[01] ANG GIOK CHIP v. SPRINGFIELD FIRE & MARINE INSURANCE COMPANY clauses.
clauses. One of them is warranty F, specially referred to on the face of the policy,
GR No. L-3367 | December 31, 1931 | Malcolm, J.
SUMMARY
Ang Giok Chip owned a warehouse, some contents of which were insured by
Springfield. Ang’s warehouse burned down; he wanted the proportional amount insured
by Springfield. Springfield did not oblige stating that Ang violated one of the provisions
(Warranty) in the insurance policy. The Court said that said Warranty is valid, and so
Ang is not entitled to the insurance money. The Court in construing the applicable
provision of the Philippine Insurance Act used principles of the law of California which
is the basis of Philippine laws.
DOCTRINES
The Philippine law on insurance was taken verbatim from the law of California.
Accordingly, the courts of the Philippines should follow in fundamental points at least,
the construction placed by California courts on a California law.
FACTS
Ang Giok Chip owned a warehouse in Calle Reina Regente, Manila.
- The contents of the warehouse were insured with the three insurance
companies for the total sum of P60,000.
Springfield Fire & Marine Insurance Company was one of the 3 insurance companies
- Insurance policy was of the amount of P10,000
January 11, 1928: The warehouse was destroyed by fire while the policy issued by
Springfield was in force.
- Plaintiff instituted action in the CFI of Manila against the defendant to recover
a proportional part of the loss coming to P8,170.59.
- Four special defenses were interposed on behalf of the insurance company,
one being planted on a violation of warranty F fixing the amount of hazardous
goods which might be stored in the insured building.
- CFI: gave judgment in favor of the plaintiff for the sum of P8,188.74.
INSURANCE POLICY
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, on commission or on joint account with
others, or for which he is responsible, while contained during the currency of this policy
in the godown, situate No. 643 Calle Reina Regent. . . .
This policy is subject to the hereon attached "Ordinary Short Period Rate Scale"
Warranties A & F, Co-insurances Clause "and Three Fourths Loss Clause," which are
forming part of same. Co-insurance declared:
P20,000. — Sun Insurance Office Ltd. (K & S)." (Emphasis inserted.) Securely
pasted on the left hand margin of the face of the policy are five warranties and special
1
They relied on the consular invoices and on the testimony of the adjuster
reading in part as follows:
WARRANTY F (slip of paper pasted on the margin of the fire insurance policy)
It is hereby declared and agreed that during the currency of this policy no
hazardous goods be stored in the Building to which this insurance applies or in any
building communicating therewith, provided, always, however, that the Insured be
permitted to stored a small quantity of the hazardous goods specified below, but not
exceeding in all 3 per cent of the total value of the whole of the goods or merchandise
contained in said warehouse, viz;…
ISSUE
W/n Warranty F is null and void. NO
RATIO
Court immediately said that hazardous goods exceeded 3%; it reached 39% 1
As to issue:
The applicable law is found in the Insurance Act, Act No. 2427, as amended, section
65 reading:
"Every express warranty, made at or before the execution of a policy, 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."
Law should be construed in the same manner as California laws
- As the Philippine law was taken verbatim from the law of California, in
accordance with well settled canons of statutory construction, the court
should follow in fundamental points, at least, the construction placed by
California courts on a California law.
- No authority or ruling from the California courts is perfectly applicable in this
case, BUT there are certain consideration lying at the basis of California law
and certain indications in the California decisions which point the way for the
decision in this case
- Section 65 of the Philippine Insurance Act corresponds to section 2605 of the
Civil Cod of California.
1. Section 2605, as it now reads (because it was amended), is in
harmony with the rule that a warranty may be contained in another
instrument than the policy when expressly referred to in the policy as
forming a part thereof
- The codification of the law of California was but an affirmance of the
generally accepted doctrine applicable to such insurance contracts.
- Two recognized doctrines in California insurance law
 1. It is well settled that a rider attached to a policy is a part of the part of it, is not one of the forms prescribed by section 65 of the Insurance Law in which
contract, to the same extent and with like effect as it actually an express warranty may be made to appear validly so as to be binding between the
embodied therein. insurer and the insured.
2. It is equally well settled that an express warranty must appear upon
the face of the policy, or be clearly incorporated therein and made a
part thereof by explicit reference, or by words clearly evidencing such
intention.
- Section 65 of the Insurance Act and its counterpart, section 265 of the Civil
Code of California, will bear analysis as tested by reason and authority.
▪ The law says that every express warranty must be "contained in the
policy itself."
▪ As to the alternative relating to "another instrument," "instrument" as
here used could not mean a mere slip of paper like a rider, but
something akin to the policy itself, which in section 48 of the
Insurance Act is defined as "The written instrument, in which a
contract of insurance is set forth." In California, the word
“instrument” means some written paper or instrument signed and
delivered by one person to another, transferring the title to, or giving
a lien, on property, or giving a right to debt or duty.
▪ The rider Warranty F is contained in the policy itself because it is
made to form a part of the contract; it is not another instrument
- Another rule adopted by Cali
▪ Receipt by the insured of the policy is binding to both parties; he
cannot thereafter claim he did not know all the terms.
▪ If however the holder or a policy discovers a mistake made in
attaching a wrong rider but thereafter elects to retain it without
modifications, he thereby accepts the policy.

Court: These are matters of public policy. We cannot believe that it was ever the
legislative intention to insert in the Philippine Law on Insurance an oddity, an
incongruity, entirely out of harmony with the law as found in other jurisdiction, and
destructive of good business practice.

SEPARATE OPINIONS
IMPERIAL, J., dissenting:
Warranty F is not binding because it is neither contained in the policy itself nor was it
in another instrument signed by the insured which is the requirement in Section 65 of
the Insurance Law.

VILLAREAL, J., dissenting

I fully concur in the dissenting opinion penned by Justice Imperial, and further say that
a rider or slip attached to an insurance policy, though referred to therein as making a