CA-Agro Industrial Devt Corp vs CA 219 SCRA 426

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 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 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.