Case Summary (A.C. No. 13035)
Issue Presented
Whether Gonzales, as non-registered owner/operator under the “kabit” system, has legal personality to sue for damages caused by petitioners’ negligence, and whether the quantum and timing of interest awarded by lower courts are appropriate.
Lower Courts’ Rulings
The trial court held Gonzales to be the real party in interest despite Vallarta’s registered CPC. It attributed negligence to Gunnaban and vicarious liability to Lim for inadequate employee supervision. It awarded P236,000 compensatory damages with interest from the accident date and P30,000 attorney’s fees. The Court of Appeals affirmed, but recognized that under the kabit system the registered owner should generally be joined, yet made an equitable exception allowing Gonzales to proceed alone.
Doctrine on the “Kabit” System
The “kabit” arrangement permits unlicensed operators to run PUJs under another’s CPC, but is void under Art. 1409, Civil Code, as contrary to public policy designed to ensure financial responsibility for accidents. Precedents bar registered owners from escaping liability through proof of transfer to an unlicensed operator, protecting the riding public.
Analysis on Real Party in Interest
The Court finds the kabit system’s policy aim—pinpointing the responsible party—is not implicated here: the accident was caused by a third party, not by misrepresentation to the public. Neither the riding public nor other road users were misled or placed at risk by Gonzales’s non-registration. Equity demands that Gonzales, being the sole injured party, may enforce his claim directly.
Compensation and Damages
Damages in tort aim to restore the plaintiff to his pre-tort financial position and include both actual loss (damnum emergens) and loss of earning capacity (lucrum cessans). The award of P236,000 reflects both repair costs and lost earnings (average P300/day) and is neither speculative nor excessive. Petitioners offered no evidence to refute this valuation.
Interest on Unliquidated Claims
Under Art. 2213, Civil Code, unliquidated damages cannot bear interest from the date of the accident; interest at 6% per annum should run only from the final judgment date when the amount is reasonably ascertained. The Court modifies the award accordingly: 6% interest from the trial cou
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Facts of the Case
- In 1982, private respondent Donato H. Gonzales purchased an Isuzu passenger jeepney from Gomercino Vallarta, the holder of a Certificate of Public Convenience (CPC) for the Monumento-Bulacan route.
- Gonzales continued operating the jeepney but did not transfer registration or secure his own CPC; Vallarta remained the registered owner and operator on record.
- On July 22, 1990, while traveling northbound on the North Diversion Road in Meycauayan, Bulacan, the jeepney was struck by a ten-wheeler truck owned by petitioner Abelardo Lim and driven by co-petitioner Esmadito Gunnaban.
- Gunnaban testified that his truck lost its brakes, causing him to swerve first into a center island, then into a Ferroza automobile, and finally into Gonzales’s jeepney.
- The collision resulted in one passenger’s death, multiple injuries, and severe damage to the Ferroza and the jeepney.
- Lim paid medical and funeral expenses, restored the Ferroza, and offered to repair the jeepney or to pay ₱20,000 (later increased to ₱40,000); Gonzales refused and demanded either a new jeepney or ₱236,000 for restoration and lost earnings.
Procedural Posture
- Gonzales filed a complaint for damages against Lim and Gunnaban.
- Lim’s answer: denied liability, asserted due diligence in employee supervision, and challenged Gonzales’s standing as he was not the registered CPC holder.
- Gunnaban’s answer: characterized the collision as a fortuitous event.
- Trial Court (October 1, 1993):
• Found Gunnaban negligent for panicking and veering into oncoming traffic.
• Held Lim vicariously liable for lack of supervision of an unqualified employee-mechanic.
• Recognized Gonzales as real party in interest despite lack of registration.
• Awarded Gonzales ₱236,000 compensatory da