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426 SUPREME COURT REPORTS ANNOTATED

CA Agro-Industrial Development Corp. vs. Court of Appeals
*
G.R. No. 90027. March 3, 1993.

CA AGRO-INDUSTRIAL DEVELOPMENT CORP.,

petitioner, vs. THE HONORABLE COURT OF APPEALS
and SECURITY BANK AND TRUST COMPANY,
respondents.

Civil Law; Deposit; Commercial Law; Banks and Banking; A

contract for the rent of a safety deposit box is not an ordinary
contract of lease but a special kind of deposit.—We agree with the
peti tioner's contention that the contract for the rent of the safety
deposi t box is not an ordinary contract of lease as defined in Article
1643 of the Civil Code. However, We do not fully subscribe to its
view that the same is a contract of deposit that is to be strictly
governed by the provisions in the 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.
Same; Same; Same; Same; Primary function of banking
institutions authorized to rent out safety deposit box, within the
parameters of contract of deposit in accord with General Banking
Act which adopts prevailing rule in American jurisprudence.—In
the context of our laws which authorize banking institutions to rent
out safety deposit boxes, it is clear that in this jurisdiction, the
prevailing rule in the United States has been adopted. Section 72 of
the General Banking Act pertinently provides: xxx 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 other
valuable objects for safekeeping. The renting out of the safety
deposit boxes is not independent from, but related to or in conjunc-

________________

* THIRD DIV ISION.

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VOL. 219, MARCH 5, 1993 427

CA Agro-Industrial Development Corp. vs. Court of Appeals

tion with, this principal function.

Same; Same; Same; Same; Any stipulation exempting
depository from liability for loss of thing deposited on account of
fraud, negligence or delay considered void for being contrary to law
and public policy.—The depositary's responsibility for the
safekeeping of the objects deposited in the case at bar is governed
by Title I, Book IV of the Civil Code. Accordingly, the depositary
would be liable if, in perform: ng its obligation, it is found guilty of
fraud, negligence, delay or contravention of the tenor of the
agreement. In the absence of any s tipulation prescribing the degree
of diligence required, that of a good father of a family is to be
observed. Hence, any stipulation exempting ng 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.
Same; Same; Same; Same; Liability of lessor in contract of lease
of safety deposit box can be limited by stipulation but any
stipulation for exemption shall be held ineffective.—With respect to
property deposited in a safe-deposit box by a customer of a
safedeposit company, the parties, since the relation is a contractual
one, may by special contract define their respective duties or provide
for increasing or limiting the liability of the deposit company,
provided such contract is not in violation of law or public policy. xxx
The company, in renting safe-deposit boxes, cannot exempt itself
from liability for loss of the contents by its own fraud or negligence
or that of its agents or servants, and if a provision of the contract
may be construed as an attempt to do so, it will be held ineffective
for the purpose. Although it has been held that the lessor of a safe-
deposit box cannot limit its liability for loss of the contents thereof
through its own negligence, the view has been taken that such a
lessor may limit its liability to some extent by agreement or
stipulation.
Same; Same; Same; Same; Bank's exoneration from liability not
by virtue of characterization of impugned contract as a contract of
lease but by reason of the absence of proof as to its knowledge about
existing\agreement between the other parties, as well as, that the
loss of certificates not attributable to its negligence or fraud.—In
the instant case, the respondent Bank's exoneration cannot,
contrary to the holding of the Court of Appeals, be based on or
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proceed from a characterization of the impugned contract as a

contract of lease, but rather on the fact that no competent proof was
presented to show that respondent Bank was aware of the
agreement between the petitioner and the Pugaos to the effect that
the certificates of title

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428 SUPREME COURT REPORTS ANNOTATED

CA Agro-Industrial Development Corp. vs. Court of Appeals

were withdrawable from the safety deposit box 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. This in turn flows re om this
Court's determination that the contract involved was one of deposit.

PETITION for review on certiorari to set aside the decision

of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Dolorfino & Dominguez Law Offices for petitioner.
     Danilo B. Banares for private respondent.

DAVIDE, JR., J.:

Is the contractual relation between a commercial bank and

another party in a contract of rent of a safety deposit box
with respect to its contents placed by the latter one of bailor
and bailee or one of lessor and lessee?
This is the crux of the present controversy.
On 3 July 1979, petitioner (through its President, Sergio
Aguirre) and the spouses Ramon and Paula Pugao entered
into an agreement whereby the former purchased from the
latter two (2) parcels of land for a consideration of
P350,625.00. Of this amount, P75,725.00 was paid as
downpayment while the balance was covered by three (3)
postdated checks. Among the terms and conditions of the
agreement embodied in a Memorandum of True and Actual
Agreement of Sale of Land were that the 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, Transfer Certificates of Title
(TCT) Nos. 284655 and 292434, 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 and the Pugaos upon full

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payment of the purchase price. Petitioner, through Sergio

Aguirre, and the Pugaos then rented Safety Deposit Box No.
1448 of private respondent Security Bank and Trust
Company, a domestic banking corporation hereinafter
referred to as the res spondent Bank. For this purpose, both
signed a contract of lease (Ex-
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VOL. 219, MARCH 3, 1993 429

CA Agro-Industrial Development Corp. vs. Court of Appeals

hibit "2") which contains, inter alia, 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,
1
and it assumes absolutely no liability in
connection therewith."

After the execution of the contract, two (2) renter's keys were
given to the renters—one to Aguirre (for the petitioner) and
the other to the Pugaos. A guard key remained in the
possession of the respondent Bank. The safety deposit box
has two (2) keyholes, one for the guard key and the other for
the renter's key, and can be opened only with the use of both
keys. Petitioner claims that the certificates of title were
placed inside the said box.
Thereafter, a certain Mrs. Margarita Ramos offered to
buy from the petitioner the two (2) lots at a price of P225.00
per square meter which, as petitioner alleged in its
complaint, translates to a profit of P100.00 per square meter
or a total of P280,500.00 for the entire property. Mrs. Ramos
demanded the execution of a deed of sale which necessarily
entailed the production of the certificates of title. In view
thereof, Aguirre, accompanied by the Pugaos, then
proceeded to the respondent Bank on 4 October 1979 to open
the safety deposit box and get the certificates of title.
However, when opened in the presence of the Bank's
representative, the box 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 thereof, the petitioner allegedly failed to
realize the expected profit of P280,500.00.
2
Hence, the latter
filed on 1 September 1980 a complaint for damages against
the respondent Bank with the Court of First Instance (now
Regional Trial Court) of Pasig, Metro Manila which
docketed the same as Civil Case No. 38382.
3
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3
In its Answer with Counterclaim, respondent Bank
alleged

_______________

1 Rollo, 102.
2 Annex "A" of Petition; Rollo, 28-32.
3 Annex "B", Id; Id., 33-35.

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430 SUPREME COURT REPORTS ANNOTATED

CA Agro-Industrial Development Corp. us. Court of Appeals

that the petitioner has no cause of action because of

paragraphs 13 and 14 of the contract of lease (Exhibit "2");
corollarily, loss of any of the items or articles contained in
the box could not give rise to an action against it. It then
interposed a counterclaim for exemplary damages as well as
attorney's fees in the amount of P20,000.00. 4 Petitioner
subsequently filed an answer to the counterclaim.
In due course, the trial court, now designated as Branch
161 of the Regional Trial 5 Court (RTC) of Pasig, Metro
Manila, rendered a decision adverse to the petitioner on 8
December 1986, the dispositive portion of which reads:

"WHEREFORE, premises considered, judgment is hereby rendered

dismissing plaintiffs complaint.
On defendant's counterclaim, judgment is hereby rendered
ordering plaintiff to pay defendant the amount of FIVE
THOUSAND (P5,000.00) PESOS 6
as attorney's fees.
With costs against plaintiff." :

The unfavorable verdict is based on the trial court's

conclusion that under paragraphs 13 and 14 of the contract
of lease, the Bank has no liability for the loss of the
certificates of title. The court declared that the said
provisions are binding on the parties.7
Its motion for reconsideration having been denied]
petitioner appealed from the adverse decision to the
respondent Court of Appeals which docketed the appeal as
CA-G.R. CV No. 15150. Petitioner urged the respondent
Court to reverse the challenged decision because the trial
court erred in (a) absolving the respondent Bank from
liability from the loss, (b) not declaring as null and void, for
being contrary to law, public order and public policy, the
provisions in the contract for lease of the safety deposit box

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absolving the Bank from any liability for loss, (c) not
concluding that in this jurisdiction. as Well as

________________

4 Annex "C". Id; Id., 36.

5 Annex "D" of Petition; Rollo, 38-54. Per Judge Cicero C. Jurado.
6 Id., 54.
7 Annex "E", Id; Id., 55-68.

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VOL. 219, MARCH 3, 1993 431

CA Agro-Industrial Development Corp. vs. Court of Appeals

under American jurisprudence, the liability of the Bank is

settled and (d) awarding attorney's fees to the Bank and
denying the petitioner's prayer
8
for nominal and exemplary
damages and attorney's fees. 9
In its Decision promulgated on 4 July 1989, respondent
Court affirmed the appealed decision principally on the
theory that the contract (Exhibit "2") executed by the
petitioner and respondent Bank is in the nature of a
contract of lease by virtue of which the petitioner and its co-
renter were given control over the safety deposit box and its
contents while the Bank retained no right to open the said
box because it had neither the possession nor control over it
and its contents. As such,
10
the contract is governed by Article
1643 of the Civil Code which provides:

"ART. 1643. In the lease of things, one of the parties binds himself
to give to another the enjoyment or use of a thing for a price
certain, and for a period which may be definite or indefinite.
However, no lease for more than ninety-nine years shall be valid."
11
It invoked Tolentino vs. Gonzales —which held that the
owner of the property loses his control over the property
leased during the period of the contract—and Article 1975 of
the Civil Code which provides:

"ART. 1975. The depositary holding certificates, bonds, securities or

instruments which earn interest shall be bound to collect the latter
when it becomes due, and to take such steps as may be necessary in
order that the securities may preserve their value and the rights
corresponding to them according to law.
The above provision shall not apply to contracts for the rent of
safety deposit boxes."

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_______________

8 Rollo, 100-101.
9 Per Associate Justice Felipe B. Kalalo, concurred in by Associate
Justices Bienvenido C. Ejercito and Luis L. Victor, Annex "I" of Petition;
Id., 89-105.
10 Citing PARAS, E.L., Civil Code of the Philippines, vol. 5 1982 ed.,
717.
11 50 Phil. 558 [1927].

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CA Agro-Industrial Development Corp. vs. Court of Appeals

and then concluded that "[c]learly, the defendant-appellee is

not under any duty to maintain the contents of the box. The
stipulation absolving the defendant-appellee from liability
is in accordance with the nature of the contract of lease and
cannot be regarded
12
as contrary to law, public order and
public policy." The appellate court was quick to add,
however, that under the contract of lease of the safety
deposit box, respondent Bank is not completely free from
liability as it may still be made answerable in case
unauthorized persons-enter into the vault area or when the
rented box is forced open. Thus, as expressly provided for in
stipulation number 8 of the contract in question:

"8. The Bank shall use due diligence that no unauthorized person
shall be admitted to any rented safe and beyond this, the Bank 13
will
not be responsible for the contents of any safe rented from it."
14
Its motion for reconsideration having been denied in15 the
respondent Court's Resolution of 28 August 1989, pe
titioner took this recourse under Rule 45 of the Rules of
Court and urges Us to review and set aside the respondent
Court's ruling. Petitioner avers that both the respondent
Court and the trial court (a) did not properly and legally
apply the correct law in this case, (b) acted with grave abuse
of discretion or in excess of jurisdiction amounting to lack
thereof and (c) set a precedent that is contrary to, or is a
departure from precedents adhered to and affirmed by
decisions of this Court and precepts in American
jurisprudence adopted in the Philippines. It reiterates the
arguments it had raised in its motion to reconsider the trial
court's decision, the brief submitted to the respondent Court
and the motion to reconsider the latter's decision. In a
nutshell, petitioner maintains that regardless of
nomenclature, the contract for the rent of the safety deposit
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box (Exhibit "2") is actually a contract of deposit governed

by

_________________

12 Rollo, 103.
13 Id.
14 Annex "J" of Petition; Rollo, 106-113.
15 Annex "K", Id.; Id., 114-115.

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VOL. 219, MARCH 3, 1993 433

CA Agro-Industrial Development Corp. vs. Court of Appeals
16
Title XII, Book IV of the Civil Code of the Philippines.
Accordingly, it is claimed that the respondent Bank is liable
for the loss of the certificates of title pursuant to Article
1972 of the Said Code which provides:

"ART. 1972. The depositary is obliged to keep the thing safely and
to return it, when required, to the depositor, or to his heirs and
successors, or to the person who may have been designated in the
contract. His responsibility, with regard to the safekeeping and the
loss of the thing, shall be governed by the provisions of Title l of this
Book.
If the deposit is gratuitous, this fact shall be taken into account
in determining the degree of care that the depositary must observe."

Petitioner then17
quotes a passage from American
Jurisprudence which is supposed to expound on the
prevailing rule in the United States, to wit:

"The prevailing rule appears to be that where a safe-deposit

company leases a safe-deposit box or safe and the lessee takes
possession of the box or safe and places therein his securities or
other valuables, the relation of bailee and bailor is created between
the parties to the transaction as to such securities or other
valuables; the fact that the safe-deposit company does not know,
and that it is not expected that it shall know, the character or
description of the property which is deposited in such safe-deposit
box or safe does not change that relation. That access to the
contents of the safe-deposit box can be had only by the use of a key
retained by the lessee (whether it is the sole key or one to be used in
connection with one retained by the lessor) does not operate to alter
the foregoing rule. The argument that there is not, in such a case, a
delivery of exclusive possession and control to the deposit company,
and that therefore the situation is entirely different from that of
ordinary bailment, has been generally rejected by the courts,
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usually on the ground that as possession must be either in the

depositor or in the company, it should reasonably be considered as
in the latter rather than in the former, since the company is, by the
nature of the contract, given absolute control of access to the
property, and the

_______________

16 Articles 1962 to 2009, inclusive.

17 10 Am Jur 2d., 440-441.

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434 SUPREME COURT REPORTS ANNOTATED

CA Agro-lndustrial Development Corp. vs. Court of Appeals

depositor cannot gain access thereto without the consent and active
participation of the company. x x x." (citations omitted)
18
and a segment from Words and Phrases which states that a
contract for the rental of a bank safety deposit box in
consideration of a fixed amount at stated periods is a
bailment for hire. Petitioner further argues that conditions
13 and 14 of the questioned contract are contrary to law and
public policy and should be declared null and void. In
support thereof, it cites Article 1306 of the Civil Code which
provides that parties to a contract may establish such
stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy.
After the respondent Bank filed its comment, this Court
gave due course to the petition and required the parties to
simultaneously submit their respective Memoranda.
The petition is partly meritorious.
We agree with the petitioner's contention that the
contract for the rent of the safety deposit box is not an
ordinary contract of lease as defined in Article 1643 of the
Civil Code. However, We do not fully subscribe to its view
that the same is a contract of deposit that is to be strictly19
governed by the provisions in the 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 pe titioner 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
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the box without the renter's key. In this case, the said key
had a duplicate which was made so that both renters could
have access to the box. 20
Hence, the authorities cited by the respondent Court on

______________

18 While the citation is 5 Words and Phrases Permanent Edition, 71-

72, We failed to locate this in the said work and volume
19 Title XII, Book IV, Civil Code.
20 PARAS, E.L., op. cit., and Tolentino vs. Gonzales, supra.

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VOL. 219, MARCH 3, 1993 435

CA Agro-Industrial Development Corp. vs. Court of Appeals

this point do not apply. Neither could Article 1975, also

relied upon by the respondent Court, be invoked as an
argument against the deposit theory. Obviously, the first
paragraph of such provision cannot apply to a depositary of
certificates, bonds, securities or instruments which earn
interest if such documents are kept in a rented safety
deposit box. It is clear that the depositary cannot open the
box without the renter being present.
We observe, however, that the deposit theory itself does
not altogether find unanimous support even in American
jurisprudence. We agree with the petitioner that under the
latter, 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 bailor and 21
bailee, the bailment being for hire and mutual benefit.
This is just the prevailing view because:

"There is, however, some support for the view that the relationship
in question might be more properly characterized as that of landlord
and tenant, or lessor and lessee. It has also been suggested that it
should be characterized as that of licensor and licensee. The relation
between a bank, safe-deposit company, or storage company, and the
renter of a safe-deposit box therein, is often described as
contractual, express or implied, oral or written, in whole or in part.
But there is apparently no jurisdiction in which any rule other than
that applicable to bailments governs questions of the liability and
rights 22of the parties in respect of loss of the contents of safe-deposit
boxes" (citations omitted)

In the context of our laws which authorize banking

institutions to rent out safety deposit boxes, it is clear that

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in this jurisdiction, the prevailing rule in the United States

23
has been adopted. Section 72 of the General Banking Act
pertinently provides:

"SEC. 72. In addition to the operations specifically authorized

elsewhere in this Act, banking institutions other than building

________________

21 10 Am Jur 2d., 441.

22 10 Am Jur 2d., 442-443.
23 R.A. No. 337, as amended.

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CA Agro-Industrial Development Corp. vs. Court of Appeals

and loan associations may perform the following services:

(a) Receive in custody funds, documents, and valuable objects, and rent
safety deposit boxes for the safeguarding of such effects.
xxx

The banks shall perform the services permitted under subsections 24

(a), (b) and (c) of this section as depositories or as agents. x x x."
(emphasis supplied)

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 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. A25contract of deposit may be entered
into orally or in writing 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, provided they are not contrary to law,
morals, good customs, public order or public policy. The
depositary's responsibility for the safekeeping of the objects
deposited in the case at bar is governed by Title I, Book IV
of the Civil Code. Accordingly, the depositary would be
liable if, in performing its obligation, it is found guilty of
fraud, negligence,
26
delay or contravention of the tenor of the
agreement. In the absence of any stipulation prescribing
the degree of diligence 27required, that of a good father of a
family is to be observed. Hence, any stipu lation exempting
the depositary from any liability arising from the loss of the
thing deposited on account of fraud, negligence or delay
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would be void for being contrary to law and public policy. In

the instant case, petitioner maintains that conditions 13
and 14 of the questioned contract of lease of the safety
deposit box, which read:

_________________

24 "Agents" refers to paragraphs (b) and (c) while "depositories' refers

to paragraph (a).
25 Article 1969, Civil Code.
26 Article 1170, Id.
27 Article 1173, Id.

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VOL. 219, MARCH 3, 1993 437

CA Agro-Industrial Development Corp. vs. Court of Appeals

"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,
28
and it assumes absolutely no liability in
connection therewith."

are void as they are contrary to law and public policy. We

find Ourselves in agreement with this proposition for
indeed, said provisions are inconsistent with the respondent
Bank's responsibility as a depositary under 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 to exercise reasonable diligence only with
respect to who shall be admitted to any rented safe, to wit:

"8. The Bank shall use due diligence that no unauthorized person
shall be admitted to any rented safe and beyond this, the Bank 29
will
not be responsible for the contents of any safe rented from it."

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 neither the possession nor
control of the contents of the box since in fact, the safety
deposit box itself is located in its premises and is under its
absolute control; moreover, the respondent Bank keeps the
guard key to the said box. As stated earlier, renters cannot
open their respective boxes unless the Bank cooperates by
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. It has been said:

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"With respect to property deposited in a safe-deposit box by a

customer of a safe-deposit company, the parties, since the relation is
a contractual one, may by special contract define their respective
duties or provide for increasing or limiting the liability of the deposit
company, provided such contract is not in violation of law or public
policy. It must clearly appear that there actually was such a

_______________

28 Supra.
29 Supra.

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438 SUPREME COURT REPORTS ANNOTATED

CA Agro-Industrial Development Corp. vs. Court of Appeals

special contract, however, in order to vary the ordinary obligations

implied by law from the relationship of the parties; liability of the
deposit company will not be enlarged or restricted by words of
doubtful meaning. The company, in renting safe-deposit boxes,
cannot exempt itself from liability for loss of the contents by its own
fraud or negligence or that of its agents or servants, and if a
provision of the contract may be construed as an attempt to do so, it
will be held ineffective for the purpose. Although it has been held
that the lessor of a safe-deposit box cannot limit its liability f for loss
of the contents thereof through its own negligence, the view has
been taken that such a lessor30 may limits its liability to some extent
by agreement or stipulation." (citations omitted)

Thus, we reach the same conclusion which the Court of

Appeals arrived at, that is, that the petition should be
dismissed, but on grounds quite different from those relied
upon by the Court of Appeals. In the instant case, the
respondent Bank's exoneration cannot, contrary to the
holding of the Court of Appeals, be based on or proceed from
a characterization of the impugned contract as a contract of
lease, but rather on the fact that no competent proof was
presented to show that respondent Bank was aware of the
agreement between the petitioner and the Pugaos to the
effect that the certificates of title were withdrawable from
the safety deposit box 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. This in turn flows from
this Court's determination that the contract involved was
one of deposit. Since both the petitioner and the Pugaos
agreed that each should have one (1) renter's key, it was
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obvious that either of them could ask the Bank for access to
the safety deposit box and, with the use of such key and the
Bank's own guard key, could open the said box, without the
other renter being present.
Since, however, the petitioner cannot be blamed for the
filing of the complaint and no bad faith on its part had been
established, the trial court erred in condemning the
petitioner to pay the respondent Bank attorney's fees. To
this extent, the

_______________

30 10 Am Jur 2d., 448.

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VOL. 219, MARCH 3, 1993 439

CA Agro-Industrial Development Corp. vs. Court of Appeals

Decision (dispositive portion) of public respondent Court of

Appeals must be modified.
WHEREFORE, the Petition for Review is partially
GRANTED by deleting the award for attorney's fees from
the 4 July 1989 Decision of the respondent Court of Appeals
in CAG.R. CV No. 15150. As modified, and subject to the
pronouncement We made above on the nature of the
relationship between the parties in a contract of lease of
safety deposit boxes, the dispositive portion of the said
Decision is hereby AFFIRMED and the instant Petition for
Review is otherwise DENIED for lack of merit.
No pronouncement as to costs.
SO ORDERED.

          Feliciano (Acting Chairman), Bidin, Romero and

Melo, JJ., concur.
     Gutierrez, Jr., (J., Chairman), Is on terminal leave.

Petition denied but partially granted on issue of

attorney's fees. Decision affirmed.

Notes.—The increases of interest rate imposed by PNB

contravene Art. 1956 of the New Civil Code (PNB vs. Court
of Appeals, 196 SCRA 536).
The capacity of a bank to file action in this jurisdiction is
governed by the Central Bank Act (Hang Lung Bank Ltd.,
Inc. vs. Saulog, 201 SCRA 137).

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