G.R. No. 76452 July 26, 1994
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, JR., respondents.

FACTS

Private respondent Ramon M. Paterno, Jr. filed a letter-complaint dated April 17, 1986, with the Insurance Commissioner against the Philippine American Life Insurance Company (Philamlife), alleging problems encountered by its agents due to certain company practices. The Insurance Commissioner requested Philamlife’s president, Rodrigo de los Reyes, to comment. De los Reyes asked for a more detailed “bill of particulars.” Private respondent maintained his complaint was sufficient and requested a hearing. A hearing was held on July 14, 1986, where private respondent was asked to specify the illegal provisions of the agency contract. On July 31, 1986, private respondent submitted a letter specifying his prayer to declare null and void the provisions on charges and fees in Philamlife’s Contract of Agency and related implementing documents, and to order reimbursement of such fees to agents. Petitioners filed an Answer and later a Motion to Quash Subpoena/Notice, arguing that no formal complaint sufficient in form and content had been filed, that the Insurance Commission lacked jurisdiction over the subject matter and parties, and that the hearing was premature. The Insurance Commissioner denied the Motion to Quash in an Order dated November 6, 1986, prompting petitioners to file this petition for certiorari and prohibition.

ISSUE

Whether the resolution of the legality of the Contract of Agency between Philamlife and its agents falls within the jurisdiction of the Insurance Commissioner.

RULING

No. The Supreme Court granted the petition and set aside the Order of the Insurance Commissioner. The Court ruled that the general regulatory authority of the Insurance Commissioner under Section 414 of the Insurance Code, and the administrative sanctions under Section 415, pertain to the business of insurance as defined in Section 2(2) of the Code. The Contract of Agency between an insurance company and its agents is not included within the meaning of “doing an insurance business.” Furthermore, the quasi-judicial power of the Insurance Commissioner under Section 416 is limited to adjudicating claims and complaints by the insured against the insurer for loss, damage, or liability under an insurance policy. It does not extend to controversies between the insurance company and its agents. The Insurance Code contains no provisions governing the relations between insurance companies and their agents; such relations for agents working on commission are governed by the Contract of Agency and the Civil Code, and disputes are cognizable by the regular courts.