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 Fieldmen’s 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 agent’s 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 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. The Court of Appeals
rendered a decision in favor of the claimants. It 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. 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: The Insurance claim is proper. 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 I n s u r a n c e "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." :