Case Summary (G.R. No. 75112)
Key Dates and Governing Constitution
Decision date of the appealed Supreme Court judgment: October 16, 1990. Because the decision date is 1990, the 1987 Philippine Constitution is the governing constitution under which the decision is situated.
Procedural History
Criminal: Funtecha was prosecuted and convicted in the City Court of Roxas City for serious physical injuries through reckless imprudence; conviction affirmed on appeal by the Court of First Instance of Capiz.
Civil: Kapunan filed Civil Case No. V‑4222 in the Regional Trial Court (RTC), Roxas City, naming Filamer and Funtecha as defendants and also alleging negligence by Agustin Masa in allowing an unlicensed houseboy to drive. The RTC rendered judgment (December 14, 1983) finding Filamer, Funtecha, and—improperly—a non‑party (Allan Masa) negligent, and awarded various damages against Filamer and Funtecha jointly and severally. Filamer and Zenith appealed to the Court of Appeals; Zenith’s appeal was dismissed for failure to pay docket fees. The Court of Appeals affirmed the RTC in toto on December 17, 1985. Filamer then elevated the case to the Supreme Court.
Trial Court Findings and Awards
The RTC found by a preponderance of evidence that (a) the jeep was owned by Filamer, (b) Funtecha was driving and had only a student’s permit, (c) only one headlight functioned, and (d) defendants were negligent. The RTC awarded medical expenses, doctor’s fees, additional expenses (helper remuneration), litigation expenses, loss of earning capacity, moral damages, attorney’s fees, and a P20,000 insurance indemnity; the RTC also held Zenith Insurance liable to Filamer in the third‑party claim. The RTC erroneously included Allan Masa (a non‑party) among those at fault.
Issues on Appeal to the Supreme Court
Primary legal issue: Whether Filamer Christian Institute can be held civilly liable under Article 2180 of the Civil Code for damages caused by Funtecha, i.e., whether an employer‑employee relationship existed between Filamer and Funtecha and, if so, whether the tort occurred within the scope of employment. Secondary issues arising from the lower courts’ rulings include the effect of non‑impleaded third parties (Allan Masa) being held responsible and the insurer’s liability.
Applicable Law
- Civil Code: Article 2176 (quasi‑delict liability) and Article 2180 (liability of employers for acts of employees and household helpers acting within the scope of assigned tasks; defense of having exercised the diligence of a good father of a family).
- Labor Code (Presidential Decree No. 442): Section 14, Rule X, Book III — Working scholars: no employer‑employee relationship between students and educational institutions where students work in exchange for free tuition, provided reasonable facilities and opportunity are given.
- Procedural/legal principle: A person not impleaded in the action is not bound by the judgment and cannot be held affected by proceedings to which he is a stranger.
Analysis — Employer‑Employee Relationship
The Supreme Court accepted the applicability of Section 14, Rule X, Book III of PD No. 442 to the facts: Funtecha was a student who rendered two hours of janitorial service daily (4:00 a.m. to 6:00 a.m.) in exchange for free tuition, and he was not on the company payroll. Under Section 14, such working scholars are not in an employer‑employee relationship with the school. Consequently, Filamer could not be deemed Funtecha’s employer for the purposes of Article 2180. The Court rejected the respondents’ attempt to confine Section 14 to purely personal relationships between the student and the school or to limit its scope where third parties are involved; the statutory language is categorical and intended to resolve the prior ambiguity about working scholars’ status.
Analysis — Scope of Employment and Imputability
Even if Funtecha were considered an employee, the Court held that employer liability requires that the employee be acting within the scope of his assigned tasks. Here, Funtecha’s assigned duty was limited to morning janitorial work before classes. The accident occurred at approximately 6:30 p.m., when Funtecha had taken the jeep from Allan and drove it recklessly. That conduct was plainly outside the scope of janitorial duties and was for the driver’s private purpose. Therefore, the primary responsibility for the tort rests with Funtecha personally; Filamer cannot be held liable on the ground of respondeat superior.
Non‑Impleaded Third Party (Allan Masa) and Insurance Issues
The RTC had found Allan Masa—a non‑par
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Parties
- Petitioner: Filamer Christian Institute (hereinafter "Filamer").
- Private respondent / injured party: Potenciano Kapunan, Sr., an eighty-two-year-old retired schoolteacher (noted in the record as now deceased), and later substituted by his heirs: Leona Kapunan Tiangco, Cicero Kapunan, Jesus Kapunan, Santiago Kapunan, Potenciano Kapunan, Jr., Paz Kapunan Publico, Susa Kapunan Genuino, and Erlinda Kapunan Tesoro.
- Alleged tortfeasor / driver: Daniel Funtecha (described as having a student driver’s permit and as a part-time/houseboy).
- Other persons mentioned:
- Allan Masa — authorized driver of the jeep, holder of a professional driver’s license; present with Funtecha at the time of the accident but not impleaded as a co-defendant in the civil case.
- Agustin Masa — director and president of Filamer Christian Institute; named in complaint in his personal capacity for allegedly authorizing Funtecha to drive.
- Zenith Insurance Corporation — third-party defendant/insurer involved in trial court third-party complaint.
- Judicial officers: Honorable Enrique P. Suplico (Judge, Regional Trial Court, Branch XIV, Roxas City); Court of Appeals panel members (Associate Justice Desiderio P. Jurado penned the CA decision; concurred by Associate Justices Jose C. Campos, Jr. and Serafin E. Camilon; Associate Justice Crisolito Pascual did not take part).
- Members of the Supreme Court disposition: Chief Justice FERNAN authored the decision; Justices Gutierrez, Jr., Bidin, and Cortes concurred; Justice Feliciano was on leave.
Factual Background
- Date, time and place of accident:
- October 20, 1977, at approximately 6:30 in the evening, along Roxas Avenue, Roxas City.
- Accident particulars:
- The victim, Potenciano Kapunan, Sr., was walking along Roxas Avenue when he was struck by a Pinoy jeep.
- The jeep was owned by petitioner Filamer Christian Institute and was being driven by Daniel Funtecha at the time of the collision.
- At the precise time of the vehicular accident, only one headlight of the jeep was functioning.
- Funtecha possessed only a student driver’s permit and had persuaded Allan Masa, the authorized driver, to turn over the wheels to him.
- After the incident, Funtecha and Allan Masa fled from the scene.
- A tricycle driver brought the unconscious victim to the hospital, where he was hospitalized for a total of twenty (20) days and suffered multiple injuries.
- Employment / status of driver:
- Funtecha rendered services to Filamer as a working student: two hours daily, five days a week, assigned to sweep/clean school passageways from 4:00 a.m. to 6:00 a.m., with time to prepare for 7:30 a.m. classes.
- Agustin Masa admitted in open court that Funtecha was not included in the company payroll.
- Funtecha was described at trial as a houseboy at the time of the incident.
Criminal Proceedings Relating to the Accident
- Criminal case:
- Private respondent Kapunan, Sr. instituted a criminal case against Daniel Funtecha alone in the City Court of Roxas City for serious physical injuries through reckless imprudence.
- Kapunan, Sr. expressly reserved his right to file an independent civil action.
- The inferior court found Funtecha guilty as charged.
- On appeal, Funtecha’s conviction was affirmed by the then Court of First Instance of Capiz (citation: Annex E of Petition, p. 49, Rollo).
Civil Action (Civil Case No. V-4222) — Parties and Claims
- Plaintiffs and defendants:
- Plaintiff: Potenciano Kapunan, Sr. (later substituted by heirs).
- Defendants named in the civil complaint: Filamer Christian Institute and Daniel Funtecha.
- Also included: Agustin Masa (director and president of Filamer Christian Institute) named in his personal capacity for allegedly authorizing and allowing Funtecha to drive despite knowledge of lack of license or permit.
- Allan Masa, though present at the time of the accident, was not impleaded as a co-defendant.
- Third-party claim:
- Filamer filed a third-party complaint against Zenith Insurance Corporation (insurer) and raised matters concerning policy coverage and authorized drivers.
Trial Court Findings and Judgment (December 14, 1983)
- Primary conclusions of the trial court:
- Defendants Daniel Funtecha, Filamer Christian Institute, and Allan Masa were found at fault and negligent for acts causing injury to plaintiff.
- Despite finding Allan Masa at fault, Allan was not a party in the civil complaint (the court nevertheless named him as at fault in its findings).
- The trial court absolved Agustin Masa from any personal liability with respect to the complaint filed against him in his personal and private capacity, because he was not in the vehicle during the alleged incident.
- Monetary awards and orders against defendants (as rendered by the trial court):
- Joint and several liability of Daniel Funtecha and Filamer Christian Institute (employer) to pay plaintiff:
- P2,950.50 — medical expenses (Exh. 'A').
- P241.00 — doctor's fee (Exh. 'C').
- P390.00 — additional expenses for thirty-nine days at P10.00/day for remuneration of plaintiff’s helper while recuperating.
- P4,000.00 — court litigation expenses.
- P3,000.00 — loss of earning capacity.
- P20,000.00 — moral damages.
- P4,500.00 — attorney's fees.
- P20,000.00 — insurance indemnity on the policy contract.
- Without prejudice to Filamer’s right to demand reimbursement from co-defendant Funtecha (part-time employee) and/or Allan Masa (full-time employee) for damages paid.
- Filamer’s third-party complaint against Zenith Insurance Corporation resulted in the trial court ordering Zenith to pay, in favor of Filamer Christian Institute:
- P20,000.00 — third party liability as provided in the Zenith Insurance Corporation policy (Exh. '2').
- P10,000.00 — moral damages.
- P4,000.00 — court litigation and actual expenses.
- P3,000.00 — attorney’s fees.
- The defendants Daniel Funtecha, Filamer Christian Institute, and Zenith Insurance Corporation were ordered jointly and severally to pay costs of the suit.
- Joint and several liability of Daniel Funtecha and Filamer Christian Institute (employer) to pay plaintiff:
- Dismissal of counterclaims:
- The trial court dismissed the counterclaims filed by defendant Daniel Funtecha, Dr. Agustin Masa, and Filamer Christian Institute for failure to prove them against the plaintiff.
- Insurance findings at trial:
- The Zenith Insurance Corporation failed to prove a policy violation by Filamer Christian Institute which would absolve it from liability under the insurance policy.
- The