Philippine American General Insurance Company v.

PKS Shipping Company

G.R. No. 149038
April 9, 2003

Vitug, J.,

FACTS:
Davao Union Marketing Corporation [DUMC] contracted the services of
respondent PKS Shipping for the shipment of 75, 000 bags of cement to Tacloban City and
insured the same with Philippine American General Insurance Company. [Philamgen]

The goods were loaded to Limar I and towed by the tugboat MT Iron Eagle, both of
which are owned by PKS Shipping. Later on, the barge sank at the coast of Dumagsa Point
in Zamboanga del Sur due to an alleged typhoon, so DUMC filed a claim with Philamgen.
After paying DUMC it then sought for reimbursement from PKS Shipping, but was refused,
prompting Philamgen to file an action before the RTC of Makati.

The RTC dismissed the complaint after finding that the loss was due to a fortuitous
event and the ship owner freed itself from liability of potential negligence of the crew by
abandoning the vessel with all her equipment and earned freightage. CA affirmed the
decision and held that PKS Shipping was not a common carrier at the time because peculiar
method of the shipping company’s carrying goods for others was not generally held out as a
business but as a casual occupation

Philamgen appealed before the SC contending that PKS is a common carrier despite
a limited clientele, and there was no fortuitous event because the typhoon APIANG has
entered the Philippine Area of responsibility yet at that time. PKS argues that petitioner
cannot raise factual issues before the high court. [In answer, the court held, it can entertain the
petition because the factual issues are intertwined with the law]

ISSUE: 1. WON PKS Shipping is a common carrier.

2. WON PKS Shipping is liable.

HELD:
Yes. Contrary to the conclusion made by the appellate court, its 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. The regularity of
its activities in this area indicates more than just a casual activity on its part. Neither can the
concept of a common carrier change merely because individual contracts are executed or
entered into with patrons of the carrier.

However, PKS Shipping is not liable under Article 1733 of the NCC because of a
fortuitous event. [storm] there was no way by which the barges or the tugboats crew could
have prevented the sinking of Limar I. The vessel was suddenly tossed by waves of
extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5 knots
resulting in the entry of water into the barges hatches, notwithstanding the fact that the ships
were seaworthy based on the Certificate of Inspection of the coastguard.
Case Notes: [Dispensable ra ni]

How is common carrier defined?

Article 1732. 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 compensation, offering their services to the public.

Can a carrier be considered a common carrier if carriage is not its principal business
activity?

The law 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. We think that Article 1732 deliberately refrained
from making such distinctions. [De Guzman v. CA]

How to distinguish a private carrier from a common carrier?

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, the person or corporation providing such service could very well be just a
private carrier.

Can leasing the ship or chartering it convert its nature from a common carrier to a
private carrier?

It depends. A charter of a common carrier can only converted into a private carrier if it is a
bareboat or demise charter, 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 and gets the control of the vessel
and its crew