VICARIOUS LIABILITY OF EMPLOYER 

Layugan vs. IAC

 G.R. No. 73998           
 November 14, 1988

Facts:

Pedro T. Layugan filed an action for damages against Godofredo Isidro, alleging
that while at Baretbet, Bagabag, Nueva Vizcaya, the Plaintiff and a companion were
repairing the tire of their cargo truck which was parked along the right side of the
National Highway; that defendant's truck, driven recklessly by Daniel Serrano bumped
the plaintiff, that as a result, plaintiff was injured and hospitalized where he incurred and
will incur more expenses as he recuperates from said injuries; Plaintiff's right leg was
amputated and that because of said injuries he would be deprived of a lifetime income.

To free themselves from liability, defendants Isidro [owner] and Serrano [driver]
averred that he knows his responsibilities as a driver and further contends that it was
the negligence of plaintiff that was the proximate cause of the accident. They alleged
that plaintiff parked his truck in a manner which occupied a part of the highway and he
did not even put a warning sign. Subsequently, a third-party complaint was filed by the
defendant against his insurer, the Travellers Multi Indemnity Corporation; that the third-
party plaintiff [Isidro], without admitting his liability to the plaintiff, claimed that the third-
party defendant [Travellers] is liable to the former for contribution, indemnity and
subrogation by virtue of their insurance contract which covers the insurer's liability for
damages arising from death, bodily injuries and damage to property.  The Insurance
company argued that it is only liable for the amount agreed in the policy and the
complaint was premature since no claim was made to it. 

The RTC ruled in favor of the Petitioners. The CA reversed the decision, stating
that it is the petitioners who were negligent since they did not exercise caution  by
putting warning signs that their truck is park on the shoulder of the highway.

Issue:

Whether or not Isidro is liable as employer of Serrano?

Ruling:

Yes.The SC held that the CA erroneously appreciated the evidence. It was

proven that the petitioner placed a warning sign within 3 to 4 meters from their truck in
the form of a lighted kerosene lamp. The existence of this warning sings was
corroborated by Serrano, respondent's driver, and further stated that when he saw a
parked truck, he kept on stepping on the brake pedal but it did not function.  
 Thus despite this warning signs, the truck recklessly driven by Serrano and
owned by Respondent Isidro bumped the truck of petitioner. The private respondent is
sued under Art. 2176 in relation to Art. 2180, paragraph 5, of the Civil Code. In the
latter, when an injury is caused by the negligence of a servant or employee there
instantly arises a presumption of law that there was negligence on the part of the master
or employer either in the selection of the servant or employee, or in supervision over
him after selection, or both. Such presumption is juris tantum and not juris et de jure and
consequently, may be rebutted. 

If follows necessarily that if the employer shows to the satisfaction of the court
that in the selection and in the supervision he has exercised the care and diligence of a
good father of a family, the presumption is overcome and he is relieved from liability.

We do not agree with the private respondent in his submission. In the first place,
it is clear that the driver did not know his responsibilities because he apparently did not
check his vehicle before he took it on the road. If he did he could have discovered
earlier that the brake fluid pipe on the right was cut, and could have repaired it and thus
the accident could have been avoided. Moreover, to our mind, the fact that the private
respondent used to instruct his driver to be careful in his driving, that the driver was
licensed, and the fact that he had no record of any accident, as found by the respondent
court, are not sufficient to destroy the finding of negligence of the Regional Trial Court
given the facts established at the trial. 

The private respondent or his mechanic, who must be competent, should have
conducted a thorough inspection of his vehicle before allowing his driver to drive it.
In the light of the circumstances obtaining in the case, we hold that Isidro failed to prove
that the diligence of a good father of a family in the supervision of his employees which
would exculpate him from solidary liability with his driver to the petitioner. But even if we
concede that the diligence of a good father of a family was observed by Isidro in the
supervision of his driver, there is not an iota of evidence on record of the observance by
Isidro of the same quantum of diligence in the supervision of his mechanic, if any, who
would be directly in charge in maintaining the road worthiness of his (Isidro's) truck. But
that is not all. There is paucity of proof that Isidro exercised the diligence of a good
father of a family in the selection of his driver, Daniel Serrano, as well as in the selection
of his mechanic, if any, in order to insure the safe operation of his truck and thus
prevent damage to others. Accordingly, the responsibility of Isidro as employer treated
in Article 2180, paragraph 5, of the Civil Code has not ceased.

Pacific Banking Corporation vs CA 

G.R. No. L-45656
May 5, 1989 

FACTS: 
Joseph and Eleanor Hart, herein private respondents, organized Insular Farms,
Inc. (IFI). They approached John Clarkin for financial assistance. They signed a
Memorandum of Agreement that stated that the division of shares outstanding, 510 for
Clarkin and 490 for the Harts. Due to financial problems, IFI borrowed P250,000 from
Pacific Banking Corporation (PBC) in July 1956. Then, a promissory note of P250,000
to PBC payable for 5 equal annual installments and the first installment payable on or
before July 1957. In addition to this, in case of default in the payment of any installment
when due, all others shall become due and payable. This loan was effected without any
security except for the Continuing Guaranty of Clarkin. The business floundered but
PBC and its then Executive Vice President, Chester Babst, did not demand payment for
the initial July 1957 installment nor the entire obligation. 
The business further deteriorated so Hart pledged all IFI shares of stocks to PBC
in lieu of additional collateral and to insure an extension of the periods to pay the July
1957 installment. This was executed on February 19, 1958. On March 3, 1958, Pacific
Farms Inc. (PFI) was created and was engage in the same business as IFI. The next
day, PBC ,through Babst, wrote IFI that the entire obligation is due in 48 hours. On
March 7, 1958, Hart received a notice that the shares of stocks would be sold at a
public auction. This was temporarily halted upon the court’s grant of the preliminary
injunction along with the complaint for reconveyance abd danages. However, this was
lifted by the court and on March 21, the 1,000 shares of stocks of IFI was sold to PFI.
Hart filed a case which contends the validity of the sale of the shares because there
was an indefinite extension of time to pay their obligation under the promissory note and
no demand was made by the bank and the latter merely asked for more collateral. The
trial court decided against the private respondents but had a favorable judgment on
appeal; hence, this petition.
 ISSUE: 
Whether or not the CA erred in committing grave error in finding that petitioner
bank agreed to an indefinite extension?
RULING:
In case the period of extension is not precise, the provisions of Art. 1197 should
apply. In the case, there was an agreement to extend the payment of the loan, including
the first installment thereon which was due on or before July 1957. The court is
convinced that Hart had been given the assurance by the conduct of Babst that the
payment would not as yet be pressed and following the said provision, the meaning
must be that there having been intended a period to pay modifying the fixe period in
original promissory note. The cause of action of PBC would have been to ask the
Courts for fixing the term. 
 Furthermore, the pledge executed on February 1958 contained no longer the
provision on an installment of P50,000 due on or before July 1957 which can mean no
other thing that the payment for the said installment was extended. Moreover, the
pledge on February 1958 on the shares of stocks of IFI was sufficient consideration for
the extension. Moreover, the pledge which modified the fixed period in the original
promissory note did not provide for dates of payment of installments nor of any fixed
date of maturity of the whole amount of indebtedness. Therefore, under Art. 1197, the
date of maturity should be determined by the proper court. Hence, the disputed
foreclosure and the subsequent sale were premature.
Merhcan v. Mendoza
G.R. No. L-24471
August 30, 1968

FACTS:

Respondents Arsenio Mendoza, Leonarda Ilaya and Zenaida Mendoza boarded

a bus owned and operated by Philippine Rabbit Bus Lines driven by Silverio Marchan.
While traveling on its way to Manila, it fell into a ditch causing the passengers inside the
bus to be thrown out to the ground resulting in their multiple injuries. Thereafter,
Marchan was convicted for serious, less serious and slight physical injuries through
reckless imprudence.

As such, respondents filed to recover damages from herein petitioners.

Petitioners, on the other hand, contends there is can be no implied contract of carriage
between them and the passengers, hence, there can be no basis for the recovery of
damages from breach of contract.

ISSUE:
Whether or not there is a contract of carriage between the bus company and the
passengers and consequently, whether or not Article 1759 is applicable in the present
case?

RULING:

YES, there is a contract of carriage between the parties and Article 1759 is
applicable in the case at bar. Respondents were waiting for a passenger bus and the
moment they boarded the bus being driven by Marchan, they were treated as
passengers thereto, for they paid their corresponding fees. The riding public is not
expected to inquire from time to time before they board the passenger bus whether or
not the driver who is at the steering wheel of said bus was authorized to drive said
vehicle or that said driver is acting within the scope of his authority and observing the
existing rules and regulations required of him by the management.

Common carriers cannot escape liability “for the death of or injuries to

passengers through the negligence and willful acts of the former’s employees, although
such employees may have acted beyond the scope of their authority or in violation of
orders”. Clearly, the applicability of Article 1759 is indisputable.