Title
Federal Express Corp. vs. Antonino
Case
G.R. No. 199455
Decision Date
Jun 27, 2018
FedEx failed to deliver checks, claimed non-compliance with notice period; Supreme Court ruled FedEx liable, upheld damages due to lack of extraordinary diligence and substantial compliance.
liability
loss
package

Case Summary (G.R. No. 199455)

Factual Background

In December 2003 respondents shipped by petitioner several Citibank checks from the Philippines to New York addressed to Veronica Z. Sison for payment of common charges and real estate taxes on Unit 22-A in Allegro Condominium owned by respondent Eliza. The total amounts alleged to have been shipped were US$17,726.18 and US$11,619.35 for different obligations, while monthly common charges then due totaled US$9,742.81. The shipment was made under petitioner’s account and Air Waybill bearing tracking number 8442 4588 4268. The checks were not received by the named consignee, Sison, who later inquired with petitioner and was informed that the package had been delivered to a neighbor and that a signature that did not match her own was on file.

Procedural History

Respondents sent a demand letter in March 2004 and thereafter filed a complaint for damages on April 5, 2004. The Regional Trial Court rendered judgment in favor of respondents in a May 8, 2008 Decision, awarding moral damages of P200,000.00, exemplary damages of P100,000.00, and attorney’s fees of P150,000.00, and dismissing petitioner’s counterclaim. The Court of Appeals affirmed the trial court in an August 31, 2011 Decision, and denied petitioner’s motion for reconsideration in a November 21, 2011 Resolution. Petitioner sought review by this Court by a Petition for Review on Certiorari under Rule 45.

Issue Presented

The sole issue before this Court was whether Federal Express Corporation may be held liable for damages on account of its failure to deliver the checks shipped by respondents to the designated consignee Veronica Sison.

Trial Court Findings

The Regional Trial Court found that respondents had not accurately declared the contents of the package as “checks,” but concluded that a check was not legal tender or a “negotiable instrument equivalent to cash” within the meaning of petitioner’s Air Waybill. The trial court applied the presumption of fault against common carriers for loss of goods and found that petitioner failed to prove that it had obtained authorization to release the shipment to any person other than the consignee. The court further held that respondents’ demand letter fell within the contractual two-year action period in the Air Waybill and that respondents substantially complied with any requirement for an earlier formal claim, attributing any delay to petitioner’s evasive handling of the matter.

Court of Appeals Ruling

The Court of Appeals affirmed the trial court’s judgment. It held that by accepting the package despite any alleged defect petitioner was bound to deliver it in good condition and could not later deny liability for loss. The appellate court sustained the trial court’s conclusion that checks were not legal tender for purposes of the Air Waybill prohibition, and reiterated that ambiguities in an Air Waybill, which is a contract of adhesion, must be construed against the drafter, petitioner.

Petitioner’s Contentions on Appeal

Petitioner advanced two principal contentions. First, it argued that respondents failed to comply with a condition precedent in the Air Waybill requiring submission of a written claim within forty-five (45) days from acceptance of the shipment, and that this failure extinguished their cause of action. Second, it contended that respondents shipped prohibited items because the Air Waybill expressly excluded “money (including but not limited to coins or negotiable instruments equivalent to cash such as endorsed stocks and bonds),” and that this misdeclaration exempted petitioner from liability.

Respondents’ Contentions on Appeal

Respondents maintained that they substantially complied with the Air Waybill’s notice requirement because they and the consignee promptly traced and followed up on the shipment and made a demand within a reasonable period, and that petitioner’s conduct in giving evasive responses and failing to investigate amounted to voluntary prevention of the condition’s fulfillment under Article 1186 of the Civil Code. Respondents also asserted that checks payable to named payees are not legal tender nor negotiable instruments equivalent to cash as contemplated by the Air Waybill prohibition, and that any ambiguity in the Air Waybill must be resolved against petitioner.

Supreme Court’s Analysis on the Condition Precedent

This Court applied settled jurisprudence holding that contractual requirements for the filing of claims are valid stipulations and constitute conditions precedent to an action on loss of shipment. The Court observed that respondents faced two contractual time hurdles: documentation of the claim within forty-five (45) days after notification and the institution of an action within two years. The Court found no dispute as to the two-year requirement and concluded that respondents had substantially complied with the forty-five (45)-day requirement. The Court relied on precedent, notably Philippine Airlines, Inc. v. Court of Appeals, to hold that zealous efforts by the shipper and the carrier’s own handling that “toss[ed] around the claim” can render the condition deemed fulfilled under Article 1186. The Court accepted the trial court’s and appellate court’s factual findings that respondents and the consignee repeatedly pursued petitioner, received ambiguous and evasive responses, and were given a “run-around,” thereby justifying substantial compliance with the formal claim requirement.

Supreme Court’s Analysis on Extraordinary Diligence and Delivery

The Court reviewed the common-carrier doctrine in the Civil Code, emphasizing that common carriers are bound to observe extraordinary diligence from the moment goods are unconditionally placed in their possession until they are delivered “to the consignee, or to the person who has a right to receive them,” and that loss of goods gives rise to a presumption of carrier fault except in enumerated exceptions. The Court held that part of extraordinary diligence is ascertaining the identity of the recipient and ensuring delivery to that person. Petitioner failed to show it exercised extraordinary diligence because it admitted delivery was not to the designated consignee and asserted release to an entity identified merely as “LGAA 385507,” an alphanumeric code that the Court found insufficient to prove delivery to a definite, identifiable person. On the record and the trial court’s credibility findings, the Court concluded the more reasonable inference was non-delivery to the named consignee and thus treated the package as lost, rendering petitioner liable.

Supreme Court’s Analysis on the Air Waybill Prohibition and Checks

The Court parsed petitioner’s International Air Waybill language excluding transportation of “money (including but not limited to coins or negotiable instruments equivalent to cash such as endorsed stocks and bonds).” The Court construed the

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