G.R. No. 71137 - Franco vs. Intermediate Appellate Court

On October 18, 1974, at about 7:30 in the evening, driver Macario Yuro was operating a northbound Franco Bus (Plate No. XY-320-PUB).
While driving along MacArthur Highway at Barrio Talaga, Capas, Tarlac, Yuro swerved to the left to avoid colliding with a parked truck with a trailer facing north on the cemented pavement.
In the process, Yuro inadvertently veered into the lane of an oncoming Isuzu Mini Bus (Plate No. YL-735), driven by Magdaleno Lugue.

The collision between the Franco Bus and the Isuzu Mini Bus was described as unavoidable and disastrous, exacerbated by the sudden lane change.
The Isuzu Mini Bus, after being dragged approximately fifteen (15) meters from the point of impact (midway along the length of the parked truck), ended up right-side down in a highway canal, sustaining total wreckage.
The Franco Bus was also damaged, though to a lesser extent compared to the Isuzu Mini Bus.

Fatalities resulted from the collision: Macario Yuro and Magdaleno Lugue, the drivers of the respective vehicles, lost their lives.
Additionally, two passengers of the mini bus, Romeo Bue and Fernando Chuay, were also killed.
Damage claims were made based on the wrecked state of the Isuzu Mini Bus and the loss of income resulting from its accident.

Antonio Reyes (registered owner of the Isuzu Mini Bus), Mrs. Susan Chuay (widow of victim Fernando Chuay), and Mrs. Lolita Lugue (widow of victim Magdaleno Lugue) filed an action for damages for reckless imprudence before the Court of First Instance of Pampanga and Angeles City, Branch IV (Civil Case No. 2154).
The complaint alleged:

That the recklessness and imprudence of the Franco Bus driver (Macario Yuro) caused the collision.
The collision led to substantial damages to the mini bus (valued at P50,000.00) and loss of its income-generating capacity (calculated based on an average net income of P120.00 daily or P3,600.00 monthly, with a minimum one-year serviceability equating to P40,200.00).
That, because of the deaths of the mini bus passengers, the heirs should receive fixed sums (minimum P12,000.00 each) and additional amounts based on expected average incomes.

Petitioners, Mr. and Mrs. Federico Franco, owners and operators of the Franco Transportation Company, asserted an affirmative defense that they exercised due diligence in the selection and supervision of their employees, including driver Yuro.
The trial court rejected this defense, stating that the act by the bus driver was punishable under criminal negligence (referencing Article 103 of the Revised Penal Code) and that the employer’s selection or supervisory measures did not excuse the negligent act.
The trial court awarded damages to the private respondents:

P90,000.00 to Antonio Reyes for the mini bus.
P18,000.00 to Lolita Lugue and P24,000.00 to Susan Chuay, along with P5,000.00 for attorney’s fees.

On appeal by petitioners, the Intermediate Appellate Court (later the Court of Appeals) affirmed the trial court’s ruling regarding the negligent act being criminal in nature and resulting in subsidiary liability under Article 103 of the Revised Penal Code.
The appellate court increased the awards for loss of earning capacity for the widows:

A motion for reconsideration filed by petitioners was denied.
The petition raised two legal questions regarding the nature of the employer’s liability (crime vs. quasi-delict) and the appellate court’s jurisdiction to increase awards for non-appealing respondents.

Whether the action for recovery of damages was predicated on a criminal act (under the Revised Penal Code) or a quasi-delict (under the Civil Code).
Whether the employer’s affirmative defense based on due diligence (exercising the care of a good father of a family in supervising employees) is applicable and sufficient.

Whether the Intermediate Appellate Court (Court of Appeals) had the jurisdiction to increase the award of damages previously granted by the trial court to private respondents (Susan Chuay and Lolita Lugue) who did not themselves file an appeal.
Whether the resulting increase in damages contradicts the limitation that a non-appealing appellee cannot obtain a higher award than that decreed by the trial court.