[REPUBLIC ACT NO.

10607] him, may be insured against, subject to the lifetime, the designation shall be deemed
provisions of this chapter. irrevocable.
AN ACT STRENGTHENING THE INSURANCE
INDUSTRY, FURTHER AMENDING PRESIDENTIAL “The consent of the spouse is not necessary for the “SEC. 12. The interest of a beneficiary in a life
DECREE NO. 612, OTHERWISE KNOWN AS “THE validity of an insurance policy taken out by a married insurance policy shall be forfeited when the
INSURANCE CODE”, AS AMENDED BY PRESIDENTIAL person on his or her life or that of his or her beneficiary is the principal, accomplice, or accessory
DECREE NOS. 1141, 1280, 1455, 1460, 1814 AND children. in willfully bringing about the death of the insured.
1981, AND BATAS PAMBANSA BLG. 874, AND FOR In such a case, the share forfeited shall pass on to
OTHER PURPOSES the other beneficiaries, unless otherwise
“All rights, title and interest in the policy of
disqualified. In the absence of other beneficiaries,
insurance taken out by an original owner on the life
the proceeds shall be paid in accordance with the
Be it enacted by the Senate and House of or health of the person insured shall automatically
policy contract. If the policy contract is silent, the
Representatives of the Philippines in Congress vest in the latter upon the death of the original
proceeds shall be paid to the estate of the insured.
assembled: owner, unless otherwise provided for in the policy.

“SEC. 13. Every interest in property, whether real or

SECTION 1. Presidential Decree No. 612, as “SEC. 4. The preceding section does not authorize an
personal, or any relation thereto, or liability in
amended, is hereby further amended to read as insurance for or against the drawing of any lottery,
respect thereof, of such nature that a contemplated
follows: or for or against any chance or ticket in a lottery
peril might directly damnify the insured, is an
drawing a prize.
insurable interest.
“GENERAL PROVISIONS
“SEC. 5. All kinds of insurance are subject to the
“SEC. 14. An insurable interest in property may
provisions of this chapter so far as the provisions can
“SECTION 1. This Decree shall be known as ‘The consist in:
apply.
Insurance Code’.
“(a) An existing interest;
“TITLE 2
“SEC. 2. Whenever used in this Code, the following
terms shall have the respective meanings
“(b) An inchoate interest founded on an existing
hereinafter set forth or indicated, unless the context “PARTIES TO THE CONTRACT
interest; or
otherwise requires:
“SEC. 6. Every corporation, partnership, or
“(c) An expectancy, coupled with an existing interest
“(a) A contract of insurance is an agreement association, duly authorized to transact insurance
in that out of which the expectancy arises.
whereby one undertakes for a consideration to business as elsewhere provided in this Code, may be
indemnify another against loss, damage or liability an insurer.
arising from an unknown or contingent event. “SEC. 15. A carrier or depository of any kind has an
insurable interest in a thing held by him as such, to
“SEC. 7. Anyone except a public enemy may be
the extent of his liability but not to exceed the value
“A contract of suretyship shall be deemed to be an insured.
thereof.
insurance contract, within the meaning of this Code,
only if made by a surety who or which, as such, is
“SEC. 8. Unless the policy otherwise provides, where
doing an insurance business as hereinafter provided. “SEC. 16. A mere contingent or expectant interest in
a mortgagor of property effects insurance in his own
any thing, not founded on an actual right to the
name providing that the loss shall be payable to the
thing, nor upon any valid contract for it, is not
“(b) The term doing an insurance mortgagee, or assigns a policy of insurance to a
insurable.
business or transacting an insurance business, within mortgagee, the insurance is deemed to be upon the
the meaning of this Code, shall include: interest of the mortgagor, who does not cease to be
a party to the original contract, and any act of his, “SEC. 17. The measure of an insurable interest in
prior to the loss, which would otherwise avoid the property is the extent to which the insured might be
“(1) Making or proposing to make, as insurer, any
insurance, will have the same effect, although the damnified by loss or injury thereof.
insurance contract;
property is in the hands of the mortgagee, but any
act which, under the contract of insurance, is to be
“SEC. 18. No contract or policy of insurance on
“(2) Making or proposing to make, as surety, any performed by the mortgagor, may be performed by
property shall be enforceable except for the benefit
contract of suretyship as a vocation and not as the mortgagee therein named, with the same effect
of some person having an insurable interest in the
merely incidental to any other legitimate business or as if it had been performed by the mortgagor.
property insured.
activity of the surety;
“SEC. 9. If an insurer assents to the transfer of an
“SEC. 19. An interest in property insured must exist
“(3) Doing any kind of business, including a insurance from a mortgagor to a mortgagee, and, at
when the insurance takes effect, and when the loss
reinsurance business, specifically recognized as the time of his assent, imposes further obligations
occurs, but need not exist in the meantime; and
constituting the doing of an insurance business on the assignee, making a new contract with him,
interest in the life or health of a person insured must
within the meaning of this Code; the acts of the mortgagor cannot affect the rights of
exist when the insurance takes effect, but need not
said assignee.
exist thereafter or when the loss occurs.
“(4) Doing or proposing to do any business in
substance equivalent to any of the foregoing in a “TITLE 3
“SEC. 20. Except in the cases specified in the next
manner designed to evade the provisions of this
four sections, and in the cases of life, accident, and
Code.
“INSURABLE INTEREST health insurance, a change of interest in any part of
a thing insured unaccompanied by a corresponding
“In the application of the provisions of this Code, the change of interest in the insurance, suspends the
“SEC. 10. Every person has an insurable interest in
fact that no profit is derived from the making of insurance to an equivalent extent, until the interest
the life and health:
insurance contracts, agreements or transactions or in the thing and the interest in the insurance are
that no separate or direct consideration is received vested in the same person.
therefor, shall not be deemed conclusive to show “(a) Of himself, of his spouse and of his children;
that the making thereof does not constitute the
“SEC. 21. A change of interest in a thing insured,
doing or transacting of an insurance business.
“(b) Of any person on whom he depends wholly or in after the occurrence of an injury which results in a
part for education or support, or in whom he has a loss, does not affect the right of the insured to
“(c) As used in this Code, the pecuniary interest; indemnity for the loss.
term Commissioner means the Insurance
Commissioner.
“(c) Of any person under a legal obligation to him for “SEC. 22. A change of interest in one or more of
the payment of money, or respecting property or several distinct things, separately insured by one
“CHAPTER I services, of which death or illness might delay or policy, does not avoid the insurance as to the others.
prevent the performance; and
“THE CONTRACT OF INSURANCE “SEC. 23. A change of interest, by will or succession,
“(d) Of any person upon whose life any estate or on the death of the insured, does not avoid an
interest vested in him depends. insurance; and his interest in the insurance passes to
“TITLE 1
the person taking his interest in the thing insured.
“SEC. 11. The insured shall have the right to change
“WHAT MAY BE INSURED
the beneficiary he designated in the policy, unless he “SEC. 24. A transfer of interest by one of several
has expressly waived this right in said policy. partners, joint owners, or owners in common, who
“SEC. 3. Any contingent or unknown event, whether Notwithstanding the foregoing, in the event the are jointly insured, to the others, does not avoid an
past or future, which may damnify a person having insured does not change the beneficiary during his insurance even though it has been agreed that the
an insurable interest, or create a liability against
insurance shall cease upon an alienation of the thing “TITLE 5 insurance shall be written on the blank spaces
insured. provided therein.
“REPRESENTATION
“SEC. 25. Every stipulation in a policy of insurance “Any rider, clause, warranty or endorsement
for the payment of loss whether the person insured purporting to be part of the contract of insurance
“SEC. 36. A representation may be oral or written.
has or has not any interest in the property insured, and which is pasted or attached to said policy is not
or that the policy shall be received as proof of such binding on the insured, unless the descriptive title or
interest, and every policy executed by way of gaming “SEC. 37. A representation may be made at the time name of the rider, clause, warranty or endorsement
or wagering, is void. of, or before, issuance of the policy. is also mentioned and written on the blank spaces
provided in the policy.
“TITLE 4 “SEC. 38. The language of a representation is to be
interpreted by the same rules as the language of “Unless applied for by the insured or owner, any
contracts in general. rider, clause, warranty or endorsement issued after
“CONCEALMENT
the original policy shall be countersigned by the
“SEC. 39. A representation as to the future is to be insured or owner, which countersignature shall be
“SEC. 26. A neglect to communicate that which a taken as his agreement to the contents of such rider,
deemed a promise, unless it appears that it was
party knows and ought to communicate, is called a clause, warranty or endorsement.
merely a statement of belief or expectation.
concealment.

“SEC. 40. A representation cannot qualify an express “Notwithstanding the foregoing, the policy may be
“SEC. 27. A concealment whether intentional or in electronic form subject to the pertinent provisions
provision in a contract of insurance, but it may
unintentional entitles the injured party to rescind a of Republic Act No. 8792, otherwise known as the
qualify an implied warranty.
contract of insurance. ‘Electronic Commerce Act’ and to such rules and
regulations as may be prescribed by the
“SEC. 41. A representation may be altered or Commissioner.
“SEC. 28. Each party to a contract of insurance must
withdrawn before the insurance is effected, but not
communicate to the other, in good faith, all facts
afterwards.
within his knowledge which are material to the “SEC. 51. A policy of insurance must specify:
contract and as to which he makes no warranty, and
which the other has not the means of ascertaining. “SEC. 42. A representation must be presumed to
refer to the date on which the contract goes into “(a) The parties between whom the contract is
effect. made;
“SEC. 29. An intentional and fraudulent omission, on
the part of one insured, to communicate
“SEC. 43. When a person insured has no personal “(b) The amount to be insured except in the cases of
information of matters proving or tending to prove
knowledge of a fact, he may nevertheless repeat open or running policies;
the falsity of a warranty, entitles the insurer to
rescind. information which he has upon the subject, and
which he believes to be true, with the explanation “(c) The premium, or if the insurance is of a
that he does so on the information of others; or he character where the exact premium is only
“SEC. 30. Neither party to a contract of insurance is
may submit the information, in its whole extent, to determinable upon the termination of the contract,
bound to communicate information of the matters
the insurer; and in neither case is he responsible for a statement of the basis and rates upon which the
following, except in answer to the inquiries of the
its truth, unless it proceeds from an agent of the final premium is to be determined;
other:
insured, whose duty it is to give the information.
“(d) The property or life insured;
“(a) Those which the other knows;
“SEC. 44. A representation is to be deemed false
when the facts fail to correspond with its assertions
“(e) The interest of the insured in property insured,
“(b) Those which, in the exercise of ordinary care, or stipulations.
if he is not the absolute owner thereof;
the other ought to know, and of which the former
has no reason to suppose him ignorant;
“SEC. 45. If a representation is false in a material
“(f) The risks insured against; and
point, whether affirmative or promissory, the
“(c) Those of which the other waives injured party is entitled to rescind the contract from
communication; the time when the representation becomes false. “(g) The period during which the insurance is to
continue.
“(d) Those which prove or tend to prove the “SEC. 46. The materiality of a representation is
existence of a risk excluded by a warranty, and determined by the same rules as the materiality of a “SEC. 52. Cover notes may be issued to bind
which are not otherwise material; and concealment. insurance temporarily pending the issuance of the
policy. Within sixty (60) days after issue of a cover
note, a policy shall be issued in lieu thereof,
“(e) Those which relate to a risk excepted from the “SEC. 47. The provisions of this chapter apply as well
including within its terms the identical insurance
policy and which are not otherwise material. to a modification of a contract of insurance as to its
bound under the cover note and the premium
original formation.
therefor.
“SEC. 31. Materiality is to be determined not by the
event, but solely by the probable and reasonable “SEC. 48. Whenever a right to rescind a contract of
“Cover notes may be extended or renewed beyond
influence of the facts upon the party to whom the insurance is given to the insurer by any provision of
such sixty (60) days with the written approval of the
communication is due, in forming his estimate of the this chapter, such right must be exercised previous
Commissioner if he determines that such extension
disadvantages of the proposed contract, or in to the commencement of an action on the contract.
is not contrary to and is not for the purpose of
making his inquiries.
violating any provisions of this Code. The
“After a policy of life insurance made payable on the Commissioner may promulgate rules and regulations
“SEC. 32. Each party to a contract of insurance is death of the insured shall have been in force during governing such extensions for the purpose of
bound to know all the general causes which are the lifetime of the insured for a period of two (2) preventing such violations and may by such rules
open to his inquiry, equally with that of the other, years from the date of its issue or of its last and regulations dispense with the requirement of
and which may affect the political or material perils reinstatement, the insurer cannot prove that the written approval by him in the case of extension in
contemplated; and all general usages of trade. policy is void ab initio or is rescindable by reason of compliance with such rules and regulations.
the fraudulent concealment or misrepresentation of
the insured or his agent.
“SEC. 33. The right to information of material facts “SEC. 53. The insurance proceeds shall be applied
may be waived, either by the terms of insurance or exclusively to the proper interest of the person in
by neglect to make inquiry as to such facts, where “TITLE 6 whose name or for whose benefit it is made unless
they are distinctly implied in other facts of which otherwise specified in the policy.
information is communicated.
“THE POLICY
“SEC. 54. When an insurance contract is executed
“SEC. 34. Information of the nature or amount of the with an agent or trustee as the insured, the fact that
“SEC. 49. The written instrument in which a contract
interest of one insured need not be communicated his principal or beneficiary is the real party in
of insurance is set forth, is called a policy of
unless in answer to an inquiry, except as prescribed interest may be indicated by describing the insured
insurance.
by Section 51. as agent or trustee, or by other general words in the
policy.
“SEC. 50. The policy shall be in printed form which
“SEC. 35. Neither party to a contract of insurance is
may contain blank spaces; and any word, phrase,
bound to communicate, even upon inquiry, “SEC. 55. To render an insurance effected by one
clause, mark, sign, symbol, signature, number, or
information of his own judgment upon the matters partner or part-owner, applicable to the interest of
word necessary to complete the contract of
in question. his co-partners or other part-owners, it is necessary
that the terms of the policy should be such as are “(b) That, upon written request of the named intermediary should exceed ninety (90) days from
applicable to the joint or common interest. insured, the insurer will furnish the facts on which date of issuance of the policy.
the cancellation is based.
“SEC. 56. When the description of the insured in a “SEC. 78. Employees of the Republic of the
policy is so general that it may comprehend any “SEC. 66. In case of insurance other than life, unless Philippines, including its political subdivisions and
person or any class of persons, only he who can the insurer at least forty-five (45) days in advance of instrumentalities, and government-owned or -
show that it was intended to include him, can claim the end of the policy period mails or delivers to the controlled corporations, may pay their insurance
the benefit of the policy. named insured at the address shown in the policy premiums and loan obligations through salary
notice of its intention not to renew the policy or to deduction: Provided, That the treasurer, cashier,
condition its renewal upon reduction of limits or paymaster or official of the entity employing the
“SEC. 57. A policy may be so framed that it will inure
elimination of coverages, the named insured shall be government employee is authorized,
to the benefit of whomsoever, during the
entitled to renew the policy upon payment of the notwithstanding the provisions of any existing law,
continuance of the risk, may become the owner of
premium due on the effective date of the renewal. rules and regulations to the contrary, to make
the interest insured.
Any policy written for a term of less than one (1) deductions from the salary, wage or income of the
year shall be considered as if written for a term of latter pursuant to the agreement between the
“SEC. 58. The mere transfer of a thing insured does one (1) year. Any policy written for a term longer insurer and the government employee and to remit
not transfer the policy, but suspends it until the than one (1) year or any policy with no fixed such deductions to the insurer concerned, and
same person becomes the owner of both the policy expiration date shall be considered as if written for collect such reasonable fee for its services.
and the thing insured. successive policy periods or terms of one (1) year.
“SEC. 79. An acknowledgment in a policy or contract
“SEC. 59. A policy is either open, valued or running. “TITLE 7 of insurance or the receipt of premium is conclusive
evidence of its payment, so far as to make the policy
“SEC. 60. An open policy is one in which the value of binding, notwithstanding any stipulation therein that
“WARRANTIES
the thing insured is not agreed upon, and the it shall not be binding until the premium is actually
amount of the insurance merely represents the paid.
“SEC. 67. A warranty is either expressed or implied.
insurer’s maximum liability. The value of such thing
insured shall be ascertained at the time of the loss. “SEC. 80. A person insured is entitled to a return of
“SEC. 68. A warranty may relate to the past, the premium, as follows:
present, the future, or to any or all of these.
“SEC. 61. A valued policy is one which expresses on
its face an agreement that the thing insured shall be “(a) To the whole premium if no part of his interest
valued at a specific sum. “SEC. 69. No particular form of words is necessary to in the thing insured be exposed to any of the perils
create a warranty. insured against;
“SEC. 62. A running policy is one which contemplates
successive insurances, and which provides that the “SEC. 70. Without prejudice to Section 51, every “(b) Where the insurance is made for a definite
object of the policy may be from time to time express warranty, made at or before the execution period of time and the insured surrenders his policy,
defined, especially as to the subjects of insurance, by of a policy, must be contained in the policy itself, or to such portion of the premium as corresponds with
additional statements or indorsements. in another instrument signed by the insured and the unexpired time, at a pro rata rate, unless a short
referred to in the policy as making a part of it. period rate has been agreed upon and appears on
“SEC. 63. A condition, stipulation, or agreement in the face of the policy, after deducting from the
any policy of insurance, limiting the time for “SEC. 71. A statement in a policy, of a matter relating whole premium any claim for loss or damage under
commencing an action thereunder to a period of less to the person or thing insured, or to the risk, as fact, the policy which has previously accrued: Provided,
than one (1) year from the time when the cause of is an express warranty thereof. That no holder of a life insurance policy may avail
action accrues, is void. himself of the privileges of this paragraph without
sufficient cause as otherwise provided by law.
“SEC. 72. A statement in a policy, which imparts that
“SEC. 64. No policy of insurance other than life shall it is intended to do or not to do a thing which
be cancelled by the insurer except upon prior notice materially affects the risk, is a warranty that such act “SEC. 81. If a peril insured against has existed, and
thereof to the insured, and no notice of cancellation or omission shall take place. the insurer has been liable for any period, however
shall be effective unless it is based on the short, the insured is not entitled to return of
occurrence, after the effective date of the policy, of premiums, so far as that particular risk is concerned.
“SEC. 73. When, before the time arrives for the
one or more of the following:
performance of a warranty relating to the future, a
loss insured against happens, or performance “SEC. 82. A person insured is entitled to a return of
“(a) Nonpayment of premium; becomes unlawful at the place of the contract, or the premium when the contract is voidable, and
impossible, the omission to fulfill the warranty does subsequently annulled under the provisions of the
not avoid the policy. Civil Code; or on account of the fraud or
“(b) Conviction of a crime arising out of acts misrepresentation of the insurer, or of his agent, or
increasing the hazard insured against; on account of facts, or the existence of which the
“SEC. 74. The violation of a material warranty, or insured was ignorant of without his fault; or when by
other material provision of a policy, on the part of any default of the insured other than actual fraud,
“(c) Discovery of fraud or material
either party thereto, entitles the other to rescind. the insurer never incurred any liability under the
misrepresentation;
policy.
“SEC. 75. A policy may declare that a violation of
“(d) Discovery of willful or reckless acts or omissions
specified provisions thereof shall avoid it, otherwise “A person insured is not entitled to a return of
increasing the hazard insured against;
the breach of an immaterial provision does not avoid premium if the policy is annulled, rescinded or if a
the policy. claim is denied by reason of fraud.
“(e) Physical changes in the property insured which
result in the property becoming uninsurable;
“SEC. 76. A breach of warranty without fraud merely “SEC. 83. In case of an over insurance by several
exonerates an insurer from the time that it occurs, insurers other than life, the insured is entitled to a
“(f) Discovery of other insurance coverage that or where it is broken in its inception, prevents the ratable return of the premium, proportioned to the
makes the total insurance in excess of the value of policy from attaching to the risk. amount by which the aggregate sum insured in all
the property insured; or the policies exceeds the insurable value of the thing
“TITLE 8 at risk.
“(g) A determination by the Commissioner that the
continuation of the policy would violate or would “SEC. 84. An insurer may contract and accept
“PREMIUM
place the insurer in violation of this Code. payments, in addition to regular premium, for the
purpose of paying future premiums on the policy or
“SEC. 77. An insurer is entitled to payment of the to increase the benefits thereof.
“SEC. 65. All notices of cancellation mentioned in the
premium as soon as the thing insured is exposed to
preceding section shall be in writing, mailed or
the peril insured against. Notwithstanding any
delivered to the named insured at the address “TITLE 9
agreement to the contrary, no policy or contract of
shown in the policy, or to his broker provided the
insurance issued by an insurance company is valid
broker is authorized in writing by the policy owner to
and binding unless and until the premium thereof “LOSS
receive the notice of cancellation on his behalf, and
has been paid, except in the case of a life or an
shall state:
industrial life policy whenever the grace period
provision applies, or whenever under the broker and “SEC. 85. An agreement not to transfer the claim of
“(a) Which of the grounds set forth in Section 64 is agency agreements with duly licensed the insured against the insurer after the loss has
relied upon; and intermediaries, a ninety (90)-day credit extension is happened, is void if made before the loss except as
given. No credit extension to a duly licensed otherwise provided in the case of life insurance.
“SEC. 86. Unless otherwise provided by the policy, “(b) Where the policy under which the insured construction, repair, operation, maintenance or use
an insurer is liable for a loss of which a peril insured claims is a valued policy, any sum received by him of the subject matter of such insurance (but not
against was the proximate cause, although a peril under any other policy shall be deducted from the including life insurance or surety bonds nor
not contemplated by the contract may have been a value of the policy without regard to the actual value insurance against loss by reason of bodily injury to
remote cause of the loss; but he is not liable for a of the subject matter insured; any person arising out of ownership, maintenance,
loss of which the peril insured against was only a or use of automobiles);
remote cause.
“(c) Where the policy under which the insured claims
is an unvalued policy, any sum received by him “(3) Precious stones, jewels, jewelry, precious
“SEC. 87. An insurer is liable where the thing insured under any policy shall be deducted against the full metals, whether in course of transportation or
is rescued from a peril insured against that would insurable value, for any sum received by him under otherwise; and
otherwise have caused a loss, if, in the course of any policy;
such rescue, the thing is exposed to a peril not
“(4) Bridges, tunnels and other instrumentalities of
insured against, which permanently deprives the
“(d) Where the insured receives any sum in excess of transportation and communication (excluding
insured of its possession, in whole or in part; or
the valuation in the case of valued policies, or of the buildings, their furniture and furnishings, fixed
where a loss is caused by efforts to rescue the thing
insurable value in the case of unvalued policies, he contents and supplies held in storage); piers,
insured from a peril insured against.
must hold such sum in trust for the insurers, wharves, docks and slips, and other aids to
according to their right of contribution among navigation and transportation, including dry docks
“SEC. 88. Where a peril is especially excepted in a themselves; and marine railways, dams and appurtenant facilities
contract of insurance, a loss, which would not have for the control of waterways.
occurred but for such peril, is thereby excepted
“(e) Each insurer is bound, as between himself and
although the immediate cause of the loss was a peril
the other insurers, to contribute ratably to the loss “(b) Marine protection and indemnity insurance,
which was not excepted.
in proportion to the amount for which he is liable meaning insurance against, or against legal liability
under his contract. of the insured for loss, damage, or expense incident
“SEC. 89. An insurer is not liable for a loss caused by to ownership, operation, chartering, maintenance,
the willful act or through the connivance of the use, repair, or construction of any vessel, craft or
“TITLE 12
insured; but he is not exonerated by the negligence instrumentality in use of ocean or inland waterways,
of the insured, or of the insurance agents or others. including liability of the insured for personal injury,
“REINSURANCE illness or death or for loss of or damage to the
property of another person.
“TITLE 10
“SEC. 97. A contract of reinsurance is one by which
an insurer procures a third person to insure him “SUB-TITLE 1-B
“NOTICE OF LOSS
against loss or liability by reason of such original
insurance.
“INSURABLE INTEREST
“SEC. 90. In case of loss upon an insurance against
fire, an insurer is exonerated, if written notice
“SEC. 98. Where an insurer obtains reinsurance,
thereof be not given to him by an insured, or some “SEC. 102. The owner of a ship has in all cases an
except under automatic reinsurance treaties, he
person entitled to the benefit of the insurance, insurable interest in it, even when it has been
must communicate all the representations of the
without unnecessary delay. For other non-life chartered by one who covenants to pay him its value
original insured, and also all the knowledge and
insurance, the Commissioner may specify the period in case of loss: Provided, That in this case the insurer
information he possesses, whether previously or
for the submission of the notice of loss. shall be liable for only that part of the loss which the
subsequently acquired, which are material to the
insured cannot recover from the charterer.
risk.
“SEC. 91. When a preliminary proof of loss is
required by a policy, the insured is not bound to give “SEC. 103. The insurable interest of the owner of the
“SEC. 99. A reinsurance is presumed to be a contract
such proof as would be necessary in a court of ship hypothecated by bottomry is only the excess of
of indemnity against liability, and not merely against
justice; but it is sufficient for him to give the best its value over the amount secured by bottomry.
damage.
evidence which he has in his power at the time.
“SEC. 104. Freightage, in the sense of a policy of
“SEC. 100. The original insured has no interest in a
“SEC. 92. All defects in a notice of loss, or in marine insurance, signifies all the benefits derived
contract of reinsurance.
preliminary proof thereof, which the insured might by the owner, either from the chartering of the ship
remedy, and which the insurer omits to specify to or its employment for the carriage of his own goods
him, without unnecessary delay, as grounds of “CHAPTER II or those of others.
objection, are waived.
“CLASSES OF INSURANCE “SEC. 105. The owner of a ship has an insurable
“SEC. 93. Delay in the presentation to an insurer of interest in expected freightage which according to
notice or proof of loss is waived if caused by any act “TITLE I the ordinary and probable course of things he would
of him, or if he omits to take objection promptly and have earned but for the intervention of a peril
specifically upon that ground. insured against or other peril incident to the voyage.
“MARINE INSURANCE

“SEC. 94. If the policy requires, by way of preliminary “SEC. 106. The interest mentioned in the last section
proof of loss, the certificate or testimony of a person “SUB-TITLE 1-A exists, in case of a charter party, when the ship has
other than the insured, it is sufficient for the insured broken ground on the chartered voyage. If a price is
to use reasonable diligence to procure it, and in case “DEFINITION to be paid for the carriage of goods it exists when
of the refusal of such person to give it, then to they are actually on board, or there is some contract
furnish reasonable evidence to the insurer that such for putting them on board, and both ship and goods
refusal was not induced by any just grounds of “SEC. 101. Marine Insurance includes: are ready for the specified voyage.
disbelief in the facts necessary to be certified or
testified. “(a) Insurance against loss of or damage to: “SEC. 107. One who has an interest in the thing from
which profits are expected to proceed has an
“TITLE 11 “(1) Vessels, craft, aircraft, vehicles, goods, freights, insurable interest in the profits.
cargoes, merchandise, effects, disbursements,
“DOUBLE INSURANCE profits, moneys, securities, choses in action, “SEC. 108. The charterer of a ship has an insurable
instruments of debts, valuable papers, bottomry, interest in it, to the extent that he is liable to be
and respondentia interests and all other kinds of damnified by its loss.
“SEC. 95. A double insurance exists where the same property and interests therein, in respect to,
person is insured by several insurers separately in appertaining to or in connection with any and all
respect to the same subject and interest. risks or perils of navigation, transit or transportation, “SUB-TITLE 1-C
or while being assembled, packed, crated, baled,
“SEC. 96. Where the insured in a policy other than compressed or similarly prepared for shipment or “CONCEALMENT
life is over insured by double insurance: while awaiting shipment, or during any delays,
storage, transhipment, or reshipment incident
thereto, including war risks, marine builder’s risks, “SEC. 109. In marine insurance, each party is bound
“(a) The insured, unless the policy otherwise and all personal property floater risks; to communicate, in addition to what is required by
provides, may claim payment from the insurers in Section 28, all the information which he possesses,
such order as he may select, up to the amount for material to the risk, except such as is mentioned in
which the insurers are severally liable under their “(2) Person or property in connection with or Section 30, and to state the exact and whole truth in
respective contracts; appertaining to a marine, inland marine, transit or relation to all matters that he represents, or upon
transportation insurance, including liability for loss inquiry discloses or assumes to disclose.
of or damage arising out of or in connection with the
“SEC. 110. In marine insurance, information of the water, fuel and lights, and other necessary or proper “SEC. 130. Every loss which is not total is partial.
belief or expectation of a third person, in reference stores and implements for the voyage.
to a material fact, is material.
“SEC. 131. A total loss may be either actual or
“SEC. 119. Where different portions of the voyage constructive.
“SEC. 111. A person insured by a contract of marine contemplated by a policy differ in respect to the
insurance is presumed to have knowledge, at the things requisite to make the ship seaworthy
“SEC. 132. An actual total loss is caused by:
time of insuring, of a prior loss, if the information therefor, a warranty of seaworthiness is complied
might possibly have reached him in the usual mode with if, at the commencement of each portion, the
of transmission and at the usual rate of ship is seaworthy with reference to that portion. “(a) A total destruction of the thing insured;
communication.
“SEC. 120. When the ship becomes unseaworthy “(b) The irretrievable loss of the thing by sinking, or
“SEC. 112. A concealment in a marine insurance, in during the voyage to which an insurance relates, an by being broken up;
respect to any of the following matters, does not unreasonable delay in repairing the defect
vitiate the entire contract, but merely exonerates exonerates the insurer on ship or shipowner’s “(c) Any damage to the thing which renders it
the insurer from a loss resulting from the risk interest from liability from any loss arising valueless to the owner for the purpose for which he
concealed: therefrom. held it; or

“(a) The national character of the insured; “SEC. 121. A ship which is seaworthy for the purpose “(d) Any other event which effectively deprives the
of an insurance upon the ship may, nevertheless, by owner of the possession, at the port of destination,
reason of being unfitted to receive the cargo, be of the thing insured.
“(b) The liability of the thing insured to capture and
unseaworthy for the purpose of insurance upon the
detention;
cargo.
“SEC. 133. A constructive total loss is one which
“(c) The liability to seizure from breach of foreign gives to a person insured a right to abandon, under
“SEC. 122. Where the nationality or neutrality of a Section 141.
laws of trade;
ship or cargo is expressly warranted, it is implied
that the ship will carry the requisite documents to
“(d) The want of necessary documents; and show such nationality or neutrality and that it will “SEC. 134. An actual loss may be presumed from the
not carry any documents which cast reasonable continued absence of a ship without being heard of.
suspicion thereon. The length of time which is sufficient to raise this
“(e) The use of false and simulated papers.
presumption depends on the circumstances of the
case.
“SUB-TITLE 1-D “SUB-TITLE 1-F

“SEC. 135. When a ship is prevented, at an

“REPRESENTATION “THE VOYAGE AND DEVIATION intermediate port, from completing the voyage, by
the perils insured against, the liability of a marine
“SEC. 123. When the voyage contemplated by a insurer on the cargo continues after they are thus
“SEC. 113. If a representation by a person insured by
marine insurance policy is described by the places of reshipped.
a contract of marine insurance, is intentionally false
in any material respect, or in respect of any fact on beginning and ending, the voyage insured is one
which the character and nature of the risk depends, which conforms to the course of sailing fixed by “Nothing in this section shall prevent an insurer from
the insurer may rescind the entire contract. mercantile usage between those places. requiring an additional premium if the hazard be
increased by this extension of liability.
“SEC. 114. The eventual falsity of a representation as “SEC. 124. If the course of sailing is not fixed by
to expectation does not, in the absence of fraud, mercantile usage, the voyage insured by a marine “SEC. 136. In addition to the liability mentioned in
avoid a contract of marine insurance. insurance policy is that way between the places the last section, a marine insurer is bound for
specified, which to a master of ordinary skill and damages, expenses of discharging, storage,
discretion, would mean the most natural, direct and reshipment, extra freightage, and all other expenses
“SUB-TITLE 1-E advantageous. incurred in saving cargo reshipped pursuant to the
last section, up to the amount insured.
“IMPLIED WARRANTIES “SEC. 125. Deviation is a departure from the course
of the voyage insured, mentioned in the last two (2) “Nothing in this or in the preceding section shall
“SEC. 115. In every marine insurance upon a ship or sections, or an unreasonable delay in pursuing the render a marine insurer liable for any amount in
freight, or freightage, or upon any thing which is the voyage or the commencement of an entirely excess of the insured value or, if there be none, of
subject of marine insurance, a warranty is implied different voyage. the insurable value.
that the ship is seaworthy.
“SEC. 126. A deviation is proper: “SEC. 137. Upon an actual total loss, a person
“SEC. 116. A ship is seaworthy when reasonably fit to insured is entitled to payment without notice of
perform the service and to encounter the ordinary “(a) When caused by circumstances over which abandonment.
perils of the voyage contemplated by the parties to neither the master nor the owner of the ship has any
the policy. control; “SEC. 138. Where it has been agreed that an
insurance upon a particular thing, or class of things,
“SEC. 117. An implied warranty of seaworthiness is “(b) When necessary to comply with a warranty, or shall be free from particular average, a marine
complied with if the ship be seaworthy at the time of to avoid a peril, whether or not the peril is insured insurer is not liable for any particular average loss
the commencement of the risk, except in the against; not depriving the insured of the possession, at the
following cases: port of destination, of the whole of such thing, or
class of things, even though it becomes entirely
“(c) When made in good faith, and upon reasonable
“(a) When the insurance is made for a specified worthless; but such insurer is liable for his
grounds of belief in its necessity to avoid a peril; or
length of time, the implied warranty is not complied proportion of all general average loss assessed upon
with unless the ship be seaworthy at the the thing insured.
commencement of every voyage it undertakes “(d) When made in good faith, for the purpose of
during that time; saving human life or relieving another vessel in
“SEC. 139. An insurance confined in terms to an
distress.
actual loss does not cover a constructive total loss,
“(b) When the insurance is upon the cargo which, by but covers any loss, which necessarily results in
the terms of the policy, description of the voyage, or “SEC. 127. Every deviation not specified in the last depriving the insured of the possession, at the port
established custom of the trade, is to be transhipped section is improper. of destination, of the entire thing insured.
at an intermediate port, the implied warranty is not
complied with unless each vessel upon which the “SEC. 128. An insurer is not liable for any loss “SUB-TITLE 1-H
cargo is shipped, or transhipped, be seaworthy at happening to the thing insured subsequent to an
the commencement of each particular voyage. improper deviation.
“ABANDONMENT

“SEC. 118. A warranty of seaworthiness extends not “SUB-TITLE 1-G

“SEC. 140. Abandonment, in marine insurance, is the
only to the condition of the structure of the ship
act of the insured by which, after a constructive total
itself, but requires that it be properly laden, and
“LOSS loss, he declares the relinquishment to the insurer of
provided with a competent master, a sufficient
his interest in the thing insured.
number of competent officers and seamen, and the
requisite appurtenances and equipment, such as “SEC. 129. A loss may be either total or partial.
ballasts, cables and anchors, cordage and sails, food,
“SEC. 141. A person insured by a contract of marine “SEC. 153. The acceptance of an abandonment, “(d) The cost of insurance is in each case to be added
insurance may abandon the thing insured, or any whether express or implied, is conclusive upon the to the value thus estimated.
particular portion thereof separately valued by the parties, and admits the loss and the sufficiency of
policy, or otherwise separately insured, and recover the abandonment.
“SEC. 164. If cargo insured against partial loss arrives
for a total loss thereof, when the cause of the loss is
at the port of destination in a damaged condition,
a peril insured against:
“SEC. 154. An abandonment once made and the loss of the insured is deemed to be the same
accepted is irrevocable, unless the ground upon proportion of the value which the market price at
“(a) If more than three-fourths (¾) thereof in value is which it was made proves to be unfounded. that port, of the thing so damaged, bears to the
actually lost, or would have to be expended to market price it would have brought if sound.
recover it from the peril;
“SEC. 155. On an accepted abandonment of a ship,
freightage earned previous to the loss belongs to the “SEC. 165. A marine insurer is liable for all the
“(b) If it is injured to such an extent as to reduce its insurer of said freightage; but freightage expenses attendant upon a loss which forces the
value more than three-fourths (¾); subsequently earned belongs to the insurer of the ship into port to be repaired; and where it is
ship. stipulated in the policy that the insured shall labor
for the recovery of the property, the insurer is liable
“(c) If the thing insured is a ship, and the
for the expense incurred thereby, such expense, in
contemplated voyage cannot be lawfully performed “SEC. 156. If an insurer refuses to accept a valid
either case, being in addition to a total loss, if that
without incurring either an expense to the insured of abandonment, he is liable as upon an actual total
afterwards occurs.
more than three-fourths (¾) the value of the thing loss, deducting from the amount any proceeds of
abandoned or a risk which a prudent man would not the thing insured which may have come to the hands
take under the circumstances; or of the insured. “SEC. 166. A marine insurer is liable for a loss falling
upon the insured, through a contribution in respect
to the thing insured, required to be made by him
“(d) If the thing insured, being cargo or freightage, “SEC. 157. If a person insured omits to abandon, he
towards a general average loss called for by a peril
and the voyage cannot be performed, nor another may nevertheless recover his actual loss.
insured against: Provided, That the liability of the
ship procured by the master, within a reasonable
insurer shall be limited to the proportion of
time and with reasonable diligence, to forward the
“SUB-TITLE 1-I contribution attaching to his policy value where this
cargo, without incurring the like expense or risk
is less than the contributing value of the thing
mentioned in the preceding subparagraph. But
“MEASURE OF INDEMNITY insured.
freightage cannot in any case be abandoned unless
the ship is also abandoned.
“SEC. 158. A valuation in a policy of marine “SEC. 167. When a person insured by a contract of
insurance is conclusive between the parties thereto marine insurance has a demand against others for
“SEC. 142. An abandonment must be neither partial
in the adjustment of either a partial or total loss, if contribution, he may claim the whole loss from the
nor conditional.
the insured has some interest at risk, and there is no insurer, subrogating him to his own right to
fraud on his part; except that when a thing has been contribution. But no such claim can be made upon
“SEC. 143. An abandonment must be made within a the insurer after the separation of the interests
hypothecated by bottomry or respondentia, before
reasonable time after receipt of reliable information liable to contribution, nor when the insured, having
its insurance, and without the knowledge of the
of the loss, but where the information is of a the right and opportunity to enforce contribution
person actually procuring the insurance, he may
doubtful character, the insured is entitled to a from others, has neglected or waived the exercise of
show the real value. But a valuation fraudulent in
reasonable time to make inquiry. that right.
fact, entitles the insurer to rescind the contract.

“SEC. 144. Where the information upon which an “SEC. 168. In the case of a partial loss of ship or its
“SEC. 159. A marine insurer is liable upon a partial
abandonment has been made proves incorrect, or equipment, the old materials are to be applied
loss, only for such proportion of the amount insured
the thing insured was so far restored when the towards payment for the new. Unless otherwise
by him as the loss bears to the value of the whole
abandonment was made that there was then in fact stipulated in the policy, a marine insurer is liable for
interest of the insured in the property insured.
no total loss, the abandonment becomes ineffectual. only two-thirds (2/3) of the remaining cost of repairs
after such deduction, except that anchors must be
“SEC. 160. Where profits are separately insured in a paid in full.
“SEC. 145. Abandonment is made by giving notice
contract of marine insurance, the insured is entitled
thereof to the insurer, which may be done orally, or
to recover, in case of loss, a proportion of such
in writing: Provided, That if the notice be done “TITLE 2
profits equivalent to the proportion which the value
orally, a written notice of such abandonment shall
of the property lost bears to the value of the whole.
be submitted within seven (7) days from such oral
“FIRE INSURANCE
notice.
“SEC. 161. In case of a valued policy of marine
insurance on freightage or cargo, if a part only of the “SEC. 169. As used in this Code, the term fire
“SEC. 146. A notice of abandonment must be
subject is exposed to risk, the valuation applies only insurance shall include insurance against loss by fire,
explicit, and must specify the particular cause of the
in proportion to such part. lightning, windstorm, tornado or earthquake and
abandonment, but need state only enough to show
other allied risks, when such risks are covered by
that there is probable cause therefor, and need not
“SEC. 162. When profits are valued and insured by a extension to fire insurance policies or under
be accompanied with proof of interest or of loss.
contract of marine insurance, a loss of them is separate policies.
conclusively presumed from a loss of the property
“SEC. 147. An abandonment can be sustained only
out of which they are expected to arise, and the “SEC. 170. An alteration in the use or condition of a
upon the cause specified in the notice thereof.
valuation fixes their amount. thing insured from that to which it is limited by the
policy made without the consent of the insurer, by
“SEC. 148. An abandonment is equivalent to a means within the control of the insured, and
“SEC. 163. In estimating a loss under an open policy
transfer by the insured of his interest to the insurer, increasing the risks, entitles an insurer to rescind a
of marine insurance the following rules are to be
with all the chances of recovery and indemnity. contract of fire insurance.
observed:

“SEC. 149. If a marine insurer pays for a loss as if it “SEC. 171. An alteration in the use or condition of a
“(a) The value of a ship is its value at the beginning
were an actual total loss, he is entitled to whatever thing insured from that to which it is limited by the
of the risk, including all articles or charges which add
may remain of the thing insured, or its proceeds or policy, which does not increase the risk, does not
to its permanent value or which are necessary to
salvage, as if there had been a formal abandonment. affect a contract of fire insurance.
prepare it for the voyage insured;

“SEC. 150. Upon an abandonment, acts done in good “SEC. 172. A contract of fire insurance is not affected
“(b) The value of the cargo is its actual cost to the
faith by those who were agents of the insured in by any act of the insured subsequent to the
insured, when laden on board, or where the cost
respect to the thing insured, subsequent to the loss, execution of the policy, which does not violate its
cannot be ascertained, its market value at the time
are at the risk of the insurer, and for his benefit. provisions, even though it increases the risk and is
and place of lading, adding the charges incurred in
purchasing and placing it on board, but without the cause of the loss.
“SEC. 151. Where notice of abandonment is properly reference to any loss incurred in raising money for
given, the rights of the insured are not prejudiced by its purchase, or to any drawback on its exportation, “SEC. 173. If there is no valuation in the policy, the
the fact that the insurer refuses to accept the or to the fluctuation of the market at the port of measure of indemnity in an insurance against fire is
abandonment. destination, or to expenses incurred on the way or the expense it would be to the insured at the time of
on arrival; the commencement of the fire to replace the thing
“SEC. 152. The acceptance of an abandonment may lost or injured in the condition in which it was at the
be either express or implied from the conduct of the “(c) The value of freightage is the gross freightage, time of the injury; but if there is a valuation in a
insurer. The mere silence of the insurer for an exclusive of primage, without reference to the cost policy of fire insurance, the effect shall be the same
unreasonable length of time after notice shall be of earning it; and as in a policy of marine insurance.
construed as an acceptance.
“SEC. 174. Whenever the insured desires to have a due thereon as service fee plus the cost of stamps or “SEC. 185. Notice to an insurer of a transfer or
valuation named in his policy, insuring any building other taxes imposed for the issuance of the contract bequest thereof is not necessary to preserve the
or structure against fire, he may require such or bond: Provided, however, That if the validity of a policy of insurance upon life or health,
building or structure to be examined by an nonacceptance of the bond be due to the fault or unless thereby expressly required.
independent appraiser and the value of the negligence of the surety, no such service fee, stamps
insured’s interest therein may then be fixed as or taxes shall be collected.
“SEC. 186. Unless the interest of a person insured is
between the insurer and the insured. The cost of
susceptible of exact pecuniary measurement, the
such examination shall be paid for by the insured. A
“In the case of a continuing bond, the obligor shall measure of indemnity under a policy of insurance
clause shall be inserted in such policy stating
pay the subsequent annual premium as it falls due upon life or health is the sum fixed in the policy.
substantially that the value of the insured’s interest
until the contract of suretyship is cancelled by the
in such building or structure has been thus fixed. In
obligee or by the Commissioner or by a court of
the absence of any change increasing the risk “TITLE 6
competent jurisdiction, as the case may be.
without the consent of the insurer or of fraud on the
part of the insured, then in case of a total loss under “MICROINSURANCE
such policy, the whole amount so insured upon the “SEC. 180. Pertinent provisions of the Civil Code of
insured’s interest in such building or structure, as the Philippines shall be applied in a suppletory
stated in the policy upon which the insurers have character whenever necessary in interpreting the “SEC. 187. Microinsurance is a financial product or
received a premium, shall be paid, and in case of a provisions of a contract of suretyship. service that meets the risk protection needs of the
partial loss the full amount of the partial loss shall be poor where:
so paid, and in case there are two (2) or more “TITLE 5
policies covering the insured’s interest therein, each “(a) The amount of contributions, premiums, fees or
policy shall contribute pro rata to the payment of charges, computed on a daily basis, does not exceed
such whole or partial loss. But in no case shall the “LIFE INSURANCE
seven and a half percent (7.5%) of the current daily
insurer be required to pay more than the amount minimum wage rate for nonagricultural workers in
thus stated in such policy. This section shall not “SEC. 181. Life insurance is insurance on human lives Metro Manila; and
prevent the parties from stipulating in such policies and insurance appertaining thereto or connected
concerning the repairing, rebuilding or replacing of therewith.
buildings or structures wholly or partially damaged “(b) The maximum sum of guaranteed benefits is not
or destroyed. more than one thousand (1,000) times of the
“Every contract or undertaking for the payment of current daily minimum wage rate for nonagricultural
annuities including contracts for the payment of workers in Metro Manila.
“SEC. 175. No policy of fire insurance shall be lump sums under a retirement program where a life
pledged, hypothecated, or transferred to any insurance company manages or acts as a trustee for
person, firm or company who acts as agent for or “SEC. 188. No insurance company or mutual benefit
such retirement program shall be considered a life
otherwise represents the issuing company, and any association shall engage in the business of
insurance contract for purposes of this Code.
such pledge, hypothecation, or transfer hereafter microinsurance unless it possesses all the
made shall be void and of no effect insofar as it may requirements as may be prescribed by the
affect other creditors of the insured. “SEC. 182. An insurance upon life may be made Commissioner. The Commissioner shall issue such
payable on the death of the person, or on his rules and regulations governing microinsurance.
surviving a specified period, or otherwise
“TITLE 3 contingently on the continuance or cessation of life.
“CHAPTER II-A

“CASUALTY INSURANCE “Every contract or pledge for the payment of

“FINANCIAL REPORTING FRAMEWORK
endowments or annuities shall be considered a life
“SEC. 176. Casualty insurance is insurance covering insurance contract for purposes of this Code.
loss or liability arising from accident or mishap, “SEC. 189. All companies regulated by the
excluding certain types of loss which by law or Commission, unless otherwise required by law,
“In the absence of a judicial guardian, the father, or
custom are considered as falling exclusively within should comply with the financial reporting
in the latter’s absence or incapacity, the mother, of
the scope of other types of insurance such as fire or frameworks adopted by the Commission for
any minor, who is an insured or a beneficiary under
marine. It includes, but is not limited to, employer’s purposes of creating the statutory financial reports
a contract of life, health, or accident insurance, may
liability insurance, motor vehicle liability insurance, and the annual statements to be submitted to the
exercise, in behalf of said minor, any right under the
plate glass insurance, burglary and theft insurance, Commission. Financial reporting framework means a
policy, without necessity of court authority or the
personal accident and health insurance as written by set of accounting and reporting principles,
giving of a bond, where the interest of the minor in
non-life insurance companies, and other standards, interpretations and pronouncements that
the particular act involved does not exceed Five
substantially similar kinds of insurance. must be adopted in the preparation and submission
hundred thousand pesos (P500,000.00) or in such
of the statutory financial statements and reports
reasonable amount as may be determined by the
required by the Commission. This financial reporting
“TITLE 4 Commissioner. Such right may include, but shall not
framework is not the same as the financial reporting
be limited to, obtaining a policy loan, surrendering
framework used to prepare the financial statements
the policy, receiving the proceeds of the Policy, and
“SURETYSHIP that the Securities and Exchange Commission may
giving the minor’s consent to any transaction on the
require. The main purpose of the statutory
policy.
statements is to present important information
“SEC. 177. A contract of suretyship is an agreement about the level of risk and solvency situation of
whereby a party called the surety guarantees the “In the absence or in case of the incapacity of the insurers. In prescribing the applicable statutory
performance by another party called the principal or father or mother, the grandparent, the eldest financial reporting framework, the Commissioner
obligor of an obligation or undertaking in favor of a brother or sister at least eighteen (18) years of age, shall take into account international standards
third party called the obligee. It includes official or any relative who has actual custody of the minor concerning solvency and insurance company
recognizances, stipulations, bonds or undertakings insured or beneficiary, shall act as a guardian reporting as well as generally accepted actuarial
issued by any company by virtue of and under the without need of a court order or judicial principles concerning financial reporting
provisions of Act No. 536, as amended by Act No. appointment as such guardian, as long as such promulgated by the Actuarial Society of the
2206. person is not otherwise disqualified or incapacitated. Philippines.
Payment made by the insurer pursuant to this
“SEC. 178. The liability of the surety or sureties shall section shall relieve such insurer of any liability
“The assets and investments discussed in Sections
be joint and several with the obligor and shall be under the contract.
204 to 215 shall be accounted for in accordance with
limited to the amount of the bond. It is determined this section.
strictly by the terms of the contract of suretyship in “SEC. 183. The insurer in a life insurance contract
relation to the principal contract between the shall be liable in case of suicide only when it is
obligor and the obligee. “The valuation of reserves shall be accounted for in
committed after the policy has been in force for a
accordance with Title 5 of this Code.
period of two (2) years from the date of its issue or
“SEC. 179. The surety is entitled to payment of the of its last reinstatement, unless the policy provides a
premium as soon as the contract of suretyship or shorter period: Provided, however, That suicide “CHAPTER III
bond is perfected and delivered to the obligor. No committed in the state of insanity shall be
contract of suretyship or bonding shall be valid and compensable regardless of the date of commission. “THE BUSINESS OF INSURANCE
binding unless and until the premium therefor has
been paid, except where the obligee has accepted “SEC. 184. A policy of insurance upon life or health
the bond, in which case the bond becomes valid and “TITLE 1
may pass by transfer, will or succession to any
enforceable irrespective of whether or not the person, whether he has an insurable interest or not,
premium has been paid by the obligor to the and such person may recover upon it whatever the “INSURANCE COMPANIES, ORGANIZATION,
surety: Provided, That if the contract of suretyship or insured might have recovered. CAPITALIZATION AND AUTHORIZATION
bond is not accepted by, or filed with the obligee,
the surety shall collect only a reasonable amount,
not exceeding fifty percent (50%) of the premium
“SEC. 190. For purposes of this Code, the rules and regulations on the use of names of organization and transform itself into a mutual
term insurer or insurance company shall include all insurance companies and other supervised persons insurance company.
partnerships, associations, cooperatives or or entities.
corporations, including government-owned or -
“The Secretary of Finance may, upon
controlled corporations or entities, engaged as
“The certificate of authority issued by the recommendation of the Commissioner, increase
principals in the insurance business, excepting
Commissioner shall expire on the last day of such minimum paid-up capital stock or cash assets
mutual benefit associations. Unless the context
December, three (3) years following its date of requirement under such terms and conditions as he
otherwise requires, the term shall also include
issuance, and shall be renewable every three (3) may impose, to an amount which, in his opinion,
professional reinsurers defined in Section
years thereafter, subject to the company’s would reasonably assure the safety of the interests
288. Domestic company shall include companies
continuing compliance with the provisions of this of the policyholders and the public. The minimum
formed, organized or existing under the laws of the
Code, circulars, instructions, rulings or decisions of paid-up capital and net worth requirement must
Philippines. Foreign company when used without
the Commission. remain unimpaired for the continuance of the
limitation shall include companies formed,
license. The Commissioner may require the adoption
organized, or existing under any laws other than
of the risk-based capital approach and other
those of the Philippines. “Every company receiving any such certificates of
internationally accepted forms of capital framework.
authority shall be subject to the provisions of this
Code and other related laws and to the jurisdiction
“SEC. 191. The provisions of the Corporation Code,
and supervision of the Commissioner. “For the purpose of this section, net worth shall
as amended, shall apply to all insurance corporations
consist of:
now or hereafter engaged in business in the
Philippines insofar as they do not conflict with the “No insurance company may be authorized to
provisions of this chapter. transact in the Philippines the business of life and “(a) Paid-up capital;
non-life insurance concurrently, unless specifically
authorized to do so by the Commissioner: Provided,
“SEC. 192. No corporation, partnership, or “(b) Retained earnings;
That the terms life and non–life insurance shall be
association of persons shall transact any insurance
deemed to include health, accident and disability
business in the Philippines except as agent of a “(c) Unimpaired surplus; and
insurance.
corporation, partnership or association authorized
to do the business of insurance in the Philippines,
unless possessed of the capital and assets required “No insurance company shall have equity in an “(d) Revaluation of assets as may be approved by
of an insurance corporation doing the same kind of adjustment company and neither shall an the Commissioner.
business in the Philippines and invested in the same adjustment company have equity in an insurance
manner; unless the Commissioner shall have granted company. “The Commission may adopt for purposes of
it a certificate to the effect that it has complied with compliance with capital build up requirement under
all the provisions of this Code. “No insurance company issued with a valid this Code the recognition as part of the capital
certificate of authority to transact insurance account, capital notes or debentures which are
“Every entity receiving any such certificate of business anywhere in the Philippines by the subordinate to all credits and senior only to common
authority shall be subject to the insurance and other Insurance Commissioner, shall be barred, prevented, capital stocks.
applicable laws of the Philippines and to the or disenfranchised from issuing any insurance policy
jurisdiction and supervision of the Commissioner. or from transacting any insurance business within “The President of the Philippines may order a
the scope or coverage of its certificate of authority, periodic review every two (2) years the capital
anywhere in the Philippines, by any local structure set out above to determine the capital
“SEC. 193. No insurance company shall transact any
government unit or authority, for whatever guise or adequacy of the local insurance industry from and
insurance business in the Philippines until after it
reason whatsoever, including under any kind of after the integration and liberalization of the
shall have obtained a certificate of authority for that
ordinance, accreditation system, or scheme. Any financial services, including insurance, in the ASEAN
purpose from the Commissioner upon application
local ordinance or local government unit regulatory Region. For this purpose, a review committee
therefor and payment by the company concerned of
issuance imposing such restriction or consisting of representatives from the Department
the fees hereinafter prescribed.
disenfranchisement on any insurance company shall of Finance (DOF), the Insurance Commission (IC), the
be deemed null and void ab initio. National Economic and Development Authority
“The Commissioner may refuse to issue a certificate (NEDA), the Securities and Exchange Commission
of authority to any insurance company if, in his (SEC) and other agencies which the President may
“SEC. 194. Except as provided in Section 289, no new
judgment, such refusal will best promote the designate shall conduct the review and may
domestic life or non-life insurance company shall, in
interest of the people of this country. No such recommend to the President to adopt for
a stock corporation, engage in business in the
certificate of authority shall be granted to any such implementation the necessary capital adjustment.
Philippines unless possessed of a paid-up capital
company until the Commissioner shall have satisfied
equal to at least One billion pesos
himself by such examination as he may make and
(P1,000,000,000.00): Provided, That a domestic “SEC. 195. Every company must, before engaging in
such evidence as he may require that such company
insurance company already doing business in the the business of insurance in the Philippines, file with
is qualified by the laws of the Philippines to transact
Philippines shall have a net worth by June 30, 2013 the Commissioner the following:
business therein, that the grant of such authority
of Two hundred fifty million pesos
appears to be justified in the light of local economic
(P250,000,000.00). Furthermore, said company must
requirements, and that the direction and “(a) A certified copy of the last annual statement or
have by December 31, 2016, an additional Three
administration, as well as the integrity and a verified financial statement exhibiting the
hundred million pesos (P300,000,000.00) in net
responsibility of the organizers and administrators, condition and affairs of such company;
worth; by December 31, 2019, an additional Three
the financial organization and the amount of capital,
hundred fifty million pesos (P350,000,000.00) in net
reasonably assure the safety of the interests of the
worth; and by December 31, 2022, an additional “(b) If incorporated under the laws of the
policyholders and the public.
Four hundred million pesos (P400,000,000.00) in net Philippines, a copy of the articles of incorporation
worth. and bylaws, and any amendments to either, certified
“In order to maintain the quality of the management by the Securities and Exchange Commission to be a
of the insurance companies and afford better copy of that which is filed in its Office;
“The Commissioner may, as a pre-licensing
protection to policyholders and the public in general,
requirement of a new insurance company, in
any person of good moral character, unquestioned
addition to the paid-up capital stock, require the “(c) If incorporated under any laws other than those
integrity and recognized competence may be
stockholders to pay in cash to the company in of the Philippines, a certificate from the Securities
elected or appointed director or officer of insurance
proportion to their subscription interests a and Exchange Commission showing that it is duly
companies in accordance with the pertinent
contributed surplus fund of not less than One registered in the mercantile registry of that
provisions contained in the corporate governance
hundred million pesos (P100,000,000.00). He may Commission in accordance with the Corporation
circulars prescribed by the Commissioner. In
also require such company to submit to him a Code. A copy of the articles of incorporation and
addition hereto, the Commissioner shall prescribe
business plan showing the company’s estimated bylaws, and any amendments to either, if organized
the qualifications of directors, executive officers and
receipts and disbursements, as well as the basis or formed under any law requiring such to be filed,
other key officials of insurance companies for
therefor, for the next succeeding three (3) years. duly certified by the officer having the custody of
purposes of this section.
same, or if not so organized, a copy of the law,
“If organized as a mutual company, in lieu of such charter or deed of settlement under which the deed
“No person shall concurrently be a Director and/or of organization is made, duly certified by the proper
net worth, it must have available total members
Officer of an insurance company and an adjustment custodian thereof, or proved by affidavit to be a
equity in an amount to be determined by the
company. copy; also, a certificate under the hand and seal of
Insurance Commission above all liabilities for losses
reported; expenses, taxes, legal reserve, and the proper officer of such state or country having
“Before issuing such certificate of authority, the reinsurance of all outstanding risks, and the supervision of insurance business therein, if any
Commissioner must be satisfied that the name of contributed surplus fund equal to the amounts there be, that such corporation or company is
the company is not that of any other known required of stock corporations. A stock insurance organized under the laws of such state or country,
company transacting a similar business in the company doing business in the Philippines may, with the amount of capital stock or assets and legal
Philippines, or a name so similar as to be calculated subject to the pertinent law and regulation which reserve required by this Code;
to mislead the public. The Commissioner may issue now or hereafter may be in force, alter its
“(d) If not incorporated and of foreign domicile, insurance company nor twenty percent (20%) of the date of default, as well as on any interests or
aside from the certificate mentioned in paragraph capital of the registered enterprise, unless dividends that have accrued or will accrue to the
(c) of this section, a certificate setting forth the previously authorized in writing by the said certificates of stock, until the corresponding
nature and character of the business, the location of Commissioner. payment or reimbursement is made by the
the principal office, the name of the individual or defaulting stockholder.
names of the persons composing the partnership or
“The Commissioner may, as a pre-licensing
association, the amount of actual capital employed
requirement of a new branch office of a foreign “SEC. 201. No domestic insurance corporation shall
or to be employed therein, and the names of all
insurance company, in addition to the required asset declare or distribute any dividend on its outstanding
officers and persons by whom the business is or may
or net worth, require the company to have an stocks unless it has met the minimum paid-up
be managed.
additional surplus fund in an amount to be capital and net worth requirements under Section
determined by the Insurance Commission. 194 and except from profits attested in a sworn
“The certificate must be verified by the affidavit of statement to the Commissioner by the president or
the chief officer, secretary, agent, or manager of the treasurer of the corporation to be remaining on
“For purposes of this Code, the net worth of a
company; and if there are any written articles of hand after retaining unimpaired:
foreign insurance company shall refer only to its net
agreement of the company, a copy thereof must
worth in the Philippines.
accompany such certificate.
“(a) The entire paid-up capital stock;
“SEC. 198. The Commissioner shall hold the
“SEC. 196. The Commissioner must require as a
securities, deposited as required in the immediately “(b) The solvency requirements defined by Section
condition precedent to the transaction of insurance
preceding section, for the benefit and security of all 200;
business in the Philippines by any foreign insurance
the policyholders and creditors of the company
company, that such company file in his office a
depositing the same: Provided, That the
written power of attorney designating some person “(c) In the case of life insurance corporations, the
Commissioner may as long as the company is
who shall be a resident of the Philippines as its legal reserve fund required by Section 217;
solvent, permit the company to collect the interest
general agent, on whom any notice provided by law
or dividends on the securities so deposited, and,
or by any insurance policy, proof of loss, summons “(d) In the case of corporations other than life, the
from time to time, with his assent, to withdraw any
and other legal processes may be served in all legal reserve fund required by Section 219; and
of such securities, upon depositing with said
actions or other legal proceedings against such
Commissioner other like securities, the market value
company, and consenting that service upon such
of which shall be equal to the market value of such “(e) A sum sufficient to pay all net losses reported,
general agent shall be admitted and held as valid as
as may be withdrawn. In the event of any company or in the course of settlement, and all liabilities for
if served upon the foreign company at its home
ceasing to do business in the Philippines, the expenses and taxes.
office. Any such foreign company shall, as further
securities deposited as aforesaid shall be returned to
condition precedent to the transaction of insurance
the company upon the Commissioner’s written
business in the Philippines, make and file with the “Any dividend declared or distributed under the
approval and only after the company has duly
Commissioner an agreement or stipulation, preceding paragraph shall be reported to the
proven in its application therefor that it has no
executed by the proper authorities of said company Commissioner within thirty (30) days after such
further liability whatsoever under any of its policies
in form and substance as follows: declaration or distribution.
nor to any of its creditors in the Philippines.

“The (name of company) does hereby stipulate and “If the Commissioner finds that any such corporation
“SEC. 199. Every foreign company doing business in
agree in consideration of the permission granted by has declared or distributed any such dividend in
the Philippines shall set aside an amount
the Insurance Commissioner to transact business in violation of this section, he may order such
corresponding to the legal reserves of the policies
the Philippines, that if at any time said company corporation to cease and desist from doing business
written in the Philippines and invest and keep the
shall leave the Philippines, or cease to transact until the amount of such dividend or the portion
same therein in accordance with the provisions of
business therein, or shall be without any agent in the thereof in excess of the amount allowed under this
this section. The legal reserve therein required to be
Philippines on whom any notice, proof of loss, section has been restored to said corporation.
set aside shall be invested only in the classes of
summons, or legal process may be served, then in
Philippine securities described in Section
any action or proceeding arising out of any business
206: Provided, however, That no investment in “The Commissioner shall prescribe solvency
or transaction which occurred in the Philippines,
stocks or bonds of any single entity shall, in the requirements for branches of foreign insurance
service of any notice provided by law, or insurance
aggregate exceed twenty percent (20%) of the net companies operating in the Philippines.
policy, proof of loss, summons, or other legal
worth of the investing company or twenty percent
process may be made upon the Insurance
(20%) of the capital of the issuing company,
Commissioner, and that such service upon the “TITLE 3
whichever is the lesser, unless otherwise approved
Insurance Commissioner shall have the same force
in writing by the Commissioner. The securities
and effect as if made upon the company.
purchased and kept in the Philippines under this “ASSETS
section, shall not be sent out of the territorial
“Whenever such service of notice, proof of loss, jurisdiction of the Philippines without the written
“SEC. 202. In any determination of the financial
summons, or other legal process shall be made upon consent of the Commissioner.
condition of any insurance company doing business
the Commissioner, he must, within ten (10) days
in the Philippines, there shall be allowed and
thereafter, transmit by mail, postage paid, a copy of
“TITLE 2 admitted as assets only such assets legally or
such notice, proof of loss, summons, or other legal
beneficially owned by the insurance company
process to the company at its home or principal
“SOLVENCY concerned as determined by the Commissioner
office. The sending of such copy by the
which consist of:
Commissioner shall be a necessary part of the
service of the notice, proof of loss, or other legal “SEC. 200. An insurance company doing business in
process. the Philippines shall at all times maintain the “(a) Cash in the possession of the insurance
minimum paid-up capital, and net worth company or in transit under its control, and the true
requirements as prescribed by the Commissioner. and duly verified balance of any deposit of such
“SEC. 197. No insurance company organized or
Such solvency requirements shall be based on company in a financially sound bank or trust
existing under the government or laws other than
internationally accepted solvency frameworks and company duly authorized by the Bangko Sentral ng
those of the Philippines shall engage in business in
adopted only after due consultation with the Pilipinas.
the Philippines unless possessed of unimpaired
capital or assets and reserve of not less than One insurance industry associations.
billion pesos (P1,000,000,000.00), nor until it shall “(b) Investments in securities, including money
have deposited with the Commissioner for the “Whenever the aforementioned requirement be market instruments, and in real property acquired or
benefit and security of the policyholders and found to be less than that herein required to be held in accordance with and subject to the
creditors of such company in the Philippines, maintained, the Commissioner shall forthwith direct applicable provisions of this Code and the income
securities satisfactory to the Commissioner the company to make good any such deficiency by realized therefrom or accrued thereon.
consisting of good securities of the Philippines, cash, to be contributed by all stockholders of record
including new issues of stock of registered in proportion to their respective interests, and paid “(c) Loans granted by the insurance company
enterprises, as this term is defined in Executive to the treasurer of the company, within fifteen (15) concerned to the extent of that portion thereof
Order No. 226 of 1987, as amended, to the actual days from receipt of the order: Provided, That the adequately secured by non-speculative assets with
market value of not less than the amount herein company in the interim shall not be permitted to readily realizable values in accordance with and
required: Provided, That at least fifty percent (50%) take any new risk of any kind or character unless and subject to the limitations imposed by applicable
of such securities shall consist of bonds or other until it make good any such deficiency: Provided; provisions of this Code.
instruments of debt of the Government of the further, That a stockholder who aside from paying
Philippines, its political subdivisions and the contribution due from him, pays the
instrumentalities, or of government-owned or - “(d) Policy loans and other policy assets and liens on
contribution due from another stockholder by
controlled corporations and entities, including the policies, contracts or certificates of a life insurance
reason of the failure or refusal of the latter to do so,
Bangko Sentral ng Pilipinas: Provided, further, That company, in an amount not exceeding legal reserves
shall have a lien on the certificates of stock of the
the total investment of a foreign insurance company and other policy liabilities carried on each individual
insurance company concerned appearing in its books
in any registered enterprise shall not exceed twenty life insurance policy, contract or certificate.
in the name of the defaulting stockholder on the
percent (20%) of the net worth of said foreign
“(e) The net amount of uncollected and deferred “(e) Furniture, furnishing, fixtures, safes, equipment, “(i) Chattel mortgages over equipment not more
premiums and annuity considerations in the case of library, stationery, literature, and supplies. than three (3) years old; and
a life insurance company which carries the full mean
tabular reserve liability.
“(f) Items of bank credits representing checks, drafts “(j) Such other security as may be approved by the
or notes returned unpaid after the date of Commissioner.
“(f) Reinsurance recoverable by the ceding insurer: statement.
“The loans provided in the preceding subsection
“(1) From an insurer authorized to transact business “(g) The amount, if any, by which the aggregate shall be subject to the following conditions:
in this country, the full amount thereof; or value of investments as carried in the ledger assets
of such insurance company exceeds the aggregate
“(1) The amount of loan secured by real estate
value thereof as determined in accordance with the
“(2) From an insurer not authorized in this country, mortgage over a non-agricultural land shall not
provisions of this Code and/or the rules of the
in an amount not exceeding the liabilities carried by exceed seventy percent (70%) of its appraised value,
Commissioner.
the ceding insurer for amounts withheld under a and in the case of a loan secured by a real estate
reinsurance treaty with such unauthorized insurer as mortgage over an agricultural land, the amount of
security for the payment of obligations thereunder if “All non-admitted assets and all other assets of loan shall not exceed forty percent (40%) of its
such funds are held subject to withdrawal by, and doubtful value or character included as ledger or market value: Provided, That, in no case shall such
under the control of, the ceding insurer. The non-ledger assets in any statement submitted by an loan have a maturity period in excess of twenty-five
Commissioner may prescribe the conditions under insurance company to the Commissioner, or in any (25) years;
which a ceding insurer may be allowed credit, as an insurance examiner’s report to him, shall also be
asset or as a deduction from loss and unearned reported, to the extent of the value disallowed as
“(2) Unless approved by the Commissioner, no loan
premium reserves, for reinsurance recoverable from deductions from the gross assets of such insurance
may be granted upon the security of a mortgage on
an insurer not authorized in this country but which company, except where the Commissioner permits a
improved real estate if the improvements thereon
presents satisfactory evidence that it meets the reserve to be carried among the liabilities of such
do not belong to the owner of the land, and the
applicable standards of solvency required in this insurance company in lieu of any such deduction.
owner of the improvements does not sign the deed
country.
of mortgage. However, if the owner of the land is
“TITLE 4 the Government of the Philippines or any of its
“(g) Funds withheld by a ceding insurer under a political subdivisions and a long-term lease has been
reinsurance treaty, provided reserves for unpaid executed in favor of the owner of the
“INVESTMENTS
losses and unearned premiums are adequately improvements, the owner of the land need not be a
provided. party to the deed of mortgage. The expiration date
“SEC. 204. A life insurance company may lend to any of the lease shall not, however, precede the
of its policyholders upon the security of the value of maturity of the loan. The phrase ‘improved real
“(h) Deposits or amounts recoverable from
its policy such sum as may be determined pursuant estate’ as used herein shall mean land with
underwriting associations, syndicates and
to the provisions of the policy. permanent building or buildings erected thereon;
reinsurance funds, or from any suspended banking
institution, to the extent deemed by the
Commissioner to be available for the payment of “No insurance company shall loan any of its money “(3) Lease-agreements or similar securities received
losses and claims and values to be determined by or deposits to any person, corporation or on the sale of real estate property shall not exceed
him. association, except upon the security of any of the one hundred percent (100%) of the selling price of
following: said property, or one hundred percent (100%) of its
market value at the time of its disposition,
“(i) Electronic data processing machines, as may be
“(a) First mortgage or deeds of trust of registered, whichever amount is lower. However, in no case
authorized by the Commissioner to be acquired by
unencumbered, improved or unimproved real shall such agreement have a maturity period not
the insurance company concerned, the acquisition
estate, including condominiums; exceeding thirty (30) years;
cost of which to be amortized in equal annual
amounts within a period of five (5) years from the
date of acquisition thereof. “(b) First mortgages or deeds of trust of actually “(4) Loans secured by shares of stock of solvent
cultivated, improved and unencumbered agricultural corporations or institutions shall not exceed fifty
lands in the Philippines; percent (50%) of:
“(j) Investments in mutual funds, real estate
investment trusts, salary loans, unit investment trust
funds and special deposit accounts, subject to the “(c) Purchase money mortgages, lease purchase “(i) The weighted average market price for the one
conditions as may be provided for by the agreements or similar securities executed or hundred eighty (180) days preceding the approval of
Commissioner. received by it on account of the sale or exchange of the loan for shares listed in the stock exchange; and
real property acquired pursuant to Sections 206 and
“(k) Other assets, not inconsistent with the 208; “(ii) For unlisted shares, the adjusted book value of
provisions of paragraphs (a) to (j) hereof, which are such shares.
deemed by the Commissioner to be readily “(d) Bonds or other instruments of indebtedness
realizable and available for the payment of losses issued or guaranteed by the Government of the “(5) Loans secured by the chattel mortgages over
and claims at values to be determined by him in a Philippines or its political subdivisions authorized by equipment shall not exceed seventy percent (70%)
circular, rule or regulation. law to incur such obligations or issue such of the market value of said equipment.
guarantees or of government-owned or -controlled
“SEC. 203. In addition to such assets as the corporations and instrumentalities including the
“SEC. 205. No loan by any insurance company on the
Commissioner may from time to time determine to Bangko Sentral ng Pilipinas; or
security of real estate shall be made unless the title
be non-admitted assets of insurance companies
to such real estate shall have first been registered in
doing business in the Philippines, the following “(e) Obligations issued or guaranteed by universal accordance with the existing Land Registration Act,
assets shall in no case be allowed as admitted assets banks, commercial banks, offshore banking units, or shall have been previously registered under the
of an insurance company doing business in the investment houses or other financial intermediaries provisions of the existing Mortgage Law and the lien
Philippines, in any determination of its financial duly registered with the Bangko Sentral ng Pilipinas; or interest of the insurance company as mortgagee
condition: or has been registered.

“(a) Goodwill, trade names, and other like intangible “(f) Obligations issued or guaranteed by foreign “SEC. 206. (a) An insurance company may purchase,
assets. banks or corporations, each of which shall have total hold, own and convey such property, real and
net worth of at least One hundred fifty million US personal, as may have been mortgaged, pledged, or
“(b) Prepaid or deferred charges for expenses and dollars ($US150,000,000.00) or such other higher conveyed to it in good faith in trust for its benefit by
commissions paid by such insurance company. net worth as may be prescribed by the Insurance reason of money loaned by it in pursuance of the
Commission, as shown in their financial statements regular business of the company, and such real or
as of the immediately preceding fiscal year; or personal property as may have been purchased by it
“(c) Advances to officers (other than policy loans),
at sales under pledges, mortgages or deeds of trust
which are not adequately secured and which are not
“(g) Assignments of monetary instruments such as for its benefit on account of money loaned by it; and
previously authorized by the Commissioner, as well
cash deposits, deposit certificates or other similar such real and personal property as may have been
as advances to employees, agents, and other
instruments of universal banks, commercial banks, conveyed to it by borrowers in satisfaction and
persons on mere personal security.
investment houses or other financial intermediaries discharge of loans made by the company in payment
duly registered with the Bangko Sentral ng Pilipinas; or by reason of any loan made by the company in
“(d) Shares of stock of such insurance company, payment or by reason of any loan made by it shall be
or
owned by it, or any equity therein as well as loans sold by the company within twenty (20) years after
secured thereby, or any proportionate interest in the title thereto has been vested in it.
such shares of stock through the ownership by such “(h) Pledges of shares of stock, bonds or other
insurance company of an interest in another instruments of indebtedness specified in Section
209; or “(b) An insurance company may purchase, hold, and
corporation or business unit.
own the following:
“(1) Real properties which serve as its main place of “(8) Certificates, notes and other obligations issued estimated cost to the company of the improvement
business and/or branch offices: Provided, That such by the trustees or receivers of any institution or development thereof, when added to the book
investment shall not in the overall exceed twenty created or existing under the laws of the Philippines value of all other real property held by it pursuant to
percent (20%) of its net worth as shown by its latest which, or the assets of which, are being this paragraph (b), shall not exceed twenty-five
financial statement approved by the Commissioner. administered under the direction of any court having percent (25%) of its admitted assets as of the thirty-
jurisdiction: Provided, however, That such first day of December next preceding.
certificates, notes or other obligations are
“(2) Bonds or other instruments of indebtedness of
adequately secured as to principal and interests.
the Government of the Philippines or its political “SEC. 209. Every domestic insurance company shall,
subdivisions authorized by law to issue bonds at the to the extent of an amount equal in value to twenty-
reasonable market value thereof. “(9) Equipment trust obligations or certificates which five percent (25%) of the minimum net worth
are adequately secured or other adequately secured required under Section 194, invest its funds only in
instruments evidencing an interest in equipment securities, satisfactory to the Commissioner,
“(3) Bonds or other instruments of debt of
wholly or in part within the Philippines: Provided, consisting of bonds or other instruments of debt of
government-owned or -controlled corporations and
however, That there is a right to receive determined the Government of the Philippines or its political
entities, including the Bangko Sentral ng Pilipinas.
portions of rental, purchase or other fixed obligatory subdivisions or instrumentalities, or of government-
payments for the use or purchase of such owned or -controlled corporations and entities,
“(4) Bonds, debentures or other instruments of equipment. including the Bangko Sentral ng Pilipinas: Provided,
indebtedness of any solvent corporation or That such investments shall at all times be
institution created or existing under the laws of the maintained free from any lien or
“(10) Any obligation of any corporation or institution
Philippines: Provided, however, That the issuing, encumbrance: Provided, further, That such securities
created or existing under the laws of the Philippines
assuming or guaranteeing entity or its predecessors shall be deposited with and held by the
which is, on the date of acquisition by the insurer,
shall not have defaulted in the payment of interest Commissioner for the faithful performance by the
adequately secured and has qualities and
on any of its securities and that during each of any depositing insurer of all its obligations under its
characteristics wherein the speculative elements are
three (3) including the last two (2) of the five (5) insurance contracts. The provisions of Section 198
not predominant.
fiscal years next preceding the date of acquisition by shall, so far as practicable, apply to the securities
such insurance company of such bonds, debentures, deposited under this section.
or other instruments of indebtedness, the net “(11) Such other securities as may be approved by
earnings of the issuing, assuming or guaranteeing the Commissioner.
“Except as otherwise provided in this Code, no
institution available for its fixed charges, as
judgment creditor or other claimant shall have the
hereinafter defined, shall have been not less than
“(c) Any domestic insurer which has outstanding right to levy upon any of the securities of the insurer
one and one-quarter (1¼) times the total of its fixed
insurance, annuity or reinsurance contracts in held on deposit under this section or held on deposit
charges for such year: Provided, further, That no life
currencies other than the national currency of the pursuant to the requirement of the Commissioner.
insurance company shall invest in or loan upon the
Philippines may invest in, or otherwise acquire or
obligations of any one institution in the kinds
loan upon securities and investments in such
permitted under this subsection an amount in excess “SEC. 210. After satisfying the requirements
currency which are substantially of the same kinds,
of twenty-five percent (25%) of the total admitted contained in the preceding section, any domestic
classes and investment grades as those eligible for
assets of such insurer as of December thirty-first non-life insurance company, shall invest, to an
investment under the foregoing subdivisions of this
next preceding the date of such investment. amount prescribed below, its funds in, or otherwise,
section; but the aggregate amount of such
acquire or loan upon, only the classes of investments
investments and of such cash in such currency which
described in Section 206, including securities issued
“As used in this subsection the term net earnings is at any time held by such insurer shall not exceed
by any registered enterprise, as this term is defined
available for fixed charges shall mean net income one and one-half (1½) times the amount of its
in Executive Order No. 226, otherwise known as ‘The
after deducting operating and maintenance reserves and other obligations under such contracts
Omnibus Investments Code of 1987’ and such other
expenses, taxes other than income taxes, or the amount which such insurer is required by the
classes of investments as may be authorized by the
depreciation and depletion; but excluding law of any country or possession outside the
Commissioner for purposes of this section: Provided,
extraordinary nonrecurring items of income or Republic of the Philippines to be invested in such
That:
expense appearing in the regular financial statement country or possession, whichever shall be greater.
of the issuing, assuming or guaranteeing institution.
The term fixed charges shall include interest on “(a) No more than twenty percent (20%) of the net
“SEC. 207. An insurance company may:
funded and unfunded debt, amortization of debt worth of such company as shown by its latest
discount, and rentals for leased properties. financial statement approved by the Commissioner
“(1) Invest in equities of other financial institutions; shall be invested in the lot and building in which the
and insurance company conducts its business; and
“(5) Preferred or guaranteed stocks of any solvent
corporation or institution created or existing under
the laws of the Philippines: Provided, That if the “(2) Engage in the buying and selling of long-term “(b) The total investment of an insurance company
stocks are guaranteed, the amount of stocks so debt instruments: Provided, That any or all of such in any registered enterprise shall not exceed twenty
guaranteed is not in excess of fifty percent (50%) of investments shall be with the prior approval of the percent (20%) of the net worth of said insurance
the amount of the preferred or common stocks, as Commissioner. Insurance companies may, however, company as shown by its aforesaid financial
the case may be, of the guaranteeing invest in listed equities of other financial institutions statement nor twenty percent (20%) of the paid-up
corporation: Provided, finally, That no life insurance without need of prior approval by the capital of the registered enterprise excluding the
company shall invest in or loan upon obligations of Commissioner. intended investment, unless previously authorized
any one institution in the kinds permitted under this by the Commissioner: Provided, further,That such
subsection an amount in excess of ten percent (10%) “SEC. 208. Any life insurance company may: investments, free from any lien or encumbrance,
of the total admitted assets of such insurer as of shall be at least equal in amount to the aggregate
December thirty-first next preceding the date of amount of: (1) its legal reserve, as provided in
such investment. “(a) Acquire or construct housing projects and, in Section 219, and (2) its reserve fund held for
connection with any such project, may acquire land reinsurance as provided for in the pertinent treaty
or any interest therein by purchase, lease or provision in the case of reinsurance ceded to
“(6) Common stocks of any solvent corporation or otherwise, or use land acquired pursuant to any authorized insurers.
institution created or existing under the laws of the other provision of this Code. Such company may
Philippines: Provided, however, That no life thereafter own, maintain, manage, collect or receive
insurance company shall invest in or loan upon the income from, or sell and convey, any land or interest “SEC. 211. After satisfying the requirements
obligations of any one corporation or institution in therein so acquired and any improvements thereon. contained in Sections 197, 199, 209 and 210, any
the kinds permitted under this subsection an The aggregate book value of the investments of any non-life insurance company may invest any portion
amount in excess of ten percent (10%) of the total such company in all such projects shall not exceed at of its funds representing earned surplus in any of the
admitted assets of such insurer as of December the time of such investments twenty-five percent investments described in Sections 204, 206 and 207,
thirty-first next preceding the date of such (25%) of the total admitted assets of such company or in any securities issued by a registered enterprise
investment. on the thirty-first day of December next mentioned in the preceding sections: Provided, That
preceding: Provided, That the funds of the company no investment in stocks or bonds of any single entity
for the payment of pending claims and obligations shall in the aggregate, exceed twenty percent (20%)
“(7) Securities issued by a registered enterprise, as
shall not be used for such investments. of the net worth of the insurance company as shown
this term is defined in Executive Order No. 226,
in its latest financial statement approved by the
otherwise known as the Omnibus Investments Code
Commissioner or twenty percent (20%) of the paid-
of 1987, as amended: Provided, That the total “(b) Acquire real property, other than property to be up capital of the issuing company, whichever is
investment of a domestic non-life insurance used primarily for providing housing and property lesser, unless otherwise approved by the
company in any registered enterprise shall not for accommodation of its own business, as an Commissioner.
exceed twenty percent (20%) of the net worth of investment for the production of income, or may
said insurance company as shown by its aforesaid acquire real property to be improved or developed
financial statement unless previously authorized by for such investment purpose pursuant to a program “SEC. 212. After satisfying the minimum capital
the Commissioner. therefor, subject to the condition that the cost of investment required in Section 209, any life
each parcel of real property so acquired under the insurance company may invest its legal policy
authority of this paragraph (b), including the reserve, as provided in Section 217 or in Section 218,
in any of the classes of securities or types of
investments described in Sections 204, 206, 207 and “(d) The stock of an insurance company shall be by the Commissioner in accordance with
208, subject to the limitations therein contained, valued at the lesser of its market value or its book internationally accepted actuarial standards, which
and in any securities issued by any registered value as shown by its last approved audited financial standard shall be stated in its annual report.
enterprise mentioned in Section 210, free from any statement or the last report on examination,
lien or encumbrance, in such amounts as may be whichever is more recent. The book value of a share
“Such standard of valuations shall be according to a
approved by the Commissioner. Such company may of common stock of an insurance company shall be
standard table of mortality with interest to be
likewise invest any portion of its earned surplus in ascertained by dividing (1) the amount of its capital
determined by the Insurance Commissioner. When
the aforesaid securities or investments subject to and surplus less the value of all of its preferred
the preliminary term basis is used, the term
the aforesaid limitations. stock, if any, outstanding, by (2) the number of
insurance shall be limited to the first policy year.
shares of its common stock issued and outstanding.
“SEC. 213. Any investment made in violation of the
“The results of such valuations shall be reported to
applicable provisions of this title shall be considered “Notwithstanding the foregoing provisions, an
the Commissioner on or before the thirtieth day of
non-admitted assets. insurer may, at its option, value its holdings of stock
April of each year accompanied by a sworn
in a subsidiary insurance company in an amount not
statement of a designated company officer and
less than acquisition cost if such acquisition cost is
“SEC. 214. (a) All bonds or other instruments of stating the methods and assumptions used in
less than the value determined as hereinbefore
indebtedness having a fixed term and rate of arriving at the values reported.
provided.
interest and held by any life insurance company
authorized to do business in this country, if amply
“SEC. 217. The aggregate net value so ascertained of
secured and if not in default as to principal or “(e) Real estate acquired by foreclosure or by deed
the policies of such company shall be deemed its
interest, shall be valued based on their amortized in lieu thereof, in the absence of a recent appraisal
reserve liability, to provide for which it shall hold
cost using effective interest method less impairment deemed by the Commissioner to be reliable, shall
funds in secure investments equal to such net value,
and unrecoverable amount based on appropriate not be valued at an amount greater than the unpaid
above all its other liabilities; and it shall be the duty
measurement methods which are generally principal of the defaulted loan at the date of such
of the Commissioner, after having verified, to such
accepted in the industry and accepted by the foreclosure or deed, together with any taxes and
an extent as he may deem necessary, the valuation
Commissioner. The Commissioner shall have the expenses paid or incurred by such insurer at such
of all policies in force, to satisfy himself that the
power to determine the eligibility of any such time in connection with such acquisition, and the
company has such amount in safe legal securities
investments for valuation on the basis of cost of additions or improvements thereafter paid
after all other debts and claims against it have been
amortization, and may by regulation prescribe or by such insurer and any amount or amounts
provided for.
limit the classes of securities so eligible for thereafter paid by such insurer or any assessments
amortization. All bonds or other instruments of levied for improvements in connection with the
indebtedness which in the judgment of the property. “The reserve liability for variable contracts defined in
Commissioner are not amply secured shall not be Section 238 shall be established in accordance with
eligible for amortization and shall be valued in actuarial procedures that recognize the variable
“(f) Purchase money mortgages received on
accordance with paragraph two. The Commissioner nature of the benefits provided, and shall be
dispositions of real property held pursuant to
may, if he finds that the interest of policyholders so approved by the Commissioner.
Section 208 shall be valued in an amount equivalent
permit or require, by official regulation permit or
to ninety percent (90%) of the value of such real
require any class or classes of insurers, other than “SEC. 218. Every life insurance company, conducted
property. Purchase money mortgages received on
life insurance companies authorized to do business on the mutual plan or a plan in which policyholders
disposition of real property otherwise held shall be
in this country, to value their bonds or other are by the terms of their policies entitled to share in
valued in an amount not exceeding ninety percent
instruments of indebtedness in accordance with the the profits or surplus shall, on all policies of life
(90%) of the value of such real property as
foregoing rule. insurance heretofore or hereafter issued, under the
determined by an appraisal made by an appraiser at
or about the time of disposition of such real conditions of which the distribution of surplus is
“(b) The investments of all insurers authorized to do property. deferred to a fixed or specified time and contingent
business in this country, except securities subject to upon the policy being in force and the insured living
amortization and except as otherwise provided in at that time, annually ascertain the amount of the
“(g) The stock of a subsidiary of an insurer shall be
this chapter, shall be valued, in the discretion of the surplus to which all such policies as a separate class
valued on the basis of the greater of:
Commissioner, at their amortized cost using are entitled, and shall annually apportion to such
effective interest method less impairment and policies as a class the amount of the surplus so
unrecoverable amount or at valuation representing “(1) The value of only such of the assets of such ascertained, and carry the amount of such
their fair market value. If the Commissioner finds subsidiary as would constitute lawful investments apportioned surplus, plus the actual interest
that in view of the character of investments of any for the insurer if acquired or held directly by the earnings and accretions to such fund, as a distinct
insurer authorized to do business in this country it insurer; or and separate liability to such class of policies on and
would be prudent for such insurer to establish a for which the same was accumulated, and no
special reserve for possible losses or fluctuations in company or any of its officers shall be permitted to
“(2) Such other value determined pursuant to
the values of its investments, he may require such use any part of such apportioned surplus fund for
standards and cumulative limitations, contained in a
insurer to establish such reserve, reasonable in any purpose whatsoever other than for the express
regulation to be promulgated by the Commissioner.
amount, and include a report thereon in any purpose for which the same was accumulated.
statement or report of the financial condition of
such insurer. The Commissioner may, in connection “(h) Notwithstanding any provision contained in this
“SEC. 219. Every insurance company, other than life,
with any examination or required financial section or elsewhere in this chapter, if the
shall maintain a reserve for unearned premiums on
statement of an authorized insurer, require such Commissioner finds that the interests of
its policies in force, which shall be charged as a
insurer to furnish him complete financial statements policyholders so permit or require, he may permit or
liability in any determination of its financial
and audited report of the financial condition of any require any class or classes of insurers authorized to
condition. Such reserve shall be calculated based on
corporation of which the securities are owned do business in this country to value their
the twenty-fourth (24th) method.
wholly or partly by such insurer and may cause an investments or any class or classes thereof as of any
examination to be made of any subsidiary or affiliate date heretofore or hereafter in accordance with any
of such insurer as appropriate to specific applicable valuation or method. “SEC. 220. In addition to its liabilities and reserves on
investments as provided in appropriate circulars contracts of insurance issued by it, every insurance
issued by the Commissioner. company shall be charged with the estimated
“SEC. 215. It shall be the duty of the officers of the
amount of all of its other liabilities, including taxes,
insurance company to report within the first fifteen
expenses and other obligations due or accrued at
“(c) Investments in equity of an insurance company (15) days of every month all such investments as
the date of statement, and including any special
shall be valued as follows: may be made by them during the preceding month,
reserves required by the Commissioner pursuant to
and the Commissioner may, if such investments or
the provisions of this Code.
any of them seem injudicious to him, require the
“(1) Listed stocks shall be valued at market value and sale or disposal of the same. The report shall also
periodically adjusted to reflect market changes include a list of investments sold or disposed of by TITLE 6
through a special valuation account to reflect their the company during the same period.
realizable value when sold;
“LIMIT OF SINGLE RISK
“TITLE 5
“(2) Unlisted stocks shall be valued at adjusted book
value based on the latest unqualified audited “SEC. 221. No insurance company other than life,
financial statements of the company which issued “RESERVES whether foreign or domestic, shall retain any risk on
such stocks; and any one subject of insurance in an amount
exceeding twenty percent (20%) of its net worth. For
“SEC. 216. Every life insurance company, doing
purposes of this section, the term subject of
“(3) Stocks of a corporation under the control of the business in the Philippines, shall annually make a
insurance shall include all properties or risks insured
insurer shall be valued using the equity method valuation of all policies, additions thereto, unpaid
by the same insurer that customarily are considered
which is the cost plus or minus the share of the dividends, and all other obligations outstanding on
by non-life company underwriters to be subject to
controlling company in the earnings or losses of the the thirty-first day of December of the preceding
loss or damage from the same occurrence of any
controlled company after acquisition of such stocks. year. All such valuations shall be made according to
hazard insured against.
the standard adopted by the company, as prescribed
“The Commissioner may issue regulations providing by the assuming insurer shall be made directly to the assets and liabilities, determination of recurring and
for a maximum limit on the overall retained risks of ceding insurer or to its liquidator, receiver, or nonrecurring income, differentiation of investment
insurers to serve as a catastrophe cover requirement statutory successor except: and operating income, and in the preparation,
for the same. where the Commissioner deems it necessary or
desirable, of consolidated balance sheets or income
“(a) Where the contract specifically provides another
accounts of any person directly or indirectly
“Reinsurance ceded as authorized under the payee of such reinsurance in the event of the
controlling or controlled by the insurance company.
succeeding title shall be deducted in determining the insolvency of the ceding insurer; and
risk retained. As to surety risk, deduction shall also
be made of the amount assumed by any other “TITLE 9
“(b) Where the assuming insurer with the consent of
company authorized to transact surety business and
the direct insured or insureds has assumed such
the value of any security mortgaged, pledged, or
policy obligations of the ceding insurer as direct “POLICY FORMS
held subject to the surety’s control and for the
obligations of the assuming insurer to the payees
surety’s protection.
under such policies and in substitution for the
“SEC. 232. No policy, certificate or contract of
obligations of the ceding insurer to such payees.
insurance shall be issued or delivered within the
“TITLE 7
Philippines unless in the form previously approved
“SEC. 228. No life insurance company doing business by the Commissioner, and no application form shall
“REINSURANCE TRANSACTIONS in the Philippines shall reinsure its whole risk on any be used with, and no rider, clause, warranty or
individual life or joint lives, or substantially all of its endorsement shall be attached to, printed or
insurance in force, without having first obtained the stamped upon such policy, certificate or contract
“SEC. 222. An insurance company doing business in
written permission of the Commissioner. unless the form of such application, rider, clause,
the Philippines may accept reinsurances only of such
warranty or endorsement has been approved by the
risks, and retain risk thereon within such limits, as it
Commissioner.
is otherwise authorized to insure. “TITLE 8

“SEC. 233. In the case of individual life or

“SEC. 223. No insurance company doing business in “ANNUAL STATEMENT
endowment insurance, the policy shall contain in
the Philippines shall cede all or part of any risks
substance the following conditions:
situated in the Philippines by way of reinsurance
“SEC. 229. Every insurance company doing business
directly to any foreign insurer not authorized to do
in the Philippines shall terminate its fiscal period on
business in the Philippines unless such foreign “(a) A provision that the policyholder is entitled to a
the thirty-first day of December every year, and shall
insurer or, if the services of a nonresident broker are grace period either of thirty (30) days or of one (1)
annually on or before the thirtieth day of April of
utilized, such nonresident broker is represented in month within which the payment of any premium
each year render to the Commissioner a statement
the Philippines by a resident agent duly registered after the first may be made, subject at the option of
signed and sworn to by the chief officer of such
with the Commissioner as required in this Code. the insurer to an interest charge not in excess of six
company showing, in such form and details as may
percent (6%) per annum for the number of days of
be prescribed by the Commissioner, the exact
grace elapsing before the payment of the premium,
“The resident agent of such unauthorized foreign condition of its affairs on the preceding thirty-first
during which period of grace the policy shall
insurer or nonresident broker shall immediately day of December.
continue in full force, but in case the policy becomes
upon registration furnish the Commissioner with the
a claim during the said period of grace before the
annual statement of such insurer, or of such
“The annual statement shall be prepared in overdue premium is paid, the amount of such
company or companies where such broker may
accordance with the financial reporting framework premium with interest may be deducted from the
place Philippine business as of the year preceding
as determined by the Commissioner. In addition, the amount payable under the policy in settlement;
such registration, and annually thereafter as soon as
Commissioner may require other relevant
available.
information. The form and details of such other
“(b) A provision that the policy shall be incontestable
relevant information shall be prescribed by the
after it shall have been in force during the lifetime of
“SEC. 224. All insurance companies, both life and Commissioner and shall form part of the
the insured for a period of two (2) years from its
non-life, authorized to do business in the Philippines supplementary schedules to the annual statement.
date of issue as shown in the policy, or date of
shall cede their excess risks to other companies
approval of last reinstatement, except for
similarly authorized to do business in the Philippines
“Any entry in the statement which is found to be nonpayment of premium and except for violation of
in such amounts and under such arrangements as
false shall constitute a misdemeanor and the officer the conditions of the policy relating to military or
would be consistent with sound underwriting
signing such statement shall be subject to the naval service in time of war;
practices before they enter into reinsurance
penalty provided for under Section 442.
arrangements with unauthorized foreign insurers.
“(c) A provision that the policy shall constitute the
“SEC. 230. Every insurance company authorized entire contract between the parties, but if the
“SEC. 225. Any insurance company doing business in
under Title 10 of this chapter to issue, deliver or use company desires to make the application a part of
the Philippines desiring to cede their excess risks to
variable contracts shall annually file with the the contract it may do so provided a copy of such
foreign insurance or reinsurance companies not
Commissioner separate annual statement of its application shall be indorsed upon or attached to
authorized to transact business in the Philippines
separate variable accounts. Such statement shall be the policy when issued, and in such case the policy
may do so under such terms and conditions which
on a form prescribed or approved by the shall contain a provision that the policy and the
the Commissioner may prescribe.
Commissioner and shall include details as to all of application therefor shall constitute the entire
the income, disbursements, assets and liability items contract between the parties;
“Should any reinsurance agreement be for any of and associated with the said separate variable
reason cancelled or terminated, the ceding company accounts. Said statement shall be under oath of two
“(d) A provision that if the age of the insured is
concerned shall inform the Commissioner in writing (2) officers of the company and shall be filed
considered in determining the premium and the
of such cancellation or termination within thirty (30) simultaneously with the annual statement required
benefits accruing under the policy, and the age of
days from the date of such cancellation or by the preceding section.
the insured has been misstated, the amount payable
termination or from the date notice or information
under the policy shall be such as the premium would
of such cancellation or termination is received by
“SEC. 231. Within thirty (30) days after receipt of the have purchased at the correct age;
such company as the case may be.
annual statement approved by the Commissioner,
every insurance company doing business in the
“(e) If the policy is participating, a provision that the
“SEC. 226. Every insurance company authorized to Philippines shall publish in a newspaper of general
company shall periodically ascertain and apportion
do business in the Philippines shall report to the circulation, a full synopsis of its annual financial
any divisible surplus accruing on the policy under
Commissioner on forms prescribed by him the statement showing fully the conditions of its
conditions specified therein;
particulars of reinsurance treaties or any new business, and setting forth its resources and
treaties or changes in existing treaties within three liabilities in accordance with such form prescribed by
(3) months from their effectivity. the Commissioner. “(f) A provision specifying the options to which the
policyholder is entitled to in the event of default in a
premium payment after three (3) full annual
“SEC. 227. No credit shall be allowed as an admitted “The Commissioner shall have the authority to
premiums shall have been paid. Such option shall
asset or as a deduction from liability, to any ceding make, amend, and rescind such accounting rules and
consist of:
insurer for reinsurance made, ceded, renewed, or regulations as may be necessary to carry out the
otherwise becoming effective after January 1, 1975, provisions of this Code, and define accounting,
unless the reinsurance shall be payable by the technical and trade terms used in this “(1) A cash surrender value payable upon surrender
assuming insurer on the basis of the liability of the Code: Provided, That such shall be in accordance of the policy which shall not be less than the reserve
ceding insurer under the contract or contracts with internationally accepted accounting standards. on the policy, the basis of which shall be indicated,
reinsured without diminution because of the Among other things, the Commissioner may for the then current policy year and any dividend
insolvency of the ceding insurer nor unless under the prescribe the form or forms in which required additions thereto, reduced by a surrender charge
contract or contracts of reinsurance the liability for information shall be set forth, the items or details to which shall not be more than one-fifth (1/5) of the
such reinsurance is assumed by the assuming insurer be shown in the balance sheet and income entire reserve or two and one-half percent (2½%) of
or insurers as of the same effective date; nor unless statement, and the methods to be followed in the the amount insured and any dividend additions
the reinsurance agreement provides that payments preparation of accounts, appraisal or valuation of thereto; and
“(2) One or more paid-up benefits on a plan or plans “(b) A provision that the validity of the policy shall be entitled to have issued to him by the insurer an
specified in the policy of such value as may be not be contested, except for nonpayment of individual policy of life insurance subject to the same
purchased by the cash surrender value. premiums after it has been in force for two (2) years limitations as set forth in paragraph (h), except that
from its date of issue; and that no statement made the group policy may provide that the amount of
by any insured under the policy relating to his such individual policy shall not exceed the amount of
“(g) A provision that at any time after a cash
insurability shall be used in contesting the validity of the person’s life insurance protection ceasing;
surrender value is available under the policy and
the insurance with respect to which such statement
while the policy is in force, the company will
was made after such insurance has been in force
advance, on proper assignment or pledge of the “(j) A provision that if a person insured under the
prior to the contest for a period of two (2) years
policy and on sole security thereof, a sum equal to, group policy dies during the thirty (30)-day period
during such person’s lifetime nor unless contained in
or at the option of the owner of the policy, less than within which he would have been entitled to an
a written instrument signed by him;
the cash surrender value on the policy, at a specified individual policy issued to him in accordance with
rate of interest, not more than the maximum paragraphs (h) and (i) above and before such
allowed by law, to be determined by the company “(c) A provision that a copy of the application, if any, individual policy shall have become effective, the
from time to time, but not more often than once a of the policyholder shall be attached to the policy amount of life insurance which he would have been
year, subject to the approval of the Commissioner; when issued, that all statements made by the entitled to have issued to him as an individual policy
and that the company will deduct from such loan policyholder or by persons insured shall be deemed shall be payable as a claim under the group policy
value any existing indebtedness on the policy and representations and not warranties, and that no whether or not application for the individual policy
any unpaid balance of the premium for the current statement made by any insured shall be used in any or the payment of the first premium has been made;
policy year, and may collect interest in advance on contest unless a copy of the instrument containing
the loan to the end of the current policy year, which the statement is or has been furnished to such
“(k) In the case of a policy issued to a creditor to
provision may further provide that such loan may be person or to his beneficiary;
insure debtors of such creditor, a provision that the
deferred for not exceeding six (6) months after the
insurer will furnish to the policyholder for delivery to
application therefor is made;
“(d) A provision setting forth the conditions, if any, each debtor insured under the policy a form which
under which the insurer reserves the right to require will contain a statement that the life of the debtor is
“(h) A table showing in figures cash surrender values a person eligible for insurance to furnish evidence of insured under the policy and that any death benefit
and paid-up options available under the policy each individual insurability satisfactory to the insurer as a paid thereunder by reason of his death shall be
year upon default in premium payments, during at condition to part or all of his coverage; applied to reduce or extinguish indebtedness.
least twenty (20) years of the policy beginning with
the year in which the values and options first
“(e) A provision specifying an equitable adjustment “The provisions of paragraphs (f) to (j) shall not
become available, together with a provision that in
of premiums or of benefits or of both to be made in apply to policies issued to a creditor to insure his
the event of the failure of the policyholder to elect
the event that the age of a person insured has been debtors. If a group life policy is on a plan of
one of the said options within the time specified in
misstated, such provision to contain a clear insurance other than term, it shall contain a non-
the policy, one of said options shall automatically
statement of the method of adjustment to be used; forfeiture provision or provisions which in the
take effect and no policyholder shall ever forfeit his
opinion of the Commissioner is or are equitable to
right to same by reason of his failure to so elect;
the insured or the policyholder: Provided, That
“(f) A provision that any sum becoming due by
nothing herein contained shall be so construed as to
reason of death of the person insured shall be
“(i) In case the proceeds of a policy are payable in require group life policies to contain the same non-
payable to the beneficiary designated by the
installments or as an annuity, a table showing the forfeiture provisions as are required of individual life
insured, subject to the provisions of the policy in the
minimum amounts of the installments or annuity policies.
event that there is no designated beneficiary, as to
payments;
all or any part of such sum, living at the death of the
insured, and subject to any right reserved by the “SEC. 235. The term industrial life insurance as used
“(j) A provision that the policyholder shall be entitled insurer in the policy and set forth in the certificate to in this Code shall mean that form of life insurance
to have the policy reinstated at any time within pay at its option a part of such sum not exceeding under which the premiums are payable either
three (3) years from the date of default of premium Five hundred pesos (P500.00) to any person monthly or oftener, if the face amount of insurance
payment unless the cash surrender value has been appearing to the insurer to be equitably entitled provided in any policy is not more than five hundred
duly paid, or the extension period has expired, upon thereto by reason of having incurred funeral or times that of the current statutory minimum daily
production of evidence of insurability satisfactory to other expenses incident to the last illness or, death wage in the City of Manila, and if the
the company and upon payment of all overdue of the person insured; words industrial policy are printed upon the policy as
premiums and any indebtedness to the company part of the descriptive matter.
upon said policy, with interest rate not exceeding
“(g) A provision that the insurer will issue to the
that which would have been applicable to said
policyholder for delivery to each person insured a “An industrial life policy shall not lapse for
premiums and indebtedness in the policy years prior
statement as to the insurance protection to which nonpayment of premium if such nonpayment was
to reinstatement.
he is entitled, to whom the insurance benefits are due to the failure of the company to send its
payable, and the rights set forth in paragraphs (h), (i) representative or agent to the insured at the
“Any of the foregoing provisions or portions thereof and (j) following; residence of the insured or at some other place
not applicable to single premium or term policies indicated by him for the purpose of collecting such
shall to that extent not be incorporated therein; and premium: Provided, That the provisions of this
“(h) A provision that if the insurance, or any portion
any such policy may be issued and delivered in the paragraph shall not apply when the premium on the
of it, on a person covered under the policy ceases
Philippines which in the opinion of the policy remains unpaid for a period of three (3)
because of termination of employment or of
Commissioner contains provisions on any one or months or twelve (12) weeks after the grace period
membership in the class or classes eligible for
more of the foregoing requirements more favorable has expired.
coverage under the policy, such person shall be
to the policyholder than hereinbefore required.
entitled to have issued to him by the insurer,
without evidence of insurability, an individual policy “SEC. 236. In the case of industrial life insurance, the
“This section shall not apply to policies of group life of life insurance without disability or other policy shall contain in substance the following
or industrial life insurance. supplementary benefits, provided application for the provisions:
individual policy and payment of the first premium
to the insurer shall be made within thirty (30) days
“SEC. 234. No policy of group life insurance shall be “(a) A provision that the insured is entitled to a grace
after such termination, and provided further that:
issued and delivered in the Philippines unless it period of four (4) weeks within which the payment
contains in substance the following provisions, or of any premium after the first may be made, except
provisions which in the opinion of the Commissioner “(1) The individual policy shall be on any one of the that where premiums are payable monthly, the
are more favorable to the persons insured, or at forms, except term insurance, then customarily period of grace shall be either one (1) month or
least as favorable to the persons insured and more issued by the insurer at the age and for an amount thirty (30) days; and that during the period of grace,
favorable to the policyholders: not in excess of the coverage under the group policy; the policy shall continue in full force, but if during
and such grace period the policy becomes a claim, then
any overdue and unpaid premiums may be deducted
“(a) A provision that the policyholder is entitled to a
from any amount payable under the policy in
grace period of either thirty (30) days or of one (1) “(2) The premium on the individual policy shall be at
settlement;
month for the payment of any premium due after the insurer’s then customary rate applicable to the
the first, during which grace period the death form and amount of the individual policy, to the
benefit coverage shall continue in force, unless the class of risk to which such person then belongs, and “(b) A provision that the policy shall be incontestable
policyholder shall have given the insurer written to his age attained on the effective date of the after it has been in force during the lifetime of the
notice of discontinuance in advance of the date of individual policy. insured for a specified period, not more than two (2)
discontinuance and in accordance with the terms of years from its date of issue, except for nonpayment
the policy. The policy may provide that the of premiums and except for violation of the
“(i) A provision that if the group policy terminates or
policyholder shall be liable for the payment of a pro conditions of the policy relating to naval or military
is amended so as to terminate the insurance of any
ratapremium for the time the policy is in force service, or services auxiliary thereto, and except as
class of insured persons, every person insured
during such grace period; to provisions relating to benefits in the event of
thereunder at the date of such termination whose
disability as defined in the policy, and those granting
insurance terminates and who has been so insured
additional insurance specifically against death by
for five (5) years prior to such termination date shall
accident or by accidental means, or to additional rate not exceeding six percent (6%) per annum specified under the provisions of paragraph (m) of
insurance against loss of, or loss of use of, specific payable annually; the preceding section;
members of the body;
“(k) A provision that when a policy shall become a “(d) A provision that limits the time within which any
“(c) A provision that the policy shall constitute the claim by death of the insured, settlement shall be action at law or in equity may be commenced to less
entire contract between the parties, or if a copy of made upon receipt of due proof of death, or not than six (6) years after the cause of action shall
the application is endorsed upon and attached to later than two (2) months after receipt of such accrue; and
the policy when issued, a provision that the policy proof;
and the application therefor shall constitute the
“(e) A provision that specifies any mode of
entire contract between the parties, and in the latter
“(l) A title on the face and on the back of the policy settlement at maturity of less value than the amount
case, a provision that all statements made by the
correctly describing its form; insured by the policy plus dividend additions, if any,
insured shall, in the absence of fraud, be deemed
less any indebtedness to the company on the policy
representations and not warranties;
and less any premium that may by the terms of the
“(m) A space on the front or the back of the policy
policy be deducted, payments to be made in
for the name of the beneficiary designated by the
“(d) A provision that if the age of the person insured, accordance with the terms of the policy.
insured with a reservation of the insured’s right to
or the age of any person, considered in determining
designate or change the beneficiary after the
the premium, or the benefits accruing under the
issuance of the policy. The policy may also provide “Nothing contained in this section nor in the
policy, has been misstated, any amount payable or
that no designation or change of beneficiary shall be provision of paragraph (b) of the preceding section,
benefit accruing under the policy shall be such as the
binding on the insurer until endorsed on the policy relating to incontestability, shall be construed as
premium paid would have purchased at the correct
by the insurer, and that the insurer may refuse to prohibiting the life insurance company from placing
age;
endorse the name of any proposed beneficiary who in its industrial life policies provisions limiting its
does not appear to the insurer to have an insurable liability with respect to:
“(e) A provision that if the policy is a participating interest in the life of the insured. Such policy may
policy, the company shall periodically ascertain and also contain a provision that if the beneficiary
“(1) Death resulting from aviation other than as a
apportion any divisible surplus accruing on the policy designated in the policy does not surrender the
fare-paying passenger on a regularly scheduled
under the conditions specified therein; policy with due proof of death within the period
route between definitely established airports; and
stated in the policy, which shall not be less than
thirty (30) days after the death of the insured, or if
“(f) A provision that in the event of default in
the beneficiary is the estate of the insured, or is a “(2) Military or naval service: Provided, That if the
premium payments after three (3) full years’
minor, or dies before the insured, or is not legally liability of the company is limited as herein provided,
premiums have been paid, the policy shall be
competent to give valid release, then the insurer such liability shall in no event be fixed at an amount
converted into a stipulated form of insurance, and
may make any payment thereunder to the executor less than the reserve on the policy (excluding the
that in the event of default in premium payments
or administrator of the insured, or to any of the reserve for any additional benefits in the event of
after five (5) full years’ premiums have been paid, a
insured’s relatives by blood or legal adoption or death by accident or accidental means or for
specified cash surrender value shall be available, in
connections by marriage or to any person appearing benefits in the event of any type of disability), less
lieu of the stipulated form of insurance, at the
to the insurer to be equitably entitled thereto by any indebtedness on or secured by such policy; nor
option of the policyholder. The net value of such
reason of having incurred expense for the shall any provision of this section apply to any
stipulated form of insurance and the amount of such
maintenance, medical attention or burial of the provision in an industrial life insurance policy for
cash value shall not be less than the reserve on the
insured; and additional benefits in the event of death by accident
policy and dividend additions thereto, if any, at the
or accidental means.
end of the last completed policy year for which
premiums shall have been paid (the policy to specify “(n) A provision that when an industrial life
the mortality table, rate of interest and method of insurance policy is issued providing for accidental or “TITLE 10
valuation adopted to compute such reserve), health benefits, or both, in addition to life insurance,
exclusive of any reserve on disability benefits and the foregoing provisions shall apply only to the life “VARIABLE CONTRACTS
accidental death benefits, less an amount not to insurance portion of the policy.
exceed two and one-half percent (2½%) of the
maximum amount insured by the policy and “SEC. 238. (a) No insurance company authorized to
“Any of the foregoing provisions or portions thereof transact business in the Philippines shall issue,
dividend additions thereto, if any, when the issue
not applicable to nonparticipating or term policies deliver, sell or use any variable contract in the
age is under ten (10) years, and less an amount not
shall to that extent not be incorporated therein. The Philippines, unless and until such company shall
to exceed two and one-half percent (2½%) of the
foregoing provisions shall not apply to policies have satisfied the Commissioner that its financial
current amount insured by the policy and dividend
issued or granted pursuant to the nonforfeiture and general condition and its methods of
additions thereto, if any, if the issue age is ten (10)
provisions prescribed in provisions of paragraphs (f) operations, including the issue and sale of variable
years or older, and less any existing indebtedness to
and (i) of this section, nor shall provisions of contracts, are not and will not be hazardous to the
the company on or secured by the policy;
paragraphs (f), (g), (h), and (i) hereof be required in public or to its policy and contract owners. No
term insurance of twenty (20) years or less but such foreign insurance company shall be authorized to
“(g) A provision that the policy may be surrendered term policies shall specify the mortality table, rate of issue, deliver or sell any variable contract in the
to the company at its home office within a period of interest, and method of computing reserves. Philippines, unless it is likewise authorized to do so
not less than sixty (60) days after the due date of a by the laws of its domicile.
premium in default for the specified cash
“SEC. 237. No policy of industrial life insurance shall
value: Provided, That the insurer may defer payment
be issued or delivered in the Philippines if it contains “(b) The term variable contract shall mean any policy
for not more than six (6) months after the
any of the following provisions: or contract on either a group or on an individual
application therefor is made;
basis issued by an insurance company providing for
“(a) A provision that gives the insurer the right to benefits or other contractual payments or values
“(h) A table that shows in figures the nonforfeiture thereunder to vary so as to reflect investment
declare the policy void because the insured has had
benefits available under the policy every year upon results of any segregated portfolio of investments or
any disease or ailment, whether specified or not, or
default in payment of premiums during at least the of a designated separate account in which amounts
because the insured has received institutional,
first twenty (20) years of the policy, such table to received in connection with such contracts shall
hospital, medical or surgical treatment or attention,
begin with the year in which such values become have been placed and accounted for separately and
except a provision which gives the insurer the right
available, and a provision that the company will apart from other investments and accounts. This
to declare the policy void if the insured has, within
furnish upon request an extension of such table contract may also provide benefits or values
two (2) years prior to the issuance of the policy,
beyond the year shown in the policy; incidental thereto payable in fixed or variable
received institutional, hospital, medical or surgical
treatment or attention and if the insured or the amounts, or both. It shall not be deemed to be a
“(i) A provision that specifies which one of the claimant under the policy fails to show that the security or securities as defined in The Securities Act,
stipulated forms of insurance provided for under the condition occasioning such treatment or attention as amended, or in the Investment Company Act, as
provision of paragraph (f) of this section shall take was not of a serious nature or was not material to amended, nor subject to regulations under said Acts.
effect in the event of the insured’s failure, within the risk;
sixty (60) days from the due date of the premium in “(c) In determining the qualifications of a company
default, to notify the insurer in writing as to which requesting authority to issue, deliver, sell or use
“(b) A provision that gives the insurer the right to
one of such forms he has selected; variable contracts, the Commissioner shall always
declare the policy void because the insured has been
rejected for insurance, unless such right be consider the following:
“(j) A provision that the policy may be reinstated at conditioned upon a showing by the insurer that
any time within two (2) years from the due date of knowledge of such rejection would have led to a “(1) The history, financial and general condition of
the premium in default unless the cash surrender refusal by the insurer to make such contract; the company: Provided, That such company, if a
value has been paid or the period of extended term foreign company, must have deposited with the
insurance expired, upon production of evidence of Commissioner for the benefit and security of its
“(c) A provision that allows the company to pay the
insurability satisfactory to the company and variable contract owners in the Philippines,
proceeds of the policy at the death of the insured to
payment of arrears of premiums with interest at a securities satisfactory to the Commissioner
any person other than the named beneficiary,
except in accordance with a standard provision as consisting of bonds of the Government of the
Philippines or its instrumentalities with an actual transfer of securities having a valuation which could “(5) Compelling policyholders to institute suits to
market value of Two million pesos (P2,000,000.00); be readily determined in the market place: Provided, recover amounts due under its policies by offering
That such transfer of securities is approved by the without justifiable reason substantially less than the
Commissioner. The Commissioner may authorize amounts ultimately recovered in suits brought by
“(2) The character, responsibility and fitness of the
other transfers among such accounts, if, in his them.
officers and directors of the company; and
opinion, such transfers would not be inequitable. All
amounts and assets allocated to any such separate
“(b) Evidence as to numbers and types of valid and
“(3) The law and regulation under which the variable account shall be owned by the company and
justifiable complaints to the Commissioner against
company is authorized in the state of domicile to with respect to the same the company shall not be
an insurance company, and the Commissioner’s
issue such contracts. nor hold itself out to be a trustee.
complaint experience with other insurance
companies writing similar lines of insurance shall be
“(d) If after notice and hearing, the Commissioner “SEC. 244. Any insurance company which has admissible in evidence in an administrative or
shall find that the company is qualified to issue, established one or more separate variable accounts judicial proceeding brought under this section.
deliver, sell or use variable contracts in accordance pursuant to the preceding section may invest and
with this Code and the regulations and rules issued reinvest all or any part of the assets allocated to any
“(c) If it is found, after notice and an opportunity to
thereunder, the corresponding order of such account in the securities and investments
be heard, that an insurance company has violated
authorization shall be issued. Any decision or order authorized by Sections 204, 206, 207 and 208 for any
this section, each instance of noncompliance with
denying authority to issue, deliver, sell or use of the funds of an insurance company in such
paragraph (a) may be treated as a separate violation
variable contracts shall clearly and distinctly state amount or amounts as may be approved by the
of this section and shall be considered sufficient
the reasons and grounds on which it is based. Commissioner. In addition thereto, such company
cause for the suspension or revocation of the
may also invest in common stocks or other equities
company’s certificate of authority.
“SEC. 239. Any insurance company issuing variable which are listed on or admitted to trading in a
contracts pursuant to this Code may in its discretion securities exchange located in the Philippines, or
which are publicly held and traded in the over-the- “SEC. 248. The proceeds of a life insurance policy
issue contracts providing a combination of fixed
counter market as defined by the Commissioner and shall be paid immediately upon maturity of the
amount and variable amount of benefits and for
as to which market quotations have been policy, unless such proceeds are made payable in
option lump-sum payment of benefits.
available: Provided, however, That no such company installments or as an annuity, in which case the
shall invest in excess of ten percent (10%) of the installments, or annuities shall be paid as they
“SEC. 240. Every variable contract form delivered or assets of any such separate variable accounts in any become due: Provided, however, That in the case of
issued for delivery in the Philippines, and every one corporation issuing such common stock. The a policy maturing by the death of the insured, the
certified form evidencing variable benefits issued assets and investments of such separate variable proceeds thereof shall be paid within sixty (60) days
pursuant to any such contract on a group basis, and accounts shall not be taken into account in applying after presentation of the claim and filing of the proof
the application, rider and endorsement forms the quantitative investment limitations applicable to of death of the insured. Refusal or failure to pay the
applicable thereto and used in connection other investments of the company. In the purchase claim within the time prescribed herein will entitle
therewith, shall be subject to the prior approval of of common capital stock or other equities, the the beneficiary to collect interest on the proceeds of
the Commissioner. insurer shall designate to the broker, or to the seller the policy for the duration of the delay at the rate of
if the purchase is not made through a broker, the twice the ceiling prescribed by the Monetary Board,
“SEC. 241. Illustration of benefits payable under any specific variable account for which the investment is unless such failure or refusal to pay is based on the
variable contract shall not include or involve made. ground that the claim is fraudulent.
projections of past investment experience into the
future and shall conform with the rules and “SEC. 245. Assets allocated to any separate variable “The proceeds of the policy maturing by the death of
regulations promulgated by the Commissioner. account shall be valued at their market value on the the insured payable to the beneficiary shall include
date of any valuation, or if there is no readily the discounted value of all premiums paid in
“SEC. 242. Variable contracts may be issued on the available market value then in accordance with the advance of their due dates, but are not due and
industrial life basis, provided that the pertinent terms of the variable contract applicable to such payable at maturity.
provisions of this Code and of the rules and assets, or if there are no such contract terms then in
regulations of the Commissioner governing variable such manner as may be prescribed by the rules and “SEC. 249. The amount of any loss or damage for
contracts are complied with in connection with such regulations of the Commissioner. which an insurer may be liable, under any policy
contracts. other than life insurance policy, shall be paid within
“SEC. 246. The reserve liability for variable contracts thirty (30) days after proof of loss is received by the
“SEC. 243. Every life insurance company authorized shall be established in accordance with actuarial insurer and ascertainment of the loss or damage is
under the provisions of this Code to issue, deliver, procedures that recognize the variable nature of the made either by agreement between the insured and
sell or use variable contracts shall, in connection benefits provided, and shall be approved by the the insurer or by arbitration; but if such
with the same, establish one or more separate Commissioner. ascertainment is not had or made within sixty (60)
accounts to be known as separate variable accounts. days after such receipt by the insurer of the proof of
All amounts received by the company in connection loss, then the loss or damage shall be paid within
“TITLE 11
with any such contracts which are required by the ninety (90) days after such receipt. Refusal or failure
terms thereof, to be allocated or applied to one or to pay the loss or damage within the time prescribed
more designated separate variable accounts shall be “CLAIMS SETTLEMENT herein will entitle the assured to collect interest on
placed in such designated account or accounts. The the proceeds of the policy for the duration of the
assets and liabilities of each such separate variable delay at the rate of twice the ceiling prescribed by
“SEC. 247. (a) No insurance company doing business
account shall at all times be clearly identifiable and the Monetary Board, unless such failure or refusal to
in the Philippines shall refuse, without just cause, to
distinguishable from the assets and liabilities in all pay is based on the ground that the claim is
pay or settle claims arising under coverages
other accounts of the company. Notwithstanding fraudulent.
provided by its policies, nor shall any such company
any provision of law to the contrary, the assets held engage in unfair claim settlement practices. Any of
in any such separate variable account shall not be the following acts by an insurance company, if “SEC. 250. In case of any litigation for the
chargeable with liabilities arising out of any other committed without just cause and performed with enforcement of any policy or contract of insurance,
business the company may conduct but shall be held such frequency as to indicate a general business it shall be the duty of the Commissioner or the
and applied exclusively for the benefit of the owners practice, shall constitute unfair claim settlement Court, as the case may be, to make a finding as to
or beneficiaries of the variable contracts applicable practices: whether the payment of the claim of the insured has
thereto. In the event of the insolvency of the been unreasonably denied or withheld; and in the
company, the assets of each such separate variable affirmative case, the insurance company shall be
“(1) Knowingly misrepresenting to claimants
account shall be applied to the contractual claims of adjudged to pay damages which shall consist of
pertinent facts or policy provisions relating to
the owners or beneficiaries of the variable contracts attorney’s fees and other expenses incurred by the
coverage at issue;
applicable thereto. Except as otherwise specifically insured person by reason of such unreasonable
provided by the contract, no sale, exchange or other denial or withholding of payment plus interest of
transfer of assets may be made by a company, “(2) Failing to acknowledge with reasonable twice the ceiling prescribed by the Monetary Board
between any of its separate accounts or between promptness pertinent communications with respect of the amount of the claim due the insured, from the
any other investment account and one or more of its to claims arising under its policies; date following the time prescribed in Section 248 or
separate accounts, unless in the case of a transfer in Section 249, as the case may be, until the claim is
into a separate account, such transfer is made solely fully satisfied: Provided, That failure to pay any such
“(3) Failing to adopt and implement reasonable
to establish the account or to support the operation claim within the time prescribed in said sections
standards for the prompt investigation of claims
of the contracts with respect to the separate shall be considered prima facieevidence of
arising under its policies;
account to which the transfer is made, or in case of a unreasonable delay in payment.
transfer from a separate account, such transfer
would not cause the remaining assets of the account “(4) Not attempting in good faith to effectuate
prompt, fair and equitable settlement of claims “SEC. 251. It is unlawful to:
to become less than the reserves and other contract
liabilities with respect to such separate account. submitted in which liability has become reasonably
Such transfer, whether into or from a separate clear; or
account, shall be made by a transfer of cash, or by a
“(a) Present or cause to be presented any fraudulent “APPOINTMENT OF CONSERVATOR be determined by the Commissioner and shall be
claim for the payment of a loss under a contract of paid out of the assets of such company.
insurance; and
“SEC. 255. If at any time before, or after, the
suspension or revocation of the certificate of “If the Commissioner shall determine and confirm
“(b) Fraudulently prepare, make or subscribe any authority of an insurance company as provided in within the said period that the insurance company is
writing with intent to present or use the same, or to the preceding title, the Commissioner finds that such insolvent, as defined hereunder, or cannot resume
allow it to be presented in support of any such claim. company is in a state of continuing inability or business with safety to its policyholders and
Any person who violates this section shall be unwillingness to maintain a condition of solvency or creditors, he shall, if the public interest requires,
punished by a fine not exceeding twice the amount liquidity deemed adequate to protect the interest of order its liquidation, indicate the manner of its
claimed or imprisonment of two (2) years, or both, policyholders and creditors, he may appoint a liquidation and approve a liquidation plan and
at the discretion of the court. conservator to take charge of the assets, liabilities, implement it immediately. The Commissioner shall
and the management of such company, collect all designate a competent and qualified person as
moneys and debts due to said company and exercise liquidator who shall take over the functions of the
“TITLE 12
all powers necessary to preserve the assets of said receiver previously designated and, with all
company, reorganize the management thereof, and convenient speed, reinsure all its outstanding
“EXAMINATION OF COMPANIES restore its viability. The said conservator shall have policies, convert the assets of the insurance
the power to overrule or revoke the actions of the company to cash, or sell, assign or otherwise dispose
“SEC. 252. The Commissioner shall require every previous management and board of directors of the of the same to the policyholders, creditors and other
insurance company doing business in the Philippines said company, any provision of law, or of the articles parties for the purpose of settling the liabilities or
to keep its books, records, accounts and vouchers in of incorporation or bylaws of the company, to the paying the debts of such company and he may, in
such manner that he or his authorized contrary notwithstanding, and such other powers as the name of the company, institute such actions as
representatives may readily verify its annual the Commissioner shall deem necessary. may be necessary in the appropriate court to collect
statements and ascertain whether the company is and recover accounts and assets of the insurance
solvent and has complied with the provisions of this company, and to do such other acts as may be
“The conservator may be another insurance
Code or the circulars, instructions, rulings or necessary to complete the liquidation as ordered by
company doing business in the Philippines, any
decisions of the Commissioner. the Commissioner.
officer or officers of such company, or any other
competent and qualified person, firm or
“SEC. 253. The Commissioner shall at least once a corporation. The remuneration of the conservator “The provisions of any law to the contrary
year and whenever he considers the public interest and other expenses attendant to the conservation notwithstanding, the actions of the Commissioner
so demands, cause an examination to be made into shall be borne by the insurance company concerned. under this section shall be final and executory, and
the affairs, financial condition and method of can be set aside by the court upon petition by the
business of every insurance company authorized to company and only if there is convincing proof that
“The conservator shall not be subject to any action,
transact business in the Philippines and of any other the action is plainly arbitrary and made in bad faith.
claim or demand by, or liability to, any person in
person, firm or corporation managing the affairs The Commissioner, through the Solicitor General,
respect of anything done or omitted to be done in
and/or property of such insurance company. Such shall then file the corresponding answer reciting the
good faith in the exercise, or in connection with the
company, as well as such managing person, firm or proceeding taken and praying the assistance of the
exercise, of the powers conferred on the
corporation, shall submit to the examiner all such court in the liquidation of the company. No
conservator.
books, papers and securities as he may require and restraining order or injunction shall be issued by the
such examiner shall also have the power to examine court enjoining the Commissioner from
“The conservator appointed shall report and be implementing his actions under this section, unless
the officers of such company under oath touching its
responsible to the Commissioner until such time as there is convincing proof that the action of the
business and financial condition, and the authority
the Commissioner is satisfied that the insurance Commissioner is plainly arbitrary and made in bad
to transact business in the Philippines of any such
company can continue to operate on its own and the faith and the petitioner or plaintiff files with the
company shall be suspended by the Commissioner if
conservatorship shall likewise be terminated should Clerk or Judge of the Court in which the action is
such examination is refused and such company shall
the Commissioner, on the basis of the report of the pending a bond executed in favor of the
not thereafter be allowed to transact further
conservator or of his own findings, determine that Commissioner in an amount to be fixed by the court.
business in the Philippines until it has fully complied
the continuance in business of the insurance The restraining order or injunction shall be refused
with the provisions of this section.
company would be hazardous to policyholders and or, if granted, shall be dissolved upon filing by the
creditors, in which case the provisions of Title 15 Commissioner, if he so desires, of a bond in an
“Government-owned or -controlled corporations or shall apply. amount twice the amount of the bond of the
entities engaged in social or private insurance shall petitioner or plaintiff conditioned that it will pay the
similarly be subject to such examination by the damages which the petition or plaintiff may suffer by
“No insurance company, life or non-life, or any
Commissioner unless their respective charters the refusal or the dissolution of the injunction. The
professional reinsurer, ordered to be liquidated by
otherwise provide. provisions of Rule 58 of the New Rules of Court
the Commissioner under the provisions hereunder
may be rehabilitated or authorized to transact anew, insofar as they are applicable shall govern the
“TITLE 13 insurance or reinsurance business, as the case may issuance and dissolution of the restraining order or
be. injunction contemplated in this section.
“SUSPENSION OR REVOCATION OF AUTHORITY
“TITLE 15 “All proceedings under this title shall be given
preference in the courts. The Commissioner shall not
“SEC. 254. If the Commissioner is of the opinion be required to pay any fee to any public officer for
upon examination of other evidence that any “PROCEEDINGS UPON INSOLVENCY filing, recording, or in any manner authenticating
domestic or foreign insurance company is in an any paper or instrument relating to the proceedings.
unsound condition, or that it has failed to comply
“SEC. 256. Whenever, upon examination or other
with the provisions of law or regulations obligatory
evidence, it shall be disclosed that the condition of “As used in this title, the term Insolvency shall mean
upon it, or that its condition or method of business is
any insurance company doing business in the the inability of an insurance company to pay its
such as to render its proceedings hazardous to the
Philippines is one of insolvency, or that its lawful obligations as they fall due in the usual and
public or to its policyholders, or that its net worth
continuance in business would be hazardous to its ordinary course of business as may be shown by its
requirement, in the case of a domestic stock
policyholders and creditors, the Commissioner shall failure to maintain the solvency requirements under
company, or its available cash assets, in the case of a
forthwith order the company to cease and desist Section 200 of this Code.
domestic mutual company, or its security deposits,
from transacting business in the Philippines and shall
in the case of a foreign company, is impaired or
designate a receiver to immediately take charge of
deficient, or that the margin of solvency required of “SEC. 257. The receiver or the liquidator, as the case
its assets and liabilities, as expeditiously as possible
such company is deficient, the Commissioner is may be, designated under the provisions of this title,
collect and gather all the assets and administer the
authorized to suspend or revoke all certificates of shall not be subject to any action, claim or demand
same for the benefit of its policyholders and
authority granted to such insurance company, its by, or liability to, any person in respect of anything
creditors, and exercise all the powers necessary for
officers and agents, and no new business shall done or omitted to be done in good faith in the
these purposes including, but not limited to, bringing
thereafter be done by such company or for such exercise, or in connection with the exercise, of the
suits and foreclosing mortgages in the name of the
company by its agent in the Philippines while such powers conferred on such receiver or liquidator.
insurance company.
suspension, revocation or disability continues or
until its authority to do business is restored by the
Commissioner. Before restoring such authority, the “The Commissioner shall thereupon determine “TITLE 16
Commissioner shall require the company concerned within ninety (90) days whether the insurance
to submit to him a business plan showing the company may be reorganized or otherwise placed in “CONSOLIDATION AND MERGER OF
company’s estimated receipts and disbursements, as such condition so that it may be permitted to INSURANCE COMPANIES
well as the basis therefor, for the next succeeding resume business with safety to its policyholders and
three (3) years. creditors and shall prescribe the conditions under
“SEC. 258. Upon prior notice to the Commissioner,
which such resumption of business shall take place
two (2) or more domestic insurance companies,
as well as the time for fulfillment of such conditions.
“TITLE 14 acting through their respective boards of directors,
In such case, the expenses and fees in the collection
may negotiate to merge into a single corporation
and administration of the insurance company shall
which shall be one of the constituent corporations, “SEC. 264. Upon receipt from the Securities and insurance, or of health and accident insurance, or of
or consolidate into a single corporation which shall Exchange Commission of the certificate of merger or any combination of life, health and accident
be a new corporation to be formed by the of consolidation, the constituent companies shall insurance. They shall also include the person or
consolidation. A common agreement of the surrender to the Commissioner their respective persons to whom any annuity or pure endowment is
proposed merger or consolidation shall be drawn up certificates of authority to transact insurance presently or prospectively payable by the terms of
for submission to the stockholders or members of business. The absorbing or surviving company in an individual annuity or pure endowment contract,
the constituent companies for adoption and case of merger, or the newly formed company in except where the policy or contract declares some
approval in accordance with the provisions of the case of consolidation, shall immediately file with the other person to be the owner or holder thereof, in
respective bylaws of the constituent companies and Commissioner the corresponding application for which case such other person shall be deemed
all existing laws that may be pertinent. issuance of a new certificate of authority to transact policyholder. In any case where a policy or contract
insurance business, together with a certified copy of names two or more persons as joint insured, payees,
the certificate of merger or of consolidation, and of owners or holders thereof, the persons so named
“SEC. 259. Such agreement shall include, aside from
the certificate of increase of stocks, if there is any, shall be deemed collectively to be one (1)
the proposed merger or consolidation, provisions
issued by the Securities and Exchange Commission. policyholder for the purpose of this chapter. In any
relative to the manner of transfer of assets to and
case where a policy or contract shall have been
assumption of liabilities by the absorbing or
assigned by assignment absolute on its face to an
acquiring company from the absorbed or dissolved “SEC. 265. Nothing in this title shall be construed to
assignee other than the insurer, and such
company or companies; the proposed articles of enlarge the powers of the absorbing or surviving
assignment shall have been filed at the principal
merger or consolidation and bylaws of the surviving company in case of merger, or the newly formed
office of the insurer at least thirty (30) days prior to
or acquiring company; the corporate name to be company in case of consolidation, except those
the date of any election or meeting referred to in
adopted which should not be that of any other conferred by the certificate of merger or of
this chapter, then such assignee shall be deemed at
existing company transacting similar business or one consolidation and the articles of merger or of
such election or meeting to be the policyholder. For
so similar as to be calculated to mislead the public; consolidation, or the amended articles of
the purpose of this chapter the
the rights of the stockholders or members of the incorporation, as registered with the Securities and
terms policyholder and policyholders include the
absorbed or dissolved companies; date of effectivity Exchange Commission.
employer to whom, or a president, secretary or
of the merger or consolidation; and such particulars
other executive officer of any corporation or
as may be necessary to explain and make manifest
“SEC. 266. No director, officer, or stockholder of any association to which a master group policy has been
the objects and purposes of the absorbing or
such constituent companies shall receive any fee, issued, but exclude the holders of certificates or
acquiring company.
commission, compensation, or other valuable policies issued under or in connection with a master
consideration whatsoever, directly or indirectly, or in group policy. Beneficiaries under unmatured
“SEC. 260. Upon execution of such agreement to any manner aiding, promoting or assisting in such contracts shall not as such be deemed to be
merge or consolidate by and between or among the merger or consolidation. policyholders; and
boards of directors of the constituent companies,
notice thereof shall be mailed immediately to their
“SEC. 267. The merger or consolidation of “(e) Filed with the Commissioner after having been
policyholders and creditors. The company or
companies under this Code shall be subject to the approved as provided in this section.
companies to be absorbed or dissolved shall
provisions of the Corporation Code, and, in those
discharge all its accrued liabilities; otherwise, such
cases specified in Republic Act No. 5455, as
liabilities shall, with the consent of its creditors, be “SEC. 270. The Commissioner shall examine the plan
amended, be further subject to the provisions of
transferred to and assumed by the absorbing or submitted to him under the provisions of
said law.
acquiring company, or such liabilities be reinsured by subparagraph (c) of Section 269. He shall not
the latter. In the case of such policies as are subject approve such plan unless in his opinion the rights
to cancellation by the company or companies to be “TITLE 17 and interests of the insurer, its policyholders and
absorbed or dissolved, same may be cancelled shareholders are protected nor unless he is satisfied
pursuant to the terms thereof in lieu of such “MUTUALIZATION OF STOCK LIFE that the plan will be fair and equitable in its
transfer, assumption, or reinsurance. INSURANCE COMPANIES operation.

“SEC. 261. Upon approval or adoption in the “SEC. 268. Any domestic stock life insurance “SEC. 271. The election prescribed by subparagraph
meetings of the stockholders or members called for company doing business in the Philippines may (d) of Section 269 shall be called by the board of
the purpose in each of the constituent companies of convert itself into an incorporated mutual life directors or the president, and every policyholder of
the agreement to merge or consolidate, all insurer. To that end it may provide and carry out a the class or classes for whose benefit the stock is to
stockholders or members dissenting or objecting to plan for the acquisition of the outstanding shares of be acquired, whose insurance shall have been in
the merger or consolidation shall be paid the value its capital stock for the benefit of its policyholders, force for at least one (1) year prior to such election
of their shares by the company concerned in or any class or classes of its policyholders, by shall have one vote, regardless of the number of
accordance with the bylaws thereof. complying with the requirements of this chapter. policies or amount of insurance he holds, and
regardless of whether such policies are policies of
life insurance or policies of health and accident
“SEC. 262. Upon approval or adoption of the “SEC 269. Such plan shall include appropriate insurance or annuity contracts. Notice of such
agreement to merge or consolidate by the proceedings for amending the insurer’s articles of election shall be given to policyholders entitled to
stockholders or members of the constituent incorporation to give effect to the acquisition, by vote by mail from the principal office of such insurer
companies, the corresponding articles of merger or said insurer, for the benefit of its policyholders or at least thirty (30) days prior to the date set for such
of consolidation shall be duly executed by the any class or classes thereof, of the outstanding election, in a sealed envelope, postage prepaid,
presidents and attested by the corporate secretaries shares of its capital stock and the conversion of the addressed to each such policyholder at his last
and shall bear the corporate seals of the merging or insurer from a stock corporation into a nonstock known address.
consolidating companies setting forth: corporation for the benefit of its members. The
members of such nonstock corporation shall be the
policyholders from time to time of the class or “Voting shall be by one of the following methods:
“(a) The plan of merger or the plan of consolidation;
classes for whose benefit the stock of the insurer
was acquired, and the policyholders of such other “(a) At a meeting of such policyholders, held
“(b) As to each corporation, the number of shares
class or classes as may be specified in such pursuant to such notice, by ballot in person or by
outstanding, or in case of mutual corporations, the
corporation’s articles of incorporation as they may proxy.
number of members; and
be amended from time to time. Such plan shall be:
“(b) If not by the method described in the preceding
“(c) As to each corporation, the number of shares or
“(a) Adopted by a vote of a majority of the directors; subparagraph, then by mail pursuant to a procedure
members voted for and against such plan,
and on forms to be prescribed by such plan.
respectively. Thereafter, a certified copy of such
articles of merger or consolidation, together with a “(b) Approved by the vote of the holders of at least a
certificate of approval or adoption by the majority of the outstanding shares at a special “Such election shall be conducted under the
stockholders or members of such articles of merger meeting of shareholders called for that purpose, or direction and supervision of three (3) impartial and
or consolidation, verified by affidavits of such by the written consent of such shareholders; disinterested inspectors appointed by the insurer
officers and under the seal of the constituent and approved by the Commissioner. In case any
companies, shall be submitted to the Commissioner, “(c) Submitted to the Commissioner and approved person appointed as inspector fails to appear at such
together with such other papers or documents by him in writing; meeting or fails or refuses to act at such election,
which the Commissioner may require, for his the vacancy, if occurring in advance of the convening
consideration. of the meeting or in advance of the opening of the
“(d) Approved by a majority vote of all the mail vote, may be filled in the manner prescribed for
policyholders of the class or classes for whose the appointment of inspectors and, if occurring at
“SEC. 263. The articles of merger or of consolidation, benefit the stock is to be acquired voting at an the meeting or during the canvass of the mail vote,
signed and verified as hereinabove required, shall be election by the policyholders called for that purpose, may be filled by the person acting as chairman of
filed with the Securities and Exchange Commission subject to the provisions of Section 271. The said meeting or designated for that purpose in such
for its examination and approval. terms policyholderor policyholders as used in this plan. The decision, act or certificate of a majority of
chapter shall be deemed to mean the person or the inspectors shall be effective in all respects as the
persons insured under an individual policy of life decision, act or certificate of all. The inspectors of
election shall determine the number of shares of the insurer not required upon the adoption offer. The Secretary of Finance may himself, after
policyholders, the voting power of each, the of such plan. The voting trustees shall be named in due notice and hearing, determine upon the
policyholders represented at the meeting or voting accordance with such plan or, if no provision is made evidence received the fair value of the shares as of
by mail, the existence of a quorum and the therein for the naming of such trustees, then by the the date of making such offer, or appoint three (3)
authenticity, validity and effect of proxies. They shall insurer. The voting trust agreement and voting impartial and disinterested persons to appraise the
receive votes, hear and determine all challenges and trustees shall be subject to the approval of the fair value of such shares with such direction as he
questions in any way arising in connection with the Commissioner. Any or all of the trustees under such shall deem proper and necessary to expedite the
right to vote, count and tabulate all votes, voting trust agreement may be the same person or proceedings. Upon completion of the appraisal
determine the result, and do such other acts as are persons as any or all of the trustees referred to in proceedings, the appraisers shall file with the
proper to conduct the vote with fairness to all Section 272. Such voting trust agreement shall Secretary of Finance their report in writing stating
policyholders. The inspectors of election shall, provide that in the event of acquisition by the the fair value of such shares as of the date of the
before commencing performance of their duties, insurer of any of the shares of stock held thereunder making of such offer and setting forth their findings
subscribe to and file with the insurer and with the in accordance with the provisions of the plan, such in support of such statement. The appraisers shall
Commissioner an oath that they, and each of them, shares so acquired together with the voting rights furnish each party to the proceedings a copy of their
will perform their duties impartially, in good faith, to thereof shall be transferred by the trustees named appraisal report, and within ten (10) days after
the best of their ability and as expeditiously as is under the provisions of this section to the trustees receipt thereof, any such party may signify his
practicable. On the request of the insurer, the named under the provisions of Section 272. Any objection, if any, to the report or move for the
Commissioner, a policyholder or his proxy, the voting trust agreement created pursuant to the approval thereof. Upon the expiration of the period
inspectors shall make a report in writing of any provisions of this section may be made irrevocable of ten (10) days referred to above, the report shall
challenge or question or matter determined by them for not longer than thirty (30) years and thereafter be set for hearing, after which the Secretary of
and execute a certificate of any fact found by them. until the termination of the trust provided for in Finance shall issue an order adopting, modifying or
They shall also certify the result of such vote to the Section 272. The trust created pursuant to the rejecting the report, in whole or in part, or he may
insurer and to the Commissioner. Any report or provisions of this section shall terminate in any receive further evidence or may recommit it with
certificate made by them shall be prima event upon termination of the trust provided for in instructions. Whenever the Secretary of Finance
facie evidence of facts stated therein. All necessary Section 272. Upon the termination of the trust shall determine in any manner, as aforesaid, the fair
expenses incurred in connection with such election created pursuant to the provisions of this section, value of such shares, he may also determine the
shall be paid by the insurer. For the purpose of this any shares held in such trust shall revert to the terms of payment thereof by the insurer. The
section, a quorum shall consist of five percent (5%) persons entitled thereto by law. expenses incidental to the proceedings including
of the policyholders of such insurer entitled to vote charges of the appraisers, if any, shall be paid
at such election. equally by the insurer and the shareholder.
“SEC. 274. Every payment for the acquisition of any
shares of the capital stock of such insurer, the
“SEC. 272. In carrying out any such plan, the insurer purchase price of which is not fixed by such plan, “The findings of the Secretary of Finance on all
may acquire any shares of its own stock by gift, shall be subject to the prior approval of the questions of fact raised at the hearing of the
bequest or purchase. Any shares so acquired shall, Commissioner. Neither such plan, nor any such application for determination of the fair value of
unless as a result of such acquisition all of the shares payment, may be approved by the Commissioner such shares shall be conclusive upon all parties to
of the insurer shall have been acquired, be acquired unless he finds that the rights and interests of the the proceedings. The order of the Secretary of
in trust for the policyholders of the class or classes insurer, its policyholders, and shareholders are Finance determining the fair value of the shares and
for whose benefit the plan provides that the stock of protected. the terms of payment thereof shall have the force
the insurer shall be acquired as hereinafter and effect of a judgment which shall be appealable
provided. Such shares shall be assigned and on any question of law. Such order shall become
“SEC. 275. The trustees referred to in Section 272
transferred on the books of such insurer and final and executory fifteen (15) days after receipt
shall file with such insurer and with the
approved by the Commissioner. Such trustees shall thereof by the parties to the proceedings.
Commissioner a verified acceptance of their
hold such stock in trust until all of the outstanding
appointments and verified declarations that they will
shares of capital stock of such insurer have been
faithfully discharge their duties as such trustees. All “Upon any such order becoming final and from
acquired, but for not longer than thirty (30) years
dividends and other sums received by said trustees which no appeal is pending, or when the time to
with such extensions of not more than five (5) years
on the shares held by them, after paying the appeal therefrom has expired, each shareholder
each as may be granted by the Commissioner. Such
necessary expenses of executing their trust, shall be party to the proceedings shall transfer his shares to
extensions may be granted by the Commissioner if
immediately repaid to such insurer for the benefit of the insurer and surrender to the said insurer the
the plan so provides and if in his opinion the plan of
all who are, or may become, policyholders of such certificates representing such shares and the insurer
acquisition of all of such stock can be completed
insurance of the class or classes for whose benefit shall make payment therefor as provided in such
within a reasonable period. Such trustees shall vote
the stock of such insurer was acquired and entitled order. Any shares so acquired by the insurer shall be
such stock at all corporate meetings at which
to participate in the profits thereof and shall be assigned and transferred to the trustees and held by
stockholders have the right to vote. When all the
added to and become part of the assets of such them as shares acquired pursuant to the plan.
outstanding shares of capital stock of such insurer
insurer.
have been acquired, all said shares shall be
cancelled, the certificate of amendment of the “Any shareholder who does not apply to the
insurer’s articles of incorporation giving effect “SEC. 276. If, at any time within the period provided Secretary of Finance in the manner and within the
thereto shall be filed in accordance with the in the plan for the acquisition of the outstanding time hereinbefore prescribed shall be deemed to
provisions of the Corporation Code, and the insurer shares of stock of the insurer, ninety percent (90%) have accepted the offer referred to above, effective,
shall become a nonstock corporation for the profit thereof has already been acquired and transferred however, upon the expiration of the time
of its members and such trust shall thereupon to the trustees under the plan, the insurer by a vote hereinabove prescribed for making such application,
terminate. Thereafter such corporation shall be of a majority of the directors may determine to and such shareholder’s time for accepting such offer
conducted for the mutual benefit, ratably, of its make an offer, with the permission of the shall, for that purpose only, be deemed to have been
policyholders of the class or classes for whose Commissioner and subject to such requirement as extended accordingly.
benefit the stock was acquired and shall have power he may specify, to acquire by purchase all of the
to issue non-assessable policies on a reserve basis shares not theretofore acquired under the plan, at a
“Any offer to acquire shares made pursuant to this
subject to all provisions of law applicable to specified price which the insurer considers to be
section shall, except as otherwise provided herein,
incorporated life insurers issuing non-assessable their fair value as of the date of making such offer.
be irrevocable until all proceedings upon such offer
policies on a reserve basis. Policies so issued may be have been completed or all shares have otherwise
upon the basis of full or partial participation therein “If the offer to acquire is permitted by the been earlier acquired by the insurer.
as agreed between the insurer and the insured. Commissioner, the insurer shall make a written offer
by registered mail to each shareholder whose shares
“Any shareholder who has expressly or impliedly
“Upon the termination of any such voting trust, have not theretofore been acquired under the plan
accepted the plan or the offer to acquire his shares
either in accordance with its terms or as or otherwise, offering to acquire all his shares at
not theretofore acquired under the plan, and any
hereinabove provided, such plan of mutualization such price if accepted in writing within thirty (30)
shareholder who has rejected such plan or such
shall terminate, unless theretofore completed. Upon days after the mailing of such offer. Any shareholder
offer and has applied, as aforesaid, to the Secretary
such termination, unless the plan of mutualization accepting such offer within the time therefor shall,
of Finance for a determination of the fair value of his
provides for the disposition of the shares acquired within sixty (60) days after his acceptance, transfer
shares subsequent to which an agreement has been
by the insurer under such plan or for the disposition to the insurer the certificates representing such
reached or a final order issued fixing such fair value
of the proceeds thereof, the shares held by such shares and, upon doing so, shall be paid by the
but who fails to surrender his certificates for
trustees shall be disposed of in accordance with an insurer the amount of such offer for his shares. Any
cancellation upon payment of the amount to which
order of the court of competent jurisdiction in the share so acquired shall be assigned and transferred
he is entitled, may be compelled to do so by an
judicial district in which is located the principal office to the trustees under the plan and held by them as
order of the Secretary of Finance for that purpose
of such insurer, made upon a verified petition of the shares acquired pursuant to the plan.
and such order may provide that upon failure of
Commissioner. such shareholder to surrender such certificates for
“Each shareholder who does not accept such offer to cancellation, such order shall stand in lieu of such
“SEC. 273. Any such plan of mutualization may acquire his shares within the time stated in such surrender and cancellation.
provide for the creation of a voting trust under a offer for acceptance thereof shall within fifteen (15)
trust agreement for the holding and voting by three days after the expiration of such offer apply to the
“SEC. 277. Such insurer, after mutualization, shall be
(3) or more trustees of any portion or all of the Secretary of Finance for a determination of the fair
a continuation of the original insurer, and such
value of his shares as of the date of making such
mutualization shall not affect such insurer’s authorized agent and filed with the secretary of such Corporation Code shall apply in a suppletory
certificate of authority nor existing suits, rights or insurer. manner.
contracts except as provided in said plan for the
acquisition of the outstanding shares of the capital
“(f) The directors of the insurer in office at the time “TITLE 18
stock of such insurer, approved as provided in this
the insurer is mutualized as provided in this chapter
chapter. Such insurer, after mutualization, shall
shall continue in office until the first annual meeting
exercise all the rights and powers and shall perform “WITHDRAWAL OF FOREIGN
of members. At the first annual meeting of members
all the duties conferred or imposed by law upon INSURANCE COMPANIES
and at each annual meeting thereafter, directors
insurers writing the classes of insurance written by
shall be elected by the members for the term or
it, and to protect rights and contracts existing prior “SEC. 281. A foreign insurance company doing
terms authorized by this chapter.
to mutualization, subject to the effect of said plan. business in the Philippines, upon payment of the fee
The board of directors of such insurer, prior to hereinafter prescribed and surrender to the
mutualization, may adopt amendments to its bylaws “(g) The articles of incorporation or the bylaws may
Commissioner of its certificate of authority, may
to take effect upon mutualization. provide that the directors may be divided into two
apply to withdraw from the Philippines. Such
(2) or more classes whose terms of office shall expire
application shall be duly executed in writing,
at different times, but no terms shall continue longer
“SEC. 278. (a) An annual meeting of members shall accompanied by evidence of due authority for such
than six (6) years. In the absence of such provisions,
be held at ten o’clock in the morning of the fourth execution, properly acknowledged.
each director, except members of the board of
Tuesday of March of each year at the principal office
directors at the time the insurer is mutualized, shall
of the insurer, unless a different time or place is “SEC. 282. The Commissioner shall publish the
be elected for a term of one (1) year. All directors
provided in the bylaws. application for withdrawal once a week for three (3)
shall hold office for a term for which they are
elected and until their successors are elected and consecutive weeks in a newspaper of general
“(b) Special meetings of the members, for any qualified. A director may, but need not be a member circulation in the Philippines. The expenses of such
purpose or purposes whatsoever, may be called at or policyholder of the insurer of which he is acting as publication shall be paid by the insurance company
any time by the president, or by the board of director. Vacancies in the board of directors may be filing such application.
directors, or by one or more members holding not filled by a majority of the remaining directors,
less than one-fifth (1/5) of the voting power of such though less than a quorum, and each director so “SEC. 283. Every foreign insurance company desiring
insurer, or by such other officers or persons as the elected shall hold office until the next annual to withdraw from the Philippines shall, prior to such
bylaws authorize. meeting. withdrawal, discharge its liabilities to policyholders
and creditors in this country. In case of its policies
(c) Notice of all meetings of members whether “(h) All insurers mutualized under the provisions of insuring residents of the Philippines, it shall cause
annual or special shall be given in writing to the this chapter shall be subject to all other applicable the primary liabilities under such policies to be
members entitled to vote by the secretary, or an provisions of this Code. The provisions of the reinsured and assumed by another insurance
assistant secretary, or other person charged with Corporation Code shall apply in a suppletory company authorized to transact business in the
that duty, or if there be no such officer, or in case of manner. Philippines. In the case of such policies as are subject
his neglect or refusal, by any director or member. At to cancellation by the withdrawing company, it may
the option of the insurer such notice may be cancel such policies pursuant to the terms thereof in
“SEC. 279. The provisions of Commonwealth Act No.
imprinted on premium notices or receipts or on lieu of such reinsurance and assumption of liabilities.
83, otherwise known as the Securities Act, as
both.
amended, shall not apply to any of the following:
“SEC. 284. The Commissioner shall cause an
“A notice may be given by such insurer to any examination of the books and records of the
“(a) Shares of the capital stock of such insurer
member either personally, or by mail, or other withdrawing company, and if, upon such
acquired as provided in Section 272 and assigned
means of written communication, charges prepaid, examination, the Commissioner finds that the
and transferred to the trustees as is provided in said
addressed to such member at his address appearing insurer has no outstanding liabilities to policyholders
section, and the assignment and transfer of said
on the books of the insurer, or given by him to the and creditors in the Philippines, and no policies
shares as so provided;
insurer for the purpose of notice. If a member gives uncancelled; or its primary liabilities have been
no address, notice shall be deemed to have been reinsured or assumed by another insurance
given him if sent by mail or other means of written “(b) Any certificate or other instrument issued to a company authorized to transact business in the
communication addressed to the place where the policyholder of such mutualized insurer conferring Philippines, as required in the preceding section, it
principal office of the insurer is situated, or if or evidencing membership in such mutualized shall cancel the withdrawing company’s certificate of
published at least once in some newspaper of insurer or conferring or evidencing such member’s authority, if unexpired, and shall permit the insurer
general circulation in the place in which said office is right to participate in the profits or share in the to withdraw. The cost and expenses of all such
located. assets of such mutualized insurer by virtue of his examination shall be paid as prescribed in Section
membership therein, and the issuance of such 440.
certificate or other instrument;
“Notice of any meeting of members shall be sent to
each member entitled thereto not less than seven “SEC. 285. Upon the failure of such withdrawing
(7) days before such meeting, unless the bylaws “(c) The plan for the acquisition of the outstanding insurance company or its agents in the Philippines to
provide otherwise. shares of the capital stock of such insurer authorized pay the expenses of such publication within thirty
by the provisions of this chapter, the submission of (30) days after the presentation of the bill therefor,
said plan to the Commissioner and to the the Commissioner shall collect such fee from the
“Notice of any meeting of members shall specify the
policyholders of such insurer as provided in this deposit furnished in accordance with the provisions
place, the day and the hour of the meeting and the
chapter, and the approval and carrying out of said of Section 197.
general nature of the business to be transacted.
plan or any part thereof in accordance with the
provisions of this chapter.
“SEC. 286. A foreign life insurance company that
“Notice of an annual meeting to be held at the time
withdraws from the Philippines shall be considered a
and place specified in subparagraph (a) of this
“SEC. 280. A domestic mutual life insurance servicing insurance company if its business
section shall be sufficiently given if published at least
company doing business in the Philippines may transactions are confined to accepting periodic
once in each of four (4) successive weeks in a
convert itself into an incorporated stock life premium payments from, or granting policy loans
newspaper of general circulation in the place in
insurance company by demutualization. To that end, and paying cash surrender values of outstanding
which the principal office of such insurer is located,
it may provide and carry out a plan for the policies to, or reviving lapsed policies of, Philippine
and if so published no other notice of such meeting
conversion by complying with the requirements of policyholders, and such other related services.
shall be required.
this title.
“SEC. 287. No company shall act as a servicing
“(d) The presence in person or by proxy of five
“The conversion of a domestic mutual life insurance insurance company until after it shall have obtained
percent (5%) of the members entitled to vote at any
company to an incorporated stock life insurance a special certificate of authority to act as such from
meeting shall constitute a quorum for the
company shall be carried out pursuant to a the Commissioner upon application therefor and
transaction of business, including the amendment of
conversion plan duly approved by the payment by the company of the fees hereinafter
the articles of incorporation and/or the bylaws
Commissioner. prescribed. Such certificate shall expire on the last
unless otherwise provided by the bylaws.
day of December of the third year and shall be
renewed, while the company continues to service its
“The Commissioner shall promulgate such rules and
“(e) Each such member shall have one (1) vote at policyholders, and to comply with all the applicable
regulations as he or she may deem necessary to
any meeting of members regardless of the number provisions of law and regulations.
carry out the provisions of this title, after due
of policies or the amount of insurance that such
consultation with representatives of the insurance
member holds and regardless of whether such
industry. “TITLE 19
policies are policies of life insurance, or of health
and accident insurance, or both. Any member
entitled to vote shall have the right to do so either in “All converted insurers under the provisions of this “PROFESSIONAL REINSURERS
person or by an agent or agents authorized by a title shall be subject to all other applicable
written proxy executed by such person or his duly provisions of this Code. The provisions of the
“SEC. 288. Except as otherwise provided in this
Code, no partnership, association or corporation
shall transact any business in the Philippines as a contract other than a commercial contract for goods “(b) Every registrant shall furnish the Commissioner
professional reinsurer until it shall have obtained a or non-management services or otherwise. Subject with the following information concerning its
certificate of authority for that purpose from the to Section 292, control shall be presumed to exist if holding company:
Commissioner upon application therefor and any person directly or indirectly owns, controls or
payment by such entity of the fees hereinafter holds with the power to vote forty percent (40%) or
“(1) A copy of its charter or articles of incorporation
prescribed. As used in this Code, the term more of the voting securities of any other
and its bylaws;
‘professional reinsurer’ shall mean any entity that person: Provided, That no person shall be deemed to
transacts solely and exclusively reinsurance business control another person solely by reason of his being
in the Philippines. an officer or director of such other person. “(2) The identities of its principal shareholders,
officers, directors and controlled persons; and
“The Commissioner may refuse to issue a certificate “(c) Holding company means any person who
of authority to any such entity when such refusal will directly or indirectly controls any authorized insurer. “(3) Information as to its capital structure and
best promote public interest. No such certificate of financial condition, and a description of its principal
authority shall be granted to any such entity unless business activities.
“(d) Controlled insurer means an authorized insurer
and until the Commissioner is satisfied by such
controlled directly or indirectly by a holding
examination and such evidence as may be required “SEC. 295. Every controlled insurer shall file with the
company.
that such entity is qualified by the laws of the Commissioner such reports or material as he may
Philippines to transact business therein as a direct for the purpose of disclosing information
professional reinsurer. “(e) Controlled person means any person, other than
concerning the operations of persons within the
a controlled insurer, who is controlled directly or
holding company system which may materially
indirectly by a holding company.
“Before issuing such certificate of authority, the affect the operations, management or financial
Commissioner must be satisfied that the name of condition of the insurer.
the applicant is not that of any other known “(f) Holding company system means a holding
company transacting insurance or reinsurance company together with its controlled insurers and
“SEC. 296. Every holding company and every
business in the Philippines, or a name so similar as to controlled persons.
controlled person within a holding company system
be calculated to mislead the public. shall be subject to examination by order of the
“SEC. 291. Notwithstanding paragraph (b) of Section Commissioner if he has cause to believe that the
“Such certificate of authority shall expire on the last 290, the Commissioner may determine after notice operations of such persons may materially affect the
day of December the third year following its and opportunity to be heard, that a person exercises operations, management or financial condition of
issuance unless it is renewed. directly or indirectly either alone or pursuant to an any controlled insurer with the system and that he is
agreement with one or more other persons such a unable to obtain relevant information from such
controlling influence over the management or controlled insurer. The grounds relied upon by the
“Every such partnership, association, or corporation
policies of an authorized insurer as to make it Commissioner for such examination shall be stated
receiving such certificate of authority shall be
necessary or appropriate in the public interest or for in his order, which order shall be subject to judicial
subject to the provisions of this Code and other
the protection of policyholders or stockholders of review only at the instance of the person sought to
related laws, and to the jurisdiction and supervision
the insurer that the person be deemed to control be examined. Such examination shall be confined to
of the Commissioner.
the insurer. matters specified in the order. The cost of such
examination shall be assessed against the person
“SEC. 289. Any partnership, association, or examined and no portion thereof shall thereafter be
“SEC. 292. The Commissioner may determine upon
corporation authorized to transact solely reimbursed to it directly or indirectly by the
application that any person, either alone or pursuant
reinsurance business must have a capitalization of at controlled insurer.
to agreement with one or more other persons, does
least Three billion pesos (P3,000,000,000.00) paid in
not or will not upon the taking of some proposed
cash of which at least fifty percent (50%) is paid-up
action control another person. The filing of an “SEC. 297. The Commissioner shall keep the
and the remaining portion thereof is contributed
application hereunder in good faith by any person contents of each report made pursuant to this title
surplus, which in no case shall be less than Four
shall relieve the applicant from any obligation or and any information obtained by him in connection
hundred million pesos (P400,000,000.00) or such
liability imposed by this title with respect to the therewith confidential and shall not make the same
capitalization as may be determined by the
subject of the application, except as contained in public without the prior written consent of the
Secretary of Finance, upon the recommendation of
Section 302, until the Commissioner has acted upon controlled insurer to which it pertains unless the
the Commissioner: Provided, That twenty-five
the application. Within thirty (30) days or such Commissioner after notice and an opportunity to be
percent (25%) of the paid-up capital must be
further period as he may prescribe, the heard shall determine that the interests of
invested in securities satisfactory to the
Commissioner may prospectively revoke or modify policyholders, stockholders or the public will be
Commissioner consisting of bonds or other
his determination, after notice and opportunity to served by the publication thereof. In any action or
instruments of debt of the Government of the
be heard, whenever in his judgment, revocation or proceeding by the Commissioner against the person
Philippines or its political subdivisions or
modification is consistent with this title. examined or any other person within the same
instrumentalities, or of government-owned or -
holding company system a report of such
controlled corporations and entities, including the
examination published by him shall be admissible as
Bangko Sentral ng Pilipinas, and deposited with the “SEC. 293. Notwithstanding any other provisions of
evidence of the facts stated therein.
Commissioner, and the remaining seventy-five this title, the following shall not be deemed holding
percent (75%) in such other securities as may be companies:
allowed and permitted by the Commissioner, which “SEC. 298. Transactions within a holding company
securities shall at all times be maintained free from system to which a controlled insurer is a party shall
“(a) Authorized insurers or reinsurers or their
any lien or encumbrance: Provided, further, That the be subject to the following:
subsidiaries; and
aforesaid capital requirement is without prejudice to
other requirements to be imposed under any risk- “(a) The terms shall be fair and equitable;
based capital method that may be adopted by the “(b) The Government of the Philippines, or any
Commissioner: Provided, finally, That the provisions political subdivision, agency or instrumentality
of this chapter applicable to insurance companies thereof, or any corporation which is wholly owned “(b) Charges or fees for services performed shall be
shall as far as practicable be likewise applicable to directly or indirectly by one or more of the reasonable;
professional reinsurers. foregoing.
“(c) Expenses incurred and payments received shall
“TITLE 20 “The Commissioner may conditionally or be allocated to the insurer on an equitable basis in
unconditionally exempt any specified person or class conformity with customary insurance accounting
of persons from any of the obligations or liabilities practices consistently applied.
“HOLDING COMPANIES imposed under this title, if and to the extent he finds
the exemption necessary or appropriate in the
“The books, accounts and records of each party to
“SEC. 290. As used in this title, the following terms public interest or not adverse to the interests of
all such transactions shall be maintained as to clearly
shall have the respective meanings hereinafter set policyholders or stockholders and consistent with
and accurately disclose the nature and details of the
forth unless the context shall otherwise require: the purposes of this title.
transactions including such accounting information
as is necessary to support the reasonableness of the
“(a) Person means an individual, partnership, firm, “SEC. 294. (a) Every person who on the date this charges or fees to the respective parties.
association, corporation, trust, any similar entity or Code takes effect is a controlled insurer and every
any combination of the foregoing acting in concert. person who thereafter becomes a controlled insurer,
“SEC. 299. The prior written approval of the
shall, within sixty (60) days thereafter, or within
Commissioner shall be required for the following
thirty (30) days after becoming a controlled insurer,
“(b) Control, including the terms controlling, transactions between a controlled insurer and any
whichever is later, register with the Commissioner.
controlled by and under common control person in its holding company system: sales,
Such registration shall be amended within thirty (30)
with, means the possession directly or indirectly of purchases, exchanges, loans or extensions of credit,
days following any change in the identity of its
the power to direct or cause the direction of the or investments, involving five percent (5%) or more
holding company. The Commissioner may grant one
management and policies of a person, whether of the insurer’s admitted assets as of the thirty-first
or more reasonable extensions of the time to
through the ownership of voting securities by a day of December next preceding.
register.
“SEC. 300. The following transactions between a “(7) Whether the acquisition is likely to be hazardous “(a) Proceed under Title 14 or Title 15, Chapter III of
controlled insurer and any person in its holding or prejudicial to the insurer’s policyholders or this Code with respect to insurer within the holding
company system may not be entered into unless the stockholders. company system; or
insurer has notified the Commissioner in writing of
its intention to enter into any such transaction at
“(c) The following conditions affecting any controlled “(b) Revoke or refuse to renew the authority to do
least thirty (30) days prior thereto, or such shorter
insurer, regardless of when such control has been business in this country of an insurer within the
period as he may permit, and he has not
acquired, are violations of this title: holding company system or refuse to issue such
disapproved it within such period:
authority to any other insurer in the system; or
“(1) The controlling person or any of its officers or
“(a) Sales, purchases, exchanges, loans or extensions
directors have demonstrated untrustworthiness; and “(c) Direct that, in addition to any other penalty
of credit, or investments, involving more than one-
provided by law, such person forfeit to the people of
half of one percent (½%) but less than five percent
this country a sum not less than Five thousand pesos
(5%) of the insurer’s admitted assets as of the thirty- “(2) The effect of retention of control may be
(P5,000.00) for a first violation and Twenty-five
first day of December next preceding; substantially to lessen competition in any line of
thousand pesos (P25,000.00) for any subsequent
commerce in insurance in this country or to tend to
violation. An additional sum not less than Twenty-
create a monopoly therein. If, after notice and an
“(b) Reinsurance treaties or agreements; five thousand pesos (P25,000.00) shall be imposed
opportunity to be heard, the Commissioner
for each month during which any such violation shall
determines that any of the foregoing violations
continue.
“(c) Rendering of services on a regular or systematic exists, he shall reduce his findings to writing and
basis; or shall issue an order based thereon and cause the
same to be served upon the insurer and upon all “CHAPTER IV
persons affected thereby directing any person found
“(d) Any material transaction, specified by
to be in violation thereof to take appropriate action
regulation, which the Commissioner determines may “SALES AGENCIES AND TECHNICAL SERVICES
to cure such violation. Upon the failure of any such
adversely affect the interest of the insurer’s
person to comply with such order, Section 306 shall
policyholders or stockholders or of the public.
become applicable. “TITLE l

“Nothing herein contained shall be deemed to

“(d) The Commissioner may require the submission “INSURANCE AGENTS AND INSURANCE BROKERS
authorize or permit any transaction which, in the
of such information as he deems necessary to
case of a non-controlled insurer, would be otherwise
determine whether any acquisition or retention of “SEC. 307. No insurance company doing business in
contrary to law.
control complies with this title and may require, as a the Philippines, nor any agent thereof, shall pay any
condition of approval of such acquisition or commission or other compensation to any person
“SEC. 301. The Commissioner, in reviewing retention of control, that all or any portion of such for services in obtaining insurance, unless such
transactions pursuant to Sections 299 and 300, shall information be disclosed to the insurer’s person shall have first procured from the
consider whether the transactions comply with the stockholders. Commissioner a license to act as an insurance agent
standard set forth in Section 298 and whether they
of such company or as an insurance broker as
may adversely affect the interests of policyholders.
“(e) Unless subject to registration under Section 294 hereinafter provided.
This section shall not apply to transactions subject to
or unless acquisition of its control is subject to
other sections of this Code which impose notice or
paragraphs (a) and (b) hereof, every authorized “No person shall act as an insurance agent or as an
approval requirements greater than those
insurer shall notify the Commissioner in writing of insurance broker in the solicitation or procurement
prescribed by this title.
the identity of any person whom the insurer then of applications for insurance, or receive for services
knows or has reason to believe controls or has taken in obtaining insurance, any commission or other
“SEC. 302. (a) No person, other than an authorized any action, other than preliminary negotiations or compensation from any insurance company doing
insurer, shall acquire control of any domestic discussion, to acquire control of the insurer. business in the Philippines, or any agent thereof,
insurer, whether by purchase of its securities or
without first procuring a license so to act from the
otherwise, except:
“SEC. 303. (a) Notwithstanding the control of an Commissioner, which must be renewed every three
authorized insurer by any person, the officers and (3) years thereafter. Such license shall be issued by
“(1) After twenty (20) days written notice to its directors of the insurer shall not thereby be relieved the Commissioner only upon the written application
insurer or such shorter period as the Commissioner of any obligation or liability to which they would of the person desiring it, such application if for a
may permit, of its intention to acquire control; and otherwise be subject by law, and the insurer shall be license to act as insurance agent, being approved or
managed so as to assure its separate operating endorsed by the company such person desires to
identity consistent with this title. represent, and shall be upon a form prescribed by
“(2) With the prior written approval of the
the Commissioner giving such information as he may
Commissioner.
require, and upon payment of the corresponding fee
“(b) Nothing herein shall preclude an authorized
hereinafter prescribed. The Commissioner shall
“(b) The Commissioner shall disapprove the insurer from having or sharing a common
satisfy himself as to the competence and
acquisition of control of a domestic insurer if he management or cooperative or joint use of
trustworthiness of the applicant and shall have the
determines, after notice and an opportunity to be personnel, property or services with one or more
right to refuse to issue or renew and to suspend or
heard, that such action is reasonably necessary to other persons under arrangements meeting the
revoke any such license in his discretion. The license
protect the interest of the people of this country. standards of Section 298.
shall expire after the thirty-first day of December of
The following shall be the only factors to be the third year following the date of issuance unless it
considered by him in reaching the foregoing “SEC. 304. To the extent that any information or is renewed.
determination: material is set forth in forms or other matter on file
with any government agency or in a registration
“Licenses may be renewed in the case of the
“(1) The financial condition of the acquiring person form filed with the Commissioner by another person
company represented by such agents, and in the
and the insurer; within the same holding company system, the
case of insurance brokers, upon the application of
controlled insurer may comply with the registration
the said brokers, themselves.
or reporting requirements of this title by referring in
“(2) The trustworthiness of the acquiring person or its registration form or report to such other filed
any of its officers or directors; matter and attaching a copy thereof certified by the “SEC. 308. The provisions of Sections 307 and 309
insurer as a true and complete copy, to such shall apply to an employee who shall be engaged to
“(3) A plan for the proper and effective conduct of registration form or report or, if such other filed sell insurance products by an insurance company.
the insurer’s operations; matter is on file with the Commissioner,
incorporating such matter by reference. “SEC. 309. Any person who for compensation solicits
“(4) The source of the funds or assets for the or obtains insurance on behalf of any insurance
acquisition; “SEC. 305. No holding company or controlled person company or transmits for a person other than
shall directly or indirectly or through another person himself an application for a policy or contract of
do or cause to be done for or in behalf of the insurance to or from such company or offers or
“(5) The fairness of any exchange of stock, assets, controlled insurer any act intended to affect the assumes to act in the negotiating of such insurance
cash or other consideration for the stock or assets to insurance operations of the insurer which, if done by shall be an insurance agent within the intent of this
be received; the insurer, would violate any provision of this Code. section and shall thereby become liable to all the
duties, requirements, liabilities and penalties to
“(6) Whether the effect of the acquisition may be which an insurance agent is subject.
“SEC. 306. In addition to any other penalty provided
substantially to lessen competition in any line of by law, the Commissioner may, upon the willful
commerce in insurance or to tend to create a failure of any person within a holding company “An insurance agent is an independent contractor
monopoly therein; and system to comply with this title or any regulation or and not an employee of the company represented.
order promulgated hereunder: ‘Insurance agent’ includes an agency leader, agency
manager, or their equivalent.
“Since the insurance industry is imbued with public “(a) Has willfully violated any provision of this Code; insurance company concerned in connection with
interest, the insurance companies upon approval of or actions or other legal proceedings against said
the Commissioner may exercise wide latitude in insurance company. It shall be the duty of said
supervising the activities of their insurance agents to general agent to notify the Commissioner of his post
“(b) Has intentionally made a material misstatement
ensure the protection of the insuring public. office address in the Philippines, or any change
in the application to qualify for such license; or
thereof. Notices, summons, or processes of any kind
sent by registered mail to the last registered address
“SEC. 310. Any person who for any compensation,
“(c) Has obtained or attempted to obtain a license of such general agent of the company concerned or
commission or other thing of value acts or aids in
by fraud or misrepresentation; or to the Commissioner shall be sufficient service and
any manner in soliciting, negotiating or procuring
deemed as if served on the insurance company
the making of any insurance contract or in placing
“(d) Has been guilty of fraudulent or dishonest itself.
risk or taking out insurance, on behalf of an insured
other than himself, shall be an insurance broker practices; or
within the intent of this Code, and shall thereby “SEC. 318. Except as otherwise provided by law or
become liable to all the duties, requirements, “(e) Has misappropriated or converted to his own treaty, it shall be unlawful for any person,
liabilities and penalties to which an insurance broker use or illegally withheld moneys required to be held partnership, association or corporation in the
is subject. in a fiduciary capacity; or Philippines, for himself or itself, or for some other
person, partnership, association or corporation,
either to procure, receive or forward applications of
“SEC. 311. Every applicant for an insurance broker’s “(f) Has not demonstrated trustworthiness and insurance in, or to issue or to deliver or accept
license shall file with the application and shall competence to transact business as an insurance policies or contracts of insurance of or for, any
thereafter maintain in force while so licensed, a agent or insurance broker in such manner as to insurance company or companies not authorized to
bond in favor of the people of the Republic of the safeguard the public; or transact business in the Philippines, covering risks,
Philippines executed by a company authorized to
life or non-life, situated in the Philippines; and any
become surety upon official recognizances,
“(g) Has materially misrepresented the terms and such person, partnership, association or corporation
stipulations, bonds and undertakings. The bond shall
conditions of policies or contracts of insurance violating the provisions of this section shall be
be in such amount as may be fixed by the
which he seeks to sell or has sold; or deemed guilty of a penal offense, and upon
Commissioner, but in no case less than Five hundred
conviction thereof, shall for each such offense be
thousand pesos (P500,000.00), and shall be
punished by a fine of Two hundred fifty thousand
conditioned upon full accounting and due payment “(h) Has failed to pass the written examination pesos (P250,000.00), or imprisonment of six (6)
to the person entitled thereto of funds coming into prescribed, if not otherwise exempt from taking the months, or both, at the discretion of the
the broker’s possession through insurance same. court: Provided, That the provisions of this section
transactions under license. The bond shall remain in
shall not apply to reinsurance.
force until released by the Commissioner, or until
cancelled by the surety. Without prejudice to any “In addition to the foregoing causes, no license to
liability previously incurred thereunder, the surety act as insurance agent or insurance broker shall be “TITLE 2
may cancel the bond on thirty (30) days advance renewed if the holder thereof has not been actively
written notice to both the broker and the engaged as such agent or broker in accordance with
such rules as the Commissioner may prescribe. “REINSURANCE BROKERS
Commissioner.

“SEC. 315. The premium, or any portion thereof, “SEC. 319. Except as provided in the next succeeding
“Upon approval of the application, the applicant
which an insurance agent or insurance broker title, no person shall act as reinsurance broker in the
must also file two (2) errors and omissions
collects from an insured and which is to be paid to Philippines unless he is authorized as such by the
(professional liability or professional indemnity)
an insurance company because of the assumption of Commissioner.
policies issued separately by two (2) insurance
companies authorized to do business in the liability through the issuance of policies or contracts
Philippines, satisfactory to the Commissioner to of insurance, shall be held by the agent or broker in “A reinsurance broker is one who, for compensation,
indemnify the applicant against any claim or claims a fiduciary capacity and shall not be misappropriated not being a duly authorized agent, employee or
for breach of duty as insurance broker which may be or converted to his own use or illegally withheld by officer of an insurer in which any reinsurance is
made against him by reason of any negligent act, the agent or broker. effected, acts or aids in any manner in negotiating
error or omission, whenever or wherever committed contracts of reinsurance, or placing risks of effecting
or alleged to have been committed, on the part of “Any insurance company which delivers to an reinsurance, for any insurance company authorized
the applicant or any person who has been, is now, or insurance agent or insurance broker a policy or to do business in the Philippines.
may hereafter during the subsistence of the policies contract of insurance shall be deemed to have
be employed by the said applicant in his capacity as authorized such agent or broker to receive on its “SEC. 320. Upon application and payment of the
insurance broker: Provided, That the filing of any behalf payment of any premium which is due on corresponding fee hereinafter prescribed, and the
claim or claims under one of such policies shall such policy or contract of insurance at the time of its filing of two (2) errors and omissions (professional
preclude the filing of the said claim or claims under issuance or delivery or which becomes due thereon. liability or professional indemnity) policies
the other policy. The said policies shall be in such hereinafter described, a person may, if found
amounts as may be prescribed by the Commissioner, qualified, be issued a license to act as reinsurance
“In order to ensure faithful performance by the
depending upon the size or amount of the broking broker by the Commissioner. No such license shall
insurance agent or insurance broker of these
business of the applicant, but in no case shall the be valid after December 31 of the third year
fiduciary responsibilities, the Insurance
amount of each of such policies be less than Five following its issuance unless it is renewed.
Commissioner shall prescribe the minimum terms
hundred thousand pesos (P500,000.00).
and conditions on such matters in the standard
agency or brokers agreement between the agents “The errors and omissions (professional liability or
“SEC. 312. The Commissioner shall, in order to and/or the broker with the insurance companies. professional indemnity) policies mentioned above
determine the competence of every applicant to shall indemnify the applicant against any claim or
have the kind of license applied for, require such claims for breach of duty as reinsurance broker
“SEC. 316. Any provision of existing laws to the
applicant to submit to a written examination and to which may be made against him by reason of any
contrary notwithstanding, no person shall, within
pass the same to the satisfaction of the negligent act, error or omission, whenever or
the Philippines, sell or offer for sale a variable
Commissioner. The Commissioner may delegate or wherever committed or alleged to have been
contract or do or perform any act or thing in the
authorize the administration of the examination to committed, on the part of the applicant or any
sale, negotiation, making or consummating of any
an independent organization, subject to such person who has been, is now, or may hereafter
variable contract other than for himself unless such
conditions that the Commissioner may provide. during the subsistence of the policies be employed
person shall have a valid and current license from
the Commissioner authorizing such person to act as by the said applicant in his capacity as reinsurance
“SEC. 313. An applicant for the written examination a variable contract agent. No such license shall be broker: Provided, That the filing of any claim or
mentioned in the preceding section must be of good issued unless and until the Commissioner is satisfied, claims under one of such policies shall preclude the
moral character and must not have been convicted after examination that such person is by training, filing of the said claim or claims under the other
of any crime involving moral turpitude. He must knowledge, ability and character qualified to act as policy. The said policies shall be issued separately by
satisfactorily show to the Commissioner that he has such agent. Any such license may be withdrawn and two (2) insurance companies authorized to do
been trained in the kind of insurance contemplated cancelled by the Commissioner after notice and business in the Philippines and shall be in such
in the license applied for. Such examination may be hearing, if he shall find that the holder thereof does amounts as may be prescribed by the Insurance
waived if it is shown to the satisfaction of the not then have the qualifications required for the Commissioner, depending upon the size or amount
Commissioner that the applicant has undergone issuance of such license. of the broking business of the applicant, but in no
extensive education and/or training in insurance. case shall the amount of each of such policies be less
than Five hundred thousand pesos (P500,000.00).
“SEC. 317. It shall be unlawful for any person,
“SEC. 314. An application for the issuance or renewal company or corporation in the Philippines to act as
of a license to act as an insurance agent or insurance general agent of any insurance company unless he is “SEC. 321. The Commissioner may recall, suspend or
broker may be refused, or such license, if already empowered by a written power of attorney duly revoke the license granted to a reinsurance broker
issued or renewed, shall be suspended or revoked if executed by such insurance company, and registered for violation of any existing law, rule and regulation,
the Commissioner finds that the applicant for, or with the Commissioner to receive notices, summons or any provision of this Code after due notice and
holder of, such license: and legal processes for and in behalf of the hearing.
 “TITLE 3 “Such examination shall not be required of any shall not be granted another license as independent
person who has served as non-life company adjuster and vice versa.
underwriter for a period of at least five (5) years, if
“RESIDENT AGENTS
the Commissioner is satisfied of the applicant’s
“No license, however, shall be required of any
competence as shown by the results of his
company adjuster who is a salaried employee of an
“SEC. 322. No person shall act as resident agent, as underwriting work in the non-life insurance
insurance company for the adjustment of claims
hereinafter defined, unless he is registered as such company or companies that employed him in that
filed under policies issued by such insurance
with the Commissioner. capacity. The minimum underwriting experience
company.
herein required may be reduced or waived if it is
“SEC. 323. The term resident agent, as used in this shown to the satisfaction of the Commissioner that
the non-life company underwriter has undergone “SEC. 335. Such license or any renewal thereof may
title, is one duly appointed by a foreign insurer or
extensive education and/or training in insurance. be issued by the Commissioner upon written
broker not authorized to do business in the
application filed by the person interested on the
Philippines to receive in its behalf notices, summons
form or forms prescribed by the Commissioner,
and legal processes in connection with actions or “SEC. 330. Any applicant who misrepresents or omits
which shall contain such information as he may
other legal proceedings against such foreign insurer any material fact in his application for registration as
require, and upon payment of the corresponding fee
or broker. a non-life company underwriter, or commits any
hereinafter prescribed.
dishonest act in taking or in connection with the
“SEC. 324. The application for a certificate of qualifying written examination for underwriters,
shall be barred from being registered as such non- “SEC. 336. The Commissioner shall conduct, at such
registration as resident agent filed with the
life company underwriter and, if already registered, times, and in such places as he may decide to hold,
Commissioner must be accompanied with a copy of
his registration shall be cancelled and the certificate written examinations to determine the competence
the power of attorney, duly notarized and
of registration issued in his favor shall be recalled and ability of applicants desiring to act as adjuster of
authenticated by the Philippine Consul in the place
immediately by the Commissioner. insurance claims.
where such foreign insurer or broker is domiciled,
empowering the applicant to act as resident agent
and to receive notices, summons and legal processes “In the event that the certificate of authority of a “SEC. 337. No adjuster’s license issued hereunder
for and in behalf of such foreign insurer or broker in non-life insurance company to transact business is shall be valid after December 31 of the third year
connection with any action or legal proceeding suspended or revoked due to business failure arising following the issuance of such license unless it is
against such foreign insurer or broker. largely from the imprudent and injudicious renewed.
acceptance of risks by the underwriter concerned,
“SEC. 325. It shall be the duty of such resident agent the registration of such underwriter shall likewise be “SEC. 338. Nothing contained in this title shall apply
to notify immediately the Commissioner of any cancelled and his certificate of registration shall be to any duly licensed attorney-at-law who acts or aids
change of his office address. recalled by the Commissioner, and no similar in adjusting insurance claims as an incident to the
certificate shall thereafter be issued in his favor. practice of his profession and who does not
advertise himself as an adjuster.
“SEC. 326. A certificate of registration issued to a
resident agent shall expire on the thirty-first day of “SEC. 331. No certificate of registration issued to an
December of the third year following its issuance underwriter shall be valid after December 31 of the “SEC. 339. The Commissioner may suspend or
unless it is renewed. third year following its issuance unless it is renewed. revoke any adjuster’s license if, after giving notice
and hearing to the adjuster concerned, the
“The Commissioner may, after due notice and Commissioner finds that the said adjuster:
“The Commissioner may, after due notice and
hearing, recall or cancel the certificate of hearing, also suspend or cancel such certificate for
registration issued to a resident agent for violation violation of existing laws, rules and regulations or of “(a) Has violated any provision of this Code and of
of any existing law, rule or regulation, or any any provisions of this Code. the circulars, rulings and instructions of the
provision of this Code. Commissioner or has violated any law in the course
“TITLE 5 of his dealings as an adjuster; or
“TITLE 4
“ADJUSTERS “(b) Has made a material misstatement in the
application for such license; or
“NON-LIFE COMPANY UNDERWRITER
“SEC. 332. No person, partnership, association, or
corporation shall act as an adjuster, as hereinafter “(c) Has been guilty of fraudulent or dishonest
“SEC. 327. No person shall act, and no company shall
defined, unless authorized so to act by virtue of a practices; or
employ any person, as non-life company
underwriter, whose duty and responsibility it shall license issued or renewed by the Commissioner
be to select, evaluate and accept risks for, and to pursuant to the provisions of this Code: Provided, “(d) Has demonstrated his incompetence or
determine the terms and conditions, including those That in the case of a natural person, he must be a untrustworthiness to act as adjuster; or
pertaining to amounts of retentions, under which Filipino citizen and in the case of a partnership,
such risks are to be accepted by the company, unless association or corporation, at least sixty percent
(60%) of its capital must be owned by citizens of the “(e) Has made patently unjust valuation of loss; or
such underwriter is registered as such with the
Commissioner. Philippines.
“(f) Has failed to make a report of the adjustment he
“SEC. 333. An adjuster may be an independent proposed within sixty (60) days from the date of the
“SEC. 328. Every non-life insurance company doing
adjuster or a public adjuster. filing of the claim by the insured with the insurer,
business in the Philippines must maintain at all times
unless prevented so to do by reasons beyond his
a register of risks accepted and a claims register for
control; or
each line of risks engaged in by such non-life “The term independent adjuster means any person,
insurance company with such entries therein as are partnership, association or corporation which, for
now or as may hereafter be required by the money, commission or any other thing of value, acts “(g) Has refused to allow an examination into his
Commissioner, and it shall be the responsibility of for or on behalf of an insurer in the adjusting of affairs or method of doing business as hereinafter
the underwriter on the particular line of risk claims arising under insurance contracts or policies provided.
involved to see to it that the said registers are well issued by such insurer.
maintained and kept, and that all entries therein are “SEC. 340. Every adjuster shall submit to the
properly and correctly recorded. Such registers shall Commissioner a quarterly report of all losses which
“The term public adjuster means any person,
be open to inspection and examination of duly are the subject of adjustment effected by him during
partnership, association or corporation which, for
authorized representatives of the Commissioner at each month in the form prescribed by the
money, commission or any other thing of value, acts
all times during business hours. Commissioner. The report shall be filed within one
on behalf of an insured in negotiating for, or
effecting, the settlement of a claim or claims of the (1) month after the end of each quarter.
“SEC. 329. No person shall be registered with the said insured arising under insurance contracts or
Commissioner, unless such person shall be at least policies, or which advertises for or solicits “SEC. 341. Every adjuster shall keep his or its books,
twenty-one (21) years of age on the date of such employment as an adjuster of such claims. records, reports, accounts, and vouchers in such
registration; a resident of the Philippines; of good manner that the Commissioner or his duly
moral character and with no conviction of any crime authorized representatives may readily verify the
“SEC. 334. For every line of insurance claim
involving moral turpitude; has had at the time such quarterly reports of the said adjuster and ascertain
adjustment, adjusters shall be licensed either as
registration is made at least two (2) years of whether the said adjuster has complied with the
independent adjusters or as public adjusters. No
underwriting work in the particular line of risk provisions of law or regulations obligatory upon him
adjuster shall act on behalf of an insurer unless said
involved; and has passed such qualifying written or whether the method of doing business of the said
adjuster is licensed as an independent adjuster; and
examination that the Commissioner shall conduct at adjuster has been fair, just and honest.
no adjuster shall act on behalf of an insured unless
such time and in such place as he may decide to hold
said adjuster is licensed as a public
for applicants desiring to act as underwriters.
adjuster: Provided, however, That when a firm or “SEC. 342. The Commissioner shall, at least once a
person has been licensed as a public adjuster, he year and whenever he considers the public interest
so demands, cause an examination to be made into
the affairs and method of doing business of every “(a) Policy reserves, claims or loss reserves and net “SEC. 350. No rating organization hereafter formed
adjuster. due and deferred premiums. shall commence rate-making operations until it shall
have obtained a license from the Commissioner.
Before obtaining such license, such rating
“SEC. 343. Any violation of any provision of this title “(b) Statements of bases and net premiums, loading
organization shall file with the Commissioner a
shall be punished by a fine of not less than Ten for gross premiums, and on non-forfeiture values
notice of its intention to commence rate-making
thousand pesos (P10,000.00), or by imprisonment at and reserves, when applying for approval of gross
operations, a copy of its constitution, articles of
the discretion of the court: Provided, That, in case of premiums, reserves and non-forfeiture values.
agreement or association, or of incorporation, and
a partnership, association or corporation, the said
its bylaws, a list of insurance companies that have
penalty shall be imposed upon the partner,
“(c) Policies of insurance under any plan submitted agreed to become members or subscribers, and such
president, manager, managing director, director or
to the Commissioner as required by law. other information concerning such rating
person in charge of its business or responsible for
organization and its operations as may be required
the violation.
“(d) Annual statements and valuation reports by the Commissioner. If the Commissioner finds that
submitted to the Commissioner as required by law. the organization has complied with the provisions of
“TITLE 6 law and that it has a sufficient number of members
or subscribers and is otherwise qualified to function
“(e) Financial projection showing the probable as a rating organization, the Commissioner may
“ACTUARIES
income and outgo and reserve requirements, issue a license to such rating organization
enumerating the actuarial assumptions and bases of authorizing it to make rates for the kinds of
“SEC. 344. No life insurance company shall be projections. insurance or subdivisions thereof as may be
licensed to do business in the Philippines nor shall specified in such license. No license issued to a
any life insurance company doing business in the rating organization shall be valid after December 31
“(f) Valuation of annuity funds or retirement plans.
Philippines be allowed to continue doing such of the third year following its issuance unless it is
business unless they shall engage the services of an renewed. No rating organization which now exists
actuary duly accredited with the Commissioner who “The Commissioner may also require non-life and is not licensed pursuant to this section shall
shall, during his tenure of office, be directly insurance companies to submit, from time to time, continue rate-making operations until it shall have
responsible for the direction and supervision of all similar documents which shall be duly certified by an obtained from the Commissioner a license which he
actuarial work connected with or that may be accredited actuary employed by such company. may issue if satisfied that such organization is
involved in the business of the insurance company. complying with the provisions of this title. Every
The Commissioner may also require non-life “Any life insurance company authorized to do rating organization shall notify the Commissioner
insurance companies to engage the services of an business in the Philippines may employ any person promptly of every change in:
accredited actuary, in accordance with the rules and who is not officially accredited under either of the
regulations that the Commissioner will formulate. qualifications for any kind of actuarial “(a) Its constitution, its articles of agreement or
work: Provided, That he shall not, at any time, have association or its certificate of incorporation, and its
“SEC. 345. Any person may be officially accredited by the authority to certify to the correctness of the bylaws, rules and regulations governing the conduct
the Commissioner to act as an actuary in any life foregoing documents. of its business; and
insurance company or in any mutual benefit
association authorized to do business in the “SEC. 347. No accredited actuary shall serve more
Philippines upon application therefor and the “(b) Its list of members and subscribers.
than one client or employer at the same time.
payment of the corresponding fee hereinafter However, one already in the employ of an insurance
prescribed: Provided, That: company may be allowed by the Commissioner to “A member means an insurer who participates in or
serve a mutual benefit association or any other is entitled to participate in the management of a
“(a) He is a fellow of good standing of the Actuarial insurance company, provided the following rating organization.
Society of the Philippines at the time of his conditions are first complied with:
appointment and remains in such good standing “A subscriber means an insurer which is furnished at
during the tenure of his engagement; or “(a) That the request to engage his services by the its request with rates and rating manuals by a rating
other employer is in writing; organization of which it is not a member.
“(b) In the case of one who is not a fellow of the
Actuarial Society of the Philippines, he meets all the “(b) That his present employer acquiesced to it in “SEC. 351. Each rating organization shall furnish its
requirements of the said Society for accreditation as writing; and rating service without discrimination to all of its
a fellow of the Society, and has been given members and subscribers, and shall, subject to
permission by the pertinent government authorities reasonable rules and regulations, permit any
in the Philippines to render services in the “(c) That he furnishes the Commissioner with copies insurance company doing business in the
Philippines, in the event that he is not a citizen of of said request and acquiescence. Philippines, not admitted to membership, to become
the Philippines. a subscriber to its rating services for any kind of
“No external auditor shall be engaged by supervised insurance or subdivisions thereof. Notice of
“The registration of the actuary shall be suspended persons or entities unless it has been issued an proposed changes in such rules and regulations shall
or revoked by the Commissioner on the following accreditation certificate by the Commissioner. The be given to subscribers. The reasonableness of any
grounds: accreditation certificate shall be valid until rule or regulation in its application to subscribers, or
December 31 of the third year from issuance unless the refusal of any rating organization to admit an
it is revoked or suspended. The Commissioner shall insurance company as a subscriber, shall, at the
“(1) Failure to adequately perform required issue rules and regulations to govern the request of any subscriber or any such insurance
functions and duties under this Code; accreditation of the external auditor and the company, be reviewed by the Commissioner at a
revocation or suspension of the accreditation. hearing held upon at least ten (10) days’ written
“(2) Failure to disclose conflict of interest; notice to such rating organization and to such
subscriber or insurance company. The Commissioner
“TITLE 7
may, after such hearing, issue an appropriate order.
“(3) Failure to comply with the Code of Conduct of
the Actuarial Society of the Philippines; or “RATING ORGANIZATION AND RATE MAKING
“SEC. 352. No rating organization or any other
association shall refuse to do business with, or
“(4) Such other grounds that may be determined by “SEC. 348. Every organization which now exists or prohibit or prevent the payment of commissions to,
the Commissioner. which may hereafter be formed for the purpose of any person licensed as an insurance broker pursuant
making rates to be used by more than one insurance to the provisions of Title 1 of this chapter.
“No actuary engaged by a life insurance company company authorized to do business in the
shall be at the same time a stockholder or a director Philippines shall be known as a rating organization.
“SEC. 353. Rating organizations shall be subject to
of the board, chief executive officer or chief financial The term rate as used in this title shall generally
examination by the Commissioner, as often as he
officer of the company or hold any position that the mean the ratio of the premium to the amount
may deem such examination expedient, pursuant to
Commissioner may determine to have an inherent insured and shall include, as the context may
the provisions of this Code applicable to the
conflict of interest to the position of an actuary. require, either the consideration to be paid or
examination of insurance companies. He shall cause
charged for insurance contracts, including surety
such an examination of each rating organization to
bonds, or the elements and factors forming the basis
“No certificate of registration issued under this title be made at least once in every five (5) years.
for the determination or application of the same, or
shall be valid after December 31 of the third year
both.
following its issuance unless it is renewed. “SEC. 354. The Commissioner may suspend or
revoke the license of any rating organization which
“SEC. 349. Every rating organization which now
“SEC. 346. The following documents, which are from fails to comply with his order within the time limited
exists or which may hereafter be formed shall be
time to time submitted to the Commissioner by a life by such order, or any extension thereof which he
subject to the provisions of this title.
insurance company authorized to do business in the may grant. The Commissioner may determine when
Philippines, shall be duly certified by an accredited a suspension of license shall become effective and it
actuary employed by such company:
shall remain in effect for the period fixed by him, with the members of or subscribers to such rating “SEC. 366. Notwithstanding any other provisions of
unless he modifies or rescinds such suspension. organization or with such insurer. this title, upon the written application of the insurer,
stating his reasons therefor, filed with and approved
by the Commissioner, a rate in excess of that
“SEC. 355. Any rating organization may subscribe for “SEC. 360. Every insurance company doing business
provided by a filing otherwise applicable may be
or purchase actuarial, technical or other services, in the Philippines shall annually file with the rating
used on any specific risk.
and such services shall be available to all members organization of which it is a member or subscriber,
and subscribers without discrimination. or with such other agency as the Commissioner may
designate, a statistical report showing a classification “SEC. 367. Whenever the Commissioner shall
schedule of its premiums and losses on all kinds or determine, after notice and a hearing, that the rates
“SEC. 356. Any rating organization may provide for
types of insurance business to which Section 358 is charged or filed on any class of risks are excessive,
the examination of policies, daily reports, binders,
applicable, and such other information as the discriminatory, inadequate or unreasonable, he shall
renewal certificates, endorsements or other
Commissioner may deem necessary or expedient for order that such rates be appropriately adjusted. For
instruments of insurance, or the cancellation
the administration of the provisions of this title. the purpose of applying the provisions of this
thereof, and may make reasonable rules governing
section, the Commissioner may from time to time
their submission. Such rules shall contain a provision
approve reasonable classifications of risks for any or
that in the event an insurance company does not “SEC. 361. Every non-life rating organization and
all such classes, having due regard to the past and
within sixty (60) days furnish satisfactory evidence to every non-life insurance company doing business in
prospective loss experience, including conflagration
the rating organization of the correction of any error the Philippines shall file with the Commissioner,
or catastrophe hazards, if any, to all other relevant
or omission previously called to its attention by the except as to risks which by general custom of the
factors and to a reasonable profit.
rating organization, it shall be the duty of the rating business are not written according to manual rates
organization to notify the Commissioner thereof. All or rating plans, every rate manual, schedule of rates,
information so submitted for examination shall be classification of risks, rating plan, and every other “SEC. 368. Nothing contained in this title shall be
confidential. rating rule and every modification of any of the construed as requiring any insurer to become a
foregoing which it proposes to use. An insurance member of or subscriber to any rating organization.
company may satisfy its obligation to make such
“SEC. 357. Cooperation among rating organizations
filings for any kind or type of insurance by becoming
or among rating organizations and insurers in rate “SEC. 369. Agreements may be made among
a member of or subscriber to a rating organization
making or in other matters within the scope of this insurance companies with respect to the equitable
which makes such filings for such kind or type of
title is hereby authorized, provided the filings apportionment among them of insurance which may
insurance, and by authorizing the Commissioner to
resulting from such cooperation are subject to all be afforded applicants who are in good faith entitled
accept such filings of the rating organization on
provisions of this title which are applicable to filings to but are unable to procure such insurance through
behalf of such insurance company.
generally. The Commissioner may review such ordinary methods and such insurance companies
cooperative activities and practices and if he finds may agree among themselves on the use of
that any such activity or practice is unfair or “SEC. 362. Every manual or schedule of rates and reasonable rates and modifications for such
unreasonable or otherwise inconsistent with the every rating plan filed as provided in the preceding insurance, such agreements and rate modifications
provisions of this title, he may issue a written order section shall state or clearly indicate the character to be subject to the approval of the
specifying in what respects such activity or practice and extent of the coverage to which any such rate or Commissioner: Provided, however, That the
is unfair or unreasonable or otherwise inconsistent any modification thereof will be applied. provisions of this section shall not be deemed to
with the provisions of this title, and requiring the apply to workmen’s compensation insurance.
discontinuance of such activity or practice.
“SEC. 363. The Commissioner shall review filings as
soon as reasonably possible after they have been “SEC. 370. No insurance company doing business in
“SEC. 358. Every rating organization and every made in order to determine whether they meet the the Philippines or any agent thereof, no insurance
insurance company which makes and files its own requirements of this title. When a filing is not broker, and no employee or other representative of
rates, shall make rates for all risks rated by such accompanied by the information upon which the any such insurance company, agent, or broker, shall
organization or insurance company in accordance insurance company supports such filing, and the make, procure or negotiate any contract of
with the following provisions: Commissioner does not have sufficient information insurance or agreement as to policy contract, other
to determine whether such filing meets the than is plainly expressed in the policy or other
requirements of this title, he shall require such written contract issued or to be issued as evidence
“(a) Basic classification, manual, minimum, class, or
insurance company to furnish the information upon thereof, or shall directly or indirectly, by giving or
schedule rates or rating plans, shall be made and
which it supports such filing. The information sharing a commission or in any manner whatsoever,
adopted for all such risks. Any departure from such
furnished in support of a filing may include: pay or allow or offer to pay or allow to the insured
rates shall be in accordance with schedules, rating
or to any employee of such insured, either as an
plans and rules filed with the Commissioner;
inducement to the making of such insurance or after
“(a) The experience or judgment of the insurance
such insurance has been effected, any rebate from
company or rating organization making the filing;
“(b) Rates shall be reasonable and adequate for the the premium which is specified in the policy, or any
class of risks to which they apply; special favor or advantage in the dividends or other
“(b) Its interpretation of any statistical data it relies benefits to accrue thereon, or shall give or offer to
upon; give any valuable consideration or inducement of
“(c) No rate shall discriminate unfairly between risks
involving essentially the same hazards and expense any kind, directly or indirectly, which is not specified
elements or between risks in the application of like “(c) The experience of other insurance companies or in such policy or contract of insurance; nor shall any
charges and credits; rating organization; or such company, or any agent thereof, as to any policy
or contract of insurance issued, make any
discrimination against any Filipino in the sense that
“(d) Consideration shall be given to the past and “(d) Any other relevant factors. he is given less advantageous rates, dividends or
prospective loss experience, including the other policy conditions or privileges than are
conflagration and catastrophe hazards, if any, to all accorded to other nationals because of his race.
“SEC. 364. If the Commissioner finds that any rate
factors reasonably attributable to the class of risks,
filings theretofore filed with him do not comply with
to a reasonable profit, to commissions paid during
the provisions of this title or that they provide rates “SEC. 371. No insurance company doing business in
the most recent annual period and to past and
or rules which are inadequate, excessive, unfairly the Philippines, and no officer, director, or agent
prospective other expenses. In case of fire insurance
discriminatory or otherwise unreasonable, he may thereof, and no insurance broker or any other
rates, consideration shall be given to the experience
order the same withdrawn and at the expiration of person, partnership or corporation shall issue or
of the fire insurance business during a period of not
sixty (60) days thereafter the same shall be deemed circulate or cause or permit to be issued or
less than five (5) years next preceding the year in
no longer on file. Before making any such finding circulated any literature, illustration, circular or
which the review is made;
and order, the Commissioner shall give notice, not statement of any sort misrepresenting the terms of
less than ten (10) days in advance, and a hearing, to any policy issued by any insurance company of the
“(e) Risk may be grouped by classifications for the the rating organization, or to the insurer, which filed benefits or advantages promised thereby, or any
establishment of rates and minimum premiums. the same. Such order shall not affect any contract or misleading estimate of the dividends or share of
Classification rates may be modified to produce policy made or issued prior to the expiration of such surplus to be received thereon, or shall use any
rates for individual risks in accordance with rating sixty (60)-day period. name or title of any policy or class of policies
plans which establish standards for measuring misrepresenting the true nature thereof; nor shall
variations in hazards or expense provisions, or both. any such company or agent thereof, or any other
“SEC. 365. No member or subscriber of a rating
Such standards may measure any difference among person, partnership or corporation make any
organization, and no insurance company doing
risks that can be demonstrated to have a probable misleading representation or incomplete
business in the Philippines, or agent, employee or
effect upon losses or expenses. comparison of policies to any person insured in such
other representative of such company, and no
insurance broker shall charge or demand a rate or company for the purpose of inducing or tending to
“SEC. 359. No rating organization and no insurance receive a premium which deviates from the rates, induce such person to lapse, forfeit, or surrender his
company which makes and files its own rates shall rating plans, classifications, schedules, rules and said insurance.
make or promulgate any rate or schedule of rates standards, made and last filed by a rating
which is to be applied to any fire risk on the organization or by or on behalf of the insurance “SEC. 372. If the Commissioner, after notice and
condition that the whole amount of insurance on company, or shall issue or make any policy or hearing, finds that any insurance company, rating
any risk or any specified part thereof shall be placed contract involving a violation of such rate filings. organization, agent, broker or other person has
violated any of the provisions of this title, it shall under the provisions of the policy. No payment from delay or fraction thereof, after the expiration of the
order the payment of a fine not to exceed Twenty- the Security Fund shall, however, be made to any first month of such delay, but the Commissioner, if
five thousand pesos (P25,000.00) for each such person who owns or controls ten percent (10%) or satisfied that the delay was excusable, may remit all
offense, and shall immediately suspend or revoke more of the voting shares of stock of the insolvent or any part of such penalty. The Commissioner, in his
the license issued to such insurance company, rating insurer and no payment on any one claim shall discretion, may suspend or revoke the certificate of
organization, agent, or broker. The issuance, exceed Twenty thousand pesos (P20,000.00). authority to do business in the Philippines of any
procurement or negotiation of a single policy or insurance company which shall fail to comply with
contract of insurance shall be deemed a separate this title or to pay any penalty imposed in
“SEC. 379. Such Fund shall consist of all payments
offense. accordance therewith.
made to the Fund by insurance companies
authorized to do business in the Philippines.
“TITLE 8 Payments made by life insurance companies shall be “SEC. 382. The Accounts created by this title shall be
treated separately from those made by non-life separate and apart from each other and from any
insurance companies and the corresponding fund other fund. The Treasurer of the Philippines shall be
“PROVISION COMMON TO AGENTS,
shall be called Life Account and Non-Life Account, the custodian of the Life Account and Non-Life
BROKERS AND ADJUSTERS
respectively, and shall be held and administered as Account of the Security Fund; and all disbursements
such by the Commissioner in accordance with the from any Account shall be made by the Treasurer of
“SEC. 373. A license issued to a partnership, provisions of this title. The Life Account shall be the Philippines upon vouchers signed by the
association or corporation to act as an insurance utilized exclusively for disbursements that refer to Commissioner or his deputy, as hereinafter
agent, general agent, insurance broker, reinsurance life insurance companies, while the Non-Life provided. The moneys of said Account may be
broker, or adjuster shall authorize only the individual Account shall be utilized exclusively for invested by the Commissioner only in bonds or other
named in the license who shall qualify therefor as disbursements that refer to non-life insurance instruments of debt of the Government of the
though an individual licensee. The Commissioner companies. Philippines or its political subdivisions or
shall charge, and the licensee shall pay, a full instrumentalities. The Commissioner may sell any of
additional license fee as to each respective the securities in which an Account is invested, if
“SEC. 380. All insurance companies doing business in
individual so named in such license in excess of one. advisable, for its proper administration or in the best
the Philippines shall contribute to the Security Fund,
interest of such Account.
Life or Non-Life Account, as the case may be, the
“Licenses and certificates of registration issued aggregate amount of Five million pesos
under the provisions of this chapter may be renewed (P5,000,000.00) for each Account. The contributions “SEC. 383. Payments from either the Life Insurance
by the filing of notices of intention on forms to be of the life insurance companies and of the non-life Account or Non-Life Account, as the case may be,
prescribed by the Commissioner and payment of the insurance companies shall be in direct proportion to shall be made by the Treasurer of the Philippines to
fees therefor. the ratio between a particular life insurance the Commissioner, upon the authority of
company or a particular non-life insurance appropriate certificate filed with him by the
“SEC. 374. The Commissioner, in consultation with company’s net worth and the aggregate net worth Commissioner acting in such capacity.
the duly accredited associations representing the of all life insurance companies or all non-life
insurance industry, shall adopt and promulgate a insurance companies, as the case may be, as shown
“SEC. 384. The Commissioner may, in his discretion,
code of conduct to promote integrity, honesty and in their latest financial statements approved by the
designate or appoint a duly authorized
ethical business practices among insurance agents, Commissioner. This proportion applied to the Five
representative or representatives to appear and
distributors and other intermediaries. million pesos (P5,000,000.00) shall be the
defend before any court or other body or official
contribution of a particular company to the
having jurisdiction any or all actions or proceedings
corresponding Account of the Security Fund.
“TITLE 9 against principals or assureds on insurance policies
or contracts issued to them where the insurer has
“The amount of Five million pesos (P5,000,000.00) in become insolvent or unable to meet its insurance
“BANCASSURANCE each Account shall be in the form of a revolving trust obligations. The Commissioner shall have, as of the
fund. The respective contributions of the companies date of insolvency of such insurer or as of the date
“SEC. 375. The term bancassurance shall mean the shall remain as admitted assets in their books and of its inability to meet its insurance obligations, only
presentation and sale to bank customers by an any disbursement therefrom shall be deducted the rights which such insurer would have had if it
insurance company of its insurance products within proportionately from the contributions of each had not become insolvent or unable to meet its
the premises of the head office of such bank duly company which will be allowed as deductions for insurance obligations. For the purpose of this title,
licensed by the Bangko Sentral ng Pilipinas or any of income tax purposes. Any earnings of the Fund shall the Commissioner shall have power to employ such
its branches under such rules and regulations which be turned over to the contributing companies in counsel, clerks and assistants as he may deem
the Commissioner and the Bangko Sentral ng proportion to their contributions. necessary.
Pilipinas may promulgate. To engage in
bancassurance arrangement, a bank is not required “In the case of disbursements of funds from the “SEC. 385. The expense of administering an Account
to have equity ownership of the insurance company. Fund as provided in the foregoing paragraph, the life shall be paid out of the Account concerned. The
No insurance company shall enter into a and non-life companies, as the case may be, shall Commissioner shall serve as administrator of the
bancassurance arrangement unless it possesses all replenish the amount disbursed in direct proportion Fund and of the Accounts without additional
the requirements as may be prescribed by the to the individual company’s net worth and the compensation, but may be allowed and paid from
Commissioner and the Bangko Sentral ng Pilipinas. aggregate net worth of the life or non-life the Account concerned expenses incurred in the
companies, as the case may be. However, in no case performance of his duties in connection with said
“No insurance product under this section, whether shall the Fund exceed the aggregate amount of Ten Account. The compensation of those persons
life or non-life, shall be issued or delivered unless in million pesos (P10,000,000.00), or Five million pesos employed by the Commissioner shall be deemed
the form previously approved by the Commissioner. (P5,000,000.00) for each Account. administration expense payable from the Account
concerned. The Commissioner shall include in his
annual report to the Secretary of Finance a
“SEC. 376. Personnel tasked to present and sell “Should the Fund, Life or Non-Life Account, as the
statement of the expenses of administration of the
insurance products within the bank premises shall case may be, be inadequate for a disbursement as
Fund and of the Life Account and Non-Life Account
be duly licensed by the Commissioner and shall be provided for, then the Life or Non-Life companies, as
for the preceding year.
subject to the rules and regulations of this Act. the case may be, shall contribute to the Fund their
respective shares in the proportion previously
mentioned. “CHAPTER VI
“SEC. 377. The Commissioner and the Bangko
Sentral ng Pilipinas shall promulgate rules and
regulations to effectively supervise the business of “SEC. 381. The Commissioner may adopt, amend, “COMPULSORY MOTOR VEHICLE
bancassurance. and enforce all reasonable rules and regulations LIABILITY INSURANCE
necessary for the proper administration of the Fund
and of the Accounts. In the event any insurer shall
“CHAPTER V “SEC. 386. For purposes of this chapter:
fail to make any payment required by this title, or
that any payment made is incorrect, he shall have
“SECURITY FUND full authority to examine all the books and records of “(a) Motor Vehicle is any vehicle as defined in
the insurer for the purpose of ascertaining the facts Section 3, paragraph (a) of Republic Act No. 4136,
and shall determine the correct amount to be paid otherwise known as the ‘Land Transportation and
“SEC. 378. There is hereby created a fund to be Traffic Code’.
and may proceed in any court of competent
known as the Security Fund which shall be used in
jurisdiction to recover for the benefit of the Fund or
the payment of allowed claims against an insurance
of the Account concerned any sum shown to be due “(b) Passenger is any fare paying person being
company authorized to transact business in the
upon such examination and determination. Any transported and conveyed in and by a motor vehicle
Philippines remaining unpaid by reason of the
insurer which fails to make any payment to the Fund for transportation of passengers for compensation,
insolvency of such company. The said Fund may also
or to the Account concerned when due, shall including persons expressly authorized by law or by
be used to reinsure the policy of the insolvent
thereby forfeit to said Fund or Account concerned a the vehicle’s operator or his agents to ride without
insurer in any solvent insurer authorized to do
penalty of five percent (5%) of the amount fare.
business in the Philippines as provided in Section
determined to be due as provided by this title, plus
256. The Fund may likewise be used to pay insured
one percent (1%) of such amount for each month of
claims which otherwise would not be compensable
“(c) Third party is any person other than a passenger “Provided, however, That such cash deposit made to, “SEC. 392. No land transportation operator or owner
as defined in this section and shall also exclude a or surety bond posted with, the Commissioner shall of motor vehicle shall be unreasonably denied the
member of the household, or a member of the be resorted to by him in cases of accidents the policy of insurance or surety bond required by this
family within the second degree of consanguinity or indemnities for which to third-parties and/or chapter by the insurance companies authorized to
affinity, of a motor vehicle owner or land passengers are not settled accordingly by the land issue the same, otherwise, the Land Transportation
transportation operator, as likewise defined herein, transportation operator and, in that event, the said Office shall require from said land transportation
or his employee in respect of death, bodily injury, or cash deposit shall be replenished or such surety operator or owner of the vehicle, in lieu of a policy
damage to property arising out of and in the course bond shall be restored within sixty (60) days after of insurance or surety bond, a certificate that a cash
of employment. impairment or expiry, as the case may be, by such deposit has been made with the Commissioner in
land transportation operator, otherwise, he shall such amount required as limits of indemnity in
secure the insurance policy required by this chapter. Section 390 to answer for the passenger and/or
“(d) Owner or motor vehicle owner means the actual
The aforesaid cash deposit may be invested by the third-party liability of such land transportation
legal owner of a motor vehicle, in whose name such
Commissioner in readily marketable government operator or owner of the vehicle.
vehicle is duly registered with the Land
bonds, and/or securities.
Transportation Office;
“No insurance company may issue the policy of
“(b) In the case of an owner of a motor vehicle, the insurance or surety bond required under this
“(e) Land transportation operator means the owner
insurance or guaranty in cash or surety bond shall chapter unless so authorized under existing laws.
or owners of motor vehicles for transportation of
cover liability for death or injury to third-parties in
passengers for compensation, including school
an amount not less than that set forth in the
buses. “The authority to engage in the casualty and/or
following scale in any one accident:
surety lines of business of an insurance company
that refuses to issue or renew, without just cause,
“(f) Insurance policy or Policy refers to a contract of
“(1) Private Cars the insurance policy or surety bond therein required
insurance against passenger and third-party liability
shall be withdrawn immediately.
for death or bodily injuries and damage to property
arising from motor vehicle accidents. “(i) Bantam: Twenty thousand pesos (P20,000.00);
“SEC. 393. No cancellation of the policy shall be valid
unless written notice thereof is given to the land
“SEC. 387. It shall be unlawful for any land “(ii) Light: Twenty thousand pesos (P20,000.00); and
transportation operator or owner of the vehicle and
transportation operator or owner of a motor vehicle
to the Land Transportation Office at least fifteen (15)
to operate the same in the public highways unless
“(iii) Heavy: Thirty thousand pesos (P30,000.00). days prior to the intended effective date thereof.
there is in force in relation thereto a policy of
Upon receipt of such notice, the Land Transportation
insurance or guaranty in cash or surety bond issued
“(2) Other Private Vehicles Office, unless it receives evidence of a new valid
in accordance with the provisions of this chapter to
insurance or guaranty in cash or surety bond as
indemnify the death, bodily injury, and/or damage
prescribed in this chapter, or an endorsement of
to property of a third-party or passenger, as the case “(i) Tricycles, motorcycles and scooters: Twelve revival of the cancelled one, shall order the
may be, arising from the use thereof. thousand pesos (P12,000.00); immediate confiscation of the plates of the motor
vehicle covered by such cancelled policy. The same
“SEC. 388. The Commissioner shall furnish the Land “(ii) Vehicles with an unladen weight of 2,600 kilos may be reissued only upon presentation of a new
Transportation Office with a list of insurance or less: Twenty thousand pesos (P20,000.00); insurance policy or that a guaranty in cash or surety
companies authorized to issue the policy of bond has been made or posted with the
insurance or surety bond required by this chapter. Commissioner and which meets the requirements of
“(iii) Vehicles with an unladen weight of between this chapter, or an endorsement or revival of the
2,601 kilos and 3,930 kilos: Thirty thousand pesos cancelled one.
“SEC. 389. The Land Transportation Office shall not (P30,000.00); and
allow the registration or renewal of registration of
any motor vehicle without first requiring from the “SEC. 394. If the cancellation of the policy or surety
land transportation operator or motor vehicle owner “(iv) Vehicles with an unladen weight over 3,930 bond is contemplated by the land transportation
concerned the presentation and filing of a kilos: Fifty thousand pesos (P50,000.00). operator or owner of the vehicle, he shall, before
substantiating documentation in a form approved by the policy or surety bond ceases to be effective,
the Commissioner evidencing that the policy of “The Commissioner may, if warranted, set forth secure a similar policy of insurance or surety bond to
insurance or guaranty in cash or surety bond schedule of indemnities for the payment of claims replace the policy or surety bond to be cancelled or
required by this chapter is in effect. for death or bodily injuries with the coverages set make a cash deposit in sufficient amount with the
forth herein. Commissioner, and without any gap, file the
“SEC. 390. Every land transportation operator and required documentation with the Land
every owner of a motor vehicle shall, before Transportation Office, and notify the insurance
“SEC. 391. Any claim for death or injury to any
applying for the registration or renewal of company concerned of the cancellation of its policy
passenger or third-party pursuant to the provisions
registration of any motor vehicle, at his option, or surety bond.
of this chapter shall be paid without the necessity of
either secure an insurance policy or surety bond proving fault or negligence of any kind: Provided,
issued by any insurance company authorized by the That for purposes of this section: “SEC. 395. In case of change of owner ship of a
Commissioner or make a cash deposit in such motor vehicle, or change of the engine of an insured
amount as herein required as limit of liability for vehicle, there shall be no need of issuing a new
purposes specified in Section 387. “(a) The total indemnity in respect of any person
policy until the next date of registration or renewal
shall not be less than Fifteen thousand pesos
of registration of such vehicle, and: Provided, That
(P15,000.00);
“(a) In the case of a land transportation operator, the insurance company shall agree to continue the
the insurance guaranty in cash or surety bond shall policy, such change of ownership or such change of
cover liability for death or bodily injuries of third- “(b) The following proofs of loss, when submitted the engine shall be indicated in a corresponding
parties and/or passengers arising out of the use of under oath, shall be sufficient evidence to endorsement by the insurance company concerned,
such vehicle in the amount not less than Twelve substantiate the claim: and a signed duplicate of such endorsement shall,
thousand pesos (P12,000.00) per passenger or third- within a reasonable time, be filed with the Land
party and an amount, for each of such categories, in “(1) Police report of accident; and Transportation Office.
any one accident of not less than that set forth in
the following scale: “SEC. 396. In the settlement and payment of claims,
“(2) Death certificate and evidence sufficient to
establish the proper payee; or the indemnity shall not be availed of by any accident
“(1) Motor vehicles with an authorized capacity of victim or claimant as an instrument of enrichment by
twenty-six (26) or more passengers: Fifty thousand reason of an accident, but as an assistance or
“(3) Medical report and evidence of medical or restitution insofar as can fairly be ascertained.
pesos (P50,000.00);
hospital disbursement in respect of which refund is
claimed;
“(2) Motor vehicles with an authorized capacity of “SEC. 397. Any person having any claim upon the
from twelve (12) to twenty-five (25) passengers: policy issued pursuant to this chapter shall, without
“(c) Claim may be made against one motor vehicle any unnecessary delay, present to the insurance
Forty thousand pesos (P40,000.00);
only. In the case of an occupant of a vehicle, claim, company concerned a written notice of claim setting
shall lie against the insurer of the vehicle in which forth the nature, extent and duration of the injuries
“(3) Motor vehicles with an authorized capacity of the occupant is riding, mounting or dismounting sustained as certified by a duly licensed physician.
from six (6) to eleven (11) passengers: Thirty from. In any other case, claim shall lie against the Notice of claim must be filed within six (6) months
thousand pesos (P30,000.00); insurer of the directly offending vehicle. In all cases, from the date of accident, otherwise, the claim shall
the right of the party paying the claim to recover be deemed waived. Action or suit for recovery of
“(4) Motor vehicles with an authorized capacity of against the owner of the vehicle responsible for the damage due to loss or injury must be brought, in
five (5) or less passengers: Five thousand pesos accident shall be maintained. proper cases, with the Commissioner or the courts
(P5,000.00) multiplied by the authorized capacity. within one (1) year from denial of the claim,
otherwise, the claimant’s right of action shall
prescribe.
“SEC. 398. The insurance company concerned shall “In no case shall a mutual benefit association be “SEC. 407. A mutual benefit association may, by
forthwith ascertain the truth and extent of the claim organized and authorized to transact business as a reinsurance agreement, cede in whole or in part any
and make payment within five (5) working days after charitable or benevolent organization, and individual risk or risks under certificates of insurance
reaching an agreement. If no agreement is reached, whenever it has this feature as incident to its issued by it, only to a life insurance company
the insurance company shall pay only the no-fault existence, the corresponding charter provision shall authorized to transact business or to a professional
indemnity provided in Section 391 without prejudice be revised to conform with the provision of this reinsurer authorized to accept life risks in the
to the claimant from pursuing his claim further, in section. Mutual benefit association, already licensed Philippines: Provided, That a copy of the draft of
which case, he shall not be required or compelled by to transact business as such on the date this Code such reinsurance agreement shall be submitted to
the insurance company to execute any quit claim or becomes effective, having charitable or benevolent the Commissioner for his approval. The association
document releasing it from liability under the policy feature shall abandon such incidental purpose upon may take credit for the reserves on such ceded risks
of insurance or surety bond issued. effectivity of this Code if they desire to continue to the extent reinsured.
operating as such mutual benefit associations.
“In case of any dispute in the enforcement of the “SEC. 408. The constitution or bylaws of a mutual
provisions of any policy issued pursuant to this “SEC. 404. A mutual benefit association, before it benefit association must distinctly state the purpose
chapter, the adjudication of such dispute shall be may transact as such, must first secure a license for which dues and/or assessments are made and
within the original and exclusive jurisdiction of the from the Commissioner. The application for such collected and the portion thereof which may be used
Commissioner, subject to the limitations provided in license shall be filed with the Commissioner together for expenses.
Section 439. with certified true copies of the articles of
incorporation or the constitution and bylaws of the
“Death benefit and other relief funds shall be
association, and all amendments thereto, and such
“SEC. 399. It shall be unlawful for a land created and used exclusively for paying benefits due
other documents or testimonies as the
transportation operator or owner of motor vehicle the members under their respective membership
Commissioner may require.
to require his or its drivers or other employees to certificates. A general fund shall likewise be created
contribute in the payment of premiums. and used for expenses of administration of the
“No license shall be granted to a mutual benefit association.
association until the Commissioner shall have been
“SEC. 400. No government office or agency having
satisfied by such examination as he may make and
the duty of implementing the provisions of this “A mutual benefit association shall only maintain
such evidence as he may require that the association
chapter nor any official or employee thereof shall free and unassigned surplus of not more than
is qualified under existing laws to operate and
act as agent in procuring the insurance policy or twenty percent (20%) of its total liabilities as verified
transact business as such. The Commissioner may
surety bond provided for herein. The commission of by the Commissioner. Any amount in excess shall be
refuse to issue a license to any mutual benefit
an agent procuring the said policy or bond shall in no returned to the members by way of dividends,
association if, in his judgment, such refusal will best
case exceed ten percent (10%) of the amount of the enhancing the equity value or providing benefits in
promote the interest of the members of such
premiums therefor. kind and other relevant services. In addition, subject
association and of the people of this country. Any
to the approval of the Commissioner, a mutual
license issued shall expire on the last day of
benefit association may allocate a portion for
“SEC. 401. Any land transportation operator or December of the third year following its issuance
capacity building and research and development
owner of motor vehicle or any other person violating and, upon proper application, may be renewed if the
such as developing new products and services,
any of the provisions of the preceding sections shall association is continuing to comply with existing
upgrading and improving operating systems and
be punished by a fine of not less than Five hundred laws, rules and regulations, orders, instructions,
equipment and continuing member education.
pesos (P500.00) and/or imprisonment for not more rulings and decisions of the Commissioner. Every
than six (6) months. The violation of Section 390 by a association receiving any such license shall be
land transportation operator shall be a sufficient subject to the supervision of the “SEC. 409. Every outstanding membership certificate
cause for the revocation of the certificate of public Commissioner: Provided, That no such license shall must have an equity value equivalent to at least fifty
convenience issued by the Land Transportation be granted to any such association if such percent (50%) of the total contributions collected
Franchising and Regulatory Board covering the association has no actuary. thereon. The equity value only applies to basic life
vehicle concerned. insurance product and excludes optional products.
“SEC. 405. No mutual benefit association shall be
“SEC. 402. Whenever any violation of the provisions issued a license to operate as such unless it has “SEC. 410. Every mutual benefit association must
of this chapter is committed by a corporation or constituted and established a Guaranty Fund by accumulate and maintain, out of the periodic dues
association, or by a government office or entity, the depositing with the Commissioner an initial collected from its members, sufficient reserves for
executive officer or officers of said corporation, minimum amount of Five million pesos the payment of claims or obligations for which it
association or government office or entity who shall (P5,000,000.00) in cash, or in government securities shall hold funds in securities satisfactory to the
have knowingly permitted, or failed to prevent, said with a total value equal to such amount, to answer Commissioner consisting of bonds of the
violation shall be held liable as principals. for any valid benefit claim of any of its members. Government of the Philippines, or any of its political
subdivisions and instrumentalities, or in such other
good securities as may be approved by the
“CHAPTER VII “All moneys received by the Commissioner for this
Commissioner.
purpose must be deposited by him in interest-
“MUTUAL BENEFIT ASSOCIATIONS AND bearing deposits with any bank or banks authorized
to transact business in the Philippines for the “The reserve liability shall be established in
TRUSTS FOR CHARITABLE USES
account of the particular association constituting the accordance with actuarial procedures and shall be
Guaranty Fund. approved by the Commissioner.
“TITLE l

“Any accrual to such fund, be it interest earned or “The articles of incorporation or the constitution and
“MUTUAL BENEFIT ASSOCIATIONS dividend additions on moneys or securities so bylaws of a mutual benefit association must provide
deposited, may, with the prior approval of the that if its reserve as to all or any class of certificates
“SEC. 403. Any society, association or corporation, Commissioner, be withdrawn by the association if becomes impaired, its board of directors or trustees
without capital stock, formed or organized not for there is no pending benefit claim against it, including may require that there shall be paid by the members
profit but mainly for the purpose of paying sick interest thereon or dividend additions thereto. to the association the amount of the members’
benefits to members, or of furnishing financial equitable proportion of such deficiency as
support to members while out of employment, or of ascertained by said board and that if the payment be
“The Commissioner, prior to or after licensing a
paying to relatives of deceased members of fixed or not made it shall stand as an indebtedness against
mutual benefit association, may require such
any sum of money, irrespective of whether such aim the membership certificates of the defaulting
association to increase its Guaranty Fund from the
or purpose is carried out by means of fixed dues or members and draw interest not to exceed five
initial minimum amount required to an amount
assessments collected regularly from the members, percent (5%) per annum compounded annually.
equal to the capital investment required of an
or of providing, by the issuance of certificates of existing domestic insurance company under Section
insurance, payment of its members of accident or 209 of this Code. “SEC. 411. A mutual benefit association may invest
life insurance benefits out of such fixed and regular such portion of its funds as shall not be required to
dues or assessments, but in no case shall include any meet pending claims and other obligations in any of
society, association, or corporation with such mutual “SEC. 406. Every mutual benefit association licensed
the classes of investments or types of securities in
benefit features and which shall be carried out to do business as such shall issue membership
which life insurance companies doing business in the
purely from voluntary contributions collected not certificates to its members specifying the benefits to
Philippines may invest.
regularly and/or no fixed amount from whomsoever which such members are entitled.
may contribute, shall be known as a mutual benefit
“It may also grant loans to members on the security
association within the intent of this Code. “Such certificates, together with the articles of
of a pledge or chattel mortgage of personal
incorporation of the association or its constitution
properties of the borrowers, or in the absence
“Any society, association, or corporation principally and bylaws, and all existing laws as may be pertinent
thereof, on the security of the membership
organized as a labor union shall be governed by the shall constitute the agreement, as of the date of its
certificate of the borrowing members, in which
Labor Code notwithstanding any mutual benefit issuance, between the association and the member.
event such loan shall become a first lien on the
feature provisions in its charter as incident to its The membership certificate shall be in a form
proceeds thereof.
organization. previously approved by the Commissioner.
“SEC. 412. The Commissioner or any of his duly “SEC. 418. No mutual benefit association shall be “TITLE 2
designated representatives, shall have the power of dissolved without first notifying the Commissioner
visitation, audit and examination into the affairs, and furnishing him with a certified copy of the
“TRUSTS FOR CHARITABLE USES
financial condition, and methods of doing business resolution authorizing the dissolution, duly adopted
of all mutual benefit associations, and he shall cause by the affirmative vote of two-thirds (2/3) of the
such examination to be made at least once every members at a meeting called for that purpose, the “SEC. 424. The term trust for charitable uses, within
two (2) years or whenever it may be deemed proper financial statements as of the date of the resolution, the intent of this Code, shall include, all the real or
and necessary. Free access to the books, records and and such other papers or documents as may be personal properties or funds, as well as those
documents of the association shall be accorded to required by the Commissioner. acquired with the fruits or income therefrom or in
the Commissioner, or to his representatives, in such exchange or substitution thereof, given to or
manner that the Commissioner or his received by any person, corporation, association,
“No dissolution shall proceed until and unless
representatives may readily verify or determine the foundation, or entity, except the National
approved by the Commissioner and all proceedings
true affairs, financial condition, and method of doing Government, its instrumentalities or political
in connection therewith shall be witnessed and
business of such association. In the course of such subdivisions, for charitable, benevolent, educational,
attested by his duly designated representative.
examination, the Commissioner or his duly pious, religious, or other uses for the benefit of the
designated representatives shall have authority to public at large or a particular portion thereof or for
administer oaths and take testimony or other “No mutual benefit association shall be officially the benefit of an indefinite number of persons.
evidence on any matter relating to the affairs of the declared as dissolved until after the Commissioner
association. so certifies that all outstanding claims against the
“SEC. 425. The term trustee shall include any
association have been duly settled and liquidated.
individual, corporation, association, foundation, or
“All minutes of the proceedings of the board of entity, except the National Government, its
directors or trustees of the association, and those of “SEC. 419. The Commissioner shall, after notice and instrumentalities or political subdivisions, in charge
the regular or special meetings of the members, hearing, have the power either to suspend or revoke of, or acting for, or concerned with the
shall be taken, and a copy thereof, in English or in the license issued to a mutual benefit association if administration of, the trust referred to in the section
Pilipino, shall be submitted to the Commissioner’s he finds that the association has: immediately preceding and with the proper
representatives or examiners in the course of such application of trust property.
examination. “(a) Failed to comply with any provision of this Code;
“SEC. 426. The term trust property shall include all
“A copy of the findings of such examination, real or personal properties or funds pertaining to the
“(b) Failed to comply with any other law or
together with the recommendations of the trust as well as those acquired with the fruits or
regulation obligatory upon it;
Commissioner, shall be furnished the association for income therefrom or in exchange or substitution
its information and compliance, and the same shall thereof.
be taken up immediately in the meetings of the “(c) Failed to comply with any order, ruling,
board of directors or trustees and of the members of instruction, requirement or recommendation of the
“SEC. 427. All trustees shall, before entering in the
the association. Commissioner;
performance of the duties of their trust, obtain a
certificate of registration from the Commissioner.
“SEC. 413. Every mutual benefit association shall, “(d) Exceeded its power to the prejudice of its The registration shall expire on December 31 of the
annually on or before the thirtieth day of April of members; third year following its issuance unless it is renewed.
each year, render to the Commissioner an annual
statement in such form and detail as may be “(e) Conducted its business fraudulently or “All provisions of this Code governing mutual benefit
prescribed by the Commissioner, signed and sworn hazardously; associations and such other provisions herein,
to by the president, secretary, treasurer, and actuary whenever practicable and necessary, shall be
of the association, showing the exact condition of its applicable to trusts for charitable uses.
affairs on the preceding thirty-first day of December. “(f) Rendered its affairs and condition to one of
insolvency; or
“SEC. 428. The treasurer of a charitable trust shall
“SEC. 414. No money, aid or benefit to be paid, file a fidelity bond in the amount commensurate
provided or tendered by any mutual benefit “(g) Failed to carry out its aims and purposes for
which it was organized due to any cause. with the value of the trust property in his custody, as
association, shall be liable to attachment, may be determined by the Commissioner.
garnishment, or other process, or be seized, taken,
appropriated, or applied by any legal or equitable “After receipt of the order from the Commissioner
process to pay any debt or liability of a member or suspending or revoking the license, the association “CHAPTER VIII
beneficiary, or any other person who may have a must immediately exert efforts to remove such
right thereunder, either before or after payment. cause or causes which brought about the order and, “TRUST BUSINESS IN GENERAL
upon proper showing, may apply with the
“SEC. 415. Any member of a mutual benefit Commissioner for the lifting of the order and
“SEC. 429. An insurance company may engage in
association shall have the right at all times to change restoration or revival of the license so revoked or
limited trust business, consisting of managing funds
the beneficiary or beneficiaries or add another suspended.
pertaining only to retirement and pre-need plans,
beneficiary or other beneficiaries in accordance with provided it has secured a license to do so from the
the rules and regulations of the association unless “SEC. 420. For failure to remove such cause or Bangko Sentral ng Pilipinas. This trust business shall
he has expressly waived this right in the membership causes which brought about the suspension or be separate and distinct from the general business
certificate. Every association may, under such rules revocation of the license of a mutual benefit of the insurance company and shall be subject to
as it may adopt, limit the scope of beneficiaries and association, the Commissioner shall apply under this rules and regulations as may be promulgated by the
provide that no beneficiary shall have or obtain any Code for an order from the proper court to liquidate Bangko Sentral ng Pilipinas in consultation with the
vested interest in the proceeds of any certificate such association. Commissioner.
until the certificate has become due and payable
under the terms of the membership certificate.
“The provisions of Titles 14 and 15, Chapter III, “CHAPTER IX
pertaining to the appointment of a conservator and
“SEC. 416. Any chapter affiliate independently proceedings upon insolvency of an insurance
licensed as a mutual benefit association may “REGISTRATION, RESPONSIBILITIES AND
company shall, insofar as practicable, apply to
consolidate or merge with any other similar chapter OVERSIGHT OF SELF-REGULATORY
mutual benefit associations.
affiliate or with the mother association. ORGANIZATIONS

“SEC. 421. To secure the enforcement of any

“SEC. 417. Any mutual benefit association may be “SEC 430. The Commissioner shall have the power to
provision under this title, the Commissioner may
converted into and licensed as a mutual life register as a self-regulatory organization, or
issue such rules, rulings, instructions, orders and
insurance company by complying with the otherwise grant licenses, and to regulate, supervise,
circulars.
requirements of the pertinent provisions of this examine, suspend or otherwise discontinue, as a
Code and submitting the specific plan for such condition for the operation of organizations whose
“SEC. 422. The violation of any provision of this title operations are related to or connected with the
conversion to the Commissioner for his approval.
shall subject the person violating or the officer of the insurance market such as, but not limited to,
Such plan, as approved, shall then be submitted to
association responsible therefor to a fine of not less associations of insurance companies, whether life or
the members either in the regular meeting or in a
than Ten thousand pesos (P10,000.00), or non-life, reinsurers, actuaries, agents, brokers,
special meeting called for the purpose for their
imprisonment of not exceeding three (3) years, or dealers, mutual benefit associations, trusts, rating
adoption. The affirmative vote of at least two-thirds
both such fine and imprisonment, at the discretion agencies, and other persons regulated by the
(2/3) of all the members shall be necessary in order
of the court. Commissioner, which are engaged in the business
to consider such plan as adopted.
regulated by this Code.
“SEC. 423. All provisions of this Code governing life
“No such conversion shall take effect unless and
insurance companies and such other provisions “The Commissioner may prescribe rules and
until approved by the Commissioner.
whenever practicable and necessary, shall be regulations which are necessary or appropriate in
applicable to mutual benefit associations. the public interest or for the protection of investors
to govern self-regulatory organizations and other registration should be denied. In the event (12) months for violation of any provision of this
organizations licensed or regulated pursuant to the proceedings are instituted, the Commissioner shall Code or any other law administered by the
authority granted hereunder including, but not have two hundred seventy (270) days within which Commission, or the rules and regulations
limited to, the requirement of cooperation within to conclude such proceedings at which time he shall, thereunder, or effected, directly or indirectly, any
and among all participants in the insurance market by order, grant or deny such registration. transaction for any person who, such member or
to ensure transparency and facilitate exchange of participant had reason to believe, was violating in
information. respect of such transaction any of such provisions;
“SEC. 434. Every self-regulatory organization shall
and
comply with the provisions of this Code, the rules
“SEC. 431. An association cannot be registered as a and regulations thereunder, and its own rules, and
self-regulatory organization unless the enforce compliance therewith by its members, “(3) To remove from office or censure any officer or
Commissioner determines that: persons associated with its members or its director of a self-regulatory organization if it finds
participants, notwithstanding any provision of the that such officer or director has violated any
Corporation Code to the contrary. provision of this Code, any other law administered
“(a) The association is so organized and has the
by the Commissioner, the rules or regulations
capacity to be able to carry out the purposes of this
thereunder and the rules of such self-regulatory
Code and to comply with, and to enforce compliance “SEC. 435. Each self-regulatory organization shall
organization, or has abused his authority, or without
by its members and persons associated with its submit to the Commissioner for prior approval any
reasonable justification or excuse has failed to
members, with the provisions of this Code, the rules proposed rule or amendment thereto, together with
enforce compliance with any of such provisions.
and regulations thereunder, and the rules of the a concise statement of the reason and effect of the
association. proposed amendment.
“SEC. 436. (a) A self-regulatory organization is
authorized to discipline a member of or participant
“(b) The rules of the association, notwithstanding “Within sixty (60) days after submission of a
in such self-regulatory organization, or any person
anything in the Corporation Code to the contrary, proposed amendment, the Commissioner shall, by
associated with a member, including suspending or
provide the following: order, approve the proposed amendment.
expelling such member or participant, or suspending
Otherwise, the same may be made effective by the
or barring such person from being associated with a
self-regulatory organization.
“(1) Qualifications and the disqualifications on member, if engaged in acts or practices inconsistent
membership of the association; with just and equitable principles of fairness or in
“In the event of an emergency requiring action for willful violation of any provision of this Code, any
the protection of the insuring public, a self- other law administered by the Commission, the rules
“(2) A fair representation of its members to serve on
regulatory organization may put a proposed or regulations thereunder, or the rules of the self-
the board of directors of the association and the
amendment into effect summarily: Provided, regulatory organization. In any disciplinary
administration of its affairs, and that any natural
however, That a copy of the same shall be proceeding by a self-regulatory organization (other
person associated with a juridical entity that is a
immediately submitted to the Commissioner. than a summary proceeding pursuant to paragraph
member shall also be deemed to be a member for
this purpose; (b) of this section) the self-regulatory organization
“The Commissioner is further authorized, if after shall bring specific charges, provide notice to the
making appropriate request in writing to a self- person charged, afford the person charged with an
“(3) The president of the association and at least two opportunity to defend against the charges, and keep
regulatory organization that such organization effect
(2) independent directors as members of the board a record of the proceedings. A determination to
on its own behalf specified changes in its rules and
of directors of the association; impose a disciplinary sanction shall be supported by
practices and, after due notice and hearing, it
determines that such changes have not been a written statement of the offense, a summary of
“(4) Equitable allocation of reasonable dues, fees, effected, and that such changes are necessary, by the evidence presented and a statement of the
and other charges among members and other rule or regulation or by order, may alter, abrogate or sanction imposed.
persons using any facility or system which the supplement the rules of such self-regulatory
association operates or controls; organization insofar as necessary or appropriate to “(b) A self-regulatory organization may summarily:
effect such changes in respect of such matters as:
“(5) The prevention of fraudulent and manipulative “(1) Suspend a member, participant or person
acts and practices to protect the insuring public and “(a) Safeguards in respect of the financial associated with a member who has been or is
the promotion of just and equitable principles of responsibility of members and adequate provision expelled or suspended from any other self-
business; against the evasion of financial responsibility regulatory organization; or
through the use of corporate forms or special
“(6) Members and persons associated with its partnerships;
“(2) Suspend a member who the self-regulatory
members subject to discipline for violation of any organization finds to be in such financial or
provision of this Code, the rules or regulations “(b) The supervision of market practices; operating difficulty that the member or participant
thereunder, or the rules of the association; cannot be permitted to continue to do business as a
“(c) The manner, method and place of soliciting member with safety to investors, creditors, other
“(7) Fair procedure for the disciplining of members business; members, participants or the self-regulatory
and persons associated with members; and organization: Provided, That the self-regulatory
organization immediately notifies the Commission of
“(d) The fixing of reasonable rates of fees, interest, the action taken. Any person aggrieved by a
“(8) The prohibition or limitation of access to listing and other charges, but not rates of summary action pursuant to this paragraph shall be
services offered by the association or a member commission; and self-regulatory organization; and promptly afforded an opportunity for a hearing by
thereof. the association in accordance with the preceding
“(e) The supervision, auditing and disciplining of paragraph. The Commissioner, by order, may stay a
“SEC. 432. A self-regulatory organization may members. summary action on his own or upon application by
examine and verify the qualifications of an applicant any person aggrieved thereby, if the Commissioner
to become a member in accordance with procedures determines summarily or after due notice and
“In addition to the general powers of the hearing (which hearing may consist solely of the
established by the rules of the association.
Commissioner over the entities under supervision, submission of affidavits or presentation of oral
the Commissioner, after due notice and hearing, is arguments), that a stay is consistent with the public
“A self-regulatory organization shall deny authorized, in the public interest and to protect the interest and the protection of the insuring public.
membership or condition the membership of an insuring public:
entity, if it does not meet the standards of financial
responsibility, operational capability, training, “(c) A self-regulatory organization shall promptly
“(1) To suspend for a period not exceeding twelve notify the Commission of any disciplinary sanction
experience, or competence that are prescribed by
(12) months or to revoke the registration of a self- on any member thereof or participant therein, any
the rules of the association; or has engaged, and
regulatory organization, or to censure or impose denial of membership or participation in such
there is a reasonable likelihood it will again engage,
limitations on the activities, functions and organization, or the imposition of any disciplinary
in acts or practices inconsistent with just and
operations of such self-regulatory organization, if sanction on a person associated with a member or a
equitable principles of fair trade.
the Commission finds that such a self-regulatory bar of such person from becoming so associated.
organization has willfully violated or is unable to Within thirty (30) days after such notice, any
“A self-regulatory organization may deny comply with any provision of this Code or of the aggrieved person may appeal to the Commissioner
membership to an entity not engaged in a type of rules and regulations thereunder, or its own rules, or from, or the Commissioner on its own motion within
business in which the rules of the association require has failed to enforce compliance therewith by a such period, may institute review of, the decision of
members to be engaged. member of, person associated with a member, or a the self-regulatory organization, at the conclusion of
participant in such self-regulatory organization; which, after due notice and hearing (which may
“SEC. 433. Upon the filing of an application for consist solely of review of the record before the self-
registration as a self-regulatory organization under “(2) To expel from a self-regulatory organization any regulatory organization), the Commissioner shall
this title, the Commissioner shall have ninety (90) member thereof or any participant therein who is affirm, modify or set aside the sanction. In such
days within which to either grant registration or found to have willfully violated any provision of this proceeding, the Commissioner shall determine
institute a proceeding to determine whether Code or suspend for a period not exceeding twelve whether the aggrieved person has engaged or
omitted to engage in the acts and practices as found provisions of and penalties prescribed by the Rules discretion, to impose upon insurance companies,
by the self-regulatory organization, whether such of Court; their directors and/or officers and/or agents, for any
acts and practices constitute willful violations of this willful failure or refusal to comply with, or violation
Code, any other law administered by the of any provision of this Code, or any order,
“(h) Compel the officers of any registered insurance
Commission, the rules or regulations thereunder, or instruction, regulation, or ruling of the Insurance
corporation or association to call meetings of
the rules of the self-regulatory organization as Commissioner, or any commission or irregularities,
stockholders or members thereof under its
specified by such organization, whether such and/or conducting business in an unsafe or unsound
supervision;
provisions were applied in a manner consistent with manner as may be determined by the Insurance
the purposes of this Code, and whether, with due Commissioner, the following:
regard for the public interest and the protection of “(i) Issue subpoena duces tecum and summon
investors, the sanction is excessive or oppressive. witnesses to appear in any proceeding of the
“(a) Fines not less than Five thousand pesos
Commission and, in appropriate cases, order the
(P5,000.00) and not more than Two hundred
examination, search and seizure of all documents,
“CHAPTER X thousand pesos (P200,000.00); and
papers, files and records, tax returns, and books of
accounts of any entity or person under investigation
“THE INSURANCE COMMISSIONER as may be necessary for the proper disposition of “(b) Suspension, or after due hearing, removal of
the cases before it, subject to the provisions of directors and/or officers and/or agents.
existing laws;
“TITLE l
“SEC. 439. The Commissioner shall have the power
“(j) Suspend or revoke, after proper notice and to adjudicate claims and complaints involving any
“ADMINISTRATIVE AND ADJUDICATORY POWERS
hearing, the license or certificate of authority of any loss, damage or liability for which an insurer may be
entity or person under its regulation, upon any of answerable under any kind of policy or contract of
“SEC. 437. The Insurance Commissioner shall be the grounds provided by law; insurance, or for which such insurer may be liable
appointed by the President of the Republic of the under a contract of suretyship, or for which a
Philippines for a term of six (6) years without reinsurer may be sued under any contract of
“(k) Conduct an examination to determine
reappointment and who shall serve as such until the reinsurance it may have entered into; or for which a
compliance with laws and regulations if the
successor shall have been appointed and qualified. If mutual benefit association may be held liable under
circumstances so warrant as determined by
the Insurance Commissioner is removed before the the membership certificates it has issued to its
appropriate rules and regulations;
expiration of his term of office, the reason for the members, where the amount of any such loss,
removal must be published. damage or liability, excluding interest, cost and
“(l) Investigate not oftener than once a year from attorney’s fees, being claimed or sued upon any kind
the last date of examination to determine whether of insurance, bond, reinsurance contract, or
“The Insurance Commissioner shall have the duty to
an institution is conducting its business on a safe and membership certificate does not exceed in any
see that all laws relating to insurance, insurance
sound basis: Provided, That, the single claim Five million pesos (P5,000,000.00).
companies and other insurance matters, mutual
deficiencies/irregularities found by or discovered by
benefit associations, and trusts for charitable uses
an audit shall be immediately addressed;
are faithfully executed and to perform the duties “The power of the Commissioner does not cover the
imposed upon him by this Code, and shall, relationship between the insurance company and its
notwithstanding any existing laws to the contrary, “(m) Inquire into the solvency and liquidity of the agents/brokers but is limited to adjudicating claims
have sole and exclusive authority to regulate the institutions under its supervision and enforce and complaints filed by the insured against the
issuance and sale of variable contracts as defined in prompt corrective action; insurance company.
Section 238 hereof and to provide for the licensing
of persons selling such contracts, and to issue such
“(n) To retain and utilize, in addition to its annual “The Commissioner may authorize any officer or
reasonable rules and regulations governing the
budget, all fees, charges and other income derived group of officers under him to conduct investigation,
same.
from the regulation of insurance companies and inquiry and/or hearing and decide claims and he
other supervised persons or entities; may issue rules governing the conduct of
“The Commissioner may issue such rulings, adjudication and resolution of cases. The Rules of
instructions, circulars, orders and decisions as may Court shall have suppletory application.
“(o) To fix and assess fees, charges and penalties as
be deemed necessary to secure the enforcement of
the Commissioner may find reasonable in the
the provisions of this Code, to ensure the efficient
exercise of regulation; and “The party filing an action pursuant to the provisions
regulation of the insurance industry in accordance
of this section thereby submits his person to the
with global best practices and to protect the insuring
“(p) Exercise such other powers as may be provided jurisdiction of the Commissioner. The Commissioner
public. Except as otherwise specified, decisions
by law as well as those which may be implied from, shall acquire jurisdiction over the person of the
made by the Commissioner shall be appealable to
or which are necessary or incidental to the express impleaded party or parties in accordance with and
the Secretary of Finance.
powers granted the Commission to achieve the pursuant to the provisions of the Rules of Court.
objectives and purposes of this Code.
“In addition to the foregoing, the Commissioner shall
“The authority to adjudicate granted to the
have the following powers and functions:
“The Commission shall indemnify the Commissioner, Commissioner under this section shall be concurrent
Deputy Commissioner, and other officials of the with that of the civil courts, but the filing of a
“(a) Formulate policies and recommendations on complaint with the Commissioner shall preclude the
Commission, including personnel performing
issues concerning the insurance industry, advise civil courts from taking cognizance of a suit involving
supervision and examination functions, for all costs
Congress and other government agencies on all the same subject matter.
and expenses reasonably incurred by such persons in
aspects of the insurance industry and propose
connection with any civil or criminal actions, suits or
legislation and amendments thereto;
proceedings to which they may be made a party to “Any decision, order or ruling rendered by the
by the reason of the performance of their duties and Commissioner after a hearing shall have the force
“(b) Approve, reject, suspend or revoke licenses or functions, unless they are finally adjudged in such and effect of a judgment. Any party may appeal from
certificates of registration provided for by this Code; actions, suits or proceedings to be liable for a final order, ruling or decision of the Commissioner
negligence or misconduct. by filing with the Commissioner within thirty (30)
“(c) Impose sanctions for the violation of laws and days from receipt of copy of such order, ruling or
the rules, regulations and orders issued pursuant “In the event of settlement or compromise, decision a notice of appeal to the Court of Appeals in
thereto; indemnification shall be provided only in connection the manner provided for in the Rules of Court for
with such matters covered by the settlement as to appeals from the Regional Trial Court to the Court of
which the Commission is advised by external counsel Appeals.
“(d) Prepare, approve, amend or repeal rules,
that the persons to be indemnified did not commit
regulations and orders, and issue opinions and
any negligence or misconduct: “For the purpose of any proceeding under this
provide guidance on and supervise compliance with
such rules, regulations and orders; section, the Commissioner, or any officer thereof
“The costs and expenses incurred in defending the designated by him is empowered to administer
aforementioned action, suit or proceeding may be oaths and affirmation, subpoena witnesses, compel
“(e) Enlist the aid and support of, and/or deputize their attendance, take evidence, and require the
paid by the Commission in advance of the final
any and all enforcement agencies of the government production of any books, papers, documents, or
disposition of such action, suit or proceeding upon
in the implementation of its powers and functions contracts or other records which are relevant or
receipt of an undertaking by or on behalf of the
under this Code; material to the inquiry.
Commissioner, Deputy Commissioner, officer or
employee to repay the amount advanced should it
“(f) Issue cease and desist orders to prevent fraud or ultimately be determined by the Commission that “A full and complete record shall be kept of all
injury to the insuring public; the person is not entitled to be indemnified. proceedings had before the Commissioner, or the
officers thereof designated by him, and all testimony
“(g) Punish for contempt of the Commissioner, both “SEC. 438. In addition to the administrative shall be taken down and transcribed by a
direct and indirect, in accordance with the pertinent sanctions provided elsewhere in this Code, the stenographer appointed by the Commissioner.
Insurance Commissioner is hereby authorized, at his
“In order to promote party autonomy in the “For the filing of annual statement referred to in “If the offense is committed by a company or
resolution of cases, the Commissioner shall establish Section 413, the Commissioner shall collect and corporation, the officers, directors, or other persons
a system for resolving cases through the use of receive from the mutual benefit association so filing responsible for its operation, management, or
alternative dispute resolution. a fee of not less than Ten pesos (P10.00): Provided, administration, unless it can be proved that they
That a fine of not less than Ten pesos (P10.00) shall have taken no part in the commission of the offense,
be imposed and collected by the Commissioner for shall likewise be guilty of a penal offense, and upon
“TITLE 2
each week of delay, or any fraction thereof, in the conviction be punished by a fine not exceeding Two
filing of the annual statement. hundred thousand pesos (P200,000.00) or
“FEES AND OTHER SOURCES OF FUNDS imprisonment of six (6) months, or both, at the
discretion of the court.
“(c) For the examination prescribed in Section 253,
“SEC. 440. (a) For the issuance or renewal of the Commissioner shall collect and receive fees
certificates of authority, licenses and certificates of according to the amount of its total assets, in the “SEC. 443. All criminal actions for the violation of any
registration, pursuant to pertinent provisions of this case of a domestic company, or of its assets in the of the provisions of this Code shall prescribe after
Code, the Commissioner shall collect and receive Philippines, in the case of a foreign company, not three (3) years from the discovery of such
fees which shall be not less than the following: less than the amount as follows: violation: Provided, That such actions shall in any
event prescribe after ten (10) years from the
“For each certificate of authority issued to an commission of such violation.
“(1) Two million pesos or more but less than Four
insurance company doing business in the million pesos, Four hundred pesos (P400.00);
Philippines, Two hundred pesos (P200.00). “SEC. 444. Any person, partnership, association or
corporation heretofore authorized, licensed or
“(2) Four million pesos or more but less than Six
“For each special certificate of authority issued to a registered by the Commissioner shall be deemed to
million pesos, Eight hundred pesos (P800.00);
servicing insurance company, One hundred pesos have been authorized, licensed or registered under
(P100.00). the provisions of this Code and shall be governed by
“(3) Six million pesos or more but less than Eight the provisions thereof: Provided, however, That
million pesos, One thousand two hundred pesos where any such person, partnership, association or
“For each license issued to a general agent of an (P1,200.00); corporation is affected by the new requirements of
insurance company, Fifty pesos (P50.00). this Code, said person, partnership, association or
“(4) Eight million pesos or more but less than Ten corporation shall, unless otherwise herein provided,
“For each license issued to an insurance agent, million pesos, One thousand six hundred pesos be given a period of one (1) year from the effectivity
Twenty-five pesos (P25.00). (P1,600.00); of this Code within which to comply with the same.

“For each license issued to an agent of variable “(5) Ten million pesos or more, Two thousand pesos “SEC. 445. Transitory Provision. – Renewal of existing
contract policy, Twenty-five pesos (P25.00). (P2,000.00); licenses, certificates of authority or accreditation
which will expire on June 30, 2013 shall be valid until
December 31, 2015. Thereafter, renewal shall be
“For each license issued to an insurance broker, One “Provided, That if the said examination is made in filed on the last day of December every third year
hundred pesos (P100.00). places outside the Metropolitan Manila area, following the date of expiry of the license, certificate
besides these fees, the Commissioner shall require of authority or accreditation.
“For each license issued to a reinsurance broker, of the company examined the payment of the actual
One hundred pesos (P100.00). and necessary travelling and subsistence expenses of
the examiner or examiners concerned. “SEC. 446. Repealing Clause. – Except as expressly
provided by this Code, all laws, decrees, orders, rules
“For each license issued to an insurance adjuster, and regulations or parts thereof, inconsistent with
One hundred pesos (P100.00). “For the examination prescribed in Section 412, the any provision of this Code shall be deemed repealed,
Commissioner shall collect and receive a minimum amended or modified accordingly.
fee of not less than One hundred pesos (P100.00)
“For each certificate of registration issued to an from the mutual benefit association
actuary, Fifty pesos (P50.00). examined: Provided, That if such association has “SEC. 447. Separability Clause. – If any provision of
total assets of more than One hundred thousand this Code or any part hereof be declared invalid or
pesos (P100,000.00), an additional fee of not less unconstitutional, the remainder of the law or other
“For each certificate of registration issued to a
than Ten pesos (P10.00) for every Fifty thousand provisions not otherwise affected shall remain valid
resident agent, Fifty pesos (P50.00).
pesos (P50,000.00) in excess thereof shall be and subsisting.
imposed:
“For each license issued to a rating organization,
“SEC. 448. This Code shall take effect fifteen (15)
One hundred pesos (P100.00).
“(d) For the filing of an application to withdraw from days following its publication in a newspaper of
the Philippines under Title 18, the Commissioner general circuation.”
“For each certificate of registration issued to a non- shall collect and receive from the foreign company
life company underwriter, Fifty pesos (P50.00). so withdrawing a fee of not less than One thousand
pesos (P1,000.00).
“For each license issued to a mutual benefit
association, Ten pesos (P10.00). “(e) The Commissioner may fix and collect fees or
charges for documents, transcripts, or other
“For each certificate of registration issued to a trust materials which may be furnished by him not in
for charitable uses, Ten pesos (P10.00). excess of reasonable cost.

“All certificates of authority and all other licenses, as “SEC. 441. The Commissioner, in accordance with
well as all certificates of registration, issued to any the rules and regulations of the Department of
person, partnership, association or corporation Budget and Management and other relevant
under the pertinent provisions of this Code for which regulatory agencies, shall source the salary,
no expiration date has been prescribed, shall expire allowances and other expenses from the retained
on the last day of December of the third year from amount of the fees, charges, penalties and other
its issuance and shall be renewed upon application income from the regulation of insurance companies
therefor and payment of the corresponding fee, if and other covered persons and entities, and from
the licensee or holder of such license or certificate is the Insurance Fund, which is created out of the
continuing to comply with all the applicable proceeds of taxes on insurance premiums
provisions of existing laws, and of rules, instructions, mentioned in Section 255 of the National Internal
orders and decisions of the Commissioner. Revenue Code, as amended.

“(b) For the filing of the annual statement referred “MISCELLANEOUS PROVISIONS
to in Section 229, the Commissioner shall collect and
receive from the insurance company so filing a fee of “SEC. 442. Any person, company or corporation
not less than Five hundred pesos subject to the supervision and control of the
(P500.00): Provided, That a fine of not less than One Commissioner who violates any provision of this
hundred pesos (P100.00) shall be imposed and Code, for which no penalty is provided, shall be
collected by the Commissioner for each week of deemed guilty of a penal offense, and upon
delay, or any fraction thereof, in the filing of the conviction be punished by a fine not exceeding Two
annual statement. hundred thousand pesos (P200,000.00) or
imprisonment of six (6) months, or both, at the
discretion of the court.