This Supreme Court decision clarifies the responsibilities of vehicle owners when their employees cause accidents. The ruling states that if a company owns a vehicle and an employee driving that vehicle causes harm, the company is presumed liable. The company must then prove they were not negligent in hiring or supervising the employee to avoid responsibility. This shifts the burden of proof, making it easier for victims to receive compensation for damages caused by negligent drivers. This decision ensures that companies cannot easily avoid liability by claiming ignorance of their employee’s actions, reinforcing the importance of due diligence in employee selection and supervision.

Who Pays When Company Car Causes an Accident? Unraveling Employer Liability

In Caravan Travel and Tours International, Inc. v. Ermilinda R. Abejar, the Supreme Court addressed the extent of an employer’s liability for damages caused by its employee while operating a company-owned vehicle. On July 13, 2000, Jesmariane R. Reyes was struck by a Mitsubishi L-300 van owned by Caravan Travel and Tours International, Inc., and driven by their employee, Jimmy Bautista. Reyes tragically passed away two days later. Ermilinda R. Abejar, Reyes’ aunt who had raised her since childhood, filed a complaint for damages against Bautista and Caravan. The central legal question was whether Caravan, as the registered owner and employer, should be held liable for the negligent acts of its employee, Bautista, even after Bautista was dropped as a defendant in the case.

The case hinged on the interplay between Article 2176 and Article 2180 of the Civil Code, which address liability for quasi-delicts, and the registered-owner rule, which presumes that the registered owner of a vehicle is responsible for damages caused by its operation. Article 2176 establishes the general principle that anyone who causes damage to another through fault or negligence is obliged to pay for the damage done. Article 2180 expands on this by stating that employers are liable for damages caused by their employees acting within the scope of their assigned tasks. The registered-owner rule, on the other hand, aims to identify the owner of a vehicle so that responsibility can be fixed in case of an accident. This is crucial because often, victims of vehicular accidents have no means to identify the actual driver or owner of the vehicle involved.

The Supreme Court acknowledged the apparent conflict between these rules. Article 2180 requires proof that the employee was acting within the scope of their assigned tasks, while the registered-owner rule seems to impose liability based solely on vehicle ownership. Previous cases, such as Castilex Industrial Corporation v. Vasquez, Jr., had relied on Article 2180, requiring the plaintiff to prove that the employee was acting within the scope of their employment at the time of the accident. However, later cases like Aguilar, Sr. v. Commercial Savings Bank emphasized the registered-owner rule, holding the bank primarily liable as the registered owner of the vehicle involved in the accident, regardless of whether the employee was acting within the scope of their employment.

The Supreme Court harmonized these seemingly conflicting rules by establishing a clear framework for determining liability. The Court ruled that in cases where both the registered-owner rule and Article 2180 apply, the plaintiff must first establish that the employer is the registered owner of the vehicle.

Once the plaintiff successfully proves ownership, there arises a disputable presumption that the requirements of Article 2180 have been proven. As a consequence, the burden of proof shifts to the defendant to show that no liability under Article 2180 has arisen.

This means that the burden shifts to the employer to prove that they are not liable. They can do this by showing that there was no employment relationship, that the employee acted outside the scope of their assigned tasks, or that they exercised the diligence of a good father of a family in the selection and supervision of the employee.

In this particular case, the Court found that Abejar had successfully proven that Caravan was the registered owner of the van that struck Reyes. Caravan admitted that Bautista was its employee at the time of the accident. However, Caravan failed to prove that Bautista was not acting within the scope of his assigned tasks. When questioned, Caravan’s representative could not provide a reason for Bautista’s presence at the location of the accident. Furthermore, Caravan failed to prove that it exercised due diligence in the selection and supervision of Bautista. The company only required Bautista to submit a non-professional driver’s license, which is a violation of the Land Transportation and Traffic Code.

SEC. 24. Use of driver’s license and badge. — … No owner of a motor vehicle shall engage, employ, or hire any person to operate such motor vehicle, unless the person sought to be employed is a duly licensed professional driver.

The Court also addressed Caravan’s argument that it should be excused from liability because Bautista was dropped as a party in the case. The Court rejected this argument, stating that the liability imposed on the registered owner is direct and primary and does not depend on the inclusion of the negligent driver in the action. Bautista was deemed a necessary party, not an indispensable one. The Court stated that the 1997 Rules of Civil Procedure distinguishes between indispensable and necessary parties, which are intended to afford a complete determination of all possible issues.

Finally, the Court upheld the Court of Appeals’ decision to award actual damages, civil indemnity, exemplary damages, moral damages, and attorney’s fees to Abejar. The Court found that the Certificate presented by Abejar as proof of funeral expenses was not hearsay, as Abejar herself had personal knowledge of the expenses incurred. The awards of civil indemnity and exemplary damages were justified by Bautista’s gross negligence, which was the proximate cause of Reyes’ death. The award of moral damages was also proper, as Abejar, who exercised substitute parental authority over Reyes, was considered an ascendant for the purpose of awarding moral damages. Additionally, because exemplary damages were awarded, Abejar was entitled to attorney’s fees.

FAQs

What was the key issue in this case?	The central issue was determining the extent of an employer’s liability for damages caused by an employee driving a company-owned vehicle, considering both Article 2180 of the Civil Code and the registered-owner rule.
What is the registered-owner rule?	The registered-owner rule presumes that the registered owner of a vehicle is liable for damages caused by its operation, regardless of who was driving at the time of the accident. This rule aims to ensure that there is a readily identifiable party responsible for compensating victims of vehicular accidents.
What is Article 2180 of the Civil Code?	Article 2180 states that employers are liable for damages caused by their employees acting within the scope of their assigned tasks, unless they can prove that they exercised due diligence in the selection and supervision of the employee. This article establishes the principle of vicarious liability for employers.
How did the Court reconcile the registered-owner rule and Article 2180?	The Court ruled that once the plaintiff proves that the defendant is the registered owner of the vehicle, a disputable presumption arises that the requirements of Article 2180 have been met. The burden then shifts to the defendant to prove that they are not liable under Article 2180.
What does an employer need to prove to avoid liability?	To avoid liability, an employer must prove either that there was no employment relationship, that the employee acted outside the scope of their assigned tasks, or that the employer exercised the diligence of a good father of a family in the selection and supervision of the employee.
Why was the employer found liable in this case?	The employer was found liable because they failed to prove that the employee was not acting within the scope of his assigned tasks and that they exercised due diligence in the selection and supervision of the employee, as they only required a non-professional driver’s license.
What types of damages were awarded in this case?	The Court awarded actual damages (funeral expenses), civil indemnity, exemplary damages, moral damages, and attorney’s fees to the plaintiff. These damages were intended to compensate the plaintiff for the losses and suffering caused by the death of the victim.
Is the negligent driver an indispensable party in a claim for damages?	No, the negligent driver is considered a necessary party, but not an indispensable one. The claim against the registered owner can proceed even if the driver is not included in the action.

This decision underscores the importance of due diligence in the selection and supervision of employees, particularly those operating company-owned vehicles. It clarifies the respective burdens of proof and ensures that victims of negligence are not left without recourse. By harmonizing the registered-owner rule with the principles of vicarious liability, the Supreme Court has provided a clear framework for resolving similar cases in the future.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Caravan Travel and Tours International, Inc. vs. Ermilinda R. Abejar, G.R. No. 170631, February 10, 2016