G.R. No. 32986 - Jarque vs. Smith, Bell and Co., Ltd.

Francisco Jarque, the owner of the motorboat Pandan, entered into a marine insurance contract.
The insurance policy was issued by the National Union Fire Insurance Company (later the defendant appellant) for a sum of P45,000.
The policy was executed under the provisions of a printed marine insurance form in the English common form and included a specially attached typewritten "rider."

The printed portion of the policy detailed a broad array of perils typical in marine insurance, including risks from the sea, pirates, jettison, and more, thereby outlining the insurer’s interests in various misfortunes encountered by the vessel.
Attached to this printed clause was a typewritten rider containing explicit language in capitalized form, stating:

“AGAINST THE ABSOLUTE TOTAL LOSS OF THE VESSEL ONLY, AND TO PAY PROPORTIONATE SALVAGE CHARGES OF THE DECLARED VALUE.”

This rider was signed as “Attaching to and forming part of the National Union Fire Insurance Co., Hull Policy No. 1055,” establishing its integral role in defining the risk covered under the policy.

On October 31, 1928, while navigating very heavy seas off the Island of Ticlin, the motorboat Pandan encountered grave peril.
A critical decision had to be made to jettison a portion of the cargo in order to save the vessel—an act that is an accepted measure in marine salvage.
As a consequence of this jettison, there was a general average contribution assessed against the National Union Fire Insurance Company in the amount of P2,610.86.

The insurance company contended that due to the explicit limitation in the rider, its liability was confined exclusively to “absolute total loss of the vessel only” and proportionate salvage charges based on the vessel’s declared value.
Based on this interpretation, the insurer refused to contribute its share toward the general average incurred by the jettison of part of the cargo.
Consequently, Francisco Jarque instituted an action demanding that National Union Fire Insurance Company pay the contribution (P2,610.86) as part of the indemnity for the general average.
The trial court ruled in favor of the plaintiff and ordered the insurance company to pay the stipulated amount.

The trial court’s apparent disregard for the typewritten clause limiting the insurer’s liability.
The conclusion that the insurer was liable to contribute to the general average resulting from the jettison of cargo.

Whether the typewritten clause (rider) attached to the policy, expressly limiting the insurer’s liability to “absolute total loss of the vessel only, and to pay proportionate salvage charges of the declared value,” should prevail over the broader printed clause.
Whether the repugnance between the rider’s explicit limitation and the general printed form affects the interpretation of the risk assumed by the insurer.

Whether the insurer, under the circumstances of the jettison necessitated by grave peril at sea, is obligated to pay for the indemnity of the general average by virtue of a quasi-contract implied by law.
Whether Article 859 of the Code of Commerce, which mandates that underwriters for the vessel, freight, and cargo contribute to the indemnity of a gross average, binds the insurer despite the contractual limitation.
Whether the insurer’s potential benefit from the jettison—by possibly saving the vessel from destruction—creates an equitable obligation to contribute like other interested parties.

Whether the freedom of contract and the clear limitation in the rider may override mandatory statutory provisions designed to ensure shared contribution among all parties interested in the vessel and its cargo.