REPUBLIC ACT NO.

10607 "(2) Making or proposing to make, as surety, any

AN ACT STRENGTHENING THE INSURANCE INDUSTRY, contract of suretyship as a vocation and not as
FURTHER AMENDING PRESIDENTIAL DECREE NO. 612, merely incidental to any other legitimate business or
OTHERWISE KNOWN AS "THE INSURANCE CODE", AS activity of the surety;
AMENDED BY PRESIDENTIAL DECREE NOS. 1141, 1280,
1455, 1460, 1814 AND 1981, AND BATAS PAMBANSA BLG. "(3) Doing any kind of business, including a
874, AND FOR OTHER PURPOSES reinsurance business, specifically recognized as
constituting the doing of an insurance business
Be it enacted by the Senate and House of Representatives of the within the meaning of this Code;
Philippines in Congress assembled:
"(4) Doing or proposing to do any business in
Section 1. Presidential Decree No. 612, as amended, is hereby substance equivalent to any of the foregoing in a
further amended to read as follows: manner designed to evade the provisions of this
Code.
"GENERAL PROVISIONS
"In the application of the provisions of this Code, the
"Section 1. This Decree shall be known as ‘The Insurance Code’. fact that no profit is derived from the making of
insurance contracts, agreements or transactions or
"Section 2. Whenever used in this Code, the following terms that no separate or direct consideration is received
shall have the respective meanings hereinafter set forth or therefor, shall not be deemed conclusive to show
indicated, unless the context otherwise requires: that the making thereof does not constitute the
doing or transacting of an insurance business.
"(a) A contract of insurance is an agreement whereby one "(c) As used in this Code, the term Commissioner means
undertakes for a consideration to indemnify another the Insurance Commissioner.
against loss, damage or liability arising from an unknown
or contingent event. "CHAPTER I
"THE CONTRACT OF INSURANCE
"A contract of suretyship shall be deemed to be an "TITLE 1
insurance contract, within the meaning of this Code, only if "WHAT MAY BE INSURED
made by a surety who or which, as such, is doing an
insurance business as hereinafter provided. "Section 3. Any contingent or unknown event, whether past or
future, which may damnify a person having an insurable interest,
"(b) The term doing an insurance business or transacting or create a liability against him, may be insured against, subject
an insurance business, within the meaning of this Code, to the provisions of this chapter.
shall include:
"The consent of the spouse is not necessary for the validity of an
"(1) Making or proposing to make, as insurer, any insurance policy taken out by a married person on his or her life
insurance contract; or that of his or her children.
"All rights, title and interest in the policy of insurance taken out
by an original owner on the life or health of the person insured "TITLE 3
shall automatically vest in the latter upon the death of the "INSURABLE INTEREST
original owner, unless otherwise provided for in the policy.
"Section 10. Every person has an insurable interest in the life
"Section 4. The preceding section does not authorize an and health:
insurance for or against the drawing of any lottery, or for or "(a) Of himself, of his spouse and of his children;
against any chance or ticket in a lottery drawing a prize. "(b) Of any person on whom he depends wholly or in part
for education or support, or in whom he has a pecuniary
"Section 5. All kinds of insurance are subject to the provisions of interest;
this chapter so far as the provisions can apply. "(c) Of any person under a legal obligation to him for the
payment of money, or respecting property or services, of
"TITLE 2 which death or illness might delay or prevent the
"PARTIES TO THE CONTRACT performance; and
"(d) Of any person upon whose life any estate or interest
"Section 6. Every corporation, partnership, or association, duly vested in him depends.
authorized to transact insurance business as elsewhere provided
in this Code, may be an insurer. "Section 11. The insured shall have the right to change the
beneficiary he designated in the policy, unless he has expressly
"Section 7. Anyone except a public enemy may be insured. waived this right in said policy. Notwithstanding the foregoing, in
the event the insured does not change the beneficiary during his
"Section 8. Unless the policy otherwise provides, where a lifetime, the designation shall be deemed irrevocable.
mortgagor of property effects insurance in his own name
providing that the loss shall be payable to the mortgagee, or "Section 12. The interest of a beneficiary in a life insurance
assigns a policy of insurance to a mortgagee, the insurance is policy shall be forfeited when the beneficiary is the principal,
deemed to be upon the interest of the mortgagor, who does not accomplice, or accessory in willfully bringing about the death of
cease to be a party to the original contract, and any act of his, the insured. In such a case, the share forfeited shall pass on to
prior to the loss, which would otherwise avoid the insurance, will the other beneficiaries, unless otherwise disqualified. In the
have the same effect, although the property is in the hands of the absence of other beneficiaries, the proceeds shall be paid in
mortgagee, but any act which, under the contract of insurance, is accordance with the policy contract. If the policy contract is
to be performed by the mortgagor, may be performed by the silent, the proceeds shall be paid to the estate of the insured.
mortgagee therein named, with the same effect as if it had been
performed by the mortgagor. "Section 13. Every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of
"Section 9. If an insurer assents to the transfer of an insurance such nature that a contemplated peril might directly damnify the
from a mortgagor to a mortgagee, and, at the time of his assent, insured, is an insurable interest.
imposes further obligations on the assignee, making a new
contract with him, the acts of the mortgagor cannot affect the "Section 14. An insurable interest in property may consist in:
rights of said assignee. "(a) An existing interest;
 "(b) An inchoate interest founded on an existing interest; "Section 22. A change of interest in one or more of several
or distinct things, separately insured by one policy, does not avoid
"(c) An expectancy, coupled with an existing interest in the insurance as to the others.
that out of which the expectancy arises.
"Section 23. A change of interest, by will or succession, on the
"Section 15. A carrier or depository of any kind has an insurable death of the insured, does not avoid an insurance; and his
interest in a thing held by him as such, to the extent of his interest in the insurance passes to the person taking his interest
liability but not to exceed the value thereof. in the thing insured.

"Section 16. A mere contingent or expectant interest in any "Section 24. A transfer of interest by one of several partners,
thing, not founded on an actual right to the thing, nor upon any joint owners, or owners in common, who are jointly insured, to
valid contract for it, is not insurable. the others, does not avoid an insurance even though it has been
"Section 17. The measure of an insurable interest in property is agreed that the insurance shall cease upon an alienation of the
the extent to which the insured might be damnified by loss or thing insured.
injury thereof.
"Section 25. Every stipulation in a policy of insurance for the
"Section 18. No contract or policy of insurance on property shall payment of loss whether the person insured has or has not any
be enforceable except for the benefit of some person having an interest in the property insured, or that the policy shall be
insurable interest in the property insured. received as proof of such interest, and every policy executed by
way of gaming or wagering, is void.
"Section 19. An interest in property insured must exist when the
insurance takes effect, and when the loss occurs, but need not
exist in the meantime; and interest in the life or health of a "TITLE 4
person insured must exist when the insurance takes effect, but "CONCEALMENT
need not exist thereafter or when the loss occurs.
"Section 26. A neglect to communicate that which a party knows
"Section 20. Except in the cases specified in the next four and ought to communicate, is called a concealment.
sections, and in the cases of life, accident, and health insurance,
a change of interest in any part of a thing insured unaccompanied "Section 27. A concealment whether intentional or unintentional
by a corresponding change of interest in the insurance, suspends entitles the injured party to rescind a contract of insurance.
the insurance to an equivalent extent, until the interest in the
thing and the interest in the insurance are vested in the same "Section 28. Each party to a contract of insurance must
person. communicate to the other, in good faith, all facts within his
knowledge which are material to the contract and as to which he
"Section 21. A change of interest in a thing insured, after the makes no warranty, and which the other has not the means of
occurrence of an injury which results in a loss, does not affect the ascertaining.
right of the insured to indemnity for the loss.
"Section 29. An intentional and fraudulent omission, on the part
of one insured, to communicate information of matters proving or
tending to prove the falsity of a warranty, entitles the insurer to "Section 35. Neither party to a contract of insurance is bound to
rescind. communicate, even upon inquiry, information of his own
judgment upon the matters in question.
"Section 30. Neither party to a contract of insurance is bound to
communicate information of the matters following, except in "TITLE 5
answer to the inquiries of the other: "REPRESENTATION

"(a) Those which the other knows; "Section 36. A representation may be oral or written.
"(b) Those which, in the exercise of ordinary care, the
other ought to know, and of which the former has no "Section 37. A representation may be made at the time of, or
reason to suppose him ignorant; before, issuance of the policy.
"(c) Those of which the other waives communication;
"(d) Those which prove or tend to prove the existence of a "Section 38. The language of a representation is to be
risk excluded by a warranty, and which are not otherwise interpreted by the same rules as the language of contracts in
material; and general.
"(e) Those which relate to a risk excepted from the policy
and which are not otherwise material. "Section 39. A representation as to the future is to be deemed a
promise, unless it appears that it was merely a statement of
"Section 31. Materiality is to be determined not by the event, belief or expectation.
but solely by the probable and reasonable influence of the facts
upon the party to whom the communication is due, in forming his "Section 40. A representation cannot qualify an express
estimate of the disadvantages of the proposed contract, or in provision in a contract of insurance, but it may qualify an implied
making his inquiries. warranty.

"Section 32. Each party to a contract of insurance is bound to "Section 41. A representation may be altered or withdrawn
know all the general causes which are open to his inquiry, equally before the insurance is effected, but not afterwards.
with that of the other, and which may affect the political or
material perils contemplated; and all general usages of trade. "Section 42. A representation must be presumed to refer to the
date on which the contract goes into effect.
"Section 33. The right to information of material facts may be
waived, either by the terms of insurance or by neglect to make "Section 43. When a person insured has no personal knowledge
inquiry as to such facts, where they are distinctly implied in other of a fact, he may nevertheless repeat information which he has
facts of which information is communicated. upon the subject, and which he believes to be true, with the
explanation that he does so on the information of others; or he
"Section 34. Information of the nature or amount of the interest may submit the information, in its whole extent, to the insurer;
of one insured need not be communicated unless in answer to an and in neither case is he responsible for its truth, unless it
inquiry, except as prescribed by Section 51. proceeds from an agent of the insured, whose duty it is to give
the information.
"Section 44. A representation is to be deemed false when the "Any rider, clause, warranty or endorsement purporting to be
facts fail to correspond with its assertions or stipulations. part of the contract of insurance and which is pasted or attached
to said policy is not binding on the insured, unless the descriptive
"Section 45. If a representation is false in a material point, title or name of the rider, clause, warranty or endorsement is also
whether affirmative or promissory, the injured party is entitled to mentioned and written on the blank spaces provided in the policy.
rescind the contract from the time when the representation "Unless applied for by the insured or owner, any rider, clause,
becomes false. warranty or endorsement issued after the original policy shall be
countersigned by the insured or owner, which countersignature
"Section 46. The materiality of a representation is determined shall be taken as his agreement to the contents of such rider,
by the same rules as the materiality of a concealment. clause, warranty or endorsement.

"Section 47. The provisions of this chapter apply as well to a "Notwithstanding the foregoing, the policy may be in electronic
modification of a contract of insurance as to its original formation. form subject to the pertinent provisions of Republic Act No. 8792,
"Section 48. Whenever a right to rescind a contract of insurance otherwise known as the ‘Electronic Commerce Act’ and to such
is given to the insurer by any provision of this chapter, such right rules and regulations as may be prescribed by the Commissioner.
must be exercised previous to the commencement of an action "Section 51. A policy of insurance must specify:
on the contract.
"(a) The parties between whom the contract is made;
"After a policy of life insurance made payable on the death of the "(b) The amount to be insured except in the cases of open
insured shall have been in force during the lifetime of the insured or running policies;
for a period of two (2) years from the date of its issue or of its "(c) The premium, or if the insurance is of a character
last reinstatement, the insurer cannot prove that the policy is where the exact premium is only determinable upon the
void ab initio or is rescindable by reason of the fraudulent termination of the contract, a statement of the basis and
concealment or misrepresentation of the insured or his agent. rates upon which the final premium is to be determined;
"(d) The property or life insured;
"(e) The interest of the insured in property insured, if he is
"TITLE 6 not the absolute owner thereof;
"THE POLICY "(f) The risks insured against; and
"(g) The period during which the insurance is to continue.
"Section 49. The written instrument in which a contract of
insurance is set forth, is called a policy of insurance.
"Section 52. Cover notes may be issued to bind insurance
"Section 50. The policy shall be in printed form which may temporarily pending the issuance of the policy. Within sixty (60)
contain blank spaces; and any word, phrase, clause, mark, sign, days after issue of a cover note, a policy shall be issued in lieu
symbol, signature, number, or word necessary to complete the thereof, including within its terms the identical insurance bound
contract of insurance shall be written on the blank spaces under the cover note and the premium therefor.
provided therein.
"Cover notes may be extended or renewed beyond such sixty
(60) days with the written approval of the Commissioner if he
determines that such extension is not contrary to and is not for insurance merely represents the insurer’s maximum liability. The
the purpose of violating any provisions of this Code. The value of such thing insured shall be ascertained at the time of the
Commissioner may promulgate rules and regulations governing loss.
such extensions for the purpose of preventing such violations and
may by such rules and regulations dispense with the requirement "Section 61. A valued policy is one which expresses on its face
of written approval by him in the case of extension in compliance an agreement that the thing insured shall be valued at a specific
with such rules and regulations. sum.
"Section 53. The insurance proceeds shall be applied exclusively
to the proper interest of the person in whose name or for whose "Section 62. A running policy is one which contemplates
benefit it is made unless otherwise specified in the policy. successive insurances, and which provides that the object of the
policy may be from time to time defined, especially as to the
"Section 54. When an insurance contract is executed with an subjects of insurance, by additional statements or indorsements.
agent or trustee as the insured, the fact that his principal or
beneficiary is the real party in interest may be indicated by "Section 63. A condition, stipulation, or agreement in any policy
describing the insured as agent or trustee, or by other general of insurance, limiting the time for commencing an action
words in the policy. thereunder to a period of less than one (1) year from the time
when the cause of action accrues, is void.
"Section 55. To render an insurance effected by one partner or
part-owner, applicable to the interest of his co-partners or other "Section 64. No policy of insurance other than life shall be
part-owners, it is necessary that the terms of the policy should be cancelled by the insurer except upon prior notice thereof to the
such as are applicable to the joint or common interest. insured, and no notice of cancellation shall be effective unless it
is based on the occurrence, after the effective date of the policy,
"Section 56. When the description of the insured in a policy is so of one or more of the following:
general that it may comprehend any person or any class of
persons, only he who can show that it was intended to include "(a) Nonpayment of premium;
him, can claim the benefit of the policy. "(b) Conviction of a crime arising out of acts increasing the
hazard insured against;
"Section 57. A policy may be so framed that it will inure to the "(c) Discovery of fraud or material misrepresentation;
benefit of whomsoever, during the continuance of the risk, may "(d) Discovery of willful or reckless acts or omissions
become the owner of the interest insured. increasing the hazard insured against;
"(e) Physical changes in the property insured which result
"Section 58. The mere transfer of a thing insured does not in the property becoming uninsurable;
transfer the policy, but suspends it until the same person "(f) Discovery of other insurance coverage that makes the
becomes the owner of both the policy and the thing insured. total insurance in excess of the value of the property
insured; or
"Section 59. A policy is either open, valued or running. "(g) A determination by the Commissioner that the
continuation of the policy would violate or would place the
"Section 60. An open policy is one in which the value of the insurer in violation of this Code.
thing insured is not agreed upon, and the amount of the
 "Section 69. No particular form of words is necessary to create a
"Section 65. All notices of cancellation mentioned in the warranty.
preceding section shall be in writing, mailed or delivered to the
named insured at the address shown in the policy, or to his "Section 70. Without prejudice to Section 51, every express
broker provided the broker is authorized in writing by the policy warranty, made at or before the execution of a policy, must be
owner to receive the notice of cancellation on his behalf, and shall contained in the policy itself, or in another instrument signed by
state: the insured and referred to in the policy as making a part of it.

"(a) Which of the grounds set forth in Section 64 is relied "Section 71. A statement in a policy, of a matter relating to the
upon; and person or thing insured, or to the risk, as fact, is an express
warranty thereof.
"(b) That, upon written request of the named insured, the
insurer will furnish the facts on which the cancellation is "Section 72. A statement in a policy, which imparts that it is
based. intended to do or not to do a thing which materially affects the
risk, is a warranty that such act or omission shall take place.

"Section 66. In case of insurance other than life, unless the "Section 73. When, before the time arrives for the performance
insurer at least forty-five (45) days in advance of the end of the of a warranty relating to the future, a loss insured against
policy period mails or delivers to the named insured at the happens, or performance becomes unlawful at the place of the
address shown in the policy notice of its intention not to renew contract, or impossible, the omission to fulfill the warranty does
the policy or to condition its renewal upon reduction of limits or not avoid the policy.
elimination of coverages, the named insured shall be entitled to
renew the policy upon payment of the premium due on the "Section 74. The violation of a material warranty, or other
effective date of the renewal. Any policy written for a term of less material provision of a policy, on the part of either party thereto,
than one (1) year shall be considered as if written for a term of entitles the other to rescind.
one (1) year. Any policy written for a term longer than one (1)
year or any policy with no fixed expiration date shall be "Section 75. A policy may declare that a violation of specified
considered as if written for successive policy periods or terms of provisions thereof shall avoid it, otherwise the breach of an
one (1) year. immaterial provision does not avoid the policy.

"Section 76. A breach of warranty without fraud merely

"TITLE 7 exonerates an insurer from the time that it occurs, or where it is
"WARRANTIES broken in its inception, prevents the policy from attaching to the
risk.
"Section 67. A warranty is either expressed or implied.
"TITLE 8
"Section 68. A warranty may relate to the past, the present, the "PREMIUM
future, or to any or all of these.
"Section 77. An insurer is entitled to payment of the premium as of the premium as corresponds with the unexpired time, at
soon as the thing insured is exposed to the peril insured against. a pro rata rate, unless a short period rate has been agreed
Notwithstanding any agreement to the contrary, no policy or upon and appears on the face of the policy, after deducting
contract of insurance issued by an insurance company is valid from the whole premium any claim for loss or damage
and binding unless and until the premium thereof has been paid, under the policy which has previously accrued: Provided,
except in the case of a life or an industrial life policy whenever That no holder of a life insurance policy may avail himself
the grace period provision applies, or whenever under the broker of the privileges of this paragraph without sufficient cause
and agency agreements with duly licensed intermediaries, a as otherwise provided by law.
ninety (90)-day credit extension is given. No credit extension to a "Section 81. If a peril insured against has existed, and the
duly licensed intermediary should exceed ninety (90) days from insurer has been liable for any period, however short, the insured
date of issuance of the policy. is not entitled to return of premiums, so far as that particular risk
is concerned.
"Section 78. Employees of the Republic of the Philippines,
including its political subdivisions and instrumentalities, and "Section 82. A person insured is entitled to a return of the
government-owned or -controlled corporations, may pay their premium when the contract is voidable, and subsequently
insurance premiums and loan obligations through salary annulled under the provisions of the Civil Code; or on account of
deduction: Provided, That the treasurer, cashier, paymaster or the fraud or misrepresentation of the insurer, or of his agent, or
official of the entity employing the government employee is on account of facts, or the existence of which the insured was
authorized, notwithstanding the provisions of any existing law, ignorant of without his fault; or when by any default of the
rules and regulations to the contrary, to make deductions from insured other than actual fraud, the insurer never incurred any
the salary, wage or income of the latter pursuant to the liability under the policy.
agreement between the insurer and the government employee
and to remit such deductions to the insurer concerned, and "A person insured is not entitled to a return of premium if the
collect such reasonable fee for its services. policy is annulled, rescinded or if a claim is denied by reason of
fraud.
"Section 79. An acknowledgment in a policy or contract of
insurance or the receipt of premium is conclusive evidence of its "Section 83. In case of an over insurance by several insurers
payment, so far as to make the policy binding, notwithstanding other than life, the insured is entitled to a ratable return of the
any stipulation therein that it shall not be binding until the premium, proportioned to the amount by which the aggregate
premium is actually paid. sum insured in all the policies exceeds the insurable value of the
thing at risk.
"Section 80. A person insured is entitled to a return of premium,
as follows: "Section 84. An insurer may contract and accept payments, in
addition to regular premium, for the purpose of paying future
"(a) To the whole premium if no part of his interest in the premiums on the policy or to increase the benefits thereof.
thing insured be exposed to any of the perils insured
against;
"(b) Where the insurance is made for a definite period of "TITLE 9
time and the insured surrenders his policy, to such portion "LOSS
"Section 85. An agreement not to transfer the claim of the
insured against the insurer after the loss has happened, is void if "Section 91. When a preliminary proof of loss is required by a
made before the loss except as otherwise provided in the case of policy, the insured is not bound to give such proof as would be
life insurance. necessary in a court of justice; but it is sufficient for him to give
the best evidence which he has in his power at the time.
"Section 86. Unless otherwise provided by the policy, an insurer
is liable for a loss of which a peril insured against was the "Section 92. All defects in a notice of loss, or in preliminary
proximate cause, although a peril not contemplated by the proof thereof, which the insured might remedy, and which the
contract may have been a remote cause of the loss; but he is not insurer omits to specify to him, without unnecessary delay, as
liable for a loss of which the peril insured against was only a grounds of objection, are waived.
remote cause. "Section 93. Delay in the presentation to an insurer of notice or
"Section 87. An insurer is liable where the thing insured is proof of loss is waived if caused by any act of him, or if he omits
rescued from a peril insured against that would otherwise have to take objection promptly and specifically upon that ground.
caused a loss, if, in the course of such rescue, the thing is
exposed to a peril not insured against, which permanently "Section 94. If the policy requires, by way of preliminary proof
deprives the insured of its possession, in whole or in part; or of loss, the certificate or testimony of a person other than the
where a loss is caused by efforts to rescue the thing insured from insured, it is sufficient for the insured to use reasonable diligence
a peril insured against. to procure it, and in case of the refusal of such person to give it,
then to furnish reasonable evidence to the insurer that such
"Section 88. Where a peril is especially excepted in a contract of refusal was not induced by any just grounds of disbelief in the
insurance, a loss, which would not have occurred but for such facts necessary to be certified or testified.
peril, is thereby excepted although the immediate cause of the
loss was a peril which was not excepted.
"TITLE 11
"Section 89. An insurer is not liable for a loss caused by the "DOUBLE INSURANCE
willful act or through the connivance of the insured; but he is not
exonerated by the negligence of the insured, or of the insurance "Section 95. A double insurance exists where the same person is
agents or others. insured by several insurers separately in respect to the same
subject and interest.

"TITLE 10 "Section 96. Where the insured in a policy other than life is over
"NOTICE OF LOSS insured by double insurance:

"Section 90. In case of loss upon an insurance against fire, an "(a) The insured, unless the policy otherwise provides, may
insurer is exonerated, if written notice thereof be not given to claim payment from the insurers in such order as he may
him by an insured, or some person entitled to the benefit of the select, up to the amount for which the insurers are
insurance, without unnecessary delay. For other non-life severally liable under their respective contracts;
insurance, the Commissioner may specify the period for the "(b) Where the policy under which the insured claims is a
submission of the notice of loss. valued policy, any sum received by him under any other
 policy shall be deducted from the value of the policy "TITLE I
without regard to the actual value of the subject matter "MARINE INSURANCE
insured; "SUB-TITLE 1-A
"(c) Where the policy under which the insured claims is an "DEFINITION
unvalued policy, any sum received by him under any policy
shall be deducted against the full insurable value, for any "Section 101. Marine Insurance includes:
sum received by him under any policy;
"(d) Where the insured receives any sum in excess of the "(a) Insurance against loss of or damage to:
valuation in the case of valued policies, or of the insurable "(1) Vessels, craft, aircraft, vehicles, goods, freights,
value in the case of unvalued policies, he must hold such cargoes, merchandise, effects, disbursements,
sum in trust for the insurers, according to their right of profits, moneys, securities, choses in action,
contribution among themselves; instruments of debts, valuable papers, bottomry,
"(e) Each insurer is bound, as between himself and the and respondentia interests and all other kinds of
other insurers, to contribute ratably to the loss in property and interests therein, in respect to,
proportion to the amount for which he is liable under his appertaining to or in connection with any and all
contract. risks or perils of navigation, transit or
transportation, or while being assembled, packed,
crated, baled, compressed or similarly prepared for
"TITLE 12 shipment or while awaiting shipment, or during any
"REINSURANCE delays, storage, transhipment, or reshipment
incident thereto, including war risks, marine
"Section 97. A contract of reinsurance is one by which an insurer builder’s risks, and all personal property floater
procures a third person to insure him against loss or liability by risks;
reason of such original insurance.
"(2) Person or property in connection with or
"Section 98. Where an insurer obtains reinsurance, except under appertaining to a marine, inland marine, transit or
automatic reinsurance treaties, he must communicate all the transportation insurance, including liability for loss of
representations of the original insured, and also all the knowledge or damage arising out of or in connection with the
and information he possesses, whether previously or construction, repair, operation, maintenance or use
subsequently acquired, which are material to the risk. of the subject matter of such insurance (but not
including life insurance or surety bonds nor
"Section 99. A reinsurance is presumed to be a contract of insurance against loss by reason of bodily injury to
indemnity against liability, and not merely against damage. any person arising out of ownership, maintenance,
or use of automobiles);
"Section 100. The original insured has no interest in a contract
of reinsurance. "(3) Precious stones, jewels, jewelry, precious
metals, whether in course of transportation or
"CHAPTER II otherwise; and
"CLASSES OF INSURANCE
 "(4) Bridges, tunnels and other instrumentalities of course of things he would have earned but for the intervention of
transportation and communication (excluding a peril insured against or other peril incident to the voyage.
buildings, their furniture and furnishings, fixed
contents and supplies held in storage); piers, "Section 106. The interest mentioned in the last section exists,
wharves, docks and slips, and other aids to in case of a charter party, when the ship has broken ground on
navigation and transportation, including dry docks the chartered voyage. If a price is to be paid for the carriage of
and marine railways, dams and appurtenant facilities goods it exists when they are actually on board, or there is some
for the control of waterways. contract for putting them on board, and both ship and goods are
ready for the specified voyage.
"(b) Marine protection and indemnity insurance, meaning
insurance against, or against legal liability of the insured "Section 107. One who has an interest in the thing from which
for loss, damage, or expense incident to ownership, profits are expected to proceed has an insurable interest in the
operation, chartering, maintenance, use, repair, or profits.
construction of any vessel, craft or instrumentality in use "Section 108. The charterer of a ship has an insurable interest in
of ocean or inland waterways, including liability of the it, to the extent that he is liable to be damnified by its loss.
insured for personal injury, illness or death or for loss of or
damage to the property of another person.
"SUB-TITLE 1-C
"CONCEALMENT
"SUB-TITLE 1-B
"INSURABLE INTEREST "Section 109. In marine insurance, each party is bound to
communicate, in addition to what is required by Section 28, all
"Section 102. The owner of a ship has in all cases an insurable the information which he possesses, material to the risk, except
interest in it, even when it has been chartered by one who such as is mentioned in Section 30, and to state the exact and
covenants to pay him its value in case of loss: Provided, That in whole truth in relation to all matters that he represents, or upon
this case the insurer shall be liable for only that part of the loss inquiry discloses or assumes to disclose.
which the insured cannot recover from the charterer.
"Section 110. In marine insurance, information of the belief or
"Section 103. The insurable interest of the owner of the ship expectation of a third person, in reference to a material fact, is
hypothecated by bottomry is only the excess of its value over the material.
amount secured by bottomry.
"Section 111. A person insured by a contract of marine
"Section 104. Freightage, in the sense of a policy of marine insurance is presumed to have knowledge, at the time of
insurance, signifies all the benefits derived by the owner, either insuring, of a prior loss, if the information might possibly have
from the chartering of the ship or its employment for the carriage reached him in the usual mode of transmission and at the usual
of his own goods or those of others. rate of communication.

"Section 105. The owner of a ship has an insurable interest in "Section 112. A concealment in a marine insurance, in respect
expected freightage which according to the ordinary and probable to any of the following matters, does not vitiate the entire
contract, but merely exonerates the insurer from a loss resulting "Section 117. An implied warranty of seaworthiness is complied
from the risk concealed: with if the ship be seaworthy at the time of the commencement
of the risk, except in the following cases:
"(a) The national character of the insured;
"(b) The liability of the thing insured to capture and "(a) When the insurance is made for a specified length of
detention; time, the implied warranty is not complied with unless the
"(c) The liability to seizure from breach of foreign laws of ship be seaworthy at the commencement of every voyage
trade; it undertakes during that time;
"(d) The want of necessary documents; and "(b) When the insurance is upon the cargo which, by the
"(e) The use of false and simulated papers. terms of the policy, description of the voyage, or
established custom of the trade, is to be transhipped at an
intermediate port, the implied warranty is not complied
"SUB-TITLE 1-D with unless each vessel upon which the cargo is shipped,
"REPRESENTATION or transhipped, be seaworthy at the commencement of
each particular voyage.
"Section 113. If a representation by a person insured by a "Section 118. A warranty of seaworthiness extends not only to
contract of marine insurance, is intentionally false in any material the condition of the structure of the ship itself, but requires that
respect, or in respect of any fact on which the character and it be properly laden, and provided with a competent master, a
nature of the risk depends, the insurer may rescind the entire sufficient number of competent officers and seamen, and the
contract. requisite appurtenances and equipment, such as ballasts, cables
and anchors, cordage and sails, food, water, fuel and lights, and
"Section 114. The eventual falsity of a representation as to other necessary or proper stores and implements for the voyage.
expectation does not, in the absence of fraud, avoid a contract of
marine insurance. "Section 119. Where different portions of the voyage
contemplated by a policy differ in respect to the things requisite
to make the ship seaworthy therefor, a warranty of
"SUB-TITLE 1-E seaworthiness is complied with if, at the commencement of each
"IMPLIED WARRANTIES portion, the ship is seaworthy with reference to that portion.

"Section 115. In every marine insurance upon a ship or freight, "Section 120. When the ship becomes unseaworthy during the
or freightage, or upon any thing which is the subject of marine voyage to which an insurance relates, an unreasonable delay in
insurance, a warranty is implied that the ship is seaworthy. repairing the defect exonerates the insurer on ship or shipowner’s
interest from liability from any loss arising therefrom.
"Section 116. A ship is seaworthy when reasonably fit to perform
the service and to encounter the ordinary perils of the voyage "Section 121. A ship which is seaworthy for the purpose of an
contemplated by the parties to the policy. insurance upon the ship may, nevertheless, by reason of being
unfitted to receive the cargo, be unseaworthy for the purpose of
insurance upon the cargo.
"Section 122. Where the nationality or neutrality of a ship or "Section 127. Every deviation not specified in the last section is
cargo is expressly warranted, it is implied that the ship will carry improper.
the requisite documents to show such nationality or neutrality
and that it will not carry any documents which cast reasonable "Section 128. An insurer is not liable for any loss happening to
suspicion thereon. the thing insured subsequent to an improper deviation.

"SUB-TITLE 1-F "SUB-TITLE 1-G

"THE VOYAGE AND DEVIATION "LOSS

"Section 123. When the voyage contemplated by a marine "Section 129. A loss may be either total or partial.
insurance policy is described by the places of beginning and
ending, the voyage insured is one which conforms to the course "Section 130. Every loss which is not total is partial.
of sailing fixed by mercantile usage between those places.
"Section 131. A total loss may be either actual or constructive.
"Section 124. If the course of sailing is not fixed by mercantile "Section 132. An actual total loss is caused by:
usage, the voyage insured by a marine insurance policy is that "(a) A total destruction of the thing insured;
way between the places specified, which to a master of ordinary "(b) The irretrievable loss of the thing by sinking, or by
skill and discretion, would mean the most natural, direct and being broken up;
advantageous. "(c) Any damage to the thing which renders it valueless to
the owner for the purpose for which he held it; or
"Section 125. Deviation is a departure from the course of the "(d) Any other event which effectively deprives the owner
voyage insured, mentioned in the last two (2) sections, or an of the possession, at the port of destination, of the thing
unreasonable delay in pursuing the voyage or the insured.
commencement of an entirely different voyage.

"Section 126. A deviation is proper: "Section 133. A constructive total loss is one which gives to a
person insured a right to abandon, under Section 141.
"(a) When caused by circumstances over which neither the
master nor the owner of the ship has any control; "Section 134. An actual loss may be presumed from the
"(b) When necessary to comply with a warranty, or to continued absence of a ship without being heard of. The length of
avoid a peril, whether or not the peril is insured against; time which is sufficient to raise this presumption depends on the
"(c) When made in good faith, and upon reasonable circumstances of the case.
grounds of belief in its necessity to avoid a peril; or
"(d) When made in good faith, for the purpose of saving "Section 135. When a ship is prevented, at an intermediate port,
human life or relieving another vessel in distress. from completing the voyage, by the perils insured against, the
liability of a marine insurer on the cargo continues after they are
thus reshipped.
"Nothing in this section shall prevent an insurer from requiring an "Section 141. A person insured by a contract of marine insurance
additional premium if the hazard be increased by this extension may abandon the thing insured, or any particular portion thereof
of liability. separately valued by the policy, or otherwise separately insured,
and recover for a total loss thereof, when the cause of the loss is
"Section 136. In addition to the liability mentioned in the last a peril insured against:
section, a marine insurer is bound for damages, expenses of
discharging, storage, reshipment, extra freightage, and all other "(a) If more than three-fourths (¾) thereof in value is
expenses incurred in saving cargo reshipped pursuant to the last actually lost, or would have to be expended to recover it
section, up to the amount insured. from the peril;
"(b) If it is injured to such an extent as to reduce its value
"Nothing in this or in the preceding section shall render a marine more than three-fourths (¾);
insurer liable for any amount in excess of the insured value or, if "(c) If the thing insured is a ship, and the contemplated
there be none, of the insurable value. voyage cannot be lawfully performed without incurring
either an expense to the insured of more than three-
"Section 137. Upon an actual total loss, a person insured is fourths (¾) the value of the thing abandoned or a risk
entitled to payment without notice of abandonment. which a prudent man would not take under the
"Section 138. Where it has been agreed that an insurance upon a circumstances; or
particular thing, or class of things, shall be free from particular "(d) If the thing insured, being cargo or freightage, and the
average, a marine insurer is not liable for any particular average voyage cannot be performed, nor another ship procured by
loss not depriving the insured of the possession, at the port of the master, within a reasonable time and with reasonable
destination, of the whole of such thing, or class of things, even diligence, to forward the cargo, without incurring the like
though it becomes entirely worthless; but such insurer is liable expense or risk mentioned in the preceding subparagraph.
for his proportion of all general average loss assessed upon the But freightage cannot in any case be abandoned unless the
thing insured. ship is also abandoned.

"Section 139. An insurance confined in terms to an actual loss "Section 142. An abandonment must be neither partial nor
does not cover a constructive total loss, but covers any loss, conditional.
which necessarily results in depriving the insured of the
possession, at the port of destination, of the entire thing insured. "Section 143. An abandonment must be made within a
reasonable time after receipt of reliable information of the loss,
but where the information is of a doubtful character, the insured
"SUB-TITLE 1-H is entitled to a reasonable time to make inquiry.
"ABANDONMENT
"Section 144. Where the information upon which an
"Section 140. Abandonment, in marine insurance, is the act of abandonment has been made proves incorrect, or the thing
the insured by which, after a constructive total loss, he declares insured was so far restored when the abandonment was made
the relinquishment to the insurer of his interest in the thing that there was then in fact no total loss, the abandonment
insured. becomes ineffectual.
"Section 145. Abandonment is made by giving notice thereof to "Section 153. The acceptance of an abandonment, whether
the insurer, which may be done orally, or in writing: Provided, express or implied, is conclusive upon the parties, and admits the
That if the notice be done orally, a written notice of such loss and the sufficiency of the abandonment.
abandonment shall be submitted within seven (7) days from such
oral notice. "Section 154. An abandonment once made and accepted is
irrevocable, unless the ground upon which it was made proves to
"Section 146. A notice of abandonment must be explicit, and be unfounded.
must specify the particular cause of the abandonment, but need
state only enough to show that there is probable cause therefor, "Section 155. On an accepted abandonment of a ship, freightage
and need not be accompanied with proof of interest or of loss. earned previous to the loss belongs to the insurer of said
freightage; but freightage subsequently earned belongs to the
"Section 147. An abandonment can be sustained only upon the insurer of the ship.
cause specified in the notice thereof.
"Section 156. If an insurer refuses to accept a valid
"Section 148. An abandonment is equivalent to a transfer by the abandonment, he is liable as upon an actual total loss, deducting
insured of his interest to the insurer, with all the chances of from the amount any proceeds of the thing insured which may
recovery and indemnity. have come to the hands of the insured.

"Section 149. If a marine insurer pays for a loss as if it were an "Section 157. If a person insured omits to abandon, he may
actual total loss, he is entitled to whatever may remain of the nevertheless recover his actual loss.
thing insured, or its proceeds or salvage, as if there had been a
formal abandonment. "SUB-TITLE 1-I
"MEASURE OF INDEMNITY
"Section 150. Upon an abandonment, acts done in good faith by
those who were agents of the insured in respect to the thing "Section 158. A valuation in a policy of marine insurance is
insured, subsequent to the loss, are at the risk of the insurer, and conclusive between the parties thereto in the adjustment of
for his benefit. either a partial or total loss, if the insured has some interest at
risk, and there is no fraud on his part; except that when a thing
"Section 151. Where notice of abandonment is properly given, has been hypothecated by bottomry or respondentia, before its
the rights of the insured are not prejudiced by the fact that the insurance, and without the knowledge of the person actually
insurer refuses to accept the abandonment. procuring the insurance, he may show the real value. But a
valuation fraudulent in fact, entitles the insurer to rescind the
"Section 152. The acceptance of an abandonment may be either contract.
express or implied from the conduct of the insurer. The mere
silence of the insurer for an unreasonable length of time after "Section 159. A marine insurer is liable upon a partial loss, only
notice shall be construed as an acceptance. for such proportion of the amount insured by him as the loss
bears to the value of the whole interest of the insured in the
property insured.
"Section 160. Where profits are separately insured in a contract "Section 164. If cargo insured against partial loss arrives at
of marine insurance, the insured is entitled to recover, in case of the port of destination in a damaged condition, the loss of
loss, a proportion of such profits equivalent to the proportion the insured is deemed to be the same proportion of the
which the value of the property lost bears to the value of the value which the market price at that port, of the thing so
whole. damaged, bears to the market price it would have brought
if sound.
"Section 161. In case of a valued policy of marine insurance on
freightage or cargo, if a part only of the subject is exposed to
risk, the valuation applies only in proportion to such part. "Section 165. A marine insurer is liable for all the expenses
attendant upon a loss which forces the ship into port to be
"Section 162. When profits are valued and insured by a contract repaired; and where it is stipulated in the policy that the insured
of marine insurance, a loss of them is conclusively presumed shall labor for the recovery of the property, the insurer is liable
from a loss of the property out of which they are expected to for the expense incurred thereby, such expense, in either case,
arise, and the valuation fixes their amount. being in addition to a total loss, if that afterwards occurs.

"Section 163. In estimating a loss under an open policy of marine "Section 166. A marine insurer is liable for a loss falling upon the
insurance the following rules are to be observed: insured, through a contribution in respect to the thing insured,
required to be made by him towards a general average loss called
"(a) The value of a ship is its value at the beginning of the for by a peril insured against: Provided, That the liability of the
risk, including all articles or charges which add to its insurer shall be limited to the proportion of contribution attaching
permanent value or which are necessary to prepare it for to his policy value where this is less than the contributing value
the voyage insured; of the thing insured.
"(b) The value of the cargo is its actual cost to the insured,
when laden on board, or where the cost cannot be "Section 167. When a person insured by a contract of marine
ascertained, its market value at the time and place of insurance has a demand against others for contribution, he may
lading, adding the charges incurred in purchasing and claim the whole loss from the insurer, subrogating him to his own
placing it on board, but without reference to any loss right to contribution. But no such claim can be made upon the
incurred in raising money for its purchase, or to any insurer after the separation of the interests liable to contribution,
drawback on its exportation, or to the fluctuation of the nor when the insured, having the right and opportunity to enforce
market at the port of destination, or to expenses incurred contribution from others, has neglected or waived the exercise of
on the way or on arrival; that right.

"(c) The value of freightage is the gross freightage, "Section 168. In the case of a partial loss of ship or its
exclusive of primage, without reference to the cost of equipment, the old materials are to be applied towards payment
earning it; and for the new. Unless otherwise stipulated in the policy, a marine
insurer is liable for only two-thirds (2/3) of the remaining cost of
"(d) The cost of insurance is in each case to be added to repairs after such deduction, except that anchors must be paid in
the value thus estimated. full.
 insured. A clause shall be inserted in such policy stating
"TITLE 2 substantially that the value of the insured’s interest in such
"FIRE INSURANCE building or structure has been thus fixed. In the absence of any
change increasing the risk without the consent of the insurer or
"Section 169. As used in this Code, the term fire insurance shall of fraud on the part of the insured, then in case of a total loss
include insurance against loss by fire, lightning, windstorm, under such policy, the whole amount so insured upon the
tornado or earthquake and other allied risks, when such risks are insured’s interest in such building or structure, as stated in the
covered by extension to fire insurance policies or under separate policy upon which the insurers have received a premium, shall be
policies. paid, and in case of a partial loss the full amount of the partial
loss shall be so paid, and in case there are two (2) or more
"Section 170. An alteration in the use or condition of a thing policies covering the insured’s interest therein, each policy shall
insured from that to which it is limited by the policy made without contribute pro rata to the payment of such whole or partial loss.
the consent of the insurer, by means within the control of the But in no case shall the insurer be required to pay more than the
insured, and increasing the risks, entitles an insurer to rescind a amount thus stated in such policy. This section shall not prevent
contract of fire insurance. the parties from stipulating in such policies concerning the
repairing, rebuilding or replacing of buildings or structures wholly
"Section 171. An alteration in the use or condition of a thing or partially damaged or destroyed.
insured from that to which it is limited by the policy, which does
not increase the risk, does not affect a contract of fire insurance. "Section 175. No policy of fire insurance shall be pledged,
hypothecated, or transferred to any person, firm or company who
"Section 172. A contract of fire insurance is not affected by any acts as agent for or otherwise represents the issuing company,
act of the insured subsequent to the execution of the policy, and any such pledge, hypothecation, or transfer hereafter made
which does not violate its provisions, even though it increases the shall be void and of no effect insofar as it may affect other
risk and is the cause of the loss. creditors of the insured.

"Section 173. If there is no valuation in the policy, the measure

of indemnity in an insurance against fire is the expense it would "TITLE 3
be to the insured at the time of the commencement of the fire to "CASUALTY INSURANCE
replace the thing lost or injured in the condition in which it was at
the time of the injury; but if there is a valuation in a policy of fire "Section 176. Casualty insurance is insurance covering loss or
insurance, the effect shall be the same as in a policy of marine liability arising from accident or mishap, excluding certain types
insurance. of loss which by law or custom are considered as falling
exclusively within the scope of other types of insurance such as
"Section 174. Whenever the insured desires to have a valuation fire or marine. It includes, but is not limited to, employer’s
named in his policy, insuring any building or structure against liability insurance, motor vehicle liability insurance, plate glass
fire, he may require such building or structure to be examined by insurance, burglary and theft insurance, personal accident and
an independent appraiser and the value of the insured’s interest health insurance as written by non-life insurance companies, and
therein may then be fixed as between the insurer and the other substantially similar kinds of insurance.
insured. The cost of such examination shall be paid for by the
 "Section 180. Pertinent provisions of the Civil Code of the
"TITLE 4 Philippines shall be applied in a suppletory character whenever
"SURETYSHIP necessary in interpreting the provisions of a contract of
suretyship.
"Section 177. A contract of suretyship is an agreement whereby a
party called the surety guarantees the performance by another
party called the principal or obligor of an obligation or "TITLE 5
undertaking in favor of a third party called the obligee. It includes "LIFE INSURANCE
official recognizances, stipulations, bonds or undertakings issued
by any company by virtue of and under the provisions of Act No. "Section 181. Life insurance is insurance on human lives and
536, as amended by Act No. 2206. insurance appertaining thereto or connected therewith.

"Section 178. The liability of the surety or sureties shall be joint "Every contract or undertaking for the payment of annuities
and several with the obligor and shall be limited to the amount of including contracts for the payment of lump sums under a
the bond. It is determined strictly by the terms of the contract of retirement program where a life insurance company manages or
suretyship in relation to the principal contract between the acts as a trustee for such retirement program shall be considered
obligor and the obligee. a life insurance contract for purposes of this Code.

"Section 179. The surety is entitled to payment of the premium "Section 182. An insurance upon life may be made payable on
as soon as the contract of suretyship or bond is perfected and the death of the person, or on his surviving a specified period, or
delivered to the obligor. No contract of suretyship or bonding otherwise contingently on the continuance or cessation of life.
shall be valid and binding unless and until the premium therefor
has been paid, except where the obligee has accepted the bond, "Every contract or pledge for the payment of endowments or
in which case the bond becomes valid and enforceable annuities shall be considered a life insurance contract for
irrespective of whether or not the premium has been paid by the purposes of this Code.
obligor to the surety: Provided, That if the contract of suretyship "In the absence of a judicial guardian, the father, or in the latter’s
or bond is not accepted by, or filed with the obligee, the surety absence or incapacity, the mother, of any minor, who is an
shall collect only a reasonable amount, not exceeding fifty insured or a beneficiary under a contract of life, health, or
percent (50%) of the premium due thereon as service fee plus accident insurance, may exercise, in behalf of said minor, any
the cost of stamps or other taxes imposed for the issuance of the right under the policy, without necessity of court authority or the
contract or bond: Provided, however, That if the nonacceptance giving of a bond, where the interest of the minor in the particular
of the bond be due to the fault or negligence of the surety, no act involved does not exceed Five hundred thousand pesos
such service fee, stamps or taxes shall be collected. (P500,000.00) or in such reasonable amount as may be
determined by the Commissioner. Such right may include, but
"In the case of a continuing bond, the obligor shall pay the shall not be limited to, obtaining a policy loan, surrendering the
subsequent annual premium as it falls due until the contract of policy, receiving the proceeds of the Policy, and giving the
suretyship is cancelled by the obligee or by the Commissioner or minor’s consent to any transaction on the policy.
by a court of competent jurisdiction, as the case may be.
"In the absence or in case of the incapacity of the father or "(a) The amount of contributions, premiums, fees or
mother, the grandparent, the eldest brother or sister at least charges, computed on a daily basis, does not exceed seven
eighteen (18) years of age, or any relative who has actual and a half percent (7.5%) of the current daily minimum
custody of the minor insured or beneficiary, shall act as a wage rate for nonagricultural workers in Metro Manila; and
guardian without need of a court order or judicial appointment as "(b) The maximum sum of guaranteed benefits is not more
such guardian, as long as such person is not otherwise than one thousand (1,000) times of the current daily
disqualified or incapacitated. Payment made by the insurer minimum wage rate for nonagricultural workers in Metro
pursuant to this section shall relieve such insurer of any liability Manila.
under the contract.
"Section 188. No insurance company or mutual benefit
"Section 183. The insurer in a life insurance contract shall be association shall engage in the business of microinsurance unless
liable in case of suicide only when it is committed after the policy it possesses all the requirements as may be prescribed by the
has been in force for a period of two (2) years from the date of Commissioner. The Commissioner shall issue such rules and
its issue or of its last reinstatement, unless the policy provides a regulations governing microinsurance.
shorter period: Provided, however, That suicide committed in the
state of insanity shall be compensable regardless of the date of
commission. "CHAPTER II-A
"FINANCIAL REPORTING FRAMEWORK
"Section 184. A policy of insurance upon life or health may pass
by transfer, will or succession to any person, whether he has an "Section 189. All companies regulated by the Commission, unless
insurable interest or not, and such person may recover upon it otherwise required by law, should comply with the financial
whatever the insured might have recovered. reporting frameworks adopted by the Commission for purposes of
creating the statutory financial reports and the annual statements
"Section 185. Notice to an insurer of a transfer or bequest thereof to be submitted to the Commission. Financial reporting
is not necessary to preserve the validity of a policy of insurance framework means a set of accounting and reporting principles,
upon life or health, unless thereby expressly required. standards, interpretations and pronouncements that must be
adopted in the preparation and submission of the statutory
"Section 186. Unless the interest of a person insured is financial statements and reports required by the Commission.
susceptible of exact pecuniary measurement, the measure of This financial reporting framework is not the same as the
indemnity under a policy of insurance upon life or health is the financial reporting framework used to prepare the financial
sum fixed in the policy. statements that the Securities and Exchange Commission may
require. The main purpose of the statutory statements is to
present important information about the level of risk and
"TITLE 6 solvency situation of insurers. In prescribing the applicable
"MICROINSURANCE statutory financial reporting framework, the Commissioner shall
take into account international standards concerning solvency
"Section 187. Microinsurance is a financial product or service that and insurance company reporting as well as generally accepted
meets the risk protection needs of the poor where: actuarial principles concerning financial reporting promulgated by
the Actuarial Society of the Philippines.
"The assets and investments discussed in Sections 204 to 215
shall be accounted for in accordance with this section. "Every entity receiving any such certificate of authority shall be
subject to the insurance and other applicable laws of the
"The valuation of reserves shall be accounted for in accordance Philippines and to the jurisdiction and supervision of the
with Title 5 of this Code. Commissioner.

"Section 193. No insurance company shall transact any insurance

"CHAPTER III business in the Philippines until after it shall have obtained a
"THE BUSINESS OF INSURANCE certificate of authority for that purpose from the Commissioner
"TITLE 1 upon application therefor and payment by the company
"INSURANCE COMPANIES, ORGANIZATION, concerned of the fees hereinafter prescribed.
CAPITALIZATION AND AUTHORIZATION
"The Commissioner may refuse to issue a certificate of authority
"Section 190. For purposes of this Code, the to any insurance company if, in his judgment, such refusal will
term insurer or insurance company shall include all partnerships, best promote the interest of the people of this country. No such
associations, cooperatives or corporations, including government- certificate of authority shall be granted to any such company until
owned or -controlled corporations or entities, engaged as the Commissioner shall have satisfied himself by such
principals in the insurance business, excepting mutual benefit examination as he may make and such evidence as he may
associations. Unless the context otherwise requires, the term require that such company is qualified by the laws of the
shall also include professional reinsurers defined in Section Philippines to transact business therein, that the grant of such
288. Domestic company shall include companies formed, authority appears to be justified in the light of local economic
organized or existing under the laws of the Philippines. Foreign requirements, and that the direction and administration, as well
company when used without limitation shall include companies as the integrity and responsibility of the organizers and
formed, organized, or existing under any laws other than those of administrators, the financial organization and the amount of
the Philippines. capital, reasonably assure the safety of the interests of the
policyholders and the public.
"Section 191. The provisions of the Corporation Code, as
amended, shall apply to all insurance corporations now or "In order to maintain the quality of the management of the
hereafter engaged in business in the Philippines insofar as they insurance companies and afford better protection to policyholders
do not conflict with the provisions of this chapter. and the public in general, any person of good moral character,
"Section 192. No corporation, partnership, or association of unquestioned integrity and recognized competence may be
persons shall transact any insurance business in the Philippines elected or appointed director or officer of insurance companies in
except as agent of a corporation, partnership or association accordance with the pertinent provisions contained in the
authorized to do the business of insurance in the Philippines, corporate governance circulars prescribed by the Commissioner.
unless possessed of the capital and assets required of an In addition hereto, the Commissioner shall prescribe the
insurance corporation doing the same kind of business in the qualifications of directors, executive officers and other key
Philippines and invested in the same manner; unless the officials of insurance companies for purposes of this section.
Commissioner shall have granted it a certificate to the effect that
it has complied with all the provisions of this Code.
"No person shall concurrently be a Director and/or Officer of an system, or scheme. Any local ordinance or local government unit
insurance company and an adjustment company. regulatory issuance imposing such restriction or
disenfranchisement on any insurance company shall be deemed
"Before issuing such certificate of authority, the Commissioner null and void ab initio.
must be satisfied that the name of the company is not that of any
other known company transacting a similar business in the "Section 194. Except as provided in Section 289, no new
Philippines, or a name so similar as to be calculated to mislead domestic life or non-life insurance company shall, in a stock
the public. The Commissioner may issue rules and regulations on corporation, engage in business in the Philippines unless
the use of names of insurance companies and other supervised possessed of a paid-up capital equal to at least One billion pesos
persons or entities. (P1,000,000,000.00): Provided, That a domestic insurance
company already doing business in the Philippines shall have a
"The certificate of authority issued by the Commissioner shall net worth by June 30, 2013 of Two hundred fifty million pesos
expire on the last day of December, three (3) years following its (P250,000,000.00). Furthermore, said company must have by
date of issuance, and shall be renewable every three (3) years December 31, 2016, an additional Three hundred million pesos
thereafter, subject to the company’s continuing compliance with (P300,000,000.00) in net worth; by December 31, 2019, an
the provisions of this Code, circulars, instructions, rulings or additional Three hundred fifty million pesos (P350,000,000.00) in
decisions of the Commission. net worth; and by December 31, 2022, an additional Four
hundred million pesos (P400,000,000.00) in net worth.
"Every company receiving any such certificates of authority shall
be subject to the provisions of this Code and other related laws "The Commissioner may, as a pre-licensing requirement of a new
and to the jurisdiction and supervision of the Commissioner. insurance company, in addition to the paid-up capital stock,
"No insurance company may be authorized to transact in the require the stockholders to pay in cash to the company in
Philippines the business of life and non-life insurance proportion to their subscription interests a contributed surplus
concurrently, unless specifically authorized to do so by the fund of not less than One hundred million pesos
Commissioner: Provided, That the terms life and non- (P100,000,000.00). He may also require such company to submit
life insurance shall be deemed to include health, accident and to him a business plan showing the company’s estimated receipts
disability insurance. and disbursements, as well as the basis therefor, for the next
succeeding three (3) years.
"No insurance company shall have equity in an adjustment "If organized as a mutual company, in lieu of such net worth, it
company and neither shall an adjustment company have equity in must have available total members equity in an amount to be
an insurance company. determined by the Insurance Commission above all liabilities for
"No insurance company issued with a valid certificate of authority losses reported; expenses, taxes, legal reserve, and reinsurance
to transact insurance business anywhere in the Philippines by the of all outstanding risks, and the contributed surplus fund equal to
Insurance Commissioner, shall be barred, prevented, or the amounts required of stock corporations. A stock insurance
disenfranchised from issuing any insurance policy or from company doing business in the Philippines may, subject to the
transacting any insurance business within the scope or coverage pertinent law and regulation which now or hereafter may be in
of its certificate of authority, anywhere in the Philippines, by any force, alter its organization and transform itself into a mutual
local government unit or authority, for whatever guise or reason insurance company.
whatsoever, including under any kind of ordinance, accreditation
"The Secretary of Finance may, upon recommendation of the "(a) A certified copy of the last annual statement or a
Commissioner, increase such minimum paid-up capital stock or verified financial statement exhibiting the condition and
cash assets requirement under such terms and conditions as he affairs of such company;
may impose, to an amount which, in his opinion, would "(b) If incorporated under the laws of the Philippines, a
reasonably assure the safety of the interests of the policyholders copy of the articles of incorporation and bylaws, and any
and the public. The minimum paid-up capital and net worth amendments to either, certified by the Securities and
requirement must remain unimpaired for the continuance of the Exchange Commission to be a copy of that which is filed in
license. The Commissioner may require the adoption of the risk- its Office;
based capital approach and other internationally accepted forms "(c) If incorporated under any laws other than those of the
of capital framework. Philippines, a certificate from the Securities and Exchange
Commission showing that it is duly registered in the
"For the purpose of this section, net worth shall consist of: mercantile registry of that Commission in accordance with
"(a) Paid-up capital; the Corporation Code. A copy of the articles of
"(b) Retained earnings; incorporation and bylaws, and any amendments to either,
"(c) Unimpaired surplus; and if organized or formed under any law requiring such to be
"(d) Revaluation of assets as may be approved by the filed, duly certified by the officer having the custody of
Commissioner. same, or if not so organized, a copy of the law, charter or
deed of settlement under which the deed of organization is
"The Commission may adopt for purposes of compliance with made, duly certified by the proper custodian thereof, or
capital build up requirement under this Code the recognition as proved by affidavit to be a copy; also, a certificate under
part of the capital account, capital notes or debentures which are the hand and seal of the proper officer of such state or
subordinate to all credits and senior only to common capital country having supervision of insurance business therein, if
stocks. any there be, that such corporation or company is
"The President of the Philippines may order a periodic review organized under the laws of such state or country, with the
every two (2) years the capital structure set out above to amount of capital stock or assets and legal reserve
determine the capital adequacy of the local insurance industry required by this Code;
from and after the integration and liberalization of the financial "(d) If not incorporated and of foreign domicile, aside from
services, including insurance, in the ASEAN Region. For this the certificate mentioned in paragraph (c) of this section, a
purpose, a review committee consisting of representatives from certificate setting forth the nature and character of the
the Department of Finance (DOF), the Insurance Commission business, the location of the principal office, the name of
(IC), the National Economic and Development Authority (NEDA), the individual or names of the persons composing the
the Securities and Exchange Commission (SEC) and other partnership or association, the amount of actual capital
agencies which the President may designate shall conduct the employed or to be employed therein, and the names of all
review and may recommend to the President to adopt for officers and persons by whom the business is or may be
implementation the necessary capital adjustment. managed.

"Section 195. Every company must, before engaging in the "The certificate must be verified by the affidavit of the chief
business of insurance in the Philippines, file with the officer, secretary, agent, or manager of the company; and if
Commissioner the following:
there are any written articles of agreement of the company, a part of the service of the notice, proof of loss, or other legal
copy thereof must accompany such certificate. process.

"Section 197. No insurance company organized or existing under

"Section 196. The Commissioner must require as a condition the government or laws other than those of the Philippines shall
precedent to the transaction of insurance business in the engage in business in the Philippines unless possessed of
Philippines by any foreign insurance company, that such company unimpaired capital or assets and reserve of not less than One
file in his office a written power of attorney designating some billion pesos (P1,000,000,000.00), nor until it shall have
person who shall be a resident of the Philippines as its general deposited with the Commissioner for the benefit and security of
agent, on whom any notice provided by law or by any insurance the policyholders and creditors of such company in the
policy, proof of loss, summons and other legal processes may be Philippines, securities satisfactory to the Commissioner consisting
served in all actions or other legal proceedings against such of good securities of the Philippines, including new issues of stock
company, and consenting that service upon such general agent of registered enterprises, as this term is defined in Executive
shall be admitted and held as valid as if served upon the foreign Order No. 226 of 1987, as amended, to the actual market value
company at its home office. Any such foreign company shall, as of not less than the amount herein required: Provided, That at
further condition precedent to the transaction of insurance least fifty percent (50%) of such securities shall consist of bonds
business in the Philippines, make and file with the Commissioner or other instruments of debt of the Government of the
an agreement or stipulation, executed by the proper authorities Philippines, its political subdivisions and instrumentalities, or of
of said company in form and substance as follows: government-owned or -controlled corporations and entities,
including the Bangko Sentral ng Pilipinas: Provided, further, That
"The (name of company) does hereby stipulate and agree in the total investment of a foreign insurance company in any
consideration of the permission granted by the Insurance registered enterprise shall not exceed twenty percent (20%) of
Commissioner to transact business in the Philippines, that if at the net worth of said foreign insurance company nor twenty
any time said company shall leave the Philippines, or cease to percent (20%) of the capital of the registered enterprise, unless
transact business therein, or shall be without any agent in the previously authorized in writing by the Commissioner.
Philippines on whom any notice, proof of loss, summons, or legal
process may be served, then in any action or proceeding arising "The Commissioner may, as a pre-licensing requirement of a new
out of any business or transaction which occurred in the branch office of a foreign insurance company, in addition to the
Philippines, service of any notice provided by law, or insurance required asset or net worth, require the company to have an
policy, proof of loss, summons, or other legal process may be additional surplus fund in an amount to be determined by the
made upon the Insurance Commissioner, and that such service Insurance Commission.
upon the Insurance Commissioner shall have the same force and
effect as if made upon the company. "For purposes of this Code, the net worth of a foreign insurance
"Whenever such service of notice, proof of loss, summons, or company shall refer only to its net worth in the Philippines.
other legal process shall be made upon the Commissioner, he "Section 198. The Commissioner shall hold the securities,
must, within ten (10) days thereafter, transmit by mail, postage deposited as required in the immediately preceding section, for
paid, a copy of such notice, proof of loss, summons, or other the benefit and security of all the policyholders and creditors of
legal process to the company at its home or principal office. The the company depositing the same: Provided, That the
sending of such copy by the Commissioner shall be a necessary Commissioner may as long as the company is solvent, permit the
company to collect the interest or dividends on the securities so "Whenever the aforementioned requirement be found to be less
deposited, and, from time to time, with his assent, to withdraw than that herein required to be maintained, the Commissioner
any of such securities, upon depositing with said Commissioner shall forthwith direct the company to make good any such
other like securities, the market value of which shall be equal to deficiency by cash, to be contributed by all stockholders of record
the market value of such as may be withdrawn. In the event of in proportion to their respective interests, and paid to the
any company ceasing to do business in the Philippines, the treasurer of the company, within fifteen (15) days from receipt of
securities deposited as aforesaid shall be returned to the the order: Provided, That the company in the interim shall not be
company upon the Commissioner’s written approval and only permitted to take any new risk of any kind or character unless
after the company has duly proven in its application therefor that and until it make good any such deficiency: Provided; further,
it has no further liability whatsoever under any of its policies nor That a stockholder who aside from paying the contribution due
to any of its creditors in the Philippines. from him, pays the contribution due from another stockholder by
reason of the failure or refusal of the latter to do so, shall have a
"Section 199. Every foreign company doing business in the lien on the certificates of stock of the insurance company
Philippines shall set aside an amount corresponding to the legal concerned appearing in its books in the name of the defaulting
reserves of the policies written in the Philippines and invest and stockholder on the date of default, as well as on any interests or
keep the same therein in accordance with the provisions of this dividends that have accrued or will accrue to the said certificates
section. The legal reserve therein required to be set aside shall be of stock, until the corresponding payment or reimbursement is
invested only in the classes of Philippine securities described in made by the defaulting stockholder.
Section 206: Provided, however, That no investment in stocks or
bonds of any single entity shall, in the aggregate exceed twenty "Section 201. No domestic insurance corporation shall declare or
percent (20%) of the net worth of the investing company or distribute any dividend on its outstanding stocks unless it has
twenty percent (20%) of the capital of the issuing company, met the minimum paid-up capital and net worth requirements
whichever is the lesser, unless otherwise approved in writing by under Section 194 and except from profits attested in a sworn
the Commissioner. The securities purchased and kept in the statement to the Commissioner by the president or treasurer of
Philippines under this section, shall not be sent out of the the corporation to be remaining on hand after retaining
territorial jurisdiction of the Philippines without the written unimpaired:
consent of the Commissioner.
"(a) The entire paid-up capital stock;
"(b) The solvency requirements defined by Section 200;
"TITLE 2 "(c) In the case of life insurance corporations, the legal
"SOLVENCY reserve fund required by Section 217;
"Section 200. An insurance company doing business in the "(d) In the case of corporations other than life, the legal
Philippines shall at all times maintain the minimum paid-up reserve fund required by Section 219; and
capital, and net worth requirements as prescribed by the "(e) A sum sufficient to pay all net losses reported, or in
Commissioner. Such solvency requirements shall be based on the course of settlement, and all liabilities for expenses and
internationally accepted solvency frameworks and adopted only taxes.
after due consultation with the insurance industry associations. "Any dividend declared or distributed under the preceding
paragraph shall be reported to the Commissioner within thirty
(30) days after such declaration or distribution.
"If the Commissioner finds that any such corporation has other policy liabilities carried on each individual life
declared or distributed any such dividend in violation of this insurance policy, contract or certificate.
section, he may order such corporation to cease and desist from "(e) The net amount of uncollected and deferred premiums
doing business until the amount of such dividend or the portion and annuity considerations in the case of a life insurance
thereof in excess of the amount allowed under this section has company which carries the full mean tabular reserve
been restored to said corporation. liability.
"(f) Reinsurance recoverable by the ceding insurer:
"The Commissioner shall prescribe solvency requirements for
branches of foreign insurance companies operating in the "(1) From an insurer authorized to transact business
Philippines. in this country, the full amount thereof; or
"(2) From an insurer not authorized in this country,
in an amount not exceeding the liabilities carried by
"TITLE 3 the ceding insurer for amounts withheld under a
"ASSETS reinsurance treaty with such unauthorized insurer as
security for the payment of obligations thereunder if
"Section 202. In any determination of the financial condition of such funds are held subject to withdrawal by, and
any insurance company doing business in the Philippines, there under the control of, the ceding insurer. The
shall be allowed and admitted as assets only such assets legally Commissioner may prescribe the conditions under
or beneficially owned by the insurance company concerned as which a ceding insurer may be allowed credit, as an
determined by the Commissioner which consist of: asset or as a deduction from loss and unearned
premium reserves, for reinsurance recoverable from
"(a) Cash in the possession of the insurance company or in an insurer not authorized in this country but which
transit under its control, and the true and duly verified presents satisfactory evidence that it meets the
balance of any deposit of such company in a financially applicable standards of solvency required in this
sound bank or trust company duly authorized by the country.
Bangko Sentral ng Pilipinas. "(g) Funds withheld by a ceding insurer under a
"(b) Investments in securities, including money market reinsurance treaty, provided reserves for unpaid losses and
instruments, and in real property acquired or held in unearned premiums are adequately provided.
accordance with and subject to the applicable provisions of "(h) Deposits or amounts recoverable from underwriting
this Code and the income realized therefrom or accrued associations, syndicates and reinsurance funds, or from
thereon. any suspended banking institution, to the extent deemed
"(c) Loans granted by the insurance company concerned to by the Commissioner to be available for the payment of
the extent of that portion thereof adequately secured by losses and claims and values to be determined by him.
non-speculative assets with readily realizable values in "(i) Electronic data processing machines, as may be
accordance with and subject to the limitations imposed by authorized by the Commissioner to be acquired by the
applicable provisions of this Code. insurance company concerned, the acquisition cost of
"(d) Policy loans and other policy assets and liens on which to be amortized in equal annual amounts within a
policies, contracts or certificates of a life insurance period of five (5) years from the date of acquisition
company, in an amount not exceeding legal reserves and thereof.
 "(j) Investments in mutual funds, real estate investment determined in accordance with the provisions of this Code
trusts, salary loans, unit investment trust funds and special and/or the rules of the Commissioner.
deposit accounts, subject to the conditions as may be
provided for by the Commissioner.
"(k) Other assets, not inconsistent with the provisions of "All non-admitted assets and all other assets of doubtful value or
paragraphs (a) to (j) hereof, which are deemed by the character included as ledger or non-ledger assets in any
Commissioner to be readily realizable and available for the statement submitted by an insurance company to the
payment of losses and claims at values to be determined Commissioner, or in any insurance examiner’s report to him, shall
by him in a circular, rule or regulation. also be reported, to the extent of the value disallowed as
deductions from the gross assets of such insurance company,
except where the Commissioner permits a reserve to be carried
"Section 203. In addition to such assets as the Commissioner among the liabilities of such insurance company in lieu of any
may from time to time determine to be non-admitted assets of such deduction.
insurance companies doing business in the Philippines, the
following assets shall in no case be allowed as admitted assets of
an insurance company doing business in the Philippines, in any "TITLE 4
determination of its financial condition: "INVESTMENTS

"(a) Goodwill, trade names, and other like intangible "Section 204. A life insurance company may lend to any of its
assets. policyholders upon the security of the value of its policy such sum
"(b) Prepaid or deferred charges for expenses and as may be determined pursuant to the provisions of the policy.
commissions paid by such insurance company. "No insurance company shall loan any of its money or deposits to
"(c) Advances to officers (other than policy loans), which any person, corporation or association, except upon the security
are not adequately secured and which are not previously of any of the following:
authorized by the Commissioner, as well as advances to
employees, agents, and other persons on mere personal "(a) First mortgage or deeds of trust of registered,
security. unencumbered, improved or unimproved real estate,
"(d) Shares of stock of such insurance company, owned by including condominiums;
it, or any equity therein as well as loans secured thereby, "(b) First mortgages or deeds of trust of actually
or any proportionate interest in such shares of stock cultivated, improved and unencumbered agricultural lands
through the ownership by such insurance company of an in the Philippines;
interest in another corporation or business unit. "(c) Purchase money mortgages, lease purchase
"(e) Furniture, furnishing, fixtures, safes, equipment, agreements or similar securities executed or received by it
library, stationery, literature, and supplies. on account of the sale or exchange of real property
"(f) Items of bank credits representing checks, drafts or acquired pursuant to Sections 206 and 208;
notes returned unpaid after the date of statement. "(d) Bonds or other instruments of indebtedness issued or
"(g) The amount, if any, by which the aggregate value of guaranteed by the Government of the Philippines or its
investments as carried in the ledger assets of such political subdivisions authorized by law to incur such
insurance company exceeds the aggregate value thereof as obligations or issue such guarantees or of government-
 owned or -controlled corporations and instrumentalities the owner of the land, and the owner of the improvements
including the Bangko Sentral ng Pilipinas; or does not sign the deed of mortgage. However, if the owner
"(e) Obligations issued or guaranteed by universal banks, of the land is the Government of the Philippines or any of
commercial banks, offshore banking units, investment its political subdivisions and a long-term lease has been
houses or other financial intermediaries duly registered executed in favor of the owner of the improvements, the
with the Bangko Sentral ng Pilipinas; or owner of the land need not be a party to the deed of
"(f) Obligations issued or guaranteed by foreign banks or mortgage. The expiration date of the lease shall not,
corporations, each of which shall have total net worth of at however, precede the maturity of the loan. The phrase
least One hundred fifty million US dollars ‘improved real estate’ as used herein shall mean land with
($US150,000,000.00) or such other higher net worth as permanent building or buildings erected thereon;
may be prescribed by the Insurance Commission, as shown "(3) Lease-agreements or similar securities received on the
in their financial statements as of the immediately sale of real estate property shall not exceed one hundred
preceding fiscal year; or percent (100%) of the selling price of said property, or one
"(g) Assignments of monetary instruments such as cash hundred percent (100%) of its market value at the time of
deposits, deposit certificates or other similar instruments of its disposition, whichever amount is lower. However, in no
universal banks, commercial banks, investment houses or case shall such agreement have a maturity period not
other financial intermediaries duly registered with the exceeding thirty (30) years;
Bangko Sentral ng Pilipinas; or "(4) Loans secured by shares of stock of solvent
"(h) Pledges of shares of stock, bonds or other instruments corporations or institutions shall not exceed fifty percent
of indebtedness specified in Section 209; or (50%) of:
"(i) Chattel mortgages over equipment not more than "(i) The weighted average market price for the one
three (3) years old; and hundred eighty (180) days preceding the approval of
"(j) Such other security as may be approved by the the loan for shares listed in the stock exchange; and
Commissioner. "(ii) For unlisted shares, the adjusted book value of
such shares.
"(5) Loans secured by the chattel mortgages over
"The loans provided in the preceding subsection shall be subject equipment shall not exceed seventy percent (70%) of the
to the following conditions: market value of said equipment.
"(1) The amount of loan secured by real estate mortgage "Section 205. No loan by any insurance company on the security
over a non-agricultural land shall not exceed seventy of real estate shall be made unless the title to such real estate
percent (70%) of its appraised value, and in the case of a shall have first been registered in accordance with the existing
loan secured by a real estate mortgage over an agricultural Land Registration Act, or shall have been previously registered
land, the amount of loan shall not exceed forty percent under the provisions of the existing Mortgage Law and the lien or
(40%) of its market value: Provided, That, in no case shall interest of the insurance company as mortgagee has been
such loan have a maturity period in excess of twenty-five registered.
(25) years; "Section 206. (a) An insurance company may purchase, hold,
"(2) Unless approved by the Commissioner, no loan may own and convey such property, real and personal, as may have
be granted upon the security of a mortgage on improved been mortgaged, pledged, or conveyed to it in good faith in trust
real estate if the improvements thereon do not belong to for its benefit by reason of money loaned by it in pursuance of
the regular business of the company, and such real or personal such year: Provided, further, That no life insurance
property as may have been purchased by it at sales under company shall invest in or loan upon the obligations
pledges, mortgages or deeds of trust for its benefit on account of of any one institution in the kinds permitted under
money loaned by it; and such real and personal property as may this subsection an amount in excess of twenty-five
have been conveyed to it by borrowers in satisfaction and percent (25%) of the total admitted assets of such
discharge of loans made by the company in payment or by insurer as of December thirty-first next preceding
reason of any loan made by the company in payment or by the date of such investment.
reason of any loan made by it shall be sold by the company "As used in this subsection the term net earnings available
within twenty (20) years after the title thereto has been vested in for fixed charges shall mean net income after deducting
it. operating and maintenance expenses, taxes other than
"(b) An insurance company may purchase, hold, and own the income taxes, depreciation and depletion; but excluding
following: extraordinary nonrecurring items of income or expense
"(1) Real properties which serve as its main place of appearing in the regular financial statement of the issuing,
business and/or branch offices: Provided, That such assuming or guaranteeing institution. The term fixed
investment shall not in the overall exceed twenty percent charges shall include interest on funded and unfunded
(20%) of its net worth as shown by its latest financial debt, amortization of debt discount, and rentals for leased
statement approved by the Commissioner. properties.
"(2) Bonds or other instruments of indebtedness of the "(5) Preferred or guaranteed stocks of any solvent
Government of the Philippines or its political subdivisions corporation or institution created or existing under the laws
authorized by law to issue bonds at the reasonable market of the Philippines: Provided, That if the stocks are
value thereof. guaranteed, the amount of stocks so guaranteed is not in
"(3) Bonds or other instruments of debt of government- excess of fifty percent (50%) of the amount of the
owned or -controlled corporations and entities, including preferred or common stocks, as the case may be, of the
the Bangko Sentral ng Pilipinas. guaranteeing corporation: Provided, finally, That no life
"(4) Bonds, debentures or other instruments of insurance company shall invest in or loan upon obligations
indebtedness of any solvent corporation or institution of any one institution in the kinds permitted under this
created or existing under the laws of the Philippines: subsection an amount in excess of ten percent (10%) of
Provided, however, That the issuing, assuming or the total admitted assets of such insurer as of December
guaranteeing entity or its predecessors shall not thirty-first next preceding the date of such investment.
have defaulted in the payment of interest on any of "(6) Common stocks of any solvent corporation or
its securities and that during each of any three (3) institution created or existing under the laws of the
including the last two (2) of the five (5) fiscal years Philippines: Provided, however, That no life insurance
next preceding the date of acquisition by such company shall invest in or loan upon the obligations of any
insurance company of such bonds, debentures, or one corporation or institution in the kinds permitted under
other instruments of indebtedness, the net earnings this subsection an amount in excess of ten percent (10%)
of the issuing, assuming or guaranteeing institution of the total admitted assets of such insurer as of December
available for its fixed charges, as hereinafter thirty-first next preceding the date of such investment.
defined, shall have been not less than one and one- "(7) Securities issued by a registered enterprise, as this
quarter (1¼) times the total of its fixed charges for term is defined in Executive Order No. 226, otherwise
 known as the Omnibus Investments Code of 1987, as of any country or possession outside the Republic of the
amended: Provided, That the total investment of a Philippines to be invested in such country or possession,
domestic non-life insurance company in any registered whichever shall be greater.
enterprise shall not exceed twenty percent (20%) of the "Section 207. An insurance company may:
net worth of said insurance company as shown by its "(1) Invest in equities of other financial institutions; and
aforesaid financial statement unless previously authorized "(2) Engage in the buying and selling of long-term debt
by the Commissioner. instruments: Provided, That any or all of such investments
"(8) Certificates, notes and other obligations issued by the shall be with the prior approval of the Commissioner.
trustees or receivers of any institution created or existing Insurance companies may, however, invest in listed
under the laws of the Philippines which, or the assets of equities of other financial institutions without need of prior
which, are being administered under the direction of any approval by the Commissioner.
court having jurisdiction: Provided, however, That such "Section 208. Any life insurance company may:
certificates, notes or other obligations are adequately "(a) Acquire or construct housing projects and, in
secured as to principal and interests. connection with any such project, may acquire land or any
"(9) Equipment trust obligations or certificates which are interest therein by purchase, lease or otherwise, or use
adequately secured or other adequately secured land acquired pursuant to any other provision of this Code.
instruments evidencing an interest in equipment wholly or Such company may thereafter own, maintain, manage,
in part within the Philippines: Provided, however, That collect or receive income from, or sell and convey, any land
there is a right to receive determined portions of rental, or interest therein so acquired and any improvements
purchase or other fixed obligatory payments for the use or thereon. The aggregate book value of the investments of
purchase of such equipment. any such company in all such projects shall not exceed at
"(10) Any obligation of any corporation or institution the time of such investments twenty-five percent (25%) of
created or existing under the laws of the Philippines which the total admitted assets of such company on the thirty-
is, on the date of acquisition by the insurer, adequately first day of December next preceding: Provided, That the
secured and has qualities and characteristics wherein the funds of the company for the payment of pending claims
speculative elements are not predominant. and obligations shall not be used for such investments.
"(11) Such other securities as may be approved by the "(b) Acquire real property, other than property to be used
Commissioner. primarily for providing housing and property for
"(c) Any domestic insurer which has outstanding insurance, accommodation of its own business, as an investment for
annuity or reinsurance contracts in currencies other than the the production of income, or may acquire real property to
national currency of the Philippines may invest in, or otherwise be improved or developed for such investment purpose
acquire or loan upon securities and investments in such currency pursuant to a program therefor, subject to the condition
which are substantially of the same kinds, classes and investment that the cost of each parcel of real property so acquired
grades as those eligible for investment under the foregoing under the authority of this paragraph (b), including the
subdivisions of this section; but the aggregate amount of such estimated cost to the company of the improvement or
investments and of such cash in such currency which is at any development thereof, when added to the book value of all
time held by such insurer shall not exceed one and one-half (1½) other real property held by it pursuant to this paragraph
times the amount of its reserves and other obligations under such (b), shall not exceed twenty-five percent (25%) of its
contracts or the amount which such insurer is required by the law
 admitted assets as of the thirty-first day of December next shown by its aforesaid financial statement nor twenty
preceding. percent (20%) of the paid-up capital of the registered
"Section 209. Every domestic insurance company shall, to the enterprise excluding the intended investment, unless
extent of an amount equal in value to twenty-five percent (25%) previously authorized by the Commissioner: Provided,
of the minimum net worth required under Section 194, invest its further, That such investments, free from any lien or
funds only in securities, satisfactory to the Commissioner, encumbrance, shall be at least equal in amount to the
consisting of bonds or other instruments of debt of the aggregate amount of: (1) its legal reserve, as provided in
Government of the Philippines or its political subdivisions or Section 219, and (2) its reserve fund held for reinsurance
instrumentalities, or of government-owned or -controlled as provided for in the pertinent treaty provision in the case
corporations and entities, including the Bangko Sentral ng of reinsurance ceded to authorized insurers.
Pilipinas: Provided, That such investments shall at all times be "Section 211. After satisfying the requirements contained in
maintained free from any lien or encumbrance: Provided, further, Sections 197, 199, 209 and 210, any non-life insurance company
That such securities shall be deposited with and held by the may invest any portion of its funds representing earned surplus in
Commissioner for the faithful performance by the depositing any of the investments described in Sections 204, 206 and 207,
insurer of all its obligations under its insurance contracts. The or in any securities issued by a registered enterprise mentioned
provisions of Section 198 shall, so far as practicable, apply to the in the preceding sections: Provided, That no investment in stocks
securities deposited under this section. or bonds of any single entity shall in the aggregate, exceed
"Except as otherwise provided in this Code, no judgment creditor twenty percent (20%) of the net worth of the insurance company
or other claimant shall have the right to levy upon any of the as shown in its latest financial statement approved by the
securities of the insurer held on deposit under this section or held Commissioner or twenty percent (20%) of the paid-up capital of
on deposit pursuant to the requirement of the Commissioner. the issuing company, whichever is lesser, unless otherwise
"Section 210. After satisfying the requirements contained in the approved by the Commissioner.
preceding section, any domestic non-life insurance company, "Section 212. After satisfying the minimum capital investment
shall invest, to an amount prescribed below, its funds in, or required in Section 209, any life insurance company may invest
otherwise, acquire or loan upon, only the classes of investments its legal policy reserve, as provided in Section 217 or in Section
described in Section 206, including securities issued by any 218, in any of the classes of securities or types of investments
registered enterprise, as this term is defined in Executive Order described in Sections 204, 206, 207 and 208, subject to the
No. 226, otherwise known as ‘The Omnibus Investments Code of limitations therein contained, and in any securities issued by any
1987′ and such other classes of investments as may be registered enterprise mentioned in Section 210, free from any
authorized by the Commissioner for purposes of this lien or encumbrance, in such amounts as may be approved by
section: Provided, That: the Commissioner. Such company may likewise invest any
"(a) No more than twenty percent (20%) of the net worth portion of its earned surplus in the aforesaid securities or
of such company as shown by its latest financial statement investments subject to the aforesaid limitations.
approved by the Commissioner shall be invested in the lot "Section 213. Any investment made in violation of the applicable
and building in which the insurance company conducts its provisions of this title shall be considered non-admitted assets.
business; and "Section 214. (a) All bonds or other instruments of indebtedness
"(b) The total investment of an insurance company in any having a fixed term and rate of interest and held by any life
registered enterprise shall not exceed twenty percent insurance company authorized to do business in this country, if
(20%) of the net worth of said insurance company as amply secured and if not in default as to principal or interest,
shall be valued based on their amortized cost using effective "(c) Investments in equity of an insurance company shall be
interest method less impairment and unrecoverable amount valued as follows:
based on appropriate measurement methods which are generally "(1) Listed stocks shall be valued at market value and
accepted in the industry and accepted by the Commissioner. The periodically adjusted to reflect market changes through a
Commissioner shall have the power to determine the eligibility of special valuation account to reflect their realizable value
any such investments for valuation on the basis of amortization, when sold;
and may by regulation prescribe or limit the classes of securities "(2) Unlisted stocks shall be valued at adjusted book value
so eligible for amortization. All bonds or other instruments of based on the latest unqualified audited financial
indebtedness which in the judgment of the Commissioner are not statements of the company which issued such stocks; and
amply secured shall not be eligible for amortization and shall be "(3) Stocks of a corporation under the control of the
valued in accordance with paragraph two. The Commissioner insurer shall be valued using the equity method which is
may, if he finds that the interest of policyholders so permit or the cost plus or minus the share of the controlling
require, by official regulation permit or require any class or company in the earnings or losses of the controlled
classes of insurers, other than life insurance companies company after acquisition of such stocks.
authorized to do business in this country, to value their bonds or "(d) The stock of an insurance company shall be valued at the
other instruments of indebtedness in accordance with the lesser of its market value or its book value as shown by its last
foregoing rule. approved audited financial statement or the last report on
"(b) The investments of all insurers authorized to do business in examination, whichever is more recent. The book value of a
this country, except securities subject to amortization and except share of common stock of an insurance company shall be
as otherwise provided in this chapter, shall be valued, in the ascertained by dividing (1) the amount of its capital and surplus
discretion of the Commissioner, at their amortized cost using less the value of all of its preferred stock, if any, outstanding, by
effective interest method less impairment and unrecoverable (2) the number of shares of its common stock issued and
amount or at valuation representing their fair market value. If the outstanding.
Commissioner finds that in view of the character of investments "Notwithstanding the foregoing provisions, an insurer may, at its
of any insurer authorized to do business in this country it would option, value its holdings of stock in a subsidiary insurance
be prudent for such insurer to establish a special reserve for company in an amount not less than acquisition cost if such
possible losses or fluctuations in the values of its investments, he acquisition cost is less than the value determined as hereinbefore
may require such insurer to establish such reserve, reasonable in provided.
amount, and include a report thereon in any statement or report "(e) Real estate acquired by foreclosure or by deed in lieu
of the financial condition of such insurer. The Commissioner may, thereof, in the absence of a recent appraisal deemed by the
in connection with any examination or required financial Commissioner to be reliable, shall not be valued at an amount
statement of an authorized insurer, require such insurer to greater than the unpaid principal of the defaulted loan at the date
furnish him complete financial statements and audited report of of such foreclosure or deed, together with any taxes and
the financial condition of any corporation of which the securities expenses paid or incurred by such insurer at such time in
are owned wholly or partly by such insurer and may cause an connection with such acquisition, and the cost of additions or
examination to be made of any subsidiary or affiliate of such improvements thereafter paid by such insurer and any amount or
insurer as appropriate to specific investments as provided in amounts thereafter paid by such insurer or any assessments
appropriate circulars issued by the Commissioner. levied for improvements in connection with the property.
"(f) Purchase money mortgages received on dispositions of real accordance with internationally accepted actuarial standards,
property held pursuant to Section 208 shall be valued in an which standard shall be stated in its annual report.
amount equivalent to ninety percent (90%) of the value of such "Such standard of valuations shall be according to a standard
real property. Purchase money mortgages received on disposition table of mortality with interest to be determined by the Insurance
of real property otherwise held shall be valued in an amount not Commissioner. When the preliminary term basis is used, the term
exceeding ninety percent (90%) of the value of such real insurance shall be limited to the first policy year.
property as determined by an appraisal made by an appraiser at "The results of such valuations shall be reported to the
or about the time of disposition of such real property. Commissioner on or before the thirtieth day of April of each year
"(g) The stock of a subsidiary of an insurer shall be valued on the accompanied by a sworn statement of a designated company
basis of the greater of: officer and stating the methods and assumptions used in arriving
"(1) The value of only such of the assets of such subsidiary at the values reported.
as would constitute lawful investments for the insurer if "Section 217. The aggregate net value so ascertained of the
acquired or held directly by the insurer; or policies of such company shall be deemed its reserve liability, to
"(2) Such other value determined pursuant to standards provide for which it shall hold funds in secure investments equal
and cumulative limitations, contained in a regulation to be to such net value, above all its other liabilities; and it shall be the
promulgated by the Commissioner. duty of the Commissioner, after having verified, to such an
"(h) Notwithstanding any provision contained in this section or extent as he may deem necessary, the valuation of all policies in
elsewhere in this chapter, if the Commissioner finds that the force, to satisfy himself that the company has such amount in
interests of policyholders so permit or require, he may permit or safe legal securities after all other debts and claims against it
require any class or classes of insurers authorized to do business have been provided for.
in this country to value their investments or any class or classes "The reserve liability for variable contracts defined in Section 238
thereof as of any date heretofore or hereafter in accordance with shall be established in accordance with actuarial procedures that
any applicable valuation or method. recognize the variable nature of the benefits provided, and shall
"Section 215. It shall be the duty of the officers of the insurance be approved by the Commissioner.
company to report within the first fifteen (15) days of every "Section 218. Every life insurance company, conducted on the
month all such investments as may be made by them during the mutual plan or a plan in which policyholders are by the terms of
preceding month, and the Commissioner may, if such their policies entitled to share in the profits or surplus shall, on all
investments or any of them seem injudicious to him, require the policies of life insurance heretofore or hereafter issued, under the
sale or disposal of the same. The report shall also include a list of conditions of which the distribution of surplus is deferred to a
investments sold or disposed of by the company during the same fixed or specified time and contingent upon the policy being in
period. force and the insured living at that time, annually ascertain the
"TITLE 5 amount of the surplus to which all such policies as a separate
"RESERVES class are entitled, and shall annually apportion to such policies as
"Section 216. Every life insurance company, doing business in the a class the amount of the surplus so ascertained, and carry the
Philippines, shall annually make a valuation of all policies, amount of such apportioned surplus, plus the actual interest
additions thereto, unpaid dividends, and all other obligations earnings and accretions to such fund, as a distinct and separate
outstanding on the thirty-first day of December of the preceding liability to such class of policies on and for which the same was
year. All such valuations shall be made according to the standard accumulated, and no company or any of its officers shall be
adopted by the company, as prescribed by the Commissioner in permitted to use any part of such apportioned surplus fund for
any purpose whatsoever other than for the express purpose for "Section 223. No insurance company doing business in the
which the same was accumulated. Philippines shall cede all or part of any risks situated in the
"Section 219. Every insurance company, other than life, shall Philippines by way of reinsurance directly to any foreign insurer
maintain a reserve for unearned premiums on its policies in force, not authorized to do business in the Philippines unless such
which shall be charged as a liability in any determination of its foreign insurer or, if the services of a nonresident broker are
financial condition. Such reserve shall be calculated based on the utilized, such nonresident broker is represented in the Philippines
twenty-fourth (24th) method. by a resident agent duly registered with the Commissioner as
"Section 220. In addition to its liabilities and reserves on required in this Code.
contracts of insurance issued by it, every insurance company "The resident agent of such unauthorized foreign insurer or
shall be charged with the estimated amount of all of its other nonresident broker shall immediately upon registration furnish
liabilities, including taxes, expenses and other obligations due or the Commissioner with the annual statement of such insurer, or
accrued at the date of statement, and including any special of such company or companies where such broker may place
reserves required by the Commissioner pursuant to the Philippine business as of the year preceding such registration,
provisions of this Code. and annually thereafter as soon as available.
TITLE 6 "Section 224. All insurance companies, both life and non-life,
"LIMIT OF SINGLE RISK authorized to do business in the Philippines shall cede their
"Section 221. No insurance company other than life, whether excess risks to other companies similarly authorized to do
foreign or domestic, shall retain any risk on any one subject of business in the Philippines in such amounts and under such
insurance in an amount exceeding twenty percent (20%) of its arrangements as would be consistent with sound underwriting
net worth. For purposes of this section, the term subject of practices before they enter into reinsurance arrangements with
insurance shall include all properties or risks insured by the same unauthorized foreign insurers.
insurer that customarily are considered by non-life company "Section 225. Any insurance company doing business in the
underwriters to be subject to loss or damage from the same Philippines desiring to cede their excess risks to foreign insurance
occurrence of any hazard insured against. or reinsurance companies not authorized to transact business in
"The Commissioner may issue regulations providing for a the Philippines may do so under such terms and conditions which
maximum limit on the overall retained risks of insurers to serve the Commissioner may prescribe.
as a catastrophe cover requirement for the same. "Should any reinsurance agreement be for any reason cancelled
"Reinsurance ceded as authorized under the succeeding title shall or terminated, the ceding company concerned shall inform the
be deducted in determining the risk retained. As to surety risk, Commissioner in writing of such cancellation or termination within
deduction shall also be made of the amount assumed by any thirty (30) days from the date of such cancellation or termination
other company authorized to transact surety business and the or from the date notice or information of such cancellation or
value of any security mortgaged, pledged, or held subject to the termination is received by such company as the case may be.
surety’s control and for the surety’s protection. "Section 226. Every insurance company authorized to do business
"TITLE 7 in the Philippines shall report to the Commissioner on forms
"REINSURANCE TRANSACTIONS prescribed by him the particulars of reinsurance treaties or any
"Section 222. An insurance company doing business in the new treaties or changes in existing treaties within three (3)
Philippines may accept reinsurances only of such risks, and retain months from their effectivity.
risk thereon within such limits, as it is otherwise authorized to "Section 227. No credit shall be allowed as an admitted asset or
insure. as a deduction from liability, to any ceding insurer for reinsurance
made, ceded, renewed, or otherwise becoming effective after form part of the supplementary schedules to the annual
January 1, 1975, unless the reinsurance shall be payable by the statement.
assuming insurer on the basis of the liability of the ceding insurer "Any entry in the statement which is found to be false shall
under the contract or contracts reinsured without diminution constitute a misdemeanor and the officer signing such statement
because of the insolvency of the ceding insurer nor unless under shall be subject to the penalty provided for under Section 442.
the contract or contracts of reinsurance the liability for such "Section 230. Every insurance company authorized under Title 10
reinsurance is assumed by the assuming insurer or insurers as of of this chapter to issue, deliver or use variable contracts shall
the same effective date; nor unless the reinsurance agreement annually file with the Commissioner separate annual statement of
provides that payments by the assuming insurer shall be made its separate variable accounts. Such statement shall be on a form
directly to the ceding insurer or to its liquidator, receiver, or prescribed or approved by the Commissioner and shall include
statutory successor except: details as to all of the income, disbursements, assets and liability
"(a) Where the contract specifically provides another payee items of and associated with the said separate variable accounts.
of such reinsurance in the event of the insolvency of the Said statement shall be under oath of two (2) officers of the
ceding insurer; and company and shall be filed simultaneously with the annual
"(b) Where the assuming insurer with the consent of the statement required by the preceding section.
direct insured or insureds has assumed such policy "Section 231. Within thirty (30) days after receipt of the annual
obligations of the ceding insurer as direct obligations of the statement approved by the Commissioner, every insurance
assuming insurer to the payees under such policies and in company doing business in the Philippines shall publish in a
substitution for the obligations of the ceding insurer to newspaper of general circulation, a full synopsis of its annual
such payees. financial statement showing fully the conditions of its business,
"Section 228. No life insurance company doing business in the and setting forth its resources and liabilities in accordance with
Philippines shall reinsure its whole risk on any individual life or such form prescribed by the Commissioner.
joint lives, or substantially all of its insurance in force, without "The Commissioner shall have the authority to make, amend, and
having first obtained the written permission of the Commissioner. rescind such accounting rules and regulations as may be
"TITLE necessary to carry out the provisions of this Code, and define
"ANNUAL STATEMENT accounting, technical and trade terms used in this
"Section 229. Every insurance company doing business in the Code: Provided, That such shall be in accordance with
Philippines shall terminate its fiscal period on the thirty-first day internationally accepted accounting standards. Among other
of December every year, and shall annually on or before the things, the Commissioner may prescribe the form or forms in
thirtieth day of April of each year render to the Commissioner a which required information shall be set forth, the items or details
statement signed and sworn to by the chief officer of such to be shown in the balance sheet and income statement, and the
company showing, in such form and details as may be prescribed methods to be followed in the preparation of accounts, appraisal
by the Commissioner, the exact condition of its affairs on the or valuation of assets and liabilities, determination of recurring
preceding thirty-first day of December. and nonrecurring income, differentiation of investment and
"The annual statement shall be prepared in accordance with the operating income, and in the preparation, where the
financial reporting framework as determined by the Commissioner deems it necessary or desirable, of consolidated
Commissioner. In addition, the Commissioner may require other balance sheets or income accounts of any person directly or
relevant information. The form and details of such other relevant indirectly controlling or controlled by the insurance company.
information shall be prescribed by the Commissioner and shall
"TITLE 9 application therefor shall constitute the entire contract
"POLICY FORMS between the parties;
"Section 232. No policy, certificate or contract of insurance shall "(d) A provision that if the age of the insured is considered
be issued or delivered within the Philippines unless in the form in determining the premium and the benefits accruing
previously approved by the Commissioner, and no application under the policy, and the age of the insured has been
form shall be used with, and no rider, clause, warranty or misstated, the amount payable under the policy shall be
endorsement shall be attached to, printed or stamped upon such such as the premium would have purchased at the correct
policy, certificate or contract unless the form of such application, age;
rider, clause, warranty or endorsement has been approved by the "(e) If the policy is participating, a provision that the
Commissioner. company shall periodically ascertain and apportion any
"Section 233. In the case of individual life or endowment divisible surplus accruing on the policy under conditions
insurance, the policy shall contain in substance the following specified therein;
conditions: "(f) A provision specifying the options to which the
"(a) A provision that the policyholder is entitled to a grace policyholder is entitled to in the event of default in a
period either of thirty (30) days or of one (1) month within premium payment after three (3) full annual premiums
which the payment of any premium after the first may be shall have been paid. Such option shall consist of:
made, subject at the option of the insurer to an interest "(1) A cash surrender value payable upon surrender
charge not in excess of six percent (6%) per annum for the of the policy which shall not be less than the reserve
number of days of grace elapsing before the payment of on the policy, the basis of which shall be indicated,
the premium, during which period of grace the policy shall for the then current policy year and any dividend
continue in full force, but in case the policy becomes a additions thereto, reduced by a surrender charge
claim during the said period of grace before the overdue which shall not be more than one-fifth (1/5) of the
premium is paid, the amount of such premium with entire reserve or two and one-half percent (2½%) of
interest may be deducted from the amount payable under the amount insured and any dividend additions
the policy in settlement; thereto; and
"(b) A provision that the policy shall be incontestable after "(2) One or more paid-up benefits on a plan or plans
it shall have been in force during the lifetime of the insured specified in the policy of such value as may be
for a period of two (2) years from its date of issue as purchased by the cash surrender value.
shown in the policy, or date of approval of last "(g) A provision that at any time after a cash surrender
reinstatement, except for nonpayment of premium and value is available under the policy and while the policy is in
except for violation of the conditions of the policy relating force, the company will advance, on proper assignment or
to military or naval service in time of war; pledge of the policy and on sole security thereof, a sum
"(c) A provision that the policy shall constitute the entire equal to, or at the option of the owner of the policy, less
contract between the parties, but if the company desires to than the cash surrender value on the policy, at a specified
make the application a part of the contract it may do so rate of interest, not more than the maximum allowed by
provided a copy of such application shall be indorsed upon law, to be determined by the company from time to time,
or attached to the policy when issued, and in such case the but not more often than once a year, subject to the
policy shall contain a provision that the policy and the approval of the Commissioner; and that the company will
deduct from such loan value any existing indebtedness on
 the policy and any unpaid balance of the premium for the "This section shall not apply to policies of group life or industrial
current policy year, and may collect interest in advance on life insurance.
the loan to the end of the current policy year, which "Section 234. No policy of group life insurance shall be issued and
provision may further provide that such loan may be delivered in the Philippines unless it contains in substance the
deferred for not exceeding six (6) months after the following provisions, or provisions which in the opinion of the
application therefor is made; Commissioner are more favorable to the persons insured, or at
"(h) A table showing in figures cash surrender values and least as favorable to the persons insured and more favorable to
paid-up options available under the policy each year upon the policyholders:
default in premium payments, during at least twenty (20) "(a) A provision that the policyholder is entitled to a grace
years of the policy beginning with the year in which the period of either thirty (30) days or of one (1) month for the
values and options first become available, together with a payment of any premium due after the first, during which
provision that in the event of the failure of the policyholder grace period the death benefit coverage shall continue in
to elect one of the said options within the time specified in force, unless the policyholder shall have given the insurer
the policy, one of said options shall automatically take written notice of discontinuance in advance of the date of
effect and no policyholder shall ever forfeit his right to discontinuance and in accordance with the terms of the
same by reason of his failure to so elect; policy. The policy may provide that the policyholder shall
"(i) In case the proceeds of a policy are payable in be liable for the payment of a pro rata premium for the
installments or as an annuity, a table showing the time the policy is in force during such grace period;
minimum amounts of the installments or annuity "(b) A provision that the validity of the policy shall not be
payments; contested, except for nonpayment of premiums after it has
"(j) A provision that the policyholder shall be entitled to been in force for two (2) years from its date of issue; and
have the policy reinstated at any time within three (3) that no statement made by any insured under the policy
years from the date of default of premium payment unless relating to his insurability shall be used in contesting the
the cash surrender value has been duly paid, or the validity of the insurance with respect to which such
extension period has expired, upon production of evidence statement was made after such insurance has been in
of insurability satisfactory to the company and upon force prior to the contest for a period of two (2) years
payment of all overdue premiums and any indebtedness to during such person’s lifetime nor unless contained in a
the company upon said policy, with interest rate not written instrument signed by him;
exceeding that which would have been applicable to said "(c) A provision that a copy of the application, if any, of the
premiums and indebtedness in the policy years prior to policyholder shall be attached to the policy when issued,
reinstatement. that all statements made by the policyholder or by persons
"Any of the foregoing provisions or portions thereof not applicable insured shall be deemed representations and not
to single premium or term policies shall to that extent not be warranties, and that no statement made by any insured
incorporated therein; and any such policy may be issued and shall be used in any contest unless a copy of the
delivered in the Philippines which in the opinion of the instrument containing the statement is or has been
Commissioner contains provisions on any one or more of the furnished to such person or to his beneficiary;
foregoing requirements more favorable to the policyholder than "(d) A provision setting forth the conditions, if any, under
hereinbefore required. which the insurer reserves the right to require a person
eligible for insurance to furnish evidence of individual
insurability satisfactory to the insurer as a condition to part not in excess of the coverage under the group
or all of his coverage; policy; and
"(e) A provision specifying an equitable adjustment of "(2) The premium on the individual policy shall be at
premiums or of benefits or of both to be made in the event the insurer’s then customary rate applicable to the
that the age of a person insured has been misstated, such form and amount of the individual policy, to the
provision to contain a clear statement of the method of class of risk to which such person then belongs, and
adjustment to be used; to his age attained on the effective date of the
"(f) A provision that any sum becoming due by reason of individual policy.
death of the person insured shall be payable to the "(i) A provision that if the group policy terminates or is
beneficiary designated by the insured, subject to the amended so as to terminate the insurance of any class of
provisions of the policy in the event that there is no insured persons, every person insured thereunder at the
designated beneficiary, as to all or any part of such sum, date of such termination whose insurance terminates and
living at the death of the insured, and subject to any right who has been so insured for five (5) years prior to such
reserved by the insurer in the policy and set forth in the termination date shall be entitled to have issued to him by
certificate to pay at its option a part of such sum not the insurer an individual policy of life insurance subject to
exceeding Five hundred pesos (P500.00) to any person the same limitations as set forth in paragraph (h), except
appearing to the insurer to be equitably entitled thereto by that the group policy may provide that the amount of such
reason of having incurred funeral or other expenses individual policy shall not exceed the amount of the
incident to the last illness or, death of the person insured; person’s life insurance protection ceasing;
"(g) A provision that the insurer will issue to the "(j) A provision that if a person insured under the group
policyholder for delivery to each person insured a policy dies during the thirty (30)-day period within which
statement as to the insurance protection to which he is he would have been entitled to an individual policy issued
entitled, to whom the insurance benefits are payable, and to him in accordance with paragraphs (h) and (i) above
the rights set forth in paragraphs (h), (i) and (j) following; and before such individual policy shall have become
"(h) A provision that if the insurance, or any portion of it, effective, the amount of life insurance which he would have
on a person covered under the policy ceases because of been entitled to have issued to him as an individual policy
termination of employment or of membership in the class shall be payable as a claim under the group policy whether
or classes eligible for coverage under the policy, such or not application for the individual policy or the payment
person shall be entitled to have issued to him by the of the first premium has been made;
insurer, without evidence of insurability, an individual "(k) In the case of a policy issued to a creditor to insure
policy of life insurance without disability or other debtors of such creditor, a provision that the insurer will
supplementary benefits, provided application for the furnish to the policyholder for delivery to each debtor
individual policy and payment of the first premium to the insured under the policy a form which will contain a
insurer shall be made within thirty (30) days after such statement that the life of the debtor is insured under the
termination, and provided further that: policy and that any death benefit paid thereunder by
"(1) The individual policy shall be on any one of the reason of his death shall be applied to reduce or extinguish
forms, except term insurance, then customarily indebtedness.
issued by the insurer at the age and for an amount "The provisions of paragraphs (f) to (j) shall not apply to policies
issued to a creditor to insure his debtors. If a group life policy is
on a plan of insurance other than term, it shall contain a non- as to provisions relating to benefits in the event of
forfeiture provision or provisions which in the opinion of the disability as defined in the policy, and those granting
Commissioner is or are equitable to the insured or the additional insurance specifically against death by accident
policyholder: Provided, That nothing herein contained shall be so or by accidental means, or to additional insurance against
construed as to require group life policies to contain the same loss of, or loss of use of, specific members of the body;
non-forfeiture provisions as are required of individual life policies. "(c) A provision that the policy shall constitute the entire
"Section 235. The term industrial life insurance as used in this contract between the parties, or if a copy of the application
Code shall mean that form of life insurance under which the is endorsed upon and attached to the policy when issued, a
premiums are payable either monthly or oftener, if the face provision that the policy and the application therefor shall
amount of insurance provided in any policy is not more than five constitute the entire contract between the parties, and in
hundred times that of the current statutory minimum daily wage the latter case, a provision that all statements made by the
in the City of Manila, and if the words industrial policy are printed insured shall, in the absence of fraud, be deemed
upon the policy as part of the descriptive matter. representations and not warranties;
"An industrial life policy shall not lapse for nonpayment of "(d) A provision that if the age of the person insured, or
premium if such nonpayment was due to the failure of the the age of any person, considered in determining the
company to send its representative or agent to the insured at the premium, or the benefits accruing under the policy, has
residence of the insured or at some other place indicated by him been misstated, any amount payable or benefit accruing
for the purpose of collecting such premium: Provided, That the under the policy shall be such as the premium paid would
provisions of this paragraph shall not apply when the premium on have purchased at the correct age;
the policy remains unpaid for a period of three (3) months or "(e) A provision that if the policy is a participating policy,
twelve (12) weeks after the grace period has expired. the company shall periodically ascertain and apportion any
"Section 236. In the case of industrial life insurance, the policy divisible surplus accruing on the policy under the
shall contain in substance the following provisions: conditions specified therein;
"(a) A provision that the insured is entitled to a grace "(f) A provision that in the event of default in premium
period of four (4) weeks within which the payment of any payments after three (3) full years’ premiums have been
premium after the first may be made, except that where paid, the policy shall be converted into a stipulated form of
premiums are payable monthly, the period of grace shall insurance, and that in the event of default in premium
be either one (1) month or thirty (30) days; and that payments after five (5) full years’ premiums have been
during the period of grace, the policy shall continue in full paid, a specified cash surrender value shall be available, in
force, but if during such grace period the policy becomes a lieu of the stipulated form of insurance, at the option of the
claim, then any overdue and unpaid premiums may be policyholder. The net value of such stipulated form of
deducted from any amount payable under the policy in insurance and the amount of such cash value shall not be
settlement; less than the reserve on the policy and dividend additions
"(b) A provision that the policy shall be incontestable after thereto, if any, at the end of the last completed policy year
it has been in force during the lifetime of the insured for a for which premiums shall have been paid (the policy to
specified period, not more than two (2) years from its date specify the mortality table, rate of interest and method of
of issue, except for nonpayment of premiums and except valuation adopted to compute such reserve), exclusive of
for violation of the conditions of the policy relating to naval any reserve on disability benefits and accidental death
or military service, or services auxiliary thereto, and except benefits, less an amount not to exceed two and one-half
percent (2½%) of the maximum amount insured by the "(l) A title on the face and on the back of the policy
policy and dividend additions thereto, if any, when the correctly describing its form;
issue age is under ten (10) years, and less an amount not "(m) A space on the front or the back of the policy for the
to exceed two and one-half percent (2½%) of the current name of the beneficiary designated by the insured with a
amount insured by the policy and dividend additions reservation of the insured’s right to designate or change
thereto, if any, if the issue age is ten (10) years or older, the beneficiary after the issuance of the policy. The policy
and less any existing indebtedness to the company on or may also provide that no designation or change of
secured by the policy; beneficiary shall be binding on the insurer until endorsed
"(g) A provision that the policy may be surrendered to the on the policy by the insurer, and that the insurer may
company at its home office within a period of not less than refuse to endorse the name of any proposed beneficiary
sixty (60) days after the due date of a premium in default who does not appear to the insurer to have an insurable
for the specified cash value: Provided, That the insurer interest in the life of the insured. Such policy may also
may defer payment for not more than six (6) months after contain a provision that if the beneficiary designated in the
the application therefor is made; policy does not surrender the policy with due proof of
"(h) A table that shows in figures the nonforfeiture benefits death within the period stated in the policy, which shall not
available under the policy every year upon default in be less than thirty (30) days after the death of the insured,
payment of premiums during at least the first twenty (20) or if the beneficiary is the estate of the insured, or is a
years of the policy, such table to begin with the year in minor, or dies before the insured, or is not legally
which such values become available, and a provision that competent to give valid release, then the insurer may
the company will furnish upon request an extension of such make any payment thereunder to the executor or
table beyond the year shown in the policy; administrator of the insured, or to any of the insured’s
"(i) A provision that specifies which one of the stipulated relatives by blood or legal adoption or connections by
forms of insurance provided for under the provision of marriage or to any person appearing to the insurer to be
paragraph (f) of this section shall take effect in the event equitably entitled thereto by reason of having incurred
of the insured’s failure, within sixty (60) days from the due expense for the maintenance, medical attention or burial of
date of the premium in default, to notify the insurer in the insured; and
writing as to which one of such forms he has selected; "(n) A provision that when an industrial life insurance
"(j) A provision that the policy may be reinstated at any policy is issued providing for accidental or health benefits,
time within two (2) years from the due date of the or both, in addition to life insurance, the foregoing
premium in default unless the cash surrender value has provisions shall apply only to the life insurance portion of
been paid or the period of extended term insurance the policy.
expired, upon production of evidence of insurability "Any of the foregoing provisions or portions thereof not applicable
satisfactory to the company and payment of arrears of to nonparticipating or term policies shall to that extent not be
premiums with interest at a rate not exceeding six percent incorporated therein. The foregoing provisions shall not apply to
(6%) per annum payable annually; policies issued or granted pursuant to the nonforfeiture provisions
"(k) A provision that when a policy shall become a claim by prescribed in provisions of paragraphs (f) and (i) of this section,
death of the insured, settlement shall be made upon nor shall provisions of paragraphs (f), (g), (h), and (i) hereof be
receipt of due proof of death, or not later than two (2) required in term insurance of twenty (20) years or less but such
months after receipt of such proof;
term policies shall specify the mortality table, rate of interest, insurance company from placing in its industrial life policies
and method of computing reserves. provisions limiting its liability with respect to:
"Section 237. No policy of industrial life insurance shall be issued "(1) Death resulting from aviation other than as a fare-
or delivered in the Philippines if it contains any of the following paying passenger on a regularly scheduled route between
provisions: definitely established airports; and
"(a) A provision that gives the insurer the right to declare "(2) Military or naval service: Provided, That if the liability
the policy void because the insured has had any disease or of the company is limited as herein provided, such liability
ailment, whether specified or not, or because the insured shall in no event be fixed at an amount less than the
has received institutional, hospital, medical or surgical reserve on the policy (excluding the reserve for any
treatment or attention, except a provision which gives the additional benefits in the event of death by accident or
insurer the right to declare the policy void if the insured accidental means or for benefits in the event of any type of
has, within two (2) years prior to the issuance of the disability), less any indebtedness on or secured by such
policy, received institutional, hospital, medical or surgical policy; nor shall any provision of this section apply to any
treatment or attention and if the insured or the claimant provision in an industrial life insurance policy for additional
under the policy fails to show that the condition benefits in the event of death by accident or accidental
occasioning such treatment or attention was not of a means.
serious nature or was not material to the risk; "TITLE 10
"(b) A provision that gives the insurer the right to declare "VARIABLE CONTRACTS
the policy void because the insured has been rejected for "Section 238. (a) No insurance company authorized to transact
insurance, unless such right be conditioned upon a showing business in the Philippines shall issue, deliver, sell or use any
by the insurer that knowledge of such rejection would have variable contract in the Philippines, unless and until such
led to a refusal by the insurer to make such contract; company shall have satisfied the Commissioner that its financial
"(c) A provision that allows the company to pay the and general condition and its methods of operations, including
proceeds of the policy at the death of the insured to any the issue and sale of variable contracts, are not and will not be
person other than the named beneficiary, except in hazardous to the public or to its policy and contract owners. No
accordance with a standard provision as specified under foreign insurance company shall be authorized to issue, deliver or
the provisions of paragraph (m) of the preceding section; sell any variable contract in the Philippines, unless it is likewise
"(d) A provision that limits the time within which any authorized to do so by the laws of its domicile.
action at law or in equity may be commenced to less than "(b) The term variable contract shall mean any policy or contract
six (6) years after the cause of action shall accrue; and on either a group or on an individual basis issued by an insurance
"(e) A provision that specifies any mode of settlement at company providing for benefits or other contractual payments or
maturity of less value than the amount insured by the values thereunder to vary so as to reflect investment results of
policy plus dividend additions, if any, less any indebtedness any segregated portfolio of investments or of a designated
to the company on the policy and less any premium that separate account in which amounts received in connection with
may by the terms of the policy be deducted, payments to such contracts shall have been placed and accounted for
be made in accordance with the terms of the policy. separately and apart from other investments and accounts. This
"Nothing contained in this section nor in the provision of contract may also provide benefits or values incidental thereto
paragraph (b) of the preceding section, relating to payable in fixed or variable amounts, or both. It shall not be
incontestability, shall be construed as prohibiting the life deemed to be a security or securities as defined in The Securities
Act, as amended, or in the Investment Company Act, as "Section 242. Variable contracts may be issued on the industrial
amended, nor subject to regulations under said Acts. life basis, provided that the pertinent provisions of this Code and
"(c) In determining the qualifications of a company requesting of the rules and regulations of the Commissioner governing
authority to issue, deliver, sell or use variable contracts, the variable contracts are complied with in connection with such
Commissioner shall always consider the following: contracts.
"(1) The history, financial and general condition of the "Section 243. Every life insurance company authorized under the
company: Provided, That such company, if a foreign provisions of this Code to issue, deliver, sell or use variable
company, must have deposited with the Commissioner for contracts shall, in connection with the same, establish one or
the benefit and security of its variable contract owners in more separate accounts to be known as separate variable
the Philippines, securities satisfactory to the Commissioner accounts. All amounts received by the company in connection
consisting of bonds of the Government of the Philippines or with any such contracts which are required by the terms thereof,
its instrumentalities with an actual market value of Two to be allocated or applied to one or more designated separate
million pesos (P2,000,000.00); variable accounts shall be placed in such designated account or
"(2) The character, responsibility and fitness of the officers accounts. The assets and liabilities of each such separate variable
and directors of the company; and account shall at all times be clearly identifiable and
"(3) The law and regulation under which the company is distinguishable from the assets and liabilities in all other accounts
authorized in the state of domicile to issue such contracts. of the company. Notwithstanding any provision of law to the
"(d) If after notice and hearing, the Commissioner shall find that contrary, the assets held in any such separate variable account
the company is qualified to issue, deliver, sell or use variable shall not be chargeable with liabilities arising out of any other
contracts in accordance with this Code and the regulations and business the company may conduct but shall be held and applied
rules issued thereunder, the corresponding order of authorization exclusively for the benefit of the owners or beneficiaries of the
shall be issued. Any decision or order denying authority to issue, variable contracts applicable thereto. In the event of the
deliver, sell or use variable contracts shall clearly and distinctly insolvency of the company, the assets of each such separate
state the reasons and grounds on which it is based. variable account shall be applied to the contractual claims of the
"Section 239. Any insurance company issuing variable contracts owners or beneficiaries of the variable contracts applicable
pursuant to this Code may in its discretion issue contracts thereto. Except as otherwise specifically provided by the contract,
providing a combination of fixed amount and variable amount of no sale, exchange or other transfer of assets may be made by a
benefits and for option lump-sum payment of benefits. company, between any of its separate accounts or between any
"Section 240. Every variable contract form delivered or issued for other investment account and one or more of its separate
delivery in the Philippines, and every certified form evidencing accounts, unless in the case of a transfer into a separate account,
variable benefits issued pursuant to any such contract on a group such transfer is made solely to establish the account or to
basis, and the application, rider and endorsement forms support the operation of the contracts with respect to the
applicable thereto and used in connection therewith, shall be separate account to which the transfer is made, or in case of a
subject to the prior approval of the Commissioner. transfer from a separate account, such transfer would not cause
"Section 241. Illustration of benefits payable under any variable the remaining assets of the account to become less than the
contract shall not include or involve projections of past reserves and other contract liabilities with respect to such
investment experience into the future and shall conform with the separate account. Such transfer, whether into or from a separate
rules and regulations promulgated by the Commissioner. account, shall be made by a transfer of cash, or by a transfer of
securities having a valuation which could be readily determined in
the market place: Provided, That such transfer of securities is recognize the variable nature of the benefits provided, and shall
approved by the Commissioner. The Commissioner may authorize be approved by the Commissioner.
other transfers among such accounts, if, in his opinion, such "TITLE 11
transfers would not be inequitable. All amounts and assets "CLAIMS SETTLEMENT
allocated to any such separate variable account shall be owned "Section 247. (a) No insurance company doing business in the
by the company and with respect to the same the company shall Philippines shall refuse, without just cause, to pay or settle claims
not be nor hold itself out to be a trustee. arising under coverages provided by its policies, nor shall any
"Section 244. Any insurance company which has established one such company engage in unfair claim settlement practices. Any of
or more separate variable accounts pursuant to the preceding the following acts by an insurance company, if committed without
section may invest and reinvest all or any part of the assets just cause and performed with such frequency as to indicate a
allocated to any such account in the securities and investments general business practice, shall constitute unfair claim settlement
authorized by Sections 204, 206, 207 and 208 for any of the practices:
funds of an insurance company in such amount or amounts as "(1) Knowingly misrepresenting to claimants pertinent
may be approved by the Commissioner. In addition thereto, such facts or policy provisions relating to coverage at issue;
company may also invest in common stocks or other equities "(2) Failing to acknowledge with reasonable promptness
which are listed on or admitted to trading in a securities pertinent communications with respect to claims arising
exchange located in the Philippines, or which are publicly held under its policies;
and traded in the over-the-counter market as defined by the "(3) Failing to adopt and implement reasonable standards
Commissioner and as to which market quotations have been for the prompt investigation of claims arising under its
available: Provided, however, That no such company shall invest policies;
in excess of ten percent (10%) of the assets of any such separate "(4) Not attempting in good faith to effectuate prompt, fair
variable accounts in any one corporation issuing such common and equitable settlement of claims submitted in which
stock. The assets and investments of such separate variable liability has become reasonably clear; or
accounts shall not be taken into account in applying the "(5) Compelling policyholders to institute suits to recover
quantitative investment limitations applicable to other amounts due under its policies by offering without
investments of the company. In the purchase of common capital justifiable reason substantially less than the amounts
stock or other equities, the insurer shall designate to the broker, ultimately recovered in suits brought by them.
or to the seller if the purchase is not made through a broker, the "(b) Evidence as to numbers and types of valid and justifiable
specific variable account for which the investment is made. complaints to the Commissioner against an insurance company,
"Section 245. Assets allocated to any separate variable account and the Commissioner’s complaint experience with other
shall be valued at their market value on the date of any insurance companies writing similar lines of insurance shall be
valuation, or if there is no readily available market value then in admissible in evidence in an administrative or judicial proceeding
accordance with the terms of the variable contract applicable to brought under this section.
such assets, or if there are no such contract terms then in such "(c) If it is found, after notice and an opportunity to be heard,
manner as may be prescribed by the rules and regulations of the that an insurance company has violated this section, each
Commissioner. instance of noncompliance with paragraph (a) may be treated as
"Section 246. The reserve liability for variable contracts shall be a separate violation of this section and shall be considered
established in accordance with actuarial procedures that sufficient cause for the suspension or revocation of the company’s
certificate of authority.
"Section 248. The proceeds of a life insurance policy shall be paid withholding of payment plus interest of twice the ceiling
immediately upon maturity of the policy, unless such proceeds prescribed by the Monetary Board of the amount of the claim due
are made payable in installments or as an annuity, in which case the insured, from the date following the time prescribed in
the installments, or annuities shall be paid as they become Section 248 or in Section 249, as the case may be, until the claim
due: Provided, however, That in the case of a policy maturing by is fully satisfied: Provided, That failure to pay any such claim
the death of the insured, the proceeds thereof shall be paid within the time prescribed in said sections shall be
within sixty (60) days after presentation of the claim and filing of considered prima facie evidence of unreasonable delay in
the proof of death of the insured. Refusal or failure to pay the payment.
claim within the time prescribed herein will entitle the beneficiary "Section 251. It is unlawful to:
to collect interest on the proceeds of the policy for the duration of "(a) Present or cause to be presented any fraudulent claim
the delay at the rate of twice the ceiling prescribed by the for the payment of a loss under a contract of insurance;
Monetary Board, unless such failure or refusal to pay is based on and
the ground that the claim is fraudulent. "(b) Fraudulently prepare, make or subscribe any writing
"The proceeds of the policy maturing by the death of the insured with intent to present or use the same, or to allow it to be
payable to the beneficiary shall include the discounted value of all presented in support of any such claim. Any person who
premiums paid in advance of their due dates, but are not due and violates this section shall be punished by a fine not
payable at maturity. exceeding twice the amount claimed or imprisonment of
"Section 249. The amount of any loss or damage for which an two (2) years, or both, at the discretion of the court.
insurer may be liable, under any policy other than life insurance "TITLE 12
policy, shall be paid within thirty (30) days after proof of loss is "EXAMINATION OF COMPANIES
received by the insurer and ascertainment of the loss or damage "Section 252. The Commissioner shall require every insurance
is made either by agreement between the insured and the insurer company doing business in the Philippines to keep its books,
or by arbitration; but if such ascertainment is not had or made records, accounts and vouchers in such manner that he or his
within sixty (60) days after such receipt by the insurer of the authorized representatives may readily verify its annual
proof of loss, then the loss or damage shall be paid within ninety statements and ascertain whether the company is solvent and
(90) days after such receipt. Refusal or failure to pay the loss or has complied with the provisions of this Code or the circulars,
damage within the time prescribed herein will entitle the assured instructions, rulings or decisions of the Commissioner.
to collect interest on the proceeds of the policy for the duration of "Section 253. The Commissioner shall at least once a year and
the delay at the rate of twice the ceiling prescribed by the whenever he considers the public interest so demands, cause an
Monetary Board, unless such failure or refusal to pay is based on examination to be made into the affairs, financial condition and
the ground that the claim is fraudulent. method of business of every insurance company authorized to
"Section 250. In case of any litigation for the enforcement of any transact business in the Philippines and of any other person, firm
policy or contract of insurance, it shall be the duty of the or corporation managing the affairs and/or property of such
Commissioner or the Court, as the case may be, to make a insurance company. Such company, as well as such managing
finding as to whether the payment of the claim of the insured has person, firm or corporation, shall submit to the examiner all such
been unreasonably denied or withheld; and in the affirmative books, papers and securities as he may require and such
case, the insurance company shall be adjudged to pay damages examiner shall also have the power to examine the officers of
which shall consist of attorney’s fees and other expenses incurred such company under oath touching its business and financial
by the insured person by reason of such unreasonable denial or condition, and the authority to transact business in the
Philippines of any such company shall be suspended by the to protect the interest of policyholders and creditors, he may
Commissioner if such examination is refused and such company appoint a conservator to take charge of the assets, liabilities, and
shall not thereafter be allowed to transact further business in the the management of such company, collect all moneys and debts
Philippines until it has fully complied with the provisions of this due to said company and exercise all powers necessary to
section. preserve the assets of said company, reorganize the
"Government-owned or -controlled corporations or entities management thereof, and restore its viability. The said
engaged in social or private insurance shall similarly be subject to conservator shall have the power to overrule or revoke the
such examination by the Commissioner unless their respective actions of the previous management and board of directors of the
charters otherwise provide. said company, any provision of law, or of the articles of
"TITLE 13 incorporation or bylaws of the company, to the contrary
"SUSPENSION OR REVOCATION OF AUTHORITY notwithstanding, and such other powers as the Commissioner
"Section 254. If the Commissioner is of the opinion upon shall deem necessary.
examination of other evidence that any domestic or foreign "The conservator may be another insurance company doing
insurance company is in an unsound condition, or that it has business in the Philippines, any officer or officers of such
failed to comply with the provisions of law or regulations company, or any other competent and qualified person, firm or
obligatory upon it, or that its condition or method of business is corporation. The remuneration of the conservator and other
such as to render its proceedings hazardous to the public or to its expenses attendant to the conservation shall be borne by the
policyholders, or that its net worth requirement, in the case of a insurance company concerned.
domestic stock company, or its available cash assets, in the case "The conservator shall not be subject to any action, claim or
of a domestic mutual company, or its security deposits, in the demand by, or liability to, any person in respect of anything done
case of a foreign company, is impaired or deficient, or that the or omitted to be done in good faith in the exercise, or in
margin of solvency required of such company is deficient, the connection with the exercise, of the powers conferred on the
Commissioner is authorized to suspend or revoke all certificates conservator.
of authority granted to such insurance company, its officers and "The conservator appointed shall report and be responsible to the
agents, and no new business shall thereafter be done by such Commissioner until such time as the Commissioner is satisfied
company or for such company by its agent in the Philippines that the insurance company can continue to operate on its own
while such suspension, revocation or disability continues or until and the conservatorship shall likewise be terminated should the
its authority to do business is restored by the Commissioner. Commissioner, on the basis of the report of the conservator or of
Before restoring such authority, the Commissioner shall require his own findings, determine that the continuance in business of
the company concerned to submit to him a business plan showing the insurance company would be hazardous to policyholders and
the company’s estimated receipts and disbursements, as well as creditors, in which case the provisions of Title 15 shall apply.
the basis therefor, for the next succeeding three (3) years. "No insurance company, life or non-life, or any professional
"TITLE 14 reinsurer, ordered to be liquidated by the Commissioner under
"APPOINTMENT OF CONSERVATOR the provisions hereunder may be rehabilitated or authorized to
"Section 255. If at any time before, or after, the suspension or transact anew, insurance or reinsurance business, as the case
revocation of the certificate of authority of an insurance company may be.
as provided in the preceding title, the Commissioner finds that "TITLE 15
such company is in a state of continuing inability or unwillingness "PROCEEDINGS UPON INSOLVENCY
to maintain a condition of solvency or liquidity deemed adequate
"Section 256. Whenever, upon examination or other evidence, it company, and to do such other acts as may be necessary to
shall be disclosed that the condition of any insurance company complete the liquidation as ordered by the Commissioner.
doing business in the Philippines is one of insolvency, or that its "The provisions of any law to the contrary notwithstanding, the
continuance in business would be hazardous to its policyholders actions of the Commissioner under this section shall be final and
and creditors, the Commissioner shall forthwith order the executory, and can be set aside by the court upon petition by the
company to cease and desist from transacting business in the company and only if there is convincing proof that the action is
Philippines and shall designate a receiver to immediately take plainly arbitrary and made in bad faith. The Commissioner,
charge of its assets and liabilities, as expeditiously as possible through the Solicitor General, shall then file the corresponding
collect and gather all the assets and administer the same for the answer reciting the proceeding taken and praying the assistance
benefit of its policyholders and creditors, and exercise all the of the court in the liquidation of the company. No restraining
powers necessary for these purposes including, but not limited to, order or injunction shall be issued by the court enjoining the
bringing suits and foreclosing mortgages in the name of the Commissioner from implementing his actions under this section,
insurance company. unless there is convincing proof that the action of the
"The Commissioner shall thereupon determine within ninety (90) Commissioner is plainly arbitrary and made in bad faith and the
days whether the insurance company may be reorganized or petitioner or plaintiff files with the Clerk or Judge of the Court in
otherwise placed in such condition so that it may be permitted to which the action is pending a bond executed in favor of the
resume business with safety to its policyholders and creditors and Commissioner in an amount to be fixed by the court. The
shall prescribe the conditions under which such resumption of restraining order or injunction shall be refused or, if granted,
business shall take place as well as the time for fulfillment of shall be dissolved upon filing by the Commissioner, if he so
such conditions. In such case, the expenses and fees in the desires, of a bond in an amount twice the amount of the bond of
collection and administration of the insurance company shall be the petitioner or plaintiff conditioned that it will pay the damages
determined by the Commissioner and shall be paid out of the which the petition or plaintiff may suffer by the refusal or the
assets of such company. dissolution of the injunction. The provisions of Rule 58 of the New
"If the Commissioner shall determine and confirm within the said Rules of Court insofar as they are applicable shall govern the
period that the insurance company is insolvent, as defined issuance and dissolution of the restraining order or injunction
hereunder, or cannot resume business with safety to its contemplated in this section.
policyholders and creditors, he shall, if the public interest "All proceedings under this title shall be given preference in the
requires, order its liquidation, indicate the manner of its courts. The Commissioner shall not be required to pay any fee to
liquidation and approve a liquidation plan and implement it any public officer for filing, recording, or in any manner
immediately. The Commissioner shall designate a competent and authenticating any paper or instrument relating to the
qualified person as liquidator who shall take over the functions of proceedings.
the receiver previously designated and, with all convenient "As used in this title, the term Insolvency shall mean the inability
speed, reinsure all its outstanding policies, convert the assets of of an insurance company to pay its lawful obligations as they fall
the insurance company to cash, or sell, assign or otherwise due in the usual and ordinary course of business as may be
dispose of the same to the policyholders, creditors and other shown by its failure to maintain the solvency requirements under
parties for the purpose of settling the liabilities or paying the Section 200 of this Code.
debts of such company and he may, in the name of the company, "Section 257. The receiver or the liquidator, as the case may be,
institute such actions as may be necessary in the appropriate designated under the provisions of this title, shall not be subject
court to collect and recover accounts and assets of the insurance to any action, claim or demand by, or liability to, any person in
respect of anything done or omitted to be done in good faith in absorbing or acquiring company, or such liabilities be reinsured
the exercise, or in connection with the exercise, of the powers by the latter. In the case of such policies as are subject to
conferred on such receiver or liquidator. cancellation by the company or companies to be absorbed or
"TITLE 16 dissolved, same may be cancelled pursuant to the terms thereof
"CONSOLIDATION AND MERGER OF in lieu of such transfer, assumption, or reinsurance.
INSURANCE COMPANIES "Section 261. Upon approval or adoption in the meetings of the
"Section 258. Upon prior notice to the Commissioner, two (2) or stockholders or members called for the purpose in each of the
more domestic insurance companies, acting through their constituent companies of the agreement to merge or consolidate,
respective boards of directors, may negotiate to merge into a all stockholders or members dissenting or objecting to the
single corporation which shall be one of the constituent merger or consolidation shall be paid the value of their shares by
corporations, or consolidate into a single corporation which shall the company concerned in accordance with the bylaws thereof.
be a new corporation to be formed by the consolidation. A "Section 262. Upon approval or adoption of the agreement to
common agreement of the proposed merger or consolidation shall merge or consolidate by the stockholders or members of the
be drawn up for submission to the stockholders or members of constituent companies, the corresponding articles of merger or of
the constituent companies for adoption and approval in consolidation shall be duly executed by the presidents and
accordance with the provisions of the respective bylaws of the attested by the corporate secretaries and shall bear the corporate
constituent companies and all existing laws that may be seals of the merging or consolidating companies setting forth:
pertinent. "(a) The plan of merger or the plan of consolidation;
"Section 259. Such agreement shall include, aside from the "(b) As to each corporation, the number of shares
proposed merger or consolidation, provisions relative to the outstanding, or in case of mutual corporations, the number
manner of transfer of assets to and assumption of liabilities by of members; and
the absorbing or acquiring company from the absorbed or "(c) As to each corporation, the number of shares or
dissolved company or companies; the proposed articles of merger members voted for and against such plan, respectively.
or consolidation and bylaws of the surviving or acquiring Thereafter, a certified copy of such articles of merger or
company; the corporate name to be adopted which should not be consolidation, together with a certificate of approval or
that of any other existing company transacting similar business adoption by the stockholders or members of such articles
or one so similar as to be calculated to mislead the public; the of merger or consolidation, verified by affidavits of such
rights of the stockholders or members of the absorbed or officers and under the seal of the constituent companies,
dissolved companies; date of effectivity of the merger or shall be submitted to the Commissioner, together with
consolidation; and such particulars as may be necessary to such other papers or documents which the Commissioner
explain and make manifest the objects and purposes of the may require, for his consideration.
absorbing or acquiring company. "Section 263. The articles of merger or of consolidation, signed
"Section 260. Upon execution of such agreement to merge or and verified as hereinabove required, shall be filed with the
consolidate by and between or among the boards of directors of Securities and Exchange Commission for its examination and
the constituent companies, notice thereof shall be mailed approval.
immediately to their policyholders and creditors. The company or "Section 264. Upon receipt from the Securities and Exchange
companies to be absorbed or dissolved shall discharge all its Commission of the certificate of merger or of consolidation, the
accrued liabilities; otherwise, such liabilities shall, with the constituent companies shall surrender to the Commissioner their
consent of its creditors, be transferred to and assumed by the respective certificates of authority to transact insurance business.
The absorbing or surviving company in case of merger, or the corporation into a nonstock corporation for the benefit of its
newly formed company in case of consolidation, shall immediately members. The members of such nonstock corporation shall be
file with the Commissioner the corresponding application for the policyholders from time to time of the class or classes for
issuance of a new certificate of authority to transact insurance whose benefit the stock of the insurer was acquired, and the
business, together with a certified copy of the certificate of policyholders of such other class or classes as may be specified in
merger or of consolidation, and of the certificate of increase of such corporation’s articles of incorporation as they may be
stocks, if there is any, issued by the Securities and Exchange amended from time to time. Such plan shall be:
Commission. "(a) Adopted by a vote of a majority of the directors;
"Section 265. Nothing in this title shall be construed to enlarge "(b) Approved by the vote of the holders of at least a
the powers of the absorbing or surviving company in case of majority of the outstanding shares at a special meeting of
merger, or the newly formed company in case of consolidation, shareholders called for that purpose, or by the written
except those conferred by the certificate of merger or of consent of such shareholders;
consolidation and the articles of merger or of consolidation, or the "(c) Submitted to the Commissioner and approved by him
amended articles of incorporation, as registered with the in writing;
Securities and Exchange Commission. "(d) Approved by a majority vote of all the policyholders of
"Section 266. No director, officer, or stockholder of any such the class or classes for whose benefit the stock is to be
constituent companies shall receive any fee, commission, acquired voting at an election by the policyholders called
compensation, or other valuable consideration whatsoever, for that purpose, subject to the provisions of Section 271.
directly or indirectly, or in any manner aiding, promoting or The terms policyholder or policyholders as used in this
assisting in such merger or consolidation. chapter shall be deemed to mean the person or persons
"Section 267. The merger or consolidation of companies under insured under an individual policy of life insurance, or of
this Code shall be subject to the provisions of the Corporation health and accident insurance, or of any combination of
Code, and, in those cases specified in Republic Act No. 5455, as life, health and accident insurance. They shall also include
amended, be further subject to the provisions of said law. the person or persons to whom any annuity or pure
"TITLE 17 endowment is presently or prospectively payable by the
"MUTUALIZATION OF STOCK LIFE terms of an individual annuity or pure endowment
INSURANCE COMPANIES contract, except where the policy or contract declares
"Section 268. Any domestic stock life insurance company doing some other person to be the owner or holder thereof, in
business in the Philippines may convert itself into an incorporated which case such other person shall be deemed
mutual life insurer. To that end it may provide and carry out a policyholder. In any case where a policy or contract names
plan for the acquisition of the outstanding shares of its capital two or more persons as joint insured, payees, owners or
stock for the benefit of its policyholders, or any class or classes of holders thereof, the persons so named shall be deemed
its policyholders, by complying with the requirements of this collectively to be one (1) policyholder for the purpose of
chapter. this chapter. In any case where a policy or contract shall
"Section 269. Such plan shall include appropriate proceedings for have been assigned by assignment absolute on its face to
amending the insurer’s articles of incorporation to give effect to an assignee other than the insurer, and such assignment
the acquisition, by said insurer, for the benefit of its policyholders shall have been filed at the principal office of the insurer at
or any class or classes thereof, of the outstanding shares of its least thirty (30) days prior to the date of any election or
capital stock and the conversion of the insurer from a stock meeting referred to in this chapter, then such assignee
 shall be deemed at such election or meeting to be the "Such election shall be conducted under the direction and
policyholder. For the purpose of this chapter the supervision of three (3) impartial and disinterested inspectors
terms policyholder and policyholders include the employer appointed by the insurer and approved by the Commissioner. In
to whom, or a president, secretary or other executive case any person appointed as inspector fails to appear at such
officer of any corporation or association to which a master meeting or fails or refuses to act at such election, the vacancy, if
group policy has been issued, but exclude the holders of occurring in advance of the convening of the meeting or in
certificates or policies issued under or in connection with a advance of the opening of the mail vote, may be filled in the
master group policy. Beneficiaries under unmatured manner prescribed for the appointment of inspectors and, if
contracts shall not as such be deemed to be policyholders; occurring at the meeting or during the canvass of the mail vote,
and may be filled by the person acting as chairman of said meeting or
"(e) Filed with the Commissioner after having been designated for that purpose in such plan. The decision, act or
approved as provided in this section. certificate of a majority of the inspectors shall be effective in all
"Section 270. The Commissioner shall examine the plan respects as the decision, act or certificate of all. The inspectors of
submitted to him under the provisions of subparagraph (c) of election shall determine the number of policyholders, the voting
Section 269. He shall not approve such plan unless in his opinion power of each, the policyholders represented at the meeting or
the rights and interests of the insurer, its policyholders and voting by mail, the existence of a quorum and the authenticity,
shareholders are protected nor unless he is satisfied that the plan validity and effect of proxies. They shall receive votes, hear and
will be fair and equitable in its operation. determine all challenges and questions in any way arising in
"Section 271. The election prescribed by subparagraph (d) of connection with the right to vote, count and tabulate all votes,
Section 269 shall be called by the board of directors or the determine the result, and do such other acts as are proper to
president, and every policyholder of the class or classes for conduct the vote with fairness to all policyholders. The inspectors
whose benefit the stock is to be acquired, whose insurance shall of election shall, before commencing performance of their duties,
have been in force for at least one (1) year prior to such election subscribe to and file with the insurer and with the Commissioner
shall have one vote, regardless of the number of policies or an oath that they, and each of them, will perform their duties
amount of insurance he holds, and regardless of whether such impartially, in good faith, to the best of their ability and as
policies are policies of life insurance or policies of health and expeditiously as is practicable. On the request of the insurer, the
accident insurance or annuity contracts. Notice of such election Commissioner, a policyholder or his proxy, the inspectors shall
shall be given to policyholders entitled to vote by mail from the make a report in writing of any challenge or question or matter
principal office of such insurer at least thirty (30) days prior to determined by them and execute a certificate of any fact found
the date set for such election, in a sealed envelope, postage by them. They shall also certify the result of such vote to the
prepaid, addressed to each such policyholder at his last known insurer and to the Commissioner. Any report or certificate made
address. by them shall be prima facie evidence of facts stated therein. All
"Voting shall be by one of the following methods: necessary expenses incurred in connection with such election
"(a) At a meeting of such policyholders, held pursuant to shall be paid by the insurer. For the purpose of this section, a
such notice, by ballot in person or by proxy. quorum shall consist of five percent (5%) of the policyholders of
"(b) If not by the method described in the preceding such insurer entitled to vote at such election.
subparagraph, then by mail pursuant to a procedure and "Section 272. In carrying out any such plan, the insurer may
on forms to be prescribed by such plan. acquire any shares of its own stock by gift, bequest or purchase.
Any shares so acquired shall, unless as a result of such
acquisition all of the shares of the insurer shall have been "Section 273. Any such plan of mutualization may provide for the
acquired, be acquired in trust for the policyholders of the class or creation of a voting trust under a trust agreement for the holding
classes for whose benefit the plan provides that the stock of the and voting by three (3) or more trustees of any portion or all of
insurer shall be acquired as hereinafter provided. Such shares the shares of the insurer not required upon the adoption of such
shall be assigned and transferred on the books of such insurer plan. The voting trustees shall be named in accordance with such
and approved by the Commissioner. Such trustees shall hold such plan or, if no provision is made therein for the naming of such
stock in trust until all of the outstanding shares of capital stock of trustees, then by the insurer. The voting trust agreement and
such insurer have been acquired, but for not longer than thirty voting trustees shall be subject to the approval of the
(30) years with such extensions of not more than five (5) years Commissioner. Any or all of the trustees under such voting trust
each as may be granted by the Commissioner. Such extensions agreement may be the same person or persons as any or all of
may be granted by the Commissioner if the plan so provides and the trustees referred to in Section 272. Such voting trust
if in his opinion the plan of acquisition of all of such stock can be agreement shall provide that in the event of acquisition by the
completed within a reasonable period. Such trustees shall vote insurer of any of the shares of stock held thereunder in
such stock at all corporate meetings at which stockholders have accordance with the provisions of the plan, such shares so
the right to vote. When all the outstanding shares of capital stock acquired together with the voting rights thereof shall be
of such insurer have been acquired, all said shares shall be transferred by the trustees named under the provisions of this
cancelled, the certificate of amendment of the insurer’s articles of section to the trustees named under the provisions of Section
incorporation giving effect thereto shall be filed in accordance 272. Any voting trust agreement created pursuant to the
with the provisions of the Corporation Code, and the insurer shall provisions of this section may be made irrevocable for not longer
become a nonstock corporation for the profit of its members and than thirty (30) years and thereafter until the termination of the
such trust shall thereupon terminate. Thereafter such corporation trust provided for in Section 272. The trust created pursuant to
shall be conducted for the mutual benefit, ratably, of its the provisions of this section shall terminate in any event upon
policyholders of the class or classes for whose benefit the stock termination of the trust provided for in Section 272. Upon the
was acquired and shall have power to issue non-assessable termination of the trust created pursuant to the provisions of this
policies on a reserve basis subject to all provisions of law section, any shares held in such trust shall revert to the persons
applicable to incorporated life insurers issuing non-assessable entitled thereto by law.
policies on a reserve basis. Policies so issued may be upon the "Section 274. Every payment for the acquisition of any shares of
basis of full or partial participation therein as agreed between the the capital stock of such insurer, the purchase price of which is
insurer and the insured. not fixed by such plan, shall be subject to the prior approval of
"Upon the termination of any such voting trust, either in the Commissioner. Neither such plan, nor any such payment,
accordance with its terms or as hereinabove provided, such plan may be approved by the Commissioner unless he finds that the
of mutualization shall terminate, unless theretofore completed. rights and interests of the insurer, its policyholders, and
Upon such termination, unless the plan of mutualization provides shareholders are protected.
for the disposition of the shares acquired by the insurer under "Section 275. The trustees referred to in Section 272 shall file
such plan or for the disposition of the proceeds thereof, the with such insurer and with the Commissioner a verified
shares held by such trustees shall be disposed of in accordance acceptance of their appointments and verified declarations that
with an order of the court of competent jurisdiction in the judicial they will faithfully discharge their duties as such trustees. All
district in which is located the principal office of such insurer, dividends and other sums received by said trustees on the shares
made upon a verified petition of the Commissioner. held by them, after paying the necessary expenses of executing
their trust, shall be immediately repaid to such insurer for the proceedings, the appraisers shall file with the Secretary of
benefit of all who are, or may become, policyholders of such Finance their report in writing stating the fair value of such
insurance of the class or classes for whose benefit the stock of shares as of the date of the making of such offer and setting forth
such insurer was acquired and entitled to participate in the profits their findings in support of such statement. The appraisers shall
thereof and shall be added to and become part of the assets of furnish each party to the proceedings a copy of their appraisal
such insurer. report, and within ten (10) days after receipt thereof, any such
"Section 276. If, at any time within the period provided in the party may signify his objection, if any, to the report or move for
plan for the acquisition of the outstanding shares of stock of the the approval thereof. Upon the expiration of the period of ten
insurer, ninety percent (90%) thereof has already been acquired (10) days referred to above, the report shall be set for hearing,
and transferred to the trustees under the plan, the insurer by a after which the Secretary of Finance shall issue an order
vote of a majority of the directors may determine to make an adopting, modifying or rejecting the report, in whole or in part, or
offer, with the permission of the Commissioner and subject to he may receive further evidence or may recommit it with
such requirement as he may specify, to acquire by purchase all of instructions. Whenever the Secretary of Finance shall determine
the shares not theretofore acquired under the plan, at a specified in any manner, as aforesaid, the fair value of such shares, he
price which the insurer considers to be their fair value as of the may also determine the terms of payment thereof by the insurer.
date of making such offer. The expenses incidental to the proceedings including charges of
"If the offer to acquire is permitted by the Commissioner, the the appraisers, if any, shall be paid equally by the insurer and the
insurer shall make a written offer by registered mail to each shareholder.
shareholder whose shares have not theretofore been acquired "The findings of the Secretary of Finance on all questions of fact
under the plan or otherwise, offering to acquire all his shares at raised at the hearing of the application for determination of the
such price if accepted in writing within thirty (30) days after the fair value of such shares shall be conclusive upon all parties to
mailing of such offer. Any shareholder accepting such offer within the proceedings. The order of the Secretary of Finance
the time therefor shall, within sixty (60) days after his determining the fair value of the shares and the terms of
acceptance, transfer to the insurer the certificates representing payment thereof shall have the force and effect of a judgment
such shares and, upon doing so, shall be paid by the insurer the which shall be appealable on any question of law. Such order
amount of such offer for his shares. Any share so acquired shall shall become final and executory fifteen (15) days after receipt
be assigned and transferred to the trustees under the plan and thereof by the parties to the proceedings.
held by them as shares acquired pursuant to the plan. "Upon any such order becoming final and from which no appeal is
"Each shareholder who does not accept such offer to acquire his pending, or when the time to appeal therefrom has expired, each
shares within the time stated in such offer for acceptance thereof shareholder party to the proceedings shall transfer his shares to
shall within fifteen (15) days after the expiration of such offer the insurer and surrender to the said insurer the certificates
apply to the Secretary of Finance for a determination of the fair representing such shares and the insurer shall make payment
value of his shares as of the date of making such offer. The therefor as provided in such order. Any shares so acquired by the
Secretary of Finance may himself, after due notice and hearing, insurer shall be assigned and transferred to the trustees and held
determine upon the evidence received the fair value of the shares by them as shares acquired pursuant to the plan.
as of the date of making such offer, or appoint three (3) impartial "Any shareholder who does not apply to the Secretary of Finance
and disinterested persons to appraise the fair value of such in the manner and within the time hereinbefore prescribed shall
shares with such direction as he shall deem proper and necessary be deemed to have accepted the offer referred to above,
to expedite the proceedings. Upon completion of the appraisal effective, however, upon the expiration of the time hereinabove
prescribed for making such application, and such shareholder’s president, or by the board of directors, or by one or more
time for accepting such offer shall, for that purpose only, be members holding not less than one-fifth (1/5) of the voting
deemed to have been extended accordingly. power of such insurer, or by such other officers or persons as the
"Any offer to acquire shares made pursuant to this section shall, bylaws authorize.
except as otherwise provided herein, be irrevocable until all (c) Notice of all meetings of members whether annual or special
proceedings upon such offer have been completed or all shares shall be given in writing to the members entitled to vote by the
have otherwise been earlier acquired by the insurer. secretary, or an assistant secretary, or other person charged with
"Any shareholder who has expressly or impliedly accepted the that duty, or if there be no such officer, or in case of his neglect
plan or the offer to acquire his shares not theretofore acquired or refusal, by any director or member. At the option of the
under the plan, and any shareholder who has rejected such plan insurer such notice may be imprinted on premium notices or
or such offer and has applied, as aforesaid, to the Secretary of receipts or on both.
Finance for a determination of the fair value of his shares "A notice may be given by such insurer to any member either
subsequent to which an agreement has been reached or a final personally, or by mail, or other means of written communication,
order issued fixing such fair value but who fails to surrender his charges prepaid, addressed to such member at his address
certificates for cancellation upon payment of the amount to which appearing on the books of the insurer, or given by him to the
he is entitled, may be compelled to do so by an order of the insurer for the purpose of notice. If a member gives no address,
Secretary of Finance for that purpose and such order may provide notice shall be deemed to have been given him if sent by mail or
that upon failure of such shareholder to surrender such other means of written communication addressed to the place
certificates for cancellation, such order shall stand in lieu of such where the principal office of the insurer is situated, or if published
surrender and cancellation. at least once in some newspaper of general circulation in the
"Section 277. Such insurer, after mutualization, shall be a place in which said office is located.
continuation of the original insurer, and such mutualization shall "Notice of any meeting of members shall be sent to each member
not affect such insurer’s certificate of authority nor existing suits, entitled thereto not less than seven (7) days before such
rights or contracts except as provided in said plan for the meeting, unless the bylaws provide otherwise.
acquisition of the outstanding shares of the capital stock of such "Notice of any meeting of members shall specify the place, the
insurer, approved as provided in this chapter. Such insurer, after day and the hour of the meeting and the general nature of the
mutualization, shall exercise all the rights and powers and shall business to be transacted.
perform all the duties conferred or imposed by law upon insurers "Notice of an annual meeting to be held at the time and place
writing the classes of insurance written by it, and to protect rights specified in subparagraph (a) of this section shall be sufficiently
and contracts existing prior to mutualization, subject to the effect given if published at least once in each of four (4) successive
of said plan. The board of directors of such insurer, prior to weeks in a newspaper of general circulation in the place in which
mutualization, may adopt amendments to its bylaws to take the principal office of such insurer is located, and if so published
effect upon mutualization. no other notice of such meeting shall be required.
"Section 278. (a) An annual meeting of members shall be held at "(d) The presence in person or by proxy of five percent (5%) of
ten o’clock in the morning of the fourth Tuesday of March of each the members entitled to vote at any meeting shall constitute a
year at the principal office of the insurer, unless a different time quorum for the transaction of business, including the amendment
or place is provided in the bylaws. of the articles of incorporation and/or the bylaws unless
"(b) Special meetings of the members, for any purpose or otherwise provided by the bylaws.
purposes whatsoever, may be called at any time by the
"(e) Each such member shall have one (1) vote at any meeting of "(b) Any certificate or other instrument issued to a
members regardless of the number of policies or the amount of policyholder of such mutualized insurer conferring or
insurance that such member holds and regardless of whether evidencing membership in such mutualized insurer or
such policies are policies of life insurance, or of health and conferring or evidencing such member’s right to participate
accident insurance, or both. Any member entitled to vote shall in the profits or share in the assets of such mutualized
have the right to do so either in person or by an agent or agents insurer by virtue of his membership therein, and the
authorized by a written proxy executed by such person or his issuance of such certificate or other instrument;
duly authorized agent and filed with the secretary of such insurer. "(c) The plan for the acquisition of the outstanding shares
"(f) The directors of the insurer in office at the time the insurer is of the capital stock of such insurer authorized by the
mutualized as provided in this chapter shall continue in office provisions of this chapter, the submission of said plan to
until the first annual meeting of members. At the first annual the Commissioner and to the policyholders of such insurer
meeting of members and at each annual meeting thereafter, as provided in this chapter, and the approval and carrying
directors shall be elected by the members for the term or terms out of said plan or any part thereof in accordance with the
authorized by this chapter. provisions of this chapter.
"(g) The articles of incorporation or the bylaws may provide that "Section 280. A domestic mutual life insurance company doing
the directors may be divided into two (2) or more classes whose business in the Philippines may convert itself into an incorporated
terms of office shall expire at different times, but no terms shall stock life insurance company by demutualization. To that end, it
continue longer than six (6) years. In the absence of such may provide and carry out a plan for the conversion by complying
provisions, each director, except members of the board of with the requirements of this title.
directors at the time the insurer is mutualized, shall be elected "The conversion of a domestic mutual life insurance company to
for a term of one (1) year. All directors shall hold office for a term an incorporated stock life insurance company shall be carried out
for which they are elected and until their successors are elected pursuant to a conversion plan duly approved by the
and qualified. A director may, but need not be a member or Commissioner.
policyholder of the insurer of which he is acting as director. "The Commissioner shall promulgate such rules and regulations
Vacancies in the board of directors may be filled by a majority of as he or she may deem necessary to carry out the provisions of
the remaining directors, though less than a quorum, and each this title, after due consultation with representatives of the
director so elected shall hold office until the next annual meeting. insurance industry.
"(h) All insurers mutualized under the provisions of this chapter "All converted insurers under the provisions of this title shall be
shall be subject to all other applicable provisions of this Code. subject to all other applicable provisions of this Code. The
The provisions of the Corporation Code shall apply in a suppletory provisions of the Corporation Code shall apply in a suppletory
manner. manner.
"Section 279. The provisions of Commonwealth Act No. 83, "TITLE 18
otherwise known as the Securities Act, as amended, shall not "WITHDRAWAL OF FOREIGN
apply to any of the following: INSURANCE COMPANIES
"(a) Shares of the capital stock of such insurer acquired as "Section 281. A foreign insurance company doing business in the
provided in Section 272 and assigned and transferred to Philippines, upon payment of the fee hereinafter prescribed and
the trustees as is provided in said section, and the surrender to the Commissioner of its certificate of authority, may
assignment and transfer of said shares as so provided; apply to withdraw from the Philippines. Such application shall be
duly executed in writing, accompanied by evidence of due paying cash surrender values of outstanding policies to, or
authority for such execution, properly acknowledged. reviving lapsed policies of, Philippine policyholders, and such
"Section 282. The Commissioner shall publish the application for other related services.
withdrawal once a week for three (3) consecutive weeks in a "Section 287. No company shall act as a servicing insurance
newspaper of general circulation in the Philippines. The expenses company until after it shall have obtained a special certificate of
of such publication shall be paid by the insurance company filing authority to act as such from the Commissioner upon application
such application. therefor and payment by the company of the fees hereinafter
"Section 283. Every foreign insurance company desiring to prescribed. Such certificate shall expire on the last day of
withdraw from the Philippines shall, prior to such withdrawal, December of the third year and shall be renewed, while the
discharge its liabilities to policyholders and creditors in this company continues to service its policyholders, and to comply
country. In case of its policies insuring residents of the with all the applicable provisions of law and regulations.
Philippines, it shall cause the primary liabilities under such "TITLE 19
policies to be reinsured and assumed by another insurance "PROFESSIONAL REINSURERS
company authorized to transact business in the Philippines. In the "Section 288. Except as otherwise provided in this Code, no
case of such policies as are subject to cancellation by the partnership, association or corporation shall transact any
withdrawing company, it may cancel such policies pursuant to the business in the Philippines as a professional reinsurer until it shall
terms thereof in lieu of such reinsurance and assumption of have obtained a certificate of authority for that purpose from the
liabilities. Commissioner upon application therefor and payment by such
"Section 284. The Commissioner shall cause an examination of entity of the fees hereinafter prescribed. As used in this Code, the
the books and records of the withdrawing company, and if, upon term ‘professional reinsurer’ shall mean any entity that transacts
such examination, the Commissioner finds that the insurer has no solely and exclusively reinsurance business in the Philippines.
outstanding liabilities to policyholders and creditors in the "The Commissioner may refuse to issue a certificate of authority
Philippines, and no policies uncancelled; or its primary liabilities to any such entity when such refusal will best promote public
have been reinsured or assumed by another insurance company interest. No such certificate of authority shall be granted to any
authorized to transact business in the Philippines, as required in such entity unless and until the Commissioner is satisfied by such
the preceding section, it shall cancel the withdrawing company’s examination and such evidence as may be required that such
certificate of authority, if unexpired, and shall permit the insurer entity is qualified by the laws of the Philippines to transact
to withdraw. The cost and expenses of all such examination shall business therein as a professional reinsurer.
be paid as prescribed in Section 440. "Before issuing such certificate of authority, the Commissioner
"Section 285. Upon the failure of such withdrawing insurance must be satisfied that the name of the applicant is not that of any
company or its agents in the Philippines to pay the expenses of other known company transacting insurance or reinsurance
such publication within thirty (30) days after the presentation of business in the Philippines, or a name so similar as to be
the bill therefor, the Commissioner shall collect such fee from the calculated to mislead the public.
deposit furnished in accordance with the provisions of Section "Such certificate of authority shall expire on the last day of
197. December the third year following its issuance unless it is
"Section 286. A foreign life insurance company that withdraws renewed.
from the Philippines shall be considered a servicing insurance "Every such partnership, association, or corporation receiving
company if its business transactions are confined to accepting such certificate of authority shall be subject to the provisions of
periodic premium payments from, or granting policy loans and
this Code and other related laws, and to the jurisdiction and whether through the ownership of voting securities by a
supervision of the Commissioner. contract other than a commercial contract for goods or
"Section 289. Any partnership, association, or corporation non-management services or otherwise. Subject to Section
authorized to transact solely reinsurance business must have a 292, control shall be presumed to exist if any person
capitalization of at least Three billion pesos (P3,000,000,000.00) directly or indirectly owns, controls or holds with the power
paid in cash of which at least fifty percent (50%) is paid-up and to vote forty percent (40%) or more of the voting
the remaining portion thereof is contributed surplus, which in no securities of any other person: Provided, That no person
case shall be less than Four hundred million pesos shall be deemed to control another person solely by reason
(P400,000,000.00) or such capitalization as may be determined of his being an officer or director of such other person.
by the Secretary of Finance, upon the recommendation of the "(c) Holding company means any person who directly or
Commissioner: Provided, That twenty-five percent (25%) of the indirectly controls any authorized insurer.
paid-up capital must be invested in securities satisfactory to the "(d) Controlled insurer means an authorized insurer
Commissioner consisting of bonds or other instruments of debt of controlled directly or indirectly by a holding company.
the Government of the Philippines or its political subdivisions or "(e) Controlled person means any person, other than a
instrumentalities, or of government-owned or -controlled controlled insurer, who is controlled directly or indirectly by
corporations and entities, including the Bangko Sentral ng a holding company.
Pilipinas, and deposited with the Commissioner, and the "(f) Holding company system means a holding company
remaining seventy-five percent (75%) in such other securities as together with its controlled insurers and controlled
may be allowed and permitted by the Commissioner, which persons.
securities shall at all times be maintained free from any lien or "Section 291. Notwithstanding paragraph (b) of Section 290, the
encumbrance: Provided, further, That the aforesaid capital Commissioner may determine after notice and opportunity to be
requirement is without prejudice to other requirements to be heard, that a person exercises directly or indirectly either alone
imposed under any risk-based capital method that may be or pursuant to an agreement with one or more other persons
adopted by the Commissioner: Provided, finally, That the such a controlling influence over the management or policies of
provisions of this chapter applicable to insurance companies shall an authorized insurer as to make it necessary or appropriate in
as far as practicable be likewise applicable to professional the public interest or for the protection of policyholders or
reinsurers. stockholders of the insurer that the person be deemed to control
"TITLE 20 the insurer.
"HOLDING COMPANIES "Section 292. The Commissioner may determine upon application
"Section 290. As used in this title, the following terms shall have that any person, either alone or pursuant to agreement with one
the respective meanings hereinafter set forth unless the context or more other persons, does not or will not upon the taking of
shall otherwise require: some proposed action control another person. The filing of an
"(a) Person means an individual, partnership, firm, application hereunder in good faith by any person shall relieve
association, corporation, trust, any similar entity or any the applicant from any obligation or liability imposed by this title
combination of the foregoing acting in concert. with respect to the subject of the application, except as contained
"(b) Control, including the terms controlling, controlled in Section 302, until the Commissioner has acted upon the
by and under common control with, means the possession application. Within thirty (30) days or such further period as he
directly or indirectly of the power to direct or cause the may prescribe, the Commissioner may prospectively revoke or
direction of the management and policies of a person, modify his determination, after notice and opportunity to be
heard, whenever in his judgment, revocation or modification is affect the operations, management or financial condition of the
consistent with this title. insurer.
"Section 293. Notwithstanding any other provisions of this title, "Section 296. Every holding company and every controlled person
the following shall not be deemed holding companies: within a holding company system shall be subject to examination
"(a) Authorized insurers or reinsurers or their subsidiaries; by order of the Commissioner if he has cause to believe that the
and operations of such persons may materially affect the operations,
"(b) The Government of the Philippines, or any political management or financial condition of any controlled insurer with
subdivision, agency or instrumentality thereof, or any the system and that he is unable to obtain relevant information
corporation which is wholly owned directly or indirectly by from such controlled insurer. The grounds relied upon by the
one or more of the foregoing. Commissioner for such examination shall be stated in his order,
"The Commissioner may conditionally or unconditionally exempt which order shall be subject to judicial review only at the instance
any specified person or class of persons from any of the of the person sought to be examined. Such examination shall be
obligations or liabilities imposed under this title, if and to the confined to matters specified in the order. The cost of such
extent he finds the exemption necessary or appropriate in the examination shall be assessed against the person examined and
public interest or not adverse to the interests of policyholders or no portion thereof shall thereafter be reimbursed to it directly or
stockholders and consistent with the purposes of this title. indirectly by the controlled insurer.
"Section 294. (a) Every person who on the date this Code takes "Section 297. The Commissioner shall keep the contents of each
effect is a controlled insurer and every person who thereafter report made pursuant to this title and any information obtained
becomes a controlled insurer, shall, within sixty (60) days by him in connection therewith confidential and shall not make
thereafter, or within thirty (30) days after becoming a controlled the same public without the prior written consent of the
insurer, whichever is later, register with the Commissioner. Such controlled insurer to which it pertains unless the Commissioner
registration shall be amended within thirty (30) days following after notice and an opportunity to be heard shall determine that
any change in the identity of its holding company. The the interests of policyholders, stockholders or the public will be
Commissioner may grant one or more reasonable extensions of served by the publication thereof. In any action or proceeding by
the time to register. the Commissioner against the person examined or any other
"(b) Every registrant shall furnish the Commissioner with the person within the same holding company system a report of such
following information concerning its holding company: examination published by him shall be admissible as evidence of
"(1) A copy of its charter or articles of incorporation and its the facts stated therein.
bylaws; "Section 298. Transactions within a holding company system to
"(2) The identities of its principal shareholders, officers, which a controlled insurer is a party shall be subject to the
directors and controlled persons; and following:
"(3) Information as to its capital structure and financial "(a) The terms shall be fair and equitable;
condition, and a description of its principal business "(b) Charges or fees for services performed shall be
activities. reasonable;
"Section 295. Every controlled insurer shall file with the "(c) Expenses incurred and payments received shall be
Commissioner such reports or material as he may direct for the allocated to the insurer on an equitable basis in conformity
purpose of disclosing information concerning the operations of with customary insurance accounting practices consistently
persons within the holding company system which may materially applied.
"The books, accounts and records of each party to all such to other sections of this Code which impose notice or approval
transactions shall be maintained as to clearly and accurately requirements greater than those prescribed by this title.
disclose the nature and details of the transactions including such "Section 302. (a) No person, other than an authorized insurer,
accounting information as is necessary to support the shall acquire control of any domestic insurer, whether by
reasonableness of the charges or fees to the respective parties. purchase of its securities or otherwise, except:
"Section 299. The prior written approval of the Commissioner "(1) After twenty (20) days written notice to its insurer or
shall be required for the following transactions between a such shorter period as the Commissioner may permit, of its
controlled insurer and any person in its holding company system: intention to acquire control; and
sales, purchases, exchanges, loans or extensions of credit, or "(2) With the prior written approval of the Commissioner.
investments, involving five percent (5%) or more of the insurer’s "(b) The Commissioner shall disapprove the acquisition of control
admitted assets as of the thirty-first day of December next of a domestic insurer if he determines, after notice and an
preceding. opportunity to be heard, that such action is reasonably necessary
"Section 300. The following transactions between a controlled to protect the interest of the people of this country. The following
insurer and any person in its holding company system may not shall be the only factors to be considered by him in reaching the
be entered into unless the insurer has notified the Commissioner foregoing determination:
in writing of its intention to enter into any such transaction at "(1) The financial condition of the acquiring person and the
least thirty (30) days prior thereto, or such shorter period as he insurer;
may permit, and he has not disapproved it within such period: "(2) The trustworthiness of the acquiring person or any of
"(a) Sales, purchases, exchanges, loans or extensions of its officers or directors;
credit, or investments, involving more than one-half of one "(3) A plan for the proper and effective conduct of the
percent (½%) but less than five percent (5%) of the insurer’s operations;
insurer’s admitted assets as of the thirty-first day of "(4) The source of the funds or assets for the acquisition;
December next preceding; "(5) The fairness of any exchange of stock, assets, cash or
"(b) Reinsurance treaties or agreements; other consideration for the stock or assets to be received;
"(c) Rendering of services on a regular or systematic basis; "(6) Whether the effect of the acquisition may be
or substantially to lessen competition in any line of commerce
"(d) Any material transaction, specified by regulation, in insurance or to tend to create a monopoly therein; and
which the Commissioner determines may adversely affect "(7) Whether the acquisition is likely to be hazardous or
the interest of the insurer’s policyholders or stockholders prejudicial to the insurer’s policyholders or stockholders.
or of the public. "(c) The following conditions affecting any controlled insurer,
"Nothing herein contained shall be deemed to authorize or permit regardless of when such control has been acquired, are violations
any transaction which, in the case of a non-controlled insurer, of this title:
would be otherwise contrary to law. "(1) The controlling person or any of its officers or
"Section 301. The Commissioner, in reviewing transactions directors have demonstrated untrustworthiness; and
pursuant to Sections 299 and 300, shall consider whether the "(2) The effect of retention of control may be substantially
transactions comply with the standard set forth in Section 298 to lessen competition in any line of commerce in insurance
and whether they may adversely affect the interests of in this country or to tend to create a monopoly therein. If,
policyholders. This section shall not apply to transactions subject after notice and an opportunity to be heard, the
Commissioner determines that any of the foregoing
 violations exists, he shall reduce his findings to writing and registration form or report or, if such other filed matter is on file
shall issue an order based thereon and cause the same to with the Commissioner, incorporating such matter by reference.
be served upon the insurer and upon all persons affected "Section 305. No holding company or controlled person shall
thereby directing any person found to be in violation directly or indirectly or through another person do or cause to be
thereof to take appropriate action to cure such violation. done for or in behalf of the controlled insurer any act intended to
Upon the failure of any such person to comply with such affect the insurance operations of the insurer which, if done by
order, Section 306 shall become applicable. the insurer, would violate any provision of this Code.
"(d) The Commissioner may require the submission of such "Section 306. In addition to any other penalty provided by law,
information as he deems necessary to determine whether any the Commissioner may, upon the willful failure of any person
acquisition or retention of control complies with this title and may within a holding company system to comply with this title or any
require, as a condition of approval of such acquisition or retention regulation or order promulgated hereunder:
of control, that all or any portion of such information be disclosed "(a) Proceed under Title 14 or Title 15, Chapter III of this
to the insurer’s stockholders. Code with respect to insurer within the holding company
"(e) Unless subject to registration under Section 294 or unless system; or
acquisition of its control is subject to paragraphs (a) and (b) "(b) Revoke or refuse to renew the authority to do
hereof, every authorized insurer shall notify the Commissioner in business in this country of an insurer within the holding
writing of the identity of any person whom the insurer then company system or refuse to issue such authority to any
knows or has reason to believe controls or has taken any action, other insurer in the system; or
other than preliminary negotiations or discussion, to acquire "(c) Direct that, in addition to any other penalty provided
control of the insurer. by law, such person forfeit to the people of this country a
"Section 303. (a) Notwithstanding the control of an authorized sum not less than Five thousand pesos (P5,000.00) for a
insurer by any person, the officers and directors of the insurer first violation and Twenty-five thousand pesos
shall not thereby be relieved of any obligation or liability to which (P25,000.00) for any subsequent violation. An additional
they would otherwise be subject by law, and the insurer shall be sum not less than Twenty-five thousand pesos
managed so as to assure its separate operating identity (P25,000.00) shall be imposed for each month during
consistent with this title. which any such violation shall continue.
"(b) Nothing herein shall preclude an authorized insurer from "CHAPTER IV
having or sharing a common management or cooperative or joint "SALES AGENCIES AND TECHNICAL SERVICES
use of personnel, property or services with one or more other "TITLE 1
persons under arrangements meeting the standards of Section "INSURANCE AGENTS AND INSURANCE BROKERS
298. "Section 307. No insurance company doing business in the
"Section 304. To the extent that any information or material is Philippines, nor any agent thereof, shall pay any commission or
set forth in forms or other matter on file with any government other compensation to any person for services in obtaining
agency or in a registration form filed with the Commissioner by insurance, unless such person shall have first procured from the
another person within the same holding company system, the Commissioner a license to act as an insurance agent of such
controlled insurer may comply with the registration or reporting company or as an insurance broker as hereinafter provided.
requirements of this title by referring in its registration form or "No person shall act as an insurance agent or as an insurance
report to such other filed matter and attaching a copy thereof broker in the solicitation or procurement of applications for
certified by the insurer as a true and complete copy, to such insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company negotiating or procuring the making of any insurance contract or
doing business in the Philippines, or any agent thereof, without in placing risk or taking out insurance, on behalf of an insured
first procuring a license so to act from the Commissioner, which other than himself, shall be an insurance broker within the intent
must be renewed every three (3) years thereafter. Such license of this Code, and shall thereby become liable to all the duties,
shall be issued by the Commissioner only upon the written requirements, liabilities and penalties to which an insurance
application of the person desiring it, such application if for a broker is subject.
license to act as insurance agent, being approved or endorsed by "Section 311. Every applicant for an insurance broker’s license
the company such person desires to represent, and shall be upon shall file with the application and shall thereafter maintain in
a form prescribed by the Commissioner giving such information force while so licensed, a bond in favor of the people of the
as he may require, and upon payment of the corresponding fee Republic of the Philippines executed by a company authorized to
hereinafter prescribed. The Commissioner shall satisfy himself as become surety upon official recognizances, stipulations, bonds
to the competence and trustworthiness of the applicant and shall and undertakings. The bond shall be in such amount as may be
have the right to refuse to issue or renew and to suspend or fixed by the Commissioner, but in no case less than Five hundred
revoke any such license in his discretion. The license shall expire thousand pesos (P500,000.00), and shall be conditioned upon full
after the thirty-first day of December of the third year following accounting and due payment to the person entitled thereto of
the date of issuance unless it is renewed. funds coming into the broker’s possession through insurance
"Licenses may be renewed in the case of the company transactions under license. The bond shall remain in force until
represented by such agents, and in the case of insurance released by the Commissioner, or until cancelled by the surety.
brokers, upon the application of the said brokers, themselves. Without prejudice to any liability previously incurred thereunder,
"Section 308. The provisions of Sections 307 and 309 shall apply the surety may cancel the bond on thirty (30) days advance
to an employee who shall be engaged to sell insurance products written notice to both the broker and the Commissioner.
by an insurance company. "Upon approval of the application, the applicant must also file two
"Section 309. Any person who for compensation solicits or (2) errors and omissions (professional liability or professional
obtains insurance on behalf of any insurance company or indemnity) policies issued separately by two (2) insurance
transmits for a person other than himself an application for a companies authorized to do business in the Philippines,
policy or contract of insurance to or from such company or offers satisfactory to the Commissioner to indemnify the applicant
or assumes to act in the negotiating of such insurance shall be an against any claim or claims for breach of duty as insurance
insurance agent within the intent of this section and shall thereby broker which may be made against him by reason of any
become liable to all the duties, requirements, liabilities and negligent act, error or omission, whenever or wherever
penalties to which an insurance agent is subject. committed or alleged to have been committed, on the part of the
"An insurance agent is an independent contractor and not an applicant or any person who has been, is now, or may hereafter
employee of the company represented. ‘Insurance agent’ includes during the subsistence of the policies be employed by the said
an agency leader, agency manager, or their equivalent. applicant in his capacity as insurance broker: Provided, That the
"Since the insurance industry is imbued with public interest, the filing of any claim or claims under one of such policies shall
insurance companies upon approval of the Commissioner may preclude the filing of the said claim or claims under the other
exercise wide latitude in supervising the activities of their policy. The said policies shall be in such amounts as may be
insurance agents to ensure the protection of the insuring public. prescribed by the Commissioner, depending upon the size or
"Section 310. Any person who for any compensation, commission amount of the broking business of the applicant, but in no case
or other thing of value acts or aids in any manner in soliciting,
shall the amount of each of such policies be less than Five "(h) Has failed to pass the written examination prescribed,
hundred thousand pesos (P500,000.00). if not otherwise exempt from taking the same.
"Section 312. The Commissioner shall, in order to determine the "In addition to the foregoing causes, no license to act as
competence of every applicant to have the kind of license applied insurance agent or insurance broker shall be renewed if the
for, require such applicant to submit to a written examination and holder thereof has not been actively engaged as such agent or
to pass the same to the satisfaction of the Commissioner. The broker in accordance with such rules as the Commissioner may
Commissioner may delegate or authorize the administration of prescribe.
the examination to an independent organization, subject to such "Section 315. The premium, or any portion thereof, which an
conditions that the Commissioner may provide. insurance agent or insurance broker collects from an insured and
"Section 313. An applicant for the written examination mentioned which is to be paid to an insurance company because of the
in the preceding section must be of good moral character and assumption of liability through the issuance of policies or
must not have been convicted of any crime involving moral contracts of insurance, shall be held by the agent or broker in a
turpitude. He must satisfactorily show to the Commissioner that fiduciary capacity and shall not be misappropriated or converted
he has been trained in the kind of insurance contemplated in the to his own use or illegally withheld by the agent or broker.
license applied for. Such examination may be waived if it is "Any insurance company which delivers to an insurance agent or
shown to the satisfaction of the Commissioner that the applicant insurance broker a policy or contract of insurance shall be
has undergone extensive education and/or training in insurance. deemed to have authorized such agent or broker to receive on its
"Section 314. An application for the issuance or renewal of a behalf payment of any premium which is due on such policy or
license to act as an insurance agent or insurance broker may be contract of insurance at the time of its issuance or delivery or
refused, or such license, if already issued or renewed, shall be which becomes due thereon.
suspended or revoked if the Commissioner finds that the "In order to ensure faithful performance by the insurance agent
applicant for, or holder of, such license: or insurance broker of these fiduciary responsibilities, the
"(a) Has willfully violated any provision of this Code; or Insurance Commissioner shall prescribe the minimum terms and
"(b) Has intentionally made a material misstatement in the conditions on such matters in the standard agency or brokers
application to qualify for such license; or agreement between the agents and/or the broker with the
"(c) Has obtained or attempted to obtain a license by fraud insurance companies.
or misrepresentation; or "Section 316. Any provision of existing laws to the contrary
"(d) Has been guilty of fraudulent or dishonest practices; notwithstanding, no person shall, within the Philippines, sell or
or offer for sale a variable contract or do or perform any act or thing
"(e) Has misappropriated or converted to his own use or in the sale, negotiation, making or consummating of any variable
illegally withheld moneys required to be held in a fiduciary contract other than for himself unless such person shall have a
capacity; or valid and current license from the Commissioner authorizing such
"(f) Has not demonstrated trustworthiness and competence person to act as a variable contract agent. No such license shall
to transact business as an insurance agent or insurance be issued unless and until the Commissioner is satisfied, after
broker in such manner as to safeguard the public; or examination that such person is by training, knowledge, ability
"(g) Has materially misrepresented the terms and and character qualified to act as such agent. Any such license
conditions of policies or contracts of insurance which he may be withdrawn and cancelled by the Commissioner after
seeks to sell or has sold; or notice and hearing, if he shall find that the holder thereof does
not then have the qualifications required for the issuance of such negotiating contracts of reinsurance, or placing risks of effecting
license. reinsurance, for any insurance company authorized to do
"Section 317. It shall be unlawful for any person, company or business in the Philippines.
corporation in the Philippines to act as general agent of any "Section 320. Upon application and payment of the corresponding
insurance company unless he is empowered by a written power of fee hereinafter prescribed, and the filing of two (2) errors and
attorney duly executed by such insurance company, and omissions (professional liability or professional indemnity) policies
registered with the Commissioner to receive notices, summons hereinafter described, a person may, if found qualified, be issued
and legal processes for and in behalf of the insurance company a license to act as reinsurance broker by the Commissioner. No
concerned in connection with actions or other legal proceedings such license shall be valid after December 31 of the third year
against said insurance company. It shall be the duty of said following its issuance unless it is renewed.
general agent to notify the Commissioner of his post office "The errors and omissions (professional liability or professional
address in the Philippines, or any change thereof. Notices, indemnity) policies mentioned above shall indemnify the applicant
summons, or processes of any kind sent by registered mail to the against any claim or claims for breach of duty as reinsurance
last registered address of such general agent of the company broker which may be made against him by reason of any
concerned or to the Commissioner shall be sufficient service and negligent act, error or omission, whenever or wherever
deemed as if served on the insurance company itself. committed or alleged to have been committed, on the part of the
"Section 318. Except as otherwise provided by law or treaty, it applicant or any person who has been, is now, or may hereafter
shall be unlawful for any person, partnership, association or during the subsistence of the policies be employed by the said
corporation in the Philippines, for himself or itself, or for some applicant in his capacity as reinsurance broker: Provided, That
other person, partnership, association or corporation, either to the filing of any claim or claims under one of such policies shall
procure, receive or forward applications of insurance in, or to preclude the filing of the said claim or claims under the other
issue or to deliver or accept policies or contracts of insurance of policy. The said policies shall be issued separately by two (2)
or for, any insurance company or companies not authorized to insurance companies authorized to do business in the Philippines
transact business in the Philippines, covering risks, life or non- and shall be in such amounts as may be prescribed by the
life, situated in the Philippines; and any such person, partnership, Insurance Commissioner, depending upon the size or amount of
association or corporation violating the provisions of this section the broking business of the applicant, but in no case shall the
shall be deemed guilty of a penal offense, and upon conviction amount of each of such policies be less than Five hundred
thereof, shall for each such offense be punished by a fine of Two thousand pesos (P500,000.00).
hundred fifty thousand pesos (P250,000.00), or imprisonment of "Section 321. The Commissioner may recall, suspend or revoke
six (6) months, or both, at the discretion of the court: Provided, the license granted to a reinsurance broker for violation of any
That the provisions of this section shall not apply to reinsurance. existing law, rule and regulation, or any provision of this Code
"TITLE 2 after due notice and hearing.
"REINSURANCE BROKERS "TITLE 3
"Section 319. Except as provided in the next succeeding title, no "RESIDENT AGENTS
person shall act as reinsurance broker in the Philippines unless he "Section 322. No person shall act as resident agent, as
is authorized as such by the Commissioner. hereinafter defined, unless he is registered as such with the
"A reinsurance broker is one who, for compensation, not being a Commissioner.
duly authorized agent, employee or officer of an insurer in which "Section 323. The term resident agent, as used in this title, is one
any reinsurance is effected, acts or aids in any manner in duly appointed by a foreign insurer or broker not authorized to do
business in the Philippines to receive in its behalf notices, properly and correctly recorded. Such registers shall be open to
summons and legal processes in connection with actions or other inspection and examination of duly authorized representatives of
legal proceedings against such foreign insurer or broker. the Commissioner at all times during business hours.
"Section 324. The application for a certificate of registration as "Section 329. No person shall be registered with the
resident agent filed with the Commissioner must be accompanied Commissioner, unless such person shall be at least twenty-one
with a copy of the power of attorney, duly notarized and (21) years of age on the date of such registration; a resident of
authenticated by the Philippine Consul in the place where such the Philippines; of good moral character and with no conviction of
foreign insurer or broker is domiciled, empowering the applicant any crime involving moral turpitude; has had at the time such
to act as resident agent and to receive notices, summons and registration is made at least two (2) years of underwriting work
legal processes for and in behalf of such foreign insurer or broker in the particular line of risk involved; and has passed such
in connection with any action or legal proceeding against such qualifying written examination that the Commissioner shall
foreign insurer or broker. conduct at such time and in such place as he may decide to hold
"Section 325. It shall be the duty of such resident agent to notify for applicants desiring to act as underwriters.
immediately the Commissioner of any change of his office "Such examination shall not be required of any person who has
address. served as non-life company underwriter for a period of at least
"Section 326. A certificate of registration issued to a resident five (5) years, if the Commissioner is satisfied of the applicant’s
agent shall expire on the thirty-first day of December of the third competence as shown by the results of his underwriting work in
year following its issuance unless it is renewed. the non-life insurance company or companies that employed him
"The Commissioner may, after due notice and hearing, recall or in that capacity. The minimum underwriting experience herein
cancel the certificate of registration issued to a resident agent for required may be reduced or waived if it is shown to the
violation of any existing law, rule or regulation, or any provision satisfaction of the Commissioner that the non-life company
of this Code. underwriter has undergone extensive education and/or training in
"TITLE 4 insurance.
"NON-LIFE COMPANY UNDERWRITER "Section 330. Any applicant who misrepresents or omits any
"Section 327. No person shall act, and no company shall employ material fact in his application for registration as a non-life
any person, as non-life company underwriter, whose duty and company underwriter, or commits any dishonest act in taking or
responsibility it shall be to select, evaluate and accept risks for, in connection with the qualifying written examination for
and to determine the terms and conditions, including those underwriters, shall be barred from being registered as such non-
pertaining to amounts of retentions, under which such risks are life company underwriter and, if already registered, his
to be accepted by the company, unless such underwriter is registration shall be cancelled and the certificate of registration
registered as such with the Commissioner. issued in his favor shall be recalled immediately by the
"Section 328. Every non-life insurance company doing business in Commissioner.
the Philippines must maintain at all times a register of risks "In the event that the certificate of authority of a non-life
accepted and a claims register for each line of risks engaged in insurance company to transact business is suspended or revoked
by such non-life insurance company with such entries therein as due to business failure arising largely from the imprudent and
are now or as may hereafter be required by the Commissioner, injudicious acceptance of risks by the underwriter concerned, the
and it shall be the responsibility of the underwriter on the registration of such underwriter shall likewise be cancelled and
particular line of risk involved to see to it that the said registers his certificate of registration shall be recalled by the
are well maintained and kept, and that all entries therein are
Commissioner, and no similar certificate shall thereafter be be granted another license as independent adjuster and vice
issued in his favor. versa.
"Section 331. No certificate of registration issued to an "No license, however, shall be required of any company adjuster
underwriter shall be valid after December 31 of the third year who is a salaried employee of an insurance company for the
following its issuance unless it is renewed. adjustment of claims filed under policies issued by such insurance
"The Commissioner may, after due notice and hearing, also company.
suspend or cancel such certificate for violation of existing laws, "Section 335. Such license or any renewal thereof may be issued
rules and regulations or of any provisions of this Code. by the Commissioner upon written application filed by the person
"TITLE 5 interested on the form or forms prescribed by the Commissioner,
"ADJUSTERS which shall contain such information as he may require, and upon
"Section 332. No person, partnership, association, or corporation payment of the corresponding fee hereinafter prescribed.
shall act as an adjuster, as hereinafter defined, unless authorized "Section 336. The Commissioner shall conduct, at such times,
so to act by virtue of a license issued or renewed by the and in such places as he may decide to hold, written
Commissioner pursuant to the provisions of this Code: Provided, examinations to determine the competence and ability of
That in the case of a natural person, he must be a Filipino citizen applicants desiring to act as adjuster of insurance claims.
and in the case of a partnership, association or corporation, at "Section 337. No adjuster’s license issued hereunder shall be
least sixty percent (60%) of its capital must be owned by citizens valid after December 31 of the third year following the issuance
of the Philippines. of such license unless it is renewed.
"Section 333. An adjuster may be an independent adjuster or a "Section 338. Nothing contained in this title shall apply to any
public adjuster. duly licensed attorney-at-law who acts or aids in adjusting
"The term independent adjuster means any person, partnership, insurance claims as an incident to the practice of his profession
association or corporation which, for money, commission or any and who does not advertise himself as an adjuster.
other thing of value, acts for or on behalf of an insurer in the "Section 339. The Commissioner may suspend or revoke any
adjusting of claims arising under insurance contracts or policies adjuster’s license if, after giving notice and hearing to the
issued by such insurer. adjuster concerned, the Commissioner finds that the said
"The term public adjuster means any person, partnership, adjuster:
association or corporation which, for money, commission or any "(a) Has violated any provision of this Code and of the
other thing of value, acts on behalf of an insured in negotiating circulars, rulings and instructions of the Commissioner or
for, or effecting, the settlement of a claim or claims of the said has violated any law in the course of his dealings as an
insured arising under insurance contracts or policies, or which adjuster; or
advertises for or solicits employment as an adjuster of such "(b) Has made a material misstatement in the application
claims. for such license; or
"Section 334. For every line of insurance claim adjustment, "(c) Has been guilty of fraudulent or dishonest practices; or
adjusters shall be licensed either as independent adjusters or as "(d) Has demonstrated his incompetence or
public adjusters. No adjuster shall act on behalf of an insurer untrustworthiness to act as adjuster; or
unless said adjuster is licensed as an independent adjuster; and "(e) Has made patently unjust valuation of loss; or
no adjuster shall act on behalf of an insured unless said adjuster "(f) Has failed to make a report of the adjustment he
is licensed as a public adjuster: Provided, however, That when a proposed within sixty (60) days from the date of the filing
firm or person has been licensed as a public adjuster, he shall not
 of the claim by the insured with the insurer, unless engage the services of an accredited actuary, in accordance with
prevented so to do by reasons beyond his control; or the rules and regulations that the Commissioner will formulate.
"(g) Has refused to allow an examination into his affairs or "Section 345. Any person may be officially accredited by the
method of doing business as hereinafter provided. Commissioner to act as an actuary in any life insurance company
"Section 340. Every adjuster shall submit to the Commissioner a or in any mutual benefit association authorized to do business in
quarterly report of all losses which are the subject of adjustment the Philippines upon application therefor and the payment of the
effected by him during each month in the form prescribed by the corresponding fee hereinafter prescribed: Provided, That:
Commissioner. The report shall be filed within one (1) month "(a) He is a fellow of good standing of the Actuarial Society
after the end of each quarter. of the Philippines at the time of his appointment and
"Section 341. Every adjuster shall keep his or its books, records, remains in such good standing during the tenure of his
reports, accounts, and vouchers in such manner that the engagement; or
Commissioner or his duly authorized representatives may readily "(b) In the case of one who is not a fellow of the Actuarial
verify the quarterly reports of the said adjuster and ascertain Society of the Philippines, he meets all the requirements of
whether the said adjuster has complied with the provisions of law the said Society for accreditation as a fellow of the Society,
or regulations obligatory upon him or whether the method of and has been given permission by the pertinent
doing business of the said adjuster has been fair, just and government authorities in the Philippines to render services
honest. in the Philippines, in the event that he is not a citizen of
"Section 342. The Commissioner shall, at least once a year and the Philippines.
whenever he considers the public interest so demands, cause an "The registration of the actuary shall be suspended or revoked by
examination to be made into the affairs and method of doing the Commissioner on the following grounds:
business of every adjuster. "(1) Failure to adequately perform required functions and
"Section 343. Any violation of any provision of this title shall be duties under this Code;
punished by a fine of not less than Ten thousand pesos "(2) Failure to disclose conflict of interest;
(P10,000.00), or by imprisonment at the discretion of the "(3) Failure to comply with the Code of Conduct of the
court: Provided, That, in case of a partnership, association or Actuarial Society of the Philippines; or
corporation, the said penalty shall be imposed upon the partner, "(4) Such other grounds that may be determined by the
president, manager, managing director, director or person in Commissioner.
charge of its business or responsible for the violation. "No actuary engaged by a life insurance company shall be at the
"TITLE 6 same time a stockholder or a director of the board, chief
"ACTUARIES executive officer or chief financial officer of the company or hold
"Section 344. No life insurance company shall be licensed to do any position that the Commissioner may determine to have an
business in the Philippines nor shall any life insurance company inherent conflict of interest to the position of an actuary.
doing business in the Philippines be allowed to continue doing "No certificate of registration issued under this title shall be valid
such business unless they shall engage the services of an actuary after December 31 of the third year following its issuance unless
duly accredited with the Commissioner who shall, during his it is renewed.
tenure of office, be directly responsible for the direction and "Section 346. The following documents, which are from time to
supervision of all actuarial work connected with or that may be time submitted to the Commissioner by a life insurance company
involved in the business of the insurance company. The authorized to do business in the Philippines, shall be duly certified
Commissioner may also require non-life insurance companies to by an accredited actuary employed by such company:
 "(a) Policy reserves, claims or loss reserves and net due or suspended. The Commissioner shall issue rules and regulations
and deferred premiums. to govern the accreditation of the external auditor and the
"(b) Statements of bases and net premiums, loading for revocation or suspension of the accreditation.
gross premiums, and on non-forfeiture values and "TITLE 7
reserves, when applying for approval of gross premiums, "RATING ORGANIZATION AND RATE MAKING
reserves and non-forfeiture values. "Section 348. Every organization which now exists or which may
"(c) Policies of insurance under any plan submitted to the hereafter be formed for the purpose of making rates to be used
Commissioner as required by law. by more than one insurance company authorized to do business
"(d) Annual statements and valuation reports submitted to in the Philippines shall be known as a rating organization. The
the Commissioner as required by law. term rate as used in this title shall generally mean the ratio of the
"(e) Financial projection showing the probable income and premium to the amount insured and shall include, as the context
outgo and reserve requirements, enumerating the actuarial may require, either the consideration to be paid or charged for
assumptions and bases of projections. insurance contracts, including surety bonds, or the elements and
"(f) Valuation of annuity funds or retirement plans. factors forming the basis for the determination or application of
"The Commissioner may also require non-life insurance the same, or both.
companies to submit, from time to time, similar documents which "Section 349. Every rating organization which now exists or which
shall be duly certified by an accredited actuary employed by such may hereafter be formed shall be subject to the provisions of this
company. title.
"Any life insurance company authorized to do business in the "Section 350. No rating organization hereafter formed shall
Philippines may employ any person who is not officially accredited commence rate-making operations until it shall have obtained a
under either of the qualifications for any kind of actuarial license from the Commissioner. Before obtaining such license,
work: Provided, That he shall not, at any time, have the authority such rating organization shall file with the Commissioner a notice
to certify to the correctness of the foregoing documents. of its intention to commence rate-making operations, a copy of
"Section 347. No accredited actuary shall serve more than one its constitution, articles of agreement or association, or of
client or employer at the same time. However, one already in the incorporation, and its bylaws, a list of insurance companies that
employ of an insurance company may be allowed by the have agreed to become members or subscribers, and such other
Commissioner to serve a mutual benefit association or any other information concerning such rating organization and its
insurance company, provided the following conditions are first operations as may be required by the Commissioner. If the
complied with: Commissioner finds that the organization has complied with the
"(a) That the request to engage his services by the other provisions of law and that it has a sufficient number of members
employer is in writing; or subscribers and is otherwise qualified to function as a rating
"(b) That his present employer acquiesced to it in writing; organization, the Commissioner may issue a license to such
and rating organization authorizing it to make rates for the kinds of
"(c) That he furnishes the Commissioner with copies of said insurance or subdivisions thereof as may be specified in such
request and acquiescence. license. No license issued to a rating organization shall be valid
"No external auditor shall be engaged by supervised persons or after December 31 of the third year following its issuance unless
entities unless it has been issued an accreditation certificate by it is renewed. No rating organization which now exists and is not
the Commissioner. The accreditation certificate shall be valid until licensed pursuant to this section shall continue rate-making
December 31 of the third year from issuance unless it is revoked operations until it shall have obtained from the Commissioner a
license which he may issue if satisfied that such organization is cause such an examination of each rating organization to be
complying with the provisions of this title. Every rating made at least once in every five (5) years.
organization shall notify the Commissioner promptly of every "Section 354. The Commissioner may suspend or revoke the
change in: license of any rating organization which fails to comply with his
"(a) Its constitution, its articles of agreement or order within the time limited by such order, or any extension
association or its certificate of incorporation, and its thereof which he may grant. The Commissioner may determine
bylaws, rules and regulations governing the conduct of its when a suspension of license shall become effective and it shall
business; and remain in effect for the period fixed by him, unless he modifies or
"(b) Its list of members and subscribers. rescinds such suspension.
"A member means an insurer who participates in or is entitled to "Section 355. Any rating organization may subscribe for or
participate in the management of a rating organization. purchase actuarial, technical or other services, and such services
"A subscriber means an insurer which is furnished at its request shall be available to all members and subscribers without
with rates and rating manuals by a rating organization of which it discrimination.
is not a member. "Section 356. Any rating organization may provide for the
"Section 351. Each rating organization shall furnish its rating examination of policies, daily reports, binders, renewal
service without discrimination to all of its members and certificates, endorsements or other instruments of insurance, or
subscribers, and shall, subject to reasonable rules and the cancellation thereof, and may make reasonable rules
regulations, permit any insurance company doing business in the governing their submission. Such rules shall contain a provision
Philippines, not admitted to membership, to become a subscriber that in the event an insurance company does not within sixty
to its rating services for any kind of insurance or subdivisions (60) days furnish satisfactory evidence to the rating organization
thereof. Notice of proposed changes in such rules and regulations of the correction of any error or omission previously called to its
shall be given to subscribers. The reasonableness of any rule or attention by the rating organization, it shall be the duty of the
regulation in its application to subscribers, or the refusal of any rating organization to notify the Commissioner thereof. All
rating organization to admit an insurance company as a information so submitted for examination shall be confidential.
subscriber, shall, at the request of any subscriber or any such "Section 357. Cooperation among rating organizations or among
insurance company, be reviewed by the Commissioner at a rating organizations and insurers in rate making or in other
hearing held upon at least ten (10) days’ written notice to such matters within the scope of this title is hereby authorized,
rating organization and to such subscriber or insurance company. provided the filings resulting from such cooperation are subject to
The Commissioner may, after such hearing, issue an appropriate all provisions of this title which are applicable to filings generally.
order. The Commissioner may review such cooperative activities and
"Section 352. No rating organization or any other association practices and if he finds that any such activity or practice is unfair
shall refuse to do business with, or prohibit or prevent the or unreasonable or otherwise inconsistent with the provisions of
payment of commissions to, any person licensed as an insurance this title, he may issue a written order specifying in what respects
broker pursuant to the provisions of Title 1 of this chapter. such activity or practice is unfair or unreasonable or otherwise
"Section 353. Rating organizations shall be subject to inconsistent with the provisions of this title, and requiring the
examination by the Commissioner, as often as he may deem such discontinuance of such activity or practice.
examination expedient, pursuant to the provisions of this Code "Section 358. Every rating organization and every insurance
applicable to the examination of insurance companies. He shall company which makes and files its own rates, shall make rates
for all risks rated by such organization or insurance company in it is a member or subscriber, or with such other agency as the
accordance with the following provisions: Commissioner may designate, a statistical report showing a
"(a) Basic classification, manual, minimum, class, or classification schedule of its premiums and losses on all kinds or
schedule rates or rating plans, shall be made and adopted types of insurance business to which Section 358 is applicable,
for all such risks. Any departure from such rates shall be in and such other information as the Commissioner may deem
accordance with schedules, rating plans and rules filed with necessary or expedient for the administration of the provisions of
the Commissioner; this title.
"(b) Rates shall be reasonable and adequate for the class "Section 361. Every non-life rating organization and every non-
of risks to which they apply; life insurance company doing business in the Philippines shall file
"(c) No rate shall discriminate unfairly between risks with the Commissioner, except as to risks which by general
involving essentially the same hazards and expense custom of the business are not written according to manual rates
elements or between risks in the application of like charges or rating plans, every rate manual, schedule of rates,
and credits; classification of risks, rating plan, and every other rating rule and
"(d) Consideration shall be given to the past and every modification of any of the foregoing which it proposes to
prospective loss experience, including the conflagration use. An insurance company may satisfy its obligation to make
and catastrophe hazards, if any, to all factors reasonably such filings for any kind or type of insurance by becoming a
attributable to the class of risks, to a reasonable profit, to member of or subscriber to a rating organization which makes
commissions paid during the most recent annual period such filings for such kind or type of insurance, and by authorizing
and to past and prospective other expenses. In case of fire the Commissioner to accept such filings of the rating organization
insurance rates, consideration shall be given to the on behalf of such insurance company.
experience of the fire insurance business during a period of "Section 362. Every manual or schedule of rates and every rating
not less than five (5) years next preceding the year in plan filed as provided in the preceding section shall state or
which the review is made; clearly indicate the character and extent of the coverage to which
"(e) Risk may be grouped by classifications for the any such rate or any modification thereof will be applied.
establishment of rates and minimum premiums. "Section 363. The Commissioner shall review filings as soon as
Classification rates may be modified to produce rates for reasonably possible after they have been made in order to
individual risks in accordance with rating plans which determine whether they meet the requirements of this title.
establish standards for measuring variations in hazards or When a filing is not accompanied by the information upon which
expense provisions, or both. Such standards may measure the insurance company supports such filing, and the
any difference among risks that can be demonstrated to Commissioner does not have sufficient information to determine
have a probable effect upon losses or expenses. whether such filing meets the requirements of this title, he shall
"Section 359. No rating organization and no insurance company require such insurance company to furnish the information upon
which makes and files its own rates shall make or promulgate any which it supports such filing. The information furnished in support
rate or schedule of rates which is to be applied to any fire risk on of a filing may include:
the condition that the whole amount of insurance on any risk or "(a) The experience or judgment of the insurance company
any specified part thereof shall be placed with the members of or or rating organization making the filing;
subscribers to such rating organization or with such insurer. "(b) Its interpretation of any statistical data it relies upon;
"Section 360. Every insurance company doing business in the "(c) The experience of other insurance companies or rating
Philippines shall annually file with the rating organization of which organization; or
 "(d) Any other relevant factors. "Section 369. Agreements may be made among insurance
"Section 364. If the Commissioner finds that any rate filings companies with respect to the equitable apportionment among
theretofore filed with him do not comply with the provisions of them of insurance which may be afforded applicants who are in
this title or that they provide rates or rules which are inadequate, good faith entitled to but are unable to procure such insurance
excessive, unfairly discriminatory or otherwise unreasonable, he through ordinary methods and such insurance companies may
may order the same withdrawn and at the expiration of sixty (60) agree among themselves on the use of reasonable rates and
days thereafter the same shall be deemed no longer on file. modifications for such insurance, such agreements and rate
Before making any such finding and order, the Commissioner modifications to be subject to the approval of the
shall give notice, not less than ten (10) days in advance, and a Commissioner: Provided, however, That the provisions of this
hearing, to the rating organization, or to the insurer, which filed section shall not be deemed to apply to workmen’s compensation
the same. Such order shall not affect any contract or policy made insurance.
or issued prior to the expiration of such sixty (60)-day period. "Section 370. No insurance company doing business in the
"Section 365. No member or subscriber of a rating organization, Philippines or any agent thereof, no insurance broker, and no
and no insurance company doing business in the Philippines, or employee or other representative of any such insurance
agent, employee or other representative of such company, and company, agent, or broker, shall make, procure or negotiate any
no insurance broker shall charge or demand a rate or receive a contract of insurance or agreement as to policy contract, other
premium which deviates from the rates, rating plans, than is plainly expressed in the policy or other written contract
classifications, schedules, rules and standards, made and last issued or to be issued as evidence thereof, or shall directly or
filed by a rating organization or by or on behalf of the insurance indirectly, by giving or sharing a commission or in any manner
company, or shall issue or make any policy or contract involving whatsoever, pay or allow or offer to pay or allow to the insured or
a violation of such rate filings. to any employee of such insured, either as an inducement to the
"Section 366. Notwithstanding any other provisions of this title, making of such insurance or after such insurance has been
upon the written application of the insurer, stating his reasons effected, any rebate from the premium which is specified in the
therefor, filed with and approved by the Commissioner, a rate in policy, or any special favor or advantage in the dividends or other
excess of that provided by a filing otherwise applicable may be benefits to accrue thereon, or shall give or offer to give any
used on any specific risk. valuable consideration or inducement of any kind, directly or
"Section 367. Whenever the Commissioner shall determine, after indirectly, which is not specified in such policy or contract of
notice and a hearing, that the rates charged or filed on any class insurance; nor shall any such company, or any agent thereof, as
of risks are excessive, discriminatory, inadequate or to any policy or contract of insurance issued, make any
unreasonable, he shall order that such rates be appropriately discrimination against any Filipino in the sense that he is given
adjusted. For the purpose of applying the provisions of this less advantageous rates, dividends or other policy conditions or
section, the Commissioner may from time to time approve privileges than are accorded to other nationals because of his
reasonable classifications of risks for any or all such classes, race.
having due regard to the past and prospective loss experience, "Section 371. No insurance company doing business in the
including conflagration or catastrophe hazards, if any, to all other Philippines, and no officer, director, or agent thereof, and no
relevant factors and to a reasonable profit. insurance broker or any other person, partnership or corporation
"Section 368. Nothing contained in this title shall be construed as shall issue or circulate or cause or permit to be issued or
requiring any insurer to become a member of or subscriber to circulated any literature, illustration, circular or statement of any
any rating organization. sort misrepresenting the terms of any policy issued by any
insurance company of the benefits or advantages promised "TITLE 9
thereby, or any misleading estimate of the dividends or share of "BANCASSURANCE
surplus to be received thereon, or shall use any name or title of "Section 375. The term bancassurance shall mean the
any policy or class of policies misrepresenting the true nature presentation and sale to bank customers by an insurance
thereof; nor shall any such company or agent thereof, or any company of its insurance products within the premises of the
other person, partnership or corporation make any misleading head office of such bank duly licensed by the Bangko Sentral ng
representation or incomplete comparison of policies to any person Pilipinas or any of its branches under such rules and regulations
insured in such company for the purpose of inducing or tending to which the Commissioner and the Bangko Sentral ng Pilipinas may
induce such person to lapse, forfeit, or surrender his said promulgate. To engage in bancassurance arrangement, a bank is
insurance. not required to have equity ownership of the insurance company.
"Section 372. If the Commissioner, after notice and hearing, finds No insurance company shall enter into a bancassurance
that any insurance company, rating organization, agent, broker arrangement unless it possesses all the requirements as may be
or other person has violated any of the provisions of this title, it prescribed by the Commissioner and the Bangko Sentral ng
shall order the payment of a fine not to exceed Twenty-five Pilipinas.
thousand pesos (P25,000.00) for each such offense, and shall "No insurance product under this section, whether life or non-life,
immediately suspend or revoke the license issued to such shall be issued or delivered unless in the form previously
insurance company, rating organization, agent, or broker. The approved by the Commissioner.
issuance, procurement or negotiation of a single policy or "Section 376. Personnel tasked to present and sell insurance
contract of insurance shall be deemed a separate offense. products within the bank premises shall be duly licensed by the
"TITLE 8 Commissioner and shall be subject to the rules and regulations of
"PROVISION COMMON TO AGENTS, this Act.
BROKERS AND ADJUSTERS "Section 377. The Commissioner and the Bangko Sentral ng
"Section 373. A license issued to a partnership, association or Pilipinas shall promulgate rules and regulations to effectively
corporation to act as an insurance agent, general agent, supervise the business of bancassurance.
insurance broker, reinsurance broker, or adjuster shall authorize "CHAPTER V
only the individual named in the license who shall qualify therefor "SECURITY FUND
as though an individual licensee. The Commissioner shall charge, "Section 378. There is hereby created a fund to be known as the
and the licensee shall pay, a full additional license fee as to each Security Fund which shall be used in the payment of allowed
respective individual so named in such license in excess of one. claims against an insurance company authorized to transact
"Licenses and certificates of registration issued under the business in the Philippines remaining unpaid by reason of the
provisions of this chapter may be renewed by the filing of notices insolvency of such company. The said Fund may also be used to
of intention on forms to be prescribed by the Commissioner and reinsure the policy of the insolvent insurer in any solvent insurer
payment of the fees therefor. authorized to do business in the Philippines as provided in Section
"Section 374. The Commissioner, in consultation with the duly 256. The Fund may likewise be used to pay insured claims which
accredited associations representing the insurance industry, shall otherwise would not be compensable under the provisions of the
adopt and promulgate a code of conduct to promote integrity, policy. No payment from the Security Fund shall, however, be
honesty and ethical business practices among insurance agents, made to any person who owns or controls ten percent (10%) or
distributors and other intermediaries. more of the voting shares of stock of the insolvent insurer and no
payment on any one claim shall exceed Twenty thousand pesos proportion to the individual company’s net worth and the
(P20,000.00). aggregate net worth of the life or non-life companies, as the case
"Section 379. Such Fund shall consist of all payments made to may be. However, in no case shall the Fund exceed the
the Fund by insurance companies authorized to do business in aggregate amount of Ten million pesos (P10,000,000.00), or Five
the Philippines. Payments made by life insurance companies shall million pesos (P5,000,000.00) for each Account.
be treated separately from those made by non-life insurance "Should the Fund, Life or Non-Life Account, as the case may be,
companies and the corresponding fund shall be called Life be inadequate for a disbursement as provided for, then the Life
Account and Non-Life Account, respectively, and shall be held and or Non-Life companies, as the case may be, shall contribute to
administered as such by the Commissioner in accordance with the Fund their respective shares in the proportion previously
the provisions of this title. The Life Account shall be utilized mentioned.
exclusively for disbursements that refer to life insurance "Section 381. The Commissioner may adopt, amend, and enforce
companies, while the Non-Life Account shall be utilized all reasonable rules and regulations necessary for the proper
exclusively for disbursements that refer to non-life insurance administration of the Fund and of the Accounts. In the event any
companies. insurer shall fail to make any payment required by this title, or
"Section 380. All insurance companies doing business in the that any payment made is incorrect, he shall have full authority
Philippines shall contribute to the Security Fund, Life or Non-Life to examine all the books and records of the insurer for the
Account, as the case may be, the aggregate amount of Five purpose of ascertaining the facts and shall determine the correct
million pesos (P5,000,000.00) for each Account. The amount to be paid and may proceed in any court of competent
contributions of the life insurance companies and of the non-life jurisdiction to recover for the benefit of the Fund or of the
insurance companies shall be in direct proportion to the ratio Account concerned any sum shown to be due upon such
between a particular life insurance company or a particular non- examination and determination. Any insurer which fails to make
life insurance company’s net worth and the aggregate net worth any payment to the Fund or to the Account concerned when due,
of all life insurance companies or all non-life insurance shall thereby forfeit to said Fund or Account concerned a penalty
companies, as the case may be, as shown in their latest financial of five percent (5%) of the amount determined to be due as
statements approved by the Commissioner. This proportion provided by this title, plus one percent (1%) of such amount for
applied to the Five million pesos (P5,000,000.00) shall be the each month of delay or fraction thereof, after the expiration of
contribution of a particular company to the corresponding the first month of such delay, but the Commissioner, if satisfied
Account of the Security Fund. that the delay was excusable, may remit all or any part of such
"The amount of Five million pesos (P5,000,000.00) in each penalty. The Commissioner, in his discretion, may suspend or
Account shall be in the form of a revolving trust fund. The revoke the certificate of authority to do business in the
respective contributions of the companies shall remain as Philippines of any insurance company which shall fail to comply
admitted assets in their books and any disbursement therefrom with this title or to pay any penalty imposed in accordance
shall be deducted proportionately from the contributions of each therewith.
company which will be allowed as deductions for income tax "Section 382. The Accounts created by this title shall be separate
purposes. Any earnings of the Fund shall be turned over to the and apart from each other and from any other fund. The
contributing companies in proportion to their contributions. Treasurer of the Philippines shall be the custodian of the Life
"In the case of disbursements of funds from the Fund as provided Account and Non-Life Account of the Security Fund; and all
in the foregoing paragraph, the life and non-life companies, as disbursements from any Account shall be made by the Treasurer
the case may be, shall replenish the amount disbursed in direct of the Philippines upon vouchers signed by the Commissioner or
his deputy, as hereinafter provided. The moneys of said Account "CHAPTER VI
may be invested by the Commissioner only in bonds or other "COMPULSORY MOTOR VEHICLE
instruments of debt of the Government of the Philippines or its LIABILITY INSURANCE
political subdivisions or instrumentalities. The Commissioner may "Section 386. For purposes of this chapter:
sell any of the securities in which an Account is invested, if "(a) Motor Vehicle is any vehicle as defined in Section 3,
advisable, for its proper administration or in the best interest of paragraph (a) of Republic Act No. 4136, otherwise known
such Account. as the ‘Land Transportation and Traffic Code’.
"Section 383. Payments from either the Life Insurance Account or "(b) Passenger is any fare paying person being transported
Non-Life Account, as the case may be, shall be made by the and conveyed in and by a motor vehicle for transportation
Treasurer of the Philippines to the Commissioner, upon the of passengers for compensation, including persons
authority of appropriate certificate filed with him by the expressly authorized by law or by the vehicle’s operator or
Commissioner acting in such capacity. his agents to ride without fare.
"Section 384. The Commissioner may, in his discretion, designate "(c) Third party is any person other than a passenger as
or appoint a duly authorized representative or representatives to defined in this section and shall also exclude a member of
appear and defend before any court or other body or official the household, or a member of the family within the
having jurisdiction any or all actions or proceedings against second degree of consanguinity or affinity, of a motor
principals or assureds on insurance policies or contracts issued to vehicle owner or land transportation operator, as likewise
them where the insurer has become insolvent or unable to meet defined herein, or his employee in respect of death, bodily
its insurance obligations. The Commissioner shall have, as of the injury, or damage to property arising out of and in the
date of insolvency of such insurer or as of the date of its inability course of employment.
to meet its insurance obligations, only the rights which such "(d) Owner or motor vehicle owner means the actual legal
insurer would have had if it had not become insolvent or unable owner of a motor vehicle, in whose name such vehicle is
to meet its insurance obligations. For the purpose of this title, the duly registered with the Land Transportation Office;
Commissioner shall have power to employ such counsel, clerks "(e) Land transportation operator means the owner or
and assistants as he may deem necessary. owners of motor vehicles for transportation of passengers
"Section 385. The expense of administering an Account shall be for compensation, including school buses.
paid out of the Account concerned. The Commissioner shall serve "(f) Insurance policy or Policy refers to a contract of
as administrator of the Fund and of the Accounts without insurance against passenger and third-party liability for
additional compensation, but may be allowed and paid from the death or bodily injuries and damage to property arising
Account concerned expenses incurred in the performance of his from motor vehicle accidents.
duties in connection with said Account. The compensation of "Section 387. It shall be unlawful for any land transportation
those persons employed by the Commissioner shall be deemed operator or owner of a motor vehicle to operate the same in the
administration expense payable from the Account concerned. The public highways unless there is in force in relation thereto a
Commissioner shall include in his annual report to the Secretary policy of insurance or guaranty in cash or surety bond issued in
of Finance a statement of the expenses of administration of the accordance with the provisions of this chapter to indemnify the
Fund and of the Life Account and Non-Life Account for the death, bodily injury, and/or damage to property of a third-party
preceding year. or passenger, as the case may be, arising from the use thereof.
"Section 388. The Commissioner shall furnish the Land
Transportation Office with a list of insurance companies
authorized to issue the policy of insurance or surety bond which to third-parties and/or passengers are not settled
required by this chapter. accordingly by the land transportation operator and, in that
"Section 389. The Land Transportation Office shall not allow the event, the said cash deposit shall be replenished or such
registration or renewal of registration of any motor vehicle surety bond shall be restored within sixty (60) days after
without first requiring from the land transportation operator or impairment or expiry, as the case may be, by such land
motor vehicle owner concerned the presentation and filing of a transportation operator, otherwise, he shall secure the
substantiating documentation in a form approved by the insurance policy required by this chapter. The aforesaid
Commissioner evidencing that the policy of insurance or guaranty cash deposit may be invested by the Commissioner in
in cash or surety bond required by this chapter is in effect. readily marketable government bonds, and/or securities.
"Section 390. Every land transportation operator and every "(b) In the case of an owner of a motor vehicle, the
owner of a motor vehicle shall, before applying for the insurance or guaranty in cash or surety bond shall cover
registration or renewal of registration of any motor vehicle, at his liability for death or injury to third-parties in an amount
option, either secure an insurance policy or surety bond issued by not less than that set forth in the following scale in any one
any insurance company authorized by the Commissioner or make accident:
a cash deposit in such amount as herein required as limit of "(1) Private Cars
liability for purposes specified in Section 387. "(i) Bantam: Twenty thousand pesos
"(a) In the case of a land transportation operator, the (P20,000.00);
insurance guaranty in cash or surety bond shall cover "(ii) Light: Twenty thousand pesos
liability for death or bodily injuries of third-parties and/or (P20,000.00); and
passengers arising out of the use of such vehicle in the "(iii) Heavy: Thirty thousand pesos
amount not less than Twelve thousand pesos (P12,000.00) (P30,000.00).
per passenger or third-party and an amount, for each of "(2) Other Private Vehicles
such categories, in any one accident of not less than that "(i) Tricycles, motorcycles and scooters:
set forth in the following scale: Twelve thousand pesos (P12,000.00);
"(1) Motor vehicles with an authorized capacity of "(ii) Vehicles with an unladen weight of 2,600
twenty-six (26) or more passengers: Fifty thousand kilos or less: Twenty thousand pesos
pesos (P50,000.00); (P20,000.00);
"(2) Motor vehicles with an authorized capacity of "(iii) Vehicles with an unladen weight of
from twelve (12) to twenty-five (25) passengers: between 2,601 kilos and 3,930 kilos: Thirty
Forty thousand pesos (P40,000.00); thousand pesos (P30,000.00); and
"(3) Motor vehicles with an authorized capacity of "(iv) Vehicles with an unladen weight over
from six (6) to eleven (11) passengers: Thirty 3,930 kilos: Fifty thousand pesos
thousand pesos (P30,000.00); (P50,000.00).
"(4) Motor vehicles with an authorized capacity of "The Commissioner may, if warranted, set forth
five (5) or less passengers: Five thousand pesos schedule of indemnities for the payment of claims
(P5,000.00) multiplied by the authorized capacity. for death or bodily injuries with the coverages set
"Provided, however, That such cash deposit made to, or forth herein.
surety bond posted with, the Commissioner shall be "Section 391. Any claim for death or injury to any passenger or
resorted to by him in cases of accidents the indemnities for third-party pursuant to the provisions of this chapter shall be paid
without the necessity of proving fault or negligence of any "Section 393. No cancellation of the policy shall be valid unless
kind: Provided, That for purposes of this section: written notice thereof is given to the land transportation operator
"(a) The total indemnity in respect of any person shall not or owner of the vehicle and to the Land Transportation Office at
be less than Fifteen thousand pesos (P15,000.00); least fifteen (15) days prior to the intended effective date
"(b) The following proofs of loss, when submitted under thereof. Upon receipt of such notice, the Land Transportation
oath, shall be sufficient evidence to substantiate the claim: Office, unless it receives evidence of a new valid insurance or
"(1) Police report of accident; and guaranty in cash or surety bond as prescribed in this chapter, or
"(2) Death certificate and evidence sufficient to an endorsement of revival of the cancelled one, shall order the
establish the proper payee; or immediate confiscation of the plates of the motor vehicle covered
"(3) Medical report and evidence of medical or by such cancelled policy. The same may be reissued only upon
hospital disbursement in respect of which refund is presentation of a new insurance policy or that a guaranty in cash
claimed; or surety bond has been made or posted with the Commissioner
"(c) Claim may be made against one motor vehicle only. In and which meets the requirements of this chapter, or an
the case of an occupant of a vehicle, claim, shall lie against endorsement or revival of the cancelled one.
the insurer of the vehicle in which the occupant is riding, "Section 394. If the cancellation of the policy or surety bond is
mounting or dismounting from. In any other case, claim contemplated by the land transportation operator or owner of the
shall lie against the insurer of the directly offending vehicle, he shall, before the policy or surety bond ceases to be
vehicle. In all cases, the right of the party paying the claim effective, secure a similar policy of insurance or surety bond to
to recover against the owner of the vehicle responsible for replace the policy or surety bond to be cancelled or make a cash
the accident shall be maintained. deposit in sufficient amount with the Commissioner, and without
"Section 392. No land transportation operator or owner of motor any gap, file the required documentation with the Land
vehicle shall be unreasonably denied the policy of insurance or Transportation Office, and notify the insurance company
surety bond required by this chapter by the insurance companies concerned of the cancellation of its policy or surety bond.
authorized to issue the same, otherwise, the Land Transportation "Section 395. In case of change of owner ship of a motor vehicle,
Office shall require from said land transportation operator or or change of the engine of an insured vehicle, there shall be no
owner of the vehicle, in lieu of a policy of insurance or surety need of issuing a new policy until the next date of registration or
bond, a certificate that a cash deposit has been made with the renewal of registration of such vehicle, and: Provided, That the
Commissioner in such amount required as limits of indemnity in insurance company shall agree to continue the policy, such
Section 390 to answer for the passenger and/or third-party change of ownership or such change of the engine shall be
liability of such land transportation operator or owner of the indicated in a corresponding endorsement by the insurance
vehicle. company concerned, and a signed duplicate of such endorsement
"No insurance company may issue the policy of insurance or shall, within a reasonable time, be filed with the Land
surety bond required under this chapter unless so authorized Transportation Office.
under existing laws. "Section 396. In the settlement and payment of claims, the
"The authority to engage in the casualty and/or surety lines of indemnity shall not be availed of by any accident victim or
business of an insurance company that refuses to issue or renew, claimant as an instrument of enrichment by reason of an
without just cause, the insurance policy or surety bond therein accident, but as an assistance or restitution insofar as can fairly
required shall be withdrawn immediately. be ascertained.
"Section 397. Any person having any claim upon the policy issued transportation operator shall be a sufficient cause for the
pursuant to this chapter shall, without any unnecessary delay, revocation of the certificate of public convenience issued by the
present to the insurance company concerned a written notice of Land Transportation Franchising and Regulatory Board covering
claim setting forth the nature, extent and duration of the injuries the vehicle concerned.
sustained as certified by a duly licensed physician. Notice of claim "Section 402. Whenever any violation of the provisions of this
must be filed within six (6) months from the date of accident, chapter is committed by a corporation or association, or by a
otherwise, the claim shall be deemed waived. Action or suit for government office or entity, the executive officer or officers of
recovery of damage due to loss or injury must be brought, in said corporation, association or government office or entity who
proper cases, with the Commissioner or the courts within one (1) shall have knowingly permitted, or failed to prevent, said
year from denial of the claim, otherwise, the claimant’s right of violation shall be held liable as principals.
action shall prescribe. "CHAPTER VII
"Section 398. The insurance company concerned shall forthwith "MUTUAL BENEFIT ASSOCIATIONS AND
ascertain the truth and extent of the claim and make payment TRUSTS FOR CHARITABLE USES
within five (5) working days after reaching an agreement. If no "TITLE 1
agreement is reached, the insurance company shall pay only the "MUTUAL BENEFIT ASSOCIATIONS
no-fault indemnity provided in Section 391 without prejudice to "Section 403. Any society, association or corporation, without
the claimant from pursuing his claim further, in which case, he capital stock, formed or organized not for profit but mainly for
shall not be required or compelled by the insurance company to the purpose of paying sick benefits to members, or of furnishing
execute any quit claim or document releasing it from liability financial support to members while out of employment, or of
under the policy of insurance or surety bond issued. paying to relatives of deceased members of fixed or any sum of
"In case of any dispute in the enforcement of the provisions of money, irrespective of whether such aim or purpose is carried out
any policy issued pursuant to this chapter, the adjudication of by means of fixed dues or assessments collected regularly from
such dispute shall be within the original and exclusive jurisdiction the members, or of providing, by the issuance of certificates of
of the Commissioner, subject to the limitations provided in insurance, payment of its members of accident or life insurance
Section 439. benefits out of such fixed and regular dues or assessments, but in
"Section 399. It shall be unlawful for a land transportation no case shall include any society, association, or corporation with
operator or owner of motor vehicle to require his or its drivers or such mutual benefit features and which shall be carried out
other employees to contribute in the payment of premiums. purely from voluntary contributions collected not regularly and/or
"Section 400. No government office or agency having the duty of no fixed amount from whomsoever may contribute, shall be
implementing the provisions of this chapter nor any official or known as a mutual benefit association within the intent of this
employee thereof shall act as agent in procuring the insurance Code.
policy or surety bond provided for herein. The commission of an "Any society, association, or corporation principally organized as
agent procuring the said policy or bond shall in no case exceed a labor union shall be governed by the Labor Code
ten percent (10%) of the amount of the premiums therefor. notwithstanding any mutual benefit feature provisions in its
"Section 401. Any land transportation operator or owner of motor charter as incident to its organization.
vehicle or any other person violating any of the provisions of the "In no case shall a mutual benefit association be organized and
preceding sections shall be punished by a fine of not less than authorized to transact business as a charitable or benevolent
Five hundred pesos (P500.00) and/or imprisonment for not more organization, and whenever it has this feature as incident to its
than six (6) months. The violation of Section 390 by a land existence, the corresponding charter provision shall be revised to
conform with the provision of this section. Mutual benefit account of the particular association constituting the Guaranty
association, already licensed to transact business as such on the Fund.
date this Code becomes effective, having charitable or benevolent "Any accrual to such fund, be it interest earned or dividend
feature shall abandon such incidental purpose upon effectivity of additions on moneys or securities so deposited, may, with the
this Code if they desire to continue operating as such mutual prior approval of the Commissioner, be withdrawn by the
benefit associations. association if there is no pending benefit claim against it,
"Section 404. A mutual benefit association, before it may transact including interest thereon or dividend additions thereto.
as such, must first secure a license from the Commissioner. The "The Commissioner, prior to or after licensing a mutual benefit
application for such license shall be filed with the Commissioner association, may require such association to increase its Guaranty
together with certified true copies of the articles of incorporation Fund from the initial minimum amount required to an amount
or the constitution and bylaws of the association, and all equal to the capital investment required of an existing domestic
amendments thereto, and such other documents or testimonies insurance company under Section 209 of this Code.
as the Commissioner may require. "Section 406. Every mutual benefit association licensed to do
"No license shall be granted to a mutual benefit association until business as such shall issue membership certificates to its
the Commissioner shall have been satisfied by such examination members specifying the benefits to which such members are
as he may make and such evidence as he may require that the entitled.
association is qualified under existing laws to operate and "Such certificates, together with the articles of incorporation of
transact business as such. The Commissioner may refuse to issue the association or its constitution and bylaws, and all existing
a license to any mutual benefit association if, in his judgment, laws as may be pertinent shall constitute the agreement, as of
such refusal will best promote the interest of the members of the date of its issuance, between the association and the
such association and of the people of this country. Any license member. The membership certificate shall be in a form previously
issued shall expire on the last day of December of the third year approved by the Commissioner.
following its issuance and, upon proper application, may be "Section 407. A mutual benefit association may, by reinsurance
renewed if the association is continuing to comply with existing agreement, cede in whole or in part any individual risk or risks
laws, rules and regulations, orders, instructions, rulings and under certificates of insurance issued by it, only to a life
decisions of the Commissioner. Every association receiving any insurance company authorized to transact business or to a
such license shall be subject to the supervision of the professional reinsurer authorized to accept life risks in the
Commissioner: Provided, That no such license shall be granted to Philippines: Provided, That a copy of the draft of such reinsurance
any such association if such association has no actuary. agreement shall be submitted to the Commissioner for his
"Section 405. No mutual benefit association shall be issued a approval. The association may take credit for the reserves on
license to operate as such unless it has constituted and such ceded risks to the extent reinsured.
established a Guaranty Fund by depositing with the "Section 408. The constitution or bylaws of a mutual benefit
Commissioner an initial minimum amount of Five million pesos association must distinctly state the purpose for which dues
(P5,000,000.00) in cash, or in government securities with a total and/or assessments are made and collected and the portion
value equal to such amount, to answer for any valid benefit claim thereof which may be used for expenses.
of any of its members. "Death benefit and other relief funds shall be created and used
"All moneys received by the Commissioner for this purpose must exclusively for paying benefits due the members under their
be deposited by him in interest-bearing deposits with any bank or respective membership certificates. A general fund shall likewise
banks authorized to transact business in the Philippines for the
be created and used for expenses of administration of the "Section 411. A mutual benefit association may invest such
association. portion of its funds as shall not be required to meet pending
"A mutual benefit association shall only maintain free and claims and other obligations in any of the classes of investments
unassigned surplus of not more than twenty percent (20%) of its or types of securities in which life insurance companies doing
total liabilities as verified by the Commissioner. Any amount in business in the Philippines may invest.
excess shall be returned to the members by way of dividends, "It may also grant loans to members on the security of a pledge
enhancing the equity value or providing benefits in kind and other or chattel mortgage of personal properties of the borrowers, or in
relevant services. In addition, subject to the approval of the the absence thereof, on the security of the membership
Commissioner, a mutual benefit association may allocate a certificate of the borrowing members, in which event such loan
portion for capacity building and research and development such shall become a first lien on the proceeds thereof.
as developing new products and services, upgrading and "Section 412. The Commissioner or any of his duly designated
improving operating systems and equipment and continuing representatives, shall have the power of visitation, audit and
member education. examination into the affairs, financial condition, and methods of
"Section 409. Every outstanding membership certificate must doing business of all mutual benefit associations, and he shall
have an equity value equivalent to at least fifty percent (50%) of cause such examination to be made at least once every two (2)
the total contributions collected thereon. The equity value only years or whenever it may be deemed proper and necessary. Free
applies to basic life insurance product and excludes optional access to the books, records and documents of the association
products. shall be accorded to the Commissioner, or to his representatives,
"Section 410. Every mutual benefit association must accumulate in such manner that the Commissioner or his representatives
and maintain, out of the periodic dues collected from its may readily verify or determine the true affairs, financial
members, sufficient reserves for the payment of claims or condition, and method of doing business of such association. In
obligations for which it shall hold funds in securities satisfactory the course of such examination, the Commissioner or his duly
to the Commissioner consisting of bonds of the Government of designated representatives shall have authority to administer
the Philippines, or any of its political subdivisions and oaths and take testimony or other evidence on any matter
instrumentalities, or in such other good securities as may be relating to the affairs of the association.
approved by the Commissioner. "All minutes of the proceedings of the board of directors or
"The reserve liability shall be established in accordance with trustees of the association, and those of the regular or special
actuarial procedures and shall be approved by the Commissioner. meetings of the members, shall be taken, and a copy thereof, in
"The articles of incorporation or the constitution and bylaws of a English or in Pilipino, shall be submitted to the Commissioner’s
mutual benefit association must provide that if its reserve as to representatives or examiners in the course of such examination.
all or any class of certificates becomes impaired, its board of "A copy of the findings of such examination, together with the
directors or trustees may require that there shall be paid by the recommendations of the Commissioner, shall be furnished the
members to the association the amount of the members’ association for its information and compliance, and the same
equitable proportion of such deficiency as ascertained by said shall be taken up immediately in the meetings of the board of
board and that if the payment be not made it shall stand as an directors or trustees and of the members of the association.
indebtedness against the membership certificates of the "Section 413. Every mutual benefit association shall, annually on
defaulting members and draw interest not to exceed five percent or before the thirtieth day of April of each year, render to the
(5%) per annum compounded annually. Commissioner an annual statement in such form and detail as
may be prescribed by the Commissioner, signed and sworn to by
the president, secretary, treasurer, and actuary of the members at a meeting called for that purpose, the financial
association, showing the exact condition of its affairs on the statements as of the date of the resolution, and such other
preceding thirty-first day of December. papers or documents as may be required by the Commissioner.
"Section 414. No money, aid or benefit to be paid, provided or "No dissolution shall proceed until and unless approved by the
tendered by any mutual benefit association, shall be liable to Commissioner and all proceedings in connection therewith shall
attachment, garnishment, or other process, or be seized, taken, be witnessed and attested by his duly designated representative.
appropriated, or applied by any legal or equitable process to pay "No mutual benefit association shall be officially declared as
any debt or liability of a member or beneficiary, or any other dissolved until after the Commissioner so certifies that all
person who may have a right thereunder, either before or after outstanding claims against the association have been duly settled
payment.1âwphi1 and liquidated.
"Section 415. Any member of a mutual benefit association shall "Section 419. The Commissioner shall, after notice and hearing,
have the right at all times to change the beneficiary or have the power either to suspend or revoke the license issued to
beneficiaries or add another beneficiary or other beneficiaries in a mutual benefit association if he finds that the association has:
accordance with the rules and regulations of the association "(a) Failed to comply with any provision of this Code;
unless he has expressly waived this right in the membership "(b) Failed to comply with any other law or regulation
certificate. Every association may, under such rules as it may obligatory upon it;
adopt, limit the scope of beneficiaries and provide that no "(c) Failed to comply with any order, ruling, instruction,
beneficiary shall have or obtain any vested interest in the requirement or recommendation of the Commissioner;
proceeds of any certificate until the certificate has become due "(d) Exceeded its power to the prejudice of its members;
and payable under the terms of the membership certificate. "(e) Conducted its business fraudulently or hazardously;
"Section 416. Any chapter affiliate independently licensed as a "(f) Rendered its affairs and condition to one of insolvency;
mutual benefit association may consolidate or merge with any or
other similar chapter affiliate or with the mother association. "(g) Failed to carry out its aims and purposes for which it
"Section 417. Any mutual benefit association may be converted was organized due to any cause.
into and licensed as a mutual life insurance company by "After receipt of the order from the Commissioner suspending or
complying with the requirements of the pertinent provisions of revoking the license, the association must immediately exert
this Code and submitting the specific plan for such conversion to efforts to remove such cause or causes which brought about the
the Commissioner for his approval. Such plan, as approved, shall order and, upon proper showing, may apply with the
then be submitted to the members either in the regular meeting Commissioner for the lifting of the order and restoration or
or in a special meeting called for the purpose for their adoption. revival of the license so revoked or suspended.
The affirmative vote of at least two-thirds (2/3) of all the "Section 420. For failure to remove such cause or causes which
members shall be necessary in order to consider such plan as brought about the suspension or revocation of the license of a
adopted. mutual benefit association, the Commissioner shall apply under
"No such conversion shall take effect unless and until approved this Code for an order from the proper court to liquidate such
by the Commissioner. association.
"Section 418. No mutual benefit association shall be dissolved "The provisions of Titles 14 and 15, Chapter III, pertaining to the
without first notifying the Commissioner and furnishing him with appointment of a conservator and proceedings upon insolvency of
a certified copy of the resolution authorizing the dissolution, duly an insurance company shall, insofar as practicable, apply to
adopted by the affirmative vote of two-thirds (2/3) of the mutual benefit associations.
"Section 421. To secure the enforcement of any provision under "All provisions of this Code governing mutual benefit associations
this title, the Commissioner may issue such rules, rulings, and such other provisions herein, whenever practicable and
instructions, orders and circulars. necessary, shall be applicable to trusts for charitable uses.
"Section 422. The violation of any provision of this title shall "Section 428. The treasurer of a charitable trust shall file a
subject the person violating or the officer of the association fidelity bond in the amount commensurate with the value of the
responsible therefor to a fine of not less than Ten thousand pesos trust property in his custody, as may be determined by the
(P10,000.00), or imprisonment of not exceeding three (3) years, Commissioner.
or both such fine and imprisonment, at the discretion of the "CHAPTER VIII
court. "TRUST BUSINESS IN GENERAL
"Section 423. All provisions of this Code governing life insurance "Section 429. An insurance company may engage in limited trust
companies and such other provisions whenever practicable and business, consisting of managing funds pertaining only to
necessary, shall be applicable to mutual benefit associations. retirement and pre-need plans, provided it has secured a license
"TITLE 2 to do so from the Bangko Sentral ng Pilipinas. This trust business
"TRUSTS FOR CHARITABLE USES shall be separate and distinct from the general business of the
"Section 424. The term trust for charitable uses, within the intent insurance company and shall be subject to rules and regulations
of this Code, shall include, all the real or personal properties or as may be promulgated by the Bangko Sentral ng Pilipinas in
funds, as well as those acquired with the fruits or income consultation with the Commissioner.
therefrom or in exchange or substitution thereof, given to or "CHAPTER IX
received by any person, corporation, association, foundation, or "REGISTRATION, RESPONSIBILITIES AND
entity, except the National Government, its instrumentalities or OVERSIGHT OF SELF-REGULATORY
political subdivisions, for charitable, benevolent, educational, ORGANIZATIONS
pious, religious, or other uses for the benefit of the public at large "Section 430. The Commissioner shall have the power to register
or a particular portion thereof or for the benefit of an indefinite as a self-regulatory organization, or otherwise grant licenses, and
number of persons. to regulate, supervise, examine, suspend or otherwise
"Section 425. The term trustee shall include any individual, discontinue, as a condition for the operation of organizations
corporation, association, foundation, or entity, except the whose operations are related to or connected with the insurance
National Government, its instrumentalities or political market such as, but not limited to, associations of insurance
subdivisions, in charge of, or acting for, or concerned with the companies, whether life or non-life, reinsurers, actuaries, agents,
administration of, the trust referred to in the section immediately brokers, dealers, mutual benefit associations, trusts, rating
preceding and with the proper application of trust property. agencies, and other persons regulated by the Commissioner,
"Section 426. The term trust property shall include all real or which are engaged in the business regulated by this Code.
personal properties or funds pertaining to the trust as well as "The Commissioner may prescribe rules and regulations which
those acquired with the fruits or income therefrom or in exchange are necessary or appropriate in the public interest or for the
or substitution thereof. protection of investors to govern self-regulatory organizations
"Section 427. All trustees shall, before entering in the and other organizations licensed or regulated pursuant to the
performance of the duties of their trust, obtain a certificate of authority granted hereunder including, but not limited to, the
registration from the Commissioner. The registration shall expire requirement of cooperation within and among all participants in
on December 31 of the third year following its issuance unless it the insurance market to ensure transparency and facilitate
is renewed. exchange of information.
"Section 431. An association cannot be registered as a self- "(8) The prohibition or limitation of access to
regulatory organization unless the Commissioner determines services offered by the association or a member
that: thereof.
"(a) The association is so organized and has the capacity to "Section 432. A self-regulatory organization may examine and
be able to carry out the purposes of this Code and to verify the qualifications of an applicant to become a member in
comply with, and to enforce compliance by its members accordance with procedures established by the rules of the
and persons associated with its members, with the association.
provisions of this Code, the rules and regulations "A self-regulatory organization shall deny membership or
thereunder, and the rules of the association. condition the membership of an entity, if it does not meet the
"(b) The rules of the association, notwithstanding anything standards of financial responsibility, operational capability,
in the Corporation Code to the contrary, provide the training, experience, or competence that are prescribed by the
following: rules of the association; or has engaged, and there is a
"(1) Qualifications and the disqualifications on reasonable likelihood it will again engage, in acts or practices
membership of the association; inconsistent with just and equitable principles of fair trade.
"(2) A fair representation of its members to serve on "A self-regulatory organization may deny membership to an
the board of directors of the association and the entity not engaged in a type of business in which the rules of the
administration of its affairs, and that any natural association require members to be engaged.
person associated with a juridical entity that is a "Section 433. Upon the filing of an application for registration as
member shall also be deemed to be a member for a self-regulatory organization under this title, the Commissioner
this purpose; shall have ninety (90) days within which to either grant
"(3) The president of the association and at least registration or institute a proceeding to determine whether
two (2) independent directors as members of the registration should be denied. In the event proceedings are
board of directors of the association; instituted, the Commissioner shall have two hundred seventy
"(4) Equitable allocation of reasonable dues, fees, (270) days within which to conclude such proceedings at which
and other charges among members and other time he shall, by order, grant or deny such registration.
persons using any facility or system which the "Section 434. Every self-regulatory organization shall comply with
association operates or controls; the provisions of this Code, the rules and regulations thereunder,
"(5) The prevention of fraudulent and manipulative and its own rules, and enforce compliance therewith by its
acts and practices to protect the insuring public and members, persons associated with its members or its
the promotion of just and equitable principles of participants, notwithstanding any provision of the Corporation
business; Code to the contrary.
"(6) Members and persons associated with its "Section 435. Each self-regulatory organization shall submit to
members subject to discipline for violation of any the Commissioner for prior approval any proposed rule or
provision of this Code, the rules or regulations amendment thereto, together with a concise statement of the
thereunder, or the rules of the association; reason and effect of the proposed amendment.
"(7) Fair procedure for the disciplining of members "Within sixty (60) days after submission of a proposed
and persons associated with members; and amendment, the Commissioner shall, by order, approve the
proposed amendment. Otherwise, the same may be made
effective by the self-regulatory organization.
"In the event of an emergency requiring action for the protection "(2) To expel from a self-regulatory organization any
of the insuring public, a self-regulatory organization may put a member thereof or any participant therein who is found to
proposed amendment into effect summarily: Provided, have willfully violated any provision of this Code or
however, That a copy of the same shall be immediately submitted suspend for a period not exceeding twelve (12) months for
to the Commissioner. violation of any provision of this Code or any other law
"The Commissioner is further authorized, if after making administered by the Commission, or the rules and
appropriate request in writing to a self-regulatory organization regulations thereunder, or effected, directly or indirectly,
that such organization effect on its own behalf specified changes any transaction for any person who, such member or
in its rules and practices and, after due notice and hearing, it participant had reason to believe, was violating in respect
determines that such changes have not been effected, and that of such transaction any of such provisions; and
such changes are necessary, by rule or regulation or by order, "(3) To remove from office or censure any officer or
may alter, abrogate or supplement the rules of such self- director of a self-regulatory organization if it finds that
regulatory organization insofar as necessary or appropriate to such officer or director has violated any provision of this
effect such changes in respect of such matters as: Code, any other law administered by the Commissioner,
"(a) Safeguards in respect of the financial responsibility of the rules or regulations thereunder and the rules of such
members and adequate provision against the evasion of self-regulatory organization, or has abused his authority,
financial responsibility through the use of corporate forms or without reasonable justification or excuse has failed to
or special partnerships; enforce compliance with any of such provisions.
"(b) The supervision of market practices; "Section 436. (a) A self-regulatory organization is authorized to
"(c) The manner, method and place of soliciting business; discipline a member of or participant in such self-regulatory
"(d) The fixing of reasonable rates of fees, interest, listing organization, or any person associated with a member, including
and other charges, but not rates of commission; and self- suspending or expelling such member or participant, or
regulatory organization; and suspending or barring such person from being associated with a
"(e) The supervision, auditing and disciplining of members. member, if engaged in acts or practices inconsistent with just and
"In addition to the general powers of the Commissioner over the equitable principles of fairness or in willful violation of any
entities under supervision, the Commissioner, after due notice provision of this Code, any other law administered by the
and hearing, is authorized, in the public interest and to protect Commission, the rules or regulations thereunder, or the rules of
the insuring public: the self-regulatory organization. In any disciplinary proceeding by
"(1) To suspend for a period not exceeding twelve (12) a self-regulatory organization (other than a summary proceeding
months or to revoke the registration of a self-regulatory pursuant to paragraph (b) of this section) the self-regulatory
organization, or to censure or impose limitations on the organization shall bring specific charges, provide notice to the
activities, functions and operations of such self-regulatory person charged, afford the person charged with an opportunity to
organization, if the Commission finds that such a self- defend against the charges, and keep a record of the
regulatory organization has willfully violated or is unable to proceedings. A determination to impose a disciplinary sanction
comply with any provision of this Code or of the rules and shall be supported by a written statement of the offense, a
regulations thereunder, or its own rules, or has failed to summary of the evidence presented and a statement of the
enforce compliance therewith by a member of, person sanction imposed.
associated with a member, or a participant in such self- "(b) A self-regulatory organization may summarily:
regulatory organization;
 "(1) Suspend a member, participant or person associated thereunder, or the rules of the self-regulatory organization as
with a member who has been or is expelled or suspended specified by such organization, whether such provisions were
from any other self-regulatory organization; or applied in a manner consistent with the purposes of this Code,
"(2) Suspend a member who the self-regulatory and whether, with due regard for the public interest and the
organization finds to be in such financial or operating protection of investors, the sanction is excessive or oppressive.
difficulty that the member or participant cannot be "CHAPTER X
permitted to continue to do business as a member with "THE INSURANCE COMMISSIONER
safety to investors, creditors, other members, participants "TITLE 1
or the self-regulatory organization: Provided, That the self- "ADMINISTRATIVE AND ADJUDICATORY POWERS
regulatory organization immediately notifies the "Section 437. The Insurance Commissioner shall be appointed by
Commission of the action taken. Any person aggrieved by the President of the Republic of the Philippines for a term of six
a summary action pursuant to this paragraph shall be (6) years without reappointment and who shall serve as such
promptly afforded an opportunity for a hearing by the until the successor shall have been appointed and qualified. If the
association in accordance with the preceding paragraph. Insurance Commissioner is removed before the expiration of his
The Commissioner, by order, may stay a summary action term of office, the reason for the removal must be published.
on his own or upon application by any person aggrieved "The Insurance Commissioner shall have the duty to see that all
thereby, if the Commissioner determines summarily or laws relating to insurance, insurance companies and other
after due notice and hearing (which hearing may consist insurance matters, mutual benefit associations, and trusts for
solely of the submission of affidavits or presentation of oral charitable uses are faithfully executed and to perform the duties
arguments), that a stay is consistent with the public imposed upon him by this Code, and shall, notwithstanding any
interest and the protection of the insuring public. existing laws to the contrary, have sole and exclusive authority to
"(c) A self-regulatory organization shall promptly notify the regulate the issuance and sale of variable contracts as defined in
Commission of any disciplinary sanction on any member thereof Section 238 hereof and to provide for the licensing of persons
or participant therein, any denial of membership or participation selling such contracts, and to issue such reasonable rules and
in such organization, or the imposition of any disciplinary regulations governing the same.
sanction on a person associated with a member or a bar of such "The Commissioner may issue such rulings, instructions,
person from becoming so associated. Within thirty (30) days after circulars, orders and decisions as may be deemed necessary to
such notice, any aggrieved person may appeal to the secure the enforcement of the provisions of this Code, to ensure
Commissioner from, or the Commissioner on its own motion the efficient regulation of the insurance industry in accordance
within such period, may institute review of, the decision of the with global best practices and to protect the insuring public.
self-regulatory organization, at the conclusion of which, after due Except as otherwise specified, decisions made by the
notice and hearing (which may consist solely of review of the Commissioner shall be appealable to the Secretary of Finance.
record before the self-regulatory organization), the Commissioner "In addition to the foregoing, the Commissioner shall have the
shall affirm, modify or set aside the sanction. In such proceeding, following powers and functions:
the Commissioner shall determine whether the aggrieved person "(a) Formulate policies and recommendations on issues
has engaged or omitted to engage in the acts and practices as concerning the insurance industry, advise Congress and
found by the self-regulatory organization, whether such acts and other government agencies on all aspects of the insurance
practices constitute willful violations of this Code, any other law industry and propose legislation and amendments thereto;
administered by the Commission, the rules or regulations
"(b) Approve, reject, suspend or revoke licenses or by or discovered by an audit shall be immediately
certificates of registration provided for by this Code; addressed;
"(c) Impose sanctions for the violation of laws and the "(m) Inquire into the solvency and liquidity of the
rules, regulations and orders issued pursuant thereto; institutions under its supervision and enforce prompt
"(d) Prepare, approve, amend or repeal rules, regulations corrective action;
and orders, and issue opinions and provide guidance on "(n) To retain and utilize, in addition to its annual budget,
and supervise compliance with such rules, regulations and all fees, charges and other income derived from the
orders; regulation of insurance companies and other supervised
"(e) Enlist the aid and support of, and/or deputize any and persons or entities;
all enforcement agencies of the government in the "(o) To fix and assess fees, charges and penalties as the
implementation of its powers and functions under this Commissioner may find reasonable in the exercise of
Code; regulation; and
"(f) Issue cease and desist orders to prevent fraud or "(p) Exercise such other powers as may be provided by law
injury to the insuring public; as well as those which may be implied from, or which are
"(g) Punish for contempt of the Commissioner, both direct necessary or incidental to the express powers granted the
and indirect, in accordance with the pertinent provisions of Commission to achieve the objectives and purposes of this
and penalties prescribed by the Rules of Court; Code.
"(h) Compel the officers of any registered insurance "The Commission shall indemnify the Commissioner, Deputy
corporation or association to call meetings of stockholders Commissioner, and other officials of the Commission, including
or members thereof under its supervision; personnel performing supervision and examination functions, for
"(i) Issue subpoena duces tecum and summon witnesses to all costs and expenses reasonably incurred by such persons in
appear in any proceeding of the Commission and, in connection with any civil or criminal actions, suits or proceedings
appropriate cases, order the examination, search and to which they may be made a party to by the reason of the
seizure of all documents, papers, files and records, tax performance of their duties and functions, unless they are finally
returns, and books of accounts of any entity or person adjudged in such actions, suits or proceedings to be liable for
under investigation as may be necessary for the proper negligence or misconduct.
disposition of the cases before it, subject to the provisions "In the event of settlement or compromise, indemnification shall
of existing laws; be provided only in connection with such matters covered by the
"(j) Suspend or revoke, after proper notice and hearing, settlement as to which the Commission is advised by external
the license or certificate of authority of any entity or counsel that the persons to be indemnified did not commit any
person under its regulation, upon any of the grounds negligence or misconduct:
provided by law; "The costs and expenses incurred in defending the
"(k) Conduct an examination to determine compliance with aforementioned action, suit or proceeding may be paid by the
laws and regulations if the circumstances so warrant as Commission in advance of the final disposition of such action, suit
determined by appropriate rules and regulations; or proceeding upon receipt of an undertaking by or on behalf of
"(l) Investigate not oftener than once a year from the last the Commissioner, Deputy Commissioner, officer or employee to
date of examination to determine whether an institution is repay the amount advanced should it ultimately be determined
conducting its business on a safe and sound by the Commission that the person is not entitled to be
basis: Provided, That, the deficiencies/irregularities found indemnified.
"Section 438. In addition to the administrative sanctions provided Commissioner. The Commissioner shall acquire jurisdiction over
elsewhere in this Code, the Insurance Commissioner is hereby the person of the impleaded party or parties in accordance with
authorized, at his discretion, to impose upon insurance and pursuant to the provisions of the Rules of Court.
companies, their directors and/or officers and/or agents, for any "The authority to adjudicate granted to the Commissioner under
willful failure or refusal to comply with, or violation of any this section shall be concurrent with that of the civil courts, but
provision of this Code, or any order, instruction, regulation, or the filing of a complaint with the Commissioner shall preclude the
ruling of the Insurance Commissioner, or any commission or civil courts from taking cognizance of a suit involving the same
irregularities, and/or conducting business in an unsafe or subject matter.
unsound manner as may be determined by the Insurance "Any decision, order or ruling rendered by the Commissioner after
Commissioner, the following: a hearing shall have the force and effect of a judgment. Any
"(a) Fines not less than Five thousand pesos (P5,000.00) party may appeal from a final order, ruling or decision of the
and not more than Two hundred thousand pesos Commissioner by filing with the Commissioner within thirty (30)
(P200,000.00); and days from receipt of copy of such order, ruling or decision a
"(b) Suspension, or after due hearing, removal of directors notice of appeal to the Court of Appeals in the manner provided
and/or officers and/or agents. for in the Rules of Court for appeals from the Regional Trial Court
"Section 439. The Commissioner shall have the power to to the Court of Appeals.
adjudicate claims and complaints involving any loss, damage or "For the purpose of any proceeding under this section, the
liability for which an insurer may be answerable under any kind of Commissioner, or any officer thereof designated by him is
policy or contract of insurance, or for which such insurer may be empowered to administer oaths and affirmation, subpoena
liable under a contract of suretyship, or for which a reinsurer may witnesses, compel their attendance, take evidence, and require
be sued under any contract of reinsurance it may have entered the production of any books, papers, documents, or contracts or
into; or for which a mutual benefit association may be held liable other records which are relevant or material to the inquiry.
under the membership certificates it has issued to its members, "A full and complete record shall be kept of all proceedings had
where the amount of any such loss, damage or liability, excluding before the Commissioner, or the officers thereof designated by
interest, cost and attorney’s fees, being claimed or sued upon him, and all testimony shall be taken down and transcribed by a
any kind of insurance, bond, reinsurance contract, or membership stenographer appointed by the Commissioner.
certificate does not exceed in any single claim Five million pesos "In order to promote party autonomy in the resolution of cases,
(P5,000,000.00). the Commissioner shall establish a system for resolving cases
"The power of the Commissioner does not cover the relationship through the use of alternative dispute resolution.
between the insurance company and its agents/brokers but is "TITLE 2
limited to adjudicating claims and complaints filed by the insured "FEES AND OTHER SOURCES OF FUNDS
against the insurance company. "Section 440. (a) For the issuance or renewal of certificates of
"The Commissioner may authorize any officer or group of officers authority, licenses and certificates of registration, pursuant to
under him to conduct investigation, inquiry and/or hearing and pertinent provisions of this Code, the Commissioner shall collect
decide claims and he may issue rules governing the conduct of and receive fees which shall be not less than the following:
adjudication and resolution of cases. The Rules of Court shall "For each certificate of authority issued to an insurance
have suppletory application. company doing business in the Philippines, Two hundred
"The party filing an action pursuant to the provisions of this pesos (P200.00).
section thereby submits his person to the jurisdiction of the
 "For each special certificate of authority issued to a insurance company so filing a fee of not less than Five hundred
servicing insurance company, One hundred pesos pesos (P500.00): Provided, That a fine of not less than One
(P100.00). hundred pesos (P100.00) shall be imposed and collected by the
"For each license issued to a general agent of an insurance Commissioner for each week of delay, or any fraction thereof, in
company, Fifty pesos (P50.00). the filing of the annual statement.
"For each license issued to an insurance agent, Twenty-five "For the filing of annual statement referred to in Section 413, the
pesos (P25.00). Commissioner shall collect and receive from the mutual benefit
"For each license issued to an agent of variable contract association so filing a fee of not less than Ten pesos
policy, Twenty-five pesos (P25.00). (P10.00): Provided, That a fine of not less than Ten pesos
"For each license issued to an insurance broker, One (P10.00) shall be imposed and collected by the Commissioner for
hundred pesos (P100.00). each week of delay, or any fraction thereof, in the filing of the
"For each license issued to a reinsurance broker, One annual statement.
hundred pesos (P100.00). "(c) For the examination prescribed in Section 253, the
"For each license issued to an insurance adjuster, One Commissioner shall collect and receive fees according to the
hundred pesos (P100.00). amount of its total assets, in the case of a domestic company, or
"For each certificate of registration issued to an actuary, of its assets in the Philippines, in the case of a foreign company,
Fifty pesos (P50.00). not less than the amount as follows:
"For each certificate of registration issued to a resident "(1) Two million pesos or more but less than Four million
agent, Fifty pesos (P50.00). pesos, Four hundred pesos (P400.00);
"For each license issued to a rating organization, One "(2) Four million pesos or more but less than Six million
hundred pesos (P100.00). pesos, Eight hundred pesos (P800.00);
"For each certificate of registration issued to a non-life "(3) Six million pesos or more but less than Eight million
company underwriter, Fifty pesos (P50.00). pesos, One thousand two hundred pesos (P1,200.00);
"For each license issued to a mutual benefit association, "(4) Eight million pesos or more but less than Ten million
Ten pesos (P10.00). pesos, One thousand six hundred pesos (P1,600.00);
"For each certificate of registration issued to a trust for "(5) Ten million pesos or more, Two thousand pesos
charitable uses, Ten pesos (P10.00). (P2,000.00);
"All certificates of authority and all other licenses, as well as all "Provided, That if the said examination is made in places outside
certificates of registration, issued to any person, partnership, the Metropolitan Manila area, besides these fees, the
association or corporation under the pertinent provisions of this Commissioner shall require of the company examined the
Code for which no expiration date has been prescribed, shall payment of the actual and necessary travelling and subsistence
expire on the last day of December of the third year from its expenses of the examiner or examiners concerned.
issuance and shall be renewed upon application therefor and "For the examination prescribed in Section 412, the
payment of the corresponding fee, if the licensee or holder of Commissioner shall collect and receive a minimum fee of not less
such license or certificate is continuing to comply with all the than One hundred pesos (P100.00) from the mutual benefit
applicable provisions of existing laws, and of rules, instructions, association examined: Provided, That if such association has total
orders and decisions of the Commissioner. assets of more than One hundred thousand pesos (P100,000.00),
"(b) For the filing of the annual statement referred to in Section an additional fee of not less than Ten pesos (P10.00) for every
229, the Commissioner shall collect and receive from the
Fifty thousand pesos (P50,000.00) in excess thereof shall be "Section 444. Any person, partnership, association or corporation
imposed: heretofore authorized, licensed or registered by the
"(d) For the filing of an application to withdraw from the Commissioner shall be deemed to have been authorized, licensed
Philippines under Title 18, the Commissioner shall collect and or registered under the provisions of this Code and shall be
receive from the foreign company so withdrawing a fee of not governed by the provisions thereof: Provided, however, That
less than One thousand pesos (P1,000.00). where any such person, partnership, association or corporation is
"(e) The Commissioner may fix and collect fees or charges for affected by the new requirements of this Code, said person,
documents, transcripts, or other materials which may be partnership, association or corporation shall, unless otherwise
furnished by him not in excess of reasonable cost. herein provided, be given a period of one (1) year from the
"Section 441. The Commissioner, in accordance with the rules effectivity of this Code within which to comply with the same.
and regulations of the Department of Budget and Management "Section 445. Transitory Provision. – Renewal of existing licenses,
and other relevant regulatory agencies, shall source the salary, certificates of authority or accreditation which will expire on June
allowances and other expenses from the retained amount of the 30, 2013 shall be valid until December 31, 2015. Thereafter,
fees, charges, penalties and other income from the regulation of renewal shall be filed on the last day of December every third
insurance companies and other covered persons and entities, and year following the date of expiry of the license, certificate of
from the Insurance Fund, which is created out of the proceeds of authority or accreditation.
taxes on insurance premiums mentioned in Section 255 of the "Section 446. Repealing Clause. – Except as expressly provided
National Internal Revenue Code, as amended. by this Code, all laws, decrees, orders, rules and regulations or
"MISCELLANEOUS PROVISIONS parts thereof, inconsistent with any provision of this Code shall
"Section 442. Any person, company or corporation subject to the be deemed repealed, amended or modified accordingly.
supervision and control of the Commissioner who violates any "Section 447. Separability Clause. – If any provision of this Code
provision of this Code, for which no penalty is provided, shall be or any part hereof be declared invalid or unconstitutional, the
deemed guilty of a penal offense, and upon conviction be remainder of the law or other provisions not otherwise affected
punished by a fine not exceeding Two hundred thousand pesos shall remain valid and subsisting.
(P200,000.00) or imprisonment of six (6) months, or both, at the "Section 448. This Code shall take effect fifteen (15) days
discretion of the court. following its publication in a newspaper of general circuation."
"If the offense is committed by a company or corporation, the Approved,
officers, directors, or other persons responsible for its operation,
management, or administration, unless it can be proved that they (Sgd.) JINGGOY EJERCITO (Sgd.) FELICIANO
have taken no part in the commission of the offense, shall ESTRADA BELMONTE JR.
likewise be guilty of a penal offense, and upon conviction be Acting Senate President Speaker of the House of
punished by a fine not exceeding Two hundred thousand pesos Representatives
(P200,000.00) or imprisonment of six (6) months, or both, at the This Act which is a consolidation of House Bill No. 4867 and
discretion of the court. Senate Bill No. 3280 was finally passed by the House of
"Section 443. All criminal actions for the violation of any of the Representatives and the Senate on February 6, 2013.
provisions of this Code shall prescribe after three (3) years from
the discovery of such violation: Provided, That such actions shall
(Sgd.) EMMA LIRIO- (Sgd.) MARILYN B.
in any event prescribe after ten (10) years from the commission
REYES BARUA-YAP
of such violation.
 Secretary of the Senate Secretary General
House of Representatives
Approved: AUG 15 2013
(Sgd.) BENIGNO S. AQUINO III
President of the Philippines