Deposit: Necessary Deposit

GR 126780 (Feb 17, 2005)

YHT Realty Corp v CA
Tinga

Petitioners and Lopez and Tan stole many times from McLoughlin the respondent during his stay in
this country using the keys to open a deposit safety box. Petitioners raised the defense of an
undertaking (on the use of deposit box). RTC held it as void for being contrary to Art 2003 and
Public Policy. CA affirmed. SC affirmed

DOCTRINE
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 is suppressed
or diminished shall be void.

Article 2003 was incorporated 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.

Art 2002 on the other hand only applies if 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.

Rule 45 petition
IMPORTANT PEOPLE
[Petitioner] YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA PAYAM
[Respondent] THE COURT OF APPEALS and MAURICE McLOUGHLIN (Australian businessman-
philanthropist)
Brunhilda Tan (the cause of all)
FACTS
1. Private respondent McLoughlin, used to stay at Sheraton Hotel during his trips to the
Philippines prior to 1984 when he met Tan. Tan befriended him and accompanying him
around including visiting impoverished children and buying gifts for them and distributing
same to charitable institutions.
a. Tan also convinced him to transfer from Sheraton Hotel to Tropicana where Lainez,
Payam and Danilo Lopez (manager of Hotel) were employed (Lainez and Payam had
custody of the keys for the safety deposit boxes).
2. On 30 October 1987, McLoughlin registered with Tropicana and rented a safety deposit box.
a. Mcloughlin was aware of the procedure observed in safety deposit boxes where it
could only be opened using two keys, one of which is given to the registered guest,
and the other remaining in the possession of the management of the hotel.
i. 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.
b. McLoughlin allegedly placed the following in his safety deposit box:
i. US$15,000.00 (in two envelopes),
ii. AUS$10,000.00 (in an envelope);
iii. Two other envelopes containing letters and credit cards;
iv. Two bankbooks and a checkbook.

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3. 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 the US$5k envelope and
AUS$10,000.00, his passports and his credit cards. McLoughlin left the other items in the box
as he did not check out of his room at the Tropicana.
a. At HK he discovered that the US$5k envelop only contained US$3K. He thought
that it was just a result of bad accounting since he did not spend anything from that
envelope.
4. At Manila, he checked out of Tropicana and left for Australia. In Australia he discovered
that the US$10k was short of 5k and that the jewelry he bought in Hongkong was
missing except for a diamond bracelet.
5. When he returned to PH, he asked Lainez if some money and/or jewelry which he had
lost were found and returned to her or to the management. Lainez denied finding
anything.
6. McLoughlin again registered room and deposit box placing therein US$15,000.00 envelope
AUS$10,000.00 envelope and other envelopes containing his traveling papers/documents.
a. Once he returned he asked the management to open the box and noticed that in the
US$15k envelope- US$2k were missing; the AUS$10k- AUS$4.5k were missing.
7. He confronted Lainez and Payam who admitted that Tan opened the safety deposit box
with the key assigned to him. 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 while
respondent was asleep.
8. Respondent Mcloughlin requested for investigation, Lopez arranged meeting with police.
a. Police did not arrive, Lopez and Tan wrote a promissory note promising payment of
AUS$4k and US$2k or its equivalent in Philippine currency on or before May 5, 1988.
Both Tan and Lopez signed it.
9. Despite it, respondent insisted that the hotel must assume responsibility for the loss he
suffered. Lopez refused to accept it because of the Undertaking For the Use Of Safety
Deposit Box, 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.
10. Respondent went back to Australia to consult his lawyers regarding the stipulations.
Lawyers: void for being violative of universal hotel practices and customs.
a. They sent letter President Corazon Aquino. The Office of the President referred the
letter to the DOJ which forwarded it to the Western Police District (WPD).
11. McLoughlin went to Malacaang 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.
a. Several times he 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.
12. Finally, WPD conducted an investigation thus affidavit to Manila City Fiscals Office.
But McLoughlin left again for Australia without receiving the notice of the hearing. Thus,
case dismissed for failure to prosecute. Mcloughlin requested the reinstatement of the
criminal charge for theft.
13. Upon his return in Manila, meetings were held between McLoughlin and his lawyer which
resulted to the filing of a complaint for damages against YHT Realty Corporation, Lopez,
Lainez, Payam and Tan (defendants). After filing the complaint, McLoughlin left again for
Australia to attend to an urgent business matter.
a. Tan and Lopez, however, were not served with summons, and trial proceeded with
only Lainez, Payam and YHT Realty Corporation as defendants

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 b. During the trial of the case, McLoughlin had been in and out of the country to attend
to urgent business in Australia. In PH 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.
14. RTC Manila IFO McLoughlin finding
McLoughlins allegations sufficiently shown by his direct and straightforward manner
of testifyingthus credible; that if McLoughlin had not lost his dollars, he would not
have gone through the trouble of seeking aid and assistance from the Office of the
President, DOJ, police authorities and the City Fiscals Office.
On the losses of US$7k and jewelry worth US$1.2k McLoughlin made no claim for
such in his complaint (he was unsure how and who is responsible). RTC however
considered admission in pre-trial brief to presume of the losses.
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.
That paragraphs (2) and (4) of the Undertaking For The Use Of Safety Deposit
Box are void for being contrary to the express mandate of Article 2003 of the New
Civil Code and against public policy.
15. The Court of Appeals affirmed thus to SC by rule 65.
RELATED ISSUE with HOLDING
Note: Petitioners availed of wrong remedy (65) since they raised questions of facts in the
issues (especially on credibility). SC affirmed CA and RTC findings of facts.
Issues Raised:
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; (YES)
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; (YES)
c) Whether the Undertaking For The Use of Safety Deposit Box admittedly executed by private
respondent is null and void; (YES)
d) Whether the damages awarded to private respondent, as well as the amounts thereof, are
proper under the circumstances (YES)

Findings of gross negligence is supported by evidence. The employees and

management failed to exercised due diligence
Evidence reveals that two keys are required to open the safety deposit boxes of Tropicana.
The guest alone cannot open the safety deposit box without the assistance of the
management or its employees. 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.
o Payam and Lainez, as employees, had custody of the master key of the management
when the loss took place.
o They admitted that they assisted Tan on three separate occasions in opening safety
deposit box.
o Therefore Tropicana had prior knowledge that a person aside from the registered
guest had access to the safety deposit box and they did not even notify of such to
respondent.
Management contends that respondent made its employees believe that Tan was his spouse
for she was always with him most of the time. But no evidence that McLoughlin
introduced Tan to the management as his wife.
o 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. Petitioners failed to exercised due diligence, thus under Article 1170 of the
NCC, those who, in the performance of their obligations, are guilty of negligence, are
liable for damages.

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 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.
o 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.

The Undertaking is void for being contrary to Art 2003 and Public Policy
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 is suppressed or diminished shall be void.
Article 2003 was incorporated 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.
o 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.
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.
o 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
Petitioners raised 2002 which exempts the hotel-keeper from liability if the loss is due to
the acts of his guest, his family, or visitors. SC disagrees since 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.
o Here 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.
o Without the assistance of hotel employees, the loss would not have occurred.
o 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.

SC ruled that the case is not merely mounted on contract theory but on Tort that
such can exist even if there is contractual relationship.

SC affirmed damages

DISPOSITIVE PORTION
Affirmed

Damages:
(1) US$2,000.00 and AUS$4,500.00 or their peso equivalent at the time of payment;

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(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
(10) P200,000 representing attorneys fees.