Philippine American General Insurance Company vs.

PKS Shipping Company

FACTS: Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping
Company (PKS Shipping) for the shipment of 75,000 bags of cement worth P3,375,000.00. DUMC insured
the goods for its full value with petitioner Philippine American General Insurance Company (Philamgen).
While the dumb barge was being towed by respondent's tugboat, the barge sank a couple of miles off
the coast bringing down with it the entire cargo of 75,000 bags of cement.

DUMC filed a claim with Philamgen for the full amount of the insurance. Philamgen promptly made
payment then sought reimbursement from PKS Shipping but the latter refused to pay. Philamgen filed a
suit against PKS Shipping with the RTC which was dismissed. Philamgen appealed with CA which affirmed
in toto the decision of the trial court.

ISSUES:

1) WON PKS Shipping is a private carrier or a common carrier.

2) WON PKS Shipping has observed the proper diligence (ordinary if private, extraordinary if common)
required of it given the circumstances.

RULING:

1) PKS Shipping is a common carrier.

Article 1732 of the Civil Code defines "common carriers" as "persons, corporations, firm or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public."

Much of the distinction between a "common or public carrier" and a "private or special carrier" lies in
the character of the business, such that if the undertaking is an isolated transaction, not part of the
business or occupation, and the carrier does not hold itself out to carry the goods for the general public
or to a limited clientele, although involving the carriage of goods for a fee, the person or corporation
providing such service could very well be just a private courier.

Here, the factual findings indicate that PKS Shipping has engaged itself in the business of carrying goods
for others, although for a limited clientele, undertaking to carry such goods for a fee. Neither can the
concept of a 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 to
escape liability by the simple expedient of entering into those distinct agreements with clients.

2) Yes. PKS Shipping has observed the proper diligence required of it given the circumstances.
Article 1733 of the Civil Code requires common carriers to observe extraordinary diligence in the
vigilance over the goods they carry. The provisions of Article 1733, notwithstanding, common carriers
are exempt from liability for loss, destruction, or deterioration of the goods due to any of the following
causes:

a. Flood, storm, earthquake, lightnings, or other natural disaster or calamity.

xxx

Here, the appellate court ruled that there was no way by which the barge's or tugboat's crew could have
prevent the sinking of the barge. The vessel was suddenly tossed by the waves of extraordinary height
and buffeted by strong winds.

Findings of fact of the CA generally conclude this court; none of the recognized exceptions from the rule
appearing to be clearly extant in this instance.

Hence, petition is DENIED.