WHITE GOLD MARINE SERVICE VS.

PIONEER INSURANCE
G . R . N O . 1 5 4 5 1 4 . J U LY 2 8 , 2 0 0 5 . 1

Clarissa B. Paghubasan
Doctrine: a marine insurance undertakes to indemnify the
assured against marine losses, such as the losses incident
to a marine adventure. Section 99 of the Insurance Code
enumerates the coverage of marine insurance.

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SEC. 99. Marine insurance includes:(1) Insurance against loss of or damage to:

(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects, disbursements,
profits, moneys, securities, choses in action, evidences of debt, valuable papers, bottomry, and
respondentia interests and all other kinds of property and interests therein, in respect to,
appertaining to or in connection with any and all risks or perils of navigation, transit or
transportation, or while being assembled, packed, crated, baled, compressed or similarly
prepared for shipment or while awaiting shipment, or during any delays, storage, trasshipment,
or reshipment incident thereto, including war risks, marine builder’s risks, and all personal
property floater risks.

(b) Person or property in connection with or appertaining to a marine, inland marine, transit or
transportation insurance, including liability for loss of or damage arising out of or in connection
with the construction, repair, operation, maintenance or use of the subject matter of such
insurance (but not including life insurance or surety bonds nor insurance against loss by reason
of bodily injury to any person arising out of the ownership, maintenance, or use of automobiles).

(c) Precious stones, jewels, jewelry, precious metals, whether in course of transportation or
otherwise.

(d) Bridges, tunnels and other instrumentalities of transportation and communication (excluding
buildings, their furniture and furnishings, fixed contents and supplies held in storage); piers,
wharves, docks and slips, and other aids to navigation and transportation, including dry docks
and marine railways, dams and appurtenant facilities for the control of waterways.
(2) “Marine protection and indemnity insurance,” meaning insurance against, or against legal
liability of the insured for loss, 3
 FACTS:
White Gold Marine Services, Inc. (White Gold) procured a protection and
indemnity coverage for its vessels from The Steamship Mutual Underwriting
Association (Bermuda) Limited (Steamship Mutual) through Pioneer
Insurance and Surety Corporation (Pioneer). Subsequently, White Gold was
issued a Certificate of Entry and Acceptance.3 Pioneer also issued receipts
evidencing payments for the coverage. When White Gold failed to fully pay its
accounts, Steamship Mutual refused to renew the coverage. Steamship Mutual
thereafter filed a case against White Gold for collection of sum of money to
recover the latter’s unpaid balance. White Gold on the other hand, filed a
complaint before the Insurance Commission claiming that Steamship Mutual
violated Sections 1864 and 1875 of the Insurance

The Insurance Commission dismissed the complaint. It said that there was no
need for Steamship Mutual to secure a license because it was not engaged in
the insurance business. It explained that Steamship Mutual was a Protection
and Indemnity Club (P & I Club). Likewise, Pioneer need not obtain another
license as insurance agent and/or a broker for Steamship Mutual because
Steamship Mutual was not engaged in the insurance business. Moreover,
Pioneer was already licensed, hence, a separate license solely as agent/ broker
of Steamship Mutual was already superfluous.

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 CA: affirmed the decision of the Insurance Commissioner. In its
decision, the appellate court distinguished between P & I Clubs
vis-à-vis conventional insurance. The appellate court also held
that Pioneer merely acted as a collection agent of Steamship
Mutual.

ISSUES:
(1) Is Steamship Mutual, a P & I Club, engaged in the
insurance business in the Philippines?

(2)Does Pioneer need a license as an insurance

agent/broker for Steamship Mutual?

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 RULING:
(1) A P & I Club is “a form of insurance against third party liability,
where the third party is anyone other than the P & I Club and the
members.”19 By definition then, Steamship Mutual as a P & I
Club is a mutual insurance association engaged in the marine
insurance business. The records reveal Steamship Mutual is
doing business in the country albeit without the requisite
certificate of authority mandated by Section 18720 of the
Insurance Code. It maintains a resident agent in the Philippines to
solicit insurance and to collect payments in its behalf. We note that
Steamship Mutual even renewed its P & I Club cover until it was
cancelled due to non-payment of the calls. Thus, to continue doing
business here, Steamship Mutual or through its agent Pioneer,
must secure a license from he Insurance Commission

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 (2) Pioneer is the resident agent of Steamship Mutual as evidenced by
the certificate of registration22 issued by the Insurance Commission. It
has been licensed to do or transact insurance business by virtue of the
certificate of authority23 issued by the same agency. However, a
Certification from the Commission states that Pioneer does not have a
separate license to be an agent/broker of Steamship MutualAlthough
Pioneer is already licensed as an insurance company, it needs a
separate license to act as insurance agent for Steamship Mutual. Section
299 of the Insurance Code clearly states:

SEC. 299. . . . No person shall act as an insurance agent or as an

insurance broker in the solicitation or procurement of applications
for insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company
doing business in the Philippines or any agent thereof, without first
procuring a license so to act from the Commissioner, which must be
renewed annually on the first day of January, or within six (6)
months thereafter.
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