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CA AGRO-INDUSTRIAL DEVELOPMENT CORP. v. CA

FACTS:

Petitioner entered into an agreement to purchase two parcels of land from the spouses Ramon and Paula Pugao. The agreement included a provision to deposit the owner's copies of the certificates of titles in a safety deposit box. The petitioner and the Pugaos rented Safety Deposit Box No. 1448 of respondent Security Bank and Trust Company.

The contract of lease stated that the bank is not a depositary of the contents of the safe and assumes no liability in connection with it. Despite this provision, the certificates of title were allegedly placed inside the safety deposit box. However, when the petitioner attempted to open the box to produce the certificates of title, they were not found.

As a result, a potential buyer withdrew their offer to purchase the lots. Petitioner then filed a complaint for damages against the bank, claiming that it should be held liable for the loss of the certificates of title. The trial court dismissed the complaint, citing the terms of the lease contract and ruling that the bank had no liability.

Petitioner appealed the decision to the Court of Appeals, which upheld the trial court's ruling. Unsatisfied with the decision, the petitioner filed a petition for review before the Supreme Court, arguing that the contract should be considered a contract of deposit rather than a lease. The petitioner contended that under Article 1972 of the Civil Code, the respondent bank should be held liable for the loss of the certificates of title.

ISSUES:

  1. Whether the contract for the rent of the safety deposit box is a contract of deposit.

  2. Whether conditions 13 and 14 of the contract are contrary to law and public policy.

  3. Whether conditions 13 and 14 of the contract of lease of the safety deposit box are void as they are contrary to law and public policy.

  4. Whether the respondent Bank is liable for the loss of the certificates of title.

  5. Whether the petitioner can be held liable for attorney's fees in a case involving a contract of lease of safety deposit boxes.

  6. Whether the nature of the relationship between the parties in a contract of lease of safety deposit boxes allows either party to have access to the safety deposit box without the presence of the other party.

RULING:

  1. 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. It is a special kind of deposit, wherein the bank acts as a depositary and the renters as depositors. The full and absolute possession and control of the safety deposit box was not given to the joint renters, as the guard key of the box remained with the bank, and the renters could not open the box without this key. Hence, the contract is not strictly governed by the provisions in the Civil Code on deposit.

  2. The conditions 13 and 14 of the contract were not discussed in the ruling.

  3. Conditions 13 and 14 of the contract of lease of the safety deposit box are void as they are contrary to law and public policy. They exempt the respondent bank from any liability except as contemplated in condition 8, which is inconsistent with its responsibility as a depositary under Section 72(a) of the General Banking Act. The bank cannot exempt itself from liability for loss due to its own fraud, negligence, or that of its agents or servants. Thus, to the extent stated, the conditions in the contract are void and ineffective.

  4. The respondent Bank is not liable for the loss of the certificates of title. The court found no competent proof that the respondent bank was aware of the agreement between the petitioner and the Pugaos regarding the joint signatures required to withdraw the certificates. Moreover, no evidence was presented to show that the loss of the certificates was due to the fraud or negligence of the respondent Bank. Hence, the bank cannot be held liable.

  5. The petitioner cannot be held liable for attorney's fees since there is no established bad faith on its part and it should not be blamed for the filing of the complaint.

  6. It is evident that either party can request access to the safety deposit box without the presence of the other party, as shown by the agreement between the petitioner and the respondents.

PRINCIPLES:

  • Parties to a contract may establish 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 relationship between a bank renting out safe-deposit boxes and its customer with respect to the contents of the box is that of a bailor and bailee, the bailment being for hire and mutual benefit. However, there are differing views and it has also been suggested that the relationship can be characterized as that of landlord and tenant or licensor and licensee. Nonetheless, bailment principles generally govern questions of liability and rights of the parties in respect to the loss of contents of safe-deposit boxes.

  • A contract of deposit may be entered into orally or in writing, and the parties may establish stipulations, clauses, terms, and conditions as long as they are not contrary to law, morals, good customs, public order, or public policy.

  • The primary function of a bank in renting out safety deposit boxes is still within the parameters of a contract of deposit.

  • The responsibility of a depositary for the safekeeping of the objects deposited is governed by the Civil Code, and the depositary would be liable for fraud, negligence, delay, or contravention of the agreement.

  • Stipulations exempting the depositary from liability arising from loss due to fraud, negligence, or delay are void for being contrary to law and public policy, unless a special contract can be established.

  • The lessor of a safe-deposit box may limit its liability for loss of the contents through agreement or stipulation, but it cannot exempt itself from liability for loss due to its own fraud or negligence.

  • In a contract of lease of safety deposit boxes, the relationship between the lessor (bank) and the lessee (renter) allows either party to have access to the safety deposit box without the presence of the other party.