CA Agro-Industrial Development Corporation vs CA GR No. 90027. March 3, 1993

Facts:

                   CA Agro (through its President, Aguirre) and spouses Pugao entered into an agreement whereby the former purchased two parcels of land for P350, 525 with a P75, 725 down payment while the balance was covered by three (3) postdated checks. Among the terms embodied in a Memorandum of True and Actual Agreement of Sale of Land were that 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 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 The same could be withdrawn only upon the joint signatures of a representative of the petitioner upon full payment of the purchase price. They then rented Safety Deposit box of private respondent Security Bank and Trust Company (SBTC). For this purpose, both signed a contract of lease which contains 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.

After the execution of the contract, two (2) renter’s key were given to Aguirre, and Pugaos. A key guard remained with the bank. The safety deposit box has two key holes and can be opened with the use of both keys. Petitioner claims that the CTC were placed inside the said box.

Thereafter, a certain Mrs. Ramos offered to buy from the petitioner the two (2) lots at a price of P225 per sqm. Mrs. Ramose demanded the execution of a deed of sale which necessarily entailed the production of the CTC. Aguirre and Pugaos then proceeded to the bank to open the safety deposit box. However, when opened in the presence of bank’s representative, the box yielded no certificates. Because of the delay in reconstitution of title, Mrs. Ramos withdrew her earlier offer and as a consequence petitioner failed to realize the expected profit of P280 , 500. Hence, the latter filed a complaint for damages.

RTC: Dismissed the complaint

CA: Affirmed

Issue:

          Whether or not the contractual relation between a commercial bank and another party in the contract of rent of a safety deposit box is one of 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.

          American Jurisprudence:

          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 bailee, the bailment being for hire and mutual benefit.

          Our provisions on safety deposit boxes are governed by Section 72 (a) of the General Banking Act, and this primary function is still found within the parameters of a contract of deposit like 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. Thus, depositary’s liability is governed by our civil code rules on obligation and contracts, and thus the SBTC would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreement.