CA AGRO-INDUSTRIAL DEVELOPMENT CORP. - v - CA,SECURITY BANK AND TRUST COMPANY

 G.R. No. 90027 March 3, 1993, DAVIDE, JR., J.

Issue: Is the contractual relation between a commercial bank and another party in a contract of rent of a safety deposit box with respect to its contents placed by the latter one of bailor and bailee or one of lessor and lessee?


Facts:
1.     In 1979, petitioner (through its President, Sergio Aguirre) and the spouses Pugao entered into an agreement whereby the former purchased from the latter 2 parcels of land for a consideration of P350,625.00.
2.     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 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 The same could be withdrawn only upon the joint signatures of a representative of the petitioner and the Pugaos upon full payment of the purchase price.
3.     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 which contains conditions[1]. See footnote, important.
4.     After the execution of the contract, 2 renter's keys were given to the renters — 1 to Aguirre (for the petitioner) and 1 to the Pugaos. A guard key remained in the possession of the respondent Bank. The safety deposit box has 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.
5.     Petitioner claims that the certificates of title were placed inside the said box.
6.     Thereafter, a certain Mrs. Ramos offered to buy from the petitioner the 2 lots. Mrs. Ramos demanded the execution of a deed of sale which necessarily entailed the production of the certificates of title.
7.     In view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the respondent Bank to open the safety deposit box and get the certificates of title.
8.     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.
9.     Hence, the latter filed on 1 September 1980 a complaint for damages against the respondent Bank with the CFI of Pasig, Metro Manila.
10.  In its Answer with Counterclaim, respondent Bank alleged that the petitioner has no cause of action because of paragraphs 13 and 14 of the contract of lease; corollarily, loss of any of the items or articles contained in the box could not give rise to an action against it.
11.  RTC of Pasig, Metro Manila, rendered a decision adverse to the petitioner on 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. MR denied, petitioner appealed from the adverse decision to the respondent Court of Appeals.
12.  CA affirmed the appealed decision principally on the theory that the contract 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.  MR denied , petitioner took this recourse under Rule 45 of ROC.

Ruling: The petition is partly meritorious.
-       In a nutshell, petitioner maintains that regardless of nomenclature, the contract for the rent of the safety deposit box 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 pursuant to Article 1972[2] of the said Code.
-       We agree with the petitioner's contention that the contract for the rent of the safety deposit box is not an ordinary contract of lease as defined in Article 1643 of the Civil Code. However, We do not fully subscribe to its view that the same is a contract of deposit that is to be strictly governed by the provisions in the Civil Code on deposit; the contract in the case at bar is a special kind of deposit. It cannot be characterized as an ordinary contract of lease under Article 1643 because the full and absolute possession and control of the safety deposit box was not given to the joint renters — the petitioner and the Pugaos. The guard key of the box remained with the respondent Bank; without this key, neither of the renters could open the box. On the other hand, the respondent Bank could not likewise open the box without the renter's key. In this case, the said key had a duplicate which was made so that both renters could have access to the box.
-       We agree with the petitioner that 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.   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. 
-       Section 72 of the General Banking Act 23 pertinently provides: “x x x 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. The banks shall perform the services permitted under subsections (a), (b) and (c) of this section as depositories or as agents.  x x x”
-       Note that the primary function is still found within the parameters of a contract of deposit, i.e., the receiving in custody of funds, documents and other valuable objects for safekeeping. The renting out of the safety deposit boxes is not independent from, but related to or in conjunction with, this principal function.
-       A contract of deposit may be entered into orally or in writing  and, pursuant to Article 1306 of the Civil Code, the parties thereto may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. The depositary's responsibility for the safekeeping of the objects deposited in the case at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreement.  In the absence of any stipulation prescribing the degree of diligence required, that of a good father of a family is to be observed.  Hence, any stipulation exempting the depositary from any liability arising from the loss of the thing deposited on account of fraud, negligence or delay would be void for being contrary to law and public policy.
-       said provisions in the contract of lease 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
-       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
-       the conditions in the contract in question are void and ineffective.


Note: Affirmed because 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.



[1] 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.
[2] 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.

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