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COMMUNICATION v. MARK SENSING AUSTRALIA PTY. LTD.

FACTS:

The case involves a petition for review on certiorari seeking to set aside the Decision and Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 110511. The petitioner, Communication and Information Systems Corporation (CISC), entered into a Memorandum of Agreement (MOA) with respondent Mark Sensing Australia Pty. Ltd. (MSAPL), appointing CISC as the exclusive agent for MSAPL to the Philippine Charity Sweepstakes Office (PCSO).

MSAPL stopped remitting commissions to CISC, claiming that CISC violated its authority in negotiating a supply contract with PCSO and MSAPL's competitors. CISC filed a complaint with the RTC for specific performance and prayed for a writ of preliminary mandatory injunction and/or writ of attachment. The RTC initially denied CISC's prayer for an injunction but ordered PCSO to hold the contested amount until the final determination of the case. However, the RTC later reversed itself, stating that its jurisdiction is limited to the amount stated in the complaint.

CISC appealed this order to the CA, which granted the appeal and ordered that the additional docket fees shall constitute a lien on the judgment. The RTC then granted CISC's application for a writ of preliminary attachment. MSAPL appealed the adverse judgment to the Supreme Court, but the appeal was denied.

The RTC later granted CISC's motion to amend the attachment order to include unpaid commissions in excess of the amount stated in the complaint. CISC posted an attachment bond in favor of MSAPL, which was approved by the RTC. MSAPL filed a motion to determine the sufficiency of the bond and later moved to recall and set aside the approval of the bond, alleging that the bonding company had no capacity to underwrite the bond.

The RTC denied MSAPL's motion, finding that the bond was reinsured with other insurance companies, but ordered the bonding company to submit proof of reinsurance. MSAPL filed a petition for certiorari before the CA, challenging the RTC's orders. The CA granted the petition, concluding that the RTC exceeded its authority in ordering the issuance of the writ of preliminary attachment.

CISC filed a petition for review on certiorari with the Supreme Court.

ISSUES:

  1. Whether the challenge to the orders dated April 13, 2009, July 2, 2009, and July 8, 2009 are time-barred.

  2. Whether the petition for certiorari was prematurely filed in relation to the non-payment of docket fees.

  3. Whether the approval of the attachment bond exceeded the retention limit under the Insurance Code.

  4. Whether the Regional Trial Court (RTC) committed grave abuse of discretion when it approved the attachment bond whose face amount exceeded the retention limit of the surety.

RULING:

  1. The challenge to the order dated April 13, 2009 is time-barred. The 60-day reglementary period for challenging the RTC's issuance of the amended writ of attachment should be counted from April 27, 2009, the date when the petitioner received a copy of the April 13, 2009 Order denying the motion for reconsideration of the December 22, 2008 Order.

  2. The petition for certiorari is premature with regards to the non-payment of docket fees. The RTC has yet to rule on the issue of non-payment and a petition for certiorari may only be filed when there is no plain, speedy, and adequate remedy in the ordinary course of law. The petitioner should have first moved for the RTC to resolve the pending motion.

  3. The approval of the attachment bond is not in violation of the Insurance Code. The motions to determine the sufficiency of the bond and to set aside the approval were resolved jointly, with the RTC holding that Section 215 of the Insurance Code allows insurance companies to exceed their retention limit for single risk coverage.

  4. No, the RTC did not commit grave abuse of discretion when it approved the attachment bond. The approval was in accordance with Section 215 of the old Insurance Code, which allows insurance companies to insure a single risk in excess of retention limits, provided that the excess amount is ceded to reinsurers. The retention limit was not breached in this case, as Plaridel's retained risk was below the maximum retention limit. The approval of the attachment bond by the RTC was therefore in order.

PRINCIPLES:

  • The timeliness of filing a petition for certiorari is mandatory and jurisdictional. The provisions on reglementary periods are strictly applied to prevent delays and ensure the orderly and speedy discharge of judicial business.

  • A petition for certiorari may only be filed when there is no plain, speedy, and adequate remedy in the ordinary course of law. Parties should not preempt the trial court's action on their motions.

  • Insurance companies may exceed their retention limit for single risk coverage under Section 215 of the Insurance Code.

  • Section 215 of the old Insurance Code allows insurance companies to insure a single risk in excess of retention limits, provided that the excess amount is ceded to reinsurers.

  • A contract of reinsurance is separate and distinct from the original contract of insurance, and the reinsurer's contractual relationship is with the direct insurer.

  • Reinsurance contracts are issued in favor of the direct insurer because they pertain to the direct insurer's risk, not the risk assumed under the original policy.