Iphone 3G repair-possible

Hi,
Recently, my Iphones speakers died all of a sudden while I was playing music from it while I was in my car driving. Ive tried to have my phone warrantied from my countrys iphone reseller (Globe Telecom), but sadly, they told me my warranty is void due to water damage on my phone. From research, I found out that water-damage to an iphone will trigger a red led near the earpiece to light up, but the led didnt light up on mine, so Im not sure what water damage they were talking about. Regardless of this, is there a way to have my iphone 3G fixed?
PC Windows Vista Intel Q9550