Santos, leaving a balance of P13
Santos Ventura Hocorma million.
Foundation, Inc. vs Ernesto Santos &
Riverland, Inc.
G.R. No. 1530004
November 5, 2004
Facts:
Subject of the present petition for
review on certiorari is the Decision,
dated January 30, 2002, as well as
the April 12, 2002, Resolution of the
Court of Appeals, The appellate
court reversed the Decision, dated
October 4, 1996, of the Regional Trial
Court of Makati City, and likewise
denied petitioner's Motion for
Reconsideration.
On October 26, 1990, the parties
executed a Compromise Agreement
which amicably ended all their
pending litigations. The pertinent
portions of the Agreement, include
the following: (1) Defendant
Foundation shall pay Plaintiff Santos
P14.5 Million on (a) P1.5 Million
immediately upon the execution of
this agreement and (b) The balance
of P13 Million shall be paid, whether
in one lump sum or in installments, at
the discretion of the Foundation,
within a period of not more than two
years from the execution of this
agreement; (2) Immediately upon
the execution of this agreement
(and [the] receipt of the P1.5 Million),
plaintiff Santos shall cause the
dismissal with prejudice of Civil
Cases; (3) Failure of compliance of
any of the foregoing terms and
conditions by either or both parties
to this agreement shall ipso facto
and ipso jure automatically entitle
the aggrieved party to a writ of
execution for the enforcement of this
agreement.
In compliance with the Compromise
Agreement, respondent Santos
moved for the dismissal of the
aforesaid civil cases. He also caused
the lifting of the notices of lis
pendens on the real properties
involved. For its part, petitioner SVHFI,
paid P1.5 million to respondent
On October 28, 1992, respondent
Santos sent another letter to
petitioner inquiring when it would
pay the balance of P13 million. There
was no response from petitioner.
Consequently, respondent Santos
applied with the Regional Trial Court
of Makati City, for the issuance of a
writ of execution of its compromise
judgment dated September 30,
1991. The RTC granted the writ.
Petitioner, however, filed numerous
motions to block the enforcement of
the said writ. The challenge of the
execution of the aforesaid
compromise judgment even
reached the Supreme Court. All
these efforts, however, were futile.
On November 22, 1994, petitioner's
real properties located in
Mabalacat, Pampanga were
auctioned. In the said auction,
Riverland, Inc. was the highest
bidder for P12 million and it was
issued a Certificate of Sale covering
the real properties subject of the
auction sale. Subsequently, another
auction sale was held on February 8,
1995, for the sale of real properties of
petitioner in Bacolod City. Again,
Riverland, Inc. was the highest
bidder. The Certificates of Sale issued
for both properties provided for the
right of redemption within one year
from the date of registration of the
said properties.
On June 2, 1995, Santos and
Riverland Inc. filed a Complaint for
Declaratory Relief and Damages
alleging that there was delay on the
part of petitioner in paying the
balance of P13 million.
Issues:
a)W/N the CA committed reversible
error when it awarded legal interest
in favor of the respondents
notwithstanding the fact that neither
in the compromise agreement nor in
the compromise of judgment by the
judge provides for payment of
interest to the respondent?
b)W/N the CA erred in awarding
legal interest to the respondents
although the obligation of the
petitioner to the respondent is to pay
a sum of money that had been
converted into an obligation to pay
in kind?
c)W/N respondents are barred from
demanding payment of interest by
reason of the waiver provision in the
compromise agreement, which
became the law among the parties.
Held:
On October 4, 1996, the trial court
rendered a Decision dismissing the
respondents' complaint and ordering
them to pay attorney's fees and
exemplary damages to petitioner.
Respondents then appealed to the
Court of Appeals.
The only issue to be resolved is
whether the respondents are entitled
to legal interest.
The appellate court reversed the
ruling of the trial court: WHEREFORE,
finding merit in the appeal, the
appealed Decision is hereby
REVERSED and judgment is hereby
rendered ordering appellee SVHFI to
pay appellants Santos and
Riverland, Inc.: (1) legal interest on
the principal amount of P13 million at
the rate of 12% per annum from the
date of demand on October 28,
1992 up to the date of actual
payment of the whole obligation;
and (2) P20,000 as attorney's fees
and costs of suit. SO ORDERED.
Delay
Delay as used in this article is
synonymous to default or mora
which means delay in the fulfillment
of obligations. It is the non-fulfillment
of the obligation with respect to
time. In the case at bar, the
obligation was already due and
demandable after the lapse of the
two-year period from the execution
of the contract. The two-year period
ended on October 26, 1992. When
the respondents gave a demand
letter on October 28, 1992, to the
petitioner, the obligation was
already due and demandable.
Furthermore, the obligation is
liquidated because the debtor
knows precisely how much he is to
pay and when he is to pay it.
The petition lacks merit
In the case at bar, the Compromise
Agreement was entered into by the
parties on October 26, 1990. It was
judicially approved on September
30, 1991. Applying existing
jurisprudence, the compromise
agreement as a consensual
contract became binding between
the parties upon its execution and
not upon its court approval. From the
time a compromise is validly entered
into, it becomes the source of the
rights and obligations of the parties
thereto. The purpose of the
compromise is precisely to replace
and terminate controverted claims.
As to the remaining P13 million, the
terms and conditions of the
compromise agreement are clear
and unambiguous. It provides that
the balance of P13 Million shall be
paid, whether in one lump sum or in
installments, at the discretion of the
Foundation, within a period of not
more than two (2) years from the
execution of this agreement.
WHEREFORE, the petition is DENIED
for lack of merit. The Decision dated
January 30, 2002 of the Court of
Appeals and its April 12, 2002
Resolution in CA-G.R. CV No. 55122
are AFFIRMED. Costs against
petitioner. SO ORDERED
G.R. No. 95469 July 25, 1991
AGAPITO MANUEL, petitioner,
vs.
HON. COURT OF APPEALS, HON.
RAMON MAKASIAR and SPOUSES
JESUS DE JESUS and CARMEN DE
JESUS, respondents.
Miguel Y. Badando for petitioner.
R.C. Lizardo Law Office for private
respondents.
REGALADO, J.:
This case had its inception in a
complaint for ejectment filed by
herein private respondents against
herein petitioner before the
Metropolitan Trial Court of Manila,
docketed as Civil Case No. 122136-
CV, for non-payment of rentals on
an apartment unit owned by private
respondents and rented by
petitioner.
The antecedent facts which led to
the filing of said case are best
quoted from the succinct
presentation thereof in the
challenged decision of respondent
court:
It appears that the private
respondents are the owners of an
apartment unit which was rented by
the petitioner on a month to month
basis for a monthly rental of P466.00
payable in advance; that the
petitioner failed to pay the
corresponding rentals for the month
of May 1987 up to the filing of the
complaint on August 31, 1987; that
on July 9, 1987, private respondents,
through their counsel, sent a
demand letter to the petitioner
(Exhibit "R") requiring him to pay his
rentals in arrears and to vacate the
leased premises within five (5) days
from receipt thereof, otherwise
private respondents will be
constrained to file the appropriate
legal action against him; that the
demand letter of private
respondents' counsel was received
by the petitioner on July 14, 1987;
that in response thereto, the
petitioner addressed a letter dated
July 15, 1987 to private respondent
Carmen de Jesus, furnishing a copy
thereof to her counsel, stating that
the amount of rentals, which the
private respondents allegedly
refused to receive, had been
deposited at United Coconut
Planters Bank, Taft Avenue Branch,
with Account No. 8893 in the name
of the petitioner's son, Mario Manuel,
and could be withdrawn upon
notice of payment; that in order to
collect the said rentals allegedly
deposited with the bank, the private
respondents' counsel sent a letter
dated August 14, 1987 to the
petitioner, requesting the payment
of the unpaid rentals to his (private
respondents' counsel) office; that
the said letter was received by the
petitioner on August 18, 1987, and,
instead of complying with private
respondents' counsel's request, the
petitioner addressed a letter dated
August 24, 1987 to the private
respondents' counsel requesting that
the rentals in arrears be paid to the
private respondents at petitioner's
house. The private respondents did
not heed the petitioner's request.1
On April 6, 1989, after the parties had
submitted their respective affidavits
and position papers, the said
metropolitan trial court rendered
judgment in favor of private
respondents, as plaintiffs therein, the
dispositive part whereof declares:
WHEREFORE, judgment is hereby
rendered in favor of the plaintiffs,
ordering defendant and/or any
other person claiming rights under
him to vacate and surrender
possession of the premises described
as door No. 2444; defendant
Agapito Manuel to pay the plaintiffs
the amount of P466.00 a month from
May 1987 and up to the date
defendant and/or any other person
claiming rights under him actually
vacates the premises, to pay the
plaintiffs the amount of P500.00 as
attorney's fees, plus cost of the Suit.2
On appeal in Civil Case No. 89-
48914, the Regional Trial Court of
Manila, Branch 35, affirmed the
aforesaid judgment in toto in its
decision dated September 20,
1989.3

Not satisfied therewith, petitioner
appealed to respondent Court of
Appeals which, in its decision4 dated
January 29, 1990 in CA-G.R. SP No.
18961, denied due course to the
petition for review and dismissed the
same for lack of merit.5 Petitioner's
motion for motion for
reconsideration was likewise denied
by said respondent court in its
resolution of March 5, 1990.6
Before us, petitioner raises two
grounds, the first supposedly in the
nature of a supervenience, for the
allowance of his petition, viz.:
1. A new situation developed
and/or came about which makes
ejectment unjust and impossible,
that is, the NHA finally awarded the
lot over which the subject structure
stands to the petitioner and other
tenants and disqualified the private
respondent. It said ruling or awards,
the private respondent are only
given the option to either sell the
structure to the petitioner and the
other awardees or to dismantle the
same.
2. Moreover, under the
circumstances prevailing in this
instant case, the private respondent
were really in mora accipiendi that
even if no deposit or consignation
had been made, said mora cannot
be cured. Petitioner had in fact
continuously made available and
deposited his rentals had been
made moot and academic by virtue
of the NHA award in favor of the
petitioner and the governmental
expression of public policy to protect
the actual occupants, specifically
the petitioner.7
We find the petition bereft of merit.
The putative award on April 6, 1990
by the National Housing Authority
(NHA) to the petitioner of the lot
where the rented apartment
stands,8 while this ejectment case
was pending in the Court of
Appeals, is of no moment. The
juridical relation between petitioner
and private respondent as lessee
and lessors is well established and
the non-payment of rentals by
petitioner for at least three (3)
months is substantial by the
evidence on record.
The award of the lot to petitioner by
NHA does not automatically vest in
him ownership over the leased
structure thereon. Petitioner cannot
invoke the provisions of the Civil
Code on accession there being an
existing lessor and lessee relation
between him and private
respondents.9 A tenant cannot, in
an action involving the possession of
the leased premises, controvert the
title of his landlord or assert any rights
adverse to that title or set up any
inconsistent right to change the
relation existing between himself and
his landlord, without first delivering
up to the landlord the premises
acquired by virtue of the agreement
between themselves. The rule
estopping a tenant while he retains
possession applies whether the
tenant is defendant or plaintiff and
applies even though the landlord
had no title at the time the
relationship was created.10
Proceedings in forcible entry and
detainer are wholly summary in
nature. The fact of lease and the
expiration of its terms are the only
elements of this kind of action.11 The
question of ownership is unessential
and should be raised by the
defendant in an appropriate
action.12 Any controversy over
ownership right could and should be
settled after the party who had the
prior, peaceful and actual
possession is returned to the
property.13
In the present case and assuming
the new factual milieu posited by
petitioner, he should file a separate
action wherein his alleged rights as
owner of the land vis-a-vis the rights
of private respondents as builders or
owners of the structure standing
thereon can be properly ventilated.
There can be no such adjudication
here for when the relationship of
lessor and lessee is established in an
unlawful detainer case, any attempt
of the defendant to inject the
question of ownership into the case
is inutile except in so far as it might
throw light on the right of
possession.14
In an appeal from an inferior court in
an ejectment case the issue of
ownership should not be delved into,
for an ejectment action lies even
against the owner of the property.15
The fact of possession in itself has a
positive value and is endowed with
a distinct standing of its own in the
law of property. True, by this principle
of respect for the possessory status, a
wrongful possessor may at times be
upheld by the courts, but this is only
temporary and for one sole and
special purpose, namely, the
maintenance of public order. The
protection is only temporary
because it is intended that as soon
as the lawless act of dispossession
has been suppressed, the question
of ownership or of possession de jure
is to be settled in the proper court
and in a proper action. The larger
and permanent interests of property
require that such rare and
exceptional instance of preference
in the courts of the actual but
wrongful possessor be permitted.16
The contention of petitioner that
private respondents are in mora
accipiendi cannot be upheld
either.1âwphi1 The failure of the
owners to collect or their refusal to
accept the rentals are not valid
defenses. Consignation, under such
circumstances, is necessary,17 and
by this we mean one that is effected
in full compliance with the specific
requirements of the law therefor.
Section 5(b) of Batas Pambansa Blg.
25, as amended, provides that in
case of refusal by the lessor to
accept payment of the rental
agreed upon, the lessee shall either
deposit, by way of consignation, the
amount in court or in a bank in the
name of and with notice to the
lessor. The failure of herein petitioner
to comply with said requirement
makes the consignation defective
and gives rise to a cause of action
for ejectment.18 Compliance with
the requisites of a valid consignation
is mandatory. It must be complied
with frilly and strictly in accordance
with the law. Substantial compliance
is not enough.19
From the earlier discussion, petitioner
evidently did not comply with the
requirements for consignation
prescribed by the governing law.
Consequently, as expounded by the
Court of Appeals —
The failure of the petitioner to fully
and strictly comply with the
requirements of consignation as
aforementioned, renders nil his
contention that the private
respondents have no cause of
action against him, As there was no
valid consignation, payment of the
more than three months rental
arrearages was not effected. Under
Section 5(b) of B.P. Blg. 25, as
amended, arrears in payment of rent
for three (3) months at any one time,
is a ground for judicial ejectment. For
such non-payment of the petitioner
to the private respondents of the
monthly rentals from May, 1987 until
the case was filed on August 31,
1987, or for more than three (3)
months, there therefore existed a
cause of action in favor of the
private respondent lessors against
the petitioner lessee.20
ACCORDINGLY, the petition is
DENIED and the assailed judgment
of respondent Court of Appeals is
AFFIRMED.
SO ORDERED.
CORTES vs. Court of Appeals
494 SCRA 570 (Art. 1169)
Facts:
For the purchase price of 3.7M, Villa
Esperanza Development
Corporation (vendee) and Antonio
Cortes (vendor) entered into a
contract of sale over the lots located
at Baclaran, Parañaque, Metro
Manila. The Corporation advanced
to Cortes the total sum of
P1,213,000.00. In September 1983,
the parties executed a deed of
absolute sale on the following terms:
The Corporation shall advance 2.2 M
as downpayment, and Cortes shall
likewise deliver the TCT for the 3 lots.
The balance of 1.5M shall be
payable within a year from the date
of the execution.
The Corporation filed the instant
case for specific performance
seeking to compel Cortes to deliver
the TCTs and the original copy of the
Deed of Absolute Sale. According to
the Corporation, despite its readiness
and ability to pay the purchase
price, Cortes refused delivery of the
sought documents. It prayed for
damages, attorney’s fees and
litigation expenses. Cortes claimed
that the owner’s duplicate copy of
the three TCTs were surrendered to
the Corporation and it is the latter
which refused to pay in full the
agreed down payment.
RTC rendered a decision rescinding
the sale and directed Cortes to
return to the Corporation the
amount of P1,213,000.00, plus
interest. CA reversed the decision
and directed Cortes to execute a
Deed of Absolute Sale conveying
the properties and to deliver the
same to the Corporation together
with the TCTs, simultaneous with the
Corporation’s payment of the
balance of the purchase price of
P2,487,000.00.
Issue:
WON Cortes delivered the TCTs and
the original Deed to the
Corporation? NO.
WON there is delay in the
performance of the parties’
obligation that would justify the
rescission of the contract of sale?
THERE IS DELAY IN BOTH PARTIES
(compensation morae)
Held:
Cortes avers that he delivered the
TCT’s through the broker’s son. He
further avers that the broker’s son
delivered it to the broker, who in turn
delivered them to the Corporation.
Marcosa Sanchez’s unrebutted
testimony is that, she did not receive
the TCTs. She also denied knowledge
of delivery thereof to her son,
Manny.
What further strengthened the
findings of the Court of Appeals that
Cortes did not surrender the subject
documents was the offer of Cortes’
counsel at the pre-trial to deliver the
TCTs and the Deed of Absolute Sale
if the Corporation will pay the
balance of the down payment.
Indeed, if the said documents were
already in the hands of the
Corporation, there was no need for
Cortes’ counsel to make such offer.
Considering that their obligation was
reciprocal, performance thereof
must be simultaneous. The mutual
inaction of Cortes and the
Corporation therefore gave rise to a
compensation morae or default on
the part of both parties because
neither has completed their part in
their reciprocal obligation. Cortes is
yet to deliver the original copy of the
notarized Deed and the TCTs, while
the Corporation is yet to pay in full
the agreed down payment of
P2,200,000.00. This mutual delay of
the parties cancels out the effects of
default, such that it is as if no one is
guilty of delay.
Under Article 1169 of the Civil Code,
from the moment one of the parties
fulfills his obligation, delay by the
other begins. Since Cortes did not
perform his part, the provision of the
contract requiring the Corporation
to pay in full the down payment
never acquired obligatory force.
RIVERA VS SPOUSES CHUA
GR NO. 184458
JANUARY 14, 2015
FACTS:
The parties were friends and
kumpadres for a long time already.
Rivera obtained a loan from the
Spouses Chua evidenced by a
Promissory Note. The relevant parts
of the note are the following:
(a) FOR VALUE RECEIVED, I,
RODRIGO RIVERA promise to pay
spouses SALVADOR C. CHUA and
VIOLETA SY CHUA, the sum of One
Hundred Twenty Thousand Philippine
Currency (_120,000.00) on
December 31, 1995.
(b) It is agreed and understood
that failure on my part to pay the
amount of (_120,000.00) One
Hundred Twenty Thousand Pesos on
December 31, 1995. I agree to pay
the sum equivalent to FIVEPERCENT
(5%) interest monthly from the date
of default until the entire obligation is
fully paid for.
Three years from the date of
payment stipulated in the promissory
note, Rivera, issued and delivered to
Spouses Chua two (2) checks drawn
against his account at Philippine
Commercial International Bank
(PCIB) but upon presentment for
payment, the two checks were
dishonored forthe reason “account
closed.” As of 31 May 1999, the
amount due the Spouses Chua was
pegged at P366,000.00 covering the
principal of P120,000.00 plus five
percent (5%) interest per month from
1 January 1996 to 31 May 1999.
The Spouses Chua alleged
that they have repeatedly
demanded payment from Rivera to
no avail. Because of Rivera’s
unjustified refusal to pay, the Spouses
Chua were constrained to file a suit
before the MeTC, Branch 30, Manila.
The MeTC ruled against Rivera
requiring him to pay the spouses
Chua P120,000.00 plus stipulated
interest at the rate of 5% per month
from 1 January 1996, and legal
interest at the rate of 12% percent
per annum fromn11 June 1999 and
was affirmed by the RTC of Manila.
The Court of Appeals further affirmed
the decision upon appeal of the two
inferior courts but with modification
of lowering the stipulated interest to
12% per annum. Hence, a petition at
the Supreme Court.
ISSUES:
1. Whether or not the Promissory
Note executed as evidence of loan
falls under Negiotiable Instruments
Law.
2. Whether or not a demand
from spouses Chua is needed to
make Rivera liable.
3. Whether or not the stipulated
interest is unconscionable and
should really be lowered.
RULINGS:
1. NO, the Promissory Note
executed as evidence of loan does
not fall under Negotiable Instruments
Law. The instrument is still governed
by the Civil Code as to interpretation
of their obligations. The Supreme
Court held that the Instrument was
not able to meet the requisites laid
down by Section 1 of the Negotiable
Instruments Law as the instrument
was made out to specific persons,
herein respondents, the Spouses
Chua, and not to order or to bearer,
or to the order of the Spouses Chua
as payees.
2. NO, a demand from spouses
Chua is not needed to make Rivera
liable. Even if Rivera’s Promissory
Note is not a negotiable instrument
and therefore outside the coverage
of Section 70 of the NIL which
provides that presentment for
payment is not necessary to charge
the person liable on the instrument,
Rivera is still liable under the terms of
the Promissory Note that he issued.
Article 1169 of the Civil Code
explicitly provides that the demand
by the creditor shall not be
necessary in order that delay may
exist when the obligation or the law
expressly so declare. The clause in
the Promissory Note containing the
stipulation of interest (letter B in the
above facts) which expressly
requires the debtor (Rivera) to pay a
5% monthly interest from the “date of
default” until the entire obligation is
fully paid for. Theparties evidently
agreed that the maturity of the
obligation at a date certain, 31
December 1995, will give rise to the
obligation to pay interest.
3. YES, the stipulated interest is
unconscionable and should really be
lowered. The Supreme Court held
that as observed by Rivera, the
stipulated interest of 5% per month or
60% per annum in addition to legal
interests and attorney’s fees is,
indeed, highly iniquitous and
unreasonable and stipulated interest
rates if illegal and are
unconscionable the Court is allowed
to temper interest rates when
necessary. Since the interest rate
agreed upon is void, the parties are
considered to have no stipulation
regarding the interest rate, thus, the
rate of interest should be 12% per
annum computed from the date of
judicial or extrajudicial demand.
However, the 12% per annum rate of
legal interest is only applicable until
30 June 2013, before the advent and
effectivity of Bangko Sentral ng
Pilipinas (BSP) Circular No. 799, Series
of 2013 reducing the rate of legal
interest to 6% per annum. Pursuant to
our ruling in Nacar v. Gallery
Frames,30 BSP Circular No. 799 is
prospectively applied from 1 July
2013.
ROBERTO C. SICAM and AGENCIA
de R.C. SICAM, INC. vs. SPOUSES
JORGE
G.R. No. 159617, August 8, 2007
FACTS: On different dates, Lulu Jorge
pawned several pieces of jewelry
with Agencia de R. C. Sicam located
in Parañaque to secure a loan.
On October 19, 1987, two armed
men entered the pawnshop and
took away whatever cash and
jewelry were found inside the
pawnshop vault.
On the same date, Sicam sent Lulu a
letter informing her of the loss of her
jewelry due to the robbery incident
in the pawnshop. Respondent Lulu
then wroteback expressing disbelief,
then requested Sicam to prepare
the pawned jewelry for withdrawal
on November 6, but Sicam failed to
return the jewelry.
Lulu, joined by her husband Cesar,
filed a complaint against Sicam with
the RTC of Makati seeking
indemnification for the loss of
pawned jewelry and payment of
AD, MD and ED as well as AF.
The RTC rendered its Decision
dismissing respondents’ complaint as
well as petitioners’ counterclaim.
Respondents appealed the RTC
Decision to the CA which reversed
the RTC, ordering the appellees to
pay appellants the actual value of
the lost jewelry and AF. Petitioners
MR denied, hence the instant
petition for review on Certiorari.
ISSUE: are the petitioners liable for
the loss of the pawned articles in
their possession? (Petitioners insist
that they are not liable since robbery
is a fortuitous event and they are not
negligent at all.)
HELD: The Decision of the CA is
AFFIRMED.
YES
Article 1174 of the Civil Code
provides:
Art. 1174. Except in cases expressly
specified by the law, or when it is
otherwise declared by stipulation, or
when the nature of the obligation
requires the assumption of risk, no
person shall be responsible for those
events which could not be foreseen
or which, though foreseen, were
inevitable.
Fortuitous events by definition are
extraordinary events not foreseeable
or avoidable. It is therefore, not
enough that the event should not
have been foreseen or anticipated,
as is commonly believed but it must
be one impossible to foresee or to
avoid. The mere difficulty to foresee
the happening is not impossibility to
foresee the same.
To constitute a fortuitous event, the
following elements must concur:
(a) the cause of the unforeseen and
unexpected occurrence or of the
failure of the debtor to comply with
obligations must be independent of
human will;
(b) it must be impossible to foresee
the event that constitutes the caso
fortuito or, if it can be foreseen, it
must be impossible to avoid;
(c) the occurrence must be such as
to render it impossible for the debtor
to fulfill obligations in a normal
manner; and,
(d) the obligor must be free from any
participation in the aggravation of
the injury or loss.
The burden of proving that the loss
was due to a fortuitous event rests on
him who invokes it. And, in order for
a fortuitous event to exempt one
from liability, it is necessary that one
has committed no negligence or
misconduct that may have
occasioned the loss.
Sicam had testified that there was a
security guard in their pawnshop at
the time of the robbery. He likewise
testified that when he started the
pawnshop business in 1983, he
thought of opening a vault with the
nearby bank for the purpose of
safekeeping the valuables but was
discouraged by the Central Bank
since pawned articles should only be
stored in a vault inside the
pawnshop. The very measures which
petitioners had allegedly adopted
show that to them the possibility of
robbery was not only foreseeable,
but actually foreseen and
anticipated. Sicam’s testimony, in
effect, contradicts petitioners’
defense of fortuitous event.
Moreover, petitioners failed to show
that they were free from any
negligence by which the loss of the
pawned jewelry may have been
occasioned.
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.
Petitioners merely presented the
police report of the Parañaque
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.
**
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
which is expected of a good father
of a family shall be required.
We expounded in Cruz v. Gangan
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. It is want of care required by
the circumstances.
A review of the records clearly shows
that petitioners failed to exercise
reasonable care and caution that
an ordinarily prudent person would
have used in the same situation.
Petitioners were guilty of negligence
in the operation of their pawnshop
business. Sicam’s testimony revealed
that there were no security measures
adopted by petitioners in the
operation of the pawnshop.
Evidently, no sufficient precaution
and vigilance were adopted by
petitioners to protect the pawnshop
from unlawful intrusion. There was no
clear showing that there was any
security guard at all. Or if there was
one, that he had sufficient training in
securing a pawnshop. Further, there
is no showing that the alleged
security guard exercised all that was
necessary to prevent any untoward
incident or to ensure that no
suspicious individuals were allowed
to enter the premises. In fact, it is
even doubtful that there was a
security guard, since it is quite
impossible that he would not have
noticed that the robbers were
armed with caliber .45 pistols each,
which were allegedly poked at the
employees. Significantly, the alleged
security guard was not presented at
all to corroborate petitioner Sicam’s
claim; not one of 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 clearly a proof
of petitioners’ failure to observe the
care, precaution and vigilance that
the circumstances justly demanded.
The robbery in this case happened in
petitioners’ pawnshop and they
were negligent in not exercising the
precautions justly demanded of a
pawnshop.
NOTES:
We, however, do not agree with the
CA when it found petitioners
negligent for not taking steps to
insure themselves against loss of the
pawned jewelries.
Under Section 17 of Central Bank
Circular No. 374, Rules and
Regulations for Pawnshops, which
took effect on July 13, 1973, and
which was issued pursuant to
Presidential Decree No. 114,
Pawnshop Regulation Act, it is
provided that pawns pledged must
be insured, to wit:
Sec. 17. Insurance of Office Building
and Pawns- The place of business of
a pawnshop and the pawns
pledged to it must be insured
against fire and against burglary as
well as for the latter(sic), by an
insurance company accredited by
the Insurance Commissioner.
However, this Section was
subsequently amended by CB
Circular No. 764 which took effect on
October 1, 1980, to wit:
Sec. 17 Insurance of Office Building
and Pawns – The office
building/premises and pawns of a
pawnshop must be insured against
fire. (emphasis supplied).
where the requirement that
insurance against burglary was
deleted. Obviously, the Central Bank
considered it not feasible to require
insurance of pawned articles against
burglary.

The robbery in the pawnshop

happened in 1987, and considering
the above-quoted amendment,
there is no statutory duty imposed on
petitioners to insure the pawned
jewelry in which case it was error for
the CA to consider it as a factor in
concluding that petitioners were
negligent.

Nevertheless, the preponderance of

evidence shows that petitioners
failed to exercise the diligence
required of them under the Civil
Code.