ORDAININGANDINSTITUTINGANINSURANCECODEOFTHE I,FerdinandE.Marcos,Presidentofthe,byvirtueofthepowersvestedinmebytheConstitution,dohereby decreeandorderthefollowing: GENERALPROVISIONS Sec.1.ThisDecreeshallbeknownas"TheInsuranceCode". Sec.2.WheneverusedinthisCode,thefollowingtermsshallhavetherespectivemeaningshereinaftersetforthor indicated,unlessthecontextotherwiserequires: (1)A"contractofinsurance"isanagreementwherebyoneundertakesforaconsiderationtoindemnifyanother againstloss,damageorliabilityarisingfromanunknownorcontingentevent.

Anyminoroftheageofeighteenyearsormore,may,notwithstandingsuchminority,contractforlife,healthand accidentinsurance,withanyinsurancecompanydulyauthorizedtodobusinessinthePhilippines,providedthe insuranceistakenonhisownlifeandthebeneficiaryappointedistheminor'sestateortheminor'sfather,mother, husband,wife,child,brotherorsister. Themarriedwomanortheminorhereinallowedtotakeoutaninsurancepolicymayexercisealltherightsand privilegesofanownerunderapolicy. Allrights,titleandinterestinthepolicyofinsurancetakenoutbyanoriginalowneronthelifeorhealthofaminor shallautomaticallyvestintheminoruponthedeathoftheoriginalowner,unlessotherwiseprovidedforinthe policy. Sec.4.Theprecedingsectiondoesnotauthorizeaninsurancefororagainstthedrawingofanylottery,orforor againstanychanceorticketinalotterydrawingaprize.

Acontractofsuretyshipshallbedeemedtobeaninsurancecontract,withinthemeaningofthisCode,onlyifmade Sec.5.Allkindsofinsurancearesubjecttotheprovisionsofthischaptersofarastheprovisionscanapply. byasuretywhoorwhich,assuch,isdoinganinsurancebusinessashereinafterprovided. (2)Theterm"doinganinsurancebusiness"or"transactinganinsurancebusiness",withinthemeaningofthisCode, shallinclude: (a)makingorproposingtomake,asinsurer,anyinsurancecontract; Title2 PARTIESTOTHECONTRACT

(b)makingorproposingtomake,assurety,anycontractofsuretyshipasavocationandnotasmerelyincidentalto Sec.7.Anyoneexceptapublicenemymaybeinsured. anyotherlegitimatebusinessoractivityofthesurety;

Sec.6.Everyperson,partnership,association,orcorporationdulyauthorizedtotransactinsurancebusinessas elsewhereprovidedinthiscode,maybeaninsurer.

(c)doinganykindofbusiness,includingareinsurancebusiness,specificallyrecognizedasconstitutingthedoingof Sec.8.Unlessthepolicyotherwiseprovides,whereamortgagorofpropertyeffectsinsuranceinhisownname providingthatthelossshallbepayabletothemortgagee,orassignsapolicyofinsurancetoamortgagee,the aninsurancebusinesswithinthemeaningofthisCode; insuranceisdeemedtobeupontheinterestofthemortgagor,whodoesnotceasetobeapartytotheoriginal (d)doingorproposingtodoanybusinessinsubstanceequivalenttoanyoftheforegoinginamannerdesignedto contract,andanyactofhis,priortotheloss,whichwouldotherwiseavoidtheinsurance,willhavethesameeffect, evadetheprovisionsofthisCode. althoughthepropertyisinthehandsofthemortgagee,butanyactwhich,underthecontractofinsurance,istobe performedbythemortgagor,maybeperformedbythemortgageethereinnamed,withthesameeffectasifithad IntheapplicationoftheprovisionsofthisCodethefactthatnoprofitisderivedfromthemakingofinsurance contracts,agreementsortransactionsorthatnoseparateordirectconsiderationisreceivedtherefore,shallnotbe beenperformedbythemortgagor. deemedconclusivetoshowthatthemakingthereofdoesnotconstitutethedoingortransactingofaninsurance Sec.9.Ifaninsurerassentstothetransferofaninsurancefromamortgagortoamortgagee,and,atthetimeofhis business. assent,imposesfurtherobligationontheassignee,makinganewcontractwithhim,theactofthemortgagorcannot affecttherightsofsaidassignee. (3)Asusedinthiscode,theterm"Commissioner"meansthe"InsuranceCommissioner". Chapter1 THECONTRACTOFINSURANCE Title1 WHATMAYBEINSURED Title3 INSURABLEINTEREST Sec.10.Everypersonhasaninsurableinterestinthelifeandhealth:

(a)Ofhimself,ofhisspouseandofhischildren; Sec.3.Anycontingentorunknownevent,whetherpastorfuture,whichmaydamnifyapersonhavinganinsurable (b)Ofanypersononwhomhedependswhollyorinpartforeducationorsupport,orinwhomhehasapecuniary interest,orcreatealiabilityagainsthim,maybeinsuredagainst,subjecttotheprovisionsofthischapter. interest; Theconsentofthehusbandisnotnecessaryforthevalidityofaninsurancepolicytakenoutbyamarriedwomanon (c)Ofanypersonunderalegalobligationtohimforthepaymentofmoney,orrespectingpropertyorservices,of herlifeorthatofherchildren. whichdeathorillnessmightdelayorpreventtheperformance;and

(d)Ofanypersonuponwhoselifeanyestateorinterestvestedinhimdepends.

Sec.24.Atransferofinterestbyoneofseveralpartners,jointowners,orownersincommon,whoarejointly insured,totheothers,doesnotavoidaninsuranceeventhoughithasbeenagreedthattheinsuranceshallceaseupon Sec.11.Theinsuredshallhavetherighttochangethebeneficiaryhedesignatedinthepolicy,unlesshehasexpressly analienationofthethinginsured. waivedthisrightinsaidpolicy. Sec.25.Everystipulationinapolicyofinsuranceforthepaymentoflosswhetherthepersoninsuredhasorhasnot Sec.12.Theinterestofabeneficiaryinalifeinsurancepolicyshallbeforfeitedwhenthebeneficiaryistheprincipal, anyinterestinthepropertyinsured,orthatthepolicyshallbereceivedasproofofsuchinterest,andeverypolicy accomplice,oraccessoryinwillfullybringingaboutthedeathoftheinsured;inwhichevent,thenearestrelativeof executedbywayofgamingorwagering,isvoid. theinsuredshallreceivetheproceedsofsaidinsuranceifnototherwisedisqualified. Title4 Sec.13.Everyinterestinproperty,whetherrealorpersonal,oranyrelationthereto,orliabilityinrespectthereof,of CONCEALMENT suchnaturethatacontemplatedperilmightdirectlydamnifytheinsured,isaninsurableinterest. Sec.26.Aneglecttocommunicatethatwhichapartyknowsandoughttocommunicate,iscalledaconcealment. Sec.14.Aninsurableinterestinpropertymayconsistin: Sec.27.Aconcealmentwhetherintentionalorunintentionalentitlestheinjuredpartytorescindacontractof (a)Anexistinginterest; insurance.(AsamendedbyBatasangPambansaBlg.874) (b)Aninchoateinterestfoundedonanexistinginterest;or Sec.28.Eachpartytoacontractofinsurancemustcommunicatedtotheother,ingoodfaith,allfactswithinhis knowledgewhicharematerialtothecontractandastowhichhemakesnowarranty,andwhichtheotherhasnotthe (c)Anexpectancy,coupledwithanexistinginterestinthatoutofwhichtheexpectancyarises. meansofascertaining. Sec.15.Acarrierordepositoryofanykindhasaninsurableinterestinathingheldbyhimassuch,totheextentof Sec.29.Anintentionalandfraudulentomission,onthepartofoneinsured,tocommunicateinformationofmatters hisliabilitybutnottoexceedthevaluethereof. provingortendingtoprovethefalsityofawarranty,entitlestheinsurertorescind. Sec.16.Amerecontingentorexpectantinterestinanything,notfoundedonanactualrighttothething,norupon Sec.30.Neitherpartytoacontractofinsuranceisboundtocommunicateinformationofthemattersfollowing, anyvalidcontractforit,isnotinsurable. exceptinanswertotheinquiriesoftheother: Sec.17.Themeasureofaninsurableinterestinpropertyistheextenttowhichtheinsuredmightbedamnifiedby (a)Thosewhichtheotherknows; lossorinjurythereof. Sec.18.Nocontractorpolicyofinsuranceonpropertyshallbeenforceableexceptforthebenefitofsomeperson havinganinsurableinterestinthepropertyinsured. (b)Thosewhich,intheexerciseofordinarycare,theotheroughttoknow,andofwhichtheformerhasnoreasonto supposehimignorant;

Sec.19.Aninterestinpropertyinsuredmustexistwhentheinsurancetakeseffect,andwhenthelossoccurs,butnot (c)Thoseofwhichtheotherwaivescommunication; existinthemeantime;andinterestinthelifeorhealthofapersoninsuredmustexistwhentheinsurancetakes (d)Thosewhichproveortendtoprovetheexistenceofariskexcludedbyawarranty,andwhicharenototherwise effect,butneednotexistthereafterorwhenthelossoccurs. material;and Sec.20.Exceptinthecasesspecifiedinthenextfoursections,andinthecasesoflife,accident,andhealthinsurance, (e)Thosewhichrelatetoariskexceptedfromthepolicyandwhicharenototherwisematerial. achangeofinterestinanypartofathinginsuredunaccompaniedbyacorrespondingchangeininterestinthe insurance,suspendstheinsurancetoanequivalentextent,untiltheinterestinthethingandtheinterestinthe Sec.31.Materialityistobedeterminednotbytheevent,butsolelybytheprobableandreasonableinfluenceofthe insurancearevestedinthesameperson. factsuponthepartytowhomthecommunicationisdue,informinghisestimateofthedisadvantagesoftheproposed contract,orinmakinghisinquiries. Sec.21.Achangeininterestinathinginsured,aftertheoccurrenceofaninjurywhichresultsinaloss,doesnot affecttherightoftheinsuredtoindemnityfortheloss. Sec.32.Eachpartytoacontractofinsuranceisboundtoknowallthegeneralcauseswhichareopentohisinquiry, equallywiththatoftheother,andwhichmayaffectthepoliticalormaterialperilscontemplated;andallgeneral Sec.22.Achangeofinterestinoneormoreseveraldistinctthings,separatelyinsuredbyonepolicy,doesnotavoid usagesoftrade. theinsuranceastotheothers. Sec.33.Therighttoinformationofmaterialfactsmaybewaived,eitherbythetermsoftheinsuranceorbyneglect Sec.23.Achangeoninterest,bywillorsuccession,onthedeathoftheinsured,doesnotavoidaninsurance;andhis tomakeinquiryastosuchfacts,wheretheyaredistinctlyimpliedinotherfactsofwhichinformationis interestintheinsurancepassestothepersontakinghisinterestinthethinginsured. communicated.

Sec.34.Informationofthenatureoramountoftheinterestofoneinsuredneednotbecommunicatedunlessin answertoaninquiry,exceptasprescribedbysectionfiftyone.

Title6 THEPOLICY

Sec.35.Neitherpartytoacontractofinsuranceisboundtocommunicate,evenuponinquiry,informationofhisownSec.49.Thewritteninstrumentinwhichacontractofinsuranceissetforth,iscalledapolicyofinsurance. judgmentuponthemattersinquestion. Sec.50.Thepolicyshallbeinprintedformwhichmaycontainblankspaces;andanyword,phrase,clause,mark, Title5 sign,symbol,signature,number,orwordnecessarytocompletethecontractofinsuranceshallbewrittenonthe REPRESENTATION blankspacesprovidedtherein. Sec.36.Arepresentationmaybeoralorwritten. Sec.37.Arepresentationmaybemadeatthetimeof,orbefore,issuanceofthepolicy. Sec.38.Thelanguageofarepresentationistobeinterpretedbythesamerulesasthelanguageofcontractsin general. Anyrider,clause,warrantyorendorsementpurportingtobepartofthecontractofinsuranceandwhichispasted orattachedtosaidpolicyisnotbindingontheinsured,unlessthedescriptivetitleornameoftherider,clause, warrantyorendorsementisalsomentionedandwrittenontheblankspacesprovidedinthepolicy.

Unlessappliedforbytheinsuredorowner,anyrider,clause,warrantyorendorsementissuedaftertheoriginal policyshallbecountersignedbytheinsuredorowner,whichcountersignatureshallbetakenashisagreementtothe Sec.39.Arepresentationastothefutureistobedeemedapromise,unlessitappearsthatitwasmerelyastatement contentsofsuchrider,clause,warrantyorendorsement. ofbelieforexpectation. Groupinsuranceandgroupannuitypolicies,however,maybetypewrittenandneednotbeinprintedform. Sec.40.Arepresentationcannotqualifyanexpressprovisioninacontractofinsurance,butitmayqualifyan Sec.51.Apolicyofinsurancemustspecify: impliedwarranty. (a)Thepartiesbetweenwhomthecontractismade; Sec.41.Arepresentationmaybealteredorwithdrawnbeforetheinsuranceiseffected,butnotafterwards. (b)Theamounttobeinsuredexceptinthecasesofopenorrunningpolicies; Sec.42.Arepresentationmustbepresumedtorefertothedateonwhichthecontractgoesintoeffect. (c)Thepremium,oriftheinsuranceisofacharacterwheretheexactpremiumisonlydeterminableuponthe Sec.43.Whenapersoninsuredhasnopersonalknowledgeofafact,hemayneverthelessrepeatinformationwhich terminationofthecontract,astatementofthebasisandratesuponwhichthefinalpremiumistobedetermined; hehasuponthesubject,andwhichhebelievestobetrue,withtheexplanationthathedoessoontheinformationof others;orhemaysubmittheinformation,initswholeextent,totheinsurer;andinneithercaseisheresponsiblefor (d)Thepropertyorlifeinsured; itstruth,unlessitproceedsfromanagentoftheinsured,whosedutyitistogivetheinformation. (e)Theinterestoftheinsuredinpropertyinsured,ifheisnottheabsoluteownerthereof; Sec.44.Arepresentationistobedeemedfalsewhenthefactsfailtocorrespondwithitsassertionsorstipulations. (f)Therisksinsuredagainst;and Sec.45.Ifarepresentationisfalseinamaterialpoint,whetheraffirmativeorpromissory,theinjuredpartyis (g)Theperiodduringwhichtheinsuranceistocontinue. entitledtorescindthecontractfromthetimewhentherepresentationbecomesfalse.Therighttorescindgrantedby thisCodetotheinsureriswaivedbytheacceptanceofpremiumpaymentsdespiteknowledgeofthegroundfor Sec.52.Covernotesmaybeissuedtobindinsurancetemporarilypendingtheissuanceofthepolicy.Withinsixty rescission.(AsamendedbyBatasangPambansaBlg.874). daysaftertheissueofthecovernote,apolicyshallbeissuedinlieuthereof,includingwithinitstermstheidentical insuranceboundunderthecovernoteandthepremiumtherefore. Sec.46.Thematerialityofarepresentationisdeterminedbythesamerulesasthematerialityofaconcealment. CovernotesmaybeextendedorrenewedbeyondsuchsixtydayswiththewrittenapprovaloftheCommissionerifhe Sec.47.Theprovisionsofthischapterapplyaswelltoamodificationofacontractofinsuranceastoitsoriginal determinesthatsuchextensionisnotcontrarytoandisnotforthepurposeofviolatinganyprovisionsofthisCode. formation. TheCommissionermaypromulgaterulesandregulationsgoverningsuchextensionsforthepurposeofpreventing Sec.48.Wheneverarighttorescindacontractofinsuranceisgiventotheinsurerbyanyprovisionofthischapter, suchviolationsandmaybysuchrulesandregulationsdispensewiththerequirementofwrittenapprovalbyhimin suchrightmustbeexercisedprevioustothecommencementofanactiononthecontract. thecaseofextensionincompliancewithsuchrulesandregulations. Afterapolicyoflifeinsurancemadepayableonthedeathoftheinsuredshallhavebeeninforceduringthelifetime Sec.53.Theinsuranceproceedsshallbeappliedexclusivelytotheproperinterestofthepersoninwhosenameorfor oftheinsuredforaperiodoftwoyearsfromthedateofitsissueorofitslastreinstatement,theinsurercannotprovewhosebenefititismadeunlessotherwisespecifiedinthepolicy. thatthepolicyisvoidabinitioorisrescindiblebyreasonofthefraudulentconcealmentormisrepresentationofthe Sec.54.Whenaninsurancecontractisexecutedwithanagentortrusteeastheinsured,thefactthathisprincipalor insuredorhisagent.

beneficiaryistherealpartyininterestmaybeindicatedbydescribingtheinsuredasagentortrustee,orbyother generalwordsinthepolicy.

fourisrelieduponand(b)that,uponwrittenrequestofthenamedinsured,theinsurerwillfurnishthefactson whichthecancellationisbased.

Sec.55.Torenderaninsuranceeffectedbyonepartnerorpartowner,applicabletotheinterestofhiscopartnersorSec.66.Incaseofinsuranceotherthanlife,unlesstheinsureratleastfortyfivedaysinadvanceoftheendofthe otherpartowners,itisnecessarythatthetermsofthepolicyshouldbesuchasareapplicabletothejointor policyperiodmailsordeliverstothenamedinsuredattheaddressshowninthepolicynoticeofitsintentionnotto commoninterest. renewthepolicyortoconditionitsrenewaluponreductionoflimitsoreliminationofcoverages,thenamedinsured shallbeentitledtorenewthepolicyuponpaymentofthepremiumdueontheeffectivedateoftherenewal.Any Sec.56.Whenthedescriptionoftheinsuredinapolicyissogeneralthatitmaycomprehendanypersonoranyclass policywrittenforatermoflessthanoneyearshallbeconsideredasifwrittenforatermofoneyear.Anypolicy ofpersons,onlyhewhocanshowthatitwasintendedtoincludehimcanclaimthebenefitofthepolicy. writtenforatermlongerthanoneyearoranypolicywithnofixedexpirationdateshallbeconsideredasifwritten Sec.57.Apolicymaybesoframedthatitwillinuretothebenefitofwhomsoever,duringthecontinuanceoftherisk,forsuccessivepolicyperiodsortermsofoneyear. maybecometheowneroftheinterestinsured. Title7 WARRANTIES Sec.58.Themeretransferofathinginsureddoesnottransferthepolicy,butsuspendsituntilthesameperson becomestheownerofboththepolicyandthethinginsured. Sec.67.Awarrantyiseitherexpressedorimplied. Sec.59.Apolicyiseitheropen,valuedorrunning. Sec.68.Awarrantymayrelatetothepast,thepresent,thefuture,ortoanyorallofthese. Sec.60.Anopenpolicyisoneinwhichthevalueofthethinginsuredisnotagreedupon,butislefttobeascertained Sec.69.Noparticularformofwordsisnecessarytocreateawarranty. incaseofloss. Sec.70.Withoutprejudicetosectionfiftyone,everyexpresswarranty,madeatorbeforetheexecutionofapolicy, Sec.61.Avaluedpolicyisonewhichexpressesonitsfaceanagreementthatthethinginsuredshallbevaluedata mustbecontainedinthepolicyitself,orinanotherinstrumentsignedbytheinsuredandreferredtointhepolicyas specificsum. makingapartofit. Sec.62.Arunningpolicyisonewhichcontemplatessuccessiveinsurances,andwhichprovidesthattheobjectofthe Sec.71.Astatementinapolicyofmatterrelatingtothepersonorthinginsured,ortotherisk,asafact,isan policymaybefromtimetotimedefined,especiallyastothesubjectsofinsurance,byadditionalstatementsor expresswarrantythereof. indorsements. Sec.72.Astatementinapolicywhichimpartsthatitisintendedtodoornottodoathingwhichmateriallyaffects Sec.63.Acondition,stipulation,oragreementinanypolicyofinsurance,limitingthetimeforcommencinganaction therisk,isawarrantythatsuchactoromissionshalltakeplace. thereundertoaperiodoflessthanoneyearfromthetimewhenthecauseofactionaccrues,isvoid. Sec.73.When,beforethetimearrivesfortheperformanceofawarrantyrelatingtothefuture,alossinsuredagainst Sec.64.Nopolicyofinsuranceotherthanlifeshallbecancelledbytheinsurerexceptuponpriornoticethereoftothe happens,orperformancebecomesunlawfulattheplaceofthecontract,orimpossible,theomissiontofulfillthe insured,andnonoticeofcancellationshallbeeffectiveunlessitisbasedontheoccurrence,aftertheeffectivedateof warrantydoesnotavoidthepolicy. thepolicy,ofoneormoreofthefollowing: Sec.74.Theviolationofamaterialwarranty,orothermaterialprovisionofapolicy,onthepartofeitherparty (a)nonpaymentofpremium; thereto,entitlestheothertorescind. (b)convictionofacrimearisingoutofactsincreasingthehazardinsuredagainst; Sec.75.Apolicymaydeclarethataviolationofspecifiedprovisionsthereofshallavoidit,otherwisethebreachofan immaterialprovisiondoesnotavoidthepolicy. (c)discoveryoffraudormaterialmisrepresentation; (d)discoveryofwillfulorrecklessactsoromissionsincreasingthehazardinsuredagainst; (e)physicalchangesinthepropertyinsuredwhichresultinthepropertybecominguninsurable;or (f)adeterminationbytheCommissionerthatthecontinuationofthepolicywouldviolateorwouldplacetheinsurer inviolationofthisCode. Sec.76.Abreachofwarrantywithoutfraudmerelyexoneratesaninsurerfromthetimethatitoccurs,orwhereitis brokeninitsinception,preventsthepolicyfromattachingtotherisk. Title8 PREMIUM

Sec.77.Aninsurerisentitledtopaymentofthepremiumassoonasthethinginsuredisexposedtotheperilinsured Sec.65.Allnoticesofcancellationmentionedintheprecedingsectionshallbeinwriting,mailedordeliveredtothe against.Notwithstandinganyagreementtothecontrary,nopolicyorcontractofinsuranceissuedbyaninsurance namedinsuredattheaddressshowninthepolicy,andshallstate(a)whichofthegroundssetforthinsectionsixty companyisvalidandbindingunlessanduntilthepremiumthereofhasbeenpaid,exceptinthecaseofalifeoran

industriallifepolicywheneverthegraceperiodprovisionapplies. Sec.78.Anacknowledgmentinapolicyorcontractofinsuranceorthereceiptofpremiumisconclusiveevidenceof itspayment,sofarastomakethepolicybinding,notwithstandinganystipulationthereinthatitshallnotbebinding untilthepremiumisactuallypaid. Sec.79.Apersoninsuredisentitledtoareturnofpremium,asfollows: (a)Tothewholepremiumifnopartofhisinterestinthethinginsuredbeexposedtoanyoftheperilsinsured against;

notexoneratedbythenegligenceoftheinsured,oroftheinsuranceagentsorothers. Title10 NOTICEOFLOSS Sec.88.Incaseoflossuponaninsuranceagainstfire,aninsurerisexonerated,ifnoticethereofbenotgiventohim byaninsured,orsomepersonentitledtothebenefitoftheinsurance,withoutunnecessarydelay. Sec.89.Whenapreliminaryproofoflossisrequiredbyapolicy,theinsuredisnotboundtogivesuchproofas wouldbenecessaryinacourtofjustice;butitissufficientforhimtogivethebestevidencewhichhehasinhis poweratthetime.

(b)Wheretheinsuranceismadeforadefiniteperiodoftimeandtheinsuredsurrendershispolicy,tosuchportion ofthepremiumascorrespondswiththeunexpiredtime,ataproratarate,unlessashortperiodratehasbeen Sec.90.Alldefectsinanoticeofloss,orinpreliminaryproofthereof,whichtheinsuredmightremedy,andwhich agreeduponandappearsonthefaceofthepolicy,afterdeductingfromthewholepremiumanyclaimforlossor theinsureromitstospecifytohim,withoutunnecessarydelay,asgroundsofobjection,arewaived. damageunderthepolicywhichhaspreviouslyaccrued;Provided,Thatnoholderofalifeinsurancepolicymayavail Sec.91.Delayinthepresentationtoaninsurerofnoticeorproofoflossiswaivedifcausedbyanyactofhim,orifhe himselfoftheprivilegesofthisparagraphwithoutsufficientcauseasotherwiseprovidedbylaw. omitstotakeobjectionpromptlyandspecificallyuponthatground. Sec.92.Ifthepolicyrequires,bywayofpreliminaryproofofloss,thecertificateortestimonyofapersonotherthan theinsured,itissufficientfortheinsuredtousereasonablediligencetoprocureit,andincaseoftherefusalofsuch persontogiveit,thentofurnishreasonableevidencetotheinsurerthatsuchrefusalwasnotinducedbyanyjust Sec.81.Apersoninsuredisentitledtoreturnofthepremiumwhenthecontractisvoidable,onaccountoffraudor groundsofdisbeliefinthefactsnecessarytobecertifiedortestified. misrepresentationoftheinsurer,orofhisagent,oronaccountoffacts,theexistenceofwhichtheinsuredwas Title11 ignorantwithouthisfault;orwhenbyanydefaultoftheinsuredotherthanactualfraud,theinsurerneverincurred DOUBLEINSURANCE anyliabilityunderthepolicy. Sec.93.Adoubleinsuranceexistswherethesamepersonisinsuredbyseveralinsurersseparatelyinrespecttothe Sec.82.Incaseofanoverinsurancebyseveralinsurers,theinsuredisentitledtoaratablereturnofthepremium, samesubjectandinterest. proportionedtotheamountbywhichtheaggregatesuminsuredinallthepoliciesexceedstheinsurablevalueofthe thingatrisk. Sec.94.Wheretheinsuredisoverinsuredbydoubleinsurance: Sec.80.Ifaperilinsuredagainsthasexisted,andtheinsurerhasbeenliableforanyperiod,howevershort,the insuredisnotentitledtoreturnofpremiums,sofarasthatparticularriskisconcerned. Title9 LOSS (a)Theinsured,unlessthepolicyotherwiseprovides,mayclaimpaymentfromtheinsurersinsuchorderashemay select,uptotheamountforwhichtheinsurersareseverallyliableundertheirrespectivecontracts;

Sec.83.Anagreementnottotransfertheclaimoftheinsuredagainsttheinsurerafterthelosshashappened,isvoid (b)Wherethepolicyunderwhichtheinsuredclaimsisavaluedpolicy,theinsuredmustgivecreditasagainstthe ifmadebeforethelossexceptasotherwiseprovidedinthecaseoflifeinsurance. valuationforanysumreceivedbyhimunderanyotherpolicywithoutregardtotheactualvalueofthesubject matterinsured; Sec.84.Unlessotherwiseprovidedbythepolicy,aninsurerisliableforalossofwhichaperilinsuredagainstwasthe proximatecause,althoughaperilnotcontemplatedbythecontractmayhavebeenaremotecauseoftheloss;buthe (c)Wherethepolicyunderwhichtheinsuredclaimsisanunvaluedpolicyhemustgivecredit,asagainstthefull isnotliableforalosswhichtheperilinsuredagainstwasonlyaremotecause. insurablevalue,foranysumreceivedbyhimunderanypolicy; Sec.85.Aninsurerisliablewherethethinginsuredisrescuedfromaperilinsuredagainstthatwouldotherwise (d)Wheretheinsuredreceivesanysuminexcessofthevaluationinthecaseofvaluedpolicies,oroftheinsurable havecausedaloss,if,inthecourseofsuchrescue,thethingisexposedtoaperilnotinsuredagainst,which valueinthecaseofunvaluedpolicies,hemustholdsuchsumintrustfortheinsurers,accordingtotheirrightof permanentlydeprivestheinsuredofitspossession,inwholeorinpart;orwherealossiscausedbyeffortstorescue contributionamongthemselves; thethinginsuredfromaperilinsuredagainst. (e)Eachinsurerisbound,asbetweenhimselfandtheotherinsurers,tocontributeratablytothelossinproportion Sec.86.Whereaperilisespeciallyexceptedinacontractofinsurance,aloss,whichwouldnothaveoccurredbutfor totheamountforwhichheisliableunderhiscontract. suchperil,istherebyexceptedalthoughtheimmediatecauseofthelosswasaperilwhichwasnotexcepted. Title12 Sec.87.Aninsurerisnotliableforalosscausedbythewillfulactorthroughtheconnivanceoftheinsured;butheis

REINSURANCE Sec.95.Acontractofreinsuranceisonebywhichaninsurerprocuresathirdpersontoinsurehimagainstlossor liabilitybyreasonofsuchoriginalinsurance. Sec.96.Whereaninsurerobtainsreinsurance,exceptunderautomaticreinsurancetreaties,hemustcommunicate alltherepresentationsoftheoriginalinsured,andalsoalltheknowledgeandinformationhepossesses,whether previouslyorsubsequentlyacquired,whicharematerialtotherisk. Sec.97.Areinsuranceispresumedtobeacontractofindemnityagainstliability,andnotmerelyagainstdamage. Sec.98.Theoriginalinsuredhasnointerestinacontractofreinsurance. ChapterII CLASSESOFINSURANCE TitleI MARINEINSURANCE SubTitle1A DEFINITION Sec.99.MarineInsuranceincludes:

(2)"Marineprotectionandindemnityinsurance,"meaninginsuranceagainst,oragainstlegalliabilityoftheinsured forloss,damage,orexpenseincidenttoownership,operation,chartering,maintenance,use,repair,orconstruction ofanyvessel,craftorinstrumentalityinuseofoceanorinlandwaterways,includingliabilityoftheinsuredfor personalinjury,illnessordeathorforlossofordamagetothepropertyofanotherperson. SubTitle1B INSURABLEINTEREST Sec.100.Theownerofashiphasinallcasesaninsurableinterestinit,evenwhenithasbeencharteredbyonewho covenantstopayhimitsvalueincaseofloss:Provided,Thatinthiscasetheinsurershallbeliableforonlythatpart ofthelosswhichtheinsuredcannotrecoverfromthecharterer. Sec.101.Theinsurableinterestoftheowneroftheshiphypothecatedbybottomryisonlytheexcessofitsvalueover theamountsecuredbybottomry. Sec.102.Freightage,inthesenseofapolicyofmarineinsurance,signifiesallthebenefitsderivedbytheowner, eitherfromthecharteringoftheshiporitsemploymentforthecarriageofhisowngoodsorthoseofothers. Sec.103.Theownerofashiphasaninsurableinterestinexpectedfreightagewhichaccordingtotheordinaryand probablecourseofthingshewouldhaveearnedbutfortheinterventionofaperilinsuredagainstorotherperil incidenttothevoyage.

(1)Insuranceagainstlossofordamageto:

Sec.104.Theinterestmentionedinthelastsectionexists,incaseofacharterparty,whentheshiphasbroken groundonthecharteredvoyage.Ifapriceistobepaidforthecarriageofgoodsitexistswhentheyareactuallyon board,orthereissomecontractforputtingthemonboard,andbothshipandgoodsarereadyforthespecified (a)Vessels,craft,aircraft,vehicles,goods,freights,cargoes,merchandise,effects,disbursements, voyage. profits,moneys,securities,chosesinaction,evidencesofdebts,valuablepapers,bottomry,and Sec.105.Onewhohasaninterestinthethingfromwhichprofitsareexpectedtoproceedhasaninsurableinterestin respondentiainterestsandallotherkindsofpropertyandintereststherein,inrespectto, theprofits. appertainingtoorinconnectionwithanyandallrisksorperilsofnavigation,transitor transportation,orwhilebeingassembled,packed,crated,baled,compressedorsimilarly Sec.106.Thechartererofashiphasaninsurableinterestinit,totheextentthatheisliabletobedamnifiedbyits preparedforshipmentorwhileawaitingshipment,orduringanydelays,storage,transhipment, loss. orreshipmentincidentthereto,includingwarrisks,marinebuilder'srisks,andallpersonal SubTitle1C propertyfloaterrisks; CONCEALMENT (b)Personorpropertyinconnectionwithorappertainingtoamarine,inlandmarine,transitor Sec.107.Inmarineinsuranceeachpartyisboundtocommunicate,inadditiontowhatisrequiredbysectiontwenty transportationinsurance,includingliabilityforlossofordamagearisingoutoforinconnection eight,alltheinformationwhichhepossesses,materialtotherisk,exceptsuchasismentionedinSectionthirty,and withtheconstruction,repair,operation,maintenanceoruseofthesubjectmatterofsuch tostatetheexactandwholetruthinrelationtoallmattersthatherepresents,oruponinquirydisclosesorassumes insurance(butnotincludinglifeinsuranceorsuretybondsnorinsuranceagainstlossbyreasonof todisclose. bodilyinjurytoanypersonarisingoutofownership,maintenance,oruseofautomobiles); Sec.108.Inmarineinsurance,informationofthebelieforexpectationofathirdperson,inreferencetoamaterial (c)Preciousstones,jewels,jewelry,preciousmetals,whetherincourseoftransportationor fact,ismaterial. otherwise; Sec.109.Apersoninsuredbyacontractofmarineinsuranceispresumedtohaveknowledge,atthetimeofinsuring, (d)Bridges,tunnelsandotherinstrumentalitiesoftransportationandcommunication(excluding ofapriorloss,iftheinformationmightpossiblyhavereachedhimintheusualmodeoftransmissionandattheusual buildings,theirfurnitureandfurnishings,fixedcontentsandsuppliesheldinstorage);piers, rateofcommunication. wharves,docksandslips,andotheraidstonavigationandtransportation,includingdrydocks andmarinerailways,damsandappurtenantfacilitiesforthecontrolofwaterways.

Sec.110.Aconcealmentinamarineinsurance,inrespecttoanyofthefollowingmatters,doesnotvitiatetheentire portion,theshipisseaworthywithreferencetothatportion. contract,butmerelyexoneratestheinsurerfromalossresultingfromtheriskconcealed: Sec.118.Whentheshipbecomesunseaworthyduringthevoyagetowhichaninsurancerelates,anunreasonable (a)Thenationalcharacteroftheinsured; delayinrepairingthedefectexoneratestheinsureronshiporshipowner'sinterestfromliabilityfromanyloss arisingtherefrom. (b)Theliabilityofthethinginsuredtocaptureanddetention; Sec.119.Ashipwhichisseaworthyforthepurposeofaninsuranceupontheshipmay,nevertheless,byreasonof (c)Theliabilitytoseizurefrombreachofforeignlawsoftrade; beingunfittedtoreceivethecargo,beunseaworthyforthepurposeoftheinsuranceuponthecargo. (d)Thewantofnecessarydocuments; Sec.120.Wherethenationalityorneutralityofashiporcargoisexpresslywarranted,itisimpliedthattheshipwill carrytherequisitedocumentstoshowsuchnationalityorneutralityandthatitwillnotcarryanydocumentswhich (e)Theuseoffalseandsimulatedpapers. castreasonablesuspicionthereon. SubTitle1D SubTitle1F REPRESENTATION THEVOYAGEANDDEVIATION Sec.111.Ifarepresentationbyapersoninsuredbyacontractofmarineinsurance,isintentionallyfalseinany Sec.121.Whenthevoyagecontemplatedbyamarineinsurancepolicyisdescribedbytheplacesofbeginningand materialrespect,orinrespectofanyfactonwhichthecharacterandnatureoftheriskdepends,theinsurermay ending,thevoyageinsuredinonewhichconformstothecourseofsailingfixedbymercantileusagebetweenthose rescindtheentirecontract. places. Sec.112.Theeventualfalsityofarepresentationastoexpectationdoesnot,intheabsenceoffraud,avoidacontract Sec.122.Ifthecourseofsailingisnotfixedbymercantileusage,thevoyageinsuredbyamarineinsurancepolicyis ofmarineinsurance. thatwaybetweentheplacesspecified,whichtoamasterofordinaryskillanddiscretion,wouldmeanthemost SubTitle1E natural,directandadvantageous. IMPLIEDWARRANTIES Sec.123.Deviationisadeparturefromthecourseofthevoyageinsured,mentionedinthelasttwosections,oran Sec.113.Ineverymarineinsuranceuponashiporfreight,orfreightage,oruponanythingwhichisthesubjectof unreasonabledelayinpursuingthevoyageorthecommencementofanentirelydifferentvoyage. marineinsurance,awarrantyisimpliedthattheshipisseaworthy. Sec.124.Adeviationisproper: Sec.114.Ashipisseaworthywhenreasonablyfittoperformtheserviceandtoencountertheordinaryperilsofthe (a)Whencausedbycircumstancesoverwhichneitherthemasternortheowneroftheshiphasanycontrol; voyagecontemplatedbythepartiestothepolicy. Sec.115.Animpliedwarrantyofseaworthinessiscompliedwithiftheshipbeseaworthyatthetimeoftheof commencementoftherisk,exceptinthefollowingcases: (b)Whennecessarytocomplywithawarranty,ortoavoidaperil,whetherornottheperilisinsuredagainst;

(c)Whenmadeingoodfaith,anduponreasonablegroundsofbeliefinitsnecessitytoavoidaperil;or (a)Whentheinsuranceismadeforaspecifiedlengthoftime,theimpliedwarrantyisnotcompliedwithunlessthe (d)Whenmadeingoodfaith,forthepurposeofsavinghumanlifeorrelievinganothervesselindistress. shipbeseaworthyatthecommencementofeveryvoyageitundertakesduringthattime; Sec.125.Everydeviationnotspecifiedinthelastsectionisimproper. (b)Whentheinsuranceisuponthecargowhich,bythetermsofthepolicy,descriptionofthevoyage,orestablished customofthetrade,istobetranshippedatanintermediateport,theimpliedwarrantyisnotcompliedwithunless Sec.126.Aninsurerisnotliableforanylosshappeningtothethinginsuredsubsequenttoanimproperdeviation. eachvesseluponwhichthecargoisshipped,ortranshipped,beseaworthyatthecommencementofeachparticular SubTitle1G voyage. LOSS Sec.116.Awarrantyofseaworthinessextendsnotonlytotheconditionofthestructureoftheshipitself,butrequires Sec.127.Alossmaybeeithertotalorpartial. thatitbeproperlyladen,andprovidedwithacompetentmaster,asufficientnumberofcompetentofficersand seamen,andtherequisiteappurtenancesandequipment,suchasballasts,cablesandanchors,cordageandsails, Sec.128.Everylosswhichisnottotalispartial. food,water,fuelandlights,andothernecessaryorproperstoresandimplementsforthevoyage. Sec.129.Atotallossmaybeeitheractualorconstructive. Sec.117.Wheredifferentportionsofthevoyagecontemplatedbyapolicydifferinrespecttothethingsrequisiteto Sec.130.Anactualtotallossiscauseby: maketheshipseaworthytherefor,awarrantyofseaworthinessiscompliedwithif,atthecommencementofeach

(a)Atotaldestructionofthethinginsured; (b)Theirretrievablelossofthethingbysinking,orbybeingbrokenup; (c)Anydamagetothethingwhichrendersitvaluelesstotheownerforthepurposeforwhichheheldit;or (d)Anyothereventwhicheffectivelydeprivestheownerofthepossession,attheportofdestination,ofthething insured. Sec.131.Aconstructivetotallossisonewhichgivestoapersoninsuredarighttoabandon,underSectionone hundredthirtynine.

(b)Ifitisinjuredtosuchanextentastoreduceitsvaluemorethanthreefourths; (c)Ifthethinginsuredisaship,andthecontemplatedvoyagecannotbelawfullyperformedwithoutincurringeither anexpensetotheinsuredofmorethanthreefourthsthevalueofthethingabandonedorariskwhichaprudent manwouldnottakeunderthecircumstances;or (d)Ifthethinginsured,beingcargoorfreightage,andthevoyagecannotbeperformed,noranothershipprocured bythemaster,withinareasonabletimeandwithreasonablediligence,toforwardthecargo,withoutincurringthe likeexpenseorriskmentionedintheprecedingsubparagraph.Butfreightagecannotinanycasebeabandoned unlesstheshipisalsoabandoned.

Sec.132.Anactuallossmaybepresumedfromthecontinuedabsenceofashipwithoutbeingheardof.ThelengthofSec.140.Anabandonmentmustbeneitherpartialnorconditional. timewhichissufficienttoraisethispresumptiondependsonthecircumstancesofthecase. Sec.141.Anabandonmentmustbemadewithinareasonabletimeafterreceiptofreliableinformationoftheloss, butwheretheinformationisofadoubtfulcharacter,theinsuredisentitledtoareasonabletimetomakeinquiry. Sec.133.Whenashipisprevented,atanintermediateport,fromcompletingthevoyage,bytheperilsinsured against,theliabilityofamarineinsureronthecargocontinuesaftertheyarethusreshipped. Sec.142.Wheretheinformationuponwhichanabandonmenthasbeenmadeprovesincorrect,orthethinginsured Nothinginthissectionshallpreventaninsurerfromrequiringanadditionalpremiumifthehazardbeincreasedby wassofarrestoredwhentheabandonmentwasmadethattherewastheninfactnototalloss,theabandonment thisextensionofliability. becomesineffectual. Sec.134.Inadditiontotheliabilitymentionedinthelastsection,amarineinsurerisboundfordamages,expensesof Sec.143.Abandonmentismadebygivingnoticethereoftotheinsurer,whichmaybedoneorally,orinwriting; discharging,storage,reshipment,extrafreightage,andallotherexpensesincurredinsavingcargoreshipped Provided,Thatifthenoticebedoneorally,awrittennoticeofsuchabandonmentshallbesubmittedwithinseven pursuanttothelastsection,uptotheamountinsured. daysfromsuchoralnotice. Nothinginthisorintheprecedingsectionshallrenderamarineinsurerliableforanyamountinexcessofthe insuredvalueor,iftherebenone,oftheinsurablevalue. Sec.144.Anoticeofabandonmentmustbeexplicit,andmustspecifytheparticularcauseoftheabandonment,but needstateonlyenoughtoshowthatthereisprobablecausetherefor,andneednotbeaccompaniedwithproofof Sec.135.Uponanactualtotalloss,apersoninsuredisentitledtopaymentwithoutnoticeofabandonment. interestorofloss. Sec.136.Whereithasbeenagreedthataninsuranceuponaparticularthing,orclassofthings,shallbefreefrom Sec.145.Anabandonmentcanbesustainedonlyuponthecausespecifiedinthenoticethereof. particularaverage,amarineinsurerisnotliableforanyparticularaveragelossnotdeprivingtheinsuredofthe possession,attheportofdestination,ofthewholeofsuchthing,orclassofthings,eventhoughitbecomesentirely Sec.146.Anabandonmentisequivalenttoatransferbytheinsuredofhisinteresttotheinsurer,withallthechances worthless;butsuchinsurerisliableforhisproportionofallgeneralaveragelossassesseduponthethinginsured. ofrecoveryandindemnity. Sec.137.Aninsuranceconfinedintermstoanactuallossdoesnotcoveraconstructivetotalloss,butcoversanyloss,Sec.147.Ifamarineinsurerpaysforalossasifitwereanactualtotalloss,heisentitledtowhatevermayremainof whichnecessarilyresultsindeprivingtheinsuredofthepossession,attheportofdestination,oftheentirething thethinginsured,oritsproceedsorsalvage,asiftherehadbeenaformalabandonment. insured. Sec.148.Uponanabandonment,actsdoneingoodfaithbythosewhowereagentsoftheinsuredinrespecttothe SubTitle1H thinginsured,subsequenttotheloss,areattheriskoftheinsurerandforhisbenefit. ABANDONMENT Sec.149.Wherenoticeofabandonmentisproperlygiven,therightsoftheinsuredarenotprejudicedbythefactthat Sec.138.Abandonment,inmarineinsurance,istheactoftheinsuredbywhich,afteraconstructivetotalloss,he theinsurerrefusestoaccepttheabandonment. declarestherelinquishmenttotheinsurerofhisinterestinthethinginsured. Sec.150.Theacceptanceofanabandonmentmaybeeitherexpressorimpliedfromtheconductoftheinsurer.The Sec.139.Apersoninsuredbyacontractofmarineinsurancemayabandonthethinginsured,oranyparticular meresilenceoftheinsurerforanunreasonablelengthoftimeafternoticeshallbeconstruedasanacceptance. portionthereofseparatelyvaluedbythepolicy,orotherwiseseparatelyinsured,andrecoverforatotallossthereof, Sec.151.Theacceptanceofanabandonment,whetherexpressorimplied,isconclusiveupontheparties,andadmits whenthecauseofthelossisaperilinsuredagainst: thelossandthesufficiencyoftheabandonment. (a)Ifmorethanthreefourthsthereofinvalueisactuallylost,orwouldhavetobeexpendedtorecoveritfromthe Sec.152.Anabandonmentoncemadeandacceptedisirrevocable,unlessthegrounduponwhichitwasmadeproves peril;

tobeunfounded.

Sec.153.Onanacceptedabandonmentofaship,freightageearnedprevioustothelossbelongstotheinsurerofsaid freightage;butfreightagesubsequentlyearnedbelongstotheinsureroftheship. Sec.163.Amarineinsurerisliableforalltheexpensesattendantuponalosswhichforcestheshipintoporttobe repaired;andwhereitisstipulatedinthepolicythattheinsuredshalllaborfortherecoveryoftheproperty,the Sec.154.Ifaninsurerrefusestoacceptavalidabandonment,heisliableasuponactualtotalloss,deductingfrom insurerisliablefortheexpenseincurredthereby,suchexpense,ineithercase,beinginadditiontoatotalloss,ifthat theamountanyproceedsofthethinginsuredwhichmayhavecometothehandsoftheinsured. afterwardsoccurs. Sec.155.Ifapersoninsuredomitstoabandon,hemayneverthelessrecoverhisactualloss. Sec.164.Amarineinsurerisliableforalossfallingupontheinsured,throughacontributioninrespecttothething insured,requiredtobemadebyhimtowardsageneralaveragelosscalledforbyaperilinsuredagainst;provided, SubTitle1I thattheliabilityoftheinsurershallbelimitedtotheproportionofcontributionattachingtohispolicyvaluewhere MEASUREOFINDEMNITY thisislessthanthecontributingvalueofthethinginsured. Sec.156.Avaluationinapolicyofmarineinsuranceinconclusivebetweenthepartiestheretointheadjustmentof Sec.165.Whenapersoninsuredbyacontractofmarineinsurancehasademandagainstothersforcontribution,he eitherapartialortotalloss,iftheinsuredhassomeinterestatrisk,andthereisnofraudonhispart;exceptthat whenathinghasbeenhypothecatedbybottomryorrespondentia,beforeitsinsurance,andwithouttheknowledge mayclaimthewholelossfromtheinsurer,subrogatinghimtohisownrighttocontribution.Butnosuchclaimcan bemadeupontheinsureraftertheseparationoftheinterestsliabletothecontribution,norwhentheinsured, ofthepersonactuallyprocuringtheinsurance,hemayshowtherealvalue.Butavaluationfraudulentinfact, havingtherightandopportunitytoenforcethecontributionfromothers,hasneglectedorwaivedtheexerciseof entitlestheinsurertorescindthecontract. thatright. Sec.157.Amarineinsurerisliableuponapartialloss,onlyforsuchproportionoftheamountinsuredbyhimasthe Sec.166.Inthecaseofapartiallossofshiporitsequipment,theoldmaterialsaretobeappliedtowardspaymentfor lossbearstothevalueofthewholeinterestoftheinsuredinthepropertyinsured. thenew.Unlessotherwisestipulatedinthepolicy,amarineinsurerisliableforonlytwothirdsoftheremainingcost Sec.158.Whereprofitsareseparatelyinsuredinacontractofmarineinsurance,theinsuredisentitledtorecover,in ofrepairsaftersuchdeduction,exceptthatanchorsmustbepaidinfull. caseofloss,aproportionofsuchprofitsequivalenttotheproportionwhichthevalueofthepropertylostbearsto Title2 thevalueofthewhole. FIREINSURANCE Sec.159.Incaseofavaluedpolicyofmarineinsuranceonfreightageorcargo,ifapartonlyofthesubjectisexposed Sec.167.AsusedinthisCode,theterm"fireinsurance"shallincludeinsuranceagainstlossbyfire,lightning, totherisk,theevaluationappliesonlyinproportiontosuchpart. windstorm,tornadoorearthquakeandotheralliedrisks,whensuchrisksarecoveredbyextensiontofireinsurance Sec.160.Whenprofitsarevaluedandinsuredbyacontractofmarineinsurance,alossofthemisconclusively policiesorunderseparatepolicies. presumedfromalossofthepropertyoutofwhichtheyareexpectedtoarise,andthevaluationfixestheiramount. Sec.168.Analterationintheuseorconditionofathinginsuredfromthattowhichitislimitedbythepolicymade Sec.161.Inestimatingalossunderanopenpolicyofmarineinsurancethefollowingrulesaretobeobserved: withouttheconsentoftheinsurer,bymeanswithinthecontroloftheinsured,andincreasingtherisks,entitlesan insurertorescindacontractoffireinsurance. (a)Thevalueofashipisitsvalueatthebeginningoftherisk,includingallarticlesorchargeswhichaddtoits permanentvalueorwhicharenecessarytoprepareitforthevoyageinsured; Sec.169.Analterationintheuseorconditionofathinginsuredfromthattowhichitislimitedbythepolicy,which doesnotincreasetherisk,doesnotaffectacontractoffireinsurance. (b)Thevalueofthecargoisitsactualcosttotheinsured,whenladenonboard,orwherethecostcannotbe ascertained,itsmarketvalueatthetimeandplaceoflading,addingthechargesincurredinpurchasingandplacing Sec.170.Acontractoffireinsuranceisnotaffectedbyanyactoftheinsuredsubsequenttotheexecutionofthe itonboard,butwithoutreferencetoanylossincurredinraisingmoneyforitspurchase,ortoanydrawbackonits policy,whichdoesnotviolateitsprovisions,eventhoughitincreasestheriskandisthecauseoftheloss. exportation,ortothefluctuationofthemarketattheportofdestination,ortoexpensesincurredonthewayoron Sec.171.Ifthereisnovaluationinthepolicy,themeasureofindemnityinaninsuranceagainstfireistheexpenseit arrival; wouldbetotheinsuredatthetimeofthecommencementofthefiretoreplacethethinglostorinjuredinthe (c)Thevalueoffreightageisthegrossfreightage,exclusiveofprimage,withoutreferencetothecostofearningit; conditioninwhichatthetimeoftheinjury;butifthereisavaluationinapolicyoffireinsurance,theeffectshallbe and thesameasinapolicyofmarineinsurance. (d)Thecostofinsuranceisineachcasetobeaddedtothevaluethusestimated. Sec.172.Whenevertheinsureddesirestohaveavaluationnamedinhispolicy,insuringanybuildingorstructure Sec.162.Ifcargoinsuredagainstpartiallossarrivesattheportofdestinationinadamagedcondition,thelossoftheagainstfire,hemayrequiresuchbuildingorstructuretobeexaminedbyanindependentappraiserandthevalueof

insuredisdeemedtobethesameproportionofthevaluewhichthemarketpriceatthatport,ofthethingso damaged,bearstothemarketpriceitwouldhavebroughtifsound.

theinsured'sinterestthereinmaythenbefixedasbetweentheinsurerandtheinsured.ThecostofsuchexaminationInthecaseofacontinuingbond,theobligorshallpaythesubsequentannualpremiumasitfallsdueuntilthe shallbepaidforbytheinsured.Aclauseshallbeinsertedinsuchpolicystatingsubstantiallythatthevalueofthe contractofsuretyshipiscancelledbytheobligeeorbytheCommissionerorbyacourtofcompetentjurisdiction,as insured'sinterestinsuchbuildingorstructurehasbeenthusfixed.Intheabsenceofanychangeincreasingtherisk thecasemaybe. withouttheconsentoftheinsureroroffraudonthepartoftheinsured,thenincaseofatotallossundersuchpolicy, Sec.178.PertinentprovisionsoftheCivilCodeoftheshallbeappliedinasuppletorycharacterwhenevernecessary thewholeamountsoinsuredupontheinsured'sinterestinsuchbuildingorstructure,asstatedinthepolicyupon ininterpretingtheprovisionsofacontractofsuretyship. whichtheinsurershavereceivedapremium,shallbepaid,andincaseofapartiallossthefullamountofthepartial lossshallbesopaid,andincasetherearetwoormorepoliciescoveringtheinsured'sinteresttherein,eachpolicy Title5 shallcontributeproratatothepaymentofsuchwholeorpartialloss.Butinnocaseshalltheinsurerberequiredto LIFEINSURANCE paymorethantheamountthusstatedinsuchpolicy.Thissectionshallnotpreventthepartiesfromstipulatingin Sec.179.Lifeinsuranceisinsuranceonhumanlivesandinsuranceappertainingtheretoorconnectedtherewith. suchpoliciesconcerningtherepairing,rebuildingorreplacingofbuildingsorstructureswhollyorpartially damagedordestroyed. Sec.180.Aninsuranceuponlifemaybemadepayableonthedeathoftheperson,oronhissurvivingaspecified period,orotherwisecontingentlyonthecontinuanceorcessationoflife. Sec.173.Nopolicyoffireinsuranceshallbepledged,hypothecated,ortransferredtoanyperson,firmorcompany whoactsasagentfororotherwiserepresentstheissuingcompany,andanysuchpledge,hypothecation,ortransfer Everycontractorpledgeforthepaymentofendowmentsorannuitiesshallbeconsideredalifeinsurancecontract hereaftermadeshallbevoidandofnoeffectinsofarasitmayaffectothercreditorsoftheinsured. forpurposeofthisCode. Intheabsenceofajudicialguardian,thefather,orinthelatter'sabsenceorincapacity,themother,oranyminor, whoisaninsuredorabeneficiaryunderacontractoflife,healthoraccidentinsurance,mayexercise,inbehalfof saidminor,anyrightunderthepolicy,withoutnecessityofcourtauthorityorthegivingofabond,wherethe Sec.174.Casualtyinsuranceisinsurancecoveringlossorliabilityarisingfromaccidentormishap,excludingcertain interestoftheminorintheparticularactinvolveddoesnotexceedtwentythousandpesos.Suchrightmayinclude, typesoflosswhichbylaworcustomareconsideredasfallingexclusivelywithinthescopeofothertypesofinsurance butshallnotbelimitedto,obtainingapolicyloan,surrenderingthepolicy,receivingtheproceedsofthepolicy,and suchasfireormarine.Itincludes,butisnotlimitedto,employer'sliabilityinsurance,motorvehicleliability givingtheminor'sconsenttoanytransactiononthepolicy. insurance,plateglassinsurance,burglaryandtheftinsurance,personalaccidentandhealthinsuranceaswrittenby nonlifeinsurancecompanies,andothersubstantiallysimilarkindsofinsurance. Sec.180A.Theinsurerinalifeinsurancecontractshallbeliableincaseofsuicidesonlywhenitiscommittedafter thepolicyhasbeeninforceforaperiodoftwoyearsfromthedateofitsissueorofitslastreinstatement,unlessthe Title4 policyprovidesashorterperiod:Provided,however,Thatsuicidecommittedinthestateofinsanityshallbe SURETYSHIP compensableregardlessofthedateofcommission.(AsamendedbyBatasangPambansaBlg.874). Sec.175.Acontractofsuretyshipisanagreementwherebyapartycalledthesuretyguaranteestheperformanceby Sec.181.Apolicyofinsuranceuponlifeorhealthmaypassbytransfer,willorsuccessiontoanyperson,whetherhe anotherpartycalledtheprincipalorobligorofanobligationorundertakinginfavorofathirdpartycalledthe hasaninsurableinterestornot,andsuchpersonmayrecoveruponitwhatevertheinsuredmighthaverecovered. obligee.Itincludesofficialrecognizances,stipulations,bondsorundertakingsissuedbyanycompanybyvirtueof andundertheprovisionsofActNo.536,asamendedbyActNo.2206. Sec.182.Noticetoaninsurerofatransferorbequestthereofisnotnecessarytopreservethevalidityofapolicyof insuranceuponlifeorhealth,unlesstherebyexpresslyrequired. Sec.176.Theliabilityofthesuretyorsuretiesshallbejointandseveralwiththeobligorandshallbelimitedtothe amountofthebond.Itisdeterminedstrictlybythetermsofthecontractofsuretyshipinrelationtotheprincipal Sec.183.Unlesstheinterestofapersoninsuredissusceptibleofexactpecuniarymeasurement,themeasureof contractbetweentheobligorandtheobligee.(AsamendedbyPresidentialDecreeNo.1455). indemnityunderapolicyofinsuranceuponlifeorhealthisthesumfixedinthepolicy. Sec.177.Thesuretyisentitledtopaymentofthepremiumassoonasthecontractofsuretyshiporbondisperfected ChapterIII anddeliveredtotheobligor.Nocontractofsuretyshiporbondingshallbevalidandbindingunlessanduntilthe THEBUSINESSOFINSURANCE premiumthereforhasbeenpaid,exceptwheretheobligeehasacceptedthebond,inwhichcasethebondbecomes Title1 validandenforceableirrespectiveofwhetherornotthepremiumhasbeenpaidbytheobligortothesurety: INSURANCECOMPANIES,ORGANIZATION, Provided,Thatifthecontractofsuretyshiporbondisnotacceptedby,orfiledwiththeobligee,thesuretyshall CAPITALIZATIONANDAUTHORIZATION collectonlyreasonableamount,notexceedingfiftypercentumofthepremiumduethereonasservicefeeplusthe costofstampsorothertaxesimposedfortheissuanceofthecontractorbond:Provided,however,Thatifthenon Sec.184.ForpurposesofthisCode,theterm"insurer"or"insurancecompany"shallincludeallindividuals, acceptanceofthebondbeduetothefaultornegligenceofthesurety,nosuchservicefee,stampsortaxesshallbe partnerships,associations,orcorporations,includinggovernmentownedorcontrolledcorporationsorentities, collected. Title3 CASUALTYINSURANCE

engagedasprincipalsintheinsurancebusiness,exceptingmutualbenefitassociations.Unlessthecontextotherwise requires,thetermsshallalsoincludeprofessionalreinsurersdefinedinsectiontwohundredeighty."Domestic company"shallincludecompaniesformed,organizedorexistingunderthelawsofthe."Foreigncompany"when usedwithoutlimitationshallincludecompaniesformed,organized,orexistingunderanylawsotherthanthoseof the.

Nopersonshallconcurrentlybeadirectorand/orofficerofaninsurancecompanyandanadjustmentcompany. Incumbentdirectorsand/orofficersaffectedbytheaboveprovisionsareherebyallowedtoholdontotheirpositions untiltheendoftheirtermsortwoyearsfromtheeffectivityofthisdecree,whicheverisshorter.

Beforeissuingsuchcertificateofauthority,theCommissionermustbesatisfiedthatthenameofthecompanyisnot thatofanyotherknowncompanytransactingasimilarbusinessinthePhilippines,oranamesosimilarastobe Sec.185.Corporationsformedororganizedtosaveanypersonorpersonsorothercorporationsharmlessfromloss, calculatedtomisleadthepublic. damage,orliabilityarisingfromanyunknownorfutureorcontingentevent,ortoindemnifyortocompensateany personorpersonsorothercorporationsforanysuchloss,damage,orliability,ortoguaranteetheperformanceoforSuchcertificateofauthorityshallexpireonthelastdayofJuneofeachyearandshallberenewedannuallyifthe compliancewithcontractualobligationsorthepaymentofdebtofothersshallbeknownas"insurance companyiscontinuingtocomplywiththeprovisionsofthisCodeorthecirculars,instructions,rulingsordecisions corporations". oftheCommissioner.Everycompanyreceivinganysuchcertificatesofauthorityshallbesubjecttotheprovisionsof thisCodeandotherrelatedlawsandtothejurisdictionandsupervisionoftheCommissioner. TheprovisionsoftheCorporationLawshallapplytoallinsurancecorporationsnoworhereafterengagedin businessintheinsofarastheydonotconflictwiththeprovisionsofthischapter. Noinsurancecompanymaybeauthorizedtotransactinthethebusinessoflifeandnonlifeinsuranceconcurrently unlessspecificallyauthorizedtodoso:Provided,Thattheterms"life"and"nonlife"insuranceshallbedeemedto Sec.186.Noperson,partnership,orassociationofpersonsshalltransactanyinsurancebusinessinthePhilippines includehealth,accidentanddisabilityinsurance. exceptasagentofapersonorcorporationauthorizedtodothebusinessofinsuranceinthePhilippines,unless possessedofthecapitalandassetsrequiredofaninsurancecorporationdoingthesamekindofbusinessinthe Noinsurancecompanyshallhaveequityinanadjustmentcompanyandneithershallanadjustmentcompanyhave Philippinesandinvestedinthesamemanner;norunlesstheCommissionershallhavegrantedtohimorthema anequityinaninsurancecompany. certificatetotheeffectthatheortheyhavecompliedwithalltheprovisionsoflawwhichaninsurancecorporation Insurancecompaniesandadjustmentcompaniespresentlyaffectedbytheaboveprovisionshallhavetwoyearsfrom doingbusinessinthePhilippinesisrequiredtoobserve. theeffectivityofthisDecreewithinwhichtodivestoftheirstockholdings.(AsamendedbyPresidentialDecreeNo. Everyperson,partnership,orassociationreceivinganysuchcertificateofauthorityshallbesubjecttotheinsurance1455). lawsofthePhilippinesandtothejurisdictionandsupervisionoftheCommissionerinthesamemannerasifan Sec.188.Exceptasprovidedinsectiontwohundredeightyone,nodomesticinsurancecompanyshall,inastock insurancecorporationauthorizedbythelawsofthePhilippinestoengageinthebusinessofinsurancespecifiedin corporation,engageinbusinessinthePhilippinesunlesspossessedofapaidupcapitalstockequaltoatleastfive thecertificate. millionpesos:Provided,ThatadomesticinsurancecompanyalreadydoingbusinessinthePhilippineswithapaidup Sec.187.Noinsurancecompanyshalltransactanyinsurancebusinessintheuntilafteritshallhaveobtaineda capitalstockwhichislessthanfivemillionpesosshallhaveapaidupcapitalstockofatleastthreemillionpesosby certificateofauthorityforthatpurposefromtheCommissioneruponapplicationthereforeandpaymentbythe Decemberthirtyone,nineteenhundredseventyeight,fourmillionpesosbyDecemberthirtyone,nineteenhundred companyconcernedofthefeeshereinafterprescribed. seventynineandfivemillionpesosbyDecemberthirtyone,nineteenhundredeighty:Provided,further,thatthe SecretaryofFinancemay,uponrecommendationoftheInsuranceCommissioner,increasesuchminimumpaidup TheCommissionermayrefusetoissueacertificateofauthoritytoanyinsurancecompanyif,inhisjudgment,such capitalstockrequirement,undersuchtermsandconditionsashemayimpose,toanamountwhich,inhisopinion, refusalwillbestpromotetheinterestofthepeopleofthiscountry.Nosuchcertificateofauthorityshallbegrantedto wouldreasonablyassurethesafetyoftheinterestsofthepolicyholdersandthepublic. anysuchcompanyuntiltheCommissionershallhavesatisfiedhimselfbysuchexaminationashemaymakeandsuch evidenceashemayrequirethatsuchcompanyisqualifiedbythelawsofthePhilippinestotransactbusinesstherein,TheCommissionermay,asaprelicensingrequirementofanewinsurancecompany,inadditiontothepaidup thatthegrantofsuchauthorityappearstobejustifiedinthelightofeconomicrequirements,andthatthedirection capitalstock,requirethestockholderstopayincashtothecompanyinproportiontotheirsubscriptioninterestsa andadministration,aswellastheintegrityandresponsibilityoftheorganizersandadministrators,thefinancial contributedsurplusfundofnotlessthanonemillionpesos,inthecaseofalifeinsurancecompany,ornotlessthan organizationandtheamountofcapital,notwithstandingtheprovisionsofsectiononehundredeightyeight, fivehundredthousandpesos,inthecaseofaninsurancecompanyotherthanlife.Hemayalsorequiresuchcompany reasonablyassurethesafetyoftheinterestsofthepolicyholdersandthepublic. tosubmittohimabusinessplanshowingthecompany'sestimatedreceiptsanddisbursements,aswellasthebasis therefore,forthenextsucceedingthreeyears. Inordertomaintainthequalityofthemanagementoftheinsurancecompaniesandaffordbetterprotectionto policyholdersandthepublicingeneral,anypersonofgoodmoralcharacter,unquestionedintegrityandrecognized Iforganizedasamutualcompany,inlieuofsuchcapitalstock,itmusthaveavailablecashassetsofatleastfive competencemaybeelectedorappointeddirectororofficerofinsurancecompanies.TheCommissionershall millionpesosaboveallliabilitiesforlossesreported,expenses,taxes,legalreserve,andreinsuranceofalloutstanding prescribethequalificationsoftheexecutiveofficersandotherkeyofficialsofinsurancecompaniesforpurposesof risks,andthecontributedsurplusfundequaltotheamountsrequiredofstockcorporations.Astockinsurance thissection. companydoingbusinessinthePhilippinesmay,subjecttothepertinentlawandregulationswhichnowareof

hereaftermaybeinforce,alteritsorganizationandtransformitselfintoamutualinsurancecompany.(Asamended whichoccurredinthePhilippines,serviceofanynoticeprovidedbylaw,orinsurancepolicy,proofofloss,summons,or otherlegalprocessmaybemadeupontheInsuranceCommissionershallhavethesameforceandeffectasifmade byPresidentialDecreeNo.1455). uponthecompany." Sec.189.Everycompanymust,beforeengaginginthebusinessofinsuranceinthe,filewiththeCommissionerthe Wheneversuchserviceofnotice,proofofloss,summons,orotherlegalprocessshallbemadeupontheCommission, following: hemust,withintendaysthereafter,transmitbymail,postagepaid,acopyofsuchnotice,proofofloss,summons,or (a)Acertifiedcopyofthelastannualstatementoraverifiedfinancialstatementexhibitingtheconditionandaffairs otherlegalprocesstothecompanyatitshomeorprincipaloffice.ThesendingofsuchcopybytheCommissioner ofsuchcompany; shallbeanecessarypartoftheserviceofthenotice,proofofloss,orotherlegalprocess. (b)IfincorporatedunderthelawsofthePhilippines,acopyofthearticlesofincorporationandbylaws,andany Sec.191.Noinsurancecompanyorganizedorexistingunderthegovernmentorlawsotherthanthoseofthe amendmentstoeither,certifiedbytheSecuritiesandExchangeCommissiontobeacopyofthatwhichisfiledinits PhilippinesshallengageinbusinessinthePhilippinesunlesspossessedofpaidupunimpairedcapitalorassetsand Office; reservenotlessthanthathereinrequiredofdomesticinsurancecompanies,noruntilitshallhavedepositedwiththe (c)IfincorporatedunderanylawsotherthanthoseofthePhilippines,acertificatefromtheSecuritiesandExchangeCommissionerforthebenefitandsecurityofthepolicyholdersandcreditorsofsuchcompanyinthePhilippines, CommissionshowingthatitisdulyregisteredinthemercantileregistryofthatCommissioninaccordancewiththe securitiessatisfactorytotheCommissionerconsistingofgoodsecuritiesofthePhilippines,includingnewissuesof CorporationLaw.Acopyofthearticlesofincorporationandbylaws,andanyamendmentstoeither,iforganizedorstockof"registeredenterprises",asthistermisdefinedinRepublicActNo.5186,otherwiseknownastheInvestment formedunderanylawrequiringsuchtobefiled,dulycertifiedbytheofficerhavingthecustodyofsame,orifnotso IncentivesAct,asamended,totheactualmarketvalueofnotlessthantheminimumpaidupcapitalrequiredof domesticinsurancecompanies:Provided,Thatatleastfiftypercentumofsuchsecuritiesshallconsistofbondsor organized,acopyofthelaw,charterordeedofsettlementunderwhichthedeedoforganizationismade,duly certifiedbythepropercustodianthereof,orprovedbyaffidavittobeacopy;also,acertificateunderthehandand otherevidencesofdebtoftheGovernmentofthePhilippines,itspoliticalsubdivisionsandinstrumentalities,orof sealoftheproperofficerofsuchstateorcountryhavingsupervisionofinsurancebusinesstherein,ifanytherebe, governmentownedorcontrolledcorporationsandentities,includingtheCentralBank.Thetotalinvestmentofa thatsuchcorporationorcompanyisorganizedunderthelawsofsuchstateorcountry,withtheamountofcapital foreigninsurancecompanyinanyregisteredenterpriseshallnotexceedtwentypercentumofthenetworthofsaid foreigninsurancecompanynortwentypercentumofthecapitaloftheregisteredenterprise,unlesspreviously stockorassetsandlegalreserverequiredbythisCode; authorizedinwritingbytheCommissioner. (d)Ifnotincorporatedandofforeigndomicile,asidefromthecertificatementionedinparagraph(c)ofthissection, acertificatesettingforththenatureandcharacterofthebusiness,thelocationoftheprincipaloffice,thenameof ForpurposesofthisCode,thenetworthofaforeigninsurancecompanyshallreferonlytoitsnetworthinthe. theindividualornamesofthepersonscomposingthepartnershiporassociation,theamountofactualcapital Sec.192.TheCommissionershallholdthesecurities,depositedasaforesaid,forthebenefitandsecurityofallthe employedortobeemployedthereinandthenamesofallofficersandpersonsbywhomthebusinessisormaybe policyholdersofthecompanydepositingthesame,butshallaslongasthecompanyissolvent,permitthecompanyto managed. collecttheinterestordividendsonthesecuritiessodeposited,and,fromtimetotime,withhisassent,towithdraw Thecertificatemustbeverifiedbytheaffidavitofthechiefofficer,secretary,agent,ormanagerofthecompany;andanyofsuchsecurities,upondepositingwithsaidCommissionerotherlikesecurities,themarketvalueofwhichshall beequaltothemarketvalueofsuchasmaybewithdrawn.Intheeventofanycompanyceasingtodobusinessinthe ifthereareanywrittenarticlesofagreementofthecompany,acopythereofmustbeaccompanysuchcertificate. Philippinesthesecuritiesdepositedasaforesaidshallbereturneduponthecompany'smakingapplicationtherefore Sec.190.TheCommissionermustrequireasaconditionprecedenttothetransactionofinsurancebusinessinthe andprovingtothesatisfactionoftheCommissionerthatithasnofurtherliabilityunderanyofitspoliciesinthe Philippinesbyanyforeigninsurancecompany,thatsuchcompanyfileinhisofficeawrittenpowerofattorney Philippines. designatingsomepersonwhoshallbearesidentofthePhilippinesasitsgeneralagent,onwhomanynoticeprovided bylaworbyanyinsurancepolicy,proofofloss,summonsandotherlegalprocessesmaybeservedinallactionsor Sec.193.EveryforeigncompanydoingbusinessinthePhilippinesshallsetasideanamountcorrespondingtothe otherlegalproceedingsagainstsuchcompany,andconsentingthatserviceuponsuchgeneralagentshallbeadmittedlegalreservesofthepolicieswritteninthePhilippinesandinvestandkeepthesamethereininaccordancewiththe provisionsofthissection.Thelegalreservethereinrequiredtobesetasideshallbeinvestedonlyintheclassesofthe andheldasvalidasifservedupontheforeigncompanyatitshomeoffice.Anysuchforeigncompanyshall,as Philippinesecuritiesdescribedinsectiontwohundred:Provided,however,Thatnoinvestmentinstocksorbondsof furtherconditionprecedenttothetransactionofinsurancebusinessinthePhilippines,makeandfilewiththe anysingleentityshall,intheaggregateexceedtwentypercentumofthenetworthoftheinvestingcompanyortwenty Commissioneranagreementorstipulation,executedbytheproperauthoritiesofsaidcompanyinformand percentumofthecapitaloftheissuingcompany,whicheveristhelesserunlessotherwiseapprovedinwritingbythe substanceasfollows: Commissioner.Thesecuritiespurchasedandkeptintheunderthissection,shallnotbesentoutoftheterritorial "The(nameofcompany)doesherebystipulateandagreeinconsiderationofthepermissiongrantedbytheInsurance jurisdictionofthewithoutthewrittenconsentoftheCommissioner. CommissionertotransactbusinessinthePhilippines,thatifatanytimesaidcompanyshallleavethePhilippines,or Title2 ceasetotransactbusinesstherein,orshallbewithoutanyagentinthePhilippinesonwhomanynotice,proofofloss, summons,orlegalprocessmaybeserved,theninanyactionorproceedingarisingoutanybusinessortransaction MARGINOFINSOLVENCY

Sec.194.AninsurancecompanydoingbusinessinthePhilippinesshallatalltimesmaintainamarginofsolvency ASSETS whichshallbeanexcessofthevalueofitsadmittedassetsexclusiveofitspaidupcapital,inthecaseofadomestic Sec.196.Inanydeterminationofthefinancialconditionofanyinsurancecompanydoingbusinessinthe,thereshall company,oranexcessofthevalueofitsadmittedassetsinthePhilippines,exclusiveofitssecuritydeposits,inthe beallowedandadmittedasassetsonlysuchassetsownedbytheinsurancecompanyconcernedandwhichconsistof: caseofaforeigncompany,overtheamountofitsliabilities,unearnedpremiumandreinsurancereservesinthe Philippinesofatleasttwopermilleofthetotalamountofitsinsuranceinforceasoftheprecedingcalendaryearon 1.Cashinthepossessionoftheinsurancecompanyorintransitunderitscontrol,andthetrueanddulyverified allpolicies,exceptterminsurance,inthecaseofalifeinsurancecompany,orofatleasttenpercentumofthetotal balanceofanydepositofsuchcompanyinafinanciallysoundcommercialbankortrustcompany. amountofitsnetpremiumwrittenduringtheprecedingcalendaryear,inthecaseofacompanyotherthanalife 2.Investmentsinsecurities,includingmoneymarketinstruments,andinrealpropertyacquiredorheldin insurancecompany:Provided,Thatineithercase,suchmarginshallinnoeventbelessthanfivehundredthousand accordancewithandsubjecttotheapplicableprovisionsofthisCodeandtheincomerealizedtherefromoraccrued pesos:andProvided,further,Thattheterm"paidupcapital"shallnotincludecontributedsurplusandcapitalpaid thereon. inexcessofparvalue.Suchassets,liabilitiesandreservesshallexcludeassets,liabilitiesandreservesincludedin separateaccountsestablishedinaccordancewithsectiontwohundredthirtyseven.Whenevertheaforementioned 3.Loansgrantedbytheinsurancecompanyconcernedtotheextentofthatportionthereofadequatelysecuredby marginbefoundtobelessthanthathereinrequiredtobemaintained,theCommissionershallforthwithdirectthe nonspeculativeassetswithreadilyrealizablevaluesinaccordancewithandsubjecttothelimitationsimposedby companytomakegoodanysuchdeficiencybycash,tobecontributedbyallstockholdersofrecordinproportionto applicableprovisionsofthisCode. theirrespectiveinterest,andpaidtothetreasurerofthecompany,withinfifteendaysfromreceiptoftheorder: 4.Policyloansandotherpolicyassetsandliensonpolicies,contractsorcertificatesofalifeinsurancecompany,in Provided,Thatthecompanyintheinterimshallnotbepermittedtotakeanynewriskofanykindorcharacter anamountnotexceedinglegalreservesandotherpolicyliabilitiescarriedoneachindividuallifeinsurancepolicy, unlessanduntilitmakegoodanysuchdeficiency:Provided,further,thatastockholderwhoasidefrompayingthe contractorcertificate. contributionduefromhim,paysthecontributionduefromtheanotherstockholderbyreasonofthefailureor refusalofthelattertodoso,shallhavealienonthecertificatesofstockoftheinsurancecompanyconcerned 5.Thenetamountofuncollectedanddeferredpremiumsandannuityconsiderationsinthecaseofalifeinsurance appearinginitsbooksinthenameofthedefaultingstockholderonthedateofdefault,aswellasonanyinterestsor companywhichcarriesthefullmeantabularreserveliability. dividendsthathaveaccruedorwillaccruetothesaidcertificatesofstock,untilthecorrespondingpaymentor 6.Reinsurancerecoverablebythecedinginsurer: reimbursementismadebythedefaultingstockholder.(AsamendedbyPresidentialDecreeNo.1455). Sec.195.Nodomesticinsurancecorporationshalldeclareordistributeanydividendonitsoutstandingstocksexcept (a)fromaninsurerauthorizedtotransactbusinessinthiscountry,thefullamountthereof;or fromprofitsattestedinaswornstatementtotheCommissionerbythepresidentortreasurerofthecorporationto beremainingonhandafterretainingunimpaired: (b)fromaninsurernotauthorizedinthiscountry,inanamountnotexceedingtheliabilities carriedbythecedinginsurerforamountswithheldunderareinsurancetreatywithsuch (a)Theentirepaidupcapitalstock; unauthorizedinsurerassecurityforthepaymentofobligationsthereunderifsuchfundsareheld subjecttowithdrawalby,andunderthecontrolof,thecedinginsurer.TheCommissionermay (b)Themarginofsolvencyrequiredbysectiononehundredninetyfour; prescribetheconditionsunderwhichacedinginsurermaybeallowedcredit,asanassetorasa (c)Inthecaseoflifeinsurancecorporation,thelegalreservefundrequiredbysectiontwohundredeleven; deductionfromlossandunearnedpremiumreserves,forreinsurancerecoverablefromaninsurer notauthorizedinthiscountrybutwhichpresentssatisfactoryevidencethatitmeetsthe (d)Inthecaseofcorporationsotherthanlife,thelegalreservefundrequiredbysectiontwohundredthirteen; applicablestandardsofsolvencyrequiredinthiscountry. (e)Asumsufficienttopayallnetlossesreported,orinthecourseofsettlement,andallliabilitiesforexpensesand taxes. 7.Fundswithheldbyacedinginsurerunderareinsurancetreaty,providedreservesforunpaidlossesandunearned AnydividenddeclaredordistributedundertheprecedingparagraphshallbereportedtotheCommissionerwithin premiumsareadequatelyprovided. thirtydaysaftersuchdeclarationordistribution. 8.Depositsoramountsrecoverablefromunderwritingassociations,syndicatesandreinsurancefunds,orfromany IftheCommissionerfindsthatanysuchcorporationhasdeclaredordistributedanysuchdividendinviolationof suspendedbankinginstitution,totheextentdeemedbytheCommissionertobeavailableforthepaymentoflosses thissection,hemayordersuchcorporationtoceaseanddesistfromdoingbusinessuntiltheamountofsuch andclaimsandvaluestobedeterminedbyhim. dividendortheportionthereofinexcessoftheamountallowedunderthissectionhasbeenrestoredtosaid 9.Electronicdataprocessingmachines,asmaybeauthorizedbytheCommissionertobeacquiredbytheinsurance corporation. companyconcerned,theacquisitioncostofwhichtobeamortizedinequalannualamountswithinaperiodoffive Title3 yearsfromthedateofacquisitionthereof.

10.Otherassets,notinconsistentwiththeprovisionsofparagraphs1to9hereof,whicharedeemedbythe issuedorguaranteedbytheInternationalBankforReconstructionandDevelopment;oruponstocks,bondsorother Commissionertobereadilyrealizableandavailableforthepaymentoflossesandclaimsatvaluestobedetermined evidencesofdebtasarespecifiedinsectiontwohundred. byhim. Alifeinsurancecompany,however,maylendtoanyofitspolicyholdersuponthesecurityofthevalueofitspolicy Sec.197.InadditiontosuchassetsastheCommissionermayfromtimetotimedeterminetobenonadmittedassets suchsumasmaybedeterminedpursuanttotheprovisionsofthepolicy. ofinsurancecompaniesdoingbusinessinthePhilippines,thefollowingassetsshallinnocasebeallowedasadmitted Loansgranteduponthesecurityofrealestateforaperiodlongerthanfiveyearsshallbeamortizedinmonthly, assetsofaninsurancecompanydoingbusinessinthePhilippines,inanydeterminationofitsfinancialcondition: quarterly,semiannualorannualinstallments;Provided,thatnosuchloansshallhaveamaturityinexcessoftwenty 1.Goodwill,tradenames,andotherlikeintangibleassets. years. 2.Prepaidordeferredchargesforexpensesandcommissionspaidbysuchinsurancecompany. Thephrase"improvedrealestate"usedaboveisherebydefinedtomeanlandwithpermanentbuildingorbuildings erectedorbeingerectedthereon.ExceptasotherwiseapprovedbytheCommissioner,incasethebuildingor 3.Advancestoofficers(otherthanpolicyloans),whicharenotadequatelysecuredandwhicharenotpreviously buildingsonlanddonotbelongtotheownerofthelatter,noloanshallbegrantedonthesecurityoftherealestate authorizedbytheCommissioner,aswellasadvancestoemployees,agents,andotherpersonsonmerepersonal inquestionunlessboththeownerofthebuildingorbuildingsandtheownerofthelandsignthedeedofmortgage, security. andunlesstheownerofthelandistheGovernmentofthePhilippinesoroneofitspoliticalsubdivisions,inwhich 4.Sharesofstockofsuchinsurancecompany,ownedbyit,oranyequitythereinaswellasloanssecuredthereby,or eventtheownerisnotrequiredtosignthedeedofmortgage. anyproportionateinterestinsuchsharesofstockthroughtheownershipbysuchinsurancecompanyofaninterest Sec.199.Noloanbyanyinsurancecompanyonthesecurityofrealestateshallbemadeunlessthetitletosuchreal inanothercorporationorbusinessunit. estateshallhavefirstbeenregisteredinaccordancewiththeexistingLandRegistrationAct,orshallbeatituloreal dulyregistered,orhavebeenpreviouslyregisteredundertheprovisionsoftheexistingMortgageLaw. 5.Furniture,furnishing,fixtures,safes,equipment,library,stationery,literature,andsupplies. Sec.200.(1)Aninsurancecompanymaypurchase,hold,ownandconveysuchproperty,realandpersonal,asmay havebeenmortgaged,pledged,orconveyedtoitingoodfaithintrustforitsbenefitbyreasonofmoneyloanedbyit 7.Theamount,ifany,bywhichtheaggregatevalueofinvestmentsascarriedintheledgerassetsofsuchinsurance inpursuanceoftheregularbusinessofthecompany,andsuchrealorpersonalpropertyasmayhavebeen companyexceedstheaggregatevaluethereofasdeterminedinaccordancewiththeprovisionsofthisCodeand/or purchasedbyitatsalesunderpledges,mortgagesordeedsoftrustforitsbenefitonaccountofmoneyloanedbyit; therulesoftheCommissioner. andsuchrealandpersonalpropertyasmayhavebeenconveyedtoitbyborrowersinsatisfactionanddischargeof Allnonadmittedassetsandallotherassetsofdoubtfulvalueorcharacterincludedasledgerornonledgerassetsin loansmadebythecompanytothem:Provided,however,Thatanyrealestatepurchasedbyaninsurancecompanyin anystatementsubmittedbyaninsurancecompanytotheCommissioner,orinanyinsuranceexaminer'sreportto paymentorbyreasonofanyloanmadebyitshallbesoldbythecompanywithintwentyyearsafterthetitlethereto hasbeenvestedinit. him,shallalsobereported,totheextentofthevaluedisallowedasdeductionsfromthegrossassetsofsuchinsurance company,exceptwheretheCommissionerpermitsareservetobecarriedamongtheliabilitiesofsuchinsurance (2)Aninsurancecompanymaypurchase,hold,ownandconveyrealandpersonalpropertyasfollows: companyinlieuofanysuchdeduction. (a)Thelotwithbuildingthereoninwhichthecompanyconductsandcarriesonitsbusiness. Title4 (b)BondsorotherevidencesofdebtoftheGovernmentoftheoritspoliticalsubdivisionsauthorizedbylawtoissue INVESTMENTS bondsatthereasonablemarketvaluethereof. Sec.198.Noinsurancecompanyshallloananyofitsmoneyordepositstoanyperson,corporationorassociation, (c)Bondsorotherevidencesofdebtofthegovernmentownedorcontrolledcorporationsandentities,includingthe exceptuponfirstmortgageordeedsoftrustofunencumbered,improvedorunimprovedrealestate,including condominiums,incitiesandcentersofpopulationofmunicipalitiesinthePhilippineswhentheamountofsuchloan CentralBank. isnotinexcessofseventypercentumofthemarketvalueofsuchrealestate;oruponthesecurityoffirstmortgages (d)Bonds,debenturesorotherevidencesofindebtednessofanysolventcorporationsorinstitutioncreatedor ordeedsoftrustofactuallycultivated,improvedandunencumberedagriculturallandsinthePhilippineswhenthe existingunderthelawsofthePhilippines:Provided,however,Thattheissuing,assumingorguaranteeingentityorits amountofsuchloanisnotinexcessoffortypercentumofthemarketvalueofsuchland;oruponthepurchase predecessorsshallnothavedefaultedinthepaymentofinterestonanyofitssecuritiesandthatduringeachofany moneymortgagesorlikesecuritiesreceivedbyituponthesaleorexchangeofrealpropertyacquiredpursuantto threeincludingthelasttwoofthefivefiscalyearsnextprecedingthedateofacquisitionbysuchinsurancecompany sectionstwohundredandtwohundredtwo;oruponbondsorotherevidencesofdebtoftheGovernmentofthe ofsuchbonds,debentures,orotherevidencesofindebtedness,thenetearningsoftheissuing,assumingor Philippinesoritspoliticalsubdivisionsauthorizedbylawtoissuebonds,oruponbondsorotherevidencesofdebtof guaranteeinginstitutionavailableforitsfixedcharges,ashereinafterdefined,shallhavebeennotlessthanoneand governmentownedorcontrolledcorporationsandinstrumentalitiesincludingtheCentralBankoruponobligations onequartertimesthetotalofitsfixedchargesforsuchyear;andProvided,further,thatnolifeinsurancecompany 6.Itemsofbankcreditsrepresentingchecks,draftsornotesreturnedunpaidafterthedateofstatement.

shallinvestinorloanupontheobligationsofanyoneinstitutioninthekindspermittedunderthissubsectionan amountinexcessoftwentyfivepercentumofthetotaladmittedassetsofsuchinsurerasofDecemberthirtyfirst nextprecedingthedateofsuchinvestment.

Asusedinthissubsectiontheterm"netearningsavailableforfixedcharges"shallmeannetincomeafterdeducting operatingandmaintenanceexpenses,taxesotherthanincometaxes,depreciationanddepletion;butexcluding Sec.201.Aninsurancecompanymay(1)investinequitiesofotherfinancialinstitutions,and(2)engageinthebuying extraordinarynonrecurringitemsofincomeorexpenseappearingintheregularfinancialstatementoftheissuing, andsellingofshorttermdebtinstruments:Provided,thatanyorallofsuchinvestmentsshallbewiththeprior assumingorguaranteeinginstitution.Theterm"fixedcharges"shallincludeinterestonfundedandunfundeddebt, approvaloftheCommissioner. amortizationofdebtdiscount,andrentalsforleasedproperties. Sec.202.Anylifeinsurancecompanymay: (e)Preferredorguaranteedstocksofanysolventcorporationorinstitutioncreatedorexistingunderthelawsofthe (a)Acquireorconstructhousingprojectsand,inconnectionwithanysuchproject,mayacquirelandoranyinterest Philippines:Provided,however,Thattheissuing,assumingorguaranteeingentityoritspredecessorshaspaid thereinbypurchase,leaseorotherwise,oruselandacquiredpursuanttoanyotherprovisionofthisCode.Such regulardividendsuponitspreferredorguaranteedstocksforaperiodofatleastthreeyearsnextprecedingthedate companymaythereafterown,maintain,manage,collectorreceiveincomefrom,orsellandconvey,anylandor ofinvestmentinsuchpreferredorguaranteedstock:Provided,further,Thatifthestocksareguaranteed,theamount interestthereinsoacquiredandanyimprovementsthereon.Theaggregatebookvalueoftheinvestmentsofanysuch ofstockssoguaranteedisnotexcessoffiftypercentumoftheamountofthepreferredorcommonstocks,asthecase companyinallsuchprojectsshallnotexceedatthetimeofsuchinvestmentstwentyfivepercentumofthetotal maybe,oftheguaranteeingcorporation:andProvided,finally,Thatnolifeinsurancecompanyshallinvestinorloan admittedassetsofsuchcompanyonthethirtyfirstdayofDecembernextpreceding; uponobligationsofanyoneinstitutioninthekindspermittedunderthissubsectionanamountinexcessoftenper centumofthetotaladmittedassetsofsuchinsurerasofDecemberthirtyfirstnextprecedingthedateofsuch (b)Acquirerealproperty,otherthanpropertytobeusedprimarilyforprovidinghousingandpropertyfor investment. accommodationofitsownbusiness,asaninvestmentfortheproductionofincome,ormayacquirerealpropertyto beimprovedordevelopedforsuchinvestmentpurposepursuanttoaprogramtherefor,subjecttotheconditionthat (f)CommonstocksofanysolventcorporationorinstitutioncreatedorexistingunderthelawsofthePhilippines thecostofeachparcelofrealpropertysoacquiredundertheauthorityofthisparagraph(b),includingthe uponwhichregulardividendsshallhavebeenpaidforthethreeyearsnextprecedingthepurchaseofsuchstock: estimatedcosttothecompanyoftheimprovementordevelopmentthereof,whenaddedtothebookvalueofallother Provided,however,Thatnolifeinsurancecompanyshallinvestinorloanupontheobligationsofanyonecorporation realpropertyheldbyitspursuanttothisparagraph(b),shallnotexceedtwentyfivepercentumofitsadmittedassets orinstitutioninthekindspermittedunderthissubsectionanamountinexcessoftenpercentumofthetotal asofthethirtyfirstdayofDecembernextpreceding. admittedassetsofsuchinsurerasofDecemberthirtyfirstnextprecedingthedateofsuchinvestment. Sec.203.Everydomesticinsurancecompanyshall,totheextentofanamountequalinvaluetotwentyfiveper (g)Certificates,notesandotherobligationsissuedbythetrusteesorreceiversofanyinstitutioncreatedorexisting centumoftheminimumpaidupcapitalrequiredundersectiononehundredeightyeight,investitsfundsonlyin underthelawsofthePhilippineswhich,ortheassetsofwhich,arebeingadministeredunderthedirectionofany securities,satisfactorytotheCommissioner,consistingofbondsorotherevidencesofdebtoftheGovernmentofthe courthavingjurisdiction;Provided,however,Thatsuchcertificates,notesorotherobligationsareadequatelysecured Philippinesoritspoliticalsubdivisionsorinstrumentalities,orofgovernmentownedorcontrolledcorporationsand astoprincipalandinterests. entities,includingtheCentralBankofthePhilippines:Provided,Thatsuchinvestmentsshallatalltimesbe maintainedfreefromanylienorencumbrance;andProvided,further,Thatsuchsecuritiesshallbedepositedwith (h)Equipmenttrustobligationsorcertificateswhichareadequatelysecuredorotheradequatelysecured instrumentsevidencinganinterestinequipmentwhollyorinpartwithinthePhilippines:Provided,however,That andheldbytheCommissionerforthefaithfulperformancebythedepositinginsurerofallitsobligationsunderits thereisarighttoreceivedeterminedportionsofrental,purchaseorotherfixedobligatorypaymentsfortheuseor insurancecontracts.Theprovisionsofsectiononehundredninetytwoshall,sofaraspracticable,applytothe securitiesdepositedunderthissection. purchaseofsuchequipment. (i)AnyobligationofanycorporationorinstitutioncreatedorexistingunderthelawsofthePhilippineswhichis,on ExceptasotherwiseprovidedinthisCode,nojudgmentcreditororotherclaimantshallhavetherighttolevyupon anyofthesecuritiesoftheinsurerheldondepositunderthissectionorheldondepositpursuanttotherequirement thedateofacquisitionbytheinsurer,adequatelysecuredandhasqualitiesandcharacteristicswhereinthe oftheCommissioner.(AsamendedbyPresidentialDecreeNo.1455). speculativeelementsarenotpredominant. Sec.204.Aftersatisfyingtherequirementscontainedintheprecedingsection,anydomesticnonlifeinsurance company,shallinvest,toanamountprescribedbelow,itsfundsin,orotherwise,acquireorloanupon,onlythe (3)Anydomesticinsurerwhichhasoutstandinginsurance,annuityorreinsurancecontractsincurrenciesotherthan classesofinvestmentsdescribedinsectiontwohundred,includingsecuritiesissuedbyany"registeredenterprise",as thenationalcurrencyofthePhilippinesmayinvestin,orotherwiseacquireorloanuponsecuritiesandinvestments thistermisdefinedinRepublicActNo.5186,otherwiseknownastheInvestmentIncentivesAct,andsuchother insuchcurrencywhicharesubstantiallyofthesamekinds,classesandinvestmentgradesasthoseeligiblefor classesofinvestmentsasmaybeauthorizedbytheCommissionerforpurposesofthissection:Provided,That(a)no investmentundertheforegoingsubdivisionsofthissection;buttheaggregateamountofsuchinvestmentandofsuch morethantwentypercentumofthenetworthofsuchcompanyasshownbyitslatestfinancialstatementapproved (j)SuchothersecuritiesasmaybeapprovedbytheCommissioner.

cashinsuchcurrencywhichisatanytimeheldbysuchinsurershallnotexceedoneandonehalftimestheamountof itsreservesandotherobligationsundersuchcontractsortheamountwhichsuchinsurerisrequiredbythelawof anycountryorpossessionoutsidetheRepublicofthePhilippinestobeinvestinsuchcountryorpossession, whichevershallbegreater.

bytheCommissionershallbeinvestedinthelotandbuildinginwhichtheinsurancecompanyconductsitsbusiness andexceptasotherwiseprovidedinthischapter,shallbevalued,inthediscretionoftheCommissioner,attheir and(b)thetotalinvestmentofaninsurancecompanyinanyregisteredenterpriseshallnotexceedtwentypercentum marketvalue,orattheirappraisedvalue,oratpricesdeterminedbyhimasrepresentingtheirfairmarketvalue.If ofthenetworthofsaidinsurancecompanyasshownbyitsaforesaidfinancialstatementnortwentypercentumof theCommissionerfindsthatinviewofthecharacterofinvestmentsofanyinsurerauthorizedtodobusinessinthis thepaidupcapitaloftheregisteredenterpriseexcludingtheintendedinvestment,unlesspreviouslyauthorizedby countryitwouldbeprudentforsuchinsurertoestablishaspecialreserveforpossiblelossesorfluctuationsinthe theCommissioner:and,Provided,further,Thatsuchinvestmentsfreefromanylienorencumbrance,shallbeatleastvaluesofitsinvestments,hemayrequiresuchinsurertoestablishsuchreserve,reasonableinamount,andmay equalinamounttotheaggregateamountof(a)itslegalreserve,asprovidedinsectiontwohundredthirteen,and(b) requirethatsuchreservebemaintainedandreportedinanystatementorreportofthefinancialconditionofsuch insurer.TheCommissionermay,inconnectionwithanyexaminationorrequiredfinancialstatementofan itsreservefundheldforreinsuranceasprovidedforinthepertinenttreatyprovisioninthecaseofreinsurance authorizedinsurer,requiresuchinsurertofurnishhimcompletefinancialstatementsandauditedreportofthe cededtoauthorizedinsurers.(AsamendedbyPresidentialDecreeNo.1455). financialconditionofanycorporationofwhichthesecuritiesareownedwhollyorpartlybysuchinsurerandmay Sec.205.Aftersatisfyingtherequirementscontainedinsectionsonehundredninetyone,onehundredninetythree, causeanexaminationtobemadeofanysubsidiaryoraffiliateofsuchinsurer. twohundredthreeandtwohundredfour,anynonlifeinsurancecompanymayinvestanyportionofitsfunds representingearnedsurplusinanyoftheinvestmentsdescribedinsectionsonehundredninetyeight,twohundred (3)Thestockofaninsurancecompanyshallbevaluedatthelesserofitsmarketvalueoritsbookvalueasshownby andtwohundredone,orinanysecuritiesissuedbya"registeredenterprise"mentionedintheprecedingsections: itslastapprovedannualstatementorthelastreportonexamination,whicheverismorerecent.Thebookvalueofa Provided,Thatnoinvestmentinstocksorbondsofanysingleentityshallintheaggregate,exceedtwentypercentum shareofcommonstockofaninsurancecompanyshallbeascertainedbydividing(a)theamountofitscapitaland ofthenetworthoftheinsurancecompanyasshowninitslatestfinancialstatementapprovedbytheCommissioner surpluslessthevalueofallofitspreferredstock,ifany,outstanding,by(b)thenumberofsharesofitscommon ortwentypercentumofthepaidupcapitaloftheissuingcompany,whicheverislesser,unlessotherwiseapproved stockissuedandoutstanding. Notwithstandingtheforegoingprovisions,aninsurermay,atitsoption,valueitsholdingsofstockinasubsidiary bytheCommissioner. insurancecompanyinanamountnotlessthanacquisitioncostifsuchacquisitioncostislessthanthevalue Sec.206.Aftersatisfyingtheminimumcapitalinvestmentrequiredinsectiontwohundredthree,anylifeinsurance determinedashereinbeforeprovided. companymayinvestitslegalpolicyreserve,asprovidedinsectiontwohundredelevenorinsectiontwohundred twelve,inanyoftheclassesofsecuritiesortypesofinvestmentsdescribedinsectionsonehundredninetyeight,two (4)Realestaterequiredbyforeclosureorbydeedinlieuthereof,intheabsenceofarecentappraisaldeemedbythe hundred,twohundredoneandtwohundredtwo,subjecttothelimitationsthereincontained,andinanysecurities Commissionertobereliable,shallnotbevaluedatanamountgreaterthantheunpaidprincipalofthedefaulted issuedbyany"registeredenterprise"mentionedinsectiontwohundredfour,freefromanylienorencumbrance,in loanatthedateofsuchforeclosureordeed,togetherwithanytaxesandexpensespaidorincurredbysuchinsurerat suchamountsasmaybeapprovedbytheCommissioner.Suchcompanymaylikewiseinvestanyportionofitsearned suchtimeinconnectionwithsuchacquisition,andthecostofadditionsorimprovementsthereafterpaidbysuch insurerandanyamountoramountsthereafterpaidbysuchinsureronanyassessmentsleviedforimprovementsin surplusintheaforesaidsecuritiesorinvestmentssubjecttotheaforesaidlimitations. connectionwiththeproperty. Sec.207.Anyinvestmentmadeinviolationoftheapplicableprovisionsofthistitleshallbeconsiderednonadmitted (5)Purchasemoneymortgagesreceivedondispositionsofrealpropertyheldpursuanttosectiononehundred assets. ninetyeightshallbevaluedinanamountequivalenttoninetypercentumofthevalueofsuchrealproperty. Sec.208.(1)Allbondsorotherevidencesofindebtednesshavingafixedtermandrateofinterestandheldbyanylife Purchasemoneymortgagesreceivedondispositionofrealpropertyotherwiseheldshallbevaluedinanamountnot insurancecompanyauthorizedtodobusinessinthiscountry,ifamplysecuredandifnotindefaultastoprincipalor exceedingninetypercentumofthevalueofsuchrealpropertyasdeterminedbyanappraisalmadebyanappraiser interest,shallbevaluedasfollows:Ifpurchasedatpar,attheparvalue;ifpurchasedaboveorbelowpar,onthe atoraboutthetimeofdispositionofsuchrealproperty. basisofthepurchasepriceadjustedsoastobringthevaluetoparatmaturityandsoastoyieldinthemeantimethe effectiverateofinterestatwhichthepurchasewasmade,orinthediscretionoftheCommissioner,onthebasisof (6)Thestockofasubsidiaryofaninsurershallbevaluedonthebasisofthegreaterof(i)thevalueofonlysuch subsidiaryoftheassetsofsuchsubsidiaryaswouldconstitutelawfulinvestmentsfortheinsurerifacquiredorheld themethodofcalculationcommonlyknownastheproratamethod.Inapplyingtheforegoingrulethepurchase directlybytheinsureror(ii)suchothervaluedeterminedpursuanttostandardsandcumulativelimitations, priceshallinnocasebetakenatahigherfigurethantheactualmarketvalueatthetimeofacquisition.The Commissionershallhavethepowertodeterminetheeligibilityofanysuchinvestmentsforvaluationonthebasisof containedinaregulationtobepromulgatedbytheCommissioner. amortization,andmaybyregulationprescribeorlimittheclassesofsecuritiessoeligibleforamortization.Allbonds (7)Notwithstandinganyprovisioncontainedinthissectionorelsewhereinthischapter,iftheCommissionerfind orotherevidencesofindebtednesswhichinthejudgmentoftheCommissionerarenotamplysecuredshallnotbe thattheinterestsofpolicyholderssopermitorrequire,hemaypermitorrequireanyclassorclassesofinsurers eligibleforamortizationandshallbevaluedinaccordancewithparagraphtwo.TheCommissionermay,ifhefinds authorizedtodobusinessinthiscountrytovaluetheirinvestmentsoranyclassorclassesthereofasofanydate thattheinterestofpolicyholderssopermitorrequire,byofficialregulationpermitorrequireanyclassorclassesof heretoforeorhereafterinaccordancewithanyapplicablevaluationormethod. insurers,otherthanlifeinsurancecompanies,authorizedtodobusinessinthiscountry,tovaluetheirbondsorother evidencesofindebtednessinaccordancewiththeforegoingrule. Sec.209.Itshallbethedutyoftheofficersoftheinsurancecompanytoreportwithinthefirstfifteendaysofevery monthallsuchinvestmentsasmaybemadebythemduringtheprecedingmonth,andtheCommissionermay,if (2)Theinvestmentsofallinsurersauthorizedtodobusinessinthiscountry,exceptsecuritiessubjecttoamortization

suchinvestmentsoranyofthemseeminjudicioustohim,requirethesaleordisposalofthesame.Thereportshall alsoincludealistofinvestmentssoldordisposedofbythecompanyduringthesameperiod. Title5 RESERVES

run:Provided,Thatformarinecargorisksthereserveshallbeequaltofortypercentumofthepremiumswrittenin thepoliciesuponyearlyrisks,andthefullamountofthepremiumswrittenduringthelasttwomonthsofthe calendaryearuponallothermarinerisksnotterminated.

Sec.214.Inadditiontoitsliabilitiesandreservesoncontractsofinsuranceissuedbyit,everyinsurancecompany shallbechargedwiththeestimatedamountofallofitsotherliabilities,includingtaxes,expensesandother Sec.210.Everylifeinsurancecompany,doingbusinessinthe,shallannuallymakeavaluationofallpolicies, obligationsdueoraccruedatthedateofstatement,andincludinganyspecialreservesrequiredbythe additionsthereto,unpaiddividends,andallotherobligationsoutstandingonthethirtyfirstdayofDecemberofthe CommissionerpursuanttotheprovisionsofthisCode. precedingyear.Allsuchvaluationsshallbemadeuponthenetpremiumsbasis,accordingtothestandardadopted bythecompany,whichstandardshallbestatedinitsannualreport. Title6 LIMITOFSINGLERISK Suchstandardofvaluationwhetherofthenetlevelpremium,fullpreliminaryterm,anymodifiedpreliminaryterm, orselectandultimatereservebasis,shallbeaccordingtoastandardtableofmortalitywithinterestatnotmorethan Sec.215.Noinsurancecompanyotherthanlife,whetherforeignordomestic,shallretainanyriskonanyonesubject sixpercentumcompoundinterest.Whenthepreliminarytermbasisisused,theterminsuranceshallbelimitedto ofinsuranceinanamountexceedingtwentypercentumofitsnetworth.Forpurposesofthissection,theterm thefirstpolicyyear. "subjectofinsurance"shallincludeallpropertiesorrisksinsuredbythesameinsurerthatcustomarilyare consideredbynonlifecompanyunderwriterstobesubjecttolossordamagefromthesameoccurrenceofany TheresultsofsuchvaluationsshallbereportedtotheCommissioneronorbeforethethirtiethdayofAprilofeach hazardinsuredagainst. yearaccompaniedbyaswornstatementofthecompany'sactuarycertifyingtothefiguresandstatinguponwhat mortalitytableitisbased,uponwhatrateofinterestthevaluationismade,andthemethodsusedinarrivingatthe Reinsurancecededasauthorizedunderthesucceedingtitleshallbedeductedindeterminingtheriskretained.Asto resultobtained. suretyrisk,deductionshallalsobemadeoftheamountassumedbyanyothercompanyauthorizedtotransactsurety businessandthevalueofanysecuritymortgage,pledged,orheldsubjecttothesurety'scontrolandforthesurety's Sec.211.Theaggregatenetvaluesoascertainedofthepoliciesofsuchcompanyshallbedeemeditsreserveliability, protection. toprovideforwhichitshallholdfundsinsecureinvestmentsequaltosuchnetvalue,aboveallitsotherliabilities; anditshallbethedutyoftheCommissioner,afterhavingverified,tosuchanextentashemaydeemnecessary,the Title7 valuationofallpoliciesinforce,tosatisfyhimselfthatthecompanyhassuchamountinsafelegalsecuritiesafterall REINSURANCETRANSACTIONS otherdebtsandclaimsagainstithavebeenprovidedfor. Sec.216.AninsurancecompanydoingbusinessinthePhilippinesmayacceptreinsurancesonlyofsuchrisks,and Thereserveliabilityforvariablecontractsdefinedinsectiontwohundredthirtytwoshallbeestablishedin retainriskthereonwithinsuchlimits,asitisotherwiseauthorizedtoinsure. accordancewithactuarialproceduresthatrecognizethevariablenatureofthebenefitsprovided,andshallbe Sec.217.NoinsurancecompanydoingbusinessinthePhilippinesshallcedeallorpartofanyriskssituatedinthe approvedbytheCommissioner. PhilippinesbywayofreinsurancedirectlytoanyforeigninsurernotauthorizedtodobusinessinthePhilippines Sec.212.Everydomesticlifeinsurancecompany,conductedonthemutualplanoraplaninwhichpolicyholdersare unlesssuchforeigninsureror,iftheservicesofanonresidentbrokerareutilized,suchnonresidentbrokeris bythetermsoftheirpoliciesentitledtoshareintheprofitsorsurplusshall,onallpoliciesoflifeinsurance representedinthePhilippinesbyaresidentagentdulyregisteredwiththeCommissionerasrequiredinthisCode. heretoforeorhereafterissued,undertheconditionsofwhichthedistributionofsurplusisdeferredtoafixedor Theresidentagentofsuchunauthorizedforeigninsurerornonresidentbrokershallimmediatelyuponregistration specifiedtimeandcontingentuponthepolicybeinginforceandtheinsuredlivingatthattime,annuallyascertain furnishtheCommissionerwiththeannualstatementofsuchinsurer,orofsuchcompanyorcompanieswheresuch theamountofthesurplustowhichallsuchpoliciesasseparateclassareentitled,andshallannuallyapportionto brokermayplacePhilippinebusinessasoftheyearprecedingsuchregistration,andannuallythereafterassoonas suchpoliciesasaclasstheamountofthesurplussoascertained,andcarrytheamountofsuchapportionedsurplus, available. plustheactualinterestearningsandaccretionstosuchfund,asadistinctandseparateliabilitytosuchclassof policiesonandforwhichthesamewasaccumulated,andnocompanyoranyofitsofficersshallbepermittedtouse Sec.218.Allinsurancecompanies,bothlifeandnonlife,authorizedtodobusinessinthePhilippinesshallcedetheir anypartofsuchapportionedsurplusfundforanypurposewhatsoeverotherthanfortheexpresspurposeforwhich excessriskstoothercompaniessimilarlyauthorizedtodobusinessinthePhilippinesinsuchamountsandunder thesamewasaccumulated. sucharrangementsaswouldbeconsistentwithsoundunderwritingpracticesbeforetheyenterintoreinsurance arrangementswithunauthorizedforeigninsurers. Sec.213.Everyinsurancecompany,otherthanlife,shallmaintainareserveforunearnedpremiumsonitspoliciesin force,whichshallbechargedasaliabilityinanydeterminationofitsfinancialcondition.SuchreserveshallbeequalSec.219.Anyinsurancecompanydoingbusinessinthedesiringtocedetheirexcessriskstoforeigninsuranceor tofortypercentumofthegrosspremiums,lessreturnsandcancellations,receivedonpoliciesorriskshavingnot reinsurancecompaniesnotauthorizedtotransactbusinessinthemaydosounderthefollowingconditions: morethanayeartorun,andprorataonallgrosspremiumsreceivedonpoliciesorriskshavingmorethanayearto

(1)Exceptinfacultativereinsuranceandexcessoflosscovers,thefullamountofthereservefundrequiredbylaw Sec.224.Everyinsurancecompanyauthorizedundertitletenofthischaptertoissue,deliverorusevariable shallbesetupinthebooksofandheldbythecedingcompanyforsolongastheriskconcernedisinforce:Provided, contractsshallannuallyfilewiththeCommissionerseparateannualstatementofitsseparatevariableaccounts. Thatincaseoffacultativeinsurance,thecedingcompanyshallshowtothesatisfactionoftheCommissionerthatthe SuchstatementshallbeonaformprescribedorapprovedbytheCommissionerandshallincludedetailsastoallof Philippinemarketcannotprovidethefacilitiessoughtabroad. theincome,disbursements,assetsandliabilityitemsofandassociatedwiththesaidseparatevariableaccounts.Said statementshallbeunderoathoftwoofficersofthecompanyandshallbefiledsimultaneouslywiththeannual (2)ThereservefundwithheldshallbeinvestedinbondsorotherevidencesofdebtoftheGovernmentoftheorits statementrequiredbytheprecedingsection. politicalsubdivisionsorinstrumentalities,orofgovernmentownedorcontrolledcorporationsandentities,including theCentralBank,and/orothersecuritiesacceptableundersectiontwohundred. Sec.225.WithinthirtydaysafterreceiptoftheannualstatementapprovedbytheCommissioner,everyinsurance companydoingbusinessinthePhilippinesshallpublishintwonewspapersofgeneralcirculationintheCityof Shouldanyreinsuranceagreementbeforanyreasoncancelledorterminated,thecedingcompanyconcernedshall Manila,onepublishedinEnglishandoneinPilipino,afullsynopsisofitsannualfinancialstatementshowingfully informtheCommissionerinwritingofsuchcancellationorterminationwithinthirtydaysfromthedateofsuch theconditionsofitsbusiness,andsettingforthitsresourcesandliabilities. cancellationorterminationorfromthedatenoticeorinformationofsuchcancellationorterminationisreceivedby suchcompanyasthecasemaybe. Title9 POLICYFORMS Sec.220.EveryinsurancecompanyauthorizedtodobusinessinthePhilippinesshallreporttotheCommissioneron formsprescribedbyhimtheparticularsofreinsurancetreatiesasofthefirstdayofJanuaryoftheyearfollowing Sec.226.Nopolicy,certificateorcontractofinsuranceshallbeissuedordeliveredwithinthePhilippinesunlessin theapprovalofthisCodeandshallthereaftersimilarlyreporttotheCommissionerparticularsofanynewtreaties theformpreviouslyapprovedbytheCommissioner,andnoapplicationformshallbeusedwith,andnorider,clause, orchangesinexistingtreaties. warrantyorendorsementshallbeattachedto,printedorstampeduponsuchpolicy,certificateorcontractunless theformofsuchapplication,rider,clause,warrantyorendorsementhasbeenapprovedbytheCommissioner. Sec.221.Nocreditshallbeallowedasanadmittedassetorasadeductionfromliability,toanycedinginsurerfor reinsurancemade,ceded,renewed,orotherwisebecomingeffectiveafterJanuaryfirst,nineteenhundredseventy Sec.227.Inthecaseofindividuallifeorendowmentinsurance,thepolicyshallcontaininsubstancethefollowing five,unlessthereinsuranceshallbepayablebytheassuminginsureronthebasisoftheliabilityofthecedinginsurerconditions: underthecontractorcontractsreinsuredwithoutdiminutionbecauseoftheinsolvencyofthecedinginsurernor (a)Aprovisionthatthepolicyholderisentitledtoagraceperiodeitherofthirtydaysorofonemonthwithinwhich unlessunderthecontractorcontractsofreinsurancetheliabilityforsuchreinsuranceisassumedbytheassuming thepaymentofanypremiumafterthefirstmaybemade,subjectattheoptionoftheinsurertoaninterestcharge insurerorinsurersasofthesameeffectivedate;norunlessthereinsuranceagreementprovidesthatpaymentsbythe notinexcessofsixpercentumperannumforthenumberofdaysofgraceelapsingbeforethepaymentofthe assuminginsurershallbemadedirectlytothecedinginsurerortoitsliquidator,receiver,orstatutorysuccessor premium,duringwhichperiodofgracethepolicyshallcontinueinfullforce,butincasethepolicybecomesaclaim except(a)wherethecontractspecificallyprovidesanotherpayeeofsuchreinsuranceintheeventoftheinsolvencyof duringthesaidperiodofgracebeforetheoverduepremiumispaid,theamountofsuchpremiumwithinterestmay thecedinginsurerand(b)wheretheassuminginsurerwiththeconsentofthedirectinsuredorinsuredshas dedeductedfromtheamountpayableunderthepolicyinsettlement; assumedsuchpolicyobligationsofthecedinginsurerasdirectobligationsoftheassuminginsurertothepayees undersuchpoliciesandinsubstitutionfortheobligationsofthecedinginsurertosuchpayees. (b)Aprovisionthatthepolicyshallbeincontestableafteritshallhavebeeninforceduringthelifetimeoftheinsured foraperiodoftwoyearsfromitsdateofissueasshowninthepolicy,ordateofapprovaloflastreinstatement,except Sec.222.NolifeinsurancecompanydoingbusinessinthePhilippinesshallreinsureitswholeriskonanyindividual fornonpaymentofpremiumandexceptforviolationoftheconditionsofthepolicyrelatingtomilitaryornaval lifeorjointlives,orsubstantiallyallofitsinsuranceinforce,withouthavingfirstobtainedthewrittenpermissionof serviceintimeofwar; theCommissioner. (c)Aprovisionthatthepolicyshallconstitutetheentirecontractbetweentheparties,butifthecompanydesiresto Title8 maketheapplicationapartofthecontractitmaydosoprovidedacopyofsuchapplicationshallbeindorsedupon ANNUALSTATEMENT orattachedtothepolicywhenissued,andinsuchcasethepolicyshallcontainaprovisionthatthepolicyandthe Sec.223.EveryinsurancecompanydoingbusinessinthePhilippinesshallterminateitsfiscalperiodonthethirty applicationthereforeshallconstitutetheentirecontractbetweentheparties; firstdayofDecembereveryyear,andshallannuallyonorbeforethethirtiethdayofAprilofeachyearrendertothe (d)Aprovisionthatiftheageoftheinsuredisconsideredindeterminingthepremiumandthebenefitsaccruing Commissionerastatementsignedandsworntobythechiefofficerofsuchcompanyshowing,insuchformand underthepolicy,andtheageoftheinsuredhasbeenmisstated,theamountpayableunderthepolicyshallbesuchas detailsasmaybeprescribedbytheCommissioner,theexactconditionofitsaffairsontheprecedingthirtyfirstday thepremiumwouldhavepurchasedatthecorrectage; ofDecember. (e)Ifthepolicyisparticipating,aprovisionthatthecompanyshallperiodicallyascertainandapportionanydivisible Anyentryinthestatementwhichisfoundtobefalseshallconstituteamisdemeanorandtheofficersigningsuch surplusaccruingonthepolicyunderconditionsspecifiedtherein; statementshallbesubjecttothepenaltyprovidedforundersectionfourhundrednineteen.

(f)Aprovisionspecifyingtheoptionstowhichthepolicyholderisentitledtointheeventofdefaultinapremium paymentafterthreefullannualpremiumsshallhavebeenpaid.Suchoptionshallconsistof:

(a)Aprovisionthatthepolicyholderisentitledtoagraceperiodofeitherthirtydaysorofonemonthforthe paymentofanypremiumdueafterthefirst,duringwhichgraceperiodthedeathbenefitcoverageshallcontinuein force,unlessthepolicyholdershallhavegiventheinsurerwrittennoticeofdiscontinuanceinadvanceofthedateof discontinuanceandinaccordancewiththetermsofthepolicy.Thepolicymayprovidethatthepolicyholdershallbe (1)Acashsurrendervaluepayableuponsurrenderofthepolicywhichshallnotbelessthanthe liableforthepaymentofaproratapremiumforthetimethepolicyisinforceduringsuchgraceperiod; reserveonthepolicy,thebasisofwhichshallbeindicated,forthethencurrentpolicyyearand anydividendadditionsthereto,reducedbyasurrenderchargewhichshallnotbemorethanone (b)Aprovisionthatthevalidityofthepolicyshallnotbecontested,exceptfornonpaymentofpremiumsafterithas fifthoftheentirereserveortwoandonehalfpercentumoftheamountinsuredandanydividendbeeninforcefortwoyearsfromitsdateofissue;andthatnostatementmadebyanyinsuredunderthepolicy additionsthereto; relatingtohisinsurabilityshallbeusedincontestingthevalidityoftheinsurancewithrespecttowhichsuch statementwasmadeaftersuchinsurancehasbeeninforcepriortothecontestforaperiodoftwoyearsduringsuch (2)Oneormorepaidupbenefitsonaplanorplansspecifiedinthepolicyofsuchvalueasmaybe person'slifetimenorunlesscontainedinwritteninstrumentsignedbyhim; purchasedbythecashsurrendervalue; (c)Aprovisionthatacopyoftheapplication,ifany,ofthepolicyholdershallbeattachedtothepolicywhenissued, (g)Aprovisionthatatanytimeafteracashsurrendervalueisavailableunderthepolicyandwhilethepolicyisin thatallstatementsmadebythepolicyholderorbypersonsinsuredshallbedeemedrepresentationsandnot force,thecompanywilladvance,onproperassignmentorpledgeofthepolicyandonsolesecuritythereof,asum warranties,andthatnostatementmadebyanyinsuredshallbeusedinanycontestunlessacopyoftheinstrument equalto,orattheoptionoftheownerofthepolicy,lessthanthecashsurrendervalueonthepolicy,ataspecified containingthestatementisorhasbeenfurnishedtosuchpersonortohisbeneficiary; rateofinterest,notmorethanthemaximumallowedbylaw,tobedeterminedbythecompanyfromtimetotime,but notmoreoftenthanonceayear,subjecttotheapprovaloftheCommissioner;andthatthecompanywilldeduct (d)Aprovisionsettingforththeconditions,ifany,underwhichtheinsurerreservestherighttorequireaperson fromsuchloanvalueanyexistingindebtednessonthepolicyandanyunpaidbalanceofthepremiumforthecurrent eligibleforinsurancetofurnishevidenceofindividualinsurabilitysatisfactorytotheinsurerasaconditiontopart policyyear,andmaycollectinterestinadvanceontheloantotheendofthecurrentpolicyyear,whichprovisionmay orallofhiscoverage; furtherprovidethatsuchloanmaybedeferredfornotexceedingsixmonthsaftertheapplicationthereforeismade; (e)Aprovisionspecifyinganequitableadjustmentofpremiumsorofbenefitsorofbothtobemadeintheeventthat (h)Atableshowinginfigurescashsurrendervaluesandpaidupoptionsavailableunderthepolicyeachyearupon theageofapersoninsuredhasbeenmisstated,suchprovisiontocontainaclearstatementofthemethodof defaultinpremiumpayments,duringatleasttwentyyearsofthepolicybeginningwiththeyearinwhichthevalues adjustmenttobeused; andoptionsfirstbecomeavailable,togetherwithaprovisionthatintheeventofthefailureofthepolicyholderto (f)Aprovisionthatanysumbecomingduebyreasonofdeathofthepersoninsuredshallbepayabletothe electoneofthesaidoptionswithinthetimespecifiedinthepolicy,oneofsaidoptionsshallautomaticallytakeeffect beneficiarydesignatedbytheinsured,subjecttotheprovisionsofthepolicyintheeventthatthereisnodesignated andnopolicyholdershalleverforfeithisrighttosamebyreasonofhisfailuretosoelect; beneficiary,astoalloranypartofsuchsum,livingatthedeathoftheinsured,andsubjecttoanyrightreservedby (i)Incasetheproceedsofapolicyarepayableininstallmentsorasanannuity,atableshowingtheminimum theinsurerinthepolicyandsetforthinthecertificatetopayatitsoptionapartofsuchsumnotexceedingfive amountsoftheinstallmentsorannuitypayments; hundredpesostoanypersonappearingtotheinsurertobeequitablyentitledtheretobyreasonofhavingincurred funeralorotherexpensesincidenttothelastillnessordeathofthepersoninsured; (j)Aprovisionthatthepolicyholdershallbeentitledtohavethepolicyreinstatedatanytimewithinthreeyears fromthedateofdefaultofpremiumpaymentunlessthecashsurrendervaluehasbeendulypaid,ortheextension (g)Aprovisionthattheinsurerwillissuetothepolicyholderfordeliverytoeachpersoninsuredanindividual periodhasexpired,uponproductionofevidenceofinsurabilitysatisfactorytothecompanyanduponpaymentofall certificatesettingforthastatementastotheinsuranceprotectiontowhichheisentitled,towhomtheinsurance overduepremiumsandanyindebtednesstothecompanyuponsaidpolicy,withinterestratenotexceedingthat benefitsarepayable,andtherightssetforthinparagraphs(h),(i)and(j)following; whichwouldhavebeenapplicabletosaidpremiumsandindebtednessinthepolicyyearspriortoreinstatement. (h)Aprovisionthatiftheinsurance,oranyportionofit,onapersoncoveredunderthepolicyceasesbecauseof Anyoftheforegoingprovisionsorportionsthereofnotapplicabletosinglepremiumortermpoliciesshalltothat terminationofemploymentorofmembershipintheclassorclasseseligibleforcoverageunderthepolicy,such extentnotbeincorporatedtherein;andanysuchpolicymaybeissuedanddeliveredinthePhilippineswhichinthe personshallbeentitledtohaveissuedtohimbytheinsurer,withoutevidenceofinsurability,anindividualpolicyof opinionoftheCommissionercontainsprovisionsonanyoneormoreoftheforegoingrequirementsmorefavorable lifeinsurancewithoutdisabilityorothersupplementarybenefits,providedapplicationfortheindividualpolicyand tothepolicyholderthanhereinbeforerequired. paymentofthefirstpremiumtotheinsurershallbemadewithinthirtydaysaftersuchterminationandprovided Thissectionshallnotapplytopoliciesofgrouplifeorindustriallifeinsurance. furtherthat: Sec.228.NopolicyofgrouplifeinsuranceshallbeissuedanddeliveredinthePhilippinesunlessitcontainsin substancethefollowingprovisions,orprovisionswhichintheopinionoftheCommissioneraremorefavorabletothe (1)theindividualpolicyshallbeonanyoneoftheforms,exceptterminsurance,thencustomarily personsinsured,oratleastasfavorabletothepersonsinsuredandmorefavorabletothepolicyholders: issuedbytheinsurerattheageandforanamountnotinexcessofthecoverageunderthegroup

afterthefirstmaybemade,exceptthatwherepremiumsarepayablemonthly,theperiodofgraceshallbeeitherone monthorthirtydays;andthatduringtheperiodofgrace,thepolicyshallcontinueinfullforce,butifduringsuch (2)thepremiumontheindividualpolicyshallbeattheinsurer'sthencustomaryrateapplicable graceperiodthepolicybecomesaclaim,thenanyoverdueandunpaidpremiumsmaybedeductedfromanyamount totheformandamountoftheindividualpolicy,totheclassofrisktowhichsuchpersonthen payableunderthepolicyinsettlement; belongs,andtohisageattainedontheeffectivedateoftheindividualpolicy. (b)Aprovisionthatthepolicyshallbeincontestableafterithasbeeninforceduringthelifetimeoftheinsuredfora specifiedperiod,notmorethantwoyearsfromitsdateofissue,exceptfornonpaymentofpremiumsandexceptfor (i)Aprovisionthatifthegrouppolicyterminatesorisamendedsoastoterminatetheinsuranceofanyclassof violationoftheconditionsofthepolicyrelatingtonavalormilitaryservice,orservicesauxiliarythereto,andexcept insuredpersons,everypersoninsuredthereunderatthedateofsuchterminationwhoseinsuranceterminatesand astoprovisionsrelatingtobenefitsintheeventofdisabilityasdefinedinthepolicy,andthosegrantingadditional whohasbeensoinsuredforfiveyearspriortosuchterminationdateshallbeentitledtohaveissuedtohimbythe insurancespecificallyagainstdeathbyaccidentorbyaccidentalmeans,ortoadditionalinsuranceagainstlossof,or insureranindividualpolicyoflifeinsurancesubjecttothesamelimitationsassetforthinparagraph(h),exceptthat lossofuseof,specificmembersofthebody; thegrouppolicymayprovidethattheamountofsuchindividualpolicyshallnotexceedthesmallerof(a)theamount oftheperson'slifeinsuranceprotectionceasinglesstheamountofanylifeinsuranceforwhatheisorbecomes (c)Aprovisionthatthepolicyshallconstitutetheentirecontractbetweentheparties,orifacopyoftheapplication eligibleunderanygrouppolicyissuedorreinstatedbythesameoranotherreinsurerwithinthirtydaysaftersuch isendorseduponandattachedtothepolicywhenissued,aprovisionthatthepolicyandtheapplicationtherefor termination,and(b)twothousandpesos; shallconstitutetheentirecontractbetweentheparties,andinthelattercase,aprovisionthatallstatementsmadeby theinsuredshall,intheabsenceoffraud,bedeemedrepresentationsandnotwarranties; (j)Aprovisionthatifapersoninsuredunderthegrouppolicydiesduringthethirtydayperiodwithinwhichhe wouldhavebeenentitledtoanindividualpolicyissuedtohiminaccordancewith(h)and(i)aboveandbeforesuch (d)Aprovisionthatiftheageofthepersoninsured,ortheageofanyperson,consideredindeterminingthe individualpolicyshallhavebecomeeffective,theamountoflifeinsurancewhichhewouldhavebeenentitledtohave premium,orthebenefitsaccruingunderthepolicy,hasbeenmisstated,anyamountpayableorbenefitaccruing issuedtohimasanindividualpolicyshallbepayableasaclaimunderthegrouppolicywhetherornotapplication underthepolicyshallbesuchasthepremiumpaidwouldhavepurchasedatthecorrectage; fortheindividualpolicyorthepaymentofthefirstpremiumhasbeenmade; (e)Aprovisionthatifthepolicyisaparticipatingpolicy,thecompanyshallperiodicallyascertainandapportionany (k)Inthecaseofapolicyissuedtoacreditortoinsuredebtorsofsuchcreditor,aprovisionthattheinsurerwill divisiblesurplusaccruingonthepolicyundertheconditionsspecifiedtherein; furnishtothepolicyholderfordeliverytoeachdebtorinsuredunderthepolicyaformwhichwillcontaina (f)Aprovisionthatintheeventofdefaultinpremiumpaymentsafterthreefullyears'premiumshavebeenpaid,the statementthatthelifeofthedebtorisinsuredunderthepolicyandthatanydeathbenefitpaidthereunderbyreason policyshallbeconvertedintoastipulatedformofinsurance,andthatintheeventofdefaultinpremiumpayments ofhisdeathshallbeappliedtoreduceorextinguishindebtedness. afterfivefullyears'premiumshavebeenpaid,aspecifiedcashsurrendervalueshallbeavailable,inlieuofthe Theprovisionsofparagraphs(f)to(j)shallnotapplytopoliciesissuedtoacreditortoinsurehisdebtors.Ifagroup stipulatedformofinsurance,attheoptionofthepolicyholder.Thenetvalueofsuchstipulatedformofinsurance lifepolicyisonaplanofinsuranceotherthanterm,itshallcontainanonforfeitureprovisionorprovisionswhichin andtheamountofsuchcashvalueshallnotbelessthanthereserveonthepolicyanddividendadditionsthereto,if theopinionoftheCommissionerisorareequitabletotheinsuredorthepolicyholder:Provided,Thatnothinghereinany,attheendofthelastcompletedpolicyyearforwhichpremiumsshallhavebeenpaid(thepolicytospecifythe containedshallbesoconstruedastorequiregrouplifepoliciestocontainthesamenonforfeitureprovisionsasare mortalitytable,rateofinterestandmethodofvaluationadoptedtocomputesuchreserve),exclusiveofanyreserve requiredofindividuallifepolicies. ondisabilitybenefitsandaccidentaldeathbenefits,lessanamountnottoexceedtwoandonehalfpercentumofthe maximumamountinsuredbythepolicyanddividendadditionsthereto,ifany,attheendofthelastcompletedpolicy Sec.229.Theterm"industriallifeinsurance"asusedinthisCodeshallmeanthatformoflifeinsuranceunderwhich yearforwhichpremiumsshallhavebeenpaid(thepolicytospecifythemortalitytable,rateofinterestandmethod thepremiumsarepayableeithermonthlyoroftener,ifthefaceamountofinsuranceprovidedinanypolicyisnot ofvaluationadoptedtocomputesuchreserve),exclusiveofanyreserveondisabilitybenefitsandaccidentaldeath morethanfivehundredtimesthatofthecurrentstatutoryminimumdailywageintheCityofManila,andifthe benefits,lessanamountnottoexceedtwoandonehalfpercentumofthemaximumamountinsuredbythepolicy words"industrialpolicy"areprinteduponthepolicyaspartofthedescriptivematter. anddividendadditionsthereto,ifany,whentheissueageisundertenyears,andlessanamountnottoexceedtwo Anindustriallifepolicyshallnotlapsefornonpaymentofpremiumifsuchnonpaymentwasduetothefailureof andonehalfpercentumofthecurrentamountinsuredbythepolicyanddividendadditionsthereto,ifany,ifthe thecompanytosenditsrepresentativeoragenttotheinsuredattheresidenceoftheinsuredoratsomeotherplace issueageistenyearsorolder,andlessanyexistingindebtednesstothecompanyonorsecuredbythepolicy; indicatedbyhimforthepurposeofcollectingsuchpremium:Provided,Thattheprovisionsofthisparagraphshall (g)Aprovisionthatthepolicymaybesurrenderedtothecompanyatitshomeofficewithinaperiodofnotlessthan notapplywhenthepremiumonthepolicyremainsunpaidforaperiodofthreemonthsortwelveweeksafterthe sixtydaysaftertheduedateofapremiumindefaultforthespecifiedcashvalue,providedthattheinsurermaydefer graceperiodhasexpired. paymentfornotmorethansixmonthsaftertheapplicationthereforeismade; Sec.230.Inthecaseofindustriallifeinsurance,thepolicyshallcontaininsubstancethefollowingprovisions: (h)Atablethatshowsinfiguresthenonforfeiturebenefitsavailableunderthepolicyeveryyearupondefaultin (a)Aprovisionthattheinsuredisentitledtoagraceperiodoffourweekswithinwhichthepaymentofanypremium paymentofpremiumsduringatleastthefirsttwentyyearsofthepolicy,suchtabletobeginwiththeyearinwhich

policy;and

suchvaluesbecomeavailable,andaprovisionthatthecompanywillfurnishuponrequestanextensionofsuchtable treatmentorattentionwasnotofaseriousnatureorwasnotmaterialtotherisk; beyondtheyearshowninthepolicy; (b)Aprovisionthatgivestheinsurertherighttodeclarethepolicyvoidbecausetheinsuredhasbeenrejectedfor (i)Aprovisionthatspecifieswhichoneofthestipulatedformsofinsuranceprovidedforundertheprovisionof insurance,unlesssuchrightbeconditioneduponashowingbytheinsurerthatknowledgeofsuchrejectionwould paragraph(f)ofthissectionshalltakeeffectintheeventoftheinsured'sfailure,withinsixtydaysfromtheduedate haveledtoarefusalbytheinsurertomakesuchcontract; ofthepremiumindefault,tonotifytheinsurerinwritingastowhichoneofsuchformshehasselected; (c)Aprovisionthatallowsthecompanytopaytheproceedsofthepolicyatthedeathoftheinsuredtoanyperson (j)Aprovisionthatthepolicymaybereinstatedatanytimewithintwoyearsfromtheduedateofthepremiumin otherthanthenamedbeneficiary,exceptinaccordancewithastandardprovisionasspecifiedundertheprovisions defaultunlessthecashsurrendervaluehasbeenpaidortheperiodofextendedterminsuranceexpired,upon ofparagraph(m)oftheprecedingsection; productionofevidenceofinsurabilitysatisfactorytothecompanyandpaymentofarrearsofpremiumswithinterest (d)Aprovisionthatlimitsthetimewithinwhichanyactionatlaworinequitymaybecommencedtolessthansix ataratenotexceedingsixpercentumperannumpayableannually; yearsafterthecauseofactionshallaccrue;and (k)Aprovisionthatwhenapolicyshallbecomeaclaimbydeathoftheinsured,settlementshallbemadeupon (e)Aprovisionthatspecifiesanymodeofsettlementatmaturityoflessvaluethantheamountinsuredbythepolicy receiptofdueproofofdeath,ornotlaterthantwomonthsafterreceiptofsuchproof; plusdividendadditions,ifany,lessanyindebtednesstothecompanyonthepolicyandlessanypremiumthatmayby (l)Atitleonthefaceandonthebackofthepolicycorrectlydescribingitsform; thetermsofthepolicybededucted,paymentstobemadeinaccordancewiththetermsofthepolicy. (m)Aspaceonthefrontorthebackofthepolicyforthenameofthebeneficiarydesignatedbytheinsuredwitha Nothingcontainedinthissectionnorintheprovisionofparagraph(b)oftheprecedingsection,relatingto reservationoftheinsured'srighttodesignateorchangethebeneficiaryaftertheissuanceofthepolicy.Thepolicy incontestability,shallbeconstruedasprohibitingthelifeinsurancecompanyfromplacinginitsindustriallife mayalsoprovidethatnodesignationorchangeofbeneficiaryshallbebindingontheinsureruntilendorsedonthe policiesprovisionslimitingitsliabilitywithrespectto:(1)deathresultingfromaviationotherthanasafarepaying policybytheinsurer,andthattheinsurermayrefusetoendorsethenameofanyproposedbeneficiarywhodoesnot passengeronaregularlyscheduledroutebetweendefinitelyestablishedairports;and(2)militaryornavalservice: appeartotheinsurertohaveaninsurableinterestinthelifeoftheinsured.Suchpolicymayalsocontainaprovision Provided,Thatiftheliabilityofthecompanyislimitedashereinprovided,suchliabilityshallinnoeventbefixedat thatifthebeneficiarydesignatedinthepolicydoesnotsurrenderthepolicywithdueproofofdeathwithinthe anamountlessthanthereserveonthepolicy(excludingthereserveforanyadditionalbenefitsintheeventofdeath periodstatedinthepolicy,whichshallnotbelessthanthirtydaysafterthedeathoftheinsured,orifthebeneficiarybyaccidentoraccidentalmeansorforbenefitsintheeventofanytypeofdisability),lessanyindebtednessonor istheestateoftheinsured,orisaminor,ordiesbeforetheinsured,orisnotlegallycompetenttogivevalidrelease, securedbysuchpolicy;norshallanyprovisionofthissectionapplytoanyprovisioninanindustriallifeinsurance thentheinsurermaymakeanypaymentthereundertotheexecutororadministratoroftheinsured,ortoanyofthe policyforadditionalbenefitsintheeventofdeathbyaccidentoraccidentalmeans. insured'srelativesbybloodorlegaladoptionorconnectionsbymarriageortoanypersonappearingtotheinsurer Title10 tobeequitablyentitledtheretobyreasonofhavingincurredexpenseforthemaintenance,medicalattentionor VARIABLECONTRACTS burialoftheinsured;and Sec.232.(1)NoinsurancecompanyauthorizedtotransactbusinessinthePhilippinesshallissue,deliver,selloruse (n)Aprovisionthatwhenanindustriallifeinsurancepolicyisissuedprovidingforaccidentalorhealthbenefits,or anyvariablecontractinthePhilippines,unlessanduntilsuchcompanyshallhavesatisfiedtheCommissionerthatits both,inadditiontolifeinsurance,theforegoingprovisionsshallapplyonlytothelifeinsuranceportionofthepolicy. financialandgeneralconditionanditsmethodsofoperations,includingtheissueandsaleofvariablecontracts,are Anyoftheforegoingprovisionsorportionsthereofnotapplicabletononparticipatingortermpoliciesshalltothat notandwillnotbehazardoustothepublicortoitspolicyandcontractowners.Noforeigninsurancecompanyshall extentnotbeincorporatedtherein.Theforegoingprovisionsshallnotapplytopoliciesissuedorgrantedpursuanttobeauthorizedtoissue,deliverorsellanyvariablecontractinthe,unlessitislikewiseauthorizedtodosobythelaws thenonforfeitureprovisionsprescribedinprovisionsofparagraphs(f)and(i)ofthissection,norshallprovisionsof ofitsdomicile. paragraphs(f),(g),(h),and(i)hereofberequiredinterminsuranceoftwentyyearsorlessbutsuchtermpolicies (2)Theterm"variablecontract"shallmeananypolicyorcontractoneitheragrouporonanindividualbasisissued shallspecifythemortalitytable,rateofinterest,andmethodofcomputingreserves. byaninsurancecompanyprovidingforbenefitsorothercontractualpaymentsorvaluesthereundertovarysoasto Sec.231.Nopolicyofindustriallifeinsuranceshallbeissuedordeliveredintheifitcontainsanyofthefollowing reflectinvestmentresultsofanysegregatedportfolioofinvestmentsorofadesignatedseparateaccountinwhich provisions: amountsreceivedinconnectionwithsuchcontractsshallhavebeenplacedandaccountedforseparatelyandapart fromotherinvestmentsandaccounts.Thiscontractmayalsoprovidebenefitsorvaluesincidentaltheretopayablein (a)Aprovisionthatgivestheinsurertherighttodeclarethepolicyvoidbecausetheinsuredhashadanydiseaseor fixedorvariableamounts,orboth.Itshallnotbedeemedtobea"security"or"securities"asdefinedinThe ailment,whetherspecifiedornot,orbecausetheinsuredhasreceivedinstitutional,hospital,medicalorsurgical SecuritiesAct,asamended,orintheTheInvestmentCompanyAct,asamended,norsubjecttoregulationunder treatmentorattention,exceptaprovisionwhichgivestheinsurertherighttodeclarethepolicyvoidiftheinsured saidActs. has,withintwoyearspriortotheissuanceofthepolicy,receivedinstitutionalhospital,medicalorsurgicaltreatment orattentionandiftheinsuredortheclaimantunderthepolicyfailstoshowthattheconditionoccasioningsuch

(3)Indeterminingthequalificationsofacompanyrequestingauthoritytoissue,deliver,sellorusevariable fromaseparateaccount,suchtransferwouldnotcausetheremainingassetsoftheaccounttobecomelessthanthe contracts,theCommissionershallalwaysconsiderthefollowing:(a)thehistory,financialandgeneralconditionof reservesandothercontractliabilitieswithrespecttosuchseparateaccount.Suchtransfer,whetherintoorfroma thecompany:Provided,Thatsuchcompany,ifaforeigncompany,musthavedepositedwiththeCommissionerfor separateaccount,shallbemadebyatransferofcash,orbyatransferofsecuritieshavingavaluationwhichcouldbe thebenefitandsecurityofitsvariablecontractownersinthePhilippines,securitiessatisfactorytotheCommissioner readilydeterminedinthemarketplace,providedthatsuchtransferofsecuritiesisapprovedbytheCommissioner. consistingofbondsoftheGovernmentofthePhilippinesoritsinstrumentalitieswithanactualmarketvalueoftwo TheCommissionermayauthorizeothertransfersamongsuchaccounts,if,inhisopinion,suchtransferwouldnotbe millionpesos;(b)thecharacter,responsibilityandfitnessoftheofficersanddirectorsofthecompany;and(c)the inequitable.Allamountsandassetsallocatedtoanysuchseparatevariableaccountshallbeownedbythecompany lawandregulationunderwhichthecompanyisauthorizedinthestateofdomiciletoissuesuchcontracts. andwithrespecttosamethecompanyshallnotbenorholditselfouttobeatrustee. (4)Ifafternoticeandhearing,theCommissionershallfindthatthecompanyisqualifiedtoissue,deliver,selloruse Sec.238.Anyinsurancecompanywhichhasestablishedoneormoreseparatevariableaccountspursuanttothe variablecontractsinaccordancewiththisCodeandtheregulationsandrulesissuedthereunder,thecorresponding precedingsectionmayinvestandreinvestalloranypartoftheassetsallocatedtoanysuchaccountinthesecurities orderofauthorizationshallbeissued.Anydecisionororderdenyingauthoritytoissue,deliver,sellorusevariable andinvestmentsauthorizedbysectionsonehundredninetyeight,twohundred,twohundredoneandtwohundred contractsshallclearlyanddistinctlystatethereasonsandgroundsonwhichitisbased. twoforanyofthefundsofaninsurancecompanyinsuchamountoramountsasmaybeapprovedbythe Commissioner.Inadditionthereto,suchcompanymayalsoinvestincommonstocksorotherequitieswhichare Sec.233.AnyinsurancecompanyissuingvariablecontractspursuanttothisCodemayinitsdiscretionissue listedonoradmittedtotradinginasecuritiesexchangelocatedinthePhilippines,orwhicharepubliclyheldand contractsprovidingacombinationoffixedamountandvariableamountofbenefitsandforoptionlumpsum tradedinthe"overthecountermarket"asdefinedbytheCommissionerandastowhichmarketquotationshave paymentofbenefits. beenavailable:Provided,however,Thatnosuchcompanyshallinvestinexcessoftenpercentumoftheassetsofany Sec.234.EveryvariablecontractformdeliveredorissuedfordeliveryinthePhilippines,andeverycertifiedform suchseparatevariableaccountsinanyonecorporationissuingsuchcommonstock.Theassetsandinvestmentsof evidencingvariablebenefitsissuedpursuanttoanysuchcontractonagroupbasis,andtheapplication,riderand suchseparatevariableaccountsshallnotbetakenintoaccountinapplyingthequantitativeinvestmentlimitations endorsementformsapplicabletheretoandusedinconnectiontherewith,shallbesubjecttothepriorapprovalofthe applicabletootherinvestmentsofthecompany.Inthepurchaseofcommoncapitalstockorotherequities,the insurershalldesignatetothebroker,ortothesellerifthepurchaseisnotmadethroughabroker,thespecific Commissioner. variableaccountforwhichtheinvestmentismade. Sec.235.Illustrationofbenefitspayableunderanyvariablecontractshallnotincludeorinvolveprojectionsofpast Sec.239.Assetsallocatedtoanyseparatevariableaccountshallbevaluedattheirmarketvalueonthedateofany investmentexperienceintothefutureandshallconformwiththerulesandregulationspromulgatedbythe valuation,orifthereisnoreadilyavailablemarkettheninaccordancewiththetermsofthevariablecontract Commissioner. applicabletosuchassets,oriftherearenosuchcontracttermstheninsuchmannerasmaybeprescribedbythe Sec.236.Variablecontractsmaybeissuedontheindustriallifebasis,providedthatthepertinentprovisionsofthis rulesandregulationsoftheCommissioner. CodeandoftherulesandregulationsoftheCommissionergoverningvariablecontractsarecompliedwithin Sec.240.Thereserveliabilityforvariablecontractsshallbeestablishedinaccordancewithactuarialprocedures connectionwithsuchcontracts. thatrecognizethevariablenatureofthebenefitsprovided,andshallbeapprovedbytheCommissioner. Sec.237.EverylifeinsurancecompanyauthorizedundertheprovisionsofthisCodetoissue,deliver,selloruse Title11 variablecontractsshall,inconnectionwithsame,establishoneormoreseparateaccountstobeknownasseparate CLAIMSSETTLEMENT variableaccounts.Allamountsreceivedbythecompanyinconnectionwithanysuchcontractswhicharerequiredby thetermsthereof,tobecollectedorappliedtooneormoredesignatedseparatevariableaccountsshallbeplacedin Sec.241.(1)NoinsurancecompanydoingbusinessinthePhilippinesshallrefuse,withoutjustcause,topayorsettle suchdesignatedaccountoraccounts.Theassetsandliabilitiesofeachsuchseparatevariableaccountshallatall claimsarisingundercoveragesprovidedbyitspolicies,norshallanysuchcompanyengageinunfairclaimsettlement timesbeclearlyidentifiableanddistinguishablefromtheassetsandliabilitiesinallotheraccountsofthecompany. practices.Anyofthefollowingactsbyaninsurancecompany,ifcommittedwithoutjustcauseandperformedwith Notwithstandinganyprovisionoflawtothecontrary,theassetsheldinanysuchseparatevariableaccountshallnot suchfrequencyastoindicateageneralbusinesspractice,shallconstituteunfairclaimsettlementpractices: bechargeablewithliabilitiesarisingoutofanyotherbusinessthecompanyconductbutshallbeheldandapplied exclusivelyforthebenefitoftheownersorbeneficiariesofthevariablecontractsapplicablethereto.Intheeventof (a)knowinglymisrepresentingtoclaimantspertinentfactsorpolicyprovisionsrelatingtocoverageatissue; theinsolvencyofthecompany,theassetsofeachsuchseparatevariableaccountshallbeappliedtothecontractual (b)failingtoacknowledgewithreasonablepromptnesspertinentcommunicationswithrespecttoclaimsarising claimsoftheownersorbeneficiariesofthevariablecontractsapplicablethereto.Exceptasotherwisespecifically underitspolicies; providedbythecontract,nosale,exchangeorothertransferofassetsmaybemadebyacompany,betweenanyofits separateaccountsorbetweenanyotherinvestmentaccountandoneormoreofitsseparateaccounts,unlessinthe (c)failingtoadoptandimplementreasonablestandardsforthepromptinvestigationofclaimsarisingunderits caseofatransferintoaseparateaccount,suchtransferismadesolelytoestablishtheaccountortosupportthe policies; operationofthecontractswithrespecttotheseparateaccounttowhichthetransferismade,orincaseofatransfer

(d)notattemptingingoodfaithtoeffectuateprompt,fairandequitablesettlementofclaimssubmittedinwhich liabilityhasbecomereasonablyclear;or

Sec.245.TheCommissionershallrequireeveryinsurancecompanydoingbusinessinthePhilippinestokeepits books,records,accountsandvouchersinsuchmannerthatheorhisauthorizedrepresentativesmayreadilyverify itsannualstatementsandascertainwhetherthecompanyissolventandhascompliedwiththeprovisionsofthis (e)compellingpolicyholderstoinstitutesuitstorecoveramountsdueunderitspoliciesbyofferingwithoutjustifiable Codeorthecirculars,instructions,rulingsordecisionsoftheCommissioner. reasonsubstantiallylessthantheamountsultimatelyrecoveredinsuitsbroughtbythem. Sec.246.TheCommissionershallatleastonceayearandwheneverheconsidersthepublicinterestsodemands, (2)EvidenceastonumbersandtypesofvalidandjustifiablecomplaintstotheCommissioneragainstaninsurance causeanexaminationtobemadeintotheaffairs,financialconditionandmethodofbusinessofeveryinsurance company,andtheCommissioner'scomplaintexperiencewithotherinsurancecompanieswritingsimilarlinesof companyauthorizedtotransactbusinessinthePhilippinesandofanyotherperson,firmorcorporationmanaging insuranceshallbeadmissibleinevidenceinanadministrativeorjudicialproceedingbroughtunderthissection. theaffairsand/orpropertyofsuchinsurancecompany.Suchcompany,aswellassuchmanagingperson,firmor (3)Ifitisfound,afternoticeandanopportunitytobeheard,thataninsurancecompanyhasviolatedthissection, corporation,shallsubmittotheexaminerallsuchbooks,papersandsecuritiesashemayrequireandsuchexaminer eachinstanceofnoncompliancewithparagraph(1)maybetreatedasaseparateviolationofthissectionandshall shallalsohavethepowertoexaminetheofficersofsuchcompanyunderoathtouchingitsbusinessandfinancial condition,andtheauthoritytotransactbusinessinthePhilippinesofanysuchcompanyshallbesuspendedbythe beconsideredsufficientcauseforthesuspensionorrevocationofthecompany'scertificateofauthority. Commissionerifsuchexaminationisrefusedandsuchcompanyshallnotthereafterbeallowedtotransactfurther Sec.242.Theproceedsofalifeinsurancepolicyshallbepaidimmediatelyuponmaturityofthepolicy,unlesssuch businessinthePhilippinesuntilithasfullycompliedwiththeprovisionsofthissection. proceedsaremadepayableininstallmentsorasanannuity,inwhichcasetheinstallments,orannuitiesshallbepaid Governmentownedorcontrolledcorporationsorentitiesengagedinsocialprivateinsuranceshallsimilarlybe astheybecomedue:Provided,however,Thatinthecaseofapolicymaturingbythedeathoftheinsured,the proceedsthereofshallbepaidwithinsixtydaysafterpresentationoftheclaimandfilingoftheproofofthedeathof subjecttosuchexaminationbytheCommissionerunlesstheirrespectivechartersotherwiseprovide. theinsured.Refusalorfailuretopaytheclaimwithinthetimeprescribedhereinwillentitlethebeneficiarytocollect Title13 interestontheproceedsofthepolicyforthedurationofthedelayattherateoftwicetheceilingprescribedbythe SUSPENSIONORREVOCATIONOFAUTHORITY MonetaryBoard,unlesssuchfailureorrefusaltopayisbasedonthegroundthattheclaimisfraudulent. Sec.247.IftheCommissionerisoftheopinionuponexaminationofotherevidencethatanydomesticorforeign Theproceedsofthepolicymaturingbythedeathoftheinsuredpayabletothebeneficiaryshallincludethe insurancecompanyisinanunsoundcondition,orthatithasfailedtocomplywiththeprovisionsoflawor discountedvalueofallpremiumspaidinadvanceoftheirduedates,butarenotdueandpayableatmaturity. regulationsobligatoryuponit,orthatitsconditionormethodofbusinessissuchastorenderitsproceedings hazardoustothepublicortoitspolicyholders,orthatitspaidupcapitalstock,inthecaseofadomesticstock Sec.243.Theamountofanylossordamageforwhichaninsurermaybeliable,underanypolicyotherthanlife insurancepolicy,shallbepaidwithinthirtydaysafterprooflossisreceivedbytheinsurerandascertainmentofthe company,oritsavailablecashassets,inthecaseofadomesticmutualcompany,oritssecuritydeposits,inthecaseof aforeigncompany,isimpairedordeficient,orthatthemarginofsolvencyrequiredofsuchcompanyisdeficient,the lossordamageismadeeitherbyagreementbetweentheinsuredandtheinsurerorbyarbitration;butifsuch ascertainmentisnothadormadewithinsixtydaysaftersuchreceiptbytheinsureroftheproofofloss,thentheloss Commissionerisauthorizedtosuspendorrevokeallcertificatesofauthoritygrantedtosuchinsurancecompany,its ordamageshallbepaidwithinninetydaysaftersuchreceipt.Refusalorfailuretopaythelossordamagewithinthe officersandagents,andnonewbusinessshallthereafterbedonebysuchcompanyorforsuchcompanybyitsagent timeprescribedhereinwillentitletheassuredtocollectinterestontheproceedsofthepolicyforthedurationofthe inthePhilippineswhilesuchsuspension,revocationordisabilitycontinuesoruntilitsauthoritytodobusinessis delayattherateoftwicetheceilingprescribedbytheMonetaryBoard,unlesssuchfailureorrefusaltopayisbased restoredbytheCommissioner.Beforerestoringsuchauthority,theCommissionershallrequirethecompany concernedtosubmittohimabusinessplanshowingthecompany'sestimatedreceiptsanddisbursements,aswellas onthegroundthattheclaimisfraudulent. thebasistherefor,forthenextsucceedingthreeyears.(AsamendedbyPresidentialDecreeNo.1455). Sec.244.Incaseofanylitigationfortheenforcementofanypolicyorcontractofinsurance,itshallbethedutyofthe Title14 CommissionerortheCourt,asthecasemaybe,tomakeafindingastowhetherthepaymentoftheclaimofthe APPOINTMENTOFCONSERVATOR insuredhasbeenunreasonablydeniedorwithheld;andintheaffirmativecase,theinsurancecompanyshallbe adjudgedtopaydamageswhichshallconsistofattorney'sfeesandotherexpensesincurredbytheinsuredpersonby Sec.248.Ifatanytimebefore,orafter,thesuspensionorrevocationofthecertificateofauthorityofaninsurance reasonofsuchunreasonabledenialorwithholdingofpaymentplusinterestoftwicetheceilingprescribedbythe companyasprovidedintheprecedingtitle,theCommissionerfindsthatsuchcompanyisinastateofcontinuing MonetaryBoardoftheamountoftheclaimduetheinsured,fromthedatefollowingthetimeprescribedinsection inabilityorunwillingnesstomaintainaconditionofsolvencyorliquiditydeemedadequatetoprotecttheinterestof twohundredfortytwoorinsectiontwohundredfortythree,asthecasemaybe,untiltheclaimisfullysatisfied; policyholdersandcreditors,hemayappointaconservatortotakechargetheassets,liabilities,andthemanagement Provided,Thatthefailuretopayanysuchclaimwithinthetimeprescribedinsaidsectionsshallbeconsidered ofsuchcompany,collectallmoneysanddebtsduesaidcompanyandexerciseallpowersnecessarytopreservethe primafacieevidenceofunreasonabledelayinpayment. assetsofsaidcompany,reorganizethemanagementthereof,andrestoreitsviability.Thesaidconservatorshallhave thepowertooverruleorrevoketheactionsofthepreviousmanagementandboardofdirectorsofthesaidcompany, Title12 anyprovisionoflaw,orofthearticlesofincorporationorbylawsofthecompany,tothecontrarynotwithstanding, EXAMINATIONOFCOMPANIES

andsuchotherpowersastheCommissionershalldeemnecessary.

befinalandexecutory,andcanbesetasidebytheCourtuponpetitionbythecompanyandonlyifthereis convincingproofthattheactionisplainlyarbitraryandmadeinbadfaith.TheCommissioner,throughtheSolicitor Theconservatormaybeanotherinsurancecompanydoingbusinessinthe,byofficerorofficersofsuchcompany,or General,shallthenfilethecorrespondinganswerrecitingtheproceedingtakenandprayingtheassistanceofthe anyothercompetentandqualifiedperson,firmorcorporation.Theremunerationoftheconservatorandother Courtintheliquidationofthecompany.NorestrainingorderorinjunctionshallbeissuedbytheCourtenjoining expensesattendanttotheconservationshallbebornebytheinsurancecompanyconcerned. theCommissionerfromimplementinghisactionsunderthisSection,unlessthereisconvincingproofthattheaction oftheCommissionerisplainlyarbitraryandmadeinbadfaithandthepetitionerorplaintifffileswiththeClerkor Theconservatorshallnotbesubjecttoanyaction,claimordemandby,orliabilityto,anypersoninrespectof anythingdoneoromittedtobedoneingoodfaithintheexercise,orinconnectionwiththeexercise,ofthepowers JudgeoftheCourtinwhichtheactionispendingabondexecutedinfavoroftheCommissionerinanamounttobe fixedbytheCourt.Therestrainingorderorinjunctionshallberefusedor,ifgranted,shallbedissolveduponfiling conferredontheconservator. bytheCommissioner,ifhesodesires,ofabondinanamounttwicetheamountofthebondofthepetitioneror TheconservatorappointedshallreportandberesponsibletotheCommissioneruntilsuchtimeastheCommissioner plaintiffconditionedthatitwillpaythedamageswhichthepetitionorplaintiffmaysufferbytherefusalorthe issatisfiedthattheinsurancecompanycancontinuetooperateonitsownandtheconservatorshipshalllikewisebe dissolutionoftheinjunction.TheprovisionsofRule58oftheNewRulesofCourtinsofarastheyareapplicableshall terminatedshouldbeCommissioner,onthebasisofthereportoftheconservatororofhisownfindings,determine governtheissuanceanddissolutionoftherestrainingorderorinjunctioncontemplatedinthisSection. thatthecontinuanceinbusinessoftheinsurancecompanywouldbehazardoustopolicyholdersandcreditors,in AllproceedingsunderthisTitleshallbegivenpreferenceintheCourts.TheCommissionershallnotberequiredto whichcasetheprovisionsofTitle15shallapply. payanyfeetoanypublicofficerforfiling,recording,orinanymannerauthenticatinganypaperorinstrument Title15 relatingtotheproceedings. PROCEEDINGSUPONINSOLVENCY AsusedinthisTitle,theterm"Insolvency"shallmeantheinabilityofaninsurancecompanytopayitslawful Sec.249.Whenever,uponexaminationorotherevidence,itshallbedisclosedthattheconditionofanyinsurance obligationsastheyfalldueintheusualandordinarycourseofbusinessasmaybeshownbyitsfailuretomaintain companydoingbusinessinthePhilippinesisoneofinsolvency,orthatitscontinuanceinbusinesswouldbe themarginofsolvencyrequiredunderSection194ofthisCode.(AsamendedbyPresidentialDecreeNo.1141and hazardoustoitspolicyholdersandcreditors,theCommissionershallforthwithorderthecompanytoceaseand furtheramendedbyPresidentialDecreeNo.1455). desistfromtransactingbusinessinthePhilippinesandshalldesignateareceivertoimmediatelytakechargeofits Sec.250.Incaseofliquidationofaninsurancecompany,afterpaymentofthecostoftheproceedings,including assetsandliabilities,asexpeditiouslyaspossiblecollectandgatheralltheassetsandadministerthesameforthe benefitofitspolicyholdersandcreditors,andexerciseallthepowersnecessaryforthesepurposesincluding,butnot reasonableexpensesandfeesincurredintheliquidationtobeallowedbytheCourt,theCommissionershallpayall allowedclaimsagainstsuchcompany,underorderoftheCourt,inaccordancewiththeirlegalpriority. limitedto,bringingsuitsandforeclosingmortgagesinthenameoftheinsurancecompany. TheCommissionershallthereupondeterminewithinthirtydayswhethertheinsurancecompanymaybe reorganizedorotherwiseplacedinsuchconditionsothatitmaybepermittedtoresumebusinesswithsafetytoits policyholdersandcreditorsandshallprescribetheconditionsunderwhichsuchresumptionofbusinessshalltake placeaswellasthetimeforfulfillmentofsuchconditions.Insuchcase,theexpensesandfeesinthecollectionand administrationoftheinsurancecompanyshallbedeterminedbytheCommissionerandshallbepaidoutofthe assetsofsuchcompany. Sec.251.Thereceiverortheliquidator,asthecasemaybe,designatedundertheprovisionsofthistitleshallnotbe subjecttoanyaction,claimordemandby,orliabilityto,anypersoninrespectofanythingdoneoromittedtobe doneingoodfaithintheexercise,orinconnectionwiththeexercise,ofthepowersconferredonsuchreceiveror liquidator. Title16 CONSOLIDATIONANDMERGEROFINSURANCECOMPANIES

IftheCommissionershalldetermineandconfirmwithinthesaidperiodthattheinsurancecompanyissolvent,as Sec.252.UponpriornoticetotheCommissioner,twoormoredomesticinsurancecompanies,actingthroughtheir definedhereunder,orcannotresumebusinesswithsafetytoitspolicyholdersandcreditors,heshall,ifthepublic respectiveboardsofdirectors,maynegotiatetomergeintoasinglecorporationwhichshallbeoneoftheconstituent interestrequires,orderitsliquidation,indicatethemannerofitsliquidationandapprovealiquidationplanand corporations,orconsolidateintoasinglecorporationwhichshallbeanewcorporationtobeformedbythe implementitimmediately.TheCommissionershalldesignateacompetentandqualifiedpersonasliquidatorwho consolidation.Acommonagreementoftheproposedmergerorconsolidationshallbedrawnupforsubmissionto shalltakeoverthefunctionsofthereceiverpreviouslydesignatedand,withallconvenientspeed,reinsureallits thestockholdersormembersoftheconstituentcompaniesforadoptionandapprovedinaccordancewiththe outstandingpolicies,converttheassetsoftheinsurancecompanytocash,orsell,assignorotherwisedisposeofthe provisionsoftherespectivebylawsoftheconstituentcompaniesandallexistinglawsthatmaybepertinent. sametothepolicyholders,creditorsandotherpartiesforthepurposeofsettlingtheliabilitiesorpayingthedebtsof suchcompanyandhemay,inthenameofthecompany,institutesuchactionsasmaybenecessaryintheappropriateSec.253.Suchagreementshallinclude,asidefromtheproposedmergerorconsolidation,provisionsrelativetothe Courttocollectandrecoveraccountsandassetsoftheinsurancecompany,andtodosuchotheractsasmaybe manneroftransferofassetstoandassumptionofliabilitiesbytheabsorbingoracquiringcompanyfromthe necessarytocompletetheliquidationasorderedbytheCommissioner. absorbedordissolvedcompanyorcompanies;theproposedarticlesofmergerorconsolidationandbylawsofthe survivingoracquiringcompany;thecorporatenametobeadoptedwhichshouldnotbethatofanyotherexisting Theprovisionsofanylawtothecontrarynotwithstanding,theactionsoftheCommissionerunderthisSectionshall companytransactingsimilarbusinessoronesosimilarastobecalculatedtomisleadthepublic;therightsofthe

stockholdersormembersoftheabsorbedordissolvedcompanies;dateofeffectivityofthemergerorconsolidation; registeredwiththeSecuritiesandExchangeCommission. andsuchparticularsasmaybenecessarytoexplainandmakemanifesttheobjectsandpurposesoftheabsorbingor Sec.260.Nodirector,officer,orstockholderofanysuchconstituentcompaniesshallreceiveanyfee,commission, acquiringcompany. compensation,orothervaluableconsiderationwhatsoever,directlyorindirectly,orinanymanneraiding,promoting Sec.254.Uponexecutionofsuchagreementtomergeorconsolidatebyandbetweenoramongtheboardsof orassistinginsuchmergerorconsolidation. directorsoftheconstituentcompanies,noticethereofshallbemailedimmediatelytotheirpolicyholdersand Sec.261.Themergerofconsolidationofcompaniesunder,thisCodeshallbesubjecttotheprovisionsofthe creditors.Thecompanyorcompaniestobeabsorbedordissolvedshalldischargeallitsaccruedliabilities;otherwise, CorporationLaw,and,inthosecasesspecifiedinRepublicActNo.5455,asamended,befurthersubjecttothe suchliabilitiesshall,withtheconsentofitscreditors,betransferredtoandassumedbytheabsorbingoracquiring provisionsofsaidlaw. company,orsuchliabilitiesbereinsuredbythelatter.Inthecaseofsuchpoliciesasaresubjecttocancellationbythe companyorcompaniestobeabsorbedordissolved,samemaybecancelledpursuanttothetermsthereofinlieuof Title17 suchtransfer,assumption,orreinsurance. MUTUALIZATIONOFSTOCKLIFEINSURANCECOMPANIES Sec.255.Uponapprovaloradoptioninthemeetingsofthestockholdersormemberscalledforthepurposeineachof Sec.262.Anydomesticstocklifeinsurancecompanydoingbusinessinthemayconvertitselfintoanincorporated theconstituentcompaniesoftheagreementtomergeorconsolidate,allstockholdersormembersdissentingor mutuallifeinsurer.Tothatenditmayprovideandcarryoutaplanfortheacquisitionoftheoutstandingsharesof objectingtomergerorconsolidationshallbepaidthevalueoftheirsharesbythecompanyconcernedinaccordance itscapitalstockforthebenefitofitspolicyholders,oranyclassorclassesofitspolicyholders,bycomplyingwiththe withthebylawsthereof. requirementsofthischapter. Sec.256.UpontheapprovaloradoptionoftheagreementtomergeorconsolidatebythestockholdersormembersofSec.263.Suchplanshallincludeappropriateproceedingsforamendingtheinsurer'sarticlesofincorporationtogive theconstituentcompanies,thecorrespondingarticlesofmergerorofconsolidationshallbedulyexecutedbythe effecttotheacquisition,bysaidinsurer,forthebenefitofitspolicyholdersoranyclassorclassesthereof,ofthe presidentsandattestedbythecorporatesecretariesandshallbearthecorporatesealsofthemergingor outstandingsharesofitscapitalstockandtheconversionoftheinsurerfromastockcorporationintoanonstock consolidatingcompaniessettingforth: corporationforthebenefitofitsmembers.Themembersofsuchnonstockcorporationshallbethepolicyholders fromtimetotimeoftheclassorclassesforwhosebenefitthestockoftheinsurerwasacquired,andthe (1)Theplanofmergerortheplanofconsolidation; policyholdersofsuchotherclassorclassesasmaybespecifiedinsuchcorporation'sarticlesofincorporationasthey (2)Astoeachcorporation,thenumberofsharesoutstanding,orincaseofmutualcorporations,thenumberof maybeamendedfromtimetotime.Suchplanshallbe: members;and (1)Adoptedbyavoteofamajorityofthedirectors; (3)Astoeachcorporation,thenumberofsharesormembersvotedforandagainstsuchplanrespectively. (2)Approvedbythevoteoftheholdersofatleastamajorityoftheoutstandingsharesataspecialmeetingof Thereafter,acertifiedcopyofsucharticlesofmergerorconsolidation,togetherwithacertificateofapprovalor shareholderscalledforthatpurpose,orbythewrittenconsentofsuchshareholders; adoptionbythestockholdersormembersofsucharticlesofmergerorconsolidation,verifiedbyaffidavitsofsuch officersandunderthesealoftheconstituentcompanies,shallbesubmittedtotheCommissioner,togetherwithsuch (3)SubmittedtotheCommissionerandapprovedbyhiminwriting; otherpapersordocumentswhichtheCommissionermayrequire,forhisconsideration. (4)Approvedbyamajorityvoteofallthepolicyholdersoftheclassorclassesforwhosebenefitthestockistobe Sec.257.Thearticlesofmergerorofconsolidation,signedandverifiedashereinaboverequired,shallbefiledwith acquiredvotingatanelectionbythepolicyholderscalledforthatpurpose,subjecttotheprovisionsofsectiontwo theSecuritiesandExchangeCommissionforitsexaminationandapproval. hundredsixtyfive.Theterms"policyholder"or"policyholders"asusedinthischaptershallbedeemedtomeanthe personorpersonsinsuredunderanindividualpolicyoflifeinsurance,orofhealthandaccidentinsurance,orofany Sec.258.UponreceiptfromtheSecuritiesandExchangeCommissionofthecertificateofmergerorofconsolidation, combinationoflife,healthandaccidentinsurance.Theyshallalsoincludethepersonorpersonstowhomany theconstituentcompaniesshallsurrendertotheCommissionertheirrespectivecertificatesofauthoritytotransact annuityorpureendowmentispresentlyorprospectivelypayablebythetermsofanindividualannuityorpure insurancebusiness.Theabsorbingorsurvivingcompanyincaseofmerger,orthenewlyformedcompanyincaseof endowmentcontract,exceptwherethepolicyorcontractdeclaressomeotherpersontobetheownerorholder consolidation,shallimmediatelyfilewiththecommissionerthecorrespondingapplicationforissuanceofanew thereof,inwhichcasesuchotherpersonshallbedeemedpolicyholder.Inanycasewhereapolicyorcontractnames certificateofauthoritytotransactinsurancebusiness,togetherwithacertifiedcopyofthecertificateofmergerorof twoormorepersonsasjointinsured,payees,ownersorholdersthereof,thepersonssonamedshallbedeemed consolidation,andofthecertificateofincreaseofstocks,ifthereisany,issuedbytheSecuritiesandExchange collectivelytobeonepolicyholderforthepurposeofthischapter.Inanycasewhereapolicyorcontractshallhave Commission. beenassignedbyassignmentabsoluteonitsfacetoanassigneeotherthantheinsurer,andsuchassignmentshall Sec.259.Nothinginthistitleshallbeconstruedtoenlargethepowersoftheabsorbingorsurvivingcompanyincase havebeenfiledattheprincipalofficeoftheinsureratleastthirtydayspriortothedateofanyelectionormeeting ofmerger,orthenewlyformedcompanyincaseofconsolidation,exceptthoseconferredbythecertificateofmerger referredtointhischapter,thensuchassigneeshallbedeemedatsuchelectionormeetingtobethepolicyholder.For orofconsolidationandthearticlesofmergerofconsolidation,ortheamendedarticlesofincorporation,as

thepurposeofthischaptertheterms"policyholder"and"policyholders"includetheemployertowhom,ora withsuchelectionshallbepaidbytheinsurer.Forthepurposeofthissection,aquorumshallconsistoffiveper president,secretaryorotherexecutiveofficerofanycorporationorassociationtowhichamastergrouppolicyhas centumofthepolicyholdersofsuchinsurerentitledtovoteatsuchelection. beenissued,butexcludetheholdersofcertificatesorpoliciesissuedunderorinconnectionwithamastergroup Sec.266.Incarryingoutanysuchplan,theinsurermayacquireanysharesofitsownstockbygift,bequestor policy.Beneficiariesunderunmaturedcontractsshallnotassuchbedeemedtobepolicyholders; purchase.Anysharessoacquiredshall,unlessasaresultofsuchacquisitionallofthesharesoftheinsurershallhave (5)FiledwiththeCommissionerafterhavingbeenapprovedasprovidedinthissection. beenacquired,beacquiredintrustforthepolicyholdersoftheclassorclassesforwhosebenefittheplanprovides thatthestockoftheinsurershallbeacquiredashereinafterprovided.Suchsharesshallbeassignedandtransferred Sec.264.TheCommissionershallexaminetheplansubmittedtohimundertheprovisionsofsubparagraphthreeof onthebooksofsuchinsurerandapprovedbytheCommissioner.Suchtrusteesshallholdsuchstockintrustuntilall sectiontwohundredsixtythree.Heshallnotapprovesuchplanunlessinhisopiniontherightsandinterestofthe oftheoutstandingsharesofcapitalstockofsuchinsurerhavebeenacquired,butfornotlongerthanthirtyyears insurer,itspolicyholdersandshareholdersareprotectednorunlessheissatisfiedthattheplanwillbefairand withsuchextensionsofnotmorethanfiveyearseachasmaybegrantedbytheCommissioner.Suchextensionsmay equitableinitsoperation. begrantedbytheCommissioneriftheplansoprovidesandifinhisopiniontheplanofacquisitionofallofsuch stockcanbecompletedwithinareasonableperiod.Suchtrusteesshallvotesuchstockatallcorporatemeetingsat Sec.265.Theelectionprescribedbysubparagraphfourofsectiontwohundredsixtythreeshallbecalledbythe boardofdirectorsorthepresident,andeverypolicyholderoftheclassorclassesforwhosebenefitthestockistobe whichstockholdershavetherighttovote.Whenalltheoutstandingsharesofcapitalstockofsuchinsurerhavebeen acquired,allsaidsharesshallbecancelled,thecertificateofamendmentoftheinsurer'sarticlesofincorporation acquired,whoseinsuranceshallhavebeeninforceforatleastoneyearpriortosuchelectionshallhaveonevote, givingeffecttheretoshallbefiledinaccordancewiththeprovisionsoftheCorporationLaw,andtheinsurershall regardlessofthenumberofpoliciesoramountofinsuranceheholds,andregardlessofwhethersuchpoliciesare becomeanonstockcorporationfortheprofitofitsmembersandsuchtrustshallthereuponterminate.Thereafter policiesoflifeinsuranceorpoliciesofhealthandaccidentinsuranceorannuitycontracts.Noticeofsuchelection shallbegiventopolicyholdersentitledtovotebymailfromtheprincipalofficeofsuchinsureratleastthirtydays suchcorporationshallbeconductedforthemutualbenefit,ratably,ofitspolicyholdersoftheclassorclassesfor priortothedatesetforsuchelection,inasealedenvelope,postageprepaid,addressedtoeachsuchpolicyholderat whosebenefitthestockwasacquiredandshallhavepowertoissuenonassessablepoliciesonareservebasissubject toallprovisionsoflawapplicabletoincorporatedlifeinsurersissuingnonassessablepoliciesonareservebasis. hislastknownaddress. Policiessoissuedmaybeuponthebasisoffullorpartialparticipationthereinasagreedbetweentheinsurerandthe Votingshallbebyoneofthefollowingmethods: insured. (1)Atameetingofsuchpolicyholders,heldpursuanttosuchnotice,byballotinpersonorbyproxy. Upontheterminationofanysuchvotingtrust,eitherinaccordancewithitstermsorashereinaboveprovided,such planofmutualizationshallterminate,unlesstheretoforecompleted.Uponsuchtermination,unlesstheplanof (2)Ifnotbythemethoddescribedintheprecedingsubparagraph,thenbymailpursuanttoaprocedureandon mutualizationprovidesforthedispositionofthesharesacquiredbytheinsurerundersuchplanorforthe formstobeprescribedbysuchplan. dispositionoftheproceedsthereof,thesharesheldbysuchtrusteesshallbedisposedofinaccordancewithanorder Suchelectionshallbeconductedunderthedirectionandsupervisionofthreeimpartialanddisinterestedinspectors ofthecourtofcompetentjurisdictioninthejudicialdistrictinwhichislocatedtheprincipalofficeofsuchinsurer, appointedbytheinsurerandapprovedbytheCommissioner.Incaseanypersonappointedasinspectorfailsto madeuponaverifiedpetitionoftheCommissioner. appearatsuchmeetingorfailsorrefusestoactatsuchelection,thevacancy,ifoccurringinadvanceofthe conveningofthemeetingorinadvanceoftheopeningofthemailvote,maybefilledinthemannerprescribedfor Sec.267.Anysuchplanofmutualizationmayprovideforthecreationofavotingtrustunderatrustagreementfor theappointmentofinspectorsand,ifoccurringatthemeetingorduringthecanvassofthemailvote,maybefilled theholdingandvotingbythreeormoretrusteesofanyportionorallofthesharesoftheinsurernotrequiredupon bythepersonactingaschairmanofsaidmeetingordesignatedforthatpurposeinsuchplan.Thedecision,actor theadoptionofsuchplan.Thevotingtrusteesshallbenamedinaccordancewithsuchplanor,ifnoprovisionis certificateofamajorityoftheinspectorsshallbeeffectiveinallrespectsasthedecision,actorcertificateofall.The madethereinforthenamingofsuchtrustees,thenbytheinsurer.Thevotingtrustagreementandvotingtrustees shallbesubjecttotheapprovaloftheCommissioner.Anyorallofthetrusteesundersuchvotingtrustagreement inspectorsofelectionshalldeterminethenumberofpolicyholders,thevotingpowerofeach,thepolicyholders representedatthemeetingorvotingbymail,theexistenceofaquorumandtheauthenticity,validityandeffectof maybethesamepersonorpersonsasanyorallofthetrusteesreferredtoinsectiontwohundredsixtysix.Such proxies.Theyshallreceivesvotes,hearanddetermineallchallengesandquestionsinanywayarisinginconnection votingtrustagreementshallprovidethatintheeventofacquisitionbytheinsurerofanyofthesharesofstockheld thereunderinaccordancewiththeprovisionsoftheplan,suchsharessoacquiredtogetherwiththevotingrights withtherighttovote,countandtabulateallvotes,determinetheresult,anddosuchotheractsasareproperto conductthevotewithfairnesstoallpolicyholders.Theinspectorsofelectionshall,beforecommencingperformance thereofshallbetransferredbythetrusteesnamedundertheprovisionsofthissectiontothetrusteesnamedunder oftheirduties,subscribetoandfilewiththeinsurerandwiththeCommissioneronoaththatthey,andeachofthem,theprovisionsofsectiontwohundredsixtysix.Anyvotingtrustagreementcreatedpursuanttotheprovisionsofthis willperformtheirdutiesimpartially,ingoodfaith,tothebestoftheirabilityandasexpeditiouslyasinpracticable. sectionmaybemadeirrevocablefornotlongerthanthirtyyearsandthereafteruntiltheterminationofthetrust Ontherequestoftheinsurer,theCommissioner,apolicyholderorhisproxy,theinspectorsshallmakeareportin providedforinsectiontwohundredsixtysix.Thetrustcreatedpursuanttotheprovisionsofthissectionshall terminateinanyeventuponterminationofthetrustprovidedforinsectiontwohundredsixtysix.Uponthe writingofanychallengeorquestionormatterdeterminedbythemandexecuteacertificateofanyfactfoundby them.TheyshallalsocertifytheresultofsuchvotetotheinsurerandtotheCommissioner.Anyreportorcertificate terminationofthetrustcreatedpursuanttotheprovisionsofthissection,anysharesheldinsuchtrustshallrevertto thepersonsentitledtheretobylaw. madebythemshallbeprimafacieevidenceoffactsstatedtherein.Allnecessaryexpensesincurredinconnection

Sec.268.Everypaymentfortheacquisitionofanysharesofthecapitalstockofsuchinsurer,thepurchasepriceof ThefindingsoftheSecretaryofFinanceonallquestionsoffactraisedatthehearingoftheapplicationfor whichisnotfixedbysuchplan,shallbesubjecttothepriorapprovaloftheCommissioner.Neithersuchplan,nor determinationofthefairvalueofsuchsharesshallbeconclusiveuponallpartiestotheproceedings.Theorderof anysuchpayment,maybeapprovedbytheCommissionerunlesshefindsthattherightsandinterestsoftheinsurer, theSecretaryofFinancedeterminingthefairvalueofthesharesandthetermsofpaymentthereofshallhavethe itspolicyholders,andshareholdersareprotected. forceandeffectofajudgmentwhichshallbeappealableonanyquestionoflaw.Suchordershallbecomefinaland executoryfifteendaysafterreceiptthereofbythepartiestotheproceedings. Sec.269.Thetrusteesreferredtoinsectiontwohundredsixtysixshallfilewithsuchinsurerandwiththe Commissioneraverifiedacceptanceoftheirappointmentsandverifieddeclarationsthattheywillfaithfully Uponanysuchorderbecomingfinalandfromwhichnoappealispending,orwhenthetimetoappealtherefromhas dischargetheirdutiesassuchtrustees.Alldividendsandothersumsreceivedbysaidtrusteesonthesharesheldby expired,eachshareholderpartytotheproceedingsshalltransferhissharestotheinsurerandsurrendertothesaid them,afterpayingthenecessaryexpensesofexecutingtheirtrust,shallbeimmediatelyrepaidtosuchinsurerfortheinsurerthecertificatesrepresentingsuchsharesandtheinsurershallmakepaymentthereforeasprovidedinsuch benefitofallwhoare,ormaybecome,policyholdersofsuchinsuranceoftheclassorclassesforwhosebenefitthe order.Anysharessoacquiredbytheinsurershallbeassignedandtransferredtothetrusteesandheldbythemas stockofsuchinsurerwasacquiredandentitledtoparticipateintheprofitsthereofandshallbeaddedtoandbecome sharesacquiredpursuanttotheplan. partoftheassetsofsuchinsurer. AnyshareholderwhodoesnotapplytotheSecretaryofFinanceinthemannerandwithinthetimehereinbefore Sec.269A.If,atanytimewithintheperiodprovidedintheplanfortheacquisitionoftheoutstandingsharesof prescribedshallbedeemedtohaveacceptedtheofferreferredtoabove,effective,however,upontheexpirationofthe stockoftheinsurer,ninetypercentthereofhasalreadybeenacquiredandtransferredtothetrusteesundertheplan,timehereinaboveprescribedformakingsuchapplication,andsuchshareholder'stimeforacceptingsuchoffershall, theinsurerbyavoteofamajorityofthedirectorsmaydeterminetomakeanoffer,withthepermissionofthe forthatpurposeonly,bedeemedtohavebeenextendedaccordingly. Commissionerandsubjecttosuchrequirementashemayspecify,toacquirebypurchaseallofthesharesnot Anyoffertoacquiresharesmadepursuanttothissectionshall,exceptasotherwiseprovidedherein,beirrevocable theretoforeacquiredundertheplan,ataspecifiedpricewhichtheinsurerconsiderstobetheirfairvalueasofthe untilallproceedingsuponsuchofferhavebeencompletedorallshareshaveotherwisebeenearlieracquiredbythe dateofmakingsuchoffer. insurer. IftheoffertoacquireispermittedbytheCommissioner,theinsurershallmakeawrittenofferbyregisteredmailto Anyshareholderwhohasexpresslyorimpliedlyacceptedtheplanortheoffertoacquirehissharesnottheretofore eachshareholderwhoseshareshavenottheretoforebeenacquiredundertheplanorotherwise,offeringtoacquire acquiredundertheplan,andanyshareholderwhohasrejectedsuchplanorsuchofferandhasapplied,asaforesaid, allhissharesatsuchpriceifacceptedinwritingwithinthirtydaysafterthemailingofsuchoffer.Anyshareholder totheSecretaryofFinanceforadeterminationofthefairvalueofhissharessubsequenttowhichanagreementhas acceptingsuchoffer,withinthetimethereforeshall,withinsixtydaysafterhisacceptance,transfertotheinsurerthe beenreachedorafinalorderissuedfixingsuchfairvaluebutwhofailstosurrenderhiscertificatesforcancellation certificatesrepresentingsuchsharesand,upondoingso,shallbepaidbytheinsurertheamountofsuchofferforhis uponpaymentoftheamounttowhichheisentitled,maybecompelledtodosobyanorderoftheSecretaryof shares.Anysharesoacquiredshallbeassignedandtransferredtothetrusteesundertheplanandheldbythemas Financeforthatpurposeandsuchordermayprovidethatuponfailureofsuchshareholdertosurrendersuch sharesacquiredpursuanttotheplan. certificatesforcancellationsuchordershallstandinlieuofsuchsurrenderandcancellation.(Asamendedby Eachshareholderwhodoesnotacceptsuchoffertoacquirehisshareswithinthetimestatedinsuchofferfor PresidentialDecreeNo.1280). acceptancethereofshallwithinfifteendaysaftertheexpirationofsuchofferapplytotheSecretaryofFinancefor Sec.270.Suchinsurer,aftermutualization,shallbeacontinuationoftheoriginalinsurer,andsuchmutualization determinationofthefairvalueofhissharesasofthedateofmakingsuchoffer.TheSecretaryofFinancemay shallnotaffectsuchinsurer'scertificateofauthoritynorexistingsuits,rightsorcontractsexceptasprovidedinsaid himself,afterduenoticeandhearing,determineupontheevidencereceivedthefairvalueofthesharesasofthedate planfortheacquisitionoftheoutstandingsharesofthecapitalstockofsuchinsurer,approvedasprovidedinthis ofmakingsuchoffer,orappointthreeimpartialanddisinterestedpersonstoappraisethefairvalueofsuchshares chapter.Suchinsurer,aftermutualization,shallexercisealltherightsandpowersandshallperformalltheduties withsuchdirectionasheshalldeemproperandnecessarytoexpeditetheproceedings.Uponcompletionofthe conferredorimposedbylawuponinsurerswritingtheclassesofinsurancewrittenbyit,andtoprotectrightsand appraisalproceedings,theappraisersshallfilewiththeSecretaryofFinancetheirreportinwritingstatingthefair contractsexistingpriortomutualization,subjecttotheeffectofsaidplan.Theboardofdirectorsofsuchinsurer, valueofsuchsharesasofthedateofthemakingofsuchofferandsettingforththeirfindingsinsupportofsuch priortomutualization,mayadoptamendmentstoitsbylawstotakeeffectuponmutualization. statement.Theappraisersshallfurnisheachpartytotheproceedingsacopyoftheirappraisalreport,andwithin tendaysafterreceiptthereofanysuchpartymaysignifyhisobjection,ifany,tothereportormovefortheapproval Sec.271.(1)Anannualmeetingofmembersshallbeheldatteno'clockinthemorningofthefourthTuesdayof thereof.Upontheexpirationoftheperiodoftendaysreferredtoabove,thereportshallbesetforhearing,after Marchofeachyearattheprincipalofficeoftheinsurer,unlessadifferenttimeorplacebeprovidedinthebylaws. whichtheSecretaryofFinanceshallissueanorderadopting,modifyingorrejectingthereportinwholeorinpart (2)Specialmeetingsofthemembers,foranypurposeorpurposeswhatsoever,maybecalledatanytimebythe orhemayreceivefurtherevidenceormayrecommititwithinstructions.WhenevertheSecretaryofFinanceshall president,orbytheboardofdirectors,orbyoneormoremembersholdingnotlessthanonefifthofthevoting determineinanymanner,asaforesaid,thefairvalueofsuchshares,hemayalsodeterminethetermsofpayment powerofsuchinsurer,orbysuchotherofficersorpersonsasthebylawsauthorize. thereofbytheinsurer.Theexpensesincidentaltotheproceedingsincludingchargesoftheappraisers,ifany,shallbe paidequallybytheinsurerandtheshareholder. (3)Noticeofallmeetingsofmemberswhetherannualorspecialshallbegiveninwritingtothemembersentitledto

votebythesecretary,oranassistantsecretary,orotherpersonchargedwiththatduty,oriftherebenosuchofficer, thisCodeandoftheCorporationLaw. orincaseofhisneglectorrefusal,byanydirectorormember.Attheoptionoftheinsurersuchnoticemaybe Sec.272.TheprovisionsofCommonwealthActNo.83,otherwiseknownastheSecuritiesAct,asamended,shallnot imprintedonpremiumnoticesofreceiptsoronboth. applytoanyofthefollowing: Anoticemaybegivenbysuchinsurertoanymembereitherpersonally,orbymail,orothermeansofwritten (a)Sharesofthecapitalstockofsuchinsureracquiredasprovidedinsectiontwohundredsixtysixandassignedand communication,chargesprepaid,addressedtosuchmemberathisaddressappearingonthebooksoftheinsurer,or transferredtothetrusteesasisprovidedinsaidsection,andtheassignmentandtransferofsaidsharesasso givenbyhimtotheinsurerforthepurposeofnotice.Ifamembergivesnoaddress,noticeshallbedeemedtohave provided; beengivenhimifsentbymailorothermeansofwrittencommunicationaddressedtotheplacewheretheprincipal officeoftheinsurerissituated,orifpublishedatleastonceinsomenewspaperofgeneralcirculationintheplacein (b)Anycertificateorotherinstrumentissuedtoapolicyholderofsuchmutualizedinsurerconferringorevidencing whichsaidofficeislocated. membershipinsuchmutualizedinsurerorconferringorevidencingsuchmember'srighttoparticipateintheprofits orshareintheassetsofsuchmutualizedinsurerbythevirtueofhismembershiptherein,andtheissuanceofsuch Noticeofanymeetingofmembersshallbesenttoeachmemberentitledtheretonotlessthansevendaysbeforesuch certificateorotherinstrument; meeting,unlessthebylawsprovideotherwise. (c)Theplanfortheacquisitionoftheoutstandingsharesofthecapitalstockofsuchinsurerauthorizedbythe Noticeofanymeetingofmembersshallspecifytheplace,thedayandthehourofthemeetingandthegeneralnature provisionsofthischapter,thesubmissionofsaidplantotheCommissionerandtothepolicyholdersofsuchinsurer ofthebusinesstobetransacted. asprovidedinthischapter,andtheapprovalandcarryingoutofsaidplanoranypartthereofinaccordancewith Noticeofanannualmeetingtobeheldatthetimeandplacespecifiedinsubparagraphoneofthissectionshallbe theprovisionsofthischapter. sufficientlygivenifpublishedatleastonceineachoffoursuccessiveweeksinanewspaperofgeneralcirculationin Title18 theplaceinwhichtheprincipalofficeofsuchinsurerislocated,andifsopublishednoothernoticeofsuchmeeting WITHDRAWALOFFOREIGNINSURANCECOMPANIES shallberequired. Sec.273.Aforeigninsurancecompanydoingbusinessinthe,uponpaymentofthefeehereinafterprescribedand (4)Thepresenceinpersonorbyproxyoffivepercentumofthemembersentitledtovoteatanymeetingshall surrendertotheCommissionerofitscertificateofauthority,mayapplytowithdrawfromthe.Suchapplication constituteaquorumforthetransactionofbusiness,unlessotherwiseprovidedbythebylaws. shallbedulyexecutedinwriting,accompaniedbyevidenceofdueauthorityforsuchexecution,properly (5)Eachsuchmembershallhaveonevoteatanymeetingofmembersregardlessofthenumberofpoliciesorthe acknowledged. amountofinsurancethatsuchmemberholdsandregardlessofwhethersuchpoliciesarepoliciesoflifeinsurance,or Sec.274.TheCommissionershallpublishtheapplicationforwithdrawaldailyforaperiodofoneweekintwo ofhealthandaccidentinsurance,orboth.Anymemberentitledtovoteshallhavetherighttodosoeitherinperson newspapersofgeneralcirculationintheCityof,oneinEnglishandtheotherinPilipino.Theexpensesofsuch orbyanagentoragentsauthorizedbyawrittenproxyexecutedbysuchpersonorhisdulyauthorizedagentand publicationshallbepaidbytheinsurancecompanyfilingsuchapplication. filedwiththesecretaryofsuchinsurer. Sec.275.Everyforeigninsurancecompanydesiringtowithdrawfromtheshall,priortosuchwithdrawal,discharge (6)Thedirectorsoftheinsurerinofficeatthetimetheinsurerismutualizedasprovidedinthischaptershall itsliabilitiestopolicyholdersandcreditorsinthiscountry.Incaseofitspoliciesinsuringresidentsofthe,itshall continueinofficeuntilthefirstannualmeetingofmembers.Atthefirstannualmeetingofmembersandateach causetheprimaryliabilitiesundersuchpoliciestobereinsuredandassumedbyanotherinsurancecompany annualmeetingthereafterdirectorsshallbeelectedbythemembersforthetermortermsauthorizedbythis authorizedtotransactbusinessinthe.Inthecaseofsuchpoliciesasaresubjecttocancellationbythewithdrawing chapter. company,itmaycancelsuchpoliciespursuanttothetermsthereofinlieuofsuchreinsuranceandassumptionof (7)Thearticlesofincorporationorthebaylawsmayprovidethatthedirectorsmaybedividedintotwoormore liabilities. classeswhosetermsofofficeshallexpireatdifferenttimes,butnotermsshallcontinuelongerthansixyears.Inthe Sec.276.TheCommissionershallmakeanexaminationofthebooksandrecordsofthewithdrawingcompany,and absenceofsuchprovisions,eachdirector,exceptmembersoftheboardofdirectorsatthetimetheinsureris if,uponsuchexamination,theCommissionerfindsthattheinsurerhasnooutstandingliabilitiestoresidentsofthe mutualized,shallbeelectedforatermofoneyear.Alldirectorsshallholdofficeforatermforwhichtheyare Philippines,itshallcancelthewithdrawingcompany'scertificateofauthority,ifunexpired,andshallpermitthe electedanduntiltheirsuccessorsareelectedandqualified.Adirectormay,butneednotbeamemberor insurertowithdraw.Thecostandexpensesofallsuchexaminationshallbepaidasprescribedinsectionfour policyholderoftheinsurerofwhichheisactingasdirector.Vacanciesintheboardofdirectorsmaybefilledbya hundredseventeen. majorityoftheremainingdirectors,thoughlessthanaquorum,andeachdirectorsoelectedshallholdofficeuntil thenextannualmeeting. Sec.277.UponthefailureofsuchwithdrawinginsurancecompanyoritsagentsinthePhilippinestopaythe expensesofsuchpublicationwithinthirtydaysafterthepresentationofthebilltherefore,theCommissionershall (8)Allinsurersmutualizedundertheprovisionsofthischaptershallbesubjecttoallotherapplicableprovisionsof collectsuchfeefromthedepositfurnishedinaccordancewiththeprovisionsofsectiononehundredninetyone.

Sec.278.AforeignlifeinsurancecompanythatwithdrawsfromthePhilippinesshallbeconsidereda"servicing insurancecompany"ifitsbusinesstransactionsareconfinedtoacceptingperiodicpremiumpaymentsfrom,or grantingpolicyloansandpayingcashsurrendervaluesofoutstandingpoliciesto,orrevivinglapsedpoliciesof, Philippinepolicyholders,andsuchotherrelatedservices. Sec.279.Nocompanyshallactasaservicinginsurancecompanyuntilafteritshallhaveobtainedaspecial certificationofauthoritytoactassuchfromtheCommissioneruponapplicationthereforeandpaymentbythe companyofthefeeshereinafterprescribed.SuchcertificateshallexpireonthelastdayofJuneofeachyearand shallberenewedannually,whilethecompanycontinuestoserviceitspolicyholders,andtocomplywithallthe applicableprovisionsoflawandregulations. Title19 PROFESSIONALREINSURERS

doingbusinessassuchinthePhilippinesshallcomplywiththerequirementofthissectionbyincreasingtheir respectivecapitalashereinprovidednotlaterthanDecemberthirtyone,nineteenhundredeighty:Provided, Further,Thattheprovisionsofthischapterapplicabletoinsurancecompaniesshallsofaraspracticablebelikewise applicabletoprofessionalreinsurers.(AsamendedbyPresidentialDecreeNo.1455). Title20 HOLDINGCOMPANIES Sec.282.Asusedinthistitle,thefollowingtermsshallhavetherespectivemeaningshereinaftersetforthunlessthe contextshallotherwiserequire: (a)"Person"meansanindividual,partnership,firm,association,corporation,trust,anysimilarentityorany combinationoftheforegoingactinginconcert;

(b)"Control",includingtheterms"controlling","controlledby"and"undercommoncontrolwith",meansthe Sec.280.ExceptasotherwiseprovidedinthisCode,noperson,partnership,associationorcorporationshalltransact possessiondirectlyorindirectlyofthepowertodirectorcausethedirectionofthemanagementandpoliciesofa anybusinessinthePhilippinesasaprofessionalreinsureruntilitshallhaveobtainedacertificateofauthorityfor person,whetherthroughtheownershipofvotingsecuritiesbyacontractotherthanacommercialcontractforgoods thatpurposefromtheCommissionerupontheapplicationthereforeandpaymentbysuchperson,partnership, ornonmanagementservicesorotherwise.Subjecttosectiontwohundredeightfour,controlshallbepresumedto associationorcorporationofthefeeshereinafterprescribed.AsusedinthisCode,theterm"professionalreinsurer" existifanypersondirectlyorindirectlyowns,controlsorholdswiththepowertovotefortypercentumormoreof shallmeananyperson,partnership,associationorcorporationthattransactssolelyandexclusivelyreinsurance thevotingsecuritiesofanyotherperson:Provided,Thatnopersonshallbedeemedtocontrolanotherpersonsolely businessinthe. byreasonofhisbeinganofficerordirectorofsuchotherperson; TheCommissionermayrefusetoissueacertificateofauthoritytoanysuchperson,partnership,associationor (c)"Holdingcompany"meansanypersonwhodirectlyorindirectlycontrolsanyauthorizedinsurer; corporationif,inhisjudgment,suchrefusalwillbestpromotepublicinterest.Nosuchcertificateofauthorityshall begrantedtoanysuchperson,partnership,associationorcorporationunlessanduntiltheCommissionershallhave (d)"Controlledinsurer"meansanauthorizedinsurercontrolleddirectlyorindirectlybyaholdingcompany; satisfiedhimselfbysuchexaminationashemaymakeandsuchevidenceashemayrequirethatsuchperson, (e)"Controlledperson"meansanyperson,otherthanacontrolledinsurer,whoiscontrolleddirectlyorindirectlyby partnership,associationorcorporationisqualifiedbythelawsofthePhilippinestotransactbusinessthereinasa aholdingcompany; professionalreinsurer. (f)"Holdingcompanysystem"meansaholdingcompanytogetherwithitscontrolledinsurersandcontrolledpersons. BeforeissuingsuchcertificateofauthorityoftheCommissionermustbesatisfiedthatthenameoftheapplicantis notthatofanyotherknowncompanytransactinginsuranceorreinsurancebusinessinthe,oranamesosimilaras Sec.283.Notwithstandingparagraph(b)ofsectiontwohundredeightytwo,theCommissionermaydetermineafter tobecalculatedtomisleadthepublic. noticeandopportunitytobeheard,thatapersonexercisesdirectlyorindirectlyeitheraloneorpursuanttoan agreementwithoneormoreotherpersonssuchacontrollinginfluenceoverthemanagementorpoliciesofan SuchcertificateofauthorityshallexpireonthelastdayofJuneofeachyearandshallberenewedannuallyifsuch authorizedinsurerastomakeitnecessaryorappropriateinthepublicinterestorfortheprotectionofpolicyholders person,partnership,association,orcorporationiscontinuingtocomplywithprovisionsofthisCode,orthe orstockholdersoftheinsurerthatthepersonbedeemedtocontroltheinsurer. circulars,instructions,rulings,ordecisionsoftheCommissionerandsuchotherpertinentlaw,rulesandregulations. Sec.284.TheCommissionermaydetermineuponapplicationthatanyperson,eitheraloneorpursuanttoagreement Everysuchperson,partnership,association,orcorporationreceivingsuchcertificateofauthorityshallbesubjectto withoneormoreotherpersons,doesnotorwillnotuponthetakingofsomeproposedactioncontrolanother theprovisionsofthisCodeandotherrelatedlaws,andtothejurisdictionandsupervisionoftheCommissioner. person.Thefilingofanapplicationhereunderingoodfaithbyanypersonshallrelievetheapplicantfromany Sec.281.Anyperson,partnership,association,orcorporationauthorizedtotransactsolelyreinsurancebusiness obligationorliabilityimposedbythistitlewithrespecttothesubjectoftheapplication,exceptascontainedin musthaveapaidupcapitalstockofatleasttenmillionpesos,twentyfivepercentumofwhichmustbeinvestedin sectiontwohundredninetyfour,untiltheCommissionerhasactedupontheapplication.Withinthirtydaysorsuch securitiessatisfactorytotheCommissioner,consistingofbondsorotherevidencesofdebtoftheGovernmentofthe furtherperiodashemayprescribe,theCommissionermayprospectivelyrevokeormodifyhisdetermination,after Philippinesoritspoliticalsubdivisionsorinstrumentalities,orofgovernmentownedorcontrolledcorporationsand noticeandopportunitytobeheard,wheneverinhisjudgmentrevocationormodificationisconsistentwithhistitle. entities,includingtheCentralBankofthePhilippines,anddepositedwiththeCommissioner,andtheremaining Sec.285.Notwithstandinganyotherprovisionsofthistitle,thefollowingshallnotbedeemedholdingcompanies: seventyfivepercentuminsuchothersecuritiesasmaybeallowedandpermittedbytheCommissioner,which securitiesshallatalltimesbemaintainedfreefromanylienorencumbrance:Provided,Thatreinsurersalready (a)authorizedinsurersorreinsurersortheirsubsidiaries;

(b)theGovernmentofthe,oranypoliticalsubdivision,agencyorinstrumentalitythereof,oranycorporationwhich (c)expensesincurredandpaymentsreceivedshallbeallocatedtotheinsureronanequitablebasisinconformity iswhollyowneddirectlyorindirectlybyoneormoreoftheforegoing. withcustomaryinsuranceaccountingpracticesconsistentlyapplied. TheCommissionermayconditionallyorunconditionallyexemptanyspecifiedpersonorclassofpersonsfromanyofThebooks,accountsandrecordsofeachpartytoallsuchtransactionsshallbemaintainedastoclearlyand theobligationsorliabilitiesimposedunderthistitle,ifandtotheextenthefindstheexemptionnecessaryto accuratelydisclosethenatureanddetailsofthetransactionsincludingsuchaccountinginformationasisnecessary appropriateinthepublicinterestornotadversetotheinterestsofpolicyholdersorstockholdersandconsistentwith tosupportthereasonablenessofthechargesorfeestotherespectiveparties. thepurposesofthistitle. Sec.291.ThepriorwrittenapprovaloftheCommissionershallberequiredforthefollowingtransactionsbetweena Sec.286.(1)EverypersonwhoonthedatethisCodetakeseffectisacontrolledinsurerandeverypersonwho controlledinsurerandanypersoninitsholdingcompanysystem:sales,purchases,exchanges,loansorextensionsof thereafterbecomesacontrolledinsurer,shall,withinsixtydaysthereafter,orwithinthirtydaysafterbecominga credit,orinvestments,involvingfivepercentumormoreoftheinsurer'sadmittedassetsasofthethirtyfirstdayof controlledinsurer,whicheverislater,registerwiththeCommissioner.Suchregistrationshallbeamendedwithin Decembernextpreceding. thirtydaysfollowinganychangeintheidentityofitsholdingcompany.TheCommissionermaygrantoneormore Sec.292.Thefollowingtransactionsbetweenacontrolledinsurerandanypersoninitsholdingcompanysystemmay reasonableextensionsofthetimetoregister. notbeenteredintounlesstheinsurerhasnotifiedtheCommissionerinwritingofitsintentiontoenterintoanysuch (2)EveryregistrantshallfurnishtheCommissionerwiththefollowinginformationconcerningitsholdingcompany: transactionatleastthirtydayspriorthereto,orsuchshorterperiodashemaypermit,andhehasnotdisapprovedit (a)acopyofitscharterorarticlesofincorporationanditsbylaws,(b)theidentitiesofitsprincipalshareholders, withinsuchperiod: officers,directorsandcontrolledpersons,and(c)informationastoitscapitalstructureandfinancialcondition,and (a)sales,purchases,exchanges,loansorextensionsofcredit,orinvestments,involvingmorethanonehalfofoneper adescriptionofitsprincipalbusinessactivities. centumbutlessthanfivepercentumoftheinsurer'sadmittedassetsasofthethirtyfirstdayofDecembernext Sec.287.EverycontrolledinsurershallfilewiththeCommissionersuchreportsormaterialashemaydirectforthe preceding; purposeofdisclosinginformationconcerningtheoperationsofpersonswithintheholdingcompanysystemwhich (b)reinsurancetreatiesoragreements; maymateriallyaffecttheoperations,managementorfinancialconditionoftheinsurer. (c)renderingofservicesonaregularorsystematicbasis;or Sec.288.Everyholdingcompanyandeverycontrolledpersonwithinaholdingcompanysystemshallbesubjectto examinationbyorderoftheCommissionerifhehascausetobelievethattheoperationsofsuchpersonsmay (d)anymaterialtransaction,specifiedbyregulation,whichtheCommissionerdeterminesmayadverselyaffectthe materiallyaffecttheoperations,managementorfinancialconditionofanycontrolledinsurerwiththesystemand interestoftheinsurer'spolicyholdersorstockholdersorofthepublic. thatheisunabletoobtainrelevantinformationfromsuchcontrolledinsurer.Thegroundsrelieduponbythe Nothinghereincontainedshallbedeemedtoauthorizeorpermitanytransactionwhich,inthecaseofanon Commissionerforsuchexaminationshallbestatedinhisorder,whichordershallbesubjecttojudicialreviewonly controlledinsurer,wouldbeotherwisecontrarytolaw. attheinstanceofthepersonsoughttobeexamined.Suchexaminationshallbeconfinedtomattersspecifiedinthe order.Thecostofsuchexaminationshallbeassessedagainstthepersonexaminedandnoportionthereofshall Sec.293.TheCommissioner,inreviewingtransactionspursuanttosectionstwohundredninetyoneandtwo thereafterbereimbursedtoitdirectlyorindirectlybythecontrolledinsurer. hundredninetytwo,shallconsiderwhetherthetransactionscomplywiththestandardsetforthinsectiontwo hundredninetyandwhethertheymayadverselyaffecttheinterestsofpolicyholders.Thissectionshallnotapplyto Sec.289.TheCommissionershallkeepthecontentsofeachreportmadepursuanttothistitleandanyinformation transactionssubjecttoothersectionsofthisCodewhichimposenoticeorapprovalrequirementsgreaterthanthose obtainedbyhiminconnectiontherewithconfidentialandshallnotmakethesamepublicwithoutthepriorwritten prescribedbythistitle. consentofthecontrolledinsurertowhichitpertainsunlesstheCommissionerafternoticeandanopportunitytobe heardshalldeterminethattheinterestsofpolicyholders,stockholdersorthepublicwillbeservedbythepublication Sec.294.(1)Noperson,otherthananauthorizedinsurer,shallacquirecontrolofanydomesticinsurer,whetherby thereof.InanyactionorproceedingbytheCommissioneragainstthepersonexaminedoranyotherpersonwithin purchaseofitssecuritiesorotherwise,except(a)aftertwentydayswrittennoticetoitsinsurerorsuchshorter thesameholdingcompanysystemareportofsuchexaminationpublishedbyhimshallbeadmissibleasevidenceof periodastheCommissionermaypermit,ofitsintentiontoacquirecontrol,and(b)withthepriorwrittenapproval thefactsstatedtherein. oftheCommissioner. Sec.290.Transactionswithinaholdingcompanysystemtowhichacontrolledinsurerisapartyshallbesubjectto (2)TheCommissionershalldisapprovetheacquisitionofcontrolofadomesticinsurerifhedetermines,afternotice thefollowing: andanopportunitytobeheard,thatsuchactionisreasonablynecessarytoprotecttheinterestofthepeopleofthis country.Thefollowingshallbetheonlyfactorstobeconsideredbyhiminreachingtheforegoingdetermination: (a)Thetermsshallbefairandequitable; (a)thefinancialconditionoftheacquiringpersonorandtheinsurer; (b)chargesorfeesforservicesperformedshallbereasonable;

(b)thetrustworthinessoftheacquiringpersonoranyofitsofficersordirectors; (c)aplanfortheproperandeffectiveconductoftheinsurer'soperations; (d)thesourceofthefundsorassetsfortheacquisition; (e)thefairnessofanyexchangeofstock,assets,cashorotherconsiderationforthestockorassetstobereceived; (f)whethertheeffectoftheacquisitionmaybesubstantiallytolessencompetitioninanylineofcommercein insuranceortotendtocreateamonopolytherein;and (g)whethertheacquisitionislikelytobehazardousorprejudicialtotheinsurer'spolicyholdersorstockholders.

theCommissioner,incorporatingsuchmatterbyreference. Sec.297.Noholdingcompanyorcontrolledpersonshalldirectlyorindirectlyorthroughanotherpersondoorcause tobedonefororinbehalfofthecontrolledinsureranyactintendedtoaffecttheinsuranceoperationsoftheinsurer which,ifdonebytheinsurer,wouldviolateanyprovisionofthisCode. Sec.298.Inadditiontoanyotherpenaltyprovidedbylaw,theCommissionermay,uponthewillfulfailureofany personwithinaholdingcompanysystemtocomplywiththistitleoranyregulationororderpromulgatedhereunder: (a)proceedundertitlefourteenortitlefifteen,ChapterIII,ofthisCodewithrespecttoinsurerwithintheholding companysystem;or

(3)Thefollowingconditionsaffectinganycontrolledinsurer,regardlessofwhensuchcontrolhasbeenacquired,are (b)revokeorrefusetorenewtheauthoritytodobusinessinthiscountryofaninsurerwithintheholdingcompany systemorrefusetoissuesuchauthoritytoanyotherinsurerinthesystem;or violationsofthistitle:(a)thecontrollingpersonoranyofitsofficersordirectorshavedemonstrated untrustworthiness;and(b)theeffectofretentionofcontrolmaybesubstantiallytolessencompetitioninanylineof (c)directthat,inadditiontoanyotherpenaltyprovidedbylaw,suchpersonforfeittothepeopleofthiscountrya commerceininsuranceinthiscountryortotendtocreateamonopolytherein.If,afternoticeandanopportunityto sumnotexceedingfivehundredpesosforafirstviolationandtwothousandfivehundredpesosforanysubsequent beheard,theCommissionerdeterminesthatanyoftheforegoingviolationsexists,heshallreducehisfindingsto violation.Anadditionalsumnotexceedingtwothousandfivehundredpesosshallbeimposedforeachmonthduring writingandshallissueanorderbasedthereonandcausethesametobeservedupontheinsureranduponall whichanysuchviolationshallcontinue. personsaffectedtherebydirectinganypersonfoundtobeinviolationthereoftotakeappropriateactiontocuresuch violation.Uponthefailureofanysuchpersontocomplywithsuchorder,sectiontwohundredninetyeightshall ChapterIV becomeapplicable. SALESAGENCIESANDTECHNICALSERVICES (4)TheCommissionermayrequirethesubmissionofsuchinformationashedeemsnecessarytodeterminewhether Title1 anyacquisitionorretentionofcontrolcomplieswiththistitleandmayrequire,asaconditionofapprovalofsuch INSURANCEAGENTSANDINSURANCEBROKERS acquisitionorretentionofcontrol,thatalloranyportionofsuchinformationbedisclosedtotheinsurer's Sec.299.NoinsurancecompanydoingbusinessinthePhilippines,noranyagentthereof,shallpayanycommission stockholders. orothercompensationtoanypersonforservicesinobtaininginsurance,unlesssuchpersonshallhavefirstprocured (5)Unlesssubjecttoregistrationundersectiontwohundredeightysixorunlessacquisitionofitscontrolissubjectto fromtheCommissioneralicensetoactasaninsuranceagentofsuchcompanyorasaninsurancebrokeras paragraphsoneandtwohereof,everyauthorizedinsurershall,onorbeforethefirstdayofJuly,nineteenhundred hereinafterprovided. seventyfive,orwithinthirtydaysafteranyeventrequiringnoticehereunder,whicheverislater,notifythe Nopersonshallactasaninsuranceagentorasaninsurancebrokerinthesolicitationorprocurementof Commissionerinwritingoftheidentityofanypersonwhomtheinsurerthenknowsorhasreasontobelievecontrols applicationsforinsurance,orreceiveforservicesinobtaininginsurance,anycommissionorothercompensation orhastakenanyaction,otherthanpreliminarynegotiationsordiscussion,toacquirecontroloftheinsurer. fromanyinsurancecompanydoingbusinessinthePhilippines,oranyagentthereof,withoutfirstprocuringa Sec.295.(1)Notwithstandingthecontrolofanauthorizedinsurerbyanyperson,theofficersanddirectorsofthe licensetoactfromtheCommissioner,whichmustberenewedannuallyonthefirstdayofJanuary,orwithinsix insurershallnottherebyberelievedofanyobligationorliabilitytowhichtheywouldotherwisebesubjectbylaw, monthsthereafter.SuchlicenseshallbeissuedbytheCommissioneronlyuponthewrittenapplicationoftheperson andtheinsurershallbemanagedsoastoassureitsseparateoperatingidentityconsistentwiththistitle. desiringit,suchapplicationifforalicensetoactasinsuranceagent,beingapprovedandcountersignedbythe companysuchpersondesirestorepresent,andshallbeuponaformprescribedbytheCommissionergivingsuch (2)Nothinghereinshallprecludeanauthorizedinsurerfromhavingorsharingacommonmanagementor informationashemayrequire,anduponpaymentofthecorrespondingfeehereinafterprescribed.The cooperativeorjointuseofpersonnel,propertyorserviceswithoneormoreotherpersonsunderarrangements Commissionershallsatisfyhimselfastocompetenceandtrustworthinessoftheapplicantandshallhavetherightto meetingthestandardsofsectiontwohundredninety. refusetoissueorrenewandtosuspendorrevokeanysuchlicenseinhisdiscretion.Nosuchlicenseshallbevalid afterthethirtiethdayofJuneoftheyearfollowingitsissuanceunlessitisrenewed.(AsamendedbyPresidential Sec.296.Totheextentthatanyinformationormaterialissetforthinformsorothermatteronfilewithany governmentagencyorinaregistrationformfiledwiththeCommissionerbyanotherpersonwithinthesameholdingDecreeNo.1455). companysystem,thecontrolledinsurermaycomplywiththeregistrationorreportingrequirementsofthistitleby Sec.300.Anypersonwhoforcompensationsolicitsorobtainsinsuranceonbehalfofanyinsurancecompanyor referringinitsregistrationformorreporttosuchotherfiledmatterandattachingacopythereofcertifiedbythe transmitsforapersonotherthanhimselfanapplicationforapolicyorcontractofinsurancetoorfromsuch insurerasatrueandcompletecopy,tosuchregistrationformorreportor,ifsuchotherfiledmatterisonfilewith companyoroffersorassumestoactinthenegotiatingofsuchinsuranceshallbeaninsuranceagentwithinthe

intentofthissectionandshalltherebybecomeliabletoalltheduties,requirements,liabilitiesandpenaltiestowhich (a)haswillfullyviolatedanyprovisionofthisCode;or aninsuranceagentissubject. (b)hasintentionallymadeamaterialmisstatementintheapplicationtoqualifyforsuchlicense;or Sec.301.Anypersonwhoforanycompensation,commissionorotherthingofvalueactsoraidsinanymannerin (c)hasobtainedorattemptedtoobtainalicensebyfraudormisrepresentation;or soliciting,negotiatingorprocuringthemakingofanyinsurancecontractorinplacingriskortakingoutinsurance, onbehalfofaninsuredotherthanhimself,shallbeaninsurancebrokerwithintheintentofthisCode,andshall (d)hasbeenguiltyoffraudulentordishonestpractices;or therebybecomeliabletoalltheduties,requirements,liabilitiesandpenaltiestowhichaninsurancebrokeris (e)hasmisappropriatedorconvertedtohisownuseorillegallywithheldmoneysrequiredtobeheldinafiduciary subject. capacity; Sec.302.Everyapplicantforaninsurancebroker'slicenseshallfilewiththeapplicationandshallthereafter (f)hasnotdemonstratedtrustworthinessandcompetencetotransactbusinessasaninsuranceagentorinsurance maintaininforcewhilesolicensed,abondinfavorofthepeopleoftheRepublicofthePhilippinesexecutedbya brokerinsuchmannerastosafeguardthepublic;or companyauthorizedtobecomesuretyuponofficialrecognizances,stipulations,bondsandundertakings.Thebond shallbeinsuchamountasmaybefixedbytheCommissioner,butinnocaselessthanonehundredthousandpesos, (g)hasmateriallymisrepresentedthetermsandconditionsofpoliciesorcontractsofinsurancewhichheseekstosell andshallbeconditioneduponfullaccountingandduepaymenttothepersonentitledtheretooffundscominginto orhassold;or thebroker'spossessionthroughinsurancetransactionsunderlicense.Thebondshallremaininforceuntilreleased (h)hasfailedtopassthewrittenexaminationprescribed,ifnototherwiseexemptfromtakingthesame. bytheCommissioner,oruntilcancelledbythesurety.Withoutprejudicetoanyliabilitypreviouslyincurred thereunder,thesuretymaycancelthebondonthirtydaysadvancewrittennoticetoboththebrokerandthe Inadditiontotheforegoingcauses,nolicensetoactasinsuranceagentorinsurancebrokershallberenewedifthe Commissioner. holderthereofhasnotbeenactivelyengagedassuchagentorbrokerinaccordancewithsuchrulesasthe Commissionermayprescribe.(AsamendedbyPresidentialDecreeNo.1814). Uponapprovaloftheapplication,theapplicantmustalsofiletwoerrorsandomissions(professionalliabilityor professionalindemnity)policiesissuedseparatelybytwoinsurancecompaniesauthorizedtodobusinessinthe Sec.306.Thepremium,oranyportionthereof,whichaninsuranceagentorinsurancebrokercollectsfroman Philippines,satisfactorytotheCommissionertoindemnifytheapplicantagainstanyclaimorclaimsforbreachof insuredandwhichistobepaidtoaninsurancecompanybecauseoftheassumptionofliabilitythroughtheissuance dutyasinsurancebrokerwhichmaybemadeagainsthimbyreasonofanynegligentact,errororomission, ofpoliciesorcontractsofinsurance,shallbeheldbytheagentorbrokerinafiduciarycapacityandshallnotbe wheneverorwherevercommittedorallegedtohavebeencommitted,onthepartoftheapplicantoranypersonwho misappropriatedorconvertedtohisownuseorillegallywithheldbytheagentorbroker. hasbeen,isnow,ormayhereafterduringthesubsistenceofthepoliciesbeemployedbythesaidapplicantinhis Anyinsurancecompanywhichdeliverstoaninsuranceagentorinsurancebrokerapolicyorcontractofinsurance capacityasinsurancebroker,providedthatthefilingofanyclaimorclaimsunderoneofsuchpoliciesshallpreclude shallbedeemedtohaveauthorizedsuchagentorbrokertoreceiveonitsbehalfpaymentofanypremiumwhichis thefilingofthesaidclaimorclaimsundertheotherpolicy.Thesaidpoliciesshallbeinsuchamountsasmaybe dueonsuchpolicyorcontractofinsuranceatthetimeofitsissuanceordeliveryorwhichbecomesduethereon. prescribedbytheInsuranceCommissioner,dependinguponthesizeoramountofthebrokingbusinessofthe applicant,butinnocaseshalltheamountofeachofsuchpoliciesbelessthanfivehundredthousandpesos.(As Sec.307.Anyprovisionofexistinglawstothecontrarynotwithstanding,nopersonshall,withinthePhilippines,sell amendedbyPresidentialDecreeNo.1455). orofferforsaleavariablecontractordoorperformanyactorthinginthesale,negotiation,makingor consummatingofanyvariablecontractotherthanforhimselfunlesssuchpersonshallhaveavalidandcurrent Sec.303.TheCommissionershall,inordertodeterminethecompetenceofeveryapplicanttohavethekindof licensefromtheCommissionerauthorizingsuchpersontoactasavariablecontractagent.Nosuchlicenseshallbe licenseappliedfor,requiresuchapplicanttosubmittoawrittenexaminationandtopassthesametothesatisfaction issuedunlessanduntiltheCommissionerissatisfied,afterexaminationthatsuchpersonisbytraining,knowledge, oftheCommissioner.SuchexaminationshallbeheldatsuchtimesandplacesastheCommissionershallfromtime abilityandcharacterqualifiedtoactassuchagent.Anysuchlicensemaybewithdrawnandcancelledbythe totimedetermine. Commissionerafternoticeandhearing,ifheshallfindthattheholderthereofdoesnotthenhavethequalifications Sec.304.Anapplicantforthewrittenexaminationmentionedintheprecedingsectionmustbeofgoodmoral requiredfortheissuanceofsuchlicense. characterandmustnothavebeenconvictedofanycrimeinvolvingmoralturpitude.Hemustsatisfactorilyshowto Sec.308.Itshallbeunlawfulforanyperson,companyorcorporationinthePhilippinestoactasgeneralagentofany theCommissionerthathehasbeentrainedinthekindofinsurancecontemplatedinthelicenseappliedfor. insurancecompanyunlessheisempoweredbyawrittenpowerofattorneydulyexecutedbysuchinsurance SuchexaminationmaybewaivedifitisshowntothesatisfactionoftheCommissionerthattheapplicanthas company,andregisteredwiththeCommissionertoreceivenotices,summonsandlegalprocessesforandinbehalfof undergoneextensiveeducationand/ortrainingininsurance. theinsurancecompanyconcernedinconnectionwithactionsorotherlegalproceedingsagainstsaidinsurance Sec.305.Anapplicationfortheissuanceorrenewalofalicensetoactasaninsuranceagentorinsurancebrokermaycompany.ItshallbethedutyofsaidgeneralagenttonotifytheCommissionerofhispostofficeaddressinthe,or berefused,orsuchlicense,ifalreadyissuedorrenewed,shallbesuspendedorrevokediftheCommissionerfinds anychangethereof.Notices,summons,orprocessesofanykindsentbyregisteredmailtothelastregisteredaddress thattheapplicantfor,orholderof,suchlicense: ofsuchgeneralagentofthecompanyconcernedortotheCommissionershallbesufficientserviceanddeemedasif

servedontheinsurancecompanyitself.

Commissioner.

Sec.309.Exceptasotherwiseprovidedbylawortreaty,itshallbeunlawfulforanyperson,partnership,association Sec.314.Theterm"residentagent",asusedinthistitle,isonedulyappointedbyaforeigninsurerorbrokernot orcorporationinthePhilippines,forhimselforitself,orforsomeotherperson,partnership,associationor authorizedtodobusinessinthePhilippinestoreceiveinitsbehalfnotices,summonsandlegalprocessesin corporation,eithertoprocure,receiveorforwardapplicationsofinsurancein,ortoissueortodeliveroraccept connectionwithactionsorotherlegalproceedingsagainstsuchforeigninsurerorbroker. policiesorcontractsofinsuranceoforfor,anyinsurancecompanyorcompaniesnotauthorizedtotransactbusiness Sec.315.TheapplicationforacertificateofregistrationasresidentagentfiledwiththeCommissionermustbe inthePhilippines,coveringrisks,lifeornonlife,situatedinthePhilippines;andanysuchperson,partnership, accompaniedwith: associationorcorporationviolatingtheprovisionsofthissectionshallbedeemedguiltyofapenaloffense,andupon convictionthereof,shallforeachsuchoffensebepunishedbyafineoftenthousandpesos,orimprisonmentofsix (a)acopyofthepowerofattorney,dulynotarizedandauthenticatedbythePhilippineConsulintheplacewhere months,orbothatthediscretionofthecourt:Provided,Thattheprovisionsofthissectionshallnotapplyto suchforeigninsurerorbrokerisdomiciled,empoweringtheapplicanttoactasresidentagentandtoreceivenotices, reinsurance. summonsandlegalprocessesforandinbehalfofsuchforeigninsurerorbrokerinconnectionwithanyactionor legalproceedingagainstsuchforeigninsurerorbroker;and Title2 REINSURANCEBROKERS (b)acopyofthecorrespondingcertificateissuedbytheBoardofInvestmentsasrequiredunderSection4of RepublicActNo.5455,ifsuchforeigninsurerorbrokerisnototherwiseexemptfromsuchrequirement. Sec.310.Exceptasprovidedinthenextsucceedingtitle,nopersonshallactasreinsurancebrokerintheunlessheis authorizedassuchbytheCommissioner. Sec.316.ItshallbethedutyofsuchresidentagenttonotifyimmediatelytheCommissionerofanychangeofhis officeaddress. Areinsurancebrokerisonewho,forcompensation,notbeingadulyauthorizedagent,employeeorofficerofan insurerinwhichanyreinsuranceiseffected,actoraidsinanymannerinnegotiatingcontractsofreinsurance,or Sec.317.AcertificateofregistrationissuedtoaresidentagentshallexpireonthethirtiethdayofJuneoftheyear placingrisksofeffectingreinsurance,foranyinsurancecompanyauthorizedtodobusinessinthePhilippines. followingitsissuanceunlessitisrenewed. Sec.311.Uponapplicationandpaymentofthecorrespondingfeehereinafterprescribed,andthefilingoftwoerrors TheCommissionermay,afterduenoticeandhearing,recallorcancelthecertificateofregistrationissuedtoa andomissions(professionalliabilityorprofessionalindemnity)policieshereinafterdescribed,apersonmay,iffoundresidentagentforviolationofanyexistinglaw,ruleorregulation,oranyprovisionofthisCode.(Asamendedby qualified,beissuedalicensetoactasreinsurancebrokerbytheCommissioner.Nosuchlicenseshallbevalidafter PresidentialDecreeNo.1455). thethirtiethdayofJuneoftheyearfollowingitsissuanceunlessitisrenewed.(AsamendedbyPresidentialDecree Title4 No.1455). NONLIFECOMPANYUNDERWRITER Theerrorsandomissions(professionalliabilityorprofessionalindemnity)policiesmentionedaboveshallindemnify Sec.318.Nopersonshallact,andnocompanyshallemployanyperson,asnonlifecompanyunderwriter,whoseduty theapplicantagainstanyclaimorclaimsforbreachofdutyasreinsurancebrokerwhichmaybemadeagainsthim andresponsibilityitshallbetoselect,evaluateandacceptrisksfor,andtodeterminethetermsandconditions, byreasonofanynegligentact,errororomission,wheneverorwherevercommittedorallegedtohavebeen includingthosepertainingtoamountsofretentions,underwhichsuchrisksaretobeacceptedbythecompany, committed,onthepartoftheapplicantoranypersonwhohasbeen,isnow,ormayhereafterduringthesubsistence unlesssuchunderwriterisregisteredassuchwiththeCommissioner. ofthepoliciesbeemployedbythesaidapplicantinhiscapacityasreinsurancebroker;Provided,Thatthefilingof anyclaimorclaimsunderoneofsuchpoliciesshallprecludethefilingofthesaidclaimorclaimsundertheother Sec.319.EverynonlifeinsurancecompanydoingbusinessinthePhilippinesmustmaintainatalltimesaregisterof policy.Thesaidpoliciesshallbeissuedseparatelybytwoinsurancecompaniesauthorizedtodobusinessinthe risksacceptedandaclaimsregisterforeachlineofrisksengagedinbysuchnonlifeinsurancecompanywithsuch PhilippinesandshallbeinsuchamountsasmaybeprescribedbytheInsuranceCommissioner,dependinguponthe entriesthereinasarenoworasmayhereafterberequiredbytheCommissioner,anditshallbetheresponsibilityof sizeoramountofthebrokingbusinessoftheapplicant,butinnocaseshalltheamountofeachofsuchpoliciesbe theunderwriterontheparticularlineorriskinvolvedtoseetoitthatthesaidregistersarewellmaintainedand lessthanfivehundredthousandpesos.(AsamendedbyPresidentialDecreeNo.1455). kept,andthatallentriesthereinareproperlyandcorrectlyrecorded.Suchregistersshallbeopentoinspectionand examinationofdulyauthorizedrepresentativeoftheCommissioneratalltimesduringbusinesshours. Sec.312.TheCommissionermayrecall,suspendorrevokethelicensegrantedtoareinsurancebrokerforviolation ofanyexistinglaw,ruleandregulation,oranyprovisionofthisCodeafterduenoticeandhearing. Sec.320.NopersonshallberegisteredwiththeCommissioner,unlesssuchpersonshallbeatleasttwentyoneyears ofageonthedateofsuchregistration;aresidentofthePhilippines;ofgoodmoralcharacterandwithnoconviction Title3 ofanycrimeinvolvingmoralturpitude;hashadatthetimesuchregistrationismadeatleasttwoyearsof RESIDENTAGENTS underwritingworkintheparticularlineorriskinvolved;andhaspassedsuchqualifyingwrittenexaminationthat Sec.313.Nopersonshallactasresidentagent,ashereinafterdefined,unlessheisregisteredassuchwiththe theCommissionershallconductatsuchtimeandinsuchplaceashemaydecidetoholdforapplicantsdesiringtoact

asunderwriters. Suchexaminationshallnotberequiredofanypersonwhohasservedasnonlifecompanyunderwriterforaperiod ofatleastfiveyears,iftheCommissionerissatisfiedoftheapplicant'scompetenceasshownbytheresultsofhis underwritingworkinthenonlifeinsurancecompanyorcompaniesthatemployedhiminthatcapacity.The minimumunderwritingexperiencehereinrequiredmaybereducedorwaivedifitisshowntothesatisfactionofthe Commissionerthatthenonlifecompanyunderwriterhasundergoneextensiveeducationand/ortrainingin insurance.

Provided,however,Thatwhenafirmorpersonhasbeenlicensedaspublicadjuster,heshallnotbegrantedanother licenseasindependentadjusterandviceversa. Nolicense,however,shallberequiredofanycompanyadjusterwhoisasalariedemployeeofaninsurancecompany fortheadjustmentofclaimsfiledunderpoliciesissuedbysuchinsurancecompany. Sec.326.SuchlicenseoranyrenewalthereofmaybeissuedbytheCommissioneruponwrittenapplicationfiledby thepersoninterestedontheformorformsprescribedbytheCommissioner,whichshallcontainsuchinformationas hemayrequire,anduponpaymentofthecorrespondingfeehereinafterprescribed.

Sec.321.Anyapplicantwhomisrepresentsoromitsanymaterialfactinhisapplicationforregistrationasanonlife companyunderwriter,orcommitsanydishonestactintakingorinconnectionwiththequalifyingwritten Sec.327.TheCommissionershallconduct,atsuchtimes,andinsuchplacesashemaydecidetohold,written examinationforunderwriters,shallbebarredfrombeingregisteredassuchnonlifecompanyunderwriterand,if examinationstodeterminethecompetenceandabilityofapplicantsdesiringtoactasadjusterofinsuranceclaims. alreadyregistered,hisregistrationshallbecancelledandthecertificateofregistrationissuedinhisfavorshallbe Sec.328.Everyadjuster'slicenseissuedhereundershallbevaliduntilafterthethirtiethdayofJuneoftheyear recalledimmediatelybytheCommissioner. followingtheissuanceofsuchlicenseunlessitisrenewed.(AsamendedbyPresidentialDecreeNo.1455). Intheeventthatthecertificateofauthorityofanonlifeinsurancecompanytotransactbusinessissuspendedor Sec.329.Nothingcontainedinthistitleshallapplytoanydulylicensedattorneyatlawwhoactsoraidsinadjusting revokedduetobusinessfailurearisinglargelyfromtheimprudentandinjudiciousacceptanceofrisksbythe insuranceclaimsasanincidenttothepracticeofhisprofessionandwhodoesnotadvertisehimselfasanadjuster. underwriterconcerned,theregistrationofsuchunderwritershalllikewisebecancelledandhiscertificateof registrationshallberecalledbytheCommissioner,andnosimilarcertificateshallthereafterbeissuedinhisfavor. Sec.330.TheCommissionermaysuspendorrevokeanyadjuster'slicenseif,aftergivingnoticeandhearingtothe adjusterconcerned,theCommissionerfindsthatthesaidadjuster: Sec.322.NocertificateofregistrationissuedtoanunderwritershallbevalidafterthethirtiethdayofJuneofthe yearfollowingitsissuanceunlessitisrenewed. (1)hasviolatedanyprovisionofthisCodeandofthecirculars,rulingsandinstructionsoftheCommissionerorhas TheCommissionermay,afterduenoticeandhearing,alsosuspendorcancelsuchcertificateforviolationofexisting violatedanylawinthecourseofhisdealingsasanadjuster;or laws,rulesandregulationsorofanyprovisionsofthisCode.(AsamendedbyPresidentialDecreeNo.1455). (2)hasmadeamaterialmisstatementintheapplicationforsuchlicense;or Title5 (3)hasbeenguiltyoffraudulentordishonestpractices;or ADJUSTERS (4)hasdemonstratedhisincompetenceoruntrustworthinesstoactasadjuster;or Sec.323.Noperson,partnership,association,orcorporationshallactasanadjuster,ashereinafterdefined,unless authorizedsotoactbyvirtueofalicenseissuedorrenewedbytheCommissionerpursuanttotheprovisionsofthis (5)hasmadepatentlyunjustvaluationofloss;or Code:Provided,Thatinthecaseofanaturalperson,hemustbeaFilipinocitizenandinthecaseofapartnership, (6)hasfailedtomakeareportoftheadjustmentheproposedwithinsixtydaysfromthedateofthefilingofthe associationorcorporation,atleastsixtypercentumofitscapitalmustbeownedbycitizensofthePhilippines. claimbytheinsuredwiththeinsurer,unlesspreventedsotodobyreasonsbeyondhiscontrol;or Sec.324.Anadjustermaybeanindependentadjusterorapublicadjuster. (7)hasrefusedtoallowanexaminationintohisaffairsormethodofdoingbusinessashereinafterprovided. Theterm"independentadjuster"meansanyperson,partnership,associationorcorporationwhich,formoney, Sec.331.EveryadjustershallsubmittotheCommissioneraquarterlyreportofalllosseswhicharethesubjectof commissionoranyotherthingofvalue,actsfororonbehalfofaninsurerintheadjustingofclaimsarisingunder adjustmenteffectedbyhimduringeachmonthintheformprescribedbytheCommissioner.Thereportshallbe insurancecontractsorpoliciesissuedbysuchinsurer. filedwithinonemonthaftertheendofeachquarter. Theterm"publicadjuster"meansanyperson,partnership,associationorcorporationwhich,formoney,commission Sec.332.Everyadjustershallkeephisoritsbooks,records,reports,accounts,andvouchersinsuchmannerthatthe oranyotherthingofvalue,actsonbehalfofaninsuredinnegotiatingfor,oreffecting,thesettlementofaclaimor Commissionerorhisdulyauthorizedrepresentativesmayreadilyverifythequarterlyreportsofthesaidadjuster claimsofthesaidinsuredarisingunderinsurancecontractsorpolicies,orwhichadvertisesfororsolicits andascertainwhetherthesaidadjusterhascompliedwiththeprovisionsoflaworregulationsobligatoryuponhim employmentasanadjusterofsuchclaims. orwhetherthemethodofdoingbusinessofthesaidadjusterhasbeenfair,justandhonest. Sec.325.Foreverylineofinsuranceclaimadjustment,adjustersshallbelicensedeitherasindependentadjustersor Sec.333.TheCommissionershall,atleastonceayearandwheneverheconsidersthepublicinterestsodemands, aspublicadjusters.Noadjustershallactonbehalfofaninsurerunlesssaidadjusterislicensedasanindependent causeanexaminationtobemadeintotheaffairsandmethodofdoingbusinessofeveryadjuster. adjuster;andnoadjustershallactonbehalfofaninsuredunlesssaidadjusterislicensedasapublicadjuster:

Sec.334.Anyviolationofanyprovisionofthistitleshallbepunishedbyafineofnotmorethantenthousandpesos, intheemployofaninsurancecompanymaybeallowedbytheCommissionertoserveamutualbenefitassociationor orbyimprisonmentinthediscretionofthecourt;Provided,That,incaseofapartnership,associationor anyotherinsurancecompany,providedthefollowingconditionsarefirstcompliedwith:(a)thattherequestto corporation,thesaidpenaltyshallbeimposeduponthepartner,president,manager,managingdirector,directoror engagehisservicesbytheotheremployerisinwriting;(b)thathispresentemployeracquiescedtoitinwriting;and personinchargeofitsbusinessorresponsiblefortheviolation. (c)thathefurnishestheCommissionerwithcopiesofsaidrequestandacquiescence. Title6 ACTUARIES Sec.335.NolifeinsurancecompanyshallbelicensedtodobusinessinthePhilippinesnorshallanylifeinsurance companydoingbusinessinthePhilippinesbeallowedtocontinuedoingsuchbusinessunlesstheyshallengagethe servicesofanactuarydulyaccreditedwiththeCommissionerwhoshall,duringhistenureofoffice,bedirectly responsibleforthedirectionandsupervisionofallactuarialworkconnectedwithorthatmaybeinvolvedinthe businessoftheinsurancecompany. Title7 RATINGORGANIZATIONANDRATEMAKING Sec.339.Everyorganizationwhichnowexistsorwhichmayhereafterbeformedforthepurposeofmakingratesto beusedbymorethanoneinsurancecompanyauthorizedtodobusinessinthePhilippinesshallbeknownasa "ratingorganization."Theterm"rate"asusedinthistitleshallgenerallymeantheratioofthepremiumtothe amountinsuredandshallinclude,asthecontextmayrequire,eithertheconsiderationtobepaidorchargedfor insurancecontracts,includingsuretybonds,ortheelementsandfactorsformingthebasisforthedeterminationor applicationofthesame,orboth.

Sec.336.AnypersonmaybeofficiallyaccreditedbytheCommissionertoactasanyactuaryinanylifeinsurance companyorinanymutualbenefitassociationauthorizedtodobusinessinthePhilippinesuponapplication Sec.340.Everyratingorganizationwhichnowexistsorwhichmayhereafterbeformedshallbesubjecttothe therefor3andthepaymentofthecorrespondingfeehereinafterprescribed:Provided,That:(1)heisafellowofgood provisionsofthistitle. standingoftheActuarialSocietyofthePhilippinesatthetimeofhisappointmentandremainsinsuchgoodstanding Sec.341.Noratingorganizationhereafterformedshallcommenceratemakingoperationsuntilitshallhave duringthetenureofhisengagement;or(2)inthecaseofonewhoisnotafellowoftheActuarialSocietyofthe obtainedalicensefromtheCommissioner.Beforeobtainingsuchlicense,suchratingorganizationshallfilewiththe Philippines,hemeetsalltherequirementsofthesaidSocietyforaccreditationasafellowoftheSociety,andhasbeen Commissioneranoticeofitsintentiontocommenceratemakingoperations,acopyofitsconstitution,articlesof givenpermissionbythepertinentgovernmentauthoritiesinthePhilippinestorenderservicesinthePhilippines,in agreementorassociation,orofincorporation,anditsbylaws,alistofinsurancecompaniesthathaveagreedto theeventthatheisnotacitizenofthePhilippines. becomemembersorsubscribers,andsuchotherinformationconcerningsuchratingorganizationanditsoperations NocertificateofregistrationissuedunderthistitleshallbevalidafterthethirtiethdayofJuneoftheyearfollowing asmayberequiredbytheCommissioner.IftheCommissionerfindsthattheorganizationhascompliedwiththe itsissuanceunlessitisrenewed.(AsamendedbyPresidentialDecreeNo.1455). provisionsoflawandthatithasasufficientnumberofmembersorsubscribersandisotherwisequalifiedto functionasaratingorganization,theCommissionermayissuealicensetosuchratingorganizationauthorizingitto Sec.337.Thefollowingdocuments,whicharefromtimetotimesubmittedtotheCommissionerbyalifeinsurance makeratesforthekindsofinsuranceorsubdivisionsthereofasmaybespecifiedinsuchlicense.Nolicenseissuedto companyauthorizedtodobusinessinthe,shallbedulycertifiedbyanaccreditedactuaryemployedbysuch aratingorganizationshallbevalidafterthethirtiethdayofJuneoftheyearfollowingitsissuanceunlessitis company: renewed.Noratingorganizationwhichnowexistsandisnotlicensedpursuanttothissectionshallcontinuerate makingoperationsuntilitshallhaveobtainedfromtheCommissioneralicensewhichhemayissueifsatisfiedthat 1.Policyreservesandnetdueanddeferredpremiums. suchorganizationiscomplyingwiththeprovisionsofthistitle.Everyratingorganizationshallnotifythe 2.Statementsofbasesandnetpremiums,loadingforgrosspremiums,andonnonforfeiturevaluesandreserves, Commissionerpromptlyofeverychangein(1)itsconstitution,itsarticlesofagreementorassociationorits whenapplyingforapprovalofgrosspremiums,reservesandnonforfeiturevalues. certificateofincorporation,anditsbylawsrulesandregulationsgoverningtheconductofitsbusiness,and(2)itslist ofmembersandsubscribers. 3.PoliciesofinsuranceunderanyplansubmittedtotheCommissionerasrequiredbylaw. A"member"meansaninsurerwhoparticipatesinorisentitledtoparticipateinthemanagementofarating organization. 5.Financialprojectionshowingtheprobableincomeandoutgoandreserverequirements,enumeratingtheactuarial A"subscriber"meansaninsurerwhichisfurnishedatitsrequestwithratesandratingmanualsbyarating assumptionsandbasesofprojections. organizationofwhichitisnotamember.(AsamendedbyPresidentialDecreeNo.1455). 6.Valuationofannuityfundsorretirementplans. AnylifeinsurancecompanyauthorizedtodobusinessinthePhilippinesmayemployanypersonwhoisnotofficially Sec.342.Eachratingorganizationshallfurnishitsratingservicewithoutdiscriminationtoallofitsmembersand accreditedundereitherofthequalificationsforanykindofactuarialwork,providedthatheshallnot,atanytime, subscribers,andshall,subjecttoreasonablerulesandregulations,permitanyinsurancecompanydoingbusinessin thePhilippines,notadmittedtomembership,tobecomeasubscribertoitsratingservicesforanykindofinsurance havetheauthoritytocertifytothecorrectnessoftheforegoingdocuments. orsubdivisionsthereof.Noticeofproposedchangesinsuchrulesandregulationsshallbegiventosubscribers.The Sec.338.Noaccreditedactuaryshallservemorethanoneclientoremployeratthesametime.However,onealready reasonablenessofanyruleorregulationinitsapplicationtosubscribers,ortherefusalofanyratingorganizationto 4.AnnualstatementsandvaluationreportssubmittedtotheCommissionerasrequiredbylaw.

admitaninsurancecompanyasasubscriber,shall,attherequestofanysubscriberoranysuchinsurancecompany, betweenrisksintheapplicationoflikechargesandcredits; bereviewedbytheCommissioneratahearinghelduponatleasttendays'writtennoticetosuchratingorganization (d)Considerationshallbegiventothepastandprospectivelossexperience,includingtheconflagrationand andtosuchsubscriberorinsurancecompany.TheCommissionermay,aftersuchhearing,issueanappropriate catastrophehazards,ifany,toallfactorsreasonablyattributabletotheclassofrisks,toareasonableprofit,to order. commissionspaidduringthemostrecentannualperiodandtopastandprospectiveotherexpenses.Incaseoffire Sec.343.Noratingorganizationoranyotherassociationshallrefusetodobusinesswith,orprohibitorpreventthe insurancerates,considerationshallbegiventotheexperienceofthefireinsurancebusinessduringaperiodofnot paymentofcommissionsto,anypersonlicensedasaninsurancebrokerpursuanttotheprovisionsoftitleoneofthis lessthanfiveyearsnextprecedingtheyearinwhichthereviewismade; chapter. (e)Riskmaybegroupedbyclassificationsfortheestablishmentofratesandminimumpremiums.Classification Sec.344.RatingorganizationshallbesubjecttoexaminationbytheCommissioner,asoftenashemaydeemsuch ratesmaybemodifiedtoproduceratesforindividualrisksinaccordancewithratingplanswhichestablish examinationexpedient,pursuanttotheprovisionsofthisCodeapplicabletotheexaminationofinsurance standardsformeasuringvariationsinhazardsorexpenseprovisions,orboth.Suchstandardsmaymeasureany companies.Heshallcausesuchanexaminationofeachratingorganizationtobemadeatleastonceineveryfive differenceamongrisksthatcanbedemonstratedtohaveaprobableeffectuponlossesorexpenses. years. Sec.350.Noratingorganizationandnoinsurancecompanywhichmakesandfilesitsownratesshallmakeor Sec.345.TheCommissionermaysuspendorrevokethelicenseofanyratingorganizationwhichfailstocomplywith promulgateanyrateorscheduleofrateswhichistobeappliedtoanyfireriskontheconditionthatthewhole hisorderwithinthetimelimitedbysuchorder,oranyextensionthereofwhichhemaygrant.TheCommissioner amountofinsuranceonanyriskoranyspecifiedpartthereofshallbeplacedwiththemembersoforsubscribersto maydeterminewhenasuspensionoflicenseshallbecomeeffectiveanditshallremainineffectfortheperiodfixed suchratingorganizationorwithsuchinsurer. byhim,unlesshemodifiesorrescindssuchsuspension. Sec.351.EveryinsurancecompanydoingbusinessinthePhilippinesshallannuallyfilewiththeratingorganization Sec.346.Anyratingorganizationmaysubscribefororpurchaseactuarial,technicalorotherservices,andsuch ofwhichitisamemberorsubscriber,orwithsuchotheragencyastheCommissionermaydesignate,astatistical servicesshallbeavailabletoallmembersandsubscriberswithoutdiscrimination. reportshowingaclassificationscheduleofitspremiumsandlossesonallkindsortypesofinsurancebusinessto whichsectionthreehundredfortynineisapplicable,andsuchotherinformationastheCommissionermaydeem Sec.347.Anyratingorganizationmayprovidefortheexaminationofpolicies,dailyreports,binders,renewal necessaryorexpedientfortheadministrationoftheprovisionsofthistitle. certificates,endorsementsorotherevidencesofinsurance,orthecancellationthereof,andmaymakereasonable rulesgoverningtheirsubmission.Suchrulesshallcontainaprovisionthatintheeventaninsurancecompanydoes Sec.352.EverynonliferatingorganizationandeverynonlifeinsurancecompanydoingbusinessinthePhilippines notwithinsixtydaysfurnishsatisfactoryevidencetotheratingorganizationofthecorrectionofanyerroror shallfilewiththeCommissioner,exceptastoriskswhichbygeneralcustomofthebusinessarenotwrittenaccording omissionpreviouslycalledtoitsattentionbytheratingorganization,itshallbethedutyoftheratingorganizationtotomanualratesorratingplans,everyratemanual,scheduleofrates,classificationofrisks,ratingplan,andevery notifytheCommissionerthereof.Allinformationsosubmittedforexaminationshallbeconfidential. otherratingruleandeverymodificationofanyoftheforegoingwhichitproposestouse.Aninsurancecompanymay satisfyitsobligationtomakesuchfilingsforanykindortypeofinsurancebybecomingamemberoforsubscriber Sec.348.Cooperationamongratingorganizationsoramongratingorganizationsandinsurersinratemakingorin toaratingorganizationwhichmakessuchfilingsforsuchkindortypeofinsurance,andbyauthorizingthe othermatterswithinthescopeofthistitleisherebyauthorized,providedthefilingsresultingfromsuchcooperation Commissionertoacceptsuchfilingsoftheratingorganizationonbehalfofsuchinsurancecompany. aresubjecttoallprovisionsofthistitlewhichareapplicabletofilingsgenerally.TheCommissionermayreviewsuch cooperativeactivitiesandpracticesandifhefindsthatanysuchactivityorpracticeisunfairorunreasonableor Sec.353.Everymanualorscheduleofratesandeveryratingplanfiledasprovidedintheprecedingsectionshall otherwiseinconsistentwiththeprovisionsofthistitle,hemayissueawrittenorderspecifyinginwhatrespectssuch stateorclearlyindicatethecharacterandextentofthecoveragetowhichanysuchrateoranymodificationthereof activityorpracticeisunfairorunreasonableorotherwiseinconsistentwiththeprovisionsofthistitle,andrequiring willbeapplied. thediscontinuanceofsuchactivityorpractice. Sec.354.TheCommissionershallreviewfilingsassoonasreasonablypossibleaftertheyhavebeenmadeinorderto Sec.349.Everyratingorganizationandeveryinsurancecompanywhichmakesandfilesitsownrates,shallmake determinewhethertheymeettherequirementsofthistitle.Whenafilingisnotaccompaniedbytheinformation ratesforallrisksratedbysuchorganizationorinsurancecompanyinaccordancewiththefollowingprovisions: uponwhichtheinsurancecompanysupportssuchfiling,andtheCommissionerdoesnothavesufficientinformation todeterminewhethersuchfilingmeetstherequirementsofthistitle,heshallrequiresuchinsurancecompanyto (a)Basicclassification,manual,minimum,class,orscheduleratesorratingplans,shallbemadeandadoptedforall furnishtheinformationuponwhichitsupportssuchfiling.Theinformationfurnishedinsupportofafilingmay suchrisks.Anydeparturefromsuchratesshallbeinaccordancewithschedules,ratingplansandrulesfiledwith include:(1)theexperienceorjudgmentoftheinsurancecompanyorratingorganizationmakingthefiling;(2)its theCommissioner; interpretationofanystatisticaldataitreliesupon;(3)theexperienceofotherinsurancecompaniesorrating organization;or(4)anyotherrelevantfactors. (b)Ratesshallbereasonableandadequatefortheclassofriskstowhichtheyapply; (c)Norateshalldiscriminateunfairlybetweenrisksinvolvingessentiallythesamehazardsandexpenseelementsor Sec.355.IftheCommissionerfindsthatanyratefilingstheretoforefiledwithhimdonotcomplywiththeprovisions

ofthistitleorthattheyprovideratesorruleswhichareinadequate,excessive,unfairlydiscriminatoryorotherwise unreasonable,hemayorderthesamewithdrawnandattheexpirationofsixtydaysthereafterthesameshallbe deemednolongeronfile.Beforemakinganysuchfindingandorder,theCommissionershallgivenotice,notless thantendaysinadvance,andahearing,totheratingorganization,ortotheinsurer,whichfiledthesame.Such ordershallnotaffectanycontractorpolicymadeorissuedpriortotheexpirationofsuchsixtydayperiod.

Sec.362.NoinsurancecompanydoingbusinessinthePhilippines,andnoofficer,director,oragentthereof,andno insurancebrokeroranyotherperson,partnershiporcorporationshallissueorcirculateorcauseorpermittobe issuedorcirculatedanyliterature,illustration,circularorstatementofanysortmisrepresentingthetermsofany policyissuedbyanyinsurancecompanyofthebenefitsoradvantagespromisedthereby,oranymisleadingestimate ofthedividendsorshareofsurplustobereceivedthereon,orshalluseanynameortitleofanypolicyorclassof policiesmisrepresentingthetruenaturethereof;norshallanysuchcompanyoragentthereof,oranyotherperson, Sec.356.Nomemberorsubscriberofaratingorganization,andnoinsurancecompanydoingbusinessinthe partnershiporcorporationmakeanymisleadingrepresentationorincompletecomparisonofpoliciestoanyperson Philippines,oragent,employeeorotherrepresentativeofsuchcompany,andnoinsurancebrokershallchargeor insuredinsuchcompanyforthepurposeofinducingortendingtoinducesuchpersontolapse,forfeit,orsurrender demandarateorreceiveapremiumwhichdeviatesfromtherates,ratingplans,classifications,schedules,rulesand hissaidinsurance. standards,madeandlastfiledbyaratingorganizationorbyoronbehalfoftheinsurancecompany,orshallissueor makeanypolicyorcontractinvolvingviolationofsuchratefilings. Sec.363.IftheCommissioner,afternoticeandhearing,findsthatanyinsurancecompany,ratingorganization, agent,brokerorotherpersonhasviolatedanyoftheprovisionsofthistitle,itshallorderthepaymentofafinenotto Sec.357.Notwithstandinganyotherprovisionsofthistitle,uponthewrittenapplicationoftheinsurer,statinghis exceedfivehundredpesosforeachsuchoffense,andshallimmediatelyrevokethelicenseissuedtosuchinsurance reasonstherefore,filedwithandapprovedbytheCommissioner,arateinexcessofthatprovidedbyafiling company,ratingorganization,agent,orbroker.Theissuance,procurementornegotiationofasinglepolicyor otherwiseapplicablemaybeusedonanyspecificrisk. contractofinsuranceshallbedeemedaseparateoffense. Sec.358.WhenevertheCommissionershalldetermine,afternoticeandahearing,thattherateschargedorfiledon Title8 anyclassofrisksareexcessive,discriminatory,inadequateorunreasonable,heshallorderthatsuchratesbe PROVISIONCOMMONTOAGENTS,BROKERS, appropriatelyadjusted.Forthepurposeofapplyingtheprovisionsofthissection,theCommissionermayfromtime ANDADJUSTERS totimeapprovereasonableclassificationsofrisksforanyorallsuchclasses,havingdueregardtothepastand prospectivelossexperience,includingconflagrationorcatastrophehazards,ifany,toallotherrelevantfactorsand Sec.364.Alicenseissuedtoapartnership,associationorcorporationtoactasaninsuranceagent,generalagent, toareasonableprofit. insurancebroker,reinsurancebroker,oradjustershallauthorizeonlytheindividualnamedinthelicensewhoshall qualifythereforasthoughanindividuallicensee.TheCommissionershallcharge,andthelicenseeshallpay,afull Sec.359.Nothingcontainedinthistitleshallbeconstruedasrequiringanyinsurertobecomeamemberofor additionallicensefeeastoeachrespectiveindividualsonamedinsuchlicenseinexcessofone. subscribertoanyratingorganization. Licensesandcertificatesofregistrationissuedundertheprovisionsofthischaptermayberenewedbythefilingof Sec.360.Agreementsmaybemadeamonginsurancecompanieswithrespecttotheequitableapportionmentamong noticesofintentiononformstobeprescribedbytheCommissionerandpaymentofthefeestherefore.(Asamended themofinsurancewhichmaybeaffordedapplicantswhoareingoodfaithentitledtobutareunabletoprocuresuchbyPresidentialDecreeNo.1455). insurancethroughordinarymethodsandsuchinsurancecompaniesmayagreeamongthemselvesontheuseof ChapterV reasonableratesandmodificationsforsuchinsurance,suchagreementsandratemodificationstobesubjecttothe SECURITYFUND approvaloftheCommissioner;Provided,however,Thattheprovisionsofthissectionshallnotbedeemedtoapplyto workmen'scompensationinsurance. Sec.365.Thereisherebycreatedafundtobeknownasthe"SecurityFund"whichshallbeusedinthepaymentof allowedclaimsagainstaninsurancecompanyauthorizedtotransactbusinessintheremainingunpaidbyreasonof Sec.361.NoinsurancecompanydoingbusinessinthePhilippinesoranyagentthereof,noinsurancebroker,andno thesolvencyofsuchcompany.ThesaidFundmayalsobeusedtoreinsurethepolicyoftheinsolventinsurerinany employeeorotherrepresentativeofanysuchinsurancecompany,agent,orbroker,shallmake,procureornegotiate solventinsurerauthorizedtodobusinessintheasprovidedinsectiontwohundredfortynine.Intheeventof anycontractofinsuranceoragreementastopolicycontract,otherthanisplainlyexpressedinthepolicyorother nationalemergencyorcalamity,theFundmaylikewisebeusedtopayinsuredclaimswhichotherwisewouldnotbe writtencontractissuedortobeissuedasevidencethereof,orshalldirectlyorindirectly,bygivingorsharinga compensableundertheprovisionsofthepolicy.NopaymentfromtheSecurityFundshall,however,bemadetoany commissionorinanymannerwhatsoever,payoralloworoffertopayorallowtotheinsuredortoanyemployeeof personwhoownsorcontrolstenpercentumormoreofthevotingsharesofstockoftheinsolventinsurerandno suchinsured,eitherasaninducementtothemakingofsuchinsuranceoraftersuchinsurancehasbeeneffected,any paymentonanyoneclaimshallexceedtwentythousandpesos. rebatefromthepremiumwhichisspecifiedinthepolicy,oranyspecialfavororadvantageinthedividendsorother benefitstoaccruethereon,orshallgiveoroffertogiveanyvaluableconsiderationorinducementofanykind, Sec.366.SuchFundshallconsistofallpaymentsmadetotheFundbyinsurancecompaniesauthorizedtodo directlyorindirectly,whichisnotspecifiedinsuchpolicyorcontractofinsurance;norshallanysuchcompany,or businessinthe.Paymentsmadebylifeinsurancecompaniesshallbetreatedseparatelyfromthosemadebynonlife anyagentthereof,astoanypolicyorcontractofinsuranceissued,makeanydiscriminationagainstanyFilipinoin insurancecompaniesandthecorrespondingfundshallbecalled"LifeAccount"and"NonLifeAccount", thesensethatheisgivenlessadvantageousrates,dividendsorotherpolicyconditionsorprivilegesthanare respectively,andshallbeheldandadministeredassuchbytheCommissionerinaccordancewiththeprovisionsof accordedtoothernationalsbecauseofhisrace. thistitle.The"LifeAccount"shallbeutilizedexclusivelyfordisbursementsthatrefertolifeinsurancecompanies,

whilethe"NonLifeAccount"shallbeutilizedexclusivelyfordisbursementsthatrefertononlifeinsurance companies. Sec.367.AllinsurancecompaniesdoingbusinessinthePhilippinesshallcontributetotheSecurityFund,Lifeor NonLifeAccount,asthecasemaybe,onorbeforethefifteenthdayofJune,nineteenhundredandseventyfive,the aggregateamountoffivemillionpesosforeachAccount.Thecontributionsofthelifeinsurancecompaniesandof thenonlifeinsurancecompaniesshallbeindirectproportiontotheratiobetweenaparticularlifeinsurance companyoraparticularnonlifeinsurancecompany'snetworthandtheaggregatenetworthofalllifeinsurance companiesorallnonlifeinsurancecompanies,asthecasemaybe,asshownintheirlatestfinancialstatements approvedbytheCommissioner.Thisproportionappliedtothefivemillionpesosshallbethecontributionofa particularcompanytothecorrespondingAccountoftheSecurityFund.

itsproperadministrationorinthebestinterestofsuchAccount. Sec.370.PaymentsfromeithertheLifeInsuranceAccountorNonLifeAccount,asthecasemaybe,shallbemade bytheTreasurerofthetotheCommissioner,upontheauthorityofappropriatecertificatefiledwithhimbythe Commissioneractinginsuchcapacity. Sec.371.TheCommissionermay,inhisdiscretion,designateorappointadulyauthorizedrepresentativeor representativestoappearanddefendbeforeanycourtorotherbodyorofficialhavingjurisdictionanyorallactions orproceedingsagainstprincipalsorassuredsoninsurancepoliciesorcontractsissuedtothemwheretheinsurerhas becomeinsolventorunabletomeetitsinsuranceobligations.TheCommissionershallhave,asofthedateof insolvencyofsuchinsurerorasofthedateofitsinabilitymeetitsinsuranceobligations,onlytherightswhichsuch insurerwouldhavehadifithadnotbecomeinsolventorunabletomeetitsinsuranceobligations.Forthepurposeof thistitletheCommissionershallhavepowertoemploysuchcounsel,clerksandassistantsashemaydeemnecessary.

TheamountoffivemillionpesosineachAccountshallbeintheformofarevolvingtrustfund.Therespective contributionsofthecompaniesshallremainasadmittedassetsintheirbooksandanydisbursementtherefromshall Sec.372.TheexpenseofadministeringanAccountshallbepaidoutoftheAccountconcerned.TheCommissioner bedeductedproportionatelyfromthecontributionsofeachcompanywhichwillbeallowedasdeductionsforincome shallserveasadministratoroftheFundandoftheAccountswithoutadditionalcompensation,butmaybeallowed taxpurposes.AnyearningsoftheFundshallbeturnedovertothecontributingcompaniesinproportiontotheir andpaidfromtheAccountconcernedexpensesincurredintheperformanceofhisdutiesinconnectionwithsaid contributions. Account.ThecompensationofthosepersonsemployedpayablefromtheAccountconcerned.TheCommissioner InthecaseofdisbursementsoffundsfromtheFundasprovidedintheforegoingparagraph,thelifeandnonlife shallincludeinhisannualreporttotheSecretaryofFinanceastatementoftheexpensesofadministrationofthe companies,asthecasemaybe,shallreplenishtheamountdisbursedindirectproportiontotheindividual FundandoftheLifeAccountandNonLifeAccountfortheprecedingyear. company'snetworthandtheaggregatenetworthofthelifeornonlifecompanies,asthecasemaybe.However,in ChapterVI nocaseshalltheFundexceedtheaggregateamountoftenmillionpesos,orfivemillionpesosforeachAccount. COMPULSORYMOTORVEHICLE ShouldtheFund,LifeofNonLifeAccount,asthecasemaybe,beinadequateforadisbursementasprovidedfor, LIABILITYINSURANCE thentheLifeorNonLifecompanies,asthecasemaybe,shallcontributetotheFundtheirrespectivesharesinthe proportionpreviouslymentioned. Sec.373.Forpurposesofthischapter: (a)"MotorVehicle"isanyvehicleasdefinedinsectionthree,paragraph(a)ofRepublicActNumberedFour Sec.368.TheCommissionermayadopt,amend,andenforceallreasonablerulesandregulationsnecessaryforthe ThousandOneHundredThirtySix,Otherwiseknownasthe"LandTransportationandTrafficCode." properadministrationoftheFundandoftheAccounts.Intheeventanyinsurershallfailtomakeanypayment requiredbythistitle,orthatanypaymentmadeisincorrect,heshallhavefullauthoritytoexamineallthebooksand (b)"Passenger"isanyfarepayingpersonbeingtransportedandconveyedinandbyamotorvehiclefor recordsoftheinsurerforthepurposeofascertainingthefactsandshalldeterminethecorrectamounttobepaid transportationofpassengersforcompensation,includingpersonsexpresslyauthorizedbylaworbythevehicle's andmayproceedinanycourtofcompetentjurisdictiontorecoverforthebenefitoftheFundoroftheAccount operatororhisagentstoridewithoutfare. concernedanysumshowntobedueuponsuchexaminationanddetermination.Anyinsurerwhichfailstomakeany (c)"ThirdParty"isanypersonotherthanapassengerasdefinedinthissectionandshallalsoexcludeamemberof paymenttotheFundortotheAccountconcernedwhendue,shalltherebyforfeittosaidFundorAccountconcerned thehousehold,oramemberofthefamilywithintheseconddegreeofconsanguinityoraffinity,ofamotorvehicle apenaltyoffivepercentumoftheamountdeterminedtobedueasprovidedbythistitle,plusonepercentumof ownerorlandtransportationoperator,aslikewisedefinedherein,orhisemployeeinrespectofdeath,bodilyinjury, suchamountforeachmonthofdelayorfractionthereof,aftertheexpirationofthefirstmonthofsuchdelay,butthe ordamagetopropertyarisingoutofandinthecourseofemployment.(AsamendedbyPresidentialDecreeNo.1814 Commissioner,ifsatisfiedthatthedelaywasexcusable,mayremitalloranypartofsuchpenalty.The and1981). Commissioner,inhisdiscretion,maysuspendorrevokethecertificateofauthoritytodobusinessintheofany insurancecompanywhichshallfailtocomplywiththistitleortopayanypenaltyimposedinaccordancetherewith. (d)"Owner"or"motorvehicleowner"meanstheactuallegalownerofamotorvehicle,inwhosenamesuchvehicleis dulyregisteredwiththeLandTransportationCommission; Sec.369.TheAccountscreatedbythistitleshallbeseparateandapartfromeachotherandfromanyotherfund. TheTreasurerofthePhilippinesshallbethecustodianoftheLifeAccountandNonLifeAccountoftheSecurity (e)"Landtransportationoperator"meanstheownerorownersofmotorvehiclesfortransportationofpassengersfor Fund;andalldisbursementsfromanyAccountshallbemadebytheTreasurerofthePhilippinesuponvouchers compensation,includingschoolbuses; signedbytheCommissionerorhisdeputy,ashereinafterprovided.ThemoneysofsaidAccountmaybeinvestedby (f)"Insurancepolicy"or"Policy"referstoacontractofinsuranceagainstpassengerandthirtypartyliabilityfor theCommissioneronlyinbondsorotherevidencesofdebtofthegovernmentoftheoritspoliticalsubdivisionsor deathorbodilyinjuriesanddamagedtopropertyarisingfrommotorvehicleaccidents.(AsamendedbyPresidential instrumentalities.TheCommissionermaysellanyofthesecuritiesinwhichanAccountisinvested,ifadvisable,for

DecreeNo.1455and1814).

I.PrivateCars Sec.374.Itshallbeunlawfulforanylandtransportationoperatororownerofamotorvehicletooperatethesamein thepublichighwaysunlessthereisinforceinrelationtheretoapolicyofinsuranceorguarantyincashorsurety bondissuedinaccordancewiththeprovisionsofthischaptertoindemnifythedeath,bodilyinjury,and/ordamage topropertyofathirdpartyorpassenger,asthecasemaybe,arisingfromtheusethereof.(Asamendedby PresidentialDecreeNo.1455and1814).

(a)Bantam:Twentythousandpesos; (b)Light:Twentythousandpesos; (c)Heavy:Thirtythousandpesos;

Sec.375.TheCommissionershallfurnishtheLandTransportationCommissionerwithalistofinsurancecompaniesII.OtherPrivateVehicles authorizedtoissuethepolicyofinsuranceorsuretybondrequiredbythischapter.(AsamendedbyPresidential DecreeNo.1814). Sec.376.TheLandTransportationCommissionshallnotallowtheregistrationorrenewalofregistrationofany motorvehiclewithoutfirstrequiringfromthelandtransportationoperatorormotorvehicleownerconcernedthe presentationandfilingofasubstantiatingdocumentationinaformapprovedbytheCommissionerevidencingthat thepolicyofinsuranceorguarantyincashorsuretybondrequiredbythischapterisineffect.(Asamendedby PresidentialDecreeNo.1455). TheCommissionermay,ifwarranted,setforthscheduleofindemnitiesforthepaymentofclaimsfordeathorbodily injurieswiththecoveragessetforthherein.(AsamendedbyPresidentialDecreeNo.1455and1814). Sec.377.Everylandtransportationoperatorandeveryownerofamotorvehicleshall,beforeapplyingforthe registrationorrenewalofregistrationofanymotorvehicle,athisoption,eithersecureaninsurancepolicyorsurety Sec.378.Anyclaimfordeathorinjurytoanypassengerorthirdpartypursuanttotheprovisionsofthischapter bondissuedbyanyinsurancecompanyauthorizedbytheCommissionerormakeacashdepositinsuchamountas shallbepaidwithoutthenecessityofprovingfaultornegligenceofanykind;Provided,Thatforpurposesofthis hereinrequiredaslimitofliabilityforpurposesspecifiedinsectionthreehundredseventyfour. section: (a)Tricycles,motorcycles,andscooters:Twelvethousandpesos; (b)Vehicleswithanunladenweightof2,600kilosorless:Twentythousandpesos; (c)Vehicleswithanunladenweightofbetween2,601kilosand3,930kilos:Thirtythousand pesos; (d)Vehicleswithanunladenweightover3,930kilos:Fiftythousandpesos.

(1)Inthecaseofalandtransportationoperator,theinsuranceguarantyincashorsuretybondshallcoverliability (i)Thetotalindemnityinrespectofanypersonshallnotexceedfivethousandpesos; fordeathorbodilyinjuriesofthirdpartiesand/orpassengersarisingoutoftheuseofsuchvehicleintheamountnot lessthantwelvethousandpesosperpassengerorthirdpartyandanamount,foreachofsuchcategories,inanyone (ii)Thefollowingproofsofloss,whensubmittedunderoath,shallbesufficientevidencetosubstantiatetheclaim: accidentofnotlessthanthatsetforthinthefollowingscale: (a)Motorvehicleswithanauthorizedcapacityoftwentysixormorepassengers:Fiftythousandpesos; (b)Motorvehicleswithanauthorizedcapacityoffromtwelvetotwentyfivepassengers:Fortythousandpesos; (c)Motorvehicleswithanauthorizedcapacityoffromsixtoelevenpassengers:Thirtythousandpesos; (d)Motorvehicleswithanauthorizedcapacityoffiveorlesspassengers:Fivethousandpesosmultipliedbythe authorizedcapacity. (a)Policereportofaccident;and (b)Deathcertificateandevidencesufficienttoestablishtheproperpayee;or (c)Medicalreportandevidenceofmedicalorhospitaldisbursementinrespectofwhichrefundis claimed;

(iii)Claimmaybemadeagainstonemotorvehicleonly.Inthecaseofanoccupantofavehicle,claimshalllieagainst Provided,however,Thatsuchcashdepositmadeto,orsuretybondpostedwith,theCommissionershallberesorted theinsurerofthevehicleinwhichtheoccupantisriding,mountingordismountingfrom.Inanyothercase,claim tobyhimincasesofaccidentstheindemnitiesforwhichtothirdpartiesand/orpassengersarenotsettled shalllieagainsttheinsurerofthedirectlyoffendingvehicle.Inallcases,therightofthepartypayingtheclaimto accordinglybythelandtransportationoperatorand,inthatevent,thesaidcashdepositshallbereplenishedorsuch recoveragainsttheownerofthevehicleresponsiblefortheaccidentshallbemaintained. suretybondshallberestoredwithsixtydaysafterimpairmentorexpiry,asthecasemaybe,bysuchland transportationoperator,otherwise,heshallsecuretheinsurancepolicyrequiredbythischapter.Theaforesaidcash Sec.379.Nolandtransportationoperatororownerofmotorvehicleshallbeunreasonablydeniedthepolicyof insuranceorsuretybondrequiredbythischapterbytheinsurancecompaniesauthorizedtoissuethesame, depositmaybeinvestedbytheCommissionerinreadilymarketablegovernmentbondsand/orsecurities. otherwise,theLandTransportationCommissionshallrequirefromsaidlandtransportationoperatororownerof (2)Inthecaseofanownerofamotorvehicle,theinsuranceorguarantyincashorsuretybondshallcoverliability thevehicle,inlieuofapolicyofinsuranceorsuretybond,acertificatethatacashdeposithasbeenmadewiththe fordeathorinjurytothirdpartiesinanamountnotlessthanthatsetforthinthefollowingscaleinanyone Commissionerinsuchamountrequiredaslimitsofindemnityinsectionthreehundredseventyseventoanswerfor accident: thepassengerand/orthirdpartyliabilityofsuchlandtransportationoperatororownerofthevehicle.

Noinsurancecompanymayissuethepolicyofinsuranceorsuretybondrequiredunderthischapterunlessso authorizedunderexistinglaws.

companytoexecuteanyquitclaimordocumentreleasingitfromliabilityunderthepolicyofinsuranceorsurety bondissued.(AsamendedbyPresidentialDecreeNo.1455).

Theauthoritytoengageinthecasualtyand/orsuretylinesofbusinessofaninsurancecompanythatrefusestoissue Incaseofanydisputeintheenforcementoftheprovisionsofanypolicyissuedpursuanttothischapter,the orrenew,withoutjustcause,theinsurancepolicyorsuretybondthereinrequiredshallbewithdrawnimmediately. adjudicationofsuchdisputeshallbewithintheoriginalandexclusivejurisdictionoftheCommissioner,subjectto (AsamendedbyPresidentialDecreeNo.1455and1814). thelimitationsprovidedinsectionfourhundredsixteen. Sec.380.Nocancellationofthepolicyshallbevalidunlesswrittennoticethereofisgiventothelandtransportation operatororownerofthevehicleandtotheLandTransportationCommissionatleastfifteendayspriortothe intendedeffectivedatethereof. Uponreceiptofsuchnotice,theLandTransportationCommission,unlessitreceivesevidenceofanewvalid insuranceorguarantyincashorsuretybondasprescribedinthischapter,oranendorsementofrevivalofthe cancelledone,shallordertheimmediateconfiscationoftheplatesofthemotorvehiclecoveredbysuchcancelled policy.Thesamemaybereissuedonlyuponpresentationofanewinsurancepolicyorthataguarantyincashor suretybandhasbeenmadeorpostedwiththeCommissionerandwhichmeetstherequirementsofthischapter,or anendorsementorrevivalofthecancelledone.(AsamendedbyPresidentialDecreeNo.1455). Sec.386.Itshallbeunlawfulforalandtransportationoperatororownerofmotorvehicletorequirehisorits driversorotheremployeestocontributeinthepaymentofpremiums. Sec.387.Nogovernmentofficeoragencyhavingthedutyofimplementingtheprovisionsofthischapternorany officialoremployeethereofshallactasagentinprocuringtheinsurancepolicyorsuretybondprovidedforherein. Thecommissionofanagentprocuringthesaidpolicyorbondshallinnocaseexceedtenpercentumoftheamount ofthepremiumstherefore. Sec.388.Anylandtransportationoperatororownerofmotorvehicleoranyotherpersonviolatinganyofthe provisionsoftheprecedingsectionsshallbepunishedbyafineofnotlessthanfivehundredpesosbutnotmorethan onethousandpesosand/orimprisonmentfornotmorethansixmonths.Theviolationofsectionthreehundred seventysevenbyalandtransportationoperatorshallbeasufficientcausefortherevocationofthecertificateof publicconvenienceissuedbytheBoardofTransportationcoveringthevehicleconcerned.

Sec.381.Ifthecancellationofthepolicyorsuretybondiscontemplatedbythelandtransportationoperatoror ownerofthevehicle,heshall,beforethepolicyorsuretybondceasestobeeffective,secureasimilarpolicyof insuranceorsuretybondtoreplacethepolicyorsuretybondtobecancelledormakeacashdepositinsufficient amountwiththeCommissionerandwithoutanygap,filetherequireddocumentationwiththeLandTransportation Sec.389.Wheneveranyviolationoftheprovisionsofthischapteriscommittedbyacorporationorassociation,orby Commission,andnotifytheinsurancecompanyconcernedofthecancellationofitspolicyorsuretybond.(As agovernmentofficeorentity,theexecutiveofficerorofficersofsaidcorporation,associationorgovernmentoffice amendedbyPresidentialDecreeNo.1455). orentitywhoshallhaveknowinglypermitted,orfailedtoprevent,saidviolationshallbeheldliableasprincipals. Sec.382.Incaseofchangeofownershipofamotorvehicle,orchangeoftheengineofaninsuredvehicle,thereshall benoneedofissuinganewpolicyuntilthenextdateofregistrationorrenewalofregistrationofsuchvehicle,and providedthattheinsurancecompanyshallagreetocontinuethepolicy,suchchangeofownershiporsuchchangeof theengineshallbeindicatedinacorrespondingendorsementbytheinsurancecompanyconcerned,andasigned duplicateofsuchendorsementshall,withinareasonabletime,befiledwiththeLandTransportationCommission. ChapterVII MUTUALBENEFITASSOCIATIONSAND TRUSTSFORCHARITABLEUSES Title1 MUTUALBENEFITASSOCIATIONS

Sec.383.Inthesettlementandpaymentofclaims,theindemnityshallnotbeavailedofbyanyaccidentvictimor Sec.390.Anysociety,associationorcorporation,withoutcapitalstock,formedororganizednotforprofitbut claimantasaninstrumentofenrichmentbyreasonofanaccident,butasanassistanceorrestitutioninsofarascan mainlyforthepurposeofpayingsickbenefitstomembers,oroffurnishingfinancialsupporttomemberswhileout fairlybeascertained. ofemployment,orofpayingtorelativesofdeceasedmembersoffixedoranysumofmoney,irrespectiveofwhether Sec.384.AnypersonhavinganyclaimuponthepolicyissuedpursuanttothisChaptershall,withoutany suchaimorpurposeiscarriedoutbymeansoffixedduesorassessmentscollectedregularlyfromthemembers,or unnecessarydelay,presenttotheinsurancecompanyconcernedawrittennoticeofclaimsettingforththenature, ofproviding,bytheissuanceofcertificatesofinsurance,paymentofitsmembersofaccidentorlifeinsurance extentanddurationoftheinjuriessustainedascertifiedbyadulylicensedphysician.Noticeofclaimmustbefiled benefitsoutofsuchfixedandregularduesorassessments,butinnocaseshallincludeanysociety,association,or withinsixmonthsfromdateofaccident,otherwise,theclaimshallbedeemedwaived.Actionorsuitforrecoveryof corporationwithsuchmutualbenefitfeaturesandwhichshallbecarriedoutpurelyfromvoluntarycontributions damageduetolossorinjurymustbebrought,inpropercases,withtheCommissionerortheCourtswithinoneyearcollectednotregularlyandornofixedamountfromwhomsoevermaycontribute,shallbeknownasamutualbenefit fromdenialoftheclaim,otherwise,theclaimant'srightofactionshallprescribe.(AsamendedbyPresidential associationwithintheintentofthisCode. Decree1814andBatasPambansaBlg.874). Anysociety,association,orcorporationprincipallyorganizedaslaborunionshallbegovernedbytheLaborCode Sec.385.Theinsurancecompanyconcernedshallforthwithascertainthetruthandextentoftheclaimandmake notwithstandinganymutualbenefitfeatureprovisionsinitscharterasincidenttoitsorganization. paymentwithinfiveworkingdaysafterreachinganagreement.Ifnoagreementisreached,theinsurancecompany Innocaseshallamutualbenefitassociationbeorganizedandauthorizedtotransactbusinessasacharitableor shallpayonlythe"nofault"indemnityprovidedinsectionthreehundredseventyeightwithoutprejudicetothe benevolentorganization,andwheneverithasthisfeatureasincidenttoitsexistence,thecorrespondingcharter claimantfrompursuinghisclaimfurther,inwhichcase,heshallnotberequiredorcompelledbytheinsurance provisionshallberevisedtoconformwiththeprovisionofthissection.Mutualbenefitassociation,alreadylicensed

totransactbusinessassuchonthedatethisCodebecomeseffective,havingcharitableorbenevolentfeatureshall abandonsuchincidentalpurposeuponeffectivityofthisCodeiftheydesiretocontinueoperatingassuchmutual benefitassociations.(AsamendedbyPresidentialDecreeNo.1455).

Suchcertificates,togetherwiththearticlesofincorporationoftheassociationoritsconstitutionandbylaws,andall existinglawsasmaybepertinentshallconstitutetheagreement,asofthedateofitsissuance,betweentheassociation andthemember.ThemembershipcertificateshallbeinaformpreviouslyapprovedbytheCommissioner.

Sec.391.Amutualbenefitassociation,beforeitmaytransactassuch,mustfirstsecurealicensefromthe Sec.394.Amutualbenefitassociationmay,byreinsuranceagreement,cedeinwholeorinpartanyindividualrisk Commissioner.TheapplicationforsuchlicenseshallbefiledwiththeCommissionertogetherwithcertifiedtrue orrisksundercertificatesofinsuranceissuedbyit,onlytoalifeinsurancecompanyauthorizedtotransactbusiness copiesofthearticlesofincorporationortheconstitutionandbylawsoftheassociation,andallamendmentsthereto,ortoaprofessionalreinsurerauthorizedtoacceptliferisksinthePhilippines:Provided,Thatcopyofthedraftof andsuchotherdocumentsortestimoniesastheCommissionermayrequire. suchreinsuranceagreementshallbesubmittedtotheCommissionerforhisapproval.Theassociationmaytake creditforthereservesonsuchcededriskstotheextentreinsured. NolicenseshallbegrantedtoamutualbenefitassociationuntiltheCommissionershallhavebeensatisfiedbysuch examinationasmaymakeandsuchevidenceashemayrequirethattheassociationisqualifiedunderexistinglawstoSec.395.Theconstitutionorbylawsofamutualbenefitassociationmustdistinctlystatethepurposeforwhichdues operateandtransactbusinessassuch.TheCommissionermayrefusetoissuealicensetoanymutualbenefit and/orassessmentsaremadeandcollectedandtheportionthereofwhichmaybeusedforexpenses. associationif,inhisjudgment,suchrefusalwillbestpromotetheinterestofthemembersofsuchassociationandof Deathbenefitandotherrelieffundsshallbecreatedandusedexclusivelyforpayingbenefitsduethemembersunder thepeopleofthiscountry.AnylicenseissuedshallexpireonthelastdayofJuneoftheyearfollowingitsissuance theirrespectivemembershipcertificates.Ageneralfundshalllikewisebecreatedandusedforexpensesof and,uponproperapplication,mayberenewediftheassociationiscontinuingtocomplywithexistinglaws,rulesand administrationoftheassociation. regulations,orders,instructions,rulingsanddecisionsoftheCommissioner.Everyassociationreceivinganysuch licenseshallbesubjecttothesupervisionoftheCommissioner:Provided,Thatnosuchlicenseshallbegrantedto Sec.396.Everyoutstandingmembershipcertificatemusthave,afterthreefullyearsofbeingcontinuouslyinforce, anysuchassociationifsuchassociationhasnoactuary. anequityvalueequivalenttoatleastfiftypercentumofthetotalmembershipduescollectedthereon. AllmutualbenefitassociationexistingandlicensedassuchundertheprovisionsofArticleEight,ChapterFortyOneSec.397.Everymutualbenefitassociationmustaccumulateandmaintain,outoftheperiodicduescollectedfromits oftheRevisedAdministrativeCode,asamendedbyActNo.3612,shall,uponeffectivityofthisCode,surrendertheirmembers,sufficientreservesforthepaymentofclaimsorobligationsforwhichitshallholdfundsinsecurities respectivelicensestotheCommissionerandapplyfornewlicensesundertheprovisionsofthiscodeiftheystill satisfactorytotheCommissionerconsistingofbondsoftheGovernmentofthePhilippines,oranyofitspolitical desiretocontinueoperatingassuchmutualbenefitassociations. subdivisionsandinstrumentalities,orinsuchothergoodsecuritiesasmaybeapprovedbytheCommissioner. Sec.392.Nomutualbenefitassociationshallbeissuedalicensetooperateassuchunlessithasconstitutedand establishedaGuarantyFundbydepositingwiththeCommissioneraninitialminimumamountoftenthousand pesosincash,oringovernmentsecuritieswithatotalvalueequaltosuchamount,toanswerforanyvalidbenefit claimofanyofitsmembers. AllmoneysreceivedbytheCommissionerforthispurposemustbedepositedbyhimininterestbearingdeposits withanybankorbanksauthorizedtotransactbusinessinthefortheaccountoftheparticularassociation constitutingtheGuarantyFund. Thereserveliabilityshallbeestablishedinaccordancewithactuarialproceduresandshallbeapprovedbythe Commissioner. Thearticlesofincorporationortheconstitutionandbylawsofamutualbenefitassociationmustprovidethatifits reserveastoalloranyclassofcertificatesbecomesimpaired,itsboardofdirectorsortrusteesmayrequirethat thereshallbepaidbythememberstotheassociationtheamountofthemembers'equitableproportionofsuch deficiencyasascertainedbysaidboardandthatifthepaymentbenotmadeitshallstandasanindebtednessagainst themembershipcertificatesofthedefaultingmembersanddrawinterestnottoexceedfivepercentumperannum compoundedannually.

Anyaccrualtosuchfund,beitinterestearnedordividendadditionsonmoneysorsecuritiessodeposited,may,with thepriorapprovaloftheCommissioner,bewithdrawnbytheassociationifthereisnopendingbenefitclaimagainst Sec.398.Amutualbenefitassociationmayinvestsuchportionofitsfundsasshallnotberequiredtomeetpending it,includinginterestthereonordividendadditionsthereto. claimsandotherobligationsinanyoftheclassesofinvestmentsortypesofsecuritiesinwhichlifeinsurance companiesdoingbusinessinthePhilippinesmayinvest. TheCommissioner,priortoorafterlicensingamutualbenefitassociation,mayrequiresuchassociationtoincrease itsGuarantyFundfromtheinitialminimumamountrequiredtoanamountequaltoatleasttenpercentumofits Itmayalsograntloanstomembersonthesecurityofapledgeorchattelmortgageofpersonalpropertiesofthe assets,ifsuchassetsexceedonehundredthousandpesos,butinnocaseshallsuchincreaseexceedthemaximum borrowers,orintheabsencethereof,onthesecurityofthemembershipcertificateoftheborrowingmembers,in amountofcapitalinvestmentrequiredofadomesticinsurancecompanyundersectiontwohundredandthreeofthiswhicheventsuchloanshallbecomeafirstlienontheproceedthereof. Code.(AsamendedbyPresidentialDecreeNo.1455). Sec.399.TheCommissioneroranyofhisdulydesignatedrepresentatives,shallhavethepowerofvisitation,audit Sec.393.Everymutualbenefitassociationlicensedtodobusinessassuchshallissuemembershipcertificatestoits andexaminationintotheaffairs,financialcondition,andmethodsofdoingbusinessofallmutualbenefit membersspecifyingthebenefitstowhichsuchmembersareentitled. associations,andheshallcausesuchexaminationtobemadeatleastonceeverytwoyearsorwheneveritmaybe deemedproperandnecessary.Freeaccesstothebooks,recordsanddocumentsoftheassociationshallbeaccorded

totheCommissioner,tohisrepresentatives,insuchmannerthattheCommissionerorhisrepresentativesmay therewithshallbewitnessedandattestedbyhisdulydesignatedrepresentative. readilyverifyordeterminethetrueaffairs,financialcondition,andmethodofdoingbusinessofsuchassociation.In NomutualbenefitassociationshallbeofficiallydeclaredasdissolveduntilaftertheCommissionersocertifiesthat thecourseofsuchexamination,theCommissionerorhisdulydesignatedrepresentativesshallhaveauthorityto alloutstandingclaimsagainsttheassociationhavebeendulysettledandliquidated. administeroathsandtaketestimonyorotherevidenceonanymatterrelatingtotheaffairsoftheassociation. Sec.406.TheCommissionershallafternoticeandhearing,havethepowereithertosuspendorrevokethelicensed Allminutesoftheproceedingsoftheboardofdirectorsortrusteesoftheassociation,andthoseoftheregularor issuedtoamutualbenefitassociationifhefindsthattheassociationhas: specialmeetingsofthemembers,shallbetake,andacopythereof,inEnglishorinPilipino,shallbesubmittedtothe Commissioner'srepresentativesorexaminersinthecourseofsuchexamination. (a)failedtocomplywithanyprovisionofthisCode; Acopyofthefindingsofsuchexamination,togetherwiththerecommendationsoftheCommissioner,shallbe furnishedtheassociationforitsinformationandcompliance,andthesameshallbetakenupimmediatelyinthe meetingsoftheboardofdirectorsortrusteesandofthemembersoftheassociation. (b)failedtocomplywithanyotherlaworregulationobligatoryuponit; (c)failedtocomplywithanyorder,ruling,instruction,requirement,orrecommendationoftheCommissioner;

(d)exceededitspowertotheprejudiceofitsmembers; Sec.400.Everymutualbenefitassociationshall,annuallyonorbeforethethirtiethdayofAprilofeachyear,render totheCommissioneranannualstatementinsuchformanddetailsasmaybeprescribedbytheCommissioner, (e)conducteditsbusinessfraudulentlyorhazardously; signedandsworntobythepresident,secretary,treasurer,andactuaryoftheassociation,showingtheexact (f)rendereditsaffairsandconditiontooneofinsolvency;or conditionofitsaffairsontheprecedingthirtyfirstdayofDecember. (g)failedtocarryoutitsaimsandpurposesforwhichitwasorganizedduetoanycause. Sec.401.Nomoney,aidorbenefittobepaid,providedortenderedbyanymutualbenefitassociation,shallbeliable toattachment,garnishment,orotherprocess,orbeseized,taken,appropriated,orappliedbyanylegalorequitable AfterreceiptoftheorderfromtheCommissionersuspendingorrevokingthelicense,theassociationmust processtopayanydebtofliabilityofamemberorbeneficiary,oranyotherpersonwhomayhavearight immediatelyexerteffortstoremovesuchcauseorcauseswhichbroughtabouttheorder,and,uponpropershowing, thereunder,eitherbeforeorafterpayment. mayapplywiththeCommissionerfortheliftingoftheorderandrestorationorrevivalofthelicensesorevokedor suspended. Sec.402.Anymemberofamutualbenefitassociationshallhavetherightatalltimestochangethebeneficiaryor beneficiariesoraddanotherbeneficiaryorotherbeneficiariesinaccordancewiththerulesandregulationsofthe Sec.407.Forfailuretoremovesuchcauseorcauseswhichbroughtaboutthesuspensionorrevocationofthelicense associationunlesshehasexpresslywaivedthisrightinthemembershipcertificate.Everyassociationmay,under ofamutualbenefitassociation,theCommissionershallapplyunderthisCodeforanorderfromthepropercourtto suchrulesasitmayadopt,limitthescopeofbeneficiariesandprovidethatnobeneficiaryshallhaveorobtainany liquidatesuchassociation. vestedinterestintheproceedsofanycertificateuntilthecertificatehasbecomedueandpayableunderthetermsof Theprovisionsoftitlesfourteenandfifteen,chapterthree,pertainingtotheappointmentofaconservatorand themembershipcertificate. proceedingsuponinsolvencyofaninsurancecompany,shall,insofaraspracticable,applytomutualbenefit Sec.403.Anychapteraffiliateindependentlylicensedasamutualbenefitassociationmayconsolidateormergewith associations. anyothersimilarchapteraffiliateorwiththemotherassociation. Sec.408.Tosecuretheenforcementofanyprovisionunderthistitle,theCommissionermayissuesuchrules,rulings, Sec.404.Anymutualbenefitassociationmaybeconvertedintoandlicensedasamutuallifeinsurancecompanyby instructions,ordersandcirculars,subjecttotheapprovaloftheSecretaryofFinance. complyingwiththerequirementsofthepertinentprovisionsofthisCodeandsubmittingthespecificplanforsuch Sec.409.Theviolationofanyprovisionofthistitleshallsubjectthepersonviolatingortheofficeroftheassociation conversiontotheCommissionerforhisapproval.Suchplan,asapproved,shallthenbesubmittedtothemembers responsibletherefortoafineofnotexceedingonethousandpesos,orimprisonmentofnotexceedingthreeyears,or eitherintheregularmeetingorinaspecialmeetingcalledforthepurposefortheiradoption.Theaffirmativevoteof bothsuchfineandimprisonment,atthediscretionofthecourt. atleasttwothirdsofallthemembersshallbenecessaryinordertoconsidersuchplanasadopted. Title2 NosuchconversionshalltakeeffectunlessanduntilapprovedbytheCommissioner. TRUSTSFORCHARITABLEUSES Sec.405.NomutualbenefitassociationshallbedissolvedwithoutfirstnotifyingtheCommissionerandfurnishing Sec.410.Theterm"trustforcharitableuses",withintheintentofthisCode,shallinclude,alltherealorpersonal himwithacertifiedcopyoftheresolutionauthorizingthedissolution,dulyadoptedbytheaffirmativevoteoftwo propertiesorfunds,aswellasthoseacquiredwiththefruitsorincometherefromorinexchangeorsubstitution thirdsofthemembersatameetingcalledforthatpurpose,thefinancialstatementsasofthedateoftheresolution, thereof,giventoorreceivedbyanyperson,corporation,association,foundation,orentity,excepttheNational andsuchotherpapersordocumentsasmayberequiredbytheCommissioner. Government,itsinstrumentalitiesorpoliticalsubdivisions,forcharitable,benevolent,educational,pious,religious, NodissolutionshallproceeduntilandunlessapprovedbytheCommissionerandallproceedingsinconnection orotherusesforthebenefitofthepublicatlargeoraparticularportionthereoforforthebenefitofanindefinite

numberofpersons.

insurermaybeliableunderacontractofsuretyship,orforwhichareinsurermaybesuedunderanycontractof reinsuranceitmayhaveenteredinto;orforwhichamutualbenefitassociationmaybeheldliableunderthe Sec.411.Theterm"trustee"shallincludeanyindividual,corporation,association,foundation,orentity,exceptthe membershipcertificatesithasissuedtoitsmembers,wheretheamountofanysuchloss,damageorliability, NationalGovernment,itsinstrumentalitiesorpoliticalsubdivisions,inchargeof,oractingfor,orconcernedwiththe excludinginterest,costandattorney'sfees,beingclaimedorsueduponanykindofinsurance,bond,reinsurance administrationof,thetrustreferredtointhesectionimmediatelyprecedingandwiththeproperapplicationoftrust contract,ormembershipcertificatedoesnotexceedinanysingleclaimonehundredthousandpesos. property. Theinsurerorsuretymay,inthesameactionfileacounterclaimagainsttheinsuredortheobligee. Sec.412.Theterm"trustproperty"shallincludeallrealorpersonalpropertiesorfundspertainingtothetrustas Theinsurerorsuretymayalsofileacrossclaimagainstapartyforanyclaimarisingoutofthetransactionor wellasthoseacquiredwiththefruitsorincometherefromorinexchangeorsubstitutionthereof. occurrencethatisthesubjectmatteroftheoriginalactionorofacounterclaimtherein. Sec.413.Alltrusteesshall,beforeenteringintheperformanceofthedutiesoftheirtrust,obtainacertificateof WithleaveoftheCommissioner,aninsurerorsuretymayfileathirdpartycomplaintagainstitsreinsurersfor registrationfromtheCommissioner. indemnification,contribution,subrogationoranyotherrelief,inrespectofthetransactionthatisthesubjectmatter TrusteeswhoarealreadydischargingthedutiesoftheirtrustonthedatethisCodebecomeseffectivemaycontinue oftheoriginalactionfiledwiththeCommissioner. assuch,subjecttotheprovisionsofthisCode. Thepartyfilinganactionpursuanttotheprovisionsofthissectiontherebysubmitshispersontothejurisdictionof AllprovisionsofthisCodegoverningmutualbenefitassociationsandsuchotherprovisionsherein,whenever theCommissioner.TheCommissionershallacquirejurisdictionoverthepersonoftheimpleadedpartyorpartiesin practicableandnecessary,shallbeapplicabletotrustsforcharitableuses. accordancewithandpursuanttotheprovisionsoftheRulesofCourt. ChapterVIII TheauthoritytoadjudicategrantedtotheCommissionerunderthissectionshallbeconcurrentwiththatofthecivil THEINSURANCECOMMISSIONER courts,butthefilingofacomplaintwiththeCommissionershallprecludethecivilcourtsfromtakingcognizanceof Title1 asuitinvolvingthesamesubjectmatter. ADMINISTRATIVEANDADJUDICATORYPOWERS Anydecision,orderorrulingrenderedbytheCommissionerafterahearingshallhavetheforceandeffectofa judgment.Anypartymayappealfromafinalorder,rulingordecisionoftheCommissionerbyfilingwiththe Sec.414.TheInsuranceCommissionershallhavethedutytoseethatalllawsrelatingtoinsurance,insurance Commissionerwithinthirtydaysfromreceiptofcopyofsuchorder,rulingordecisionanoticeofappealtothe companiesandotherinsurancematters,mutualbenefitassociations,andtrustsforcharitableusesarefaithfully executedandtoperformthedutiesimposeduponhimbythisCode,andshall,notwithstandinganyexistinglawsto IntermediateAppellateCourtinthemannerprovidedforintheRulesofCourtforappealsfromtheRegionalTrial thecontrary,havesoleandexclusiveauthoritytoregulatetheissuanceandsaleofvariablecontractsasdefinedin CourttotheIntermediateAppellateCourt.(AsamendedbyBatasPambansaBlg.874). sectiontwohundredthirtytwoandtoprovideforthelicensingofpersonssellingsuchcontracts,andtoissuesuch Assoonasadecision,orderorrulinghasbecomefinalandexecutory,theCommissionershallmotupropriooron reasonablerulesandregulationsgoverningthesame. motionoftheinterestedparty,issueawritofexecutionrequiringthesheriffortheproperofficertowhomitis TheCommissionermayissuesuchrulings,instructions,circulars,ordersanddecisionashemaydeemnecessaryto directedtoexecutesaiddecision,orderoraward,pursuanttoRulethirtynineoftheRulesofCourt. securetheenforcementoftheprovisionsofthisCode,subjecttotheapprovaloftheSecretaryofFinance.Exceptas Forthepurposeofanyproceedingunderthissection,theCommissioner,oranyofficerthereofdesignatedbyhim, empoweredtoadministeroathsandaffirmation,subpoenawitnesses,compeltheirattendance,takeevidence,and otherwisespecified,decisionsmadebytheCommissionershallbeappealabletotheSecretaryofFinance. requiretheproductionofanybooks,papers,documents,orcontractsorotherrecordswhicharerelevantor Sec.415.InadditiontotheadministrativesanctionsprovidedelsewhereinthisCode,theInsuranceCommissioneris materialtotheinquiry.Incaseofcontumacyby,orrefusaltoobeyasubpoenaissuedtoanyperson,the herebyauthorized,athisdiscretion,toimposeupontheinsurancecompanies,theirdirectorsand/orofficersand/or Commissionermayinvoketheaidofanycourtoffirstinstancewithinthejurisdictionofwhichsuchproceedingis agents,foranywillfulfailureorrefusaltocomplywith,orviolationofanyprovisionofthisCode,oranyorder, carriedon,wheresuchpersonresidesorcarriesonhisownbusiness,inrequiringtheattendanceandtestimonyof instruction,regulation,orrulingoftheInsuranceCommissioner,oranycommissionorirregularities,and/or witnessesandtheproductionofbooks,papers,documents,contractsorotherrecords.Andsuchcourtmayissuean conductingbusinessinanunsafeorunsoundmannerasmaybedeterminedbytheInsuranceCommissioner,the orderrequiringsuchpersontoappearbeforetheCommissioner,orofficerdesignatedbytheCommissioner,thereto following: producerecords,ifsoorderedortogivetestimonytouchingthematterinquestion.Anyfailuretoobeysuchorderof thecourtmaybepublishedbysuchcourtasacontemptthereof. (a)finesnotinexcessoffivehundredpesosaday;and Afullandcompleterecordshallbekeptofallproceedingshadbeforethecommissioner,ortheofficersthereof designatedbyhim,andalltestimonyshallbetakendownandtranscribedbyastenographerappointedbythe Sec.416.TheCommissionershallhavethepowertoadjudicateclaimsandcomplaintsinvolvinganyloss,damageor Commissioner. liabilityforwhichininsurermaybeanswerableunderanykindofpolicyorcontractofinsurance,orforwhichsuch Atranscribedcopyoftheevidenceandproceeding,oranyspecificpartthereof,ofanyhearingtakenbya (b)suspension,orafterduehearing,removalofdirectorsand/orofficersand/oragents.

stenographerappointedbytheCommissioner,beingcertifiedbysuchstenographertobeatrueandcorrect transcriptofthetestimonyonthishearingofaparticularwitness,orofaspecificproofthereof,carefullycompared byhimfromhisoriginalnotes,andtobeacorrectstatementofevidenceandproceedinghadinsuchhearingso purportingtobetakenandsubscribed,maybereceivedasevidencebytheCommissionerandbyanycourtwiththe sameeffectasifsuchstenographerwerepresentandtestifiedtothefactssocertified.(AsamendedbyPresidential DecreeNo.1455). Title2 FEESANDOTHERSOURCESOFFUNDS

hundredpesosshallbeimposedandcollectedbytheCommissionerforeachweekofdelay,oranyfractionthereof,in thefilingoftheannualstatement. Forthefilingofannualstatementreferredtoinsectionfourhundred,theCommissionershallcollectandreceive fromthemutualbenefitassociationsofilingafeeoftenpesos:Provided,Thatafineoftenpesosshallbeimposed andcollectedbytheCommissionerforeachweekofdelay,oranyfractionthereof,inthefilingoftheannual statement.

(3)Fortheexaminationprescribedinsectiontwohundredfortysix,theCommissionershallcollectandreceivefees accordingtotheamountofitstotalassets,inthecaseofadomesticcompany,orofitsassetsinthePhilippines,inthe Sec.417.(1)Fortheissuanceorrenewalofcertificatesofauthority,licensesandcertificatesofregistration,pursuant caseofaforeigncompany,asfollows: topertinentprovisionsofthisCode,theCommissionershallcollectandreceivefeeswhichshallbenotlessthanthe (a)Twomillionpesosormorebutlessthanfourmillionpesos,Fourhundredpesos; following: (b)Fourmillionpesosormorebutlessthansixmillionpesos,Eighthundredpesos; Foreachcertificateofauthorityissuedtoaninsurancecompanydoingbusinessinthe,twohundredpesos. (c)Sixmillionpesosormorebutlessthaneightmillionpesos,Onethousandtwohundredpesos; Foreachspecialcertificateofauthorityissuedtoaservicinginsurancecompany,onehundredpesos. (d)Eightmillionpesosormorebutlessthantenmillionpesos,Onethousandsixhundredpesos; Foreachlicenseissuedtoageneralagentofaninsurancecompany,fiftypesos. (e)Tenmillionpesosormore,Twothousandpesos; Foreachlicenseissuedtoaninsuranceagent,twentyfivepesos. Provided,ThatifthesaidexaminationismadeinplacesoutsidetheMetropolitanManilaarea,besidesthesefees,the Foreachlicenseissuedtoanagentofvariablecontractpolicy,twentyfivepesos. Commissionershallrequireofthecompanyexaminedthepaymentoftheactualandnecessarytravelingand subsistenceexpensesoftheexaminerorexaminersconcerned. Foreachlicenseissuedtoaninsurancebroker,onehundredpesos. Fortheexaminationprescribedinsectionthreehundredninetynine,theCommissionershallcollectandreceivea Foreachlicenseissuedtoanreinsurancebroker,onehundredpesos. minimumfeeofonehundredpesosfromthemutualbenefitassociationexamined:Provided,Thatifsuchassociation hastotalassetsofmorethanonehundredthousandpesos,anadditionalfeeoftenpesosforeveryfiftythousand Foreachlicenseissuedtoaninsuranceadjuster,onehundredpesos. pesosinexcessthereofshallbeimposed:Provided,further,Thatsuchfeeshallnotexceedtwothousandpesos. Foreachcertificateofregistrationissuedtoanactuary,fiftypesos. (4)Forthefilingofanapplicationtowithdrawfromtheundertitleeighteen,theCommissionershallcollectand Foreachcertificateofregistrationissuedtoaresidentagent,fiftypesos. receivefromtheforeigncompanysowithdrawingafeeofonethousandpesos. Foreachlicenseissuedtoaratingorganization,onehundredpesos. (5)TheCommissionermayfixandcollectfeesorchargesfordocuments,transcripts,orothermaterialswhichmay befurnishedbyhimnotinexcessofreasonablecost.(AsamendedbyPresidentialDecreeNo.1455). Foreachcertificateofregistrationissuedtoanonlifecompanyunderwriter,fiftypesos. Sec.418.IfthetotalexpensesoftheInsuranceCommissionerforeveryfiscalyearexceedtheaggregateamountof thefeescollectedunderthepertinentprovisionsofthisCode,theexcessshallbechargedagainsttheInsuranceFund, Foreachcertificateofregistrationissuedtoatrustforcharitableuses,tenpesos. whichshallhereafterbecreatedoutoftheproceedsoftaxesoninsurancepremiumsmentionedinsectiontwo hundredfiftyfiveoftheNationalInternalRevenueCode,asamended:Provided,however,Thatpendingthecreation Allcertificatesofauthorityandallotherlicenses,aswellasallcertificatesofregistration,issuedtoanyperson, partnership,associationorcorporationunderthepertinentprovisionsofthisCodeforwhichnoexpirationdatehas ofsaidInsuranceFund,theprovisionsofsectiontwo,threeandfourofRepublicActNumberedTwoHundred SeventyFive,shallcontinuetoremaininforceandeffect. beenprescribed,shallexpireonthelastdayofJuneofeachyearandshallberenewedannuallyuponapplication thereforeandpaymentofthecorrespondingfee,ifthelicenseeorholderofsuchlicenseorcertificateiscontinuingto MISCELLANEOUSPROVISIONS complywithalltheapplicableprovisionsofexistinglaws,andofrules,instructions,ordersanddecisionsofthe Sec.419.Anyperson,companyorcorporationsubjecttothesupervisionandcontroloftheCommissionerwho Commissioner. violatesanyprovisionofthisCode,forwhichnopenaltyisprovided,shallbedeemedguiltyofapenaloffense,and (2)Forthefilingoftheannualstatementreferredtoinsectiontwohundredtwentythree,theCommissionershall uponconvictionbepunishedbyafinenotexceedingtenthousandpesosorimprisonmentofsixmonths,orboth,at collectandreceivefromtheinsurancecompanysofilingafeeoffivehundredpesos:Provided,Thatafineofone Foreachlicenseissuedtoamutualbenefitassociation,tenpesos.

thediscretionofthecourt.

associationorcorporationisaffectedbythenewrequirementsofthisCode,saidperson,partnershipassociationor corporationshall,unlessotherwisehereinprovided,begivenaperiodofoneyearfromtheeffectivityofthisCode Iftheoffenseiscommittedbyacompanyorcorporation,theofficers,directors,orotherpersonsresponsibleforits withinwhichtocomplywiththesame. operation,management,oradministration,unlessitcanbeprovedthattheyhavetakennopartinthecommissionof theoffense,shalllikewisebeguiltyofapenaloffense,anduponconvictionbepunishedbyafinenotexceedingten Sec.422.ExceptasexpresslyprovidedbythisCode,alllawsorpartsthereofinconsistentwithanyprovisionofthis thousandpesosorimprisonmentofsixmonths,orboth,atthediscretionofthecourt. Codeshallbedeemedrepealed. Sec.420.AllcriminalactionsfortheviolationofanyoftheprovisionsofthisCodeshallprescribedafterthreeyears Sec.423.ShouldanyprovisionsofthisCodeoranypartthereofbedeclaredinvalid,theotherprovisions,sofaras fromthediscoveryofsuchviolation:Provided,Thatsuchactionsshallinanyeventprescribeaftertenyearsfromthetheyareseparablefromtheinvalidones,shallremaininforce. commissionofsuchviolation. Sec.424.ThisCodeshalltakeeffectimmediately. Sec.421.Anyperson,partnership,associationorcorporationheretoforeauthorized,licensedorregisteredbythe DONEintheCityof,this18thdayofDecember,intheyearofOurLord,nineteenhundredandseventyfour. InsuranceCommissionershallbedeemedtohavebeenauthorized,licensedorregisteredundertheprovisionsofthis Codeandshallbegovernedbytheprovisionsthereof:Provided,however,Thatwhereanysuchperson,partnership,