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. 

 

Spouses Bautista vs Pilar Devt Corp 312 SCRA 611

Fact:

In 1978, Petitioner spouses Bautista purchased a house and lot in Pilar Village, Las Pinas, Metro Manila. To partially finance the purchase, they obtained from the Apex Mortgage and Loan Corp a loan in the amout of 100,180.00php. They executed a promissory note obligating themselves, jointly and severally to pay the principal sum with interest rate of 12% for 240 months or 2years. In the same promissory note, petitioners authorized Apex to "increase the rate of interest and/or service charge" without notice to them in the event a law, Presidential Decree or any Central Bank regulation should be enacted increasing the lawful rate of interest.

Petitioner spouses failed to pay several installments. On September 20, 1982, they executed another promissory note in favor of Apex. This time there was an increased interest rate of 21% per annum with penalty of 11/2 for late payment payable for 196 months. Petitioners retained the authorization to increase/decrease the rate of interest.

In November 1983, petitioners again failed to pay installments. On June 06, 1984, Apex assigned the second promissory note to respondent Pilar Development Corporation, a successor-in-interest. The latter then instituted against petitioner spouses before the RTC collection for the unpaid balance as of November 23, 1983 including the internal rate of 21%. RTC rendered judgment ordering petitioners to pay balance with interest of 12%. CA reversed the trial court by applying 21% per annum amounting to 142,346.42php. However, it was reversed to 140,515.11, initial decision of RTC, after the denial for motion to reconsider.

Issue:

Whether it be 12% under the promissory note of December 22, 1978 or 21% under the promissory note of September 20, 1982.

Ruling:

The court ruled that at the time the parties executed the first promissory note in 1978, the interest of 12% was the maximum rate fixed by the Usury Law for loans secured by a mortgage upon registered estate.

On December 1, 1979, the Monetary Board of the Central Bank of the Philippines issued Circular No 705 which fixed the effective rate of interest on loan transactions with maturities of more than 730 days to 21% per annum for both secured and unsecured loans. On January 28, 1980, the Monetary Board issued Circular           No 712 reiterating the effective rate of 21% on said transactions. On January 1, 1983, CB Circular No 905 series of 1982, took effect. The circular declared that the rate of interest on any loan or forbearance of any money, goods or credit, regardless of maturity and whether secured or unsecured, "shall not be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended." In short, Circular No 905 removed the ceiling on interest rate for secured and unsecured loans, regardless of majority.

When the second promissory note was executed on September 20, 1982, Central Bank Circulars Nos 705 and 712 were already in effect. These circulars fixed the effective interest rate for secured loans transactions with maturities of more than 730 days, i.e., 2years at 21% per annum. The interest rate of 21% provided in the second promissory note was therefore authorized under these Circulars.