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Insurance Code Updates based on RA 10607 insurance and which is pasted or attached to

said policy is not binding on the insured,


Section 3. Any contingent or unknown event, unless the descriptive title or name of the rider,
whether past or future, which may damnify a clause, warranty or endorsement is also
mentioned and written on the blank spaces
person having an insurable interest, or create a
liability against him, may be insured against, provided in the policy.
subject to the provisions of this chapter. Unless applied for by the insured or owner,
The consent of the spouse is not necessary for any rider, clause, warranty or endorsement
the validity of an insurance policy taken out by issued after the original policy shall be
countersigned by the insured or owner, which
a married person on his or her life or that of his
or her children. countersignature shall be taken as his
agreement to the contents of such rider, clause,
All rights, title and interest in the policy of
warranty or endorsement.
insurance taken out by an original owner on
Notwithstanding the foregoing, the policy may
the life or health of the person insured shall
automatically vest in the latter upon the death be in electronic form subject to the pertinent
of the original owner, unless otherwise provisions of Republic Act No. 8792, otherwise
provided for in the policy. known as the Electronic Commerce Act and
to such rules and regulations as may be
Section 11. The insured shall have the right to
prescribed by the Commissioner.
change the beneficiary he designated in the
policy, unless he has expressly waived this Section 60. An open policy is one in which the
right in said policy. Notwithstanding the value of the thing insured is not agreed upon,
foregoing, in the event the insured does not and the amount of the insurance merely
represents the insurers maximum liability.
change the beneficiary during his lifetime, the
designation shall be deemed irrevocable. The value of such thing insured shall be
ascertained at the time of the loss.
Section 12. The interest of a beneficiary in a life
Section 64. No policy of insurance other than
insurance policy shall be forfeited when the
beneficiary is the principal, accomplice, or life shall be cancelled by the insurer except
accessory in willfully bringing about the death upon prior notice thereof to the insured, and
of the insured. In such a case, the share no notice of cancellation shall be effective
forfeited shall pass on to the other unless it is based on the occurrence, after the
beneficiaries, unless otherwise disqualified. In effective date of the policy, of one or more of
the absence of other beneficiaries, the proceeds the following:
shall be paid in accordance with the policy (a) Nonpayment of premium;
contract. If the policy contract is silent, the (b) Conviction of a crime arising out of acts
proceeds shall be paid to the estate of the increasing the hazard insured against;
insured. (c) Discovery of fraud or material
Section 45. If a representation is false in a misrepresentation;
material point, whether affirmative or (d) Discovery of willful or reckless acts or
promissory, the injured party is entitled to omissions increasing the hazard insured
rescind the contract from the time when the against;
representation becomes false.
(e) Physical changes in the property insured
Section 50. The policy shall be in printed form which result in the property becoming
which may contain blank spaces; and any uninsurable;
word, phrase, clause, mark, sign, symbol,
(f) Discovery of other insurance coverage that
signature, number, or word necessary to
makes the total insurance in excess of the value
complete the contract of insurance shall be
of the property insured; or
written on the blank spaces provided therein.
(g) A determination by the Commissioner that
Any rider, clause, warranty or endorsement
the continuation of the policy would violate or
purporting to be part of the contract of

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would place the insurer in violation of this provisions of the Civil Code; or on account of
Code. the fraud or misrepresentation of the insurer,
Section 65. All notices of cancellation or of his agent, or on account of facts, or the
mentioned in the preceding section shall be in existence of which the insured was ignorant of
writing, mailed or delivered to the named without his fault; or when by any default of the
insured at the address shown in the policy, or insured other than actual fraud, the insurer
to his broker provided the broker is authorized never incurred any liability under the policy.
in writing by the policy owner to receive the A person insured is not entitled to a return of
notice of cancellation on his behalf, and shall premium if the policy is annulled, rescinded or
state: if a claim is denied by reason of fraud.
(a) Which of the grounds set forth in Section 64 Section 83. In case of an over insurance by
is relied upon; and several insurers other than life, the insured is
(b) That, upon written request of the named entitled to a ratable return of the premium,
insured, the insurer will furnish the facts on proportioned to the amount by which the
which the cancellation is based. aggregate sum insured in all the policies
exceeds the insurable value of the thing at risk.
Section 77. An insurer is entitled to payment of
the premium as soon as the thing insured is Section 84. An insurer may contract and accept
exposed to the peril insured against. payments, in addition to regular premium, for
Notwithstanding any agreement to the the purpose of paying future premiums on the
contrary, no policy or contract of insurance policy or to increase the benefits thereof.
issued by an insurance company is valid and Section 90. In case of loss upon an insurance
binding unless and until the premium thereof against fire, an insurer is exonerated, if written
has been paid, except in the case of a life or an notice thereof be not given to him by an
industrial life policy whenever the grace insured, or some person entitled to the benefit
period provision applies, or whenever under of the insurance, without unnecessary delay.
the broker and agency agreements with duly For other non-life insurance, the Commissioner
licensed intermediaries, a ninety (90)-day may specify the period for the submission of
credit extension is given. No credit extension the notice of loss.
to a duly licensed intermediary should exceed Section 96. Where the insured in a policy other
ninety (90) days from date of issuance of the than life is over insured by double insurance:
policy.
(a) The insured, unless the policy otherwise
Section 78. Employees of the Republic of the provides, may claim payment from the
Philippines, including its political subdivisions insurers in such order as he may select, up to
and instrumentalities, and government-owned the amount for which the insurers are severally
or -controlled corporations, may pay their liable under their respective contracts;
insurance premiums and loan obligations
(b) Where the policy under which the insured
through salary deduction: Provided, That the
claims is a valued policy, any sum received by
treasurer, cashier, paymaster or official of the
him under any other policy shall be deducted
entity employing the government employee is
from the value of the policy without regard to
authorized, notwithstanding the provisions of
the actual value of the subject matter insured;
any existing law, rules and regulations to the
(c) Where the policy under which the insured
contrary, to make deductions from the salary,
claims is an unvalued policy, any sum received
wage or income of the latter pursuant to the
by him under any policy shall be deducted
agreement between the insurer and the
against the full insurable value, for any sum
government employee and to remit such
received by him under any policy;
deductions to the insurer concerned, and
collect such reasonable fee for its services. (d) Where the insured receives any sum in
excess of the valuation in the case of valued
Section 82. A person insured is entitled to a
policies, or of the insurable value in the case of
return of the premium when the contract is
unvalued policies, he must hold such sum in
voidable, and subsequently annulled under the

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trust for the insurers, according to their right of liability of the insured for loss, damage, or
contribution among themselves; expense incident to ownership, operation,
(e) Each insurer is bound, as between himself chartering, maintenance, use, repair, or
and the other insurers, to contribute ratably to construction of any vessel, craft or
the loss in proportion to the amount for which instrumentality in use of ocean or inland
he is liable under his contract. waterways, including liability of the insured
for personal injury, illness or death or for loss
Section 101. Marine Insurance includes:
of or damage to the property of another
(a) Insurance against loss of or damage to:
person.
(1) Vessels, craft, aircraft, vehicles, goods,
Section 174. Whenever the insured desires to
freights, cargoes, merchandise, effects,
have a valuation named in his policy, insuring
disbursements, profits, moneys, securities,
any building or structure against fire, he may
choses in action, instruments of debts, valuable
require such building or structure to be
papers, bottomry, and respondentia interests
examined by an independent appraiser and the
and all other kinds of property and interests
value of the insureds interest therein may then
therein, in respect to, appertaining to or in
be fixed as between the insurer and the
connection with any and all risks or perils of
insured. The cost of such examination shall be
navigation, transit or transportation, or while
paid for by the insured. A clause shall be
being assembled, packed, crated, baled,
inserted in such policy stating substantially
compressed or similarly prepared for shipment
that the value of the insureds interest in such
or while awaiting shipment, or during any
building or structure has been thus fixed. In
delays, storage, transhipment, or reshipment
the absence of any change increasing the risk
incident thereto, including war risks, marine
without the consent of the insurer or of fraud
builders risks, and all personal property
on the part of the insured, then in case of a
floater risks;
total loss under such policy, the whole amount
(2) Person or property in connection with or so insured upon the insureds interest in such
appertaining to a marine, inland marine, building or structure, as stated in the policy
transit or transportation insurance, including upon which the insurers have received a
liability for loss of or damage arising out of or premium, shall be paid, and in case of a partial
in connection with the construction, repair, loss the full amount of the partial loss shall be
operation, maintenance or use of the subject so paid, and in case there are two (2) or more
matter of such insurance (but not including life policies covering the insureds interest therein,
insurance or surety bonds nor insurance each policy shall contribute pro rata to the
against loss by reason of bodily injury to any payment of such whole or partial loss. But in
person arising out of ownership, maintenance, no case shall the insurer be required to pay
or use of automobiles); more than the amount thus stated in such
(3) Precious stones, jewels, jewelry, precious policy. This section shall not prevent the
metals, whether in course of transportation or parties from stipulating in such policies
otherwise; and concerning the repairing, rebuilding or
(4) Bridges, tunnels and other instrumentalities replacing of buildings or structures wholly or
of transportation and communication partially damaged or destroyed.
(excluding buildings, their furniture and Section 176. Casualty insurance is insurance
furnishings, fixed contents and supplies held covering loss or liability arising from accident
in storage); piers, wharves, docks and slips, or mishap, excluding certain types of loss
and other aids to navigation and which by law or custom are considered as
transportation, including dry docks and falling exclusively within the scope of other
marine railways, dams and appurtenant types of insurance such as fire or marine. It
facilities for the control of waterways. includes, but is not limited to, employers
(b) Marine protection and indemnity insurance, liability insurance, motor vehicle liability
meaning insurance against, or against legal insurance, plate glass insurance, burglary and
theft insurance, personal accident and health

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insurance as written by non-life insurance Section 183. The insurer in a life insurance
companies, and other substantially similar contract shall be liable in case of suicide only
kinds of insurance. when it is committed after the policy has been
Section 181. Life insurance is insurance on in force for a period of two (2) years from the
human lives and insurance appertaining date of its issue or of its last reinstatement,
thereto or connected therewith. unless the policy provides a shorter
period: Provided, however, That suicide
"Every contract or undertaking for the
committed in the state of insanity shall be
payment of annuities including contracts for
compensable regardless of the date of
the payment of lump sums under a retirement
commission.
program where a life insurance company
manages or acts as a trustee for such TITLE 6
retirement program shall be considered a life MICROINSURANCE
insurance contract for purposes of this Code. Section 187. Microinsurance is a financial
Section 182. An insurance upon life may be product or service that meets the risk
made payable on the death of the person, or on protection needs of the poor where:
his surviving a specified period, or otherwise (a) The amount of contributions, premiums,
contingently on the continuance or cessation of fees or charges, computed on a daily basis,
life. does not exceed seven and a half percent
Every contract or pledge for the payment of (7.5%) of the current daily minimum wage rate
endowments or annuities shall be considered a for nonagricultural workers in Metro Manila;
life insurance contract for purposes of this and
Code. (b) The maximum sum of guaranteed benefits
In the absence of a judicial guardian, the is not more than one thousand (1,000) times of
father, or in the latters absence or incapacity, the current daily minimum wage rate for
the mother, of any minor, who is an insured or nonagricultural workers in Metro Manila.
a beneficiary under a contract of life, health, or Section 188. No insurance company or mutual
accident insurance, may exercise, in behalf of benefit association shall engage in the business
said minor, any right under the policy, without of microinsurance unless it possesses all the
necessity of court authority or the giving of a requirements as may be prescribed by the
bond, where the interest of the minor in the Commissioner. The Commissioner shall issue
particular act involved does not exceed Five such rules and regulations governing
hundred thousand pesos (P500,000.00) or in microinsurance.
such reasonable amount as may be determined CHAPTER II-A
by the Commissioner. Such right may include, FINANCIAL REPORTING FRAMEWORK
but shall not be limited to, obtaining a policy
Section 189. All companies regulated by the
loan, surrendering the policy, receiving the
Commission, unless otherwise required by
proceeds of the Policy, and giving the minors
law, should comply with the financial
consent to any transaction on the policy.
reporting frameworks adopted by the
In the absence or in case of the incapacity of Commission for purposes of creating the
the father or mother, the grandparent, the statutory financial reports and the annual
eldest brother or sister at least eighteen (18) statements to be submitted to the Commission.
years of age, or any relative who has actual Financial reporting framework means a set of
custody of the minor insured or beneficiary, accounting and reporting principles,
shall act as a guardian without need of a court standards, interpretations and
order or judicial appointment as such pronouncements that must be adopted in the
guardian, as long as such person is not preparation and submission of the statutory
otherwise disqualified or incapacitated. financial statements and reports required by
Payment made by the insurer pursuant to this the Commission. This financial reporting
section shall relieve such insurer of any framework is not the same as the financial
liability under the contract. reporting framework used to prepare the

4|KDCS 2016
financial statements that the Securities and has complied with all the provisions of this
Exchange Commission may require. The main Code.
purpose of the statutory statements is to Every entity receiving any such certificate of
present important information about the level authority shall be subject to the insurance and
of risk and solvency situation of insurers. In other applicable laws of the Philippines and to
prescribing the applicable statutory financial the jurisdiction and supervision of the
reporting framework, the Commissioner shall Commissioner.
take into account international standards
Section 193. No insurance company shall
concerning solvency and insurance company
transact any insurance business in the
reporting as well as generally accepted
Philippines until after it shall have obtained a
actuarial principles concerning financial
certificate of authority for that purpose from
reporting promulgated by the Actuarial
the Commissioner upon application therefor
Society of the Philippines.
and payment by the company concerned of the
The assets and investments discussed in fees hereinafter prescribed.
Sections 204 to 215 shall be accounted for in
The Commissioner may refuse to issue a
accordance with this section.
certificate of authority to any insurance
The valuation of reserves shall be accounted company if, in his judgment, such refusal will
for in accordance with Title 5 of this Code. best promote the interest of the people of this
country. No such certificate of authority shall
Section 190. For purposes of this Code, the be granted to any such company until the
term insurer or insurance company shall include Commissioner shall have satisfied himself by
all partnerships, associations, cooperatives or such examination as he may make and such
corporations, including government-owned or evidence as he may require that such company
-controlled corporations or entities, engaged as is qualified by the laws of the Philippines to
principals in the insurance business, excepting transact business therein, that the grant of such
mutual benefit associations. Unless the context authority appears to be justified in the light of
otherwise requires, the term shall also include local economic requirements, and that the
professional reinsurers defined in Section direction and administration, as well as the
288. Domestic companyshall include companies integrity and responsibility of the organizers
formed, organized or existing under the laws and administrators, the financial organization
of the Philippines. Foreign company when used and the amount of capital, reasonably assure
without limitation shall include companies the safety of the interests of the policyholders
formed, organized, or existing under any laws and the public.
other than those of the Philippines. In order to maintain the quality of the
Section 191. The provisions of the Corporation management of the insurance companies and
Code, as amended, shall apply to all insurance afford better protection to policyholders and
corporations now or hereafter engaged in the public in general, any person of good
business in the Philippines insofar as they do moral character, unquestioned integrity and
not conflict with the provisions of this chapter. recognized competence may be elected or
appointed director or officer of insurance
Section 192. No corporation, partnership, or
companies in accordance with the pertinent
association of persons shall transact any
provisions contained in the corporate
insurance business in the Philippines except as
governance circulars prescribed by the
agent of a corporation, partnership or
Commissioner. In addition hereto, the
association authorized to do the business of
Commissioner shall prescribe the
insurance in the Philippines, unless possessed
qualifications of directors, executive officers
of the capital and assets required of an
and other key officials of insurance companies
insurance corporation doing the same kind of
for purposes of this section.
business in the Philippines and invested in the
same manner; unless the Commissioner shall
have granted it a certificate to the effect that it

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No person shall concurrently be a Director government unit regulatory issuance imposing
and/or Officer of an insurance company and such restriction or disenfranchisement on any
an adjustment company. insurance company shall be deemed null and
Before issuing such certificate of authority, the void ab initio.
Commissioner must be satisfied that the name Section 194. Except as provided in Section 289,
of the company is not that of any other known no new domestic life or non-life insurance
company transacting a similar business in the company shall, in a stock corporation, engage
Philippines, or a name so similar as to be in business in the Philippines unless possessed
calculated to mislead the public. The of a paid-up capital equal to at least One
Commissioner may issue rules and regulations billion pesos (P1,000,000,000.00): Provided, That
on the use of names of insurance companies a domestic insurance company already doing
and other supervised persons or entities. business in the Philippines shall have a net
The certificate of authority issued by the worth by June 30, 2013 of Two hundred fifty
Commissioner shall expire on the last day of million pesos (P250,000,000.00). Furthermore,
December, three (3) years following its date of said company must have by December 31,
issuance, and shall be renewable every three 2016, an additional Three hundred million
(3) years thereafter, subject to the companys pesos (P300,000,000.00) in net worth; by
continuing compliance with the provisions of December 31, 2019, an additional Three
this Code, circulars, instructions, rulings or hundred fifty million pesos (P350,000,000.00)
decisions of the Commission. in net worth; and by December 31, 2022, an
additional Four hundred million pesos
Every company receiving any such certificates
(P400,000,000.00) in net worth.
of authority shall be subject to the provisions
of this Code and other related laws and to the The Commissioner may, as a pre-licensing
jurisdiction and supervision of the requirement of a new insurance company, in
Commissioner. addition to the paid-up capital stock, require
the stockholders to pay in cash to the company
No insurance company may be authorized to
in proportion to their subscription interests a
transact in the Philippines the business of life
contributed surplus fund of not less than One
and non-life insurance concurrently, unless
hundred million pesos (P100,000,000.00). He
specifically authorized to do so by the
may also require such company to submit to
Commissioner: Provided, That the
him a business plan showing the companys
terms lifeand non-life insurance shall be
estimated receipts and disbursements, as well
deemed to include health, accident and
as the basis therefor, for the next succeeding
disability insurance.
three (3) years.
No insurance company shall have equity in an
If organized as a mutual company, in lieu of
adjustment company and neither shall an
such net worth, it must have available total
adjustment company have equity in an
members equity in an amount to be
insurance company.
determined by the Insurance Commission
No insurance company issued with a valid
above all liabilities for losses reported;
certificate of authority to transact insurance
expenses, taxes, legal reserve, and reinsurance
business anywhere in the Philippines by the
of all outstanding risks, and the contributed
Insurance Commissioner, shall be barred,
surplus fund equal to the amounts required of
prevented, or disenfranchised from issuing
stock corporations. A stock insurance company
any insurance policy or from transacting any
doing business in the Philippines may, subject
insurance business within the scope or
to the pertinent law and regulation which now
coverage of its certificate of authority,
or hereafter may be in force, alter its
anywhere in the Philippines, by any local
organization and transform itself into a mutual
government unit or authority, for whatever
insurance company.
guise or reason whatsoever, including under
The Secretary of Finance may, upon
any kind of ordinance, accreditation system, or
recommendation of the Commissioner,
scheme. Any local ordinance or local

6|KDCS 2016
increase such minimum paid-up capital stock Commissioner for the benefit and security of
or cash assets requirement under such terms the policyholders and creditors of such
and conditions as he may impose, to an company in the Philippines, securities
amount which, in his opinion, would satisfactory to the Commissioner consisting of
reasonably assure the safety of the interests of good securities of the Philippines, including
the policyholders and the public. The new issues of stock of registered enterprises, as
minimum paid-up capital and net worth this term is defined in Executive Order No. 226
requirement must remain unimpaired for the of 1987, as amended, to the actual market value
continuance of the license. The Commissioner of not less than the amount herein
may require the adoption of the risk-based required: Provided, That at least fifty percent
capital approach and other internationally (50%) of such securities shall consist of bonds
accepted forms of capital framework. or other instruments of debt of the
For the purpose of this section, net worth shall Government of the Philippines, its political
consist of: subdivisions and instrumentalities, or of
government-owned or -controlled corporations
(a) Paid-up capital;
and entities, including the Bangko Sentral ng
(b) Retained earnings;
Pilipinas: Provided, further, That the total
(c) Unimpaired surplus; and investment of a foreign insurance company in
(d) Revaluation of assets as may be approved any registered enterprise shall not exceed
by the Commissioner. twenty percent (20%) of the net worth of said
The Commission may adopt for purposes of foreign insurance company nor twenty percent
compliance with capital build up requirement (20%) of the capital of the registered enterprise,
under this Code the recognition as part of the unless previously authorized in writing by the
capital account, capital notes or debentures Commissioner.
which are subordinate to all credits and senior The Commissioner may, as a pre-licensing
only to common capital stocks. requirement of a new branch office of a foreign
The President of the Philippines may order a insurance company, in addition to the required
periodic review every two (2) years the capital asset or net worth, require the company to
structure set out above to determine the capital have an additional surplus fund in an amount
adequacy of the local insurance industry from to be determined by the Insurance
and after the integration and liberalization of Commission.
the financial services, including insurance, in For purposes of this Code, the net worth of a
the ASEAN Region. For this purpose, a review foreign insurance company shall refer only to
committee consisting of representatives from its net worth in the Philippines.
the Department of Finance (DOF), the Section 198. The Commissioner shall hold the
Insurance Commission (IC), the National securities, deposited as required in the
Economic and Development Authority immediately preceding section, for the benefit
(NEDA), the Securities and Exchange and security of all the policyholders and
Commission (SEC) and other agencies which creditors of the company depositing the
the President may designate shall conduct the same:Provided, That the Commissioner may as
review and may recommend to the President long as the company is solvent, permit the
to adopt for implementation the necessary company to collect the interest or dividends on
capital adjustment. the securities so deposited, and, from time to
Section 197. No insurance company organized time, with his assent, to withdraw any of such
or existing under the government or laws other securities, upon depositing with said
than those of the Philippines shall engage in Commissioner other like securities, the market
business in the Philippines unless possessed of value of which shall be equal to the market
unimpaired capital or assets and reserve of not value of such as may be withdrawn. In the
less than One billion pesos (P1,000,000,000.00), event of any company ceasing to do business
nor until it shall have deposited with the in the Philippines, the securities deposited as

7|KDCS 2016
aforesaid shall be returned to the company deficiency: Provided; further, That a stockholder
upon the Commissioners written approval who aside from paying the contribution due
and only after the company has duly proven in from him, pays the contribution due from
its application therefor that it has no further another stockholder by reason of the failure or
liability whatsoever under any of its policies refusal of the latter to do so, shall have a lien
nor to any of its creditors in the Philippines. on the certificates of stock of the insurance
Section 199. Every foreign company doing company concerned appearing in its books in
business in the Philippines shall set aside an the name of the defaulting stockholder on the
amount corresponding to the legal reserves of date of default, as well as on any interests or
the policies written in the Philippines and dividends that have accrued or will accrue to
invest and keep the same therein in accordance the said certificates of stock, until the
with the provisions of this section. The legal corresponding payment or reimbursement is
reserve therein required to be set aside shall be made by the defaulting stockholder.
invested only in the classes of Philippine Section 201. No domestic insurance
securities described in Section 206: Provided, corporation shall declare or distribute any
however, That no investment in stocks or bonds dividend on its outstanding stocks unless it
of any single entity shall, in the aggregate has met the minimum paid-up capital and net
exceed twenty percent (20%) of the net worth worth requirements under Section 194 and
of the investing company or twenty percent except from profits attested in a sworn
(20%) of the capital of the issuing company, statement to the Commissioner by the
whichever is the lesser, unless otherwise president or treasurer of the corporation to be
approved in writing by the Commissioner. The remaining on hand after retaining unimpaired:
securities purchased and kept in the (a) The entire paid-up capital stock;
Philippines under this section, shall not be sent
(b) The solvency requirements defined by
out of the territorial jurisdiction of the
Section 200;
Philippines without the written consent of the
(c) In the case of life insurance corporations,
Commissioner.
the legal reserve fund required by Section 217;
TITLE 2
(d) In the case of corporations other than life,
SOLVENCY
the legal reserve fund required by Section 219;
Section 200. An insurance company doing
and
business in the Philippines shall at all times
(e) A sum sufficient to pay all net losses
maintain the minimum paid-up capital, and
reported, or in the course of settlement, and all
net worth requirements as prescribed by the
liabilities for expenses and taxes.
Commissioner. Such solvency requirements
shall be based on internationally accepted Any dividend declared or distributed under
solvency frameworks and adopted only after the preceding paragraph shall be reported to
due consultation with the insurance industry the Commissioner within thirty (30) days after
associations. such declaration or distribution.

Whenever the aforementioned requirement be If the Commissioner finds that any such
found to be less than that herein required to be corporation has declared or distributed any
maintained, the Commissioner shall forthwith such dividend in violation of this section, he
direct the company to make good any such may order such corporation to cease and desist
deficiency by cash, to be contributed by all from doing business until the amount of such
stockholders of record in proportion to their dividend or the portion thereof in excess of the
respective interests, and paid to the treasurer amount allowed under this section has been
of the company, within fifteen (15) days from restored to said corporation.
receipt of the order: Provided, That the The Commissioner shall prescribe solvency
company in the interim shall not be permitted requirements for branches of foreign insurance
to take any new risk of any kind or character companies operating in the Philippines.
unless and until it make good any such

8|KDCS 2016
Section 202. In any determination of the under which a ceding insurer may be allowed
financial condition of any insurance company credit, as an asset or as a deduction from loss
doing business in the Philippines, there shall and unearned premium reserves, for
be allowed and admitted as assets only such reinsurance recoverable from an insurer not
assets legally or beneficially owned by the authorized in this country but which presents
insurance company concerned as determined satisfactory evidence that it meets the
by the Commissioner which consist of: applicable standards of solvency required in
(a) Cash in the possession of the insurance this country.
company or in transit under its control, and the (g) Funds withheld by a ceding insurer under a
true and duly verified balance of any deposit reinsurance treaty, provided reserves for
of such company in a financially sound bank unpaid losses and unearned premiums are
or trust company duly authorized by the adequately provided.
Bangko Sentral ng Pilipinas. (h) Deposits or amounts recoverable from
(b) Investments in securities, including money underwriting associations, syndicates and
market instruments, and in real property reinsurance funds, or from any suspended
acquired or held in accordance with and banking institution, to the extent deemed by
subject to the applicable provisions of this the Commissioner to be available for the
Code and the income realized therefrom or payment of losses and claims and values to be
accrued thereon. determined by him.
(c) Loans granted by the insurance company (i) Electronic data processing machines, as may
concerned to the extent of that portion thereof be authorized by the Commissioner to be
adequately secured by non-speculative assets acquired by the insurance company concerned,
with readily realizable values in accordance the acquisition cost of which to be amortized in
with and subject to the limitations imposed by equal annual amounts within a period of five
applicable provisions of this Code. (5) years from the date of acquisition thereof.
(d) Policy loans and other policy assets and (j) Investments in mutual funds, real estate
liens on policies, contracts or certificates of a investment trusts, salary loans, unit investment
life insurance company, in an amount not trust funds and special deposit accounts,
exceeding legal reserves and other policy subject to the conditions as may be provided
liabilities carried on each individual life for by the Commissioner.
insurance policy, contract or certificate. (k) Other assets, not inconsistent with the
(e) The net amount of uncollected and deferred provisions of paragraphs (a) to (j) hereof,
premiums and annuity considerations in the which are deemed by the Commissioner to be
case of a life insurance company which carries readily realizable and available for the
the full mean tabular reserve liability. payment of losses and claims at values to be
(f) Reinsurance recoverable by the ceding determined by him in a circular, rule or
insurer: regulation.
(1) From an insurer authorized to transact TITLE 3
business in this country, the full amount ASSETS
thereof; or Section 202. In any determination of the
(2) From an insurer not authorized in this financial condition of any insurance company
country, in an amount not exceeding the doing business in the Philippines, there shall
liabilities carried by the ceding insurer for be allowed and admitted as assets only such
amounts withheld under a reinsurance treaty assets legally or beneficially owned by the
with such unauthorized insurer as security for insurance company concerned as determined
the payment of obligations thereunder if such by the Commissioner which consist of:
funds are held subject to withdrawal by, and (a) Cash in the possession of the insurance
under the control of, the ceding insurer. The company or in transit under its control, and the
Commissioner may prescribe the conditions true and duly verified balance of any deposit

9|KDCS 2016
of such company in a financially sound bank unpaid losses and unearned premiums are
or trust company duly authorized by the adequately provided.
Bangko Sentral ng Pilipinas. (h) Deposits or amounts recoverable from
(b) Investments in securities, including money underwriting associations, syndicates and
market instruments, and in real property reinsurance funds, or from any suspended
acquired or held in accordance with and banking institution, to the extent deemed by
subject to the applicable provisions of this the Commissioner to be available for the
Code and the income realized therefrom or payment of losses and claims and values to be
accrued thereon. determined by him.
(c) Loans granted by the insurance company (i) Electronic data processing machines, as may
concerned to the extent of that portion thereof be authorized by the Commissioner to be
adequately secured by non-speculative assets acquired by the insurance company concerned,
with readily realizable values in accordance the acquisition cost of which to be amortized in
with and subject to the limitations imposed by equal annual amounts within a period of five
applicable provisions of this Code. (5) years from the date of acquisition thereof.
(d) Policy loans and other policy assets and (j) Investments in mutual funds, real estate
liens on policies, contracts or certificates of a investment trusts, salary loans, unit investment
life insurance company, in an amount not trust funds and special deposit accounts,
exceeding legal reserves and other policy subject to the conditions as may be provided
liabilities carried on each individual life for by the Commissioner.
insurance policy, contract or certificate. (k) Other assets, not inconsistent with the
(e) The net amount of uncollected and deferred provisions of paragraphs (a) to (j) hereof,
premiums and annuity considerations in the which are deemed by the Commissioner to be
case of a life insurance company which carries readily realizable and available for the
the full mean tabular reserve liability. payment of losses and claims at values to be
(f) Reinsurance recoverable by the ceding determined by him in a circular, rule or
insurer: regulation.
(1) From an insurer authorized to transact Section 203. In addition to such assets as the
business in this country, the full amount Commissioner may from time to time
thereof; or determine to be non-admitted assets of
insurance companies doing business in the
(2) From an insurer not authorized in this
Philippines, the following assets shall in no
country, in an amount not exceeding the
case be allowed as admitted assets of an
liabilities carried by the ceding insurer for
insurance company doing business in the
amounts withheld under a reinsurance treaty
Philippines, in any determination of its
with such unauthorized insurer as security for
financial condition:
the payment of obligations thereunder if such
funds are held subject to withdrawal by, and (a) Goodwill, trade names, and other like
under the control of, the ceding insurer. The intangible assets.
Commissioner may prescribe the conditions (b) Prepaid or deferred charges for expenses
under which a ceding insurer may be allowed and commissions paid by such insurance
credit, as an asset or as a deduction from loss company.
and unearned premium reserves, for (c) Advances to officers (other than policy
reinsurance recoverable from an insurer not loans), which are not adequately secured and
authorized in this country but which presents which are not previously authorized by the
satisfactory evidence that it meets the Commissioner, as well as advances to
applicable standards of solvency required in employees, agents, and other persons on mere
this country. personal security.
(g) Funds withheld by a ceding insurer under a (d) Shares of stock of such insurance company,
reinsurance treaty, provided reserves for owned by it, or any equity therein as well as

10 | K D C S 2 0 1 6
loans secured thereby, or any proportionate received by it on account of the sale or
interest in such shares of stock through the exchange of real property acquired pursuant to
ownership by such insurance company of an Sections 206 and 208;
interest in another corporation or business (d) Bonds or other instruments of indebtedness
unit. issued or guaranteed by the Government of the
(e) Furniture, furnishing, fixtures, safes, Philippines or its political subdivisions
equipment, library, stationery, literature, and authorized by law to incur such obligations or
supplies. issue such guarantees or of government-
(f) Items of bank credits representing checks, owned or -controlled corporations and
drafts or notes returned unpaid after the date instrumentalities including the Bangko Sentral
of statement. ng Pilipinas; or
(g) The amount, if any, by which the aggregate (e) Obligations issued or guaranteed by
value of investments as carried in the ledger universal banks, commercial banks, offshore
assets of such insurance company exceeds the banking units, investment houses or other
aggregate value thereof as determined in financial intermediaries duly registered with
accordance with the provisions of this Code the Bangko Sentral ng Pilipinas; or
and/or the rules of the Commissioner. (f) Obligations issued or guaranteed by foreign
All non-admitted assets and all other assets of banks or corporations, each of which shall
doubtful value or character included as ledger have total net worth of at least One hundred
or non-ledger assets in any statement fifty million US dollars ($US150,000,000.00) or
submitted by an insurance company to the such other higher net worth as may be
Commissioner, or in any insurance examiners prescribed by the Insurance Commission, as
report to him, shall also be reported, to the shown in their financial statements as of the
extent of the value disallowed as deductions immediately preceding fiscal year; or
from the gross assets of such insurance (g) Assignments of monetary instruments such
company, except where the Commissioner as cash deposits, deposit certificates or other
permits a reserve to be carried among the similar instruments of universal banks,
liabilities of such insurance company in lieu of commercial banks, investment houses or other
any such deduction. financial intermediaries duly registered with
TITLE 4 the Bangko Sentral ng Pilipinas; or
INVESTMENTS (h) Pledges of shares of stock, bonds or other
Section 204. A life insurance company may instruments of indebtedness specified in
lend to any of its policyholders upon the Section 209; or
security of the value of its policy such sum as (i) Chattel mortgages over equipment not more
may be determined pursuant to the provisions than three (3) years old; and
of the policy. (j) Such other security as may be approved by
No insurance company shall loan any of its the Commissioner.
money or deposits to any person, corporation The loans provided in the preceding
or association, except upon the security of any subsection shall be subject to the following
of the following: conditions:
(a) First mortgage or deeds of trust of (1) The amount of loan secured by real estate
registered, unencumbered, improved or mortgage over a non-agricultural land shall
unimproved real estate, including not exceed seventy percent (70%) of its
condominiums; appraised value, and in the case of a loan
(b) First mortgages or deeds of trust of actually secured by a real estate mortgage over an
cultivated, improved and unencumbered agricultural land, the amount of loan shall not
agricultural lands in the Philippines; exceed forty percent (40%) of its market
(c) Purchase money mortgages, lease purchase value:Provided, That, in no case shall such loan
agreements or similar securities executed or

11 | K D C S 2 0 1 6
have a maturity period in excess of twenty-five Section 206. (a) An insurance company may
(25) years; purchase, hold, own and convey such
(2) Unless approved by the Commissioner, no property, real and personal, as may have been
loan may be granted upon the security of a mortgaged, pledged, or conveyed to it in good
mortgage on improved real estate if the faith in trust for its benefit by reason of money
improvements thereon do not belong to the loaned by it in pursuance of the regular
owner of the land, and the owner of the business of the company, and such real or
improvements does not sign the deed of personal property as may have been purchased
mortgage. However, if the owner of the land is by it at sales under pledges, mortgages or
the Government of the Philippines or any of its deeds of trust for its benefit on account of
political subdivisions and a long-term lease has money loaned by it; and such real and
been executed in favor of the owner of the personal property as may have been conveyed
improvements, the owner of the land need not to it by borrowers in satisfaction and discharge
be a party to the deed of mortgage. The of loans made by the company in payment or
expiration date of the lease shall not, however, by reason of any loan made by the company in
precede the maturity of the loan. The phrase payment or by reason of any loan made by it
improved real estate as used herein shall shall be sold by the company within twenty
mean land with permanent building or (20) years after the title thereto has been vested
buildings erected thereon; in it.
(3) Lease-agreements or similar securities (b) An insurance company may purchase,
received on the sale of real estate property hold, and own the following:
shall not exceed one hundred percent (100%) (1) Real properties which serve as its main
of the selling price of said property, or one place of business and/or branch
hundred percent (100%) of its market value at offices: Provided, That such investment shall
the time of its disposition, whichever amount not in the overall exceed twenty percent (20%)
is lower. However, in no case shall such of its net worth as shown by its latest financial
agreement have a maturity period not statement approved by the Commissioner.
exceeding thirty (30) years; (2) Bonds or other instruments of indebtedness
(4) Loans secured by shares of stock of solvent of the Government of the Philippines or its
corporations or institutions shall not exceed political subdivisions authorized by law to
fifty percent (50%) of: issue bonds at the reasonable market value
(i) The weighted average market price for the thereof.
one hundred eighty (180) days preceding the (3) Bonds or other instruments of debt of
approval of the loan for shares listed in the government-owned or -controlled corporations
stock exchange; and and entities, including the Bangko Sentral ng
(ii) For unlisted shares, the adjusted book Pilipinas.
value of such shares. (4) Bonds, debentures or other instruments of
(5) Loans secured by the chattel mortgages indebtedness of any solvent corporation or
over equipment shall not exceed seventy institution created or existing under the laws
percent (70%) of the market value of said of the Philippines:
equipment. Provided, however, That the issuing, assuming
Section 205. No loan by any insurance or guaranteeing entity or its predecessors shall
company on the security of real estate shall be not have defaulted in the payment of interest
made unless the title to such real estate shall on any of its securities and that during each of
have first been registered in accordance with any three (3) including the last two (2) of the
the existing Land Registration Act, or shall five (5) fiscal years next preceding the date of
have been previously registered under the acquisition by such insurance company of such
provisions of the existing Mortgage Law and bonds, debentures, or other instruments of
the lien or interest of the insurance company as indebtedness, the net earnings of the issuing,
mortgagee has been registered. assuming or guaranteeing institution available

12 | K D C S 2 0 1 6
for its fixed charges, as hereinafter defined, (7) Securities issued by a registered enterprise,
shall have been not less than one and one- as this term is defined in Executive Order No.
quarter (1) times the total of its fixed charges 226, otherwise known as the Omnibus
for such year: Provided, further, That no life Investments Code of 1987, as
insurance company shall invest in or loan amended: Provided, That the total investment
upon the obligations of any one institution in of a domestic non-life insurance company in
the kinds permitted under this subsection an any registered enterprise shall not exceed
amount in excess of twenty-five percent (25%) twenty percent (20%) of the net worth of said
of the total admitted assets of such insurer as insurance company as shown by its aforesaid
of December thirty-first next preceding the financial statement unless previously
date of such investment. authorized by the Commissioner.
As used in this subsection the term net earnings (8) Certificates, notes and other obligations
available for fixed charges shall mean net income issued by the trustees or receivers of any
after deducting operating and maintenance institution created or existing under the laws
expenses, taxes other than income taxes, of the Philippines which, or the assets of
depreciation and depletion; but excluding which, are being administered under the
extraordinary nonrecurring items of income or direction of any court having
expense appearing in the regular financial jurisdiction: Provided, however, That such
statement of the issuing, assuming or certificates, notes or other obligations are
guaranteeing institution. The term fixed adequately secured as to principal and
charges shall include interest on funded and interests.
unfunded debt, amortization of debt discount, (9) Equipment trust obligations or certificates
and rentals for leased properties. which are adequately secured or other
(5) Preferred or guaranteed stocks of any adequately secured instruments evidencing an
solvent corporation or institution created or interest in equipment wholly or in part within
existing under the laws of the the Philippines: Provided, however, That there is
Philippines: Provided, That if the stocks are a right to receive determined portions of
guaranteed, the amount of stocks so rental, purchase or other fixed obligatory
guaranteed is not in excess of fifty percent payments for the use or purchase of such
(50%) of the amount of the preferred or equipment.
common stocks, as the case may be, of the (10) Any obligation of any corporation or
guaranteeing corporation: Provided, finally, institution created or existing under the laws
That no life insurance company shall invest in of the Philippines which is, on the date of
or loan upon obligations of any one institution acquisition by the insurer, adequately secured
in the kinds permitted under this subsection an and has qualities and characteristics wherein
amount in excess of ten percent (10%) of the the speculative elements are not predominant.
total admitted assets of such insurer as of
(11) Such other securities as may be approved
December thirty-first next preceding the date
by the Commissioner.
of such investment.
(c) Any domestic insurer which has
(6) Common stocks of any solvent corporation
outstanding insurance, annuity or reinsurance
or institution created or existing under the
contracts in currencies other than the national
laws of the Philippines: Provided, however, That
currency of the Philippines may invest in, or
no life insurance company shall invest in or
otherwise acquire or loan upon securities and
loan upon the obligations of any one
investments in such currency which are
corporation or institution in the kinds
substantially of the same kinds, classes and
permitted under this subsection an amount in
investment grades as those eligible for
excess of ten percent (10%) of the total
investment under the foregoing subdivisions
admitted assets of such insurer as of December
of this section; but the aggregate amount of
thirty-first next preceding the date of such
such investments and of such cash in such
investment.
currency which is at any time held by such

13 | K D C S 2 0 1 6
insurer shall not exceed one and one-half (1) added to the book value of all other real
times the amount of its reserves and other property held by it pursuant to this paragraph
obligations under such contracts or the amount (b), shall not exceed twenty-five percent (25%)
which such insurer is required by the law of of its admitted assets as of the thirty-first day
any country or possession outside the Republic of December next preceding.
of the Philippines to be invested in such Section 209. Every domestic insurance
country or possession, whichever shall be company shall, to the extent of an amount
greater. equal in value to twenty-five percent (25%) of
Section 207. An insurance company may: the minimum net worth required under
(1) Invest in equities of other financial Section 194, invest its funds only in securities,
institutions; and satisfactory to the Commissioner, consisting of
bonds or other instruments of debt of the
(2) Engage in the buying and selling of long-
Government of the Philippines or its political
term debt instruments: Provided, That any or all
subdivisions or instrumentalities, or of
of such investments shall be with the prior
government-owned or -controlled corporations
approval of the Commissioner. Insurance
and entities, including the Bangko Sentral ng
companies may, however, invest in listed
Pilipinas: Provided, That such investments shall
equities of other financial institutions without
at all times be maintained free from any lien or
need of prior approval by the Commissioner.
encumbrance: Provided, further, That such
Section 208. Any life insurance company may:
securities shall be deposited with and held by
(a) Acquire or construct housing projects and, the Commissioner for the faithful performance
in connection with any such project, may by the depositing insurer of all its obligations
acquire land or any interest therein by under its insurance contracts. The provisions
purchase, lease or otherwise, or use land of Section 198 shall, so far as practicable, apply
acquired pursuant to any other provision of to the securities deposited under this section.
this Code. Such company may thereafter own,
Except as otherwise provided in this Code, no
maintain, manage, collect or receive income
judgment creditor or other claimant shall have
from, or sell and convey, any land or interest
the right to levy upon any of the securities of
therein so acquired and any improvements
the insurer held on deposit under this section
thereon. The aggregate book value of the
or held on deposit pursuant to the requirement
investments of any such company in all such
of the Commissioner.
projects shall not exceed at the time of such
Section 210. After satisfying the requirements
investments twenty-five percent (25%) of the
contained in the preceding section, any
total admitted assets of such company on the
domestic non-life insurance company, shall
thirty-first day of December next
invest, to an amount prescribed below, its
preceding: Provided, That the funds of the
funds in, or otherwise, acquire or loan upon,
company for the payment of pending claims
only the classes of investments described in
and obligations shall not be used for such
Section 206, including securities issued by any
investments.
registered enterprise, as this term is defined in
(b) Acquire real property, other than property
Executive Order No. 226, otherwise known as
to be used primarily for providing housing
The Omnibus Investments Code of 1987 and
and property for accommodation of its own
such other classes of investments as may be
business, as an investment for the production
authorized by the Commissioner for purposes
of income, or may acquire real property to be
of this section:Provided, That:
improved or developed for such investment
(a) No more than twenty percent (20%) of the
purpose pursuant to a program therefor,
net worth of such company as shown by its
subject to the condition that the cost of each
latest financial statement approved by the
parcel of real property so acquired under the
Commissioner shall be invested in the lot and
authority of this paragraph (b), including the
building in which the insurance company
estimated cost to the company of the
conducts its business; and
improvement or development thereof, when

14 | K D C S 2 0 1 6
(b) The total investment of an insurance Section 215. It shall be the duty of the officers
company in any registered enterprise shall not of the insurance company to report within the
exceed twenty percent (20%) of the net worth first fifteen (15) days of every month all such
of said insurance company as shown by its investments as may be made by them during
aforesaid financial statement nor twenty the preceding month, and the Commissioner
percent (20%) of the paid-up capital of the may, if such investments or any of them seem
registered enterprise excluding the intended injudicious to him, require the sale or disposal
investment, unless previously authorized by of the same. The report shall also include a list
the Commissioner: Provided, further, That such of investments sold or disposed of by the
investments, free from any lien or company during the same period.
encumbrance, shall be at least equal in amount TITLE 5
to the aggregate amount of: (1) its legal RESERVES
reserve, as provided in Section 219, and (2) its
Section 216. Every life insurance company,
reserve fund held for reinsurance as provided
doing business in the Philippines, shall
for in the pertinent treaty provision in the case
annually make a valuation of all policies,
of reinsurance ceded to authorized insurers.
additions thereto, unpaid dividends, and all
Section 211. After satisfying the requirements other obligations outstanding on the thirty-first
contained in Sections 197, 199, 209 and 210, any day of December of the preceding year. All
non-life insurance company may invest any such valuations shall be made according to the
portion of its funds representing earned standard adopted by the company, as
surplus in any of the investments described in prescribed by the Commissioner in accordance
Sections 204, 206 and 207, or in any securities with internationally accepted actuarial
issued by a registered enterprise mentioned in standards, which standard shall be stated in its
the preceding sections: Provided, That no annual report.
investment in stocks or bonds of any single
Such standard of valuations shall be according
entity shall in the aggregate, exceed twenty
to a standard table of mortality with interest to
percent (20%) of the net worth of the insurance
be determined by the Insurance
company as shown in its latest financial
Commissioner. When the preliminary term
statement approved by the Commissioner or
basis is used, the term insurance shall be
twenty percent (20%) of the paid-up capital of
limited to the first policy year.
the issuing company, whichever is lesser,
The results of such valuations shall be reported
unless otherwise approved by the
to the Commissioner on or before the thirtieth
Commissioner.
day of April of each year accompanied by a
Section 212. After satisfying the minimum
sworn statement of a designated company
capital investment required in Section 209, any
officer and stating the methods and
life insurance company may invest its legal
assumptions used in arriving at the values
policy reserve, as provided in Section 217 or in
reported.
Section 218, in any of the classes of securities or
Section 217. The aggregate net value so
types of investments described in Sections 204,
ascertained of the policies of such company
206, 207 and 208, subject to the limitations
shall be deemed its reserve liability, to provide
therein contained, and in any securities issued
for which it shall hold funds in secure
by any registered enterprise mentioned in
investments equal to such net value, above all
Section 210, free from any lien or
its other liabilities; and it shall be the duty of
encumbrance, in such amounts as may be
the Commissioner, after having verified, to
approved by the Commissioner. Such
such an extent as he may deem necessary, the
company may likewise invest any portion of
valuation of all policies in force, to satisfy
its earned surplus in the aforesaid securities or
himself that the company has such amount in
investments subject to the aforesaid
safe legal securities after all other debts and
limitations.
claims against it have been provided for.

15 | K D C S 2 0 1 6
The reserve liability for variable contracts The Commissioner may issue regulations
defined in Section 238 shall be established in providing for a maximum limit on the overall
accordance with actuarial procedures that retained risks of insurers to serve as a
recognize the variable nature of the benefits catastrophe cover requirement for the same.
provided, and shall be approved by the Reinsurance ceded as authorized under the
Commissioner. succeeding title shall be deducted in
Section 218. Every life insurance company, determining the risk retained. As to surety
conducted on the mutual plan or a plan in risk, deduction shall also be made of the
which policyholders are by the terms of their amount assumed by any other company
policies entitled to share in the profits or authorized to transact surety business and the
surplus shall, on all policies of life insurance value of any security mortgaged, pledged, or
heretofore or hereafter issued, under the held subject to the suretys control and for the
conditions of which the distribution of surplus suretys protection.
is deferred to a fixed or specified time and
contingent upon the policy being in force and
Section 225. Any insurance company doing
the insured living at that time, annually
business in the Philippines desiring to cede
ascertain the amount of the surplus to which
their excess risks to foreign insurance or
all such policies as a separate class are entitled,
reinsurance companies not authorized to
and shall annually apportion to such policies
transact business in the Philippines may do so
as a class the amount of the surplus so
under such terms and conditions which the
ascertained, and carry the amount of such
Commissioner may prescribe.
apportioned surplus, plus the actual interest
Should any reinsurance agreement be for any
earnings and accretions to such fund, as a
reason cancelled or terminated, the ceding
distinct and separate liability to such class of
company concerned shall inform the
policies on and for which the same was
Commissioner in writing of such cancellation
accumulated, and no company or any of its
or termination within thirty (30) days from the
officers shall be permitted to use any part of
date of such cancellation or termination or
such apportioned surplus fund for any
from the date notice or information of such
purpose whatsoever other than for the express
cancellation or termination is received by such
purpose for which the same was accumulated.
company as the case may be.
Section 219. Every insurance company, other
Section 226. Every insurance company
than life, shall maintain a reserve for unearned
authorized to do business in the Philippines
premiums on its policies in force, which shall
shall report to the Commissioner on forms
be charged as a liability in any determination
prescribed by him the particulars of
of its financial condition. Such reserve shall be
reinsurance treaties or any new treaties or
calculated based on the twenty-fourth (24th)
changes in existing treaties within three (3)
method.
months from their effectivity.
TITLE 6
Section 227. No credit shall be allowed as an
LIMIT OF SINGLE RISK
admitted asset or as a deduction from liability,
Section 221. No insurance company other than
to any ceding insurer for reinsurance made,
life, whether foreign or domestic, shall retain
ceded, renewed, or otherwise becoming
any risk on any one subject of insurance in an
effective after January 1, 1975, unless the
amount exceeding twenty percent (20%) of its
reinsurance shall be payable by the assuming
net worth. For purposes of this section, the
insurer on the basis of the liability of the
term subject of insurance shall include all
ceding insurer under the contract or contracts
properties or risks insured by the same insurer
reinsured without diminution because of the
that customarily are considered by non-life
insolvency of the ceding insurer nor unless
company underwriters to be subject to loss or
under the contract or contracts of reinsurance
damage from the same occurrence of any
the liability for such reinsurance is assumed by
hazard insured against.
the assuming insurer or insurers as of the same

16 | K D C S 2 0 1 6
effective date; nor unless the reinsurance one (1) month for the payment of any premium
agreement provides that payments by the due after the first, during which grace period
assuming insurer shall be made directly to the the death benefit coverage shall continue in
ceding insurer or to its liquidator, receiver, or force, unless the policyholder shall have given
statutory successor except: the insurer written notice of discontinuance in
(a) Where the contract specifically provides advance of the date of discontinuance and in
another payee of such reinsurance in the event accordance with the terms of the policy. The
of the insolvency of the ceding insurer; and policy may provide that the policyholder shall
be liable for the payment of a pro rata premium
(b) Where the assuming insurer with the
for the time the policy is in force during such
consent of the direct insured or insureds has
grace period;
assumed such policy obligations of the ceding
insurer as direct obligations of the assuming (b) A provision that the validity of the policy
insurer to the payees under such policies and shall not be contested, except for nonpayment
in substitution for the obligations of the ceding of premiums after it has been in force for two
insurer to such payees. (2) years from its date of issue; and that no
statement made by any insured under the
Section 229. Every insurance company doing
policy relating to his insurability shall be used
business in the Philippines shall terminate its
in contesting the validity of the insurance with
fiscal period on the thirty-first day of
respect to which such statement was made
December every year, and shall annually on or
after such insurance has been in force prior to
before the thirtieth day of April of each year
the contest for a period of two (2) years during
render to the Commissioner a statement signed
such persons lifetime nor unless contained in
and sworn to by the chief officer of such
a written instrument signed by him;
company showing, in such form and details as
may be prescribed by the Commissioner, the (c) A provision that a copy of the application, if
exact condition of its affairs on the preceding any, of the policyholder shall be attached to the
thirty-first day of December. policy when issued, that all statements made
by the policyholder or by persons insured shall
The annual statement shall be prepared in
be deemed representations and not warranties,
accordance with the financial reporting
and that no statement made by any insured
framework as determined by the
shall be used in any contest unless a copy of
Commissioner. In addition, the Commissioner
the instrument containing the statement is or
may require other relevant information. The
has been furnished to such person or to his
form and details of such other relevant
beneficiary;
information shall be prescribed by the
Commissioner and shall form part of the (d) A provision setting forth the conditions, if
supplementary schedules to the annual any, under which the insurer reserves the right
statement. to require a person eligible for insurance to
furnish evidence of individual insurability
Any entry in the statement which is found to
satisfactory to the insurer as a condition to part
be false shall constitute a misdemeanor and the
or all of his coverage;
officer signing such statement shall be subject
to the penalty provided for under Section 442. (e) A provision specifying an equitable
adjustment of premiums or of benefits or of
Section 234. No policy of group life insurance
both to be made in the event that the age of a
shall be issued and delivered in the Philippines
person insured has been misstated, such
unless it contains in substance the following
provision to contain a clear statement of the
provisions, or provisions which in the opinion
method of adjustment to be used;
of the Commissioner are more favorable to the
persons insured, or at least as favorable to the (f) A provision that any sum becoming due by
persons insured and more favorable to the reason of death of the person insured shall be
policyholders: payable to the beneficiary designated by the
insured, subject to the provisions of the policy
(a) A provision that the policyholder is entitled
in the event that there is no designated
to a grace period of either thirty (30) days or of

17 | K D C S 2 0 1 6
beneficiary, as to all or any part of such sum, individual policy of life insurance subject to
living at the death of the insured, and subject the same limitations as set forth in paragraph
to any right reserved by the insurer in the (h), except that the group policy may provide
policy and set forth in the certificate to pay at that the amount of such individual policy shall
its option a part of such sum not exceeding not exceed the amount of the persons life
Five hundred pesos (P500.00) to any person insurance protection ceasing;
appearing to the insurer to be equitably (j) A provision that if a person insured under
entitled thereto by reason of having incurred the group policy dies during the thirty (30)-day
funeral or other expenses incident to the last period within which he would have been
illness or, death of the person insured; entitled to an individual policy issued to him
(g) A provision that the insurer will issue to in accordance with paragraphs (h) and (i)
the policyholder for delivery to each person above and before such individual policy shall
insured a statement as to the insurance have become effective, the amount of life
protection to which he is entitled, to whom the insurance which he would have been entitled
insurance benefits are payable, and the rights to have issued to him as an individual policy
set forth in paragraphs (h), (i) and (j) following; shall be payable as a claim under the group
(h) A provision that if the insurance, or any policy whether or not application for the
portion of it, on a person covered under the individual policy or the payment of the first
policy ceases because of termination of premium has been made;
employment or of membership in the class or (k) In the case of a policy issued to a creditor to
classes eligible for coverage under the policy, insure debtors of such creditor, a provision
such person shall be entitled to have issued to that the insurer will furnish to the policyholder
him by the insurer, without evidence of for delivery to each debtor insured under the
insurability, an individual policy of life policy a form which will contain a statement
insurance without disability or other that the life of the debtor is insured under the
supplementary benefits, provided application policy and that any death benefit paid
for the individual policy and payment of the thereunder by reason of his death shall be
first premium to the insurer shall be made applied to reduce or extinguish indebtedness.
within thirty (30) days after such termination, The provisions of paragraphs (f) to (j) shall not
and provided further that: apply to policies issued to a creditor to insure
(1) The individual policy shall be on any one of his debtors. If a group life policy is on a plan of
the forms, except term insurance, then insurance other than term, it shall contain a
customarily issued by the insurer at the age non-forfeiture provision or provisions which in
and for an amount not in excess of the the opinion of the Commissioner is or are
coverage under the group policy; and equitable to the insured or the
(2) The premium on the individual policy shall policyholder: Provided, That nothing herein
be at the insurers then customary rate contained shall be so construed as to require
applicable to the form and amount of the group life policies to contain the same non-
individual policy, to the class of risk to which forfeiture provisions as are required of
such person then belongs, and to his age individual life policies.
attained on the effective date of the individual Section 237. No policy of industrial life
policy. insurance shall be issued or delivered in the
(i) A provision that if the group policy Philippines if it contains any of the following
terminates or is amended so as to terminate the provisions:
insurance of any class of insured persons, (a) A provision that gives the insurer the right
every person insured thereunder at the date of to declare the policy void because the insured
such termination whose insurance terminates has had any disease or ailment, whether
and who has been so insured for five (5) years specified or not, or because the insured has
prior to such termination date shall be entitled received institutional, hospital, medical or
to have issued to him by the insurer an surgical treatment or attention, except a

18 | K D C S 2 0 1 6
provision which gives the insurer the right to policy (excluding the reserve for any
declare the policy void if the insured has, additional benefits in the event of death by
within two (2) years prior to the issuance of the accident or accidental means or for benefits in
policy, received institutional, hospital, medical the event of any type of disability), less any
or surgical treatment or attention and if the indebtedness on or secured by such policy; nor
insured or the claimant under the policy fails shall any provision of this section apply to any
to show that the condition occasioning such provision in an industrial life insurance policy
treatment or attention was not of a serious for additional benefits in the event of death by
nature or was not material to the risk; accident or accidental means.
(b) A provision that gives the insurer the right Section 244. Any insurance company which
to declare the policy void because the insured has established one or more separate variable
has been rejected for insurance, unless such accounts pursuant to the preceding section
right be conditioned upon a showing by the may invest and reinvest all or any part of the
insurer that knowledge of such rejection would assets allocated to any such account in the
have led to a refusal by the insurer to make securities and investments authorized by
such contract; Sections 204, 206, 207 and 208 for any of the
(c) A provision that allows the company to pay funds of an insurance company in such
the proceeds of the policy at the death of the amount or amounts as may be approved by the
insured to any person other than the named Commissioner. In addition thereto, such
beneficiary, except in accordance with a company may also invest in common stocks or
standard provision as specified under the other equities which are listed on or admitted
provisions of paragraph (m) of the preceding to trading in a securities exchange located in
section; the Philippines, or which are publicly held and
traded in the over-the-counter market as
(d) A provision that limits the time within
defined by the Commissioner and as to which
which any action at law or in equity may be
market quotations have been
commenced to less than six (6) years after the
available: Provided, however, That no such
cause of action shall accrue; and
company shall invest in excess of ten percent
(e) A provision that specifies any mode of
(10%) of the assets of any such separate
settlement at maturity of less value than the
variable accounts in any one corporation
amount insured by the policy plus dividend
issuing such common stock. The assets and
additions, if any, less any indebtedness to the
investments of such separate variable accounts
company on the policy and less any premium
shall not be taken into account in applying the
that may by the terms of the policy be
quantitative investment limitations applicable
deducted, payments to be made in accordance
to other investments of the company. In the
with the terms of the policy.
purchase of common capital stock or other
Nothing contained in this section nor in the equities, the insurer shall designate to the
provision of paragraph (b) of the preceding broker, or to the seller if the purchase is not
section, relating to incontestability, shall be made through a broker, the specific variable
construed as prohibiting the life insurance account for which the investment is made.
company from placing in its industrial life
Section 250. In case of any litigation for the
policies provisions limiting its liability with
enforcement of any policy or contract of
respect to:
insurance, it shall be the duty of the
(1) Death resulting from aviation other than as Commissioner or the Court, as the case may
a fare-paying passenger on a regularly be, to make a finding as to whether the
scheduled route between definitely established payment of the claim of the insured has been
airports; and unreasonably denied or withheld; and in the
(2) Military or naval service: Provided, That if affirmative case, the insurance company shall
the liability of the company is limited as herein be adjudged to pay damages which shall
provided, such liability shall in no event be consist of attorneys fees and other expenses
fixed at an amount less than the reserve on the incurred by the insured person by reason of

19 | K D C S 2 0 1 6
such unreasonable denial or withholding of restoring such authority, the Commissioner
payment plus interest of twice the ceiling shall require the company concerned to submit
prescribed by the Monetary Board of the to him a business plan showing the companys
amount of the claim due the insured, from the estimated receipts and disbursements, as well
date following the time prescribed in Section as the basis therefor, for the next succeeding
248 or in Section 249, as the case may be, until three (3) years.
the claim is fully satisfied: Provided, That TITLE 14
failure to pay any such claim within the time APPOINTMENT OF CONSERVATOR
prescribed in said sections shall be
Section 255. If at any time before, or after, the
considered prima facieevidence of unreasonable
suspension or revocation of the certificate of
delay in payment.
authority of an insurance company as
Section 251. It is unlawful to: provided in the preceding title, the
(a) Present or cause to be presented any Commissioner finds that such company is in a
fraudulent claim for the payment of a loss state of continuing inability or unwillingness
under a contract of insurance; and to maintain a condition of solvency or liquidity
(b) Fraudulently prepare, make or subscribe deemed adequate to protect the interest of
any writing with intent to present or use the policyholders and creditors, he may appoint a
same, or to allow it to be presented in support conservator to take charge of the assets,
of any such claim. Any person who violates liabilities, and the management of such
this section shall be punished by a fine not company, collect all moneys and debts due to
exceeding twice the amount claimed or said company and exercise all powers
imprisonment of two (2) years, or both, at the necessary to preserve the assets of said
discretion of the court. company, reorganize the management thereof,
and restore its viability. The said conservator
TITLE 13
shall have the power to overrule or revoke the
SUSPENSION OR REVOCATION OF
actions of the previous management and board
AUTHORITY
of directors of the said company, any provision
Section 254. If the Commissioner is of the
of law, or of the articles of incorporation or
opinion upon examination of other evidence
bylaws of the company, to the contrary
that any domestic or foreign insurance
notwithstanding, and such other powers as the
company is in an unsound condition, or that it
Commissioner shall deem necessary.
has failed to comply with the provisions of law
The conservator may be another insurance
or regulations obligatory upon it, or that its
company doing business in the Philippines,
condition or method of business is such as to
any officer or officers of such company, or any
render its proceedings hazardous to the public
other competent and qualified person, firm or
or to its policyholders, or that its net worth
corporation. The remuneration of the
requirement, in the case of a domestic stock
conservator and other expenses attendant to
company, or its available cash assets, in the
the conservation shall be borne by the
case of a domestic mutual company, or its
insurance company concerned.
security deposits, in the case of a foreign
company, is impaired or deficient, or that the The conservator shall not be subject to any
margin of solvency required of such company action, claim or demand by, or liability to, any
is deficient, the Commissioner is authorized to person in respect of anything done or omitted
suspend or revoke all certificates of authority to be done in good faith in the exercise, or in
granted to such insurance company, its officers connection with the exercise, of the powers
and agents, and no new business shall conferred on the conservator.
thereafter be done by such company or for The conservator appointed shall report and be
such company by its agent in the Philippines responsible to the Commissioner until such
while such suspension, revocation or disability time as the Commissioner is satisfied that the
continues or until its authority to do business insurance company can continue to operate on
is restored by the Commissioner. Before its own and the conservatorship shall likewise

20 | K D C S 2 0 1 6
be terminated should the Commissioner, on safety to its policyholders and creditors, he
the basis of the report of the conservator or of shall, if the public interest requires, order its
his own findings, determine that the liquidation, indicate the manner of its
continuance in business of the insurance liquidation and approve a liquidation plan and
company would be hazardous to policyholders implement it immediately. The Commissioner
and creditors, in which case the provisions of shall designate a competent and qualified
Title 15 shall apply. person as liquidator who shall take over the
No insurance company, life or non-life, or any functions of the receiver previously designated
professional reinsurer, ordered to be liquidated and, with all convenient speed, reinsure all its
by the Commissioner under the provisions outstanding policies, convert the assets of the
hereunder may be rehabilitated or authorized insurance company to cash, or sell, assign or
to transact anew, insurance or reinsurance otherwise dispose of the same to the
business, as the case may be. policyholders, creditors and other parties for
the purpose of settling the liabilities or paying
TITLE 15
the debts of such company and he may, in the
PROCEEDINGS UPON INSOLVENCY
name of the company, institute such actions as
Section 256. Whenever, upon examination or
may be necessary in the appropriate court to
other evidence, it shall be disclosed that the
collect and recover accounts and assets of the
condition of any insurance company doing
insurance company, and to do such other acts
business in the Philippines is one of
as may be necessary to complete the
insolvency, or that its continuance in business
liquidation as ordered by the Commissioner.
would be hazardous to its policyholders and
The provisions of any law to the contrary
creditors, the Commissioner shall forthwith
notwithstanding, the actions of the
order the company to cease and desist from
Commissioner under this section shall be final
transacting business in the Philippines and
and executory, and can be set aside by the
shall designate a receiver to immediately take
court upon petition by the company and only
charge of its assets and liabilities, as
if there is convincing proof that the action is
expeditiously as possible collect and gather all
plainly arbitrary and made in bad faith. The
the assets and administer the same for the
Commissioner, through the Solicitor General,
benefit of its policyholders and creditors, and
shall then file the corresponding answer
exercise all the powers necessary for these
reciting the proceeding taken and praying the
purposes including, but not limited to,
assistance of the court in the liquidation of the
bringing suits and foreclosing mortgages in the
company. No restraining order or injunction
name of the insurance company.
shall be issued by the court enjoining the
The Commissioner shall thereupon determine
Commissioner from implementing his actions
within ninety (90) days whether the insurance
under this section, unless there is convincing
company may be reorganized or otherwise
proof that the action of the Commissioner is
placed in such condition so that it may be
plainly arbitrary and made in bad faith and the
permitted to resume business with safety to its
petitioner or plaintiff files with the Clerk or
policyholders and creditors and shall prescribe
Judge of the Court in which the action is
the conditions under which such resumption
pending a bond executed in favor of the
of business shall take place as well as the time
Commissioner in an amount to be fixed by the
for fulfillment of such conditions. In such case,
court. The restraining order or injunction shall
the expenses and fees in the collection and
be refused or, if granted, shall be dissolved
administration of the insurance company shall
upon filing by the Commissioner, if he so
be determined by the Commissioner and shall
desires, of a bond in an amount twice the
be paid out of the assets of such company.
amount of the bond of the petitioner or
If the Commissioner shall determine and plaintiff conditioned that it will pay the
confirm within the said period that the damages which the petition or plaintiff may
insurance company is insolvent, as defined suffer by the refusal or the dissolution of the
hereunder, or cannot resume business with injunction. The provisions of Rule 58 of the

21 | K D C S 2 0 1 6
New Rules of Court insofar as they are (c) Submitted to the Commissioner and
applicable shall govern the issuance and approved by him in writing;
dissolution of the restraining order or (d) Approved by a majority vote of all the
injunction contemplated in this section. policyholders of the class or classes for whose
All proceedings under this title shall be given benefit the stock is to be acquired voting at an
preference in the courts. The Commissioner election by the policyholders called for that
shall not be required to pay any fee to any purpose, subject to the provisions of Section
public officer for filing, recording, or in any 271. The terms policyholder or policyholders as
manner authenticating any paper or used in this chapter shall be deemed to mean
instrument relating to the proceedings. the person or persons insured under an
As used in this title, the term Insolvency shall individual policy of life insurance, or of health
mean the inability of an insurance company to and accident insurance, or of any combination
pay its lawful obligations as they fall due in the of life, health and accident insurance. They
usual and ordinary course of business as may shall also include the person or persons to
be shown by its failure to maintain the whom any annuity or pure endowment is
solvency requirements under Section 200 of presently or prospectively payable by the
this Code. terms of an individual annuity or pure
endowment contract, except where the policy
Section 257. The receiver or the liquidator, as
or contract declares some other person to be
the case may be, designated under the
the owner or holder thereof, in which case
provisions of this title, shall not be subject to
such other person shall be deemed
any action, claim or demand by, or liability to,
policyholder. In any case where a policy or
any person in respect of anything done or
contract names two or more persons as joint
omitted to be done in good faith in the
insured, payees, owners or holders thereof, the
exercise, or in connection with the exercise, of
persons so named shall be deemed collectively
the powers conferred on such receiver or
to be one (1) policyholder for the purpose of
liquidator.
this chapter. In any case where a policy or
Section 269. Such plan shall include
contract shall have been assigned by
appropriate proceedings for amending the
assignment absolute on its face to an assignee
insurers articles of incorporation to give effect
other than the insurer, and such assignment
to the acquisition, by said insurer, for the
shall have been filed at the principal office of
benefit of its policyholders or any class or
the insurer at least thirty (30) days prior to the
classes thereof, of the outstanding shares of its
date of any election or meeting referred to in
capital stock and the conversion of the insurer
this chapter, then such assignee shall be
from a stock corporation into a nonstock
deemed at such election or meeting to be the
corporation for the benefit of its members. The
policyholder. For the purpose of this chapter
members of such nonstock corporation shall be
the terms policyholder and policyholders include
the policyholders from time to time of the class
the employer to whom, or a president,
or classes for whose benefit the stock of the
secretary or other executive officer of any
insurer was acquired, and the policyholders of
corporation or association to which a master
such other class or classes as may be specified
group policy has been issued, but exclude the
in such corporations articles of incorporation
holders of certificates or policies issued under
as they may be amended from time to time.
or in connection with a master group policy.
Such plan shall be:
Beneficiaries under unmatured contracts shall
(a) Adopted by a vote of a majority of the not as such be deemed to be policyholders; and
directors;
(e) Filed with the Commissioner after having
(b) Approved by the vote of the holders of at been approved as provided in this section.
least a majority of the outstanding shares at a
Section 270. The Commissioner shall examine
special meeting of shareholders called for that
the plan submitted to him under the
purpose, or by the written consent of such
provisions of subparagraph (c) of Section 269.
shareholders;

22 | K D C S 2 0 1 6
He shall not approve such plan unless in his or certificate of all. The inspectors of election
opinion the rights and interests of the insurer, shall determine the number of policyholders,
its policyholders and shareholders are the voting power of each, the policyholders
protected nor unless he is satisfied that the represented at the meeting or voting by mail,
plan will be fair and equitable in its operation. the existence of a quorum and the authenticity,
Section 271. The election prescribed by validity and effect of proxies. They shall
subparagraph (d) of Section 269 shall be called receive votes, hear and determine all
by the board of directors or the president, and challenges and questions in any way arising in
every policyholder of the class or classes for connection with the right to vote, count and
whose benefit the stock is to be acquired, tabulate all votes, determine the result, and do
whose insurance shall have been in force for at such other acts as are proper to conduct the
least one (1) year prior to such election shall vote with fairness to all policyholders. The
have one vote, regardless of the number of inspectors of election shall, before commencing
policies or amount of insurance he holds, and performance of their duties, subscribe to and
regardless of whether such policies are policies file with the insurer and with the
of life insurance or policies of health and Commissioner an oath that they, and each of
accident insurance or annuity contracts. Notice them, will perform their duties impartially, in
of such election shall be given to policyholders good faith, to the best of their ability and as
entitled to vote by mail from the principal expeditiously as is practicable. On the request
office of such insurer at least thirty (30) days of the insurer, the Commissioner, a
prior to the date set for such election, in a policyholder or his proxy, the inspectors shall
sealed envelope, postage prepaid, addressed to make a report in writing of any challenge or
each such policyholder at his last known question or matter determined by them and
address. execute a certificate of any fact found by them.
They shall also certify the result of such vote to
Voting shall be by one of the following
the insurer and to the Commissioner. Any
methods:
report or certificate made by them shall
(a) At a meeting of such policyholders, held
be prima facie evidence of facts stated therein.
pursuant to such notice, by ballot in person or
All necessary expenses incurred in connection
by proxy.
with such election shall be paid by the insurer.
(b) If not by the method described in the For the purpose of this section, a quorum shall
preceding subparagraph, then by mail consist of five percent (5%) of the
pursuant to a procedure and on forms to be policyholders of such insurer entitled to vote at
prescribed by such plan. such election.
Such election shall be conducted under the Section 272. In carrying out any such plan, the
direction and supervision of three (3) impartial insurer may acquire any shares of its own
and disinterested inspectors appointed by the stock by gift, bequest or purchase. Any shares
insurer and approved by the Commissioner. In so acquired shall, unless as a result of such
case any person appointed as inspector fails to acquisition all of the shares of the insurer shall
appear at such meeting or fails or refuses to act have been acquired, be acquired in trust for the
at such election, the vacancy, if occurring in policyholders of the class or classes for whose
advance of the convening of the meeting or in benefit the plan provides that the stock of the
advance of the opening of the mail vote, may insurer shall be acquired as hereinafter
be filled in the manner prescribed for the provided. Such shares shall be assigned and
appointment of inspectors and, if occurring at transferred on the books of such insurer and
the meeting or during the canvass of the mail approved by the Commissioner. Such trustees
vote, may be filled by the person acting as shall hold such stock in trust until all of the
chairman of said meeting or designated for outstanding shares of capital stock of such
that purpose in such plan. The decision, act or insurer have been acquired, but for not longer
certificate of a majority of the inspectors shall than thirty (30) years with such extensions of
be effective in all respects as the decision, act not more than five (5) years each as may be

23 | K D C S 2 0 1 6
granted by the Commissioner. Such extensions the insurer. The voting trust agreement and
may be granted by the Commissioner if the voting trustees shall be subject to the approval
plan so provides and if in his opinion the plan of the Commissioner. Any or all of the trustees
of acquisition of all of such stock can be under such voting trust agreement may be the
completed within a reasonable period. Such same person or persons as any or all of the
trustees shall vote such stock at all corporate trustees referred to in Section 272. Such voting
meetings at which stockholders have the right trust agreement shall provide that in the event
to vote. When all the outstanding shares of of acquisition by the insurer of any of the
capital stock of such insurer have been shares of stock held thereunder in accordance
acquired, all said shares shall be cancelled, the with the provisions of the plan, such shares so
certificate of amendment of the insurers acquired together with the voting rights
articles of incorporation giving effect thereto thereof shall be transferred by the trustees
shall be filed in accordance with the provisions named under the provisions of this section to
of the Corporation Code, and the insurer shall the trustees named under the provisions of
become a nonstock corporation for the profit of Section 272. Any voting trust agreement
its members and such trust shall thereupon created pursuant to the provisions of this
terminate. Thereafter such corporation shall be section may be made irrevocable for not longer
conducted for the mutual benefit, ratably, of its than thirty (30) years and thereafter until the
policyholders of the class or classes for whose termination of the trust provided for in Section
benefit the stock was acquired and shall have 272. The trust created pursuant to the
power to issue non-assessable policies on a provisions of this section shall terminate in any
reserve basis subject to all provisions of law event upon termination of the trust provided
applicable to incorporated life insurers issuing for in Section 272. Upon the termination of the
non-assessable policies on a reserve basis. trust created pursuant to the provisions of this
Policies so issued may be upon the basis of full section, any shares held in such trust shall
or partial participation therein as agreed revert to the persons entitled thereto by law.
between the insurer and the insured. Section 275. The trustees referred to in Section
Upon the termination of any such voting trust, 272 shall file with such insurer and with the
either in accordance with its terms or as Commissioner a verified acceptance of their
hereinabove provided, such plan of appointments and verified declarations that
mutualization shall terminate, unless they will faithfully discharge their duties as
theretofore completed. Upon such termination, such trustees. All dividends and other sums
unless the plan of mutualization provides for received by said trustees on the shares held by
the disposition of the shares acquired by the them, after paying the necessary expenses of
insurer under such plan or for the disposition executing their trust, shall be immediately
of the proceeds thereof, the shares held by repaid to such insurer for the benefit of all who
such trustees shall be disposed of in are, or may become, policyholders of such
accordance with an order of the court of insurance of the class or classes for whose
competent jurisdiction in the judicial district in benefit the stock of such insurer was acquired
which is located the principal office of such and entitled to participate in the profits thereof
insurer, made upon a verified petition of the and shall be added to and become part of the
Commissioner. assets of such insurer.
Section 273. Any such plan of mutualization Section 276. If, at any time within the period
may provide for the creation of a voting trust provided in the plan for the acquisition of the
under a trust agreement for the holding and outstanding shares of stock of the insurer,
voting by three (3) or more trustees of any ninety percent (90%) thereof has already been
portion or all of the shares of the insurer not acquired and transferred to the trustees under
required upon the adoption of such plan. The the plan, the insurer by a vote of a majority of
voting trustees shall be named in accordance the directors may determine to make an offer,
with such plan or, if no provision is made with the permission of the Commissioner and
therein for the naming of such trustees, then by subject to such requirement as he may specify,

24 | K D C S 2 0 1 6
to acquire by purchase all of the shares not Finance shall issue an order adopting,
theretofore acquired under the plan, at a modifying or rejecting the report, in whole or
specified price which the insurer considers to in part, or he may receive further evidence or
be their fair value as of the date of making may recommit it with instructions. Whenever
such offer. the Secretary of Finance shall determine in any
If the offer to acquire is permitted by the manner, as aforesaid, the fair value of such
Commissioner, the insurer shall make a shares, he may also determine the terms of
written offer by registered mail to each payment thereof by the insurer. The expenses
shareholder whose shares have not theretofore incidental to the proceedings including charges
been acquired under the plan or otherwise, of the appraisers, if any, shall be paid equally
offering to acquire all his shares at such price if by the insurer and the shareholder.
accepted in writing within thirty (30) days The findings of the Secretary of Finance on all
after the mailing of such offer. Any questions of fact raised at the hearing of the
shareholder accepting such offer within the application for determination of the fair value
time therefor shall, within sixty (60) days after of such shares shall be conclusive upon all
his acceptance, transfer to the insurer the parties to the proceedings. The order of the
certificates representing such shares and, upon Secretary of Finance determining the fair value
doing so, shall be paid by the insurer the of the shares and the terms of payment thereof
amount of such offer for his shares. Any share shall have the force and effect of a judgment
so acquired shall be assigned and transferred which shall be appealable on any question of
to the trustees under the plan and held by law. Such order shall become final and
them as shares acquired pursuant to the plan. executory fifteen (15) days after receipt thereof
Each shareholder who does not accept such by the parties to the proceedings.
offer to acquire his shares within the time Upon any such order becoming final and from
stated in such offer for acceptance thereof shall which no appeal is pending, or when the time
within fifteen (15) days after the expiration of to appeal therefrom has expired, each
such offer apply to the Secretary of Finance for shareholder party to the proceedings shall
a determination of the fair value of his shares transfer his shares to the insurer and surrender
as of the date of making such offer. The to the said insurer the certificates representing
Secretary of Finance may himself, after due such shares and the insurer shall make
notice and hearing, determine upon the payment therefor as provided in such order.
evidence received the fair value of the shares Any shares so acquired by the insurer shall be
as of the date of making such offer, or appoint assigned and transferred to the trustees and
three (3) impartial and disinterested persons to held by them as shares acquired pursuant to
appraise the fair value of such shares with the plan.
such direction as he shall deem proper and Any shareholder who does not apply to the
necessary to expedite the proceedings. Upon Secretary of Finance in the manner and within
completion of the appraisal proceedings, the the time hereinbefore prescribed shall be
appraisers shall file with the Secretary of deemed to have accepted the offer referred to
Finance their report in writing stating the fair above, effective, however, upon the expiration
value of such shares as of the date of the of the time hereinabove prescribed for making
making of such offer and setting forth their such application, and such shareholders time
findings in support of such statement. The for accepting such offer shall, for that purpose
appraisers shall furnish each party to the only, be deemed to have been extended
proceedings a copy of their appraisal report, accordingly.
and within ten (10) days after receipt thereof,
Any offer to acquire shares made pursuant to
any such party may signify his objection, if
this section shall, except as otherwise provided
any, to the report or move for the approval
herein, be irrevocable until all proceedings
thereof. Upon the expiration of the period of
upon such offer have been completed or all
ten (10) days referred to above, the report shall
be set for hearing, after which the Secretary of

25 | K D C S 2 0 1 6
shares have otherwise been earlier acquired by by mail or other means of written
the insurer. communication addressed to the place where
Any shareholder who has expressly or the principal office of the insurer is situated, or
impliedly accepted the plan or the offer to if published at least once in some newspaper of
acquire his shares not theretofore acquired general circulation in the place in which said
under the plan, and any shareholder who has office is located.
rejected such plan or such offer and has Notice of any meeting of members shall be sent
applied, as aforesaid, to the Secretary of to each member entitled thereto not less than
Finance for a determination of the fair value of seven (7) days before such meeting, unless the
his shares subsequent to which an agreement bylaws provide otherwise.
has been reached or a final order issued fixing Notice of any meeting of members shall
such fair value but who fails to surrender his specify the place, the day and the hour of the
certificates for cancellation upon payment of meeting and the general nature of the business
the amount to which he is entitled, may be to be transacted.
compelled to do so by an order of the Secretary
Notice of an annual meeting to be held at the
of Finance for that purpose and such order
time and place specified in subparagraph (a) of
may provide that upon failure of such
this section shall be sufficiently given if
shareholder to surrender such certificates for
published at least once in each of four (4)
cancellation, such order shall stand in lieu of
successive weeks in a newspaper of general
such surrender and cancellation.
circulation in the place in which the principal
Section 278. (a) An annual meeting of members office of such insurer is located, and if so
shall be held at ten oclock in the morning of published no other notice of such meeting shall
the fourth Tuesday of March of each year at be required.
the principal office of the insurer, unless a
(d) The presence in person or by proxy of five
different time or place is provided in the
percent (5%) of the members entitled to vote at
bylaws.
any meeting shall constitute a quorum for the
(b) Special meetings of the members, for any transaction of business, including the
purpose or purposes whatsoever, may be amendment of the articles of incorporation
called at any time by the president, or by the and/or the bylaws unless otherwise provided
board of directors, or by one or more members by the bylaws.
holding not less than one-fifth (1/5) of the
(e) Each such member shall have one (1) vote
voting power of such insurer, or by such other
at any meeting of members regardless of the
officers or persons as the bylaws authorize.
number of policies or the amount of insurance
(c) Notice of all meetings of members whether that such member holds and regardless of
annual or special shall be given in writing to whether such policies are policies of life
the members entitled to vote by the secretary, insurance, or of health and accident insurance,
or an assistant secretary, or other person or both. Any member entitled to vote shall
charged with that duty, or if there be no such have the right to do so either in person or by
officer, or in case of his neglect or refusal, by an agent or agents authorized by a written
any director or member. At the option of the proxy executed by such person or his duly
insurer such notice may be imprinted on authorized agent and filed with the secretary
premium notices or receipts or on both. of such insurer.
A notice may be given by such insurer to any (f) The directors of the insurer in office at the
member either personally, or by mail, or other time the insurer is mutualized as provided in
means of written communication, charges this chapter shall continue in office until the
prepaid, addressed to such member at his first annual meeting of members. At the first
address appearing on the books of the insurer, annual meeting of members and at each
or given by him to the insurer for the purpose annual meeting thereafter, directors shall be
of notice. If a member gives no address, notice elected by the members for the term or terms
shall be deemed to have been given him if sent authorized by this chapter.

26 | K D C S 2 0 1 6
(g) The articles of incorporation or the bylaws part thereof in accordance with the provisions
may provide that the directors may be divided of this chapter.
into two (2) or more classes whose terms of Section 280. A domestic mutual life insurance
office shall expire at different times, but no company doing business in the Philippines
terms shall continue longer than six (6) years. may convert itself into an incorporated stock
In the absence of such provisions, each life insurance company by demutualization. To
director, except members of the board of that end, it may provide and carry out a plan
directors at the time the insurer is mutualized, for the conversion by complying with the
shall be elected for a term of one (1) year. All requirements of this title.
directors shall hold office for a term for which
The conversion of a domestic mutual life
they are elected and until their successors are
insurance company to an incorporated stock
elected and qualified. A director may, but need
life insurance company shall be carried out
not be a member or policyholder of the insurer
pursuant to a conversion plan duly approved
of which he is acting as director. Vacancies in
by the Commissioner.
the board of directors may be filled by a
The Commissioner shall promulgate such rules
majority of the remaining directors, though
and regulations as he or she may deem
less than a quorum, and each director so
necessary to carry out the provisions of this
elected shall hold office until the next annual
title, after due consultation with
meeting.
representatives of the insurance industry.
(h) All insurers mutualized under the
All converted insurers under the provisions of
provisions of this chapter shall be subject to all
this title shall be subject to all other applicable
other applicable provisions of this Code. The
provisions of this Code. The provisions of the
provisions of the Corporation Code shall apply
Corporation Code shall apply in a suppletory
in a suppletory manner.
manner.
Section 279. The provisions of Commonwealth
Section 282. The Commissioner shall publish
Act No. 83, otherwise known as the Securities
the application for withdrawal once a week for
Act, as amended, shall not apply to any of the
three (3) consecutive weeks in a newspaper of
following:
general circulation in the Philippines. The
(a) Shares of the capital stock of such insurer
expenses of such publication shall be paid by
acquired as provided in Section 272 and
the insurance company filing such application.
assigned and transferred to the trustees as is
Section 284. The Commissioner shall cause an
provided in said section, and the assignment
examination of the books and records of the
and transfer of said shares as so provided;
withdrawing company, and if, upon such
(b) Any certificate or other instrument issued
examination, the Commissioner finds that the
to a policyholder of such mutualized insurer
insurer has no outstanding liabilities to
conferring or evidencing membership in such
policyholders and creditors in the Philippines,
mutualized insurer or conferring or evidencing
and no policies uncancelled; or its primary
such members right to participate in the
liabilities have been reinsured or assumed by
profits or share in the assets of such
another insurance company authorized to
mutualized insurer by virtue of his
transact business in the Philippines, as
membership therein, and the issuance of such
required in the preceding section, it shall
certificate or other instrument;
cancel the withdrawing companys certificate
(c) The plan for the acquisition of the of authority, if unexpired, and shall permit the
outstanding shares of the capital stock of such insurer to withdraw. The cost and expenses of
insurer authorized by the provisions of this all such examination shall be paid as
chapter, the submission of said plan to the prescribed in Section 440.
Commissioner and to the policyholders of such
Section 285. Upon the failure of such
insurer as provided in this chapter, and the
withdrawing insurance company or its agents
approval and carrying out of said plan or any
in the Philippines to pay the expenses of such
publication within thirty (30) days after the

27 | K D C S 2 0 1 6
presentation of the bill therefor, the Every such partnership, association, or
Commissioner shall collect such fee from the corporation receiving such certificate of
deposit furnished in accordance with the authority shall be subject to the provisions of
provisions of Section 197. this Code and other related laws, and to the
Section 287. No company shall act as a jurisdiction and supervision of the
servicing insurance company until after it shall Commissioner.
have obtained a special certificate of authority Section 289. Any partnership, association, or
to act as such from the Commissioner upon corporation authorized to transact solely
application therefor and payment by the reinsurance business must have a
company of the fees hereinafter prescribed. capitalization of at least Three billion pesos
Such certificate shall expire on the last day of (P3,000,000,000.00) paid in cash of which at
December of the third year and shall be least fifty percent (50%) is paid-up and the
renewed, while the company continues to remaining portion thereof is contributed
service its policyholders, and to comply with surplus, which in no case shall be less than
all the applicable provisions of law and Four hundred million pesos (P400,000,000.00)
regulations. or such capitalization as may be determined by
TITLE 19 the Secretary of Finance, upon the
PROFESSIONAL REINSURERS recommendation of the
Commissioner: Provided, That twenty-five
Section 288. Except as otherwise provided in
percent (25%) of the paid-up capital must be
this Code, no partnership, association or
invested in securities satisfactory to the
corporation shall transact any business in the
Commissioner consisting of bonds or other
Philippines as a professional reinsurer until it
instruments of debt of the Government of the
shall have obtained a certificate of authority for
Philippines or its political subdivisions or
that purpose from the Commissioner upon
instrumentalities, or of government-owned or -
application therefor and payment by such
controlled corporations and entities, including
entity of the fees hereinafter prescribed. As
the Bangko Sentral ng Pilipinas, and deposited
used in this Code, the term professional
with the Commissioner, and the remaining
reinsurer shall mean any entity that transacts
seventy-five percent (75%) in such other
solely and exclusively reinsurance business in
securities as may be allowed and permitted by
the Philippines.
the Commissioner, which securities shall at all
The Commissioner may refuse to issue a
times be maintained free from any lien or
certificate of authority to any such entity when
encumbrance: Provided, further, That the
such refusal will best promote public interest.
aforesaid capital requirement is without
No such certificate of authority shall be
prejudice to other requirements to be imposed
granted to any such entity unless and until the
under any risk-based capital method that may
Commissioner is satisfied by such examination
be adopted by the Commissioner: Provided,
and such evidence as may be required that
finally,That the provisions of this chapter
such entity is qualified by the laws of the
applicable to insurance companies shall as far
Philippines to transact business therein as a
as practicable be likewise applicable to
professional reinsurer.
professional reinsurers.
Before issuing such certificate of authority, the
TITLE 20
Commissioner must be satisfied that the name
HOLDING COMPANIES
of the applicant is not that of any other known
Section 290. As used in this title, the following
company transacting insurance or reinsurance
terms shall have the respective meanings
business in the Philippines, or a name so
hereinafter set forth unless the context shall
similar as to be calculated to mislead the
otherwise require:
public.
(a) Person means an individual, partnership,
Such certificate of authority shall expire on the
firm, association, corporation, trust, any
last day of December the third year following
its issuance unless it is renewed.

28 | K D C S 2 0 1 6
similar entity or any combination of the relieve the applicant from any obligation or
foregoing acting in concert. liability imposed by this title with respect to
(b) Control, including the terms controlling, the subject of the application, except as
controlled by and under common control contained in Section 302, until the
with, means the possession directly or Commissioner has acted upon the application.
indirectly of the power to direct or cause the Within thirty (30) days or such further period
direction of the management and policies of a as he may prescribe, the Commissioner may
person, whether through the ownership of prospectively revoke or modify his
voting securities by a contract other than a determination, after notice and opportunity to
commercial contract for goods or non- be heard, whenever in his judgment,
management services or otherwise. Subject to revocation or modification is consistent with
Section 292, control shall be presumed to exist this title.
if any person directly or indirectly owns, Section 301. The Commissioner, in reviewing
controls or holds with the power to vote forty transactions pursuant to Sections 299 and 300,
percent (40%) or more of the voting securities shall consider whether the transactions comply
of any other person: Provided, That no person with the standard set forth in Section 298 and
shall be deemed to control another person whether they may adversely affect the interests
solely by reason of his being an officer or of policyholders. This section shall not apply to
director of such other person. transactions subject to other sections of this
(c) Holding company means any person who Code which impose notice or approval
directly or indirectly controls any authorized requirements greater than those prescribed by
insurer. this title.
(d) Controlled insurer means an authorized Section 302. (a) No person, other than an
insurer controlled directly or indirectly by a authorized insurer, shall acquire control of any
holding company. domestic insurer, whether by purchase of its
securities or otherwise, except:
(e) Controlled person means any person, other
than a controlled insurer, who is controlled (1) After twenty (20) days written notice to its
directly or indirectly by a holding company. insurer or such shorter period as the
Commissioner may permit, of its intention to
(f) Holding company system means a holding
acquire control; and
company together with its controlled insurers
and controlled persons. (2) With the prior written approval of the
Commissioner.
Section 291. Notwithstanding paragraph (b) of
Section 290, the Commissioner may determine (b) The Commissioner shall disapprove the
after notice and opportunity to be heard, that a acquisition of control of a domestic insurer if
person exercises directly or indirectly either he determines, after notice and an opportunity
alone or pursuant to an agreement with one or to be heard, that such action is reasonably
more other persons such a controlling necessary to protect the interest of the people
influence over the management or policies of of this country. The following shall be the only
an authorized insurer as to make it necessary factors to be considered by him in reaching the
or appropriate in the public interest or for the foregoing determination:
protection of policyholders or stockholders of (1) The financial condition of the acquiring
the insurer that the person be deemed to person and the insurer;
control the insurer. (2) The trustworthiness of the acquiring person
Section 292. The Commissioner may determine or any of its officers or directors;
upon application that any person, either alone (3) A plan for the proper and effective conduct
or pursuant to agreement with one or more of the insurers operations;
other persons, does not or will not upon the
(4) The source of the funds or assets for the
taking of some proposed action control
acquisition;
another person. The filing of an application
hereunder in good faith by any person shall

29 | K D C S 2 0 1 6
(5) The fairness of any exchange of stock, Section 303. (a) Notwithstanding the control of
assets, cash or other consideration for the stock an authorized insurer by any person, the
or assets to be received; officers and directors of the insurer shall not
(6) Whether the effect of the acquisition may be thereby be relieved of any obligation or
substantially to lessen competition in any line liability to which they would otherwise be
of commerce in insurance or to tend to create a subject by law, and the insurer shall be
monopoly therein; and managed so as to assure its separate operating
identity consistent with this title.
(7) Whether the acquisition is likely to be
hazardous or prejudicial to the insurers (b) Nothing herein shall preclude an
policyholders or stockholders. authorized insurer from having or sharing a
common management or cooperative or joint
(c) The following conditions affecting any
use of personnel, property or services with one
controlled insurer, regardless of when such
or more other persons under arrangements
control has been acquired, are violations of this
meeting the standards of Section 298.
title:
Section 306. In addition to any other penalty
(1) The controlling person or any of its officers
provided by law, the Commissioner may, upon
or directors have demonstrated
the willful failure of any person within a
untrustworthiness; and
holding company system to comply with this
(2) The effect of retention of control may be
title or any regulation or order promulgated
substantially to lessen competition in any line
hereunder:
of commerce in insurance in this country or to
(a) Proceed under Title 14 or Title 15, Chapter
tend to create a monopoly therein. If, after
III of this Code with respect to insurer within
notice and an opportunity to be heard, the
the holding company system; or
Commissioner determines that any of the
foregoing violations exists, he shall reduce his (b) Revoke or refuse to renew the authority to
findings to writing and shall issue an order do business in this country of an insurer within
based thereon and cause the same to be served the holding company system or refuse to issue
upon the insurer and upon all persons affected such authority to any other insurer in the
thereby directing any person found to be in system; or
violation thereof to take appropriate action to (c) Direct that, in addition to any other penalty
cure such violation. Upon the failure of any provided by law, such person forfeit to the
such person to comply with such order, people of this country a sum not less than Five
Section 306 shall become applicable. thousand pesos (P5,000.00) for a first violation
(d) The Commissioner may require the and Twenty-five thousand pesos (P25,000.00)
submission of such information as he deems for any subsequent violation. An additional
necessary to determine whether any sum not less than Twenty-five thousand pesos
acquisition or retention of control complies (P25,000.00) shall be imposed for each month
with this title and may require, as a condition during which any such violation shall
of approval of such acquisition or retention of continue.
control, that all or any portion of such TITLE 1
information be disclosed to the insurers INSURANCE AGENTS AND INSURANCE
stockholders. BROKERS
(e) Unless subject to registration under Section Section 307. No insurance company doing
294 or unless acquisition of its control is subject business in the Philippines, nor any agent
to paragraphs (a) and (b) hereof, every thereof, shall pay any commission or other
authorized insurer shall notify the compensation to any person for services in
Commissioner in writing of the identity of any obtaining insurance, unless such person shall
person whom the insurer then knows or has have first procured from the Commissioner a
reason to believe controls or has taken any license to act as an insurance agent of such
action, other than preliminary negotiations or company or as an insurance broker as
discussion, to acquire control of the insurer. hereinafter provided.

30 | K D C S 2 0 1 6
No person shall act as an insurance agent or as includes an agency leader, agency manager, or
an insurance broker in the solicitation or their equivalent.
procurement of applications for insurance, or Since the insurance industry is imbued with
receive for services in obtaining insurance, any public interest, the insurance companies upon
commission or other compensation from any approval of the Commissioner may exercise
insurance company doing business in the wide latitude in supervising the activities of
Philippines, or any agent thereof, without first their insurance agents to ensure the protection
procuring a license so to act from the of the insuring public.
Commissioner, which must be renewed every
Section 311. Every applicant for an insurance
three (3) years thereafter. Such license shall be
brokers license shall file with the application
issued by the Commissioner only upon the
and shall thereafter maintain in force while so
written application of the person desiring it,
licensed, a bond in favor of the people of the
such application if for a license to act as
Republic of the Philippines executed by a
insurance agent, being approved or endorsed
company authorized to become surety upon
by the company such person desires to
official recognizances, stipulations, bonds and
represent, and shall be upon a form prescribed
undertakings. The bond shall be in such
by the Commissioner giving such information
amount as may be fixed by the Commissioner,
as he may require, and upon payment of the
but in no case less than Five hundred thousand
corresponding fee hereinafter prescribed. The
pesos (P500,000.00), and shall be conditioned
Commissioner shall satisfy himself as to the
upon full accounting and due payment to the
competence and trustworthiness of the
person entitled thereto of funds coming into
applicant and shall have the right to refuse to
the brokers possession through insurance
issue or renew and to suspend or revoke any
transactions under license. The bond shall
such license in his discretion. The license shall
remain in force until released by the
expire after the thirty-first day of December of
Commissioner, or until cancelled by the surety.
the third year following the date of issuance
Without prejudice to any liability previously
unless it is renewed.
incurred thereunder, the surety may cancel the
Licenses may be renewed in the case of the bond on thirty (30) days advance written
company represented by such agents, and in notice to both the broker and the
the case of insurance brokers, upon the Commissioner.
application of the said brokers, themselves.
Upon approval of the application, the
Section 308. The provisions of Sections 307 and applicant must also file two (2) errors and
309 shall apply to an employee who shall be omissions (professional liability or professional
engaged to sell insurance products by an indemnity) policies issued separately by two
insurance company. (2) insurance companies authorized to do
Section 309. Any person who for compensation business in the Philippines, satisfactory to the
solicits or obtains insurance on behalf of any Commissioner to indemnify the applicant
insurance company or transmits for a person against any claim or claims for breach of duty
other than himself an application for a policy as insurance broker which may be made
or contract of insurance to or from such against him by reason of any negligent act,
company or offers or assumes to act in the error or omission, whenever or wherever
negotiating of such insurance shall be an committed or alleged to have been committed,
insurance agent within the intent of this on the part of the applicant or any person who
section and shall thereby become liable to all has been, is now, or may hereafter during the
the duties, requirements, liabilities and subsistence of the policies be employed by the
penalties to which an insurance agent is said applicant in his capacity as insurance
subject. broker: Provided, That the filing of any claim or
An insurance agent is an independent claims under one of such policies shall
contractor and not an employee of the preclude the filing of the said claim or claims
company represented. Insurance agent under the other policy. The said policies shall

31 | K D C S 2 0 1 6
be in such amounts as may be prescribed by issue or to deliver or accept policies or
the Commissioner, depending upon the size or contracts of insurance of or for, any insurance
amount of the broking business of the company or companies not authorized to
applicant, but in no case shall the amount of transact business in the Philippines, covering
each of such policies be less than Five hundred risks, life or non-life, situated in the
thousand pesos (P500,000.00). Philippines; and any such person, partnership,
Section 312. The Commissioner shall, in order association or corporation violating the
to determine the competence of every provisions of this section shall be deemed
applicant to have the kind of license applied guilty of a penal offense, and upon conviction
for, require such applicant to submit to a thereof, shall for each such offense be punished
written examination and to pass the same to by a fine of Two hundred fifty thousand pesos
the satisfaction of the Commissioner. The (P250,000.00), or imprisonment of six (6)
Commissioner may delegate or authorize the months, or both, at the discretion of the court:
administration of the examination to an Provided, That the provisions of this section
independent organization, subject to such shall not apply to reinsurance.
conditions that the Commissioner may Section 320. Upon application and payment of
provide. the corresponding fee hereinafter prescribed,
Section 315. The premium, or any portion and the filing of two (2) errors and omissions
thereof, which an insurance agent or insurance (professional liability or professional
broker collects from an insured and which is to indemnity) policies hereinafter described, a
be paid to an insurance company because of person may, if found qualified, be issued a
the assumption of liability through the license to act as reinsurance broker by the
issuance of policies or contracts of insurance, Commissioner. No such license shall be valid
shall be held by the agent or broker in a after December 31 of the third year following
fiduciary capacity and shall not be its issuance unless it is renewed.
misappropriated or converted to his own use The errors and omissions (professional liability
or illegally withheld by the agent or broker. or professional indemnity) policies mentioned
Any insurance company which delivers to an above shall indemnify the applicant against
insurance agent or insurance broker a policy or any claim or claims for breach of duty as
contract of insurance shall be deemed to have reinsurance broker which may be made
authorized such agent or broker to receive on against him by reason of any negligent act,
its behalf payment of any premium which is error or omission, whenever or wherever
due on such policy or contract of insurance at committed or alleged to have been committed,
the time of its issuance or delivery or which on the part of the applicant or any person who
becomes due thereon. has been, is now, or may hereafter during the
subsistence of the policies be employed by the
In order to ensure faithful performance by the
said applicant in his capacity as reinsurance
insurance agent or insurance broker of these
broker: Provided, That the filing of any claim or
fiduciary responsibilities, the Insurance
claims under one of such policies shall
Commissioner shall prescribe the minimum
preclude the filing of the said claim or claims
terms and conditions on such matters in the
under the other policy. The said policies shall
standard agency or brokers agreement
be issued separately by two (2) insurance
between the agents and/or the broker with the
companies authorized to do business in the
insurance companies.
Philippines and shall be in such amounts as
Section 318. Except as otherwise provided by
may be prescribed by the Insurance
law or treaty, it shall be unlawful for any
Commissioner, depending upon the size or
person, partnership, association or corporation
amount of the broking business of the
in the Philippines, for himself or itself, or for
applicant, but in no case shall the amount of
some other person, partnership, association or
each of such policies be less than Five hundred
corporation, either to procure, receive or
thousand pesos (P500,000.00).
forward applications of insurance in, or to

32 | K D C S 2 0 1 6
Section 324. The application for a certificate of accordance with the rules and regulations that
registration as resident agent filed with the the Commissioner will formulate.
Commissioner must be accompanied with a Section 345. Any person may be officially
copy of the power of attorney, duly notarized accredited by the Commissioner to act as an
and authenticated by the Philippine Consul in actuary in any life insurance company or in
the place where such foreign insurer or broker any mutual benefit association authorized to
is domiciled, empowering the applicant to act do business in the Philippines upon
as resident agent and to receive notices, application therefor and the payment of the
summons and legal processes for and in behalf corresponding fee hereinafter
of such foreign insurer or broker in connection prescribed: Provided, That:
with any action or legal proceeding against
(a) He is a fellow of good standing of the
such foreign insurer or broker.
Actuarial Society of the Philippines at the time
Section 326. A certificate of registration issued of his appointment and remains in such good
to a resident agent shall expire on the thirty- standing during the tenure of his engagement;
first day of December of the third year or
following its issuance unless it is renewed.
(b) In the case of one who is not a fellow of the
The Commissioner may, after due notice and Actuarial Society of the Philippines, he meets
hearing, recall or cancel the certificate of all the requirements of the said Society for
registration issued to a resident agent for accreditation as a fellow of the Society, and has
violation of any existing law, rule or been given permission by the pertinent
regulation, or any provision of this Code. government authorities in the Philippines to
Section 331. No certificate of registration issued render services in the Philippines, in the event
to an underwriter shall be valid after that he is not a citizen of the Philippines.
December 31 of the third year following its The registration of the actuary shall be
issuance unless it is renewed. suspended or revoked by the Commissioner
The Commissioner may, after due notice and on the following grounds:
hearing, also suspend or cancel such certificate (1) Failure to adequately perform required
for violation of existing laws, rules and functions and duties under this Code;
regulations or of any provisions of this Code.
(2) Failure to disclose conflict of interest;
Section 337. No adjusters license issued
(3) Failure to comply with the Code of Conduct
hereunder shall be valid after December 31 of
of the Actuarial Society of the Philippines; or
the third year following the issuance of such
(4) Such other grounds that may be
license unless it is renewed.
determined by the Commissioner.
TITLE 6
No actuary engaged by a life insurance
ACTUARIES
company shall be at the same time a
Section 344. No life insurance company shall
stockholder or a director of the board, chief
be licensed to do business in the Philippines
executive officer or chief financial officer of the
nor shall any life insurance company doing
company or hold any position that the
business in the Philippines be allowed to
Commissioner may determine to have an
continue doing such business unless they shall
inherent conflict of interest to the position of
engage the services of an actuary duly
an actuary.
accredited with the Commissioner who shall,
No certificate of registration issued under this
during his tenure of office, be directly
title shall be valid after December 31 of the
responsible for the direction and supervision
third year following its issuance unless it is
of all actuarial work connected with or that
renewed.
may be involved in the business of the
insurance company. The Commissioner may Section 346. The following documents, which
also require non-life insurance companies to are from time to time submitted to the
engage the services of an accredited actuary, in Commissioner by a life insurance company
authorized to do business in the Philippines,

33 | K D C S 2 0 1 6
shall be duly certified by an accredited actuary No external auditor shall be engaged by
employed by such company: supervised persons or entities unless it has
(a) Policy reserves, claims or loss reserves and been issued an accreditation certificate by the
net due and deferred premiums. Commissioner. The accreditation certificate
shall be valid until December 31 of the third
(b) Statements of bases and net premiums,
year from issuance unless it is revoked or
loading for gross premiums, and on non-
suspended. The Commissioner shall issue rules
forfeiture values and reserves, when applying
and regulations to govern the accreditation of
for approval of gross premiums, reserves and
the external auditor and the revocation or
non-forfeiture values.
suspension of the accreditation.
(c) Policies of insurance under any plan
Section 350. No rating organization hereafter
submitted to the Commissioner as required by
formed shall commence rate-making
law.
operations until it shall have obtained a license
(d) Annual statements and valuation reports
from the Commissioner. Before obtaining such
submitted to the Commissioner as required by
license, such rating organization shall file with
law.
the Commissioner a notice of its intention to
(e) Financial projection showing the probable commence rate-making operations, a copy of
income and outgo and reserve requirements, its constitution, articles of agreement or
enumerating the actuarial assumptions and association, or of incorporation, and its bylaws,
bases of projections. a list of insurance companies that have agreed
(f) Valuation of annuity funds or retirement to become members or subscribers, and such
plans. other information concerning such rating
The Commissioner may also require non-life organization and its operations as may be
insurance companies to submit, from time to required by the Commissioner. If the
time, similar documents which shall be duly Commissioner finds that the organization has
certified by an accredited actuary employed by complied with the provisions of law and that it
such company. has a sufficient number of members or
Any life insurance company authorized to do subscribers and is otherwise qualified to
business in the Philippines may employ any function as a rating organization, the
person who is not officially accredited under Commissioner may issue a license to such
either of the qualifications for any kind of rating organization authorizing it to make
actuarial work: Provided, That he shall not, at rates for the kinds of insurance or subdivisions
any time, have the authority to certify to the thereof as may be specified in such license. No
correctness of the foregoing documents. license issued to a rating organization shall be
valid after December 31 of the third year
Section 347. No accredited actuary shall serve
following its issuance unless it is renewed. No
more than one client or employer at the same
rating organization which now exists and is
time. However, one already in the employ of
not licensed pursuant to this section shall
an insurance company may be allowed by the
continue rate-making operations until it shall
Commissioner to serve a mutual benefit
have obtained from the Commissioner a
association or any other insurance company,
license which he may issue if satisfied that
provided the following conditions are first
such organization is complying with the
complied with:
provisions of this title. Every rating
(a) That the request to engage his services by organization shall notify the Commissioner
the other employer is in writing; promptly of every change in:
(b) That his present employer acquiesced to it (a) Its constitution, its articles of agreement or
in writing; and association or its certificate of incorporation,
(c) That he furnishes the Commissioner with and its bylaws, rules and regulations
copies of said request and acquiescence. governing the conduct of its business; and
(b) Its list of members and subscribers.

34 | K D C S 2 0 1 6
A member means an insurer who participates in forms to be prescribed by the Commissioner
or is entitled to participate in the management and payment of the fees therefor.
of a rating organization. Section 374. The Commissioner, in consultation
A subscriber means an insurer which is with the duly accredited associations
furnished at its request with rates and rating representing the insurance industry, shall
manuals by a rating organization of which it is adopt and promulgate a code of conduct to
not a member. promote integrity, honesty and ethical
Section 360. Every insurance company doing business practices among insurance agents,
business in the Philippines shall annually file distributors and other intermediaries.
with the rating organization of which it is a TITLE 9
member or subscriber, or with such other BANCASSURANCE
agency as the Commissioner may designate, a Section 375. The term bancassurance shall mean
statistical report showing a classification the presentation and sale to bank customers by
schedule of its premiums and losses on all an insurance company of its insurance
kinds or types of insurance business to which products within the premises of the head office
Section 358 is applicable, and such other of such bank duly licensed by the Bangko
information as the Commissioner may deem Sentral ng Pilipinas or any of its branches
necessary or expedient for the administration under such rules and regulations which the
of the provisions of this title. Commissioner and the Bangko Sentral ng
Section 372. If the Commissioner, after notice Pilipinas may promulgate. To engage in
and hearing, finds that any insurance bancassurance arrangement, a bank is not
company, rating organization, agent, broker or required to have equity ownership of the
other person has violated any of the provisions insurance company. No insurance company
of this title, it shall order the payment of a fine shall enter into a bancassurance arrangement
not to exceed Twenty-five thousand pesos unless it possesses all the requirements as may
(P25,000.00) for each such offense, and shall be prescribed by the Commissioner and the
immediately suspend or revoke the license Bangko Sentral ng Pilipinas.
issued to such insurance company, rating No insurance product under this section,
organization, agent, or broker. The issuance, whether life or non-life, shall be issued or
procurement or negotiation of a single policy delivered unless in the form previously
or contract of insurance shall be deemed a approved by the Commissioner.
separate offense.
Section 376. Personnel tasked to present and
TITLE 8 sell insurance products within the bank
PROVISION COMMON TO AGENTS, premises shall be duly licensed by the
BROKERS AND ADJUSTERS Commissioner and shall be subject to the rules
Section 373. A license issued to a partnership, and regulations of this Act.
association or corporation to act as an Section 377. The Commissioner and the
insurance agent, general agent, insurance Bangko Sentral ng Pilipinas shall promulgate
broker, reinsurance broker, or adjuster shall rules and regulations to effectively supervise
authorize only the individual named in the the business of bancassurance.
license who shall qualify therefor as though an
CHAPTER V
individual licensee. The Commissioner shall
SECURITY FUND
charge, and the licensee shall pay, a full
Section 378. There is hereby created a fund to
additional license fee as to each respective
be known as the Security Fund which shall be
individual so named in such license in excess
used in the payment of allowed claims against
of one.
an insurance company authorized to transact
Licenses and certificates of registration issued
business in the Philippines remaining unpaid
under the provisions of this chapter may be
by reason of the insolvency of such company.
renewed by the filing of notices of intention on
The said Fund may also be used to reinsure the

35 | K D C S 2 0 1 6
policy of the insolvent insurer in any solvent contributions of the companies shall remain as
insurer authorized to do business in the admitted assets in their books and any
Philippines as provided in Section 256. The disbursement therefrom shall be deducted
Fund may likewise be used to pay insured proportionately from the contributions of each
claims which otherwise would not be company which will be allowed as deductions
compensable under the provisions of the for income tax purposes. Any earnings of the
policy. No payment from the Security Fund Fund shall be turned over to the contributing
shall, however, be made to any person who companies in proportion to their contributions.
owns or controls ten percent (10%) or more of In the case of disbursements of funds from the
the voting shares of stock of the insolvent Fund as provided in the foregoing paragraph,
insurer and no payment on any one claim shall the life and non-life companies, as the case
exceed Twenty thousand pesos (P20,000.00). may be, shall replenish the amount disbursed
Section 379. Such Fund shall consist of all in direct proportion to the individual
payments made to the Fund by insurance companys net worth and the aggregate net
companies authorized to do business in the worth of the life or non-life companies, as the
Philippines. Payments made by life insurance case may be. However, in no case shall the
companies shall be treated separately from Fund exceed the aggregate amount of Ten
those made by non-life insurance companies million pesos (P10,000,000.00), or Five million
and the corresponding fund shall be called Life pesos (P5,000,000.00) for each Account.
Account and Non-Life Account, respectively, Should the Fund, Life or Non-Life Account, as
and shall be held and administered as such by the case may be, be inadequate for a
the Commissioner in accordance with the disbursement as provided for, then the Life or
provisions of this title. The Life Account shall Non-Life companies, as the case may be, shall
be utilized exclusively for disbursements that contribute to the Fund their respective shares
refer to life insurance companies, while the in the proportion previously mentioned.
Non-Life Account shall be utilized exclusively
CHAPTER VI
for disbursements that refer to non-life
COMPULSORY MOTOR VEHICLE
insurance companies.
LIABILITY INSURANCE
Section 380. All insurance companies doing
Section 386. For purposes of this chapter:
business in the Philippines shall contribute to
(a) Motor Vehicle is any vehicle as defined in
the Security Fund, Life or Non-Life Account, as
Section 3, paragraph (a) of Republic Act No.
the case may be, the aggregate amount of Five
4136, otherwise known as the Land
million pesos (P5,000,000.00) for each Account.
Transportation and Traffic Code.
The contributions of the life insurance
companies and of the non-life insurance (b) Passenger is any fare paying person being
companies shall be in direct proportion to the transported and conveyed in and by a motor
ratio between a particular life insurance vehicle for transportation of passengers for
company or a particular non-life insurance compensation, including persons expressly
companys net worth and the aggregate net authorized by law or by the vehicles operator
worth of all life insurance companies or all or his agents to ride without fare.
non-life insurance companies, as the case may (c) Third party is any person other than a
be, as shown in their latest financial statements passenger as defined in this section and shall
approved by the Commissioner. This also exclude a member of the household, or a
proportion applied to the Five million pesos member of the family within the second degree
(P5,000,000.00) shall be the contribution of a of consanguinity or affinity, of a motor vehicle
particular company to the corresponding owner or land transportation operator, as
Account of the Security Fund. likewise defined herein, or his employee in
The amount of Five million pesos respect of death, bodily injury, or damage to
(P5,000,000.00) in each Account shall be in the property arising out of and in the course of
form of a revolving trust fund. The respective employment.

36 | K D C S 2 0 1 6
(d) Owner or motor vehicle owner means the surety bond shall cover liability for death or
actual legal owner of a motor vehicle, in whose bodily injuries of third-parties and/or
name such vehicle is duly registered with the passengers arising out of the use of such
Land Transportation Office; vehicle in the amount not less than Twelve
(e) Land transportation operator means the thousand pesos (P12,000.00) per passenger or
owner or owners of motor vehicles for third-party and an amount, for each of such
transportation of passengers for compensation, categories, in any one accident of not less than
including school buses. that set forth in the following scale:
(f) Insurance policy or Policy refers to a contract (1) Motor vehicles with an authorized capacity
of insurance against passenger and third-party of twenty-six (26) or more passengers: Fifty
liability for death or bodily injuries and thousand pesos (P50,000.00);
damage to property arising from motor vehicle (2) Motor vehicles with an authorized capacity
accidents. of from twelve (12) to twenty-five (25)
Section 387. It shall be unlawful for any land passengers: Forty thousand pesos (P40,000.00);
transportation operator or owner of a motor (3) Motor vehicles with an authorized capacity
vehicle to operate the same in the public of from six (6) to eleven (11) passengers: Thirty
highways unless there is in force in relation thousand pesos (P30,000.00);
thereto a policy of insurance or guaranty in (4) Motor vehicles with an authorized capacity
cash or surety bond issued in accordance with of five (5) or less passengers: Five thousand
the provisions of this chapter to indemnify the pesos (P5,000.00) multiplied by the authorized
death, bodily injury, and/or damage to capacity.
property of a third-party or passenger, as the
Provided, however, That such cash deposit made
case may be, arising from the use thereof.
to, or surety bond posted with, the
Section 388. The Commissioner shall furnish Commissioner shall be resorted to by him in
the Land Transportation Office with a list of cases of accidents the indemnities for which to
insurance companies authorized to issue the third-parties and/or passengers are not settled
policy of insurance or surety bond required by accordingly by the land transportation
this chapter. operator and, in that event, the said cash
Section 389. The Land Transportation Office deposit shall be replenished or such surety
shall not allow the registration or renewal of bond shall be restored within sixty (60) days
registration of any motor vehicle without first after impairment or expiry, as the case may be,
requiring from the land transportation by such land transportation operator,
operator or motor vehicle owner concerned the otherwise, he shall secure the insurance policy
presentation and filing of a substantiating required by this chapter. The aforesaid cash
documentation in a form approved by the deposit may be invested by the Commissioner
Commissioner evidencing that the policy of in readily marketable government bonds,
insurance or guaranty in cash or surety bond and/or securities.
required by this chapter is in effect. (b) In the case of an owner of a motor vehicle,
Section 390. Every land transportation operator the insurance or guaranty in cash or surety
and every owner of a motor vehicle shall, bond shall cover liability for death or injury to
before applying for the registration or renewal third-parties in an amount not less than that
of registration of any motor vehicle, at his set forth in the following scale in any one
option, either secure an insurance policy or accident:
surety bond issued by any insurance company (1) Private Cars
authorized by the Commissioner or make a
(i) Bantam: Twenty thousand pesos
cash deposit in such amount as herein required
(P20,000.00);
as limit of liability for purposes specified in
(ii) Light: Twenty thousand pesos (P20,000.00);
Section 387.
and
(a) In the case of a land transportation
(iii) Heavy: Thirty thousand pesos (P30,000.00).
operator, the insurance guaranty in cash or

37 | K D C S 2 0 1 6
(2) Other Private Vehicles otherwise, the Land Transportation Office shall
(i) Tricycles, motorcycles and scooters: Twelve require from said land transportation operator
thousand pesos (P12,000.00); or owner of the vehicle, in lieu of a policy of
insurance or surety bond, a certificate that a
(ii) Vehicles with an unladen weight of 2,600
cash deposit has been made with the
kilos or less: Twenty thousand pesos
Commissioner in such amount required as
(P20,000.00);
limits of indemnity in Section 390 to answer for
(iii) Vehicles with an unladen weight of
the passenger and/or third-party liability of
between 2,601 kilos and 3,930 kilos: Thirty
such land transportation operator or owner of
thousand pesos (P30,000.00); and
the vehicle.
(iv) Vehicles with an unladen weight over
No insurance company may issue the policy of
3,930 kilos: Fifty thousand pesos (P50,000.00).
insurance or surety bond required under this
The Commissioner may, if warranted, set forth chapter unless so authorized under existing
schedule of indemnities for the payment of laws.
claims for death or bodily injuries with the
The authority to engage in the casualty and/or
coverages set forth herein.
surety lines of business of an insurance
Section 391. Any claim for death or injury to company that refuses to issue or renew,
any passenger or third-party pursuant to the without just cause, the insurance policy or
provisions of this chapter shall be paid without surety bond therein required shall be
the necessity of proving fault or negligence of withdrawn immediately.
any kind: Provided, That for purposes of this
Section 393. No cancellation of the policy shall
section:
be valid unless written notice thereof is given
(a) The total indemnity in respect of any to the land transportation operator or owner of
person shall not be less than Fifteen thousand the vehicle and to the Land Transportation
pesos (P15,000.00); Office at least fifteen (15) days prior to the
(b) The following proofs of loss, when intended effective date thereof. Upon receipt of
submitted under oath, shall be sufficient such notice, the Land Transportation Office,
evidence to substantiate the claim: unless it receives evidence of a new valid
(1) Police report of accident; and insurance or guaranty in cash or surety bond
(2) Death certificate and evidence sufficient to as prescribed in this chapter, or an
establish the proper payee; or endorsement of revival of the cancelled one,
shall order the immediate confiscation of the
(3) Medical report and evidence of medical or
plates of the motor vehicle covered by such
hospital disbursement in respect of which
cancelled policy. The same may be reissued
refund is claimed;
only upon presentation of a new insurance
(c) Claim may be made against one motor policy or that a guaranty in cash or surety
vehicle only. In the case of an occupant of a bond has been made or posted with the
vehicle, claim, shall lie against the insurer of Commissioner and which meets the
the vehicle in which the occupant is riding, requirements of this chapter, or an
mounting or dismounting from. In any other endorsement or revival of the cancelled one.
case, claim shall lie against the insurer of the
Section 394. If the cancellation of the policy or
directly offending vehicle. In all cases, the right
surety bond is contemplated by the land
of the party paying the claim to recover against
transportation operator or owner of the
the owner of the vehicle responsible for the
vehicle, he shall, before the policy or surety
accident shall be maintained.
bond ceases to be effective, secure a similar
Section 392. No land transportation operator or policy of insurance or surety bond to replace
owner of motor vehicle shall be unreasonably the policy or surety bond to be cancelled or
denied the policy of insurance or surety bond make a cash deposit in sufficient amount with
required by this chapter by the insurance the Commissioner, and without any gap, file
companies authorized to issue the same, the required documentation with the Land

38 | K D C S 2 0 1 6
Transportation Office, and notify the insurance a license from the Commissioner. The
company concerned of the cancellation of its application for such license shall be filed with
policy or surety bond. the Commissioner together with certified true
Section 395. In case of change of owner ship of copies of the articles of incorporation or the
a motor vehicle, or change of the engine of an constitution and bylaws of the association, and
insured vehicle, there shall be no need of all amendments thereto, and such other
issuing a new policy until the next date of documents or testimonies as the Commissioner
registration or renewal of registration of such may require.
vehicle, and: Provided, That the insurance No license shall be granted to a mutual benefit
company shall agree to continue the policy, association until the Commissioner shall have
such change of ownership or such change of been satisfied by such examination as he may
the engine shall be indicated in a make and such evidence as he may require
corresponding endorsement by the insurance that the association is qualified under existing
company concerned, and a signed duplicate of laws to operate and transact business as such.
such endorsement shall, within a reasonable The Commissioner may refuse to issue a
time, be filed with the Land Transportation license to any mutual benefit association if, in
Office. his judgment, such refusal will best promote
Section 398. The insurance company concerned the interest of the members of such association
shall forthwith ascertain the truth and extent of and of the people of this country. Any license
the claim and make payment within five (5) issued shall expire on the last day of December
working days after reaching an agreement. If of the third year following its issuance and,
no agreement is reached, the insurance upon proper application, may be renewed if
company shall pay only the no-fault indemnity the association is continuing to comply with
provided in Section 391 without prejudice to existing laws, rules and regulations, orders,
the claimant from pursuing his claim further, instructions, rulings and decisions of the
in which case, he shall not be required or Commissioner. Every association receiving any
compelled by the insurance company to such license shall be subject to the supervision
execute any quit claim or document releasing it of the Commissioner: Provided, That no such
from liability under the policy of insurance or license shall be granted to any such association
surety bond issued. if such association has no actuary.
In case of any dispute in the enforcement of the Section 405. No mutual benefit association
provisions of any policy issued pursuant to shall be issued a license to operate as such
this chapter, the adjudication of such dispute unless it has constituted and established a
shall be within the original and exclusive Guaranty Fund by depositing with the
jurisdiction of the Commissioner, subject to the Commissioner an initial minimum amount of
limitations provided in Section 439. Five million pesos (P5,000,000.00) in cash, or in
government securities with a total value equal
Section 401. Any land transportation operator
to such amount, to answer for any valid benefit
or owner of motor vehicle or any other person
claim of any of its members.
violating any of the provisions of the
preceding sections shall be punished by a fine All moneys received by the Commissioner for
of not less than Five hundred pesos (P500.00) this purpose must be deposited by him in
and/or imprisonment for not more than six (6) interest-bearing deposits with any bank or
months. The violation of Section 390 by a land banks authorized to transact business in the
transportation operator shall be a sufficient Philippines for the account of the particular
cause for the revocation of the certificate of association constituting the Guaranty Fund.
public convenience issued by the Land Any accrual to such fund, be it interest earned
Transportation Franchising and Regulatory or dividend additions on moneys or securities
Board covering the vehicle concerned. so deposited, may, with the prior approval of
Section 404. A mutual benefit association, the Commissioner, be withdrawn by the
before it may transact as such, must first secure association if there is no pending benefit claim

39 | K D C S 2 0 1 6
against it, including interest thereon or pesos (P10,000.00), or imprisonment of not
dividend additions thereto. exceeding three (3) years, or both such fine and
The Commissioner, prior to or after licensing a imprisonment, at the discretion of the court.
mutual benefit association, may require such Section 427. All trustees shall, before entering
association to increase its Guaranty Fund from in the performance of the duties of their trust,
the initial minimum amount required to an obtain a certificate of registration from the
amount equal to the capital investment Commissioner. The registration shall expire on
required of an existing domestic insurance December 31 of the third year following its
company under Section 209 of this Code. issuance unless it is renewed.
Section 408. The constitution or bylaws of a All provisions of this Code governing mutual
mutual benefit association must distinctly state benefit associations and such other provisions
the purpose for which dues and/or herein, whenever practicable and necessary,
assessments are made and collected and the shall be applicable to trusts for charitable uses.
portion thereof which may be used for Section 428. The treasurer of a charitable trust
expenses. shall file a fidelity bond in the amount
Death benefit and other relief funds shall be commensurate with the value of the trust
created and used exclusively for paying property in his custody, as may be determined
benefits due the members under their by the Commissioner.
respective membership certificates. A general CHAPTER VIII
fund shall likewise be created and used for TRUST BUSINESS IN GENERAL
expenses of administration of the association.
Section 429. An insurance company may
A mutual benefit association shall only engage in limited trust business, consisting of
maintain free and unassigned surplus of not managing funds pertaining only to retirement
more than twenty percent (20%) of its total and pre-need plans, provided it has secured a
liabilities as verified by the Commissioner. license to do so from the Bangko Sentral ng
Any amount in excess shall be returned to the Pilipinas. This trust business shall be separate
members by way of dividends, enhancing the and distinct from the general business of the
equity value or providing benefits in kind and insurance company and shall be subject to
other relevant services. In addition, subject to rules and regulations as may be promulgated
the approval of the Commissioner, a mutual by the Bangko Sentral ng Pilipinas in
benefit association may allocate a portion for consultation with the Commissioner.
capacity building and research and
CHAPTER IX
development such as developing new products
REGISTRATION, RESPONSIBILITIES AND
and services, upgrading and improving
OVERSIGHT OF SELF-REGULATORY
operating systems and equipment and
ORGANIZATIONS
continuing member education.
Section 430. The Commissioner shall have the
Section 409. Every outstanding membership
power to register as a self-regulatory
certificate must have an equity value
organization, or otherwise grant licenses, and
equivalent to at least fifty percent (50%) of the
to regulate, supervise, examine, suspend or
total contributions collected thereon. The
otherwise discontinue, as a condition for the
equity value only applies to basic life insurance
operation of organizations whose operations
product and excludes optional products.
are related to or connected with the insurance
Section 421. To secure the enforcement of any market such as, but not limited to, associations
provision under this title, the Commissioner of insurance companies, whether life or non-
may issue such rules, rulings, instructions, life, reinsurers, actuaries, agents, brokers,
orders and circulars. dealers, mutual benefit associations, trusts,
Section 422. The violation of any provision of rating agencies, and other persons regulated
this title shall subject the person violating or by the Commissioner, which are engaged in
the officer of the association responsible the business regulated by this Code.
therefor to a fine of not less than Ten thousand

40 | K D C S 2 0 1 6
The Commissioner may prescribe rules and (7) Fair procedure for the disciplining of
regulations which are necessary or appropriate members and persons associated with
in the public interest or for the protection of members; and
investors to govern self-regulatory (8) The prohibition or limitation of access to
organizations and other organizations licensed services offered by the association or a member
or regulated pursuant to the authority granted thereof.
hereunder including, but not limited to, the
Section 432. A self-regulatory organization
requirement of cooperation within and among
may examine and verify the qualifications of
all participants in the insurance market to
an applicant to become a member in
ensure transparency and facilitate exchange of
accordance with procedures established by the
information.
rules of the association.
Section 431. An association cannot be
A self-regulatory organization shall deny
registered as a self-regulatory organization
membership or condition the membership of
unless the Commissioner determines that:
an entity, if it does not meet the standards of
(a) The association is so organized and has the financial responsibility, operational capability,
capacity to be able to carry out the purposes of training, experience, or competence that are
this Code and to comply with, and to enforce prescribed by the rules of the association; or
compliance by its members and persons has engaged, and there is a reasonable
associated with its members, with the likelihood it will again engage, in acts or
provisions of this Code, the rules and practices inconsistent with just and equitable
regulations thereunder, and the rules of the principles of fair trade.
association.
A self-regulatory organization may deny
(b) The rules of the association, membership to an entity not engaged in a type
notwithstanding anything in the Corporation of business in which the rules of the
Code to the contrary, provide the following: association require members to be engaged.
(1) Qualifications and the disqualifications on Section 433. Upon the filing of an application
membership of the association; for registration as a self-regulatory
(2) A fair representation of its members to organization under this title, the
serve on the board of directors of the Commissioner shall have ninety (90) days
association and the administration of its affairs, within which to either grant registration or
and that any natural person associated with a institute a proceeding to determine whether
juridical entity that is a member shall also be registration should be denied. In the event
deemed to be a member for this purpose; proceedings are instituted, the Commissioner
(3) The president of the association and at least shall have two hundred seventy (270) days
two (2) independent directors as members of within which to conclude such proceedings at
the board of directors of the association; which time he shall, by order, grant or deny
such registration.
(4) Equitable allocation of reasonable dues,
fees, and other charges among members and Section 434. Every self-regulatory organization
other persons using any facility or system shall comply with the provisions of this Code,
which the association operates or controls; the rules and regulations thereunder, and its
own rules, and enforce compliance therewith
(5) The prevention of fraudulent and
by its members, persons associated with its
manipulative acts and practices to protect the
members or its participants, notwithstanding
insuring public and the promotion of just and
any provision of the Corporation Code to the
equitable principles of business;
contrary.
(6) Members and persons associated with its
Section 435. Each self-regulatory organization
members subject to discipline for violation of
shall submit to the Commissioner for prior
any provision of this Code, the rules or
approval any proposed rule or amendment
regulations thereunder, or the rules of the
thereto, together with a concise statement of
association;

41 | K D C S 2 0 1 6
the reason and effect of the proposed activities, functions and operations of such
amendment. self-regulatory organization, if the
Within sixty (60) days after submission of a Commission finds that such a self-regulatory
proposed amendment, the Commissioner organization has willfully violated or is unable
shall, by order, approve the proposed to comply with any provision of this Code or
amendment. Otherwise, the same may be of the rules and regulations thereunder, or its
made effective by the self-regulatory own rules, or has failed to enforce compliance
organization. therewith by a member of, person associated
with a member, or a participant in such self-
In the event of an emergency requiring action
regulatory organization;
for the protection of the insuring public, a self-
regulatory organization may put a proposed (2) To expel from a self-regulatory
amendment into effect summarily: Provided, organization any member thereof or any
however, That a copy of the same shall be participant therein who is found to have
immediately submitted to the Commissioner. willfully violated any provision of this Code or
suspend for a period not exceeding twelve (12)
The Commissioner is further authorized, if
months for violation of any provision of this
after making appropriate request in writing to
Code or any other law administered by the
a self-regulatory organization that such
Commission, or the rules and regulations
organization effect on its own behalf specified
thereunder, or effected, directly or indirectly,
changes in its rules and practices and, after due
any transaction for any person who, such
notice and hearing, it determines that such
member or participant had reason to believe,
changes have not been effected, and that such
was violating in respect of such transaction
changes are necessary, by rule or regulation or
any of such provisions; and
by order, may alter, abrogate or supplement
the rules of such self-regulatory organization (3) To remove from office or censure any
insofar as necessary or appropriate to effect officer or director of a self-regulatory
such changes in respect of such matters as: organization if it finds that such officer or
director has violated any provision of this
(a) Safeguards in respect of the financial
Code, any other law administered by the
responsibility of members and adequate
Commissioner, the rules or regulations
provision against the evasion of financial
thereunder and the rules of such self-
responsibility through the use of corporate
regulatory organization, or has abused his
forms or special partnerships;
authority, or without reasonable justification
(b) The supervision of market practices;
or excuse has failed to enforce compliance with
(c) The manner, method and place of soliciting any of such provisions.
business;
Section 436. (a) A self-regulatory organization
(d) The fixing of reasonable rates of fees, is authorized to discipline a member of or
interest, listing and other charges, but not rates participant in such self-regulatory
of commission; and self-regulatory organization, or any person associated with a
organization; and member, including suspending or expelling
(e) The supervision, auditing and disciplining such member or participant, or suspending or
of members. barring such person from being associated
In addition to the general powers of the with a member, if engaged in acts or practices
Commissioner over the entities under inconsistent with just and equitable principles
supervision, the Commissioner, after due of fairness or in willful violation of any
notice and hearing, is authorized, in the public provision of this Code, any other law
interest and to protect the insuring public: administered by the Commission, the rules or
(1) To suspend for a period not exceeding regulations thereunder, or the rules of the self-
twelve (12) months or to revoke the regulatory organization. In any disciplinary
registration of a self-regulatory organization, proceeding by a self-regulatory organization
or to censure or impose limitations on the (other than a summary proceeding pursuant to

42 | K D C S 2 0 1 6
paragraph (b) of this section) the self- Commissioner on its own motion within such
regulatory organization shall bring specific period, may institute review of, the decision of
charges, provide notice to the person charged, the self-regulatory organization, at the
afford the person charged with an opportunity conclusion of which, after due notice and
to defend against the charges, and keep a hearing (which may consist solely of review of
record of the proceedings. A determination to the record before the self-regulatory
impose a disciplinary sanction shall be organization), the Commissioner shall affirm,
supported by a written statement of the modify or set aside the sanction. In such
offense, a summary of the evidence presented proceeding, the Commissioner shall determine
and a statement of the sanction imposed. whether the aggrieved person has engaged or
(b) A self-regulatory organization may omitted to engage in the acts and practices as
summarily: found by the self-regulatory organization,
whether such acts and practices constitute
(1) Suspend a member, participant or person
willful violations of this Code, any other law
associated with a member who has been or is
administered by the Commission, the rules or
expelled or suspended from any other self-
regulations thereunder, or the rules of the self-
regulatory organization; or
regulatory organization as specified by such
(2) Suspend a member who the self-regulatory
organization, whether such provisions were
organization finds to be in such financial or
applied in a manner consistent with the
operating difficulty that the member or
purposes of this Code, and whether, with due
participant cannot be permitted to continue to
regard for the public interest and the
do business as a member with safety to
protection of investors, the sanction is
investors, creditors, other members,
excessive or oppressive.
participants or the self-regulatory
CHAPTER X
organization: Provided, That the self-regulatory
THE INSURANCE COMMISSIONER
organization immediately notifies the
Commission of the action taken. Any person TITLE 1
aggrieved by a summary action pursuant to ADMINISTRATIVE AND ADJUDICATORY
this paragraph shall be promptly afforded an POWERS
opportunity for a hearing by the association in Section 437. The Insurance Commissioner shall
accordance with the preceding paragraph. The be appointed by the President of the Republic
Commissioner, by order, may stay a summary of the Philippines for a term of six (6) years
action on his own or upon application by any without reappointment and who shall serve as
person aggrieved thereby, if the Commissioner such until the successor shall have been
determines summarily or after due notice and appointed and qualified. If the Insurance
hearing (which hearing may consist solely of Commissioner is removed before the
the submission of affidavits or presentation of expiration of his term of office, the reason for
oral arguments), that a stay is consistent with the removal must be published.
the public interest and the protection of the The Insurance Commissioner shall have the
insuring public. duty to see that all laws relating to insurance,
(c) A self-regulatory organization shall insurance companies and other insurance
promptly notify the Commission of any matters, mutual benefit associations, and trusts
disciplinary sanction on any member thereof for charitable uses are faithfully executed and
or participant therein, any denial of to perform the duties imposed upon him by
membership or participation in such this Code, and shall, notwithstanding any
organization, or the imposition of any existing laws to the contrary, have sole and
disciplinary sanction on a person associated exclusive authority to regulate the issuance
with a member or a bar of such person from and sale of variable contracts as defined in
becoming so associated. Within thirty (30) days Section 238 hereof and to provide for the
after such notice, any aggrieved person may licensing of persons selling such contracts, and
appeal to the Commissioner from, or the

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to issue such reasonable rules and regulations returns, and books of accounts of any entity or
governing the same. person under investigation as may be
The Commissioner may issue such rulings, necessary for the proper disposition of the
instructions, circulars, orders and decisions as cases before it, subject to the provisions of
may be deemed necessary to secure the existing laws;
enforcement of the provisions of this Code, to (j) Suspend or revoke, after proper notice and
ensure the efficient regulation of the insurance hearing, the license or certificate of authority of
industry in accordance with global best any entity or person under its regulation, upon
practices and to protect the insuring public. any of the grounds provided by law;
Except as otherwise specified, decisions made (k) Conduct an examination to determine
by the Commissioner shall be appealable to the compliance with laws and regulations if the
Secretary of Finance. circumstances so warrant as determined by
In addition to the foregoing, the Commissioner appropriate rules and regulations;
shall have the following powers and functions: (l) Investigate not oftener than once a year
(a) Formulate policies and recommendations from the last date of examination to determine
on issues concerning the insurance industry, whether an institution is conducting its
advise Congress and other government business on a safe and sound basis: Provided,
agencies on all aspects of the insurance That, the deficiencies/irregularities found by
industry and propose legislation and or discovered by an audit shall be immediately
amendments thereto; addressed;
(b) Approve, reject, suspend or revoke licenses (m) Inquire into the solvency and liquidity of
or certificates of registration provided for by the institutions under its supervision and
this Code; enforce prompt corrective action;
(c) Impose sanctions for the violation of laws (n) To retain and utilize, in addition to its
and the rules, regulations and orders issued annual budget, all fees, charges and other
pursuant thereto; income derived from the regulation of
(d) Prepare, approve, amend or repeal rules, insurance companies and other supervised
regulations and orders, and issue opinions and persons or entities;
provide guidance on and supervise compliance (o) To fix and assess fees, charges and penalties
with such rules, regulations and orders; as the Commissioner may find reasonable in
(e) Enlist the aid and support of, and/or the exercise of regulation; and
deputize any and all enforcement agencies of (p) Exercise such other powers as may be
the government in the implementation of its provided by law as well as those which may be
powers and functions under this Code; implied from, or which are necessary or
(f) Issue cease and desist orders to prevent incidental to the express powers granted the
fraud or injury to the insuring public; Commission to achieve the objectives and
purposes of this Code.
(g) Punish for contempt of the Commissioner,
both direct and indirect, in accordance with the The Commission shall indemnify the
pertinent provisions of and penalties Commissioner, Deputy Commissioner, and
prescribed by the Rules of Court; other officials of the Commission, including
personnel performing supervision and
(h) Compel the officers of any registered
examination functions, for all costs and
insurance corporation or association to call
expenses reasonably incurred by such persons
meetings of stockholders or members thereof
in connection with any civil or criminal
under its supervision;
actions, suits or proceedings to which they
(i) Issue subpoena duces tecum and summon
may be made a party to by the reason of the
witnesses to appear in any proceeding of the
performance of their duties and functions,
Commission and, in appropriate cases, order
unless they are finally adjudged in such
the examination, search and seizure of all
documents, papers, files and records, tax

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actions, suits or proceedings to be liable for damage or liability, excluding interest, cost
negligence or misconduct. and attorneys fees, being claimed or sued
In the event of settlement or compromise, upon any kind of insurance, bond, reinsurance
indemnification shall be provided only in contract, or membership certificate does not
connection with such matters covered by the exceed in any single claim Five million pesos
settlement as to which the Commission is (P5,000,000.00).
advised by external counsel that the persons to The power of the Commissioner does not cover
be indemnified did not commit any negligence the relationship between the insurance
or misconduct: company and its agents/brokers but is limited
The costs and expenses incurred in defending to adjudicating claims and complaints filed by
the aforementioned action, suit or proceeding the insured against the insurance company.
may be paid by the Commission in advance of The Commissioner may authorize any officer
the final disposition of such action, suit or or group of officers under him to conduct
proceeding upon receipt of an undertaking by investigation, inquiry and/or hearing and
or on behalf of the Commissioner, Deputy decide claims and he may issue rules
Commissioner, officer or employee to repay governing the conduct of adjudication and
the amount advanced should it ultimately be resolution of cases. The Rules of Court shall
determined by the Commission that the person have suppletory application.
is not entitled to be indemnified. The party filing an action pursuant to the
Section 438. In addition to the administrative provisions of this section thereby submits his
sanctions provided elsewhere in this Code, the person to the jurisdiction of the Commissioner.
Insurance Commissioner is hereby authorized, The Commissioner shall acquire jurisdiction
at his discretion, to impose upon insurance over the person of the impleaded party or
companies, their directors and/or officers parties in accordance with and pursuant to the
and/or agents, for any willful failure or refusal provisions of the Rules of Court.
to comply with, or violation of any provision The authority to adjudicate granted to the
of this Code, or any order, instruction, Commissioner under this section shall be
regulation, or ruling of the Insurance concurrent with that of the civil courts, but the
Commissioner, or any commission or filing of a complaint with the Commissioner
irregularities, and/or conducting business in shall preclude the civil courts from taking
an unsafe or unsound manner as may be cognizance of a suit involving the same subject
determined by the Insurance Commissioner, matter.
the following:
Any decision, order or ruling rendered by the
(a) Fines not less than Five thousand pesos Commissioner after a hearing shall have the
(P5,000.00) and not more than Two hundred force and effect of a judgment. Any party may
thousand pesos (P200,000.00); and appeal from a final order, ruling or decision of
(b) Suspension, or after due hearing, removal the Commissioner by filing with the
of directors and/or officers and/or agents. Commissioner within thirty (30) days from
Section 439. The Commissioner shall have the receipt of copy of such order, ruling or
power to adjudicate claims and complaints decision a notice of appeal to the Court of
involving any loss, damage or liability for Appeals in the manner provided for in the
which an insurer may be answerable under Rules of Court for appeals from the Regional
any kind of policy or contract of insurance, or Trial Court to the Court of Appeals.
for which such insurer may be liable under a For the purpose of any proceeding under this
contract of suretyship, or for which a reinsurer section, the Commissioner, or any officer
may be sued under any contract of reinsurance thereof designated by him is empowered to
it may have entered into; or for which a mutual administer oaths and affirmation, subpoena
benefit association may be held liable under witnesses, compel their attendance, take
the membership certificates it has issued to its evidence, and require the production of any
members, where the amount of any such loss, books, papers, documents, or contracts or

45 | K D C S 2 0 1 6
other records which are relevant or material to For each license issued to a mutual benefit
the inquiry. association, Ten pesos (P10.00).
A full and complete record shall be kept of all For each certificate of registration issued to a
proceedings had before the Commissioner, or trust for charitable uses, Ten pesos (P10.00).
the officers thereof designated by him, and all All certificates of authority and all other
testimony shall be taken down and transcribed licenses, as well as all certificates of
by a stenographer appointed by the registration, issued to any person, partnership,
Commissioner. association or corporation under the pertinent
In order to promote party autonomy in the provisions of this Code for which no expiration
resolution of cases, the Commissioner shall date has been prescribed, shall expire on the
establish a system for resolving cases through last day of December of the third year from its
the use of alternative dispute resolution. issuance and shall be renewed upon
TITLE 2 application therefor and payment of the
FEES AND OTHER SOURCES OF FUNDS corresponding fee, if the licensee or holder of
such license or certificate is continuing to
Section 440. (a) For the issuance or renewal of
comply with all the applicable provisions of
certificates of authority, licenses and
existing laws, and of rules, instructions, orders
certificates of registration, pursuant to
and decisions of the Commissioner.
pertinent provisions of this Code, the
Commissioner shall collect and receive fees (b) For the filing of the annual statement
which shall be not less than the following: referred to in Section 229, the Commissioner
shall collect and receive from the insurance
For each certificate of authority issued to an
company so filing a fee of not less than Five
insurance company doing business in the
hundred pesos (P500.00): Provided, That a fine
Philippines, Two hundred pesos (P200.00).
of not less than One hundred pesos (P100.00)
For each special certificate of authority issued
shall be imposed and collected by the
to a servicing insurance company, One
Commissioner for each week of delay, or any
hundred pesos (P100.00).
fraction thereof, in the filing of the annual
For each license issued to a general agent of an statement.
insurance company, Fifty pesos (P50.00).
For the filing of annual statement referred to in
For each license issued to an insurance agent, Section 413, the Commissioner shall collect and
Twenty-five pesos (P25.00). receive from the mutual benefit association so
For each license issued to an agent of variable filing a fee of not less than Ten pesos
contract policy, Twenty-five pesos (P25.00). (P10.00): Provided, That a fine of not less than
For each license issued to an insurance broker, Ten pesos (P10.00) shall be imposed and
One hundred pesos (P100.00). collected by the Commissioner for each week
For each license issued to a reinsurance broker, of delay, or any fraction thereof, in the filing of
One hundred pesos (P100.00). the annual statement.

For each license issued to an insurance (c) For the examination prescribed in Section
adjuster, One hundred pesos (P100.00). 253, the Commissioner shall collect and receive
fees according to the amount of its total assets,
For each certificate of registration issued to an
in the case of a domestic company, or of its
actuary, Fifty pesos (P50.00).
assets in the Philippines, in the case of a
For each certificate of registration issued to a foreign company, not less than the amount as
resident agent, Fifty pesos (P50.00). follows:
For each license issued to a rating (1) Two million pesos or more but less than
organization, One hundred pesos (P100.00). Four million pesos, Four hundred pesos
For each certificate of registration issued to a (P400.00);
non-life company underwriter, Fifty pesos (2) Four million pesos or more but less than Six
(P50.00). million pesos, Eight hundred pesos (P800.00);

46 | K D C S 2 0 1 6
(3) Six million pesos or more but less than Section 442. Any person, company or
Eight million pesos, One thousand two corporation subject to the supervision and
hundred pesos (P1,200.00); control of the Commissioner who violates any
(4) Eight million pesos or more but less than provision of this Code, for which no penalty is
Ten million pesos, One thousand six hundred provided, shall be deemed guilty of a penal
pesos (P1,600.00); offense, and upon conviction be punished by a
fine not exceeding Two hundred thousand
(5) Ten million pesos or more, Two thousand
pesos (P200,000.00) or imprisonment of six (6)
pesos (P2,000.00);
months, or both, at the discretion of the court.
Provided, That if the said examination is made
If the offense is committed by a company or
in places outside the Metropolitan Manila area,
corporation, the officers, directors, or other
besides these fees, the Commissioner shall
persons responsible for its operation,
require of the company examined the payment
management, or administration, unless it can
of the actual and necessary travelling and
be proved that they have taken no part in the
subsistence expenses of the examiner or
commission of the offense, shall likewise be
examiners concerned.
guilty of a penal offense, and upon conviction
For the examination prescribed in Section 412,
be punished by a fine not exceeding Two
the Commissioner shall collect and receive a
hundred thousand pesos (P200,000.00) or
minimum fee of not less than One hundred
imprisonment of six (6) months, or both, at the
pesos (P100.00) from the mutual benefit
discretion of the court.
association examined: Provided, That if such
Section 445. Transitory Provision. Renewal of
association has total assets of more than One
existing licenses, certificates of authority or
hundred thousand pesos (P100,000.00), an
accreditation which will expire on June 30,
additional fee of not less than Ten pesos
2013 shall be valid until December 31, 2015.
(P10.00) for every Fifty thousand pesos
Thereafter, renewal shall be filed on the last
(P50,000.00) in excess thereof shall be imposed:
day of December every third year following
(d) For the filing of an application to withdraw
the date of expiry of the license, certificate of
from the Philippines under Title 18, the
authority or accreditation.
Commissioner shall collect and receive from
Section 446. Repealing Clause. Except as
the foreign company so withdrawing a fee of
expressly provided by this Code, all laws,
not less than One thousand pesos (P1,000.00).
decrees, orders, rules and regulations or parts
(e) The Commissioner may fix and collect fees
thereof, inconsistent with any provision of this
or charges for documents, transcripts, or other
Code shall be deemed repealed, amended or
materials which may be furnished by him not
modified accordingly.
in excess of reasonable cost.
Section 447. Separability Clause. If any
Section 441. The Commissioner, in accordance
provision of this Code or any part hereof be
with the rules and regulations of the
declared invalid or unconstitutional, the
Department of Budget and Management and
remainder of the law or other provisions not
other relevant regulatory agencies, shall source
otherwise affected shall remain valid and
the salary, allowances and other expenses from
subsisting.
the retained amount of the fees, charges,
Section 448. This Code shall take effect fifteen
penalties and other income from the regulation
(15) days following its publication in a
of insurance companies and other covered
newspaper of general circulation.
persons and entities, and from the Insurance
Fund, which is created out of the proceeds of
taxes on insurance premiums mentioned in
Section 255 of the National Internal Revenue
Code, as amended.
MISCELLANEOUS PROVISIONS

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