Published 27 May 2019, The Daily Tribune
This case involves Eliza who purchased a condominium unit in New York. Just like any unit owner, she is bound to pay condominium dues and realty tax. She went back to the Philippines but kept her unit. Her monthly dues accumulated over the period that she was in the Philippines. To cover the payment of her obligations, she sent several bank checks to her friend Susan who was based in New York. The checks were sent through FedEx. The package was addressed to Susan who was tasked to deliver the checks to the intended payees. Susan allegedly did not receive the package, resulting in the non-payment of Eliza’ s obligations and the foreclosure of her property.
After several follow-ups, Susan was informed that the package was delivered to her neighbor but there was no signed receipt. Eliza, through her counsel, sent a demand letter to FedEx for payment of damages due to the non-delivery of the package but FedEx refused to heed her demand. Hence, Eliza filed her complaint for damages.
FedEx contended that it should be absolved of liability as Eliza shipped prohibited items and misdeclared these items as “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).”
The issue is whether or not the bank checks are considered money, within the prohibition of FedEx’s Air Waybill.
The prohibition has a singular object: money. 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.
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 another case, the Court also ruled that the payment of a check to the sheriff did not satisfy the judgment debt as checks are not considered legal tender.
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 instruments equivalent to cash.” The checks involved here are payable to specific payees. Thus, they are order instruments. They are not payable to their bearer. Order instruments differ from bearer instruments in their manner of negotiation: Under Section 30 of the Negotiable Instruments Law, an order instrument requires an endorsement from the payee or holder before it may be validly negotiated. A bearer instrument, on the other hand, does not require an endorsement to be validly negotiated. 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. 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. The Supreme Court thinks they are not. An order instrument, which has to be endorsed by the payee before it may be negotiated, 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. (Federal Express Corporation vs. Antonino, G.R. No. 199455, June 27, 2018)
This case taught both parties a lesson. For Fedex, to perhaps include in the prohibited items for delivery all forms of bank checks or in the alternative, to stipulate against liability in case of delay or non-delivery of these items. For the sender, to consider a more efficient mode of payment remittance. While Eliza recovered damages, she lost her prized condominium unit. I hope you my dear readers learn your lesson from reading this article and not by actual experience.
For comments and questions, please send an email to firstname.lastname@example.org.