G.R. No. L-32986 – FRANCISCO JARQUE, plaintiff-appellee, vs. SMITH, BELL & CO., LTD., ET AL., defendants.
UNION FIRE INSURANCE CO., appellant.
OSTRAND, J.
Rule Synopsis
The obligation for general averages is not based on the agreement but on a quasi-contract implied by law for those who were benefited by the expense.
Facts
Francisco Jarque (insured) insured its boat with National Union Fire Insurance Company (insurer). A typewritten rider in the policy states that the insurance was against the “absolute total loss of the vessel only.” The boat then ran into a heavy sea, necessitating jettisoning a portion of the cargo. For its share in the general average, the insurer was assessed in the sum of P2,610. The insurer refused to pay saying that its obligation is limited only in cases of “absolute total loss.”
Issue
Should National Union Fire Insurance Company be held liable?
Ruling and Discussion
Yes. National Union Fire Insurance Company should be held liable.
The Supreme Court held the insurer liable. It said that under the Philippine jurisdiction, within which the policy was executed, the liability for contribution in general average is not based on agreement, but upon the theory that from the relation of the parties and for their benefit, a quasi-contract is implied by law. Also, Art. 859 of the Code of Commerce imposes upon the insurers (whether of the vessel or of the freight), the obligation to contribute to gross or general averages. This provision simply places the insurer on the same footing as other persons who have an interest in the vessel, or the cargo therein; it is not unreasonable nor unfair. Lastly, the Court pointed out that the jettison also inured to the benefit of the insurer of the vessel since, without such, its liability would have been many times as large as the contribution now demanded.
Dispositive
Judgment affirmed.