G.R. No. L-22491 January 27, 1967
DOMINGO ANG, plaintiff-appellant, vs. AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellee.

FACTS

Yau Yue Commercial Bank Ltd. of Hongkong agreed to sell galvanized steel sheets to Herminio G. Teves. The terms required Teves to pay a bank draft to receive the bill of lading from the Hongkong & Shanghai Bank of Manila. The goods were shipped via S.S. TENSAI MARU under Bill of Lading No. WM-2, consigned “to order of the shipper” with Teves as the notify party. Yau Yue drew a demand draft against Teves through the bank. Upon arrival in Manila on or about May 9, 1961, Teves did not pay the draft. The bank returned the bill of lading to Yau Yue, which endorsed it to Domingo Ang. However, Teves obtained a bank guaranty in favor of the carrier’s agent, American Steamship Agencies, Inc., and secured a “Permit To Deliver Imported Articles,” leading to the release of the goods by the Bureau of Customs. Domingo Ang, as holder of the endorsed bill of lading, claimed the goods from American Steamship Agencies but was informed they had been delivered to Teves. On October 30, 1963, Ang filed a complaint for wrongful delivery/conversion. Defendant moved to dismiss, arguing prescription under the Carriage of Goods by Sea Act (one-year period from delivery or when goods should have been delivered). The lower court dismissed the action on the ground of prescription.

ISSUE

Has plaintiff-appellant’s cause of action prescribed under Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act?

RULING

No. The one-year prescriptive period under the Carriage of Goods by Sea Act applies only to liability for “loss or damage” to the goods. In this case, there was no damage, and the goods were not “lost” as defined by law. Applying Article 1189 of the Civil Code, “loss” refers to situations where goods perish, go out of commerce, or disappear. Here, the goods were delivered, albeit allegedly to the wrong person (Teves). This constitutes a case of misdelivery, not nondelivery or loss. The distinction is crucial: the Carriage of Goods by Sea Act’s short limitation period addresses maritime hazards, which are not present in a misdelivery scenario. For suits based on misdelivery or conversion, the Civil Code prescriptive periods apply (ten years for breach of written contract or four years for quasi-delict). Since the suit was filed on October 30, 1963, and the right of action accrued at the earliest on May 9, 1961, the action had not prescribed under these Civil Code provisions. The dismissal order was reversed, and the case was remanded for further proceedings.