G.R. No. 167797 - Metro Manila Transit Corp. vs. Cuevas

Metro Manila Transit Corporation (MMTC), petitioner, entered into an agreement to sell dated August 31, 1990, with Mina’s Transit Corporation, whereby Mina’s Transit bought several bus units from MMTC at a stipulated price.
MMTC retained ownership of the buses until certain conditions were met, but Mina’s Transit was allowed to operate the buses within Metro Manila in the meantime.

On October 14, 1994, one of the buses subject to the agreement, bearing plate number NXM-449-TB-pil 94, driven by Jessie Rillera y Gaceta, hit and damaged a Honda Motorcycle owned by Reynaldo Cuevas and driven by Junnel Cuevas.
Reynaldo and Junnel sued MMTC and Mina’s Transit before the Regional Trial Court (RTC) in Cavite (Civil Case No. N-6127), alleging joint ownership and operation of the bus and the driver’s negligence causing injuries and damages.
The plaintiffs prayed for actual damages (medical expenses and repair costs), moral, exemplary, nominal damages, litigation expenses, attorney’s fees, and costs.

MMTC denied liability, contending it retained ownership but that Mina’s Transit was the actual operator and employer of the bus driver. MMTC filed a cross-claim against Mina’s Transit based on a contractual provision holding MMTC free from liability.
Mina’s Transit denied liability, asserting due diligence in employer and driver conduct, and alleged plaintiff’s contributory negligence. Mina’s Transit also filed a third-party complaint against Perla Compania de Seguros, Inc., its insurer.
Perla denied insurer’s liability due to Mina’s Transit’s failure to give timely notice of claim, and further limited its coverage to maximum amounts specified in the insurance policy.

Trial court ruled in favor of Reynaldo and Junnel, holding MMTC and Mina’s Transit solidarily liable for damages amounting to actual damages, moral damages, exemplary damages, and attorney’s fees, plus costs.
The court found the proximate cause of the accident was the negligence of the bus driver. Liability was imposed under Article 2180 of the Civil Code.
The court dismissed the third-party complaint due to lack of evidence. However, it did not rule on the propriety of MMTC’s cross-claim against Mina’s Transit.

The CA affirmed the RTC ruling, maintaining solidary liability of MMTC and Mina’s Transit.

MMTC appealed the decision asserting the sole issue: whether it was liable despite the agreement provision shielding it from liability, given that the operation and employment of the driver were Mina’s Transit’s responsibility.

Whether MMTC, as the registered owner of the bus, is liable for the injuries sustained by the plaintiffs despite the contractual provision in the agreement to sell which purports to exempt MMTC from liability.

Whether the employer-employee relationship between MMTC and the bus driver is prerequisite to establish MMTC’s liability for the driver’s negligence.

Whether MMTC may recover from Mina’s Transit by way of cross-claim for reimbursement of damages paid.