Published 24 June 2019, The Daily Tribune

After completing the sale of a vehicle, most sellers tend to move on from the transaction and leave all the paperwork and other formalities to the buyer. This proves to be an unwise decision if the vehicle fits into an accident involving third persons or other vehicles, in which case the registered owner is still directly and primarily liable for damages.

Under the “registered-owner rule”, the registered owner of a motor vehicle whose operation causes injury to another is legally liable to the latter.

To illustrate:

Bus company A and bus company B entered into an agreement to sell whereby company B bought several bus units from company A. They agreed that company A would retain the ownership and registration of the buses in the meantime, but bus company B would operate the buses within Metro Manila. Company B also agreed to hold company A free from any liability arising from the use and operation of the bus units. While this arrangement was in effect, one of the buses hit and damaged a motorcycle.

If the driver of the motorcycle sues bus companies A and B for damages, company A will most likely deny liability, and aver that although it retained ownership of the bus, the actual operator and employer of the bus driver was company B. Company A would also likely use the hold harmless clause to avoid liability, and file a cross-claim against company B, such that company B should be liable to company A for whatever amounts it may be ordered to pay the motorcycle driver.

Company A cannot escape liability for the personal injuries and property damage suffered by the motorcycle driver. Under the “registered-owner rule,” the registered owner of the motor vehicle involved in a vehicular accident could be held liable for the consequences. It is not a defense insofar as the third-party is concerned that the vehicle had already been sold to the buyer, even if, for instance, it was the buyer himself or someone authorized by him who was driving the vehicle at the time of the mishap.

This is because the aim of the law is to avoid inconvenience to the public in instances where the identification of the owner of the erring vehicle is not easily determined. Thus, the law holds the person whose name appears in the registration of the vehicle as primarily and directly responsible for any accident, injury or death caused by the operation of the vehicle in the streets and highways.

Under the same premise, even if the driver of the vehicle is employed by the buyer and not the registered owner, it is still the registered owner who is directly and primarily liable to the third persons who are involved in the mishap. In the eyes of third persons, the registered owner of the motor vehicle is the employer of the negligent driver, and the actual employer is considered merely as an agent of such owner. The existence of an employer-employee relationship, as it is understood in labor relations law, is not required in such instances. It is sufficient to establish that the person sought to be held liable is the registered owner of the motor vehicle causing damage in order that it may be held vicariously liable under the Civil Code provisions which makes an employer liable for the acts of its employee (here, the negligent driver of the registered vehicle).

Applying these principles, company A is primarily and directly liable to the motorcycle driver who may rely on the data contained in the registration certificate of the erring bus. However, under the foregoing scenario, company A may seek reimbursement from company B for damages arising from the negligence of the latter’s driver.

Overall, the inconvenience that may be caused to the registered owner is far outweighed by the benefit to the victims of reckless drivers and irresponsible motor vehicle owners involved in accidents. At the end of the day, this inconvenience can be avoided and actual liability can be ascribed to the actual erring party if the transfer of registration involving vehicles subject of a sale is completed.  Hence, it would be beneficial to all parties to the transaction if this is done immediately after a sale.

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