Perez vs. Gutierrez

A registered owner of a common carrier is directly and solidarily liable with the negligent driver to passengers injured by the vehicle’s operation, notwithstanding an unapproved sale or transfer of the vehicle to another, because the public has the right to assume that the registered owner is the actual owner, and an unapproved transferee operates merely as an agent of the registered owner.

On September 6, 1959, Fe Perez, together with nine co-teachers, was a passenger in an AC jeepney operated as a public utility auto-calesa. The vehicle was registered in the name of Josefina Gutierrez. Due to the alleged reckless negligence of driver Leopoldo Cordero, the jeepney met with an accident, causing injuries to Perez that required hospitalization. Perez thereafter filed an action for breach of contract of carriage against Gutierrez, who in turn claimed that the jeepney had been sold to Panfilo Alajar and that Alajar had assumed full responsibility for claims arising from its operation.

• The Accident: On September 6, 1959, Fe Perez and nine co-teachers were passengers of an AC jeepney registered as a public utility auto-calesa under the name of Josefina Gutierrez. Due to the reckless negligence of its driver, Leopoldo Cordero, the vehicle met with an accident, causing physical injuries to Perez that necessitated hospitalization.

• The Deed of Sale: Gutierrez claimed that she had sold the jeepney to Panfilo Alajar. The deed of sale stipulated that title to the vehicle would remain with the vendor (Gutierrez) pending approval of the sale by the Public Service Commission, and that the vendee (Alajar) assumed responsibility for all claims and demands that might develop as a consequence of or in the course of the vehicle’s operation.

• Alajar’s Position: In his answer to the third-party complaint, Alajar denied liability. He alleged that the deed of sale was null and void for lack of registration with the Public Service Commission despite his repeated demands; that the vehicle remained under Gutierrez’s control, and she, together with her lawyer-husband, continued collecting rentals from him; and that, by express agreement, title remained with Gutierrez pending PSC approval.

• Trial Court Findings: The trial court found Cordero guilty of reckless imprudence and determined that Alajar owned and operated the auto-calesa. It noted that after the accident, Alajar assumed responsibility for the payment of Perez’s hospital bills at Brokenshire Memorial Hospital. Consequently, the court ordered Alajar to pay damages to Perez and also awarded moral damages and attorney’s fees to Gutierrez.

• Liability of Registered Owner: Petitioner Fe Perez argued that the registered owner of a motor vehicle should be the one held liable for damages resulting from breach of contract of carriage by a common carrier. She maintained that Gutierrez, as the registered owner, must directly answer for her injuries.

• Josefina Gutierrez (Defendant-Appellee): Gutierrez contended that Panfilo Alajar, as the actual owner by purchase, had expressly assumed full responsibility for all claims arising from the vehicle’s operation under the deed of sale. She argued that liability should therefore devolve solely upon Alajar.

• Panfilo Alajar (Third-Party Defendant-Appellee): Alajar argued that the deed of sale was void due to non-registration with the Public Service Commission despite his repeated demands; that Gutierrez had retained control over the vehicle and continued to collect rentals; and that, by explicit agreement, title remained with Gutierrez pending PSC approval. He asserted that Gutierrez remained the true owner and operator in contemplation of law.

• Liability of Registered Owner vs. Unapproved Transferee: Whether the registered owner of a public utility vehicle, or the unapproved transferee, is directly liable to an injured passenger for damages arising from the driver’s negligence in a breach of contract of carriage.

• Liability of Registered Owner vs. Unapproved Transferee: The registered owner, Josefina Gutierrez, remained directly liable to Fe Perez notwithstanding the unapproved sale to Panfilo Alajar. Under Section 20(g) of the Public Service Act, the approval of the Public Service Commission is required for any transfer of a franchise or the property covered thereby to be binding on the Commission and the public. Because the sale had not been approved, the transfer was not effective as against the public. The public has the right to assume that the registered owner is the actual owner; requiring passengers to ascertain the true owner would thwart the enforcement of their rights. Alajar, who operated the vehicle without an approved transfer, acted merely as an agent of the registered owner and must answer to Gutierrez for any damages she is compelled to pay. The driver Leopoldo Cordero, found guilty of reckless imprudence, was held jointly and solidarily liable with Gutierrez to Perez pursuant to Article 2184 in relation to Article 2180 of the Civil Code.

• Registered Owner Rule in Common Carriers — In the operation of public utility vehicles, the registered owner is directly and primarily liable to the public for injuries caused by the negligent operation of the vehicle, even if actual ownership has been transferred, unless the transfer has been approved by the Public Service Commission. The public is entitled to rely on the registration; the unapproved transferee is deemed an agent of the registered owner and must indemnify the latter for any damages paid. The rule rests on the principle that a franchise is personal, and its transfer without PSC approval is not binding on the Commission or the public.

• Solidary Liability of Driver and Registered Owner — Under Articles 2184 and 2180 of the Civil Code, the driver found guilty of reckless imprudence and the registered owner of the vehicle are jointly and solidarily liable to the injured passenger for damages arising from breach of the contract of carriage.

• “[I]n dealing with vehicles registered under the Public Service Law, the public has the right to assume or presume that the registered owner is the actual owner thereof, for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is.” — This passage from Erezo v. Jepte encapsulates the core rationale for the registered owner rule.

• “In operating the truck without transfer thereof having been approved by the Public Service Commission, the transferee acted merely as agent of the registered owner and should be responsible to him (the registered owner), for any damages that he may cause the latter by his negligence.” — This articulation from Tamayo v. Aquino defines the legal relationship between the registered owner and the unapproved transferee.

• Peralta v. Mangusang, L-18110, July 31, 1964, 11 SCRA 598 — Followed; affirmed that a transfer of a public utility vehicle without PSC approval is not binding on the Commission or the public, and the registered owner continues to be responsible for the consequences of its operation.

• Erezo v. Jepte, 102 Phil. 106 — Controlling precedent; established the rule that the public may assume the registered owner is the actual owner, and that the registered owner may recover from the actual transferee amounts paid to third persons.

• Tamayo v. Aquino, 105 Phil. 949 — Applied; clarified that an unapproved transferee acts merely as an agent of the registered owner and must indemnify the latter for damages caused by his negligence.

• Viluan v. Court of Appeals, L-21477-81, April 29, 1966 — Cited; provided the basis for holding the driver jointly and solidarily liable with the registered owner under Articles 2184 and 2180 of the Civil Code.

• Section 20(g), Public Service Act (Commonwealth Act No. 146) — Requires the approval of the Public Service Commission for any sale or lease of a franchise or the property covered thereby. Applied to hold that an unapproved transfer is ineffective against the public and the Commission, leaving the registered owner directly liable.

• Articles 2184 and 2180, Civil Code — Article 2184 establishes the presumption of negligence against the driver in a motor vehicle mishap; Article 2180 makes owners responsible for damages caused by their employees acting within the scope of their assigned tasks. These provisions grounded the joint and solidary liability of the registered owner and the driver.

Acting Chief Justice Makalintal, and Justices Zaldivar, Fernando, Teehankee, Barredo, Makasiar, Antonio, and Esguerra concurred.

N/A — The decision was unanimous.