oblicon second assignment.docx

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, the law 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 Review1 under Rule 45 of the Rules of Court, assailing the October 9, 2002 Decision2and the December 29, 2003 Resolution3 of 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 REVERSED and SET ASIDE. [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 P565,000.5 Consigned 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 board Judy VII, a barge leased by Lea Mer.6 During 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. 8 To recover the amount paid and in the exercise 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 was a 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. Thus, the loss of the cargo was occasioned by petitioner’s 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 presented as a witness of the said report during the trial of this case before the lower court can be admitted in 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 finding of fact of the Regional Trial Court which clearly and unequivocally held that the loss of the cargo subject of 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 abuse of discretion in disregarding the testimony of the witness from the MARINA, Engr. Jacinto Lazo y Villegal, to the effect that the vessel ‘Judy VII’ was seaworthy at the time of incident and further in disregarding the testimony of the PAG-ASA weather specialist, Ms. Rosa Barba y Saliente, to the effect 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, and (2) whether the survey report of Jesus Cortez is admissible in evidence.

The Court’s Ruling

The Petition has no merit.

First Issue:

Liability for Loss of Cargo

Question of Fact

The resolution of the present case hinges on whether the loss of the cargo was due to a fortuitous event. This issue involves primarily a question of fact, notwithstanding petitioner’s claim that it pertains only to a question of law. As a general rule, questions of fact may not be raised in a petition for review.15 The present case serves as an exception to this rule, because the factual findings of the appellate and the trial

OBLICON SECOND ASSIGNMENT| 1

courts vary.16 This Court meticulously reviewed the records, but found no reason to reverse the CA.

Rule on Common Carriers

Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods, or both -- by land, water, or air -- when this service is offered to the public for compensation.17 Petitioner is clearly a common carrier, because it offers to the public its business of transporting goods through its vessels.18

Thus, the Court corrects the trial court’s finding that petitioner became a private carrier when Vulcan chartered it.19 Charter parties are classified as contracts of demise (or bareboat) and affreightment, which are distinguished as follows:

"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 owner pro 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 isprivate in 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 petitioner’s crew that manned the tugboat M/V Ayalit and controlled the barge Judy VII.23 Necessarily, petitioner was a common carrier, and the pertinent law governs the present factual circumstances.

Extraordinary Diligence Required

Common carriers are bound to observe extraordinary diligence 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.24Extraordinary 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 Fortuitous 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 foresee or, 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 proximate and only cause of the loss.30 Moreover, it should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event.31

Loss in the Instant Case

There is no controversy regarding the loss of the cargo in the present case. As the common carrier, petitioner bore the burden of proving that it had exercised extraordinary diligence to avoid the loss, or 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 the loss of the cargo was due to the bad weather condition brought about by Typhoon Trining.32 Evidence was presented to show that petitioner had not been informed of the incoming typhoon, and that the Philippine Coast Guard had given it clearance to begin the voyage.33 On October 25, 1991, the date on which the voyage commenced and the barge sank, Typhoon Trining was allegedly far from Palawan, 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 insufficient. As required by the pertinent law, it was not enough for the common carrier to show that there was an unforeseen or unexpected occurrence. It had to show that it was free from any fault -- a fact it miserably failed to prove.

First, petitioner presented no evidence that it had attempted to minimize or prevent the loss before, during or after the alleged fortuitous event.35 Its witness, Joey A. Draper, testified that he could no longer remember whether anything had been done to minimize loss when water started entering the barge.36 This fact was confirmed during his cross-examination, as shown by the following brief exchange:


"Atty. Baldovino, Jr.:

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

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. There is a preponderance of evidence that the barge was not seaworthy when it sailed for Manila.38 Respondent was able to prove that, in the hull of the barge, there were holes that might have caused or aggravated 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 Guard’s Certificate of Inspection of Judy 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 Cortez’s Survey Report was used in the testimonies of respondent’s 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 Report after 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 Independently

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 Cortez’s Affidavit, which respondent had offered as evidence.52 Well-settled is the rule that, unless the affiant is presented as a witness, an affidavit 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 prove 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 of the testimonies of respondent’s witnesses. The referral to Cortez’s Report was in relation to Manlapig’s final Adjustment Report. Evidently, it was the existence of the Survey Report that was testified to. The admissibility of that Report as part of the testimonies of the witnesses was correctly ruled upon by the trial court.

At any rate, even without the Survey Report, petitioner has already failed to overcome the presumption of fault that applies to common carriers.

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution are AFFIRMED. Costs against petitioner.

SO ORDERED.

_____________________


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) and Agencia deR.C. Sicam, Inc. (petitioner corporation) seeking to annul the Decision1 of the Court of Appeals dated March 31, 2003, and its Resolution2 dated 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 with Agencia de R. C. Sicam located at No. 17 Aguirre Ave., BF Homes Parañaque, 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 Southern Police District, Parañaque 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 letter4 to 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 jewelry and payment of actual, moral and exemplary damages as well as 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 Agencia de R.C. Sicam, Inc; that petitioner 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 that he is not the real party-in-interest. Respondents opposed the same. The RTC denied the motion in an Order dated November 8, 1989.5

After trial on the merits, the RTC rendered its Decision6 dated January 12, 1993, dismissing respondents’ complaint as well as petitioners’ counterclaim. The RTC held that petitioner Sicam could not be made personally liable for a claim arising out of a corporate transaction; that in the Amended Complaint of respondents, they asserted that "plaintiff pawned assorted jewelries in defendants' pawnshop"; and that as a consequence of the separate juridical personality of a corporation, the 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 pawned jewelry since it had not been rebutted by respondents that the loss of the pledged pieces of jewelry in the possession of the corporation was occasioned by armed robbery; that robbery is a fortuitous event which exempts the victim from liability for the loss, citing the case of Austria v. Court of Appeals;7 and that the parties’ transaction was that of a pledgor and pledgee and under Art. 1174 of the Civil Code, the 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, the CA reversed the RTC, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the instant Appeal is GRANTED, and the Decision dated January 12, 1993,of the Regional Trial Court of Makati, Branch 62, is hereby REVERSED and SET ASIDE, ordering the appellees to pay appellants the actual value of the lost jewelry amounting to P272,000.00, and attorney' fees of P27,200.00.8

In finding petitioner Sicam liable together with petitioner corporation, the CA applied the doctrine of piercing the veil of corporate entity reasoning that respondents were misled into thinking that they were dealing with the pawnshop owned by petitioner Sicam as all the pawnshop tickets issued to them bear the words "Agencia de R.C.


http://www.lawphil.net/judjuris/juri2007/aug2007/gr_159617_2007.html#fnt8








Sicam"; and that there was no indication on the pawnshop tickets that it was the petitioner corporation that owned the pawnshop which explained why respondents had to amend their complaint impleading petitioner corporation.

The CA further held that the corresponding diligence required of a pawnshop is that it should take steps to secure and protect the pledged items and should take steps to insure itself against the loss of articles which are entrusted to its custody as it derives earnings from the pawnshop trade which petitioners failed to do; that Austria is not applicable to this case since the robbery incident happened in 1961 when the criminality had not as yet reached the levels attained in the present day; that they are at least guilty of contributory negligence and should be held liable for the loss of jewelries; and that robberies and hold-ups are foreseeable risks in that those engaged in the pawnshop business are expected to foresee.

The CA concluded that both petitioners should be jointly and severally held liable to respondents for the 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 REVERSAL, WHEN IT ADOPTED UNCRITICALLY (IN FACT IT REPRODUCED AS ITS OWN WITHOUT IN 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 CA’s 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) In Hernandez 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 one of the 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 committed by the appellate court. Generally, the findings of fact of the appellate court are deemed conclusive and we are not duty-bound to analyze and calibrate all over again the evidence adduced by the parties in the court a quo.12 This rule, however, is not without exceptions, such as where the factual findings of the Court of Appeals and the trial court are conflicting or contradictory13 as is obtaining in the instant case.

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







The CA correctly pierced the veil of the corporate fiction and adjudged petitioner Sicam liable together with petitioner corporation. The rule is that the veil of corporate fiction may be pierced when made as a shield to perpetrate fraud and/or confuse legitimate issues. 14 The theory of corporate entity was not 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 jewelry, the pawnshop was owned by petitioner Sicam himself. As correctly observed by the CA, in all the pawnshop receipts issued to respondent Lulu in September 1987, all bear the words "Agencia de R. C. Sicam," notwithstanding that the pawnshop was allegedly incorporated in April 1987. The receipts issued after such alleged incorporation were still in the name of "Agencia de R. C. Sicam," thus inevitably misleading, or at the very least, creating the wrong impression to respondents and the public 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 letter16 dated October 15, 1987 addressed to the Central Bank, expressly referred to petitioner Sicam as the proprietor of the pawnshop notwithstanding the alleged incorporation in April 1987.

We also find no merit in petitioners' argument that since respondents had alleged in their Amended Complaint that petitioner corporation is the present owner of the pawnshop, the CA is bound to decide the case on that basis.

Section 4 Rule 129 of the Rules of Court provides that an admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.

Thus, the general rule that a judicial admission is conclusive upon the party making it and does not require proof, admits of two exceptions, to wit: (1) when it is shown that such admission was made through palpable mistake, and (2) when it is shown that no such admission was in fact made. The latter exception allows one to contradict an admission by denying that he made such an admission.17

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

x x x if a party invokes an "admission" by an adverse party, but cites the admission "out of context," then the one making the "admission" may show that he made no "such" admission, or that his 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 which the admission is made to appear.

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 as Agencia deR.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 Sicam is personally liable is inextricably connected with the determination of the question whether the doctrine 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 possession.

Petitioners insist that they are not liable since robbery is a fortuitous event and they are not negligent at 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 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. 22

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. 23

The burden of proving that the loss was due to a fortuitous event rests on him who invokes it.24 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. 25

It has been held that an act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss. One's negligence may have concurred with an act of God in producing damage and injury to another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be partly the result of a person's participation -- whether by active

intervention, neglect or failure to act -- the whole occurrence is humanized and removed from the rules applicable to acts of God. 26

Petitioner 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. Petitioner 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. 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 private respondent. 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 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.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 which is 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 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. 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 there was a security 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 guard?

A. At the time of the incident which happened about 1:00 and 2:00 o'clock in the afternoon and it happened on a Saturday and everything was quiet in the area BF Homes Parañaque they pretended to pawn an article in the pawnshop, so one of my

employees allowed him to come in and it was only when 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 combination 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 robbers were 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 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.33 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. Petitioner Sicam testified that once the pawnshop was open, the combination was already off. Considering petitioner Sicam's testimony that the robbery took place on a Saturday afternoon and the area in BF Homes Parañaque at that time was quiet, there was more reason for petitioners to have exercised reasonable foresight and diligence in protecting the pawned jewelries. Instead of taking the precaution to protect them, they let open the vault, providing no difficulty for the robbers to cart away the pawned articles.

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.

The diligence with which the law requires the individual at all times to govern his conduct varies with the nature of the situation in which he is placed and the importance of the act which he is to perform.34 Thus, the cases ofAustria v. Court of Appeals,35 Hernandez v. Chairman, Commission on Audit36 and Cruz v. Gangan37 cited by petitioners in their pleadings, where the victims of robbery were exonerated from liability, find no application to the present case.

In Austria, Maria Abad received from Guillermo Austria a pendant with diamonds to be sold on commission basis, but which Abad failed to subsequently return because of a robbery committed upon her in 1961. The incident became the subject of a criminal case filed against several persons. Austria filed an action against Abad and her husband (Abads) for recovery of the pendant or its value, but the Abads set up the defense that the robbery extinguished their obligation. The RTC ruled in favor of Austria, as the Abads failed to prove robbery; or, if committed, that Maria Abad was guilty of negligence. The CA, however, reversed the RTC decision holding that the fact of robbery was duly established and declared the Abads not responsible for the loss of the jewelry on account of a fortuitous event. We held that for the Abads to be relieved from the civil liability of returning the pendant under Art. 1174 of the Civil Code, it would only be sufficient that the unforeseen event, the robbery, took place without any concurrent fault on the debtor’s part, and this can be done by preponderance of evidence; that to be free from liability for reason of fortuitous event, the debtor must, in addition to the casus itself, be free of any concurrent or contributory fault or negligence.38

We found in Austria that under the circumstances prevailing at the time the Decision was promulgated in 1971, the City of Manila and its suburbs had a high incidence of crimes against persons and property that rendered travel after nightfall a matter to be sedulously avoided without suitable precaution and protection; that the conduct of

Maria Abad in returning alone to her house in the evening carrying jewelry of considerable value would have been negligence per se and would not exempt her from responsibility in the case of robbery. However we did not hold Abad liable for negligence since, the robbery happened ten years previously; i.e., 1961, when criminality had not reached the level of incidence obtaining in 1971.

In contrast, the robbery in this case took place in 1987 when robbery was already prevalent and petitioners in fact had already foreseen it as they wanted to deposit the pawn with a nearby bank for safekeeping. Moreover, unlike in Austria, where no negligence was committed, we found petitioners negligent in securing their pawnshop as earlier discussed.

In Hernandez, Teodoro Hernandez was the OIC and special disbursing officer of the Ternate Beach Project of the Philippine Tourism in Cavite. In the morning of July 1, 1983, a Friday, he went to Manila to encash two checks covering the wages of the employees and the operating expenses of the project. However for some reason, the processing of the check was delayed and was completed at about 3 p.m. Nevertheless, he decided to encash the check because the project employees would be waiting for their pay the following day; otherwise, the workers would have to wait until July 5, the earliest time, when the main office would open. At that time, he had two choices: (1) return to Ternate, Cavite that same afternoon and arrive early evening; or (2) take the money with him to his house in Marilao, Bulacan, spend the night there, and leave for Ternate the following day. He chose the second option, thinking it was the safer one. Thus, a little past 3 p.m., he took a passenger jeep bound for Bulacan. While the jeep was on Epifanio de los Santos Avenue, the jeep was held up and the money kept by Hernandez was taken, and the robbers jumped out of the jeep and ran. Hernandez chased the robbers and caught up with one robber who was subsequently charged with robbery and pleaded guilty. The other robber who held the stolen money escaped. The Commission on Audit found Hernandez negligent because he had not brought the cash proceeds of the checks to his office in Ternate, Cavite for safekeeping, which is the normal procedure in the handling of funds. We held that Hernandez was not negligent in deciding to encash the check and bringing it home to Marilao, Bulacan instead of Ternate, Cavite due to the lateness of the hour for the following reasons: (1) he was moved by unselfish motive for his co-employees to collect their wages and salaries the following day, a Saturday, a non-working, because to encash the check on July 5, the next working day after July 1, would have caused discomfort to laborers who were dependent on their wages for sustenance; and (2) that choosing Marilao as a safer destination, being nearer, and in view of the comparative hazards in the trips to the two places, said decision seemed logical at that time. We further held that the fact that two robbers attacked him in broad daylight in the jeep while it was on a busy highway and in the presence of other passengers could not be said to be a result of his imprudence and negligence.

Unlike in Hernandez where the robbery happened in a public utility, the robbery in this case took place in the pawnshop which is under the control of petitioners. Petitioners had the means to screen the persons who were allowed entrance to the premises and to protect itself from unlawful intrusion. Petitioners had failed to







exercise precautionary measures in ensuring that the robbers were prevented 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 the request 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 Cruz’s 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 Cruz case, the robbery in this case happened in petitioners' 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.

________________________

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 Resolution1 dated 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 Resolution2 dated 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 demanded compensation 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. 152822.3 Respondent 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 Decision6 dated 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:


http://www.lawphil.net/judjuris/juri2007/jan2007/gr_146224_2007.html#fnt6






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 fire broke out due to the leaking fumes coming from the LPG stove and tank installed at petitioner's fastfood stall; that factual circumstances did not show any sign of interference by any force of nature to infer that the fire occurred due to fortuitous event; that the petitioner failed to exercise due diligence, precaution, and vigilance in the conduct of her business, particularly, in maintaining the safety of her cooking equipment as well as in the selection and supervision of her employees; that even if petitioner passes the fault to her employees, Article 2180 of the Civil Code finds application; that in the absence of supporting evidence, the amount of actual damages and unrealized profits prayed for by respondent cannot be granted; that, nonetheless, respondent is entitled to temperate damages since respondent sustained pecuniary loss, though its true value cannot, from the very nature of the case, be proved with certainty.

Dissatisfied, petitioner filed an appeal with the Regional Trial Court, Branch 43, Manila (RTC), docketed as Civil Case No. 99-94606, insisting that the fire was a fortuitous event. On November 26, 1999, the RTC affirmed the Decision of the MeTC but increased the amount of temperate damages 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 temperate 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 holding that it cannot disregard evidence showing that the fire originated from petitioner's fastfood stall; that the increased amount of temperate damages awarded to respondent is not a full compensation but only a fair 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 On June 16, 2000, the CA issued a Resolution dismissing the petition for being "procedurally flawed/deficient."11 The CA held that the attached RTC Decision was not certified as a true copy by the Clerk of Court; that a certified true copy of the MeTC Decision was not attached; that material portions of the record, such as the position papers of the parties and affidavits of witnesses, as would support the material allegations of the petition were also not attached.12

On July 14, 2000, petitioner filed her Motion for Reconsideration,13 attaching photocopies of the 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 Reconsideration.15

Hence, the present petition raising the following issues:

1. Whether the submitted certified true copy of the appealed decision of the Regional Trial Court as authenticated by a court employee other than the Clerk of Court who was not around at that time said 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 still an indispensable requirement in filing a petition for review before the Court of Appeals despite the fact that said judgment was already modified by the above decision of the Regional Trial Court and it is the latter 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 still an indispensable requirement in filing a petition for review before the Court of Appeals despite the fact that 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 in the 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 down 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 original copy intended for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties to the case, without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time; (c) set forth concisely a statement of the matters involved, the issues raised, the specification of errors of fact or law, or both, allegedly committed by the Regional Trial Court, and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof and of the pleadings and other material portions 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 sufficient ground for the dismissal thereof."

However, Section 6, Rule 1 of the Revised Rules of Court also provides that rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. Indeed, rules of procedure should be used to promote, not frustrate justice.21

In the present case, petitioner's submission of copies of the RTC Decision and Order certified as correct by the Administrative Officer IV of the RTC is insufficient compliance with the requirements of the rule. Petitioner failed to show that the Clerk of Court was officially on leave and the Administrative Officer was officially designated as officer-in-charge. The rule is explicit in its mandate that the legible duplicate originals or true copies of the judgments or final orders of both lower courts must be certified correct by the Clerk of Court.

Nonetheless, a strict application of the rule in this case is not called for. This Court has ruled against the dismissal of appeals based solely on technicalities in several cases, especially when the appellant had substantially complied with the formal requirements.22 There is ample jurisprudence holding that the subsequent and substantial compliance of a party may call for the relaxation of the rules of procedure.23 When the CA dismisses a petition outright and the petitioner files a motion for the reconsideration of such dismissal, appending thereto the requisite pleadings, documents or order/resolution, this would constitute substantial compliance with the Revised Rules of Court.24

Thus, in the present case, there was substantial compliance when petitioner attached in her Motion for Reconsideration a photocopy of the Decision of the RTC as certified correct by the Clerk of Court of the RTC. In like manner, there was substantial compliance when petitioner attached, in her Motion for Reconsideration, a photocopy of the Decision of the MeTC as certified correct by the Clerk of Court of the RTC.

On the necessity of attaching position papers and affidavits of witnesses, Section 2 of Rule 42 of the Revised Rules of Court requires attachments if these would support the allegations of the petition.25 In the present case, there was no compelling need to attach the position papers of the parties since the Decisions of the MeTC and RTC already stated their respective arguments. As to the affidavits, the Court notes that they were presented by the respondent as part of the testimony of his witness Fire Investigator Pinca and therefore would not support the allegations of the petitioner.

Truly, in dismissing the petition for review, the CA had committed grave abuse of discretion amounting to lack of jurisdiction in putting a premium on technicalities at the expense of a just resolution of the case.

The Court's pronouncement in Republic of the Philippines v. Court of Appeals26 is worth echoing: "cases should be determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural imperfections. In that way, the ends of justice would be better served."27Thus, what should guide judicial action is that a party litigant is given the




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fullest opportunity to establish the merits of his action or defense rather than for him to lose life, honor or property on mere technicalities.28

The next most logical step would then be for the Court to simply set aside the challenged resolutions, remand the case to the CA and direct the latter to resolve on the merits of the petition in CA-G.R. SP No. 58799. But, that would further delay the case. Considering the issues raised which can be resolved on the basis of the pleadings and documents filed, and the fact that petitioner herself has asked the Court to decide her petition on the merits, the Court deems it more practical and in the greater interest of justice not to remand the case to the CA but, instead, to resolve the controversy once and for all.29

The Court shall now address the issue of whether the fire was a fortuitous event.

Jurisprudence defines the elements of a "fortuitous event" as follows: (a) the cause of the unforeseen and unexpected occurrence must be independent of human will; (b) it must be impossible to foresee the event which 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 his obligation in a normal manner; and (d) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor. 30

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. In other words, there must be an entire exclusion of human agency from the cause of injury or loss.31

It is established by evidence that the fire originated from leaking fumes from the LPG stove and tank installed at petitioner's fastfood stall and her employees failed to prevent the fire from spreading and destroying the other fastfood stalls, including respondent's fastfood stall. Such circumstances do not support petitioner's theory of fortuitous event.

Petitioner's bare allegation is far from sufficient proof for the Court to rule in her favor. It is basic in the rule of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to proof.32 In short, mere allegations are not evidence.33

The Civil Code provides:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. x x x

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.

x x x x

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.

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.

x x x x

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.

Whenever an employee's negligence causes damage or injury to another, there instantly arises a presumptionjuris tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.34 To avoid liability for a quasi-delict committed by his employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee.35

In this case, petitioner not only failed to show that she submitted proof that the LPG stove and tank in her fastfood stall were maintained in good condition and periodically checked for defects but she also failed to submit proof that she exercised the diligence of a good father of a family in the selection and supervision of her employees. For failing to prove care and diligence in the maintenance of her cooking equipment and in the selection and supervision of her employees, the necessary inference was that petitioner had been negligent.36

As to the award of temperate damages, the increase in the amount thereof by the RTC is improper. The RTC could no longer examine the amounts awarded by the MeTC since respondent did not appeal from the Decision of the MeTC.37 It is well-settled that a party who does not appeal from the decision may not obtain any affirmative relief from the appellate court other than what he has obtained from the lower court, if any, whose decision is brought up on appeal.38 While there are exceptions to this rule, such as if they involve (1) errors affecting the lower court's jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical errors,39 none apply here.

WHEREFORE, the petition is GRANTED. The assailed Resolutions dated June 16, 2000 and November 27, 2000 of the Court of Appeals are REVERSED and SET ASIDE. The Decision dated November 26, 1999 of the Regional Trial Court, Branch 43, Manila is AFFIRMED with MODIFICATION that the temperate damages awarded is reduced from P80,000.00 to P50,000.00 as awarded by the Metropolitan Trial Court, Branch 24, Manila in its Decision dated April 5, 1999.

No costs.

SO ORDERED.

_________________-














FIRST DIVISION

G.R. No. 161151, March 24, 2014

BJDC CONSTRUCTION, REPRESENTED BY ITS MANAGER/PROPRIETOR JANET S. DELA CRUZ,Petitioner, v. NENA E. LANUZO, CLAUDETTE E. LANUZO, JANET E. LANUZO, JOAN BERNABE E. LANUZO, AND RYAN JOSE E. LANUZO, Respondents.

D E C I S I O N

BERSAMIN, J.:

The party alleging the negligence of the other as the cause of injury has the burden to establish the allegation with competent evidence. If the action based on negligence is civil in nature, the proof required is preponderance of evidence.

This case involves a claim for damages arising from the death of a motorcycle rider in a nighttime accident due to the supposed negligence of a construction company then undertaking re–blocking work on a national highway. The plaintiffs insisted that the accident happened because the construction company did not provide adequate lighting on the site, but the latter countered that the fatal accident was caused by the negligence of the motorcycle rider himself. The trial court decided in favor of the construction company, but the Court of Appeals (CA) reversed the decision and ruled for the plaintiffs. Hence, this appeal.

Antecedents

On January 5, 1998, Nena E. Lanuzo (Nena) filed a complaint for damages 1 against BJDC Construction (company), a single proprietorship engaged in the construction business under its Manager/Proprietor Janet S. de la Cruz. The company was the contractor of the re–blocking project to repair the damaged portion of one lane of the national highway at San Agustin, Pili, Camarines Sur from September 1997to November 1997.

Nena alleged that she was the surviving spouse of the late Balbino Los Baños Lanuzo (Balbino) who figured in the accident that transpired at the site of the re–blocking work at about 6:30 p.m. on October 30, 1997; that Balbino’s Honda motorcycle sideswiped the road barricade placed by the company in the right lane portion of the road, causing him to lose control of his motorcycle and to crash on the newly cemented road, resulting in his instant death; and that the company’s failure to place illuminated warning signs on the site of the project, especially during night time, was the proximate cause of the death of Balbino. She prayed that the company be held liable for damages, to wit: (a) P5,000.00 as the actual damage to Balbino’s motorcycle; (b) P100,000.00 as funeral and burial expenses; (c) P559,786.00 representing the “unearned income in expectancy” of Balbino; (d) P100,000.00 as moral damages; (e) P75,000.00 as attorney’s fees, plus P1,500.00 per court appearance; and (f) P20,000.00 as litigation costs and other incidental expenses.

In its answer,2 the company denied Nena’s allegations of negligence, insisting that it had installed warning signs and lights along the highway and on the barricades of the project; that at the time of the incident, the lights were working and switched on; that its project was duly inspected by the Department of Public Works and Highways (DPWH), the Office of the Mayor of Pili, and the Pili Municipal Police Station; and that it was found to have satisfactorily taken measures to ensure the safety of motorists.

The company further alleged that since the start of the project in September 1997, it installed several warning signs, namely: (a) big overhead streamers containing the words SLOW DOWN ROAD UNDER REPAIR AHEAD hung approximately 100 meters before the re–blocking site, one facing the Pili–bound motorists and another facing the Naga–bound motorists; (b) road signs containing the words SLOW DOWN ROAD UNDER REPAIR 100 METERS AHEAD placed on the road shoulders below the streamers; (c) road signs with the words SLOW DOWN ROAD UNDER REPAIR 50 METERS AHEAD placed 50 meters before the project site; (d) barricades surrounded the affected portion of the highway, and a series of 50–watt light bulbs were installed and switched on daily from 6:00 p.m. until the following morning; (e) big warning signs containing the words SLOW DOWN ROAD UNDER REPAIR and SLOW DOWN MEN WORKING were displayed at both ends of the affected portion of the highway with illumination from two 50–watt bulbs from 6:00 p.m. until the following morning; and (f) the unaffected portion of the highway was temporarily widened in the adjacent road shoulder to allow two–way vehicular traffic.

The company insisted that the death of Balbino was an accident brought about by his own negligence, as confirmed by the police investigation report that stated, among others, that Balbino was not wearing any helmet at that time, and the accident occurred while Balbino was overtaking another motorcycle; and that the police report also stated that the road sign/barricade installed on the road had a light. Thus, it sought the dismissal of the complaint and prayed, by way of counterclaim, that the Nena be ordered to pay P100,000.00 as attorney’s fees, as well as moral damages to be proven in the course of trial.

The RTC subsequently directed the amendment of the complaint to include the children of Nena and Balbino as co–plaintiffs, namely: Janet, Claudette, Joan Bernabe and Ryan Jose, all surnamed Lanuzo. Hence, the plaintiffs are hereinafter be referred to as the Lanuzo heirs.

Decision of the RTC

On October 8, 2001, the RTC rendered judgment in favor of the company, as follows:

Plaintiffs are the survivors of Balbino Los Baños Lanuzo who met a traumatic death on 30 October, 1997 at about 6:30 p.m., when he bumped his motorcycle on a


barricade that was lighted with an electric bulb, protecting from traffic the newly–reblocked cement road between San Agustin and San Jose, Pili, Camarines Sur; they claim defendant’s OMISSION in lighting up the barricaded portion of the reblocking project being undertaken by defendant was the proximate cause of the accident, leaving them bereaved and causing them actual and moral damages.

Defendant DENIED the claim of plaintiffs; both parties offered testimonial and documentary evidence, from which this Court, FINDS that: plaintiff DID NOT present an eyewitness account of the death of their decedent; on the contrary, the flagman of defendant was present when the accident occurred, which was caused by the decedent having overtaken a motorcycle ahead of [him] and on swerving, to avoid the barricade, hit it, instead, breaking the lighted electric bulb on top of the barricade, resulting in the fall of the decedent about 18 paces from where his motorcycle fell on the reblocked pavement; the police investigator, policeman Corporal, by Exh. 1, confirmed the tale of the flagman, aside from confirming the presence of the warning devices placed not only on the premises but at places calculated to warn motorists of the ongoing reblocking project.

OPINION From the foregoing findings, it is the opinion of this Court that the plaintiffs were unable to make out a case for damages, with a preponderance of evidence.

WHEREFORE, Judgment is hereby rendered, DISMISSING the complaint. 3

ecision of the CA

The Lanuzo heirs appealed to the CA.

On August 11, 2003, the CA promulgated its decision declaring that the issue was whether the company had installed adequate lighting in the project so that motorists could clearly see the barricade placed on the newly cemented lane that was then still closed to vehicular traffic,4 thereby reversing the judgment of the RTC, and holding thusly:

WHEREFORE, premises considered, the present appeal is hereby GRANTED and the decision appealed from in Civil Case No. P–2117 is hereby REVERSED and SET ASIDE. A new judgment is hereby entered ordering the defendant–appellee to pay the plaintiff–appellants, heirs of the victim Balbino L. B. Lanuzo, the sums of P50,000.00 as death indemnity, P20,000.00 by way of temperate damages and P939,736.50 as loss of earning capacity of the deceased Balbino L. B. Lanuzo.

SO ORDERED.5

The CA ruled that the following elements for the application of the doctrine of res ipsa loquitur were present, namely: (1) the accident was of such character as to warrant an inference that it would not have happened except for the defendant’s

negligence; (2) the accident must have been caused by an agency or instrumentality within the exclusive management or control of the person charged with the negligence complained of; and (3) the accident must not have been due to any voluntary action or contribution on the part of the person injured.

The CA regarded as self–serving the testimony of Eduardo Zamora, an employee of the company who testified that there was an electric bulb placed on top of the barricade on the area of the accident. It held that Zamora’s statement was negated by the statements of Ernesto Alto and Asuncion Sandia to the effect that they had passed by the area immediately before the accident and had seen the road to be dark and lit only by a gas lamp. It noted that SPO1 Corporal, the police investigator, had noticed the presence of lighted electric bulbs in the area, but the same had been installed on the other side of the street opposite the barricade.

The CA ruled that the placing of road signs and streamers alone did not prove that the electric bulbs were in fact switched on at the time of the accident as to sufficiently light up the newly re–blocked portion of the highway. It opined that “[t]he trial court gave undue weight to the self–serving statement of appellee’s employee, Eduardo Zamora, which was supposedly corroborated by SPO1 Pedro Corporal. SPO1 Corporal arrived at the scene only after the accident occurred, and thus the electric bulbs could have already been switched on by Zamora who was at the area of the project.” It concluded that the negligence of the company was the proximate cause of Balbino’s death; hence, the company was liable for damages.

The company filed a motion for reconsideration,6 but the CA denied the motion in the resolution promulgated on November 13, 2003.

Issues

In this appeal, the company submits the following issues, namely:

I. The application by the Honorable Court of Appeals of the doctrine of res ipsa loquiturto the case at bar, despite and contrary to the finding, among others, by the trial court that the proximate cause of the accident is the victim’s own negligence, is “not in accord with the law or with the applicable decisions of the Supreme Court” [Sec. 6 (a), Rule 45, Rules of Court].

II. The Honorable Court of Appeals, by substituting its own findings of fact and conclusion with those of the trial court despite the lack of “strong or cogent reasons” therefor, “has so far departed from the accepted and usual course of judicial proceedings ... as to call for an exercise of the power of supervision” by this Honorable Supreme Court [Sec. 6 (b), Ibid.].

III. The findings by the Honorable Court of Appeals that respondents (appellants therein) “had satisfactorily presented a prima facie case of negligence which the appellee (petitioner herein) had not overcome with an adequate explanation” and which alleged negligence is “the proximate cause of death of Lanuzo” are manifestations of grave abuse of discretion in the appreciation of facts, and constitute


a judgment based on a misinterpretation of facts, which justify a review by this Honorable Supreme Court.7

The company reiterates the categorical finding of the RTC that the proximate cause of the accident was Balbino’s own negligence, and that such finding was based on the conclusion stated by SPO1 Corporal in his investigation report to the effect that the incident was “purely self accident,” and on the unrebutted testimony of Zamora to the effect that Balbino was driving his motorcycle at a fast speed trying to overtake another motorcycle rider before hitting the barricade. On the other hand, it insists that its documentary and testimonial evidence proved its exercise of due care and observance of the legally prescribed safety requirements for contractors.

The company maintains that Balbino was familiar with the re–blocking project that had been going on for months because he had been passing the area at least four times a day during weekdays in going to and from his place of work in the morning and in the afternoon; and that he could have avoided the accident had he exercised reasonable care and prudence.

The company assails the application of the doctrine of res ipsa loquitur, positing that the Lanuzo heirs did not establish all the requisites for the doctrine to apply.

Anent the first requisite, the company states that the Lanuzo heirs did not successfully counter its documentary and testimonial evidence showing that Balbino’s own negligence had caused the accident. It cites the fact that Balbino was familiar with the road conditions and the re–blocking project because he had been passing there daily; and that Balbino had been driving too fast and not wearing the required helmet for motorcycle drivers, which were immediately evident because he had been thrown from his motorcycle and had landed “18 paces away” from the barricade that he had hit.

On the second requisite, the company argues that Balbino’s driving and operation of his motorcycle on the day of the accident indicated that the accident was not within its exclusive management and control; and that as to the matters that were within its control, it sufficiently showed its observance of due and reasonable care and its compliance with the legally prescribed safety requirements.

Regarding the third requisite, the company reminds that Zamora and SPO1 Corporal revealed that Balbino was overtaking another motorcycle rider before hitting the barricade. The credibility of said witnesses was not challenged, and their testimonies not rebutted; hence, the CA erred in relying on the recollections of Asuncion Sandia and Ernesto Alto who were not present when the incident took place. Sandia and Alto’s testimonies could not be accorded more weight than Zamora’s eyewitness account, considering that the latter was believed by the trial judge who had the first–hand opportunity to observe the demeanor of the witnesses.

Whose negligence was the proximate cause of the death of Balbino?

Ruling of the Court

Inasmuch as the RTC and the CA arrived at conflicting findings of fact on who was the negligent party, the Court holds that an examination of the evidence of the parties needs to be undertaken to properly determine the issue.8 The Court must ascertain whose evidence was preponderant, for Section 1, Rule 133 of the Rules of Court mandates that in civil cases, like this one, the party having the burden of proof must establish his case by a preponderance of evidence.9

Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law.10 It is basic that whoever alleges a fact has the burden of proving it because a mere allegation is not evidence.11 Generally, the party who denies has no burden to prove.12 In civil cases, the burden of proof is on the party who would be defeated if no evidence is given on either side.13 The burden of proof is on the plaintiff if the defendant denies the factual allegations of the complaint in the manner required by the Rules of Court, but it may rest on the defendant if he admits expressly or impliedly the essential allegations but raises affirmative defense or defenses, which if proved, will exculpate him from liability.14

By preponderance of evidence, according to Raymundo v. Lunaria:15

x x x is meant that the evidence as a whole adduced by one side is superior to that of the other. It refers to the weight, credit and value of the aggregate evidence on either side and is usually considered to be synonymous with the term “greater weight of evidence” or “greater weight of the credible evidence.” It is evidence which is more convincing to the court as worthy of belief than that which is offered in opposition thereto.

In addition, according to United Airlines, Inc. v. Court of Appeals,16 the plaintiff must rely on the strength of his own evidence and not upon the weakness of the defendant’s.

Upon a review of the records, the Court affirms the findings of the RTC, and rules that the Lanuzo heirs, the parties carrying the burden of proof, did not establish by preponderance of evidence that the negligence on the part of the company was the proximate cause of the fatal accident of Balbino.

Negligence, the Court said in Layugan v. Intermediate Appellate Court,17 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,18 or as Judge Cooley defines it, ‘(t)he failure to observe for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury.’”19 In order that a party may be held liable for damages for any injury brought about by the negligence of another, the claimant


must prove that the negligence was the immediate and proximate cause of the injury. Proximate cause is defined as “that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred.”20

The test by which the existence of negligence in a particular case is determined is aptly stated in the leading case of Picart v. Smith,21 as follows:

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreetpaterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light of human experience and in view of the facts involved in the particular case. Abstract speculation cannot here be of much value but this much can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by the ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this: Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding against its consequences.

First of all, we note that the Lanuzo heirs argued in the trial and appellate courts that there was a total omission on the part of the company to place illuminated warning signs on the site of the project, especially during night time, in order to warn motorists of the project. They claim that the omission was the proximate cause of the death of Balbino.22 In this appeal, however, they contend that the negligence of the company consisted in its omission to put up adequate lighting and the required signs to warn motorists of the project, abandoning their previous argument of a total omission to illuminate the project site.

During the trial, the Lanuzo heirs attempted to prove inadequacy of illumination instead of the total omission of illumination. Their first witness was Cesar Palmero,

who recalled that lights had been actually installed in the site of the project. The next witness was Ernesto Alto, who stated that he had seen three light bulbs installed in the site, placed at intervals along the stretch of the road covered by the project. Alto further stated that he had passed the site on board his tricycle on October 30, 1997 prior to the accident, and had seen only a gas lamp, not light bulbs, on his approach. Another witness of the plaintiffs, Asuncion Sandia, claimed that she had also passed the site on board a bus on the night just prior to the accident, and had seen the site to be dark, with only one lane open to traffic, with no light at all. Obviously, the witnesses of the plaintiffs were not consistent on their recollections of the significant detail of the illumination of the site.

In contrast, the company credibly refuted the allegation of inadequate illumination. Zamora, its flagman in the project, rendered an eyewitness account of the accident by stating that the site had been illuminated by light bulbs and gas lamps, and that Balbino had been in the process of overtaking another motorcycle rider at a fast speed when he hit the barricade placed on the newly cemented road. On his part, SPO1 Corporal, the police investigator who arrived at the scene of the accident on October 30, 1997, recalled that there were light bulbs on the other side of the barricade on the lane coming from Naga City; and that the light bulb on the lane where the accident had occurred was broken because it had been hit by the victim’s motorcycle. Witnesses Gerry Alejo and Engr. Victorino del Socorro remembered that light bulbs and gas lamps had been installed in the area of the project.

Secondly, the company presented as its documentary evidence the investigation report dated December 3, 1997 of SPO1 Corporal (Annex 1), the relevant portions of which indicated the finding of the police investigator on the presence of illumination at the project site, viz:

SUBJECT: Investigation Report Re: Homicide Thru Reckless Imprudence (Self Accident)

x x x x

II. MATTERS INVESTIGATED:

1. To determine how the incident happened.2. To determine the vehicle involved.

III. FACTS OF THE CASE:

3. At 6:45 P.M. October 30, 1997, Elements of Pili Municipal Police Station led by SPO2 Melchor Estallo, SPO2 Cesar Pillarda, both members of the patrol section and SPO1 Pedro D. Corporal, investigator reported having conducted an on the spot investigation re: vehicular incident (Self Accident) that happened on or about 6:30 o’clock in the evening of October 30, 1997 along national highway, San Agustin, Pili, Camarines Sur, wherein one Balbino Lanuzo y Doe, of legal age, married, a public school teacher, a resident of San Jose, Pili, Camarines Sur while driving his Honda


motorcycle 110 CC enroute to San Jose, Pili, Camarines Sur from Poblacion, this municipality and upon reaching at road re: blocking portion of the national highway at barangay San Agustin, Pili, Camarines Sur and while overtaking another motorcycle ahead incidentally side–swiped a road sign/barricade installed at the lane road re: blocking of the national highway, causing said motorcycle rider to swerved his ridden motorcycle to the right and stumble down and fell to the concrete cemented road. Victim was rushed to Bicol Medical Center, Naga City for treatment but was pronounced dead on arrival.

4. That upon arrival at the scene of the incident it was noted that road sign/barricade installed on the road has a light.

5. That said road was under repair for almost a month which one lane portion of the national highway is possible of all passing vehicles from south and north bound.

6. That said motorcycle stumble down on the newly repair portion of the national highway and the driver lying down beside the motorcycle.

x x x x

7. That one of the passerby revealed that the victim possibly be miscalculated the road block that made him to tumble down when he applied sudden brake.

IV. FINDINGS/DISCUSSION:

8. The time of the incident was at about 6:30 o’clock in the evening a time wherein dark of the night is approaching the vision of the driver is affected with the changing condition and it is all the time when driver should lights his driven vehicle, as to this case, the driver Balbino Lanuzo y Doe (victim has exercise all precautionary measures to avoid accident but due to self accident he incidentally sideswiped the road sign/barricade of the re: Blocking portion of the national highway resulting him to stumble down his motorcycle and fell down to the concrete cement road.

9. The driver/victim met unexpectedly (sic) along that one lane potion of the re: blocking and considering it was night time, confusion overthrew him and because of sudden impulse, he lost control on the motorcycle he was driving.

10. That the driver/victim has no crush (sic) helmet at the time of the incident considering that it should be a basic requirement as to prevent from any accident.

V. RECOMMENDATION:

11. Basing on the above discussion and facts surroundings the case was purely self accident resulting to Homicide Thru Reckless Imprudence and the case must be closed. (Emphasis ours.) 23

Additionally, the company submitted the application for lighting permit covering the project site (Annex 7) to prove the fact of installation of the electric light bulbs in the project site.

In our view, the RTC properly gave more weight to the testimonies of Zamora and SPO1 Corporal than to those of the witnesses for the Lanuzo heirs. There was justification for doing so, because the greater probability pertained to the former. Moreover, the trial court’s assessment of the credibility of the witnesses and of their testimonies is preferred to that of the appellate court’s because of the trial court’s unique first–hand opportunity to observe the witnesses and their demeanor as such. The Court said in Cang v. Cullen:24

The findings of the trial court on the credibility of witnesses are accorded great weight and respect – even considered as conclusive and binding on this Court – since the trial judge had the unique opportunity to observe the witness firsthand and note his demeanor, conduct and attitude under grueling examination. Only the trial judge can observe the furtive glance, blush of conscious shame, hesitation, flippant or sneering tone, calmness, sigh of a witness, or his scant or full realization of an oath – all of which are useful aids for an accurate determination of a witness' honesty and sincerity. He can thus be expected to determine with reasonable discretion which testimony is acceptable and which witness is worthy of belief.

Absent any showing that the trial court’s calibration of the credibility of the witnesses was flawed, we are bound by its assessment. This Court will sustain such findings unless it can be shown that the trial court ignored, overlooked, misunderstood, misappreciated, or misapplied substantial facts and circumstances, which, if considered, would materially affect the result of the case.25

The Court observes, too, that SPO1 Corporal, a veteran police officer detailed for more than 17 years at the Pili Police Station, enjoyed the presumption of regularity in the performance of his official duties.26 The presumption, although rebuttable, stands because the Lanuzo heirs did not adduce evidence to show any deficiency or irregularity in the performance of his official duty as the police investigator of the accident. They also did not show that he was impelled by any ill motive or bias to testify falsely.

Thirdly, the CA unreasonably branded the testimonies of Zamora and SPO1 Corporal as “self–serving.” They were not. Self–serving evidence refers to out–of–court statements that favor the declarant’s interest;27 it is disfavored mainly because the adverse party is given no opportunity to dispute the statement and their admission would encourage fabrication of testimony.28 But court declarations are not self–serving considering that the adverse party is accorded the opportunity to test the veracity of the declarations by cross–examination and other methods.

There is no question that Zamora and SPO1 Corporal were thoroughly cross–examined by the counsel for the Lanuzo heirs. Their recollections remained unchallenged by superior contrary evidence from the Lanuzo heirs.


Fourthly, the doctrine of res ipsa loquitur had no application here. In Tan v. JAM Transit, Inc.,29 the Court has discussed the doctrine husly:

Res ipsa loquitur is a Latin phrase that literally means “the thing or the transaction speaks for itself.” It is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation. Where the thing that caused the injury complained of is shown to be under the management of the defendant or his servants; and the accident, in the ordinary course of things, would not happen if those who had management or control used proper care, it affords reasonable evidence — in the absence of a sufficient, reasonable and logical explanation by defendant — that the accident arose from or was caused by the defendant’s want of care. This rule is grounded on the superior logic of ordinary human experience, and it is on the basis of such experience or common knowledge that negligence may be deduced from the mere occurrence of the accident itself. Hence, the rule is applied in conjunction with the doctrine of common knowledge.

For the doctrine to apply, the following requirements must be shown to exist, namely: (a) the accident is of a kind that ordinarily does not occur in the absence of someone’s negligence; (b) it is caused by an instrumentality within the exclusive control of the defendant or defendants; and (c) the possibility of contributing conduct that would make the plaintiff responsible is eliminated.30

The Court has warned in Reyes v. Sisters of Mercy Hospital,31 however, that “res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case.”

Based on the evidence adduced by the Lanuzo heirs, negligence cannot be fairly ascribed to the company considering that it has shown its installation of the necessary warning signs and lights in the project site. In that context, the fatal accident was not caused by any instrumentality within the exclusive control of the company. In contrast, Balbino had the exclusive control of how he operated and managed his motorcycle. The records disclose that he himself did not take the necessary precautions. As Zamora declared, Balbino overtook another motorcycle rider at a fast speed, and in the process could not avoid hitting a barricade at the site, causing him to be thrown off his motorcycle onto the newly cemented road. SPO1 Corporal’s investigation report corroborated Zamora’s declaration. This causation of the fatal injury went uncontroverted by the Lanuzo heirs.

Moreover, by the time of the accident, the project, which had commenced in September 1997, had been going on for more than a month and was already in the completion stage. Balbino, who had passed there on a daily basis in going to and from his residence and the school where he then worked as the principal, was thus very familiar with the risks at the project site. Nor could the Lanuzo heirs justly posit that the illumination was not adequate, for it cannot be denied that Balbino’s motorcycle

was equipped with headlights that would have enabled him at dusk or night time to see the condition of the road ahead. That the accident still occurred surely indicated that he himself did not exercise the degree of care expected of him as a prudent motorist.

According to Dr. Abilay, the cause of death of Balbino was the fatal depressed fracture at the back of his head, an injury that Dr. Abilay opined to be attributable to his head landing on the cemented road after being thrown off his motorcycle. Considering that it was shown that Balbino was not wearing any protective head gear or helmet at the time of the accident, he was guilty of negligence in that respect. Had he worn the protective head gear or helmet, his untimely death would not have occurred.

The RTC was correct on its conclusions and findings that the company was not negligent in ensuring safety at the project site. All the established circumstances showed that the proximate and immediate cause of the death of Balbino was his own negligence. Hence, the Lanuzo heirs could not recover damages.32

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDEthe decision promulgated on August 11, 2003 by the Court of Appeals; REINSTATES the decision rendered on October 8, 2001 by the Regional Trial Court, Branch 32, in Pili, Camarines Sur dismissing the complaint; and MAKES no pronouncements on costs of suit. SO ORDERED.

____________

SECOND DIVISION

G.R. No. 181995 July 16, 2012

BIBIANO C. ELEGIR, Petitioner, vs.PHILIPPINE AIRLINES, INC., Respondent.

D E C I S I O N

REYES, J.:


This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision1 dated August 6, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 79111, which reversed and set aside the Decision2 dated March 18, 2002 and Order3 dated June 30, 2003 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-08-06135-97 and NLRC NCR CA No. 015030-98.

Factual Antecedents

As culled from the records, the instant case stemmed from the following factual antecedents:

Petitioner Bibiano C. Elegir (petitioner) was hired by Philippine Airlines, Inc. (PAL) as a commercial pilot, specifically designated as HS748 Limited First Officer, on March 16, 1971.4

In 1995, PAL embarked on a refleeting program and acquired new and highly sophisticated aircrafts. Subsequently, it sent an invitation to bid to all its flight deck crew, announcing the opening of eight (8) B747-400 Captain positions that were created by the refleeting program. The petitioner, who was then holding the position of A-300 Captain, submitted his bid and was fortunately awarded the same.5 The petitioner, together with seven (7) other pilots, was sent for training at Boeing in Seattle, Washington, United States of America on May 8, 1995, to acquire the necessary skills and knowledge in handling the new aircraft. He completed his training on September 19, 1995.6

On November 5, 1996, after rendering twenty-five (25) years, eight (8) months and twenty (20) days of continuous service, the petitioner applied for optional retirement authorized under the Collective Bargaining Agreement (CBA) between PAL and the Airline Pilots Association of the

Philippines (ALPAP), in which he was a member of good standing. In response, PAL asked him to reconsider his decision, asseverating that the company has yet to recover the full value of the costs of his training. It warned him that if he leaves PAL before he has rendered service for at least three (3) years, it shall be constrained to deduct the costs of his training from his retirement pay.7

On November 6, 1996, the petitioner went on terminal leave for thirty (30) days and thereafter made effective his retirement from service. Upon securing his clearance, however, he was informed that the costs of his training will be deducted from his retirement pay, which will be computed at the rate of P 5,000.00 per year of service. The petitioner, through his counsel, sent PAL a correspondence, asserting that his retirement benefits should be based on the computation stated in Article 287 of the Labor Code, as amended by Republic Act (R.A.) No. 7641, and that the costs of his training should not be deducted therefrom. In its Reply dated August 4, 1997, PAL refused to yield to the petitioner’s demand and maintained that his retirement pay should be based on PAL-ALPAP Retirement Plan of 1967 (PAL-ALPAP Retirement Plan) and that he should reimburse the company with the proportionate costs of his training. Thus, on August 27, 1997, the petitioner filed a complaint for non-payment

of retirement pay, moral damages, exemplary damages and attorney’s fees against PAL.8

On February 6, 1998, the Labor Arbiter (LA) rendered a Decision,9the pertinent portions of which read:

From the foregoing, it is manifestly clear that an employee’s retirement benefits under any collective bargaining agreement shall not be less than those provided under the New Retirement Pay Law and if such benefits are less, the employee shall pay the difference between the amount due the employee and that provided under the CBA or individual agreement or retirement plan (Par. 3.2, Sec. 3, rules Implementing the New Retirement Pay Law).

Thus, applying the pertinent CBA provision in correlation with the New Retirement Pay Law, complainant should receive the following amount, to wit:

22.5 x 26 yrs. x P138,447.00= P2,700,301.50

If we were to follow the PAL’s computation of petitioner’s retirement pay, the latter’s retirement benefits in the amount of P125,000.00 based on Section 2, Article VII of the Retirement Plan of the CBA at P5,000.00 per every year of service would be much less than his monthly salary of P138,477.00 at the time of his retirement. This was never envisioned by the law. Instead, it is the clear intention of our law makers to provide a bigger and better retirement pay or benefits under existing laws and/or existing CBA or other agreements.

x x x x

WHEREFORE, in view of the foregoing, we find PAL liable to the petitioner for the payment of his retirement benefits as follows:

Retirement Benefits(22.5 x 26 years x P138,477.00)

P 2,700,301.50

Accrued Trip Leave 760,299.37

Accrued Vacation Leave 386,546.44

1996 Unutilized days off 105,089.46

Nov. ‘96 Prod. Allow. (net) 1,726.92

Unpaid Salary 12/1/-5/96 22,416.65

1996 w/tax refund 2,464.42

13th month backpay for the year 171,262.50


1988-1991

TOTAL P 4,150,106.20

plus legal interest of 12% per annum from November 06, 1996.

Finally, ten percent (10%) of all sums owing to petitioner is hereby adjudged as attorney’s fees.

SO ORDERED.10

The LA ratiocinated that PAL had no right to withhold the payment of the petitioner’s retirement benefits simply because he retired from service before the lapse of three (3) years. To begin with, there was no document evidencing the fact that the petitioner was required to stay with PAL for three (3) years from the completion of his training or that he was bound to reimburse the company of the costs of his training should he retire from service before the completion of the period. The LA likewise dismissed the theory espoused by PAL that the petitioner’s submission of his bid for the new position which necessarily requires training created an innominate contract of du ut facias between him and the company since their relationship is governed by the CBA between the management and the ALPAP.11

On appeal, the NLRC took a different stance and modified the decision of the LA in its Decision dated March 18, 2002, which pertinently states:

Considering that [petitioner] was only fifty-two (52) years when he opted to retire on November 6, 1996, he was, strictly, not yet qualified to receive the benefits provided under said Article 287 of the Labor Code, as amended by R.A. 7641. However, petitioner is eligible for retirement under the CBA between respondent PAL and ALPAP, as he had already served for more than 25 years with said respondent. This is covered by the provision in the first paragraph of Article 287 of the Labor Code which states that an employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract, inasmuch as the CBA in question does not provide for any retirement age, but limited itself to the number of years of service or flying hours of the employee concerned. Consequently, anytime that an employee of respondent PAL reaches twenty (20) years of service or 20,000 (flying) hours as a pilot of PAL, then his age at that precise time would be considered as the retirement age, as far as he is concerned.

The retirement benefits of petitioner should, therefore, be computed in accordance with both Article 287 of the Labor Code and the Retirement Plan in the CBA of PAL and ALPAP.

On the second issue, we rule that petitioner is under obligation to reimburse a portion of the expenses incurred for his training as B747-400 Captain.

It would be grossly unfair and unjust to PAL if the petitioner would be allowed to reap the fruits of this training, which upgraded his knowledge and skills that would enable him to demand higher pay, if he would not be made to return said benefits in the form of service for a reasonable period of time, say three (3) years as PAL’s company policy demands. x x x

x x x x

Thus, with the adjudged reimbursement for training expenses of P921,281.71 (sic), the awards due to petitioner shall be, as follows:

Retirement Pay (P138,477.00 divided by 2 times 26)

- P1,800,201.00

Service Incentive Leave (P138,477.00 divided by 30 x 5)

- 23,074.50

Accrued Trip Leave - 386,546.44

13th Month Pay - 138,477.00

1996 Unutilized days off - 105,089.48

Nov. 1996 Productive Allowance (net) - 1,726.92

Unpaid salary 12/1-5/96 - 22,416.63

1996 w/ tax refund - 2,464.42

TOTAL -[P] 2,479.996.39

LESS:

Reimbursement of training expenses

981,281.71

1996 13thmonth pay overpayment

19,837.16

1996 Christmas bonus overpayment

11,539.75


PESALA 567.93

TOTAL - 1,013,226.55

RETIREMENT PAY STILL PAYABLE -[P] 1,466,769.81

IN VIEW OF THE FOREGOING, the decision of the Labor Arbiter should be MODIFIED by increasing the awards to the petitioner to ONE MILLION FOUR HUNDRED SIXTY SIX THOUSAND SEVEN HUNDRED SIXTY-NINE and 84/100 (P1,466,769.84) PESOS as computed above.

SO ORDERED.12

Both PAL and petitioner filed their respective motions for partial reconsideration from the decision of the NLRC. In its Motion for Partial Reconsideration,13 PAL asseverated that the decision of the NLRC, directing the computation of the petitioner’s retirement benefits based on Article 287 of the Labor Code, instead of the CBA, was inconsistent with the disposition of this Court in Philippine Airlines, Inc. v. Airline Pilots Association of the Philippines.14 It emphasized that in said case, this Court sustained PAL’s position and directed the payment of retirement benefits of the complainant pilot in accordance with the PAL-ALPAP Retirement Plan. However, in an Order15 dated June 30, 2003, the NLRC denied PAL’s motion for reconsideration.

Unyielding, PAL filed a petition for certiorari with the CA. In said petition, PAL emphasized that the petitioner’s case should be decided in light of the ruling in Philippine Airlines, Inc., where this Court held that the computation of the retirement pay of a PAL pilot who retired before reaching the retirement age of sixty (60) should be based on the PAL-ALPAP Retirement Plan or at the rate of P5,000.00 for every year of service.16

In its Decision dated August 6, 2007, the CA ruled that the petitioner’s retirement pay should be computed in accordance with PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan as was held in Philippine Airlines, Inc. It held, thus:

The present case squarely falls within the state of facts upon which the ruling in Philippine Airlines, Inc., vs. Airline Pilots Association of the Philippines was enunciated. Petitioner herein applies for retirement at an age below 60. A distinction was made between a pilot who retires at the age of sixty and another who retires earlier. The Supreme Court was explicit when it declared:

"A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of his life and at the peak of his career, compared to one who retires at the age of 60 years old."

Furthermore, petitioner would not be getting less if his retirement pay is computed on the PAL-ALPAP retirement plan rather than the formula provided by the Labor Code.

Petitioner did not refute that he already got retirement benefits from another retirement plan – the PAL

Pilots Retirement Plan. It appearing that the retirement benefits amounting to P1,800,201.00 being the main bone of contention herein, this Court proceeds to compute the balance of Capt. Elegir’s retirement benefits as follows:

Retirement Pay (P5,000 x 25 years) P125,000.00

Trip Leave Pay 757,564.04

Vacation Leave Pay 385,155.76

1996 Unutilized Day-Off 104,711.38

Productivity Allowance for 1996 1,726.92

Unpaid Salary for December 1-5, 1996 22,335.00

1996 Withholding Tax Refund 2,464.42

P1,398,957.52

Less Accountabilities:

Training Cost P981,281.71

1996 13th Month Pay Overpayment 19,837.16

1996 Christmas Bonus 11,539.75

PESALA 567.93 1,013,226.55

BALANCE P 385,730.97

pursuant to the ruling in G.R. No. 143686.

x x x x

WHEREFORE, the petition is GRANTED. The Decision of public respondent dated March 18, 2002 and its Order of June 30, 2003 are REVERSED and SET ASIDE. The retirement benefits of petitioner Capt. Bibiano Elegir shall be based on the 1967 PAL-


ALPAP Retirement Plan andthe PAL Pilots Retirement Benefit Plan and the balance still due him, pegged at P385,730.97.

SO ORDERED.17 (Citation omitted and emphasis supplied)

The petitioner filed a motion for reconsideration but the same was denied in a Resolution18 dated February 21, 2008. Aggrieved, the petitioner appealed to this Court.

Essentially, we are called upon to rule on the following issues:

1. Whether the petitioner’s retirement benefits should be computed based on Article 287 of the Labor Code or on PAL’s retirement plans;

2. Whether the petitioner should reimburse PAL with the proportionate costs of his training; and

3. Whether interest should be imposed on the monetary award in favor of the petitioner.

The Ruling of this Court

The petitioner’s retirement pay should be computed based on PAL’s retirement plans.

The petitioner maintains that it is Article 287 of the Labor Code which should be applied in the computation of his retirement pay since the same provides for higher benefits. He contends that the CA erroneously resorted to the ruling in Philippine Airlines, Inc. since the circumstances in the said case, which led this Court to rule in favor of the applicability of PAL’s retirement plans in computing retirement benefits, are unavailing in the present case. Specifically, he pointed out that the pilot in Philippine Airlines, Inc. retired at the age of forty-five (45), while he opted to retire at fifty-two (52). He further emphasized that the ruling was anchored on a finding that the retirement benefits that the pilot would get under Article 287 of the Labor Code are less than those he would get under PAL’s retirement plans.19

Apparently, the petitioner failed to appreciate the heart behind the ruling in Philippine Airlines, Inc. To recapitulate, the case stemmed from PAL’s unilateral act of retiring airline pilot Captain Albino Collantes (Collantes) under the authority of Section 2, Article VII of the PAL-ALPAP Retirement Plan. Thereafter, ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE), asseverating that the retirement of Collantes constituted illegal dismissal and union busting. The Secretary of Labor assumed jurisdiction and eventually upheld PAL’s action of retiring Collantes as a valid exercise of its option under Section 2, Article VII of the PAL-ALPAP Retirement Plan. It further directed for the computation of Collantes’ retirement benefits on the basis of Article 287 of the Labor Code.20 Acting on Collantes’ petition for certiorari, the CA held that the pilot’s retirement benefits should be based on Article 287 of the Labor Code and not on the PAL-ALPAP Retirement Plan. On appeal to this Court, we reversed the CA and ruled that Collantes’ retirement benefits should be computed based on the PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan and not on Article 287

of the Labor Code since the benefits under the two (2) plans are substantially higher than the latter. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The March 2, 2000 Decision and the June 19, 2000 Resolution of the Court of Appeals in CA-G.R. SP No. 54403 are REVERSED and SET ASIDE. The Order of the Secretary of Labor in NCMB-NCR-N.S. 12-514-97 dated June 13, 1998, is MODIFIED as follows: The retirement benefits to be awarded to Captain Albino Collantes shall be based on the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan. The directive contained in subparagraph (2) of the dispositive portion thereof, which required petitioner to consult the pilot involved before exercising its option to retire him, is DELETED. The said Order is AFFIRMED in all other respects.

SO ORDERED.21 (Emphasis supplied)

It bears reiterating that there are only two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan. The two retirement schemes are alternative in nature such that the retired pilot can only be entitled to that which provides for superior benefits.

Article 287 of the Labor Code states:

Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: provided, however, that an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared as the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary’ shallmean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. x x x (Emphasis supplied)

It can be clearly inferred from the language of the foregoing provision that it is applicable only to a situation where (1) there is no CBA or other applicable employment contract providing for retirement benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for retirement benefits for


an employee, but it is below the requirement set by law. The rationale for the first situation is to prevent the absurd situation where an employee, deserving to receive retirement benefits, is denied them through the nefarious scheme of employers to deprive employees of the benefits due them under existing labor laws. On the other hand, the second situation aims to prevent private contracts from derogating from the public law.22

The primary application of existing CBA in computing retirement benefits is implied in the title of R.A. No. 7641 which amended Article 287 of the Labor Code. The complete title of R.A. No. 7641 reads: "An Act Amending Article 287 of Presidential Decree No. 442, As Amended, otherwise known as the Labor Code of the Philippines, By Providing for Retirement Pay to Qualified Private Sector in the Absence of Any Retirement Plan in the Establishment."23

Emphasis must be placed on the fact that the purpose of the amendment is not merely to establish precedence in application or accord blanket priority to existing CBAs in computing retirement benefits. The determining factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided. Thus, even if there is an existing CBA but the same does not provide for retirement benefits equal or superior to that which is provided under Article 287 of the Labor Code, the latter will apply. In this manner, the employee can be assured of a reasonable amount of retirement pay for his sustenance.

Consistent with the purpose of the law, the CA correctly ruled for the computation of the petitioner’s retirement benefits based on the two (2) PAL retirement plans because it is under the same that he will reap the most benefits. Under the PAL-ALPAP Retirement Plan, the petitioner, who qualified for late retirement after rendering more than twenty (20) years of service as a pilot, is entitled to a lump sum payment of P125,000.00 for his twenty-five (25) years of service to PAL. Section 2, Article VII of the PAL-ALPAP Retirement Plan provides:

Section 2. Late Retirement. Any member who remains in the service of the company after his normal retirement date may retire either at his option or at the option of the Company, and when so retired he shall be entitled either: (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount.24

Apart from the abovementioned benefit, the petitioner is also entitled to the equity of the retirement fund under PAL Pilots’ Retirement Benefit Plan, which pertains to the retirement fund raised from contributions exclusively from PAL of amounts equivalent to 20% of each pilot’s gross monthly pay. Each pilot stands to receive the full amount of the contribution upon his retirement which is equivalent to 240% of his gross monthly income for every year of service he rendered to PAL. This is in addition to the amount of not less than P100,000.00 that he shall receive under the PAL-ALPAP Retirement Plan.25

In sum, therefore, the petitioner will receive the following retirement benefits:

(1) P125,000.00 (25 years x P5,000.00) for his 25 years of service to PAL under the PAL-ALPAP Retirement Plan, and;

(2) 240% of his gross monthly salary for every year of his employment or, more specifically, the summation of PAL’s monthly contribution of an amount equivalent to 20% of his actual monthly salary, under the PAL Pilots’ Retirement Benefit Plan.

As stated in the records, the petitioner already received the amount due to him under the PAL Pilots’ Retirement Benefit Plan.26 As much as we would like to demonstrate with specificity the amount of the petitioner’s entitlement under said plan, we are precluded from doing so because there is no record of the petitioner’s salary, including increments thereto, attached to the records of this case. To reiterate, the benefit under the PAL Pilots’ Retirement Benefit Plan pertains to the totality of PAL’s monthly contribution for every pilot, which amounts to 20% of the actual monthly salary. Necessarily, the computation of this benefit requires a record of the petitioner’s salary, which was unfortunately not submitted by either of the parties. At any rate, the petitioner did not dispute the fact that he already received his entitlement under the PAL Pilots’ Retirement Benefit Plan nor did he question the propriety of the amount tendered. Thus, we can reasonably assume that he received the rightful amount of his entitlement under the plan.

On the other hand, under Article 287 of the Labor Code, the petitioner would only be receiving a retirement pay equivalent to at least one-half (1/2) of his monthly salary for every year of service, a fraction of at least six (6) months being considered as one whole year. To stress, one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for service incentive leave.27

Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240% of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots’ Retirement Benefit Plan, which will be further added to the P125,000.00 to which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioner’s advantage that PAL’s retirement plans were applied in the computation of his retirement benefits.

The petitioner should reimburse PAL with the costs of his training.

As regards the issue of whether the petitioner should be obliged to reimburse PAL with the costs of his training, the ruling in Almario v. Philippine Airlines, Inc.28 is controlling. Essentially, in the mentioned case, this Court recognized the right of PAL to recoup the costs of a pilot’s training in the form of service for a period of at least three (3) years. This right emanated from the CBA between PAL and ALPAP, which must be complied with good faith by the parties. Thus:

"The CBA is the law between the contracting parties – the collective bargaining representative and the employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions


should be "construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve." This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation."

In N.S. Case No. 11-506-87, "In re Labor Dispute at the Philippine Airlines, Inc.," the Secretary of the Department of Labor and Employment (DOLE), passing on the failure of PAL and ALPAP to agree on the terms and conditions for the renewal of their CBA which expired on December 31, 1987 and construing Section 1 of Article XXIII of the 1985-1987 CBA, held:

x x x x

Section 1, Article XXIII of the 1985-1987 CBA provides:

Pilots fifty-five (55) years of age or over who have not previously qualified in any Company turbo-jet aircraft shall not be permitted to bid into the Company’s turbo-jet operations. Pilots fifty-five (55) years of age or over who have previously qualified in the company’s turbo-jet operations may be by-passed at Company option, however, any such pilot shall be paid the by-pass pay effective upon the date a junior pilot starts to occupy the bidded position.

x x x PAL x x x proposed to amend the provision in this wise:

The compulsory retirement age for all pilots is sixty (60) years. Pilots who reach the age of fifty-five (55) years and over without having previously qualified in any Company turbo-jet aircraft shall not be permitted to occupy any position in the Company’s turbo-jet fleet. Pilots fifty-four (54) years of age and over are ineligible for promotion to any position in Group I. Pilots reaching the age of fifty-five (55) shall be frozen in the position they currently occupy at that time and shall be ineligible for any further movement to any other positions.

PAL’s contention is basically premised on prohibitive training costs. The return on this investment in the form of the pilot promoted is allegedly five (5) years. Considering the pilot’s age, the chances of full recovery are asserted to be quite slim.

ALPAP opposed the proposal and argued that the training cost is offset by the pilot’s maturity, expertise and experience.

By way of compromise, we rule that a pilot should remain in the position where he is upon reaching age fifty-seven (57), irrespective of whether or not he has previously qualified in the Company’s turbo-jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be burdened with training for a new position. But if a pilot is only at age fifty-five (55), and promotional positions are available, he should still be considered and promoted if qualified, provided he has previously qualified in any company turbo-jet aircraft. In

the latter case, the prohibitive training costs are more than offset by the maturity, expertise, and experience of the pilot.

Thus, the provision on age limit should now read:

Pilots fifty-seven (57) years of age shall be frozen in their positions.1âwphi1 Pilots fifty-five (55) [sic] years of age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any position in the company’s turbo-jet fleet.29 (Citations omitted and emphasis supplied)

Further, we considered PAL’s act of sending its crew for training as an investment which expects an equitable return in the form of service within a reasonable period of time such that a pilot who decides to leave the company before it is able to regain the full value of the investment must proportionately reimburse the latter for the costs of his training. We ratiocinated:

It bears noting that when Almario took the training course, he was about 39 years old, 21 years away from the retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the training course, he was expected to serve PAL for at least three years to offset "the prohibitive costs" thereof.

The pertinent provision of the CBA and its rationale aside, contrary to Almario’s claim, Article 22 of the Civil Code which reads:

"Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him," applies.

This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of another. An authority on Civil Law writes on the subject, viz:

"Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is appreciable in money. It may consist of some positive pecuniary value incorporated into the patrimony of the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits from service rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value of property of the defendant; (5) the improvement of a right of the defendant, such as the acquisition of a right of preference; (6) the recognition of the existence of a right in the defendant; and (7) the improvement of the conditions of life of the defendant.

x x x x"

Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill, proficiency, or technical competence so that he could efficiently discharge the position of A-300 First Officer. Given that, PAL expected to recover the training costs by availing of Almario’s services for at least three years. The expectation of PAL was not fully realized, however, due to Almario’s resignation after only eight months of service following the completion of his training course. He


cannot, therefore, refuse to reimburse the costs of training without violating the principle of unjust enrichment.30 (Citation omitted and emphasis supplied)

After perusing the records of this case, we fail to find any significant fact or circumstance that could warrant a departure from the established jurisprudence. The petitioner admitted that as in Almario, the prevailing CBA between PAL and ALPAP at the time of his retirement incorporated the same stipulation in Section 1, Article XXIII of the 1985-1987 CBA31 which provides:

Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots fifty-five (55) [sic] years of age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any position in the company’s turbo-jet fleet.32

As discussed in Almario, the above provision initially set the age of fifty-five (55) years as the reckoning point when a pilot becomes disqualified to bid for a higher position. The age of disqualification was set at 55 years old to enable PAL to fully recover the costs of the pilot’s training within a period of five (5) years before the pilot reaches the compulsory retirement age of sixty (60). The DOLE Secretary however lowered the age to fifty-seven (57), thereby cutting the supposed period of recovery of investment to three (3) years. The DOLE Secretary justified the amendment in that the "prohibitive training costs are more than offset by the maturity, expertise and the experience of the pilot."33

By carrying over the same stipulation in the present CBA, both PAL and ALPAP recognized that the company’s effort in sending pilots for training abroad is an investment which necessarily expects a reasonable return in the form of service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot to remain within PAL’s employ within a period of 3 years after he has been sent on training. The supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly covered the petitioner’s obligation to render service to PAL within 3 years to enable it to recoup the costs of its investment.

Further, to allow the petitioner to leave the company before it has fulfilled the reasonable expectation of service on his part will amount to unjust enrichment. Pertinently, Article 22 of the New Civil Code states:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or when a person retains the money or property of another against the fundamental principles of justice, equity and good conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2) such benefit is derived at the expense of or with damages to another. The main objective of the principle of unjust

enrichment is to prevent one from enriching oneself at the expense of another. It is commonly accepted that this doctrine simply means that a person shall not be allowed to profit or enrich himself inequitably at another’s expense.34 The enrichment may consist of a patrimonial, physical, or moral advantage, so long as it is appreciable in money.35 It must have a correlative prejudice, disadvantage or injury to the plaintiff which may consist, not only of the loss of the property or the deprivation of its enjoyment, but also of the non-payment of compensation for a prestation or service rendered to the defendant without intent to donate on the part of the plaintiff, or the failure to acquire something what the latter would have obtained.36

As can be gathered from the facts, PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to prepare him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new knowledge and skills which effectively enriched his technical know-how. As all other investors, PAL expects a return on investment in the form of service by the petitioner for a period of 3 years, which is the estimated length of time within which the costs of the latter’s training can be fully recovered. The petitioner is, thus, expected to work for PAL and utilize whatever knowledge he had learned from the training for the benefit of the company. However, after only one (1) year of service, the petitioner opted to retire from service, leaving PAL stripped of a necessary manpower.

Undeniably, the petitioner was enriched at the expense of PAL. After undergoing the training fully shouldered by PAL, he acquired a higher level of technical competence which, in the professional realm, translates to a higher compensation. To prove this point, his monthly salary of P125,692.00 was increased to P131,703.00 while he was still undergoing training. After his training, his salary was further increased to P137,977.00.37 Further, his training broadened his opportunities for a better employment as in fact he was able to transfer to another airline company immediately after he left PAL.38 To allow the petitioner to simply leave the company without reimbursing it for the proportionate amount of the expenses it incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason and fairness dictate that he must return to the company a proportionate amount of the costs of his training.

Award of interest not warranted under the circumstances.

The petitioner claims that the CA should have imposed interest on the monetary award in his favor. To support his claim, he cited the case of Eastern Shipping Lines, Inc. v. Court of Appeals,39 where this Court summarized the rules in the imposition of the proper interest rates:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.


II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.40 (Citations omitted and emphasis supplied)

The petitioner, however, took the foregoing guidelines out of context and entertained a misplaced supposition that all judgments which include a monetary award must be imposed with interest. The jurisprudential guideline clearly referred to breach of an obligation consisting of a forbearance of money, goods or credit before the imposition of a legal interest of 12% can be warranted. Such essential element is nowhere to be found in the facts of this case. Even granting that an interest of 6% may be imposed in cases of breached obligations not constituting loan or forbearance of money, loan or credit, such depends upon the discretion of the court. If at all, the monetary award in favor of the petitioner will earn legal interest from the time the judgment becomes final and executory until the same is fully satisfied, regardless of the nature of the breached obligation. The imposition is justified considering that the interim period from the finality of judgment, awarding a monetary claim and until payment thereof, is deemed to be equivalent to a forbearance of credit.41

WHEREFORE, in view of the foregoing disquisitions, the petition is DENIED. The Decision dated August 6, 2007 of the Court of Appeals in CA-G.R. SP No. 79111 is AFFIRMED. The Labor Arbiter is hereby DIRECTED to compute Bibiano C. Elegir's

retirement pay based on the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots' Retirement Benefit Plan, crediting Philippine Airlines, Inc. for the amount it had already paid the petitioner under the mentioned plans.

SO ORDERED.


oblicon second assignment.docx

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