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Oriental Assurance Vs Ong

Oriental Assurance Corp. paid JEA Steel Industries P521,530 after 11 steel coils imported by JEA and transported by Manuel Ong and Asian Terminals were found damaged upon arrival. Oriental then demanded indemnity from Ong and Asian Terminals. Asian Terminals argued the claim was barred due to failure to file within the 15-day period required in their contract. The court found there was substantial compliance with the contract provisions. While JEA did not explicitly request a certificate of loss, its claim letter was received within the prescribed period. Therefore, the claim against Asian Terminals was not barred. However, Asian Terminals' liability is limited to P55,000 based on the contractual limit of P5

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178 views2 pages

Oriental Assurance Vs Ong

Oriental Assurance Corp. paid JEA Steel Industries P521,530 after 11 steel coils imported by JEA and transported by Manuel Ong and Asian Terminals were found damaged upon arrival. Oriental then demanded indemnity from Ong and Asian Terminals. Asian Terminals argued the claim was barred due to failure to file within the 15-day period required in their contract. The court found there was substantial compliance with the contract provisions. While JEA did not explicitly request a certificate of loss, its claim letter was received within the prescribed period. Therefore, the claim against Asian Terminals was not barred. However, Asian Terminals' liability is limited to P55,000 based on the contractual limit of P5

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Cadiz

Topic: Transportation Law


5.  Oriental Assurance Corp. v. Ong, G.R. No. 189524, October 11, 2017

Problem: JEA Steel Industries imported 72 alloy steel coils from South Korea. The goods were
transported to Manila onboard M/V Dooyang Glory. Upon its arrival, the 72 coils were
discharged and stored in Pier 9 under the custody of Asian Terminals, the arrastre operator.
Asian Terminals then inspected and loaded the coils in the trucks owned by Manuel Ong and
delivered to JEA’s plant located in Cavite. 11 of these coils were found to be in damaged
condition, dented and deformed. JEA filed a claim with Oriental insurance and the latter paid
them the value of the damaged coils amounting to P521, 530. Oriental subsequently demanded
indemnity from Ong and Asian Terminals, but they refused to pay.
Asian Terminals argued that Oriental’s claim was barred for its failure to file a notice of claim
within the 15-day period provided in the Management Contract which states:
“the consignee had thirty (30) days from receipt of the cargo to request for a
certificate of loss from the arrastre operator. Upon receipt of such request, the
arrastre operator would have 15 days to issue a certificate of loss, either actually
or constructively. From the date of issuance of the certificate of loss or where no
certificate was issued, from the expiration of the 15-day period, the consignee
has 15 days within which to file a formal claim with the arrastre operator.”
Assuming that it was liable, Asian Terminals argued that its liability is limited to the actual
invoice value of each package amounting to P5,000 each (or P55,000 for 11 coils) because the
value of the cargo was not specified or manifested in writing together with the Bill of Lading
pursuant to the stipulation limiting liability found in the Management Contract.
Question: Is the claim against Asian Terminals barred by prescription?
No, there was substantial compliance with the provisions of the Management Contract. In New
Zealand vs Navarro, the Supreme Court has held that "substantial compliance with the 15-day
time limitation is allowed provided that the consignee has made a provisional claim thru a
request for bad order survey or examination report."
Although the consignee here did not make a provision claim, the provisions of the Management
Contract provides that the consignee had 45 to 60 days from the date of last delivery of the
goods within which to submit a formal claim to the arrastre operator.
The consignee's claim letter was received by respondent on July 4, 2002,75 or 17 days from the
last delivery of the goods, still within the prescribed 30-day period to request a certificate of loss,
damage, or injury from the arrastre operator.
Whether the consignee files a claim letter or requests for a certificate of loss or bad order
examination, the effect would be the same, in that either would afford the arrastre contractor
knowledge that the shipment has been damaged and an opportunity to examine the nature and
extent of the injury. Hence, the consignee's claim letter is regarded as substantial compliance
with the condition precedent set forth in the Management Contract to hold the arrastre operator
liable.
Question: Is Asian Terminals liable for the entire amount of the insurance claim?
No, it’s liable only for P55,000. Art. 1750 provides that a contract fixing the sum that may be
recovered by the owner or shipper for the loss, destruction or deterioration of goods is valid if it
is reasonable and just under the circumstances and it has been fairly and freely agreed upon.
In this case, the records do not show that the value of the shipment was specified or manifested
to Asian Terminals before discharge from the vessel. Accordingly, Asian Terminals' liability
should be limited to the maximum recoverable value of ₱5,000.00 per package or coil, the
customary freight unit. Hence, the total recoverable amount is ₱55,000.00 for the 11 damaged
coils earning a legal interest of 6% per annum until full satisfaction.

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