Mayer Steel Pipe Corp. vs.

CA (1997)
FACTS:
- The Hong Kong Government contracted Mayer Steel Corporation to manufacture and supply steel pipes
and fittings. Prior to the shipping, Mayer insured these pipes and fittings against all riss !ith South Sea
Surety and Charter "nsurance Corp. "ndustrial "nspection "nc. !as appointed as third-party inspector.
- #fter e$amining the pipes and fittings, "ndustrial "nspection certified that they are in good order
condition. Ho!ever, !hen the goods reached Hong Kong, it !as discovered that a su%stantial portion
thereof !as damaged.
- Hongong and Mayer demanded payment of the cost of repair of the damaged pipes. South Sea and
Charter refused to pay %ecause the insurance surveyor&s report allegedly sho!ed that the damage is a
factory defect.
- Trial court found in favor of the insured. "t found that the damage to the goods is not due to
manufacturing defects. "t also noted that the insurance contracts !ere 'all riss( policies !hich insure
against all causes of conceiva%le loss or damage. The only e$ceptions are those e$cluded in the policy, or
those sustained due to fraud or intentional misconduct on the part of the insured.
- CA: set aside the decision of the trial court and dismissed the complaint on the ground of prescription.
"t held that the action !as %arred under Sec. )*+, of the Carriage of Goods %y Sea #ct *C-GS#, since it
!as filed only on #pril ./, .01+, more than t!o years from the time the goods !ere unloaded from the
vessel.
ISSUE:
2hether or not the action is %arred %y prescription. !.
"E#$:
- Sec. )*+, of the C-GS# states that the carrier and the ship shall %e discharged from all lia%ility for loss
or damage to the goods if no suit is filed !ithin one year after delivery of the goods or the date !hen they
should have %een delivered.
- 3nder this provision, only the carrier&s lia%ility is e$tinguished if no suit is %rought !ithin one year. 4ut
the lia%ility of the insurer is not e$tinguished %ecause the insurer&s lia%ility is %ased not on the contract of
carriage %ut on the contract of insurance.
- The C-GS# governs the relationship %et!een the carrier on the one hand and the s%ipper& co'si('ee
a')*or t%e i'surer on the other hand. "t defines the o%ligations of the carrier under the contract of
carriage. "t does not affect the relationship %et!een the shipper and the insurer. The latter case is
governed %y the "nsurance Code.
- The 5ilipino Merchants case is different from the case at %ar. "n 5ilipino Merchants, it !as the insurer
!hich filed a claim against the carrier for reim%ursement of the amount it paid to the shipper. "n the case
at %ar, it !as the shipper !hich filed a claim against the insurer.
- The ruling therein should apply only to suits against the carrier filed either %y the shipper6consignee6
insurer. +%e' t%e court sai) i' Filipi'o Merc%a'ts t%at Sectio' ,(-) o. t%e Carria(e o. /oo)s 0y
Sea Act applies to t%e i'surer& it 1ea't t%at t%e i'surer& li2e t%e s%ipper& 1ay 'o lo'(er .ile a clai1
a(ai'st t%e carrier 0eyo') t%e o'e3year perio) provi)e) i' t%e la4.
- 4ut it does not mean that the shipper may no longer file a claim against the insurer %ecause the %asis of
the insurer&s lia%ility is the insurance contract. *Such o%ligation prescri%es in ten years, in accordance
!ith #rticle ..77 of the 8e! Civil Code.,