Harding vs.

Commercial Union Assurance Company

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

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 Assurance Company 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 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 Article 1334 of the Civil Code which provides
that "All gifts between spouses during the marriage shall be void. Moderate
gifts which the spouses bestow on each other on festive days of the family
are not included in this rule. (Note: Same as Art. 87 of the Family 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 P2,800.00 and then thereafter, Luneta
Garage made some repairs and body paints which amounted to P900.00. Mr.
Server attested that the car is as good as new at the time the insurance was
effected.
Art. 87 of the Family Code Every donation or grant of gratuitous advantage, direct
or indirect, between the spouses during marriage shall be void, except in moderate
gifts which the spouses may give each other on occasion of any family rejoicing.
The prohibition shall also apply to persons living together as husband and wife
without a valid marriage.

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.

Art. 87 of the Family Code Every donation or grant of gratuitous advantage, direct
or indirect, between the spouses during marriage shall be void, except in moderate
gifts which the spouses may give each other on occasion of any family rejoicing.
The prohibition shall also apply to persons living together as husband and wife
without a valid marriage.