J.A.B. Bulao & Associates

CASE 2011-0189: ANTONIO FRANCISCO, SUBSTITUTED BY HIS HEIRS: NELIA E.S. FRANCISCO, EMILIA F. BERTIZ, REBECCA E.S. FRANCISCO, ANTONIO E.S. FRANCISCO, JR., SOCORRO F. FONTANILLA, AND JOVITO E.S. FRANCISCO VS. CHEMICAL BULK CARRIERS, INCORPORATED (G.R. NO. 193577, 07 SEPTEMBER 2011, CARPIO, J.) SUBJECTS: REQUIRED DILIGENCE OF A BLIND PERSON; SALE.  (BRIEF TITLE: FRANCISCO VS. CHEMICAL BULK CARRIERS).

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DISPOSITIVE:

WHEREFORE, we DENY the petition. We AFFIRM the 31 May 2010 Decision and 31 August 2010 Resolution of the Court of Appeals.

SO ORDERED.

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SECOND DIVISION

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -x

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review¹ of the 31 May 2010 Decision² and 31 August 2010 Resolution³ of the Court of Appeals in CA G.R. CV No. 63591. In its 31 May 2010 Decision, the Court of Appeals set aside the 21 August 1998 Decision⁴ of the Regional Trial of Pasig City, Branch 71 (trial court), and ordered petitioner Antonio Francisco (Francisco) to pay respondent Chemical Bulk Carriers, Incorporated (CBCI) P1,119,905 as actual damages. In its 31 August 2010 Resolution, the Court of Appeals denied Francisco’s motion for reconsideration.

The Facts

Since 1965, Francisco was the owner and manager of a Caltex station in Teresa, Rizal. Sometime in March 1993, four persons, including Gregorio Bacsa (Bacsa), came to Francisco’s Caltex station and introduced themselves as employees of CBCI. Bacsa offered to sell to Francisco a certain quantity of CBCI’s diesel fuel.

After checking Bacsa’s identification card, Francisco agreed to purchase CBCI’s diesel fuel. Francisco imposed the following conditions for the purchase: (1) that Petron Corporation (Petron) should deliver the diesel fuel to Francisco at his business address which should be properly indicated in Petron’s invoice; (2) that the delivery tank is sealed; and (3) that Bacsa should issue a separate receipt to Francisco.

The deliveries started on 5 April 1993 and lasted for ten months, or up to 25 January 1994.⁵ There were 17 deliveries to Francisco and all his conditions were complied with.

In February 1996, CBCI sent a demand letter to Francisco regarding the diesel fuel delivered to him but which had been paid for by CBCI.⁶ CBCI demanded that Francisco pay CBCI P1,053,527 for the diesel fuel or CBCI would file a complaint against him in court. Francisco rejected CBCI’s demand.

On 16 April 1996, CBCI filed a complaint for sum of money and damages against Francisco and other unnamed defendants.⁷ According to CBCI, Petron, on various dates, sold diesel fuel to CBCI but these were delivered to and received by Francisco. Francisco then sold the diesel fuel to third persons from whom he received payment. CBCI alleged that Francisco acquired possession of the diesel fuel without authority from CBCI and deprived CBCI of the use of the diesel fuel it had paid for. CBCI demanded payment from Francisco but he refused to pay. CBCI argued that Francisco should have known that since only Petron, Shell and Caltex are authorized to sell and distribute petroleum products in the Philippines, the diesel fuel came from illegitimate, if not illegal or criminal, acts. CBCI asserted that Francisco violated Articles 19,⁸ 20,⁹ 21,¹⁰ and 22¹¹ of the Civil Code and that he should be held liable. In the alternative, CBCI claimed that Francisco, in receiving CBCI’s diesel fuel, entered into an innominate contract of do ut des (I give and you give) with CBCI for which Francisco is obligated to pay CBCI P1,119,905, the value of the diesel fuel. CBCI also prayed for exemplary damages, attorney’s fees and other expenses of litigation.

On 20 May 1996, Francisco filed a Motion to Dismiss on the ground of forum shopping.¹² CBCI filed its Opposition.¹³ In an Order dated 15 November 1996, the trial court denied Francisco’s motion.¹⁴

Thereafter, Francisco filed his Answer.¹⁵ Francisco explained that he operates the Caltex station with the help of his family because, in February 1978, he completely lost his eyesight due to sickness. Francisco claimed that he asked Jovito, his son, to look into and verify the identity of Bacsa, who introduced himself as a radio operator and confidential secretary of a certain Mr. Inawat (Inawat), CBCI’s manager for operations. Francisco said he was satisfied with the proof presented by Bacsa. When asked to explain why CBCI was selling its fuel, Bacsa allegedly replied that CBCI was in immediate need of cash for the salary of its daily paid workers and for petty cash. Francisco maintained that Bacsa assured him that the diesel fuel was not stolen property and that CBCI enjoyed a big credit line with Petron. Francisco agreed to purchase the diesel fuel offered by Bacsa on the following conditions:

1) Defendant [Francisco] will not accept any delivery if it is not company (Petron) delivered, with his name and address as shipping point properly printed and indicated in the invoice of Petron, and that the product on the delivery tank is sealed; [and]

2) Although the original invoice is sufficient evidence of delivery and payment, under ordinary course of business, defendant still required Mr. Bacsa to issue a separate receipt duly signed by him acknowledging receipt of the amount stated in the invoice, for and in behalf of CBCI.¹⁶

During the first delivery on 5 April 1993, Francisco asked one of his sons to verify whether the delivery truck’s tank was properly sealed and whether Petron issued the invoice. Francisco said all his conditions were complied with. There were 17 deliveries made from 5 April 1993 to 25 January 1994 and each delivery was for 10,000 liters of diesel fuel at P65,865.¹⁷ Francisco maintained that he acquired the diesel fuel in good faith and for value. Francisco also filed a counterclaim for exemplary damages, moral damages and attorney’s fees.

In its 21 August 1998 Decision, the trial court ruled in Francisco’s favor and dismissed CBCI’s complaint. The dispositive portion of the trial court’s 21 August 1998 Decision reads:

WHEREFORE, Judgment is hereby rendered:

1. Dismissing the complaint dated March 13, 1996 with costs.

2. Ordering plaintiff (CBCI), on the counterclaim, to pay defendant the amount of P100,000.00 as moral damages and P50,000.00 as and by way of attorney’s fees.

SO ORDERED.¹⁸

CBCI appealed to the Court of Appeals.¹⁹ CBCI argued that Francisco acquired the diesel fuel from Petron without legal ground because Bacsa was not authorized to deliver and sell CBCI’s diesel fuel. CBCI added that Francisco acted in bad faith because he should have inquired further whether Bacsa’s sale of CBCI’s diesel fuel was legitimate.

In its 31 May 2010 Decision, the Court of Appeals set aside the trial court’s 21 August 1998 Decision and ruled in CBCI’s favor. The dispositive portion of the Court of Appeals’ 31 May 2010 Decision reads:

IN VIEW OF THE FOREGOING, the assailed decision is hereby REVERSED and SET ASIDE. Antonio Francisco is ordered to pay Chemical Bulk Carriers, Incorporated the amount of P1,119,905.00 as actual damages.

SO ORDERED.²⁰

On 15 January 2001, Francisco died.²¹ Francisco’s heirs, namely: Nelia E.S. Francisco, Emilia F. Bertiz, Rebecca E.S. Francisco, Antonio E.S. Francisco, Jr., Socorro F. Fontanilla, and Jovito E.S. Francisco (heirs of Francisco) filed a motion for substitution.²² The heirs of Francisco also filed a motion for reconsideration.²³ In its 31 August 2010 Resolution, the Court of Appeals granted the motion for substitution but denied the motion for reconsideration.

Hence, this petition.

The Ruling of the Trial Court

The trial court ruled that Francisco was not liable for damages in favor of CBCI because the 17 deliveries were covered by original and genuine invoices. The trial court declared that Bacsa, as confidential secretary of Inawat, was CBCI’s authorized representative who received Francisco’s full payment for the diesel fuel. The trial court stated that if Bacsa was not authorized, CBCI should have sued Bacsa and not Francisco. The trial court also considered Francisco a buyer in good faith who paid in full for the merchandise without notice that some other person had a right to or interest in such diesel fuel. The trial court pointed out that good faith affords protection to a purchaser for value. Finally, since CBCI was bound by the acts of Bacsa, the trial court ruled that CBCI is liable to pay damages to Francisco.

The Ruling of the Court of Appeals

The Court of Appeals set aside the trial court’s 21 August 1998 Decision and ruled that Bacsa’s act of selling the diesel fuel to Francisco was his personal act and, even if Bacsa connived with Inawat, the sale does not bind CBCI.

The Court of Appeals declared that since Francisco had been in the business of selling petroleum products for a considerable number of years, his blindness was not a hindrance for him to transact business with other people. With his condition and experience, Francisco should have verified whether CBCI was indeed selling diesel fuel and if it had given Bacsa authority to do so. Moreover, the Court of Appeals stated that Francisco cannot feign good faith since he had doubts as to the authority of Bacsa yet he did not seek confirmation from CBCI and contented himself with an improvised receipt. Francisco’s failure to verify Bacsa’s authority showed that he had an ulterior motive. The receipts issued by Bacsa also showed his lack of authority because it was on a plain sheet of bond paper with no letterhead or any indication that it came from CBCI. The Court of Appeals ruled that Francisco cannot invoke estoppel because he was at fault for choosing to ignore the tell-tale signs of petroleum diversion and for not exercising prudence.

The Court of Appeals also ruled that CBCI was unlawfully deprived of the diesel fuel which, as indicated in the invoices, CBCI had already paid for. Therefore, CBCI had the right to recover the diesel fuel or its value from Francisco. Since the diesel fuel can no longer be returned, the Court of Appeals ordered Francisco to give back the actual amount paid by CBCI for the diesel fuel.

The Issues

The heirs of Francisco raise the following issues:

I. WHETHER THE COURT OF APPEALS ERRED IN NOT FINDING THAT DEFENDANT ANTONIO FRANCISCO EXERCISED THE REQUIRED DILIGENCE OF A BLIND PERSON IN THE CONDUCT OF HIS BUSINESS; and

II. WHETHER ON THE BASIS OF THE FACTUAL FINDINGS OF THE COURT OF APPEALS AND THE TRIAL COURT AND ADMITTED FACTS, IT CAN BE CONCLUDED THAT THE PLAINTIFF APPROVED EXPRESSLY OR TACITLY THE TRANSACTIONS.²⁴

The Ruling of the Court

The petition has no merit.

Required Diligence of a Blind Person

The heirs of Francisco argue that the Court of Appeals erred when it ruled that Francisco was liable to CBCI because he failed to exercise the diligence of a good father of a family when he bought the diesel fuel. They argue that since Francisco was blind, the standard of conduct that was required of him was that of a reasonable person under like disability. Moreover, they insist that Francisco exercised due care in purchasing the diesel fuel by doing the following: (1) Francisco asked his son to check the identity of Bacsa; (2) Francisco required direct delivery from Petron; (3) Francisco required that he be named as the consignee in the invoice; and (4) Francisco required separate receipts from Bacsa to evidence actual payment.

Standard of conduct is the level of expected conduct that is required by the nature of the obligation and corresponding to the circumstances of the person, time and place.²⁵ The most common standard of conduct is that of a good father of a family or that of a reasonably prudent person.²⁶ To determine the diligence which must be required of all persons, we use as basis the abstract average standard corresponding to a normal orderly person.²⁷

However, one who is physically disabled is required to use the same degree of care that a reasonably careful person who has the same physical disability would use.²⁸ Physical handicaps and infirmities, such as blindness or deafness, are treated as part of the circumstances under which a reasonable person must act. Thus, the standard of conduct for a blind person becomes that of a reasonable person who is blind.

We note that Francisco, despite being blind, had been managing and operating the Caltex station for 15 years and this was not a hindrance for him to transact business until this time. In this instance, however, we rule that Francisco failed to exercise the standard of conduct expected of a reasonable person who is blind. First, Francisco merely relied on the identification card of Bacsa to determine if he was authorized by CBCI. Francisco did not do any other background check on the identity and authority of Bacsa. Second, Francisco already expressed his misgivings about the diesel fuel, fearing that they might be stolen property,²⁹ yet he did not verify with CBCI the authority of Bacsa to sell the diesel fuel. Third, Francisco relied on the receipts issued by Bacsa which were typewritten on a half sheet of plain bond paper.³⁰ If Francisco exercised reasonable diligence, he should have asked for an official receipt issued by CBCI. Fourth, the delivery to Francisco, as indicated in Petron’s invoice, does not show that CBCI authorized Bacsa to sell the diesel fuel to Francisco. Clearly, Francisco failed to exercise the standard of conduct expected of a reasonable person who is blind.

Express or Tacit Approval of the Transaction

The heirs of Francisco argue that CBCI approved expressly or tacitly the transactions. According to them, there was apparent authority for Bacsa to enter into the transactions. They argue that even if the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the later to act as though he had full powers.³¹ They insist CBCI was not unlawfully deprived of its property because Inawat gave Bacsa the authority to sell the diesel fuel and that CBCI is bound by such action. Lastly, they argue that CBCI should be considered in estoppel for failure to act during the ten month period that deliveries were being made to Francisco.

The general principle is that a seller without title cannot transfer a better title than he has.³² Only the owner of the goods or one authorized by the owner to sell can transfer title to the buyer.³³ Therefore, a person can sell only what he owns or is authorized to sell and the buyer can, as a consequence, acquire no more than what the seller can legally transfer.³⁴

Moreover, the owner of the goods who has been unlawfully deprived of it may recover it even from a purchaser in good faith.³⁵ Thus, the purchaser of property which has been stolen from the owner has been held to acquire no title to it even though he purchased for value and in good faith.

The exception from the general principle is the doctrine of estoppel where the owner of the goods is precluded from denying the seller’s authority to sell.³⁶ But in order that there may be estoppel, the owner must, by word or conduct, have caused or allowed it to appear that title or authority to sell is with the seller and the buyer must have been misled to his damage.³⁷

In this case, it is clear that Bacsa was not the owner of the diesel fuel. Francisco was aware of this but he claimed that Bacsa was authorized by CBCI to sell the diesel fuel. However, Francisco’s claim that Bacsa was authorized is not supported by any evidence except his self-serving testimony. First, Francisco did not even confirm with CBCI if it was indeed selling its diesel fuel since it is not one of the oil companies known in the market to be selling petroleum products. This fact alone should have put Francisco on guard. Second, it does not appear that CBCI, by some direct and equivocal act, has clothed Bacsa with the indicia of ownership or apparent authority to sell CBCI’s diesel fuel. Francisco did not state if the identification card presented by Bacsa indicated that he was CBCI’s agent or a mere employee. Third, the receipt issued by Bacsa was typewritten on a half sheet of plain bond paper. There was no letterhead or any indication that it came from CBCI. We agree with the Court of Appeals that this was a personal receipt issued by Bacsa and not an official receipt issued by CBCI. Consequently, CBCI is not precluded by its conduct from denying Bacsa’s authority to sell. CBCI did not hold out Bacsa or allow Bacsa to appear as the owner or one with apparent authority to dispose of the diesel fuel.

Clearly, Bacsa cannot transfer title to Francisco as Bacsa was not the owner of the diesel fuel nor was he authorized by CBCI to sell its diesel fuel. CBCI did not commit any act to clothe Bacsa with apparent authority to sell the diesel fuel that would have misled Francisco. Francisco, therefore, did not acquire any title over the diesel fuel. Since CBCI was unlawfully deprived of its property, it may recover from Francisco, even if Francisco pleads good faith.

WHEREFORE, we DENY the petition. We AFFIRM the 31 May 2010 Decision and 31 August 2010 Resolution of the Court of Appeals.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ARTURO D. BRION

Associate Justice

DIOSDADO M. PERALTA JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE C. MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

* Designated Acting Member per Special Order No. 1074 dated 6 September 2011.

** Designated Acting Member per Special Order No. 1066 dated 23 August 2011.

1 Under Rule 45 of the Rules of Court.

2 Rollo, pp. 7-27. Penned by Presiding Judge Andres B. Reyes, Jr., with Associate Justices Isaias P. Dicidican and Stephen C. Cruz, concurring.

3Id. at 28-30.

4Id. at 150-157. Penned by Judge Celso D. Laviña.

5 Annexes “1” to “17,” Records, pp. 11-27.

6Id. at 196.

7 Rollo, pp. 77-85.

8 ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

9 ART. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.

10 ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

11ART. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

12 Rollo, pp. 86-93.

13Id. at 94-98.

14Id. at 99.

15 Records, pp. 97-113.

16Id. at 99-100.

17 The first delivery on 5 April 1993 was for 10,000 liters at P66,065; Annex “1,” id. at 11.

18 Rollo, p. 157.

19 CA rollo, pp. 12-43.

20 Rollo, p. 27.

21 CA rollo, p. 150.

22Id. at 120-124.

23Id. at 126-136.

24 Rollo, p. 39.

25 Civil Code, Art. 1173.

26 Civil Code, Art. 1173.

27 Arturo M. Tolentino, Civil Code of thePhilippines, Vol. 4 125 (1991).

28 Timoteo B. Aquino, Torts and Damages 92 (2001).

29 Records, pp. 98-99.

30 Exhibits “7” to “7-N,” id. at 61-77.

31 Civil Code, Art. 1911.

32 Civil Code, Art. 1505.

33Id.

34 Nool v. Court of Appeals, 342 Phil. 106 (1997); Segura v. Segura, 247-A Phil. 449 (1988).

35 Civil Code, Art. 559.

36 Civil Code, Art. 1505.

37Id.

CASE 2011-188: OFFICE OF THE COURT ADMINISTRATOR VS. ELSIE C. REMOROZA, CLERK OF COURT, MUNICIPAL TRIAL COURT, MAUBAN, QUEZON (A.M. NO. P-05-2083, 06 SEPTEMBER 2011, ABAD, J.) SUBJECTS: GROSS DISHONESTY; GROSS NEGLECT OF DUTY (BRIEF TITLE: OCA VS. REMOROZA)

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DISPOSITIVE:

        WHEREFORE, the Court finds respondent Clerk of Court Elsie C. Remoroza GUILTY of gross dishonesty and gross neglect of duty for failure to explain and restitute her shortages in the different funds of the court and DISMISSES her from the service with forfeiture of all leave credits and of retirement privileges and with prejudice to reemployment in any branch or instrumentality of the government, including the government-owned or controlled corporation.  The Court further FORFEITS all of Remoroza’s accrued leave credits, if any, which shall be applied as part of the restitution of her shortages in the Judiciary Development Fund, General Fund, Special Allowance for the Judiciary Fund, and Fiduciary Fund in respective amounts of P10,583.60, P18,952.00, P25,281.40 and P168,000.00.  Lastly, in the event that her accrued leave credits will not be enough to cover the shortages, the Court DIRECTS the Office of the Court Administrator to file the appropriate case for the recovery of such unremitted amounts.

        SO ORDERED.

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EN BANC

OFFICE OF THE COURT                      A.M. No. P-05-2083

ADMINISTRATOR,   

                             Complainant,                   Present:                                                      

                                                                     CORONA, C.J., 

                                                                     CARPIO,

                                                            VELASCO, JR.,^*

                                                            LEONARDO-DE CASTRO,

                                                            BRION,

– versus –                                              PERALTA,

  BERSAMIN,

  DEL CASTILLO,

  ABAD,

  VILLARAMA, JR.,

  PEREZ,^*

  MENDOZA,

  SERENO, and

  REYES,^** JJ.

ELSIE C. REMOROZA, Clerk of

Court, Municipal Trial Court,

Mauban, Quezon,

                             Respondent.

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OFFICE OF THE COURT                      A.M. No. P-06-2263

ADMINISTRATOR,   

                             Complainant,

– versus –                                            Promulgated:

JOSEFINA NERI N. ALPAJORA,

                             Respondent.                                September 6, 2011                   

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DECISION

ABAD, J.:

          On February 28, 2005 an Audit Team of the Court conducted a financial audit of the accountabilities of the following officials of the Municipal Trial Court of Mauban, Quezon:

          The audit showed a shortage of P160,221.00 in respondent Elsie C. Remoroza’s collections.  The subsidiary ledgers of the Court’s Accounting Division also showed that Remoroza and respondents Anaceto T. Obeña and Josefina Neri-Alpajora failed to submit their monthly reports for collections, deposits, and withdrawals involving the Judiciary Development Fund (JDF), General Fund (GF), Special Allowance for the Judiciary Fund (SAJF) and the Fiduciary Fund (FF).

          On October 5, 2005 the Court adopted the findings of the audit team^[1][1] and resolved to:

(a)        DOCKET the report of the Financial Audit Team as a regular administrative complaint against Clerk of Court Elsie C. Remoroza.

(b)        DIRECT Ms. Elsie C. Remoroza to: [1] EXPLAIN within ten (10) days from notice, her: [a] failure to remit her collections for the different judiciary funds on time; [2] non-submission of Monthly reports of Collections, Deposits and Withdrawals for the Judiciary Development Fund, Special Allowance for the Judiciary, and Fiduciary Fund from September 2004 to January 2005; and [3] failure to update postings of transactions in the cashbooks for the different funds; [2] RESTITUTE her shortages in the Judiciary Development Fund, General Fund, Special Allowance for the Judiciary Fund, and Fiduciary Fund in the amounts of P10,583.60, P18,952.00, P25,281.40 and P168,000.00, respectively, by depositing the same to their respective Fund Accounts; and [3] SUBMIT the machine-validated deposit slips to the Fiscal Monitoring Division, Court Management Office, as proof of compliance.

(c)        DIRECT former Officer-in-Charge Josefina Neri-Al[p]ajora to: [1] EXPLAIN, within ten (10) days from notice, the: [a] shortage in the Judiciary Development Fund and General Fund in the amounts of P10,120.00 and P4,684.00, respectively; and [b] non-submission of Monthly reports of Collections, Deposits and Withdrawals for the following funds:

[2]        RESTITUTE the aforesaid shortages in the different Funds by depositing the same to their respective Fund Accounts; and [3] SUBMIT the machine-validated deposit slips to the Fiscal Monitoring Division, Court Management Office, as proof of compliance; 

(d)        DIRECT former Officer-in-Charge Anaceto T. Obeña to:  [1] EXPLAIN within ten (10) days, the non-submission of Monthly Reports of Collections, Deposits and Withdrawals for the following Funds:

[2]        RESTITUTE his shortages in the Judiciary Development Fund and Fiduciary Fund in the amounts of P350.00 and P40,000.00, respectively, by depositing the same to their respective Fund Accounts; and [3] SUBMIT the machine-validated deposit slips to the Fiscal Monitoring Division, Court Management Office, as proof of compliance; 

            (e)        DIRECT Acting Presiding Judge Felix A. Caraos to STUDY and IMPLEMENT procedures that shall strengthen the internal control over cash transactions of the Court; and

(f)         SUSPEND Clerk of Court Elsie C. Remoroza form office, pending resolution of this administrative matter.

          Respondent Alpajora submitted her explanation^[2][2] on March 8, 2006.  She said that she already accounted for and remitted all her collections to respondent Remoroza when the latter resumed her post as clerk of court.  Alpajora also submitted with her explanation the monthly reports relating to funds mentioned.  Further, she attached to her explanation Remoroza’s certification that she was not involved in any anomaly regarding the handling of court funds. 

          Respondent Obeña, on the other hand, maintained^[3][3] that his appointment as acting clerk of court was a mere “paper” designation since Remoroza continued with the work of preparing the monthly reports of collections, deposits, and withdrawals during her suspension from work.  Obeña further said that he had already complied with the order for him to restitute his cash shortages and submit the machine-validated deposit slips for the JDF as well as the required monthly reports.

          The Court referred the cases of respondents Alpajora and Obeña to the Office of the Court Administrator (OCA) for evaluation, report, and recommendation.  On June 23, 2006 the OCA recommended^[4][4] that Alpajora: 1) be fined the amount of P5,000.00 for her failure to remit her collections on time and for the delay in submitting the monthly reports for collections, deposits, and withdrawals; and 2) be ordered to restitute the shortages of P10,120.00 and P4,684.00 for the JDF and GF, respectively. 

          On August 20, 2008 the Court adopted in toto the OCA’s above recommendations.  On December 15, 2008 Alpajora told the Court that she had already restored the shortages required of her. 

On June 23, 2008 the Court also issued a resolution adopting^[5][5] the OCA’s recommendation,^[6][6] finding respondent Obeña guilty of simple neglect of duty.  The Court fined him in the amount of P5,000.00 and ordered him to restitute the shortages in his collections. 

          What remains is the case of respondent Remoroza.  The issue presented in her case is whether or not she committed a breach of duty a) to account for and deposit without delay her collections of court funds and b) render the corresponding monthly report of collections, deposits and withdrawals.  

          The OCA stressed in its report and recommendation^[7][7] that in an earlier administrative case,^[8][8] the Court had found against respondent Remorozaguilty of simple neglect of duty for failing to remit her collections and belatedly submitting the required monthly reports.  The Court suspended her from work without pay and fined her P10,000.00.  This time, the OCA has found Remoroza guilty of gross dishonesty and grave misconduct and recommends her dismissal from the service.  It also asks that she be directed to restitute her shortages for the different court funds.

          The Court fully agrees with the OCA’s finding and recommendations.  Remoroza deserves to be dismissed from the service, with forfeiture of all her leave credits and retirement privileges and with prejudice to reemployment in any branch or instrumentality of the government.  She must restitute her shortages of P10,583.60 for the JDF, P18,952.00 for the GF, P25,281.40 for the SAJF, and P168,000.00 for the FF.

Notably, respondent Remoroza repeated exactly the same offenses for which she was previously found guilty and penalized.^[9][9]  She is apparently incorrigible.  And what makes the matter worse is that she had returned to work barely five months and yet she already incurred huge shortages of P222,817.00 affecting four separate court funds placed in her safekeeping.  It now appears fortunate that a Court’s Audit Team happened to conduct a spot audit sooner. 

It does not also pass the Court’s attention that respondent Remoroza twice requested for additional time to submit her written explanation to the audit results yet did not.  She also snubbed the Court’s show cause order.  Her defiance demonstrates extreme insolence and arrogance, making her unfit for government service. 

The Court cannot countenance any dishonesty and malversation committed by those responsible for safekeeping and handling of its funds.  Any lenience towards their infractions will ultimately diminish the faith and trust of the people in the judiciary. 

          WHEREFORE, the Court finds respondent Clerk of Court Elsie C. Remoroza GUILTY of gross dishonesty and gross neglect of duty for failure to explain and restitute her shortages in the different funds of the court and DISMISSES her from the service with forfeiture of all leave credits and of retirement privileges and with prejudice to reemployment in any branch or instrumentality of the government, including the government-owned or controlled corporation.  The Court further FORFEITS all of Remoroza’s accrued leave credits, if any, which shall be applied as part of the restitution of her shortages in the Judiciary Development Fund, General Fund, Special Allowance for the Judiciary Fund, and Fiduciary Fund in respective amounts of P10,583.60, P18,952.00, P25,281.40 and P168,000.00.  Lastly, in the event that her accrued leave credits will not be enough to cover the shortages, the Court DIRECTS the Office of the Court Administrator to file the appropriate case for the recovery of such unremitted amounts.

          SO ORDERED.

ROBERTO A. ABAD

                                                              Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

                                                                                (No Part)

       ANTONIO T. CARPIO              PRESBITERO J. VELASCO, JR.    

   Associate Justice                                    Associate Justice

TERESITA J. LEONARDO-DE CASTRO       ARTURO D. BRION

                     Associate Justice                                 Associate Justice

       DIOSDADO M. PERALTA                     LUCAS P. BERSAMIN

                 Associate Justice                                      Associate Justice        

 MARIANO C. DEL CASTILLO             MARTIN S. VILLARAMA, JR.

              Associate Justice                                     Associate Justice

                   (No Part)                                                                     

   JOSE PORTUGAL PEREZ                            JOSE CATRAL MENDOZA

             Associate Justice                                                 Associate Justice

          (On Leave)                                        (On Official Leave)

MARIA LOURDES P. A. SERENO                     BIENVENIDO L. REYES

              Associate Justice                                     Associate Justice

CASE 2011-0187: RCJ BUS LINES, INCORPORATED VS. STANDARD INSURANCE COMPANY, INC. (G.R. NO. 193629, 17 AUGUST 2011, CARPIO, J.) SUBJECTS: LIABILITY OF A PUBLIC CARRIER; SUBROGATION; DAMAGES ARISING FROM NEGLIGENCE; LIABILITY OF EMPLOYER. (BRIEF TITLE: RCJ BUS LINES VS. STANDARD INSURANCE.

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DISPOSITIVE:

WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 105338 promulgated on 11 March 2010 as well as the Resolution promulgated on 3 September 2010.

SO ORDERED.

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AN RCJ BUS LINES BUS DRIVEN BY MANGOBA WAS SPEEDING AT 60 TO 75 KMS PER HOUR  BEYOND SPEED LIMIT OF 50 KMS. IT BUMPED AND DAMAGED A LANCER CAR. IS MANGOBA LIABLE?

YES. THE PRESUMPTION UNDER ART. 2185 OF THE CIVIL CODE IS THAT MANGOBA IS NEGLIGENT SINCE HE VIOLATED A TRAFFIC REGULATION AT THE TIME OF THE MISHAP.

Mangoba, per testimony of his conductor, was ten meters away from the Mitsubishi Lancer before the collision and was driving 60 to 75 kilometers per hour when the speed limit was 50 kilometers per hour.²² The presumption under Article 2185²³ of the Civil Code was thus proven true: Mangoba, as driver of the bus which collided with the Mitsubishi Lancer, was negligent since he violated a traffic regulation at the time of the mishap. We see no reason to depart from the findings of the MeTC, RTC and appellate court that Mangoba was negligent. The appellate court stated:

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RCJ BUS LINES ARGUES THAT THE COMPLAINT DOES NOT STATE A CAUSE OF ACTION AGAINST THE COMPANY. WAS THERE CAUSE OF ACTION.

YES. THE COMPLAINT STATES THAT RCJ IS THE REGISTERED OWNER OF THE PASSENGER BUS WITH PLATE NUMBER NYG 363 WHICH FIGURED IN THE MISHAP. THIS IS  SUFFICIENT TO STATE A CAUSE OF ACTION AGAINST RCJ. THE REGISTERED OWNER OF A VEHICLE SHOULD BE PRIMARILY RESPONSIBLE TO THE PUBLIC FOR INJURIES CAUSED WHILE THE VEHICLE IS IN USE.¹⁶ THE MAIN AIM OF MOTOR VEHICLE REGISTRATION IS TO IDENTIFY THE OWNER SO THAT IF ANY ACCIDENT HAPPENS, OR THAT ANY DAMAGE OR INJURY IS CAUSED BY THE VEHICLE ON THE PUBLIC HIGHWAYS, RESPONSIBILITY THEREFOR CAN BE FIXED ON A DEFINITE INDIVIDUAL, THE REGISTERED OWNER.¹⁷

Standard’s allegation in its amended complaint that RCJ is the registered owner of the passenger bus with plate number NYG 363 was sufficient to state a cause of action against RCJ. The registered owner of a vehicle should be primarily responsible to the public for injuries caused while the vehicle is in use.¹⁶ The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the registered owner.¹⁷

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IS EMPLOYER RCJ BUS LINES LIABLE FOR MANGOBA’S NEGLIGENCE? WHAT IS THE BASIS OF RCJ’S LIABILITY?

YES. ARTICLE 2180¹⁹ OF THE CIVIL CODE, IN RELATION TO ARTICLE 2176,²⁰ MAKES THE EMPLOYER VICARIOUSLY LIABLE FOR THE ACTS OF ITS EMPLOYEES. WHEN THE EMPLOYEE CAUSES DAMAGE DUE TO HIS OWN NEGLIGENCE WHILE PERFORMING HIS OWN DUTIES, THERE ARISES THE JURIS TANTUM PRESUMPTION THAT THE EMPLOYER IS NEGLIGENT, REBUTTABLE ONLY BY PROOF OF OBSERVANCE OF THE DILIGENCE OF A GOOD FATHER OF A FAMILY. FOR FAILURE TO REBUT SUCH LEGAL PRESUMPTION OF NEGLIGENCE IN THE SELECTION AND SUPERVISION OF EMPLOYEES, THE EMPLOYER IS LIKEWISE RESPONSIBLE FOR DAMAGES, THE BASIS OF THE LIABILITY BEING THE RELATIONSHIP OF PATER FAMILIAS OR ON THE EMPLOYER’S OWN NEGLIGENCE.²¹

RCJ, by presenting witnesses to testify on its exercise of diligence of a good father of a family in the selection and supervision of its bus drivers, admitted that Mangoba is its employee. Article 2180¹⁹ of the Civil Code, in relation to Article 2176,²⁰ makes the employer vicariously liable for the acts of its employees. When the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection and supervision of employees, the employer is likewise responsible for damages, the basis of the liability being the relationship of pater familias or on the employer’s own negligence.²¹

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STANDARD INSURANCE PAID OWNER OF LANCER CAR P162,151.22 FOR THE REPAIRS OF THE CAR. CAN STANDARD INSURANCE RECOVER FROM RCJ BUS LINES?

YES, BY SUBROGATION PURSUANT TO ART. 2207 OF THE CIVIL CODE.

ARTICLE 2207 OF THE CIVIL CODE READS:

ART. 2207. IF THE PLAINTIFF’S PROPERTY HAS BEEN INSURED AND HE HAS RECEIVED INDEMNITY FROM THE INSURANCE COMPANY FOR THE INJURY OR LOSS ARISING OUT OF THE WRONG OR BREACH OF CONTRACT COMPLAINED OF, THE INSURANCE COMPANY SHALL BE SUBROGATED TO THE RIGHTS OF THE INSURED AGAINST THE WRONGDOER OR THE PERSON WHO HAS VIOLATED THE CONTRACT. IF THE AMOUNT PAID BY THE INSURANCE COMPANY DOES NOT FULLY COVER THE INJURY OR LOSS, THE AGGRIEVED PARTY SHALL BE ENTITLED TO RECOVER THE DEFICIENCY FROM THE PERSON CAUSING THE LOSS OR INJURY.

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WHAT IS SUBROGATION?

SUBROGATION IS THE SUBSTITUTION OF ONE PERSON BY ANOTHER WITH REFERENCE TO A LAWFUL CLAIM OR RIGHT, SO THAT HE WHO SUBSTITUTES ANOTHER SUCCEEDS TO THE RIGHTS OF THE OTHER IN RELATION TO A DEBT OR CLAIM, INCLUDING ITS REMEDIES OR SECURITIES. THE PRINCIPLE COVERS A SITUATION WHEREIN AN INSURER WHO HAS PAID A LOSS UNDER AN INSURANCE POLICY IS ENTITLED TO ALL THE RIGHTS AND REMEDIES BELONGING TO THE INSURED AGAINST A THIRD PARTY WITH RESPECT TO ANY LOSS COVERED BY THE POLICY.²⁶

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SECOND DIVISION

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

CARPIO, J.:

The Case

G.R. No. 193629 is a petition for review¹ assailing the Decision² promulgated on 11 March 2010 as well as the Resolution³ promulgated on 3 September 2010 by the Court of Appeals (appellate court) in CA-G.R. SP No. 105338. The appellate court affirmed with modification the 27 May 2008 Decision⁴ of Branch 37 of the Regional Trial Court of Manila (RTC) in Civil Case No. 00-99410. The RTC dismissed RCJ Bus Lines’ appeal from the 12 July 2000 Decision⁵ of the Metropolitan Trial Court of Manila (MeTC) in Civil Case No. 153566. The MeTC rendered judgment in favor of Standard Insurance Company, Incorporated (Standard) and ordered Flor Bola Mangoba (Mangoba) and RCJ Bus Lines, Incorporated (RCJ) to pay damages.

The Facts

The appellate court narrated the facts as follows:

On 01 December 2000, respondent Standard Insurance Co., Inc. (STANDARD) filed an amended complaint against the petitioners Flor Bola Mangoba and RCJ Bus Lines, Inc. (docketed as Civil Case No. 153566-CV before the Metropolitan Trial Court of Manila, Branch 29). Said amended complaint alleged, among others:

“2. On June 19, 1994 along theNational Highwayat Brgy. Amlang, Rosario, La Union, defendant Flor B. Mangoba while driving [sic] an RCJ HINO BLUE RIBBON PASSENGER BUS bearing Plate No. NYG-363 in a reckless and imprudent manner, bumped and hit a 1991 Mitsubishi Lancer GLX bearing Plate No. TAJ-796, a photocopy of the police report is attached hereto and made an integral part hereof as Annex ‘A.’

3. The subject Mitsubishi Lancer which is owned by Rodelene Valentino was insured for loss and damage with plaintiff [Standard Insurance Co. Inc.] for P450,000.00, a photocopy of the insurance policy is attached hereto and made an integral part hereof as Annex ‘B.’

4. Defendant RCJ Bus Lines, Inc. is the registered owner of the Passenger Bus bearing Plate No. NYG-363 while defendant Flor Mangoba was the driver of the subject Passenger Bus when the accident took place.

5. As a direct and proximate cause of the vehicular accident, the Mitsubishi Lancer was extensively damaged, the costs of repairs of which were borne by the plaintiff [Standard Insurance Co. Inc.] at a cost of P162,151.22.

6. By virtue of the insurance contract, plaintiff [Standard Insurance Co. Inc.] paid Rodelene Valentino the amount of P162,151.22 for the repair of the Mitsubishi Lancer car.

7. After plaintiff [Standard Insurance Co. Inc.] has complied with its obligation under the policy mentioned above, plaintiff’s assured executed in plaintiff’s favor a Release of Claim thereby subrogating the latter to all his rights of recovery on all claims, demands and rights of action on account of loss, damage or injury as a consequence of the accident from any person liable therefor.

8. Despite demands, defendants have failed and refused and still continue to fail and refuse to reimburse plaintiff the sum of P162,151.22. A photocopy of the demand letter is attached hereto and made an integral part hereof as Annex ‘C.’

9. As a consequence, plaintiff [Standard Insurance Co. Inc.] has been compelled to resort to court action and thereby hire the services of counsel as well as incur expenses of litigation for all of which it should be indemnified by the defendant in the amount of at least P30,000.00.

10. In order that it may serve as a deterrent for others and by way of example for the public good, defendants should be adjudged to pay plaintiff [Standard Insurance Co. Inc.] exemplary damages in the amount of P20,000.00.”

Thus, STANDARD prayed:

“WHEREFORE, plaintiff respectfully prays that after due trial on the issues, this court render judgment against the defendants adjudging them jointly and severally liable to pay plaintiff the following amounts:

1. The principal claim of P162,151.22 with interest at 12% per annum from September 1, 1995 until fully paid.

2. P30,000.00 as and by way of indemnification for attorney’s fees.

3. P25,000.00 as exemplary damages.

Plaintiff prays for such further or other reliefs as may be deemed just and equitable under the premises.”

In its answer, RCJ Bus Lines, Inc. maintained:

“1. That the complaint states no cause of action against it;

2. That venue was improperly laid; and,

3. That the direct, immediate and proximate cause of the accident was the negligence of the driver of the Mitsubishi Lancer when, for no reason at all, it made a sudden stop along the National Highway, as if to initiate and/or create an accident.”

Flor Bola Mangoba, in his own answer to the complaint, also pointed his finger at the driver of the Mitsubishi Lancer as the one who caused the vehicular accident on the time, date and place in question.

For his failure to appear at the pre-trial despite notice, Flor Bola Mangoba was declared in default on 14 November 1997. Accordingly, trial proceeded sans his participation.

At the trial, the evidence adduced by the parties established the following facts:

In the evening of 19 June 1994, at around 7:00 o’clock, a Toyota Corolla with Plate No. PHU-185 driven by Rodel Chua, cruised along theNational Highwayat Barangay Amlang, Rosario, La Union, heading towards the general direction of Bauan, La Union. The Toyota Corolla travelled at a speed of 50 kilometers per hour as it traversed the downward slope of the road, which curved towards the right.

The Mitsubishi Lancer GLX with Plate No. TAJ-796, driven by Teodoro Goki, and owned by Rodelene Valentino, was then following the Toyota Corolla along the said highway. Behind the Mitsubishi Lancer GLX was the passenger bus with Plate No. NYG-363, driven by Flor Bola Mangoba and owned by RCJ Bus Lines, Inc. The bus followed the Mitsubishi Lancer GLX at a distance of ten (10) meters and traveled at the speed of 60 to 75 kilometers per hour.

Upon seeing a pile of gravel and sand on the road, the Toyota Corolla stopped on its tracks. The Mitsubishi Lancer followed suit and also halted. At this point, the bus hit and bumped the rear portion of the Mitsubishi Lancer causing it to move forward and hit the Toyota Corolla in front of it.

As a result of the incident, the Mitsubishi Lancer sustained damages amounting to P162,151.22, representing the costs of its repairs. Under the comprehensive insurance policy secured by Rodelene Valentino, owner of the Mitsubishi Lancer, STANDARD reimbursed to the former the amount she expended for the repairs of her vehicle. Rodelene then executed a Release of Claim and Subrogation Receipt, subrogating STANDARD to all rights, claims and actions she may have against RCJ Bus Lines, Inc. and its driver, Flor Bola Mangoba.⁶

The MeTC’s Ruling

On 12 July 2000, the MeTC rendered its decision in favor of Standard, the dispositive portion of which reads:

WHEREFORE, consistent with Section 1, Rule 131 and Section 1, Rule 133 of the Revised Rules on Evidence, judgment is hereby rendered in favor of the plaintiff, ordering defendants Flor Bola Mangoba and RCJ Bus Lines, Inc.:

1. To pay the principal sum of ONE HUNDRED SIXTY TWO THOUSAND ONE HUNDRED FIFTY ONE PESOS and 22/100 (P162,151.22), with legal rate of interest at 12% per annum from September 1, 1995 until full payment;

2. To pay the sum of TWENTY THOUSAND PESOS (P20,000.00) as exemplary damages;

3. To pay the sum of TWENTY THOUSAND PESOS (P20,000.00) as reasonable attorney’s fees; and

4. To pay the costs of suit.

For want of merit, the separate Counterclaim is hereby DISMISSED.⁷

In an Order⁸ dated 2 May 2002, the RTC dismissed Mangoba and RCJ’s appeal for filing their pleading beyond the reglementary period. The appellate court, however, in a Decision⁹ in CA-G.R. SP No. 77598 dated 23 April 2004, granted RCJ’s petition and remanded the case to the RTC for further proceedings.

The RTC’s Ruling

In its Decision dated 27 May 2008, the RTC affirmed with modification the MeTC’s Decision dated 12 July 2000. The RTC deleted the award for exemplary damages.

RCJ failed to convince the RTC that it observed the diligence of a good father of a family to prevent damages sustained by the Mitsubishi Lancer. The RTC ruled that the testimony of Conrado Magno, RCJ’s Operations Manager, who declared that all applicants for employment in RCJ were required to submit clearances from the barangay, the courts and the National Bureau of Investigation, is insufficient to show that RCJ exercised due diligence in the selection and supervision of its drivers. The allegation of the conduct of seminars and training for RCJ’s drivers is not proof that RCJ examined Mangoba’s qualifications, experience and driving history. Moreover, the testimony of Noel Oalog, the bus conductor, confirmed that the bus was travelling at a speed of 60 to 75 kilometers per hour, which was beyond the maximum allowable speed of 50 kilometers per hour for a bus on an open country road. The RTC, however, deleted the award of exemplary damages because it found no evidence that Mangoba acted with gross negligence.

In an Order¹⁰ dated 27 August 2008, the RTC partially reconsidered its 27 May 2008 Decision and modified the MeTC’s Decision to read as follows:

WHEREFORE, the Decision dated May 27, 2008 is partially reconsidered and the Decision of the court a quo dated July 12, 2000 is MODIFIED. Appellant RCJ Bus Lines, Inc. and defendant Flor Bola Mangoba are ordered to pay jointly and severally the appellee [Standard Insurance Co., Inc.] the following:

1. ONE HUNDRED SIXTY TWO THOUSAND ONE FIFTY ONE PESOS and 22/100 (P162,151.22), with legal rate of interest at 6% per annum from September 1, 1995 until full payment;

2. TWENTY THOUSAND PESOS (P20,000.00) as reasonable attorney’s fees; and

3. Cost of suit.

SO ORDERED.¹¹

The Appellate Court’s Ruling

Mangoba and RCJ filed a petition for review before the appellate court. The appellate court found that the RTC committed no reversible error in affirming RCJ’s liability as registered owner of the bus and employer of Mangoba, as well as Mangoba’s negligence in driving the passenger bus. The appellate court, however, deleted the award for attorney’s fees and modified the legal interest imposed by the MeTC.

The dispositive portion of the appellate court’s decision reads:

WHEREFORE, the instant petition for review is DENIED. The assailed Decision of the Regional Trial Court of Manila, Branch 37, in Civil Case No. 00-99410 is hereby AFFIRMED with MODIFICATION that the legal interest that should be imposed on the actual damages awarded in favor of respondent Standard Insurance, Co., Inc. should be at the rate of 6% per annum computed from the time of extra judicial demand until the finality of the 12 July 2000 Decision of the MeTC and thereafter, the legal interest shall be at the rate of 12% per annum until the full payment of the actual damages. The award of attorney’s fees is DELETED.

SO ORDERED.¹²

The appellate court denied RCJ’s Motion for Reconsideration¹³ for lack of merit.¹⁴

The Issues

RCJ assigns the following as errors of the appellate court:

1. The Court of Appeals erroneously awarded the amount of P162,151.22 representing actual damages based merely on the proof of payment of policy/insurance claim and not on an official receipt of payment of actual cost of repair;

2. The Court of Appeals erroneously disregarded the point that petitioner RCJ’s defense of extraordinary diligence in the selection and supervision of its driver was made as an alternative defense;

3. The Court of Appeals erroneously disregarded the legal principle that the supposed violation of Sec. 35 of R.A. 4136 merely results in a disputable presumption; and

4. The Court of Appeals erroneously held that petitioner RCJ is vicariously liable for the claim of supposed actual damages incurred by respondent Standard Insurance.¹⁵

The Court’s Ruling

The petition has no merit. We see no reason to overturn the findings of the lower courts. We affirm the ruling of the appellate court.

RCJ’s Liability

RCJ argues that its defense of extraordinary diligence in the selection and supervision of its employees is a mere alternative defense. RCJ’s initial claim was that Standard’s complaint failed to state a cause of action against RCJ.

Standard may hold RCJ liable for two reasons, both of which rely upon facts uncontroverted by RCJ. One, RCJ is the registered owner of the bus driven by Mangoba. Two, RCJ is Mangoba’s employer.

Standard’s allegation in its amended complaint that RCJ is the registered owner of the passenger bus with plate number NYG 363 was sufficient to state a cause of action against RCJ. The registered owner of a vehicle should be primarily responsible to the public for injuries caused while the vehicle is in use.¹⁶ The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the registered owner.¹⁷

Moreover, in its efforts to extricate itself from liability, RCJ proffered the defense of the exercise of the diligence of a good father of a family. The MeTC characterized RCJ’s defense against negligence in this manner:

To repel the idea of negligence, defendant [RCJ] bus company’s operations manager at the Laoag City Terminal was presented on the witness stand on January 5, 2000 in regard to the company’s seminars and dialogues with respect to its employees, and the absence of any record of a vehicular accident involving the co-defendant driver [Mangoba] (TSN, January 5, 2000, pp. 2-17; TSN, February 16, 2000, pp. 2-9). As the last witness of defendant [RCJ] bus company, Noel Oalog, bus conductor who was allegedly seated to the right side of the bus driver during the incident, was presented on March 22, 2000 (TSN, March 22, 2000, page 2). He confirmed on direct examination and cross examination that it was defendant’s bus, then running at 60-75 [kph] and at a distance of 10 meters, which bumped a Mitsubishi Lancer without a tail light. According to him, the incident occurred when the driver of the Toyota Corolla, which was ahead of the Lancer, stepped on the brakes due to the pile of gravel and sand in sight (TSN, Vide at pp. 3-11). Subsequent to the proffer of exhibits (TSN, Vide, at page 14), and in default of any rebuttal, the parties were directed to file the Memoranda within thirty days from March 23, 2000.¹⁸

RCJ, by presenting witnesses to testify on its exercise of diligence of a good father of a family in the selection and supervision of its bus drivers, admitted that Mangoba is its employee. Article 2180¹⁹ of the Civil Code, in relation to Article 2176,²⁰ makes the employer vicariously liable for the acts of its employees. When the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection and supervision of employees, the employer is likewise responsible for damages, the basis of the liability being the relationship of pater familias or on the employer’s own negligence.²¹

Mangoba, per testimony of his conductor, was ten meters away from the Mitsubishi Lancer before the collision and was driving 60 to 75 kilometers per hour when the speed limit was 50 kilometers per hour.²² The presumption under Article 2185²³ of the Civil Code was thus proven true: Mangoba, as driver of the bus which collided with the Mitsubishi Lancer, was negligent since he violated a traffic regulation at the time of the mishap. We see no reason to depart from the findings of the MeTC, RTC and appellate court that Mangoba was negligent. The appellate court stated:

To be sure, had not the passenger bus been speeding while traversing the downward sloping road, it would not have hit and bumped the Mitsubishi Lancer in front of it, causing the latter vehicle to move forward and hit and bump, in turn, the Toyota Corolla. Had the bus been moving at a reasonable speed, it could have avoided hitting and bumping the Mitsubishi Lancer upon spotting the same, taking into account that the distance between the two vehicles was ten (10) meters. As fittingly opined by the MeTC, the driver of the passenger bus, being the rear vehicle, had full control of the situation as he was in a position to observe the vehicle in front of him. Had he observed the diligence required under the circumstances, the accident would not have occurred.²⁴

Subrogation

In the present case, it cannot be denied that the Mitsubishi Lancer sustained damages. Moreover, it cannot also be denied that Standard paid Rodelene Valentino P162,151.22 for the repair of the Mitsubishi Lancer pursuant to a Release of Claim and Subrogation Receipt. Neither RCJ nor Mangoba cross-examined Standard’s claims evaluator when he testified on his duties, the insurance contract between Rodelene Valentino and Standard, Standard’s payment of insurance proceeds, and RCJ and Mangoba’s refusal to pay despite demands. After being lackadaisical during trial, RCJ cannot escape liability now. Standard’s right of subrogation accrues simply upon its payment of the insurance claim.²⁵

Article 2207 of the Civil Code reads:

Art. 2207. If the plaintiff’s property has been insured and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

Subrogation is the substitution of one person by another with reference to a lawful claim or right, so that he who substitutes another succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities. The principle covers a situation wherein an insurer who has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy.²⁶

WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 105338 promulgated on 11 March 2010 as well as the Resolution promulgated on 3 September 2010.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

* Designated Acting Member per Special Order No. 1006 dated 10 June 2011.

** Designated Acting Member per Special Order No. 1062 dated 16 August 2011.

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Rollo, pp. 41-62. Penned by Associate Justice Mariflor P. Punzalan Castillo, with Associate Justices Juan Q. Enriquez and Elihu A. Ybañez, concurring.

3 Id. at 77-79. Penned by Associate Justice Mariflor P. Punzalan Castillo, with Associate Justices Juan Q. Enriquez and Elihu A. Ybañez, concurring.

4 Id. at 120-128. Penned by Judge Virgilio V. Macaraig.

5 Id. at 102-108. Penned by Judge Eduardo B. Peralta, Jr.

6 Id. at 43-46.

7 Id. at 108.

8 Id. at 109.

9 Id. at 110-119. Penned by Associate Justice Bienvenido L. Reyes, with Associate Justices Ruben T. Reyes (retired Supreme Court Justice) and Jose C. Mendoza (now Supreme Court Justice) concurring.

10 Id. at 129-131. Penned by Judge Virgilio V. Macaraig.

11 Id. at 131.

12 Id. at 61-62.

13 Id. at 63-75.

14 Id. at 77-79.

15 Id. at 17-18.

16See FEB Leasing and Finance Corporation (now BPI Leasing Corporation) v. Spouses Baylon, G.R. No. 181398, 29 June 2011; Guillang v. Bedania, G.R. No. 162987, 21 May 2009, 588 SCRA 73; Villanueva v. Domingo, 481 Phil. 837 (2004); MYC-Agro-Industrial Corp. v. Camerino, 217 Phil. 11 (1984); Erezo v. Jepte, 102 Phil. 103 (1957).

17 Erezo v. Jepte, supra at 108.

18 Rollo, p. 103.

19 The pertinent portions of Article 2180 read: “The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. x x x Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. x x x The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.”

20 Article 2176 states: “Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre- existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.”

21 Metro Manila Transit Corp. v. Court of Appeals, G.R. No. 104408, 21 June 1993, 223 SCRA 521, 539. Citations omitted.

22 Section 35, Article I, Chapter IV, Republic Act No. 4136.

23 Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation.

24 Rollo, pp. 57-58.

25 See Delsan Transport Lines, Inc. v. Court of Appeals, 420 Phil. 824 (2001).

26 Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety Corporation, G.R. Nos. 180880-81, 25 September 2009, 601 SCRA 96, 141.