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24 SUPREMECOURTREPORTSANNOTATED

Siavs.CourtofAppeals
*
G.R.No.102970.May13,1993.

LUZAN SIA, petitioner, vs. COURT OF APPEALS and


SECURITYBANKANDTRUSTCOMPANY,respondents.

Civil Law Deposit Contract for the use of safety deposit box is a
specialkindofdepositandtherelationshipbetweenthepartiesthereto,with
respecttothecontentsofthebox,isthatofabailorandbailee,thebailment
beingforhireandmutualbenefit.IntherecentcaseofCAAgroIndustrial
Development Corp. vs. Court of Appeals, this Court explicitly rejected the
contentionthatacontractfortheuseofasafetydepositboxisacontractof
lease governed by Title VII, Book IV of the Civil Code. Nor did We fully
subscribetotheviewthatitisacontractofdeposittobestrictlygovernedby
theCivilCodeprovisionondeposititis,asWedeclared,aspecialkindof
deposit. The prevailing rule in American jurisprudencethat the relation
betweenabankrentingoutsafedepositboxesanditscustomerwithrespect
tothecontentsoftheboxisthatofabailorandbailee,thebailmentbeingfor
hireandmutualbenefithasbeenadoptedinthisjurisdiction.

Same Same Same Conditions in a Lease Agreement covering a


safetydepositboxwhichexemptthebankfromanyliabilityfordamage,loss
or destruction of the contents thereof arising from its own or its agents
fraud, negligence or delay are considered null and void, for being contrary
to law and public policy.Assayed in the light of Our aforementioned
pronouncements in CA AgroIndustrial Development Corp., it is not at all
difficult to conclude that both conditions No. 9 and No. 13 of the Lease
Agreement covering the safety deposit box in question (Exhibits A and
1) must be stricken down for being contrary to law and public policy as
they 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
itsownoritsagentsfraud,negligenceordelay.Accordingly,SBTCcannot
takerefugeunderthesaidconditions.

Same Same Same Same Although flooding could be considered a


fortuitous event, failure of the bank to give notice to the renter of such fact
makes it liable for damages, its negligence caused to aggravate injury or
damage to the renter Case at bar.Unfortunately, however, the public
respondentfailedtoconsiderthatintheinstantcase,ascorrectlyheldbythe
trialcourt,SBTCwasguiltyofnegligence.The
______________

*THIRDDIVISION.

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Siavs.CourtofAppeals

facts constituting negligence are enumerated in the petition and have been
summarized in this ponencia. SBTCs negligence aggravated the injury or
damage to the petitioner which resulted from the loss or destruction of the
stamp collection. SBTC was aware of the floods of 1985 and 1986 it also
knew that the floodwaters inundated the room where Safe Deposit Box No.
54waslocated.Inviewthereof,itshouldhavelostnotimeinnotifyingthe
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 x x x The destruction or loss of the stamp
collection which was, in the language of the trial court, the product of 27
yearsofpatienceanddiligencecausedthepetitionerpecuniarylosshence,
hemustbecompensatedtherefor.

SameDamages Moral damages, to be recoverable in a relationship


based on a contract, a party committing breach thereof must have acted
fraudulentlyorinbadfaith.Wecannot,however,placeOurimprimaturon
thetrialcourtsawardofmoraldamages.Sincetherelationshipbetweenthe
petitionerandSBTCisbasedonacontract,eitherofthemmaybeheldliable
for moral damages for breach thereof only if said party had acted
fraudulentlyorinbadfaith.Thereisherenoproofoffraudorbadfaithon
thepartofSBTC.

PETITIONforreviewoncertiorariofthedecisionoftheCourtof
Appeals.

ThefactsarestatedintheopinionoftheCourt.
AsuncionLawOfficesforpetitioner.
Cauton,Banares,Carpio&Associatesforprivaterespondent.

DAVIDE,JR.,J.:

TheDecisionofpublicrespondentCourtofAppealsinCAG.R.CV
1
No.26737,promulgatedon21August1991, reversingand

_______________
1 Rollo, 3441. Per Associate Justice Lucio L. Victor, concurred in by Associate

JusticesSantiagoM.KapunanandSegundinoG.Chua.

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26 SUPREMECOURTREPORTSANNOTATED
Siavs.CourtofAppeals
2
settingasidetheDecision,dated19February1990, ofBranch47of
the Regional Trial Court (RTC) of Manila in Civil Case No. 87
42601,entitledLUZAN SIA vs. SECURITY BANK and TRUST
CO., is challenged in this petition for review on certiorari under
Rule45oftheRulesofCourt.
CivilCaseNo.8742601isanactionfordamagesarisingoutof
the destruction or loss of the stamp collection of the plaintiff
(petitioner herein) contained in Safety Deposit Box No. 54 which
had been rented from the defendant 3
pursuant to a contract
denominatedasaLeaseAgreement. Judgmentthereinwasrendered
infavoroftheplaintiff,thedispositiveportionofwhichreads:

WHEREFORE,premisesconsidered,judgmentisherebyrenderedinfavor
oftheplaintiffandagainstthedefendant,SecurityBank&TrustCompany,
orderingthedefendantbanktopaytheplaintiffthesumof

a) Twenty Thousand Pesos (P20,000.00), Philippine Currency, as


actualdamages
b) OneHundredThousandPesos(P100,000.00),PhilippineCurrency,
asmoraldamagesand
c) Five Thousand Pesos (P5,000.00), Philippine Currency, as
attorneysfeesandlegalexpenses.

Thecounterclaimsetupbythedefendantareherebydismissedforlackof
merit.
Nocosts. 4
SOORDERED.

Theantecedentfactsofthepresentcontroversyaresummarizedby
thepublicrespondentinitschallengeddecisionasfollows:

The plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of
the defendant bank at its Binondo Branch located at the Fookien Times
Building,SolerSt.,Binondo,Manilawhereinheplaced

_______________

2Id.,5255.

3ExhibitAand1,OriginalRecordsofCivilCaseNo.8742601,87.

4Rollo,55.

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VOL.222,MAY13,1993 27
Siavs.CourtofAppeals

his collection of stamps. The said safety deposit box leased by the
plaintiffwasatthebottomoratthelowestlevelofthesafetydepositboxes
ofthedefendantbankatitsaforesaidBinondoBranch.
During the floods that took place in 1985 and 1986, floodwater entered
intothedefendantbankspremises,seepedintothesafetydepositboxleased
bytheplaintiffandcaused,accordingtotheplaintiff,damagetohisstamps
collection. The defendant bank rejected the plaintiffs claim for
compensation for his damaged stamps collection, so, the plaintiff instituted
anactionfordamagesagainstthedefendantbank.
Thedefendantbankdeniedliabilityforthedamagedstampscollectionof
theplaintiffonthebasisoftheRulesandRegulationsGoverningtheLease
ofSafeDepositBoxes(Exhs.A1,1A),particularlyparagraphs9and
13,whichreads(sic):

9.TheliabilityoftheBank,byreasonofthelease,islimitedtotheexerciseofthe
diligencetopreventtheopeningofthesafebyanypersonotherthantheRenter,his
authorizedagentorlegalrepresentative
xxx
13.TheBankisnotadepositoryofthecontentsofthesafeandithasneitherthe
possessionnorthecontrolofthesame.TheBankhasnointerestwhatsoeverinsaid
contents, except as herein provided, and it assumes absolutely no liability in
connectiontherewith.

Thedefendantbankalsocontendedthatitscontractwiththeplaintiffover
safetydepositboxNo.54wasoneofleaseandnotofdepositand,therefore,
governed by the lease agreement (Exhs. A, L) which should be the
applicable law that the destruction of the plaintiffs stamps collection was
duetoacalamitybeyonditscontrolandthattherewasnoobligationonits
part to notify the plaintiff about the floodwaters that inundated its premises
atBinondobranchwhichallegedlyseepedintothesafetydepositboxleased
totheplaintiff.
Thetrialcourtthendirectedthatanocularinspectionon(sic)thecontents
of the safety deposit box be conducted, which was done on December 8,
1988byitsclerkofcourtinthepresenceofthepartiesandtheircounsels.A
reportthereonwasthensubmittedonDecember12,1988(Records,p.98A)
andconfirmedinopencourtbybothpartiesthrucounselduringthehearing
onthesamedate(Ibid,p.102)stating:

ThattheSafetyBoxDepositNo.54wasopenedbybothplaintiffLuzanSiaandthe
Acting Branch Manager Jimmy B. Ynion in the presence of the undersigned,
plaintiffsanddefendantscounsel.SaidSafetyBoxwhenopenedcontainstwo

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Siavs.CourtofAppeals

albumsofdifferentsizesandthickness,lengthandwidthandatinboxwithprinted
wordTaiPingShiangRoastPorkinpieceswithChinesedesignsandcharacter.
ConditionoftheabovestatedItems
Bothalbumsarewet,moldyandbadlydamaged.

1. Thefirstalbummeasures101/8inchesinlength,8inchesinwidthand3/4in
thick.Theleavesofthealbumareattachedtoeverypageandcannotbelifted
without destroying it, hence the stamps contained therein are no longer
visible.
2. Thesecondalbummeasures121/2inchesinlength,93/4inwidthand1inch
thick.Someofitspagescanstillbelifted.Thestampsthereincanstillbe
distinguishedbutbeyondrestoration.Othershavelostitsoriginalform.
3. Thetinboxisrustyinside.Itcontainsanalbumwithseveralpiecesofpapers
stuckuptothecoverofthebox.Theconditionofthealbumisthesameas
5
describedinthesecondabovementionedalbum.

The SECURITY BANK AND TRUST COMPANY, hereinafter


referredtoasSBTC,appealedthetrialcourtsdecisiontothepublic
respondentCourtofAppeals.TheappealwasdocketedasCAG.R.
CVNo.26737.
Inurgingthepublicrespondenttoreversethedecisionofthetrial
court, SBTC contended that the latter erred in (a) holding that the
lease agreement is a contract of adhesion (b) finding that the
defendanthadfailedtoexercisetherequireddiligenceexpectedofa
bank in maintaining the safety deposit box (c) awarding to the
plaintiff actual damages in the amount of P20,000.00, moral
damagesintheamountofP100,000.00andattorneysfeesandlegal
expenses in the amount of P5,000.00 and (d) dismissing the
counterclaim.
On 21 August 1991, the public respondent promulgated its
decisionthedispositiveportionofwhichreads:

WHEREFORE, the decision appealed from is hereby REVERSED and


instead the appellees complaint is hereby DISMISSED.
6
The appellant
bankscounterclaimislikewiseDISMISSED.Nocosts.

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5Rollo,3436.

6Rollo,41.

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Siavs.CourtofAppeals

In reversing the trial courts decision and absolving SBTC from


liability,thepublicrespondentfoundandruledthat:

a) thefineprintintheLeaseAgreement(ExhibitsAand
1)constitutesthetermsandconditionsofthecontractof
lease which the appellee (now petitioner) had voluntarily
andknowinglyexecutedwithSBTC
b) the contract entered into by the parties regarding Safe
DepositBoxNo.54wasnotacontractofdepositwherein
the bank became a depositary of the subject stamp
collectionhence,ascontendedbySBTC,theprovisionsof
Book IV, Title XII of the Civil Code on deposits do not
apply
c) Thefollowingprovisionsofthequestionedleaseagreement
ofthesafetydepositboxlimitingSBTCsliability:

9.Theliabilityofthebankbyreasonofthelease,islimitedtotheexercise
ofthediligencetopreventtheopeningoftheSafebyanypersonotherthan
theRenter,hisauthorizedagentorlegalrepresentative
xxx
13. The bank is not a depository of the contents of the Safe and it has
neitherthepossessionnorthecontrolofthesame.TheBankhasnointerest
whatsoever in said contents, except as herein provided, and it assumes
absolutelynoliabilityinconnectiontherewith,

are valid since said stipulations are not contrary to law,


morals,goodcustoms,publicorderorpublicpolicyand
d) there is no concrete evidence to show that SBTC failed to
exercise the required diligence in maintaining the safety
deposit box what was proven was that the floods of 1985
and1986,whichwerebeyondthecontrolofSBTC,caused
the damage to the stamp collection said floods were
fortuitouseventswhichSBTCshouldnotbeheldliablefor
since it was not shown to have participated in the
aggravation of the damage to the stamp collection on the
contrary,itoffereditsservicestosecuretheassistanceofan
expertinordertosavemostofthestamps,buttheappellee
refusedappelleemustthenbearthelossundertheprinciple
ofresperitdomino.

Unsuccessfulinhisbidtohavetheabovedecisionreconsid

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30 SUPREMECOURTREPORTSANNOTATED
Siavs.CourtofAppeals
7
ered by the public respondent, petitioner filed the instant petition
whereinhecontendsthat:

ITWASAGRAVEERRORORANABUSEOFDISCRETIONONTHE
PART OF THE RESPONDENT COURT WHEN IT RULED THAT
RESPONDENTSBTCDIDNOTFAILTOEXERCISETHEREQUIRED
DILIGENCEINMAINTAININGTHESAFETYDEPOSITBOXOFTHE
PETITIONER CONSIDERING THAT SUBSTANTIAL EVIDENCE
EXIST(sic)PROVINGTHECONTRARY.

II
THE RESPONDENT COURT SERIOUSLY ERRED IN
EXCULPATING PRIVATE RESPONDENT FROM ANY LIABILITY
WHATSOEVER BY REASON OF THE PROVISIONS OF
PARAGRAPHS9AND13OFTHEAGREEMENT(EXHS.AANDA
1).

III

THE RESPONDENT COURT SERIOUSLY ERRED IN NOT


UPHOLDING THE AWARDS OF THE TRIAL COURT FOR ACTUAL
AND MORAL DAMAGES, INCLUDING ATTORNEYS 8
FEES AND
LEGALEXPENSES,INFAVOROFTHEPETITIONER.

We subsequentlygavedue courseto the petition and required both


partiestosubmittheirrespectivememoranda,whichtheycomplied
9
with.
Petitioner insists that the trial court correctly ruled that SBTC
had failed to exercise the required diligence expected of a bank
maintaining such safety deposit box . . . in the light of the
environmental circumstances of said safety deposit box after the
floods of 1985 and 1986. He argues that such a conclusion is
supported by the evidence on record, to wit: SBTC was fully
cognizantoftheexactlocationofthesafetydepositboxinquestion
itknewthatthepremiseswereinundatedbyfloodwatersin1985and
1986andconsideringthatthebankis

_______________

7Rollo,4349.

8Id.,17.

9Id.,63.

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Siavs.CourtofAppeals

guarded twentyfour (24) hours a day, it is safe to conclude that it


was also aware of the inundation of the premises where the safety
depositboxwaslocateddespitesuchknowledge,however,itnever
bothered to inform the petitioner of the flooding or take any
appropriate measures to insure the safety and good maintenance of
thesafetydepositboxinquestion.
SBTC does not squarely dispute these facts rather, it relies on
the rule that findings of fact of the Court of Appeals, when
supportedbysubstantialevidence,arenotreviewableonappealby
10
certiorari
The foregoing rule is, of course, subject to certain exceptions
such as when there exists a disparity between the factual11findings
andconclusionsoftheCourtofAppealsandthetrialcourt. Sucha
disparityobtainsinthepresentcase.
As We see it, SBTCs theory, which was upheld by the public
respondent, is that the Lease Agreement covering Safe Deposit
BoxNo.54(ExhibitsAand1)isjustthatacontractoflease
and not a contract of deposit, and that paragraphs 9 and 13
thereof,whichexpresslylimitthebanksliabilityasfollows:

9.Theliabilityofthebankbyreasonofthelease,islimitedtotheexercise
ofthediligencetopreventtheopeningoftheSafebyanypersonotherthan
theRenter,hisauthorizedagentorlegalrepresentative
xxx
13. The bank is not a depository of the contents of the Safe and it has
neitherthepossessionnorthecontrolofthesame.TheBankhasnointerest
whatsoever in said contents, except as herein 12
provided, and it assumes
absolutelynoliabilityinconnectiontherewith,

are valid and binding upon the parties. In the challenged decision,
the public respondent further avers that even without such a
limitation of liability, SBTC should still be absolved from any
responsibilityforthedamagesustainedbythepetitionerasit

_______________

10Rollo,61,citingGonzalesvs.CourtofAppeals,90SCRA183[1979].

11Sacayvs.Sandiganbayan,142SCRA593[1986]Remalantevs.Tibe,158SCRA

138[1988]Medinavs.Asistio,191SCRA218[1990].
12ExhibitA1,OriginalRecords,dorsalsideofpage87.

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Siavs.CourtofAppeals

appearsthatsuchdamagewasoccasionedbyafortuitouseventand
that the respondent bank was free from participation in the
aggravationoftheinjury.
We cannot accept this theory and ratiocination. Consequently,
this Court finds the petition to be impressed with merit . In the
recent case
13
of CA AgroIndustrial Development Corp. vs. Court of
Appeals, thisCourtexplicitlyrejectedthecontentionthatacontract
fortheuseofasafetydepositboxisacontractofleasegovernedby
TitleVII,BookIVoftheCivilCode.NordidWefullysubscribeto
theviewthatitisacontractofdeposittobestrictlygovernedbythe
14
Civil Code provision on deposit it is, as We declared, a special
kindofdeposit.TheprevailingruleinAmericanjurisprudencethat
the relation between a bank renting out safe deposit boxes and its
customer with respect to the contents of the box is that of a15 bailor
and bailee, the bailment being for hire and mutual benefit has
beenadoptedinthisjurisdiction,thus:

In the context of our laws which authorize banking institutions to rent out
safetydepositboxes,itisclearthatinthisjurisdiction,theprevailingrulein
the United States has been adopted. Section 72 of the General Banking Act
[R.A.337,asamended]pertinentlyprovides:

SEC.72.InadditiontotheoperationsspecificallyauthorizedelsewhereinthisAct,
banking institutions other than building and loan associations may perform the
followingservices:
(a) Receive in custody funds, documents, and valuable objects, and rent safety
depositboxesforthesafeguardingofsucheffects.
xxx
Thebanksshallperformtheservicespermittedundersubsections(a),(b),and(c)of
thissectionasdepositoriesorasagents.xxx(emphasissupplied)

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
othervaluableobjectsforsafekeeping.Therentingout

_______________

13G.R.No.90027,3March1993.

14TitleXII,BookIV,CivilCode.

1510AmJur2d,440441.

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Siavs.CourtofAppeals

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 [Art. 1969, Civil Code] 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,
providedtheyarenotcontrarytolaw,morals,goodcustoms,publicorderor
public policy. The depositarys responsibility for the safekeeping of the
objects deposited in the case at bar is governed by Title I, Book IV of the
CivilCode.Accordingly,thedepositarywouldbeliableif,inperformingits
obligation, it is found guilty of fraud, negligence, delay or contravention of
thetenoroftheagreement[Art.1170,id.].Intheabsenceofanystipulation
prescribingthedegreeofdiligencerequired,thatofagoodfatherofafamily
is to be observed [Art. 1173, id.]. Hence, any stipulation exempting the
depositaryfromanyliability,arisingfromthelossofthethingdepositedon
accountoffraud,negligenceordelaywouldbevoidforbeingcontrarytolaw
andpublicpolicy.Intheinstantcase,petitionermaintainsthatconditions13
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
neitherthepossessionnorcontrolofthesame.
14. The bank has no interest whatsoever in said contents, except as
hereinexpresslyprovided,anditassumesabsolutelynoliabilityin
connectiontherewith.
arevoidastheyarecontrarytolawandpublicpolicy.WefindOurselves
in agreement with this proposition for indeed, said provisions are
inconsistentwiththerespondentBanksresponsibilityasadepositaryunder
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
toexercisereasonablediligenceonlywithrespecttowhoshallbeadmittedto
anyrentedsafe,towit:

8. TheBankshalluseduediligencethatnounauthorizedpersonshall
beadmittedtoanyrentedsafeandbeyondthis,theBankwillnotbe
responsibleforthecontentsofanysaferentedfromit.

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
neitherthepossessionnorcontrolofthecontentsoftheboxsinceinfact,the
safety deposit box itself is located in its premises and is under its absolute
controlmoreover,therespondentBankkeepstheguardkeytothesaidbox.
Asstatedearlier,renterscannotopentheirrespectiveboxesunlesstheBank
cooperatesby

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34 SUPREMECOURTREPORTSANNOTATED
Siavs.CourtofAppeals

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.Ithasbeensaid:

With respect to property deposited in a safedeposit box by a customer of a safe


depositcompany,theparties,sincetherelationisacontractualone,maybyspecial
contract define their respective duties or provide for increasing or limiting the
liabilityofthedepositcompany,providedsuchcontractisnotinviolationoflawor
publicpolicy.Itmustclearlyappearthatthereactuallywassuchaspecialcontract,
however,inordertovarytheordinaryobligationsimpliedbylawfromtherelationship
ofthepartiesliabilityofthedepositcompanywillnotbeenlargedorrestrictedby
words of doubtful meaning. The company, in renting safedeposit boxes, cannot
exemptitselffromliabilityforlossofthecontentsbyitsownfraudornegligenceor
thatofitsagentsorservants,andifaprovisionofthecontractmaybeconstruedasan
attempttodoso,itwillbeheldineffectiveforthepurpose.Althoughithasbeenheld
thatthelessorofasafedepositboxcannotlimititsliabilityforlossofthecontents
thereof through its own negligence, the view has been taken that such a lessor may
limititsliabilitytosomeextentbyagreementorstipulation.[10AMJUR2d.,446].
16
(citationsomitted)

ItmustbenotedthatconditionsNo.13andNo.14intheContractof
Lease of Safety Deposit Box in CA AgroIndustrial Development
Corp.arestrikinglysimilartoconditionNo.13intheinstantcase.
On the other hand, both condition No. 8 in CA AgroIndustrial
DevelopmentCorp.andconditionNo.9inthepresentcaselimitthe
scope of the exercise of due diligence by the banks involved to
merely seeing to it that only the renter, his authorized agent or his
legalrepresentativeshouldopenorhaveaccesstothesafetydeposit
box.Inshort,inallothersituations,itwouldseemthatSBTCisnot
boundtoexercisediligenceofanykindatall.Assayedinthelightof
Our aforementioned pronouncements in CA AgroIndustrial
Development Corp., it is not at all difficult to conclude that both
conditionsNo.9andNo.13oftheLeaseAgreementcoveringthe
safety deposit box in question (Exhibits A and 1) must be
strickendownforbeingcontrarytolawandpublicpolicyastheyare
meanttoexempt

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16Entriesinbracketsappearasfootnotesinthedecision.

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Siavs.CourtofAppeals

SBTC from any liability for damage, loss or destruction of the


contentsofthesafetydepositboxwhichmayarisefromitsownor
its agents fraud, negligence or delay. Accordingly, SBTC cannot
takerefugeunderthesaidconditions.
Public respondent further postulates that SBTC cannot be held
responsible for the destruction or loss of the stamp collection
because the flooding was a fortuitous event and there was no
showing of SBTCs participation in the aggravation of the loss or
injury.Itstates:

Article1174oftheCivilCodeprovides:
Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which
couldnotbeforeseen,orwhich,thoughforeseen,wereinevitable.

In its dissertation of
17
the phrase caso fortuito the Enciclopedia
JuridicadaEspaola says:Inalegalsenseand,consequently,also 18
in relation to contracts, a caso fortuito prevents (sic) the
following essential characteristics: (1) the cause of the unforeseen
andunexpectedoccurrence,orofthefailureofthedebtortocomply
withhisobligation,mustbeindependentofhumanwill(2)itmust
be impossible to foresee the event which constitutes the caso
fortuito,orifitcanbeforeseen,itmustbeimpossibletoavoid(3)
theoccurrencemustbesuchastorenderitimpossibleforonedebtor
tofulfillhisobligationinanormalmannerand(4)theobligormust
be free from any participation in the aggravation of the injury
resulting to the creditor.
19
(cited in Servando vs. Phil. Steam
NavigationCo.,supra).
Here, the unforeseen or unexpected inundating floods were
independentofthewilloftheappellantbankandthelatterwasnot
shown to have participated in aggravating damage (sic) to the
stampscollectionoftheappellee.Infact,theappellantbankoffered
itsservicestosecuretheassistanceofanexperttosavemostofthe
then good stamps but the appellee refused and let (sic) these
recoverable
20
stamps inside the safety deposit box until they were
ruined.

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175EnciclopediaJuridicadaEspaola.

18Shouldbepresents.

19117SCRA832[1982].

20Rollo,40.

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36 SUPREMECOURTREPORTSANNOTATED
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Both the law and authority cited are clear enough and require no
further elucidation. Unfortunately, however, the public respondent
failed to consider that in the instant case, as correctly held by the
trial court, SBTC was guilty of negligence. The facts constituting
negligence are enumerated in the petition and have been
summarized in this ponencia. SBTCs negligence aggravated the
injury or damage to the petitioner which resulted from the loss or
destruction ofthestamp collection. SBTC was aware of thefloods
of 1985 and 1986 it also knew that the floodwaters inundated the
roomwhereSafeDepositBoxNo.54waslocated.Inviewthereof,
it should have lost no time in notifying the petitioner in order that
theboxcouldhavebeenopenedtoretrievethestamps,thussaving
thesamefromfurtherdeteriorationandloss.Inthisrespect,itfailed
to exercise the reasonable care and prudence expected of a good
fatherofafamily,therebybecomingapartytotheaggravationofthe
injuryorloss.Accordingly,theaforementionedfourthcharacteristic
of a fortuitous event is absent and Article 1170 of the Civil Code,
whichreads:

Those who in the performance of their obligations are guilty of fraud,


negligence, or delay, and those who in any manner contravene the tenor
thereof,areliablefordamages,

thuscomestothesuccorofthepetitioner.Thedestructionorlossof
thestampcollectionwhichwas,inthelanguageofthetrialcourt,the
21
product of 27 years of patience and diligence caused the
petitionerpecuniarylosshence,hemustbecompensatedtherefor.
We cannot, however, place Our imprimatur on the trial courts
award of moral damages. Since the relationship between the
petitionerandSBTCisbasedonacontract,eitherofthemmaybe
held liable for moral damages for breach
22
thereof only if said party
had acted fraudulently or in bad faith. There is here no proof of
fraudorbadfaithonthepartofSBTC.
WHEREFORE, the instant petition is hereby GRANTED. The
challengedDecisionandResolutionofthepublicrespondent
_______________

21Rollo,54.

22Article2220,CivilCode.

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VOL.222,MAY13,1993 37
LibertyInsuranceCorporationvs.CourtofAppeals

Court of Appeals of 21 August 1991 and 21 November 1991,


respectively,inCAG.R.CVNo.26737,areherebySETASIDEand
theDecisionof19February1990ofBranch47oftheRegionalTrial
Court of Manila in Civil Case No. 8742601 is hereby
REINSTATED in full, except as to the award of moral damages
whichisherebysetaside.
Costsagainsttheprivaterespondent.
SOORDERED.

Feliciano(Chairman),Bidin,RomeroandMelo,JJ.,concur.

Petitiongranted.Challengeddecisionandresolutionsetaside.

Note.In the absence of malice and bad faith, moral damages


cannotbeawarded(Capcovs.Macasaet,189SCRA561).

o0o

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