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Equitable Leasing Corp vs.

Suyom, Enena, Tamayo & Oledan


A Fuso Road tractor driven by Tutor rammed into the house cum of Tamayo which resulted in
the death of Tamayo’s son and Oledan’s daughter. Failure to claim from a criminal case
finding Tutor guilty of reckless imprudence, respondents filed a civil case based on quasi delict
against Equitable Leasing Corp, the registered owner of the tractor, among others. Equitable
contends that it should not be held liable for such damages which arose from the negligence
of the driver Fuso Road. That such tractor was already sold to the owner of Fuso Road at the
time of the accident. Thus, not having employed driver Tutor, it could not have controlled or
supervised him.

Issue: WON Equitable should be held liable for damages in an action based on quasi delict for
the negligent acts of a driver who was not its employee.

Held: Yes, Equitable should be held liable because it was the registered owner at the time of
the accident.

The Court has consistently ruled that, regardless of sales made of a motor vehicle, the
registered owner is the lawful operator insofar as the public and third persons are concerned;
consequently, it is directly and primarily responsible for the consequences of its operation. In
contemplation of law, the owner/operator of record is the employer of the driver, the actual
operator and employer being considered as merely its agent. The same principle applies even
if the registered owner of any vehicle does not use it for public service.


The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or
injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the
registered owner.

BA Finance Corp vs. CA G.R. No. 98275 November 13, 1992


Amare, the driver of an Isuzu truck was involved in an accident which caused the death of
three persons. Amare was found guilty beyond reasonable doubt of reckless imprudence. BA
Finance was found liable for damages since the truck was registered in its name. BA Finance
contends that it should not be held liable since it was not Amare’s employer at the time of the
accident. It also contends that the Isuzu truck was in the possession of Rock Component Phil,
by virtue of a lease agreement. Hence, BA Finance wants to prove who the actual/real owner
is at the time of the accident, and in accordance with such proof, evade liability and lay the
same on the person actually owning the vehicle.


1 WON BA Finance should be held liable.

2 WON BA Finance can escape liability by proving the actual/real owner of the truck.


1 Yes, BA Finance is liable.

The registered owner of a certificate of public convenience is liable to the public for the
injuries or damages suffered by passengers or third persons caused by the operation of said
vehicle, even though the same had been transferred to a third person. Under the same
principle the registered owner of any vehicle, even if not used for a public service, should
primarily be responsible to the public or to the third persons for injuries caused the latter while
the vehicle is being driven on the highways or streets.
2 No, the law does not allow him. The law, with its aim and policy in mind, does not relieve
him directly of the responsibility that the law fixes and places upon him as an incident or
consequence of registration. This may appear harsh but nevertheless, a registered owner who
has already sold or transferred a vehicle has the recourse to a third-party complaint, in the
same action brought against him to recover for the damage or injury done, against the vendee
or transferee of the vehicle.

While the registered owner is primarily responsible for the damage caused, 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.

Duavit vs. CA, Sarmiento & Catuar G.R. No. 82318 May 18, 1989

Private respondents were on board a jeep when they met an accident with another jeep driven
by Sabiniano. This accident caused injuries to private respondents, thus they filed a case for
damages against driver Salbiniano and owner of the jeep Duavit. Duavit admits ownership of
the jeep but contends that he should not be held liable since Salbiniano is not his employee
and that the jeep was taken by Salbiniano without his (Duavit) consent.

Issue: Whether or not the owner of a private vehicle which figured in an accident can be held
liable as an employer when the said vehicle was neither driven by an employee of the owner
nor taken with his consent.

Held: No, an owner of a vehicle cannot be held liable for an accident involving the said vehicle
if the same was driven without his consent or knowledge and by a person not employed by

To hold the petitioner liable for the accident caused by the negligence of Sabiniano who was
neither his driver nor employee would be absurd as it would be like holding liable the owner of
a stolen vehicle for an accident caused by the person who stole such vehicle.

Lim & Gunnaban vs. CA & Gonzales


Gonzales purchased an Isuzu passenger jeepney from Vallarta. Vallarta remained as the
holder of a certificate of public convenience and the registered owner of the jeepney.
Subsequently, the jeepney collided with a ten-wheeler truck owned by Lim, driven by
Gunnaban which resulted in the death of 1 passenger and injuries to all others. Failure to
arrive to a settlement with Lim for the repair of the jeepney, Gonzales brought an action for
damages against Lim & Gunnaban. Lim denied liability asserting that Vallarte, and not
Gonzales, is the real party in interest being the registered owner of the jeepney. He further
asserts that an operator of the vehicle continues to be its operator as he remains the operator
of record; and that to recognize an operator under the kabit system as the real party in
interest and to countenance his claim for damages is utterly subversive of public policy.

Issue: WON Gonzales, an operator under the kabit system (considering that he is not the
registered owner of the jeepney), may sue for damages against Lim. Or, WON Gonzales is a
real party in interest.

Held: Yes, Gonzales may sue.

The evil sought to be prevented in enjoining the kabit system* does not exist.

1 Neither of the parties to the pernicious kabit system is being held liable for damages.

2 The case arose from the negligence of another vehicle in using the public road to whom no
representation, or misrepresentation, as regards the ownership and operation of the
passenger jeepney was made and to whom no such representation, or misrepresentation, was
necessary. Thus it cannot be said that Gonzales and the registered owner of the jeepney were
in 3stoppels for leading the public to believe that the jeepney belonged to the registered

3 The riding public was not bothered nor inconvenienced at the very least by the illegal
arrangement. On the contrary, it was private respondent himself who had been wronged and
was seeking compensation for the damage done to him. Certainly, it would be the height of
inequity to deny him his right.

Thus, it is evident that private respondent has the right to proceed against petitioners for the
damage caused on his passenger jeepney as well as on his business.


The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows
other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the
earnings. Although the parties to such an agreement are not outrightly penalized by law, thekabit system is invariably
recognized as being contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code.

It would seem then that the thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to
identify the person upon whom responsibility may be fixed in case of an accident with the end view of protecting the
riding public. The policy therefore loses its force if the public at large is not deceived, much less involved.

Baliwag Transit Incs (BTI) vs CA & Martinez G.R. No. L-57493 January 7, 1987


Martinez, claiming to be an employee of two bus lines operating under different grants of
franchise but were issued only one ID Number: “Baliwag Transit” owned and operated by the
late Tuazon and “Baliwag Transit Inc” (BTI) owned by de Tengco, (Martinez) filed a petition
with the Social Security Commission to compel BTI to remit his premium contributions to SSS.
BTI denied ever employing Martinez, and alleges that he was in fact employed by Tuason who
operated a separate and distinct bus line from BTI. The Social Security Commission granted
Martinez’s petition. On appeal, the CA reversed the decision of the commission, finding that
Tuason was operating under the kabit system; that while Tuason was the owner and operator,
his buses were not registered with the Public Service Commission in his own name; and thus
ordered BTI to remit Martinez’ premiums to SSS.

Issue: WON the issuance by SSS of one ID Number to the two bus lines necessarily indicates
that one of them is operating under the kabit system.

Held: No.

The "Kabit System" has been defined by the Supreme Court as an arrangement "whereby a
person who has been granted a certificate of convenience allows another person who owns
motor vehicles to operate under such franchise for a fee."

The determining factor, therefore, is the possession of a franchise to operate which negates
the existence of the "Kabit System" and not the issuance of one SSS ID Number for both bus
lines from which the existence of said system was inferred.

Thus, it is evident that both bus lines operated under their own franchises but opted to retain
the firm name "Baliwag Transit" with slight modification, by the inclusion of the word "Inc." in
the case of herein petitioner, obviously to take advantage of the goodwill such firm name
enjoys with the riding public. Conversely, the conclusion of the Court of Appeals that the late
Pascual Tuazon, during the time material to this case operated his buses under the "Kabit
System" on the ground that while he was actually the owner and operator, his buses were not
registered with the Public Service Commission (now the Bureau of Land Transportation) in his
own name, is not supported by the records.
Philtranco & Manilhig vs. CA & Heirs of Acuesta G.R. No. 120553 June 17, 1997

Acuesta was riding his easy rider bicycle. One of the buses of Philtranco driven by Manilhig, on
the other hand, was being pushed by some persons in order to start its engine. Subsequently,
the engine started which occurred at the time when Acuesta was directly in front of the bus.
Acuesta was run over by the bus. Trial court rendered a decision ordering Philtranco &
Manilhig to be jointly and severally liable to the Heirs of Acuesta. CA affirmed, holding that
Philtranco has a solidary liability with Manilhig under Art 2194 of the Civil Code.

Issue: WON Philtranco’s liability is solidary (jointly & severally) with Manilhig. Or, WON Art
2194 is applicable.

Held: Yes.

It had been consistently held that the liability of the registered owner of a public service
vehicle, like petitioner Philtranco, for damages arising from the tortious acts of the driver
is primary, direct, and joint and several orsolidary with the driver. As to solidarity, Article
2194 expressly provides:

Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is

Since the employer's liability is primary, direct and solidary, its only recourse if the judgment
for damages is satisfied by it is to recover what it has paid from its employee who committed
the fault or negligence which gave rise to the action based on quasi-delict. Article 2181 of the
Civil Code provides:

Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover
from the latter what he has paid or delivered in satisfaction of the claim.

Tamayo vs. Aquino et al & Rayos G.R. Nos. L-12634 and L-12720 May 29, 1959


Epifania Gonzales (wife of Aquino) boarded a truck owned by Tamayo, holder of a certificate of
public convenience to operate. Allegedly, while Epifania was making a trip aboard the truck, it
bumped against a culvert on the side of the road, causing her death. Aquino et al filed an
action for damages against Tamayo. Tamayo answered alleging that the truck is owned by
Rayos, so he filed a 3rd party complaint against him (Rayos). The CFI ruled that Tamayo is the
registered owner, under a public convenience certificate but such truck was sold to Rayos one
month after the accident, but he (Tamayo) did not inform the Public Service Commission of
the sale. CFI held Tamayo and Rayos jointly and severally liable to Aquino. CA affirmed,
holding that, both the registered owner (Tamayo) and the actual owner and operator (Rayos)
should be considered as joint tortfeasors and should be made liable in accordance with Article
2194 of the Civil Code (solidary).

Issue: WON Art 2194 (solidary liability) is applicable; and, if NOT, how should Tamayo (holder
of the cert. of public convenience) participate with Rayos (transferee/operator) in the damages

Held: No, Art 2194 is not applicable.

The action instituted in this case is one for breach of contract, for failure of the defendant to
carry safety the deceased for her destination. The liability for which he is made responsible,
i.e., for the death of the passenger, may not be considered as arising from a quasi-delict. As
the registered owner Tamayo and his transferee Rayos may not be held guilty of tort or a
quasi-delict; their responsibility is NOT SOLIDARY.

As Tamayo is the registered owner of the truck, his responsibility to the public or to any
passenger riding in the vehicle or truck must be direct. If the policy of the law is to be
enforced and carried out, the registered owner should not be allowed to prove that a third
person or another has become the owner, so that he may thereby be relieved of the
responsibility to the injured. But as the transferee, who operated the vehicle when the
passenger died, is the one directly responsible for the accident and death he should in turn be
made responsible to the registered owner for what the latter may have been adjudged to pay.
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.