G.R. No. 159617 - Sicam vs. Jorge

Case Summary (G.R. No. 159617)

Facts of the Case

Respondent Lulu pawned several pieces of jewelry with the pawnshop to secure loans totalling P59,500.00. On October 19, 1987 two armed men allegedly entered the pawnshop and took cash and pawned jewelry from the vault; the incident was recorded in the Parañaque Police Station blotter. Petitioner Sicam informed respondent Lulu by letter dated October 19, 1987 of the loss; respondent Lulu replied on November 2, 1987 asserting that pawned jewelry had been deposited with Far East Bank and requesting return on November 6, 1987, but petitioners failed to return the items.

Trial Court Proceedings and RTC Ruling

Respondents filed suit (joined by husband Cesar) on September 28, 1988 for indemnification, actual, moral and exemplary damages, and attorney’s fees. Petitioner Sicam initially claimed he was not the real party in interest because the pawnshop had been incorporated as Agencia de R.C. Sicam, Inc. in April 1987; petitioners maintained they exercised due care and that the loss was a fortuitous event (robbery). The RTC denied petitioner Sicam’s motion to dismiss and, after trial, dismissed respondents’ complaint and petitioners’ counterclaim by Decision dated January 12, 1993. The RTC held petitioner Sicam could not be personally liable for a corporate transaction, and that the corporate pawnshop was relieved from liability because the loss was occasioned by robbery, a fortuitous event, citing Austria v. Court of Appeals.

Court of Appeals Ruling

The Court of Appeals reversed the RTC in a March 31, 2003 decision, ordering petitioners to pay respondents P272,000.00 as the actual value of the lost jewelry and attorney’s fees of P27,200.00. The CA pierced the corporate veil to hold petitioner Sicam personally liable alongside the corporation, reasoning that pawnshop receipts bore “Agencia de R. C. Sicam” and did not indicate corporate ownership, thereby misleading respondents. The CA also found petitioners failed to observe the diligence required of a pawnshop—specifically, to secure and protect pledged items and procure insurance—concluding robbery was a foreseeable risk in the pawnshop business and that petitioners were at least contributorily negligent. Petitioners’ motion for reconsideration was denied.

Issues Raised in the Petition for Review

Petitioners assigned errors principally that the Court of Appeals uncritically adopted respondents’ brief and reproduced respondents’ arguments without independent analysis; that petitioner Sicam was not the real party in interest and thus could not be held personally liable; that the corporate veil should not have been pierced; and that the CA erroneously found negligence despite unrebutted evidence of proper diligence (including attempts to open a bank vault and Central Bank regulations discouraging off-premises storage), and despite the asserted impossibility of obtaining insurance against robbery.

Standard of Review and Scope of Supreme Court Review

Under Rule 45, the Supreme Court’s review is limited to errors of law committed by the appellate court; factual findings of the appellate court are generally conclusive unless conflicting or contradictory with trial court findings. The Court accepted the CA’s factual determinations only insofar as the record and applicable legal standards supported them.

Corporate Veil Piercing: Rationale and Findings

The Supreme Court affirmed the CA’s piercing of the corporate veil. It applied the established principle that corporate personality may be disregarded when used as a shield to perpetrate fraud or to confuse legitimate issues. The record showed that pawnshop receipts continued to bear the proprietor’s name (“Agencia de R. C. Sicam”) even after alleged incorporation, creating the impression that respondents dealt with Sicam personally. A letter by petitioners’ counsel to the Central Bank also referred to Sicam as proprietor. The Court rejected petitioners’ reliance on respondents’ Amended Complaint allegation that the corporation was the owner: such judicial admissions may be contradicted when shown to be taken out of context or made through palpable mistake. Petitioners had raised the real-party-in-interest issue at trial, moved to dismiss as to Sicam, and litigated the question; thus, liability of Sicam was properly before the courts and the CA correctly applied veil-piercing to hold him liable with the corporation.

Fortuitous Event Doctrine and Burden of Proof

The Court reviewed the elements for a fortuitous event under Article 1174 of the Civil Code and related jurisprudence: (a) independence from human will; (b) impossibility of foreseeability or of avoidance if foreseen; (c) occurrence rendering normal performance impossible; and (d) absence of participation in aggravating the loss. The party invoking a fortuitous event bears the burden of proof. The Court emphasized that fortuitous event relief requires absence of concurrent fault or negligence.

Negligence, Foreseeability, and Petitioners’ Conduct

The Supreme Court found petitioners failed to prove absence of negligence. Testimony by petitioner Sicam established that petitioners had contemplated a bank vault (discouraged by the Central Bank) and thus had foreseen the risk of robbery. Crucially, Sicam admitted the vault was open during business hours at the time of the robbery and that robbers entered by pretending to pawn an item, which allowed them access. The alleged security guard was not presented as a witness, and no employees who witnessed the robbery testified. The Court held these facts established lack of adequate precaution and vigilance, supporting a finding of concurrent or contributory negligence under Article 1170 of the Civil Code. The Court rejected the sufficiency of the police blotter alone to prove robbery as absolving petitioners from fault.

Pawnshop Duty of Care and Insurance Issue

The Court examined statutory and regulatory duties: Article 2123 (special laws and regulations for pawnshops), Article 2099 (creditor to take care of the thing pledged with the diligence of a good father of a family), and Article 1173 (diligence required by the nature of the o

Case Syllabus (G.R. No. 159617)

Court, Date and Reference

Decision of the Supreme Court, Third Division, penned by Justice Austria‑Martinez, concurred in by Justices Ynares‑Santiago (Chairperson), Chico‑Nazario, and Nachura.
G.R. No. 159617; reported at 556 Phil. 278.
Decision promulgated August 8, 2007.
Petition for Review on Certiorari from the Court of Appeals Decision dated March 31, 2003 and Resolution dated August 8, 2003 in CA G.R. CV No. 56633.

Parties and Posture

Petitioners: Roberto C. Sicam, Jr. (hereafter “petitioner Sicam”) and Agencia de R.C. Sicam, Inc. (hereafter “petitioner corporation”).
Respondents: Lulu V. Jorge (hereafter “respondent Lulu”) and Cesar Jorge.
Nature of case: Civil action for indemnification for loss of pawned jewelry, and claims for actual, moral and exemplary damages and attorney’s fees; appellate review by petitioners of Court of Appeals reversal of Regional Trial Court decision.

Relevant Dates and Chronology of Key Events

April 20, 1987: Alleged incorporation date of Agencia de R.C. Sicam, Inc.
September to October 1987: Respondent Lulu pawned several pieces of jewelry to the pawnshop located at No. 17 Aguirre Ave., BF Homes Parañaque to secure a loan totalling P59,500.00.
October 19, 1987: Robbery at the pawnshop; petitioner Sicam sent respondent Lulu a letter informing her of loss of jewelry same date.
November 2, 1987: Respondent Lulu sent petitioner Sicam a letter asserting that pawned jewelry were deposited with Far East Bank and requesting preparation for withdrawal on November 6, 1987.
November 6, 1987: Respondent Lulu requested withdrawal (per correspondence); petitioner Sicam failed to return jewelry.
September 28, 1988: Complaint filed with the Regional Trial Court (RTC), Makati (Civil Case No. 88‑2035).
November 8, 1989: RTC denied petitioner Sicam’s Motion to Dismiss.
January 12, 1993: RTC Decision dismissing respondents’ complaint and petitioners’ counterclaim.
March 31, 2003: Court of Appeals reversed RTC and ordered payment of P272,000.00 plus attorney’s fees P27,200.00.
August 8, 2003: CA denied petitioners’ motion for reconsideration.
August 8, 2007: Supreme Court affirmed CA Decision except for the insurance aspect; costs against petitioners.

Facts as Found in the Record

Respondent Lulu pawned multiple jewelry items between September and October 1987 at the pawnshop identified on receipts as “Agencia de R. C. Sicam.”
On October 19, 1987, two armed men entered the pawnshop and removed cash and jewelry from the pawnshop vault; the Parañaque Police blotter contains an entry describing the robbery (robbers with guns, employees forced to lie on floor, items taken, escape in a Marson Toyota).
Petitioner Sicam notified respondent Lulu by letter the same day of the alleged robbery and loss.
Respondent Lulu asserted by letter (Nov. 2, 1987) that the pawned jewelry had been deposited with Far East Bank and that customary practice required advance notice before withdrawal so the pawnshop could retrieve items from the bank.
Respondents amended their complaint to include petitioner corporation as defendant.
Petitioner Sicam asserted he was not the real party in interest because the pawnshop had been incorporated on April 20, 1987 as Agencia de R.C. Sicam, Inc.
Pawnshop receipts issued to respondents bore the words “Agencia de R. C. Sicam” and did not indicate specifically that the pawnshop was owned by the corporation.
Petitioner Sicam testified that he had contemplated opening a vault with a nearby bank when he started the pawnshop business in 1983 but was discouraged by the Central Bank, directing that pawned items be stored in a vault inside the pawnshop; he also claimed a security guard was present at the time of the robbery and admitted the vault was open when the robbery occurred.
There was no testimony from the alleged security guard or from employees present during the robbery to corroborate petitioner Sicam’s account.
Petitioners presented a police report (Parañaque Police Station blotter excerpt) of the robbery as evidence.

Procedural History Below

RTC, Makati, Branch 62: dismissed respondents’ complaint and petitioners’ counterclaim (Jan. 12, 1993); held petitioner Sicam not personally liable due to corporate personality; found petitioner corporation not liable because loss was occasioned by robbery, a fortuitous event.
Court of Appeals: reversed RTC (Mar. 31, 2003), ordered appellees (petitioners) to pay appellants (respondents) actual value of lost jewelry P272,000.00 and attorney’s fees of P27,200.00; pierced corporate veil and held petitioner Sicam personally liable together with petitioner corporation; found petitioners negligent and at least contributorily negligent; CA disagreed with Austria v. Court of Appeals' applicability and emphasized foreseeability of robbery in pawnshop business.
Supreme Court: denied petition; affirmed CA Decision except as to insurance consideration; imposed costs against petitioners.

Issues Presented (as framed and argued)

Whether the Court of Appeals erred in adopting respondents’ arguments and thereby finding petitioner Sicam personally liable despite corporate incorporation.
Whether the Court of Appeals erred in finding petitioners negligent and liable for loss of pawned jewelry, given the alleged fortuitous character of the robbery and petitioners’ asserted observance of required diligence.
Ancillary issue regarding statutory/regulatory requirement to insure pawned articles against burglary and whether failure to insure constitutes negligence.

Petitioners’ Primary Contentions / Assignments of Error

The CA reproduced respondents’ arguments without independent analysis, adopting palpably unsustainable points and warranting reversal.
Respondents’ Amended Complaint conclusively asserted that Agencia de R.C. Sicam, Inc. is the owner of the pawnshop; thus CA could not rule ag