M. D. TRANSIT & TAXI CO., INC., PETITIONER, VS. COURT OF APPEALS AND DAVID EPSTEIN, RESPONDENTS.

Appeal by certiorari from a decision of the Court of Appeals.

While crossing Taft Avenue extension, near its intersection with
Castro Street, Manila, passing by the pedestrian lane, on August 18, 1958,
about 8:30 a.m., and as he was about to reach the island the middle of the
road, David Epstein hereinafter referred to a plaintiff was hit by a Pasay-bound bus of the MD Transit & Taxi Co., Inc. –
hereinafter referred to as appellant – driven by Dominador
Sembrano, in consequence of which plaintiff’ s left
femur and right fibula were fractured, apart from sustaining lacerations in
scalp, occipital region.  Prosecuted for
serious physical injuries through reckless imprudence, the Court of First
Instance of Manila found Sembrano guilty thereof
beyond reasonable doubt and sentence, him to suffer the corresponding penalty
of imprisonment,^[1]
but, re­frained from making any pronouncement on his civil liability, plaintiff
having reserved the right to file a separate civil action for dam­ages.  Although, from the decision of said court, Sembrano appealed to the Court of Appeals, he, later,
withdrew the appeal.  As a con­sequence,
said decision became final and executory on May 5, 1961.

Meanwhile, or on January
23, 1959, plaintiff had commenced the present action for damages
against Sembrano and appellant herein.  Sembrano was
declared in default, whereas appellant filed its answer alleging that it had
exercised due diligence in the selection of its employees and in supervising
them in the performance of their duties, and that the accident was due to
plaintiff’s recklessness or negligence. 
After appropriate proceedings, the Court of First Instance of Manila
rendered a decision, the dispositive part of which
reads:

“WHEREFORE, judgment is hereby rendered finding defendant, Dominador Sembrano, primarily
liable to plaintiff, David Epstein, for the damages sustained by the latter,
and hereby orders the for­mer to pay the latter the following:

“(1) Actual damages in the amount of P3,161.10;

“(2) Compensatory damages in the amount of P12,000.00;

“(3) Moral damages in the amount of P5,000.00; and

“(4) Counsel fees in the amount of P1,000.00; and

“Finding defendant MD Transit and Taxi Co., Inc., subsidiary
liable to plaintiffs David Epstein, in the amounts above-indicated, in the event
that de­fendant, Dominador Sembrano,
fails to pay the same or is insolvent. 
Costs against defendants. “

On appeal, said decision was affirmed by the Court of Ap­peals.  Hence, this petition for review by
certiorari, filed by ap­pellant.

The main issue raised by the latter refers the nature of the
present action, namely, whether the liability sought to be en­forced therein
arises from a crime, as contended by the plaintiff, or from a quasi-delict, as urged by appellant.  The importance of this issue is due to the
fact that appellant’s alleged diligence in the selection of its employees and
in exercising supervision over them would be a good defense should the action
be based upon a quasi-delict, but not if predicated
upon a liability springing from a crime. 
The trial court and the appellate court rejected appel­lant’s pretense
and sustained that of the plaintiff, and, we think, correctly.

Indeed, in his complaint, plaintiff premised his action against
herein appellant upon the allegation that the latter is “subsidiarily liable for all damages caused by
negligence of its employee in the performance of his duties,” and,
accordingly, prayed that Sembrano be ordered and,
“upon his inability,” appellant herein, to pay the damages
claimed in said pleading. In other words, plaintiff maintained that Sembrano is primarily liable for said damages, and
that appellant’s liability therefor is purely, secondary,
which is typical of the civil liability arising from crimes, pursuant to
articles 102 and 103 of the Revised Penal Code. 
The effect of said allegation and subsequent prayer upon the nature of
the present action is illustrated by the case of De Leon, Brokerage v. Court of
Appeals2 in
which the allegations the complaint were not clear on whether or not the
damages sued for resulted from a crime or from a quasi-delict.  The issue was resolved in favor of the latter
alternative, in view of the prayer in said pleading to the effect that
the employer be held “solidarily liable with his
employee.  In fact, solidarity is one of
the main characteristics of obligations arising from quasi-delicts.3

Another circumstance militating in favor of plaintiff’ s
contention is the fact that, in the criminal action, he had reserved right to
seek indemnity in a separate civil action. There can be doubt that the present
action was filed in pursuance of said reser­vation, which would have been
unnecessary had plaintiff not based his right of action upon Sembrano’s criminal liability.  Further corroboration is supplied by the fact
that the first piece of evidence offered by plaintiff herein, at trial of this
case in the court of origin, was the decision of conviction rendered in the
criminal case against Sembrano.

Contrary to appellant’s pretense, the absence of allegations, in
plaintiff’s complaint, about Sembrano’s conviction in
the criminal case, and about his insolvency, does not impair the theory of the
plaintiff, for such allegations are not indispensable in an action for damages
sustained on account of a crime committed by the employee. Indeed, the law
authorizing the commencement of a civil action based upon a liability arising
from a crime, even before the institution of the criminal action,4
necessarily implies that the rendition of a judg­ment of conviction in the
latter need not be alleged in the civil complaint.

Neither is an allegation of insolvency of the employee essen­tial
to an action to enforce the subsidiary liability of the employer, particularly
when both are sued in the same action — as in the case at bar — to exact
the primary liability of the employee, and the sub­sidiary
liability of the employer.  To be sure,
the secondary nature of the latter’s obligation necessarily connotes that his
properties may not be levied upon, in pursuance of a writ, of execution
of the judgment declaring the existence of both liabilities, as long and so
long as the employer can point out properties of the employee which may be
levied upon in satisfaction of said judgment.5 Thus, the employee’s solvency is
merely a matter of defense which may be availed of by the employer.

It is next urged that the lower courts erred in considering in
this case the judgment of conviction in the criminal case, in which appellant
was not a party, and in disregarding appellant’ s evi­dence on the alleged
diligence exercised in selecting its employees and in supervising them in the
discharged of their duties.  Though
relevant in an action based upon a quasi-delict, said
diligence is, however, immaterial in the case at bar, the same being predicate
upon a liability arising from a crime. 
Moreover, it is already settled that the judgment of conviction in the
criminal case against employee, is, not only admissible in evidence in
the civil case against the employer, but, also, conclusive upon his
subsidiary liability arising from the employee’s criminal liability.  Thus in Miranda v. Malate
Garage & Taxicab, Inc.,6 we held:

“It is true that an employer, strictly speaking is not a party
to the criminal case instituted against his employee but in substance and in
effect he is, considering the subsidiary liability imposed upon him by law.  It is his concern, as well as of his
employee, to see to it that his interest be protected in the criminal case by
taking virtual participation in the defense of his employee.  He cannot leave him to his own fate
because his failure is also his.  And
if because of his indiffer­ence or inaction the employee is convicted and
damages are awarded against him, he cannot later be heard to complain if
brought to court for the enforcement of his subsidiary liability that he was
not given his day in court.” (Underscoring supplied.)

The language used in Martinez
v. Barredo7
was:

“The important question is whether a judgment of conviction
sentencing the defendant to pay an indem­nity is conclusive in an action
against his employer for the enforcement of the latter’s subsidiary liability
un­der Articles 102 and 103 of the Revised Penal Code.  The appealed decision makes reference to two
earlier decisions of this Court, namely, City of Manila vs. Ma­nila Electric
Co., 52 Phil., 586, holding that such judg­ment of conviction is not
admissible, and Arambulo vs. Manila Electric Co.,
55 Phil., 75, in effect holding that it is merely prima facie evidence,
and to the prevailing view in the United States to the effect that the person subsidiarily liable is bound by the judgment if the
former had notice of the criminal case and could have de­fended it had he seen fit
to do so, and that otherwise such judgment is only prima facie evidence.

“After very careful reflection, we have arrived at the opinion
that the judgment of conviction, in the absence of any collusion between the
defendant and the offended party, should bind the person subsidiarily
liable.  The stigma of a criminal
conviction surpasses in effect and implications mere civil liability.  Com­mon sense dictates that a finding of
guilt in a criminal case in which proof beyond reasonable doubt is neces­sary,
should not be nullified in a subsequent civil ac­tion requiring only preponderance
of evidence to sup­port a judgment, unless those who support the contrary
rule should also hold that an absolution in a civil case will operate to
automatically set aside the verdict against the defendant in the criminal
case.  It is anomalous, to say the least,
to suppose that the driver, excelling ‘Dr. Jekyl and
Mr. Hyde’, could be guilty of reckless negli­gence in so far as his
obligation to pay indemnity is concerned, and at the same time could be
free from blame when said indemnity is sought to be collected from his
employer, although the right to the indemnity arose from and was based on one
and the same act of the driver.

“The employer cannot be said to have been de­prived of his day
in court, because the situation before us is not one wherein the
employer is sued for a pri­mary liability under article 1903 of the
Civil Code, but one in which enforcement is sought of a subsidiary
“civil liability incident to and dependent upon his driver’s criminal
negligence which is a proper issue to be tried and decided only in a criminal
action.  In other words, the employer
becomes ipso facto subsidiarily liable up­on his
driver’s conviction and upon proof of the latter’s insolvency, in the same way
that acquittal wipes out not only the employee’s primary civil liability but
also his employer’s subsidiary liability for such criminal negligence.  x x x.” (Underscoring supplied.)

These views were reiterated in Nagrampa
v. Mulvaney8
and Orsal v. Alisbo.9

Although conceding that the sum of P3,161 awarded as actual
damages “is not too excessive,” appellant maintains that it is
“unreasonable and ought to be reduced.” Actual damages is, however, a
question of fact, and the findings thereon of the Court of Appeals, adopting
those of the trial court, are conclusive upon us.

Appellant likewise impugns the awards to plaintiff of P5,000 as
moral damages, P12,000 as compensatory damages and P1,000 as attorney’s
fees.  In connection therewith, the Court
of Appeals, after quoting the findings of the court of origin on the facts and
circumstances justifying said awards, had the following to say:

“Bearing in mind that in crimes, the defend­ant is liable for
all damages which are the natural and probable consequences of the act or
omission complained of, including loss or impairment of earn­ing capacity of
the offended party and injury to his business standing or commercial credit as
well as compensation for physical pain and suffering and mental anguish, which
was a gap in our legal system, filled in by the new Civil Code, and that
attorney’s fees are recoverable in a separate action to recover civil liability
arising from crime, and considering that appellant has not adduced compelling
reasons to justify us in disturbing the abovementioned find­ings of the lower
court, by substituting ours for its sound discretion, exercised in the light of
the facts and circumstances obtaining in this case as observed by it, the said
last three assigned errors of appellant are likewise declared without
sufficient merit.”

Upon a review of the record, we do not feel justified in dis­turbing
the conclusions reached by the appellate court and the court of origin.

It may not be amiss to note that “actual” damages and
“consequential damages” are dealt with in the Civil Code of the Philippines
under the same Chapter thereof;10 that the two (2) terms are thus
used therein as equivalent to one another; and that the decision appealed had
characterized as “actual damages the expenses incurred by the plaintiff
for his medical treatment and as “compensatory damages” the earnings
he failed to make due to his consequent “inability to pursue his normal
work or occupation.”  Considering,
however, that in the language of Article 2200 of said Code, which is part of
the aforementioned Chapter 2 — “indemnification for damages shall
comprehend not only the value of the loss suffered” — otherwise known as
“damnum emergens,”
and alluded to in said decision as “actual damages” “but also
that of the profits which the obligee failed to
obtain” — or “lucrum cessans”
or “compensatory damages, ” pursuant to the same decision — the
distinction therein made appears to be inconsequential, insofar as the law and
this case is concerned.

WHEREFORE, the decision appealed from is hereby affirmed,
with costs against appellant, MD Transit & Taxi Co., Inc.

IT IS SO ORDERED.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.

^[1]
From 1 year, 8 months and 1 day to 2 years and 4 months.

2
L-15247, February 28, 1962.

3
See Articles 2180 and 2194, Civil Code of the Philippines.

4
Alba v. Acuña, 53 Phil., 381.

5
Quiambao v. Mora, L-12690, May 25, 1960; Rotea
v. Halili, L-12030, September 30, 1960.

6
99 Phil., 670, 675.

7
81 Phil., 1, 2-3.

8
97 Phil., 724.

9
L-13310, November 28, 1959.

10 Chapter 2 of Title XVIII, on Damages.