PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY v 1. WON PKS Shipping is a common carrier – YES.

PKS SHIPPING COMPANY PKS Shipping is a common carrier. The factual findings indicate that PKS Shipping has
G.R. No. 149038/ April 9, 2003 / VITUG, J./ Definition and test of common carrier concept engaged itself in the business of carrying goods for others, although for a limited
NATURE Petition for Review clientele, undertaking to carry such goods for a fee. The regularity of its activities in this
PETITIONERS Philippines American General Insurance Company area indicates more than just a casual activity on its part. Neither can the concept of a
RESPONDENTS PKS Shipping Company common carrier change merely because individual contracts are executed or entered into with
patrons of the carrier. Such restrictive interpretation would make it easy for a common carrier
SUMMARY. Philippines American General Insurance Company (PAGIC), as the insurer of to escape liability by the simple expedient of entering into those distinct agreements with
Davao Uninion Marketing Corportion (DUMC) filed for claim for reimbursement against clients.
PKS Shipping company for the sinking of 75,000 bags of cement that was under the care
of PKS. PKS was found by the lower court to be not a common carrier and was not 2. WON PKS Shipping has observed the proper diligence (ordinary, if a private carrier,
expected to observe stringent and extraordinary diligence required of common carriers. or extraordinary, if a common carrier) required of it given the circumstances– YES.
SC held that PKS is indeed a common carrier but is still exempted from liabilities as the The loss was due to a natural disaster or calamity thus PKS is exempted from liability of
loss was cause by a fortuitous event, and that nothing can be done to prevent it. loss. Article 1733 of the Civil Code requires common carriers to observe extraordinary
diligence in the vigilance over the goods they carry. In case of loss, destruction or deterioration
DOCTRINE. The concept of a common carrier does not change merely because individual of goods, common carriers are presumed to have been at fault or to have acted negligently,
contracts are executed or entered into with patrons of the carrier. and the burden of proving otherwise rests on them. The provisions of Article 1733,
notwithstanding, common carriers are exempt from liability for loss, destruction, or
FACTS. deterioration of the goods due to any of the following causes:
 Davao Union Marketing Corporation (DUMC) contracted the services of PKS Shipping
Company (PKS) for the shipment to Tacloban City of 75,000 bags of cement worth (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
P3.375.000 (2) Act of the public enemy in war, whether international or civil;
 DUMC insure the goods for its full value with Philippine American General Insurance (3) Act or omission of the shipper or owner of the goods;
Company (Philamgen) (4) The character of the goods or defects in the packing or in the containers; and
 The goods were loaded aboard the dumb barge Limar I belonging to PKS (5) Order or act of competent public authority.
 December 22, 1988 at around 9 pm: while Limar I was being towed by PKS’ tugboat MT Iron
Eagle, the barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga del The appellate court ruled, gathered from the testimonies and sworn marine protests of the
Sur, bringing down with it the entire cargo of 75,000 bags of cement, respective vessel masters of Limar I and MT Iron Eagle, that there was no way by which the
 DUMC filed a formal claim of insurance with Philamgen for the full amount of the insurance. barge’s or the tugboat’s crew could have prevented the sinking of Limar I. The vessel was
Philamgen promptly made payment; it them sought reimbursement from PKS of the sum suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and buffeted by
paid to DUMC but the shipping company refused to pay so Philamgen filed a suit against strong winds of 1.5 knots resulting in the entry of water into the barge’s hatches. The official
PKS Shipping. Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise
 RTC dismissed the complaint after finding that the total loss of the cargo could have been Load Line Certificate would attest to the seaworthiness of Limar I and should strengthen the
caused either by a fortuitous event, in which case the ship owner was not liable, or factual findings of the appellate court. The appellate court did not err in its judgment
through the negligence of the captain and crew of the vessel and that, under Article 587 absolving PKS Shipping from liability for the loss of the DUMC cargo.
of the Code of Commerce adopting the “Limited Liability Rule,” the ship owner could free
itself of liability by abandoning, as it apparently so did, the vessel with all her equipment DECISION.
and earned freightage. Petition Denied.
 CA affirmed in toto and ruled PKS is not a common carrier since the evidence to establish
that PKS Shipping was a common carrier at the time it undertook to transport the bags
of cement was wanting because the peculiar method of the shipping company’s carrying
goods for others was not generally held out as a business but as a casual occupation. It
concluded that PKS Shipping, not being a common carrier, was not expected to observe
the stringent extraordinary diligence required of common carriers in the care of goods. -
found that the loss of the goods was sufficiently established as having been due to
fortuitous event, negating any liability on the part of PKS Shipping to the shipper.

ISSUES & RATIO.