Fieldmen’s Insurance Co., Inc. vs. Vda.

De Songco, 25 SCRA 70

Facts: Federico Songco, a man of scant education being only a 1st grader owned a
private jeepney. He was induced by Fieldmen’s Insurance Company agent Benjamin
Sabat to apply for a Common Carrier’s Insurance Policy covering his motor vehicle.
Federico said that his vehicle is an ‘owner’ private vehicle and not for passengers,
but agent Sambat said that they can insure whatever kind of vehicle because their
company is not owned by the government, so they could do what they please
whenever they believe a vehicle is insurable. Songco paid an annual premium and he
was issued a Common Carriers Accident Insurance Policy. After the policy expired, he
renewed the policy. During the effectivity of the renewed policy, the insured vehicle
while being driven by Rodolfo Songco [duly licensed driver and Federico’s 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.

Issue: Whether or not the Songcos’ can claim the insurance proceeds despite the fact
that the vehicle concerned was an owner and not a common carrier.

Ruling: Yes. In the case of Qua Chee Gan vs Law Union and Rock Insurance, the
Supreme Court held 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. 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. After petitioner Fieldmen Insurance had lead the insured Federico Songco
to believe that he could qualify under the common carrier liability insurance policy,
and to enter into a contract of insurance paying the premuims due, it could not be
permitted to change its stand to the detriment of the heirs of the insured. It would
now rely on the fact that the insured owned a private vehicle and not a common
carrier, something which it knew all along when not once but twice it’s agent
without a doubt exerted utmost pressure on the insured, a man of scant education
to enter into contract. Fieldmen’s Insurance incurred legal liability under the policy.
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. This was clearly a deception on the part of the company.Even if it be
assumed that there was an ambiguity, such must bestrictly interpreted against the
party that caused them. 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