SAN ILDEFONSO LINES, INC., AND EDUARDO JAVIER, PETITIONERS, VS. COURT OF APPEALS (THIRTEENTH DIVISION) AND PIONEER INSURANCE AND SURETY CORPORATION, RESPONDENTS.

At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite
Ace Van being driven by its owner Annie U. Jao and a passenger bus of herein
petitioner San Ildefonso Lines, Inc. (hereafter, SILI) figured in a vehicular
mishap at the intersection of Julia Vargas Avenue and Rodriguez Lanuza Avenue
in Pasig, Metro Manila, totally wrecking the Toyota van and injuring Ms. Jao
and her two (2) passengers in the process.

A criminal case was thereafter filed with the Regional Trial
Court of Pasig on September 18, 1991 charging the driver of the bus, herein
petitioner Eduardo Javier, with reckless imprudence resulting in damage to
property with multiple physical injuries.

About four (4) months later, or on January 13, 1992, herein
private respondent Pioneer Insurance and Surety Corporation (PISC), as insurer
of the van and subrogee, filed a case for damages against petitioner SILI with
the Regional Trial Court of Manila, seeking to recover the sums it paid the
assured under a motor vehicle insurance policy as well as other damages,
totaling P564,500.00 (P454,000.00 as actual/compensatory damages;
P50,000.00 as exemplary damages; P50,000.00 as attorney’s fees; P10,000.00
as litigation expenses; and P500.00 as appearance fees.)^[1]

With the issues having been joined upon the filing of the
petitioners’ answer to the complaint for damages and after submission by the
parties of their respective pre-trial briefs, petitioners filed on September
18, 1992 a Manifestation and Motion to Suspend Civil Proceedings grounded on
the pendency of the criminal case against petitioner Javier in the Pasig RTC
and the failure of respondent PISC to make a reservation to file a separate
damage suit in said criminal action. This was denied by the Manila Regional Trial Court in its Order dated
July 21, 1993,^[2]
ruling thus:

“Answering the first question thus posed, the court holds that
plaintiff may legally institute the present civil action even in the absence of
a reservation in the criminal action. This is so because it falls among the very exceptions to the rule cited
by the movant.

“It is true that the general rule is that once a criminal
action has been instituted, then civil action based thereon is deemed
instituted together with the criminal action, such that if the offended party
did not reserve the filing of the civil action when the criminal action was
filed, then such filing of the civil action is therefore barred; on the other
hand, if there was such reservation, still the civil action cannot be
instituted until final judgment has been rendered in the criminal action;

“But, this rule (Section 2, Rule 111, Revised Rules of Court)
is subject to exemptions, the same being those provided for in Section 3 of the
same rule which states:

‘Section 3. When civil
action may proceed independently. – In the cases provided for in Articles 32,
33, 34 and 2176 of the Civil Code of the Philippines, the independent civil
action which was been reserved may be brought by the offended party, shall
proceed independently of the criminal action, and shall require only a
preponderance of evidence.’

“Besides, the requirement in Section 2 of Rule 111 of the
former Rules on Criminal Procedure that there be a reservation in the criminal
case of the right to institute an independent civil action has been declared as
not in accordance with law. It is
regarded as an unauthorized amendment to our substantive law, i.e., the Civil
Code which does not require such reservation. In fact, the reservation of the right to file an independent civil
action has been deleted from Section 2, Rule 111 of the 1985 Rules on Criminal
Procedure, in consonance with the decisions of this Court declaring such
requirement of a reservation as ineffective. (Bonite vs. Zosa, 162 SCRA 180)

“Further, the Court rules that a subrogee-plaintiff may institute
and prosecute the civil action, it being allowed by Article 2207 of the Civil
Code.”

After their motion for reconsideration of said July 21, 1993
Order was denied, petitioners elevated the matter to this Court via
petition for certiorari which was, however, referred to public
respondent Court of Appeals for disposition. On February 24, 1995, a decision adverse to petitioners once again was
rendered by respondent court, upholding the assailed Manila Regional Trial
Court Order in this wise:

“A separate civil action lies against the offender in a
criminal act, whether or not he is criminally prosecuted and found guilty or
acquitted, provided that the offended party is not allowed (if the tortfeasor
is actually charged also criminally), to recover damages on both scores, and
would be entitled in such eventuality only to the bigger award of the two,
assuming the awards made in the two cases vary.

“To subordinate the civil action contemplated in the said
articles to the result of the criminal prosecution – whether it be conviction
or acquittal – would render meaningless the independent character of the civil
action and the clear injunction in Art. 31, that this action may proceed
independently of the criminal proceedings and regardless of the result of the latter.

“In Yakult Phil. vs. CA, the Supreme Court said:

‘Even if there was no reservation in the criminal case and that the
civil action was not filed before the filing of the criminal action but before
the prosecution presented evidence in the criminal action, and the judge
handling the criminal case was informed thereof, then the actual filing of the
civil action is even far better than a compliance with the requirement of an
express reservation that should be made by the offended party before the prosecution
presented its evidence.’

“The purpose of this rule requiring reservation is to prevent
the offended party from recovering damages twice for the same act or omission.

“Substantial compliance with the reservation requirement may,
therefore, be made by making a manifestation in the criminal case that the
private respondent has instituted a separate and independent civil action for
damages.

“Oft-repeated is the dictum that courts should not place undue
importance on technicalities when by so doing, substantial justice is
sacrificed. While the rules of
procedure require adherence, it must be remembered that said rules of procedure
are intended to promote, not defeat, substantial justice, and therefore, they
should not be applied in a very rigid and technical sense.”

Hence, this petition for review after a
motion for reconsideration of said respondent court judgment was denied.

The two (2) crucial issues to be resolved, as posited by
petitioners, are:

1) If a criminal case was
filed, can an independent civil action based on quasi-delict under Article 2176
of the Civil Code be filed if no reservation was made in the said criminal
case?

2) Can a subrogee of an
offended party maintain an independent civil action during the pendency of a
criminal action when no reservation of the right to file an independent civil
action was made in the criminal action and despite the fact that the private
complainant is actively participating through a private prosecutor in the
aforementioned criminal case?

We rule for petitioners.

On the chief issue of “reservation”, at the fore is
Section 3, Rule 111 of the Rules of Court which reads:

“Sec. 3. When civil action may proceed independently. — In
the cases provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the
Philippines, the independent civil action which has been reserved may be
brought by the offended party, shall proceed independently of the criminal
action, and shall require only a preponderance of evidence.”

There is no dispute that these so-called
“independent civil actions” based on the aforementioned Civil Code
articles are the exceptions to the primacy of the criminal action over the
civil action as set forth in Section 2 of Rule 111.^[3]
However, it is easily deducible from the present wording of Section 3 as
brought about by the 1988 amendments to the Rules on Criminal Procedure —
particularly the phrase “… which has been reserved” — that
the “independent” character of these civil actions does not do away
with the reservation requirement. In other words, prior reservation is a
condition sine qua non before any of these independent civil actions can
be instituted and thereafter have a continuous determination apart from or
simultaneous with the criminal action. That this should now be the controlling
procedural rule is confirmed by no less than retired Justice Jose Y.
Feria, remedial law expert and a member
of the committee which drafted the 1988 amendments, whose learned explanation
on the matter was aptly pointed out by petitioners, to wit:

“The 1988 amendment expands the scope of the civil action
which is deemed impliedly instituted with the criminal action unless waived,
reserved or previously instituted xxx.

Under the present Rule as amended, such a civil action includes not
only recovery of indemnity under the Revised Penal Code and damages under
Articles 32, 33, 34 of the Civil Code of the Philippines, but also damages
under Article 2176 of the said code. xxx

Objections were raised to the inclusion in this Rule of quasi-delicts
under Article 2176 of the Civil Code of the Philippines. However, in view of
Article 2177 of the said code which provides that the offended party may not
recover twice for the same act or omission of the accused, and in line with the
policy of avoiding multiplicity of suits, these objections were overruled. In
any event, the offended party is not precluded from filing a civil action to
recover damages arising from quasi-delict before the institution of the
criminal action, or from reserving his right to file such a separate civil
action, just as he is not precluded from filing a civil action for damages
under Articles 32, 33 and 34 before the institution of the criminal action, or
from reserving his right to file such a separate civil action. It is only in
those cases where the offended party has not previously filed a civil action or
has not reserved his right to file a separate civil action that his civil
action is deemed impliedly instituted with the criminal action.

It should be noted that while it was ruled in Abella vs. Marave (57
SCRA 106) that a reservation of the right to file an independent civil action
is not necessary, such a reservation is necessary under the amended rule.
Without such reservation, the civil action is deemed impliedly instituted with
the criminal action, unless previously waived or instituted. (Underscoring
ours. Justice Jose Y. Feria [Ret.], 1988 Amendments to the 1985 Rules on
Criminal Procedure, a pamphlet, published by Central Lawbook Publishing Co.,
Inc., Philippine Legal Studies, Series No. 3, 5-6).^[4]

Sharing the same view on the indispensability of a prior
reservation is Mr. Justice Florenz D. Regalado, whose analysis of the
historical changes in Rule 111 since the 1964 Rules of Court is equally
illuminating. Thus,

“1. Under Rule 111 of the 1964 Rules of Court, the civil
liability arising from the offense charged was impliedly instituted with the
criminal action, unless such civil action was expressly waived or reserved. The
offended party was authorized to bring an independent civil action in the cases
provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code provided
such right was reserved.

In the 1985 Rules on Criminal Procedure, the same Rule 111 thereof
reiterated said provision on the civil liability arising from the offense
charged. The independent civil actions, however, were limited to the cases provided
for in Articles 32, 33 and 34 of the Civil Code, obviously because the actions
contemplated in Articles 31 and 2177 of said Code are not liabilities ex
delicto. Furthermore, no reservation was required in order the civil
actions in said Articles 32, 33 and 34 may be pursued separately.

2. The present amendments introduced by the Supreme Court have the
following notable features on this particular procedural aspect, viz:

a.           The civil action which is impliedly
instituted with the criminal action, barring a waiver, reservation or prior
institution thereof, need not arise from the offense charged, as the phrase
‘arising from the offense charged’ which creates that nexus has been
specifically eliminated.

b.           The independent civil actions
contemplated in the present Rule 111 include the quasi-delicts provided
for in Art. 2176 of the Civil Code, in addition to the cases provided in Arts.
32, 33 and 34 thereof. It is necessary, however, that the civil liability under
all the said articles arise ‘from the same act or omission of the accused.’ Furthermore,
a reservation of the right to institute these separate civil actions is again
required, otherwise, said civil actions are impliedly instituted with the
criminal action, unless the former are waived or filed ahead of the criminal
action.” (Emphasis supplied.)^[5]

In fact, a deeper reading of the “Yakult Phils. vs. CA”
case^[6]
relied upon by respondent court reveals an acknowledgement of the reservation
requirement. After recognizing that the civil case instituted by private
respondent therein Roy Camaso (represented by his father David Camaso) against
petitioner Yakult Phils. (the owner of the motorcycle that sideswiped Roy
Camaso, only five years old at the time of the accident) and Larry Salvado (the
driver of the motorcycle) during the pendency of the criminal case against
Salvado for reckless imprudence resulting to slight physical injuries, as one
based on tort, this Court said:

“The civil liability sought arising from the act or omission
of the accused in this case is a quasi-delict as defined under Article
2176 of the Civil Code as follows:

x x x                                  x x x                            x x x

“The aforecited rule [referring to the amended Section 1,
Rule111] requiring such previous reservation also covers quasi-delict
as defined under Article 2176 of the Civil Code arising from the same act or
omission of the accused”(Underscoring supplied).

But what prompted the Court to validate
the institution and non-suspension of the civil case involved in “Yakult”
was the peculiar facts attendant therein. Thus,

“Although the separate civil action filed in this case was
without previous reservation in the criminal case, nevertheless since it was
instituted before the prosecution presented evidence in the criminal action,
and the judge handling the criminal case was informed thereof, then the
actual filing of the civil action is even far better than a compliance with the
requirement of an express reservation that should be made by the offended party
before the prosecution presents its evidence”

The distinct factual scenario in “Yakult” simply
does not obtain in this case. No satisfactory proof exists to show that private
respondent PISC’s damage suit was instituted before the prosecution presented
its evidence in the criminal case pending in the Pasig Regional Trial Court.
Neither is there any indication that the judge presiding over the criminal
action has been made aware of the civil case. It is in this light that reliance
on the “Yakult” case is indeed misplaced.

Now that the necessity of a prior reservation is the standing
rule that shall govern the institution of the independent civil actions
referred to in Rule 111 of the Rules of Court, past pronouncements that view the
reservation requirement as an “unauthorized amendment” to substantive
law – i.e., the Civil Code, should no longer be controlling. There must be a
renewed adherence to the time-honored dictum that procedural rules are
designed, not to defeat, but to safeguard the ends of substantial justice. And
for this noble reason, no less than the Constitution itself has mandated this
Court to promulgate rules concerning the enforcement of rights with the end in
view of providing a simplified and inexpensive procedure for the speedy
disposition of cases which should not diminish, increase or modify substantive
rights.^[7]
Far from altering substantive rights, the primary purpose of the reservation
is, to borrow the words of the Court in “Caños v. Peralta“:^[8]

“… to avoid multiplicity of suits, to guard against
oppression and abuse, to prevent delays, to clear congested dockets, to
simplify the work of the trial court; in short, the attainment of justice with
the least expense and vexation to the parties-litigants.”

Clearly then, private respondent PISC, as subrogee under Article
2207 of the Civil Code,^[9]
is not exempt from the reservation requirement with respect to its damages suit
based on quasi-delict arising from the same act or omission of
petitioner Javier complained of in the criminal case. As private respondent
PISC merely stepped into the shoes of Ms. Jao (as owner of the insured Toyota
van), then it is bound to observe the procedural requirements which Ms. Jao
ought to follow had she herself instituted the civil case.

WHEREFORE, premises considered, the assailed decision of
the Court of Appeals dated February 24, 1995 and the Resolution dated April 3,
1995 denying the motion for reconsideration thereof are hereby REVERSED and SET
ASIDE. The “MANIFESTATION AND MOTION TO SUSPEND CIVIL PROCEEDINGS”
filed by petitioners is GRANTED.

SO ORDERED.

Regalado, (Chairman), Melo, Puno,
and Mendoza, JJ., concur.