Case Digest: White Gold Marine Services, Inc. vs. Pioneer Insurance and Surety Corporation

WHITE GOLD MARINE SERVICES, INC. vs. PIONEER INSURANCE AND SURETY CORPORATION and THE STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD.

G.R. No. 154514                       28 July 2005 

FACTS:

White Gold procured a protection and indemnity coverage for its vessels from Bermuda through Pioneer. When White Gold failed to fully pay its accounts, Bermuda refused to renew its coverage and later filed an action for sum of money against the former to recover the latter’s unpaid balance. Meanwhile, White Gold filed a complaint against Pioneer and Bermuda for their alleged lack if sufficient license.

The Insurance Commission and the Court of Appeals decided that Bermuda need not procure a license for it was not an insurance business, rather a Protection and Indemnity Club. Furthermore, Pioneer is merely a collection agent, thus it does not need a separate insurance license for that purpose.

ISSUES:

1. Is the respondent Bermuda, a P & I Club, engaged in the insurance business in the Philippines?
2. Does Pioneer need a license as an insurance agent/broker for Bermuda?

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 test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by what it is called.
2. Yes. Although Pioneer is already licensed as an insurance company, it needs a separate license to act as insurance agent for Bermuda in accordance to Section 299 of the Insurance Code, which states that, 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