SECOND DIVISION
[G.R. No. 125817. January 16, 2002]
ABELARDO LIM and ESMADITO GUNNABAN, petitioners, vs. COURT
OF APPEALS and DONATO H. GONZALES, respondents.
D E C I S I O N
BELLOSILLO, J.:
When a passenger jeepney covered by a certificate of public convenience is sold to another who continues to operate it under the same certificate of public convenience under the so-called kabit system, and in the course thereof the vehicle meets an accident through the fault of another vehicle, may the new owner sue for damages against the erring vehicle? Otherwise stated, does the new owner have any legal personality to bring the action, or is he the real party in interest in the suit, despite the fact that he is not the registered owner under the certificate of public convenience?
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger jeepney from Gomercino Vallarta, holder of a certificate of public convenience for the operation of public utility vehicles plying the Monumento-Bulacan route. While private respondent Gonzales continued offering the jeepney for public transport services he did not have the registration of the vehicle transferred in his name nor did he secure for himself a certificate of public convenience for its operation. Thus Vallarta remained on record as its registered owner and operator.
On 22 July 1990, while the jeepney was running northbound along the North Diversion Road somewhere in Meycauayan, Bulacan, it collided with a ten-wheeler-truck owned by petitioner Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility for the accident, explaining that while he was traveling towards Manila the truck suddenly lost its brakes. To avoid colliding with another vehicle, he swerved to the left until he reached the center island. However, as the center island eventually came to an end, he veered farther to the left until he smashed into a Ferroza automobile, and later, into private respondent's passenger jeepney driven by one Virgilio Gonzales. The impact caused severe damage to both the Ferroza and the passenger jeepney and left one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the
wounded, compensated the heirs of the deceased passenger, and had the Ferroza
restored to good condition. He also
negotiated with private respondent and offered to have the passenger jeepney
repaired at his shop. Private
respondent however did not accept the offer so Lim offered him P20,000.00,
the assessment of the damage as estimated by his chief mechanic. Again, petitioner Lim's proposition was
rejected; instead, private respondent demanded a brand-new jeep or the amount
of P236,000.00. Lim increased
his bid to P40,000.00 but private respondent was unyielding. Under the circumstances, negotiations had to
be abandoned; hence, the filing of the complaint for damages by private
respondent against petitioners.
In his answer Lim denied liability by contending that he
exercised due diligence in the
selection and supervision of his employees. He further asserted that as the jeepney was registered in
Vallarta’s name, it was Vallarta and not private respondent who was the real
party in interest.[1]
For his part, petitioner Gunnaban averred that the accident was a fortuitous
event which was beyond his control.[2]
Meanwhile, the damaged passenger jeepney was left by the roadside
to corrode and decay. Private
respondent explained that although he wanted to take his jeepney home he had no
capability, financial or otherwise, to tow the damaged vehicle.[3]
The main point of contention between the parties related to the
amount of damages due private respondent.
Private respondent Gonzales averred that per estimate made by an
automobile repair shop he would have to spend P236,000.00 to restore his
jeepney to its original condition.[4]
On the other hand, petitioners insisted that they could have the vehicle
repaired for P20,000.00.[5]
On 1 October 1993 the trial court upheld private respondent's
claim and awarded him P236,000.00 with legal interest from 22 July 1990
as compensatory damages and P30,000.00 as attorney's fees. In support of its decision, the trial court
ratiocinated that as vendee and current owner of the passenger jeepney private
respondent stood for all intents and purposes as the real party in
interest. Even Vallarta himself
supported private respondent's assertion of interest over the jeepney for, when
he was called to testify, he dispossessed himself of any claim or pretension on
the property. Gunnaban was found by the
trial court to have caused the accident since he panicked in the face of an
emergency which was rather palpable from his act of directing his vehicle to a
perilous streak down the fast lane of the superhighway then across the island
and ultimately to the opposite lane where it collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's
negligence was premised on his want of diligence in supervising his
employees. It was admitted during trial
that Gunnaban doubled as mechanic of the ill-fated truck despite the fact that
he was neither tutored nor trained to handle such task.[6]
Forthwith, petitioners appealed to the Court of Appeals which, on 17 July 1996, affirmed the decision of the trial court. In upholding the decision of the court a quo the appeals court concluded that while an operator under the kabit system could not sue without joining the registered owner of the vehicle as his principal, equity demanded that the present case be made an exception.[7] Hence this petition.
It is petitioners' contention that the Court of Appeals erred in
sustaining the decision of the trial court despite their opposition to the
well-established doctrine that an operator of a vehicle continues to be its
operator as long as he remains the operator of record. According to petitioners, to recognize an
operator under the kabit system as the real party in interest and to
countenance his claim for damages is utterly subversive of public policy. Petitioners further contend that inasmuch
as the passenger jeepney was purchased by private respondent for only P30,000.00,
an award of P236,000.00 is inconceivably large and would amount to
unjust enrichment.[8]
Petitioners' attempt to illustrate that an affirmance of the appealed decision could be supportive of the pernicious kabit system does not persuade. Their labored efforts to demonstrate how the questioned rulings of the courts a quo are diametrically opposed to the policy of the law requiring operators of public utility vehicles to secure a certificate of public convenience for their operation is quite unavailing.
The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings.[9] Although the parties to such an agreement are not outrightly penalized by law, the kabit system is invariably recognized as being contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio[10]
the Court explained that one of the primary factors considered in the granting
of a certificate of public convenience for the business of public
transportation is the financial capacity of the holder of the license, so that
liabilities arising from accidents may be duly compensated. The kabit system renders
illusory such purpose and, worse, may
still be availed of by the grantee to escape civil liability caused by a
negligent use of a vehicle owned by another and operated under his license. If a registered owner is allowed to escape
liability by proving who the supposed owner of the vehicle is, it would be easy
for him to transfer the subject vehicle to another who possesses no
property with which to respond
financially for the damage
done. Thus, for the safety of
passengers and the public who may have been wronged and deceived through the
baneful kabit system, the registered owner of the vehicle is not allowed
to prove that another person has become the owner so that he may be thereby
relieved of responsibility. Subsequent
cases affirm such basic doctrine.[11]
It would seem then that the thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to identify the person upon whom responsibility may be fixed in case of an accident with the end view of protecting the riding public. The policy therefore loses its force if the public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be prevented in enjoining the kabit system does not exist. First, neither of the parties to the pernicious kabit system is being held liable for damages. Second, the case arose from the negligence of another vehicle in using the public road to whom no representation, or misrepresentation, as regards the ownership and operation of the passenger jeepney was made and to whom no such representation, or misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and the registered owner of the jeepney were in estoppel for leading the public to believe that the jeepney belonged to the registered owner. Third, the riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On the contrary, it was private respondent himself who had been wronged and was seeking compensation for the damage done to him. Certainly, it would be the height of inequity to deny him his right.
In light of the foregoing, it is evident that private respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well as on his business. Any effort then to frustrate his claim of damages by the ingenuity with which petitioners framed the issue should be discouraged, if not repelled.
In awarding damages for tortuous injury, it becomes the sole
design of the courts to provide for adequate compensation by putting the
plaintiff in the same financial position he was in prior to the tort. It is a fundamental principle in the law on
damages that a defendant cannot be held liable in damages for more than the
actual loss which he has inflicted and that a plaintiff is entitled to no more
than the just and adequate compensation for the injury suffered. His recovery is, in the absence of
circumstances giving rise to an allowance of punitive damages, limited to a
fair compensation for the harm done.
The law will not put him in a position better than where he should be in
had not the wrong happened.[12]
In the present case, petitioners insist that as the passenger
jeepney was purchased in 1982 for only P30,000.00 to award damages
considerably greater than this amount would be improper and unjustified. Petitioners are at best reminded that
indemnification for damages comprehends not only the value of the loss suffered
but also that of the profits which the obligee failed to obtain. In other words, indemnification for damages
is not limited to damnum emergens or actual loss but extends to lucrum
cessans or the amount of profit lost.[13]
Had private respondent's jeepney not met an accident it could
reasonably be expected that it would have continued earning from the business
in which it was engaged. Private
respondent avers that he derives an average income of P300.00 per day
from his passenger jeepney and this earning was included in the award of
damages made by the trial court and upheld by the appeals court. The award therefore of P236,000.00 as
compensatory damages is not beyond
reason nor speculative as it is based on a reasonable estimate of the total
damage suffered by private respondent, i.e. damage wrought upon his
jeepney and the income lost from his transportation business. Petitioners for their part did not offer any
substantive evidence to refute the estimate made by the courts a quo.
However, we are constrained to depart from the conclusion of the
lower courts that upon the award of compensatory damages legal interest should
be imposed beginning 22 July 1990, i.e. the date of the accident. Upon the provisions of Art. 2213 of the
Civil Code, interest "cannot be recovered upon unliquidated claims or
damages, except when the demand can be established with reasonable
certainty." It is axiomatic that if the suit were for damages,
unliquidated and not known until definitely ascertained, assessed and
determined by the courts after proof, interest at the rate of six percent (6%)
per annum should be from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to be reasonably ascertained).[14]
In this case, the matter was not a liquidated obligation as the
assessment of the damage on the vehicle was heavily debated upon by the parties with private respondent's demand for P236,000.00
being refuted by petitioners who argue that they could have the vehicle
repaired easily for P20,000.00.
In fine, the amount due private respondent was not a liquidated account
that was already demandable and payable.
One last word. We have observed that private respondent left his passenger jeepney by the roadside at the mercy of the elements. Article 2203 of the Civil Code exhorts parties suffering from loss or injury to exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. One who is injured then by the wrongful or negligent act of another should exercise reasonable care and diligence to minimize the resulting damage. Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve the property injured and for injuries incurred in attempting to prevent damage to it.[15]
However we sadly note that in the present case petitioners failed to offer in evidence the estimated amount of the damage caused by private respondent's unconcern towards the damaged vehicle. It is the burden of petitioners to show satisfactorily not only that the injured party could have mitigated his damages but also the amount thereof; failing in this regard, the amount of damages awarded cannot be proportionately reduced.
WHEREFORE, the questioned Decision awarding private
respondent Donato Gonzales P236,000.00 with legal interest from 22 July
1990 as compensatory damages and P30,000.00 as attorney's fees is
MODIFIED. Interest at the rate of six
percent (6%) per annum shall be computed from the time the judgment of the
lower court is made until the finality of this Decision. If the adjudged principal and interest
remain unpaid thereafter, the interest shall be twelve percent (12%) per annum
computed from the time judgment becomes final and executory until it is fully
satisfied.
Costs against petitioners.
SO ORDERED.
Mendoza, Quisumbing, Buena, and
De Leon, Jr., JJ., concur.
[1] Original Records,
pp. 23-26.
[2] Id., pp.
15-18.
[3] TSN, 6 February
1992, pp. 1-14.
[4] Ibid.
[5] See Note 1, p. 109.
[6] Decision penned by
Judge Basilio R. Gabo, RTC-Br. 11, Malolos, Bulacan; CA Rollo, pp.
41-44.
[7] Decision penned by
Associate Justice Maximiano C. Asuncion, concurred in by Associate Justices
Salome A. Montoya and Godardo A. Jacinto; Rollo, pp 25-33.
[8] Id., pp.
12-23.
[9] Baliwag Transit Inc.
v. Court of Appeals, G.R. No. 57493, 7 January 1987, 147 SCRA 82; Teja
Marketing v. IAC, G.R. No. 65510, 9 March 1987, 148 SCRA 347; Lita
Enterprises, Inc. v. Second Civil Cases Division, IAC, G.R. No. 64693,
27 April 1984, 129 SCRA 79.
[10] 51 O.G. 4059 (1955).
[11] Santos v.
Sibug, No. L-26815, 26 May 1981, 104 SCRA 520; Vargas v. Langcay, 116
Phil 478 (1962); Tamayo v. Aquino 105 Phil. 949 (1959); Erezo v.
Jepte, 102 Phil. 103 (1957) .
[12] Ong v. Court of Appeals, G.R. No. 117103,
21 January 1999, 301 SCRA 387; Congregation of the Religious of the Virgin Mary
v. Court of Appeals, 353 Phil 591 (1998); Llorente v. Sandiganbayan, G.R. No.
122166, 11 March 1998, 287 SCRA 382.
[13] Magat, Jr. v. CA, G.R. No. 124221, 4
August 2000, 337 SCRA 298; Integrated
Packaging Corp. v. CA, G.R. No. 115117, 8 June 2000, 333 SCRA 171;
Coca-Cola Bottlers Packaging Inc., v. Henson, 367 Phil 493 (1999);
Associated Realty Development Co., Inc. v. CA, No. L-18056, 30 January
1956, 13 SCRA 52.
[14] Eastern Assurance and Surety Corporation,
G.R. No. 127135, 18 January 2000, 322 SCRA 73; Eastern Shipping Lines, Inc.
v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78; Rivera v.
Matute, 98 Phil 516 (1956).
[15] Puentebella v.
Negros Coal, 50 Phil 69 (1927); De Castelvi v. Compania de Tabaccos, 49
Phil 998 (1926).