PHILIPPINE AMERICAN LIFE INSURANCE COMPANY AND RODRIGO DE LOS REYES, PETITIONERS, VS. HON. ARMANDO ANSALDO, IN HIS CAPACITY AS INSURANCE COMMISSIONER, AND RAMON MONTILLA PATERNO…

This is a petition for certiorari and prohibition under
Rule 65 of the Revised Rules of Court, with preliminary injunction or temporary
restraining order, to annul and set aside the Order dated November 6, 1986 of
the Insurance Commissioner and the entire proceedings taken in I.C. Special
Case No. 1-86.

We grant the petition.

I

The instant case arose from a letter-complaint of private
respondent Ramon M. Paterno, Jr. dated April 17, 1986, to respondent
Commissioner, alleging certain problems encountered by agents, supervisors,
managers and public consumers of the Philippine American Life Insurance Company
(Philamlife) as a result of certain practices by said company.

In a letter dated April 23, 1986, respondent Commissioner requested
petitioner Rodrigo de los Reyes, in his capacity as Philamlife’s president, to
comment on respondent Paterno’s letter.

In a letter dated April 29, 1986 to respondent Commissioner,
petitioner De los Reyes suggested that private respondent “submit some sort
of a ‘bill of particulars’ listing and citing actual cases, facts, dates,
figures, provisions of law, rules and regulations, and all other pertinent data
which are necessary to enable him to prepare an intelligent reply” (Rollo,
p. 37). A copy of this letter was sent
by the Insurance Commissioner to private respondent for his comments thereon.

On May 16, 1986, respondent Commissioner received a letter from
private respondent maintaining that his letter-complaint of April 17, 1986 was
sufficient in form and substance, and requested that a hearing thereon be
conducted.

Petitioner De los Reyes, in his letter to respondent Commissioner
dated June 6, 1986, reiterated his claim that private respondent’s letter of
May 16, 1986 did not supply the information he needed to enable him to answer
the letter-complaint.

On July 14, a hearing on the letter-complaint was held by
respondent Commissioner on the validity of the Contract of Agency complained of
by private respondent.

In said hearing, private respondent was required by respondent
Commissioner to specify the provisions of the agency contract which he claimed
to be illegal.

On August 4, private respondent submitted a letter of
specification to respondent Commissioner dated July 31, 1986, reiterating his
letter of April 17, 1986 and praying that the provisions on charges and fees
stated in the Contract of Agency executed between Philamlife and its agents, as
well as the implementing provisions as published in the agents’ handbook,
agency bulletins and circulars, be declared as null and void. He also asked that the amounts of such
charges and fees already deducted and collected by Philamlife in connection
therewith be reimbursed to the agents, with interest at the prevailing rate
reckoned from the date when they were deducted.

Respondent Commissioner furnished petitioner De los Reyes with a
copy of private respondent’s letter of July 31, 1986, and requested his answer
thereto.

Petitioner De los Reyes
submitted an Answer dated September 8, 1986, stating inter alia that:

(1) Private respondent’s letter of August 11,
1986 does not contain any of the particular information which Philamlife was
seeking from him and which he promised to submit.

(2) That since the Commission’s quasi-judicial power was being invoked with
regard to the complaint, private respondent must file a verified formal
complaint before any further proceedings.

In his letter dated
September 9, 1986, private respondent asked for the resumption of the hearings
on his complaint.

On October 1, private respondent
executed an affidavit, verifying his letters of April 17, 1986 and July 31,
1986.

In a letter dated October
14, 1986, Manuel Ortega, Philamlife’s Senior Assistant Vice-President and
Executive Assistant to the President, asked that respondent Commission first
rule on the questions of the jurisdiction of the Insurance Commissioner over
the subject matter of the letters-complaint and the legal standing of private
respondent.

On October 27, respondent
Commissioner notified both parties of the hearing of the case on November 5,
1986.

On November 3, Manuel
Ortega filed a Motion to Quash Subpoena/Notice on the following grounds:

“1. The
Subpoena/Notice has no legal basis and is premature because:

(1) No complaint sufficient in form and
contents has been filed;

(2) No summons has been issued nor received by
the respondent De los Reyes, and hence, no jurisdiction has been acquired over
his person;

(3) No answer has been filed, and hence, the hearing scheduled on November 5,
1986 in the subpoena/notice, and wherein the respondent is required to appear,
is premature and lacks legal basis.

II. The Insurance
Commission has no jurisdiction over:

(1) the subject matter or nature of the action; and

(2) over the parties involved” (Rollo, p. 102).

In the Order dated
November 6, 1986, respondent Commissioner denied the Motion to Quash. The dispositive portion of said Order reads:

NOW, THEREFORE, finding
the position of complainant thru
counsel tenable and considering the fact that the instant case is an informal
administrative litigation falling outside the operation of the aforecited
memorandum circular but cognizable by this Commission, the hearing officer, in
open session ruled as it is hereby ruled to deny the Motion to Quash
Subpoena/Notice for lack of merit (Rollo, p. 109).

Hence, this petition.

II

The main issue to be
resolved is whether or not the resolution of the legality of the Contract of
Agency falls within the jurisdiction of the Insurance Commissioner.

Private respondent contends that the Insurance Commissioner has
jurisdiction to take cognizance of the complaint in the exercise of its
quasi-judicial powers. The Solicitor
General, upholding the jurisdiction of the Insurance Commissioner, claims that
under Sections 414 and 415 of the Insurance Code, the Commissioner has
authority to nullify the alleged illegal provisions of the Contract of Agency.

III

The general regulatory authority of the Insurance Commissioner is
described in Section 414 of the Insurance Code, to wit:

“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,
xxx.”

On the other hand, Section 415 provides:

“In addition to the administrative sanctions provided
elsewhere in this Code, the Insurance Commissioner is hereby authorized, at his
discretion, to impose upon 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 of 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.”

A plain reading of the
above-quoted provisions show that the Insurance Commissioner has the authority
to regulate the business of insurance, which is defined as follows:

“(2) The term ‘doing an insurance business’ or
‘transacting an insurance business,’ within the meaning of this Code, shall include (a) making or proposing to
make, as insurer, any insurance contract; (b) making, or proposing to make, as surety, any contract of
suretyship as a vocation and not as merely incidental to any other legitimate business or activity of
the surety; (c) doing any kind of business, including a reinsurance business, specifically
recognized as constituting the doing of an insurance business within the meaning
of this Code; (d) doing or proposing to do any business in substance equivalent
to any of the foregoing in a manner designed to evade the provisions of this
Code. (Insurance Code, Sec. 2[2]; underscoring
supplied).

Since the contract of
agency entered into between Philamlife and its agents is not included within
the meaning of an insurance business, Section 2 of the Insurance Code cannot be
invoked to give jurisdiction
over the same to the Insurance Commissioner. Expressio unius est exclusio alterius.

With regard to private
respondent’s contention that the quasi-judicial power of the Insurance
Commissioner under Section 416 of the Insurance Code applies in his case, we
likewise rule in the negative. Section
416 of the Code in pertinent part, provides:

“The Commissioner shall have the power to adjudicate claims
and complaints involving any loss, damage or liability for which an insurer may
be answerable under any kind of policy or contract of insurance, or for which
such insurer may be liable under a contract of suretyship, or for which a reinsurer
may be used under any contract or reinsurance it may have entered into, or for
which a mutual benefit association may be held liable under the membership
certificates it has issued to its members, where the amount of any such loss,
damage or liability, excluding interest, costs and attorney’s fees, being
claimed or sued upon any kind of insurance, bond, reinsurance contract, or
membership certificate does not exceed in any single claim one hundred thousand
pesos.”

A reading of the said
section shows that the quasi-judicial power of the Insurance Commissioner is
limited by law “to claims and complaints involving any loss, damage or
liability for which an insurer may be answerable under any kind of policy or
contract of insurance, xxx.” Hence, this 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.

The Insurance Code does not have provisions governing the
relations between insurance companies and their agents. It follows that the Insurance Commissioner
cannot, in the exercise of its quasi-judicial powers, assume jurisdiction over
controversies between the insurance companies and their agents.

We have held in the
cases of Great Pacific Life Assurance Corporation v. Judico, 180 SCRA 445 (1989), and Investment Planning
Corporation of the
Philippines v. Social Security
Commission, 21 SCRA 904 (1962), that an 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; and (2)
registered representatives, who work on commission basis.

Under the first category, the relationship between the insurance
company and its agents is governed by the Contract of Employment and the
provisions of the Labor Code, while under the second category, the same is governed by the Contract of
Agency and the provisions of the Civil
Code on the Agency. Disputes involving
the latter are cognizable by the regular courts.

WHEREFORE, the petition is GRANTED. The Order dated November 6, 1986 of the
Insurance Commission is SET ASIDE.

SO ORDERED.

Cruz, (Chairman), Davide, Jr., and
Kapunan, JJ., concur.

Bellosillo, J., on leave.