Magbojos, Kristine V.

TOPIC: Nature and Common Carrier

ORIENTAL ASSURANCE CORP. v. ONG.

GR 189524 | October 11, 2017
Leonen, J.

DOCTRINE: In Government Service Insurance System v. Manila Railroad Company, this Court
held that the provisions of a gate pass or of an arrastre management contract are binding on an
insurer-subrogee even if the latter is not a party to it.

FACTS: JEA Steel imported from South Korea 72 steel sheets in coils which were transported
to Manila onboard M/V Dooyang Glory. These were discharged and stored under the custody of
Asian Terminals, arrastre contractor. Upon delivery to JEA Steel plant in Cavite by trucks owned
by Ong, it was found that 11 coils were damaged prompting JEA to file a claim with Oriental
Assurance Corp. The latter, in turn, demanded indemnity from Ong and Asian Terminals but
they refused to pay. It was later found that Ong received the coils already in its damaged
condition and the liability was imputed to Asian Terminals. However, the latter countered that
the claim is already barred by prescription for petitioner’s failure to file notice of claim within the
15-day period as provided in the Gate Pass and Management Contract.

ISSUE: Is the claim of the insurer under its subrogated rights already barred by prescription?

RULING: Yes. In Government Service Insurance System v. Manila Railroad Company, this
Court held that the provisions of a gate pass or of an arrastre management contract are binding
on an insurer-subrogee even if the latter is not a party to it, including the observance of the 15-
day period in filing a notice of claim. This is also in consonance with Article 2207 of the Civil
Code. In this case, the fact that Oriental is not a party to the Gate Pass and the Management
Contract does not mean that it cannot be bound by their provisions. Oriental is subrogated to
the rights of the consignee simply upon its payment of the insurance claim.