The Makati Regional Trial Court permanently stopped the Land Transportation Office from implementing the Reformed Compulsory Third Party Liability for vehicle registration.
In a 14-page order, Makati Regional Trial Court Judge Edgrado Caldona of Branch 65 granted the writ of preliminary injunction filed by Standard Insurance Co. Inc. against the LTO and the Insurance Commission in December last year.
The CTPL is a mandatory insurance plan required by the LTO for vehicle registration. The “reformed” version is a modification of the CTPL.
The new measure required an administrator, which insurers said would eventually turn out as the insurer, resulting in the non-life insurance industry becoming mere reinsurers.
The court said the LTO committed grave abuse of discretion amounting to lack of or excess of jurisdiction when it “overstepped its office which is essentially overseeing the registration of motor vehicles and licensing of drivers.”
Caldona noted that the reformed CTPL was also deemed in violation of the Amended Insurance Code and the exclusive right of the Insurance IC to regulate the country’s insurance industry.
“Thus, arrogate upon itself such power in derogation of I’s authority respondent LTO inevitably committed an act constitutive of grave abuse of discretion amounting to luck of or excess of jurisdiction,” said the judge in his order.
Caldona, who issued a temporary restraining order December last year, said the Memorandum Circular AVT-2015-1975 or the CTPL project violated regulations on monopolies and restraining trade under the Constitution.
Standard Insurance lawyer Reynaldo Geronimo informed the court that 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.
Geronimo, of the Romulo Mabanta Buenaventura Sayoc and Delos Angeles Law Offices, said the circular might cause massive disenfranchisement of insurance providers and stakeholders engaged in CTPL insurance for several decades.
The petitioner argued that it could also lead to higher costs to vehicle owners.
Another insurer said the proposed administrator was not the solution to problems of fake CTPL, fly-by-night insurers, under cutting of tariffs and tax leaks.
The court also noted that IC Commissioner Emmanuel Dooc repeatedly failed to participate at any stage of the proceedings to clarify its position on the matter despite having been duly notified.
