Legality of Insurance Commissioner's Directives and Conservator's Acts Relative to Rehabilitation of National Life Insurance Company of the Phil.

DOJ OPINION NO. 039, s. 2016 July 4, 2016 Commissioner Emmanuel F. Dooc Insurance Commission 1071 United Nations Avenue Manila Dear Commissioner Dooc : This pertains to your request for opinion on whether the directives issued by the Insurance Commissioner and the acts performed by the Conservator relative to the rehabilitation of the National Life Insurance Company of the Philippines ("NLIC") are legal, valid and in accordance with the statutory powers granted to you under Republic Act No. 10607 (the "Amended Insurance Code") and despite the absence of the consent of the policyholders and creditors. You state that sometime 2008, NLIC was found to be continuously suffering from deficiencies as regards its Margin of Solvency following regular examination by the Commission; that the Commission placed NLIC under conservatorship for failure to comply with the solvency requirement under Section 194 of Presidential Decree No. 612 ("Old Insurance Code"), as amended, ordering NLIC to cease and desist from taking in new risks. You also state that over the course of five (5) years and after being placed under six (6) Conservators, NLIC was unable to successfully address its Margin of Solvency deficiency. You further state that on 22 January 2013, the Commission appointed Mr. Ermilando D. Napa as NLIC's 6th Conservator wherein the latter presented a Proposed Rehabilitation Plan dated 12 March 2013, which the Commission considered together with another rehabilitation proposal prepared and presented by NLIC policyholders; that the Commission adopted certain elements of Mr. Napa's and the policyholders' respective proposals to arrive at a Modified Rehabilitation Plan, which was approved in a Directive dated 08 November 2013. You further state that a Supplemental Directive dated 21 July 2014 and a Second Supplemental Directive dated 29 April 2016 were likewise issued by the Commission, providing for the terms of the rehabilitation of NLIC. Hence, this request. With regret, we are constrained to decline the request. The resolution of the present query would amount to a review of the rulings by the Insurance Commissioner. Pursuant to established precedents, this Department has consistently desisted from passing upon the rulings and/on official actuations of other government offices over which the Secretary of Justice possesses neither revisory authority nor supervisory jurisdiction (Secretary of Justice Opinion No. 22, s. 1977; No. 181, s. 1976; No. 9, s. 1987; and No. 48, s. 1990). It bears stress that the opinions of the Secretary of Justice being advisory in nature, cannot prevail over the rulings promulgated by the governmental agency primarily charged with the enforcement of the law involved ( Id., No. 145, s. 1973; and No. 89, s. 1980). This practice has evolved not only from practical considerations but also out of respect and deference for the competence and expertise of the Office having primary jurisdiction to resolve the matter and its familiarity with the policy repercussions of the questions, as well as from a logical recognition of the lawful exercise of an authority conferred by law ( Id., No. 1, s. 1983). 1 Besides, the resolution of the issues raised indubitably affects the substantive rights of the policyholders and creditors of NLIC. Opinions of the Secretary of Justice are merely advisory in nature. As such, they have no binding effect upon the party/parties whose substantive rights may be affected by the opinion, and who may, in all probability, contest the same before the courts, if said opinion turns out to be opposed to their interest. As a matter of policy and in consonance with long established precedents, the Secretary of Justice does not render opinion or give legal advice on matters that are justiciable in nature or may be the subject of court litigation. 2 It is suggested that the request should be addressed to the Secretary of Finance who, under the law, is empowered to review on appeal the official actuations of the Insurance Commissioner (Section 437, R.A. 10607, The Insurance Code). CAIHTE Please be guided accordingly. Very truly yours, For the Secretary of Justice: (SGD.) RICARDO V. PARAS III Chief State Counsel Footnotes 1. Secretary of Justice Opinion No. 001, s. 1991. 2. Secretary of Justice Opinion No. 63, s. 2007, citing Opinion No. 57, s. 2007 and Nos. 50 & 33, s. 2005.