Easco Vs LTFRB

EASTERN ASSURANCE & SURETY CORPORATION (EASCO), Petitioner, vs.
LAND TRANSPORTATION
FRANCHISING and REGULATORY BOARD (LTFRB), respondent.\
PANGANIBAN, J.:
The Facts
LTFRB conducted a thorough investigation on the sufficiency of existing insurance policies for PUVs. In
the course of its investigation, the Board discovered that insurance coverage of PUVs was only P50,
000.00 for the entire vehicle regardless of the number of passengers or persons killed or injured.
Thereafter, the Board issued Memorandum Circular fixing the insurance coverage of PUVs on the basis
of the number of persons that may be killed or injured instead of the entire vehicle alone.
After a year of implementation, the Board now has received numerous complaints. So the board made
several amendments In order to make sure that future claims of PUV operators and passenger accident
victims are paid within the required time, and in order to minimize, if not eliminate, fake certificates of
cover and graft and corruption, as well as to ensure the payment of the proper taxes much needed by
the government, as well as to create a computerized data bank without any cost to the government
which is necessary for transport planning. The Board will only accept, as proof of compliance of this
program, insurance policies/certificates of cover duly approved by the Insurance Commission specifically
for this project, and issued by any of the two groups as authorized by the Board.
More so, any insurance company found to have violated any of the prohibitions shall, after notice and
hearing, be banned permanently from participating. All insurance companies who are blacklisted in any
government agency or instrumentality including court and other quasi-judicial agencies are
automatically disallowed to participate in this program. Accordingly, no policy or certificate of cover
shall be accepted from these companies as proof of compliance with this program. The Board shall issue
from time to time the list of the blacklisted or suspended companies.
The LTFRB made a one month nationwide information campaign on the nature of the two-group system
and of the blacklisting scheme and in a meeting with the different insurance companies, including
EASCO was blacklisted by the RTC QC. Thus prompted them to file a Petition for Certiorari and
Prohibition with the CA questioning the validity of those issuances.
Issue: Won Petitioner the subsequent implementing Circulars violate the constitutional proscription
against monopoly as well as unfair competition and combination in restraint of trade
Held: The constitutional provision on monopolies is found in Article XII as follows:
Sec. 19. The State shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.
While embracing free enterprise as an economic creed, the Constitution does not totally prohibit the
operation of monopolies.10 However, it mandates the State to regulate them when public interest so
requires.
Undoubtedly, Memorandum Circular No. 2001-010 authorized and regulated two separate monopolies.
In Garcia v. Corona,12 the Court stated:
The simplest form of monopoly exists when there is only one seller or producer of a product or service
for which there are no substitute. In its more complex form, monopoly is defined as the joint acquisition
or maintenance by members of a conspiracy formed for that purpose, of the power to control and
dominate trade and commerce in a commodity to such an extent that they are able, as a group, to
exclude actual or potential competitors from the field, accompanied with the intention or purpose to
exercise such power.
Indeed, in authorizing and regulating the two insurance monopolies, the LTFRB acted within its
prerogatives in promoting public interest and protecting the riding public. After all, the consortia are
open to all insurance companies, including petitioner. There is no discrimination against any legitimate
insurer. On the whole, the public is given protection without unfair competition or undue restraint of
trade. As the Court of Appeals pointed out, the two consortia are not engaged in the insurance business;
they merely serve as service arms of their respective members.
At bottom, the subject Memorandum Circulars were issued for the stated purpose of promoting public
interest; and of protecting the riding public and PUV operators from being defrauded by fake,
undervalued or misrepresented insurance policies.

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EASTERN ASSURANCE & SURETY CORPORATION (EASCO), Petitioner, vs.

Held: The constitutional provision on monopolies is found in Article XII as follows:

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