Republic of the Philippines CONGRESS OF THE PHILIPPINES Metro Manila Fifteenth Congress Third Regular Session Begun and

held in Metro Manila, on Monday, the twenty-third day of July, two thousand twelve. REPUBLIC ACT NO !"#"$ AN ACT STRENGTHENING THE INSURANCE IN%USTR&' FURTHER A(EN%ING PRESI%ENTIAL %ECREE NO #!)' OTHER*ISE +NO*N AS ,THE INSURANCE CO%E,' AS A(EN%E% B& PRESI%ENTIAL %ECREE NOS !!-!' !)."' !-//' !-#"' !.!- AN% !0.!' AN% BATAS PA(BANSA BLG .$-' AN% FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in ongress asse!bled" Se1tion ! Presidential Decree No. 612, as amended, is hereby further amended to read as follows: !"N"R#$ PR%&'('%N( (ection 1. )his Decree shall be *nown as +)he 'nsurance ,ode-. (ection 2. .hene/er used in this ,ode, the followin0 terms shall ha/e the respecti/e meanin0s hereinafter set forth or indicated, unless the conte1t otherwise re2uires: 3a4 # contract of insurance is an a0reement whereby one underta*es for a consideration to indemnify another a0ainst loss, dama0e or liability arisin0 from an un*nown or contin0ent e/ent.

# contract of suretyship shall be deemed to be an insurance contract, within the meanin0 of this ,ode, only if made by a surety who or which, as such, is doin0 an insurance business as hereinafter pro/ided. 3b4 )he term doing an insurance business or transacting an insurance business, within the meanin0 of this ,ode, shall include: 314 Ma*in0 or proposin0 to ma*e, as insurer, any insurance contract5 324 Ma*in0 or proposin0 to ma*e, as surety, any contract of suretyship as a /ocation and not as merely incidental to any other le0itimate business or acti/ity of the surety5 364 Doin0 any *ind of business, includin0 a reinsurance business, specifically reco0ni7ed as constitutin0 the doin0 of an insurance business within the meanin0 of this ,ode5 384 Doin0 or proposin0 to do any business in substance e2ui/alent to any of the fore0oin0 in a manner desi0ned to e/ade the pro/isions of this ,ode. 'n the application of the pro/isions of this ,ode, the fact that no profit is deri/ed from the ma*in0 of insurance contracts, a0reements or transactions or that no separate or direct consideration is recei/ed therefor, shall not be deemed conclusi/e to show that the ma*in0 thereof does not constitute the doin0 or transactin0 of an insurance business. 3c4 #s used in this ,ode, the term o!!issioner means the #nsurance o!!issioner.

,9#P)"R ' )9" ,%N)R#,) %: 'N(;R#N," )')$" 1 .9#) M#< =" 'N(;R"D (ection 6. #ny contin0ent or un*nown e/ent, whether past or future, which may damnify a person ha/in0 an insurable interest, or create a liability a0ainst him, may be insured a0ainst, sub>ect to the pro/isions of this chapter. )he consent of the spouse is not necessary for the /alidity of an insurance policy ta*en out by a married person on his or her life or that of his or her children. #ll ri0hts, title and interest in the policy of insurance ta*en out by an ori0inal owner on the life or health of the person insured shall automatically /est in the latter upon the death of the ori0inal owner, unless otherwise pro/ided for in the policy. (ection 8. )he precedin0 section does not authori7e an insurance for or a0ainst the drawin0 of any lottery, or for or a0ainst any chance or tic*et in a lottery drawin0 a pri7e. (ection ?. #ll *inds of insurance are sub>ect to the pro/isions of this chapter so far as the pro/isions can apply. )')$" 2 P#R)'"( )% )9" ,%N)R#,) (ection 6. "/ery corporation, partnership, or association, duly authori7ed to transact insurance business as elsewhere pro/ided in this ,ode, may be an insurer. (ection @. #nyone e1cept a public enemy may be insured.

(ection A. ;nless the policy otherwise pro/ides, where a mort0a0or of property effects insurance in his own name pro/idin0 that the loss shall be payable to the mort0a0ee, or assi0ns a policy of insurance to a mort0a0ee, the insurance is deemed to be upon the interest of the mort0a0or, who does not cease to be a party to the ori0inal contract, and any act of his, prior to the loss, which would otherwise a/oid the insurance, will ha/e the same effect, althou0h the property is in the hands of the mort0a0ee, but any act which, under the contract of insurance, is to be performed by the mort0a0or, may be performed by the mort0a0ee therein named, with the same effect as if it had been performed by the mort0a0or. (ection B. 'f an insurer assents to the transfer of an insurance from a mort0a0or to a mort0a0ee, and, at the time of his assent, imposes further obli0ations on the assi0nee, ma*in0 a new contract with him, the acts of the mort0a0or cannot affect the ri0hts of said assi0nee. )')$" 6 'N(;R#=$" 'N)"R"() (ection 1C. "/ery person has an insurable interest in the life and health: 3a4 %f himself, of his spouse and of his children5 3b4 %f any person on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest5 3c4 %f any person under a le0al obli0ation to him for the payment of money, or respectin0 property or ser/ices, of which death or illness mi0ht delay or pre/ent the performance5 and 3d4 %f any person upon whose life any estate or interest /ested in him depends. (ection 11. )he insured shall ha/e the ri0ht to chan0e the beneficiary he desi0nated in the policy, unless he has e1pressly wai/ed this ri0ht in

said policy. Notwithstandin0 the fore0oin0, in the e/ent the insured does not chan0e the beneficiary durin0 his lifetime, the desi0nation shall be deemed irre/ocable. (ection 12. )he interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice, or accessory in willfully brin0in0 about the death of the insured. 'n such a case, the share forfeited shall pass on to the other beneficiaries, unless otherwise dis2ualified. 'n the absence of other beneficiaries, the proceeds shall be paid in accordance with the policy contract. 'f the policy contract is silent, the proceeds shall be paid to the estate of the insured. (ection 16. "/ery interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril mi0ht directly damnify the insured, is an insurable interest. (ection 18. #n insurable interest in property may consist in: 3a4 #n e1istin0 interest5 3b4 #n inchoate interest founded on an e1istin0 interest5 or 3c4 #n e1pectancy, coupled with an e1istin0 interest in that out of which the e1pectancy arises. (ection 1?. # carrier or depository of any *ind has an insurable interest in a thin0 held by him as such, to the e1tent of his liability but not to e1ceed the /alue thereof. (ection 16. # mere contin0ent or e1pectant interest in any thin0, not founded on an actual ri0ht to the thin0, nor upon any /alid contract for it, is not insurable.

(ection 1@. )he measure of an insurable interest in property is the e1tent to which the insured mi0ht be damnified by loss or in>ury thereof. (ection 1A. No contract or policy of insurance on property shall be enforceable e1cept for the benefit of some person ha/in0 an insurable interest in the property insured. (ection 1B. #n interest in property insured must e1ist when the insurance ta*es effect, and when the loss occurs, but need not e1ist in the meantime5 and interest in the life or health of a person insured must e1ist when the insurance ta*es effect, but need not e1ist thereafter or when the loss occurs. (ection 2C. "1cept in the cases specified in the ne1t four sections, and in the cases of life, accident, and health insurance, a chan0e of interest in any part of a thin0 insured unaccompanied by a correspondin0 chan0e of interest in the insurance, suspends the insurance to an e2ui/alent e1tent, until the interest in the thin0 and the interest in the insurance are /ested in the same person. (ection 21. # chan0e of interest in a thin0 insured, after the occurrence of an in>ury which results in a loss, does not affect the ri0ht of the insured to indemnity for the loss. (ection 22. # chan0e of interest in one or more of se/eral distinct thin0s, separately insured by one policy, does not a/oid the insurance as to the others. (ection 26. # chan0e of interest, by will or succession, on the death of the insured, does not a/oid an insurance5 and his interest in the insurance passes to the person ta*in0 his interest in the thin0 insured. (ection 28. # transfer of interest by one of se/eral partners, >oint owners, or owners in common, who are >ointly insured, to the others, does not a/oid an insurance e/en thou0h it has been a0reed that the insurance shall cease upon an alienation of the thin0 insured.

(ection 2?. "/ery stipulation in a policy of insurance for the payment of loss whether the person insured has or has not any interest in the property insured, or that the policy shall be recei/ed as proof of such interest, and e/ery policy e1ecuted by way of 0amin0 or wa0erin0, is /oid. )')$" 8 ,%N,"#$M"N) (ection 26. # ne0lect to communicate that which a party *nows and ou0ht to communicate, is called a concealment. (ection 2@. # concealment whether intentional or unintentional entitles the in>ured party to rescind a contract of insurance. (ection 2A. "ach party to a contract of insurance must communicate to the other, in 0ood faith, all facts within his *nowled0e which are material to the contract and as to which he ma*es no warranty, and which the other has not the means of ascertainin0. (ection 2B. #n intentional and fraudulent omission, on the part of one insured, to communicate information of matters pro/in0 or tendin0 to pro/e the falsity of a warranty, entitles the insurer to rescind. (ection 6C. Neither party to a contract of insurance is bound to communicate information of the matters followin0, e1cept in answer to the in2uiries of the other: 3a4 )hose which the other *nows5 3b4 )hose which, in the e1ercise of ordinary care, the other ou0ht to *now, and of which the former has no reason to suppose him i0norant5 3c4 )hose of which the other wai/es communication5

3d4 )hose which pro/e or tend to pro/e the e1istence of a ris* e1cluded by a warranty, and which are not otherwise material5 and 3e4 )hose which relate to a ris* e1cepted from the policy and which are not otherwise material. (ection 61. Materiality is to be determined not by the e/ent, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in formin0 his estimate of the disad/anta0es of the proposed contract, or in ma*in0 his in2uiries. (ection 62. "ach party to a contract of insurance is bound to *now all the 0eneral causes which are open to his in2uiry, e2ually with that of the other, and which may affect the political or material perils contemplated5 and all 0eneral usa0es of trade. (ection 66. )he ri0ht to information of material facts may be wai/ed, either by the terms of insurance or by ne0lect to ma*e in2uiry as to such facts, where they are distinctly implied in other facts of which information is communicated. (ection 68. 'nformation of the nature or amount of the interest of one insured need not be communicated unless in answer to an in2uiry, e1cept as prescribed by (ection ?1. (ection 6?. Neither party to a contract of insurance is bound to communicate, e/en upon in2uiry, information of his own >ud0ment upon the matters in 2uestion. )')$" ? R"PR"("N)#)'%N (ection 66. # representation may be oral or written.

(ection 6@. # representation may be made at the time of, or before, issuance of the policy. (ection 6A. )he lan0ua0e of a representation is to be interpreted by the same rules as the lan0ua0e of contracts in 0eneral. (ection 6B. # representation as to the future is to be deemed a promise, unless it appears that it was merely a statement of belief or e1pectation. (ection 8C. # representation cannot 2ualify an e1press pro/ision in a contract of insurance, but it may 2ualify an implied warranty. (ection 81. # representation may be altered or withdrawn before the insurance is effected, but not afterwards. (ection 82. # representation must be presumed to refer to the date on which the contract 0oes into effect. (ection 86. .hen a person insured has no personal *nowled0e of a fact, he may ne/ertheless repeat information which he has upon the sub>ect, and which he belie/es to be true, with the e1planation that he does so on the information of others5 or he may submit the information, in its whole e1tent, to the insurer5 and in neither case is he responsible for its truth, unless it proceeds from an a0ent of the insured, whose duty it is to 0i/e the information. (ection 88. # representation is to be deemed false when the facts fail to correspond with its assertions or stipulations. (ection 8?. 'f a representation is false in a material point, whether affirmati/e or promissory, the in>ured party is entitled to rescind the contract from the time when the representation becomes false. (ection 86. )he materiality of a representation is determined by the same rules as the materiality of a concealment.

(ection 8@. )he pro/isions of this chapter apply as well to a modification of a contract of insurance as to its ori0inal formation. (ection 8A. .hene/er a ri0ht to rescind a contract of insurance is 0i/en to the insurer by any pro/ision of this chapter, such ri0ht must be e1ercised pre/ious to the commencement of an action on the contract. #fter a policy of life insurance made payable on the death of the insured shall ha/e been in force durin0 the lifetime of the insured for a period of two 324 years from the date of its issue or of its last reinstatement, the insurer cannot pro/e that the policy is /oid ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his a0ent. )')$" 6 )9" P%$',< (ection 8B. )he written instrument in which a contract of insurance is set forth, is called a policy of insurance. (ection ?C. )he policy shall be in printed form which may contain blan* spaces5 and any word, phrase, clause, mar*, si0n, symbol, si0nature, number, or word necessary to complete the contract of insurance shall be written on the blan* spaces pro/ided therein. #ny rider, clause, warranty or endorsement purportin0 to be part of the contract of insurance and which is pasted or attached to said policy is not bindin0 on the insured, unless the descripti/e title or name of the rider, clause, warranty or endorsement is also mentioned and written on the blan* spaces pro/ided in the policy. ;nless applied for by the insured or owner, any rider, clause, warranty or endorsement issued after the ori0inal policy shall be countersi0ned by the insured or owner, which countersi0nature shall be ta*en as his a0reement to the contents of such rider, clause, warranty or endorsement.

Notwithstandin0 the fore0oin0, the policy may be in electronic form sub>ect to the pertinent pro/isions of Republic #ct No. A@B2, otherwise *nown as the +"lectronic ,ommerce #ct- and to such rules and re0ulations as may be prescribed by the ,ommissioner. (ection ?1. # policy of insurance must specify: 3a4 )he parties between whom the contract is made5 3b4 )he amount to be insured e1cept in the cases of open or runnin0 policies5 3c4 )he premium, or if the insurance is of a character where the e1act premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined5 3d4 )he property or life insured5 3e4 )he interest of the insured in property insured, if he is not the absolute owner thereof5 3f4 )he ris*s insured a0ainst5 and 304 )he period durin0 which the insurance is to continue. (ection ?2. ,o/er notes may be issued to bind insurance temporarily pendin0 the issuance of the policy. .ithin si1ty 36C4 days after issue of a co/er note, a policy shall be issued in lieu thereof, includin0 within its terms the identical insurance bound under the co/er note and the premium therefor. ,o/er notes may be e1tended or renewed beyond such si1ty 36C4 days with the written appro/al of the ,ommissioner if he determines that such e1tension is not contrary to and is not for the purpose of /iolatin0 any pro/isions of this ,ode. )he ,ommissioner may promul0ate rules and

re0ulations 0o/ernin0 such e1tensions for the purpose of pre/entin0 such /iolations and may by such rules and re0ulations dispense with the re2uirement of written appro/al by him in the case of e1tension in compliance with such rules and re0ulations. (ection ?6. )he insurance proceeds shall be applied e1clusi/ely to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy. (ection ?8. .hen an insurance contract is e1ecuted with an a0ent or trustee as the insured, the fact that his principal or beneficiary is the real party in interest may be indicated by describin0 the insured as a0ent or trustee, or by other 0eneral words in the policy. (ection ??. )o render an insurance effected by one partner or partD owner, applicable to the interest of his coDpartners or other partDowners, it is necessary that the terms of the policy should be such as are applicable to the >oint or common interest. (ection ?6. .hen the description of the insured in a policy is so 0eneral that it may comprehend any person or any class of persons, only he who can show that it was intended to include him, can claim the benefit of the policy. (ection ?@. # policy may be so framed that it will inure to the benefit of whomsoe/er, durin0 the continuance of the ris*, may become the owner of the interest insured. (ection ?A. )he mere transfer of a thin0 insured does not transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thin0 insured. (ection ?B. # policy is either open, /alued or runnin0. (ection 6C. #n open policy is one in which the /alue of the thin0 insured is not a0reed upon, and the amount of the insurance merely

represents the insurer-s ma1imum liability. )he /alue of such thin0 insured shall be ascertained at the time of the loss. (ection 61. # /alued policy is one which e1presses on its face an a0reement that the thin0 insured shall be /alued at a specific sum. (ection 62. # runnin0 policy is one which contemplates successi/e insurances, and which pro/ides that the ob>ect of the policy may be from time to time defined, especially as to the sub>ects of insurance, by additional statements or indorsements.$%wphi$ (ection 66. # condition, stipulation, or a0reement in any policy of insurance, limitin0 the time for commencin0 an action thereunder to a period of less than one 314 year from the time when the cause of action accrues, is /oid. (ection 68. No policy of insurance other than life shall be cancelled by the insurer e1cept upon prior notice thereof to the insured, and no notice of cancellation shall be effecti/e unless it is based on the occurrence, after the effecti/e date of the policy, of one or more of the followin0: 3a4 Nonpayment of premium5 3b4 ,on/iction of a crime arisin0 out of acts increasin0 the ha7ard insured a0ainst5 3c4 Disco/ery of fraud or material misrepresentation5 3d4 Disco/ery of willful or rec*less acts or omissions increasin0 the ha7ard insured a0ainst5 3e4 Physical chan0es in the property insured which result in the property becomin0 uninsurable5 3f4 Disco/ery of other insurance co/era0e that ma*es the total insurance in e1cess of the /alue of the property insured5 or

304 # determination by the ,ommissioner that the continuation of the policy would /iolate or would place the insurer in /iolation of this ,ode. (ection 6?. #ll notices of cancellation mentioned in the precedin0 section shall be in writin0, mailed or deli/ered to the named insured at the address shown in the policy, or to his bro*er pro/ided the bro*er is authori7ed in writin0 by the policy owner to recei/e the notice of cancellation on his behalf, and shall state: 3a4 .hich of the 0rounds set forth in (ection 68 is relied upon5 and 3b4 )hat, upon written re2uest of the named insured, the insurer will furnish the facts on which the cancellation is based. (ection 66. 'n case of insurance other than life, unless the insurer at least fortyDfi/e 38?4 days in ad/ance of the end of the policy period mails or deli/ers to the named insured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of co/era0es, the named insured shall be entitled to renew the policy upon payment of the premium due on the effecti/e date of the renewal. #ny policy written for a term of less than one 314 year shall be considered as if written for a term of one 314 year. #ny policy written for a term lon0er than one 314 year or any policy with no fi1ed e1piration date shall be considered as if written for successi/e policy periods or terms of one 314 year. )')$" @ .#RR#N)'"( (ection 6@. # warranty is either e1pressed or implied. (ection 6A. # warranty may relate to the past, the present, the future, or to any or all of these.

(ection 6B. No particular form of words is necessary to create a warranty. (ection @C. .ithout pre>udice to (ection ?1, e/ery e1press warranty, made at or before the e1ecution of a policy, must be contained in the policy itself, or in another instrument si0ned by the insured and referred to in the policy as ma*in0 a part of it. (ection @1. # statement in a policy, of a matter relatin0 to the person or thin0 insured, or to the ris*, as fact, is an e1press warranty thereof. (ection @2. # statement in a policy, which imparts that it is intended to do or not to do a thin0 which materially affects the ris*, is a warranty that such act or omission shall ta*e place. (ection @6. .hen, before the time arri/es for the performance of a warranty relatin0 to the future, a loss insured a0ainst happens, or performance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not a/oid the policy. (ection @8. )he /iolation of a material warranty, or other material pro/ision of a policy, on the part of either party thereto, entitles the other to rescind. (ection @?. # policy may declare that a /iolation of specified pro/isions thereof shall a/oid it, otherwise the breach of an immaterial pro/ision does not a/oid the policy. (ection @6. # breach of warranty without fraud merely e1onerates an insurer from the time that it occurs, or where it is bro*en in its inception, pre/ents the policy from attachin0 to the ris*. )')$" A PR"M';M

(ection @@. #n insurer is entitled to payment of the premium as soon as the thin0 insured is e1posed to the peril insured a0ainst. Notwithstandin0 any a0reement to the contrary, no policy or contract of insurance issued by an insurance company is /alid and bindin0 unless and until the premium thereof has been paid, e1cept in the case of a life or an industrial life policy whene/er the 0race period pro/ision applies, or whene/er under the bro*er and a0ency a0reements with duly licensed intermediaries, a ninety 3BC4Dday credit e1tension is 0i/en. No credit e1tension to a duly licensed intermediary should e1ceed ninety 3BC4 days from date of issuance of the policy. (ection @A. "mployees of the Republic of the Philippines, includin0 its political subdi/isions and instrumentalities, and 0o/ernmentDowned or Dcontrolled corporations, may pay their insurance premiums and loan obli0ations throu0h salary deduction: Provided, )hat the treasurer, cashier, paymaster or official of the entity employin0 the 0o/ernment employee is authori7ed, notwithstandin0 the pro/isions of any e1istin0 law, rules and re0ulations to the contrary, to ma*e deductions from the salary, wa0e or income of the latter pursuant to the a0reement between the insurer and the 0o/ernment employee and to remit such deductions to the insurer concerned, and collect such reasonable fee for its ser/ices. (ection @B. #n ac*nowled0ment in a policy or contract of insurance or the receipt of premium is conclusi/e e/idence of its payment, so far as to ma*e the policy bindin0, notwithstandin0 any stipulation therein that it shall not be bindin0 until the premium is actually paid. (ection AC. # person insured is entitled to a return of premium, as follows: 3a4 )o the whole premium if no part of his interest in the thin0 insured be e1posed to any of the perils insured a0ainst5 3b4 .here the insurance is made for a definite period of time and the insured surrenders his policy, to such portion of the premium as corresponds with the une1pired time, at a pro rata

rate, unless a short period rate has been a0reed upon and appears on the face of the policy, after deductin0 from the whole premium any claim for loss or dama0e under the policy which has pre/iously accrued: Provided, )hat no holder of a life insurance policy may a/ail himself of the pri/ile0es of this para0raph without sufficient cause as otherwise pro/ided by law. (ection A1. 'f a peril insured a0ainst has e1isted, and the insurer has been liable for any period, howe/er short, the insured is not entitled to return of premiums, so far as that particular ris* is concerned. (ection A2. # person insured is entitled to a return of the premium when the contract is /oidable, and subse2uently annulled under the pro/isions of the ,i/il ,ode5 or on account of the fraud or misrepresentation of the insurer, or of his a0ent, or on account of facts, or the e1istence of which the insured was i0norant of without his fault5 or when by any default of the insured other than actual fraud, the insurer ne/er incurred any liability under the policy. # person insured is not entitled to a return of premium if the policy is annulled, rescinded or if a claim is denied by reason of fraud. (ection A6. 'n case of an o/er insurance by se/eral insurers other than life, the insured is entitled to a ratable return of the premium, proportioned to the amount by which the a00re0ate sum insured in all the policies e1ceeds the insurable /alue of the thin0 at ris*. (ection A8. #n insurer may contract and accept payments, in addition to re0ular premium, for the purpose of payin0 future premiums on the policy or to increase the benefits thereof. )')$" B $%((

(ection A?. #n a0reement not to transfer the claim of the insured a0ainst the insurer after the loss has happened, is /oid if made before the loss e1cept as otherwise pro/ided in the case of life insurance. (ection A6. ;nless otherwise pro/ided by the policy, an insurer is liable for a loss of which a peril insured a0ainst was the pro1imate cause, althou0h a peril not contemplated by the contract may ha/e been a remote cause of the loss5 but he is not liable for a loss of which the peril insured a0ainst was only a remote cause. (ection A@. #n insurer is liable where the thin0 insured is rescued from a peril insured a0ainst that would otherwise ha/e caused a loss, if, in the course of such rescue, the thin0 is e1posed to a peril not insured a0ainst, which permanently depri/es the insured of its possession, in whole or in part5 or where a loss is caused by efforts to rescue the thin0 insured from a peril insured a0ainst. (ection AA. .here a peril is especially e1cepted in a contract of insurance, a loss, which would not ha/e occurred but for such peril, is thereby e1cepted althou0h the immediate cause of the loss was a peril which was not e1cepted. (ection AB. #n insurer is not liable for a loss caused by the willful act or throu0h the conni/ance of the insured5 but he is not e1onerated by the ne0li0ence of the insured, or of the insurance a0ents or others. )')$" 1C N%)'," %: $%(( (ection BC. 'n case of loss upon an insurance a0ainst fire, an insurer is e1onerated, if written notice thereof be not 0i/en to him by an insured, or some person entitled to the benefit of the insurance, without unnecessary delay. :or other nonDlife insurance, the ,ommissioner may specify the period for the submission of the notice of loss.

(ection B1. .hen a preliminary proof of loss is re2uired by a policy, the insured is not bound to 0i/e such proof as would be necessary in a court of >ustice5 but it is sufficient for him to 0i/e the best e/idence which he has in his power at the time. (ection B2. #ll defects in a notice of loss, or in preliminary proof thereof, which the insured mi0ht remedy, and which the insurer omits to specify to him, without unnecessary delay, as 0rounds of ob>ection, are wai/ed. (ection B6. Delay in the presentation to an insurer of notice or proof of loss is wai/ed if caused by any act of him, or if he omits to ta*e ob>ection promptly and specifically upon that 0round. (ection B8. 'f the policy re2uires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured, it is sufficient for the insured to use reasonable dili0ence to procure it, and in case of the refusal of such person to 0i/e it, then to furnish reasonable e/idence to the insurer that such refusal was not induced by any >ust 0rounds of disbelief in the facts necessary to be certified or testified. )')$" 11 D%;=$" 'N(;R#N," (ection B?. # double insurance e1ists where the same person is insured by se/eral insurers separately in respect to the same sub>ect and interest. (ection B6. .here the insured in a policy other than life is o/er insured by double insurance: 3a4 )he insured, unless the policy otherwise pro/ides, may claim payment from the insurers in such order as he may select, up to the amount for which the insurers are se/erally liable under their respecti/e contracts5

3b4 .here the policy under which the insured claims is a /alued policy, any sum recei/ed by him under any other policy shall be deducted from the /alue of the policy without re0ard to the actual /alue of the sub>ect matter insured5 3c4 .here the policy under which the insured claims is an un/alued policy, any sum recei/ed by him under any policy shall be deducted a0ainst the full insurable /alue, for any sum recei/ed by him under any policy5 3d4 .here the insured recei/es any sum in e1cess of the /aluation in the case of /alued policies, or of the insurable /alue in the case of un/alued policies, he must hold such sum in trust for the insurers, accordin0 to their ri0ht of contribution amon0 themsel/es5 3e4 "ach insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract. )')$" 12 R"'N(;R#N," (ection B@. # contract of reinsurance is one by which an insurer procures a third person to insure him a0ainst loss or liability by reason of such ori0inal insurance. (ection BA. .here an insurer obtains reinsurance, e1cept under automatic reinsurance treaties, he must communicate all the representations of the ori0inal insured, and also all the *nowled0e and information he possesses, whether pre/iously or subse2uently ac2uired, which are material to the ris*. (ection BB. # reinsurance is presumed to be a contract of indemnity a0ainst liability, and not merely a0ainst dama0e.

(ection 1CC. )he ori0inal insured has no interest in a contract of reinsurance. ,9#P)"R '' ,$#(("( %: 'N(;R#N," )')$" ' M#R'N" 'N(;R#N," (;=D)')$" 1D# D":'N')'%N (ection 1C1. Marine 'nsurance includes: 3a4 'nsurance a0ainst loss of or dama0e to: 314 &essels, craft, aircraft, /ehicles, 0oods, frei0hts, car0oes, merchandise, effects, disbursements, profits, moneys, securities, choses in action, instruments of debts, /aluable papers, bottomry, and respondentia interests and all other *inds of property and interests therein, in respect to, appertainin0 to or in connection with any and all ris*s or perils of na/i0ation, transit or transportation, or while bein0 assembled, pac*ed, crated, baled, compressed or similarly prepared for shipment or while awaitin0 shipment, or durin0 any delays, stora0e, transhipment, or reshipment incident thereto, includin0 war ris*s, marine builder-s ris*s, and all personal property floater ris*s5 324 Person or property in connection with or appertainin0 to a marine, inland marine, transit or transportation insurance, includin0 liability for loss of or dama0e arisin0 out of or in connection with the construction, repair, operation, maintenance or use of the sub>ect matter of such insurance 3but not includin0 life insurance or surety

bonds nor insurance a0ainst loss by reason of bodily in>ury to any person arisin0 out of ownership, maintenance, or use of automobiles45 364 Precious stones, >ewels, >ewelry, precious metals, whether in course of transportation or otherwise5 and 384 =rid0es, tunnels and other instrumentalities of transportation and communication 3e1cludin0 buildin0s, their furniture and furnishin0s, fi1ed contents and supplies held in stora0e45 piers, whar/es, doc*s and slips, and other aids to na/i0ation and transportation, includin0 dry doc*s and marine railways, dams and appurtenant facilities for the control of waterways. 3b4 Marine protection and inde!nity insurance, meanin0 insurance a0ainst, or a0ainst le0al liability of the insured for loss, dama0e, or e1pense incident to ownership, operation, charterin0, maintenance, use, repair, or construction of any /essel, craft or instrumentality in use of ocean or inland waterways, includin0 liability of the insured for personal in>ury, illness or death or for loss of or dama0e to the property of another person. (;=D)')$" 1D= 'N(;R#=$" 'N)"R"() (ection 1C2. )he owner of a ship has in all cases an insurable interest in it, e/en when it has been chartered by one who co/enants to pay him its /alue in case of loss: Provided, )hat in this case the insurer shall be liable for only that part of the loss which the insured cannot reco/er from the charterer. (ection 1C6. )he insurable interest of the owner of the ship hypothecated by bottomry is only the e1cess of its /alue o/er the amount secured by bottomry.

(ection 1C8. :rei0hta0e, in the sense of a policy of marine insurance, si0nifies all the benefits deri/ed by the owner, either from the charterin0 of the ship or its employment for the carria0e of his own 0oods or those of others. (ection 1C?. )he owner of a ship has an insurable interest in e1pected frei0hta0e which accordin0 to the ordinary and probable course of thin0s he would ha/e earned but for the inter/ention of a peril insured a0ainst or other peril incident to the /oya0e. (ection 1C6. )he interest mentioned in the last section e1ists, in case of a charter party, when the ship has bro*en 0round on the chartered /oya0e. 'f a price is to be paid for the carria0e of 0oods it e1ists when they are actually on board, or there is some contract for puttin0 them on board, and both ship and 0oods are ready for the specified /oya0e. (ection 1C@. %ne who has an interest in the thin0 from which profits are e1pected to proceed has an insurable interest in the profits. (ection 1CA. )he charterer of a ship has an insurable interest in it, to the e1tent that he is liable to be damnified by its loss. (;=D)')$" 1D, ,%N,"#$M"N) (ection 1CB. 'n marine insurance, each party is bound to communicate, in addition to what is re2uired by (ection 2A, all the information which he possesses, material to the ris*, e1cept such as is mentioned in (ection 6C, and to state the e1act and whole truth in relation to all matters that he represents, or upon in2uiry discloses or assumes to disclose. (ection 11C. 'n marine insurance, information of the belief or e1pectation of a third person, in reference to a material fact, is material. (ection 111. # person insured by a contract of marine insurance is presumed to ha/e *nowled0e, at the time of insurin0, of a prior loss, if

the information mi0ht possibly ha/e reached him in the usual mode of transmission and at the usual rate of communication. (ection 112. # concealment in a marine insurance, in respect to any of the followin0 matters, does not /itiate the entire contract, but merely e1onerates the insurer from a loss resultin0 from the ris* concealed: 3a4 )he national character of the insured5 3b4 )he liability of the thin0 insured to capture and detention5 3c4 )he liability to sei7ure from breach of forei0n laws of trade5 3d4 )he want of necessary documents5 and 3e4 )he use of false and simulated papers. (;=D)')$" 1DD R"PR"("N)#)'%N (ection 116. 'f a representation by a person insured by a contract of marine insurance, is intentionally false in any material respect, or in respect of any fact on which the character and nature of the ris* depends, the insurer may rescind the entire contract. (ection 118. )he e/entual falsity of a representation as to e1pectation does not, in the absence of fraud, a/oid a contract of marine insurance. (;=D)')$" 1D" 'MP$'"D .#RR#N)'"( (ection 11?. 'n e/ery marine insurance upon a ship or frei0ht, or frei0hta0e, or upon any thin0 which is the sub>ect of marine insurance, a warranty is implied that the ship is seaworthy.

(ection 116. # ship is seaworthy when reasonably fit to perform the ser/ice and to encounter the ordinary perils of the /oya0e contemplated by the parties to the policy. (ection 11@. #n implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the ris*, e1cept in the followin0 cases: 3a4 .hen the insurance is made for a specified len0th of time, the implied warranty is not complied with unless the ship be seaworthy at the commencement of e/ery /oya0e it underta*es durin0 that time5 3b4 .hen the insurance is upon the car0o which, by the terms of the policy, description of the /oya0e, or established custom of the trade, is to be transhipped at an intermediate port, the implied warranty is not complied with unless each /essel upon which the car0o is shipped, or transhipped, be seaworthy at the commencement of each particular /oya0e. (ection 11A. # warranty of seaworthiness e1tends not only to the condition of the structure of the ship itself, but re2uires that it be properly laden, and pro/ided with a competent master, a sufficient number of competent officers and seamen, and the re2uisite appurtenances and e2uipment, such as ballasts, cables and anchors, corda0e and sails, food, water, fuel and li0hts, and other necessary or proper stores and implements for the /oya0e. (ection 11B. .here different portions of the /oya0e contemplated by a policy differ in respect to the thin0s re2uisite to ma*e the ship seaworthy therefor, a warranty of seaworthiness is complied with if, at the commencement of each portion, the ship is seaworthy with reference to that portion. (ection 12C. .hen the ship becomes unseaworthy durin0 the /oya0e to which an insurance relates, an unreasonable delay in repairin0 the defect

e1onerates the insurer on ship or shipowner-s interest from liability from any loss arisin0 therefrom. (ection 121. # ship which is seaworthy for the purpose of an insurance upon the ship may, ne/ertheless, by reason of bein0 unfitted to recei/e the car0o, be unseaworthy for the purpose of insurance upon the car0o. (ection 122. .here the nationality or neutrality of a ship or car0o is e1pressly warranted, it is implied that the ship will carry the re2uisite documents to show such nationality or neutrality and that it will not carry any documents which cast reasonable suspicion thereon. (;=D)')$" 1D: )9" &%<#!" #ND D"&'#)'%N (ection 126. .hen the /oya0e contemplated by a marine insurance policy is described by the places of be0innin0 and endin0, the /oya0e insured is one which conforms to the course of sailin0 fi1ed by mercantile usa0e between those places. (ection 128. 'f the course of sailin0 is not fi1ed by mercantile usa0e, the /oya0e insured by a marine insurance policy is that way between the places specified, which to a master of ordinary s*ill and discretion, would mean the most natural, direct and ad/anta0eous. (ection 12?. De/iation is a departure from the course of the /oya0e insured, mentioned in the last two 324 sections, or an unreasonable delay in pursuin0 the /oya0e or the commencement of an entirely different /oya0e. (ection 126. # de/iation is proper: 3a4 .hen caused by circumstances o/er which neither the master nor the owner of the ship has any control5

3b4 .hen necessary to comply with a warranty, or to a/oid a peril, whether or not the peril is insured a0ainst5 3c4 .hen made in 0ood faith, and upon reasonable 0rounds of belief in its necessity to a/oid a peril5 or 3d4 .hen made in 0ood faith, for the purpose of sa/in0 human life or relie/in0 another /essel in distress. (ection 12@. "/ery de/iation not specified in the last section is improper. (ection 12A. #n insurer is not liable for any loss happenin0 to the thin0 insured subse2uent to an improper de/iation. (;=D)')$" 1D! $%(( (ection 12B. # loss may be either total or partial. (ection 16C. "/ery loss which is not total is partial. (ection 161. # total loss may be either actual or constructi/e. (ection 162. #n actual total loss is caused by: 3a4 # total destruction of the thin0 insured5 3b4 )he irretrie/able loss of the thin0 by sin*in0, or by bein0 bro*en up5 3c4 #ny dama0e to the thin0 which renders it /alueless to the owner for the purpose for which he held it5 or 3d4 #ny other e/ent which effecti/ely depri/es the owner of the possession, at the port of destination, of the thin0 insured.

(ection 166. # constructi/e total loss is one which 0i/es to a person insured a ri0ht to abandon, under (ection 181. (ection 168. #n actual loss may be presumed from the continued absence of a ship without bein0 heard of. )he len0th of time which is sufficient to raise this presumption depends on the circumstances of the case. (ection 16?. .hen a ship is pre/ented, at an intermediate port, from completin0 the /oya0e, by the perils insured a0ainst, the liability of a marine insurer on the car0o continues after they are thus reshipped. Nothin0 in this section shall pre/ent an insurer from re2uirin0 an additional premium if the ha7ard be increased by this e1tension of liability. (ection 166. 'n addition to the liability mentioned in the last section, a marine insurer is bound for dama0es, e1penses of dischar0in0, stora0e, reshipment, e1tra frei0hta0e, and all other e1penses incurred in sa/in0 car0o reshipped pursuant to the last section, up to the amount insured. Nothin0 in this or in the precedin0 section shall render a marine insurer liable for any amount in e1cess of the insured /alue or, if there be none, of the insurable /alue. (ection 16@. ;pon an actual total loss, a person insured is entitled to payment without notice of abandonment. (ection 16A. .here it has been a0reed that an insurance upon a particular thin0, or class of thin0s, shall be free from particular a/era0e, a marine insurer is not liable for any particular a/era0e loss not depri/in0 the insured of the possession, at the port of destination, of the whole of such thin0, or class of thin0s, e/en thou0h it becomes entirely worthless5 but such insurer is liable for his proportion of all 0eneral a/era0e loss assessed upon the thin0 insured.

(ection 16B. #n insurance confined in terms to an actual loss does not co/er a constructi/e total loss, but co/ers any loss, which necessarily results in depri/in0 the insured of the possession, at the port of destination, of the entire thin0 insured. (;=D)')$" 1D9 #=#ND%NM"N) (ection 18C. #bandonment, in marine insurance, is the act of the insured by which, after a constructi/e total loss, he declares the relin2uishment to the insurer of his interest in the thin0 insured. (ection 181. # person insured by a contract of marine insurance may abandon the thin0 insured, or any particular portion thereof separately /alued by the policy, or otherwise separately insured, and reco/er for a total loss thereof, when the cause of the loss is a peril insured a0ainst: 3a4 'f more than threeDfourths 3E4 thereof in /alue is actually lost, or would ha/e to be e1pended to reco/er it from the peril5 3b4 'f it is in>ured to such an e1tent as to reduce its /alue more than threeDfourths 3E45 3c4 'f the thin0 insured is a ship, and the contemplated /oya0e cannot be lawfully performed without incurrin0 either an e1pense to the insured of more than threeDfourths 3E4 the /alue of the thin0 abandoned or a ris* which a prudent man would not ta*e under the circumstances5 or 3d4 'f the thin0 insured, bein0 car0o or frei0hta0e, and the /oya0e cannot be performed, nor another ship procured by the master, within a reasonable time and with reasonable dili0ence, to forward the car0o, without incurrin0 the li*e e1pense or ris* mentioned in the precedin0 subpara0raph. =ut frei0hta0e cannot in any case be abandoned unless the ship is also abandoned.

(ection 182. #n abandonment must be neither partial nor conditional. (ection 186. #n abandonment must be made within a reasonable time after receipt of reliable information of the loss, but where the information is of a doubtful character, the insured is entitled to a reasonable time to ma*e in2uiry. (ection 188. .here the information upon which an abandonment has been made pro/es incorrect, or the thin0 insured was so far restored when the abandonment was made that there was then in fact no total loss, the abandonment becomes ineffectual. (ection 18?. #bandonment is made by 0i/in0 notice thereof to the insurer, which may be done orally, or in writin0: Provided, )hat if the notice be done orally, a written notice of such abandonment shall be submitted within se/en 3@4 days from such oral notice. (ection 186. # notice of abandonment must be e1plicit, and must specify the particular cause of the abandonment, but need state only enou0h to show that there is probable cause therefor, and need not be accompanied with proof of interest or of loss. (ection 18@. #n abandonment can be sustained only upon the cause specified in the notice thereof. (ection 18A. #n abandonment is e2ui/alent to a transfer by the insured of his interest to the insurer, with all the chances of reco/ery and indemnity. (ection 18B. 'f a marine insurer pays for a loss as if it were an actual total loss, he is entitled to whate/er may remain of the thin0 insured, or its proceeds or sal/a0e, as if there had been a formal abandonment. (ection 1?C. ;pon an abandonment, acts done in 0ood faith by those who were a0ents of the insured in respect to the thin0 insured, subse2uent to the loss, are at the ris* of the insurer, and for his benefit.

(ection 1?1. .here notice of abandonment is properly 0i/en, the ri0hts of the insured are not pre>udiced by the fact that the insurer refuses to accept the abandonment. (ection 1?2. )he acceptance of an abandonment may be either e1press or implied from the conduct of the insurer. )he mere silence of the insurer for an unreasonable len0th of time after notice shall be construed as an acceptance. (ection 1?6. )he acceptance of an abandonment, whether e1press or implied, is conclusi/e upon the parties, and admits the loss and the sufficiency of the abandonment. (ection 1?8. #n abandonment once made and accepted is irre/ocable, unless the 0round upon which it was made pro/es to be unfounded. (ection 1??. %n an accepted abandonment of a ship, frei0hta0e earned pre/ious to the loss belon0s to the insurer of said frei0hta0e5 but frei0hta0e subse2uently earned belon0s to the insurer of the ship. (ection 1?6. 'f an insurer refuses to accept a /alid abandonment, he is liable as upon an actual total loss, deductin0 from the amount any proceeds of the thin0 insured which may ha/e come to the hands of the insured. (ection 1?@. 'f a person insured omits to abandon, he may ne/ertheless reco/er his actual loss. (;=D)')$" 1D' M"#(;R" %: 'ND"MN')< (ection 1?A. # /aluation in a policy of marine insurance is conclusi/e between the parties thereto in the ad>ustment of either a partial or total loss, if the insured has some interest at ris*, and there is no fraud on his part5 e1cept that when a thin0 has been hypothecated by bottomry or respondentia, before its insurance, and without the *nowled0e of the

person actually procurin0 the insurance, he may show the real /alue. =ut a /aluation fraudulent in fact, entitles the insurer to rescind the contract. (ection 1?B. # marine insurer is liable upon a partial loss, only for such proportion of the amount insured by him as the loss bears to the /alue of the whole interest of the insured in the property insured. (ection 16C. .here profits are separately insured in a contract of marine insurance, the insured is entitled to reco/er, in case of loss, a proportion of such profits e2ui/alent to the proportion which the /alue of the property lost bears to the /alue of the whole. (ection 161. 'n case of a /alued policy of marine insurance on frei0hta0e or car0o, if a part only of the sub>ect is e1posed to ris*, the /aluation applies only in proportion to such part. (ection 162. .hen profits are /alued and insured by a contract of marine insurance, a loss of them is conclusi/ely presumed from a loss of the property out of which they are e1pected to arise, and the /aluation fi1es their amount. (ection 166. 'n estimatin0 a loss under an open policy of marine insurance the followin0 rules are to be obser/ed: 3a4 )he /alue of a ship is its /alue at the be0innin0 of the ris*, includin0 all articles or char0es which add to its permanent /alue or which are necessary to prepare it for the /oya0e insured5 3b4 )he /alue of the car0o is its actual cost to the insured, when laden on board, or where the cost cannot be ascertained, its mar*et /alue at the time and place of ladin0, addin0 the char0es incurred in purchasin0 and placin0 it on board, but without reference to any loss incurred in raisin0 money for its purchase, or to any drawbac* on its e1portation, or to the fluctuation of the mar*et at the port of destination, or to e1penses incurred on the way or on arri/al5

3c4 )he /alue of frei0hta0e is the 0ross frei0hta0e, e1clusi/e of prima0e, without reference to the cost of earnin0 it5 and 3d4 )he cost of insurance is in each case to be added to the /alue thus estimated. (ection 168. 'f car0o insured a0ainst partial loss arri/es at the port of destination in a dama0ed condition, the loss of the insured is deemed to be the same proportion of the /alue which the mar*et price at that port, of the thin0 so dama0ed, bears to the mar*et price it would ha/e brou0ht if sound. (ection 16?. # marine insurer is liable for all the e1penses attendant upon a loss which forces the ship into port to be repaired5 and where it is stipulated in the policy that the insured shall labor for the reco/ery of the property, the insurer is liable for the e1pense incurred thereby, such e1pense, in either case, bein0 in addition to a total loss, if that afterwards occurs. (ection 166. # marine insurer is liable for a loss fallin0 upon the insured, throu0h a contribution in respect to the thin0 insured, re2uired to be made by him towards a 0eneral a/era0e loss called for by a peril insured a0ainst: Provided, )hat the liability of the insurer shall be limited to the proportion of contribution attachin0 to his policy /alue where this is less than the contributin0 /alue of the thin0 insured. (ection 16@. .hen a person insured by a contract of marine insurance has a demand a0ainst others for contribution, he may claim the whole loss from the insurer, subro0atin0 him to his own ri0ht to contribution. =ut no such claim can be made upon the insurer after the separation of the interests liable to contribution, nor when the insured, ha/in0 the ri0ht and opportunity to enforce contribution from others, has ne0lected or wai/ed the e1ercise of that ri0ht. (ection 16A. 'n the case of a partial loss of ship or its e2uipment, the old materials are to be applied towards payment for the new. ;nless

otherwise stipulated in the policy, a marine insurer is liable for only twoD thirds 32F64 of the remainin0 cost of repairs after such deduction, e1cept that anchors must be paid in full. )')$" 2 :'R" 'N(;R#N," (ection 16B. #s used in this ,ode, the term fire insurance shall include insurance a0ainst loss by fire, li0htnin0, windstorm, tornado or earth2ua*e and other allied ris*s, when such ris*s are co/ered by e1tension to fire insurance policies or under separate policies. (ection 1@C. #n alteration in the use or condition of a thin0 insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increasin0 the ris*s, entitles an insurer to rescind a contract of fire insurance. (ection 1@1. #n alteration in the use or condition of a thin0 insured from that to which it is limited by the policy, which does not increase the ris*, does not affect a contract of fire insurance. (ection 1@2. # contract of fire insurance is not affected by any act of the insured subse2uent to the e1ecution of the policy, which does not /iolate its pro/isions, e/en thou0h it increases the ris* and is the cause of the loss. (ection 1@6. 'f there is no /aluation in the policy, the measure of indemnity in an insurance a0ainst fire is the e1pense it would be to the insured at the time of the commencement of the fire to replace the thin0 lost or in>ured in the condition in which it was at the time of the in>ury5 but if there is a /aluation in a policy of fire insurance, the effect shall be the same as in a policy of marine insurance. (ection 1@8. .hene/er the insured desires to ha/e a /aluation named in his policy, insurin0 any buildin0 or structure a0ainst fire, he may re2uire such buildin0 or structure to be e1amined by an independent appraiser

and the /alue of the insured-s interest therein may then be fi1ed as between the insurer and the insured. )he cost of such e1amination shall be paid for by the insured. # clause shall be inserted in such policy statin0 substantially that the /alue of the insured-s interest in such buildin0 or structure has been thus fi1ed. 'n the absence of any chan0e increasin0 the ris* without the consent of the insurer or of fraud on the part of the insured, then in case of a total loss under such policy, the whole amount so insured upon the insured-s interest in such buildin0 or structure, as stated in the policy upon which the insurers ha/e recei/ed a premium, shall be paid, and in case of a partial loss the full amount of the partial loss shall be so paid, and in case there are two 324 or more policies co/erin0 the insured-s interest therein, each policy shall contribute pro rata to the payment of such whole or partial loss. =ut in no case shall the insurer be re2uired to pay more than the amount thus stated in such policy. )his section shall not pre/ent the parties from stipulatin0 in such policies concernin0 the repairin0, rebuildin0 or replacin0 of buildin0s or structures wholly or partially dama0ed or destroyed. (ection 1@?. No policy of fire insurance shall be pled0ed, hypothecated, or transferred to any person, firm or company who acts as a0ent for or otherwise represents the issuin0 company, and any such pled0e, hypothecation, or transfer hereafter made shall be /oid and of no effect insofar as it may affect other creditors of the insured. )')$" 6 ,#(;#$)< 'N(;R#N," (ection 1@6. ,asualty insurance is insurance co/erin0 loss or liability arisin0 from accident or mishap, e1cludin0 certain types of loss which by law or custom are considered as fallin0 e1clusi/ely within the scope of other types of insurance such as fire or marine. 't includes, but is not limited to, employer-s liability insurance, motor /ehicle liability insurance, plate 0lass insurance, bur0lary and theft insurance, personal accident and health insurance as written by nonDlife insurance companies, and other substantially similar *inds of insurance.

)')$" 8 (;R")<(9'P (ection 1@@. # contract of suretyship is an a0reement whereby a party called the surety 0uarantees the performance by another party called the principal or obli0or of an obli0ation or underta*in0 in fa/or of a third party called the obli0ee. 't includes official reco0ni7ances, stipulations, bonds or underta*in0s issued by any company by /irtue of and under the pro/isions of #ct No. ?66, as amended by #ct No. 22C6. (ection 1@A. )he liability of the surety or sureties shall be >oint and se/eral with the obli0or and shall be limited to the amount of the bond. 't is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obli0or and the obli0ee. (ection 1@B. )he surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and deli/ered to the obli0or. No contract of suretyship or bondin0 shall be /alid and bindin0 unless and until the premium therefor has been paid, e1cept where the obli0ee has accepted the bond, in which case the bond becomes /alid and enforceable irrespecti/e of whether or not the premium has been paid by the obli0or to the surety: Provided, )hat if the contract of suretyship or bond is not accepted by, or filed with the obli0ee, the surety shall collect only a reasonable amount, not e1ceedin0 fifty percent 3?CG4 of the premium due thereon as ser/ice fee plus the cost of stamps or other ta1es imposed for the issuance of the contract or bond: Provided, however, )hat if the nonacceptance of the bond be due to the fault or ne0li0ence of the surety, no such ser/ice fee, stamps or ta1es shall be collected. 'n the case of a continuin0 bond, the obli0or shall pay the subse2uent annual premium as it falls due until the contract of suretyship is cancelled by the obli0ee or by the ,ommissioner or by a court of competent >urisdiction, as the case may be.

(ection 1AC. Pertinent pro/isions of the ,i/il ,ode of the Philippines shall be applied in a suppletory character whene/er necessary in interpretin0 the pro/isions of a contract of suretyship. )')$" ? $':" 'N(;R#N," (ection 1A1. $ife insurance is insurance on human li/es and insurance appertainin0 thereto or connected therewith. "/ery contract or underta*in0 for the payment of annuities includin0 contracts for the payment of lump sums under a retirement pro0ram where a life insurance company mana0es or acts as a trustee for such retirement pro0ram shall be considered a life insurance contract for purposes of this ,ode. (ection 1A2. #n insurance upon life may be made payable on the death of the person, or on his sur/i/in0 a specified period, or otherwise contin0ently on the continuance or cessation of life. "/ery contract or pled0e for the payment of endowments or annuities shall be considered a life insurance contract for purposes of this ,ode. 'n the absence of a >udicial 0uardian, the father, or in the latter-s absence or incapacity, the mother, of any minor, who is an insured or a beneficiary under a contract of life, health, or accident insurance, may e1ercise, in behalf of said minor, any ri0ht under the policy, without necessity of court authority or the 0i/in0 of a bond, where the interest of the minor in the particular act in/ol/ed does not e1ceed :i/e hundred thousand pesos 3P?CC,CCC.CC4 or in such reasonable amount as may be determined by the ,ommissioner. (uch ri0ht may include, but shall not be limited to, obtainin0 a policy loan, surrenderin0 the policy, recei/in0 the proceeds of the Policy, and 0i/in0 the minor-s consent to any transaction on the policy.

'n the absence or in case of the incapacity of the father or mother, the 0randparent, the eldest brother or sister at least ei0hteen 31A4 years of a0e, or any relati/e who has actual custody of the minor insured or beneficiary, shall act as a 0uardian without need of a court order or >udicial appointment as such 0uardian, as lon0 as such person is not otherwise dis2ualified or incapacitated. Payment made by the insurer pursuant to this section shall relie/e such insurer of any liability under the contract. (ection 1A6. )he insurer in a life insurance contract shall be liable in case of suicide only when it is committed after the policy has been in force for a period of two 324 years from the date of its issue or of its last reinstatement, unless the policy pro/ides a shorter period: Provided, however, )hat suicide committed in the state of insanity shall be compensable re0ardless of the date of commission. (ection 1A8. # policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or not, and such person may reco/er upon it whate/er the insured mi0ht ha/e reco/ered. (ection 1A?. Notice to an insurer of a transfer or be2uest thereof is not necessary to preser/e the /alidity of a policy of insurance upon life or health, unless thereby e1pressly re2uired. (ection 1A6. ;nless the interest of a person insured is susceptible of e1act pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fi1ed in the policy. )')$" 6 M',R%'N(;R#N," (ection 1A@. Microinsurance is a financial product or ser/ice that meets the ris* protection needs of the poor where:

3a4 )he amount of contributions, premiums, fees or char0es, computed on a daily basis, does not e1ceed se/en and a half percent 3@.?G4 of the current daily minimum wa0e rate for nona0ricultural wor*ers in Metro Manila5 and 3b4 )he ma1imum sum of 0uaranteed benefits is not more than one thousand 31,CCC4 times of the current daily minimum wa0e rate for nona0ricultural wor*ers in Metro Manila. (ection 1AA. No insurance company or mutual benefit association shall en0a0e in the business of microinsurance unless it possesses all the re2uirements as may be prescribed by the ,ommissioner. )he ,ommissioner shall issue such rules and re0ulations 0o/ernin0 microinsurance. ,9#P)"R ''D# :'N#N,'#$ R"P%R)'N! :R#M".%RH (ection 1AB. #ll companies re0ulated by the ,ommission, unless otherwise re2uired by law, should comply with the financial reportin0 framewor*s adopted by the ,ommission for purposes of creatin0 the statutory financial reports and the annual statements to be submitted to the ,ommission. :inancial reportin0 framewor* means a set of accountin0 and reportin0 principles, standards, interpretations and pronouncements that must be adopted in the preparation and submission of the statutory financial statements and reports re2uired by the ,ommission. )his financial reportin0 framewor* is not the same as the financial reportin0 framewor* used to prepare the financial statements that the (ecurities and "1chan0e ,ommission may re2uire. )he main purpose of the statutory statements is to present important information about the le/el of ris* and sol/ency situation of insurers. 'n prescribin0 the applicable statutory financial reportin0 framewor*, the ,ommissioner shall ta*e into account international standards concernin0 sol/ency and insurance company reportin0 as well as 0enerally accepted actuarial principles concernin0 financial reportin0 promul0ated by the #ctuarial (ociety of the Philippines.

)he assets and in/estments discussed in (ections 2C8 to 21? shall be accounted for in accordance with this section. )he /aluation of reser/es shall be accounted for in accordance with )itle ? of this ,ode. ,9#P)"R ''' )9" =;('N"(( %: 'N(;R#N," )')$" 1 'N(;R#N," ,%MP#N'"(, %R!#N'I#)'%N, ,#P')#$'I#)'%N #ND #;)9%R'I#)'%N (ection 1BC. :or purposes of this ,ode, the term insurer or insurance co!pany shall include all partnerships, associations, cooperati/es or corporations, includin0 0o/ernmentDowned or Dcontrolled corporations or entities, en0a0ed as principals in the insurance business, e1ceptin0 mutual benefit associations. ;nless the conte1t otherwise re2uires, the term shall also include professional reinsurers defined in (ection 2AA. &o!estic co!pany shall include companies formed, or0ani7ed or e1istin0 under the laws of the Philippines. 'oreign co!pany when used without limitation shall include companies formed, or0ani7ed, or e1istin0 under any laws other than those of the Philippines. (ection 1B1. )he pro/isions of the ,orporation ,ode, as amended, shall apply to all insurance corporations now or hereafter en0a0ed in business in the Philippines insofar as they do not conflict with the pro/isions of this chapter. (ection 1B2. No corporation, partnership, or association of persons shall transact any insurance business in the Philippines e1cept as a0ent of a corporation, partnership or association authori7ed to do the business of insurance in the Philippines, unless possessed of the capital and assets re2uired of an insurance corporation doin0 the same *ind of business in the Philippines and in/ested in the same manner5 unless the

,ommissioner shall ha/e 0ranted it a certificate to the effect that it has complied with all the pro/isions of this ,ode. "/ery entity recei/in0 any such certificate of authority shall be sub>ect to the insurance and other applicable laws of the Philippines and to the >urisdiction and super/ision of the ,ommissioner. (ection 1B6. No insurance company shall transact any insurance business in the Philippines until after it shall ha/e obtained a certificate of authority for that purpose from the ,ommissioner upon application therefor and payment by the company concerned of the fees hereinafter prescribed. )he ,ommissioner may refuse to issue a certificate of authority to any insurance company if, in his >ud0ment, such refusal will best promote the interest of the people of this country. No such certificate of authority shall be 0ranted to any such company until the ,ommissioner shall ha/e satisfied himself by such e1amination as he may ma*e and such e/idence as he may re2uire that such company is 2ualified by the laws of the Philippines to transact business therein, that the 0rant of such authority appears to be >ustified in the li0ht of local economic re2uirements, and that the direction and administration, as well as the inte0rity and responsibility of the or0ani7ers and administrators, the financial or0ani7ation and the amount of capital, reasonably assure the safety of the interests of the policyholders and the public. 'n order to maintain the 2uality of the mana0ement of the insurance companies and afford better protection to policyholders and the public in 0eneral, any person of 0ood moral character, un2uestioned inte0rity and reco0ni7ed competence may be elected or appointed director or officer of insurance companies in accordance with the pertinent pro/isions contained in the corporate 0o/ernance circulars prescribed by the ,ommissioner. 'n addition hereto, the ,ommissioner shall prescribe the 2ualifications of directors, e1ecuti/e officers and other *ey officials of insurance companies for purposes of this section.

No person shall concurrently be a Director andFor %fficer of an insurance company and an ad>ustment company. =efore issuin0 such certificate of authority, the ,ommissioner must be satisfied that the name of the company is not that of any other *nown company transactin0 a similar business in the Philippines, or a name so similar as to be calculated to mislead the public. )he ,ommissioner may issue rules and re0ulations on the use of names of insurance companies and other super/ised persons or entities. )he certificate of authority issued by the ,ommissioner shall e1pire on the last day of December, three 364 years followin0 its date of issuance, and shall be renewable e/ery three 364 years thereafter, sub>ect to the company-s continuin0 compliance with the pro/isions of this ,ode, circulars, instructions, rulin0s or decisions of the ,ommission. "/ery company recei/in0 any such certificates of authority shall be sub>ect to the pro/isions of this ,ode and other related laws and to the >urisdiction and super/ision of the ,ommissioner. No insurance company may be authori7ed to transact in the Philippines the business of life and nonDlife insurance concurrently, unless specifically authori7ed to do so by the ,ommissioner: Provided, )hat the terms life and nonDlife insurance shall be deemed to include health, accident and disability insurance. No insurance company shall ha/e e2uity in an ad>ustment company and neither shall an ad>ustment company ha/e e2uity in an insurance company. No insurance company issued with a /alid certificate of authority to transact insurance business anywhere in the Philippines by the 'nsurance ,ommissioner, shall be barred, pre/ented, or disenfranchised from issuin0 any insurance policy or from transactin0 any insurance business within the scope or co/era0e of its certificate of authority, anywhere in the Philippines, by any local 0o/ernment unit or authority, for whate/er

0uise or reason whatsoe/er, includin0 under any *ind of ordinance, accreditation system, or scheme. #ny local ordinance or local 0o/ernment unit re0ulatory issuance imposin0 such restriction or disenfranchisement on any insurance company shall be deemed null and /oid ab initio. (ection 1B8. "1cept as pro/ided in (ection 2AB, no new domestic life or nonDlife insurance company shall, in a stoc* corporation, en0a0e in business in the Philippines unless possessed of a paidDup capital e2ual to at least %ne billion pesos 3P1,CCC,CCC,CCC.CC4: Provided, )hat a domestic insurance company already doin0 business in the Philippines shall ha/e a net worth by June 6C, 2C16 of )wo hundred fifty million pesos 3P2?C,CCC,CCC.CC4. :urthermore, said company must ha/e by December 61, 2C16, an additional )hree hundred million pesos 3P6CC,CCC,CCC.CC4 in net worth5 by December 61, 2C1B, an additional )hree hundred fifty million pesos 3P6?C,CCC,CCC.CC4 in net worth5 and by December 61, 2C22, an additional :our hundred million pesos 3P8CC,CCC,CCC.CC4 in net worth. )he ,ommissioner may, as a preDlicensin0 re2uirement of a new insurance company, in addition to the paidDup capital stoc*, re2uire the stoc*holders to pay in cash to the company in proportion to their subscription interests a contributed surplus fund of not less than %ne hundred million pesos 3P1CC,CCC,CCC.CC4. 9e may also re2uire such company to submit to him a business plan showin0 the company-s estimated receipts and disbursements, as well as the basis therefor, for the ne1t succeedin0 three 364 years. 'f or0ani7ed as a mutual company, in lieu of such net worth, it must ha/e a/ailable total members e2uity in an amount to be determined by the 'nsurance ,ommission abo/e all liabilities for losses reported5 e1penses, ta1es, le0al reser/e, and reinsurance of all outstandin0 ris*s, and the contributed surplus fund e2ual to the amounts re2uired of stoc* corporations. # stoc* insurance company doin0 business in the Philippines may, sub>ect to the pertinent law and re0ulation which now

or hereafter may be in force, alter its or0ani7ation and transform itself into a mutual insurance company. )he (ecretary of :inance may, upon recommendation of the ,ommissioner, increase such minimum paidDup capital stoc* or cash assets re2uirement under such terms and conditions as he may impose, to an amount which, in his opinion, would reasonably assure the safety of the interests of the policyholders and the public. )he minimum paidDup capital and net worth re2uirement must remain unimpaired for the continuance of the license. )he ,ommissioner may re2uire the adoption of the ris*Dbased capital approach and other internationally accepted forms of capital framewor*. :or the purpose of this section, net worth shall consist of: 3a4 PaidDup capital5 3b4 Retained earnin0s5 3c4 ;nimpaired surplus5 and 3d4 Re/aluation of assets as may be appro/ed by the ,ommissioner. )he ,ommission may adopt for purposes of compliance with capital build up re2uirement under this ,ode the reco0nition as part of the capital account, capital notes or debentures which are subordinate to all credits and senior only to common capital stoc*s. )he President of the Philippines may order a periodic re/iew e/ery two 324 years the capital structure set out abo/e to determine the capital ade2uacy of the local insurance industry from and after the inte0ration and liberali7ation of the financial ser/ices, includin0 insurance, in the #("#N Re0ion. :or this purpose, a re/iew committee consistin0 of representati/es from the Department of :inance 3D%:4, the 'nsurance ,ommission 3',4, the National "conomic and De/elopment #uthority

3N"D#4, the (ecurities and "1chan0e ,ommission 3(",4 and other a0encies which the President may desi0nate shall conduct the re/iew and may recommend to the President to adopt for implementation the necessary capital ad>ustment. (ection 1B?. "/ery company must, before en0a0in0 in the business of insurance in the Philippines, file with the ,ommissioner the followin0: 3a4 # certified copy of the last annual statement or a /erified financial statement e1hibitin0 the condition and affairs of such company5 3b4 'f incorporated under the laws of the Philippines, a copy of the articles of incorporation and bylaws, and any amendments to either, certified by the (ecurities and "1chan0e ,ommission to be a copy of that which is filed in its %ffice5 3c4 'f incorporated under any laws other than those of the Philippines, a certificate from the (ecurities and "1chan0e ,ommission showin0 that it is duly re0istered in the mercantile re0istry of that ,ommission in accordance with the ,orporation ,ode. # copy of the articles of incorporation and bylaws, and any amendments to either, if or0ani7ed or formed under any law re2uirin0 such to be filed, duly certified by the officer ha/in0 the custody of same, or if not so or0ani7ed, a copy of the law, charter or deed of settlement under which the deed of or0ani7ation is made, duly certified by the proper custodian thereof, or pro/ed by affida/it to be a copy5 also, a certificate under the hand and seal of the proper officer of such state or country ha/in0 super/ision of insurance business therein, if any there be, that such corporation or company is or0ani7ed under the laws of such state or country, with the amount of capital stoc* or assets and le0al reser/e re2uired by this ,ode5 3d4 'f not incorporated and of forei0n domicile, aside from the certificate mentioned in para0raph 3c4 of this section, a certificate

settin0 forth the nature and character of the business, the location of the principal office, the name of the indi/idual or names of the persons composin0 the partnership or association, the amount of actual capital employed or to be employed therein, and the names of all officers and persons by whom the business is or may be mana0ed. )he certificate must be /erified by the affida/it of the chief officer, secretary, a0ent, or mana0er of the company5 and if there are any written articles of a0reement of the company, a copy thereof must accompany such certificate. (ection 1B6. )he ,ommissioner must re2uire as a condition precedent to the transaction of insurance business in the Philippines by any forei0n insurance company, that such company file in his office a written power of attorney desi0natin0 some person who shall be a resident of the Philippines as its 0eneral a0ent, on whom any notice pro/ided by law or by any insurance policy, proof of loss, summons and other le0al processes may be ser/ed in all actions or other le0al proceedin0s a0ainst such company, and consentin0 that ser/ice upon such 0eneral a0ent shall be admitted and held as /alid as if ser/ed upon the forei0n company at its home office. #ny such forei0n company shall, as further condition precedent to the transaction of insurance business in the Philippines, ma*e and file with the ,ommissioner an a0reement or stipulation, e1ecuted by the proper authorities of said company in form and substance as follows: )he 3name of company4 does hereby stipulate and a0ree in consideration of the permission 0ranted by the 'nsurance ,ommissioner to transact business in the Philippines, that if at any time said company shall lea/e the Philippines, or cease to transact business therein, or shall be without any a0ent in the Philippines on whom any notice, proof of loss, summons, or le0al process may be ser/ed, then in any action or proceedin0 arisin0 out of any business or transaction which occurred in the Philippines, ser/ice of any notice pro/ided by law, or insurance policy, proof of loss, summons, or other le0al process may be made upon

the 'nsurance ,ommissioner, and that such ser/ice upon the 'nsurance ,ommissioner shall ha/e the same force and effect as if made upon the company. .hene/er such ser/ice of notice, proof of loss, summons, or other le0al process shall be made upon the ,ommissioner, he must, within ten 31C4 days thereafter, transmit by mail, posta0e paid, a copy of such notice, proof of loss, summons, or other le0al process to the company at its home or principal office. )he sendin0 of such copy by the ,ommissioner shall be a necessary part of the ser/ice of the notice, proof of loss, or other le0al process. (ection 1B@. No insurance company or0ani7ed or e1istin0 under the 0o/ernment or laws other than those of the Philippines shall en0a0e in business in the Philippines unless possessed of unimpaired capital or assets and reser/e of not less than %ne billion pesos 3P1,CCC,CCC,CCC.CC4, nor until it shall ha/e deposited with the ,ommissioner for the benefit and security of the policyholders and creditors of such company in the Philippines, securities satisfactory to the ,ommissioner consistin0 of 0ood securities of the Philippines, includin0 new issues of stoc* of re0istered enterprises, as this term is defined in "1ecuti/e %rder No. 226 of 1BA@, as amended, to the actual mar*et /alue of not less than the amount herein re2uired: Provided, )hat at least fifty percent 3?CG4 of such securities shall consist of bonds or other instruments of debt of the !o/ernment of the Philippines, its political subdi/isions and instrumentalities, or of 0o/ernmentDowned or Dcontrolled corporations and entities, includin0 the =an0*o (entral n0 Pilipinas: Provided, further, )hat the total in/estment of a forei0n insurance company in any re0istered enterprise shall not e1ceed twenty percent 32CG4 of the net worth of said forei0n insurance company nor twenty percent 32CG4 of the capital of the re0istered enterprise, unless pre/iously authori7ed in writin0 by the ,ommissioner. )he ,ommissioner may, as a preDlicensin0 re2uirement of a new branch office of a forei0n insurance company, in addition to the re2uired asset

or net worth, re2uire the company to ha/e an additional surplus fund in an amount to be determined by the 'nsurance ,ommission. :or purposes of this ,ode, the net worth of a forei0n insurance company shall refer only to its net worth in the Philippines. (ection 1BA. )he ,ommissioner shall hold the securities, deposited as re2uired in the immediately precedin0 section, for the benefit and security of all the policyholders and creditors of the company depositin0 the same: Provided, )hat the ,ommissioner may as lon0 as the company is sol/ent, permit the company to collect the interest or di/idends on the securities so deposited, and, from time to time, with his assent, to withdraw any of such securities, upon depositin0 with said ,ommissioner other li*e securities, the mar*et /alue of which shall be e2ual to the mar*et /alue of such as may be withdrawn. 'n the e/ent of any company ceasin0 to do business in the Philippines, the securities deposited as aforesaid shall be returned to the company upon the ,ommissioner-s written appro/al and only after the company has duly pro/en in its application therefor that it has no further liability whatsoe/er under any of its policies nor to any of its creditors in the Philippines. (ection 1BB. "/ery forei0n company doin0 business in the Philippines shall set aside an amount correspondin0 to the le0al reser/es of the policies written in the Philippines and in/est and *eep the same therein in accordance with the pro/isions of this section. )he le0al reser/e therein re2uired to be set aside shall be in/ested only in the classes of Philippine securities described in (ection 2C6: Provided, however, )hat no in/estment in stoc*s or bonds of any sin0le entity shall, in the a00re0ate e1ceed twenty percent 32CG4 of the net worth of the in/estin0 company or twenty percent 32CG4 of the capital of the issuin0 company, whiche/er is the lesser, unless otherwise appro/ed in writin0 by the ,ommissioner. )he securities purchased and *ept in the Philippines under this section, shall not be sent out of the territorial >urisdiction of the Philippines without the written consent of the ,ommissioner.

)')$" 2 (%$&"N,< (ection 2CC. #n insurance company doin0 business in the Philippines shall at all times maintain the minimum paidDup capital, and net worth re2uirements as prescribed by the ,ommissioner. (uch sol/ency re2uirements shall be based on internationally accepted sol/ency framewor*s and adopted only after due consultation with the insurance industry associations. .hene/er the aforementioned re2uirement be found to be less than that herein re2uired to be maintained, the ,ommissioner shall forthwith direct the company to ma*e 0ood any such deficiency by cash, to be contributed by all stoc*holders of record in proportion to their respecti/e interests, and paid to the treasurer of the company, within fifteen 31?4 days from receipt of the order: Provided, )hat the company in the interim shall not be permitted to ta*e any new ris* of any *ind or character unless and until it ma*e 0ood any such deficiency: Provided( further, )hat a stoc*holder who aside from payin0 the contribution due from him, pays the contribution due from another stoc*holder by reason of the failure or refusal of the latter to do so, shall ha/e a lien on the certificates of stoc* of the insurance company concerned appearin0 in its boo*s in the name of the defaultin0 stoc*holder on the date of default, as well as on any interests or di/idends that ha/e accrued or will accrue to the said certificates of stoc*, until the correspondin0 payment or reimbursement is made by the defaultin0 stoc*holder. (ection 2C1. No domestic insurance corporation shall declare or distribute any di/idend on its outstandin0 stoc*s unless it has met the minimum paidDup capital and net worth re2uirements under (ection 1B8 and e1cept from profits attested in a sworn statement to the ,ommissioner by the president or treasurer of the corporation to be remainin0 on hand after retainin0 unimpaired: 3a4 )he entire paidDup capital stoc*5

3b4 )he sol/ency re2uirements defined by (ection 2CC5 3c4 'n the case of life insurance corporations, the le0al reser/e fund re2uired by (ection 21@5 3d4 'n the case of corporations other than life, the le0al reser/e fund re2uired by (ection 21B5 and 3e4 # sum sufficient to pay all net losses reported, or in the course of settlement, and all liabilities for e1penses and ta1es. #ny di/idend declared or distributed under the precedin0 para0raph shall be reported to the ,ommissioner within thirty 36C4 days after such declaration or distribution. 'f the ,ommissioner finds that any such corporation has declared or distributed any such di/idend in /iolation of this section, he may order such corporation to cease and desist from doin0 business until the amount of such di/idend or the portion thereof in e1cess of the amount allowed under this section has been restored to said corporation. )he ,ommissioner shall prescribe sol/ency re2uirements for branches of forei0n insurance companies operatin0 in the Philippines. )')$" 6 #((")( (ection 2C2. 'n any determination of the financial condition of any insurance company doin0 business in the Philippines, there shall be allowed and admitted as assets only such assets le0ally or beneficially owned by the insurance company concerned as determined by the ,ommissioner which consist of: 3a4 ,ash in the possession of the insurance company or in transit under its control, and the true and duly /erified balance of any

deposit of such company in a financially sound ban* or trust company duly authori7ed by the =an0*o (entral n0 Pilipinas. 3b4 'n/estments in securities, includin0 money mar*et instruments, and in real property ac2uired or held in accordance with and sub>ect to the applicable pro/isions of this ,ode and the income reali7ed therefrom or accrued thereon. 3c4 $oans 0ranted by the insurance company concerned to the e1tent of that portion thereof ade2uately secured by nonD speculati/e assets with readily reali7able /alues in accordance with and sub>ect to the limitations imposed by applicable pro/isions of this ,ode. 3d4 Policy loans and other policy assets and liens on policies, contracts or certificates of a life insurance company, in an amount not e1ceedin0 le0al reser/es and other policy liabilities carried on each indi/idual life insurance policy, contract or certificate. 3e4 )he net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurance company which carries the full mean tabular reser/e liability. 3f4 Reinsurance reco/erable by the cedin0 insurer: 314 :rom an insurer authori7ed to transact business in this country, the full amount thereof5 or 324 :rom an insurer not authori7ed in this country, in an amount not e1ceedin0 the liabilities carried by the cedin0 insurer for amounts withheld under a reinsurance treaty with such unauthori7ed insurer as security for the payment of obli0ations thereunder if such funds are held sub>ect to withdrawal by, and under the control of, the cedin0 insurer. )he ,ommissioner may prescribe the

conditions under which a cedin0 insurer may be allowed credit, as an asset or as a deduction from loss and unearned premium reser/es, for reinsurance reco/erable from an insurer not authori7ed in this country but which presents satisfactory e/idence that it meets the applicable standards of sol/ency re2uired in this country. 304 :unds withheld by a cedin0 insurer under a reinsurance treaty, pro/ided reser/es for unpaid losses and unearned premiums are ade2uately pro/ided. 3h4 Deposits or amounts reco/erable from underwritin0 associations, syndicates and reinsurance funds, or from any suspended ban*in0 institution, to the e1tent deemed by the ,ommissioner to be a/ailable for the payment of losses and claims and /alues to be determined by him. 3i4 "lectronic data processin0 machines, as may be authori7ed by the ,ommissioner to be ac2uired by the insurance company concerned, the ac2uisition cost of which to be amorti7ed in e2ual annual amounts within a period of fi/e 3?4 years from the date of ac2uisition thereof. 3>4 'n/estments in mutual funds, real estate in/estment trusts, salary loans, unit in/estment trust funds and special deposit accounts, sub>ect to the conditions as may be pro/ided for by the ,ommissioner. 3*4 %ther assets, not inconsistent with the pro/isions of para0raphs 3a4 to 3>4 hereof, which are deemed by the ,ommissioner to be readily reali7able and a/ailable for the payment of losses and claims at /alues to be determined by him in a circular, rule or re0ulation. (ection 2C6. 'n addition to such assets as the ,ommissioner may from time to time determine to be nonDadmitted assets of insurance companies

doin0 business in the Philippines, the followin0 assets shall in no case be allowed as admitted assets of an insurance company doin0 business in the Philippines, in any determination of its financial condition: 3a4 !oodwill, trade names, and other li*e intan0ible assets. 3b4 Prepaid or deferred char0es for e1penses and commissions paid by such insurance company. 3c4 #d/ances to officers 3other than policy loans4, which are not ade2uately secured and which are not pre/iously authori7ed by the ,ommissioner, as well as ad/ances to employees, a0ents, and other persons on mere personal security. 3d4 (hares of stoc* of such insurance company, owned by it, or any e2uity therein as well as loans secured thereby, or any proportionate interest in such shares of stoc* throu0h the ownership by such insurance company of an interest in another corporation or business unit. 3e4 :urniture, furnishin0, fi1tures, safes, e2uipment, library, stationery, literature, and supplies. 3f4 'tems of ban* credits representin0 chec*s, drafts or notes returned unpaid after the date of statement. 304 )he amount, if any, by which the a00re0ate /alue of in/estments as carried in the led0er assets of such insurance company e1ceeds the a00re0ate /alue thereof as determined in accordance with the pro/isions of this ,ode andFor the rules of the ,ommissioner. #ll nonDadmitted assets and all other assets of doubtful /alue or character included as led0er or nonDled0er assets in any statement submitted by an insurance company to the ,ommissioner, or in any insurance e1aminer-s report to him, shall also be reported, to the e1tent

of the /alue disallowed as deductions from the 0ross assets of such insurance company, e1cept where the ,ommissioner permits a reser/e to be carried amon0 the liabilities of such insurance company in lieu of any such deduction. )')$" 8 'N&"()M"N)( (ection 2C8. # life insurance company may lend to any of its policyholders upon the security of the /alue of its policy such sum as may be determined pursuant to the pro/isions of the policy. No insurance company shall loan any of its money or deposits to any person, corporation or association, e1cept upon the security of any of the followin0: 3a4 :irst mort0a0e or deeds of trust of re0istered, unencumbered, impro/ed or unimpro/ed real estate, includin0 condominiums5 3b4 :irst mort0a0es or deeds of trust of actually culti/ated, impro/ed and unencumbered a0ricultural lands in the Philippines5 3c4 Purchase money mort0a0es, lease purchase a0reements or similar securities e1ecuted or recei/ed by it on account of the sale or e1chan0e of real property ac2uired pursuant to (ections 2C6 and 2CA5 3d4 =onds or other instruments of indebtedness issued or 0uaranteed by the !o/ernment of the Philippines or its political subdi/isions authori7ed by law to incur such obli0ations or issue such 0uarantees or of 0o/ernmentDowned or Dcontrolled corporations and instrumentalities includin0 the =an0*o (entral n0 Pilipinas5 or

3e4 %bli0ations issued or 0uaranteed by uni/ersal ban*s, commercial ban*s, offshore ban*in0 units, in/estment houses or other financial intermediaries duly re0istered with the =an0*o (entral n0 Pilipinas5 or 3f4 %bli0ations issued or 0uaranteed by forei0n ban*s or corporations, each of which shall ha/e total net worth of at least %ne hundred fifty million ;( dollars 3K;(1?C,CCC,CCC.CC4 or such other hi0her net worth as may be prescribed by the 'nsurance ,ommission, as shown in their financial statements as of the immediately precedin0 fiscal year5 or 304 #ssi0nments of monetary instruments such as cash deposits, deposit certificates or other similar instruments of uni/ersal ban*s, commercial ban*s, in/estment houses or other financial intermediaries duly re0istered with the =an0*o (entral n0 Pilipinas5 or 3h4 Pled0es of shares of stoc*, bonds or other instruments of indebtedness specified in (ection 2CB5 or 3i4 ,hattel mort0a0es o/er e2uipment not more than three 364 years old5 and 3>4 (uch other security as may be appro/ed by the ,ommissioner. )he loans pro/ided in the precedin0 subsection shall be sub>ect to the followin0 conditions: 314 )he amount of loan secured by real estate mort0a0e o/er a nonDa0ricultural land shall not e1ceed se/enty percent 3@CG4 of its appraised /alue, and in the case of a loan secured by a real estate mort0a0e o/er an a0ricultural land, the amount of loan shall not e1ceed forty percent 38CG4 of its mar*et /alue:

Provided, )hat, in no case shall such loan ha/e a maturity period in e1cess of twentyDfi/e 32?4 years5 324 ;nless appro/ed by the ,ommissioner, no loan may be 0ranted upon the security of a mort0a0e on impro/ed real estate if the impro/ements thereon do not belon0 to the owner of the land, and the owner of the impro/ements does not si0n the deed of mort0a0e. 9owe/er, if the owner of the land is the !o/ernment of the Philippines or any of its political subdi/isions and a lon0Dterm lease has been e1ecuted in fa/or of the owner of the impro/ements, the owner of the land need not be a party to the deed of mort0a0e. )he e1piration date of the lease shall not, howe/er, precede the maturity of the loan. )he phrase +impro/ed real estate- as used herein shall mean land with permanent buildin0 or buildin0s erected thereon5 364 $easeDa0reements or similar securities recei/ed on the sale of real estate property shall not e1ceed one hundred percent 31CCG4 of the sellin0 price of said property, or one hundred percent 31CCG4 of its mar*et /alue at the time of its disposition, whiche/er amount is lower. 9owe/er, in no case shall such a0reement ha/e a maturity period not e1ceedin0 thirty 36C4 years5 384 $oans secured by shares of stoc* of sol/ent corporations or institutions shall not e1ceed fifty percent 3?CG4 of: 3i4 )he wei0hted a/era0e mar*et price for the one hundred ei0hty 31AC4 days precedin0 the appro/al of the loan for shares listed in the stoc* e1chan0e5 and 3ii4 :or unlisted shares, the ad>usted boo* /alue of such shares. 3?4 $oans secured by the chattel mort0a0es o/er e2uipment shall not e1ceed se/enty percent 3@CG4 of the mar*et /alue of said e2uipment.

(ection 2C?. No loan by any insurance company on the security of real estate shall be made unless the title to such real estate shall ha/e first been re0istered in accordance with the e1istin0 $and Re0istration #ct, or shall ha/e been pre/iously re0istered under the pro/isions of the e1istin0 Mort0a0e $aw and the lien or interest of the insurance company as mort0a0ee has been re0istered. (ection 2C6. 3a4 #n insurance company may purchase, hold, own and con/ey such property, real and personal, as may ha/e been mort0a0ed, pled0ed, or con/eyed to it in 0ood faith in trust for its benefit by reason of money loaned by it in pursuance of the re0ular business of the company, and such real or personal property as may ha/e been purchased by it at sales under pled0es, mort0a0es or deeds of trust for its benefit on account of money loaned by it5 and such real and personal property as may ha/e been con/eyed to it by borrowers in satisfaction and dischar0e of loans made by the company in payment or by reason of any loan made by the company in payment or by reason of any loan made by it shall be sold by the company within twenty 32C4 years after the title thereto has been /ested in it. 3b4 #n insurance company may purchase, hold, and own the followin0: 314 Real properties which ser/e as its main place of business andFor branch offices: Provided, )hat such in/estment shall not in the o/erall e1ceed twenty percent 32CG4 of its net worth as shown by its latest financial statement appro/ed by the ,ommissioner. 324 =onds or other instruments of indebtedness of the !o/ernment of the Philippines or its political subdi/isions authori7ed by law to issue bonds at the reasonable mar*et /alue thereof. 364 =onds or other instruments of debt of 0o/ernmentDowned or Dcontrolled corporations and entities, includin0 the =an0*o (entral n0 Pilipinas.

384 =onds, debentures or other instruments of indebtedness of any sol/ent corporation or institution created or e1istin0 under the laws of the Philippines: Provided, however, )hat the issuin0, assumin0 or 0uaranteein0 entity or its predecessors shall not ha/e defaulted in the payment of interest on any of its securities and that durin0 each of any three 364 includin0 the last two 324 of the fi/e 3?4 fiscal years ne1t precedin0 the date of ac2uisition by such insurance company of such bonds, debentures, or other instruments of indebtedness, the net earnin0s of the issuin0, assumin0 or 0uaranteein0 institution a/ailable for its fi1ed char0es, as hereinafter defined, shall ha/e been not less than one and oneD2uarter 31L4 times the total of its fi1ed char0es for such year: Provided, further, )hat no life insurance company shall in/est in or loan upon the obli0ations of any one institution in the *inds permitted under this subsection an amount in e1cess of twentyDfi/e percent 32?G4 of the total admitted assets of such insurer as of December thirtyDfirst ne1t precedin0 the date of such in/estment. #s used in this subsection the term net earnings available for fi)ed charges shall mean net income after deductin0 operatin0 and maintenance e1penses, ta1es other than income ta1es, depreciation and depletion5 but e1cludin0 e1traordinary nonrecurrin0 items of income or e1pense appearin0 in the re0ular financial statement of the issuin0, assumin0 or 0uaranteein0 institution. )he term fi)ed charges shall include interest on funded and unfunded debt, amorti7ation of debt discount, and rentals for leased properties. 3?4 Preferred or 0uaranteed stoc*s of any sol/ent corporation or institution created or e1istin0 under the laws of the Philippines: Provided, )hat if the stoc*s are 0uaranteed, the amount of stoc*s

so 0uaranteed is not in e1cess of fifty percent 3?CG4 of the amount of the preferred or common stoc*s, as the case may be, of the 0uaranteein0 corporation: Provided, finally, )hat no life insurance company shall in/est in or loan upon obli0ations of any one institution in the *inds permitted under this subsection an amount in e1cess of ten percent 31CG4 of the total admitted assets of such insurer as of December thirtyDfirst ne1t precedin0 the date of such in/estment. 364 ,ommon stoc*s of any sol/ent corporation or institution created or e1istin0 under the laws of the Philippines: Provided, however, )hat no life insurance company shall in/est in or loan upon the obli0ations of any one corporation or institution in the *inds permitted under this subsection an amount in e1cess of ten percent 31CG4 of the total admitted assets of such insurer as of December thirtyDfirst ne1t precedin0 the date of such in/estment. 3@4 (ecurities issued by a re0istered enterprise, as this term is defined in "1ecuti/e %rder No. 226, otherwise *nown as the %mnibus 'n/estments ,ode of 1BA@, as amended: Provided, )hat the total in/estment of a domestic nonDlife insurance company in any re0istered enterprise shall not e1ceed twenty percent 32CG4 of the net worth of said insurance company as shown by its aforesaid financial statement unless pre/iously authori7ed by the ,ommissioner. 3A4 ,ertificates, notes and other obli0ations issued by the trustees or recei/ers of any institution created or e1istin0 under the laws of the Philippines which, or the assets of which, are bein0 administered under the direction of any court ha/in0 >urisdiction: Provided, however, )hat such certificates, notes or other obli0ations are ade2uately secured as to principal and interests. 3B4 "2uipment trust obli0ations or certificates which are ade2uately secured or other ade2uately secured instruments

e/idencin0 an interest in e2uipment wholly or in part within the Philippines: Provided, however, )hat there is a ri0ht to recei/e determined portions of rental, purchase or other fi1ed obli0atory payments for the use or purchase of such e2uipment. 31C4 #ny obli0ation of any corporation or institution created or e1istin0 under the laws of the Philippines which is, on the date of ac2uisition by the insurer, ade2uately secured and has 2ualities and characteristics wherein the speculati/e elements are not predominant. 3114 (uch other securities as may be appro/ed by the ,ommissioner. 3c4 #ny domestic insurer which has outstandin0 insurance, annuity or reinsurance contracts in currencies other than the national currency of the Philippines may in/est in, or otherwise ac2uire or loan upon securities and in/estments in such currency which are substantially of the same *inds, classes and in/estment 0rades as those eli0ible for in/estment under the fore0oin0 subdi/isions of this section5 but the a00re0ate amount of such in/estments and of such cash in such currency which is at any time held by such insurer shall not e1ceed one and oneD half 31M4 times the amount of its reser/es and other obli0ations under such contracts or the amount which such insurer is re2uired by the law of any country or possession outside the Republic of the Philippines to be in/ested in such country or possession, whiche/er shall be 0reater. (ection 2C@. #n insurance company may: 314 'n/est in e2uities of other financial institutions5 and 324 "n0a0e in the buyin0 and sellin0 of lon0Dterm debt instruments: Provided, )hat any or all of such in/estments shall be with the prior appro/al of the ,ommissioner. 'nsurance companies may, howe/er, in/est in listed e2uities of other

financial institutions without need of prior appro/al by the ,ommissioner. (ection 2CA. #ny life insurance company may: 3a4 #c2uire or construct housin0 pro>ects and, in connection with any such pro>ect, may ac2uire land or any interest therein by purchase, lease or otherwise, or use land ac2uired pursuant to any other pro/ision of this ,ode. (uch company may thereafter own, maintain, mana0e, collect or recei/e income from, or sell and con/ey, any land or interest therein so ac2uired and any impro/ements thereon. )he a00re0ate boo* /alue of the in/estments of any such company in all such pro>ects shall not e1ceed at the time of such in/estments twentyDfi/e percent 32?G4 of the total admitted assets of such company on the thirtyDfirst day of December ne1t precedin0: Provided, )hat the funds of the company for the payment of pendin0 claims and obli0ations shall not be used for such in/estments. 3b4 #c2uire real property, other than property to be used primarily for pro/idin0 housin0 and property for accommodation of its own business, as an in/estment for the production of income, or may ac2uire real property to be impro/ed or de/eloped for such in/estment purpose pursuant to a pro0ram therefor, sub>ect to the condition that the cost of each parcel of real property so ac2uired under the authority of this para0raph 3b4, includin0 the estimated cost to the company of the impro/ement or de/elopment thereof, when added to the boo* /alue of all other real property held by it pursuant to this para0raph 3b4, shall not e1ceed twentyDfi/e percent 32?G4 of its admitted assets as of the thirtyDfirst day of December ne1t precedin0. (ection 2CB. "/ery domestic insurance company shall, to the e1tent of an amount e2ual in /alue to twentyDfi/e percent 32?G4 of the minimum net worth re2uired under (ection 1B8, in/est its funds only in securities,

satisfactory to the ,ommissioner, consistin0 of bonds or other instruments of debt of the !o/ernment of the Philippines or its political subdi/isions or instrumentalities, or of 0o/ernmentDowned or Dcontrolled corporations and entities, includin0 the =an0*o (entral n0 Pilipinas: Provided, )hat such in/estments shall at all times be maintained free from any lien or encumbrance: Provided, further, )hat such securities shall be deposited with and held by the ,ommissioner for the faithful performance by the depositin0 insurer of all its obli0ations under its insurance contracts. )he pro/isions of (ection 1BA shall, so far as practicable, apply to the securities deposited under this section. "1cept as otherwise pro/ided in this ,ode, no >ud0ment creditor or other claimant shall ha/e the ri0ht to le/y upon any of the securities of the insurer held on deposit under this section or held on deposit pursuant to the re2uirement of the ,ommissioner. (ection 21C. #fter satisfyin0 the re2uirements contained in the precedin0 section, any domestic nonDlife insurance company, shall in/est, to an amount prescribed below, its funds in, or otherwise, ac2uire or loan upon, only the classes of in/estments described in (ection 2C6, includin0 securities issued by any re0istered enterprise, as this term is defined in "1ecuti/e %rder No. 226, otherwise *nown as +)he %mnibus 'n/estments ,ode of 1BA@N and such other classes of in/estments as may be authori7ed by the ,ommissioner for purposes of this section: Provided, )hat: 3a4 No more than twenty percent 32CG4 of the net worth of such company as shown by its latest financial statement appro/ed by the ,ommissioner shall be in/ested in the lot and buildin0 in which the insurance company conducts its business5 and 3b4 )he total in/estment of an insurance company in any re0istered enterprise shall not e1ceed twenty percent 32CG4 of the net worth of said insurance company as shown by its aforesaid financial statement nor twenty percent 32CG4 of the paidDup capital of the re0istered enterprise e1cludin0 the intended

in/estment, unless pre/iously authori7ed by the ,ommissioner: Provided, further, )hat such in/estments, free from any lien or encumbrance, shall be at least e2ual in amount to the a00re0ate amount of: 314 its le0al reser/e, as pro/ided in (ection 21B, and 324 its reser/e fund held for reinsurance as pro/ided for in the pertinent treaty pro/ision in the case of reinsurance ceded to authori7ed insurers. (ection 211. #fter satisfyin0 the re2uirements contained in (ections 1B@, 1BB, 2CB and 21C, any nonDlife insurance company may in/est any portion of its funds representin0 earned surplus in any of the in/estments described in (ections 2C8, 2C6 and 2C@, or in any securities issued by a re0istered enterprise mentioned in the precedin0 sections: Provided, )hat no in/estment in stoc*s or bonds of any sin0le entity shall in the a00re0ate, e1ceed twenty percent 32CG4 of the net worth of the insurance company as shown in its latest financial statement appro/ed by the ,ommissioner or twenty percent 32CG4 of the paidDup capital of the issuin0 company, whiche/er is lesser, unless otherwise appro/ed by the ,ommissioner. (ection 212. #fter satisfyin0 the minimum capital in/estment re2uired in (ection 2CB, any life insurance company may in/est its le0al policy reser/e, as pro/ided in (ection 21@ or in (ection 21A, in any of the classes of securities or types of in/estments described in (ections 2C8, 2C6, 2C@ and 2CA, sub>ect to the limitations therein contained, and in any securities issued by any re0istered enterprise mentioned in (ection 21C, free from any lien or encumbrance, in such amounts as may be appro/ed by the ,ommissioner. (uch company may li*ewise in/est any portion of its earned surplus in the aforesaid securities or in/estments sub>ect to the aforesaid limitations. (ection 216. #ny in/estment made in /iolation of the applicable pro/isions of this title shall be considered nonDadmitted assets. (ection 218. 3a4 #ll bonds or other instruments of indebtedness ha/in0 a fi1ed term and rate of interest and held by any life insurance company

authori7ed to do business in this country, if amply secured and if not in default as to principal or interest, shall be /alued based on their amorti7ed cost usin0 effecti/e interest method less impairment and unreco/erable amount based on appropriate measurement methods which are 0enerally accepted in the industry and accepted by the ,ommissioner. )he ,ommissioner shall ha/e the power to determine the eli0ibility of any such in/estments for /aluation on the basis of amorti7ation, and may by re0ulation prescribe or limit the classes of securities so eli0ible for amorti7ation. #ll bonds or other instruments of indebtedness which in the >ud0ment of the ,ommissioner are not amply secured shall not be eli0ible for amorti7ation and shall be /alued in accordance with para0raph two. )he ,ommissioner may, if he finds that the interest of policyholders so permit or re2uire, by official re0ulation permit or re2uire any class or classes of insurers, other than life insurance companies authori7ed to do business in this country, to /alue their bonds or other instruments of indebtedness in accordance with the fore0oin0 rule. 3b4 )he in/estments of all insurers authori7ed to do business in this country, e1cept securities sub>ect to amorti7ation and e1cept as otherwise pro/ided in this chapter, shall be /alued, in the discretion of the ,ommissioner, at their amorti7ed cost usin0 effecti/e interest method less impairment and unreco/erable amount or at /aluation representin0 their fair mar*et /alue. 'f the ,ommissioner finds that in /iew of the character of in/estments of any insurer authori7ed to do business in this country it would be prudent for such insurer to establish a special reser/e for possible losses or fluctuations in the /alues of its in/estments, he may re2uire such insurer to establish such reser/e, reasonable in amount, and include a report thereon in any statement or report of the financial condition of such insurer. )he ,ommissioner may, in connection with any e1amination or re2uired financial statement of an authori7ed insurer, re2uire such insurer to furnish him complete financial statements and audited report of the financial condition of any corporation of which the securities are owned wholly or partly by such insurer and may cause an e1amination to be made of any subsidiary or

affiliate of such insurer as appropriate to specific in/estments as pro/ided in appropriate circulars issued by the ,ommissioner. 3c4 'n/estments in e2uity of an insurance company shall be /alued as follows: 314 $isted stoc*s shall be /alued at mar*et /alue and periodically ad>usted to reflect mar*et chan0es throu0h a special /aluation account to reflect their reali7able /alue when sold5 324 ;nlisted stoc*s shall be /alued at ad>usted boo* /alue based on the latest un2ualified audited financial statements of the company which issued such stoc*s5 and 364 (toc*s of a corporation under the control of the insurer shall be /alued usin0 the e2uity method which is the cost plus or minus the share of the controllin0 company in the earnin0s or losses of the controlled company after ac2uisition of such stoc*s. 3d4 )he stoc* of an insurance company shall be /alued at the lesser of its mar*et /alue or its boo* /alue as shown by its last appro/ed audited financial statement or the last report on e1amination, whiche/er is more recent. )he boo* /alue of a share of common stoc* of an insurance company shall be ascertained by di/idin0 314 the amount of its capital and surplus less the /alue of all of its preferred stoc*, if any, outstandin0, by 324 the number of shares of its common stoc* issued and outstandin0. Notwithstandin0 the fore0oin0 pro/isions, an insurer may, at its option, /alue its holdin0s of stoc* in a subsidiary insurance company in an amount not less than ac2uisition cost if such ac2uisition cost is less than the /alue determined as hereinbefore pro/ided. 3e4 Real estate ac2uired by foreclosure or by deed in lieu thereof, in the absence of a recent appraisal deemed by the ,ommissioner to be reliable, shall not be /alued at an amount 0reater than the unpaid

principal of the defaulted loan at the date of such foreclosure or deed, to0ether with any ta1es and e1penses paid or incurred by such insurer at such time in connection with such ac2uisition, and the cost of additions or impro/ements thereafter paid by such insurer and any amount or amounts thereafter paid by such insurer or any assessments le/ied for impro/ements in connection with the property. 3f4 Purchase money mort0a0es recei/ed on dispositions of real property held pursuant to (ection 2CA shall be /alued in an amount e2ui/alent to ninety percent 3BCG4 of the /alue of such real property. Purchase money mort0a0es recei/ed on disposition of real property otherwise held shall be /alued in an amount not e1ceedin0 ninety percent 3BCG4 of the /alue of such real property as determined by an appraisal made by an appraiser at or about the time of disposition of such real property. 304 )he stoc* of a subsidiary of an insurer shall be /alued on the basis of the 0reater of: 314 )he /alue of only such of the assets of such subsidiary as would constitute lawful in/estments for the insurer if ac2uired or held directly by the insurer5 or 324 (uch other /alue determined pursuant to standards and cumulati/e limitations, contained in a re0ulation to be promul0ated by the ,ommissioner. 3h4 Notwithstandin0 any pro/ision contained in this section or elsewhere in this chapter, if the ,ommissioner finds that the interests of policyholders so permit or re2uire, he may permit or re2uire any class or classes of insurers authori7ed to do business in this country to /alue their in/estments or any class or classes thereof as of any date heretofore or hereafter in accordance with any applicable /aluation or method. (ection 21?. 't shall be the duty of the officers of the insurance company to report within the first fifteen 31?4 days of e/ery month all such in/estments as may be made by them durin0 the precedin0 month,

and the ,ommissioner may, if such in/estments or any of them seem in>udicious to him, re2uire the sale or disposal of the same. )he report shall also include a list of in/estments sold or disposed of by the company durin0 the same period. )')$" ? R"("R&"( (ection 216. "/ery life insurance company, doin0 business in the Philippines, shall annually ma*e a /aluation of all policies, additions thereto, unpaid di/idends, and all other obli0ations outstandin0 on the thirtyDfirst day of December of the precedin0 year. #ll such /aluations shall be made accordin0 to the standard adopted by the company, as prescribed by the ,ommissioner in accordance with internationally accepted actuarial standards, which standard shall be stated in its annual report. (uch standard of /aluations shall be accordin0 to a standard table of mortality with interest to be determined by the 'nsurance ,ommissioner. .hen the preliminary term basis is used, the term insurance shall be limited to the first policy year. )he results of such /aluations shall be reported to the ,ommissioner on or before the thirtieth day of #pril of each year accompanied by a sworn statement of a desi0nated company officer and statin0 the methods and assumptions used in arri/in0 at the /alues reported. (ection 21@. )he a00re0ate net /alue so ascertained of the policies of such company shall be deemed its reser/e liability, to pro/ide for which it shall hold funds in secure in/estments e2ual to such net /alue, abo/e all its other liabilities5 and it shall be the duty of the ,ommissioner, after ha/in0 /erified, to such an e1tent as he may deem necessary, the /aluation of all policies in force, to satisfy himself that the company has such amount in safe le0al securities after all other debts and claims a0ainst it ha/e been pro/ided for.

)he reser/e liability for /ariable contracts defined in (ection 26A shall be established in accordance with actuarial procedures that reco0ni7e the /ariable nature of the benefits pro/ided, and shall be appro/ed by the ,ommissioner. (ection 21A. "/ery life insurance company, conducted on the mutual plan or a plan in which policyholders are by the terms of their policies entitled to share in the profits or surplus shall, on all policies of life insurance heretofore or hereafter issued, under the conditions of which the distribution of surplus is deferred to a fi1ed or specified time and contin0ent upon the policy bein0 in force and the insured li/in0 at that time, annually ascertain the amount of the surplus to which all such policies as a separate class are entitled, and shall annually apportion to such policies as a class the amount of the surplus so ascertained, and carry the amount of such apportioned surplus, plus the actual interest earnin0s and accretions to such fund, as a distinct and separate liability to such class of policies on and for which the same was accumulated, and no company or any of its officers shall be permitted to use any part of such apportioned surplus fund for any purpose whatsoe/er other than for the e1press purpose for which the same was accumulated. (ection 21B. "/ery insurance company, other than life, shall maintain a reser/e for unearned premiums on its policies in force, which shall be char0ed as a liability in any determination of its financial condition. (uch reser/e shall be calculated based on the twentyDfourth 328th4 method. (ection 22C. 'n addition to its liabilities and reser/es on contracts of insurance issued by it, e/ery insurance company shall be char0ed with the estimated amount of all of its other liabilities, includin0 ta1es, e1penses and other obli0ations due or accrued at the date of statement, and includin0 any special reser/es re2uired by the ,ommissioner pursuant to the pro/isions of this ,ode. )')$" 6 $'M') %: ('N!$" R'(H

(ection 221. No insurance company other than life, whether forei0n or domestic, shall retain any ris* on any one sub>ect of insurance in an amount e1ceedin0 twenty percent 32CG4 of its net worth. :or purposes of this section, the term sub*ect of insurance shall include all properties or ris*s insured by the same insurer that customarily are considered by nonDlife company underwriters to be sub>ect to loss or dama0e from the same occurrence of any ha7ard insured a0ainst. )he ,ommissioner may issue re0ulations pro/idin0 for a ma1imum limit on the o/erall retained ris*s of insurers to ser/e as a catastrophe co/er re2uirement for the same. Reinsurance ceded as authori7ed under the succeedin0 title shall be deducted in determinin0 the ris* retained. #s to surety ris*, deduction shall also be made of the amount assumed by any other company authori7ed to transact surety business and the /alue of any security mort0a0ed, pled0ed, or held sub>ect to the surety-s control and for the surety-s protection. )')$" @ R"'N(;R#N," )R#N(#,)'%N( (ection 222. #n insurance company doin0 business in the Philippines may accept reinsurances only of such ris*s, and retain ris* thereon within such limits, as it is otherwise authori7ed to insure. (ection 226. No insurance company doin0 business in the Philippines shall cede all or part of any ris*s situated in the Philippines by way of reinsurance directly to any forei0n insurer not authori7ed to do business in the Philippines unless such forei0n insurer or, if the ser/ices of a nonresident bro*er are utili7ed, such nonresident bro*er is represented in the Philippines by a resident a0ent duly re0istered with the ,ommissioner as re2uired in this ,ode. )he resident a0ent of such unauthori7ed forei0n insurer or nonresident bro*er shall immediately upon re0istration furnish the ,ommissioner

with the annual statement of such insurer, or of such company or companies where such bro*er may place Philippine business as of the year precedin0 such re0istration, and annually thereafter as soon as a/ailable. (ection 228. #ll insurance companies, both life and nonDlife, authori7ed to do business in the Philippines shall cede their e1cess ris*s to other companies similarly authori7ed to do business in the Philippines in such amounts and under such arran0ements as would be consistent with sound underwritin0 practices before they enter into reinsurance arran0ements with unauthori7ed forei0n insurers. (ection 22?. #ny insurance company doin0 business in the Philippines desirin0 to cede their e1cess ris*s to forei0n insurance or reinsurance companies not authori7ed to transact business in the Philippines may do so under such terms and conditions which the ,ommissioner may prescribe. (hould any reinsurance a0reement be for any reason cancelled or terminated, the cedin0 company concerned shall inform the ,ommissioner in writin0 of such cancellation or termination within thirty 36C4 days from the date of such cancellation or termination or from the date notice or information of such cancellation or termination is recei/ed by such company as the case may be. (ection 226. "/ery insurance company authori7ed to do business in the Philippines shall report to the ,ommissioner on forms prescribed by him the particulars of reinsurance treaties or any new treaties or chan0es in e1istin0 treaties within three 364 months from their effecti/ity. (ection 22@. No credit shall be allowed as an admitted asset or as a deduction from liability, to any cedin0 insurer for reinsurance made, ceded, renewed, or otherwise becomin0 effecti/e after January 1, 1B@?, unless the reinsurance shall be payable by the assumin0 insurer on the basis of the liability of the cedin0 insurer under the contract or contracts reinsured without diminution because of the insol/ency of the cedin0

insurer nor unless under the contract or contracts of reinsurance the liability for such reinsurance is assumed by the assumin0 insurer or insurers as of the same effecti/e date5 nor unless the reinsurance a0reement pro/ides that payments by the assumin0 insurer shall be made directly to the cedin0 insurer or to its li2uidator, recei/er, or statutory successor e1cept: 3a4 .here the contract specifically pro/ides another payee of such reinsurance in the e/ent of the insol/ency of the cedin0 insurer5 and 3b4 .here the assumin0 insurer with the consent of the direct insured or insureds has assumed such policy obli0ations of the cedin0 insurer as direct obli0ations of the assumin0 insurer to the payees under such policies and in substitution for the obli0ations of the cedin0 insurer to such payees. (ection 22A. No life insurance company doin0 business in the Philippines shall reinsure its whole ris* on any indi/idual life or >oint li/es, or substantially all of its insurance in force, without ha/in0 first obtained the written permission of the ,ommissioner. )')$" #NN;#$ ()#)"M"N) (ection 22B. "/ery insurance company doin0 business in the Philippines shall terminate its fiscal period on the thirtyDfirst day of December e/ery year, and shall annually on or before the thirtieth day of #pril of each year render to the ,ommissioner a statement si0ned and sworn to by the chief officer of such company showin0, in such form and details as may be prescribed by the ,ommissioner, the e1act condition of its affairs on the precedin0 thirtyDfirst day of December. )he annual statement shall be prepared in accordance with the financial reportin0 framewor* as determined by the ,ommissioner. 'n addition, the ,ommissioner may re2uire other rele/ant information. )he form and

details of such other rele/ant information shall be prescribed by the ,ommissioner and shall form part of the supplementary schedules to the annual statement. #ny entry in the statement which is found to be false shall constitute a misdemeanor and the officer si0nin0 such statement shall be sub>ect to the penalty pro/ided for under (ection 882. (ection 26C. "/ery insurance company authori7ed under )itle 1C of this chapter to issue, deli/er or use /ariable contracts shall annually file with the ,ommissioner separate annual statement of its separate /ariable accounts. (uch statement shall be on a form prescribed or appro/ed by the ,ommissioner and shall include details as to all of the income, disbursements, assets and liability items of and associated with the said separate /ariable accounts. (aid statement shall be under oath of two 324 officers of the company and shall be filed simultaneously with the annual statement re2uired by the precedin0 section. (ection 261. .ithin thirty 36C4 days after receipt of the annual statement appro/ed by the ,ommissioner, e/ery insurance company doin0 business in the Philippines shall publish in a newspaper of 0eneral circulation, a full synopsis of its annual financial statement showin0 fully the conditions of its business, and settin0 forth its resources and liabilities in accordance with such form prescribed by the ,ommissioner. )he ,ommissioner shall ha/e the authority to ma*e, amend, and rescind such accountin0 rules and re0ulations as may be necessary to carry out the pro/isions of this ,ode, and define accountin0, technical and trade terms used in this ,ode: Provided, )hat such shall be in accordance with internationally accepted accountin0 standards. #mon0 other thin0s, the ,ommissioner may prescribe the form or forms in which re2uired information shall be set forth, the items or details to be shown in the balance sheet and income statement, and the methods to be followed in the preparation of accounts, appraisal or /aluation of assets and liabilities, determination of recurrin0 and nonrecurrin0 income, differentiation of in/estment and operatin0 income, and in the

preparation, where the ,ommissioner deems it necessary or desirable, of consolidated balance sheets or income accounts of any person directly or indirectly controllin0 or controlled by the insurance company. )')$" B P%$',< :%RM( (ection 262. No policy, certificate or contract of insurance shall be issued or deli/ered within the Philippines unless in the form pre/iously appro/ed by the ,ommissioner, and no application form shall be used with, and no rider, clause, warranty or endorsement shall be attached to, printed or stamped upon such policy, certificate or contract unless the form of such application, rider, clause, warranty or endorsement has been appro/ed by the ,ommissioner. (ection 266. 'n the case of indi/idual life or endowment insurance, the policy shall contain in substance the followin0 conditions: 3a4 # pro/ision that the policyholder is entitled to a 0race period either of thirty 36C4 days or of one 314 month within which the payment of any premium after the first may be made, sub>ect at the option of the insurer to an interest char0e not in e1cess of si1 percent 36G4 per annum for the number of days of 0race elapsin0 before the payment of the premium, durin0 which period of 0race the policy shall continue in full force, but in case the policy becomes a claim durin0 the said period of 0race before the o/erdue premium is paid, the amount of such premium with interest may be deducted from the amount payable under the policy in settlement5 3b4 # pro/ision that the policy shall be incontestable after it shall ha/e been in force durin0 the lifetime of the insured for a period of two 324 years from its date of issue as shown in the policy, or date of appro/al of last reinstatement, e1cept for nonpayment of premium and e1cept for /iolation of the

conditions of the policy relatin0 to military or na/al ser/ice in time of war5 3c4 # pro/ision that the policy shall constitute the entire contract between the parties, but if the company desires to ma*e the application a part of the contract it may do so pro/ided a copy of such application shall be indorsed upon or attached to the policy when issued, and in such case the policy shall contain a pro/ision that the policy and the application therefor shall constitute the entire contract between the parties5 3d4 # pro/ision that if the a0e of the insured is considered in determinin0 the premium and the benefits accruin0 under the policy, and the a0e of the insured has been misstated, the amount payable under the policy shall be such as the premium would ha/e purchased at the correct a0e5 3e4 'f the policy is participatin0, a pro/ision that the company shall periodically ascertain and apportion any di/isible surplus accruin0 on the policy under conditions specified therein5 3f4 # pro/ision specifyin0 the options to which the policyholder is entitled to in the e/ent of default in a premium payment after three 364 full annual premiums shall ha/e been paid. (uch option shall consist of: 314 # cash surrender /alue payable upon surrender of the policy which shall not be less than the reser/e on the policy, the basis of which shall be indicated, for the then current policy year and any di/idend additions thereto, reduced by a surrender char0e which shall not be more than oneDfifth 31F?4 of the entire reser/e or two and oneD half percent 32MG4 of the amount insured and any di/idend additions thereto5 and

324 %ne or more paidDup benefits on a plan or plans specified in the policy of such /alue as may be purchased by the cash surrender /alue. 304 # pro/ision that at any time after a cash surrender /alue is a/ailable under the policy and while the policy is in force, the company will ad/ance, on proper assi0nment or pled0e of the policy and on sole security thereof, a sum e2ual to, or at the option of the owner of the policy, less than the cash surrender /alue on the policy, at a specified rate of interest, not more than the ma1imum allowed by law, to be determined by the company from time to time, but not more often than once a year, sub>ect to the appro/al of the ,ommissioner5 and that the company will deduct from such loan /alue any e1istin0 indebtedness on the policy and any unpaid balance of the premium for the current policy year, and may collect interest in ad/ance on the loan to the end of the current policy year, which pro/ision may further pro/ide that such loan may be deferred for not e1ceedin0 si1 364 months after the application therefor is made5 3h4 # table showin0 in fi0ures cash surrender /alues and paidDup options a/ailable under the policy each year upon default in premium payments, durin0 at least twenty 32C4 years of the policy be0innin0 with the year in which the /alues and options first become a/ailable, to0ether with a pro/ision that in the e/ent of the failure of the policyholder to elect one of the said options within the time specified in the policy, one of said options shall automatically ta*e effect and no policyholder shall e/er forfeit his ri0ht to same by reason of his failure to so elect5 3i4 'n case the proceeds of a policy are payable in installments or as an annuity, a table showin0 the minimum amounts of the installments or annuity payments5 3>4 # pro/ision that the policyholder shall be entitled to ha/e the policy reinstated at any time within three 364 years from the date

of default of premium payment unless the cash surrender /alue has been duly paid, or the e1tension period has e1pired, upon production of e/idence of insurability satisfactory to the company and upon payment of all o/erdue premiums and any indebtedness to the company upon said policy, with interest rate not e1ceedin0 that which would ha/e been applicable to said premiums and indebtedness in the policy years prior to reinstatement. #ny of the fore0oin0 pro/isions or portions thereof not applicable to sin0le premium or term policies shall to that e1tent not be incorporated therein5 and any such policy may be issued and deli/ered in the Philippines which in the opinion of the ,ommissioner contains pro/isions on any one or more of the fore0oin0 re2uirements more fa/orable to the policyholder than hereinbefore re2uired. )his section shall not apply to policies of 0roup life or industrial life insurance. (ection 268. No policy of 0roup life insurance shall be issued and deli/ered in the Philippines unless it contains in substance the followin0 pro/isions, or pro/isions which in the opinion of the ,ommissioner are more fa/orable to the persons insured, or at least as fa/orable to the persons insured and more fa/orable to the policyholders: 3a4 # pro/ision that the policyholder is entitled to a 0race period of either thirty 36C4 days or of one 314 month for the payment of any premium due after the first, durin0 which 0race period the death benefit co/era0e shall continue in force, unless the policyholder shall ha/e 0i/en the insurer written notice of discontinuance in ad/ance of the date of discontinuance and in accordance with the terms of the policy. )he policy may pro/ide that the policyholder shall be liable for the payment of a pro rata premium for the time the policy is in force durin0 such 0race period5

3b4 # pro/ision that the /alidity of the policy shall not be contested, e1cept for nonpayment of premiums after it has been in force for two 324 years from its date of issue5 and that no statement made by any insured under the policy relatin0 to his insurability shall be used in contestin0 the /alidity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two 324 years durin0 such person-s lifetime nor unless contained in a written instrument si0ned by him5 3c4 # pro/ision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by persons insured shall be deemed representations and not warranties, and that no statement made by any insured shall be used in any contest unless a copy of the instrument containin0 the statement is or has been furnished to such person or to his beneficiary5 3d4 # pro/ision settin0 forth the conditions, if any, under which the insurer reser/es the ri0ht to re2uire a person eli0ible for insurance to furnish e/idence of indi/idual insurability satisfactory to the insurer as a condition to part or all of his co/era0e5 3e4 # pro/ision specifyin0 an e2uitable ad>ustment of premiums or of benefits or of both to be made in the e/ent that the a0e of a person insured has been misstated, such pro/ision to contain a clear statement of the method of ad>ustment to be used5 3f4 # pro/ision that any sum becomin0 due by reason of death of the person insured shall be payable to the beneficiary desi0nated by the insured, sub>ect to the pro/isions of the policy in the e/ent that there is no desi0nated beneficiary, as to all or any part of such sum, li/in0 at the death of the insured, and sub>ect to any ri0ht reser/ed by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not

e1ceedin0 :i/e hundred pesos 3P?CC.CC4 to any person appearin0 to the insurer to be e2uitably entitled thereto by reason of ha/in0 incurred funeral or other e1penses incident to the last illness or, death of the person insured5 304 # pro/ision that the insurer will issue to the policyholder for deli/ery to each person insured a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable, and the ri0hts set forth in para0raphs 3h4, 3i4 and 3>4 followin05 3h4 # pro/ision that if the insurance, or any portion of it, on a person co/ered under the policy ceases because of termination of employment or of membership in the class or classes eli0ible for co/era0e under the policy, such person shall be entitled to ha/e issued to him by the insurer, without e/idence of insurability, an indi/idual policy of life insurance without disability or other supplementary benefits, pro/ided application for the indi/idual policy and payment of the first premium to the insurer shall be made within thirty 36C4 days after such termination, and pro/ided further that: 314 )he indi/idual policy shall be on any one of the forms, e1cept term insurance, then customarily issued by the insurer at the a0e and for an amount not in e1cess of the co/era0e under the 0roup policy5 and 324 )he premium on the indi/idual policy shall be at the insurer-s then customary rate applicable to the form and amount of the indi/idual policy, to the class of ris* to which such person then belon0s, and to his a0e attained on the effecti/e date of the indi/idual policy. 3i4 # pro/ision that if the 0roup policy terminates or is amended so as to terminate the insurance of any class of insured persons, e/ery person insured thereunder at the date of such termination

whose insurance terminates and who has been so insured for fi/e 3?4 years prior to such termination date shall be entitled to ha/e issued to him by the insurer an indi/idual policy of life insurance sub>ect to the same limitations as set forth in para0raph 3h4, e1cept that the 0roup policy may pro/ide that the amount of such indi/idual policy shall not e1ceed the amount of the person-s life insurance protection ceasin05 3>4 # pro/ision that if a person insured under the 0roup policy dies durin0 the thirty 36C4Dday period within which he would ha/e been entitled to an indi/idual policy issued to him in accordance with para0raphs 3h4 and 3i4 abo/e and before such indi/idual policy shall ha/e become effecti/e, the amount of life insurance which he would ha/e been entitled to ha/e issued to him as an indi/idual policy shall be payable as a claim under the 0roup policy whether or not application for the indi/idual policy or the payment of the first premium has been made5 3*4 'n the case of a policy issued to a creditor to insure debtors of such creditor, a pro/ision that the insurer will furnish to the policyholder for deli/ery to each debtor insured under the policy a form which will contain a statement that the life of the debtor is insured under the policy and that any death benefit paid thereunder by reason of his death shall be applied to reduce or e1tin0uish indebtedness. )he pro/isions of para0raphs 3f4 to 3>4 shall not apply to policies issued to a creditor to insure his debtors. 'f a 0roup life policy is on a plan of insurance other than term, it shall contain a nonDforfeiture pro/ision or pro/isions which in the opinion of the ,ommissioner is or are e2uitable to the insured or the policyholder: Provided, )hat nothin0 herein contained shall be so construed as to re2uire 0roup life policies to contain the same nonDforfeiture pro/isions as are re2uired of indi/idual life policies.

(ection 26?. )he term industrial life insurance as used in this ,ode shall mean that form of life insurance under which the premiums are payable either monthly or oftener, if the face amount of insurance pro/ided in any policy is not more than fi/e hundred times that of the current statutory minimum daily wa0e in the ,ity of Manila, and if the words industrial policy are printed upon the policy as part of the descripti/e matter. #n industrial life policy shall not lapse for nonpayment of premium if such nonpayment was due to the failure of the company to send its representati/e or a0ent to the insured at the residence of the insured or at some other place indicated by him for the purpose of collectin0 such premium: Provided, )hat the pro/isions of this para0raph shall not apply when the premium on the policy remains unpaid for a period of three 364 months or twel/e 3124 wee*s after the 0race period has e1pired. (ection 266. 'n the case of industrial life insurance, the policy shall contain in substance the followin0 pro/isions: 3a4 # pro/ision that the insured is entitled to a 0race period of four 384 wee*s within which the payment of any premium after the first may be made, e1cept that where premiums are payable monthly, the period of 0race shall be either one 314 month or thirty 36C4 days5 and that durin0 the period of 0race, the policy shall continue in full force, but if durin0 such 0race period the policy becomes a claim, then any o/erdue and unpaid premiums may be deducted from any amount payable under the policy in settlement5 3b4 # pro/ision that the policy shall be incontestable after it has been in force durin0 the lifetime of the insured for a specified period, not more than two 324 years from its date of issue, e1cept for nonpayment of premiums and e1cept for /iolation of the conditions of the policy relatin0 to na/al or military ser/ice, or ser/ices au1iliary thereto, and e1cept as to pro/isions relatin0 to benefits in the e/ent of disability as defined in the policy, and

those 0rantin0 additional insurance specifically a0ainst death by accident or by accidental means, or to additional insurance a0ainst loss of, or loss of use of, specific members of the body5 3c4 # pro/ision that the policy shall constitute the entire contract between the parties, or if a copy of the application is endorsed upon and attached to the policy when issued, a pro/ision that the policy and the application therefor shall constitute the entire contract between the parties, and in the latter case, a pro/ision that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties5 3d4 # pro/ision that if the a0e of the person insured, or the a0e of any person, considered in determinin0 the premium, or the benefits accruin0 under the policy, has been misstated, any amount payable or benefit accruin0 under the policy shall be such as the premium paid would ha/e purchased at the correct a0e5 3e4 # pro/ision that if the policy is a participatin0 policy, the company shall periodically ascertain and apportion any di/isible surplus accruin0 on the policy under the conditions specified therein5 3f4 # pro/ision that in the e/ent of default in premium payments after three 364 full years- premiums ha/e been paid, the policy shall be con/erted into a stipulated form of insurance, and that in the e/ent of default in premium payments after fi/e 3?4 full years- premiums ha/e been paid, a specified cash surrender /alue shall be a/ailable, in lieu of the stipulated form of insurance, at the option of the policyholder. )he net /alue of such stipulated form of insurance and the amount of such cash /alue shall not be less than the reser/e on the policy and di/idend additions thereto, if any, at the end of the last completed policy year for which premiums shall ha/e been paid 3the policy to specify the mortality table, rate of interest and method of /aluation adopted

to compute such reser/e4, e1clusi/e of any reser/e on disability benefits and accidental death benefits, less an amount not to e1ceed two and oneDhalf percent 32MG4 of the ma1imum amount insured by the policy and di/idend additions thereto, if any, when the issue a0e is under ten 31C4 years, and less an amount not to e1ceed two and oneDhalf percent 32MG4 of the current amount insured by the policy and di/idend additions thereto, if any, if the issue a0e is ten 31C4 years or older, and less any e1istin0 indebtedness to the company on or secured by the policy5 304 # pro/ision that the policy may be surrendered to the company at its home office within a period of not less than si1ty 36C4 days after the due date of a premium in default for the specified cash /alue: Provided, )hat the insurer may defer payment for not more than si1 364 months after the application therefor is made5 3h4 # table that shows in fi0ures the nonforfeiture benefits a/ailable under the policy e/ery year upon default in payment of premiums durin0 at least the first twenty 32C4 years of the policy, such table to be0in with the year in which such /alues become a/ailable, and a pro/ision that the company will furnish upon re2uest an e1tension of such table beyond the year shown in the policy5 3i4 # pro/ision that specifies which one of the stipulated forms of insurance pro/ided for under the pro/ision of para0raph 3f4 of this section shall ta*e effect in the e/ent of the insured-s failure, within si1ty 36C4 days from the due date of the premium in default, to notify the insurer in writin0 as to which one of such forms he has selected5 3>4 # pro/ision that the policy may be reinstated at any time within two 324 years from the due date of the premium in default unless the cash surrender /alue has been paid or the period of e1tended term insurance e1pired, upon production of e/idence of

insurability satisfactory to the company and payment of arrears of premiums with interest at a rate not e1ceedin0 si1 percent 36G4 per annum payable annually5 3*4 # pro/ision that when a policy shall become a claim by death of the insured, settlement shall be made upon receipt of due proof of death, or not later than two 324 months after receipt of such proof5 3l4 # title on the face and on the bac* of the policy correctly describin0 its form5 3m4 # space on the front or the bac* of the policy for the name of the beneficiary desi0nated by the insured with a reser/ation of the insured-s ri0ht to desi0nate or chan0e the beneficiary after the issuance of the policy. )he policy may also pro/ide that no desi0nation or chan0e of beneficiary shall be bindin0 on the insurer until endorsed on the policy by the insurer, and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to ha/e an insurable interest in the life of the insured. (uch policy may also contain a pro/ision that if the beneficiary desi0nated in the policy does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than thirty 36C4 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not le0ally competent to 0i/e /alid release, then the insurer may ma*e any payment thereunder to the e1ecutor or administrator of the insured, or to any of the insured-s relati/es by blood or le0al adoption or connections by marria0e or to any person appearin0 to the insurer to be e2uitably entitled thereto by reason of ha/in0 incurred e1pense for the maintenance, medical attention or burial of the insured5 and 3n4 # pro/ision that when an industrial life insurance policy is issued pro/idin0 for accidental or health benefits, or both, in

addition to life insurance, the fore0oin0 pro/isions shall apply only to the life insurance portion of the policy. #ny of the fore0oin0 pro/isions or portions thereof not applicable to nonparticipatin0 or term policies shall to that e1tent not be incorporated therein. )he fore0oin0 pro/isions shall not apply to policies issued or 0ranted pursuant to the nonforfeiture pro/isions prescribed in pro/isions of para0raphs 3f4 and 3i4 of this section, nor shall pro/isions of para0raphs 3f4, 304, 3h4, and 3i4 hereof be re2uired in term insurance of twenty 32C4 years or less but such term policies shall specify the mortality table, rate of interest, and method of computin0 reser/es. (ection 26@. No policy of industrial life insurance shall be issued or deli/ered in the Philippines if it contains any of the followin0 pro/isions: 3a4 # pro/ision that 0i/es the insurer the ri0ht to declare the policy /oid because the insured has had any disease or ailment, whether specified or not, or because the insured has recei/ed institutional, hospital, medical or sur0ical treatment or attention, e1cept a pro/ision which 0i/es the insurer the ri0ht to declare the policy /oid if the insured has, within two 324 years prior to the issuance of the policy, recei/ed institutional, hospital, medical or sur0ical treatment or attention and if the insured or the claimant under the policy fails to show that the condition occasionin0 such treatment or attention was not of a serious nature or was not material to the ris*5 3b4 # pro/ision that 0i/es the insurer the ri0ht to declare the policy /oid because the insured has been re>ected for insurance, unless such ri0ht be conditioned upon a showin0 by the insurer that *nowled0e of such re>ection would ha/e led to a refusal by the insurer to ma*e such contract5 3c4 # pro/ision that allows the company to pay the proceeds of the policy at the death of the insured to any person other than the named beneficiary, e1cept in accordance with a standard

pro/ision as specified under the pro/isions of para0raph 3m4 of the precedin0 section5 3d4 # pro/ision that limits the time within which any action at law or in e2uity may be commenced to less than si1 364 years after the cause of action shall accrue5 and 3e4 # pro/ision that specifies any mode of settlement at maturity of less /alue than the amount insured by the policy plus di/idend additions, if any, less any indebtedness to the company on the policy and less any premium that may by the terms of the policy be deducted, payments to be made in accordance with the terms of the policy. Nothin0 contained in this section nor in the pro/ision of para0raph 3b4 of the precedin0 section, relatin0 to incontestability, shall be construed as prohibitin0 the life insurance company from placin0 in its industrial life policies pro/isions limitin0 its liability with respect to: 314 Death resultin0 from a/iation other than as a fareDpayin0 passen0er on a re0ularly scheduled route between definitely established airports5 and 324 Military or na/al ser/ice: Provided, )hat if the liability of the company is limited as herein pro/ided, such liability shall in no e/ent be fi1ed at an amount less than the reser/e on the policy 3e1cludin0 the reser/e for any additional benefits in the e/ent of death by accident or accidental means or for benefits in the e/ent of any type of disability4, less any indebtedness on or secured by such policy5 nor shall any pro/ision of this section apply to any pro/ision in an industrial life insurance policy for additional benefits in the e/ent of death by accident or accidental means. )')$" 1C &#R'#=$" ,%N)R#,)(

(ection 26A. 3a4 No insurance company authori7ed to transact business in the Philippines shall issue, deli/er, sell or use any /ariable contract in the Philippines, unless and until such company shall ha/e satisfied the ,ommissioner that its financial and 0eneral condition and its methods of operations, includin0 the issue and sale of /ariable contracts, are not and will not be ha7ardous to the public or to its policy and contract owners. No forei0n insurance company shall be authori7ed to issue, deli/er or sell any /ariable contract in the Philippines, unless it is li*ewise authori7ed to do so by the laws of its domicile. 3b4 )he term variable contract shall mean any policy or contract on either a 0roup or on an indi/idual basis issued by an insurance company pro/idin0 for benefits or other contractual payments or /alues thereunder to /ary so as to reflect in/estment results of any se0re0ated portfolio of in/estments or of a desi0nated separate account in which amounts recei/ed in connection with such contracts shall ha/e been placed and accounted for separately and apart from other in/estments and accounts. )his contract may also pro/ide benefits or /alues incidental thereto payable in fi1ed or /ariable amounts, or both. 't shall not be deemed to be a security or securities as defined in )he (ecurities #ct, as amended, or in the 'n/estment ,ompany #ct, as amended, nor sub>ect to re0ulations under said #cts. 3c4 'n determinin0 the 2ualifications of a company re2uestin0 authority to issue, deli/er, sell or use /ariable contracts, the ,ommissioner shall always consider the followin0: 314 )he history, financial and 0eneral condition of the company: Provided, )hat such company, if a forei0n company, must ha/e deposited with the ,ommissioner for the benefit and security of its /ariable contract owners in the Philippines, securities satisfactory to the ,ommissioner consistin0 of bonds of the !o/ernment of the Philippines or its instrumentalities with an actual mar*et /alue of )wo million pesos 3P2,CCC,CCC.CC45

324 )he character, responsibility and fitness of the officers and directors of the company5 and 364 )he law and re0ulation under which the company is authori7ed in the state of domicile to issue such contracts. 3d4 'f after notice and hearin0, the ,ommissioner shall find that the company is 2ualified to issue, deli/er, sell or use /ariable contracts in accordance with this ,ode and the re0ulations and rules issued thereunder, the correspondin0 order of authori7ation shall be issued. #ny decision or order denyin0 authority to issue, deli/er, sell or use /ariable contracts shall clearly and distinctly state the reasons and 0rounds on which it is based. (ection 26B. #ny insurance company issuin0 /ariable contracts pursuant to this ,ode may in its discretion issue contracts pro/idin0 a combination of fi1ed amount and /ariable amount of benefits and for option lumpDsum payment of benefits. (ection 28C. "/ery /ariable contract form deli/ered or issued for deli/ery in the Philippines, and e/ery certified form e/idencin0 /ariable benefits issued pursuant to any such contract on a 0roup basis, and the application, rider and endorsement forms applicable thereto and used in connection therewith, shall be sub>ect to the prior appro/al of the ,ommissioner. (ection 281. 'llustration of benefits payable under any /ariable contract shall not include or in/ol/e pro>ections of past in/estment e1perience into the future and shall conform with the rules and re0ulations promul0ated by the ,ommissioner. (ection 282. &ariable contracts may be issued on the industrial life basis, pro/ided that the pertinent pro/isions of this ,ode and of the rules and re0ulations of the ,ommissioner 0o/ernin0 /ariable contracts are complied with in connection with such contracts.

(ection 286. "/ery life insurance company authori7ed under the pro/isions of this ,ode to issue, deli/er, sell or use /ariable contracts shall, in connection with the same, establish one or more separate accounts to be *nown as separate /ariable accounts. #ll amounts recei/ed by the company in connection with any such contracts which are re2uired by the terms thereof, to be allocated or applied to one or more desi0nated separate /ariable accounts shall be placed in such desi0nated account or accounts. )he assets and liabilities of each such separate /ariable account shall at all times be clearly identifiable and distin0uishable from the assets and liabilities in all other accounts of the company. Notwithstandin0 any pro/ision of law to the contrary, the assets held in any such separate /ariable account shall not be char0eable with liabilities arisin0 out of any other business the company may conduct but shall be held and applied e1clusi/ely for the benefit of the owners or beneficiaries of the /ariable contracts applicable thereto. 'n the e/ent of the insol/ency of the company, the assets of each such separate /ariable account shall be applied to the contractual claims of the owners or beneficiaries of the /ariable contracts applicable thereto. "1cept as otherwise specifically pro/ided by the contract, no sale, e1chan0e or other transfer of assets may be made by a company, between any of its separate accounts or between any other in/estment account and one or more of its separate accounts, unless in the case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, or in case of a transfer from a separate account, such transfer would not cause the remainin0 assets of the account to become less than the reser/es and other contract liabilities with respect to such separate account. (uch transfer, whether into or from a separate account, shall be made by a transfer of cash, or by a transfer of securities ha/in0 a /aluation which could be readily determined in the mar*et place: Provided, )hat such transfer of securities is appro/ed by the ,ommissioner. )he ,ommissioner may authori7e other transfers amon0 such accounts, if, in his opinion, such transfers would not be ine2uitable. #ll amounts and assets allocated to any such separate /ariable account shall be owned by

the company and with respect to the same the company shall not be nor hold itself out to be a trustee. (ection 288. #ny insurance company which has established one or more separate /ariable accounts pursuant to the precedin0 section may in/est and rein/est all or any part of the assets allocated to any such account in the securities and in/estments authori7ed by (ections 2C8, 2C6, 2C@ and 2CA for any of the funds of an insurance company in such amount or amounts as may be appro/ed by the ,ommissioner. 'n addition thereto, such company may also in/est in common stoc*s or other e2uities which are listed on or admitted to tradin0 in a securities e1chan0e located in the Philippines, or which are publicly held and traded in the o/erDtheDcounter mar*et as defined by the ,ommissioner and as to which mar*et 2uotations ha/e been a/ailable: Provided, however, )hat no such company shall in/est in e1cess of ten percent 31CG4 of the assets of any such separate /ariable accounts in any one corporation issuin0 such common stoc*. )he assets and in/estments of such separate /ariable accounts shall not be ta*en into account in applyin0 the 2uantitati/e in/estment limitations applicable to other in/estments of the company. 'n the purchase of common capital stoc* or other e2uities, the insurer shall desi0nate to the bro*er, or to the seller if the purchase is not made throu0h a bro*er, the specific /ariable account for which the in/estment is made. (ection 28?. #ssets allocated to any separate /ariable account shall be /alued at their mar*et /alue on the date of any /aluation, or if there is no readily a/ailable mar*et /alue then in accordance with the terms of the /ariable contract applicable to such assets, or if there are no such contract terms then in such manner as may be prescribed by the rules and re0ulations of the ,ommissioner. (ection 286. )he reser/e liability for /ariable contracts shall be established in accordance with actuarial procedures that reco0ni7e the /ariable nature of the benefits pro/ided, and shall be appro/ed by the ,ommissioner.

)')$" 11 ,$#'M( ("))$"M"N) (ection 28@. 3a4 No insurance company doin0 business in the Philippines shall refuse, without >ust cause, to pay or settle claims arisin0 under co/era0es pro/ided by its policies, nor shall any such company en0a0e in unfair claim settlement practices. #ny of the followin0 acts by an insurance company, if committed without >ust cause and performed with such fre2uency as to indicate a 0eneral business practice, shall constitute unfair claim settlement practices: 314 Hnowin0ly misrepresentin0 to claimants pertinent facts or policy pro/isions relatin0 to co/era0e at issue5 324 :ailin0 to ac*nowled0e with reasonable promptness pertinent communications with respect to claims arisin0 under its policies5 364 :ailin0 to adopt and implement reasonable standards for the prompt in/esti0ation of claims arisin0 under its policies5 384 Not attemptin0 in 0ood faith to effectuate prompt, fair and e2uitable settlement of claims submitted in which liability has become reasonably clear5 or 3?4 ,ompellin0 policyholders to institute suits to reco/er amounts due under its policies by offerin0 without >ustifiable reason substantially less than the amounts ultimately reco/ered in suits brou0ht by them. 3b4 "/idence as to numbers and types of /alid and >ustifiable complaints to the ,ommissioner a0ainst an insurance company, and the ,ommissioner-s complaint e1perience with other insurance companies writin0 similar lines of insurance shall be admissible in e/idence in an administrati/e or >udicial proceedin0 brou0ht under this section.

3c4 'f it is found, after notice and an opportunity to be heard, that an insurance company has /iolated this section, each instance of noncompliance with para0raph 3a4 may be treated as a separate /iolation of this section and shall be considered sufficient cause for the suspension or re/ocation of the company-s certificate of authority. (ection 28A. )he proceeds of a life insurance policy shall be paid immediately upon maturity of the policy, unless such proceeds are made payable in installments or as an annuity, in which case the installments, or annuities shall be paid as they become due: Provided, however, )hat in the case of a policy maturin0 by the death of the insured, the proceeds thereof shall be paid within si1ty 36C4 days after presentation of the claim and filin0 of the proof of death of the insured. Refusal or failure to pay the claim within the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceilin0 prescribed by the Monetary =oard, unless such failure or refusal to pay is based on the 0round that the claim is fraudulent. )he proceeds of the policy maturin0 by the death of the insured payable to the beneficiary shall include the discounted /alue of all premiums paid in ad/ance of their due dates, but are not due and payable at maturity. (ection 28B. )he amount of any loss or dama0e for which an insurer may be liable, under any policy other than life insurance policy, shall be paid within thirty 36C4 days after proof of loss is recei/ed by the insurer and ascertainment of the loss or dama0e is made either by a0reement between the insured and the insurer or by arbitration5 but if such ascertainment is not had or made within si1ty 36C4 days after such receipt by the insurer of the proof of loss, then the loss or dama0e shall be paid within ninety 3BC4 days after such receipt. Refusal or failure to pay the loss or dama0e within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceilin0 prescribed by the Monetary

=oard, unless such failure or refusal to pay is based on the 0round that the claim is fraudulent. (ection 2?C. 'n case of any liti0ation for the enforcement of any policy or contract of insurance, it shall be the duty of the ,ommissioner or the ,ourt, as the case may be, to ma*e a findin0 as to whether the payment of the claim of the insured has been unreasonably denied or withheld5 and in the affirmati/e case, the insurance company shall be ad>ud0ed to pay dama0es which shall consist of attorney-s fees and other e1penses incurred by the insured person by reason of such unreasonable denial or withholdin0 of payment plus interest of twice the ceilin0 prescribed by the Monetary =oard of the amount of the claim due the insured, from the date followin0 the time prescribed in (ection 28A or in (ection 28B, as the case may be, until the claim is fully satisfied: Provided, )hat failure to pay any such claim within the time prescribed in said sections shall be considered pri!a facie e/idence of unreasonable delay in payment. (ection 2?1. 't is unlawful to: 3a4 Present or cause to be presented any fraudulent claim for the payment of a loss under a contract of insurance5 and 3b4 :raudulently prepare, ma*e or subscribe any writin0 with intent to present or use the same, or to allow it to be presented in support of any such claim. #ny person who /iolates this section shall be punished by a fine not e1ceedin0 twice the amount claimed or imprisonment of two 324 years, or both, at the discretion of the court. )')$" 12 "O#M'N#)'%N %: ,%MP#N'"( (ection 2?2. )he ,ommissioner shall re2uire e/ery insurance company doin0 business in the Philippines to *eep its boo*s, records, accounts and /ouchers in such manner that he or his authori7ed representati/es may readily /erify its annual statements and ascertain whether the company is

sol/ent and has complied with the pro/isions of this ,ode or the circulars, instructions, rulin0s or decisions of the ,ommissioner. (ection 2?6. )he ,ommissioner shall at least once a year and whene/er he considers the public interest so demands, cause an e1amination to be made into the affairs, financial condition and method of business of e/ery insurance company authori7ed to transact business in the Philippines and of any other person, firm or corporation mana0in0 the affairs andFor property of such insurance company. (uch company, as well as such mana0in0 person, firm or corporation, shall submit to the e1aminer all such boo*s, papers and securities as he may re2uire and such e1aminer shall also ha/e the power to e1amine the officers of such company under oath touchin0 its business and financial condition, and the authority to transact business in the Philippines of any such company shall be suspended by the ,ommissioner if such e1amination is refused and such company shall not thereafter be allowed to transact further business in the Philippines until it has fully complied with the pro/isions of this section. !o/ernmentDowned or Dcontrolled corporations or entities en0a0ed in social or pri/ate insurance shall similarly be sub>ect to such e1amination by the ,ommissioner unless their respecti/e charters otherwise pro/ide. )')$" 16 (;(P"N('%N %R R"&%,#)'%N %: #;)9%R')< (ection 2?8. 'f the ,ommissioner is of the opinion upon e1amination of other e/idence that any domestic or forei0n insurance company is in an unsound condition, or that it has failed to comply with the pro/isions of law or re0ulations obli0atory upon it, or that its condition or method of business is such as to render its proceedin0s ha7ardous to the public or to its policyholders, or that its net worth re2uirement, in the case of a domestic stoc* company, or its a/ailable cash assets, in the case of a domestic mutual company, or its security deposits, in the case of a forei0n company, is impaired or deficient, or that the mar0in of sol/ency re2uired of such company is deficient, the ,ommissioner is authori7ed to

suspend or re/o*e all certificates of authority 0ranted to such insurance company, its officers and a0ents, and no new business shall thereafter be done by such company or for such company by its a0ent in the Philippines while such suspension, re/ocation or disability continues or until its authority to do business is restored by the ,ommissioner. =efore restorin0 such authority, the ,ommissioner shall re2uire the company concerned to submit to him a business plan showin0 the company-s estimated receipts and disbursements, as well as the basis therefor, for the ne1t succeedin0 three 364 years. )')$" 18 #PP%'N)M"N) %: ,%N("R&#)%R (ection 2??. 'f at any time before, or after, the suspension or re/ocation of the certificate of authority of an insurance company as pro/ided in the precedin0 title, the ,ommissioner finds that such company is in a state of continuin0 inability or unwillin0ness to maintain a condition of sol/ency or li2uidity deemed ade2uate to protect the interest of policyholders and creditors, he may appoint a conser/ator to ta*e char0e of the assets, liabilities, and the mana0ement of such company, collect all moneys and debts due to said company and e1ercise all powers necessary to preser/e the assets of said company, reor0ani7e the mana0ement thereof, and restore its /iability. )he said conser/ator shall ha/e the power to o/errule or re/o*e the actions of the pre/ious mana0ement and board of directors of the said company, any pro/ision of law, or of the articles of incorporation or bylaws of the company, to the contrary notwithstandin0, and such other powers as the ,ommissioner shall deem necessary. )he conser/ator may be another insurance company doin0 business in the Philippines, any officer or officers of such company, or any other competent and 2ualified person, firm or corporation. )he remuneration of the conser/ator and other e1penses attendant to the conser/ation shall be borne by the insurance company concerned.

)he conser/ator shall not be sub>ect to any action, claim or demand by, or liability to, any person in respect of anythin0 done or omitted to be done in 0ood faith in the e1ercise, or in connection with the e1ercise, of the powers conferred on the conser/ator. )he conser/ator appointed shall report and be responsible to the ,ommissioner until such time as the ,ommissioner is satisfied that the insurance company can continue to operate on its own and the conser/atorship shall li*ewise be terminated should the ,ommissioner, on the basis of the report of the conser/ator or of his own findin0s, determine that the continuance in business of the insurance company would be ha7ardous to policyholders and creditors, in which case the pro/isions of )itle 1? shall apply. No insurance company, life or nonDlife, or any professional reinsurer, ordered to be li2uidated by the ,ommissioner under the pro/isions hereunder may be rehabilitated or authori7ed to transact anew, insurance or reinsurance business, as the case may be. )')$" 1? PR%,""D'N!( ;P%N 'N(%$&"N,< (ection 2?6. .hene/er, upon e1amination or other e/idence, it shall be disclosed that the condition of any insurance company doin0 business in the Philippines is one of insol/ency, or that its continuance in business would be ha7ardous to its policyholders and creditors, the ,ommissioner shall forthwith order the company to cease and desist from transactin0 business in the Philippines and shall desi0nate a recei/er to immediately ta*e char0e of its assets and liabilities, as e1peditiously as possible collect and 0ather all the assets and administer the same for the benefit of its policyholders and creditors, and e1ercise all the powers necessary for these purposes includin0, but not limited to, brin0in0 suits and foreclosin0 mort0a0es in the name of the insurance company. )he ,ommissioner shall thereupon determine within ninety 3BC4 days whether the insurance company may be reor0ani7ed or otherwise placed

in such condition so that it may be permitted to resume business with safety to its policyholders and creditors and shall prescribe the conditions under which such resumption of business shall ta*e place as well as the time for fulfillment of such conditions. 'n such case, the e1penses and fees in the collection and administration of the insurance company shall be determined by the ,ommissioner and shall be paid out of the assets of such company. 'f the ,ommissioner shall determine and confirm within the said period that the insurance company is insol/ent, as defined hereunder, or cannot resume business with safety to its policyholders and creditors, he shall, if the public interest re2uires, order its li2uidation, indicate the manner of its li2uidation and appro/e a li2uidation plan and implement it immediately. )he ,ommissioner shall desi0nate a competent and 2ualified person as li2uidator who shall ta*e o/er the functions of the recei/er pre/iously desi0nated and, with all con/enient speed, reinsure all its outstandin0 policies, con/ert the assets of the insurance company to cash, or sell, assi0n or otherwise dispose of the same to the policyholders, creditors and other parties for the purpose of settlin0 the liabilities or payin0 the debts of such company and he may, in the name of the company, institute such actions as may be necessary in the appropriate court to collect and reco/er accounts and assets of the insurance company, and to do such other acts as may be necessary to complete the li2uidation as ordered by the ,ommissioner. )he pro/isions of any law to the contrary notwithstandin0, the actions of the ,ommissioner under this section shall be final and e1ecutory, and can be set aside by the court upon petition by the company and only if there is con/incin0 proof that the action is plainly arbitrary and made in bad faith. )he ,ommissioner, throu0h the (olicitor !eneral, shall then file the correspondin0 answer recitin0 the proceedin0 ta*en and prayin0 the assistance of the court in the li2uidation of the company. No restrainin0 order or in>unction shall be issued by the court en>oinin0 the ,ommissioner from implementin0 his actions under this section, unless there is con/incin0 proof that the action of the ,ommissioner is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with

the ,ler* or Jud0e of the ,ourt in which the action is pendin0 a bond e1ecuted in fa/or of the ,ommissioner in an amount to be fi1ed by the court. )he restrainin0 order or in>unction shall be refused or, if 0ranted, shall be dissol/ed upon filin0 by the ,ommissioner, if he so desires, of a bond in an amount twice the amount of the bond of the petitioner or plaintiff conditioned that it will pay the dama0es which the petition or plaintiff may suffer by the refusal or the dissolution of the in>unction. )he pro/isions of Rule ?A of the New Rules of ,ourt insofar as they are applicable shall 0o/ern the issuance and dissolution of the restrainin0 order or in>unction contemplated in this section. #ll proceedin0s under this title shall be 0i/en preference in the courts. )he ,ommissioner shall not be re2uired to pay any fee to any public officer for filin0, recordin0, or in any manner authenticatin0 any paper or instrument relatin0 to the proceedin0s. #s used in this title, the term #nsolvency shall mean the inability of an insurance company to pay its lawful obli0ations as they fall due in the usual and ordinary course of business as may be shown by its failure to maintain the sol/ency re2uirements under (ection 2CC of this ,ode. (ection 2?@. )he recei/er or the li2uidator, as the case may be, desi0nated under the pro/isions of this title, shall not be sub>ect to any action, claim or demand by, or liability to, any person in respect of anythin0 done or omitted to be done in 0ood faith in the e1ercise, or in connection with the e1ercise, of the powers conferred on such recei/er or li2uidator. )')$" 16 ,%N(%$'D#)'%N #ND M"R!"R %: 'N(;R#N," ,%MP#N'"( (ection 2?A. ;pon prior notice to the ,ommissioner, two 324 or more domestic insurance companies, actin0 throu0h their respecti/e boards of directors, may ne0otiate to mer0e into a sin0le corporation which shall be one of the constituent corporations, or consolidate into a sin0le

corporation which shall be a new corporation to be formed by the consolidation. # common a0reement of the proposed mer0er or consolidation shall be drawn up for submission to the stoc*holders or members of the constituent companies for adoption and appro/al in accordance with the pro/isions of the respecti/e bylaws of the constituent companies and all e1istin0 laws that may be pertinent. (ection 2?B. (uch a0reement shall include, aside from the proposed mer0er or consolidation, pro/isions relati/e to the manner of transfer of assets to and assumption of liabilities by the absorbin0 or ac2uirin0 company from the absorbed or dissol/ed company or companies5 the proposed articles of mer0er or consolidation and bylaws of the sur/i/in0 or ac2uirin0 company5 the corporate name to be adopted which should not be that of any other e1istin0 company transactin0 similar business or one so similar as to be calculated to mislead the public5 the ri0hts of the stoc*holders or members of the absorbed or dissol/ed companies5 date of effecti/ity of the mer0er or consolidation5 and such particulars as may be necessary to e1plain and ma*e manifest the ob>ects and purposes of the absorbin0 or ac2uirin0 company. (ection 26C. ;pon e1ecution of such a0reement to mer0e or consolidate by and between or amon0 the boards of directors of the constituent companies, notice thereof shall be mailed immediately to their policyholders and creditors. )he company or companies to be absorbed or dissol/ed shall dischar0e all its accrued liabilities5 otherwise, such liabilities shall, with the consent of its creditors, be transferred to and assumed by the absorbin0 or ac2uirin0 company, or such liabilities be reinsured by the latter. 'n the case of such policies as are sub>ect to cancellation by the company or companies to be absorbed or dissol/ed, same may be cancelled pursuant to the terms thereof in lieu of such transfer, assumption, or reinsurance. (ection 261. ;pon appro/al or adoption in the meetin0s of the stoc*holders or members called for the purpose in each of the constituent companies of the a0reement to mer0e or consolidate, all stoc*holders or members dissentin0 or ob>ectin0 to the mer0er or consolidation shall be

paid the /alue of their shares by the company concerned in accordance with the bylaws thereof. (ection 262. ;pon appro/al or adoption of the a0reement to mer0e or consolidate by the stoc*holders or members of the constituent companies, the correspondin0 articles of mer0er or of consolidation shall be duly e1ecuted by the presidents and attested by the corporate secretaries and shall bear the corporate seals of the mer0in0 or consolidatin0 companies settin0 forth: 3a4 )he plan of mer0er or the plan of consolidation5 3b4 #s to each corporation, the number of shares outstandin0, or in case of mutual corporations, the number of members5 and 3c4 #s to each corporation, the number of shares or members /oted for and a0ainst such plan, respecti/ely. )hereafter, a certified copy of such articles of mer0er or consolidation, to0ether with a certificate of appro/al or adoption by the stoc*holders or members of such articles of mer0er or consolidation, /erified by affida/its of such officers and under the seal of the constituent companies, shall be submitted to the ,ommissioner, to0ether with such other papers or documents which the ,ommissioner may re2uire, for his consideration. (ection 266. )he articles of mer0er or of consolidation, si0ned and /erified as hereinabo/e re2uired, shall be filed with the (ecurities and "1chan0e ,ommission for its e1amination and appro/al. (ection 268. ;pon receipt from the (ecurities and "1chan0e ,ommission of the certificate of mer0er or of consolidation, the constituent companies shall surrender to the ,ommissioner their respecti/e certificates of authority to transact insurance business. )he absorbin0 or sur/i/in0 company in case of mer0er, or the newly formed company in case of consolidation, shall immediately file with the ,ommissioner the correspondin0 application for issuance of a new

certificate of authority to transact insurance business, to0ether with a certified copy of the certificate of mer0er or of consolidation, and of the certificate of increase of stoc*s, if there is any, issued by the (ecurities and "1chan0e ,ommission. (ection 26?. Nothin0 in this title shall be construed to enlar0e the powers of the absorbin0 or sur/i/in0 company in case of mer0er, or the newly formed company in case of consolidation, e1cept those conferred by the certificate of mer0er or of consolidation and the articles of mer0er or of consolidation, or the amended articles of incorporation, as re0istered with the (ecurities and "1chan0e ,ommission. (ection 266. No director, officer, or stoc*holder of any such constituent companies shall recei/e any fee, commission, compensation, or other /aluable consideration whatsoe/er, directly or indirectly, or in any manner aidin0, promotin0 or assistin0 in such mer0er or consolidation. (ection 26@. )he mer0er or consolidation of companies under this ,ode shall be sub>ect to the pro/isions of the ,orporation ,ode, and, in those cases specified in Republic #ct No. ?8??, as amended, be further sub>ect to the pro/isions of said law. )')$" 1@ M;);#$'I#)'%N %: ()%,H $':" 'N(;R#N," ,%MP#N'"( (ection 26A. #ny domestic stoc* life insurance company doin0 business in the Philippines may con/ert itself into an incorporated mutual life insurer. )o that end it may pro/ide and carry out a plan for the ac2uisition of the outstandin0 shares of its capital stoc* for the benefit of its policyholders, or any class or classes of its policyholders, by complyin0 with the re2uirements of this chapter. (ection 26B. (uch plan shall include appropriate proceedin0s for amendin0 the insurer-s articles of incorporation to 0i/e effect to the ac2uisition, by said insurer, for the benefit of its policyholders or any

class or classes thereof, of the outstandin0 shares of its capital stoc* and the con/ersion of the insurer from a stoc* corporation into a nonstoc* corporation for the benefit of its members. )he members of such nonstoc* corporation shall be the policyholders from time to time of the class or classes for whose benefit the stoc* of the insurer was ac2uired, and the policyholders of such other class or classes as may be specified in such corporation-s articles of incorporation as they may be amended from time to time. (uch plan shall be: 3a4 #dopted by a /ote of a ma>ority of the directors5 3b4 #ppro/ed by the /ote of the holders of at least a ma>ority of the outstandin0 shares at a special meetin0 of shareholders called for that purpose, or by the written consent of such shareholders5 3c4 (ubmitted to the ,ommissioner and appro/ed by him in writin05 3d4 #ppro/ed by a ma>ority /ote of all the policyholders of the class or classes for whose benefit the stoc* is to be ac2uired /otin0 at an election by the policyholders called for that purpose, sub>ect to the pro/isions of (ection 2@1. )he terms policyholder or policyholders as used in this chapter shall be deemed to mean the person or persons insured under an indi/idual policy of life insurance, or of health and accident insurance, or of any combination of life, health and accident insurance. )hey shall also include the person or persons to whom any annuity or pure endowment is presently or prospecti/ely payable by the terms of an indi/idual annuity or pure endowment contract, e1cept where the policy or contract declares some other person to be the owner or holder thereof, in which case such other person shall be deemed policyholder. 'n any case where a policy or contract names two or more persons as >oint insured, payees, owners or holders thereof, the persons so named shall be deemed collecti/ely to be one 314 policyholder for the purpose of this chapter. 'n any case where a policy or contract shall ha/e been

assi0ned by assi0nment absolute on its face to an assi0nee other than the insurer, and such assi0nment shall ha/e been filed at the principal office of the insurer at least thirty 36C4 days prior to the date of any election or meetin0 referred to in this chapter, then such assi0nee shall be deemed at such election or meetin0 to be the policyholder. :or the purpose of this chapter the terms policyholder and policyholders include the employer to whom, or a president, secretary or other e1ecuti/e officer of any corporation or association to which a master 0roup policy has been issued, but e1clude the holders of certificates or policies issued under or in connection with a master 0roup policy. =eneficiaries under unmatured contracts shall not as such be deemed to be policyholders5 and 3e4 :iled with the ,ommissioner after ha/in0 been appro/ed as pro/ided in this section. (ection 2@C. )he ,ommissioner shall e1amine the plan submitted to him under the pro/isions of subpara0raph 3c4 of (ection 26B. 9e shall not appro/e such plan unless in his opinion the ri0hts and interests of the insurer, its policyholders and shareholders are protected nor unless he is satisfied that the plan will be fair and e2uitable in its operation. (ection 2@1. )he election prescribed by subpara0raph 3d4 of (ection 26B shall be called by the board of directors or the president, and e/ery policyholder of the class or classes for whose benefit the stoc* is to be ac2uired, whose insurance shall ha/e been in force for at least one 314 year prior to such election shall ha/e one /ote, re0ardless of the number of policies or amount of insurance he holds, and re0ardless of whether such policies are policies of life insurance or policies of health and accident insurance or annuity contracts. Notice of such election shall be 0i/en to policyholders entitled to /ote by mail from the principal office of such insurer at least thirty 36C4 days prior to the date set for such election, in a sealed en/elope, posta0e prepaid, addressed to each such policyholder at his last *nown address.

&otin0 shall be by one of the followin0 methods: 3a4 #t a meetin0 of such policyholders, held pursuant to such notice, by ballot in person or by pro1y. 3b4 'f not by the method described in the precedin0 subpara0raph, then by mail pursuant to a procedure and on forms to be prescribed by such plan. (uch election shall be conducted under the direction and super/ision of three 364 impartial and disinterested inspectors appointed by the insurer and appro/ed by the ,ommissioner. 'n case any person appointed as inspector fails to appear at such meetin0 or fails or refuses to act at such election, the /acancy, if occurrin0 in ad/ance of the con/enin0 of the meetin0 or in ad/ance of the openin0 of the mail /ote, may be filled in the manner prescribed for the appointment of inspectors and, if occurrin0 at the meetin0 or durin0 the can/ass of the mail /ote, may be filled by the person actin0 as chairman of said meetin0 or desi0nated for that purpose in such plan. )he decision, act or certificate of a ma>ority of the inspectors shall be effecti/e in all respects as the decision, act or certificate of all. )he inspectors of election shall determine the number of policyholders, the /otin0 power of each, the policyholders represented at the meetin0 or /otin0 by mail, the e1istence of a 2uorum and the authenticity, /alidity and effect of pro1ies. )hey shall recei/e /otes, hear and determine all challen0es and 2uestions in any way arisin0 in connection with the ri0ht to /ote, count and tabulate all /otes, determine the result, and do such other acts as are proper to conduct the /ote with fairness to all policyholders. )he inspectors of election shall, before commencin0 performance of their duties, subscribe to and file with the insurer and with the ,ommissioner an oath that they, and each of them, will perform their duties impartially, in 0ood faith, to the best of their ability and as e1peditiously as is practicable. %n the re2uest of the insurer, the ,ommissioner, a policyholder or his pro1y, the inspectors shall ma*e a report in writin0 of any challen0e or 2uestion or matter determined by them and e1ecute a certificate of any fact found by them. )hey shall also certify the result of such /ote to the insurer and to the

,ommissioner. #ny report or certificate made by them shall be pri!a facie e/idence of facts stated therein. #ll necessary e1penses incurred in connection with such election shall be paid by the insurer. :or the purpose of this section, a 2uorum shall consist of fi/e percent 3?G4 of the policyholders of such insurer entitled to /ote at such election. (ection 2@2. 'n carryin0 out any such plan, the insurer may ac2uire any shares of its own stoc* by 0ift, be2uest or purchase. #ny shares so ac2uired shall, unless as a result of such ac2uisition all of the shares of the insurer shall ha/e been ac2uired, be ac2uired in trust for the policyholders of the class or classes for whose benefit the plan pro/ides that the stoc* of the insurer shall be ac2uired as hereinafter pro/ided. (uch shares shall be assi0ned and transferred on the boo*s of such insurer and appro/ed by the ,ommissioner. (uch trustees shall hold such stoc* in trust until all of the outstandin0 shares of capital stoc* of such insurer ha/e been ac2uired, but for not lon0er than thirty 36C4 years with such e1tensions of not more than fi/e 3?4 years each as may be 0ranted by the ,ommissioner. (uch e1tensions may be 0ranted by the ,ommissioner if the plan so pro/ides and if in his opinion the plan of ac2uisition of all of such stoc* can be completed within a reasonable period. (uch trustees shall /ote such stoc* at all corporate meetin0s at which stoc*holders ha/e the ri0ht to /ote. .hen all the outstandin0 shares of capital stoc* of such insurer ha/e been ac2uired, all said shares shall be cancelled, the certificate of amendment of the insurer-s articles of incorporation 0i/in0 effect thereto shall be filed in accordance with the pro/isions of the ,orporation ,ode, and the insurer shall become a nonstoc* corporation for the profit of its members and such trust shall thereupon terminate. )hereafter such corporation shall be conducted for the mutual benefit, ratably, of its policyholders of the class or classes for whose benefit the stoc* was ac2uired and shall ha/e power to issue nonD assessable policies on a reser/e basis sub>ect to all pro/isions of law applicable to incorporated life insurers issuin0 nonDassessable policies on a reser/e basis. Policies so issued may be upon the basis of full or partial participation therein as a0reed between the insurer and the insured.

;pon the termination of any such /otin0 trust, either in accordance with its terms or as hereinabo/e pro/ided, such plan of mutuali7ation shall terminate, unless theretofore completed. ;pon such termination, unless the plan of mutuali7ation pro/ides for the disposition of the shares ac2uired by the insurer under such plan or for the disposition of the proceeds thereof, the shares held by such trustees shall be disposed of in accordance with an order of the court of competent >urisdiction in the >udicial district in which is located the principal office of such insurer, made upon a /erified petition of the ,ommissioner. (ection 2@6. #ny such plan of mutuali7ation may pro/ide for the creation of a /otin0 trust under a trust a0reement for the holdin0 and /otin0 by three 364 or more trustees of any portion or all of the shares of the insurer not re2uired upon the adoption of such plan. )he /otin0 trustees shall be named in accordance with such plan or, if no pro/ision is made therein for the namin0 of such trustees, then by the insurer. )he /otin0 trust a0reement and /otin0 trustees shall be sub>ect to the appro/al of the ,ommissioner. #ny or all of the trustees under such /otin0 trust a0reement may be the same person or persons as any or all of the trustees referred to in (ection 2@2. (uch /otin0 trust a0reement shall pro/ide that in the e/ent of ac2uisition by the insurer of any of the shares of stoc* held thereunder in accordance with the pro/isions of the plan, such shares so ac2uired to0ether with the /otin0 ri0hts thereof shall be transferred by the trustees named under the pro/isions of this section to the trustees named under the pro/isions of (ection 2@2. #ny /otin0 trust a0reement created pursuant to the pro/isions of this section may be made irre/ocable for not lon0er than thirty 36C4 years and thereafter until the termination of the trust pro/ided for in (ection 2@2. )he trust created pursuant to the pro/isions of this section shall terminate in any e/ent upon termination of the trust pro/ided for in (ection 2@2. ;pon the termination of the trust created pursuant to the pro/isions of this section, any shares held in such trust shall re/ert to the persons entitled thereto by law. (ection 2@8. "/ery payment for the ac2uisition of any shares of the capital stoc* of such insurer, the purchase price of which is not fi1ed by

such plan, shall be sub>ect to the prior appro/al of the ,ommissioner. Neither such plan, nor any such payment, may be appro/ed by the ,ommissioner unless he finds that the ri0hts and interests of the insurer, its policyholders, and shareholders are protected. (ection 2@?. )he trustees referred to in (ection 2@2 shall file with such insurer and with the ,ommissioner a /erified acceptance of their appointments and /erified declarations that they will faithfully dischar0e their duties as such trustees. #ll di/idends and other sums recei/ed by said trustees on the shares held by them, after payin0 the necessary e1penses of e1ecutin0 their trust, shall be immediately repaid to such insurer for the benefit of all who are, or may become, policyholders of such insurance of the class or classes for whose benefit the stoc* of such insurer was ac2uired and entitled to participate in the profits thereof and shall be added to and become part of the assets of such insurer. (ection 2@6. 'f, at any time within the period pro/ided in the plan for the ac2uisition of the outstandin0 shares of stoc* of the insurer, ninety percent 3BCG4 thereof has already been ac2uired and transferred to the trustees under the plan, the insurer by a /ote of a ma>ority of the directors may determine to ma*e an offer, with the permission of the ,ommissioner and sub>ect to such re2uirement as he may specify, to ac2uire by purchase all of the shares not theretofore ac2uired under the plan, at a specified price which the insurer considers to be their fair /alue as of the date of ma*in0 such offer. 'f the offer to ac2uire is permitted by the ,ommissioner, the insurer shall ma*e a written offer by re0istered mail to each shareholder whose shares ha/e not theretofore been ac2uired under the plan or otherwise, offerin0 to ac2uire all his shares at such price if accepted in writin0 within thirty 36C4 days after the mailin0 of such offer. #ny shareholder acceptin0 such offer within the time therefor shall, within si1ty 36C4 days after his acceptance, transfer to the insurer the certificates representin0 such shares and, upon doin0 so, shall be paid by the insurer the amount of such offer for his shares. #ny share so ac2uired shall be assi0ned and

transferred to the trustees under the plan and held by them as shares ac2uired pursuant to the plan. "ach shareholder who does not accept such offer to ac2uire his shares within the time stated in such offer for acceptance thereof shall within fifteen 31?4 days after the e1piration of such offer apply to the (ecretary of :inance for a determination of the fair /alue of his shares as of the date of ma*in0 such offer. )he (ecretary of :inance may himself, after due notice and hearin0, determine upon the e/idence recei/ed the fair /alue of the shares as of the date of ma*in0 such offer, or appoint three 364 impartial and disinterested persons to appraise the fair /alue of such shares with such direction as he shall deem proper and necessary to e1pedite the proceedin0s. ;pon completion of the appraisal proceedin0s, the appraisers shall file with the (ecretary of :inance their report in writin0 statin0 the fair /alue of such shares as of the date of the ma*in0 of such offer and settin0 forth their findin0s in support of such statement. )he appraisers shall furnish each party to the proceedin0s a copy of their appraisal report, and within ten 31C4 days after receipt thereof, any such party may si0nify his ob>ection, if any, to the report or mo/e for the appro/al thereof. ;pon the e1piration of the period of ten 31C4 days referred to abo/e, the report shall be set for hearin0, after which the (ecretary of :inance shall issue an order adoptin0, modifyin0 or re>ectin0 the report, in whole or in part, or he may recei/e further e/idence or may recommit it with instructions. .hene/er the (ecretary of :inance shall determine in any manner, as aforesaid, the fair /alue of such shares, he may also determine the terms of payment thereof by the insurer. )he e1penses incidental to the proceedin0s includin0 char0es of the appraisers, if any, shall be paid e2ually by the insurer and the shareholder. )he findin0s of the (ecretary of :inance on all 2uestions of fact raised at the hearin0 of the application for determination of the fair /alue of such shares shall be conclusi/e upon all parties to the proceedin0s. )he order of the (ecretary of :inance determinin0 the fair /alue of the shares and the terms of payment thereof shall ha/e the force and effect of a >ud0ment which shall be appealable on any 2uestion of law. (uch order

shall become final and e1ecutory fifteen 31?4 days after receipt thereof by the parties to the proceedin0s. ;pon any such order becomin0 final and from which no appeal is pendin0, or when the time to appeal therefrom has e1pired, each shareholder party to the proceedin0s shall transfer his shares to the insurer and surrender to the said insurer the certificates representin0 such shares and the insurer shall ma*e payment therefor as pro/ided in such order. #ny shares so ac2uired by the insurer shall be assi0ned and transferred to the trustees and held by them as shares ac2uired pursuant to the plan. #ny shareholder who does not apply to the (ecretary of :inance in the manner and within the time hereinbefore prescribed shall be deemed to ha/e accepted the offer referred to abo/e, effecti/e, howe/er, upon the e1piration of the time hereinabo/e prescribed for ma*in0 such application, and such shareholder-s time for acceptin0 such offer shall, for that purpose only, be deemed to ha/e been e1tended accordin0ly. #ny offer to ac2uire shares made pursuant to this section shall, e1cept as otherwise pro/ided herein, be irre/ocable until all proceedin0s upon such offer ha/e been completed or all shares ha/e otherwise been earlier ac2uired by the insurer. #ny shareholder who has e1pressly or impliedly accepted the plan or the offer to ac2uire his shares not theretofore ac2uired under the plan, and any shareholder who has re>ected such plan or such offer and has applied, as aforesaid, to the (ecretary of :inance for a determination of the fair /alue of his shares subse2uent to which an a0reement has been reached or a final order issued fi1in0 such fair /alue but who fails to surrender his certificates for cancellation upon payment of the amount to which he is entitled, may be compelled to do so by an order of the (ecretary of :inance for that purpose and such order may pro/ide that upon failure of such shareholder to surrender such certificates for cancellation, such order shall stand in lieu of such surrender and cancellation.

(ection 2@@. (uch insurer, after mutuali7ation, shall be a continuation of the ori0inal insurer, and such mutuali7ation shall not affect such insurer-s certificate of authority nor e1istin0 suits, ri0hts or contracts e1cept as pro/ided in said plan for the ac2uisition of the outstandin0 shares of the capital stoc* of such insurer, appro/ed as pro/ided in this chapter. (uch insurer, after mutuali7ation, shall e1ercise all the ri0hts and powers and shall perform all the duties conferred or imposed by law upon insurers writin0 the classes of insurance written by it, and to protect ri0hts and contracts e1istin0 prior to mutuali7ation, sub>ect to the effect of said plan. )he board of directors of such insurer, prior to mutuali7ation, may adopt amendments to its bylaws to ta*e effect upon mutuali7ation. (ection 2@A. 3a4 #n annual meetin0 of members shall be held at ten o-cloc* in the mornin0 of the fourth )uesday of March of each year at the principal office of the insurer, unless a different time or place is pro/ided in the bylaws. 3b4 (pecial meetin0s of the members, for any purpose or purposes whatsoe/er, may be called at any time by the president, or by the board of directors, or by one or more members holdin0 not less than oneDfifth 31F?4 of the /otin0 power of such insurer, or by such other officers or persons as the bylaws authori7e. 3c4 Notice of all meetin0s of members whether annual or special shall be 0i/en in writin0 to the members entitled to /ote by the secretary, or an assistant secretary, or other person char0ed with that duty, or if there be no such officer, or in case of his ne0lect or refusal, by any director or member. #t the option of the insurer such notice may be imprinted on premium notices or receipts or on both. # notice may be 0i/en by such insurer to any member either personally, or by mail, or other means of written communication, char0es prepaid, addressed to such member at his address appearin0 on the boo*s of the insurer, or 0i/en by him to the insurer for the purpose of notice. 'f a member 0i/es no address, notice shall be deemed to ha/e been 0i/en

him if sent by mail or other means of written communication addressed to the place where the principal office of the insurer is situated, or if published at least once in some newspaper of 0eneral circulation in the place in which said office is located. Notice of any meetin0 of members shall be sent to each member entitled thereto not less than se/en 3@4 days before such meetin0, unless the bylaws pro/ide otherwise. Notice of any meetin0 of members shall specify the place, the day and the hour of the meetin0 and the 0eneral nature of the business to be transacted. Notice of an annual meetin0 to be held at the time and place specified in subpara0raph 3a4 of this section shall be sufficiently 0i/en if published at least once in each of four 384 successi/e wee*s in a newspaper of 0eneral circulation in the place in which the principal office of such insurer is located, and if so published no other notice of such meetin0 shall be re2uired. 3d4 )he presence in person or by pro1y of fi/e percent 3?G4 of the members entitled to /ote at any meetin0 shall constitute a 2uorum for the transaction of business, includin0 the amendment of the articles of incorporation andFor the bylaws unless otherwise pro/ided by the bylaws. 3e4 "ach such member shall ha/e one 314 /ote at any meetin0 of members re0ardless of the number of policies or the amount of insurance that such member holds and re0ardless of whether such policies are policies of life insurance, or of health and accident insurance, or both. #ny member entitled to /ote shall ha/e the ri0ht to do so either in person or by an a0ent or a0ents authori7ed by a written pro1y e1ecuted by such person or his duly authori7ed a0ent and filed with the secretary of such insurer.

3f4 )he directors of the insurer in office at the time the insurer is mutuali7ed as pro/ided in this chapter shall continue in office until the first annual meetin0 of members. #t the first annual meetin0 of members and at each annual meetin0 thereafter, directors shall be elected by the members for the term or terms authori7ed by this chapter. 304 )he articles of incorporation or the bylaws may pro/ide that the directors may be di/ided into two 324 or more classes whose terms of office shall e1pire at different times, but no terms shall continue lon0er than si1 364 years. 'n the absence of such pro/isions, each director, e1cept members of the board of directors at the time the insurer is mutuali7ed, shall be elected for a term of one 314 year. #ll directors shall hold office for a term for which they are elected and until their successors are elected and 2ualified. # director may, but need not be a member or policyholder of the insurer of which he is actin0 as director. &acancies in the board of directors may be filled by a ma>ority of the remainin0 directors, thou0h less than a 2uorum, and each director so elected shall hold office until the ne1t annual meetin0. 3h4 #ll insurers mutuali7ed under the pro/isions of this chapter shall be sub>ect to all other applicable pro/isions of this ,ode. )he pro/isions of the ,orporation ,ode shall apply in a suppletory manner. (ection 2@B. )he pro/isions of ,ommonwealth #ct No. A6, otherwise *nown as the (ecurities #ct, as amended, shall not apply to any of the followin0: 3a4 (hares of the capital stoc* of such insurer ac2uired as pro/ided in (ection 2@2 and assi0ned and transferred to the trustees as is pro/ided in said section, and the assi0nment and transfer of said shares as so pro/ided5 3b4 #ny certificate or other instrument issued to a policyholder of such mutuali7ed insurer conferrin0 or e/idencin0 membership in such mutuali7ed insurer or conferrin0 or e/idencin0 such member-s ri0ht to participate in the profits or share in the assets

of such mutuali7ed insurer by /irtue of his membership therein, and the issuance of such certificate or other instrument5 3c4 )he plan for the ac2uisition of the outstandin0 shares of the capital stoc* of such insurer authori7ed by the pro/isions of this chapter, the submission of said plan to the ,ommissioner and to the policyholders of such insurer as pro/ided in this chapter, and the appro/al and carryin0 out of said plan or any part thereof in accordance with the pro/isions of this chapter. (ection 2AC. # domestic mutual life insurance company doin0 business in the Philippines may con/ert itself into an incorporated stoc* life insurance company by demutuali7ation. )o that end, it may pro/ide and carry out a plan for the con/ersion by complyin0 with the re2uirements of this title. )he con/ersion of a domestic mutual life insurance company to an incorporated stoc* life insurance company shall be carried out pursuant to a con/ersion plan duly appro/ed by the ,ommissioner. )he ,ommissioner shall promul0ate such rules and re0ulations as he or she may deem necessary to carry out the pro/isions of this title, after due consultation with representati/es of the insurance industry. #ll con/erted insurers under the pro/isions of this title shall be sub>ect to all other applicable pro/isions of this ,ode. )he pro/isions of the ,orporation ,ode shall apply in a suppletory manner. )')$" 1A .')9DR#.#$ %: :%R"'!N 'N(;R#N," ,%MP#N'"( (ection 2A1. # forei0n insurance company doin0 business in the Philippines, upon payment of the fee hereinafter prescribed and surrender to the ,ommissioner of its certificate of authority, may apply to withdraw from the Philippines. (uch application shall be duly

e1ecuted in writin0, accompanied by e/idence of due authority for such e1ecution, properly ac*nowled0ed. (ection 2A2. )he ,ommissioner shall publish the application for withdrawal once a wee* for three 364 consecuti/e wee*s in a newspaper of 0eneral circulation in the Philippines. )he e1penses of such publication shall be paid by the insurance company filin0 such application. (ection 2A6. "/ery forei0n insurance company desirin0 to withdraw from the Philippines shall, prior to such withdrawal, dischar0e its liabilities to policyholders and creditors in this country. 'n case of its policies insurin0 residents of the Philippines, it shall cause the primary liabilities under such policies to be reinsured and assumed by another insurance company authori7ed to transact business in the Philippines. 'n the case of such policies as are sub>ect to cancellation by the withdrawin0 company, it may cancel such policies pursuant to the terms thereof in lieu of such reinsurance and assumption of liabilities. (ection 2A8. )he ,ommissioner shall cause an e1amination of the boo*s and records of the withdrawin0 company, and if, upon such e1amination, the ,ommissioner finds that the insurer has no outstandin0 liabilities to policyholders and creditors in the Philippines, and no policies uncancelled5 or its primary liabilities ha/e been reinsured or assumed by another insurance company authori7ed to transact business in the Philippines, as re2uired in the precedin0 section, it shall cancel the withdrawin0 company-s certificate of authority, if une1pired, and shall permit the insurer to withdraw. )he cost and e1penses of all such e1amination shall be paid as prescribed in (ection 88C. (ection 2A?. ;pon the failure of such withdrawin0 insurance company or its a0ents in the Philippines to pay the e1penses of such publication within thirty 36C4 days after the presentation of the bill therefor, the ,ommissioner shall collect such fee from the deposit furnished in accordance with the pro/isions of (ection 1B@.

(ection 2A6. # forei0n life insurance company that withdraws from the Philippines shall be considered a ser/icin0 insurance company if its business transactions are confined to acceptin0 periodic premium payments from, or 0rantin0 policy loans and payin0 cash surrender /alues of outstandin0 policies to, or re/i/in0 lapsed policies of, Philippine policyholders, and such other related ser/ices. (ection 2A@. No company shall act as a ser/icin0 insurance company until after it shall ha/e obtained a special certificate of authority to act as such from the ,ommissioner upon application therefor and payment by the company of the fees hereinafter prescribed. (uch certificate shall e1pire on the last day of December of the third year and shall be renewed, while the company continues to ser/ice its policyholders, and to comply with all the applicable pro/isions of law and re0ulations. )')$" 1B PR%:"(('%N#$ R"'N(;R"R( (ection 2AA. "1cept as otherwise pro/ided in this ,ode, no partnership, association or corporation shall transact any business in the Philippines as a professional reinsurer until it shall ha/e obtained a certificate of authority for that purpose from the ,ommissioner upon application therefor and payment by such entity of the fees hereinafter prescribed. #s used in this ,ode, the term +professional reinsurer- shall mean any entity that transacts solely and e1clusi/ely reinsurance business in the Philippines. )he ,ommissioner may refuse to issue a certificate of authority to any such entity when such refusal will best promote public interest. No such certificate of authority shall be 0ranted to any such entity unless and until the ,ommissioner is satisfied by such e1amination and such e/idence as may be re2uired that such entity is 2ualified by the laws of the Philippines to transact business therein as a professional reinsurer. =efore issuin0 such certificate of authority, the ,ommissioner must be satisfied that the name of the applicant is not that of any other *nown

company transactin0 insurance or reinsurance business in the Philippines, or a name so similar as to be calculated to mislead the public. (uch certificate of authority shall e1pire on the last day of December the third year followin0 its issuance unless it is renewed. "/ery such partnership, association, or corporation recei/in0 such certificate of authority shall be sub>ect to the pro/isions of this ,ode and other related laws, and to the >urisdiction and super/ision of the ,ommissioner. (ection 2AB. #ny partnership, association, or corporation authori7ed to transact solely reinsurance business must ha/e a capitali7ation of at least )hree billion pesos 3P6,CCC,CCC,CCC.CC4 paid in cash of which at least fifty percent 3?CG4 is paidDup and the remainin0 portion thereof is contributed surplus, which in no case shall be less than :our hundred million pesos 3P8CC,CCC,CCC.CC4 or such capitali7ation as may be determined by the (ecretary of :inance, upon the recommendation of the ,ommissioner: Provided, )hat twentyDfi/e percent 32?G4 of the paidDup capital must be in/ested in securities satisfactory to the ,ommissioner consistin0 of bonds or other instruments of debt of the !o/ernment of the Philippines or its political subdi/isions or instrumentalities, or of 0o/ernmentDowned or Dcontrolled corporations and entities, includin0 the =an0*o (entral n0 Pilipinas, and deposited with the ,ommissioner, and the remainin0 se/entyDfi/e percent 3@?G4 in such other securities as may be allowed and permitted by the ,ommissioner, which securities shall at all times be maintained free from any lien or encumbrance: Provided, further, )hat the aforesaid capital re2uirement is without pre>udice to other re2uirements to be imposed under any ris*Dbased capital method that may be adopted by the ,ommissioner: Provided, finally, )hat the pro/isions of this chapter applicable to insurance companies shall as far as practicable be li*ewise applicable to professional reinsurers.

)')$" 2C 9%$D'N! ,%MP#N'"( (ection 2BC. #s used in this title, the followin0 terms shall ha/e the respecti/e meanin0s hereinafter set forth unless the conte1t shall otherwise re2uire: 3a4 Person means an indi/idual, partnership, firm, association, corporation, trust, any similar entity or any combination of the fore0oin0 actin0 in concert. 3b4 ontrol, includin0 the terms controlling, controlled by and under co!!on control with, means the possession directly or indirectly of the power to direct or cause the direction of the mana0ement and policies of a person, whether throu0h the ownership of /otin0 securities by a contract other than a commercial contract for 0oods or nonDmana0ement ser/ices or otherwise. (ub>ect to (ection 2B2, control shall be presumed to e1ist if any person directly or indirectly owns, controls or holds with the power to /ote forty percent 38CG4 or more of the /otin0 securities of any other person: Provided, )hat no person shall be deemed to control another person solely by reason of his bein0 an officer or director of such other person. 3c4 Holding co!pany means any person who directly or indirectly controls any authori7ed insurer. 3d4 ontrolled insurer means an authori7ed insurer controlled directly or indirectly by a holdin0 company. 3e4 ontrolled person means any person, other than a controlled insurer, who is controlled directly or indirectly by a holdin0 company. 3f4 Holding co!pany syste! means a holdin0 company to0ether with its controlled insurers and controlled persons.

(ection 2B1. Notwithstandin0 para0raph 3b4 of (ection 2BC, the ,ommissioner may determine after notice and opportunity to be heard, that a person e1ercises directly or indirectly either alone or pursuant to an a0reement with one or more other persons such a controllin0 influence o/er the mana0ement or policies of an authori7ed insurer as to ma*e it necessary or appropriate in the public interest or for the protection of policyholders or stoc*holders of the insurer that the person be deemed to control the insurer. (ection 2B2. )he ,ommissioner may determine upon application that any person, either alone or pursuant to a0reement with one or more other persons, does not or will not upon the ta*in0 of some proposed action control another person. )he filin0 of an application hereunder in 0ood faith by any person shall relie/e the applicant from any obli0ation or liability imposed by this title with respect to the sub>ect of the application, e1cept as contained in (ection 6C2, until the ,ommissioner has acted upon the application. .ithin thirty 36C4 days or such further period as he may prescribe, the ,ommissioner may prospecti/ely re/o*e or modify his determination, after notice and opportunity to be heard, whene/er in his >ud0ment, re/ocation or modification is consistent with this title. (ection 2B6. Notwithstandin0 any other pro/isions of this title, the followin0 shall not be deemed holdin0 companies: 3a4 #uthori7ed insurers or reinsurers or their subsidiaries5 and 3b4 )he !o/ernment of the Philippines, or any political subdi/ision, a0ency or instrumentality thereof, or any corporation which is wholly owned directly or indirectly by one or more of the fore0oin0. )he ,ommissioner may conditionally or unconditionally e1empt any specified person or class of persons from any of the obli0ations or liabilities imposed under this title, if and to the e1tent he finds the e1emption necessary or appropriate in the public interest or not ad/erse

to the interests of policyholders or stoc*holders and consistent with the purposes of this title. (ection 2B8. 3a4 "/ery person who on the date this ,ode ta*es effect is a controlled insurer and e/ery person who thereafter becomes a controlled insurer, shall, within si1ty 36C4 days thereafter, or within thirty 36C4 days after becomin0 a controlled insurer, whiche/er is later, re0ister with the ,ommissioner. (uch re0istration shall be amended within thirty 36C4 days followin0 any chan0e in the identity of its holdin0 company. )he ,ommissioner may 0rant one or more reasonable e1tensions of the time to re0ister. 3b4 "/ery re0istrant shall furnish the ,ommissioner with the followin0 information concernin0 its holdin0 company: 314 # copy of its charter or articles of incorporation and its bylaws5 324 )he identities of its principal shareholders, officers, directors and controlled persons5 and 364 'nformation as to its capital structure and financial condition, and a description of its principal business acti/ities. (ection 2B?. "/ery controlled insurer shall file with the ,ommissioner such reports or material as he may direct for the purpose of disclosin0 information concernin0 the operations of persons within the holdin0 company system which may materially affect the operations, mana0ement or financial condition of the insurer. (ection 2B6. "/ery holdin0 company and e/ery controlled person within a holdin0 company system shall be sub>ect to e1amination by order of the ,ommissioner if he has cause to belie/e that the operations of such persons may materially affect the operations, mana0ement or financial condition of any controlled insurer with the system and that he is unable to obtain rele/ant information from such controlled insurer.

)he 0rounds relied upon by the ,ommissioner for such e1amination shall be stated in his order, which order shall be sub>ect to >udicial re/iew only at the instance of the person sou0ht to be e1amined. (uch e1amination shall be confined to matters specified in the order. )he cost of such e1amination shall be assessed a0ainst the person e1amined and no portion thereof shall thereafter be reimbursed to it directly or indirectly by the controlled insurer. (ection 2B@. )he ,ommissioner shall *eep the contents of each report made pursuant to this title and any information obtained by him in connection therewith confidential and shall not ma*e the same public without the prior written consent of the controlled insurer to which it pertains unless the ,ommissioner after notice and an opportunity to be heard shall determine that the interests of policyholders, stoc*holders or the public will be ser/ed by the publication thereof. 'n any action or proceedin0 by the ,ommissioner a0ainst the person e1amined or any other person within the same holdin0 company system a report of such e1amination published by him shall be admissible as e/idence of the facts stated therein. (ection 2BA. )ransactions within a holdin0 company system to which a controlled insurer is a party shall be sub>ect to the followin0: 3a4 )he terms shall be fair and e2uitable5 3b4 ,har0es or fees for ser/ices performed shall be reasonable5 3c4 "1penses incurred and payments recei/ed shall be allocated to the insurer on an e2uitable basis in conformity with customary insurance accountin0 practices consistently applied. )he boo*s, accounts and records of each party to all such transactions shall be maintained as to clearly and accurately disclose the nature and details of the transactions includin0 such accountin0 information as is necessary to support the reasonableness of the char0es or fees to the respecti/e parties.

(ection 2BB. )he prior written appro/al of the ,ommissioner shall be re2uired for the followin0 transactions between a controlled insurer and any person in its holdin0 company system: sales, purchases, e1chan0es, loans or e1tensions of credit, or in/estments, in/ol/in0 fi/e percent 3?G4 or more of the insurer-s admitted assets as of the thirtyDfirst day of December ne1t precedin0. (ection 6CC. )he followin0 transactions between a controlled insurer and any person in its holdin0 company system may not be entered into unless the insurer has notified the ,ommissioner in writin0 of its intention to enter into any such transaction at least thirty 36C4 days prior thereto, or such shorter period as he may permit, and he has not disappro/ed it within such period: 3a4 (ales, purchases, e1chan0es, loans or e1tensions of credit, or in/estments, in/ol/in0 more than oneDhalf of one percent 3MG4 but less than fi/e percent 3?G4 of the insurer-s admitted assets as of the thirtyDfirst day of December ne1t precedin05 3b4 Reinsurance treaties or a0reements5 3c4 Renderin0 of ser/ices on a re0ular or systematic basis5 or 3d4 #ny material transaction, specified by re0ulation, which the ,ommissioner determines may ad/ersely affect the interest of the insurer-s policyholders or stoc*holders or of the public. Nothin0 herein contained shall be deemed to authori7e or permit any transaction which, in the case of a nonDcontrolled insurer, would be otherwise contrary to law. (ection 6C1. )he ,ommissioner, in re/iewin0 transactions pursuant to (ections 2BB and 6CC, shall consider whether the transactions comply with the standard set forth in (ection 2BA and whether they may ad/ersely affect the interests of policyholders. )his section shall not apply to transactions sub>ect to other sections of this ,ode which impose

notice or appro/al re2uirements 0reater than those prescribed by this title. (ection 6C2. 3a4 No person, other than an authori7ed insurer, shall ac2uire control of any domestic insurer, whether by purchase of its securities or otherwise, e1cept: 314 #fter twenty 32C4 days written notice to its insurer or such shorter period as the ,ommissioner may permit, of its intention to ac2uire control5 and 324 .ith the prior written appro/al of the ,ommissioner. 3b4 )he ,ommissioner shall disappro/e the ac2uisition of control of a domestic insurer if he determines, after notice and an opportunity to be heard, that such action is reasonably necessary to protect the interest of the people of this country. )he followin0 shall be the only factors to be considered by him in reachin0 the fore0oin0 determination: 314 )he financial condition of the ac2uirin0 person and the insurer5 324 )he trustworthiness of the ac2uirin0 person or any of its officers or directors5 364 # plan for the proper and effecti/e conduct of the insurer-s operations5 384 )he source of the funds or assets for the ac2uisition5 3?4 )he fairness of any e1chan0e of stoc*, assets, cash or other consideration for the stoc* or assets to be recei/ed5 364 .hether the effect of the ac2uisition may be substantially to lessen competition in any line of commerce in insurance or to tend to create a monopoly therein5 and

3@4 .hether the ac2uisition is li*ely to be ha7ardous or pre>udicial to the insurer-s policyholders or stoc*holders. 3c4 )he followin0 conditions affectin0 any controlled insurer, re0ardless of when such control has been ac2uired, are /iolations of this title: 314 )he controllin0 person or any of its officers or directors ha/e demonstrated untrustworthiness5 and 324 )he effect of retention of control may be substantially to lessen competition in any line of commerce in insurance in this country or to tend to create a monopoly therein. 'f, after notice and an opportunity to be heard, the ,ommissioner determines that any of the fore0oin0 /iolations e1ists, he shall reduce his findin0s to writin0 and shall issue an order based thereon and cause the same to be ser/ed upon the insurer and upon all persons affected thereby directin0 any person found to be in /iolation thereof to ta*e appropriate action to cure such /iolation. ;pon the failure of any such person to comply with such order, (ection 6C6 shall become applicable. 3d4 )he ,ommissioner may re2uire the submission of such information as he deems necessary to determine whether any ac2uisition or retention of control complies with this title and may re2uire, as a condition of appro/al of such ac2uisition or retention of control, that all or any portion of such information be disclosed to the insurer-s stoc*holders. 3e4 ;nless sub>ect to re0istration under (ection 2B8 or unless ac2uisition of its control is sub>ect to para0raphs 3a4 and 3b4 hereof, e/ery authori7ed insurer shall notify the ,ommissioner in writin0 of the identity of any person whom the insurer then *nows or has reason to belie/e controls or has ta*en any action, other than preliminary ne0otiations or discussion, to ac2uire control of the insurer. (ection 6C6. 3a4 Notwithstandin0 the control of an authori7ed insurer by any person, the officers and directors of the insurer shall not thereby be

relie/ed of any obli0ation or liability to which they would otherwise be sub>ect by law, and the insurer shall be mana0ed so as to assure its separate operatin0 identity consistent with this title. 3b4 Nothin0 herein shall preclude an authori7ed insurer from ha/in0 or sharin0 a common mana0ement or cooperati/e or >oint use of personnel, property or ser/ices with one or more other persons under arran0ements meetin0 the standards of (ection 2BA. (ection 6C8. )o the e1tent that any information or material is set forth in forms or other matter on file with any 0o/ernment a0ency or in a re0istration form filed with the ,ommissioner by another person within the same holdin0 company system, the controlled insurer may comply with the re0istration or reportin0 re2uirements of this title by referrin0 in its re0istration form or report to such other filed matter and attachin0 a copy thereof certified by the insurer as a true and complete copy, to such re0istration form or report or, if such other filed matter is on file with the ,ommissioner, incorporatin0 such matter by reference. (ection 6C?. No holdin0 company or controlled person shall directly or indirectly or throu0h another person do or cause to be done for or in behalf of the controlled insurer any act intended to affect the insurance operations of the insurer which, if done by the insurer, would /iolate any pro/ision of this ,ode. (ection 6C6. 'n addition to any other penalty pro/ided by law, the ,ommissioner may, upon the willful failure of any person within a holdin0 company system to comply with this title or any re0ulation or order promul0ated hereunder: 3a4 Proceed under )itle 18 or )itle 1?, ,hapter ''' of this ,ode with respect to insurer within the holdin0 company system5 or 3b4 Re/o*e or refuse to renew the authority to do business in this country of an insurer within the holdin0 company system or

refuse to issue such authority to any other insurer in the system5 or 3c4 Direct that, in addition to any other penalty pro/ided by law, such person forfeit to the people of this country a sum not less than :i/e thousand pesos 3P?,CCC.CC4 for a first /iolation and )wentyDfi/e thousand pesos 3P2?,CCC.CC4 for any subse2uent /iolation. #n additional sum not less than )wentyDfi/e thousand pesos 3P2?,CCC.CC4 shall be imposed for each month durin0 which any such /iolation shall continue. ,9#P)"R '& (#$"( #!"N,'"( #ND )",9N',#$ ("R&',"( )')$" 1 'N(;R#N," #!"N)( #ND 'N(;R#N," =R%H"R( (ection 6C@. No insurance company doin0 business in the Philippines, nor any a0ent thereof, shall pay any commission or other compensation to any person for ser/ices in obtainin0 insurance, unless such person shall ha/e first procured from the ,ommissioner a license to act as an insurance a0ent of such company or as an insurance bro*er as hereinafter pro/ided. No person shall act as an insurance a0ent or as an insurance bro*er in the solicitation or procurement of applications for insurance, or recei/e for ser/ices in obtainin0 insurance, any commission or other compensation from any insurance company doin0 business in the Philippines, or any a0ent thereof, without first procurin0 a license so to act from the ,ommissioner, which must be renewed e/ery three 364 years thereafter. (uch license shall be issued by the ,ommissioner only upon the written application of the person desirin0 it, such application if for a license to act as insurance a0ent, bein0 appro/ed or endorsed by the company such person desires to represent, and shall be upon a form prescribed by the ,ommissioner 0i/in0 such information as he may re2uire, and upon payment of the correspondin0 fee hereinafter

prescribed. )he ,ommissioner shall satisfy himself as to the competence and trustworthiness of the applicant and shall ha/e the ri0ht to refuse to issue or renew and to suspend or re/o*e any such license in his discretion. )he license shall e1pire after the thirtyDfirst day of December of the third year followin0 the date of issuance unless it is renewed. $icenses may be renewed in the case of the company represented by such a0ents, and in the case of insurance bro*ers, upon the application of the said bro*ers, themsel/es. (ection 6CA. )he pro/isions of (ections 6C@ and 6CB shall apply to an employee who shall be en0a0ed to sell insurance products by an insurance company. (ection 6CB. #ny person who for compensation solicits or obtains insurance on behalf of any insurance company or transmits for a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the ne0otiatin0 of such insurance shall be an insurance a0ent within the intent of this section and shall thereby become liable to all the duties, re2uirements, liabilities and penalties to which an insurance a0ent is sub>ect. #n insurance a0ent is an independent contractor and not an employee of the company represented. +'nsurance a0ent- includes an a0ency leader, a0ency mana0er, or their e2ui/alent. (ince the insurance industry is imbued with public interest, the insurance companies upon appro/al of the ,ommissioner may e1ercise wide latitude in super/isin0 the acti/ities of their insurance a0ents to ensure the protection of the insurin0 public. (ection 61C. #ny person who for any compensation, commission or other thin0 of /alue acts or aids in any manner in solicitin0, ne0otiatin0 or procurin0 the ma*in0 of any insurance contract or in placin0 ris* or ta*in0 out insurance, on behalf of an insured other than himself, shall be an insurance bro*er within the intent of this ,ode, and shall thereby

become liable to all the duties, re2uirements, liabilities and penalties to which an insurance bro*er is sub>ect. (ection 611. "/ery applicant for an insurance bro*er-s license shall file with the application and shall thereafter maintain in force while so licensed, a bond in fa/or of the people of the Republic of the Philippines e1ecuted by a company authori7ed to become surety upon official reco0ni7ances, stipulations, bonds and underta*in0s. )he bond shall be in such amount as may be fi1ed by the ,ommissioner, but in no case less than :i/e hundred thousand pesos 3P?CC,CCC.CC4, and shall be conditioned upon full accountin0 and due payment to the person entitled thereto of funds comin0 into the bro*er-s possession throu0h insurance transactions under license. )he bond shall remain in force until released by the ,ommissioner, or until cancelled by the surety. .ithout pre>udice to any liability pre/iously incurred thereunder, the surety may cancel the bond on thirty 36C4 days ad/ance written notice to both the bro*er and the ,ommissioner. ;pon appro/al of the application, the applicant must also file two 324 errors and omissions 3professional liability or professional indemnity4 policies issued separately by two 324 insurance companies authori7ed to do business in the Philippines, satisfactory to the ,ommissioner to indemnify the applicant a0ainst any claim or claims for breach of duty as insurance bro*er which may be made a0ainst him by reason of any ne0li0ent act, error or omission, whene/er or where/er committed or alle0ed to ha/e been committed, on the part of the applicant or any person who has been, is now, or may hereafter durin0 the subsistence of the policies be employed by the said applicant in his capacity as insurance bro*er: Provided, )hat the filin0 of any claim or claims under one of such policies shall preclude the filin0 of the said claim or claims under the other policy. )he said policies shall be in such amounts as may be prescribed by the ,ommissioner, dependin0 upon the si7e or amount of the bro*in0 business of the applicant, but in no case shall the amount of each of such policies be less than :i/e hundred thousand pesos 3P?CC,CCC.CC4.

(ection 612. )he ,ommissioner shall, in order to determine the competence of e/ery applicant to ha/e the *ind of license applied for, re2uire such applicant to submit to a written e1amination and to pass the same to the satisfaction of the ,ommissioner. )he ,ommissioner may dele0ate or authori7e the administration of the e1amination to an independent or0ani7ation, sub>ect to such conditions that the ,ommissioner may pro/ide. (ection 616. #n applicant for the written e1amination mentioned in the precedin0 section must be of 0ood moral character and must not ha/e been con/icted of any crime in/ol/in0 moral turpitude. 9e must satisfactorily show to the ,ommissioner that he has been trained in the *ind of insurance contemplated in the license applied for. (uch e1amination may be wai/ed if it is shown to the satisfaction of the ,ommissioner that the applicant has under0one e1tensi/e education andFor trainin0 in insurance. (ection 618. #n application for the issuance or renewal of a license to act as an insurance a0ent or insurance bro*er may be refused, or such license, if already issued or renewed, shall be suspended or re/o*ed if the ,ommissioner finds that the applicant for, or holder of, such license: 3a4 9as willfully /iolated any pro/ision of this ,ode5 or 3b4 9as intentionally made a material misstatement in the application to 2ualify for such license5 or 3c4 9as obtained or attempted to obtain a license by fraud or misrepresentation5 or 3d4 9as been 0uilty of fraudulent or dishonest practices5 or 3e4 9as misappropriated or con/erted to his own use or ille0ally withheld moneys re2uired to be held in a fiduciary capacity5 or

3f4 9as not demonstrated trustworthiness and competence to transact business as an insurance a0ent or insurance bro*er in such manner as to safe0uard the public5 or 304 9as materially misrepresented the terms and conditions of policies or contracts of insurance which he see*s to sell or has sold5 or 3h4 9as failed to pass the written e1amination prescribed, if not otherwise e1empt from ta*in0 the same. 'n addition to the fore0oin0 causes, no license to act as insurance a0ent or insurance bro*er shall be renewed if the holder thereof has not been acti/ely en0a0ed as such a0ent or bro*er in accordance with such rules as the ,ommissioner may prescribe. (ection 61?. )he premium, or any portion thereof, which an insurance a0ent or insurance bro*er collects from an insured and which is to be paid to an insurance company because of the assumption of liability throu0h the issuance of policies or contracts of insurance, shall be held by the a0ent or bro*er in a fiduciary capacity and shall not be misappropriated or con/erted to his own use or ille0ally withheld by the a0ent or bro*er. #ny insurance company which deli/ers to an insurance a0ent or insurance bro*er a policy or contract of insurance shall be deemed to ha/e authori7ed such a0ent or bro*er to recei/e on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or deli/ery or which becomes due thereon. 'n order to ensure faithful performance by the insurance a0ent or insurance bro*er of these fiduciary responsibilities, the 'nsurance ,ommissioner shall prescribe the minimum terms and conditions on such matters in the standard a0ency or bro*ers a0reement between the a0ents andFor the bro*er with the insurance companies.

(ection 616. #ny pro/ision of e1istin0 laws to the contrary notwithstandin0, no person shall, within the Philippines, sell or offer for sale a /ariable contract or do or perform any act or thin0 in the sale, ne0otiation, ma*in0 or consummatin0 of any /ariable contract other than for himself unless such person shall ha/e a /alid and current license from the ,ommissioner authori7in0 such person to act as a /ariable contract a0ent. No such license shall be issued unless and until the ,ommissioner is satisfied, after e1amination that such person is by trainin0, *nowled0e, ability and character 2ualified to act as such a0ent. #ny such license may be withdrawn and cancelled by the ,ommissioner after notice and hearin0, if he shall find that the holder thereof does not then ha/e the 2ualifications re2uired for the issuance of such license. (ection 61@. 't shall be unlawful for any person, company or corporation in the Philippines to act as 0eneral a0ent of any insurance company unless he is empowered by a written power of attorney duly e1ecuted by such insurance company, and re0istered with the ,ommissioner to recei/e notices, summons and le0al processes for and in behalf of the insurance company concerned in connection with actions or other le0al proceedin0s a0ainst said insurance company. 't shall be the duty of said 0eneral a0ent to notify the ,ommissioner of his post office address in the Philippines, or any chan0e thereof. Notices, summons, or processes of any *ind sent by re0istered mail to the last re0istered address of such 0eneral a0ent of the company concerned or to the ,ommissioner shall be sufficient ser/ice and deemed as if ser/ed on the insurance company itself. (ection 61A. "1cept as otherwise pro/ided by law or treaty, it shall be unlawful for any person, partnership, association or corporation in the Philippines, for himself or itself, or for some other person, partnership, association or corporation, either to procure, recei/e or forward applications of insurance in, or to issue or to deli/er or accept policies or contracts of insurance of or for, any insurance company or companies not authori7ed to transact business in the Philippines, co/erin0 ris*s, life or nonDlife, situated in the Philippines5 and any such person, partnership, association or corporation /iolatin0 the pro/isions of this section shall be

deemed 0uilty of a penal offense, and upon con/iction thereof, shall for each such offense be punished by a fine of )wo hundred fifty thousand pesos 3P2?C,CCC.CC4, or imprisonment of si1 364 months, or both, at the discretion of the court: Provided, )hat the pro/isions of this section shall not apply to reinsurance. )')$" 2 R"'N(;R#N," =R%H"R( (ection 61B. "1cept as pro/ided in the ne1t succeedin0 title, no person shall act as reinsurance bro*er in the Philippines unless he is authori7ed as such by the ,ommissioner. # reinsurance bro*er is one who, for compensation, not bein0 a duly authori7ed a0ent, employee or officer of an insurer in which any reinsurance is effected, acts or aids in any manner in ne0otiatin0 contracts of reinsurance, or placin0 ris*s of effectin0 reinsurance, for any insurance company authori7ed to do business in the Philippines. (ection 62C. ;pon application and payment of the correspondin0 fee hereinafter prescribed, and the filin0 of two 324 errors and omissions 3professional liability or professional indemnity4 policies hereinafter described, a person may, if found 2ualified, be issued a license to act as reinsurance bro*er by the ,ommissioner. No such license shall be /alid after December 61 of the third year followin0 its issuance unless it is renewed. )he errors and omissions 3professional liability or professional indemnity4 policies mentioned abo/e shall indemnify the applicant a0ainst any claim or claims for breach of duty as reinsurance bro*er which may be made a0ainst him by reason of any ne0li0ent act, error or omission, whene/er or where/er committed or alle0ed to ha/e been committed, on the part of the applicant or any person who has been, is now, or may hereafter durin0 the subsistence of the policies be employed by the said applicant in his capacity as reinsurance bro*er: Provided, )hat the filin0 of any claim or claims under one of such policies shall

preclude the filin0 of the said claim or claims under the other policy. )he said policies shall be issued separately by two 324 insurance companies authori7ed to do business in the Philippines and shall be in such amounts as may be prescribed by the 'nsurance ,ommissioner, dependin0 upon the si7e or amount of the bro*in0 business of the applicant, but in no case shall the amount of each of such policies be less than :i/e hundred thousand pesos 3P?CC,CCC.CC4. (ection 621. )he ,ommissioner may recall, suspend or re/o*e the license 0ranted to a reinsurance bro*er for /iolation of any e1istin0 law, rule and re0ulation, or any pro/ision of this ,ode after due notice and hearin0. )')$" 6 R"('D"N) #!"N)( (ection 622. No person shall act as resident a0ent, as hereinafter defined, unless he is re0istered as such with the ,ommissioner. (ection 626. )he term resident agent, as used in this title, is one duly appointed by a forei0n insurer or bro*er not authori7ed to do business in the Philippines to recei/e in its behalf notices, summons and le0al processes in connection with actions or other le0al proceedin0s a0ainst such forei0n insurer or bro*er. (ection 628. )he application for a certificate of re0istration as resident a0ent filed with the ,ommissioner must be accompanied with a copy of the power of attorney, duly notari7ed and authenticated by the Philippine ,onsul in the place where such forei0n insurer or bro*er is domiciled, empowerin0 the applicant to act as resident a0ent and to recei/e notices, summons and le0al processes for and in behalf of such forei0n insurer or bro*er in connection with any action or le0al proceedin0 a0ainst such forei0n insurer or bro*er. (ection 62?. 't shall be the duty of such resident a0ent to notify immediately the ,ommissioner of any chan0e of his office address.

(ection 626. # certificate of re0istration issued to a resident a0ent shall e1pire on the thirtyDfirst day of December of the third year followin0 its issuance unless it is renewed. )he ,ommissioner may, after due notice and hearin0, recall or cancel the certificate of re0istration issued to a resident a0ent for /iolation of any e1istin0 law, rule or re0ulation, or any pro/ision of this ,ode. )')$" 8 N%ND$':" ,%MP#N< ;ND"R.R')"R (ection 62@. No person shall act, and no company shall employ any person, as nonDlife company underwriter, whose duty and responsibility it shall be to select, e/aluate and accept ris*s for, and to determine the terms and conditions, includin0 those pertainin0 to amounts of retentions, under which such ris*s are to be accepted by the company, unless such underwriter is re0istered as such with the ,ommissioner. (ection 62A. "/ery nonDlife insurance company doin0 business in the Philippines must maintain at all times a re0ister of ris*s accepted and a claims re0ister for each line of ris*s en0a0ed in by such nonDlife insurance company with such entries therein as are now or as may hereafter be re2uired by the ,ommissioner, and it shall be the responsibility of the underwriter on the particular line of ris* in/ol/ed to see to it that the said re0isters are well maintained and *ept, and that all entries therein are properly and correctly recorded. (uch re0isters shall be open to inspection and e1amination of duly authori7ed representati/es of the ,ommissioner at all times durin0 business hours. (ection 62B. No person shall be re0istered with the ,ommissioner, unless such person shall be at least twentyDone 3214 years of a0e on the date of such re0istration5 a resident of the Philippines5 of 0ood moral character and with no con/iction of any crime in/ol/in0 moral turpitude5 has had at the time such re0istration is made at least two 324 years of underwritin0 wor* in the particular line of ris* in/ol/ed5 and has passed such 2ualifyin0 written e1amination that the ,ommissioner shall

conduct at such time and in such place as he may decide to hold for applicants desirin0 to act as underwriters. (uch e1amination shall not be re2uired of any person who has ser/ed as nonDlife company underwriter for a period of at least fi/e 3?4 years, if the ,ommissioner is satisfied of the applicant-s competence as shown by the results of his underwritin0 wor* in the nonDlife insurance company or companies that employed him in that capacity. )he minimum underwritin0 e1perience herein re2uired may be reduced or wai/ed if it is shown to the satisfaction of the ,ommissioner that the nonDlife company underwriter has under0one e1tensi/e education andFor trainin0 in insurance. (ection 66C. #ny applicant who misrepresents or omits any material fact in his application for re0istration as a nonDlife company underwriter, or commits any dishonest act in ta*in0 or in connection with the 2ualifyin0 written e1amination for underwriters, shall be barred from bein0 re0istered as such nonDlife company underwriter and, if already re0istered, his re0istration shall be cancelled and the certificate of re0istration issued in his fa/or shall be recalled immediately by the ,ommissioner. 'n the e/ent that the certificate of authority of a nonDlife insurance company to transact business is suspended or re/o*ed due to business failure arisin0 lar0ely from the imprudent and in>udicious acceptance of ris*s by the underwriter concerned, the re0istration of such underwriter shall li*ewise be cancelled and his certificate of re0istration shall be recalled by the ,ommissioner, and no similar certificate shall thereafter be issued in his fa/or. (ection 661. No certificate of re0istration issued to an underwriter shall be /alid after December 61 of the third year followin0 its issuance unless it is renewed.

)he ,ommissioner may, after due notice and hearin0, also suspend or cancel such certificate for /iolation of e1istin0 laws, rules and re0ulations or of any pro/isions of this ,ode. )')$" ? #DJ;()"R( (ection 662. No person, partnership, association, or corporation shall act as an ad>uster, as hereinafter defined, unless authori7ed so to act by /irtue of a license issued or renewed by the ,ommissioner pursuant to the pro/isions of this ,ode: Provided, )hat in the case of a natural person, he must be a :ilipino citi7en and in the case of a partnership, association or corporation, at least si1ty percent 36CG4 of its capital must be owned by citi7ens of the Philippines. (ection 666. #n ad>uster may be an independent ad>uster or a public ad>uster. )he term independent ad*uster means any person, partnership, association or corporation which, for money, commission or any other thin0 of /alue, acts for or on behalf of an insurer in the ad>ustin0 of claims arisin0 under insurance contracts or policies issued by such insurer. )he term public ad*uster means any person, partnership, association or corporation which, for money, commission or any other thin0 of /alue, acts on behalf of an insured in ne0otiatin0 for, or effectin0, the settlement of a claim or claims of the said insured arisin0 under insurance contracts or policies, or which ad/ertises for or solicits employment as an ad>uster of such claims. (ection 668. :or e/ery line of insurance claim ad>ustment, ad>usters shall be licensed either as independent ad>usters or as public ad>usters. No ad>uster shall act on behalf of an insurer unless said ad>uster is licensed as an independent ad>uster5 and no ad>uster shall act on behalf of an insured unless said ad>uster is licensed as a public ad>uster:

Provided, however, )hat when a firm or person has been licensed as a public ad>uster, he shall not be 0ranted another license as independent ad>uster and vice versa. No license, howe/er, shall be re2uired of any company ad>uster who is a salaried employee of an insurance company for the ad>ustment of claims filed under policies issued by such insurance company. (ection 66?. (uch license or any renewal thereof may be issued by the ,ommissioner upon written application filed by the person interested on the form or forms prescribed by the ,ommissioner, which shall contain such information as he may re2uire, and upon payment of the correspondin0 fee hereinafter prescribed. (ection 666. )he ,ommissioner shall conduct, at such times, and in such places as he may decide to hold, written e1aminations to determine the competence and ability of applicants desirin0 to act as ad>uster of insurance claims. (ection 66@. No ad>uster-s license issued hereunder shall be /alid after December 61 of the third year followin0 the issuance of such license unless it is renewed. (ection 66A. Nothin0 contained in this title shall apply to any duly licensed attorneyDatDlaw who acts or aids in ad>ustin0 insurance claims as an incident to the practice of his profession and who does not ad/ertise himself as an ad>uster. (ection 66B. )he ,ommissioner may suspend or re/o*e any ad>uster-s license if, after 0i/in0 notice and hearin0 to the ad>uster concerned, the ,ommissioner finds that the said ad>uster: 3a4 9as /iolated any pro/ision of this ,ode and of the circulars, rulin0s and instructions of the ,ommissioner or has /iolated any law in the course of his dealin0s as an ad>uster5 or

3b4 9as made a material misstatement in the application for such license5 or 3c4 9as been 0uilty of fraudulent or dishonest practices5 or 3d4 9as demonstrated his incompetence or untrustworthiness to act as ad>uster5 or 3e4 9as made patently un>ust /aluation of loss5 or 3f4 9as failed to ma*e a report of the ad>ustment he proposed within si1ty 36C4 days from the date of the filin0 of the claim by the insured with the insurer, unless pre/ented so to do by reasons beyond his control5 or 304 9as refused to allow an e1amination into his affairs or method of doin0 business as hereinafter pro/ided. (ection 68C. "/ery ad>uster shall submit to the ,ommissioner a 2uarterly report of all losses which are the sub>ect of ad>ustment effected by him durin0 each month in the form prescribed by the ,ommissioner. )he report shall be filed within one 314 month after the end of each 2uarter. (ection 681. "/ery ad>uster shall *eep his or its boo*s, records, reports, accounts, and /ouchers in such manner that the ,ommissioner or his duly authori7ed representati/es may readily /erify the 2uarterly reports of the said ad>uster and ascertain whether the said ad>uster has complied with the pro/isions of law or re0ulations obli0atory upon him or whether the method of doin0 business of the said ad>uster has been fair, >ust and honest. (ection 682. )he ,ommissioner shall, at least once a year and whene/er he considers the public interest so demands, cause an e1amination to be made into the affairs and method of doin0 business of e/ery ad>uster.

(ection 686. #ny /iolation of any pro/ision of this title shall be punished by a fine of not less than )en thousand pesos 3P1C,CCC.CC4, or by imprisonment at the discretion of the court: Provided, )hat, in case of a partnership, association or corporation, the said penalty shall be imposed upon the partner, president, mana0er, mana0in0 director, director or person in char0e of its business or responsible for the /iolation. )')$" 6 #,);#R'"( (ection 688. No life insurance company shall be licensed to do business in the Philippines nor shall any life insurance company doin0 business in the Philippines be allowed to continue doin0 such business unless they shall en0a0e the ser/ices of an actuary duly accredited with the ,ommissioner who shall, durin0 his tenure of office, be directly responsible for the direction and super/ision of all actuarial wor* connected with or that may be in/ol/ed in the business of the insurance company. )he ,ommissioner may also re2uire nonDlife insurance companies to en0a0e the ser/ices of an accredited actuary, in accordance with the rules and re0ulations that the ,ommissioner will formulate. (ection 68?. #ny person may be officially accredited by the ,ommissioner to act as an actuary in any life insurance company or in any mutual benefit association authori7ed to do business in the Philippines upon application therefor and the payment of the correspondin0 fee hereinafter prescribed: Provided, )hat: 3a4 9e is a fellow of 0ood standin0 of the #ctuarial (ociety of the Philippines at the time of his appointment and remains in such 0ood standin0 durin0 the tenure of his en0a0ement5 or 3b4 'n the case of one who is not a fellow of the #ctuarial (ociety of the Philippines, he meets all the re2uirements of the said (ociety for accreditation as a fellow of the (ociety, and has been 0i/en permission by the pertinent 0o/ernment authorities in

the Philippines to render ser/ices in the Philippines, in the e/ent that he is not a citi7en of the Philippines. )he re0istration of the actuary shall be suspended or re/o*ed by the ,ommissioner on the followin0 0rounds: 314 :ailure to ade2uately perform re2uired functions and duties under this ,ode5 324 :ailure to disclose conflict of interest5 364 :ailure to comply with the ,ode of ,onduct of the #ctuarial (ociety of the Philippines5 or 384 (uch other 0rounds that may be determined by the ,ommissioner. No actuary en0a0ed by a life insurance company shall be at the same time a stoc*holder or a director of the board, chief e1ecuti/e officer or chief financial officer of the company or hold any position that the ,ommissioner may determine to ha/e an inherent conflict of interest to the position of an actuary. No certificate of re0istration issued under this title shall be /alid after December 61 of the third year followin0 its issuance unless it is renewed. (ection 686. )he followin0 documents, which are from time to time submitted to the ,ommissioner by a life insurance company authori7ed to do business in the Philippines, shall be duly certified by an accredited actuary employed by such company: 3a4 Policy reser/es, claims or loss reser/es and net due and deferred premiums.

3b4 (tatements of bases and net premiums, loadin0 for 0ross premiums, and on nonDforfeiture /alues and reser/es, when applyin0 for appro/al of 0ross premiums, reser/es and nonD forfeiture /alues. 3c4 Policies of insurance under any plan submitted to the ,ommissioner as re2uired by law. 3d4 #nnual statements and /aluation reports submitted to the ,ommissioner as re2uired by law. 3e4 :inancial pro>ection showin0 the probable income and out0o and reser/e re2uirements, enumeratin0 the actuarial assumptions and bases of pro>ections. 3f4 &aluation of annuity funds or retirement plans. )he ,ommissioner may also re2uire nonDlife insurance companies to submit, from time to time, similar documents which shall be duly certified by an accredited actuary employed by such company. #ny life insurance company authori7ed to do business in the Philippines may employ any person who is not officially accredited under either of the 2ualifications for any *ind of actuarial wor*: Provided, )hat he shall not, at any time, ha/e the authority to certify to the correctness of the fore0oin0 documents. (ection 68@. No accredited actuary shall ser/e more than one client or employer at the same time. 9owe/er, one already in the employ of an insurance company may be allowed by the ,ommissioner to ser/e a mutual benefit association or any other insurance company, pro/ided the followin0 conditions are first complied with: 3a4 )hat the re2uest to en0a0e his ser/ices by the other employer is in writin05

3b4 )hat his present employer ac2uiesced to it in writin05 and 3c4 )hat he furnishes the ,ommissioner with copies of said re2uest and ac2uiescence. No e1ternal auditor shall be en0a0ed by super/ised persons or entities unless it has been issued an accreditation certificate by the ,ommissioner. )he accreditation certificate shall be /alid until December 61 of the third year from issuance unless it is re/o*ed or suspended. )he ,ommissioner shall issue rules and re0ulations to 0o/ern the accreditation of the e1ternal auditor and the re/ocation or suspension of the accreditation. )')$" @ R#)'N! %R!#N'I#)'%N #ND R#)" M#H'N! (ection 68A. "/ery or0ani7ation which now e1ists or which may hereafter be formed for the purpose of ma*in0 rates to be used by more than one insurance company authori7ed to do business in the Philippines shall be *nown as a ratin0 or0ani7ation. )he term rate as used in this title shall 0enerally mean the ratio of the premium to the amount insured and shall include, as the conte1t may re2uire, either the consideration to be paid or char0ed for insurance contracts, includin0 surety bonds, or the elements and factors formin0 the basis for the determination or application of the same, or both. (ection 68B. "/ery ratin0 or0ani7ation which now e1ists or which may hereafter be formed shall be sub>ect to the pro/isions of this title. (ection 6?C. No ratin0 or0ani7ation hereafter formed shall commence rateDma*in0 operations until it shall ha/e obtained a license from the ,ommissioner. =efore obtainin0 such license, such ratin0 or0ani7ation shall file with the ,ommissioner a notice of its intention to commence rateDma*in0 operations, a copy of its constitution, articles of a0reement or association, or of incorporation, and its bylaws, a list of insurance companies that ha/e a0reed to become members or subscribers, and such

other information concernin0 such ratin0 or0ani7ation and its operations as may be re2uired by the ,ommissioner. 'f the ,ommissioner finds that the or0ani7ation has complied with the pro/isions of law and that it has a sufficient number of members or subscribers and is otherwise 2ualified to function as a ratin0 or0ani7ation, the ,ommissioner may issue a license to such ratin0 or0ani7ation authori7in0 it to ma*e rates for the *inds of insurance or subdi/isions thereof as may be specified in such license. No license issued to a ratin0 or0ani7ation shall be /alid after December 61 of the third year followin0 its issuance unless it is renewed. No ratin0 or0ani7ation which now e1ists and is not licensed pursuant to this section shall continue rateDma*in0 operations until it shall ha/e obtained from the ,ommissioner a license which he may issue if satisfied that such or0ani7ation is complyin0 with the pro/isions of this title. "/ery ratin0 or0ani7ation shall notify the ,ommissioner promptly of e/ery chan0e in: 3a4 'ts constitution, its articles of a0reement or association or its certificate of incorporation, and its bylaws, rules and re0ulations 0o/ernin0 the conduct of its business5 and 3b4 'ts list of members and subscribers. # !e!ber means an insurer who participates in or is entitled to participate in the mana0ement of a ratin0 or0ani7ation. # subscriber means an insurer which is furnished at its re2uest with rates and ratin0 manuals by a ratin0 or0ani7ation of which it is not a member. (ection 6?1. "ach ratin0 or0ani7ation shall furnish its ratin0 ser/ice without discrimination to all of its members and subscribers, and shall, sub>ect to reasonable rules and re0ulations, permit any insurance company doin0 business in the Philippines, not admitted to membership, to become a subscriber to its ratin0 ser/ices for any *ind of insurance or subdi/isions thereof. Notice of proposed chan0es in such rules and re0ulations shall be 0i/en to subscribers. )he reasonableness of any rule

or re0ulation in its application to subscribers, or the refusal of any ratin0 or0ani7ation to admit an insurance company as a subscriber, shall, at the re2uest of any subscriber or any such insurance company, be re/iewed by the ,ommissioner at a hearin0 held upon at least ten 31C4 dayswritten notice to such ratin0 or0ani7ation and to such subscriber or insurance company. )he ,ommissioner may, after such hearin0, issue an appropriate order. (ection 6?2. No ratin0 or0ani7ation or any other association shall refuse to do business with, or prohibit or pre/ent the payment of commissions to, any person licensed as an insurance bro*er pursuant to the pro/isions of )itle 1 of this chapter. (ection 6?6. Ratin0 or0ani7ations shall be sub>ect to e1amination by the ,ommissioner, as often as he may deem such e1amination e1pedient, pursuant to the pro/isions of this ,ode applicable to the e1amination of insurance companies. 9e shall cause such an e1amination of each ratin0 or0ani7ation to be made at least once in e/ery fi/e 3?4 years. (ection 6?8. )he ,ommissioner may suspend or re/o*e the license of any ratin0 or0ani7ation which fails to comply with his order within the time limited by such order, or any e1tension thereof which he may 0rant. )he ,ommissioner may determine when a suspension of license shall become effecti/e and it shall remain in effect for the period fi1ed by him, unless he modifies or rescinds such suspension. (ection 6??. #ny ratin0 or0ani7ation may subscribe for or purchase actuarial, technical or other ser/ices, and such ser/ices shall be a/ailable to all members and subscribers without discrimination. (ection 6?6. #ny ratin0 or0ani7ation may pro/ide for the e1amination of policies, daily reports, binders, renewal certificates, endorsements or other instruments of insurance, or the cancellation thereof, and may ma*e reasonable rules 0o/ernin0 their submission. (uch rules shall contain a pro/ision that in the e/ent an insurance company does not within si1ty 36C4 days furnish satisfactory e/idence to the ratin0

or0ani7ation of the correction of any error or omission pre/iously called to its attention by the ratin0 or0ani7ation, it shall be the duty of the ratin0 or0ani7ation to notify the ,ommissioner thereof. #ll information so submitted for e1amination shall be confidential. (ection 6?@. ,ooperation amon0 ratin0 or0ani7ations or amon0 ratin0 or0ani7ations and insurers in rate ma*in0 or in other matters within the scope of this title is hereby authori7ed, pro/ided the filin0s resultin0 from such cooperation are sub>ect to all pro/isions of this title which are applicable to filin0s 0enerally. )he ,ommissioner may re/iew such cooperati/e acti/ities and practices and if he finds that any such acti/ity or practice is unfair or unreasonable or otherwise inconsistent with the pro/isions of this title, he may issue a written order specifyin0 in what respects such acti/ity or practice is unfair or unreasonable or otherwise inconsistent with the pro/isions of this title, and re2uirin0 the discontinuance of such acti/ity or practice. (ection 6?A. "/ery ratin0 or0ani7ation and e/ery insurance company which ma*es and files its own rates, shall ma*e rates for all ris*s rated by such or0ani7ation or insurance company in accordance with the followin0 pro/isions: 3a4 =asic classification, manual, minimum, class, or schedule rates or ratin0 plans, shall be made and adopted for all such ris*s. #ny departure from such rates shall be in accordance with schedules, ratin0 plans and rules filed with the ,ommissioner5 3b4 Rates shall be reasonable and ade2uate for the class of ris*s to which they apply5 3c4 No rate shall discriminate unfairly between ris*s in/ol/in0 essentially the same ha7ards and e1pense elements or between ris*s in the application of li*e char0es and credits5 3d4 ,onsideration shall be 0i/en to the past and prospecti/e loss e1perience, includin0 the confla0ration and catastrophe ha7ards,

if any, to all factors reasonably attributable to the class of ris*s, to a reasonable profit, to commissions paid durin0 the most recent annual period and to past and prospecti/e other e1penses. 'n case of fire insurance rates, consideration shall be 0i/en to the e1perience of the fire insurance business durin0 a period of not less than fi/e 3?4 years ne1t precedin0 the year in which the re/iew is made5 3e4 Ris* may be 0rouped by classifications for the establishment of rates and minimum premiums. ,lassification rates may be modified to produce rates for indi/idual ris*s in accordance with ratin0 plans which establish standards for measurin0 /ariations in ha7ards or e1pense pro/isions, or both. (uch standards may measure any difference amon0 ris*s that can be demonstrated to ha/e a probable effect upon losses or e1penses. (ection 6?B. No ratin0 or0ani7ation and no insurance company which ma*es and files its own rates shall ma*e or promul0ate any rate or schedule of rates which is to be applied to any fire ris* on the condition that the whole amount of insurance on any ris* or any specified part thereof shall be placed with the members of or subscribers to such ratin0 or0ani7ation or with such insurer. (ection 66C. "/ery insurance company doin0 business in the Philippines shall annually file with the ratin0 or0ani7ation of which it is a member or subscriber, or with such other a0ency as the ,ommissioner may desi0nate, a statistical report showin0 a classification schedule of its premiums and losses on all *inds or types of insurance business to which (ection 6?A is applicable, and such other information as the ,ommissioner may deem necessary or e1pedient for the administration of the pro/isions of this title. (ection 661. "/ery nonDlife ratin0 or0ani7ation and e/ery nonDlife insurance company doin0 business in the Philippines shall file with the ,ommissioner, e1cept as to ris*s which by 0eneral custom of the business are not written accordin0 to manual rates or ratin0 plans, e/ery

rate manual, schedule of rates, classification of ris*s, ratin0 plan, and e/ery other ratin0 rule and e/ery modification of any of the fore0oin0 which it proposes to use. #n insurance company may satisfy its obli0ation to ma*e such filin0s for any *ind or type of insurance by becomin0 a member of or subscriber to a ratin0 or0ani7ation which ma*es such filin0s for such *ind or type of insurance, and by authori7in0 the ,ommissioner to accept such filin0s of the ratin0 or0ani7ation on behalf of such insurance company. (ection 662. "/ery manual or schedule of rates and e/ery ratin0 plan filed as pro/ided in the precedin0 section shall state or clearly indicate the character and e1tent of the co/era0e to which any such rate or any modification thereof will be applied. (ection 666. )he ,ommissioner shall re/iew filin0s as soon as reasonably possible after they ha/e been made in order to determine whether they meet the re2uirements of this title. .hen a filin0 is not accompanied by the information upon which the insurance company supports such filin0, and the ,ommissioner does not ha/e sufficient information to determine whether such filin0 meets the re2uirements of this title, he shall re2uire such insurance company to furnish the information upon which it supports such filin0. )he information furnished in support of a filin0 may include: 3a4 )he e1perience or >ud0ment of the insurance company or ratin0 or0ani7ation ma*in0 the filin05 3b4 'ts interpretation of any statistical data it relies upon5 3c4 )he e1perience of other insurance companies or ratin0 or0ani7ation5 or 3d4 #ny other rele/ant factors. (ection 668. 'f the ,ommissioner finds that any rate filin0s theretofore filed with him do not comply with the pro/isions of this title or that they

pro/ide rates or rules which are inade2uate, e1cessi/e, unfairly discriminatory or otherwise unreasonable, he may order the same withdrawn and at the e1piration of si1ty 36C4 days thereafter the same shall be deemed no lon0er on file. =efore ma*in0 any such findin0 and order, the ,ommissioner shall 0i/e notice, not less than ten 31C4 days in ad/ance, and a hearin0, to the ratin0 or0ani7ation, or to the insurer, which filed the same. (uch order shall not affect any contract or policy made or issued prior to the e1piration of such si1ty 36C4Dday period. (ection 66?. No member or subscriber of a ratin0 or0ani7ation, and no insurance company doin0 business in the Philippines, or a0ent, employee or other representati/e of such company, and no insurance bro*er shall char0e or demand a rate or recei/e a premium which de/iates from the rates, ratin0 plans, classifications, schedules, rules and standards, made and last filed by a ratin0 or0ani7ation or by or on behalf of the insurance company, or shall issue or ma*e any policy or contract in/ol/in0 a /iolation of such rate filin0s. (ection 666. Notwithstandin0 any other pro/isions of this title, upon the written application of the insurer, statin0 his reasons therefor, filed with and appro/ed by the ,ommissioner, a rate in e1cess of that pro/ided by a filin0 otherwise applicable may be used on any specific ris*. (ection 66@. .hene/er the ,ommissioner shall determine, after notice and a hearin0, that the rates char0ed or filed on any class of ris*s are e1cessi/e, discriminatory, inade2uate or unreasonable, he shall order that such rates be appropriately ad>usted. :or the purpose of applyin0 the pro/isions of this section, the ,ommissioner may from time to time appro/e reasonable classifications of ris*s for any or all such classes, ha/in0 due re0ard to the past and prospecti/e loss e1perience, includin0 confla0ration or catastrophe ha7ards, if any, to all other rele/ant factors and to a reasonable profit. (ection 66A. Nothin0 contained in this title shall be construed as re2uirin0 any insurer to become a member of or subscriber to any ratin0 or0ani7ation.

(ection 66B. #0reements may be made amon0 insurance companies with respect to the e2uitable apportionment amon0 them of insurance which may be afforded applicants who are in 0ood faith entitled to but are unable to procure such insurance throu0h ordinary methods and such insurance companies may a0ree amon0 themsel/es on the use of reasonable rates and modifications for such insurance, such a0reements and rate modifications to be sub>ect to the appro/al of the ,ommissioner: Provided, however, )hat the pro/isions of this section shall not be deemed to apply to wor*men-s compensation insurance. (ection 6@C. No insurance company doin0 business in the Philippines or any a0ent thereof, no insurance bro*er, and no employee or other representati/e of any such insurance company, a0ent, or bro*er, shall ma*e, procure or ne0otiate any contract of insurance or a0reement as to policy contract, other than is plainly e1pressed in the policy or other written contract issued or to be issued as e/idence thereof, or shall directly or indirectly, by 0i/in0 or sharin0 a commission or in any manner whatsoe/er, pay or allow or offer to pay or allow to the insured or to any employee of such insured, either as an inducement to the ma*in0 of such insurance or after such insurance has been effected, any rebate from the premium which is specified in the policy, or any special fa/or or ad/anta0e in the di/idends or other benefits to accrue thereon, or shall 0i/e or offer to 0i/e any /aluable consideration or inducement of any *ind, directly or indirectly, which is not specified in such policy or contract of insurance5 nor shall any such company, or any a0ent thereof, as to any policy or contract of insurance issued, ma*e any discrimination a0ainst any :ilipino in the sense that he is 0i/en less ad/anta0eous rates, di/idends or other policy conditions or pri/ile0es than are accorded to other nationals because of his race. (ection 6@1. No insurance company doin0 business in the Philippines, and no officer, director, or a0ent thereof, and no insurance bro*er or any other person, partnership or corporation shall issue or circulate or cause or permit to be issued or circulated any literature, illustration, circular or statement of any sort misrepresentin0 the terms of any policy issued by any insurance company of the benefits or ad/anta0es promised thereby,

or any misleadin0 estimate of the di/idends or share of surplus to be recei/ed thereon, or shall use any name or title of any policy or class of policies misrepresentin0 the true nature thereof5 nor shall any such company or a0ent thereof, or any other person, partnership or corporation ma*e any misleadin0 representation or incomplete comparison of policies to any person insured in such company for the purpose of inducin0 or tendin0 to induce such person to lapse, forfeit, or surrender his said insurance. (ection 6@2. 'f the ,ommissioner, after notice and hearin0, finds that any insurance company, ratin0 or0ani7ation, a0ent, bro*er or other person has /iolated any of the pro/isions of this title, it shall order the payment of a fine not to e1ceed )wentyDfi/e thousand pesos 3P2?,CCC.CC4 for each such offense, and shall immediately suspend or re/o*e the license issued to such insurance company, ratin0 or0ani7ation, a0ent, or bro*er. )he issuance, procurement or ne0otiation of a sin0le policy or contract of insurance shall be deemed a separate offense. )')$" A PR%&'('%N ,%MM%N )% #!"N)(, =R%H"R( #ND #DJ;()"R( (ection 6@6. # license issued to a partnership, association or corporation to act as an insurance a0ent, 0eneral a0ent, insurance bro*er, reinsurance bro*er, or ad>uster shall authori7e only the indi/idual named in the license who shall 2ualify therefor as thou0h an indi/idual licensee. )he ,ommissioner shall char0e, and the licensee shall pay, a full additional license fee as to each respecti/e indi/idual so named in such license in e1cess of one. $icenses and certificates of re0istration issued under the pro/isions of this chapter may be renewed by the filin0 of notices of intention on forms to be prescribed by the ,ommissioner and payment of the fees therefor.

(ection 6@8. )he ,ommissioner, in consultation with the duly accredited associations representin0 the insurance industry, shall adopt and promul0ate a code of conduct to promote inte0rity, honesty and ethical business practices amon0 insurance a0ents, distributors and other intermediaries. )')$" B =#N,#((;R#N," (ection 6@?. )he term bancassurance shall mean the presentation and sale to ban* customers by an insurance company of its insurance products within the premises of the head office of such ban* duly licensed by the =an0*o (entral n0 Pilipinas or any of its branches under such rules and re0ulations which the ,ommissioner and the =an0*o (entral n0 Pilipinas may promul0ate. )o en0a0e in bancassurance arran0ement, a ban* is not re2uired to ha/e e2uity ownership of the insurance company. No insurance company shall enter into a bancassurance arran0ement unless it possesses all the re2uirements as may be prescribed by the ,ommissioner and the =an0*o (entral n0 Pilipinas. No insurance product under this section, whether life or nonDlife, shall be issued or deli/ered unless in the form pre/iously appro/ed by the ,ommissioner. (ection 6@6. Personnel tas*ed to present and sell insurance products within the ban* premises shall be duly licensed by the ,ommissioner and shall be sub>ect to the rules and re0ulations of this #ct. (ection 6@@. )he ,ommissioner and the =an0*o (entral n0 Pilipinas shall promul0ate rules and re0ulations to effecti/ely super/ise the business of bancassurance. ,9#P)"R & (",;R')< :;ND

(ection 6@A. )here is hereby created a fund to be *nown as the (ecurity :und which shall be used in the payment of allowed claims a0ainst an insurance company authori7ed to transact business in the Philippines remainin0 unpaid by reason of the insol/ency of such company. )he said :und may also be used to reinsure the policy of the insol/ent insurer in any sol/ent insurer authori7ed to do business in the Philippines as pro/ided in (ection 2?6. )he :und may li*ewise be used to pay insured claims which otherwise would not be compensable under the pro/isions of the policy. No payment from the (ecurity :und shall, howe/er, be made to any person who owns or controls ten percent 31CG4 or more of the /otin0 shares of stoc* of the insol/ent insurer and no payment on any one claim shall e1ceed )wenty thousand pesos 3P2C,CCC.CC4. (ection 6@B. (uch :und shall consist of all payments made to the :und by insurance companies authori7ed to do business in the Philippines. Payments made by life insurance companies shall be treated separately from those made by nonDlife insurance companies and the correspondin0 fund shall be called $ife #ccount and NonD$ife #ccount, respecti/ely, and shall be held and administered as such by the ,ommissioner in accordance with the pro/isions of this title. )he $ife #ccount shall be utili7ed e1clusi/ely for disbursements that refer to life insurance companies, while the NonD$ife #ccount shall be utili7ed e1clusi/ely for disbursements that refer to nonDlife insurance companies. (ection 6AC. #ll insurance companies doin0 business in the Philippines shall contribute to the (ecurity :und, $ife or NonD$ife #ccount, as the case may be, the a00re0ate amount of :i/e million pesos 3P?,CCC,CCC.CC4 for each #ccount. )he contributions of the life insurance companies and of the nonDlife insurance companies shall be in direct proportion to the ratio between a particular life insurance company or a particular nonDlife insurance company-s net worth and the a00re0ate net worth of all life insurance companies or all nonDlife insurance companies, as the case may be, as shown in their latest financial statements appro/ed by the ,ommissioner. )his proportion applied to the :i/e million pesos 3P?,CCC,CCC.CC4 shall be the contribution of a particular company to the correspondin0 #ccount of the (ecurity :und.

)he amount of :i/e million pesos 3P?,CCC,CCC.CC4 in each #ccount shall be in the form of a re/ol/in0 trust fund. )he respecti/e contributions of the companies shall remain as admitted assets in their boo*s and any disbursement therefrom shall be deducted proportionately from the contributions of each company which will be allowed as deductions for income ta1 purposes. #ny earnin0s of the :und shall be turned o/er to the contributin0 companies in proportion to their contributions. 'n the case of disbursements of funds from the :und as pro/ided in the fore0oin0 para0raph, the life and nonDlife companies, as the case may be, shall replenish the amount disbursed in direct proportion to the indi/idual company-s net worth and the a00re0ate net worth of the life or nonDlife companies, as the case may be. 9owe/er, in no case shall the :und e1ceed the a00re0ate amount of )en million pesos 3P1C,CCC,CCC.CC4, or :i/e million pesos 3P?,CCC,CCC.CC4 for each #ccount. (hould the :und, $ife or NonD$ife #ccount, as the case may be, be inade2uate for a disbursement as pro/ided for, then the $ife or NonD$ife companies, as the case may be, shall contribute to the :und their respecti/e shares in the proportion pre/iously mentioned. (ection 6A1. )he ,ommissioner may adopt, amend, and enforce all reasonable rules and re0ulations necessary for the proper administration of the :und and of the #ccounts. 'n the e/ent any insurer shall fail to ma*e any payment re2uired by this title, or that any payment made is incorrect, he shall ha/e full authority to e1amine all the boo*s and records of the insurer for the purpose of ascertainin0 the facts and shall determine the correct amount to be paid and may proceed in any court of competent >urisdiction to reco/er for the benefit of the :und or of the #ccount concerned any sum shown to be due upon such e1amination and determination. #ny insurer which fails to ma*e any payment to the :und or to the #ccount concerned when due, shall thereby forfeit to said :und or #ccount concerned a penalty of fi/e percent 3?G4 of the amount determined to be due as pro/ided by this title, plus one percent 31G4 of

such amount for each month of delay or fraction thereof, after the e1piration of the first month of such delay, but the ,ommissioner, if satisfied that the delay was e1cusable, may remit all or any part of such penalty. )he ,ommissioner, in his discretion, may suspend or re/o*e the certificate of authority to do business in the Philippines of any insurance company which shall fail to comply with this title or to pay any penalty imposed in accordance therewith. (ection 6A2. )he #ccounts created by this title shall be separate and apart from each other and from any other fund. )he )reasurer of the Philippines shall be the custodian of the $ife #ccount and NonD$ife #ccount of the (ecurity :und5 and all disbursements from any #ccount shall be made by the )reasurer of the Philippines upon /ouchers si0ned by the ,ommissioner or his deputy, as hereinafter pro/ided. )he moneys of said #ccount may be in/ested by the ,ommissioner only in bonds or other instruments of debt of the !o/ernment of the Philippines or its political subdi/isions or instrumentalities. )he ,ommissioner may sell any of the securities in which an #ccount is in/ested, if ad/isable, for its proper administration or in the best interest of such #ccount. (ection 6A6. Payments from either the $ife 'nsurance #ccount or NonD $ife #ccount, as the case may be, shall be made by the )reasurer of the Philippines to the ,ommissioner, upon the authority of appropriate certificate filed with him by the ,ommissioner actin0 in such capacity. (ection 6A8. )he ,ommissioner may, in his discretion, desi0nate or appoint a duly authori7ed representati/e or representati/es to appear and defend before any court or other body or official ha/in0 >urisdiction any or all actions or proceedin0s a0ainst principals or assureds on insurance policies or contracts issued to them where the insurer has become insol/ent or unable to meet its insurance obli0ations. )he ,ommissioner shall ha/e, as of the date of insol/ency of such insurer or as of the date of its inability to meet its insurance obli0ations, only the ri0hts which such insurer would ha/e had if it had not become insol/ent or unable to meet its insurance obli0ations. :or the purpose of this title, the

,ommissioner shall ha/e power to employ such counsel, cler*s and assistants as he may deem necessary. (ection 6A?. )he e1pense of administerin0 an #ccount shall be paid out of the #ccount concerned. )he ,ommissioner shall ser/e as administrator of the :und and of the #ccounts without additional compensation, but may be allowed and paid from the #ccount concerned e1penses incurred in the performance of his duties in connection with said #ccount. )he compensation of those persons employed by the ,ommissioner shall be deemed administration e1pense payable from the #ccount concerned. )he ,ommissioner shall include in his annual report to the (ecretary of :inance a statement of the e1penses of administration of the :und and of the $ife #ccount and NonD$ife #ccount for the precedin0 year. ,9#P)"R &' ,%MP;$(%R< M%)%R &"9',$" $'#='$')< 'N(;R#N," (ection 6A6. :or purposes of this chapter: 3a4 Motor +ehicle is any /ehicle as defined in (ection 6, para0raph 3a4 of Republic #ct No. 8166, otherwise *nown as the +$and )ransportation and )raffic ,ode-. 3b4 Passenger is any fare payin0 person bein0 transported and con/eyed in and by a motor /ehicle for transportation of passen0ers for compensation, includin0 persons e1pressly authori7ed by law or by the /ehicle-s operator or his a0ents to ride without fare. 3c4 ,hird party is any person other than a passen0er as defined in this section and shall also e1clude a member of the household, or a member of the family within the second de0ree of consan0uinity or affinity, of a motor /ehicle owner or land transportation operator, as li*ewise defined herein, or his

employee in respect of death, bodily in>ury, or dama0e to property arisin0 out of and in the course of employment. 3d4 -wner or !otor vehicle owner means the actual le0al owner of a motor /ehicle, in whose name such /ehicle is duly re0istered with the $and )ransportation %ffice5 3e4 .and transportation operator means the owner or owners of motor /ehicles for transportation of passen0ers for compensation, includin0 school buses. 3f4 #nsurance policy or Policy refers to a contract of insurance a0ainst passen0er and thirdDparty liability for death or bodily in>uries and dama0e to property arisin0 from motor /ehicle accidents. (ection 6A@. 't shall be unlawful for any land transportation operator or owner of a motor /ehicle to operate the same in the public hi0hways unless there is in force in relation thereto a policy of insurance or 0uaranty in cash or surety bond issued in accordance with the pro/isions of this chapter to indemnify the death, bodily in>ury, andFor dama0e to property of a thirdDparty or passen0er, as the case may be, arisin0 from the use thereof. (ection 6AA. )he ,ommissioner shall furnish the $and )ransportation %ffice with a list of insurance companies authori7ed to issue the policy of insurance or surety bond re2uired by this chapter. (ection 6AB. )he $and )ransportation %ffice shall not allow the re0istration or renewal of re0istration of any motor /ehicle without first re2uirin0 from the land transportation operator or motor /ehicle owner concerned the presentation and filin0 of a substantiatin0 documentation in a form appro/ed by the ,ommissioner e/idencin0 that the policy of insurance or 0uaranty in cash or surety bond re2uired by this chapter is in effect.

(ection 6BC. "/ery land transportation operator and e/ery owner of a motor /ehicle shall, before applyin0 for the re0istration or renewal of re0istration of any motor /ehicle, at his option, either secure an insurance policy or surety bond issued by any insurance company authori7ed by the ,ommissioner or ma*e a cash deposit in such amount as herein re2uired as limit of liability for purposes specified in (ection 6A@. 3a4 'n the case of a land transportation operator, the insurance 0uaranty in cash or surety bond shall co/er liability for death or bodily in>uries of thirdDparties andFor passen0ers arisin0 out of the use of such /ehicle in the amount not less than )wel/e thousand pesos 3P12,CCC.CC4 per passen0er or thirdDparty and an amount, for each of such cate0ories, in any one accident of not less than that set forth in the followin0 scale: 314 Motor /ehicles with an authori7ed capacity of twentyDsi1 3264 or more passen0ers: :ifty thousand pesos 3P?C,CCC.CC45 324 Motor /ehicles with an authori7ed capacity of from twel/e 3124 to twentyDfi/e 32?4 passen0ers: :orty thousand pesos 3P8C,CCC.CC45 364 Motor /ehicles with an authori7ed capacity of from si1 364 to ele/en 3114 passen0ers: )hirty thousand pesos 3P6C,CCC.CC45 384 Motor /ehicles with an authori7ed capacity of fi/e 3?4 or less passen0ers: :i/e thousand pesos 3P?,CCC.CC4 multiplied by the authori7ed capacity. Provided, however, )hat such cash deposit made to, or surety bond posted with, the ,ommissioner shall be resorted to by him in cases of accidents the indemnities for which to thirdDparties andFor passen0ers are not settled accordin0ly by the land

transportation operator and, in that e/ent, the said cash deposit shall be replenished or such surety bond shall be restored within si1ty 36C4 days after impairment or e1piry, as the case may be, by such land transportation operator, otherwise, he shall secure the insurance policy re2uired by this chapter. )he aforesaid cash deposit may be in/ested by the ,ommissioner in readily mar*etable 0o/ernment bonds, andFor securities. 3b4 'n the case of an owner of a motor /ehicle, the insurance or 0uaranty in cash or surety bond shall co/er liability for death or in>ury to thirdDparties in an amount not less than that set forth in the followin0 scale in any one accident: 314 Pri/ate ,ars 3i4 =antam: )wenty thousand pesos 3P2C,CCC.CC45 3ii4 $i0ht: )wenty thousand pesos 3P2C,CCC.CC45 and 3iii4 9ea/y: )hirty thousand pesos 3P6C,CCC.CC4. 324 %ther Pri/ate &ehicles 3i4 )ricycles, motorcycles and scooters: )wel/e thousand pesos 3P12,CCC.CC45 3ii4 &ehicles with an unladen wei0ht of 2,6CC *ilos or less: )wenty thousand pesos 3P2C,CCC.CC45 3iii4 &ehicles with an unladen wei0ht of between 2,6C1 *ilos and 6,B6C *ilos: )hirty thousand pesos 3P6C,CCC.CC45 and

3i/4 &ehicles with an unladen wei0ht o/er 6,B6C *ilos: :ifty thousand pesos 3P?C,CCC.CC4. )he ,ommissioner may, if warranted, set forth schedule of indemnities for the payment of claims for death or bodily in>uries with the co/era0es set forth herein. (ection 6B1. #ny claim for death or in>ury to any passen0er or thirdD party pursuant to the pro/isions of this chapter shall be paid without the necessity of pro/in0 fault or ne0li0ence of any *ind: Provided, )hat for purposes of this section: 3a4 )he total indemnity in respect of any person shall not be less than :ifteen thousand pesos 3P1?,CCC.CC45 3b4 )he followin0 proofs of loss, when submitted under oath, shall be sufficient e/idence to substantiate the claim: 314 Police report of accident5 and 324 Death certificate and e/idence sufficient to establish the proper payee5 or 364 Medical report and e/idence of medical or hospital disbursement in respect of which refund is claimed5 3c4 ,laim may be made a0ainst one motor /ehicle only. 'n the case of an occupant of a /ehicle, claim, shall lie a0ainst the insurer of the /ehicle in which the occupant is ridin0, mountin0 or dismountin0 from. 'n any other case, claim shall lie a0ainst the insurer of the directly offendin0 /ehicle. 'n all cases, the ri0ht of the party payin0 the claim to reco/er a0ainst the owner of the /ehicle responsible for the accident shall be maintained. (ection 6B2. No land transportation operator or owner of motor /ehicle shall be unreasonably denied the policy of insurance or surety bond

re2uired by this chapter by the insurance companies authori7ed to issue the same, otherwise, the $and )ransportation %ffice shall re2uire from said land transportation operator or owner of the /ehicle, in lieu of a policy of insurance or surety bond, a certificate that a cash deposit has been made with the ,ommissioner in such amount re2uired as limits of indemnity in (ection 6BC to answer for the passen0er andFor thirdDparty liability of such land transportation operator or owner of the /ehicle. No insurance company may issue the policy of insurance or surety bond re2uired under this chapter unless so authori7ed under e1istin0 laws. )he authority to en0a0e in the casualty andFor surety lines of business of an insurance company that refuses to issue or renew, without >ust cause, the insurance policy or surety bond therein re2uired shall be withdrawn immediately. (ection 6B6. No cancellation of the policy shall be /alid unless written notice thereof is 0i/en to the land transportation operator or owner of the /ehicle and to the $and )ransportation %ffice at least fifteen 31?4 days prior to the intended effecti/e date thereof. ;pon receipt of such notice, the $and )ransportation %ffice, unless it recei/es e/idence of a new /alid insurance or 0uaranty in cash or surety bond as prescribed in this chapter, or an endorsement of re/i/al of the cancelled one, shall order the immediate confiscation of the plates of the motor /ehicle co/ered by such cancelled policy. )he same may be reissued only upon presentation of a new insurance policy or that a 0uaranty in cash or surety bond has been made or posted with the ,ommissioner and which meets the re2uirements of this chapter, or an endorsement or re/i/al of the cancelled one. (ection 6B8. 'f the cancellation of the policy or surety bond is contemplated by the land transportation operator or owner of the /ehicle, he shall, before the policy or surety bond ceases to be effecti/e, secure a similar policy of insurance or surety bond to replace the policy or surety bond to be cancelled or ma*e a cash deposit in sufficient amount with the ,ommissioner, and without any 0ap, file the re2uired documentation

with the $and )ransportation %ffice, and notify the insurance company concerned of the cancellation of its policy or surety bond. (ection 6B?. 'n case of chan0e of owner ship of a motor /ehicle, or chan0e of the en0ine of an insured /ehicle, there shall be no need of issuin0 a new policy until the ne1t date of re0istration or renewal of re0istration of such /ehicle, and: Provided, )hat the insurance company shall a0ree to continue the policy, such chan0e of ownership or such chan0e of the en0ine shall be indicated in a correspondin0 endorsement by the insurance company concerned, and a si0ned duplicate of such endorsement shall, within a reasonable time, be filed with the $and )ransportation %ffice. (ection 6B6. 'n the settlement and payment of claims, the indemnity shall not be a/ailed of by any accident /ictim or claimant as an instrument of enrichment by reason of an accident, but as an assistance or restitution insofar as can fairly be ascertained. (ection 6B@. #ny person ha/in0 any claim upon the policy issued pursuant to this chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim settin0 forth the nature, e1tent and duration of the in>uries sustained as certified by a duly licensed physician. Notice of claim must be filed within si1 364 months from the date of accident, otherwise, the claim shall be deemed wai/ed. #ction or suit for reco/ery of dama0e due to loss or in>ury must be brou0ht, in proper cases, with the ,ommissioner or the courts within one 314 year from denial of the claim, otherwise, the claimant-s ri0ht of action shall prescribe. (ection 6BA. )he insurance company concerned shall forthwith ascertain the truth and e1tent of the claim and ma*e payment within fi/e 3?4 wor*in0 days after reachin0 an a0reement. 'f no a0reement is reached, the insurance company shall pay only the noDfault indemnity pro/ided in (ection 6B1 without pre>udice to the claimant from pursuin0 his claim further, in which case, he shall not be re2uired or compelled by

the insurance company to e1ecute any 2uit claim or document releasin0 it from liability under the policy of insurance or surety bond issued. 'n case of any dispute in the enforcement of the pro/isions of any policy issued pursuant to this chapter, the ad>udication of such dispute shall be within the ori0inal and e1clusi/e >urisdiction of the ,ommissioner, sub>ect to the limitations pro/ided in (ection 86B. (ection 6BB. 't shall be unlawful for a land transportation operator or owner of motor /ehicle to re2uire his or its dri/ers or other employees to contribute in the payment of premiums. (ection 8CC. No 0o/ernment office or a0ency ha/in0 the duty of implementin0 the pro/isions of this chapter nor any official or employee thereof shall act as a0ent in procurin0 the insurance policy or surety bond pro/ided for herein. )he commission of an a0ent procurin0 the said policy or bond shall in no case e1ceed ten percent 31CG4 of the amount of the premiums therefor. (ection 8C1. #ny land transportation operator or owner of motor /ehicle or any other person /iolatin0 any of the pro/isions of the precedin0 sections shall be punished by a fine of not less than :i/e hundred pesos 3P?CC.CC4 andFor imprisonment for not more than si1 364 months. )he /iolation of (ection 6BC by a land transportation operator shall be a sufficient cause for the re/ocation of the certificate of public con/enience issued by the $and )ransportation :ranchisin0 and Re0ulatory =oard co/erin0 the /ehicle concerned. (ection 8C2. .hene/er any /iolation of the pro/isions of this chapter is committed by a corporation or association, or by a 0o/ernment office or entity, the e1ecuti/e officer or officers of said corporation, association or 0o/ernment office or entity who shall ha/e *nowin0ly permitted, or failed to pre/ent, said /iolation shall be held liable as principals.

,9#P)"R &'' M;);#$ ="N":') #((%,'#)'%N( #ND )R;()( :%R ,9#R')#=$" ;("( )')$" 1 M;);#$ ="N":') #((%,'#)'%N( (ection 8C6. #ny society, association or corporation, without capital stoc*, formed or or0ani7ed not for profit but mainly for the purpose of payin0 sic* benefits to members, or of furnishin0 financial support to members while out of employment, or of payin0 to relati/es of deceased members of fi1ed or any sum of money, irrespecti/e of whether such aim or purpose is carried out by means of fi1ed dues or assessments collected re0ularly from the members, or of pro/idin0, by the issuance of certificates of insurance, payment of its members of accident or life insurance benefits out of such fi1ed and re0ular dues or assessments, but in no case shall include any society, association, or corporation with such mutual benefit features and which shall be carried out purely from /oluntary contributions collected not re0ularly andFor no fi1ed amount from whomsoe/er may contribute, shall be *nown as a mutual benefit association within the intent of this ,ode. #ny society, association, or corporation principally or0ani7ed as a labor union shall be 0o/erned by the $abor ,ode notwithstandin0 any mutual benefit feature pro/isions in its charter as incident to its or0ani7ation. 'n no case shall a mutual benefit association be or0ani7ed and authori7ed to transact business as a charitable or bene/olent or0ani7ation, and whene/er it has this feature as incident to its e1istence, the correspondin0 charter pro/ision shall be re/ised to conform with the pro/ision of this section. Mutual benefit association, already licensed to transact business as such on the date this ,ode becomes effecti/e, ha/in0 charitable or bene/olent feature shall abandon such incidental purpose upon effecti/ity of this ,ode if they desire to continue operatin0 as such mutual benefit associations.

(ection 8C8. # mutual benefit association, before it may transact as such, must first secure a license from the ,ommissioner. )he application for such license shall be filed with the ,ommissioner to0ether with certified true copies of the articles of incorporation or the constitution and bylaws of the association, and all amendments thereto, and such other documents or testimonies as the ,ommissioner may re2uire. No license shall be 0ranted to a mutual benefit association until the ,ommissioner shall ha/e been satisfied by such e1amination as he may ma*e and such e/idence as he may re2uire that the association is 2ualified under e1istin0 laws to operate and transact business as such. )he ,ommissioner may refuse to issue a license to any mutual benefit association if, in his >ud0ment, such refusal will best promote the interest of the members of such association and of the people of this country. #ny license issued shall e1pire on the last day of December of the third year followin0 its issuance and, upon proper application, may be renewed if the association is continuin0 to comply with e1istin0 laws, rules and re0ulations, orders, instructions, rulin0s and decisions of the ,ommissioner. "/ery association recei/in0 any such license shall be sub>ect to the super/ision of the ,ommissioner: Provided, )hat no such license shall be 0ranted to any such association if such association has no actuary. (ection 8C?. No mutual benefit association shall be issued a license to operate as such unless it has constituted and established a !uaranty :und by depositin0 with the ,ommissioner an initial minimum amount of :i/e million pesos 3P?,CCC,CCC.CC4 in cash, or in 0o/ernment securities with a total /alue e2ual to such amount, to answer for any /alid benefit claim of any of its members. #ll moneys recei/ed by the ,ommissioner for this purpose must be deposited by him in interestDbearin0 deposits with any ban* or ban*s authori7ed to transact business in the Philippines for the account of the particular association constitutin0 the !uaranty :und.

#ny accrual to such fund, be it interest earned or di/idend additions on moneys or securities so deposited, may, with the prior appro/al of the ,ommissioner, be withdrawn by the association if there is no pendin0 benefit claim a0ainst it, includin0 interest thereon or di/idend additions thereto. )he ,ommissioner, prior to or after licensin0 a mutual benefit association, may re2uire such association to increase its !uaranty :und from the initial minimum amount re2uired to an amount e2ual to the capital in/estment re2uired of an e1istin0 domestic insurance company under (ection 2CB of this ,ode. (ection 8C6. "/ery mutual benefit association licensed to do business as such shall issue membership certificates to its members specifyin0 the benefits to which such members are entitled. (uch certificates, to0ether with the articles of incorporation of the association or its constitution and bylaws, and all e1istin0 laws as may be pertinent shall constitute the a0reement, as of the date of its issuance, between the association and the member. )he membership certificate shall be in a form pre/iously appro/ed by the ,ommissioner. (ection 8C@. # mutual benefit association may, by reinsurance a0reement, cede in whole or in part any indi/idual ris* or ris*s under certificates of insurance issued by it, only to a life insurance company authori7ed to transact business or to a professional reinsurer authori7ed to accept life ris*s in the Philippines: Provided, )hat a copy of the draft of such reinsurance a0reement shall be submitted to the ,ommissioner for his appro/al. )he association may ta*e credit for the reser/es on such ceded ris*s to the e1tent reinsured. (ection 8CA. )he constitution or bylaws of a mutual benefit association must distinctly state the purpose for which dues andFor assessments are made and collected and the portion thereof which may be used for e1penses.

Death benefit and other relief funds shall be created and used e1clusi/ely for payin0 benefits due the members under their respecti/e membership certificates. # 0eneral fund shall li*ewise be created and used for e1penses of administration of the association. # mutual benefit association shall only maintain free and unassi0ned surplus of not more than twenty percent 32CG4 of its total liabilities as /erified by the ,ommissioner. #ny amount in e1cess shall be returned to the members by way of di/idends, enhancin0 the e2uity /alue or pro/idin0 benefits in *ind and other rele/ant ser/ices. 'n addition, sub>ect to the appro/al of the ,ommissioner, a mutual benefit association may allocate a portion for capacity buildin0 and research and de/elopment such as de/elopin0 new products and ser/ices, up0radin0 and impro/in0 operatin0 systems and e2uipment and continuin0 member education. (ection 8CB. "/ery outstandin0 membership certificate must ha/e an e2uity /alue e2ui/alent to at least fifty percent 3?CG4 of the total contributions collected thereon. )he e2uity /alue only applies to basic life insurance product and e1cludes optional products. (ection 81C. "/ery mutual benefit association must accumulate and maintain, out of the periodic dues collected from its members, sufficient reser/es for the payment of claims or obli0ations for which it shall hold funds in securities satisfactory to the ,ommissioner consistin0 of bonds of the !o/ernment of the Philippines, or any of its political subdi/isions and instrumentalities, or in such other 0ood securities as may be appro/ed by the ,ommissioner. )he reser/e liability shall be established in accordance with actuarial procedures and shall be appro/ed by the ,ommissioner. )he articles of incorporation or the constitution and bylaws of a mutual benefit association must pro/ide that if its reser/e as to all or any class of certificates becomes impaired, its board of directors or trustees may re2uire that there shall be paid by the members to the association the

amount of the members- e2uitable proportion of such deficiency as ascertained by said board and that if the payment be not made it shall stand as an indebtedness a0ainst the membership certificates of the defaultin0 members and draw interest not to e1ceed fi/e percent 3?G4 per annum compounded annually. (ection 811. # mutual benefit association may in/est such portion of its funds as shall not be re2uired to meet pendin0 claims and other obli0ations in any of the classes of in/estments or types of securities in which life insurance companies doin0 business in the Philippines may in/est. 't may also 0rant loans to members on the security of a pled0e or chattel mort0a0e of personal properties of the borrowers, or in the absence thereof, on the security of the membership certificate of the borrowin0 members, in which e/ent such loan shall become a first lien on the proceeds thereof. (ection 812. )he ,ommissioner or any of his duly desi0nated representati/es, shall ha/e the power of /isitation, audit and e1amination into the affairs, financial condition, and methods of doin0 business of all mutual benefit associations, and he shall cause such e1amination to be made at least once e/ery two 324 years or whene/er it may be deemed proper and necessary. :ree access to the boo*s, records and documents of the association shall be accorded to the ,ommissioner, or to his representati/es, in such manner that the ,ommissioner or his representati/es may readily /erify or determine the true affairs, financial condition, and method of doin0 business of such association. 'n the course of such e1amination, the ,ommissioner or his duly desi0nated representati/es shall ha/e authority to administer oaths and ta*e testimony or other e/idence on any matter relatin0 to the affairs of the association. #ll minutes of the proceedin0s of the board of directors or trustees of the association, and those of the re0ular or special meetin0s of the members, shall be ta*en, and a copy thereof, in "n0lish or in Pilipino,

shall be submitted to the ,ommissioner-s representati/es or e1aminers in the course of such e1amination. # copy of the findin0s of such e1amination, to0ether with the recommendations of the ,ommissioner, shall be furnished the association for its information and compliance, and the same shall be ta*en up immediately in the meetin0s of the board of directors or trustees and of the members of the association. (ection 816. "/ery mutual benefit association shall, annually on or before the thirtieth day of #pril of each year, render to the ,ommissioner an annual statement in such form and detail as may be prescribed by the ,ommissioner, si0ned and sworn to by the president, secretary, treasurer, and actuary of the association, showin0 the e1act condition of its affairs on the precedin0 thirtyDfirst day of December. (ection 818. No money, aid or benefit to be paid, pro/ided or tendered by any mutual benefit association, shall be liable to attachment, 0arnishment, or other process, or be sei7ed, ta*en, appropriated, or applied by any le0al or e2uitable process to pay any debt or liability of a member or beneficiary, or any other person who may ha/e a ri0ht thereunder, either before or after payment.$%wphi$ (ection 81?. #ny member of a mutual benefit association shall ha/e the ri0ht at all times to chan0e the beneficiary or beneficiaries or add another beneficiary or other beneficiaries in accordance with the rules and re0ulations of the association unless he has e1pressly wai/ed this ri0ht in the membership certificate. "/ery association may, under such rules as it may adopt, limit the scope of beneficiaries and pro/ide that no beneficiary shall ha/e or obtain any /ested interest in the proceeds of any certificate until the certificate has become due and payable under the terms of the membership certificate. (ection 816. #ny chapter affiliate independently licensed as a mutual benefit association may consolidate or mer0e with any other similar chapter affiliate or with the mother association.

(ection 81@. #ny mutual benefit association may be con/erted into and licensed as a mutual life insurance company by complyin0 with the re2uirements of the pertinent pro/isions of this ,ode and submittin0 the specific plan for such con/ersion to the ,ommissioner for his appro/al. (uch plan, as appro/ed, shall then be submitted to the members either in the re0ular meetin0 or in a special meetin0 called for the purpose for their adoption. )he affirmati/e /ote of at least twoDthirds 32F64 of all the members shall be necessary in order to consider such plan as adopted. No such con/ersion shall ta*e effect unless and until appro/ed by the ,ommissioner. (ection 81A. No mutual benefit association shall be dissol/ed without first notifyin0 the ,ommissioner and furnishin0 him with a certified copy of the resolution authori7in0 the dissolution, duly adopted by the affirmati/e /ote of twoDthirds 32F64 of the members at a meetin0 called for that purpose, the financial statements as of the date of the resolution, and such other papers or documents as may be re2uired by the ,ommissioner. No dissolution shall proceed until and unless appro/ed by the ,ommissioner and all proceedin0s in connection therewith shall be witnessed and attested by his duly desi0nated representati/e. No mutual benefit association shall be officially declared as dissol/ed until after the ,ommissioner so certifies that all outstandin0 claims a0ainst the association ha/e been duly settled and li2uidated. (ection 81B. )he ,ommissioner shall, after notice and hearin0, ha/e the power either to suspend or re/o*e the license issued to a mutual benefit association if he finds that the association has: 3a4 :ailed to comply with any pro/ision of this ,ode5 3b4 :ailed to comply with any other law or re0ulation obli0atory upon it5

3c4 :ailed to comply with any order, rulin0, instruction, re2uirement or recommendation of the ,ommissioner5 3d4 "1ceeded its power to the pre>udice of its members5 3e4 ,onducted its business fraudulently or ha7ardously5 3f4 Rendered its affairs and condition to one of insol/ency5 or 304 :ailed to carry out its aims and purposes for which it was or0ani7ed due to any cause. #fter receipt of the order from the ,ommissioner suspendin0 or re/o*in0 the license, the association must immediately e1ert efforts to remo/e such cause or causes which brou0ht about the order and, upon proper showin0, may apply with the ,ommissioner for the liftin0 of the order and restoration or re/i/al of the license so re/o*ed or suspended. (ection 82C. :or failure to remo/e such cause or causes which brou0ht about the suspension or re/ocation of the license of a mutual benefit association, the ,ommissioner shall apply under this ,ode for an order from the proper court to li2uidate such association. )he pro/isions of )itles 18 and 1?, ,hapter ''', pertainin0 to the appointment of a conser/ator and proceedin0s upon insol/ency of an insurance company shall, insofar as practicable, apply to mutual benefit associations. (ection 821. )o secure the enforcement of any pro/ision under this title, the ,ommissioner may issue such rules, rulin0s, instructions, orders and circulars. (ection 822. )he /iolation of any pro/ision of this title shall sub>ect the person /iolatin0 or the officer of the association responsible therefor to a fine of not less than )en thousand pesos 3P1C,CCC.CC4, or imprisonment

of not e1ceedin0 three 364 years, or both such fine and imprisonment, at the discretion of the court. (ection 826. #ll pro/isions of this ,ode 0o/ernin0 life insurance companies and such other pro/isions whene/er practicable and necessary, shall be applicable to mutual benefit associations. )')$" 2 )R;()( :%R ,9#R')#=$" ;("( (ection 828. )he term trust for charitable uses, within the intent of this ,ode, shall include, all the real or personal properties or funds, as well as those ac2uired with the fruits or income therefrom or in e1chan0e or substitution thereof, 0i/en to or recei/ed by any person, corporation, association, foundation, or entity, e1cept the National !o/ernment, its instrumentalities or political subdi/isions, for charitable, bene/olent, educational, pious, reli0ious, or other uses for the benefit of the public at lar0e or a particular portion thereof or for the benefit of an indefinite number of persons. (ection 82?. )he term trustee shall include any indi/idual, corporation, association, foundation, or entity, e1cept the National !o/ernment, its instrumentalities or political subdi/isions, in char0e of, or actin0 for, or concerned with the administration of, the trust referred to in the section immediately precedin0 and with the proper application of trust property. (ection 826. )he term trust property shall include all real or personal properties or funds pertainin0 to the trust as well as those ac2uired with the fruits or income therefrom or in e1chan0e or substitution thereof. (ection 82@. #ll trustees shall, before enterin0 in the performance of the duties of their trust, obtain a certificate of re0istration from the ,ommissioner. )he re0istration shall e1pire on December 61 of the third year followin0 its issuance unless it is renewed.

#ll pro/isions of this ,ode 0o/ernin0 mutual benefit associations and such other pro/isions herein, whene/er practicable and necessary, shall be applicable to trusts for charitable uses. (ection 82A. )he treasurer of a charitable trust shall file a fidelity bond in the amount commensurate with the /alue of the trust property in his custody, as may be determined by the ,ommissioner. ,9#P)"R &''' )R;() =;('N"(( 'N !"N"R#$ (ection 82B. #n insurance company may en0a0e in limited trust business, consistin0 of mana0in0 funds pertainin0 only to retirement and preDneed plans, pro/ided it has secured a license to do so from the =an0*o (entral n0 Pilipinas. )his trust business shall be separate and distinct from the 0eneral business of the insurance company and shall be sub>ect to rules and re0ulations as may be promul0ated by the =an0*o (entral n0 Pilipinas in consultation with the ,ommissioner. ,9#P)"R 'O R"!'()R#)'%N, R"(P%N('='$')'"( #ND %&"R('!9) %: ("$:DR"!;$#)%R< %R!#N'I#)'%N( (ection 86C. )he ,ommissioner shall ha/e the power to re0ister as a selfDre0ulatory or0ani7ation, or otherwise 0rant licenses, and to re0ulate, super/ise, e1amine, suspend or otherwise discontinue, as a condition for the operation of or0ani7ations whose operations are related to or connected with the insurance mar*et such as, but not limited to, associations of insurance companies, whether life or nonDlife, reinsurers, actuaries, a0ents, bro*ers, dealers, mutual benefit associations, trusts, ratin0 a0encies, and other persons re0ulated by the ,ommissioner, which are en0a0ed in the business re0ulated by this ,ode. )he ,ommissioner may prescribe rules and re0ulations which are necessary or appropriate in the public interest or for the protection of

in/estors to 0o/ern selfDre0ulatory or0ani7ations and other or0ani7ations licensed or re0ulated pursuant to the authority 0ranted hereunder includin0, but not limited to, the re2uirement of cooperation within and amon0 all participants in the insurance mar*et to ensure transparency and facilitate e1chan0e of information. (ection 861. #n association cannot be re0istered as a selfDre0ulatory or0ani7ation unless the ,ommissioner determines that: 3a4 )he association is so or0ani7ed and has the capacity to be able to carry out the purposes of this ,ode and to comply with, and to enforce compliance by its members and persons associated with its members, with the pro/isions of this ,ode, the rules and re0ulations thereunder, and the rules of the association. 3b4 )he rules of the association, notwithstandin0 anythin0 in the ,orporation ,ode to the contrary, pro/ide the followin0: 314 Pualifications and the dis2ualifications on membership of the association5 324 # fair representation of its members to ser/e on the board of directors of the association and the administration of its affairs, and that any natural person associated with a >uridical entity that is a member shall also be deemed to be a member for this purpose5 364 )he president of the association and at least two 324 independent directors as members of the board of directors of the association5 384 "2uitable allocation of reasonable dues, fees, and other char0es amon0 members and other persons usin0 any facility or system which the association operates or controls5

3?4 )he pre/ention of fraudulent and manipulati/e acts and practices to protect the insurin0 public and the promotion of >ust and e2uitable principles of business5 364 Members and persons associated with its members sub>ect to discipline for /iolation of any pro/ision of this ,ode, the rules or re0ulations thereunder, or the rules of the association5 3@4 :air procedure for the disciplinin0 of members and persons associated with members5 and 3A4 )he prohibition or limitation of access to ser/ices offered by the association or a member thereof. (ection 862. # selfDre0ulatory or0ani7ation may e1amine and /erify the 2ualifications of an applicant to become a member in accordance with procedures established by the rules of the association. # selfDre0ulatory or0ani7ation shall deny membership or condition the membership of an entity, if it does not meet the standards of financial responsibility, operational capability, trainin0, e1perience, or competence that are prescribed by the rules of the association5 or has en0a0ed, and there is a reasonable li*elihood it will a0ain en0a0e, in acts or practices inconsistent with >ust and e2uitable principles of fair trade. # selfDre0ulatory or0ani7ation may deny membership to an entity not en0a0ed in a type of business in which the rules of the association re2uire members to be en0a0ed. (ection 866. ;pon the filin0 of an application for re0istration as a selfD re0ulatory or0ani7ation under this title, the ,ommissioner shall ha/e ninety 3BC4 days within which to either 0rant re0istration or institute a proceedin0 to determine whether re0istration should be denied. 'n the e/ent proceedin0s are instituted, the ,ommissioner shall ha/e two

hundred se/enty 32@C4 days within which to conclude such proceedin0s at which time he shall, by order, 0rant or deny such re0istration. (ection 868. "/ery selfDre0ulatory or0ani7ation shall comply with the pro/isions of this ,ode, the rules and re0ulations thereunder, and its own rules, and enforce compliance therewith by its members, persons associated with its members or its participants, notwithstandin0 any pro/ision of the ,orporation ,ode to the contrary. (ection 86?. "ach selfDre0ulatory or0ani7ation shall submit to the ,ommissioner for prior appro/al any proposed rule or amendment thereto, to0ether with a concise statement of the reason and effect of the proposed amendment. .ithin si1ty 36C4 days after submission of a proposed amendment, the ,ommissioner shall, by order, appro/e the proposed amendment. %therwise, the same may be made effecti/e by the selfDre0ulatory or0ani7ation. 'n the e/ent of an emer0ency re2uirin0 action for the protection of the insurin0 public, a selfDre0ulatory or0ani7ation may put a proposed amendment into effect summarily: Provided, however, )hat a copy of the same shall be immediately submitted to the ,ommissioner. )he ,ommissioner is further authori7ed, if after ma*in0 appropriate re2uest in writin0 to a selfDre0ulatory or0ani7ation that such or0ani7ation effect on its own behalf specified chan0es in its rules and practices and, after due notice and hearin0, it determines that such chan0es ha/e not been effected, and that such chan0es are necessary, by rule or re0ulation or by order, may alter, abro0ate or supplement the rules of such selfD re0ulatory or0ani7ation insofar as necessary or appropriate to effect such chan0es in respect of such matters as: 3a4 (afe0uards in respect of the financial responsibility of members and ade2uate pro/ision a0ainst the e/asion of financial

responsibility throu0h the use of corporate forms or special partnerships5 3b4 )he super/ision of mar*et practices5 3c4 )he manner, method and place of solicitin0 business5 3d4 )he fi1in0 of reasonable rates of fees, interest, listin0 and other char0es, but not rates of commission5 and selfDre0ulatory or0ani7ation5 and 3e4 )he super/ision, auditin0 and disciplinin0 of members. 'n addition to the 0eneral powers of the ,ommissioner o/er the entities under super/ision, the ,ommissioner, after due notice and hearin0, is authori7ed, in the public interest and to protect the insurin0 public: 314 )o suspend for a period not e1ceedin0 twel/e 3124 months or to re/o*e the re0istration of a selfDre0ulatory or0ani7ation, or to censure or impose limitations on the acti/ities, functions and operations of such selfDre0ulatory or0ani7ation, if the ,ommission finds that such a selfDre0ulatory or0ani7ation has willfully /iolated or is unable to comply with any pro/ision of this ,ode or of the rules and re0ulations thereunder, or its own rules, or has failed to enforce compliance therewith by a member of, person associated with a member, or a participant in such selfD re0ulatory or0ani7ation5 324 )o e1pel from a selfDre0ulatory or0ani7ation any member thereof or any participant therein who is found to ha/e willfully /iolated any pro/ision of this ,ode or suspend for a period not e1ceedin0 twel/e 3124 months for /iolation of any pro/ision of this ,ode or any other law administered by the ,ommission, or the rules and re0ulations thereunder, or effected, directly or indirectly, any transaction for any person who, such member or

participant had reason to belie/e, was /iolatin0 in respect of such transaction any of such pro/isions5 and 364 )o remo/e from office or censure any officer or director of a selfDre0ulatory or0ani7ation if it finds that such officer or director has /iolated any pro/ision of this ,ode, any other law administered by the ,ommissioner, the rules or re0ulations thereunder and the rules of such selfDre0ulatory or0ani7ation, or has abused his authority, or without reasonable >ustification or e1cuse has failed to enforce compliance with any of such pro/isions. (ection 866. 3a4 # selfDre0ulatory or0ani7ation is authori7ed to discipline a member of or participant in such selfDre0ulatory or0ani7ation, or any person associated with a member, includin0 suspendin0 or e1pellin0 such member or participant, or suspendin0 or barrin0 such person from bein0 associated with a member, if en0a0ed in acts or practices inconsistent with >ust and e2uitable principles of fairness or in willful /iolation of any pro/ision of this ,ode, any other law administered by the ,ommission, the rules or re0ulations thereunder, or the rules of the selfDre0ulatory or0ani7ation. 'n any disciplinary proceedin0 by a selfDre0ulatory or0ani7ation 3other than a summary proceedin0 pursuant to para0raph 3b4 of this section4 the selfD re0ulatory or0ani7ation shall brin0 specific char0es, pro/ide notice to the person char0ed, afford the person char0ed with an opportunity to defend a0ainst the char0es, and *eep a record of the proceedin0s. # determination to impose a disciplinary sanction shall be supported by a written statement of the offense, a summary of the e/idence presented and a statement of the sanction imposed. 3b4 # selfDre0ulatory or0ani7ation may summarily: 314 (uspend a member, participant or person associated with a member who has been or is e1pelled or suspended from any other selfDre0ulatory or0ani7ation5 or

324 (uspend a member who the selfDre0ulatory or0ani7ation finds to be in such financial or operatin0 difficulty that the member or participant cannot be permitted to continue to do business as a member with safety to in/estors, creditors, other members, participants or the selfDre0ulatory or0ani7ation: Provided, )hat the selfDre0ulatory or0ani7ation immediately notifies the ,ommission of the action ta*en. #ny person a00rie/ed by a summary action pursuant to this para0raph shall be promptly afforded an opportunity for a hearin0 by the association in accordance with the precedin0 para0raph. )he ,ommissioner, by order, may stay a summary action on his own or upon application by any person a00rie/ed thereby, if the ,ommissioner determines summarily or after due notice and hearin0 3which hearin0 may consist solely of the submission of affida/its or presentation of oral ar0uments4, that a stay is consistent with the public interest and the protection of the insurin0 public. 3c4 # selfDre0ulatory or0ani7ation shall promptly notify the ,ommission of any disciplinary sanction on any member thereof or participant therein, any denial of membership or participation in such or0ani7ation, or the imposition of any disciplinary sanction on a person associated with a member or a bar of such person from becomin0 so associated. .ithin thirty 36C4 days after such notice, any a00rie/ed person may appeal to the ,ommissioner from, or the ,ommissioner on its own motion within such period, may institute re/iew of, the decision of the selfDre0ulatory or0ani7ation, at the conclusion of which, after due notice and hearin0 3which may consist solely of re/iew of the record before the selfDre0ulatory or0ani7ation4, the ,ommissioner shall affirm, modify or set aside the sanction. 'n such proceedin0, the ,ommissioner shall determine whether the a00rie/ed person has en0a0ed or omitted to en0a0e in the acts and practices as found by the selfDre0ulatory or0ani7ation, whether such acts and practices constitute willful /iolations of this ,ode, any other law administered by the ,ommission, the rules or re0ulations thereunder, or the rules of the selfDre0ulatory or0ani7ation as specified by such or0ani7ation, whether such pro/isions

were applied in a manner consistent with the purposes of this ,ode, and whether, with due re0ard for the public interest and the protection of in/estors, the sanction is e1cessi/e or oppressi/e. ,9#P)"R O )9" 'N(;R#N," ,%MM'(('%N"R )')$" 1 #DM'N'()R#)'&" #ND #DJ;D',#)%R< P%."R( (ection 86@. )he 'nsurance ,ommissioner shall be appointed by the President of the Republic of the Philippines for a term of si1 364 years without reappointment and who shall ser/e as such until the successor shall ha/e been appointed and 2ualified. 'f the 'nsurance ,ommissioner is remo/ed before the e1piration of his term of office, the reason for the remo/al must be published. )he 'nsurance ,ommissioner shall ha/e the duty to see that all laws relatin0 to insurance, insurance companies and other insurance matters, mutual benefit associations, and trusts for charitable uses are faithfully e1ecuted and to perform the duties imposed upon him by this ,ode, and shall, notwithstandin0 any e1istin0 laws to the contrary, ha/e sole and e1clusi/e authority to re0ulate the issuance and sale of /ariable contracts as defined in (ection 26A hereof and to pro/ide for the licensin0 of persons sellin0 such contracts, and to issue such reasonable rules and re0ulations 0o/ernin0 the same. )he ,ommissioner may issue such rulin0s, instructions, circulars, orders and decisions as may be deemed necessary to secure the enforcement of the pro/isions of this ,ode, to ensure the efficient re0ulation of the insurance industry in accordance with 0lobal best practices and to protect the insurin0 public. "1cept as otherwise specified, decisions made by the ,ommissioner shall be appealable to the (ecretary of :inance.

'n addition to the fore0oin0, the ,ommissioner shall ha/e the followin0 powers and functions: 3a4 :ormulate policies and recommendations on issues concernin0 the insurance industry, ad/ise ,on0ress and other 0o/ernment a0encies on all aspects of the insurance industry and propose le0islation and amendments thereto5 3b4 #ppro/e, re>ect, suspend or re/o*e licenses or certificates of re0istration pro/ided for by this ,ode5 3c4 'mpose sanctions for the /iolation of laws and the rules, re0ulations and orders issued pursuant thereto5 3d4 Prepare, appro/e, amend or repeal rules, re0ulations and orders, and issue opinions and pro/ide 0uidance on and super/ise compliance with such rules, re0ulations and orders5 3e4 "nlist the aid and support of, andFor deputi7e any and all enforcement a0encies of the 0o/ernment in the implementation of its powers and functions under this ,ode5 3f4 'ssue cease and desist orders to pre/ent fraud or in>ury to the insurin0 public5 304 Punish for contempt of the ,ommissioner, both direct and indirect, in accordance with the pertinent pro/isions of and penalties prescribed by the Rules of ,ourt5 3h4 ,ompel the officers of any re0istered insurance corporation or association to call meetin0s of stoc*holders or members thereof under its super/ision5 3i4 'ssue subpoena duces tecu! and summon witnesses to appear in any proceedin0 of the ,ommission and, in appropriate cases, order the e1amination, search and sei7ure of all documents,

papers, files and records, ta1 returns, and boo*s of accounts of any entity or person under in/esti0ation as may be necessary for the proper disposition of the cases before it, sub>ect to the pro/isions of e1istin0 laws5 3>4 (uspend or re/o*e, after proper notice and hearin0, the license or certificate of authority of any entity or person under its re0ulation, upon any of the 0rounds pro/ided by law5 3*4 ,onduct an e1amination to determine compliance with laws and re0ulations if the circumstances so warrant as determined by appropriate rules and re0ulations5 3l4 'n/esti0ate not oftener than once a year from the last date of e1amination to determine whether an institution is conductin0 its business on a safe and sound basis: Provided, )hat, the deficienciesFirre0ularities found by or disco/ered by an audit shall be immediately addressed5 3m4 'n2uire into the sol/ency and li2uidity of the institutions under its super/ision and enforce prompt correcti/e action5 3n4 )o retain and utili7e, in addition to its annual bud0et, all fees, char0es and other income deri/ed from the re0ulation of insurance companies and other super/ised persons or entities5 3o4 )o fi1 and assess fees, char0es and penalties as the ,ommissioner may find reasonable in the e1ercise of re0ulation5 and 3p4 "1ercise such other powers as may be pro/ided by law as well as those which may be implied from, or which are necessary or incidental to the e1press powers 0ranted the ,ommission to achie/e the ob>ecti/es and purposes of this ,ode.

)he ,ommission shall indemnify the ,ommissioner, Deputy ,ommissioner, and other officials of the ,ommission, includin0 personnel performin0 super/ision and e1amination functions, for all costs and e1penses reasonably incurred by such persons in connection with any ci/il or criminal actions, suits or proceedin0s to which they may be made a party to by the reason of the performance of their duties and functions, unless they are finally ad>ud0ed in such actions, suits or proceedin0s to be liable for ne0li0ence or misconduct. 'n the e/ent of settlement or compromise, indemnification shall be pro/ided only in connection with such matters co/ered by the settlement as to which the ,ommission is ad/ised by e1ternal counsel that the persons to be indemnified did not commit any ne0li0ence or misconduct: )he costs and e1penses incurred in defendin0 the aforementioned action, suit or proceedin0 may be paid by the ,ommission in ad/ance of the final disposition of such action, suit or proceedin0 upon receipt of an underta*in0 by or on behalf of the ,ommissioner, Deputy ,ommissioner, officer or employee to repay the amount ad/anced should it ultimately be determined by the ,ommission that the person is not entitled to be indemnified. (ection 86A. 'n addition to the administrati/e sanctions pro/ided elsewhere in this ,ode, the 'nsurance ,ommissioner is hereby authori7ed, at his discretion, to impose upon insurance companies, their directors andFor officers andFor a0ents, for any willful failure or refusal to comply with, or /iolation of any pro/ision of this ,ode, or any order, instruction, re0ulation, or rulin0 of the 'nsurance ,ommissioner, or any commission or irre0ularities, andFor conductin0 business in an unsafe or unsound manner as may be determined by the 'nsurance ,ommissioner, the followin0: 3a4 :ines not less than :i/e thousand pesos 3P?,CCC.CC4 and not more than )wo hundred thousand pesos 3P2CC,CCC.CC45 and

3b4 (uspension, or after due hearin0, remo/al of directors andFor officers andFor a0ents. (ection 86B. )he ,ommissioner shall ha/e the power to ad>udicate claims and complaints in/ol/in0 any loss, dama0e or liability for which an insurer may be answerable under any *ind of policy or contract of insurance, or for which such insurer may be liable under a contract of suretyship, or for which a reinsurer may be sued under any contract of reinsurance it may ha/e entered into5 or for which a mutual benefit association may be held liable under the membership certificates it has issued to its members, where the amount of any such loss, dama0e or liability, e1cludin0 interest, cost and attorney-s fees, bein0 claimed or sued upon any *ind of insurance, bond, reinsurance contract, or membership certificate does not e1ceed in any sin0le claim :i/e million pesos 3P?,CCC,CCC.CC4. )he power of the ,ommissioner does not co/er the relationship between the insurance company and its a0entsFbro*ers but is limited to ad>udicatin0 claims and complaints filed by the insured a0ainst the insurance company. )he ,ommissioner may authori7e any officer or 0roup of officers under him to conduct in/esti0ation, in2uiry andFor hearin0 and decide claims and he may issue rules 0o/ernin0 the conduct of ad>udication and resolution of cases. )he Rules of ,ourt shall ha/e suppletory application. )he party filin0 an action pursuant to the pro/isions of this section thereby submits his person to the >urisdiction of the ,ommissioner. )he ,ommissioner shall ac2uire >urisdiction o/er the person of the impleaded party or parties in accordance with and pursuant to the pro/isions of the Rules of ,ourt. )he authority to ad>udicate 0ranted to the ,ommissioner under this section shall be concurrent with that of the ci/il courts, but the filin0 of a

complaint with the ,ommissioner shall preclude the ci/il courts from ta*in0 co0ni7ance of a suit in/ol/in0 the same sub>ect matter. #ny decision, order or rulin0 rendered by the ,ommissioner after a hearin0 shall ha/e the force and effect of a >ud0ment. #ny party may appeal from a final order, rulin0 or decision of the ,ommissioner by filin0 with the ,ommissioner within thirty 36C4 days from receipt of copy of such order, rulin0 or decision a notice of appeal to the ,ourt of #ppeals in the manner pro/ided for in the Rules of ,ourt for appeals from the Re0ional )rial ,ourt to the ,ourt of #ppeals. :or the purpose of any proceedin0 under this section, the ,ommissioner, or any officer thereof desi0nated by him is empowered to administer oaths and affirmation, subpoena witnesses, compel their attendance, ta*e e/idence, and re2uire the production of any boo*s, papers, documents, or contracts or other records which are rele/ant or material to the in2uiry. # full and complete record shall be *ept of all proceedin0s had before the ,ommissioner, or the officers thereof desi0nated by him, and all testimony shall be ta*en down and transcribed by a steno0rapher appointed by the ,ommissioner. 'n order to promote party autonomy in the resolution of cases, the ,ommissioner shall establish a system for resol/in0 cases throu0h the use of alternati/e dispute resolution. )')$" 2 :""( #ND %)9"R (%;R,"( %: :;ND( (ection 88C. 3a4 :or the issuance or renewal of certificates of authority, licenses and certificates of re0istration, pursuant to pertinent pro/isions of this ,ode, the ,ommissioner shall collect and recei/e fees which shall be not less than the followin0:

:or each certificate of authority issued to an insurance company doin0 business in the Philippines, )wo hundred pesos 3P2CC.CC4. :or each special certificate of authority issued to a ser/icin0 insurance company, %ne hundred pesos 3P1CC.CC4. :or each license issued to a 0eneral a0ent of an insurance company, :ifty pesos 3P?C.CC4. :or each license issued to an insurance a0ent, )wentyDfi/e pesos 3P2?.CC4. :or each license issued to an a0ent of /ariable contract policy, )wentyDfi/e pesos 3P2?.CC4. :or each license issued to an insurance bro*er, %ne hundred pesos 3P1CC.CC4. :or each license issued to a reinsurance bro*er, %ne hundred pesos 3P1CC.CC4. :or each license issued to an insurance ad>uster, %ne hundred pesos 3P1CC.CC4. :or each certificate of re0istration issued to an actuary, :ifty pesos 3P?C.CC4. :or each certificate of re0istration issued to a resident a0ent, :ifty pesos 3P?C.CC4. :or each license issued to a ratin0 or0ani7ation, %ne hundred pesos 3P1CC.CC4. :or each certificate of re0istration issued to a nonDlife company underwriter, :ifty pesos 3P?C.CC4.

:or each license issued to a mutual benefit association, )en pesos 3P1C.CC4. :or each certificate of re0istration issued to a trust for charitable uses, )en pesos 3P1C.CC4. #ll certificates of authority and all other licenses, as well as all certificates of re0istration, issued to any person, partnership, association or corporation under the pertinent pro/isions of this ,ode for which no e1piration date has been prescribed, shall e1pire on the last day of December of the third year from its issuance and shall be renewed upon application therefor and payment of the correspondin0 fee, if the licensee or holder of such license or certificate is continuin0 to comply with all the applicable pro/isions of e1istin0 laws, and of rules, instructions, orders and decisions of the ,ommissioner. 3b4 :or the filin0 of the annual statement referred to in (ection 22B, the ,ommissioner shall collect and recei/e from the insurance company so filin0 a fee of not less than :i/e hundred pesos 3P?CC.CC4: Provided, )hat a fine of not less than %ne hundred pesos 3P1CC.CC4 shall be imposed and collected by the ,ommissioner for each wee* of delay, or any fraction thereof, in the filin0 of the annual statement. :or the filin0 of annual statement referred to in (ection 816, the ,ommissioner shall collect and recei/e from the mutual benefit association so filin0 a fee of not less than )en pesos 3P1C.CC4: Provided, )hat a fine of not less than )en pesos 3P1C.CC4 shall be imposed and collected by the ,ommissioner for each wee* of delay, or any fraction thereof, in the filin0 of the annual statement. 3c4 :or the e1amination prescribed in (ection 2?6, the ,ommissioner shall collect and recei/e fees accordin0 to the amount of its total assets, in the case of a domestic company, or of its assets in the Philippines, in the case of a forei0n company, not less than the amount as follows:

314 )wo million pesos or more but less than :our million pesos, :our hundred pesos 3P8CC.CC45 324 :our million pesos or more but less than (i1 million pesos, "i0ht hundred pesos 3PACC.CC45 364 (i1 million pesos or more but less than "i0ht million pesos, %ne thousand two hundred pesos 3P1,2CC.CC45 384 "i0ht million pesos or more but less than )en million pesos, %ne thousand si1 hundred pesos 3P1,6CC.CC45 3?4 )en million pesos or more, )wo thousand pesos 3P2,CCC.CC45 Provided, )hat if the said e1amination is made in places outside the Metropolitan Manila area, besides these fees, the ,ommissioner shall re2uire of the company e1amined the payment of the actual and necessary tra/ellin0 and subsistence e1penses of the e1aminer or e1aminers concerned. :or the e1amination prescribed in (ection 812, the ,ommissioner shall collect and recei/e a minimum fee of not less than %ne hundred pesos 3P1CC.CC4 from the mutual benefit association e1amined: Provided, )hat if such association has total assets of more than %ne hundred thousand pesos 3P1CC,CCC.CC4, an additional fee of not less than )en pesos 3P1C.CC4 for e/ery :ifty thousand pesos 3P?C,CCC.CC4 in e1cess thereof shall be imposed: 3d4 :or the filin0 of an application to withdraw from the Philippines under )itle 1A, the ,ommissioner shall collect and recei/e from the forei0n company so withdrawin0 a fee of not less than %ne thousand pesos 3P1,CCC.CC4. 3e4 )he ,ommissioner may fi1 and collect fees or char0es for documents, transcripts, or other materials which may be furnished by him not in e1cess of reasonable cost.

(ection 881. )he ,ommissioner, in accordance with the rules and re0ulations of the Department of =ud0et and Mana0ement and other rele/ant re0ulatory a0encies, shall source the salary, allowances and other e1penses from the retained amount of the fees, char0es, penalties and other income from the re0ulation of insurance companies and other co/ered persons and entities, and from the 'nsurance :und, which is created out of the proceeds of ta1es on insurance premiums mentioned in (ection 2?? of the National 'nternal Re/enue ,ode, as amended. M'(,"$$#N"%;( PR%&'('%N( (ection 882. #ny person, company or corporation sub>ect to the super/ision and control of the ,ommissioner who /iolates any pro/ision of this ,ode, for which no penalty is pro/ided, shall be deemed 0uilty of a penal offense, and upon con/iction be punished by a fine not e1ceedin0 )wo hundred thousand pesos 3P2CC,CCC.CC4 or imprisonment of si1 364 months, or both, at the discretion of the court. 'f the offense is committed by a company or corporation, the officers, directors, or other persons responsible for its operation, mana0ement, or administration, unless it can be pro/ed that they ha/e ta*en no part in the commission of the offense, shall li*ewise be 0uilty of a penal offense, and upon con/iction be punished by a fine not e1ceedin0 )wo hundred thousand pesos 3P2CC,CCC.CC4 or imprisonment of si1 364 months, or both, at the discretion of the court. (ection 886. #ll criminal actions for the /iolation of any of the pro/isions of this ,ode shall prescribe after three 364 years from the disco/ery of such /iolation: Provided, )hat such actions shall in any e/ent prescribe after ten 31C4 years from the commission of such /iolation. (ection 888. #ny person, partnership, association or corporation heretofore authori7ed, licensed or re0istered by the ,ommissioner shall be deemed to ha/e been authori7ed, licensed or re0istered under the pro/isions of this ,ode and shall be 0o/erned by the pro/isions thereof:

Provided, however, )hat where any such person, partnership, association or corporation is affected by the new re2uirements of this ,ode, said person, partnership, association or corporation shall, unless otherwise herein pro/ided, be 0i/en a period of one 314 year from the effecti/ity of this ,ode within which to comply with the same. (ection 88?. ,ransitory Provision. Q Renewal of e1istin0 licenses, certificates of authority or accreditation which will e1pire on June 6C, 2C16 shall be /alid until December 61, 2C1?. )hereafter, renewal shall be filed on the last day of December e/ery third year followin0 the date of e1piry of the license, certificate of authority or accreditation. (ection 886. Repealing lause. Q "1cept as e1pressly pro/ided by this ,ode, all laws, decrees, orders, rules and re0ulations or parts thereof, inconsistent with any pro/ision of this ,ode shall be deemed repealed, amended or modified accordin0ly. (ection 88@. Separability lause. Q 'f any pro/ision of this ,ode or any part hereof be declared in/alid or unconstitutional, the remainder of the law or other pro/isions not otherwise affected shall remain /alid and subsistin0. (ection 88A. )his ,ode shall ta*e effect fifteen 31?4 days followin0 its publication in a newspaper of 0eneral circuation. #ppro/ed,

3(0d.4 E((A LIRIO3RE&ES 3(0d.4 (ARIL&N B BARUA3 (ecretary of the (enate &AP (ecretary !eneral 9ouse of Representati/es #ppro/ed: #;! 1? 2C16 4Sgd 5 BENIGNO S A6UINO III President of the Philippines )he $awphil Pro>ect D #rellano $aw :oundation

3(0d.4 2INGGO& E2ERCITO ESTRA%A #ctin0 (enate President

3(0d.4 FELICIANO BEL(ONTE 2R (pea*er of the 9ouse of Representati/es

)his #ct which is a consolidation of 9ouse =ill No. 8A6@ and (enate =ill No. 62AC was finally passed by the 9ouse of Representati/es and the (enate on :ebruary 6, 2C16.