Republic of the Philippines

SUPREME COURT
FIRST DIVISION
G.R. No. 154514. July 28, 2005
WHITE GOLD MARINE SERICES, INC., Petitioners,
vs.
PIONEER INSURANCE AND SURET! CORPORATION AND THE STEAMSHIP MUTUAL UNDERWRITING
ASSOCIATION "#ERMUDA$ LTD., Respondents.
D E C I S I O N
%UISUM#ING, J.&
This petition for revie !ss!ils the D'()*)o+
"
d!ted #ul$ %&, '&&' of the Court of (ppe!ls in C()*.R. SP No. +&",,,
!-r.in/ the D'()*)o+
'
d!ted 0!$ %, '&&& of the Insur!nce Co..ission in I.C. (d.. C!se No. RD)'11. 2oth decisions
held th!t there !s no viol!tion of the Insur!nce Code !nd the respondents do not need license !s insurer !nd
insur!nce !/ent3bro4er.
The f!cts !re undisputed.
5hite *old 0!rine Services, Inc. 65hite *old7 procured ! protection !nd inde.nit$ cover!/e for its vessels fro. The
Ste!.ship 0utu!l 8nderritin/ (ssoci!tion 62er.ud!7 9i.ited 6Ste!.ship 0utu!l7 throu/h Pioneer Insur!nce !nd
Suret$ Corpor!tion 6Pioneer7. Subse:uentl$, 5hite *old !s issued ! Certi;c!te of Entr$ !nd (ccept!nce.
%
Pioneer !lso
issued receipts evidencin/ p!$.ents for the cover!/e. 5hen 5hite *old f!iled to full$ p!$ its !ccounts, Ste!.ship
0utu!l refused to rene the cover!/e.
Ste!.ship 0utu!l there!fter ;led ! c!se !/!inst 5hite *old for collection of su. of .one$ to recover the l!tter<s
unp!id b!l!nce. 5hite *old on the other h!nd, ;led ! co.pl!int before the Insur!nce Co..ission cl!i.in/ th!t
Ste!.ship 0utu!l viol!ted Sections "=+
,
!nd "=1
>
of the Insur!nce Code, hile Pioneer viol!ted Sections '??,
+
%&&
1

!nd %&"
=
in rel!tion to Sections %&' !nd %&%, thereof.
The Insur!nce Co..ission dis.issed the co.pl!int. It s!id th!t there !s no need for Ste!.ship 0utu!l to secure !
license bec!use it !s not en/!/ed in the insur!nce business. It e@pl!ined th!t Ste!.ship 0utu!l !s ! Protection !nd
Inde.nit$ Club 6P A I Club7. 9i4eise, Pioneer need not obt!in !nother license !s insur!nce !/ent !nd3or ! bro4er for
Ste!.ship 0utu!l bec!use Ste!.ship 0utu!l !s not en/!/ed in the insur!nce business. 0oreover, Pioneer !s
!lre!d$ licensed, hence, ! sep!r!te license solel$ !s !/ent3bro4er of Ste!.ship 0utu!l !s !lre!d$ superBuous.
The Court of (ppe!ls !-r.ed the decision of the Insur!nce Co..issioner. In its decision, the !ppell!te court
distin/uished beteen P A I Clubs vis--vis convention!l insur!nce. The !ppell!te court !lso held th!t Pioneer .erel$
!cted !s ! collection !/ent of Ste!.ship 0utu!l.
In this petition, petitioner !ssi/ns the folloin/ errors !lle/edl$ co..itted b$ the !ppell!te court,
FIRST (SSI*N0ENT OF ERROR
TCE CO8RT ( D8O ERRED 5CEN IT R89ED TC(T RESPONDENT STE(0SCIP IS NOT DOIN* 28SINESS IN TCE
PCI9IPPINES ON TCE *RO8ND TC(T IT CO8RSED . . . ITS TR(NS(CTIONS TCRO8*C ITS (*ENT (ND3OR 2ROEER CENCE
(S (N INS8RER IT NEED NOT SEC8RE ( 9ICENSE TO EN*(*E IN INS8R(NCE 28SINESS IN TCE PCI9IPPINES.
SECOND (SSI*N0ENT OF ERROR
TCE CO8RT ( D8O ERRED 5CEN IT R89ED TC(T TCE RECORD IS 2EREFT OF (NF EVIDENCE TC(T RESPONDENT
STE(0SCIP IS EN*(*ED IN INS8R(NCE 28SINESS.
TCIRD (SSI*N0ENT OF ERROR
TCE CO8RT ( D8O ERRED 5CEN IT R89ED, TC(T RESPONDENT PIONEER NEED NOT SEC8RE ( 9ICENSE 5CEN
COND8CTIN* ITS (FF(IR (S (N (*ENT32ROEER OF RESPONDENT STE(0SCIP.
FO8RTC (SSI*N0ENT OF ERROR
TCE CO8RT ( D8O ERRED IN NOT REVOEIN* TCE 9ICENSE OF RESPONDENT PIONEER (ND GIN NOT RE0OVIN*H TCE
OFFICERS (ND DIRECTORS OF RESPONDENT PIONEER.
?
Si.pl$, the b!sic issues before us !re 6"7 Is Ste!.ship 0utu!l, ! P A I Club, en/!/ed in the insur!nce business in the
PhilippinesI 6'7 Does Pioneer need ! license !s !n insur!nce !/ent3bro4er for Ste!.ship 0utu!lI
The p!rties !d.it th!t Ste!.ship 0utu!l is ! P A I Club. Ste!.ship 0utu!l !d.its it does not h!ve ! license to do
business in the Philippines !lthou/h Pioneer is its resident !/ent. This rel!tionship is reBected in the certi;c!tions
issued b$ the Insur!nce Co..ission.
Petitioner insists th!t Ste!.ship 0utu!l !s ! P A I Club is en/!/ed in the insur!nce business. To buttress its !ssertion,
it cites the de;nition of ! P A I Club in Hyopsung Maritime Co., Ltd. v. Court of Appeals
"&
!s J!n !ssoci!tion co.posed
of shiponers in /ener!l ho b!nd to/ether for the speci;c purpose of providin/ insur!nce cover on ! .utu!l b!sis
!/!inst li!bilities incident!l to shiponin/ th!t the .e.bers incur in f!vor of third p!rties.J It stresses th!t !s ! P A I
Club, Ste!.ship 0utu!l<s pri.!r$ purpose is to solicit !nd provide protection !nd inde.nit$ cover!/e !nd for this
purpose, it h!s en/!/ed the services of Pioneer to !ct !s its !/ent.
Respondents contend th!t !lthou/h Ste!.ship 0utu!l is ! P A I Club, it is not en/!/ed in the insur!nce business in the
Philippines. It is .erel$ !n !ssoci!tion of vessel oners ho h!ve co.e to/ether to provide .utu!l protection !/!inst
li!bilities incident!l to shiponin/.
""
Respondents !ver Hyopsung is in!pplic!ble in this c!se bec!use the issue in
Hyopsung !s the Kurisdiction of the court over Hyopsung.
Is Ste!.ship 0utu!l en/!/ed in the insur!nce businessI
Section '6'7 of the Insur!nce Code enu.er!tes h!t constitutes Jdoin/ !n insur!nce businessJ or Jtr!ns!ctin/ !n
insur!nce businessJ. These !reL
6!7 .!4in/ or proposin/ to .!4e, !s insurer, !n$ insur!nce contr!ctM
6b7 .!4in/, or proposin/ to .!4e, !s suret$, !n$ contr!ct of suret$ship !s ! voc!tion !nd not !s .erel$ incident!l to
!n$ other le/iti.!te business or !ctivit$ of the suret$M
6c7 doin/ !n$ 4ind of business, includin/ ! reinsur!nce business, speci;c!ll$ reco/niNed !s constitutin/ the doin/ of !n
insur!nce business ithin the .e!nin/ of this CodeM
6d7 doin/ or proposin/ to do !n$ business in subst!nce e:uiv!lent to !n$ of the fore/oin/ in ! .!nner desi/ned to
ev!de the provisions of this Code.
. . .
The s!.e provision !lso provides, the f!ct th!t no pro;t is derived fro. the .!4in/ of insur!nce contr!cts,
!/ree.ents or tr!ns!ctions, or th!t no sep!r!te or direct consider!tion is received therefor, sh!ll not preclude the
e@istence of !n insur!nce business.
"'
The test to deter.ine if ! contr!ct is !n insur!nce contr!ct or not, depends on the n!ture of the pro.ise, the !ct
re:uired to be perfor.ed, !nd the e@!ct n!ture of the !/ree.ent in the li/ht of the occurrence, contin/enc$, or
circu.st!nces under hich the perfor.!nce beco.es re:uisite. It is not b$ h!t it is c!lled.
"%
2!sic!ll$, !n insur!nce contr!ct is ! contr!ct of inde.nit$. In it, one undert!4es for ! consider!tion to inde.nif$
!nother !/!inst loss, d!.!/e or li!bilit$ !risin/ fro. !n un4non or contin/ent event.
",
In p!rticul!r, ! .!rine insur!nce undert!4es to inde.nif$ the !ssured !/!inst .!rine losses, such !s the losses
incident to ! .!rine !dventure.
">
Section ??
"+
of the Insur!nce Code enu.er!tes the cover!/e of .!rine insur!nce.
Rel!tedl$, ! .utu!l insur!nce co.p!n$ is ! cooper!tive enterprise here the .e.bers !re both the insurer !nd
insured. In it, the .e.bers !ll contribute, b$ ! s$ste. of pre.iu.s or !ssess.ents, to the cre!tion of ! fund fro.
hich !ll losses !nd li!bilities !re p!id, !nd here the pro;ts !re divided !.on/ the.selves, in proportion to their
interest.
"1
(ddition!ll$, .utu!l insur!nce !ssoci!tions, or clubs, provide three t$pes of cover!/e, n!.el$, protection
!nd inde.nit$, !r ris4s, !nd defense costs.
"=
( P A I Club is J! ,o-. o, )+*u-/+(' !/!inst third p!rt$ li!bilit$, here the third p!rt$ is !n$one other th!n the P A I
Club !nd the .e.bers.J
"?
2$ de;nition then, Ste!.ship 0utu!l !s ! P A I Club is ! .utu!l insur!nce !ssoci!tion
en/!/ed in the .!rine insur!nce business.
The records reve!l Ste!.ship 0utu!l is doin/ business in the countr$ !lbeit ithout the re:uisite certi;c!te of
!uthorit$ .!nd!ted b$ Section "=1
'&
of the Insur!nce Code. It .!int!ins ! resident !/ent in the Philippines to solicit
insur!nce !nd to collect p!$.ents in its beh!lf. 5e note th!t Ste!.ship 0utu!l even reneed its P A I Club cover until
it !s c!ncelled due to non)p!$.ent of the c!lls. Thus, to continue doin/ business here, Ste!.ship 0utu!l or throu/h
its !/ent Pioneer, .ust secure ! license fro. the Insur!nce Co..ission.
Since ! contr!ct of insur!nce involves public interest, re/ul!tion b$ the St!te is necess!r$. Thus, no insurer or
insur!nce co.p!n$ is !lloed to en/!/e in the insur!nce business ithout ! license or ! certi;c!te of !uthorit$ fro.
the Insur!nce Co..ission.
'"
Does Pioneer, !s !/ent3bro4er of Ste!.ship 0utu!l, need ! speci!l licenseI
Pioneer is the resident !/ent of Ste!.ship 0utu!l !s evidenced b$ the certi;c!te of re/istr!tion
''
issued b$ the
Insur!nce Co..ission. It h!s been licensed to do or tr!ns!ct insur!nce business b$ virtue of the certi;c!te of
!uthorit$
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issued b$ the s!.e !/enc$. Coever, ! Certi;c!tion fro. the Co..ission st!tes th!t Pioneer does not
h!ve ! sep!r!te license to be !n !/ent3bro4er of Ste!.ship 0utu!l.
',
(lthou/h Pioneer is !lre!d$ licensed !s !n insur!nce co.p!n$, it needs ! sep!r!te license to !ct !s insur!nce !/ent
for Ste!.ship 0utu!l. Section '?? of the Insur!nce Code cle!rl$ st!tesL
SEC. '?? . . .
No person sh!ll !ct !s !n insur!nce !/ent or !s !n insur!nce bro4er in the solicit!tion or procure.ent of !pplic!tions
for insur!nce, or receive for services in obt!inin/ insur!nce, !n$ co..ission or other co.pens!tion fro. !n$
insur!nce co.p!n$ doin/ business in the Philippines or !n$ !/ent thereof, ithout ;rst procurin/ ! license so to !ct
fro. the Co..issioner, hich .ust be reneed !nnu!ll$ on the ;rst d!$ of #!nu!r$, or ithin si@ .onths there!fter. . .
Fin!ll$, 5hite *old see4s revoc!tion of Pioneer<s certi;c!te of !uthorit$ !nd re.ov!l of its directors !nd o-cers.
Re/rett!bl$, e !re not the foru. for these issues.
WHERE0ORE, the petition is P(RTI(99F *R(NTED. The Decision d!ted #ul$ %&, '&&' of the Court of (ppe!ls !-r.in/
the Decision d!ted 0!$ %, '&&& of the Insur!nce Co..ission is hereb$ REVERSED (ND SET (SIDE. The Ste!.ship
0utu!l 8nderritin/ (ssoci!tion 62er.ud!7 9td., !nd Pioneer Insur!nce !nd Suret$ Corpor!tion !re ORDERED to obt!in
licenses !nd to secure proper !uthoriN!tions to do business !s insurer !nd insur!nce !/ent, respectivel$. The
petitioner<s pr!$er for the revoc!tion of Pioneer<s Certi;c!te of (uthorit$ !nd re.ov!l of its directors !nd o-cers, is
DENIED. Costs !/!inst respondents.
SO ORDERED.
D!vide, #r., C.#., 6Ch!ir.!n7, Fn!res)S!nti!/o, C!rpio, !nd (Ncun!, ##., concur.
0oo1+o1'*
"
Rollo, pp. '=),". Penned b$ (ssoci!te #ustice Delil!h Vid!llon)0!/tolis, ith (ssoci!te #ustices
C!ndido V. River!, !nd Ser/io 9. Pest!Oo concurrin/.
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C( Rollo, pp. ,%)>".
%
Id. !t "&%.
,
SEC. "=+. No person, p!rtnership, or !ssoci!tion of persons sh!ll tr!ns!ct !n$ insur!nce business in
the Philippines e@cept !s !/ent of ! person or corpor!tion !uthoriNed to do the business of insur!nce in
the Philippines, unless possessed of the c!pit!l !nd !ssets re:uired of !n insur!nce corpor!tion doin/
the s!.e 4ind of business in the Philippines !nd invested in the s!.e .!nnerM nor unless the
Co..issioner sh!ll h!ve /r!nted to hi. or the. ! certi;c!te to the ePect th!t he or the$ h!ve
co.plied ith !ll the provisions of l! hich !n insur!nce corpor!tion doin/ business in the Philippines
is re:uired to observe.
Ever$ person, p!rtnership, or !ssoci!tion receivin/ !n$ such certi;c!te of !uthorit$ sh!ll be subKect to
the insur!nce l!s of the Philippines !nd to the Kurisdiction !nd supervision of the Co..issioner in the
s!.e .!nner !s if !n insur!nce corpor!tion !uthoriNed b$ the l!s of the Philippines to en/!/e in the
business of insur!nce speci;ed in the certi;c!te.
>
SEC. "=1. No Insur!nce Co.p!n$ sh!ll tr!ns!ct !n$ insur!nce business in the Philippines until !fter it
sh!ll h!ve obt!ined ! certi;c!te of !uthorit$ for th!t purpose fro. the Co..issioner upon !pplic!tion
therefor !nd p!$.ent b$ the co.p!n$ concerned of the fees herein!fter prescribed.
. . .
+
SEC. '??. No insur!nce co.p!n$ doin/ business in the Philippines, nor !n$ !/ent thereof, sh!ll p!$
!n$ co..ission or other co.pens!tion to !n$ person for services in obt!inin/ insur!nce, unless such
person sh!ll h!ve ;rst procured fro. the Co..issioner ! license to !ct !s !n insur!nce !/ent of such
co.p!n$ or !s !n insur!nce bro4er !s herein!fter provided.
No person sh!ll !ct !s !n insur!nce !/ent or !s !n insur!nce bro4er in the solicit!tion or procure.ent
of !pplic!tions for insur!nce, or receive for services in obt!inin/ insur!nce, !n$ co..ission or other
co.pens!tion fro. !n$ insur!nce co.p!n$ doin/ business in the Philippines or !n$ !/ent thereof,
ithout ;rst procurin/ ! license so to !ct fro. the Co..issioner, . . .
1
SEC. %&&. (n$ person ho for co.pens!tion solicits or obt!ins insur!nce on beh!lf of !n$ insur!nce
co.p!n$ or tr!ns.its for ! person other th!n hi.self !n !pplic!tion for ! polic$ or contr!ct of
insur!nce to or fro. such co.p!n$ or oPers or !ssu.es to !ct in the ne/oti!tin/ of such insur!nce
sh!ll be !n insur!nce !/ent ithin the intent of this section !nd sh!ll thereb$ beco.e li!ble to !ll the
duties, re:uire.ents, li!bilities !nd pen!lties to hich !n insur!nce !/ent is subKect.
=
SEC. %&". (n$ person ho for !n$ co.pens!tion, co..ission or other thin/ of v!lue !cts or !ids in
!n$ .!nner in solicitin/, ne/oti!tin/ or procurin/ the .!4in/ of !n$ insur!nce contr!ct or in pl!cin/
ris4 or t!4in/ out insur!nce, on beh!lf of !n insured other th!n hi.self, sh!ll be !n insur!nce bro4er
ithin the intent of this Code, !nd sh!ll thereb$ beco.e li!ble to !ll the duties, re:uire.ents, li!bilities
!nd pen!lties to hich !n insur!nce bro4er is subKect.
?
Rollo, pp. ",,)",>.
"&
No. 9)11%+?, %" (u/ust "?==, "+> SCR( '>=, '+&.
""
Rollo, p. "1+.
"'
TCE INS8R(NCE CODE OF TCE PCI9IPPINES, Section '6'7.
"%
,% (0 #8R. 'd Insurance Sec. , 6"?='7.
",
Rufus 2. Rodri/ueN, The Insur!nce Code of the Philippines (nnot!ted , 6,th ed., "???7, citing 28IST
0. (NDERSON, V!nce on Insur!nce =% 6%rd ed., "?>"7.
">
Edu!rdo F. Cern!ndeN !nd (ntero (. PeO!s!les, Philippine (d.ir!lt$ !nd 0!riti.e 9! +"' 6"st ed.,
"?=17.
"+
SEC. ??. 0!rine insur!nce includesL
6"7 Insur!nce !/!inst loss of or d!.!/e toL
6!7 Vessels, cr!ft, !ircr!ft, vehicles, /oods, frei/hts, c!r/oes, .erch!ndise, ePects, disburse.ents,
pro;ts, .one$s, securities, choses in !ction, evidences of debt, v!lu!ble p!pers, botto.r$, !nd
respondenti! interests !nd !ll other 4inds of propert$ !nd interests therein, in respect to, !ppert!inin/
to or in connection ith !n$ !nd !ll ris4s or perils of n!vi/!tion, tr!nsit or tr!nsport!tion, or hile bein/
!sse.bled, p!c4ed, cr!ted, b!led, co.pressed or si.il!rl$ prep!red for ship.ent or hile !!itin/
ship.ent, or durin/ !n$ del!$s, stor!/e, tr!sship.ent, or reship.ent incident thereto, includin/ !r
ris4s, .!rine builder<s ris4s, !nd !ll person!l propert$ Bo!ter ris4s.
6b7 Person or propert$ in connection ith or !ppert!inin/ to ! .!rine, inl!nd .!rine, tr!nsit or
tr!nsport!tion insur!nce, includin/ li!bilit$ for loss of or d!.!/e !risin/ out of or in connection ith
the construction, rep!ir, oper!tion, .!inten!nce or use of the subKect .!tter of such insur!nce 6but
not includin/ life insur!nce or suret$ bonds nor insur!nce !/!inst loss b$ re!son of bodil$ inKur$ to !n$
person !risin/ out of the onership, .!inten!nce, or use of !uto.obiles7.
6c7 Precious stones, Keels, Keelr$, precious .et!ls, hether in course of tr!nsport!tion or otherise.
6d7 2rid/es, tunnels !nd other instru.ent!lities of tr!nsport!tion !nd co..unic!tion 6e@cludin/
buildin/s, their furniture !nd furnishin/s, ;@ed contents !nd supplies held in stor!/e7M piers, h!rves,
doc4s !nd slips, !nd other !ids to n!vi/!tion !nd tr!nsport!tion, includin/ dr$ doc4s !nd .!rine
r!il!$s, d!.s !nd !ppurten!nt f!cilities for the control of !ter!$s.
6'7 J0!rine protection !nd inde.nit$ insur!nce,J .e!nin/ insur!nce !/!inst, or !/!inst le/!l li!bilit$
of the insured for loss, d!.!/e, or e@pense incident to onership, oper!tion, ch!rterin/, .!inten!nce,
use, rep!ir, or construction of !n$ vessel, cr!ft or instru.ent!lit$ in use in oce!n or inl!nd !ter!$s,
includin/ li!bilit$ of the insured for person!l inKur$, illness or de!th or for loss of or d!.!/e to the
propert$ of !nother person.
"1
Supra, note "% !t Sec. +>.
"=
Co!rd 2ennett, The 9! of 0!rine Insur!nce '%+ 6"??+7.
"?
Supra, note "> !t 1%%.
'&
Supra, note >.
'"
Supra, note "' !t Sec. "=1.
''
C( Rollo, p. ">,.
'%
Id. !t ">%.
',
Id. !t ""'. Certi;c!tion issued b$ the Insur!nce Co..ission hich certi;ed th!t Pioneer is not !
re/istered bro4er for !n$ forei/n corpor!ti