Republic of the
Supreme Court
THIRD
DIVISION
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PCI LEASING AND FINANCE, INC., |
G.R.
No. 162267 |
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Petitioner,
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Present: |
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YNARES-SANTIAGO, J., |
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Chairperson, |
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-
versus - |
AUSTRIA-MARTINEZ, |
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CHICO-NAZARIO, |
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NACHURA, and |
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REYES, JJ. |
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UCPB GENERAL INSURANCE CO., INC.,
Respondent. |
Promulgated: July 4, 2008 |
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D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before
the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking a reversal of the Decision[1] of the
Court of Appeals (CA) dated December 12, 2003 affirming with modification the
Decision of the Regional Trial Court (RTC) of Makati
City which ordered petitioner and Renato Gonzaga (Gonzaga) to pay, jointly
and severally, respondent the amount of P244,500.00 plus interest; and
the CA Resolution[2]
dated February 18, 2004 denying petitioner's Motion for Reconsideration.
The facts, as found by the CA, are
undisputed:
On
The impact caused heavy damage to
the Mitsubishi Lancer car resulting in an explosion of the rear part of the
car. The driver and passenger suffered physical injuries. However, the driver
defendant-appellant Gonzaga continued on its [sic]
way to its [sic] destination and did not bother to bring his victims to the
hospital.
Plaintiff-appellee
paid the assured UCPB the amount of P244,500.00
representing the insurance coverage of the damaged car.
As the 18-wheeler truck is
registered under the name of PCI Leasing, repeated demands were made by
plaintiff-appellee for the payment of the aforesaid
amounts. However, no payment was made. Thus, plaintiff-appellee
filed the instant case on
PCI Leasing and
Finance, Inc., (petitioner) interposed the defense
that it could not be held liable for the collision, since the driver of the
truck, Gonzaga, was not its employee, but that of its
co-defendant Superior Gas & Equitable Co., Inc. (SUGECO).[4] In fact, it was SUGECO, and not petitioner,
that was the actual operator of the truck, pursuant to a Contract of Lease
signed by petitioner and SUGECO.[5] Petitioner, however, admitted that it was the
owner of the truck in question.[6]
After trial, the RTC
rendered its Decision dated
WHEREFORE, premises
considered, judgment is hereby rendered in favor of
plaintiff UCPB General Insurance [respondent], ordering the defendants PCI
Leasing and Finance, Inc., [petitioner] and Renato Gonzaga, to pay jointly and severally the former the
following amounts: the principal amount of P244,500.00
with 12% interest as of the filing of this complaint until the same is paid; P50,000.00
as attorney's fees; and P20,000.00 as costs of suit.
SO ORDERED.[8]
Aggrieved by the
decision of the trial court, petitioner appealed to the CA.
In its Decision dated
WHEREFORE, the appealed decision
dated
SO ORDERED.[9]
Petitioner filed a
Motion for Reconsideration which the CA denied in its Resolution dated
Hence, herein Petition
for Review.
The issues raised by
petitioner are purely legal:
Whether
petitioner, as registered owner of a motor vehicle that figured in a quasi-delict may be held liable, jointly and severally, with
the driver thereof, for the damages caused to third parties.
Whether
petitioner, as a financing company, is absolved from liability by the enactment
of Republic Act (R.A.) No. 8556, or the Financing Company Act of 1998.
Anent the first issue,
the CA found petitioner liable for the damage caused by the collision since
under the Public Service Act, if the property covered by a franchise is transferred or leased to another
without obtaining the requisite approval, the transfer is not binding on the
Public Service Commission and, in contemplation of law, the grantee continues
to be responsible under the franchise in relation to the operation of the
vehicle, such as damage or injury to third parties due to collisions.[10]
Petitioner claims that
the CA's reliance on the Public Service Act is
misplaced, since the said law applies only to cases involving common carriers,
or those which have franchises to operate as public utilities. In contrast, the case before this Court
involves a private commercial vehicle for business use, which is not offered
for service to the general public.[11]
Petitioner's contention
has partial merit, as indeed, the vehicles involved in the case at bar are not
common carriers, which makes the Public Service Act inapplicable.
However, the registered owner of the vehicle driven by a negligent
driver may still be held liable under applicable jurisprudence involving laws
on compulsory motor vehicle registration and the liabilities of employers for quasi-delicts under the Civil Code.
The principle of
holding the registered owner of a vehicle liable for quasi-delicts resulting from its use is well-established
in jurisprudence. Erezo
v. Jepte,[12] with
Justice Labrador as ponente, wisely
explained the reason behind this principle, thus:
Registration is
required not to make said registration the operative act by which ownership in
vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear any essential relation
to the contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the use and
operation of the vehicle upon any public highway (section 5
[a], Act No. 3992, as amended.) The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicle
on the public highways, responsibility therefor can
be fixed on a definite individual, the registered owner. Instances are
numerous where vehicles running on public highways caused accidents or injuries
to pedestrians or other vehicles without positive identification of the owner
or drivers, or with very scant means of identification. It is to
forestall these circumstances, so inconvenient or prejudicial to the public,
that the motor vehicle registration is
primarily ordained, in the interest of the determination of persons responsible
for damages or injuries caused on public highways.
“‘One of the
principal purposes of motor vehicles legislation is
identification of the vehicle and of the operator, in case
of accident; and another is that the knowledge that means of detection are
always available may act as a deterrent from lax observance of the law and of
the rules of conservative and safe operation. Whatever purpose there may
be in these statutes, it is subordinate at the last to the primary purpose of
rendering it certain that the violator of the law or of the rules of safety
shall not escape because of lack of means to discover him.’ The purpose
of the statute is thwarted, and the displayed number becomes a ‘snare and
delusion,’ if courts would entertain such defenses as that put forward by appellee in this case. No responsible person or
corporation could be held liable for the most outrageous acts of negligence, if
they should be allowed to place a ‘middleman’ between them and the public, and
escape liability by the manner in which they recompense their servants.”
(King vs. Brenham Automobile Co., 145 S.W. 278, 279.)
With the above
policy in mind, the question that defendant-appellant poses is: should not the
registered owner be allowed at the trial to prove who the actual and real owner
is, and in accordance with such proof escape or evade responsibility and lay
the same on the person actually owning the vehicle? We
hold with the trial court that the law does not allow him to do so; the law,
with its aim and policy in mind, does not relieve him directly of the
responsibility that the law fixes and places upon him as an incident or
consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would be
easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
injury done. A victim of recklessness on the public highways is usually
without means to discover or identify the person actually causing the injury or
damage. He has no means other than by a recourse
to the registration in the Motor Vehicles Office to
determine who is the owner. The protection that the law aims to extend to
him would become illusory were the registered owner given the opportunity to
escape liability by disproving his ownership. If the policy of the law is
to be enforced and carried out, the registered owner should not be allowed to
prove the contrary to the prejudice of the person injured, that is, to prove
that a third person or another has become the owner, so that he may thereby be
relieved of the responsibility to the injured person.
The above policy
and application of the law may appear quite harsh and would seem to conflict
with truth and justice. We do not think it is so. A registered
owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of the vehicle. The inconvenience of the suit is no
justification for relieving him of liability; said inconvenience is the price
he pays for failure to comply with the registration that the law demands and
requires.
In synthesis, we hold that the registered owner, the defendant-appellant
herein, is primarily responsible for the damage caused to the vehicle of the
plaintiff-appellee, but he (defendant-appellant) has
a right to be indemnified by the real or actual owner of the amount that he may
be required to pay as damage for the injury caused to the plaintiff-appellant.[13]
The case is still good
law and has been consistently cited in subsequent cases.[14] Thus, there is no good reason to depart from
its tenets.
For damage or injuries
arising out of negligence in the operation of a motor vehicle, the registered
owner may be held civilly liable with the negligent driver either 1) subsidiarily, if the aggrieved party seeks relief
based on a delict or crime under
Articles 100 and 103 of the Revised Penal Code; or 2) solidarily,
if the complainant seeks relief based on a quasi-delict
under Articles 2176 and 2180 of the Civil Code. It is the option of the
plaintiff whether to waive completely the filing of the civil action, or
institute it with the criminal action, or file it separately or independently
of a criminal action;[15] his
only limitation is that he cannot recover damages twice for the same act or
omission of the defendant.[16]
In case a separate
civil action is filed, the long-standing principle is that the registered owner
of a motor vehicle is primarily and directly responsible for the consequences
of its operation, including the negligence of the driver, with respect to the
public and all third persons.[17] In contemplation of law, the registered owner
of a motor vehicle is the employer of its driver, with the actual operator and
employer, such as a lessee, being considered as merely the owner's agent.[18] This being the case, even if a sale has been
executed before a tortious incident, the sale, if
unregistered, has no effect as to the right of the public and third persons to
recover from the registered owner.[19] The public has the right to conclusively
presume that the registered owner is the real owner, and may sue accordingly.[20]
In the case now before
the Court, there is not even a sale of the vehicle involved, but a mere lease,
which remained unregistered up to the time of the occurrence of the quasi-delict that gave rise to the case. Since a lease, unlike a sale, does not even
involve a transfer of title or ownership, but the mere use or enjoyment of
property, there is more reason, therefore, in this instance to uphold the
policy behind the law, which is to protect the unwitting public and provide it
with a definite person to make accountable for losses or injuries suffered in
vehicular accidents.[21] This is
and has always been the rationale behind compulsory motor vehicle registration
under the Land Transportation and Traffic Code and similar laws, which, as
early as Erezo, has been guiding the
courts in their disposition of cases involving motor vehicular incidents. It is also important to emphasize that such
principles apply to all vehicles in general, not just those offered for public
service or utility.[22]
The Court recognizes
that the business of financing companies has a legitimate and commendable
purpose.[23]
In earlier cases, it considered a
financial lease or financing lease a legal contract,[24] though
subject to the restrictions of the so-called Recto Law or Articles 1484
and 1485 of the Civil Code.[25] In previous cases, the Court adopted the
statutory definition of a financial lease or financing lease, as:
[A]
mode of extending credit through a non-cancelable
lease contract under which the lessor purchases or
acquires, at the instance of the lessee, machinery, equipment, motor vehicles,
appliances, business and office machines, and other movable or immovable
property in consideration of the periodic payment by the lessee of a fixed
amount of money sufficient to amortize at least seventy (70%) of the purchase
price or acquisition cost, including any incidental expenses and a margin of
profit over an obligatory period of not less than two (2) years during which
the lessee has the right to hold and use the leased property, x x x but with no obligation or
option on his part to purchase the leased property from the owner-lessor at the end of the lease contract. [26]
Petitioner presented a
lengthy discussion of the purported trend in other jurisdictions, which
apparently tends to favor absolving financing
companies from liability for the consequences of quasi-delictual
acts or omissions involving financially leased property.[27] The petition adds that these developments have
been legislated in our jurisdiction in Republic Act (R.A.) No. 8556,[28] which
provides:
Section 12.
Liability of lessors.
— Financing companies shall not be liable for loss, damage or injury caused by
a motor vehicle, aircraft, vessel, equipment, machinery or other property
leased to a third person or entity except when the motor vehicle, aircraft,
vessel, equipment or other property is operated by the financing company, its
employees or agents at the time of the loss, damage or injury.
Petitioner’s argument
that the enactment of R.A. No. 8556, especially its addition of the new Sec. 12
to the old law, is deemed to have absolved petitioner from liability, fails to
convince the Court.
These developments, indeed, point to a seeming emancipation of financing
companies from the obligation to compensate claimants for losses suffered from
the operation of vehicles covered by their lease. Such, however, are not applicable to
petitioner and do not exonerate it from liability in the present case.
The new law, R.A. No.
8556, notwithstanding developments in foreign jurisdictions, do not supersede
or repeal the law on compulsory motor vehicle registration. No part of the law expressly repeals Section
5(a) and (e) of R.A. No. 4136, as amended, otherwise known as the Land
Transportation and Traffic Code, to wit:
Sec. 5. Compulsory registration of motor vehicles. -
(a) All motor vehicles and trailer of any type used or operated on or upon any
highway of the Philippines must be registered with the Bureau of Land
Transportation (now the Land Transportation Office, per Executive Order No.
125, January 30, 1987, and Executive Order No. 125-A, April 13, 1987) for the
current year in accordance with the provisions of this Act.
x
x x x
(e) Encumbrances
of motor vehicles. - Mortgages, attachments, and other encumbrances of motor
vehicles, in order to be valid against third parties must be recorded in
the Bureau (now the Land Transportation Office). Voluntary transactions or
voluntary encumbrances shall likewise be properly recorded on the face of all
outstanding copies of the certificates of registration of the vehicle
concerned.
Cancellation or foreclosure of such mortgages,
attachments, and other encumbrances shall likewise be recorded, and in the
absence of such cancellation, no certificate of registration shall be issued
without the corresponding notation of mortgage, attachment and/or other
encumbrances.
x x x
x (Emphasis supplied)
Neither is there an implied repeal of R.A. No. 4136. As a rule, repeal by implication is frowned
upon, unless there is clear showing that the later statute is so irreconcilably
inconsistent and repugnant to the existing law that they cannot be reconciled
and made to stand together.[29] There is nothing in R.A. No. 4136 that is inconsistent
and incapable of reconciliation.
Thus, the rule remains the same: a sale,
lease, or financial lease, for that matter, that is not
registered with the Land Transportation Office, still does not bind
third persons who are aggrieved in tortious
incidents, for the latter need only to rely on the public registration of a
motor vehicle as conclusive evidence of ownership.[30] A lease such as
the one involved in the instant case is an encumbrance in contemplation of law,
which needs to be registered in order for it to bind third parties.[31]
Under this policy, the
evil sought to be avoided is the exacerbation of the suffering of victims of
tragic vehicular accidents in not being able to identify a guilty party. A contrary ruling will not serve the ends of
justice. The failure to register a
lease, sale, transfer or encumbrance, should not benefit the parties
responsible, to the prejudice of innocent victims.
The non-registration of
the lease contract between petitioner and its lessee precludes the former from
enjoying the benefits under Section 12 of R.A. No. 8556.
This ruling may appear
too severe and unpalatable to leasing and financing companies, but the Court
believes that petitioner and other companies so situated are not entirely left
without recourse. They may resort to
third-party complaints against their lessees or whoever are the actual
operators of their vehicles. In the case at bar, there is, in fact, a provision
in the lease contract between petitioner and SUGECO to the effect that the
latter shall indemnify and hold the former free and harmless from any
“liabilities, damages, suits, claims or judgments” arising from the latter's
use of the motor vehicle.[32] Whether petitioner would act against SUGECO
based on this provision is its own option.
The burden of
registration of the lease contract is minuscule compared to the chaos that may
result if registered owners or operators of vehicles are freed from such
responsibility. Petitioner pays the
price for its failure to obey the law on compulsory registration of motor
vehicles for registration is a pre-requisite for any person to even enjoy the
privilege of putting a vehicle on public roads.
WHEREFORE, the
petition is DENIED. The Decision
dated
Costs
against petitioner.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
WE
CONCUR:
CONSUELO
YNARES-SANTIAGO
Associate Justice
Chairperson
|
MINITA
V. CHICO-NAZARIO Associate
Justice |
ANTONIO
EDUARDO B. NACHURA Associate
Justice |
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, it is hereby certified
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
REYNATO S.
PUNO
Chief Justice
[1] Penned
by Associate Justice Eugenio S. Labitoria
with the concurrence of Associate Justices Mercedes Gozo-Dadole
and Rosmari D. Carandang, rollo, pp. 41-47.
[2]
[3] Rollo, p. 42.
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12] 102 Phil. 103 (1957).
[13]
[14] Equitable Leasing Corp. v. Suyom, 437 Phil. 244, 256 (2002); Aguilar v.
Commercial Savings Bank, 412 Phil. 834, 841 (2001);
Spouses Hernandez v. Spouses Dolor, 479
Phil. 593, 603 (2004).
[15] Rules of Court, Rule 111, Sec. 1, par.
(a), sub-par. 1.
[16] Civil Code, Art.
2177.
[17] Equitable
Leasing Corp. v. Suyom, supra note 14, at 255; First Malayan Leasing
and Finance Corp. v. Court of Appeals, G.R. No. 91378, June 9, 1992, 209
SCRA 660, 663.
[18] Equitable
Leasing Corp. v. Suyom, supra 14, at 255, citing First Malayan Leasing
and Finance Corp. v. Court of Appeals, supra note 17; MYC-Agro-Industrial
Corp. v. Camerino, 217 Phil. 11, 17 (1984); and Vargas
v. Langcay, 116 Phil. 478, 481-482 (1962).
The
only known exception to the rule is that enunciated in FGU Insurance Corp.
v. Court of Appeals, 351 Phil. 219, 225 (1998), where it was held that a
rent-a-car company is not liable for the damages caused by the negligence of
its lessee, who drove the subject vehicle. Here, it was established that
between a rent-a-car company and a client who drove a leased vehicle, there was
a clear absence of vinculum juris as employer
and employee.
[19] Equitable
Leasing Corp. v. Suyom, supra; note 14, at 255; First Malayan Leasing
and Finance Corp. v. Court of Appeals, supra note 17, at 664.
[20] First
Malayan Leasing and Finance Corp. v. Court of Appeals, supra note 17, at 664.
[21] Erezo v. Jepte, supra note 12, at 108.
[22] Erezo v. Jepte, supra note 12, at 107; Equitable Leasing Corp.
v. Suyom, supra note 14, at 256; BA Finance
Corp. v. Court of Appeals, G.R. No. 98275, November 13, 1992, 215 SCRA 715,
720.
[23] PCI
Leasing and Finance Inc. v. Giraffe-X Creative Imaging Inc., G.R. No. 142618, July 12, 2007, 527 SCRA 405,
420-421.
[24] Cebu Contractors
Consortium Co. v. Court of Appeals, 454 Phil.
650, 656 (2003).
[25] Elisco Tools Manufacturing Corp. v. Court of Appeals, 367 Phil. 242, 255 (1999); PCI Leasing and
Finance Inc. v. Giraffe-X Creative Imaging Inc., supra note 23, at 424-426.
[26] Republic
Act No. 5980 (1969), as amended by Republic Act No. 8556 (1998), Sec. 3 (d),
quoted in Cebu Contractors Consortium Co.
v. Court of Appeals, supra note 24, at 657; PCI Leasing and Finance,
Inc. v. Giraffe-X Creative Imaging Inc., supra note 23, at 416.
[27] Rollo, pp.
29-30.
[28] Amending R.A. No. 5980, or the old Financing Company Act.
[29] Agujetas v.
Court of Appeals, 329 Phil. 721, 745 (1996).
[30] First
Malayan Leasing and Finance Corp. v. Court of Appeals, supra note 17, at 664.
[31] Roxas v. Court of Appeals, G.R. No.
92245, June 26, 1991, 198 SCRA 541, 546;
also Black's Law Dictionary (abridged 5th edition) defines an
encumbrance as “any right to, or interest in, land which may subsist in another
to diminution of its value, but consistent with the passing of the fee. A
claim, lien, charge, or liability attached to and binding real property; e.g.
a mortgage; judgment lien; mechanics' lien; lease; security interest;
easement of right of way; accrued and unpaid taxes”. (Emphasis supplied.)
[32] Exhibit “1-A”, records, p. 359.