On October 29, 1961, during the effectivity of the renewed policy, the insured vehicle while being driven by Rodolfo Songco, a duly licensed driver and son of Federico (the vehicle owner) collided with a car in the municipality of Calumpit, province of Bulacan, as a result of which mishap Federico Songco (father) and Rodolfo Songco (son) died, Carlos Songco (another son), the latters wife, Angelita Songco, and a family friend by the name of Jose Manuel sustained physical injuries of varying degree. 1 Amor Songco, son of deceased Federico Songco, declared that when insurance agent Benjamin Sambat was inducing his father to insure his vehicle, he butted in saying: That cannot be, Mr. Sambat, because our vehicle is an owner private vehicle and not for passengers, to which agent Sambat replied: whether our vehicle was an owner type or for passengers it could be insured because their company is not owned by the Government and the Government has nothing to do with their company. So they could do what they please whenever they believe a vehicle is insurable 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. HELD: YES RULING: The basis for the favorable judgment is the doctrine announced in Qua Chee Gan v. Law Union and Rock Insurance Co., 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. This is a case where the doctrine of estoppel undeniably calls for application. After petitioner Fieldmens Insurance Co., Inc. had led the insured Federico Songco 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, be permitted to change its stand to the detriment of the heirs of the insured. lt would now rely on the fact that the insured owned a private vehicle, not a common carrier, something which it knew all along when not once but twice its agent, no doubt without any objection in its part, exerted the utmost pressure on the insured, a man of scant education, to enter into such a contract.
This was clearly a deception on the part of the company. Article 1377: the interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. In the case at bar, even if it be assumed that there was an ambiguity, taking into account the well known rule that ambiguities or obscurities must be strictly interpreted against the party that caused them (fieldman in the present case). 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 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 Saleilles contracts by adherence (contrats dadhesion), in contrast to those entered into by parties bargaining on an equal footing, such contracts (of which policies of insurance and international bills of lading are prime examples) obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwary The contract of insurance is one of perfect good faith (uberima 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.
9 This is merely to stress that while the morality of the business world is not the morality of institutions of rectitude like the pulpit and the academe, it cannot descend so low as to be another name for guile or deception. Moreover, should it happen thus, no court of justice should allow itself to lend its approval and support.1awph®l.n¨t We have no choice but to recognize the monetary responsibility of petitioner Fieldmens Insurance Co., Inc. It did not succeed in its persistent effort to avoid complying with its obligation in the lower court and the Court of Appeals. Much less should it find any receptivity from us for its unwarranted and unjustified plea to escape from its liability.