Republic of the Philippines

Congress of the Philippines

Metro Manila
Fifteenth Congress
Third Regular Session
Begun and held in Metro Manila, on
Monday, the twenty-third day of
July, two thousand twele!
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Be it enacted by the Senate and
0ouse of Representaties of the
Philippines in Congress asse:bled;
S#CT&)( *! Presidential 1ecree (o!
,*3, as a:ended, is hereby further
a:ended to read as follows;
/#(#R'% PR)<&S&)(S
S#CT&)( *! This 1ecree shall be
=nown as The &nsurance Code!
S#C! 3! 4heneer used in this
Code, the following ter:s shall hae
the respectie :eanings hereinafter
set forth or indicated, unless the
conte>t otherwise re?uires;
@aA ' contract of insurance is an
agree:ent whereby one underta=es
for a consideration to inde:nify
another against loss, da:age or
liability arising fro: an un=nown or
contingent eent!
' contract of suretyship shall be
dee:ed to be an insurance contract,
within the :eaning of this Code,
only if :ade by a surety who or
which, as such, is doing an
insurance business as hereinafter
proided!
@bA The ter: doing an insurance
business or transacting an
insurance business , within the
:eaning of this Code, shall include;
@*A Ma=ing or proposing to :a=e,
as insurer, any insurance contractB
@3A Ma=ing or proposing to :a=e,
as surety, any contract of suretyship
as a ocation and not as :erely
incidental to any other legiti:ate
business or actiity of the suretyB
@CA 1oing any =ind of business,
including a reinsurance business,
specifically recogniDed as
constituting the doing of an
insurance business within the
:eaning of this CodeB
@6A 1oing or proposing to do any
business in substance e?uialent to
any of the foregoing in a :anner
designed to eade the proisions of
this Code!
&n the application of the proisions
of this Code, the fact that no profit is
deried fro: the :a=ing of
insurance contracts, agree:ents or
transactions or that no separate or
direct consideration is receied
therefor, shall not be dee:ed
conclusie to show that the :a=ing
thereof does not constitute the
doing or transacting of an insurance
business!
@cA 's used in this Code, the ter:
Co::issioner :eans the &nsurance
Co::issioner!
C0'PT#R &
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S#C! C! 'ny contingent or un=nown
eent, whether past or future, which
:ay da:nify a person haing an
insurable interest, or create a
liability against hi:, :ay be insured
against, subEect to the proisions of
this chapter!
The consent of the spouse is not
necessary for the alidity of an
insurance policy ta=en out by a
:arried person on his or her life or
that of his or her children!
'll rights, title and interest in the
policy of insurance ta=en out by an
original owner on the life or health
of the person insured shall
auto:atically est in the latter upon
the death of the original owner,
unless otherwise proided for in the
policy!
S#C! 6! The preceding section does
not authoriDe an insurance for or
against the drawing of any lottery, or
for or against any chance or tic=et in
a lottery drawing a priDe!
S#C! 8! 'll =inds of insurance are
subEect to the proisions of this
chapter so far as the proisions can
apply!
T&T%# 3
P'RT&#S T) T0# C)(TR'CT
S#C! ,! #ery corporation,
partnership, or association, duly
authoriDed to transact insurance
business as elsewhere proided in
this Code, :ay be an insurer!
S#C! -! 'nyone e>cept a public
ene:y :ay be insured!
S#C! 7! $nless the policy otherwise
proides, where a :ortgagor of
property effects insurance in his
own na:e proiding that the loss
shall be payable to the :ortgagee,
or assigns a policy of insurance to a
:ortgagee, the insurance is dee:ed
to be upon the interest of the
:ortgagor, who does not cease to
be a party to the original contract,
and any act of his, prior to the loss,
which would otherwise aoid the
insurance, will hae the sa:e effect,
although the property is in the
hands of the :ortgagee, but any act
which, under the contract of
insurance, is to be perfor:ed by the
:ortgagor, :ay be perfor:ed by the
:ortgagee therein na:ed, with the
sa:e effect as if it had been
perfor:ed by the :ortgagor!
S#C! 9! &f an insurer assents to the
transfer of an insurance fro: a
:ortgagor to a :ortgagee, and, at
the ti:e of his assent, i:poses
further obligations on the assignee,
:a=ing a new contract with hi:, the
acts of the :ortgagor cannot affect
the rights of said assignee!
T&T%# C
&(S$R'B%# &(T#R#ST
S#C! *+! #ery person has an
insurable interest in the life and
health;
@aA )f hi:self, of his spouse and of
his childrenB
@bA )f any person on who: he
depends wholly or in part for
education or support, or in who: he
has a pecuniary interestB
@cA )f any person under a legal
obligation to hi: for the pay:ent of
:oney, or respecting property or
serices, of which death or illness
:ight delay or preent the
perfor:anceB and
@dA )f any person upon whose life
any estate or interest ested in hi:
depends!
S#C! **! The insured shall hae the
right to change the beneficiary he
designated in the policy, unless he
has e>pressly waied this right in
said policy! (otwithstanding the
foregoing, in the eent the insured
does not change the beneficiary
during his lifeti:e, the designation
shall be dee:ed irreocable!
S#C! *3! The interest of a
beneficiary in a life insurance policy
shall be forfeited when the
beneficiary is the principal,
acco:plice, or accessory in willfully
bringing about the death of the
insured! &n such a case, the share
forfeited shall pass on to the other
beneficiaries, unless otherwise
dis?ualified! &n the absence of other
beneficiaries, the proceeds shall be
paid in accordance with the policy
contract! &f the policy contract is
silent, the proceeds shall be paid to
the estate of the insured!
S#C! *C! #ery interest in property,
whether real or personal, or any
relation thereto, or liability in respect
thereof, of such nature that a
conte:plated peril :ight directly
da:nify the insured, is an insurable
interest!
S#C! *6! 'n insurable interest in
property :ay consist in;
@aA 'n e>isting interestB
@bA 'n inchoate interest founded on
an e>isting interestB or
@cA 'n e>pectancy, coupled with an
e>isting interest in that out of which
the e>pectancy arises!
S#C! *8! ' carrier or depository of
any =ind has an insurable interest in
a thing held by hi: as such, to the
e>tent of his liability but not to
e>ceed the alue thereof!
S#C! *,! ' :ere contingent or
e>pectant interest in any thing, not
founded on an actual right to the
thing, nor upon any alid contract
for it, is not insurable!
S#C! *-! The :easure of an
insurable interest in property is the
e>tent to which the insured :ight be
da:nified by loss or inEury thereof!
S#C! *7! (o contract or policy of
insurance on property shall be
enforceable e>cept for the benefit of
so:e person haing an insurable
interest in the property insured!
S#C! *9! 'n interest in property
insured :ust e>ist when the
insurance ta=es effect, and when the
loss occurs, but need not e>ist in
the :eanti:eB and interest in the life
or health of a person insured :ust
e>ist when the insurance ta=es
effect, but need not e>ist thereafter
or when the loss occurs!
S#C! 3+! #>cept in the cases
specified in the ne>t four sections,
and in the cases of life, accident,
and health insurance, a change of
interest in any part of a thing
insured unacco:panied by a
corresponding change of interest in
the insurance, suspends the
insurance to an e?uialent e>tent,
until the interest in the thing and the
interest in the insurance are ested
in the sa:e person!
S#C! 3*! ' change of interest in a
thing insured, after the occurrence
of an inEury which results in a loss,
does not affect the right of the
insured to inde:nity for the loss!
S#C! 33! ' change of interest in
one or :ore of seeral distinct
things, separately insured by one
policy, does not aoid the insurance
as to the others!
S#C! 3C! ' change of interest, by
will or succession, on the death of
the insured, does not aoid an
insuranceB and his interest in the
insurance passes to the person
ta=ing his interest in the thing
insured!
S#C! 36! ' transfer of interest by
one of seeral partners, Eoint owners,
or owners in co::on, who are
Eointly insured, to the others, does
not aoid an insurance een though
it has been agreed that the
insurance shall cease upon an
alienation of the thing insured!
S#C! 38! #ery stipulation in a
policy of insurance for the pay:ent
of loss whether the person insured
has or has not any interest in the
property insured, or that the policy
shall be receied as proof of such
interest, and eery policy e>ecuted
by way of ga:ing or wagering, is
oid!
T&T%# 6
C)(C#'%M#(T
S#C! 3,! ' neglect to co::unicate
that which a party =nows and ought
to co::unicate, is called a
conceal:ent!
S#C! 3-! ' conceal:ent whether
intentional or unintentional entitles
the inEured party to rescind a
contract of insurance!
S#C! 37! #ach party to a contract of
insurance :ust co::unicate to the
other, in good faith, all facts within
his =nowledge which are :aterial to
the contract and as to which he
:a=es no warranty, and which the
other has not the :eans of
ascertaining!
S#C! 39! 'n intentional and
fraudulent o:ission, on the part of
one insured, to co::unicate
infor:ation of :atters proing or
tending to proe the falsity of a
warranty, entitles the insurer to
rescind!
S#C! C+! (either party to a contract
of insurance is bound to
co::unicate infor:ation of the
:atters following, e>cept in answer
to the in?uiries of the other;
@aA Those which the other =nowsB
@bA Those which, in the e>ercise of
ordinary care, the other ought to
=now, and of which the for:er has
no reason to suppose hi: ignorantB
@cA Those of which the other
waies co::unicationB
@dA Those which proe or tend to
proe the e>istence of a ris=
e>cluded by a warranty, and which
are not otherwise :aterialB and
@eA Those which relate to a ris=
e>cepted fro: the policy and which
are not otherwise :aterial!
S#C! C*! Materiality is to be
deter:ined not by the eent, but
solely by the probable and
reasonable influence of the facts
upon the party to who: the
co::unication is due, in for:ing
his esti:ate of the disadantages of
the proposed contract, or in :a=ing
his in?uiries!
S#C! C3! #ach party to a contract of
insurance is bound to =now all the
general causes which are open to
his in?uiry, e?ually with that of the
other, and which :ay affect the
political or :aterial perils
conte:platedB and all general
usages of trade!
S#C! CC! The right to infor:ation of
:aterial facts :ay be waied, either
by the ter:s of insurance or by
neglect to :a=e in?uiry as to such
facts, where they are distinctly
i:plied in other facts of which
infor:ation is co::unicated!
S#C! C6! &nfor:ation of the nature
or a:ount of the interest of one
insured need not be co::unicated
unless in answer to an in?uiry,
e>cept as prescribed by Section 8*!
S#C! C8! (either party to a contract
of insurance is bound to
co::unicate, een upon in?uiry,
infor:ation of his own Eudg:ent
upon the :atters in ?uestion!
T&T%# 8
R#PR#S#(T'T&)(
S#C! C,! ' representation :ay be
oral or written!
S#C! C-! ' representation :ay be
:ade at the ti:e of, or before,
issuance of the policy!
S#C! C7! The language of a
representation is to be interpreted by
the sa:e rules as the language of
contracts in general!
S#C! C9! ' representation as to the
future is to be dee:ed a pro:ise,
unless it appears that it was :erely
a state:ent of belief or e>pectation!
S#C! 6+! ' representation cannot
?ualify an e>press proision in a
contract of insurance, but it :ay
?ualify an i:plied warranty!
S#C! 6*! ' representation :ay be
altered or withdrawn before the
insurance is effected, but not
afterwards!
S#C! 63! ' representation :ust be
presu:ed to refer to the date on
which the contract goes into effect!
S#C! 6C! 4hen a person insured
has no personal =nowledge of a
fact, he :ay neertheless repeat
infor:ation which he has upon the
subEect, and which he beliees to be
true, with the e>planation that he
does so on the infor:ation of
othersB or he :ay sub:it the
infor:ation, in its whole e>tent, to
the insurerB and in neither case is
he responsible for its truth, unless it
proceeds fro: an agent of the
insured, whose duty it is to gie the
infor:ation!
S#C! 66! ' representation is to be
dee:ed false when the facts fail to
correspond with its assertions or
stipulations!
S#C! 68! &f a representation is false
in a :aterial point, whether
affir:atie or pro:issory, the inEured
party is entitled to rescind the
contract fro: the ti:e when the
representation beco:es false!
S#C! 6,! The :ateriality of a
representation is deter:ined by the
sa:e rules as the :ateriality of a
conceal:ent!
S#C! 6-! The proisions of this
chapter apply as well to a
:odification of a contract of
insurance as to its original
for:ation!
S#C! 67! 4heneer a right to
rescind a contract of insurance is
gien to the insurer by any proision
of this chapter, such right :ust be
e>ercised preious to the
co::ence:ent of an action on the
contract!
'fter a policy of life insurance :ade
payable on the death of the insured
shall hae been in force during the
lifeti:e of the insured for a period of
two @3A years fro: the date of its
issue or of its last reinstate:ent, the
insurer cannot proe that the policy
is oid ab initio or is rescindable by
reason of the fraudulent
conceal:ent or :isrepresentation of
the insured or his agent!
T&T%# ,
T0# P)%&C2
S#C! 69! The written instru:ent in
which a contract of insurance is set
forth, is called a policy of insurance!
S#C! 8+! The policy shall be in
printed for: which :ay contain
blan= spacesB and any word, phrase,
clause, :ar=, sign, sy:bol,
signature, nu:ber, or word
necessary to co:plete the contract
of insurance shall be written on the
blan= spaces proided therein!
'ny rider, clause, warranty or
endorse:ent purporting to be part of
the contract of insurance and which
is pasted or attached to said policy
is not binding on the insured,
unless the descriptie title or na:e
of the rider, clause, warranty or
endorse:ent is also :entioned and
written on the blan= spaces
proided in the policy!
$nless applied for by the insured or
owner, any rider, clause, warranty or
endorse:ent issued after the
original policy shall be
countersigned by the insured or
owner, which countersignature shall
be ta=en as his agree:ent to the
contents of such rider, clause,
warranty or endorse:ent!
(otwithstanding the foregoing, the
policy :ay be in electronic for:
subEect to the pertinent proisions of
Republic 'ct (o! 7-93, otherwise
=nown as the #lectronic Co::erce
'ct and to such rules and
regulations as :ay be prescribed by
the Co::issioner!
S#C! 8*! ' policy of insurance :ust
specify;
@aA The parties between who: the
contract is :adeB
@bA The a:ount to be insured
e>cept in the cases of open or
running policiesB
@cA The pre:iu:, or if the
insurance is of a character where
the e>act pre:iu: is only
deter:inable upon the ter:ination of
the contract, a state:ent of the
basis and rates upon which the final
pre:iu: is to be deter:inedB
@dA The property or life insuredB
@eA The interest of the insured in
property insured, if he is not the
absolute owner thereofB
@fA The ris=s insured againstB and
@gA The period during which the
insurance is to continue!
S#C! 83! Coer notes :ay be
issued to bind insurance te:porarily
pending the issuance of the policy!
4ithin si>ty @,+A days after issue of
a coer note, a policy shall be
issued in lieu thereof, including
within its ter:s the identical
insurance bound under the coer
note and the pre:iu: therefor!
Coer notes :ay be e>tended or
renewed beyond such si>ty @,+A
days with the written approal of the
Co::issioner if he deter:ines that
such e>tension is not contrary to
and is not for the purpose of
iolating any proisions of this
Code! The Co::issioner :ay
pro:ulgate rules and regulations
goerning such e>tensions for the
purpose of preenting such
iolations and :ay by such rules
and regulations dispense with the
re?uire:ent of written approal by
hi: in the case of e>tension in
co:pliance with such rules and
regulations!
S#C! 8C! The insurance proceeds
shall be applied e>clusiely to the
proper interest of the person in
whose na:e or for whose benefit it
is :ade unless otherwise specified
in the policy!
S#C! 86! 4hen an insurance
contract is e>ecuted with an agent
or trustee as the insured, the fact
that his principal or beneficiary is
the real party in interest :ay be
indicated by describing the insured
as agent or trustee, or by other
general words in the policy!
S#C! 88! To render an insurance
effected by one partner or part-
owner, applicable to the interest of
his co-partners or other part-
owners, it is necessary that the
ter:s of the policy should be such
as are applicable to the Eoint or
co::on interest!
S#C! 8,! 4hen the description of
the insured in a policy is so general
that it :ay co:prehend any person
or any class of persons, only he who
can show that it was intended to
include hi:, can clai: the benefit of
the policy!
S#C! 8-! ' policy :ay be so fra:ed
that it will inure to the benefit of
who:soeer, during the continuance
of the ris=, :ay beco:e the owner
of the interest insured!
S#C! 87! The :ere transfer of a
thing insured does not transfer the
policy, but suspends it until the
sa:e person beco:es the owner of
both the policy and the thing
insured!
S#C! 89! ' policy is either open,
alued or running!
S#C! ,+! 'n open policy is one in
which the alue of the thing insured
is not agreed upon, and the a:ount
of the insurance :erely represents
the insurers :a>i:u: liability! The
alue of such thing insured shall be
ascertained at the ti:e of the loss!
S#C! ,*! ' alued policy is one
which e>presses on its face an
agree:ent that the thing insured
shall be alued at a specific su:!
S#C! ,3! ' running policy is one
which conte:plates successie
insurances, and which proides that
the obEect of the policy :ay be fro:
ti:e to ti:e defined, especially as to
the subEects of insurance, by
additional state:ents or
indorse:ents!
S#C! ,C! ' condition, stipulation, or
agree:ent in any policy of
insurance, li:iting the ti:e for
co::encing an action thereunder to
a period of less than one @*A year
fro: the ti:e when the cause of
action accrues, is oid!
S#C! ,6! (o policy of insurance
other than life shall be cancelled by
the insurer e>cept upon prior notice
thereof to the insured, and no notice
of cancellation shall be effectie
unless it is based on the
occurrence, after the effectie date
of the policy, of one or :ore of the
following;
@aA (onpay:ent of pre:iu:B
@bA Coniction of a cri:e arising
out of acts increasing the haDard
insured againstB
@cA 1iscoery of fraud or :aterial
:isrepresentationB
@dA 1iscoery of willful or rec=less
acts or o:issions increasing the
haDard insured againstB
@eA Physical changes in the
property insured which result in the
property beco:ing uninsurableB
@fA 1iscoery of other insurance
coerage that :a=es the total
insurance in e>cess of the alue of
the property insuredB or
@gA ' deter:ination by the
Co::issioner that the continuation
of the policy would iolate or would
place the insurer in iolation of this
Code!
S#C! ,8! 'll notices of cancellation
:entioned in the preceding section
shall be in writing, :ailed or
deliered to the na:ed insured at
the address shown in the policy, or
to his bro=er proided the bro=er is
authoriDed in writing by the policy
owner to receie the notice of
cancellation on his behalf, and shall
state;
@aA 4hich of the grounds set forth
in Section ,6 is relied uponB and
@bA That, upon written re?uest of
the na:ed insured, the insurer will
furnish the facts on which the
cancellation is based!
S#C! ,,! &n case of insurance other
than life, unless the insurer at least
forty-fie @68A days in adance of
the end of the policy period :ails or
deliers to the na:ed insured at the
address shown in the policy notice
of its intention not to renew the
policy or to condition its renewal
upon reduction of li:its or
eli:ination of coerages, the na:ed
insured shall be entitled to renew
the policy upon pay:ent of the
pre:iu: due on the effectie date of
the renewal! 'ny policy written for a
ter: of less than one @*A year shall
be considered as if written for a
ter: of one @*A year! 'ny policy
written for a ter: longer than one
@*A year or any policy with no fi>ed
e>piration date shall be considered
as if written for successie policy
periods or ter:s of one @*A year!
T&T%# -
4'RR'(T&#S
S#C! ,-! ' warranty is either
e>pressed or i:plied!
S#C! ,7! ' warranty :ay relate to
the past, the present, the future, or
to any or all of these!
S#C! ,9! (o particular for: of
words is necessary to create a
warranty!
S#C! -+! 4ithout preEudice to
Section 8*, eery e>press warranty,
:ade at or before the e>ecution of a
policy, :ust be contained in the
policy itself, or in another instru:ent
signed by the insured and referred
to in the policy as :a=ing a part of
it!
S#C! -*! ' state:ent in a policy, of
a :atter relating to the person or
thing insured, or to the ris=, as fact,
is an e>press warranty thereof!
S#C! -3! ' state:ent in a policy,
which i:parts that it is intended to
do or not to do a thing which
:aterially affects the ris=, is a
warranty that such act or o:ission
shall ta=e place!
S#C! -C! 4hen, before the ti:e
arries for the perfor:ance of a
warranty relating to the future, a loss
insured against happens, or
perfor:ance beco:es unlawful at
the place of the contract, or
i:possible, the o:ission to fulfill the
warranty does not aoid the policy!
S#C! -6! The iolation of a :aterial
warranty, or other :aterial proision
of a policy, on the part of either
party thereto, entitles the other to
rescind!
S#C! -8! ' policy :ay declare that
a iolation of specified proisions
thereof shall aoid it, otherwise the
breach of an i::aterial proision
does not aoid the policy!
S#C! -,! ' breach of warranty
without fraud :erely e>onerates an
insurer fro: the ti:e that it occurs,
or where it is bro=en in its inception,
preents the policy fro: attaching to
the ris=!
T&T%# 7
PR#M&$M
S#C! --! 'n insurer is entitled to
pay:ent of the pre:iu: as soon as
the thing insured is e>posed to the
peril insured against!
(otwithstanding any agree:ent to
the contrary, no policy or contract of
insurance issued by an insurance
co:pany is alid and binding unless
and until the pre:iu: thereof has
been paid, e>cept in the case of a
life or an industrial life policy
wheneer the grace period proision
applies, or wheneer under the
bro=er and agency agree:ents with
duly licensed inter:ediaries, a
ninety @9+A-day credit e>tension is
gien! (o credit e>tension to a duly
licensed inter:ediary should e>ceed
ninety @9+A days fro: date of
issuance of the policy!
S#C! -7! #:ployees of the Republic
of the Philippines, including its
political subdiisions and
instru:entalities, and goern:ent-
owned or -controlled corporations,
:ay pay their insurance pre:iu:s
and loan obligations through salary
deduction; Proided , That the
treasurer, cashier, pay:aster or
official of the entity e:ploying the
goern:ent e:ployee is authoriDed,
notwithstanding the proisions of
any e>isting law, rules and
regulations to the contrary, to :a=e
deductions fro: the salary, wage or
inco:e of the latter pursuant to the
agree:ent between the insurer and
the goern:ent e:ployee and to
re:it such deductions to the insurer
concerned, and collect such
reasonable fee for its serices!
S#C! -9! 'n ac=nowledg:ent in a
policy or contract of insurance or
the receipt of pre:iu: is conclusie
eidence of its pay:ent, so far as to
:a=e the policy binding,
notwithstanding any stipulation
therein that it shall not be binding
until the pre:iu: is actually paid!
S#C! 7+! ' person insured is
entitled to a return of pre:iu:, as
follows;
@aA To the whole pre:iu: if no part
of his interest in the thing insured
be e>posed to any of the perils
insured againstB
@bA 4here the insurance is :ade
for a definite period of ti:e and the
insured surrenders his policy, to
such portion of the pre:iu: as
corresponds with the une>pired
ti:e, at a pro rata rate, unless a
short period rate has been agreed
upon and appears on the face of the
policy, after deducting fro: the
whole pre:iu: any clai: for loss or
da:age under the policy which has
preiously accrued; Proided , That
no holder of a life insurance policy
:ay aail hi:self of the priileges of
this paragraph without sufficient
cause as otherwise proided by law!
S#C! 7*! &f a peril insured against
has e>isted, and the insurer has
been liable for any period, howeer
short, the insured is not entitled to
return of pre:iu:s, so far as that
particular ris= is concerned!
S#C! 73! ' person insured is
entitled to a return of the pre:iu:
when the contract is oidable, and
subse?uently annulled under the
proisions of the Ciil CodeB or on
account of the fraud or
:isrepresentation of the insurer, or
of his agent, or on account of facts,
or the e>istence of which the
insured was ignorant of without his
faultB or when by any default of the
insured other than actual fraud, the
insurer neer incurred any liability
under the policy!
' person insured is not entitled to
a return of pre:iu: if the policy is
annulled, rescinded or if a clai: is
denied by reason of fraud!
S#C! 7C! &n case of an oer
insurance by seeral insurers other
than life, the insured is entitled to a
ratable return of the pre:iu:,
proportioned to the a:ount by
which the aggregate su: insured in
all the policies e>ceeds the
insurable alue of the thing at ris=!
S#C! 76! 'n insurer :ay contract
and accept pay:ents, in addition to
regular pre:iu:, for the purpose of
paying future pre:iu:s on the
policy or to increase the benefits
thereof!
T&T%# 9
%)SS
S#C! 78! 'n agree:ent not to
transfer the clai: of the insured
against the insurer after the loss has
happened, is oid if :ade before the
loss e>cept as otherwise proided in
the case of life insurance!
S#C! 7,! $nless otherwise proided
by the policy, an insurer is liable for
a loss of which a peril insured
against was the pro>i:ate cause,
although a peril not conte:plated by
the contract :ay hae been a
re:ote cause of the lossB but he is
not liable for a loss of which the
peril insured against was only a
re:ote cause!
S#C! 7-! 'n insurer is liable where
the thing insured is rescued fro: a
peril insured against that would
otherwise hae caused a loss, if, in
the course of such rescue, the thing
is e>posed to a peril not insured
against, which per:anently depries
the insured of its possession, in
whole or in partB or where a loss is
caused by efforts to rescue the thing
insured fro: a peril insured against!
S#C! 77! 4here a peril is especially
e>cepted in a contract of insurance,
a loss, which would not hae
occurred but for such peril, is
thereby e>cepted although the
i::ediate cause of the loss was a
peril which was not e>cepted!
S#C! 79! 'n insurer is not liable for
a loss caused by the willful act or
through the conniance of the
insuredB but he is not e>onerated by
the negligence of the insured, or of
the insurance agents or others!
T&T%# *+
()T&C# )F %)SS
S#C! 9+! &n case of loss upon an
insurance against fire, an insurer is
e>onerated, if written notice thereof
be not gien to hi: by an insured,
or so:e person entitled to the
benefit of the insurance, without
unnecessary delay! For other non-
life insurance, the Co::issioner
:ay specify the period for the
sub:ission of the notice of loss!
S#C! 9*! 4hen a preli:inary proof
of loss is re?uired by a policy, the
insured is not bound to gie such
proof as would be necessary in a
court of EusticeB but it is sufficient
for hi: to gie the best eidence
which he has in his power at the
ti:e!
S#C! 93! 'll defects in a notice of
loss, or in preli:inary proof thereof,
which the insured :ight re:edy,
and which the insurer o:its to
specify to hi:, without unnecessary
delay, as grounds of obEection, are
waied!
S#C! 9C! 1elay in the presentation
to an insurer of notice or proof of
loss is waied if caused by any act
of hi:, or if he o:its to ta=e
obEection pro:ptly and specifically
upon that ground!
S#C! 96! &f the policy re?uires, by
way of preli:inary proof of loss, the
certificate or testi:ony of a person
other than the insured, it is
sufficient for the insured to use
reasonable diligence to procure it,
and in case of the refusal of such
person to gie it, then to furnish
reasonable eidence to the insurer
that such refusal was not induced
by any Eust grounds of disbelief in
the facts necessary to be certified or
testified!
T&T%# **
1)$B%# &(S$R'(C#
S#C! 98! ' double insurance e>ists
where the sa:e person is insured
by seeral insurers separately in
respect to the sa:e subEect and
interest!
S#C! 9,! 4here the insured in a
policy other than life is oer insured
by double insurance;
@aA The insured, unless the policy
otherwise proides, :ay clai:
pay:ent fro: the insurers in such
order as he :ay select, up to the
a:ount for which the insurers are
seerally liable under their
respectie contractsB
@bA 4here the policy under which
the insured clai:s is a alued
policy, any su: receied by hi:
under any other policy shall be
deducted fro: the alue of the
policy without regard to the actual
alue of the subEect :atter insuredB
@cA 4here the policy under which
the insured clai:s is an unalued
policy, any su: receied by hi:
under any policy shall be deducted
against the full insurable alue, for
any su: receied by hi: under any
policyB
@dA 4here the insured receies any
su: in e>cess of the aluation in
the case of alued policies, or of the
insurable alue in the case of
unalued policies, he :ust hold
such su: in trust for the insurers,
according to their right of
contribution a:ong the:selesB
@eA #ach insurer is bound, as
between hi:self and the other
insurers, to contribute ratably to the
loss in proportion to the a:ount for
which he is liable under his
contract!
T&T%# *3
R#&(S$R'(C#
S#C! 9-! ' contract of reinsurance
is one by which an insurer procures
a third person to insure hi: against
loss or liability by reason of such
original insurance!
S#C! 97! 4here an insurer obtains
reinsurance, e>cept under auto:atic
reinsurance treaties, he :ust
co::unicate all the representations
of the original insured, and also all
the =nowledge and infor:ation he
possesses, whether preiously or
subse?uently ac?uired, which are
:aterial to the ris=!
S#C! 99! ' reinsurance is presu:ed
to be a contract of inde:nity against
liability, and not :erely against
da:age!
S#C! *++! The original insured has
no interest in a contract of
reinsurance!
C0'PT#R &&
C%'SS#S )F &(S$R'(C#
T&T%# &
M'R&(# &(S$R'(C#
S$B-T&T%# *-'
1#F&(&T&)(
S#C! *+*! Marine &nsurance
includes;
@aA &nsurance against loss of or
da:age to;
@*A <essels, craft, aircraft, ehicles,
goods, freights, cargoes,
:erchandise, effects, disburse:ents,
profits, :oneys, securities, choses
in action, instru:ents of debts,
aluable papers, botto:ry, and
respondentia interests and all other
=inds of property and interests
therein, in respect to, appertaining to
or in connection with any and all
ris=s or perils of naigation, transit
or transportation, or while being
asse:bled, pac=ed, crated, baled,
co:pressed or si:ilarly prepared for
ship:ent or while awaiting
ship:ent, or during any delays,
storage, tranship:ent, or reship:ent
incident thereto, including war ris=s,
:arine builders ris=s, and all
personal property floater ris=sB
@3A Person or property in
connection with or appertaining to a
:arine, inland :arine, transit or
transportation insurance, including
liability for loss of or da:age arising
out of or in connection with the
construction, repair, operation,
:aintenance or use of the subEect
:atter of such insurance @but not
including life insurance or surety
bonds nor insurance against loss by
reason of bodily inEury to any person
arising out of ownership,
:aintenance, or use of
auto:obilesAB
@CA Precious stones, Eewels,
Eewelry, precious :etals, whether in
course of transportation or
otherwiseB and
@6A Bridges, tunnels and other
instru:entalities of transportation
and co::unication @e>cluding
buildings, their furniture and
furnishings, fi>ed contents and
supplies held in storageAB piers,
whares, doc=s and slips, and other
aids to naigation and
transportation, including dry doc=s
and :arine railways, da:s and
appurtenant facilities for the control
of waterways!
@bA Marine protection and
inde:nity insurance , :eaning
insurance against, or against legal
liability of the insured for loss,
da:age, or e>pense incident to
ownership, operation, chartering,
:aintenance, use, repair, or
construction of any essel, craft or
instru:entality in use of ocean or
inland waterways, including liability
of the insured for personal inEury,
illness or death or for loss of or
da:age to the property of another
person!
S$B-T&T%# *-B
&(S$R'B%# &(T#R#ST
S#C! *+3! The owner of a ship has
in all cases an insurable interest in
it, een when it has been chartered
by one who coenants to pay hi: its
alue in case of loss; Proided , That
in this case the insurer shall be
liable for only that part of the loss
which the insured cannot recoer
fro: the charterer!
S#C! *+C! The insurable interest of
the owner of the ship hypothecated
by botto:ry is only the e>cess of its
alue oer the a:ount secured by
botto:ry!
S#C! *+6! Freightage, in the sense
of a policy of :arine insurance,
signifies all the benefits deried by
the owner, either fro: the chartering
of the ship or its e:ploy:ent for the
carriage of his own goods or those
of others!
S#C! *+8! The owner of a ship has
an insurable interest in e>pected
freightage which according to the
ordinary and probable course of
things he would hae earned but for
the interention of a peril insured
against or other peril incident to the
oyage!
S#C! *+,! The interest :entioned in
the last section e>ists, in case of a
charter party, when the ship has
bro=en ground on the chartered
oyage! &f a price is to be paid for
the carriage of goods it e>ists when
they are actually on board, or there
is so:e contract for putting the: on
board, and both ship and goods are
ready for the specified oyage!
S#C! *+-! )ne who has an interest
in the thing fro: which profits are
e>pected to proceed has an
insurable interest in the profits!
S#C! *+7! The charterer of a ship
has an insurable interest in it, to the
e>tent that he is liable to be
da:nified by its loss!
S$B-T&T%# *-C
C)(C#'%M#(T
S#C! *+9! &n :arine insurance,
each party is bound to
co::unicate, in addition to what is
re?uired by Section 37, all the
infor:ation which he possesses,
:aterial to the ris=, e>cept such as
is :entioned in Section C+, and to
state the e>act and whole truth in
relation to all :atters that he
represents, or upon in?uiry
discloses or assu:es to disclose!
S#C! **+! &n :arine insurance,
infor:ation of the belief or
e>pectation of a third person, in
reference to a :aterial fact, is
:aterial!
S#C! ***! ' person insured by a
contract of :arine insurance is
presu:ed to hae =nowledge, at the
ti:e of insuring, of a prior loss, if
the infor:ation :ight possibly hae
reached hi: in the usual :ode of
trans:ission and at the usual rate of
co::unication!
S#C! **3! ' conceal:ent in a
:arine insurance, in respect to any
of the following :atters, does not
itiate the entire contract, but :erely
e>onerates the insurer fro: a loss
resulting fro: the ris= concealed;
@aA The national character of the
insuredB
@bA The liability of the thing insured
to capture and detentionB
@cA The liability to seiDure fro:
breach of foreign laws of tradeB
@dA The want of necessary
docu:entsB and
@eA The use of false and si:ulated
papers!
S$B-T&T%# *-1
R#PR#S#(T'T&)(
S#C! **C! &f a representation by a
person insured by a contract of
:arine insurance, is intentionally
false in any :aterial respect, or in
respect of any fact on which the
character and nature of the ris=
depends, the insurer :ay rescind
the entire contract!
S#C! **6! The eentual falsity of a
representation as to e>pectation
does not, in the absence of fraud,
aoid a contract of :arine
insurance!
S$B-T&T%# *-#
&MP%&#1 4'RR'(T&#S
S#C! **8! &n eery :arine
insurance upon a ship or freight, or
freightage, or upon any thing which
is the subEect of :arine insurance, a
warranty is i:plied that the ship is
seaworthy!
S#C! **,! ' ship is seaworthy when
reasonably fit to perfor: the serice
and to encounter the ordinary perils
of the oyage conte:plated by the
parties to the policy!
S#C! **-! 'n i:plied warranty of
seaworthiness is co:plied with if
the ship be seaworthy at the ti:e of
the co::ence:ent of the ris=,
e>cept in the following cases;
@aA 4hen the insurance is :ade for
a specified length of ti:e, the
i:plied warranty is not co:plied
with unless the ship be seaworthy at
the co::ence:ent of eery oyage
it underta=es during that ti:eB
@bA 4hen the insurance is upon the
cargo which, by the ter:s of the
policy, description of the oyage, or
established custo: of the trade, is
to be transhipped at an inter:ediate
port, the i:plied warranty is not
co:plied with unless each essel
upon which the cargo is shipped, or
transhipped, be seaworthy at the
co::ence:ent of each particular
oyage!
S#C! **7! ' warranty of
seaworthiness e>tends not only to
the condition of the structure of the
ship itself, but re?uires that it be
properly laden, and proided with a
co:petent :aster, a sufficient
nu:ber of co:petent officers and
sea:en, and the re?uisite
appurtenances and e?uip:ent, such
as ballasts, cables and anchors,
cordage and sails, food, water, fuel
and lights, and other necessary or
proper stores and i:ple:ents for
the oyage!
S#C! **9! 4here different portions
of the oyage conte:plated by a
policy differ in respect to the things
re?uisite to :a=e the ship seaworthy
therefor, a warranty of seaworthiness
is co:plied with if, at the
co::ence:ent of each portion, the
ship is seaworthy with reference to
that portion!
S#C! *3+! 4hen the ship beco:es
unseaworthy during the oyage to
which an insurance relates, an
unreasonable delay in repairing the
defect e>onerates the insurer on
ship or shipowners interest fro:
liability fro: any loss arising
therefro:!
S#C! *3*! ' ship which is
seaworthy for the purpose of an
insurance upon the ship :ay,
neertheless, by reason of being
unfitted to receie the cargo, be
unseaworthy for the purpose of
insurance upon the cargo!
S#C! *33! 4here the nationality or
neutrality of a ship or cargo is
e>pressly warranted, it is i:plied
that the ship will carry the re?uisite
docu:ents to show such nationality
or neutrality and that it will not carry
any docu:ents which cast
reasonable suspicion thereon!
S$B-T&T%# *-F
T0# <)2'/# '(1 1#<&'T&)(
S#C! *3C! 4hen the oyage
conte:plated by a :arine insurance
policy is described by the places of
beginning and ending, the oyage
insured is one which confor:s to
the course of sailing fi>ed by
:ercantile usage between those
places!
S#C! *36! &f the course of sailing is
not fi>ed by :ercantile usage, the
oyage insured by a :arine
insurance policy is that way between
the places specified, which to a
:aster of ordinary s=ill and
discretion, would :ean the :ost
natural, direct and adantageous!
S#C! *38! 1eiation is a departure
fro: the course of the oyage
insured, :entioned in the last two
@3A sections, or an unreasonable
delay in pursuing the oyage or the
co::ence:ent of an entirely
different oyage!
S#C! *3,! ' deiation is proper;
@aA 4hen caused by circu:stances
oer which neither the :aster nor
the owner of the ship has any
controlB
@bA 4hen necessary to co:ply with
a warranty, or to aoid a peril,
whether or not the peril is insured
againstB
@cA 4hen :ade in good faith, and
upon reasonable grounds of belief in
its necessity to aoid a perilB or
@dA 4hen :ade in good faith, for
the purpose of saing hu:an life or
relieing another essel in distress!
S#C! *3-! #ery deiation not
specified in the last section is
i:proper!
S#C! *37! 'n insurer is not liable
for any loss happening to the thing
insured subse?uent to an i:proper
deiation!
S$B-T&T%# *-/
%)SS
S#C! *39! ' loss :ay be either total
or partial!
S#C! *C+! #ery loss which is not
total is partial!
S#C! *C*! ' total loss :ay be either
actual or constructie!
S#C! *C3! 'n actual total loss is
caused by;
@aA ' total destruction of the thing
insuredB
@bA The irretrieable loss of the
thing by sin=ing, or by being bro=en
upB
@cA 'ny da:age to the thing which
renders it alueless to the owner for
the purpose for which he held itB or
@dA 'ny other eent which
effectiely depries the owner of the
possession, at the port of
destination, of the thing insured!
S#C! *CC! ' constructie total loss
is one which gies to a person
insured a right to abandon, under
Section *6*!
S#C! *C6! 'n actual loss :ay be
presu:ed fro: the continued
absence of a ship without being
heard of! The length of ti:e which is
sufficient to raise this presu:ption
depends on the circu:stances of
the case!
S#C! *C8! 4hen a ship is
preented, at an inter:ediate port,
fro: co:pleting the oyage, by the
perils insured against, the liability of
a :arine insurer on the cargo
continues after they are thus
reshipped!
(othing in this section shall
preent an insurer fro: re?uiring an
additional pre:iu: if the haDard be
increased by this e>tension of
liability!
S#C! *C,! &n addition to the liability
:entioned in the last section, a
:arine insurer is bound for
da:ages, e>penses of discharging,
storage, reship:ent, e>tra
freightage, and all other e>penses
incurred in saing cargo reshipped
pursuant to the last section, up to
the a:ount insured!
(othing in this or in the preceding
section shall render a :arine
insurer liable for any a:ount in
e>cess of the insured alue or, if
there be none, of the insurable
alue!
S#C! *C-! $pon an actual total loss,
a person insured is entitled to
pay:ent without notice of
abandon:ent!
S#C! *C7! 4here it has been
agreed that an insurance upon a
particular thing, or class of things,
shall be free fro: particular aerage,
a :arine insurer is not liable for any
particular aerage loss not depriing
the insured of the possession, at the
port of destination, of the whole of
such thing, or class of things, een
though it beco:es entirely
worthlessB but such insurer is liable
for his proportion of all general
aerage loss assessed upon the
thing insured!
S#C! *C9! 'n insurance confined in
ter:s to an actual loss does not
coer a constructie total loss, but
coers any loss, which necessarily
results in depriing the insured of
the possession, at the port of
destination, of the entire thing
insured!
S$B-T&T%# *-0
'B'(1)(M#(T
S#C! *6+! 'bandon:ent, in :arine
insurance, is the act of the insured
by which, after a constructie total
loss, he declares the relin?uish:ent
to the insurer of his interest in the
thing insured!
S#C! *6*! ' person insured by a
contract of :arine insurance :ay
abandon the thing insured, or any
particular portion thereof separately
alued by the policy, or otherwise
separately insured, and recoer for a
total loss thereof, when the cause of
the loss is a peril insured against;
@aA &f :ore than three-fourths @FA
thereof in alue is actually lost, or
would hae to be e>pended to
recoer it fro: the perilB
@bA &f it is inEured to such an e>tent
as to reduce its alue :ore than
three-fourths @FAB
@cA &f the thing insured is a ship,
and the conte:plated oyage cannot
be lawfully perfor:ed without
incurring either an e>pense to the
insured of :ore than three-fourths
@FA the alue of the thing
abandoned or a ris= which a prudent
:an would not ta=e under the
circu:stancesB or
@dA &f the thing insured, being cargo
or freightage, and the oyage cannot
be perfor:ed, nor another ship
procured by the :aster, within a
reasonable ti:e and with reasonable
diligence, to forward the cargo,
without incurring the li=e e>pense or
ris= :entioned in the preceding
subparagraph! But freightage cannot
in any case be abandoned unless
the ship is also abandoned!
S#C! *63! 'n abandon:ent :ust
be neither partial nor conditional!
S#C! *6C! 'n abandon:ent :ust
be :ade within a reasonable ti:e
after receipt of reliable infor:ation of
the loss, but where the infor:ation
is of a doubtful character, the
insured is entitled to a reasonable
ti:e to :a=e in?uiry!
S#C! *66! 4here the infor:ation
upon which an abandon:ent has
been :ade proes incorrect, or the
thing insured was so far restored
when the abandon:ent was :ade
that there was then in fact no total
loss, the abandon:ent beco:es
ineffectual!
S#C! *68! 'bandon:ent is :ade by
giing notice thereof to the insurer,
which :ay be done orally, or in
writing; Proided , That if the notice
be done orally, a written notice of
such abandon:ent shall be
sub:itted within seen @-A days
fro: such oral notice!
S#C! *6,! ' notice of abandon:ent
:ust be e>plicit, and :ust specify
the particular cause of the
abandon:ent, but need state only
enough to show that there is
probable cause therefor, and need
not be acco:panied with proof of
interest or of loss!
S#C! *6-! 'n abandon:ent can be
sustained only upon the cause
specified in the notice thereof!
S#C! *67! 'n abandon:ent is
e?uialent to a transfer by the
insured of his interest to the insurer,
with all the chances of recoery and
inde:nity!
S#C! *69! &f a :arine insurer pays
for a loss as if it were an actual total
loss, he is entitled to whateer :ay
re:ain of the thing insured, or its
proceeds or salage, as if there had
been a for:al abandon:ent!
S#C! *8+! $pon an abandon:ent,
acts done in good faith by those
who were agents of the insured in
respect to the thing insured,
subse?uent to the loss, are at the
ris= of the insurer, and for his
benefit!
S#C! *8*! 4here notice of
abandon:ent is properly gien, the
rights of the insured are not
preEudiced by the fact that the
insurer refuses to accept the
abandon:ent!
S#C! *83! The acceptance of an
abandon:ent :ay be either e>press
or i:plied fro: the conduct of the
insurer! The :ere silence of the
insurer for an unreasonable length
of ti:e after notice shall be
construed as an acceptance!
S#C! *8C! The acceptance of an
abandon:ent, whether e>press or
i:plied, is conclusie upon the
parties, and ad:its the loss and the
sufficiency of the abandon:ent!
S#C! *86! 'n abandon:ent once
:ade and accepted is irreocable,
unless the ground upon which it
was :ade proes to be unfounded!
S#C! *88! )n an accepted
abandon:ent of a ship, freightage
earned preious to the loss belongs
to the insurer of said freightageB but
freightage subse?uently earned
belongs to the insurer of the ship!
S#C! *8,! &f an insurer refuses to
accept a alid abandon:ent, he is
liable as upon an actual total loss,
deducting fro: the a:ount any
proceeds of the thing insured which
:ay hae co:e to the hands of the
insured!
S#C! *8-! &f a person insured o:its
to abandon, he :ay neertheless
recoer his actual loss!
S$B-T&T%# *-&
M#'S$R# )F &(1#M(&T2
S#C! *87! ' aluation in a policy of
:arine insurance is conclusie
between the parties thereto in the
adEust:ent of either a partial or total
loss, if the insured has so:e
interest at ris=, and there is no fraud
on his partB e>cept that when a
thing has been hypothecated by
botto:ry or respondentia, before its
insurance, and without the
=nowledge of the person actually
procuring the insurance, he :ay
show the real alue! But a aluation
fraudulent in fact, entitles the insurer
to rescind the contract!
S#C! *89! ' :arine insurer is liable
upon a partial loss, only for such
proportion of the a:ount insured by
hi: as the loss bears to the alue of
the whole interest of the insured in
the property insured!
S#C! *,+! 4here profits are
separately insured in a contract of
:arine insurance, the insured is
entitled to recoer, in case of loss, a
proportion of such profits e?uialent
to the proportion which the alue of
the property lost bears to the alue
of the whole!
S#C! *,*! &n case of a alued
policy of :arine insurance on
freightage or cargo, if a part only of
the subEect is e>posed to ris=, the
aluation applies only in proportion
to such part!
S#C! *,3! 4hen profits are alued
and insured by a contract of :arine
insurance, a loss of the: is
conclusiely presu:ed fro: a loss
of the property out of which they are
e>pected to arise, and the aluation
fi>es their a:ount!
S#C! *,C! &n esti:ating a loss
under an open policy of :arine
insurance the following rules are to
be obsered;
@aA The alue of a ship is its alue
at the beginning of the ris=,
including all articles or charges
which add to its per:anent alue or
which are necessary to prepare it for
the oyage insuredB
@bA The alue of the cargo is its
actual cost to the insured, when
laden on board, or where the cost
cannot be ascertained, its :ar=et
alue at the ti:e and place of
lading, adding the charges incurred
in purchasing and placing it on
board, but without reference to any
loss incurred in raising :oney for its
purchase, or to any drawbac= on its
e>portation, or to the fluctuation of
the :ar=et at the port of destination,
or to e>penses incurred on the way
or on arrialB
@cA The alue of freightage is the
gross freightage, e>clusie of
pri:age, without reference to the
cost of earning itB and
@dA The cost of insurance is in
each case to be added to the alue
thus esti:ated!
S#C! *,6! &f cargo insured against
partial loss arries at the port of
destination in a da:aged condition,
the loss of the insured is dee:ed to
be the sa:e proportion of the alue
which the :ar=et price at that port,
of the thing so da:aged, bears to
the :ar=et price it would hae
brought if sound!
S#C! *,8! ' :arine insurer is liable
for all the e>penses attendant upon
a loss which forces the ship into
port to be repairedB and where it is
stipulated in the policy that the
insured shall labor for the recoery
of the property, the insurer is liable
for the e>pense incurred thereby,
such e>pense, in either case, being
in addition to a total loss, if that
afterwards occurs!
S#C! *,,! ' :arine insurer is liable
for a loss falling upon the insured,
through a contribution in respect to
the thing insured, re?uired to be
:ade by hi: towards a general
aerage loss called for by a peril
insured against; Proided , That the
liability of the insurer shall be
li:ited to the proportion of
contribution attaching to his policy
alue where this is less than the
contributing alue of the thing
insured!
S#C! *,-! 4hen a person insured
by a contract of :arine insurance
has a de:and against others for
contribution, he :ay clai: the
whole loss fro: the insurer,
subrogating hi: to his own right to
contribution! But no such clai: can
be :ade upon the insurer after the
separation of the interests liable to
contribution, nor when the insured,
haing the right and opportunity to
enforce contribution fro: others,
has neglected or waied the
e>ercise of that right!
S#C! *,7! &n the case of a partial
loss of ship or its e?uip:ent, the
old :aterials are to be applied
towards pay:ent for the new!
$nless otherwise stipulated in the
policy, a :arine insurer is liable for
only two-thirds @3GCA of the
re:aining cost of repairs after such
deduction, e>cept that anchors :ust
be paid in full!
T&T%# 3
F&R# &(S$R'(C#
S#C! *,9! 's used in this Code, the
ter: fire insurance shall include
insurance against loss by fire,
lightning, windstor:, tornado or
earth?ua=e and other allied ris=s,
when such ris=s are coered by
e>tension to fire insurance policies
or under separate policies!
S#C! *-+! 'n alteration in the use
or condition of a thing insured fro:
that to which it is li:ited by the
policy :ade without the consent of
the insurer, by :eans within the
control of the insured, and
increasing the ris=s, entitles an
insurer to rescind a contract of fire
insurance!
S#C! *-*! 'n alteration in the use
or condition of a thing insured fro:
that to which it is li:ited by the
policy, which does not increase the
ris=, does not affect a contract of
fire insurance!
S#C! *-3! ' contract of fire
insurance is not affected by any act
of the insured subse?uent to the
e>ecution of the policy, which does
not iolate its proisions, een
though it increases the ris= and is
the cause of the loss!
S#C! *-C! &f there is no aluation in
the policy, the :easure of inde:nity
in an insurance against fire is the
e>pense it would be to the insured
at the ti:e of the co::ence:ent of
the fire to replace the thing lost or
inEured in the condition in which it
was at the ti:e of the inEuryB but if
there is a aluation in a policy of fire
insurance, the effect shall be the
sa:e as in a policy of :arine
insurance!
S#C! *-6! 4heneer the insured
desires to hae a aluation na:ed
in his policy, insuring any building
or structure against fire, he :ay
re?uire such building or structure to
be e>a:ined by an independent
appraiser and the alue of the
insureds interest therein :ay then
be fi>ed as between the insurer and
the insured! The cost of such
e>a:ination shall be paid for by the
insured! ' clause shall be inserted
in such policy stating substantially
that the alue of the insureds
interest in such building or structure
has been thus fi>ed! &n the absence
of any change increasing the ris=
without the consent of the insurer or
of fraud on the part of the insured,
then in case of a total loss under
such policy, the whole a:ount so
insured upon the insureds interest
in such building or structure, as
stated in the policy upon which the
insurers hae receied a pre:iu:,
shall be paid, and in case of a
partial loss the full a:ount of the
partial loss shall be so paid, and in
case there are two @3A or :ore
policies coering the insureds
interest therein, each policy shall
contribute pro rata to the pay:ent of
such whole or partial loss! But in no
case shall the insurer be re?uired to
pay :ore than the a:ount thus
stated in such policy! This section
shall not preent the parties fro:
stipulating in such policies
concerning the repairing, rebuilding
or replacing of buildings or
structures wholly or partially
da:aged or destroyed!
S#C! *-8! (o policy of fire
insurance shall be pledged,
hypothecated, or transferred to any
person, fir: or co:pany who acts
as agent for or otherwise represents
the issuing co:pany, and any such
pledge, hypothecation, or transfer
hereafter :ade shall be oid and of
no effect insofar as it :ay affect
other creditors of the insured!
T&T%# C
C'S$'%T2 &(S$R'(C#
S#C! *-,! Casualty insurance is
insurance coering loss or liability
arising fro: accident or :ishap,
e>cluding certain types of loss
which by law or custo: are
considered as falling e>clusiely
within the scope of other types of
insurance such as fire or :arine! &t
includes, but is not li:ited to,
e:ployers liability insurance, :otor
ehicle liability insurance, plate
glass insurance, burglary and theft
insurance, personal accident and
health insurance as written by non-
life insurance co:panies, and other
substantially si:ilar =inds of
insurance!
T&T%# 6
S$R#T2S0&P
S#C! *--! ' contract of suretyship
is an agree:ent whereby a party
called the surety guarantees the
perfor:ance by another party called
the principal or obligor of an
obligation or underta=ing in faor of
a third party called the obligee! &t
includes official recogniDances,
stipulations, bonds or underta=ings
issued by any co:pany by irtue of
and under the proisions of 'ct (o!
8C,, as a:ended by 'ct (o! 33+,!
S#C! *-7! The liability of the surety
or sureties shall be Eoint and seeral
with the obligor and shall be li:ited
to the a:ount of the bond! &t is
deter:ined strictly by the ter:s of
the contract of suretyship in relation
to the principal contract between the
obligor and the obligee!
S#C! *-9! The surety is entitled to
pay:ent of the pre:iu: as soon as
the contract of suretyship or bond is
perfected and deliered to the
obligor! (o contract of suretyship or
bonding shall be alid and binding
unless and until the pre:iu:
therefor has been paid, e>cept
where the obligee has accepted the
bond, in which case the bond
beco:es alid and enforceable
irrespectie of whether or not the
pre:iu: has been paid by the
obligor to the surety; Proided , That
if the contract of suretyship or bond
is not accepted by, or filed with the
obligee, the surety shall collect only
a reasonable a:ount, not e>ceeding
fifty percent @8+HA of the pre:iu:
due thereon as serice fee plus the
cost of sta:ps or other ta>es
i:posed for the issuance of the
contract or bond; Proided, howeer ,
That if the nonacceptance of the
bond be due to the fault or
negligence of the surety, no such
serice fee, sta:ps or ta>es shall be
collected!
&n the case of a continuing bond,
the obligor shall pay the subse?uent
annual pre:iu: as it falls due until
the contract of suretyship is
cancelled by the obligee or by the
Co::issioner or by a court of
co:petent Eurisdiction, as the case
:ay be!
S#C! *7+! Pertinent proisions of
the Ciil Code of the Philippines
shall be applied in a suppletory
character wheneer necessary in
interpreting the proisions of a
contract of suretyship!
T&T%# 8
%&F# &(S$R'(C#
S#C! *7*! %ife insurance is
insurance on hu:an lies and
insurance appertaining thereto or
connected therewith!
#ery contract or underta=ing for
the pay:ent of annuities including
contracts for the pay:ent of lu:p
su:s under a retire:ent progra:
where a life insurance co:pany
:anages or acts as a trustee for
such retire:ent progra: shall be
considered a life insurance contract
for purposes of this Code!
S#C! *73! 'n insurance upon life
:ay be :ade payable on the death
of the person, or on his suriing a
specified period, or otherwise
contingently on the continuance or
cessation of life!
#ery contract or pledge for the
pay:ent of endow:ents or annuities
shall be considered a life insurance
contract for purposes of this Code!
&n the absence of a Eudicial
guardian, the father, or in the latters
absence or incapacity, the :other,
of any :inor, who is an insured or a
beneficiary under a contract of life,
health, or accident insurance, :ay
e>ercise, in behalf of said :inor, any
right under the policy, without
necessity of court authority or the
giing of a bond, where the interest
of the :inor in the particular act
inoled does not e>ceed Fie
hundred thousand pesos
@P8++,+++!++A or in such
reasonable a:ount as :ay be
deter:ined by the Co::issioner!
Such right :ay include, but shall
not be li:ited to, obtaining a policy
loan, surrendering the policy,
receiing the proceeds of the Policy,
and giing the :inors consent to
any transaction on the policy!
&n the absence or in case of the
incapacity of the father or :other,
the grandparent, the eldest brother
or sister at least eighteen @*7A years
of age, or any relatie who has
actual custody of the :inor insured
or beneficiary, shall act as a
guardian without need of a court
order or Eudicial appoint:ent as
such guardian, as long as such
person is not otherwise dis?ualified
or incapacitated! Pay:ent :ade by
the insurer pursuant to this section
shall reliee such insurer of any
liability under the contract!
S#C! *7C! The insurer in a life
insurance contract shall be liable in
case of suicide only when it is
co::itted after the policy has been
in force for a period of two @3A years
fro: the date of its issue or of its
last reinstate:ent, unless the policy
proides a shorter period; Proided,
howeer , That suicide co::itted in
the state of insanity shall be
co:pensable regardless of the date
of co::ission!
S#C! *76! ' policy of insurance
upon life or health :ay pass by
transfer, will or succession to any
person, whether he has an insurable
interest or not, and such person
:ay recoer upon it whateer the
insured :ight hae recoered!
S#C! *78! (otice to an insurer of a
transfer or be?uest thereof is not
necessary to presere the alidity of
a policy of insurance upon life or
health, unless thereby e>pressly
re?uired!
S#C! *7,! $nless the interest of a
person insured is susceptible of
e>act pecuniary :easure:ent, the
:easure of inde:nity under a policy
of insurance upon life or health is
the su: fi>ed in the policy!
T&T%# ,
M&CR)&(S$R'(C#
S#C! *7-! Microinsurance is a
financial product or serice that
:eets the ris= protection needs of
the poor where;
@aA The a:ount of contributions,
pre:iu:s, fees or charges,
co:puted on a daily basis, does not
e>ceed seen and a half percent
@-!8HA of the current daily :ini:u:
wage rate for nonagricultural
wor=ers in Metro ManilaB and
@bA The :a>i:u: su: of
guaranteed benefits is not :ore than
one thousand @*,+++A ti:es of the
current daily :ini:u: wage rate for
nonagricultural wor=ers in Metro
Manila!
S#C! *77! (o insurance co:pany
or :utual benefit association shall
engage in the business of
:icroinsurance unless it possesses
all the re?uire:ents as :ay be
prescribed by the Co::issioner!
The Co::issioner shall issue such
rules and regulations goerning
:icroinsurance!
C0'PT#R &&-'
F&('(C&'% R#P)RT&(/
FR'M#4)R5
S#C! *79! 'll co:panies regulated
by the Co::ission, unless
otherwise re?uired by law, should
co:ply with the financial reporting
fra:ewor=s adopted by the
Co::ission for purposes of creating
the statutory financial reports and
the annual state:ents to be
sub:itted to the Co::ission!
Financial reporting fra:ewor= :eans
a set of accounting and reporting
principles, standards, interpretations
and pronounce:ents that :ust be
adopted in the preparation and
sub:ission of the statutory financial
state:ents and reports re?uired by
the Co::ission! This financial
reporting fra:ewor= is not the sa:e
as the financial reporting fra:ewor=
used to prepare the financial
state:ents that the Securities and
#>change Co::ission :ay re?uire!
The :ain purpose of the statutory
state:ents is to present i:portant
infor:ation about the leel of ris=
and solency situation of insurers!
&n prescribing the applicable
statutory financial reporting
fra:ewor=, the Co::issioner shall
ta=e into account international
standards concerning solency and
insurance co:pany reporting as well
as generally accepted actuarial
principles concerning financial
reporting pro:ulgated by the
'ctuarial Society of the Philippines!
The assets and inest:ents
discussed in Sections 3+6 to 3*8
shall be accounted for in
accordance with this section!
The aluation of reseres shall be
accounted for in accordance with
Title 8 of this Code!
C0'PT#R &&&
T0# B$S&(#SS )F &(S$R'(C#
T&T%# *
&(S$R'(C# C)MP'(&#S,
)R/'(&I'T&)(,
C'P&T'%&I'T&)( '(1
'$T0)R&I'T&)(
S#C! *9+! For purposes of this
Code, the ter: insurer or insurance
co:pany shall include all
partnerships, associations,
cooperaties or corporations,
including goern:ent-owned or -
controlled corporations or entities,
engaged as principals in the
insurance business, e>cepting
:utual benefit associations! $nless
the conte>t otherwise re?uires, the
ter: shall also include professional
reinsurers defined in Section 377!
1o:estic co:pany shall include
co:panies for:ed, organiDed or
e>isting under the laws of the
Philippines! Foreign co:pany when
used without li:itation shall include
co:panies for:ed, organiDed, or
e>isting under any laws other than
those of the Philippines!
S#C! *9*! The proisions of the
Corporation Code, as a:ended, shall
apply to all insurance corporations
now or hereafter engaged in
business in the Philippines insofar
as they do not conflict with the
proisions of this chapter!
S#C! *93! (o corporation,
partnership, or association of
persons shall transact any insurance
business in the Philippines e>cept
as agent of a corporation,
partnership or association
authoriDed to do the business of
insurance in the Philippines, unless
possessed of the capital and assets
re?uired of an insurance corporation
doing the sa:e =ind of business in
the Philippines and inested in the
sa:e :annerB unless the
Co::issioner shall hae granted it
a certificate to the effect that it has
co:plied with all the proisions of
this Code!
#ery entity receiing any such
certificate of authority shall be
subEect to the insurance and other
applicable laws of the Philippines
and to the Eurisdiction and
superision of the Co::issioner!
S#C! *9C! (o insurance co:pany
shall transact any insurance
business in the Philippines until
after it shall hae obtained a
certificate of authority for that
purpose fro: the Co::issioner
upon application therefor and
pay:ent by the co:pany concerned
of the fees hereinafter prescribed!
The Co::issioner :ay refuse to
issue a certificate of authority to any
insurance co:pany if, in his
Eudg:ent, such refusal will best
pro:ote the interest of the people of
this country! (o such certificate of
authority shall be granted to any
such co:pany until the
Co::issioner shall hae satisfied
hi:self by such e>a:ination as he
:ay :a=e and such eidence as he
:ay re?uire that such co:pany is
?ualified by the laws of the
Philippines to transact business
therein, that the grant of such
authority appears to be Eustified in
the light of local econo:ic
re?uire:ents, and that the direction
and ad:inistration, as well as the
integrity and responsibility of the
organiDers and ad:inistrators, the
financial organiDation and the
a:ount of capital, reasonably assure
the safety of the interests of the
policyholders and the public!
&n order to :aintain the ?uality of
the :anage:ent of the insurance
co:panies and afford better
protection to policyholders and the
public in general, any person of
good :oral character, un?uestioned
integrity and recogniDed co:petence
:ay be elected or appointed director
or officer of insurance co:panies in
accordance with the pertinent
proisions contained in the
corporate goernance circulars
prescribed by the Co::issioner! &n
addition hereto, the Co::issioner
shall prescribe the ?ualifications of
directors, e>ecutie officers and
other =ey officials of insurance
co:panies for purposes of this
section!
(o person shall concurrently be a
1irector andGor )fficer of an
insurance co:pany and an
adEust:ent co:pany!
Before issuing such certificate of
authority, the Co::issioner :ust be
satisfied that the na:e of the
co:pany is not that of any other
=nown co:pany transacting a
si:ilar business in the Philippines,
or a na:e so si:ilar as to be
calculated to :islead the public!
The Co::issioner :ay issue rules
and regulations on the use of na:es
of insurance co:panies and other
superised persons or entities!
The certificate of authority issued
by the Co::issioner shall e>pire on
the last day of 1ece:ber, three @CA
years following its date of issuance,
and shall be renewable eery three
@CA years thereafter, subEect to the
co:panys continuing co:pliance
with the proisions of this Code,
circulars, instructions, rulings or
decisions of the Co::ission!
#ery co:pany receiing any such
certificates of authority shall be
subEect to the proisions of this
Code and other related laws and to
the Eurisdiction and superision of
the Co::issioner!
(o insurance co:pany :ay be
authoriDed to transact in the
Philippines the business of life and
non-life insurance concurrently,
unless specifically authoriDed to do
so by the Co::issioner; Proided ,
That the ter:s life and non -life
insurance shall be dee:ed to
include health, accident and
disability insurance!
(o insurance co:pany shall hae
e?uity in an adEust:ent co:pany
and neither shall an adEust:ent
co:pany hae e?uity in an
insurance co:pany!
(o insurance co:pany issued with
a alid certificate of authority to
transact insurance business
anywhere in the Philippines by the
&nsurance Co::issioner, shall be
barred, preented, or
disenfranchised fro: issuing any
insurance policy or fro: transacting
any insurance business within the
scope or coerage of its certificate
of authority, anywhere in the
Philippines, by any local goern:ent
unit or authority, for whateer guise
or reason whatsoeer, including
under any =ind of ordinance,
accreditation syste:, or sche:e!
'ny local ordinance or local
goern:ent unit regulatory issuance
i:posing such restriction or
disenfranchise:ent on any
insurance co:pany shall be dee:ed
null and oid ab initio !
S#C! *96! #>cept as proided in
Section 379, no new do:estic life or
non-life insurance co:pany shall, in
a stoc= corporation, engage in
business in the Philippines unless
possessed of a paid-up capital
e?ual to at least )ne billion pesos
@P*,+++,+++,+++!++A; Proided , That
a do:estic insurance co:pany
already doing business in the
Philippines shall hae a net worth
by June C+, 3+*C of Two hundred
fifty :illion pesos
@P38+,+++,+++!++A! Further:ore,
said co:pany :ust hae by
1ece:ber C*, 3+*,, an additional
Three hundred :illion pesos
@PC++,+++,+++!++A in net worthB by
1ece:ber C*, 3+*9, an additional
Three hundred fifty :illion pesos
@PC8+,+++,+++!++A in net worthB and
by 1ece:ber C*, 3+33, an additional
Four hundred :illion pesos
@P6++,+++,+++!++A in net worth!
The Co::issioner :ay, as a pre-
licensing re?uire:ent of a new
insurance co:pany, in addition to
the paid-up capital stoc=, re?uire
the stoc=holders to pay in cash to
the co:pany in proportion to their
subscription interests a contributed
surplus fund of not less than )ne
hundred :illion pesos
@P*++,+++,+++!++A! 0e :ay also
re?uire such co:pany to sub:it to
hi: a business plan showing the
co:panys esti:ated receipts and
disburse:ents, as well as the basis
therefor, for the ne>t succeeding
three @CA years!
&f organiDed as a :utual co:pany,
in lieu of such net worth, it :ust
hae aailable total :e:bers e?uity
in an a:ount to be deter:ined by
the &nsurance Co::ission aboe all
liabilities for losses reportedB
e>penses, ta>es, legal resere, and
reinsurance of all outstanding ris=s,
and the contributed surplus fund
e?ual to the a:ounts re?uired of
stoc= corporations! ' stoc=
insurance co:pany doing business
in the Philippines :ay, subEect to
the pertinent law and regulation
which now or hereafter :ay be in
force, alter its organiDation and
transfor: itself into a :utual
insurance co:pany!
The Secretary of Finance :ay, upon
reco::endation of the
Co::issioner, increase such
:ini:u: paid-up capital stoc= or
cash assets re?uire:ent under such
ter:s and conditions as he :ay
i:pose, to an a:ount which, in his
opinion, would reasonably assure
the safety of the interests of the
policyholders and the public! The
:ini:u: paid-up capital and net
worth re?uire:ent :ust re:ain
uni:paired for the continuance of
the license! The Co::issioner :ay
re?uire the adoption of the ris=-
based capital approach and other
internationally accepted for:s of
capital fra:ewor=!
For the purpose of this section, net
worth shall consist of;
@aA Paid-up capitalB
@bA Retained earningsB
@cA $ni:paired surplusB and
@dA Realuation of assets as :ay
be approed by the Co::issioner!
The Co::ission :ay adopt for
purposes of co:pliance with capital
build up re?uire:ent under this
Code the recognition as part of the
capital account, capital notes or
debentures which are subordinate to
all credits and senior only to
co::on capital stoc=s!
The President of the Philippines
:ay order a periodic reiew eery
two @3A years the capital structure
set out aboe to deter:ine the
capital ade?uacy of the local
insurance industry fro: and after the
integration and liberaliDation of the
financial serices, including
insurance, in the 'S#'( Region! For
this purpose, a reiew co::ittee
consisting of representaties fro:
the 1epart:ent of Finance @1)FA,
the &nsurance Co::ission @&CA, the
(ational #cono:ic and 1eelop:ent
'uthority @(#1'A, the Securities and
#>change Co::ission @S#CA and
other agencies which the President
:ay designate shall conduct the
reiew and :ay reco::end to the
President to adopt for
i:ple:entation the necessary
capital adEust:ent!
S#C! *98! #ery co:pany :ust,
before engaging in the business of
insurance in the Philippines, file with
the Co::issioner the following;
@aA ' certified copy of the last
annual state:ent or a erified
financial state:ent e>hibiting the
condition and affairs of such
co:panyB
@bA &f incorporated under the laws
of the Philippines, a copy of the
articles of incorporation and bylaws,
and any a:end:ents to either,
certified by the Securities and
#>change Co::ission to be a copy
of that which is filed in its )fficeB
@cA &f incorporated under any laws
other than those of the Philippines,
a certificate fro: the Securities and
#>change Co::ission showing that
it is duly registered in the :ercantile
registry of that Co::ission in
accordance with the Corporation
Code! ' copy of the articles of
incorporation and bylaws, and any
a:end:ents to either, if organiDed
or for:ed under any law re?uiring
such to be filed, duly certified by the
officer haing the custody of sa:e,
or if not so organiDed, a copy of the
law, charter or deed of settle:ent
under which the deed of
organiDation is :ade, duly certified
by the proper custodian thereof, or
proed by affidait to be a copyB
also, a certificate under the hand
and seal of the proper officer of
such state or country haing
superision of insurance business
therein, if any there be, that such
corporation or co:pany is organiDed
under the laws of such state or
country, with the a:ount of capital
stoc= or assets and legal resere
re?uired by this CodeB
@dA &f not incorporated and of
foreign do:icile, aside fro: the
certificate :entioned in paragraph
@cA of this section, a certificate
setting forth the nature and
character of the business, the
location of the principal office, the
na:e of the indiidual or na:es of
the persons co:posing the
partnership or association, the
a:ount of actual capital e:ployed
or to be e:ployed therein, and the
na:es of all officers and persons by
who: the business is or :ay be
:anaged!
The certificate :ust be erified by
the affidait of the chief officer,
secretary, agent, or :anager of the
co:panyB and if there are any
written articles of agree:ent of the
co:pany, a copy thereof :ust
acco:pany such certificate!
S#C! *9,! The Co::issioner :ust
re?uire as a condition precedent to
the transaction of insurance
business in the Philippines by any
foreign insurance co:pany, that
such co:pany file in his office a
written power of attorney
designating so:e person who shall
be a resident of the Philippines as
its general agent, on who: any
notice proided by law or by any
insurance policy, proof of loss,
su::ons and other legal processes
:ay be sered in all actions or
other legal proceedings against
such co:pany, and consenting that
serice upon such general agent
shall be ad:itted and held as alid
as if sered upon the foreign
co:pany at its ho:e office! 'ny
such foreign co:pany shall, as
further condition precedent to the
transaction of insurance business in
the Philippines, :a=e and file with
the Co::issioner an agree:ent or
stipulation, e>ecuted by the proper
authorities of said co:pany in for:
and substance as follows;
The @na:e of co:panyA does
hereby stipulate and agree in
consideration of the per:ission
granted by the &nsurance
Co::issioner to transact business
in the Philippines, that if at any ti:e
said co:pany shall leae the
Philippines, or cease to transact
business therein, or shall be without
any agent in the Philippines on
who: any notice, proof of loss,
su::ons, or legal process :ay be
sered, then in any action or
proceeding arising out of any
business or transaction which
occurred in the Philippines, serice
of any notice proided by law, or
insurance policy, proof of loss,
su::ons, or other legal process
:ay be :ade upon the &nsurance
Co::issioner, and that such serice
upon the &nsurance Co::issioner
shall hae the sa:e force and effect
as if :ade upon the co:pany!
4heneer such serice of notice,
proof of loss, su::ons, or other
legal process shall be :ade upon
the Co::issioner, he :ust, within
ten @*+A days thereafter, trans:it by
:ail, postage paid, a copy of such
notice, proof of loss, su::ons, or
other legal process to the co:pany
at its ho:e or principal office! The
sending of such copy by the
Co::issioner shall be a necessary
part of the serice of the notice,
proof of loss, or other legal process!
S#C! *9-! (o insurance co:pany
organiDed or e>isting under the
goern:ent or laws other than those
of the Philippines shall engage in
business in the Philippines unless
possessed of uni:paired capital or
assets and resere of not less than
)ne billion pesos
@P*,+++,+++,+++!++A, nor until it
shall hae deposited with the
Co::issioner for the benefit and
security of the policyholders and
creditors of such co:pany in the
Philippines, securities satisfactory to
the Co::issioner consisting of
good securities of the Philippines,
including new issues of stoc= of
registered enterprises, as this ter:
is defined in #>ecutie )rder (o!
33, of *97-, as a:ended, to the
actual :ar=et alue of not less than
the a:ount herein re?uired;
Proided , That at least fifty percent
@8+HA of such securities shall
consist of bonds or other
instru:ents of debt of the
/oern:ent of the Philippines, its
political subdiisions and
instru:entalities, or of goern:ent-
owned or -controlled corporations
and entities, including the Bang=o
Sentral ng Pilipinas; Proided ,
further , That the total inest:ent of a
foreign insurance co:pany in any
registered enterprise shall not
e>ceed twenty percent @3+HA of the
net worth of said foreign insurance
co:pany nor twenty percent @3+HA
of the capital of the registered
enterprise, unless preiously
authoriDed in writing by the
Co::issioner!
The Co::issioner :ay, as a pre-
licensing re?uire:ent of a new
branch office of a foreign insurance
co:pany, in addition to the re?uired
asset or net worth, re?uire the
co:pany to hae an additional
surplus fund in an a:ount to be
deter:ined by the &nsurance
Co::ission!
For purposes of this Code, the net
worth of a foreign insurance
co:pany shall refer only to its net
worth in the Philippines!
S#C! *97! The Co::issioner shall
hold the securities, deposited as
re?uired in the i::ediately
preceding section, for the benefit
and security of all the policyholders
and creditors of the co:pany
depositing the sa:e; Proided , That
the Co::issioner :ay as long as
the co:pany is solent, per:it the
co:pany to collect the interest or
diidends on the securities so
deposited, and, fro: ti:e to ti:e,
with his assent, to withdraw any of
such securities, upon depositing
with said Co::issioner other li=e
securities, the :ar=et alue of which
shall be e?ual to the :ar=et alue of
such as :ay be withdrawn! &n the
eent of any co:pany ceasing to do
business in the Philippines, the
securities deposited as aforesaid
shall be returned to the co:pany
upon the Co::issioners written
approal and only after the co:pany
has duly proen in its application
therefor that it has no further liability
whatsoeer under any of its policies
nor to any of its creditors in the
Philippines!
S#C! *99! #ery foreign co:pany
doing business in the Philippines
shall set aside an a:ount
corresponding to the legal reseres
of the policies written in the
Philippines and inest and =eep the
sa:e therein in accordance with the
proisions of this section! The legal
resere therein re?uired to be set
aside shall be inested only in the
classes of Philippine securities
described in Section 3+,; Proided,
howeer , That no inest:ent in
stoc=s or bonds of any single entity
shall, in the aggregate e>ceed
twenty percent @3+HA of the net
worth of the inesting co:pany or
twenty percent @3+HA of the capital
of the issuing co:pany, whicheer
is the lesser, unless otherwise
approed in writing by the
Co::issioner! The securities
purchased and =ept in the
Philippines under this section, shall
not be sent out of the territorial
Eurisdiction of the Philippines
without the written consent of the
Co::issioner!
T&T%# 3
S)%<#(C2
S#C! 3++! 'n insurance co:pany
doing business in the Philippines
shall at all ti:es :aintain the
:ini:u: paid-up capital, and net
worth re?uire:ents as prescribed by
the Co::issioner! Such solency
re?uire:ents shall be based on
internationally accepted solency
fra:ewor=s and adopted only after
due consultation with the insurance
industry associations!
4heneer the afore:entioned
re?uire:ent be found to be less than
that herein re?uired to be
:aintained, the Co::issioner shall
forthwith direct the co:pany to
:a=e good any such deficiency by
cash, to be contributed by all
stoc=holders of record in proportion
to their respectie interests, and
paid to the treasurer of the
co:pany, within fifteen @*8A days
fro: receipt of the order; Proided ,
That the co:pany in the interi:
shall not be per:itted to ta=e any
new ris= of any =ind or character
unless and until it :a=e good any
such deficiency; ProidedB further ,
That a stoc=holder who aside fro:
paying the contribution due fro:
hi:, pays the contribution due fro:
another stoc=holder by reason of the
failure or refusal of the latter to do
so, shall hae a lien on the
certificates of stoc= of the insurance
co:pany concerned appearing in its
boo=s in the na:e of the defaulting
stoc=holder on the date of default,
as well as on any interests or
diidends that hae accrued or will
accrue to the said certificates of
stoc=, until the corresponding
pay:ent or rei:burse:ent is :ade
by the defaulting stoc=holder!
S#C! 3+*! (o do:estic insurance
corporation shall declare or
distribute any diidend on its
outstanding stoc=s unless it has
:et the :ini:u: paid-up capital
and net worth re?uire:ents under
Section *96 and e>cept fro: profits
attested in a sworn state:ent to the
Co::issioner by the president or
treasurer of the corporation to be
re:aining on hand after retaining
uni:paired;
@aA The entire paid-up capital
stoc=B
@bA The solency re?uire:ents
defined by Section 3++B
@cA &n the case of life insurance
corporations, the legal resere fund
re?uired by Section 3*-B
@dA &n the case of corporations
other than life, the legal resere fund
re?uired by Section 3*9B and
@eA ' su: sufficient to pay all net
losses reported, or in the course of
settle:ent, and all liabilities for
e>penses and ta>es!
'ny diidend declared or
distributed under the preceding
paragraph shall be reported to the
Co::issioner within thirty @C+A days
after such declaration or
distribution!
&f the Co::issioner finds that any
such corporation has declared or
distributed any such diidend in
iolation of this section, he :ay
order such corporation to cease and
desist fro: doing business until the
a:ount of such diidend or the
portion thereof in e>cess of the
a:ount allowed under this section
has been restored to said
corporation!
The Co::issioner shall prescribe
solency re?uire:ents for branches
of foreign insurance co:panies
operating in the Philippines!
T&T%# C
'SS#TS
S#C! 3+3! &n any deter:ination of
the financial condition of any
insurance co:pany doing business
in the Philippines, there shall be
allowed and ad:itted as assets only
such assets legally or beneficially
owned by the insurance co:pany
concerned as deter:ined by the
Co::issioner which consist of;
@aA Cash in the possession of the
insurance co:pany or in transit
under its control, and the true and
duly erified balance of any deposit
of such co:pany in a financially
sound ban= or trust co:pany duly
authoriDed by the Bang=o Sentral ng
Pilipinas!
@bA &nest:ents in securities,
including :oney :ar=et
instru:ents, and in real property
ac?uired or held in accordance with
and subEect to the applicable
proisions of this Code and the
inco:e realiDed therefro: or
accrued thereon!
@cA %oans granted by the insurance
co:pany concerned to the e>tent of
that portion thereof ade?uately
secured by non-speculatie assets
with readily realiDable alues in
accordance with and subEect to the
li:itations i:posed by applicable
proisions of this Code!
@dA Policy loans and other policy
assets and liens on policies,
contracts or certificates of a life
insurance co:pany, in an a:ount
not e>ceeding legal reseres and
other policy liabilities carried on
each indiidual life insurance policy,
contract or certificate!
@eA The net a:ount of uncollected
and deferred pre:iu:s and annuity
considerations in the case of a life
insurance co:pany which carries
the full :ean tabular resere
liability!
@fA Reinsurance recoerable by the
ceding insurer;
@*A Fro: an insurer authoriDed to
transact business in this country,
the full a:ount thereofB or
@3A Fro: an insurer not authoriDed
in this country, in an a:ount not
e>ceeding the liabilities carried by
the ceding insurer for a:ounts
withheld under a reinsurance treaty
with such unauthoriDed insurer as
security for the pay:ent of
obligations thereunder if such funds
are held subEect to withdrawal by,
and under the control of, the ceding
insurer! The Co::issioner :ay
prescribe the conditions under
which a ceding insurer :ay be
allowed credit, as an asset or as a
deduction fro: loss and unearned
pre:iu: reseres, for reinsurance
recoerable fro: an insurer not
authoriDed in this country but which
presents satisfactory eidence that
it :eets the applicable standards of
solency re?uired in this country!
@gA Funds withheld by a ceding
insurer under a reinsurance treaty,
proided reseres for unpaid losses
and unearned pre:iu:s are
ade?uately proided!
@hA 1eposits or a:ounts
recoerable fro: underwriting
associations, syndicates and
reinsurance funds, or fro: any
suspended ban=ing institution, to
the e>tent dee:ed by the
Co::issioner to be aailable for the
pay:ent of losses and clai:s and
alues to be deter:ined by hi:!
@iA #lectronic data processing
:achines, as :ay be authoriDed by
the Co::issioner to be ac?uired by
the insurance co:pany concerned,
the ac?uisition cost of which to be
a:ortiDed in e?ual annual a:ounts
within a period of fie @8A years fro:
the date of ac?uisition thereof!
@EA &nest:ents in :utual funds,
real estate inest:ent trusts, salary
loans, unit inest:ent trust funds
and special deposit accounts,
subEect to the conditions as :ay be
proided for by the Co::issioner!
@=A )ther assets, not inconsistent
with the proisions of paragraphs
@aA to @EA hereof, which are dee:ed
by the Co::issioner to be readily
realiDable and aailable for the
pay:ent of losses and clai:s at
alues to be deter:ined by hi: in a
circular, rule or regulation!
S#C! 3+C! &n addition to such
assets as the Co::issioner :ay
fro: ti:e to ti:e deter:ine to be
non-ad:itted assets of insurance
co:panies doing business in the
Philippines, the following assets
shall in no case be allowed as
ad:itted assets of an insurance
co:pany doing business in the
Philippines, in any deter:ination of
its financial condition;
@aA /oodwill, trade na:es, and
other li=e intangible assets!
@bA Prepaid or deferred charges for
e>penses and co::issions paid by
such insurance co:pany!
@cA 'dances to officers @other than
policy loansA, which are not
ade?uately secured and which are
not preiously authoriDed by the
Co::issioner, as well as adances
to e:ployees, agents, and other
persons on :ere personal security!
@dA Shares of stoc= of such
insurance co:pany, owned by it, or
any e?uity therein as well as loans
secured thereby, or any
proportionate interest in such
shares of stoc= through the
ownership by such insurance
co:pany of an interest in another
corporation or business unit!
@eA Furniture, furnishing, fi>tures,
safes, e?uip:ent, library, stationery,
literature, and supplies!
@fA &te:s of ban= credits
representing chec=s, drafts or notes
returned unpaid after the date of
state:ent!
@gA The a:ount, if any, by which
the aggregate alue of inest:ents
as carried in the ledger assets of
such insurance co:pany e>ceeds
the aggregate alue thereof as
deter:ined in accordance with the
proisions of this Code andGor the
rules of the Co::issioner!
'll non-ad:itted assets and all
other assets of doubtful alue or
character included as ledger or non-
ledger assets in any state:ent
sub:itted by an insurance co:pany
to the Co::issioner, or in any
insurance e>a:iners report to hi:,
shall also be reported, to the e>tent
of the alue disallowed as
deductions fro: the gross assets of
such insurance co:pany, e>cept
where the Co::issioner per:its a
resere to be carried a:ong the
liabilities of such insurance
co:pany in lieu of any such
deduction!
T&T%# 6
&(<#STM#(TS
S#C! 3+6! ' life insurance co:pany
:ay lend to any of its policyholders
upon the security of the alue of its
policy such su: as :ay be
deter:ined pursuant to the
proisions of the policy!
(o insurance co:pany shall loan
any of its :oney or deposits to any
person, corporation or association,
e>cept upon the security of any of
the following;
@aA First :ortgage or deeds of trust
of registered, unencu:bered,
i:proed or uni:proed real estate,
including condo:iniu:sB
@bA First :ortgages or deeds of
trust of actually cultiated, i:proed
and unencu:bered agricultural
lands in the PhilippinesB
@cA Purchase :oney :ortgages,
lease purchase agree:ents or
si:ilar securities e>ecuted or
receied by it on account of the sale
or e>change of real property
ac?uired pursuant to Sections 3+,
and 3+7B
@dA Bonds or other instru:ents of
indebtedness issued or guaranteed
by the /oern:ent of the Philippines
or its political subdiisions
authoriDed by law to incur such
obligations or issue such
guarantees or of goern:ent-owned
or -controlled corporations and
instru:entalities including the
Bang=o Sentral ng PilipinasB or
@eA )bligations issued or
guaranteed by uniersal ban=s,
co::ercial ban=s, offshore ban=ing
units, inest:ent houses or other
financial inter:ediaries duly
registered with the Bang=o Sentral
ng PilipinasB or
@fA )bligations issued or
guaranteed by foreign ban=s or
corporations, each of which shall
hae total net worth of at least )ne
hundred fifty :illion $S dollars
@J$S*8+,+++,+++!++A or such other
higher net worth as :ay be
prescribed by the &nsurance
Co::ission, as shown in their
financial state:ents as of the
i::ediately preceding fiscal yearB or
@gA 'ssign:ents of :onetary
instru:ents such as cash deposits,
deposit certificates or other si:ilar
instru:ents of uniersal ban=s,
co::ercial ban=s, inest:ent
houses or other financial
inter:ediaries duly registered with
the Bang=o Sentral ng PilipinasB or
@hA Pledges of shares of stoc=,
bonds or other instru:ents of
indebtedness specified in Section
3+9B or
@iA Chattel :ortgages oer
e?uip:ent not :ore than three @CA
years oldB and
@EA Such other security as :ay be
approed by the Co::issioner!
The loans proided in the
preceding subsection shall be
subEect to the following conditions;
@*A The a:ount of loan secured by
real estate :ortgage oer a non-
agricultural land shall not e>ceed
seenty percent @-+HA of its
appraised alue, and in the case of a
loan secured by a real estate
:ortgage oer an agricultural land,
the a:ount of loan shall not e>ceed
forty percent @6+HA of its :ar=et
alue; Proided , That, in no case
shall such loan hae a :aturity
period in e>cess of twenty-fie @38A
yearsB
@3A $nless approed by the
Co::issioner, no loan :ay be
granted upon the security of a
:ortgage on i:proed real estate if
the i:proe:ents thereon do not
belong to the owner of the land, and
the owner of the i:proe:ents does
not sign the deed of :ortgage!
0oweer, if the owner of the land is
the /oern:ent of the Philippines or
any of its political subdiisions and
a long-ter: lease has been
e>ecuted in faor of the owner of the
i:proe:ents, the owner of the land
need not be a party to the deed of
:ortgage! The e>piration date of the
lease shall not, howeer, precede
the :aturity of the loan! The phrase
i:proed real estate as used
herein shall :ean land with
per:anent building or buildings
erected thereonB
@CA %ease-agree:ents or si:ilar
securities receied on the sale of
real estate property shall not e>ceed
one hundred percent @*++HA of the
selling price of said property, or one
hundred percent @*++HA of its
:ar=et alue at the ti:e of its
disposition, whicheer a:ount is
lower! 0oweer, in no case shall
such agree:ent hae a :aturity
period not e>ceeding thirty @C+A
yearsB
@6A %oans secured by shares of
stoc= of solent corporations or
institutions shall not e>ceed fifty
percent @8+HA of;
@iA The weighted aerage :ar=et
price for the one hundred eighty
@*7+A days preceding the approal
of the loan for shares listed in the
stoc= e>changeB and
@iiA For unlisted shares, the
adEusted boo= alue of such shares!
@8A %oans secured by the chattel
:ortgages oer e?uip:ent shall not
e>ceed seenty percent @-+HA of the
:ar=et alue of said e?uip:ent!
S#C! 3+8! (o loan by any insurance
co:pany on the security of real
estate shall be :ade unless the title
to such real estate shall hae first
been registered in accordance with
the e>isting %and Registration 'ct,
or shall hae been preiously
registered under the proisions of
the e>isting Mortgage %aw and the
lien or interest of the insurance
co:pany as :ortgagee has been
registered!
S#C! 3+,! @aA 'n insurance
co:pany :ay purchase, hold, own
and coney such property, real and
personal, as :ay hae been
:ortgaged, pledged, or coneyed to
it in good faith in trust for its benefit
by reason of :oney loaned by it in
pursuance of the regular business of
the co:pany, and such real or
personal property as :ay hae been
purchased by it at sales under
pledges, :ortgages or deeds of trust
for its benefit on account of :oney
loaned by itB and such real and
personal property as :ay hae been
coneyed to it by borrowers in
satisfaction and discharge of loans
:ade by the co:pany in pay:ent or
by reason of any loan :ade by the
co:pany in pay:ent or by reason of
any loan :ade by it shall be sold by
the co:pany within twenty @3+A
years after the title thereto has been
ested in it!
@bA 'n insurance co:pany :ay
purchase, hold, and own the
following;
@*A Real properties which sere as
its :ain place of business andGor
branch offices; Proided , That such
inest:ent shall not in the oerall
e>ceed twenty percent @3+HA of its
net worth as shown by its latest
financial state:ent approed by the
Co::issioner!
@3A Bonds or other instru:ents of
indebtedness of the /oern:ent of
the Philippines or its political
subdiisions authoriDed by law to
issue bonds at the reasonable
:ar=et alue thereof!
@CA Bonds or other instru:ents of
debt of goern:ent-owned or -
controlled corporations and entities,
including the Bang=o Sentral ng
Pilipinas!
@6A Bonds, debentures or other
instru:ents of indebtedness of any
solent corporation or institution
created or e>isting under the laws of
the Philippines; Proided, howeer ,
That the issuing, assu:ing or
guaranteeing entity or its
predecessors shall not hae
defaulted in the pay:ent of interest
on any of its securities and that
during each of any three @CA
including the last two @3A of the fie
@8A fiscal years ne>t preceding the
date of ac?uisition by such
insurance co:pany of such bonds,
debentures, or other instru:ents of
indebtedness, the net earnings of
the issuing, assu:ing or
guaranteeing institution aailable for
its fi>ed charges, as hereinafter
defined, shall hae been not less
than one and one-?uarter @*KA ti:es
the total of its fi>ed charges for such
year; Proided, further , That no life
insurance co:pany shall inest in
or loan upon the obligations of any
one institution in the =inds per:itted
under this subsection an a:ount in
e>cess of twenty-fie percent @38HA
of the total ad:itted assets of such
insurer as of 1ece:ber thirty-first
ne>t preceding the date of such
inest:ent!
's used in this subsection the ter:
net earnings aailable for fi>ed
charges shall :ean net inco:e after
deducting operating and
:aintenance e>penses, ta>es other
than inco:e ta>es, depreciation and
depletionB but e>cluding
e>traordinary nonrecurring ite:s of
inco:e or e>pense appearing in the
regular financial state:ent of the
issuing, assu:ing or guaranteeing
institution! The ter: fi>ed charges
shall include interest on funded and
unfunded debt, a:ortiDation of debt
discount, and rentals for leased
properties!
@8A Preferred or guaranteed stoc=s
of any solent corporation or
institution created or e>isting under
the laws of the Philippines;
Proided , That if the stoc=s are
guaranteed, the a:ount of stoc=s so
guaranteed is not in e>cess of fifty
percent @8+HA of the a:ount of the
preferred or co::on stoc=s, as the
case :ay be, of the guaranteeing
corporation; Proided, finally , That
no life insurance co:pany shall
inest in or loan upon obligations of
any one institution in the =inds
per:itted under this subsection an
a:ount in e>cess of ten percent
@*+HA of the total ad:itted assets of
such insurer as of 1ece:ber thirty-
first ne>t preceding the date of such
inest:ent!
@,A Co::on stoc=s of any solent
corporation or institution created or
e>isting under the laws of the
Philippines; Proided, howeer , That
no life insurance co:pany shall
inest in or loan upon the
obligations of any one corporation or
institution in the =inds per:itted
under this subsection an a:ount in
e>cess of ten percent @*+HA of the
total ad:itted assets of such insurer
as of 1ece:ber thirty-first ne>t
preceding the date of such
inest:ent!
@-A Securities issued by a
registered enterprise, as this ter: is
defined in #>ecutie )rder (o! 33,,
otherwise =nown as the ):nibus
&nest:ents Code of *97-, as
a:ended; Proided , That the total
inest:ent of a do:estic non-life
insurance co:pany in any registered
enterprise shall not e>ceed twenty
percent @3+HA of the net worth of
said insurance co:pany as shown
by its aforesaid financial state:ent
unless preiously authoriDed by the
Co::issioner!
@7A Certificates, notes and other
obligations issued by the trustees or
receiers of any institution created
or e>isting under the laws of the
Philippines which, or the assets of
which, are being ad:inistered under
the direction of any court haing
Eurisdiction; Proided, howeer , That
such certificates, notes or other
obligations are ade?uately secured
as to principal and interests!
@9A #?uip:ent trust obligations or
certificates which are ade?uately
secured or other ade?uately secured
instru:ents eidencing an interest
in e?uip:ent wholly or in part within
the Philippines; Proided, howeer ,
That there is a right to receie
deter:ined portions of rental,
purchase or other fi>ed obligatory
pay:ents for the use or purchase of
such e?uip:ent!
@*+A 'ny obligation of any
corporation or institution created or
e>isting under the laws of the
Philippines which is, on the date of
ac?uisition by the insurer,
ade?uately secured and has
?ualities and characteristics wherein
the speculatie ele:ents are not
predo:inant!
@**A Such other securities as :ay
be approed by the Co::issioner!
@cA 'ny do:estic insurer which has
outstanding insurance, annuity or
reinsurance contracts in currencies
other than the national currency of
the Philippines :ay inest in, or
otherwise ac?uire or loan upon
securities and inest:ents in such
currency which are substantially of
the sa:e =inds, classes and
inest:ent grades as those eligible
for inest:ent under the foregoing
subdiisions of this sectionB but the
aggregate a:ount of such
inest:ents and of such cash in
such currency which is at any ti:e
held by such insurer shall not
e>ceed one and one-half @*LA ti:es
the a:ount of its reseres and other
obligations under such contracts or
the a:ount which such insurer is
re?uired by the law of any country
or possession outside the Republic
of the Philippines to be inested in
such country or possession,
whicheer shall be greater!
S#C! 3+-! 'n insurance co:pany
:ay;
@*A &nest in e?uities of other
financial institutionsB and
@3A #ngage in the buying and
selling of long-ter: debt
instru:ents; Proided , That any or
all of such inest:ents shall be with
the prior approal of the
Co::issioner! &nsurance co:panies
:ay, howeer, inest in listed
e?uities of other financial
institutions without need of prior
approal by the Co::issioner!
S#C! 3+7! 'ny life insurance
co:pany :ay;
@aA 'c?uire or construct housing
proEects and, in connection with any
such proEect, :ay ac?uire land or
any interest therein by purchase,
lease or otherwise, or use land
ac?uired pursuant to any other
proision of this Code! Such
co:pany :ay thereafter own,
:aintain, :anage, collect or receie
inco:e fro:, or sell and coney, any
land or interest therein so ac?uired
and any i:proe:ents thereon! The
aggregate boo= alue of the
inest:ents of any such co:pany in
all such proEects shall not e>ceed at
the ti:e of such inest:ents
twenty-fie percent @38HA of the
total ad:itted assets of such
co:pany on the thirty-first day of
1ece:ber ne>t preceding; Proided ,
That the funds of the co:pany for
the pay:ent of pending clai:s and
obligations shall not be used for
such inest:ents!
@bA 'c?uire real property, other than
property to be used pri:arily for
proiding housing and property for
acco::odation of its own business,
as an inest:ent for the production
of inco:e, or :ay ac?uire real
property to be i:proed or
deeloped for such inest:ent
purpose pursuant to a progra:
therefor, subEect to the condition
that the cost of each parcel of real
property so ac?uired under the
authority of this paragraph @bA,
including the esti:ated cost to the
co:pany of the i:proe:ent or
deelop:ent thereof, when added to
the boo= alue of all other real
property held by it pursuant to this
paragraph @bA, shall not e>ceed
twenty-fie percent @38HA of its
ad:itted assets as of the thirty-first
day of 1ece:ber ne>t preceding!
S#C! 3+9! #ery do:estic insurance
co:pany shall, to the e>tent of an
a:ount e?ual in alue to twenty-fie
percent @38HA of the :ini:u: net
worth re?uired under Section *96,
inest its funds only in securities,
satisfactory to the Co::issioner,
consisting of bonds or other
instru:ents of debt of the
/oern:ent of the Philippines or its
political subdiisions or
instru:entalities, or of goern:ent-
owned or -controlled corporations
and entities, including the Bang=o
Sentral ng Pilipinas; Proided , That
such inest:ents shall at all ti:es
be :aintained free fro: any lien or
encu:brance; Proided, further, That
such securities shall be deposited
with and held by the Co::issioner
for the faithful perfor:ance by the
depositing insurer of all its
obligations under its insurance
contracts! The proisions of Section
*97 shall, so far as practicable,
apply to the securities deposited
under this section!
#>cept as otherwise proided in
this Code, no Eudg:ent creditor or
other clai:ant shall hae the right
to ley upon any of the securities of
the insurer held on deposit under
this section or held on deposit
pursuant to the re?uire:ent of the
Co::issioner!
S#C! 3*+! 'fter satisfying the
re?uire:ents contained in the
preceding section, any do:estic
non-life insurance co:pany, shall
inest, to an a:ount prescribed
below, its funds in, or otherwise,
ac?uire or loan upon, only the
classes of inest:ents described in
Section 3+,, including securities
issued by any registered enterprise,
as this ter: is defined in #>ecutie
)rder (o! 33,, otherwise =nown as
The ):nibus &nest:ents Code of
*97- and such other classes of
inest:ents as :ay be authoriDed
by the Co::issioner for purposes of
this section; Proided , That;
@aA (o :ore than twenty percent
@3+HA of the net worth of such
co:pany as shown by its latest
financial state:ent approed by the
Co::issioner shall be inested in
the lot and building in which the
insurance co:pany conducts its
businessB and
@bA The total inest:ent of an
insurance co:pany in any registered
enterprise shall not e>ceed twenty
percent @3+HA of the net worth of
said insurance co:pany as shown
by its aforesaid financial state:ent
nor twenty percent @3+HA of the
paid-up capital of the registered
enterprise e>cluding the intended
inest:ent, unless preiously
authoriDed by the Co::issioner;
Proided, further, That such
inest:ents, free fro: any lien or
encu:brance, shall be at least e?ual
in a:ount to the aggregate a:ount
of; @*A its legal resere, as proided
in Section 3*9, and @3A its resere
fund held for reinsurance as
proided for in the pertinent treaty
proision in the case of reinsurance
ceded to authoriDed insurers!
S#C! 3**! 'fter satisfying the
re?uire:ents contained in Sections
*9-, *99, 3+9 and 3*+, any non-life
insurance co:pany :ay inest any
portion of its funds representing
earned surplus in any of the
inest:ents described in Sections
3+6, 3+, and 3+-, or in any
securities issued by a registered
enterprise :entioned in the
preceding sections; Proided , That
no inest:ent in stoc=s or bonds of
any single entity shall in the
aggregate, e>ceed twenty percent
@3+HA of the net worth of the
insurance co:pany as shown in its
latest financial state:ent approed
by the Co::issioner or twenty
percent @3+HA of the paid-up capital
of the issuing co:pany, whicheer
is lesser, unless otherwise approed
by the Co::issioner!
S#C! 3*3! 'fter satisfying the
:ini:u: capital inest:ent re?uired
in Section 3+9, any life insurance
co:pany :ay inest its legal policy
resere, as proided in Section 3*-
or in Section 3*7, in any of the
classes of securities or types of
inest:ents described in Sections
3+6, 3+,, 3+- and 3+7, subEect to
the li:itations therein contained,
and in any securities issued by any
registered enterprise :entioned in
Section 3*+, free fro: any lien or
encu:brance, in such a:ounts as
:ay be approed by the
Co::issioner! Such co:pany :ay
li=ewise inest any portion of its
earned surplus in the aforesaid
securities or inest:ents subEect to
the aforesaid li:itations!
S#C! 3*C! 'ny inest:ent :ade in
iolation of the applicable
proisions of this title shall be
considered non-ad:itted assets!
S#C! 3*6! @aA 'll bonds or other
instru:ents of indebtedness haing
a fi>ed ter: and rate of interest and
held by any life insurance co:pany
authoriDed to do business in this
country, if a:ply secured and if not
in default as to principal or interest,
shall be alued based on their
a:ortiDed cost using effectie
interest :ethod less i:pair:ent and
unrecoerable a:ount based on
appropriate :easure:ent :ethods
which are generally accepted in the
industry and accepted by the
Co::issioner! The Co::issioner
shall hae the power to deter:ine
the eligibility of any such
inest:ents for aluation on the
basis of a:ortiDation, and :ay by
regulation prescribe or li:it the
classes of securities so eligible for
a:ortiDation! 'll bonds or other
instru:ents of indebtedness which
in the Eudg:ent of the Co::issioner
are not a:ply secured shall not be
eligible for a:ortiDation and shall be
alued in accordance with
paragraph two! The Co::issioner
:ay, if he finds that the interest of
policyholders so per:it or re?uire,
by official regulation per:it or
re?uire any class or classes of
insurers, other than life insurance
co:panies authoriDed to do
business in this country, to alue
their bonds or other instru:ents of
indebtedness in accordance with the
foregoing rule!
@bA The inest:ents of all insurers
authoriDed to do business in this
country, e>cept securities subEect to
a:ortiDation and e>cept as
otherwise proided in this chapter,
shall be alued, in the discretion of
the Co::issioner, at their a:ortiDed
cost using effectie interest :ethod
less i:pair:ent and unrecoerable
a:ount or at aluation representing
their fair :ar=et alue! &f the
Co::issioner finds that in iew of
the character of inest:ents of any
insurer authoriDed to do business in
this country it would be prudent for
such insurer to establish a special
resere for possible losses or
fluctuations in the alues of its
inest:ents, he :ay re?uire such
insurer to establish such resere,
reasonable in a:ount, and include a
report thereon in any state:ent or
report of the financial condition of
such insurer! The Co::issioner
:ay, in connection with any
e>a:ination or re?uired financial
state:ent of an authoriDed insurer,
re?uire such insurer to furnish hi:
co:plete financial state:ents and
audited report of the financial
condition of any corporation of
which the securities are owned
wholly or partly by such insurer and
:ay cause an e>a:ination to be
:ade of any subsidiary or affiliate of
such insurer as appropriate to
specific inest:ents as proided in
appropriate circulars issued by the
Co::issioner!
@cA &nest:ents in e?uity of an
insurance co:pany shall be alued
as follows;
@*A %isted stoc=s shall be alued at
:ar=et alue and periodically
adEusted to reflect :ar=et changes
through a special aluation account
to reflect their realiDable alue when
soldB
@3A $nlisted stoc=s shall be alued
at adEusted boo= alue based on the
latest un?ualified audited financial
state:ents of the co:pany which
issued such stoc=sB and
@CA Stoc=s of a corporation under
the control of the insurer shall be
alued using the e?uity :ethod
which is the cost plus or :inus the
share of the controlling co:pany in
the earnings or losses of the
controlled co:pany after ac?uisition
of such stoc=s!
@dA The stoc= of an insurance
co:pany shall be alued at the
lesser of its :ar=et alue or its boo=
alue as shown by its last approed
audited financial state:ent or the
last report on e>a:ination,
whicheer is :ore recent! The boo=
alue of a share of co::on stoc= of
an insurance co:pany shall be
ascertained by diiding @*A the
a:ount of its capital and surplus
less the alue of all of its preferred
stoc=, if any, outstanding, by @3A the
nu:ber of shares of its co::on
stoc= issued and outstanding!
(otwithstanding the foregoing
proisions, an insurer :ay, at its
option, alue its holdings of stoc= in
a subsidiary insurance co:pany in
an a:ount not less than ac?uisition
cost if such ac?uisition cost is less
than the alue deter:ined as
hereinbefore proided!
@eA Real estate ac?uired by
foreclosure or by deed in lieu
thereof, in the absence of a recent
appraisal dee:ed by the
Co::issioner to be reliable, shall
not be alued at an a:ount greater
than the unpaid principal of the
defaulted loan at the date of such
foreclosure or deed, together with
any ta>es and e>penses paid or
incurred by such insurer at such
ti:e in connection with such
ac?uisition, and the cost of
additions or i:proe:ents thereafter
paid by such insurer and any
a:ount or a:ounts thereafter paid
by such insurer or any assess:ents
leied for i:proe:ents in
connection with the property!
@fA Purchase :oney :ortgages
receied on dispositions of real
property held pursuant to Section
3+7 shall be alued in an a:ount
e?uialent to ninety percent @9+HA
of the alue of such real property!
Purchase :oney :ortgages receied
on disposition of real property
otherwise held shall be alued in an
a:ount not e>ceeding ninety
percent @9+HA of the alue of such
real property as deter:ined by an
appraisal :ade by an appraiser at or
about the ti:e of disposition of such
real property!
@gA The stoc= of a subsidiary of an
insurer shall be alued on the basis
of the greater of;
@*A The alue of only such of the
assets of such subsidiary as would
constitute lawful inest:ents for the
insurer if ac?uired or held directly
by the insurerB or
@3A Such other alue deter:ined
pursuant to standards and
cu:ulatie li:itations, contained in
a regulation to be pro:ulgated by
the Co::issioner!
@hA (otwithstanding any proision
contained in this section or
elsewhere in this chapter, if the
Co::issioner finds that the
interests of policyholders so per:it
or re?uire, he :ay per:it or re?uire
any class or classes of insurers
authoriDed to do business in this
country to alue their inest:ents or
any class or classes thereof as of
any date heretofore or hereafter in
accordance with any applicable
aluation or :ethod!
S#C! 3*8! &t shall be the duty of the
officers of the insurance co:pany to
report within the first fifteen @*8A
days of eery :onth all such
inest:ents as :ay be :ade by
the: during the preceding :onth,
and the Co::issioner :ay, if such
inest:ents or any of the: see:
inEudicious to hi:, re?uire the sale
or disposal of the sa:e! The report
shall also include a list of
inest:ents sold or disposed of by
the co:pany during the sa:e
period!
T&T%# 8
R#S#R<#S
S#C! 3*,! #ery life insurance
co:pany, doing business in the
Philippines, shall annually :a=e a
aluation of all policies, additions
thereto, unpaid diidends, and all
other obligations outstanding on the
thirty-first day of 1ece:ber of the
preceding year! 'll such aluations
shall be :ade according to the
standard adopted by the co:pany,
as prescribed by the Co::issioner
in accordance with internationally
accepted actuarial standards, which
standard shall be stated in its
annual report!
Such standard of aluations shall
be according to a standard table of
:ortality with interest to be
deter:ined by the &nsurance
Co::issioner! 4hen the preli:inary
ter: basis is used, the ter:
insurance shall be li:ited to the first
policy year!
The results of such aluations shall
be reported to the Co::issioner on
or before the thirtieth day of 'pril of
each year acco:panied by a sworn
state:ent of a designated co:pany
officer and stating the :ethods and
assu:ptions used in arriing at the
alues reported!
S#C! 3*-! The aggregate net alue
so ascertained of the policies of
such co:pany shall be dee:ed its
resere liability, to proide for which
it shall hold funds in secure
inest:ents e?ual to such net alue,
aboe all its other liabilitiesB and it
shall be the duty of the
Co::issioner, after haing erified,
to such an e>tent as he :ay dee:
necessary, the aluation of all
policies in force, to satisfy hi:self
that the co:pany has such a:ount
in safe legal securities after all other
debts and clai:s against it hae
been proided for!
The resere liability for ariable
contracts defined in Section 3C7
shall be established in accordance
with actuarial procedures that
recogniDe the ariable nature of the
benefits proided, and shall be
approed by the Co::issioner!
S#C! 3*7! #ery life insurance
co:pany, conducted on the :utual
plan or a plan in which
policyholders are by the ter:s of
their policies entitled to share in the
profits or surplus shall, on all
policies of life insurance heretofore
or hereafter issued, under the
conditions of which the distribution
of surplus is deferred to a fi>ed or
specified ti:e and contingent upon
the policy being in force and the
insured liing at that ti:e, annually
ascertain the a:ount of the surplus
to which all such policies as a
separate class are entitled, and shall
annually apportion to such policies
as a class the a:ount of the surplus
so ascertained, and carry the
a:ount of such apportioned surplus,
plus the actual interest earnings and
accretions to such fund, as a
distinct and separate liability to such
class of policies on and for which
the sa:e was accu:ulated, and no
co:pany or any of its officers shall
be per:itted to use any part of such
apportioned surplus fund for any
purpose whatsoeer other than for
the e>press purpose for which the
sa:e was accu:ulated!
S#C! 3*9! #ery insurance
co:pany, other than life, shall
:aintain a resere for unearned
pre:iu:s on its policies in force,
which shall be charged as a liability
in any deter:ination of its financial
condition! Such resere shall be
calculated based on the twenty-
fourth @36 thA :ethod!
S#C! 33+! &n addition to its
liabilities and reseres on contracts
of insurance issued by it, eery
insurance co:pany shall be charged
with the esti:ated a:ount of all of
its other liabilities, including ta>es,
e>penses and other obligations due
or accrued at the date of state:ent,
and including any special reseres
re?uired by the Co::issioner
pursuant to the proisions of this
Code!
T&T%# ,
%&M&T )F S&(/%# R&S5
S#C! 33*! (o insurance co:pany
other than life, whether foreign or
do:estic, shall retain any ris= on
any one subEect of insurance in an
a:ount e>ceeding twenty percent
@3+HA of its net worth! For purposes
of this section, the ter: subEect of
insurance shall include all
properties or ris=s insured by the
sa:e insurer that custo:arily are
considered by non-life co:pany
underwriters to be subEect to loss or
da:age fro: the sa:e occurrence
of any haDard insured against!
The Co::issioner :ay issue
regulations proiding for a :a>i:u:
li:it on the oerall retained ris=s of
insurers to sere as a catastrophe
coer re?uire:ent for the sa:e!
Reinsurance ceded as authoriDed
under the succeeding title shall be
deducted in deter:ining the ris=
retained! 's to surety ris=, deduction
shall also be :ade of the a:ount
assu:ed by any other co:pany
authoriDed to transact surety
business and the alue of any
security :ortgaged, pledged, or held
subEect to the suretys control and
for the suretys protection!
T&T%# -
R#&(S$R'(C# TR'(S'CT&)(S
S#C! 333! 'n insurance co:pany
doing business in the Philippines
:ay accept reinsurances only of
such ris=s, and retain ris= thereon
within such li:its, as it is otherwise
authoriDed to insure!
S#C! 33C! (o insurance co:pany
doing business in the Philippines
shall cede all or part of any ris=s
situated in the Philippines by way of
reinsurance directly to any foreign
insurer not authoriDed to do
business in the Philippines unless
such foreign insurer or, if the
serices of a nonresident bro=er are
utiliDed, such nonresident bro=er is
represented in the Philippines by a
resident agent duly registered with
the Co::issioner as re?uired in this
Code!
The resident agent of such
unauthoriDed foreign insurer or
nonresident bro=er shall
i::ediately upon registration
furnish the Co::issioner with the
annual state:ent of such insurer, or
of such co:pany or co:panies
where such bro=er :ay place
Philippine business as of the year
preceding such registration, and
annually thereafter as soon as
aailable!
S#C! 336! 'll insurance co:panies,
both life and non-life, authoriDed to
do business in the Philippines shall
cede their e>cess ris=s to other
co:panies si:ilarly authoriDed to do
business in the Philippines in such
a:ounts and under such
arrange:ents as would be
consistent with sound underwriting
practices before they enter into
reinsurance arrange:ents with
unauthoriDed foreign insurers!
S#C! 338! 'ny insurance co:pany
doing business in the Philippines
desiring to cede their e>cess ris=s
to foreign insurance or reinsurance
co:panies not authoriDed to
transact business in the Philippines
:ay do so under such ter:s and
conditions which the Co::issioner
:ay prescribe!
Should any reinsurance agree:ent
be for any reason cancelled or
ter:inated, the ceding co:pany
concerned shall infor: the
Co::issioner in writing of such
cancellation or ter:ination within
thirty @C+A days fro: the date of
such cancellation or ter:ination or
fro: the date notice or infor:ation
of such cancellation or ter:ination
is receied by such co:pany as the
case :ay be!
S#C! 33,! #ery insurance co:pany
authoriDed to do business in the
Philippines shall report to the
Co::issioner on for:s prescribed
by hi: the particulars of reinsurance
treaties or any new treaties or
changes in e>isting treaties within
three @CA :onths fro: their
effectiity!
S#C! 33-! (o credit shall be
allowed as an ad:itted asset or as
a deduction fro: liability, to any
ceding insurer for reinsurance :ade,
ceded, renewed, or otherwise
beco:ing effectie after January *,
*9-8, unless the reinsurance shall
be payable by the assu:ing insurer
on the basis of the liability of the
ceding insurer under the contract or
contracts reinsured without
di:inution because of the
insolency of the ceding insurer nor
unless under the contract or
contracts of reinsurance the liability
for such reinsurance is assu:ed by
the assu:ing insurer or insurers as
of the sa:e effectie dateB nor
unless the reinsurance agree:ent
proides that pay:ents by the
assu:ing insurer shall be :ade
directly to the ceding insurer or to
its li?uidator, receier, or statutory
successor e>cept;
@aA 4here the contract specifically
proides another payee of such
reinsurance in the eent of the
insolency of the ceding insurerB
and
@bA 4here the assu:ing insurer
with the consent of the direct
insured or insureds has assu:ed
such policy obligations of the
ceding insurer as direct obligations
of the assu:ing insurer to the
payees under such policies and in
substitution for the obligations of
the ceding insurer to such payees!
S#C! 337! (o life insurance
co:pany doing business in the
Philippines shall reinsure its whole
ris= on any indiidual life or Eoint
lies, or substantially all of its
insurance in force, without haing
first obtained the written per:ission
of the Co::issioner!
T&T%# 7
'(($'% ST'T#M#(T
S#C! 339! #ery insurance co:pany
doing business in the Philippines
shall ter:inate its fiscal period on
the thirty-first day of 1ece:ber
eery year, and shall annually on or
before the thirtieth day of 'pril of
each year render to the
Co::issioner a state:ent signed
and sworn to by the chief officer of
such co:pany showing, in such
for: and details as :ay be
prescribed by the Co::issioner, the
e>act condition of its affairs on the
preceding thirty-first day of
1ece:ber!
The annual state:ent shall be
prepared in accordance with the
financial reporting fra:ewor= as
deter:ined by the Co::issioner! &n
addition, the Co::issioner :ay
re?uire other releant infor:ation!
The for: and details of such other
releant infor:ation shall be
prescribed by the Co::issioner and
shall for: part of the supple:entary
schedules to the annual state:ent!
'ny entry in the state:ent which is
found to be false shall constitute a
:isde:eanor and the officer signing
such state:ent shall be subEect to
the penalty proided for under
Section 663!
S#C! 3C+! #ery insurance co:pany
authoriDed under Title *+ of this
chapter to issue, delier or use
ariable contracts shall annually file
with the Co::issioner separate
annual state:ent of its separate
ariable accounts! Such state:ent
shall be on a for: prescribed or
approed by the Co::issioner and
shall include details as to all of the
inco:e, disburse:ents, assets and
liability ite:s of and associated with
the said separate ariable accounts!
Said state:ent shall be under oath
of two @3A officers of the co:pany
and shall be filed si:ultaneously
with the annual state:ent re?uired
by the preceding section!
S#C! 3C*! 4ithin thirty @C+A days
after receipt of the annual state:ent
approed by the Co::issioner,
eery insurance co:pany doing
business in the Philippines shall
publish in a newspaper of general
circulation, a full synopsis of its
annual financial state:ent showing
fully the conditions of its business,
and setting forth its resources and
liabilities in accordance with such
for: prescribed by the
Co::issioner!
The Co::issioner shall hae the
authority to :a=e, a:end, and
rescind such accounting rules and
regulations as :ay be necessary to
carry out the proisions of this
Code, and define accounting,
technical and trade ter:s used in
this Code; Proided , That such shall
be in accordance with internationally
accepted accounting standards!
':ong other things, the
Co::issioner :ay prescribe the
for: or for:s in which re?uired
infor:ation shall be set forth, the
ite:s or details to be shown in the
balance sheet and inco:e
state:ent, and the :ethods to be
followed in the preparation of
accounts, appraisal or aluation of
assets and liabilities, deter:ination
of recurring and nonrecurring
inco:e, differentiation of inest:ent
and operating inco:e, and in the
preparation, where the
Co::issioner dee:s it necessary
or desirable, of consolidated balance
sheets or inco:e accounts of any
person directly or indirectly
controlling or controlled by the
insurance co:pany!
T&T%# 9
P)%&C2 F)RMS
S#C! 3C3! (o policy, certificate or
contract of insurance shall be
issued or deliered within the
Philippines unless in the for:
preiously approed by the
Co::issioner, and no application
for: shall be used with, and no
rider, clause, warranty or
endorse:ent shall be attached to,
printed or sta:ped upon such
policy, certificate or contract unless
the for: of such application, rider,
clause, warranty or endorse:ent
has been approed by the
Co::issioner!
S#C! 3CC! &n the case of indiidual
life or endow:ent insurance, the
policy shall contain in substance the
following conditions;
@aA ' proision that the
policyholder is entitled to a grace
period either of thirty @C+A days or of
one @*A :onth within which the
pay:ent of any pre:iu: after the
first :ay be :ade, subEect at the
option of the insurer to an interest
charge not in e>cess of si> percent
@,HA per annu: for the nu:ber of
days of grace elapsing before the
pay:ent of the pre:iu:, during
which period of grace the policy
shall continue in full force, but in
case the policy beco:es a clai:
during the said period of grace
before the oerdue pre:iu: is paid,
the a:ount of such pre:iu: with
interest :ay be deducted fro: the
a:ount payable under the policy in
settle:entB
@bA ' proision that the policy shall
be incontestable after it shall hae
been in force during the lifeti:e of
the insured for a period of two @3A
years fro: its date of issue as
shown in the policy, or date of
approal of last reinstate:ent,
e>cept for nonpay:ent of pre:iu:
and e>cept for iolation of the
conditions of the policy relating to
:ilitary or naal serice in ti:e of
warB
@cA ' proision that the policy shall
constitute the entire contract
between the parties, but if the
co:pany desires to :a=e the
application a part of the contract it
:ay do so proided a copy of such
application shall be indorsed upon
or attached to the policy when
issued, and in such case the policy
shall contain a proision that the
policy and the application therefor
shall constitute the entire contract
between the partiesB
@dA ' proision that if the age of
the insured is considered in
deter:ining the pre:iu: and the
benefits accruing under the policy,
and the age of the insured has been
:isstated, the a:ount payable
under the policy shall be such as
the pre:iu: would hae purchased
at the correct ageB
@eA &f the policy is participating, a
proision that the co:pany shall
periodically ascertain and apportion
any diisible surplus accruing on
the policy under conditions specified
thereinB
@fA ' proision specifying the
options to which the policyholder is
entitled to in the eent of default in
a pre:iu: pay:ent after three @CA
full annual pre:iu:s shall hae
been paid! Such option shall consist
of;
@*A ' cash surrender alue payable
upon surrender of the policy which
shall not be less than the resere
on the policy, the basis of which
shall be indicated, for the then
current policy year and any diidend
additions thereto, reduced by a
surrender charge which shall not be
:ore than one-fifth @*G8A of the
entire resere or two and one-half
percent @3LHA of the a:ount
insured and any diidend additions
theretoB and
@3A )ne or :ore paid-up benefits
on a plan or plans specified in the
policy of such alue as :ay be
purchased by the cash surrender
alue!
@gA ' proision that at any ti:e
after a cash surrender alue is
aailable under the policy and while
the policy is in force, the co:pany
will adance, on proper assign:ent
or pledge of the policy and on sole
security thereof, a su: e?ual to, or
at the option of the owner of the
policy, less than the cash surrender
alue on the policy, at a specified
rate of interest, not :ore than the
:a>i:u: allowed by law, to be
deter:ined by the co:pany fro:
ti:e to ti:e, but not :ore often
than once a year, subEect to the
approal of the Co::issionerB and
that the co:pany will deduct fro:
such loan alue any e>isting
indebtedness on the policy and any
unpaid balance of the pre:iu: for
the current policy year, and :ay
collect interest in adance on the
loan to the end of the current policy
year, which proision :ay further
proide that such loan :ay be
deferred for not e>ceeding si> @,A
:onths after the application therefor
is :adeB
@hA ' table showing in figures cash
surrender alues and paid-up
options aailable under the policy
each year upon default in pre:iu:
pay:ents, during at least twenty
@3+A years of the policy beginning
with the year in which the alues
and options first beco:e aailable,
together with a proision that in the
eent of the failure of the
policyholder to elect one of the said
options within the ti:e specified in
the policy, one of said options shall
auto:atically ta=e effect and no
policyholder shall eer forfeit his
right to sa:e by reason of his
failure to so electB
@iA &n case the proceeds of a policy
are payable in install:ents or as an
annuity, a table showing the
:ini:u: a:ounts of the
install:ents or annuity pay:entsB
@EA ' proision that the policyholder
shall be entitled to hae the policy
reinstated at any ti:e within three
@CA years fro: the date of default of
pre:iu: pay:ent unless the cash
surrender alue has been duly paid,
or the e>tension period has e>pired,
upon production of eidence of
insurability satisfactory to the
co:pany and upon pay:ent of all
oerdue pre:iu:s and any
indebtedness to the co:pany upon
said policy, with interest rate not
e>ceeding that which would hae
been applicable to said pre:iu:s
and indebtedness in the policy years
prior to reinstate:ent!
'ny of the foregoing proisions or
portions thereof not applicable to
single pre:iu: or ter: policies
shall to that e>tent not be
incorporated thereinB and any such
policy :ay be issued and deliered
in the Philippines which in the
opinion of the Co::issioner
contains proisions on any one or
:ore of the foregoing re?uire:ents
:ore faorable to the policyholder
than hereinbefore re?uired!
This section shall not apply to
policies of group life or industrial life
insurance!
S#C! 3C6! (o policy of group life
insurance shall be issued and
deliered in the Philippines unless it
contains in substance the following
proisions, or proisions which in
the opinion of the Co::issioner are
:ore faorable to the persons
insured, or at least as faorable to
the persons insured and :ore
faorable to the policyholders;
@aA ' proision that the
policyholder is entitled to a grace
period of either thirty @C+A days or of
one @*A :onth for the pay:ent of
any pre:iu: due after the first,
during which grace period the death
benefit coerage shall continue in
force, unless the policyholder shall
hae gien the insurer written notice
of discontinuance in adance of the
date of discontinuance and in
accordance with the ter:s of the
policy! The policy :ay proide that
the policyholder shall be liable for
the pay:ent of a pro rata pre:iu:
for the ti:e the policy is in force
during such grace periodB
@bA ' proision that the alidity of
the policy shall not be contested,
e>cept for nonpay:ent of pre:iu:s
after it has been in force for two @3A
years fro: its date of issueB and
that no state:ent :ade by any
insured under the policy relating to
his insurability shall be used in
contesting the alidity of the
insurance with respect to which
such state:ent was :ade after such
insurance has been in force prior to
the contest for a period of two @3A
years during such persons lifeti:e
nor unless contained in a written
instru:ent signed by hi:B
@cA ' proision that a copy of the
application, if any, of the
policyholder shall be attached to the
policy when issued, that all
state:ents :ade by the policyholder
or by persons insured shall be
dee:ed representations and not
warranties, and that no state:ent
:ade by any insured shall be used
in any contest unless a copy of the
instru:ent containing the state:ent
is or has been furnished to such
person or to his beneficiaryB
@dA ' proision setting forth the
conditions, if any, under which the
insurer reseres the right to re?uire
a person eligible for insurance to
furnish eidence of indiidual
insurability satisfactory to the
insurer as a condition to part or all
of his coerageB
@eA ' proision specifying an
e?uitable adEust:ent of pre:iu:s or
of benefits or of both to be :ade in
the eent that the age of a person
insured has been :isstated, such
proision to contain a clear
state:ent of the :ethod of
adEust:ent to be usedB
@fA ' proision that any su:
beco:ing due by reason of death of
the person insured shall be payable
to the beneficiary designated by the
insured, subEect to the proisions of
the policy in the eent that there is
no designated beneficiary, as to all
or any part of such su:, liing at
the death of the insured, and subEect
to any right resered by the insurer
in the policy and set forth in the
certificate to pay at its option a part
of such su: not e>ceeding Fie
hundred pesos @P8++!++A to any
person appearing to the insurer to
be e?uitably entitled thereto by
reason of haing incurred funeral or
other e>penses incident to the last
illness or, death of the person
insuredB
@gA ' proision that the insurer will
issue to the policyholder for deliery
to each person insured a state:ent
as to the insurance protection to
which he is entitled, to who: the
insurance benefits are payable, and
the rights set forth in paragraphs
@hA, @iA and @EA followingB
@hA ' proision that if the
insurance, or any portion of it, on a
person coered under the policy
ceases because of ter:ination of
e:ploy:ent or of :e:bership in the
class or classes eligible for
coerage under the policy, such
person shall be entitled to hae
issued to hi: by the insurer, without
eidence of insurability, an
indiidual policy of life insurance
without disability or other
supple:entary benefits, proided
application for the indiidual policy
and pay:ent of the first pre:iu: to
the insurer shall be :ade within
thirty @C+A days after such
ter:ination, and proided further
that;
@*A The indiidual policy shall be
on any one of the for:s, e>cept ter:
insurance, then custo:arily issued
by the insurer at the age and for an
a:ount not in e>cess of the
coerage under the group policyB
and
@3A The pre:iu: on the indiidual
policy shall be at the insurers then
custo:ary rate applicable to the
for: and a:ount of the indiidual
policy, to the class of ris= to which
such person then belongs, and to
his age attained on the effectie
date of the indiidual policy!
@iA ' proision that if the group
policy ter:inates or is a:ended so
as to ter:inate the insurance of any
class of insured persons, eery
person insured thereunder at the
date of such ter:ination whose
insurance ter:inates and who has
been so insured for fie @8A years
prior to such ter:ination date shall
be entitled to hae issued to hi: by
the insurer an indiidual policy of
life insurance subEect to the sa:e
li:itations as set forth in paragraph
@hA, e>cept that the group policy
:ay proide that the a:ount of such
indiidual policy shall not e>ceed
the a:ount of the persons life
insurance protection ceasingB
@EA ' proision that if a person
insured under the group policy dies
during the thirty @C+A-day period
within which he would hae been
entitled to an indiidual policy
issued to hi: in accordance with
paragraphs @hA and @iA aboe and
before such indiidual policy shall
hae beco:e effectie, the a:ount
of life insurance which he would
hae been entitled to hae issued to
hi: as an indiidual policy shall be
payable as a clai: under the group
policy whether or not application for
the indiidual policy or the pay:ent
of the first pre:iu: has been :adeB
@=A &n the case of a policy issued to
a creditor to insure debtors of such
creditor, a proision that the insurer
will furnish to the policyholder for
deliery to each debtor insured
under the policy a for: which will
contain a state:ent that the life of
the debtor is insured under the
policy and that any death benefit
paid thereunder by reason of his
death shall be applied to reduce or
e>tinguish indebtedness!
The proisions of paragraphs @fA to
@EA shall not apply to policies issued
to a creditor to insure his debtors! &f
a group life policy is on a plan of
insurance other than ter:, it shall
contain a non-forfeiture proision or
proisions which in the opinion of
the Co::issioner is or are e?uitable
to the insured or the policyholder;
Proided , That nothing herein
contained shall be so construed as
to re?uire group life policies to
contain the sa:e non-forfeiture
proisions as are re?uired of
indiidual life policies!
S#C! 3C8! The ter: industrial life
insurance as used in this Code shall
:ean that for: of life insurance
under which the pre:iu:s are
payable either :onthly or oftener, if
the face a:ount of insurance
proided in any policy is not :ore
than fie hundred ti:es that of the
current statutory :ini:u: daily
wage in the City of Manila, and if the
words industrial policy are printed
upon the policy as part of the
descriptie :atter!
'n industrial life policy shall not
lapse for nonpay:ent of pre:iu: if
such nonpay:ent was due to the
failure of the co:pany to send its
representatie or agent to the
insured at the residence of the
insured or at so:e other place
indicated by hi: for the purpose of
collecting such pre:iu:; Proided ,
That the proisions of this
paragraph shall not apply when the
pre:iu: on the policy re:ains
unpaid for a period of three @CA
:onths or twele @*3A wee=s after
the grace period has e>pired!
S#C! 3C,! &n the case of industrial
life insurance, the policy shall
contain in substance the following
proisions;
@aA ' proision that the insured is
entitled to a grace period of four @6A
wee=s within which the pay:ent of
any pre:iu: after the first :ay be
:ade, e>cept that where pre:iu:s
are payable :onthly, the period of
grace shall be either one @*A :onth
or thirty @C+A daysB and that during
the period of grace, the policy shall
continue in full force, but if during
such grace period the policy
beco:es a clai:, then any oerdue
and unpaid pre:iu:s :ay be
deducted fro: any a:ount payable
under the policy in settle:entB
@bA ' proision that the policy shall
be incontestable after it has been in
force during the lifeti:e of the
insured for a specified period, not
:ore than two @3A years fro: its
date of issue, e>cept for
nonpay:ent of pre:iu:s and
e>cept for iolation of the conditions
of the policy relating to naal or
:ilitary serice, or serices au>iliary
thereto, and e>cept as to proisions
relating to benefits in the eent of
disability as defined in the policy,
and those granting additional
insurance specifically against death
by accident or by accidental :eans,
or to additional insurance against
loss of, or loss of use of, specific
:e:bers of the bodyB
@cA ' proision that the policy shall
constitute the entire contract
between the parties, or if a copy of
the application is endorsed upon
and attached to the policy when
issued, a proision that the policy
and the application therefor shall
constitute the entire contract
between the parties, and in the latter
case, a proision that all state:ents
:ade by the insured shall, in the
absence of fraud, be dee:ed
representations and not warrantiesB
@dA ' proision that if the age of
the person insured, or the age of
any person, considered in
deter:ining the pre:iu:, or the
benefits accruing under the policy,
has been :isstated, any a:ount
payable or benefit accruing under
the policy shall be such as the
pre:iu: paid would hae purchased
at the correct ageB
@eA ' proision that if the policy is
a participating policy, the co:pany
shall periodically ascertain and
apportion any diisible surplus
accruing on the policy under the
conditions specified thereinB
@fA ' proision that in the eent of
default in pre:iu: pay:ents after
three @CA full years pre:iu:s hae
been paid, the policy shall be
conerted into a stipulated for: of
insurance, and that in the eent of
default in pre:iu: pay:ents after
fie @8A full years pre:iu:s hae
been paid, a specified cash
surrender alue shall be aailable, in
lieu of the stipulated for: of
insurance, at the option of the
policyholder! The net alue of such
stipulated for: of insurance and the
a:ount of such cash alue shall not
be less than the resere on the
policy and diidend additions
thereto, if any, at the end of the last
co:pleted policy year for which
pre:iu:s shall hae been paid @the
policy to specify the :ortality table,
rate of interest and :ethod of
aluation adopted to co:pute such
resereA, e>clusie of any resere on
disability benefits and accidental
death benefits, less an a:ount not
to e>ceed two and one-half percent
@3LHA of the :a>i:u: a:ount
insured by the policy and diidend
additions thereto, if any, when the
issue age is under ten @*+A years,
and less an a:ount not to e>ceed
two and one-half percent @3LHA of
the current a:ount insured by the
policy and diidend additions
thereto, if any, if the issue age is ten
@*+A years or older, and less any
e>isting indebtedness to the
co:pany on or secured by the
policyB
@gA ' proision that the policy :ay
be surrendered to the co:pany at
its ho:e office within a period of not
less than si>ty @,+A days after the
due date of a pre:iu: in default for
the specified cash alue; Proided ,
That the insurer :ay defer pay:ent
for not :ore than si> @,A :onths
after the application therefor is
:adeB
@hA ' table that shows in figures
the nonforfeiture benefits aailable
under the policy eery year upon
default in pay:ent of pre:iu:s
during at least the first twenty @3+A
years of the policy, such table to
begin with the year in which such
alues beco:e aailable, and a
proision that the co:pany will
furnish upon re?uest an e>tension of
such table beyond the year shown
in the policyB
@iA ' proision that specifies which
one of the stipulated for:s of
insurance proided for under the
proision of paragraph @fA of this
section shall ta=e effect in the eent
of the insureds failure, within si>ty
@,+A days fro: the due date of the
pre:iu: in default, to notify the
insurer in writing as to which one of
such for:s he has selectedB
@EA ' proision that the policy :ay
be reinstated at any ti:e within two
@3A years fro: the due date of the
pre:iu: in default unless the cash
surrender alue has been paid or
the period of e>tended ter:
insurance e>pired, upon production
of eidence of insurability
satisfactory to the co:pany and
pay:ent of arrears of pre:iu:s with
interest at a rate not e>ceeding si>
percent @,HA per annu: payable
annuallyB
@=A ' proision that when a policy
shall beco:e a clai: by death of
the insured, settle:ent shall be
:ade upon receipt of due proof of
death, or not later than two @3A
:onths after receipt of such proofB
@lA ' title on the face and on the
bac= of the policy correctly
describing its for:B
@:A ' space on the front or the
bac= of the policy for the na:e of
the beneficiary designated by the
insured with a reseration of the
insureds right to designate or
change the beneficiary after the
issuance of the policy! The policy
:ay also proide that no
designation or change of beneficiary
shall be binding on the insurer until
endorsed on the policy by the
insurer, and that the insurer :ay
refuse to endorse the na:e of any
proposed beneficiary who does not
appear to the insurer to hae an
insurable interest in the life of the
insured! Such policy :ay also
contain a proision that if the
beneficiary designated in the policy
does not surrender the policy with
due proof of death within the period
stated in the policy, which shall not
be less than thirty @C+A days after
the death of the insured, or if the
beneficiary is the estate of the
insured, or is a :inor, or dies before
the insured, or is not legally
co:petent to gie alid release, then
the insurer :ay :a=e any pay:ent
thereunder to the e>ecutor or
ad:inistrator of the insured, or to
any of the insureds relaties by
blood or legal adoption or
connections by :arriage or to any
person appearing to the insurer to
be e?uitably entitled thereto by
reason of haing incurred e>pense
for the :aintenance, :edical
attention or burial of the insuredB
and
@nA ' proision that when an
industrial life insurance policy is
issued proiding for accidental or
health benefits, or both, in addition
to life insurance, the foregoing
proisions shall apply only to the
life insurance portion of the policy!
'ny of the foregoing proisions or
portions thereof not applicable to
nonparticipating or ter: policies
shall to that e>tent not be
incorporated therein! The foregoing
proisions shall not apply to
policies issued or granted pursuant
to the nonforfeiture proisions
prescribed in proisions of
paragraphs @fA and @iA of this
section, nor shall proisions of
paragraphs @fA, @gA, @hA, and @iA
hereof be re?uired in ter: insurance
of twenty @3+A years or less but
such ter: policies shall specify the
:ortality table, rate of interest, and
:ethod of co:puting reseres!
S#C! 3C-! (o policy of industrial life
insurance shall be issued or
deliered in the Philippines if it
contains any of the following
proisions;
@aA ' proision that gies the
insurer the right to declare the
policy oid because the insured has
had any disease or ail:ent, whether
specified or not, or because the
insured has receied institutional,
hospital, :edical or surgical
treat:ent or attention, e>cept a
proision which gies the insurer
the right to declare the policy oid if
the insured has, within two @3A years
prior to the issuance of the policy,
receied institutional, hospital,
:edical or surgical treat:ent or
attention and if the insured or the
clai:ant under the policy fails to
show that the condition occasioning
such treat:ent or attention was not
of a serious nature or was not
:aterial to the ris=B
@bA ' proision that gies the
insurer the right to declare the
policy oid because the insured has
been reEected for insurance, unless
such right be conditioned upon a
showing by the insurer that
=nowledge of such reEection would
hae led to a refusal by the insurer
to :a=e such contractB
@cA ' proision that allows the
co:pany to pay the proceeds of the
policy at the death of the insured to
any person other than the na:ed
beneficiary, e>cept in accordance
with a standard proision as
specified under the proisions of
paragraph @:A of the preceding
sectionB
@dA ' proision that li:its the ti:e
within which any action at law or in
e?uity :ay be co::enced to less
than si> @,A years after the cause of
action shall accrueB and
@eA ' proision that specifies any
:ode of settle:ent at :aturity of
less alue than the a:ount insured
by the policy plus diidend
additions, if any, less any
indebtedness to the co:pany on the
policy and less any pre:iu: that
:ay by the ter:s of the policy be
deducted, pay:ents to be :ade in
accordance with the ter:s of the
policy!
(othing contained in this section
nor in the proision of paragraph @bA
of the preceding section, relating to
incontestability, shall be construed
as prohibiting the life insurance
co:pany fro: placing in its
industrial life policies proisions
li:iting its liability with respect to;
@*A 1eath resulting fro: aiation
other than as a fare-paying
passenger on a regularly scheduled
route between definitely established
airportsB and
@3A Military or naal serice;
Proided , That if the liability of the
co:pany is li:ited as herein
proided, such liability shall in no
eent be fi>ed at an a:ount less
than the resere on the policy
@e>cluding the resere for any
additional benefits in the eent of
death by accident or accidental
:eans or for benefits in the eent of
any type of disabilityA, less any
indebtedness on or secured by such
policyB nor shall any proision of
this section apply to any proision
in an industrial life insurance policy
for additional benefits in the eent of
death by accident or accidental
:eans!
T&T%# *+
<'R&'B%# C)(TR'CTS
S#C! 3C7! @aA (o insurance
co:pany authoriDed to transact
business in the Philippines shall
issue, delier, sell or use any
ariable contract in the Philippines,
unless and until such co:pany shall
hae satisfied the Co::issioner that
its financial and general condition
and its :ethods of operations,
including the issue and sale of
ariable contracts, are not and will
not be haDardous to the public or to
its policy and contract owners! (o
foreign insurance co:pany shall be
authoriDed to issue, delier or sell
any ariable contract in the
Philippines, unless it is li=ewise
authoriDed to do so by the laws of
its do:icile!
@bA The ter: ariable contract shall
:ean any policy or contract on
either a group or on an indiidual
basis issued by an insurance
co:pany proiding for benefits or
other contractual pay:ents or
alues thereunder to ary so as to
reflect inest:ent results of any
segregated portfolio of inest:ents
or of a designated separate account
in which a:ounts receied in
connection with such contracts shall
hae been placed and accounted for
separately and apart fro: other
inest:ents and accounts! This
contract :ay also proide benefits
or alues incidental thereto payable
in fi>ed or ariable a:ounts, or
both! &t shall not be dee:ed to be a
security or securities as defined in
The Securities 'ct, as a:ended, or
in the &nest:ent Co:pany 'ct, as
a:ended, nor subEect to regulations
under said 'cts!
@cA &n deter:ining the ?ualifications
of a co:pany re?uesting authority to
issue, delier, sell or use ariable
contracts, the Co::issioner shall
always consider the following;
@*A The history, financial and
general condition of the co:pany;
Proided , That such co:pany, if a
foreign co:pany, :ust hae
deposited with the Co::issioner for
the benefit and security of its
ariable contract owners in the
Philippines, securities satisfactory to
the Co::issioner consisting of
bonds of the /oern:ent of the
Philippines or its instru:entalities
with an actual :ar=et alue of Two
:illion pesos @P3,+++,+++!++AB
@3A The character, responsibility
and fitness of the officers and
directors of the co:panyB and
@CA The law and regulation under
which the co:pany is authoriDed in
the state of do:icile to issue such
contracts!
@dA &f after notice and hearing, the
Co::issioner shall find that the
co:pany is ?ualified to issue,
delier, sell or use ariable contracts
in accordance with this Code and
the regulations and rules issued
thereunder, the corresponding order
of authoriDation shall be issued! 'ny
decision or order denying authority
to issue, delier, sell or use ariable
contracts shall clearly and distinctly
state the reasons and grounds on
which it is based!
S#C! 3C9! 'ny insurance co:pany
issuing ariable contracts pursuant
to this Code :ay in its discretion
issue contracts proiding a
co:bination of fi>ed a:ount and
ariable a:ount of benefits and for
option lu:p-su: pay:ent of
benefits!
S#C! 36+! #ery ariable contract
for: deliered or issued for deliery
in the Philippines, and eery certified
for: eidencing ariable benefits
issued pursuant to any such
contract on a group basis, and the
application, rider and endorse:ent
for:s applicable thereto and used in
connection therewith, shall be
subEect to the prior approal of the
Co::issioner!
S#C! 36*! &llustration of benefits
payable under any ariable contract
shall not include or inole
proEections of past inest:ent
e>perience into the future and shall
confor: with the rules and
regulations pro:ulgated by the
Co::issioner!
S#C! 363! <ariable contracts :ay
be issued on the industrial life
basis, proided that the pertinent
proisions of this Code and of the
rules and regulations of the
Co::issioner goerning ariable
contracts are co:plied with in
connection with such contracts!
S#C! 36C! #ery life insurance
co:pany authoriDed under the
proisions of this Code to issue,
delier, sell or use ariable contracts
shall, in connection with the sa:e,
establish one or :ore separate
accounts to be =nown as separate
ariable accounts! 'll a:ounts
receied by the co:pany in
connection with any such contracts
which are re?uired by the ter:s
thereof, to be allocated or applied to
one or :ore designated separate
ariable accounts shall be placed in
such designated account or
accounts! The assets and liabilities
of each such separate ariable
account shall at all ti:es be clearly
identifiable and distinguishable fro:
the assets and liabilities in all other
accounts of the co:pany!
(otwithstanding any proision of law
to the contrary, the assets held in
any such separate ariable account
shall not be chargeable with
liabilities arising out of any other
business the co:pany :ay conduct
but shall be held and applied
e>clusiely for the benefit of the
owners or beneficiaries of the
ariable contracts applicable
thereto! &n the eent of the
insolency of the co:pany, the
assets of each such separate
ariable account shall be applied to
the contractual clai:s of the owners
or beneficiaries of the ariable
contracts applicable thereto! #>cept
as otherwise specifically proided
by the contract, no sale, e>change
or other transfer of assets :ay be
:ade by a co:pany, between any of
its separate accounts or between
any other inest:ent account and
one or :ore of its separate
accounts, unless in the case of a
transfer into a separate account,
such transfer is :ade solely to
establish the account or to support
the operation of the contracts with
respect to the separate account to
which the transfer is :ade, or in
case of a transfer fro: a separate
account, such transfer would not
cause the re:aining assets of the
account to beco:e less than the
reseres and other contract
liabilities with respect to such
separate account! Such transfer,
whether into or fro: a separate
account, shall be :ade by a transfer
of cash, or by a transfer of
securities haing a aluation which
could be readily deter:ined in the
:ar=et place; Proided , That such
transfer of securities is approed by
the Co::issioner! The
Co::issioner :ay authoriDe other
transfers a:ong such accounts, if,
in his opinion, such transfers would
not be ine?uitable! 'll a:ounts and
assets allocated to any such
separate ariable account shall be
owned by the co:pany and with
respect to the sa:e the co:pany
shall not be nor hold itself out to be
a trustee!
S#C! 366! 'ny insurance co:pany
which has established one or :ore
separate ariable accounts pursuant
to the preceding section :ay inest
and reinest all or any part of the
assets allocated to any such
account in the securities and
inest:ents authoriDed by Sections
3+6, 3+,, 3+- and 3+7 for any of the
funds of an insurance co:pany in
such a:ount or a:ounts as :ay be
approed by the Co::issioner! &n
addition thereto, such co:pany :ay
also inest in co::on stoc=s or
other e?uities which are listed on or
ad:itted to trading in a securities
e>change located in the Philippines,
or which are publicly held and
traded in the oer-the-counter
:ar=et as defined by the
Co::issioner and as to which
:ar=et ?uotations hae been
aailable; Proided, howeer, That
no such co:pany shall inest in
e>cess of ten percent @*+HA of the
assets of any such separate ariable
accounts in any one corporation
issuing such co::on stoc=! The
assets and inest:ents of such
separate ariable accounts shall not
be ta=en into account in applying
the ?uantitatie inest:ent
li:itations applicable to other
inest:ents of the co:pany! &n the
purchase of co::on capital stoc=
or other e?uities, the insurer shall
designate to the bro=er, or to the
seller if the purchase is not :ade
through a bro=er, the specific
ariable account for which the
inest:ent is :ade!
S#C! 368! 'ssets allocated to any
separate ariable account shall be
alued at their :ar=et alue on the
date of any aluation, or if there is
no readily aailable :ar=et alue
then in accordance with the ter:s of
the ariable contract applicable to
such assets, or if there are no such
contract ter:s then in such :anner
as :ay be prescribed by the rules
and regulations of the
Co::issioner!
S#C! 36,! The resere liability for
ariable contracts shall be
established in accordance with
actuarial procedures that recogniDe
the ariable nature of the benefits
proided, and shall be approed by
the Co::issioner!
T&T%# **
C%'&MS S#TT%#M#(T
S#C! 36-! @aA (o insurance
co:pany doing business in the
Philippines shall refuse, without Eust
cause, to pay or settle clai:s arising
under coerages proided by its
policies, nor shall any such
co:pany engage in unfair clai:
settle:ent practices! 'ny of the
following acts by an insurance
co:pany, if co::itted without Eust
cause and perfor:ed with such
fre?uency as to indicate a general
business practice, shall constitute
unfair clai: settle:ent practices;
@*A 5nowingly :isrepresenting to
clai:ants pertinent facts or policy
proisions relating to coerage at
issueB
@3A Failing to ac=nowledge with
reasonable pro:ptness pertinent
co::unications with respect to
clai:s arising under its policiesB
@CA Failing to adopt and i:ple:ent
reasonable standards for the pro:pt
inestigation of clai:s arising under
its policiesB
@6A (ot atte:pting in good faith to
effectuate pro:pt, fair and e?uitable
settle:ent of clai:s sub:itted in
which liability has beco:e
reasonably clearB or
@8A Co:pelling policyholders to
institute suits to recoer a:ounts
due under its policies by offering
without Eustifiable reason
substantially less than the a:ounts
ulti:ately recoered in suits brought
by the:!
@bA #idence as to nu:bers and
types of alid and Eustifiable
co:plaints to the Co::issioner
against an insurance co:pany, and
the Co::issioners co:plaint
e>perience with other insurance
co:panies writing si:ilar lines of
insurance shall be ad:issible in
eidence in an ad:inistratie or
Eudicial proceeding brought under
this section!
@cA &f it is found, after notice and an
opportunity to be heard, that an
insurance co:pany has iolated this
section, each instance of
nonco:pliance with paragraph @aA
:ay be treated as a separate
iolation of this section and shall be
considered sufficient cause for the
suspension or reocation of the
co:panys certificate of authority!
S#C! 367! The proceeds of a life
insurance policy shall be paid
i::ediately upon :aturity of the
policy, unless such proceeds are
:ade payable in install:ents or as
an annuity, in which case the
install:ents, or annuities shall be
paid as they beco:e due; Proided,
howeer, That in the case of a policy
:aturing by the death of the
insured, the proceeds thereof shall
be paid within si>ty @,+A days after
presentation of the clai: and filing
of the proof of death of the insured!
Refusal or failure to pay the clai:
within the ti:e prescribed herein
will entitle the beneficiary to collect
interest on the proceeds of the
policy for the duration of the delay at
the rate of twice the ceiling
prescribed by the Monetary Board,
unless such failure or refusal to pay
is based on the ground that the
clai: is fraudulent!
The proceeds of the policy :aturing
by the death of the insured payable
to the beneficiary shall include the
discounted alue of all pre:iu:s
paid in adance of their due dates,
but are not due and payable at
:aturity!
S#C! 369! The a:ount of any loss
or da:age for which an insurer :ay
be liable, under any policy other
than life insurance policy, shall be
paid within thirty @C+A days after
proof of loss is receied by the
insurer and ascertain:ent of the
loss or da:age is :ade either by
agree:ent between the insured and
the insurer or by arbitrationB but if
such ascertain:ent is not had or
:ade within si>ty @,+A days after
such receipt by the insurer of the
proof of loss, then the loss or
da:age shall be paid within ninety
@9+A days after such receipt! Refusal
or failure to pay the loss or da:age
within the ti:e prescribed herein
will entitle the assured to collect
interest on the proceeds of the
policy for the duration of the delay at
the rate of twice the ceiling
prescribed by the Monetary Board,
unless such failure or refusal to pay
is based on the ground that the
clai: is fraudulent!
S#C! 38+! &n case of any litigation
for the enforce:ent of any policy or
contract of insurance, it shall be the
duty of the Co::issioner or the
Court, as the case :ay be, to :a=e
a finding as to whether the pay:ent
of the clai: of the insured has been
unreasonably denied or withheldB
and in the affir:atie case, the
insurance co:pany shall be
adEudged to pay da:ages which
shall consist of attorneys fees and
other e>penses incurred by the
insured person by reason of such
unreasonable denial or withholding
of pay:ent plus interest of twice the
ceiling prescribed by the Monetary
Board of the a:ount of the clai:
due the insured, fro: the date
following the ti:e prescribed in
Section 367 or in Section 369, as
the case :ay be, until the clai: is
fully satisfied; Proided , That failure
to pay any such clai: within the
ti:e prescribed in said sections
shall be considered pri:a facie
eidence of unreasonable delay in
pay:ent!
S#C! 38*! &t is unlawful to;
@aA Present or cause to be
presented any fraudulent clai: for
the pay:ent of a loss under a
contract of insuranceB and
@bA Fraudulently prepare, :a=e or
subscribe any writing with intent to
present or use the sa:e, or to allow
it to be presented in support of any
such clai:! 'ny person who iolates
this section shall be punished by a
fine not e>ceeding twice the a:ount
clai:ed or i:prison:ent of two @3A
years, or both, at the discretion of
the court!
T&T%# *3
#M'M&('T&)( )F C)MP'(&#S
S#C! 383! The Co::issioner shall
re?uire eery insurance co:pany
doing business in the Philippines to
=eep its boo=s, records, accounts
and ouchers in such :anner that
he or his authoriDed representaties
:ay readily erify its annual
state:ents and ascertain whether
the co:pany is solent and has
co:plied with the proisions of this
Code or the circulars, instructions,
rulings or decisions of the
Co::issioner!
S#C! 38C! The Co::issioner shall
at least once a year and wheneer
he considers the public interest so
de:ands, cause an e>a:ination to
be :ade into the affairs, financial
condition and :ethod of business of
eery insurance co:pany authoriDed
to transact business in the
Philippines and of any other person,
fir: or corporation :anaging the
affairs andGor property of such
insurance co:pany! Such co:pany,
as well as such :anaging person,
fir: or corporation, shall sub:it to
the e>a:iner all such boo=s, papers
and securities as he :ay re?uire
and such e>a:iner shall also hae
the power to e>a:ine the officers of
such co:pany under oath touching
its business and financial condition,
and the authority to transact
business in the Philippines of any
such co:pany shall be suspended
by the Co::issioner if such
e>a:ination is refused and such
co:pany shall not thereafter be
allowed to transact further business
in the Philippines until it has fully
co:plied with the proisions of this
section!
/oern:ent-owned or -controlled
corporations or entities engaged in
social or priate insurance shall
si:ilarly be subEect to such
e>a:ination by the Co::issioner
unless their respectie charters
otherwise proide!
T&T%# *C
S$SP#(S&)( )R R#<)C'T&)( )F
'$T0)R&T2
S#C! 386! &f the Co::issioner is of
the opinion upon e>a:ination of
other eidence that any do:estic or
foreign insurance co:pany is in an
unsound condition, or that it has
failed to co:ply with the proisions
of law or regulations obligatory
upon it, or that its condition or
:ethod of business is such as to
render its proceedings haDardous to
the public or to its policyholders, or
that its net worth re?uire:ent, in the
case of a do:estic stoc= co:pany,
or its aailable cash assets, in the
case of a do:estic :utual co:pany,
or its security deposits, in the case
of a foreign co:pany, is i:paired or
deficient, or that the :argin of
solency re?uired of such co:pany
is deficient, the Co::issioner is
authoriDed to suspend or reo=e all
certificates of authority granted to
such insurance co:pany, its officers
and agents, and no new business
shall thereafter be done by such
co:pany or for such co:pany by its
agent in the Philippines while such
suspension, reocation or disability
continues or until its authority to do
business is restored by the
Co::issioner! Before restoring such
authority, the Co::issioner shall
re?uire the co:pany concerned to
sub:it to hi: a business plan
showing the co:panys esti:ated
receipts and disburse:ents, as well
as the basis therefor, for the ne>t
succeeding three @CA years!
T&T%# *6
'PP)&(TM#(T )F C)(S#R<'T)R
S#C! 388! &f at any ti:e before, or
after, the suspension or reocation
of the certificate of authority of an
insurance co:pany as proided in
the preceding title, the
Co::issioner finds that such
co:pany is in a state of continuing
inability or unwillingness to :aintain
a condition of solency or li?uidity
dee:ed ade?uate to protect the
interest of policyholders and
creditors, he :ay appoint a
conserator to ta=e charge of the
assets, liabilities, and the
:anage:ent of such co:pany,
collect all :oneys and debts due to
said co:pany and e>ercise all
powers necessary to presere the
assets of said co:pany, reorganiDe
the :anage:ent thereof, and restore
its iability! The said conserator
shall hae the power to oerrule or
reo=e the actions of the preious
:anage:ent and board of directors
of the said co:pany, any proision
of law, or of the articles of
incorporation or bylaws of the
co:pany, to the contrary
notwithstanding, and such other
powers as the Co::issioner shall
dee: necessary!
The conserator :ay be another
insurance co:pany doing business
in the Philippines, any officer or
officers of such co:pany, or any
other co:petent and ?ualified
person, fir: or corporation! The
re:uneration of the conserator and
other e>penses attendant to the
conseration shall be borne by the
insurance co:pany concerned!
The conserator shall not be
subEect to any action, clai: or
de:and by, or liability to, any
person in respect of anything done
or o:itted to be done in good faith
in the e>ercise, or in connection
with the e>ercise, of the powers
conferred on the conserator!
The conserator appointed shall
report and be responsible to the
Co::issioner until such ti:e as the
Co::issioner is satisfied that the
insurance co:pany can continue to
operate on its own and the
conseratorship shall li=ewise be
ter:inated should the
Co::issioner, on the basis of the
report of the conserator or of his
own findings, deter:ine that the
continuance in business of the
insurance co:pany would be
haDardous to policyholders and
creditors, in which case the
proisions of Title *8 shall apply!
(o insurance co:pany, life or non-
life, or any professional reinsurer,
ordered to be li?uidated by the
Co::issioner under the proisions
hereunder :ay be rehabilitated or
authoriDed to transact anew,
insurance or reinsurance business,
as the case :ay be!
T&T%# *8
PR)C##1&(/S $P)( &(S)%<#(C2
S#C! 38,! 4heneer, upon
e>a:ination or other eidence, it
shall be disclosed that the condition
of any insurance co:pany doing
business in the Philippines is one of
insolency, or that its continuance
in business would be haDardous to
its policyholders and creditors, the
Co::issioner shall forthwith order
the co:pany to cease and desist
fro: transacting business in the
Philippines and shall designate a
receier to i::ediately ta=e charge
of its assets and liabilities, as
e>peditiously as possible collect
and gather all the assets and
ad:inister the sa:e for the benefit
of its policyholders and creditors,
and e>ercise all the powers
necessary for these purposes
including, but not li:ited to,
bringing suits and foreclosing
:ortgages in the na:e of the
insurance co:pany!
The Co::issioner shall thereupon
deter:ine within ninety @9+A days
whether the insurance co:pany :ay
be reorganiDed or otherwise placed
in such condition so that it :ay be
per:itted to resu:e business with
safety to its policyholders and
creditors and shall prescribe the
conditions under which such
resu:ption of business shall ta=e
place as well as the ti:e for
fulfill:ent of such conditions! &n
such case, the e>penses and fees in
the collection and ad:inistration of
the insurance co:pany shall be
deter:ined by the Co::issioner
and shall be paid out of the assets
of such co:pany!
&f the Co::issioner shall
deter:ine and confir: within the
said period that the insurance
co:pany is insolent, as defined
hereunder, or cannot resu:e
business with safety to its
policyholders and creditors, he shall,
if the public interest re?uires, order
its li?uidation, indicate the :anner
of its li?uidation and approe a
li?uidation plan and i:ple:ent it
i::ediately! The Co::issioner
shall designate a co:petent and
?ualified person as li?uidator who
shall ta=e oer the functions of the
receier preiously designated and,
with all conenient speed, reinsure
all its outstanding policies, conert
the assets of the insurance
co:pany to cash, or sell, assign or
otherwise dispose of the sa:e to
the policyholders, creditors and
other parties for the purpose of
settling the liabilities or paying the
debts of such co:pany and he :ay,
in the na:e of the co:pany,
institute such actions as :ay be
necessary in the appropriate court
to collect and recoer accounts and
assets of the insurance co:pany,
and to do such other acts as :ay
be necessary to co:plete the
li?uidation as ordered by the
Co::issioner!
The proisions of any law to the
contrary notwithstanding, the
actions of the Co::issioner under
this section shall be final and
e>ecutory, and can be set aside by
the court upon petition by the
co:pany and only if there is
conincing proof that the action is
plainly arbitrary and :ade in bad
faith! The Co::issioner, through the
Solicitor /eneral, shall then file the
corresponding answer reciting the
proceeding ta=en and praying the
assistance of the court in the
li?uidation of the co:pany! (o
restraining order or inEunction shall
be issued by the court enEoining the
Co::issioner fro: i:ple:enting
his actions under this section,
unless there is conincing proof that
the action of the Co::issioner is
plainly arbitrary and :ade in bad
faith and the petitioner or plaintiff
files with the Cler= or Judge of the
Court in which the action is pending
a bond e>ecuted in faor of the
Co::issioner in an a:ount to be
fi>ed by the court! The restraining
order or inEunction shall be refused
or, if granted, shall be dissoled
upon filing by the Co::issioner, if
he so desires, of a bond in an
a:ount twice the a:ount of the
bond of the petitioner or plaintiff
conditioned that it will pay the
da:ages which the petition or
plaintiff :ay suffer by the refusal or
the dissolution of the inEunction! The
proisions of Rule 87 of the (ew
Rules of Court insofar as they are
applicable shall goern the issuance
and dissolution of the restraining
order or inEunction conte:plated in
this section!
'll proceedings under this title
shall be gien preference in the
courts! The Co::issioner shall not
be re?uired to pay any fee to any
public officer for filing, recording, or
in any :anner authenticating any
paper or instru:ent relating to the
proceedings!
's used in this title, the ter:
&nsolency shall :ean the inability
of an insurance co:pany to pay its
lawful obligations as they fall due in
the usual and ordinary course of
business as :ay be shown by its
failure to :aintain the solency
re?uire:ents under Section 3++ of
this Code!
S#C! 38-! The receier or the
li?uidator, as the case :ay be,
designated under the proisions of
this title, shall not be subEect to any
action, clai: or de:and by, or
liability to, any person in respect of
anything done or o:itted to be done
in good faith in the e>ercise, or in
connection with the e>ercise, of the
powers conferred on such receier
or li?uidator!
T&T%# *,
C)(S)%&1'T&)( '(1 M#R/#R )F
&(S$R'(C# C)MP'(&#S
S#C! 387! $pon prior notice to the
Co::issioner, two @3A or :ore
do:estic insurance co:panies,
acting through their respectie
boards of directors, :ay negotiate to
:erge into a single corporation
which shall be one of the
constituent corporations, or
consolidate into a single corporation
which shall be a new corporation to
be for:ed by the consolidation! '
co::on agree:ent of the proposed
:erger or consolidation shall be
drawn up for sub:ission to the
stoc=holders or :e:bers of the
constituent co:panies for adoption
and approal in accordance with the
proisions of the respectie bylaws
of the constituent co:panies and all
e>isting laws that :ay be pertinent!
S#C! 389! Such agree:ent shall
include, aside fro: the proposed
:erger or consolidation, proisions
relatie to the :anner of transfer of
assets to and assu:ption of
liabilities by the absorbing or
ac?uiring co:pany fro: the
absorbed or dissoled co:pany or
co:paniesB the proposed articles of
:erger or consolidation and bylaws
of the suriing or ac?uiring
co:panyB the corporate na:e to be
adopted which should not be that of
any other e>isting co:pany
transacting si:ilar business or one
so si:ilar as to be calculated to
:islead the publicB the rights of the
stoc=holders or :e:bers of the
absorbed or dissoled co:paniesB
date of effectiity of the :erger or
consolidationB and such particulars
as :ay be necessary to e>plain and
:a=e :anifest the obEects and
purposes of the absorbing or
ac?uiring co:pany!
S#C! 3,+! $pon e>ecution of such
agree:ent to :erge or consolidate
by and between or a:ong the
boards of directors of the
constituent co:panies, notice
thereof shall be :ailed i::ediately
to their policyholders and creditors!
The co:pany or co:panies to be
absorbed or dissoled shall
discharge all its accrued liabilitiesB
otherwise, such liabilities shall, with
the consent of its creditors, be
transferred to and assu:ed by the
absorbing or ac?uiring co:pany, or
such liabilities be reinsured by the
latter! &n the case of such policies
as are subEect to cancellation by the
co:pany or co:panies to be
absorbed or dissoled, sa:e :ay be
cancelled pursuant to the ter:s
thereof in lieu of such transfer,
assu:ption, or reinsurance!
S#C! 3,*! $pon approal or
adoption in the :eetings of the
stoc=holders or :e:bers called for
the purpose in each of the
constituent co:panies of the
agree:ent to :erge or consolidate,
all stoc=holders or :e:bers
dissenting or obEecting to the
:erger or consolidation shall be
paid the alue of their shares by the
co:pany concerned in accordance
with the bylaws thereof!
S#C! 3,3! $pon approal or
adoption of the agree:ent to :erge
or consolidate by the stoc=holders
or :e:bers of the constituent
co:panies, the corresponding
articles of :erger or of
consolidation shall be duly e>ecuted
by the presidents and attested by
the corporate secretaries and shall
bear the corporate seals of the
:erging or consolidating co:panies
setting forth;
@aA The plan of :erger or the plan
of consolidationB
@bA 's to each corporation, the
nu:ber of shares outstanding, or in
case of :utual corporations, the
nu:ber of :e:bersB and
@cA 's to each corporation, the
nu:ber of shares or :e:bers oted
for and against such plan,
respectiely! Thereafter, a certified
copy of such articles of :erger or
consolidation, together with a
certificate of approal or adoption by
the stoc=holders or :e:bers of
such articles of :erger or
consolidation, erified by affidaits
of such officers and under the seal
of the constituent co:panies, shall
be sub:itted to the Co::issioner,
together with such other papers or
docu:ents which the Co::issioner
:ay re?uire, for his consideration!
S#C! 3,C! The articles of :erger or
of consolidation, signed and erified
as hereinaboe re?uired, shall be
filed with the Securities and
#>change Co::ission for its
e>a:ination and approal!
S#C! 3,6! $pon receipt fro: the
Securities and #>change
Co::ission of the certificate of
:erger or of consolidation, the
constituent co:panies shall
surrender to the Co::issioner their
respectie certificates of authority to
transact insurance business! The
absorbing or suriing co:pany in
case of :erger, or the newly for:ed
co:pany in case of consolidation,
shall i::ediately file with the
Co::issioner the corresponding
application for issuance of a new
certificate of authority to transact
insurance business, together with a
certified copy of the certificate of
:erger or of consolidation, and of
the certificate of increase of stoc=s,
if there is any, issued by the
Securities and #>change
Co::ission!
S#C! 3,8! (othing in this title shall
be construed to enlarge the powers
of the absorbing or suriing
co:pany in case of :erger, or the
newly for:ed co:pany in case of
consolidation, e>cept those
conferred by the certificate of
:erger or of consolidation and the
articles of :erger or of
consolidation, or the a:ended
articles of incorporation, as
registered with the Securities and
#>change Co::ission!
S#C! 3,,! (o director, officer, or
stoc=holder of any such constituent
co:panies shall receie any fee,
co::ission, co:pensation, or other
aluable consideration whatsoeer,
directly or indirectly, or in any
:anner aiding, pro:oting or
assisting in such :erger or
consolidation!
S#C! 3,-! The :erger or
consolidation of co:panies under
this Code shall be subEect to the
proisions of the Corporation Code,
and, in those cases specified in
Republic 'ct (o! 8688, as a:ended,
be further subEect to the proisions
of said law!
T&T%# *-
M$T$'%&I'T&)( )F ST)C5 %&F#
&(S$R'(C# C)MP'(&#S
S#C! 3,7! 'ny do:estic stoc= life
insurance co:pany doing business
in the Philippines :ay conert itself
into an incorporated :utual life
insurer! To that end it :ay proide
and carry out a plan for the
ac?uisition of the outstanding
shares of its capital stoc= for the
benefit of its policyholders, or any
class or classes of its policyholders,
by co:plying with the re?uire:ents
of this chapter!
S#C 3,9! Such plan shall include
appropriate proceedings for
a:ending the insurers articles of
incorporation to gie effect to the
ac?uisition, by said insurer, for the
benefit of its policyholders or any
class or classes thereof, of the
outstanding shares of its capital
stoc= and the conersion of the
insurer fro: a stoc= corporation into
a nonstoc= corporation for the
benefit of its :e:bers! The
:e:bers of such nonstoc=
corporation shall be the
policyholders fro: ti:e to ti:e of
the class or classes for whose
benefit the stoc= of the insurer was
ac?uired, and the policyholders of
such other class or classes as :ay
be specified in such corporations
articles of incorporation as they :ay
be a:ended fro: ti:e to ti:e! Such
plan shall be;
@aA 'dopted by a ote of a :aEority
of the directorsB
@bA 'pproed by the ote of the
holders of at least a :aEority of the
outstanding shares at a special
:eeting of shareholders called for
that purpose, or by the written
consent of such shareholdersB
@cA Sub:itted to the Co::issioner
and approed by hi: in writingB
@dA 'pproed by a :aEority ote of
all the policyholders of the class or
classes for whose benefit the stoc=
is to be ac?uired oting at an
election by the policyholders called
for that purpose, subEect to the
proisions of Section 3-*! The
ter:s policyholder or policyholders
as used in this chapter shall be
dee:ed to :ean the person or
persons insured under an indiidual
policy of life insurance, or of health
and accident insurance, or of any
co:bination of life, health and
accident insurance! They shall also
include the person or persons to
who: any annuity or pure
endow:ent is presently or
prospectiely payable by the ter:s
of an indiidual annuity or pure
endow:ent contract, e>cept where
the policy or contract declares so:e
other person to be the owner or
holder thereof, in which case such
other person shall be dee:ed
policyholder! &n any case where a
policy or contract na:es two or
:ore persons as Eoint insured,
payees, owners or holders thereof,
the persons so na:ed shall be
dee:ed collectiely to be one @*A
policyholder for the purpose of this
chapter! &n any case where a policy
or contract shall hae been
assigned by assign:ent absolute on
its face to an assignee other than
the insurer, and such assign:ent
shall hae been filed at the principal
office of the insurer at least thirty
@C+A days prior to the date of any
election or :eeting referred to in
this chapter, then such assignee
shall be dee:ed at such election or
:eeting to be the policyholder! For
the purpose of this chapter the
ter:s policyholder and policyholders
include the e:ployer to who:, or a
president, secretary or other
e>ecutie officer of any corporation
or association to which a :aster
group policy has been issued, but
e>clude the holders of certificates or
policies issued under or in
connection with a :aster group
policy! Beneficiaries under
un:atured contracts shall not as
such be dee:ed to be
policyholdersB and
@eA Filed with the Co::issioner
after haing been approed as
proided in this section!
S#C! 3-+! The Co::issioner shall
e>a:ine the plan sub:itted to hi:
under the proisions of
subparagraph @cA of Section 3,9! 0e
shall not approe such plan unless
in his opinion the rights and
interests of the insurer, its
policyholders and shareholders are
protected nor unless he is satisfied
that the plan will be fair and
e?uitable in its operation!
S#C! 3-*! The election prescribed
by subparagraph @dA of Section 3,9
shall be called by the board of
directors or the president, and eery
policyholder of the class or classes
for whose benefit the stoc= is to be
ac?uired, whose insurance shall
hae been in force for at least one
@*A year prior to such election shall
hae one ote, regardless of the
nu:ber of policies or a:ount of
insurance he holds, and regardless
of whether such policies are policies
of life insurance or policies of health
and accident insurance or annuity
contracts! (otice of such election
shall be gien to policyholders
entitled to ote by :ail fro: the
principal office of such insurer at
least thirty @C+A days prior to the
date set for such election, in a
sealed enelope, postage prepaid,
addressed to each such
policyholder at his last =nown
address!
<oting shall be by one of the
following :ethods;
@aA 't a :eeting of such
policyholders, held pursuant to such
notice, by ballot in person or by
pro>y!
@bA &f not by the :ethod described
in the preceding subparagraph, then
by :ail pursuant to a procedure and
on for:s to be prescribed by such
plan!
Such election shall be conducted
under the direction and superision
of three @CA i:partial and
disinterested inspectors appointed
by the insurer and approed by the
Co::issioner! &n case any person
appointed as inspector fails to
appear at such :eeting or fails or
refuses to act at such election, the
acancy, if occurring in adance of
the conening of the :eeting or in
adance of the opening of the :ail
ote, :ay be filled in the :anner
prescribed for the appoint:ent of
inspectors and, if occurring at the
:eeting or during the canass of
the :ail ote, :ay be filled by the
person acting as chair:an of said
:eeting or designated for that
purpose in such plan! The decision,
act or certificate of a :aEority of the
inspectors shall be effectie in all
respects as the decision, act or
certificate of all! The inspectors of
election shall deter:ine the nu:ber
of policyholders, the oting power of
each, the policyholders represented
at the :eeting or oting by :ail, the
e>istence of a ?uoru: and the
authenticity, alidity and effect of
pro>ies! They shall receie otes,
hear and deter:ine all challenges
and ?uestions in any way arising in
connection with the right to ote,
count and tabulate all otes,
deter:ine the result, and do such
other acts as are proper to conduct
the ote with fairness to all
policyholders! The inspectors of
election shall, before co::encing
perfor:ance of their duties,
subscribe to and file with the insurer
and with the Co::issioner an oath
that they, and each of the:, will
perfor: their duties i:partially, in
good faith, to the best of their ability
and as e>peditiously as is
practicable! )n the re?uest of the
insurer, the Co::issioner, a
policyholder or his pro>y, the
inspectors shall :a=e a report in
writing of any challenge or ?uestion
or :atter deter:ined by the: and
e>ecute a certificate of any fact
found by the:! They shall also
certify the result of such ote to the
insurer and to the Co::issioner!
'ny report or certificate :ade by
the: shall be pri:a facie eidence
of facts stated therein! 'll necessary
e>penses incurred in connection
with such election shall be paid by
the insurer! For the purpose of this
section, a ?uoru: shall consist of
fie percent @8HA of the
policyholders of such insurer
entitled to ote at such election!
S#C! 3-3! &n carrying out any such
plan, the insurer :ay ac?uire any
shares of its own stoc= by gift,
be?uest or purchase! 'ny shares so
ac?uired shall, unless as a result of
such ac?uisition all of the shares of
the insurer shall hae been
ac?uired, be ac?uired in trust for the
policyholders of the class or classes
for whose benefit the plan proides
that the stoc= of the insurer shall be
ac?uired as hereinafter proided!
Such shares shall be assigned and
transferred on the boo=s of such
insurer and approed by the
Co::issioner! Such trustees shall
hold such stoc= in trust until all of
the outstanding shares of capital
stoc= of such insurer hae been
ac?uired, but for not longer than
thirty @C+A years with such
e>tensions of not :ore than fie @8A
years each as :ay be granted by
the Co::issioner! Such e>tensions
:ay be granted by the
Co::issioner if the plan so
proides and if in his opinion the
plan of ac?uisition of all of such
stoc= can be co:pleted within a
reasonable period! Such trustees
shall ote such stoc= at all
corporate :eetings at which
stoc=holders hae the right to ote!
4hen all the outstanding shares of
capital stoc= of such insurer hae
been ac?uired, all said shares shall
be cancelled, the certificate of
a:end:ent of the insurers articles
of incorporation giing effect thereto
shall be filed in accordance with the
proisions of the Corporation Code,
and the insurer shall beco:e a
nonstoc= corporation for the profit of
its :e:bers and such trust shall
thereupon ter:inate! Thereafter such
corporation shall be conducted for
the :utual benefit, ratably, of its
policyholders of the class or classes
for whose benefit the stoc= was
ac?uired and shall hae power to
issue non-assessable policies on a
resere basis subEect to all
proisions of law applicable to
incorporated life insurers issuing
non-assessable policies on a
resere basis! Policies so issued
:ay be upon the basis of full or
partial participation therein as
agreed between the insurer and the
insured!
$pon the ter:ination of any such
oting trust, either in accordance
with its ter:s or as hereinaboe
proided, such plan of :utualiDation
shall ter:inate, unless theretofore
co:pleted! $pon such ter:ination,
unless the plan of :utualiDation
proides for the disposition of the
shares ac?uired by the insurer
under such plan or for the
disposition of the proceeds thereof,
the shares held by such trustees
shall be disposed of in accordance
with an order of the court of
co:petent Eurisdiction in the Eudicial
district in which is located the
principal office of such insurer,
:ade upon a erified petition of the
Co::issioner!
S#C! 3-C! 'ny such plan of
:utualiDation :ay proide for the
creation of a oting trust under a
trust agree:ent for the holding and
oting by three @CA or :ore trustees
of any portion or all of the shares of
the insurer not re?uired upon the
adoption of such plan! The oting
trustees shall be na:ed in
accordance with such plan or, if no
proision is :ade therein for the
na:ing of such trustees, then by the
insurer! The oting trust agree:ent
and oting trustees shall be subEect
to the approal of the Co::issioner!
'ny or all of the trustees under such
oting trust agree:ent :ay be the
sa:e person or persons as any or
all of the trustees referred to in
Section 3-3! Such oting trust
agree:ent shall proide that in the
eent of ac?uisition by the insurer of
any of the shares of stoc= held
thereunder in accordance with the
proisions of the plan, such shares
so ac?uired together with the oting
rights thereof shall be transferred by
the trustees na:ed under the
proisions of this section to the
trustees na:ed under the proisions
of Section 3-3! 'ny oting trust
agree:ent created pursuant to the
proisions of this section :ay be
:ade irreocable for not longer than
thirty @C+A years and thereafter until
the ter:ination of the trust proided
for in Section 3-3! The trust created
pursuant to the proisions of this
section shall ter:inate in any eent
upon ter:ination of the trust
proided for in Section 3-3! $pon
the ter:ination of the trust created
pursuant to the proisions of this
section, any shares held in such
trust shall reert to the persons
entitled thereto by law!
S#C! 3-6! #ery pay:ent for the
ac?uisition of any shares of the
capital stoc= of such insurer, the
purchase price of which is not fi>ed
by such plan, shall be subEect to the
prior approal of the Co::issioner!
(either such plan, nor any such
pay:ent, :ay be approed by the
Co::issioner unless he finds that
the rights and interests of the
insurer, its policyholders, and
shareholders are protected!
S#C! 3-8! The trustees referred to
in Section 3-3 shall file with such
insurer and with the Co::issioner a
erified acceptance of their
appoint:ents and erified
declarations that they will faithfully
discharge their duties as such
trustees! 'll diidends and other
su:s receied by said trustees on
the shares held by the:, after
paying the necessary e>penses of
e>ecuting their trust, shall be
i::ediately repaid to such insurer
for the benefit of all who are, or :ay
beco:e, policyholders of such
insurance of the class or classes for
whose benefit the stoc= of such
insurer was ac?uired and entitled to
participate in the profits thereof and
shall be added to and beco:e part
of the assets of such insurer!
S#C! 3-,! &f, at any ti:e within the
period proided in the plan for the
ac?uisition of the outstanding
shares of stoc= of the insurer, ninety
percent @9+HA thereof has already
been ac?uired and transferred to the
trustees under the plan, the insurer
by a ote of a :aEority of the
directors :ay deter:ine to :a=e an
offer, with the per:ission of the
Co::issioner and subEect to such
re?uire:ent as he :ay specify, to
ac?uire by purchase all of the
shares not theretofore ac?uired
under the plan, at a specified price
which the insurer considers to be
their fair alue as of the date of
:a=ing such offer!
&f the offer to ac?uire is per:itted
by the Co::issioner, the insurer
shall :a=e a written offer by
registered :ail to each shareholder
whose shares hae not theretofore
been ac?uired under the plan or
otherwise, offering to ac?uire all his
shares at such price if accepted in
writing within thirty @C+A days after
the :ailing of such offer! 'ny
shareholder accepting such offer
within the ti:e therefor shall, within
si>ty @,+A days after his acceptance,
transfer to the insurer the certificates
representing such shares and, upon
doing so, shall be paid by the
insurer the a:ount of such offer for
his shares! 'ny share so ac?uired
shall be assigned and transferred to
the trustees under the plan and held
by the: as shares ac?uired
pursuant to the plan!
#ach shareholder who does not
accept such offer to ac?uire his
shares within the ti:e stated in
such offer for acceptance thereof
shall within fifteen @*8A days after
the e>piration of such offer apply to
the Secretary of Finance for a
deter:ination of the fair alue of his
shares as of the date of :a=ing
such offer! The Secretary of Finance
:ay hi:self, after due notice and
hearing, deter:ine upon the
eidence receied the fair alue of
the shares as of the date of :a=ing
such offer, or appoint three @CA
i:partial and disinterested persons
to appraise the fair alue of such
shares with such direction as he
shall dee: proper and necessary to
e>pedite the proceedings! $pon
co:pletion of the appraisal
proceedings, the appraisers shall file
with the Secretary of Finance their
report in writing stating the fair
alue of such shares as of the date
of the :a=ing of such offer and
setting forth their findings in support
of such state:ent! The appraisers
shall furnish each party to the
proceedings a copy of their
appraisal report, and within ten @*+A
days after receipt thereof, any such
party :ay signify his obEection, if
any, to the report or :oe for the
approal thereof! $pon the
e>piration of the period of ten @*+A
days referred to aboe, the report
shall be set for hearing, after which
the Secretary of Finance shall issue
an order adopting, :odifying or
reEecting the report, in whole or in
part, or he :ay receie further
eidence or :ay reco::it it with
instructions! 4heneer the Secretary
of Finance shall deter:ine in any
:anner, as aforesaid, the fair alue
of such shares, he :ay also
deter:ine the ter:s of pay:ent
thereof by the insurer! The e>penses
incidental to the proceedings
including charges of the appraisers,
if any, shall be paid e?ually by the
insurer and the shareholder!
The findings of the Secretary of
Finance on all ?uestions of fact
raised at the hearing of the
application for deter:ination of the
fair alue of such shares shall be
conclusie upon all parties to the
proceedings! The order of the
Secretary of Finance deter:ining the
fair alue of the shares and the
ter:s of pay:ent thereof shall hae
the force and effect of a Eudg:ent
which shall be appealable on any
?uestion of law! Such order shall
beco:e final and e>ecutory fifteen
@*8A days after receipt thereof by the
parties to the proceedings!
$pon any such order beco:ing
final and fro: which no appeal is
pending, or when the ti:e to appeal
therefro: has e>pired, each
shareholder party to the proceedings
shall transfer his shares to the
insurer and surrender to the said
insurer the certificates representing
such shares and the insurer shall
:a=e pay:ent therefor as proided
in such order! 'ny shares so
ac?uired by the insurer shall be
assigned and transferred to the
trustees and held by the: as shares
ac?uired pursuant to the plan!
'ny shareholder who does not
apply to the Secretary of Finance in
the :anner and within the ti:e
hereinbefore prescribed shall be
dee:ed to hae accepted the offer
referred to aboe, effectie, howeer,
upon the e>piration of the ti:e
hereinaboe prescribed for :a=ing
such application, and such
shareholders ti:e for accepting
such offer shall, for that purpose
only, be dee:ed to hae been
e>tended accordingly!
'ny offer to ac?uire shares :ade
pursuant to this section shall,
e>cept as otherwise proided herein,
be irreocable until all proceedings
upon such offer hae been
co:pleted or all shares hae
otherwise been earlier ac?uired by
the insurer!
'ny shareholder who has e>pressly
or i:pliedly accepted the plan or the
offer to ac?uire his shares not
theretofore ac?uired under the plan,
and any shareholder who has
reEected such plan or such offer and
has applied, as aforesaid, to the
Secretary of Finance for a
deter:ination of the fair alue of his
shares subse?uent to which an
agree:ent has been reached or a
final order issued fi>ing such fair
alue but who fails to surrender his
certificates for cancellation upon
pay:ent of the a:ount to which he
is entitled, :ay be co:pelled to do
so by an order of the Secretary of
Finance for that purpose and such
order :ay proide that upon failure
of such shareholder to surrender
such certificates for cancellation,
such order shall stand in lieu of
such surrender and cancellation!
S#C! 3--! Such insurer, after
:utualiDation, shall be a
continuation of the original insurer,
and such :utualiDation shall not
affect such insurers certificate of
authority nor e>isting suits, rights or
contracts e>cept as proided in said
plan for the ac?uisition of the
outstanding shares of the capital
stoc= of such insurer, approed as
proided in this chapter! Such
insurer, after :utualiDation, shall
e>ercise all the rights and powers
and shall perfor: all the duties
conferred or i:posed by law upon
insurers writing the classes of
insurance written by it, and to
protect rights and contracts e>isting
prior to :utualiDation, subEect to the
effect of said plan! The board of
directors of such insurer, prior to
:utualiDation, :ay adopt
a:end:ents to its bylaws to ta=e
effect upon :utualiDation!
S#C! 3-7! @aA 'n annual :eeting of
:e:bers shall be held at ten
ocloc= in the :orning of the fourth
Tuesday of March of each year at
the principal office of the insurer,
unless a different ti:e or place is
proided in the bylaws!
@bA Special :eetings of the
:e:bers, for any purpose or
purposes whatsoeer, :ay be called
at any ti:e by the president, or by
the board of directors, or by one or
:ore :e:bers holding not less
than one-fifth @*G8A of the oting
power of such insurer, or by such
other officers or persons as the
bylaws authoriDe!
@cA (otice of all :eetings of
:e:bers whether annual or special
shall be gien in writing to the
:e:bers entitled to ote by the
secretary, or an assistant secretary,
or other person charged with that
duty, or if there be no such officer,
or in case of his neglect or refusal,
by any director or :e:ber! 't the
option of the insurer such notice
:ay be i:printed on pre:iu:
notices or receipts or on both!
' notice :ay be gien by such
insurer to any :e:ber either
personally, or by :ail, or other
:eans of written co::unication,
charges prepaid, addressed to such
:e:ber at his address appearing
on the boo=s of the insurer, or gien
by hi: to the insurer for the purpose
of notice! &f a :e:ber gies no
address, notice shall be dee:ed to
hae been gien hi: if sent by :ail
or other :eans of written
co::unication addressed to the
place where the principal office of
the insurer is situated, or if
published at least once in so:e
newspaper of general circulation in
the place in which said office is
located!
(otice of any :eeting of :e:bers
shall be sent to each :e:ber
entitled thereto not less than seen
@-A days before such :eeting,
unless the bylaws proide
otherwise!
(otice of any :eeting of :e:bers
shall specify the place, the day and
the hour of the :eeting and the
general nature of the business to be
transacted!
(otice of an annual :eeting to be
held at the ti:e and place specified
in subparagraph @aA of this section
shall be sufficiently gien if
published at least once in each of
four @6A successie wee=s in a
newspaper of general circulation in
the place in which the principal
office of such insurer is located, and
if so published no other notice of
such :eeting shall be re?uired!
@dA The presence in person or by
pro>y of fie percent @8HA of the
:e:bers entitled to ote at any
:eeting shall constitute a ?uoru:
for the transaction of business,
including the a:end:ent of the
articles of incorporation andGor the
bylaws unless otherwise proided
by the bylaws!
@eA #ach such :e:ber shall hae
one @*A ote at any :eeting of
:e:bers regardless of the nu:ber
of policies or the a:ount of
insurance that such :e:ber holds
and regardless of whether such
policies are policies of life
insurance, or of health and accident
insurance, or both! 'ny :e:ber
entitled to ote shall hae the right
to do so either in person or by an
agent or agents authoriDed by a
written pro>y e>ecuted by such
person or his duly authoriDed agent
and filed with the secretary of such
insurer!
@fA The directors of the insurer in
office at the ti:e the insurer is
:utualiDed as proided in this
chapter shall continue in office until
the first annual :eeting of
:e:bers! 't the first annual
:eeting of :e:bers and at each
annual :eeting thereafter, directors
shall be elected by the :e:bers for
the ter: or ter:s authoriDed by this
chapter!
@gA The articles of incorporation or
the bylaws :ay proide that the
directors :ay be diided into two
@3A or :ore classes whose ter:s of
office shall e>pire at different ti:es,
but no ter:s shall continue longer
than si> @,A years! &n the absence of
such proisions, each director,
e>cept :e:bers of the board of
directors at the ti:e the insurer is
:utualiDed, shall be elected for a
ter: of one @*A year! 'll directors
shall hold office for a ter: for which
they are elected and until their
successors are elected and
?ualified! ' director :ay, but need
not be a :e:ber or policyholder of
the insurer of which he is acting as
director! <acancies in the board of
directors :ay be filled by a :aEority
of the re:aining directors, though
less than a ?uoru:, and each
director so elected shall hold office
until the ne>t annual :eeting!
@hA 'll insurers :utualiDed under
the proisions of this chapter shall
be subEect to all other applicable
proisions of this Code! The
proisions of the Corporation Code
shall apply in a suppletory :anner!
S#C! 3-9! The proisions of
Co::onwealth 'ct (o! 7C,
otherwise =nown as the Securities
'ct, as a:ended, shall not apply to
any of the following;
@aA Shares of the capital stoc= of
such insurer ac?uired as proided
in Section 3-3 and assigned and
transferred to the trustees as is
proided in said section, and the
assign:ent and transfer of said
shares as so proidedB
@bA 'ny certificate or other
instru:ent issued to a policyholder
of such :utualiDed insurer
conferring or eidencing
:e:bership in such :utualiDed
insurer or conferring or eidencing
such :e:bers right to participate
in the profits or share in the assets
of such :utualiDed insurer by irtue
of his :e:bership therein, and the
issuance of such certificate or other
instru:entB
@cA The plan for the ac?uisition of
the outstanding shares of the capital
stoc= of such insurer authoriDed by
the proisions of this chapter, the
sub:ission of said plan to the
Co::issioner and to the
policyholders of such insurer as
proided in this chapter, and the
approal and carrying out of said
plan or any part thereof in
accordance with the proisions of
this chapter!
S#C! 37+! ' do:estic :utual life
insurance co:pany doing business
in the Philippines :ay conert itself
into an incorporated stoc= life
insurance co:pany by
de:utualiDation! To that end, it :ay
proide and carry out a plan for the
conersion by co:plying with the
re?uire:ents of this title!
The conersion of a do:estic
:utual life insurance co:pany to an
incorporated stoc= life insurance
co:pany shall be carried out
pursuant to a conersion plan duly
approed by the Co::issioner!
The Co::issioner shall pro:ulgate
such rules and regulations as he or
she :ay dee: necessary to carry
out the proisions of this title, after
due consultation with
representaties of the insurance
industry!
'll conerted insurers under the
proisions of this title shall be
subEect to all other applicable
proisions of this Code! The
proisions of the Corporation Code
shall apply in a suppletory :anner!
T&T%# *7
4&T01R'4'% )F F)R#&/(
&(S$R'(C# C)MP'(&#S
S#C! 37*! ' foreign insurance
co:pany doing business in the
Philippines, upon pay:ent of the fee
hereinafter prescribed and surrender
to the Co::issioner of its certificate
of authority, :ay apply to withdraw
fro: the Philippines! Such
application shall be duly e>ecuted in
writing, acco:panied by eidence of
due authority for such e>ecution,
properly ac=nowledged!
S#C! 373! The Co::issioner shall
publish the application for
withdrawal once a wee= for three @CA
consecutie wee=s in a newspaper
of general circulation in the
Philippines! The e>penses of such
publication shall be paid by the
insurance co:pany filing such
application!
S#C! 37C! #ery foreign insurance
co:pany desiring to withdraw fro:
the Philippines shall, prior to such
withdrawal, discharge its liabilities to
policyholders and creditors in this
country! &n case of its policies
insuring residents of the Philippines,
it shall cause the pri:ary liabilities
under such policies to be reinsured
and assu:ed by another insurance
co:pany authoriDed to transact
business in the Philippines! &n the
case of such policies as are subEect
to cancellation by the withdrawing
co:pany, it :ay cancel such
policies pursuant to the ter:s
thereof in lieu of such reinsurance
and assu:ption of liabilities!
S#C! 376! The Co::issioner shall
cause an e>a:ination of the boo=s
and records of the withdrawing
co:pany, and if, upon such
e>a:ination, the Co::issioner finds
that the insurer has no outstanding
liabilities to policyholders and
creditors in the Philippines, and no
policies uncancelledB or its pri:ary
liabilities hae been reinsured or
assu:ed by another insurance
co:pany authoriDed to transact
business in the Philippines, as
re?uired in the preceding section, it
shall cancel the withdrawing
co:panys certificate of authority, if
une>pired, and shall per:it the
insurer to withdraw! The cost and
e>penses of all such e>a:ination
shall be paid as prescribed in
Section 66+!
S#C! 378! $pon the failure of such
withdrawing insurance co:pany or
its agents in the Philippines to pay
the e>penses of such publication
within thirty @C+A days after the
presentation of the bill therefor, the
Co::issioner shall collect such fee
fro: the deposit furnished in
accordance with the proisions of
Section *9-!
S#C! 37,! ' foreign life insurance
co:pany that withdraws fro: the
Philippines shall be considered a
sericing insurance co:pany if its
business transactions are confined
to accepting periodic pre:iu:
pay:ents fro:, or granting policy
loans and paying cash surrender
alues of outstanding policies to, or
reiing lapsed policies of,
Philippine policyholders, and such
other related serices!
S#C! 37-! (o co:pany shall act as
a sericing insurance co:pany until
after it shall hae obtained a special
certificate of authority to act as such
fro: the Co::issioner upon
application therefor and pay:ent by
the co:pany of the fees hereinafter
prescribed! Such certificate shall
e>pire on the last day of 1ece:ber
of the third year and shall be
renewed, while the co:pany
continues to serice its
policyholders, and to co:ply with all
the applicable proisions of law and
regulations!
T&T%# *9
PR)F#SS&)('% R#&(S$R#RS
S#C! 377! #>cept as otherwise
proided in this Code, no
partnership, association or
corporation shall transact any
business in the Philippines as a
professional reinsurer until it shall
hae obtained a certificate of
authority for that purpose fro: the
Co::issioner upon application
therefor and pay:ent by such entity
of the fees hereinafter prescribed! 's
used in this Code, the ter:
professional reinsurer shall :ean
any entity that transacts solely and
e>clusiely reinsurance business in
the Philippines!
The Co::issioner :ay refuse to
issue a certificate of authority to any
such entity when such refusal will
best pro:ote public interest! (o
such certificate of authority shall be
granted to any such entity unless
and until the Co::issioner is
satisfied by such e>a:ination and
such eidence as :ay be re?uired
that such entity is ?ualified by the
laws of the Philippines to transact
business therein as a professional
reinsurer!
Before issuing such certificate of
authority, the Co::issioner :ust be
satisfied that the na:e of the
applicant is not that of any other
=nown co:pany transacting
insurance or reinsurance business
in the Philippines, or a na:e so
si:ilar as to be calculated to
:islead the public!
Such certificate of authority shall
e>pire on the last day of 1ece:ber
the third year following its issuance
unless it is renewed!
#ery such partnership, association,
or corporation receiing such
certificate of authority shall be
subEect to the proisions of this
Code and other related laws, and to
the Eurisdiction and superision of
the Co::issioner!
S#C! 379! 'ny partnership,
association, or corporation
authoriDed to transact solely
reinsurance business :ust hae a
capitaliDation of at least Three
billion pesos @PC,+++,+++,+++!++A
paid in cash of which at least fifty
percent @8+HA is paid-up and the
re:aining portion thereof is
contributed surplus, which in no
case shall be less than Four
hundred :illion pesos
@P6++,+++,+++!++A or such
capitaliDation as :ay be deter:ined
by the Secretary of Finance, upon
the reco::endation of the
Co::issioner; Proided , That
twenty-fie percent @38HA of the
paid-up capital :ust be inested in
securities satisfactory to the
Co::issioner consisting of bonds
or other instru:ents of debt of the
/oern:ent of the Philippines or its
political subdiisions or
instru:entalities, or of goern:ent-
owned or -controlled corporations
and entities, including the Bang=o
Sentral ng Pilipinas, and deposited
with the Co::issioner, and the
re:aining seenty-fie percent
@-8HA in such other securities as
:ay be allowed and per:itted by
the Co::issioner, which securities
shall at all ti:es be :aintained free
fro: any lien or encu:brance;
Proided, further, That the aforesaid
capital re?uire:ent is without
preEudice to other re?uire:ents to
be i:posed under any ris=-based
capital :ethod that :ay be adopted
by the Co::issioner; Proided,
finally, That the proisions of this
chapter applicable to insurance
co:panies shall as far as
practicable be li=ewise applicable to
professional reinsurers!
T&T%# 3+
0)%1&(/ C)MP'(&#S
S#C! 39+! 's used in this title, the
following ter:s shall hae the
respectie :eanings hereinafter set
forth unless the conte>t shall
otherwise re?uire;
@aA Person :eans an indiidual,
partnership, fir:, association,
corporation, trust, any si:ilar entity
or any co:bination of the foregoing
acting in concert!
@bA Control , including the ter:s
controlling, controlled by and under
co::on control with, :eans the
possession directly or indirectly of
the power to direct or cause the
direction of the :anage:ent and
policies of a person, whether
through the ownership of oting
securities by a contract other than a
co::ercial contract for goods or
non-:anage:ent serices or
otherwise! SubEect to Section 393,
control shall be presu:ed to e>ist if
any person directly or indirectly
owns, controls or holds with the
power to ote forty percent @6+HA or
:ore of the oting securities of any
other person; Proided , That no
person shall be dee:ed to control
another person solely by reason of
his being an officer or director of
such other person!
@cA 0olding co:pany :eans any
person who directly or indirectly
controls any authoriDed insurer!
@dA Controlled insurer :eans an
authoriDed insurer controlled directly
or indirectly by a holding co:pany!
@eA Controlled person :eans any
person, other than a controlled
insurer, who is controlled directly or
indirectly by a holding co:pany!
@fA 0olding co:pany syste: :eans
a holding co:pany together with its
controlled insurers and controlled
persons!
S#C! 39*! (otwithstanding
paragraph @bA of Section 39+, the
Co::issioner :ay deter:ine after
notice and opportunity to be heard,
that a person e>ercises directly or
indirectly either alone or pursuant to
an agree:ent with one or :ore
other persons such a controlling
influence oer the :anage:ent or
policies of an authoriDed insurer as
to :a=e it necessary or appropriate
in the public interest or for the
protection of policyholders or
stoc=holders of the insurer that the
person be dee:ed to control the
insurer!
S#C! 393! The Co::issioner :ay
deter:ine upon application that any
person, either alone or pursuant to
agree:ent with one or :ore other
persons, does not or will not upon
the ta=ing of so:e proposed action
control another person! The filing of
an application hereunder in good
faith by any person shall reliee the
applicant fro: any obligation or
liability i:posed by this title with
respect to the subEect of the
application, e>cept as contained in
Section C+3, until the Co::issioner
has acted upon the application!
4ithin thirty @C+A days or such
further period as he :ay prescribe,
the Co::issioner :ay prospectiely
reo=e or :odify his deter:ination,
after notice and opportunity to be
heard, wheneer in his Eudg:ent,
reocation or :odification is
consistent with this title!
S#C! 39C! (otwithstanding any
other proisions of this title, the
following shall not be dee:ed
holding co:panies;
@aA 'uthoriDed insurers or
reinsurers or their subsidiariesB and
@bA The /oern:ent of the
Philippines, or any political
subdiision, agency or
instru:entality thereof, or any
corporation which is wholly owned
directly or indirectly by one or :ore
of the foregoing!
The Co::issioner :ay
conditionally or unconditionally
e>e:pt any specified person or
class of persons fro: any of the
obligations or liabilities i:posed
under this title, if and to the e>tent
he finds the e>e:ption necessary or
appropriate in the public interest or
not aderse to the interests of
policyholders or stoc=holders and
consistent with the purposes of this
title!
S#C! 396! @aA #ery person who on
the date this Code ta=es effect is a
controlled insurer and eery person
who thereafter beco:es a controlled
insurer, shall, within si>ty @,+A days
thereafter, or within thirty @C+A days
after beco:ing a controlled insurer,
whicheer is later, register with the
Co::issioner! Such registration
shall be a:ended within thirty @C+A
days following any change in the
identity of its holding co:pany! The
Co::issioner :ay grant one or
:ore reasonable e>tensions of the
ti:e to register!
@bA #ery registrant shall furnish
the Co::issioner with the following
infor:ation concerning its holding
co:pany;
@*A ' copy of its charter or articles
of incorporation and its bylawsB
@3A The identities of its principal
shareholders, officers, directors and
controlled personsB and
@CA &nfor:ation as to its capital
structure and financial condition,
and a description of its principal
business actiities!
S#C! 398! #ery controlled insurer
shall file with the Co::issioner
such reports or :aterial as he :ay
direct for the purpose of disclosing
infor:ation concerning the
operations of persons within the
holding co:pany syste: which :ay
:aterially affect the operations,
:anage:ent or financial condition
of the insurer!
S#C! 39,! #ery holding co:pany
and eery controlled person within a
holding co:pany syste: shall be
subEect to e>a:ination by order of
the Co::issioner if he has cause to
beliee that the operations of such
persons :ay :aterially affect the
operations, :anage:ent or financial
condition of any controlled insurer
with the syste: and that he is
unable to obtain releant infor:ation
fro: such controlled insurer! The
grounds relied upon by the
Co::issioner for such e>a:ination
shall be stated in his order, which
order shall be subEect to Eudicial
reiew only at the instance of the
person sought to be e>a:ined!
Such e>a:ination shall be confined
to :atters specified in the order!
The cost of such e>a:ination shall
be assessed against the person
e>a:ined and no portion thereof
shall thereafter be rei:bursed to it
directly or indirectly by the
controlled insurer!
S#C! 39-! The Co::issioner shall
=eep the contents of each report
:ade pursuant to this title and any
infor:ation obtained by hi: in
connection therewith confidential
and shall not :a=e the sa:e public
without the prior written consent of
the controlled insurer to which it
pertains unless the Co::issioner
after notice and an opportunity to be
heard shall deter:ine that the
interests of policyholders,
stoc=holders or the public will be
sered by the publication thereof! &n
any action or proceeding by the
Co::issioner against the person
e>a:ined or any other person within
the sa:e holding co:pany syste: a
report of such e>a:ination
published by hi: shall be
ad:issible as eidence of the facts
stated therein!
S#C! 397! Transactions within a
holding co:pany syste: to which a
controlled insurer is a party shall be
subEect to the following;
@aA The ter:s shall be fair and
e?uitableB
@bA Charges or fees for serices
perfor:ed shall be reasonableB
@cA #>penses incurred and
pay:ents receied shall be
allocated to the insurer on an
e?uitable basis in confor:ity with
custo:ary insurance accounting
practices consistently applied!
The boo=s, accounts and records of
each party to all such transactions
shall be :aintained as to clearly
and accurately disclose the nature
and details of the transactions
including such accounting
infor:ation as is necessary to
support the reasonableness of the
charges or fees to the respectie
parties!
S#C! 399! The prior written
approal of the Co::issioner shall
be re?uired for the following
transactions between a controlled
insurer and any person in its
holding co:pany syste:; sales,
purchases, e>changes, loans or
e>tensions of credit, or inest:ents,
inoling fie percent @8HA or :ore
of the insurers ad:itted assets as
of the thirty-first day of 1ece:ber
ne>t preceding!
S#C! C++! The following
transactions between a controlled
insurer and any person in its
holding co:pany syste: :ay not
be entered into unless the insurer
has notified the Co::issioner in
writing of its intention to enter into
any such transaction at least thirty
@C+A days prior thereto, or such
shorter period as he :ay per:it, and
he has not disapproed it within
such period;
@aA Sales, purchases, e>changes,
loans or e>tensions of credit, or
inest:ents, inoling :ore than
one-half of one percent @LHA but
less than fie percent @8HA of the
insurers ad:itted assets as of the
thirty-first day of 1ece:ber ne>t
precedingB
@bA Reinsurance treaties or
agree:entsB
@cA Rendering of serices on a
regular or syste:atic basisB or
@dA 'ny :aterial transaction,
specified by regulation, which the
Co::issioner deter:ines :ay
adersely affect the interest of the
insurers policyholders or
stoc=holders or of the public!
(othing herein contained shall be
dee:ed to authoriDe or per:it any
transaction which, in the case of a
non-controlled insurer, would be
otherwise contrary to law!
S#C! C+*! The Co::issioner, in
reiewing transactions pursuant to
Sections 399 and C++, shall
consider whether the transactions
co:ply with the standard set forth in
Section 397 and whether they :ay
adersely affect the interests of
policyholders! This section shall not
apply to transactions subEect to
other sections of this Code which
i:pose notice or approal
re?uire:ents greater than those
prescribed by this title!
S#C! C+3! @aA (o person, other than
an authoriDed insurer, shall ac?uire
control of any do:estic insurer,
whether by purchase of its
securities or otherwise, e>cept;
@*A 'fter twenty @3+A days written
notice to its insurer or such shorter
period as the Co::issioner :ay
per:it, of its intention to ac?uire
controlB and
@3A 4ith the prior written approal
of the Co::issioner!
@bA The Co::issioner shall
disapproe the ac?uisition of control
of a do:estic insurer if he
deter:ines, after notice and an
opportunity to be heard, that such
action is reasonably necessary to
protect the interest of the people of
this country! The following shall be
the only factors to be considered by
hi: in reaching the foregoing
deter:ination;
@*A The financial condition of the
ac?uiring person and the insurerB
@3A The trustworthiness of the
ac?uiring person or any of its
officers or directorsB
@CA ' plan for the proper and
effectie conduct of the insurers
operationsB
@6A The source of the funds or
assets for the ac?uisitionB
@8A The fairness of any e>change of
stoc=, assets, cash or other
consideration for the stoc= or assets
to be receiedB
@,A 4hether the effect of the
ac?uisition :ay be substantially to
lessen co:petition in any line of
co::erce in insurance or to tend to
create a :onopoly thereinB and
@-A 4hether the ac?uisition is li=ely
to be haDardous or preEudicial to the
insurers policyholders or
stoc=holders!
@cA The following conditions
affecting any controlled insurer,
regardless of when such control has
been ac?uired, are iolations of this
title;
@*A The controlling person or any of
its officers or directors hae
de:onstrated untrustworthinessB
and
@3A The effect of retention of control
:ay be substantially to lessen
co:petition in any line of co::erce
in insurance in this country or to
tend to create a :onopoly therein!
&f, after notice and an opportunity to
be heard, the Co::issioner
deter:ines that any of the foregoing
iolations e>ists, he shall reduce his
findings to writing and shall issue
an order based thereon and cause
the sa:e to be sered upon the
insurer and upon all persons
affected thereby directing any
person found to be in iolation
thereof to ta=e appropriate action to
cure such iolation! $pon the failure
of any such person to co:ply with
such order, Section C+, shall
beco:e applicable!
@dA The Co::issioner :ay re?uire
the sub:ission of such infor:ation
as he dee:s necessary to deter:ine
whether any ac?uisition or retention
of control co:plies with this title
and :ay re?uire, as a condition of
approal of such ac?uisition or
retention of control, that all or any
portion of such infor:ation be
disclosed to the insurers
stoc=holders!
@eA $nless subEect to registration
under Section 396 or unless
ac?uisition of its control is subEect
to paragraphs @aA and @bA hereof,
eery authoriDed insurer shall notify
the Co::issioner in writing of the
identity of any person who: the
insurer then =nows or has reason to
beliee controls or has ta=en any
action, other than preli:inary
negotiations or discussion, to
ac?uire control of the insurer!
S#C! C+C! @aA (otwithstanding the
control of an authoriDed insurer by
any person, the officers and
directors of the insurer shall not
thereby be relieed of any obligation
or liability to which they would
otherwise be subEect by law, and the
insurer shall be :anaged so as to
assure its separate operating
identity consistent with this title!
@bA (othing herein shall preclude
an authoriDed insurer fro: haing or
sharing a co::on :anage:ent or
cooperatie or Eoint use of
personnel, property or serices with
one or :ore other persons under
arrange:ents :eeting the standards
of Section 397!
S#C! C+6! To the e>tent that any
infor:ation or :aterial is set forth in
for:s or other :atter on file with
any goern:ent agency or in a
registration for: filed with the
Co::issioner by another person
within the sa:e holding co:pany
syste:, the controlled insurer :ay
co:ply with the registration or
reporting re?uire:ents of this title
by referring in its registration for:
or report to such other filed :atter
and attaching a copy thereof
certified by the insurer as a true and
co:plete copy, to such registration
for: or report or, if such other filed
:atter is on file with the
Co::issioner, incorporating such
:atter by reference!
S#C! C+8! (o holding co:pany or
controlled person shall directly or
indirectly or through another person
do or cause to be done for or in
behalf of the controlled insurer any
act intended to affect the insurance
operations of the insurer which, if
done by the insurer, would iolate
any proision of this Code!
S#C! C+,! &n addition to any other
penalty proided by law, the
Co::issioner :ay, upon the willful
failure of any person within a
holding co:pany syste: to co:ply
with this title or any regulation or
order pro:ulgated hereunder;
@aA Proceed under Title *6 or Title
*8, Chapter &&& of this Code with
respect to insurer within the holding
co:pany syste:B or
@bA Reo=e or refuse to renew the
authority to do business in this
country of an insurer within the
holding co:pany syste: or refuse
to issue such authority to any other
insurer in the syste:B or
@cA 1irect that, in addition to any
other penalty proided by law, such
person forfeit to the people of this
country a su: not less than Fie
thousand pesos @P8,+++!++A for a
first iolation and Twenty-fie
thousand pesos @P38,+++!++A for
any subse?uent iolation! 'n
additional su: not less than
Twenty-fie thousand pesos
@P38,+++!++A shall be i:posed for
each :onth during which any such
iolation shall continue!
C0'PT#R &<
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S#R<&C#S
T&T%# l
&(S$R'(C# '/#(TS '(1
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S#C! C+-! (o insurance co:pany
doing business in the Philippines,
nor any agent thereof, shall pay any
co::ission or other co:pensation
to any person for serices in
obtaining insurance, unless such
person shall hae first procured
fro: the Co::issioner a license to
act as an insurance agent of such
co:pany or as an insurance bro=er
as hereinafter proided!
(o person shall act as an
insurance agent or as an insurance
bro=er in the solicitation or
procure:ent of applications for
insurance, or receie for serices in
obtaining insurance, any
co::ission or other co:pensation
fro: any insurance co:pany doing
business in the Philippines, or any
agent thereof, without first procuring
a license so to act fro: the
Co::issioner, which :ust be
renewed eery three @CA years
thereafter! Such license shall be
issued by the Co::issioner only
upon the written application of the
person desiring it, such application
if for a license to act as insurance
agent, being approed or endorsed
by the co:pany such person
desires to represent, and shall be
upon a for: prescribed by the
Co::issioner giing such
infor:ation as he :ay re?uire, and
upon pay:ent of the corresponding
fee hereinafter prescribed! The
Co::issioner shall satisfy hi:self
as to the co:petence and
trustworthiness of the applicant and
shall hae the right to refuse to
issue or renew and to suspend or
reo=e any such license in his
discretion! The license shall e>pire
after the thirty-first day of 1ece:ber
of the third year following the date of
issuance unless it is renewed!
%icenses :ay be renewed in the
case of the co:pany represented by
such agents, and in the case of
insurance bro=ers, upon the
application of the said bro=ers,
the:seles!
S#C! C+7! The proisions of
Sections C+- and C+9 shall apply to
an e:ployee who shall be engaged
to sell insurance products by an
insurance co:pany!
S#C! C+9! 'ny person who for
co:pensation solicits or obtains
insurance on behalf of any
insurance co:pany or trans:its for
a person other than hi:self an
application for a policy or contract
of insurance to or fro: such
co:pany or offers or assu:es to act
in the negotiating of such insurance
shall be an insurance agent within
the intent of this section and shall
thereby beco:e liable to all the
duties, re?uire:ents, liabilities and
penalties to which an insurance
agent is subEect!
'n insurance agent is an
independent contractor and not an
e:ployee of the co:pany
represented! &nsurance agent
includes an agency leader, agency
:anager, or their e?uialent!
Since the insurance industry is
i:bued with public interest, the
insurance co:panies upon approal
of the Co::issioner :ay e>ercise
wide latitude in superising the
actiities of their insurance agents
to ensure the protection of the
insuring public!
S#C! C*+! 'ny person who for any
co:pensation, co::ission or other
thing of alue acts or aids in any
:anner in soliciting, negotiating or
procuring the :a=ing of any
insurance contract or in placing ris=
or ta=ing out insurance, on behalf of
an insured other than hi:self, shall
be an insurance bro=er within the
intent of this Code, and shall thereby
beco:e liable to all the duties,
re?uire:ents, liabilities and
penalties to which an insurance
bro=er is subEect!
S#C! C**! #ery applicant for an
insurance bro=ers license shall file
with the application and shall
thereafter :aintain in force while so
licensed, a bond in faor of the
people of the Republic of the
Philippines e>ecuted by a co:pany
authoriDed to beco:e surety upon
official recogniDances, stipulations,
bonds and underta=ings! The bond
shall be in such a:ount as :ay be
fi>ed by the Co::issioner, but in no
case less than Fie hundred
thousand pesos @P8++,+++!++A, and
shall be conditioned upon full
accounting and due pay:ent to the
person entitled thereto of funds
co:ing into the bro=ers possession
through insurance transactions
under license! The bond shall
re:ain in force until released by the
Co::issioner, or until cancelled by
the surety! 4ithout preEudice to any
liability preiously incurred
thereunder, the surety :ay cancel
the bond on thirty @C+A days
adance written notice to both the
bro=er and the Co::issioner!
$pon approal of the application,
the applicant :ust also file two @3A
errors and o:issions @professional
liability or professional inde:nityA
policies issued separately by two
@3A insurance co:panies authoriDed
to do business in the Philippines,
satisfactory to the Co::issioner to
inde:nify the applicant against any
clai: or clai:s for breach of duty
as insurance bro=er which :ay be
:ade against hi: by reason of any
negligent act, error or o:ission,
wheneer or whereer co::itted or
alleged to hae been co::itted, on
the part of the applicant or any
person who has been, is now, or
:ay hereafter during the
subsistence of the policies be
e:ployed by the said applicant in
his capacity as insurance bro=er;
Proided , That the filing of any clai:
or clai:s under one of such policies
shall preclude the filing of the said
clai: or clai:s under the other
policy! The said policies shall be in
such a:ounts as :ay be prescribed
by the Co::issioner, depending
upon the siDe or a:ount of the
bro=ing business of the applicant,
but in no case shall the a:ount of
each of such policies be less than
Fie hundred thousand pesos
@P8++,+++!++A!
S#C! C*3! The Co::issioner shall,
in order to deter:ine the
co:petence of eery applicant to
hae the =ind of license applied for,
re?uire such applicant to sub:it to a
written e>a:ination and to pass the
sa:e to the satisfaction of the
Co::issioner! The Co::issioner
:ay delegate or authoriDe the
ad:inistration of the e>a:ination to
an independent organiDation, subEect
to such conditions that the
Co::issioner :ay proide!
S#C! C*C! 'n applicant for the
written e>a:ination :entioned in
the preceding section :ust be of
good :oral character and :ust not
hae been conicted of any cri:e
inoling :oral turpitude! 0e :ust
satisfactorily show to the
Co::issioner that he has been
trained in the =ind of insurance
conte:plated in the license applied
for! Such e>a:ination :ay be
waied if it is shown to the
satisfaction of the Co::issioner
that the applicant has undergone
e>tensie education andGor training
in insurance!
S#C! C*6! 'n application for the
issuance or renewal of a license to
act as an insurance agent or
insurance bro=er :ay be refused, or
such license, if already issued or
renewed, shall be suspended or
reo=ed if the Co::issioner finds
that the applicant for, or holder of,
such license;
@aA 0as willfully iolated any
proision of this CodeB or
@bA 0as intentionally :ade a
:aterial :isstate:ent in the
application to ?ualify for such
licenseB or
@cA 0as obtained or atte:pted to
obtain a license by fraud or
:isrepresentationB or
@dA 0as been guilty of fraudulent or
dishonest practicesB or
@eA 0as :isappropriated or
conerted to his own use or illegally
withheld :oneys re?uired to be held
in a fiduciary capacityB or
@fA 0as not de:onstrated
trustworthiness and co:petence to
transact business as an insurance
agent or insurance bro=er in such
:anner as to safeguard the publicB
or
@gA 0as :aterially :isrepresented
the ter:s and conditions of policies
or contracts of insurance which he
see=s to sell or has soldB or
@hA 0as failed to pass the written
e>a:ination prescribed, if not
otherwise e>e:pt fro: ta=ing the
sa:e!
&n addition to the foregoing causes,
no license to act as insurance agent
or insurance bro=er shall be
renewed if the holder thereof has
not been actiely engaged as such
agent or bro=er in accordance with
such rules as the Co::issioner
:ay prescribe!
S#C! C*8! The pre:iu:, or any
portion thereof, which an insurance
agent or insurance bro=er collects
fro: an insured and which is to be
paid to an insurance co:pany
because of the assu:ption of
liability through the issuance of
policies or contracts of insurance,
shall be held by the agent or bro=er
in a fiduciary capacity and shall not
be :isappropriated or conerted to
his own use or illegally withheld by
the agent or bro=er!
'ny insurance co:pany which
deliers to an insurance agent or
insurance bro=er a policy or contract
of insurance shall be dee:ed to
hae authoriDed such agent or
bro=er to receie on its behalf
pay:ent of any pre:iu: which is
due on such policy or contract of
insurance at the ti:e of its issuance
or deliery or which beco:es due
thereon!
&n order to ensure faithful
perfor:ance by the insurance agent
or insurance bro=er of these
fiduciary responsibilities, the
&nsurance Co::issioner shall
prescribe the :ini:u: ter:s and
conditions on such :atters in the
standard agency or bro=ers
agree:ent between the agents andG
or the bro=er with the insurance
co:panies!
S#C! C*,! 'ny proision of e>isting
laws to the contrary notwithstanding,
no person shall, within the
Philippines, sell or offer for sale a
ariable contract or do or perfor:
any act or thing in the sale,
negotiation, :a=ing or
consu::ating of any ariable
contract other than for hi:self
unless such person shall hae a
alid and current license fro: the
Co::issioner authoriDing such
person to act as a ariable contract
agent! (o such license shall be
issued unless and until the
Co::issioner is satisfied, after
e>a:ination that such person is by
training, =nowledge, ability and
character ?ualified to act as such
agent! 'ny such license :ay be
withdrawn and cancelled by the
Co::issioner after notice and
hearing, if he shall find that the
holder thereof does not then hae
the ?ualifications re?uired for the
issuance of such license!
S#C! C*-! &t shall be unlawful for
any person, co:pany or corporation
in the Philippines to act as general
agent of any insurance co:pany
unless he is e:powered by a written
power of attorney duly e>ecuted by
such insurance co:pany, and
registered with the Co::issioner to
receie notices, su::ons and legal
processes for and in behalf of the
insurance co:pany concerned in
connection with actions or other
legal proceedings against said
insurance co:pany! &t shall be the
duty of said general agent to notify
the Co::issioner of his post office
address in the Philippines, or any
change thereof! (otices, su::ons,
or processes of any =ind sent by
registered :ail to the last registered
address of such general agent of the
co:pany concerned or to the
Co::issioner shall be sufficient
serice and dee:ed as if sered on
the insurance co:pany itself!
S#C! C*7! #>cept as otherwise
proided by law or treaty, it shall be
unlawful for any person, partnership,
association or corporation in the
Philippines, for hi:self or itself, or
for so:e other person, partnership,
association or corporation, either to
procure, receie or forward
applications of insurance in, or to
issue or to delier or accept policies
or contracts of insurance of or for,
any insurance co:pany or
co:panies not authoriDed to
transact business in the Philippines,
coering ris=s, life or non-life,
situated in the PhilippinesB and any
such person, partnership,
association or corporation iolating
the proisions of this section shall
be dee:ed guilty of a penal offense,
and upon coniction thereof, shall
for each such offense be punished
by a fine of Two hundred fifty
thousand pesos @P38+,+++!++A, or
i:prison:ent of si> @,A :onths, or
both, at the discretion of the court;
Proided , That the proisions of this
section shall not apply to
reinsurance!
T&T%# 3
R#&(S$R'(C# BR)5#RS
S#C! C*9! #>cept as proided in the
ne>t succeeding title, no person
shall act as reinsurance bro=er in
the Philippines unless he is
authoriDed as such by the
Co::issioner!
' reinsurance bro=er is one who,
for co:pensation, not being a duly
authoriDed agent, e:ployee or
officer of an insurer in which any
reinsurance is effected, acts or aids
in any :anner in negotiating
contracts of reinsurance, or placing
ris=s of effecting reinsurance, for
any insurance co:pany authoriDed
to do business in the Philippines!
S#C! C3+! $pon application and
pay:ent of the corresponding fee
hereinafter prescribed, and the filing
of two @3A errors and o:issions
@professional liability or professional
inde:nityA policies hereinafter
described, a person :ay, if found
?ualified, be issued a license to act
as reinsurance bro=er by the
Co::issioner! (o such license
shall be alid after 1ece:ber C* of
the third year following its issuance
unless it is renewed!
The errors and o:issions
@professional liability or professional
inde:nityA policies :entioned aboe
shall inde:nify the applicant against
any clai: or clai:s for breach of
duty as reinsurance bro=er which
:ay be :ade against hi: by reason
of any negligent act, error or
o:ission, wheneer or whereer
co::itted or alleged to hae been
co::itted, on the part of the
applicant or any person who has
been, is now, or :ay hereafter
during the subsistence of the
policies be e:ployed by the said
applicant in his capacity as
reinsurance bro=er; Proided , That
the filing of any clai: or clai:s
under one of such policies shall
preclude the filing of the said clai:
or clai:s under the other policy!
The said policies shall be issued
separately by two @3A insurance
co:panies authoriDed to do
business in the Philippines and
shall be in such a:ounts as :ay be
prescribed by the &nsurance
Co::issioner, depending upon the
siDe or a:ount of the bro=ing
business of the applicant, but in no
case shall the a:ount of each of
such policies be less than Fie
hundred thousand pesos
@P8++,+++!++A!
S#C! C3*! The Co::issioner :ay
recall, suspend or reo=e the license
granted to a reinsurance bro=er for
iolation of any e>isting law, rule
and regulation, or any proision of
this Code after due notice and
hearing!
T&T%# C
R#S&1#(T '/#(TS
S#C! C33! (o person shall act as
resident agent, as hereinafter
defined, unless he is registered as
such with the Co::issioner!
S#C! C3C! The ter: resident agent ,
as used in this title, is one duly
appointed by a foreign insurer or
bro=er not authoriDed to do
business in the Philippines to
receie in its behalf notices,
su::ons and legal processes in
connection with actions or other
legal proceedings against such
foreign insurer or bro=er!
S#C! C36! The application for a
certificate of registration as resident
agent filed with the Co::issioner
:ust be acco:panied with a copy
of the power of attorney, duly
notariDed and authenticated by the
Philippine Consul in the place where
such foreign insurer or bro=er is
do:iciled, e:powering the applicant
to act as resident agent and to
receie notices, su::ons and legal
processes for and in behalf of such
foreign insurer or bro=er in
connection with any action or legal
proceeding against such foreign
insurer or bro=er!
S#C! C38! &t shall be the duty of
such resident agent to notify
i::ediately the Co::issioner of
any change of his office address!
S#C! C3,! ' certificate of
registration issued to a resident
agent shall e>pire on the thirty-first
day of 1ece:ber of the third year
following its issuance unless it is
renewed!
The Co::issioner :ay, after due
notice and hearing, recall or cancel
the certificate of registration issued
to a resident agent for iolation of
any e>isting law, rule or regulation,
or any proision of this Code!
T&T%# 6
()(-%&F# C)MP'(2 $(1#R4R&T#R
S#C! C3-! (o person shall act, and
no co:pany shall e:ploy any
person, as non-life co:pany
underwriter, whose duty and
responsibility it shall be to select,
ealuate and accept ris=s for, and to
deter:ine the ter:s and conditions,
including those pertaining to
a:ounts of retentions, under which
such ris=s are to be accepted by the
co:pany, unless such underwriter is
registered as such with the
Co::issioner!
S#C! C37! #ery non-life insurance
co:pany doing business in the
Philippines :ust :aintain at all
ti:es a register of ris=s accepted
and a clai:s register for each line of
ris=s engaged in by such non-life
insurance co:pany with such
entries therein as are now or as
:ay hereafter be re?uired by the
Co::issioner, and it shall be the
responsibility of the underwriter on
the particular line of ris= inoled to
see to it that the said registers are
well :aintained and =ept, and that
all entries therein are properly and
correctly recorded! Such registers
shall be open to inspection and
e>a:ination of duly authoriDed
representaties of the Co::issioner
at all ti:es during business hours!
S#C! C39! (o person shall be
registered with the Co::issioner,
unless such person shall be at least
twenty-one @3*A years of age on the
date of such registrationB a resident
of the PhilippinesB of good :oral
character and with no coniction of any cri:e inoling :oral turpitudeB has had at the ti:e such
registration is :ade at least two @3A years of underwriting wor= in the particular line of ris=
inoledB and has passed such ?ualifying written e>a:ination that the Co::issioner shall conduct
at such ti:e and in such place as he :ay decide to hold for applicants desiring to act as
underwriters!
NSuch e>a:ination shall not be re?uired of any person who has sered as non-life co:pany
underwriter for a period of at least fie @8A years, if the Co::issioner is satisfied of the
applicants co:petence as shown by the results of his underwriting wor= in the non-life
insurance co:pany or co:panies that e:ployed hi: in that capacity! The :ini:u: underwriting
e>perience herein re?uired :ay be reduced or waied if it is shown to the satisfaction of the
Co::issioner that the non-life co:pany underwriter has undergone e>tensie education andGor
training in insurance!
NSection CC+! 'ny applicant who :isrepresents or o:its any :aterial fact in his application for
registration as a non-life co:pany underwriter, or co::its any dishonest act in ta=ing or in
connection with the ?ualifying written e>a:ination for underwriters, shall be barred fro: being
registered as such non-life co:pany underwriter and, if already registered, his registration shall be
cancelled and the certificate of registration issued in his faor shall be recalled i::ediately by the
Co::issioner!
N&n the eent that the certificate of authority of a non-life insurance co:pany to transact business
is suspended or reo=ed due to business failure arising largely fro: the i:prudent and inEudicious
acceptance of ris=s by the underwriter concerned, the registration of such underwriter shall
li=ewise be cancelled and his certificate of registration shall be recalled by the Co::issioner, and
no si:ilar certificate shall thereafter be issued in his faor!
NSection CC*! (o certificate of registration issued to an underwriter shall be alid after 1ece:ber
C* of the third year following its issuance unless it is renewed!
NThe Co::issioner :ay, after due notice and hearing, also suspend or cancel such certificate for
iolation of e>isting laws, rules and regulations or of any proisions of this Code!
NT&T%# 8
N'1J$ST#RS
NSection CC3! (o person, partnership, association, or corporation shall act as an adEuster, as
hereinafter defined, unless authoriDed so to act by irtue of a license issued or renewed by the
Co::issioner pursuant to the proisions of this Code; Proided, That in the case of a natural
person, he :ust be a Filipino citiDen and in the case of a partnership, association or corporation, at
least si>ty percent @,+HA of its capital :ust be owned by citiDens of the Philippines!
NSection CCC! 'n adEuster :ay be an independent adEuster or a public adEuster!
NThe ter: independent adEuster :eans any person, partnership, association or corporation which,
for :oney, co::ission or any other thing of alue, acts for or on behalf of an insurer in the
adEusting of clai:s arising under insurance contracts or policies issued by such insurer!
NThe ter: public adEuster :eans any person, partnership, association or corporation which, for
:oney, co::ission or any other thing of alue, acts on behalf of an insured in negotiating for, or
effecting, the settle:ent of a clai: or clai:s of the said insured arising under insurance contracts
or policies, or which adertises for or solicits e:ploy:ent as an adEuster of such clai:s!
NSection CC6! For eery line of insurance clai: adEust:ent, adEusters shall be licensed either as
independent adEusters or as public adEusters! (o adEuster shall act on behalf of an insurer unless
said adEuster is licensed as an independent adEusterB and no adEuster shall act on behalf of an
insured unless said adEuster is licensed as a public adEuster; Proided, howeer, That when a fir:
or person has been licensed as a public adEuster, he shall not be granted another license as
independent adEuster and ice ersa!
N(o license, howeer, shall be re?uired of any co:pany adEuster who is a salaried e:ployee of an
insurance co:pany for the adEust:ent of clai:s filed under policies issued by such insurance
co:pany!
NSection CC8! Such license or any renewal thereof :ay be issued by the Co::issioner upon
written application filed by the person interested on the for: or for:s prescribed by the
Co::issioner, which shall contain such infor:ation as he :ay re?uire, and upon pay:ent of the
corresponding fee hereinafter prescribed!
NSection CC,! The Co::issioner shall conduct, at such ti:es, and in such places as he :ay decide
to hold, written e>a:inations to deter:ine the co:petence and ability of applicants desiring to act
as adEuster of insurance clai:s!
NSection CC-! (o adEusters license issued hereunder shall be alid after 1ece:ber C* of the
third year following the issuance of such license unless it is renewed!
NSection CC7! (othing contained in this title shall apply to any duly licensed attorney-at-law who
acts or aids in adEusting insurance clai:s as an incident to the practice of his profession and who
does not adertise hi:self as an adEuster!
NSection CC9! The Co::issioner :ay suspend or reo=e any adEusters license if, after giing
notice and hearing to the adEuster concerned, the Co::issioner finds that the said adEuster;
N@aA 0as iolated any proision of this Code and of the circulars, rulings and instructions of the
Co::issioner or has iolated any law in the course of his dealings as an adEusterB or
N@bA 0as :ade a :aterial :isstate:ent in the application for such licenseB or
N@cA 0as been guilty of fraudulent or dishonest practicesB or
N@dA 0as de:onstrated his inco:petence or untrustworthiness to act as adEusterB or
N@eA 0as :ade patently unEust aluation of lossB or
N@fA 0as failed to :a=e a report of the adEust:ent he proposed within si>ty @,+A days fro: the date
of the filing of the clai: by the insured with the insurer, unless preented so to do by reasons
beyond his controlB or
N@gA 0as refused to allow an e>a:ination into his affairs or :ethod of doing business as
hereinafter proided!
NSection C6+! #ery adEuster shall sub:it to the Co::issioner a ?uarterly report of all losses
which are the subEect of adEust:ent effected by hi: during each :onth in the for: prescribed by
the Co::issioner! The report shall be filed within one @*A :onth after the end of each ?uarter!
NSection C6*! #ery adEuster shall =eep his or its boo=s, records, reports, accounts, and ouchers
in such :anner that the Co::issioner or his duly authoriDed representaties :ay readily erify
the ?uarterly reports of the said adEuster and ascertain whether the said adEuster has co:plied with
the proisions of law or regulations obligatory upon hi: or whether the :ethod of doing business
of the said adEuster has been fair, Eust and honest!
NSection C63! The Co::issioner shall, at least once a year and wheneer he considers the public
interest so de:ands, cause an e>a:ination to be :ade into the affairs and :ethod of doing
business of eery adEuster!
NSection C6C! 'ny iolation of any proision of this title shall be punished by a fine of not less
than Ten thousand pesos @P*+,+++!++A, or by i:prison:ent at the discretion of the court; Proided,
That, in case of a partnership, association or corporation, the said penalty shall be i:posed upon
the partner, president, :anager, :anaging director, director or person in charge of its business or
responsible for the iolation!
NT&T%# ,
N'CT$'R&#S
NSection C66! (o life insurance co:pany shall be licensed to do business in the Philippines nor
shall any life insurance co:pany doing business in the Philippines be allowed to continue doing
such business unless they shall engage the serices of an actuary duly accredited with the
Co::issioner who shall, during his tenure of office, be directly responsible for the direction and
superision of all actuarial wor= connected with or that :ay be inoled in the business of the
insurance co:pany! The Co::issioner :ay also re?uire non-life insurance co:panies to engage
the serices of an accredited actuary, in accordance with the rules and regulations that the
Co::issioner will for:ulate!
NSection C68! 'ny person :ay be officially accredited by the Co::issioner to act as an actuary in
any life insurance co:pany or in any :utual benefit association authoriDed to do business in the
Philippines upon application therefor and the pay:ent of the corresponding fee hereinafter
prescribed; Proided, That;
N@aA 0e is a fellow of good standing of the 'ctuarial Society of the Philippines at the ti:e of his
appoint:ent and re:ains in such good standing during the tenure of his engage:entB or
N@bA &n the case of one who is not a fellow of the 'ctuarial Society of the Philippines, he :eets all
the re?uire:ents of the said Society for accreditation as a fellow of the Society, and has been
gien per:ission by the pertinent goern:ent authorities in the Philippines to render serices in
the Philippines, in the eent that he is not a citiDen of the Philippines!
NThe registration of the actuary shall be suspended or reo=ed by the Co::issioner on the
following grounds;
N@*A Failure to ade?uately perfor: re?uired functions and duties under this CodeB
N@3A Failure to disclose conflict of interestB
N@CA Failure to co:ply with the Code of Conduct of the 'ctuarial Society of the PhilippinesB or
N@6A Such other grounds that :ay be deter:ined by the Co::issioner!
N(o actuary engaged by a life insurance co:pany shall be at the sa:e ti:e a stoc=holder or a
director of the board, chief e>ecutie officer or chief financial officer of the co:pany or hold any
position that the Co::issioner :ay deter:ine to hae an inherent conflict of interest to the
position of an actuary!
N(o certificate of registration issued under this title shall be alid after 1ece:ber C* of the third
year following its issuance unless it is renewed!
NSection C6,! The following docu:ents, which are fro: ti:e to ti:e sub:itted to the
Co::issioner by a life insurance co:pany authoriDed to do business in the Philippines, shall be
duly certified by an accredited actuary e:ployed by such co:pany;
N@aA Policy reseres, clai:s or loss reseres and net due and deferred pre:iu:s!
N@bA State:ents of bases and net pre:iu:s, loading for gross pre:iu:s, and on non-forfeiture
alues and reseres, when applying for approal of gross pre:iu:s, reseres and non-forfeiture
alues!
N@cA Policies of insurance under any plan sub:itted to the Co::issioner as re?uired by law!
N@dA 'nnual state:ents and aluation reports sub:itted to the Co::issioner as re?uired by law!
N@eA Financial proEection showing the probable inco:e and outgo and resere re?uire:ents,
enu:erating the actuarial assu:ptions and bases of proEections!
N@fA <aluation of annuity funds or retire:ent plans!
NThe Co::issioner :ay also re?uire non-life insurance co:panies to sub:it, fro: ti:e to ti:e,
si:ilar docu:ents which shall be duly certified by an accredited actuary e:ployed by such
co:pany!
N'ny life insurance co:pany authoriDed to do business in the Philippines :ay e:ploy any person
who is not officially accredited under either of the ?ualifications for any =ind of actuarial wor=;
Proided, That he shall not, at any ti:e, hae the authority to certify to the correctness of the
foregoing docu:ents!
NSection C6-! (o accredited actuary shall sere :ore than one client or e:ployer at the sa:e ti:e!
0oweer, one already in the e:ploy of an insurance co:pany :ay be allowed by the
Co::issioner to sere a :utual benefit association or any other insurance co:pany, proided the
following conditions are first co:plied with;
N@aA That the re?uest to engage his serices by the other e:ployer is in writingB
N@bA That his present e:ployer ac?uiesced to it in writingB and
N@cA That he furnishes the Co::issioner with copies of said re?uest and ac?uiescence!
N(o e>ternal auditor shall be engaged by superised persons or entities unless it has been issued
an accreditation certificate by the Co::issioner! The accreditation certificate shall be alid until
1ece:ber C* of the third year fro: issuance unless it is reo=ed or suspended! The Co::issioner
shall issue rules and regulations to goern the accreditation of the e>ternal auditor and the
reocation or suspension of the accreditation!
NT&T%# -
NR'T&(/ )R/'(&I'T&)( '(1 R'T# M'5&(/
NSection C67! #ery organiDation which now e>ists or which :ay hereafter be for:ed for the
purpose of :a=ing rates to be used by :ore than one insurance co:pany authoriDed to do business
in the Philippines shall be =nown as a rating organiDation! The ter: rate as used in this title shall
generally :ean the ratio of the pre:iu: to the a:ount insured and shall include, as the conte>t
:ay re?uire, either the consideration to be paid or charged for insurance contracts, including
surety bonds, or the ele:ents and factors for:ing the basis for the deter:ination or application of
the sa:e, or both!
NSection C69! #ery rating organiDation which now e>ists or which :ay hereafter be for:ed shall
be subEect to the proisions of this title!
NSection C8+! (o rating organiDation hereafter for:ed shall co::ence rate-:a=ing operations
until it shall hae obtained a license fro: the Co::issioner! Before obtaining such license, such
rating organiDation shall file with the Co::issioner a notice of its intention to co::ence rate-
:a=ing operations, a copy of its constitution, articles of agree:ent or association, or of
incorporation, and its bylaws, a list of insurance co:panies that hae agreed to beco:e :e:bers
or subscribers, and such other infor:ation concerning such rating organiDation and its operations
as :ay be re?uired by the Co::issioner! &f the Co::issioner finds that the organiDation has
co:plied with the proisions of law and that it has a sufficient nu:ber of :e:bers or subscribers
and is otherwise ?ualified to function as a rating organiDation, the Co::issioner :ay issue a
license to such rating organiDation authoriDing it to :a=e rates for the =inds of insurance or
subdiisions thereof as :ay be specified in such license! (o license issued to a rating organiDation
shall be alid after 1ece:ber C* of the third year following its issuance unless it is renewed! (o
rating organiDation which now e>ists and is not licensed pursuant to this section shall continue
rate-:a=ing operations until it shall hae obtained fro: the Co::issioner a license which he :ay
issue if satisfied that such organiDation is co:plying with the proisions of this title! #ery rating
organiDation shall notify the Co::issioner pro:ptly of eery change in;
N@aA &ts constitution, its articles of agree:ent or association or its certificate of incorporation, and
its bylaws, rules and regulations goerning the conduct of its businessB and
N@bA &ts list of :e:bers and subscribers!
N' :e:ber :eans an insurer who participates in or is entitled to participate in the :anage:ent of
a rating organiDation!
N' subscriber :eans an insurer which is furnished at its re?uest with rates and rating :anuals by a
rating organiDation of which it is not a :e:ber!
NSection C8*! #ach rating organiDation shall furnish its rating serice without discri:ination to all
of its :e:bers and subscribers, and shall, subEect to reasonable rules and regulations, per:it any
insurance co:pany doing business in the Philippines, not ad:itted to :e:bership, to beco:e a
subscriber to its rating serices for any =ind of insurance or subdiisions thereof! (otice of
proposed changes in such rules and regulations shall be gien to subscribers! The reasonableness
of any rule or regulation in its application to subscribers, or the refusal of any rating organiDation
to ad:it an insurance co:pany as a subscriber, shall, at the re?uest of any subscriber or any such
insurance co:pany, be reiewed by the Co::issioner at a hearing held upon at least ten @*+A
days written notice to such rating organiDation and to such subscriber or insurance co:pany!
The Co::issioner :ay, after such hearing, issue an appropriate order!
NSection C83! (o rating organiDation or any other association shall refuse to do business with, or
prohibit or preent the pay:ent of co::issions to, any person licensed as an insurance bro=er
pursuant to the proisions of Title * of this chapter!
NSection C8C! Rating organiDations shall be subEect to e>a:ination by the Co::issioner, as often
as he :ay dee: such e>a:ination e>pedient, pursuant to the proisions of this Code applicable to
the e>a:ination of insurance co:panies! 0e shall cause such an e>a:ination of each rating
organiDation to be :ade at least once in eery fie @8A years!
NSection C86! The Co::issioner :ay suspend or reo=e the license of any rating organiDation
which fails to co:ply with his order within the ti:e li:ited by such order, or any e>tension
thereof which he :ay grant! The Co::issioner :ay deter:ine when a suspension of license shall
beco:e effectie and it shall re:ain in effect for the period fi>ed by hi:, unless he :odifies or
rescinds such suspension!
NSection C88! 'ny rating organiDation :ay subscribe for or purchase actuarial, technical or other
serices, and such serices shall be aailable to all :e:bers and subscribers without
discri:ination!
NSection C8,! 'ny rating organiDation :ay proide for the e>a:ination of policies, daily reports,
binders, renewal certificates, endorse:ents or other instru:ents of insurance, or the cancellation
thereof, and :ay :a=e reasonable rules goerning their sub:ission! Such rules shall contain a
proision that in the eent an insurance co:pany does not within si>ty @,+A days furnish
satisfactory eidence to the rating organiDation of the correction of any error or o:ission
preiously called to its attention by the rating organiDation, it shall be the duty of the rating
organiDation to notify the Co::issioner thereof! 'll infor:ation so sub:itted for e>a:ination
shall be confidential!
NSection C8-! Cooperation a:ong rating organiDations or a:ong rating organiDations and insurers
in rate :a=ing or in other :atters within the scope of this title is hereby authoriDed, proided the
filings resulting fro: such cooperation are subEect to all proisions of this title which are
applicable to filings generally! The Co::issioner :ay reiew such cooperatie actiities and
practices and if he finds that any such actiity or practice is unfair or unreasonable or otherwise
inconsistent with the proisions of this title, he :ay issue a written order specifying in what
respects such actiity or practice is unfair or unreasonable or otherwise inconsistent with the
proisions of this title, and re?uiring the discontinuance of such actiity or practice!
NSection C87! #ery rating organiDation and eery insurance co:pany which :a=es and files its
own rates, shall :a=e rates for all ris=s rated by such organiDation or insurance co:pany in
accordance with the following proisions;
N@aA Basic classification, :anual, :ini:u:, class, or schedule rates or rating plans, shall be :ade
and adopted for all such ris=s! 'ny departure fro: such rates shall be in accordance with
schedules, rating plans and rules filed with the Co::issionerB
N@bA Rates shall be reasonable and ade?uate for the class of ris=s to which they applyB
N@cA (o rate shall discri:inate unfairly between ris=s inoling essentially the sa:e haDards and
e>pense ele:ents or between ris=s in the application of li=e charges and creditsB
N@dA Consideration shall be gien to the past and prospectie loss e>perience, including the
conflagration and catastrophe haDards, if any, to all factors reasonably attributable to the class of
ris=s, to a reasonable profit, to co::issions paid during the :ost recent annual period and to past
and prospectie other e>penses! &n case of fire insurance rates, consideration shall be gien to the
e>perience of the fire insurance business during a period of not less than fie @8A years ne>t
preceding the year in which the reiew is :adeB
N@eA Ris= :ay be grouped by classifications for the establish:ent of rates and :ini:u:
pre:iu:s! Classification rates :ay be :odified to produce rates for indiidual ris=s in accordance
with rating plans which establish standards for :easuring ariations in haDards or e>pense
proisions, or both! Such standards :ay :easure any difference a:ong ris=s that can be
de:onstrated to hae a probable effect upon losses or e>penses!
NSection C89! (o rating organiDation and no insurance co:pany which :a=es and files its own
rates shall :a=e or pro:ulgate any rate or schedule of rates which is to be applied to any fire ris=
on the condition that the whole a:ount of insurance on any ris= or any specified part thereof shall
be placed with the :e:bers of or subscribers to such rating organiDation or with such insurer!
NSection C,+! #ery insurance co:pany doing business in the Philippines shall annually file with
the rating organiDation of which it is a :e:ber or subscriber, or with such other agency as the
Co::issioner :ay designate, a statistical report showing a classification schedule of its
pre:iu:s and losses on all =inds or types of insurance business to which Section C87 is
applicable, and such other infor:ation as the Co::issioner :ay dee: necessary or e>pedient for
the ad:inistration of the proisions of this title!
NSection C,*! #ery non-life rating organiDation and eery non-life insurance co:pany doing
business in the Philippines shall file with the Co::issioner, e>cept as to ris=s which by general
custo: of the business are not written according to :anual rates or rating plans, eery rate
:anual, schedule of rates, classification of ris=s, rating plan, and eery other rating rule and eery
:odification of any of the foregoing which it proposes to use! 'n insurance co:pany :ay satisfy
its obligation to :a=e such filings for any =ind or type of insurance by beco:ing a :e:ber of or
subscriber to a rating organiDation which :a=es such filings for such =ind or type of insurance,
and by authoriDing the Co::issioner to accept such filings of the rating organiDation on behalf of
such insurance co:pany!
NSection C,3! #ery :anual or schedule of rates and eery rating plan filed as proided in the
preceding section shall state or clearly indicate the character and e>tent of the coerage to which
any such rate or any :odification thereof will be applied!
NSection C,C! The Co::issioner shall reiew filings as soon as reasonably possible after they
hae been :ade in order to deter:ine whether they :eet the re?uire:ents of this title! 4hen a
filing is not acco:panied by the infor:ation upon which the insurance co:pany supports such
filing, and the Co::issioner does not hae sufficient infor:ation to deter:ine whether such
filing :eets the re?uire:ents of this title, he shall re?uire such insurance co:pany to furnish the
infor:ation upon which it supports such filing! The infor:ation furnished in support of a filing
:ay include;
N@aA The e>perience or Eudg:ent of the insurance co:pany or rating organiDation :a=ing the
filingB
N@bA &ts interpretation of any statistical data it relies uponB
N@cA The e>perience of other insurance co:panies or rating organiDationB or
N@dA 'ny other releant factors!
NSection C,6! &f the Co::issioner finds that any rate filings theretofore filed with hi: do not
co:ply with the proisions of this title or that they proide rates or rules which are inade?uate,
e>cessie, unfairly discri:inatory or otherwise unreasonable, he :ay order the sa:e withdrawn
and at the e>piration of si>ty @,+A days thereafter the sa:e shall be dee:ed no longer on file!
Before :a=ing any such finding and order, the Co::issioner shall gie notice, not less than ten
@*+A days in adance, and a hearing, to the rating organiDation, or to the insurer, which filed the
sa:e! Such order shall not affect any contract or policy :ade or issued prior to the e>piration of
such si>ty @,+A-day period!
NSection C,8! (o :e:ber or subscriber of a rating organiDation, and no insurance co:pany doing
business in the Philippines, or agent, e:ployee or other representatie of such co:pany, and no
insurance bro=er shall charge or de:and a rate or receie a pre:iu: which deiates fro: the
rates, rating plans, classifications, schedules, rules and standards, :ade and last filed by a rating
organiDation or by or on behalf of the insurance co:pany, or shall issue or :a=e any policy or
contract inoling a iolation of such rate filings!
NSection C,,! (otwithstanding any other proisions of this title, upon the written application of
the insurer, stating his reasons therefor, filed with and approed by the Co::issioner, a rate in
e>cess of that proided by a filing otherwise applicable :ay be used on any specific ris=!
NSection C,-! 4heneer the Co::issioner shall deter:ine, after notice and a hearing, that the
rates charged or filed on any class of ris=s are e>cessie, discri:inatory, inade?uate or
unreasonable, he shall order that such rates be appropriately adEusted! For the purpose of applying
the proisions of this section, the Co::issioner :ay fro: ti:e to ti:e approe reasonable
classifications of ris=s for any or all such classes, haing due regard to the past and prospectie
loss e>perience, including conflagration or catastrophe haDards, if any, to all other releant factors
and to a reasonable profit!
NSection C,7! (othing contained in this title shall be construed as re?uiring any insurer to beco:e
a :e:ber of or subscriber to any rating organiDation!
NSection C,9! 'gree:ents :ay be :ade a:ong insurance co:panies with respect to the e?uitable
apportion:ent a:ong the: of insurance which :ay be afforded applicants who are in good faith
entitled to but are unable to procure such insurance through ordinary :ethods and such insurance
co:panies :ay agree a:ong the:seles on the use of reasonable rates and :odifications for such
insurance, such agree:ents and rate :odifications to be subEect to the approal of the
Co::issioner; Proided, howeer, That the proisions of this section shall not be dee:ed to
apply to wor=:ens co:pensation insurance!
NSection C-+! (o insurance co:pany doing business in the Philippines or any agent thereof, no
insurance bro=er, and no e:ployee or other representatie of any such insurance co:pany, agent,
or bro=er, shall :a=e, procure or negotiate any contract of insurance or agree:ent as to policy
contract, other than is plainly e>pressed in the policy or other written contract issued or to be
issued as eidence thereof, or shall directly or indirectly, by giing or sharing a co::ission or in
any :anner whatsoeer, pay or allow or offer to pay or allow to the insured or to any e:ployee of
such insured, either as an induce:ent to the :a=ing of such insurance or after such insurance has
been effected, any rebate fro: the pre:iu: which is specified in the policy, or any special faor
or adantage in the diidends or other benefits to accrue thereon, or shall gie or offer to gie any
aluable consideration or induce:ent of any =ind, directly or indirectly, which is not specified in
such policy or contract of insuranceB nor shall any such co:pany, or any agent thereof, as to any
policy or contract of insurance issued, :a=e any discri:ination against any Filipino in the sense
that he is gien less adantageous rates, diidends or other policy conditions or priileges than are
accorded to other nationals because of his race!
NSection C-*! (o insurance co:pany doing business in the Philippines, and no officer, director, or
agent thereof, and no insurance bro=er or any other person, partnership or corporation shall issue
or circulate or cause or per:it to be issued or circulated any literature, illustration, circular or
state:ent of any sort :isrepresenting the ter:s of any policy issued by any insurance co:pany of
the benefits or adantages pro:ised thereby, or any :isleading esti:ate of the diidends or share
of surplus to be receied thereon, or shall use any na:e or title of any policy or class of policies
:isrepresenting the true nature thereofB nor shall any such co:pany or agent thereof, or any other
person, partnership or corporation :a=e any :isleading representation or inco:plete co:parison
of policies to any person insured in such co:pany for the purpose of inducing or tending to induce
such person to lapse, forfeit, or surrender his said insurance!
NSection C-3! &f the Co::issioner, after notice and hearing, finds that any insurance co:pany,
rating organiDation, agent, bro=er or other person has iolated any of the proisions of this title, it
shall order the pay:ent of a fine not to e>ceed Twenty-fie thousand pesos @P38,+++!++A for each
such offense, and shall i::ediately suspend or reo=e the license issued to such insurance
co:pany, rating organiDation, agent, or bro=er! The issuance, procure:ent or negotiation of a
single policy or contract of insurance shall be dee:ed a separate offense!
NT&T%# 7
NPR)<&S&)( C)MM)( T) '/#(TS,
BR)5#RS '(1 '1J$ST#RS
NSection C-C! ' license issued to a partnership, association or corporation to act as an insurance
agent, general agent, insurance bro=er, reinsurance bro=er, or adEuster shall authoriDe only the
indiidual na:ed in the license who shall ?ualify therefor as though an indiidual licensee! The
Co::issioner shall charge, and the licensee shall pay, a full additional license fee as to each
respectie indiidual so na:ed in such license in e>cess of one!
N%icenses and certificates of registration issued under the proisions of this chapter :ay be
renewed by the filing of notices of intention on for:s to be prescribed by the Co::issioner and
pay:ent of the fees therefor!
NSection C-6! The Co::issioner, in consultation with the duly accredited associations
representing the insurance industry, shall adopt and pro:ulgate a code of conduct to pro:ote
integrity, honesty and ethical business practices a:ong insurance agents, distributors and other
inter:ediaries!
NT&T%# 9
NB'(C'SS$R'(C#
NSection C-8! The ter: bancassurance shall :ean the presentation and sale to ban= custo:ers by
an insurance co:pany of its insurance products within the pre:ises of the head office of such
ban= duly licensed by the Bang=o Sentral ng Pilipinas or any of its branches under such rules and
regulations which the Co::issioner and the Bang=o Sentral ng Pilipinas :ay pro:ulgate! To
engage in bancassurance arrange:ent, a ban= is not re?uired to hae e?uity ownership of the
insurance co:pany! (o insurance co:pany shall enter into a bancassurance arrange:ent unless it
possesses all the re?uire:ents as :ay be prescribed by the Co::issioner and the Bang=o Sentral
ng Pilipinas!
N(o insurance product under this section, whether life or non-life, shall be issued or deliered
unless in the for: preiously approed by the Co::issioner!
NSection C-,! Personnel tas=ed to present and sell insurance products within the ban= pre:ises
shall be duly licensed by the Co::issioner and shall be subEect to the rules and regulations of this
'ct!
NSection C--! The Co::issioner and the Bang=o Sentral ng Pilipinas shall pro:ulgate rules and
regulations to effectiely superise the business of bancassurance!
NC0'PT#R <
NS#C$R&T2 F$(1
NSection C-7! There is hereby created a fund to be =nown as the Security Fund which shall be used
in the pay:ent of allowed clai:s against an insurance co:pany authoriDed to transact business in
the Philippines re:aining unpaid by reason of the insolency of such co:pany! The said Fund
:ay also be used to reinsure the policy of the insolent insurer in any solent insurer authoriDed to
do business in the Philippines as proided in Section 38,! The Fund :ay li=ewise be used to pay
insured clai:s which otherwise would not be co:pensable under the proisions of the policy! (o
pay:ent fro: the Security Fund shall, howeer, be :ade to any person who owns or controls ten
percent @*+HA or :ore of the oting shares of stoc= of the insolent insurer and no pay:ent on
any one clai: shall e>ceed Twenty thousand pesos @P3+,+++!++A!
NSection C-9! Such Fund shall consist of all pay:ents :ade to the Fund by insurance co:panies
authoriDed to do business in the Philippines! Pay:ents :ade by life insurance co:panies shall be
treated separately fro: those :ade by non-life insurance co:panies and the corresponding fund
shall be called %ife 'ccount and (on-%ife 'ccount, respectiely, and shall be held and
ad:inistered as such by the Co::issioner in accordance with the proisions of this title! The %ife
'ccount shall be utiliDed e>clusiely for disburse:ents that refer to life insurance co:panies,
while the (on-%ife 'ccount shall be utiliDed e>clusiely for disburse:ents that refer to non-life
insurance co:panies!
NSection C7+! 'll insurance co:panies doing business in the Philippines shall contribute to the
Security Fund, %ife or (on-%ife 'ccount, as the case :ay be, the aggregate a:ount of Fie
:illion pesos @P8,+++,+++!++A for each 'ccount! The contributions of the life insurance co:panies
and of the non-life insurance co:panies shall be in direct proportion to the ratio between a
particular life insurance co:pany or a particular non-life insurance co:panys net worth and the
aggregate net worth of all life insurance co:panies or all non-life insurance co:panies, as the
case :ay be, as shown in their latest financial state:ents approed by the Co::issioner! This
proportion applied to the Fie :illion pesos @P8,+++,+++!++A shall be the contribution of a
particular co:pany to the corresponding 'ccount of the Security Fund!
NThe a:ount of Fie :illion pesos @P8,+++,+++!++A in each 'ccount shall be in the for: of a
reoling trust fund! The respectie contributions of the co:panies shall re:ain as ad:itted assets
in their boo=s and any disburse:ent therefro: shall be deducted proportionately fro: the
contributions of each co:pany which will be allowed as deductions for inco:e ta> purposes! 'ny
earnings of the Fund shall be turned oer to the contributing co:panies in proportion to their
contributions!
N&n the case of disburse:ents of funds fro: the Fund as proided in the foregoing paragraph, the
life and non-life co:panies, as the case :ay be, shall replenish the a:ount disbursed in direct
proportion to the indiidual co:panys net worth and the aggregate net worth of the life or non-
life co:panies, as the case :ay be! 0oweer, in no case shall the Fund e>ceed the aggregate
a:ount of Ten :illion pesos @P*+,+++,+++!++A, or Fie :illion pesos @P8,+++,+++!++A for each
'ccount!
NShould the Fund, %ife or (on-%ife 'ccount, as the case :ay be, be inade?uate for a disburse:ent
as proided for, then the %ife or (on-%ife co:panies, as the case :ay be, shall contribute to the
Fund their respectie shares in the proportion preiously :entioned!
NSection C7*! The Co::issioner :ay adopt, a:end, and enforce all reasonable rules and
regulations necessary for the proper ad:inistration of the Fund and of the 'ccounts! &n the eent
any insurer shall fail to :a=e any pay:ent re?uired by this title, or that any pay:ent :ade is
incorrect, he shall hae full authority to e>a:ine all the boo=s and records of the insurer for the
purpose of ascertaining the facts and shall deter:ine the correct a:ount to be paid and :ay
proceed in any court of co:petent Eurisdiction to recoer for the benefit of the Fund or of the
'ccount concerned any su: shown to be due upon such e>a:ination and deter:ination! 'ny
insurer which fails to :a=e any pay:ent to the Fund or to the 'ccount concerned when due, shall
thereby forfeit to said Fund or 'ccount concerned a penalty of fie percent @8HA of the a:ount
deter:ined to be due as proided by this title, plus one percent @*HA of such a:ount for each
:onth of delay or fraction thereof, after the e>piration of the first :onth of such delay, but the
Co::issioner, if satisfied that the delay was e>cusable, :ay re:it all or any part of such penalty!
The Co::issioner, in his discretion, :ay suspend or reo=e the certificate of authority to do
business in the Philippines of any insurance co:pany which shall fail to co:ply with this title or
to pay any penalty i:posed in accordance therewith!
NSection C73! The 'ccounts created by this title shall be separate and apart fro: each other and
fro: any other fund! The Treasurer of the Philippines shall be the custodian of the %ife 'ccount
and (on-%ife 'ccount of the Security FundB and all disburse:ents fro: any 'ccount shall be
:ade by the Treasurer of the Philippines upon ouchers signed by the Co::issioner or his
deputy, as hereinafter proided! The :oneys of said 'ccount :ay be inested by the
Co::issioner only in bonds or other instru:ents of debt of the /oern:ent of the Philippines or
its political subdiisions or instru:entalities! The Co::issioner :ay sell any of the securities in
which an 'ccount is inested, if adisable, for its proper ad:inistration or in the best interest of
such 'ccount!
NSection C7C! Pay:ents fro: either the %ife &nsurance 'ccount or (on-%ife 'ccount, as the case
:ay be, shall be :ade by the Treasurer of the Philippines to the Co::issioner, upon the authority
of appropriate certificate filed with hi: by the Co::issioner acting in such capacity!
NSection C76! The Co::issioner :ay, in his discretion, designate or appoint a duly authoriDed
representatie or representaties to appear and defend before any court or other body or official
haing Eurisdiction any or all actions or proceedings against principals or assureds on insurance
policies or contracts issued to the: where the insurer has beco:e insolent or unable to :eet its
insurance obligations! The Co::issioner shall hae, as of the date of insolency of such insurer
or as of the date of its inability to :eet its insurance obligations, only the rights which such insurer
would hae had if it had not beco:e insolent or unable to :eet its insurance obligations! For the
purpose of this title, the Co::issioner shall hae power to e:ploy such counsel, cler=s and
assistants as he :ay dee: necessary!
NSection C78! The e>pense of ad:inistering an 'ccount shall be paid out of the 'ccount
concerned! The Co::issioner shall sere as ad:inistrator of the Fund and of the 'ccounts
without additional co:pensation, but :ay be allowed and paid fro: the 'ccount concerned
e>penses incurred in the perfor:ance of his duties in connection with said 'ccount! The
co:pensation of those persons e:ployed by the Co::issioner shall be dee:ed ad:inistration
e>pense payable fro: the 'ccount concerned! The Co::issioner shall include in his annual
report to the Secretary of Finance a state:ent of the e>penses of ad:inistration of the Fund and of
the %ife 'ccount and (on-%ife 'ccount for the preceding year!
NC0'PT#R <&
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NSection C7,! For purposes of this chapter;
N@aA Motor <ehicle is any ehicle as defined in Section C, paragraph @aA of Republic 'ct (o! 6*C,,
otherwise =nown as the %and Transportation and Traffic Code!
N@bA Passenger is any fare paying person being transported and coneyed in and by a :otor
ehicle for transportation of passengers for co:pensation, including persons e>pressly authoriDed
by law or by the ehicles operator or his agents to ride without fare!
N@cA Third party is any person other than a passenger as defined in this section and shall also
e>clude a :e:ber of the household, or a :e:ber of the fa:ily within the second degree of
consanguinity or affinity, of a :otor ehicle owner or land transportation operator, as li=ewise
defined herein, or his e:ployee in respect of death, bodily inEury, or da:age to property arising
out of and in the course of e:ploy:ent!
N@dA )wner or :otor ehicle owner :eans the actual legal owner of a :otor ehicle, in whose
na:e such ehicle is duly registered with the %and Transportation )fficeB
N@eA %and transportation operator :eans the owner or owners of :otor ehicles for transportation
of passengers for co:pensation, including school buses!
N@fA &nsurance policy or Policy refers to a contract of insurance against passenger and third-party
liability for death or bodily inEuries and da:age to property arising fro: :otor ehicle accidents!
NSection C7-! &t shall be unlawful for any land transportation operator or owner of a :otor ehicle
to operate the sa:e in the public highways unless there is in force in relation thereto a policy of
insurance or guaranty in cash or surety bond issued in accordance with the proisions of this
chapter to inde:nify the death, bodily inEury, andGor da:age to property of a third-party or
passenger, as the case :ay be, arising fro: the use thereof!
NSection C77! The Co::issioner shall furnish the %and Transportation )ffice with a list of
insurance co:panies authoriDed to issue the policy of insurance or surety bond re?uired by this
chapter!
NSection C79! The %and Transportation )ffice shall not allow the registration or renewal of
registration of any :otor ehicle without first re?uiring fro: the land transportation operator or
:otor ehicle owner concerned the presentation and filing of a substantiating docu:entation in a
for: approed by the Co::issioner eidencing that the policy of insurance or guaranty in cash or
surety bond re?uired by this chapter is in effect!
NSection C9+! #ery land transportation operator and eery owner of a :otor ehicle shall, before
applying for the registration or renewal of registration of any :otor ehicle, at his option, either
secure an insurance policy or surety bond issued by any insurance co:pany authoriDed by the
Co::issioner or :a=e a cash deposit in such a:ount as herein re?uired as li:it of liability for
purposes specified in Section C7-!
N@aA &n the case of a land transportation operator, the insurance guaranty in cash or surety bond
shall coer liability for death or bodily inEuries of third-parties andGor passengers arising out of the
use of such ehicle in the a:ount not less than Twele thousand pesos @P*3,+++!++A per passenger
or third-party and an a:ount, for each of such categories, in any one accident of not less than that
set forth in the following scale;
N@*A Motor ehicles with an authoriDed capacity of twenty-si> @3,A or :ore passengers; Fifty
thousand pesos @P8+,+++!++AB
N@3A Motor ehicles with an authoriDed capacity of fro: twele @*3A to twenty-fie @38A
passengers; Forty thousand pesos @P6+,+++!++AB
N@CA Motor ehicles with an authoriDed capacity of fro: si> @,A to eleen @**A passengers; Thirty
thousand pesos @PC+,+++!++AB
N@6A Motor ehicles with an authoriDed capacity of fie @8A or less passengers; Fie thousand pesos
@P8,+++!++A :ultiplied by the authoriDed capacity!
NProided, howeer, That such cash deposit :ade to, or surety bond posted with, the
Co::issioner shall be resorted to by hi: in cases of accidents the inde:nities for which to third-
parties andGor passengers are not settled accordingly by the land transportation operator and, in
that eent, the said cash deposit shall be replenished or such surety bond shall be restored within
si>ty @,+A days after i:pair:ent or e>piry, as the case :ay be, by such land transportation
operator, otherwise, he shall secure the insurance policy re?uired by this chapter! The aforesaid
cash deposit :ay be inested by the Co::issioner in readily :ar=etable goern:ent bonds,
andGor securities!
N@bA &n the case of an owner of a :otor ehicle, the insurance or guaranty in cash or surety bond
shall coer liability for death or inEury to third-parties in an a:ount not less than that set forth in
the following scale in any one accident;
N@*A Priate Cars
N@iA Banta:; Twenty thousand pesos @P3+,+++!++AB
N@iiA %ight; Twenty thousand pesos @P3+,+++!++AB and
N@iiiA 0eay; Thirty thousand pesos @PC+,+++!++A!
N@3A )ther Priate <ehicles
N@iA Tricycles, :otorcycles and scooters; Twele thousand pesos @P*3,+++!++AB
N@iiA <ehicles with an unladen weight of 3,,++ =ilos or less; Twenty thousand pesos @P3+,+++!++AB
N@iiiA <ehicles with an unladen weight of between 3,,+* =ilos and C,9C+ =ilos; Thirty thousand
pesos @PC+,+++!++AB and
N@iA <ehicles with an unladen weight oer C,9C+ =ilos; Fifty thousand pesos @P8+,+++!++A!
NThe Co::issioner :ay, if warranted, set forth schedule of inde:nities for the pay:ent of clai:s
for death or bodily inEuries with the coerages set forth herein!
NSection C9*! 'ny clai: for death or inEury to any passenger or third-party pursuant to the
proisions of this chapter shall be paid without the necessity of proing fault or negligence of any
=ind; Proided, That for purposes of this section;
N@aA The total inde:nity in respect of any person shall not be less than Fifteen thousand pesos
@P*8,+++!++AB
N@bA The following proofs of loss, when sub:itted under oath, shall be sufficient eidence to
substantiate the clai:;
N@*A Police report of accidentB and
N@3A 1eath certificate and eidence sufficient to establish the proper payeeB or
N@CA Medical report and eidence of :edical or hospital disburse:ent in respect of which refund is
clai:edB
N@cA Clai: :ay be :ade against one :otor ehicle only! &n the case of an occupant of a ehicle,
clai:, shall lie against the insurer of the ehicle in which the occupant is riding, :ounting or
dis:ounting fro:! &n any other case, clai: shall lie against the insurer of the directly offending
ehicle! &n all cases, the right of the party paying the clai: to recoer against the owner of the
ehicle responsible for the accident shall be :aintained!
NSection C93! (o land transportation operator or owner of :otor ehicle shall be unreasonably
denied the policy of insurance or surety bond re?uired by this chapter by the insurance co:panies
authoriDed to issue the sa:e, otherwise, the %and Transportation )ffice shall re?uire fro: said
land transportation operator or owner of the ehicle, in lieu of a policy of insurance or surety
bond, a certificate that a cash deposit has been :ade with the Co::issioner in such a:ount
re?uired as li:its of inde:nity in Section C9+ to answer for the passenger andGor third-party
liability of such land transportation operator or owner of the ehicle!
N(o insurance co:pany :ay issue the policy of insurance or surety bond re?uired under this
chapter unless so authoriDed under e>isting laws!
NThe authority to engage in the casualty andGor surety lines of business of an insurance co:pany
that refuses to issue or renew, without Eust cause, the insurance policy or surety bond therein
re?uired shall be withdrawn i::ediately!
NSection C9C! (o cancellation of the policy shall be alid unless written notice thereof is gien to
the land transportation operator or owner of the ehicle and to the %and Transportation )ffice at
least fifteen @*8A days prior to the intended effectie date thereof! $pon receipt of such notice, the
%and Transportation )ffice, unless it receies eidence of a new alid insurance or guaranty in
cash or surety bond as prescribed in this chapter, or an endorse:ent of reial of the cancelled
one, shall order the i::ediate confiscation of the plates of the :otor ehicle coered by such
cancelled policy! The sa:e :ay be reissued only upon presentation of a new insurance policy or
that a guaranty in cash or surety bond has been :ade or posted with the Co::issioner and which
:eets the re?uire:ents of this chapter, or an endorse:ent or reial of the cancelled one!
NSection C96! &f the cancellation of the policy or surety bond is conte:plated by the land
transportation operator or owner of the ehicle, he shall, before the policy or surety bond ceases to
be effectie, secure a si:ilar policy of insurance or surety bond to replace the policy or surety
bond to be cancelled or :a=e a cash deposit in sufficient a:ount with the Co::issioner, and
without any gap, file the re?uired docu:entation with the %and Transportation )ffice, and notify
the insurance co:pany concerned of the cancellation of its policy or surety bond!
NSection C98! &n case of change of owner ship of a :otor ehicle, or change of the engine of an
insured ehicle, there shall be no need of issuing a new policy until the ne>t date of registration or
renewal of registration of such ehicle, and; Proided, That the insurance co:pany shall agree to
continue the policy, such change of ownership or such change of the engine shall be indicated in a
corresponding endorse:ent by the insurance co:pany concerned, and a signed duplicate of such
endorse:ent shall, within a reasonable ti:e, be filed with the %and Transportation )ffice!
NSection C9,! &n the settle:ent and pay:ent of clai:s, the inde:nity shall not be aailed of by
any accident icti: or clai:ant as an instru:ent of enrich:ent by reason of an accident, but as an
assistance or restitution insofar as can fairly be ascertained!
NSection C9-! 'ny person haing any clai: upon the policy issued pursuant to this chapter shall,
without any unnecessary delay, present to the insurance co:pany concerned a written notice of
clai: setting forth the nature, e>tent and duration of the inEuries sustained as certified by a duly
licensed physician! (otice of clai: :ust be filed within si> @,A :onths fro: the date of accident,
otherwise, the clai: shall be dee:ed waied! 'ction or suit for recoery of da:age due to loss or
inEury :ust be brought, in proper cases, with the Co::issioner or the courts within one @*A year
fro: denial of the clai:, otherwise, the clai:ants right of action shall prescribe!
NSection C97! The insurance co:pany concerned shall forthwith ascertain the truth and e>tent of
the clai: and :a=e pay:ent within fie @8A wor=ing days after reaching an agree:ent! &f no
agree:ent is reached, the insurance co:pany shall pay only the no-fault inde:nity proided in
Section C9* without preEudice to the clai:ant fro: pursuing his clai: further, in which case, he
shall not be re?uired or co:pelled by the insurance co:pany to e>ecute any ?uit clai: or
docu:ent releasing it fro: liability under the policy of insurance or surety bond issued!
N&n case of any dispute in the enforce:ent of the proisions of any policy issued pursuant to this
chapter, the adEudication of such dispute shall be within the original and e>clusie Eurisdiction of
the Co::issioner, subEect to the li:itations proided in Section 6C9!
NSection C99! &t shall be unlawful for a land transportation operator or owner of :otor ehicle to
re?uire his or its driers or other e:ployees to contribute in the pay:ent of pre:iu:s!
NSection 6++! (o goern:ent office or agency haing the duty of i:ple:enting the proisions of
this chapter nor any official or e:ployee thereof shall act as agent in procuring the insurance
policy or surety bond proided for herein! The co::ission of an agent procuring the said policy
or bond shall in no case e>ceed ten percent @*+HA of the a:ount of the pre:iu:s therefor!
NSection 6+*! 'ny land transportation operator or owner of :otor ehicle or any other person
iolating any of the proisions of the preceding sections shall be punished by a fine of not less
than Fie hundred pesos @P8++!++A andGor i:prison:ent for not :ore than si> @,A :onths! The
iolation of Section C9+ by a land transportation operator shall be a sufficient cause for the
reocation of the certificate of public conenience issued by the %and Transportation Franchising
and Regulatory Board coering the ehicle concerned!
NSection 6+3! 4heneer any iolation of the proisions of this chapter is co::itted by a
corporation or association, or by a goern:ent office or entity, the e>ecutie officer or officers of
said corporation, association or goern:ent office or entity who shall hae =nowingly per:itted,
or failed to preent, said iolation shall be held liable as principals!
NC0'PT#R <&&
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TR$STS F)R C0'R&T'B%# $S#S
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NM$T$'% B#(#F&T 'SS)C&'T&)(S
NSection 6+C! 'ny society, association or corporation, without capital stoc=, for:ed or organiDed
not for profit but :ainly for the purpose of paying sic= benefits to :e:bers, or of furnishing
financial support to :e:bers while out of e:ploy:ent, or of paying to relaties of deceased
:e:bers of fi>ed or any su: of :oney, irrespectie of whether such ai: or purpose is carried out
by :eans of fi>ed dues or assess:ents collected regularly fro: the :e:bers, or of proiding, by
the issuance of certificates of insurance, pay:ent of its :e:bers of accident or life insurance
benefits out of such fi>ed and regular dues or assess:ents, but in no case shall include any society,
association, or corporation with such :utual benefit features and which shall be carried out purely
fro: oluntary contributions collected not regularly andGor no fi>ed a:ount fro: who:soeer
:ay contribute, shall be =nown as a :utual benefit association within the intent of this Code!
N'ny society, association, or corporation principally organiDed as a labor union shall be goerned
by the %abor Code notwithstanding any :utual benefit feature proisions in its charter as incident
to its organiDation!
N&n no case shall a :utual benefit association be organiDed and authoriDed to transact business as a
charitable or beneolent organiDation, and wheneer it has this feature as incident to its e>istence,
the corresponding charter proision shall be reised to confor: with the proision of this section!
Mutual benefit association, already licensed to transact business as such on the date this Code
beco:es effectie, haing charitable or beneolent feature shall abandon such incidental purpose
upon effectiity of this Code if they desire to continue operating as such :utual benefit
associations!
NSection 6+6! ' :utual benefit association, before it :ay transact as such, :ust first secure a
license fro: the Co::issioner! The application for such license shall be filed with the
Co::issioner together with certified true copies of the articles of incorporation or the constitution
and bylaws of the association, and all a:end:ents thereto, and such other docu:ents or
testi:onies as the Co::issioner :ay re?uire!
N(o license shall be granted to a :utual benefit association until the Co::issioner shall hae
been satisfied by such e>a:ination as he :ay :a=e and such eidence as he :ay re?uire that the
association is ?ualified under e>isting laws to operate and transact business as such! The
Co::issioner :ay refuse to issue a license to any :utual benefit association if, in his Eudg:ent,
such refusal will best pro:ote the interest of the :e:bers of such association and of the people of
this country! 'ny license issued shall e>pire on the last day of 1ece:ber of the third year
following its issuance and, upon proper application, :ay be renewed if the association is
continuing to co:ply with e>isting laws, rules and regulations, orders, instructions, rulings and
decisions of the Co::issioner! #ery association receiing any such license shall be subEect to
the superision of the Co::issioner; Proided, That no such license shall be granted to any such
association if such association has no actuary!
NSection 6+8! (o :utual benefit association shall be issued a license to operate as such unless it
has constituted and established a /uaranty Fund by depositing with the Co::issioner an initial
:ini:u: a:ount of Fie :illion pesos @P8,+++,+++!++A in cash, or in goern:ent securities with
a total alue e?ual to such a:ount, to answer for any alid benefit clai: of any of its :e:bers!
N'll :oneys receied by the Co::issioner for this purpose :ust be deposited by hi: in interest-
bearing deposits with any ban= or ban=s authoriDed to transact business in the Philippines for the
account of the particular association constituting the /uaranty Fund!
N'ny accrual to such fund, be it interest earned or diidend additions on :oneys or securities so
deposited, :ay, with the prior approal of the Co::issioner, be withdrawn by the association if
there is no pending benefit clai: against it, including interest thereon or diidend additions
thereto!
NThe Co::issioner, prior to or after licensing a :utual benefit association, :ay re?uire such
association to increase its /uaranty Fund fro: the initial :ini:u: a:ount re?uired to an a:ount
e?ual to the capital inest:ent re?uired of an e>isting do:estic insurance co:pany under Section
3+9 of this Code!
NSection 6+,! #ery :utual benefit association licensed to do business as such shall issue
:e:bership certificates to its :e:bers specifying the benefits to which such :e:bers are
entitled!
NSuch certificates, together with the articles of incorporation of the association or its constitution
and bylaws, and all e>isting laws as :ay be pertinent shall constitute the agree:ent, as of the date
of its issuance, between the association and the :e:ber! The :e:bership certificate shall be in a
for: preiously approed by the Co::issioner!
NSection 6+-! ' :utual benefit association :ay, by reinsurance agree:ent, cede in whole or in
part any indiidual ris= or ris=s under certificates of insurance issued by it, only to a life insurance
co:pany authoriDed to transact business or to a professional reinsurer authoriDed to accept life
ris=s in the Philippines; Proided, That a copy of the draft of such reinsurance agree:ent shall be
sub:itted to the Co::issioner for his approal! The association :ay ta=e credit for the reseres
on such ceded ris=s to the e>tent reinsured!
NSection 6+7! The constitution or bylaws of a :utual benefit association :ust distinctly state the
purpose for which dues andGor assess:ents are :ade and collected and the portion thereof which
:ay be used for e>penses!
N1eath benefit and other relief funds shall be created and used e>clusiely for paying benefits due
the :e:bers under their respectie :e:bership certificates! ' general fund shall li=ewise be
created and used for e>penses of ad:inistration of the association!
N' :utual benefit association shall only :aintain free and unassigned surplus of not :ore than
twenty percent @3+HA of its total liabilities as erified by the Co::issioner! 'ny a:ount in e>cess
shall be returned to the :e:bers by way of diidends, enhancing the e?uity alue or proiding
benefits in =ind and other releant serices! &n addition, subEect to the approal of the
Co::issioner, a :utual benefit association :ay allocate a portion for capacity building and
research and deelop:ent such as deeloping new products and serices, upgrading and
i:proing operating syste:s and e?uip:ent and continuing :e:ber education!
NSection 6+9! #ery outstanding :e:bership certificate :ust hae an e?uity alue e?uialent to at
least fifty percent @8+HA of the total contributions collected thereon! The e?uity alue only applies
to basic life insurance product and e>cludes optional products!
NSection 6*+! #ery :utual benefit association :ust accu:ulate and :aintain, out of the periodic
dues collected fro: its :e:bers, sufficient reseres for the pay:ent of clai:s or obligations for
which it shall hold funds in securities satisfactory to the Co::issioner consisting of bonds of the
/oern:ent of the Philippines, or any of its political subdiisions and instru:entalities, or in such
other good securities as :ay be approed by the Co::issioner!
NThe resere liability shall be established in accordance with actuarial procedures and shall be
approed by the Co::issioner!
NThe articles of incorporation or the constitution and bylaws of a :utual benefit association :ust
proide that if its resere as to all or any class of certificates beco:es i:paired, its board of
directors or trustees :ay re?uire that there shall be paid by the :e:bers to the association the
a:ount of the :e:bers e?uitable proportion of such deficiency as ascertained by said board
and that if the pay:ent be not :ade it shall stand as an indebtedness against the :e:bership
certificates of the defaulting :e:bers and draw interest not to e>ceed fie percent @8HA per
annu: co:pounded annually!
NSection 6**! ' :utual benefit association :ay inest such portion of its funds as shall not be
re?uired to :eet pending clai:s and other obligations in any of the classes of inest:ents or types
of securities in which life insurance co:panies doing business in the Philippines :ay inest!
N&t :ay also grant loans to :e:bers on the security of a pledge or chattel :ortgage of personal
properties of the borrowers, or in the absence thereof, on the security of the :e:bership
certificate of the borrowing :e:bers, in which eent such loan shall beco:e a first lien on the
proceeds thereof!
NSection 6*3! The Co::issioner or any of his duly designated representaties, shall hae the
power of isitation, audit and e>a:ination into the affairs, financial condition, and :ethods of
doing business of all :utual benefit associations, and he shall cause such e>a:ination to be :ade
at least once eery two @3A years or wheneer it :ay be dee:ed proper and necessary! Free access
to the boo=s, records and docu:ents of the association shall be accorded to the Co::issioner, or
to his representaties, in such :anner that the Co::issioner or his representaties :ay readily
erify or deter:ine the true affairs, financial condition, and :ethod of doing business of such
association! &n the course of such e>a:ination, the Co::issioner or his duly designated
representaties shall hae authority to ad:inister oaths and ta=e testi:ony or other eidence on
any :atter relating to the affairs of the association!
N'll :inutes of the proceedings of the board of directors or trustees of the association, and those
of the regular or special :eetings of the :e:bers, shall be ta=en, and a copy thereof, in #nglish or
in Pilipino, shall be sub:itted to the Co::issioners representaties or e>a:iners in the course
of such e>a:ination!
N' copy of the findings of such e>a:ination, together with the reco::endations of the
Co::issioner, shall be furnished the association for its infor:ation and co:pliance, and the sa:e
shall be ta=en up i::ediately in the :eetings of the board of directors or trustees and of the
:e:bers of the association!
NSection 6*C! #ery :utual benefit association shall, annually on or before the thirtieth day of
'pril of each year, render to the Co::issioner an annual state:ent in such for: and detail as :ay
be prescribed by the Co::issioner, signed and sworn to by the president, secretary, treasurer, and
actuary of the association, showing the e>act condition of its affairs on the preceding thirty-first
day of 1ece:ber!
NSection 6*6! (o :oney, aid or benefit to be paid, proided or tendered by any :utual benefit
association, shall be liable to attach:ent, garnish:ent, or other process, or be seiDed, ta=en,
appropriated, or applied by any legal or e?uitable process to pay any debt or liability of a :e:ber
or beneficiary, or any other person who :ay hae a right thereunder, either before or after
pay:ent!*Owphi*
NSection 6*8! 'ny :e:ber of a :utual benefit association shall hae the right at all ti:es to
change the beneficiary or beneficiaries or add another beneficiary or other beneficiaries in
accordance with the rules and regulations of the association unless he has e>pressly waied this
right in the :e:bership certificate! #ery association :ay, under such rules as it :ay adopt, li:it
the scope of beneficiaries and proide that no beneficiary shall hae or obtain any ested interest
in the proceeds of any certificate until the certificate has beco:e due and payable under the ter:s
of the :e:bership certificate!
NSection 6*,! 'ny chapter affiliate independently licensed as a :utual benefit association :ay
consolidate or :erge with any other si:ilar chapter affiliate or with the :other association!
NSection 6*-! 'ny :utual benefit association :ay be conerted into and licensed as a :utual life
insurance co:pany by co:plying with the re?uire:ents of the pertinent proisions of this Code
and sub:itting the specific plan for such conersion to the Co::issioner for his approal! Such
plan, as approed, shall then be sub:itted to the :e:bers either in the regular :eeting or in a
special :eeting called for the purpose for their adoption! The affir:atie ote of at least two-
thirds @3GCA of all the :e:bers shall be necessary in order to consider such plan as adopted!
N(o such conersion shall ta=e effect unless and until approed by the Co::issioner!
NSection 6*7! (o :utual benefit association shall be dissoled without first notifying the
Co::issioner and furnishing hi: with a certified copy of the resolution authoriDing the
dissolution, duly adopted by the affir:atie ote of two-thirds @3GCA of the :e:bers at a :eeting
called for that purpose, the financial state:ents as of the date of the resolution, and such other
papers or docu:ents as :ay be re?uired by the Co::issioner!
N(o dissolution shall proceed until and unless approed by the Co::issioner and all proceedings
in connection therewith shall be witnessed and attested by his duly designated representatie!
N(o :utual benefit association shall be officially declared as dissoled until after the
Co::issioner so certifies that all outstanding clai:s against the association hae been duly
settled and li?uidated!
NSection 6*9! The Co::issioner shall, after notice and hearing, hae the power either to suspend
or reo=e the license issued to a :utual benefit association if he finds that the association has;
N@aA Failed to co:ply with any proision of this CodeB
N@bA Failed to co:ply with any other law or regulation obligatory upon itB
N@cA Failed to co:ply with any order, ruling, instruction, re?uire:ent or reco::endation of the
Co::issionerB
N@dA #>ceeded its power to the preEudice of its :e:bersB
N@eA Conducted its business fraudulently or haDardouslyB
N@fA Rendered its affairs and condition to one of insolencyB or
N@gA Failed to carry out its ai:s and purposes for which it was organiDed due to any cause!
N'fter receipt of the order fro: the Co::issioner suspending or reo=ing the license, the
association :ust i::ediately e>ert efforts to re:oe such cause or causes which brought about
the order and, upon proper showing, :ay apply with the Co::issioner for the lifting of the order
and restoration or reial of the license so reo=ed or suspended!
NSection 63+! For failure to re:oe such cause or causes which brought about the suspension or
reocation of the license of a :utual benefit association, the Co::issioner shall apply under this
Code for an order fro: the proper court to li?uidate such association!
NThe proisions of Titles *6 and *8, Chapter &&&, pertaining to the appoint:ent of a conserator
and proceedings upon insolency of an insurance co:pany shall, insofar as practicable, apply to
:utual benefit associations!
NSection 63*! To secure the enforce:ent of any proision under this title, the Co::issioner :ay
issue such rules, rulings, instructions, orders and circulars!
NSection 633! The iolation of any proision of this title shall subEect the person iolating or the
officer of the association responsible therefor to a fine of not less than Ten thousand pesos
@P*+,+++!++A, or i:prison:ent of not e>ceeding three @CA years, or both such fine and
i:prison:ent, at the discretion of the court!
NSection 63C! 'll proisions of this Code goerning life insurance co:panies and such other
proisions wheneer practicable and necessary, shall be applicable to :utual benefit associations!
NT&T%# 3
NTR$STS F)R C0'R&T'B%# $S#S
NSection 636! The ter: trust for charitable uses, within the intent of this Code, shall include, all
the real or personal properties or funds, as well as those ac?uired with the fruits or inco:e
therefro: or in e>change or substitution thereof, gien to or receied by any person, corporation,
association, foundation, or entity, e>cept the (ational /oern:ent, its instru:entalities or
political subdiisions, for charitable, beneolent, educational, pious, religious, or other uses for the
benefit of the public at large or a particular portion thereof or for the benefit of an indefinite
nu:ber of persons!
NSection 638! The ter: trustee shall include any indiidual, corporation, association, foundation,
or entity, e>cept the (ational /oern:ent, its instru:entalities or political subdiisions, in charge
of, or acting for, or concerned with the ad:inistration of, the trust referred to in the section
i::ediately preceding and with the proper application of trust property!
NSection 63,! The ter: trust property shall include all real or personal properties or funds
pertaining to the trust as well as those ac?uired with the fruits or inco:e therefro: or in e>change
or substitution thereof!
NSection 63-! 'll trustees shall, before entering in the perfor:ance of the duties of their trust,
obtain a certificate of registration fro: the Co::issioner! The registration shall e>pire on
1ece:ber C* of the third year following its issuance unless it is renewed!
N'll proisions of this Code goerning :utual benefit associations and such other proisions
herein, wheneer practicable and necessary, shall be applicable to trusts for charitable uses!
NSection 637! The treasurer of a charitable trust shall file a fidelity bond in the a:ount
co::ensurate with the alue of the trust property in his custody, as :ay be deter:ined by the
Co::issioner!
NC0'PT#R <&&&
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NSection 639! 'n insurance co:pany :ay engage in li:ited trust business, consisting of :anaging
funds pertaining only to retire:ent and pre-need plans, proided it has secured a license to do so
fro: the Bang=o Sentral ng Pilipinas! This trust business shall be separate and distinct fro: the
general business of the insurance co:pany and shall be subEect to rules and regulations as :ay be
pro:ulgated by the Bang=o Sentral ng Pilipinas in consultation with the Co::issioner!
NC0'PT#R &M
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NSection 6C+! The Co::issioner shall hae the power to register as a self-regulatory organiDation,
or otherwise grant licenses, and to regulate, superise, e>a:ine, suspend or otherwise discontinue,
as a condition for the operation of organiDations whose operations are related to or connected with
the insurance :ar=et such as, but not li:ited to, associations of insurance co:panies, whether life
or non-life, reinsurers, actuaries, agents, bro=ers, dealers, :utual benefit associations, trusts, rating
agencies, and other persons regulated by the Co::issioner, which are engaged in the business
regulated by this Code!
NThe Co::issioner :ay prescribe rules and regulations which are necessary or appropriate in the
public interest or for the protection of inestors to goern self-regulatory organiDations and other
organiDations licensed or regulated pursuant to the authority granted hereunder including, but not
li:ited to, the re?uire:ent of cooperation within and a:ong all participants in the insurance
:ar=et to ensure transparency and facilitate e>change of infor:ation!
NSection 6C*! 'n association cannot be registered as a self-regulatory organiDation unless the
Co::issioner deter:ines that;
N@aA The association is so organiDed and has the capacity to be able to carry out the purposes of
this Code and to co:ply with, and to enforce co:pliance by its :e:bers and persons associated
with its :e:bers, with the proisions of this Code, the rules and regulations thereunder, and the
rules of the association!
N@bA The rules of the association, notwithstanding anything in the Corporation Code to the
contrary, proide the following;
N@*A Pualifications and the dis?ualifications on :e:bership of the associationB
N@3A ' fair representation of its :e:bers to sere on the board of directors of the association and
the ad:inistration of its affairs, and that any natural person associated with a Euridical entity that is
a :e:ber shall also be dee:ed to be a :e:ber for this purposeB
N@CA The president of the association and at least two @3A independent directors as :e:bers of the
board of directors of the associationB
N@6A #?uitable allocation of reasonable dues, fees, and other charges a:ong :e:bers and other
persons using any facility or syste: which the association operates or controlsB
N@8A The preention of fraudulent and :anipulatie acts and practices to protect the insuring
public and the pro:otion of Eust and e?uitable principles of businessB
N@,A Me:bers and persons associated with its :e:bers subEect to discipline for iolation of any
proision of this Code, the rules or regulations thereunder, or the rules of the associationB
N@-A Fair procedure for the disciplining of :e:bers and persons associated with :e:bersB and
N@7A The prohibition or li:itation of access to serices offered by the association or a :e:ber
thereof!
NSection 6C3! ' self-regulatory organiDation :ay e>a:ine and erify the ?ualifications of an
applicant to beco:e a :e:ber in accordance with procedures established by the rules of the
association!
N' self-regulatory organiDation shall deny :e:bership or condition the :e:bership of an entity,
if it does not :eet the standards of financial responsibility, operational capability, training,
e>perience, or co:petence that are prescribed by the rules of the associationB or has engaged, and
there is a reasonable li=elihood it will again engage, in acts or practices inconsistent with Eust and
e?uitable principles of fair trade!
N' self-regulatory organiDation :ay deny :e:bership to an entity not engaged in a type of
business in which the rules of the association re?uire :e:bers to be engaged!
NSection 6CC! $pon the filing of an application for registration as a self-regulatory organiDation
under this title, the Co::issioner shall hae ninety @9+A days within which to either grant
registration or institute a proceeding to deter:ine whether registration should be denied! &n the
eent proceedings are instituted, the Co::issioner shall hae two hundred seenty @3-+A days
within which to conclude such proceedings at which ti:e he shall, by order, grant or deny such
registration!
NSection 6C6! #ery self-regulatory organiDation shall co:ply with the proisions of this Code,
the rules and regulations thereunder, and its own rules, and enforce co:pliance therewith by its
:e:bers, persons associated with its :e:bers or its participants, notwithstanding any proision
of the Corporation Code to the contrary!
NSection 6C8! #ach self-regulatory organiDation shall sub:it to the Co::issioner for prior
approal any proposed rule or a:end:ent thereto, together with a concise state:ent of the reason
and effect of the proposed a:end:ent!
N4ithin si>ty @,+A days after sub:ission of a proposed a:end:ent, the Co::issioner shall, by
order, approe the proposed a:end:ent! )therwise, the sa:e :ay be :ade effectie by the self-
regulatory organiDation!
N&n the eent of an e:ergency re?uiring action for the protection of the insuring public, a self-
regulatory organiDation :ay put a proposed a:end:ent into effect su::arily; Proided, howeer,
That a copy of the sa:e shall be i::ediately sub:itted to the Co::issioner!
NThe Co::issioner is further authoriDed, if after :a=ing appropriate re?uest in writing to a self-
regulatory organiDation that such organiDation effect on its own behalf specified changes in its
rules and practices and, after due notice and hearing, it deter:ines that such changes hae not
been effected, and that such changes are necessary, by rule or regulation or by order, :ay alter,
abrogate or supple:ent the rules of such self-regulatory organiDation insofar as necessary or
appropriate to effect such changes in respect of such :atters as;
N@aA Safeguards in respect of the financial responsibility of :e:bers and ade?uate proision
against the easion of financial responsibility through the use of corporate for:s or special
partnershipsB
N@bA The superision of :ar=et practicesB
N@cA The :anner, :ethod and place of soliciting businessB
N@dA The fi>ing of reasonable rates of fees, interest, listing and other charges, but not rates of
co::issionB and self-regulatory organiDationB and
N@eA The superision, auditing and disciplining of :e:bers!
N&n addition to the general powers of the Co::issioner oer the entities under superision, the
Co::issioner, after due notice and hearing, is authoriDed, in the public interest and to protect the
insuring public;
N@*A To suspend for a period not e>ceeding twele @*3A :onths or to reo=e the registration of a
self-regulatory organiDation, or to censure or i:pose li:itations on the actiities, functions and
operations of such self-regulatory organiDation, if the Co::ission finds that such a self-regulatory
organiDation has willfully iolated or is unable to co:ply with any proision of this Code or of the
rules and regulations thereunder, or its own rules, or has failed to enforce co:pliance therewith by
a :e:ber of, person associated with a :e:ber, or a participant in such self-regulatory
organiDationB
N@3A To e>pel fro: a self-regulatory organiDation any :e:ber thereof or any participant therein
who is found to hae willfully iolated any proision of this Code or suspend for a period not
e>ceeding twele @*3A :onths for iolation of any proision of this Code or any other law
ad:inistered by the Co::ission, or the rules and regulations thereunder, or effected, directly or
indirectly, any transaction for any person who, such :e:ber or participant had reason to beliee,
was iolating in respect of such transaction any of such proisionsB and
N@CA To re:oe fro: office or censure any officer or director of a self-regulatory organiDation if it
finds that such officer or director has iolated any proision of this Code, any other law
ad:inistered by the Co::issioner, the rules or regulations thereunder and the rules of such self-
regulatory organiDation, or has abused his authority, or without reasonable Eustification or e>cuse
has failed to enforce co:pliance with any of such proisions!
NSection 6C,! @aA ' self-regulatory organiDation is authoriDed to discipline a :e:ber of or
participant in such self-regulatory organiDation, or any person associated with a :e:ber, including
suspending or e>pelling such :e:ber or participant, or suspending or barring such person fro:
being associated with a :e:ber, if engaged in acts or practices inconsistent with Eust and e?uitable
principles of fairness or in willful iolation of any proision of this Code, any other law
ad:inistered by the Co::ission, the rules or regulations thereunder, or the rules of the self-
regulatory organiDation! &n any disciplinary proceeding by a self-regulatory organiDation @other
than a su::ary proceeding pursuant to paragraph @bA of this sectionA the self-regulatory
organiDation shall bring specific charges, proide notice to the person charged, afford the person
charged with an opportunity to defend against the charges, and =eep a record of the proceedings! '
deter:ination to i:pose a disciplinary sanction shall be supported by a written state:ent of the
offense, a su::ary of the eidence presented and a state:ent of the sanction i:posed!
N@bA ' self-regulatory organiDation :ay su::arily;
N@*A Suspend a :e:ber, participant or person associated with a :e:ber who has been or is
e>pelled or suspended fro: any other self-regulatory organiDationB or
N@3A Suspend a :e:ber who the self-regulatory organiDation finds to be in such financial or
operating difficulty that the :e:ber or participant cannot be per:itted to continue to do business
as a :e:ber with safety to inestors, creditors, other :e:bers, participants or the self-regulatory
organiDation; Proided, That the self-regulatory organiDation i::ediately notifies the Co::ission
of the action ta=en! 'ny person aggrieed by a su::ary action pursuant to this paragraph shall be
pro:ptly afforded an opportunity for a hearing by the association in accordance with the
preceding paragraph! The Co::issioner, by order, :ay stay a su::ary action on his own or upon
application by any person aggrieed thereby, if the Co::issioner deter:ines su::arily or after
due notice and hearing @which hearing :ay consist solely of the sub:ission of affidaits or
presentation of oral argu:entsA, that a stay is consistent with the public interest and the protection
of the insuring public!
N@cA ' self-regulatory organiDation shall pro:ptly notify the Co::ission of any disciplinary
sanction on any :e:ber thereof or participant therein, any denial of :e:bership or participation
in such organiDation, or the i:position of any disciplinary sanction on a person associated with a
:e:ber or a bar of such person fro: beco:ing so associated! 4ithin thirty @C+A days after such
notice, any aggrieed person :ay appeal to the Co::issioner fro:, or the Co::issioner on its
own :otion within such period, :ay institute reiew of, the decision of the self-regulatory
organiDation, at the conclusion of which, after due notice and hearing @which :ay consist solely of
reiew of the record before the self-regulatory organiDationA, the Co::issioner shall affir:,
:odify or set aside the sanction! &n such proceeding, the Co::issioner shall deter:ine whether
the aggrieed person has engaged or o:itted to engage in the acts and practices as found by the
self-regulatory organiDation, whether such acts and practices constitute willful iolations of this
Code, any other law ad:inistered by the Co::ission, the rules or regulations thereunder, or the
rules of the self-regulatory organiDation as specified by such organiDation, whether such
proisions were applied in a :anner consistent with the purposes of this Code, and whether, with
due regard for the public interest and the protection of inestors, the sanction is e>cessie or
oppressie!
NC0'PT#R M
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NT&T%# *
N'1M&(&STR'T&<# '(1 '1J$1&C'T)R2 P)4#RS
NSection 6C-! The &nsurance Co::issioner shall be appointed by the President of the Republic of
the Philippines for a ter: of si> @,A years without reappoint:ent and who shall sere as such until
the successor shall hae been appointed and ?ualified! &f the &nsurance Co::issioner is re:oed
before the e>piration of his ter: of office, the reason for the re:oal :ust be published!
NThe &nsurance Co::issioner shall hae the duty to see that all laws relating to insurance,
insurance co:panies and other insurance :atters, :utual benefit associations, and trusts for
charitable uses are faithfully e>ecuted and to perfor: the duties i:posed upon hi: by this Code,
and shall, notwithstanding any e>isting laws to the contrary, hae sole and e>clusie authority to
regulate the issuance and sale of ariable contracts as defined in Section 3C7 hereof and to proide
for the licensing of persons selling such contracts, and to issue such reasonable rules and
regulations goerning the sa:e!
NThe Co::issioner :ay issue such rulings, instructions, circulars, orders and decisions as :ay be
dee:ed necessary to secure the enforce:ent of the proisions of this Code, to ensure the efficient
regulation of the insurance industry in accordance with global best practices and to protect the
insuring public! #>cept as otherwise specified, decisions :ade by the Co::issioner shall be
appealable to the Secretary of Finance!
N&n addition to the foregoing, the Co::issioner shall hae the following powers and functions;
N@aA For:ulate policies and reco::endations on issues concerning the insurance industry, adise
Congress and other goern:ent agencies on all aspects of the insurance industry and propose
legislation and a:end:ents theretoB
N@bA 'pproe, reEect, suspend or reo=e licenses or certificates of registration proided for by this
CodeB
N@cA &:pose sanctions for the iolation of laws and the rules, regulations and orders issued
pursuant theretoB
N@dA Prepare, approe, a:end or repeal rules, regulations and orders, and issue opinions and
proide guidance on and superise co:pliance with such rules, regulations and ordersB
N@eA #nlist the aid and support of, andGor deputiDe any and all enforce:ent agencies of the
goern:ent in the i:ple:entation of its powers and functions under this CodeB
N@fA &ssue cease and desist orders to preent fraud or inEury to the insuring publicB
N@gA Punish for conte:pt of the Co::issioner, both direct and indirect, in accordance with the
pertinent proisions of and penalties prescribed by the Rules of CourtB
N@hA Co:pel the officers of any registered insurance corporation or association to call :eetings of
stoc=holders or :e:bers thereof under its superisionB
N@iA &ssue subpoena duces tecu: and su::on witnesses to appear in any proceeding of the
Co::ission and, in appropriate cases, order the e>a:ination, search and seiDure of all docu:ents,
papers, files and records, ta> returns, and boo=s of accounts of any entity or person under
inestigation as :ay be necessary for the proper disposition of the cases before it, subEect to the
proisions of e>isting lawsB
N@EA Suspend or reo=e, after proper notice and hearing, the license or certificate of authority of
any entity or person under its regulation, upon any of the grounds proided by lawB
N@=A Conduct an e>a:ination to deter:ine co:pliance with laws and regulations if the
circu:stances so warrant as deter:ined by appropriate rules and regulationsB
N@lA &nestigate not oftener than once a year fro: the last date of e>a:ination to deter:ine
whether an institution is conducting its business on a safe and sound basis; Proided, That, the
deficienciesGirregularities found by or discoered by an audit shall be i::ediately addressedB
N@:A &n?uire into the solency and li?uidity of the institutions under its superision and enforce
pro:pt correctie actionB
N@nA To retain and utiliDe, in addition to its annual budget, all fees, charges and other inco:e
deried fro: the regulation of insurance co:panies and other superised persons or entitiesB
N@oA To fi> and assess fees, charges and penalties as the Co::issioner :ay find reasonable in the
e>ercise of regulationB and
N@pA #>ercise such other powers as :ay be proided by law as well as those which :ay be i:plied
fro:, or which are necessary or incidental to the e>press powers granted the Co::ission to
achiee the obEecties and purposes of this Code!
NThe Co::ission shall inde:nify the Co::issioner, 1eputy Co::issioner, and other officials
of the Co::ission, including personnel perfor:ing superision and e>a:ination functions, for all
costs and e>penses reasonably incurred by such persons in connection with any ciil or cri:inal
actions, suits or proceedings to which they :ay be :ade a party to by the reason of the
perfor:ance of their duties and functions, unless they are finally adEudged in such actions, suits or
proceedings to be liable for negligence or :isconduct!
N&n the eent of settle:ent or co:pro:ise, inde:nification shall be proided only in connection
with such :atters coered by the settle:ent as to which the Co::ission is adised by e>ternal
counsel that the persons to be inde:nified did not co::it any negligence or :isconduct;
NThe costs and e>penses incurred in defending the afore:entioned action, suit or proceeding :ay
be paid by the Co::ission in adance of the final disposition of such action, suit or proceeding
upon receipt of an underta=ing by or on behalf of the Co::issioner, 1eputy Co::issioner,
officer or e:ployee to repay the a:ount adanced should it ulti:ately be deter:ined by the
Co::ission that the person is not entitled to be inde:nified!
NSection 6C7! &n addition to the ad:inistratie sanctions proided elsewhere in this Code, the
&nsurance Co::issioner is hereby authoriDed, at his discretion, to i:pose upon insurance
co:panies, their directors andGor officers andGor agents, for any willful failure or refusal to co:ply
with, or iolation of any proision of this Code, or any order, instruction, regulation, or ruling of
the &nsurance Co::issioner, or any co::ission or irregularities, andGor conducting business in
an unsafe or unsound :anner as :ay be deter:ined by the &nsurance Co::issioner, the
following;
N@aA Fines not less than Fie thousand pesos @P8,+++!++A and not :ore than Two hundred thousand
pesos @P3++,+++!++AB and
N@bA Suspension, or after due hearing, re:oal of directors andGor officers andGor agents!
NSection 6C9! The Co::issioner shall hae the power to adEudicate clai:s and co:plaints
inoling any loss, da:age or liability for which an insurer :ay be answerable under any =ind of
policy or contract of insurance, or for which such insurer :ay be liable under a contract of
suretyship, or for which a reinsurer :ay be sued under any contract of reinsurance it :ay hae
entered intoB or for which a :utual benefit association :ay be held liable under the :e:bership
certificates it has issued to its :e:bers, where the a:ount of any such loss, da:age or liability,
e>cluding interest, cost and attorneys fees, being clai:ed or sued upon any =ind of insurance,
bond, reinsurance contract, or :e:bership certificate does not e>ceed in any single clai: Fie
:illion pesos @P8,+++,+++!++A!
NThe power of the Co::issioner does not coer the relationship between the insurance co:pany
and its agentsGbro=ers but is li:ited to adEudicating clai:s and co:plaints filed by the insured
against the insurance co:pany!
NThe Co::issioner :ay authoriDe any officer or group of officers under hi: to conduct
inestigation, in?uiry andGor hearing and decide clai:s and he :ay issue rules goerning the
conduct of adEudication and resolution of cases! The Rules of Court shall hae suppletory
application!
NThe party filing an action pursuant to the proisions of this section thereby sub:its his person to
the Eurisdiction of the Co::issioner! The Co::issioner shall ac?uire Eurisdiction oer the person
of the i:pleaded party or parties in accordance with and pursuant to the proisions of the Rules of
Court!
NThe authority to adEudicate granted to the Co::issioner under this section shall be concurrent
with that of the ciil courts, but the filing of a co:plaint with the Co::issioner shall preclude the
ciil courts fro: ta=ing cogniDance of a suit inoling the sa:e subEect :atter!
N'ny decision, order or ruling rendered by the Co::issioner after a hearing shall hae the force
and effect of a Eudg:ent! 'ny party :ay appeal fro: a final order, ruling or decision of the
Co::issioner by filing with the Co::issioner within thirty @C+A days fro: receipt of copy of
such order, ruling or decision a notice of appeal to the Court of 'ppeals in the :anner proided
for in the Rules of Court for appeals fro: the Regional Trial Court to the Court of 'ppeals!
NFor the purpose of any proceeding under this section, the Co::issioner, or any officer thereof
designated by hi: is e:powered to ad:inister oaths and affir:ation, subpoena witnesses, co:pel
their attendance, ta=e eidence, and re?uire the production of any boo=s, papers, docu:ents, or
contracts or other records which are releant or :aterial to the in?uiry!
N' full and co:plete record shall be =ept of all proceedings had before the Co::issioner, or the
officers thereof designated by hi:, and all testi:ony shall be ta=en down and transcribed by a
stenographer appointed by the Co::issioner!
N&n order to pro:ote party autono:y in the resolution of cases, the Co::issioner shall establish a
syste: for resoling cases through the use of alternatie dispute resolution!
NT&T%# 3
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NSection 66+! @aA For the issuance or renewal of certificates of authority, licenses and certificates
of registration, pursuant to pertinent proisions of this Code, the Co::issioner shall collect and
receie fees which shall be not less than the following;
NFor each certificate of authority issued to an insurance co:pany doing business in the
Philippines, Two hundred pesos @P3++!++A!
NFor each special certificate of authority issued to a sericing insurance co:pany, )ne hundred
pesos @P*++!++A!
NFor each license issued to a general agent of an insurance co:pany, Fifty pesos @P8+!++A!
NFor each license issued to an insurance agent, Twenty-fie pesos @P38!++A!
NFor each license issued to an agent of ariable contract policy, Twenty-fie pesos @P38!++A!
NFor each license issued to an insurance bro=er, )ne hundred pesos @P*++!++A!
NFor each license issued to a reinsurance bro=er, )ne hundred pesos @P*++!++A!
NFor each license issued to an insurance adEuster, )ne hundred pesos @P*++!++A!
NFor each certificate of registration issued to an actuary, Fifty pesos @P8+!++A!
NFor each certificate of registration issued to a resident agent, Fifty pesos @P8+!++A!
NFor each license issued to a rating organiDation, )ne hundred pesos @P*++!++A!
NFor each certificate of registration issued to a non-life co:pany underwriter, Fifty pesos
@P8+!++A!
NFor each license issued to a :utual benefit association, Ten pesos @P*+!++A!
NFor each certificate of registration issued to a trust for charitable uses, Ten pesos @P*+!++A!
N'll certificates of authority and all other licenses, as well as all certificates of registration, issued
to any person, partnership, association or corporation under the pertinent proisions of this Code
for which no e>piration date has been prescribed, shall e>pire on the last day of 1ece:ber of the
third year fro: its issuance and shall be renewed upon application therefor and pay:ent of the
corresponding fee, if the licensee or holder of such license or certificate is continuing to co:ply
with all the applicable proisions of e>isting laws, and of rules, instructions, orders and decisions
of the Co::issioner!
N@bA For the filing of the annual state:ent referred to in Section 339, the Co::issioner shall
collect and receie fro: the insurance co:pany so filing a fee of not less than Fie hundred pesos
@P8++!++A; Proided, That a fine of not less than )ne hundred pesos @P*++!++A shall be i:posed
and collected by the Co::issioner for each wee= of delay, or any fraction thereof, in the filing of
the annual state:ent!
NFor the filing of annual state:ent referred to in Section 6*C, the Co::issioner shall collect and
receie fro: the :utual benefit association so filing a fee of not less than Ten pesos @P*+!++A;
Proided, That a fine of not less than Ten pesos @P*+!++A shall be i:posed and collected by the
Co::issioner for each wee= of delay, or any fraction thereof, in the filing of the annual
state:ent!
N@cA For the e>a:ination prescribed in Section 38C, the Co::issioner shall collect and receie
fees according to the a:ount of its total assets, in the case of a do:estic co:pany, or of its assets
in the Philippines, in the case of a foreign co:pany, not less than the a:ount as follows;
N@*A Two :illion pesos or :ore but less than Four :illion pesos, Four hundred pesos @P6++!++AB
N@3A Four :illion pesos or :ore but less than Si> :illion pesos, #ight hundred pesos @P7++!++AB
N@CA Si> :illion pesos or :ore but less than #ight :illion pesos, )ne thousand two hundred pesos
@P*,3++!++AB
N@6A #ight :illion pesos or :ore but less than Ten :illion pesos, )ne thousand si> hundred pesos
@P*,,++!++AB
N@8A Ten :illion pesos or :ore, Two thousand pesos @P3,+++!++AB
NProided, That if the said e>a:ination is :ade in places outside the Metropolitan Manila area,
besides these fees, the Co::issioner shall re?uire of the co:pany e>a:ined the pay:ent of the
actual and necessary traelling and subsistence e>penses of the e>a:iner or e>a:iners concerned!
NFor the e>a:ination prescribed in Section 6*3, the Co::issioner shall collect and receie a
:ini:u: fee of not less than )ne hundred pesos @P*++!++A fro: the :utual benefit association
e>a:ined; Proided, That if such association has total assets of :ore than )ne hundred thousand
pesos @P*++,+++!++A, an additional fee of not less than Ten pesos @P*+!++A for eery Fifty thousand
pesos @P8+,+++!++A in e>cess thereof shall be i:posed;
N@dA For the filing of an application to withdraw fro: the Philippines under Title *7, the
Co::issioner shall collect and receie fro: the foreign co:pany so withdrawing a fee of not less
than )ne thousand pesos @P*,+++!++A!
N@eA The Co::issioner :ay fi> and collect fees or charges for docu:ents, transcripts, or other
:aterials which :ay be furnished by hi: not in e>cess of reasonable cost!
NSection 66*! The Co::issioner, in accordance with the rules and regulations of the 1epart:ent
of Budget and Manage:ent and other releant regulatory agencies, shall source the salary,
allowances and other e>penses fro: the retained a:ount of the fees, charges, penalties and other
inco:e fro: the regulation of insurance co:panies and other coered persons and entities, and
fro: the &nsurance Fund, which is created out of the proceeds of ta>es on insurance pre:iu:s
:entioned in Section 388 of the (ational &nternal Reenue Code, as a:ended!
NM&SC#%%'(#)$S PR)<&S&)(S
NSection 663! 'ny person, co:pany or corporation subEect to the superision and control of the
Co::issioner who iolates any proision of this Code, for which no penalty is proided, shall be
dee:ed guilty of a penal offense, and upon coniction be punished by a fine not e>ceeding Two
hundred thousand pesos @P3++,+++!++A or i:prison:ent of si> @,A :onths, or both, at the
discretion of the court!
N&f the offense is co::itted by a co:pany or corporation, the officers, directors, or other persons
responsible for its operation, :anage:ent, or ad:inistration, unless it can be proed that they
hae ta=en no part in the co::ission of the offense, shall li=ewise be guilty of a penal offense,
and upon coniction be punished by a fine not e>ceeding Two hundred thousand pesos
@P3++,+++!++A or i:prison:ent of si> @,A :onths, or both, at the discretion of the court!
NSection 66C! 'll cri:inal actions for the iolation of any of the proisions of this Code shall
prescribe after three @CA years fro: the discoery of such iolation; Proided, That such actions
shall in any eent prescribe after ten @*+A years fro: the co::ission of such iolation!
NSection 666! 'ny person, partnership, association or corporation heretofore authoriDed, licensed
or registered by the Co::issioner shall be dee:ed to hae been authoriDed, licensed or registered
under the proisions of this Code and shall be goerned by the proisions thereof; Proided,
howeer, That where any such person, partnership, association or corporation is affected by the
new re?uire:ents of this Code, said person, partnership, association or corporation shall, unless
otherwise herein proided, be gien a period of one @*A year fro: the effectiity of this Code
within which to co:ply with the sa:e!
NSection 668! Transitory Proision! Renewal of e>isting licenses, certificates of authority or
accreditation which will e>pire on June C+, 3+*C shall be alid until 1ece:ber C*, 3+*8!
Thereafter, renewal shall be filed on the last day of 1ece:ber eery third year following the date
of e>piry of the license, certificate of authority or accreditation!
NSection 66,! Repealing Clause! #>cept as e>pressly proided by this Code, all laws, decrees,
orders, rules and regulations or parts thereof, inconsistent with any proision of this Code shall be
dee:ed repealed, a:ended or :odified accordingly!
NSection 66-! Separability Clause! &f any proision of this Code or any part hereof be declared
inalid or unconstitutional, the re:ainder of the law or other proisions not otherwise affected
shall re:ain alid and subsisting!
NSection 667! This Code shall ta=e effect fifteen @*8A days following its publication in a newspaper
of general circuation!N
'pproed,
@Sgd!A J&(//)2 #J#RC&T) #STR'1'
'cting Senate President @Sgd!A F#%&C&'() B#%M)(T# JR!
Spea=er of the 0ouse of Representaties
This 'ct which is a consolidation of 0ouse Bill (o! 67,- and Senate Bill (o! C37+ was finally
passed by the 0ouse of Representaties and the Senate on February ,, 3+*C!
@Sgd!A #MM' %&R&)-R#2#S
Secretary of the Senate
@Sgd!A M'R&%2( B! B'R$'-2'P
Secretary /eneral
0ouse of Representaties
'pproed; '$/ *8 3+*C
@Sgd!A B#(&/() S! 'P$&() &&&
President of the Philippines
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