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
cars 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.