Sicam v. Jorge (2007): A Pawnshop Robbery Is Not a Fortuitous Event

In 1987, a customer pawned several pieces of jewelry at a pawnshop to secure a loan. Later that year, two armed men entered the pawnshop and took the cash and jewelry inside the vault. The pawnshop told the customer that her jewelry was lost in the robbery.

The customer and her husband sued the pawnshop and its owner for the value of the jewelry and for damages. The pawnshop said the robbery was a fortuitous event that freed it from liability. The trial court agreed and dismissed the complaint. The Court of Appeals reversed. It held the pawnshop and its owner liable and ordered them to pay "the actual value of the lost jewelry amounting to P272,000.00, and attorney' fees of P27,200.00." The pawnshop and its owner appealed.

Was the robbery a fortuitous event that freed the pawnshop from liability for the pawned jewelry?

The Supreme Court affirmed the Court of Appeals, except on the question of insurance.

What a fortuitous event is. Under Article 1174 of the Civil Code, no person is responsible for events that could not be foreseen or that, though foreseen, were inevitable, except where the law, the contract or the nature of the obligation says otherwise. The Court said that "Fortuitous events by definition are extraordinary events not foreseeable or avoidable." It listed four elements that must concur:

1. the cause of the event or of the failure to comply must be independent of human will;
2. it must be impossible to foresee the event or, if it can be foreseen, impossible to avoid it;
3. the event must make it impossible for the debtor to fulfill the obligation in a normal manner; and
4. the obligor must be free from any participation in the aggravation of the injury or loss.

Burden and negligence. The Court said the burden of proving that a loss was due to a fortuitous event rests on the one who invokes it, and that the person must have committed no negligence or misconduct that may have caused the loss.

Robbery is not enough. The Court held that robbery per se is not a fortuitous event and does not rule out negligence. The pawnshop owner admitted that the vault was open at the time of the robbery. The Court said this admission was "clearly a proof of petitioners' failure to observe the care, precaution and vigilance that the circumstances justly demanded." It also applied the pledge provisions of the Civil Code then in force, which required the creditor to take care of the thing pledged with the diligence of a good father of a family.

Insurance. The Court disagreed with the Court of Appeals on one point. It said that at the time of the robbery, the rules on pawnshops no longer required pawned items to be insured against burglary, so the lack of such insurance could not be counted as negligence.

A fortuitous event must be independent of human will, impossible to foresee or avoid, must make normal performance impossible, and the obligor must not have contributed to the loss; the one who invokes it must prove it, and robbery per se is not a fortuitous event when the loss was made possible by the obligor's negligence.

Sicam is often cited for the elements of a fortuitous event. It shows that a business holding other people's property cannot escape liability by pointing to a crime, if its own lack of care made the loss possible.

In 2007, the Court relied on Articles 2099 and 2123 of the Civil Code, the pledge provisions it cited for pawnshops. Both are among the provisions listed in Section 66 of Republic Act No. 11057 (2018), the Personal Property Security Act, so they are not described here as the current rules for pawnshops. Article 1174 is not among the provisions that section lists.

For a plain answer on when a fortuitous event excuses a party, read fortuitous event and force majeure.

Made-up illustration: Nora leaves her laptop for repair at a shop. The shop is robbed one night after the staff forgot to lock the storage room. Following Sicam, the robbery alone would not free the shop from liability, because its own lack of care made the loss possible.

Read the full decision on the Supreme Court E-Library (link in the sources below). For a claim about lost or damaged property, see where to find legal help.