fulltext transportation law

7/29/2019 Fulltext Transportation Law

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1. G.R. No. L-9605, September 30, 1957, GAUDIOSO EREZO, ET AL.,plaintiff-appellee, vs. AGUEDO JEPTE, defendant-appellant.

LABRADOR, J.:

Appeal from a judgment of the Court of First Instance of Manila orderingdefendant to pay plaintiff Gaudioso Erezo P3,000 on the death of ErnestoErezo, son of plaintiff Gaudioso Erezo.

Defendant-appellant is the registered owner of a six by six truck bearingplate No. TC-1253. On August, 9, 1949, while the same was being driven byRodolfo Espino y Garcia, it collided with a taxicab at the intersection of SanAndres and Dakota Streets, Manila. As the truck went off the street, it hitErnesto Erezo and another, and the former suffered injuries, as a result ofwhich he died. The driver was prosecuted for homicide through reckless

negligence in criminal case No. 10663 of the Court of First Instance of Manila.The accused pleaded guilty and was sentenced to suffer imprisonment and topay the heirs of Ernesto Erezo the sum of P3,000. As the amount of the

judgment could not be enforced against him, plaintiff brought this actionagainst the registered owner of the truck, the defendant-appellant. Thecircumstances material to the case are stated by the court in its decision.

The defendant does not deny at the time of the fatal accident the cargo truckdriven by Rodolfo Espino y Garcia was registered in his name. He, however,claims that the vehicle belonged to the Port Brokerage, of which he was the

broker at the time of the accident. He explained, and his explanation wascorroborated by Policarpio Franco, the manager of the corporation, that thetrucks of the corporation were registered in his name as a convenientarrangement so as to enable the corporation to pay the registration fee withhis backpay as a pre-war government employee. Franco, however, admittedthat the arrangement was not known to the Motor Vehicle Office.

The trial court held that as the defendant-appellant represented himself to bethe owner of the truck and the Motor Vehicle Office, relying on hisrepresentation, registered the vehicles in his name, the Government and allpersons affected by the representation had the right to rely on his declarationof ownership and registration. It, therefore, held that the defendant-appellantis liable because he cannot be permitted to repudiate his own declaration.(Section 68 [a], Rule 123, and Art. 1431, New Civil Code.).

Against the judgment, the defendant has prosecuted this appeal claimingthat at the time of the accident the relation of employer and employeebetween the driver and defendant-appellant was not established, it having


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been proved at the trial that the owner of the truck was the Port Brokerage,of which defendant-appellant was merely a broker. We find no merit or justicein the above contention. In previous decisions, We already have held that theregistered owner of a certificate of public convenience is liable to the publicfor the injuries or damages suffered by passengers or third persons causedby the operation of said vehicle, even though the same had been transferred

to a third person. (Montoya vs. Ignacio, 94 Phil., 182, 50 Off. Gaz., 108; Roquevs. Malibay Transit Inc.,1 G. R. No. L- 8561, November 18,1955; Vda. deMedina vs. Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.)The principleupon which this doctrine is based is that in dealing with vehicles registeredunder the Public Service Law, the public has the right to assume or presumethat the registered owner is the actual owner thereof, for it would be difficultfor the public to enforce the actions that they may have for injuries caused tothem by the vehicles being negligently operated if the public should berequired to prove who the actual owner is. How would the public or thirdpersons know against whom to enforce their rights in case of subsequenttransfers of the vehicles? We do not imply by this doctrine, however, that theregistered owner may not recover whatever amount he had paid by virtue of

his liability to third persons from the person to whom he had actually sold,assigned or conveyed the vehicle.

Under the same principle the registered owner of any vehicle, even if notused for a public service, should primarily be responsible to the public or tothird persons for injuries caused the latter while the vehicle is being driven onthe highways or streets. The members of the Court are in agreement that thedefendant-appellant should be held liable to plaintiff-appellee for the injuriesoccasioned to the latter because of the negligence of the driver even if thedefendant-appellant was no longer the owner of the vehicle at the time of the

damage because he had previously sold it to another. What is the legal basisfor his (defendant-appellant's) liability?.

There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he is the registered owner in the Motor Vehicle Office. Should henot be allowed to prove the truth, that he had sold it to another and thus shiftthe responsibility for the injury to the real and actual owner? The defendantholds the affirmative of this proposition; the trial court held the negative.

The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that novehicle may be used or operated upon any public highway unless the same isproperly registered. It has been stated that the system of licensing and therequirement that each machine must carry a registration number,conspicuously displayed, is one of the precautions taken to reduce thedanger of injury to pedestrians and other travelers from the carelessmanagement of automobiles, and to furnish a means of ascertaining theidentity of persons violating the laws and ordinances, regulating the speed


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and operation of machines upon the highways (2 R. C. L. 1176). Not only arevehicles to be registered and that no motor vehicles are to be used oroperated without being properly registered for the current year, but thatdealers in motor vehicles shall furnish the Motor Vehicles Office a reportshowing the name and address of each purchaser of motor vehicle during theprevious month and the manufacturer's serial number and motor number.

(Section 5 [c], Act. No. 3992, as amended.).

Registration is required not to make said registration the operative act bywhich ownership in vehicles is transferred, as in land registration cases,because the administrative proceeding of registration does not bear anyessential relation to the contract of sale between the parties (Chinchilla vs.Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation ofthe vehicle upon any public highway (section 5 [a], Act No. 3992, asamended).The main aim of motor vehicle registration is to identify the ownerso that if any accident happens, or that any damage or injury is caused by

the vehicles on the public highways, responsibility therefore can be fixed on adefinite individual, the registered owner. Instances are numerous wherevehicles running on public highways caused accidents or injuries topedestrians or other vehicles without positive identification of the owner ordrivers, or with very scant means of identification. It is to forestall thosecircumstances, so inconvenient or prejudicial to the public, that the motorvehicle registration is primarily ordained, in the interest of the determinationof persons responsible for damages or injuries caused on public highways.

One of the principal purposes of motor vehicles legislation is identification ofthe vehicle and of the operator, in case of accident; and another is that theknowledge that means of detection are always available may act as adeterrent from lax observance of the law and of the rules of conservative andsafe operation. Whatever purpose there may be in these statutes, it issubordinate at the last to the primary purpose of rendering it certain that theviolator of the law or of the rules of safety shall not escape because of lack ofmeans to discover him." The purpose of the statute is thwarted, and thedisplayed number becomes a "snare and delusion," if courts will entertainsuch defenses as that put forward by appellee in this case. No responsibleperson or corporation could be held liable for the most outrageous acts ofnegligence, if they should be allowed to place a "middleman" between themand the public, and escape liability by the manner in which they recompensetheir servants. (King vs. Brenham Automobile Co., 145 S. W. 278,279.)

With the above policy in mind, the question that defendant-appellant posesis: should not be registered owner be allowed at the trial to prove who theactual and real owner is, and in accordance with such proof escape or evaderesponsibility and lay the same on the person actually owning the vehicle?We hold with the trial court that the laws does not allow him to do so; the


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law, with its aim and policy in mind, does not relieve him directly of theresponsibility that the law fixes and places upon him as an incident orconsequence of registration. Were a registered owner allowed to evaderesponsibility by proving who the supposed transferee or owner is, it wouldbe easy for him, by collusion with others or otherwise, to escape saidresponsibility and transfer the same to an indefinite person, or to one who

possesses no property with which to respond financially for the damage orinjury done. A victim of recklessness on the public highways is usuallywithout means to discover or identify the person actually causing the injuryor damage. He has no means other than by a recourse to the registration inthe Motor Vehicles Office to determine who is the owner. The protection thatthe law aims to extend to him would become illusory were the registeredowner given the opportunity to escape liability by disproving his ownership. Ifthe policy of the law is to be enforced and carried out, the registered ownershould be allowed to prove the contrary to the prejudice of the person injuredthat is, to prove that a third person or another has become the owner, so thathe may thereby be relieved of the responsibility to the injuredperson.1wphl.nt

The above policy and application of the law may appear quite harsh andwould seem to conflict with truth and justice. We do not think it is so. Aregistered owner who has already sold or transferred a vehicle has therecourse to a third-party complaint, in the same action brought against himto recover for the damage or injury done, against the vendee or transferee ofthe vehicle. The inconvenience of the suit is no justification for relieving himof liability; said inconvenience is the price he pays for failure to comply withthe registration that the law demands and requires.

In synthesis, we hold that the registered owner, the defendant-appellantherein, is primarily responsible for the damage caused to the vehicle of theplaintiff-appellee, but he (defendant-appellant) has a right to be indemnifiedby the real or actual owner of the amount that he may be required to pay asdamage for the injury caused to the plaintiff-appellant.

2. [G.R. No. 143360. September 5, 2002] EQUITABLE LEASINGCORPORATION, petitioner, vs. LUCITA SUYOM, MARISSA ENANO,MYRNA TAMAYO and FELIX OLEDAN, respondents.

D E C I S I O N

PANGANIBAN, J.:

In an action based on quasi delict, the registered owner of a motor vehicle issolidarily liable for the injuries and damages caused by the negligence of thedriver, in spite of the fact that the vehicle may have already been the subjectof an unregistered Deed of Sale in favor of another person. Unless registered


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with the Land Transportation Office, the sale -- while valid and bindingbetween the parties -- does not affect third parties, especially the victims ofaccidents involving the said transport equipment. Thus, in the present case,petitioner, which is the registered owner, is liable for the acts of the driveremployed by its former lessee who has become the owner of that vehicle byvirtue of an unregistered Deed of Sale.

Statement of the Case

Before us is a Petition for Review under Rule 45 of the Rules of Court,assailing the May 12, 2000 Decision[1] of the Court of Appeals[2] (CA) in CA-GR CV No. 55474. The decretal portion of the Decision reads as follows:

WHEREFORE, premises considered, the instant appeal is hereby DISMISSEDfor lack of merit. The assailed decision, dated May 5, 1997, of the Regional

Trial Court of Manila, Branch 14, in Civil Case No. 95-73522, is herebyAFFIRMED with MODIFICATION that the award of attorneys fees isDELETED.[3]

On the other hand, in Civil Case No. 95-73522, the Regional Trial Court (RTC)of Manila (Branch 14) had earlier disposed in this wise:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs andagainst the defendant Equitable Leasing Corporation ordering said defendantto pay to the plaintiffs the following:

A. TO MYRNA TAMAYO

1. the sum of P50,000.00 for the death of Reniel Tamayo;

2. P50,000.00 as moral damages; and

3. P56,000.00 for the damage to the store and its contents, and funeralexpenses.


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B. TO FELIX OLEDAN

1. the sum of P50,000.00 for the death of Felmarie Oledan;

2. P50,000.00 as moral damages; and

3. P30,000.00 for medical expenses, and funeral expenses.

C. TO MARISSA ENANO

1. P7,000.00 as actual damages

D. TO LUCITA SUYOM

1. The sum of P5,000.00 for the medical treatment of her two sons.

The sum of P120,000.00 as and for attorneys fees.[4]

The Facts

On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into thehouse cum store of Myrna Tamayo located at Pier 18, Vitas, Tondo, Manila. Aportion of the house was destroyed. Pinned to death under the engine of thetractor were Respondent Myrna Tamayos son, Reniel Tamayo, andRespondent Felix Oledans daughter, Felmarie Oledan. Injured wereRespondent Oledan himself, Respondent Marissa Enano, and two sons of

Respondent Lucita Suyom.

Tutor was charged with and later convicted of reckless imprudence resultingin multiple homicide and multiple physical injuries in Criminal Case No.296094-SA, Metropolitan Trial Court of Manila, Branch 12.[5]


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Upon verification with the Land Transportation Office, respondents werefurnished a copy of Official Receipt No. 62204139[6] and Certificate ofRegistration No. 08262797,[7] showing that the registered owner of thetractor was Equitable Leasing Corporation/leased to Edwin Lim. On April15, 1995, respondents filed against Raul Tutor, Ecatine Corporation(Ecatine) and Equitable Leasing Corporation (Equitable) a Complaint[8]

for damages docketed as Civil Case No. 95-73522 in the RTC of Manila,Branch 14.

The trial court, upon motion of plaintiffs counsel, issued an Order droppingRaul Tutor, Ecatine and Edwin Lim from the Complaint, because they couldnot be located and served with summonses.[9] On the other hand, in itsAnswer with Counterclaim,[10] petitioner alleged that the vehicle had alreadybeen sold to Ecatine and that the former was no longer in possession andcontrol thereof at the time of the incident. It also claimed that Tutor was anemployee, not of Equitable, but of Ecatine.

After trial on the merits, the RTC rendered its Decision ordering petitioner topay actual and moral damages and attorneys fees to respondents. It heldthat since the Deed of Sale between petitioner and Ecatine had not beenregistered with the Land Transportation Office (LTO), the legal owner was stillEquitable.[11] Thus, petitioner was liable to respondents.[12]

Ruling of the Court of Appeals

Sustaining the RTC, the CA held that petitioner was still to be legally deemedthe owner/operator of the tractor, even if that vehicle had been the subject ofa Deed of Sale in favor of Ecatine on December 9, 1992. The reason cited bythe CA was that the Certificate of Registration on file with the LTO stillremained in petitioners name.[13] In order that a transfer of ownership of amotor vehicle can bind third persons, it must be duly recorded in the LTO.[14]

The CA likewise upheld respondents claim for moral damages againstpetitioner because the appellate court considered Tutor, the driver of the

tractor, to be an agent of the registered owner/operator.[15]

Hence, this Petition.[16]

Issues


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In its Memorandum, petitioner raises the following issues for the Courtsconsideration:

I

Whether or not the Court of Appeals and the trial court gravely erred whenthey decided and held that petitioner [was] liable for damages suffered byprivate respondents in an action based on quasi delict for the negligent actsof a driver who [was] not the employee of the petitioner.

II

Whether or not the Court of Appeals and the trial court gravely erred whenthey awarded moral damages to private respondents despite their failure toprove that the injuries they suffered were brought by petitioners wrongfulact.[17]

This Courts Ruling

The Petition has no merit.

First Issue:

Liability for Wrongful Acts

Petitioner contends that it should not be held liable for the damagessustained by respondents and that arose from the negligence of the driver ofthe Fuso Road Tractor, which it had already sold to Ecatine at the time of theaccident. Not having employed Raul Tutor, the driver of the vehicle, it couldnot have controlled or supervised him.[18]

We are not persuaded. In negligence cases, the aggrieved party may sue thenegligent party under (1) Article 100[19] of the Revised Penal Code, for civilliability ex delicto; or (2) under Article 2176[20] of the Civil Code, for civilliability ex quasi delicto.[21]


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Furthermore, under Article 103 of the Revised Penal Code, employers may beheld subsidiarily liable for felonies committed by their employees in thedischarge of the latters duties.[22] This liability attaches when theemployees who are convicted of crimes committed in the performance of

their work are found to be insolvent and are thus unable to satisfy the civilliability adjudged.[23]

On the other hand, under Article 2176 in relation to Article 2180[24] of theCivil Code, an action predicated on quasi delict may be instituted against theemployer for an employees act or omission. The liability for the negligentconduct of the subordinate is direct and primary, but is subject to the defenseof due diligence in the selection and supervision of the employee.[25] Theenforcement of the judgment against the employer for an action based onArticle 2176 does not require the employee to be insolvent, since the liability

of the former is solidary -- the latter being statutorily considered a jointtortfeasor.[26] To sustain a claim based on quasi delict, the followingrequisites must be proven: (a) damage suffered by the plaintiff, (b) fault ornegligence of the defendant, and (c) connection of cause and effect betweenthe fault or negligence of the defendant and the damage incurred by theplaintiff.[27]

These two causes of action (ex delicto or ex quasi delicto) may be availed of,subject to the caveat[28] that the offended party cannot recover damagestwice for the same act or omission or under both causes.[29] Since thesetwo civil liabilities are distinct and independent of each other, the failure to

recover in one will not necessarily preclude recovery in the other.[30]

In the instant case, respondents -- having failed to recover anything in thecriminal case -- elected to file a separate civil action for damages, based onquasi delict under Article 2176 of the Civil Code.[31] The evidence is clearthat the deaths and the injuries suffered by respondents and their kins weredue to the fault of the driver of the Fuso tractor.

Dated June 4, 1991, the Lease Agreement[32] between petitioner and EdwinLim stipulated that it is the intention of the parties to enter into a FINANCELEASE AGREEMENT.[33] Under such scheme, ownership of the subjecttractor was to be registered in the name of petitioner, until the value of thevehicle has been fully paid by Edwin Lim.[34] Further, in the LeaseSchedule,[35] the monthly rental for the tractor was stipulated, and the termof the Lease was scheduled to expire on December 4, 1992. After a fewmonths, Lim completed the payments to cover the full price of the tractor.[36] Thus, on December 9, 1992, a Deed of Sale[37] over the tractor was


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executed by petitioner in favor of Ecatine represented by Edwin Lim.However, the Deed was not registered with the LTO.

We hold petitioner liable for the deaths and the injuries complained of,

because it was the registered owner of the tractor at the time of the accidenton July 17, 1994.[38] The Court has consistently ruled that, regardless ofsales made of a motor vehicle, the registered owner is the lawful operatorinsofar as the public and third persons are concerned; consequently, it isdirectly and primarily responsible for the consequences of its operation.[39]In contemplation of law, the owner/operator of record is the employer of thedriver, the actual operator and employer being considered as merely itsagent.[40] The same principle applies even if the registered owner of anyvehicle does not use it for public service.[41]

Since Equitable remained the registered owner of the tractor, it could notescape primary liability for the deaths and the injuries arising from thenegligence of the driver.[42]

The finance-lease agreement between Equitable on the one hand and Lim orEcatine on the other has already been superseded by the sale. In any event,it does not bind third persons. The rationale for this rule has been aptlyexplained in Erezo v. Jepte,[43] which we quote hereunder:

x x x. The main aim of motor vehicle registration is to identify the owner sothat if any accident happens, or that any damage or injury is caused by thevehicle on the public highways, responsibility therefor can be fixed on adefinite individual, the registered owner. Instances are numerous wherevehicles running on public highways caused accidents or injuries topedestrians or other vehicles without positive identification of the owner ordrivers, or with very scant means of identification. It is to forestall thesecircumstances, so inconvenient or prejudicial to the public, that the motorvehicle registration is primarily ordained, in the interest of the determinationof persons responsible for damages or injuries caused on publichighways.[44]

Further, petitioners insistence on FGU Insurance Corp. v. Court of Appeals ismisplaced.[45] First, in FGU Insurance, the registered vehicle owner, whichwas engaged in a rent-a-car business, rented out the car. In this case, theregistered owner of the truck, which is engaged in the business of financingmotor vehicle acquisitions, has actually sold the truck to Ecatine, which inturn employed Tutor. Second, in FGU Insurance, the registered owner of thevehicle was not held responsible for the negligent acts of the person who


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rented one of its cars, because Article 2180 of the Civil Code was notapplicable. We held that no vinculum juris as employer and employeeexisted between the owner and the driver.[46] In this case, the registeredowner of the tractor is considered under the law to be the employer of thedriver, while the actual operator is deemed to be its agent.[47] Thus,Equitable, the registered owner of the tractor, is -- for purposes of the law on

quasi delict -- the employer of Raul Tutor, the driver of the tractor. Ecatine,Tutors actual employer, is deemed as merely an agent of Equitable.[48]

True, the LTO Certificate of Registration, dated 5/31/91, qualifies the nameof the registered owner as EQUITABLE LEASING CORPORATION/Leased toEdwin Lim. But the lease agreement between Equitable and Lim has beenovertaken by the Deed of Sale on December 9, 1992, between petitioner andEcatine. While this Deed does not affect respondents in this quasi delict suit,it definitely binds petitioner because, unlike them, it is a party to it.

We must stress that the failure of Equitable and/or Ecatine to register thesale with the LTO should not prejudice respondents, who have the legal rightto rely on the legal principle that the registered vehicle owner is liable for thedamages caused by the negligence of the driver. Petitioner cannot hidebehind its allegation that Tutor was the employee of Ecatine. This willeffectively prevent respondents from recovering their losses on the basis ofthe inaction or fault of petitioner in failing to register the sale. The non-registration is the fault of petitioner, which should thus face the legalconsequences thereof.

Second Issue:

Moral Damages

Petitioner further claims that it is not liable for moral damages, becauserespondents failed to establish or show the causal connection or relationbetween the factual basis of their claim and their wrongful act or omission, ifany. [49]

Moral damages are not punitive in nature, but are designed tocompensate[50] and alleviate in some way the physical suffering, mentalanguish, fright, serious anxiety, besmirched reputation, wounded feelings,moral shock, social humiliation, and similar injury unjustly caused a person.[51] Although incapable of pecuniary computation, moral damages mustnevertheless be somehow proportional to and in approximation of thesuffering inflicted.[52] This is so because moral damages are in the categoryof an award designed to compensate the claimant for actual injury suffered,


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not to impose a penalty on the wrongdoer.[53]

Viewed as an action for quasi delict, the present case falls squarely within thepurview of Article 2219 (2),[54] which provides for the payment of moral

damages in cases of quasi delict.[55] Having established the liability ofpetitioner as the registered owner of the vehicle,[56] respondents havesatisfactorily shown the existence of the factual basis for the award[57] andits causal connection to the acts of Raul Tutor, who is deemed as petitionersemployee.[58] Indeed, the damages and injuries suffered by respondentswere the proximate result of petitioners tortious act or omission.[59]

Further, no proof of pecuniary loss is necessary in order that moral damagesmay be awarded, the amount of indemnity being left to the discretion of thecourt.[60] The evidence gives no ground for doubt that such discretion wasproperly and judiciously exercised by the trial court.[61] The award is in factconsistent with the rule that moral damages are not intended to enrich theinjured party, but to alleviate the moral suffering undergone by that party byreason of the defendants culpable action.[62]

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.Costs against petitioner.

SO ORDERED.

3. G.R. No. 98275 November 13, 1992 BA FINANCECORPORATION, petitioner, vs. HON. COURT OF APPEALS, REGIONALTRIAL COURT OF ANGELES CITY, BRANCH LVI, CARLOS OCAMPO,INOCENCIO TURLA, SPOUSES MOISES AGAPITO and SOCORRO M.AGAPITO and NICOLAS CRUZ, respondents.

MELO, J.:

The question of petitioner's responsibility for damages when on March 6,1983, an accident occurred involving petitioner's Isuzu ten-wheeler truckthen driven by an employee of Lino Castro is the thrust of the petition forreview on certiorari now before Us considering that neither the driver nor LinoCastro appears to be connected with petitioner.

On October 13, 1988, the disputed decision in the suit below was rendered by


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the court of origin in this manner:

1. Ordering Rock B.A. and Rogelio Villar y Amare jointly and severally topay the plaintiffs as follows:

a) To the plaintiff Carlos Ocampo P121,650.00;

b) To the plaintiff Moises Ocampo P298,500.00

c) To the plaintiff Nicolas Cruz P154,740.00

d) To the plaintiff Inocencio Turla, Sr. 48,000.00

2. Dismissing the case against Lino Castro

3. Dismissing the third-party complaint against STRONGHOLD

4. Dismissing all the counterclaim of the defendants and third-partydefendants.

5. Ordering ROCK to reimburse B.A. the total amount of P622,890.00which the latter is adjudged to pay to the plaintiffs. (p. 46, Rollo)

Respondent Court of Appeals affirmed the appealed disposition in totothrough Justice Rasul, with Justices De Pano, Jr. and Imperial concurring, onpractically the same grounds arrived at by the court a quo (p. 28, Rollo).

Efforts exerted towards re-evaluation of the adverse were futile (p. 37, Rollo).Hence, the instant petition.

The lower court ascertained after due trial that Rogelio Villar y Amare, thedriver of the Isuzu truck, was at fault when the mishap occurred in as muchas he was found guilty beyond reasonable doubt of reckless imprudenceresulting in triple homicide with multiple physical injuries with damage to


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property in a decision rendered on February 16, 1984 by the Presiding Judgeof Branch 6 of the Regional Trial Court stationed at Malolos, Bulacan.Petitioner was adjudged liable for damages in as much as the truck wasregistered in its name during the incident in question, following the doctrinelaid down by this Court in Perez vs. Gutierrez (53 SCRA 149 [1973]) andErezo, et al. vs. Jepte (102 Phil. 103 [1957]). In the same breadth, Rock

Component Philippines, Inc. was ordered to reimburse petitioner for anyamount that the latter may be adjudged liable to pay herein privaterespondents as expressly stipulated in the contract of lease betweenpetitioner and Rock Component Philippines, Inc. Moreover, the trial courtapplied Article 2194 of the new Civil Code on solidary accountability of jointortfeasors insofar as the liability of the driver, herein petitioner and RockComponent Philippines was concerned (pp. 6-7, Decision; pp. 44-45, Rollo).

To the question of whether petitioner can be held responsible to the victimalbeit the truck was leased to Rock Component Philippines when the incident

occurred, the appellate court answered in the affirmative on the basis of thejurisprudential dogmas which, as aforesaid, were relied upon by the trialcourt although respondent court was quick to add the caveat embodied in thelease covenant between petitioner and Rock Component Philippines relativeto the latter's duty to reimburse any amount which may be adjudged againstpetitioner (pp. 32-33, Rollo).

Petitioner asseverates that it should not have been haled to court andordered to respond for the damage in the manner arrived at by both the trialand appellate courts since paragraph 5 of the complaint lodged by theplaintiffs below would indicate that petitioner was not the employer of thenegligent driver who was under the control an supervision of Lino Castro atthe time of the accident, apart from the fact that the Isuzu truck was in thephysical possession of Rock Component Philippines by virtue of the leaseagreement.

Aside from casting clouds of doubt on the propriety of invoking the Perez andErezo doctrines, petitioner continue to persist with the idea that thepronouncements of this Court in Duavit vs. Court of Appeals (173 SCRA 490[1989]) and Duquillo vs. Bayot (67 Phil 131 [1939]) dovetail with the factualand legal scenario of the case at hand. Furthermore, petitioner assumes,

given the so-called hiatus on the basis for the award of damages as decreedby the lower and appellate courts, that Article 2180 of the new Civil Code onvicarious liability will divest petitioner of any responsibility absent as there isany employer-employee relationship between petitioner and the driver.

Contrary to petitioner's expectations, the recourse instituted from the rebuffsit encountered may not constitute a sufficient foundation for reversal of the


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impugned judgment of respondent court. Petitioner is of the impression thatthe Perez and Erezo cases are inapplicable due to the variance of thegenerative facts in said cases as against those obtaining in the controversy atbar. A contrario, the lesson imparted by Justice Labrador in Erezo is still goodlaw, thus:

. . . In previous decisions, We already have held that the registered owner ofa certificate of public convenience is liable to the public for the injuries ordamages suffered by passengers or third persons caused by the operation ofsaid vehicle, even though the same had been transferred to a third person.(Montoya vs. Ignacio, 94 Phil., 182 50 Off. Gaz., 108; Roque vs. Malibay

Transit, Inc., G.R. No. L-8561, November 18, 1955; Vda. de Medina vs.Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.) The principle upon whichthis doctrine is based is that in dealing with vehicles registered under thePublic Service Law, the public has the right to assume or presumed that theregistered owner is the actual owner thereof, for it would be difficult with the

public to enforce the actions that they may have for injuries caused to themby the vehicles being negligently operated if the public should be required toprove who actual the owner is. How would the public or third persons knowagainst whom to enforce their rights in case of subsequent transfer of thevehicles? We do not imply by this doctrine, however, that the registeredowner may not recover whatever amount he had paid by virtue of his liabilityto third persons from the person to whom he had actually sold, assigned orconveyed the vehicle.

Under the same principle the registered owner of any vehicle, even if notused for a public service, should primarily responsible to the public or to thethird persons for injuries caused the latter while the vehicle is being driven onthe highways or streets. The members of the Court are in agreement that thedefendant-appellant should be held liable to plaintiff-appellee for the injuriesoccasioned to the latter because of the negligence of the driver, even if thedefendant-appellant was no longer an owner of the vehicle at the time of thedamage because he had previously sold it to another. What is the legal basisfor his (defendants-appellant's) liability?

There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he is the registered owner in the Motor Vehicle Office. Should he

not be allowed to prove the truth, that he had sold it to another and thus shiftthe responsibility for the injury to the real and the actual owner? Thedefendants hold the affirmative of this proposition; the trial court hold thenegative.

The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that thevehicle may be used or operated upon any public highway unless the same is


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properly registered. It has been stated that the system of licensing and therequirement that each machine must carry a registration number,conspicuously displayed, is one of the precautions taken to reduce thedanger of injury of pedestrians and other travelers from the carelessmanagement of automobiles, and to furnish a means of ascertaining theidentity of persons violating the laws and ordinances, regulating the speed

and operation of machines upon the highways (2 R. C. L. 1176). Not only arevehicles to be registered and that no motor vehicles are to be used oroperated without being properly registered from the current year, furnish theMotor Vehicle Office a report showing the name and address of eachpurchaser of motor vehicle during the previous month and themanufacturer's serial number and motor number. (Section 5[c], Act No. 3992,as amended.)

Registration is required not to make said registration the operative act bywhich ownership in vehicles is transferred, as in land registration cases,

because the administrative proceeding of registration does not bear anyessential relation to the contract of sale between the parties (Chinchilla vs.Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation ofthe vehicle upon any public highway (section 5[a], Act No. 3992, asamended). the main aim of motor vehicle registration is to identify the ownerso that if any accident happens, or that any damage or injury is caused bythe vehicle on the public highways, responsibility therefor can be fixed on adefinite individual, the registered owner. Instances are numerous wherevehicles running on public highways caused accidents or injuries topedestrians or other vehicles without positive identification of the owner ordrivers, or with very scant means of identification. It is to forestall thesecircumstances, so inconvenient or prejudicial to the public, that the motor

vehicle registration is primarily obtained, in the interest of the determinationsof persons responsible for damages or injuries caused on public highways.

One of the principle purposes of motor vehicles legislation is identification ofthe vehicle and of the operator, in case of accident; and another is that theknowledge that means of detection are always available my act as adeterrent from lax observance of the law and of the rules of conservative andsafe operation. Whatever purpose there may be in these statutes, it issubordinate at the last to the primary purpose of rendering it certain that theviolator of the law or of the rules of safety shall not escape because of lack ofmeans to discover him. The purpose of the statute is thwarted, and thedisplayed number becomes a "share and delusion," if courts would entertainsuch defenses as that put forward by appellee in this case. No responsibleperson or corporation could be held liable for the most outrageous acts ofnegligence, if they should be allowed to pace a "middleman" between themand the public, and escape liability by the manner in which they recompensetheir servants. (King vs. Breham Automobile Co., Inc. 145 S. W. 278, 279.)


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With the above policy in mind, the question that defendant-appellant posesis: should not the registered owner be allowed at the trial to prove who theactual and real owner is, and in accordance with such proof escape or evaderesponsibility and lay the same on the person actually owning the vehicle?We hold with the trial court that the law does not allow him to do so; the law,with its aim and policy in mind, does not relieve him directly of the

responsibility that the law fixes and places upon him as an incident orconsequence of registration. Were a registered owner allowed to evaderesponsibility by proving who the supposed transferee or owner is, it wouldbe easy for him, by collusion with others or otherwise, to escape saidresponsibility and transfer the same to an indefinite person, or to one whopossesses no property with which to respond financially for the damage orinjury done. A victim of recklessness on the public highways is usuallywithout means to discover or Identify the person actually causing the injuryor damage. He has no means other then by a recourse to the registration inthe Motor Vehicles Office to determine who is the owner. The protection thatthe law aims to extend to him would become illusory were the registeredowner given the opportunity to escape liability by disproving his ownership. If

the policy of the law is to be enforced and carried out, the registered ownershould not be allowed to prove the contrary to the prejudice of the personinjured, that is, to prove that a third person or another has become theowner, so that he may thereby be relieved of the responsibility to the injuredperson.

The above policy and application of the law may appear quite harsh andwould seem to conflict with truth and justice. We do not think it is so. Aregistered owner who has already sold or transferred a vehicle has therecourse to a third-party complaint, in the same action brought against him

to recover for the damage or injury done, against the vendee or transferee ofthe vehicle. The inconvenience of the suit is no justification for relieving himof liability; said inconvenience is the price he pays for failure to comply withthe registration that the law demands and requires.

In synthesis, we hold that the registered owner, the defendant-appellantherein, is primarily responsible for the damage caused to the vehicle of theplaintiff-appellee, but he (defendant-appellant) has a right to be indemnifiedby the real or actual owner of the amount that he may be required to pay asdamage for the injury caused to the plaintiff-appellant.

If the foregoing words of wisdom were applied in solving the circumstancewhereof the vehicle had been alienated or sold to another, there certainly canbe no serious exception against utilizing the same rationale to theantecedents of this case where the subject vehicle was merely leased bypetitioner to Rock Component Philippines, Inc., with petitioner retainingownership over the vehicle.


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Petitioner's reliance on the ruling of this Court in Duavit vs. Court of Appealsand in Duquillo vs. Bayot (supra) is legally unpalatable for the purpose of thepresent discourse. The vehicles adverted to in the two cases shared acommon thread, so to speak, in that the jeep and the truck were driven in

reckless fashion without the consent or knowledge of the respective owners.Cognizant of the inculpatory testimony spewed by defendant Sabiniano whenhe admitted that he took the jeep from the garage of defendant Dauvitwithout the consent or authority of the latter, Justice Gutierrez, Jr. in Duavitremarked;

. . . Herein petitioner does not deny ownership of the vehicle involved in themishap but completely denies having employed the driver Sabiniano or evenhaving authorized the latter to drive his jeep. The jeep was virtually stolenfrom the petitioner's garage. To hold, therefore, the petitioner liable for the

accident caused by the negligence of Sabiniano who was neither his drivernor employee would be absurd as it would be like holding liable the owner ofa stolen vehicle for an accident caused by the person who stole such vehicle.In this regard, we cannot ignore the many cases of vehicles forcibly takenfrom their owners at gunpoint or stolen from garages and parking areas andthe instances of service station attendants or mechanics of auto repair shopsusing, without the owner's consent, vehicles entrusted to them for servicingor repair.(at p. 496.)

In the Duquillo case, the defendant therein cannot, according to Justice Diaz,be held liable for anything because of circumstances which indicated that the

truck was driven without the consent or knowledge of the owner thereof.

Consequently, there is no need for Us to discuss the matter of imputednegligence because petitioner merely presumed, erroneously, however, that

judgment was rendered against it on the basis of such doctrine embodiedunder Article 2180 of the new Civil Code.

WHEREFORE, the petition is hereby DISMISSED and decision under reviewAFFIRMED without special pronouncement as to costs.

SO ORDERED.

4. G.R. No. 82318 May 18, 1989 GILBERTO M. DUAVIT, petitioner, vs.THE HON. COURT OF APPEALS, Acting through the Third Division, as


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Public Respondent, and ANTONIO SARMIENTO, SR. & VIRGILIOCATUAR respondents.

GUTIERREZ, JR., J.:

This petition raises the sole issue of whether or not the owner of a privatevehicle which figured in an accident can be held liable under Article 2180 ofthe Civil Code when the said vehicle was neither driven by an employee ofthe owner nor taken with the consent of the latter.

The facts are summarized in the contested decision, as follows:

From the evidence adduced by the plaintiffs, consisting of the testimonies of

witnesses Virgilio Catuar, Antonio Sarmiento, Jr., Ruperto Catuar, Jr. andNorberto Bernarte it appears that on July 28, 1971 plaintiffs AntonioSarmiento, Sr. and Virgilio Catuar were aboard a jeep with plate number 77-99-F-I Manila, 1971, owned by plaintiff, Ruperto Catuar was driving the said

jeep on Ortigas Avenue, San Juan, Rizal; that plaintiff's jeep, at the time, wasrunning moderately at 20 to 35 kilometers per hour and while approachingRoosevelt Avenue, Virgilio Catuar slowed down; that suddenly, another jeepwith plate number 99-97-F-J Manila 1971 driven by defendant OscarSabiniano hit and bumped plaintiff's jeep on the portion near the left rearwheel, and as a result of the impact plaintiff's jeep fell on its right andskidded by about 30 yards; that as a result plaintiffs jeep was damaged,particularly the windshield, the differential, the part near the left rear wheel

and the top cover of the jeep; that plaintiff Virgilio Catuar was thrown to themiddle of the road; his wrist was broken and he sustained contusions on thehead; that likewise plaintiff Antonio Sarmiento, Sr. was trapped inside thefallen jeep, and one of his legs was fractured.

Evidence also shows that the plaintiff Virgilio Catuar spent a total ofP2,464.00 for repairs of the jeep, as shown by the receipts of payment oflabor and spare parts (Exhs. H to H-7 Plaintiffs likewise tried to prove thatplaintiff Virgilio Catuar, immediately after the accident was taken toImmaculate Concepcion Hospital, and then was transferred to the NationalOrthopedic Hospital; that while plaintiff Catuar was not confined in thehospital, his wrist was in a plaster cast for a period of one month, and thecontusions on his head were under treatment for about two (2) weeks; thatfor hospitalization, medicine and allied expenses, plaintiff Catuar spentP5,000.00.

Evidence also shows that as a result of the incident, plaintiff AntonioSarmiento, Sr. sustained injuries on his leg; that at first, he was taken to the


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National Orthopedic Hospital (Exh. K but later he was confined at the MakatiMedical Center from July 29, to August 29, 1971 and then from September 15to 25, 1971; that his leg was in a plaster cast for a period of eight (8) months;and that for hospitalization and medical attendance, plaintiff AntonioSarmiento, Sr. spent no less than P13,785.25 as evidenced by receipts in hispossession. (Exhs. N to N-1).

Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. isemployed as Assistant Accountant of the Canlubang Sugar Estate with asalary of P1,200.00 a month; that as sideline he also works as accountant ofUnited Haulers Inc. with a salary of P500.00 a month; and that as a result ofthis incident, plaintiff Sarmiento was unable to perform his normal work for aperiod of at least 8 months. On the other hand, evidence shows that theother plaintiff Virgilio Catuar is a Chief Clerk in Canlubang Sugar Estate with asalary of P500.00 a month, and as a result of the incident, he wasincapacitated to work for a period of one (1) month.

The plaintiffs have filed this case both against Oscar Sabiniano as driver, andagainst Gualberto Duavit as owner of the jeep.

Defendant Gualberto Duavit, while admitting ownership of the other jeep(Plate No. 99-07-F-J Manila, 1971), denied that the other defendant (OscarSabiniano) was his employee. Duavit claimed that he has not been anemployer of defendant Oscar Sabiniano at any time up to the present.

On the other hand documentary and testimonial evidence show thatdefendant Oscar Sabiniano was an employee of the Board of Liquidators fromNovember 14, 1966 up to January 4, 1973 (Annex A of Answer).

Defendant Sabiniano, in his testimony, categorically admitted that he tookthe jeep from the garage of defendant Duavit without the consent orauthority of the latter (TSN, September 7, 1978, p. 8). He testified further,that Duavit even filed charges against him for theft of the jeep, but whichDuavit did not push through as his (Sabiniano's) parents apologized to Duavit

on his behalf.

Defendant Oscar Sabiniano, on the other hand in an attempt to exculpatehimself from liability, makes it appear that he was taking all necessaryprecaution while driving and the accident occurred due to the negligence ofVirgilio Catuar. Sabiniano claims that it was plaintiffs vehicle which hit andbumped their jeep. (Reno, pp. 21-23)


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The trial court found Oscar Sabiniano negligent in driving the vehicle butfound no employer-employee relationship between him and the petitionerbecause the latter was then a government employee and he took the vehiclewithout the authority and consent of the owner. The petitioner was, thus,

absolved from liability under Article 2180 of the Civil Code.

The private respondents appealed the case.

On January 7, 1988, the Court of Appeals rendered the questioned decisionholding the petitioner jointly and severally liable with Sabiniano. Theappellate court in part ruled:

We cannot go along with appellee's argument. It will be seen that in Vargas v.Langcay, supra, it was held that it is immaterial whether or not the driver wasactually employed by the operator of record or registered owner, and it iseven not necessary to prove who the actual owner of the vehicle and who theemployer of the driver is. When the Supreme Court ruled, thus: 'We musthold and consider such owner-operator of record (registered owner) as theemployer in contemplation of law, of the driver,' it cannot be construed otherthan that the registered owner is the employer of the driver in contemplationof law. It is a conclusive presumption of fact and law, and is not subject torebuttal of proof to the contrary. Otherwise, as stated in the decision, wequote:

The purpose of the principles evolved by the decisions in these matters willbe defeated and thwarted if we entertain the argument of petitioner that sheis not liable because the actual owner and employer was established by theevidence. . . .

Along the same vein, the defendant-appellee Gualberto Duavit cannot beallowed to prove that the driver Sabiniano was not his employee at the timeof the vehicular accident.

The ruling laid down in Amar V. Soberano (1966), 63 O.G. 6850, by this Courtto the effect that the burden of proving the non-existence of an employer-employee relationship is upon the defendant and this he must do by asatisfactory preponderance of evidence, has to defer to the doctrines evolvedby the Supreme Court in cases of damages arising from vehicular mishapsinvolving registered motor vehicle. (See Tugade v. Court of Appeals, 85 SCRA


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226, 230). (Rollo, pp. 26-27)

The appellate court also denied the petitioner's motion for reconsideration.Hence, this petition.

The petitioner contends that the respondent appellate court committed graveabuse of discretion in holding him jointly and severally liable with Sabinianoin spite of the absence of an employer-employee relationship between themand despite the fact that the petitioner's jeep was taken out of his garageand was driven by Sabiniano without his consent.

As early as in 1939, we have ruled that an owner of a vehicle cannot be heldliable for an accident involving the said vehicle if the same was driven

without his consent or knowledge and by a person not employed by him.Thus, in Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said:

Under the facts established, the defendant cannot be held liable for anything.At the time of the accident, James McGurk was driving the truck, and he wasnot an employee of the defendant, nor did he have anything to do with thelatter's business; neither the defendant nor Father Ayson, who was in chargeof her business, consented to have any of her trucks driven on the day of theaccident, as it was a holy day, and much less by a chauffeur who was not incharge of driving it; the use of the defendant's truck in the circumstances

indicated was done without her consent or knowledge; it may, therefore, besaid, that there was not the remotest contractual relation between thedeceased Pio Duquillo and the defendant. It necessarily follows from all thisthat articles 1101 and following of the Civil Code, cited by the appellant, haveno application in this case, and, therefore, the errors attributed to the inferiorcourt are without basis.

The Court upholds the above ruling as still relevant and better applicable topresent day circumstances.

The respondent court's misplaced reliance on the cases of Erezo v. Jepte (102Phil. 103 [1957] and Vargas v. Langcay (6 SCRA 174 [1962]) cannot besustained. In the Erezo case, Jepte, the registered owner of the truck whichcollided with a taxicab, and which resulted in the killing of Erezo, claimed thatat the time of the accident, the truck belonged to the Port Brokerage in anarrangement with the corporation but the same was not known to the MotorVehicles Office. This Court sustained the trial court's ruling that since Jepterepresented himself to be the owner of the truck and the Motor Vehicles


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Office, relying on his representation, registered the vehicle in his name, theGovernment and all persons affected by the representation had the right torely on his declaration of ownership and registration. Thus, even if Jepte werenot the owner of the truck at the time of the accident, he was still held liablefor the death of Erezo significantly, the driver of the truck was fullyauthorized to drive it.

Likewise, in the Vargas case, just before the accident occurred Vargas hadsold her jeepney to a third person, so that at the time of the accident she wasno longer the owner of the jeepney. This court, nevertheless, affirmedVargas' liability since she failed to surrender to the Motor Vehicles Office thecorresponding AC plates in violation of the Revised Motor Vehicle Law andCommonwealth Act No. 146. We further ruled that the operator of recordcontinues to be the operator of the vehicle in contemplation of law, asregards the public and third persons, and as such is responsible for theconsequences incident to its operator. The vehicle involved was a public

utility jeepney for hire. In such cases, the law does not only require thesurrender of the AC plates but orders the vendor operator to stop theoperation of the jeepney as a form of public transportation until the matter isreported to the authorities.

As can be seen, the circumstances of the above cases are entirely differentfrom those in the present case. Herein petitioner does not deny ownership ofthe vehicle involved in tire mishap but completely denies having employedthe driver Sabiniano or even having authorized the latter to drive his jeep.

The jeep was virtually stolen from the petitioner's garage. To hold, therefore,the petitioner liable for the accident caused by the negligence of Sabinianowho was neither his driver nor employee would be absurd as it would be likeholding liable the owner of a stolen vehicle for an accident caused by theperson who stole such vehicle. In this regard, we cannot ignore the manycases of vehicles forcibly taken from their owners at gunpoint or stolen fromgarages and parking areas and the instances of service station attendants ormechanics of auto repair shops using, without the owner's consent, vehiclesentrusted to them for servicing or repair.

We cannot blindly apply absolute rules based on precedents whose facts donot jibe four square with pending cases. Every case must be determined on

its own peculiar factual circumstances. Where, as in this case, the records ofthe petition fail to indicate the slightest indicia of an employer-employeerelationship between the owner and the erring driver or any consent given bythe owner for the vehicle's use, we cannot hold the owner liable.

We, therefore, find that the respondent appellate court committed reversibleerror in holding the petitioner jointly and severally liable with Sabiniano to the


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private respondent.

WHEREFORE, the petition is GRANTED and the decision and resolutionappealed from are hereby ANNULLED and SET ASIDE. The decision of the

then Court of First Instance (now Regional Trial Court) of Laguna, 8th JudicialDistrict, Branch 6, dated July 30, 1981 is REINSTATED.

SO ORDERED.

5. G.R. No. 125817, January 16, 2002 ABELARDO LIM and ESMADITOGUNNABAN, petitioners, vs. COURT OF APPEALS and DONATO H.GONZALES, respondents.

BELLOSILLO, J.:

When a passenger jeepney covered by a certificate of public convenience issold to another who continues to operate it under the same certificate ofpublic convenience under the so-called kabit system, and in the coursethereof the vehicle meets an accident through the fault of another vehicle,may the new owner sue for damages against the erring vehicle? Otherwisestated, does the new owner have any legal personality to bring the action, oris he the real party in interest in the suit, despite the fact that he is not the

registered owner under the certificate of public convenience?

Sometime in 1982 private respondent Donato Gonzales purchased an Isuzupassenger jeepney from Gomercino Vallarta, holder of a certificate of publicconvenience for the operation of public utility vehicles plying the Monumento-Bulacan route. While private respondent Gonzales continued offering the

jeepney for public transport services he did not have the registration of thevehicle transferred in his name nor did he secure for himself a certificate ofpublic convenience for its operation. Thus Vallarta remained on record as itsregistered owner and operator.1wphi1.nt

On 22 July 1990, while the jeepney was running northbound along the NorthDiversion Road somewhere in Meycauayan, Bulacan, it collided with a ten-wheeler-truck owned by petitioner Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility for theaccident, explaining that while he was traveling towards Manila the trucksuddenly lost its brakes. To avoid colliding with another vehicle, he swerved


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to the left until he reached the center island. However, as the center islandeventually came to an end, he veered farther to the left until he smashed intoa Ferroza automobile, and later, into private respondent's passenger jeepneydriven by one Virgilio Gonzales. The impact caused severe damage to boththe Ferroza and the passenger jeepney and left one (1) passenger dead andmany others wounded.

Petitioner Lim shouldered the costs for hospitalization of the wounded,compensated the heirs of the deceased passenger, and had the Ferrozarestored to good condition. He also negotiated with private respondent andoffered to have the passenger jeepney repaired at his shop. Privaterespondent however did not accept the offer so Lim offered him P20,000.00,the assessment of the damage as estimated by his chief mechanic. Again,petitioner Lim's proposition was rejected; instead, private respondentdemanded a brand-new jeep or the amount of P236,000.00. Lim increased hisbid to P40,000.00 but private respondent was unyielding. Under the

circumstances, negotiations had to be abandoned; hence, the filing of thecomplaint for damages by private respondent against petitioners.

In his answer Lim denied liability by contending that he exercised duediligence in the selection and supervision of his employees. He furtherasserted that as the jeepney was registered in Vallartas name, it wasVallarta and not private respondent who was the real party in interest.1 Forhis part, petitioner Gunnaban averred that the accident was a fortuitousevent which was beyond his control.2

Meanwhile, the damaged passenger jeepney was left by the roadside tocorrode and decay. Private respondent explained that although he wanted totake his jeepney home he had no capability, financial or otherwise, to tow thedamaged vehicle.3

The main point of contention between the parties related to the amount ofdamages due private respondent. Private respondent Gonzales averred thatper estimate made by an automobile repair shop he would have to spendP236,000.00 to restore his jeepney to its original condition.4 On the other

hand, petitioners insisted that they could have the vehicle repaired forP20,000.00.5

On 1 October 1993 the trial court upheld private respondent's claim andawarded him P236,000.00 with legal interest from 22 July 1990 ascompensatory damages and P30,000.00 as attorney's fees. In support of itsdecision, the trial court ratiocinated that as vendee and current owner of the


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passenger jeepney private respondent stood for all intents and purposes asthe real party in interest. Even Vallarta himself supported privaterespondent's assertion of interest over the jeepney for, when he was called totestify, he dispossessed himself of any claim or pretension on the property.Gunnaban was found by the trial court to have caused the accident since hepanicked in the face of an emergency which was rather palpable from his act

of directing his vehicle to a perilous streak down the fast lane of thesuperhighway then across the island and ultimately to the opposite lanewhere it collided with the jeepney.

On the other hand, petitioner Lim's liability for Gunnaban's negligence waspremised on his want of diligence in supervising his employees. It wasadmitted during trial that Gunnaban doubled as mechanic of the ill-fatedtruck despite the fact that he was neither tutored nor trained to handle suchtask.6

Forthwith, petitioners appealed to the Court of Appeals which, on 17 July1996, affirmed the decision of the trial court. In upholding the decision of thecourt a quo the appeals court concluded that while an operator under thekabit system could not sue without joining the registered owner of the vehicleas his principal, equity demanded that the present case be made anexception.7 Hence this petition.

It is petitioners' contention that the Court of Appeals erred in sustaining thedecision of the trial court despite their opposition to the well-established

doctrine that an operator of a vehicle continues to be its operator as long ashe remains the operator of record. According to petitioners, to recognize anoperator under the kabit system as the real party in interest and tocountenance his claim for damages is utterly subversive of public policy.Petitioners further contend that inasmuch as the passenger jeepney waspurchased by private respondent for only P30,000.00, an award ofP236,000.00 is inconceivably large and would amount to unjust enrichment.8

Petitioners' attempt to illustrate that an affirmance of the appealed decisioncould be supportive of the pernicious kabit system does not persuade. Their

labored efforts to demonstrate how the questioned rulings of the courts a quoare diametrically opposed to the policy of the law requiring operators ofpublic utility vehicles to secure a certificate of public convenience for theiroperation is quite unavailing.

The kabit system is an arrangement whereby a person who has been granteda certificate of public convenience allows other persons who own motor


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vehicles to operate them under his license, sometimes for a fee orpercentage of the earnings.9 Although the parties to such an agreement arenot outrightly penalized by law, the kabit system is invariably recognized asbeing contrary to public policy and therefore void and inexistent under Art.1409 of the Civil Code.

In the early case of Dizon v. Octavio10 the Court explained that one of theprimary factors considered in the granting of a certificate of publicconvenience for the business of public transportation is the financial capacityof the holder of the license, so that liabilities arising from accidents may beduly compensated. The kabit system renders illusory such purpose and,worse, may still be availed of by the grantee to escape civil liability caused bya negligent use of a vehicle owned by another and operated under hislicense. If a registered owner is allowed to escape liability by proving who thesupposed owner of the vehicle is, it would be easy for him to transfer thesubject vehicle to another who possesses no property with which to respond

financially for the damage done. Thus, for the safety of passengers and thepublic who may have been wronged and deceived through the baneful kabitsystem, the registered owner of the vehicle is not allowed to prove thatanother person has become the owner so that he may be thereby relieved ofresponsibility. Subsequent cases affirm such basic doctrine.11

It would seem then that the thrust of the law in enjoining the kabit system isnot so much as to penalize the parties but to identify the person upon whomresponsibility may be fixed in case of an accident with the end view ofprotecting the riding public. The policy therefore loses its force if the public atlarge is not deceived, much less involved.

In the present case it is at once apparent that the evil sought to be preventedin enjoining the kabit system does not exist. First, neither of the parties to thepernicious kabit system is being held liable for damages. Second, the casearose from the negligence of another vehicle in using the public road towhom no representation, or misrepresentation, as regards the ownership andoperation of the passenger jeepney was made and to whom no suchrepresentation, or misrepresentation, was necessary. Thus it cannot be saidthat private respondent Gonzales and the registered owner of the jeepneywere in estoppel for leading the public to believe that the jeepney belonged

to the registered owner. Third, the riding public was not bothered norinconvenienced at the very least by the illegal arrangement. On the contrary,it was private respondent himself who had been wronged and was seekingcompensation for the damage done to him. Certainly, it would be the heightof inequity to deny him his right.

In light of the foregoing, it is evident that private respondent has the right to


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proceed against petitioners for the damage caused on his passenger jeepneyas well as on his business. Any effort then to frustrate his claim of damagesby the ingenuity with which petitioners framed the issue should bediscouraged, if not repelled.

In awarding damages for tortuous injury, it becomes the sole design of thecourts to provide for adequate compensation by putting the plaintiff in thesame financial position he was in prior to the tort. It is a fundamentalprinciple in the law on damages that a defendant cannot be held liable indamages for more than the actual loss which he has inflicted and that aplaintiff is entitled to no more than the just and adequate compensation forthe injury suffered. His recovery is, in the absence of circumstances givingrise to an allowance of punitive damages, limited to a fair compensation forthe harm done. The law will not put him in a position better than where heshould be in had not the wrong happened.12

In the present case, petitioners insist that as the passenger jeepney waspurchased in 1982 for only P30,000.00 to award damages considerablygreater than this amount would be improper and unjustified. Petitioners areat best reminded that indemnification for damages comprehends not only thevalue of the loss suffered but also that of the profits which the obligee failedto obtain. In other words, indemnification for damages is not limited todamnum emergens or actual loss but extends to lucrum cessans or theamount of profit lost.13

Had private respondent's jeepney not met an accident it could reasonably beexpected that it would have continued earning from the business in which itwas engaged. Private respondent avers that he derives an average income ofP300.00 per day from his passenger jeepney and this earning was included inthe award of damages made by the trial court and upheld by the appealscourt. The award therefore of P236,000.00 as compensatory damages is notbeyond reason nor speculative as it is based on a reasonable estimate of thetotal damage suffered by private respondent, i.e. damage wrought upon his

jeepney and the income lost from his transportation business. Petitioners fortheir part did not offer any substantive evidence to refute the estimate madeby the courts a quo.

However, we are constrained to depart from the conclusion of the lowercourts that upon the award of compensatory damages legal interest shouldbe imposed beginning 22 July 1990, i.e. the date of the accident. Upon theprovisions of Art. 2213 of the Civil Code, interest "cannot be recovered uponunliquidated claims or damages, except when the demand can be establishedwith reasonable certainty." It is axiomatic that if the suit were for damages,unliquidated and not known until definitely ascertained, assessed and


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determined by the courts after proof, interest at the rate of six percent (6%)per annum should be from the date the judgment of the court is made (atwhich time the quantification of damages may be deemed to be reasonablyascertained).14

In this case, the matter was not a liquidated obligation as the assessment ofthe damage on the vehicle was heavily debated upon by the parties withprivate respondent's demand for P236,000.00 being refuted by petitionerswho argue that they could have the vehicle repaired easily for P20,000.00. Infine, the amount due private respondent was not a liquidated account thatwas already demandable and payable.

One last word. We have observed that private respondent left his passengerjeepney by the roadside at the mercy of the elements. Article 2203 of theCivil Code exhorts parties suffering from loss or injury to exercise thediligence of a good father of a family to minimize the damages resulting fromthe act or omission in question. One who is injured then by the wrongful ornegligent act of another should exercise reasonable care and diligence tominimize the resulting damage. Anyway, he can recover from the wrongdoermoney lost in reasonable efforts to preserve the property injured and forinjuries incurred in attempting to prevent damage to it.15

However we sadly note that in the present case petitioners failed to offer inevidence the estimated amount of the damage caused by privaterespondent's unconcern towards the damaged vehicle. It is the burden of

petitioners to show satisfactorily not only that the injured party could havemitigated his damages but also the amount thereof; failing in this regard, theamount of damages awarded cannot be proportionately reduced.

WHEREFORE, the questioned Decision awarding private respondent DonatoGonzales P236,000.00 with legal interest from 22 July 1990 as compensatorydamages and P30,000.00 as attorney's fees is MODIFIED. Interest at the rateof six percent (6%) per annum shall be computed from the time the judgmentof the lower court is made until the finality of this Decision. If the adjudgedprincipal and interest remain unpaid thereafter, the interest shall be twelve

percent (12%) per annum computed from the time judgment becomes finaland executory until it is fully satisfied.1wphi1.nt

Costs against petitioners.

SO ORDERED


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6. G.R. No. L-57493 January 7, 1987 BALIWAG TRANSIT, INC.,petitioner, vs. THE HON. COURT OF APPEALS AND ROMAN MARTINEZ,respondents.

PARAS, J.:

This is a petition for review on certiorari, seeking the reversal of the decisionof the Court of Appeals dated June 4, 1981, the dispositive portion of whichreads:

WHEREFORE, the resolution (decision) of the Social Security Commission inSSC Case No. 3272 is hereby set aside and another one entered: orderingrespondent Baliwag Transit, Inc. to remit to the Social Security Commissionthe premium contributions for the petitioner for the years 1958 to May 1963and from 1967 to March 1971, inclusive, plus penalties thereon at the rate of

3% per month of delinquency.

Two passenger bus lines with similar buses and similar routes were beingoperated by firm names "Baliwag Transit' and "Baliwag Transit, Inc." (BTI) theherein petitioner. The former was owned by the late Pascual Tuazon whocontinued to operate it until his death on January 26, 1972, while the latterwas owned by petitioner corporation, incorporated in the year 1968 andexisting until the present time. Both bus lines operate under different grantsof franchises by the Public Service Commission (Brief for Petitioner, p.11), butwere issued only one ID Number 03-22151 by the Social Security System

(Rollo, p. 66).

Private respondent claiming to be an employee of both bus lines with one IDNumber, filed a petition with the Social Security Commision on August 14,1975 which was docketed as SSC Case No. 3272 to compel BTI to remit to theSocial Security private respondent's SSS Premium contributions for the years1958 to March, 1963 and from 1967 to March 1971. He alleged that he wasemployed by petitioner from 1947 to 1971 as conductor and later asinspector with corresponding salary increases and that petitioner deductedfrom his salaries, premium contributions, but what was remitted to the SSSwas only for a period covering June, 1963 to 1966, at a much lesser amount.

In its answer, BTI denied having employed private respondent RamonMartinez, the truth being that he was employed by Pascual Tuazon who since1948 owned and operated buses under the trade name Baliwag Transit whichwere separate and distinct from the buses operated by petitioner companyowned by Mrs. Victoria Vda. de Tengco. Both bus lines had different offices,different maintenance and repair shops, garages, books of account, and


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managers. The employment of private respondent lasted until 1971 when hisemployer Pascual Tuazon became bankrupt. It was the latter which deductedfrom private respondent the amount corresponding to his SSS contributionsfor the years in question but allegedly did not remit the same. Finally, hereinpetitioner BTI claims that private respondent allowed 17 years to elapse andat a time when Pascual Tuazon was already dead before filing the subject

petition with the Social Security Commission. (Rollo, p. 18).lwphl@it

After trial on the merits, the Social Security Commission on September 12,1979, entered a resolution in SSC Case No. 3272, the dispositive portion ofwhich reads:

PREMISES CONSIDERED, this Commission finds and so holds that thereexisted no employer-employee relationship between the petitioner andrespondent as would warrant further remittance of SSS contributions for andin behalf of petitioner Roman Martinez.

Consequently, this petition is hereby dismissed for lack of merit,

SO ORDERED.

On appeal ,the Court of Appeals finding that the late Pascual Tuazon operated

his buses under the "Kabit" System reversed and set aside the foregoingresolution as follows:

WHEREFORE, the resolution (decision) of the Social Security Commission inSSC Case No. 3272 is hereby set aside and another one entered orderingrespondent Baliwag Transit, Inc. to remit to the Social Security Commissionthe premium contributions for the petitioner for the years 1958 to May 1963and from 1967 to March 1971, inclusive, plus penalties thereon at the rate of3% per month of delinquency.

SO ORDERED.

Herein petitioner filed a Motion for Reconsideration with respondent Court ofAppeals, which Motion was later denied.


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Hence, this petition.

In the resolution of August 26, 1981 of the Second Division of this Court,respondents were required to comment (Rollo, p. 64) which was complied

with on September 21, 1981 (Rollo, pp. 65-71). On October 5, 198 1,petitioner filed its Reply (Rollo, pp. 73-75) in compliance with the resolutionof September 30, 1981 (Rollo, p. 71). In the resolution of December 7, 1981,the petition was given due course (Rollo, p. 81). The brief for petitioner-appellant was filed on March 27, 1982 (Rollo, p. 89) while private respondentfiled a manifestation and motion to be excused for not filing privaterespondent's brief and to be allowed to adopt as his arguments thecomments he filed on September 19, 1981 and his brief with the Court ofAppeals (Rollo, p. 92). Said manifestation and motion was noted in theresolution of June 23, 1982 (Rollo, p. 93) and this case was submitted fordeliberation in the resolution of February 3, 1984 (Rllo, p. 94).

Petitioners raised the following assignment of errors:

I. THAT THE FINDINGS OF THE RESPONDENT HONORABLE COURT OFAPPEALS TO THE EFFECT THAT THE VEHICLES OF THE LATE PASCUAL TUAZONWERE "ATTACHED" OR "KABIT" WITH PETITIONER, BALIWAG TRANSIT, INC.MAY NOT HAVE BEEN SUPPORTED BY SUBSTANTIAL EVIDENCE.

II. GRANTING THAT THE VEHICLES OF THE LATE PASCUAL TUAZON WEREINDEED "ATTACHED" OR "KABIT" WITH PETITIONER BALIWAG TRANSIT, INC.EMPLOYER- EMPLOYEE RELATIONS MAY NOT EXTENT TC COVER OR INCLUDE

THE EMPLOYEES OF THE ACTUAL OWNER OF THE VEHICLES AS EMPLOYEESALSO OF THE HOLDER OF THE CERTIFICATE OF PUBLIC CONVENIENCE WHICHIS IN THIS CASE, PETITIONER BALIWAG TRANSIT, INC.

However, the main issue in this case is whether or not the issuance by theSocial Security System of one SSS-ID-Number to two bus lines necessarilyindicates that one of them, operates his buses under the "Kabit System."

The answer is in the negative.

The "Kabit System" has been defined by the Supreme Court as anarrangement "whereby a person who has been granted a certificate ofconvenience allows another person who owns motor vehicles to operate


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under such franchise for a fee." (Lita Enterprises, Inc. v. Second Civil CasesDivision, IAC, et al., G.R. No. 64693, April 27, 1984).lwphl@it

The determining factor, therefore, is the possession of a franchise to operate

which negates the existence of the "Kabit System" and not the issuance ofone SSS ID Number for both bus lines from which the existence of saidsystem was inferred.

In the instant case, the findings of the Court of Appeals are as follows:

... It is very obvious from the foregoing narration of facts that the late PascualTuazon, during the time material to this case, operated his buses under the"kabit" Syetem; that is, while actually he was the owner and operator of

public utility buses, maintaining his own drivers, conductors, inspectors andother employees, his buses were not registered with the Public ServiceCommission (now the Bureau of Land Transportation) in his own name.Instead, his buses were absorbed and registered as owned and operated bythe "Baliwag Transit," which was the firm name owned and used by his niece,Victoria Vda. de Tengco.

It is well settled that the findings of facts of the Court of Appeals ... areconclusive on the parties and on this Court, unless ... (2) the inference madeis manifestly mistaken; ... (4) the judgment is based on misapprehension of

facts; ... (6) the Court of Appeals went beyond the issues of the case and itsfindings are contrary to the admissions of both appellant appellant andappellees; (7) the findings of facts of the Court of Appeals are contrary tothose of the trial court; ... (Sacay v. Sandiganbayan, G.R. No. 66497-98, July10, 1986).

In the case at bar, it is undisputed that as testified to, lot only by seven (7)witnesses presented by the petitioner but also by the Social Security Systemwitness Mangowan Macalaba, Clerk I ,of the R & A Division of the Board of

Transportation, who had access to the records of said office with respect toapplications and grant of franchises of public utility vehicles, that Victoria

Vda. de Tengco and Pascual Tuazon were granted separate franchises tooperate public utility buses, under Cases Nos. 15904, 114913, 11564,103366, 64157 and 65894 for the former and Case No. 69-4592 and Case No.697775 for the latter, both operating between Manila and Baliuag routes.However, the franchises of Pascual Tuazon were cancelled on December 16,1971 and may 14, 1972 respectively (Rollo, p. 22), when the latterterminated his operation.


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It is thus evident that both bus lines operated under their own franchises butopted to retain the firm name "Baliwag Transit" with slight modification, bythe inclusion of the word "Inc." in the case of herein petitioner, obviously totake advantage of the goodwill such firm name enjoys with the riding public.Conversely, the conclusion of the Court of Appeals that the late Pascual

Tuazon, during the time material to this case operated his buses under the

"Kabit System" on the ground that while he was actually the owner andoperator, his buses were not registered with the Public Service Commission(now the Bureau of Land Transportation) in his own name, is not supportedby the records. Much less can it be said that there is an analogy between thecase at bar and the cited case of Doligosa, et al. v. Decolongon, et al. (3 CANos. 1135, 1142-43) to the extent that Baliwag Transit, Inc. being theostensible operator of the buses actually owned by Pascual Tuazon, should beheld liable for the contributions collected or ought to be collected fromprivate respondent (Rollo, pp. 53-54), presumably to discourage theproliferating "Kabit System" in public utility vehicles.

While it is admitted that petitioner was the one who remitted the SSSpremiums of private respondent, it has also been established by testimoniesof witnesses that such arrangement was done purposely to accommodate therequest of the late Pascual Tuazon, the uncle of Victoria Vda. de Tengco andthe money came from him. On the other hand, there is no reason why suchtestimonies should not be given credence as the records fail to show thatsaid witnesses have any motive or reason to falsify or perjure theirtestimonies (Rollo, pp. 23-24).

Moreover, the Social Security Commission after several hearings had beenconducted, arrived at the following conclusion:

It was established during the hearings that petitioner Roman Martinez wasemployed by, worked for and took orders from Pascual Tuazon and wasauthorized to get "vales" from the conductors of the trucks of Mr. Tuazon.

This was admitted got "vales" from the buses of Pascual Tuazon (TSN. pp. 24-25, May 7, 1976 and Exhibits "3" to "49").

On the other hand, there is no evidence introducted to show that petitionerever received salaries from respondent or from Mrs. Victoria Vda. de Tengcoand neither had he been under the orders of the latter. The only basis uponwhich petitioner anchors his claim despite his actual employment by Pascual

Tuazon was the use by the latter of the trade name, Baliwag Transit, in theoperation of his (Mr. Tuazon's) own buses which the latter had every reasonto do since he laboriously helped and organized said firm until it gainedcognizance by the public.


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It is, therefore, clear that even long before the incorporation of the BaliwagTransit in 1968 petitioner was already an employee of the late PascualTuazon who despite having separate office, employees and buses which wereoperated under the line of the Baliwag Transit did not report him for coverage

to the SSS. Sadly enough petitioner who claims to be an employee of therespondent did not refute, by way of submitting rebuttal evidence, thetestimonies given by respondent's witnesses that he was an employee of thelate Pascual Tuazon and not of said respondent or of Mrs. Victoria Tuazon andnot of said respondent or of Mr. Victoria Vda. de Tengco. Indeed, there is areasonable basis to believe that he would not attempt to do so if only to beconsistent with his stand when he filed a case before the National LaborRelations Commission, a claim against both the late Pascual Tuazon and therespondent, He is now concentrating his action against the respondent inview of the death of Pascual Tuazon who during his lifetime sold his trucksand became bankrupt Exhibit "2") Resolution, September 14, 1979, pp. 29-31). (Rollo, pp. 28-30)

It has been uniformly held by this Court that it is sufficient that administrativefindings of fact are supported by evidence on the record, or statednegatively, it is sufficient that findings of fact are not shown to beunsupported by evidence.

The Court has also held further that "in reviewing administrative decisions,the reviewin/g court cannot re-examine the sufficiency of the evidence as iforiginally instituted therein, and receive additional evidence that was not

submitted to the administrative agency concerned. The findings of fact mustbe respected, so long as they are supported by substantial evidence, even ifnot overwhelming or preponderant." (Police Commission v. Lood, 127 SCRA758 [1984]).lwphl@it

Thus, the employer-employee relationship between the late Pascual Tuazonand herein private respondent, having been established, the remittance ofSSS contributions of the latter, is the responsibility of his employer Tuazon,regardless of the existence or non-existence of the "Kabit System."

Moreover, private respondent having allowed seventeen (17) years to elapsebefore filing his petition with the Social Security System, has undoubtedlyslept on his rights and his cause of action has already prescribed underArticle 1144(2) of the Civil Code (Central Azucarrera del Davao v. Court ofAppeals, 137 SCRA 296 [1985]; applied by analogy).


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PREMISES CONCERNED, the decision of respondent Court of Appeals datedJune 4, 1981 is hereby REVERSED and SET ASIDE, and the Resolution of theSocial Security Commission dated September 12, 1979 is herebyREINSTATED.

SO ORDERED.

7. [G.R. No. 120553. June 17, 1997] PHILTRANCO SERVICEENTERPRISES, INC. and ROGACIONES MANILHIG, petitioner, vs.COURT OF APPEALS and HEIRS OF THE LATE RAMON ACUESTA,respondents.

D E C I S I O N

DAVIDE, JR., J.:

The petitioners interposed this appeal by way of a petition for review underRule 45 of the Rules of Court from the 31 January 1995 Decision of the Courtof Appeals in CA-G.R. CV No. 41140[1] affirming the 22 January 1993[2]Decision of Branch 31 of the Regional Trial Court, Calbayog City, in Civil CaseNo. 373, which ordered the petitioners to pay the private respondentsdamages as a result of a vehicular accident.

Civil Case No. 373 was an action against herein petitioners for damagesinstituted by the heirs of Ramon A. Acuesta, namely, Gregorio O. Acuesta;

Julio O. Acuesta; Ramon O. Acuesta, Jr.; Baltazar O. Acuesta; Rufino O.Acuesta; Maximo O. Acuesta; Neri O. Acuesta; Iluminada O. Acuesta; RosarioAcuesta-Sanz; and Pamfilo O. Acuesta. Atty. Julio O. Acuesta also appearedas counsel for the plaintiffs (herein private respondents).[3] The privaterespondents alleged that the petitioners were guilty of gross negligence,recklessness, violation of traffic rules and regulations, abandonment ofvictim, and attempt to escape from a crime.

To support their allegations, the private respondents presented eightwitnesses. On 10 February 1992, after the cross-examination of the lastwitness, the private respondents counsel made a reservation to present a

ninth witness. The case was then set for continuation of the trial on 30 and31 March 1992. Because of the non-appearance of the petitioners counsel,the 30 March 1992 hearing was cancelled. The next day, privaterespondents counsel manifested that he would no longer present the ninthwitness. He thereafter made an oral offer of evidence and rested the case.

The trial court summarized private respondents evidence in this wise:


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[I]n the early morning of March 24, 1990, about 6:00 o'clock, the victimRamon A. Acuest

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