FGU INSURANCE CORPORATION, petitioner, vs.

deliver have been lost or damaged while in its

G.P. SARMIENTO TRUCKING
CORPORATION and LAMBERT M. EROLES,
respondents. (2002)
FACTS:
1. G.P. Sarmiento Trucking Corporation (GPS)
undertook to deliver on 18 June 1994 thirty (30)
units of Condura S.D. white refrigerators aboard
one of its Isuzu truck, driven by Lambert Eroles,
from the plant site of Concepcion Industries,
Inc. in Alabang, Metro Manila, to the Central
Luzon Appliances in Dagupan City. The truck
collided with an unidentified truck, causing it to
fall into a deep canal, resulting in damage to the
cargoes.
2. FGU Insurance Corporation (FGU), an insurer
of the shipment, paid to Concepcion Industries,
Inc., the value of the covered cargoes in the
sum of P204,450.00. FGU, sought
reimbursement of the amount it had paid to
Concepcion from GPS.
custody. In such a situation, a default on, or
failure of compliance with, the obligation in this
case, the delivery of the goods in its custody to
the place of destination - gives rise to a
presumption of lack of care and corresponding
liability on the part of the contractual obligor the
burden being on him to establish otherwise.
GPS has failed to do so.
4. Respondent driver, on the other hand, without
concrete proof of his negligence or fault, may
not himself be ordered to pay petitioner. The
driver, not being a party to the contract of
carriage between petitioners principal and
defendant, may not be held liable under the
agreement. A contract can only bind the parties
who have entered into it or their successors
who have assumed their personality or their
juridical position.

3. Since the trucking company failed to heed the

claim, FGU filed a complaint for damages and
breach of contract of carriage against GPS and
its driver Lambert Eroles.

4. SARMIENTO: GPS was the exclusive hauler

only of Concepcion Industries, Inc., since 1988,
and it was not so engaged in business as a
common carrier. They claimed that the cause of
damage was purely accidental.

ISSUE: WON GPS is a common carrier

RULING: NO
1. GPS, being an exclusive contractor and hauler
of Concepcion Industries, Inc., rendering or
offering its services to no other individual or
entity, cannot be considered a common carrier.

2. Common carriers are persons, corporations,

firms or associations engaged in the business
of carrying or transporting passengers or goods
or both, by land, water, or air, for hire or
compensation, offering their services to the
public,i whether to the public in general or to a
limited clientele in particular, but never on an
exclusive basis.ii The true test of a common
carrier is the carriage of passengers or
goods, providing space for those who opt to
avail themselves of its transportation
service for a fee.iii.

3. GPS recognizes the existence of a contract of

carriage between it and petitioners assured,
and admits that the cargoes it has assumed to
i

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner,

vs.
PKS SHIPPING COMPANY, respondent. (2003)

FACTS:
1. Davao Union Marketing Corporation (DUMC) contracted the services of PKS Shipping Company (PKS
Shipping) for the shipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth
Three Million Three Hundred Seventy-Five Thousand Pesos (P3,375,000.00). DUMC insured the goods
for its full value with petitioner Philippine American General Insurance Company (Philamgen). The goods
were loaded aboard the dumb barge Limar I belonging to PKS Shipping. On the evening of 22
December 1988, about nine o’clock, while Limar I was being towed by respondent’s tugboat, MT Iron
Eagle, the barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga del Sur,
bringing down with it the entire cargo of 75,000 bags of cement.

2. DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly
made payment; it then sought reimbursement from PKS Shipping of the sum paid to DUMC but the
shipping company refused to pay, prompting Philamgen to file suit against PKS Shipping with the Makati
RTC.

3. RTC: dismissed the complaint after finding that the total loss of the cargo could have been caused either
by a fortuitous event, in which case the ship owner was not liable, or through the negligence of the
captain and crew of the vessel and that, under Article 587 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 and earned freightage.

4. CA: affirmed the decision of the trial court. Ruled that 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 then 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. The appellate court, moreover, 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.

5. Philamgen: CA has committed a patent error in ruling that PKS Shipping is not a common carrier and
that it is not liable for the loss of the subject cargo. The fact that respondent has a limited clientele,
petitioner argues, does not militate against respondent’s being a common carrier and that the only way
by which such carrier can be held exempt for the loss of the cargo would be if the loss were caused by
natural disaster or calamity. Petitioner avers that typhoon "APIANG" has not entered the Philippine area
of responsibility and that, even if it did, respondent would not be exempt from liability because its
employees, particularly the tugmaster, have failed to exercise due diligence to prevent or minimize the
loss.

ISSUE: WON PKS is a common carrier

RULING: YES

1. 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. The regularity of its activities in this area indicates
more than just a casual activity on its part. 6 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. The prevailing doctrine on the question is that enunciated in the leading case of De Guzman vs. Court of
Appeals.2 Applying Article 1732 of the Code, in conjunction with Section 13(b) of the Public Service Act,
this Court has held:
 3. "Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as
`a sideline’). Article 1732 also carefully avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the `general public,’ i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general population.

4. 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 a 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, 3 the person or corporation
providing such service could very well be just a private carrier. A typical case is that of a charter party
which includes both the vessel and its crew, such as in a bareboat or demise, where the charterer
obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages 4 and
gets the control of the vessel and its crew.

ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, vs. COURT OF APPEALS and PRUDENTIAL
GUARANTEE AND ASSURANCE, INC., respondents. (2003)

FACTS:
1. On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at US$423,192.35
was shipped by Marubeni American Corporation of Portland, Oregon on board the vessel M/V NEO
CYMBIDIUM V-26 for delivery to the consignee, General Milling Corporation in Manila, evidenced by
Bill of Lading No. PTD/Man-4. The shipment was insured by the private respondent Prudential
Guarantee and Assurance, Inc. against loss or damage for P14,621,771.75 under Marine Cargo Risk
Note RN 11859/90.

2. On July 25, 1990, the carrying vessel arrived in Manila and the cargo was transferred to the custody of
the petitioner Asia Lighterage and Shipping, Inc. The petitioner was contracted by the consignee as
carrier to deliver the cargo to consignee's warehouse at Bo. Ugong, Pasig City.

3. On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III, evidenced by
Lighterage Receipt No. 0364 for delivery to consignee. The cargo did not reach its destination.

4. It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an
incoming typhoon.

5. The petitioner filed a Marine Protest. Consignee sent a claim letter to the petitioner, and another letter
dated September 18, 1990 to the private respondent for the value of the lost cargo.

6. Respondent indemnified the consignee in the amount of P4,104,654.22. Thereafter, as subrogee, it

sought recovery of said amount from the petitioner, but to no avail.

7. Respondent filed a complaint against the petitioner for recovery of the amount of indemnity, attorney's
fees and cost of suit.

8. RTC: in favor of respondent. CA affirmed

9. Asia Lighterage: it is not a common carrier but a private carrier. Allegedly, it has no fixed and publicly
known route, maintains no terminals, and issues no tickets. It points out that it is not obliged to carry
indiscriminately for any person. It is not bound to carry goods unless it consents. In short, it does not
hold out its services to the general public.

ISSUE: WON Asia Lighterage is a common carrier

 RULING: YES

1. Article 1732 of the Civil Code defines common carriers as persons, corporations, firms 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.

2. In De Guzman vs. Court of Appeals, we held that the definition of common carriers in Article 1732 of
the Civil Code makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity. We also did not
distinguish between a person or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or unscheduled basis. Further, we ruled
that Article 1732 does not distinguish between a carrier offering its services to the general public, and
one who offers services or solicits business only from a narrow segment of the general population.

3. APPLICATION TO THE CASE AT BAR:

a. principal business of the petitioner is that of lighterage and drayage and it offers its barges
to the public for carrying or transporting goods by water for compensation. Petitioner is
clearly a common carrier. In De Guzman, supra, we considered private respondent Ernesto
Cendaa to be a common carrier even if his principal occupation was not the carriage of
goods for others, but that of buying used bottles and scrap metal in Pangasinan and selling
these items in Manila.

b. Petitioner is a common carrier whether its carrying of goods is done on an irregular rather
than scheduled manner, and with an only limited clientele. A common carrier need not have
fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets.

c. Petitioner fits the test of a common carrier as laid down in Bascos vs. Court of Appeals.
The test to determine a common carrier is whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted. In the case at bar,
the petitioner admitted that it is engaged in the business of shipping and lighterage, offering
its barges to the public, despite its limited clientele for carrying or transporting goods by
water for compensation.

ii

iii