PHILTRANCO SERVICE ENTERPRISES, INC. and ROGACIONES MANILHIG, petitioner, vs.

COURT OF
APPEALS and HEIRS OF THE LATE RAMON ACUESTA, respondents.

DECISION

DAVIDE, JR., J.:

The petitioners interposed this appeal by way of a petition for review under Rule 45 of the Rules of Court
from the 31 January 1995 Decision of the Court of 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 Case No. 373, which
ordered the petitioners to pay the private respondents damages as a result of a vehicular accident.

Civil Case No. 373 was an action against herein petitioners for damages instituted 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; Rosario Acuesta-Sanz; and
Pamfilo O. Acuesta. Atty. Julio O. Acuesta also appeared as counsel for the plaintiffs (herein private
respondents).[3] The private respondents alleged that the petitioners were guilty of gross negligence,
recklessness, violation of traffic rules and regulations, abandonment of victim, and attempt to escape from a
crime.

To support their allegations, the private respondents presented eight witnesses. On 10 February 1992,
after the cross-examination of the last witness, the private respondents counsel made a reservation to present
a ninth witness. The case was then set for continuation of the trial on 30 and 31 March 1992. Because of the
non-appearance of the petitioners counsel, the 30 March 1992 hearing was cancelled. The next day, private
respondents counsel manifested that he would no longer present the ninth witness. He thereafter made an oral
offer of evidence and rested the case. The trial court summarized private respondents evidence in this wise:

[I]n the early morning of March 24, 1990, about 6:00 o'clock, the victim Ramon A. Acuesta was riding in his
easy rider bicycle (Exhibit O), along the Gomez Street of Calbayog City. The Gomez Street is along the side of
Nijaga Park. On the Magsaysay Blvd., also in Calbayog City, defendant Philtranco Service Enterprises, Inc.
(Philtranco for brevity) Bus No. 4025 with plate No. EVA-725 driven by defendant Rogasiones Manilhig y Dolira
was being pushed by some persons in order to start its engine. The Magsaysay Blvd. runs perpendicular to
Gomez St. and the said Philtranco bus 4025 was heading in the general direction of the said Gomez
Street. Some of the persons who were pushing the bus were on its back, while the others were on the
sides. As the bus was pushed, its engine started thereby the bus continued on its running motion and it
occurred at the time when Ramon A. Acuesta who was still riding on his bicycle was directly in front of the said
bus. As the engine of the Philtranco bus started abruptly and suddenly, its running motion was also enhanced
by the said functioning engine, thereby the subject bus bumped on the victim Ramon A. Acuesta who, as a
result thereof fell and, thereafter, was run over by the said bus. The bus did not stop although it had already
bumped and ran [sic] over the victim; instead, it proceeded running towards the direction of the Rosales Bridge
which is located at one side of the Nijaga Park and towards one end of the Gomez St., to which direction the
victim was then heading when he was riding on his bicycle. P/Sgt. Yabao who was then jogging thru the
Gomez Street and was heading and meeting the victim Ramon A. Acuesta as the latter was riding on his
bicycle, saw when the Philtranco bus was being pushed by some passengers, when its engine abruptly started
and when the said bus bumped and ran over the victim. He approached the bus driver defendant Manilhig
herein and signalled to him to stop, but the latter did not listen. So the police officer jumped into the bus and
introducing himself to the driver defendant as policeman, ordered the latter to stop. The said defendant driver
stopped the Philtranco bus near the Nijaga Park and Sgt. Yabao thereafter, told the driver to proceed to the
Police Headquarter which was only 100 meters away from Nijaga Park because he was apprehensive that the
said driver might be harmed by the relatives of the victim who might come to the scene of the accident. Then
Sgt. Yabao cordoned the scene where the vehicular accident occurred and had P/Cpl. Bartolome Bagot, the
Traffic Investigator, conduct an investigation and make a sketch of the crime scene. Sgt. Yambao Yabao was
only about 20 meters away when he saw the bus of defendant Philtranco bumped [sic] and [sic] ran over the
victim. From the place where the victim was actually bumped by the bus, the said vehicle still had run to a
distance of about 15 meters away.[4]

For their part, the petitioners filed an Answer[5] wherein they alleged that petitioner Philtranco exercised the
diligence of a good father of a family in the selection and supervision of its employees, including petitioner
Manilhig who had excellent record as a driver and had undergone months of rigid training before he was hired.
Petitioner Manilhig had always been a prudent professional driver, religiously observing traffic rules and
regulations. In driving Philtranco's buses, he exercised the diligence of a very cautious person.

As might be expected, the petitioners had a different version of the incident. They alleged that in the
morning of 24 March 1990, Manilhig, in preparation for his trip back to Pasay City, warmed up the engine of the
bus and made a few rounds within the city proper of Calbayog. While the bus was slowly and moderately
cruising along Gomez Street, the victim, who was biking towards the same direction as the bus, suddenly
overtook two tricycles and swerved left to the center of the road. The swerving was abrupt and so sudden that
even as Manilhig applied the brakes and blew the bus horn, the victim was bumped from behind and run over
by the bus. It was neither willful nor deliberate on Manilhig's part to proceed with the trip after his bus bumped
the victim, the truth being that when he looked at his rear-view window, he saw people crowding around the
victim, with others running after his bus. Fearing that he might be mobbed, he moved away from the scene of
the accident and intended to report the incident to the police. After a man boarded his bus and introduced
himself as a policeman, Manilhig gave himself up to the custody of the police and reported the accident in
question.

The petitioners further claimed that it was the negligence of the victim in overtaking two tricycles, without
taking precautions such as seeing first that the road was clear, which caused the death of the victim. The latter
did not even give any signal of his intention to overtake. The petitioners then counterclaimed for P50,000 as
and for attorney's fees; P1 million as moral damages; and P50,000 for litigation expenses.

However, the petitioners were not able to present their evidence, as they were deemed to have
waived that right by the failure of their counsel to appear at the scheduled hearings on 30 and 31 March
1992. The trial court then issued an Order[6] declaring the case submitted for decision. Motions for the
reconsideration of the said Order were both denied.

On 22 January 1992, the trial court handed down a decision ordering the petitioners to jointly and severally
pay the private respondents the following amounts:

1) P55, 615.72 as actual damages;

2) P200,000 as death indemnity for the death of the victim Ramon A. Acuesta;

3) P1 million as moral damages;

4) P500,000 by way of exemplary damages;

5) P50,000 as attorneys fees; and

6) the costs of suit.[7]

Unsatisfied with the judgment, the petitioners appealed to the Court of Appeals imputing upon the trial
court the following errors:

(1) in preventing or barring them from presenting their evidence;

(2) in finding that petitioner Manilhig was at fault;

(3) in not finding that Ramon was the one at fault and his own fault caused, or at least contributed to,
his unfortunate accident;

(4) in awarding damages to the private respondents; and

(5) in finding that petitioner Philtranco was solidarily liable with Manilhig for damages.[8]

In its decision of 31 January 1995, the Court of Appeals affirmed the decision of the trial court. It held that
the petitioners were not denied due process, as they were given an opportunity to present their defense. The
records show that they were notified of the assignment of the case for 30 and 31 March 1992. Yet, their
counsel did not appear on the said dates.Neither did he file a motion for postponement of the hearings, nor did
he appeal from the denial of the motions for reconsideration of the 31 March 1992 Order of the trial court. The
petitioners have thereby waived their right to present evidence. Their expectation that they would have to
object yet to a formal offer of evidence by the private respondents was misplaced, for it was within the sound
discretion of the court to allow oral offer of evidence.

As to the second and third assigned errors, the respondent court disposed as follows:

... We cannot help but accord with the lower court's finding on appellant Manilhig's fault. First, it is not disputed
that the bus driven by appellant Manilhig was being pushed at the time of the unfortunate happening. It is of
common knowledge and experience that when a vehicle is pushed to a jump-start, its initial movement is far
from slow. Rather, its movement is abrupt and jerky and it takes a while before the vehicle attains normal
speed. The lower court had thus enough basis to conclude, as it did, that the bumping of the victim was due to
appellant Manilhig's actionable negligence and inattention. Prudence should have dictated against jump-
starting the bus in a busy section of the city. Militating further against appellants' posture was the fact that the
precarious pushing of subject bus to a jumpstart was done where the bus had to take a left turn, thereby
making the move too risky to take. The possibility that pedestrians on Gomez Street, where the bus turned left
and the victim was biking, would be unaware of a vehicle being pushed to a jumpstart, was too obvious to be
overlooked. Verily, contrary to their bare arguments, there was gross negligence on the part of appellants.

The doctrine of last clear chance theorized upon by appellants, is inapplicable under the premises because the
victim, who was bumped from behind, obviously, did not of course anticipate a Philtranco bus being pushed
from a perpendicular street.

The respondent court sustained the awards of moral and exemplary damages and of attorneys fees, for
they are warranted under Articles 2206, 2231, and 2208(1), respectively, of the Civil Code. Anent the solidary
liability of petitioner Philtranco, the same finds support in Articles 2180 and 2194 of the said Code. The defense
that Philtranco exercised the diligence of a good father of a family in the selection and supervision of its
employees crumbles in the face of the gross negligence of its driver, which caused the untimely death of the
victim.

Their motion for reconsideration having been denied, the petitioners came to us claiming that the Court of
Appeals gravely erred

...IN HOLDING THAT PETITIONERS WAIVED THEIR RIGHT TO PRESENT THEIR EVIDENCE, AND
THAT PETITIONERS WERE NOT DENIED DUE PROCESS.

II

...IN APPLYING ART. 2194, INSTEAD OF ART. 2180, OF THE CIVIL CODE, AND IN HOLDING THAT
PETITIONER PHILTRANCO CAN NOT INVOKE THE DEFENSE OF DILIGENCE OF A GOOD FATHER
OF A FAMILY.

III

...IN AWARDING DAMAGES TO RESPONDENTS AND/OR IN NOT FINDING THE TRIAL COURT'S
AWARD OF DAMAGES EXCESSIVE.

We resolved to give due course to the petition and required the parties to submit their respective
memoranda after due consideration of the allegations, issues, and arguments adduced in the petition, the
comment thereon by the private respondents, and the reply to the comment filed by the petitioners. The
petitioners filed their memorandum in due time; while the private respondents filed theirs only on 3 January
1997, after their counsel was fined in the amount of P1,000 for failure to submit the required memorandum.

The first imputed error is without merit. The petitioners and their counsel, Atty. Jose Buban, were duly
notified in open court of the order of the trial court of 10 February 1992 setting the case for hearing on 30 and
31 March 1992.[9] On both dates neither the petitioners nor their counsel appeared. In his motion for
reconsideration,[10] Atty. Buban gave the following reasons for his failure to appear on the said hearings:
1. That when this case was called on March 27, 1992, counsel was very much indisposed due to the rigors of a
very hectic campaign as he is a candidate for City Councilor of Tacloban; he wanted to leave for Calbayog City,
but he was seized with slight fever on the morning of said date; but then, during the last hearing, counsel was
made to understand that plaintiffs would formally offer their exhibits in writing, for which reason, counsel for
defendants waited for a copy of said formal offer, but counsel did not receive any copy as counsel for plaintiffs
opted to formally offer their exhibits orally in open court;

2. That counsel for defendants, in good faith believed that he would be given reasonable time within which to
comment on the formal offer in writing, only to know that counsel for plaintiffs orally offered their exhibits in
open court and that the same were admitted by the Honorable Court; and that when this case was called on
March 30 and 31, 1992, the undersigned counsel honestly believed that said schedule would be cancelled,
pending on the submission of the comments made by the defendants on the formal offer; but it was not so, as
the exhibits were admitted in open court.[11]

In its order of 26 May 1992, the trial court denied the motion, finding it to be "devoid of meritorious basis,"
as Atty. Buban could have filed a motion for postponement. [12] Atty. Buban then filed a motion to
reconsider[13] the order of denial, which was likewise denied by the trial court in its order of 12 August 1992.
[14]
Nothing more was done by the petitioners after receipt of the order of 12 August 1992. A perusal of the first
and second motions for reconsideration discloses absence of any claim that the petitioners have meritorious
defenses. Clearly, therefore, the trial court committed no error in declaring the case submitted for decision on
the basis of private respondent's evidence.

The second imputed error is without merit either.

Civil Case No. 373 is an action for damages based on quasi-delict[15] under Article 2176 and 2180 of the
Civil Code against petitioner Manilhig and his employer, petitioner Philtranco, respectively. These articles
pertinently provide:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but
also for those of persons for whom one is responsible.

...

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by
their employees in the service of the branches in which the latter are employed or on the occasion of their
functions.

Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks even though the former are not engaged in any business or industry.

...

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to prevent damage.

We have consistently held that the liability of the registered owner of a public service vehicle, like petitioner
Philtranco,[16] for damages arising from the tortious acts of the driver is primary, direct, and joint and several
or solidary with the driver.[17] As to solidarity, Article 2194 expressly provides:

ART. 2194. The responsibility of two or more persons who are liable for a quasi-delict is solidary.

Since the employer's liability is primary, direct and solidary, its only recourse if the judgment for damages is
satisfied by it is to recover what it has paid from its employee who committed the fault or negligence which
gave rise to the action based on quasi-delict. Article 2181 of the Civil Code provides:
ART. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter
what he has paid or delivered in satisfaction of the claim.

There is, however, merit in the third imputed error.

The trial court erroneously fixed the "death indemnity" at P200,000. The private respondents defended the
award in their Opposition to the Motion for Reconsideration by saying that "[i]n the case of Philippine Airlines,
Inc. vs. Court of Appeals, 185 SCRA 110, our Supreme Court held that the award of damages for death is
computed on the basis of the life expectancy of the deceased." In that case, the "death indemnity" was
computed by multiplying the victim's gross annual income by his life expectancy, less his yearly living
expenses. Clearly then, the "death indemnity" referred to was the additional indemnity for the loss of earning
capacity mentioned in Article 2206(1) of the Civil Code, and not the basic indemnity for death mentioned in the
first paragraph thereof. This article provides as follows:

ART. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall
be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court,
unless the deceased on account of permanent physical disability not caused by the defendant, had no earning
capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is
not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand
support from the person causing the death, for a period of not exceeding five years, the exact duration to be
fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased.

We concur with petitioners view that the trial court intended the award of "P200,000.00 as death
indemnity" not as compensation for loss of earning capacity. Even if the trial court intended the award as
indemnity for loss of earning capacity, the same must be struck out for lack of basis. There is no evidence on
the victim's earning capacity and life expectancy.

Only indemnity for death under the opening paragraph of Article 2206 is due, the amount of which has
been fixed by current jurisprudence at P50,000.[18]

The award of P1 million for moral damages to the heirs of Ramon Acuesta has no sufficient basis and is
excessive and unreasonable. This was based solely on the testimony of one of the heirs, Atty. Julio Acuesta,
contained in his "Direct Testimony... As Plaintiff, conducted by Himself,"[19] to wit:

Q. What was your feeling or reaction as a result of the death of your father Ramon A. Acuesta?

A. We, the family members, have suffered much from wounded feelings, moral shock, mental
anguish, sleepless nights, to which we are entitled to moral damages at the reasonable amount of
ONE MILLION (P1,000,000.00) PESOS or at the sound discretion of this Hon. Court."

Since the other heirs of the deceased did not take the witness stand, the trial court had no basis for its award
of moral damages to those who did not testify thereon.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They
are awarded only to allow the former to obtain means, diversion, or amusements that will serve to alleviate the
moral suffering he has undergone due to the defendant's culpable action and must, perforce, be proportional to
the suffering inflicted.[20] In light of the circumstances in this case, an award of P50,000 for moral damages is in
order.

The award of P500,000 for exemplary damages is also excessive. In quasi-delicts, exemplary damages
may be awarded if the party at fault acted with gross negligence. [21] The Court of Appeals found that there was
gross negligence on the part of petitioner Manilhig. [22] Under Article 2229 of the Civil Code, exemplary damages
are imposed by way of example or correction for the public good, in addition to the moral, temperate,
liquidated, or compensatory damages. Considering its purpose, it must be fair and reasonable in every case
and should not be awarded to unjustly enrich a prevailing party. In the instant case, an award of P50,000 for
the purpose would be adequate, fair, and reasonable.

Finally, the award of P50,000 for attorney's fees must be reduced. The general rule is that attorney's fees
cannot be recovered as part of damages because of the policy that no premium should be placed on the right
to litigate.[23] Stated otherwise, the grant of attorney's fees as part of damages is the exception rather than the
rule, as counsel's fees are not awarded every time a party prevails in a suit. [24] Such attorney's fees can be
awarded in the cases enumerated in Article 2208 of the Civil Code, and in all cases it must be reasonable. In
the instant case, the counsel for the plaintiffs is himself a co-plaintiff; it is then unlikely that he demanded from
his brothers and sisters P100,000 as attorney's fees as alleged in the complaint and testified to by him. [25] He
did not present any written contract for his fees. He is, however, entitled to a reasonable amount for attorney's
fees, considering that exemplary damages are awarded. Among the instances mentioned in Article 2208 of the
Civil Code when attorney's fees may be recovered is "(1) when exemplary damages are awarded." Under the
circumstances in this case, an award of P25,000 for attorney's fees is reasonable.

The petitioners did not contest the award for actual damages fixed by the trial court. Hence, such award
shall stand.

IN VIEW OF THE FOREGOING, the petition is hereby partly granted and the challenged decision of CA-
G.R. CV No. 41140 is AFFIRMED, subject to modifications as to the damages awarded, which are reduced as
follows:

(a) Death indemnity, from P200,000 to P50,000;

(b) Moral damages, from P1 million to P50,000;

(c) Exemplary damages, from P500,000 to P50,000; and

(d) Attorney's fees, from P50,000 to P25,000.

No pronouncements as to costs in this instance.

SO ORDERED.

G.R. No. 132266. December 21, 1999]

CASTILEX INDUSTRIAL CORPORATION, petitioner, vs. VICENTE VASQUEZ, JR. and LUISA SO
VASQUEZ, and CEBU DOCTORS HOSPITAL, INC., respondents.

DECISION

DAVIDE, JR., C.J.:

The pivotal issue in this petition is whether an employer may be held vicariously liable for the death
resulting from the negligent operation by a managerial employee of a company-issued vehicle.

The antecedents, as succinctly summarized by the Court of Appeals, are as follows:

On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So Vasquez, was driving a Honda
motorcycle around Fuente Osmea Rotunda. He was traveling counter-clockwise, (the normal flow of
traffic in a rotunda) but without any protective helmet or goggles. He was also only carrying a Students
Permit to Drive at the time. Upon the other hand, Benjamin Abad [was a] manager of Appellant Castilex
Industrial Corporation, registered owner [of] a Toyota Hi-Lux Pick-up with plate no. GBW-794. On the
same date and time, Abad drove the said company car out of a parking lot but instead of going around the
Osmea rotunda he made a short cut against [the] flow of the traffic in proceeding to his route to General
Maxilom St. or to Belvic St.
In the process, the motorcycle of Vasquez and the pick-up of Abad collided with each other causing
severe injuries to the former. Abad stopped his vehicle and brought Vasquez to the Southern Islands
Hospital and later to the Cebu Doctors Hospital.

On September 5, 1988, Vasquez died at the Cebu Doctors Hospital. It was there that Abad signed an
acknowledgment of Responsible Party (Exhibit K) wherein he agreed to pay whatever hospital bills,
professional fees and other incidental charges Vasquez may incur.

After the police authorities had conducted the investigation of the accident, a Criminal Case was filed
against Abad but which was subsequently dismissed for failure to prosecute. So, the present action for
damages was commenced by Vicente Vasquez, Jr. and Luisa So Vasquez, parents of the deceased
Romeo So Vasquez, against Jose Benjamin Abad and Castilex Industrial Corporation. In the same action,
Cebu Doctors Hospital intervened to collect unpaid balance for the medical expense given to Romeo So
Vasquez.[1]

The trial court ruled in favor of private respondents Vicente and Luisa Vasquez and ordered Jose
Benjamin Abad (hereafter ABAD) and petitioner Castilex Industrial Corporation (hereafter CASTILEX) to
pay jointly and solidarily (1) Spouses Vasquez, the amounts of P8,000.00 for burial expenses; P50,000.00
as moral damages; P10,000.00 as attorneys fees; and P778,752.00 for loss of earning capacity; and (2)
Cebu Doctors Hospital, the sum of P50,927.83 for unpaid medical and hospital bills at 3% monthly
interest from 27 July 1989 until fully paid, plus the costs of litigation.[2]

CASTILEX and ABAD separately appealed the decision.

In its decision[3] of 21 May 1997, the Court of Appeals affirmed the ruling of the trial court holding
ABAD and CASTILEX liable but held that the liability of the latter is only vicarious and not solidary with the
former. It reduced the award of damages representing loss of earning capacity from P778,752.00
to P214,156.80; and the interest on the hospital and medical bills, from 3% per month to 12% per annum
from 5 September 1988 until fully paid.

Upon CASTILEXs motion for reconsideration, the Court of Appeals modified its decision by (1)
reducing the award of moral damages from P50,000 to P30,000 in view of the deceaseds contributory
negligence; (b) deleting the award of attorneys fees for lack of evidence; and (c) reducing the interest on
hospital and medical bills to 6% per annum from 5 September 1988 until fully paid.[4]

Hence, CASTILEX filed the instant petition contending that the Court of Appeals erred in (1) applying
to the case the fifth paragraph of Article 2180 of the Civil Code, instead of the fourth paragraph thereof;
(2) that as a managerial employee, ABAD was deemed to have been always acting within the scope of
his assigned task even outside office hours because he was using a vehicle issued to him by petitioner;
and (3) ruling that petitioner had the burden to prove that the employee was not acting within the scope of
his assigned task.

Jose Benjamin ABAD merely adopted the statement of facts of petitioner which holds fast on the
theory of negligence on the part of the deceased.

On the other hand, respondents Spouses Vasquez argue that their sons death was caused by the
negligence of petitioners employee who was driving a vehicle issued by petitioner and who was on his
way home from overtime work for petitioner; and that petitioner is thus liable for the resulting injury and
subsequent death of their son on the basis of the fifth paragraph of Article 2180. Even if the fourth
paragraph of Article 2180 were applied, petitioner cannot escape liability therefor. They moreover argue
that the Court of Appeals erred in reducing the amount of compensatory damages when the award made
by the trial court was borne both by evidence adduced during the trial regarding deceaseds wages and by
jurisprudence on life expectancy. Moreover, they point out that the petition is procedurally not acceptable
on the following grounds: (1) lack of an explanation for serving the petition upon the Court of Appeals by
registered mail, as required under Section 11, Rule 13 of the Rules of Civil Procedure; and (2) lack of a
statement of the dates of the expiration of the original reglementary period and of the filing of the motion
for extension of time to file a petition for review.

For its part, respondent Cebu Doctors Hospital maintains that petitioner CASTILEX is indeed
vicariously liable for the injuries and subsequent death of Romeo Vasquez caused by ABAD, who was on
his way home from taking snacks after doing overtime work for petitioner. Although the incident occurred
when ABAD was not working anymore the inescapable fact remains that said employee would not have
been situated at such time and place had he not been required by petitioner to do overtime work.
Moreover, since petitioner adopted the evidence adduced by ABAD, it cannot, as the latters employer,
inveigle itself from the ambit of liability, and is thus estopped by the records of the case, which it failed to
refute.

We shall first address the issue raised by the private respondents regarding some alleged procedural
lapses in the petition.

Private respondents contention of petitioners violation of Section 11 of Rule 13 and Section 4 of Rule
45 of the 1997 Rules of Civil Procedure holds no water.

Section 11 of Rule 13 provides:

SEC. 11. Priorities in modes of service and filing. -- Whenever practicable, the service and filing of
pleadings and other papers shall be done personally. Except with respect to papers emanating from the
court, a resort to other modes must be accompanied by a written explanation why the service or filing was
not done personally. A violation of this Rule may be cause to consider the paper as not filed.

The explanation why service of a copy of the petition upon the Court of Appeals was done by
registered mail is found on Page 28 of the petition. Thus, there has been compliance with the aforequoted
provision.

As regards the allegation of violation of the material data rule under Section 4 of Rule 45, the same is
unfounded. The material dates required to be stated in the petition are the following: (1) the date of
receipt of the judgment or final order or resolution subject of the petition; (2) the date of filing of a motion
for new trial or reconsideration, if any; and (3) the date of receipt of the notice of the denial of the
motion. Contrary to private respondents claim, the petition need not indicate the dates of the expiration of
the original reglementary period and the filing of a motion for extension of time to file the petition. At any
rate, aside from the material dates required under Section 4 of Rule 45, petitioner CASTILEX also stated
in the first page of the petition the date it filed the motion for extension of time to file the petition.

Now on the merits of the case.

The negligence of ABAD is not an issue at this instance. Petitioner CASTILEX presumes said
negligence but claims that it is not vicariously liable for the injuries and subsequent death caused by
ABAD.

Petitioner contends that the fifth paragraph of Article 2180 of the Civil Code should only apply to
instances where the employer is not engaged in business or industry. Since it is engaged in the business
of manufacturing and selling furniture it is therefore not covered by said provision. Instead, the fourth
paragraph should apply.

Petitioners interpretation of the fifth paragraph is not accurate. The phrase even though the former
are not engaged in any business or industry found in the fifth paragraph should be interpreted to mean
that it is not necessary for the employer to be engaged in any business or industry to be liable for the
negligence of his employee who is acting within the scope of his assigned task.[5]

A distinction must be made between the two provisions to determine what is applicable. Both
provisions apply to employers: the fourth paragraph, to owners and managers of an establishment or
enterprise; and the fifth paragraph, to employers in general, whether or not engaged in any business or
industry. The fourth paragraph covers negligent acts of employees committed either in the service of the
branches or on the occasion of their functions, while the fifth paragraph encompasses negligent acts of
employees acting within the scope of their assigned task. The latter is an expansion of the former in both
employer coverage and acts included. Negligent acts of employees, whether or not the employer is
engaged in a business or industry, are covered so long as they were acting within the scope of their
assigned task, even though committed neither in the service of the branches nor on the occasion of their
functions. For, admittedly, employees oftentimes wear different hats. They perform functions which are
beyond their office, title or designation but which, nevertheless, are still within the call of duty.
 This court has applied the fifth paragraph to cases where the employer was engaged in a business or
industry such as truck operators[6] and banks.[7] The Court of Appeals cannot, therefore, be faulted in
applying the said paragraph of Article 2180 of the Civil Code to this case.

Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an
employer is liable for the torts committed by employees within the scope of his assigned tasks. But it is
necessary to establish the employer-employee relationship; once this is done, the plaintiff must show, to
hold the employer liable, that the employee was acting within the scope of his assigned task when the tort
complained of was committed. It is only then that the employer may find it necessary to interpose the
defense of due diligence in the selection and supervision of the employee.[8]

It is undisputed that ABAD was a Production Manager of petitioner CASTILEX at the time of the tort
occurrence. As to whether he was acting within the scope of his assigned task is a question of fact, which
the court a quo and the Court of Appeals resolved in the affirmative.

Well-entrenched in our jurisprudence is the rule that the factual findings of the Court of Appeals are
entitled to great respect, and even finality at times. This rule is, however, subject to exceptions such as
when the conclusion is grounded on speculations, surmises, or conjectures.[9] Such exception obtain in
the present case to warrant review by this Court of the finding of the Court of Appeals that since ABAD
was driving petitioners vehicle he was acting within the scope of his duties as a manager.

Before we pass upon the issue of whether ABAD was performing acts within the range of his
employment, we shall first take up the other reason invoked by the Court of Appeals in holding petitioner
CASTILEX vicariously liable for ABADs negligence, i.e., that the petitioner did not present evidence that
ABAD was not acting within the scope of his assigned tasks at the time of the motor vehicle
mishap. Contrary to the ruling of the Court of Appeals, it was not incumbent upon the petitioner to prove
the same. It was enough for petitioner CASTILEX to deny that ABAD was acting within the scope of his
duties; petitioner was not under obligation to prove this negative averment. Ei incumbit probatio qui dicit,
non qui negat (He who asserts, not he who denies, must prove). The Court has consistently applied the
ancient rule that if the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in
a satisfactory manner facts which he bases his claim, the defendant is under no obligation to prove his
exception or defense.[10]

Now on the issue of whether the private respondents have sufficiently established that ABAD was
acting within the scope of his assigned tasks.

ABAD, who was presented as a hostile witness, testified that at the time of the incident, he was
driving a company-issued vehicle, registered under the name of petitioner. He was then leaving the
restaurant where he had some snacks and had a chat with his friends after having done overtime work for
the petitioner.

No absolutely hard and fast rule can be stated which will furnish the complete answer to the problem
of whether at a given moment, an employee is engaged in his employers business in the operation of a
motor vehicle, so as to fix liability upon the employer because of the employees action or inaction; but
rather, the result varies with each state of facts.[11]

In Filamer Christian Institute v. Intermediate Appellate Court,[12] this Court had the occasion to hold
that acts done within the scope of the employees assigned tasks includes any act done by an employee
in furtherance of the interests of the employer or for the account of the employer at the time of the
infliction of the injury or damages.

The court a quo and the Court of Appeals were one in holding that the driving by a manager of a
company-issued vehicle is within the scope of his assigned tasks regardless of the time and
circumstances.

We do not agree. The mere fact that ABAD was using a service vehicle at the time of the injurious
incident is not of itself sufficient to charge petitioner with liability for the negligent operation of said vehicle
unless it appears that he was operating the vehicle within the course or scope of his employment.
 The following are principles in American Jurisprudence on the employers liability for the injuries
inflicted by the negligence of an employee in the use of an employers motor vehicle:

I. Operation of Employers Motor Vehicle in Going to or from Meals

It has been held that an employee who uses his employers vehicle in going from his work to a place
where he intends to eat or in returning to work from a meal is not ordinarily acting within the scope of his
employment in the absence of evidence of some special business benefit to the employer. Evidence that
by using the employers vehicle to go to and from meals, an employee is enabled to reduce his time-off
and so devote more time to the performance of his duties supports the finding that an employee is acting
within the scope of his employment while so driving the vehicle.[13]

II. Operation of Employers Vehicle in Going to or from Work

In the same vein, traveling to and from the place of work is ordinarily a personal problem or concern
of the employee, and not a part of his services to his employer. Hence, in the absence of some special
benefit to the employer other than the mere performance of the services available at the place where he
is needed, the employee is not acting within the scope of his employment even though he uses his
employers motor vehicle.[14]

The employer may, however, be liable where he derives some special benefit from having the
employee drive home in the employers vehicle as when the employer benefits from having the employee
at work earlier and, presumably, spending more time at his actual duties. Where the employees duties
require him to circulate in a general area with no fixed place or hours of work, or to go to and from his
home to various outside places of work, and his employer furnishes him with a vehicle to use in his work,
the courts have frequently applied what has been called the special errand or roving commission rule,
under which it can be found that the employee continues in the service of his employer until he actually
reaches home. However, even if the employee be deemed to be acting within the scope of his
employment in going to or from work in his employers vehicle, the employer is not liable for his
negligence where at the time of the accident, the employee has left the direct route to his work or back
home and is pursuing a personal errand of his own.

III. Use of Employers Vehicle Outside Regular Working Hours

An employer who loans his motor vehicle to an employee for the latters personal use outside of
regular working hours is generally not liable for the employees negligent operation of the vehicle during
the period of permissive use, even where the employer contemplates that a regularly assigned motor
vehicle will be used by the employee for personal as well as business purposes and there is some
incidental benefit to the employer. Even where the employees personal purpose in using the vehicle has
been accomplished and he has started the return trip to his house where the vehicle is normally kept, it
has been held that he has not resumed his employment, and the employer is not liable for the employees
negligent operation of the vehicle during the return trip.[15]

The foregoing principles and jurisprudence are applicable in our jurisdiction albeit based on the
doctrine of respondeat superior, not on the principle of bonus pater familias as in ours. Whether the fault
or negligence of the employee is conclusive on his employer as in American law or jurisprudence, or
merely gives rise to the presumption juris tantum of negligence on the part of the employer as in ours, it is
indispensable that the employee was acting in his employers business or within the scope of his assigned
task.[16]

In the case at bar, it is undisputed that ABAD did some overtime work at the petitioners office, which
was located in Cabangcalan, Mandaue City. Thereafter, he went to Goldies Restaurant in Fuente Osmea,
Cebu City, which is about seven kilometers away from petitioners place of business. [17] A witness for the
private respondents, a sidewalk vendor, testified that Fuente Osmea is a lively place even at dawn
because Goldies Restaurant and Back Street were still open and people were drinking thereat. Moreover,
prostitutes, pimps, and drug addicts littered the place.[18]

At the Goldies Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD
was leaving the restaurant that the incident in question occurred. That same witness for the private
respondents testified that at the time of the vehicular accident, ABAD was with a woman in his car, who
then shouted: Daddy, Daddy![19] This woman could not have been ABADs daughter, for ABAD was only 29
years old at the time.

To the mind of this Court, ABAD was engaged in affairs of his own or was carrying out a personal
purpose not in line with his duties at the time he figured in a vehicular accident. It was then about 2:00
a.m. of 28 August 1988, way beyond the normal working hours. ABADs working day had ended; his
overtime work had already been completed. His being at a place which, as petitioner put it, was known as
a haven for prostitutes, pimps, and drug pushers and addicts, had no connection to petitioners business;
neither had it any relation to his duties as a manager. Rather, using his service vehicle even for personal
purposes was a form of a fringe benefit or one of the perks attached to his position.

Since there is paucity of evidence that ABAD was acting within the scope of the functions entrusted
to him, petitioner CASTILEX had no duty to show that it exercised the diligence of a good father of a
family in providing ABAD with a service vehicle. Thus, justice and equity require that petitioner be relieved
of vicarious liability for the consequences of the negligence of ABAD in driving its vehicle.[20]

WHEREFORE, the petition is GRANTED, and the appealed decision and resolution of the Court of
Appeals is AFFIRMED with the modification that petitioner Castilex Industrial Corporation be absolved of
any liability for the damages caused by its employee, Jose Benjamin Abad.

SO ORDERED

RCJ BUS LINES, INCORPORATED, G.R. No. 193629

STANDARD INSURANCE COMPANY, INCORPORATED, Promulgated:

Respondent.
August 17, 2011
x--------------------------------------------------x

DECISION

CARPIO, J.:

The Case

G.R. No. 193629 is a petition for review 1 assailing the Decision2 promulgated on 11 March 2010 as well as the
Resolution3 promulgated on 3 September 2010 by the Court of Appeals (appellate court) in CA-G.R. SP No.
105338. The appellate court affirmed with modification the 27 May 2008 Decision4 of Branch 37 of the
Regional Trial Court of Manila (RTC) in Civil Case No. 00-99410. The RTC dismissed RCJ Bus Lines appeal
from the 12 July 2000 Decision5 of the Metropolitan Trial Court of Manila (MeTC) in Civil Case No. 153566.
The MeTC rendered judgment in favor of Standard Insurance Company, Incorporated (Standard) and
ordered Flor Bola Mangoba (Mangoba) and RCJ Bus Lines, Incorporated (RCJ) to pay damages.

The Facts

The appellate court narrated the facts as follows:

On 01 December 2000, respondent Standard Insurance Co., Inc. (STANDARD) filed an amended complaint
against the petitioners Flor Bola Mangoba and RCJ Bus Lines, Inc. (docketed as Civil Case No. 153566-CV
before the Metropolitan Trial Court of Manila, Branch 29). Said amended complaint alleged, among others:

2. On June 19, 1994 along the National Highway at Brgy. Amlang, Rosario, La Union,
defendant Flor B. Mangoba while driving [sic] an RCJ HINO BLUE RIBBON PASSENGER BUS
bearing Plate No. NYG-363 in a reckless and imprudent manner, bumped and hit a 1991
Mitsubishi Lancer GLX bearing Plate No. TAJ-796, a photocopy of the police report is attached
hereto and made an integral part hereof as Annex A.
 3. The subject Mitsubishi Lancer which is owned by Rodelene Valentino was insured for loss
and damage with plaintiff [Standard Insurance Co. Inc.] for P450,000.00, a photocopy of the
insurance policy is attached hereto and made an integral part hereof as Annex B.

4. Defendant RCJ Bus Lines, Inc. is the registered owner of the Passenger Bus bearing Plate
No. NYG-363 while defendant Flor Mangoba was the driver of the subject Passenger Bus when
the accident took place.

5. As a direct and proximate cause of the vehicular accident, the Mitsubishi Lancer was
extensively damaged, the costs of repairs of which were borne by the plaintiff [Standard
Insurance Co. Inc.] at a cost of P162,151.22.

6. By virtue of the insurance contract, plaintiff [Standard Insurance Co. Inc.]

paid Rodelene Valentino the amount of P162,151.22 for the repair of the Mitsubishi Lancer car.

7. After plaintiff [Standard Insurance Co. Inc.] has complied with its obligation under the policy
mentioned above, plaintiffs assured executed in plaintiffs favor a Release of Claim thereby
subrogating the latter to all his rights of recovery on all claims, demands and rights of action on
account of loss, damage or injury as a consequence of the accident from any person
liable therefor.

8. Despite demands, defendants have failed and refused and still continue to fail and refuse to
reimburse plaintiff the sum of P162,151.22. A photocopy of the demand letter is attached hereto
and made an integral part hereof as Annex C.

9. As a consequence, plaintiff [Standard Insurance Co. Inc.] has been compelled to resort to
court action and thereby hire the services of counsel as well as incur expenses of litigation for
all of which it should be indemnified by the defendant in the amount of at least P30,000.00.

10. In order that it may serve as a deterrent for others and by way of example for the public
good, defendants should be adjudged to pay plaintiff [Standard Insurance Co. Inc.] exemplary
damages in the amount of P20,000.00.

Thus, STANDARD prayed:

WHEREFORE, plaintiff respectfully prays that after due trial on the issues, this court render
judgment against the defendants adjudging them jointly and severally liable to pay plaintiff the
following amounts:

1. The principal claim of P162,151.22 with interest at 12% per annum from September 1, 1995
until fully paid.

2. P30,000.00 as and by way of indemnification for attorneys fees.

3. P25,000.00 as exemplary damages.

Plaintiff prays for such further or other reliefs as may be deemed just and equitable under the
premises.

In its answer, RCJ Bus Lines, Inc. maintained:

1. That the complaint states no cause of action against it;

2. That venue was improperly laid; and,

3. That the direct, immediate and proximate cause of the accident was the negligence of the
driver of the Mitsubishi Lancer when, for no reason at all, it made a sudden stop along the
National Highway, as if to initiate and/or create an accident.

Flor Bola Mangoba, in his own answer to the complaint, also pointed his finger at the driver of the Mitsubishi
Lancer as the one who caused the vehicular accident on the time, date and place in question.

For his failure to appear at the pre-trial despite notice, Flor Bola Mangoba was declared in default on 14
November 1997. Accordingly, trial proceeded sans his participation.

At the trial, the evidence adduced by the parties established the following facts:
 In the evening of 19 June 1994, at around 7:00 oclock, a Toyota Corolla with Plate No. PHU-185
driven by Rodel Chua, cruised along the National Highway at Barangay Amlang, Rosario, La
Union, heading towards the general direction of Bauan, La Union. The Toyota Corolla travelled
at a speed of 50 kilometers per hour as it traversed the downward slope of the road, which
curved towards the right.

The Mitsubishi Lancer GLX with Plate No. TAJ-796, driven by Teodoro Goki, and owned
by Rodelene Valentino, was then following the Toyota Corolla along the said highway. Behind
the Mitsubishi Lancer GLX was the passenger bus with Plate No. NYG-363, driven
by Flor Bola Mangoba and owned by RCJ Bus Lines, Inc. The bus followed the Mitsubishi
Lancer GLX at a distance of ten (10) meters and traveled at the speed of 60 to 75 kilometers
per hour.

Upon seeing a pile of gravel and sand on the road, the Toyota Corolla stopped on its tracks. The
Mitsubishi Lancer followed suit and also halted. At this point, the bus hit and bumped the rear
portion of the Mitsubishi Lancer causing it to move forward and hit the Toyota Corolla in front of
it.

As a result of the incident, the Mitsubishi Lancer sustained damages amounting to P162,151.22,
representing the costs of its repairs. Under the comprehensive insurance policy secured
by Rodelene Valentino, owner of the Mitsubishi Lancer, STANDARD reimbursed to the former
the amount she expended for the repairs of her vehicle. Rodelene then executed a Release of
Claim and Subrogation Receipt, subrogating STANDARD to all rights, claims and actions she
may have against RCJ Bus Lines, Inc. and its driver, Flor Bola Mangoba.6

The MeTCs Ruling

On 12 July 2000, the MeTC rendered its decision in favor of Standard, the dispositive portion of which reads:

WHEREFORE, consistent with Section 1, Rule 131 and Section 1, Rule 133 of the Revised Rules on
Evidence, judgment is hereby rendered in favor of the plaintiff, ordering defendants Flor Bola Mangoba and
RCJ Bus Lines, Inc.:

1. To pay the principal sum of ONE HUNDRED SIXTY TWO THOUSAND ONE HUNDRED FIFTY ONE
PESOS and 22/100 (P162,151.22), with legal rate of interest at 12% per annum from September 1, 1995 until
full payment;

2. To pay the sum of TWENTY THOUSAND PESOS (P20,000.00) as exemplary damages;

3. To pay the sum of TWENTY THOUSAND PESOS (P20,000.00) as reasonable attorneys fees; and

4. To pay the costs of suit.

For want of merit, the separate Counterclaim is hereby DISMISSED.7

In an Order8 dated 2 May 2002, the RTC dismissed Mangoba and RCJs appeal for filing their pleading beyond
the reglementary period. The appellate court, however, in a Decision 9 in CA-G.R. SP No. 77598 dated 23 April
2004, granted RCJs petition and remanded the case to the RTC for further proceedings.

The RTCs Ruling

In its Decision dated 27 May 2008, the RTC affirmed with modification the MeTCs Decision dated 12 July
2000. The RTC deleted the award for exemplary damages.

RCJ failed to convince the RTC that it observed the diligence of a good father of a family to prevent damages
sustained by the Mitsubishi Lancer. The RTC ruled that the testimony of Conrado Magno, RCJs Operations
Manager, who declared that all applicants for employment in RCJ were required to submit clearances from
the barangay, the courts and the National Bureau of Investigation, is insufficient to show that RCJ exercised
due diligence in the selection and supervision of its drivers. The allegation of the conduct of seminars and
training for RCJs drivers is not proof that RCJ examined Mangobas qualifications, experience and driving
history. Moreover, the testimony of Noel Oalog, the bus conductor, confirmed that the bus was travelling at a
speed of 60 to 75 kilometers per hour, which was beyond the maximum allowable speed of 50 kilometers per
hour for a bus on an open country road. The RTC, however, deleted the award of exemplary damages
because it found no evidence that Mangoba acted with gross negligence.

In an Order10 dated 27 August 2008, the RTC partially reconsidered its 27 May 2008 Decision and modified
the MeTCs Decision to read as follows:

WHEREFORE, the Decision dated May 27, 2008 is partially reconsidered and the Decision of the court a quo
dated July 12, 2000 is MODIFIED. Appellant RCJ Bus Lines, Inc. and defendant Flor Bola Mangoba are
ordered to pay jointly and severally the appellee [Standard Insurance Co., Inc.] the following:

1. ONE HUNDRED SIXTY TWO THOUSAND ONE FIFTY ONE PESOS and 22/100 (P162,151.22), with legal
rate of interest at 6% per annum from September 1, 1995 until full payment;

2. TWENTY THOUSAND PESOS (P20,000.00) as reasonable attorneys fees; and

3. Cost of suit.

SO ORDERED.11

The Appellate Courts Ruling

Mangoba and RCJ filed a petition for review before the appellate court. The appellate court found that the RTC
committed no reversible error in affirming RCJs liability as registered owner of the bus and employer
of Mangoba, as well as Mangobas negligence in driving the passenger bus. The appellate court, however,
deleted the award for attorneys fees and modified the legal interest imposed by the MeTC.

The dispositive portion of the appellate courts decision reads:

WHEREFORE, the instant petition for review is DENIED. The assailed Decision of the Regional Trial Court of
Manila, Branch 37, in Civil Case No. 00-99410 is hereby AFFIRMED with MODIFICATION that the legal
interest that should be imposed on the actual damages awarded in favor of respondent Standard Insurance,
Co., Inc. should be at the rate of 6% per annum computed from the time of extra judicial demand until the
finality of the 12 July 2000 Decision of the MeTC and thereafter, the legal interest shall be at the rate of 12%
per annum until the full payment of the actual damages. The award of attorneys fees is DELETED.

SO ORDERED.12

The appellate court denied RCJs Motion for Reconsideration13 for lack of merit.14
The Issues

RCJ assigns the following as errors of the appellate court:

1. The Court of Appeals erroneously awarded the amount of P162,151.22 representing actual damages based
merely on the proof of payment of policy/insurance claim and not on an official receipt of payment of actual
cost of repair;

2. The Court of Appeals erroneously disregarded the point that petitioner RCJs defense of extraordinary
diligence in the selection and supervision of its driver was made as an alternative defense;

3. The Court of Appeals erroneously disregarded the legal principle that the supposed violation of Sec. 35 of
R.A. 4136 merely results in a disputable presumption; and

4. The Court of Appeals erroneously held that petitioner RCJ is vicariously liable for the claim of supposed
actual damages incurred by respondent Standard Insurance.15

The Courts Ruling

The petition has no merit. We see no reason to overturn the findings of the lower courts. We affirm the ruling of
the appellate court.

RCJs Liability
RCJ argues that its defense of extraordinary diligence in the selection and supervision of its employees is a
mere alternative defense. RCJs initial claim was that Standards complaint failed to state a cause of action
against RCJ.

Standard may hold RCJ liable for two reasons, both of which rely upon facts uncontroverted by RCJ. One, RCJ
is the registered owner of the bus driven by Mangoba. Two, RCJ is Mangobas employer.

Standards allegation in its amended complaint that RCJ is the registered owner of the passenger bus with
plate number NYG 363 was sufficient to state a cause of action against RCJ. The registered owner of a vehicle
should be primarily responsible to the public for injuries caused while the vehicle is in use. 16 The main aim of
motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury
is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the
registered owner.17

Moreover, in its efforts to extricate itself from liability, RCJ proffered the defense of the exercise of the diligence
of a good father of a family. The MeTC characterized RCJs defense against negligence in this manner:

To repel the idea of negligence, defendant [RCJ] bus companys operations manager at the Laoag City
Terminal was presented on the witness stand on January 5, 2000 in regard to the companys seminars and
dialogues with respect to its employees, and the absence of any record of a vehicular accident involving the
co-defendant driver [Mangoba] (TSN, January 5, 2000, pp. 2-17; TSN, February 16, 2000, pp. 2-9). As the last
witness of defendant [RCJ] bus company, Noel Oalog, bus conductor who was allegedly seated to the right
side of the bus driver during the incident, was presented on March 22, 2000 (TSN, March 22, 2000, page 2).
He confirmed on direct examination and cross examination that it was defendants bus, then running at 60-75
[kph] and at a distance of 10 meters, which bumped a Mitsubishi Lancer without a tail light. According to him,
the incident occurred when the driver of the Toyota Corolla, which was ahead of the Lancer, stepped on the
brakes due to the pile of gravel and sand in sight (TSN, Vide at pp. 3-11). Subsequent to the proffer of exhibits
(TSN, Vide, at page 14), and in default of any rebuttal, the parties were directed to file the Memoranda within
thirty days from March 23, 2000.18

RCJ, by presenting witnesses to testify on its exercise of diligence of a good father of a family in the selection
and supervision of its bus drivers, admitted that Mangoba is its employee. Article 218019 of the Civil Code, in
relation to Article 2176,20 makes the employer vicariously liable for the acts of its employees. When the
employee causes damage due to his own negligence while performing his own duties, there arises
the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the
diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection
and supervision of employees, the employer is likewise responsible for damages, the basis of the liability being
the relationship of pater familias or on the employers own negligence.21

Mangoba, per testimony of his conductor, was ten meters away from the Mitsubishi Lancer before the collision
and was driving 60 to 75 kilometers per hour when the speed limit was 50 kilometers per hour.22 The
presumption under Article 218523 of the Civil Code was thus proven true: Mangoba, as driver of the bus which
collided with the Mitsubishi Lancer, was negligent since he violated a traffic regulation at the time of the
mishap. We see no reason to depart from the findings of the MeTC, RTC and appellate court
that Mangoba was negligent. The appellate court stated:

To be sure, had not the passenger bus been speeding while traversing the downward sloping road, it would not
have hit and bumped the Mitsubishi Lancer in front of it, causing the latter vehicle to move forward and hit and
bump, in turn, the Toyota Corolla. Had the bus been moving at a reasonable speed, it could have avoided
hitting and bumping the Mitsubishi Lancer upon spotting the same, taking into account that the distance
between the two vehicles was ten (10) meters. As fittingly opined by the MeTC, the driver of the passenger
bus, being the rear vehicle, had full control of the situation as he was in a position to observe the vehicle in
front of him. Had he observed the diligence required under the circumstances, the accident would not have
occurred.24

Subrogation

In the present case, it cannot be denied that the Mitsubishi Lancer sustained damages. Moreover, it cannot
also be denied that Standard paid Rodelene Valentino P162,151.22 for the repair of the Mitsubishi Lancer
pursuant to a Release of Claim and Subrogation Receipt. Neither RCJ nor Mangoba cross-examined
Standards claims evaluator when he testified on his duties, the insurance contract
between Rodelene Valentino and Standard, Standards payment of insurance proceeds, and RCJ
and Mangobas refusal to pay despite demands. After being lackadaisical during trial, RCJ cannot escape
liability now. Standards right of subrogation accrues simply upon its payment of the insurance claim.25

Article 2207 of the Civil Code reads:

Art. 2207. If the plaintiffs property has been insured and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated
the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved
party shall be entitled to recover the deficiency from the person causing the loss or injury.

Subrogation is the substitution of one person by another with reference to a lawful claim or right, so that he
who substitutes another succeeds to the rights of the other in relation to a debt or claim, including its remedies
or securities. The principle covers a situation wherein an insurer who has paid a loss under an insurance policy
is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss
covered by the policy.26

WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No.
105338 promulgated on 11 March 2010 as well as the Resolution promulgated on 3 September 2010.

SO ORDERED.

G.R. No. 150157 January 25, 2007

MAURICIO MANLICLIC and PHILIPPINE RABBIT BUS LINES, INC., Petitioners,

vs.
MODESTO CALAUNAN, Respondent.

DECISION

CHICO-NAZARIO, J.:

Assailed before Us is the decision1 of the Court of Appeals in CA-G.R. CV No. 55909 which affirmed in toto the
decision2 of the Regional Trial Court (RTC) of Dagupan City, Branch 42, in Civil Case No. D-10086, finding
petitioners Mauricio Manliclic and Philippine Rabbit Bus Lines, Inc. (PRBLI) solidarily liable to pay damages
and attorneys fees to respondent Modesto Calaunan.

The factual antecedents are as follows:

The vehicles involved in this case are: (1) Philippine Rabbit Bus No. 353 with plate number CVD-478, owned
by petitioner PRBLI and driven by petitioner Mauricio Manliclic; and (2) owner-type jeep with plate number
PER-290, owned by respondent Modesto Calaunan and driven by Marcelo Mendoza.

At around 6:00 to 7:00 oclock in the morning of 12 July 1988, respondent Calaunan, together with Marcelo
Mendoza, was on his way to Manila from Pangasinan on board his owner-type jeep. The Philippine Rabbit Bus
was likewise bound for Manila from Concepcion, Tarlac. At approximately Kilometer 40 of the North Luzon
Expressway in Barangay Lalangan, Plaridel, Bulacan, the two vehicles collided. The front right side of the
Philippine Rabbit Bus hit the rear left side of the jeep causing the latter to move to the shoulder on the right and
then fall on a ditch with water resulting to further extensive damage. The bus veered to the left and stopped 7
to 8 meters from point of collision.

Respondent suffered minor injuries while his driver was unhurt. He was first brought for treatment to the Manila
Central University Hospital in Kalookan City by Oscar Buan, the conductor of the Philippine Rabbit Bus, and
was later transferred to the Veterans Memorial Medical Center.

By reason of such collision, a criminal case was filed before the RTC of Malolos, Bulacan, charging petitioner
Manliclic with Reckless Imprudence Resulting in Damage to Property with Physical Injuries, docketed as Crim.
Case No. 684-M-89. Subsequently on 2 December 1991, respondent filed a complaint for damages against
petitioners Manliclic and PRBLI before the RTC of Dagupan City, docketed as Civil Case No. D-10086. The
criminal case was tried ahead of the civil case. Among those who testified in the criminal case were respondent
Calaunan, Marcelo Mendoza and Fernando Ramos.

In the civil case (now before this Court), the parties admitted the following:
 1. The parties agreed on the capacity of the parties to sue and be sued as well as the venue and the
identities of the vehicles involved;

2. The identity of the drivers and the fact that they are duly licensed;

3. The date and place of the vehicular collision;

4. The extent of the injuries suffered by plaintiff Modesto Calaunan and the existence of the medical
certificate;

5. That both vehicles were going towards the south; the private jeep being ahead of the bus;

6. That the weather was fair and the road was well paved and straight, although there was a ditch on
the right side where the jeep fell into.3

When the civil case was heard, counsel for respondent prayed that the transcripts of stenographic notes
(TSNs)4of the testimonies of respondent Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal
case be received in evidence in the civil case in as much as these witnesses are not available to testify in the
civil case.

Francisco Tuliao testified that his brother-in-law, respondent Calaunan, left for abroad sometime in November,
1989 and has not returned since then. Rogelio Ramos took the stand and said that his brother, Fernando
Ramos, left for Amman, Jordan, to work. Rosalia Mendoza testified that her husband, Marcelo Mendoza, left
their residence to look for a job. She narrated that she thought her husband went to his hometown in Panique,
Tarlac, when he did not return after one month. She went to her husbands hometown to look for him but she
was informed that he did not go there.1awphil.net

The trial court subpoenaed the Clerk of Court of Branch 8, RTC, Malolos, Bulacan, the court where Criminal
Case No. 684-M-89 was tried, to bring the TSNs of the testimonies of respondent Calaunan, 5 Marcelo
Mendoza6 and Fernando Ramos7 in said case, together with other documentary evidence marked therein.
Instead of the Branch Clerk of Court, it was Enrique Santos Guevara, Court Interpreter, who appeared before
the court and identified the TSNs of the three afore-named witnesses and other pertinent documents he had
brought.8 Counsel for respondent wanted to mark other TSNs and documents from the said criminal case to be
adopted in the instant case, but since the same were not brought to the trial court, counsel for petitioners
compromised that said TSNs and documents could be offered by counsel for respondent as rebuttal evidence.

For the defendants, petitioner Manliclic and bus conductor Oscar Buan testified. The TSN 9 of the testimony of
Donato Ganiban, investigator of the PRBLI, in Criminal Case No. 684-M-89 was marked and allowed to be
adopted in the civil case on the ground that he was already dead.

Respondent further marked, among other documents, as rebuttal evidence, the TSNs 10 of the testimonies of
Donato Ganiban, Oscar Buan and petitioner Manliclic in Criminal Case No. 684-M-89.

The disagreement arises from the question: Who is to be held liable for the collision?

Respondent insists it was petitioner Manliclic who should be liable while the latter is resolute in saying it was
the former who caused the smash up.

The versions of the parties are summarized by the trial court as follows:

The parties differed only on the manner the collision between the two (2) vehicles took place. According to the
plaintiff and his driver, the jeep was cruising at the speed of 60 to 70 kilometers per hour on the slow lane of
the expressway when the Philippine Rabbit Bus overtook the jeep and in the process of overtaking the jeep,
the Philippine Rabbit Bus hit the rear of the jeep on the left side. At the time the Philippine Rabbit Bus hit the
jeep, it was about to overtake the jeep. In other words, the Philippine Rabbit Bus was still at the back of the
jeep when the jeep was hit. Fernando Ramos corroborated the testimony of the plaintiff and Marcelo Mendoza.
He said that he was on another jeep following the Philippine Rabbit Bus and the jeep of plaintiff when the
incident took place. He said, the jeep of the plaintiff overtook them and the said jeep of the plaintiff was
followed by the Philippine Rabbit Bus which was running very fast. The bus also overtook the jeep in which he
was riding. After that, he heard a loud sound. He saw the jeep of the plaintiff swerved to the right on a grassy
portion of the road. The Philippine Rabbit Bus stopped and they overtook the Philippine Rabbit Bus so that it
could not moved (sic), meaning they stopped in front of the Philippine Rabbit Bus. He testified that the jeep of
plaintiff swerved to the right because it was bumped by the Philippine Rabbit bus from behind.

Both Mauricio Manliclic and his driver, Oscar Buan admitted that the Philippine Rabbit Bus bumped the jeep in
question. However, they explained that when the Philippine Rabbit bus was about to go to the left lane to
overtake the jeep, the latter jeep swerved to the left because it was to overtake another jeep in front of it. Such
was their testimony before the RTC in Malolos in the criminal case and before this Court in the instant case.
[Thus, which of the two versions of the manner how the collision took place was correct, would be
determinative of who between the two drivers was negligent in the operation of their respective vehicles.]11

Petitioner PRBLI maintained that it observed and exercised the diligence of a good father of a family in the
selection and supervision of its employee, specifically petitioner Manliclic.

On 22 July 1996, the trial court rendered its decision in favor of respondent Calaunan and against petitioners
Manliclic and PRBLI. The dispositive portion of its decision reads:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants ordering the said
defendants to pay plaintiff jointly and solidarily the amount of P40,838.00 as actual damages for the towing as
well as the repair and the materials used for the repair of the jeep in question; P100,000.00 as moral damages
and another P100,000.00 as exemplary damages and P15,000.00 as attorneys fees, including appearance
fees of the lawyer. In addition, the defendants are also to pay costs.12

Petitioners appealed the decision via Notice of Appeal to the Court of Appeals.13

In a decision dated 28 September 2001, the Court of Appeals, finding no reversible error in the decision of the
trial court, affirmed it in all respects.14

Petitioners are now before us by way of petition for review assailing the decision of the Court of Appeals. They
assign as errors the following:

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS
QUESTIONABLE ADMISSION IN EVIDENCE OF THE TSNs AND OTHER DOCUMENTS PRESENTED IN
THE CRIMINAL CASE.

II

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS
RELIANCE ON THE VERSION OF THE RESPONDENT ON HOW THE ACCIDENT SUPPOSEDLY
OCCURRED.

III

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS
UNFAIR DISREGARD OF HEREIN PETITIONER PRBLs DEFENSE OF EXERCISE OF DUE DILIGENCE IN
THE SELECTION AND SUPERVISION OF ITS EMPLOYEES.

IV

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE TRIAL COURTS
QUESTIONABLE AWARD OF DAMAGES AND ATTORNEYS FEE.

With the passing away of respondent Calaunan during the pendency of this appeal with this Court, we granted
the Motion for the Substitution of Respondent filed by his wife, Mrs. Precila Zarate Vda. De Calaunan, and
children, Virgilio Calaunan, Carmelita Honeycomb, Evelyn Calaunan, Marko Calaunan and Liwayway
Calaunan.15
In their Reply to respondents Comment, petitioners informed this Court of a Decision16 of the Court of Appeals
acquitting petitioner Manliclic of the charge 17 of Reckless Imprudence Resulting in Damage to Property with
Physical Injuries attaching thereto a photocopy thereof.

On the first assigned error, petitioners argue that the TSNs containing the testimonies of respondent
Calaunan,18Marcelo Mendoza19 and Fernando Ramos20 should not be admitted in evidence for failure of
respondent to comply with the requisites of Section 47, Rule 130 of the Rules of Court.

For Section 47, Rule 13021 to apply, the following requisites must be satisfied: (a) the witness is dead or unable
to testify; (b) his testimony or deposition was given in a former case or proceeding, judicial or administrative,
between the same parties or those representing the same interests; (c) the former case involved the same
subject as that in the present case, although on different causes of action; (d) the issue testified to by the
witness in the former trial is the same issue involved in the present case; and (e) the adverse party had an
opportunity to cross-examine the witness in the former case.22

Admittedly, respondent failed to show the concurrence of all the requisites set forth by the Rules for a
testimony given in a former case or proceeding to be admissible as an exception to the hearsay rule. Petitioner
PRBLI, not being a party in Criminal Case No. 684-M-89, had no opportunity to cross-examine the three
witnesses in said case. The criminal case was filed exclusively against petitioner Manliclic, petitioner PRBLIs
employee. The cases dealing with the subsidiary liability of employers uniformly declare that, strictly speaking,
they are not parties to the criminal cases instituted against their employees.23

Notwithstanding the fact that petitioner PRBLI was not a party in said criminal case, the testimonies of the
three witnesses are still admissible on the ground that petitioner PRBLI failed to object on their admissibility.

It is elementary that an objection shall be made at the time when an alleged inadmissible document is offered
in evidence; otherwise, the objection shall be treated as waived, since the right to object is merely a privilege
which the party may waive. Thus, a failure to except to the evidence because it does not conform to the statute
is a waiver of the provisions of the law. Even assuming ex gratia argumenti that these documents are
inadmissible for being hearsay, but on account of failure to object thereto, the same may be admitted and
considered as sufficient to prove the facts therein asserted. 24 Hearsay evidence alone may be insufficient to
establish a fact in a suit but, when no objection is made thereto, it is, like any other evidence, to be considered
and given the importance it deserves.25

In the case at bar, petitioner PRBLI did not object to the TSNs containing the testimonies of respondent
Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case when the same were offered in
evidence in the trial court. In fact, the TSNs of the testimonies of Calaunan and Mendoza were admitted by
both petitioners.26Moreover, petitioner PRBLI even offered in evidence the TSN containing the testimony of
Donato Ganiban in the criminal case. If petitioner PRBLI argues that the TSNs of the testimonies of plaintiffs
witnesses in the criminal case should not be admitted in the instant case, why then did it offer the TSN of the
testimony of Ganiban which was given in the criminal case? It appears that petitioner PRBLI wants to have its
cake and eat it too. It cannot argue that the TSNs of the testimonies of the witnesses of the adverse party in
the criminal case should not be admitted and at the same time insist that the TSN of the testimony of the
witness for the accused be admitted in its favor. To disallow admission in evidence of the TSNs of the
testimonies of Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case and to admit the TSN of
the testimony of Ganiban would be unfair.

We do not subscribe to petitioner PRBLIs argument that it will be denied due process when the TSNs of the
testimonies of Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case are to be admitted in the
civil case. It is too late for petitioner PRBLI to raise denial of due process in relation to Section 47, Rule 130 of
the Rules of Court, as a ground for objecting to the admissibility of the TSNs. For failure to object at the proper
time, it waived its right to object that the TSNs did not comply with Section 47.

In Mangio v. Court of Appeals,27 this Court, through Associate Justice Reynato S. Puno, 28 admitted in evidence
a TSN of the testimony of a witness in another case despite therein petitioners assertion that he would be
denied due process. In admitting the TSN, the Court ruled that the raising of denial of due process in relation to
Section 47, Rule 130 of the Rules of Court, as a ground for objecting to the admissibility of the TSN was
belatedly done. In so doing, therein petitioner waived his right to object based on said ground.
Petitioners contend that the documents in the criminal case should not have been admitted in the instant civil
case because Section 47 of Rule 130 refers only to "testimony or deposition." We find such contention to be
untenable. Though said section speaks only of testimony and deposition, it does not mean that documents
from a former case or proceeding cannot be admitted. Said documents can be admitted they being part of the
testimonies of witnesses that have been admitted. Accordingly, they shall be given the same weight as that to
which the testimony may be entitled.29

On the second assigned error, petitioners contend that the version of petitioner Manliclic as to how the accident
occurred is more credible than respondents version. They anchor their contention on the fact that petitioner
Manliclic was acquitted by the Court of Appeals of the charge of Reckless Imprudence Resulting in Damage to
Property with Physical Injuries.

To be resolved by the Court is the effect of petitioner Manliclics acquittal in the civil case.

From the complaint, it can be gathered that the civil case for damages was one arising from, or based on,
quasi-delict.30 Petitioner Manliclic was sued for his negligence or reckless imprudence in causing the collision,
while petitioner PRBLI was sued for its failure to exercise the diligence of a good father in the selection and
supervision of its employees, particularly petitioner Manliclic. The allegations read:

"4. That sometime on July 12, 1988 at around 6:20 A.M. plaintiff was on board the above-described
motor vehicle travelling at a moderate speed along the North Luzon Expressway heading South
towards Manila together with MARCELO MENDOZA, who was then driving the same;

"5. That approximately at kilometer 40 of the North Luzon Express Way, the above-described motor
vehicle was suddenly bumped from behind by a Philippine Rabbit Bus with Body No. 353 and with plate
No. CVD 478 then being driven by one Mauricio Manliclic of San Jose, Concepcion, Tarlac, who was
then travelling recklessly at a very fast speed and had apparently lost control of his vehicle;

"6. That as a result of the impact of the collision the above-described motor vehicle was forced off the
North Luzon Express Way towards the rightside where it fell on its drivers side on a ditch, and that as a
consequence, the above-described motor vehicle which maybe valued at EIGHTY THOUSAND PESOS
(P80,000) was rendered a total wreck as shown by pictures to be presented during the pre-trial and trial
of this case;

"7. That also as a result of said incident, plaintiff sustained bodily injuries which compounded plaintiffs
frail physical condition and required his hospitalization from July 12, 1988 up to and until July 22, 1988,
copy of the medical certificate is hereto attached as Annex "A" and made an integral part hereof;

"8. That the vehicular collision resulting in the total wreckage of the above-described motor vehicle as
well as bodily (sic) sustained by plaintiff, was solely due to the reckless imprudence of the defendant
driver Mauricio Manliclic who drove his Philippine Rabbit Bus No. 353 at a fast speed without due
regard or observance of existing traffic rules and regulations;

"9. That defendant Philippine Rabbit Bus Line Corporation failed to exercise the diligence of a good
father of (sic) family in the selection and supervision of its drivers; x x x"31

Can Manliclic still be held liable for the collision and be found negligent notwithstanding the declaration of the
Court of Appeals that there was an absence of negligence on his part?

In exonerating petitioner Manliclic in the criminal case, the Court of Appeals said:

To the following findings of the court a quo, to wit: that accused-appellant was negligent "when the bus he was
driving bumped the jeep from behind"; that "the proximate cause of the accident was his having driven the bus
at a great speed while closely following the jeep"; x x x

We do not agree.

The swerving of Calaunans jeep when it tried to overtake the vehicle in front of it was beyond the control of
accused-appellant.
xxxx

Absent evidence of negligence, therefore, accused-appellant cannot be held liable for Reckless Imprudence
Resulting in Damage to Property with Physical Injuries as defined in Article 365 of the Revised Penal Code.32

From the foregoing declaration of the Court of Appeals, it appears that petitioner Manliclic was acquitted not on
reasonable doubt, but on the ground that he is not the author of the act complained of which is based on
Section 2(b) of Rule 111 of the Rules of Criminal Procedure which reads:

(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds
from a declaration in a final judgment that the fact from which the civil might arise did not exist.

In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The afore-quoted section
applies only to a civil action arising from crime or ex delicto and not to a civil action arising from quasi-delict or
culpa aquiliana. The extinction of civil liability referred to in Par. (e) of Section 3, Rule 111 [now Section 2 (b) of
Rule 111], refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil
liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a
declaration in the criminal case that the criminal act charged has not happened or has not been committed by
the accused.33

A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a substantivity all its
own, and individuality that is entirely apart and independent from a delict or crime a distinction exists
between the civil liability arising from a crime and the responsibility for quasi-delicts or culpa extra-contractual.
The same negligence causing damages may produce civil liability arising from a crime under the Penal Code,
or create an action for quasi-delicts or culpa extra-contractual under the Civil Code. 34 It is now settled that
acquittal of the accused, even if based on a finding that he is not guilty, does not carry with it the extinction of
the civil liability based on quasi delict.35

In other words, if an accused is acquitted based on reasonable doubt on his guilt, his civil liability arising from
the crime may be proved by preponderance of evidence only. However, if an accused is acquitted on the basis
that he was not the author of the act or omission complained of (or that there is declaration in a final judgment
that the fact from which the civil might arise did not exist), said acquittal closes the door to civil liability based
on the crime or ex delicto. In this second instance, there being no crime or delict to speak of, civil liability based
thereon or ex delicto is not possible. In this case, a civil action, if any, may be instituted on grounds other than
the delict complained of.

As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be extinguished by an
acquittal, whether it be on ground of reasonable doubt or that accused was not the author of the act or
omission complained of (or that there is declaration in a final judgment that the fact from which the civil liability
might arise did not exist). The responsibility arising from fault or negligence in a quasi-delict is entirely separate
and distinct from the civil liability arising from negligence under the Penal Code. 36 An acquittal or conviction in
the criminal case is entirely irrelevant in the civil case37 based on quasi-delict or culpa aquiliana.

Petitioners ask us to give credence to their version of how the collision occurred and to disregard that of
respondents. Petitioners insist that while the PRBLI bus was in the process of overtaking respondents jeep,
the latter, without warning, suddenly swerved to the left (fast) lane in order to overtake another jeep ahead of it,
thus causing the collision.

As a general rule, questions of fact may not be raised in a petition for review. The factual findings of the trial
court, especially when affirmed by the appellate court, are binding and conclusive on the Supreme Court. 38 Not
being a trier of facts, this Court will not allow a review thereof unless:

(1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference
made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both appellant and appellees; (7) the
findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of fact are
conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition
as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) the findings of
fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the
evidence on record.39

After going over the evidence on record, we do not find any of the exceptions that would warrant our departure
from the general rule. We fully agree in the finding of the trial court, as affirmed by the Court of Appeals, that it
was petitioner Manliclic who was negligent in driving the PRBLI bus which was the cause of the collision. In
giving credence to the version of the respondent, the trial court has this say:

x x x Thus, which of the two versions of the manner how the collision took place was correct, would be
determinative of who between the two drivers was negligent in the operation of their respective vehicle.

In this regard, it should be noted that in the statement of Mauricio Manliclic (Exh. 15) given to the Philippine
Rabbit Investigator CV Cabading no mention was made by him about the fact that the driver of the jeep was
overtaking another jeep when the collision took place. The allegation that another jeep was being overtaken by
the jeep of Calaunan was testified to by him only in Crim. Case No. 684-M-89 before the Regional Trial Court
in Malolos, Bulacan and before this Court. Evidently, it was a product of an afterthought on the part of Mauricio
Manliclic so that he could explain why he should not be held responsible for the incident. His attempt to veer
away from the truth was also apparent when it would be considered that in his statement given to the
Philippine Rabbit Investigator CV Cabading (Exh. 15), he alleged that the Philippine Rabbit Bus bumped the
jeep of Calaunan while the Philippine Rabbit Bus was behind the said jeep. In his testimony before the
Regional Trial Court in Malolos, Bulacan as well as in this Court, he alleged that the Philippine Rabbit Bus was
already on the left side of the jeep when the collision took place. For this inconsistency between his statement
and testimony, his explanation regarding the manner of how the collision between the jeep and the bus took
place should be taken with caution. It might be true that in the statement of Oscar Buan given to the Philippine
Rabbit Investigator CV Cabading, it was mentioned by the former that the jeep of plaintiff was in the act of
overtaking another jeep when the collision between the latter jeep and the Philippine Rabbit Bus took place.
But the fact, however, that his statement was given on July 15, 1988, one day after Mauricio Manliclic gave his
statement should not escape attention. The one-day difference between the giving of the two statements would
be significant enough to entertain the possibility of Oscar Buan having received legal advise before giving his
statement. Apart from that, as between his statement and the statement of Manliclic himself, the statement of
the latter should prevail. Besides, in his Affidavit of March 10, 1989, (Exh. 14), the unreliability of the statement
of Oscar Buan (Exh. 13) given to CV Cabading rear its "ugly head" when he did not mention in said affidavit
that the jeep of Calaunan was trying to overtake another jeep when the collision between the jeep in question
and the Philippine Rabbit bus took place.

xxxx

If one would believe the testimony of the defendant, Mauricio Manliclic, and his conductor, Oscar Buan, that
the Philippine Rabbit Bus was already somewhat parallel to the jeep when the collision took place, the point of
collision on the jeep should have been somewhat on the left side thereof rather than on its rear. Furthermore,
the jeep should have fallen on the road itself rather than having been forced off the road. Useless, likewise to
emphasize that the Philippine Rabbit was running very fast as testified to by Ramos which was not
controverted by the defendants.40

Having ruled that it was petitioner Manliclics negligence that caused the smash up, there arises the juris
tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a
good father of a family.41 Under Article 218042 of the New Civil Code, when an injury is caused by the
negligence of the employee, there instantly arises a presumption of law that there was negligence on the part
of the master or employer either in the selection of the servant or employee, or in supervision over him after
selection or both. The liability of the employer under Article 2180 is direct and immediate; it is not conditioned
upon prior recourse against the negligent employee and a prior showing of the insolvency of such employee.
Therefore, it is incumbent upon the private respondents to prove that they exercised the diligence of a good
father of a family in the selection and supervision of their employee.43

In the case at bar, petitioner PRBLI maintains that it had shown that it exercised the required diligence in the
selection and supervision of its employees, particularly petitioner Manliclic. In the matter of selection, it showed
the screening process that petitioner Manliclic underwent before he became a regular driver. As to the exercise
of due diligence in the supervision of its employees, it argues that presence of ready investigators (Ganiban
and Cabading) is sufficient proof that it exercised the required due diligence in the supervision of its
employees.

In the selection of prospective employees, employers are required to examine them as to their qualifications,
experience and service records. In the supervision of employees, the employer must formulate standard
operating procedures, monitor their implementation and impose disciplinary measures for the breach thereof.
To fend off vicarious liability, employers must submit concrete proof, including documentary evidence, that they
complied with everything that was incumbent on them.44

In Metro Manila Transit Corporation v. Court of Appeals,45 it was explained that:

Due diligence in the supervision of employees on the other hand, includes the formulation of suitable rules and
regulations for the guidance of employees and the issuance of proper instructions intended for the protection of
the public and persons with whom the employer has relations through his or its employees and the imposition
of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the
performance of acts indispensable to the business of and beneficial to their employer. To this, we add that
actual implementation and monitoring of consistent compliance with said rules should be the constant concern
of the employer, acting through dependable supervisors who should regularly report on their supervisory
functions.

In order that the defense of due diligence in the selection and supervision of employees may be deemed
sufficient and plausible, it is not enough to emptily invoke the existence of said company guidelines and
policies on hiring and supervision. As the negligence of the employee gives rise to the presumption of
negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only in
the selection of employees but also in the actual supervision of their work. The mere allegation of the existence
of hiring procedures and supervisory policies, without anything more, is decidedly not sufficient to overcome
such presumption.

We emphatically reiterate our holding, as a warning to all employers, that "the formulation of various company
policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from
liability arising from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and
employing the erring driver the recruitment procedures and company policies on efficiency and safety were
followed." x x x.

The trial court found that petitioner PRBLI exercised the diligence of a good father of a family in the selection
but not in the supervision of its employees. It expounded as follows:

From the evidence of the defendants, it seems that the Philippine Rabbit Bus Lines has a very good procedure
of recruiting its driver as well as in the maintenance of its vehicles. There is no evidence though that it is as
good in the supervision of its personnel. There has been no iota of evidence introduced by it that there are
rules promulgated by the bus company regarding the safe operation of its vehicle and in the way its driver
should manage and operate the vehicles assigned to them. There is no showing that somebody in the bus
company has been employed to oversee how its driver should behave while operating their vehicles without
courting incidents similar to the herein case. In regard to supervision, it is not difficult to observe that the
Philippine Rabbit Bus Lines, Inc. has been negligent as an employer and it should be made responsible for the
acts of its employees, particularly the driver involved in this case.

We agree. The presence of ready investigators after the occurrence of the accident is not enough to exempt
petitioner PRBLI from liability arising from the negligence of petitioner Manliclic. Same does not comply with
the guidelines set forth in the cases above-mentioned. The presence of the investigators after the accident is
not enough supervision. Regular supervision of employees, that is, prior to any accident, should have been
shown and established. This, petitioner failed to do. The lack of supervision can further be seen by the fact that
there is only one set of manual containing the rules and regulations for all the drivers of PRBLI. 46 How then
can all the drivers of petitioner PRBLI know and be continually informed of the rules and regulations when only
one manual is being lent to all the drivers?

For failure to adduce proof that it exercised the diligence of a good father of a family in the selection and
supervision of its employees, petitioner PRBLI is held solidarily responsible for the damages caused by
petitioner Manliclics negligence.
We now go to the award of damages. The trial court correctly awarded the amount of P40,838.00 as actual
damages representing the amount paid by respondent for the towing and repair of his jeep. 47 As regards the
awards for moral and exemplary damages, same, under the circumstances, must be modified.
The P100,000.00 awarded by the trial court as moral damages must be reduced to P50,000.00.48 Exemplary
damages are imposed by way of example or correction for the public good. 49 The amount awarded by the trial
court must, likewise, be lowered to P50,000.00.50 The award of P15,000.00 for attorneys fees and expenses of
litigation is in order and authorized by law.51

WHEREFORE, premises considered, the instant petition for review is DENIED. The decision of the Court of
Appeals in CA-G.R. CV No. 55909 is AFFIRMED with the MODIFICATION that (1) the award of moral
damages shall be reduced to P50,000.00; and (2) the award of exemplary damages shall be lowered
to P50,000.00. Costs against petitioners.

SO ORDERED.

VICTORY LINER, INC. petitioner, vs. HEIRS OF ANDRES MALECDAN, respondents.

DECISION

MENDOZA, J.:

This is a petition for review of the decision[1] of the Eighth Division of the Court of Appeals, which affirmed
the decision[2] of the Regional Trial Court of Baguio City, Branch 5, in Civil Case No. 3082-R, ordering petitioner
and its driver, Ricardo Joson, Jr., to pay damages to the heirs of Andres Malecdan, who had been killed after
being hit by a bus while attempting to cross the National Highway in Barangay Nungnungan 2 in Cauayan,
Isabela.

The facts of the case are as follows:

Petitioner is a common carrier. Private respondent Elena Malecdan is the widow of the deceased, while
private respondents Veronica, Virginia, Mary Pauline, Arthur, Viola, Manuel and Valentin Malecdan are their
children.

Andres Malecdan was a 75 year-old farmer residing in Barangay Nungnungan 2, Municipality of Cauayan,
Province of Isabela.[3] On July 15, 1994, at around 7:00 p.m., while Andres was crossing the National Highway
on his way home from the farm, a Dalin Liner bus on the southbound lane stopped to allow him and his
carabao to pass. However, as Andres was crossing the highway, a bus of petitioner Victory Liner, driven by
Ricardo C. Joson, Jr., bypassed the Dalin bus. In so doing, respondent hit the old man and the carabao on
which he was riding. As a result, Andres Malecdan was thrown off the carabao, while the beast toppled over.
[4]
The Victory Liner bus sped past the old man, while the Dalin bus proceeded to its destination without helping
him.

The incident was witnessed by Andres Malecdans neighbor, Virgilio Lorena, who was resting in a nearby
waiting shed after working on his farm. Malecdan sustained a wound on his left shoulder, from which bone
fragments protruded. He was taken by Lorena and another person to the Cagayan District Hospital where he
died a few hours after arrival.[5] The carabao also died soon afterwards.[6] Lorena executed a sworn statement
before the police authorities. Subsequently, a criminal complaint for reckless imprudence resulting in homicide
and damage to property was filed against the Victory Liner bus driver Ricardo Joson, Jr.[7]

On October 5, 1994, private respondents brought this suit for damages in the Regional Trial Court, Branch
5, Baguio City,[8] which, in a decision rendered on July 17, 2000, found the driver guilty of gross negligence in
the operation of his vehicle and Victory Liner, Inc. also guilty of gross negligence in the selection and
supervision of Joson, Jr. Petitioner and its driver were held liable for damages. The dispositive portion of the
trial courts decision reads:

WHEREFORE, judgment is hereby rendered ordering the defendants to pay, jointly and severally to the
plaintiffs the amounts of:

a. P50,000.00 as death indemnity;

b. P88,339.00 for actual damages;

c. P200,000.00 for moral damages;

d. P50,000.00 as exemplary damages;

e. Thirty percent (30%) as attorneys fees of whatever amount that can be collected by the plaintiff; and

f. The costs of the suit.

The counterclaim of the defendant Victory Liner, Inc. against the plaintiffs and the third-party complaint of the
same defendant against the Zenith Insurance Corporation are dismissed.

SO ORDERED.[9]

On appeal, the decision was affirmed by the Court of Appeals, with the modification that the award of
attorneys fees was fixed at P50,000.00.[10]

Hence, this appeal raising the following issues:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE

APPEALED DECISION OF THE REGIONAL TRIAL COURT GRANTING P200,000.00 AS MORAL
DAMAGES WHICH IS DOUBLE THE P100,000.00 AS PRAYED FOR BY THE PRIVATE
RESPONDENTS IN THEIR COMPLAINT AND IN GRANTING ACTUAL DAMAGES NOT
SUPPORTED BY OFFICIAL RECEIPTS AND SPENT WAY BEYOND THE BURIAL OF THE
DECEASED VICTIM.

II. WHETHER OR NOT THE AFFIRMATION BY THE HONORABLE COURT OF APPEALS OF THE
APPEALED DECISION OF THE REGIONAL TRIAL COURT GRANTING THE AWARD OF MORAL
AND EXEMPLARY DAMAGES AND ATTORNEYS FEES WHICH WERE NOT PROVED AND
CONSIDERING THAT THERE IS NO FINDING OF BAD FAITH AND GROSS NEGLIGENCE ON
THE PART OF THE PETITIONER WAS NOT ESTABLISHED, IS IN ACCORD WITH LAW AND
JURISPRUDENCE.

III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE
APPEALED DECISION OF THE REGIONAL TRIAL COURT WHICH DISREGARDED THE
APPELLANTS TESTIMONIAL AND DOCUMENTARY EVIDENCE THAT IT HAS EXERCISED
EXTRAORDINARY DILIGENCE IN THE SELECTION AND SUPERVISION OF ITS EMPLOYEES,
OR STATED DIFFERENTLY, WHETHER OR NOT THE AFFIRMATION BY THE COURT OF
APPEALS OF THE APPEALED DECISION OF THE TRIAL COURT THAT IS CONTRARY TO LAW
AND JURISPRUDENCE CONSTITUTES GRAVE ABUSE AND EXCESS OF JURISDICTION. [11]

We find the appealed decision to be in order.

First. Victory Liner, Inc. no longer questions the findings of the Regional Trial Court that Andres Malecdan
was injured as a result of the gross negligence of its driver, Ricardo Joson, Jr.What petitioner now questions is
the finding that it (petitioner) failed to exercise the diligence of a good father of the family in the selection and
supervision of its employee. Petitioner argues,

With all due respect, the assignment of three inspectors to check and remind the drivers of petitioner
Victory Liner of its policies in a two-and-a-half hour driving distance, the installation of tachometers to monitor
the speed of the bus all throughout the trip, the periodic monitoring and checking of the trips from one station
to another through a trip ticket from station to station, the regular periodic conducting of safety and defensive
driving [training sessions] for its drivers are concrete and physical proofs of the formulated operating
standards, the implementation and monitoring of the same, designed for the exercise of due diligence of a
good father of a family in the supervision of its employees.[12]

It explained that it did not present bus driver Joson, Jr. on the witness stands because he had been
dismissed from the company after the incident, which it found was a breach in the company
regulations. Petitioner blames private respondents for the death of their father, Andres Malecdan, who was
already 75 years old, for allowing him to plough their field by himself.[13]

The contention has no merit.

Article 2176 provides:

Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this Chapter.

Article 2180 provides for the solidary liability of an employer for the quasi-delict committed by an
employee. The responsibility of employers for the negligence of their employees in the performance of their
duties is primary and, therefore, the injured party may recover from the employers directly, regardless of the
solvency of their employees.[14] The rationale for the rule on vicarious liability has been explained thus:

What has emerged as the modern justification for vicarious liability is a rule of policy, a deliberate
allocation of a risk. The losses caused by the torts of employees, which as a practical matter are sure to occur
in the conduct of the employers enterprise, are placed upon that enterprise itself, as a required cost of doing
business. They are placed upon the employer because, having engaged in an enterprise, which will on the
basis of all past experience involve harm to others through the tort of employees, and sought to profit by it, it is
just that he, rather than the innocent injured plaintiff, should bear them; and because he is better able to
absorb them and to distribute them, through prices, rates or liability insurance, to the public, and so to shift
them to society, to the community at large. Added to this is the makeweight argument that an employer who is
held strictly liable is under the greatest incentive to be careful in the selection, instruction and supervision of his
servants, and to take every precaution to see that the enterprise is conducted safely.[15]

Employers may be relieved of responsibility for the negligent acts of their employees acting within the
scope of their assigned task only if they can show that they observed all the diligence of a good father of a
family to prevent damage.[16] For this purpose, they have the burden of proving that they have indeed exercised
such diligence, both in the selection of the employee and in the supervision of the performance of his duties.[17]

In the selection of prospective employees, employers are required to examine them as to their
qualifications, experience and service records.[18] With respect to the supervision of employees, employers
must formulate standard operating procedures, monitor their implementation and impose disciplinary measures
for breaches thereof.[19] These facts must be shown by concrete proof, including documentary evidence.[20]

In the instant case, petitioner presented the results of Joson, Jr.s written examination, [21] actual driving
tests,[22] x-ray examination,[23] psychological examination,[24] NBI clearance,[25]physical examination,
[26]
hematology examination, urinalysis, student driver training, shop training,[30] birth certificate,[31] high
[27] [28] [29]

school diploma[32] and reports from the General Maintenance Manager and the Personnel Manager showing
that he had passed all the tests and training sessions and was ready to work as a professional driver.
[33]
However, as the trial court noted, petitioner did not present proof that Joson, Jr. had nine years of driving
experience.[34]

Petitioner also presented testimonial evidence that drivers of the company were given seminars on driving
safety at least twice a year.[35] Again, however, as the trial court noted there is no record of Joson, Jr. ever
attending such a seminar.[36] Petitioner likewise failed to establish the speed of its buses during its daily trips or
to submit in evidence the trip tickets, speed meters and reports of field inspectors. The finding of the trial court
that petitioners bus was running at a very fast speed when it overtook the Dalin bus and hit the deceased was
not disputed by petitioner. For these reasons, we hold that the trial court did not err in finding petitioner to be
negligent in the supervision of its driver Joson, Jr.

Second. To justify an award of actual damages, there should be proof of the actual amount of loss incurred
in connection with the death, wake or burial of the victim. [37] We cannot take into account receipts showing
expenses incurred some time after the burial of the victim, such as expenses relating to the 9 th day, 40th day
and 1st year death anniversaries.[38] In this case, the trial court awarded P88,339.00 as actual damages. While
these were duly supported by receipts, these included the amount of P5,900.00, the cost of one pig which had
been butchered for the 9th day death anniversary of the deceased. This item cannot be allowed. We, therefore,
reduce the amount of actual damages to P82,439.00.00. The award of P200,000.00 for moral damages should
likewise be reduced. The trial court found that the wife and children of the deceased underwent intense moral
suffering as a result of the latters death.[39] Under Art. 2206 of the Civil Code, the spouse, legitimate children
and illegitimate descendants and ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased. Under the circumstances of this case an award
of P100,000.00 would be in keeping with the purpose of the law in allowing moral damages.[40]

On the other hand, the award of P50,000.00 for indemnity is in accordance with current rulings of the
Court.[41]

Art. 2231 provides that exemplary damages may be recovered in cases involving quasi-delicts if the
defendant acted with gross negligence. Exemplary damages are imposed not to enrich one party or impoverish
another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. [42] In
this case, petitioners driver Joson, Jr. was grossly negligent in driving at such a high speed along the national
highway and overtaking another vehicle which had stopped to allow a pedestrian to cross. Worse, after the
accident, Joson, Jr. did not stop the bus to help the victim. Under the circumstances, we believe that the trial
courts award of P50,000.00 as exemplary damages is proper.

Finally, private respondents are entitled to attorneys fees. Under Art. 2008 of the Civil Code, attorneys fees
may be recovered when, as in the instant case, exemplary damages are awarded. In the recent case of Metro
Manila Transit Corporation v. Court of Appeals,[43] we held an award of P50,000.00 as attorneys fees to be
reasonable. Hence, private respondents are entitled to attorneys fees in that amount.

WHEREFORE, the decision of the Court of Appeals, dated January 17, 2002, is hereby AFFIRMED, with
the MODIFICATION that petitioner Victory Liner, Inc. is ordered to pay the following amounts to the respondent
heirs of Andres Malecdan:

1. Death indemnity in the amount of Fifty Thousand Pesos (P50,000.00);

2. Actual damages in the amount of Eighty-Two Thousand Four Hundred Thirty-Nine Pesos (P82,439.00);

3. Moral damages in the amount of One Hundred Thousand Pesos (P100,000.00);

4. Exemplary damages in the amount of Fifty Thousand Pesos (P50,000.00);

5. Attorneys fees in the amount of Fifty Thousand Pesos (P50,000.00); and

6. Costs of suit.

SO ORDERED.

[G.R. No. 160039. June 29, 2004]

RAYMUNDO ODANI SECOSA, EL BUENASENSO SY and DASSAD WAREHOUSING and PORT

SERVICES, INCORPORATED, petitioners, vs. HEIRS OF ERWIN SUAREZ
FRANCISCO, respondents.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the decision [1] of
the Court of Appeals dated February 27, 2003 in CA-G.R. CV No. 61868, which affirmed in toto the June 19,
1998 decision[2] of Branch 20 of the Regional Trial Court of Manila in Civil Case No. 96-79554.

The facts are as follows:

On June 27, 1996, at around 4:00 p.m., Erwin Suarez Francisco, an eighteen year old third year physical
therapy student of the Manila Central University, was riding a motorcycle along Radial 10 Avenue, near the
Veteran Shipyard Gate in the City of Manila. At the same time, petitioner, Raymundo Odani Secosa, was
driving an Isuzu cargo truck with plate number PCU-253 on the same road. The truck was owned by petitioner,
Dassad Warehousing and Port Services, Inc.

Traveling behind the motorcycle driven by Francisco was a sand and gravel truck, which in turn was being
tailed by the Isuzu truck driven by Secosa. The three vehicles were traversing the southbound lane at a fairly
high speed. When Secosa overtook the sand and gravel truck, he bumped the motorcycle causing Francisco to
fall. The rear wheels of the Isuzu truck then ran over Francisco, which resulted in his instantaneous
death. Fearing for his life, petitioner Secosa left his truck and fled the scene of the collision.[3]

Respondents, the parents of Erwin Francisco, thus filed an action for damages against Raymond Odani
Secosa, Dassad Warehousing and Port Services, Inc. and Dassads president, El Buenasucenso Sy. The
complaint was docketed as Civil Case No. 96-79554 of the RTC of Manila, Branch 20.

On June 19, 1998, after a full-blown trial, the court a quo rendered a decision in favor of herein
respondents, the dispositive portion of which states:

WHEREFORE, premised on the foregoing, judgment is hereby rendered in favor of the plaintiffs ordering the
defendants to pay plaintiffs jointly and severally:

1. The sum of P55,000.00 as actual and compensatory damages;

2. The sum of P20,000.00 for the repair of the motorcycle;

3. The sum of P100,000.00 for the loss of earning capacity;

4. The sum of P500,000.00 as moral damages;

5. The sum of P50,000.00 as exemplary damages;

6. The sum of P50,000.00 as attorneys fees plus cost of suit.

SO ORDERED.

Petitioners appealed the decision to the Court of Appeals, which affirmed the appealed decision in toto.[4]

Hence the present petition, based on the following arguments:

I.

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT AFFIRMED THE DECISION OF THE TRIAL
COURT THAT PETITIONER DASSAD DID NOT EXERCISE THE DILIGENCE OF A GOOD FATHER OF A
FAMILY IN THE SELECTION AND SUPERVISION OF ITS EMPLOYEES WHICH IS NOT IN ACCORDANCE
WITH ARTICLE 2180 OF THE NEW CIVIL CODE AND RELATED JURISPRUDENCE ON THE MATTER.

II.

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT AFFIRMED THE DECISION OF THE TRIAL
COURT IN HOLDING PETITIONER EL BUENASENSO SY SOLIDARILY LIABLE WITH PETITIONERS
DASSAD AND SECOSA IN VIOLATION OF THE CORPORATION LAW AND RELATED JURISPRUDENCE
ON THE MATTER.

III.

THE JUDGMENT OF THE TRIAL COURT AS AFFIRMED BY THE COURT OF APPEALS AWARDING
P500,000.00 AS MORAL DAMAGES IS MANIFESTLY ABSURD, MISTAKEN AND UNJUST.[5]

The petition is partly impressed with merit.

 On the issue of whether petitioner Dassad Warehousing and Port Services, Inc. exercised the diligence of
a good father of a family in the selection and supervision of its employees, we find the assailed decision to be
in full accord with pertinent provisions of law and established jurisprudence.

Article 2176 of the Civil Code provides:

Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this Chapter.

On the other hand, Article 2180, in pertinent part, states:

The obligation imposed by article 2176 is demandable not only for ones own acts or omissions, but also for
those of persons for whom one is responsible x x x.

Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks, even though the former are not engaged in any business or industry x x x.

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to prevent damage.

Based on the foregoing provisions, when an injury is caused by the negligence of an employee, there
instantly arises a presumption that there was negligence on the part of the employer either in the selection of
his employee or in the supervision over him after such selection. The presumption, however, may be rebutted
by a clear showing on the part of the employer that it exercised the care and diligence of a good father of a
family in the selection and supervision of his employee. Hence, to evade solidary liability for quasi-delict
committed by an employee, the employer must adduce sufficient proof that it exercised such degree of care.[6]

How does an employer prove that he indeed exercised the diligence of a good father of a family in the
selection and supervision of his employee? The case of Metro Manila Transit Corporation v. Court of
Appeals[7] is instructive:

In fine, the party, whether plaintiff or defendant, who asserts the affirmative of the issue has the burden of
presenting at the trial such amount of evidence required by law to obtain a favorable judgment [8] . . . In making
proof in its or his case, it is paramount that the best and most complete evidence is formally entered.[9]

Coming now to the case at bar, while there is no rule which requires that testimonial evidence, to hold sway,
must be corroborated by documentary evidence, inasmuch as the witnesses testimonies dwelt on mere
generalities, we cannot consider the same as sufficiently persuasive proof that there was observance of due
diligence in the selection and supervision of employees. Petitioners attempt to prove its deligentissimi patris
familias in the selection and supervision of employees through oral evidence must fail as it was unable to
buttress the same with any other evidence, object or documentary, which might obviate the apparent biased
nature of the testimony.[10]

Our view that the evidence for petitioner MMTC falls short of the required evidentiary quantum as would
convincingly and undoubtedly prove its observance of the diligence of a good father of a family has its
precursor in the underlying rationale pronounced in the earlier case of Central Taxicab Corp. vs. Ex-Meralco
Employees Transportation Co., et al.,[11] set amidst an almost identical factual setting, where we held that:

The failure of the defendant company to produce in court any record or other documentary proof tending to
establish that it had exercised all the diligence of a good father of a family in the selection and supervision of its
drivers and buses, notwithstanding the calls therefor by both the trial court and the opposing counsel, argues
strongly against its pretensions.

We are fully aware that there is no hard-and-fast rule on the quantum of evidence needed to prove due
observance of all the diligence of a good father of a family as would constitute a valid defense to the legal
presumption of negligence on the part of an employer or master whose employee has by his negligence,
caused damage to another. x x x (R)educing the testimony of Albert to its proper proportion, we do not have
enough trustworthy evidence left to go by. We are of the considered opinion, therefore, that the believable
evidence on the degree of care and diligence that has been exercised in the selection and supervision of
Roberto Leon y Salazar, is not legally sufficient to overcome the presumption of negligence against the
defendant company.

The above-quoted ruling was reiterated in a recent case again involving the Metro Manila Transit
Corporation,[12] thus:

In the selection of prospective employees, employers are required to examine them as to their qualifications,
experience, and service records.[13] On the other hand, with respect to the supervision of employees,
employers should formulate standard operating procedures, monitor their implementation, and impose
disciplinary measures for breaches thereof. To establish these factors in a trial involving the issue of vicarious
liability, employers must submit concrete proof, including documentary evidence.

In this case, MMTC sought to prove that it exercised the diligence of a good father of a family with respect to
the selection of employees by presenting mainly testimonial evidence on its hiring procedure. According to
MMTC, applicants are required to submit professional driving licenses, certifications of work experience, and
clearances from the National Bureau of Investigation; to undergo tests of their driving skills, concentration,
reflexes, and vision; and, to complete training programs on traffic rules, vehicle maintenance, and standard
operating procedures during emergency cases.

xxxxxxxxx

Although testimonies were offered that in the case of Pedro Musa all these precautions were followed, the
records of his interview, of the results of his examinations, and of his service were not presented. . . [T]here is
no record that Musa attended such training programs and passed the said examinations before he was
employed. No proof was presented that Musa did not have any record of traffic violations. Nor were records of
daily inspections, allegedly conducted by supervisors, ever presented. . . The failure of MMTC to present such
documentary proof puts in doubt the credibility of its witnesses.

Jurisprudentially, therefore, the employer must not merely present testimonial evidence to prove that he
observed the diligence of a good father of a family in the selection and supervision of his employee, but he
must also support such testimonial evidence with concrete or documentary evidence. The reason for this is to
obviate the biased nature of the employers testimony or that of his witnesses.[14]

Applying the foregoing doctrines to the present case, we hold that petitioner Dassad Warehousing and
Port Services, Inc. failed to conclusively prove that it had exercised the requisite diligence of a good father of a
family in the selection and supervision of its employees.

Edilberto Duerme, the lone witness presented by Dassad Warehousing and Port Services, Inc. to support
its position that it had exercised the diligence of a good father of a family in the selection and supervision of its
employees, testified that he was the one who recommended petitioner Raymundo Secosa as a driver to
Dassad Warehousing and Port Services, Inc.; that it was his duty to scrutinize the capabilities of drivers; and
that he believed petitioner to be physically and mentally fit for he had undergone rigid training and attended the
PPA safety seminar.[15]

Petitioner Dassad Warehousing and Port Services, Inc. failed to support the testimony of its lone witness
with documentary evidence which would have strengthened its claim of due diligence in the selection and
supervision of its employees. Such an omission is fatal to its position, on account of which, Dassad can be
rightfully held solidarily liable with its co-petitioner Raymundo Secosa for the damages suffered by the heirs of
Erwin Francisco.

However, we find that petitioner El Buenasenso Sy cannot be held solidarily liable with his co-petitioners.
While it may be true that Sy is the president of petitioner Dassad Warehousing and Port Services, Inc., such
fact is not by itself sufficient to hold him solidarily liable for the liabilities adjudged against his co-petitioners.

It is a settled precept in this jurisdiction that a corporation is invested by law with a personality separate
from that of its stockholders or members. [16] It has a personality separate and distinct from those of the persons
composing it as well as from that of any other entity to which it may be related. Mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not in itself
sufficient ground for disregarding the separate corporate personality.[17] A corporations authority to act and its
liability for its actions are separate and apart from the individuals who own it.[18]
 The so-called veil of corporation fiction treats as separate and distinct the affairs of a corporation and its
officers and stockholders. As a general rule, a corporation will be looked upon as a legal entity, unless and until
sufficient reason to the contrary appears. When the notion of legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.
[19]
Also, the corporate entity may be disregarded in the interest of justice in such cases as fraud that may work
inequities among members of the corporation internally, involving no rights of the public or third persons. In
both instances, there must have been fraud and proof of it. For the separate juridical personality of a
corporation to be disregarded, the wrongdoing must be clearly and convincingly established. [20] It cannot be
presumed.[21]

The records of this case are bereft of any evidence tending to show the presence of any grounds
enumerated above that will justify the piercing of the veil of corporate fiction such as to hold the president of
Dassad Warehousing and Port Services, Inc. solidarily liable with it.

The Isuzu cargo truck which ran over Erwin Francisco was registered in the name of Dassad Warehousing
and Port Services, Inc., and not in the name of El Buenasenso Sy.Raymundo Secosa is an employee of
Dassad Warehousing and Port Services, Inc. and not of El Buenasenso Sy. All these things, when taken
collectively, point toward El Buenasenso Sys exclusion from liability for damages arising from the death of
Erwin Francisco.

Having both found Raymundo Secosa and Dassad Warehousing and Port Services, Inc. liable for
negligence for the death of Erwin Francisco on June 27, 1996, we now consider the question of moral
damages which his parents, herein respondents, are entitled to recover. Petitioners assail the award of moral
damages of P500,000.00 for being manifestly absurd, mistaken and unjust. We are not persuaded.

Under Article 2206, the spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish for the death of the deceased. The reason for the grant of
moral damages has been explained in this wise:

. . . the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status quo
ante; and therefore, it must be proportionate to the suffering inflicted. The intensity of the pain experienced by
the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever
with the wealth or means of the offender.[22]

In the instant case, the spouses Francisco presented evidence of the searing pain that they felt when the
premature loss of their son was relayed to them. That pain was highly evident in the testimony of the father
who was forever deprived of a son, a son whose untimely death came at that point when the latter was nearing
the culmination of every parents wish to educate their children. The death of Francis has indeed left a void in
the lives of the respondents. Antonio Francisco testified on the effect of the death of his son, Francis, in this
manner:

Q: (Atty. Balanag): What did you do when you learned that your son was killed on June 27, 1996?

A: (ANTONIO FRANCISCO): I boxed the door and pushed the image of St. Nio telling why this
happened to us.

Q: Mr. Witness, how did you feel when you learned of the untimely death of your son, Erwin Suares
(sic)?

A: Masakit po ang mawalan ng anak. Its really hard for me, the thought that my son is dead.

xxxxxxxxx

Q: How did your family react to the death of Erwin Suarez Francisco?

A: All of my family and relatives were felt (sic) sorrow because they knew that my son is (sic) good.

Q: We know that it is impossible to put money terms(s) [on] the life of [a] human, but since you are
now in court and if you were to ask this court how much would you and your family compensate?
(sic)
 A: Even if they pay me millions, they cannot remove the anguish of my son (sic).[23]

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They
are awarded to allow the former to obtain means, diversion or amusements that will serve to alleviate the moral
suffering he has undergone due to the defendants culpable action and must, perforce, be proportional to the
suffering inflicted.[24] We have previously held as proper an award of P500,000.00 as moral damages to the
heirs of a deceased family member who died in a vehicular accident. In our 2002 decision in Metro Manila
Transit Corporation v. Court of Appeals, et al.,[25] we affirmed the award of moral damages of P500,000.00 to
the heirs of the victim, a mother, who died from injuries she sustained when a bus driven by an employee of
the petitioner hit her. In the case at bar, we likewise affirm the portion of the assailed decision awarding the
moral damages.

Since the petitioners did not question the other damages adjudged against them by the court a quo, we
affirm the award of these damages to the respondents.

WHEREFORE, the petition is DENIED. The assailed decision is AFFIRMED with the MODIFICATION
that petitioner El Buenasenso Sy is ABSOLVED from any liability adjudged against his co-petitioners in this
case.

Costs against petitioners.

SO ORDERED.

EQUITABLE LEASING CORPORATION, petitioner, vs. LUCITA SUYOM, MARISSA ENANO, MYRNA
TAMAYO and FELIX OLEDAN, respondents.

DECISION

PANGANIBAN, J.:

In an action based on quasi delict, the registered owner of a motor vehicle is solidarily liable for the injuries
and damages caused by the negligence of the driver, in spite of the fact that the vehicle may have already
been the subject of an unregistered Deed of Sale in favor of another person. Unless registered with the Land
Transportation Office, the sale -- while valid and binding between the parties -- does not affect third parties,
especially the victims of accidents involving the said transport equipment. Thus, in the present case, petitioner,
which is the registered owner, is liable for the acts of the driver employed by its former lessee who has become
the owner of that vehicle by virtue 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 DISMISSED for 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
hereby AFFIRMED with MODIFICATION that the award of attorneys fees is DELETED.[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 and against the defendant Equitable
Leasing Corporation ordering said defendant to 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 funeral expenses.

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 the house cum store of Myrna
Tamayo located at Pier 18, Vitas, Tondo, Manila. A portion of the house was destroyed. Pinned to death under
the engine of the tractor were Respondent Myrna Tamayos son, Reniel Tamayo, and Respondent Felix
Oledans daughter, Felmarie Oledan. Injured were Respondent Oledan himself, Respondent Marissa Enano,
and two sons of Respondent Lucita Suyom.

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

Upon verification with the Land Transportation Office, respondents were furnished a copy of Official
Receipt No. 62204139[6] and Certificate of Registration No. 08262797,[7] showing that the registered owner of
the tractor was Equitable Leasing Corporation/leased to Edwin Lim. On April 15, 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 dropping Raul Tutor, Ecatine and Edwin
Lim from the Complaint, because they could not be located and served with summonses. [9] On the other hand,
in its Answer with Counterclaim,[10] petitioner alleged that the vehicle had already been sold to Ecatine and that
the former was no longer in possession and control thereof at the time of the incident. It also claimed that Tutor
was an employee, not of Equitable, but of Ecatine.

After trial on the merits, the RTC rendered its Decision ordering petitioner to pay actual and moral
damages and attorneys fees to respondents. It held that since the Deed of Sale between petitioner and Ecatine
had not been registered with the Land Transportation Office (LTO), the legal owner was still Equitable. [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 deemed the owner/operator of the
tractor, even if that vehicle had been the subject of a Deed of Sale in favor of Ecatine on December 9,
1992. The reason cited by the CA was that the Certificate of Registration on file with the LTO still remained in
petitioners name.[13] In order that a transfer of ownership of a motor vehicle can bind third persons, it must be
duly recorded in the LTO.[14]

The CA likewise upheld respondents claim for moral damages against petitioner 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

In its Memorandum, petitioner raises the following issues for the Courts consideration:

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

II

Whether or not the Court of Appeals and the trial court gravely erred when they awarded moral damages to
private respondents despite their failure to prove that the injuries they suffered were brought by petitioners
wrongful act.[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 damages sustained by respondents and that
arose from the negligence of the driver of the Fuso Road Tractor, which it had already sold to Ecatine at the
time of the accident. Not having employed Raul Tutor, the driver of the vehicle, it could not have controlled or
supervised him.[18]

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

Furthermore, under Article 103 of the Revised Penal Code, employers may be held subsidiarily liable for
felonies committed by their employees in the discharge of the latters duties. [22]This liability attaches when the
employees who are convicted of crimes committed in the performance of their work are found to be insolvent
and are thus unable to satisfy the civil liability adjudged.[23]

On the other hand, under Article 2176 in relation to Article 2180 [24] of the Civil Code, an action predicated
on quasi delict may be instituted against the employer for an employees act or omission. The liability for the
negligent conduct of the subordinate is direct and primary, but is subject to the defense of due diligence in the
selection and supervision of the employee.[25]The enforcement of the judgment against the employer for an
action based on Article 2176 does not require the employee to be insolvent, since the liability of the former
is solidary -- the latter being statutorily considered a joint tortfeasor.[26] To sustain a claim based on quasi delict,
the following requisites must be proven: (a) damage suffered by the plaintiff, (b) fault or negligence of the
defendant, and (c) connection of cause and effect between the fault or negligence of the defendant and the
damage incurred by the plaintiff.[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 damages twice for the same act or omission or under both causes. [29] Since
these two 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 the criminal case -- elected to file a
separate civil action for damages, based on quasi delict under Article 2176 of the Civil Code. [31] The evidence is
clear that the deaths and the injuries suffered by respondents and their kins were due to the fault of the driver
of the Fuso tractor.

Dated June 4, 1991, the Lease Agreement[32] between petitioner and Edwin Lim stipulated that it is the
intention of the parties to enter into a FINANCE LEASE AGREEMENT.[33] Under such scheme, ownership of
the subject tractor was to be registered in the name of petitioner, until the value of the vehicle has been fully
paid by Edwin Lim.[34] Further, in the Lease Schedule,[35] the monthly rental for the tractor was stipulated, and
the term of the Lease was scheduled to expire on December 4, 1992. After a few months, 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 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 accident on July 17, 1994. [38] The Court has consistently ruled that,
regardless of sales made of a motor vehicle, the registered owner is the lawful operator insofar as the public
and third persons are concerned; consequently, it is directly and primarily responsible for the consequences of
its operation.[39] In contemplation of law, the owner/operator of record is the employer of the driver, the actual
operator and employer being considered as merely its agent.[40] The same principle applies even if the
registered owner of any vehicle does not use it for public service.[41]

Since Equitable remained the registered owner of the tractor, it could not escape primary liability for the
deaths and the injuries arising from the negligence of the driver.[42]

The finance-lease agreement between Equitable on the one hand and Lim or Ecatine 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 aptly explained in Erezo v. Jepte,[43] which we quote hereunder:

x x x. The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that
any damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner. Instances are numerous where vehicles running on public highways
caused accidents or injuries to pedestrians or other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to forestall these circumstances, so inconvenient or
prejudicial to the public, that the motor vehicle registration is primarily ordained, in the interest of the
determination of persons responsible for damages or injuries caused on public highways.[44]

Further, petitioners insistence on FGU Insurance Corp. v. Court of Appeals is misplaced.[45] First, in FGU
Insurance, the registered vehicle owner, which was engaged in a rent-a-car business, rented out the car. In this
case, the registered owner of the truck, which is engaged in the business of financing motor vehicle
acquisitions, has actually sold the truck to Ecatine, which in turn employed Tutor. Second, in FGU
Insurance, the registered owner of the vehicle was not held responsible for the negligent acts of the person
who rented one of its cars, because Article 2180 of the Civil Code was not applicable. We held that
no vinculum juris as employer and employee existed between the owner and the driver.[46] In this case, the
registered owner of the tractor is considered under the law to be the employer of the driver, 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 name of the registered owner as
EQUITABLE LEASING CORPORATION/Leased to Edwin Lim. But the lease agreement between Equitable
and Lim has been overtaken by the Deed of Sale on December 9, 1992, between petitioner and Ecatine. 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 the sale with the LTO should not
prejudice respondents, who have the legal right to rely on the legal principle that the registered vehicle owner
is liable for the damages caused by the negligence of the driver. Petitioner cannot hide behind its allegation
that Tutor was the employee of Ecatine. This will effectively prevent respondents from recovering their losses
on the basis of the inaction or fault of petitioner in failing to register the sale. The non-registration is the fault of
petitioner, which should thus face the legal consequences thereof.

Second Issue:

Moral Damages
 Petitioner further claims that it is not liable for moral damages, because respondents failed to establish or
show the causal connection or relation between the factual basis of their claim and their wrongful act or
omission, if any. [49]

Moral damages are not punitive in nature, but are designed to compensate [50] and alleviate in some way
the physical suffering, mental anguish, 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 must nevertheless be somehow proportional to and in approximation of the
suffering inflicted.[52] This is so because moral damages are in the category of an award designed to
compensate the claimant for actual injury suffered, not to impose a penalty on the wrongdoer.[53]

Viewed as an action for quasi delict, the present case falls squarely within the purview of Article 2219 (2),
[54]
which provides for the payment of moral damages in cases of quasi delict. [55] Having established the liability
of petitioner as the registered owner of the vehicle,[56] respondents have satisfactorily shown the existence of
the factual basis for the award[57] and its causal connection to the acts of Raul Tutor, who is deemed as
petitioners employee.[58] Indeed, the damages and injuries suffered by respondents were the proximate result
of petitioners tortious act or omission.[59]

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

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

SO ORDERED.