Spouses Franco vs. Intermediate Appellate Court

An employer's liability for the negligent act of an employee may be based either on the subsidiary liability under Article 103 of the Revised Penal Code, which requires a prior criminal conviction of the employee, or on the primary liability under Articles 2176 and 2180 of the Civil Code based on quasi-delict, subject to the defense of due diligence in the selection and supervision of employees. Where no criminal action was instituted because the employee-driver died, the employer's liability cannot be predicated on the Revised Penal Code but must be based on quasi-delict under the Civil Code.

The petitioners, spouses Federico Franco and Felicisima R. Franco, were the owners and operators of the Franco Transportation Company, which ran a fleet of twelve buses plying the Manila-Laoag line. The private respondents were the registered owner of an Isuzu Mini Bus (Antonio Reyes), the widow of a passenger who died in the collision (Mrs. Susan Chuay), and the widow of the mini bus driver who also died (Mrs. Lolita Lugue). The case concerns the nature of an employer's liability for the negligent act of its employee-driver, distinguishing between subsidiary liability under the Revised Penal Code and primary liability under the Civil Code.

At about 7:30 in the evening of October 18, 1974, Macario Yuro swerved the northbound Franco Bus with Plate No. XY320-PUB he was driving to the left to avoid hitting a truck with a trailer parked facing north along the cemented pavement of the MacArthur Highway at Barrio Talaga, Capas, Tarlac. This maneuver took the lane of an incoming Isuzu Mini Bus bearing Plate No. YL-735, driven by Magdaleno Lugue, making a collision between the two vehicles unavoidable. Dragged fifteen meters from the point of impact, the mini bus landed right side down facing south in the canal of the highway, a total wreck. The Franco Bus was also damaged but not as severely. The collision resulted in the deaths of both drivers, Macario Yuro and Magdaleno Lugue, and two passengers of the mini bus, Romeo Bue and Fernando Chuay.

Consequently, Antonio Reyes, the registered owner of the Isuzu Mini Bus, Mrs. Susan Chuay, the wife of victim Fernando Chuay, and Mrs. Lolita Lugue, the wife of driver-victim Magdaleno Lugue, filed an action for damages through reckless imprudence before the Court of First Instance of Pampanga in Angeles City, Branch IV, docketed as Civil Case No. 2154, against Mr. and Mrs. Federico Franco, the owners and operators of the Franco Transportation Company. The complaint alleged that: (a) the recklessness and imprudence of the Franco Bus driver caused the collision which resulted in his own death and that of the mini bus driver and two other passengers thereof; (b) as a consequence of the vehicular mishap, the Isuzu Mini Bus became a total wreck resulting in actual damages amounting to P50,000.00 and the loss of an average net income of P120.00 daily or P3,600.00 monthly multiplied by a minimum of one more year of serviceability of said mini bus or P40,200.00; and (c) in view of the death of the three passengers aforementioned, the heirs of each should be awarded a minimum of P12,000.00 and the expected average income of P6,000.00 each of the driver and one of the passengers and P12,000.00 of the Chinese businessman passenger.

In answer to the complaint, the defendants set up, among others, the affirmative defense that as owners and operators of the Franco Transportation Company, they exercised due diligence in the selection and supervision of all their employees, including the deceased driver Macario Yuro. The trial court rejected this defense, holding that the act of the Franco Bus driver was a negligent act punishable by law resulting in a civil obligation arising from Article 103 of the Revised Penal Code and not from Article 2180 of the Civil Code, and that the defense of having acted like a good father of a family was no defense to avoid civil liability. The trial court awarded damages to the plaintiffs, including P90,000.00 to Antonio Reyes for the Isuzu Mini Bus, P18,000.00 to Lolita Lugue, P24,000.00 to Susan Chuay, and P5,000.00 attorney's fees, all with legal interests from the filing of the suit.

On appeal, the respondent appellate court agreed with the lower court that the driver was guilty of reckless or criminal imprudence punishable by law, that the civil obligation of the appellants arises from Article 103 of the Revised Penal Code resulting in subsidiary liability, and that there is nothing in Articles 102 and 103 of the Revised Penal Code which requires a prior judgment of conviction of the erring vehicle driver. The appellate court modified the decision by increasing the awards: P30,000.00 to Susan Chuay for the death of Fernando Chuay and P112,000.00 for loss of earning capacity, and P30,000.00 to Lolita Lugue for the death of Magdaleno Lugue and P62,000.00 for loss of earning capacity. The appellate court also found that the appellants were not able to establish the defense of a good father of a family in the supervision of their bus driver, as the evidence presented was purely self-serving, with no independent evidence of supervision regarding driving habits and reaction to actual traffic conditions, and the appellants admitted that the only supervision given the drivers referred to running time between terminal points, with only two inspectors whose duties were only ticket inspection.

• Nature of the Action (Quasi-Delict vs. Crime): Petitioners contended that the allegations in paragraph 9 of the Amended Complaint unequivocally claim that the petitioners, as employers of Macario Yuro, are jointly and severally liable to the respondents for the damages suffered, which makes Civil Case No. 2154 an action predicated upon a quasi-delict under the Civil Code, subject to the defense that the employer exercised all the diligence of a good father of a family in the selection and supervision of their employees.
• Increase of Damages on Appeal: Petitioners argued that the respondent appellate court, in an appeal filed by the defeated parties (the petitioners), may not properly increase the award of damages in favor of the private respondents Chuay and Lugue, who were the prevailing parties in the lower court and did not appeal said court's decision.

• Subsidiary Liability under the Revised Penal Code: The respondent appellate court held that the case involves culpable negligence out of which civil liability arises and is not one of civil negligence, and that there is nothing in Articles 102 and 103 of the Revised Penal Code which requires a prior judgment of conviction of the erring vehicle driver and his obligation to pay his civil liability before the said provisions can be applied.
• Reliance on Arambulo: The respondent appellate court relied on the case of Arambulo vs. Manila Electric Company where it was held that the defense of observance of due diligence of a good father of a family in the selection and supervision of employees is not applicable to the subsidiary liability provided in Article 20 of the Penal Code (now Article 103 of the Revised Penal Code).

• Nature of the Action: Whether the action for recovery of damages instituted by the private respondents was predicated upon crime (subsidiary liability under the Revised Penal Code) or quasi-delict (primary liability under the Civil Code).
• Increase of Damages on Appeal: Whether the respondent appellate court, in an appeal filed by the defeated parties (petitioners), may properly increase the award of damages in favor of the private respondents Chuay and Lugue, who were the prevailing parties in the lower court and did not appeal said court's decision.

• Nature of the Action: The action was predicated upon quasi-delict under the Civil Code. The petitioners' subsidiary liability under Article 103 of the Revised Penal Code has no basis because no criminal action was instituted, the employee-driver having died; the employer's liability must instead be based on the primary liability under Articles 2176 and 2180 of the Civil Code.
• Increase of Damages on Appeal: No. The Intermediate Appellate Court was without jurisdiction to increase the amount of damages awarded to private respondents Chuay and Lugue, neither of whom appealed the decision of the lower court; an appellee who is not also an appellant cannot ask for modification or reversal of the judgment or affirmative relief unless he has also appealed.

• Nature of the Action: The Court distinguished between the subsidiary liability of the employer under the Revised Penal Code and the employer's primary liability under the Civil Code which is quasi-delictual or tortious in character. Under Article 103 of the Revised Penal Code, liability originates from a delict committed by the employee who is primarily liable therefor, and upon whose primary liability the employer's subsidiary liability is to be based. Before the employer's subsidiary liability may be proceeded against, it is imperative that there should be a criminal action whereby the employee's criminal negligence or delict and corresponding liability therefor are proved. In this case, no criminal action was instituted because the person who should stand as the accused and the party supposed to be primarily liable for the damages died. Thus, the petitioners' subsidiary liability has no leg to stand on, their liability being merely secondary to their employee's primary liability. The Court found the appellate court's reliance on Arambulo to be erroneous and absurd, as it would enforce the subsidiary civil liability of the employer without a criminal conviction of the party primarily liable, which is a condition sine qua non. Under Articles 2176 and 2180 of the Civil Code, liability is based on culpa aquiliana which holds the employer primarily liable for tortious acts of its employees, subject to the defense that the former exercised all the diligence of a good father of a family in the selection and supervision of his employees. The Court rejected the petitioners' affirmative defense of due diligence, finding that the appellate court's factual findings — that the evidence presented was purely self-serving, that no independent evidence was presented as to the alleged supervision of the bus drivers, and that the only supervision referred to running time between terminal points with only two ticket inspectors for a fleet of twelve buses — were entitled to respect and finality.
• Increase of Damages on Appeal: The Court agreed with the petitioners that the Intermediate Appellate Court was without jurisdiction to increase the amount of damages awarded to private respondents Chuay and Lugue, neither of whom appealed the decision of the lower court. While an appellee who is not also an appellant may assign error in his brief if his purpose is to maintain the judgment on other grounds, he cannot ask for modification or reversal of the judgment or affirmative relief unless he has also appealed. The records show that the plaintiffs-private respondents limited their claim for actual and compensatory damages to the supposed average income for a period of one year of P6,000.00 for the driver Magdaleno Lugue and P12,000.00 for the Chinese businessman Fernando Chuay, and the award should not exceed those amounts. However, the increase in awards for indemnity arising from death to P30,000.00 each was sustained, having been made in accordance with prevailing jurisprudence decreeing such increase in view of the depreciated Philippine currency.

• Employer's subsidiary liability under Article 103 of the Revised Penal Code — The employer's subsidiary liability originates from a delict committed by the employee who is primarily liable therefor, and upon whose primary liability the employer's subsidiary liability is to be based. A prior criminal conviction of the employee is a condition sine qua non for the employer's subsidiary liability. In this case, because no criminal action was instituted against the deceased driver, the employer's subsidiary liability could not be enforced.
• Employer's primary liability under Articles 2176 and 2180 of the Civil Code (culpa aquiliana) — Liability is based on quasi-delict which holds the employer primarily liable for tortious acts of its employees, subject to the defense that the former exercised all the diligence of a good father of a family in the selection and supervision of his employees. This defense was raised but rejected for lack of evidence.
• Rule on appeal of damages — An appellee who is not also an appellant may assign error in his brief if his purpose is to maintain the judgment on other grounds, but he cannot ask for modification or reversal of the judgment or affirmative relief unless he has also appealed. The appellate court cannot increase the award of damages in favor of a prevailing party who did not appeal.

• "Distinction should be made between the subsidiary liability of the employer under the Revised Penal Code and the employer's primary liability under the Civil Code which is quasi-delictual or tortious in character." — This passage articulates the central doctrinal distinction that governs the case, separating the two possible bases of employer liability.
• "Before the employer's subsidiary liability may be proceeded against, it is imperative that there should be a criminal action whereby the employee's criminal negligence or delict and corresponding liability therefor are proved." — This states the condition sine qua non for subsidiary liability under Article 103 of the Revised Penal Code, which was not satisfied in this case.
• "It is erroneous because the conviction of the employee primarily liable is a condition sine qua non for the employer's subsidiary liability and, at the same time, absurd because we will be faced with a situation where the employer is held subsidiarily liable even without a primary liability being previously established." — This passage explains why the appellate court's reliance on Arambulo was erroneous, emphasizing the logical necessity of establishing primary liability before subsidiary liability can attach.
• "While an appellee who is not also an appellant may assign error in his brief if his purpose is to maintain the judgment on other grounds, he cannot ask for modification or reversal of the judgment or affirmative relief unless he has also appealed." — This states the rule limiting the appellate court's authority to modify judgments in favor of non-appealing parties.

• Arambulo vs. Manila Electric Company, 55 Phil. 75 — Cited by the respondent appellate court for the proposition that the defense of due diligence is not applicable to subsidiary liability under the Penal Code; the Supreme Court found this reliance erroneous.
• Rakes vs. Atlantic Gulf & Pacific Co., 7 Phil. 359 — Cited for the proposition that if no criminal action was instituted, the employer's liability would not be predicated under Article 103 of the Revised Penal Code.
• M.D. Transit and Taxi Co., Inc. vs. Court of Appeals, 22 SCRA 559 — Cited for the rule that there can be no automatic subsidiary liability of the defendant employer under Article 103 of the Revised Penal Code where his employee has not been previously criminally convicted.
• Agalo-os vs. Intermediate Appellate Court, 149 SCRA 546 — Cited for the rule that the Supreme Court respects the factual findings of the appellate and trial courts and accords them a certain measure of finality.
• La Campana Food Products, Inc. vs. PCI Bank, 142 SCRA 394 — Cited for the rule that an appellee who is not also an appellant cannot ask for modification or reversal of the judgment or affirmative relief unless he has also appealed.
• Aguilar vs. Chan, 144 SCRA 673 — Cited for the rule that for failure of plaintiffs-appellees to appeal the lower court's judgment, the amount of actual damages cannot exceed that awarded by it.
• Makabali vs. CA, et al., G.R. No. L-46877, January 22, 1988 — Cited for the rule that the award should not exceed the amounts claimed by the plaintiffs.
• People vs. Cruz, 142 SCRA 576 — Cited for the rule that the increase in awards for indemnity arising from death to P30,000.00 each was made in accordance with prevailing jurisprudence in view of the depreciated Philippine currency.

• Article 102, Revised Penal Code — Subsidiary civil liability of innkeepers, tavern-keepers and proprietors of establishments; cited to distinguish the subsidiary liability regime from the primary liability under the Civil Code.
• Article 103, Revised Penal Code — Subsidiary civil liability of other persons, including employers, for felonies committed by their employees in the discharge of their duties; held inapplicable because no criminal action was instituted against the deceased driver.
• Article 2176, Civil Code — Defines quasi-delict as fault or negligence causing damage to another where there is no pre-existing contractual relation; applied as the basis of the respondents' action.
• Article 2177, Civil Code — Provides that responsibility for fault or negligence under Article 2176 is entirely separate and distinct from the civil liability arising from negligence under the Penal Code, but the plaintiff cannot recover damages twice for the same act or omission; cited to distinguish the two liability regimes.
• Article 2180, Civil Code — Provides that employers shall be liable for damages caused by their employees acting within the scope of their assigned tasks, and that the responsibility ceases when the employer proves observance of all the diligence of a good father of a family to prevent damage; applied as the basis of the employer's primary liability.

Feliciano, Bidin, and Cortes, JJ., concurred. Gutierrez, Jr., J., was on leave.