FIRST DIVISION

[G.R. No. 149038. April 9, 2003.]

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY , petitioner,

vs . PKS SHIPPING COMPANY , respondent.

Gerard M. Linsangan for petitioner.

Arthur D. Lim for respondent.

SYNOPSIS

Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS
shipping company (PKS) to transport its 75,000 bags of cement. DUMC insured the full
amount of the goods with the petitioner insurance company (Philamgen). Ironically, the
barge sank bringing down the entire cargo of 75,000 bags of cement. DUMC filed a formal
claim for the entire amount of insurance, to which Philamgen promptly paid. Philamgen
then sought a reimbursement of the amount it paid to DUMC but the PKS refused to pay,
which prompted Philamgen to file a suit against PKS. The trial court, finding the cause of
the loss to be through fortuitous event, dismissed the complaint filed. Philamgen
interposed an appeal to the Court of Appeals which affirmed in toto the decision of the
trial court. In this appeal before the Supreme Court, Philamgen contended that the
appellate court committed patent error in ruling that PKS is not a common carrier and it is
not liable for the loss of the subject cargo.
According to the Supreme Court, the issue of whether a carrier is private or common
carrier on the basis of facts found by the trial court or the appellate court can be a valid
and reviewable question of law. Contrary to the conclusion made by the appellate court, its
factual findings indicated that PKS engaged itself in the business of carrying goods for
others, although for a limited clientele, undertaking to carry such goods for a fee. Hence,
the Court found PKS to be a common carrier. However, the Court also found that PKS
exercised the proper diligence demanded of a common carrier. The factual findings of the
appellate court were strengthened by the Certificate of Inspection of the barge issued by
the Philippine Coastguard and the Coastwise Load Line Certificate, which attested to the
seaworthiness of the vessel involved in this case. Hence, the Court found no error in the
judgment made by the appellate court in absolving PKS from liability for the loss of the
DUMC cargo.

SYLLABUS

1. CIVIL LAW; TRANSPORTATION; COMMON CARRIERS; DEFINED AND CONSTRUED. —

The Civil Code defines "common carriers" in the following terms: "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." Complementary to the codal definition
is Section 13, paragraph (b), of the Public Service Act; it defines "public service" to be — ". .
. every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether permanent,
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 occasional or accidental, and done for general business purposes, any common carrier,
railroad, street railway, subway motor vehicle, either for freight or passenger, or both, with
or without fixed route and whatever may be its classification, freight or carrier service of
any class, express service, steamboat, or steamship, or steamship line, pontines, ferries
and water craft, engaged in the transportation of passengers or freight or both, shipyard,
marine repair shop, wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power petroleum, sewerage system,
wire or wireless communication systems, wire or wireless broadcasting stations and other
similar public services. . . . . "The prevailing doctrine on the question is that enunciated in
the leading case of De Guzman vs. Court of Appeals. Applying Article 1732 of the Code, in
conjunction with Section 13(b) of the Public Service Act, this Court has held: "The above
article 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. "So understood, the concept of
'common carrier' under Article 1732 may be seen to coincide neatly with the notion of
'public service,' under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil
Code." AaCTcI

2. ID.; ID.; ID.; COMMON OR PUBLIC CARRIER DISTINGUISHED FROM PRIVATE OR

SPECIAL 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. 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 and gets the control of the vessel and its crew.
3. ID.; ID.; ID.; PRESUMED TO BEAT FAULT OR TO HAVE ACTED NEGLIGENTLY IN
CASE OF LOSS, DESTRUCTION OR DETERIORATION OF GOODS UNDER ITS CARE;
EXCEPTION. — In case of loss, destruction or deterioration of goods, common carriers are
presumed to have been at fault or to have acted negligently, 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 deterioration of the goods due to
any of the following causes: (1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3)
Act or omission of the shipper or owner of the goods; (4) The character of the goods or
defects in the packing or in the containers; and (5) Order or act of competent public
authority.
4. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACTS OF THE COURT OF APPEALS;
CONCLUSIVE UPON THE SUPREME COURT; EXCEPTIONS. — Findings of fact of the Court
of Appeals generally conclude this Court; none of the recognized exceptions from the rule
— (1) when the factual findings of the Court of Appeals and the trial court are
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 contradictory; (2) when the conclusion is a finding grounded entirely on speculation,
surmises, or conjectures; (3) when the inference made by the Court of Appeals from its
findings of fact is manifestly mistaken, absurd, or impossible; (4) when there is a grave
abuse of discretion in the appreciation of facts; (5) when the appellate court, in making its
findings, went beyond the issues of the case and such findings are contrary to the
admissions of both appellant and appellee; (6) when the judgment of the Court of Appeals
is premised on a misapprehension of facts; (7) when the Court of Appeals failed to notice
certain relevant facts which, if properly considered, would justify a different conclusion; (8)
when the findings of fact are themselves conflicting; (9) when the findings of fact are
conclusions without citation of the specific evidence on which they are based; and (10)
when the findings of fact of the Court of Appeals are premised on the absence of evidence
but such findings are contradicted by the evidence on record — would appear to be clearly
extant in this instance.

DECISION

VITUG , J : p

The petition before the Court seeks a review of the decision of the Court of Appeals in C.A.
G.R. CV No. 56470, promulgated on 25 June 2001, which has affirmed in toto the judgment
of the Regional Trial Court (RTC), Branch 65, of Makati, dismissing the complaint for
damages filed by petitioner insurance corporation against respondent shipping company.
Davao Union Marketing Corporation (DUMC) contracted the services of respondent 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.
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.
The 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.

Philamgen interposed an appeal to the Court of Appeals which affirmed in toto the
decision of the trial court. The appellate court ruled that evidence to establish that PKS
Shipping was a common carrier at the time it undertook to transport the bags of cement
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 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.
In the instant appeal, Philamgen contends that the appellate court 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.
PKS Shipping, in its comment, urges that the petition should be denied because what
Philamgen seeks is not a review on points or errors of law but a review of the undisputed
factual findings of the RTC and the appellate court. In any event, PKS Shipping points out,
the findings and conclusions of both courts find support from the evidence and applicable
jurisprudence.
The determination of possible liability on the part of PKS Shipping boils down to the
question of whether it is a private carrier or a common carrier and, in either case, to the
other question of whether or not it has observed the proper diligence (ordinary, if a private
carrier, or extraordinary, if a common carrier) required of it given the circumstances.
The findings of fact made by the Court of Appeals, particularly when such findings are
consistent with those of the trial court, may not at liberty be reviewed by this Court in a
petition for review under Rule 45 of the Rules of Court. 1 The conclusions derived from
those factual findings, however, are not necessarily just matters of fact as when they are
so linked to, or inextricably intertwined with, a requisite appreciation of the applicable law.
In such instances, the conclusions made could well be raised as being appropriate issues
in a petition for review before this Court. Thus, an issue whether a carrier is private or
common on the basis of the facts found by a trial court or the appellate court can be a
valid and reviewable question of law.
The Civil Code defines "common carriers" in the following terms:
"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."

Complementary to the codal de nition is Section 13, paragraph (b), of the Public
Service Act; it defines "public service" to be —
". . . every person that now or hereafter may own, operate, manage, or control in
the Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes,
any common carrier, railroad, street railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 classification, freight or carrier service of any class, express service, steamboat, or
steamship, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop,
wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and power petroleum, sewerage
system, wire or wireless communication systems, wire or wireless broadcasting
stations and other similar public services. . . .. (Emphasis supplied)."

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:
"The above article 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.

"So understood, the concept of 'common carrier' under Article 1732 may be seen
to coincide neatly with the notion of 'public service,' under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially supplements
the law on common carriers set forth in the Civil Code."

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. 5 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. 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.
Addressing now the issue of whether or not PKS Shipping has exercised the proper
diligence demanded of common carriers, 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 of goods, common carriers are presumed to
have been at fault or to have acted negligently, and the burden of proving otherwise rests
on them. 7 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:
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 (1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers; and
(5) Order or act of competent public authority. 8
The appellate court ruled, gathered from the testimonies and sworn marine protests of the
respective vessel masters of Limar I and MT Iron Eagle, that there was no way by which
the barge's or the tugboat's 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 barge's
hatches. The official Certificate of Inspection of the barge issued by the Philippine
Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness of
Limar I and should strengthen the factual findings of the appellate court.
Findings of fact of the Court of Appeals generally conclude this Court; none of the
recognized exceptions from the rule — (1) when the factual findings of the Court of
Appeals and the trial court are contradictory; (2) when the conclusion is a finding grounded
entirely on speculation, surmises, or conjectures; (3) when the inference made by the Court
of Appeals from its findings of fact is manifestly mistaken, absurd, or impossible; (4) when
there is a grave abuse of discretion in the appreciation of facts; (5) when the appellate
court, in making its findings, went beyond the issues of the case and such findings are
contrary to the admissions of both appellant and appellee; (6) when the judgment of the
Court of Appeals is premised on a misapprehension of facts; (7) when the Court of
Appeals failed to notice certain relevant facts which, if properly considered, would justify a
different conclusion; (8) when the findings of fact are themselves conflicting; (9) when the
findings of fact are conclusions without citation of the specific evidence on which they are
based; and (10) when the findings of fact of the Court of Appeals are premised on the
absence of evidence but such findings are contradicted by the evidence on record — would
appear to be clearly extant in this instance. ADTCaI

All given then, the appellate court did not err in its judgment absolving PKS Shipping from
liability for the loss of the DUMC cargo.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
Davide, Jr., C.J., Ynares-Santiago, Carpio and Azcuna, JJ., concur.
Footnotes

1. National Steel Corporation vs. Court of Appeals, 283 SCRA 45.

2. 168 SCRA 612.
3. Planters Products, Inc. vs. Court of Appeals, G.R. No. 101503, 15 September 1993, 226
SCRA 476.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

 4. National Steel Corporation vs. Court of Appeals, G.R. No. 112287, 12 December 1997,
283 SCRA 45.
5. National Steel Corporation vs. Court of Appeals, G.R. No. 112287, 12 December 1997,
283 SCRA 45.
6. The testimony of respondent's own witness, Capt. Andres Elbena, is quite revealing. He
testified that he had been working for respondent as tugmaster for the past twenty-five
(25) years and that the company owns several vessels.
7. Article 1735, Civil Code of the Philippines.
8. Article 1734, Civil Code of the Philippines.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com