Case Summary (G.R. No. 183869)
Issues
- Whether Steamship Mutual, as a P&I mutual insurance association, is engaged in “doing an insurance business” in the Philippines without a certificate of authority.
- Whether Pioneer must secure a distinct license as an insurance agent or broker for Steamship Mutual despite its existing insurer’s license.
Definition of Insurance Business
Section 2(2) of the Insurance Code defines “doing insurance business” to include:
(a) making or proposing insurance contracts;
(b) transacting suretyship as a vocation;
(c) any recognized insurance or reinsurance activity; or
(d) equivalent activities designed to evade the Code.
Profit or separate consideration is not a prerequisite for constituting insurance business.
Nature of P&I Clubs
A P&I club is a mutual insurance association composed of shipowners pooling contributions to indemnify members and cover third-party liabilities. Marine insurance under Section 99 of the Code embraces protection and indemnity coverage for liabilities incidental to navigation. Mutual underwriting associations perform core insurance functions—solicitation, premium or call collection, risk sharing—despite operating on a not-for-profit basis.
Ruling on Steamship Mutual’s Obligation to Secure a License
By definition and practice, Steamship Mutual engaged in insurance business in the Philippines:
- It solicited coverage through its resident agent, Pioneer.
- It collected calls from Philippine members until cancellation for nonpayment.
- It undertook indemnity obligations against maritime liabilities.
These activities fall squarely under Section 2(2) and require a certificate of authority under Section 187. Regulation is compelled by public interest in insurance transactions. The absence of a license renders its Philippine operations unauthorized.
Ruling on Pioneer’s Licensing Requirement
Although Pioneer holds a certificate of authority as an insurer, Section 299 mandates that any person or entity acting as an insurance agent or broker—“soliciting or procuring applications” or receiving commission—must obtain a separate license from the Insurance Commissioner, renewed annually. Pioneer’s role as Steamship Mutual’s resident agent and its collection of commissions on Steamship Mutual’s contracts trigger this requirement. Its general insurer’s license does not su
Case Syllabus (G.R. No. 183869)
Procedural History
- Petition for review filed before the Supreme Court assailing the Court of Appeals Decision dated July 30, 2002 in CA-G.R. SP No. 60144.
- The Court of Appeals had affirmed the Insurance Commission’s Decision dated May 3, 2000 in I.C. Adm. Case No. RD-277.
- Insurance Commission held that:
• Steamship Mutual did not need a license as insurer because it was a Protection and Indemnity (“P & I”) Club, not a conventional insurer.
• Pioneer did not need a separate license as agent/broker for Steamship Mutual because Pioneer was already licensed. - White Gold Marine Services, Inc. (“White Gold”) seeks review of these rulings and further prays for revocation of Pioneer’s certificate of authority and removal of its officers and directors.
Facts
- White Gold procured protection and indemnity coverage for its vessels through Steamship Mutual Underwriting Association (Bermuda) Ltd. (“Steamship Mutual”), engaging Pioneer Insurance and Surety Corporation (“Pioneer”) as intermediary.
- White Gold received a Certificate of Entry and Acceptance and paid premiums evidenced by Pioneer-issued receipts.
- Upon White Gold’s failure to fully pay the calls, Steamship Mutual refused to renew the coverage.
- Steamship Mutual sued White Gold in court for collection of unpaid premiums.
- White Gold filed a complaint with the Insurance Commission alleging violations of various sections of the Insurance Code by Steamship Mutual (Sections 186 and 187) and by Pioneer (Sections 299–301 in relation to Sections 302–303).
- Insurance Commission dismissed the complaint; Court of Appeals affirmed.
Issues
- Is Steamship Mutual, as a P & I Club, “doing business” or “transacting an insurance business” in the Philippines under the Insurance Code without a certificate of authority?
- Does Pioneer, acting as agent/broker for Steamship Mutual, require a separate license under the Insurance Code to solicit and procure coverage on Steamship Mutual’s behalf?
- Separate relief prayed: revocation of Pioneer’s certificate and removal of its officers/directors (denied by Supreme Court as beyond its forum).
Relevant Provisions of the Insurance Code
- Section 2(2): Defines “doing an insurance business” to