LA CAMPANA FOOD PRODUCTS, INC., PETITIONER, VS. THE COURT OF APPEALS, TIMOTHY M. ANG AND BETHLEHEM MANUFACTURING, INC., RESPONDENTS.

This is a petition for review on certiorari seeking
reversal of the decision of public respondent Court of Appeals dated March 18,
1991, in CA-G.R. CV No. 15605 which modified the decision of the Regional Trial
Court of Quezon City, in Civil Case No. Q-39428, dated August 26, 1987,
dismissing petitioner’s complaint and finding it liable to private respondents
for damages, attorney’s fees and litigation expenses.

The antecedent facts of this case are, as follows:

Petitioner La Campana Food Products, Inc. is the owner-lessor of
a warehouse type building located at 37 Baler St., SFDM, Quezon City. The building is of strong materials and
consisted of several partitions of concrete
or hollow blocks. Each partition was
occupied by the following respective lessees of petitioner company:

a. 1st partition: By
lessee Perflex Manufacturing Corporation under contract of lease dated May 18,
1981^[1]
and an addendum thereto dated May 31, 1982^[2] with
areas of 500 sq.m. and 98 sq.m. more or less;

b. 2nd partition: By
lessee Chromecraft Industries, Inc. under contract of lease dated January 30,
1982^[3]
with an area of 500 sq.m. more or less;

c. 3rd partition: By
private respondent Bethlehem Manufacturing, Inc. under contract of lease dated
June 3, 1981^[4]
with an area of 1,000 sq.m. more or less;

d. 4th and 5th partitions: By private respondent company under addendum to the contract of lease
dated July 11, 1983^[5] with an area of 500 sq.m. more or less;

e. 6th partition: By
lessee Concorde.^[6]

The contracts of lease, Exhibits “I” and “J,”
were executed by private
respondent Timothy M. Ang, who is the majority stockholder and director of
Bethlehem Manufacturing, Inc.^[7] which
is engaged in the knitting and garments business, with machineries and sewing
materials for knitting and manufacture of garments, hosiery, dresses and all kinds
of knitted and woven materials.^[8]

On August 1, 1983, at about 2:00 a.m., a fire broke out heavily
damaging petitioner’s building. Several
machineries, equipments and materials of private respondent company therein
were also heavily damaged and/or destroyed.

On August 24, 1983, petitioner filed a case for damages with
preliminary attachment against Chromecraft^[9] and
Perflex,^[10]
and on September 30, 1983, against private respondent company.^[11]

In all these three cases, the allegations in petitioner’s
complaints are substantially the same, especially the allegation on the
proximate cause of the fire,^[12] to
wit: “x x x the negligence of
defendants’ domestics and/or employees, some of whom were staying inside the
leased premises and were present during the fire, by storing within the leased premises flammable materials, in
gross violation of the lease agreement, and by failing to put up and/or install
the proper safeguards and equipments to prevent the occurrence of fire
therein.” In the present case, petitioner claimed that it suffered damages
in the amount of P415,584.00 representing actual damages and P83,116.80 for
attorney’s fees.

Traversing the allegations in the complaint, private respondents,
in their answer with compulsory counterclaims, alleged that the fire started
somewhere else and not in the premises leased by them and that they have not done any act or omission which,
factually or legally, renders them answerable for the fire and/or the resulting
damages. They interposed counterclaims
for P1,300,000.00 as actual damages due to the malicious filing by petitioner
of the complaint; P2,000,000.00 for moral damages; P50,000.00 for exemplary
damages and P100,000.00 as attorney’s fees.

Petitioner, at the inception of this case, was able to obtain a
writ of preliminary attachment on the properties of private respondent company
upon the filing of a bond furnished by Visayan
Surety and Insurance Corporation in the sum of P498,700.80, all done ex-parte as private respondents were not yet properly summoned.^[13]
The Sheriff was able to attach private respondents’ properties still located
inside the burnt building as well as on the
proceeds of the insurance claim, upon the request of petitioner. However, by virtue of the trial court’s order dated November 7, 1983,
discharging the attachment upon private respondents’ filing of a counterbond in
the amount of P498,700.00 furnished by Prudential Guarantee and Assurance,
Inc., the properties attached were released on November 10, 1983.^[14]

On August 26, 1987, the trial court rendered its decision, the
dispositive portion of which reads:^[15]

“WHEREFORE, premises considered, judgment is hereby rendered:

1. DISMISSING plaintiff’s complaint with costs against plaintiff;
and

2. ORDERING plaintiff to pay defendants-counterclaimants the following
amounts:

a. P900,000.00 as actual damages;

b. P10,000.00 as moral damages;

c. P10,000.00 as exemplary or corrective damages;

d. P50,000.00 as attorney’s fees; and

e. P5,000:00 as litigation expenses.

SO ORDERED.”

Not satisfied with said decision, both parties appealed before
public respondent Court of Appeals. On
March 18, 1991, respondent court rendered its decision, the dispositive portion
of which reads:^[16]

“PREMISES CONSIDERED, the decision appealed from is hereby
MODIFIED by deleting the award of P900,000.00 actual damages in favor of the
defendants-appellants and by increasing the award of moral damages from
P10,000.00 to P100,000.00.

SO ORDERED.”

Hence, the present petition for review on certiorari.

Petitioner assigns the following relevant errors committed by
respondent court:^[17]

1) In not rejecting as
inadmissible evidence, the exhibits (Exhs. “9” to “12,”
with submarkings and Exhs. “15” to “51,” with submarkings)
formally offered by private respondents,
consisting of mere xerox copies of documents purportedly marked
during the trial without proper comparison and verification that the xerox
copies are faithful
reproductions of the exhibits so marked, despite seasonable objection thereto;

2) In considering the
action as based on tort and not on breach of lease contracts;

3) In placing undue
reliance on the investigation reports of the police (Exh. “24”) and
the insurance adjuster (Exh. “21”);

4) In holding that the
testimonies of Marcelo Salatan, Eddie Luspo and Ricardo S. Tantongco are not
credible;

5) In not finding any
significance to the unusually high fire insurance coverage of P6 million
procured by private respondent company; and

6) That its monetary award
in favor of private respondent company lacks factual and legal bases.

Petitioner asseverates that what private
respondents formally offered, as Exhibits “9” to “12” and
“15” to “51,” with submarkings, were mere xerox copies of
documents purporting to have been marked as exhibits in the course of the
trial. Prior to such offer, no
comparison was made between the documents purportedly marked as exhibits and
the alleged xerox copies thereof, to establish their faithful reproduction;
that the cause of action against private respondents was founded on breach of
lease contracts rather than on tort; that the police and insurance adjuster’s
reports are hearsay because their findings, insofar as the origin and cause of
the fire are concerned, did not stem from personal knowledge but on information
from other persons who were not called to the witness stand; and that the
respondent court’s finding that the testimonies of Marcelo Salatan, Eddie Luspo
and Ricardo Tantongco, its President and General Manager, are not credible,
following the finding of Judge Tomas V. Tadeo who penned the decision but who
did not hear the testimonies of these witnesses, is unfounded and springs from
a gross misapprehension of the totality of their respective testimonies. Private respondent company, whose paid-up
capital is only P62,500.00, procured an unusually high fire insurance coverage
of P6,000,000.00 over the personal properties supposedly found inside the
leased premises. Lastly, the grant of
damages to private respondents is bereft of any factual or legal basis, and
contravenes well-settled jurisprudence.

The voluminous pleadings filed in this case notwithstanding, this
Court finds no reversible error in the decision of respondent court.

The issues raised by petitioner involve factual matters and the
rule in this jurisdiction as
held in Remalante v. Tibe, et al.,^[18] is that “only questions of law
may be raised in a petition for (review on) certiorari under Rule 45 of
the Revised Rules of Court. ‘The
jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals
is limited to reviewing and revising the errors of law imputed to it, its
findings of fact being conclusive’ [Chan v. Court of Appeals, G.R. No. L-27488,
June 30, 1970, 33 SCRA 737, reiterating a long line of decisions].”^[19]
The rule, admits of several exceptions as enumerated in Medina, et al. v. Asistio, etc., et al.,^[20] detailing instances when findings of
fact may be passed upon and reviewed by this Court.^[21]
Petitioner’s case, however, does not fall under any of these exceptions.

The respondent court’s ratiocination, being anchored on factual
and legal grounds, deserves Our affirmance.

With respect to petitioner’s first assignment of errors, while
Exhibits “9,” “10” and “11” (which are copies of
the complaint filed by petitioner
against Chromecraft and Perflex, and a copy of the amended complaint filed
against the latter) are mere xerox copies, respondent court noted that relevant
portions of said exhibits were read in evidence from certified true copies of
the aforementioned complaints.^[22]

As to Exhibit “12” (the lay-out of the premises leased
by private respondents which was sketched by insurance adjuster Victor Mariñas
and on which were indicated the locations of the knitting machines in the burnt
premises), the same had been sufficiently established in the testimony of
Mariñas.^[23]

Concerning Exhibits “16” and “17” and its
submarkings,^[24]
what is important are the nature and value of the stocks transferred to the
additional leased premises as testified to by Mariñas.^[25]

Exhibits “18” and “19” (which refer to items
evidenced by invoices but which
were burnt in the premises of private respondent company) were also identified
and testified to by Mariñas.^[26]
And so with Exhibits “18” to “23,” which were offered to
prove that there was no over-insurance by private respondent company.^[27]

Exhibit “24” (the final investigation report of the
Anti-Arson Composite Team, FD 11, Northern Police District) which is also
Exhibit “HH” for petitioner was identified by witness Arturo Martin
(who is a signatory to such exhibit) as a xerox copy of the original brought by
him to the Regional Trial Court (Branch 85) of Quezon City in the course of his
testimony in said court in a complaint filed by the former in connection with
the same fire incident.

As for Exhibits “25” to “46,” these were
offered merely to show that there were deliveries of supplies and equipments
immediately before the fire as testified to by witness Timothy Ang.^[28]

Exhibits “47” to “50” refer to firm offers
and corresponding cancellations made as the basis for private respondents’
demand for actual and consequential damages. These exhibits were identified by
Timothy Ang in the hearing of April 8, 1987.

Exhibit “51” (the retainer agreement) was also
identified by Ang in the course
of his testimony on April 8, 1987.

In view of the foregoing, as correctly held by respondent court,
the first assignment of error would not help the cause of petitioner even if it
were resolved in its favor. Moreover,
its objection is purely technical. It
failed to show any discrepancy between the exhibits marked during the trial and
those offered in evidence.

With regard to the second, third, fourth and fifth assigned
errors, again, respondent court correctly ruled on these issues.

Petitioner attempted to prove private respondent company’s negligence
with evidence to the effect that two days before the fire, Ricardo Tantongco
saw flammable materials in the leased premises after he was informed earlier by
his construction workers, namely, Marcelo Salatan and Eddie Luspo, of its
presence in said premises.

Salatan’s testimony, however, is not credible for a good number
of reasons. In one instance, he was
caught lying regarding his previous claim that he was not investigated by anybody regarding the fire.^[29]
Subsequently, he testified that he was. Witness his testimony, to wit:^[30]

Atty. Ortega:

Q    About
the question what made you say that you were not investigated in connection
with the fire involved in this case whereas according to your subsequent
testimony or previous testimony you were in fact asked so many questions by the
policeman and you said that you were asked these questions outside the compound
of La Campana in the afternoon of when?

A     I
cannot remember sir.

Q    You
mean to say you were not brought to any precinct or any headquarters where you
were asked questions by the
policeman?

A     I
was brought sir.

Even if Salatan’s testimony were credible, it could not be relied
upon to prove that the fire started simultaneously at Perflex, Chromecraft and
Bethlehem because when he saw the fire after having been awakened, the fire had
already affected one-half of the premises of the three establishments.^[31]

Neither is Ricardo Tantongco’s testimony, which at times was
conspicuously evasive, credible because he had manifested extreme bias against
private respondents. This is shown by the following:

1. His conclusion about
over-insurance is not only baseless but was reached without any attempt at
verification as shown by insurance
adjuster Mariñas’ findings;^[32]

2. He was not truthful
about the number of machines that he saw in the burnt premises;^[33]
and

3. His testimony that the
machines in the burnt premises were under repair and were not operating^[34]
is traversed by Mariñas who testified that the machines were brand new and were
being used just before the fire.^[35]

Hereunder is a sample of Tantongco’s testimony:^[36]

“Atty. Ortega:

Q    Did
you not go to any law enforcement agency to ask them to investigate the cause
of the fire?

A     I
did not ask.

Q How about any employee or officer of the plaintiff, have you not as a
president instructed any of them to go to a law enforcement agency to secure an
investigation of the cause of the fire?

A No, I did not.

Q Do you have any special reason for not
being interested to have a government enforcement (sic) or investigator find out
what is the cause of the fire?

A I know already, they are heavily insured, that is my conclusion.”

The allegation that the judge who heard
their testimonies and the one who penned the decision are not one and the same
does not deserve serious consideration for being raised for the first time in
this petition.^[37]

Aside from the testimony of insurance adjuster Victor Mariñas
that there was no over-insurance, private respondent company presented the
Anti-Arson’s Final Investigation Report which contained the following entry:^[38]

“FINDINGS: It appears on the final investigation as jointly conducted by
elements of the Anti-Arson Composite Team, this District, that this fire of accidental
cause and/or origin broke out at the Production Section of Perflex Mfg. Co.
Ltd. located at the ground floor.

x        x          x          x          x

Occular (sic) inspection conducted at the focal point of origin
shows no sign that the incident was deliberately set because of the very
extensive damage brought about by the fire. However, ashes and debris were collected at the scene and were forwarded
to the PC Crime Laboratory for examination, the result of which was negative
for inflammable substance, thereby ruling out incendiarism. Insurance coverage of these establishments
shows that it is not enough to cover up their actual total damages brought
about by this fire. With this findings,
it is honestly believed that the cause of fire was purely accidental.”

The said report had been assailed as hearsay for the reason that
the supporting affidavits and documents on which such report was based had not
been attached thereto. But the report
was submitted by government officials and personnel, with expertise in the line
of work they are doing, to investigate and report on the cause of the
fire. Their findings and conclusions
warrant the presumption of regularity and correctness. If petitioner believed that the conclusions
contained in the report is not true, then it is incumbent upon petitioner to
prove the contrary. The report as well
as the supporting affidavits are available for inspection and perusal. It could have compelled the production of
the same and proved its suspicions before the trial court. These, petitioners failed to do. In fact Ricardo Tantongco’s failure to
contact the arson investigators and inform them of the flammable materials that
he allegedly saw in the premises burned two days before the fire is incomprehensible.

With respect to the award of damages by respondent court subject
of the sixth and seventh assigned errors, We find the same proper. It took into account the following
actuations of petitioner, through Ricardo Tantongco, as indications of
recklessness, insincerity, malice, oppression, and wanton bad faith in the
filing of its complaint in that –

1. He knew that an investigation was conducted right after the
fire on the premises in question by the Anti-Arson Team of Quezon City Police
Department and yet he did nothing by way of cooperating in said
investigation. He likewise knew that
the investigators found out that the fire did not originate from the place of
private respondents but from Perflex, that it was accidental, and that private
respondent company’s employees had nothing to do at all with the cause of the
fire. The insurance adjuster also
arrived at the same findings. In spite
of all these, petitioner still filed the complaint; and

2. He filed similar cases against Perflex and Chromecraft in
support of petitioner’s allegation that the proximate cause of the fire is the
negligence of the domestics/employees of each defendant in each case.

WHEREFORE, finding no reversible error in the decision of
the Court of Appeals dated March 18, 1991, the same is hereby AFFIRMED. Costs de officio.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, and Regalado, JJ., concur.

---

^[1]
Annex “A” to Exh. “10.”

^[2]
Annex “B” to Exh. “10.”

^[3]
Annex “A” to Exh. “9.”

^[4]
Exh. “I.”

^[5]
Exh. “J.”

^[6]
See sketch Exh. “I” and Exh. “L” and sketch Exh.
“12.”

^[7]
Exhibit “F” and series.

^[8]
Exhibit “F-1.”

^[9]
Lessee of second partition, supra, docketed as Civil Case No. Q-39194 of
the Regional Trial Court of Quezon City and raffled to Branch 85.

^[10]
Lessee of first partition, supra, docketed as Civil Case No. Q-39193 of
the Regional Trial Court of Quezon City
and raffled to Branch 100.

^[11]
Lessee of third, fourth and fifth partitions, supra, docketed as Civil
Case No. Q-39428 of the Regional Trial Court of Quezon City and raffled to
Branch 105.

^[12]
Paragraph 9 of the complaint against private respondent company; paragraph 6 of
the complaint against Chromecraft; and paragraph 6 of the complaint against
Perflex.

^[13]
Order dated October 11, 1983.

^[14]
Sheriff’s Report dated December 8, 1983.

^[15]
Rollo, p. 193.

^[16]
Rollo, p. 86.

^[17]
Rollo, pp. 329-330.

^[18]
G.R. No. 59514, 158 SCRA 138 (1988).

^[19]
158 SCRA, at 144.

^[20]
G.R. No. 75450, 191 SCRA 218 (1990).

^[21]
“(1) When the conclusion is a finding grounded entirely on
speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257
[1953]); (2) When the inference made is manifestly mistaken, absurd or
impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where there is a
grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4)
When the judgment is based on a misapprehension of facts (Cruz v. Sosing,
L­-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v.
Villaseca, L-9590 Ap. 30, 1957; unrep.); (6) When the Court of Appeals, in
making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee (Evangelista v.
Alto Surety and Insurance Co., 103 Phil. 401 [1958]); (7) The findings of the
Court of Appeals are contrary to those of the trial court (Garcia v.
Court of Appeals, 33 SCRA 622 [1970]); Sacay v. Sandiganbayan, 142 SCRA
593 [1986]); (8) When the findings of fact are conclusions without citation of
specific evidence on which they are based (Ibid.,); (9) When the facts
set forth in the petition as well as in the petitioners’ main and reply briefs
are not disputed by the respondents (Ibid.,); and (10) The
finding of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by the evidence on record (Salazar v.
Gutierrez, 33 SCRA 242 [1970]).” 191 SCRA, at 223-224.

^[22]
T.S.N., November 20, 1985, pp. 11-14.

^[23]
T.S.N., March 12, 1986, p. 6.

^[24]
Exhibit “15” was not mentioned although it was also an inventory like
Exhibits “16” and “17” admittedly prepared and signed by
insurance adjuster Mariñas.

^[25]
T.S.N., April 18, 1986, pp. 5-6.

^[26]
Ibid, pp. 6-7.

^[27]
T.S.N., March 12, 1986, pp. 19-10.

^[28]
T.S.N., March 4, 1987, pp. 17-18.

^[29]
T.S.N., November 6, 1984, p. 3.

^[30]
T.S.N., February 20, 1985, p. 6.

^[31]
T.S.N., October 4, 1984, pp. 13-14.

^[32]
T.S.N., March 13, 1986, pp. 17-20.

^[33]
T.S.N., January 8, 1986, pp. 5-6 and
20.

^[34]
T.S.N., January 8, 1986, pp. 20-22.

^[35]
T.S.N., March 12, 1986, pp. 19, 21-22.

^[36]
T.S.N., January 8, 1986, p. 10.

^[37]
Cordero v. Cabral, G.R. No. L-36789, 123 SCRA 532 (1983).

^[38]
Exhibits “HH” and “24,” underscoring supplied.