Makati court stops LTO car insurance plan

MANILA, Philippines – The Makati Regional Trial Court (RTC) has permanently stopped the Land Transportation Office (LTO) from implementing the Reformed Compulsory Third Party Liability (CTPL) for vehicle registration.

In a 14-page order, Makati RTC Branch 65 Judge Edgrado Caldona granted the writ of preliminary injunction filed by Standard Insurance Co. Inc. against LTO and Insurance Commission (IC) 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 likewise requires an administrator, which insurers said would eventually turn out as the insurer, resulting in the non-life insurance industry becoming mere reinsurers.

The court, however, said the LTO committed an act constitutive of 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 the reformed CTPL was also deemed in violation of the Amended Insurance Code and the exclusive right of the IC to regulate the country’s insurance industry.

 “Thus, arrogate upon itself such power in derogation of IC’s authority, respondent LTO inevitably committed an act constitutive of grave abuse of discretion amounting to lack of or excess of jurisdiction,” said Caldona in his order.

Caldona, who issued a temporary restraining order December last year, said Memorandum Circular AVT-2015-1975 or the CTPL project violated regulations on monopolies and restraining trade under the Constitution. 

Standard Insurance private counsel Reynaldo Geronimo also informed the court the designation of administrators is 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 may cause massive disenfranchisement of insurance providers and stakeholders that have been engaged in CTPL insurance for several decades.

The petitioner argued it could also lead to higher costs to vehicle owners. Another insurer said the proposed administrator is not the solution to problems of fake CTPL, fly-by-night insurers, under cutting of tariffs, and tax leaks.