[G.R. NO.

126780 : February 17, 2005]

YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA

PAYAM, Petitioners, v. THE COURT OF APPEALS and MAURICE
McLOUGHLIN, Respondents.

TINGA, J.:

The primary question of interest before this Court is the only legal issue in the case: It
is whether a hotel may evade liability for the loss of items left with it for safekeeping by
its guests, by having these guests execute written waivers holding the establishment or
its employees free from blame for such loss in light of Article 2003 of the Civil Code
which voids such waivers.

The factual backdrop of the case follow.

Private respondent Maurice McLoughlin, an Australian businessman-philanthropist, used

to stay at Sheraton Hotel during his trips to the Philippines prior to 1984 when he met
Brunhilda Mata-Tan. Tan befriended McLoughlin by showing him around, introducing
him to important people, accompanying him in visiting impoverished street children and
assisting him in buying gifts for the children and in distributing the same to charitable
institutions for poor children. Tan convinced McLoughlin to transfer from Sheraton Hotel
to Tropicana Copacabana Apartment Hotel, owned and operated by YHT Realty
Corporation, where Erlinda Lainez, Anicia Payam and Danilo Lopez were employed.
Lopez served as manager of the hotel while Lainez and Payam had custody of the keys
for the safety deposit boxes of Tropicana. Tan took care of McLoughlin's booking at the
Tropicana where he started staying during his trips to the Philippines from December
1984 to September 1987.

On 30 October 1987, McLoughlin arrived from Australia and registered with Tropicana.
He rented a safety deposit box as it was his practice to rent a safety deposit box every
time he registered at Tropicana in previous trips. As a tourist, McLoughlin was aware of
the procedure observed by Tropicana relative to its safety deposit boxes. The safety
deposit box could only be opened through the use of two keys, one of which is given to
the registered guest, and the other remaining in the possession of the management of
the hotel. When a registered guest wished to open his safety deposit box, he alone
could personally request the management who then would assign one of its employees
to accompany the guest and assist him in opening the safety deposit box with the two
keys.

McLoughlin allegedly placed the following in his safety deposit box: Fifteen Thousand
US Dollars (US$15,000.00) which he placed in two envelopes, one envelope containing
Ten Thousand US Dollars (US$10,000.00) and the other envelope Five Thousand US
Dollars (US$5,000.00); Ten Thousand Australian Dollars (AUS$10,000.00) which he
also placed in another envelope; two (2) other envelopes containing letters and credit
cards; two (2) bankbooks; and a checkbook, arranged side by side inside the safety
deposit box.

On 12 December 1987, before leaving for a brief trip to Hongkong, McLoughlin opened
his safety deposit box with his key and with the key of the management and took
therefrom the envelope containing Five Thousand US Dollars (US$5,000.00), the
envelope containing Ten Thousand Australian Dollars (AUS$10,000.00), his passports
and his credit cards. McLoughlin left the other items in the box as he did not check out
of his room at the Tropicana during his short visit to Hongkong. When he arrived in
Hongkong, he opened the envelope which contained Five Thousand US Dollars
(US$5,000.00) and discovered upon counting that only Three Thousand US Dollars
(US$3,000.00) were enclosed therein. Since he had no idea whether somebody else
had tampered with his safety deposit box, he thought that it was just a result of bad
accounting since he did not spend anything from that envelope.

After returning to Manila, he checked out of Tropicana on 18 December 1987 and left
for Australia. When he arrived in Australia, he discovered that the envelope with Ten
Thousand US Dollars (US$10,000.00) was short of Five Thousand US Dollars
(US$5,000). He also noticed that the jewelry which he bought in Hongkong and stored
in the safety deposit box upon his return to Tropicana was likewise missing, except for
a diamond bracelet.

When McLoughlin came back to the Philippines on 4 April 1988, he asked Lainez if some
money and/or jewelry which he had lost were found and returned to her or to the
management. However, Lainez told him that no one in the hotel found such things and
none were turned over to the management. He again registered at Tropicana and
rented a safety deposit box. He placed therein one (1) envelope containing Fifteen
Thousand US Dollars (US$15,000.00), another envelope containing Ten Thousand
Australian Dollars (AUS$10,000.00) and other envelopes containing his traveling
papers/documents. On 16 April 1988, McLoughlin requested Lainez and Payam to open
his safety deposit box. He noticed that in the envelope containing Fifteen Thousand US
Dollars (US$15,000.00), Two Thousand US Dollars (US$2,000.00) were missing and in
the envelope previously containing Ten Thousand Australian Dollars (AUS$10,000.00),
Four Thousand Five Hundred Australian Dollars (AUS$4,500.00) were missing.

When McLoughlin discovered the loss, he immediately confronted Lainez and Payam
who admitted that Tan opened the safety deposit box with the key assigned to
him. McLoughlin went up to his room where Tan was staying and confronted her. Tan
admitted that she had stolen McLoughlin's key and was able to open the safety deposit
box with the assistance of Lopez, Payam and Lainez. Lopez also told McLoughlin that
Tan stole the key assigned to McLoughlin while the latter was asleep.

McLoughlin requested the management for an investigation of the incident. Lopez got in
touch with Tan and arranged for a meeting with the police and McLoughlin. When the
police did not arrive, Lopez and Tan went to the room of McLoughlin at Tropicana and
thereat, Lopez wrote on a piece of paper a promissory note dated 21 April 1988. The
promissory note reads as follows:

I promise to pay Mr. Maurice McLoughlin the amount of AUS$4,000.00 and

US$2,000.00 or its equivalent in Philippine currency on or before May 5, 1988.14

Lopez requested Tan to sign the promissory note which the latter did and Lopez also
signed as a witness. Despite the execution of promissory note by Tan, McLoughlin
insisted that it must be the hotel who must assume responsibility for the loss he
suffered. However, Lopez refused to accept the responsibility relying on the conditions
for renting the safety deposit box entitled "Undertaking For the Use Of Safety Deposit
Box," specifically paragraphs (2) and (4) thereof, to wit:

2. To release and hold free and blameless TROPICANA APARTMENT HOTEL from
any liability arising from any loss in the contents and/or use of the said deposit
box for any cause whatsoever, including but not limited to the presentation or
use thereof by any other person should the key be lost;

...

4. To return the key and execute the RELEASE in favor of TROPICANA

APARTMENT HOTEL upon giving up the use of the box.

Upon his return on 22 October 1990, he registered at the Echelon Towers at Malate,
Manila. Meetings were held between McLoughlin and his lawyer which resulted to the
filing of a complaint for damages on 3 December 1990 against YHT Realty Corporation,
Lopez, Lainez, Payam and Tan (defendants) for the loss of McLoughlin's money which
was discovered on 16 April 1988. After filing the complaint, McLoughlin left again for
Australia to attend to an urgent business matter. Tan and Lopez, however, were not
served with summons, and trial proceeded with only Lainez, Payam and YHT Realty
Corporation as defendants.

ISSUE: Whether a hotel may evade liability for the loss of items left with it for
safekeeping by its guests, by having these guests execute written waivers holding the
establishment or its employees free from blame for such loss in light of Article 2003 of
the Civil Code which voids such waivers.

Petitioners submit for resolution by this Court the following issues: (a) whether the
appellate court's conclusion on the alleged prior existence and subsequent loss of the
subject money and jewelry is supported by the evidence on record; (b) whether the
finding of gross negligence on the part of petitioners in the performance of their duties
as innkeepers is supported by the evidence on record; (c) whether the "Undertaking For
The Use of Safety Deposit Box" admittedly executed by private respondent is null and
void; and (d) whether the damages awarded to private respondent, as well as the
amounts thereof, are proper under the circumstances.

RULING: The petition is devoid of merit.

Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had
custody of the master key of the management when the loss took place. In fact, they
even admitted that they assisted Tan on three separate occasions in opening
McLoughlin's safety deposit box. This only proves that Tropicana had prior knowledge
that a person aside from the registered guest had access to the safety deposit box. Yet
the management failed to notify McLoughlin of the incident and waited for him to
discover the taking before it disclosed the matter to him. Therefore, Tropicana should
be held responsible for the damage suffered by McLoughlin by reason of the negligence
of its employees.
The management should have guarded against the occurrence of this incident
considering that Payam admitted in open court that she assisted Tan three times in
opening the safety deposit box of McLoughlin at around 6:30 A.M. to 7:30 A.M. while
the latter was still asleep. In light of the circumstances surrounding this case, it is
undeniable that without the acquiescence of the employees of Tropicana to the opening
of the safety deposit box, the loss of McLoughlin's money could and should have been
avoided.

The management contends, however, that McLoughlin, by his act, made its employees
believe that Tan was his spouse for she was always with him most of the time. The
evidence on record, however, is bereft of any showing that McLoughlin introduced Tan
to the management as his wife. Such an inference from the act of McLoughlin will not
exculpate the petitioners from liability in the absence of any showing that he made the
management believe that Tan was his wife or was duly authorized to have access to the
safety deposit box. Mere close companionship and intimacy are not enough to warrant
such conclusion considering that what is involved in the instant case is the very safety
of McLoughlin's deposit. If only petitioners exercised due diligence in taking care of
McLoughlin's safety deposit box, they should have confronted him as to his relationship
with Tan considering that the latter had been observed opening McLoughlin's safety
deposit box a number of times at the early hours of the morning. Tan's acts should
have prompted the management to investigate her relationship with McLoughlin. Then,
petitioners would have exercised due diligence required of them. Failure to do so
warrants the conclusion that the management had been remiss in complying with the
obligations imposed upon hotel-keepers under the law.

Under Article 1170 of the New Civil Code, those who, in the performance of their
obligations, are guilty of negligence, are liable for damages. As to who shall bear the
burden of paying damages, Article 2180, paragraph (4) of the same Code provides that
the owners and managers of an establishment or enterprise are likewise responsible
for damages caused by their employees in the service of the branches in which the
latter are employed or on the occasion of their functions. Also, this Court has ruled that
if an employee is found negligent, it is presumed that the employer was negligent in
selecting and/or supervising him for it is hard for the victim to prove the negligence of
such employer. Thus, given the fact that the loss of McLoughlin's money was
consummated through the negligence of Tropicana's employees in allowing Tan to open
the safety deposit box without the guest's consent, both the assisting employees and
YHT Realty Corporation itself, as owner and operator of Tropicana, should be held
solidarily liable pursuant to Article 2193.

The issue of whether the "Undertaking For The Use of Safety Deposit Box" executed by
McLoughlin is tainted with nullity presents a legal question appropriate for resolution in
this petition. Notably, both the trial court and the appellate court found the same to be
null and void. We find no reason to reverse their common conclusion. Article 2003 is
controlling, thus:

Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices
to the effect that he is not liable for the articles brought by the guest. Any stipulation
between the hotel-keeper and the guest whereby the responsibility of the former as set
forth in Articles 1998 to 200137 is suppressed or diminished shall be void.
Article 2003 was incorporated in the New Civil Code as an expression of public policy
precisely to apply to situations such as that presented in this case. The hotel business
like the common carrier's business is imbued with public interest. Catering to the
public, hotelkeepers are bound to provide not only lodging for hotel guests and security
to their persons and belongings. The twin duty constitutes the essence of the business.
The law in turn does not allow such duty to the public to be negated or diluted by any
contrary stipulation in so-called "undertakings" that ordinarily appear in prepared forms
imposed by hotel keepers on guests for their signature.

In an early case, the Court of Appeals through its then Presiding Justice (later Associate
Justice of the Court) Jose P. Bengzon, ruled that to hold hotelkeepers or innkeeper
liable for the effects of their guests, it is not necessary that they be actually delivered
to the innkeepers or their employees. It is enough that such effects are within the hotel
or inn. With greater reason should the liability of the hotelkeeper be enforced when the
missing items are taken without the guest's knowledge and consent from a safety
deposit box provided by the hotel itself, as in this case.

Paragraphs (2) and (4) of the "undertaking" manifestly contravene Article 2003 of the
New Civil Code for they allow Tropicana to be released from liability arising from any
loss in the contents and/or use of the safety deposit box for any cause
whatsoever. Evidently, the undertaking was intended to bar any claim against
Tropicana for any loss of the contents of the safety deposit box whether or not
negligence was incurred by Tropicana or its employees. The New Civil Code is explicit
that the responsibility of the hotel-keeper shall extend to loss of, or injury to, the
personal property of the guests even if caused by servants or employees of the keepers
of hotels or inns as well as by strangers, except as it may proceed from any force
majeure. It is the loss through force majeure that may spare the hotel-keeper from
liability. In the case at bar, there is no showing that the act of the thief or robber was
done with the use of arms or through an irresistible force to qualify the same as force
majeure.

Petitioners likewise anchor their defense on Article 2002 which exempts the hotel-
keeper from liability if the loss is due to the acts of his guest, his family, or visitors.
Even a cursory reading of the provision would lead us to reject petitioners' contention.
The justification they raise would render nugatory the public interest sought to be
protected by the provision. What if the negligence of the employer or its employees
facilitated the consummation of a crime committed by the registered guest's relatives
or visitor? Should the law exculpate the hotel from liability since the loss was due to the
act of the visitor of the registered guest of the hotel? Hence, this provision presupposes
that the hotel-keeper is not guilty of concurrent negligence or has not contributed in
any degree to the occurrence of the loss. A depositary is not responsible for the loss of
goods by theft, unless his actionable negligence contributes to the loss.

In the case at bar, the responsibility of securing the safety deposit box was shared not
only by the guest himself but also by the management since two keys are necessary to
open the safety deposit box. Without the assistance of hotel employees, the loss would
not have occurred. Thus, Tropicana was guilty of concurrent negligence in allowing Tan,
who was not the registered guest, to open the safety deposit box of McLoughlin, even
assuming that the latter was also guilty of negligence in allowing another person to use
his key. To rule otherwise would result in undermining the safety of the safety deposit
boxes in hotels for the management will be given imprimatur to allow any person,
under the pretense of being a family member or a visitor of the guest, to have access
to the safety deposit box without fear of any liability that will attach thereafter in case
such person turns out to be a complete stranger. This will allow the hotel to evade
responsibility for any liability incurred by its employees in conspiracy with the guest's
relatives and visitors.

Petitioners contend that McLoughlin's case was mounted on the theory of contract, but
the trial court and the appellate court upheld the grant of the claims of the latter on the
basis of tort. There is nothing anomalous in how the lower courts decided the
controversy for this Court has pronounced a jurisprudential rule that tort liability can
exist even if there are already contractual relations. The act that breaks the contract
may also be tort.