G.R. No. L-21546 March 31, 1966
ATLANTIC MUTUAL INSURANCE COMPANY, plaintiff-appellant, vs. UNITED PHILIPPINE LINES, INC. and/or MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, defendants-appellees.

FACTS

On March 24, 1961, S.S. “Philippine President Magsaysay,” owned by United Philippine Lines, Inc., loaded 16 bales of cotton remnants in New York, consigned to Vera Clothes, Inc., Manila, and insured by Atlantic Mutual Insurance Company. The vessel arrived in Manila on April 29, 1961, and discharged the shipment complete and in good order to the Manila Port Service, the arrastre operator. On May 3, 1961, the consignee’s broker filed a provisional claim with Manila Port Service for “short landed or bad order cargo” using a standard mimeographed form. On May 16, 1961, Manila Port Service delivered the shipment, and its Bad Order Examination Report No. 230 confirmed a shortage of 138.4 pounds valued at $48.44. The consignee also filed a claim with the carrier’s agent on May 17, 1961, which was denied. Atlantic Mutual Insurance Company, having paid the consignee, filed suit on April 30, 1962, against the carrier and/or the arrastre service. The Court of First Instance dismissed the complaint, absolving the carrier because the goods were discharged in good order, and ruling that the provisional claim did not comply with Section 15 of the arrastre management contract. Atlantic Mutual Insurance Company appealed directly to the Supreme Court on a pure question of law regarding the interpretation of Section 15.

ISSUE

Whether the provisional claim for “short landed or bad order cargo” filed by the consignee with the Manila Port Service within 15 days from discharge of the goods substantially complies with the claim requirement under Section 15 of the arrastre management contract.

RULING

Yes. The Supreme Court reversed the lower court’s judgment. It ruled that the provisional claim constituted substantial compliance with Section 15. The Court held that the purpose of the claim requirement is to afford the arrastre operator a reasonable opportunity to check the validity of the claim while facts are fresh and documents are available. The provisional claim, filed after discharge and within the 15-day period, served this purpose by alerting Manila Port Service to verify the claim using its tally sheets and stored goods. The absence of a precise amount did not defeat compliance, as the exact value of the loss could only be ascertained upon delivery on May 16, 1961, after the 15-day period had elapsed. The claim was directed at Manila Port Service, not the carrier, as it addressed the party liable for damage occurring in its custody. Furthermore, Manila Port Service’s own Bad Order Examination Report confirming the loss precluded it from invoking non-compliance with Section 15, as the provision’s object had been accomplished. The Manila Port Service was ordered to pay Atlantic Mutual Insurance Company the sum of $48.44 or its peso equivalent as of April 30, 1962, with legal interest from that date.