DoF upholds IC ruling ordering BFPMBAI to stop its operations

THE Department of Finance (DoF) upheld a 2017 ruling by the Insurance Commission (IC) declaring the operations of Bureau of Fire Protection Mutual Aid and Beneficiary Association, Inc. (BFPMBAI) as illegal.

Finance Secretary Carlos G. Dominguez III affirmed the IC ruling in a decision dated May 24 that said the IC has jurisdiction over the case as the “sole government agency mandated to ensure the faithful execution and enforcement of the provisions of the Insurance Code as well as the efficient regulation of the insurance industry.”

“The IC very much appreciates the DoF’s acknowledgment and affirmation in its decision of our mandate to safeguard the rights and interests of the insuring public against the deleterious effects of unsanctioned and unsupervised activities of unregistered entities,” Insurance Commissioner Dennis B. Funa said in a statement.

In 2017, the IC ordered the BFPMBAI to shut down and pay a P200,000 fine for operating as a mutual benefit association (MBA) without a license from the regulator following an administrative case filed by the Fire Service Mutual Benefit Association, Inc. (FSMBAI).

In an administrative case filed before the IC, the BFPMBAI argued it was not operating as an MBA but as a mutual aid and beneficiary association organized under the National Internal Revenue Code (NIRC). The firm denied providing insurance benefits to its members as they are covered by a private insurance company.

The NIRC states that a beneficiary association provides for the payment of life, sickness, accident, and other benefits of its members.

The BFPMBAI argued that based on the NIRC, the IC has no jurisdiction over it, that it was denied the due process of law, and that the IC’s imposition of a cease-and-desist order on its operations was incorrect.

It added that the FSMBAI, which filed an administrative case against it in 2017, should not have been allowed to file to begin with as it was under conservatorship at the time.

FSMBAI is a licensed MBA comprised of officers, employees and retirees of Bureau of Fire Protection and some personnel from the Department of the Interior and Local Government.

For its part, the DoF said the BFPMBAI met the requirements to be considered an MBA, based on Section 430 of the Insurance Code, which effectively places them under the IC’s jurisdiction.

The Insurance Code defines an MBA as a nonstock and nonprofit society, association or corporation organized for the purpose of paying sick benefits to members, furnishing financial support to members while out of employment, or of paying relatives of deceased members.

The DoF also upheld the IC’s finding that FSMBAI had the right to file an administrative case against BFPMBAI as it “had the statutory power under the Corporation Code to sue under its own name.

It added that the BFPMBAI was able to defend itself during the pre-trial and hearings in 2017, in contrast to its claim that it was denied the opportunity to do so. — TJT