Batangas firm assails CA insurance claim rule

A BATANGAS-based steel manufacturing firm assailed a Court of Appeals order blocking the release of at least $41 million of its claims from five insurance firms, saying the order was issued with “indecent haste.”

In a motion for inhibition, Steel Corp. of the Phils. (SCP) questioned how Associate Justice Amy Lazaro-Javier was able to issue a temporary restraining order (TRO) in favor of the insurance firms “within a very brief span of only one day.”

Nonnatus Chua, SCP counsel, said the insurance firms—Mapfre Insular Insurance Corp., New India Assurance Co. Ltd., Philippine Charter Insurance Corp., Malayan Insurance Co. Inc. and Asia Insurance Phil. Corp.—sought reprieve from the Court of Appeals on June 7 to stop the implementation of an order issued by Batangas Regional Trial Court Judge Ruben Galvez’s last June 1.

After a day, the case was raffled off to the appellate court’s Special Fifth Division headed by Javier with Associate Justices Estela Perlas-Bernabe and Sesinando Villon as members.

On June 10, Javier and her fellow justices granted the insurance firms’ petition without indicating its validity period.

“Practically, the justices only had a day to study a petition composed of several documents,” Chua said, adding that the 79-page petition was accompanied by five “thick volumes of annexes.”

“Without indicating a period of effectivity, what the appellate court issued was an injunction order which is an obvious violation of the rules of court,” Chua said.

Before issuing an injunction order, he said the justices should have notified the SCP for a summary hearing “which they did not do as required by the rules.”

In his order, Batangas Judge Galvez had directed the insurance companies to pay SCP $41 million in aggregate claims for business interruption and damages wrought by a fire which razed the steel company’s assembly line on Dec. 7, 2009.

The judge said the insurance companies may also opt to just replace the damaged “cold rolling mill machinery and equipment covered by insurance policies issued by them” in lieu of the cash claims.

However, the insurance firms refused to pay the SCP’s claims, arguing that they may have to “close shop” if they release the large amount.

Chua said it was “unthinkable how the justices could have believed the outrageous argument of the insurance companies that without the TRO, their businesses will be in danger of closing shop.”

Chua said it was unbelievable that the insurance firms couldn’t afford to pay the claims. “They are supposed to spread the risk through reinsurance,” said Chua.