"(a) A contract of insurance is an agreement therefor, shall not be deemed conclusive to

whereby one undertakes for a consideration to show that the making thereof does not
indemnify another against loss, damage or liability constitute the doing or transacting of an
arising from an unknown or contingent event. insurance business.

"A contract of suretyship shall be deemed to be an "(c) As used in this Code, the
Fifteenth Congress insurance contract, within the meaning of this Code, term Commissioner means the Insurance
Third Regular Session only if made by a surety who or which, as such, is Commissioner.
doing an insurance business as hereinafter
Begun and held in Metro Manila, on Monday, the twenty-third provided. "CHAPTER I
day of July, two thousand twelve. "THE CONTRACT OF INSURANCE
"(b) The term doing an insurance
REPUBLIC ACT NO. 10607 business or transacting an insurance business, "TITLE 1
within the meaning of this Code, shall include: "WHAT MAY BE INSURED
AN ACT STRENGTHENING THE INSURANCE
INDUSTRY, FURTHER AMENDING PRESIDENTIAL "(1) Making or proposing to make, as "Section 3. Any contingent or unknown event, whether past
DECREE NO. 612, OTHERWISE KNOWN AS "THE insurer, any insurance contract; or future, which may damnify a person having an insurable
INSURANCE CODE", AS AMENDED BY PRESIDENTIAL interest, or create a liability against him, may be insured
DECREE NOS. 1141, 1280, 1455, 1460, 1814 AND 1981, "(2) Making or proposing to make, as surety, against, subject to the provisions of this chapter.
AND BATAS PAMBANSA BLG. 874, AND FOR OTHER any contract of suretyship as a vocation and
PURPOSES not as merely incidental to any other "The consent of the spouse is not necessary for the validity
legitimate business or activity of the surety; of an insurance policy taken out by a married person on his
Be it enacted by the Senate and House of Representatives or her life or that of his or her children.
of the Philippines in Congress assembled: "(3) Doing any kind of business, including a
reinsurance business, specifically "All rights, title and interest in the policy of insurance taken
Section 1. Presidential Decree No. 612, as amended, is recognized as constituting the doing of an out by an original owner on the life or health of the person
hereby further amended to read as follows: insurance business within the meaning of insured shall automatically vest in the latter upon the death
this Code; of the original owner, unless otherwise provided for in the
"GENERAL PROVISIONS policy.
"(4) Doing or proposing to do any business
in substance equivalent to any of the "Section 4. The preceding section does not authorize an
"Section 1. This Decree shall be known as ‘The Insurance foregoing in a manner designed to evade
Code’. insurance for or against the drawing of any lottery, or for or
the provisions of this Code. against any chance or ticket in a lottery drawing a prize.
"Section 2. Whenever used in this Code, the following terms "In the application of the provisions of this
shall have the respective meanings hereinafter set forth or "Section 5. All kinds of insurance are subject to the
Code, the fact that no profit is derived from provisions of this chapter so far as the provisions can apply.
indicated, unless the context otherwise requires: the making of insurance contracts,
agreements or transactions or that no
separate or direct consideration is received
"TITLE 2 "(b) Of any person on whom he depends wholly or "(b) An inchoate interest founded on an existing
"PARTIES TO THE CONTRACT in part for education or support, or in whom he has interest; or
a pecuniary interest;
"Section 6. Every corporation, partnership, or association, "(c) An expectancy, coupled with an existing interest
duly authorized to transact insurance business as elsewhere "(c) Of any person under a legal obligation to him for in that out of which the expectancy arises.
provided in this Code, may be an insurer. the payment of money, or respecting property or
services, of which death or illness might delay or "Section 15. A carrier or depository of any kind has an
"Section 7. Anyone except a public enemy may be insured. prevent the performance; and insurable interest in a thing held by him as such, to the extent
of his liability but not to exceed the value thereof.
"Section 8. Unless the policy otherwise provides, where a "(d) Of any person upon whose life any estate or
mortgagor of property effects insurance in his own name interest vested in him depends. "Section 16. A mere contingent or expectant interest in any
providing that the loss shall be payable to the mortgagee, or thing, not founded on an actual right to the thing, nor upon
assigns a policy of insurance to a mortgagee, the insurance "Section 11. The insured shall have the right to change the any valid contract for it, is not insurable.
is deemed to be upon the interest of the mortgagor, who beneficiary he designated in the policy, unless he has
does not cease to be a party to the original contract, and any expressly waived this right in said policy. Notwithstanding "Section 17. The measure of an insurable interest in property
act of his, prior to the loss, which would otherwise avoid the the foregoing, in the event the insured does not change the is the extent to which the insured might be damnified by loss
insurance, will have the same effect, although the property beneficiary during his lifetime, the designation shall be or injury thereof.
is in the hands of the mortgagee, but any act which, under deemed irrevocable.
the contract of insurance, is to be performed by the "Section 18. No contract or policy of insurance on property
mortgagor, may be performed by the mortgagee therein "Section 12. The interest of a beneficiary in a life insurance shall be enforceable except for the benefit of some person
named, with the same effect as if it had been performed by policy shall be forfeited when the beneficiary is the principal, having an insurable interest in the property insured.
the mortgagor. accomplice, or accessory in willfully bringing about the death
of the insured. In such a case, the share forfeited shall pass
"Section 19. An interest in property insured must exist when
"Section 9. If an insurer assents to the transfer of an on to the other beneficiaries, unless otherwise disqualified. the insurance takes effect, and when the loss occurs, but
insurance from a mortgagor to a mortgagee, and, at the time In the absence of other beneficiaries, the proceeds shall be need not exist in the meantime; and interest in the life or
of his assent, imposes further obligations on the assignee, paid in accordance with the policy contract. If the policy health of a person insured must exist when the insurance
making a new contract with him, the acts of the mortgagor contract is silent, the proceeds shall be paid to the estate of
takes effect, but need not exist thereafter or when the loss
cannot affect the rights of said assignee. the insured.
occurs.

"TITLE 3 "Section 13. Every interest in property, whether real or "Section 20. Except in the cases specified in the next four
"INSURABLE INTEREST personal, or any relation thereto, or liability in respect
sections, and in the cases of life, accident, and health
thereof, of such nature that a contemplated peril might
insurance, a change of interest in any part of a thing insured
"Section 10. Every person has an insurable interest in the life directly damnify the insured, is an insurable interest. unaccompanied by a corresponding change of interest in the
and health: insurance, suspends the insurance to an equivalent extent,
"Section 14. An insurable interest in property may consist in: until the interest in the thing and the interest in the insurance
"(a) Of himself, of his spouse and of his children; are vested in the same person.
"(a) An existing interest;
"Section 21. A change of interest in a thing insured, after the he makes no warranty, and which the other has not the political or material perils contemplated; and all general
occurrence of an injury which results in a loss, does not means of ascertaining. usages of trade.
affect the right of the insured to indemnity for the loss.
"Section 29. An intentional and fraudulent omission, on the "Section 33. The right to information of material facts may be
"Section 22. A change of interest in one or more of several part of one insured, to communicate information of matters waived, either by the terms of insurance or by neglect to
distinct things, separately insured by one policy, does not proving or tending to prove the falsity of a warranty, entitles make inquiry as to such facts, where they are distinctly
avoid the insurance as to the others. the insurer to rescind. implied in other facts of which information is communicated.

"Section 23. A change of interest, by will or succession, on "Section 30. Neither party to a contract of insurance is bound "Section 34. Information of the nature or amount of the
the death of the insured, does not avoid an insurance; and to communicate information of the matters following, except interest of one insured need not be communicated unless in
his interest in the insurance passes to the person taking his in answer to the inquiries of the other: answer to an inquiry, except as prescribed by Section 51.
interest in the thing insured.
"(a) Those which the other knows; "Section 35. Neither party to a contract of insurance is bound
"Section 24. A transfer of interest by one of several partners, to communicate, even upon inquiry, information of his own
joint owners, or owners in common, who are jointly insured, "(b) Those which, in the exercise of ordinary care, judgment upon the matters in question.
to the others, does not avoid an insurance even though it has the other ought to know, and of which the former has
been agreed that the insurance shall cease upon an no reason to suppose him ignorant; "TITLE 5
alienation of the thing insured. "REPRESENTATION
"(c) Those of which the other waives
"Section 25. Every stipulation in a policy of insurance for the communication; "Section 36. A representation may be oral or written.
payment of loss whether the person insured has or has not
any interest in the property insured, or that the policy shall
"(d) Those which prove or tend to prove the "Section 37. A representation may be made at the time of, or
be received as proof of such interest, and every policy
existence of a risk excluded by a warranty, and before, issuance of the policy.
executed by way of gaming or wagering, is void.
which are not otherwise material; and
"Section 38. The language of a representation is to be
"TITLE 4
"(e) Those which relate to a risk excepted from the interpreted by the same rules as the language of contracts
"CONCEALMENT
policy and which are not otherwise material. in general.

"Section 26. A neglect to communicate that which a party "Section 31. Materiality is to be determined not by the event, "Section 39. A representation as to the future is to be
knows and ought to communicate, is called a concealment.
but solely by the probable and reasonable influence of the deemed a promise, unless it appears that it was merely a
facts upon the party to whom the communication is due, in statement of belief or expectation.
"Section 27. A concealment whether intentional or forming his estimate of the disadvantages of the proposed
unintentional entitles the injured party to rescind a contract contract, or in making his inquiries. "Section 40. A representation cannot qualify an express
of insurance. provision in a contract of insurance, but it may qualify an
"Section 32. Each party to a contract of insurance is bound implied warranty.
"Section 28. Each party to a contract of insurance must to know all the general causes which are open to his inquiry,
communicate to the other, in good faith, all facts within his equally with that of the other, and which may affect the "Section 41. A representation may be altered or withdrawn
knowledge which are material to the contract and as to which
before the insurance is effected, but not afterwards.
"Section 42. A representation must be presumed to refer to the fraudulent concealment or misrepresentation of the "(b) The amount to be insured except in the cases of
the date on which the contract goes into effect. insured or his agent. open or running policies;

"Section 43. When a person insured has no personal "TITLE 6 "(c) The premium, or if the insurance is of a
knowledge of a fact, he may nevertheless repeat information "THE POLICY character where the exact premium is only
which he has upon the subject, and which he believes to be determinable upon the termination of the contract, a
true, with the explanation that he does so on the information "Section 49. The written instrument in which a contract of statement of the basis and rates upon which the final
of others; or he may submit the information, in its whole insurance is set forth, is called a policy of insurance. premium is to be determined;
extent, to the insurer; and in neither case is he responsible
for its truth, unless it proceeds from an agent of the insured, "Section 50. The policy shall be in printed form which may "(d) The property or life insured;
whose duty it is to give the information. contain blank spaces; and any word, phrase, clause, mark,
sign, symbol, signature, number, or word necessary to "(e) The interest of the insured in property insured, if
"Section 44. A representation is to be deemed false when complete the contract of insurance shall be written on the he is not the absolute owner thereof;
the facts fail to correspond with its assertions or stipulations. blank spaces provided therein.
"(f) The risks insured against; and
"Section 45. If a representation is false in a material point, "Any rider, clause, warranty or endorsement purporting to be
whether affirmative or promissory, the injured party is part of the contract of insurance and which is pasted or "(g) The period during which the insurance is to
entitled to rescind the contract from the time when the attached to said policy is not binding on the insured, unless continue.
representation becomes false. the descriptive title or name of the rider, clause, warranty or
endorsement is also mentioned and written on the blank "Section 52. Cover notes may be issued to bind insurance
"Section 46. The materiality of a representation is spaces provided in the policy. temporarily pending the issuance of the policy. Within sixty
determined by the same rules as the materiality of a
(60) days after issue of a cover note, a policy shall be issued
concealment. "Unless applied for by the insured or owner, any rider, in lieu thereof, including within its terms the identical
clause, warranty or endorsement issued after the original insurance bound under the cover note and the premium
"Section 47. The provisions of this chapter apply as well to a policy shall be countersigned by the insured or owner, which therefor.
modification of a contract of insurance as to its original countersignature shall be taken as his agreement to the
formation. contents of such rider, clause, warranty or endorsement.
"Cover notes may be extended or renewed beyond such
sixty (60) days with the written approval of the Commissioner
"Section 48. Whenever a right to rescind a contract of "Notwithstanding the foregoing, the policy may be in if he determines that such extension is not contrary to and is
insurance is given to the insurer by any provision of this electronic form subject to the pertinent provisions of not for the purpose of violating any provisions of this Code.
chapter, such right must be exercised previous to the Republic Act No. 8792, otherwise known as the ‘Electronic The Commissioner may promulgate rules and regulations
commencement of an action on the contract. Commerce Act’ and to such rules and regulations as may be governing such extensions for the purpose of preventing
prescribed by the Commissioner. such violations and may by such rules and regulations
"After a policy of life insurance made payable on the death dispense with the requirement of written approval by him in
of the insured shall have been in force during the lifetime of "Section 51. A policy of insurance must specify: the case of extension in compliance with such rules and
the insured for a period of two (2) years from the date of its regulations.
issue or of its last reinstatement, the insurer cannot prove "(a) The parties between whom the contract is
that the policy is void ab initio or is rescindable by reason of made;
"Section 53. The insurance proceeds shall be applied "Section 61. A valued policy is one which expresses on its "(g) A determination by the Commissioner that the
exclusively to the proper interest of the person in whose face an agreement that the thing insured shall be valued at continuation of the policy would violate or would
name or for whose benefit it is made unless otherwise a specific sum. place the insurer in violation of this Code.
specified in the policy.
"Section 62. A running policy is one which contemplates "Section 65. All notices of cancellation mentioned in the
"Section 54. When an insurance contract is executed with an successive insurances, and which provides that the object of preceding section shall be in writing, mailed or delivered to
agent or trustee as the insured, the fact that his principal or the policy may be from time to time defined, especially as to the named insured at the address shown in the policy, or to
beneficiary is the real party in interest may be indicated by the subjects of insurance, by additional statements or his broker provided the broker is authorized in writing by the
describing the insured as agent or trustee, or by other indorsements.1âwphi1 policy owner to receive the notice of cancellation on his
general words in the policy. behalf, and shall state:
"Section 63. A condition, stipulation, or agreement in any
"Section 55. To render an insurance effected by one partner policy of insurance, limiting the time for commencing an "(a) Which of the grounds set forth in Section 64 is
or part-owner, applicable to the interest of his co-partners or action thereunder to a period of less than one (1) year from relied upon; and
other part-owners, it is necessary that the terms of the policy the time when the cause of action accrues, is void.
should be such as are applicable to the joint or common "(b) That, upon written request of the named
interest. "Section 64. No policy of insurance other than life shall be insured, the insurer will furnish the facts on which
cancelled by the insurer except upon prior notice thereof to the cancellation is based.
"Section 56. When the description of the insured in a policy the insured, and no notice of cancellation shall be effective
is so general that it may comprehend any person or any unless it is based on the occurrence, after the effective date "Section 66. In case of insurance other than life, unless the
class of persons, only he who can show that it was intended of the policy, of one or more of the following: insurer at least forty-five (45) days in advance of the end of
to include him, can claim the benefit of the policy. the policy period mails or delivers to the named insured at
"(a) Nonpayment of premium; the address shown in the policy notice of its intention not to
"Section 57. A policy may be so framed that it will inure to renew the policy or to condition its renewal upon reduction
the benefit of whomsoever, during the continuance of the "(b) Conviction of a crime arising out of acts of limits or elimination of coverages, the named insured shall
risk, may become the owner of the interest insured. increasing the hazard insured against; be entitled to renew the policy upon payment of the premium
due on the effective date of the renewal. Any policy written
"Section 58. The mere transfer of a thing insured does not for a term of less than one (1) year shall be considered as if
"(c) Discovery of fraud or material
transfer the policy, but suspends it until the same person written for a term of one (1) year. Any policy written for a term
misrepresentation;
becomes the owner of both the policy and the thing insured. longer than one (1) year or any policy with no fixed expiration
date shall be considered as if written for successive policy
"(d) Discovery of willful or reckless acts or omissions periods or terms of one (1) year.
"Section 59. A policy is either open, valued or running. increasing the hazard insured against;

"Section 60. An open policy is one in which the value of the "TITLE 7
"(e) Physical changes in the property insured which "WARRANTIES
thing insured is not agreed upon, and the amount of the result in the property becoming uninsurable;
insurance merely represents the insurer’s maximum liability.
The value of such thing insured shall be ascertained at the "Section 67. A warranty is either expressed or implied.
"(f) Discovery of other insurance coverage that
time of the loss. makes the total insurance in excess of the value of
the property insured; or "Section 68. A warranty may relate to the past, the present,
the future, or to any or all of these.
"Section 69. No particular form of words is necessary to "TITLE 8 "(a) To the whole premium if no part of his interest in
create a warranty. "PREMIUM the thing insured be exposed to any of the perils
insured against;
"Section 70. Without prejudice to Section 51, every express "Section 77. An insurer is entitled to payment of the premium
warranty, made at or before the execution of a policy, must as soon as the thing insured is exposed to the peril insured "(b) Where the insurance is made for a definite
be contained in the policy itself, or in another instrument against. Notwithstanding any agreement to the contrary, no period of time and the insured surrenders his policy,
signed by the insured and referred to in the policy as making policy or contract of insurance issued by an insurance to such portion of the premium as corresponds with
a part of it. company is valid and binding unless and until the premium the unexpired time, at a pro rata rate, unless a short
thereof has been paid, except in the case of a life or an period rate has been agreed upon and appears on
"Section 71. A statement in a policy, of a matter relating to industrial life policy whenever the grace period provision the face of the policy, after deducting from the whole
the person or thing insured, or to the risk, as fact, is an applies, or whenever under the broker and agency premium any claim for loss or damage under the
express warranty thereof. agreements with duly licensed intermediaries, a ninety (90)- policy which has previously accrued: Provided, That
day credit extension is given. No credit extension to a duly no holder of a life insurance policy may avail himself
"Section 72. A statement in a policy, which imparts that it is licensed intermediary should exceed ninety (90) days from of the privileges of this paragraph without sufficient
intended to do or not to do a thing which materially affects date of issuance of the policy. cause as otherwise provided by law.
the risk, is a warranty that such act or omission shall take
place. "Section 78. Employees of the Republic of the Philippines, "Section 81. If a peril insured against has existed, and the
including its political subdivisions and instrumentalities, and insurer has been liable for any period, however short, the
government-owned or -controlled corporations, may pay insured is not entitled to return of premiums, so far as that
"Section 73. When, before the time arrives for the
their insurance premiums and loan obligations through particular risk is concerned.
performance of a warranty relating to the future, a loss
insured against happens, or performance becomes unlawful salary deduction: Provided, That the treasurer, cashier,
at the place of the contract, or impossible, the omission to paymaster or official of the entity employing the government "Section 82. A person insured is entitled to a return of the
fulfill the warranty does not avoid the policy. employee is authorized, notwithstanding the provisions of premium when the contract is voidable, and subsequently
any existing law, rules and regulations to the contrary, to annulled under the provisions of the Civil Code; or on
make deductions from the salary, wage or income of the account of the fraud or misrepresentation of the insurer, or
"Section 74. The violation of a material warranty, or other latter pursuant to the agreement between the insurer and the
material provision of a policy, on the part of either party of his agent, or on account of facts, or the existence of which
government employee and to remit such deductions to the the insured was ignorant of without his fault; or when by any
thereto, entitles the other to rescind. insurer concerned, and collect such reasonable fee for its default of the insured other than actual fraud, the insurer
services. never incurred any liability under the policy.
"Section 75. A policy may declare that a violation of specified
provisions thereof shall avoid it, otherwise the breach of an "Section 79. An acknowledgment in a policy or contract of
immaterial provision does not avoid the policy. "A person insured is not entitled to a return of premium if the
insurance or the receipt of premium is conclusive evidence policy is annulled, rescinded or if a claim is denied by reason
of its payment, so far as to make the policy binding, of fraud.
"Section 76. A breach of warranty without fraud merely notwithstanding any stipulation therein that it shall not be
exonerates an insurer from the time that it occurs, or where binding until the premium is actually paid. "Section 83. In case of an over insurance by several insurers
it is broken in its inception, prevents the policy from attaching
to the risk. other than life, the insured is entitled to a ratable return of the
"Section 80. A person insured is entitled to a return of premium, proportioned to the amount by which the
premium, as follows: aggregate sum insured in all the policies exceeds the
insurable value of the thing at risk.
"Section 84. An insurer may contract and accept payments, "TITLE 10 "Section 95. A double insurance exists where the same
in addition to regular premium, for the purpose of paying "NOTICE OF LOSS person is insured by several insurers separately in respect
future premiums on the policy or to increase the benefits to the same subject and interest.
thereof. "Section 90. In case of loss upon an insurance against fire,
an insurer is exonerated, if written notice thereof be not given "Section 96. Where the insured in a policy other than life is
"TITLE 9 to him by an insured, or some person entitled to the benefit over insured by double insurance:
"LOSS of the insurance, without unnecessary delay. For other non-
life insurance, the Commissioner may specify the period for "(a) The insured, unless the policy otherwise
"Section 85. An agreement not to transfer the claim of the the submission of the notice of loss. provides, may claim payment from the insurers in
insured against the insurer after the loss has happened, is such order as he may select, up to the amount for
void if made before the loss except as otherwise provided in "Section 91. When a preliminary proof of loss is required by which the insurers are severally liable under their
the case of life insurance. a policy, the insured is not bound to give such proof as would respective contracts;
be necessary in a court of justice; but it is sufficient for him
"Section 86. Unless otherwise provided by the policy, an to give the best evidence which he has in his power at the "(b) Where the policy under which the insured claims
insurer is liable for a loss of which a peril insured against was time. is a valued policy, any sum received by him under
the proximate cause, although a peril not contemplated by any other policy shall be deducted from the value of
the contract may have been a remote cause of the loss; but "Section 92. All defects in a notice of loss, or in preliminary the policy without regard to the actual value of the
he is not liable for a loss of which the peril insured against proof thereof, which the insured might remedy, and which subject matter insured;
was only a remote cause. the insurer omits to specify to him, without unnecessary
delay, as grounds of objection, are waived. "(c) Where the policy under which the insured claims
"Section 87. An insurer is liable where the thing insured is is an unvalued policy, any sum received by him
rescued from a peril insured against that would otherwise "Section 93. Delay in the presentation to an insurer of notice under any policy shall be deducted against the full
have caused a loss, if, in the course of such rescue, the thing or proof of loss is waived if caused by any act of him, or if he insurable value, for any sum received by him under
is exposed to a peril not insured against, which permanently omits to take objection promptly and specifically upon that any policy;
deprives the insured of its possession, in whole or in part; or ground.
where a loss is caused by efforts to rescue the thing insured "(d) Where the insured receives any sum in excess
from a peril insured against. "Section 94. If the policy requires, by way of preliminary proof of the valuation in the case of valued policies, or of
of loss, the certificate or testimony of a person other than the the insurable value in the case of unvalued policies,
"Section 88. Where a peril is especially excepted in a insured, it is sufficient for the insured to use reasonable he must hold such sum in trust for the insurers,
contract of insurance, a loss, which would not have occurred diligence to procure it, and in case of the refusal of such according to their right of contribution among
but for such peril, is thereby excepted although the person to give it, then to furnish reasonable evidence to the themselves;
immediate cause of the loss was a peril which was not insurer that such refusal was not induced by any just grounds
excepted. of disbelief in the facts necessary to be certified or testified. "(e) Each insurer is bound, as between himself and
the other insurers, to contribute ratably to the loss in
"Section 89. An insurer is not liable for a loss caused by the "TITLE 11 proportion to the amount for which he is liable under
willful act or through the connivance of the insured; but he is "DOUBLE INSURANCE his contract.
not exonerated by the negligence of the insured, or of the
insurance agents or others. "TITLE 12
"REINSURANCE
"Section 97. A contract of reinsurance is one by which an appertaining to or in connection with any "(b) Marine protection and indemnity insurance,
insurer procures a third person to insure him against loss or and all risks or perils of navigation, transit or meaning insurance against, or against legal liability
liability by reason of such original insurance. transportation, or while being assembled, of the insured for loss, damage, or expense incident
packed, crated, baled, compressed or to ownership, operation, chartering, maintenance,
"Section 98. Where an insurer obtains reinsurance, except similarly prepared for shipment or while use, repair, or construction of any vessel, craft or
under automatic reinsurance treaties, he must communicate awaiting shipment, or during any delays, instrumentality in use of ocean or inland waterways,
all the representations of the original insured, and also all the storage, transhipment, or reshipment including liability of the insured for personal injury,
knowledge and information he possesses, whether incident thereto, including war risks, marine illness or death or for loss of or damage to the
previously or subsequently acquired, which are material to builder’s risks, and all personal property property of another person.
the risk. floater risks;
"SUB-TITLE 1-B
"Section 99. A reinsurance is presumed to be a contract of "(2) Person or property in connection with or "INSURABLE INTEREST
indemnity against liability, and not merely against damage. appertaining to a marine, inland marine,
transit or transportation insurance, including "Section 102. The owner of a ship has in all cases an
"Section 100. The original insured has no interest in a liability for loss of or damage arising out of insurable interest in it, even when it has been chartered by
or in connection with the construction, one who covenants to pay him its value in case of
contract of reinsurance.
repair, operation, maintenance or use of the loss: Provided, That in this case the insurer shall be liable for
subject matter of such insurance (but not only that part of the loss which the insured cannot recover
"CHAPTER II including life insurance or surety bonds nor from the charterer.
"CLASSES OF INSURANCE insurance against loss by reason of bodily
injury to any person arising out of "Section 103. The insurable interest of the owner of the ship
"TITLE I ownership, maintenance, or use of hypothecated by bottomry is only the excess of its value over
"MARINE INSURANCE automobiles); the amount secured by bottomry.
"SUB-TITLE 1-A "(3) Precious stones, jewels, jewelry, "Section 104. Freightage, in the sense of a policy of marine
precious metals, whether in course of insurance, signifies all the benefits derived by the owner,
"DEFINITION transportation or otherwise; and either from the chartering of the ship or its employment for
the carriage of his own goods or those of others.
"Section 101. Marine Insurance includes: "(4) Bridges, tunnels and other
instrumentalities of transportation and "Section 105. The owner of a ship has an insurable interest
"(a) Insurance against loss of or damage to: communication (excluding buildings, their in expected freightage which according to the ordinary and
furniture and furnishings, fixed contents and probable course of things he would have earned but for the
supplies held in storage); piers, wharves,
"(1) Vessels, craft, aircraft, vehicles, goods, intervention of a peril insured against or other peril incident
docks and slips, and other aids to navigation
freights, cargoes, merchandise, effects, to the voyage.
and transportation, including dry docks and
disbursements, profits, moneys, securities,
marine railways, dams and appurtenant
choses in action, instruments of debts, "Section 106. The interest mentioned in the last section
facilities for the control of waterways.
valuable papers, bottomry, and exists, in case of a charter party, when the ship has broken
respondentia interests and all other kinds of ground on the chartered voyage. If a price is to be paid for
property and interests therein, in respect to, the carriage of goods it exists when they are actually on
board, or there is some contract for putting them on board, "(b) The liability of the thing insured to capture and "(a) When the insurance is made for a specified
and both ship and goods are ready for the specified voyage. detention; length of time, the implied warranty is not complied
with unless the ship be seaworthy at the
"Section 107. One who has an interest in the thing from "(c) The liability to seizure from breach of foreign commencement of every voyage it undertakes
which profits are expected to proceed has an insurable laws of trade; during that time;
interest in the profits.
"(d) The want of necessary documents; and "(b) When the insurance is upon the cargo which, by
"Section 108. The charterer of a ship has an insurable the terms of the policy, description of the voyage, or
interest in it, to the extent that he is liable to be damnified by "(e) The use of false and simulated papers. established custom of the trade, is to be transhipped
its loss. at an intermediate port, the implied warranty is not
complied with unless each vessel upon which the
"SUB-TITLE 1-D cargo is shipped, or transhipped, be seaworthy at
"SUB-TITLE 1-C "REPRESENTATION the commencement of each particular voyage.
"CONCEALMENT
"Section 113. If a representation by a person insured by a "Section 118. A warranty of seaworthiness extends not only
"Section 109. In marine insurance, each party is bound to contract of marine insurance, is intentionally false in any
communicate, in addition to what is required by Section 28, to the condition of the structure of the ship itself, but requires
material respect, or in respect of any fact on which the that it be properly laden, and provided with a competent
all the information which he possesses, material to the risk, character and nature of the risk depends, the insurer may master, a sufficient number of competent officers and
except such as is mentioned in Section 30, and to state the rescind the entire contract. seamen, and the requisite appurtenances and equipment,
exact and whole truth in relation to all matters that he
such as ballasts, cables and anchors, cordage and sails,
represents, or upon inquiry discloses or assumes to "Section 114. The eventual falsity of a representation as to
disclose. food, water, fuel and lights, and other necessary or proper
expectation does not, in the absence of fraud, avoid a stores and implements for the voyage.
contract of marine insurance.
"Section 110. In marine insurance, information of the belief
"Section 119. Where different portions of the voyage
or expectation of a third person, in reference to a material "SUB-TITLE 1-E contemplated by a policy differ in respect to the things
fact, is material. "IMPLIED WARRANTIES requisite to make the ship seaworthy therefor, a warranty of
seaworthiness is complied with if, at the commencement of
"Section 111. A person insured by a contract of marine each portion, the ship is seaworthy with reference to that
"Section 115. In every marine insurance upon a ship or
insurance is presumed to have knowledge, at the time of portion.
freight, or freightage, or upon any thing which is the subject
insuring, of a prior loss, if the information might possibly have of marine insurance, a warranty is implied that the ship is
reached him in the usual mode of transmission and at the
seaworthy. "Section 120. When the ship becomes unseaworthy during
usual rate of communication.
the voyage to which an insurance relates, an unreasonable
"Section 116. A ship is seaworthy when reasonably fit to delay in repairing the defect exonerates the insurer on ship
"Section 112. A concealment in a marine insurance, in or shipowner’s interest from liability from any loss arising
perform the service and to encounter the ordinary perils of
respect to any of the following matters, does not vitiate the the voyage contemplated by the parties to the policy. therefrom.
entire contract, but merely exonerates the insurer from a loss
resulting from the risk concealed:
"Section 117. An implied warranty of seaworthiness is "Section 121. A ship which is seaworthy for the purpose of
complied with if the ship be seaworthy at the time of the an insurance upon the ship may, nevertheless, by reason of
"(a) The national character of the insured;
commencement of the risk, except in the following cases:
being unfitted to receive the cargo, be unseaworthy for the "(c) When made in good faith, and upon reasonable "Section 133. A constructive total loss is one which gives to
purpose of insurance upon the cargo. grounds of belief in its necessity to avoid a peril; or a person insured a right to abandon, under Section 141.

"Section 122. Where the nationality or neutrality of a ship or "(d) When made in good faith, for the purpose of "Section 134. An actual loss may be presumed from the
cargo is expressly warranted, it is implied that the ship will saving human life or relieving another vessel in continued absence of a ship without being heard of. The
carry the requisite documents to show such nationality or distress. length of time which is sufficient to raise this presumption
neutrality and that it will not carry any documents which cast depends on the circumstances of the case.
reasonable suspicion thereon. "Section 127. Every deviation not specified in the last section
is improper. "Section 135. When a ship is prevented, at an intermediate
"SUB-TITLE 1-F port, from completing the voyage, by the perils insured
"THE VOYAGE AND DEVIATION "Section 128. An insurer is not liable for any loss happening against, the liability of a marine insurer on the cargo
to the thing insured subsequent to an improper deviation. continues after they are thus reshipped.
"Section 123. When the voyage contemplated by a marine
insurance policy is described by the places of beginning and "SUB-TITLE 1-G "Nothing in this section shall prevent an insurer from
ending, the voyage insured is one which conforms to the "LOSS requiring an additional premium if the hazard be increased
course of sailing fixed by mercantile usage between those by this extension of liability.
places.
"Section 129. A loss may be either total or partial.
"Section 136. In addition to the liability mentioned in the last
"Section 124. If the course of sailing is not fixed by mercantile "Section 130. Every loss which is not total is partial. section, a marine insurer is bound for damages, expenses of
usage, the voyage insured by a marine insurance policy is discharging, storage, reshipment, extra freightage, and all
that way between the places specified, which to a master of other expenses incurred in saving cargo reshipped pursuant
ordinary skill and discretion, would mean the most natural, "Section 131. A total loss may be either actual or to the last section, up to the amount insured.
direct and advantageous. constructive.
"Nothing in this or in the preceding section shall render a
"Section 125. Deviation is a departure from the course of the "Section 132. An actual total loss is caused by: marine insurer liable for any amount in excess of the insured
voyage insured, mentioned in the last two (2) sections, or an value or, if there be none, of the insurable value.
unreasonable delay in pursuing the voyage or the "(a) A total destruction of the thing insured;
commencement of an entirely different voyage. "Section 137. Upon an actual total loss, a person insured is
"(b) The irretrievable loss of the thing by sinking, or entitled to payment without notice of abandonment.
"Section 126. A deviation is proper: by being broken up;
"Section 138. Where it has been agreed that an insurance
"(a) When caused by circumstances over which "(c) Any damage to the thing which renders it upon a particular thing, or class of things, shall be free from
neither the master nor the owner of the ship has any valueless to the owner for the purpose for which he particular average, a marine insurer is not liable for any
control; held it; or particular average loss not depriving the insured of the
possession, at the port of destination, of the whole of such
"(b) When necessary to comply with a warranty, or "(d) Any other event which effectively deprives the thing, or class of things, even though it becomes entirely
to avoid a peril, whether or not the peril is insured owner of the possession, at the port of destination, worthless; but such insurer is liable for his proportion of all
against; of the thing insured. general average loss assessed upon the thing insured.
"Section 139. An insurance confined in terms to an actual mentioned in the preceding subparagraph. But "Section 149. If a marine insurer pays for a loss as if it were
loss does not cover a constructive total loss, but covers any freightage cannot in any case be abandoned unless an actual total loss, he is entitled to whatever may remain of
loss, which necessarily results in depriving the insured of the the ship is also abandoned. the thing insured, or its proceeds or salvage, as if there had
possession, at the port of destination, of the entire thing been a formal abandonment.
insured. "Section 142. An abandonment must be neither partial nor
conditional. "Section 150. Upon an abandonment, acts done in good faith
"SUB-TITLE 1-H by those who were agents of the insured in respect to the
"ABANDONMENT "Section 143. An abandonment must be made within a thing insured, subsequent to the loss, are at the risk of the
reasonable time after receipt of reliable information of the insurer, and for his benefit.
"Section 140. Abandonment, in marine insurance, is the act loss, but where the information is of a doubtful character, the
of the insured by which, after a constructive total loss, he insured is entitled to a reasonable time to make inquiry. "Section 151. Where notice of abandonment is properly
declares the relinquishment to the insurer of his interest in given, the rights of the insured are not prejudiced by the fact
the thing insured. "Section 144. Where the information upon which an that the insurer refuses to accept the abandonment.
abandonment has been made proves incorrect, or the thing
"Section 141. A person insured by a contract of marine insured was so far restored when the abandonment was "Section 152. The acceptance of an abandonment may be
insurance may abandon the thing insured, or any particular made that there was then in fact no total loss, the either express or implied from the conduct of the insurer. The
portion thereof separately valued by the policy, or otherwise abandonment becomes ineffectual. mere silence of the insurer for an unreasonable length of
separately insured, and recover for a total loss thereof, when time after notice shall be construed as an acceptance.
the cause of the loss is a peril insured against: "Section 145. Abandonment is made by giving notice thereof
to the insurer, which may be done orally, or in "Section 153. The acceptance of an abandonment, whether
"(a) If more than three-fourths (¾) thereof in value is writing: Provided, That if the notice be done orally, a written express or implied, is conclusive upon the parties, and
actually lost, or would have to be expended to notice of such abandonment shall be submitted within seven admits the loss and the sufficiency of the abandonment.
recover it from the peril; (7) days from such oral notice.
"Section 154. An abandonment once made and accepted is
"(b) If it is injured to such an extent as to reduce its "Section 146. A notice of abandonment must be explicit, and irrevocable, unless the ground upon which it was made
value more than three-fourths (¾); must specify the particular cause of the abandonment, but proves to be unfounded.
need state only enough to show that there is probable cause
"(c) If the thing insured is a ship, and the therefor, and need not be accompanied with proof of interest "Section 155. On an accepted abandonment of a ship,
contemplated voyage cannot be lawfully performed or of loss. freightage earned previous to the loss belongs to the insurer
without incurring either an expense to the insured of of said freightage; but freightage subsequently earned
more than three-fourths (¾) the value of the thing "Section 147. An abandonment can be sustained only upon belongs to the insurer of the ship.
abandoned or a risk which a prudent man would not the cause specified in the notice thereof.
take under the circumstances; or "Section 156. If an insurer refuses to accept a valid
"Section 148. An abandonment is equivalent to a transfer by abandonment, he is liable as upon an actual total loss,
"(d) If the thing insured, being cargo or freightage, the insured of his interest to the insurer, with all the chances deducting from the amount any proceeds of the thing insured
and the voyage cannot be performed, nor another of recovery and indemnity. which may have come to the hands of the insured.
ship procured by the master, within a reasonable
time and with reasonable diligence, to forward the
cargo, without incurring the like expense or risk
"Section 157. If a person insured omits to abandon, he may "(a) The value of a ship is its value at the beginning "Section 166. A marine insurer is liable for a loss falling upon
nevertheless recover his actual loss. of the risk, including all articles or charges which add the insured, through a contribution in respect to the thing
to its permanent value or which are necessary to insured, required to be made by him towards a general
"SUB-TITLE 1-I prepare it for the voyage insured; average loss called for by a peril insured against: Provided,
"MEASURE OF INDEMNITY That the liability of the insurer shall be limited to the
"(b) The value of the cargo is its actual cost to the proportion of contribution attaching to his policy value where
"Section 158. A valuation in a policy of marine insurance is insured, when laden on board, or where the cost this is less than the contributing value of the thing insured.
conclusive between the parties thereto in the adjustment of cannot be ascertained, its market value at the time
either a partial or total loss, if the insured has some interest and place of lading, adding the charges incurred in "Section 167. When a person insured by a contract of marine
at risk, and there is no fraud on his part; except that when a purchasing and placing it on board, but without insurance has a demand against others for contribution, he
thing has been hypothecated by bottomry or respondentia, reference to any loss incurred in raising money for may claim the whole loss from the insurer, subrogating him
before its insurance, and without the knowledge of the its purchase, or to any drawback on its exportation, to his own right to contribution. But no such claim can be
person actually procuring the insurance, he may show the or to the fluctuation of the market at the port of made upon the insurer after the separation of the interests
real value. But a valuation fraudulent in fact, entitles the destination, or to expenses incurred on the way or liable to contribution, nor when the insured, having the right
insurer to rescind the contract. on arrival; and opportunity to enforce contribution from others, has
neglected or waived the exercise of that right.
"Section 159. A marine insurer is liable upon a partial loss, "(c) The value of freightage is the gross freightage,
only for such proportion of the amount insured by him as the exclusive of primage, without reference to the cost "Section 168. In the case of a partial loss of ship or its
loss bears to the value of the whole interest of the insured in of earning it; and equipment, the old materials are to be applied towards
the property insured. payment for the new. Unless otherwise stipulated in the
"(d) The cost of insurance is in each case to be policy, a marine insurer is liable for only two-thirds (2/3) of
"Section 160. Where profits are separately insured in a added to the value thus estimated. the remaining cost of repairs after such deduction, except
contract of marine insurance, the insured is entitled to that anchors must be paid in full.
recover, in case of loss, a proportion of such profits "Section 164. If cargo insured against partial loss
equivalent to the proportion which the value of the property arrives at the port of destination in a damaged "TITLE 2
lost bears to the value of the whole. condition, the loss of the insured is deemed to be the "FIRE INSURANCE
same proportion of the value which the market price
"Section 161. In case of a valued policy of marine insurance at that port, of the thing so damaged, bears to the "Section 169. As used in this Code, the term fire
on freightage or cargo, if a part only of the subject is exposed market price it would have brought if sound. insurance shall include insurance against loss by fire,
to risk, the valuation applies only in proportion to such part. lightning, windstorm, tornado or earthquake and other allied
"Section 165. A marine insurer is liable for all the expenses risks, when such risks are covered by extension to fire
attendant upon a loss which forces the ship into port to be insurance policies or under separate policies.
"Section 162. When profits are valued and insured by a
contract of marine insurance, a loss of them is conclusively repaired; and where it is stipulated in the policy that the
presumed from a loss of the property out of which they are insured shall labor for the recovery of the property, the "Section 170. An alteration in the use or condition of a thing
expected to arise, and the valuation fixes their amount. insurer is liable for the expense incurred thereby, such insured from that to which it is limited by the policy made
expense, in either case, being in addition to a total loss, if without the consent of the insurer, by means within the
that afterwards occurs. control of the insured, and increasing the risks, entitles an
"Section 163. In estimating a loss under an open policy of
insurer to rescind a contract of fire insurance.
marine insurance the following rules are to be observed:
"Section 171. An alteration in the use or condition of a thing concerning the repairing, rebuilding or replacing of buildings the contract of suretyship in relation to the principal contract
insured from that to which it is limited by the policy, which or structures wholly or partially damaged or destroyed. between the obligor and the obligee.
does not increase the risk, does not affect a contract of fire
insurance. "Section 175. No policy of fire insurance shall be pledged, "Section 179. The surety is entitled to payment of the
hypothecated, or transferred to any person, firm or company premium as soon as the contract of suretyship or bond is
"Section 172. A contract of fire insurance is not affected by who acts as agent for or otherwise represents the issuing perfected and delivered to the obligor. No contract of
any act of the insured subsequent to the execution of the company, and any such pledge, hypothecation, or transfer suretyship or bonding shall be valid and binding unless and
policy, which does not violate its provisions, even though it hereafter made shall be void and of no effect insofar as it until the premium therefor has been paid, except where the
increases the risk and is the cause of the loss. may affect other creditors of the insured. obligee has accepted the bond, in which case the bond
becomes valid and enforceable irrespective of whether or
"Section 173. If there is no valuation in the policy, the "TITLE 3 not the premium has been paid by the obligor to the
measure of indemnity in an insurance against fire is the "CASUALTY INSURANCE surety: Provided, That if the contract of suretyship or bond is
expense it would be to the insured at the time of the not accepted by, or filed with the obligee, the surety shall
commencement of the fire to replace the thing lost or injured "Section 176. Casualty insurance is insurance covering loss collect only a reasonable amount, not exceeding fifty percent
in the condition in which it was at the time of the injury; but if or liability arising from accident or mishap, excluding certain (50%) of the premium due thereon as service fee plus the
there is a valuation in a policy of fire insurance, the effect cost of stamps or other taxes imposed for the issuance of the
types of loss which by law or custom are considered as
shall be the same as in a policy of marine insurance. falling exclusively within the scope of other types of contract or bond: Provided, however, That if the
insurance such as fire or marine. It includes, but is not limited nonacceptance of the bond be due to the fault or negligence
of the surety, no such service fee, stamps or taxes shall be
"Section 174. Whenever the insured desires to have a to, employer’s liability insurance, motor vehicle liability
collected.
valuation named in his policy, insuring any building or insurance, plate glass insurance, burglary and theft
structure against fire, he may require such building or insurance, personal accident and health insurance as written
structure to be examined by an independent appraiser and by non-life insurance companies, and other substantially "In the case of a continuing bond, the obligor shall pay the
the value of the insured’s interest therein may then be fixed similar kinds of insurance. subsequent annual premium as it falls due until the contract
as between the insurer and the insured. The cost of such of suretyship is cancelled by the obligee or by the
examination shall be paid for by the insured. A clause shall "TITLE 4 Commissioner or by a court of competent jurisdiction, as the
be inserted in such policy stating substantially that the value "SURETYSHIP case may be.
of the insured’s interest in such building or structure has
been thus fixed. In the absence of any change increasing the "Section 180. Pertinent provisions of the Civil Code of the
"Section 177. A contract of suretyship is an agreement
risk without the consent of the insurer or of fraud on the part Philippines shall be applied in a suppletory character
whereby a party called the surety guarantees the
of the insured, then in case of a total loss under such policy, performance by another party called the principal or obligor whenever necessary in interpreting the provisions of a
the whole amount so insured upon the insured’s interest in of an obligation or undertaking in favor of a third party called contract of suretyship.
such building or structure, as stated in the policy upon which the obligee. It includes official recognizances, stipulations,
the insurers have received a premium, shall be paid, and in "TITLE 5
bonds or undertakings issued by any company by virtue of
case of a partial loss the full amount of the partial loss shall "LIFE INSURANCE
and under the provisions of Act No. 536, as amended by Act
be so paid, and in case there are two (2) or more policies No. 2206.
covering the insured’s interest therein, each policy shall
"Section 181. Life insurance is insurance on human lives and
contribute pro rata to the payment of such whole or partial
"Section 178. The liability of the surety or sureties shall be insurance appertaining thereto or connected therewith.
loss. But in no case shall the insurer be required to pay more
than the amount thus stated in such policy. This section shall joint and several with the obligor and shall be limited to the
not prevent the parties from stipulating in such policies amount of the bond. It is determined strictly by the terms of
"Every contract or undertaking for the payment of annuities "Section 183. The insurer in a life insurance contract shall be "Section 188. No insurance company or mutual benefit
including contracts for the payment of lump sums under a liable in case of suicide only when it is committed after the association shall engage in the business of microinsurance
retirement program where a life insurance company policy has been in force for a period of two (2) years from the unless it possesses all the requirements as may be
manages or acts as a trustee for such retirement program date of its issue or of its last reinstatement, unless the policy prescribed by the Commissioner. The Commissioner shall
shall be considered a life insurance contract for purposes of provides a shorter period: Provided, however, That suicide issue such rules and regulations governing microinsurance.
this Code. committed in the state of insanity shall be compensable
regardless of the date of commission. "CHAPTER II-A
"Section 182. An insurance upon life may be made payable "FINANCIAL REPORTING FRAMEWORK
on the death of the person, or on his surviving a specified "Section 184. A policy of insurance upon life or health may
period, or otherwise contingently on the continuance or pass by transfer, will or succession to any person, whether "Section 189. All companies regulated by the Commission,
cessation of life. he has an insurable interest or not, and such person may unless otherwise required by law, should comply with the
recover upon it whatever the insured might have recovered. financial reporting frameworks adopted by the Commission
"Every contract or pledge for the payment of endowments or for purposes of creating the statutory financial reports and
annuities shall be considered a life insurance contract for "Section 185. Notice to an insurer of a transfer or bequest the annual statements to be submitted to the Commission.
purposes of this Code. thereof is not necessary to preserve the validity of a policy of Financial reporting framework means a set of accounting
insurance upon life or health, unless thereby expressly and reporting principles, standards, interpretations and
"In the absence of a judicial guardian, the father, or in the required. pronouncements that must be adopted in the preparation
latter’s absence or incapacity, the mother, of any minor, who and submission of the statutory financial statements and
is an insured or a beneficiary under a contract of life, health, "Section 186. Unless the interest of a person insured is reports required by the Commission. This financial reporting
or accident insurance, may exercise, in behalf of said minor, susceptible of exact pecuniary measurement, the measure framework is not the same as the financial reporting
any right under the policy, without necessity of court of indemnity under a policy of insurance upon life or health framework used to prepare the financial statements that the
authority or the giving of a bond, where the interest of the is the sum fixed in the policy. Securities and Exchange Commission may require. The
minor in the particular act involved does not exceed Five main purpose of the statutory statements is to present
hundred thousand pesos (P500,000.00) or in such important information about the level of risk and solvency
"TITLE 6
reasonable amount as may be determined by the situation of insurers. In prescribing the applicable statutory
"MICROINSURANCE
Commissioner. Such right may include, but shall not be financial reporting framework, the Commissioner shall take
limited to, obtaining a policy loan, surrendering the policy, into account international standards concerning solvency
"Section 187. Microinsurance is a financial product or service and insurance company reporting as well as generally
receiving the proceeds of the Policy, and giving the minor’s
that meets the risk protection needs of the poor where: accepted actuarial principles concerning financial reporting
consent to any transaction on the policy.
promulgated by the Actuarial Society of the Philippines.
"(a) The amount of contributions, premiums, fees or
"In the absence or in case of the incapacity of the father or charges, computed on a daily basis, does not
mother, the grandparent, the eldest brother or sister at least "The assets and investments discussed in Sections 204 to
exceed seven and a half percent (7.5%) of the 215 shall be accounted for in accordance with this section.
eighteen (18) years of age, or any relative who has actual
current daily minimum wage rate for nonagricultural
custody of the minor insured or beneficiary, shall act as a workers in Metro Manila; and
guardian without need of a court order or judicial "The valuation of reserves shall be accounted for in
appointment as such guardian, as long as such person is not accordance with Title 5 of this Code.
otherwise disqualified or incapacitated. Payment made by "(b) The maximum sum of guaranteed benefits is not
the insurer pursuant to this section shall relieve such insurer more than one thousand (1,000) times of the current
"CHAPTER III
of any liability under the contract. daily minimum wage rate for nonagricultural workers
in Metro Manila. "THE BUSINESS OF INSURANCE
"TITLE 1 "Section 193. No insurance company shall transact any company is not that of any other known company transacting
"INSURANCE COMPANIES, ORGANIZATION, insurance business in the Philippines until after it shall have a similar business in the Philippines, or a name so similar as
CAPITALIZATION AND AUTHORIZATION obtained a certificate of authority for that purpose from the to be calculated to mislead the public. The Commissioner
Commissioner upon application therefor and payment by the may issue rules and regulations on the use of names of
"Section 190. For purposes of this Code, the company concerned of the fees hereinafter prescribed. insurance companies and other supervised persons or
term insurer or insurance company shall include all entities.
partnerships, associations, cooperatives or corporations, "The Commissioner may refuse to issue a certificate of
including government-owned or -controlled corporations or authority to any insurance company if, in his judgment, such "The certificate of authority issued by the Commissioner
entities, engaged as principals in the insurance business, refusal will best promote the interest of the people of this shall expire on the last day of December, three (3) years
excepting mutual benefit associations. Unless the context country. No such certificate of authority shall be granted to following its date of issuance, and shall be renewable every
otherwise requires, the term shall also include professional any such company until the Commissioner shall have three (3) years thereafter, subject to the company’s
reinsurers defined in Section 288. Domestic company shall satisfied himself by such examination as he may make and continuing compliance with the provisions of this Code,
include companies formed, organized or existing under the such evidence as he may require that such company is circulars, instructions, rulings or decisions of the
laws of the Philippines. Foreign company when used without qualified by the laws of the Philippines to transact business Commission.
limitation shall include companies formed, organized, or therein, that the grant of such authority appears to be
existing under any laws other than those of the Philippines. justified in the light of local economic requirements, and that "Every company receiving any such certificates of authority
the direction and administration, as well as the integrity and shall be subject to the provisions of this Code and other
"Section 191. The provisions of the Corporation Code, as responsibility of the organizers and administrators, the related laws and to the jurisdiction and supervision of the
amended, shall apply to all insurance corporations now or financial organization and the amount of capital, reasonably Commissioner.
hereafter engaged in business in the Philippines insofar as assure the safety of the interests of the policyholders and the
they do not conflict with the provisions of this chapter. public. "No insurance company may be authorized to transact in the
Philippines the business of life and non-life insurance
"Section 192. No corporation, partnership, or association of "In order to maintain the quality of the management of the concurrently, unless specifically authorized to do so by the
persons shall transact any insurance business in the insurance companies and afford better protection to Commissioner: Provided, That the terms life and non-
Philippines except as agent of a corporation, partnership or policyholders and the public in general, any person of good life insurance shall be deemed to include health, accident
association authorized to do the business of insurance in the moral character, unquestioned integrity and recognized and disability insurance.
Philippines, unless possessed of the capital and assets competence may be elected or appointed director or officer
required of an insurance corporation doing the same kind of of insurance companies in accordance with the pertinent "No insurance company shall have equity in an adjustment
business in the Philippines and invested in the same provisions contained in the corporate governance circulars
company and neither shall an adjustment company have
manner; unless the Commissioner shall have granted it a prescribed by the Commissioner. In addition hereto, the equity in an insurance company.
certificate to the effect that it has complied with all the Commissioner shall prescribe the qualifications of directors,
provisions of this Code. executive officers and other key officials of insurance
companies for purposes of this section. "No insurance company issued with a valid certificate of
authority to transact insurance business anywhere in the
"Every entity receiving any such certificate of authority shall Philippines by the Insurance Commissioner, shall be barred,
be subject to the insurance and other applicable laws of the "No person shall concurrently be a Director and/or Officer of prevented, or disenfranchised from issuing any insurance
Philippines and to the jurisdiction and supervision of the an insurance company and an adjustment company.
policy or from transacting any insurance business within the
Commissioner. scope or coverage of its certificate of authority, anywhere in
"Before issuing such certificate of authority, the the Philippines, by any local government unit or authority, for
Commissioner must be satisfied that the name of the whatever guise or reason whatsoever, including under any
kind of ordinance, accreditation system, or scheme. Any organization and transform itself into a mutual insurance Insurance Commission (IC), the National Economic and
local ordinance or local government unit regulatory issuance company. Development Authority (NEDA), the Securities and
imposing such restriction or disenfranchisement on any Exchange Commission (SEC) and other agencies which the
insurance company shall be deemed null and void ab initio. "The Secretary of Finance may, upon recommendation of President may designate shall conduct the review and may
the Commissioner, increase such minimum paid-up capital recommend to the President to adopt for implementation the
"Section 194. Except as provided in Section 289, no new stock or cash assets requirement under such terms and necessary capital adjustment.
domestic life or non-life insurance company shall, in a stock conditions as he may impose, to an amount which, in his
corporation, engage in business in the Philippines unless opinion, would reasonably assure the safety of the interests "Section 195. Every company must, before engaging in the
possessed of a paid-up capital equal to at least One billion of the policyholders and the public. The minimum paid-up business of insurance in the Philippines, file with the
pesos (P1,000,000,000.00): Provided, That a domestic capital and net worth requirement must remain unimpaired Commissioner the following:
insurance company already doing business in the for the continuance of the license. The Commissioner may
Philippines shall have a net worth by June 30, 2013 of Two require the adoption of the risk-based capital approach and "(a) A certified copy of the last annual statement or
hundred fifty million pesos (P250,000,000.00). Furthermore, other internationally accepted forms of capital framework. a verified financial statement exhibiting the condition
said company must have by December 31, 2016, an and affairs of such company;
additional Three hundred million pesos (P300,000,000.00) in "For the purpose of this section, net worth shall consist of:
net worth; by December 31, 2019, an additional Three
"(b) If incorporated under the laws of the Philippines,
hundred fifty million pesos (P350,000,000.00) in net worth; "(a) Paid-up capital; a copy of the articles of incorporation and bylaws,
and by December 31, 2022, an additional Four hundred and any amendments to either, certified by the
million pesos (P400,000,000.00) in net worth.
"(b) Retained earnings; Securities and Exchange Commission to be a copy
of that which is filed in its Office;
"The Commissioner may, as a pre-licensing requirement of
a new insurance company, in addition to the paid-up capital "(c) Unimpaired surplus; and
"(c) If incorporated under any laws other than those
stock, require the stockholders to pay in cash to the company of the Philippines, a certificate from the Securities
in proportion to their subscription interests a contributed "(d) Revaluation of assets as may be approved by
and Exchange Commission showing that it is duly
surplus fund of not less than One hundred million pesos the Commissioner.
registered in the mercantile registry of that
(P100,000,000.00). He may also require such company to Commission in accordance with the Corporation
submit to him a business plan showing the company’s "The Commission may adopt for purposes of compliance Code. A copy of the articles of incorporation and
estimated receipts and disbursements, as well as the basis with capital build up requirement under this Code the bylaws, and any amendments to either, if organized
therefor, for the next succeeding three (3) years. recognition as part of the capital account, capital notes or or formed under any law requiring such to be filed,
debentures which are subordinate to all credits and senior duly certified by the officer having the custody of
"If organized as a mutual company, in lieu of such net worth, only to common capital stocks. same, or if not so organized, a copy of the law,
it must have available total members equity in an amount to charter or deed of settlement under which the deed
be determined by the Insurance Commission above all "The President of the Philippines may order a periodic review of organization is made, duly certified by the proper
liabilities for losses reported; expenses, taxes, legal reserve, every two (2) years the capital structure set out above to custodian thereof, or proved by affidavit to be a
and reinsurance of all outstanding risks, and the contributed determine the capital adequacy of the local insurance copy; also, a certificate under the hand and seal of
surplus fund equal to the amounts required of stock industry from and after the integration and liberalization of the proper officer of such state or country having
corporations. A stock insurance company doing business in the financial services, including insurance, in the ASEAN supervision of insurance business therein, if any
the Philippines may, subject to the pertinent law and Region. For this purpose, a review committee consisting of there be, that such corporation or company is
regulation which now or hereafter may be in force, alter its representatives from the Department of Finance (DOF), the organized under the laws of such state or country,
 with the amount of capital stock or assets and legal Commissioner to transact business in the Philippines, that if Sentral ng Pilipinas: Provided, further, That the total
reserve required by this Code; at any time said company shall leave the Philippines, or investment of a foreign insurance company in any registered
cease to transact business therein, or shall be without any enterprise shall not exceed twenty percent (20%) of the net
"(d) If not incorporated and of foreign domicile, aside agent in the Philippines on whom any notice, proof of loss, worth of said foreign insurance company nor twenty percent
from the certificate mentioned in paragraph (c) of summons, or legal process may be served, then in any (20%) of the capital of the registered enterprise, unless
this section, a certificate setting forth the nature and action or proceeding arising out of any business or previously authorized in writing by the Commissioner.
character of the business, the location of the transaction which occurred in the Philippines, service of any
principal office, the name of the individual or names notice provided by law, or insurance policy, proof of loss, "The Commissioner may, as a pre-licensing requirement of
of the persons composing the partnership or summons, or other legal process may be made upon the a new branch office of a foreign insurance company, in
association, the amount of actual capital employed Insurance Commissioner, and that such service upon the addition to the required asset or net worth, require the
or to be employed therein, and the names of all Insurance Commissioner shall have the same force and company to have an additional surplus fund in an amount to
officers and persons by whom the business is or effect as if made upon the company. be determined by the Insurance Commission.
may be managed.
"Whenever such service of notice, proof of loss, summons, "For purposes of this Code, the net worth of a foreign
"The certificate must be verified by the affidavit of the chief or other legal process shall be made upon the insurance company shall refer only to its net worth in the
officer, secretary, agent, or manager of the company; and if Commissioner, he must, within ten (10) days thereafter, Philippines.
there are any written articles of agreement of the company, transmit by mail, postage paid, a copy of such notice, proof
a copy thereof must accompany such certificate. of loss, summons, or other legal process to the company at "Section 198. The Commissioner shall hold the securities,
its home or principal office. The sending of such copy by the
deposited as required in the immediately preceding section,
Commissioner shall be a necessary part of the service of the
"Section 196. The Commissioner must require as a condition for the benefit and security of all the policyholders and
precedent to the transaction of insurance business in the notice, proof of loss, or other legal process. creditors of the company depositing the same: Provided,
Philippines by any foreign insurance company, that such That the Commissioner may as long as the company is
company file in his office a written power of attorney "Section 197. No insurance company organized or existing solvent, permit the company to collect the interest or
designating some person who shall be a resident of the under the government or laws other than those of the dividends on the securities so deposited, and, from time to
Philippines as its general agent, on whom any notice Philippines shall engage in business in the Philippines time, with his assent, to withdraw any of such securities,
provided by law or by any insurance policy, proof of loss, unless possessed of unimpaired capital or assets and upon depositing with said Commissioner other like
summons and other legal processes may be served in all reserve of not less than One billion pesos securities, the market value of which shall be equal to the
actions or other legal proceedings against such company, (P1,000,000,000.00), nor until it shall have deposited with market value of such as may be withdrawn. In the event of
and consenting that service upon such general agent shall the Commissioner for the benefit and security of the any company ceasing to do business in the Philippines, the
be admitted and held as valid as if served upon the foreign policyholders and creditors of such company in the securities deposited as aforesaid shall be returned to the
company at its home office. Any such foreign company shall, Philippines, securities satisfactory to the Commissioner company upon the Commissioner’s written approval and
as further condition precedent to the transaction of insurance consisting of good securities of the Philippines, including only after the company has duly proven in its application
business in the Philippines, make and file with the new issues of stock of registered enterprises, as this term is therefor that it has no further liability whatsoever under any
Commissioner an agreement or stipulation, executed by the defined in Executive Order No. 226 of 1987, as amended, to of its policies nor to any of its creditors in the Philippines.
proper authorities of said company in form and substance as the actual market value of not less than the amount herein
follows: required: Provided, That at least fifty percent (50%) of such "Section 199. Every foreign company doing business in the
securities shall consist of bonds or other instruments of debt Philippines shall set aside an amount corresponding to the
"The (name of company) does hereby stipulate and agree in of the Government of the Philippines, its political legal reserves of the policies written in the Philippines and
consideration of the permission granted by the Insurance subdivisions and instrumentalities, or of government-owned invest and keep the same therein in accordance with the
or -controlled corporations and entities, including the Bangko
provisions of this section. The legal reserve therein required any interests or dividends that have accrued or will accrue to "The Commissioner shall prescribe solvency requirements
to be set aside shall be invested only in the classes of the said certificates of stock, until the corresponding for branches of foreign insurance companies operating in the
Philippine securities described in Section 206: Provided, payment or reimbursement is made by the defaulting Philippines.
however, That no investment in stocks or bonds of any single stockholder.
entity shall, in the aggregate exceed twenty percent (20%) "TITLE 3
of the net worth of the investing company or twenty percent "Section 201. No domestic insurance corporation shall "ASSETS
(20%) of the capital of the issuing company, whichever is the declare or distribute any dividend on its outstanding stocks
lesser, unless otherwise approved in writing by the unless it has met the minimum paid-up capital and net worth "Section 202. In any determination of the financial condition
Commissioner. The securities purchased and kept in the requirements under Section 194 and except from profits of any insurance company doing business in the Philippines,
Philippines under this section, shall not be sent out of the attested in a sworn statement to the Commissioner by the there shall be allowed and admitted as assets only such
territorial jurisdiction of the Philippines without the written president or treasurer of the corporation to be remaining on assets legally or beneficially owned by the insurance
consent of the Commissioner. hand after retaining unimpaired: company concerned as determined by the Commissioner
which consist of:
"TITLE 2 "(a) The entire paid-up capital stock;
"SOLVENCY "(a) Cash in the possession of the insurance
"(b) The solvency requirements defined by Section company or in transit under its control, and the true
"Section 200. An insurance company doing business in the 200; and duly verified balance of any deposit of such
Philippines shall at all times maintain the minimum paid-up company in a financially sound bank or trust
capital, and net worth requirements as prescribed by the company duly authorized by the Bangko Sentral ng
"(c) In the case of life insurance corporations, the
Commissioner. Such solvency requirements shall be based Pilipinas.
legal reserve fund required by Section 217;
on internationally accepted solvency frameworks and
adopted only after due consultation with the insurance "(b) Investments in securities, including money
industry associations. "(d) In the case of corporations other than life, the
legal reserve fund required by Section 219; and market instruments, and in real property acquired or
held in accordance with and subject to the
"Whenever the aforementioned requirement be found to be applicable provisions of this Code and the income
less than that herein required to be maintained, the "(e) A sum sufficient to pay all net losses reported,
or in the course of settlement, and all liabilities for realized therefrom or accrued thereon.
Commissioner shall forthwith direct the company to make
good any such deficiency by cash, to be contributed by all expenses and taxes.
"(c) Loans granted by the insurance company
stockholders of record in proportion to their respective
"Any dividend declared or distributed under the preceding concerned to the extent of that portion thereof
interests, and paid to the treasurer of the company, within adequately secured by non-speculative assets with
fifteen (15) days from receipt of the order: Provided, That the paragraph shall be reported to the Commissioner within
readily realizable values in accordance with and
company in the interim shall not be permitted to take any new thirty (30) days after such declaration or distribution.
subject to the limitations imposed by applicable
risk of any kind or character unless and until it make good
provisions of this Code.
any such deficiency: Provided; further, That a stockholder "If the Commissioner finds that any such corporation has
who aside from paying the contribution due from him, pays declared or distributed any such dividend in violation of this
the contribution due from another stockholder by reason of section, he may order such corporation to cease and desist "(d) Policy loans and other policy assets and liens
the failure or refusal of the latter to do so, shall have a lien on policies, contracts or certificates of a life
from doing business until the amount of such dividend or the
on the certificates of stock of the insurance company portion thereof in excess of the amount allowed under this insurance company, in an amount not exceeding
concerned appearing in its books in the name of the section has been restored to said corporation. legal reserves and other policy liabilities carried on
defaulting stockholder on the date of default, as well as on
each individual life insurance policy, contract or "(h) Deposits or amounts recoverable from "(b) Prepaid or deferred charges for expenses and
certificate. underwriting associations, syndicates and commissions paid by such insurance company.
reinsurance funds, or from any suspended banking
"(e) The net amount of uncollected and deferred institution, to the extent deemed by the "(c) Advances to officers (other than policy loans),
premiums and annuity considerations in the case of Commissioner to be available for the payment of which are not adequately secured and which are not
a life insurance company which carries the full mean losses and claims and values to be determined by previously authorized by the Commissioner, as well
tabular reserve liability. him. as advances to employees, agents, and other
persons on mere personal security.
"(f) Reinsurance recoverable by the ceding insurer: "(i) Electronic data processing machines, as may be
authorized by the Commissioner to be acquired by "(d) Shares of stock of such insurance company,
"(1) From an insurer authorized to transact the insurance company concerned, the acquisition owned by it, or any equity therein as well as loans
business in this country, the full amount cost of which to be amortized in equal annual secured thereby, or any proportionate interest in
amounts within a period of five (5) years from the such shares of stock through the ownership by such
thereof; or
date of acquisition thereof. insurance company of an interest in another
"(2) From an insurer not authorized in this corporation or business unit.
country, in an amount not exceeding the "(j) Investments in mutual funds, real estate
investment trusts, salary loans, unit investment trust "(e) Furniture, furnishing, fixtures, safes, equipment,
liabilities carried by the ceding insurer for
funds and special deposit accounts, subject to the library, stationery, literature, and supplies.
amounts withheld under a reinsurance
conditions as may be provided for by the
treaty with such unauthorized insurer as
Commissioner.
security for the payment of obligations "(f) Items of bank credits representing checks, drafts
thereunder if such funds are held subject to or notes returned unpaid after the date of statement.
withdrawal by, and under the control of, the "(k) Other assets, not inconsistent with the
ceding insurer. The Commissioner may provisions of paragraphs (a) to (j) hereof, which are
"(g) The amount, if any, by which the aggregate
prescribe the conditions under which a deemed by the Commissioner to be readily
value of investments as carried in the ledger assets
ceding insurer may be allowed credit, as an realizable and available for the payment of losses
of such insurance company exceeds the aggregate
asset or as a deduction from loss and and claims at values to be determined by him in a value thereof as determined in accordance with the
unearned premium reserves, for circular, rule or regulation. provisions of this Code and/or the rules of the
reinsurance recoverable from an insurer not Commissioner.
authorized in this country but which "Section 203. In addition to such assets as the
presents satisfactory evidence that it meets Commissioner may from time to time determine to be non-
"All non-admitted assets and all other assets of doubtful
the applicable standards of solvency admitted assets of insurance companies doing business in value or character included as ledger or non-ledger assets
required in this country. the Philippines, the following assets shall in no case be
in any statement submitted by an insurance company to the
allowed as admitted assets of an insurance company doing
Commissioner, or in any insurance examiner’s report to him,
"(g) Funds withheld by a ceding insurer under a business in the Philippines, in any determination of its shall also be reported, to the extent of the value disallowed
reinsurance treaty, provided reserves for unpaid financial condition: as deductions from the gross assets of such insurance
losses and unearned premiums are adequately company, except where the Commissioner permits a reserve
provided. "(a) Goodwill, trade names, and other like intangible to be carried among the liabilities of such insurance
assets. company in lieu of any such deduction.
"TITLE 4 "(f) Obligations issued or guaranteed by foreign "(2) Unless approved by the Commissioner, no loan
"INVESTMENTS banks or corporations, each of which shall have total may be granted upon the security of a mortgage on
net worth of at least One hundred fifty million US improved real estate if the improvements thereon do
"Section 204. A life insurance company may lend to any of dollars ($US150,000,000.00) or such other higher not belong to the owner of the land, and the owner
its policyholders upon the security of the value of its policy net worth as may be prescribed by the Insurance of the improvements does not sign the deed of
such sum as may be determined pursuant to the provisions Commission, as shown in their financial statements mortgage. However, if the owner of the land is the
of the policy. as of the immediately preceding fiscal year; or Government of the Philippines or any of its political
subdivisions and a long-term lease has been
"No insurance company shall loan any of its money or "(g) Assignments of monetary instruments such as executed in favor of the owner of the improvements,
deposits to any person, corporation or association, except cash deposits, deposit certificates or other similar the owner of the land need not be a party to the deed
instruments of universal banks, commercial banks, of mortgage. The expiration date of the lease shall
upon the security of any of the following:
investment houses or other financial intermediaries not, however, precede the maturity of the loan. The
duly registered with the Bangko Sentral ng Pilipinas; phrase ‘improved real estate’ as used herein shall
"(a) First mortgage or deeds of trust of registered, mean land with permanent building or buildings
unencumbered, improved or unimproved real or
erected thereon;
estate, including condominiums;
"(h) Pledges of shares of stock, bonds or other
instruments of indebtedness specified in Section "(3) Lease-agreements or similar securities received
"(b) First mortgages or deeds of trust of actually on the sale of real estate property shall not exceed
209; or
cultivated, improved and unencumbered agricultural one hundred percent (100%) of the selling price of
lands in the Philippines; said property, or one hundred percent (100%) of its
"(i) Chattel mortgages over equipment not more than
market value at the time of its disposition, whichever
"(c) Purchase money mortgages, lease purchase three (3) years old; and
amount is lower. However, in no case shall such
agreements or similar securities executed or agreement have a maturity period not exceeding
received by it on account of the sale or exchange of "(j) Such other security as may be approved by the thirty (30) years;
real property acquired pursuant to Sections 206 and Commissioner.
208; "(4) Loans secured by shares of stock of solvent
"The loans provided in the preceding subsection shall be corporations or institutions shall not exceed fifty
"(d) Bonds or other instruments of indebtedness subject to the following conditions: percent (50%) of:
issued or guaranteed by the Government of the
Philippines or its political subdivisions authorized by "(1) The amount of loan secured by real estate "(i) The weighted average market price for
law to incur such obligations or issue such mortgage over a non-agricultural land shall not the one hundred eighty (180) days
guarantees or of government-owned or -controlled exceed seventy percent (70%) of its appraised preceding the approval of the loan for
corporations and instrumentalities including the value, and in the case of a loan secured by a real shares listed in the stock exchange; and
Bangko Sentral ng Pilipinas; or estate mortgage over an agricultural land, the
amount of loan shall not exceed forty percent (40%)
of its market value: Provided, That, in no case shall "(ii) For unlisted shares, the adjusted book
"(e) Obligations issued or guaranteed by universal value of such shares.
banks, commercial banks, offshore banking units, such loan have a maturity period in excess of
investment houses or other financial intermediaries twenty-five (25) years;
duly registered with the Bangko Sentral ng Pilipinas;
or
 "(5) Loans secured by the chattel mortgages over subdivisions authorized by law to issue bonds at the expenses, taxes other than income taxes,
equipment shall not exceed seventy percent (70%) reasonable market value thereof. depreciation and depletion; but excluding
of the market value of said equipment. extraordinary nonrecurring items of income or
"(3) Bonds or other instruments of debt of expense appearing in the regular financial statement
"Section 205. No loan by any insurance company on the government-owned or -controlled corporations and of the issuing, assuming or guaranteeing institution.
security of real estate shall be made unless the title to such entities, including the Bangko Sentral ng Pilipinas. The term fixed charges shall include interest on
real estate shall have first been registered in accordance funded and unfunded debt, amortization of debt
with the existing Land Registration Act, or shall have been discount, and rentals for leased properties.
"(4) Bonds, debentures or other instruments of
previously registered under the provisions of the existing indebtedness of any solvent corporation or
Mortgage Law and the lien or interest of the insurance institution created or existing under the laws of the "(5) Preferred or guaranteed stocks of any solvent
company as mortgagee has been registered. Philippines: corporation or institution created or existing under
the laws of the Philippines: Provided, That if the
"Section 206. (a) An insurance company may purchase, stocks are guaranteed, the amount of stocks so
Provided, however, That the issuing,
hold, own and convey such property, real and personal, as assuming or guaranteeing entity or its guaranteed is not in excess of fifty percent (50%) of
may have been mortgaged, pledged, or conveyed to it in predecessors shall not have defaulted in the the amount of the preferred or common stocks, as
good faith in trust for its benefit by reason of money loaned the case may be, of the guaranteeing
payment of interest on any of its securities
by it in pursuance of the regular business of the company, and that during each of any three (3) corporation: Provided, finally, That no life insurance
and such real or personal property as may have been including the last two (2) of the five (5) fiscal company shall invest in or loan upon obligations of
purchased by it at sales under pledges, mortgages or deeds any one institution in the kinds permitted under this
years next preceding the date of acquisition
of trust for its benefit on account of money loaned by it; and subsection an amount in excess of ten percent
by such insurance company of such bonds,
such real and personal property as may have been debentures, or other instruments of (10%) of the total admitted assets of such insurer as
conveyed to it by borrowers in satisfaction and discharge of indebtedness, the net earnings of the of December thirty-first next preceding the date of
loans made by the company in payment or by reason of any issuing, assuming or guaranteeing such investment.
loan made by the company in payment or by reason of any institution available for its fixed charges, as
loan made by it shall be sold by the company within twenty hereinafter defined, shall have been not less "(6) Common stocks of any solvent corporation or
(20) years after the title thereto has been vested in it. than one and one-quarter (1¼) times the institution created or existing under the laws of the
total of its fixed charges for such Philippines: Provided, however, That no life
"(b) An insurance company may purchase, hold, and own the year: Provided, further, That no life insurance company shall invest in or loan upon the
following: insurance company shall invest in or loan obligations of any one corporation or institution in
upon the obligations of any one institution in the kinds permitted under this subsection an amount
the kinds permitted under this subsection an in excess of ten percent (10%) of the total admitted
"(1) Real properties which serve as its main place of
amount in excess of twenty-five percent assets of such insurer as of December thirty-first
business and/or branch offices: Provided, That such
investment shall not in the overall exceed twenty (25%) of the total admitted assets of such next preceding the date of such investment.
percent (20%) of its net worth as shown by its latest insurer as of December thirty-first next
financial statement approved by the Commissioner. preceding the date of such investment. "(7) Securities issued by a registered enterprise, as
this term is defined in Executive Order No. 226,
"As used in this subsection the term net earnings otherwise known as the Omnibus Investments Code
"(2) Bonds or other instruments of indebtedness of
the Government of the Philippines or its political available for fixed charges shall mean net income of 1987, as amended: Provided, That the total
after deducting operating and maintenance investment of a domestic non-life insurance
company in any registered enterprise shall not
 exceed twenty percent (20%) of the net worth of said investment under the foregoing subdivisions of this section; for the payment of pending claims and obligations
insurance company as shown by its aforesaid but the aggregate amount of such investments and of such shall not be used for such investments.
financial statement unless previously authorized by cash in such currency which is at any time held by such
the Commissioner. insurer shall not exceed one and one-half (1½) times the "(b) Acquire real property, other than property to be
amount of its reserves and other obligations under such used primarily for providing housing and property for
"(8) Certificates, notes and other obligations issued contracts or the amount which such insurer is required by the accommodation of its own business, as an
by the trustees or receivers of any institution created law of any country or possession outside the Republic of the investment for the production of income, or may
or existing under the laws of the Philippines which, Philippines to be invested in such country or possession, acquire real property to be improved or developed
or the assets of which, are being administered under whichever shall be greater. for such investment purpose pursuant to a program
the direction of any court having therefor, subject to the condition that the cost of
jurisdiction: Provided, however, That such "Section 207. An insurance company may: each parcel of real property so acquired under the
certificates, notes or other obligations are authority of this paragraph (b), including the
adequately secured as to principal and interests. "(1) Invest in equities of other financial institutions; estimated cost to the company of the improvement
and or development thereof, when added to the book
"(9) Equipment trust obligations or certificates which value of all other real property held by it pursuant to
are adequately secured or other adequately secured this paragraph (b), shall not exceed twenty-five
"(2) Engage in the buying and selling of long-term
instruments evidencing an interest in equipment debt instruments: Provided, That any or all of such percent (25%) of its admitted assets as of the thirty-
wholly or in part within the Philippines: Provided, investments shall be with the prior approval of the first day of December next preceding.
however, That there is a right to receive determined Commissioner. Insurance companies may,
portions of rental, purchase or other fixed obligatory however, invest in listed equities of other financial "Section 209. Every domestic insurance company shall, to
payments for the use or purchase of such institutions without need of prior approval by the the extent of an amount equal in value to twenty-five percent
equipment. Commissioner. (25%) of the minimum net worth required under Section 194,
invest its funds only in securities, satisfactory to the
"(10) Any obligation of any corporation or institution Commissioner, consisting of bonds or other instruments of
"Section 208. Any life insurance company may:
created or existing under the laws of the Philippines debt of the Government of the Philippines or its political
which is, on the date of acquisition by the insurer, subdivisions or instrumentalities, or of government-owned or
"(a) Acquire or construct housing projects and, in -controlled corporations and entities, including the Bangko
adequately secured and has qualities and connection with any such project, may acquire land
characteristics wherein the speculative elements are Sentral ng Pilipinas: Provided, That such investments shall
or any interest therein by purchase, lease or at all times be maintained free from any lien or
not predominant.
otherwise, or use land acquired pursuant to any encumbrance: Provided, further, That such securities shall
other provision of this Code. Such company may be deposited with and held by the Commissioner for the
"(11) Such other securities as may be approved by thereafter own, maintain, manage, collect or receive faithful performance by the depositing insurer of all its
the Commissioner. income from, or sell and convey, any land or interest obligations under its insurance contracts. The provisions of
therein so acquired and any improvements thereon. Section 198 shall, so far as practicable, apply to the
"(c) Any domestic insurer which has outstanding insurance, The aggregate book value of the investments of any securities deposited under this section.
annuity or reinsurance contracts in currencies other than the such company in all such projects shall not exceed
national currency of the Philippines may invest in, or at the time of such investments twenty-five percent
"Except as otherwise provided in this Code, no judgment
otherwise acquire or loan upon securities and investments in (25%) of the total admitted assets of such company
such currency which are substantially of the same kinds, on the thirty-first day of December next creditor or other claimant shall have the right to levy upon
any of the securities of the insurer held on deposit under this
classes and investment grades as those eligible for preceding: Provided, That the funds of the company
section or held on deposit pursuant to the requirement of the earned surplus in any of the investments described in classes of securities so eligible for amortization. All bonds or
Commissioner. Sections 204, 206 and 207, or in any securities issued by a other instruments of indebtedness which in the judgment of
registered enterprise mentioned in the preceding the Commissioner are not amply secured shall not be eligible
"Section 210. After satisfying the requirements contained in sections: Provided, That no investment in stocks or bonds of for amortization and shall be valued in accordance with
the preceding section, any domestic non-life insurance any single entity shall in the aggregate, exceed twenty paragraph two. The Commissioner may, if he finds that the
company, shall invest, to an amount prescribed below, its percent (20%) of the net worth of the insurance company as interest of policyholders so permit or require, by official
funds in, or otherwise, acquire or loan upon, only the classes shown in its latest financial statement approved by the regulation permit or require any class or classes of insurers,
of investments described in Section 206, including securities Commissioner or twenty percent (20%) of the paid-up capital other than life insurance companies authorized to do
issued by any registered enterprise, as this term is defined of the issuing company, whichever is lesser, unless business in this country, to value their bonds or other
in Executive Order No. 226, otherwise known as ‘The otherwise approved by the Commissioner. instruments of indebtedness in accordance with the
Omnibus Investments Code of 1987′ and such other classes foregoing rule.
of investments as may be authorized by the Commissioner "Section 212. After satisfying the minimum capital
for purposes of this section: Provided, That: investment required in Section 209, any life insurance "(b) The investments of all insurers authorized to do
company may invest its legal policy reserve, as provided in business in this country, except securities subject to
"(a) No more than twenty percent (20%) of the net Section 217 or in Section 218, in any of the classes of amortization and except as otherwise provided in this
worth of such company as shown by its latest securities or types of investments described in Sections 204, chapter, shall be valued, in the discretion of the
financial statement approved by the Commissioner 206, 207 and 208, subject to the limitations therein Commissioner, at their amortized cost using effective
shall be invested in the lot and building in which the contained, and in any securities issued by any registered interest method less impairment and unrecoverable amount
insurance company conducts its business; and enterprise mentioned in Section 210, free from any lien or or at valuation representing their fair market value. If the
encumbrance, in such amounts as may be approved by the Commissioner finds that in view of the character of
"(b) The total investment of an insurance company Commissioner. Such company may likewise invest any investments of any insurer authorized to do business in this
in any registered enterprise shall not exceed twenty portion of its earned surplus in the aforesaid securities or country it would be prudent for such insurer to establish a
percent (20%) of the net worth of said insurance investments subject to the aforesaid limitations. special reserve for possible losses or fluctuations in the
values of its investments, he may require such insurer to
company as shown by its aforesaid financial
"Section 213. Any investment made in violation of the establish such reserve, reasonable in amount, and include a
statement nor twenty percent (20%) of the paid-up
applicable provisions of this title shall be considered non- report thereon in any statement or report of the financial
capital of the registered enterprise excluding the
admitted assets. condition of such insurer. The Commissioner may, in
intended investment, unless previously authorized
by the Commissioner: Provided, further, That such connection with any examination or required financial
investments, free from any lien or encumbrance, "Section 214. (a) All bonds or other instruments of statement of an authorized insurer, require such insurer to
furnish him complete financial statements and audited report
shall be at least equal in amount to the aggregate indebtedness having a fixed term and rate of interest and
of the financial condition of any corporation of which the
amount of: (1) its legal reserve, as provided in held by any life insurance company authorized to do
Section 219, and (2) its reserve fund held for business in this country, if amply secured and if not in default securities are owned wholly or partly by such insurer and
reinsurance as provided for in the pertinent treaty as to principal or interest, shall be valued based on their may cause an examination to be made of any subsidiary or
provision in the case of reinsurance ceded to amortized cost using effective interest method less affiliate of such insurer as appropriate to specific
investments as provided in appropriate circulars issued by
authorized insurers. impairment and unrecoverable amount based on appropriate
the Commissioner.
measurement methods which are generally accepted in the
"Section 211. After satisfying the requirements contained in industry and accepted by the Commissioner. The
Sections 197, 199, 209 and 210, any non-life insurance Commissioner shall have the power to determine the "(c) Investments in equity of an insurance company shall be
company may invest any portion of its funds representing eligibility of any such investments for valuation on the basis valued as follows:
of amortization, and may by regulation prescribe or limit the
 "(1) Listed stocks shall be valued at market value of additions or improvements thereafter paid by such insurer them during the preceding month, and the Commissioner
and periodically adjusted to reflect market changes and any amount or amounts thereafter paid by such insurer may, if such investments or any of them seem injudicious to
through a special valuation account to reflect their or any assessments levied for improvements in connection him, require the sale or disposal of the same. The report shall
realizable value when sold; with the property. also include a list of investments sold or disposed of by the
company during the same period.
"(2) Unlisted stocks shall be valued at adjusted book "(f) Purchase money mortgages received on dispositions of
value based on the latest unqualified audited real property held pursuant to Section 208 shall be valued in "TITLE 5
financial statements of the company which issued an amount equivalent to ninety percent (90%) of the value of "RESERVES
such stocks; and such real property. Purchase money mortgages received on
disposition of real property otherwise held shall be valued in "Section 216. Every life insurance company, doing business
"(3) Stocks of a corporation under the control of the an amount not exceeding ninety percent (90%) of the value in the Philippines, shall annually make a valuation of all
insurer shall be valued using the equity method of such real property as determined by an appraisal made by policies, additions thereto, unpaid dividends, and all other
which is the cost plus or minus the share of the an appraiser at or about the time of disposition of such real obligations outstanding on the thirty-first day of December of
controlling company in the earnings or losses of the property. the preceding year. All such valuations shall be made
controlled company after acquisition of such stocks. according to the standard adopted by the company, as
"(g) The stock of a subsidiary of an insurer shall be valued prescribed by the Commissioner in accordance with
"(d) The stock of an insurance company shall be valued at on the basis of the greater of: internationally accepted actuarial standards, which standard
the lesser of its market value or its book value as shown by shall be stated in its annual report.
its last approved audited financial statement or the last report "(1) The value of only such of the assets of such
on examination, whichever is more recent. The book value subsidiary as would constitute lawful investments for "Such standard of valuations shall be according to a
of a share of common stock of an insurance company shall the insurer if acquired or held directly by the insurer; standard table of mortality with interest to be determined by
be ascertained by dividing (1) the amount of its capital and or the Insurance Commissioner. When the preliminary term
surplus less the value of all of its preferred stock, if any, basis is used, the term insurance shall be limited to the first
outstanding, by (2) the number of shares of its common stock "(2) Such other value determined pursuant to policy year.
issued and outstanding. standards and cumulative limitations, contained in a
regulation to be promulgated by the Commissioner. "The results of such valuations shall be reported to the
"Notwithstanding the foregoing provisions, an insurer may, Commissioner on or before the thirtieth day of April of each
at its option, value its holdings of stock in a subsidiary "(h) Notwithstanding any provision contained in this section year accompanied by a sworn statement of a designated
insurance company in an amount not less than acquisition or elsewhere in this chapter, if the Commissioner finds that company officer and stating the methods and assumptions
cost if such acquisition cost is less than the value determined the interests of policyholders so permit or require, he may used in arriving at the values reported.
as hereinbefore provided. permit or require any class or classes of insurers authorized
to do business in this country to value their investments or "Section 217. The aggregate net value so ascertained of the
"(e) Real estate acquired by foreclosure or by deed in lieu any class or classes thereof as of any date heretofore or policies of such company shall be deemed its reserve
thereof, in the absence of a recent appraisal deemed by the hereafter in accordance with any applicable valuation or liability, to provide for which it shall hold funds in secure
Commissioner to be reliable, shall not be valued at an method. investments equal to such net value, above all its other
amount greater than the unpaid principal of the defaulted liabilities; and it shall be the duty of the Commissioner, after
loan at the date of such foreclosure or deed, together with "Section 215. It shall be the duty of the officers of the having verified, to such an extent as he may deem
any taxes and expenses paid or incurred by such insurer at insurance company to report within the first fifteen (15) days necessary, the valuation of all policies in force, to satisfy
such time in connection with such acquisition, and the cost of every month all such investments as may be made by himself that the company has such amount in safe legal
securities after all other debts and claims against it have including any special reserves required by the unless such foreign insurer or, if the services of a
been provided for. Commissioner pursuant to the provisions of this Code. nonresident broker are utilized, such nonresident broker is
represented in the Philippines by a resident agent duly
"The reserve liability for variable contracts defined in Section TITLE 6 registered with the Commissioner as required in this Code.
238 shall be established in accordance with actuarial "LIMIT OF SINGLE RISK
procedures that recognize the variable nature of the benefits "The resident agent of such unauthorized foreign insurer or
provided, and shall be approved by the Commissioner. "Section 221. No insurance company other than life, whether nonresident broker shall immediately upon registration
foreign or domestic, shall retain any risk on any one subject furnish the Commissioner with the annual statement of such
"Section 218. Every life insurance company, conducted on of insurance in an amount exceeding twenty percent (20%) insurer, or of such company or companies where such
the mutual plan or a plan in which policyholders are by the of its net worth. For purposes of this section, the term subject broker may place Philippine business as of the year
terms of their policies entitled to share in the profits or of insurance shall include all properties or risks insured by preceding such registration, and annually thereafter as soon
surplus shall, on all policies of life insurance heretofore or the same insurer that customarily are considered by non-life as available.
hereafter issued, under the conditions of which the company underwriters to be subject to loss or damage from
distribution of surplus is deferred to a fixed or specified time the same occurrence of any hazard insured against. "Section 224. All insurance companies, both life and non-life,
and contingent upon the policy being in force and the insured authorized to do business in the Philippines shall cede their
living at that time, annually ascertain the amount of the "The Commissioner may issue regulations providing for a excess risks to other companies similarly authorized to do
surplus to which all such policies as a separate class are maximum limit on the overall retained risks of insurers to business in the Philippines in such amounts and under such
entitled, and shall annually apportion to such policies as a serve as a catastrophe cover requirement for the same. arrangements as would be consistent with sound
class the amount of the surplus so ascertained, and carry the underwriting practices before they enter into reinsurance
amount of such apportioned surplus, plus the actual interest arrangements with unauthorized foreign insurers.
"Reinsurance ceded as authorized under the succeeding
earnings and accretions to such fund, as a distinct and title shall be deducted in determining the risk retained. As to
separate liability to such class of policies on and for which surety risk, deduction shall also be made of the amount "Section 225. Any insurance company doing business in the
the same was accumulated, and no company or any of its assumed by any other company authorized to transact Philippines desiring to cede their excess risks to foreign
officers shall be permitted to use any part of such insurance or reinsurance companies not authorized to
surety business and the value of any security mortgaged,
apportioned surplus fund for any purpose whatsoever other pledged, or held subject to the surety’s control and for the transact business in the Philippines may do so under such
than for the express purpose for which the same was surety’s protection. terms and conditions which the Commissioner may
accumulated. prescribe.
"TITLE 7
"Section 219. Every insurance company, other than life, shall "Should any reinsurance agreement be for any reason
"REINSURANCE TRANSACTIONS
maintain a reserve for unearned premiums on its policies in cancelled or terminated, the ceding company concerned
force, which shall be charged as a liability in any shall inform the Commissioner in writing of such cancellation
determination of its financial condition. Such reserve shall be "Section 222. An insurance company doing business in the
or termination within thirty (30) days from the date of such
calculated based on the twenty-fourth (24th) method. Philippines may accept reinsurances only of such risks, and
cancellation or termination or from the date notice or
retain risk thereon within such limits, as it is otherwise
authorized to insure. information of such cancellation or termination is received by
"Section 220. In addition to its liabilities and reserves on such company as the case may be.
contracts of insurance issued by it, every insurance
company shall be charged with the estimated amount of all "Section 223. No insurance company doing business in the
"Section 226. Every insurance company authorized to do
of its other liabilities, including taxes, expenses and other Philippines shall cede all or part of any risks situated in the
business in the Philippines shall report to the Commissioner
obligations due or accrued at the date of statement, and Philippines by way of reinsurance directly to any foreign
insurer not authorized to do business in the Philippines on forms prescribed by him the particulars of reinsurance
treaties or any new treaties or changes in existing treaties "Section 229. Every insurance company doing business in of its annual financial statement showing fully the conditions
within three (3) months from their effectivity. the Philippines shall terminate its fiscal period on the thirty- of its business, and setting forth its resources and liabilities
first day of December every year, and shall annually on or in accordance with such form prescribed by the
"Section 227. No credit shall be allowed as an admitted asset before the thirtieth day of April of each year render to the Commissioner.
or as a deduction from liability, to any ceding insurer for Commissioner a statement signed and sworn to by the chief
reinsurance made, ceded, renewed, or otherwise becoming officer of such company showing, in such form and details "The Commissioner shall have the authority to make,
effective after January 1, 1975, unless the reinsurance shall as may be prescribed by the Commissioner, the exact amend, and rescind such accounting rules and regulations
be payable by the assuming insurer on the basis of the condition of its affairs on the preceding thirty-first day of as may be necessary to carry out the provisions of this Code,
liability of the ceding insurer under the contract or contracts December. and define accounting, technical and trade terms used in this
reinsured without diminution because of the insolvency of Code: Provided, That such shall be in accordance with
the ceding insurer nor unless under the contract or contracts "The annual statement shall be prepared in accordance with internationally accepted accounting standards. Among other
of reinsurance the liability for such reinsurance is assumed the financial reporting framework as determined by the things, the Commissioner may prescribe the form or forms in
by the assuming insurer or insurers as of the same effective Commissioner. In addition, the Commissioner may require which required information shall be set forth, the items or
date; nor unless the reinsurance agreement provides that other relevant information. The form and details of such details to be shown in the balance sheet and income
payments by the assuming insurer shall be made directly to other relevant information shall be prescribed by the statement, and the methods to be followed in the preparation
the ceding insurer or to its liquidator, receiver, or statutory Commissioner and shall form part of the supplementary of accounts, appraisal or valuation of assets and liabilities,
successor except: schedules to the annual statement. determination of recurring and nonrecurring income,
differentiation of investment and operating income, and in
"(a) Where the contract specifically provides another "Any entry in the statement which is found to be false shall the preparation, where the Commissioner deems it
payee of such reinsurance in the event of the constitute a misdemeanor and the officer signing such necessary or desirable, of consolidated balance sheets or
insolvency of the ceding insurer; and statement shall be subject to the penalty provided for under income accounts of any person directly or indirectly
Section 442. controlling or controlled by the insurance company.
"(b) Where the assuming insurer with the consent of
the direct insured or insureds has assumed such "Section 230. Every insurance company authorized under "TITLE 9
policy obligations of the ceding insurer as direct Title 10 of this chapter to issue, deliver or use variable "POLICY FORMS
obligations of the assuming insurer to the payees contracts shall annually file with the Commissioner separate
under such policies and in substitution for the annual statement of its separate variable accounts. Such "Section 232. No policy, certificate or contract of insurance
obligations of the ceding insurer to such payees. statement shall be on a form prescribed or approved by the shall be issued or delivered within the Philippines unless in
Commissioner and shall include details as to all of the the form previously approved by the Commissioner, and no
"Section 228. No life insurance company doing business in income, disbursements, assets and liability items of and application form shall be used with, and no rider, clause,
the Philippines shall reinsure its whole risk on any individual associated with the said separate variable accounts. Said warranty or endorsement shall be attached to, printed or
life or joint lives, or substantially all of its insurance in force, statement shall be under oath of two (2) officers of the stamped upon such policy, certificate or contract unless the
without having first obtained the written permission of the company and shall be filed simultaneously with the annual form of such application, rider, clause, warranty or
Commissioner. statement required by the preceding section. endorsement has been approved by the Commissioner.

"TITLE "Section 231. Within thirty (30) days after receipt of the "Section 233. In the case of individual life or endowment
"ANNUAL STATEMENT annual statement approved by the Commissioner, every insurance, the policy shall contain in substance the following
insurance company doing business in the Philippines shall conditions:
publish in a newspaper of general circulation, a full synopsis
"(a) A provision that the policyholder is entitled to a "(e) If the policy is participating, a provision that the company will deduct from such loan value any
grace period either of thirty (30) days or of one (1) company shall periodically ascertain and apportion existing indebtedness on the policy and any unpaid
month within which the payment of any premium any divisible surplus accruing on the policy under balance of the premium for the current policy year,
after the first may be made, subject at the option of conditions specified therein; and may collect interest in advance on the loan to
the insurer to an interest charge not in excess of six the end of the current policy year, which provision
percent (6%) per annum for the number of days of "(f) A provision specifying the options to which the may further provide that such loan may be deferred
grace elapsing before the payment of the premium, policyholder is entitled to in the event of default in a for not exceeding six (6) months after the application
during which period of grace the policy shall premium payment after three (3) full annual therefor is made;
continue in full force, but in case the policy becomes premiums shall have been paid. Such option shall
a claim during the said period of grace before the consist of: "(h) A table showing in figures cash surrender values
overdue premium is paid, the amount of such and paid-up options available under the policy each
premium with interest may be deducted from the "(1) A cash surrender value payable upon year upon default in premium payments, during at
amount payable under the policy in settlement; surrender of the policy which shall not be least twenty (20) years of the policy beginning with
less than the reserve on the policy, the basis the year in which the values and options first
"(b) A provision that the policy shall be incontestable of which shall be indicated, for the then become available, together with a provision that in
after it shall have been in force during the lifetime of current policy year and any dividend the event of the failure of the policyholder to elect
the insured for a period of two (2) years from its date additions thereto, reduced by a surrender one of the said options within the time specified in
of issue as shown in the policy, or date of approval charge which shall not be more than one- the policy, one of said options shall automatically
of last reinstatement, except for nonpayment of fifth (1/5) of the entire reserve or two and take effect and no policyholder shall ever forfeit his
premium and except for violation of the conditions of one-half percent (2½%) of the amount right to same by reason of his failure to so elect;
the policy relating to military or naval service in time insured and any dividend additions thereto;
of war; and "(i) In case the proceeds of a policy are payable in
installments or as an annuity, a table showing the
"(c) A provision that the policy shall constitute the "(2) One or more paid-up benefits on a plan minimum amounts of the installments or annuity
entire contract between the parties, but if the or plans specified in the policy of such value payments;
company desires to make the application a part of as may be purchased by the cash surrender
the contract it may do so provided a copy of such value. "(j) A provision that the policyholder shall be entitled
application shall be indorsed upon or attached to the to have the policy reinstated at any time within three
policy when issued, and in such case the policy shall (3) years from the date of default of premium
"(g) A provision that at any time after a cash
contain a provision that the policy and the surrender value is available under the policy and payment unless the cash surrender value has been
application therefor shall constitute the entire duly paid, or the extension period has expired, upon
while the policy is in force, the company will
contract between the parties; production of evidence of insurability satisfactory to
advance, on proper assignment or pledge of the
policy and on sole security thereof, a sum equal to, the company and upon payment of all overdue
"(d) A provision that if the age of the insured is or at the option of the owner of the policy, less than premiums and any indebtedness to the company
considered in determining the premium and the the cash surrender value on the policy, at a specified upon said policy, with interest rate not exceeding
benefits accruing under the policy, and the age of rate of interest, not more than the maximum allowed that which would have been applicable to said
the insured has been misstated, the amount payable by law, to be determined by the company from time premiums and indebtedness in the policy years prior
under the policy shall be such as the premium would to time, but not more often than once a year, subject to reinstatement.
have purchased at the correct age; to the approval of the Commissioner; and that the
"Any of the foregoing provisions or portions thereof not the contest for a period of two (2) years during such expenses incident to the last illness or, death of the
applicable to single premium or term policies shall to that person’s lifetime nor unless contained in a written person insured;
extent not be incorporated therein; and any such policy may instrument signed by him;
be issued and delivered in the Philippines which in the "(g) A provision that the insurer will issue to the
opinion of the Commissioner contains provisions on any one "(c) A provision that a copy of the application, if any, policyholder for delivery to each person insured a
or more of the foregoing requirements more favorable to the of the policyholder shall be attached to the policy statement as to the insurance protection to which he
policyholder than hereinbefore required. when issued, that all statements made by the is entitled, to whom the insurance benefits are
policyholder or by persons insured shall be deemed payable, and the rights set forth in paragraphs (h),
"This section shall not apply to policies of group life or representations and not warranties, and that no (i) and (j) following;
industrial life insurance. statement made by any insured shall be used in any
contest unless a copy of the instrument containing "(h) A provision that if the insurance, or any portion
"Section 234. No policy of group life insurance shall be the statement is or has been furnished to such of it, on a person covered under the policy ceases
issued and delivered in the Philippines unless it contains in person or to his beneficiary; because of termination of employment or of
substance the following provisions, or provisions which in the membership in the class or classes eligible for
opinion of the Commissioner are more favorable to the "(d) A provision setting forth the conditions, if any, coverage under the policy, such person shall be
persons insured, or at least as favorable to the persons under which the insurer reserves the right to require entitled to have issued to him by the insurer, without
insured and more favorable to the policyholders: a person eligible for insurance to furnish evidence of evidence of insurability, an individual policy of life
individual insurability satisfactory to the insurer as a insurance without disability or other supplementary
"(a) A provision that the policyholder is entitled to a condition to part or all of his coverage; benefits, provided application for the individual
grace period of either thirty (30) days or of one (1) policy and payment of the first premium to the
month for the payment of any premium due after the "(e) A provision specifying an equitable adjustment insurer shall be made within thirty (30) days after
first, during which grace period the death benefit of premiums or of benefits or of both to be made in such termination, and provided further that:
coverage shall continue in force, unless the the event that the age of a person insured has been
policyholder shall have given the insurer written misstated, such provision to contain a clear "(1) The individual policy shall be on any
notice of discontinuance in advance of the date of statement of the method of adjustment to be used; one of the forms, except term insurance,
discontinuance and in accordance with the terms of then customarily issued by the insurer at the
the policy. The policy may provide that the "(f) A provision that any sum becoming due by age and for an amount not in excess of the
policyholder shall be liable for the payment of a pro reason of death of the person insured shall be coverage under the group policy; and
rata premium for the time the policy is in force during payable to the beneficiary designated by the
such grace period; insured, subject to the provisions of the policy in the "(2) The premium on the individual policy
event that there is no designated beneficiary, as to shall be at the insurer’s then customary rate
"(b) A provision that the validity of the policy shall not all or any part of such sum, living at the death of the applicable to the form and amount of the
be contested, except for nonpayment of premiums insured, and subject to any right reserved by the individual policy, to the class of risk to which
after it has been in force for two (2) years from its insurer in the policy and set forth in the certificate to such person then belongs, and to his age
date of issue; and that no statement made by any pay at its option a part of such sum not exceeding attained on the effective date of the
insured under the policy relating to his insurability Five hundred pesos (P500.00) to any person individual policy.
shall be used in contesting the validity of the appearing to the insurer to be equitably entitled
insurance with respect to which such statement was thereto by reason of having incurred funeral or other "(i) A provision that if the group policy terminates or
made after such insurance has been in force prior to is amended so as to terminate the insurance of any
 class of insured persons, every person insured policies to contain the same non-forfeiture provisions as are years from its date of issue, except for nonpayment
thereunder at the date of such termination whose required of individual life policies. of premiums and except for violation of the
insurance terminates and who has been so insured conditions of the policy relating to naval or military
for five (5) years prior to such termination date shall "Section 235. The term industrial life insurance as used in service, or services auxiliary thereto, and except as
be entitled to have issued to him by the insurer an this Code shall mean that form of life insurance under which to provisions relating to benefits in the event of
individual policy of life insurance subject to the same the premiums are payable either monthly or oftener, if the disability as defined in the policy, and those granting
limitations as set forth in paragraph (h), except that face amount of insurance provided in any policy is not more additional insurance specifically against death by
the group policy may provide that the amount of than five hundred times that of the current statutory minimum accident or by accidental means, or to additional
such individual policy shall not exceed the amount daily wage in the City of Manila, and if the words industrial insurance against loss of, or loss of use of, specific
of the person’s life insurance protection ceasing; policy are printed upon the policy as part of the descriptive members of the body;
matter.
"(j) A provision that if a person insured under the "(c) A provision that the policy shall constitute the
group policy dies during the thirty (30)-day period "An industrial life policy shall not lapse for nonpayment of entire contract between the parties, or if a copy of
within which he would have been entitled to an premium if such nonpayment was due to the failure of the the application is endorsed upon and attached to the
individual policy issued to him in accordance with company to send its representative or agent to the insured policy when issued, a provision that the policy and
paragraphs (h) and (i) above and before such at the residence of the insured or at some other place the application therefor shall constitute the entire
individual policy shall have become effective, the indicated by him for the purpose of collecting such contract between the parties, and in the latter case,
amount of life insurance which he would have been premium: Provided, That the provisions of this paragraph a provision that all statements made by the insured
entitled to have issued to him as an individual policy shall not apply when the premium on the policy remains shall, in the absence of fraud, be deemed
shall be payable as a claim under the group policy unpaid for a period of three (3) months or twelve (12) weeks representations and not warranties;
whether or not application for the individual policy or after the grace period has expired.
the payment of the first premium has been made; "(d) A provision that if the age of the person insured,
"Section 236. In the case of industrial life insurance, the or the age of any person, considered in determining
"(k) In the case of a policy issued to a creditor to policy shall contain in substance the following provisions: the premium, or the benefits accruing under the
insure debtors of such creditor, a provision that the policy, has been misstated, any amount payable or
insurer will furnish to the policyholder for delivery to "(a) A provision that the insured is entitled to a grace benefit accruing under the policy shall be such as
each debtor insured under the policy a form which period of four (4) weeks within which the payment of the premium paid would have purchased at the
will contain a statement that the life of the debtor is any premium after the first may be made, except that correct age;
insured under the policy and that any death benefit
where premiums are payable monthly, the period of
paid thereunder by reason of his death shall be grace shall be either one (1) month or thirty (30) "(e) A provision that if the policy is a participating
applied to reduce or extinguish indebtedness. policy, the company shall periodically ascertain and
days; and that during the period of grace, the policy
shall continue in full force, but if during such grace apportion any divisible surplus accruing on the
"The provisions of paragraphs (f) to (j) shall not apply to period the policy becomes a claim, then any overdue policy under the conditions specified therein;
policies issued to a creditor to insure his debtors. If a group and unpaid premiums may be deducted from any
life policy is on a plan of insurance other than term, it shall amount payable under the policy in settlement; "(f) A provision that in the event of default in premium
contain a non-forfeiture provision or provisions which in the payments after three (3) full years’ premiums have
opinion of the Commissioner is or are equitable to the been paid, the policy shall be converted into a
"(b) A provision that the policy shall be incontestable
insured or the policyholder: Provided, That nothing herein after it has been in force during the lifetime of the stipulated form of insurance, and that in the event of
contained shall be so construed as to require group life default in premium payments after five (5) full years’
insured for a specified period, not more than two (2)
premiums have been paid, a specified cash "(i) A provision that specifies which one of the policy with due proof of death within the period
surrender value shall be available, in lieu of the stipulated forms of insurance provided for under the stated in the policy, which shall not be less than thirty
stipulated form of insurance, at the option of the provision of paragraph (f) of this section shall take (30) days after the death of the insured, or if the
policyholder. The net value of such stipulated form effect in the event of the insured’s failure, within sixty beneficiary is the estate of the insured, or is a minor,
of insurance and the amount of such cash value (60) days from the due date of the premium in or dies before the insured, or is not legally
shall not be less than the reserve on the policy and default, to notify the insurer in writing as to which one competent to give valid release, then the insurer
dividend additions thereto, if any, at the end of the of such forms he has selected; may make any payment thereunder to the executor
last completed policy year for which premiums shall or administrator of the insured, or to any of the
have been paid (the policy to specify the mortality "(j) A provision that the policy may be reinstated at insured’s relatives by blood or legal adoption or
table, rate of interest and method of valuation any time within two (2) years from the due date of connections by marriage or to any person appearing
adopted to compute such reserve), exclusive of any the premium in default unless the cash surrender to the insurer to be equitably entitled thereto by
reserve on disability benefits and accidental death value has been paid or the period of extended term reason of having incurred expense for the
benefits, less an amount not to exceed two and one- insurance expired, upon production of evidence of maintenance, medical attention or burial of the
half percent (2½%) of the maximum amount insured insurability satisfactory to the company and payment insured; and
by the policy and dividend additions thereto, if any, of arrears of premiums with interest at a rate not
when the issue age is under ten (10) years, and less exceeding six percent (6%) per annum payable "(n) A provision that when an industrial life insurance
an amount not to exceed two and one-half percent annually; policy is issued providing for accidental or health
(2½%) of the current amount insured by the policy benefits, or both, in addition to life insurance, the
and dividend additions thereto, if any, if the issue "(k) A provision that when a policy shall become a foregoing provisions shall apply only to the life
age is ten (10) years or older, and less any existing insurance portion of the policy.
claim by death of the insured, settlement shall be
indebtedness to the company on or secured by the
made upon receipt of due proof of death, or not later
policy;
than two (2) months after receipt of such proof; "Any of the foregoing provisions or portions thereof not
applicable to nonparticipating or term policies shall to that
"(g) A provision that the policy may be surrendered extent not be incorporated therein. The foregoing provisions
"(l) A title on the face and on the back of the policy
to the company at its home office within a period of shall not apply to policies issued or granted pursuant to the
correctly describing its form;
not less than sixty (60) days after the due date of a nonforfeiture provisions prescribed in provisions of
premium in default for the specified cash paragraphs (f) and (i) of this section, nor shall provisions of
value: Provided, That the insurer may defer "(m) A space on the front or the back of the policy
for the name of the beneficiary designated by the paragraphs (f), (g), (h), and (i) hereof be required in term
payment for not more than six (6) months after the insurance of twenty (20) years or less but such term policies
application therefor is made; insured with a reservation of the insured’s right to
designate or change the beneficiary after the shall specify the mortality table, rate of interest, and method
of computing reserves.
issuance of the policy. The policy may also provide
"(h) A table that shows in figures the nonforfeiture
that no designation or change of beneficiary shall be
benefits available under the policy every year upon binding on the insurer until endorsed on the policy "Section 237. No policy of industrial life insurance shall be
default in payment of premiums during at least the issued or delivered in the Philippines if it contains any of the
by the insurer, and that the insurer may refuse to
first twenty (20) years of the policy, such table to following provisions:
endorse the name of any proposed beneficiary who
begin with the year in which such values become does not appear to the insurer to have an insurable
available, and a provision that the company will interest in the life of the insured. Such policy may "(a) A provision that gives the insurer the right to
furnish upon request an extension of such table also contain a provision that if the beneficiary declare the policy void because the insured has had
beyond the year shown in the policy; designated in the policy does not surrender the any disease or ailment, whether specified or not, or
because the insured has received institutional, "Nothing contained in this section nor in the provision of "(b) The term variable contract shall mean any policy or
hospital, medical or surgical treatment or attention, paragraph (b) of the preceding section, relating to contract on either a group or on an individual basis issued by
except a provision which gives the insurer the right incontestability, shall be construed as prohibiting the life an insurance company providing for benefits or other
to declare the policy void if the insured has, within insurance company from placing in its industrial life policies contractual payments or values thereunder to vary so as to
two (2) years prior to the issuance of the policy, provisions limiting its liability with respect to: reflect investment results of any segregated portfolio of
received institutional, hospital, medical or surgical investments or of a designated separate account in which
treatment or attention and if the insured or the "(1) Death resulting from aviation other than as a amounts received in connection with such contracts shall
claimant under the policy fails to show that the fare-paying passenger on a regularly scheduled have been placed and accounted for separately and apart
condition occasioning such treatment or attention route between definitely established airports; and from other investments and accounts. This contract may also
was not of a serious nature or was not material to provide benefits or values incidental thereto payable in fixed
the risk; or variable amounts, or both. It shall not be deemed to be a
"(2) Military or naval service: Provided, That if the
liability of the company is limited as herein provided, security or securities as defined in The Securities Act, as
"(b) A provision that gives the insurer the right to such liability shall in no event be fixed at an amount amended, or in the Investment Company Act, as amended,
declare the policy void because the insured has nor subject to regulations under said Acts.
less than the reserve on the policy (excluding the
been rejected for insurance, unless such right be reserve for any additional benefits in the event of
conditioned upon a showing by the insurer that death by accident or accidental means or for "(c) In determining the qualifications of a company
knowledge of such rejection would have led to a benefits in the event of any type of disability), less requesting authority to issue, deliver, sell or use variable
refusal by the insurer to make such contract; any indebtedness on or secured by such policy; nor contracts, the Commissioner shall always consider the
shall any provision of this section apply to any following:
"(c) A provision that allows the company to pay the provision in an industrial life insurance policy for
proceeds of the policy at the death of the insured to additional benefits in the event of death by accident "(1) The history, financial and general condition of
any person other than the named beneficiary, or accidental means. the company: Provided, That such company, if a
except in accordance with a standard provision as foreign company, must have deposited with the
specified under the provisions of paragraph (m) of "TITLE 10 Commissioner for the benefit and security of its
the preceding section; "VARIABLE CONTRACTS variable contract owners in the Philippines,
securities satisfactory to the Commissioner
"(d) A provision that limits the time within which any "Section 238. (a) No insurance company authorized to consisting of bonds of the Government of the
action at law or in equity may be commenced to less transact business in the Philippines shall issue, deliver, sell Philippines or its instrumentalities with an actual
than six (6) years after the cause of action shall market value of Two million pesos (P2,000,000.00);
or use any variable contract in the Philippines, unless and
accrue; and until such company shall have satisfied the Commissioner
that its financial and general condition and its methods of "(2) The character, responsibility and fitness of the
"(e) A provision that specifies any mode of operations, including the issue and sale of variable officers and directors of the company; and
settlement at maturity of less value than the amount contracts, are not and will not be hazardous to the public or
insured by the policy plus dividend additions, if any, to its policy and contract owners. No foreign insurance "(3) The law and regulation under which the
less any indebtedness to the company on the policy company shall be authorized to issue, deliver or sell any company is authorized in the state of domicile to
and less any premium that may by the terms of the variable contract in the Philippines, unless it is likewise issue such contracts.
policy be deducted, payments to be made in authorized to do so by the laws of its domicile.
accordance with the terms of the policy. "(d) If after notice and hearing, the Commissioner shall find
that the company is qualified to issue, deliver, sell or use
variable contracts in accordance with this Code and the required by the terms thereof, to be allocated or applied to "Section 244. Any insurance company which has
regulations and rules issued thereunder, the corresponding one or more designated separate variable accounts shall be established one or more separate variable accounts
order of authorization shall be issued. Any decision or order placed in such designated account or accounts. The assets pursuant to the preceding section may invest and reinvest all
denying authority to issue, deliver, sell or use variable and liabilities of each such separate variable account shall or any part of the assets allocated to any such account in the
contracts shall clearly and distinctly state the reasons and at all times be clearly identifiable and distinguishable from securities and investments authorized by Sections 204, 206,
grounds on which it is based. the assets and liabilities in all other accounts of the company. 207 and 208 for any of the funds of an insurance company
Notwithstanding any provision of law to the contrary, the in such amount or amounts as may be approved by the
"Section 239. Any insurance company issuing variable assets held in any such separate variable account shall not Commissioner. In addition thereto, such company may also
contracts pursuant to this Code may in its discretion issue be chargeable with liabilities arising out of any other invest in common stocks or other equities which are listed on
contracts providing a combination of fixed amount and business the company may conduct but shall be held and or admitted to trading in a securities exchange located in the
variable amount of benefits and for option lump-sum applied exclusively for the benefit of the owners or Philippines, or which are publicly held and traded in the over-
payment of benefits. beneficiaries of the variable contracts applicable thereto. In the-counter market as defined by the Commissioner and as
the event of the insolvency of the company, the assets of to which market quotations have been available: Provided,
each such separate variable account shall be applied to the however, That no such company shall invest in excess of ten
"Section 240. Every variable contract form delivered or
issued for delivery in the Philippines, and every certified form contractual claims of the owners or beneficiaries of the percent (10%) of the assets of any such separate variable
evidencing variable benefits issued pursuant to any such variable contracts applicable thereto. Except as otherwise accounts in any one corporation issuing such common stock.
contract on a group basis, and the application, rider and specifically provided by the contract, no sale, exchange or The assets and investments of such separate variable
endorsement forms applicable thereto and used in other transfer of assets may be made by a company, accounts shall not be taken into account in applying the
connection therewith, shall be subject to the prior approval between any of its separate accounts or between any other quantitative investment limitations applicable to other
investment account and one or more of its separate investments of the company. In the purchase of common
of the Commissioner.
accounts, unless in the case of a transfer into a separate capital stock or other equities, the insurer shall designate to
account, such transfer is made solely to establish the the broker, or to the seller if the purchase is not made
"Section 241. Illustration of benefits payable under any account or to support the operation of the contracts with through a broker, the specific variable account for which the
variable contract shall not include or involve projections of respect to the separate account to which the transfer is investment is made.
past investment experience into the future and shall conform made, or in case of a transfer from a separate account, such
with the rules and regulations promulgated by the transfer would not cause the remaining assets of the account "Section 245. Assets allocated to any separate variable
Commissioner. to become less than the reserves and other contract account shall be valued at their market value on the date of
liabilities with respect to such separate account. Such any valuation, or if there is no readily available market value
"Section 242. Variable contracts may be issued on the transfer, whether into or from a separate account, shall be then in accordance with the terms of the variable contract
industrial life basis, provided that the pertinent provisions of made by a transfer of cash, or by a transfer of securities applicable to such assets, or if there are no such contract
this Code and of the rules and regulations of the having a valuation which could be readily determined in the terms then in such manner as may be prescribed by the rules
Commissioner governing variable contracts are complied market place: Provided, That such transfer of securities is and regulations of the Commissioner.
with in connection with such contracts. approved by the Commissioner. The Commissioner may
authorize other transfers among such accounts, if, in his
"Section 246. The reserve liability for variable contracts shall
"Section 243. Every life insurance company authorized opinion, such transfers would not be inequitable. All amounts be established in accordance with actuarial procedures that
under the provisions of this Code to issue, deliver, sell or use and assets allocated to any such separate variable account
recognize the variable nature of the benefits provided, and
variable contracts shall, in connection with the same, shall be owned by the company and with respect to the same
shall be approved by the Commissioner.
establish one or more separate accounts to be known as the company shall not be nor hold itself out to be a trustee.
separate variable accounts. All amounts received by the
"TITLE 11
company in connection with any such contracts which are
"CLAIMS SETTLEMENT
"Section 247. (a) No insurance company doing business in administrative or judicial proceeding brought under this receipt. Refusal or failure to pay the loss or damage within
the Philippines shall refuse, without just cause, to pay or section. the time prescribed herein will entitle the assured to collect
settle claims arising under coverages provided by its interest on the proceeds of the policy for the duration of the
policies, nor shall any such company engage in unfair claim "(c) If it is found, after notice and an opportunity to be heard, delay at the rate of twice the ceiling prescribed by the
settlement practices. Any of the following acts by an that an insurance company has violated this section, each Monetary Board, unless such failure or refusal to pay is
insurance company, if committed without just cause and instance of noncompliance with paragraph (a) may be based on the ground that the claim is fraudulent.
performed with such frequency as to indicate a general treated as a separate violation of this section and shall be
business practice, shall constitute unfair claim settlement considered sufficient cause for the suspension or revocation "Section 250. In case of any litigation for the enforcement of
practices: of the company’s certificate of authority. any policy or contract of insurance, it shall be the duty of the
Commissioner or the Court, as the case may be, to make a
"(1) Knowingly misrepresenting to claimants "Section 248. The proceeds of a life insurance policy shall finding as to whether the payment of the claim of the insured
pertinent facts or policy provisions relating to be paid immediately upon maturity of the policy, unless such has been unreasonably denied or withheld; and in the
coverage at issue; proceeds are made payable in installments or as an annuity, affirmative case, the insurance company shall be adjudged
in which case the installments, or annuities shall be paid as to pay damages which shall consist of attorney’s fees and
"(2) Failing to acknowledge with reasonable they become due: Provided, however, That in the case of a other expenses incurred by the insured person by reason of
promptness pertinent communications with respect policy maturing by the death of the insured, the proceeds such unreasonable denial or withholding of payment plus
to claims arising under its policies; thereof shall be paid within sixty (60) days after presentation interest of twice the ceiling prescribed by the Monetary
of the claim and filing of the proof of death of the insured. Board of the amount of the claim due the insured, from the
Refusal or failure to pay the claim within the time prescribed date following the time prescribed in Section 248 or in
"(3) Failing to adopt and implement reasonable
herein will entitle the beneficiary to collect interest on the Section 249, as the case may be, until the claim is fully
standards for the prompt investigation of claims
proceeds of the policy for the duration of the delay at the rate satisfied: Provided, That failure to pay any such claim within
arising under its policies;
of twice the ceiling prescribed by the Monetary Board, unless the time prescribed in said sections shall be
such failure or refusal to pay is based on the ground that the considered prima facie evidence of unreasonable delay in
"(4) Not attempting in good faith to effectuate payment.
claim is fraudulent.
prompt, fair and equitable settlement of claims
submitted in which liability has become reasonably
clear; or "The proceeds of the policy maturing by the death of the "Section 251. It is unlawful to:
insured payable to the beneficiary shall include the
discounted value of all premiums paid in advance of their due "(a) Present or cause to be presented any fraudulent
"(5) Compelling policyholders to institute suits to
dates, but are not due and payable at maturity. claim for the payment of a loss under a contract of
recover amounts due under its policies by offering
without justifiable reason substantially less than the insurance; and
amounts ultimately recovered in suits brought by "Section 249. The amount of any loss or damage for which
them. an insurer may be liable, under any policy other than life "(b) Fraudulently prepare, make or subscribe any
insurance policy, shall be paid within thirty (30) days after writing with intent to present or use the same, or to
"(b) Evidence as to numbers and types of valid and justifiable proof of loss is received by the insurer and ascertainment of allow it to be presented in support of any such claim.
complaints to the Commissioner against an insurance the loss or damage is made either by agreement between Any person who violates this section shall be
company, and the Commissioner’s complaint experience the insured and the insurer or by arbitration; but if such punished by a fine not exceeding twice the amount
with other insurance companies writing similar lines of ascertainment is not had or made within sixty (60) days after claimed or imprisonment of two (2) years, or both, at
insurance shall be admissible in evidence in an such receipt by the insurer of the proof of loss, then the loss the discretion of the court.
or damage shall be paid within ninety (90) days after such
"TITLE 12 "Section 254. If the Commissioner is of the opinion upon actions of the previous management and board of directors
"EXAMINATION OF COMPANIES examination of other evidence that any domestic or foreign of the said company, any provision of law, or of the articles
insurance company is in an unsound condition, or that it has of incorporation or bylaws of the company, to the contrary
"Section 252. The Commissioner shall require every failed to comply with the provisions of law or regulations notwithstanding, and such other powers as the
insurance company doing business in the Philippines to obligatory upon it, or that its condition or method of business Commissioner shall deem necessary.
keep its books, records, accounts and vouchers in such is such as to render its proceedings hazardous to the public
manner that he or his authorized representatives may readily or to its policyholders, or that its net worth requirement, in "The conservator may be another insurance company doing
verify its annual statements and ascertain whether the the case of a domestic stock company, or its available cash business in the Philippines, any officer or officers of such
company is solvent and has complied with the provisions of assets, in the case of a domestic mutual company, or its company, or any other competent and qualified person, firm
this Code or the circulars, instructions, rulings or decisions security deposits, in the case of a foreign company, is or corporation. The remuneration of the conservator and
of the Commissioner. impaired or deficient, or that the margin of solvency required other expenses attendant to the conservation shall be borne
of such company is deficient, the Commissioner is by the insurance company concerned.
"Section 253. The Commissioner shall at least once a year authorized to suspend or revoke all certificates of authority
granted to such insurance company, its officers and agents,
and whenever he considers the public interest so demands, "The conservator shall not be subject to any action, claim or
cause an examination to be made into the affairs, financial and no new business shall thereafter be done by such demand by, or liability to, any person in respect of anything
condition and method of business of every insurance company or for such company by its agent in the Philippines done or omitted to be done in good faith in the exercise, or
company authorized to transact business in the Philippines while such suspension, revocation or disability continues or in connection with the exercise, of the powers conferred on
and of any other person, firm or corporation managing the until its authority to do business is restored by the the conservator.
affairs and/or property of such insurance company. Such Commissioner. Before restoring such authority, the
Commissioner shall require the company concerned to
company, as well as such managing person, firm or "The conservator appointed shall report and be responsible
submit to him a business plan showing the company’s
corporation, shall submit to the examiner all such books, to the Commissioner until such time as the Commissioner is
estimated receipts and disbursements, as well as the basis
papers and securities as he may require and such examiner satisfied that the insurance company can continue to operate
shall also have the power to examine the officers of such therefor, for the next succeeding three (3) years.
on its own and the conservatorship shall likewise be
company under oath touching its business and financial terminated should the Commissioner, on the basis of the
condition, and the authority to transact business in the "TITLE 14
report of the conservator or of his own findings, determine
Philippines of any such company shall be suspended by the "APPOINTMENT OF CONSERVATOR
that the continuance in business of the insurance company
Commissioner if such examination is refused and such would be hazardous to policyholders and creditors, in which
company shall not thereafter be allowed to transact further "Section 255. If at any time before, or after, the suspension case the provisions of Title 15 shall apply.
business in the Philippines until it has fully complied with the or revocation of the certificate of authority of an insurance
provisions of this section. company as provided in the preceding title, the "No insurance company, life or non-life, or any professional
Commissioner finds that such company is in a state of
reinsurer, ordered to be liquidated by the Commissioner
"Government-owned or -controlled corporations or entities continuing inability or unwillingness to maintain a condition
under the provisions hereunder may be rehabilitated or
engaged in social or private insurance shall similarly be of solvency or liquidity deemed adequate to protect the authorized to transact anew, insurance or reinsurance
subject to such examination by the Commissioner unless interest of policyholders and creditors, he may appoint a
business, as the case may be.
their respective charters otherwise provide. conservator to take charge of the assets, liabilities, and the
management of such company, collect all moneys and debts
due to said company and exercise all powers necessary to "TITLE 15
"TITLE 13 "PROCEEDINGS UPON INSOLVENCY
"SUSPENSION OR REVOCATION OF AUTHORITY preserve the assets of said company, reorganize the
management thereof, and restore its viability. The said
conservator shall have the power to overrule or revoke the
"Section 256. Whenever, upon examination or other settling the liabilities or paying the debts of such company "As used in this title, the term Insolvency shall mean the
evidence, it shall be disclosed that the condition of any and he may, in the name of the company, institute such inability of an insurance company to pay its lawful obligations
insurance company doing business in the Philippines is one actions as may be necessary in the appropriate court to as they fall due in the usual and ordinary course of business
of insolvency, or that its continuance in business would be collect and recover accounts and assets of the insurance as may be shown by its failure to maintain the solvency
hazardous to its policyholders and creditors, the company, and to do such other acts as may be necessary to requirements under Section 200 of this Code.
Commissioner shall forthwith order the company to cease complete the liquidation as ordered by the Commissioner.
and desist from transacting business in the Philippines and "Section 257. The receiver or the liquidator, as the case may
shall designate a receiver to immediately take charge of its "The provisions of any law to the contrary notwithstanding, be, designated under the provisions of this title, shall not be
assets and liabilities, as expeditiously as possible collect and the actions of the Commissioner under this section shall be subject to any action, claim or demand by, or liability to, any
gather all the assets and administer the same for the benefit final and executory, and can be set aside by the court upon person in respect of anything done or omitted to be done in
of its policyholders and creditors, and exercise all the powers petition by the company and only if there is convincing proof good faith in the exercise, or in connection with the exercise,
necessary for these purposes including, but not limited to, that the action is plainly arbitrary and made in bad faith. The of the powers conferred on such receiver or liquidator.
bringing suits and foreclosing mortgages in the name of the Commissioner, through the Solicitor General, shall then file
insurance company. the corresponding answer reciting the proceeding taken and "TITLE 16
praying the assistance of the court in the liquidation of the "CONSOLIDATION AND MERGER OF
"The Commissioner shall thereupon determine within ninety company. No restraining order or injunction shall be issued INSURANCE COMPANIES
(90) days whether the insurance company may be by the court enjoining the Commissioner from implementing
reorganized or otherwise placed in such condition so that it his actions under this section, unless there is convincing "Section 258. Upon prior notice to the Commissioner, two (2)
may be permitted to resume business with safety to its proof that the action of the Commissioner is plainly arbitrary
or more domestic insurance companies, acting through their
policyholders and creditors and shall prescribe the and made in bad faith and the petitioner or plaintiff files with
respective boards of directors, may negotiate to merge into
conditions under which such resumption of business shall the Clerk or Judge of the Court in which the action is pending a single corporation which shall be one of the constituent
take place as well as the time for fulfillment of such a bond executed in favor of the Commissioner in an amount corporations, or consolidate into a single corporation which
conditions. In such case, the expenses and fees in the to be fixed by the court. The restraining order or injunction shall be a new corporation to be formed by the consolidation.
collection and administration of the insurance company shall shall be refused or, if granted, shall be dissolved upon filing
A common agreement of the proposed merger or
be determined by the Commissioner and shall be paid out of by the Commissioner, if he so desires, of a bond in an
consolidation shall be drawn up for submission to the
the assets of such company. amount twice the amount of the bond of the petitioner or
stockholders or members of the constituent companies for
plaintiff conditioned that it will pay the damages which the
adoption and approval in accordance with the provisions of
"If the Commissioner shall determine and confirm within the petition or plaintiff may suffer by the refusal or the dissolution the respective bylaws of the constituent companies and all
said period that the insurance company is insolvent, as of the injunction. The provisions of Rule 58 of the New Rules existing laws that may be pertinent.
defined hereunder, or cannot resume business with safety to of Court insofar as they are applicable shall govern the
its policyholders and creditors, he shall, if the public interest issuance and dissolution of the restraining order or injunction
contemplated in this section. "Section 259. Such agreement shall include, aside from the
requires, order its liquidation, indicate the manner of its
proposed merger or consolidation, provisions relative to the
liquidation and approve a liquidation plan and implement it manner of transfer of assets to and assumption of liabilities
immediately. The Commissioner shall designate a "All proceedings under this title shall be given preference in
by the absorbing or acquiring company from the absorbed or
competent and qualified person as liquidator who shall take the courts. The Commissioner shall not be required to pay
dissolved company or companies; the proposed articles of
over the functions of the receiver previously designated and, any fee to any public officer for filing, recording, or in any merger or consolidation and bylaws of the surviving or
with all convenient speed, reinsure all its outstanding manner authenticating any paper or instrument relating to acquiring company; the corporate name to be adopted which
policies, convert the assets of the insurance company to the proceedings. should not be that of any other existing company transacting
cash, or sell, assign or otherwise dispose of the same to the similar business or one so similar as to be calculated to
policyholders, creditors and other parties for the purpose of
mislead the public; the rights of the stockholders or members "(b) As to each corporation, the number of shares consolidation, except those conferred by the certificate of
of the absorbed or dissolved companies; date of effectivity outstanding, or in case of mutual corporations, the merger or of consolidation and the articles of merger or of
of the merger or consolidation; and such particulars as may number of members; and consolidation, or the amended articles of incorporation, as
be necessary to explain and make manifest the objects and registered with the Securities and Exchange Commission.
purposes of the absorbing or acquiring company. "(c) As to each corporation, the number of shares or
members voted for and against such plan, "Section 266. No director, officer, or stockholder of any such
"Section 260. Upon execution of such agreement to merge respectively. Thereafter, a certified copy of such constituent companies shall receive any fee, commission,
or consolidate by and between or among the boards of articles of merger or consolidation, together with a compensation, or other valuable consideration whatsoever,
directors of the constituent companies, notice thereof shall certificate of approval or adoption by the directly or indirectly, or in any manner aiding, promoting or
be mailed immediately to their policyholders and creditors. stockholders or members of such articles of merger assisting in such merger or consolidation.
The company or companies to be absorbed or dissolved or consolidation, verified by affidavits of such
shall discharge all its accrued liabilities; otherwise, such officers and under the seal of the constituent "Section 267. The merger or consolidation of companies
liabilities shall, with the consent of its creditors, be companies, shall be submitted to the Commissioner, under this Code shall be subject to the provisions of the
transferred to and assumed by the absorbing or acquiring together with such other papers or documents which Corporation Code, and, in those cases specified in Republic
company, or such liabilities be reinsured by the latter. In the the Commissioner may require, for his Act No. 5455, as amended, be further subject to the
case of such policies as are subject to cancellation by the consideration. provisions of said law.
company or companies to be absorbed or dissolved, same
may be cancelled pursuant to the terms thereof in lieu of "Section 263. The articles of merger or of consolidation, "TITLE 17
such transfer, assumption, or reinsurance. signed and verified as hereinabove required, shall be filed "MUTUALIZATION OF STOCK LIFE
with the Securities and Exchange Commission for its INSURANCE COMPANIES
"Section 261. Upon approval or adoption in the meetings of examination and approval.
the stockholders or members called for the purpose in each "Section 268. Any domestic stock life insurance company
of the constituent companies of the agreement to merge or "Section 264. Upon receipt from the Securities and doing business in the Philippines may convert itself into an
consolidate, all stockholders or members dissenting or Exchange Commission of the certificate of merger or of incorporated mutual life insurer. To that end it may provide
objecting to the merger or consolidation shall be paid the consolidation, the constituent companies shall surrender to and carry out a plan for the acquisition of the outstanding
value of their shares by the company concerned in the Commissioner their respective certificates of authority to shares of its capital stock for the benefit of its policyholders,
accordance with the bylaws thereof. transact insurance business. The absorbing or surviving or any class or classes of its policyholders, by complying with
company in case of merger, or the newly formed company in the requirements of this chapter.
"Section 262. Upon approval or adoption of the agreement case of consolidation, shall immediately file with the
to merge or consolidate by the stockholders or members of Commissioner the corresponding application for issuance of "Section 269. Such plan shall include appropriate
the constituent companies, the corresponding articles of a new certificate of authority to transact insurance business, proceedings for amending the insurer’s articles of
merger or of consolidation shall be duly executed by the together with a certified copy of the certificate of merger or incorporation to give effect to the acquisition, by said insurer,
presidents and attested by the corporate secretaries and of consolidation, and of the certificate of increase of stocks,
for the benefit of its policyholders or any class or classes
shall bear the corporate seals of the merging or if there is any, issued by the Securities and Exchange
thereof, of the outstanding shares of its capital stock and the
consolidating companies setting forth: Commission. conversion of the insurer from a stock corporation into a
nonstock corporation for the benefit of its members. The
"(a) The plan of merger or the plan of consolidation; "Section 265. Nothing in this title shall be construed to members of such nonstock corporation shall be the
enlarge the powers of the absorbing or surviving company in policyholders from time to time of the class or classes for
case of merger, or the newly formed company in case of whose benefit the stock of the insurer was acquired, and the
policyholders of such other class or classes as may be assignment shall have been filed at the principal "Voting shall be by one of the following methods:
specified in such corporation’s articles of incorporation as office of the insurer at least thirty (30) days prior to
they may be amended from time to time. Such plan shall be: the date of any election or meeting referred to in this "(a) At a meeting of such policyholders, held
chapter, then such assignee shall be deemed at pursuant to such notice, by ballot in person or by
"(a) Adopted by a vote of a majority of the directors; such election or meeting to be the policyholder. For proxy.
the purpose of this chapter the
"(b) Approved by the vote of the holders of at least a terms policyholder and policyholders include the "(b) If not by the method described in the preceding
employer to whom, or a president, secretary or other
majority of the outstanding shares at a special subparagraph, then by mail pursuant to a procedure
meeting of shareholders called for that purpose, or executive officer of any corporation or association to and on forms to be prescribed by such plan.
by the written consent of such shareholders; which a master group policy has been issued, but
exclude the holders of certificates or policies issued
under or in connection with a master group policy. "Such election shall be conducted under the direction and
"(c) Submitted to the Commissioner and approved Beneficiaries under unmatured contracts shall not supervision of three (3) impartial and disinterested
by him in writing; as such be deemed to be policyholders; and inspectors appointed by the insurer and approved by the
Commissioner. In case any person appointed as inspector
"(d) Approved by a majority vote of all the fails to appear at such meeting or fails or refuses to act at
"(e) Filed with the Commissioner after having been
policyholders of the class or classes for whose such election, the vacancy, if occurring in advance of the
approved as provided in this section. convening of the meeting or in advance of the opening of the
benefit the stock is to be acquired voting at an
election by the policyholders called for that purpose, mail vote, may be filled in the manner prescribed for the
"Section 270. The Commissioner shall examine the plan appointment of inspectors and, if occurring at the meeting or
subject to the provisions of Section 271. The
submitted to him under the provisions of subparagraph (c) of during the canvass of the mail vote, may be filled by the
terms policyholder or policyholders as used in this
chapter shall be deemed to mean the person or Section 269. He shall not approve such plan unless in his person acting as chairman of said meeting or designated for
persons insured under an individual policy of life opinion the rights and interests of the insurer, its that purpose in such plan. The decision, act or certificate of
insurance, or of health and accident insurance, or of policyholders and shareholders are protected nor unless he a majority of the inspectors shall be effective in all respects
is satisfied that the plan will be fair and equitable in its as the decision, act or certificate of all. The inspectors of
any combination of life, health and accident
insurance. They shall also include the person or operation. election shall determine the number of policyholders, the
persons to whom any annuity or pure endowment is voting power of each, the policyholders represented at the
presently or prospectively payable by the terms of "Section 271. The election prescribed by subparagraph (d) meeting or voting by mail, the existence of a quorum and the
an individual annuity or pure endowment contract, of Section 269 shall be called by the board of directors or the authenticity, validity and effect of proxies. They shall receive
except where the policy or contract declares some president, and every policyholder of the class or classes for votes, hear and determine all challenges and questions in
other person to be the owner or holder thereof, in whose benefit the stock is to be acquired, whose insurance any way arising in connection with the right to vote, count
which case such other person shall be deemed shall have been in force for at least one (1) year prior to such and tabulate all votes, determine the result, and do such
policyholder. In any case where a policy or contract election shall have one vote, regardless of the number of other acts as are proper to conduct the vote with fairness to
names two or more persons as joint insured, policies or amount of insurance he holds, and regardless of all policyholders. The inspectors of election shall, before
payees, owners or holders thereof, the persons so whether such policies are policies of life insurance or policies commencing performance of their duties, subscribe to and
named shall be deemed collectively to be one (1) of health and accident insurance or annuity contracts. Notice file with the insurer and with the Commissioner an oath that
policyholder for the purpose of this chapter. In any of such election shall be given to policyholders entitled to they, and each of them, will perform their duties impartially,
case where a policy or contract shall have been vote by mail from the principal office of such insurer at least in good faith, to the best of their ability and as expeditiously
assigned by assignment absolute on its face to an thirty (30) days prior to the date set for such election, in a as is practicable. On the request of the insurer, the
assignee other than the insurer, and such sealed envelope, postage prepaid, addressed to each such Commissioner, a policyholder or his proxy, the inspectors
policyholder at his last known address. shall make a report in writing of any challenge or question or
matter determined by them and execute a certificate of any basis subject to all provisions of law applicable to of this section shall terminate in any event upon termination
fact found by them. They shall also certify the result of such incorporated life insurers issuing non-assessable policies on of the trust provided for in Section 272. Upon the termination
vote to the insurer and to the Commissioner. Any report or a reserve basis. Policies so issued may be upon the basis of of the trust created pursuant to the provisions of this section,
certificate made by them shall be prima facie evidence of full or partial participation therein as agreed between the any shares held in such trust shall revert to the persons
facts stated therein. All necessary expenses incurred in insurer and the insured. entitled thereto by law.
connection with such election shall be paid by the insurer.
For the purpose of this section, a quorum shall consist of five "Upon the termination of any such voting trust, either in "Section 274. Every payment for the acquisition of any
percent (5%) of the policyholders of such insurer entitled to accordance with its terms or as hereinabove provided, such shares of the capital stock of such insurer, the purchase
vote at such election. plan of mutualization shall terminate, unless theretofore price of which is not fixed by such plan, shall be subject to
completed. Upon such termination, unless the plan of the prior approval of the Commissioner. Neither such plan,
"Section 272. In carrying out any such plan, the insurer may mutualization provides for the disposition of the shares nor any such payment, may be approved by the
acquire any shares of its own stock by gift, bequest or acquired by the insurer under such plan or for the disposition Commissioner unless he finds that the rights and interests of
purchase. Any shares so acquired shall, unless as a result of the proceeds thereof, the shares held by such trustees the insurer, its policyholders, and shareholders are
of such acquisition all of the shares of the insurer shall have shall be disposed of in accordance with an order of the court protected.
been acquired, be acquired in trust for the policyholders of of competent jurisdiction in the judicial district in which is
the class or classes for whose benefit the plan provides that located the principal office of such insurer, made upon a "Section 275. The trustees referred to in Section 272 shall
the stock of the insurer shall be acquired as hereinafter verified petition of the Commissioner. file with such insurer and with the Commissioner a verified
provided. Such shares shall be assigned and transferred on acceptance of their appointments and verified declarations
the books of such insurer and approved by the "Section 273. Any such plan of mutualization may provide for that they will faithfully discharge their duties as such
Commissioner. Such trustees shall hold such stock in trust the creation of a voting trust under a trust agreement for the trustees. All dividends and other sums received by said
until all of the outstanding shares of capital stock of such holding and voting by three (3) or more trustees of any trustees on the shares held by them, after paying the
insurer have been acquired, but for not longer than thirty (30) portion or all of the shares of the insurer not required upon necessary expenses of executing their trust, shall be
years with such extensions of not more than five (5) years the adoption of such plan. The voting trustees shall be immediately repaid to such insurer for the benefit of all who
each as may be granted by the Commissioner. Such named in accordance with such plan or, if no provision is are, or may become, policyholders of such insurance of the
extensions may be granted by the Commissioner if the plan made therein for the naming of such trustees, then by the class or classes for whose benefit the stock of such insurer
so provides and if in his opinion the plan of acquisition of all insurer. The voting trust agreement and voting trustees shall was acquired and entitled to participate in the profits thereof
of such stock can be completed within a reasonable period. be subject to the approval of the Commissioner. Any or all of and shall be added to and become part of the assets of such
Such trustees shall vote such stock at all corporate meetings the trustees under such voting trust agreement may be the insurer.
at which stockholders have the right to vote. When all the same person or persons as any or all of the trustees referred
outstanding shares of capital stock of such insurer have to in Section 272. Such voting trust agreement shall provide "Section 276. If, at any time within the period provided in the
been acquired, all said shares shall be cancelled, the that in the event of acquisition by the insurer of any of the plan for the acquisition of the outstanding shares of stock of
certificate of amendment of the insurer’s articles of shares of stock held thereunder in accordance with the the insurer, ninety percent (90%) thereof has already been
incorporation giving effect thereto shall be filed in provisions of the plan, such shares so acquired together with acquired and transferred to the trustees under the plan, the
accordance with the provisions of the Corporation Code, and the voting rights thereof shall be transferred by the trustees insurer by a vote of a majority of the directors may determine
the insurer shall become a nonstock corporation for the profit named under the provisions of this section to the trustees to make an offer, with the permission of the Commissioner
of its members and such trust shall thereupon terminate. named under the provisions of Section 272. Any voting trust and subject to such requirement as he may specify, to
Thereafter such corporation shall be conducted for the agreement created pursuant to the provisions of this section acquire by purchase all of the shares not theretofore
mutual benefit, ratably, of its policyholders of the class or may be made irrevocable for not longer than thirty (30) years acquired under the plan, at a specified price which the
classes for whose benefit the stock was acquired and shall and thereafter until the termination of the trust provided for insurer considers to be their fair value as of the date of
have power to issue non-assessable policies on a reserve in Section 272. The trust created pursuant to the provisions making such offer.
"If the offer to acquire is permitted by the Commissioner, the manner, as aforesaid, the fair value of such shares, he may or all shares have otherwise been earlier acquired by the
insurer shall make a written offer by registered mail to each also determine the terms of payment thereof by the insurer. insurer.
shareholder whose shares have not theretofore been The expenses incidental to the proceedings including
acquired under the plan or otherwise, offering to acquire all charges of the appraisers, if any, shall be paid equally by the "Any shareholder who has expressly or impliedly accepted
his shares at such price if accepted in writing within thirty insurer and the shareholder. the plan or the offer to acquire his shares not theretofore
(30) days after the mailing of such offer. Any shareholder acquired under the plan, and any shareholder who has
accepting such offer within the time therefor shall, within "The findings of the Secretary of Finance on all questions of rejected such plan or such offer and has applied, as
sixty (60) days after his acceptance, transfer to the insurer fact raised at the hearing of the application for determination aforesaid, to the Secretary of Finance for a determination of
the certificates representing such shares and, upon doing of the fair value of such shares shall be conclusive upon all the fair value of his shares subsequent to which an
so, shall be paid by the insurer the amount of such offer for parties to the proceedings. The order of the Secretary of agreement has been reached or a final order issued fixing
his shares. Any share so acquired shall be assigned and Finance determining the fair value of the shares and the such fair value but who fails to surrender his certificates for
transferred to the trustees under the plan and held by them terms of payment thereof shall have the force and effect of a cancellation upon payment of the amount to which he is
as shares acquired pursuant to the plan. judgment which shall be appealable on any question of law. entitled, may be compelled to do so by an order of the
Such order shall become final and executory fifteen (15) Secretary of Finance for that purpose and such order may
"Each shareholder who does not accept such offer to acquire days after receipt thereof by the parties to the proceedings. provide that upon failure of such shareholder to surrender
his shares within the time stated in such offer for acceptance such certificates for cancellation, such order shall stand in
thereof shall within fifteen (15) days after the expiration of "Upon any such order becoming final and from which no lieu of such surrender and cancellation.
such offer apply to the Secretary of Finance for a appeal is pending, or when the time to appeal therefrom has
determination of the fair value of his shares as of the date of expired, each shareholder party to the proceedings shall "Section 277. Such insurer, after mutualization, shall be a
making such offer. The Secretary of Finance may himself, transfer his shares to the insurer and surrender to the said continuation of the original insurer, and such mutualization
after due notice and hearing, determine upon the evidence insurer the certificates representing such shares and the shall not affect such insurer’s certificate of authority nor
received the fair value of the shares as of the date of making insurer shall make payment therefor as provided in such existing suits, rights or contracts except as provided in said
such offer, or appoint three (3) impartial and disinterested order. Any shares so acquired by the insurer shall be plan for the acquisition of the outstanding shares of the
persons to appraise the fair value of such shares with such assigned and transferred to the trustees and held by them capital stock of such insurer, approved as provided in this
direction as he shall deem proper and necessary to expedite as shares acquired pursuant to the plan. chapter. Such insurer, after mutualization, shall exercise all
the proceedings. Upon completion of the appraisal the rights and powers and shall perform all the duties
proceedings, the appraisers shall file with the Secretary of conferred or imposed by law upon insurers writing the
"Any shareholder who does not apply to the Secretary of
Finance their report in writing stating the fair value of such Finance in the manner and within the time hereinbefore classes of insurance written by it, and to protect rights and
shares as of the date of the making of such offer and setting prescribed shall be deemed to have accepted the offer contracts existing prior to mutualization, subject to the effect
forth their findings in support of such statement. The of said plan. The board of directors of such insurer, prior to
referred to above, effective, however, upon the expiration of
appraisers shall furnish each party to the proceedings a copy mutualization, may adopt amendments to its bylaws to take
the time hereinabove prescribed for making such
of their appraisal report, and within ten (10) days after receipt application, and such shareholder’s time for accepting such effect upon mutualization.
thereof, any such party may signify his objection, if any, to offer shall, for that purpose only, be deemed to have been
the report or move for the approval thereof. Upon the extended accordingly. "Section 278. (a) An annual meeting of members shall be
expiration of the period of ten (10) days referred to above,
held at ten o’clock in the morning of the fourth Tuesday of
the report shall be set for hearing, after which the Secretary
"Any offer to acquire shares made pursuant to this section March of each year at the principal office of the insurer,
of Finance shall issue an order adopting, modifying or unless a different time or place is provided in the bylaws.
rejecting the report, in whole or in part, or he may receive shall, except as otherwise provided herein, be irrevocable
further evidence or may recommit it with instructions. until all proceedings upon such offer have been completed
Whenever the Secretary of Finance shall determine in any
"(b) Special meetings of the members, for any purpose or the place in which the principal office of such insurer is less than a quorum, and each director so elected shall hold
purposes whatsoever, may be called at any time by the located, and if so published no other notice of such meeting office until the next annual meeting.
president, or by the board of directors, or by one or more shall be required.
members holding not less than one-fifth (1/5) of the voting "(h) All insurers mutualized under the provisions of this
power of such insurer, or by such other officers or persons "(d) The presence in person or by proxy of five percent (5%) chapter shall be subject to all other applicable provisions of
as the bylaws authorize. of the members entitled to vote at any meeting shall this Code. The provisions of the Corporation Code shall
constitute a quorum for the transaction of business, including apply in a suppletory manner.
(c) Notice of all meetings of members whether annual or the amendment of the articles of incorporation and/or the
special shall be given in writing to the members entitled to bylaws unless otherwise provided by the bylaws. "Section 279. The provisions of Commonwealth Act No. 83,
vote by the secretary, or an assistant secretary, or other otherwise known as the Securities Act, as amended, shall
person charged with that duty, or if there be no such officer, "(e) Each such member shall have one (1) vote at any not apply to any of the following:
or in case of his neglect or refusal, by any director or meeting of members regardless of the number of policies or
member. At the option of the insurer such notice may be the amount of insurance that such member holds and "(a) Shares of the capital stock of such insurer
imprinted on premium notices or receipts or on both. regardless of whether such policies are policies of life acquired as provided in Section 272 and assigned
insurance, or of health and accident insurance, or both. Any and transferred to the trustees as is provided in said
"A notice may be given by such insurer to any member either member entitled to vote shall have the right to do so either in section, and the assignment and transfer of said
personally, or by mail, or other means of written person or by an agent or agents authorized by a written shares as so provided;
communication, charges prepaid, addressed to such proxy executed by such person or his duly authorized agent
member at his address appearing on the books of the and filed with the secretary of such insurer.
"(b) Any certificate or other instrument issued to a
insurer, or given by him to the insurer for the purpose of
policyholder of such mutualized insurer conferring or
notice. If a member gives no address, notice shall be "(f) The directors of the insurer in office at the time the insurer evidencing membership in such mutualized insurer
deemed to have been given him if sent by mail or other is mutualized as provided in this chapter shall continue in or conferring or evidencing such member’s right to
means of written communication addressed to the place office until the first annual meeting of members. At the first participate in the profits or share in the assets of
where the principal office of the insurer is situated, or if annual meeting of members and at each annual meeting such mutualized insurer by virtue of his membership
published at least once in some newspaper of general thereafter, directors shall be elected by the members for the therein, and the issuance of such certificate or other
circulation in the place in which said office is located. term or terms authorized by this chapter. instrument;

"Notice of any meeting of members shall be sent to each "(g) The articles of incorporation or the bylaws may provide "(c) The plan for the acquisition of the outstanding
member entitled thereto not less than seven (7) days before that the directors may be divided into two (2) or more classes shares of the capital stock of such insurer authorized
such meeting, unless the bylaws provide otherwise. whose terms of office shall expire at different times, but no by the provisions of this chapter, the submission of
terms shall continue longer than six (6) years. In the absence said plan to the Commissioner and to the
"Notice of any meeting of members shall specify the place, of such provisions, each director, except members of the policyholders of such insurer as provided in this
the day and the hour of the meeting and the general nature board of directors at the time the insurer is mutualized, shall chapter, and the approval and carrying out of said
of the business to be transacted. be elected for a term of one (1) year. All directors shall hold plan or any part thereof in accordance with the
office for a term for which they are elected and until their provisions of this chapter.
"Notice of an annual meeting to be held at the time and place successors are elected and qualified. A director may, but
specified in subparagraph (a) of this section shall be need not be a member or policyholder of the insurer of which "Section 280. A domestic mutual life insurance company
sufficiently given if published at least once in each of four (4) he is acting as director. Vacancies in the board of directors doing business in the Philippines may convert itself into an
successive weeks in a newspaper of general circulation in may be filled by a majority of the remaining directors, though incorporated stock life insurance company by
demutualization. To that end, it may provide and carry out a discharge its liabilities to policyholders and creditors in this "Section 287. No company shall act as a servicing insurance
plan for the conversion by complying with the requirements country. In case of its policies insuring residents of the company until after it shall have obtained a special certificate
of this title. Philippines, it shall cause the primary liabilities under such of authority to act as such from the Commissioner upon
policies to be reinsured and assumed by another insurance application therefor and payment by the company of the fees
"The conversion of a domestic mutual life insurance company authorized to transact business in the Philippines. hereinafter prescribed. Such certificate shall expire on the
company to an incorporated stock life insurance company In the case of such policies as are subject to cancellation by last day of December of the third year and shall be renewed,
shall be carried out pursuant to a conversion plan duly the withdrawing company, it may cancel such policies while the company continues to service its policyholders,
approved by the Commissioner. pursuant to the terms thereof in lieu of such reinsurance and and to comply with all the applicable provisions of law and
assumption of liabilities. regulations.
"The Commissioner shall promulgate such rules and
regulations as he or she may deem necessary to carry out "Section 284. The Commissioner shall cause an examination "TITLE 19
the provisions of this title, after due consultation with of the books and records of the withdrawing company, and "PROFESSIONAL REINSURERS
representatives of the insurance industry. if, upon such examination, the Commissioner finds that the
insurer has no outstanding liabilities to policyholders and "Section 288. Except as otherwise provided in this Code, no
"All converted insurers under the provisions of this title shall creditors in the Philippines, and no policies uncancelled; or partnership, association or corporation shall transact any
its primary liabilities have been reinsured or assumed by business in the Philippines as a professional reinsurer until
be subject to all other applicable provisions of this Code. The
provisions of the Corporation Code shall apply in a another insurance company authorized to transact business it shall have obtained a certificate of authority for that
suppletory manner. in the Philippines, as required in the preceding section, it purpose from the Commissioner upon application therefor
shall cancel the withdrawing company’s certificate of and payment by such entity of the fees hereinafter
authority, if unexpired, and shall permit the insurer to prescribed. As used in this Code, the term ‘professional
"TITLE 18 withdraw. The cost and expenses of all such examination
"WITHDRAWAL OF FOREIGN reinsurer’ shall mean any entity that transacts solely and
shall be paid as prescribed in Section 440. exclusively reinsurance business in the Philippines.
INSURANCE COMPANIES
"Section 285. Upon the failure of such withdrawing insurance "The Commissioner may refuse to issue a certificate of
"Section 281. A foreign insurance company doing business company or its agents in the Philippines to pay the expenses authority to any such entity when such refusal will best
in the Philippines, upon payment of the fee hereinafter of such publication within thirty (30) days after the
prescribed and surrender to the Commissioner of its promote public interest. No such certificate of authority shall
presentation of the bill therefor, the Commissioner shall be granted to any such entity unless and until the
certificate of authority, may apply to withdraw from the collect such fee from the deposit furnished in accordance Commissioner is satisfied by such examination and such
Philippines. Such application shall be duly executed in with the provisions of Section 197. evidence as may be required that such entity is qualified by
writing, accompanied by evidence of due authority for such
execution, properly acknowledged. the laws of the Philippines to transact business therein as a
"Section 286. A foreign life insurance company that professional reinsurer.
withdraws from the Philippines shall be considered a
"Section 282. The Commissioner shall publish the servicing insurance company if its business transactions are "Before issuing such certificate of authority, the
application for withdrawal once a week for three (3) confined to accepting periodic premium payments from, or
consecutive weeks in a newspaper of general circulation in Commissioner must be satisfied that the name of the
granting policy loans and paying cash surrender values of applicant is not that of any other known company transacting
the Philippines. The expenses of such publication shall be outstanding policies to, or reviving lapsed policies of,
paid by the insurance company filing such application. insurance or reinsurance business in the Philippines, or a
Philippine policyholders, and such other related services. name so similar as to be calculated to mislead the public.
"Section 283. Every foreign insurance company desiring to
withdraw from the Philippines shall, prior to such withdrawal,
"Such certificate of authority shall expire on the last day of "Section 290. As used in this title, the following terms shall "Section 291. Notwithstanding paragraph (b) of Section 290,
December the third year following its issuance unless it is have the respective meanings hereinafter set forth unless the Commissioner may determine after notice and
renewed. the context shall otherwise require: opportunity to be heard, that a person exercises directly or
indirectly either alone or pursuant to an agreement with one
"Every such partnership, association, or corporation "(a) Person means an individual, partnership, firm, or more other persons such a controlling influence over the
receiving such certificate of authority shall be subject to the association, corporation, trust, any similar entity or management or policies of an authorized insurer as to make
provisions of this Code and other related laws, and to the any combination of the foregoing acting in concert. it necessary or appropriate in the public interest or for the
jurisdiction and supervision of the Commissioner. protection of policyholders or stockholders of the insurer that
"(b) Control, including the terms controlling, the person be deemed to control the insurer.
"Section 289. Any partnership, association, or corporation controlled by and under common control
authorized to transact solely reinsurance business must with, means the possession directly or indirectly of "Section 292. The Commissioner may determine upon
have a capitalization of at least Three billion pesos the power to direct or cause the direction of the application that any person, either alone or pursuant to
(P3,000,000,000.00) paid in cash of which at least fifty management and policies of a person, whether agreement with one or more other persons, does not or will
percent (50%) is paid-up and the remaining portion thereof through the ownership of voting securities by a not upon the taking of some proposed action control another
is contributed surplus, which in no case shall be less than contract other than a commercial contract for goods person. The filing of an application hereunder in good faith
Four hundred million pesos (P400,000,000.00) or such or non-management services or otherwise. Subject by any person shall relieve the applicant from any obligation
capitalization as may be determined by the Secretary of to Section 292, control shall be presumed to exist if or liability imposed by this title with respect to the subject of
Finance, upon the recommendation of the any person directly or indirectly owns, controls or the application, except as contained in Section 302, until the
Commissioner: Provided, That twenty-five percent (25%) of holds with the power to vote forty percent (40%) or Commissioner has acted upon the application. Within thirty
the paid-up capital must be invested in securities satisfactory more of the voting securities of any other (30) days or such further period as he may prescribe, the
to the Commissioner consisting of bonds or other person: Provided, That no person shall be deemed Commissioner may prospectively revoke or modify his
instruments of debt of the Government of the Philippines or to control another person solely by reason of his determination, after notice and opportunity to be heard,
its political subdivisions or instrumentalities, or of being an officer or director of such other person. whenever in his judgment, revocation or modification is
government-owned or -controlled corporations and entities, consistent with this title.
including the Bangko Sentral ng Pilipinas, and deposited "(c) Holding company means any person who
with the Commissioner, and the remaining seventy-five directly or indirectly controls any authorized insurer. "Section 293. Notwithstanding any other provisions of this
percent (75%) in such other securities as may be allowed title, the following shall not be deemed holding companies:
and permitted by the Commissioner, which securities shall "(d) Controlled insurer means an authorized insurer
at all times be maintained free from any lien or "(a) Authorized insurers or reinsurers or their
controlled directly or indirectly by a holding
encumbrance: Provided, further, That the aforesaid capital company. subsidiaries; and
requirement is without prejudice to other requirements to be
imposed under any risk-based capital method that may be
"(e) Controlled person means any person, other "(b) The Government of the Philippines, or any
adopted by the Commissioner: Provided, finally, That the political subdivision, agency or instrumentality
provisions of this chapter applicable to insurance companies than a controlled insurer, who is controlled directly
or indirectly by a holding company. thereof, or any corporation which is wholly owned
shall as far as practicable be likewise applicable to
directly or indirectly by one or more of the foregoing.
professional reinsurers.
"(f) Holding company system means a holding
company together with its controlled insurers and "The Commissioner may conditionally or unconditionally
"TITLE 20 exempt any specified person or class of persons from any of
"HOLDING COMPANIES controlled persons.
the obligations or liabilities imposed under this title, if and to
the extent he finds the exemption necessary or appropriate affect the operations, management or financial condition of "The books, accounts and records of each party to all such
in the public interest or not adverse to the interests of any controlled insurer with the system and that he is unable transactions shall be maintained as to clearly and accurately
policyholders or stockholders and consistent with the to obtain relevant information from such controlled insurer. disclose the nature and details of the transactions including
purposes of this title. The grounds relied upon by the Commissioner for such such accounting information as is necessary to support the
examination shall be stated in his order, which order shall be reasonableness of the charges or fees to the respective
"Section 294. (a) Every person who on the date this Code subject to judicial review only at the instance of the person parties.
takes effect is a controlled insurer and every person who sought to be examined. Such examination shall be confined
thereafter becomes a controlled insurer, shall, within sixty to matters specified in the order. The cost of such "Section 299. The prior written approval of the Commissioner
(60) days thereafter, or within thirty (30) days after becoming examination shall be assessed against the person examined shall be required for the following transactions between a
a controlled insurer, whichever is later, register with the and no portion thereof shall thereafter be reimbursed to it controlled insurer and any person in its holding company
Commissioner. Such registration shall be amended within directly or indirectly by the controlled insurer. system: sales, purchases, exchanges, loans or extensions
thirty (30) days following any change in the identity of its of credit, or investments, involving five percent (5%) or more
holding company. The Commissioner may grant one or more "Section 297. The Commissioner shall keep the contents of of the insurer’s admitted assets as of the thirty-first day of
reasonable extensions of the time to register. each report made pursuant to this title and any information December next preceding.
obtained by him in connection therewith confidential and
"(b) Every registrant shall furnish the Commissioner with the shall not make the same public without the prior written "Section 300. The following transactions between a
following information concerning its holding company: consent of the controlled insurer to which it pertains unless controlled insurer and any person in its holding company
the Commissioner after notice and an opportunity to be system may not be entered into unless the insurer has
heard shall determine that the interests of policyholders, notified the Commissioner in writing of its intention to enter
"(1) A copy of its charter or articles of incorporation
stockholders or the public will be served by the publication into any such transaction at least thirty (30) days prior
and its bylaws;
thereof. In any action or proceeding by the Commissioner thereto, or such shorter period as he may permit, and he has
against the person examined or any other person within the not disapproved it within such period:
"(2) The identities of its principal shareholders, same holding company system a report of such examination
officers, directors and controlled persons; and published by him shall be admissible as evidence of the facts
"(a) Sales, purchases, exchanges, loans or
stated therein.
extensions of credit, or investments, involving more
"(3) Information as to its capital structure and
financial condition, and a description of its principal than one-half of one percent (½%) but less than five
"Section 298. Transactions within a holding company system percent (5%) of the insurer’s admitted assets as of
business activities. to which a controlled insurer is a party shall be subject to the the thirty-first day of December next preceding;
following:
"Section 295. Every controlled insurer shall file with the
"(b) Reinsurance treaties or agreements;
Commissioner such reports or material as he may direct for "(a) The terms shall be fair and equitable;
the purpose of disclosing information concerning the
operations of persons within the holding company system "(c) Rendering of services on a regular or systematic
"(b) Charges or fees for services performed shall be basis; or
which may materially affect the operations, management or
financial condition of the insurer. reasonable;
"(d) Any material transaction, specified by
"Section 296. Every holding company and every controlled "(c) Expenses incurred and payments received shall regulation, which the Commissioner determines
be allocated to the insurer on an equitable basis in may adversely affect the interest of the insurer’s
person within a holding company system shall be subject to
conformity with customary insurance accounting policyholders or stockholders or of the public.
examination by order of the Commissioner if he has cause
to believe that the operations of such persons may materially practices consistently applied.
"Nothing herein contained shall be deemed to authorize or "(3) A plan for the proper and effective conduct of person to comply with such order, Section 306 shall
permit any transaction which, in the case of a non-controlled the insurer’s operations; become applicable.
insurer, would be otherwise contrary to law.
"(4) The source of the funds or assets for the "(d) The Commissioner may require the submission of such
"Section 301. The Commissioner, in reviewing transactions acquisition; information as he deems necessary to determine whether
pursuant to Sections 299 and 300, shall consider whether any acquisition or retention of control complies with this title
the transactions comply with the standard set forth in Section "(5) The fairness of any exchange of stock, assets, and may require, as a condition of approval of such
298 and whether they may adversely affect the interests of cash or other consideration for the stock or assets to acquisition or retention of control, that all or any portion of
policyholders. This section shall not apply to transactions be received; such information be disclosed to the insurer’s stockholders.
subject to other sections of this Code which impose notice or
approval requirements greater than those prescribed by this "(6) Whether the effect of the acquisition may be "(e) Unless subject to registration under Section 294 or
title. substantially to lessen competition in any line of unless acquisition of its control is subject to paragraphs (a)
commerce in insurance or to tend to create a and (b) hereof, every authorized insurer shall notify the
"Section 302. (a) No person, other than an authorized monopoly therein; and Commissioner in writing of the identity of any person whom
insurer, shall acquire control of any domestic insurer, the insurer then knows or has reason to believe controls or
whether by purchase of its securities or otherwise, except: "(7) Whether the acquisition is likely to be hazardous has taken any action, other than preliminary negotiations or
discussion, to acquire control of the insurer.
or prejudicial to the insurer’s policyholders or
"(1) After twenty (20) days written notice to its stockholders.
insurer or such shorter period as the Commissioner "Section 303. (a) Notwithstanding the control of an
may permit, of its intention to acquire control; and "(c) The following conditions affecting any controlled insurer, authorized insurer by any person, the officers and directors
regardless of when such control has been acquired, are of the insurer shall not thereby be relieved of any obligation
"(2) With the prior written approval of the or liability to which they would otherwise be subject by law,
violations of this title:
Commissioner. and the insurer shall be managed so as to assure its
separate operating identity consistent with this title.
"(1) The controlling person or any of its officers or
"(b) The Commissioner shall disapprove the acquisition of directors have demonstrated untrustworthiness; and
control of a domestic insurer if he determines, after notice "(b) Nothing herein shall preclude an authorized insurer from
and an opportunity to be heard, that such action is having or sharing a common management or cooperative or
"(2) The effect of retention of control may be joint use of personnel, property or services with one or more
reasonably necessary to protect the interest of the people of substantially to lessen competition in any line of
this country. The following shall be the only factors to be other persons under arrangements meeting the standards of
commerce in insurance in this country or to tend to Section 298.
considered by him in reaching the foregoing determination: create a monopoly therein. If, after notice and an
opportunity to be heard, the Commissioner
"(1) The financial condition of the acquiring person "Section 304. To the extent that any information or material
determines that any of the foregoing violations
and the insurer; exists, he shall reduce his findings to writing and is set forth in forms or other matter on file with any
government agency or in a registration form filed with the
shall issue an order based thereon and cause the
Commissioner by another person within the same holding
"(2) The trustworthiness of the acquiring person or same to be served upon the insurer and upon all
any of its officers or directors; persons affected thereby directing any person found company system, the controlled insurer may comply with the
registration or reporting requirements of this title by referring
to be in violation thereof to take appropriate action
in its registration form or report to such other filed matter and
to cure such violation. Upon the failure of any such
attaching a copy thereof certified by the insurer as a true and
complete copy, to such registration form or report or, if such "TITLE 1 "Section 308. The provisions of Sections 307 and 309 shall
other filed matter is on file with the Commissioner, "INSURANCE AGENTS AND INSURANCE BROKERS apply to an employee who shall be engaged to sell insurance
incorporating such matter by reference. products by an insurance company.
"Section 307. No insurance company doing business in the
"Section 305. No holding company or controlled person shall Philippines, nor any agent thereof, shall pay any commission "Section 309. Any person who for compensation solicits or
directly or indirectly or through another person do or cause or other compensation to any person for services in obtains insurance on behalf of any insurance company or
to be done for or in behalf of the controlled insurer any act obtaining insurance, unless such person shall have first transmits for a person other than himself an application for a
intended to affect the insurance operations of the insurer procured from the Commissioner a license to act as an policy or contract of insurance to or from such company or
which, if done by the insurer, would violate any provision of insurance agent of such company or as an insurance broker offers or assumes to act in the negotiating of such insurance
this Code. as hereinafter provided. shall be an insurance agent within the intent of this section
and shall thereby become liable to all the duties,
"Section 306. In addition to any other penalty provided by "No person shall act as an insurance agent or as an requirements, liabilities and penalties to which an insurance
law, the Commissioner may, upon the willful failure of any insurance broker in the solicitation or procurement of agent is subject.
person within a holding company system to comply with this applications for insurance, or receive for services in
title or any regulation or order promulgated hereunder: obtaining insurance, any commission or other compensation "An insurance agent is an independent contractor and not an
from any insurance company doing business in the employee of the company represented. ‘Insurance agent’
"(a) Proceed under Title 14 or Title 15, Chapter III of Philippines, or any agent thereof, without first procuring a includes an agency leader, agency manager, or their
this Code with respect to insurer within the holding license so to act from the Commissioner, which must be equivalent.
company system; or renewed every three (3) years thereafter. Such license shall
be issued by the Commissioner only upon the written "Since the insurance industry is imbued with public interest,
"(b) Revoke or refuse to renew the authority to do application of the person desiring it, such application if for a the insurance companies upon approval of the
business in this country of an insurer within the license to act as insurance agent, being approved or Commissioner may exercise wide latitude in supervising the
holding company system or refuse to issue such endorsed by the company such person desires to represent, activities of their insurance agents to ensure the protection
and shall be upon a form prescribed by the Commissioner of the insuring public.
authority to any other insurer in the system; or
giving such information as he may require, and upon
payment of the corresponding fee hereinafter prescribed. "Section 310. Any person who for any compensation,
"(c) Direct that, in addition to any other penalty The Commissioner shall satisfy himself as to the
provided by law, such person forfeit to the people of commission or other thing of value acts or aids in any
competence and trustworthiness of the applicant and shall manner in soliciting, negotiating or procuring the making of
this country a sum not less than Five thousand have the right to refuse to issue or renew and to suspend or
pesos (P5,000.00) for a first violation and Twenty- any insurance contract or in placing risk or taking out
revoke any such license in his discretion. The license shall insurance, on behalf of an insured other than himself, shall
five thousand pesos (P25,000.00) for any expire after the thirty-first day of December of the third year
subsequent violation. An additional sum not less be an insurance broker within the intent of this Code, and
following the date of issuance unless it is renewed.
than Twenty-five thousand pesos (P25,000.00) shall shall thereby become liable to all the duties, requirements,
be imposed for each month during which any such liabilities and penalties to which an insurance broker is
"Licenses may be renewed in the case of the company subject.
violation shall continue.
represented by such agents, and in the case of insurance
brokers, upon the application of the said brokers,
"CHAPTER IV "Section 311. Every applicant for an insurance broker’s
themselves.
"SALES AGENCIES AND TECHNICAL SERVICES license shall file with the application and shall thereafter
maintain in force while so licensed, a bond in favor of the
people of the Republic of the Philippines executed by a
company authorized to become surety upon official authorize the administration of the examination to an agent or insurance broker in such manner as to
recognizances, stipulations, bonds and undertakings. The independent organization, subject to such conditions that the safeguard the public; or
bond shall be in such amount as may be fixed by the Commissioner may provide.
Commissioner, but in no case less than Five hundred "(g) Has materially misrepresented the terms and
thousand pesos (P500,000.00), and shall be conditioned "Section 313. An applicant for the written examination conditions of policies or contracts of insurance which
upon full accounting and due payment to the person entitled mentioned in the preceding section must be of good moral he seeks to sell or has sold; or
thereto of funds coming into the broker’s possession through character and must not have been convicted of any crime
insurance transactions under license. The bond shall remain involving moral turpitude. He must satisfactorily show to the "(h) Has failed to pass the written examination
in force until released by the Commissioner, or until Commissioner that he has been trained in the kind of prescribed, if not otherwise exempt from taking the
cancelled by the surety. Without prejudice to any liability insurance contemplated in the license applied for. Such same.
previously incurred thereunder, the surety may cancel the examination may be waived if it is shown to the satisfaction
bond on thirty (30) days advance written notice to both the of the Commissioner that the applicant has undergone
broker and the Commissioner. "In addition to the foregoing causes, no license to act as
extensive education and/or training in insurance.
insurance agent or insurance broker shall be renewed if the
holder thereof has not been actively engaged as such agent
"Upon approval of the application, the applicant must also "Section 314. An application for the issuance or renewal of a or broker in accordance with such rules as the
file two (2) errors and omissions (professional liability or license to act as an insurance agent or insurance broker may Commissioner may prescribe.
professional indemnity) policies issued separately by two (2) be refused, or such license, if already issued or renewed,
insurance companies authorized to do business in the shall be suspended or revoked if the Commissioner finds
Philippines, satisfactory to the Commissioner to indemnify "Section 315. The premium, or any portion thereof, which an
that the applicant for, or holder of, such license:
the applicant against any claim or claims for breach of duty insurance agent or insurance broker collects from an insured
as insurance broker which may be made against him by and which is to be paid to an insurance company because of
"(a) Has willfully violated any provision of this Code; the assumption of liability through the issuance of policies or
reason of any negligent act, error or omission, whenever or or
wherever committed or alleged to have been committed, on contracts of insurance, shall be held by the agent or broker
the part of the applicant or any person who has been, is now, in a fiduciary capacity and shall not be misappropriated or
or may hereafter during the subsistence of the policies be "(b) Has intentionally made a material misstatement converted to his own use or illegally withheld by the agent or
employed by the said applicant in his capacity as insurance in the application to qualify for such license; or broker.
broker: Provided, That the filing of any claim or claims under
one of such policies shall preclude the filing of the said claim "(c) Has obtained or attempted to obtain a license by "Any insurance company which delivers to an insurance
or claims under the other policy. The said policies shall be in fraud or misrepresentation; or agent or insurance broker a policy or contract of insurance
such amounts as may be prescribed by the Commissioner, shall be deemed to have authorized such agent or broker to
depending upon the size or amount of the broking business "(d) Has been guilty of fraudulent or dishonest receive on its behalf payment of any premium which is due
of the applicant, but in no case shall the amount of each of practices; or on such policy or contract of insurance at the time of its
such policies be less than Five hundred thousand pesos issuance or delivery or which becomes due thereon.
(P500,000.00). "(e) Has misappropriated or converted to his own
use or illegally withheld moneys required to be held "In order to ensure faithful performance by the insurance
"Section 312. The Commissioner shall, in order to determine in a fiduciary capacity; or agent or insurance broker of these fiduciary responsibilities,
the competence of every applicant to have the kind of license the Insurance Commissioner shall prescribe the minimum
applied for, require such applicant to submit to a written "(f) Has not demonstrated trustworthiness and terms and conditions on such matters in the standard agency
examination and to pass the same to the satisfaction of the competence to transact business as an insurance or brokers agreement between the agents and/or the broker
Commissioner. The Commissioner may delegate or with the insurance companies.
"Section 316. Any provision of existing laws to the contrary Philippines, covering risks, life or non-life, situated in the committed, on the part of the applicant or any person who
notwithstanding, no person shall, within the Philippines, sell Philippines; and any such person, partnership, association has been, is now, or may hereafter during the subsistence of
or offer for sale a variable contract or do or perform any act or corporation violating the provisions of this section shall be the policies be employed by the said applicant in his capacity
or thing in the sale, negotiation, making or consummating of deemed guilty of a penal offense, and upon conviction as reinsurance broker: Provided, That the filing of any claim
any variable contract other than for himself unless such thereof, shall for each such offense be punished by a fine of or claims under one of such policies shall preclude the filing
person shall have a valid and current license from the Two hundred fifty thousand pesos (P250,000.00), or of the said claim or claims under the other policy. The said
Commissioner authorizing such person to act as a variable imprisonment of six (6) months, or both, at the discretion of policies shall be issued separately by two (2) insurance
contract agent. No such license shall be issued unless and the court: Provided, That the provisions of this section shall companies authorized to do business in the Philippines and
until the Commissioner is satisfied, after examination that not apply to reinsurance. shall be in such amounts as may be prescribed by the
such person is by training, knowledge, ability and character Insurance Commissioner, depending upon the size or
qualified to act as such agent. Any such license may be "TITLE 2 amount of the broking business of the applicant, but in no
withdrawn and cancelled by the Commissioner after notice "REINSURANCE BROKERS case shall the amount of each of such policies be less than
and hearing, if he shall find that the holder thereof does not Five hundred thousand pesos (P500,000.00).
then have the qualifications required for the issuance of such
"Section 319. Except as provided in the next succeeding title,
license. no person shall act as reinsurance broker in the Philippines "Section 321. The Commissioner may recall, suspend or
unless he is authorized as such by the Commissioner. revoke the license granted to a reinsurance broker for
"Section 317. It shall be unlawful for any person, company violation of any existing law, rule and regulation, or any
or corporation in the Philippines to act as general agent of "A reinsurance broker is one who, for compensation, not provision of this Code after due notice and hearing.
any insurance company unless he is empowered by a written
being a duly authorized agent, employee or officer of an
power of attorney duly executed by such insurance "TITLE 3
insurer in which any reinsurance is effected, acts or aids in
company, and registered with the Commissioner to receive any manner in negotiating contracts of reinsurance, or "RESIDENT AGENTS
notices, summons and legal processes for and in behalf of placing risks of effecting reinsurance, for any insurance
the insurance company concerned in connection with company authorized to do business in the Philippines. "Section 322. No person shall act as resident agent, as
actions or other legal proceedings against said insurance
hereinafter defined, unless he is registered as such with the
company. It shall be the duty of said general agent to notify
"Section 320. Upon application and payment of the Commissioner.
the Commissioner of his post office address in the
Philippines, or any change thereof. Notices, summons, or corresponding fee hereinafter prescribed, and the filing of
processes of any kind sent by registered mail to the last two (2) errors and omissions (professional liability or "Section 323. The term resident agent, as used in this title,
registered address of such general agent of the company professional indemnity) policies hereinafter described, a is one duly appointed by a foreign insurer or broker not
concerned or to the Commissioner shall be sufficient service person may, if found qualified, be issued a license to act as authorized to do business in the Philippines to receive in its
and deemed as if served on the insurance company itself. reinsurance broker by the Commissioner. No such license behalf notices, summons and legal processes in connection
shall be valid after December 31 of the third year following with actions or other legal proceedings against such foreign
its issuance unless it is renewed. insurer or broker.
"Section 318. Except as otherwise provided by law or treaty,
it shall be unlawful for any person, partnership, association
or corporation in the Philippines, for himself or itself, or for "The errors and omissions (professional liability or "Section 324. The application for a certificate of registration
some other person, partnership, association or corporation, professional indemnity) policies mentioned above shall as resident agent filed with the Commissioner must be
either to procure, receive or forward applications of indemnify the applicant against any claim or claims for accompanied with a copy of the power of attorney, duly
insurance in, or to issue or to deliver or accept policies or breach of duty as reinsurance broker which may be made notarized and authenticated by the Philippine Consul in the
contracts of insurance of or for, any insurance company or against him by reason of any negligent act, error or omission, place where such foreign insurer or broker is domiciled,
companies not authorized to transact business in the whenever or wherever committed or alleged to have been empowering the applicant to act as resident agent and to
receive notices, summons and legal processes for and in and correctly recorded. Such registers shall be open to "In the event that the certificate of authority of a non-life
behalf of such foreign insurer or broker in connection with inspection and examination of duly authorized insurance company to transact business is suspended or
any action or legal proceeding against such foreign insurer representatives of the Commissioner at all times during revoked due to business failure arising largely from the
or broker. business hours. imprudent and injudicious acceptance of risks by the
underwriter concerned, the registration of such underwriter
"Section 325. It shall be the duty of such resident agent to "Section 329. No person shall be registered with the shall likewise be cancelled and his certificate of registration
notify immediately the Commissioner of any change of his Commissioner, unless such person shall be at least twenty- shall be recalled by the Commissioner, and no similar
office address. one (21) years of age on the date of such registration; a certificate shall thereafter be issued in his favor.
resident of the Philippines; of good moral character and with
"Section 326. A certificate of registration issued to a resident no conviction of any crime involving moral turpitude; has had "Section 331. No certificate of registration issued to an
agent shall expire on the thirty-first day of December of the at the time such registration is made at least two (2) years of underwriter shall be valid after December 31 of the third year
third year following its issuance unless it is renewed. underwriting work in the particular line of risk involved; and following its issuance unless it is renewed.
has passed such qualifying written examination that the
"The Commissioner may, after due notice and hearing, recall Commissioner shall conduct at such time and in such place "The Commissioner may, after due notice and hearing, also
or cancel the certificate of registration issued to a resident as he may decide to hold for applicants desiring to act as suspend or cancel such certificate for violation of existing
underwriters. laws, rules and regulations or of any provisions of this Code.
agent for violation of any existing law, rule or regulation, or
any provision of this Code.
"Such examination shall not be required of any person who "TITLE 5
has served as non-life company underwriter for a period of "ADJUSTERS
"TITLE 4
at least five (5) years, if the Commissioner is satisfied of the
"NON-LIFE COMPANY UNDERWRITER
applicant’s competence as shown by the results of his "Section 332. No person, partnership, association, or
underwriting work in the non-life insurance company or corporation shall act as an adjuster, as hereinafter defined,
"Section 327. No person shall act, and no company shall companies that employed him in that capacity. The minimum
employ any person, as non-life company underwriter, whose unless authorized so to act by virtue of a license issued or
underwriting experience herein required may be reduced or
duty and responsibility it shall be to select, evaluate and renewed by the Commissioner pursuant to the provisions of
waived if it is shown to the satisfaction of the Commissioner this Code: Provided, That in the case of a natural person, he
accept risks for, and to determine the terms and conditions, that the non-life company underwriter has undergone
including those pertaining to amounts of retentions, under must be a Filipino citizen and in the case of a partnership,
extensive education and/or training in insurance. association or corporation, at least sixty percent (60%) of its
which such risks are to be accepted by the company, unless
such underwriter is registered as such with the capital must be owned by citizens of the Philippines.
"Section 330. Any applicant who misrepresents or omits any
Commissioner.
material fact in his application for registration as a non-life "Section 333. An adjuster may be an independent adjuster
company underwriter, or commits any dishonest act in taking or a public adjuster.
"Section 328. Every non-life insurance company doing or in connection with the qualifying written examination for
business in the Philippines must maintain at all times a underwriters, shall be barred from being registered as such
register of risks accepted and a claims register for each line non-life company underwriter and, if already registered, his "The term independent adjuster means any person,
of risks engaged in by such non-life insurance company with registration shall be cancelled and the certificate of partnership, association or corporation which, for money,
such entries therein as are now or as may hereafter be registration issued in his favor shall be recalled immediately commission or any other thing of value, acts for or on behalf
required by the Commissioner, and it shall be the by the Commissioner. of an insurer in the adjusting of claims arising under
responsibility of the underwriter on the particular line of risk insurance contracts or policies issued by such insurer.
involved to see to it that the said registers are well
maintained and kept, and that all entries therein are properly
"The term public adjuster means any person, partnership, "Section 338. Nothing contained in this title shall apply to any "Section 340. Every adjuster shall submit to the
association or corporation which, for money, commission or duly licensed attorney-at-law who acts or aids in adjusting Commissioner a quarterly report of all losses which are the
any other thing of value, acts on behalf of an insured in insurance claims as an incident to the practice of his subject of adjustment effected by him during each month in
negotiating for, or effecting, the settlement of a claim or profession and who does not advertise himself as an the form prescribed by the Commissioner. The report shall
claims of the said insured arising under insurance contracts adjuster. be filed within one (1) month after the end of each quarter.
or policies, or which advertises for or solicits employment as
an adjuster of such claims. "Section 339. The Commissioner may suspend or revoke "Section 341. Every adjuster shall keep his or its books,
any adjuster’s license if, after giving notice and hearing to records, reports, accounts, and vouchers in such manner
"Section 334. For every line of insurance claim adjustment, the adjuster concerned, the Commissioner finds that the said that the Commissioner or his duly authorized representatives
adjusters shall be licensed either as independent adjusters adjuster: may readily verify the quarterly reports of the said adjuster
or as public adjusters. No adjuster shall act on behalf of an and ascertain whether the said adjuster has complied with
insurer unless said adjuster is licensed as an independent "(a) Has violated any provision of this Code and of the provisions of law or regulations obligatory upon him or
adjuster; and no adjuster shall act on behalf of an insured the circulars, rulings and instructions of the whether the method of doing business of the said adjuster
unless said adjuster is licensed as a public Commissioner or has violated any law in the course has been fair, just and honest.
adjuster: Provided, however, That when a firm or person has of his dealings as an adjuster; or
been licensed as a public adjuster, he shall not be granted "Section 342. The Commissioner shall, at least once a year
another license as independent adjuster and vice versa. "(b) Has made a material misstatement in the and whenever he considers the public interest so demands,
application for such license; or cause an examination to be made into the affairs and method
"No license, however, shall be required of any company of doing business of every adjuster.
adjuster who is a salaried employee of an insurance
"(c) Has been guilty of fraudulent or dishonest
company for the adjustment of claims filed under policies practices; or "Section 343. Any violation of any provision of this title shall
issued by such insurance company. be punished by a fine of not less than Ten thousand pesos
(P10,000.00), or by imprisonment at the discretion of the
"(d) Has demonstrated his incompetence or
"Section 335. Such license or any renewal thereof may be court: Provided, That, in case of a partnership, association
untrustworthiness to act as adjuster; or
issued by the Commissioner upon written application filed by or corporation, the said penalty shall be imposed upon the
the person interested on the form or forms prescribed by the partner, president, manager, managing director, director or
Commissioner, which shall contain such information as he "(e) Has made patently unjust valuation of loss; or person in charge of its business or responsible for the
may require, and upon payment of the corresponding fee violation.
hereinafter prescribed. "(f) Has failed to make a report of the adjustment he
proposed within sixty (60) days from the date of the "TITLE 6
"Section 336. The Commissioner shall conduct, at such filing of the claim by the insured with the insurer, "ACTUARIES
times, and in such places as he may decide to hold, written unless prevented so to do by reasons beyond his
examinations to determine the competence and ability of control; or
"Section 344. No life insurance company shall be licensed to
applicants desiring to act as adjuster of insurance claims. do business in the Philippines nor shall any life insurance
"(g) Has refused to allow an examination into his company doing business in the Philippines be allowed to
"Section 337. No adjuster’s license issued hereunder shall affairs or method of doing business as hereinafter continue doing such business unless they shall engage the
be valid after December 31 of the third year following the provided. services of an actuary duly accredited with the
issuance of such license unless it is renewed. Commissioner who shall, during his tenure of office, be
directly responsible for the direction and supervision of all
actuarial work connected with or that may be involved in the "(4) Such other grounds that may be determined by "(f) Valuation of annuity funds or retirement plans.
business of the insurance company. The Commissioner may the Commissioner.
also require non-life insurance companies to engage the "The Commissioner may also require non-life insurance
services of an accredited actuary, in accordance with the "No actuary engaged by a life insurance company shall be companies to submit, from time to time, similar documents
rules and regulations that the Commissioner will formulate. at the same time a stockholder or a director of the board, which shall be duly certified by an accredited actuary
chief executive officer or chief financial officer of the employed by such company.
"Section 345. Any person may be officially accredited by the company or hold any position that the Commissioner may
Commissioner to act as an actuary in any life insurance determine to have an inherent conflict of interest to the "Any life insurance company authorized to do business in the
company or in any mutual benefit association authorized to position of an actuary. Philippines may employ any person who is not officially
do business in the Philippines upon application therefor and accredited under either of the qualifications for any kind of
the payment of the corresponding fee hereinafter "No certificate of registration issued under this title shall be actuarial work: Provided, That he shall not, at any time, have
prescribed: Provided, That: valid after December 31 of the third year following its the authority to certify to the correctness of the foregoing
issuance unless it is renewed. documents.
"(a) He is a fellow of good standing of the Actuarial
Society of the Philippines at the time of his "Section 346. The following documents, which are from time "Section 347. No accredited actuary shall serve more than
appointment and remains in such good standing to time submitted to the Commissioner by a life insurance one client or employer at the same time. However, one
during the tenure of his engagement; or company authorized to do business in the Philippines, shall already in the employ of an insurance company may be
be duly certified by an accredited actuary employed by such allowed by the Commissioner to serve a mutual benefit
"(b) In the case of one who is not a fellow of the company: association or any other insurance company, provided the
Actuarial Society of the Philippines, he meets all the following conditions are first complied with:
requirements of the said Society for accreditation as "(a) Policy reserves, claims or loss reserves and net
a fellow of the Society, and has been given due and deferred premiums. "(a) That the request to engage his services by the
permission by the pertinent government authorities other employer is in writing;
in the Philippines to render services in the
"(b) Statements of bases and net premiums, loading
Philippines, in the event that he is not a citizen of the
for gross premiums, and on non-forfeiture values "(b) That his present employer acquiesced to it in
Philippines. and reserves, when applying for approval of gross writing; and
premiums, reserves and non-forfeiture values.
"The registration of the actuary shall be suspended or
"(c) That he furnishes the Commissioner with copies
revoked by the Commissioner on the following grounds:
"(c) Policies of insurance under any plan submitted of said request and acquiescence.
to the Commissioner as required by law.
"(1) Failure to adequately perform required functions
"No external auditor shall be engaged by supervised persons
and duties under this Code;
"(d) Annual statements and valuation reports or entities unless it has been issued an accreditation
submitted to the Commissioner as required by law. certificate by the Commissioner. The accreditation certificate
"(2) Failure to disclose conflict of interest; shall be valid until December 31 of the third year from
"(e) Financial projection showing the probable issuance unless it is revoked or suspended. The
"(3) Failure to comply with the Code of Conduct of income and outgo and reserve requirements, Commissioner shall issue rules and regulations to govern
the Actuarial Society of the Philippines; or enumerating the actuarial assumptions and bases of the accreditation of the external auditor and the revocation
projections. or suspension of the accreditation.
"TITLE 7 continue rate-making operations until it shall have obtained "Section 352. No rating organization or any other association
"RATING ORGANIZATION AND RATE MAKING from the Commissioner a license which he may issue if shall refuse to do business with, or prohibit or prevent the
satisfied that such organization is complying with the payment of commissions to, any person licensed as an
"Section 348. Every organization which now exists or which provisions of this title. Every rating organization shall notify insurance broker pursuant to the provisions of Title 1 of this
may hereafter be formed for the purpose of making rates to the Commissioner promptly of every change in: chapter.
be used by more than one insurance company authorized to
do business in the Philippines shall be known as a rating "(a) Its constitution, its articles of agreement or "Section 353. Rating organizations shall be subject to
organization. The term rate as used in this title shall association or its certificate of incorporation, and its examination by the Commissioner, as often as he may deem
generally mean the ratio of the premium to the amount bylaws, rules and regulations governing the conduct such examination expedient, pursuant to the provisions of
insured and shall include, as the context may require, either of its business; and this Code applicable to the examination of insurance
the consideration to be paid or charged for insurance companies. He shall cause such an examination of each
contracts, including surety bonds, or the elements and "(b) Its list of members and subscribers. rating organization to be made at least once in every five (5)
factors forming the basis for the determination or application years.
of the same, or both. "A member means an insurer who participates in or is
entitled to participate in the management of a rating "Section 354. The Commissioner may suspend or revoke the
"Section 349. Every rating organization which now exists or organization. license of any rating organization which fails to comply with
which may hereafter be formed shall be subject to the his order within the time limited by such order, or any
provisions of this title. extension thereof which he may grant. The Commissioner
"A subscriber means an insurer which is furnished at its
may determine when a suspension of license shall become
request with rates and rating manuals by a rating
"Section 350. No rating organization hereafter formed shall effective and it shall remain in effect for the period fixed by
organization of which it is not a member.
commence rate-making operations until it shall have him, unless he modifies or rescinds such suspension.
obtained a license from the Commissioner. Before obtaining
"Section 351. Each rating organization shall furnish its rating
such license, such rating organization shall file with the "Section 355. Any rating organization may subscribe for or
service without discrimination to all of its members and
Commissioner a notice of its intention to commence rate- purchase actuarial, technical or other services, and such
subscribers, and shall, subject to reasonable rules and
making operations, a copy of its constitution, articles of services shall be available to all members and subscribers
regulations, permit any insurance company doing business
agreement or association, or of incorporation, and its bylaws, in the Philippines, not admitted to membership, to become a without discrimination.
a list of insurance companies that have agreed to become subscriber to its rating services for any kind of insurance or
members or subscribers, and such other information "Section 356. Any rating organization may provide for the
subdivisions thereof. Notice of proposed changes in such
concerning such rating organization and its operations as examination of policies, daily reports, binders, renewal
rules and regulations shall be given to subscribers. The
may be required by the Commissioner. If the Commissioner reasonableness of any rule or regulation in its application to certificates, endorsements or other instruments of insurance,
finds that the organization has complied with the provisions subscribers, or the refusal of any rating organization to admit or the cancellation thereof, and may make reasonable rules
of law and that it has a sufficient number of members or an insurance company as a subscriber, shall, at the request governing their submission. Such rules shall contain a
subscribers and is otherwise qualified to function as a rating provision that in the event an insurance company does not
of any subscriber or any such insurance company, be
organization, the Commissioner may issue a license to such within sixty (60) days furnish satisfactory evidence to the
reviewed by the Commissioner at a hearing held upon at
rating organization authorizing it to make rates for the kinds least ten (10) days’ written notice to such rating organization rating organization of the correction of any error or omission
of insurance or subdivisions thereof as may be specified in previously called to its attention by the rating organization, it
and to such subscriber or insurance company. The
such license. No license issued to a rating organization shall shall be the duty of the rating organization to notify the
Commissioner may, after such hearing, issue an appropriate
be valid after December 31 of the third year following its order. Commissioner thereof. All information so submitted for
issuance unless it is renewed. No rating organization which examination shall be confidential.
now exists and is not licensed pursuant to this section shall
"Section 357. Cooperation among rating organizations or prospective other expenses. In case of fire schedule of rates, classification of risks, rating plan, and
among rating organizations and insurers in rate making or in insurance rates, consideration shall be given to the every other rating rule and every modification of any of the
other matters within the scope of this title is hereby experience of the fire insurance business during a foregoing which it proposes to use. An insurance company
authorized, provided the filings resulting from such period of not less than five (5) years next preceding may satisfy its obligation to make such filings for any kind or
cooperation are subject to all provisions of this title which are the year in which the review is made; type of insurance by becoming a member of or subscriber to
applicable to filings generally. The Commissioner may a rating organization which makes such filings for such kind
review such cooperative activities and practices and if he "(e) Risk may be grouped by classifications for the or type of insurance, and by authorizing the Commissioner
finds that any such activity or practice is unfair or establishment of rates and minimum premiums. to accept such filings of the rating organization on behalf of
unreasonable or otherwise inconsistent with the provisions Classification rates may be modified to produce such insurance company.
of this title, he may issue a written order specifying in what rates for individual risks in accordance with rating
respects such activity or practice is unfair or unreasonable plans which establish standards for measuring "Section 362. Every manual or schedule of rates and every
or otherwise inconsistent with the provisions of this title, and variations in hazards or expense provisions, or both. rating plan filed as provided in the preceding section shall
requiring the discontinuance of such activity or practice. Such standards may measure any difference among state or clearly indicate the character and extent of the
risks that can be demonstrated to have a probable coverage to which any such rate or any modification thereof
"Section 358. Every rating organization and every insurance effect upon losses or expenses. will be applied.
company which makes and files its own rates, shall make
rates for all risks rated by such organization or insurance "Section 359. No rating organization and no insurance "Section 363. The Commissioner shall review filings as soon
company in accordance with the following provisions: company which makes and files its own rates shall make or as reasonably possible after they have been made in order
promulgate any rate or schedule of rates which is to be to determine whether they meet the requirements of this title.
"(a) Basic classification, manual, minimum, class, or applied to any fire risk on the condition that the whole amount When a filing is not accompanied by the information upon
schedule rates or rating plans, shall be made and of insurance on any risk or any specified part thereof shall which the insurance company supports such filing, and the
adopted for all such risks. Any departure from such be placed with the members of or subscribers to such rating Commissioner does not have sufficient information to
rates shall be in accordance with schedules, rating organization or with such insurer. determine whether such filing meets the requirements of this
plans and rules filed with the Commissioner; title, he shall require such insurance company to furnish the
"Section 360. Every insurance company doing business in information upon which it supports such filing. The
"(b) Rates shall be reasonable and adequate for the the Philippines shall annually file with the rating organization information furnished in support of a filing may include:
class of risks to which they apply; of which it is a member or subscriber, or with such other
agency as the Commissioner may designate, a statistical "(a) The experience or judgment of the insurance
"(c) No rate shall discriminate unfairly between risks report showing a classification schedule of its premiums and company or rating organization making the filing;
involving essentially the same hazards and expense losses on all kinds or types of insurance business to which
elements or between risks in the application of like Section 358 is applicable, and such other information as the "(b) Its interpretation of any statistical data it relies
charges and credits; Commissioner may deem necessary or expedient for the upon;
administration of the provisions of this title.
"(d) Consideration shall be given to the past and "(c) The experience of other insurance companies or
prospective loss experience, including the "Section 361. Every non-life rating organization and every rating organization; or
conflagration and catastrophe hazards, if any, to all non-life insurance company doing business in the
factors reasonably attributable to the class of risks, Philippines shall file with the Commissioner, except as to "(d) Any other relevant factors.
to a reasonable profit, to commissions paid during risks which by general custom of the business are not written
the most recent annual period and to past and according to manual rates or rating plans, every rate manual,
"Section 364. If the Commissioner finds that any rate filings catastrophe hazards, if any, to all other relevant factors and policy conditions or privileges than are accorded to other
theretofore filed with him do not comply with the provisions to a reasonable profit. nationals because of his race.
of this title or that they provide rates or rules which are
inadequate, excessive, unfairly discriminatory or otherwise "Section 368. Nothing contained in this title shall be "Section 371. No insurance company doing business in the
unreasonable, he may order the same withdrawn and at the construed as requiring any insurer to become a member of Philippines, and no officer, director, or agent thereof, and no
expiration of sixty (60) days thereafter the same shall be or subscriber to any rating organization. insurance broker or any other person, partnership or
deemed no longer on file. Before making any such finding corporation shall issue or circulate or cause or permit to be
and order, the Commissioner shall give notice, not less than issued or circulated any literature, illustration, circular or
"Section 369. Agreements may be made among insurance
ten (10) days in advance, and a hearing, to the rating companies with respect to the equitable apportionment statement of any sort misrepresenting the terms of any policy
organization, or to the insurer, which filed the same. Such among them of insurance which may be afforded applicants issued by any insurance company of the benefits or
order shall not affect any contract or policy made or issued advantages promised thereby, or any misleading estimate of
who are in good faith entitled to but are unable to procure
prior to the expiration of such sixty (60)-day period. such insurance through ordinary methods and such the dividends or share of surplus to be received thereon, or
insurance companies may agree among themselves on the shall use any name or title of any policy or class of policies
"Section 365. No member or subscriber of a rating use of reasonable rates and modifications for such misrepresenting the true nature thereof; nor shall any such
organization, and no insurance company doing business in insurance, such agreements and rate modifications to be company or agent thereof, or any other person, partnership
the Philippines, or agent, employee or other representative subject to the approval of the Commissioner: Provided, or corporation make any misleading representation or
of such company, and no insurance broker shall charge or however, That the provisions of this section shall not be incomplete comparison of policies to any person insured in
demand a rate or receive a premium which deviates from the deemed to apply to workmen’s compensation insurance. such company for the purpose of inducing or tending to
rates, rating plans, classifications, schedules, rules and induce such person to lapse, forfeit, or surrender his said
standards, made and last filed by a rating organization or by insurance.
"Section 370. No insurance company doing business in the
or on behalf of the insurance company, or shall issue or Philippines or any agent thereof, no insurance broker, and
make any policy or contract involving a violation of such rate no employee or other representative of any such insurance "Section 372. If the Commissioner, after notice and hearing,
filings. company, agent, or broker, shall make, procure or negotiate finds that any insurance company, rating organization,
any contract of insurance or agreement as to policy contract, agent, broker or other person has violated any of the
"Section 366. Notwithstanding any other provisions of this other than is plainly expressed in the policy or other written provisions of this title, it shall order the payment of a fine not
title, upon the written application of the insurer, stating his contract issued or to be issued as evidence thereof, or shall to exceed Twenty-five thousand pesos (P25,000.00) for
reasons therefor, filed with and approved by the directly or indirectly, by giving or sharing a commission or in each such offense, and shall immediately suspend or revoke
Commissioner, a rate in excess of that provided by a filing any manner whatsoever, pay or allow or offer to pay or allow the license issued to such insurance company, rating
otherwise applicable may be used on any specific risk. to the insured or to any employee of such insured, either as organization, agent, or broker. The issuance, procurement
an inducement to the making of such insurance or after such or negotiation of a single policy or contract of insurance shall
"Section 367. Whenever the Commissioner shall determine, insurance has been effected, any rebate from the premium be deemed a separate offense.
after notice and a hearing, that the rates charged or filed on which is specified in the policy, or any special favor or
any class of risks are excessive, discriminatory, inadequate advantage in the dividends or other benefits to accrue "TITLE 8
or unreasonable, he shall order that such rates be thereon, or shall give or offer to give any valuable "PROVISION COMMON TO AGENTS,
appropriately adjusted. For the purpose of applying the consideration or inducement of any kind, directly or BROKERS AND ADJUSTERS
provisions of this section, the Commissioner may from time indirectly, which is not specified in such policy or contract of
to time approve reasonable classifications of risks for any or insurance; nor shall any such company, or any agent "Section 373. A license issued to a partnership, association
all such classes, having due regard to the past and thereof, as to any policy or contract of insurance issued, or corporation to act as an insurance agent, general agent,
prospective loss experience, including conflagration or make any discrimination against any Filipino in the sense insurance broker, reinsurance broker, or adjuster shall
that he is given less advantageous rates, dividends or other
authorize only the individual named in the license who shall "Section 376. Personnel tasked to present and sell insurance the Non-Life Account shall be utilized exclusively for
qualify therefor as though an individual licensee. The products within the bank premises shall be duly licensed by disbursements that refer to non-life insurance companies.
Commissioner shall charge, and the licensee shall pay, a full the Commissioner and shall be subject to the rules and
additional license fee as to each respective individual so regulations of this Act. "Section 380. All insurance companies doing business in the
named in such license in excess of one. Philippines shall contribute to the Security Fund, Life or Non-
"Section 377. The Commissioner and the Bangko Sentral ng Life Account, as the case may be, the aggregate amount of
"Licenses and certificates of registration issued under the Pilipinas shall promulgate rules and regulations to effectively Five million pesos (P5,000,000.00) for each Account. The
provisions of this chapter may be renewed by the filing of supervise the business of bancassurance. contributions of the life insurance companies and of the non-
notices of intention on forms to be prescribed by the life insurance companies shall be in direct proportion to the
Commissioner and payment of the fees therefor. "CHAPTER V ratio between a particular life insurance company or a
"SECURITY FUND particular non-life insurance company’s net worth and the
"Section 374. The Commissioner, in consultation with the aggregate net worth of all life insurance companies or all
duly accredited associations representing the insurance non-life insurance companies, as the case may be, as shown
"Section 378. There is hereby created a fund to be known as
industry, shall adopt and promulgate a code of conduct to the Security Fund which shall be used in the payment of in their latest financial statements approved by the
promote integrity, honesty and ethical business practices allowed claims against an insurance company authorized to Commissioner. This proportion applied to the Five million
among insurance agents, distributors and other pesos (P5,000,000.00) shall be the contribution of a
transact business in the Philippines remaining unpaid by
intermediaries. reason of the insolvency of such company. The said Fund particular company to the corresponding Account of the
may also be used to reinsure the policy of the insolvent Security Fund.
"TITLE 9 insurer in any solvent insurer authorized to do business in
"BANCASSURANCE the Philippines as provided in Section 256. The Fund may "The amount of Five million pesos (P5,000,000.00) in each
likewise be used to pay insured claims which otherwise Account shall be in the form of a revolving trust fund. The
"Section 375. The term bancassurance shall mean the would not be compensable under the provisions of the respective contributions of the companies shall remain as
presentation and sale to bank customers by an insurance policy. No payment from the Security Fund shall, however, admitted assets in their books and any disbursement
be made to any person who owns or controls ten percent therefrom shall be deducted proportionately from the
company of its insurance products within the premises of the
head office of such bank duly licensed by the Bangko Sentral (10%) or more of the voting shares of stock of the insolvent contributions of each company which will be allowed as
ng Pilipinas or any of its branches under such rules and insurer and no payment on any one claim shall exceed deductions for income tax purposes. Any earnings of the
regulations which the Commissioner and the Bangko Sentral Twenty thousand pesos (P20,000.00). Fund shall be turned over to the contributing companies in
ng Pilipinas may promulgate. To engage in bancassurance proportion to their contributions.
arrangement, a bank is not required to have equity "Section 379. Such Fund shall consist of all payments made
ownership of the insurance company. No insurance to the Fund by insurance companies authorized to do "In the case of disbursements of funds from the Fund as
company shall enter into a bancassurance arrangement business in the Philippines. Payments made by life provided in the foregoing paragraph, the life and non-life
unless it possesses all the requirements as may be insurance companies shall be treated separately from those companies, as the case may be, shall replenish the amount
prescribed by the Commissioner and the Bangko Sentral ng made by non-life insurance companies and the disbursed in direct proportion to the individual company’s net
Pilipinas. corresponding fund shall be called Life Account and Non-Life worth and the aggregate net worth of the life or non-life
Account, respectively, and shall be held and administered as companies, as the case may be. However, in no case shall
such by the Commissioner in accordance with the provisions the Fund exceed the aggregate amount of Ten million pesos
"No insurance product under this section, whether life or
of this title. The Life Account shall be utilized exclusively for (P10,000,000.00), or Five million pesos (P5,000,000.00) for
non-life, shall be issued or delivered unless in the form
previously approved by the Commissioner. disbursements that refer to life insurance companies, while each Account.
"Should the Fund, Life or Non-Life Account, as the case may the Government of the Philippines or its political subdivisions "CHAPTER VI
be, be inadequate for a disbursement as provided for, then or instrumentalities. The Commissioner may sell any of the "COMPULSORY MOTOR VEHICLE
the Life or Non-Life companies, as the case may be, shall securities in which an Account is invested, if advisable, for LIABILITY INSURANCE
contribute to the Fund their respective shares in the its proper administration or in the best interest of such
proportion previously mentioned. Account. "Section 386. For purposes of this chapter:

"Section 381. The Commissioner may adopt, amend, and "Section 383. Payments from either the Life Insurance "(a) Motor Vehicle is any vehicle as defined in
enforce all reasonable rules and regulations necessary for Account or Non-Life Account, as the case may be, shall be Section 3, paragraph (a) of Republic Act No. 4136,
the proper administration of the Fund and of the Accounts. made by the Treasurer of the Philippines to the otherwise known as the ‘Land Transportation and
In the event any insurer shall fail to make any payment Commissioner, upon the authority of appropriate certificate Traffic Code’.
required by this title, or that any payment made is incorrect, filed with him by the Commissioner acting in such capacity.
he shall have full authority to examine all the books and "(b) Passenger is any fare paying person being
records of the insurer for the purpose of ascertaining the "Section 384. The Commissioner may, in his discretion, transported and conveyed in and by a motor vehicle
facts and shall determine the correct amount to be paid and designate or appoint a duly authorized representative or for transportation of passengers for compensation,
may proceed in any court of competent jurisdiction to recover representatives to appear and defend before any court or including persons expressly authorized by law or by
for the benefit of the Fund or of the Account concerned any other body or official having jurisdiction any or all actions or the vehicle’s operator or his agents to ride without
sum shown to be due upon such examination and proceedings against principals or assureds on insurance fare.
determination. Any insurer which fails to make any payment policies or contracts issued to them where the insurer has
to the Fund or to the Account concerned when due, shall become insolvent or unable to meet its insurance
thereby forfeit to said Fund or Account concerned a penalty "(c) Third party is any person other than a
obligations. The Commissioner shall have, as of the date of
of five percent (5%) of the amount determined to be due as passenger as defined in this section and shall also
insolvency of such insurer or as of the date of its inability to exclude a member of the household, or a member of
provided by this title, plus one percent (1%) of such amount meet its insurance obligations, only the rights which such
for each month of delay or fraction thereof, after the the family within the second degree of consanguinity
insurer would have had if it had not become insolvent or or affinity, of a motor vehicle owner or land
expiration of the first month of such delay, but the unable to meet its insurance obligations. For the purpose of
Commissioner, if satisfied that the delay was excusable, may transportation operator, as likewise defined herein,
this title, the Commissioner shall have power to employ such or his employee in respect of death, bodily injury, or
remit all or any part of such penalty. The Commissioner, in counsel, clerks and assistants as he may deem necessary.
his discretion, may suspend or revoke the certificate of damage to property arising out of and in the course
authority to do business in the Philippines of any insurance of employment.
"Section 385. The expense of administering an Account shall
company which shall fail to comply with this title or to pay be paid out of the Account concerned. The Commissioner
any penalty imposed in accordance therewith. "(d) Owner or motor vehicle owner means the actual
shall serve as administrator of the Fund and of the Accounts legal owner of a motor vehicle, in whose name such
without additional compensation, but may be allowed and vehicle is duly registered with the Land
"Section 382. The Accounts created by this title shall be paid from the Account concerned expenses incurred in the
separate and apart from each other and from any other fund. Transportation Office;
performance of his duties in connection with said Account.
The Treasurer of the Philippines shall be the custodian of the The compensation of those persons employed by the
Life Account and Non-Life Account of the Security Fund; and Commissioner shall be deemed administration expense "(e) Land transportation operator means the owner
all disbursements from any Account shall be made by the payable from the Account concerned. The Commissioner or owners of motor vehicles for transportation of
Treasurer of the Philippines upon vouchers signed by the shall include in his annual report to the Secretary of Finance passengers for compensation, including school
Commissioner or his deputy, as hereinafter provided. The a statement of the expenses of administration of the Fund buses.
moneys of said Account may be invested by the and of the Life Account and Non-Life Account for the
Commissioner only in bonds or other instruments of debt of preceding year.
 "(f) Insurance policy or Policy refers to a contract of cover liability for death or bodily injuries of third- The aforesaid cash deposit may be invested by the
insurance against passenger and third-party liability parties and/or passengers arising out of the use of Commissioner in readily marketable government
for death or bodily injuries and damage to property such vehicle in the amount not less than Twelve bonds, and/or securities.
arising from motor vehicle accidents. thousand pesos (P12,000.00) per passenger or
third-party and an amount, for each of such "(b) In the case of an owner of a motor vehicle, the
"Section 387. It shall be unlawful for any land transportation categories, in any one accident of not less than that insurance or guaranty in cash or surety bond shall
operator or owner of a motor vehicle to operate the same in set forth in the following scale: cover liability for death or injury to third-parties in an
the public highways unless there is in force in relation thereto amount not less than that set forth in the following
a policy of insurance or guaranty in cash or surety bond "(1) Motor vehicles with an authorized scale in any one accident:
issued in accordance with the provisions of this chapter to capacity of twenty-six (26) or more
indemnify the death, bodily injury, and/or damage to property passengers: Fifty thousand pesos "(1) Private Cars
of a third-party or passenger, as the case may be, arising (P50,000.00);
from the use thereof.
"(i) Bantam: Twenty thousand
"(2) Motor vehicles with an authorized pesos (P20,000.00);
"Section 388. The Commissioner shall furnish the Land capacity of from twelve (12) to twenty-five
Transportation Office with a list of insurance companies (25) passengers: Forty thousand pesos "(ii) Light: Twenty thousand pesos
authorized to issue the policy of insurance or surety bond (P40,000.00);
(P20,000.00); and
required by this chapter.
"(3) Motor vehicles with an authorized "(iii) Heavy: Thirty thousand pesos
"Section 389. The Land Transportation Office shall not allow capacity of from six (6) to eleven (11) (P30,000.00).
the registration or renewal of registration of any motor passengers: Thirty thousand pesos
vehicle without first requiring from the land transportation (P30,000.00);
operator or motor vehicle owner concerned the presentation "(2) Other Private Vehicles
and filing of a substantiating documentation in a form "(4) Motor vehicles with an authorized
approved by the Commissioner evidencing that the policy of capacity of five (5) or less passengers: Five "(i) Tricycles, motorcycles and
insurance or guaranty in cash or surety bond required by this thousand pesos (P5,000.00) multiplied by scooters: Twelve thousand pesos
chapter is in effect. the authorized capacity. (P12,000.00);

"Section 390. Every land transportation operator and every "Provided, however, That such cash deposit made "(ii) Vehicles with an unladen weight
owner of a motor vehicle shall, before applying for the to, or surety bond posted with, the Commissioner of 2,600 kilos or less: Twenty
registration or renewal of registration of any motor vehicle, shall be resorted to by him in cases of accidents the thousand pesos (P20,000.00);
at his option, either secure an insurance policy or surety indemnities for which to third-parties and/or
bond issued by any insurance company authorized by the passengers are not settled accordingly by the land "(iii) Vehicles with an unladen
Commissioner or make a cash deposit in such amount as transportation operator and, in that event, the said weight of between 2,601 kilos and
herein required as limit of liability for purposes specified in cash deposit shall be replenished or such surety 3,930 kilos: Thirty thousand pesos
Section 387. bond shall be restored within sixty (60) days after (P30,000.00); and
impairment or expiry, as the case may be, by such
"(a) In the case of a land transportation operator, the land transportation operator, otherwise, he shall
insurance guaranty in cash or surety bond shall secure the insurance policy required by this chapter.
 "(iv) Vehicles with an unladen against the owner of the vehicle responsible for the "Section 394. If the cancellation of the policy or surety bond
weight over 3,930 kilos: Fifty accident shall be maintained. is contemplated by the land transportation operator or owner
thousand pesos (P50,000.00). of the vehicle, he shall, before the policy or surety bond
"Section 392. No land transportation operator or owner of ceases to be effective, secure a similar policy of insurance
"The Commissioner may, if warranted, set motor vehicle shall be unreasonably denied the policy of or surety bond to replace the policy or surety bond to be
forth schedule of indemnities for the insurance or surety bond required by this chapter by the cancelled or make a cash deposit in sufficient amount with
payment of claims for death or bodily insurance companies authorized to issue the same, the Commissioner, and without any gap, file the required
injuries with the coverages set forth herein. otherwise, the Land Transportation Office shall require from documentation with the Land Transportation Office, and
said land transportation operator or owner of the vehicle, in notify the insurance company concerned of the cancellation
"Section 391. Any claim for death or injury to any passenger lieu of a policy of insurance or surety bond, a certificate that of its policy or surety bond.
or third-party pursuant to the provisions of this chapter shall a cash deposit has been made with the Commissioner in
be paid without the necessity of proving fault or negligence such amount required as limits of indemnity in Section 390 "Section 395. In case of change of owner ship of a motor
of any kind: Provided, That for purposes of this section: to answer for the passenger and/or third-party liability of vehicle, or change of the engine of an insured vehicle, there
such land transportation operator or owner of the vehicle. shall be no need of issuing a new policy until the next date
"(a) The total indemnity in respect of any person of registration or renewal of registration of such vehicle,
"No insurance company may issue the policy of insurance or and: Provided, That the insurance company shall agree to
shall not be less than Fifteen thousand pesos
(P15,000.00); surety bond required under this chapter unless so authorized continue the policy, such change of ownership or such
under existing laws. change of the engine shall be indicated in a corresponding
endorsement by the insurance company concerned, and a
"(b) The following proofs of loss, when submitted signed duplicate of such endorsement shall, within a
under oath, shall be sufficient evidence to "The authority to engage in the casualty and/or surety lines
of business of an insurance company that refuses to issue reasonable time, be filed with the Land Transportation
substantiate the claim: Office.
or renew, without just cause, the insurance policy or surety
bond therein required shall be withdrawn immediately.
"(1) Police report of accident; and "Section 396. In the settlement and payment of claims, the
"Section 393. No cancellation of the policy shall be valid indemnity shall not be availed of by any accident victim or
"(2) Death certificate and evidence sufficient claimant as an instrument of enrichment by reason of an
to establish the proper payee; or unless written notice thereof is given to the land
transportation operator or owner of the vehicle and to the accident, but as an assistance or restitution insofar as can
Land Transportation Office at least fifteen (15) days prior to fairly be ascertained.
"(3) Medical report and evidence of medical the intended effective date thereof. Upon receipt of such
or hospital disbursement in respect of which notice, the Land Transportation Office, unless it receives "Section 397. Any person having any claim upon the policy
refund is claimed; evidence of a new valid insurance or guaranty in cash or issued pursuant to this chapter shall, without any
surety bond as prescribed in this chapter, or an endorsement unnecessary delay, present to the insurance company
"(c) Claim may be made against one motor vehicle of revival of the cancelled one, shall order the immediate concerned a written notice of claim setting forth the nature,
only. In the case of an occupant of a vehicle, claim, confiscation of the plates of the motor vehicle covered by extent and duration of the injuries sustained as certified by a
shall lie against the insurer of the vehicle in which such cancelled policy. The same may be reissued only upon duly licensed physician. Notice of claim must be filed within
the occupant is riding, mounting or dismounting presentation of a new insurance policy or that a guaranty in six (6) months from the date of accident, otherwise, the claim
from. In any other case, claim shall lie against the cash or surety bond has been made or posted with the shall be deemed waived. Action or suit for recovery of
insurer of the directly offending vehicle. In all cases, Commissioner and which meets the requirements of this damage due to loss or injury must be brought, in proper
the right of the party paying the claim to recover chapter, or an endorsement or revival of the cancelled one. cases, with the Commissioner or the courts within one (1)
year from denial of the claim, otherwise, the claimant’s right sufficient cause for the revocation of the certificate of public Code notwithstanding any mutual benefit feature provisions
of action shall prescribe. convenience issued by the Land Transportation Franchising in its charter as incident to its organization.
and Regulatory Board covering the vehicle concerned.
"Section 398. The insurance company concerned shall "In no case shall a mutual benefit association be organized
forthwith ascertain the truth and extent of the claim and make "Section 402. Whenever any violation of the provisions of and authorized to transact business as a charitable or
payment within five (5) working days after reaching an this chapter is committed by a corporation or association, or benevolent organization, and whenever it has this feature as
agreement. If no agreement is reached, the insurance by a government office or entity, the executive officer or incident to its existence, the corresponding charter provision
company shall pay only the no-fault indemnity provided in officers of said corporation, association or government office shall be revised to conform with the provision of this section.
Section 391 without prejudice to the claimant from pursuing or entity who shall have knowingly permitted, or failed to Mutual benefit association, already licensed to transact
his claim further, in which case, he shall not be required or prevent, said violation shall be held liable as principals. business as such on the date this Code becomes effective,
compelled by the insurance company to execute any quit having charitable or benevolent feature shall abandon such
claim or document releasing it from liability under the policy "CHAPTER VII incidental purpose upon effectivity of this Code if they desire
of insurance or surety bond issued. "MUTUAL BENEFIT ASSOCIATIONS AND to continue operating as such mutual benefit associations.
TRUSTS FOR CHARITABLE USES
"In case of any dispute in the enforcement of the provisions "Section 404. A mutual benefit association, before it may
of any policy issued pursuant to this chapter, the adjudication "TITLE 1 transact as such, must first secure a license from the
of such dispute shall be within the original and exclusive "MUTUAL BENEFIT ASSOCIATIONS Commissioner. The application for such license shall be filed
jurisdiction of the Commissioner, subject to the limitations with the Commissioner together with certified true copies of
provided in Section 439. the articles of incorporation or the constitution and bylaws of
"Section 403. Any society, association or corporation,
the association, and all amendments thereto, and such other
without capital stock, formed or organized not for profit but
"Section 399. It shall be unlawful for a land transportation mainly for the purpose of paying sick benefits to members, documents or testimonies as the Commissioner may require.
operator or owner of motor vehicle to require his or its drivers or of furnishing financial support to members while out of
or other employees to contribute in the payment of employment, or of paying to relatives of deceased members "No license shall be granted to a mutual benefit association
premiums. of fixed or any sum of money, irrespective of whether such until the Commissioner shall have been satisfied by such
aim or purpose is carried out by means of fixed dues or examination as he may make and such evidence as he may
"Section 400. No government office or agency having the assessments collected regularly from the members, or of require that the association is qualified under existing laws
duty of implementing the provisions of this chapter nor any providing, by the issuance of certificates of insurance, to operate and transact business as such. The
official or employee thereof shall act as agent in procuring payment of its members of accident or life insurance benefits Commissioner may refuse to issue a license to any mutual
the insurance policy or surety bond provided for herein. The out of such fixed and regular dues or assessments, but in no benefit association if, in his judgment, such refusal will best
commission of an agent procuring the said policy or bond case shall include any society, association, or corporation promote the interest of the members of such association and
shall in no case exceed ten percent (10%) of the amount of with such mutual benefit features and which shall be carried of the people of this country. Any license issued shall expire
the premiums therefor. out purely from voluntary contributions collected not on the last day of December of the third year following its
regularly and/or no fixed amount from whomsoever may issuance and, upon proper application, may be renewed if
contribute, shall be known as a mutual benefit association the association is continuing to comply with existing laws,
"Section 401. Any land transportation operator or owner of
motor vehicle or any other person violating any of the within the intent of this Code. rules and regulations, orders, instructions, rulings and
decisions of the Commissioner. Every association receiving
provisions of the preceding sections shall be punished by a
any such license shall be subject to the supervision of the
fine of not less than Five hundred pesos (P500.00) and/or "Any society, association, or corporation principally
imprisonment for not more than six (6) months. The violation organized as a labor union shall be governed by the Labor Commissioner: Provided, That no such license shall be
granted to any such association if such association has no
of Section 390 by a land transportation operator shall be a
actuary.
"Section 405. No mutual benefit association shall be issued "Section 407. A mutual benefit association may, by value only applies to basic life insurance product and
a license to operate as such unless it has constituted and reinsurance agreement, cede in whole or in part any excludes optional products.
established a Guaranty Fund by depositing with the individual risk or risks under certificates of insurance issued
Commissioner an initial minimum amount of Five million by it, only to a life insurance company authorized to transact "Section 410. Every mutual benefit association must
pesos (P5,000,000.00) in cash, or in government securities business or to a professional reinsurer authorized to accept accumulate and maintain, out of the periodic dues collected
with a total value equal to such amount, to answer for any life risks in the Philippines: Provided, That a copy of the draft from its members, sufficient reserves for the payment of
valid benefit claim of any of its members. of such reinsurance agreement shall be submitted to the claims or obligations for which it shall hold funds in securities
Commissioner for his approval. The association may take satisfactory to the Commissioner consisting of bonds of the
"All moneys received by the Commissioner for this purpose credit for the reserves on such ceded risks to the extent Government of the Philippines, or any of its political
must be deposited by him in interest-bearing deposits with reinsured. subdivisions and instrumentalities, or in such other good
any bank or banks authorized to transact business in the securities as may be approved by the Commissioner.
Philippines for the account of the particular association "Section 408. The constitution or bylaws of a mutual benefit
constituting the Guaranty Fund. association must distinctly state the purpose for which dues "The reserve liability shall be established in accordance with
and/or assessments are made and collected and the portion actuarial procedures and shall be approved by the
"Any accrual to such fund, be it interest earned or dividend thereof which may be used for expenses. Commissioner.
additions on moneys or securities so deposited, may, with
the prior approval of the Commissioner, be withdrawn by the "Death benefit and other relief funds shall be created and "The articles of incorporation or the constitution and bylaws
association if there is no pending benefit claim against it, used exclusively for paying benefits due the members under of a mutual benefit association must provide that if its reserve
including interest thereon or dividend additions thereto. their respective membership certificates. A general fund as to all or any class of certificates becomes impaired, its
shall likewise be created and used for expenses of board of directors or trustees may require that there shall be
"The Commissioner, prior to or after licensing a mutual administration of the association. paid by the members to the association the amount of the
benefit association, may require such association to members’ equitable proportion of such deficiency as
increase its Guaranty Fund from the initial minimum amount "A mutual benefit association shall only maintain free and ascertained by said board and that if the payment be not
required to an amount equal to the capital investment unassigned surplus of not more than twenty percent (20%) made it shall stand as an indebtedness against the
required of an existing domestic insurance company under of its total liabilities as verified by the Commissioner. Any membership certificates of the defaulting members and draw
Section 209 of this Code. amount in excess shall be returned to the members by way interest not to exceed five percent (5%) per annum
of dividends, enhancing the equity value or providing compounded annually.
"Section 406. Every mutual benefit association licensed to benefits in kind and other relevant services. In addition,
do business as such shall issue membership certificates to subject to the approval of the Commissioner, a mutual "Section 411. A mutual benefit association may invest such
its members specifying the benefits to which such members benefit association may allocate a portion for capacity portion of its funds as shall not be required to meet pending
are entitled. building and research and development such as developing claims and other obligations in any of the classes of
new products and services, upgrading and improving investments or types of securities in which life insurance
operating systems and equipment and continuing member companies doing business in the Philippines may invest.
"Such certificates, together with the articles of incorporation
education.
of the association or its constitution and bylaws, and all
existing laws as may be pertinent shall constitute the "It may also grant loans to members on the security of a
agreement, as of the date of its issuance, between the "Section 409. Every outstanding membership certificate pledge or chattel mortgage of personal properties of the
association and the member. The membership certificate must have an equity value equivalent to at least fifty percent borrowers, or in the absence thereof, on the security of the
shall be in a form previously approved by the Commissioner. (50%) of the total contributions collected thereon. The equity membership certificate of the borrowing members, in which
event such loan shall become a first lien on the proceeds and actuary of the association, showing the exact condition "No such conversion shall take effect unless and until
thereof. of its affairs on the preceding thirty-first day of December. approved by the Commissioner.

"Section 412. The Commissioner or any of his duly "Section 414. No money, aid or benefit to be paid, provided "Section 418. No mutual benefit association shall be
designated representatives, shall have the power of or tendered by any mutual benefit association, shall be liable dissolved without first notifying the Commissioner and
visitation, audit and examination into the affairs, financial to attachment, garnishment, or other process, or be seized, furnishing him with a certified copy of the resolution
condition, and methods of doing business of all mutual taken, appropriated, or applied by any legal or equitable authorizing the dissolution, duly adopted by the affirmative
benefit associations, and he shall cause such examination process to pay any debt or liability of a member or vote of two-thirds (2/3) of the members at a meeting called
to be made at least once every two (2) years or whenever it beneficiary, or any other person who may have a right for that purpose, the financial statements as of the date of
may be deemed proper and necessary. Free access to the thereunder, either before or after payment.1âwphi1 the resolution, and such other papers or documents as may
books, records and documents of the association shall be be required by the Commissioner.
accorded to the Commissioner, or to his representatives, in "Section 415. Any member of a mutual benefit association
such manner that the Commissioner or his representatives shall have the right at all times to change the beneficiary or "No dissolution shall proceed until and unless approved by
may readily verify or determine the true affairs, financial beneficiaries or add another beneficiary or other the Commissioner and all proceedings in connection
condition, and method of doing business of such association. beneficiaries in accordance with the rules and regulations of therewith shall be witnessed and attested by his duly
In the course of such examination, the Commissioner or his the association unless he has expressly waived this right in designated representative.
duly designated representatives shall have authority to the membership certificate. Every association may, under
administer oaths and take testimony or other evidence on such rules as it may adopt, limit the scope of beneficiaries "No mutual benefit association shall be officially declared as
any matter relating to the affairs of the association. and provide that no beneficiary shall have or obtain any dissolved until after the Commissioner so certifies that all
vested interest in the proceeds of any certificate until the outstanding claims against the association have been duly
"All minutes of the proceedings of the board of directors or certificate has become due and payable under the terms of settled and liquidated.
trustees of the association, and those of the regular or the membership certificate.
special meetings of the members, shall be taken, and a copy "Section 419. The Commissioner shall, after notice and
thereof, in English or in Pilipino, shall be submitted to the "Section 416. Any chapter affiliate independently licensed as hearing, have the power either to suspend or revoke the
Commissioner’s representatives or examiners in the course a mutual benefit association may consolidate or merge with license issued to a mutual benefit association if he finds that
of such examination. any other similar chapter affiliate or with the mother the association has:
association.
"A copy of the findings of such examination, together with
"(a) Failed to comply with any provision of this Code;
the recommendations of the Commissioner, shall be "Section 417. Any mutual benefit association may be
furnished the association for its information and compliance, converted into and licensed as a mutual life insurance
and the same shall be taken up immediately in the meetings "(b) Failed to comply with any other law or regulation
company by complying with the requirements of the pertinent obligatory upon it;
of the board of directors or trustees and of the members of provisions of this Code and submitting the specific plan for
the association. such conversion to the Commissioner for his approval. Such
plan, as approved, shall then be submitted to the members "(c) Failed to comply with any order, ruling,
"Section 413. Every mutual benefit association shall, either in the regular meeting or in a special meeting called instruction, requirement or recommendation of the
annually on or before the thirtieth day of April of each year, for the purpose for their adoption. The affirmative vote of at Commissioner;
render to the Commissioner an annual statement in such least two-thirds (2/3) of all the members shall be necessary
form and detail as may be prescribed by the Commissioner, in order to consider such plan as adopted. "(d) Exceeded its power to the prejudice of its
signed and sworn to by the president, secretary, treasurer, members;
 "(e) Conducted its business fraudulently or "Section 423. All provisions of this Code governing life "All provisions of this Code governing mutual benefit
hazardously; insurance companies and such other provisions whenever associations and such other provisions herein, whenever
practicable and necessary, shall be applicable to mutual practicable and necessary, shall be applicable to trusts for
"(f) Rendered its affairs and condition to one of benefit associations. charitable uses.
insolvency; or
"TITLE 2 "Section 428. The treasurer of a charitable trust shall file a
"(g) Failed to carry out its aims and purposes for "TRUSTS FOR CHARITABLE USES fidelity bond in the amount commensurate with the value of
which it was organized due to any cause. the trust property in his custody, as may be determined by
"Section 424. The term trust for charitable uses, within the the Commissioner.
"After receipt of the order from the Commissioner intent of this Code, shall include, all the real or personal
suspending or revoking the license, the association must properties or funds, as well as those acquired with the fruits "CHAPTER VIII
immediately exert efforts to remove such cause or causes or income therefrom or in exchange or substitution thereof, "TRUST BUSINESS IN GENERAL
which brought about the order and, upon proper showing, given to or received by any person, corporation, association,
may apply with the Commissioner for the lifting of the order foundation, or entity, except the National Government, its "Section 429. An insurance company may engage in limited
and restoration or revival of the license so revoked or instrumentalities or political subdivisions, for charitable, trust business, consisting of managing funds pertaining only
suspended. benevolent, educational, pious, religious, or other uses for to retirement and pre-need plans, provided it has secured a
the benefit of the public at large or a particular portion thereof license to do so from the Bangko Sentral ng Pilipinas. This
or for the benefit of an indefinite number of persons. trust business shall be separate and distinct from the general
"Section 420. For failure to remove such cause or causes
which brought about the suspension or revocation of the business of the insurance company and shall be subject to
license of a mutual benefit association, the Commissioner "Section 425. The term trustee shall include any individual, rules and regulations as may be promulgated by the Bangko
shall apply under this Code for an order from the proper court corporation, association, foundation, or entity, except the Sentral ng Pilipinas in consultation with the Commissioner.
to liquidate such association. National Government, its instrumentalities or political
subdivisions, in charge of, or acting for, or concerned with "CHAPTER IX
the administration of, the trust referred to in the section "REGISTRATION, RESPONSIBILITIES AND
"The provisions of Titles 14 and 15, Chapter III, pertaining to
immediately preceding and with the proper application of OVERSIGHT OF SELF-REGULATORY
the appointment of a conservator and proceedings upon
insolvency of an insurance company shall, insofar as trust property. ORGANIZATIONS
practicable, apply to mutual benefit associations.
"Section 426. The term trust property shall include all real or "Section 430. The Commissioner shall have the power to
personal properties or funds pertaining to the trust as well as register as a self-regulatory organization, or otherwise grant
"Section 421. To secure the enforcement of any provision
those acquired with the fruits or income therefrom or in licenses, and to regulate, supervise, examine, suspend or
under this title, the Commissioner may issue such rules,
rulings, instructions, orders and circulars. exchange or substitution thereof. otherwise discontinue, as a condition for the operation of
organizations whose operations are related to or connected
"Section 422. The violation of any provision of this title shall "Section 427. All trustees shall, before entering in the with the insurance market such as, but not limited to,
performance of the duties of their trust, obtain a certificate of associations of insurance companies, whether life or non-
subject the person violating or the officer of the association
registration from the Commissioner. The registration shall life, reinsurers, actuaries, agents, brokers, dealers, mutual
responsible therefor to a fine of not less than Ten thousand
pesos (P10,000.00), or imprisonment of not exceeding three expire on December 31 of the third year following its benefit associations, trusts, rating agencies, and other
issuance unless it is renewed. persons regulated by the Commissioner, which are engaged
(3) years, or both such fine and imprisonment, at the
in the business regulated by this Code.
discretion of the court.
"The Commissioner may prescribe rules and regulations members of the board of directors of the practices inconsistent with just and equitable principles of
which are necessary or appropriate in the public interest or association; fair trade.
for the protection of investors to govern self-regulatory
organizations and other organizations licensed or regulated "(4) Equitable allocation of reasonable "A self-regulatory organization may deny membership to an
pursuant to the authority granted hereunder including, but dues, fees, and other charges among entity not engaged in a type of business in which the rules of
not limited to, the requirement of cooperation within and members and other persons using any the association require members to be engaged.
among all participants in the insurance market to ensure facility or system which the association
transparency and facilitate exchange of information. operates or controls; "Section 433. Upon the filing of an application for registration
as a self-regulatory organization under this title, the
"Section 431. An association cannot be registered as a self- "(5) The prevention of fraudulent and Commissioner shall have ninety (90) days within which to
regulatory organization unless the Commissioner manipulative acts and practices to protect either grant registration or institute a proceeding to
determines that: the insuring public and the promotion of just determine whether registration should be denied. In the
and equitable principles of business; event proceedings are instituted, the Commissioner shall
"(a) The association is so organized and has the have two hundred seventy (270) days within which to
capacity to be able to carry out the purposes of this "(6) Members and persons associated with conclude such proceedings at which time he shall, by order,
Code and to comply with, and to enforce compliance its members subject to discipline for grant or deny such registration.
by its members and persons associated with its violation of any provision of this Code, the
members, with the provisions of this Code, the rules rules or regulations thereunder, or the rules "Section 434. Every self-regulatory organization shall
and regulations thereunder, and the rules of the of the association; comply with the provisions of this Code, the rules and
association. regulations thereunder, and its own rules, and enforce
"(7) Fair procedure for the disciplining of compliance therewith by its members, persons associated
"(b) The rules of the association, notwithstanding members and persons associated with with its members or its participants, notwithstanding any
anything in the Corporation Code to the contrary, members; and provision of the Corporation Code to the contrary.
provide the following:
"(8) The prohibition or limitation of access to "Section 435. Each self-regulatory organization shall submit
"(1) Qualifications and the disqualifications services offered by the association or a to the Commissioner for prior approval any proposed rule or
on membership of the association; member thereof. amendment thereto, together with a concise statement of the
reason and effect of the proposed amendment.
"(2) A fair representation of its members to "Section 432. A self-regulatory organization may examine
serve on the board of directors of the and verify the qualifications of an applicant to become a "Within sixty (60) days after submission of a proposed
association and the administration of its member in accordance with procedures established by the amendment, the Commissioner shall, by order, approve the
affairs, and that any natural person rules of the association. proposed amendment. Otherwise, the same may be made
associated with a juridical entity that is a effective by the self-regulatory organization.
member shall also be deemed to be a
"A self-regulatory organization shall deny membership or
member for this purpose; "In the event of an emergency requiring action for the
condition the membership of an entity, if it does not meet the
standards of financial responsibility, operational capability, protection of the insuring public, a self-regulatory
"(3) The president of the association and at training, experience, or competence that are prescribed by organization may put a proposed amendment into effect
least two (2) independent directors as the rules of the association; or has engaged, and there is a summarily: Provided, however, That a copy of the same
reasonable likelihood it will again engage, in acts or shall be immediately submitted to the Commissioner.
"The Commissioner is further authorized, if after making Commission finds that such a self-regulatory thereunder, or the rules of the self-regulatory organization.
appropriate request in writing to a self-regulatory organization has willfully violated or is unable to In any disciplinary proceeding by a self-regulatory
organization that such organization effect on its own behalf comply with any provision of this Code or of the rules organization (other than a summary proceeding pursuant to
specified changes in its rules and practices and, after due and regulations thereunder, or its own rules, or has paragraph (b) of this section) the self-regulatory organization
notice and hearing, it determines that such changes have not failed to enforce compliance therewith by a member shall bring specific charges, provide notice to the person
been effected, and that such changes are necessary, by rule of, person associated with a member, or a charged, afford the person charged with an opportunity to
or regulation or by order, may alter, abrogate or supplement participant in such self-regulatory organization; defend against the charges, and keep a record of the
the rules of such self-regulatory organization insofar as proceedings. A determination to impose a disciplinary
necessary or appropriate to effect such changes in respect "(2) To expel from a self-regulatory organization any sanction shall be supported by a written statement of the
of such matters as: member thereof or any participant therein who is offense, a summary of the evidence presented and a
found to have willfully violated any provision of this statement of the sanction imposed.
"(a) Safeguards in respect of the financial Code or suspend for a period not exceeding twelve
responsibility of members and adequate provision (12) months for violation of any provision of this "(b) A self-regulatory organization may summarily:
against the evasion of financial responsibility Code or any other law administered by the
through the use of corporate forms or special Commission, or the rules and regulations "(1) Suspend a member, participant or person
partnerships; thereunder, or effected, directly or indirectly, any associated with a member who has been or is
transaction for any person who, such member or expelled or suspended from any other self-
"(b) The supervision of market practices; participant had reason to believe, was violating in regulatory organization; or
respect of such transaction any of such provisions;
and
"(c) The manner, method and place of soliciting "(2) Suspend a member who the self-regulatory
business; organization finds to be in such financial or operating
"(3) To remove from office or censure any officer or difficulty that the member or participant cannot be
"(d) The fixing of reasonable rates of fees, interest, director of a self-regulatory organization if it finds permitted to continue to do business as a member
that such officer or director has violated any with safety to investors, creditors, other members,
listing and other charges, but not rates of
provision of this Code, any other law administered participants or the self-regulatory
commission; and self-regulatory organization; and
by the Commissioner, the rules or regulations organization: Provided, That the self-regulatory
thereunder and the rules of such self-regulatory organization immediately notifies the Commission of
"(e) The supervision, auditing and disciplining of organization, or has abused his authority, or without the action taken. Any person aggrieved by a
members. reasonable justification or excuse has failed to summary action pursuant to this paragraph shall be
enforce compliance with any of such provisions. promptly afforded an opportunity for a hearing by the
"In addition to the general powers of the Commissioner over association in accordance with the preceding
the entities under supervision, the Commissioner, after due "Section 436. (a) A self-regulatory organization is authorized paragraph. The Commissioner, by order, may stay a
notice and hearing, is authorized, in the public interest and to discipline a member of or participant in such self- summary action on his own or upon application by
to protect the insuring public: regulatory organization, or any person associated with a any person aggrieved thereby, if the Commissioner
member, including suspending or expelling such member or determines summarily or after due notice and
"(1) To suspend for a period not exceeding twelve participant, or suspending or barring such person from being hearing (which hearing may consist solely of the
(12) months or to revoke the registration of a self- associated with a member, if engaged in acts or practices submission of affidavits or presentation of oral
regulatory organization, or to censure or impose inconsistent with just and equitable principles of fairness or arguments), that a stay is consistent with the public
limitations on the activities, functions and operations in willful violation of any provision of this Code, any other law interest and the protection of the insuring public.
of such self-regulatory organization, if the administered by the Commission, the rules or regulations
"(c) A self-regulatory organization shall promptly notify the "The Insurance Commissioner shall have the duty to see that provide guidance on and supervise compliance with
Commission of any disciplinary sanction on any member all laws relating to insurance, insurance companies and such rules, regulations and orders;
thereof or participant therein, any denial of membership or other insurance matters, mutual benefit associations, and
participation in such organization, or the imposition of any trusts for charitable uses are faithfully executed and to "(e) Enlist the aid and support of, and/or deputize
disciplinary sanction on a person associated with a member perform the duties imposed upon him by this Code, and any and all enforcement agencies of the government
or a bar of such person from becoming so associated. Within shall, notwithstanding any existing laws to the contrary, have in the implementation of its powers and functions
thirty (30) days after such notice, any aggrieved person may sole and exclusive authority to regulate the issuance and under this Code;
appeal to the Commissioner from, or the Commissioner on sale of variable contracts as defined in Section 238 hereof
its own motion within such period, may institute review of, and to provide for the licensing of persons selling such "(f) Issue cease and desist orders to prevent fraud
the decision of the self-regulatory organization, at the contracts, and to issue such reasonable rules and or injury to the insuring public;
conclusion of which, after due notice and hearing (which may regulations governing the same.
consist solely of review of the record before the self-
regulatory organization), the Commissioner shall affirm, "(g) Punish for contempt of the Commissioner, both
"The Commissioner may issue such rulings, instructions,
modify or set aside the sanction. In such proceeding, the direct and indirect, in accordance with the pertinent
circulars, orders and decisions as may be deemed provisions of and penalties prescribed by the Rules
Commissioner shall determine whether the aggrieved necessary to secure the enforcement of the provisions of this
person has engaged or omitted to engage in the acts and of Court;
Code, to ensure the efficient regulation of the insurance
practices as found by the self-regulatory organization, industry in accordance with global best practices and to
whether such acts and practices constitute willful violations protect the insuring public. Except as otherwise specified, "(h) Compel the officers of any registered insurance
of this Code, any other law administered by the Commission, decisions made by the Commissioner shall be appealable to corporation or association to call meetings of
the rules or regulations thereunder, or the rules of the self- the Secretary of Finance. stockholders or members thereof under its
regulatory organization as specified by such organization, supervision;
whether such provisions were applied in a manner
"In addition to the foregoing, the Commissioner shall have
consistent with the purposes of this Code, and whether, with the following powers and functions: "(i) Issue subpoena duces tecum and summon
due regard for the public interest and the protection of witnesses to appear in any proceeding of the
investors, the sanction is excessive or oppressive. Commission and, in appropriate cases, order the
"(a) Formulate policies and recommendations on
examination, search and seizure of all documents,
issues concerning the insurance industry, advise papers, files and records, tax returns, and books of
"CHAPTER X
Congress and other government agencies on all accounts of any entity or person under investigation
"THE INSURANCE COMMISSIONER aspects of the insurance industry and propose
as may be necessary for the proper disposition of
legislation and amendments thereto;
"TITLE 1 the cases before it, subject to the provisions of
"ADMINISTRATIVE AND ADJUDICATORY POWERS existing laws;
"(b) Approve, reject, suspend or revoke licenses or
certificates of registration provided for by this Code;
"Section 437. The Insurance Commissioner shall be "(j) Suspend or revoke, after proper notice and
appointed by the President of the Republic of the Philippines hearing, the license or certificate of authority of any
"(c) Impose sanctions for the violation of laws and entity or person under its regulation, upon any of the
for a term of six (6) years without reappointment and who the rules, regulations and orders issued pursuant
shall serve as such until the successor shall have been grounds provided by law;
thereto;
appointed and qualified. If the Insurance Commissioner is
removed before the expiration of his term of office, the "(k) Conduct an examination to determine
reason for the removal must be published. "(d) Prepare, approve, amend or repeal rules, compliance with laws and regulations if the
regulations and orders, and issue opinions and
 circumstances so warrant as determined by "In the event of settlement or compromise, indemnification for which a reinsurer may be sued under any contract of
appropriate rules and regulations; shall be provided only in connection with such matters reinsurance it may have entered into; or for which a mutual
covered by the settlement as to which the Commission is benefit association may be held liable under the membership
"(l) Investigate not oftener than once a year from the advised by external counsel that the persons to be certificates it has issued to its members, where the amount
last date of examination to determine whether an indemnified did not commit any negligence or misconduct: of any such loss, damage or liability, excluding interest, cost
institution is conducting its business on a safe and and attorney’s fees, being claimed or sued upon any kind of
sound basis: Provided, That, the "The costs and expenses incurred in defending the insurance, bond, reinsurance contract, or membership
deficiencies/irregularities found by or discovered by aforementioned action, suit or proceeding may be paid by certificate does not exceed in any single claim Five million
an audit shall be immediately addressed; the Commission in advance of the final disposition of such pesos (P5,000,000.00).
action, suit or proceeding upon receipt of an undertaking by
"(m) Inquire into the solvency and liquidity of the or on behalf of the Commissioner, Deputy Commissioner, "The power of the Commissioner does not cover the
institutions under its supervision and enforce prompt officer or employee to repay the amount advanced should it relationship between the insurance company and its
corrective action; ultimately be determined by the Commission that the person agents/brokers but is limited to adjudicating claims and
is not entitled to be indemnified. complaints filed by the insured against the insurance
"(n) To retain and utilize, in addition to its annual company.
budget, all fees, charges and other income derived "Section 438. In addition to the administrative sanctions
from the regulation of insurance companies and provided elsewhere in this Code, the Insurance "The Commissioner may authorize any officer or group of
other supervised persons or entities; Commissioner is hereby authorized, at his discretion, to officers under him to conduct investigation, inquiry and/or
impose upon insurance companies, their directors and/or hearing and decide claims and he may issue rules governing
officers and/or agents, for any willful failure or refusal to the conduct of adjudication and resolution of cases. The
"(o) To fix and assess fees, charges and penalties
as the Commissioner may find reasonable in the comply with, or violation of any provision of this Code, or any Rules of Court shall have suppletory application.
exercise of regulation; and order, instruction, regulation, or ruling of the Insurance
Commissioner, or any commission or irregularities, and/or "The party filing an action pursuant to the provisions of this
conducting business in an unsafe or unsound manner as section thereby submits his person to the jurisdiction of the
"(p) Exercise such other powers as may be provided may be determined by the Insurance Commissioner, the Commissioner. The Commissioner shall acquire jurisdiction
by law as well as those which may be implied from, following:
or which are necessary or incidental to the express over the person of the impleaded party or parties in
powers granted the Commission to achieve the accordance with and pursuant to the provisions of the Rules
"(a) Fines not less than Five thousand pesos of Court.
objectives and purposes of this Code.
(P5,000.00) and not more than Two hundred
thousand pesos (P200,000.00); and "The authority to adjudicate granted to the Commissioner
"The Commission shall indemnify the Commissioner, Deputy
Commissioner, and other officials of the Commission, under this section shall be concurrent with that of the civil
"(b) Suspension, or after due hearing, removal of courts, but the filing of a complaint with the Commissioner
including personnel performing supervision and examination
directors and/or officers and/or agents. shall preclude the civil courts from taking cognizance of a
functions, for all costs and expenses reasonably incurred by
such persons in connection with any civil or criminal actions, suit involving the same subject matter.
suits or proceedings to which they may be made a party to "Section 439. The Commissioner shall have the power to
by the reason of the performance of their duties and adjudicate claims and complaints involving any loss, "Any decision, order or ruling rendered by the Commissioner
functions, unless they are finally adjudged in such actions, damage or liability for which an insurer may be answerable after a hearing shall have the force and effect of a judgment.
suits or proceedings to be liable for negligence or under any kind of policy or contract of insurance, or for which Any party may appeal from a final order, ruling or decision of
misconduct. such insurer may be liable under a contract of suretyship, or the Commissioner by filing with the Commissioner within
thirty (30) days from receipt of copy of such order, ruling or "For each special certificate of authority issued to a "For each certificate of registration issued to a trust
decision a notice of appeal to the Court of Appeals in the servicing insurance company, One hundred pesos for charitable uses, Ten pesos (P10.00).
manner provided for in the Rules of Court for appeals from (P100.00).
the Regional Trial Court to the Court of Appeals. "All certificates of authority and all other licenses, as well as
"For each license issued to a general agent of an all certificates of registration, issued to any person,
"For the purpose of any proceeding under this section, the insurance company, Fifty pesos (P50.00). partnership, association or corporation under the pertinent
Commissioner, or any officer thereof designated by him is provisions of this Code for which no expiration date has been
empowered to administer oaths and affirmation, subpoena "For each license issued to an insurance agent, prescribed, shall expire on the last day of December of the
witnesses, compel their attendance, take evidence, and Twenty-five pesos (P25.00). third year from its issuance and shall be renewed upon
require the production of any books, papers, documents, or application therefor and payment of the corresponding fee, if
contracts or other records which are relevant or material to "For each license issued to an agent of variable the licensee or holder of such license or certificate is
the inquiry. contract policy, Twenty-five pesos (P25.00). continuing to comply with all the applicable provisions of
existing laws, and of rules, instructions, orders and decisions
"A full and complete record shall be kept of all proceedings of the Commissioner.
"For each license issued to an insurance broker,
had before the Commissioner, or the officers thereof One hundred pesos (P100.00).
designated by him, and all testimony shall be taken down "(b) For the filing of the annual statement referred to in
and transcribed by a stenographer appointed by the Section 229, the Commissioner shall collect and receive
Commissioner. "For each license issued to a reinsurance broker, from the insurance company so filing a fee of not less than
One hundred pesos (P100.00). Five hundred pesos (P500.00): Provided, That a fine of not
"In order to promote party autonomy in the resolution of less than One hundred pesos (P100.00) shall be imposed
cases, the Commissioner shall establish a system for "For each license issued to an insurance adjuster, and collected by the Commissioner for each week of delay,
resolving cases through the use of alternative dispute One hundred pesos (P100.00). or any fraction thereof, in the filing of the annual statement.
resolution.
"For each certificate of registration issued to an "For the filing of annual statement referred to in Section 413,
"TITLE 2 actuary, Fifty pesos (P50.00). the Commissioner shall collect and receive from the mutual
"FEES AND OTHER SOURCES OF FUNDS benefit association so filing a fee of not less than Ten pesos
"For each certificate of registration issued to a (P10.00): Provided, That a fine of not less than Ten pesos
resident agent, Fifty pesos (P50.00). (P10.00) shall be imposed and collected by the
"Section 440. (a) For the issuance or renewal of certificates
Commissioner for each week of delay, or any fraction
of authority, licenses and certificates of registration, pursuant
to pertinent provisions of this Code, the Commissioner shall "For each license issued to a rating organization, thereof, in the filing of the annual statement.
collect and receive fees which shall be not less than the One hundred pesos (P100.00).
following: "(c) For the examination prescribed in Section 253, the
"For each certificate of registration issued to a non- Commissioner shall collect and receive fees according to the
"For each certificate of authority issued to an life company underwriter, Fifty pesos (P50.00). amount of its total assets, in the case of a domestic
insurance company doing business in the company, or of its assets in the Philippines, in the case of a
Philippines, Two hundred pesos (P200.00). foreign company, not less than the amount as follows:
"For each license issued to a mutual benefit
association, Ten pesos (P10.00).
"(1) Two million pesos or more but less than Four
million pesos, Four hundred pesos (P400.00);
 "(2) Four million pesos or more but less than Six "Section 441. The Commissioner, in accordance with the licensed or registered under the provisions of this Code and
million pesos, Eight hundred pesos (P800.00); rules and regulations of the Department of Budget and shall be governed by the provisions thereof: Provided,
Management and other relevant regulatory agencies, shall however, That where any such person, partnership,
"(3) Six million pesos or more but less than Eight source the salary, allowances and other expenses from the association or corporation is affected by the new
million pesos, One thousand two hundred pesos retained amount of the fees, charges, penalties and other requirements of this Code, said person, partnership,
(P1,200.00); income from the regulation of insurance companies and association or corporation shall, unless otherwise herein
other covered persons and entities, and from the Insurance provided, be given a period of one (1) year from the
Fund, which is created out of the proceeds of taxes on effectivity of this Code within which to comply with the same.
"(4) Eight million pesos or more but less than Ten
million pesos, One thousand six hundred pesos insurance premiums mentioned in Section 255 of the
(P1,600.00); National Internal Revenue Code, as amended. "Section 445. Transitory Provision. – Renewal of existing
licenses, certificates of authority or accreditation which will
"(5) Ten million pesos or more, Two thousand pesos "MISCELLANEOUS PROVISIONS expire on June 30, 2013 shall be valid until December 31,
2015. Thereafter, renewal shall be filed on the last day of
(P2,000.00);
"Section 442. Any person, company or corporation subject December every third year following the date of expiry of the
to the supervision and control of the Commissioner who license, certificate of authority or accreditation.
"Provided, That if the said examination is made in places
outside the Metropolitan Manila area, besides these fees, violates any provision of this Code, for which no penalty is
provided, shall be deemed guilty of a penal offense, and "Section 446. Repealing Clause. – Except as expressly
the Commissioner shall require of the company examined
upon conviction be punished by a fine not exceeding Two provided by this Code, all laws, decrees, orders, rules and
the payment of the actual and necessary travelling and
hundred thousand pesos (P200,000.00) or imprisonment of regulations or parts thereof, inconsistent with any provision
subsistence expenses of the examiner or examiners
six (6) months, or both, at the discretion of the court. of this Code shall be deemed repealed, amended or
concerned.
modified accordingly.
"If the offense is committed by a company or corporation, the
"For the examination prescribed in Section 412, the
officers, directors, or other persons responsible for its "Section 447. Separability Clause. – If any provision of this
Commissioner shall collect and receive a minimum fee of not
operation, management, or administration, unless it can be Code or any part hereof be declared invalid or
less than One hundred pesos (P100.00) from the mutual
proved that they have taken no part in the commission of the unconstitutional, the remainder of the law or other provisions
benefit association examined: Provided, That if such
association has total assets of more than One hundred offense, shall likewise be guilty of a penal offense, and upon not otherwise affected shall remain valid and subsisting.
thousand pesos (P100,000.00), an additional fee of not less conviction be punished by a fine not exceeding Two hundred
thousand pesos (P200,000.00) or imprisonment of six (6) "Section 448. This Code shall take effect fifteen (15) days
than Ten pesos (P10.00) for every Fifty thousand pesos
months, or both, at the discretion of the court. following its publication in a newspaper of general
(P50,000.00) in excess thereof shall be imposed:
circuation."
"(d) For the filing of an application to withdraw from the "Section 443. All criminal actions for the violation of any of
the provisions of this Code shall prescribe after three (3) Approved,
Philippines under Title 18, the Commissioner shall collect
years from the discovery of such violation: Provided, That
and receive from the foreign company so withdrawing a fee
of not less than One thousand pesos (P1,000.00). such actions shall in any event prescribe after ten (10) years
from the commission of such violation.
(Sgd.) JINGGOY (Sgd.) FELICIANO
"(e) The Commissioner may fix and collect fees or charges EJERCITO ESTRADA BELMONTE JR.
"Section 444. Any person, partnership, association or
for documents, transcripts, or other materials which may be Acting Senate President Speaker of the House of
corporation heretofore authorized, licensed or registered by
furnished by him not in excess of reasonable cost. Representatives
the Commissioner shall be deemed to have been authorized,
This Act which is a consolidation of House Bill No. 4867 and
Senate Bill No. 3280 was finally passed by the House of
Representatives and the Senate on February 6, 2013.

(Sgd.) EMMA LIRIO- (Sgd.) MARILYN B.

Approved: AUG 15 2013

(Sgd.) BENIGNO S. AQUINO III