Fieldmen's Insurance v. vda. de Songco

FIELDMEN’S INSURANCE v. MERCEDES VARGAS vda. DE SONGCO, et al. and CA

1968 / Fernando / Review of CA decision

Federico Songco, a man of scant education [first grader], owned a private jeepney. He was induced by Fieldmen’s Insurance agent Benjamin Sambat to apply for a Common Carrier’s Liability Insurance Policy covering his motor vehicle. [As testified by Songco’s son Amor later,] 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.

            The lower court held that Fieldmen’s Insurance 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.

CA DECISION AFFIRMED; FIELDMEN’S INSURANCE IS LIABLE

From Qua Chee Gan v. Law Union and Rock Insurance – 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.

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. Even if the be assumed that there was an ambiguity, such must be strictly 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.