evidence to show that SBTC
failed to exercise the required diligence in maintaining the safety
deposit box; what was proven was that the floods of 1985 and 1986, which
were beyond the control of SBTC, caused the damage to the stamp
collection; said floods were fortuitous events which SBTC should not be
held liable for since it was not shown to have participated in the
aggravation of the damage to the stamp collection; on the contrary, it
offered its services to secure the assistance of an expert in order to
save most of the stamps, but the appellee refused; appellee must then
bear the lose under the principle of "res perit domino."
Unsuccessful in his bid to have the above decision reconsidered by the public respondent, 7 petitioner filed the instant petition wherein he contends that:
I
IT WAS A GRAVE ERROR OR AN ABUSE OF DISCRETION ON THE
PART OF THE RESPONDENT COURT WHEN IT RULED THAT RESPONDENT SBTC DID NOT
FAIL TO EXERCISE THE REQUIRED DILIGENCE IN MAINTAINING THE SAFETY
DEPOSIT BOX OF THE PETITIONER CONSIDERING THAT SUBSTANTIAL EVIDENCE
EXIST (sic) PROVING THE CONTRARY.
II
THE RESPONDENT COURT SERIOUSLY ERRED IN EXCULPATING
PRIVATE RESPONDENT FROM ANY LIABILITY WHATSOEVER BY REASON OF THE
PROVISIONS OF PARAGRAPHS 9 AND 13 OF THE AGREEMENT (EXHS. "A" AND
"A-1").
III
THE
RESPONDENT COURT SERIOUSLY ERRED IN NOT UPHOLDING THE AWARDS OF THE
TRIAL COURT FOR ACTUAL AND MORAL DAMAGES, INCLUDING ATTORNEY'S FEES AND
LEGAL EXPENSES, IN FAVOR OF THE PETITIONER. 8
We
subsequently gave due course the petition and required both parties to
submit their respective memoranda, which they complied with. 9
Petitioner
insists that the trial court correctly ruled that SBTC had failed "to
exercise the required diligence expected of a bank maintaining such
safety deposit box . . . in the light of the environmental circumstance
of said safety deposit box after the floods of 1985 and 1986." He argues
that such a conclusion is supported by the evidence on record, to wit:
SBTC was fully cognizant of the exact location of the safety deposit box
in question; it knew that the premises were inundated by floodwaters in
1985 and 1986 and considering that the bank is guarded twenty-four (24)
hours a day , it is safe to conclude that it was also aware of the
inundation of the premises where the safety deposit box was located;
despite such knowledge, however, it never bothered to inform the
petitioner of the flooding or take any appropriate measures to insure
the safety and good maintenance of the safety deposit box in question.
SBTC
does not squarely dispute these facts; rather, it relies on the rule
that findings of facts of the Court of Appeals, when supported by
substantial exidence, are not reviewable on appeal by certiorari. 10
The
foregoing rule is, of course, subject to certain exceptions such as
when there exists a disparity between the factual findings and
conclusions of the Court of Appeals and the trial court. 11 Such a disparity obtains in the present case.
As We see it, SBTC's theory, which was upheld by the
public respondent, is that the "Lease Agreement " covering Safe Deposit
Box No. 54 (Exhibit "A and "1") is just that — a contract of lease — and
not a contract of deposit, and that paragraphs 9 and 13 thereof, which
expressly limit the bank's liability as follows:
9.
The liability of the bank by reason of the lease, is limited to the
exercise of the diligence to prevent the opening of the Safe by any
person other than the Renter, his autliorized agent or legal
representative;
xxx xxx xxx
13.
The bank is not a depository of the contents of the Safe and it has
neither the possession nor the control of the same. The Bank has no
interest whatsoever said contents, except as herein provided, and it
assumes absolutely no liability in connection therewith. 12
are
valid and binding upon the parties. In the challenged decision, the
public respondent further avers that even without such a limitation of
liability, SBTC should still be absolved from any responsibility for the
damage sustained by the petitioner as it appears that such damage was
occasioned by a fortuitous event and that the respondent bank was free
from any participation in the aggravation of the injury.
We cannot accept this theory and ratiocination. Consequently, this Court finds the petition to be impressed with merit.
In the recent case CA Agro-Industrial Development Corp. vs. Court of Appeals, 13 this
Court explicitly rejected the contention that a contract for the use of
a safety deposit box is a contract of lease governed by Title VII, Book
IV of the Civil Code. Nor did We fully subscribe to the view that it is
a contract of deposit to be strictly governed by the Civil Code
provision on deposit; 14 it
is, as We declared, a special kind of deposit. The prevailing rule in
American jurisprudence — that the relation between a bank renting out
safe deposit boxes and its customer with respect to the contents of the
box is that of a bailor and bailee, the bailment for hire and mutual
benefit 15 — has been adopted in this jurisdiction, thus:
In
the context of our laws which authorize banking institutions to rent
out safety deposit boxes, it is clear that in this jurisdiction, the
prevailing rule in the United States has been adopted. Section 72 of the
General Banking Act [R.A. 337, as amended] pertinently provides:
"Sec. 72. In addition to the operations specifically
authorized elsewhere in this Act, banking institutions other than
building and loan associations may perform the following services:
(a) Receive in custody funds, documents, and valuable
objects, and rent safety deposit boxes for the safequarding of such
effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b) and (c) of this section as depositories or as agents. . . ."(emphasis supplied)
Note that the primary function is still found within the parameters of a contract of deposit, i.e.,
the receiving in custody of funds, documents and other valuable objects
for safekeeping. The renting out of the safety deposit boxes is not
independent from, but related to or in conjunction with, this principal
function. A contract of deposit may be entered into orally or in writing
(Art. 1969, Civil Code] and, pursuant to Article 1306 of the Civil
Code, the parties thereto may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order or public policy.
The depositary's responsibility for the safekeeping of the objects
deposited in the case at bar is governed by Title I, Book IV of the
Civil Code. Accordingly, the depositary would be liable if, in
performing its obligation, it is found guilty of fraud, negligence,
delay or contravention of the tenor of the agreement [Art. 1170, id.].
In the absence of any stipulation prescribing the degree of diligence
required, that of a good father of a family is to be observed [Art.
1173, id.]. Hence, any stipulation exempting the depositary from
any liability arising from the loss of the thing deposited on account of
fraud, negligence or delay would be void for being contrary to law and
public policy. In the instant case, petitioner maintains that conditions
13 and l4 of the questioned contract of lease of the safety deposit
box, which read:
"13. The bank is a depositary of the contents of the safe and it has neither the possession nor control of the same.
"14. The bank has no interest whatsoever in said
contents, except as herein expressly provided, and it assumes absolutely
no liability in connection therewith."
are void as they are contrary to law and public
policy. We find Ourselves in agreement with this proposition for indeed,
said provisions are inconsistent with the respondent Bank's
responsibility as a depositary under Section 72 (a) of the General
Banking Act. Both exempt the latter from any liability except as
contemplated in condition 8 thereof which limits its duty to exercise
reasonable diligence only with respect to who shall be admitted to any
rented safe, to wit:
"8. The Bank shall use due diligence that no
unauthorized person shall be admitted to any rented safe and beyond
this, the Bank will not be responsible for the contents of any safe
rented from it."
Furthermore condition 13 stands on a wrong premise
and is contrary to the actual practice of the Bank. It is not correct to
assert that the Bank has neither the possession nor control of the
contents of the box since in fact, the safety deposit box itself is
located in its premises and is under its absolute control; moreover, the
respondent Bank keeps the guard key to the said box. As stated earlier,
renters cannot open their respective boxes unless the Bank cooperates
by presenting and using this guard key. Clearly then, to the extent
above stated, the foregoing conditions in the contract in question are
void and ineffective. It has been said:
"With respect to property deposited in a safe-deposit
box by a customer of a safe-deposit company, the parties, since the
relation is a contractual one, may by special contract define their
respective duties or provide for increasing or limiting the liability of
the deposit company, provided such contract is not in violation of law
or public policy. It must clearly appear that there actually was such a
special contract, however, in order to vary the ordinary obligations
implied by law from the relationship of the parties; liability of the
deposit company will not be enlarged or restricted by words of doubtful
meaning. The company, in renting safe-deposit boxes, cannot exempt
itself from liability for loss of the contents by its own fraud or
negligence or that, of its agents or servants, and if a provision of the
contract may be construed as an attempt to do so, it will be held
ineffective for the purpose. Although it has been held that the lessor
of a safe-deposit box cannot limit its liability for loss of the
contents thereof through its own negligence, the view has been taken
that such a lessor may limit its liability to some extent by agreement
or stipulation ."[10 AM JUR 2d., 466]. (citations omitted) 16
It must be noted that conditions No. 13 and No. 14 in the Contract of Lease of Safety Deposit Box in CA Agro-Industrial Development Corp. are strikingly similar to condition No. 13 in the instant case. On the other hand, both condition No. 8 in CA Agro-Industrial Development Corp.
and condition No. 9 in the present case limit the scope of the exercise
of due diligence by the banks involved to merely seeing to it that only
the renter, his authorized agent or his legal representative should
open or have access to the safety deposit box. In short, in all other
situations, it would seem that SBTC is not bound to exercise diligence
of any kind at all. Assayed in the light of Our aforementioned
pronouncements in CA Agro-lndustrial Development Corp., it is not
at all difficult to conclude that both conditions No. 9 and No. 13 of
the "Lease Agreement" covering the safety deposit box in question
(Exhibits "A" and "1") must be stricken down for being contrary to law
and public policy as they are meant to exempt SBTC from any liability
for damage, loss or destruction of the contents of the safety deposit
box which may arise from its own or its agents' fraud, negligence or
delay. Accordingly, SBTC cannot take refuge under the said conditions.
Public respondent further postulates that SBTC cannot
be held responsible for the destruction or loss of the stamp collection
because the flooding was a fortuitous event and there was no showing of
SBTC's participation in the aggravation of the loss or injury. It
states:
Article 1174 of the Civil Code provides:
"Except in cases expressly specified by the law, or
when it is otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which,
though foreseen, were inevitable.'
In its dissertation of the phrase "caso fortuito" the Enciclopedia Jurisdicada EspaƱola 17 says: "In a legal sense and, consequently, also in relation to contracts, a "caso fortuito" prevents (sic) 18
the following essential characteristics: (1) the cause of the
unforeseen ands unexpected occurrence, or of the failure of the debtor
to comply with his obligation, must be independent of the human will;
(2) it must be impossible to foresee the event which constitutes the "caso fortuito,"
or if it can be foreseen, it must be impossible to avoid; (3) the
occurrence must be such as to render it impossible for one debtor to
fulfill his obligation in a normal manner; and (4) the obligor must be
free from any participation in the aggravation of the injury resulting
to the creditor." (cited in Servando vs. Phil., Steam Navigation Co., supra). 19
Here,
the unforeseen or unexpected inundating floods were independent of the
will of the appellant bank and the latter was not shown to have
participated in aggravating damage (sic) to the stamps collection
of the appellee. In fact, the appellant bank offered its services to
secure the assistance of an expert to save most of the then good stamps
but the appelle refused and let (sic) these recoverable stamps inside the safety deposit box until they were ruined. 20
Both
the law and authority cited are clear enough and require no further
elucidation. Unfortunately, however, the public respondent failed to
consider that in the instant case, as correctly held by the trial court,
SBTC was guilty of negligence. The facts constituting negligence are
enumerated in the petition and have been summarized in this ponencia. SBTC's negligence aggravated the
injury or damage to the stamp collection. SBTC was aware of the floods
of 1985 and 1986; it also knew that the floodwaters inundated the room
where Safe Deposit Box No. 54 was located. In view thereof, it should
have lost no time in notifying the petitioner in order that the box
could have been opened to retrieve the stamps, thus saving the same from
further deterioration and loss. In this respect, it failed to exercise
the reasonable care and prudence expected of a good father of a family,
thereby becoming a party to the aggravation of the injury or loss.
Accordingly, the aforementioned fourth characteristic of a fortuitous
event is absent Article 1170 of the Civil Code, which reads:
Those
who in the performance of their obligation are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor
thereof, are liable for damages,
thus
comes to the succor of the petitioner. The destruction or loss of the
stamp collection which was, in the language of the trial court, the
"product of 27 years of patience and diligence" 21 caused the petitioner pecuniary loss; hence, he must be compensated therefor.
We
cannot, however, place Our imprimatur on the trial court's award of
moral damages. Since the relationship between the petitioner and SBTC is
based on a contract, either of them may be held liable for moral
damages for breach thereof only if said party had acted fraudulently or
in bad faith. 22 There is here no proof of fraud or bad faith on the part of SBTC.
WHEREFORE, the instant petition is hereby GRANTED.
The challenged Decision and Resolution of the public respondent Court of
Appeals of 21 August 1991 and 21 November 1991, respectively, in
CA-G.R. CV No. 26737, are hereby SET ASIDE and the Decision of 19
February 1990 of Branch 47 of the Regional Trial Court of Manila in
Civil Case No. 87-42601 is hereby REINSTATED in full, except as to the
award of moral damages which is hereby set aside.
Costs against the private respondent.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.
# Footnotes
1 Rollo, 34-41. Per Associate Justice Lucio L. Victor, concurred in by Associate Justices Santiago M. Kapunan and Segundino G. Chua.
2 Id., 52-55.
3 Exhibit "A" and "1", Original Records of Civil Case No. 87-42601, 87.
4 Rollo, 55.
5 Rollo, 34-36.
6 Rollo, 41.
7 Rollo, 43-49.
8 Id., 17.
9 Id., 63.
10 Rollo, 61, citing Gonzales vs. Court of Appeals, 90 SCRA 183 [1979].
11 Sacay vs. Sandiganbayan, 142 SCRA 593 [1986];
Remalante vs. Tibe, 158 SCRA 138 [1988]; Medina vs. Asisitio, 191 SCRA
218 [1990].
12 Exhibit "A-1", Original Records, dorsal side of page 87.
13 G.R. No. 90027, 3 March 1993.
14 Title XII, Book IV, Civil Code.
15 10 Am Jur 2d, 440-441.
16 Entries in brackets appear as footnotes in the decision.
17 5 Enciclopedia Juridicada EspaƱola.
18 Should be presents.
19 117 SCRA 832 [1982].
20 Rollo, 40.
21 Rollo, 54.
22 Article 2220, Civil Code.
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