Mrs. Henry Harding vs Commercial Union Assurance Company

G.R. No. L-12707 – 38 Phil. 464 – Mercantile Law – Insurance Law – Representation – Warranty

In February 1916, Mrs. Harding applied for car insurance for a Studebaker she received as a gift from her husband. She was assisted by Smith, Bell, and Co. which was the duly authorized representative (insurance agent) of Commercial Union Assurance Company in the Philippines. The car’s value was estimated with the help of an experienced mechanic (Mr. Server) of the Luneta Garage. The car was bought by Mr. Harding for P2,. The mechanic, considering some repairs done, estimated the value to be at P3,. This estimated value was the value disclosed by Mrs. Harding to Smith, Bell, and Co. She also disclosed that the value was an estimate made by Luneta Garage (which also acts as an agent for Smith, Bell, and Co).

In March 1916, a fire destroyed the Studebaker. Mrs. Harding filed an insurance claim but Commercial Union denied it as it insisted that the representations and averments made as to the cost of the car were false; and that said statement was a warranty. Commercial Union also stated that the car does not belong to Mrs. Harding because such a gift [from her husband] is void under the Civil Code.

ISSUE: Whether or not Mrs. Harding is entitled to the insurance claim.

HELD: Yes. Commercial Union is not the proper party to attack the validity of the gift made by Mr. Harding to his wife.

The statement made by Mrs. Harding as to the cost of the car is not a warranty. The evidence does not prove that the statement is false. In fact, the evidence shows that the cost of the car is more than the price of the insurance. The car was bought for P2, and then thereafter, Luneta Garage made some repairs and body paints which amounted to . Mr. Server attested that the car is as good as new at the time the insurance was effected.

Commercial Union, upon the information given by Mrs. Harding, and after an inspection of the automobile by its examiner, having agreed that it was worth P3,000, is bound by this valuation in the absence of fraud on the part of the insured. All statements of value are, of necessity, to a large extent matters of opinion, and it would be outrageous to hold that the validity of all valued policies must depend upon the absolute correctness of such estimated value.

Read full text