FIELDMEN'S INSURANCE CO., INC. vs. VDA. DE SONGCO, ET AL.

25 SCRA 70
[G.R. No. L-24833; September 23, 1968]

NATURE OF THE CASE:

The lower court held that Fieldmens Insurance Co., petitioner cannot escape
liability under a common carrier insurance policy on the pretext that what was
insured was a private vehicle and not a common carrier, the policy being issued
upon the agents insistence. CA affirmed the lower court. Petitioner files for the
review of the above decision of respondent Court of Appeals but the Supreme
Court sustained the Court of Appeals decision.

FACTS:

Federico Songco of Floridablanca, Pampanga, a man of scant education being

only a first grader, owned a private jeepney. He was induced by Fieldmen's
Insurance Company Pampanga agent Benjamin Sambat to apply for a Common
Carrier's Liability Insurance Policy covering his motor vehicle. Upon paying the
annual premium, Fieldmen's Insurance Company, Inc. issued a Common
Carriers Accident Insurance Policy covering one year. Federico said that his
vehicle is an owner private vehicle and not for passengers, despite the latter
being initially adamant, was made to believe that his vehicle qualifies under the
common carrier liability insurance policy. Songco paid an annual premium and he
was issued a Common Carriers Accident Insurance Policy.

After the lapse of one year, and upon payment of the corresponding premium,
the policy was renewed extending the coverage for another year. During the
effectivity of the renewed policy, the insured vehicle, while being driven by
Rodolfo Songco, duly licensed driver and Federicos son, collided with a car. As
a result, Federico and Rodolfo died, while Carlos (another son) and his wife
Angelita, and a family friend sustained physical injuries.

The Court of Appeals rendered a decision in favor of the claimants, holding that
where inequitable conduct is shown by an insurance firm, it is estopped from
enforcing forfeitures in its favor, in order to forestall fraud or imposition on the
insured. After Fieldmen's Insurance Co. had led the insured Songco to believe
that he could qualify under the common carrier liability insurance policy, it could
not, thereafter, be permitted to change its stand to the detriment of the heirs of
the insured. The failure to apply the Doctrine of Estoppel in this case would result
in a gross travesty of justice.

ISSUE:
Whether or not the insurance claim is proper?

RULING: YES.

The fact that the insured owned a private vehicle, not a common carrier, was
something which the company knew all along. In fact, it exerted the utmost
pressure on the insured, a man of scant education, to enter into the contract of
insurance. The Court of Appeals also held that since some of the conditions in
the policy were impossible to comply with under the existing conditions at the
time and inconsistent with the known facts, the insurer is estopped from asserting
breach of such conditions. Except for the fact that the passengers were not fare-
paying, their status as beneficiaries under the policy is recognized. Even if the be
assumed that there was an ambiguity, such must be strictly interpreted against
the party that caused them
As estoppel is primarily based on the doctrine of good faith and the avoidance of
harm that will befall the innocent party due to its injurious reliance, the failure to
apply it in this case would result in a gross travesty of justice.

Citing the case of Qua Chee Gan vs. Law Union & Rock Insurance "The contract
of insurance is one of perfect good faith (uberrima fides) not for the insured
alone, but equally so for the insurer; in fact, it is more so for the latter, since its
dominant bargaining position carries with it stricter responsibility."