FIRST DIVISION

[G.R. No. 154514. July 28, 2005]

WHITE GOLD MARINE SERVIES, IN., petitioner, vs. !IONEER INS"RANE
AND S"RET# OR!ORATION AND THE STEAMSHI! M"T"AL
"NDERWRITING ASSOIATION $%ERM"DA& LTD., respondents.
D E I S I O N
'"IS"M%ING, J.(
This petition for review assails the D)*+,+o-
[1]
dated July !" #!!# of the $ourt
of %ppeals in $%&'(R( S) No( *!1++" affir,in- the D)*+,+o-
[#]
dated .ay " #!!! of
the Insuran/e $o,,ission in I($( %d,( $ase No( RD&#00( 1oth de/isions held that
there was no violation of the Insuran/e $ode and the respondents do not need
li/ense as insurer and insuran/e a-ent23ro4er(
The fa/ts are undisputed(
5hite 'old .arine Servi/es" In/( 65hite 'old7 pro/ured a prote/tion and
inde,nity /overa-e for its vessels fro, The Stea,ship .utual 8nderwritin-
%sso/iation 61er,uda7 9i,ited 6Stea,ship .utual7 throu-h )ioneer Insuran/e and
Surety $orporation 6)ioneer7( Su3se:uently" 5hite 'old was issued a $ertifi/ate of
;ntry and %//eptan/e(
[]
)ioneer also issued re/eipts eviden/in- pay,ents for the
/overa-e( 5hen 5hite 'old failed to fully pay its a//ounts" Stea,ship .utual
refused to renew the /overa-e(
Stea,ship .utual thereafter filed a /ase a-ainst 5hite 'old for /olle/tion of
su, of ,oney to re/over the latter<s unpaid 3alan/e( 5hite 'old on the other hand"
filed a /o,plaint 3efore the Insuran/e $o,,ission /lai,in- that Stea,ship .utual
violated Se/tions 1=*
[+]
and 1=0
[>]
of the Insuran/e $ode" while )ioneer violated
Se/tions #??"
[*]
!!
[0]
and !1
[=]
in relation to Se/tions !# and !" thereof(
The Insuran/e $o,,ission dis,issed the /o,plaint( It said that there was no
need for Stea,ship .utual to se/ure a li/ense 3e/ause it was not en-a-ed in the
insuran/e 3usiness( It e@plained that Stea,ship .utual was a )rote/tion and
Inde,nity $lu3 6) A I $lu37( 9i4ewise" )ioneer need not o3tain another li/ense as
insuran/e a-ent and2or a 3ro4er for Stea,ship .utual 3e/ause Stea,ship .utual
was not en-a-ed in the insuran/e 3usiness( .oreover" )ioneer was already
li/ensed" hen/e" a separate li/ense solely as a-ent23ro4er of Stea,ship .utual was
already superfluous(
The $ourt of %ppeals affir,ed the de/ision of the Insuran/e $o,,issioner( In
its de/ision" the appellate /ourt distin-uished 3etween ) A I $lu3s vis--
vis /onventional insuran/e( The appellate /ourt also held that )ioneer ,erely a/ted
as a /olle/tion a-ent of Stea,ship .utual(
In this petition" petitioner assi-ns the followin- errors alle-edly /o,,itted 3y the
appellate /ourt"
FIRST %SSI'N.;NT OF ;RROR
TB; $O8RT % C8O ;RR;D 5B;N IT R89;D TB%T R;S)OND;NT ST;%.SBI)
IS NOT DOIN' 18SIN;SS IN TB; )BI9I))IN;S ON TB; 'RO8ND TB%T IT
$O8RS;D ( ( ( ITS TR%NS%$TIONS TBRO8'B ITS %';NT %ND2OR 1ROD;R
B;N$; %S %N INS8R;R IT N;;D NOT S;$8R; % 9I$;NS; TO ;N'%'; IN
INS8R%N$; 18SIN;SS IN TB; )BI9I))IN;S(
S;$OND %SSI'N.;NT OF ;RROR
TB; $O8RT % C8O ;RR;D 5B;N IT R89;D TB%T TB; R;$ORD IS 1;R;FT
OF %NE ;VID;N$; TB%T R;S)OND;NT ST;%.SBI) IS ;N'%';D IN
INS8R%N$; 18SIN;SS(
TBIRD %SSI'N.;NT OF ;RROR
TB; $O8RT % C8O ;RR;D 5B;N IT R89;D" TB%T R;S)OND;NT )ION;;R
N;;D NOT S;$8R; % 9I$;NS; 5B;N $OND8$TIN' ITS %FF%IR %S %N
%';NT21ROD;R OF R;S)OND;NT ST;%.SBI)(
FO8RTB %SSI'N.;NT OF ;RROR
TB; $O8RT % C8O ;RR;D IN NOT R;VODIN' TB; 9I$;NS; OF
R;S)OND;NT )ION;;R %ND [IN NOT R;.OVIN'] TB; OFFI$;RS %ND
DIR;$TORS OF R;S)OND;NT )ION;;R(
[?]
Si,ply" the 3asi/ issues 3efore us are 617 Is Stea,ship .utual" a ) A I $lu3"
en-a-ed in the insuran/e 3usiness in the )hilippinesF 6#7 Does )ioneer need a
li/ense as an insuran/e a-ent23ro4er for Stea,ship .utualF
The parties ad,it that Stea,ship .utual is a ) A I $lu3( Stea,ship .utual
ad,its it does not have a li/ense to do 3usiness in the )hilippines althou-h )ioneer
is its resident a-ent( This relationship is refle/ted in the /ertifi/ations issued 3y the
Insuran/e $o,,ission(
)etitioner insists that Stea,ship .utual as a ) A I $lu3 is en-a-ed in the
insuran/e 3usiness( To 3uttress its assertion" it /ites the definition of a ) A I $lu3
in Hyopsung Maritime Co., Ltd. v. Court of Appeals
[1!]
as Gan asso/iation /o,posed of
shipowners in -eneral who 3and to-ether for the spe/ifi/ purpose of providin-
insuran/e /over on a ,utual 3asis a-ainst lia3ilities in/idental to shipownin- that the
,e,3ers in/ur in favor of third parties(H It stresses that as a ) A I $lu3" Stea,ship
.utual<s pri,ary purpose is to soli/it and provide prote/tion and inde,nity /overa-e
and for this purpose" it has en-a-ed the servi/es of )ioneer to a/t as its a-ent(
Respondents /ontend that althou-h Stea,ship .utual is a ) A I $lu3" it is not
en-a-ed in the insuran/e 3usiness in the )hilippines( It is ,erely an asso/iation of
vessel owners who have /o,e to-ether to provide ,utual prote/tion a-ainst lia3ilities
in/idental to shipownin-(
[11]
Respondents aver Hyopsung is inappli/a3le in this /ase
3e/ause the issue in Hyopsung was the Iurisdi/tion of the /ourt over Hyopsung(
Is Stea,ship .utual en-a-ed in the insuran/e 3usinessF
Se/tion #6#7 of the Insuran/e $ode enu,erates what /onstitutes Gdoin- an
insuran/e 3usinessH or Gtransa/tin- an insuran/e 3usinessH( These areJ
6a7 ,a4in- or proposin- to ,a4e" as insurer" any insuran/e /ontra/tK
637 ,a4in-" or proposin- to ,a4e" as surety" any /ontra/t of suretyship as a
vo/ation and not as ,erely in/idental to any other le-iti,ate 3usiness or
a/tivity of the suretyK
6/7 doin- any 4ind of 3usiness" in/ludin- a reinsuran/e 3usiness" spe/ifi/ally
re/o-niLed as /onstitutin- the doin- of an insuran/e 3usiness within the
,eanin- of this $odeK
6d7 doin- or proposin- to do any 3usiness in su3stan/e e:uivalent to any of the
fore-oin- in a ,anner desi-ned to evade the provisions of this $ode(
( ( (
The sa,e provision also provides" the fa/t that no profit is derived fro, the
,a4in- of insuran/e /ontra/ts" a-ree,ents or transa/tions" or that no separate or
dire/t /onsideration is re/eived therefor" shall not pre/lude the e@isten/e of an
insuran/e 3usiness(
[1#]
The test to deter,ine if a /ontra/t is an insuran/e /ontra/t or not" depends on
the nature of the pro,ise" the a/t re:uired to 3e perfor,ed" and the e@a/t nature of
the a-ree,ent in the li-ht of the o//urren/e" /ontin-en/y" or /ir/u,stan/es under
whi/h the perfor,an/e 3e/o,es re:uisite( It is not 3y what it is /alled(
[1]
1asi/ally" an insuran/e /ontra/t is a /ontra/t of inde,nity( In it" one underta4es
for a /onsideration to inde,nify another a-ainst loss" da,a-e or lia3ility arisin- fro,
an un4nown or /ontin-ent event(
[1+]
In parti/ular" a ,arine insuran/e underta4es to inde,nify the assured a-ainst
,arine losses" su/h as the losses in/ident to a ,arine adventure(
[1>]
Se/tion ??
[1*]
of
the Insuran/e $ode enu,erates the /overa-e of ,arine insuran/e(
Relatedly" a ,utual insuran/e /o,pany is a /ooperative enterprise where the
,e,3ers are 3oth the insurer and insured( In it" the ,e,3ers all /ontri3ute" 3y a
syste, of pre,iu,s or assess,ents" to the /reation of a fund fro, whi/h all losses
and lia3ilities are paid" and where the profits are divided a,on- the,selves" in
proportion to their interest(
[10]
%dditionally" ,utual insuran/e asso/iations" or /lu3s"
provide three types of /overa-e" na,ely" prote/tion and inde,nity" war ris4s" and
defense /osts(
[1=]
% ) A I $lu3 is Ga .o/0 o. +-,u/1-*) a-ainst third party lia3ility" where the third
party is anyone other than the ) A I $lu3 and the ,e,3ers(H
[1?]
1y definition then"
Stea,ship .utual as a ) A I $lu3 is a ,utual insuran/e asso/iation en-a-ed in the
,arine insuran/e 3usiness(
The re/ords reveal Stea,ship .utual is doin- 3usiness in the /ountry al3eit
without the re:uisite /ertifi/ate of authority ,andated 3y Se/tion 1=0
[#!]
of the
Insuran/e $ode( It ,aintains a resident a-ent in the )hilippines to soli/it insuran/e
and to /olle/t pay,ents in its 3ehalf( 5e note that Stea,ship .utual even renewed
its ) A I $lu3 /over until it was /an/elled due to non&pay,ent of the /alls( Thus" to
/ontinue doin- 3usiness here" Stea,ship .utual or throu-h its a-ent )ioneer" ,ust
se/ure a li/ense fro, the Insuran/e $o,,ission(
Sin/e a /ontra/t of insuran/e involves pu3li/ interest" re-ulation 3y the State is
ne/essary( Thus" no insurer or insuran/e /o,pany is allowed to en-a-e in the
insuran/e 3usiness without a li/ense or a /ertifi/ate of authority fro, the Insuran/e
$o,,ission(
[#1]
Does )ioneer" as a-ent23ro4er of Stea,ship .utual" need a spe/ial li/enseF
)ioneer is the resident a-ent of Stea,ship .utual as eviden/ed 3y the
/ertifi/ate of re-istration
[##]
issued 3y the Insuran/e $o,,ission( It has 3een
li/ensed to do or transa/t insuran/e 3usiness 3y virtue of the /ertifi/ate of
authority
[#]
issued 3y the sa,e a-en/y( Bowever" a $ertifi/ation fro, the
$o,,ission states that )ioneer does not have a separate li/ense to 3e an
a-ent23ro4er of Stea,ship .utual(
[#+]
%lthou-h )ioneer is already li/ensed as an insuran/e /o,pany" it needs a
separate li/ense to a/t as insuran/e a-ent for Stea,ship .utual( Se/tion #?? of the
Insuran/e $ode /learly statesJ
S;$( #?? ( ( (
No person shall a/t as an insuran/e a-ent or as an insuran/e 3ro4er in the
soli/itation or pro/ure,ent of appli/ations for insuran/e" or re/eive for servi/es in
o3tainin- insuran/e" any /o,,ission or other /o,pensation fro, any insuran/e
/o,pany doin- 3usiness in the )hilippines or any a-ent thereof" without first
pro/urin- a li/ense so to a/t fro, the $o,,issioner" whi/h ,ust 3e renewed
annually on the first day of January" or within si@ ,onths thereafter( ( (
Finally" 5hite 'old see4s revo/ation of )ioneer<s /ertifi/ate of authority and
re,oval of its dire/tors and offi/ers( Re-retta3ly" we are not the foru, for these
issues(
WHERE2ORE" the petition is )%RTI%99E 'R%NT;D( The De/ision dated July
!" #!!# of the $ourt of %ppeals affir,in- the De/ision dated .ay " #!!! of the
Insuran/e $o,,ission is here3y R;V;RS;D %ND S;T %SID;( The Stea,ship
.utual 8nderwritin- %sso/iation 61er,uda7 9td(" and )ioneer Insuran/e and Surety
$orporation are ORD;R;D to o3tain li/enses and to se/ure proper authoriLations to
do 3usiness as insurer and insuran/e a-ent" respe/tively( The petitioner<s prayer for
the revo/ation of )ioneer<s $ertifi/ate of %uthority and re,oval of its dire/tors and
offi/ers" is D;NI;D( $osts a-ainst respondents(
SO ORDERED.
Davide, Jr., C.J., (Chairman, !nares-"antiago, Carpio, and A#$una,
JJ., /on/ur.
[1]
%ollo" pp( #=&+1( )enned 3y %sso/iate Justi/e Delilah Vidallon&.a-tolis" with
%sso/iate Justi/es $andido V( Rivera" and Ser-io 9( )estaMo /on/urrin-(
[#]
$% %ollo" pp( +&>1(
[]
&d. at 1!(
[+]
S;$( 1=*( No person" partnership" or asso/iation of persons shall transa/t any
insuran/e 3usiness in the )hilippines e@/ept as a-ent of a person or
/orporation authoriLed to do the 3usiness of insuran/e in the )hilippines"
unless possessed of the /apital and assets re:uired of an insuran/e
/orporation doin- the sa,e 4ind of 3usiness in the )hilippines and invested
in the sa,e ,annerK nor unless the $o,,issioner shall have -ranted to hi,
or the, a /ertifi/ate to the effe/t that he or they have /o,plied with all the
provisions of law whi/h an insuran/e /orporation doin- 3usiness in the
)hilippines is re:uired to o3serve(
;very person" partnership" or asso/iation re/eivin- any su/h
/ertifi/ate of authority shall 3e su3Ie/t to the insuran/e laws of the
)hilippines and to the Iurisdi/tion and supervision of the $o,,issioner in the
sa,e ,anner as if an insuran/e /orporation authoriLed 3y the laws of the
)hilippines to en-a-e in the 3usiness of insuran/e spe/ified in the /ertifi/ate(
[>]
S;$( 1=0( No Insuran/e $o,pany shall transa/t any insuran/e 3usiness in the
)hilippines until after it shall have o3tained a /ertifi/ate of authority for that
purpose fro, the $o,,issioner upon appli/ation therefor and pay,ent 3y
the /o,pany /on/erned of the fees hereinafter pres/ri3ed(
( ( (
[*]
S;$( #??( No insuran/e /o,pany doin- 3usiness in the )hilippines" nor any a-ent
thereof" shall pay any /o,,ission or other /o,pensation to any person for
servi/es in o3tainin- insuran/e" unless su/h person shall have first pro/ured
fro, the $o,,issioner a li/ense to a/t as an insuran/e a-ent of su/h
/o,pany or as an insuran/e 3ro4er as hereinafter provided(
No person shall a/t as an insuran/e a-ent or as an insuran/e 3ro4er
in the soli/itation or pro/ure,ent of appli/ations for insuran/e" or re/eive for
servi/es in o3tainin- insuran/e" any /o,,ission or other /o,pensation fro,
any insuran/e /o,pany doin- 3usiness in the )hilippines or any a-ent
thereof" without first pro/urin- a li/ense so to a/t fro, the $o,,issioner" ( ( (
[0]
S;$( !!( %ny person who for /o,pensation soli/its or o3tains insuran/e on
3ehalf of any insuran/e /o,pany or trans,its for a person other than hi,self
an appli/ation for a poli/y or /ontra/t of insuran/e to or fro, su/h /o,pany
or offers or assu,es to a/t in the ne-otiatin- of su/h insuran/e shall 3e an
insuran/e a-ent within the intent of this se/tion and shall there3y 3e/o,e
lia3le to all the duties" re:uire,ents" lia3ilities and penalties to whi/h an
insuran/e a-ent is su3Ie/t(
[=]
S;$( !1( %ny person who for any /o,pensation" /o,,ission or other thin- of
value a/ts or aids in any ,anner in soli/itin-" ne-otiatin- or pro/urin- the
,a4in- of any insuran/e /ontra/t or in pla/in- ris4 or ta4in- out insuran/e"
on 3ehalf of an insured other than hi,self" shall 3e an insuran/e 3ro4er
within the intent of this $ode" and shall there3y 3e/o,e lia3le to all the
duties" re:uire,ents" lia3ilities and penalties to whi/h an insuran/e 3ro4er is
su3Ie/t(
[?]
%ollo" pp( 1++&1+>(
[1!]
No( 9&00*?" 1 %u-ust 1?==" 1*> S$R% #>=" #*!(
[11]
%ollo" p( 10*(
[1#]
TB; INS8R%N$; $OD; OF TB; )BI9I))IN;S" Se/tion #6#7(
[1]
+ %. J8R( #d &nsuran$e Se/( + 61?=#7(
[1+]
R8F8S 1( RODRI'8;N" TB; INS8R%N$; $OD; OF TB; )BI9I))IN;S
%NNOT%T;D + 6+
th
ed(" 1???7" $iting 18IST .( %ND;RSON" V%N$; ON
INS8R%N$; = 6
rd
ed(" 1?>17(
[1>]
;D8%RDO F( B;RN%ND;N %ND %NT;RO %( );O%S%9;S" )BI9I))IN;
%D.IR%9TE %ND .%RITI.; 9%5 *1# 61
st
ed(" 1?=07(
[1*]
S;$( ??( .arine insuran/e in/ludesJ
617 Insuran/e a-ainst loss of or da,a-e toJ
6a7 Vessels" /raft" air/raft" vehi/les" -oods" frei-hts" /ar-oes" ,er/handise"
effe/ts" dis3urse,ents" profits" ,oneys" se/urities" /hoses in a/tion"
eviden/es of de3t" valua3le papers" 3otto,ry" and respondentia interests and
all other 4inds of property and interests therein" in respe/t to" appertainin- to
or in /onne/tion with any and all ris4s or perils of navi-ation" transit or
transportation" or while 3ein- asse,3led" pa/4ed" /rated" 3aled" /o,pressed
or si,ilarly prepared for ship,ent or while awaitin- ship,ent" or durin- any
delays" stora-e" trasship,ent" or reship,ent in/ident thereto" in/ludin- war
ris4s" ,arine 3uilder<s ris4s" and all personal property floater ris4s(
637 )erson or property in /onne/tion with or appertainin- to a ,arine" inland
,arine" transit or transportation insuran/e" in/ludin- lia3ility for loss of or
da,a-e arisin- out of or in /onne/tion with the /onstru/tion" repair"
operation" ,aintenan/e or use of the su3Ie/t ,atter of su/h insuran/e 63ut
not in/ludin- life insuran/e or surety 3onds nor insuran/e a-ainst loss 3y
reason of 3odily inIury to any person arisin- out of the ownership"
,aintenan/e" or use of auto,o3iles7(
6/7 )re/ious stones" Iewels" Iewelry" pre/ious ,etals" whether in /ourse of
transportation or otherwise(
6d7 1rid-es" tunnels and other instru,entalities of transportation and
/o,,uni/ation 6e@/ludin- 3uildin-s" their furniture and furnishin-s" fi@ed
/ontents and supplies held in stora-e7K piers" wharves" do/4s and slips" and
other aids to navi-ation and transportation" in/ludin- dry do/4s and ,arine
railways" da,s and appurtenant fa/ilities for the /ontrol of waterways(
6#7 G.arine prote/tion and inde,nity insuran/e"H ,eanin- insuran/e a-ainst" or
a-ainst le-al lia3ility of the insured for loss" da,a-e" or e@pense in/ident to
ownership" operation" /harterin-" ,aintenan/e" use" repair" or /onstru/tion of
any vessel" /raft or instru,entality in use in o/ean or inland waterways"
in/ludin- lia3ility of the insured for personal inIury" illness or death or for loss
of or da,a-e to the property of another person(
[10]
"upra" note 1 at Se/( *>(
[1=]
BO5%RD 1;NN;TT" TB; 9%5 OF .%RIN; INS8R%N$; #* 61??*7(
[1?]
"upra" note 1> at 0(
[#!]
"upra, note >(
[#1]
"upra" note 1# at Se/( 1=0(
[##]
$% %ollo" p( 1>+(
[#]
&d. at 1>(
[#+]
&d. at 11#( $ertifi/ation issued 3y the Insuran/e $o,,ission whi/h /ertified that
)ioneer is not a re-istered 3ro4er for any forei-n /orporation(