First Malayan Leasing and Finance Corporation vs. Court of Appeals

The registered owner of a motor vehicle is directly and primarily liable to third persons for damages caused by the vehicle's operation, regardless of any prior unrecorded sale or transfer of the vehicle to another person. A transfer of ownership of a motor vehicle, to be valid against third persons, must be recorded in the Land Transportation Office; until so recorded, the registered owner remains the operator of record in contemplation of law.

Crisostomo B. Vitug was a motorist who suffered physical injuries and property damage when his car was struck by an Isuzu cargo truck in a three-vehicle collision on December 14, 1983, at the intersection of New York Street and EDSA in Cubao, Quezon City. The truck was registered in the name of First Malayan Leasing and Finance Corporation (FMLFC), a financing corporation that had earlier entered into a financing lease agreement with Vicente Trinidad over the same vehicle. FMLFC claimed to have sold the truck to Trinidad on September 24, 1980, after Trinidad fully paid his monthly amortizations, but the transfer of ownership was never reflected in the motor vehicle registration records of the Land Transportation Office.

On December 14, 1983, a three-vehicle collision occurred at the intersection of New York Street and Epifanio delos Santos Avenue (EDSA) in Cubao, Quezon City. Crisostomo B. Vitug's car was at a full stop, northward-bound, when an oncoming Isuzu cargo truck bumped a Ford Granada car behind Vitug's vehicle with such force that the Ford car was thrown on top of Vitug's car, crushing its roof. The cargo truck thereafter struck Vitug's car in the rear, causing the gas tank to explode and setting the car ablaze. The truck was driven by one Crispin Sicat and was registered in the name of First Malayan Leasing and Finance Corporation (FMLFC).

Vitug was extricated from his car by bystanders before the vehicle exploded, but two of his passengers were burned to death. His car, valued at P70,000, was a total loss. Upon regaining consciousness in the hospital, Vitug discovered that he had lost various personal articles valued at P48,950, including a necklace with a diamond pendant, a GP watch, a pair of Christian Dior eyeglasses, a gold Cross pen, and a pair of Bally shoes. He suffered injuries producing recurring pains in his neck and back, and upon his physician's advice, received further medical treatment in the United States costing US$2,373.64 for his first trip and US$5,596.64 for the second.

FMLFC denied liability, alleging that it was neither the owner of the truck nor the employer of the driver Crispin Sicat, because it had sold the truck to Vicente Trinidad on September 24, 1980, after the latter had paid all his monthly amortizations under the financing lease agreement between FMLFC and Trinidad. On FMLFC's motion, the trial court granted leave to file a third-party complaint against Trinidad, which was admitted. The Estate of Vicente Trinidad, answering the third-party complaint, admitted that the truck was operated by the deceased during his lifetime but raised the defense that the estate was no longer existing, having been settled and partitioned extrajudicially by his heirs.

The trial court found that the Isuzu cargo truck was still registered in the name of FMLFC at the time of the accident, a factual finding affirmed by the Court of Appeals. This finding was not disputed as to the registration status itself; FMLFC's position was that the prior sale to Trinidad should absolve it of liability notwithstanding the unrecorded transfer.

• Non-Ownership and Non-Employment: FMLFC argued that it was not the owner of the truck and not the employer of the driver Crispin Sicat, having sold the truck to Vicente Trinidad on September 24, 1980, after Trinidad fully paid his monthly amortizations under the financing lease agreement, and therefore should not be held liable for damages caused by the truck's operation.

• Registered Owner Liability: Whether the registered owner of a motor vehicle remains liable to third persons for damages caused by the vehicle's operation despite having sold the vehicle to another person, where the transfer of ownership was not recorded with the Land Transportation Office.

• Registered Owner Liability: Yes. The registered owner is considered the operator of the vehicle in contemplation of law and is directly and primarily responsible for the consequences of its operation as regards the public and third persons, regardless of who the actual owner might be. A transfer of ownership must be recorded in the Land Transportation Office to be valid against third persons.

• Registered Owner Liability: The Court applied the well-settled doctrine that the registered owner of a motor vehicle is the operator of record in contemplation of law, and as such, is directly and primarily responsible to the public and third persons for the consequences incident to its operation. It is immaterial whether the driver was actually employed by the registered owner; the owner-operator of record is considered in law as the employer of the driver, with the actual operator and employer being regarded merely as his agent. This doctrine serves a public policy purpose: were the registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion or otherwise, to escape liability 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. The Court noted that the factual finding of both the trial court and the Court of Appeals — that the Isuzu vehicle was still registered in the name of FMLFC at the time of the accident — is not reviewable in a petition for certiorari under Rule 45, as only questions of law may be raised. Because the sale of the truck to Trinidad was never recorded with the Land Transportation Office, the transfer, although valid between the parties, could not affect third persons who rely on the public registration of the motor vehicle as conclusive evidence of ownership. Accordingly, FMLFC was in law the owner and operator of the Isuzu cargo truck and was fully liable to third parties injured by its operation due to the fault or negligence of the driver.

• Registered Owner Doctrine — Regardless of who the actual owner of a motor vehicle might be, the registered owner is considered the operator of the vehicle in contemplation of law with respect to the public and third persons, and is directly and primarily responsible for the consequences of its operation. The owner/operator of record is regarded in law as the employer of the driver, the actual operator and employer being considered merely as his agent. A transfer of ownership of a motor vehicle, to be valid against third persons, must be recorded in the Land Transportation Office; although valid between the parties, an unrecorded sale cannot affect third persons who rely on the public registration as conclusive evidence of ownership. The rationale is that allowing the registered owner to evade responsibility by proving the identity of the transferee would enable collusion and transfer of liability to persons who may possess no property to satisfy the damage or injury done. In this case, FMLFC remained the registered owner at the time of the accident, and the unrecorded sale to Trinidad could not exempt it from liability to Vitug.

• "This Court has consistently ruled that regardless of who the actual owner of a motor vehicle might be, the registered owner is the operator of the same with respect to the public and third persons, and as such, directly and primarily responsible for the consequences of its operation." — This passage states the canonical formulation of the registered owner doctrine, articulating the ratio decidendi that the registered owner is liable to third persons regardless of actual ownership.

• "In order for a transfer of ownership of a motor vehicle to be valid against third persons, it must be recorded in the Land Transportation Office. For, although valid between the parties, the sale cannot affect third persons who rely on the public registration of the motor vehicle as conclusive evidence of ownership." — This passage defines the requirement for a valid transfer of motor vehicle ownership as against third persons, explaining why FMLFC's unrecorded sale to Trinidad did not absolve it of liability.

• "Were the 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." — This passage articulates the public policy rationale underlying the registered owner doctrine, explaining why the rule prevents collusive evasion of liability.

• MYC-Agro-Industrial Corporation vs. Vda. de Caldo, 132 SCRA 10 — Controlling precedent followed. Held that the registered owner or operator of record is the one liable for damages caused by a vehicle regardless of any alleged sale or lease made thereon, and that the owner-operator of record is considered the employer of the driver in contemplation of law.
• Vargas vs. Langcay, 6 SCRA 174 — Followed. Established that it is immaterial whether the driver was actually employed by the operator of record, and that the actual operator and employer are considered merely as the agent of the operator of record.
• Erezo vs. Jepte, 102 Phil. 103 — Followed. Articulated the policy rationale that allowing the registered owner to evade responsibility by proving the identity of the transferee would enable collusion and transfer of liability to financially insolvent persons.
• Tamayo vs. Aquino, 105 Phil. 949 — Cited in support of the registered owner doctrine as applied in MYC-Agro-Industrial Corporation.
• Montoya vs. Ignacio, G.R. No. L-5868, Dec. 29, 1953 — Cited in support of the principle that the operator of record continues to be the operator in contemplation of law.
• Timbol vs. Osias, G.R. No. L-7547, April 30, 1955 — Cited in support of the same principle.
• Vda. de Medina vs. Cresencia, G.R. No. L-8194, July 11, 1956 — Cited in support of the same principle.
• Necesito vs. Paras, G.R. No. L-10605, June 30, 1955 — Cited in support of the same principle.

• Rule 45, Rules of Court — Governed the mode of review. The Court noted that the factual finding of the trial court and the Court of Appeals that the vehicle was still registered in FMLFC's name at the time of the accident is not reviewable in a petition for certiorari under Rule 45, which is limited to questions of law.
• Circular 1-88 — Required the submission of proof of service of the petition on the adverse party and a certified true copy of the Court of Appeals decision. FMLFC's initial failure to comply with these requirements, along with late filing, led to the initial dismissal of the petition on February 14, 1990.

Cruz, J.; Medialdea, J.; Bellosillo, J. — concurred.