The Court of Appeals has upheld the decision of a lower court stopping the implementation of an order that requires insurance companies to increase their paid-up capital from P250-million to P1 billion by 2018.
In a 10-page decision, the appeals court’s 7th division through Associate Justice Stephen Cruz said there is a need to examine the far-reaching implications of the increase in the paid-up capital stock especially in relation to the insurance firms’ capability to raise that amount.
The order was issued earlier by the Department of Finance and the Insurance Commission through Department Order (DO) 15-2012.
A group of insurance companies filed a complaint before the Quezon City Regional Trial Court, claiming that the increase might have adverse effect on their business.
The RTC ruled in their favor and stopped the DOF and IC from implementing the order.
The government went to the appeals court. In their petition, Finance Secretary Cesar Purisima and Insurance Commissioner Emmanuel Dooc claimed that DO 15-2012 is not oppressive because it features a step-by-step type of compliance which the IC may suspend in favor of merging insurance companies and similar businesses that may be affected by the order.
They also said the complainants have no clear right to engage in the insurance that warrants injunctive relief.
But the appeals court said the respondents have the right to question the regulation.
“As correctly held by the RTC, the probability that the increase might have adverse effect on the business climate is sufficient basis for an injunction to issue a provisional remedy since the Rules of Court do not require that the act complained of be in clear violation of the rights of the applicant. What the Rules simply require is the probability that the act violates the rights of the applicant,” the appeals court said.
”But, more than the legal ramifications of the case, it is important to understand that every insurance business, big or small, local or otherwise, builds its name and sizable interest (be it financial, proprietary or manpower) around the stability of its certificate of authority which it has every right to shield from all forms of unsound government policy and discretionary abuse,” the CA ruled.
“To deny private respondents of this basic right is to deny them of their fundamental protection under the law. Hence, the remedy of complaint for injunction with prayer for the issuance of an injunctive writ,” it added.
Concurring with the ruling were Associate Justices Fernanda Lampas Peralta and Ramon Paul Hernando.
The complainants were Security Pacific Assurance Corp., Visayan Surety and Insurance Corp., Finman General Assurance Corp., Milestone Guaranty and Assurance Corp., R & B Insurance Corp., Industrial Insurance Co., Philippine Phoenix Insurance and Surety Corp., Mercantile Insurance Co., Great Domestic Insurance Co. of the Philippines and Insurance of the Philippine Islands Co. AU