THE Department of Finance (DOF) announced it has affirmed the Insurance Commission’s (IC) decision to order Bureau of Fire Protection Mutual Aid and Beneficiary Association (BFPMBAI) to immediately cease and desist from operating as a mutual benefit association (MBA) without a license from the regulator.
In a decision dated May 24 this year, Finance Secretary Carlos G. Dominguez upheld Insurance Commissioner Dennis B. Funa’s ruling in 2017 declaring BFPMBAI’s operations illegal after the Fire Service Mutual Benefit Association Inc. (FSMBAI) filed an administrative case against the BFPMBAI.
Aside from the CDO, the IC also ordered the BFMBAI to pay P200,000 as fine for operating as an MBA sans a license from the IC. The BFPMBAI filed an appeal to the Department of Finance, the IC’s parent agency, regarding the latter’s decision.
In the administrative case filed before the IC, the BFPMBAI argued it wasn’t operating as an MBA but as a mutual aid and beneficiary association organized under Section 30 (c) of the National Internal Revenue Code (“NIRC”). The BFPMBAI also denied it provides insurance benefits, citing its members are covered by policies issued by a private insurer.
In its appeal to the DOF, the BFPMBAI said the IC doesn’t have jurisdiction over the group. The BFPMBAI added it was denied due process of law and that the IC’s CDO and fine is incorrect. It also stressed that FSMBAI could not validly file an action against them for being under conservatorship at the time.
However, the DOF said “records show that the BFPMBAI complied with all the requisites to be considered as a mutual benefit association as stated in Section 430 of the Insurance Code,” thereby affirming the IC’s findings of illegal business operations. The DOF also affirmed the IC’s statutory power to issue the CDO and to impose fines. It also ruled that IC had jurisdiction over the instant case since it is the “sole government agency mandated to ensure the faithful execution and enforcement of the provisions of the Insurance Code as well as the efficient regulation of the insurance industry.”
Dominguez also held that the IC afforded BFPMBAI due process as it was “given the opportunity to be heard when BFPMBAI attended the pre-trial conference, hearings and filed its pleadings” in the administrative case decided by the IC in 2017.
Further, he also held that any procedural defect that occurred in the proceedings was subsequently cured by BFPMBAI’s filing of a motion for reconsideration and its appeal to the DOF, pursuant to a Supreme Court ruling.
In the same decision, the DOF also agreed with IC’s finding that FSMBAI had the juridical personality to institute the administrative case against BFPMBAI, as it had the statutory power under the Corporation Code to sue under its own name as a private corporation that had an existing Certificate of Incorporation issued by the Securities and Exchange Commission.
“As mentioned by the Honorable Secretary in his Decision dated 24 May 2022, the IC takes to heart its duty to ensure the faithful execution and enforcement of the provisions of the Insurance Code,” Funa said.
He added that the IC “very much appreciates the DOF’s acknowledgment and affirmation in its decision of our mandate to safeguard the rights and interests of the insuring public against the deleterious effects of unsanctioned and unsupervised activities of unregistered entities.”