You are on page 1of 10

[G.R. No. 177921. December 4, 2013.

]

METRO CONCAST STEEL CORPORATION, SPOUSES JOSE S. DYCHIAO
AND TIU OH YAN, SPOUSES GUILLERMO AND MERCEDES DYCHIAO, AND
SPOUSES VICENTE FILOMENA
DYCHIAO, petitioners, vs. ALLIED BANK CORPORATION,respondent.

RESOLUTION

PERLAS-BERNABE, J : p

Assailed in this petition for review on certiorari 1 are the Decision 2 dated February 12, 2007
and the Resolution 3 dated May 10, 2007 of the Court of Appeals (CA) in CA-G.R. CV No.
86896 which reversed and set aside the Decision 4 dated January 17, 2006 of the Regional
Trial Court of Makati City, Branch 57 (RTC) in Civil Case No. 00-1563, thereby ordering
petitioners Metro Concast SteelCorporation (Metro Concast), Spouses Jose S. Dychiao and
Tiu Oh Yan, Spouses Guillermo and Mercedes Dychiao, and Spouses Vicente and Filomena
Dychiao (individual petitioners) to solidarily pay respondent Allied Bank Corporation
(Allied Bank) the aggregate amount of P51,064,094.28, with applicable interests and penalty
charges.
The Facts
On various dates and for different amounts, Metro Concast, a corporation duly organized and
existing under and by virtue of Philippine laws and engaged in the business of
manufacturing steel, 5 through its officers, herein individual petitioners, obtained several loans
from Allied Bank. These loan transactions were covered by a promissory note and separate
letters of credit/trust receipts, the details of which are as follows:
Date Document Amount

December 13, 1996 Promissory Note No. 96-21301 6 P2,000,000.00
November 7, 1995 Trust Receipt No. 96-202365 7 P608,603.04
May 13, 1996 Trust Receipt No. 96-960522 8 P3,753,777.40
May 24, 1996 Trust Receipt No. 96-960524 9 P4,602,648.08
March 21, 1997 Trust Receipt No. 97-204724 10 P7,289,757.79
June 7, 1996 Trust Receipt No. 96-203280 11 P17,340,360.73
July 26, 1995 Trust Receipt No. 95-201943 12 P670,709.24
August 31, 1995 Trust Receipt No. 95-202053 13 P313,797.41
November 16, 1995 Trust Receipt No. 96-202439 14 P13,015,109.87
July 3, 1996 Trust Receipt No. 96-203552 15 P401,608.89
June 20, 1995 Trust Receipt No. 95-201710 16 P750,089.25
December 13, 1995 Trust Receipt No. 96-379089 17 P92,919.00
December 13, 1995 Trust Receipt No. 96/202581 18 P224,713.58

The interest rate under Promissory Note No. 96-21301 was pegged at 15.25% per annum
(p.a.), with penalty charge of 3% per month in case of default; while the twelve (12) trust receipts
uniformly provided for an interest rate of 14% p.a. and 1% penalty charge. By way of security,
the individual petitioners executed several Continuing Guaranty/Comprehensive Surety
Agreements 19 in favor ofAllied Bank. HIaTDS

Petitioners failed to settle their obligations under the aforementioned promissory note and trust
receipts, hence, Allied Bank, through counsel, sent them demand letters, 20 all dated December
10, 1998, seeking payment of the total amount of P51,064,093.62, but to no avail.

including costs of suit. During the negotiations with Peakstar. The Issue Before the Court At the core of the present controversy is the sole issue of whether or not the loan obligations incurred by the petitioners under the subject promissory note and various trust receipts have already been extinguished. . Peakstar Oil Corporation (Peakstar). Saw himself who drafted the MoA and subsequently received 29 the P2. claiming to have paid the total sum of P65. however. In 2002. petitioners offered the equipment for sale. 2002 (MoA) was drawn between Metro Concast. Saw.000.000. to Allied Bank.000. secured by bank guarantees from Bankwise. Atty.00 each from Camiling. P1. and (b) since Allied Bank was the party that accepted the terms and conditions of payment proposed by Peakstar. 23 petitioners admitted their indebtedness to Allied Bank but denied liability for the interests and penalties charged.000. a member of Allied Bank's legal department.00 to be paid in cash and the other P2. 30 Claiming that the subject complaint was falsely and maliciously filed.00 to be paid in two (2) post-dated checks of P1.00. Hence. petitioners must therefore be deemed to have settled their obligations to Allied Bank. Peakstar reneged on all its obligations under the MoA. which the latter. directly affecting the business of Metro Concastand eventually leading to its cessation. represented by petitioner Jose Dychiao. and Peakstar.00 by way of earnest money — P2.000. refused.00 cash and the two (2) Bankwise post-dated checks worth P1. Inc.073. In this regard.000.00 in cash to the wife of Jose Dychiao. petitioners claimed that Atty.000.000. 27 Unfortunately.00 for each individual petitioner.500. P500.000. Saw turned over only the two (2) checks and P1.00 to be paid in ten (10) monthly installments of P3. 26 and (b) the balance of P30.000. acted as the latter's agent. Accordingly.000.000. However. docketed as Civil Case No.Thus.000. through Atty. expressed interest in buying the scrap metal.00. Eventually.000. payable as follows: (a) P4. under which Peakstar obligated itself to purchase the scrap metal for a total consideration of P34.000. with the alleged conformity of Allied Bank. through Camiling.000.000. P25. the equipment was reduced into ferro scrap or scrap metal over the years. Instead.73 by way of interest charges for the period covering 1992 to 1997.000. a Memorandum of Agreement 25 dated November 8. represented by one Crisanta Camiling (Camiling).00 in favor of Metro Concast and at least P25.00 for other litigation expenses. Allied Bank was prompted to file a complaint for collection of sum of money 21 (subject complaint) against petitioners before the RTC.000.000. petitioner Jose Dychiao (Jose Dychiao) testified 28 during trial that it was Atty. In their second 22 Amended Answer. petitioners offered the sale of MetroConcast's remaining assets.00 as exemplary damages.000. To bolster their defense.00 as attorney's fees. petitioners prayed for the award of moral damages in the amount of P20. Peter Saw (Atty.00 each.000.000. (Bankwise) in the form of separate post-dated checks.000. in order to settle their debts with Allied Bank.055. consisting of machineries and equipment.000.000.Allied Bank advised them to sell the equipment and apply the proceeds of the sale to their outstanding obligations.000. Saw). but since there were no takers.000. petitioners asseverated that: (a) their failure to pay their outstanding loan obligations to Allied Bank must be considered as force majeure. 00-1563. 24 They also alleged that the economic reverses suffered by the Philippine economy in 1998 as well as the devaluation of the peso against the US dollar contributed greatly to the downfall of the steel industry.

such that the existence. 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. Besides. Petitioners classify Peakstar's default as a form of force majeure in the sense that they have. compensation or novation. modified or novated by the terms and conditions in the MoA. the issue on whether or not Allied Bank expressed its conformity to the assets sale transaction between Metro Concast and Peakstar (as evidenced by the MoA) is actually irrelevant to the issues related to petitioners' loan obligations to the bank. The mere difficulty to foresee the happening is not impossibility to foresee the same. At the outset. Atty. use to pay their own loan obligations to Allied Bank. the confusion or merger of the rights of creditor and debtor. petitioners essentially argue that their loan obligations to Allied Bank had already been extinguished due to Peakstar's failure to perform its own obligations to Metro Concast pursuant to the MoA. ADETca Petitioners' arguments are untenable. the same is clearly not "impossible" to foresee or even an event which is "independent of human will. In any case. in any way. To constitute a fortuitous event. It is therefore. if it can be foreseen. as the CA pointed out. as earlier stated. said contracts should be treated separately and distinctly from each other. beyond their control. as is commonly believed but it must be one impossible to foresee or to avoid. As discussed in Sicam v. suffice it to state that Peakstar's breach of its obligations to Metro Concast arising from the MoA cannot be classified as a fortuitous event under jurisprudential formulation. performance or breach of one would not depend on the existence. The Court's Ruling Article 1231 of the Civil Code states that obligations are extinguished either by payment or performance. and. They further state that AlliedBank was equally bound by Metro Concast's MoA with Peakstar since its agent. anent petitioners' reliance on force majeure. (d) the obligor must be free from any participation in the aggravation of the injury or loss. lost the funds they expected to have received from the Peakstar (due to the MoA) which they would. the performance or breach of the MoA bears no . the Court must dispel the notion that the MoA would have any relevance to the performance of petitioners' obligations to Allied Bank. 40 (Emphases supplied) While it may be argued that Peakstar's breach of the MoA was unforeseen by petitioners." Neither has it been shown that said occurrence rendered it impossible for petitioners to pay their loan obligations to Allied Bank and thus. actively represented it during the negotiations and execution of the said agreement. Saw. negates the former's force majeure theory altogether. (c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a normal manner. while petitioners' obligations to Allied Bank arose from various loan transactions. performance or breach of the other. Now. Jorge: 39 Fortuitous events by definition are extraordinary events not foreseeable or avoidable. the loss of the thing due. The MoA is a sale of assets contract. cannot be deemed as a sustainable defense to exculpate petitioners from their loan obligations to Allied Bank. In the present case. In the foregoing respect. (b) it must be impossible to foresee the event that constitutes the caso fortuito or. in turn. the condonation or remission of the debt. Absent any showing that the terms and conditions of the latter transactions have been. not enough that the event should not have been foreseen or anticipated. the fact of Allied Bank's representation has not been proven in this case and hence. it must be impossible to avoid.

Considering. 1998. [G. It is. must perforce stand. From the undisputed facts in this case and from the facts and conditions that very probably cannot be charged hereafter.876. 1998. however. (Metro Concast Steel Corp.‖ After 27 years. No. it is our present opinion that such action is itself prescribed. [December ||| 4. 2013]. In this regard.R. The mortgage in question. The fact of the matter is that petitioners' loan obligations to AlliedBank remain subsisting for the basic reason that the former has not been able to prove that the same had already been paid 41 or. 722 PHIL 698-710) Seone v. The obligation seems to leave the duration of the period for the payment thereof to the will of the debtor. The rest of the appellate court's dispositions stand. Franco. extinguished. they being separate and distinct sources of obligation. 177921 (Resolution). ISSUE: Whether or not the creditor may demand immediate performance of the obligation. Ordinarily when an action of this sort is dismissed the plaintiff may at once begin his action for the purpose of fixing a date upon which the instrument shall become due. nothing has been paid either of the principal or of the interest. 1998. which is to secure the payment of the sum of P4. Such being the case. concur. the computation of the applicable interests and penalty charges should be reckoned only from such date. The Decision dated February 12.01. thatAllied Bank's extra-judicial demand on petitioners appears to have been made only on December 10. Velasco. that the obligation is not due and payable until an action has been commenced by the mortgagee against the mortgagor for the purpose of having the court fix the date on and after which the instrument shall be payable and the date of maturity is fixed in pursuance thereof. 2007 of the Court of Appeals in CA-G. HELD: In such cases this court has held. Carpio. The judgment was affirmed. holding that the right of action upon the mortgage debt which was the basis of the claim presented against the plaintiff’s estate had already prescribed. It appears also that it was the intention of the instrument to give the debtor time within which to pay the obligation. No. * Brion and Perez. the debtor agreeing to pay the sum ―little by little.relation to the performance or breach of the subject loan transactions. 86896 are hereby AFFIRMED with MODIFICATION reckoning the applicable interests and penalty charges from the date of the extrajudicial demand or on December 10. JJ. 124922. 2007 and Resolution dated May 10.R. clear that this action is premature.. in any way. on several occasions. petitioners' liability. WHEREFORE.R.. Allied Bank Corp. The instrument has been sued upon before it is due. Until such action was prosecuted no suit could be instrument. as action should have been brought for the purpose of having the court set a date on which the instrument should become due and payable. Jr. 24 Phil 309 FACTS: This is an appeal from a judgment of the Court of First Instance of Zamboanga in favor of the plaintiff. with cost against the appellant. as adjudged by the CA.. TcEAIH SO ORDERED. CV No. G. v. the petition is DENIED. therefore. June 22. The action must accordingly be dismissed. given that there is no date stipulated by the parties as to when it should become due and payable.] .

the latter undertaking to return the vehicle on July 21. BURDEN OF PROOF. JIMMY CO. petitioner. the latter could not release the vehicle as its battery was weak and was not yet replaced. Samson S. It ruled that the vehicle was lost due to a fortuitous event. Article 1165 of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the delivery. Parungao for petitioner. petitioner entrusted his car to private respondent for some repair including battery replacement. 1990. 1990. doing business under the name & style DRAGON METAL MANUFACTURING. EVIDENCE. respondents. When petitioner sought to reclaim his car in the afternoon of July 24. RESTS ON HIM WHO INVOKES FORTUITOUS EVENT. In accordance with the Rules of Evidence. SYNOPSIS On July 18. the Supreme Court held that carnapping per se cannot be considered as a fortuitous event. Lorenzo G.. the Court of Appeals reversed the lower court's ruling. However. vs. carnapping entails more than the mere forceful taking of another's property. — It is a not a defense for a repair shopof motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its possession was due to carnapping. On appeal. Carnapping per se cannot be considered as a fortuitous event. the burden of proving that the loss was due to a fortuitous event rests on him who invokes it. COURT OFAPPEALS and BROADWAY MOTOR SALES CORPORATION. Alcantara for private respondent. found the latter guilty of delay in the performance of its obligation and held it liable to petitioner for the value of the lost vehicle and its accessories plus interest and attorney's fees. Even assuming arguendo that carnapping was duly established as a fortuitous event. To be considered as such. 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. he was told that it was carnapped earlier that morning while being road-tested by an employee of private respondent. SYLLABUS DACcH 2. The fact that a thing was unlawfully and forcefully taken from another's rightful possession. the battery was not installed and the delivery of the car was rescheduled to July 24. The RTC. does not automatically give rise to a fortuitous event. It must be proved and established that the event was an act of God or was done solely by third . In reversing the Court of Appeals. as in cases of carnapping. Left with no option. Hence this petition for review. 1990. still private respondent cannot escape liability. 1990. ID. To be considered as such. 1990 fully serviced and supplied in accordance with the job contract. carnapping entails more than the mere forceful taking of another's property. in a suit for damages filed by petitioner against private respondent. But came July 21. petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the same day.

— It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil Code. still working against private respondent is the legal presumption under Article 1265 that its possession of the thing at the time it was lost was due to its fault. the exempting circumstances — earthquake. to which only private respondent is privy. private respondent's possession at the time of the loss is undisputed. — Assuming further that there was no delay.. REPAIR SHOPS ARE REQUIRED TO SECURE AN INSURANCE POLICY COVERING THE MOTOR VEHICLE ENTRUSTED FOR REPAIR. Moreover. — Even assuming arguendo that carnapping was duly established as a fortuitous event. 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.. A police reportof an alleged crime. private respondent is answerable for the loss. However. such occasion cannot be construed as waiver of petitioner's right to hold private respondent liable because the car was unusable and thus. Moreover. repair shops are required to first register with the Department of Trade and Industry (DTI) and to secure an insurance policy for the "shop covering the property entrusted by its customer for repair. Consequently. LEGAL PRESUMPTION THAT THE LOSS OF A THING WAS DUE TO THE FAULT OF THE ONE IN POSSESSION AT THE TIMEOF THE LOSS. service or maintenance" as an pre- requisite for such registration/accreditation. liability attaches even if the loss was due to a fortuitous event if "the nature of the obligation requires the assumption of risk. the burden shifts to the possessor who needs to present controverting evidence sufficient enough to overcome that presumption.parties and that neither the claimant nor the person alleged to be negligent has any participation. Carnapping does not foreclose the possibility of fault or negligence on the part of private respondent. Article 1165 of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the delivery. flood. 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 is a normal business risk for those engaged in the repair of motor vehicles. ID. AN OBLIGOR GUILTY OF DELAY IS RESPONSIBLE EVEN FOR A FORTUITOUS EVENT UNTIL HE HAS EFFECTED DELIVERY. VIOLATION OF THIS STATUTORY DUTY CONSTITUTES NEGLIGENCE PER SE. ID. That is why. as claimant. CIVIL LAW. storm or other natural calamity — when the presumption of fault is not applicable do not concur in this case. All that petitioner needs to prove. having failed to rebut the presumption and since the case does not fall under the exceptions. In this case. Violationof this statutory duty constitutes .. petitioner had no option but to leave it. ID. no other evidence was presented by private respondent to the effect that the incident was not due to its fault. This presumption is reasonable since he who has the custody and care of the thing can easily explain the circumstances of the loss. OBLIGATIONS AND CONTRACT. In this case. 3. still private respondent cannot escape liability. ID. is the simple fact that private respondent was in possession ofthe vehicle at the time it was lost. The vehicle owner has no duty to show that the repair shop was at fault.. 4. Accordingly. does not suffice to establish the carnapping. other than the police report of the alleged carnapping incident. 5. For just as the owner is exposed to that risk so is the repair shop since the car was entrusted to it. In accordance with the Rules of evidence. Petitioner's agreement to the rescheduled delivery does not defeat his claim as private respondent had already breached its obligation. private respondent was already in delay as it was supposed to deliver petitioner's car three (3) days before it was lost.

it presupposes that its shop is covered by insurance from which it may recover the loss. For its part. 1990. private respondent is obliged not only to repair the vehicle but must also provide the customer with some form of security for his property over which he losses immediate control. to recover or vindicate and to the fruits — is a crippled owner. Manila. to use and enjoy. the battery was not installed and the delivery of the car was rescheduled to July 24. he was told that it was carnapped earlier that morning while being road-tested by private respondent's employee along Pedro Gil and Perez Streets in Paco. However. AECDHS DECISION MARTINEZ.negligence per se. When petitioner sought to reclaim his car in the afternoon of July 24. Having taken custody of the vehicle. Failure of the repair shop to provide security to a motor vehicle owner would leave the latter at the mercy of the former. the latter could not release the vehicle as its battery was weak and was not yet replaced. 6. distribution and repair of motor vehicles — for the following job repair services and supply of parts: Private respondent undertook to return the vehicle on July 21.397. to accessories. This value may be recovered without prejudice to such other damages that a claimant is entitled under applicable laws. 1990 fully serviced and supplied in accordance with the job contract. 1990. on the assumption that private respondent's repair business is duly registered. it should be based on the fair market value that the property would command at the time it was entrusted to it or such other value as agreed upon by the parties subsequent to the loss. An owner who cannot exercise the seven (7) juses or attributes of ownership — the right to possess. — One last thing. to dispose or alienate. then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be attributed. to abuse or consume. private respondent contended that it has no liability because the car . Left with no option.00. petitioner himself bought a new battery nearby and delivered it to private respondent for installation on the same day. After petitioner paid in full the repair bill in the amount of P1. Private respondent said that the incident was reported to the police.. J : p On July 18. But came July 21. If private respondent can recover from its insurer.. Moreover. then the presumption ofnegligence applies. 3 private respondent issued to him a gate pass for the release ofthe vehicle on said date. if the shop is not registered. petitioner filed a suit for damages against private respondent anchoring his claim on the latter's alleged negligence. Having failed to recover his car and its accessories or the value thereof. 1990 or three (3) days later. Such recoverable value is fair and reasonable considering that the value of the vehicle depreciates. LIABILITY OF REPAIR SHOP ON LOST VEHICLES AND ACCESSORIES SHOULD BE BASED ON ITS FAIR MARKET VALUE AT THE TIME IT WAS ENTRUSTED OR SUCH VALUE AS AGREED UPON SUBSEQUENT TO THE LOSS. With respect to the value of the lost vehicle and its accessories for which the repair shop is liable. petitioner entrusted his Nissan pick-up car 1988 model 1 to private respondent — which is engaged in the sale. 1990. ID. Otherwise. ID.

1990 'approximately two (2) years and five (5) months from the date of the purchase'.00 which amount was received and duly receipted by the defendant company. does not automatically give rise to a fortuitous event. it was unavoidable for the court to resolve the case. To be considered as such. Petitioner's imputation ofnegligence to private respondent is premised on delay which is the very basis of the former's complaint.was lost as a result of a fortuitous event — the carnapping. 5 After trial. During pre-trial. Thus. i. Contrary to the CA's pronouncement. the principal query raised is whether a repair shop can be held liable for the loss of a customer's vehicle while the same is in its custody for repair or other job services? The Court resolves the query in favor of the customer. the Court of Appeals (CA) reversed the ruling of the lower court and ordered the dismissal of petitioner's damage suit.00 without accessories. carnapping entails more than the mere forceful taking of another's property. the rule that the determination of issues at a pre-trial conference bars the consideration of other issues on appeal. the parties agreed that: "(T)he cost of the Nissan Pick-up four (4) door when the plaintiff purchased it from the defendant is P332. and (2) the vehicle was lost due to a fortuitous event. stereo speaker. the burden of proving that the loss was due to a fortuitous event rests on him who invokes it 10 — which in this case is the private respondent. particularly the question of negligence without considering whether private respondent was guilty ofdelay in the performance of its obligation. It is agreed that the vehicle was lost on July 24.e. no other . 1990 in the amount of P1. amplifier which amount all in all to P20. However. 6 On appeal.397. as in cases of carnapping. other than the police report of the alleged carnapping incident.00 excluding accessories which were installed in the vehicle by the plaintiff consisting of four (4) brand new tires. magwheels. though not specifically mentioned as an issue at the pre-trial may be tackled by the court considering that it is necessarily intertwined and intimately connected with the principal issue agreed upon by the parties. First. 7 The CA ruled that: (1) the trial court was limited to resolving the issue of negligence as agreed during pre-trial. It was also agreed that the present value of a brand new vehicle of the same type at this time is P425. except those that may involve privilege or impeaching matter." 4 They likewise agreed that the sole issue for trial was who between the parties shall bear the loss of the vehicle which necessitates the resolution of whether private respondent was indeed negligent.000. On the merits. It was agreed that the plaintiff paid the defendant the cost of service and repairs as early as July 21. The question of delay.000. on the technical aspect involved. Carnapping per se cannot be considered as a fortuitous event.500. 9 In accordance with the Rules of evidence. 8 is inapplicable to this case. hence it cannot pass on the issue of delay. the court a quo found private respondent guilty of delay in the performance of its obligation and held it liable to petitioner for the value of the lost vehicle and its accessories plus interest and attorney's fees. 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. who will bear the loss and whether there was negligence. In a petition for review to this Court.00. The fact that a thing was unlawfully and forcefully taken from another's rightful possession. It is a 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.

as claimant. the burden shifts to the possessor who needs to present controverting evidence sufficient enough to overcome that presumption. In this case. it presupposes that its shop is covered by insurance from which it may recover the loss. Accordingly. still private respondent cannot escape liability. Failure of the repair shop to provide security to a motor vehicle owner would leave the latter at the mercy of the former. to use and enjoy. Petitioner's agreement to the rescheduled delivery does not defeat his claim as private respondent had already breached its obligation. The vehicle owner has no duty to show that the repair shop was at fault. the exempting circumstances — earthquake. to dispose or alienate. Moreover. still working against private respondent is the legal presumption under Article 1265 that its possession of the thing at the time it was lost was due to its fault. repair shops are required to first register with the Department of Trade and Industry (DTI) 15 and to secure an insurance policy for the "shop covering the property entrusted by customer for repair. Moreover. such accession cannot be construed as waiver of petitioner's right to hold private respondent liable because the car was unusable and thus. to recover or vindicate and to the fruits — 18 is a crippled owner. to which only private respondent is privy. petitioner had no option but to leave it. 16 Violation of this statutory duty constitutes negligence per se. does not suffice to establish the carnapping. is the simple fact that private respondent was in possession of the vehicle at the time it was lost. It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil Code. Even assuming arguendo that carnapping was duly established as a fortuitous event. An owner who cannot exercise the seven (7) juses or attributes of ownership — the right to possess. service or maintenance" as a pre-requisite for such registration/accreditation. Assuming further that there was no delay. private respondent's possession at the time of the loss is undisputed. If private respondent can recover from its insurer. to abuse or consume. In this case. Consequently. private respondent is answerable for the loss. flood. private respondent is obliged not only to repair the vehicle but must also provide the customer with some form of security for his property over which he loses immediate control. on the assumption that private respondent's repair business is duly registered. A police report of an alleged crime.Article 1165 11 of the New Civil Code makes an obligor who is guilty of delay responsible even for a fortuitous event until he has effected the delivery. 14 Carnapping is a normal business risk for those engaged in the repair of motor vehicles.evidence was presented by private respondent to the effect that the incident was not due to its fault. to accessories. storm or other natural calamity — when the presumption of fault is not applicable 13do not concur in this case. Moreover. For just as the owner is exposed to that risk so is the repair shop since car was entrusted to it. 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. 12 This presumption is reasonable since he who has the custody and care of the thing can easily explain the circumstances of the loss. private respondent was already in delay as it was supposed to deliver petitioner's car three (3) days before it was lost. All that petitioner needs to prove. then it would be unjustly enriched if it will not compensate petitioner . Carnapping does not foreclose the possibility of fault or negligence on the partof private respondent. 17 Having taken custody of the vehicle. liability attaches even if the loss was due to a fortuitous event if "the nature of the obligation requires the assumption of risk". having failed to rebut the presumption and since the case does not fall under the exceptions. That is why.

Otherwise. G. 1998].R. Such recoverable value is fair and reasonable considering that the value of the vehicle depreciates. [June 22. 353 PHIL 305-317) . No. then the presumption of negligence applies. SO ORDERED. This value may be recovered without prejudice to such other damages that a claimant is entitled under applicable laws. One last thing. With respect to the value of the lost vehicle and its accessories for which the repair shop is liable. it should be based on the fair market value that the property would command at the time it was entrusted to it or such other value as agreed upon by the parties subsequent to the loss. premises considered.to whom no fault can be attributed. Court of Appeals. 124922. ||| (Co v. if the shop is not registered. the decision of the Court Appeals is REVERSED and SET ASIDE and the decision of the court a quo is REINSTATED. WHEREFORE.