Republic of the Philippines

SUPREME COURT Manila

EN BANC

MRS. HENRY E. HARDING vs. COMMERCIAL UNION ASSURANCE COMPANY

G.R. No. L-12707, August 10, 1918

Procedural History

This was an action by plaintiffs to recover from defendant the sum of P3,000 and interest, alleged to be
due under the terms of a policy of insurance. The trial court gave plaintiffs judgment for the amount
demanded, with interest and costs, and from that decision the defendant appeals.

Statement of Facts

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 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
P2,800.00. The mechanic, considering some repairs done, estimated the value to be at P3,000.00. 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 is 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 Commercial is liable.

Answer

Yes. Commercial is liable.

Where it appears that the proposal form, while signed by the insured was made out by the person
authorized to solicit the insurance (Luneta and Smith Bell) the facts stated in the proposal, even if
incorrect, will not be regarded as warranted by the insured, in the absence of willful misstatement.
Under such circumstances, the proposal is to be regarded as the act of the insurer.

Reason

Section 163 of the Insurance Law (Act No. 2427) provides that “the effect of a valuation in a policy of fire
insurance is the same as in a policy of marine insurance.”

By the terms of section 149 of the Act cited, the valuation in a policy of marine insurance is conclusive if
the insured had an insurable interest and was not guilty of fraud.
Holding

The court, therefore, of the opinion and hold that plaintiff was the owner of the automobile in question
and had an insurable interest therein; that there was no fraud on her part in procuring the insurance;
that the valuation of the automobile, for the purposes of the insurance, is binding upon the defendant
corporation, and that the judgment of the court below is, therefore, correct and must be affirmed, with
interest, the costs of this appeal to be paid by the appellant.