G.R. No. L-5915. March 31, 1955
EAGLE STAR INSURANCE CO., LTD., KURR STEAMSHIP CO., INC., ROOSEVELT STEAMSHIP AGENCY, INC., AND LEIF HOEGH & COMPANY, A/S., PETITIONERS VS. CHIA YU, RESPONDENT.
REYES, A., J.:
Silverlight owned and operated by Leigh Hoegh & Co., A/S, of San Francisco,
California, 14 bales of assorted underwear valued at P8,085.23 consigned to Chia
Yu in the City of Manila. The shipment was insured against all risks by Eagle
Star Ins. Co. of San Francisco, California, under a policy issued to the shipper
and by the latter assigned to the consignee. The vessel arrived in Manila on
February 10, 1946, and on March 4 started discharging its cargo into the custody
of the Manila Terminal Co., Inc., which was then operating the arrastre service
for the Bureau of Customs. But of the 14 bales consigned to Chia Yu only 10 were
delivered to him as the remaining 4 could not be found. Three of those delivered
were also found damaged to the extent of 50 per cent.
Chia Yu claimed indemnity for the missing and damaged bales. But the claim
was declined, first, by the carrier and afterward by the insurer, whereupon Chia
Yu brought the present action against both, including their respective agents in
the Philippines. Commenced in the Court of First Instance of Manila on November
16, 1948, or more than two years after delivery of the damaged bales and the
date when the missing bales should have been delivered, the action was resisted
by the defendants principally on the ground of prescription. But the trial court
found for plaintiff and rendered judgment in his favor for the sum claimed plus
legal interest and costs. The judgment was affirmed by the Court of Appeals, and
the case is now before us on appeal by certiorari.
Except for the controversy as to the amount for which the carrier could be
held liable under the terms of the bill of lading, the only question presented
for determination is whether plaintiff’s action has prescribed.
On the part of the carrier the defense of prescription is made to rest on the
following stipulation of the bill of lading:
“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 the
delivery of the goods or the date when the goods should have been
delivered.”
The stipulation is but a repetition of a provision contained in section 3(6)
of the United States Carriage of Goods by Sea, Act of 1936, which was adopted
and made applicable to the Philippines by Commonwealth Act 65 and by express
agreement incorporated by reference in £he bill of lading. Following our
decision in Chua Kuy vs. Everett Steamship Corporation,[1] G. R. No. L-5554 (May 27, 1953) and in E.
E. Elser, Inc., et al., vs. Court of Appeals, et al.,[2] G. R. No.” L-6517 (November 29, 1954)
giving force and effect to this kind of stipulation in bills of lading covering
shipments from the United States to the Philippines, we have to hold that
plaintiff’s failure to bring his action “within one year after the delivery of
the goods or the date when the goods should have been delivered” discharged the
carrier from all liability. This dispenses with the necessity of deciding how
much could be recovered from the carrier1 under the terms of the bill of
lading.
The case for the insurer stands on a different footing, for its claim of
prescription is founded upon the terms of the policy and not upon the bill of
lading. Under our law the time limit for bringing a civil action upon a written
contract is ten years after the right of action accrues. (Sec. 43, Act 190; Art.
1144, New Civil Code.) But counsel for the insurer claim that this statutory
limitation must yield to the following stipulation in the policy:
“No suit or action on this Policy, for the recovery of any claim, shall be
sustainable in any Court of law or equity unless the insured shall have fully
complied with all the terms and conditions of this Policy nor unless commenced
within twelve (12) months next after the happening of the loss * *
*”
To this we cannot agree.
In the case of E. Macias & Co. vs. China Fire Insurance &
Co., Ltd., et al., 46 Phil. 345, relied upon by the insurer, this Court held
that a clause in an insurance policy providing that an action upon the policy by
the insured must be brought within a certain time is, if reasonable, valid and
will prevail over statutory limitations of the action. That decision, however,
was rendered before the passage of Act 4101, which amended the Insurance Act by
inserting the following section in chapter one thereof:
“Sec. 61-A. Any condition, stipulation or agreement in any policy of
insurance, limiting the time for commencing an action thereunder to a period of
less than one year from the time when the cause of action accrues, is
void.”
As “matters respecting a remedy, such as the bringing of suit, admissibility
of evidence, and statute of limitations, depend upon the law of the place where
the suit is brought” (Insular Government vs. Frank, 13 Phil. 236), any
policy clause repugnant to this amendment to the Insurance Act cannot be given
effect in an action in our courts.
Examining the policy sued upon in the present case, we find that its
prescriptive clause, if given effect in accordance with the terms of the policy,
would reduce the period allowed the insured for bringing his action to less than
one year. This is so because the said clause makes the prescriptive period begin
from the happening of the loss and at the same time provides that no suit on the
policy shall be sustainable in any court unless the insured shall have first
fully complied with all the terms and conditions of the policy, among them that
which requires that, as soon as the loss is determined, written claim therefor
be filed with the carrier and that the letter to the carrier and the
latter’s reply should be attached to the claim papers to be sent to the
insurer. It is obvious that compliance with this condition precedent
will necessarily consume time and thus shorten the period for bringing suit to
less than one year if the period is to begin, as stated in the policy, from
“the happening of the loss.” Being contrary to the law of the forum,
such stipulation cannot be given effect.
It may perhaps be suggested that the policy clause relied on by the insurer
for defeating plaintiff’s action should be given the construction that would
harmonize it with section 61-A of the Insurance Act by taking; it to mean that
the time given the insured for bringing his suit is twelve months after the
cause of action accrues. But the question then would be: When did the cause of
action accrue ? On that ” question we agree with the court below that
plaintiff’s cause of action did not accrue until his claim was finally rejected
by the insurance company. This is because, before such final rejection, there
was no real necessity for bringing suit. As the policy provides that the insured
should file his claim, first, with the carrier and then with the insurer, he had
a right to wait for his claim to be finally decided before going to court. The
law does not encourage unnecessary litigation.
At this junction it should be explained that while the decision of the Court
of Appeals states that the claim against the insurance company “was finally
rejected on April 22, 1947, as correctly concluded by the court below,” it is
obvious from the context and we find it to be a fact that the date meant was
April 22, 1948, for this was the date when, according to the finding of
the trial court, the insurance company in London rejected the claim. The trial
court’s decision says:
‘On September 21, 1946, after Roosevelt Steamship Agency, Inc., and Manila
Terminal Co., Inc. denied plaintiff’s claim, a formal insurance claim was filed
with Kerr & Co., Ltd., local agents of Eagle Star Insurance Co., Ltd. (Exh.
L.) Kerr & Co., Ltd. referred the insurance claim to Eagle Star Insurance
Co., Ltd. in London, but the latter, after insistent requests of plaintiff for
action, rejected the claim on April 22, 1948, giving as its reason the lapse of
the expiry day of the risks covered by the policy and returned the claim docu
ments only in August of 1948.” (pp. 87-88, Record on Appeal.)
Furthermore, there is nothing in the record to show that the claim was
rejected in the year 1947, either by the insurance company in London or its
settling agents in the Philippines, while on the other hand defendant’s own
Exhibit L-l is indisputable proof that it was on “22nd April 1948” that the
settling agents informed the claimant “that after due and careful consideration,
our Principals confirm our declination of this claim.” It not appearing that the
settling agents’ decisions on claims against their principals were not subject
to reversal or modification by the latter, while on the contrary the insurance
policy expressly stipulates, under the heading “Important Notice” that
the said agents “have authority to certify only as to the nature, cause and
extent of the damage,” and it furthermore appearing that a reiteration of
plaintiff’s claim was made to the principals and the latter gave it due course
since only “after due and careful consideration” did they confirm the action
taken by the agents, we conclude that, for the purposes of the present action,
we should consider plaintiff’s claim to have been finally rejected by the
insurer on April 22, 1948. Having been filed within twelve months from that
date, the action cannot be deemed to have prescribed even on the supposition
that the period given the insured for bringing suit under the prescriptive
clause of the policy is twelve months after the accrual of the cause of
action.
In concluding, we may state that contractual limitations contained in
insurance policies are regarded with extreme jealousy by courts and will be
strictly construed against the insurer and should not be permitted to prevent a
recovery when their just and honest application would not produce that result.
(46 C. J. S. 273.)
Wherefore, the judgment appealed from is reversed with respect to the carrier
and its agents but affirmed with respect to the insurance company and its
agents, with costs against the latter.
Pablo, Bengzon, Padilla, Jugo, Bautista Angelo, Concepcion and
Reyes, J.B.L., JJ., concur.
Judgment reversed.
[1] 193 Phil., 207.
[2] Supra, p. 264.