No. L-24833. September 23, 1968.

FIELDMEN'S INSURANCE Co., INC., petitioner, vs. MERCEDES VARGAS VDA. DE SONGCO; ET AL. and
COURT OF APPEALS, respondents.
Insurance; Nature of contract.—To borrow once again from the language of the Qua Chee Gan opinion: "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."
Same; Where insurer is estopped from disclaiming responsibility; Case at bar.—The insurer knew all along that the
insured owned a private vehicle and not a common carrier. Its agents even discounted the fears of the latter, not once
but twice, that his privately owned vehicle might not fall within the terms of the common carrier insurance policy.
Held: This is a case where the doctrine of estoppel undeniably calls for application. It is now beyond question that
where inequitable conduct is shown by an insurance firm, it is "estopped from enforcing forfeitures in its f avor, in
order to forestall fraud or imposition on the insured." After petitioner had led the insured to believe that he could
qualify under the common carrier liability insurance policy, and to enter into contract of insurance paying the
premiums due, it could not, thereafter, in any litigation arising out of such representation, be permitted to change its
stand to the detriment of the heirs of the insured. 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.
Same; Ambiguities in contract; Against whom and how interpreted.—It is a 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. The courts cannot ignore that nowadays
monopolies, cartels and concentration of capital, endowed with overwhelming economic power, manage to impose
upon parties dealing with them cunningly prepared
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Fieldmen's Insurance Co., Inc. vs. Vda. de Songco
'agreements' that the weaker party may not change one whit, his participation in the 'agreement' being reduced to the
alternative to 'take it or leave it' labelled since Raymond Saleilees 'contracts by adherence' (contrats d'adhesion), in
contrast to those entered into by parties bargaining on an equal f ooting, such contracts (of which policies of
insurance and international bills of lading are prime example) obviously call for greater strictness and vigilance on
the part of the court of justice with a view to protecting the weaker party from abuses and imposition, and prevent
their becoming traps for the unwary. (Citing Qua Chee Gan case).
REVIEW of a decision of the Court of Appeals.

The facts are stated in the resolution of the Court.

     Jose S. Suarez for petitioner.
     Eligio G. Lagman for respondents. Fieldmen's Insurance Co., Inc. vs. Vda. de Songco, 25 SCRA 70, No. L-
24833 September 23, 1968