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Fedex V American Home Assurance Co

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Fedex v American Home Assurance Co & Philam Insurance Company Philippines, the Philam Insurance Co., Inc.

nes, the Philam Insurance Co., Inc. which recompensed


G.R. No. 150094 | August 18, 2004 | Panganiban, J. | Group 2 SMITHKLINE for the whole insured amount of $39,339.00.
 Thereafter, [respondents] filed an action for damages against the [petitioner]
Petitioner: Federal Express Corporation imputing negligence on either or both of them in the handling of the cargo.
Respondents: American Home Assurance Company & Philam Insurance Company,
Inc. TC: [March 18, 1997] Petitioner solidarily liable for the loss; ordered to pay:
Topic: Subrogation
1. Actual damages in the amount of the peso equivalent of US$39,339.00 with
Facts interest from the time of the filing of the complaint to the time the same is
fully paid.
 On January 26, 1994, SMITHKLINE Beecham of Nebraska, USA delivered 2. Attorneys fees in the amount of P50,000.00 and
to Burlington Air Express, an agent of [Petitioner] Federal Express 3. Costs of suit.
Corporation, a shipment of 109 cartons of veterinary biologicals for delivery
to consignee SMITHKLINE and French Overseas Company in Makati City, CA: The Test Report issued by the US Department of Agriculture (Animal and Plant
Metro Manila. Health Inspection Service) was found to be inadmissible in evidence. Despite this
o The shipment was covered by Burlington Airway Bill No. 11263825 ruling, it was held that the shipping Receipts were a prima facie proof that the goods
with the words, REFRIGERATE WHEN NOT IN TRANSIT and had indeed been delivered to the carrier in good condition.
PERISHABLE stamp marked on its face.  Where the plaintiff introduces evidence which shows prima facie that the
o That same day, Burlington insured the cargoes in the amount of goods were delivered to the carrier in good condition [i.e., the shipping
$39,339.00 with American Home Assurance Company (AHAC). receipts], and that the carrier delivered the goods in a damaged condition, a
 The following day, Burlington turned over the custody of said cargoes to presumption is raised that the damage occurred through the fault or
Federal Express which transported the same to Manila. negligence of the carrier, and this casts upon the carrier the burden of
o The first shipment, consisting of 92 cartons arrived in Manila on showing that the goods were not in good condition when delivered to the
January 29, 1994 in Flight No. 0071-28NRT and was immediately carrier, or that the damage was occasioned by some cause excepting the
stored at [Cargohaus Inc.’s] warehouse. carrier from absolute liability. This the [petitioner] failed to discharge. x x x.
o The second, consisting of 17 cartons, came in 2 days later, or on
January 31, 1994, in Flight No. 0071-30NRT which was likewise Found devoid of merit was petitioners claim that respondents had no personality to sue.
immediately stored at Cargohaus warehouse. This argument was supposedly not raised in the Answer or during trial.
 Prior to the arrival of the cargoes, Federal Express informed GETC Cargo Issues
International Corporation, the customs broker hired by the consignee to (1) Is the Petition proper for review by the Supreme Court? Yes
facilitate the release of its cargoes from the Bureau of Customs, of the (2) Is Federal Express liable for damage to or loss of the insured goods? No
impending arrival of its client’s cargoes.
 On February 10, 1994, DARIO C. DIONEDA, 12 days after the cargoes Held
arrived in Manila, a non-licensed customs broker who was assigned by Issue 1
GETC to facilitate the release of the subject cargoes, found out, while he  The correctness of legal conclusions drawn by the Court of Appeals from
was about to cause the release of the said cargoes, that the same [were] undisputed facts is a question of law cognizable by the Supreme Court.
stored only in a room with 2 air conditioners running, to cool the place  In the present case, the facts are undisputed. As will be shown shortly,
instead of a refrigerator. petitioner is questioning the conclusions drawn from such facts. Hence, this
o When he asked an employee of Cargohaus why the cargoes were case is a proper subject for review by this Court.
stored in the cool room only, the latter told him that the cartons
where the vaccines were contained specifically indicated therein Issue 2
that it should not be subjected to hot or cold temperature. Liability for Damages
 DIONEDA, upon instructions from GETC, did not proceed with the  Petitioner contends that respondents have no personality to sue (thus, no
withdrawal of the vaccines; instead, samples of the same were taken and cause of action against it) because the payment made to Smithkline was
brought to the Bureau of Animal Industry of the Department of Agriculture in erroneous.
the Philippines by SMITHKLINE for examination  Pertinent to this issue is the Certificate of Insurance (Certificate) that both
o It was discovered that the ELISA reading of vaccinates sera are opposing parties cite in support of their respective positions.
below the positive reference serum. o They differ only in their interpretation of what their rights are under
 As a consequence of the foregoing result of the veterinary biologics test, its terms. The determination of those rights involves a question of
SMITHKLINE abandoned the shipment and, declaring total loss for the law, not a question of fact.
unusable shipment, filed a claim with AHAC through its representative in the
 As distinguished from a question of law which exists when the doubt or the airway bill. Indeed, this fact has never been denied by respondents and is
difference arises as to what the law is on a certain state of facts -- there is a plainly evident from the records.
question of fact when the doubt or difference arises as to the truth or the  Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:
falsehood of alleged facts; or when the query necessarily invites calibration of o 6. No action shall be maintained in the case of damage to or partial
the whole evidence considering mainly the credibility of witnesses, existence loss of the shipment unless a written notice, sufficiently describing
and relevancy of specific surrounding circumstance, their relation to each the goods concerned, the approximate date of the damage or loss,
other and to the whole and the probabilities of the situation. and the details of the claim, is presented by shipper or consignee to
an office of Burlington within (14) days from the date the goods are
Proper Payee placed at the disposal of the person entitled to delivery, or in the case
 The Certificate specifies that loss of or damage to the insured cargo is payable of total loss (including non-delivery) unless presented within (120)
to order x x x upon surrender of this Certificate. days from the date of issue of the [Airway Bill].
o Such wording conveys the right of collecting on any such damage or  Relevantly, petitioner’s airway bill states:
loss, as fully as if the property were covered by a special policy in the o 12./12.1 The person entitled to delivery must make a complaint to
name of the holder itself. the carrier in writing in the case:
o At the back of the Certificate appears the signature of the  12.1.1 of visible damage to the goods, immediately after
representative of Burlington. This document has thus been duly discovery of the damage and at the latest within fourteen
indorsed in blank and is deemed a bearer instrument. (14) days from receipt of the goods;
 Since the Certificate was in the possession of Smithkline, the latter had the  12.1.2 of other damage to the goods, within fourteen (14)
right of collecting or of being indemnified for loss of or damage to the insured days from the date of receipt of the goods;
shipment, as fully as if the property were covered by a special policy in the  12.1.3 delay, within twenty-one (21) days of the date the
name of the holder. goods are placed at his disposal; and
 Hence, being the holder of the Certificate and having an insurable interest in  12.1.4 of non-delivery of the goods, within one hundred and
the goods, Smithkline was the proper payee of the insurance proceeds. twenty (120) days from the date of the issue of the air
waybill.
Subrogation [MAIN TOPIC]  12.2 For the purpose of 12.1 complaint in writing may be
 Upon receipt of the insurance proceeds, the consignee (Smithkline) executed made to the carrier whose air waybill was used, or to the
a subrogation Receipt in favor of respondents. first carrier or to the last carrier or to the carrier who
o The latter were thus authorized to file claims and begin suit against performed the transportation during which the loss, damage
any such carrier, vessel, person, corporation or government. or delay took place.
o Undeniably, the consignee had a legal right to receive the goods in  Article 26 of the Warsaw Convention, on the other hand, provides:
the same condition it was delivered for transport to petitioner. If that o ART. 26. (1) Receipt by the person entitled to the delivery of baggage
right was violated, the consignee would have a cause of action or goods without complaint shall be prima facie evidence that the
against the person responsible therefor. same have been delivered in good condition and in accordance with
 Upon payment to the consignee of an indemnity for the loss of or damage to the document of transportation.
the insured goods, the insurers entitlement to subrogation pro tanto -- being o (2) In case of damage, the person entitled to delivery must complain
of the highest equity -- equips it with a cause of action in case of a contractual to the carrier forthwith after the discovery of the damage, and, at the
breach or negligence. latest, within 3 days from the date of receipt in the case of baggage
o Further, the insurer’s subrogatory right to sue for recovery under the and 7 days from the date of receipt in the case of goods. In case of
bill of lading in case of loss of or damage to the cargo is delay the complaint must be made at the latest within 14 days from
jurisprudentially upheld. the date on which the baggage or goods have been placed at his
 In the exercise of its subrogatory right, an insurer may proceed against an disposal.
erring carrier. To all intents and purposes, it stands in the place and in o (3) Every complaint must be made in writing upon the document of
substitution of the consignee. A fortiori, both the insurer and the consignee transportation or by separate notice in writing dispatched within the
are bound by the contractual stipulations under the bill of lading. times aforesaid.
o (4) Failing complaint within the times aforesaid, no action shall lie
Prescription of Claim against the carrier, save in the case of fraud on his part.
 From the initial proceedings in the trial court up to the present, petitioner has
tirelessly pointed out that respondents claim and right of action are already Condition Precedent
barred. The latter, and even the consignee, never filed with the carrier any  In this jurisdiction, the filing of a claim with the carrier within the time limitation
written notice or complaint regarding its claim for damage of or loss to the therefor actually constitutes a condition precedent to the accrual of a right of
subject cargo within the period required by the Warsaw Convention and/or in action against a carrier for loss of or damage to the goods.
o The shipper or consignee must allege and prove the fulfillment of the
condition.
o If it fails to do so, no right of action against the carrier can accrue in
favor of the former. The aforementioned requirement is a reasonable
condition precedent; it does not constitute a limitation of action.
 The requirement of giving notice of loss of or injury to the goods is not an
empty formalism. The fundamental reasons for such a stipulation are (1) to
inform the carrier that the cargo has been damaged, and that it is being
charged with liability therefor; and (2) to give it an opportunity to examine the
nature and extent of the injury.
o This protects the carrier by affording it an opportunity to make an
investigation of a claim while the matter is fresh and easily
investigated so as to safeguard itself from false and fraudulent
claims.
 When an airway bill -- or any contract of carriage for that matter -- has a
stipulation that requires a notice of claim for loss of or damage to goods
shipped and the stipulation is not complied with, its enforcement can be
prevented and the liability cannot be imposed on the carrier.
o To stress, notice is a condition precedent, and the carrier is not liable
if notice is not given in accordance with the stipulation. Failure to comply with
such a stipulation bars recovery for the loss or damage suffered.
 Being a condition precedent, the notice must precede a suit for
enforcement. In the present case, there is neither an allegation nor a showing
of respondents compliance with this requirement within the prescribed period.
While respondents may have had a cause of action then, they cannot now
enforce it for their failure to comply with the aforesaid condition precedent.
 In view of the foregoing, we find no more necessity to pass upon the other
issues raised by petitioner.
 We note that respondents are not without recourse. Cargohaus, Inc. --
petitioners co-defendant in respondents Complaint below -- has been
adjudged by the trial court as liable for, inter alia, actual damages in the
amount of the peso equivalent of US $39,339. This judgment was affirmed by
the Court of Appeals and is already final and executory.

WHEREFORE, the Petition is GRANTED, and the assailed


Decision REVERSED insofar as it pertains to Petitioner Federal Express Corporation.
No pronouncement as to costs. SO ORDERED.

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