Loadstar Shipping Company Inc. et al.

v.
Malayan Insurance Co.
G.R. No. 18565
November 26, 2014

Facts:

Loadstar carried copper concentrates for Philippine Associated Smelting and Refining
Corporation (PASAR) and Philex which was insured by the respondent Malayan Insurance. On its
voyage, while a routine inspection was carried, a crack was found on deck which caused seawater
to enter and wet the copper concentrates inside cargo hold 2. Upon inspection, the adjusters and
surveyors assessed the value of the damage and concluded that the cargo was contaminated
with seawater. Malayan paid PASAR the amount of damages sustained by the cargo. Malayan
thereafter demanded reimbursement from Loadstar in which the latter refused to comply.

Issue: Whether or not the carrier is liable to pay the diminution of the value of the goods which
shall constitute as damages.

Ruling: Yes

Under the Code of Commerce, if the goods are delivered but arrived at the destination in
damaged condition, the remedies to be pursued by the consignee depend on the extent of
damage on the goods. If the effect of damage on the goods consisted merely of diminution in
value, the carrier is bound to pay only the difference between its price on that day and its
depreciated value as provided under Article 364.