Republic v Del Monte G.R. No.

156956 October 9, 2006

C.J. Panganiban

Facts:
Vilfran Liner lost in a case against Del Monte Motors. They were made to pay 11
million pesos forservice contracts with Del Monte, and such was sourced from the
counterbond posted by Vilfran. CISCO issued the counterbond. CISCO opposed
but was rebuffed. The RTC released a motion for execution commanding the
sheriff to levy the amount on the property of CISCO. To completely satisfy the
amount, the Insurance Commissioner was also commanded to withdraw
the security deposit filed by CISCO with the Commission according to Sec 203
of the Insurance Code.
Insurance Commissioner Malinis was ordered by the RTC to withdraw the security
bond of CISCO for the payment of the insurance indemnity won by Del
Monte Motor against Vilfran Liner, the insured.
Malinis didnt obey the order, so the respondent moved to cite him in contempt of
Court. The RTC ruled against Malinis because he didnt have legal basis.

Issues:
1. Whether or not the security deposit held by the Insurance Commissioner
pursuant to Section 203 of the Insurance Code may be levied or garnished in favor
of only one insured.
2. Whether or not the Insurance Commissioner has power to withhold the release
of the security deposit.

Held: No. Yes. Petition granted.

Ratio:
1. Sec 203- No judgment creditor or other claimant shall have the right to levy upon
any of the securities of the insurer held on deposit pursuant to the requirement of
the Commissioner.
The court also claimed that the security deposit shall be (1) answerable for all the
obligations of the depositing insurer under its insurance contracts; (2) at all times
free from any liens or encumbrance; and (3) exempt from levy by any claimant.
To allow the garnishment of that deposit would impair the fund by decreasing it to
less than the percentage of paid-up capital that the law requires to be maintained.
Further, this move would create, in favor of respondent, a preference of credit over
the other policy holders and beneficiaries.
Also, the securities are held as a contingency fund to answer for the claims
against the insurancecompany by all its policy holders and their beneficiaries. This
step is taken in the event that the company becomes insolvent or otherwise unable
to satisfy the claims against it. Thus, a single claimant may not lay stake on the
securities to the exclusion of all others. The other parties may have their own
claims against the insurance company under other insurance contracts it has
entered into.
2. The Insurance Code has vested the Office of the Insurance Commission with
both regulatory and adjudicatory authority over insurance matters.
Under Sec 414 of the Insurance Code, "The Commissioner may issue such
rulings, instructions, circulars, orders and decisions as he may deem necessary to
secure the enforcement of the provisions of this Code.
The commissioner is authorized to (1) issue (or to refuse to issue) certificates of
authority to persons or entities desiring to engage in insurance business in the
Philippines;16 (2) revoke or suspend these certificates of authority upon finding
grounds for the revocation or suspension; (3) impose upon insurance companies,
their directors and/or officers and/or agents appropriate penalties --
fines, suspension or removal from office -- for failing to comply with the Code or
with any of the commissioner's orders, instructions, regulations or rulings, or for
otherwise conducting business in an unsafe or unsound manner.
Included here is the duty to hold security deposits under Secs 191 and 202 of the
Code for the benefit of policy holders. Sec 192, on the other hand, states:
the securities deposited as aforesaid shall be returned upon the company's
making application therefor and proving to the satisfaction of the Commissioner
that it has no further liability under any of its policies in the Philippines.
He has been given great discretion to regulate the business to protect the public.
Also An implied trust is created by the law for the benefit of all claimants under
subsisting insurance contracts issued by the insurance company. He believed that
the security deposit was exempt from execution to protect the policy holders.









PHILAMLIFE V. ANSALDO - JURISDICTION OF THE INSURANCE
COMMISSIONER

234 SCRA 509
Facts:
> Ramon M. Paterno sent a letter-complaint to the Insurance Commissioner
alleging certain problems encountered by agents, supervisors, managers and
public consumers of the Philamlife as a result of certain practices by said
company.
> Commissioner requested petitioner Rodrigo de los Reyes, in his capacity as
Philamlife's president, to comment on respondent Paterno's letter.
> The complaint prays that provisions on charges and fees stated in the Contract
of Agency executed between Philamlife and its agents, as well as the
implementing provisions as published in the agents' handbook, agency bulletins
and circulars, be declared as null and void. He also asked that the amounts of
such charges and fees already deducted and collected by Philamlife in connection
therewith be reimbursed to the agents, with interest at the prevailing rate reckoned
from the date when they were deducted
> Manuel Ortega, Philamlife's Senior Assistant Vice-President and Executive
Assistant to the President, asked that the Commissioner first rule on the questions
of the jurisdiction of the Insurance Commissioner over the subject matter of the
letters-complaint and the legal standing of Paterno.
> Insurance Commissioner set the case for hearing and sent subpoena to the
officers of Philamlife. Ortega filed a motion to quash the subpoena alleging that
the Insurance company has no jurisdiction over the subject matter of the case and
that there is no complaint sufficient in form and contents has been filed.
> The motion to quash was denied.

Issue:
Whether or not the insurance commissioner had jurisdiction over the legality of the
Contract of Agency between Philamlife and its agents.

Held:
No, it does not have jurisdiction.
The general regulatory authority of the Insurance Commissioner is described in
Section 414 of the Insurance Code, to wit:
"The Insurance Commissioner shall have the duty to see that all laws relating to
insurance, insurance companies and other insurance matters, mutual benefit
associations and trusts for charitable uses are faithfully executed and to perform
the duties imposed upon him by this Code, . . . ."

On the other hand, Section 415 provides:
"In addition to the administrative sanctions provided elsewhere in this Code, the
Insurance Commissioner is hereby authorized, at his discretion, to impose upon
insurance companies, their directors and/or officers and/or agents, for any willful
failure or refusal to comply with, or violation of any provision of this Code, or any
order, instruction, regulation or ruling of the Insurance Commissioner, or any
commission of irregularities, and/or conducting business in an unsafe or unsound
manner as may be determined by the Insurance Commissioner, the following:
a) fines not in excess of five hundred pesos a day; and
b) suspension, or after due hearing, removal of directors and/or officers and/or
agents."

A plain reading of the above-quoted provisions show that the Insurance
Commissioner has the authority to regulate the business of insurance, which is
defined as follows:
"(2) The term 'doing an insurance business' or 'transacting an insurance
business,' within the meaning of this Code, shall include (a) making or proposing to
make, as insurer, any insurance contract; (b) making, or proposing to make, as
surety, any contract of suretyship as a vocation and not as merely incidental of the
surety; (c) doing any kind of business, including a reinsurance business,
specifically recognized as constituting the doing of an insurance business within
the meaning of this Code; (d) doing or proposing to do any business in substance
equivalent to any of the foregoing in a manner designed to evade the provisions of
this Code. (Insurance Code, Sec. 2 [2])
Since the contract of agency entered into between Philamlife and its agents is not
included within the meaning of an insurance business, Section 2 of the Insurance
Code cannot be invoked to give jurisdiction over the same to the Insurance
Commissioner. Expressio unius est exclusio alterius.








White Gold Marine Service Inc. vs. Pioneer Insurance and Surety Co.
Post under case digests, Commercial Law at Tuesday, February 21, 2012 Posted
by Schizophrenic Mind
Facts: Petitioner White Gold bought a protection and indemnity coverage for its
ships from Steamship Mutual through Respondent Pioneer. Certificates and
receipts thus were given. However, Petitioner failed to fulfill its payments thus
Steamship refused to renew its coverage. Steamship then filed for collection
against Petitioner for recovery of unpaid balance. Thereafter, Petitioner also filed
a complaint against Steamship and Respondent before theInsurance
Commission for violations (186,187 for Steamship and 299,300,301 in relation to
302 and 303 for Respondent) of the Insurance Code-license requirements as an
Insurance company for the former and as insurance agent for the latter. Said
commission dismissed the complaint which decision was affirmed by the CA.

Issue: Whether or not Steamship Mutual is a Protection and Indemnity Club
engaged in the insurance business in the Philippines

Held: Steamship Mutual as a P & I Club is a mutual insurance company engaged
in the marine insurance business.

An insurance contract is a contract of indemnity. This means that one party
undertakes for a consideration to indemnify another party against loss, damage, or
liability arising from an unknown or contingent event. While to determine if a
contract is an insurance contract we can look at the nature of the promise, the act
to be performed, exact nature of the agreement in view of the entire occurrence,
contingency or circumstance where the performance is mandated. The label is not
controlling. While under Section 2(2) ofthe Insurance Code the phrase doing
an insurance business constitutes the following: 1) making or proposing to make,
as insurer, any insurance contract; 2) making or proposing to make, as surety, any
contract of suretyship as a vocation and not as merely incidental to any other
legitimate business or activity of the surety; 3) doing any kind of business,
including a reinsurance business, specifically recognized as constituting the doing
of an insurance business within the meaning of this code; 4) doing or proposing to
do any business in substance to any of the foregoing in a manner designed to
evade the provision of this code.

Taking all of these in to consideration, Steamship Mutual engaged inmarine
insurance business undertook to indemnify Petitioner White Gold against marine
losses as enumerated under sec. 99 of the Insurance Code. It is immaterial
whether profit is derived from making insurance contract and that no separate or
direct consideration is received since these does not preclude the existence of
aninsurance business.

NOTES:

*Mutual Insurance company- cooperative enterprise where the members are both
the insurer and insured.

*Protection and Indemnity Club- a form of insurance against third party liability
where the third party is anyone other than the P & I Club and its members


















UCPB v Masagana G.R. No. 137172. April 4, 2001
C.J. Davide

Facts:
In our decision of 15 June 1999 in this case, we reversed and set aside the
assailed decision[1] of the Court of Appeals, which affirmed with modification
the judgment of the trial court (a) allowing Respondent to consign the sum of
P225,753.95 as full payment of the premiums for the renewalof the five insurance
policies on Respondents properties; (b) declaring the replacement-renewalpolicies
effective and binding from 22 May 1992 until 22 May 1993; and (c) ordering
Petitioner to pay Respondent P18,645,000.00 as indemnity for the burned
properties covered by the renewal-replacement policies. The modification
consisted in the (1) deletion of the trial courts declaration that three of the policies
were in force from August 1991 to August 1992; and (2) reduction of the award of
the attorneys fees from 25% to 10% of the total amount due the Respondent.
Masagana obtained from UCPB five (5) insurance policies on its Manila properties.
The policies were effective from May 22, 1991 to May 22, 1992. On June 13, 1992,
Masaganas properties were razed by fire. On July 13, 1992, plaintiff tendered five
checks for P225,753.45 asrenewal premium payments. A receipt was issued. On
July 14, 1992, Masagana made its formal demand for indemnification for the
burned insured properties. UCPB then rejected Masaganas claims under the
argument that the fire took place before the tender of payment.
Hence Masagana filed this case.
The Court of Appeals disagreed with UCPBs argument that Masaganas tender
of payment of the premiums on 13 July 1992 did not result in the renewal of the
policies, having been made beyond the effective date of renewal as provided under
Policy Condition No. 26, which states:
26. Renewal Clause. -- Unless the company at least forty five days in advance of
the end of the policy period mails or delivers to the assured at the address shown
in the policy notice of its intention not to renew the policy or to condition
its renewal upon reduction of limits or elimination of coverages, the assured shall
be entitled to renew the policy upon payment of the premium due on the effective
date of renewal.
Both the Court of Appeals and the trial court found that sufficient proof exists that
Masagana, which had procured insurance coverage from UCPB for a number of
years, had been granted a 60 to 90-day credit term for the renewal of the policies.
Such a practice had existed up to the time the claims were filed. Most of the
premiums have been paid for more than 60 days after the issuance. Also, no timely
notice of non-renewal was made by UCPB.
The Supreme Court ruled against UCPB in the first case on the issue of whether
the fire insurance policies issued by petitioner to the respondent covering the
period from May 22, 1991 to May 22, 1992 had been extended or renewed by an
implied credit arrangement though actualpayment of premium was tendered on a
later date and after the occurrence of the risk insured against.
UCPB filed a motion for reconsideration.
The Supreme Court, upon observing the facts, affirmed that there was no valid
notice of non-renewal of the policies in question, as there is no proof at all that the
notice sent by ordinary mail was received by Masagana. Also, the premiums were
paid within the grace period.

Issue: Whether Section 77 of the Insurance Code of 1978 must be strictly applied
to Petitioners advantage despite its practice of granting a 60- to 90-day credit term
for the payment of premiums.

Held: No. Petition denied.

Ratio:
Section 77 of the Insurance Code provides: No policy or contract of insurance
issued by an insurance company is valid and binding unless and until the premium
thereof has been paid
An exception to this section is Section 78 which provides: Any acknowledgment in
a policy or contract of insurance of the receipt of premium is conclusive evidence
of its payment, so far as to make the policy binding, notwithstanding any stipulation
therein that it shall not be binding until premium is actually paid.
Makati Tuscany v Court of Appeals- Section 77 may not apply if the parties have
agreed to thepayment in installments of the premium and partial payment has been
made at the time of loss.
Section 78 allows waiver by the insurer of the condition of prepayment and makes
the policy binding despite the fact that premium is actually unpaid. Section 77
does not expressly prohibit an agreement granting credit extension. At the very
least, both parties should be deemed in estoppel to question the arrangement they
have voluntarily accepted.
The Tuscany case has provided another exception to Section 77 that the insurer
may grant creditextension for the payment of the premium. If the insurer has
granted the insured a credit term for the payment of the premium and loss occurs
before the expiration of the term, recovery on the policy should be allowed even
though the premium is paid after the loss but within the credit term.
Moreover, there is nothing in Section 77 which prohibits the parties in an insurance
contract to provide a credit term within which to pay the premiums. That
agreement is not against the law,morals, good customs, public order or public
policy. The agreement binds the parties.
It would be unjust if recovery on the policy would not be permitted against
Petitioner, which had consistently granted a 60- to 90-day credit term for
the payment of premiums. Estoppel bars it from taking refuge since Masagana
relied in good faith on such practice. Estoppel then is the fifth exception.