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G.R. No. 122039 May 31, 2000 WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and
another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO appellant:
SALVA, respondents.
(1) P50,000.00 as actual and compensatory damages;
Page | 1
MENDOZA, J.:
(2) P50,000.00 as moral damages;
This is a petition for review on certiorari of the decision1 of the Court of Appeals, dated March 31, 1991,
reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding (3) P10,000.00 as attorney's fees; and
damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for breach of contract
of carriage. (4) P1,000.00 as expenses of litigation; and

The facts, as found by the Court of Appeals, are as follows: (5) to pay the costs.

At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college SO ORDERED.
freshman majoring in Physical Education at the Siliman University, took a passenger jeepney owned and
operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of Verena
was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of
was the proximate cause of the accident negates his liability and that to rule otherwise would be to make
the vehicle.
the common carrier an insurer of the safety of its passengers. He contends that the bumping of the jeepney
by the truck owned by Salva was a caso fortuito. Petitioner further assails the award of moral damages to
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was Sunga on the ground that it is not supported by evidence.
seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an
Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the
The petition has no merit.
jeepney. As a result, Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula
with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg circular casting, and
case wedging were done under sedation. Her confinement in the hospital lasted from August 23 to The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of
September 7, 1989. Her attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the
would remain on a cast for a period of three months and would have to ambulate in crutches during said principle of res judicata does not apply.
period.
Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's
carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage.
the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck. Thefirst, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source the
negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the
negligence in the performance of a contractual obligation.
The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of liability,
holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of
another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of
37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of
the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger
safely to his destination.2 In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sunga's
common carriers are presumed to have been at fault or to have acted negligently unless they prove that
cause of action was based on a contract of carriage, not quasi-delict, and that the common carrier failed to
they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision
exercise the diligence required under the Civil Code. The appellate court dismissed the third-party complaint
necessarily shifts to the common carrier the burden of proof.
against Salva and adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision reads:
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There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver Sec. 54. Obstruction of Traffic. — No person shall drive his motor vehicle in such a
Verena liable for the damage to petitioner's jeepney, should be binding on Sunga. It is immaterial that the manner as to obstruct or impede the passage of any vehicle, nor, while discharging or
proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. taking on passengers or loading or unloading freight, obstruct the free passage of other
The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach vehicles on the highway.
of contract. The doctrine is a device for imputing liability to a person where there is no relation between him
and another
Page | 2 party. In such a case, the obligation is created by law itself. But, where there is a pre-existing Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating capacity of
contractual relation between the parties, it is the parties themselves who create the obligation, and the the jeepney, a violation of §32(a) of the same law. It provides:
function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are
concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common
Exceeding registered capacity. — No person operating any motor vehicle shall allow
carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or
more passengers or more freight or cargo in his vehicle than its registered capacity.
injury to passengers. It provides:

The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the
Art. 1733. Common carriers, from the nature of their business and for reasons of public
other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of
policy, are bound to observe extraordinary diligence in the vigilance over the goods and
negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually
for the safety of the passengers transported by them, according to all the circumstances
negligent in transporting passengers.
of each case.

We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension seat"
Such extraordinary diligence in the vigilance over the goods is further expressed in
amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the
articles 1734, 1735, and 1746, Nos. 5, 6, and 7, while the extraordinary diligence for the
tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of
safety of the passengers is further set forth in articles 1755 and 1756.
drowning by boarding an overloaded ferry. This is also true of petitioner's contention that the jeepney being
bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care be foreseen, or which, though foreseen, was inevitable. 3 This requires that the following requirements be
and foresight can provide, using the utmost diligence of very cautious persons, with due present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or
regard for all the circumstances. unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal
manner, and (d) the debtor did not take part in causing the injury to the
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to creditor.4 Petitioner should have foreseen the danger of parking his jeepney with its body protruding two
have been at fault or to have acted negligently, unless they prove that they observed meters into the highway.
extraordinary diligence as prescribed by articles 1733 and 1755.
Finally, petitioner challenges the award of moral damages alleging that it is excessive and without basis in
In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it law. We find this contention well taken.
became the duty of petitioner to prove that he had to observe extraordinary diligence in the care of his
passengers. In awarding moral damages, the Court of Appeals stated:

Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using Plaintiff-appellant at the time of the accident was a first-year college student in that
the utmost diligence of very cautious persons, with due regard for all the circumstances" as required by Art. school year 1989-1990 at the Silliman University, majoring in Physical Education. Because
1755? We do not think so. Several factors militate against petitioner's contention. of the injury, she was not able to enroll in the second semester of that school year. She
testified that she had no more intention of continuing with her schooling, because she
First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed could not walk and decided not to pursue her degree, major in Physical Education
about two meters from the broad shoulders of the highway, and facing the middle of the highway in a "because of my leg which has a defect already."
diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land Transportation and Traffic
Code, which provides: Plaintiff-appellant likewise testified that even while she was under confinement, she
cried in pain because of her injured left foot. As a result of her injury, the Orthopedic
Surgeon also certified that she has "residual bowing of the fracture side." She likewise
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decided not to further pursue Physical Education as her major subject, because "my left The factual background of this case is as follows:
leg . . . has a defect already."
Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to Manila with
Those are her physical pains and moral sufferings, the inevitable bedfellows of the Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were
injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise.
Page | 3 moral damages in the sum of P50,000.00, which is fair, just and reasonable.
Upon reaching Manila Bay, while approaching Pier 18, one of the barges, "Coastwise 9", struck an unknown
As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole "two
contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. 5 As an exception, such inches wide and twenty-two inches long"1 As a consequence, the molasses at the cargo tanks were
damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in contaminated and rendered unfit for the use it was intended. This prompted the consignee, Pag-asa Sales,
Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a formal claim with
fraud or bad faith, as provided in Art. 2220.6 the insurer of its lost cargo, herein private respondent, Philippine General Insurance Company (PhilGen, for
short) and against the carrier, herein petitioner, Coastwise Lighterage. Coastwise Lighterage denied the
In this case, there is no legal basis for awarding moral damages since there was no factual finding by the claim and it was PhilGen which paid the consignee, Pag-asa Sales, Inc., the amount of P700,000.00,
appellate court that petitioner acted in bad faith in the performance of the contract of carriage. Sunga's representing the value of the damaged cargo of molasses.
contention that petitioner's admission in open court that the driver of the jeepney failed to assist her in
going to a nearby hospital cannot be construed as an admission of bad faith. The fact that it was the driver of In turn, PhilGen then filed an action against Coastwise Lighterage before the Regional Trial Court of Manila,
the Isuzu truck who took her to the hospital does not imply that petitioner was utterly indifferent to the seeking to recover the amount of P700,000.00 which it paid to Pag-asa Sales, Inc. for the latter's lost cargo.
plight of his injured passenger. If at all, it is merely implied recognition by Verena that he was the one at PhilGen now claims to be subrogated to all the contractual rights and claims which the consignee may have
fault for the accident. against the carrier, which is presumed to have violated the contract of carriage.

WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated The RTC awarded the amount prayed for by PhilGen. On Coastwise Lighterage's appeal to the Court of
September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is DELETED. Appeals, the award was affirmed.

SO ORDERED. Hence, this petition.

G.R. No. 114167 July 12, 1995 There are two main issues to be resolved herein. First, whether or not petitioner Coastwise Lighterage was
transformed into a private carrier, by virtue of the contract of affreightment which it entered into with the
COASTWISE LIGHTERAGE CORPORATION, petitioner, vs. COURT OF APPEALS and the PHILIPPINE GENERAL consignee, Pag-asa Sales, Inc. Corollarily, if it were in fact transformed into a private carrier, did it exercise
INSURANCE COMPANY, respondents. the ordinary diligence to which a private carrier is in turn bound? Second, whether or not the insurer was
subrogated into the rights of the consignee against the carrier, upon payment by the insurer of the value of
the consignee's goods lost while on board one of the carrier's vessels.
RESOLUTION

On the first issue, petitioner contends that the RTC and the Court of Appeals erred in finding that it was a
common carrier. It stresses the fact that it contracted with Pag-asa Sales, Inc. to transport the shipment of
molasses from Negros Oriental to Manila and refers to this contract as a "charter agreement". It then
FRANCISCO, R., J.: proceeds to cite the case of Home Insurance Company vs. American Steamship Agencies, Inc.2 wherein this
Court held: ". . . a common carrier undertaking to carry a special cargo or chartered to a special person only
This is a petition for review of a Decision rendered by the Court of Appeals, dated December 17, 1993, becomes a private carrier."
affirming Branch 35 of the Regional Trial Court, Manila in holding that herein petitioner is liable to pay herein
private respondent the amount of P700,000.00, plus legal interest thereon, another sum of P100,000.00 as Petitioner's reliance on the aforementioned case is misplaced. In its entirety, the conclusions of the court are
attorney's fees and the cost of the suit. as follows:
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Accordingly, the charter party contract is one of affreightment over the whole vessel, It follows then that the presumption of negligence that attaches to common carriers, once the goods it
rather than a demise. As such, the liability of the shipowner for acts or negligence of its transports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is
captain and crew, would remain in the absence of stipulation. 3 overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case.

The distinction between the two kinds of charter parties (i.e. bareboat or demise and contract of The records show that the damage to the barge which carried the cargo of molasses was caused by its hitting
Page | 4 is more clearly set out in the case of Puromines, Inc. vs. Court of Appeals,4 wherein we ruled:
affreightment) an unknown sunken object as it was heading for Pier 18. The object turned out to be a submerged derelict
vessel. Petitioner contends that this navigational hazard was the efficient cause of the accident. Further it
Under the demise or bareboat charter of the vessel, the charterer will generally be asserts that the fact that the Philippine Coastguard "has not exerted any effort to prepare a chart to indicate
regarded as the owner for the voyage or service stipulated. The charterer mans the the location of sunken derelicts within Manila North Harbor to avoid navigational accidents" 6 effectively
vessel with his own people and becomes the owner  pro hac vice, subject to liability to contributed to the happening of this mishap. Thus, being unaware of the hidden danger that lies in its path,
others for damages caused by negligence. To create a demise, the owner of a vessel it became impossible for the petitioner to avoid the same. Nothing could have prevented the event, making
must completely and exclusively relinquish possession, command and navigation thereof it beyond the pale of even the exercise of extraordinary diligence.
to the charterer, anything short of such a complete transfer is a contract of
affreightment (time or voyage charter party) or not a charter party at all. However, petitioner's assertion is belied by the evidence on record where it appeared that far from having
rendered service with the greatest skill and utmost foresight, and being free from fault, the carrier was
On the other hand a contract of affreightment is one in which the owner of the vessel culpably remiss in the observance of its duties.
leases part or all of its space to haul goods for others. It is a contract for special service to
be rendered by the owner of the vessel and under such contract the general owner Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. The Code of
retains the possession, command and navigation of the ship, the charterer or freighter Commerce, which subsidiarily governs common carriers (which are primarily governed by the provisions of
merely having use of the space in the vessel in return for his payment of the charter hire. the Civil Code) provides:
....
Art. 609. — Captains, masters, or patrons of vessels must be Filipinos, have legal capacity
. . . . An owner who retains possession of the ship though the hold is the property of the to contract in accordance with this code, and prove the skill capacity and qualifications
charterer, remains liable as carrier and must answer for any breach of duty as to the necessary to command and direct the vessel, as established by marine and navigation
care, loading and unloading of the cargo. . . . laws, ordinances or regulations, and must not be disqualified according to the same for
the discharge of the duties of the position. . . .
Although a charter party may transform a common carrier into a private one, the same however is not true
in a contract of affreightment on account of the aforementioned distinctions between the two. Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this
rule. It cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational
Petitioner admits that the contract it entered into with the consignee was one of affreightment. 5 We agree. skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also
Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost
but the possession, command and navigation of the vessels remained with petitioner Coastwise Lighterage. familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron
been licensed, he could be presumed to have both the skill and the knowledge that would have prevented
the vessel's hitting the sunken derelict ship that lay on their way to Pier 18.
Pursuant therefore to the ruling in the aforecited Puromines case, Coastwise Lighterage, by the contract of
affreightment, was not converted into a private carrier, but remained a common carrier and was still liable
as such. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the
presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of
extraordinary diligence.
The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good
order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order
makes for aprima facie case against the carrier. On the issue of subrogation, which petitioner contends as inapplicable in this case, we once more rule
against the petitioner. We have already found petitioner liable for breach of the contract of carriage it
entered into with Pag-asa Sales, Inc. However, for the damage sustained by the loss of the cargo which
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petitioner-carrier was transporting, it was not the carrier which paid the value thereof to Pag-asa Sales, Inc.
but the latter's insurer, herein private respondent PhilGen.

Article 2207 of the Civil Code is explicit on this point:

Page | 5 Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from
the insurance company for the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who violated the contract. . . .

This legal provision containing the equitable principle of subrogation has been applied in a long line of cases
including Compania Maritima v. Insurance Company of North America;7 Fireman's Fund Insurance Company
v. Jamilla & Company, Inc.,8 and Pan Malayan Insurance Corporation v. Court of Appeals, 9 wherein this Court
explained:

Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If
the insured property is destroyed or damaged through the fault or negligence of a party
other than the assured, then the insurer, upon payment to the assured will be
subrogated to the rights of the assured to recover from the wrongdoer to the extent that
the insurer has been obligated to pay. Payment by the insurer to the assured operated as
an equitable assignment to the former of all remedies which the latter may have against
the third party whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of, any privity of contract or
upon written assignment of claim. It accrues simply upon payment of the insurance claim
by the insurer.

Undoubtedly, upon payment by respondent insurer PhilGen of the amount of P700,000.00 to Pag-asa Sales,
Inc., the consignee of the cargo of molasses totally damaged while being transported by petitioner Coastwise
Lighterage, the former was subrogated into all the rights which Pag-asa Sales, Inc. may have had against the
carrier, herein petitioner Coastwise Lighterage.

WHEREFORE, premises considered, this petition is DENIED and the appealed decision affirming the order of
Branch 35 of the Regional Trial Court of Manila for petitioner Coastwise Lighterage to pay respondent
Philippine General Insurance Company the "principal amount of P700,000.00 plus interest thereon at the
legal rate computed from March 29, 1989, the date the complaint was filed until fully paid and another sum
of P100,000.00 as attorney's fees and costs" 10 is likewise hereby AFFIRMED

SO ORDERED.