White gold vs.

Pioneer insurance
Facts:
White Gold Marine Services, Inc. owns several shipping vessels. Steamship Mutual
Underwriting Association, Ltd. (based in Bermuda) is a protection and indemnity club which
is an association composed of shipowners in general who band together for the specific
purpose of providing insurance cover on a mutual basis against liabilities incidental to
shipowning that the members incur in favor of third parties. White Gold, through Pioneer
Insurance (agent of Steamship Mutual here), procured a protection and indemnity coverage
from Steamship Mutual. Steamship Mutual does not have authority from the Insurance
Commission to conduct insurance business in the Philippines but its collection agent here
(Pioneer Insurance) has been licensed to conduct insurance business.
Later, Steamship Mutual filed a case for collection of sum of money against White Gold due
to the latter’s failure to pay its balance with the former. White Gold averred that Steamship
Mutual has no license [hence it cannot collect]. Nor can it collect through Pioneer Insurance
because, though Pioneer Insurance is licensed as an insurance company, it is not licensed
to be an insurance broker/agent. Steamship Mutual insisted it is not conducting insurance
business here and is merely a protection and indemnity club. The Insurance Commission as
well as the Court of Appeals ruled against White Gold.
ISSUE: Whether or not Steamship Mutual needs a license to operate in the Philippines.
HELD: Yes. 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. If it is a contract of indemnity, it
must be a contract of insurance. In fact, a protection and indemnity club is a form of insurance
where the members are both the insurers and the insured. It is a mutual insurance company.
The club indemnifies the member for whatever risks it may incur against a third party where
the third party is other than the club and the members. Hence, Steamship Mutual needs to
procure a license from the Insurance Commission in order to continue operating here.
Pioneer Insurance also needs to secure another license as an insurance broker/agent of
Steamship Mutual pursuant to Section 299 of the Insurance Code.