BPI (successor-in-interest of CBTC)v.

CA, Eastern Plywood and Lim

FactsPrivate respondents held at least one “and/or” joint account with CBTC. A joint checking “and” account was opened by Lim and Mariano Velasco in the amount of Php120,000, which funds deposited came from the “and/or” joint account of private respondents. Various amounts were later deposited or withdrawn from the “and” account of Lim & Velasco. Velasco died, and at the time of his death the outstanding balance of the “and” account was Php662,522.87. By virtue of an indemnity undertaking executed by Lim, one-half of this amount was provisionally transferred to one the accounts of Eastern with CBTC. Eastern obtained a loan of Php73,000 from CBTC, for which loan Eastern issued PNs payable on demand at the order of CBTC. Eastern also signed a hold-out agreement which provided that Eastern and Lim conferred upon CBTC sufficient power to retain the account balance of the “and” account (current account of Lim and Velasco) and to apply same for the purpose of liquidating the load of Php73,000 in respect of the principal and/or interest. In the meantime, a case for the settlement of Velasco’s estate was filed in the RTC of Pasig. The RTC granted the claim of the estate from the “and” account of Lim and Velasco and allowed the heirs to withdraw the amount of Php331,261.44. When CBTC merged with BPI, the latter filed a complaint against Lim and Eastern demanding the payment of the loan. Lim and Eastern filed a counterclaim against BPI for the return of the balance in the disputed account subject of the holdout agreement; the balance of which “and” account was permitted by BPI to be withdrawn by the heirs of Velasco.

IssueIs BPI still liable to the private respondents on the “and” account subject of the holdout agreement after its withdrawal by the heirs of Velasco?

HeldYes. The award of Php331,264.44 in favor of private respondents shall bear interest at the rate of 12% per annum from the filing of the counterclaim.

RatioThe counterclaim of private respondents for the return of the Php331,261.44 was equivalent to a demand that they be allowed to withdraw their deposit with the bank. Article 1980 of the Civil Code provides that fixed, savings, current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. In Serrano v. Central Bank, bank deposits are in the nature of irregular deposits; they are really loans because they earn interest. The relationship then between a depositor and a bank is

one of creditor and debtor. The deposit under the questioned “and” account was an ordinary bank deposit; hence, it was payable on demand of the depositor.

The account was proven and established to belong to Eastern even it was deposited in the names of Lim and Velasco. As the real creditor of the BPI, Eastern had the right to withdraw it or to demand payment thereof. BPI cannot be relieved of its duty to pay Eastern simply because it already allowed the heirs of Velasco to withdraw the whole balance of the account. The petitioner should have not allowed such withdrawal because it had admitted in the holdout agreement the questioned ownership of the money deposited in the account. As early as May 12 1979, CBTC was notified by the corporate secretary of Eastern that the deposit in the “and” account of Lim and Velasco was being claimed by them and that one-half was being claimed by the heirs of Velasco.

Moreover, the order of the RTC of Pasig merely authorized the heirs of Velasco to withdraw the account. BPI was not specifically ordered to release the account to the said heirs; hence, it was under no judicial compulsion to do so. The authorization given to the heirs of Velasco cannot be construed as a final determination or adjudication that the account belonged to Velasco. When the ownership of a particular property is disputed, the determination by a probate court of whether that property is included in the estate of a deceased is merely provisional in character and cannot be the subject of execution. Because the ownership of the deposit remained undetermined, BPI, as the debtor, had no right to pay to persons other than those in whose favor the obligation was constituted or whose right or authority to receive payment is indisputable. The payment of the money deposited with BPI that will extinguish its obligation to the creditor-depositor is payment to the person of the creditor or to one authorized by him or by the law to receive it. The payment of BPI to the heirs of Velasco even if done in good faith did not extinguish its obligation to the true depositor, Eastern.

Aboitiz, administrator of the estate of Juan Ibanez de Aldecoav.

Oquiñena & Co. and Oquiñena & Co. Ltd.

FactsJuan de Aldecoa maintained mercantile relations with Oquiñena. When Aldecoa died, Anastacio de Aldecoa was appointed administrator of the former’s estate. At that time Anastacio was also the Cebu manager of Oquiñena. Anastacio committed suicide, thus Aboitiz was appointed as administrator of Juan’s estate in place of Anastacio.

For the first cause of action, plaintiff sought to recover from defendants the sum of Php9,011.58 with interest at the rate 8% per annum beginning on Feb. 13, 1913; and for the second cause of action, the sum of Php5,000 with legal interest from Feb. 5, 1915, the time the complaint was filed.

At the death of Juan, Anastacio collected from the New York Life Insurance the sum of Php9,011.58 which Anastacio deposited with, and was receipted by, Oquiñena & Co. .

After the death of Juan I. de Aldecoa, his business employees in Surigao continued said commercial relations with the Oquiñena & Co. in Cebu, whereby there resulted a balance, in favor of Jose I. de Aldecoa, of P2,312.79, and not P5,000 as is alleged in the complaint.

The court rendered a judgment against defendant Oquiñena & Co. in favor of the petitioner, and absolved defendant Oquiñena & Co. Ltd.

Both defendants appealed the decision of the trial court.

IssueDid the trial court err when it- overruled the demurrer interposed to the amended complaint? - pronounced judgment against Oquiñena & Co., a company already dissolved, and absolved Oquiñena & Co. Ltd., the successor and assignee of the former?

HeldNo/Yes.

RatioThe demurrer was based on the ground that the facts alleged in the complaint did not constitute a cause of action in regard to the payment of the sum of Php9,011.58. It is said that, if this was in the hands of the defendants as a deposit, the plaintiff cannot withdraw it without a judicial order, inasmuch

as in the receipt no fixed time was given. The document was in fact embodying a deposit, according to its terms, without a fixed time. But exactly for being such, the sum deposited may be withdrawn at any time.

According to its by-laws, Oquiñena & Co. ought to have bee dissolved ob July 30, 1912. However, in accordance with the said by-laws this date was extended to July 1, 1913. On April 14, 1914, the creditors and shareholders of the Oquiñena & Co. began to organize a company called Oquiñena & Co. Ltd. and was transferred with all the assets and business of Oquiñena & Co. In the articles of co-partnership, it was made to appear that Oquiñena & Co. Ltd. had assumed all the obligations of Oquiñena & Co.; and that it appeared at its own request as defendant in this case and appealed in order to assume all the obligations of Oquiñena & Co. In fact and in law, Oquiñena & Co. had not existed since the organization of Oquiñena & Co. Ltd. and there was no reason why the former should be declared liable instead of Oquiñena & Co. Ltd. to which had passed all said obligations and rights and by which all were assumed in good faith.

YHT Realty, Lainez, Payamv.

CA and McLoughlin

FactsMcLoughlin was an Australian businessman-philanthropist who met a certain Bhrunilda Mata – Tan and befriended him. Tan convinced McLoughlin to transfer from Sheraton Hotel and stay at Tropicana Hotel during trips to the Philippines. Petitioners Lainez, as manager, Payam and Danilo Lopez, had the custody of the keys for the safety deposit boxes, were all employees at Tropicana. McLoughlin started staying at said Tropicana Hotel and registered therein from December 1984 to 1987. On October 30, 1987, McLoughlin arrived from Australia and registered with Tropicana. He rented a safety deposit box which could only be opened through the use of 2 keys, one of which is given to the registered guest, and the other remaining in the possession of the management of the hotel. When a registered guest wished to open his safety deposit box, he alone could personally request the management who then would assign one of its employees to accompany the guest and assist him in opening the safety deposit box with the two keys.

When McLoughlin went for a trip in Hong Kong and without checking out the hotel, he left some US and Australian dollars in the safety deposit box. Upon his return, he went back to Australia; there he noticed that some USD5000 and jewelry he bought from Hong Kong were missing. When he came back to the Philippines, again registered and rented a safety deposit box with Tropicana, placing therein some USD15000, AUD10000 and some important documents. He requested to open the safety deposit box, but he found out that USD2000, and AUD4500 were missing. He confronted Lainez and Payam; they told him that Tan was able to open the safety deposit box. Tan admitted to the said actuation and added that she was assisted by Lainez, Lopez and Payam. Lopez wrote a PN and requested Tan to sign it, which the latter did. Despite the execution of the PN, McLoughlin insisted that it must be the hotel who must assume responsibility for the loss he suffered. However, Lopez refused to accept the responsibility relying on the conditions for renting the deposit box, which held free and blameless Tropicana for any loss in the contents of the safety deposit box.

IssueMay a hotel evade liability for the loss of items left with it for safekeeping by its guests, by having these guests execute written waivers holding the establishment or its employees free from blame for such loss in light of Article 2003 of the Civil Code which voids such waivers?

Held No. Petitioners were directed, jointly and severally, to pay private respondent.

RatioFor the main issue:

Article 2003 provides that the hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the reasonability of the former as set for the in articles 1998 to 2001 is suppressed or diminished shall be void. The hotel business like the common carrier's business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes the essence of the business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary stipulation in so-called "undertakings" that ordinarily appear in prepared forms imposed by hotel keepers on guests for their signature.

In an early case, to hold hotel-keepers or innkeepers liable for the effects of their guests, it is not necessary that they be actually delivered to the innkeepers or their employees. It is enough that such effects are within the hotel or inn. With greater reason should the liability of the hotelkeeper be enforced when the missing items are taken without the guest’s knowledge and consent from a safety deposit box provided by the hotel itself. The undertaking manifestly contravened Article 2003 of the Civil Code it allowed Tropicana to be released from liability arising from any loss in the contents of the safety deposit box for any cause whatsoever. Evidently, the undertaking was intended to bar any claim against Tropicana for any loss of the contents of the safety deposit box whether or not negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the responsibility of the hotel-keeper shall extend to loss of, or injury to, the personal property of the guests even if caused by servants or employees of the keepers of hotels or inns as well as by strangers, except as it may proceed from any force majeure. It is the loss through force majeure that may spare the hotel-keeper from liability. In the case at bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible force to qualify the same as force majeure_________________________________________________________

(for the benefit of all - Supplemental reasoning of the Court)

We are also not impressed by petitioners' argument that the finding of gross negligence by the lower court as affirmed by the appellate court is not supported by evidence. The evidence reveals that two keys are required to open the safety deposit boxes of Tropicana. One key is assigned to the guest while the other remains in the possession of the management. If the guest desires to open his safety deposit box, he must request the management for the other key to open the same. In other words, the guest alone cannot open the safety deposit box without the assistance of the management or its employees. With more reason that access to the safety deposit box should be denied if the one requesting for the opening of the safety deposit box is a stranger. Thus, in case of loss of any item deposited in the safety deposit box, it is inevitable to

conclude that the management had at least a hand in the consummation of the taking, unless the reason for the loss is force majeure.

Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had custody of the master key of the management when the loss took place. In fact, they even admitted that they assisted Tan on three separate occasions in opening McLoughlin's safety deposit box. This only proves that Tropicana had prior knowledge that a person aside from the registered guest had access to the safety deposit box. Yet the management failed to notify McLoughlin of the incident and waited for him to discover the taking before it disclosed the matter to him. Therefore, Tropicana should be held responsible for the damage suffered by McLoughlin by reason of the negligence of its employees.

The management should have guarded against the occurrence of this incident considering that Payam admitted in open court that she assisted Tan three times in opening the safety deposit box of McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was still asleep. In light of the circumstances surrounding this case, it is undeniable that without the acquiescence of the employees of Tropicana to the opening of the safety deposit box, the loss of McLoughlin's money could and should have been avoided.

The management contends, however, that McLoughlin, by his act, made its employees believe that Tan was his spouse for she was always with him most of the time. The evidence on record, however, is bereft of any showing that McLoughlin introduced Tan to the management as his wife. Such an inference from the act of McLoughlin will not exculpate the petitioners from liability in the absence of any showing that he made the management believe that Tan was his wife or was duly authorized to have access to the safety deposit box. Mere close companionship and intimacy are not enough to warrant such conclusion considering that what is involved in the instant case is the very safety of McLoughlin's deposit. If only petitioners exercised due diligence in taking care of McLoughlin's safety deposit box, they should have confronted him as to his relationship with Tan considering that the latter had been observed opening McLoughlin's safety deposit box a number of times at the early hours of the morning. Tan's acts should have prompted the management to investigate her relationship with McLoughlin. Then, petitioners would have exercised due diligence required of them. Failure to do so warrants the conclusion that the management had been remiss in complying with the obligations imposed upon hotel-keepers under the law.

Under Article 1170 of the New Civil Code, those who, in the performance of their obligations, are guilty of negligence, are liable for damages. As to who shall bear the burden of paying damages, Article 2180, paragraph (4) of the same Code provides that the owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Also, this Court has ruled that if an employee is found negligent, it is presumed that the employer was negligent in selecting and/or supervising him for it is hard for the victim to prove the negligence of such employer.Thus, given the fact that the loss of McLoughlin's money was consummated through the negligence of Tropicana's employees in allowing Tan to open the safety deposit box without the guest's consent, both the assisting employees and YHT Realty Corporation itself, as owner and operator of Tropicana, should be held solidarily liable pursuant to Article 2193.Petitioners likewise anchor their defense on Article 200243 which exempts the hotel-keeper from liability if the loss is due to the acts of his guest, his family, or visitors. Even a cursory reading of the provision would lead us to reject petitioners' contention. The justification they raise would render nugatory the public interest sought to be protected by the provision. What if the negligence of the employer or its employees facilitated the consummation of a crime committed by the registered guest's relatives or visitor? Should the law exculpate the hotel from liability since the loss was due to the act of the visitor of the registered guest of the hotel? Hence, this provision presupposes that the hotel-keeper is not guilty of concurrent negligence or has not contributed in any degree to the occurrence of the loss. A depositary is not responsible for the loss of goods by theft, unless his actionable negligence contributes to the loss.

In the case at bar, the responsibility of securing the safety deposit box was shared not only by the guest himself but also by the management since two keys are necessary to open the safety deposit box. Without the assistance of hotel employees, the loss would not have occurred. Thus, Tropicana was guilty of concurrent negligence in allowing Tan, who was not the registered guest, to open the safety deposit box of McLoughlin, even assuming that the latter was also guilty of negligence in allowing another person to use his key. To rule otherwise would result in undermining the safety of the safety deposit boxes in hotels for the management will be given imprimatur to allow any person, under the pretense of being a family member or a visitor of the guest, to have access to the safety deposit box without fear of any liability that will attach thereafter in case such person turns out to be a complete stranger. This will allow the hotel to evade responsibility for any liability incurred by its employees in conspiracy with the guest's relatives and visitors.

Petitioners contend that McLoughlin's case was mounted on the theory of contract, but the trial court and the appellate court upheld the grant of the claims of the latter on the basis of tort.There is nothing anomalous in how the lower courts decided the controversy for this Court has pronounced a jurisprudential rule that tort liability can exist even if there are already contractual relations. The act that breaks the contract may also be tort.

Estrada, et.al.v.

Court of Agrarian Relations and Galvan

(Full case – maiksi lang)These cases are now before this Court on the petition flied by the petitioners under date of June 10, 1961, asking that the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan be declared in contempt of court and punished accordingly.

It appears that, upon motion, this Court, on January 6, 1961, issued a resolution of the following tenor:

In cases L-17481 and L-17537 to 17559 (Liberata Antonio Estrada, et al. vs. Court of Agrarian Relations and Faustino Galvan), considering the motion, and opposition thereto, that the owner or manager of the Moncada Bonded Warehouse be ordered to release and give to petitioners-appellants the remaining deposits — 10% of the net produce of the first crop minus P300.00 and 15% of the net produce of the second crop minus P200.00, the COURT RESOLVED to grant the motion without prejudice to subsequent accounting.

That on April 12, 1961, this Court, passing upon motion filed by the petitioners in which they alleged that the manager of the Moncada Bonded Warehouse had refused to comply with the above resolution unless "the original of the receipts of palay deposits be presented and surrendered to him," issued another resolution which provides:

In cases L-17537 to 17559 (Liberata Antonio Estrada, et al. vs. Court of Agrarian Relations, et al.), considering the petitioner's motion dated March 18, 1961, and the respondents' opposition thereto, THE COURT RESOLVED to order respondent Faustino Galvan to surrender the original of the receipts of the palay deposits to the manager or owner of the Moncada Bonded Warehouse, Moncada Tarlac.

That the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan were duly served with notice of the above resolutions, and that notwithstanding such service of notice and in spite of repeated demands, the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan refused and still refuse to comply with the above orders of this Court, the former, for the reason that petitioners could not surrender to him the original of the warehouse receipts issued for the palay in question, and the latter, because, as he alleged in his answer to the motion for contempt, he could not locate any more said receipts "as they were scattered, misplaced, destroyed or lost when the contents of the Office of

said respondent-appellee, Faustino F. Galvan, in the Galvan-Cabrera Building in Ylaya Street, Manila, were being desperately evacuated therefrom during the fire which burned the Divisoria market and said Galvan-Cabrera Building in Ylaya Street, Manila, in the latter part of May, 1961."

The excuses respectively offered by the manager of the Moncada Bonded Warehouse and respondent Faustino F. Galvan are not without some merits.

The former unquestionably had the right to protect the interest of the bonded warehouse of which he was manager, as the warehouse receipts issued for the palay in question might have been for the value in favor of innocent third parties; and the latter, or Faustino F. Galvan, might have in fact lost said warehouse receipts in the manner above stated, for his allegation to the effect in his answer to petitioners' motion for contempt until now has not been contradicted.

Such incidents, however, do not constitute a valid excuse to evade compliance with the order of this Court that the palay in question be delivered to the petitioners, and, considering that the petitioners, according to the manifestation filed by their counsel under date of August 3, 1961, are in dire need of said palay for their subsistence, our order must be carried out in the meantime that this cases have not been finally decided in order to ameliorate the precarious situation in which said petitioners find themselves.

WHEREFORE, it is hereby ordered that the manager or the owner of the Moncada Bonded Warehouse in Moncada, Tarlac, and respondent Faustino F. Galvan release and deliver to the petitioners the portion still remaining to be delivered to them or their shares in the palay involved in these cases, i.e.,(a) 10% of the net produce of the first crops minus P300.00; and(b) 15% of the net produce of the second crops minus P200.00;which was ordered deposited in said warehouse by the trial court, upon the issuance by said petitioners, or their duly authorized representative, of the corresponding receipts, without the necessity of producing and surrendering the original of the warehouse receipts issued therefore. It is so ordered.