[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.
1.BAILMENT AND CARRIERS; U. S. CARRIAGE OF GOODS BY SEA ACT OF 1936, MADE BY LAW
APPLICABLE IN THE PHILIPPINES; LIMITATION OF ACTIONS UNDER THAT ACT.—The U. S. Carriage
of Goods by Sea Act of 1936 was adopted and made applicable to the Philippines by Commonwealth Act 65. Where
697

VOL. 96, MARCH 31, 1955

697
Eagle Star Ins., Co., Ltd., et al. vs. Chia Yu
there is a stipulation in a bill of lading covering shipment from the United States to the Philippines that "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 shipper's failure to bring
an action for damages within the said period of one year discharges the carrier from all liability (Chua Kuy vs.
Everret Steamship Corp., 93 Phil., 207; E. E. Elser, Inc. vs. Court of Appeals, supra, p. 264).
2.PLEADING AND PRACTICE; LIMITATION OF ACTIONS; INSURANCE POLICY; CONTRACTUAL
LIMITATION OF ACTION.—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).
3.ID.; ID.; ID.; ID.—It was held in Macias & Co. vs. China Fire Insurance Co., Ltd. (46 Phil., 345) 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 inserted in the Insurance Act section 61-A providing that "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."
4.ID.; ID.; ID.; ID.; CAUSE OF ACTION ACCRUES AFTER CLAIM OF INSURER is FINALLY REJECTED
BY THE CARRIER AND THE INSURER.—Where the policy provides that the insured should file his claim, first,
with the carrier and then with the insurer, the shipper has a right to wait for his claim to be finally decided before
going to court. The law does not encourage unnecessary litigation. Eagle Star Ins., Co., Ltd., et al. vs. Chia Yu, 96
Phil. 696, No. L-5915 March 31, 1955