View full case

LOADSTAR SHIPPING COMPANY v. MALAYAN INSURANCE COMPANY

FACTS:

Malayan Insurance Company, Incorporated (Malayan) filed a motion for reconsideration against the court's decision that favored Loadstar Shipping Company, Incorporated and Loadstar International Shipping Company, Incorporated (petitioners). Malayan argued that the court disregarded the conclusion of the Court of Appeals that the petitioners breached the contract of affreightment as a common carrier. Malayan also claimed that the petitioners failed to present evidence of a calamity to be exempted from liability.

The petitioners, on the other hand, stated that Malayan's arguments were no longer relevant because Malayan did not provide proof of pecuniary loss to the insured Philippine Associated Smelting and Refining Corporation (PASAR). According to the petitioners, PASAR failed to establish the amount of loss or actual damage it suffered due to seawater wettage of the copper concentrates. Malayan paid the claim of PASAR without any proof of loss.

Furthermore, Malayan filed a motion to refer the case to the Court en banc, contending that the court's decision deviated from the doctrine established in Delsan Transport Lines, Inc. v. CA. However, the court determined that Delsan could not be applied to this case because of the different circumstances.

Malayan also argued that the contaminated parts of the copper concentrates should be considered as totally damaged since the petitioners failed to provide a seaworthy ship as agreed upon. The court, however, declared that without evidence of the value of the contaminated copper concentrates, it would be unjust to consider them as the amount of damages suffered by PASAR. The court noted that there was even an agreement on a residual value between PASAR and Malayan, which contradicted the claim of total loss.

ISSUES:

  1. Whether or not the Court of Appeals erred in concluding that the petitioners acted as a common carrier and in finding a breach of the contract of affreightment.

  2. Whether or not the Court of Appeals erred in finding that the petitioners failed to produce evidence of a calamity to be exculpated from liability.

  3. Whether or not the Court of Appeals erred in ruling that Malayan should be subrogated to the rights of the insured and should be indemnified by the petitioners.

RULING:

  1. The Court ruled in favor of the petitioners and denied the motion for reconsideration. The court held that the facts of the case did not establish a straightforward case of total loss, unlike in the case of Delsan Transport Lines, Inc. v. CA. The Court found that the actions of Malayan and the consignee PASAR were inconsistent with the alleged fact of total loss. Therefore, the principle of subrogation invoked by Malayan is not applicable in this case.

PRINCIPLES:

  • The burden of proof is upon the common carrier to prove that it was not liable for the loss. (Delsan Transport Lines, Inc. v. CA)

  • Subrogation is a matter of equity, and the insurance company should be subrogated to the rights of the insured upon payment of the insurance claim. (Delsan Transport Lines, Inc. v. CA)

  • The value of the contaminated goods cannot be considered as damages sustained by the insured without evidence to support such claim. (Code of Commerce, Article 364)