Benedicto vs. IAC

The registered owner of a common carrier is liable for the loss of goods entrusted for transport, notwithstanding a prior sale of the vehicle, because the public has the right to rely on the certificate of registration and the carrier’s duty of extraordinary diligence embraces the carriage of goods as fully as the carriage of passengers.

Greenhills Wood Industries Company, Inc., a lumber manufacturer with a sawmill in Maddela, Quirino, bound itself to sell and deliver 100,000 board feet of sawn lumber to Blue Star Mahogany, Inc. in Valenzuela, Bulacan, with an initial delivery scheduled for 15 May 1980. To transport the first consignment, Greenhills’ resident manager engaged a cargo truck bearing Plate No. 225 GA TH, which was registered in the name of petitioner Ma. Luisa Benedicto, the proprietor of Macoven Trucking. The truck was driven by Virgilio Licuden. After the lumber was loaded and the truck departed, the shipment failed to reach the consignee. Greenhills sought to recover the value of the lost goods from Benedicto as the registered owner, while Benedicto claimed she had sold the truck to Benjamin Tee months earlier and therefore could not be held liable.

• The Shipment: Sometime in May 1980, Greenhills Wood Industries Company, Inc. (Greenhills) undertook to deliver 100,000 board feet of sawn lumber to Blue Star Mahogany, Inc. (Blue Star) in Valenzuela, Bulacan. For the initial delivery scheduled on 15 May 1980, Greenhills’ resident manager in Maddela, Dominador Cruz, contracted Virgilio Licuden, the driver of a cargo truck with Plate No. 225 GA TH, to transport the lumber. The truck was registered in the name of Ma. Luisa Benedicto, who operated Macoven Trucking.

• Loading and Documentation: On 15 May 1980, in the presence and with the consent of driver Licuden, Cruz supervised the loading of 7,690 board feet of sawn lumber with an invoice value of P16,918.00. Cruz issued two charge invoices (Nos. 3259 and 3260), which Licuden initialed. Cruz instructed Licuden to deliver the original invoices to the consignee upon arrival and to retain the duplicate copies to claim freightage from Greenhills’ Manila office.

• The Loss: The truck never arrived at Blue Star’s premises in Valenzuela. On 16 May 1980, Blue Star’s manager telephoned Greenhills’ president to report the non-delivery. Blue Star formally confirmed by letter dated 18 May 1980 that it had not received the lumber and, due to the delay, was constrained to look for other suppliers.

• Actions Taken: After confirming Blue Star’s loss and unsuccessfully attempting to persuade it to continue the contract, Greenhills filed Criminal Case No. 668 for estafa against driver Licuden on 25 June 1980. Greenhills also instituted Civil Case No. D-5206 against petitioner Benedicto in the RTC of Dagupan City to recover the value of the lost lumber plus damages.

• Petitioner’s Defense: Benedicto denied liability, asserting she was a stranger to the contract of carriage. She claimed she had sold the truck to Benjamin Tee on 28 February 1980 by a deed of sale. Although Tee had paid only P50,000.00 of the P68,000.00 purchase price, the truck had remained registered in Benedicto’s name solely to secure the balance. Benedicto maintained that Tee had been operating the truck from that date onward and that Licuden was Tee’s employee, not hers.

• Lower Courts’ Findings: The RTC held that Benedicto, as the registered owner, was liable because the public is entitled to rely on the certificate of registration. It treated Licuden as her employee and ordered her to pay P16,016.00 for the lost lumber, plus legal interest, P2,000.00 attorney’s fees, and costs. The Intermediate Appellate Court affirmed in toto.

• Scope of Registered Owner Doctrine: Petitioner argued that the doctrine making the registered owner of a common carrier vehicle liable for the consequences of its operation, despite a prior sale, applies exclusively to cases involving death or injury to passengers. She maintained that the rule should not be extended to the carriage of goods.

• Perfection of Contract of Carriage: Petitioner contended that no perfected contract of carriage existed because there was no proof that her consent or that of Benjamin Tee had been obtained, no proof that the driver Licuden was authorized to bind the registered owner, and no proof that the parties had agreed on the freightage to be paid.

• Scope of Registered Owner Doctrine: Private respondent Greenhills asserted that the registered owner liability doctrine applies equally to the carriage of goods. It argued that the public policy underlying the rule—the right of the public to rely on the certificate of registration—is no less compelling when goods rather than passengers are involved.

• Existence of Contract and Apparent Authority: Greenhills maintained that a perfected contract of carriage was shown by the loading of the goods with the driver’s consent, that the driver was clothed with at least apparent authority to bind the registered owner, and that the freight was determinable even if not fixed in advance, given the tariff schedules at the carrier’s office.

• Scope of Registered Owner Liability: Whether the doctrine holding the registered owner of a common carrier liable for the consequences of its operations, despite a prior sale of the vehicle, applies to the carriage of goods, or whether it is confined to cases of death or injury to passengers.

• Existence of a Contract of Carriage: Whether a perfected contract of carriage was established between the shipper and the registered owner, given the lack of express authorization of the driver and the absence of a fixed freight rate.

• Scope of Registered Owner Liability: The registered owner liability doctrine applies with equal force to the carriage of goods. The doctrine rests on the principle that the public has the right to assume that the registered owner is the actual or lawful owner of the vehicle, and it would be practically impossible for the public to enforce rights of action if required to go behind the certificate of registration. This policy rationale is not diminished where goods, rather than passengers, are transported. Allowing a common carrier to escape responsibility for goods by proving a secret sale would drastically attenuate the carrier’s duty of extraordinary diligence and invite collusion between the carrier and an insolvent transferee.

• Existence of a Contract of Carriage: A perfected contract of carriage was established. The driver Licuden was entrusted with possession and control of the freight truck by the registered owner and, under the circumstances, was clothed with at least implied authority to contract for the carriage of goods and to accept delivery of the lumber. The fact that the freight rate was not fixed before loading did not prevent the contract from arising, because the rate was determinable from the tariff schedules at petitioner’s main office. Moreover, Greenhills had previously contracted with the same driver and truck earlier in May 1980 without any challenge to Licuden’s authority, giving it no reason to doubt his representation. Once the loss of the goods was proven, a presumption of fault or negligence on the part of the carrier arose, and petitioner failed to overcome that presumption by proving extraordinary diligence or that the loss was due to a fortuitous event. Petitioner’s liability was thus fixed, without prejudice to her right to seek reimbursement from Benjamin Tee and the driver.

• Registered Owner Liability Doctrine — The registered owner of a common carrier vehicle is liable to the public for the consequences of its operation, even if the vehicle has been transferred to another person. The public has the right to rely on the certificate of registration, and the ostensible owner is not permitted to prove who the actual owner may be. The doctrine was applied to hold petitioner Benedicto liable for the lost cargo, as the shipper was not required to look beyond the vehicle’s registration.

• Extraordinary Diligence of Common Carriers — Under Article 1733 of the Civil Code, a common carrier is bound to exercise extraordinary diligence in the vigilance over goods transported by it, as well as in the safety of passengers. The carrier’s duty of extraordinary diligence is not limited to personal injury cases; it extends fully to the carriage of goods.

• Presumption of Negligence upon Loss of Goods — Article 1735, in conjunction with Article 1734 of the Civil Code, provides that the loss or destruction of goods entrusted to a common carrier raises a presumption of fault or negligence on the part of the carrier. The carrier may overcome the presumption only by proving that it exercised extraordinary diligence or that the loss was due to any of the exempting causes enumerated in Article 1734 (e.g., fortuitous event, act of the shipper, inherent defect of the goods). Here, the carrier failed to present such proof.

• Implied Authority of a Driver-Employee — A driver entrusted with possession and control of a common carrier vehicle is clothed with at least implied authority to enter into a contract of carriage on behalf of the registered owner and to accept delivery of goods for transport. The shipper need not prove express authorization when the driver has been placed in a position that reasonably suggests authority.

• “The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof.” — This passage crystallizes the registered owner liability doctrine that the Court applied to affirm Benedicto’s liability.

• “A common carrier, both from the nature of its business and for insistent reasons of public policy, is burdened by the law with the duty of exercising extraordinary diligence not only in ensuring the safety of passengers but also in caring for goods transported by it.” — The Court expressly rejected the argument that the extraordinary diligence duty is less stringent in the carriage of goods.

• “Clearly, to permit a common carrier to escape its responsibility for the passengers or goods transported by it by proving a prior sale of the vehicle or means of transportation to an alleged vendee would be to attenuate drastically the carrier’s duty of extraordinary diligence. It would also open wide the door to collusion between the carrier and the supposed vendee and to shifting liability from the carrier to one without financial capability to respond for the resulting damages.” — This passage explains the public policy rationale for not limiting the registered owner rule to passenger cases and for rejecting the defense of a secret sale.

• Perez v. Gutierrez, 53 SCRA 149 (1973); Tamayo v. Aquino, 105 Phil. 949 (1959); Erezo v. Jepte, 102 Phil. 106 (1957) — Cited as controlling precedents establishing that the registered owner of a common carrier vehicle is liable to the public for its operations, and that the registered owner may not escape liability by proving a transfer to another person. The Court applied the same principle to the loss of goods.

• De Peralta v. Mangusang, 11 SCRA 598 (1964); Jereos v. Court of Appeals, 117 SCRA 395 (1982) — Cited for the rule that loss or non-delivery of goods by a common carrier raises a presumption of negligence that the carrier must rebut with proof of extraordinary diligence.

• Mirasol v. Robert Dollar Co., 53 Phil. 124 (1929); Ynchausti Steamship Co. v. Dexter and Unson, 41 Phil. 289 (1920) — Cited to support the principle that the carrier’s liability does not prejudice its right to seek reimbursement from the actual wrongdoer or the person responsible for the loss.

• Articles 1733, 1734, and 1735, Civil Code of the Philippines — Article 1733 imposes upon common carriers the duty to exercise extraordinary diligence for the safety of passengers and for the preservation of goods transported. Article 1734 enumerates the exclusive causes that exempt a carrier from liability for loss, destruction, or deterioration of goods (e.g., fortuitous event, act of the shipper, inherent defect). Article 1735 establishes that in all cases other than those mentioned in Article 1734, the carrier is presumed to have been at fault or negligent if the goods are lost, destroyed, or deteriorated. The Court invoked these articles to hold that the loss of the sawn lumber raised a presumption of negligence which petitioner failed to rebut.

Fernan (Chairman), Gutierrez, Jr., and Cortes, JJ., concurred. Bidin, J., took no part.