View full case

FEDERAL EXPRESS CORPORATION v. LUWALHATI R. ANTONINO

FACTS:

Eliza Bettina Ricasa Antonino (Eliza) owned Unit 22-A in Allegro Condominium in New York. In November 2003, monthly common charges on the unit became due. Eliza and Luwalhati R. Antonino (Luwalhati), who were in the Philippines at the time, decided to send several Citibank checks to Veronica Z. Sison in New York through FedEx. The checks were intended for the payment of monthly charges and real estate taxes. However, Sison allegedly did not receive the package, resulting in the non-payment of their obligations and the foreclosure of the unit. Sison contacted FedEx to inquire about the non-delivery and was informed that the package was delivered to her neighbor but there was no signed receipt. Luwalhati and Eliza sent a demand letter to FedEx for payment of damages, but FedEx refused to heed their demand. They subsequently filed a complaint for damages. FedEx claimed that they failed to comply with the condition precedent of filing a written notice of claim and that they shipped prohibited items. The Regional Trial Court ruled in favor of Luwalhati and Eliza, awarding them moral and exemplary damages, and attorney's fees. The Court of Appeals affirmed the ruling, stating that FedEx must deliver the package in good condition and cannot deny liability for loss after accepting the package. Furthermore, the Court of Appeals concluded that checks are not legal tender and are not prohibited items under the Air Waybill.

The case involves a dispute between petitioner Federal Express Corporation (FedEx) and respondents Luwalhati R. Antonino and Eliza Bettina Ricasa Antonino. The respondents shipped checks to consignee Veronica Sison through FedEx. However, the checks were not delivered to the consignee. The respondents filed a complaint against FedEx for damages due to its failure to deliver the checks.

FedEx argues that it should not be held liable because the respondents failed to comply with a condition precedent, specifically the filing of a written notice of claim for non-delivery or misdelivery within 45 days from acceptance of the shipment. The Regional Trial Court found that the condition precedent was substantially complied with and attributed the respondents' non-compliance to FedEx for giving them a run-around. The Court of Appeals affirmed this finding.

The Court of Appeals stated that a provision in a contract of carriage requiring the filing of a formal claim within a specified period is a valid stipulation. Compliance with this provision is considered a legitimate condition precedent for an action for damages arising from the loss of the shipment. The right to damages against the carrier is extinguished unless an action is brought within two years from the date of delivery.

The respondents filed their complaint within two years, but the dispute revolves around their compliance with the first condition of filing a formal claim within 45 days. The Court is guided by previous jurisprudence that recognizes substantial compliance with the period if there are zealous efforts in following up the claim, especially if the carrier had contributed to the delay or prevention of filing the claim. The Court noted that FedEx's ambiguous and evasive responses, as well as its nonchalant handling of the respondents' concerns, impeded the respondents' compliance with this condition.

ISSUES:

  1. Whether or not there was substantial compliance with the requirement for the immediate filing of a formal claim for damages as required in the Air Waybill.

  2. Whether the common carrier exercised extraordinary diligence in ensuring the delivery of the package to its designated consignee.

  3. Whether the common carrier can be exempted from liability due to the shipment of checks, which is allegedly prohibited based on the Air Waybill.

  4. Whether checks with a specified payee are negotiable instruments equivalent to cash as prohibited in the Air Waybill.

  5. Whether the ambiguity in the Air Waybill should be construed against the party that prepared it.

RULING:

  1. The court held that there was substantial compliance with the requirement for the immediate filing of a formal claim for damages. Even though the formal claim was filed after the prescribed 45-day period, it was due to the airline's own actions in not resolving the claim and not providing proper responses to the claimants' inquiries. This constituted a voluntary prevention of the fulfillment of the condition for filing a formal claim. Therefore, the filing of the baggage freight claim, which informed the airline of the damage sustained, constituted substantial compliance with the requirement in the contract.

  2. The common carrier failed to prove that it exercised extraordinary diligence in ensuring the delivery of the package to its designated consignee. The carrier claimed to have made a delivery, but it was not to the designated consignee. The assertion that the package was received by an alphanumeric code does not satisfy the requisite of extraordinary diligence. Thus, the package shall be considered lost, and liability for this loss ensues.

  3. The prohibition stated in the Air Waybill regarding the transportation of money is not applicable to the shipment of checks. The additional phrase enclosed in parentheses, which mentions negotiable instruments, is only an illustrative example and not a qualifier that is integral to or inseverable from money. Checks are considered negotiable instruments and substitutes for money, but they are not legal tender. The shipment of checks does not violate the terms of the Air Waybill, and the carrier cannot be exempted from liability based on this ground.

  4. Checks with a specified payee are not negotiable instruments equivalent to cash as contemplated in the Air Waybill. An order instrument, which requires an endorsement from the payee before it can be negotiated, cannot be considered equivalent to cash.

  5. The ambiguity in the Air Waybill should be strictly construed against the party that prepared it, which in this case is the petitioner. Therefore, the prohibition against transporting money must be construed restrictively against the petitioner and liberally for the respondents.

PRINCIPLES:

  • The condition for the timely filing of a formal claim can be deemed fulfilled if the carrier's actions or inactions prevented the fulfillment of the condition (Article 1186 of the Civil Code).

  • Common carriers are required to observe extraordinary diligence in the vigilance over goods and for the safety of passengers transported by them (Article 1733 of the Civil Code).

  • In case of loss or damage to goods, common carriers are presumed to be negligent or at fault, except in certain specified instances.

  • Common carriers have the responsibility to exercise extraordinary diligence in the performance of their duties.

  • The duty of common carriers to ensure the delivery of shipments to none but the person who has the right to receive them is part of their extraordinary responsibility.

  • The failure to deliver a package to the designated consignee amounts to a failure to deliver, and the shipment shall be considered lost.

  • Checks are only negotiable instruments and substitutes for money, but they are not legal tender.

  • Any ambiguity in a contract of adhesion should be strictly construed against the party that prepared it.

  • In the interpretation of contracts, the terms should be read as a whole to determine their true intent and meaning.

  • Negotiable instruments must meet the requirements under Section 1 of the Negotiable Instruments Law to be considered as such.

  • Checks with a specified payee, which require an endorsement before they can be negotiated, are order instruments and not negotiable instruments equivalent to cash.