G.R. No. 107968 - Cipriano vs. Court of Appeals

Petitioner Elias S. Cipriano is the owner of E.S. Cipriano Enterprises, engaged in the rustproofing of vehicles under the style Motobilkote.
Private respondent Maclin Electronics, Inc. is the customer who brought in a vehicle for rustproofing.

On April 30, 1991, a 1990 Kia Pride People’s car was brought to petitioner’s shop by an employee of Maclin Electronics, Inc. for rustproofing.
The vehicle, previously purchased from Integrated Auto Sales, Inc. for P252,155.00, was received under Job Order No. 123581 which noted the date of receipt and the vehicle’s condition, though the exact time of acceptance and release was not specified.
Petitioner claimed that the car was received at 10 o’clock in the morning and was ready for release by late afternoon as the process took only six hours.

In the afternoon of May 1, 1991, a fire broke out at the Lambat restaurant, which was adjacent to petitioner’s rustproofing shop.
The fire destroyed both the restaurant and the Mobilkote shop, including the Kia Pride that was kept inside the building allegedly to protect it from theft.
Petitioner asserted that efforts were made to save the car, but due to its location inside the building and being parked further from the exit compared to other cars, it could not be rescued.

On May 8, 1991, private respondent sent a letter demanding reimbursement for the value of the car.
In response, petitioner denied liability by invoking the defense of a fortuitous event, contending that the fire was accidental and independent of his will.
Private respondent filed a suit for the vehicle’s value and damages, arguing that petitioner’s negligence—specifically, his failure to register his business with the Department of Trade and Industry under P.D. No. 1572 and to secure the mandatory insurance—rendered him liable.

Invoked Article 1174 of the Civil Code, arguing that he was not responsible for losses resulting from unforeseeable fortuitous events.
Claimed that the rustproofing materials used were not inflammable and that the delay in retrieving the vehicle was due to the customer’s inaction.
Asserted that he was not required to register his business with the Department of Trade and Industry because his activity was not covered by P.D. No. 1572.

Contended that the nature of the business imposed a legal duty to register and secure fire insurance coverage.
Argued that failure to comply with P.D. No. 1572 constituted an act of negligence, making petitioner liable for the loss—even if the loss was precipitated by a fortuitous event.

The Quezon City Regional Trial Court (Branch 58) ruled in favor of the private respondent, ordering petitioner to pay P252,155.00 plus attorney’s fees of P10,000.00.
The Court of Appeals affirmed the trial court’s decision in toto, holding that under P.D. No. 1572 the petitioner was required to assume the risk of loss due to deficient registration and lack of mandatory insurance coverage.

Whether the petitioner was legally obliged to register his vehicle rustproofing business and secure fire insurance coverage pursuant to P.D. No. 1572 and its implementing rules.
Whether the failure to comply with the statutory requirements, regardless of the fortuitous nature of the fire, constitutes negligence rendering the petitioner liable for the loss incurred by the private respondent.
Whether the award of attorney’s fees is justified based on the findings of negligence and the petitioner’s unjustified refusal to pay a valid claim.