FEDERAL EXPRESS VS.

AMERICAN
437 SCRA 50
AUGUST 18, 2004

FACTS:
Shipper SMITHKLINE USA delivered to carrier Burlington Air Express, an agent of
herein petitioner, a cargo shipment, insured with respondent which consist of 109 cartons
of veterinary biological for delivery to consignee SMITHKLINE and French Overseas
Company in Makati City with the words, “REFRIGERATE WHEN NOT IN TRANSIT” and
“PERISHABLE” stamp marked on its face. However, 12 days after the cargoes arrived in
Manila, it was found out that the same were stored only in a room with 2 air conditioners
running in the warehouse of Cargohaus Inc., to cool the place instead of a refrigerator.

As a consequence of the result of the veterinary biological 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.
Thereafter, PHILAM filed an action for damages against FEDEX imputing negligence on
either or both of them in the handling of the cargo where it was decided that FEDEX is
solidarily liable with Cargohaus Inc.

ISSUE: Whether or not FEDEX is liable for damage to or loss of the insured goods?

HELD:
NO.

Upon receipt of the insurance proceeds, the consignee (SMITHKLINE) executed a

subrogation receipt in favor of respondents authorizing them “to file claims and begin suit
against any such carrier, person, vessel, 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 and if that right was violated, the consignee would have a cause
of action against the person responsible therefor.

In the exercise of its subrogatory right, an insurer may proceed against an erring
carrier and to all intents and purposes, it stands in the place and in substitution of the
consignee.