Jarque v. Smith, Bell & Co.
REITERATIONFacts
The Antecedents: Francisco Jarque, owner of the motorboat Pandan, obtained a marine insurance policy for P45,000 from National Union Fire Insurance Company. A rider attached to the policy stipulated that the insurance was against the "absolute total loss of the vessel only" and to pay proportionate salvage charges. During a voyage, the vessel encountered heavy seas, necessitating the jettison of a portion of the cargo. As a result, the insurance company was assessed P2,610.86 as its contribution to the general average. Procedural History: The insurance company refused to contribute to the general average, citing the policy's limitation. Francisco Jarque filed a case, and the trial court ruled in his favor, ordering the insurance company to pay P2,610.86. The insurance company appealed this decision. The Appeal: The appellant, National Union Fire Insurance Company, argued that the lower court erred in disregarding the typewritten clause limiting its liability to the absolute total loss of the vessel and proportionate salvage charges. It also contended that the court erred in holding it liable to contribute to the general average arising from the jettison of cargo.
Issue(s)
Whether the typewritten rider limiting the insurance coverage to "absolute total loss of the vessel only" prevails over the printed clauses and statutory provisions regarding general average contributions. Whether the appellant, as an underwriter of the vessel, is liable to contribute to the general average resulting from the jettison of cargo.
Ruling
The Supreme Court affirmed the decision of the lower court. It held that the typewritten rider, while controlling over the printed portion of the policy in case of inconsistency, did not exempt the insurance company from its statutory obligation to contribute to general average. The Court ruled that Article 859 of the Code of Commerce mandates such contributions from underwriters, irrespective of specific policy limitations.
Ratio Decidendi
On Issue 1: The Court held that while the typewritten rider limiting the insurance to "absolute total loss of the vessel only" prevails over the printed clauses of the policy due to the rule that written portions control printed portions in case of inconsistency, this limitation does not override statutory obligations. Section 291 of the Code of Civil Procedure supports the principle that written provisions control printed ones. However, the Court found that the liability for general average contribution is not solely a matter of contractual stipulation but is also imposed by law, specifically Article 859 of the Code of Commerce. On Issue 2: The Court ruled that the appellant is liable to contribute to the general average. Article 859 of the Code of Commerce explicitly states that underwriters of the vessel, freight, and cargo are obliged to pay for the indemnity of the gross average in so far as is required of each. This provision is mandatory and places the insurer on the same footing as other parties with an interest in the venture who are compelled to contribute. The jettison of cargo, undertaken to save the vessel, benefited the underwriter by potentially averting a much larger loss, thus justifying its contribution to the general average.
Main Doctrine
The Supreme Court affirmed that when a typewritten rider attached to an insurance policy contradicts a printed clause, the rider controls. Moreover, the Court held that underwriters are obligated by law to contribute to general average, as stipulated in Article 859 of the Code of Commerce, even if the policy's printed terms or a rider attempt to limit liability to absolute total loss of the vessel only. This obligation arises from the quasi-contractual relationship implied by law for the benefit of all parties with an interest in the venture.