FACTS:

This case involves a vehicular accident that occurred on October 20, 1977. Petitioner Filamer Christian Institute's jeep, driven by its alleged employee Daniel Funtecha, struck private respondent Potenciano Kapunan, Sr. as he was walking along Roxas Avenue, Roxas City. Kapunan, Sr., an eighty-two-year old retired schoolteacher, suffered multiple injuries and was hospitalized for twenty days.

Investigation revealed that at the time of the accident, only one headlight of the jeep was functioning. Funtecha, who only had a student driver's permit, had convinced the authorized driver, Allan Masa, to let him drive the vehicle. After the incident, Funtecha and Masa fled from the scene, while a tricycle driver brought the injured Kapunan, Sr. to the hospital.

Kapunan, Sr. filed a criminal case against Funtecha for serious physical injuries through reckless imprudence in the City Court of Roxas City. He also reserved his right to file an independent civil action. Funtecha was found guilty by the inferior court, and this conviction was affirmed on appeal.

Kapunan, Sr. then commenced a civil case for damages against petitioner Filamer Christian Institute, Funtecha, and Agustin Masa, the director and president of Filamer Christian Institute. Agustin Masa was included in the case in his personal capacity because he allegedly authorized and allowed Funtecha, his houseboy at the time, to drive the vehicle even though he knew that Funtecha did not have the necessary license or permit. Allan Masa, who was with Funtecha during the accident, was not named as a defendant.

The RTC of Roxas City rendered a judgment finding Filamer Christian Institute, Funtecha, and Allan Masa at fault and negligent. The court ordered them to pay damages to Kapunan, Sr., including medical expenses, doctor's fees, additional expenses for the helper, court litigation expenses, loss of earning capacity, moral damages, and attorney's fees. Agustin Masa was absolved from personal liability as he was not present in the vehicle during the incident. The counterclaims filed by Funtecha, Agustin Masa, and Filamer Christian Institute were dismissed. The third party defendant, Zenith Insurance Corporation, failed to prove that there was a policy violation that absolved them from liability under the insurance policy.

ISSUES:

1. Whether Filamer Christian Institute and Daniel Funtecha are negligent and therefore answerable for the injuries caused to Potenciano Kapunan, Sr.

2. Whether Agustin Masa should be held personally liable for the actions of his employees.

3. Whether Zenith Insurance Corporation is absolved of liability under the insurance policy.

RULING:

1. Filamer Christian Institute and Daniel Funtecha are found to be at fault and negligent for the injuries caused to Potenciano Kapunan, Sr. They are held jointly and severally liable to pay damages to the plaintiff.

2. Agustin Masa is absolved from personal liability as he was not in the vehicle during the incident.

3. Zenith Insurance Corporation failed to prove any policy violation, and therefore, they are not absolved from liability under the insurance policy.

PRINCIPLES:

• Employers can be held liable for the negligence of their employees if the latter were acting within the scope of their employment at the time of the incident.

• The director of a company may be held personally liable for the actions of his employees only if he himself participated in the tortious act or was shown to have actual participation or complicity in the wrongful act.

• Insurance companies can be absolved of liability only if they can prove that there was a policy violation that relieves them of their obligations under the insurance policy.