CONSUELO DE PERALTA, PLAINTIFF AND APPELLEE, VS. WALTER MANGUSANG, ET AL., DEFENDANTS; TEOFILO COSTALES CROSS-DEFENDANT AND APPELLANT.

This is an appeal from a decision of the Court of First Instance of Baguio City. The following facts are not disputed.

Walter Mangusang was the holder of a certificate of public
convenience for the operation of a jeepney line in Baguio City. Without
the approval of the Public Service Commission, he sold his jeepney on
February 1, 1958 to Teofilo Costales. On March 3, 1958, the jeepney
crashed against a post on Session Road, as a result of which Consuelo
de Peralta, one of the passengers, suffered injuries which disfigured
her face.

De Peralta brought an action for damages for breach of contract of
carriage against Mangusang, Mrs. Teofilo Costales and the driver,
Bienvenido Soriano Mendoza. The case was filed in the Court of First
Instance of Baguio City.

At the start of the trial, however, the court dismissed the case
with respect to Mrs. Teofilo Costales and Bienvenido Soriano Mendoza on
the ground that, the case being for breach of a contract of carriage,
the action did not lie against the two. Thereafter, the court proceeded
with the trial of the case, found Mangusang liable for breach of
contract of carriage and accordingly ordered him to pay De Peralta the
sums of P300 for damages and P200 for attorney’s fees.

Mangusang did not appeal from the decision. Instead, he begged leave
to file a cross claim against Mrs. Teofilo Costales on the theory that
the latter, being the real owner of the jeepney in question, should
ultimately be held liable for damages to the plaintiff. The court
granted his request as well as his subsequent motion to amend the cross
claim so as to substitute Teofilo Costales for his wife. After trial,
the court rendered an “Amending Decision,” making Teofilo Costales
“subsidiarily liable to Mangusang for any payments the latter might
have to make to the Plaintiff,” it appearing that he was the actual
owner of the jeepney in question at the time of the accident.

Costales appeals from this decision. He contends that in an action
for breach of contract of carriage, the registered owner alone is
responsible.

The law (Sec. 20 [g], Public Service Act) really requires the
approval of the Public Service Commission in order that a franchise, or
any privileges pertaining thereto, may be sold or leased without
infringing the certificate issued to the grantee. The reason is
obvious. Since a franchise is personal in nature any transfer or lease
thereof should be submitted for approval of the Public Service
Commission, so that the latter may take proper safeguards to protect
the interest of the public. It follows that if the property covered by
the 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 Commission and to
the public for the consequences incident to the operation of the
vehicle, one of them being the collision under consideration. (Montoya
vs. Ignacio, 94 Phil., 182; 50 Off. Gaz. No. 1, 108; Vda. de Medina, et
al. vs. Cresencia, et al., 99 Phil., 506; 52 Off. Gaz. No. 10, 4606; Erezo vs. Jepte, et al., 102 Phil., 103; Tamayo vs. Aquino, 105 Phil, 949; 66.Off. Gaz. No. 36, 5617.)

This is exactly what the trial court did in dismissing the case
filed by De Peralta as far as Mrs. Teofilo Costales and Bienvenido
Soriano Mendoza are concerned. In fact, in its decision dated July 22,
1959, the court said in part:

“Defendant, placed on the stand, claims that he had
already sold the jeepney at the time of the accident to one Costales.
However, it is admitted that this sale was never approved by the Public
Service Commission so that Defendant, in whose name the certificate,
still exists, is liable to the public* * *.

But that is only as far as the public and the Public Service Commission are concerned. In Ereza vs. Jepte, supra, and Tamayo. vs.
Aquino, supra, this Court also upheld the right of the registered owner
to be indemnified in turn by the real or actual owner for any amount
that he may be required to pay as damage. Thus, in the Tamayo case, it
was held that—

“The question that noses, therefore, is how should
the holder of the certificate of public convenience Tumayo participate
with his transferee, operator Kayos, in damages recoverable by the
heirs of the deceased passenger, if their liability is not that of
joint tortfeasors in accordance with Article 2194 of the Civil Code.
The following considerations must be borne in mind in determining this
question. 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 for the reasons given in our decision in the
case of Erezo vs. Jente, supra, as above quoted. 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 the
transfer thereof having been approved by the Public Service Com
mission, 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.”

There is simply no merit in the claim that as the sale of the
jeepney had not yet been approved by the Motor Vehicles Office at the
time of the accident, it did not transfer ownership of the vehicle to
the buyer (Costales). Registration of motor vehicles is required not
because it is the operative act that transfers ownership in vehicles
(as it is in land registration cases), but because it is the means by
which to identify the owner, so that if any accident happens or nny
damage or injury is caused by the vehicle, responsibility for the Fame
can be fixed. (See Erezo. et al. vs. Jepte, supra.) It is never essential for the validity of the sale.

Neither is there merit in the contention that the cross claim should
have been filed before, and not after, judgment and that because it was
filed after judgment, Costales was deprived of the opportunity to cross
examine the witnesses for the plaintiff De Peralta. While Mangusang
should have filed his cross claim during the pendency of the action
before judgment or, at least, should have filed an independent civil
action against Costales, yet, as the trial court correctly observed,
the result would be the same. After all the Rules of Court should be
liberally construed to secure substantial justice to the parties. Anent
the point that because the cross claim was filed after judgment
Costales was deprived of his right to cross examine witnesses for the
plaintiff, suffice it to advert to the fact that his liability, as air
dy stated, is not based on culpa contractual but on his own
negligence as the agent of the registered owner. As agent, he is
responsible for whatever amount the registered owner may be adjudged to
pay, attorney’s fees including, by reason of the agent’s negligence. At
any rate, the records show that Costales was given his day in court.

Wherefore, finding no error in the appealed decision, the same is affirmed, without pronouncement as to costs.

Bengzon, C. J., Padilla, Bautista Angelo, Concepcion, Reyes, J. B. L., Paredes and Makalintal, JJ., concur.