TRANSPORTATION

 LAW  DIGESTS  (2014  –  2015)                          ATTY.  NORIANNE  TAN  

 
G.R.  No.  125817                                January  16,  2002   consideration  the  amount  of  profits  lost  due  to  the  accident.  Also,  legal  
  interest   CANNOT   yet   be   awarded   to   Gonzales   because   there   was   no  
LIM  v.  COURT  OF  APPEALS   liquidated   and   demandable   obligation   on   the   part   of   Lim   since   they  
  were  still  negotiating.  Finally,  the  damages  due  to  Gonzales  could  have  
PETITIONERS:     been   mitigated   if   Lim   had   proved   that   such   amount   would   have   been  
• ABELARDO  LIM  (Owner  of  the  10-­‐wheeler  truck)   less  had  Gonzales  not  left  the  jeep  to  decay  and  rot  at  the  roadside  of  
• ESMADITO  GUNNABAN  (Truck  driver)     the  scene  of  the  accident.  Unfortunately,  Lim  failed  to  present  proof.  
   
RESPONDENTS:     DOCTRINE:   It   would   seem   then   that   the   thrust   of   the   law   in   enjoining  
• DONATO  H.  GONZALES  (buyer/new  owner  of  the  jeep)   the  kabit  system  is  not  so  much  as  to  penalize  the  parties  but  to  identify  
  the   person   upon   whom   responsibility   may   be   fixed   in   case   of   an  
CASE:  Gonzales  bought  a  jeep  from  Vallarta.  However,  he  did  not  have   accident   with   the   end   view   of   protecting   the   riding   public.   The   policy,  
the  registration  of  the  vehicle  transferred  to  him  nor  did  he  secure  for   therefore,   loses   its   force   if   the   public   at   large   is   not   deceived,   much   less  
himself  a  certificate  of  public  convenience.  He  continued  to  operate  it  as   involved.  
a   passenger   jeep,   however,   and   was   involved   in   an   accident   later   on   BACKGROUND  
after   a   truck   owned   by   Lim   and   driven   by   Gunnaban   hit   his   jeep.   The   • 1982   à   Donato   Gonzales   purchased   an   Isuzu   passenger  
petitioners   admitted   responsibility   and   Lim   negotiated   with   Gonzales   jeepney   from   Gomercino   Vallarta,   holder   of   a   certificate   of  
for  the  repair  of  the  former’s  jeep.  However,  Lim  refused  Gonzales  offer   public   convenience   for   the   operation   of   public   utility   vehicles  
to   repair   and   the   two   money   compensations   offered   by   Lim.   Gonzales   plying  the  Monumento-­‐Bulacan  route.    
demanded  a  brand  new  jeep  AND  P236,000.  Hence,  they  went  to  Court.   o While   private   respondent   Gonzales   continued   offering  
Here,  Lim  argues  that  Gonzales  was  not  a  real  party-­‐in-­‐interest  since  the   the   jeepney   for   public   transport   services,   he   did   not  
registered  owner  was  still  Vallarta.   have   the   registration   of   the   vehicle   transferred   in   his  
  name  nor  did  he  secure  for  himself  a  certificate  of  public  
The   Supreme   Court   ruled   in   favor   of   Gonzales   stating   that   the   danger   convenience   for   its   operation.   Thus   Vallarta   remained  
posed  by  the  kabit  system  was  not  present  here,  and  as  such  Gonzales   on  record  as  its  registered  owner  and  operator.  
may  sue  for  damages  owed  him.  The  court  gave  the  following  reasons:   • July   22,   1990   à   while   the   jeepney   was   running   northbound  
(1)   it   is   the   neither   Gonzales   or   Vallarta   (the   parties   of   the   kabit   system)   along   the   North   Diversion   Road   somewhere   in   Meycauayan,  
being  held  liable  for  damages,  (2)  the  case  didn’t  arise  from  a  scenario   Bulacan,   it   collided   with   a   ten-­‐wheeler   truck   of   herein  
whereby  liability  arose  by  either  Gonzales  or  Vallarta  leading  the  public   petitioners  Lim  and  Gunnaban.  
to   believe   that   jeepney   belonged   to   the   registered   owner,   and   (3)   the   o Gunnaban   owned   responsibility   for   the   accident,  
riding  public  was  not  bothered  nor  inconvenienced  at  the  very  least  by   explaining   that   while   he   was   traveling   towards   Manila  
the   illegal   arrangement.   On   the   contrary,   it   was   private   respondent   the  truck  suddenly  lost  its  brakes.  To  avoid  collision  he  
himself  who  had  been  wronged  and  was  seeking  compensation  for  the   swerved   the   truck   to   the   center   island   and   veered   to  
damage   done   to   him.   The   Supreme   Court   ruled   that   the   amount   of   the  left  until  he  smashed  into  a  Ferroza  automobile,  and  
damages   demanded   by   Gonzales   was   fair   compensation   taking   into   later,   into   private   respondent’s   passenger   jeepney  

 
RACHELLE  ANNE  D.  GUTIERREZ  
TRANSPORTATION  LAW  DIGESTS  (2014  –  2015)                          ATTY.  NORIANNE  TAN  
 
driven   by   one   Virgilio   Gonzales.   The   impact   caused   ISSUES  TO  BE  RESOLVED  
damage  to  both  the  Ferroza  and  the  passenger  jeepney   1. Whether  or  not  Donato  Gonzales  is  a  real  party  in  interest  given  
and  left  one  passenger  dead  and  others  wounded.   that  he  is  working  under  the  kabit  system.  
• Lim   shouldered   the   medical   treatment   of   the   injured   and   2. Whether  or  not  the  amount  of  the  damages  was  proper.  
compensated   the   heirs   of   the   deceased   passenger.   He   also   3. Whether  or  not  legal  interest  should  be  awarded.  
restored  the  damage  vehicles,  and  negotiated  with  Gonzales  by    
offering   to   repair   Gonzales’   jeep   at   Lim’s   shop.   In   the   RESOLUTIONS  AND  ARGUMENTS  
alternative,   Lim   offered   P20,000   as   compensation   for   the   ISSUE  1  à  Whether  or  not  Donato  Gonzales  is  a  real  party-­‐in-­‐interest  
vehicular   damage.   However,   Gonzales   did   not   accept   the   offer   given   that   he   is   working   under   the   kabit   system   à   YES.   The   evil  
and  demanded  a  brand  new  jeep  and  the  amount  of  P236,000.   sought  to  be  prevented  by  the  prohibition  against  the  kabit  system  is  
Gonzales  thereafter  denied  Lim’s  increased  offer  of  P40,000.   not  present  in  this  case!  (See  3rd  bullet  point!)  
• Gonzales   then   filed   a   complaint   for   damages   against   herein    
petitioners.   MAJOR  POINT  1:  The  purpose  of  the  liability  under  the  kabit  system  is  
o Lim   denied   liability   contending   that   he   exercised   due   to  identify  the  person  to  be  held  liable  by  passengers  who  are  injured  
diligence   in   the   selection   and   supervision   of   his   by   those   operating   under   such   system.   This   is   absent   in   the   case   at  
employees.   Also,   Lim   alleged   that   Vallarta   (original   hand.  
owner),  and  not  Gonzales,  was  the  real  party-­‐in-­‐interest   • What  is  the  kabit  system?    
because   Gonzales   was   working   under   the   kabit   system   o The   kabit   system   is   an   arrangement   whereby   a   person  
which  is  against  public  policy.   who   has   been   granted   a   certificate   of   public  
o Gunnaban   averred   that   the   accident   was   a   fortuitous   convenience   allows   other   persons   who   own   motor  
event  which  was  beyond  his  control.   vehicles   to   operate   them   under   his   license,   sometimes  
• During   trial,   the   damaged   jeepney   was   left   by   the   roadside   to   for   a   fee   or   percentage   of   the   earnings.9   Although   the  
corrode  and  decay.  Private  respondent  explained  that  although   parties   to   such   an   agreement   are   not   outrightly  
he   wanted   to   take   his   jeepney   home   he   had   no   capability,   penalized   by   law,   the   kabit   system   is   invariably  
financial  or  otherwise,  to  tow  the  damaged  vehicle.   recognized   as   being   contrary   to   public   policy   and  
• October   1,   1993   à   the   Trial   Court   ruled   in   favor   of   Gonzales   therefore   void   and   inexistent   under   Art.   1409   of   the  
ratiocinating  that  as  vendee  and  current  owner  of  the  passenger   Civil  Code.  
jeepney,   private   respondent   stood   for   all   intents   and   purposes   o Dizon  v.  Octavio  à  the  Court  explained  that  one  of  the  
as  the  real  party-­‐-­‐in-­‐-­‐interest.   primary   factors   considered   in   the   granting   of   a  
• July   17,   1996   à   the   Court   of   Appeals   affirmed   the   decision   of   certificate   of   public   convenience   for   the   business   of  
the  trial  court  concluding  that  while  an  operator  under  the  kabit   public   transportation   is   the   financial   capacity   of   the  
system   could   not   sue   without   joining   the   registered   owner   of   holder   of   the   license,   so   that   liabilities   arising   from  
the   vehicle   as   his   principal,   equity   demanded   that   the   present   accidents   may   be   duly   compensated.   The   kabit   system  
case  be  made  an  exception.  Hence  this  petition.   renders   illusory   such   purpose   and,   worse,   may   still   be  
  availed  of  by  the  grantee  to  escape  civil  liability  caused  

 
RACHELLE  ANNE  D.  GUTIERREZ  
TRANSPORTATION  LAW  DIGESTS  (2014  –  2015)                          ATTY.  NORIANNE  TAN  
 
by   a   negligent   use   of   a   vehicle   owned   by   another   and   respondent   himself   who   had   been   wronged   and   was  
operated   under   his   license.   If   a   registered   owner   is   seeking   compensation   for   the   damage   done   to   him.  
allowed  to  escape  liability  by  proving  who  the  supposed   Certainly,  it  would  be  the  height  of  inequity  to  deny  him  
owner   of   the   vehicle   is,   it   would   be   easy   for   him   to   his  right.  
transfer   the   subject   vehicle   to   another   who   possesses    
no   property   with   which   to   respond   financially   for   the   ISSUE   2   à   Whether   or   not   the   amount   of   the   damages   was   proper   à  
damage   done.   Thus,   for   the   safety   of   passengers   and   YES.  Petitioners  are  not  only  liable  for  the  damage  done  on  the  vehicle  
the   public   who   may   have   been   wronged   and   deceived   of  Gonzales,  but  also  for  the  profits  he  lost  because  of  the  accident.  
through  the  baneful  kabit  system,  the  registered  owner    
of   the   vehicle   is   not   allowed   to   prove   that   another   MAJOR  POINT  1:  It  is  a  fundamental  principle  in  the  law  on  damages  
person   has   become   the   owner   so   that   he   may   be   that  a  defendant  cannot  be  held  liable  in  damages  for  more  than  the  
thereby   relieved   of   responsibility.   Subsequent   cases   actual  loss  which  he  has  inflicted  and  that  a  plaintiff  is  entitled  to  no  
affirm  such  basic  doctrine.   more   than   the   just   and   adequate   compensation   for   the   injury  
• It   would   seem   then   that   the   thrust   of   the   law   in   enjoining   the   suffered.   His   recovery   is,   in   the   absence   of   circumstances   giving   rise   to  
kabit   system   is   not   so   much   as   to   penalize   the   parties   but   to   an  allowance  of  punitive  damages,  limited  to  a  fair  compensation.  
identify   the   person   upon   whom   responsibility   may   be   fixed   in   • Indemnification   for   damages   is   not   limited   to   damnum  
case   of   an   accident   with   the   end   view   of   protecting   the   riding   emergens   or   actual   loss   but   extends   to   lucrum   cessans   or   the  
public.   The   policy,   therefore,   loses   its   force   if   the   public   at   large   amount  of  profit  lost.  
is  not  deceived,  much  less  involved.   • Had  private  respondent’s  jeepney  not  met  an  accident  it  could  
• The  evil  sought  to  be  prevented  is  not  present  here  because:   reasonably   be   expected   that   it   would   have   continued   earning  
o First,   neither   of   the   parties   to   the   pernicious   kabit   from  the  business  in  which  it  was  engaged.  Private  respondent  
system  is  being  held  liable  for  damages.     avers   that   he   derives   an   average   income   of   P300.00   per   day  
o Second,  the  case  arose  from  the  negligence  of  another   from  his  passenger  jeepney  and  this  earning  was  included  in  the  
vehicle   in   using   the   public   road   to   whom   no   award   of   damages   made   by   the   trial   court   and   upheld   by   the  
representation,   or   misrepresentation,   as   regards   the   appeals   court.   The   award   therefore   of   P236,000.00   as  
ownership  and  operation  of  the  passenger  jeepney  was   compensatory   damages   is   not   beyond   reason   nor   speculative   as  
made   and   to   whom   no   such   representation,   or   it   is   based   on   a   reasonable   estimate   of   the   total   damage  
misrepresentation,   was   necessary.   Thus   it   cannot   be   suffered   by   private   respondent,   i.e.   damage   wrought   upon   his  
said   that   private   respondent   Gonzales   and   the   jeepney   and   the   income   lost   from   his   transportation   business.  
registered   owner   of   the   jeepney   were   in   estoppel   for   Petitioners  for  their  part  did  not  offer  any  substantive  evidence  
leading  the  public  to  believe  that  the  jeepney  belonged   to  refute  the  estimate  made  by  the  courts  a  quo.  
to  the  registered  owner.      
o Third,   the   riding   public   was   not   bothered   nor   ISSUE   3   à   Whether   or   not   legal   interest   should   be   awarded   à   NO.  
inconvenienced   at   the   very   least   by   the   illegal   The  amount  due  from  Lim  was  not  demandable  yet.  
arrangement.   On   the   contrary,   it   was   private    

 
RACHELLE  ANNE  D.  GUTIERREZ  
TRANSPORTATION  LAW  DIGESTS  (2014  –  2015)                          ATTY.  NORIANNE  TAN  
 
MAJOR   POINT   1:   Legal   interest   “cannot   be   recovered   upon  
unliquidated   claims   or   damages,   except   when   the   demand   can   be  
established  with  reasonable  certainty.”  In  addition,  interest  at  the  rate  
of  six  percent  (6%)  per  annum  should  be  from  the  date  the  judgment  
of  the  court  is  made  (at  which  time  the  quantification  of  damages  may  
be  deemed  to  be  reasonably  ascertained).  
• In   this   case,   the   matter   was   not   a   liquidated   obligation   as   the  
assessment   of   the   damage   on   the   vehicle   was   heavily   debated  
upon   by   the   parties   with   private   respondent’s   demand   for  
P236,000.00   being   refuted   by   petitioners   who   argue   that   they  
could   have   the   vehicle   repaired   easily   for   P20,000.00.   In   fine,  
the   amount   due   private   respondent   was   not   a   liquidated  
account  that  was  already  demandable  and  payable.  
 
MAJOR   POINT   2:  One  who  is  injured  then  by  the  wrongful  or  negligent  
act   of   another   should   exercise   reasonable   care   and   diligence   to  
minimize   the   resulting   damage.   Anyway,   he   can   recover   from   the  
wrongdoer  money  lost  in  reasonable  efforts  to  preserve  the  property  
injured  and  for  injuries  incurred  in  attempting  to  prevent  damage  to  it.  
• We   have   observed   that   private   respondent   left   his   passenger  
jeepney   by   the   roadside   at   the   mercy   of   the   elements.   Article  
2203   of   the   Civil   Code   exhorts   parties   suffering   from   loss   or  
injury   to   exercise   the   diligence   of   a   good   father   of   a   family   to  
minimize   the   damages   resulting   from   the   act   or   omission   in  
question.   However,   we   sadly   note   that   in   the   present   case  
petitioners  failed  to  offer  in  evidence  the  estimated  amount  of  
the  damage  caused  by  private  respondent’s  unconcern  towards  
the   damaged   vehicle.   It   is   the   burden   of   petitioners   to   show  
satisfactorily   not   only   that   the   injured   party   could   have  
mitigated   his   damages   but   also   the   amount   thereof;   failing   in  
this   regard,   the   amount   of   damages   awarded   cannot   be  
proportionately  reduced.  
 
NO  SEPARATE  OPINIONS  
 
 
RACHELLE  ANNE  D.  GUTIERREZ