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 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 formers 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 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 didnt 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 respondents 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 Lims shop. In the RESOLUTIONS AND ARGUMENTS
alternative, Lim offered P20,000 as compensation for the ISSUE 1 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 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 Lims 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 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 the Court explained that one of the
as the real party--in--interest. primary factors considered in the granting of a
July 17, 1996 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 Whether or not the amount of the damages was proper
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 respondents 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 Whether or not legal interest should be awarded 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 respondents 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 respondents 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