CDCP vs. Estrella

An employer whose negligent employee causes injury to a passenger of a common carrier is solidarily liable with the carrier for damages, the employer's liability arising from quasi-delict under Article 2176 while the carrier's arises from breach of contract of carriage, and joint tort feasors are jointly and severally liable for the whole damage.

Respondents Rebecca G. Estrella and her granddaughter Rachel E. Fletcher were fare-paying passengers of a Batangas Laguna Tayabas Bus Co. (BLTB) bus, a common carrier. Petitioner Construction Development Corporation of the Philippines (CDCP) owned the tractor-truck that collided with the bus. Philippine Phoenix Surety and Insurance, Inc. (Phoenix) was CDCP's insurer under a third-party liability policy. The dispute required the Court to determine the nature and extent of liability of a third-party vehicle owner for injuries to a common carrier's passengers, the proper measure of damages, and the prescriptive period for insurance claims under the Insurance Code.

On December 29, 1978, respondents Rebecca G. Estrella and her granddaughter Rachel E. Fletcher boarded a BLTB bus in San Pablo City bound for Pasay City. They never reached their destination. Along the South Expressway, a tractor-truck owned by CDCP rammed the bus from behind. The impact pushed their seats forward and pinned their knees against the seats in front of them. They regained consciousness only after rescuers created a hole in the bus and extricated their legs. Both were brought to Makati Medical Center, where Estrella was diagnosed with a fractured left tibia, lacerated chin wound, contusions with abrasions on the left lower leg, and fractured sixth and seventh right ribs. Fletcher sustained extensive lacerated wounds on the right leg with severance of muscles, partial amputation below the knee of the left leg with severance of the gastrocnoleus and antero-lateral compartment, and open comminuted fractures of both tibiae.

Thereafter, respondents filed a complaint for damages against CDCP, BLTB, and their respective drivers Espiridion Payunan, Jr. and Wilfredo Datinguinoo before the Regional Trial Court of Manila, Branch 13. They alleged that both drivers were negligent and did not obey traffic laws, that BLTB and CDCP failed to exercise the diligence of a good father of a family in the selection and supervision of their employees, that BLTB allowed its bus to operate despite lack of proper maintenance, and that they suffered actual damages, moral damages, and were entitled to exemplary damages and attorney's fees. CDCP filed an answer and later amended it to include a third-party complaint against Phoenix, its insurer.

The trial court found that BLTB, as a common carrier, was bound to observe extraordinary diligence and was presumed negligent when it failed to carry respondents safely to their destination, a presumption it failed to rebut. As for CDCP, evidence showed that its driver Payunan, Jr. was driving recklessly and very fast at the time of the incident, as demonstrated by skid marks in the police investigator's sketch. CDCP failed to prove that it exercised the diligence of a good father of a family in the selection and supervision of its driver, raising the presumption of negligence that it could not rebut. Both the trial court and the Court of Appeals found CDCP solidarily liable with BLTB for the actual damages suffered by respondents. The Court of Appeals additionally awarded moral and exemplary damages, attorney's fees, and legal interest, and affirmed that CDCP's claim against Phoenix had prescribed.

• Sole Liability of BLTB: Petitioner contended that since it was made solidarily liable with BLTB for actual damages and attorney's fees in paragraph 1 of the trial court's decision, it should no longer be held liable for the amounts stated in paragraph 2. Petitioner claimed that the liability for actual damages and attorney's fees is based on culpa contractual, and thus only BLTB should be held liable.
• Ambiguity of Paragraph 2: Petitioner claimed that paragraph 2 of the trial court's dispositive portion was ambiguous and arbitrary because it did not state the basis and nature of the award, and that it entitles respondents to recover twice for the same injury.
• Excessive Damages: Petitioner claimed that the damages, attorney's fees, and legal interest awarded by the Court of Appeals are excessive and unfounded.
• Insurance Recovery: Petitioner argued that it should be able to recover under its insurance policy from Phoenix, contesting the finding of prescription.

• Proper Joinder: Respondents argued that petitioner was also at fault and was properly joined as a party, since there may be an action arising out of one incident where questions of fact are common to all. The cause of action based on culpa aquiliana in the civil suit they filed against petitioner was valid.

• Solidary Liability: Whether BLTB and its driver Wilfredo Datinguinoo are solely liable for the damages sustained by respondents, or whether CDCP is also solidarily liable.
• Damages, Attorney's Fees, and Legal Interest: Whether the damages, attorney's fees, and legal interest awarded by the Court of Appeals are excessive and unfounded.
• Insurance Prescription: Whether CDCP can recover under its insurance policy from Phoenix, or whether its claim has prescribed.

• Solidary Liability: No, BLTB is not solely liable. CDCP is solidarily liable with BLTB for damages, because the negligence of CDCP's driver concurred with that of BLTB's driver to produce the same injury, making them joint tort feasors jointly and severally liable under Article 2176 of the Civil Code.
• Damages, Attorney's Fees, and Legal Interest: Partially yes. Moral damages were reduced from P80,000.00 to P50,000.00 each in line with prevailing jurisprudence. Exemplary damages of P20,000.00 each, attorney's fees at 30%, and the award of actual damages were affirmed. Legal interest at 6% was adjusted to commence from the date of trial court judgment, not the filing of the complaint, because the damages were unliquidated at the time of filing.
• Insurance Prescription: No, CDCP cannot recover from Phoenix. Its claim has prescribed because it failed to file a written notice of claim within six months from the date of the accident as required by Section 384 of P.D. 612, as amended.

• Solidary Liability: The action filed by respondents against petitioner is one for culpa aquiliana or quasi-delict under Article 2176 of the Civil Code. Article 2180 provides that the obligation imposed by Article 2176 is demandable for the acts or omissions of those persons for whom one is responsible, making an employer directly and primarily liable for the negligent conduct of its subordinate, subject to the defense of due diligence in selection and supervision. The trial court found that petitioner failed to prove it exercised such diligence. The negligence of CDCP's driver, established through skid marks in the police sketch, concurred with the negligence of BLTB's driver to produce the same injury. Citing Fabre, Jr. vs. Court of Appeals, the Court reiterated that the owner of the other vehicle which collided with a common carrier is solidarily liable to the injured passenger. It makes no difference that the liability of the carrier springs from contract while that of the other vehicle owner arises from quasi-delict. Joint tort feasors are jointly and severally liable for the whole damage; the injured party may sue all or any number less than all, and each is liable for the whole amount. Damages cannot be apportioned among them except among themselves. Petitioner's claim that paragraph 2 of the trial court's dispositive portion was ambiguous and entailed double recovery was rejected: the body of the decision clearly stated that the award in paragraph 2 was for moral damages, while paragraph 1 covered actual damages and attorney's fees — distinct categories precluding double recovery.

• Damages, Attorney's Fees, and Legal Interest: Moral damages are recoverable in quasi-delicts causing physical injuries under Article 2219 of the Civil Code. However, the award of P80,000.00 to Fletcher was reduced to P50,000.00, consistent with prevailing jurisprudence fixing moral damages at that amount for similar injuries. Moral damages must be commensurate to the suffering inflicted and are not intended to enrich the plaintiff. Exemplary damages of P20,000.00 each were correctly awarded under Article 2231, which allows exemplary damages in quasi-delicts when the defendant acted with gross negligence. Petitioner's driver was driving recklessly, and petitioner was found negligent in the selection and supervision of its employees. Attorney's fees at 30% of the total amount recovered were properly awarded under the extraordinary concept as indemnity for damages, pursuant to Article 2208 of the Civil Code, since exemplary damages were awarded and the defendant acted in gross and evident bad faith in refusing to satisfy the claim. Regarding legal interest, applying the framework in Eastern Shipping Lines, Inc. vs. Court of Appeals, since the obligation did not constitute a loan or forbearance of money, interest at 6% per annum was proper, but only from the time the claim was established with reasonable certainty. At the time the complaint was filed, the amount of damages was unliquidated and unknown; it became ascertainable only upon the trial court's judgment on February 9, 1993. Accordingly, the 6% interest runs from that date until finality of the judgment, after which the rate becomes 12% per annum until satisfaction, the interim period being deemed equivalent to a forbearance of credit.

• Insurance Prescription: Both the trial court and the Court of Appeals correctly ruled that CDCP's claim against Phoenix had prescribed. Section 384 of P.D. 612, as amended, requires that a written notice of claim be filed within six months from the date of the accident, otherwise the claim is deemed waived, and that any action for recovery must be brought within one year from denial of the claim. The law is clear and leaves no room for interpretation. Since petitioner never made any claim within six months from the date of the accident, its claim had already prescribed.

• Solidary Liability of Joint Tort Feasors — Joint tort feasors are all persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done if done for their benefit. They are each liable as principals, to the same extent and in the same manner as if they had performed the wrongful act themselves. They are jointly and severally liable for the whole damage; the injured party may sue all or any number less than all. Damages cannot be apportioned among them except among themselves. A payment in full by one joint tort feasor satisfies any claim against the others. In this case, the Court applied the doctrine to hold CDCP solidarily liable with BLTB, because the negligence of their respective drivers concurred to produce the same injury to the passengers.

• Concurrence of Contractual and Quasi-delictual Liability — It makes no difference that the liability of the common carrier springs from contract while that of the third-party vehicle owner arises from quasi-delict. A plaintiff may allege alternative causes of action and join as many parties as may be liable, so long as there is no double recovery for the same injury. The separate and distinct acts of the carrier and the third party concur to produce the same injury, justifying joint and several liability.

• Employer's Direct and Primary Liability under Article 2180 — The liability of an employer for the negligent conduct of its subordinate is direct and primary, subject only to the defense of due diligence in the selection and supervision of the employee. Failure to prove such diligence raises a presumption of negligence that renders the employer liable.

• Eastern Shipping Lines Framework on Legal Interest — When an obligation not constituting a loan or forbearance of money is breached, interest on damages may be imposed at 6% per annum at the court's discretion. No interest shall be adjudged on unliquidated claims until the demand can be established with reasonable certainty. Where certainty cannot be reasonably established at the time demand is made, interest begins to run only from the date of judgment. Upon finality of the judgment, the rate becomes 12% per annum until satisfaction, the interim period being deemed equivalent to a forbearance of credit.

• "Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of respondents [owner and driver of other vehicle] arises from quasi-delict." — This passage, quoted from Viluan vs. Court of Appeals, articulates the doctrinal basis for holding a common carrier and a third-party vehicle owner solidarily liable despite their liabilities arising from different sources — contract and quasi-delict respectively.

• "Joint tort feasors are jointly and severally liable for the tort which they commit. The persons injured may sue all of them or any number less than all. Each is liable for the whole damages caused by all, and all together are jointly liable for the whole damage." — This formulation, quoted from Worcester vs. Ocampo via Lafarge Cement vs. Continental Cement Corporation, defines the canonical rule on solidary liability of joint tort feasors and is frequently cited in subsequent jurisprudence on concurrence of negligence.

• "Accordingly, the legal interest of 6% shall begin to run on February 9, 1993 when the trial court rendered judgment and not on February 4, 1980 when the complaint was filed. This is because at the time of the filing of the complaint, the amount of the damages to which plaintiffs may be entitled remains unliquidated and unknown, until it is definitely ascertained, assessed and determined by the court and only upon presentation of proof thereon." — This passage applies the Eastern Shipping Lines framework to fix the commencement date of legal interest on unliquidated damages at the date of judgment rather than the date of filing, a point of recurring significance in damages computation.

• Fabre, Jr. vs. Court of Appeals, 328 Phil. 774 (1996) — Controlling precedent establishing that the owner of a vehicle which collides with a common carrier is solidarily liable to the injured passenger, and that it makes no difference that the carrier's liability arises from contract while the other vehicle owner's arises from quasi-delict.
• Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation, G.R. No. 155173, Nov. 23, 2004, 443 SCRA 522 — Followed for the proposition that joint tort feasors are jointly and severally liable for the tort they commit, citing Worcester vs. Ocampo.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78 — Controlling framework for computing legal interest on monetary judgments: 6% per annum on unliquidated damages from date of judgment until finality, then 12% per annum from finality until satisfaction.
• Del Rosario vs. Court of Appeals, G.R. No. 118325, Jan. 29, 1997, 267 SCRA 158 — Cited for the rule that exemplary damages serve as a deterrent against socially deleterious actions and need not be proved but require entitlement to moral, temperate, or compensatory damages as a precondition.
• Traders Royal Bank Employees Union-Independent vs. National Labor Relations Commission, 336 Phil. 705 (1997) — Cited for the distinction between the ordinary and extraordinary concepts of attorney's fees, the latter being an indemnity for damages ordered by the court payable to the client.

• Article 2176, Civil Code — Defines quasi-delict: whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Applied as the basis for respondents' action against CDCP.
• Article 2180, Civil Code — Provides that the obligation imposed by Article 2176 is demandable for the acts or omissions of those for whom one is responsible, making employers directly and primarily liable for their employees' negligence, subject to the defense of due diligence in selection and supervision. Applied to hold CDCP liable for its driver's reckless driving.
• Article 2219, Civil Code — Authorizes recovery of moral damages in quasi-delicts causing physical injuries. Applied to sustain the award of moral damages to respondents.
• Article 2229, Civil Code — Provides that exemplary damages may be imposed by way of example or correction for the public good. Applied in conjunction with the finding of gross negligence.
• Article 2231, Civil Code — States that in quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. Applied to sustain the award of P20,000.00 exemplary damages each.
• Article 2234, Civil Code — Provides that while exemplary damages need not be proved, the plaintiff must show entitlement to moral, temperate, or compensatory damages before exemplary damages may be considered. Applied as a precondition for the exemplary damages award.
• Article 2208, Civil Code — Enumerates the instances when attorney's fees may be recovered, including when exemplary damages are awarded and when the defendant acted in gross and evident bad faith. Applied to sustain the 30% attorney's fees award.
• Section 384, P.D. 612 (Insurance Code), as amended by P.D. 1814 and B.P. 874 — Requires a written notice of claim within six months from the date of the accident, otherwise the claim is deemed waived, and requires that any action for recovery be brought within one year from denial of the claim. Applied to bar CDCP's third-party claim against Phoenix for failure to file a timely notice of claim.

Panganiban, C.J., Chairperson; Austria-Martinez, J.; Callejo, Sr., J.; and Chico-Nazario, J., concurred.