G.R. No. 199455.  June 27, 2018.*

 
FEDERAL EXPRESS CORPORATION,
petitioner,  vs.  LUWALHATI R. ANTONINO and ELIZA
BETTINA RICASA ANTONINO, respondents.

Civil Law; Common Carriers; Contract of Carriage; A

provision in a contract of carriage requiring the filing of a formal
claim within a specified period is a valid stipulation.—Petitioner
disclaims liability because of respondents’ failure to comply with a
condition precedent, that is, the filing of a written notice of a
claim for nondelivery or misdelivery within 45 days from
acceptance of the shipment. The Regional Trial Court found the
condition precedent to have been substantially complied with and
attributed respondents’ noncompliance to FedEx for giving them a
runaround. This Court affirms this finding. A provision in a
contract of carriage requiring the filing of a formal claim within a
specified period is a valid stipulation. Jurisprudence maintains
that compliance with this provision

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*  THIRD DIVISION.

 
 
451

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Federal Express Corporation vs. Antonino

is a legitimate condition precedent to an action for damages

arising from loss of the shipment.
Same; Same; Diligence Required of Common Carriers;
Extraordinary Diligence; The Civil Code mandates common
carriers to observe extraordinary diligence in caring for the goods
they are transporting.—The Civil Code mandates common carriers
to observe extraordinary diligence in caring for the goods they are
transporting: Article 1733. Common carriers, from the nature of
their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by them,
according to all the circumstances of each case. “Extraordinary
diligence is that extreme measure of care and caution which
persons of unusual prudence and circumspection use for securing
and preserving their own property or rights.” Consistent with the
mandate of extraordinary diligence, the Civil Code stipulates that
in case of loss or damage to goods, common carriers are presumed
to be negligent or at fault, except in the following instances: (1)
Flood, storm, earthquake, lightning, or other natural disaster or
calamity; (2) Act of the public enemy in war, whether
international or civil; (3) Act or omission of the shipper or owner
of the goods; (4) The character of the goods or defects in the
packing or in the containers; (5) Order or act or competent public
authority. In all other cases, common carriers must prove that
they exercised extraordinary diligence in the performance of their
duties, if they are to be absolved of liability.
Same; Same; Same; Same; The responsibility of common
carriers to exercise extraordinary diligence lasts from the time the
goods are unconditionally placed in their possession until they are
delivered “to the consignee, or to the person who has a right to
receive them.”—The responsibility of common carriers to exercise
extraordinary diligence lasts from the time the goods are
unconditionally placed in their possession until they are delivered
“to the consignee, or to the person who has a right to receive
them.” Thus, part of the extraordinary responsibility of common
carriers is the duty to ensure that shipments are received by none
but “the person who has a right to receive them.” Common
carriers must ascertain the identity of the recipient. Failing to
deliver shipment to the designated recipient amounts to a failure
to deliver. The shipment shall then be considered lost, and
liability for this loss ensues.

 
 
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452 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

Money; Money is “what is generally acceptable in exchange for

goods.”—Money is “what is generally acceptable in exchange for
goods.” It can take many forms, most commonly as coins and
banknotes. Despite its myriad forms, its key element is its general
acceptability. Laws usually define what can be considered as a
generally acceptable medium of exchange. In the Philippines,
Republic Act No. 7653, otherwise known as The New Central
Bank Act, defines “legal tender” as follows: All notes and coins
issued by the Bangko Sentral shall be fully guaranteed by the
Government of the Republic of the Philippines and shall be legal
tender in the Philippines for all debts, both public and private:
Provided, however, That, unless otherwise fixed by the Monetary
Board, coins shall be legal tender in amounts not exceeding Fifty
pesos (P50.00) for denomination of Twenty-five centavos and
above, and in amounts not exceeding Twenty pesos (P20.00) for
denominations of Ten centavos or less.
Mercantile Law; Negotiable Instruments; Checks; It is settled
in jurisprudence that checks, being only negotiable instruments,
are only substitutes for money and are not legal tender; more so
when the check has a named payee and is not payable to bearer.—
It is settled in jurisprudence that checks, being only negotiable
instruments, are only substitutes for money and are not legal
tender; more so when the check has a named payee and is not
payable to bearer. In Philippine Airlines, Inc. v. Court of Appeals,
181 SCRA 557 (1990), this Court ruled that the payment of a
check to the sheriff did not satisfy the judgment debt as checks
are not considered legal tender. This has been maintained in
other cases decided by this Court. In Cebu International Finance
Corporation v. Court of Appeals, 316 SCRA 488 (1999), this Court
held that the debts paid in a money market transaction through
the use of a check is not a valid tender of payment as a check is
not legal tender in the Philippines. Further, in Bank of the
Philippine Islands v. Court of Appeals, 326 SCRA 641 (2000), this
Court held that “a check, whether a manager’s check or ordinary
check, is not legal tender.”
Civil Law; Contracts; Contract of Adhesion; Although not
automatically void, any ambiguity in a contract of adhesion is
construed strictly against the party that prepared it.—The contract
between petitioner and respondents is a contract of adhesion; it
was prepared solely by petitioner for respondents to conform to.
Although not automatically void, any ambiguity in a contract of
adhesion is con-

 
 
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Federal Express Corporation vs. Antonino
 strued strictly against the party that prepared it.
Accordingly, the prohibition against transporting money must be
restrictively construed against petitioner and liberally for
respondents. Viewed through this lens, with greater reason
should respondents be exculpated from liability for shipping
documents or instruments, which are reasonably understood as
not being money, and for being unable to declare them as such.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
   Quisumbing, Torres Law Office for petitioner.
   Alentajan Law Office for respondents.

 
LEONEN,  J.:
 
The duty of common carriers to observe extraordinary
diligence in shipping goods does not terminate until
delivery to the consignee or to the specific person
authorized to receive the shipped goods. Failure to deliver
to the person authorized to receive the goods is tantamount
to loss of the goods, thereby engendering the common
carrier’s liability for loss. Ambiguities in contracts of
carriage, which are contracts of adhesion, must be
interpreted against the common carrier that prepared
these contracts.
This resolves a Petition for Review on Certiorari1 under
Rule 45 of the 1997 Rules of Civil Procedure praying that
the assailed Court of Appeals’ August 31, 2011 Decision2
and 

_______________

1  Rollo, pp. 10-54.

2   Id., at pp. 56-70. The Decision was penned by Associate Justice
Franchito N. Diamante, and concurred in by Associate Justices Mariflor P.
Punzalan Castillo and Ricardo R. Rosario of the Special Fourth Division,
Court of Appeals, Manila.

 
 
454

454 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino
November 21, 2011 Resolution3 in C.A.-G.R. CV No. 91216
be reversed and set aside and that Luwalhati R. Antonino
(Luwalhati) and Eliza Bettina Ricasa Antonino (Eliza) be
held liable on Federal Express Corporation’s (FedEx)
counterclaim.
The assailed Court of Appeals’ August 31, 2011 Decision
denied the appeal filed by FedEx and affirmed the May 8, 2008
Decision4  of Branch 217, Regional Trial Court, Quezon City,
awarding moral and exemplary damages, and attorney’s fees to
Luwalhati and Eliza.5  In its assailed November 21, 2011
Resolution, the Court of Appeals denied FedEx’s Motion for
Reconsideration.6
Eliza was the owner of Unit 22-A (the Unit) in Allegro
Condominium, located at 62 West 62nd  St., New York,
United States.7  In November 2003, monthly common
charges on the Unit became due. These charges were for
the period of July 2003 to November 2003, and were for a
total amount of US$9,742.81.8
On December 15, 2003, Luwalhati and Eliza were in the
Philippines. As the monthly common charges on the Unit
had become due, they decided to send several Citibank
checks to Veronica Z. Sison (Sison), who was based in New
York. Citibank checks allegedly amounting to
US$17,726.18 for the payment of monthly charges and
US$11,619.35 for the payment of real estate taxes were
sent by Luwalhati through FedEx with Account No. x2546-
4948-1 and Tracking No. 8442

_______________

3   Id., at pp. 72-73. The Resolution was penned by Associate Justice

Franchito N. Diamante, and concurred in by Associate Justices Mariflor P.
Punzalan Castillo and Ricardo R. Rosario of the Former Special Fourth
Division, Court of Appeals, Manila.
4  Id., at pp. 203-209. The Decision, docketed as Civil Case No. Q-04-
52325, was penned by Pair Judge Hilario L. Laqui.
5  Id., at p. 69.
6  Id., at p. 73.
7  Id., at pp. 118, 203.
8  Id., at p. 256.

 
 

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Federal Express Corporation vs. Antonino
4588 4268. The package was addressed to Sison who was
tasked to deliver the checks payable to Maxwell-Kates, Inc.
and to the New York County Department of Finance. Sison
allegedly did not receive the package, resulting in the non-
payment of Luwalhati and Eliza’s obligations and the
foreclosure of the Unit.9
Upon learning that the checks were sent on December
15, 2003, Sison contacted FedEx on February 9, 2004 to
inquire about the nondelivery. She was informed that the
package was delivered to her neighbor but there was no
signed receipt.10
On March 14, 2004, Luwalhati and Eliza, through their
counsel, sent a demand letter to FedEx for payment of
damages due to the nondelivery of the package, but FedEx
refused to heed their demand.11  Hence, on April 5, 2004,
they filed their Complaint12 for damages.
FedEx claimed that Luwalhati and Eliza “ha[d] no cause of
action against it because [they] failed to comply with a condition
precedent, that of filing a written notice of claim within the 45
calendar days from the acceptance of the shipment.”13  It added
that it was absolved of liability as Luwalhati and Eliza shipped
prohibited items and misdeclared these items as
14
“documents.”   It pointed to conditions under its Air Waybill
prohibiting the “transportation of money (including but not
limited to coins or negotiable instruments equivalent to cash such
as endorsed stocks and bonds).”15

_______________

9   Id., at p. 203.
10  Id., at p. 256.
11  Id., at p. 203.
12  Id., at pp. 74-81.
13  Id., at p. 58.
14  Id.
15  Id., at p. 282.

 
 
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456 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

In its May 8, 2008 Decision,16 the Regional Trial Court

ruled for Luwalhati and Eliza, awarding them moral and
exemplary damages, and attorney’s fees.17
 The Regional Trial Court found that Luwalhati failed to
accurately declare the contents of the package as
“checks.”18  However, it ruled that a check is not legal
tender or a “negotiable instrument equivalent to cash,” as
prohibited by the Air Waybill.19  It explained that common
carriers are presumed to be at fault whenever goods are
lost.20  Luwalhati testified on the nondelivery of the
package. FedEx, on the other hand, claimed that the
shipment was released without the signature of the actual
recipient, as authorized by the shipper or recipient.
However, it failed to show that this authorization was
made; thus, it was still liable for the loss of the package.21
On noncompliance with a condition precedent, it ruled
that under the Air Waybill, the prescriptive period for
filing an action was “within two (2) years from the date of
delivery of the shipment or from the date on which the
shipment should have been delivered.”22  Luwalhati and
Eliza’s demand letter made on March 11, 2004 was within
the two (2)-year period sanctioned by the Air Waybill.23 The
trial court also noted that they were given a “run around”
by FedEx employees, and thus, were deemed to have
complied with the filing of the formal claim.24
The dispositive portion of the Regional Trial Court’s
May 8, 2008 Decision read:

_______________

16  Id., at pp. 203-209.

17  Id., at p. 209.
18  Id., at p. 204.
19  Id., at p. 205.
20  Id.
21  Id., at p. 206.
22  Id., at p. 207.
23  Id.
24  Id., at pp. 207-208.

 
 
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Federal Express Corporation vs. Antonino

WHEREFORE, judgment is hereby rendered in

favor of plaintiffs Luwalhati R. Antonino and Eliza
Bettina Ricasa Antonino ordering the following:
 1) The amount of P200,000.00 by way of moral
damages;
2) The amount of P100,000.00 by way of exemplary
damages; and
[3]) The amount of P150,000.00 as and for
attorney’s fees.
Costs against defendant.
The counterclaim is ordered dismissed.
SO ORDERED.25
 
In its assailed August 31, 2011 Decision,26  the Court of
Appeals affirmed the ruling of the Regional Trial
Court.27  According to it, by accepting the package despite
its supposed defect, FedEx was deemed to have acquiesced
to the transaction. Thus, it must deliver the package in
good condition and could not subsequently deny liability for
loss.28  The Court of Appeals sustained the Regional Trial
Court’s conclusion that checks are not legal tender, and
thus, not covered by the Air Waybill’s prohibition.29  It
further noted that an Air Waybill is a contract of adhesion
and should be construed against the party that drafted it.30
The dispositive portion of the Court of Appeals’ August
31, 2011 Decision read:

_______________

25  Id., at p. 209.
26  Id., at pp. 56-70.
27  Id., at p. 69.
28  Id., at p. 60.
29  Id., at p. 61.
30  Id., at pp. 61-62.

 
 
458

458 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

WHEREFORE, premises considered, the present appeal

is hereby DENIED. The assailed May 08, 2008 Decision of
the Regional Trial Court, Branch 217, Quezon City in Civil
case No. Q-04-52325 is AFFIRMED. Costs against the
herein appellant.
SO ORDERED.31

 
 Following the Court of Appeals’ denial32 of its Motion for
Reconsideration, FedEx filed the present Petition.
For resolution of this Court is the sole issue of whether or not
petitioner Federal Express Corporation may be held liable for
damages on account of its failure to deliver the checks shipped by
respondents Luwalhati R. Antonino and Eliza Bettina Ricasa
Antonino to the consignee Veronica Sison.
 
I
 
Petitioner disclaims liability because of respondents’
failure to comply with a condition precedent, that is, the
filing of a written notice of a claim for nondelivery or
misdelivery within 45 days from acceptance of the
shipment.33  The Regional Trial Court found the condition
precedent to have been substantially complied with and
attributed respondents’ noncompliance to FedEx for giving
them a runaround.34 This Court affirms this finding.
A provision in a contract of carriage requiring the filing
of a formal claim within a specified period is a valid
stipulation. Jurisprudence maintains that compliance with
this provision is a legitimate condition precedent to an
action for damages arising from loss of the shipment:

_______________

31  Id., at p. 69.
32  Id., at p. 73.
33  Id., at pp. 289-290.
34  Id., at pp. 207-208.

 
 
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Federal Express Corporation vs. Antonino

More particularly, where the contract of shipment

contains a reasonable requirement of giving notice of loss of
or injury to the goods, the giving of such notice is a
condition precedent to the action for loss or injury or the
right to enforce the carrier’s liability. Such requirement is
not an empty formalism. The fundamental reason or
purpose of such a stipulation is not to relieve the carrier
from just liability, but reasonably to inform it that the
shipment has been damaged and that it is charged with
 liability therefor, and 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.35
(Citation omitted)

 
Petitioner’s Air Waybill stipulates the following on filing
of claims:

Claims for Loss, Damage, or Delay. All claims must be

made in writing and within strict time limits. See any
applicable tariff, our service guide or our standard
conditions for carriage for details.
The right to damages against us shall be extinguished
unless an action is brought within two (2) years from the
date of delivery of the shipment or from the date on which
the shipment should have been delivered.
Within forty-five (45) days after notification of the claim,
it must be documented by sending to us [all the] relevant
information about it.36

 
For their claim to prosper, respondents must, thus,
surpass two (2) hurdles:  first, the filing of their formal
claim within 45

_______________

35   Philippine American General Insurance Co., Inc. v. Sweet Lines,

Inc., 287 Phil. 212, 226-227; 212 SCRA 194, 208 (1992) [Per J. Regalado,
Second Division].
36  Rollo, pp. 206-207.

 
 
460

460 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

days; and second, the subsequent filing of the action within

two (2) years.
There is no dispute on respondents’ compliance with the
second period as their Complaint was filed on April 5,
2004.37
 In appraising respondents’ compliance with the first
condition, this Court is guided by settled standards in
jurisprudence.
In  Philippine Airlines, Inc. v. Court of
38
Appeals,   Philippine Airlines alleged that shipper Gilda
Mejia (Mejia) failed to file a formal claim within the period
stated in the Air Waybill.39 This Court ruled that there was
substantial compliance with the period because of the
zealous efforts demonstrated by Mejia in following up her
claim.40  These efforts coupled with Philippine Airlines’
“tossing around the claim and leaving it unresolved for an
indefinite period of time” led this Court to deem the
requisite period satisfied.41 This is pursuant to Article 1186
of the New Civil Code which provides that “[t]he condition
shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment”:42

Considering the above mentioned incident and private

respondent Mejia’s own zealous efforts in following up the
claim, it was clearly not her fault that the letter of demand
for damages could only be filed, after months of
exasperating follow-up of the claim, on August 13, 1990. If
there was any failure at all to file the formal claim within
the prescriptive period contemplated in the air waybill, this
was largely because of PAL’s own doing, the

_______________

37  Id., at p. 74.
38   Philippine Airlines, Inc. v. Court of Appeals, 325 Phil. 303; 255
SCRA 48 (1996) [Per J. Regalado, Second Division].
39  Id., at p. 310; p. 69.
40  Id., at p. 328; p. 69.
41  Id.
42  Civil Code, Art. 1186.

 
 
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consequences of which cannot, in all fairness, be attributed

to private respondent.
Even if the claim for damages was conditioned on the
timely filing of a formal claim, under Article 1186 of the
 Civil Code that condition was deemed fulfilled, considering
that the collective action of PAL’s personnel in tossing
around the claim and leaving it unresolved for an indefinite
period of time was tantamount to “voluntarily preventing
its fulfillment.” On grounds of equity, the filing of the
baggage freight claim, which sufficiently informed PAL of
the damage sustained by private respondent’s cargo,
constituted substantial compliance with the requirement in
the contract for the filing of a formal claim.43 (Citations
omitted)

 
Here, the Court of Appeals detailed the efforts made by
respondent Luwalhati and consignee Sison. It also noted
petitioner’s ambiguous and evasive responses, nonchalant
handling of respondents’ concerns, and how these bogged
down respondents’ actions and impaired their compliance
with the required 45-day period:

Anent the issues concerning lack of cause of action and

their so-called “runaround” matter, We uphold the lower
court’s finding that the herein appellees complied with the
requirement for the immediate filing of a formal claim for
damages as required in the Air Waybill or, at least, We find
that there was substantial compliance therewith. Luwalhati
testified that the addressee, Veronica Z. Sison promptly
traced the whereabouts of the said package, but to no avail.
Her testimony narrated what happened thereafter, thus:

“. . .
COURT: All right. She was informed that it was lost. What steps
did you take to find out or to recover back this package?

_______________

43  Supra note 38 at p. 328; pp. 69-70.

 
 
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462 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

ATTY. ALENTAJAN:
Q What did you do to Fedex?
...
 WITNESS: First, I asked the secretary here to call Fedex Manila
and they said, the record show that it was sent to New York,
Your Honor.
...
ATTY. ALENTAJAN:
Q After calling Fedex, what did Fedex do?
A None, sir. They washed their hands because according to them
it is New York because they have sent it. Their records show
that New York received it, Sir.
Q New York Fedex?
A Yes, Sir.
Q Now what else did you do after that?
A And then I asked my friend Mrs. Veronica Sison to trace it,
Sir.
...
Q What did she report to you?
A She reported to me that first, she checked with the Fedex and
the first answer was they were going to trace it. The second
answer was that, it was delivered to the lady, her neighbor
and the neighbor completely denied it and as they show a
signature that is not my signature, so the next time she
called again, another person answered. She called to say
that the neighbor did not receive and the person on the other
line I think she got his name, said that, it is because it is
December and we usually do that just leave it and then they
cut the line and so I asked my friend to issue a sworn
statement in the form of affidavit and have it notarized in
the Philippine Embassy or Consulate, Sir. That is what she
did.
Q On your part here in the Philippines after doing that, after
instructing Veronica Sison, what else did you do because of
this violation?

 
 
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Federal Express Corporation vs. Antonino

A I think the next step was to issue a demand letter because any
way I do not want to go to Court, it is so hard, Sir.”

The foregoing event show Luwalhati’s own ardent

campaign in following up the claim. To the Court’s mind, it
is beyond her control why the demand letter for damages
was only sent subsequent to her infuriating follow-ups
 regarding the whereabouts of the said package. We can
surmise that if there was any omission at all to file the said
claim within the prescriptive period provided for under the
Air Waybill it was mostly due to herein appellant’s own
behavior, the outcome thereof cannot, by any chance, be
imputed to the herein appellees.44 (Grammatical errors in
the original)

 
Petitioner has been unable to persuasively refute
Luwalhati’s recollection of the efforts that she and Sison
exerted, and of the responses it gave them. It instead
insists that the 45-day period stated in its Air Waybill is
sacrosanct. This Court is unable to bring itself to
sustaining petitioner’s appeal to a convenient reprieve. It is
one with the Regional Trial Court and the Court of Appeals
in stressing that respondents’ inability to expediently file a
formal claim can only be attributed to petitioner hampering
its fulfillment. Thus, respondents must be deemed to have
substantially complied with the requisite 45-day period for
filing a formal claim.
 
II
 
The Civil Code mandates common carriers to observe
extraordinary diligence in caring for the goods they are
transporting:

Article  1733.  Common carriers, from the nature of their

business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over 

_______________

44  Rollo, pp. 62-64.

 
 
464

464 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

the goods and for the safety of the passengers transported by

them, according to all the circumstances of each case.

 
 “Extraordinary diligence is that extreme measure of care
and caution which persons of unusual prudence and
circumspection use for securing and preserving their own
property or rights.”45 Consistent with the mandate of
extraordinary diligence, the Civil Code stipulates that in
case of loss or damage to goods, common carriers are
presumed to be negligent or at fault,46 except in the
following instances:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international
or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing
or in the containers;
(5) Order or act or competent public authority.47
 
In all other cases, common carriers must prove that they
exercised extraordinary diligence in the performance of
their duties, if they are to be absolved of liability.48
The responsibility of common carriers to exercise
extraordinary diligence lasts from the time the goods are
unconditionally placed in their possession until they are
delivered “to the consignee, or to the person who has a
right to receive

_______________

45   Loadstar Shipping Company, Incorporated v. Malayan Insurance

Company, Incorporated, G.R. No. 185565, April 26, 2017, 825 SCRA 14
[Per J. Reyes, Special Third Division].
46  Civil Code, Art. 1735.
47  Id., Art. 1734.
48  Id., Art. 1735.

 
 
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them.”49 Thus, part of the extraordinary responsibility of

common carriers is the duty to ensure that shipments are
received by none but “the person who has a right to receive
them.”50 Common carriers must ascertain the identity of
the recipient. Failing to deliver shipment to the designated
recipient amounts to a failure to deliver. The shipment
shall then be considered lost, and liability for this loss
ensues.
Petitioner is unable to prove that it exercised
extraordinary diligence in ensuring delivery of the package
to its designated consignee. It claims to have made a
delivery but it even admits that it was not to the
designated consignee. It asserts instead that it was
authorized to release the package without the signature of
the designated recipient and that the neighbor of the
consignee, one identified only as “LGAA 385507,” received
it.51 This fails to impress.
The assertion that receipt was made by “LGAA 385507”
amounts to little, if any, value in proving petitioner’s successful
discharge of its duty. “LGAA 385507” is nothing but an
alphanumeric code that outside of petitioner’s personnel and
internal systems signifies nothing. This code does not represent a
definite, readily identifiable person, contrary to how commonly
accepted identifiers, such as numbers attached to official, public,
or professional identifications like social security numbers and
professional license numbers, function. Reliance on this code is
tantamount to reliance on nothing more than petitioner’s bare,
self-serving allegations. Certainly, this cannot satisfy the
requisite of extraordinary diligence consummated through
delivery to none but “the person who has a right to receive”52 the
package.
Given the circumstances in this case, the more reasonable
conclusion is that the package was not delivered. The package 

_______________

49  Id., Art. 1736.

50  Id.
51  Rollo, p. 66.
52  Civil Code, Art. 1736.

 
 
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466 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino

shipped by respondents should then be considered lost,

thereby engendering the liability of a common carrier for
this loss.
 Petitioner cannot but be liable for this loss. It failed to
ensure that the package was delivered to the named
consignee. It admitted to delivering to a mere neighbor.
Even as it claimed this, it failed to identify that neighbor.
 
III
 
Petitioner further asserts that respondents violated the
terms of the Air Waybill by shipping checks. It adds that
this violation exempts it from liability.53
This is untenable.
Petitioner’s International Air Waybill states:

Items Not Acceptable for Transportation. We do not

accept transportation of money (including but not limited to
coins or negotiable instruments equivalent to cash such as
endorsed stocks and bonds). We exclude all liability for
shipments of such items accepted by mistake. Other items
may be accepted for carriage only to limited destinations or
under restricted conditions. We reserve the right to reject
packages based upon these limitations or for reasons of
safety or security. You may consult our Service Guide,
Standard Conditions of Carriage, or any applicable tariff for
specific details.54 (Emphasis in the original)

 
The prohibition has a singular object: money. What
follows the phrase “transportation of  money” is a phrase
enclosed in parentheses, and commencing with the words
“including but not limited to.” The additional phrase,
enclosed as it is in parentheses, is not the object of the
prohibition, but merely a postscript to the word “money.”
Moreover, its introductory 

_______________

53  Rollo, p. 284.
54  Id., at p. 282.

 
 

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Federal Express Corporation vs. Antonino

words “including but not limited to” signify that the items
that follow are illustrative examples; they are not qualifiers
that are integral to or inseverable from “money.” Despite
the utterance of the enclosed phrase, the singular
prohibition remains: money.
Money is “what is generally acceptable in exchange for
goods.”55 It can take many forms, most commonly as coins
and banknotes. Despite its myriad forms, its key element is
its general acceptability.56 Laws usually define what can be
considered as a generally acceptable medium of exchange.57
In the Philippines, Republic Act No. 7653, otherwise known
as The New Central Bank Act, defines “legal tender” as
follows:

All notes and coins issued by the Bangko Sentral shall be

fully guaranteed by the Government of the Republic of the
Philippines and shall be legal tender in the Philippines for
all debts, both public and private: Provided, however, That,
unless otherwise fixed by the Monetary Board, coins shall
be legal tender in amounts not exceeding Fifty pesos
(P50.00) for denomination of Twenty-five centavos and
above, and in amounts not exceeding Twenty pesos (P20.00)
for denominations of Ten centavos or less.58

 
It is settled in jurisprudence that checks, being only
negotiable instruments, are only substitutes for money and
are not legal tender; more so when the check has a named
payee and is not payable to bearer. In Philippine Airlines,
Inc. v. Court of Appeals,59  this Court ruled that the
payment of a check to the sheriff did not satisfy the
judgment debt as checks are not 

_______________

55  Fisher, Irving, The Purchasing Power of Money: Its Determination

and Relation to Credit Interest and Crises 8 (2007).
56  Id.
57  Id.
58  Rep. Act No. 7653 (1993), Sec. 52.
59   260 Phil. 606; 181 SCRA 557 (1990) [Per J. Gutierrez, Jr., En
Banc].

 
 
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468 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino
considered legal tender. This has been maintained in other
cases decided by this Court. In Cebu International Finance
Corporation v. Court of Appeals,60 this Court held that the
debts paid in a money market transaction through the use
of a check is not a valid tender of payment as a check is not
legal tender in the Philippines. Further, in  Bank of the
Philippine Islands v. Court of Appeals,61  this Court held
that “a check, whether a manager’s check or ordinary
check, is not legal tender.”62
The Air Waybill’s prohibition mentions “negotiable
instruments” only in the course of making an example.
Thus, they are not prohibited items themselves. Moreover,
the illustrative example does not even pertain to negotiable
instruments  per se  but to “negotiable
63
instruments equivalent to cash.”
The checks involved here are payable to specific payees,
Maxwell­-Kates, Inc. and the New York County Department
of Finance.64  Thus, they are order instruments. They are
not payable to their bearer, i.e., bearer instruments. Order
instruments differ from bearer instruments in their
manner of negotiation:
 

Under Section 30 of the [Negotiable Instruments Law], an

order instrument requires an indorsement from the payee
or holder before it may be validly negotiated. A bearer
instrument, on the other hand, does not require an
indorsement to be validly negotiated.65

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60   374 Phil. 844; 316 SCRA 488 (1999) [Per J. Quisumbing, Second
Division].
61  383 Phil. 538; 326 SCRA 641 (2000) [Per J. Ynares-Santiago, First
Division].
62  Id., at p. 553; p. 655.
63  Rollo, p. 282.
64  Id., at p. 203.
65   Philippine National Bank v. Rodriguez, 588 Phil. 196, 210; 566
SCRA 513, 530 (2008) [Per J. Reyes, Third Division].

 
 
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Federal Express Corporation vs. Antonino
 There is no question that checks, whether payable to
order or to bearer, so long as they comply with the
requirements under Section 1 of the Negotiable
Instruments Law, are negotiable instruments.66 The more
relevant consideration is whether checks with a specified
payee are negotiable instruments equivalent to cash, as
contemplated in the example added to the Air Waybill’s
prohibition.
This Court thinks not. An order instrument, which has
to be endorsed by the payee before it may be
negotiated,67 cannot be a negotiable instrument equivalent
to cash. It is worth emphasizing that the instruments given
as further examples under the Air Waybill must be
endorsed to be considered equivalent to cash:68
 

Items Not Acceptable for Transportation. We do not

accept transportation of money (including but not limited to
coins or negotiable instruments equivalent to cash such
as endorsed stocks and bonds). (Emphasis in the original)69

 
What this Court’s protracted discussion reveals is that
petitioner’s Air Waybill lends itself to a great deal of
confusion.

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66  Section  1.  Form of negotiable instruments.—An instrument to be

negotiable must conform to the following requirements:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum
certain in money;
(c) Must be payable on demand, or at a fixed or determinable future
time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be
named or otherwise indicated therein with reasonable certainty.
67  Supra note 65.
68  Rollo, p. 282.
69  Id.

 
 
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470 SUPREME COURT REPORTS ANNOTATED

Federal Express Corporation vs. Antonino
The clarity of its terms leaves much to be desired. This lack
of clarity can only militate against petitioner’s cause.
The contract between petitioner and respondents is a
contract of adhesion; it was prepared solely by petitioner
for respondents to conform to.70 Although not automatically
void, any ambiguity in a contract of adhesion is construed
strictly against the party that prepared it.71 Accordingly,
the prohibition against transporting money must be
restrictively construed against petitioner and liberally for
respondents. Viewed through this lens, with greater reason
should respondents be exculpated from liability for
shipping documents or instruments, which are reasonably
understood as not being money, and for being unable to
declare them as such.
Ultimately, in shipping checks, respondents were not
violating petitioner’s Air Waybill. From this, it follows that
they committed no breach of warranty that would absolve
petitioner of liability.
WHEREFORE, the Petition for Review
on  Certiorari  is  DENIED. The assailed August 31, 2011
Decision and November 21, 2011 Resolution of the Court of
Appeals in C.A.-G.R. CV No. 91216 are AFFIRMED.
SO ORDERED.

_______________

70  Radio Communications of the Philippines, Inc. v. Verchez, 516 Phil.

725, 742; 481 SCRA 384, 401 (2006) [Per J. Carpio-Morales, Third
Division], citing Phil. Commercial International Bank v. Court of Appeals,
325 Phil. 588, 600; 255 SCRA 299, 306 (1996) [Per J. Francisco, Third
Division].
“A contract of adhesion is defined as one in which one of the parties
imposes a ready-made form of contract, which the other party may accept
or reject, but which the latter cannot modify. One party prepares the
stipulation in the contract, while the other party merely affixes his
signature or his ‘adhesion’ thereto, giving no room for negotiation and
depriving the latter of the opportunity to bargain on equal footing.”
71  Id.

 
 
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Federal Express Corporation vs. Antonino
 Velasco, Jr. (Chairperson), Bersamin, Martires, and
Gesmundo, JJ., concur.

Petition denied, judgment and resolution affirmed.

Notes.—Though casino chips do not constitute legal

tender, there is no law which prohibits their use or trade
outside of the casino which issues them. (Subic Bay Legend
Resorts and Casinos, Inc. vs. Fernandez, 736 SCRA  667
[2014])
In an action based on a breach of contract of carriage,
the aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All that he
has to prove is the existence of the contract and the fact of
its nonperformance by the carrier. (Fernando vs. Northwest
Airlines, Inc., 817 SCRA 233 [2017])

 
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