ROMAN CATHOLIC BISHOP OF JARO V.

DE LA PENA 26 PHIL 144 (AQUINO) Facts: - This is an appeal by the administrator of the estate of Father De la Pea (defendant) from a judgment of the CFI, awarding to the Roman Catholic Bishop of Jaro (plaintiff) the sum of P6,641, with interest. - Fr. De la Pea was the representative of plaintiff over the legacy which it held in trust for the construction of a leper hospital. - In 1898, the books Fr. De la Pea, as trustee, had on hand the sum of P6,641 collected by him for the charitable purposes aforesaid. Subsequently, he deposited in his personal account P19,000 in the Hongkong and Shanghai Bank (Bank) at Iloilo. - During the war of the revolution, Fr. De la Pea was arrested by the military authorities as a political prisoner because they claimed that he was an insurgent and the funds deposited had been collected by him for revolutionary purposes. - A confiscation order was issued to the Bank for the deposit of Fr. De la Pea in favor of the United States Army officer and turned over to the Government. Issue and Ratio: 1. W/N the trust funds was included in the P19,000 deposited in the account of Fr. De la Pea in the bank - Yes. A careful examination of the case leads us to the conclusion that said trust funds were a part of the funds deposited and which were removed and confiscated by the military authorities of the United States. 2. W/N the estate of Fr. De la Pea is liable for the loss of the trust fund - No. Fr. De la Pea's liability is determined the Civil Code which states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family" (art. 1094), it also provides that "no one shall be liable for events which could not be foreseen, or which having been foreseen were inevitable, with the exception of the cases expressly mentioned in the law or those in which the obligation so declares." (Art. 1105.) - The fact that he placed the trust fund in the bank in his personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at all hazards. There was no law prohibiting him from depositing it as he did and there was no law which changed his responsibility be reason of the deposit. - While it may be true that one who is under obligation to do or give a thing is in duty bound, when he sees events approaching the results of which will be dangerous to his trust, to take all reasonable means and measures to escape or, if unavoidable, to temper the effects of those events, we do not feel constrained to hold that, in choosing between two means equally legal, he is culpably negligent in selecting one whereas he would not have been if he had selected the other. The deposit was forcibly taken by the military forces of one of the combatants during a state of war, it is clear that under the provisions of the Civil Code he would be exempt from responsibility. - The judgment is reversed. Dissent by Justice TRENT (I think he might ask this but its up to the encoders if they want to include this) - Fr. De la Pea was a trustee or an agent of the plaintiff. The money was clothed with all the immunities and protection with which the law seeks to invest trust funds. But when Fr. De la Pea mixed the trust fund with his own and deposited the whole in the bank to his personal account, his act stamped on the said fund his own private marks and unclothed it of all the protection it had. If it had been deposited in the name of Fr. De la Pea as trustee or agent it may be presumed that the military authorities would not have confiscated it for the reason that they were looking for insurgent funds only. Again, the plaintiff had no reason to suppose that De la Pea would attempt to strip the fund of its identity, nor had he said or done anything which tended to relieve De la Pea from the legal reponsibility which pertains to the care and custody of trust funds. - The US SC in the United State vs. Thomas said that "Trustees are only bound to exercise the same care and solicitude with regard to the trust property which they would exercise with regard to their own. Equity will not exact more of them. They are not liable for a loss by theft without their fault. But this exemption ceases when they mix the trust-money with their own, whereby it loses its identity, and they become mere debtors."

BISHOP OF JARO V. DELA PENA

CA Agro-Industrial vs CA G.R. No. 90027 March 3, 1993 Facts Petitioner (through its President) purchased 2 parcels of land from spouses Pugao for P350 K with a downpayment of P75 K. Per agreement, the land titles will be transferred upon full payment and will be placed in a safety deposit box (SBDB) of any bank. Moreover, the same could be withdrawn only upon the joint signatures of a representative of the Petitioner and the Pugaos upon full payment of the purchase price. Thereafter, Petitioner and spouses placed the titles in SDB of Respondent Security Bank and signed a lease contract which substantially states that the Bank will not assume liability for the contents of the SDB. Subsequently, 2 renter's keys were given to the renters one to the Petitioner and the other to the Pugaos. A guard key remained in the possession of the Respondent Bank. The SDB can only be opened using these 2 keys simultaneously. Afterwards, a certain Mrs. Ramos offered to buy from the Petitioner the 2 lots that would yield a profit of P285K. Mrs. Ramos demanded the execution of a deed of sale which necessarily entailed the production of the certificates of title. Thus, Petitioner with the spouses went to Respondent Bank to retrieve the titles. However, when opened in the presence of the Bank's representative, the SDB yielded no such certificates. Because of the delay in the reconstitution of the title, Mrs. Ramos withdrew her earlier offer to purchase the lots; as a consequence, the Petitioner allegedly failed to realize the expected profit of P285K. Hence, Petitioner filed a complaint for damages against Respondent Bank. Lower courts ruled in favour of Respondent Bank. Thus, this petition.

Issues: 1. Whether or not the disputed contract is an ordinary contract of lease? 2. Whether or not the provisions of the cited contract are valid? 3. Whether or not Respondent Bank is liable for damages? Ruling: 1. No. SC ruled that it is a special kind of deposit because: the full and absolute possession and control of the SDB 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 and vice versa. In this case, the said key had a duplicate which was made so that both renters could have access to the box.

Moreover, the renting out of the SDBs is not independent from, but related to or in conjunction with, the principal function of a contract of deposit the receiving in custody of funds, documents and other valuable objects for safekeeping. 2. NO. SC opined that it is void. Generally, the Civil Code provides that the depositary (Respondent Bank) would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreement. In the absence of any stipulation, the diligence of a good father of a family is to be observed. Hence, any stipulation exempting the depositary from any liability arising from the loss of the thing deposited on account of fraud, negligence or delay would be void for being contrary to law and public policy (which is present in the disputed contract) Said provisions are inconsistent with the Respondent Bank's responsibility as a depositary under Section 72(a) of the General Banking Act.

3. NO. SC ruled that: no competent proof was presented to show that Respondent Bank was aware of the private agreement between the Petitioner and the Pugaos that the Land titles were withdrawable from the SDB only upon both parties' joint signatures, and that no evidence was submitted to reveal that the loss of the certificates of title was due to the fraud or negligence of the Respondent Bank.

ART. 1977. OBLIGATION NOT TO MAKE USE OF THING DEPOSITED UNLESS AUTHORIZED. JAVELLANA VS. LIM FACTS: Defendants executed a document in favor of plaintiff-appellee wherein it states that they have received, as a deposit, without interest, money from plaintiff-appellee and agreed upon a date when they will return the money. Upon the stipulated due date, defendants asked for an extension to pay and binding themselves to pay 15% interest per annum on the amount of their indebtedness, to which the plaintiff-appellee acceded. The defendants were not able to pay the full amount of their indebtedness notwithstanding the request made by plaintiff-appellee. The lower court ruled in favor of plaintiff-appellee for the recovery of the amount due. ISSUE: Whether the agreement entered into by the parties is one of loan or of deposit?

HELD: The document executed was a contract of loan. Where money, consisting of coins of legal tender, is deposited with a person and the latter is authorized by the depositor to use and dispose of the same, the agreement is not a contract of deposit, but a loan. A subsequent agreement between the parties as to interest on the amount said to have been deposited, because the same could not be returned at the time fixed therefor, does not constitute a renewal of an agreement of deposit, but it is the best evidence that the original contract entered into between therein was for a loan under the guise of a deposit.

G.R. Nos. L-26948 and L-26949 vs.

October 8, 1927

SILVESTRA BARON, plaintiff-appellant, PABLO DAVID, defendant-appellant. And GUILLERMO BARON, plaintiff-appellant, vs. PABLO DAVID, defendant-appellant. FACTS: The defendant owns a rice mill, which was well patronized by the rice growers of the vicinity. - On January 17, 1921, a fire occurred that destroyed the mill and its contents, and it was some time before the mill could be rebuilt and put in operation again. - Silvestra Baron (P1) and Guillermo Baron (P2) each filed an action for the recovery of the value of palay from the defendant (D), alleged that: o The palay have been sold by both plaintiffs to the D in the year 1920 o Palay was delivered to D at his special request, with a promise of compensation at the highest price per cavan - D claims that the palay was deposited subject to future withdrawal by the depositors or to some future sale, which was never effected. D also contended that in order for the plaintiffs to recover, it is necessary that they should be able to establish that the plaintiffs' palay was delivered in the character of a sale, and that if, on the contrary, the defendant should prove that the delivery was made in the character of deposit, the defendant should be absolved. ISSUE: WoN there was deposit SC: NO Art. 1978. When the depositary has permission to use the thing deposited, the contract loses the concept of a deposit and becomes a loan or commodatum, except where safekeeping is still the principal purpose of the contract. The permission shall not be presumed, and its existence must be proved. The case does not depend precisely upon this explicit alternative; for even supposing that the palay may have been delivered in the character of deposit, subject to future sale or withdrawal at plaintiffs' election, nevertheless if it was understood that the defendant might mill the palay and he has in fact appropriated it to his own use, he is of course bound to account for its value. In this connection we wholly reject the defendant's pretense that the palay delivered by the plaintiffs or any part of it was actually consumed in the fire of January, 1921. Nor is the liability of the defendant in any wise affected by the circumstance that, by a custom prevailing among rice millers in this country, persons placing palay with them without special agreement as to price are at liberty to withdraw it later, proper

allowance being made for storage and shrinkage, a thing that is sometimes done, though rarely. UNITED STATES, vs. IGPUARA Facts: The defendant Jose igpuara was entrusted with the amount of P2,498 by Montilla and Veraguth. Without the consent of Montilla and Veraguth however, Igpuara used the said amount for his own ends. Thus, igpuara was charged and convicted with estafa, for having swindled Juana Montilla and Eugenio Veraguth out of P2,498 which he had taken as deposit from the former to be at the his disposal. Igpuara was sentenced to pay Juana Montilla P2,498 . The instrument for the deposit reads: We hold at the disposal of Eugenio Veraguth the sum of two thousand four hundred and ninety-eight pesos (P2,498), the balance from Juana Montilla's sugar. Iloilo, June 26, 1911, Jose Igpuara, for Ramirez and Co Igpuara contended that the amount was not deposit for there was no certificate of deposit, there was no transfer or delivery of the P2,498 and what transpired was a loan. If assuming that it was deposit, this is negotiable. Issues: Whether or not it is necessary that there be transfer or delivery in order to constitute a deposit. Held: No. A deposit is constituted from the time a person receives a thing belonging to another with the obligation of keeping and returning it. (Art. 1758, Civil Code.) His contention is without merit because firstly, the defendant drew up a document declaring that they remained in his possession. With the understanding that he would, for it has no other purpose. The certificate of deposit in question is not negotiable because only instruments payable to order are negotiable. Hence, this instrument not being to order but to bearer, it is not negotiable. As for the argument that the depositary may use or dispose oft he things deposited, the depositor's consent is required thus, the rights and obligations of the depositary and of the depositor shall cease and the rules and provisions applicable to commercial loans, commission, or contract which took the place of the deposit shall be observed. Igpuara however has shown no authorization whatsoever or the consent of the depositary for using or disposing of the P2,498. That there was not demand on the same or the next day after the certificate was signed, does not operate against the depositor, or signify anything except the intention not to press it. Failure to claim at once or delay for sometime in demanding restitution of the things deposited, which was immediately due, does not imply such permission to use the thing deposited as would convert the deposit into a loan. Judgment appealed from is affirmed ROMAN V. ASIA BANKING CORPORATION

FACTS: U. de Poli, for value received, issued a quedan convering the 576 bultos of tobacco to the Asia Banking Corporation (claimant & appellant). It was executed as a security for a loan. The aforesaid 576 butlos are part and parcel of the 2, 766 bultos purchased by U. de Poli from Felisa Roman (claimant & appellee). The quedan was marked as Exhibit D which is a warehouse receipt issued by the warehouse of U. de Poli for 576 bultos of tobacco. In the left margin of the face of the receipt, U. de Poli certifies that he is the sole owner of the merchandise therein described. The receipt is endorsed in blank; it is not markednon-negotiable or not negotiable. Since a sale was consummated between Roman and U. de Poli, Romans claim is a vendors lien. The lower court ruled in favor of Roman on the theory that since the transfer to Asia Banking Corp. (ASIA) was neither a pledge nor a mortgage, but a security for a loan, the vendors lien of Roman should be accorded preference over it. However, if the warehouse receipt issued was non-negotiable, the vendors lien of Roman cannot prevail against the rights of ASIA as indorsee of the receipt. ISSUE: WON the quedan issued by U. de Poli in favor of ASIA. is negotiable, despite failure to mark it as not negotiable? HELD: YES. The warehouse receipt in question is negotiable. It recited that certain merchandise deposited in the ware house por orden of the depositor instead of a la orden, there was no other direct statement showing whether the goods received are to be delivered to the bearer, to a specified person, or to a specified order or his order. However, the use of por orden was merely a clerical or grammatical error and that the receipt was negotiable. As provided by the Warehouse Receipts Act, in case the warehouse man fails to mark it as non-negotiable, a holder of the receipt who purchase if for value supposing it to be negotiable may, at his option, treat such receipt as imposing upon the warehouseman the same liabilities he would have incurred had the receipt been negotiable. This appears to have given any warehouse receipt not marked non-negotiable practically the same effect as a receipt which, by its terms, is negotiable provided the holder of such unmarked receipt acquired it for value supposing it to be negotiable, circumstances which admittedly exist in the present case. Hence, the rights of the indorsee, ASIA, are superior to the vendors lien. Bank of P.I. v. Herridge FACTS: The insolvent Umberto de Poli was for several years engaged on an extensive scale in the exportation of Manila hemp, maguey and other products of the country. He was also a licensed public warehouseman, though most of the goods stored in his warehouses appear to have been merchandise purchased by him for exportation and deposited there by he himself.chanr In order to finance his commercial operations De Poli established credits with some of the leading banking institutions doing business in Manila at that time, among them the Hongkong & Shanghai Banking Corporation, the Bank of the Philippine Islands, the Asia Banking Corporation, the Chartered Bank of India, Australia and China, and the American Foreign Banking Corporation. De Poli opened a current account credit with the bank against which he drew his checks in payment of the products bought by him for exportation. Upon the purchase, the products were stored in one of his warehouses and warehouse receipts issued therefor which were endorsed by him to the bank as security for the payment of his credit in the account current. When the goods stored by the warehouse receipts were sold and shipped, the warehouse receipt was exchanged for shipping papers, a draft was drawn in favor of the bank and against the foreign purchaser, with bill of landing attached, and the entire proceeds of the export sale were received by the bank and credited to the current account of De Poli.chanroble

De Poli was declared insolvent by the Court of First Instance of Manila with liabilities to the amount of several million pesos over and above his assets. An assignee was elected by the creditors and the election was confirmed by the court Among the property taken over the assignee was the merchandise stored in the various warehouses of the insolvent. This merchandise consisted principally of hemp, maguey and tobacco. The various banks holding warehouse receipts issued by De Poli claim ownership of this merchandise under their respective receipts, whereas the other creditors of the insolvent maintain that the warehouse receipts are not negotiable, that their endorsement to the present holders conveyed no title to the property, that they cannot be regarded as pledges of the merchandise inasmuch as they are not public documents and the possession of the merchandise was not delivered to the claimants and that the claims of the holders of the receipts have no preference over those of the ordinary unsecured creditors.law lib ISSSUE: Whether or not the warehouse receipts issued are negotiable? HELD: Yes, a warehouseman who deposited merchandise in his own warehouse, issued a warehouse receipts therefore and thereafter negotiated the receipts by endorsement. The receipt recites that the goods were deposited por orden of the depositor, the warehouseman, but contained no statement that the goods were to be delivered to the bearer of the receipts or to a specified person. It is in the form of a warehouse receipts and was not mark nonnegotiable. Therefore the receipts was negotiable warehouse receipts and the words por orden must be construed to mean to the order. PNB v PRODUCERS WAREHOUSE ASSOCIATION FACTS: - PNB (P) is a bank in PH, Producers Warehouse Association (D) is a domestic corporation doing general warehouse business and Phil. Fiber and Produce Company (Fiber) is another domestic corporation. D and Fiber entered into a written contract, wherein Fiber would act as the general manager of the business of D and that Fiber would exercise a general and complete supervision over the management of the business of D. Nov and Dec 1918 D issued negotiable quedans to Fiber for 15k++ piculs of Copra, which the terms states that o o o o D agreed to deliver that amount of copra to Fiber or its order D will deliver the packages noted therein upon the surrender of the warrant to D No transfer of interest/ownership will be recognized unless registered in the books of D The words negotiable warrant were printed in red ink in the quedan

Fiber then arranged for overdraft with P for P1M and to secure it, the subject quedans were endorsed in blank and delivered by Fiber to P, which became the owner and holder thereof. P later on requested D the delivery of copra described in the quedans, however, D refused to comply despite repeated requests of P, stating that it could not be delivered since the goods mentioned are not in the warehouse.

D stated that the quedans were invalid and wrongfully issued and that the copra was not in its warehouse LC ruled in favor of D

ISSUE: WoN the quedans were validly negotiated to P SC: YES! - The quedans have legal force and effect o o o They were duly executed by Wicks, as treasurer and Torres as warehouseman, for and in behalf of D. The said quedans were endorsed in blank and physical possession was delivered to P as collateral security for the overdraft of Fiber Company and That the quedans were in negotiable form.

D cannot now deny the existence of the quedans