G.R. No. L-66826 August 19, 1988
Ordering defendant COMTRUST to return to the
BANK OF THE PHILIPPINE ISLANDS, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT and
ZSHORNACK respondents.
Pacis & Reyes Law Office for petitioner.
Ernesto T. Zshornack, Jr. for private respondent.
CORTES, J.:
The original parties to this case were Rizaldy T. Zshornack and the
Commercial Bank and Trust Company of the Philippines [hereafter
referred to as "COMTRUST."] In 1980, the Bank of the Philippine
Islands (hereafter referred to as BPI absorbed COMTRUST through
a corporate merger, and was substituted as party to the case.
Rizaldy Zshornack initiated proceedings on June 28,1976 by filing in
the Court of First Instance of Rizal — Caloocan City a complaint
against COMTRUST alleging four causes of action. Except for the
third cause of action, the CFI ruled in favor of Zshornack. The bank
appealed to the Intermediate Appellate Court which modified the CFI
decision absolving the bank from liability on the fourth cause of
action. The pertinent portions of the judgment, as modified, read:
IN VIEW OF THE FOREGOING, the Court renders
judgment as follows:
1. Ordering the defendant COMTRUST to restore to
the dollar savings account of plaintiff (No. 25-4109)
the amount of U.S $1,000.00 as of October 27, 1975
to earn interest together with the remaining balance
of the said account at the rate fixed by the bank for
dollar deposits under Central Bank Circular 343;
2.
plaintiff the amount of U.S. $3,000.00 immediately
upon the finality of this decision, without interest for
the reason that the said amount was merely held in
custody for safekeeping, but was not actually
deposited with the defendant COMTRUST because
being cash currency, it cannot by law be deposited
with plaintiffs dollar account and defendant's only
obligation is to return the same to plaintiff upon
demand;
xxx xxx xxx
5. Ordering defendant COMTRUST to pay plaintiff in
the amount of P8,000.00 as damages in the concept
of litigation expenses and attorney's fees suffered by
plaintiff as a result of the failure of the defendant
bank to restore to his (plaintiffs) account the amount
of U.S. $1,000.00 and to return to him (plaintiff) the
U.S. $3,000.00 cash left for safekeeping.
Costs against defendant COMTRUST.
SO ORDERED. [Rollo, pp. 47-48.]
Undaunted, the bank comes to this Court praying that it be totally
absolved from any liability to Zshornack. The latter not having
appealed the Court of Appeals decision, the issues facing this Court
are limited to the bank's liability with regard to the first and second
causes of action and its liability for damages.
1. We first consider the first cause of action, On the dates material to
this case, Rizaldy Zshornack and his wife, Shirley Gorospe,
maintained in COMTRUST, Quezon City Branch, a dollar savings
account and a peso current account.
On October 27, 1975, an application for a dollar draft was
accomplished by Virgilio V. Garcia, Assistant Branch Manager of
COMTRUST Quezon City, payable to a certain Leovigilda D. Dizon
in the amount of $1,000.00. In the application, Garcia indicated that
the amount was to be charged to Dollar Savings Acct. No. 25-4109,
the savings account of the Zshornacks; the charges for commission,
documentary stamp tax and others totalling P17.46 were to be
charged to Current Acct. No. 210465-29, again, the current account
of the Zshornacks. There was no indication of the name of the
purchaser of the dollar draft.
On the same date, October 27,1975, COMTRUST, under the
signature of Virgilio V. Garcia, issued a check payable to the order of
Leovigilda D. Dizon in the sum of US $1,000 drawn on the Chase
Manhattan Bank, New York, with an indication that it was to be
charged to Dollar Savings Acct. No. 25-4109.
When Zshornack noticed the withdrawal of US$1,000.00 from his
account, he demanded an explanation from the bank. In answer,
COMTRUST claimed that the peso value of the withdrawal was
given to Atty. Ernesto Zshornack, Jr., brother of Rizaldy, on October
27, 1975 when he (Ernesto) encashed with COMTRUST a cashier's
check for P8,450.00 issued by the Manila Banking Corporation
payable to Ernesto.
Upon consideration of the foregoing facts, this Court finds no reason
to disturb the ruling of both the trial court and the Appellate Court on
the first cause of action. Petitioner must be held liable for the
unauthorized withdrawal of US$1,000.00 from private respondent's
dollar account.
In its desperate attempt to justify its act of withdrawing from its
depositor's savings account, the bank has adopted inconsistent
theories. First, it still maintains that the peso value of the amount
withdrawn was given to Atty. Ernesto Zshornack, Jr. when the latter
encashed the Manilabank Cashier's Check. At the same time, the
bank claims that the withdrawal was made pursuant to an agreement
where Zshornack allegedly authorized the bank to withdraw from his
dollar savings account such amount which, when converted to
pesos, would be needed to fund his peso current account. If indeed
the peso equivalent of the amount withdrawn from the dollar account
was credited to the peso current account, why did the bank still have
to pay Ernesto?
At any rate, both explanations are unavailing. With regard to the first
explanation, petitioner bank has not shown how the transaction
involving the cashier's check is related to the transaction involving
the dollar draft in favor of Dizon financed by the withdrawal from
Rizaldy's dollar account. The two transactions appear entirely
independent of each other. Moreover, Ernesto Zshornack, Jr.,
possesses a personality distinct and separate from Rizaldy
Zshornack. Payment made to Ernesto cannot be considered
payment to Rizaldy.
As to the second explanation, even if we assume that there was
such an agreement, the evidence do not show that the withdrawal
was made pursuant to it. Instead, the record reveals that the amount
withdrawn was used to finance a dollar draft in favor of Leovigilda D.
Dizon, and not to fund the current account of the Zshornacks. There
is no proof whatsoever that peso Current Account No. 210-465-29
was ever credited with the peso equivalent of the US$1,000.00
withdrawn on October 27, 1975 from Dollar Savings Account No. 25-
4109.
2. As for the second cause of action, the complaint filed with the trial
court alleged that on December 8, 1975, Zshornack entrusted to
COMTRUST, thru Garcia, US $3,000.00 cash (popularly known as
greenbacks) for safekeeping, and that the agreement was embodied
in a document, a copy of which was attached to and made part of the
complaint. The document reads:
Makati Cable Address:
Philippines "COMTRUST"
COMMERCIAL BANK AND TRUST COMPANY
of the Philippines
Quezon City Branch
MR. RIZALDY T. ZSHORNACK
&/OR MRS SHIRLEY E. ZSHORNACK
Sir/Madam:
We acknowledged (sic) having
received from you today the sum of
US DOLLARS: THREE THOUSAND
ONLY (US$3,000.00) for
safekeeping.
It was also alleged in the complaint that despite demands, the bank
refused to return the money.
D
In its answer, COMTRUST averred that e the US$3,000 was credited
to Zshornack's peso current account cat prevailing conversion rates.
e
It must be emphasized that COMTRUST m did not deny specifically
b
under oath the authenticity and due execution of the above
instrument. e
r
During trial, it was established that on December 8, 1975 Zshornack
8
indeed delivered to the bank US $3,000 for safekeeping. When he
requested the return of the money on, May 10, 1976, COMTRUST
explained that the sum was disposed of in this manner: US$2,000.00
1
was sold on December 29, 1975 and the peso proceeds amounting
9
to P14,920.00 were deposited to Zshornack's current account per
7
deposit slip accomplished by Garcia; the remaining US$1,000.00
5
was sold on February 3, 1976 and the peso proceeds amounting to
P8,350.00 were deposited to his current account per deposit slip also
accomplished by Garcia.
Aside from asserting that the US$3,000.00 was properly credited to
Zshornack's current account at prevailing conversion rates, BPI now
posits another ground to defeat private respondent's claim. It now
argues that the contract embodied in the document is the contract of
depositum (as defined in Article 1962, New Civil Code), which banks
do not enter into. The bank alleges that Garcia exceeded his powers
when he entered into the transaction. Hence, it is claimed, the bank
cannot be liable under the contract, and the obligation is purely
personal to Garcia.
Before we go into theRnature of the contract entered into, an
important point whiche arises on the pleadings, must be considered.
c
The second cause ofeaction is based on a document purporting to be
signed by COMTRUST, R a copy of which document was attached to
the complaint. In short,
A the second cause of action was based on an
actionable document. It was therefore incumbent upon the bank to
specifically deny under oath the due execution of the document, as
prescribed under Rule 8, Section 8, if it desired: (1) to question the
authority of Garcia to bind the corporation; and (2) to deny its
capacity to enter into such contract. [See, E.B. Merchant v.
International Banking Corporation, 6 Phil. 314 (1906).] No sworn
answer denying the due execution of the document in question, or
questioning the authority of Garcia to bind the bank, or denying the
bank's capacity to enter into the contract, was ever filed. Hence, the
bank is deemed to have admitted not only Garcia's authority, but also
the bank's power, to enter into the contract in question.
In the past, this Court had occasion to explain the reason behind this
procedural requirement.
The reason for the rule enunciated in the foregoing
authorities will, we think, be readily appreciated. In
dealing with corporations the public at large is bound
to rely to a large extent upon outward appearances.
If a man is found acting for a corporation with the
external indicia of authority, any person, not having
notice of want of authority, may usually rely upon
those appearances; and if it be found that the
directors had permitted the agent to exercise that
authority and thereby held him out as a person
competent to bind the corporation, or had
acquiesced in a contract and retained the benefit
supposed to have been conferred by it, the
corporation will be bound, notwithstanding the actual
authority may never have been granted
... Whether a particular officer actually possesses
the authority which he assumes to exercise is
frequently known to very few, and the proof of it
usually is not readily accessible to the stranger who
deals with the corporation on the faith of the
ostensible authority exercised by some of the
corporate officers. It is therefore reasonable, in a
case where an officer of a corporation has made a
contract in its name, that the corporation should be
required, if it denies his authority, to state such
defense in its answer. By this means the plaintiff is
apprised of the fact that the agent's authority is
contested; and he is given an opportunity to adduce
evidence showing either that the authority existed or
that the contract was ratified and approved.
[Ramirez v. Orientalist Co. and Fernandez, 38 Phil.
634, 645- 646 (1918).]
Petitioner's argument must also be rejected for another reason. The
practical effect of absolving a corporation from liability every time an
officer enters into a contract which is beyond corporate powers, even
without the proper allegation or proof that the corporation has not
authorized nor ratified the officer's act, is to cast corporations in so
perfect a mold that transgressions and wrongs by such artificial
beings become impossible [Bissell v. Michigan Southern and N.I.R.
Cos 22 N.Y 258 (1860).] "To say that a corporation has no right to do
unauthorized acts is only to put forth a very plain truism but to say
that such bodies have no power or capacity to err is to impute to
them an excellence which does not belong to any created existence
with which we are acquainted. The distinction between power and
right is no more to be lost sight of in respect to artificial than in
respect to natural persons." [Ibid.]
Having determined that Garcia's act of entering into the contract
binds the corporation, we now determine the correct nature of the
contract, and its legal consequences, including its enforceability.
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 to any person, firm, partnership,
not the principal purpose of the contract, there is no association, branch office, agency,
deposit but some other contract. company or other unincorporated
body or corporation residing or
Note that the object of the contract between Zshornack and located within the Philippines;
COMTRUST was foreign exchange. Hence, the transaction was
covered by Central Bank Circular No. 20, Restrictions on Gold and (b) Any and all assets of the kinds
Foreign Exchange Transactions, promulgated on December 9, 1949, included and/or described in
which was in force at the time the parties entered into the transaction subparagraph (a) above, whether or
involved in this case. The circular provides: not held through, in, or with banks or
banking institutions, and existent
xxx xxx xxx within the Philippines, which belong
to any person, firm, partnership,
2. Transactions in the assets described below and association, branch office, agency,
company or other unincorporated
all dealings in them of whatever nature, including,
body or corporation not residing or
where applicable their exportation and
importation, shall NOT be effected, except with located within the Philippines;
respect to deposit accounts included in sub-
paragraphs (b) and (c) of this paragraph, when such (c) Any and all assets existent within
deposit accounts are owned by and in the name of, the Philippines including money,
banks. checks, drafts, bullions, bank drafts,
all debts, indebtedness or
obligations, financial securities
(a) Any and all assets, provided they
are held through, in, or with banks commonly dealt in by bankers,
brokers and investment houses,
or banking institutions located in the
Philippines, including money, notes, debentures, stock, bonds,
coupons, bank acceptances,
checks, drafts, bullions bank drafts,
mortgages, pledges, liens or other
deposit accounts (demand, time and
savings), all debts, indebtedness or rights in the nature of security
obligations, financial brokers and expressed in foreign currencies, or if
payable abroad, irrespective of the
investment houses, notes,
currency in which they are
debentures, stocks, bonds,
expressed, and belonging to any
coupons, bank acceptances,
person, firm, partnership,
mortgages, pledges, liens or other
rights in the nature of association, branch office, agency,
security, expressed in foreign company or other unincorporated
currencies, or if payable abroad, body or corporation residing or
located within the Philippines.
irrespective of the currency in which
they are expressed, and belonging
xxx xxx xxx
 4. (a) All receipts of foreign exchange shall be sold
daily to the Central Bank by those authorized to deal
in foreign exchange. All receipts of foreign exchange
by any person, firm, partnership, association, branch
office, agency, company or other unincorporated
body or corporation shall be sold to the authorized
agents of the Central Bank by the recipients within
one business day following the receipt of such
foreign exchange. Any person, firm, partnership,
association, branch office, agency, company or
other unincorporated body or corporation, residing or
located within the Philippines, who acquires on and
after the date of this Circular foreign exchange shall
not, unless licensed by the Central Bank, dispose of
such foreign exchange in whole or in part, nor
receive less than its full value, nor delay taking
ownership thereof except as such delay is
customary; Provided, further, That within one day
upon taking ownership, or receiving payment, of
foreign exchange the aforementioned persons and
entities shall sell such foreign exchange to
designated agents of the Central Bank.
xxx xxx xxx
8. Strict observance of the provisions of this Circular
is enjoined; and any person, firm or corporation,
foreign or domestic, who being bound to the
observance thereof, or of such other rules,
regulations or directives as may hereafter be issued
in implementation of this Circular, shall fail or refuse
to comply with, or abide by, or shall violate the
same, shall be subject to the penal sanctions
provided in the Central Bank Act.
xxx xxx xxx
Paragraph 4 (a) above was modified by Section 6 of Central Bank
Circular No. 281, Regulations on Foreign Exchange, promulgated on
November 26, 1969 by limiting its coverage to Philippine residents
only. Section 6 provides:
SEC. 6. All receipts of foreign exchange by
any resident person, firm, company or corporation
shall be sold to authorized agents of the Central
Bank by the recipients within one business day
following the receipt of such foreign exchange.
Any resident person, firm, company or
corporation residing or located within the Philippines,
who acquires foreign exchange shall not, unless
authorized by the Central Bank, dispose of such
foreign exchange in whole or in part, nor receive
less than its full value, nor delay taking ownership
thereof except as such delay is customary;
Provided, That, within one business day upon taking
ownership or receiving payment of foreign exchange
the aforementioned persons and entities shall sell
such foreign exchange to the authorized agents of
the Central Bank.
As earlier stated, the document and the subsequent acts of the
parties show that they intended the bank to safekeep the foreign
exchange, and return it later to Zshornack, who alleged in his
complaint that he is a Philippine resident. The parties did not
intended to sell the US dollars to the Central Bank within one
business day from receipt. Otherwise, the contract
of depositum would never have been entered into at all.
Since the mere safekeeping of the greenbacks, without selling them
to the Central Bank within one business day from receipt, is a
transaction which is not authorized by CB Circular No. 20, it must be
considered as one which falls under the general class of prohibited
transactions. Hence, pursuant to Article 5 of the Civil Code, it is void,
having been executed against the provisions of a
mandatory/prohibitory law. More importantly, it affords neither of the
parties a cause of action against the other. "When the nullity
proceeds from the illegality of the cause or object of the contract, and
the act constitutes a criminal offense, both parties being in pari
delicto, they shall have no cause of action against each other. . ."
[Art. 1411, New Civil Code.] The only remedy is one on behalf of the
State to prosecute the parties for violating the law.
We thus rule that Zshornack cannot recover under the second cause
of action.
3. Lastly, we find the P8,000.00 awarded by the courts a quo as
damages in the concept of litigation expenses and attorney's fees to
be reasonable. The award is sustained.
WHEREFORE, the decision appealed from is hereby MODIFIED.
Petitioner is ordered to restore to the dollar savings account of
private respondent the amount of US$1,000.00 as of October 27,
1975 to earn interest at the rate fixed by the bank for dollar savings
deposits. Petitioner is further ordered to pay private respondent the
amount of P8,000.00 as damages. The other causes of action of
private respondent are ordered dismissed.
SO ORDERED.
[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]cralaw dated October 21, 2003 of the Court of Appeals in
CA-G.R. 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]cralaw the Court of Appeals
dismissed petitioner's appeal and affirmed the appealed 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]cralaw A deposit may be constituted even without any
consideration. It is not necessary that the depositary 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]cralaw On the
basis of such item, the trial court concluded that the 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]cralaw Thus, having 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]cralaw This is not so in the
case at bar. For, we have 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.
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 complaint2 for damages against the respondent
Bank with the Court of First Instance (now Regional Trial Court) of
Pasig, Metro Manila which docketed the same as Civil Case No.
38382.
In its Answer with Counterclaim,3 respondent Bank alleged that the
petitioner has no cause of action because of 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
decision5 adverse to the petitioner on 8 December 1986, the
dispositive portion of which reads:
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 reconsideration7 having been denied, petitioner
appealed from the adverse decision to the respondent 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 1989,9 respondent Court
affirmed the appealed decision principally on the 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 10 which provides:
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 11 — which held that the
owner of the property loses his control over the 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." 12 The 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 14 having been denied in the
respondent Court's Resolution of 28 August 1989, 15petitioner took
this recourse under Rule 45 of the Rules of Court and urges Us to
review and set aside the 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. 16 Accordingly, it is claimed that the respondent Bank is
liable for the loss of the certificates of title 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 17 which is supposed to expound on the
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 18 which states that
a contract for the rental of a bank safety deposit 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; 19 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.
Hence, the authorities cited by the respondent Court 20 on this point
do not apply. Neither could Article 1975, also 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. 21 This is just the prevailing view because:
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. 22 (citations
omitted)
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 23pertinently provides:
 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. . . . 24 (emphasis
supplied)
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 25 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. 26 In the absence of any stipulation prescribing the
degree of diligence required, that of a good father of a family is to be
observed. 27 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. 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 use of such key and the Bank's own guard key, could open the said
provide for increasing or limiting the liability of the box, without the other renter being present.
deposit company, provided such contract is not in
violation of law or public policy. It must clearly Since, however, the petitioner cannot be blamed for the filing of the
appear that there actually was such a special complaint and no bad faith on its part had been established, the trial
contract, however, in order to vary the ordinary court erred in condemning the petitioner to pay the respondent Bank
obligations implied by law from the relationship of attorney's fees. To this extent, the Decision (dispositive portion) of
the parties; liability of the deposit company will not public respondent Court of Appeals must be modified.
be enlarged or restricted by words of doubtful
meaning. The company, in renting
WHEREFORE, the Petition for Review is partially GRANTED by
safe-deposit boxes, cannot exempt itself from liability
deleting the award for attorney's fees from the 4 July 1989 Decision
for loss of the contents by its own fraud or
of the respondent Court of Appeals in CA-G.R. CV No. 15150. As
negligence or that of its agents or servants, and if a
modified, and subject to the pronouncement We made above on the
provision of the contract may be construed as an nature of the relationship between the parties in a contract of lease
attempt to do so, it will be held ineffective for the of safety deposit boxes, the dispositive portion of the said Decision is
purpose. Although it has been held that the lessor of
hereby AFFIRMED and the instant Petition for Review is otherwise
a safe-deposit box cannot limit its liability for loss of
DENIED for lack of merit.
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 No pronouncement as to costs.
stipulation. 30 (citations omitted)
SO ORDERED.
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
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.
YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA
PAYAM, petitioners, vs. THE COURT OF APPEALS and
MAURICE McLOUGHLIN, respondents.
DECISION
TINGA, J.:
The primary question of interest before this Court is the only
legal issue in the case: It is whether a hotel may 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.
Before this Court is a Rule 45 petition for review of
the Decision[1] dated 19 October 1995 of the Court of Appeals which
affirmed the Decision[2] dated 16 December 1991 of the Regional
Trial Court (RTC), Branch 13, of Manila, finding YHT Realty
Corporation, Brunhilda Mata-Tan (Tan), Erlinda Lainez (Lainez) and
Anicia Payam (Payam) jointly and solidarily liable for damages in an
action filed by Maurice McLoughlin (McLoughlin) for the loss of his
American and Australian dollars deposited in the safety deposit box
of Tropicana Copacabana Apartment Hotel, owned and operated by
YHT Realty Corporation.
The factual backdrop of the case follow.
Private respondent McLoughlin, an Australian businessman-
philanthropist, used to stay at Sheraton Hotel during his trips to the
Philippines prior to 1984 when he met Tan. Tan befriended
McLoughlin by showing him around, introducing him to important
people, accompanying him in visiting impoverished street children
and assisting him in buying gifts for the children and in distributing
the same to charitable institutions for poor children. Tan convinced
McLoughlin to transfer from Sheraton Hotel to Tropicana where
Lainez, Payam and Danilo Lopez were employed. Lopez served as
manager of the hotel while Lainez and Payam had custody of the
keys for the safety deposit boxes of Tropicana. Tan took care of
McLoughlins booking at the Tropicana where he started staying
during his trips to the Philippines from December 1984 to September
1987.[3]
On 30 October 1987, McLoughlin arrived from Australia and
registered with Tropicana. He rented a safety deposit box as it was
his practice to rent a safety deposit box every time he registered at
Tropicana in previous trips. As a tourist, McLoughlin was aware of
the procedure observed by Tropicana relative to its safety deposit
boxes. The safety deposit box could only be opened through the use
of two 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.[4]
McLoughlin allegedly placed the following in his safety deposit
box: Fifteen Thousand US Dollars (US$15,000.00) which he placed
in two envelopes, one envelope containing Ten Thousand US
Dollars (US$10,000.00) and the other envelope Five Thousand US
Dollars (US$5,000.00); Ten Thousand Australian Dollars
(AUS$10,000.00) which he also placed in another envelope; two (2)
other envelopes containing letters and credit cards; two (2)
bankbooks; and a checkbook, arranged side by side inside the safety
deposit box.[5]
On 12 December 1987, before leaving for a brief trip to
Hongkong, McLoughlin opened his safety deposit box with his key
and with the key of the management and took therefrom the
envelope containing Five Thousand US Dollars (US$5,000.00), the
envelope containing Ten Thousand Australian Dollars
(AUS$10,000.00), his passports and his credit cards. [6] McLoughlin
left the other items in the box as he did not check out of his room at
the Tropicana during his short visit to Hongkong. When he arrived in
Hongkong, he opened the envelope which contained Five Thousand
US Dollars (US$5,000.00) and discovered upon counting that only
Three Thousand US Dollars (US$3,000.00) were enclosed
therein.[7] Since he had no idea whether somebody else had
tampered with his safety deposit box, he thought that it was just a
result of bad accounting since he did not spend anything from that
envelope.[8]
After returning to Manila, he checked out of Tropicana on 18
December 1987 and left for Australia. When he arrived in Australia,
he discovered that the envelope with Ten Thousand US Dollars
(US$10,000.00) was short of Five Thousand US Dollars (US$5,000).
He also noticed that the jewelry which he bought in Hongkong and
stored in the safety deposit box upon his return to Tropicana was
likewise missing, except for a diamond bracelet.[9]
When McLoughlin came back to the Philippines on 4 April 1988,
he asked Lainez if some money and/or jewelry which he had lost
were found and returned to her or to the management. However,
Lainez told him that no one in the hotel found such things and none
were turned over to the management. He again registered at
Tropicana and rented a safety deposit box. He placed therein one (1)
envelope containing Fifteen Thousand US Dollars (US$15,000.00),
another envelope containing Ten Thousand Australian Dollars
(AUS$10,000.00) and other envelopes containing his traveling
papers/documents. On 16 April 1988, McLoughlin requested Lainez
and Payam to open his safety deposit box. He noticed that in the
envelope containing Fifteen Thousand US Dollars (US$15,000.00),
Two Thousand US Dollars (US$2,000.00) were missing and in the
envelope previously containing Ten Thousand Australian Dollars
(AUS$10,000.00), Four Thousand Five Hundred Australian Dollars
(AUS$4,500.00) were missing.[10]
When McLoughlin discovered the loss, he immediately
confronted Lainez and Payam who admitted that Tan opened the
safety deposit box with the key assigned to him. [11] McLoughlin went
up to his room where Tan was staying and confronted her. Tan
admitted that she had stolen McLoughlins key and was able to open
the safety deposit box with the assistance of Lopez, Payam and
Lainez.[12] Lopez also told McLoughlin that Tan stole the key
assigned to McLoughlin while the latter was asleep.[13]
McLoughlin requested the management for an investigation of
the incident. Lopez got in touch with Tan and arranged for a meeting
with the police and McLoughlin. When the police did not arrive,
Lopez and Tan went to the room of McLoughlin at Tropicana and
thereat, Lopez wrote on a piece of paper a promissory note dated 21
April 1988. The promissory note reads as follows:
I promise to pay Mr. Maurice McLoughlin the amount of
AUS$4,000.00 and US$2,000.00 or its equivalent in Philippine
currency on or before May 5, 1988.[14]
Lopez requested Tan to sign the promissory note which the
latter did and Lopez also signed as a witness. Despite the execution
of promissory note by Tan, 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 safety deposit box entitled Undertaking For
the Use Of Safety Deposit Box,[15] specifically paragraphs (2) and (4)
thereof, to wit:
2. To release and hold free and blameless TROPICANA
APARTMENT HOTEL from any liability arising from any
loss in the contents and/or use of the said deposit box for
any cause whatsoever, including but not limited to the
presentation or use thereof by any other person should the
key be lost;
...
4. To return the key and execute the RELEASE in favor of
TROPICANA APARTMENT HOTEL upon giving up the use
of the box.[16]
On 17 May 1988, McLoughlin went back to Australia and he
consulted his lawyers as to the validity of the abovementioned
stipulations. They opined that the stipulations are void for being
violative of universal hotel practices and customs. His lawyers
prepared a letter dated 30 May 1988 which was signed by
McLoughlin and sent to President Corazon Aquino.[17] The Office of
the President referred the letter to the Department of Justice (DOJ)
which forwarded the same to the Western Police District (WPD).[18]
After receiving a copy of the indorsement in Australia,
McLoughlin came to the Philippines and registered again as a hotel
guest of Tropicana. McLoughlin went to Malacaňang to follow up on
his letter but he was instructed to go to the DOJ. The DOJ directed
him to proceed to the WPD for documentation. But McLoughlin went
back to Australia as he had an urgent business matter to attend to.
For several times, McLoughlin left for Australia to attend to his
business and came back to the Philippines to follow up on his letter
to the President but he failed to obtain any concrete assistance.[19]
McLoughlin left again for Australia and upon his return to the
Philippines on 25 August 1989 to pursue his claims against
petitioners, the WPD conducted an investigation which resulted in
the preparation of an affidavit which was forwarded to the Manila City
Fiscals Office. Said affidavit became the basis of preliminary
investigation. However, McLoughlin left again for Australia without
receiving the notice of the hearing on 24 November 1989. Thus, the
case at the Fiscals Office was dismissed for failure to prosecute.
Mcloughlin requested the reinstatement of the criminal charge for
theft. In the meantime, McLoughlin and his lawyers wrote letters of
demand to those having responsibility to pay the damage. Then he
left again for Australia.
Upon his return on 22 October 1990, he registered at the
Echelon Towers at Malate, Manila. Meetings were held between
McLoughlin and his lawyer which resulted to the filing of a complaint
for damages on 3 December 1990 against YHT Realty Corporation,
Lopez, Lainez, Payam and Tan (defendants) for the loss of
McLoughlins money which was discovered on 16 April 1988. After
filing the complaint, McLoughlin left again for Australia to attend to an
urgent business matter. Tan and Lopez, however, were not served
with summons, and trial proceeded with only Lainez, Payam and
YHT Realty Corporation as defendants.
After defendants had filed their Pre-Trial Brief admitting that
they had previously allowed and assisted Tan to open the safety
deposit box, McLoughlin filed an Amended/Supplemental
Complaint[20] dated 10 June 1991 which included another incident of
loss of money and jewelry in the safety deposit box rented by
McLoughlin in the same hotel which took place prior to 16 April
1988.[21] The trial court admitted the Amended/Supplemental
Complaint.
During the trial of the case, McLoughlin had been in and out of
the country to attend to urgent business in Australia, and while
staying in the Philippines to attend the hearing, he incurred expenses
for hotel bills, airfare and other transportation expenses, long
distance calls to Australia, Meralco power expenses, and expenses
for food and maintenance, among others.[22]
After trial, the RTC of Manila rendered judgment in favor of
McLoughlin, the dispositive portion of which reads:
WHEREFORE, above premises considered, judgment is hereby
rendered by this Court in favor of plaintiff and against the
defendants, to wit:
1. Ordering defendants, jointly and severally, to pay plaintiff
the sum of US$11,400.00 or its equivalent in
Philippine Currency of P342,000.00, more or less, and
the sum of AUS$4,500.00 or its equivalent in
Philippine Currency of P99,000.00, or a total
of P441,000.00, more or less, with 12% interest from
April 16 1988 until said amount has been paid to
plaintiff (Item 1, Exhibit CC);
2. Ordering defendants, jointly and severally to pay plaintiff
the sum of P3,674,238.00 as actual and consequential
damages arising from the loss of his Australian and
American dollars and jewelries complained against
and in prosecuting his claim and rights administratively
and judicially (Items II, III, IV, V, VI, VII, VIII, and IX,
Exh. CC);
3. Ordering defendants, jointly and severally, to pay plaintiff
the sum of P500,000.00 as moral damages (Item X,
Exh. CC);
4. Ordering defendants, jointly and severally, to pay plaintiff
the sum of P350,000.00 as exemplary damages (Item
XI, Exh. CC);
5. And ordering defendants, jointly and severally, to pay
litigation expenses in the sum of P200,000.00 (Item
XII, Exh. CC);
6. Ordering defendants, jointly and severally, to pay plaintiff
the sum of P200,000.00 as attorneys fees, and a fee
of P3,000.00 for every appearance; and
7. Plus costs of suit.
SO ORDERED.[23]
The trial court found that McLoughlins allegations as to the fact
of loss and as to the amount of money he lost were sufficiently
shown by his direct and straightforward manner of testifying in court
and found him to be credible and worthy of belief as it was
established that McLoughlins money, kept in Tropicanas safety
deposit box, was taken by Tan without McLoughlins consent. The
taking was effected through the use of the master key which was in
the possession of the management. Payam and Lainez allowed Tan
to use the master key without authority from McLoughlin. The trial
court added that if McLoughlin had not lost his dollars, he would not
have gone through the trouble and personal inconvenience of
seeking aid and assistance from the Office of the President, DOJ,
police authorities and the City Fiscals Office in his desire to recover
his losses from the hotel management and Tan.[24]
As regards the loss of Seven Thousand US Dollars
(US$7,000.00) and jewelry worth approximately One Thousand Two
Hundred US Dollars (US$1,200.00) which allegedly occurred during
his stay at Tropicana previous to 4 April 1988, no claim was made by
McLoughlin for such losses in his complaint dated 21 November
1990 because he was not sure how they were lost and who the
responsible persons were. But considering the admission of the
defendants in their pre-trial brief that on three previous occasions
they allowed Tan to open the box, the trial court opined that it was
logical and reasonable to presume that his personal assets
consisting of Seven Thousand US Dollars (US$7,000.00) and jewelry
were taken by Tan from the safety deposit box without McLoughlins
consent through the cooperation of Payam and Lainez. [25]
The trial court also found that defendants acted with gross
negligence in the performance and exercise of their duties and
obligations as innkeepers and were therefore liable to answer for the
losses incurred by McLoughlin.[26]
 Moreover, the trial court ruled that paragraphs (2) and (4) of
the Undertaking For The Use Of Safety Deposit Box are not valid for
being contrary to the express mandate of Article 2003 of the New
Civil Code and against public policy.[27] Thus, there being fraud or
wanton conduct on the part of defendants, they should be
responsible for all damages which may be attributed to the non-
performance of their contractual obligations.[28]
The Court of Appeals affirmed the disquisitions made by the
lower court except as to the amount of damages awarded. The
decretal text of the appellate courts decision reads:
THE FOREGOING CONSIDERED, the appealed Decision is hereby
AFFIRMED but modified as follows:
The appellants are directed jointly and severally to pay the
plaintiff/appellee the following amounts:
1) P153,200.00 representing the peso equivalent of
US$2,000.00 and AUS$4,500.00;
2) P308,880.80, representing the peso value for the air
fares from Sidney [sic] to Manila and back for a total
of eleven (11) trips;
3) One-half of P336,207.05 or P168,103.52 representing
payment to Tropicana Apartment Hotel;
4) One-half of P152,683.57 or P76,341.785 representing
payment to Echelon Tower;
5) One-half of P179,863.20 or P89,931.60 for the taxi xxx
transportation from the residence to Sidney [sic]
Airport and from MIA to the hotel here in Manila, for
the eleven (11) trips;
6) One-half of P7,801.94 or P3,900.97 representing
Meralco power expenses;
7) One-half of P356,400.00 or P178,000.00 representing
expenses for food and maintenance;
8) P50,000.00 for moral damages;
9) P10,000.00 as exemplary damages; and
10) P200,000 representing attorneys fees.
With costs.
SO ORDERED.[29]
Unperturbed, YHT Realty Corporation, Lainez and Payam went
to this Court in this appeal by certiorari.
Petitioners submit for resolution by this Court the following
issues: (a) whether the appellate courts conclusion on the alleged
prior existence and subsequent loss of the subject money and
jewelry is supported by the evidence on record; (b) whether the
finding of gross negligence on the part of petitioners in the
performance of their duties as innkeepers is supported by the
evidence on record; (c) whether the Undertaking For The Use of
Safety Deposit Box admittedly executed by private respondent is null
and void; and (d) whether the damages awarded to private
respondent, as well as the amounts thereof, are proper under the
circumstances.[30]
The petition is devoid of merit.
It is worthy of note that the thrust of Rule 45 is the resolution
only of questions of law and any peripheral factual question
addressed to this Court is beyond the bounds of this mode of review.
Petitioners point out that the evidence on record is insufficient to
prove the fact of prior existence of the dollars and the jewelry which
had been lost while deposited in the safety deposit boxes of
Tropicana, the basis of the trial court and the appellate court being
the sole testimony of McLoughlin as to the contents thereof.
Likewise, petitioners dispute the finding of gross negligence on their
part as not supported by the evidence on record.
We are not persuaded. We adhere to the findings of the trial
court as affirmed by the appellate court that the fact of loss was
established by the credible testimony in open court by McLoughlin.
Such findings are factual and therefore beyond the ambit of the
present petition.
The trial court had the occasion to observe the demeanor of
McLoughlin while testifying which reflected the veracity of the facts
testified to by him. On this score, we give full credence to the
appreciation of testimonial evidence by the trial court especially if
what is at issue is the credibility of the witness. The oft-repeated
principle is that where the credibility of a witness is an issue, the
established rule is that great respect is accorded to the evaluation of
the credibility of witnesses by the trial court. [31] The trial court is in the
best position to assess the credibility of witnesses and their
testimonies because of its unique opportunity to observe the
witnesses firsthand and note their demeanor, conduct and attitude
under grilling examination.[32]
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
McLoughlins safety deposit box.[33] 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.[34] 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
McLoughlins 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 McLoughlins deposit. If only
petitioners exercised due diligence in taking care of McLoughlins
safety deposit box, they should have confronted him as to his
relationship with Tan considering that the latter had been observed
opening McLoughlins safety deposit box a number of times at the
early hours of the morning. Tans 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.[35] Thus, given the
fact that the loss of McLoughlins money was consummated through
the negligence of Tropicanas employees in allowing Tan to open the
safety deposit box without the guests 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.[36]
The issue of whether the Undertaking For The Use of Safety
Deposit Box executed by McLoughlin is tainted with nullity presents a
legal question appropriate for resolution in this petition. Notably, both
the trial court and the appellate court found the same to be null and
void. We find no reason to reverse their common conclusion. Article
2003 is controlling, thus:
Art. 2003. 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 responsibility of the former as set forth in
Articles 1998 to 2001[37] is suppressed or diminished shall be void.
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,[38] the Court of Appeals through its then
Presiding Justice (later Associate Justice of the Court) Jose P.
Bengzon, 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.[39] 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 of the New Civil Code 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.[40] 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.[41] 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.[42]
Petitioners likewise anchor their defense on Article
2002[43] 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 guests
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.[44]
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 guests relatives and visitors.
Petitioners contend that McLoughlins 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.[45] 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.[46]
As to damages awarded to McLoughlin, we see no reason to
modify the amounts awarded by the appellate court for the same
were based on facts and law. It is within the province of lower courts
to settle factual issues such as the proper amount of damages
awarded and such finding is binding upon this Court especially if
sufficiently proven by evidence and not unconscionable or excessive.
Thus, the appellate court correctly awarded McLoughlin Two
Thousand US Dollars (US$2,000.00) and Four Thousand Five
Hundred Australian dollars (AUS$4,500.00) or their peso equivalent
at the time of payment,[47] being the amounts duly proven by
evidence.[48] The alleged loss that took place prior to 16 April 1988
was not considered since the amounts alleged to have been taken
were not sufficiently established by evidence. The appellate court
also correctly awarded the sum of P308,880.80, representing the
peso value for the air fares from Sydney to Manila and back for a
total of eleven (11) trips;[49] one-half of P336,207.05 or P168,103.52
representing payment to Tropicana;[50] one-half of P152,683.57
or P76,341.785 representing payment to Echelon Tower;[51] one-half
of P179,863.20 or P89,931.60 for the taxi or transportation expenses
from McLoughlins residence to Sydney Airport and from MIA to the
hotel here in Manila, for the eleven (11) trips;[52] one-half
of P7,801.94 or P3,900.97 representing Meralco power
expenses;[53] one-half of P356,400.00 or P178,000.00 representing
expenses for food and maintenance.[54]
The amount of P50,000.00 for moral damages is reasonable.
Although trial courts are given discretion to determine the amount of
moral damages, the appellate court may modify or change the
amount awarded when it is palpably and scandalously excessive.
Moral damages are not intended to enrich a complainant at the
expense of a defendant. They are awarded only to enable the injured
party to obtain means, diversion or amusements that will serve to
alleviate the moral suffering he has undergone, by reason of
defendants culpable action.[55]
The awards of P10,000.00 as exemplary damages
and P200,000.00 representing attorneys fees are likewise sustained.
WHEREFORE, foregoing premises considered, the Decision of
the Court of Appeals dated 19 October 1995 is hereby AFFIRMED.
Petitioners are directed, jointly and severally, to pay private
respondent the following amounts:
(1) US$2,000.00 and AUS$4,500.00 or their peso equivalent
at the time of payment;
(2) P308,880.80, representing the peso value for the air fares
from Sydney to Manila and back for a total of eleven
(11) trips;
(3) One-half of P336,207.05 or P168,103.52 representing
payment to Tropicana Copacabana Apartment Hotel;
 (4) One-half of P152,683.57 or P76,341.785 representing
payment to Echelon Tower;
(5) One-half of P179,863.20 or P89,931.60 for the taxi or
transportation expense from McLoughlins residence to
Sydney Airport and from MIA to the hotel here in
Manila, for the eleven (11) trips;
(6) One-half of P7,801.94 or P3,900.97 representing Meralco
power expenses;
(7) One-half of P356,400.00 or P178,200.00 representing
expenses for food and maintenance;
(8) P50,000.00 for moral damages;
(9) P10,000.00 as exemplary damages; and
2. ID.; ID.; ID.; WAREHOUSEMANS LIEN; POSSESSORY IN
(10) P200,000 representing attorneys fees.
With costs.
SO ORDERED.
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. PRES.
JUDGE BENITO C. SE, JR., RTC, BR. 45, MANILA;
NOAHS ARK SUGAR REFINERY; ALBERTO T.
LOOYUKO, JIMMY T. GO and WILSON T.
GO, respondents.
SYLLABUS
1. COMMERCIAL LAW; WAREHOUSE RECEIPTS LAW; THE
UNCONDITIONAL PRESENTMENT OF THE RECEIPTS FOR
PAYMENT CARRIED WITH IT THE ADMISSIONS OF THE
EXISTENCE AND VALIDITY OF THE TERMS, CONDITIONS
AND STIPULATIONS WRITTEN ON THE FACE OF THE
WAREHOUSE RECEIPTS, INCLUDING THE UNQUALIFIED
RECOGNITION OF THE PAYMENT OF WAREHOUSEMANS
LIEN FOR STORAGE FEES AND PRESERVATION
EXPENSES; CASE AT BAR. - Petitioner is in estoppel in
disclaiming liability for the payment of storage fees due the
private respondents as warehouseman while claiming to be
entitled to the sugar stocks covered by the subject Warehouse
Receipts on the basis of which it anchors its claim for payment
or delivery of the sugar stocks. The unconditional presentment
of the receipts by the petitioner for payment against private
respondents on the strength of the provisions of the Warehouse
Receipts Law (R.A. 2137) carried with it the admission of the
existence and validity of the terms, conditions and stipulations
written on the face of the Warehouse Receipts, including the
unqualified recognition of the payment of warehousemans lien
for storage fees and preservation expenses. Petitioner may not
now retrieve the sugar stocks without paying the lien due private
respondents as warehouseman.
NATURE. - 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
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.
 DECISION
HERMOSISIMA, JR., J.:
The source of conflict herein is the question as to whether the
Philippine National Bank should pay storage fees for sugar stocks
covered by five (5) Warehouse Receipts stored in the warehouse of
private respondents in the face of the Court of Appeals decision
(affirmed by the Supreme Court) declaring the Philippine National
Bank as the owner of the said sugar stocks and ordering their
delivery to the said bank. From the same facts but on a different
perspective, it can be said that the issue is: Can the warehouseman
enforce his warehousemans lien before delivering the sugar stocks
as ordered by the Court of Appeals or need he file a separate action
to enforce payment of storage fees?
The herein petition seeks to annul: (1) the Resolution of
respondent Judge Benito C. Se, Jr. of the Regional Trial Court of
Manila, Branch 45, dated December 20, 1994, in Civil Case No. 90-
53023, authorizing reception of evidence to establish the claim of
respondents Noahs Ark Sugar Refinery, et al., for storage fees and
preservation expenses over sugar stocks covered by
five (5) Warehouse Receipts which is in the nature of a
warehousemans lien; and (2) the Resolution of the said respondent
Judge, dated March 1, 1995, declaring the validity of private
respondents warehousemans lien under Section 27 of Republic Act
No 2137 and ordering that execution of the Court of Appeals
decision, dated December 13, 1991, be in effect held in abeyance
until the full amount of the warehousemans lien on the sugar stocks
covered by five (5) quedans subject of the action shall have been
satisfied conformably with the provisions of Section 31 of Republic
Act 2137.
Also prayed for by the petition is a Writ of Prohibition to require
respondent RTC Judge to desist from further proceeding with Civil
Case No. 90-53023, except order the execution of the Supreme
Court judgment; and a Writ of Mandamus to compel respondent RTC
Judge to issue a Writ of Execution in accordance with the said
executory Supreme Court decision.
THE FACTS
In accordance with Act No. 2137, the Warehouse Receipts Law,
Noahs Ark Sugar Refinery issued on several dates, the following
Warehouse Receipts (Quedans): (a) March 1, 1989, Receipt No.
18062, covering sugar deposited by Rosa Sy; (b) March 7, 1989,
Receipt No. 18080, covering sugar deposited by RNS Merchandising
(Rosa Ng Sy); (c) March 21, 1989, Receipt No. 18081, covering
sugar deposited by St. Therese Merchandising; (d)March 31, 1989,
Receipt No. 18086, covering sugar deposited by St. Therese
Merchandising; and (e) April 1, 1989, Receipt No. 18087, covering
sugar deposited by RNS Merchandising. The receipts are
substantially in the form, and contains the terms, prescribed for
negotiable warehouse receipts by Section 2 of the law.
Subsequently, Warehouse Receipts Nos. 18080 and 18081
were negotiated and endorsed to Luis T. Ramos; and Receipts Nos.
18086, 18087 and 18062 were negotiated and endorsed to
Cresencia K. Zoleta. Ramos and Zoleta then used the quedans as
security for two loan agreements - one for P15.6 million and the
other for P23.5 million - obtained by them from the Philippine
National Bank. The aforementioned quedans were endorsed by them
to the Philippine National Bank.
Luis T. Ramos and Cresencia K. Zoleta failed to pay their loans
upon maturity on January 9, 1990. Consequently, on March 16,
1990, the Philippine National Bank wrote to Noahs Ark Sugar
Refinery demanding delivery of the sugar stocks covered by the
quedans endorsed to it by Zoleta and Ramos. Noahs Ark Sugar
Refinery refused to comply with the demand alleging ownership
thereof, for which reason the Philippine National Bank filed with the
Regional Trial Court of Manila a verified complaint for Specific
Performance with Damages and Application for Writ of Attachment
against Noahs Ark Sugar Refinery, Alberto T. Looyuko, Jimmy T. Go
and Wilson T. Go, the last three being identified as the sole
proprietor, managing partner, and Executive Vice President of
Noahs Ark, respectively.
 Respondent Judge Benito C. Se, Jr., in whose sala the case
was raffled, denied the Application for Preliminary Attachment.
Reconsideration therefor was likewise denied.
Noahs Ark and its co-defendants filed an Answer with
Counterclaim and Third-Party Complaint in which they claimed that
they are the owners of the subject quedans and the sugar
represented therein, averring as they did that:
9.*** In an agreement dated April 1, 1989, defendants agreed to sell
to Rosa Ng Sy of RNS Merchandising and Teresita Ng
of St. Therese Merchandising the total volume of sugar indicated in
the quedans stored at Noahs Ark Sugar Refinery for a total
consideration of P63,000,000.00,
*** The corresponding payments in the form of checks issued by the
vendees in favor of defendants were subsequently dishonored by the
drawee banks by reason of payment stopped and drawn against
insufficient funds,
*** Upon proper notification to said vendees and plaintiff in due
course, defendants refused to deliver to vendees therein the quantity
of sugar covered by the subject quedans.
10. *** Considering that the vendees and first endorsers of subject
quedans did not acquire ownership thereof, the subsequent
endorsers and plaintiff itself did not acquire a better right of
ownership than the original vendees/first endorsers. 1
The Answer incorporated a Third-Party Complaint by Alberto T.
Looyuko, Jimmy T. Go and Wilson T. Go, doing business under the
trade name and style Noahs Ark Sugar Refinery against Rosa Ng Sy
and Teresita Ng, praying that the latter be ordered to deliver or return
to them the quedans (previously endorsed to PNB and the subject of
the suit) and pay damages and litigation expenses.
The Answer of Rosa Ng Sy and Teresita Ng, dated September
6, 1990, one of avoidance, is essentially to the effect that the
transaction between them, on the one hand, and Jimmy T. Go, on
the other, concerning the quedans and the sugar stocks covered by
them was merely a simulated one being part of the latters complex
banking schemes and financial maneuvers, and thus, they are not
answerable in damages to him.
On January 31, 1991, the Philippine National Bank filed a
Motion for Summary Judgment in favor of the plaintiff as against the
defendants for the reliefs prayed for in the complaint.
On May 2, 1991, the Regional Trial Court issued an order
denying the Motion for Summary Judgment. Thereupon, the
Philippine National Bank filed a Petition for Certiorari with the Court
of Appeals, docketed as CA-G.R. SP. No. 25938 on December 13,
1991.
Pertinent portions of the decision of the Court of Appeals read:
In issuing the questioned Orders, the respondent Court ruled that
questions of law should be resolved after and not before, the
questions of fact are properly litigated. A scrutiny of defendants
affirmative defenses does not show material questions of fact as to
the alleged nonpayment of purchase price by the vendees/first
endorsers, and which nonpayment is not disputed by PNB as it does
not materially affect PNBs title to the sugar stocks as holder of the
negotiable quedans.
What is determinative of the propriety of summary judgment is not
the existence of conflicting claims from prior parties but whether from
an examination of the pleadings, depositions, admissions and
documents on file, the defenses as to the main issue do not tender
material questions of fact (see Garcia vs. Court of Appeals, 167
SCRA 815) or the issues thus tendered are in fact sham, fictitious,
contrived, set up in bad faith or so unsubstantial as not to constitute
genuine issues for trial. (See Vergara vs. Suelto, et al., 156 SCRA
753; Mercado, et al. vs. Court of Appeals, 162 SCRA 75). The
questioned Orders themselves do not specify what material facts are
in issue. (See Sec. 4, Rule 34, Rules of Court).
To require a trial notwithstanding pertinent allegations of the
pleadings and other facts appearing on the record, would constitute
a waste of time and an injustice to the PNB whose rights to relief to
which it is plainly entitled would be further delayed to its prejudice.
In issuing the questioned Orders, We find the respondent Court to
have acted in grave abuse of discretion which justify holding null and
void and setting aside the Orders dated May 2 and July 4, 1990 of
respondent Court, and that a summary judgment be rendered
forthwith in favor of the PNB against Noahs Ark Sugar Refinery, et
al., as prayed for in petitioners Motion for Summary Judgment.2
On December 13, 1991, the Court of Appeals nullified and set
aside the orders of May 2 and July 4, 1990 of the Regional Trial
Court and ordered the trial court to render summary judgment in
favor of the PNB. On June 18, 1992, the trial court rendered
judgment dismissing plaintiffs complaint against private respondents
for lack of cause of action and likewise dismissed private
respondents counterclaim against PNB and of the Third-Party
Complaint and the Third-Party Defendants Counterclaim.
On September 4, 1992, the trial court denied PNBs Motion for
Reconsideration.
On June 9, 1992, the PNB filed an appeal from the RTC
decision with the Supreme Court, G.R. No. 107243, by way of a
Petition for Review on Certiorari under Rule 45 of the Rules of Court.
This Court rendered judgment on September 1, 1993, the dispositive
portion of which reads:
WHEREFORE, the trial judges decision in Civil Case No. 90-53023,
dated June 18, 1992, is reversed and set aside and a new one
rendered conformably with the final and executory decision of the
Court of Appeals in CA-G.R SP. No. 25938, ordering the private
respondents Noahs Ark Sugar Refinery, Alberto T. Looyuko, Jimmy
T. Go and Wilson T. Go, jointly and severally:
(a) to deliver to the petitioner Philippine National Bank, the
sugar stocks covered by the Warehouse Receipts/
Quedans which are now in the latters possession as
holder for value and in due course; or alternatively, to
pay (said) plaintiff actual damages in the amount of
P39.1 million, with legal interest thereon from the filing
of the complaint until full payment; and
(b) to pay plaintiff Philippine National Bank attorneys fees,
litigation expenses and judicial costs hereby fixed at the
amount of One Hundred Fifty Thousand Pesos
(P150,000.00) as well as the costs.
SO ORDERED.3
On September 29, 1993, private respondents moved for
reconsideration of this decision. A Supplemental/Second Motion for
Reconsideration with leave of court was filed by private respondents
on November 8, 1993. We denied private respondents motion
on January 10, 1994. .
Private respondents filed a Motion Seeking Clarification of the
Decision, dated September 1, 1993. We denied this motion in this
manner:
It bears stressing that the relief granted in this Courts decision of
September 1, 1993 is precisely that set out in the final and executory
decision of the Court of Appeals in CA-G.R. SP No. 25938, dated
December 13, 1991, which was affirmed in toto by this Court and
which became unalterable upon becoming final and executory. 4
Private respondents thereupon filed before the trial court an
Omnibus Motion seeking among others the deferment of the
proceedings until private respondents are heard on their claim for
warehousemans lien. On the other hand, on August 22, 1994, the
Philippine National Bank filed a Motion for the Issuance of a Writ of
Execution and an Opposition to the Omnibus Motion filed by private
respondents.
The trial court granted private respondents Omnibus Motion
on December 20, 1994 and set reception of evidence on their claim
for warehousemans lien. The resolution of the PNBs Motion for
Execution was ordered deferred until the determination of private
respondents claim.
On February 21, 1995, private respondents claim for lien was
heard and evidence was received in support thereof. The trial court
thereafter gave both parties five (5) days to file respective
memoranda.
On February 28, 1995, the Philippine National Bank filed a
Manifestation with Urgent Motion to Nullify Court Proceedings. In
adjudication thereof, the trial court issued the following order
on March 1, 1995:
WHEREFORE, this court hereby finds that there exists in favor of the
defendants a valid warehousemans lien under Section 27 of
Republic Act 2137 and accordingly, execution of the judgment is
hereby ordered stayed and/ or precluded until the full amount of
defendants lien on the sugar stocks covered by the five (5) quedans
subject of this action shall have been satisfied conformably with the
provisions of Section 31 of Republic Act 2137. 5
Consequently, the Philippine National Bank filed the herein
petition to seek the nullification of the above-assailed orders of
respondent judge.
The PNB submits that:
I
PNBs RIGHT TO A WRIT OF EXECUTION IS SUPPORTED BY
TWO FINAL AND EXECUTORY DECISIONS: THE DECEMBER 13,
1991 COURT OF APPEALS DECISION IN CA-G.R. SP. NO. 25938;
AND, THE NOVEMBER 9, 1992 SUPREME COURT DECISION IN
G.R NO. 107243. RESPONDENT RTCS MINISTERIAL AND
MANDATORY DUTY IS TO ISSUE THE WRIT OF EXECUTION TO
IMPLEMENT THE DECRETAL PORTION OF SAID SUPREME
COURT DECISION
II
RESPONDENT RTC IS WITHOUT JURISDICTION TO HEAR
PRIVATE RESPONDENTS OMNIBUS MOTION. THE CLAIMS SET
FORTH IN SAID MOTION: (1) WERE ALREADY REJECTED BY
THE SUPREME COURT IN ITS MARCH 9, 1994 RESOLUTION
DENYING PRIVATE RESPONDENTS MOTION FOR
CLARIFICATION OF DECISION IN .G.R. NO. 107243; AND (2) ARE
BARRED FOREVER BY PRIVATE RESPONDENTS FAILURE TO
INTERPOSE THEM IN THEIR ANSWER, AND FAILURE TO
APPEAL FROM THE JUNE 18, 1992 RTC DECISION IN CIVIL
CASE NO. 90-52023
III
RESPONDENT RTCS ONLY JURISDICTION IS TO ISSUE THE
WRIT TO EXECUTE THE SUPREME COURT DECISION. THUS,
PNB IS ENTITLED TO: (1) A WRIT OF CERTIORARI TO ANNUL
THE RTC RESOLUTION DATED DECEMBER 20, 1994 AND THE
ORDER DATED FEBRUARY 7, 1995 AND ALL PROCEEDINGS
TAKEN BY THE RTC THEREAFTER; (2) A WRIT OF PROHIBITION
TO PREVENT RESPONDENT RTC FROM FURTHER
PROCEEDING WITH CIVIL CASE NO. 90-53023 AND
COMMITTING OTHER ACTS VIOLATIVE OF THE SUPREME
COURT DECISION IN G.R. NO. 107243; AND (3) A WRIT OF
MANDAMUS TO COMPEL RESPONDENT RTC TO ISSUE THE
WRIT TO EXECUTE THE SUPREME COURT JUDGMENT IN
FAVOR OF PNB
The issues presented before us in this petition revolve around
the legality of the questioned orders of respondent judge, issued as
they were after we had denied with finality private respondents
contention that the PNB could not compel them to deliver the stocks
of sugar in their warehouse covered by the endorsed quedans or pay
the value of the said stocks of sugar.
Petitioners submission is on a technicality, that is, that private
respondents have lost their right to recover warehousemans lien on
the sugar stocks covered by the five (5) Warehouse Receipts for the
reason that they failed to set up said claim in their Answer before the
trial court and that private respondents did not appeal from the
decision in this regard, dated June 18, 1992. Petitioner asseverates
that the denial by this Court on March 9, 1994 of the motion seeking
clarification of our decision, dated September 1, 1993, has
foreclosed private respondents right to enforce their warehousemans
lien for storage fees and preservation expenses under the
Warehouse Receipts Act.
 On the other hand, private respondents maintain that they could
not have claimed the right to a warehouseman s lien in their Answer
to the complaint before the trial court as it would have been
inconsistent with their stand that they claim ownership of the stocks
covered by the quedans since the checks issued for payment thereof
were dishonored. If they were still the owners, it would have been
absurd for them to ask payment for storage fees and preservation
expenses. They further contend that our resolution, dated March 9,
1994, denying their motion for clarification did not preclude their right
to claim their warehousemans lien under Sections 27 and 31 of
Republic Act 2137, as our resolution merely affirmed and adopted
the earlier decision, dated December 13, 1991, of the Court of
Appeals (6th Division) in CA-G.R. SP. No. 25938 and did not make
any finding on the matter of the warehouseman s lien.
We find for private respondents on the foregoing issue and so
the petition necessarily must fail.
We have carefully examined our resolution, dated March 9,
1994, which denied Noahs Arks motion for clarification of our
decision, dated September 1, 1993, wherein we affirmed in full and
adopted the Court of Appeals earlier decision, dated December 13,
1991, in CA-G.R. SP. No. 25938. We are not persuaded by the
petitioners argument that our said resolution carried with it the denial
of the warehousemans lien over the sugar stocks covered by the
subject Warehouse Receipts. We have simply resolved and upheld
in our decision, dated September 1, 1993, the propriety of summary
judgment which was then assailed by private respondents. In effect,
we ruled therein that, considering the circumstances obtaining before
the trial court, the issuance of the Warehouse Receipts not being
disputed by the private respondents, a summary judgment in favor of
PNB was proper. We in effect further affirmed the finding that
Noahs Ark is a warehouseman which was obliged to deliver the
sugar stocks covered by the Warehouse Receipts pledged by
Cresencia K. Zoleta and Luis T. Ramos to the petitioner pursuant to
the pertinent provisions of Republic Act 2137.
In disposing of the private respondents motion for clarification,
we could not contemplate the matter of warehousemans lien
because the issue to be finally resolved then was the claim of private
respondents for retaining ownership of the stocks of sugar covered
by the endorsed quedans. Stated otherwise, there was no point in
taking up the issue of warehousemans lien since the matter of
ownership was as yet being determined. Neither could storage fees
be due then while no one has been declared the owner of the sugar
stocks in question.
Of considerable relevance is the pertinent stipulation in the
subject Warehouse Receipts which provides for respondent
Noahs Arks right to impose and collect warehousemans lien:
Storage of the refined sugar quantities mentioned herein shall be
free up to one (1) week from the date of the quedans covering said
sugar and thereafter, storage fees shall be charged in accordance
with the Refining Contract under which the refined sugar covered by
this Quedan was produced. 6
It is not disputed, therefore, that, under the subject Warehouse
Receipts provision, storage fees are chargeable.
Petitioner anchors its claim against private respondents on the
five (5) Warehouse Receipts issued by the latter to third-party
defendants Rosa Ng Sy of RNS Merchandising and Teresita Ng of
St. Therese Merchandising, which found their way to petitioner after
they were negotiated to them by Luis T. Ramos and Cresencia K.
Zoleta for a loan of P39.1 Million. Accordingly, petitioner PNB is
legally bound to stand by the express terms and conditions on the
face of the Warehouse Receipts as to the payment of storage fees.
Even in the absence of such a provision, law and equity dictate the
payment of the warehouseman s lien pursuant to Sections 27 and 31
of the Warehouse Receipts Law (R.A. 2137), to wit:
SECTION 27. What claims are included in the warehousemans lien.
- Subject to the provisions of section thirty, a warehouseman shall
have lien on goods deposited or on the proceeds thereof in his
hands, for all lawful charges for storage and preservation of the
goods; also for all lawful claims for money advanced, interest,
insurance, transportation, labor, weighing coopering and other
charges and expenses in relation to such goods; also for all
reasonable charges and expenses for notice, and advertisement of
sale, and for sale of the goods where default has been made in
satisfying the warehousemans lien.
xxx xxx xxx
SECTION 31. Warehouseman need not deliver until lien is satisfied.
- A warehouseman having a lien valid against the person demanding
the goods may refuse to deliver the goods to him until the lien is
satisfied.
After being declared not the owner, but the warehouseman, by
the Court of Appeals on December 13, 1991 in CA-G.R. SP. No.
25938, the decision having been affirmed by us on December 1,
1993, private respondents cannot legally be deprived of their right to
enforce their claim for warehousemans lien, for reasonable storage
fees and preservation expenses. Pursuant to Section 31 which we
quote hereunder, the goods under storage may not be delivered until
said lien is satisfied.
SECTION 31. Warehouseman need not deliver until lien is satisfied.
- A warehouseman having a lien valid against the person demanding
the goods may refuse to deliver the goods to him until the lien is
satisfied.
Considering that petitioner does not deny the existence, validity
and genuineness of the Warehouse Receipts on which it anchors its
claim for payment against private respondents, it cannot disclaim
liability for the payment of the storage fees stipulated therein. As
contracts, the receipts must be respected by authority of Article 1159
of the Civil Code, to wit:
ART. 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith.
Petitioner is in estoppel in disclaiming liability for the payment of
storage fees due the private respondents as warehouseman while
claiming to be entitled to the sugar stocks covered by the subject
Warehouse Receipts on the basis of which it anchors its claim for
payment or delivery of the sugar stocks. The unconditional
presentment of the receipts by the petitioner for payment against
private respondents on the strength of the provisions of the
Warehouse Receipts Law (R.A. 2137) carried with it the admission of
the existence and validity of the terms, conditions and stipulations
written on the face of the Warehouse Receipts, including the
unqualified recognition of the payment of warehousemans lien for
storage fees and preservation expenses. Petitioner may not now
retrieve the sugar stocks without paying the lien due private
respondents as warehouseman.
In view of the foregoing, the rule may be simplified thus: 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 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.
We, therefore, uphold and sustain the validity of the assailed
orders of public respondent, dated December 20, 1994 and March 1,
1995.
In fine, we fail to see any taint of abuse of discretion on the part
of the public respondent in issuing the questioned orders which
recognized the legitimate right of Noahs Ark, after being declared as
warehouseman, to recover storage fees before it would release to
the PNB sugar stocks covered by the five (5) Warehouse Receipts.
Our resolution, dated March 9, 1994, did not preclude private
respondents unqualified right to establish its claim to recover storage
fees which is recognized under Republic Act No. 2137. Neither did
the Court of Appeals decision, dated December 13, 1991, restrict
such right.
Our Resolutions reference to the decision by the Court of
Appeals, dated December 13, 1991, in CA-G.R. SP. No. 25938, was
intended to guide the parties in the subsequent disposition of the
case to its final end. We certainly did not foreclose private
respondents inherent right as warehouseman to collect storage fees
and preservation expenses as stipulated n the face of each of the
Warehouse Receipts and as provided for in the Warehouse Receipts
Law (R.A. 2137).
WHEREFORE, the petition should be, as it is, hereby dismissed
for lack of merit. The questioned orders issued by public respondent
judge are affirmed.
Costs against the petitioner.
SO ORDERED.
G.R. No. L-32974 July 30, 1979
BARTOLOME ORTIZ, petitioner,
vs.
HON. UNION C. KAYANAN, in his capacity as Judge of the Court
of First Instance of Quezon, Branch IV; ELEUTERIO ZAMORA,
QUIRINO COMINTAN, VICENTE FERRO, AND GREGORIO
PAMISARAN, respondents.
Salonga, Ordoñ;ez, Yap, Sicat & Associates and Salvador, Ulgado &
Carbon for petitioner.
Jose A. Cusi for private respondents.
ANTONIO, J.:
Petition for certiorari and Prohibition with Preliminary Injunction to
nullify the Order of respondent Judge directing the execution of the
final judgment in Civil Case No. C-90, entitled "Bartolome Ortiz vs.
Secretary of Agriculture and Natural Resources, et al.," and the Writ
of Execution issued to implement said Order, allegedly for being
inconsistent with the judgment sought to be enforced.
Civil Case No. C-90 was filed by Bartolome Ortiz who sought the
review and/or annulment of the decision of the Secretary of
Agriculture and Natural Resources, giving preference to the sales
applications of private respondents Quirino Comintan and Eleuterio
Zamora over Lot No. 5785, PLS-45, located at Barrio Cabuluan,
Calauag, Quezon.
I
The factual background of the case, as found by respondent Court,
is as follows:
... The lot in controversy was formerly the subject of
Homestead Application No. 122417 of Martin
Dolorico II, plaintiff's ward who died on August 20,
1931; that since then it was plaintiff who continued
the cultivation and possession of the property,
without however filing any application to acquire title
thereon; that in the Homestead Application No.
122417, Martin Dolorico II named his uncle, Martin
Dolorico I as his heir and successor in interest, so
that in 1951 Martin Dolorico I executed an affidavit
relinquishing his rights over the property in favor of
defendants Quirino Comintan and Eleuterio Zamora,
his grandson and son-in-law, respectively, and
requested the Director of Lands to cancel the
homestead application; that on the strength of the
affidavit, Homestead Application No. 122417 was
cancelled and thereafter, defendants Comintan and
Zamora filed their respective sales applications Nos.
8433 and 9258; that plaintiff filed his protest on
November 26, 1951 alleging that he should be given
preference to purchase the lot inasmuch as he is the
actual occupant and has been in continuous
possession of the same since 1931; and inspite of
plaintiff's opposition, "Portion A" of the property was
sold at public auction wherein defendant Comintan
was the only bidder; that on June 8, 1957,
investigation was conducted on plaintiff's protest by
Assistant Public Lands Inspector Serapion Bauzon
 who submitted his report to the Regional Land
Officer, and who in turn rendered a decision on April
9, 1958, dismissing plaintiff's claim and giving due
course to defendants' sales applications on the
ground that the relinquishment of the homestead
rights of Martin Dolorico I in favor of Comintan and
Zamora is proper, the former having been
designated as successor in interest of the original
homestead applicant and that because plaintiff failed
to participate in the public auction, he is forever
barred to claim the property; that plaintiff filed a
motion for reconsideration of this decision which was
denied by the Director of Lands in his order dated
June 10, 1959; that, finally, on appeal to the
Secretary of Agriculture and Natural Resources, the
decision rendered by the Regional Land Officer was
affirmed in toto. 1
On March 22, 1966, respondent Court rendered judgment in the
afore-mentioned civil case, the dispositive portion of which reads as
follows:têñ.£îhqwâ£
IN VIEW OF THE FOREGOING
CONSIDERATIONS, judgment is hereby rendered
awarding Lot No. 5785-A of PLS-45, (Calauag
Public Land Subdivision) one-half portion of the
property in litigation located at Bo. Cabuluan,
Calauag, Quezon, in favor of defendant QUIRINO
COMINTAN, being the successful bidder in the
public auction conducted by the bureau of Lands on
April 18, 1955, and hereby giving due course to the
Sales Application No. 9258 of defendant Eleuterio
Zamora over the other half, Lot No. 5785-B of PLS-
45, Calauag, without prejudice to the right of plaintiff
BARTOLOME ORTIZ to participate in the public
bidding of the same to be announced by the Bureau
of Lands, Manila. However, should plaintiff
Bartolome Ortiz be not declared the successful
bidder thereof, defendants Quirino Comintan and
Eleuterio Zamora are ordered to reimburse jointly
said plaintiff the improvements he has introduced on
the whole property in the amount of THIRTEEN
THOUSAND SIX HUNDRED THIRTY-TWO
(P13,632.00) PESOS, the latter having the right to
retain the property until after he has been fully paid
therefor, without interest since he enjoys the fruits of
the property in question, with prejudice and with
costs again the plaintiff.2
Plaintiff appealed the decision to the Court of Appeals.
Two (2) years after the rendition of the judgment by the court a quo,
while the case was pending appeal and upon petition of private
respondents Quirino Comintan and Eleuterio Zamora, respondent
Court appointed respondent Vicente Ferro, Clerk of Court, as
Receiver to collect tolls on a portion of the property used as a
diversion road. On August 19, 1969, the Court of Appeals issued a
Resolution annulling the Order appointing the Receiver.
Subsequently, on February 19, 1970, the Appellate Court affirmed
the decision of the trial court. A petition for review on certiorari of the
decision of the Court of Appeals was denied by this Court on April 6,
1970. At this point, private respondents filed a petition for
appointment of a new receiver with the court a quo. This petition was
granted and the receiver was reappointed. Petitioner sought the
annulment of this Order with the Court of Appeals, but said Court
ruled that its decision had already become final and that the records
of the case were to be remanded to the trial court.
Not satisfied with such denial, petitioner filed a petitioner for
certiorari, prohibition and mandamus with preliminary injunction
before this Court, 3 praying for the annulment of the Order
reappointing the Receiver. On July 13, 1970, the petition was
dismissed by this Court on the ground of insufficient showing of
grave abuse of discretion.
II
The judgment having become final and executory private
respondents filed a motion for the execution of the same, praying as
follows:
WHEREFORE, it is respectfully prayed of this
Honorable Court to order the issuance of a writ of
execution in accordance with the judgment of this
Honorable Court, confirmed by the Court of Appeals
and the Supreme Court, commanding any lawful
officer to deliver to defendants Comintan and
Zamora the land subject of the decision in this case
but allowing defendants to file a bond in such
amount as this Honorable Court may fix, in lieu of
the P13,632.00 required to be paid to plaintiff,
conditioned that after the accounting of the tools
collected by plaintiff, there is still an amount due and
payable to said plaintiff, then if such amount is not
paid on demand, including the legal interests, said
bond shall be held answerable.
Ordering further the plaintiff to render an accounting
of the tolls he collected from March of 1967 to
December 31, 1968 and from September 1969 to
March 31, 1970, and deliver said tolls collected to
the receiver and if judgment is already executed,
then to Quirino Comintan and Eleuterio Zamora;
and,
Finally, to condemn plaintiff to pay moral damages
for withholding the tools which belong to your
movant in an amount this Court may deem just in
the premises.4
Acting upon the foregoing motion, respondent Judge issued an
Order, dated September 23, 1970, stating, among others, the
following: têñ.£îhqwâ£
The records further disclosed that from March 1967
to December 31, 1968, piaintiff Bartolome Ortiz
collected tolls on a portion of the propertv in
question wherein he has not introduced anv
improvement particularlv on Lot No. 5785-A; PLS-45
awarded to defendant Quirino Comintan, thru which
vehicular traffic was detoured or diverted, and again
from September 1969 to March 31, 1970, the
plaintiff resumed the collection of tools on the same
portion without rendering any accounting on said
tolls to the Receiver, who, was reappointed after
submitting the required bond and specifically
authorized only to collect tolls leaving the harvesting
of the improvements to the plaintiff.
xxx xxx xxx
ln virtue of he findings of this Court as contained in
the dispositive portion of its decision, the defendants
are jointly obligated to pay the plaintiff in the amount
of P13,632.00 as reasonable value of the
improvements he introduced on the whole property
in question, and that he has the right of retention
until fully paid. It can be gleaned from the motion of
the defendants that if plaintiff submits an accounting
of the tolls he collected during the periods above
alluded to, their damages of about P25,000.00 can
more than offset their obligation of P13,362.00 in
favor of the plaintiff, thereafter the possession of the
land be delivered to the defendants since the
decision of the Supreme Court has already become
final and executory, but in the interregnum pending
such accounting and recovery by the Receiver of the
tolls collected by the plaintiff, the defendants pray
that they allowed to put up a bond in lieu of the said
P13,632.00 to answer for damages of the former, if
any.
On the other hand, plaintiff contends in his
opposition, admitting that the decision of the
Supreme Court has become final and executory; (1)
the offer of a bond in lieu of payment of P13,632.00
does not, and cannot, satisfy the condition imposed
in the decision of this Court which was affirmed in
toto; (2) the public sale of Portion "B" of the land has
still to take place as ordained before the decision
could be executed; and, (3) that whatever sums
plaintiff may derive from the property cannot be set
off against what is due him for the improvements he
made, for which he has to be reimbursed as
ordered.
xxx xxx xxx
Let it be known that plaintiff does not dispute his
having collected tolls during the periods from March
1967 to December 31, 1968 and from September
1969 to March 31, 1970. The Supreme Court
affirmed the decision of this Court its findings that
said tolls belong to the defendant, considering that
the same were collected on a portion of the land
question where the plaintiff did not introduce any
improvement. The reimbursement to the plaintiff
pertains only to the value of the improvements, like
coconut trees and other plants which he introduced
on the whole property. The tolls collected by the
plaintiff on an unimproved portion naturally belong to
the defendants, following the doctrine on accretion.
Further, the reappointment of a Receiver by this
Court was upheld by the Supreme Court when it
denied the petition for certiorari filed by the plaintiff,
bolstering the legal claim of defendants over said
tolls. Thus, the decision of the Supreme Court
rendered the decision of this Court retroactive from
March 22, 1966 although pending accounting of the
tolls collected by the plaintiff is justified and will not
prejudice anybody, but certainly would substantially
satisfy the conditions imposed in the decision.
However, insofar as the one-half portion "B" of the
property, the decision may be executed only after
public sale by the Bureau of Lands shall be
accomplished.
WHEREFORE, finding the Motion for Execution filed
by the defendants to be meritorious, the same is
granted; provided, however, that they put up a bond
equal the adjudicated amount of P13,632.00
accruing in favor of the plaintiff, from a reputable or
recognized bonding or surety company, conditioned
that after an accounting of the tolls collected by the
plaintiff should there be found out any balance due
and payable to him after reckoning said obligation of
P13,632.00 the bond shall be held answerable
therefor.5
Accordingly, a Writ of Execution was issued after private respondent
Quirino Comintan had filed the required bond. The writ directed the
Sheriff to enforce the decision of the Court, and stated, part in, the
following:têñ.£îhqwâ£
But should there be found any amount collectible
after accounting and deducting the amount of
P3,632.00, you are hereby ordered that of the goods
and chattels of Bartolome Ortiz of Bo. Kabuluan,
Calauag, Quezon, be caused to be made any
excess in the above-metioned amount together with
your lawful fees and that you render same to
defendant Quirino Comintan. If sufficient personal
property cannot be found thereof to satisfy this
execution and lawful fees thereon, then you are
commanded that of the lands and buildings of the
said BARTOLOME ORTIZ you make the said
excess amount in the manner required by the Rules
of Court, and make return of your proceedings within
this Court within sixty (60) days from date of service.
You are also ordered to cause Bartolome Ortiz to
vacate the property within fifteen (15) days after
service thereof the defendant Quirino Comintan
having filed the required bond in the amount of
THIRTEEN THOUSAND SIX HUNDRED THIRTY-
TWO (P13,632.00) PESOS. 6
On October 12, 1970, petitioner filed a Motion for Reconsideration of
the aforesaid Order and Writ of Execution, alleging:
(a) That the respondent judge has no authority to
place respondents in possession of the property;
(b) That the Supreme Court has never affirmed any
decision of the trial court that tolls collected from the
diversionary road on the property, which is public
land, belong to said respondents;
(c) That to assess petitioner a P25,000.00 liability for
damages is purely punitive imposition without factual
or legal justification.
The foregoing Motion for Reconsideration was denied by respondent
Judge per Order dated November 18, 1970. Saod Order states, in
part:têñ.£îhqwâ£
It goes without saying that defendant Comintan is
entitled to be placed in possession of lot No. 5785-A
of PLS-45 (Calauag Public Land Subdivision) and
enjoyment of the tolls from March, 1967 to March,
1968 and from September, 1969 to March 31, l970
which were received by plaintiff Bartolome Ortiz,
collected from the property by reason of the
diversion road where vehicular traffic was detoured.
To defendant Comintan belongs the tolls thus
collected from a portion of the land awarded to him
used as a diversionary road by the doctrine of
accretion and his right over the same is ipso jure,
there being no need of any action to possess said
addition. It is so because as consistently maintained
by the Supreme Court, an applicant who has
complied with all the terms and conditions which
entitle him to a patent for a particular tract of publlic
land, acquires a vested right therein and is to be
regarded as equitable owner thereof so that even
without a patent, a perfected homestead or sales
application is a property right in the fullest sense,
unaffectcd by the fact that the paramount title is still
in the Government and no subsequent law can
deprive him of that vested right The question of the
actual damages suffered by defendant Comintan by
reason of the unaccounted tolls received by plaintiff
had already been fully discussed in the order of
September 23, 1970 and the Court is honestly
convinced and believes it to be proper and regular
under the circumstances.
Incidentally, the Court stands to correct itself when
in the same order, it directed the execution of he
decision with respect to the one-half portion "B" of
the property only after the public sale by the Bureau
of Lands, the same being an oversight, it appearing
that the Sales Application of defendant Eleuterio
Zamora had already been recognized and full
confirmed by the Supreme Court.
In view thereof, finding the motion filed by plaintiff to
be without merit, the Court hereby denies the same
and the order of September 23, 1970 shall remain in
full force subject to the amendment that the
execution of the decision with respect to the one-half
portion "B" shall not be conditioned to the public sale
by the Bureau of Lands.
SO ORDERED.7
Petitioner thus filed the instant petition, contending that in having
issued the Order and Writ of Execution, respondent Court "acted
without or in excess of jurisdiction, and/or with grave abuse of
discretion, because the said order and writ in effect vary the terms of
the judgment they purportedly seek to enforce." He argued that since
said judgment declared the petitioner a possessor in good faith, he is
entitled to the payment of the value of the improvements introduced
by him on the whole property, with right to retain the land until he has
been fully paid such value. He likewise averred that no payment for
improvements has been made and, instead, a bond therefor had
been filed by defendants (private respondents), which, according to
petitioner, is not the payment envisaged in the decision which would
entitle private respondents to the possession of the property.
Furthermore, with respect to portion "B", petitioner alleges that,
under the decision, he has the right to retain the same until after he
has participated and lost in the public bidding of the land to be
conducted by the Bureau of Lands. It is claimed that it is only in the
event that he loses in the bidding that he can be legally
dispossessed thereof.
It is the position of petitioner that all the fruits of the property,
including the tolls collected by him from the passing vehicles, which
according to the trial court amounts to P25,000.00, belongs to
petitioner and not to defendant/private respondent Quirino Comintan,
in accordance with the decision itself, which decreed that the fruits of
the property shall be in lieu of interest on the amount to be paid to
petitioner as reimbursement for improvements. Any contrary opinion,
in his view, would be tantamount to an amendment of a decision
which has long become final and executory and, therefore, cannot be
lawfully done.
Petitioner, therefore, prayed that: (1) a Writ of Preliminary Injunction
be issued enjoining the enforcement of the Orders of September 23,
1970 and November 18, 1970, and the Writ of Execution issued
thereto, or restoring to petitioner the possession of the property if the
private respondents had been placed in possession thereof; (2)
annulling said Orders as well as the Writ of Execution, dissolving the
receivership established over the property; and (3) ordering private
respondents to account to petitioner all the fruits they may have
gathered or collected from the property in question from the time of
petitioiier's illegal dispossession thereof.
On January 29, 1971, this Court issued the Writ of Preliminary
Injunction. On January 30, 1971, private respondents filed a Motion
for Reconsideration and/or Modification of the Order dated January
29, 1971. This was followed by a Supplemental Motion for
Reconsideration and Manifestation on February 3, 1971. In the latter
motion, private respondents manifested that the amount of
P14,040.96, representing the amount decreed in the judgment as
reimbursement to petitioner for the improvements, plus interest for
six months, has already been deposited by them in court, "with the
understanding that said amount shall be turned over to the plaintiff
after the court a quo shall have determined the improvement on Lot
5785-A, and subsequently the remaining balance of the deposit shall
be delivered to the petitioner (plaintiff therein) in the event he loses
the bid for Lot 5785-B in favor of private respondent Eleuterio
Zamora."8 The deposit is evidenced by a certification made by the
Clerk of the Court a quo.9 Contending that said deposit was a faithful
compliance with the judgment of the trial court, private respondent
Quirino Comintan prayed for the dissolution of the Writ of Injunction.
It appears that as a consequence of the deposit made by private
respondents, the Deputy, Sheriff of Calauag, Quezon ousted
petitioner's representative from the land in question and put private
respondents in possession thereof. 10
On March 10, 1971, petitioner filed a "Comment on Respondents'
'Motion for Reconsideration' dated January 29, 1971' and
'Supplemental Motion for Reconsideration and Manifestation,'"
contending that the tender of deposit mentioned in the Suplemental
Motion was not really and officially made, "inasmuch as the same
is not supported by any official receipt from the lower court, or from
its clerk or cashier, as required by law;" that said deposit does not
constitute sufficient compliance with the judgment sought to be
enforced, neither was it legally and validly made because the
requisites for consignation had not been complied with; that the
tender of legal interest for six months cannot substitute petitioner's
enjoyment of the fruits of the property as long as the judgment in
Civil Case No. C-90 has not been implemented in the manner
decreed therein; that contrary to the allegations of private
respondents, the value of the improvements on the whole property
had been determined by the lower court, and the segregation of the
improvements for each lot should have been raised by them at the
opportune moment by asking for the modification of the decision
before it became final and executory; and that the tolls on the
property constituted "civil fruits" to which the petitioner is entitled
under the terms of the decision.
IV
The issue decisive of the controvery is—after the rendition by the
trial court of its judgment in Civil Case No. C-90 on March 22, 1966
confirming the award of one-half of the property to Quirino
Comintan—whether or not petitioner is still entitled to retain for his
own exclusive benefit all the fruits of the property, such as the tolls
collected by him from March 1967 to December 1968, and
September 1969 to March 31, 1970, amounting to about P25,000.00.
In other words, petitioner contends that so long as the aforesaid
amount of P13,632,00 decreed in the judgment representing the
expenses for clearing the land and the value of the coconuts and fruit
trees planted by him remains unpaid, he can appropriate for his
exclusive benefit all the fruits which he may derive from the property,
without any obligation to apply any portion thereof to the payment of
the interest and the principal of the debt.
We find this contention untenable.
There is no question that a possessor in good faith is entitled to the
fruits received before the possession is legally
interrupted. 11 Possession in good faith ceases or is legally
interrupted from the moment defects in the title are made known to
the possessor, by extraneous evidence or by the filing of an action in
court by the true owner for the recovery of the property. 12 Hence, all
the fruits that the possessor may receive from the time he is
summoned in court, or when he answers the complaint, must be
delivered and paid by him to the owner or lawful possessor. 13
However, even after his good faith ceases, the possessor in fact can
still retain the property, pursuant to Article 546 of the New Civil Code,
until he has been fully reimbursed for all the necessary and useful
expenses made by him on the property. This right of retention has
been considered as one of the conglomerate of measures devised
by the law for the protection of the possessor in good faith. Its object
is to guarantee the reimbursement of the expenses, such as those
for the preservation of the property,14 or for the enhancement of its
utility or productivity.15 It permits the actual possessor to remain in
possession while he has not been reimbursed by the person who
defeated him in the possession for those necessary expenses and
useful improvements made by him on the thing possessed. The
principal characteristic of the right of retention is its accessory
character. It is accessory to a principal obligation. Considering that
the right of the possessor to receive the fruits terminates when his
good faith ceases, it is necessary, in order that this right to retain
may be useful, to concede to the creditor the right to secure
reimbursement from the fruits of the property by utilizing its proceeds
for the payment of the interest as well as the principal of the debt
while he remains in possession. This right of retention of the property
by the creditor, according to Scaevola, in the light of the provisions of
Article 502 of the Spanish Civil Code,16 is considered not a coercive
measure to oblige the debtor to pay, depriving him temporarily of the
enjoyment of the fruits of his property, but as a means of obtainitig
compensation for the debt. The right of retention in this case is
analogous to a contract of antichresis and it cati be considered as a
means of extinguishing the obligation, inasmuch as the right to retain
the thing lasts only for the period necessary to enable the creditor to
be reimbursed from the fruits for the necessary and useful
expenses. 17
According to Manresa, the right of retention is, therefore, analogous
to that of a pledge, if the property retained is a movable, and to that
of antichresis, if the property held is immovable.18 This construction
appears to be in harmony with similar provisions of the civil law
which employs the right of retention as a means or device by which a
creditor is able to obtain the payment of a debt. Thus, under Article
1731 of the New Civil Code, any person who has performed work
upon a movable has a right to retain it by way of pledge until he is
paid. Similarly, under Article 1914 of the same Code, the agent may
retain in pledge the things which are the object of the agency until
the principal effects reimbursement of the funds advanced by the
former for the execution of the agency, or he is indemnified for all
damages which he may have suffered as a consequence of the
execution of the agency, provided he is free from fault. To the same
effect, the depositary, under Article 1994 of the same Code, may
retain the thing in pledge until the full payment of what may be due
him by reason of the deposit. The usufructuary, pursuant to Article
612 of the same Code, may retain the property until he is reimbursed
for the amount paid for taxes levied on the capital (Article 597) and
tor extraordinary repairs (Article 594).
In all of these cases, the right of retention is used as a means of
extinguishing the obligation. As amply observed by Manresa: "El
derecho de retencion, lo hemos dicho, es el derecho de prenda o el
de anticresis constituido por la ley con independencia de las
partes." 19 In a pledge, if the thing pledged earns or produces fruits,
income, dividends or interests, the creditor shall compensate what
he receives with those which are owing him.20 In the same manner,
in a contract of antichresis, the creditor acquires the right to receive
the fruits of an immovable of his debtor with the obligation to apply
them to payment of the interest, if owing, and thereafter to the
principal of his credit. 21 The debtor can not reacquire enjoyment of
the immovable until he has actually paid what he owes the
creditor. 22
Applying the afore-cited principles to the case at bar, petitioner
cannot appropriate for his own exclusive benefit the tolls which he
collected from the property retained by him. It was his duty under the
law, after deducting the necessary expenses for his administration,
to apply such amount collected to the payment of the interest, and
the balance to the payment of the obligation.
We hold, therefore, that the disputed tolls, after deducting petitioner's
expenses for administration, belong to Quirino Comintan, owner of
the land through which the toll road passed, further considering that
the same was on portions of the property on which petitioner had not
introduced any improvement. The trial court itself clarified this matter
when it placed the toll road under receivership. The omission of any
mention of the tolls in the decision itself may be attributed to the fact
that the tolls appear to have been collected after the rendition of the
judgment of the trial court.
The records further reveal that earnest efforts have been made by
private respondents to have the judgment executed in the most
practicable manner. They deposited in court the amount of the
judgment in the sum of P13,632.00 in cash, subject only to the
accounting of the tolls collected by the petitioner so that whatever is
due from him may be set off with the amount of reimbursement. This
is just and proper under the circumstances and, under the law,
compensation or set off may take place, either totally or partially.
Considering that petitioner is the creditor with respect to the
judgment obligation and the debtor with respect to the tolls collected,
Comintan being the owner thereof, the trial court's order for an
accounting and compensation is in accord with law. 23
With respect to the amount of reimbursement to be paid by
Comintan, it appears that the dispositive portion of the decision was
lacking in specificity, as it merely provided that Comintan and
Zamora are jointly liable therefor. When two persons are liable under
a contract or under a judgment, and no words appear in the contract
or judgment to make each liable for the entire obligation, the
presumption is that their obligation is joint or mancomunada, and
each debtor is liable only for a proportionate part of the
obligation. 24 The judgment debt of P13,632.00 should, therefore, be
pro-rated in equal shares to Comintan and Zamora.
Regarding Lot 5785-B, it appears that no public sale has yet been
conducted by the Bureau of Lands and, therefore, petitioner is
entitled to remain in possession thereof. This is not disputed by
respondent Eleuterio Zamora. 25 After public sale is had and in the
event that Ortiz is not declared the successful bidder, then he should
be reimbursed by respondent Zamora in the corresponding amount
for the improvements on Lot 5785-B.
WHEREFORE, in view hereof, the Order of respondent Court of
November 18, 1970 is hereby modified to conform to the foregoing
judgment. The Writ of Preliminary Injunction, dated January 29,
1971, is hereby dissolved. Without special pronouncement as to
costs.