Ang Giok Chip v Springfield G.R. No. L-33637 December 31, 1931 J.

Malcolm Facts: Ang insured his warehouse for the total value of Php 60,000. One of these, amounting to 10,000, was with Springfield Insurance Company. His warehouse burned down, then he attempted to recover 8,000 from Springfield for the indemnity. The insurance company interposed its defense on a rider in the policy in the form of Warranty F, fixing the amount of hazardous good that can be stored in a building to be covered by the insurance. They claimed that Ang violated the 3 percent limit by placing hazardous goods to as high as 39 percent of all the goods stored in the building. His suit to recover was granted by the trial court. Hence, this appeal. Issue: Whether a warranty referred to in the policy as forming part of the contract of insurance and in the form of a rider to the insurance policy, is null and void because not complying with the Philippine Insurance Act. Held: No. The warranty is valid. Petition dismissed. Ratio: The Insurance Act, Section 65, taken from California law, states: "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." Warranty F, indemnifying for a value of Php 20,000 and pasted on the left margin of the policy stated: 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; . . . . Also, the court stated a book that said, "any express warranty or condition is always a part of the policy, but, like any other part of an express contract, may be written in the margin, or contained in proposals or documents expressly referred to in the policy, and so made a part of it." It is well settled that a rider attached to a policy is a part of the contract, to the same extent and with like effect as i t actually embodied therein. In the second place, 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. The court concluded that Warranty F is contained in the policy itself, because by the contract of insurance agreed to by the parties it was made to be a part. It wasnt aseparate instrument agreed to by the parties. The receipt of the policy by the insured without objection binds him. It was his duty to read the policy and know its terms. He also never chose to accept a different policy by considering the earlier one as a mistake. Hence, the rider is valid.

QUA CHEE GAN V. LAW UNION ROCK - BREACH OF WARRANTY 98 PHIL 85

Facts: > Qua Chee Gan, a merchant, owned 4 warehouses in Albay which were used for the storage or copra and hemp in which the appelle deals with exclusively. > The warehouses together with the contents were insured with Law Union since 1937 and the loss made payable to PNB as mortgagee of the hemp and copra.

> A fire of undetermined cause broke out in July 21, 1940 and lasted for almost 1 whole week. > Bodegas 1, 3, and 4 including the merchandise stored were destroyed completely. > Insured then informed insurer of the unfortunate event and submitted the corresponding fire claims, which were later reduced to P370T. > Insurer refused to pay claiming violations of the warranties and conditions, filing of fraudulent claims and that the fire had been deliberately caused by the insured. > Insured filed an action before CFI which rendered a decision in favor of the insured.

Issues and Resolutions: (1) Whether or not the policies should be avoided for the reason that there was a breach of warranty.

Under the Memorandum of Warranty, there should be no less than 1 hydrant for each 150 feet of external wall measurements of the compound, and since bodegas insured had an external wall per meter of 1640 feet, the insured should have 11 hydrants in the compound. But he only had 2.

Even so, the insurer is barred by estoppel to claim violation of the fire hydrants warranty, because knowing that the number of hydrants it demanded never existed from the very beginning, appellant nevertheless issued the policies subject to such warranty and received the corresponding premiums. The insurance company was aware, even before the policies were issued, that in the premises there were only 2 hydrants and 2 others were owned by the Municipality, contrary to the requirements of the warranties in question.

It should be close to conniving at fraud upon the insured to allow the insurer to claim now as void the policies it issued to the insured, without warning him of the fatal defect, of which the insurer was informed, and after it had misled the insured into believing that the policies were effective.

Accdg to American Jurisprudence: It is a well-settled rule that the insurer at the time of the issuance of a policy has the knowledge of existing facts, which if insisted on, would invalidate the contract from its very inception, such knowledge constitutes a waiver of conditions in the contract inconsistent with known facts, and the insurer is stopped thereafter from asserting the breach of such conditions. The reason for the rule is: To allow a company to accept ones money for a policy of insurance which it knows to be void and of no effect, though it knows as it must that the insured believes it to be valid and binding is so contrary to the dictates of honesty and fair dealing, as so closely related to positive fraud, as to be

abhorrent to fair-minded men. It would be to allow the company to treat the policy as valid long enough to get the premium on it, and leave it at liberty to repudiate it the next moment.

Moreover, taking into account the well-known rule that ambiguities or obscurities must strictly be interpreted against the party that cause them, the memorandum of warranty invoked by the insurer bars the latter from questioning the existence of the appliances called for, since its initial expression the undernoted appliances for the extinction of fire being kept on the premises insured hereby.. admits of the interpretation as an admission of the existence of such appliances which insurer cannot now contradict, should the parole evidence apply.

(2) Whether or not the insured violated the hemp warranty provision against the storage of gasoline since insured admitted there were 36 cans of gasoline in Bodega 2 which was a separate structure and not affected by the fire.

It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in the socalled hemp warranty. The clause relied upon by the insurer speaks of oils. Ordinarily, oils mean lubricants and not gasoline or kerosene. Here again, by reason of the exclusive control of the insurance company over the terms of the contract, the ambiguity must be held strictly against the insurer and liberally in favor of the insured, specially to avoid a forfeiture.

Furthermore, the gasoline kept was only incidental to the insureds business. It is a well settled rule that keeping of inflammable oils in the premises though prohibited by the policy does NOT void it if such keeping is incidental to the business. Also, the hemp warranty forbade the storage only in the building to which the insurance applies, and/or in any building communicating therewith; and it is undisputed that no gasoline was stored in the burnt bodegas and that Bodega No. 2 which was where the gasoline was found stood isolated from the other bodegas.

Young vs. Midland Textile Insurance Young vs Midland Textile Insurance Co. March 31, 1915 Insurance: warranty (Insurance) Plaintiff m : Young Defendant Midland Textile Insurance Company. Ponente

: Johnson FACTS Young: owner of candy and fruit store in Escolta which occupied a building as both aresidence and bodega.Entered into contract of insurance with Midland, in which insurer promised to pay P3,000 incase residence and bodega and its contents should be destroyed by fire. One of the conditions (WARRANTY B): During the pendency of this policy, no hazardousgoods be stored/kept for sale, and no hazardous trade/process be carried on, in thebuilding to which this insurance applies, or in any building connected therewith. Young: places 3 boxes filled withfireworks in said residence and bodega. Building was partially destroyed by fire. Both parties agreed that the fireworks come within the term hazardous goods and that the fireworks in no way contributed to the fire. Allegation of insured: Young contends that they were not store and placing them there does not violate the contract. That he only placed them there because he was notified thathe cannot use them for the Chinese New Year and in order that he might later send them toa friend in the province. ISSUES/HELD :(1)Whether or not the fireworks were stored therefore, makes the policy void. YES. (2)Whether insured should be allowed to recover since the storage of the fireworks did notcontribute to the damage occasioned by the fire. NO. RATIO :(1) Whether the goods were stored depends upon the intention of the party. Nearly all cases cited by TC were cases where the article was being put to somereasonable/actual use, which would not void the policy. (ex. small quantities for sale likegasoline, gunpowder; or for actual use like oil, paints; or for lighting the purposes). Dictionary definition: to deposit for preservation/safe keeping; put away for future use. (diff from TC definitions in small quantities/for daily use. In this case, the fireworks were placed in the bodega for future use/consumption or forsafe keeping, and NOT for present/daily use. They were stored in the bodega as the word is generally defined.(2)The fact that it did not contribute to the fire is beside the point if the storing was in violation of the contract. Placing of the firecracker increased the risk. Insured had not paid the premium based uponthe increased risk, neither had the insurer issued a policy upon the theory of a different risk. Insured enjoyed the insurance policy upon one risk, when it was issued for an entirely different one. It was a direct injury to the insurer and changes the basis of the insurance contract.

Insurance Case Digest: New Life Enterprises V. Court Of Appeals (1992) G.R. No. 94071 March 31, 1992 Lessons Applicable: Requisites of Double insurance (Insurance) FACTS: May 15, 1981: Western Guaranty Corporation issued Fire Insurance Policyto New Life Enterprises foar P350,000 renewed on May, 13, 1982 July 30,1981: Reliance Surety and Insurance Co., Inc. issued Fire Insurance Policy to New Life Enterprises for P300,000 November 12, 1981; Additional P700,000 February 8, 1982: Equitable Insurance Corporation issued Fire Insurance Policyto New Life Enterprises for P200,000 October 19, 1982 2 am: fire electrical in nature destroyed the stock in tradeworth P1,550,000 Julian Sy went to Reliance to claim but he was refused. Same thing happened with the others who were sister companies. Sy violated the "Other Insurance Clause" RTC: favored New Life and against the three insurance companies CA: reversed -failure to state or endorse the other insurance coverage

ISSUE: W/N Sy can claim against the three insurance companies for violating the "Other Insurance Clause"

HELD: NO. The terms of the contract are clear and unambiguous. The insured is specifically required to disclose to the insurer any other insurance and its particulars which he may have effected on the same subject matter. The knowledge of such insurance by the insurer's agents, even assuming the acquisition thereof by the former, is not the "notice" that would estop the insurers from denying the claim. conclusion of the trial court that Reliance and Equitable are "sister companies" is an unfounded conjecture drawn from the mere fact that Yap Kam Chuan was an agent for both companies which also had the same insurance claims adjuster

Availmentof the services of the same agents and adjusters by different companies is a common practice in the insurancebusiness and such facts do not warrant the speculative conclusion of the trial court.

The conformity of the insured to the terms of the policy isimplied from his failure to express any disagreement with what is provided for. a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not, that was deception - guilty of clear fraud total absence of such notice nullifies the policy assuming arguendo that petitioners felt the legitimate need to be clarified as to the policy condition violated, there was a considerable lapse of time from their receipt of the insurer's clarificatory letter dated March 30, 1983, up to the time the complaint was filed in court on January 31, 1984. The oneyear prescriptive period was yet toexpire on November 29, 1983, or about eight (8) months from the receipt of the clarificatory letter, but petitioners let the period lapse without bringing their action in court