MAYER STEEL PIPE CORP. v. CA
274 SCRA 432, June 19, 1997
FACTS:
Petitioner Hongkong Government Supplies Department
(Hongkong) contracted petitioner Mayer Steel Pipe Corporation
(Mayer) to manufacture and supply various steel pipes and fittings.
Prior to the shipping, petitioner Mayer insured the pipes and fittings
against all risks with private respondents South Sea Surety and
Insurance Co., Inc. (South Sea) and Charter Insurance Corp.
(Charter). A third-party inspector jointly hired by petitioners certified
all the pipes and fittings to be in good order condition before they
were loaded in the vessel. Nonetheless, when the goods reached
Hongkong, it was discovered that a substantial portion thereof was
damaged.
Petitioners Mayer and Hong Kong filed a claim against private
respondents for indemnity under the insurance contract.
Respondent Charter paid petitioner Hongkong the amount of
HK$64,904.75. Petitioners demanded payment of the balance of
HK$299,345.30 representing the cost of repair of the damaged
pipes. Private respondents refused to pay because the insurance
surveyor’s report allegedly showed that the damage is a factory
defect.
Petitioners filed an action against private respondents South Sea
and Charter to recover the sum of HK$299,345.30.
The trial court ruled in favor of petitioners. Private respondents
elevated the case to respondent Court of Appeals. Respondent
court affirmed the finding of the trial court that the damage is not
due to factory defect and that it was covered by the “all risks”
insurance policies issued by private respondents to petitioner
Mayer. However, it set aside the decision of the trial court and
dismissed the complaint on the groimd of prescription. It held that,
the action is barred under Section 3(6) of the Carriage of Goods by
Sea Act since it was filed only on April 17, 1986, more than two
years from the time the goods were unloaded from the vessel.
HELD:
Section 3(6) of the Carriage of Goods by Sea Act states that
the carrier and the ship shall be discharged from all liability for loss
or damage to the goods if no suit is filed within one year after
delivery of the goods or the date when they should have been
delivered. Under this provision, only the carrier’s liability is
extinguished if no suit is brought within one year. But the liability of
the insurer is not extinguished because the insurer’s liability is
based not on the contract of carriage but on the contract of
insurance. A close reading of the law reveals that COGSA governs
the relationship between the carrier on the one hand and the
shipper, the consignee and/or the insurer on the other hand. It
defines the obligations of the carrier under the contract of carriage.
It does not, however, affect the relationship between the shipper
and the insurer. The latter case is governed by the Insurance Code.
