Credit Transactions Cases for August 19, 2017

THE ROMAN CATHOLIC BISHOP OF JARO vs .GREGORIO DE LA

PENA

Facts:
> The plaintiff is the trustee of a charitable bequest made for the
construction of a leper hospital and that Father Agustin de la Pena was
the duly authorized representative of the plaintiff to receive the legacy.

> The defendant is the administrator of the estate of Father De la Pena.

> During the war of the revolution, Father De la Pena was arrested by the
military authorities as a political prisoner. The arrest of Father De la
Pena 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 deposited had been collected by him is 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.

ISSUE: Whether or not Father De la Pena is liable for the loss of the
funds?

Ruling: NO.

> 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, that "no one shall be liable for events which could not be
foreseen, or which having been foreseen were inevitable, with the
exceptions of the cases expressly mentioned in the law of those in which
the obligation so declares." (Art. 1105).

> The Supreme Court finds and declares that the money which is the
subject matter of the action was deposited by Father De la Pena 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
Pena was not responsible for its loss.

> Further, one who, having in his possession trust funds, deposits them
in his personal account in a bank and mixes them with his own funds,
does not thereby assume an obligation different from that under which
he would have lain in such deposit had not been made; not does he
thereby become liable to repay the money at all hazards; and where such
funds are taken from the bank by fuerza mayor, he is relieved from
responsibility in relation thereto.

BPI vs. Intermediate Appellate Court GR# L-66826, August 19, 1988

Facts:

Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar

savings account and a peso current account. An application for a dollar
drat was accomplished by Virgillo Garcia branch manager of COMTRUST
payable to a certain Leovigilda Dizon. In the PPLICtion, Garcia indicated
that the amount was to be charged to the dolar savings account of the
Zshornacks. There was no indication of the name of the purchaser of the
dollar draft. Comtrust issued a check payable to the order of Dizon.
When Zshornack noticed the withdrawal from his account, he demanded
an explainaiton from the bank. In its answer, Comtrust claimed that the
peso value of the withdrawal was given to Atty. Ernesto Zshornack,
brother of Rizaldy. When he encashed with COMTRUST a cashiers check
for P8450 issued by the manila banking corporation payable to Ernesto.

Issue: Whether the contract between petitioner and respondent bank is a

deposit?

Held: The document which embodies the contract states that the
US$3,000.00 was received by the bank for safekeeping. The subsequent
acts of the parties also show that the intent of the parties was really for
the bank to safely keep the dollars and to return it to Zshornack at a
later time. Thus, Zshornack demanded the return of the money on May
10, 1976, or over five months later.

Note:

The above arrangement is that contract defined under Article 1962, New
Civil Code, which reads:

Art. 1962. A deposit is constituted from the moment a person receives a

thing belonging to another, with the obligation of safely keeping it and of
returning the same. If the safekeeping of the thing delivered is not the
principal purpose of the contract, there is no deposit but some other
contract.

*With regard to the liability of the bank, are as follows:

Issue: WON BPI is liable. YES

Held: Comtrust failed to show how the transaction involving the check is
related to the transaction involving the dollar draft in favor of Dizon
financed by the account. They are two separate transactions. There is no
evidence that the withdrawal was made in pursuant to the agreement.
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.
Parties did not intend to sell the US dollars to the Central Bank within
one day from receipt.

The above arrangement is that contract of deposit defined under NCC

1962. However, the contract is covered by Central Bank Circular No. 20
on restrictions on gold and foreign exchange transactions. Safekeeping of
foreign currency without selling them to the Central Bank is a prohibited
transaction. Pursuant to NCC 5, it is void. Hence, Zshornack, under the
principal of in pari delicto, cannot recover.

SC modified the decision of the IAC, ordered BPI to restore the dollar
savings account $1000, to earn interest rate fixed by the bank from Oct
27, 1975 + pay damages P8k.

CA-Agro Industrial Development Corporations vs Court of Appeals

Facts:
On July 3, 1979, petitioner (through its President- Sergio Aguirre) and
the Spouses Ramon and Paula Pugao entered into an agreement whereby
the former purchase two parcel of lands from the latter for a
consideration of P350,625.00. Of this amount, P75,725 was paid as
downpayment while the balance was covered by three (3) postdated
checks. Among the terms and conditions embodied in the agreement
were the titles shall be transferred to the petitioner upon full payment of
the price and the owner's copies of the certificate of titles shall be
deposited in a safety deposit box of any bank. Petitioner and the Pugaos
then rented Safety Deposit box of private respondent Security Bank and
Trust Company.

Thereafter, a certain Margarita Ramos offered to buy from the petitioner

the two (2) lots at a price of P225.00 per square meter. Mrs Ramos
demand the execution of a deed of sale which necessarily entailed the
production of the certificate of titles. In view thereof, Aguirre,
accompanied by the Pugaos, then proceed to the respondent Bank to
open the safety deposit box and get the certificate of titles. However,
when opened in the presence of the Bank's representative, the box
yielded no such certificate. Because of the delay in the reconstitution of
the title, Mrs Ramos withdrew her earlier offer to purchase.

Hence this petition.

Issue:

Whether or not the 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 is one of a bailor and bailee?

Ruling:
Yes, 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
Pugaos.
The guard key of the box remained with the respondent bank; without
this key, neither of the renters could open the box. On the other hand,
the respondent bank could not likewise open the box without the renter's
key. The Court further assailed that the petitioner is correct in applying
American Jurisprudence. Herein, the prevailing view is that the relation
between the bank renting out safe deposits boxes and its customer with
respect to the contents of the box is that of a bail or/ and bailee, the
bailment being for hire and mutual benefits. That prevailing rule has
been adopted in Section 72 of the General Banking Act.

Section 72. In addition to the operations specifically authorized

elsewhere in this Act, banking institutions other that building and loan
associations may perform the following services:
(a) Receive in custody funds, document and valuable objects and rents
safety deposits taxes for the safeguard of such effects.
xxx xxx xxx
The bank shall perform the services permitted under subsections (a) (b)
and (c) of this section as depositories or as agents.

ANGEL JAVELLANA vs. JOSE LIM, ET AL.

FACTS: The attorney for the plaintiff, Angel Javellana, filed a complaint
in 1906 with the CFI Iloilo, for the defendants Lim to pay him the sum
owed him with interest. The complaint alleged that in 1897 the Lims
executed and subscribed a document in favor of Javellana reading as
follows:

We have received from Angel Javellana, as a deposit without interest, the

sum of two thousand six hundred and eighty-six cents of pesos fuertes
(P2600.86), which we will return to the said gentleman, jointly and
severally, on the 20th of January, 1898. - Jaro, 26th of May, 1897. -
Signed Jose Lim. - Signed: Ceferino Domingo Lim.

The document of indebtedness stated that Javellana left on deposit with

the Lims a given sum of money which they were jointly and severally
obliged to return on the date fixed in the document. When the obligation
became due, the Lims begged Javellana for an extension of time for the
payment to which the plaintiff acceded. The debtors paid, on account of
interest due, the sum of P1,000 in 1900. In 1902, the parties executed
another document, written in the Visayan dialect and followed by a
translation into Spanish, where it was acknowledged that the amount
deposited had not been returned to Javellana on the stipulated date, for
which reason he was subjected to losses and damages amounting to
P830. The return of the amount was again stipulated in that later
document, with the further agreement that the amount deposited should
bear interest at the rate of 15% per annum, less the 1,000 pesos paid.
The document was called a deposit, and stated that they could
accomplish its return by the delivery of a sum equal to the one received
by them.

The Lims answered acknowledging the facts stated in the complaint, and
admitted that they paid P1,102.16. However, they denied that payment
was made on account of the interest, instead alleging that it was for the
account of the principal. They also denied that there had been any
agreement as to an extension of the time for payment and the payment of
interest. As a counterclaim, the defendants alleged that they had paid to
the plaintiff sums which, together with the P1,102.16 acknowledged in
the complaint, came up to the total sum of P5,602.16, and that,
deducting therefrom the total sum of P2,686.58 stated in the document
transcribed in the complaint, the plaintiff still owed the defendants
P2,915.58
ISSUE: WON THE TRANSACTION WAS ONE OF DEPOSIT OR LOAN?

RULING: The debtors were lawfully authorized to make use of the

amount deposited, which they have done, as shown by the fact that they
asked for an extension of the time for the return thereof, and
acknowledged that they have subjected their creditor to losses and
damages for not complying with what had been stipulated. Also, the Lims
were conscious that they had used for their own profit and gain the
money that they received apparently as a deposit, which was why they
engaged to pay interest. Such conduct on the part of the debtors is
unquestionable evidence that the transaction entered into between the
interested parties was not a deposit, but a real contract of loan.

Article 1767 CC: The depository cannot make use of the thing deposited
without the express permission of the depositor. Otherwise he shall be
liable for losses and damages.

Article 1768 CC: When the depository has permission to make use of the
thing deposited, the contract loses the character of a deposit and becomes
a loan or bailment. The permission shall not be presumed, and its
existence must be proven.

When in 1898, Jose Lim went to the office of Javellana and asked for an
extension of one year to pay return the money, it was because he did not
have in his possession the amount deposited, he having made use of the
same. In turn, the creditor, by granting them the extension, evidently
confirmed the express permission previously given to use and dispose of
the amount stated as having been deposited. There was no renewal of the
contract deposited converted into a loan, because, as has already been
stated, the defendants received said amount by virtue of real loan
contract under the name of a deposit, since the so-called bailees were
forthwith authorized to dispose of the amount deposited.

The case for the Lims' counterclaim for P5,602.16 is defeated, because
the existence and certainty of said indebtedness imputed to Javellana
had not been proven, and the Lims had failed to show that Javellana had
received partial payments and failed to issue a receipt, which he had
consistently done.

ANGEL JAVELLANA vs. JOSE LIM, ET AL.

FACTS: The attorney for the plaintiff, Angel Javellana, filed a complaint
in 1906 with the CFI Iloilo, for the defendants Lim to pay him the sum
owed him with interest. The complaint alleged that in 1897 the Lims
executed and subscribed a document in favor of Javellana reading as
follows:

We have received from Angel Javellana, as a deposit without interest, the

sum of two thousand six hundred and eighty-six cents of pesos fuertes
(P2600.86), which we will return to the said gentleman, jointly and
severally, on the 20th of January, 1898. - Jaro, 26th of May, 1897. -
Signed Jose Lim. - Signed: Ceferino Domingo Lim.

The document of indebtedness stated that Javellana left on deposit with

the Lims a given sum of money which they were jointly and severally
obliged to return on the date fixed in the document. When the obligation
became due, the Lims begged Javellana for an extension of time for the
payment to which the plaintiff acceded. The debtors paid, on account of
interest due, the sum of P1,000 in 1900. In 1902, the parties executed
another document, written in the Visayan dialect and followed by a
translation into Spanish, where it was acknowledged that the amount
deposited had not been returned to Javellana on the stipulated date, for
which reason he was subjected to losses and damages amounting to
P830. The return of the amount was again stipulated in that later
document, with the further agreement that the amount deposited should
bear interest at the rate of 15% per annum, less the 1,000 pesos paid.
The document was called a deposit, and stated that they could
accomplish its return by the delivery of a sum equal to the one received
by them.

The Lims answered acknowledging the facts stated in the complaint, and
admitted that they paid P1,102.16. However, they denied that payment
was made on account of the interest, instead alleging that it was for the
account of the principal. They also denied that there had been any
agreement as to an extension of the time for payment and the payment of
interest. As a counterclaim, the defendants alleged that they had paid to
the plaintiff sums which, together with the P1,102.16 acknowledged in
the complaint, came up to the total sum of P5,602.16, and that,
deducting therefrom the total sum of P2,686.58 stated in the document
transcribed in the complaint, the plaintiff still owed the defendants
P2,915.58

ISSUE: WON THE TRANSACTION WAS ONE OF DEPOSIT OR LOAN?

RULING: The debtors were lawfully authorized to make use of the

amount deposited, which they have done, as shown by the fact that they
asked for an extension of the time for the return thereof, and
acknowledged that they have subjected their creditor to losses and
damages for not complying with what had been stipulated. Also, the Lims
were conscious that they had used for their own profit and gain the
money that they received apparently as a deposit, which was why they
engaged to pay interest. Such conduct on the part of the debtors is
unquestionable evidence that the transaction entered into between the
interested parties was not a deposit, but a real contract of loan.

Article 1767 CC: The depository cannot make use of the thing deposited
without the express permission of the depositor. Otherwise he shall be
liable for losses and damages.

Article 1768 CC: When the depository has permission to make use of the
thing deposited, the contract loses the character of a deposit and becomes
a loan or bailment. The permission shall not be presumed, and its
existence must be proven.

When in 1898, Jose Lim went to the office of Javellana and asked for an
extension of one year to pay return the money, it was because he did not
have in his possession the amount deposited, he having made use of the
same. In turn, the creditor, by granting them the extension, evidently
confirmed the express permission previously given to use and dispose of
the amount stated as having been deposited. There was no renewal of the
contract deposited converted into a loan, because, as has already been
stated, the defendants received said amount by virtue of real loan
contract under the name of a deposit, since the so-called bailees were
forthwith authorized to dispose of the amount deposited.
The case for the Lims' counterclaim for P5,602.16 is defeated, because
the existence and certainty of said indebtedness imputed to Javellana
had not been proven, and the Lims had failed to show that Javellana had
received partial payments and failed to issue a receipt, which he had
consistently done.