GR 150094; (August, 2004) (Digest)

G.R. No. 150094; August 18, 2004
FEDERAL EXPRESS CORPORATION, petitioner, vs. AMERICAN HOME ASSURANCE COMPANY and PHILAM INSURANCE COMPANY, INC., respondents.

FACTS

SmithKline Beecham delivered a shipment of veterinary biologicals, marked “PERISHABLE” and “REFRIGERATE WHEN NOT IN TRANSIT,” to Burlington Air Express, an agent of petitioner Federal Express Corporation, for transport to Manila. The cargo was insured with respondent American Home Assurance Company. Upon arrival, the shipments were stored at the warehouse of Cargohaus, Inc., FedEx’s local agent. Twelve days after arrival, a customs broker discovered the cargo was stored in a merely air-conditioned room, not a refrigerator. Subsequent tests on samples indicated the vaccines were below standard, leading SmithKline to declare a total loss. Respondents, as subrogees, paid the claim and sued FedEx and Cargohaus for damages.
The Regional Trial Court held FedEx and Cargohaus solidarily liable. The Court of Appeals affirmed, ruling that the airway bills constituted prima facie evidence of receipt of the goods in good condition, shifting the burden to FedEx to prove otherwise, which it failed to do. FedEx appealed to the Supreme Court.

ISSUE

Whether respondents, as subrogees, complied with the requisite notice of claim for loss or damage to the shipped goods as mandated by the Warsaw Convention and the airway bill.

RULING

The Supreme Court REVERSED the Court of Appeals and GRANTED the petition, absolving Federal Express Corporation from liability. The Court held that the failure to provide timely written notice of loss or damage is fatal to the claim. The governing airway bill, expressly subject to the Warsaw Convention, required written complaint to the carrier within 14 days of receipt of the goods. The consignee’s broker discovered the alleged improper storage on February 10, 1994, yet no written notice was given to FedEx. The first written claim was made only on March 14, 1994, well beyond the 14-day period.
The purpose of the notice requirement is to allow the carrier to immediately investigate the claim while facts are fresh and evidence is available. Non-compliance bars any right to recovery. The Court emphasized that this condition precedent is absolute and cannot be disregarded. Since respondents failed to present proof that FedEx received the requisite written notice within the contractual and conventional period, their cause of action against the carrier was extinguished. The Court noted that respondents’ recourse lay against Cargohaus, Inc., against whom the judgment for damages had become final and executory.