Title
M.D. Transit and Taxi Co., Inc. vs. Court of Appeals
Case
G.R. No. L-23882
Decision Date
Feb 17, 1968
A pedestrian hit by a bus sued for damages; the employer’s subsidiary liability was affirmed based on the driver’s criminal conviction, rendering due diligence defenses irrelevant.
taxi company
subsidiary liability
damages
A

Case Summary (G.R. No. L-23882)

Factual Background

While crossing Taft Avenue extension near Castro Street, Manila, and passing by the pedestrian lane on August 18, 1958, David Epstein was struck by a Pasay-bound bus driven by Dominador Sembrano and owned by M. D. TRANSIT & TAXI CO., INC. Epstein sustained fractures of the left femur and right fibula and lacerations of the scalp and occipital region. A criminal complaint for serious physical injuries through reckless imprudence was prosecuted against Sembrano in the Court of First Instance of Manila.

Criminal Proceedings and Reservation of Civil Action

The Court of First Instance found Dominador Sembrano guilty beyond reasonable doubt and sentenced him to imprisonment, but refrained from pronouncing civil liability, the plaintiff having expressly reserved the right to file a separate civil action for damages. Sembrano initially appealed that criminal judgment to the Court of Appeals but later withdrew the appeal, rendering the criminal conviction final and executory on May 5, 1961.

Civil Action and Pleadings

On January 23, 1959, David Epstein commenced a civil action for damages against Dominador Sembrano and M. D. TRANSIT & TAXI CO., INC. Sembrano was declared in default. The employer answered alleging due diligence in selecting and supervising its employees and attributing the accident to plaintiff's recklessness or negligence. Epstein’s complaint expressly prayed for Sembrano to be ordered to pay damages and, "upon his inability," for the employer to pay, thus framing the employer’s liability as subsidiary.

Trial Court Judgment

The Court of First Instance of Manila rendered judgment finding Dominador Sembrano primarily liable and awarded Epstein actual damages of P3,161.10; compensatory damages of P12,000.00; moral damages of P5,000.00; and counsel fees of P1,000.00. The trial court further declared M. D. TRANSIT & TAXI CO., INC. subsidiarily liable in the event Sembrano failed to pay or was insolvent, and assessed costs against the defendants.

Appellate Review and Supreme Court Recourse

The Court of Appeals affirmed the judgment of the trial court. M. D. TRANSIT & TAXI CO., INC. sought review by certiorari to the Supreme Court, principally contesting the nature of the civil action and the preclusive effect of the criminal conviction, and seeking reduction of the damages awarded.

Legal Issue Framed

The principal issue was whether Epstein’s civil action enforced a liability arising from a crime, as he alleged, or a liability arising from a quasi-delict, as the employer contended. The distinction mattered because an employer’s asserted diligence in selecting and supervising employees constitutes a defense in an action grounded in quasi-delict but not in an action predicated on civil liability arising from a criminal conviction under Articles 102 and 103 of the Revised Penal Code.

Parties’ Contentions

Plaintiff asserted that Sembrano was primarily liable and that the employer’s liability was subsidiary under Articles 102 and 103 of the Revised Penal Code, relying on his reservation of civil action in the criminal trial and by introducing the criminal conviction as the first piece of evidence. The employer argued that the action was one for a quasi-delict, that it had exercised due diligence in employee selection and supervision, that the conviction should not be binding upon it because it was not a party to the criminal case, and that the awards of moral, compensatory damages and counsel fees were excessive.

Court’s Characterization of the Action

The Supreme Court held that Epstein’s pleading, its prayer that the employer pay upon the employee’s inability, the reservation of civil action in the criminal case, and the introduction of the criminal conviction established that the civil action sought enforcement of a civil liability incident to crime. The Court contrasted this posture with cases in which plaintiffs prayed for solidarity and thereby indicated a quasi-delict theory.

Preclusive and Evidentiary Effect of the Criminal Conviction

The Court ruled that a conviction in the criminal case was admissible and, absent collusion, conclusive on the employee’s criminal guilt and on the employer’s subsidiary civil liability under Articles 102 and 103 of the Revised Penal Code. The Court cited and reaffirmed the holdings in Miranda v. Malate Garage & Taxicab, Inc., Martinez v. Barredo, and subsequent decisions that a person subsidiarily liable becomes bound by the criminal judgment when the issue of criminal guilt has been finally and validly adjudicated, noting that the employer’s opportunity and duty to protect its interests in the criminal case is a relevant consideration. The Court observed that acquittal in the criminal case would negate both the employee’s primary civil liability and the employer’s subsidiary liability.

Employer’s Diligence and Insolvency as Defenses

The Court explained that the employer’s plea of due diligence in hiring and supervision, relevant in quasi-delict actions, was immaterial where civil liability arose from a criminal conviction. The Court further held that the employee’s solvency was a matter of defense for the employer; an allegation of insolvency need not appear in the plaintiff’s complaint when both employee and employer are sued so that the plaintiff seeks primary liability against the employee and subs

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