White Gold Marine Services, Inc.

vs Pioneer Insurance & Surety Corporation

464 SCRA 448 Insurance Code Protection and Indemnity Club Mutual Insurance Company
Certificate of Authority

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 ship owners in general who band together for the specific purpose of providing
insurance cover on a mutual basis against liabilities incidental to ship owning 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
latters 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.