8. Fieldmen’s Insurance v. Vda de Songco (Maye) 2. Sep. 15, 1960 - Federico was induced by Fieldmen’s Insurance Co.
23 September 1968 | Fernando, J. | Misrepresentation (Fieldmen’s) Pampanga agent, Benjamin Sambat (Sambat) to apply for a
PETITIONERS: Fieldmen’s Insurance Co., Inc.
RESPONDENTS: Mercedes Vargas vda. De Songco, CA
SUMMARY: Federico, a person who only reached grade 1, owned a private
jeepney. He was induced by Fieldmen’s agent, Sambat, to apply for a Common
Carrier’s Liability Insurance Policy to cover his motor vehicle. This was insured
twice under the same policy. While the policy was still effective, the jeep collided
with a car, resulting to the death of Federico and a son, and injuries to the other
passengers who were members of his family. The heirs wanted to claim on the
insurance policy but Fieldmen’s said that they can’t since what was insured was a
private vehicle and not a common carrier. When the heirs filed in the CFI, the
surviving son, Amor, testified that Sambat induced Federico to insure the vehicle
despite knowing that the vehicle wasn’t a common carrier. Lower court ruled in
favor of the heirs. On appeal to the CA, the CA also affirmed the lower court.
Hence, this petition. The issue in this case is whether or not Fieldmen’s is liable
on the policy despite the fact that the vehicle insured is a private one and not a
common carrier.
The SC held in the affirmative. See doctrine #1. After Fieldmen’s led Federico to
believe that he could qualify under the common carrier liability insurance, it could
not be permitted to change its stand to the detriment of the heirs of 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. A contract of
insurance is one of perfect good faith 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. Even it be assumed that there was an
ambiguity, the well-known rule that ambiguities or obscurities must be strictly
interpreted against the party 
that caused them must be considered.
DOCTRINE: 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.
Contractual duty of disclosure imposed by utmost good faith is not required of the
insured alone, but it is imposed with equal stringency upon the insurer, moreso
upon the latter since his dominant bargaining position carries with it stricter
responsibility.
FACTS:
1. Federico Songco (Federico) was a man of scant education, since he only
reached first grade.
 On whether Fieldmen’s is liable on the policy
a. 1960 - He owned a private jeepney with Plate No. 41-289
Common Carrier’s Liability Insurance Policy covering his jeepney upon
paying annual premium of P16.50.
a. Fieldmen’s issued the Common Carriers Accident Insurance Policy
which will be effective for 1 year (Sept. 1960-1961)
3. September 1961 - Fieldmen’s renewed the policy upon payment of the
premium, this time effective from October 15, 1961–1962.
a. This time, the jeep had a different Plate No: J-68136
3.
4. October 29-1961, while the policy was still effective, the jeep was being
driven by Rodolfo, son of Federico and a duly licensed driver.
5. The jeep collided with a car in Calumpit, Bulacan. As a result, Federico and
Rodolfo died, while Carlos (another son), Angelita (wife of Carlos), and Jose
Manuel (family friend) sustained physical injuries.

6. The injured parties or the heirs wanted to claim from Fieldmen’s under their
insurance policy. However, Fieldmen’s denied, saying that what was
insured was a private vehicle and not a common carrier.

7. During trial in CFI, another son of Federico, Amor, testified:
a. When Sambat was inducing Federico to insure the vehicle, he butted
in saying that they can’t insure the vehicle since it is an “owner”
private vehicle, not for passengers.
b. Agent Sambat replied: “whether the vehicle was an “owner” type or
for passengers, it could be insured because their company is not
owned by the Government, and Government has nothing to do with
their company, so they could do as they please whenever they
believe that the vehicle is insurable.”
8. Fieldmen’s did not even rebut the testimony of Amor by calling on Agent
Sambat, its Pampanga Field Representative.
9. CFI: ruled in favor of the surviving widow and children and the injured
passenger Jose Manuel.
10. Fieldmen’s appealed to the CA, which also affirmed the lower court.
11. Hence, this case. Fieldmen’s claims that:
a. Estoppel cannot be invoked by the heirs as a bar to the alleged
breach 
of warranty and condition in the policy 

b. No legal liability was incurred under the policy by Fieldmen’s. 

ISSUE: W/N Insurer is liable for allegedly inducing the insured to apply for insurance
with them, despite the fact that the vehicle is a private one and not a common carrier,
hence, not qualified for such insurance? — YES, after Fieldmen’s led Federico to
believe that he could qualify under the common carrier liability insurance, it could not
be permitted to change its stand to the detriment of the heirs of the insured.
RATIO:
1. 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. 

2. After Fieldmen’s led Federico to believe that he could qualify under the
common carrier liability insurance, it could not be permitted to change its
stand to the detriment of the heirs of the insured. 

a. Note that Fieldmen knew all along of the fact that the insured owned
a private vehicle, not a common carrier, when not once but twice its
agent, without objection in its part, exerted the utmost pressure on
the insured, a man of scant education, to enter into such a contract.
3. 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 in this case would result in a gross travesty of justice. 


On whether no legal liability was incurred under the policy

4. As to the issue on breach, CA said (which the SC also agreed with) that, some
of the conditions contained in the policy were impossible to comply with
under the existing conditions at the time and inconsistent with the known
facts, so the insurer (Fieldmen’s) is estopped from asserting breach of such
conditions. 

5. The injured policies, for whose hospital, medical and burial expenses
expenses Fieldmen was being made liable were the passengers and the driver
of the vehicle in question at the time of the accident. Their status as
beneficiaries under the policy must be recognized.
6. Even it be assumed that there was an ambiguity, based on Qua Chee Gan v.
Law Union and Rock Insurance, taking into account the well-known rule that
ambiguities or obscurities must be strictly interpreted against the party

that caused them. This rigid application of the rule on ambiguities has
become necessary in view of current business practices.
a. Nowadays, monopolies, cartels, those with overwhelming economic
power, manage to impose upon parties dealing with them contracts
of adhesion, in contrast to those entered by parties bargaining on
equal footing.
b. The weaker party’s participation in the agreement is reduced to the
alternative of “take it or leave it”
c. These kinds of contracts (contract of adhesion) call for greater
strictness and vigilance on the part of courts of justice with a view
to protecting the weaker party.
7. Contract of insurance is one of perfect good faith (uberima fides) not for the
insured alone, but equally so for the insurer; in fact, the insurer’s dominant
bargaining position carries with it stricter responsibility.
8. SC has no choice but to recognize the monetary responsibility of Fieldmen’s
Insurance Co. It cannot escape from its liability.

RULING: WHEREFORE, the decision of the CA is AFFIRMED in its entirety.