Gelisan v. Alday
REITERATIONFacts
The Antecedents: Bienvenido Gelisan owned a freight truck. He entered into a contract with Roberto Espiritu, leasing the truck for P18.00 per trip, with Espiritu bearing all losses and damages. Espiritu hired the truck to haul fertilizers for Benito Alday. Espiritu's driver and helper received the fertilizers and waybill receipts but failed to deliver them. Espiritu could not be found and was later arrested for theft. Alday, who had contracted to haul the fertilizers, was compelled to pay Atlas Fertilizer Corporation the value of the undelivered fertilizers amounting to P5,397.33. Procedural History: Alday filed a complaint against Espiritu and Gelisan for damages. Espiritu was declared in default. Gelisan disclaimed responsibility, asserting no contractual relation with Alday and that the lease contract with Espiritu stipulated that Espiritu would bear all losses. The trial court ruled in favor of Gelisan, holding Espiritu solely liable. On appeal, the Court of Appeals found Gelisan jointly and severally liable with Espiritu, citing his status as the registered owner of the truck and the unapproved lease contract. The appellate court ordered Espiritu to indemnify Gelisan for any amount paid to Alday. The Petition: Gelisan filed a petition for review on certiorari with the Supreme Court, challenging his joint and several liability.
Issue(s)
Whether the registered owner of a public service vehicle is liable for damages arising from its operation, despite a lease agreement with another party. Whether a lease contract for a public service vehicle, not approved by the Public Service Commission, is binding on third persons. Whether the registered owner's liability is direct and primary, or merely subsidiary.
Ruling
The petition is denied. The Court of Appeals' judgment finding Bienvenido Gelisan jointly and severally liable with Roberto Espiritu is affirmed. Roberto Espiritu is ordered to indemnify Bienvenido Gelisan for any amount paid to Benito Alday.
Ratio Decidendi
On the issue of the registered owner's liability for damages despite a lease agreement: The Court reiterated its consistent ruling that the registered owner of a public service vehicle is responsible for damages arising from its operation or caused to passengers or third persons. This responsibility stems from the nature of public service vehicles and the need to protect the public. The lease contract between Gelisan and Espiritu, not having been approved by the Public Service Commission, is not binding on third persons like Alday. Therefore, Gelisan, as the registered owner, remains liable. On the binding effect of an unapproved lease contract on third persons: The Court affirmed that a lease contract for a public service vehicle, if not approved by the Public Service Commission, is not binding upon the public and third persons. The franchise is personal, and any transfer or lease requires the Commission's approval to ensure public safety and interest. Without such approval, the registered owner continues to be responsible under the franchise in relation to the public. This principle was established in Montoya v. Ignacio and applied in subsequent cases. On whether the registered owner's liability is direct and primary, or merely subsidiary: The Court clarified that the registered owner/operator of a public service vehicle is not merely subsidiarily liable but is jointly and severally liable with the driver for damages incurred by passengers or third persons. This direct and primary responsibility is based on the established jurisprudence, citing cases like Vargas v. Langcay and Erezo v. Jepte, where the registered owner was held primarily responsible for damages caused by the vehicle's operation. The lease agreement, while binding between Gelisan and Espiritu, does not diminish Gelisan's direct liability to the injured third party.
Main Doctrine
The registered owner of a public service vehicle is jointly and severally liable with the driver for damages arising from the operation of the vehicle, even if the vehicle was leased to another without the approval of the Public Service Commission. The lease contract, however, remains valid between the lessor and lessee, entitling the lessor to indemnification from the lessee.