Oblicon Second Assignment

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THIRD DIVISION

G.R. No. 161745 September 30, 2005

LEA MER INDUSTRIES, INC.,Petitioners,

vs.

MALAYAN INSURANCE CO., INC.,*Respondent.

D E C I S I O N

PANGANIBAN, J.:

ommon carriers are bound to observe extraordinary diligence in their vigilance over the goods entrusted

to them, as required by the nature of their business and for reasons of public policy. Consequently, thelaw presumes that common carriers are at fault or negligent for any loss or damage to the goods that

they transport. In the present case, the evidence submitted by petitioner to overcome this presumption

was sorely insufficient.

The Case

Before us is a Petition for Review1under Rule 45 of the Rules of Court, assailing the October 9, 2002

Decision2and the December 29, 2003 Resolution

3of the Court of Appeals (CA) in CA-GR CV No.

66028. The challenged Decision disposed as follows:

"WHEREFORE, the appeal is GRANTED. The December 7, 1999 decision of the Regional Trial

Court of Manila, Branch 42 in Civil Case No. 92-63159 is hereby REVERSEDand SETASIDE.

[Petitioner] is ordered to pay the [herein respondent] the value of the lost cargo in the amount

of P565,000.00. Costs against the [herein petitioner]."4

The assailed Resolution denied reconsideration.

The Facts

Ilian Silica Mining entered into a contract of carriage with Lea Mer Industries, Inc., for the shipment of

900 metric tons of silica sand valued at P565,000.5Consigned to Vulcan Industrial and Mining

Corporation, the cargo was to be transported from Palawan to Manila. On October 25, 1991, the silica

sand was placed on boardJudy VII, a barge leased by Lea Mer.6During the voyage, the vessel sank,

resulting in the loss of the cargo.7

Malayan Insurance Co., Inc., as insurer, paid Vulcan the value of the lost cargo .8To recover the amount

paid and in the exerci se of its right of subrogation, Malayan demanded reimbursement from Lea Mer,

which refused to comply. Consequently, Malayan instituted a Complaint with the Regional Trial Court

(RTC) of Manila on September 4, 1992, for the collection of P565,000 representing the amount that

respondent had paid Vulcan.9

On October 7, 1999, the trial court dismissed the Complaint, upon finding that the cause of the loss wasa fortuitous event.10

The RTC noted that the vessel had sunk because of the bad weather condition

brought about by Typhoon Trining. The court ruled that petitioner had no advance knowledge of the

incoming typhoon, and that the vessel had been cleared by the Philippine Coast Guard to travel from

Palawan to Manila.11

Ruling of the Court of Appeals

Reversing the trial court, the CA held that the vessel was not seaworthy when it sailed for Manila

the loss of the cargo was occasioned by petitioners fault, not by a fortuitous event .12

Hence, this recourse.13

The Issues

Petitioner states the issues in this wise:

"A. Whether or not the survey report of the cargo surveyor, Jesus Cortez, who had not been prese

a witness of the said report during the trial of this case before the lower court can be adm

evidence to prove the alleged facts cited in the said report.

"B. Whether or not the respondent, Court of Appeals, had validly or legally reversed the findingof the Regional Trial Court which clearly and unequivocally held that the loss of the cargo sub

this case was caused by fortuitous event for which herein petitioner could not be held liable.

"C. Whether or not the respondent, Court of Appeals, had committed serious error and grave a

discretion in disregarding the testimony of the witness from the MARINA, Engr. Jacinto

Villegal, to the effect that the vessel Judy VII was seaworthy at the time of incident and fur

disregarding the testimony of the PAG-ASA weather specialist, Ms. Rosa Barba y Saliente, to th

that typhoon Trining did not hit Metro Manila or Palawan. "14

In the main, the issues are as follows: (1) whether petitioner is liable for the loss of the cargo,

whether the survey report of Jesus Cortez is admissible in evidence.

The Courts Ruling

The Petition has no merit.

First Issue:

Liability f or L oss of Cargo

Question of Fact

The resolution of the present case hinges on whether the loss of the cargo was due to a fortuitou

This issue involves primarily a question of fact, notwithstanding petitioners claim that it pertai

to a question of law. As a general rule, questions of fact may not be raised in a petition for review

present case serves as an exception to this rule, because the factual findings of the appella te and

courts vary.16

This Court meticulously reviewed the records, but found no reason to reverse the C

Rule on Common Carri ers

Common carriers are persons, corporations, firms or associations engaged in the business of carr

transporting passengers or goods, or both -- by land, water, or air -- when this service is offered

public for compensation.

17

Petitioner is clearly a common carrier, because it offers to the pubusiness of transporting goods through its vessels.18

Thus, the Court corrects the trial courts finding that petitioner became a private carrier when

chartered it.19

Charter parties are classified as contracts of demise (or bareboat) and affreig

which are distinguished as follows:

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"Under the demise or bareboat charter of the vessel, the charterer will generally be considered as owner

for the voyage or service stipulated. The charterer mans the vessel with his own people and becomes, in

effect, the ownerpro hac vice, subject to liability to others for damages caused by negligence. To create

a demise, the owner of a vessel must completely and exclusively relinquish possession, command and

navigation thereof to the charterer; anything short of such a complete transfer is a contract of

affreightment (time or voyage charter party) or not a charter party at all. "20

The distinction is significant, because a demise or bareboat charter indicates a business undertaking that

isprivatein character.21

Consequently, the rights and obligations of the parties to a contract of private

carriage are governed principally by their stipulations, not by the law on common carriers.22

The Contract in the present case was one of affreightment, as shown by the fact that it was petitioners

crew that manned the tugboatM/V Ayalit and controlled the bargeJudy VII.23Necessarily, petitioner

was a common carrier, and the pertinent law governs the present factual circumstances.

Extr aordinar y Dil igence Required

Common carriers are bound to observe extraordinarydiligence in their vigilance over the goods and the

safety of the passengers they transport, as required by the nature of their business and for reasons of

public policy.24

Extraordinary diligence requires rendering service with the greatest skill and foresight to

avoid damage and destruction to the goods entrusted for carriage and delivery.25

Common carriers are presumed to have been at fault or to have acted negligently for loss or damage to

the goods that they have transported.26

This presumption can be rebutted only by proof that they

observed extraordinary diligence, or that the loss or damage was occasioned by any of the following

causes:27

"(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

"(2) Act of the public enemy in war, whether international or civil;

"(3) Act or omission of the shipper or owner of the goods;

"(4) The character of the goods or defects in the packing or in the containers;

"(5) Order or act of competent public authority. "28

Rule on Fortui tous Events

Article 1174 of the Civil Code provides that "no person shall be responsible for a fortuitous event which

could not be foreseen, or which, though foreseen, was inevitable." Thus, if the loss or damage was due

to such an event, a common carrier is exempted from liability.

Jurisprudence defines the elements of a "fortuitous event" as follows: (a) the cause of the unforeseen

and unexpected occurrence, or the failure of the debtors to comply with their obligations, must have

been independent of human will; (b) the event that constituted the caso fortuito must have been

impossible to foreseeor, if foreseeable, impossible to avoid; (c) the occurrence must have been such as

to render it impossible for the debtors to fulfill their obligation in a normal manner; and (d) the obligor

must have been free from any participation in the aggravation of the resulting injury to the creditor.29

To excuse the common carrier fully of any liability, the fortuitous event must have been the pro

and only cause of the loss.30

Moreover, it should have exercised due diligence to prevent or m

the loss before, during and after the occurrence of the fortuitous event.31

Loss in the I nstant Case

There is no controversy regarding the loss of the cargo in the present case. As the common

petitioner bore the burden of proving that it had exercised extraordinary di ligence to avoid the

that the loss had been occasioned by a fortuitous event -- an exempting circumstance.

It was precisely this circumstance that petitioner cited to escape liability. Lea Mer claimed that

of the cargo was due to the bad weather condition brought about by Typhoon Trining.32

Eviden

presented to show that petitioner had not been informed of the incoming typhoon, and tPhilippine Coast Guard had given it clearance to begin the voyage .

33On October 25, 1991, the

which the voyage commenced and the barge sank, Typhoon Trining was allegedly far from Pa

where the storm warning was only "Signal No. 1."34

The evidence presented by petitioner in support of its defense of fortuitous event was sorely insu

As required by the pertinent law, it was not enough for the common carrier to show that there

unforeseen or unexpected occurrence. It had to show that it was free from any fault -- a fact it mi

failed to prove.

First, petitioner presented no evidence that it had attempted to minimize or prevent the loss

during or after the alleged fortuitous event.35

Its witness, Joey A. Draper, testified that he co

longer remember whether anything had been done to minimize loss when water started enter

barge.36

This fact was confirmed during his cross-examination, as shown by the followin

exchange:

"Atty. Baldovino, Jr.:

Other than be[a]ching the barge Judy VII, were there other precautionary measure[s] exercised

and the crew of Judy VII so as to prevent the los[s] or sinking of barge Judy VII?

x x x x x x x x x

Atty. Baldovino, Jr.:

Your Honor, what I am asking [relates to the] action taken by the officers and crew of tugboat

and barge Judy VII x x x to prevent the sinking of barge Judy VII?

x x x x x x x x x

Court:

Mr. witness, did the captain of that tugboat give any instruction on how to save the barge Judy VI

Joey Draper:

I can no longer remember sir, because that happened [a] long time ago. "37

Second, the alleged fortuitous event was not the sole and proximate cause of the loss. The

preponderance of evidence that the barge was not seaworthy when i t sailed for Manila.38

Resp

was able to prove that, in the hull of the barge, there were holes that might have caused or agg

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the sinking.39

Because the presumption of negligence or fault applied to petitioner, it was incumbent

upon it to show that there were no holes; or, if there were, that they did not aggravate the sinking.

Petitioner offered no evidence to rebut the existence of the holes. Its witness, Domingo A. Luna,

testified that the barge was in "tip-top" or excellent condition,40

but that he had not personally inspected

it when it left Palawan.41

The submission of the Philippine Coast Guards Ce rtificate of Inspection ofJudy VII, dated July 31,

1991, did not conclusively prove that the barge was seaworthy.42

The regularity of the issuance of the

Certificate is disputably presumed.43

It could be contradicted by competent evidence, which respondent

offered. Moreover, this evidence did not necessarily take into account the actual condition of

the vessel at the time of the commencement of the voyage .44

Second Issue:

Admissibility of the Survey Report

Petitioner claims that the Survey Report45

prepared by Jesus Cortez, the cargo surveyor, should not have

been admitted in evidence. The Court partly agrees. Because he did not testify during the trial,46

then the

Report that he had prepared was hearsay and therefore inadmissible for the purpose of proving the truth

of its contents.

The Survey Report Not the Sole Evidence

The facts reveal that Cortezs Survey Report was used in the testimonies of respondents witnesses --

Charlie M. Soriano; and Federico S. Manlapig, a cargo marine surveyor and the vice-president of Toplis

and Harding Company.47

Soriano testified that the Survey Report had been used in preparing the final

Adjustment Report conducted by their company.48

The final Report showed that the barge was not

seaworthy because of the existence of the holes. Manlapig testified that he had prepared that Reportafter taking into account the findings of the surveyor, as well as the pictures and the sketches of the

place where the sinking occurred.49

Evidently, the existence of the holes was proved by the testimonies

of the witnesses, not merely by Cortez Survey Report.

Rule on I ndependently

Relevant Statement

That witnesses must be examined and presented during the trial,50

and that their testimonies must be

confined to personal knowledge is required by the rules on evidence, from which we quote:

"Section 36. Testimony generally confined to personal knowledge; hearsay excluded. A witness can

testify only to those facts which he knows of his personal knowledge; that is, which are derived from his

own perception, except as otherwise provided in these rules."51

On this basis, the trial court correctly refused to admit Jesus Cortezs Affidavit, which respondent had

offered as evidence.52

Well-settled is the rule that, unless the affiant is presented as a witness, anaffidavit is considered hearsay.

53

An exception to the foregoing rule is that on "independently relevant statements."A report made by a

person is admissible if it is intended to p rove the tenor, not the truth, of the statements.54

Independent of

the truth or the falsity of the statement given in the report, the fact that it has been made is relevant.

Here, the hearsay rule does not apply.55

In the instant case, the challenged Survey Report prepared by Cortez was admitted only as part

testimonies of respondents witnesses. The referral to Cortezs Report was in relation to Man

final Adjustment Report. Evidently, it was the existence of the Survey Report that was testified

admissibility of that Report as part of the testimonies of the witnesses was correctly ruled upon

trial court.

At any rate, even without the Survey Report, petitioner has already failed to overcome the presu

of fault that applies to common carriers.

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution are AFFI

Costs against petitioner.

SO ORDERED.

_____________________

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THIRD DIVISION

G.R. No. 159617 August 8, 2007

ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC.,petitioners,

vs.

LULU V. JORGE and CESAR JORGE, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari filed by Roberto C. Sicam, Jr. (petitioner Sicam)

andAgenciadeR.C. Sicam, Inc. (petitioner corporation) seeking to annul the Decision1

of the Court ofAppeals dated March 31, 2003, and its Resolution

2dated August 8, 2003, in CA G.R. CV No. 56633.

It appears that on different dates from September to October 1987, Lulu V. Jorge (respondent Lulu)

pawned several pieces of jewelry withAgenciade R. C. Sicam located at No. 17 Aguirre Ave., BF

Homes Paraaque, Metro Manila, to secure a loan in the total amount of P59,500.00.

On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry

were found inside the pawnshop vault. The incident was entered in the police blotter of the SouthernPolice District, Paraaque Police Station as follows:

Investigation shows that at above TDPO, while victims were inside the office, two (2) male unidentified

persons entered into the said office with guns drawn. Suspects(sic) (1) went straight inside and poked

his gun toward Romeo Sicam and thereby tied him with an electric wire while suspects (sic) (2) poked

his gun toward Divina Mata and Isabelita Rodriguez and ordered them to lay (sic) face flat on the floor.

Suspects asked forcibly the case and assorted pawned jewelries items mentioned above.

Suspects after taking the money and jewelries fled on board a Marson Toyota unidentified plate

number.3

Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987 informing her of the loss of her

jewelry due to the robbery incident in the pawnshop. On November 2, 1987, respondent Lulu then wrote

a letter4to petitioner Sicam expressing disbelief stating that when the robbery happened, all jewelry

pawned were deposited with Far East Bank near the pawnshop since it had been the practice that before

they could withdraw, advance notice must be given to the pawnshop so it could withdraw the jewelry

from the bank. Respondent Lulu then requested petitioner Sicam to prepare the pawned jewelry for

withdrawal on November 6, 1987 but petitioner Sicam failed to return the jewelry.

On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, filed a complaint against

petitioner Sicam with the Regional Trial Court of Makati seeking indemnification for the loss of

pawned j ewelry and payment of actual, moral and exempla ry damages as well a s attorney's fees. The

case was docketed as Civil Case No. 88-2035.

Petitioner Sicam filed his Answer contending that he is not the real party-in-interest as the pawnshop

was incorporated on April 20, 1987 and known as AgenciadeR.C. Sicam, Inc; that petit ioner

corporation had exercised due care and diligence in the safekeeping of the articles pledged with it and

could not be made liable for an event that is fortuitous.

Respondents subsequently filed an Amended Complaint to include petitioner corporation.

Thereafter, petitioner Sicam filed a Motion to Dismiss as far as he is concerned considering tha

not the real party-in-interest. Respondents opposed the same. The RTC denied the motion in an

dated November 8, 1989.5

After trial on the merits, the RTC rendered its Decisio n6dated January 12, 1993, dis

respondents complaint as well as petitioners counterclaim. The RTC held that petitioner Sicam

not be made personally liable for a claim arising out of a corporate transaction; that in the Am

Complaint of respondents, they asserted that "plaintiff pawned assorted jewelries in defe

pawnshop"; and that as a consequence of the separate juridical personality of a corporati

corporate debt or credit is not the debt or credit of a stockholder.

The RTC further ruled that petitioner corporation could not be held liable for the loss of the p

jewelry since it had not been rebutted by respondents that the loss of the pledged pieces of jewelrpossession of the corporation was occasioned by armed robbery; that robbery is a fortuitous even

exempts the victim from liability for the loss, citing the case ofAustria v. Court of Appeals;7a

the parties transaction was that of a pledgor and pledgee and under A rt. 1174 of the Civil Co

pawnshop as a pledgee is not responsible for those events which could not be foreseen.

Respondents appealed the RTC Decision to the CA. In a Decision dated March 31, 2003,

reversed the RTC, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the instant Appeal is GRANTED, and the Decision dated

12, 1993,of the Regional Trial Court of Makati, Branch 62, is hereby REVERSED and SET A

ordering the appellees to pay appellants the actual value of the lost jewelry amounting to P272

and attorney' fees of P27,200.00.8

In finding petitioner Sicam liable together with petitioner corporation, the CA applied the doc

piercing the vei l of corporate entity reasoning that respondents were misled into thinking that thedealing with the pawnshop owned by petitioner Sicam as all the pawnshop tickets issued to the

the words "AgenciadeR.C. Sicam"; and that there was no indication on the pawnshop tickets tha

the petitioner corporation that owned the pawnshop which explained why respondents had to

their complaint impleading petitioner corporation.

The CA further held that the corresponding diligence required of a pawnshop is that it should tak

to secure and protect the pledged items and should take steps to insure itself against the loss of

which are entrusted to its custody as it derives earnings from the pawnshop trade which pet

failed to do; thatAustria is not applicable to this case since the robbery incident happened in 196

the criminality had not as yet reached the levels attained in the present day; that they are at leas

of contributory negligence and should be held liable for the loss of jewelries; and that robberi

hold-ups are foreseeable risks in that those engaged in the pawnshop business are expected to for

The CA concluded that both petitioners should be jointly and severally held liable to respondents

loss of the pawned jewelry.

Petitioners motion for reconsideration was denied in a Resolution dated August 8, 2003.

Hence, the instant petition for review with the following assignment of errors:

THE COURT OF APPEALS ERRED AND WHEN IT DID, IT OPENED ITSELF TO REVE

WHEN IT ADOPTED UNCRITICALLY (IN FACT IT REPRODUCED AS ITS OWN WITHO

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THE MEANTIME ACKNOWLEDGING IT) WHAT THE RESPONDENTS ARGUED IN THEIR

BRIEF, WHICH ARGUMENT WAS PALPABLY UNSUSTAINABLE.

THE COURT OF APPEALS ERRED, AND WHEN IT DID, IT OPENED ITSELF TO REVERSAL

BY THIS HONORABLE COURT, WHEN IT AGAIN ADOPTED UNCRITICALLY (BUT

WITHOUT ACKNOWLEDGING IT) THE SUBMISSIONS OF THE RESPONDENTS IN THEIR

BRIEF WITHOUT ADDING ANYTHING MORE THERETO DESPITE THE FACT THAT THE

SAID ARGUMENT OF THE RESPONDENTS COULD NOT HAVE BEEN SUSTAINED IN VIEW

OF UNREBUTTED EVIDENCE ON RECORD.9

Anent the first assigned error, petitioners point out that the CAs finding that petitioner Sicam is

personally liable for the loss of the pawned jewelries is "a virtual and uncritical reproduction of the

arguments set out on pp. 5-6 of the Appellants brief."10

Petitioners argue that the reproduced arguments of respondents in their Appellants Brief suffer from

infirmities, as follows:

(1) Respondents conclusively asserted in paragraph 2 of their Amended Complaint that Agencia de R.C.

Sicam, Inc. is the present owner of Agencia de R.C. Sicam Pawnshop, and therefore, the CA cannot rule

against said conclusive assertion of respondents;

(2) The issue resolved against petitioner Sicam was not among those raised and litigated in the trial

court; and

(3) By reason of the above infirmities, it was error for the CA to have pierced the corporate veil since a

corporation has a personality distinct and separate from its individual stockholders or members.

Anent the second error, petitioners point out that the CA finding on their negligence is likewise an

unedited reproduction of respondents brief which had the following defects:(1) There were unrebutted evidence on record that petitioners had observed the diligence required of

them, i.e, they wanted to open a vault with a nearby bank for purposes of safekeeping the pawned

articles but was discouraged by the Central Bank (CB) since CB rules provide that they can only store

the pawned articles in a vault inside the pawnshop premises and no other place;

(2) Petitioners were adjudged negligent as they did not take insurance against the loss of the pledged

jelweries, but it is judicial notice that due to high incidence of crimes, insurance companies refused to

cover pawnshops and banks because of high probability of losses due to robberies;

(3) InHernandez v. Chairman, Commission on Audit(179 SCRA 39, 45-46), the victim of robbery was

exonerated from liability for the sum of money belonging to others and lost by him to robbers.

Respondents filed their Comment and petitioners filed their Reply thereto. The parties subsequently

submitted their respective Memoranda.

We find no merit in the petition.

To begin with, although it is true that indeed the CA findings were exact reproductions of the arguments

raised in respondents (appellants) brief filed with the CA, we find the same to be not fatally infirmed.

Upon examination of the Decision, we find that it expressed clearly and distinctly the facts and the law

on which it is based as required by Section 8, Article VIII of the Constitution. The discretion to decide a

case one way or another is broad enough to justify the adoption of the arguments put forth by on

parties, as long as these are legally tenable and supported by law and the facts on records.11

Our jurisdiction under Rule 45 of the Rules of Court is limited to the review of errors of law com

by the appellate court. Generally, the findings of fact of the appellate court are deemed conclus

we are not duty-bound to analyze and calibrate all over again the evidence adduced by the partie

court a quo.12

This rule, however, is not without exceptions, such as where the factual findings

Court of Appeals and the trial court are conflicting or contradictory13

as is obtaining in the instan

However, after a careful examination of the records, we find no justification to absolve petitioner

from liability.

The CA correctly pierced the veil of the corporate fiction and adjudged petitioner Sicam liable twith petitioner corporation. The rule is that the veil of corporate fiction may be pierced when ma

shield to perpetrate fraud and/or confuse legitimate issues.14

The theory of corporate entity w

meant to promote unfair objectives or otherwise to shield them .15

Notably, the evidence on record shows that at the time respondent Lulu pawned her jewe

pawnshop was owned by petitioner Sicam himself. As correctly observed by the CA, in

pawnshop receipts issued to respondent Lulu in September 1987, all bear the words "Agenciad

Sicam," notwithstanding that the pawnshop was allegedly incorporated in April 1987. The r

issued after such alleged incorporation were still in the name of "AgenciadeR. C. Sicam

inevitably misleading, or at the very least, creating the wrong impression to respondents and the

as well, that the pawnshop was owned solely by petitioner Sicam and not by a corporation.

Even petitioners counsel, Atty. Marcial T. Balgos, in his lette r16

dated October 15, 1987 addre

the Central Bank, expressly referred to petitioner Sicam as the proprietor of the paw

notwithstanding the alleged incorporation in April 1987.We also find no merit in petitioners' argument that since respondents had alleged in their Am

Complaint that petitioner corporation is the present owner of the pawnshop, the CA is bound to

the case on that basis.

Section 4 Rule 129 of the Rules of Court provides that an admission, verbal or written, made by

in the course of the proceedings in the same case, does not require proof. The admission m

contradicted only by showing that it was made through palpable mistake or that no such admissi

made.

Thus, the general rule that a judicial admission is conclusive upon the party making it and d

require proof, admits of two exceptions, to wit: (1) when it is shown that such admission wa

through palpable mistake, and (2) when it is shown that no such admission was in fact made. Th

exception allows one to contradict an admission by denying that he made such an admission

The Committee on the Revision of the Rules of Court explained the second exception in this wis

x x x if a party invokes an "admission" by an adverse party, but cites the admission "out of c

then the one making the "admission" may show that he made no "such" admission, or t

admission was taken out of context.

x x x that the party can also show that he made no "such admission", i.e., not in the sense in

the admission is made to appear.

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That is the reason for the modifier "such" because if the rule simply states that the admission may be

contradicted by showing that "no admission was made," the rule would not really be providing for a

contradiction of the admission but just a denial.18

(Emphasis supplied).

While it is true that respondents alleged in their Amended Complaint that petitioner corporation is the

present owner of the pawnshop, they did so only because petitioner Sicam alleged in his Answer to the

original complaint filed against him that he was not the real party-in-interest as the pawnshop was

incorporated in April 1987. Moreover, a reading of the Amended Complaint in its entirety shows that

respondents referred to both petitioner Sicam and petitioner corporation where they (respondents)

pawned their assorted pieces of jewelry and ascribed to both the failure to observe due diligence

commensurate with the business which resulted in the loss of their pawned jewelry.

Markedly, respondents, in their Opposition to petitioners Motion to Dismiss Amended Complaint,insofar as petitioner Sicam is concerned, averred as follows:

Roberto C. Sicam was named the defendant in the original complaint because the pawnshop tickets

involved in this case did not show that the R.C. Sicam Pawnshop was a corporation. In paragraph 1 of

his Answer, he admitted the allegations in paragraph 1 and 2 of the Complaint. He merely added "that

defendant is not now the real party in interest in this case."

It was defendant Sicam's omission to correct the pawnshop tickets used in the subject transactions in

this case which was the cause of the instant action. He cannot now ask for the dismissal of the complaint

against him simply on the mere allegation that his pawnshop business is now incorporated. It is a matter

of defense, the merit of which can only be reached after consideration of the evidence to be presented in

due course.19

Unmistakably, the alleged admission made in respondents' Amended Complaint was taken "out of

context" by petitioner Sicam to suit his own purpose. Ineluctably, the fact that petitioner Sicam

continued to issue pawnshop receipts under his name and not under the corporation's name militates for

the piercing of the corporate veil.

We likewise find no merit in petitioners' contention that the CA erred in piercing the veil of corporate

fiction of petitioner corporation, as it was not an issue raised and litigated before the RTC.

Petitioner Sicam had alleged in his Answer filed with the trial court that he was not the real party-in-

interest because since April 20, 1987, the pawnshop business initiated by him was incorporated and

known asAgenciadeR.C. Sicam. In the pre-trial brief filed by petitioner Sicam, he submitted that as far

as he was concerned, the basic issue was whether he is the real party in interest against whom the

complaint should be directed.20

In fact, he subsequently moved for the dismissal of the complaint as to

him but was not favorably acted upon by the trial court. Moreover, the issue was squarely passed upon,

although erroneously, by the trial court in its Decision in this manner:

x x x The defendant Roberto Sicam, Jr likewise denies liability as far as he is concerned for the reason

that he cannot be made personally liable for a claim arising from a corporate transaction.

This Court sustains the contention of the defendant Roberto C. Sicam, Jr. The amended complaint itself

asserts that "plaintiff pawned assorted jewelries in defendant's pawnshop." It has been held that " as a

consequence of the separate juridical personality of a corporation, the corporate debt or credit is not the

debt or credit of the stockholder, nor is the stockholder's debt or credit that of a corporation .21

Clearly, in view of the alleged incorporation of the pawnshop, the issue of whether petitioner S

personally l iable is inextricably connected with the determination of the question whether the d

of piercing the corporate veil should or should not apply to the case.

The next question is whether petitioners are liable for the loss of the pawned articles in their poss

Petitioners insist that they are not liable since robbery is a fortuitous event and they are not negl

all.

We are not persuaded.

Article 1174 of the Civil Code provides:

Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declastipulation, or when the nature of the obligation requires the assumption of risk, no person s

responsible for those events which could not be foreseen or which, though foreseen, were inevita

Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefo

enough that the event should not have been foreseen or anticipated, as is commonly believed but

be one impossible to foresee or to avoid. The mere difficulty to foresee the happening

impossibility to foresee the same.22

To constitute a fortuitous event, the following elements must concur: (a) the cause of the unfores

unexpected occurrence or of the failure of the debtor to comply with obligations must be indepen

human will; (b) it must be impossible to foresee the event that constitutes the casofortuitoor,

be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it imp

for the debtor to fulfill obligations in a normal manner; and, (d) the obligor must be free fr

participation in the aggravat ion of the injury or loss.23

The burden of proving that the loss was due to a fortuitous event rests on him who invokes it.24order for a fortuitous event to exempt one from liability, it is necessary that one has commi

negligence or misconduct that may have occasioned the loss.25

It has been held that an act of God cannot be invoked to protect a person who has failed to take

forestall the possible adverse consequences of such a loss. One's negligence may have concurre

an act of God in producing damage and injury to another; nonetheless, showing that the immed

proximate cause of the damage or injury was a fortuitous event would not exempt one from l

When the effect is found to be partly the result of a person's participation -- whether by

intervention, neglect or failure to act -- the whole occurrence is humanized and removed from t

applicable to acts of God.26

Petitioner Sicam had testified that there was a security guard in their pawnshop at the time

robbery. He likewise testified that when he started the pawnshop business in 1983, he tho

opening a vault with the nearby bank for the purpose of safekeeping the valuables but was disco

by the Centra l Bank since pawned ar ticles should only be stored in a vault inside the pawnshvery measures which petitioners had allegedly adopted show that to them the possibility of robb

not only foreseeable, but actually foreseen and anticipated. Petitioner Sicams testimony, in

contradicts petitioners defense of fortuitous event.

Moreover, petitioners failed to show that they were free from any negligence by which the loss

pawned jewelry may have been occasioned .

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Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of

negligence on the part of herein petitioners. In Co v. Court of Appeals,27

the Court held:

It is not a defense for a repair shop of motor vehicles to escape liability simply because the damage or

loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se cannot be

considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from

another's rightful possession, as in cases of carnapping, does not automatically give rise to a

fortuitous event. To be considered as such, carnapping entails more than the mere forceful taking

of another's property. It must be proved and established that the event was an act of God or was

done solely by third parties and that neither the claimant nor the person alleged to be negligent

has any participation. In accordance with the Rules of Evidence, the burden of proving that the

loss was due to a fortuitous event rests on him who invokes it

which in this case is the privaterespondent.However, other than the police report of the alleged carnapping incident, no other evidence

was presented by private respondent to the effect that the incident was not due to its fault. A police

report of an alleged crime, to which only private respondent is privy, does not suffice to establish the

carnapping. Neither does it prove that there was no fault on the part of private respondent

notwithstanding the parties' agreement at the pre-trial that the car was carnapped. Carnapping does not

foreclose the possibility of fault or negligence on the part of private respondent.28

Just like in Co, petitioners merely presented the police report of the Paraaque Police Station on the

robbery committed based on the report of petitioners' employees which is not sufficient to establish

robbery. Such report also does not prove that petitioners were not at fault.

On the contrary, by the very evidence of petitioners, the CA did not err in finding that petitioners are

guilty of concurrent or contributory negligence as provided in Article 1170 of the Civil Code, to wit:

Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay,

and those who in any manner contravene the tenor thereof, are liable for damages .29

Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments which

are engaged in making loans secured by pledges, the special laws and regulations concerning them shall

be observed, and subsidiarily, the provisions on pledge, mortgage and antichresis.

The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall

take care of the thing pledged with the diligence of a good father of a family. This means that petitioners

must take care of the pawns the way a prudent person would as to his own property.

In this connection, Article 1173 of the Civil Code further provides:

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is

required by the nature of the obligation and corresponds with the circumstances of the persons, of time

and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph

2 shall apply.

If the law or contract does not state the diligence which is to be observed in the performance, that whichis expected of a good father of a family shall be required.

We expounded in Cruz v. Gangan30

that negligence is the omission to do something which a reasonable

man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do;

or the doing of something which a prudent and reasonable man would not do .31

It is want

required by the circumstances.

A review of the records clearly shows that petitioners failed to exercise reasonable care and caut

an ordinarily prudent person would have used in the same situation. Petitioners were gu

negligence in the operation of their pawnshop business. Petitioner Sicam testified, thus:

Court:

Q. Do you have security guards in your pawnshop?

A. Yes, your honor.

Q. Then how come that the robbers were able to enter the premises when according to you thersecurity guard?

A. Sir, if these robbers can rob a bank, how much more a pawnshop.

Q. I am asking you how were the robbers able to enter despite the fact that there was a security gu

A. At the time of the incident which happened about 1:00 and 2:00 o'clock in the afternoon

happened on a Saturday and everything was quiet in the area BF Homes Paraaque they prete

pawn an article in the pawnshop, so one of my employees allowed him to come in and it was onl

it was announced that it was a hold up.

Q. Did you come to know how the vault was opened?

A. When the pawnshop is official (sic) open your honor the pawnshop is partly open. The comb

is off.

Q. No one open (sic) the vault for the robbers?A. No one your honor it was open at the time of the robbery.

Q. It is clear now that at the time of the robbery the vault was open the reason why the robber

able to get all the items pawned to you inside the vault.

A. Yes sir.32

revealing that there were no security measures adopted by petitioners in the operation of the paw

Evidently, no sufficient precaution and vigilance were adopted by petitioners to protect the paw

from unlawful intrusion. There was no clear showing that there was any security guard at all. Or

was one, that he had sufficient training in securing a pawnshop. Further, there is no showing t

alleged security guard exercised all that was necessary to prevent any untoward incident or to

that no suspicious individuals were allowed to enter the premises. In fact, it is even doubtful tha

was a security guard, since it is quite impossible that he would not have noticed that the robbe

armed with caliber .45 pistols each, which were allegedly poked at the employees.33

Significan

alleged security guard was not presented at all to corroborate petitioner Sicam's claim; not

petitioners' employees who were present during the robbery incident testified in court.

Furthermore, petitioner Sicam's admission that the vault was open at the time of robbery is cl

proof o f petitioners' failure to observe the care, precaution and vigilance that the circumstance

demanded. Petitioner Sicam testified that once the pawnshop was open, the combination was

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from entering the pawnshop and for keeping the vault open for the day, which paved the way for the

robbers to easily cart away the pawned articles.

In Cruz, Dr. Filonila O. Cruz, Camanava District Director of Technological Education and Skills

Development Authority (TESDA), boarded the Light Rail Transit (LRT) from Sen. Puyat Avenue to

Monumento when her handbag was slashed and the contents were stolen by an unidentified person.

Among those stolen were her wallet and the government-issued cellular phone. She then reported the

incident to the police authorities; however, the thief was not located, and the cellphone was not

recovered. She also reported the loss to the Regional Director of TESDA, and she requested that she be

freed from accountability for the cellphone. The Resident Auditor denied her request on the ground that

she lacked the diligence required in the custody of government property and was ordered to pay the

purchase value in the total amount of P4,238.00. The COA found no sufficient justification to grant therequest for relief from accountability. We reversed the ruling and found that riding the LRT cannot per

se be denounced as a negligent act more so because Cruzs mode of transit was influenced by time and

money considerations; that she boarded the LRT to be able to arrive in Caloocan in time for her 3 pm

meeting; that any prudent and rational person under similar circumstance can reasonably be expected to

do the same; that possession of a cellphone should not hinder one from boarding the LRT coach as Cruz

did considering that whether she rode a jeep or bus, the risk of theft would have also been present; that

because of her relatively low position and pay, she was not expected to have her own vehicle or to ride a

taxicab; she did not have a government assigned vehicle; that placing the cellphone in a bag away from

covetous eyes and holding on to that bag as she did is ordinarily sufficient care of a cellphone while

traveling on board the LRT; that the records did not show any specific act of negligence on her part and

negligence can never be presumed.

Unlike in the Cruzcase, the robbery in thi s case happened in peti tioners' pawnshop and they were

negligent in not exercising the precautions justly demanded of a pawnshop.

WHEREFORE, except for the insurance aspect, the Decision of the Court of Appeals dated March 31,

2003 and its Resolution dated August 8, 2003, are AFFIRMED.

Costs against petitioners.

SO ORDERED.

________________________

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THIRD DIVISION

G.R. NO. 146224 January 26, 2007

VIRGINIA REAL, Petitioner,

vs.

SISENANDO H. BELO,Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Revised Rules of Court

assailing the Resolution1dated June 16, 2000 of the Court of Appeals (CA) which dismissed outright

the petition for review of Virginia Real (petitioner) in CA-G.R. SP No. 58799, and the CA

Resolution2dated November 27, 2000 which denied her Motion for Reconsideration.

The facts of the case:

Petitioner owned and operated the Wasabe Fastfood stall located at the Food Center of the Philippine

Women's University (PWU) along Taft Avenue, Malate, Manila. Sisenando H. Belo (respondent)

owned and operated the BS Masters fastfood stall, also located at the Food Center of PWU.

Around 7:00 o'clock in the morning of January 25, 1996, a fire broke out at petitioner's Wasabe

Fastfood stall. The fire spread and gutted other fastfood stalls in the area, including respondent's stall.

An investigation on the cause of the fire by Fire Investigator SFO1 Arnel C. Pinca (Pinca) revealed that

the fire broke out due to the leaking fumes coming from the Liquefied Petroleum Gas (LPG) stove and

tank installed at petitioner's stall. For the loss of his fastfood stall due to the fire, respondent demandedcompensation from petitioner. However, petitioner refused to accede to respondent's demand.

Hence, respondent filed a complaint for damages against petitioner before the Metropolitan Trial Court,

Branch 24, Manila (MeTC), docketed as Civil Case No. 152822 .3Respondent alleged that petitioner

failed to exercise due diligence in the upkeep and maintenance of her cooking equipments, as well as

the selection and supervision of her employees; that petitioner's negligence was the proximate cause of

the fire that gutted the fastfood stalls.4

In her Answer dated September 23, 1996, petitioner denied liability on the grounds that the fire was a

fortuitous event and that she exercised due diligence in the selection and supervision of her employees.5

After trial, the MeTC rendered its Decision6dated April 5, 1999 in favor of the respondent, the

dispositive portion of which reads:

WHEREFORE, in light of the foregoing, judgment is hereby rendered in favor of the plaintiff and

against the defendant ordering the latter:

1) To pay the plaintiff the sum of P50,000.00 representing temperate or moderate damages; and

2) To pay the plaintiff the sum of P25,000.00 as and for attorney's fees and litigation expenses.

The counterclaim filed by the defendant is hereby DENIED FOR LACK OF MERIT.

SO ORDERED.7

The MeTC held that the investigation conducted by the appropriate authority revealed that the fir

out due to the leaking fumes coming from the LPG stove and tank installed at petitioner's fastfoo

that factual circumstances did not show any sign of interference by any force of nature to infer

fire occurred due to fortuitous event; that the petitioner failed to exercise due diligence, precauti

vigilance in the conduct of her business, particularly, in maintaining the safety of her c

equipment as well as in the selection and supervision of her employees; that even if petitioner pa

fault to her employees, Article 2180 of the Civil Code finds application; that in the abse

supporting evidence, the amount of actual damages and unrealized profits prayed for by resp

cannot be granted; that, nonetheless, respondent is entitled to temperate damages since respsustained pecuniary loss, though its true value cannot, from the very nature of the case, be prov

certainty.

Dissatisfied, petitioner filed an appeal with the Regional Trial Court, Branch 43, Manila

docketed as Civil Case No. 99-94606, insisting that the fire was a fortuitous event. On Novem

1999, the RTC affirmed the Decision of the MeTC but increased the amount of temperate d

awarded to the respondent fromP50,000.00 to P80,000.00.8

Petitioner filed a Motion for Reconsideration contending that the increase in the award of tem

damages is unreasonable since she also incurred losses from the fire.

In its Order dated April 12, 2000, the RTC denied petitioner's Motion for Reconsideration holdin

cannot disregard evidence showing that the fire originated from petitioner's fastfood stall; t

increased amount of temperate damages awarded to respondent is not a full compensation but onl

approximate of what he lost due to the negligence of petitioner's workers .9

Petitioner then filed a Petition for Review with the CA, docketed as CA-G.R. SP No. 58799 .10

O

16, 2000, the CA issued a Resolution dismissing the petition for being "proce

flawed/deficient."11

The CA held that the attached RTC Decision was not certified as a true copyClerk of Court; that a certified true copy of the MeTC Decision was not attached; that material p

of the record, such as the position papers of the parties and affidavits of witnesses, as would supp

material allegations of the petition were also not attached.12

On July 14, 2000, petitioner filed her Motion for Reconsideration ,13

attaching photocopies

Decisions of the RTC and MeTC as certified correct by the Clerk of Court .14

On November 27, 2000, the CA issued its Resolution denying petitioner's Motion for Reconsidera

Hence, the present petition raising the following issues:

1. Whether the submitted certified true copy of the appealed decision of the Regional Trial C

authenticated by a court employee other than the Clerk of Court who was not around at that tim

copy was secured constitutes compliance with the Rules?

2. Whether the submission of a certified true copy of the Metropolitan Trial Court's judgment is

indispensable requirement in filing a petition for review before the Court of Appeals despite the fsaid judgment was already modified by the above decision of the Regional Trial Court and it is th

decision that is the proper subject of the petition for review?

3. Whether the submission of copies of the respective position papers of the contending parties is

indispensable requirement in filing a petition for review before the Court of Appeals despite the f

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the contents thereof are already quoted in the body of the verified petition and in the subject judgment

of the Metropolitan Trial Court?

4. Whether the herein petitioner could be held liable for damages as a result of the fire that razed not

only her own food kiosk but also the adjacent foodstalls at the Food Center premises of the Philippine

Women's University, including that of the respondent?

5. Whether the Regional Trial Court could increase the amount of damages awarded by the

Metropolitan Trial Court in favor of the respondent who has not even filed an appeal therefrom ?16

Petitioner submits that rules of procedure should not be applied in a very harsh, inflexible and

technically unreasonable sense.

While admitting that the RTC Decision and Order were not certified by the Clerk of Court himself,petitioner insists that they were certified as authentic copies by Administrative Officer IV Gregorio B.

Paraon of the RTC.

As to the MeTC Decision, petitioner contends that the submission of a certified true copy thereof is not

an indispensable requirement because that judgment is not the subject of the petition for review.

In any case, petitioner submits that she had substantially complied with the requirements of the rule

when she attached with her Motion for Reconsideration the copies of the Decisions of the RTC and

MeTC as certified correct by the Clerk of Court.

Anent the non-submission of the position papers of the parties, petitioner maintains that the contents of

said position papers were lengthily quoted verbatim in the petition and in the attached copy of the

MeTC Decision.

On the submission of affidavits of witnesses, petitioner contends that it was not necessary because the

case before the MeTC was not covered by summary proceedings.

On the merits of her petition before the CA, petitioner avers that she should not be held liable for a fire

which was a fortuitous event since the fire could not be foreseen and the spread of the fire to the

adjacent fastfood stalls was inevitable.

Lastly, she argues that the RTC cannot increase the amount of temperate damages since the respondent

did not appeal from the judgment of the MeTC.

Respondent opted not to file a Comment, manifesting that the petition contains no new arguments which

would require a comment since the arguments are but a rehash of those raised and decided by the lower

courts.17

The Court gave due course to the petition and required both parties to submit their respective

memoranda.18

In compliance therewith, petitioner submitted her Memorandum.19

On the other hand,

respondent filed a Manifestation stating that since no new issues have been raised by the petitioner in

her petition and in order not to be redundant, he adopts as his memorandum the memoranda he filed inthe MeTC and the RTC.20

In his Memoranda before the MeTC and RTC, respondent emphasized the evidence he presented to

establish his cause of action against petitioner, principally the testimony of Fire Investigator SFO1

Arnel G. Pinca stating that the fire originated from the LPG stove and tank in petitioner's fastfood stall.

The requirements as to form and content of a petition for review of a decision of the RTC are laid

in Section 2 of Rule 42 of the Revised Rules of Court, thus:

Sec. 2.Form and contents. - The petition shall be filed in seven (7) legible copies, with the o

copy intended for the court being indicated as such by the petitioner, and shall (a) state the full na

the parties to the case, without impleading the lower courts or judges thereof either as petitio

respondents; (b) indicate the specific material dates showing that it was filed on time; (c) s

concisely a statement of the matters involved, the issues raised, the specification of errors of fact

or both, allegedly committed by the Regional Trial Court, and the reasons or arguments relied up

the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true co

the judgments or final orders of both lower courts, certified correct by the clerk of court of the R

Trial Court, the requisite number of plain copies thereof and of the pleadings and other material p

of the record as would support the allegations of the petition. (Emphasis supplied)

x x x x

Under Section 3 of the same Rule, failure to comply with the above requirements "shall be su

ground for the dismissal thereof."

However, Section 6, Rule 1 of the Revised Rules of Court also provides that rules shall be l

construed in order to promote their objective of securing a just, speedy and inexpensive dispos

every action and proceeding. Indeed, rules of procedure should be used to promote, not f

justice.21

In the present case, petitioner's submission of copies of the RTC Decision and Order certified as

by the Administrative Officer IV o f the RTC is insufficient compliance with the requirements

rule. Petitioner failed to show that the Clerk of Court was officially on leave and the Admini

Officer was officially designated as officer-in-charge. The rule is explicit in its mandate that the

duplicate originals or true copies of the judgments or final orders of both lower courts must be c

correct by the Clerk of Court.

Nonetheless, a strict application of the rule in this case is not called for. This Court has ruled aga

dismissal of appeals based solely on technicalities in several cases, especially when the appell

substantially complied with the formal requirements.22

There is ample jurisprudence holding

subsequent and substantial compliance of a party may call for the relaxation of the r

procedure.23

When the CA dismisses a petition outright and the petitioner files a motion

reconsideration of such dismissal, appending thereto the requisite pleadings, docume

order/resolution, this would constitute substantial compliance with the Revised Rules of Court.24

Thus, in the present case, there was substantial compl