Private insurers scored a major victory after a local court issued a preliminary injunction stopping the Land Transportation Office from implementing the Reformed Compulsory Third Party Liability for vehicle registration.
Makati regional trial court branch 65 judge Edgrado Caldona granted the writ of preliminary injunction, after petitioner Standard Insurance Co. Inc. filed the necessary bond on Dec. 17. Caldona also issued a temporary restraining order on Dec. 2, ordering LTO not to implement Memorandum Circular AVT-2015-1975 or the Reformed CTPL Project.
LTO assistant secretary Alfonso Tan Jr. and LTO’s bids and notices section were also facing contempt charges after the agency ignored and proceeded on Dec. 4, in appointing national administrators despite of the TRO issued by Caldona.
Tan said in a statement that eight insurance companies expressed interest to become administrators but only three participants were able to submit their eligibility and accreditation documents.
The CTPL is a mandatory insurance plan required by LTO for vehicle registration. The “reformed” version is a modification of the CTPL.
The new measure requires an administrator, which insurers said would eventually turn out as the insurer, resulting in the non-life insurance industry becoming mere reinsurers.
Standard Insurance private counsel Reynaldo Geronimo said the designation of administrators was in excess of LTO’s jurisdiction and the circular infringes upon the constitutional provision against monopolies and restraint of trade under Section 19, Article XII of the Constitution.
“Such action by the LTO in the accreditation of the administrators is a clear violation of the TRO and LTO together with Tan could be cited for contempt of court,” said Geronimo of the Romulo Mabanta De Los Angeles law dirm.
The private counsel also pointed out that the Office of the Solicitor General would be in a difficult position to come up with its memorandum against Standard Insurance’s petition as it represented both LTO and the Insurance Commission who had opposing views on the matter.
IC Commissioner Emmanuel Dooc claimed that thousands of jobs might be lost and regulations might be onerous, with regards to the proposed reformed CTPL.
The OSG did not present any contradictory evidence nor opposed the pieces of evidence presented by Standard Insurance, a leader in motorcar insurance, by the Philippine Insurance and Reinsurance Association and Maribeth Castro, senior vice president of Standard Insurance.
Castro testified that 65 companies aligned with Pira and the Bukluran ng mga Mangagawa sa Industriya ng Seguro were against LTO’s “reformed” CTPL project because the supposed initiative would only result in the monopoly in the auto insurance industry.
She informed court that the monopoly would practically negate or render useless the presence of thousands of frontline employees and agents. She said the proposed administrator was not the solution to the problems of fake CTPL, fly-by-night insurers, undercutting of tariffs, tax leaks and the life.