DOMINGO ANG, PLAINTIFF-APPELLANT, VS. AMERICAN STEAMSHIP AGENCIES, INC., DEFENDANT-APPELLEE. DOMINGO ANG, PLAINTIFF-APPELLANT, VS. AMERICAN STEAMSHIP AGENCIES, INC., DEFENDANT-A…

Domingo Ang versus American Steamship Agencies

The Case

This is a consolidated appeal in two civil actions for damages brought by Domingo Ang against American Steamship Agencies, Inc., the Philippine agent of the ocean carriers that transported two shipments from Japan to Manila. Ang had acquired the bills of lading by indorsement, but the goods were released by the carrier's agent to the buyers named as notify parties, who could not present the bills of lading and who gave only bank guaranties. Ang sued for wrongful delivery and conversion. The case matters because it fixes the boundary between the one-year prescriptive period of the Carriage of Goods by Sea Act and the longer periods of the Civil Code: the short maritime period applies to loss or damage, not to misdelivery.

Procedural History

Ang filed two separate complaints in the Court of First Instance of Manila, one for the Teves shipment and one for the Davao Merchandising Corporation shipment. The defendant moved to dismiss both on the ground of prescription under the Carriage of Goods by Sea Act. In the Teves case, the trial court granted the motion and dismissed the action; Ang's motion for reconsideration was denied, and he appealed to the Court of Appeals. In the Davao Merchandising Corporation case, the trial court initially denied the motion to dismiss because the complaint alleged no date of arrival or of delivery, but on reconsideration it reversed itself and likewise dismissed on prescription; the defendant appealed to the Court of Appeals. Both appeals, involving the same parties and the same question of law, were certified to the Supreme Court and decided together.

Facts

Yau Yue Commercial Bank Ltd. of Hongkong agreed to sell a boat containing used United States military surplus to Davao Merchandising Corporation, and forty-two cases of loom parts to Herminio Teves. Under the arrangements, the purchase price was to be covered by a bank draft, the bill of lading was to be deposited with the Hongkong and Shanghai Bank of Manila, the purchaser would be notified on arrival and would pay the draft in exchange for the bill of lading, and the purchaser would then present the bill of lading to the carrier's agent, American Steamship Agencies, Inc., to obtain a permit to deliver imported articles for presentation to the Bureau of Customs.

The loom parts were shipped from Nagoya in February 1961, consigned to the order of the shipper with Teves as the party to be notified, and arrived in Manila in March 1961. The boat was shipped from Yokohama in June 1961, consigned to the order of Yau Yue with Davao Merchandising Corporation as the party to be notified, and arrived in Manila in June 1961. The bills of lading were indorsed to Yau Yue and delivered to it by the shippers, and Yau Yue drew demand drafts with the bills of lading attached against the two buyers through the Hongkong and Shanghai Bank.

The buyers did not pay the drafts, and the bank protested and returned the bills of lading and drafts to Yau Yue, which indorsed both bills of lading to Domingo Ang. Meanwhile, the buyers obtained bank guaranties in favor of the carrier's agent promising to surrender the original bills of lading duly indorsed by Yau Yue, and on the strength of those guaranties each obtained a permit to deliver imported articles and secured the release of the goods from the Bureau of Customs. Ang demanded payment from the carrier's agent, was refused, and sued in October and November 1963, roughly two years and five months to two years and eight months after the shipments arrived.

Issues

• Whether or not the causes of action of Domingo Ang prescribed under the one-year period fixed by Section 3, paragraph 6, subparagraph 4 of the Carriage of Goods by Sea Act.
• Whether or not the release of the goods to the notify parties without surrender of the bills of lading constitutes loss or damage within the meaning of that provision, or is instead misdelivery or conversion governed by the Civil Code.

Applicable Provisions

Section 3, paragraph 6, subparagraph 4 of the Carriage of Goods by Sea Act, Commonwealth Act Number 65, provides:

In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

This is the provision invoked by the defendant and construed by the Court, and its application turns on whether the facts amount to loss or damage.

Article 18 of the Civil Code provides:

In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of this Code.

This supplies the definition of loss, which the Carriage of Goods by Sea Act does not define.

Article 1189 of the Civil Code provides:

When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received. In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return. As for the obligations of the debtor, it shall be understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered.

The Court adopts the definition of loss in the last sentence and applies it to the maritime provision.

Articles 1144 and 1146 of the Civil Code, referred to by the Court, establish the ten-year period for actions upon a written contract and the four-year period for actions upon a quasi-delict.

Ruling

The Court held that the causes of action had not prescribed. It applied its earlier ruling between the same parties on parallel facts, Domingo Ang versus American Steamship Agencies, Inc., decided in January 1967, which held that the one-year period does not apply to cases of misdelivery or conversion. The provision speaks of loss or damage, and the goods here were delivered intact, with no notice of damage filed by the recipients. Since the Carriage of Goods by Sea Act does not define loss, the Court resorted to the Civil Code, and under Article 1189 a thing is lost when it perishes, goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered.

The Court reasoned that loss contemplates no delivery at all, and does not include delivery to the wrong person. The situation is either delivery or misdelivery, but not nondelivery; the goods were either rightly delivered or misdelivered, but they were not lost. The one-year limitation exists to meet the exigencies of maritime hazards, and that need does not obtain where goods were neither lost nor damaged in transit but delivered at port to someone claiming to be entitled to them. Accordingly, the governing periods are those of the Civil Code, ten years for breach of a written contract or four years for quasi-delict. Since the complaints were filed only about two years and five months to two years and eight months after arrival, the actions were timely.

Doctrine

The one-year prescriptive period under Section 3, paragraph 6, subparagraph 4 of the Carriage of Goods by Sea Act applies only to claims for loss or damage to the goods. It does not apply to misdelivery or conversion, because the carrier's liability there arises from delivery to the wrong person, not from a maritime peril. For such suits, the applicable periods are those of the Civil Code: ten years for breach of a written contract under Article 1144, or four years for quasi-delict under Article 1146. Loss, as supplied by Article 1189 of the Civil Code through Article 18, means that the thing perished, went out of commerce, or disappeared in such a way that its existence is unknown or it cannot be recovered.

Disposition

The Court reversed and set aside the orders dismissing the complaints on the ground of prescription, and remanded both cases to the courts of origin for further proceedings, in favor of Domingo Ang.

Remember This

Memorize the line: the one-year period covers loss or damage, not misdelivery or conversion, so misdelivery is governed by the Civil Code periods of ten years on a written contract or four years on a quasi-delict. Examiners use this case to test whether a candidate can distinguish nondelivery from misdelivery and resist applying the maritime prescriptive period to a wrongful release of cargo.