-versus-
AMERICAN
HOME
ASSURANCE
COMPANY
AND PHILAM
INSURANCE
COMPANY, INC.,
Respondents.
D E C I S I O N
PANGANIBAN, J.:
Basic is the requirement
that before suing to recover loss of or damage to transported goods,
the
plaintiff must give the carrier notice of the loss or damage, within
the
period prescribed by the Warsaw Convention and/or the airway bill.
The Case
Before us is a Petition
for Review[1]
under Rule 45 of the Rules of Court, challenging the June 4, 2001
decision[2]
and the September 21, 2001 Resolution[3]
of the Court of Appeals (CA) in CA-GR CV No. 58208. The assailed
Decision disposed as follows:
“WHEREFORE,
premises considered, the present appeal is hereby DISMISSED for lack of
merit. The appealed Decision of Branch 149 of the Regional Trial
Court of Makati City in Civil Case No. 95-1219, entitled ‘American Home
Assurance Co. and PHILAM Insurance Co., Inc. v. FEDERAL EXPRESS
CORPORATION
and/or CARGOHAUS, INC. (formerly U-WAREHOUSE, INC.),’ is hereby
AFFIRMED
and REITERATED.chanrobles virtual law library
“Costs against the
[petitioner
and Cargohaus, Inc.].”[4]
The assailed resolution
denied petitioner’s Motion for Reconsideration.
The Facts
The antecedent facts
are summarized by the appellate court as follows:
“On January 26, 1994,
SMITHKLINE Beecham (SMITHKLINE for brevity) of Nebraska, USA delivered
to Burlington Air Express (BURLINGTON), an agent of [Petitioner]
Federal
Express Corporation, a shipment of 109 cartons of veterinary
biologicals
for delivery to consignee SMITHKLINE and French Overseas Company in
Makati
City, Metro Manila. The shipment was covered by Burlington Airway
Bill No. 11263825 with the words, ‘REFRIGERATE WHEN NOT IN TRANSIT’ and
‘PERISHABLE’ stamp marked on its face. That same day, Burlington
insured the cargoes in the amount of $39,339.00 with American Home
Assurance
Company (AHAC). The following day, Burlington turned over the
custody
of said cargoes to Federal Express which transported the same to
Manila.
The first shipment, consisting of 92 cartons arrived in Manila on
January
29, 1994 in Flight No. 0071-28NRT and was immediately stored at
[Cargohaus
Inc.’s] warehouse. While the second, consisting of 17 cartons,
came
in two (2) days later, or on January 31, 1994, in Flight No. 0071-30NRT
which was likewise immediately stored at Cargohaus’ warehouse.
Prior
to the arrival of the cargoes, Federal Express informed GETC Cargo
International
Corporation, the customs broker hired by the consignee to facilitate
the
release of its cargoes from the Bureau of Customs, of the impending
arrival
of its client’s cargoes.chanrobles virtual law library
“On February 10, 1994,
DARIO C. DIONEDA (‘DIONEDA’), twelve (12) days after the cargoes
arrived
in Manila, a non-licensed custom’s broker who was assigned by GETC to
facilitate
the release of the subject cargoes, found out, while he was about to
cause
the release of the said cargoes, that the same [were] stored only in a
room with two (2) air conditioners running, to cool the place instead
of
a refrigerator. When he asked an employee of Cargohaus why the
cargoes
were stored in the ‘cool room’ only, the latter told him that the
cartons
where the vaccines were contained specifically indicated therein that
it
should not be subjected to hot or cold temperature. Thereafter,
DIONEDA,
upon instructions from GETC, did not proceed with the withdrawal of the
vaccines and instead, samples of the same were taken and brought to the
Bureau of Animal Industry of the Department of Agriculture in the
Philippines
by SMITHKLINE for examination wherein it was discovered that the ‘ELISA
reading of vaccinates sera are below the positive reference serum.’
“As a consequence of
the foregoing result of the veterinary biologics test, SMITHKLINE
abandoned
the shipment and, declaring ‘total loss’ for the unusable shipment,
filed
a claim with AHAC through its representative in the Philippines, the
Philam
Insurance Co., Inc. (‘PHILAM’) which recompensed SMITHKLINE for the
whole
insured amount of THIRTY NINE THOUSAND THREE HUNDRED THIRTY NINE
DOLLARS
($39,339.00). Thereafter, [respondents] filed an action for
damages
against the [petitioner] imputing negligence on either or both of them
in the handling of the cargo.chanrobles virtual law library
“Trial ensued and ultimately
concluded on March 18, 1997 with the [petitioner] being held solidarily
liable for the loss as follows:
‘WHEREFORE,
judgment is hereby rendered in favor of [respondents] and [petitioner
and
its Co-Defendant Cargohaus] are directed to pay [respondents], jointly
and severally, the following:
1. Actual damages
in
the amount of the peso equivalent of US$39,339.00 with interest from
the
time of the filing of the complaint to the time the same is fully paid.
2. Attorney’s fees
in
the amount of P50,000.00 and
3. Costs of
suit.
‘SO ORDERED.’
“Aggrieved,
[petitioner]
appealed to [the CA].”[5]
Ruling of the
Court
of Appeals
The Test Report issued
by the United States Department of Agriculture (Animal and Plant Health
Inspection Service) was found by the CA to be inadmissible in
evidence.
Despite this ruling, the appellate court held that the shipping
Receipts
were a prima facie proof that the goods had indeed been delivered to
the
carrier in good condition. We quote from the ruling as follows:chanrobles virtual law library
“Where the plaintiff
introduces evidence which shows prima facie that the goods were
delivered
to the carrier in good condition [i.e., the shipping receipts], and
that
the carrier delivered the goods in a damaged condition, a presumption
is
raised that the damage occurred through the fault or negligence of the
carrier, and this casts upon the carrier the burden of showing that the
goods were not in good condition when delivered to the carrier, or that
the damage was occasioned by some cause excepting the carrier from
absolute
liability. This the [petitioner] failed to discharge.
x
x x.”[6]
Found devoid of merit
was petitioner’s claim that respondents had no personality to
sue.
This argument was supposedly not raised in the Answer or during trial.cralaw:red
Hence, this Petition.[7]
The Issues
In its Memorandum, petitioner
raises the following issues for our consideration:
“I.
Are the decision
and
resolution of the Honorable Court of Appeals proper subject for review
by the Honorable Court under Rule 45 of the 1997 Rules of Civil
Procedure?
“II.
Is the conclusion
of
the Honorable Court of Appeals – petitioner’s claim that respondents
have
no personality to sue because the payment was made by the respondents
to
Smithkline when the insured under the policy is Burlington Air Express
is devoid of merit – correct or not?
“III.
Is the conclusion
of
the Honorable Court of Appeals that the goods were received in good
condition,
correct or not?
“IV.
Are Exhibits ‘F’
and
‘G’ hearsay evidence, and therefore, not admissible?
“V.
Is the Honorable
Court
of Appeals correct in ignoring and disregarding respondents’ own
admission
that petitioner is not liable? and
“VI.
Is the Honorable
Court
of Appeals correct in ignoring the Warsaw Convention?”[8]
Simply stated, the
issues
are as follows: (1) Is the Petition proper for review by the Supreme
Court?
(2) Is Federal Express liable for damage to or loss of the insured
goods?
This Court’s
Ruling
The Petition has merit.cralaw:red
Preliminary Issue:
Propriety of Review
The correctness of legal
conclusions drawn by the Court of Appeals from undisputed facts is a
question
of law cognizable by the Supreme Court.[9]
In the present case,
the facts are undisputed. As will be shown shortly, petitioner is
questioning the conclusions drawn from such facts. Hence, this
case
is a proper subject for review by this Court.chanrobles virtual law library
Main Issue:
Liability for Damages
Petitioner contends
that respondents have no personality to sue -- thus, no cause of action
against it -- because the payment made to Smithkline was erroneous.cralaw:red
Pertinent to this issue
is the Certificate of Insurance[10]
(“Certificate”) that both opposing parties cite in support of their
respective
positions. They differ only in their interpretation of what their
rights are under its terms. The determination of those rights
involves
a question of law, not a question of fact. “As distinguished from
a question of law which exists ‘when the doubt or difference arises as
to what the law is on a certain state of facts’ -- ‘there is a question
of fact when the doubt or difference arises as to the truth or the
falsehood
of alleged facts’; or when the ‘query necessarily invites calibration
of
the whole evidence considering mainly the credibility of witnesses,
existence
and relevancy of specific surrounding circumstance, their relation to
each
other and to the whole and the probabilities of the situation.’”[11]chanrobles virtual law library
Proper Payee
The Certificate specifies
that loss of or damage to the insured cargo is “payable to order x x x
upon surrender of this Certificate.” Such wording conveys the right of
collecting on any such damage or loss, as fully as if the property were
covered by a special policy in the name of the holder itself. At
the back of the Certificate appears the signature of the representative
of Burlington. This document has thus been duly indorsed in blank
and is deemed a bearer instrument.cralaw:red
Since the Certificate
was in the possession of Smithkline, the latter had the right of
collecting
or of being indemnified for loss of or damage to the insured shipment,
as fully as if the property were covered by a special policy in the
name
of the holder. Hence, being the holder of the Certificate and
having
an insurable interest in the goods, Smithkline was the proper payee of
the insurance proceeds.cralaw:red
Subrogation
Upon receipt of the
insurance proceeds, the consignee (Smithkline) executed a subrogation
receipt[12]
in favor of respondents. The latter were thus authorized “to file
claims and begin suit against any such carrier, vessel, person,
corporation
or government.” Undeniably, the consignee had a legal right to
receive
the goods in the same condition it was delivered for transport to
petitioner.
If that right was violated, the consignee would have a cause of action
against the person responsible therefor.cralaw:red
Upon payment to the
consignee of an indemnity for the loss of or damage to the insured
goods,
the insurer’s entitlement to subrogation pro tanto -- being of the
highest
equity -- equips it with a cause of action in case of a contractual
breach
or negligence.[13]
“Further, the insurer’s subrogatory right to sue for recovery under the
bill of lading in case of loss of or damage to the cargo is
jurisprudentially
upheld.”[14]chanrobles virtual law library
In the exercise of its
subrogatory right, an insurer may proceed against an erring
carrier.
To all intents and purposes, it stands in the place and in substitution
of the consignee. A fortiori, both the insurer and the consignee
are bound by the contractual stipulations under the bill of lading.[15]
Prescription of
Claim
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
barred.
The latter, and even the consignee, never filed with the carrier any
written
notice or complaint regarding its claim for damage of or loss to the
subject
cargo within the period required by the Warsaw Convention and/or in the
airway bill. Indeed, this fact has never been denied by
respondents
and is plainly evident from the records.cralaw:red
Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:
6. No action shall be maintained in the case of damage to or partial loss of the shipment unless a written notice, sufficiently describing the goods concerned, the approximate date of the damage or loss, 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 placed at the disposal of the person entitled to delivery, or in the case of total loss (including non-delivery) unless presented within (120) days from the date of issue of the [Airway Bill].16
Relevantly, petitioners airway bill states:
12./12.1 The person entitled to delivery must make a complaint to the carrier in writing in the case:
12.1.1 of visible damage to the goods, immediately after discovery of the damage and at the latest within fourteen (14) days from receipt of the goods;
12.1.2 of other damage to the goods, within fourteen (14) days from the date of receipt of the goods;
12.1.3 delay, within twenty-one (21) days of the date the goods are placed at his disposal; and
12.1.4 of non-delivery of the goods, within one hundred and twenty (120) days from the date of the issue of the air waybill.
12.2 For the purpose of 12.1 complaint in writing may be made to the carrier whose air waybill was used, or to the first carrier or to the last carrier or to the carrier who performed the transportation during which the loss, damage or delay took place.17
Article 26 of the Warsaw Convention, on the other hand, provides:
ART. 26. (1) Receipt by the person entitled to the delivery of baggage or goods without complaint shall be prima facie evidence that the same have been delivered in good condition and in accordance with the document of transportation.
(2) In case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within 3 days from the date of receipt in the case of baggage and 7 days from the date of receipt in the case of goods. In case of delay the complaint must be made at the latest within 14 days from the date on which the baggage or goods have been placed at his disposal.
(3) Every complaint must be made in writing upon the document of transportation or by separate notice in writing dispatched within the times aforesaid.
(4) Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part.18
Condition Precedent
In this jurisdiction, the filing of a claim with the carrier within the time limitation therefor actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of or damage to the goods.19 The shipper or consignee must allege and prove the fulfillment of the condition. 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.20
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. 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.21
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. To stress, notice is a condition precedent, and the carrier is not liable if notice is not given in accordance with the stipulation.[22 Failure to comply with such a stipulation bars recovery for the loss or damage suffered.[23
Being a condition precedent, the notice must precede a suit for enforcement.24 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 $39,339.25 This judgment was affirmed by the Court of Appeals and is already final and executory.26
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.
Corona, and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on leave.
Endnotes:
1 Rollo, pp. 14-33.
2 Id., pp. 35-43. Twelfth Division. Penned by Justice Martin S. Villarama Jr., with the concurrence of JusticesConrado M. Vasquez Jr. (Division chair) and Alicia L. Santos (member).
3 Id., pp. 45-47.
4 Assailed CA Decision, p. 9; rollo, p. 43.
5 Id., pp. 1-3 & 35-37.
6 Id., pp. 8 & 42.
7 The case was deemed submitted for decision on September 20, 2002, upon this Courts receipt of respondents Memorandum, signed by Atty. Mary Joyce M. Sasan. Petitioners Memorandum, signed by Atty. Emiliano S. Samson, was received by this Court on August 28, 2002.
8 Petitioners Memorandum, p. 10; rollo, p. 116. Citations omitted.
9 Pilar Development Corp. v. IAC, 146 SCRA 215, December 12, 1986.
10 Exhibit D; records, p. 142.
11 Bernardo v. CA, 216 SCRA 224, December 7, 1992, per Campos Jr., J.
12 Exhibit N; records, p 159.
13 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., 212 SCRA 194, August 5, 1992 (citing Firemans Fund Insurance Company, Inc. v. Jamila & Company, Inc., 70 SCRA 323, April 7, 1976).
14 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., supra, p. 201, per Regalado, J. (citing National Development Company v. Court of Appeals, 164 SCRA 593, August 19, 1988).
15 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., supra.
16 Exhibit B of respondent; records, p. 139-A. This airway bill was issued on January 26, 1994.
17 Exhibit 5-a of Federal Express; records, p. 189-A.
18 51 OG 5091-5092, October 1955.
19 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., supra.
20 Government of the Philippine Islands v. Inchausti & Co., 24 Phil. 315, February 14, 1913; Triton Insurance Co. v. Jose, 33 Phil. 194, January 14, 1916.
21 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., supra, p. 208, per Regalado, J.
22 Id. (citing 14 Am. Jur. 2d, Carriers 97; Roldan v. Lim Ponzo & Co., 37 Phil. 285, December 7, 1917; Consunji v. Manila Port Service, 110 Phil. 231, November 29, 1960).
23 Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc., supra, pp. 208-209.
24 Philippine American General Insurance Co. Inc v. Sweet Lines, Inc., supra.
25 The insured value of the goods lost.
26 Entry of judgment in the Supreme Court was made on March 11, 2003.