Case Summary (G.R. No. 199455)
Obligation of Extraordinary Diligence by Common Carriers
Under Civil Code Art. 1733, common carriers must exercise “extraordinary diligence”—the highest degree of care—in safeguarding goods throughout transit. Article 1735 further presumes carrier negligence in cases of loss or damage, shifting the burden to the carrier to prove that it observed extraordinary diligence, except in specified excusable events (natural calamities, war, shipper’s fault, defects in packing, or public authority acts).
Failure to Deliver to Authorized Consignee
Article 1736 mandates delivery only to the consignee or an authorized person. FedEx admitted that the package was delivered to an unidentified neighbor, denoted solely by an internal code (“LGAA 385507”), without proper signature or confirmation that the neighbor was authorized. Such delivery falls short of extraordinary diligence and is equivalent to non-delivery, triggering carrier liability for the loss of the shipment.
Interpretation of Prohibition Against Transporting Money
The Air Waybill prohibited the carriage of “money (including but not limited to coins or negotiable instruments equivalent to cash).” The clause’s parenthetical examples are illustrative, not limiting, and the primary prohibition is on “money.” Under general definitions and Philippine law (Republic Act No. 7653), “money” refers to government-issued legal tender (coins and banknotes). The courts held that the prohibition’s wording must be strictly construed against FedEx, the drafter.
Checks as Not Equivalent to Cash
Checks payable to a specific payee are order instruments under the Negotiable Instruments Law and require endorsement to negotiate. They lack the status of legal tender or “equivalent to cash.” Supreme Court jurisprudence consistently treats checks as negotiable substitutes, not money. Consequently, respondents’ shipment of checks did not violate the Air Waybill’s prohibition.
Ambiguity and Contract of Adhesion Rule
The Air Waybill is a contract of adhesion prepared by FedEx. Any ambiguity must be construed in favor of the non-drafter.
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Procedural History
- Petition for Review on Certiorari filed by Federal Express Corporation (FedEx) under Rule 45 of the 1997 Rules of Civil Procedure.
- RTC, Branch 217, Quezon City (May 8, 2008): awarded respondents moral damages (₱200,000), exemplary damages (₱100,000), and attorney’s fees (₱150,000); dismissed FedEx’s counterclaim.
- Court of Appeals (August 31, 2011): denied FedEx’s appeal; affirmed RTC decision; in November 21, 2011 resolution, denied motion for reconsideration.
- Supreme Court resolves sole issue of FedEx’s liability for failure to deliver respondents’ shipment.
Factual Background
- Respondent Eliza Bettina Ricasa Antonino owned Unit 22-A in Allegro Condominium, New York.
- Common charges for July–November 2003 totalled US$9,742.81.
- On December 15, 2003, Luwalhati and Eliza shipped Citibank checks totaling US$17,726.18 (common charges) and US$11,619.35 (real estate taxes) via FedEx (Account No. x2546-4948-1; Tracking No. 8442 4588 4268).
- Package addressed to Veronica Z. Sison in New York for delivery to Maxwell-Kates, Inc. and the New York County Department of Finance.
- Sison did not receive the package; Unit foreclosed.
- On February 9, 2004, Sison inquired with FedEx and was told the package was delivered to a neighbor without a signed receipt.
- March 14, 2004: demand letter sent to FedEx; refusal to pay.
- April 5, 2004: Complaint for damages filed by Luwalhati and Eliza.
Claims and Counterclaims
- Respondents’ claim: damages for loss of package due to non-delivery.
- FedEx’s defenses:
• Failure to file written notice of claim within 45 days as required by Air Waybill;
• Shipment of prohibited items (“money” or “negotiable instruments equivalent to cash”) misdeclared as “documents.”
Issue Presented
- Whether FedEx is liable for damages for its failure to del