Consumers group files graft raps vs insurance commissioner

A consumers group has filed graft charges before the Office of the Ombudsman against Insurance Commissioner Evangeline Escobillo for allegedly having "illegally endorsed and approved" the creation of a private stock corporation called the Compulsory Insurance Processing Center Corp. (CPICC) to centralize the processing of all CTPL polices issued to motor vehicle owners.

In a statement, the Commuters and Consumers Advocate of the Philippines (CCAP) represented by Rene Mades said it had accused Escobillo of violating the Anti-Graft and Corrupt Practices Act and grave misconduct.

In a statement, Mades said that with the creation of the CPICC, a "monopoly" in the issuance, selling, handling, dealing and processing of CTPL policies was created.

"At the very least, the creation of a single entity that shall handle the CTPL business is combination in restraint of trade. Both business schemes are in violation of Section 19 of the Philippine Constitution," CCAP said in its statement.

Mades also accused Escobillo of "giving unwarranted benefits and advantage" to the Philippine Insurers and Reinsurers Association (PIRA), a private rating corporation composed of insurance companies.

According to Mades, the by-laws of CPICC approved by Escobillo stated that an insurance company may subscribe and own shares of stock in the center provided it is a member in good standing of PIRA. Mades pointed out that only a member of PIRA could be a member of the CPICC.

"Because of her endorsement and for fear that they will lose out in the CTPL business a lot of insurance companies hesitantly paid their respective subscriptions to CPICC in the amount of P200,000, while there are others who remain strong willed in support of their rights," said Mades in a statement.

In a meeting of PIRA on April 10, 2006, Mades said, Escobillo "with utter disregard of decency and ethical standards attached to her office, and her being a public official, made it clear that all non-life insurance companies should join CIPCC in order to [be able] to issue CTPL policies. Otherwise, said non-members will be barred from selling CTPL insurance." However, only members of PIRA could be members of the CIPCC, Mades affirmed.

According to Mades, Escobillo did not object when it was mentioned that the CIPCC’s articles and by-laws would be submitted to her for her approval. "It is very strange, irregular and illegal that a public officer will be directly involved in the setting up of a private corporation that will eventually be regulated by the very office he or she is connected with." Consequently, "she is presumed to have personal gain or interest in CIPPC," Mades said.

Anomalies have been reported in the issuance of CTPL policies which vehicle owners are required to obtain before they are allowed to register their vehicles with the Land Transportation Office. In a privilege speech in the Senate last year, Sen. Juan Ponce Enrile exposed a widespread racket victimizing thousands of vehicle owners who are issued fake CTPL policies. In 2003 alone, when 4.3 million vehicles were registered, premiums from CTPL polices were estimated at P2.5 billion and taxes due at P579 million.

However, according to Enrile, only P1.3 billion in premiums were reported, out of which the government was paid P310 million taxes, thus cheating the government of P268 million of taxes in that year alone. As a result of the anomalies, several proposals were made to protect the vehicle owners and also to ensure accurate payment of taxes to the government.

The Government Service Insurance System through President and General Manager Winston Garcia offered to issue the CTPL policies, guaranteeing the genuineness and financial viability of the policies and ensuring full payment of taxes due the government. He offered to allow private insurance companies to participate in the business through reinsurance, obviating the possibility of a monopoly.