Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-6913            November 21, 1913

THE ROMAN CATHOLIC BISHOP OF JARO, plaintiff-appellee,

vs.
GREGORIO DE LA PEÑA, administrator of the estate of Father Agustin de la Peña, defendant-appellant.

J. Lopez Vito, for appellant.

Arroyo and Horrilleno, for appellee.

MORELAND, J.:

This is an appeal by the defendant from a judgment of the Court of First Instance of Iloilo, awarding to the plaintiff
the sum of P6,641, with interest at the legal rate from the beginning of the action.

It is established in this case that the plaintiff is the trustee of a charitable bequest made for the construction of a
leper hospital and that father Agustin de la Peña was the duly authorized representative of the plaintiff to receive the
legacy. The defendant is the administrator of the estate of Father De la Peña.

In the year 1898 the books Father De la Peña, as trustee, showed that he had on hand as such trustee the sum of
P6,641, collected by him for the charitable purposes aforesaid. In the same year he deposited in his personal
account P19,000 in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the war of the
revolution, Father De la Peña was arrested by the military authorities as a political prisoner, and while thus detained
made an order on said bank in favor of the United States Army officer under whose charge he then was for the sum
thus deposited in said bank. The arrest of Father De la Peña and the confiscation of the funds in the bank were the
result of the claim of the military authorities that he was an insurgent and that the funds thus deposited had been
collected by him for revolutionary purposes. The money was taken from the bank by the military authorities by virtue
of such order, was confiscated and turned over to the Government.

While there is considerable dispute in the case over the question whether the P6,641 of trust funds was included in
the P19,000 deposited as aforesaid, nevertheless, a careful examination of the case leads us to the conclusion that
said trust funds were a part of the funds deposited and which were removed and confiscated by the military
authorities of the United States.

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

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

By placing the money in the bank and mixing it with his personal funds De la Peña did not thereby assume an
obligation different from that under which he would have lain if such deposit had not been made, nor did he thereby
make himself liable to repay the money at all hazards. If the had been forcibly taken from his pocket or from his
house by the military forces of one of the combatants during a state of war, it is clear that under the provisions of the
Civil Code he would have been exempt from responsibility. The fact that he placed the trust fund in the bank in his
personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at
all hazards.

We do not enter into a discussion for the purpose of determining whether he acted more or less negligently by
depositing the money in the bank than he would if he had left it in his home; or whether he was more or less
negligent by depositing the money in his personal account than he would have been if he had deposited it in a
separate account as trustee. We regard such discussion as substantially fruitless, inasmuch as the precise question
is not one of negligence. There was no law prohibiting him from depositing it as he did and there was no law which
changed his responsibility be reason of the deposit. While it may be true that one who is under obligation to do or
give a thing is in duty bound, when he sees events approaching the results of which will be dangerous to his trust, to
take all reasonable means and measures to escape or, if unavoidable, to temper the effects of those events, we do
not feel constrained to hold that, in choosing between two means equally legal, he is culpably negligent in selecting
one whereas he would not have been if he had selected the other.

The court, therefore, finds and declares that the money which is the subject matter of this action was deposited by
Father De la Peña in the Hongkong and Shanghai Banking Corporation of Iloilo; that said money was forcibly taken
from the bank by the armed forces of the United States during the war of the insurrection; and that said Father De la
Peña was not responsible for its loss.

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

Arellano, C.J., Torres and Carson, JJ., concur.

Separate Opinions

TRENT, J., dissenting:

I dissent. Technically speaking, whether Father De la Peña was a trustee or an agent of the plaintiff his books
showed that in 1898 he had in his possession as trustee or agent the sum of P6,641 belonging to the plaintiff as the
head of the church. This money was then clothed with all the immunities and protection with which the law seeks to
invest trust funds. But when De la Peña mixed this trust fund with his own and deposited the whole in the bank to
his personal account or credit, he by this act stamped on the said fund his own private marks and unclothed it of all
the protection it had. If this money had been deposited in the name of De la Peña as trustee or agent of the plaintiff,
I think that it may be presumed that the military authorities would not have confiscated it for the reason that they
were looking for insurgent funds only. Again, the plaintiff had no reason to suppose that De la Peña would attempt
to strip the fund of its identity, nor had he said or done anything which tended to relieve De la Peña from the legal
reponsibility which pertains to the care and custody of trust funds.

The Supreme Court of the United States in the United State vs. Thomas (82 U. S., 337), at page 343, said:
"Trustees are only bound to exercise the same care and solicitude with regard to the trust property which they would
exercise with regard to their own. Equity will not exact more of them. They are not liable for a loss by theft without
their fault. But this exemption ceases when they mix the trust-money with their own, whereby it loses its identity, and
they become mere debtors."

If this proposition is sound and is applicable to cases arising in this jurisdiction, and I entertain no doubt on this
point, the liability of the estate of De la Peña cannot be doubted. But this court in the majority opinion says: "The fact
that he (Agustin de la Peña) placed the trust fund in the bank in his personal account does not add to his
responsibility. Such deposit did not make him a debtor who must respond at all hazards. . . . There was no law
prohibiting him from depositing it as he did, and there was no law which changed his responsibility, by reason of the
deposit."

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

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

If the doctrine announced in the majority opinion be followed in cases hereafter arising in this jurisdiction trust funds
will be placed in precarious condition. The position of the trustee will cease to be one of trust.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

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 complaint  for damages against the respondent Bank with the Court of First Instance
2

(now Regional Trial Court) of Pasig, Metro Manila which docketed the same as Civil Case No. 38382.

In its Answer with Counterclaim,  respondent Bank alleged that the petitioner has no cause of action because of
3

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 decision  adverse to the petitioner on 8 December 1986, the dispositive portion of which reads:
5

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 reconsideration  having been denied, petitioner appealed from the adverse decision to the respondent
7

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,  respondent Court affirmed the appealed decision principally on the
9

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   which provides:
10
 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   — which held that the owner of the property loses his control over the
11

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."   The
12

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

Its motion for reconsideration   having been denied in the respondent Court's Resolution of 28 August
14

1989,   petitioner took this recourse under Rule 45 of the Rules of Court and urges Us to review and set aside the
15

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.   Accordingly, it is claimed that the respondent Bank is liable for the loss of the certificates of title
16

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   which is supposed to expound on the
17

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   which states that a contract for the rental of a bank safety deposit
18

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;   the
19

contract in the case at bar is a special kind of deposit. It cannot be characterized as an ordinary contract of lease
under Article 1643 because the full and absolute possession and control of the safety deposit box was not given to
the joint renters — the petitioner and the Pugaos. The guard key of the box remained with the respondent Bank;
without this key, neither of the renters could open the box. On the other hand, the respondent Bank could not
likewise open the box without the renter's key. In this case, the said key had a duplicate which was made so that
both renters could have access to the box.

Hence, the authorities cited by the respondent Court   on this point do not apply. Neither could Article 1975, also
20

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.   This is just the prevailing view because:
21

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.   (citations omitted)
22

In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is clear that in this
jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of the General Banking
Act   pertinently provides:
23
 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. . . .   (emphasis supplied)
24

Note that the primary function is still found within the parameters of a contract of deposit, i.e., the receiving in
custody of funds, documents and other valuable objects for safekeeping. The renting out of the safety deposit boxes
is not independent from, but related to or in conjunction with, this principal function. A contract of deposit may be
entered into orally or in writing   and, pursuant to Article 1306 of the Civil Code, the parties thereto may establish
25

such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order or public policy. The depositary's responsibility for the safekeeping of the
objects deposited in the case at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary
would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the
tenor of the agreement.   In the absence of any stipulation prescribing the degree of diligence required, that of a
26

good father of a family is to be observed.   Hence, any stipulation exempting the depositary from any liability arising
27

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 stipulation.   (citations omitted)
30

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.

Feliciano, Bidin, Romero and Melo, JJ., concur.

Gutierrez, Jr., J., is on leave.

# Footnotes

1 Rollo, 102.

2 Annex "A" of Petition; Rollo, 28-32.

3 Annex "B", Id.; Id., 33-35.

4 Annex "C", Id.; Id., 36.

5 Annex "D" of Petition; Rollo, 38-54. Per Judge Cicero C. Jurado.

6 Id., 54.

7 Annex "E", Id.; Id., 55-68.

8 Rollo, 100-101.

9 Per Associate Justice Felipe B. Kalalo, concurred in by Associate Justices Bienvenido C. Ejercito
and Luis L. Victor. Annex "I" of Petition; Id., 89-105.
10 Citing PARAS, E.L., Civil Code of the Philippines, vol. 5, 1982 ed., 717.

11 50 Phil. 558 [1927].

12 Rollo, 103.

13 Id.

14 Annex "J" of Petition; Rollo, 106-113.

15 Annex "K", Id.; Id., 114-115.

16 Articles 1962 to 2009, inclusive.

17 10 Am Jur 2d., 440-441.

18 While the citation is 5 Words and Phrases Permanent Edition, 71-72, We failed to locate this in
the said work and volume.

19 Title XII, Book IV, Civil Code.

20 PARAS, E.L., op. cit., and Tolentino vs. Gonzales, supra.

21 10 Am Jur 2d., 441.

22 10 Am Jur 2d., 442-443.

23 R.A. No. 337, as amended.

24 "Agents" refers to paragraphs (b) and (c) while "depositories" refers to paragraph (a).

25 Article 1969, Civil Code.

26 Article 1170, Id.

27 Article 1173, Id.

28 Supra.

29 Supra.

30 10 Am Jur 2d., 448.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. Nos. L-26948 and L-26949             October 8, 1927

SILVESTRA BARON, plaintiff-appellant,
vs.
PABLO DAVID, defendant-appellant.

And

GUILLERMO BARON, plaintiff-appellant,
vs.
PABLO DAVID, defendant-appellant.

Jose Gutierrez David for plaintiff-appellant in case of No. 26948.

Gregorio Perfecto for defendant-appellant in both cases.
Francisco, Lualhati & Lopez and Jose Gutierrez David for plaintiff-appellant in case No. 26949.

STREET, J.:

These two actions were instituted in the Court of First Instance of the Province of Pampanga by the respective
plaintiffs, Silvestra Baron and Guillermo Baron, for the purpose of recovering from the defendant, Pablo David, the
value of palay alleged to have been sold by the plaintiffs to the defendant in the year 1920. Owing to the fact that
the defendant is the same in both cases and that the two cases depend in part upon the same facts, the cases were
heard together in the trial court and determined in a single opinion. The same course will accordingly be followed
here.

In the first case, i. e., that which Silvestra Baron is plaintiff, the court gave judgment for her to recover of the
defendant the sum of P5,238.51, with costs. From this judgment both the plaintiff and the defendant appealed.

In the second case, i. e., that in which Guillermo Baron, is plaintiff, the court gave judgment for him to recover of the
defendant the sum of P5,734.60, with costs, from which judgment both the plaintiff and the defendant also
appealed. In the same case the defendant interposed a counterclaim in which he asked credit for the sum of P2,800
which he had advanced to the plaintiff Guillermo Baron on various occasions. This credit was admitted by the
plaintiff and allowed by the trial court. But the defendant also interposed a cross-action against Guillermo Baron in
which the defendant claimed compensation for damages alleged to have Ben suffered by him by reason of the
alleged malicious and false statements made by the plaintiff against the defendant in suing out an attachment
against the defendant's property soon after the institution of the action. In the same cross-action the defendant also
sought compensation for damages incident to the shutting down of the defendant's rice mill for the period of one
hundred seventy days during which the above-mentioned attachment was in force. The trial judge disallowed these
claims for damages, and from this feature of the decision the defendant appealed. We are therefore confronted with
five distinct appeals in this record.

Prior to January 17, 1921, the defendant Pablo David has been engaged in running a rice mill in the municipality of
Magalang, in the Province of Pampanga, a mill which was well patronized by the rice growers of the vicinity and
almost constantly running. On the date stated a fire occurred that destroyed the mill and its contents, and it was
some time before the mill could be rebuilt and put in operation again. Silvestra Baron, the plaintiff in the first of the
actions before us, is an aunt of the defendant; while Guillermo Baron, the plaintiff in the other action; is his uncle. In
the months of March, April, and May, 1920, Silvestra Baron placed a quantity of palay in the defendant's mill; and
this, in connection with some that she took over from Guillermo Baron, amounted to 1,012 cavans and 24 kilos.
During approximately the same period Guillermo Baron placed other 1,865 cavans and 43 kilos of palay in the mill.
No compensation has ever been received by Silvestra Baron upon account of the palay delivered by Guillermo
Baron, he has received from the defendant advancements amounting to P2,800; but apart from this he has not been
compensated. Both the plaintiffs claim that the palay which was delivered by them to the defendant was sold to the
defendant; while the defendant, on the other hand, claims that the palay was deposited subject to future withdrawal
by the depositors or subject to some future sale which was never effected. He therefore supposes himself to be
relieved from all responsibility by virtue of the fire of January 17, 1921, already mentioned.

The plaintiff further say that their palay was delivered to the defendant at his special request, coupled with a promise
on his part to pay for the same at the highest price per cavan at which palay would sell during the year 1920; and
they say that in August of that year the defendant promised to pay them severally the price of P8.40 per cavan,
which was about the top of the market for the season, provided they would wait for payment until December. The
trial judge found that no such promise had been given; and the incredulity of the court upon this point seems to us to
be justified. A careful examination of the proof, however, leads us to the conclusion that the plaintiffs did, some time
in the early part of August, 1920, make demand upon the defendant for a settlement, which he evaded or postponed
leaving the exact amount due to the plaintiffs undetermined.

It should be stated that the palay in question was place by the plaintiffs in the defendant's mill with the
understanding that the defendant was at liberty to convert it into rice and dispose of it at his pleasure. The mill was
actively running during the entire season, and as palay was daily coming in from many customers and as rice was
being constantly shipped by the defendant to Manila, or other rice markets, it was impossible to keep the plaintiffs'
palay segregated. In fact the defendant admits that the plaintiffs' palay was mixed with that of others. In view of the
nature of the defendant's activities and the way in which the palay was handled in the defendant's mill, it is quite
certain that all of the plaintiffs' palay, which was put in before June 1, 1920, been milled and disposed of long prior
to the fire of January 17, 1921. Furthermore, the proof shows that when the fire occurred there could not have been
more than about 360 cavans of palay in the mill, none of which by any reasonable probability could have been any
part of the palay delivered by the plaintiffs. Considering the fact that the defendant had thus milled and doubtless
sold the plaintiffs' palay prior to the date of the fire, it result that he is bound to account for its value, and his liability
was not extinguished by the occurence of the fire. In the briefs before us it seems to have been assumed by the
opposing attorneys that in order for the plaintiffs to recover, it is necessary that they should be able to establish that
the plaintiffs' palay was delivered in the character of a sale, and that if, on the contrary, the defendant should prove
that the delivery was made in the character of deposit, the defendant should be absolved. But the case does not
depend precisely upon this explicit alternative; for even supposing that the palay may have been delivered in the
character of deposit, subject to future sale or withdrawal at plaintiffs' election, nevertheless if it was understood that
the defendant might mill the palay and he has in fact appropriated it to his own use, he is of course bound to
account for its value. Under article 1768 of the Civil Code, when the depository has permission to make use of the
thing deposited, the contract loses the character of mere deposit and becomes a loan or a commodatum; and of
course by appropriating the thing, the bailee becomes responsible for its value. In this connection we wholly reject
the defendant's pretense that the palay delivered by the plaintiffs or any part of it was actually consumed in the fire
of January, 1921. Nor is the liability of the defendant in any wise affected by the circumstance that, by a custom
prevailing among rice millers in this country, persons placing palay with them without special agreement as to price
are at liberty to withdraw it later, proper allowance being made for storage and shrinkage, a thing that is sometimes
done, though rarely.

In view of what has been said it becomes necessary to discover the price which the defendant should be required to
pay for the plaintiffs' palay. Upon this point the trial judge fixed upon P6.15 per cavan; and although we are not
exactly in agreement with him as to the propriety of the method by which he arrived at this figure, we are
nevertheless of the opinion that, all things considered, the result is approximately correct. It appears that the price of
palay during the months of April, May, and June, 1920, had been excessively high in the Philippine Islands and
even prior to that period the Government of the Philippine Islands had been attempting to hold the price in check by
executive regulation. The highest point was touched in this season was apparently about P8.50 per cavan, but the
market began to sag in May or June and presently entered upon a precipitate decline. As we have already stated,
the plaintiffs made demand upon the defendant for settlement in the early part of August; and, so far as we are able
to judge from the proof, the price of P6.15 per cavan, fixed by the trial court, is about the price at which the
defendant should be required to settle as of that date. It was the date of the demand of the plaintiffs for settlement
that determined the price to be paid by the defendant, and this is true whether the palay was delivered in the
character of sale with price undetermined or in the character of deposit subject to use by the defendant. It results
that the plaintiffs are respectively entitle to recover the value of the palay which they had placed with the defendant
during the period referred to, with interest from the date of the filing of their several complaints.

As already stated, the trial court found that at the time of the fire there were about 360 cavans of palay in the mill
and that this palay was destroyed. His Honor assumed that this was part of the palay delivered by the plaintiffs, and
he held that the defendant should be credited with said amount. His Honor therefore deducted from the claims of the
plaintiffs their respective proportionate shares of this amount of palay. We are unable to see the propriety of this
feature of the decision. There were many customers of the defendant's rice mill who had placed their palay with the
defendant under the same conditions as the plaintiffs, and nothing can be more certain than that the palay which
was burned did not belong to the plaintiffs. That palay without a doubt had long been sold and marketed. The
assignments of error of each of the plaintiffs-appellants in which this feature of the decision is attacked are therefore
well taken; and the appealed judgments must be modified by eliminating the deductions which the trial court allowed
from the plaintiffs' claims.

The trial judge also allowed a deduction from the claim of the plaintiff Guillermo Baron of 167 cavans of palay, as
indicated in Exhibit 12, 13, 14, and 16. This was also erroneous. These exhibits relate to transactions that occurred
nearly two years after the transactions with which we are here concerned, and they were offered in evidence merely
to show the character of subsequent transactions between the parties, it appearing that at the time said exhibits
came into existence the defendant had reconstructed his mill and that business relations with Guillermo Baron had
been resumed. The transactions shown by these exhibits (which relate to palay withdrawn by the plaintiff from the
defendant's mill) were not made the subject of controversy in either the complaint or the cross-complaint of the
defendant in the second case. They therefore should not have been taken into account as a credit in favor of the
defendant. Said credit must therefore be likewise of course be without prejudice to any proper adjustment of the
rights of the parties with respect to these subsequent transactions that they have heretofore or may hereafter effect.

The preceding discussion disposes of all vital contentions relative to the liability of the defendant upon the causes of
action stated in the complaints. We proceed therefore now to consider the question of the liability of the plaintiff
Guillermo Baron upon the cross-complaint of Pablo David in case R. G. No. 26949. In this cross-action the
defendant seek, as the stated in the third paragraph of this opinion, to recover damages for the wrongful suing out of
an attachment by the plaintiff and the levy of the same upon the defendant's rice mill. It appears that about two and
one-half months after said action was begun, the plaintiff, Guillermo Baron, asked for an attachment to be issued
against the property of the defendant; and to procure the issuance of said writ the plaintiff made affidavit to the
effect that the defendant was disposing, or attempting the plaintiff. Upon this affidavit an attachment was issued as
prayed, and on March 27, 1924, it was levied upon the defendant's rice mill, and other property, real and personal.  1awph!l.net

Upon attaching the property the sheriff closed the mill and placed it in the care of a deputy. Operations were not
resumed until September 13, 1924, when the attachment was dissolved by an order of the court and the defendant
was permitted to resume control. At the time the attachment was levied there were, in the bodega, more than 20,000
cavans of palay belonging to persons who held receipts therefor; and in order to get this grain away from the sheriff,
twenty-four of the depositors found it necessary to submit third-party claims to the sheriff. When these claims were
put in the sheriff notified the plaintiff that a bond in the amount of P50,000 must be given, otherwise the grain would
be released. The plaintiff, being unable or unwilling to give this bond, the sheriff surrendered the palay to the
claimants; but the attachment on the rice mill was maintained until September 13, as above stated, covering a
period of one hundred seventy days during which the mill was idle. The ground upon which the attachment was
based, as set forth in the plaintiff's affidavit was that the defendant was disposing or attempting to dispose of his
property for the purpose of defrauding the plaintiff. That this allegation was false is clearly apparent, and not a word
of proof has been submitted in support of the assertion. On the contrary, the defendant testified that at the time this
attachment was secured he was solvent and could have paid his indebtedness to the plaintiff if judgment had been
rendered against him in ordinary course. His financial conditions was of course well known to the plaintiff, who is his
uncle. The defendant also states that he had not conveyed away any of his property, nor had intended to do so, for
the purpose of defrauding the plaintiff. We have before us therefore a case of a baseless attachment, recklessly
sued out upon a false affidavit and levied upon the defendant's property to his great and needless damage. That the
act of the plaintiff in suing out the writ was wholly unjustifiable is perhaps also indicated in the circumstance that the
attachment was finally dissolved upon the motion of the plaintiff himself.

The defendant testified that his mill was accustomed to clean from 400 to 450 cavans of palay per day, producing
225 cavans of rice of 57 kilos each. The price charged for cleaning each cavan rice was 30 centavos. The
defendant also stated that the expense of running the mill per day was from P18 to P25, and that the net profit per
day on the mill was more than P40. As the mill was not accustomed to run on Sundays and holiday, we estimate
that the defendant lost the profit that would have been earned on not less than one hundred forty work days.
Figuring his profits at P40 per day, which would appear to be a conservative estimate, the actual net loss resulting
from his failure to operate the mill during the time stated could not have been less than P5,600. The reasonableness
of these figures is also indicated in the fact that the twenty-four customers who intervened with third-party claims
took out of the camarin 20,000 cavans of palay, practically all of which, in the ordinary course of events, would have
been milled in this plant by the defendant. And of course other grain would have found its way to this mill if it had
remained open during the one hundred forty days when it was closed.

But this is not all. When the attachment was dissolved and the mill again opened, the defendant found that his
customers had become scattered and could not be easily gotten back. So slow, indeed, was his patronage in
returning that during the remainder of the year 1924 the defendant was able to mill scarcely more than the grain
belonging to himself and his brothers; and even after the next season opened many of his old customers did not
return. Several of these individuals, testifying as witnesses in this case, stated that, owing to the unpleasant
experience which they had in getting back their grain from the sheriff to the mill of the defendant, though they had
previously had much confidence in him.

As against the defendant's proof showing the facts above stated the plaintiff submitted no evidence whatever. We
are therefore constrained to hold that the defendant was damaged by the attachment to the extent of P5,600, in
profits lost by the closure of the mill, and to the extent of P1,400 for injury to the good-will of his business, making a
total of P7,000. For this amount the defendant must recover judgment on his cross-complaint.

The trial court, in dismissing the defendant's cross-complaint for damages resulting from the wrongful suing out of
the attachment, suggested that the closure of the rice mill was a mere act of the sheriff for which the plaintiff was not
responsible and that the defendant might have been permitted by the sheriff to continue running the mill if he had
applied to the sheriff for permission to operate it. This singular suggestion will not bear a moment's criticism. It was
of course the duty of the sheriff, in levying the attachment, to take the attached property into his possession, and the
closure of the mill was a natural, and even necessary, consequence of the attachment. For the damage thus
inflicted upon the defendant the plaintiff is undoubtedly responsible.

One feature of the cross-complaint consist in the claim of the defendant (cross-complaint) for the sum of P20,000 as
damages caused to the defendant by the false and alleged malicious statements contained in the affidavit upon
which the attachment was procured. The additional sum of P5,000 is also claimed as exemplary damages. It is clear
that with respect to these damages the cross-action cannot be maintained, for the reason that the affidavit in
question was used in course of a legal proceeding for the purpose of obtaining a legal remedy, and it is therefore
privileged. But though the affidavit is not actionable as a libelous publication, this fact in no obstacle to the
maintenance of an action to recover the damage resulting from the levy of the attachment.

Before closing this opinion a word should be said upon the point raised in the first assignment of error of Pablo
David as defendant in case R. G. No. 26949. In this connection it appears that the deposition of Guillermo Baron
was presented in court as evidence and was admitted as an exhibit, without being actually read to the court. It is
supposed in the assignment of error now under consideration that the deposition is not available as evidence to the
plaintiff because it was not actually read out in court. This connection is not well founded. It is true that in section
364 of the Code of Civil Procedure it is said that a deposition, once taken, may be read by either party and will then
be deemed the evidence of the party reading it. The use of the word "read" in this section finds its explanation of
course in the American practice of trying cases for the most part before juries. When a case is thus tried the actual
reading of the deposition is necessary in order that the jurymen may become acquainted with its contents. But in
courts of equity, and in all courts where judges have the evidence before them for perusal at their pleasure, it is not
necessary that the deposition should be actually read when presented as evidence.

From what has been said it result that judgment of the court below must be modified with respect to the amounts
recoverable by the respective plaintiffs in the two actions R. G. Nos. 26948 and 26949 and must be reversed in
respect to the disposition of the cross-complaint interposed by the defendant in case R. G. No. 26949, with the
following result: In case R. G. No. 26948 the plaintiff Silvestra Baron will recover of the Pablo David the sum of
P6,227.24, with interest from November 21, 1923, the date of the filing of her complaint, and with costs. In case R.
G. No. 26949 the plaintiff Guillermo Baron will recover of the defendant Pablo David the sum of P8,669.75, with
interest from January 9, 1924. In the same case the defendant Pablo David, as plaintiff in the cross-complaint, will
recover of Guillermo Baron the sum of P7,000, without costs. So ordered.
Avanceña, C.J., Johnson, Malcolm, Villamor, Romualdez and Villa-Real, JJ., concur.

Separate Opinions

JOHNS, J., dissenting and concurring:

The plaintiff Silvestra Baron is the aunt of the defendant, and Guillermo Baron, the plaintiff in the other action, is his
uncle. There is no dispute as to the amount of palay which each delivered to the mill of the defendant. Owing to the
fact that they were relatives and that the plaintiffs reposed special reposed special trust and confidence in the
defendant, who was their nephew, they were not as careful and prudent in their business dealings with him as they
should have been. Plaintiffs allege that their respective palay was delivered to the defendant at his mill with the
understanding and agreement between them that they should receive the highest market price for the palay for that
season, which was P8.50 per cavan. They further allege that about August first they made another contract in and
by which he promised and agreed to pay them P8.40 per cavan for their palay, in consideration of which they
agreed to extend the time for payment to the first of December of that year. The amount of palay is not in dispute,
and the defendant admits that it was delivered to his mill, but he claims that he kept it on deposit and as bailee
without hire for the plaintiffs and at their own risk, and that the mill was burned down, and that at the time of the fire,
plaintiffs' palay was in the mill. The lower court found as a fact that there was no merit in that defense, and that there
was but little, if any, palay in the mill at the time of the fire and that in truth and in fact that defense was based upon
perjured testimony.

The two cases were tried separately in the court below, but all of the evidence in the case was substituted and used
in the other. Both plaintiffs testified to the making of the respective contracts as alleged in their complaint; to wit, that
they delivered the palay to the defendant with the express understanding and agreement that he would pay them for
the palay the highest market price for the season, and to the making of the second contract about the first of August,
in which they had a settlement, and that the defendant then agreed to pay them P8.40 per cavan, such payment to
be made on December first. It appears that the highest market price for palay for that season was P8.50 per cavan.
The defendant denied the making of either one of those contracts, and offered no other evidence on that question.
That is to say, we have the evidence of both Silvestra Baron and Guillermo Baron to the making of those contracts,
which is denied by the defendant only. Plaintiffs' evidence is also corroborated by the usual and customary manner
in which the growers sell their palay. That is to say, it is their custom to sell the palay at or about the time it is
delivered at the mill and as soon as it is made ready for market in the form of rice. As stated the lower court found
as a fact that the evidence of the defendants as to plaintiffs' palay being in the mill at the time of the fire was not
worthy of belief, and that in legal effect it was a manufactured defense. Yet, strange as it may seem, both the lower
court and this court have found as a fact that upon the question of the alleged contracts, the evidence for the
defendant is true and entitled to more weight than the evidence of both plaintiffs which is false.

It appears that the plaintiff Silvestra Baron is an old lady about 80 years of age and the aunt of the defendant, and
Guillermo Baron is the uncle. Under the theory of the lower court and of this court, both of them at all the time during
the high prices held their palay in defendant's mill at their own risk, and that upon that point the evidence of the
defendant, standing alone is entitled to more weight and is more convincing than the combined evidence of the two
plaintiffs. In the very nature of things, if defendant's evidence upon that point is true, it stands to reason that,
following the custom of growers, the plaintiffs would have sold their palay during the period of high prices, and would
not have waited until it dropped from P8.50 per cavan to P6.15 per cavan about the first of August. Upon that
question, both the weight and the credibility of the evidence is with the plaintiffs, and they should have judgment for
the full amount of their palay on the basis of P8.40 per cavan. For such reason, I vigorously dissent from the
majority opinion.

I frankly concede that the attachment was wrongful, and that it should never have been levied. It remained in force
for a period of one hundred and seventy days at which time it was released on motion of the plaintiffs. The
defendant now claims, and the majority opinion has allowed him, damages for that full period, exclusive of Sundays,
at the rate, of P40 per day, found to be the net profit for the operation of the rice mill. It further appears, and this
court finds, that the defendant was a responsible man, and that he had ample property out which to satisfy plaintiffs'
claim. Assuming that to be true, there was no valid reason why he could not had given a counter bond and released
the attachment. Upon the theory of the majority opinion, if the plaintiffs had not released the attachment, they would
still be liable to the defendant at the rate of P40 per day up to the present time. When the mill was attached, if he
was in a position to do so, it was the duty of the defendant to give a counter bond and release the attachment and
resume its operation. The majority opinion also allowed the defendant P1,400 "for injury to the goodwill of his
business." The very fact that after a delay of about four years, both of the plaintiffs were compelled to bring to their
respective actions against the defendant to recover from him on a just and meritorious claim, as found by this court
and the lower court, and the further fact that after such long delay, the defendant has sought to defeat the actions by
a sham and manufactured defense, as found by this and the lower court, would arouse the suspicion of any
customers the defendant ever had, and shake their confidence in his business honor and integrity, and destroy any
goodwill which he ever did have. Under such conditions, it would be strange that the defendant would have any
customers left. He is not entitled to any compensation for the loss of goodwill, and P5,000 should be the very limit of
the amount of his damages for the wrongful attachment, and upon that point I vigorously dissent. In all other
respects, I agree with the majority opinion.

[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]  dated October 21, 2003 of the Court of Appeals in CA-G.R.
cralaw

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]  the Court of Appeals dismissed petitioner's appeal and affirmed the appealed
cralaw

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]  A deposit may be constituted even without any consideration. It is not necessary that the depositary
cralaw

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]  On the basis of such item, the trial court concluded that the
cralaw

coverage includes a full comprehensive insurance of the vehicle in case of damage or loss. Besides, Crispa paid a premium
of P10,304 to cover theft. This is clearly shown in the breakdown of premiums in the same policy. [6]  Thus, having
cralaw

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]  This is not so in the case at bar. For, we have
cralaw

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.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court

Endnotes:

 Penned by Associale Justice Elvi John S. Asuncion and concurred in by Associate Justices Renato C. Dacudao and Lucas P.
[1]
cralaw

Bersamin of the Special Fourth Division.

[2]
 Rollo, pp. 52-58.
cralaw

[3]
 Calibo vs. Court of Appeals, 350 SCRA 427 [2001] citing Article 1962 of the New Civil Code.
cralaw

[4]
 Ermitano vs. Court of Appeals, 306 SCRA 218 [ 1999].
cralaw

[5]
 Rollo, p. 633.
cralaw

[6]
 Ibid
cralaw

 Article 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance company for
[7]
cralaw

the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to
the rights of the insured against the wrongdoer or the person who has violated the contract. xxx

 C & S Fishfarm Corporation vs. Court of Appeals, et al, 394 SCRA 82 [2002]; Peñalosa vs. Santos, 363 SCRA 545
[8]
cralaw

[2001]; Marvin Mercado vs. People of the Philippines, 392 SCRA 687 [2002].