CA Agro-Industrial Dev.
Corp vs CA the box remained with the respondent bank; without
Facts:
On July 3, 1979, petitioner (through its President- Sergio
Aguirre) and the Spouses Ramon and Paula Pugao
entered into an agreement whereby the former
purchase two parcel of lands from the latter. It was paid
of downpayment while the balance was covered by
there postdated checks. Among the terms and
conditions embodied in the agreement were the titles
shall be transferred to the petitioner upon full payment
of the price and the owner's copies of the certificate of
titles shall be deposited in a safety deposit box of any
bank. Petitioner and the Pugaos then rented Safety
Deposit box of private respondent Security Bank and
Trust Company.
Thereafter, a certain Margarita Ramos offered to buy
from the petitioner. Mrs Ramos demand the execution
of a deed of sale which necessarily entailed the
production of the certificate of titles. In view thereof,
Aguirre, accompanied by the Pugaos, then proceed to
the respondent Bank to open the safety deposit box and
get the certificate of titles. However, when opened in
the presence of the Bank's representative, the box
yielded no such certificate. Because of the delay in the
reconstitution of the title, Mrs Ramos withdrew her
earlier offer to purchase.
Hence this petition.
Issue:
Whether or not the contract of rent between a
commercial bank and another party for the use of safety
deposit box can be considered alike to a lessor-lessee
relationship.
Ruling:
The petitioner is correct in making the contention that
the contract for the rent of the deposit box is not a
ordinary contract of lease as defined in Article 1643 of
the Civil Code. However, the Court do not really
subscribe to its view that the same is a contract of
deposit that is to be strictly governed by the provisions
in Civil Code on Deposit; the contract in the case at bar
is a special kind of deposit. It cannot be characterized as
an ordinary contract of lease under Article 1643
because the full and absolute possession and control of
the safety deposit box was not given to the joint
renters- the petitioner and the Pugaos. The guard key of
this key, neither of the renters could open the box. On
the other hand, the respondent bank could not likewise
open the box without the renter's key. The Court further
assailed that the petitioner is correct in applying
American Jurisprudence. Herein, the prevailing view is
that the relation between the a bank renting out safe
deposits boxes and its customer with respect to the
contents of the box is that of a bail or/ and bailee, the
bailment being for hire and mutual benefits. That
prevailing rule has been adopted in Section 72 of the
General Banking Act.
Section 72. In addition to the operations specifically
authorized elsewhere in this Act, banking institutions
other that building and loan associations may perform
the following services:
(a) Receive in custody funds, document and valuable
objects and rents safety deposits taxes for the safeguard
of such effects.
xxx xxx xxx
The bank shall perform the services permitted under
subsections (a) (b) and (c) of this section as depositories
or as agents.
Luzan Sia vs CA
Facts: Plaintiff Luzon Sia rented a safety deposit box of
Security Bank and Trust Co. (Security Bank) at its
Binondo Branch wherein he placed his collection of
stamps. The said safety deposit box leased by the
plaintiff was at the bottom or at the lowest level of the
safety deposit boxes of the defendant bank. During the
floods that took place in 1985 and 1986, floodwater
entered into the defendant banks premises, seeped
into the safety deposit box leased by the plaintiff and
caused, according damage to his stamps collection.
Security Bank rejected the plaintiffs claim for
compensation for his damaged stamps collection.
Sia, thereafter, instituted an action for damages against
the defendant bank. Security Bank contended that its
contract with the Sia over safety deposit box was one of
lease and not of deposit and, therefore, governed by
the lease agreement which should be the applicable
law; the destruction of the plaintiffs stamps collection
was due to a calamity beyond obligation on its part to
notify the plaintiff about the floodwaters that inundated
its premises at Binondo branch which allegedly seeped
into the safety deposit box leased to the plaintiff. The
trial court rendered in favor of plaintiff Sia and ordered
Sia to pay damages.

Issue: Whether or not the Bank is liable for

negligence.

Held: Contract of the use of a safety deposit box of a

bank is not a deposit but a lease. Section 72 of the
General Banking Act [R.A. 337, as amended] pertinently
provides: 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 safequarding of such effects.

As correctly held by the trial court, Security Bank was

guilty of negligence. The banks
negligenceaggravated the injury or damage to the
stamp collection. SBTC was aware of the floods of 1985
and 1986; it also knew that the floodwaters inundated
the room where the safe deposit box was located. In
view thereof, it should have lost no time in notifying the
petitioner in order that the box could have been opened
to retrieve the stamps, thus saving the same from
further deterioration and loss. In this respect, it failed to
exercise the reasonable care and prudence expected of
a good father of a family, thereby becoming a party to
the aggravation of the injury or loss. Accordingly, the
aforementioned fourth characteristic of a fortuitous
event is absent. Article 1170 of the Civil Code, which
reads Those who in the performance of their obligation
are guilty of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof, are liable
for damages is applicable. Hence, the petition was
granted.

The provisions contended by Security Bank in the lease

agreement which are meant to exempt SBTC from any
liability for damage, loss or destruction of the contents
of the safety deposit box which may arise from its own
agents fraud, negligence or delay must be stricken
down for being contrary to law and public policy.