Case Digest: PCI Leasing and Finance, Inc. vs. UCPB General Insurance Co., Inc., G.R. No. 162267

 

PCI Leasing and Finance, Inc. vs. UCPB General Insurance Co., Inc., G.R. No. 162267, July 4, 2008

Subject: Transportation Law

FACTS

A Mitsubishi Lancer was hit and bumped by an 18-wheeler Tanker Truck o Lancer, owned by UCPB and insured by respondent, driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of UCPB. While the truck was owned by petitioner and allegedly leased to and operated by SUGECO and driven by its employee, Renato Gonzaga.

The rear part of the Lancer exploded due to the impact. The driver and passenger suffered physical injuries. However, the Truck driver Gonzaga continued on his way to its destination and did not bother to bring his victims to the hospital Respondent paid insurance proceeds to the assured UCPB Demands were made by respondent to the registered owner of the truck, PCI, for payment of the amount of the insurance proceeds.

No payment was made Respondent filed the present case. Petitioner admits that it is the owner, but it could not be held liable for the collision, since the driver of the truck, Gonzaga, was not its employee, but that of SUGECO. It was SUGECO that was the actual operator of the truck, pursuant to a Contract of Lease.

After trial, RTC favored the respondent and held petitioner and driver are solidarily liable to respondent. On appeal, CA affirmed RTC’s decision with modifications.

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.

Petitioner contends that PSA applies only to common carriers, or those which have franchises to operate as public utilities. Its truck is a private commercial vehicle for business use, which is not offered for service to the general public. With the enactment of RA 8556, financing companies have been absolved from liability for the consequences of quasi-delictual acts or omissions involving financially leased property.

ISSUE

Whether or not the petitioner is liable to the respondent even though the vehicle is on lease to another when the incident happened.

RULING

Yes, the petitioner is still liable to the respondent.

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. 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.  The public has the right to conclusively presume that the registered owner is the real owner and may sue accordingly.

In this case, 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. Since a lease does not even transfer title or ownership, there is more reason to uphold the policy behind the law On financing companies. The new law, RA 8556, does not supersede or repeal the law on compulsory motor vehicle registration. 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. 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.

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 RA 8556. The registered owner is primarily responsible for the damage caused to the vehicle of the plaintiff, but he 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.