CARMA (Car Registration and Other Liabilities)

By Obiter07

It seems simple enough. You buy a car firsthand. Over time, you get to use it and drive around the city. But then, a new model catches your eye and you think, what if I sell my old car and buy myself that new one?

That is perfectly fine. So you bring your old car to a used car dealer or put up an advertisement. A buyer comes along, you execute the deed of sale, get paid and say good-bye to the jalopy you used to love. You think the change of name in the registration is just a formality and you leave it to the buyer to take care of it.

Are you home free? No, not totally, because the buyer may not take the time to change the registration papers which remains in your name. And as a result, any ill thing that befalls that car might come back to haunt you, like some bad karma that won’t go away. Dings and dents that it may cause as it wends it way along the roads, including bodily harm or injury, may end up to be your responsibility. Who knows? It might be used as get-away car in a bank robbery, tagged in a kidnapping, …

Under the Insurance Code, a vehicle’s owner is defined as the “actual legal owner of the vehicle, in whose name such vehicle is registered with the Land Transportation Commission.”[1] And it is the owner who should secure motor vehicle liability insurance.[2]

Hence, it is therefore possible for the any complainant to insist upon collecting damages from you personally and not from the current de facto owner of the car. As held in BA FINANCE CORPORATION vs. COURT OF APPEALS, et al. [G.R. No. 98275. November 13, 1992.]:

“The Revised Motor Vehicles Law (Act No. 3992, as amended) provides that no vehicle may be used or operated upon any public highway unless the same is properly registered. It has been stated that the system of licensing and the requirement that each machine must carry a registration number, conspicuously displayed, is one of the precautions taken to reduce the danger of injury to pedestrians and other travelers from the careless management of automobiles, and to furnish a means of ascertaining the identity of persons violating the laws and ordinances, regulating the speed and operation of machines upon the highways (2 R. C. L. 1176). Not only are vehicles to be registered and that no motor vehicles are to be used or operated without being properly registered for the current year, but that dealers in motor vehicles shall furnish the Motor Vehicles Office a report showing the name and address of each purchaser of motor vehicle during the previous month and the manufacturer’s serial number and motor number. (Section 5[c], Act No. 3992, as amended.). “Registration is required not to make said registration the operative act by which ownership in vehicles is transferred, as in land registration cases, because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of the vehicle upon any public highway (section 5 [a], Act No. 3992, as amended). 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. xxx [Underscoring supplied]

Your only remedy then would be to file a third party complaint against the buyer, assuming you can still find him or her. But this shouldn’t even be concern for you if you had just taken the time to have the transfer formally registered.

Here’s another thing. The general belief is that when it comes to buying things second hand, this should not come with any warranty on the part of the seller. So you sell the car, leaving it to the buyer to inspect, so that he can take it or leave it, with its warts and all. And if it conks out later on, that is his own look-out.

Not so, says the Court of Appeals. Used car sellers are liable for hidden defects says the Court. This relates to a case involving the sale of a Pajero by importers of used cars. The vehicle broke down while in use by the buyer and its transmission had to be replaced. The buyer sued the importers for breach of the implied warranty against hidden defects. The importers argued that the since the vehicle is secondhand, there is no such warranty, that it even stated in the receipt that there is “no guarantee” on the vehicle. The Court of Appeals upheld the lower court’s decision that “there is an implied warranty in the sale of secondhand articles where the buyer makes known to the seller the particular purpose for which the articles are acquired and it appears that the buyer relies on the seller’s skill.” And that there was no showing that the buyer had waived this warranty from the seller.[3] The fact that the seller in that case were importers with some degree of expertise could have been a factor.

While this is still a Court of Appeals decision, any seller of a car is put on notice not to rely on the simple form deeds of sale that they normally use. But the decision does have basis in Articles 1561 to 1562 of the New Civil Code.[4] To be safe, it should be expressly stated in the deed of sale that the buyer waives any and all warranties, including for hidden defects. But do expect some clever buyer to argue that such a waiver is void.

Now that you’ve sold your car and bought a new one, maybe your thoughts are now on dispensing with your proletarian duty of driving yourself and getting someone to do it for you.

That is all well and good, just as long as your keep in mind that any mistake that your driver makes can be your own, even while you were asleep at the back. This just might help keep you awake.

Article 2180 of the New Civil Code holds employers liable “for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.” And that an employer can avoid liability only if he can prove that he observed the diligence of a good father of a family to prevent damage.”

This kind of due diligence required has been discussed in the case of LARRY ESTACION VS. NOE BERNARDO, ET AL., G.R. No. 144723, February 27, 2006:

“In any case, assuming arguendo that Venturina did submit his license and clearances when he applied with petitioner in January 1992, the latter still fails the test of due diligence in the selection of her bus driver. Case law teaches that for an employer to have exercised the diligence of a good father of a family, he should not be satisfied with the applicant’s mere possession of a professional driver’s license; he must also carefully examine the applicant for employment as to his qualifications, his experience and record of service. Petitioner failed to present convincing proof that she went to this extent of verifying Venturina’s qualifications, safety record, and driving history. The presumption juris tantum that there was negligence in the selection of her bus driver, thus, remains unrebutted.” [Underscoring supplied]

Anyone for a walk?

[1] Section 373 (d).

[2] Section 377.

[3] Frialde, Used car sellers liable for hidden defects, says CA, The Philippine Star, http://www.abs-cbnnews.com/storypage.aspx?StoryId=79932

[4] Warranty Against Hidden Defects of or Encumbrances Upon the Thing Sold
ARTICLE 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of his trade or profession, should have known them. (1484a)
ARTICLE 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are acquired, and it appears that the buyer relies on the seller’s skill or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose;
(2) Where the goods are brought by description from a seller who deals in goods of that description (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be of merchantable quality. (n)

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