Facts:

The case Ang Giok Chip, doing business under the name and style of Hua Bee Kong Si, as the plaintiff and appellee, versus Springfield Fire & Marine Insurance Company, as the defendant and appellant, was decided by the Supreme Court of the Philippines on December 31, 1931. The dispute arose from a fire that destroyed a warehouse owned by Ang Giok Chip, located at No. 643 Calle Reina Regente, City of Manila, on January 11, 1928. The warehouse's contents were insured for a total of P60,000 with three different insurance companies, including a policy worth P10,000 from Springfield Fire & Marine Insurance Company. Following the fire, Ang Giok Chip filed a claim to recover P8,170.59, which represented a proportional part of the loss under the insurance policy. The insurance company raised four special defenses, one of which claimed a violation of warranty F, which limited the amount of hazardous goods that could be stored in the insured building to no more than 3% of th...

Facts:

Background of the Case

• Ang GioK Chip, doing business under the name and style of Hua Bee Kong Si, was formerly the owner of a warehouse located at No. 643 Calle Reina Regente, City of Manila.
• The warehouse contained merchandise insured for a total value of P60,000 with three different insurance companies, one of which was the Springfield Fire & Marine Insurance Company for a policy amount of P10,000.

Occurrence of the Loss

• The warehouse was destroyed by fire on January 11, 1928, while the Springfield policy was still in force.
• Based on this policy, the plaintiff filed an action in the Court of First Instance of Manila, seeking to recover a proportional part of the loss, amounting to P8,170.59.

Special Defenses Raised by the Insurance Company

• Among four special defenses raised by the insurance company, one key defense was based on a violation of warranty F, which fixed the maximum amount of hazardous goods allowed in the insured building.
• The trial court found against the insurance company on all counts and rendered judgment for P8,188.74 in favor of the plaintiff.

Policy and Warranty F Details

• The insurance policy described the risk as “Ten thousand pesos Philippine Currency. On general non-hazardous merchandise, chiefly consisting of chucherias, also produce, Cacao, Flour, all the property of the Insured, or held by them in trust…” and references several attached warranties, including warranty F.
• Warranty F, presented as a rider pasted on the margin of the policy, stated that no hazardous goods should be stored in the building, except for a permissible small quantity not exceeding 3 percent of the total value of the merchandise.

Relevant Legal Provisions and Jurisprudence

• Section 65 of the Insurance Act (Act No. 2427, as amended) mandates that every express warranty must be “contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it.”
• The policy and its attached rider were analyzed in light of California law, specifically section 2605 of the Civil Code of California, whose historical interpretation has influenced the prevailing doctrine in insurance contracts both in California and, by adoption, in the Philippines.
• The majority opinion relied on the established practice that a rider attached to the policy is deemed part of the contract, provided it is sufficiently attached and does not contravene statutory requirements.

Parties’ Positions and Evidence Presented

• The insurance company contended that the rider (warranty F) did not comply with the formalities required by the Insurance Act and should therefore be declared null and void.
• The plaintiff, on the other hand, maintained that the rider was an integral part of the policy, in line with both Philippine and California insurance law doctrine.
• Evidence such as consular invoices and testimony from the adjuster Herrnidge indicated that the percentage of hazardous goods stored in the warehouse might have significantly exceeded the allowable 3 percent, yet the legal debate centered on the validity of the warranty rather than its quantitative breach.

Issue:

Validity of Warranty F

• Whether the express warranty (warranty F) attached as a rider to the insurance policy is valid and binding under section 65 of the Insurance Act.
• Whether a rider or slip attached to the policy, though not signed by the insured, can be considered as “contained in the policy itself” and thus form a part of the contract.

Interpretation of “Contained in the Policy Itself”

• Whether the term “contained” encompasses documents physically attached to the policy (i.e., riders or slips) or if it strictly requires incorporation within the body of the policy or in an instrument signed by the insured.
• How the Philippine Insurance Act, modeled after California law, should be interpreted concerning such attachments.

Public Policy Considerations

• The implications of invalidating common insurance practices that rely on riders, given that similar mechanisms are widely used by over sixty-nine insurance companies in the Philippine Islands.
• Whether nullifying such riders would create adverse effects on the business and custom of insurance in the Philippines.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)