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White Gold Marine Services Inc vs Pioneer Insurance Surety Corp 2005

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White Gold Marine Services Inc vs Pioneer Insurance Surety Corp 2005
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  FIRST DIVISION [G.R. No. 154514. July 28, 2005]WHITE GOLD MARINE SERVIES, IN.,  petitioner  , vs . !IONEER INS RANEAND S RET# OR!ORATION AND THE STEAMSHI! M T AL NDERWRITING ASSOIATION $%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 $ourtof %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( oth de/isions held thatthere was no violation of the Insuran/e $ode and the respondents do not needli/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 andinde,nity /overa-e for its vessels fro, The Stea,ship .utual 8nderwritin- %sso/iation 6er,uda7 9i,ited 6Stea,ship .utual7 throu-h )ioneer Insuran/e andSurety $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 .utualrefused 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 .utualviolated 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 noneed for Stea,ship .utual to se/ure a li/ense 3e/ause it was not en-a-ed in theinsuran/e 3usiness( It e@plained that Stea,ship .utual was a )rote/tion andInde,nity $lu3 6) A I $lu37( 9i4ewise )ioneer need not o3tain another li/ense asinsuran/e a-ent and2or a 3ro4er for Stea,ship .utual 3e/ause Stea,ship .utualwas not en-a-ed in the insuran/e 3usiness( .oreover )ioneer was alreadyli/ensed hen/e a separate li/ense solely as a-ent23ro4er of Stea,ship .utual wasalready superfluous(The $ourt of %ppeals affir,ed the de/ision of the Insuran/e $o,,issioner( Inits de/ision the appellate /ourt distin-uished 3etween ) A I $lu3s vis-à-vis /onventional insuran/e( The appellate /ourt also held that )ioneer ,erely a/tedas a /olle/tion a-ent of Stea,ship .utual(In this petition petitioner assi-ns the followin- errors alle-edly /o,,itted 3y theappellate /ourt FIRST %SSI'N.;NT OF ;RRORTB; $O8RT % C8O ;RR;D 5B;N IT R89;D TB%T R;S)OND;NT ST;%.SBI)IS NOT DOIN' 8SIN;SS IN TB; )BI9I))IN;S ON TB; 'RO8ND TB%T IT$O8RS;D ( ( ( ITS TR%NS%$TIONS TBRO8'B ITS %';NT %ND2OR RO;RB;N$; %S %N INS8R;R IT N;;D NOT S;$8R; % 9I$;NS; TO ;N'%'; ININS8R%N$; 8SIN;SS IN TB; )BI9I))IN;S(S;$OND %SSI'N.;NT OF ;RRORTB; $O8RT % C8O ;RR;D 5B;N IT R89;D TB%T TB; R;$ORD IS ;R;FTOF %NE ;VID;N$; TB%T R;S)OND;NT ST;%.SBI) IS ;N'%';D ININS8R%N$; 8SIN;SS(TBIRD %SSI'N.;NT OF ;RRORTB; $O8RT % C8O ;RR;D 5B;N IT R89;D TB%T R;S)OND;NT )ION;;RN;;D NOT S;$8R; % 9I$;NS; 5B;N $OND8$TIN' ITS %FF%IR %S %N %';NT2RO;R OF R;S)OND;NT ST;%.SBI)(FO8RTB %SSI'N.;NT OF ;RRORTB; $O8RT % C8O ;RR;D IN NOT R;VOIN' TB; 9I$;NS; OFR;S)OND;NT )ION;;R %ND [IN NOT R;.OVIN'] TB; OFFI$;RS %NDDIR;$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 )hilippines 6#7 Does )ioneer need ali/ense as an insuran/e a-ent23ro4er for Stea,ship .utualThe parties ad,it that Stea,ship .utual is a ) A I $lu3( Stea,ship .utualad,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 theInsuran/e $o,,ission()etitioner insists that Stea,ship .utual as a ) A I $lu3 is en-a-ed in theinsuran/e 3usiness( To 3uttress its assertion it /ites the definition of a ) A I $lu3in 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-eand 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 noten-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 lia3ilitiesin/idental to shipownin-( [11]  Respondents aver Hyopsung is inappli/a3le in this /ase3e/ause the issue in Hyopsung   was the urisdi/tion of the /ourt over Hyopsung  (Is Stea,ship .utual en-a-ed in the insuran/e 3usinessSe/tion #6#7 of the Insuran/e $ode enu,erates what /onstitutes Gdoin- aninsuran/e 3usinessH or Gtransa/tin- an insuran/e 3usinessH( These are6a7 ,a4in- or proposin- to ,a4e as insurer any insuran/e /ontra/tK637 ,a4in- or proposin- to ,a4e as surety any /ontra/t of suretyship as avo/ation and not as ,erely in/idental to any other le-iti,ate 3usiness or a/tivity of the suretyK6/7 doin- any 4ind of 3usiness in/ludin- a reinsuran/e 3usiness spe/ifi/allyre/o-niLed as /onstitutin- the doin- of an insuran/e 3usiness within the,eanin- of this $odeK6d7 doin- or proposin- to do any 3usiness in su3stan/e e:uivalent to any of thefore-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 aninsuran/e 3usiness( [1#] The test to deter,ine if a /ontra/t is an insuran/e /ontra/t or not depends onthe 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] asi/ally an insuran/e /ontra/t is a /ontra/t of inde,nity( In it one underta4esfor 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 asyste, of pre,iu,s or assess,ents to the /reation of a fund fro, whi/h all lossesand lia3ilities are paid and where the profits are divided a,on- the,selves inproportion 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 anddefense /osts( [1=]  % ) A I $lu3 is Ga o/ o +-u/-*)  a-ainst third party lia3ility where the thirdparty is anyone other than the ) A I $lu3 and the ,e,3ers(H [1?]  y 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 al3eitwithout the re:uisite /ertifi/ate of authority ,andated 3y Se/tion 1=0 [#!]  of theInsuran/e $ode( It ,aintains a resident a-ent in the )hilippines to soli/it insuran/eand to /olle/t pay,ents in its 3ehalf( 5e note that Stea,ship .utual even renewedits ) 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 ,ustse/ure a li/ense fro, the Insuran/e $o,,ission(Sin/e a /ontra/t of insuran/e involves pu3li/ interest re-ulation 3y the State isne/essary( Thus no insurer or insuran/e /o,pany is allowed to en-a-e in the  insuran/e 3usiness without a li/ense or a /ertifi/ate of authority fro, the Insuran/e$o,,ission( [#1] Does )ioneer as a-ent23ro4er of Stea,ship .utual need a spe/ial li/ense)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 3eenli/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 ana-ent23ro4er of Stea,ship .utual( [#+]  %lthou-h )ioneer is already li/ensed as an insuran/e /o,pany it needs aseparate li/ense to a/t as insuran/e a-ent for Stea,ship .utual( Se/tion #?? of theInsuran/e $ode /learly statesS;$( #?? ( ( (No person shall a/t as an insuran/e a-ent or as an insuran/e 3ro4er in thesoli/itation or pro/ure,ent of appli/ations for insuran/e or re/eive for servi/es ino3tainin- 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 firstpro/urin- a li/ense so to a/t fro, the $o,,issioner whi/h ,ust 3e renewedannually on the first day of January or within si@ ,onths thereafter( ( (Finally 5hite 'old see4s revo/ation of )ioneer<s /ertifi/ate of authority andre,oval of its dire/tors and offi/ers( Re-retta3ly we are not the foru, for theseissues( WHEREORE 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 theInsuran/e $o,,ission is here3y R;V;RS;D %ND S;T %SID;( The Stea,ship.utual 8nderwritin- %sso/iation 6er,uda7 9td( and )ioneer Insuran/e and Surety$orporation are ORD;R;D to o3tain li/enses and to se/ure proper authoriLations todo 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 andoffi/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 anyinsuran/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 investedin 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 theprovisions 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 su3e/t to the insuran/e laws of the)hilippines and to the urisdi/tion and supervision of the $o,,issioner in thesa,e ,anner as if an insuran/e /orporation authoriLed 3y the laws of the)hilippines to en-a-e in the 3usiness of insuran/e spe/ified in the /ertifi/ate( [>]  S;$( 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 thatpurpose fro, the $o,,issioner upon appli/ation therefor and pay,ent 3ythe /o,pany /on/erned of the fees hereinafter pres/ri3ed(( ( ( [*]  S;$( #??( No insuran/e /o,pany doin- 3usiness in the )hilippines nor any a-entthereof 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/uredfro, 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-entthereof 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 on3ehalf 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,panyor offers or assu,es to a/t in the ne-otiatin- of su/h insuran/e shall 3e aninsuran/e a-ent within the intent of this se/tion and shall there3y 3e/o,elia3le to all the duties re:uire,ents lia3ilities and penalties to whi/h aninsuran/e a-ent is su3e/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 $ode and shall there3y 3e/o,e lia3le to all theduties re:uire,ents lia3ilities and penalties to whi/h an insuran/e 3ro4er issu3e/t( [?]   %ollo pp( 1++&1+>( [1!]  No( 9&00*? 1 %u-ust 1?== 1*> S$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 ( RODRI'8; TB; INS8R%N$; $OD; OF TB; )BI9I))IN;S %NNOT%T;D + 6+ th  ed( 1???7 $iting   8IST .( %ND;RSON V%N$; ONINS8R%N$; = 6 rd  ed( 1?>17( [1>]  ;D8%RDO F( B;RN%ND; %ND %NT;RO %( );%S%9;S )BI9I))IN; %D.IR%9TE %ND .%RITI.; 9%5 *1# 61 st  ed( 1?=07( [1*]  S;$( ??( .arine insuran/e in/ludes617 Insuran/e a-ainst loss of or da,a-e to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 andall other 4inds of property and interests therein in respe/t to appertainin- toor 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,pressedor si,ilarly prepared for ship,ent or while awaitin- ship,ent or durin- anydelays 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 su3e/t ,atter of su/h insuran/e 63utnot in/ludin- life insuran/e or surety 3onds nor insuran/e a-ainst loss 3yreason of 3odily inury to any person arisin- out of the ownership ,aintenan/e or use of auto,o3iles7(6/7 )re/ious stones ewels ewelry pre/ious ,etals whether in /ourse of transportation or otherwise(6d7 rid-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 andother aids to navi-ation and transportation in/ludin- dry do/4s and ,arinerailways 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 toownership 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 inury illness or death or for lossof or da,a-e to the property of another person( [10]   upra note 1 at   Se/( *>( [1=]  BO5%RD ;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(
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