REPUBLIC OF THE PHILIPPINES

COURT OF APPEALS
Manila

SOUTH SEA SURETY AND INSURANCE CO., INC. Represented by ROLANDO E. PALAD, President/COO Petitioner Versus EVANGELINE CRISOSTOMO-ESCOBILLO Insurance Commissioner Respondent

C.A..-G.R. No. __________ For Certiorari, Prohibition Mandamus and Injunction with Prayer for the Issuance of Temporary Order and /or Writ of Preliminary Injunction

COMMENT
PUBLIC RESPONDENT, by counsel unto this Honorable Court, respectfully state:

THE PARTIES
Petitioner is an Insurance Company represented herein by its Executive Vice-President, ROLANDO E. PALAD, with office address at Suite 1708 & 1709 East Tower, Philippine Stock Exchange Center, Exchange Road, Ortigas Complex, Pasig City.

Respondent EVANGELINE CRISOSTOMO ESCOBILLO is being sued in her capacity as Insurance Commissioner, Insurance Commission, Manila, and may be served with summons, writs and processes by this Honorable Court at 1071 United Nations Avenue, Manila.

STATEMENT OF THE FACTS AND OF THE CASE

Herein Respondent hereby admits the Petitioners allegations in the Statement of Facts except for the last sentence of paragraph 7, where South Sea Surety & Insurance Corporation alleges that no new conservator or conservators may be appointed as this is only an opinion and not a fact.

ARGUMENTS
I. THE HONORABLE COMMISSIONER DID NOT COMMIT ERROR IN ORDERING THE PETITIONER TO CEASE AND DESIST FROM TRANSACTING BUSINESS.

Herein Respondent did not commit error in ordering the petitioner to cease and desist from transacting business, in the contrary, Respondent validly issued the said order in

accordance with the provision of the Insurance Code of the Philippines which in part provides:

"Sec. 249. Whenever, upon examination or other evidence, it shall be disclosed that the condition of any insurance company doing business in the Philippines is one of insolvency, or that its continuance in business would be hazardous to its policyholders and creditors, the Commissioner shall forthwith order the company to cease and desist from transacting business in the Philippines x x x x. (emphasis supplied) After the Insurance Commissioner informed the South Sea Surety and Insurance Company of its violation of the Insurance Code, they were given a period within which to correct the violation which they failed. Finding that the South Sea Insurance Company did not comply with its directive, a show cause order was given to the SSSIC, after finding sufficient cause, it was only then that the CDO was issued. They were given chance to correct their violation and was afforded their right to be heard, although no hearing was conducted.

A formal trial or hearing is not necessary to comply with the requirements of due process. Its essence is simply the opportunity to explain ones position.1 In Autobus Workers Union v. NLRC the Supreme Court holds:2

This Court has held that there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard.

G.R. No. 164182, February 26, 2008 Autobus Workers Union v. NLRC

They were given ample opportunity to be heard through the letters and orders admitted as facts by the Petitoner in their Statement of Facts.

The essence of due process is simply an opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained of.3

Moreover, the exercise of the Insurance Commissioner of it power to issue the CDO is a valid exercise of police power to protect the policy holders and creditors of the South Sea Surety and Insurance Corporation. Insurance contract is imbued with public interest and when public interest is involved, police power can be validly exercise by the agent of the State, as held by the Supreme Court in Pollution Adjudication Board vs. Court of Appeals:

It is a constitutional commonplace that the ordinary requirements of procedural due process yield to the necessities of protecting vital public interests like those here involved, through the exercise of police power. . . . The Petitioner alleges that the issuance of the cease and desist order without hearing constitute a grave abuse of discretion amounting to lack or excess of jurisdiction. We are not persuaded.

Grave abuse of discretion means a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough; it must be so grave as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation or law.4

3 4

Var Orient Shipping Co., Inc. vs. Achacoso

Suliguin v. The Commission on Elections, G.R. No. 166046, 23 March 2006

The orders issued by the Insurance Commissioner belie the allegations of Petitioner. The issuance of the Cease and Desist Order was issued with caution and impartiality that leaves no showing of arbitrariness.

II THE DAMAGE ALLEGED BY THE PETITIONER CAN BE QUANTIFIED; IT CANNOT BE CONSIDERED AS GRAVE AND IRREPARABLE INJURY AS UNDERSTOOD IN LAW

The damaged as alleged by herein Petitioner is easily quantifiable, and certainly does not fall within the concept of irreparable damage or injury as described in Social Security Commission v. Bayona: Damages are irreparable within the meaning of the rule relative to the issuance of injunction where there is no standard by which their amount can be measured with reasonable accuracy. An irreparable injury which a court of equity will enjoin includes that degree of wrong of a repeated and continuing kind which produce hurt, inconvenience, or damage that can be estimated only by conjecture, and not by any accurate standard of measurement. An irreparable injury to authorize an injunction consists of a serious charge of, or is destructive to, the property it affects, either physically or in the character in which it has been held and enjoined, or when the property has some peculiar quality or use, so that its pecuniary value will not fairly recompense the owner of the loss thereof. (Emphasis supplied)

When the damaged supposed to be suffered by party may or can be easily determined by mathematical computation and, may be proven, is fully compensable by damages. Thus, a preliminary injunction is not warranted. As previously held in Golding v. Balatbat the writ of injunction should never issue when an action for damages would adequately compensate the injuries caused. The very foundation of the jurisdiction to issue the writ rests in the probability of irreparable injury, the inadequacy of pecuniary compensation, and the prevention of the multiplicity of suits, and where facts are not shown to bring the case within these conditions, the relief of injunction should be refused.

III

THE APPOINTMENT OF ATTY. ROSARIO REYES AS ONE OF THE CONSERVATORS OF SSSICI IS PROPER AND WITHIN THE PROVISION OF THE INSURANCE CODE OF THE PHILS.

South Sea Surety & Insurance Corporation tries to impose limitation to which the exercise of the prerogative of the Insurance Commissioner in appointing a conservator by trying

to impress upon this court that the law uses conservator in the singular sense and so the Insurance Commissioner is precluded from appointing more than one conservators.

However , by reading the entire provision of the Section 248 of the Insurance Code of the Philippines, in the 2nd paragraph of the section quoted by the South Sea Surety and Insurance Corporation in its letters to the commissioner we will find:

The conservator may be another insurance company doing business in the Philippines, by officer or officers of such company, or any other competent and qualified person, firm or corporation. It is clear in the above provision that the Insurance Commissioner may appoint more than one persons to act as conservators.

PRAYER
WHEREFORE, it is most respectfully prayed that instant petition be DISMISSED for lack of merit. Santa Cruz, Laguna September 27, 2011

RAMIL F. DE JESUS

EDMUND ZAIDE

NEMESIO SUCANO