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Insurance Case Digest: Phil. American Life Insurance Company v. Ansaldo (1994)

G.R. No. 76452 July 26, 1994
Lessons Applicable: Doing an Insurance Business (Insurance)

  • Ramon M. Paterno, Jr. sent a letter dated April 17, 1986 to Insurance Commissioner alleging certain problems encountered by agents, supervisors, managers and public consumers of the Philippine American Life Insurance Company (Philamlife)
  • During the hearing Ramon stated that the contract of agency is illegal 
  • Philamlife through its president De los Reyes contended that the Insurance Commissioner as a quasi-judicial body cannot rule on the matter
1. W/N the Insurance Commissioner has the authority to regulate the business of insurance - YES
2. W/N the business of insurance covers the contract of agency - NO

HELD: petition is GRANTED

1. YES.

Insurance Code
Sec. 414
Sec. 414. The Insurance Commissioner shall have the duty to see that all laws relating to insurance, insurance companies and other insurance matters, mutual benefit associations, and trusts for charitable uses are faithfully executed and to perform the duties imposed upon him by this Code, and shall, notwithstanding any existing laws to the contrary, have sole and exclusive authority to regulate the issuance and sale of variable contracts as defined in section two hundred thirty-two and to provide for the licensing of persons selling such contracts, and to issue such reasonable rules and regulations governing the same.

The Commissioner may issue such rulings, instructions, circulars, orders and decision as he may deem necessary to secure the enforcement of the provisions of this Code, subject to the approval of the Secretary of Finance. Except as otherwise specified, decisions made by the Commissioner shall be appealable to the Secretary of Finance.
Sec. 415
Sec. 415. In addition to the administrative sanctions provided elsewhere in this Code, the Insurance Commissioner is hereby authorized, at his discretion, to impose upon the insurance companies, their directors and/or officers and/or agents, for any willful failure or refusal to comply with, or violation of any provision of this Code, or any order, instruction, regulation, or ruling of the Insurance Commissioner, or any commission or irregularities, and/or conducting business in an unsafe or unsound manner as may be determined by the Insurance Commissioner, the following:

(a) fines not in excess of five hundred pesos a day; and
(b) suspension, or after due hearing, removal of directors and/or officers and/or agents.

  • Insurance Commissioner has the authority to regulate the business of insurance
2. NO.
  • power does not cover the relationship affecting the insurance company and its agents but is limited to adjudicating claims and complaints filed by the insured against the insurance company
  • While the subject of Insurance Agents and Brokers is discussed under Chapter IV, Title I of the Insurance Code, the provisions of said Chapter speak only of the licensing requirements and limitations imposed on insurance agents and brokers.
  • Great Pacific Life Assurance Corporation v. Judico, 180 SCRA 445 (1989):
    • insurance company may have two classes of agents who sell its insurance policies: 
      • (1) salaried employees who keep definite hours and work under the control and supervision of the company - governed by the Contract of Employment and the provisions of the Labor Code
      • (2) registered representatives, who work on commission basis. - governed by the Contract of Agency and the provisions of the Civil Code on the Agency