Philippine Rabbit Bus Lines, Inc. vs. Phil-American Forwarders, Inc.

The term “manager” in Article 2180 of the Civil Code is used in the sense of “employer” and does not embrace the manager of a corporation, who is himself an employee. Consequently, no vicarious quasi-delictual liability under that provision attaches to the corporate manager for injuries caused by the corporation’s driver.

On November 24, 1962, a freight truck owned by Phil-American Forwarders, Inc., and driven by Fernando Pineda, collided with a bus owned by Philippine Rabbit Bus Lines, Inc., and driven by Felix Pangalangan along the national highway in Sto. Tomas, Pampanga. The bus company and its driver alleged that Pineda’s recklessness caused bodily injuries to Pangalangan, damage to the bus, and loss of earnings. Archimedes J. Balingit was the manager of Phil-American Forwarders, Inc. The plaintiffs sued the corporation, its driver, and Balingit for damages under quasi-delict.

• The Collision: On November 24, 1962, along the national highway at Sto. Tomas, Pampanga, a freight truck owned by Phil-American Forwarders, Inc. and driven by Fernando Pineda allegedly recklessly bumped a bus owned by Philippine Rabbit Bus Lines, Inc. and driven by Felix Pangalangan.
• Injuries and Losses: Pangalangan suffered physical injuries. The bus was damaged and rendered inoperable for seventy-nine days, resulting in lost earnings claimed at P8,665.51.
• Parties’ Roles: Archimedes J. Balingit was the manager of Phil-American Forwarders, Inc. The complaint impleaded him as manager under Article 2180 of the Civil Code.
• Defendants’ Answer: The defendants denied that Balingit was Pineda’s employer, asserting Balingit was a mere corporate manager.
• New Theory on Appeal: For the first time on appeal, plaintiffs argued that Phil-American Forwarders, Inc. was a mere business conduit of Balingit, pointing out that Balingit and his wife subscribed to P40,000 of the P41,200 capital stock, and urged piercing the corporate veil. This theory was not raised in the trial court.

• Managerial Liability under Article 2180: Petitioners maintained that Balingit, as manager of Phil-American Forwarders, Inc., fell within the “owners and managers of an establishment or enterprise” under Article 2180, and should be vicariously liable for damages caused by the corporation’s driver.
• Piercing the Corporate Veil: Petitioners argued that Phil-American Forwarders, Inc. was a mere business conduit of Balingit because he and his wife held nearly all the subscribed capital, and the veil of corporate fiction should be pierced to hold Balingit personally liable.

• No Employer-Employee Relationship: Balingit countered that he was not the employer of driver Fernando Pineda; Pineda was employed by Phil-American Forwarders, Inc., a separate juridical person.
• No Cause of Action under Article 2180: Balingit contended that as a mere manager of the corporation he was not the “manager” contemplated in Article 2180, which imposes liability only on employers or on enterprise managers in their capacity as employers.

• Interpretation of Article 2180: Whether the term “managers” in Article 2180 of the Civil Code includes the manager of a corporation, rendering him vicariously liable for the quasi-delict of the corporation’s employee.
• Corporate Alter Ego: Whether the corporate veil of Phil-American Forwarders, Inc. could be pierced for the first time on appeal to hold Balingit personally liable as the corporation’s alter ego.

• Interpretation of Article 2180: The term “manager” in Article 2180 was interpreted to mean “employer,” and it does not include a corporate manager, who is himself an employee. The Spanish text (“director”) and the context of the provision show that the employer—whether a natural person or a juridical entity—is the one held vicariously liable. A corporate manager, regardless of his rank, remains subordinate to the corporate entity and is therefore a “dependiente,” not an employer. Spanish jurisprudence, holding that even a newspaper director is a dependent for purposes of subsidiary liability because he is subject to the superior authority of the enterprise, was followed. Consequently, Balingit could not be held liable for the driver’s acts under Article 2180.
• Corporate Alter Ego: The argument that the corporation was a mere business conduit of Balingit could not be entertained. It was not raised in the lower court, and an appeal must be decided on the basis of the issues framed by the parties. Plaintiffs-appellants deliberately adopted the theory that Phil-American Forwarders, Inc. had a separate personality, and the case was decided on that theory below; a change of theory on appeal would be unfair to the adverse party.

• “Manager” in Article 2180 Means “Employer” — Under Article 2180 of the Civil Code, the terms “owners and managers of an establishment or enterprise” refer to persons who act in the capacity of employers. A manager of a corporation is an employee (“dependiente”) and does not fall within the provision’s coverage for vicarious liability. The employer, whether an individual or a juridical entity, is the party liable for the torts of employees.
• No Change of Theory on Appeal — A party who deliberately adopts a certain theory in the trial court and the case is decided on that theory is not permitted to change his theory on appeal, as doing so would prejudice the adverse party. This is consistent with Section 18, Rule 46 of the Rules of Court, which confines appellate review to issues raised below.

• “We are of the opinion that those terms do not include the manager of a corporation. It may be gathered from the context of article 2180 that the term ‘manager’ (‘director’ in the Spanish version) is used in the sense of ‘employer’.”
• “Hence, under the allegations of the complaint, no tortious or quasi-delictual liability can be fastened on Balingit as manager of Phil-American Forwarders, Inc., in connection with the vehicular accident already mentioned because he himself may be regarded as an employee or dependiente of his employer, Phil-American Forwarders, Inc.”
• “When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change his theory on appeal because, to permit him to do so, could be unfair to the adverse party.”

• Spanish Supreme Court Decision, December 6, 1912 (cited in 12 Manresa, Codigo Civil Español 5th Ed. 662) — This decision held that a newspaper director is a “dependiente” for purposes of subsidiary liability under Article 1903 (now Article 2180), because despite his hierarchy he remains subordinate to the superior authority of the enterprise. The Court relied on this authority to support the conclusion that a corporate manager is an employee, not an employer.

• Article 2176, Civil Code — Defines quasi-delict and imposes liability on whoever by act or omission causes damage through fault or negligence without a pre-existing contractual relation. The complaint was anchored on this article.
• Article 2180, Civil Code — Imposes vicarious liability on employers and on owners and managers of an establishment or enterprise for damages caused by their employees in the service of the branches in which they are employed or on the occasion of their functions. The Court interpreted “managers” to mean persons acting as employers, thereby excluding a corporate manager.
• Section 18, Rule 46, Rules of Court — Restricts the scope of appellate review to issues raised in the lower court and framed by the parties. Applied to preclude the new veil-piercing theory.

Fernando (Chairman), Barredo, Antonio, and Fernandez, JJ., concur.