Pnb vs. padilla PNB vs. PADILLA Padilla was granted by PNB a credit line of P1.

8M, secured by a Real Estate Mortgage, for a term of 2 years, with 18% interest per annum. Private respondent executed in favor of the PNB a Credit Agreement, 2 Promissory Notes P90,000 each, and a Real Estate Mortgage Contract. All these contracts contained a uniform stipulation that PNB may increase the interest whenever it may please. Hence, even assuming that the P1.8M loan agreement between PNB and the private respondent gave PNB a license (although in fact there was none) to increase the interest rate at will during the term of the loan, that license would have been null and void for being violative of the principle of mutuality essential in contracts. It would have invested the loan agreement with the character of a contract of adhesion, where the parties do not bargain on equal footing, the weaker partys (the debtor) participation being reduced to the alternative to take it or leave it. Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition.

Tio Khe Chio v. CA GR No. 76101-02 September 30, 1991 Facts: Petitioner shipped bags of imported fishmeals and insured the same with respondent insurance company Eastern Assurance & Surety Corp (EASCO). During transit, the bags were found out to be damaged thus rendering the fishmeals useless. Petitioner filed a claim before the EASCO which denied the same, prompting the former to sue the latter at CFI Cebu who ordered EASCO to pay the petitioner's claim for insurance with damages. Upon execution, respondent filed a petition for certiorari with the CA who set aside the lower court's decision arguing that the latter has erred in fixing the legal interest on 12% per annum rather than the mandated 6%. Issue: What should the legal interest be for damages arising from loss of property?

W/N the creditor, PNB, may unilaterally change or increase the interest rate stipulated at will and as often as it pleased. NO.

Held: The applicable law is Article 2209 of the Civil Code which reads that if the obligation consists in the payment of a sum of money and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of interest agreed upon, and in the absence of stipulation, the legal interest which is 6% per annum. The adjusted rate mentioned in the Circular No. 416, from which the CFI based its decision, refers only to loans or forbearances of money, goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and loss of property which does not involve a loan. Tio Khe Chio vs. Court of Appeals (202 SCRA 119)Circular No. 416 of the Central Bank which took effect on July 29, 1974 pursuant to Presidential Decree No. 116 (Usury Law) raised the legal rate of interest from six (6%) percent to twelve (12%) percent. The adjusted rate mentioned in the circular refers only to loans or forbearances of money, goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and loss of property which does not involve a loan. In the case of Philippine Rabbit Bus Lines, Inc. vs. Cruz ,G.R. No. 71017, July 28, 1986, 143 SCRA 158, the Court declared that the legal rate of interest is six (6%) percent per annum and not twelve (12%) percent, where a judgment award is based on an action for damages for personal injury, not use or forbearance of money, goods or credit. In the same vein, the Court held in GSIS vs. Court of Appeals G.R. No. 52478, October30, 1986, 145 SCRA 311, that the rates under the Usury Law(amended by P. D. 116) are applicable only to interest by way of compensation for the use or forbearance of money; interest by way of damages is governed by Article 2209 of the Civil Code.

The unilateral action of PNB in increasing the interest rate on the private respondents loan violated the mutuality of contracts ordained in Art. 1308: The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.

PNBs successive increase of the interest rate on the private respondents loan, over the latters protest, were arbitrary as they violated an express provision of the Credit Agreement Sec. 9.01---that the terms may be amended only by instrument in writing signed by the party to be bound as burdened by such amendment. The increases imposed by PNB also contravene Art. 1956 of the Civil Code which provides that no interest shall be due unless it has been expressly stipulated in writing.

In order that obligations arising from contracts may have the force of law between the parties, there must be mutuality between the parties based on their essential equality. A contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties

PILIPINAS BANK, petitioner, vs. THE HONORABLE COURT OF APPEALS, and LILIA R. ECHAUS, respondents. The debtor herein never agreed in writing to pay the interest increases fixed by the PNB beyond 24% per annum, hence he is not bound to pay a higher rate than that. Facts: private respondent filed a complaint against petitioner and its president, Constantino Bautista, for collection of a sum of money. The complaint alleged: (1) that petitioner and

Greatland executed a "Dacion en Pago," wherein Greatland conveyed to petitioner several parcels of land in consideration of the sum of P7,776,335.69; (2) that Greatland assigned P2,300,000.00 out of the total consideration in favor of private respondent; and (3) that notwithstanding her demand for payment, petitioner refused and failed to pay the said amount assigned to her. Petitioner claimed: (1) that its former president had no authority (2) that it never ratified the same; and (3) that assuming arguendo that the agreement was binding, the conditions stipulated therein were never fulfilled. The trial court ruled in favor of private respondent. Court of Appeals modified the Order dated April 3, 1985, by limiting the execution pending appeal against petitioner to P5,517.707.00 Trial court granted the new motion for execution pending appeal. Petitioner complied with the writ of execution pending appeal by issuing two manager's checks in the total amount of P5,517,707.00 The Court of Appeals rendered a decision in CA-G.R. No. CV-06017, which modified the judgment of the trial court Petitioner filed a motion in the trial court praying that private respondent to refund to her the excess payment of P1,898,623.67 with interests at 6%. It must be recalled that while private respondent was able to collect P5,517,707.00 from petitioner pursuant to the writ of advance execution, the final judgment in the main case awarded to private respondent damages in the total amount of P3,619,083.33 ISSUE: What interest rate applicable? HELD: Note that Circular No. 416, fixing the rate of interest at 12% per annum, deals with (1) loans; (2) forbearance of any money, goods or credit; and (3) judgments. (1) the amount of P2,300,000.00 adjudged to be paid by petitioner to private respondent shall earn interest of 6% per annum - The said obligation arose from a contract of purchase and sale and not from a contract of loan or mutuum. Hence, what is applicable is the rate of 6% per annum as provided in Article 2209 of the Civil Code of the Philippines and not the rate of 12% per annum as provided in Circular No. 416. (2) the amount of P1,898,623.67 to be refunded by private respondent to petitioner shall earn interest of 12% per annum. - where money is transferred from one person to another and the obligation to return the same or a portion thereof is subsequently adjudged.

Almeda v. CA April 17, 1996; Kapunan, J. FACTS: PNB granted to the spouses Almeda several loan/credit accommodations totaling P18 M in a period of six years at an interest rate of 21% per annum. To secure the loan, the spouses Almeda executed a Real Estate Mortgage Contract covering a 3,500 square meter parcel of land, together with the building erected thereon (the Marvin Plaza). On the contract, it was stipulated that the Bank reserves the right to increase the interest rate within the limits allowed by law at any time depending on whatever policy it may adopt in the future; provided, that the interest rate on this/these accommodations shall be correspondingly decreased in the event that the applicable maximum interest rate is reduced by law or by the Monetary Board. In either case, the adjustment in the interest rate agreed upon shall take effect on the effectivity date of the increase or decrease of the maximum interest rate. Petitioners made partial payments on the loan totaling. P7,735,004.66. On March 31, 1984, PNB raised the interest rate to 28%. It was thereupon increased from an initial 21% to a high of 68% between March of 1984 to September, 1986. Petitioner protested the increase in interest rates. Before the loan was to mature in March, 1988, the spouses filed a petition for injunction and TRO with the RTC. The RTC issued a writ of preliminary injunction and supplemental preliminary writ of injunction Upon the posting of a counterbond by the PNB, the trial court dissolved the supplemental writ of preliminary injunction. PNB set a new date for the foreclosure sale of Marvin Plaza which was March 12, 1990. Prior to the scheduled date, however, petitioners tendered to respondent bank the amount of P40,142,518.00, consisting of the principal (P18,000,000.00) and accrued interest calculated at the originally stipulated rate of 21%. The PNB refused to accept the payment. Petitioners formally consigned the amount of P40,142,518.00 with the Regional Trial Court Case History: RTC issued a writ of preliminary injunction enjoining the foreclosure sale of Marvin Plaza CA - set aside the assailed orders and upheld PNBs right to foreclose the mortgaged property ISSUE:

WON PNB was authorized to raise its interest rates to as high as 68%, pursuant to the credit agreement's escalation clause, and in relation to Central Bank Circular No. 905 RATIO:

PNBs argument: Invoking the Law on Mandatory Foreclosure (Act 3135), the PNB countered by ordering the extrajudicial foreclosure of petitioner's mortgaged properties and scheduled an auction sale for March 14, 1989. RATIO:

The binding effect of any agreement between parties to a contract is premised on two settled principles: (1) that any obligation arising from contract has the force of law between the parties; and (2) that there must be mutuality between the parties based on their essential equality. Any contract which appears to be heavily weighed in favor of one of the parties so as to lead to an unconscionable result is void. Any stipulation regarding the validity or compliance of the contract which is left solely to the will of one of the parties, is likewise, invalid. PNB unilaterally altered the terms of its contract with petitioners by increasing the interest rates on the loan without the prior assent of the latter. In fact, the manner of agreement is itself explicitly stipulated by the Civil Code when it provides, in Article 1956 that "No interest shall be due unless it has been expressly stipulated in writing." What has been "stipulated in writing" from a perusal of interest rate provision of the credit agreement signed between the parties is that petitioners were bound merely to pay 21% interest, subject to a possible escalation or de-escalation, when 1) the circumstances warrant such escalation or de-escalation; 2) within the limits allowed by law; and 3) upon agreement. C.B. Circular No. 905 did not authorize the bank, or any lending institution for that matter, to progressively increase interest rates. Nothing in the said circular could possibly be read as granting respondent bank carte blanche authority to raise interest rates to levels which would either enslave its borrowers or lead to a hemorrhaging of their assets.

Because of the dispute regarding the interest rate increases, an issue which was never settled on merit in the courts below, the exact amount of petitioner's obligations could not be determined. Thus, the foreclosure provisions of P.D. 385 could be validly invoked by respondent only after settlement of the question involving the interest rate on the loan, and only after the spouses refused to meet their obligations following such determination. Furthermore, petitioners made a valid consignation of what they, in good faith and in compliance with the letter of the Credit Agreement, honestly believed to be the real amount of their remaining obligations with the respondent bank. The latter could not therefore claim that there was no honest-to-goodness attempt on the part of the spouse to settle their obligations.

Disposition: Reversed. Case remanded for further proceedings. CARPO vs. CHUA & DY NG, GR. Nos. 150773 & 153599, September 30, 2005

FACTS: Herein petitioner spouses David Carpo and Rechilda Carpo contracted a loan from Eleanor Chua and Elma Dy Ng for a certain sum of money payable within six (6) months with an interest rate of six percent (6%) per month secured by a mortgaged of the spouses Carpo of their residential house and lot. Petitioners failed to pay the loan upon demand. Consequently, the real estate mortgage was extrajudicially foreclosed, mortgaged property sold at a public auction, and the house and lot was awarded to respondents, who were the only bidders. Unable to exercise their right of redemption by petitioners, a certificate of sale was issued in the name

The credit agreement specifically requires that the increase be "within the limits allowed by law". The escalation clause of the credit agreement requires that the same be made "within the limits allowed by law," obviously referring specifically to legislative enactments not administrative circulars. Note that the phrase "limits imposed by law," refers only to the escalation clause. However, the same agreement allows reduction on the basis of law or the Monetary Board. Had the parties intended the word "law" to refer to both legislative enactments and administrative circulars and issuances, the agreement would not have gone as far as making a distinction between "law or the Monetary Board Circulars" in referring to mutually agreed upon reductions in interest rates.

of respondents. However, petitioners continued to occupy the said house and lot, thus respondents file a petition for writ of possession which was granted by the Trial Court. Petitioners filed a complaint for annulment of real estate mortgage and the consequent foreclosure proceedings claiming that the rate of interest stipulated in the principal loan agreement is clearly null and void for being excessive, iniquitous, unconscionable and exorbitant. Consequently, they also argue that the nullity of the agreed interest rate affects the validity of the real estate mortgage.

ISSUE: WON PNB is granted the authority to foreclose the Marvin Plaza under the mandatory foreclosure provisions of P.D. 385

ISSUE: Whether or not the agreed rate of interest of 6% per month or 72% per annum is so excessive, iniquitous, unconscionable and exorbitant that it should have been declared null and void.

is void (Garcia vs. Rita Legarda, Inc., 21 SCRA 555). Hence, even assuming that the loan agreement between the PNB and the private respondent gave the PNB a license (although in fact there was none) to increase the interest rate at will during the term of the loan, that license would have been null and void for being violative of the principle of mutuality essential in

HELD: In a long line of cases, the Supreme Court has invalidated similar stipulations on interest rates for being excessive, iniquitous, unconscionable and exorbitant. Pursuant to the freedom of contract principle embodied in Article 1306 of the Civil Code, contracting parties 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. In the ordinary course, the codal provision may be invoked to annul the excessive stipulated interest. In the case at bar, the stipulated interest rate is 6% per month, or 72% per annum. By the standards set by jurisprudence, this stipulation is similarly invalid.

contracts. It would have invested the loan agreement with the character of a contract of adhesion, where the parties do not bargain on equal footing, the weaker party's (the debtor) participation being reduced to the alternative "to take it or leave it" (Qua vs. Law Union & Rock Insurance Co., 95 Phil. 85). Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition

BPI vs. Intermediate Appellate Court GR# L-66826, August 19, 1988 CORTES, J: Facts: Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings account and a peso current account. An application for a dollar drat was accomplished by Virgillo Garcia branch manager of COMTRUST payable to a certain Leovigilda Dizon. In the PPLICtion, Garcia indicated that the amount was to be charged to the dolar savings account of the Zshornacks. There wasa no indication of the name of the purchaser of the dollar draft. Comtrust issued a check payable to the order of Dizon. When Zshornack noticed the withdrawal from his account, he demanded an explainaiton from the bank. In its answer, Comtrust claimed that the peso value of the withdrawal was given to Atty. Ernesto Zshornack, brother of Rizaldy. When he encashed with COMTRUST a cashiers check for P8450 issued by the manila banking corporation payable to Ernesto. Issue: Whether the contract between petitioner and respondent bank is a deposit? Held: The document which embodies the contract states that the US$3,000.00 was received by the bank for safekeeping. The subsequent acts of the parties also show that the intent of the parties was really for the bank to safely keep the dollars and to return it to Zshornack at a later time. Thus, Zshornack demanded the return of the money on May 10, 1976, or over five months later. The above arrangement is that contract defined under Article 1962, New Civil Code, which reads: Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract.

UCPB v. Spouses Beluso The UCPB granted the spouses Beluso a Promissory Note Line under a Credit Agreement. The spouses Beluso constituted other than their promissory notes, a real estate mortgage over parcels of land as additional security for the obligation. UCPB unilaterally applied interest rates on the different promissory notes ranging from 18% to 34%: FOR VALUE RECEIVED, I, and/or We, on or before due date, SPS. SAMUEL AND ODETTE BELUSO (BORROWER), jointly and severally promise to pay to UNITED COCONUT PLANTERS BANK (LENDER) or order at UCPB Bldg., Makati Avenue, Makati City, Philippines, the sum of ______________ PESOS, (P_____), Philippine Currency, with interest thereon at the rate indicative of DBD retail rate or as determined by the Branch Head. The spouses, however, failed to pay their obligations with the bank. Due to this, the bank foreclosed the property which was under mortgage. Spouses Beluso filed a petition for the annulment, accounting and damages against UCPB. Issue: Is UCPB authorized to unilaterally fix the interest rates? Ruling: No! A promissory note which grants the creditor the power to unilaterally fix the interest rate means that the promissory note does not contain a clear statement in writing of the finance charge. Such provision is illegal because it violates the provisions of the Civil Code on mutuality of contracts Ratio: Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. We applied this provision in Philippine National Bank v. Court of Appeals, where we held: In order that obligations arising from contracts may have the force of law between the parties, there must be mutuality between the parties based on their essential equality. A contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties,

CA-Agro Industrial Devt Corp vs CA 219 SCRA 426 Facts:

On July 3, 1979, petitioner (through its President- Sergio Aguirre) and the Spouses Ramon and Paula Pugao entered into an agreement whereby the former purchase two parcel of lands from the latter. It was paid of downpayment while the balance was covered by there postdated checks. Among the terms and conditions embodied in the agreement were the titles shall be transferred to the petitioner upon full payment of the price and the owner's copies of the certificate of titles shall be deposited in a safety deposit box of any bank. Petitioner and the Pugaos then rented Safety Deposit box of private respondent Security Bank and Trust Company. Thereafter, a certain Margarita Ramos offered to buy from the petitioner. Mrs Ramos demand the execution of a deed of sale which necessarily entailed the production of the certificate of titles. In view thereof, Aguirre, accompanied by the Pugaos, then proceed to the respondent Bank to open the safety deposit box and get the certificate of titles. However, when opened in the presence of the Bank's representative, the box yielded no such certificate. Because of the delay in the reconstitution of the title, Mrs Ramos withdrew her earlier offer to purchase. Hence this petition. Issue: Whether or not the contract of rent between a commercial bank and another party for the use of safety deposit box can be considered alike to a lessor-lessee relationship. Ruling: The petitioner is correct in making the contention that the contract for the rent of the deposit box is not a ordinary contract of lease as defined in Article 1643 of the Civil Code. However, the Court do not really subscribe to its view that the same is a contract of deposit that is to be strictly governed by the provisions in 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. The Court further assailed that the petitioner is correct in applying American Jurisprudence. Herein, the prevailing view is that the relation between the a bank renting out safe deposits 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 benefits. That prevailing rule has been adopted in Section 72 of the General Banking Act. Section 72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions other that building and loan associations may perform the following services:

(a) Receive in custody funds, document and valuable objects and rents safety deposits taxes for the safeguard of such effects. xxx xxx xxx The bank shall perform the services permitted under subsections (a) (b) and (c) of this section as depositories or as agents. Triple v vs. Filipino merchants Food chain owner Triple-V Food Services, Inc. was recently found liable for the loss of a car entrusted to the valet parking service of one of its restaurants. In a seven-page resolution, the Supreme Courts Third Division denied due course to TripleVs petition and held it responsible for the loss of a Mitsubishi Galant car deposited by one Mary Jo-Anne De Asis with the valet parking service of Kamayan restaurant on West Avenue, Quezon City.

The Court said Triple-V cannot evade liability by claiming that availing of its free valet parking service did not give rise to a contract of deposit or insurance for the safety of the car. When De Asis entrusted the car to the restaurants valet attendant, she expected the cars safe return at the end of her meal. Thus, petitioner was constituted as a depositary of the same car, the Court said. The Court brushed aside Triple-Vs claim that under the terms of the valet parking claim stub, the restaurant was relieved from responsibility for any loss or damage to the vehicle and that by availing of the service, De Asis had waived her right to claim indemnity. The Court pointed out that the parking claim stub was a contract of adhesion prepared by the company with no participation from customers, who merely adhered to the stipulations. Triple-V could not be allowed to use this stipulation as a shield from liability, it said. The Court added, [w]hile 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. The Court also said that the free valet service was part of the restaurants enticement for customers since it assured them that their vehicles would be safely kept within the restaurants vicinity, rather than parked elsewhere at their own risk. Having then entrusted the car to Triple-Vs valet attendant, De Asis, like all of the restaurants customers, fully expected the

security of her car while in the designated parking area and its safe return at the end of her visit, the Court stressed.

G.R. NO. L-30511.

FEBRUARY 14, 1980

I. The controversy stemmed from a case for damages filed with the Makati Regional Trial Court by the Filipino Merchants Insurance Company, Inc. against Triple-V. FMICI filed the suit after it paid the car insurance claims of Crispa Textile, Inc., owner of the vehicle and De Asis employer. The trial court ruled in FMICIs favor, which ruling was affirmed by the Court of Appeals. (GR No. 160544, Triple-V Food Services, Inc. v. Filipino Merchants Insurance Company, Inc., February 21, 2005) Sia v. Court of Appeals, 222 SCRA 24 (1993) FACTS: -Luaon Sia rented a Safety Deposit Box with Security Bank and Trust Company, wherein he placed his stamps collection, pursuant to Lease Agreement. -During the floods that took place in 1985 1nd 1986, floodwater entered into the banks premises and seeped into the safety deposit box causing damage to the stamp collection. -SBTC rejected Sias claim for compensation. -Hence, Sia instituted an action for damages. TC: -In favor of Sia, holding that SBTC failed to exercise the required diligence expected of a bank maintaining such safety deposit bank. CA: -Reversed and dismissed the complaint holding that the LEASE AGREEMENT covering the the safety deposit bank is just a contract of lease, not a contract of deposit, and that paragraphs 9 and 13 thereof, expressly limited the banks liability to the exercise of the diligence to prevent the opening of the safe by any person other than the renter, his authorized agent or legal representative; and that the bank not being depository of the contents of the safe has neither the possession nor the control of the same nor interest what so ever in the contents and thus assumes no liability in connection therewith. HELD: -A bank is liable for the damages to a stamp collection deposited in a safety deposit box caused by its failure to notify the depositor to retrieve the stamps promptly when the floodwater inundated the room where the safety deposit was located, because it is a depository and the stipulation that it is not a depository and is not liable for the contents of the safety deposit box is void for being contrary to law and public policy. SERRANO V. CENTRAL BANK OF THE PHILIPPINES IV. III. II.

PARTIES Petitioner Manuel Serrrano Respondents- Central Bank of the Philippines Overseas Bank of Manila and its Stockholders

PRIOR PROCEEDINGS Court of First Instance Supreme Court THEORIES OF THE PARTIES Petitioner: The petitioner claimed to establish joint and solidary liability to the amount of Php350,000.00 with interest against respondent and its stockholders on the failure to return the time deposits on the ground that the respondent Central Bank failed in its duty to exercise strict supervision over Overseas Bank of Manila to protect depositors and general public. Respondent: Central Bank claimed that it is not guarantor of the permanent solvency of an banking institution. Central Bank denied that a constructive trust was created in favor of the petitioner and his predecessor in interest Concepcion Maneja when their time deposits were made with Overseas Bank of Manila. OBJECTIVES OF THE PARTY Petitioner: The petitioner sought to recover time deposits with an amount of Php350,000.00 including interests due therein from respondent Overseas Bank of Manila and recovery of damages against respondent Central Bank by virtue of constructive trust. Respondent: The respondent sought to be relieved in paying damages due to the petitioners claim as during that time Overseas Bank of Manila was not an insolvent bank.

V.

KEY FACTS Manuel Serrano made a time deposit, for one year with 6% interest of One Hundred Fifty Thousand Pesos with the Respondent Overseas Bank of Manila. Concepcion Maneja also made a time deposit, for one year with 6-1/2 % interest, of Two Hundred Thousand Pesos on the same respondent Overseas Bank of Manila. Concepcion MAneja, then married, assigned and conveyed to petitioner Manuel Serrano, her time deposit of Php200,000.00. Notwithstanding series of demands for encashment of the aforementioned time deposit from the respondent Overseas Bank of Manila, not a single one of the time deposit certificates was honored by respondent Overseas Bank of Manila. Respondent Central Bank dissolve and liquidated the Overseas Bank of Manila. The former denied that it is a guarantor of the permanent solvency of any banking institution as claimed by the petitioner.

Respondent Central Bank avers no knowledge of petitioners claim that the properties given by the respondent Overseas Bank of Manila as additional collaterals to the respondent Central Bank of the Philippines for the formers overdrafts and emergency loans were acquired from the depositors money including the time deposits of the petitioner. Hence, this petition. VI. ISSUE Whether or not the respondents are jointly and solidary liable for damages due to breach of trust. VII. HOLDINGS. The Court held that both respondent banks was not given preliminary injunction with respect to the acts of the respondent Central Bank. VIII. RATIO DECIDENDI Both parties overlooked the fundamental principle in the nature of bank deposits when the petitioner claimed that there should be created a constructive trust in his favor when the respondent Overseas Bank of Manila increased the collaterals in favor of the respondent Central Bank of the Philippines for the formers overdrafts and emergency loans, since these collaterals were acquired by the use of depositors money. Bank deposits are in nature of irregular deposits. They are really loans because they earn interest. All kinds of bank deposits, whether fixed, savings or current are to be treated as loans and are to be covered by the loans. Current and savings deposits are loans to a bank because it can use the same. The petitioner here in the making time deposits that earn interests with respondent Overseas Bank of Manila was in reality a creditor of the respondent bank and not a depositor. The respondent bank was in turn a debtor of petitioner. Failure of the respondent bank to honor the time deposit is failure to pay obligation as a debtor and not a breach of trust arising from depositorys failure to return the subject matter of the deposit. DISPOSITION The petition is dismissed for lack of merit, with costs against the petitioner.

Eventually, he confronted Lainez and Paiyam who admitted that Tan opened the safety deposit box with the key assigned to him. McLoughlin went up to his room where Tan was staying and confronted her. Tan admitted that she had stolen McLouglins key and was able to open the safety deposit box with the assistance of Lopez, Paiyam and Lainez. Lopez alsto told McLoughlin that Tan stole the key assigned to McLouglin while the latter was asleep. McLoughlin insisted that it must be the hotel who must assume responsibility for the loss he suffered. Lopez refused to accept responsibility relying on the conditions for renting the safety deposit box entitled Undertaking For the Use of Safety Deposit Box

ISSUE: Whether the hotels Undertaking is valid? HELD: NO Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to apply to situations such as that presented in this case. The hotel business like the common carriers 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 (De Los Santos v. Tan Khey), CA ruled that to hold hotelkeepers or innkeeper 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 guests knowledge and consent from a safety deposit box provided by the hotel itself, as in this case. Paragraphs (2) and (4) of the undertaking manifestly contravene Article 2003, CC for they allow Tropicana to be released from liability arising from any loss in the contents and/or use 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. Philippine National Bank v. Noahs Ark Sugar Refinery, 226 SCRA 36 (1993)

IX.

FACTS: YHT Realty v. CA FACTS: Respondent McLoughlin would stay at Tropicana Hotel every time he is here in the Philippines and would rent a safety deposit box. The safety deposit box 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. McLoughlin allegedly placed the following in his safety deposit box 2 envelopes containing US Dollars, one envelope containing Australian Dollars, Letters, credit cards, bankbooks and a checkbook. When he went abroad, a few dollars were missing and the jewelry he bought was likewise missing. -Noahs Ark issued negotiable warehouse receipts.

Two of the warehouse receipts were negotiated and endorsed to Ramos and the other two to Zoleta. The endorsees used the quedans as security for loans obtained by them from the PNB and the quedans were subsequently endorsed to the bank.

-Failure of payment prompted PNB to demand delivery of the sugar covered by the receipts, but Noahs Ark refused to comply so PNB filed an action for specific performance but denied by the court.

-Noahs Ark filed before the trial court an Omnibus Motion seeking deferment of the proceedings until it is heard on its claim for warehousemans lien. On the other hand, PNB filed a motion for issuance of writ of execution.

-CA reversed.

-Trial Court granted the Omnibus motion and set the reception of evidence on their claim for warehousemans lien. Motion for execution was deferred until determination of respondents

ISSUE: -If the warehouse man was not paid for the warehouse receipt, may the negotiation of the warehouse receipt be valid?

claim. -The trial court issued an order finding that there exists a warehousemans lien and execution of judgment is stayed and/or precluded until the full amount of the full amount of the defendants lien on the sugar stocks shall be satisfied. Noahs Ark submits that they could not have claimed their right to warehousemans lien in the prior case since it could be inconsistent with their claim of ownership.

HELD: - The validity of the negotiation by RNS Merchandising and St. Therese Merchandising to Ramos and Zoleta, and by the latter to PNB to secure a loan cannot be impaired by the fact that the negotiation between Noah's Ark and RNS Merchandising and St. Therese Merchandising was in breach of faith on the part of the merchandising firms or by the fact that the owner (Noah's Ark) was deprived of the possession of the same by fraud, mistake or conversion of the person to whom the warehouse receipt/quedan was subsequently negotiated if (PNB) paid value therefor in good faith without notice of such breach of duty, fraud, mistake or conversion. And the creditor (PNB) whose debtor was the owner of the negotiable document of title (warehouse receipt) shall be entitled to such aid from the court of appropriate jurisdiction attaching such document or in satisfying the claim by means as is allowed by law or in equity in regard to property which cannot be readily attached or levied upon by ordinary process.

ISSUE: - Should the writ of execution be stayed until full amount of lien be satisfied.

HELD: -In PNB v. Noahs Ark Suagr refinery the Supreme Court ruled that PNB is entitled to the stocks of sugar as the endorsee of the quedans. In this case, the Supreme Court clarified that while the PNB is entitled to the stocks of sugar as the endorsee of the quedans, delivery to it shall be effected only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by

-If the quedans were negotiable in form and duly indorsed to PNB (the creditor), the delivery of the quedans to PNB makes the PNB the owner of the property covered by said quedans and on deposit with Noah's Ark, the warehouseman.

surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien, because a warehousemans lien is possessory in nature.

4. Philippine National Bank v. Se Jr., 256 SCRA 380 (1996)

FACTS: -In PNB vs. Noahs Ark, SC ordered Noahs Ark to deliver to PNB the sugar covered by the warehouse receipts. Noahs Ark filed a MR and motion seeking clarification of the decision but SC denied both motions.