G.R. No. 118030 . January 15, 2004.
PROVIDENT INSURANCE CORP., petitioner, vs. HONORABLE COURT OF APPEALS and AZUCAR SHIPPING CORP., respondents.

FACTS

On June 5, 1989, respondent Azucar Shipping Corp., as carrier, received a shipment of 32,000 bags of fertilizer in good order for transport. Upon arrival and unloading in Davao City on June 10, 1989, three bags fell overboard and 281 bags were unrecovered spillages due to mishandling. The consignee, Atlas Fertilizer Corporation, incurred damages amounting to P68,196.16. Petitioner Provident Insurance Corp., as the insurer, indemnified the consignee and, as subrogee, filed a complaint against the carrier for reimbursement.
The carrier moved to dismiss based on Stipulation No. 7 of the bill of lading, which required written claims for damages to be made within twenty-four hours from delivery if no exterior damage was visible. The consignee failed to comply with this notice requirement. The trial court dismissed the complaint, a decision affirmed by the Court of Appeals.

ISSUE

Whether the consignee’s failure to comply with the 24-hour notice of claim provision in the bill of lading is fatal to the insurer-subrogee’s right of action against the carrier.

RULING

Yes, the failure is fatal. The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic is anchored on the binding nature of contractual stipulations in a bill of lading. A bill of lading is a contract between the shipper and carrier, and its terms, unless contrary to law, morals, good customs, public order, or public policy, are binding on the parties.
The Court rejected petitioner’s arguments that the stipulation was unreasonable due to remote delivery locations and small print. The consignee, a large and regular shipper, is presumed to know and assent to the terms of the bill of lading upon acceptance without objection. The principle of estoppel applies; having accepted the document and allowed the carrier to act upon it, the shipper cannot later deny knowledge of its terms. The Court also found unpersuasive the claim that lack of communication facilities excused compliance, noting that a major corporation could reasonably be expected to monitor such shipments.
The notice requirement is a valid condition precedent to the right of action. The carrier’s knowledge of the loss, through its chief officer’s report, does not constitute a waiver of the written claim stipulation. Non-compliance extinguishes the claim. Thus, the insurer-subrogee, stepping into the shoes of the consignee, is likewise barred from recovery for failing to meet this contractual condition.